The Ramsey Show - App - It's Time to Address Your Emotional Relationship with Debt (Hour 3)

Episode Date: June 27, 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. This is your show. Thanks for joining us. Open phones at 888-825-5225. That's 888-825-5225. John is with us in Baton Rouge to start off this hour. Hey, John, how are you? Hey, how are you doing, Dave? Better than I deserve. What's up? Hey, so I got a quick question for you. So I recently just graduated college, and I was able to actually secure a good job starting around $70,000 a year.

Good for you. What's your degree in? Aviation maintenance. Way to go, man. You're killing it. Good for you. Thank you. So one question I have is I've never really been good with budgeting.

I've tried really been good with budgeting. I've tried budgeting multiple times. And with me now starting to get all my career paths, especially with the amount of money I'll be making, I'm wondering how I would be able to stick to my budget since I wasn't even able to stick to my budget at my minimum wage job. Mm-hmm. Okay. Well, there's not a budget technique that makes you behave. You have to decide you're going to behave. Okay? It's not rocket science.

All a budget is is you're going to write down, before the month begins, where every one of your dollars is going to go. You're going to give every dollar a mission, every dollar an assignment. Now, if you're an aircraft mechanic, you have to be, by definition, a process-driven guy. Yes. If you do not follow proper processes, aircraft crash because of you. Right? Yes, sir. And so you don't have a choice you can choose

to follow the process and then you fix the engine or the landing gear or whatever the element is you're working on properly because you chose to follow a prescribed process you don't get to free form when you're an aircraft mechanic. You don't get to make it up as you go. You have to know the steps and follow the steps. Agreed? Correct. So use that same discipline to keep control of your personal life that you keep from crashing aircraft.

And so it's simple as this. Before the month begins, we're going to write down where every one of your dollars are going to go. An easy way to do that is the EveryDollar budgeting app. It makes it easier to do because it's automated in that as you fill it out, it calculates for you. But it's as simple as this. Have you yet gotten a paycheck? Not yet. I'm right now going through

the process so i need to get security clearance because it is technically a government job okay all right so when will you get your first paycheck uh probably within the next two months okay what are you eating on in the meantime uh right now i'm still working at my current job uh that's making around 15 and i'm, and I'm still working with my parents. So you think you're going to make $70,000, and so $60,000, $55,000 take-home pay probably, something like that. So let's just make up a number, okay? Let's say that your take-home pay from your new job is $4,500. It's probably a little more than that, but let's just make it.

Let's call it $5,000. It's not that either, but let's just call it $5,000, okay? Do you know how often you'll be paid? Once a week? Every week. Okay. Every week. Okay, and so that would mean that you're getting about $1 dollars a week roughly okay so in the beginning of a week

you get a thousand dollars and and every month you would get either four or five thousand dollars depending on how many fridays there are so you look at this coming month and you say i'm going to get four one thousand dollar checks one thousand twenty three23 or whatever they are, right? I'm going to write it down how many, and I know exactly how many of those checks I'm going to get this month because I can look at this month's income and this month's calendar and know what I'm going to make. So this is what I'm going to make, and then you put that at the top of the list for the whole month, and you say, say okay for the month this is what we're going to make and i'm going to give every one of those dollars a name first thing

i'm going to do is pay rent and then i'm going to buy food and then i'm going to pay my lights and water and then i'm going to pay off start paying all you know having gas and insurance for my car hopefully you don't have a car payment uh okay right now and we're going to start working then we're going to start working to get out of debt but every one of those dollars for the whole month has a name and then you can do it for the week this week the one thousand dollars goes to this it goes to these these five things or these six things or wherever you're going to put it but you just give those dollars a name before the month and then once you've set that in place, that is your manual. That's your operating manual.

And you follow that manual. It's the boss of you. Just like when you open an aircraft maintenance manual, it's the boss of you. You have to follow those procedures or you're going to crash an aircraft. And so once you've written this down and every dollar has an assignment, if you spend money that is not on that game plan, you're going to screw up your process. You didn't follow the manual. The good news is you're writing the manual every month.

