The Ramsey Show - App - Is It Smart to Default on Debts to Avoid Paying? (Hour 2)

Episode Date: March 7, 2019

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Live from the headquarters of Ramsey Solutions Broadcasting from the Dollar Car Rental Studios, it's the Dave Ramsey Show, where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. I'm Dave Ramsey, your host. Open phones this hour as we talk about your life and your money. It's a free call at 888-825-5225. That's 888-825-5225. Bruce starts off this hour in Seattle, Washington.

Hi, Bruce. Welcome to the Dave Ramsey Show. Hi, Mr. Ramsey. Thanks for taking my call. Sure. What's up? Well, so the question I have is you've talked about paying down debt and the snowball method. And every time you talk, you say,

hey, get current, pay your minimums and start the snowball. My question is, if you don't care about debt in the future and you don't want to use credit cards or your credit score at all, why not take all available income and pay off your smallest debt and let things default, right? I mean, you'll get to them when you get to them, and you'll just settle if you can, and you're attacking the snowball faster by taking all available income and attacking the debt specifically. Because my daddy would whoop me in the woodshed if I didn't keep my word and I was able to.

So this is more of a morality issue and not a practical issue this is a stewardship issue and not practical it's it is a morality issue to keep your word when you're able to yes and it is practical always to do that as well uh because there's a high correlation of people that have in uh between extreme levels of integrity and the ability to build wealth. And so trying to scam the system generally does not cause people to build wealth. And so, you know, you gave your word. If you're able to keep your word, you pay it. Now, I've been in situations where I wasn't able to because I was so stupid, I left myself drowning and couldn't breathe.

And you can't do what you said you were going to do you get in a traffic jam and you can't be on time for a meeting that you set the time on that's nice breaking your word you know but you it was beyond your control you didn't have well you couldn't left earlier but i mean you know the whole thing is that so yeah yeah uh the other thing from a practical standpoint is this stuff will catch up with you. I mean, you're just setting out, you know, there's other things that people are going to look at your credit bureau report for later. And when it appears that you've purposefully gone into default in order to create a deal or as an act of irresponsibility, that stuff's going to catch up with you. Now, I don't believe in struggling and striving to build your credit bureau report or to build your credit score, but I also don't believe in just

intentionally destroying it either. So that's the basis for that. You can live your life however you want, Bruce, but you're called me. And so I'll give you what I think, and that's what I do here. So living in your shoes, what would I do? I'd pay my bills, and I'd get out of debt as fast as I could. Brad is with us in Dayton, Ohio. Hi, Brad.

Welcome to the Dave Ramsey Show. Hey, Mr. Ramsey. How are you? Better than I deserve. What's up? Hey, that guy kind of stole my thunder there a little bit. I was going to ask sort of the same question. If I would pay off like some of our smaller credit cards and let the other ones just kind of ride like for a month or two, not default. I don't want anything to default.

And credit doesn't matter. No big deal. But if I paid off like a $600 credit card this month and made a minimum payment on one but not all of them. What's the purpose? Do them. What's the purpose? Do what? What's the purpose of this? To just get rid of the smaller ones as quickly. I mean, I know I've read your book.

I even bought Financial Peace University. I never went through the class. Why? I just didn't. I think I'm going to redo it and do it online because I just don't have time for my job, what I do, and weekends because every other weekend I work. But that was my question. Pay off like a big one, like a smaller one, and I know what the baby steps are. Pay off, put extra money toward them.

I think when you actually put actual pen and paper and you sharpen the pencil point and you laid all this out, I don't think you're going to gain as much ground as you feel like in your emotions you're going to gain. Okay. What I think you're experiencing is frustration of a lack of traction, and you're trying to do something to throw some dynamite into the situation and get some traction. Yes. And what I would throw is a different stick of dynamite,

and that would be let's work a system really, really stringently, pick up extra jobs, have a garage sale, sell so much stuff the kids think they're next, and let's get into Financial Peace University again. Well, you paid for it. Let's just get into it this time. I tell you what, we'll give you the upgrade and let you be an online member for a year for free, and Kelly will pick up and we'll send you even the new workbook that just came out for that. You probably got an old one.

So hold on. I'll have Kelly pick up, and we'll upgrade his Financial Peace University membership. Ashley's with us in Charlotte, North Carolina. Hi, Ashley. Welcome to the Dave Ramsey Show. Hey, Mr. Ramsey. Thank you so much.

