The Ramsey Show - App - It's Time to Get in Attack Mode (Hour 1)

Episode Date: December 24, 2018

The show about you

🎵 🎵 Live from the headquarters of Ramsey Solutions, it's the Dave Ramsey Show, where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. I am Dave Ramsey, your host. This is your show, America. Thank you for joining us. Open phones at 888-825-5225. That's 888-825-5225. Chance is with us to start off this hour.

Ardmore, Oklahoma. Merry Christmas, Chance. Hey, how's it going? Merry Christmas. Better than I deserve, man. How can I help you? Well, I've got four rental properties, and I've been listening to your show, and I've been thinking about kicking around selling one of them to pay off, you know, what I owe on them.

So if you sold one, you could clear the other three? Well, most of it, yeah. I'd get it down to about $ 000 as opposed to 130 i got a really good deal on one of them i bought it in foreclosure and i remodeled it myself and i stand to make the most gain out of it but it's my you know i owe the most on that one too i figured it would have been the best one to call. Yeah, sounds like a good move. The good news is it sounds like you know how to buy property at a good price,

which is half the battle when you're buying real estate. You've got to buy a good deal on it. You know how to do that. And so it's not like you'll never do another deal again. When you're debt-free like this, you'll be able to save up cash very quickly and do the next deal in cash. Yeah, that's what me and my wife have been thinking. You know, just get this paid off and then let it accumulate enough money

to just buy a house instead of borrowing the money to get them. Exactly, and then the next time you do that, it'll be easier, and then the next time it'll be easier because every time you do that, you've got all that rent. I mean, these things, I've got a bunch of them. They cash flow like a bandit when there's no debt on them. I mean, you make some serious bank on them. So that's a good deal.

What do you make a year? What's your household income? Well, right now I'm at about $60,000 with my occupation. And then, you know, I have my rental business that's on the side that takes care of itself. And, you know, I try to keep them separate. Okay. Does your wife work outside the home? She does, but she is pregnant with twins right now, and she's quitting in about four months.

Okay. For good? Probably so, yeah. For the foreseeable future. Okay, cool. That's cool. Well, I mean, if you've got 40 left on them after you sell this one, probably going to take you a little while to work your way through that 40

with the numbers you're giving me. But as soon as you do, then you'll save up and buy the next one for cash and save up and buy the next one for cash. And it's exactly what I did. So I can't recommend you to do anything other than what I did. That would be hypocritical, wouldn't it? And I truly believe it is the best and the most peaceful way to own property. It just changes the way you landlord.

It changes the way you do everything. You don't think about it. Because I never sell anything. I just buy them. I mean, the chances of me selling a house or a piece of my real estate, very few times do I sell a piece of real estate because I don't need to, you know. It's pretty simple. And that, you know, that's just a different position to be in.

And I'm not trying to squeeze every nickel out of every little thing. They make plenty of money when you don't have any debt on them. Chris is with us in Evansville, Indiana. Merry Christmas, Chris. How are Indiana. Merry Christmas, Chris. How are you? Merry Christmas, Dave. Thanks for taking my call. Sure.

What's up? I have a question. Years ago, I worked with a company that switched over and sold out to an ESOP. And I have no money invested in it myself, but before I left the company, I became vested. Right. No money invested in it myself, but before I left the company, I became vested. Now, all that is still sitting there, and here before long, the employees or former employees are going to be able to withdraw. Now, they said that we can withdraw at $5,000 increments. I want to know if I can take it all and roll it into something, or should I leave it set?

What's my best option? You can't roll it. It'll be income when you take it. But I would take it, and here's why. This is a small company. It's not publicly traded. It does not have an exchange for this stock. It's very what we call illiquid.