You give every one of these dollars an assignment every month before the month begins. And when you do that, then you follow it. You give every one of these dollars an assignment every month before the month begins. And when you do that, then you follow it. And if you'll treat it just like it's an aircraft maintenance manual and say, I wrote the manual and I'm going to follow that. If I want to change it, I can change it. But if I'm going to raise one category, my entertainment category by 100 bucks, I've got to lower another category by 100 bucks or categories because i don't have that money i've given every one of these dollars an assignment and i'll be in the hole and so don't you know you you have to intentionally screw up then once you've laid it all out and so that's what you want to do you want to lay it out and stick to the plan you're the boss of the plan until the

plan is done then the plan is the boss of you and it's like when you're four years old your little brother said you're not the boss of me it's that kind of a thing that's the way you look at but it is the boss of you once you get it in place and those of you that are married you know the two of you are setting the plan in place and then the plan is the boss of both of you you are agreeing you're contracting with each other that this is what we're going to spend the money on it is permission to spend in those categories that you've pre-agreed it is permission denied to spend in the categories you did not pre-agree and And if you're married, you have to go back and have an emergency budget committee meeting to shift money around if you want to move money around.

And you don't do that after the fact. You do that together before the fact. And in your case, what you're going to do, John, is you're going to give every one of these dollars a name, and then that becomes your manual. That becomes your money manual, just like you've got an aircraft maintenance manual. And you follow it step by step by step. And the only way you spend money that's not on there is if you go back and change your own plan and adjust it.

The good news with EveryDollar is it's on your iPhone, so it's right there with you all the time. And you'll know right where you are on your budget. And that changes everything. And there's almost 5 million people using the EveryDollarBudget now. It's the fastest-growing budgeting app in America, well, or worldwide for that matter. This is the news, guys. You need to stop and listen. The Fed decided not to raise interest rates.

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Their team of experts will give you more clarity about your options and more peace, knowing you're saving significant money in the long run. Call 888-LOAN-200. That's 888-562-6200 or churchillmortgage.com. Christine is with us in Salt Lake City. Welcome to the Dave Ramsey Show, Christine. Thanks for taking my call. Sure, what's up?

Okay, I have apparently a unique situation. My husband's employment was restructured about a year ago, and due to the nature of how they get paid, we knew that we'd go four to six months without seeing an income, which he has fluctuating income. So rather than just a $1,000 emergency fund, we have a three to four month so that we can pay ourselves steadily every month.

And then that refills when he gets paid. Unfortunately, that's gone most of the year, and we've been able to ride it out. But when the employer started realizing how bad it was, and some people were drawing from 401Ks and other things, they didn't offer. They gave everyone a $5,000 advance. You didn't have an option of turning it down. It was given, but the repayment is expected. We also have insurance premiums that the employer covered and has been carrying,

and those are being repaid as income comes back. My question is, do we put those premiums or those debts to the employer in their place within our snowball, or do they take a priority, kind of like the IRS would, so that we don't offend employment? Offend? We don't want to do anything. Like, if they fall into our snowball they're number six and number eight so they're down a little ways um and getting paid off yeah but do they do they not have a repayment schedule no they do not they loaned you money with no terms correct at point, there's no interest being charged on it.

They've been carrying that because it's taken a lot longer to get payments coming back in from clients. What does he do for a living? He's an attorney. How large a law firm is this? They're a pretty good size. I'm confused how an attorney goes months and months and months without making money. Because it's considered a merit-based income, so we're paid on commission, and some of the clients that they work with can take up to six months to pay their bills.

So he's brand new? The firm is, yes. Well, it's now a year old. But my husband's been working as an attorney for nine years, going on ten. And so what does he normally make in a year? Last year was $100 before taxes. So if he's not going to get paid for six months to a year, why didn't he just start his own practice? He's not comfortable doing that at this point i'm not comfortable

i'm not comfortable working without getting paid nor am i he is getting paid we've gotten paid for the last three months um sounds like this law firm is dramatically undercapitalized it feels that way from a spousal perspective no i think that's a math perspective yeah i think it's a spousal perspective um so i'm not worried about when i'm going to repay these jokers um i've just put them in the debt snowball when you get to them you get to them uh but the i am worried about his career. Yeah. There's a lot of red flags and flares going off and bombs dropping around this story that are scary. Because, you know, if he was in a specific type of law with one specific client or something,

and he's making $300,000 a year, but they only draw down on this client twice a year or something, and he's making $300,000 a year, but they only draw down on this client twice a year or something, I would just say, let's go restructure the payment terms with the client. But it sounds like their business model is screwed. I'm concerned about that. Yeah, I mean, we work with attorneys all the time. I mean, not only as their customer, but also, you know, coaching them on their personal finances. And I just don't know any that make no money for six months. It's just very, very weird. So I'm concerned about that.

