The Ramsey Show - App - It's Here: The National Study of Millionaires White Paper (Hour 2)

Episode Date: May 8, 2019

Get Started on Your Debt-Free Journey We’ve made it even easier to get started taking control of your money.  Learn How! How Fast Can You Be Debt-Free? You don’t have to be in debt for the rest of your life! Answer 5 simple questions and our Debt Calculator will show you how quickly you could be out debt!   Get the Complete Guide to Budgeting. Budgeting is often misunderstood and overcomplicated. It doesn't have to be! We made it simple. After 90 days of budgeting with EveryDollar, 9 out of 10 users feel more confident in their financial future. Get the Complete Guide to Budgeting.   Get the Coverage You Need. How does your coverage stack up? This Coverage Checkup will show you what you need (and don’t need), which questions to ask, and where to get the best coverage.   Find the Right Financial Advisor. Finding the right financial advisor doesn't have to be complicated. Our free guide makes it easy to know what questions to ask so you can make a confident choice. Get the guide!    Listen and Watch Anytime, Anywhere.   The Dave Ramsey Show app lets you download episodes for offline playback, customize your content, and see what’s coming up!

Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studios, it's the Dave Ramsey Show. When debt is done, 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. Thank you for joining us, America. We're glad you are here. Open phones at 888-825-5225. That's 888-825-5225. Brian starts this hour in Cleveland, Ohio.

Welcome to the Dave Ramsey Show, Brian. Hi, thanks, Dave. Thanks for taking my call. Sure, what's up? So my girlfriend and I have been working your baby steps for about close to a year and a half. And by the end of this month, we will have our emergency fund fully funded. We're debt-free, and we're ready to start saving for our retirement. So I have a quick question. I got a raise this year, which is always a good thing, but it has now put me into the next tax bracket. And I know you're a big proponent of the Roth IRA or Roth 401k options. So if I do that, I'm going to be paying significantly more taxes.

If I opt to go tax deferred on my 401k, I could save a couple thousand dollars, $2,500 in taxes. I'm wondering what your opinion is. Okay. How old are you? Forty-five. Okay. What do you make? $115.

Okay. All right. And so you should be putting around $16,000, we'll call it, into your retirement plan. Okay? Correct. All right. And so I just want to play with some numbers here while we're here live on the air. That's really uncomfortable, but I'm going to do it anyway.

If I can make this calculator work, it's not working. Let's see here, 16. Okay, it's not going to work. Screw it. Here's the thing. 16, maybe I can get that to work. Let's see here, 16. 20 years from now, you'll be 65.

Correct. You will have put in $320,000. Okay? Okay. And if you do it pre-tax, you will have saved taxes on $320,000 until you take it out, and you will then pay the taxes. That's tax deferred. That's pre-tax retirement savings, which is what you're suggesting, because that saves you taxes on the $320,000 over the next 20 years.

However, that $320,000 in either account, whether you put it into the Roth or whether you put it into the exact same mutual funds, will have grown to, I'm going to make up a number because I can't make my calculator work, but I'm going to be pretty close. Okay? It will have grown to somewhere around $4 million. Okay? Okay. So, here's the equation. to somewhere around $4 million. Okay? Okay.

So here's the equation. You're going to either pay taxes on $4 million, or you're going to pay taxes on $320,000. Easy decision, right? Exactly. Roth. The reason is that when you run the calculation, and you'll probably get to an online calculator after we get off the air, and the doofus here can't run his calculator.

But anyway, when you find one, you're going to find that about 90 at your age, about 95% of what is in the account is growth. 5% is what you've put in. Tax-free growth, therefore, makes the Roth option a slam dunk. So pay the excess tax now. Yep. I'd rather pay taxes on 320 over the 20 years as I make the contributions because it's not pre-tax. It's an after-tax investment into a Roth because the lion's share, the big lion's share of what will be in the account is growth, not contribution. And the growth not being taxable is better than deferring the taxes.

You still have to pay the taxes, but deferring the taxes on the 320. And that's why I already have about probably 120, 130 in deferred retirement. That's fine. Just leave it. Just leave it until you've got some extra money. Someday when you've got some extra money, like in five or six years, if you're really going cha-ching, and you probably will be because it sounds like you're on a good track here, you may want to reach over and convert that to Roth.