I'm so excited to talk to you. You too. What's up? I am a home health nurse. I'm a registered nurse. I currently drive a 99 paid for Honda Accord for work, and then I have a personal vehicle besides that. It's paid for as well.

So we're on baby step number two, $6,000 left until we're free of our consumer debt. Good for you. I do get paid. Thank you. I do get paid mileage. It's 45 cents per mile. I drive anywhere from 600 to 1,200 miles every two weeks. With all the wear and tear on the car, the transmission is currently going out.

We've had it looked at by a couple people. It's probably going to be about $2,000 just for the transmission. Not 99 Honda. Yeah, 99 Honda. Yeah, 99 Honda. Yeah, I'm not spending $2,000 on a $1,000 car. Yes, sir. So we actually just bought this car. It drove amazingly.

We changed the transmission fluid. Evidently, nobody else had. And so now the transmission has slipping. The Honda dealership and the mechanics we talked to said it may fall apart next week. We may get two years out of it. So we were going to keep driving it until I had to replace it if I did or buy another one. But I do have an option for a fleet car where I work at. It sounded like a fleet, so I wanted your option, your opinion.

You pay $75 biweekly, so 150 dollars total per month but they pay the insurance on the car they pay all wear and tear and they pay of course for the gas that does include for you to be able to drive it for your personal vehicle as well so even if you drive to florida on vacation they cover the gas for that as well but 150 150 a month yes sir out of your pocket and you get the full use of a car that they furnish all the gas for yes sir do it plus insurance okay do it you can't drive a vehicle that cheap okay that's that's called yeah that's called a benefit that's going to work for you. That is not a lease. You're not signed up.

If you get fired, what happens to the car? You turn it in, you're no longer charged $150. Yes, sir. Yeah, so you're not signed up for debt. You're not signed up into a lease. You're fine. That's a good deal. I would do that in a heartbeat.

And let them experience all the depreciation from the miles you're putting on. And they're putting gas in your tank. Yeah, that's a substantial raise over what you're doing right now. And then go sell your old Honda. This is the Dave Ramsey Show. Are high health care costs getting you down? Are you confused trying to navigate your options? Do you wish you could find an affordable, biblical solution to your health care costs? Based on New Testament principles, Christian Health Care Ministries, or CHM,

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To learn more, visit chministries.org. That's chministries.org. That's chministries.org. Christian Healthcare Ministries is a proud sponsor of Dave Ramsey Live Events. chministries.org. Well, look who dropped by. My friend Tom Ziegler, CEO of the Zig Ziegler Corporation, just dropped by. And got a brand new book out called Choose to Win. Now, Tom is the proud son of Zig Ziegler, the CEO of Ziegler Inc. And he joined the corporation in 1987. And I guess you and I have known each other 20-plus years, haven't we?

20 years, yeah. We've even spent time in Cancun. We have. Yeah. We have. Doing some teaching there and some leadership stuff, and certainly there's a lot of time around your dad when he was still with us, and your mom. How's she doing?

Mom passed away. Oh, I missed this. I'm so sorry. Oh, no. She passed away in July. I guess I knew this, and my brain just locked up. Yeah, no worries. She, amazing life, 90 missed this. I'm so sorry. Oh, no. She passed away in July. I guess I knew this, and my brain just locked up. No worries. She, amazing life, 90 years old, and I would sign the ticket right now if I could have

90 good years and three bad days. Yeah, I hear you. For real. Wow. I can't believe I didn't remember that. Oh, my gosh. My brain. It's awful.

Okay. So, choose to win. Transform your life one simple choice at a time how's that work well i tell you what i run into people all the time and they're like i'm stuck what do i do and the reality is we have a choice we the choices we make today will determine our tomorrows it's a theme that you teach all the time. And so what the book is simply about is how do you as an individual claim ownership, claim responsibility, and it starts with identifying your purpose, your why,

what you're called to do, the direction that you want to go. I was just taking a picture out on the hallway there, and you have Dad's quote. If you aim at nothing, you'll hit it every time you'll hit it every time and i think that's how we make unintentionally bad choices is we're not aiming at anything yeah the the ziggler isms are all over this building i'll just tell you you know that for sure so you know and people do this with their careers i remember hearing earl nightingale probably your dad was probably on the stage and and I was probably 15 or something years old. And he said, people spend more time selecting a suit of clothes than they do their career when they come out of school. And they just take a job.