You can't get to the money. Until now, you've not been able to get to it at all. And you have absolutely no control or detailed reporting until now you're not going to get to it at all and you have absolutely no control or or detailed reporting over how this stock's going to do i mean if it has done extremely well and the company is exploding and is beyond belief blowing your mind i mean it's a little apple computer you know or something like that and you want to leave a little bit in there just for fun that's fine but uh but i don't do single stocks and i really don't do single stocks and small privately held companies that i have

absolutely no control over that would be you know because you're just you're asking for trouble you have no idea what's going to happen there and no say so and can't get out if they start doing something that you don't like or you know it just so i'm taking it all i'm gonna pay the taxes and i'm gonna do some investing, move on my merry way, and call it a bonus from my former employer, which is exactly what it is now that you're vested. And just pay your taxes, move it off into an investment, or move it on to whatever baby step you are in now.

I'd take it all personally. If you want to leave a little just for fun, just because you're just enamored, that's fine, but I wouldn't. Jill is in Salt Lake City, Utah. Hi, Jill. How are you? I'm good. Merry Christmas, Dave.

Merry Christmas. How can I help? So my husband and I are trying to decide if I should go back to work next year. We just had a baby in April, and I love being home, but we're on baby steps, too, right now, and we're just trying to pay off debt as fast as we can. So we're trying to decide what to do. Gotcha. What does he make? He makes about $60,000 a year. Okay. And how much debt do you guys have in baby step two?

We have about $60,000 in student loans, and then we have a car, and we have about $13,000 on that. Okay. Is that all? That's it. Okay. All right. And what did you used to make when you worked? I was a third-grade teacher, and I made about $40,000.

Okay. All right. Cool. All right. Well, I don't mind you being at home. You just need to – my wife, Sharon, stayed at home full-time when our kids were growing up and, for that matter, has not had a quote-unquote job outside the home. She works a lot. She volunteers in all these charities.

But, you know, has not had a quote-unquote earned income outside the home since our 32-year-old daughter was born. So I'm fine with that idea. You just need to know what your tradeoffs are, and you need to make them very carefully. Okay, you have $73,000 in debt. Making $60,000, how quickly do you pay that off? Well, I work from home part-time right now, and I bring home about $1,000 a month, and we've been paying off about $2,500 a month in debt every month.

Okay, that's good. Are you going to continue to do that? Yes. Okay. All right, so if we take $73,000, right, and we say $2,500, that's a, what? I did something wrong. Is that three years? No, that's not three years.

Yeah, it's about that. Yeah, it's about three years. Okay. That's fine. As long as you all are willing to do that. But you're on a tight budget. And by the way, while you're at home, you're a home economist. And that means we're cooking from scratch, which is cheaper.

And better for you, too, by the way. And we're doing consignment sale clothes. And we're doing couponing. And we're doing everything else we can to save money at home while you're at home being a mom. That's part of the equation. This is the Dave Ramsey Show. One question I get asked all the time is, do I need life insurance? Listen, the whole point of life insurance is to replace your income for someone who counts on you. So if you have a spouse or you have kids, yes, you need term life insurance.

It's the only way to protect them until you're out of debt and have built up your wealth. You're only digging a deeper hole if you waste money on cash value plans since it robs you of the ability to make real progress. And that's why I send you to Zander Insurance, and I have for 20 years. That's where I get all my insurance, and they only offer the plans I recommend. It is not expensive. It's not complicated. And Zander will be there as your guide every step of the way.

Visit Zander.com or call 800-356-4282. You need to get this taken care of. I can give you the advice, and I can tell you where to go, but it's really up to you to take that important step to get your family protected. That's zander.com or 800-356-4282. America is with us in Jackson, Mississippi. Merry Christmas, America. How are you? I am good. How are you, Dave? Better than I deserve. How can I help?

Just got a quick question. I have no credit card debt, and I know it says paid off the smallest to the largest, but my smallest happens to be my mortgage. So my question is, and I've been paying extra on the principal now for about a year. What's the

balance on your mortgage? $35,000. Okay, and what other debt have you got? I only have a car payment that I wish I did not have. You owe more than $35,000 on your car? I have $36,000. Good gracious. What is your income?