But as far as the answer to your question, where would I put the unsolicited advance that is interest-free, I would put it in the debt snowball where it belongs. And if they get offended about that, they're the ones that advanced it with no terms. There's no term sheet on this. They didn't say you have to pay this back in six months. They didn't say, do you want this? They just issued the check.

And this is just strange. Strange, very strange. So, yeah, i'm not worried about whether they're offended because i'm getting ready to leave them anyway if he if this doesn't turn around he that you know a couple couple more months of this crap and you guys really need to make a decision ray is on the line in nashville hi ray Welcome to the Dave Ramsey Show. Hey, Dave. How are you? Better than I deserve. What's up? Well, I have a 501c3. I am personally debt-free, and so is the business at this point. We help veterans with PTSD, and we have a 30-acre farm out in Gainesboro, Tennessee.

Wonderful. And right now, we're not bringing anybody in, except we're bringing animals in right this moment. But the veterans will come out there, stay for three months, have different activities set up for them. They learn life skills, how to build, how to do several things. Right now we're trying to clear the land, though, and it's being pretty costly. That being said, we're trying to apply for grants,

but the grant writing is so difficult we're going to have to hire a lawyer or somebody that does write grants. Right. And nobody right now we're able to get pro bono. And unfortunately, I'm retired military. I'm on a fixed income myself. And all my money's been going. I have four kids and a wife.

But all my money, spare money, has been going into feeding the animals. It cost me about $1,100 in order to keep everything going with the farm on its own entity. And then plus I have my own house bills and everything else. So without taking out a loan, I'm trying to make this thing survive. And it's just been, you know, we're getting donations and everything like that. And it's been going fairly... Not enough. It's just not going as fast as what needs to be because I've got people knocking on the doors begging for help. Yeah, you don't have enough coming in in donations.

No, I had an $8,000 donation, and we had a $4,000 donation. And we have another restaurant that's trying to donate a vehicle for us to fix up and sell an auction. So here's the reality of non-profits and ministries that are non-profits. You've got a wonderful heart, you've got a wonderful cause, but a non-profit that does not make

a profit is closed. And so you cannot personally support this ministry until you have taken care of your family. And you cannot go into debt to keep this thing running. You have to fix your model. And your model is you have to bring in more than you spend. Agree?

Right now we're just selling T-shirts and simple items like that. That's fine. I don't care where it comes from, but you have to face the reality that your good intentions and the wonderful cause that you're serving is not enough. Right. You have to bring in more than is going out. This is going to end very poorly otherwise, and it's going to be not only a financial

problem, but a broken heart. Yours. And what about the monies that we've already received? If anything does go awry and I'm not going to be able to afford doing all this. They made a donation to a nonprofit that failed. You're not liable for that. That's not a debt. It was a donation. But you need to get your donation model working and your revenue generation off the T-shirts or whatever model working and the grant writing going. stuff happening on the income side of this equation for this ministry, for this nonprofit

to prosper, to be able to serve the veterans that you want to serve, because otherwise the animals are going to eat it and it's going to be over. That's what you described. So we've got to get the income up of donors, grants, and whatever else. Thank you. In the lobby of Ramsey Solutions, Ed and Sarah are with us. Hey, guys, how are you? Hey, Dave. Welcome, welcome. It's good to have you all.

We're so happy to have you. Thanks for being here. Thanks. Appreciate you. Where are you? Hey, Dave. Welcome, welcome. It's good to have you all. Thanks. We're so happy to have you. Thank you. Thanks for being here. Yeah, thanks. Appreciate you. Where are you guys from? Greensboro, North Carolina. Oh, nice.

Fun. Well, welcome to Nashville and all the way over here to do your debt-free scream. Yes, sir. Love it. How much have you paid off? We paid off $37,000. Very good. I love it.

Very fun. And how long did that take you? It took us about two years and a month, but once we started getting gazelle intense, we paid off about $28,000 in 13 or 14 months. Gotcha. Very cool. And your range of income during that two years? It was $40,000 our net take-home pay. The whole time?

Yeah. Okay. All right. Very cool. Good for you guys. What kind of debt was the $37,000? It was my student loans that my husband shared with me once we got married. That's true. So you came

with a bill. It's all student loans. That's all it was. Just Sally Mae. Yeah. So we had to kick her out of the house. Yep. Put the old woman on the curb. Yes. I like it. I like it. I love it.