Right. Just because their friend took a job or just because it was just this thing. And you talk about the Ziegler performance formula in this career chapter. Let's unpack that. Yeah, you bet and uh those people that are just wandering through life i call them zombies you know because they're and if you've ever worked with a zombie you know what i'm talking about they don't have a plan they get there as late as they can they leave early and they're not there while they're there yeah

in the performance formula we talk about performances attitude times effort times skill you got to have all three, right? You've got to have that contagious, upbeat, positive attitude. You've got to have, you know, that go get them, I'm going to do it effort. And then skill, nobody likes a motivated idiot. And so what we've done in that chapter is we have taken specific habits for attitude, effort, and skill. We've created an assessment where you can actually

go in and rank yourself on these attitude habits these effort habits these skill habits and pick two or three that will literally change your life in a very short period of time if you implement them i have been an enthusiastic ignoramus in my past i have been yeah you got your foot on the pedal and no hand on the wheel that's right i mean I mean, it's just, yeah, that'll get you. That'll get you. It's good until the curve and the road comes. That's for sure. For real.

Tom Ziegler is my guest, the CEO of the Zig Ziegler Corporation, a friend of ours for the last couple of decades. The book is Choose to Win. Transform your life one simple choice at a time. You can get the book at choosetowinbook.com, choosetowinbook.com, or anywhere great books are sold. So what would your dad think of this book? You know, I think he would love it.

And the reason that he would love it is it's on the foundation, on the principles and philosophies that he always taught. But I'm kind of a little bit of a nerd. I like to know the why behind the why and so I've gone into into detail making it simple so that when you're when you're where you are right now and you have this big vision for where you want to go it's not overwhelming it's just that simple choice in one of the seven areas of life the physical the mental the spiritual the family the financial the personal the career in fact I was in Australia, and somebody asked me the cornerstone question. They said, what is the fastest way to success?

It wasn't what are the three keys or what do successful people do? I just blurted out the fastest way to success is to replace bad habits with good habits. Then I put it to the test. Think of every area of your life if you just simply replaced a little bad habit with a little good habit and did it on a weekly basis i mean it's it sounds like the seven steps or something i'm not sure well i mean like you lost a bazillion pounds a couple years back right how much did you lose i lost and i've still i've kept it off i lost 65 pounds wow so and i you know i could

probably still use another 10 but you know how that is we're not talking about that part yeah we're not i've i went over to martha's place so you know i hear you yeah you can grab a cookie over there it'll mess up the whole thing so um the book is choose to win folks you need to pick it up i endorsed it obviously uh tom and i've been friends a long time and obviously uh uh zig his dad iconic and he's the proud son of that and this book stands on its own it's it's uh it's an amazing piece you need to pick it up um transformation is just like a constant thing you are are really transforming or deteriorating, aren't you? Right. You're either growing or dying.

There is no in-between. And, Dave, I did want to thank you for your endorsement because one of the things you said in it was you've watched me grow. And I think that's one of the greatest compliments that can be said about anybody because ultimately we have to own that. We have to choose to grow. And so those we love, those we care about own that we have to choose to grow and so those we love those we care about those we do business with when they can look out and say hey that person's

growing or i like where that person's going then that's powerful and this is the roadmap for that cool so out of all the zig ziglar lessons all of us that were just unbelievable fans of his and obviously you two uh you had a great dad you're aware of that what's the number one lesson you learned from your dad that's for me he had a quote he said you are what you are and where you are because of what's gone into your mind you can change what you are and you can change where you are by changing what goes into your mind the number one lesson i learned from Dad was to choose your input. We've got a choice.

We can listen to garbage. We can listen to things that build us up. We can associate with the right kind of people. We can associate with people who pull us down. We can read good stuff, or we can read things that are just mind wasters. And when we choose what goes into our mind the the dominoes that happen play out in our life in every area when we choose the right input we've chosen a better future and the interesting thing is you can you can just decide that today you can just go i'm going to

change that it's a choice you can just you really can choose it people are not stuck by anything other than their perception that they're stuck well Well, people like me, the neighborhood I grew up in, the people I, you know, well, stop it. Yeah. I know one of the things I love doing now is I call it changing the atmosphere. And what I do, when I fly, I get on the plane and I have Starbucks cards and these little quote books. I think I have one in my pocket. I give these little Zig Ziglar quote books to the flight crew. And I just say, hey, you know what?