When you can pay the taxes out of your pocket from doing that, you've got an extra $25,000 laying around, you've got $100,000 laying there and deferred, just roll it on over to Roth because it's going to do the exact same thing. Again, the only time it doesn't make sense is if you're up close to the bubble. But you got so far out to the bubble, a good 20, 25 years before you touch this money, that the math is always going to work out and say Roth 100% of the time. So your rule of thumb is what I call rock, paper, scissors, is you do matching first. Always take the match.

A match is 100% rate of return, even though it's taxable later. But 100% rate of return, we can pay some taxes and still come out. So always take the match, up to the match, then always take the Roth. And if you're still not at 15% of your income going into retirement and you're baby step four and you want to do some more, then and only then would you do the traditional pre-tax 401k or pre-tax IRA. Good discussion. Thanks for calling in.

Joey is with us in Austin, Texas. Hey, Joey, how are you? Hey, Dave, doing well. Thanks for taking my call sure how can i help um so my wife and i have recently sold a good amount of company stock and after setting aside money on the taxes for 2019 for selling that stock, we're roughly going to have probably about $600,000 worth of money. Yay! And I wanted to get your advice. Yeah, not too bad, right? Yeah, I hate it when that happens.

Way to go, dude! Thank you, sir. Thank you. We've worked hard for it. I bet. How old are you? 38. Okay.

Wow! This is awesome, man. So not counting all this mess, what's your household income? We are at $350,000 just household income. Ding, ding. So where are you in the baby steps, and do you know what I mean when I ask that? Yes, I do, sir. We are on baby step seven.

So you're already, everything's paid off. You're done. So you're rocking. This is paid off. You're done. So you're rocking. This is just excess wealth. Absolutely wonderful. So proud of you. Well done, man. You just are killing it.

What kind of field of work are you in? What's your career? So I'm a consultant in the technology field. And my wife is in the technology field as well. Okay. Good choices. Ding, ding. Okay is in the technology field as well. Okay. Good choices. Ding, ding. Okay.

So here's what we do. When I'm working with someone who's a Baby Step 7 person, including my wife, Sharon, and I, sometimes it's even something like a music star or an athlete or somebody like that, we always just remind ourselves that there's three things we can do with money. We can spend it, we can give it, and we can invest it. And we should always be doing all three. What I did years ago, Joey, was I just decided a percentage of my excess wealth, above what I need to eat and pay my budget, any extra monies that come in at Baby Step 7,

I'm going to take a percentage. There's a dollar sitting there. What percentage of that dollar am I going to give? Additional giving. What percentage is going to go to taxes? You've already paid your taxes on this. What percentage am I going to enjoy and spend on me and Sharon? And what percentage are we going to invest?

And that way, I never feel guilty for enjoying some of it. I'm always prompted to invest some of it, and it forces me to have a formula to continue my outrageous generosity. And so I'm always giving more as I make more. I'm always investing more, and I'm always enjoying some of it. So put a percentage on this and do all three with this money. This is the Dave Ramsey Show. With more frequency than you know, I get calls and emails from people dealing with the recent

loss of a spouse or a parent. You can hear the struggle and the heartache that they've been experiencing. And at a time they should be grieving, what breaks my heart the most is the strain and tension that they're going through because of money, especially when it's a situation that could have been avoided. If you have a family, it is your responsibility to have term life insurance. It's one of the things you do to say I love you. And yes, this is an ad for Zander Insurance.

But since this is one of the most effective ways I have to get my point across, so be it. For over 20 years, I've been telling you about the importance of term life insurance and protecting your family. Listen, you need to check out Zander.com or call 800-356-4282. I can't say it enough. Protect your family. It's what you're supposed to do. Go to Zander.com or call 800-356-4282. natalie is in san diego hi natalie welcome to the dave ramsey show hello hi how can i help thanks for taking my call um So me and my husband have about $70,000 worth of debt, and that is our mortgage. We will be paying that off this year.

Yay! And we really, the only big expense we have is we do have a one-year-old son, and we pay about $20,000 a year for his preschool. Aside from that, we're going to be completely debt free and we're we're talking about what to do next um because we'll own our our condo we will still have the baby no car payments no student loans we're just trying to figure out what to do with the money so one of one of the ideas that we've been throwing around is purchasing a property that we would eventually retire into, something near the ocean here in San Diego. And then a couple of other friends of ours have said, you know, why don't you retire early and kind of put more money away.