Yeah, super tax. What's your household income? $55,000, single mom. Okay, you've got a car you can't afford. I know, and I wish I could get rid of it. What is your income? Yeah, super tax. What's your household income? $55,000, single mom. Okay. You've got a car you can't afford. I know, and I wish I could get rid of it. Why don't you? I looked at selling it, and I would be upside down, probably $14,000.

Mm-hmm. Which is why you don't need to own a $36,000 car making $55,000. Exactly. Oh, I know now. I'm all in. Dave Ramsey, all in. Okay. Who said you were 14 upside down?

The dealer? Yeah, when I asked to sell it back to him. Yeah, that's a wholesale. So you're probably only about $10,000 upside down. And then what other debt have you got? Just my student loans. How much are you owing them? I owe $78,000 on those.

Okay. Now, my question, I know you say don't consolidate, but they've been consolidated. I mean, education, and they supposedly do the loan forgiveness after 10 years of making payments. Yeah, but we don't want to wait 10 years to be out of debt. So what I would do is get your car sold and uh you have to borrow the difference and get your little car and uh and that's going to get that down to i have another pay-per-car oh you do okay let's borrow the difference and get you a little loan to cover the difference and get out this car payment which will accelerate how fast you can get the student loans paid off and then

just i just keep paying your minimum house payment And then put your extra principal on these student loans. They need to go away. I would not have a 10-year plan to be debt-free. And I would not be driving a $36,000 car, even if it were paid for, making $55,000. And here's why. They go down in value so fast that it's dragging. It's trying to run a ski boat with an anchor behind it. It's just you're trying to drag this anchor along while you're trying to build wealth. And it's just the opposite, exact opposite of what millionaires do.

And what we're all about is doing what millionaires do. Rebecca is with us in Effingham, Illinois. Hi, Rebecca. Merry Christmas. Merry Christmas, Dave. I wish I was calling with an exciting question, but I'm not. Basically, my husband and I were doing the baby steps. We were on baby step two, and we were talking about bonuses and stuff,

and I thought we would be able to be done maybe at the beginning of the year. And then he kind of somberly told me, I have something to tell you, and he had actually still been using a credit card all year that he didn't tell me about. So you guys were in agreement, you thought, to work your way out of debt. Meanwhile, he's in the background lying and using a credit card. Is that what you're telling me? Yes. For how long?

Which I know is about a year, maybe nine months-ish. So this wasn't really passive in that we just weren't talking about it and I didn't know about his debt. No, we're working a get-out-of-debt plan, and he's just straight-up lying in the background. And I wasn't, I was asking about every month because I wasn't, we weren't meeting. So obviously we weren't as good as intense as we should have been.'t we weren't meeting so obviously we're like as good

as well intense as we should so you weren't working a plan we i thought we were working the plan i thought we were at least surviving and maybe not right we were not working it obviously how we should okay i'm a little bit confused you know if you're working a plan if you're working a plan you're hedging like crazy you're not know whether you're trying to save his hide or if you're working a plan, you're hedging like crazy. And I don't know whether you're trying to save his hide or whether you're just trying to, I don't know what's going on. So let's, if you had a solid agreement, we are getting out of debt. We're not borrowing money anymore. That's different than, I thought we were surviving.

Right. Which is it? I thought we were getting out of debt. We were really low income, and so I knew it wasn't going to be as fast. Well, you're so uninvolved, nobody needed to hide anything from you. Yeah. He didn't hide anything. You just didn't show up to ask.

He was just doing his thing. You were doing your thing. You guys did not have agreement. You were not working a plan. That's what you're telling me with all this edging. Or you're trying to save his hide. I can't tell which because I'm getting ready to kill him otherwise. I don't know which is either.

I'm still a little bit in shock processing mode about all of it. So how much credit card debt is there? It's about $9,000, which for the general world is not that much. And what is your household income? About $35,000. Okay. $35,000? Yes.

Oh, okay. Right. And how much other debt have you got? Not even a shovel. It's like a Right. And how much other debt have you got? Not even a shovel. It's like a pick. What was the question? How much other debt have you got? That's it.