You get all the credit when the plane breaks and the weather's bad. Nobody says great job when everything goes smooth. I love and appreciate you. Thank you for the job that you do. And they like the Starbucks card better than the quote book. Sure. You know how that is. But it changes the atmosphere of the whole plane.

I mean, the crew is lifted. They're talking to people differently. We all have that potential to change the atmosphere of the whole plane. I mean, the crew is lifted. They're talking to people differently. We all have that potential to change the atmosphere wherever we go, and that's a choice. And that's one of the things that I talk about in the book is do we let life happen to us or do we happen to life? And when we change our input, we can make that choice. It's the power of the tongue, too. You can speak blessings into a situation. You can speak encouragement into a situation, and the air literally changes in the room that's what you're talking

about it does it changes and when we speak a blessing to somebody it changes the air that we inhale i mean i can't tell you how many times i've been tired from a long road trip get on the plane say a few nice words and then they start coming up and saying, thank you, thank you, thank you. And all of a sudden, I don't need a plane to get home. Amen. Changes everything. Again, the book is Choose to Win. The author, Tom Ziegler, the CEO of the Zig Ziegler Corp. Transform your life one simple choice at a time.

Change your atmosphere. You can get the book at choosetowinbook.com. choosetowinbook.com. choosetowinbook.com. You really can choose to win. My friend, proud of you. Thanks for stopping by. Good to see you again. This is The Dave Ramsey Show. Thank you. In the lobby of Ramsey Solutions, Greg and Karen are here with us for a debt-free scream.

Hey, guys, how are you? Hi, how are you? Dave, how are you? Good to be here. Good to have you. Now, welcome. Now, where do you guys live? We are from Farmington, Utah. Oh, cool. Now, I understand when you guys landed last night in Nashville to do your debt-free scream that something crazy happened. It was great, Dave. We showed up at the Dollar Rental Car counter. Sorry, a little bit nervous.

That's okay. We had red balloons there for us. The legendary Kelly Daniels was there for us. It was great. It was the easiest rental car experience we've ever had. And they gave you a car. And they gave you a car. And they gave us a car. Not for free,

but to get to use. Yes. No rental fees. They were fantastic. They wanted to celebrate your debt-free scream with you. Absolutely. I love that.

It was great. Thank you for working that. That's fun. Way to go, Dollar. That's good stuff. Good stuff. Yeah. Well, they're part of the family now.

That's how it works. All right, good. So how much debt have you two paid off? We paid off $148,000 in 14 months. Wow, you've been kicking it. And your range of income during that time? $170,000 to $275,000.

Whoa, in 14 months you added $100,000? Yep, that's right. What do you all do for a living? Greg is a federal probation officer, and he teaches college at a local university, and I am a recipe. I own a recipe website, and I'm a cookbook author. Okay, so where did the extra 100 grand in 14 months come from? Your site? My site.

Your site exploded. It blew up. It blew up. Look at you and your recipes. I love it. It's awesome. Very well done. Proud of you.

So what kind of debt was the $148,000? It was our house. You paid off your house? We paid off our house. Isn't that awesome? That's amazing. So the recipes, the money starts flowing, and you're like, we're going to knock the house out. Exactly.

We decided to just put everything we could towards the house, taking all of my income, living off what he made, towards the house. So it was amazing. Yeah, I mean, your income shot so up, it's like hitting the lottery almost, and you're like, we're going to be smart. Yes. Exactly.

We're going to be smart. We're not going to waste it. We're going to get this house done. What's the house worth? It's about $550,000. Yeah. Woohoo! I love it.

How old are you two? I'm 38. I'm 39. Oh, and you've got a paid-for house. You're not even 40. I love it. How old are you two? I'm 38. I'm 39. Oh, and you got a paid four house. You're not even 40. I love it. Looking at weird people. You guys are amazing.

Thanks, Dave. Wow. What a blessing. How fun. It's so great. And now it's just Monopoly money. I mean, you got no payments in the world. What are you going to do with all this money?

Invest and give and live. It's going to be amazing. What big What are you going to do with all this money? Invest and give and live. It's going to be amazing. What big thing are you going to do to celebrate? Well, coming out here was the pinnacle of it. Can I tell you a little bit of our story? So in July of 2017, I went to Karen and I said, we've got to get this house paid down. We took out a loan for about $224,000 in 2012. And we were throwing extra payments at it, which was good.