So we're just in a quandary. We don't really know which way to go. Okay. How old are you? 37. Great. Good job. You've done beautifully congratulations well we

teach a thing called the baby steps and your your your child's um care and your child's schooling is not a debt it is a monthly expense okay so it's just part of your budget that doesn't even come up you have no debt um are you putting money into retirement aggressively we are so we're both maxing out on our the ross um iras and then we do he has a 403b at work that gives him 10 of his salary um kind of like as a bonus every year and then we contribute probably another 10 000 to that 403b tax deferred perfect very good very good Well, then you're down to almost what I was discussing before the break with the other guy, that he had that $500,000 windfall, which was awesome. But you're kind of down to the same situation.

There's only three things you can do with money. You can enjoy it, give it, and save it. And I would like to see you increase all three by just managing your budget carefully. It's not like you need to be on a tight budget where you can't enjoy life. I want you to enjoy some of this money. Intentionally, though, what happens to people sometimes when they finally get where you are is they relax so much that they get sloppy. It's kind of like somebody who lost a bunch of weight and got in shape, and then they

just gave up, and then they gain all their weight back. Don't do that, okay? Instead, do the thing where you just stay on the program. You stay with it. The program being intentional with money and just doing it on purpose. Now that means you're going to enjoy some money, you're going to purchase some items, you're going to go on some trips, you're going to continue to take care of your child in a way that is fun and reasonable and all those kinds of things. But you're also going to probably increase your generosity.

You need to be very intentional about increasing your generosity. And then you need to invest. Now, I personally started where you are about the same time you did, about 20, 25 years ago, though. And so my net worth as a result is ridiculous and wonderful and um so i only do two things because i discovered wealthy people and for that matter very wealthy people um uh are very careful to only invest in things they know about people lose money when they put money in stuff they don't know about. Okay. So if I decided to invest in mutual funds in my retirement and in other things, just buying mutual funds, and I love real estate like you mentioned,

and so I buy real estate that I pay cash for. Okay. One way to do that is just put some money in what's called a no-load, no-commission S&P 500 fund, an index fund. I'll drop money in there like crazy because there's no commission. It all goes in there. And it rides the stock market up and down. But when I get enough built up in there, I'll buy another piece of property.

Okay. That's like my real estate savings account kind of. Got it. So I'm investing so that I can invest. Yeah, where we're getting a little, you know, and we don't want to get nervous and get sloppy like you're talking about. So I bought my condo, you know, a couple years before I met my husband, and it's doubled in price. And San Diego is one of those places where we're running out of time or space. So there is a little bit of wonder if, you know, waiting to have that cash and paying it off in cash or with a mutual fund investment is better than, you know, buying something now at the lower price.

Yeah. No, I'm going to, if you can't pay for it, I'm not going to put you back in debt. You're debt free. Okay. You're debt free. The data points among the wealthy is they get debt-free and they stay debt-free because your most powerful wealth-building tool is not some kind of arbitrage game that you play with the bank. Your most powerful wealth-building tool is your brains and your income. And so just stay clear. Be the tortoise.

Don't be the hare. So if you want to move up a house that you live in, save up and move up. If you want to buy a piece of property for the future that you're going to rent or use as a second home, pay cash for it. Second home's a toy. It's like having an extra car. It's a toy. And so you always pay cash for toys. If you want to buy some investment property that creates an income, a rental property, save up and pay for it.

We've done all three. We have a lake house. We have a condo. We have a farm. Those are all toys in addition to our home. Then we've got bunches and bunches of real estate. We love real estate that makes us money. And lots and lots of tenants, and that's just so fun.

And it just continues to build on itself after that. And that's what you can get to. But it's a slow, steady process. You're doing really good. Keep it up. Keep it up. Now, it's interesting. I always look for patterns here on the air.