Okay. All right. Well, what I would say is this has exposed, this knowledge of this debt has exposed two major things that if I'm your husband and I'm you, I'm going to have alarm bells going off like the house is burning down. These two things must be addressed. Okay? Right. Number one, you are not on a plan, and you're not working together,

and you're not communicating, and you're not doing a budget every month, and you are just trying to survive, and that's not going to work. You're a rat in a wheel it's killing both of you he was doing the best he could do but he didn't want to worry you and so he's you know paying off bills with these credit cards he didn't go to europe on him with his girlfriend right okay yeah you're right so uh you know he's just a good guy doing a stupid butt thing the wrong way and it's time to stop it so the two of you together there's the house is on fire you have to you have to grab each other's hands and go we can't do this anymore we can't do this more it's going to kill us it's going to kill our marriage it's going to

kill everything because i'm i'm starting to be really really pissed about this debt and you got a lot of shame about it and we got to get on the same page and we got to write this down and we got to have a budget and we got to get an attack same page, and we've got to write this down, and we've got to have a budget, and we've got to get in attack mode. Does that sound right? Yes. Okay. The second thing that this exposes is that Ural's income is struggling, and we need a game plan to get the income up short-term and long-term to be able to attack this debt, and maybe even to balance your budget.

Right. And so, what is his, you know know how old is he 30 okay so when he's 45 what is he going to be doing making 100 well he's in ministry okay so we don't know Okay. Is he a pastor? He's a youth pastor. He's a youth pastor. Okay. And sadly, translation, that means in most cases you starve to death. Right. Most youth pastors don't make much. Yeah.

Acquired director, youth pastor, most of them struggle. It's very low-paid positions, sadly. I wish it wasn't. It should be a higher priority and a higher-paid position, but we can talk of philosophy while you starve to death. So I think he's got to decide how he can flesh out God's calling in his life while providing a larger income to his family. Right.

I'm not saying quit your job today, but there's not a lot of 45- or 55-year-old youth pastors. Very true. So where are we going with this? What's God telling us to do? What's our calling? I'm not doubting that he's called to the ministry. I'm glad he's called to the ministry.

But we need to think about how we're going to eat here and how we're going to be able to make the bills and how we're going to escalate in our career. And pastors need to grow in their careers like anyone else. And they need to grow in the effectiveness of their ministry, the wisdom of their ministry, the depth of their ministry. And there's nothing illegal in Scripture about making more money as a result of that. Very true. And I'm not suggesting he become a prosperity guy.

That's not what I'm talking about. But obviously a pastor who leads a 3,000-member congregation typically makes more than the youth pastor that has 30 kids in a small church. And, you know, that's the truth. Now, are those 30 kids important in God's eyes? Yes, they are. There's an economic transaction that occurs even in ministry. And it doesn't make money evil, and it doesn't make you evil to think about that for another look at your budget.

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NMLS ID 1591. NMLS ConsumerAccess.org. Equal housing lender. 761 Old Hickory Boulevard, in the lobby of Ramsey Solutions. Jill is with us. Hey, Jill, how are you? Dave, I am honored, and it's such a pleasure to be here with you today. So thank you for having me, and thank you to Kelly for allowing me to come talk to you today. Well, we're happy that Kelly let you through, I'll just tell you, she's kind of tough. But Merry Christmas to you.

Good to have you. Where do you live? Merry Christmas to you. I live in Huntsville, Alabama, so just right down the road. Yeah, about an hour down the south here. Good. Well, welcome. And you're here to do a debt-free scream.

Yes, sir. How much have you paid off? Dave, I've paid off $120,000, 800, hold on, let me say that again, $120,840. There we go. Perfect. Yeah. Well done. And how long did this take?

31 months. Wow. And your range of income during that time? Well, when I started this process, it was around $85,000. And now I'm well above $100,000. Good for you. What do you do for a living? I'm actually in medical sales.