But I went to her in 2017. I was like, we've got to knock this out and we had about 148,000 dollars left I wrote it on our whiteboard that we had there in our office and we just got intentional we just went to town and the minute I swear Dave the minute we wrote that down it was like the Lord's like all right you're in I'm in and her income just shot up. It was remarkable and amazing. So we just started just chucking every dollar that we could at that mortgage so we could just knock it off. And we had a four-year goal of doing it. So we wrote July of 2021 is when we wanted to have it done by. And we were able to pay it off in September of 2018.

14 months instead of four years. It was awesome. I remember going to Karen and saying, we're going to do this. And she said, well. I just said, you know what? That would take a miracle to pay that off in four years. I mean, because my income hadn't shot up yet. I said, we'd have to do everything exactly right for that to happen.

And lo and behold, 14 months later, we're debt free. And you did. Yeah. And what was fun with it, we have two kids. We didn't bring them with us. Our ninth, or I guess she's eighth grader. She acts like a ninth grader or even older than that. But our eighth grader was too responsible.

Didn't want to miss school. But we really worked on bringing them involved in this. And so the common line in our house was when we get out of debt, we can do... When we pay off our house, we can do this. Yeah, we can do dot, dot, dot. And our kids would bring that up often, so it was awesome. Wow. Well, way to go, you guys.

That's fun. Well, we're glad you made this trip. And I hope you get to make a lot of other trips and do a lot of other things. I think you will. You're going to be everyday millionaires before you know it. If you're not already, you might be already with that paid for $550,000 house. Add a little 401K in there. You're going to be there in a heartbeat.

Yeah. Good job, guys. Thanks, Dave. Well done. Very well done. Thank you. Okay, so obviously if you say, what is the secret to getting out of debt? Well, adding $100,000 to your income doesn't hurt.

Yeah, but other than that, what is the secret? To me, it was paid in a tithe. We were honest tithe payers. We've been married for almost as long as we've been single, and we made a commitment to the Lord right when we got married that we were going to put him first in our lives. And ever since we've done that, you know, if it was between paying the light bill or paying the Lord,

we decided we would pay the Lord because we knew he could provide a way to pay the light bill. I've got two other things. The second one was we just set a goal, and we were committed to it. We're both long-distance runners, so we know what it's like to push through pain and and debt is pain you know but you just make it to the next aid station that next water station payout you know and once you see momentum as you talk about all the time we're we're on a roll and the third thing the third thing that i like um i work in the federal government and i work in these two specialty courts where we surround these people

who are struggling with addiction and mental illness with a team. We've got a judge who's on board. We've got the prosecutor on board, the defense attorney on board. And so we've got a team surrounding these people offering encouragement.

And we've surrounded ourselves with a team. Misery loves company, but company doesn't like misery. So if you're going to be miserable, you've got to be out of our lives. So we try to instill positive people around us who are going to cheerlead us. Other than the two of you, who are your biggest outside cheerleaders? I would say our parents.

Our parents. Probably. Yeah. Both of them are serving missions for our church, and their focus is on spiritual and temporal self-reliance. Karen's parents are doing it in France, and mine are in Utah. Wow.

Kind of a neat thing. Very cool. That's neat. Well, congratulations, you guys. Thank you. Very, very proud of you. How does it feel? You don't have a payment in the world.

It feels free. When the government shut down a few weeks ago, I wasn't worried. I was like, no, it's fine. Because we had our house paid off. We don't have payments. We're going to be just fine. So I love that feeling of just being free.

Yeah, a lot of my friends and colleagues were stressing out how they were going to make their next meal. And we didn't. We were standing outside with an umbrella, and we were covered, and it felt great. Yeah, excellent. Well done, guys. Wow, amazing story story i love your story congratulations you're rock stars man not even 40 years old and you're there wow we got a copy of chris hogan's book for you everyday millionaires as we said that's your next chapter you may already

have closed that chapter but you're about there if not so congratulations again we're proud of you guys thank you so much for your plan. It works. I was yesterday, I was at the, we flew in from Salt Lake City last night, as you mentioned earlier. And I was standing at a large bank and they were just having a small talk with me saying, what are you doing today? And I was just saying, I'm just taking out cash. We're heading to Nashville tomorrow.

They're like, for fun? And I told them we were going to be on the Dave Ramsey show and gave them the seven baby steps there, right there in the lobby. Right in the lobby of the bank. It was great. Their eyes were just like saucers. They're like, really? You did that?