And we don't set these calls up what they're going to call. So I always just take it as a cue. So here's the thing. The only book I've written on wealth is called The Legacy Journey. All the other books I wrote were about money, not about wealth. There is a difference. And these last couple of calls have been about wealth, how to deal with it when you get to baby step seven, how to deal with it when you get a lump sum like that, how to handle an unusually high income,

how to deal with those kinds of things. And a good rule of thumb is what I've been telling those last two callers, and you guys have heard it this hour, but Legacy Journey covers it. It's the only book I wrote, by the way, that's super, super, super Christianized. It is completely from a Christian perspective. And so if you're offended by Christian things, you'll completely be offended by that book, that kind of a thing.

So it's called The Legacy Journey. We have a class called The Legacy Journey that is the follow-up class to Financial Peace University. And it's not as in your face, but it's still a Bible study on wealth because everybody's all concerned about Christians having wealth, Christians having wealth. Oh, is that bad? Would Jesus do that? All this kind of stuff.

The Bible's real clear about wealth. You don't own anything. You just manage it. Are you managing it in a spiritually acceptable way if you're a person of faith? Is a wealthy person managing their wealth for God? Can that be done? Yes, it can be done. You take care of your own household first, the Bible says, or you're worse than an unbeliever.

A good man leaves an inheritance to his children's children. That's in the Bible. David didn't build the temple. Solomon didn't use his own money to build the temple, his son. The temple was approximately $21 billion in today's dollars. If you take the increments of biblical money and you actually take it out to inflation. Solomon spent $21 billion to build a temple for God. It was not his money. It was inherited money.

So what if some of you had told David he's supposed to give all that money away because wealth is evil? See, you wouldn't have been biblical, would you? So families manage wealth for the glory of God. Families of faith do. Some families mismanage wealth, and some families are mean with their wealth and nasty. That's not what I'm talking about. But this assumption that wealth is bad and always is horrible is not a biblical concept. And so you're managing money for God.

When you do that, you take care of your own household first. That's why you can increase your spending and enjoy some of the money for your family. You also want to invest for the future, because in the house of the wise are stores of choice food and oil. You want to diversify, because it says in Ecclesiastes, spread your portions to seven, yes, to eight, for disaster may come upon the land. You want to leave an inheritance. A good man leaves an inheritance to his children's children.

You want to be outrageously generous because God loves a cheerful giver. Are you hearing the scriptures here? That was a Bible study I just did for you. So those of you that are people of faith, calm your butt down. You're all twisted up about wealth. You're supposed to enjoy some of it, give a bunch of it, invest some of it for the future generations.

And so you can give more. Wow. There you go. Just relax. It's going to be okay. You're going to be all right. Calm down. So if you're new to the show, it would be the only possible way you did not know. We have a number one bestselling book with chris hogan ramsey personality called everyday millionaires the book came out the first week of january and it was an

instant number one we're real proud of that aren't we chris yes we are dave it was a big deal and it was a great great awesome adventure chris is uh joining us this half hour to take your calls and uh we're about ready to make a little announcement here the book has been number one it's sold hundreds and hundreds of thousands of copies and it continues to just zoom lots of you are wanting to know how to be an everyday millionaire we did the largest study of millionaires ever done in north america over 10 000 of them were surveyed by this. We used 140 of the statistics from that study in Chris's book. But Chris's book is more about inspiration and stories of the people to show you how people became millionaires to let you know that you can, too. That's right.

And, Dave, but despite that, even with 140 of those stats in there, people were still clamoring and wanting to know additional information. Clamoring is one word. Is that a nice way to put it? Yeah. Griping was another word. Griping, complaining. Because the super nerd wanted more of the details. They wanted a white paper.

Right. And we knew we needed to give people the information, but more importantly, the stories. Because that's what we do. We help people transform their lives. So, we got an answer for them we did a white paper we did a white paper the ramsey research team took all the guts of the bolts the nuts the washers the uh the turbocharged anything that was in the engine inside and opened it up and uh laid it out to bear all of the details of the research in a white paper.

Yes. It is here. And for all of you out there that really wanted it, go get it today. Yeah. Yeah. There's one place you can get it, DaveRamsey.com, on our store. We're not going to put it out on Amazon and all the other stuff. It's a white paper.

It's a PDF download, right? I guess it is. Yes. I yes that's how we're doing that's right dave it's just a p you can't even buy a hard copy we're not even selling hard copies no so if you want to get a copy you can get a copy it's 9.99 for the white paper and is there it's uh called the national study of millionaires oh we give it a name good we'll go we give it a name yes good because it's not. That way, it's the National Study of Millionaires. Well, our research team does all the research team nerd stuff. They go into the detail and are complete crazy people about how they design the surveys so that they're properly done.