Ah, good. Good field. You can make some bank there. Good for you. Yes, sir. Okay, so you did this in two and a half years. So you're averaging about just under $60,000 a year in debt reduction, which means you either sold some stuff or you have lived on absolutely nothing.

Dave, I did not sell a thing. It got to the place where I think my parents were hoping I was still actually eating real food. I said, yes, I'm still going to the grocery store. I'm still actually eating, so don't worry. But I was extremely strict. Yes, you must have been. You went game on. Well, very well done.

What kind of debt was the $121,000? So, it was actually my house. You paid off your house? I did. I mean, this intense? Look at you. Well, and a little portion of it actually went to my parents, but that was just because, you know, you always say you get gazelle intense and things just start happening.

And, you know, I'll be honest with you. I think God knew what was in my heart and why I was trying to go where I was going. So, I ended up getting several pay raises, a promotion during that time. Wow. So it just helped kind of compound that income, which you always say is your biggest shovel into getting out of debt. Absolutely. So I just pounded it out, and I was kind of moving along a lot quicker than I thought. And I was like, you know, my parents have really been so good to me.

I should probably pay them back for all the stuff that they've done for me. And, of course, the whole time they kept saying, we've never asked you for any of it. It was all just to help you get along in life. And I just felt like there was a part of me that needed to give some of it back. Because I can tell you, Thanksgiving's never tasted any different, like you might always suggest to people. Because for me, it was just something I felt like I needed to do, not something that I really had to do. Well, it wasn't a loan. It was a gift.

But you just chose to turn around and reciprocate. So initially, it was my house that I started with, and then a lot towards the end, it was just really giving back to my parents. Wow. Well, good for you. Congratulations. Thank you so much. Proud of you.

So what's the house worth? So it's worth around $175,000. And you're how old? 34. You have a paid for $175,000 house. Yeah. I'm looking at weird people. Dave, can I please tell you that I am so thankful you called me weird today?

The only reason why I say that is a good portion of my life I've been called weird. I just do things differently than most people. And this obviously was one of those things. And it got to a point where I actually didn't like people calling me weird. I was like, stop calling me weird. And then I really started listening to your show, and you kept calling people weird. And I thought, oh, I cannot wait for the day when he calls me weird, because I'm actually okay with that now.

So thank you. Well, normal's broke. Nobody wants to be weird. Normal sucks. And I am absolutely not normal. I love it. No, you're not. You have a paid-for house.

You're 34 years old. That's weird. Yep, absolutely. you're 34 years old that's weird yep by definition statistically that is weird so congratulations thank you so much well i'm sure your mom and dad are very proud of you yes and they had to be some of your biggest cheerleaders except they worried about your food budget yes there was actually a time where my dad wanted to just give me the money to pay off my house because he was like okay look we keep hearing about this day after day after day let me just give you the money you can off my house because he was like, okay, look, we keep hearing about this day after day after day. Let me just give you the money.

You can just pay me back at some point and then we can just be all done with this. You'll be completely debt free. And I said, but dad, that's just not how it works. I've got to work to get to where I want to be. So that's why I didn't sell anything. That's why I didn't take money from my parents. I just got to the grind and did it. I went back and actually got a second master's.

Come to find out, apparently I had so many credit hours that i could actually teach college classes so i started picking up a second job doing that at nights and on weekends just to really you know get it going add to the income and keep things rolling good for you it's actually a lot of fun too believe it or not so what's interesting in a situation like yours, you were so intense and so focused and so grinding that the difference is not just the math of you having everything paid off. You're different now than when you started this journey. It changed you, didn't it? You know, it's kind of funny you say that because how this all actually started was I like to call it just a life event that happened to me where I ended up moving to Birmingham, got this new job where I actually ended up getting paid twice as much as I was at my job when I was living in Huntsville. About seven months later, the territory that was

in Huntsville became open. And I had a renter in my house at the time who actually called me and said, I need to break the lease. I'm reconciling with my husband. Is there any way you'll let me out of it? And come to find out, I was like, this is actually perfect timing. I mean, God was definitely playing a hand in it because it was kind of stars all aligning. I called my parents and I said, what do you think I should do? And my mom was actually like, well, hang up the phone with us. Absolutely, we want you to move back to Huntsville. We think that would be great.