You paid your house off? Yeah, we paid our house off. You can do it. Anybody can do it. Follow the plan. It works. Wow. It's great.

Good for you. Well, thank you. Thank you for the endorsement. We appreciate it. We're proud of you guys. All right. Greg and Karen, Salt Lake City, $148,000 paid off in 14 months, making $171,000 to $275,000. House and everything, baby.

Not even $40,000. Count it down. Let's hear a debt-free scream. Are you ready? Three, two, one. We're debt-free scream. You ready? Three, two, one. We're debt-free! Yay! Woo!

Love it! Woo! Woo-hoo! Well done. And thanks to Dollar Car Rental, giving them a free ride out from the airport and let them rent a little minivan for $0. That's pretty cool. That's pretty cool.

Well, if you want to rent a car, Dollar Rent-A-Car has set the whole thing up to where they now take debit cards. They don't treat you like a second-class citizen. If you're 20 years old, you've got $200 in the bank, you can rent a car. Suggest you go on over to Dollar.com slash Ramsey and join the Dollar Express Rewards. Dollar.com slash Ramsey and go ahead and join, even if you don't have your travel plans right now. And then you don't even have to walk to the counter. You walk straight out to the car with your debit card and you drive off. Wow.

Gets rid of like a regular person. Thanks, Dollar. Dollar Car Rental. Thanks for furnishing them a car. That's pretty neat. That's a neat way, Indiana. Welcome to the Dave Ramsey us, America. Dan is in Fort Wayne, Indiana. Welcome to the Dave Ramsey Show, Dan. Thanks, Dave. A longtime follower since my travels through Tennessee back in the late 90s, so I appreciate everything that I could pick up from you back then on my travels

and everything I've followed through your books and finally sat down this last winter and went through FPU at home. Wow. I said, what the heck, I'm done with that. I'm going to sit in the class. So I got halfway through my class over at the church. And anyway, it's definitely put us in a good position. Well, thanks.

How can I help today? Well, my big question is my wife, through her employer, since she took the job in 05, has long-term care insurance that comes out of her paycheck, not a lot of money. And I know that you say, you know, don't buy it until you're 60. Right. It's not necessarily a bad thing that she has that. And then I guess part of that question, too, is should I be buying that through her employer for me? Mm-hmm. How old are you guys? I'm 54. She's 51. Okay. Part of that question, too, is should I be buying that through her employer for me?

How old are you guys? I'm 54. She's 51. Okay. Well, the probability of using long-term care insurance before you're 60 is almost zero. It's very, very close to zero. Yep. And so, you know, you're basically paying insurance for something that has almost no probability of happening is the point. And so there's no benefit to it.

It's wasted money. But if you want to keep it, if it does something for you, that's fine. But, you know, it's kind of like having car insurance. You don't have a car. Right. Right. No, I agree. Oh, I forgot to drop my insurance when I sold the car.

Yeah. You know, it's that kind of thing. But, I mean, you guys are heading towards 60, and, you know, you can look at it based on your income and so forth, and you can just decide if you want to do that or not. I mean, what she's paying from each paycheck, again, isn't breaking us. Right. How much is it? And I guess you've answered my question.

How much is it? For me to buy now. Less than $7 a paycheck, it looks like. How often is she paid? Twice a month. Okay, so $14. We're talking about $100 a year, you know, $120 a year, and $150 a year. But anyway, and your household income is?

Around $125,000-ish. It takes a little bit depending on what you might get a year. It's irrelevant. It's like saying, you know, do I want to buy Starbucks coffee every day? It costs more than that. I know, but it costs more than that. I mean, you know. Right. So you could do that.

You make $125,000 a year. It's not a big deal. It's more of a philosophical discussion at this stage than it is actually a math or a finance discussion because it's such an irrelevant amount of money. As you said, you prefaced the question that way accurately. So, you know, you can go whichever direction you want to go. I'll tell you an area where I do a similar thing. There's absolutely no reason whatsoever that Sharon Ramsey needs life insurance on me. If I die, the woman is set without life insurance. But I got several million dollars in life insurance, in term life insurance.

You know why? No financial planning reason whatsoever. I absolutely do not need it. She's got tens of millions of dollars if I die. She's in good shape. You know why we have it? She wants it. It's S-W-I.