So how long have you guys been married? Three and a half years, almost. All right. So a year and a half into marriage, something happened, and you went game on. What was that? Well, what happened was we did have a credit card, and I asked Ed if we could use it. And he said, sure. And so we used it, and then I got us into debt the first time. Um, and then I was like, Ed, can I have one more chance?

I really, really want the points. And he was like, okay, one more chance. About six months later, I overused it again. And he said, no more. So I was like, okay, Ed, can I have a third chance? And he said, well, first we're going to go through Financial Peace University. That's true. And then you can use it. But then he would know once we did Financial Peace University that I wouldn't want to use a credit card anymore. He tricked you. Yeah, but thankfully, I'm very thankful.

So, Ed, how did you know about Financial Peace University? I'd grown up kind of hearing about you through family. I'd heard about you through a lot of friends. And yeah, so I'd heard a little bit about your program, kind of was vaguely familiar with your teaching. So whenever we kind of came into marriage, I kind of had this strong sense of like, hey, we need to get out of debt eventually. I know I'm marrying into about $36,000, $37,000 in student loans. For me, things really started changing. And so we had the opportunity to lead a six-week international mission trip with the missions organization that we work with.

And so I was the operations director for that, which I kind of joke is like being an accountant and a travel agent all at the same time in addition to regular ministry. And I remember thinking at one point through the summer, I was like between flights and travel arrangements and everything for like for 15 people for six weeks going to the opposite side of the world. I was tracking a budget of like $50,000. And I remember having this kind of epiphany moment about two years ago, right before we started getting gazelle intense. And I was like, I'm paying way more attention to how I'm

spending this money purely because I realize that it's not my money and I just started really reflecting on the spiritual aspect of that of you know the reality is none of my money is my money and so how am I stewarding that and so for me through that process it kind of just sort of woke me up to how I was really actually stewarding my own money once you uh for a person of faith like you guys and me i want you say it's not mine i'm managing it for someone else and you really mean it it changes the way you handle it yeah instantly yeah because you would never mishandle those people's money yeah right and once you go this is god's it's not mine you can't mishandle it it changes it it puts a different weight on you a different sense of responsibility.

Even when we're talking with our kids about, you know, our estate plan, they're your age, right? And we're talking about that. I go, this looks like a lot of money, and it kind of feels like you hit the lottery, but you really didn't. Really, what you just got was a really heavy burden. You have a lot of responsibility before God to manage his stuff. When I die, that's it. And so you need to look at it that way. And they kind of all went, ooh, that's true.

But it does. It changes. That paradigm shift changes everything. That's very cool. So you knew to go through Financial Peace University, and you knew you could do away with the credit card by getting her in there, you tricky devil you. So you guys go to the class, and what happened in the class? Well, what happened was the very first video, you know, you're teaching from scripture.

And so you had my trust. So thank you for doing that. And then we watched the fourth video, the dumping debt, which I thought was going to be like a strategic way on how to get out of debt, which it is. But it's more so about breaking off the emotional relationship with, with debt. Yeah. Because you, when you're teaching it,

you have, you are trying to work to engage all of the senses of the people who are watching. Like you have the visual in the background with the gazelle being chased by the cheetah. And then you are jumping up and down on stage trying to get people's attention your voice is loud emotions are high i cry every time i watch it wow and because i realized like wow dave is trying to wake up america to be a good

steward of the money that we have because this country is in a lot of debt and has a lot of wealth to give to needs all over the world, including the Great Commission. So anyway, I was hooked and I was like, we got to get out of debt. You know, all of this money, we're living on a really, really small income right now. And once we're debt free, we can like give money to missionaries that we want to partner with. But one thing I want to share is about five months into this gazelle intense time, I was kind of getting discouraged. Because you want to give up a lot of times.

Sure. But within our ministry that we work, we're career missionaries. And so we have partners who partner with us financially on a monthly basis. And we found out that one of our ministry partners actually passed away, but her giving continued past her death. It's still continuing today? It's still continuing, and her son is managing her money. But her giving will not discontinue because she was such a wonderful steward of it when she was alive. And I'm like, I want to be her, you know? So that made me continue like being

disciplined whenever I would get, when I lose vision. When you think of her, no whining is allowed, right? Yeah, that's true. Yeah. So. Wow. Very cool, you guys. So what do you tell people the key to getting out of debt is? I think for me, a big key was getting not only on a written budget, but actually tracking our spending. I think we, for the first few years, year, year and a half, two years of our marriage, we did a written budget, but we never really tracked our spending. So I heard somebody say recently doing a budget, but not tracking your spending is kind of just like doing a financial autopsy every month. And so I really resonated with that because that's essentially what we were doing.