This research is freaking airtight. And so some of you wanted to know every little nuance of the findings. And so we got it for you. It's here. I read it. I've read it three times now because we don't put stuff out that I don't read. Frankly, it put me to sleep. Dave, I needed three cups of coffee to make it through.

Yeah. Yeah. It's boring as crap. It really is. But if you wanted a boring as crap white paper email detail, we got it for you, baby. You're ready, and you're going to love it if you're that guy. No, you really are. You're going to be like, this is the best thing yes ever they're gonna be running down the

street they're gonna i got one i had that i got one they're so hard to get and they're rare you can't get them except at daveremsey.com that's right so go get it go get it read the stats but you know what more importantly because that's them on your refrigerator put the stats on your refrigerator you're that guy. Yes. And I want you to go get it. But more importantly, also read the book. For God's sakes.

Yes. Get some stories to go with the stats. It's just... Yeah. Okay. All right. You could tell Chris and I are not nerds. Okay?

No. No. No. We like stories. We like humor. We enjoy things. Hey, we're all we're all kidding aside it's available today it's 999 it is a downloadable pdf it is the white paper the national study of millionaires on which chris and the team built the million everyday millionaires

number one best-selling book so that's the deal it99. Now, if you want to get the bundle and actually get the freaking book, too, we're going to bundle them together with the number one bestseller. It's only $24.99. And you can get it at chrishogan360.com slash store. You can get it at DaveRamsey.com. Note to self, Chris Hogan's store is my store. It comes into my store. So it's all the freaking same thing anyway because chris

is on our team he's a ramsey personality so but anyway chris hogan 360.com slash store dave ramsey dot com you can jump on the store get the study the national study of millionaires downloadable pdf only place you can get the details from the study for 9.99 if you want to buy the book as well we'll bundle them together and give you a deal at $24.99. At the end of the day, all this joking aside, we have, without a doubt, the research that you and the team did with this process have proven. There is no question, if you don't agree with the conclusions, the research is so airtight, you're what's known as wrong, that millionaires did not become millionaires in North America by inheriting money by and large. No, not at all.

Nowhere near. And so the book, for those of you out there that have not read it yet, you need to because it gets rid of all the myths. They didn't inherit it. They didn't go to a fancy school. They don't make a large income. They're not C-suite individuals that are high-end execs. You know what they are? They're everyday

men and women that have worked hard over time. I'm staring at two of them right out there in our lobby right now, Dave. They're fantastic people. I love their story. They've been intentional over time. It's not an accident. So, if you're out there and I don't care where you were born, I don't care how your family handled money, you get to make a decision about your future.

The choice is yours. Seventy-three percent of millionaires never held a penny of credit card debt. Seventy-nine percent received zero inheritance. Another five percent received under $100,000. And another five percent received what inheritance they received after they were already millionaires or already so close that it mathematically did not cause them to become millionaires. Translation, about 9 out of 10 millionaires are not inherited money millionaires. Conclusive study. Conclusive study.

The sample size is so freaking large, it punches you in the face. You cannot argue with this statistically. If you know anything about stats and analysis and research, there is no question. No question. Top three jobs, engineer, accountant, and school teacher. I like that. I love that. Hey, Dave, guess what?

What? Third of them never made a six-figure household income. That one caught me off guard. Me too. Be honest. Never in their lives was their household income over six figures. And the key word in my mind is household. That meant two of them could have been working and they didn't make six figures.

Yeah. Yet, they still were able to reach millionaire status. Now, what is a millionaire? Net worth. Take what you own minus what you owe. And I'm talking about what's in your bank account, your 401K, your 403B, your home, all of it. And, Dave, I put together a net worth tool at my website to help people with that. Go to ChrisHogan360.com slash net worth.

I've got a free tool on there that will help you do that. So what you own minus what you owe. That's free. If that in number, Dave, is a million dollars or more than congratulations you're an everyday millionaire the average millionaire pays off their home in 11 years 10.2 years actually that's what it came out and the average millionaire lives in a 2600 square foot house that they've been in for 17 years ah ah no 15 000 square foot homes people well they're there but they're not necessarily they're multi-gazillionaires.