Sharon wants it. And so it doesn't cost that much, especially, like you said, relative to my income. It's not a lot of money. It's not a big deal. She'd rather have that than some little trinket thingy i might buy her for her birthday and so that's fine you know you got the money you can afford to do that and that's where you are in this situation so um there's no actual financial mathematical reason for me to have life insurance whatsoever.

Tim is with us in Fort Worth, Texas. Hi, Tim. How are you? Hey, Dave. I'm doing well. How are you? Better than I deserve. What's up?

So my son is 22, and he's going to be graduating college in May. Yay. Nice. Yes. And it's a long story, but he's graduating debt-free. He's got him a job where he's going to be making just into six figures starting this summer. Wow. And well, that's thanks to a very well-known engineering college in the Northeast. Okay. So we were in an accident back in 2000, 2001, and he was injured, and as a result of that, they put some money in a trust for him.

So he's been getting payments every six months for about $10,000, which is what's paying for the college. He's got a payment coming in May of 2019 for $10,000, and then he's got another $10,000 coming in November of 2019. 10, and then he's got another 10 coming in November of 19. And again, he has no debt. So at age 25, which is September of 21, he's going to get $15,000. At age 30, which is September 26, he's going to get another $20, in september of 2031 he's going to get 26 000 so it's a lot of money coming in and i'm just curious what you thought a strategy might be because i think if he learns from like

my mistakes uh he could potentially retire like but by the time he's 50, if not sooner. I'm just curious what your strategy might be for him for something like this. The thing that happens with those kinds of monies coming in, where people make the biggest mistake, is they don't bother to decide ahead of time and if you'll decide if he'll decide of head ahead of time uh we know this we know he's an engineer and we know you're his father so there's a high probability that this guy's going to have a level of wisdom with this he's not going to be some wild party animal that goes and buys a red truck with it or something you know i mean he decides you can do that if you want, but you need to decide ahead

of time what you're going to do with the money. And if you're going to do that, then I'm going to be working up our baby steps. You know, I'm going to be he graduates from school debt free. Any money he gets from anywhere, he puts 15 percent of his income into retirement. And that alone, with the kind of money he's making, as young as he is, is going to have him in the millions of dollars in his nest egg very soon. It's going to be amazingly fast. And then when he gets a lump sum like that in, what are we going to do with it?

Well, we've got to have our emergency fund in place. We're putting 15% away. Next thing that comes up is a young lady in a house, and we get that bought, and we get it paid for as fast as we can so i'm thinking it let's pretend at 25 he's married and has bought a house then what our baby steps would suggest is that anything he can find in any of his income above 15 of his income is going to start chunking at that house and you get it paid for then you don't have a house payment you're making 150

spouses making something on top of that we may be talking to a 30 year old with a two hundred thousand dollar income in a paid for house well you talk about being set i mean he starts investing 15 of that that's going to turn into some real stinking money and that's what i see as his future uh assuming you know a normal life progression uh that he has if that unfolds that way but even if he didn't get married he says i want to buy a condo i want to buy a house or whatever i want to buy a car pay cash for everything no dad he's been doing that so far way to go good job dad and um then let's you know walk right up those baby steps emergency fund 15 of your income going into retirement pay the house off as soon as possible after you buy it or pay cash for it when you do buy it either one both of those will work beautifully for him wow what a

great head start from a horrible tragedy horrible thing to go through and then he gets a great head start out of it that's that's the way that's good that's good that's called a blessing that's wonderful congratulations open phones at 888-825-5225 chris is on twitter i'm on baby step four and six putting money into retirement paying off my house i'm curious if I should factor in the money that I put into my pension through work as part of my 15%. If you do not control it, you can't take it with you when you leave in a lump sum, and you don't control the investments that it goes into, I would probably count it at about 50%. So if you're putting in 8%, I'd count four of that towards your 15%. And that's only, I assume,

the money you're putting into your pension is mandatory contribution. If you can avoid it, don't put any money in it. You're better off to put it other places than in a pension. But if it's a mandatory contribution and you want to say, how much of that does that count

towards my baby step four? About 50% is what I do because you're not in control of it. This is The Dave Ramsey Show. Hey guys, this is Blake Thompson, Senior Executive Producer of The Dave Ramsey Show. Did you know over 15 million people listen to The Dave Ramsey Show every week? And a lot of those people listen to one of over 600 radio stations across the country to find a station near you, head to Dave Ramsey.com slash show.