And so for me, numbers don't really lie and it's hard to argue with numbers. And so getting on a written budget that we checked, tracked our spending with consistently was huge for us. Yeah. And I would say, honestly, like sincerely a lot of prayer because it takes a lot of effort to be disciplined, especially when you're not disciplined and you're using the structure to become disciplined. You know, resetting that whole section of your life. Yeah. A lot of prayer and a lot of like supported encouragement from our family and friends. But also you need a reality check. People who don't take that seriously or who want to be lackadaisical, they really need a reality check. You're actually broke. No,

you can't go on a vacation. You're actually broke. So lots of reality checks and encouragement and prayer. Wow. Well done, you guys. Proud of you. Very good've got a copy of Chris Hogan's retire-inspired book for you. That'll be the next chapter in your story. Thanks. Become millionaires and outrageously generous. You get to become that lady someday. Oh, yeah. That's very, very cool.

While you're alive and even after you pass. Very good stuff. All right. It's Ed and Sarah Greensboro, North Carolina. $37,000 paid off two years and one month, but did most of it in the last 13 months. Did that on $40,000 take-home pay. Way to go, you guys. Count it down.

Let's hear a debt-free scream. Ready? Three, two, one. We're debt-free! Well done, well done, well done. I love it. Congratulations, you guys. Very, very, very proud of you.

Wow. Beautiful stuff. Good words in that one. Good words. Thoughtful people. This is the Dave Ramsey Show. our scripture today second corinthians 8 21 for we aim at what is honorable not only in the Lord's sight, but also in the sight of man. Thomas Jefferson said,

Honesty is the first chapter in the book of wisdom. Hmm, good stuff. Our question of the day comes from Blinds.com. They have a 100% satisfaction guarantee that means even if you mismeasure or pick the wrong color, they'll remake your blinds for free. With Blinds.com, you get free samples, free shipping, and with the new promos they run every month, you're going to save even more. Always put in the promo code RAMSEY and you'll see the best possible deal out there. That's the magic word, RAMSEY, at Blinds.com.

Today's question is from Dustin in Georgia. What are your thoughts on a Gerber baby life insurance plan for our new baby? It would be $22 a month for $35,000, and that doubles when he turns 18. Is this a good investment? Okay, let's just say out loud that you are discussing buying a financial investment from a baby food company. Let's just say out loud that you just said that. Does that not make you giggle just a little bit how stupid that is? I mean, really?

You're going to buy an investment from a baby food company. It's a whole life life insurance policy on a baby. So let me help you with this, Dustin. It's stupid. Really, really stupid. Like, don't do it. The money, okay, let's try this. Let me just do this.

$22. Put this in the calculator because I just can't stand it. Okay, and 18 years. It was 18, right? Yeah, okay. $22. Put this in the calculator because I just can't stand it. Okay. And 18 years. It was 18, right? Yeah. Okay. Let's do this again.

18. Put it all in the calculator here. And let's see. So, okay. If you were to invest the $22 in a decent growth stock mutual fund per month from 0 to 18. Now, let's go back. Remember the Gerber whole life life insurance rip off baby plan from the baby food company.

Says if you put $22 a month in you get $35,000 in life insurance and it doubles when he turns 18. They didn't say that you could cash it in for $70,000. They said you'd have $70,000 worth of life insurance, which, let me help you with this,

that means you're going to have about a $10,000 or a $12,000 cash value, roughly. I'll be off a little bit, but I won't be off much. However, if instead of getting ripped off, you were to put the $22 in a decent growth stock mutual fund for the same period of time, you would have not $ $22 in a decent growth stock mutual fund for the same period of time, you would have not $10,000 or $12,000, not $70,000 worth of life insurance, but $125,000 on average with average mutual fund growth rates. Hmm.