That's right. They're not simply a millionaire. I mean, if you get north of $10 million, you get different numbers. It's a different ballgame. Yeah. Yeah. But the typical person that we were talking to had between $1 and $5 million net worth. Oh, Dave, you know what else?

The whole school thing, this one here, 62% went to a public state university. No fancy Ivy League schools. school thing this one here 62 went to a public state university no fancy ivy league schools eight percent went to prestige schools yep a bunch of them didn't go to school not yep nine percent didn't go at all i mean so community colleges arrest so all the stuff that people typically grab out there as an excuse it's just that it's an excuse it's available we found them evenly distributed not perfectly but fairly evenly distributed across areas of the country um across race um across male female uh fairly not exactly no some of them were a little off um i mean there were some uh things in the racial with a princess that we found that were uncomfortable, that weren't great. But nobody was kept from winning.

There were people of every race in the study. But it's just the percentages versus the percentage of the population. And same thing in the areas of the country, like New York, California, real estate values drove more a higher higher um grouping of millionaires there so the white paper is out daveremsey.com it's 9.99 everyday millionaires is the number one best-selling book is you can buy them together for 24.99 at chrishogan360.com slash store or daveremsey.com jump in the store it'ssey.com, jump in the store. It's the National Study of Millionaires. The white paper is here. Get it.

There are challenges in our culture there are problems in our culture your life is going to have issues the message of the everyday millionaire book is not that things are perfect it is that you can do it anyway and people have overcome childhood poverty they've overcome racism sexism they've overcome not being accepted because of the area of the country uh that they're from oh they've overcome every possible thing in order to become millionaires we met them all didn't we't we? Yes, we did, Dave. And what's amazing is the mindset of these millionaires. 97% of them feel that they control their own destiny. And I think that says something, Dave,

about kind of the difference between people that have made a decision, sacrificed and worked a plan, versus people that are just standing on the sideline having an opinion about other people that have worked hard to have a plan. Well, in statistics, there's a thing called, is it causal? Does it cause it?

Okay. And the way you do that is you set a control group against it. And so we ask millionaires, do you believe you control your own destiny? Ninety-seven percent said yes, by and large. Not exactly, not perfectly, but the point being yes by and large and when we interviewed the general public we found 62 believe they do and so our mission with this book chris's mission with this book is to get that 62 up because the news media has been telling you a lie and the financial world and the political world has been telling you a lie

that you can't do it without them that's right and yet they're not sending you any money out of washington dc and neither is the financial community and neither are the media you are in control of your destiny what happens at your house is more important than what happens at the White House. It's a big deal. I like that. What you believe about things causes your action on those things, and that's called hope or lack thereof. And that's what this book is about.

It really is. And, Dave, even for people that grew up in families that, you know, I mean, some of us can have crazy in our families dave some everybody's got crazy in their family somewhere some of it okay no you're right i mean it's it's everywhere it's it's just part of it but regardless even if you grew up with crazy in your family you still get to decide and i think it's really important for america to think about your beliefs. What do you think is possible for you? Like, what do you think you can achieve?

That's really important to look at and to think about and to really make a decision for yourself that regardless of where you come from, regardless of your start point, you have the same opportunities in front of you that everyone else does. And, you know, Tony Robbins tells the story to illustrate this and i don't know the exact truth of the story or anything but the story is illustrative illustrative i don't think you can't say it it'd be help if i could say it but anyway you know um two twin boys are born and their father is in jail for robbing a bank. They visit them then as grown men. One of them is highly successful, high character, high integrity.

The other was in jail for robbing a bank. And they interviewed them, and they asked them, you know, how did you become so successful and such a man of character if your father's in jail for robbing a bank? His answer was, well with a father like mine how could i not become this they interviewed the kid in jail and said his brother just like him and said how come you're in jail for robbing a bank and he said with a father like mine how could i not end up in jail turns out the father was not the variable and point being the choices were the variable

how you define yourself based on your beliefs are the variable and that's not a uh fake it till you make it and that's not a uh positive thinking solves everything but it solves more things than negative thinking and that's what this stuff's about, you guys. And so, yeah, Chris has gotten a lot of criticism. I've gotten a lot of criticism for publishing this book and putting out this information from people who want you to believe that the only way you're going to succeed is if their political party sends you money or takes care of you.

Well, we don't feel the burn. I am a capitalist pig. I don't care anything about socialism. And, you know, if you need Bernie to fix your life, you're screwed. You really are. And if you need Trump to fix your life, you're screwed. You're going to wait on somebody else to fix your life. It's not going to happen.

Yeah, you just get to keep waiting. And eventually you look up and you're 10 or 15 years down the road and you really wish you would have made some different decisions i say wake up now decide now for you and your family yeah that's what we get to do we don't need a permission slip dave i don't need anybody to sign off on it for me to choose to dream bigger because you're a grown man i'm a full grown man you wait a minute you said that wait a minute you said you're the one said something about sizes i'm here america we get to choose and i want you to choose right now today

oh steve help us steve's in denver get us out of this. How can we help you, Steve? Well, I'm actually really excited to be talking to you. I've been listening to you for a long time. Sorry about the wind noise. I'm getting to my car, so it's quiet. Okay, thanks. I've been listening for a long time, and I have a pretty volatile income, mostly because of seasonal.

I'm in construction. And, you know, I've established a $1,000 emergency fund before and tried to bridge to the next step. But it's never enough because I'm always having emergencies. And I don't know how big of an emergency fund I need to weather my income. and i've got a huge debt stash i need to tax okay yeah steve here's the thing there's a difference between emergencies versus a lack of planning right and and and reality that is us looking at it and being honest uh but i'm going to tell you my friend after having gosh countless numbers of millions of people that have walked through it, the $1,000 is the first step. Okay? That is.

That's the first step. Now, how much debt do you owe right now? $217,000 with nothing to show for it. $217,000. Is that credit card debt? Most of that is student loans and divorce debt. Okay. Okay.

And what's your household income? Well, I'm pretty proud of that is student loans and divorce debt. Okay. Okay. And what's your household income? Well, I'm pretty proud of that. I did about 70 last year, which is twice what I've ever made in my life. Good for you. 70. Okay. So how volatile is your income? What's your worst month look like?

How much income? Well, I'm paid on a profit percentage, so if the company doesn't make money, I don't either. Yeah. So what's your worst month? Do they have zeros? I've had zeros. Okay. All right.

So it's very volatile. All right. So you need a different account other than an emergency fund. Okay? Okay. Sharon and I were in the same situation when we first started doing this. We called it the put-and-take account or the mountain and valley account. It's not your emergency fund.

It's the account that covers for your volatility. Okay. What you need to do is calculate what it takes to exist for a month. So if you had zero for one month month you'd have the money to exist i'm going to make up a number let's call that three thousand dollars right okay so after your one thousand dollar emergency funds in place before you start your debt snowball you need to build a three thousand dollar put and take account you put it in one month yeah one and that covers one month if you have volatility so if if you have a zero month, you use that money to pay your bills and eat.

Okay. Then next month, you've got to put that back before you restart on your debt. Okay. Okay, because you're going to have some zero months, and you've got to have the money, right? But that's not an emergency fund. This is a predictable event. It's not an emergency. And so in a sense, it's kind of like Christmas is coming.

This year it's in December. You need to save towards Christmas. In your case, we're going to have some zero months. We have to budget for zero months and have some money for zero months as a part of our budget. That's what the $3,000 is. It's not really a savings account. It's more of a budget item that's a put-and-take account that smooths out your income then. The chances of you having two zero months in a row are zero because you're probably

looking for a new job then. Right. Yeah, that's where you are. So that's how you do it. You can do this. And he can. And Steve, with your education level and your skill set, what you need to do is to get focused on ramping up your income. So you can get serious about getting this debt out of your life.

If you get that out of your life, you give yourself a raise. You're on the track. You've already doubled it. Best year you've ever had. So that's a good track. If you're recovering from a divorce, you can do this. Chris Hogan, thanks for dropping by to talk about the white paper and the everyday millionaire. All at DaveRamsey.com.

Thank you, Dave. Good times. This is The Dave Ramsey Show. Hey, it's Blake Thompson, Senior Executive Producer for the show. You know you can listen or watch anywhere with the Dave Ramsey Show app on your smartphone. Catch the full show or watch the highlights and check out Dave's upcoming guests. Head to the app store and download it today.