Interesting. If I'm half wrong, you still came out way ahead. So, the answer is never buy life insurance as an investment. Let me say it again, because some of you get confused, because you missed the part where I said never. Never buy life insurance as an investment. The math never works. And never is like never works. And this little Gerber policy is an example of that as a matter of fact it's one of it the

math is even worse on it than the typical rip off adult whole life policy i mean you can get ripped off by prudential you could get ripped off by new york life you could get ripped off by northwestern mutual you could get ripped off by a lot of these whole life companies if you want to and you wouldn't be ripped off as much as you would by Gerber mathematically here. Now, you'd be putting more money in, so you'd lose more money. But mathematically, percentage-wise, the $22 will turn into more than it would have if you were to put it with those other companies. But, you know, sucks still sucks at the end of the day. It's just a matter of how bad something sucks.

And this is all bad. Never use, never use life insurance as an investment vehicle. It never works for you. It always comes out better if you do your investing in an investment. Yeah, that's why they call it that. And if you need life insurance, just buy some inexpensive life insurance that is life insurance only, like term life insurance, in other words. And that's what I have done for 30-something years.

And it's worked out for me. I'm a multim-millionaire and that's one of the reasons I am because I didn't give my money to these rip-off whole life companies and my babies were not insured by Gerber Life a baby food company selling life insurance products really right there should have been a hint. Okay. Kind of sometimes if you're looking at investment products or money things, if you look at where it's advertised and what's advertised around it, it will sometimes tell you that you're not supposed to do it. I'll give you another example. Let's pretend that your latest financial thing you're wondering about is advertised on television.

And the advertisement running next to it is a self-insert catheter or a walk-in bathtub or a snuggie that tells you that the life insurance or the the the financial product being advertised is crap and so let's think about who advertises right next to walk-in bathtubs self-insert catheters and snuggies uh reverse mortgages with the funds or magnum pi yeah and who else advertises there um what's that guy well i can't remember he played in a mel gibson movie that was a really cool movie he was the bad guy he got killed he was the medium level bad guy uh but he does the gold coins thing you know with the bad guy. He got killed. He was the medium-level bad guy. But he does the gold coins thing, you know, with the bad teeth guy. Yeah.

He's got, like, caps on his caps. I can't think of it. He's an actor, but he does the gold coins event. He does the gold coins. So the gold coins is right in there. Yeah, it fits right in the mix here. What else is advertised there? Hmm.

Oh, we'll get you out of your income taxes for free. We will get you out of your income. for free. We will get you out of your income. You don't have to pay income taxes. I can show you how to get out of your income taxes for free. You've seen that one? Is the IRS hounding you? You've seen those ads? What are they advertising?

Right next to Snuggie, right next to a self-insert catheter, and right next to the walk-in bathtubs. So that tells you right there the quality of your financial products. And, you know, Gerber Life is right there in that same bunch of people, in that same neighborhood. No, they're not advertising on the cable TV. But think about it. I mean, what are they doing?

It's a baby food company. Please. Please. Really. I mean, you buy your car there, too? I mean, I got a car. I got a Gerber Life car. I got a Gerber Life car.

I got a Gerber Life blue jeans. Really? I mean, you just don't think of them that way, do you? I mean, I don't think the baby food's bad, but maybe they should have stuck to that. Here's the trick. They probably make more on the life insurance. It's really profitable because it's crap. Oh, it's really profitable because it's crap oh it's really profitable because it's crap so here's the thing no we don't do gerber life life insurance we don't do any life insurance

that is an investment because here's the deal one more time let's walk through it a hundred dollars a month going out the door for whole life life insurance for those of you that are an adult. Now, we did $22 a month here and showed you how bad it was a minute ago. You can buy the same amount of term life insurance for about $5 a month that you could spend $100 on for whole life. That means $95 is going into the quote-unquote investment side to build up your cash value, which has an average rate of return with whole life of 1.2% on universal life of 4.2% and on variable life 7.3% after fees. These are outside studies that I'm quoting that have absolutely nothing to do with you in the life insurance business.

Now, they tell you all kinds of other rates, but that's the actual after fees rate of return that you can expect. And when you finally build up a cash value because you put $95 out of every $100 in there and you die, they pay the face amount. They pay the life insurance amount. What happened to your savings account? They keep it. It's the payday lender of the middle class, people.

It's a piece of garbage. Stay away from cash value, life insurance of any kind, investment life insurance of any kind. Never use that as an investment. We'll be back with you before you know it. In the meantime, remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace,

Christ Jesus. This is James Childs, producer of The Dave Ramsey Show. Did you know you can now listen to The Dave Ramsey Show on Pandora and Spotify? For all the ways to watch and listen, check out our show page at DaveRamsey.com slash show.