So, you know, I moved back and you were actually a really good, I call it distraction, that kind of got me through that part of my time where it was such a good thing for me to have a focus on something, and it was in a positive light. And when I did get back to my house in Huntsville, I took about a year to save up some money because at the time I was paying for a mortgage and for an apartment, and, you know, I didn't have a renter in my house the entire time, so I certainly wasn't saving much money when I was away. And moved back,

saved up some money. And I said to myself, you know what, let's just kind of go on Dave's website. So I went and I looked at your mortgage calculator, put in all the information. I was like, holy cow, maybe I could actually do this in a little over three years because that was kind of my initial plan. And I'm a very visual person as well. So to be able to really keep on the path, I printed out a bunch of stuff. And I had different things that I would cross off each month that I got stuff done. And to say that it changed me, it absolutely did. Because spiritually, I just took to your books.

I appreciate you actually recommending Rabbi Lappin's book. And that really helped change my world as to how he says, you know, you really are a servant of your community. So getting paid for something shouldn't be something you should be upset about. You should really say to yourself, hey, when I'm getting paid, that means I'm serving my community. And that's really just how I look at my job and a lot of my customers that I work with is just being able to serve them in God's light. And honestly, I think that's why so many good things have happened. So what do you tell people the number one key to getting out of debt is? So, you know, I got to thinking about it because for me, it felt so hard but easy at the same time.

But I really had to have the why. There had to be a why behind. What was your why? So I had two different whys. One of them was I wanted to live, but I wanted to give greatly. That was kind of my big push was I wanted to be able to help so many people out. I kept hearing things that I wished I could just give a lot of money to. The second part is I am single. So I say to myself, you know, I'm in medical sales. If they called me up tomorrow and said, hey, we don't need you any longer, what are you going to do, Jill? You have a mortgage.

Security. Absolutely. And you say it all the time. You just can't really put a dollar figure on what that means to someone to not have to worry about paying something off. And so the fact that I owe nobody anything, I even have a paid-for car, so I literally, they could tell me tomorrow I'm done, and I just say to myself, well, okay, what do I want to do next? And I can be relaxed, and the giving part is huge. And your sales will go up now. Well, they have this year, Dave.

Because you don't, well, you're not desperate. No, I've done really well this year. A desperate salesperson smells different. They just do. That's probably true. And when you don't have to make a sale, you walk in there different. Your vocal cords are shaped different. Your body language is different.

Everything's different when you don't have to make a sale. Yep. Yeah, that's cool. And your sales usually go up because you're relaxed and the people don't feel threatened. Their shields don't go up. It's all those non-visual cues or non-verbal cues that people take. So you brought Mom and Dad with you to cheer, huh? I absolutely did.

Good. They've been huge supporters of mine, Dave. I'll be honest with you. I wouldn't be where I am at today without them. I'm sure. I've had no student loans coming out of school, so I was very fortunate they helped get me through school. Well, we've got a copy of Chris Hogan's retire-inspired book for you. I want that to be your next chapter in your story to be a millionaire.

And as you said, outrageously generous. Jill from Huntsville, Alabama, $121,000 paid off in 31 months, making 85 to 100. Count it down. Let's hear a debt free scream. Oh, here we go. Three, two, one. With God's grace and my parents as my example, I'm debt-free!

Woo! Woo-hoo! Boom! Now that's how it's done right there. You tell me you can't do this stuff. You just decide. You know what? She just decided, didn't she?

Listen carefully to these stories. They matter. This is the Dave Ramsey Show. Jingle Hop and Bingo Jingle Bell, Jingle Bell Merry Christmas, America. We're glad you're here. Open phones at 888-825-5225. Bart's with us in Greenville, South Carolina. Hey, Bart, how are you? I'm doing well. How are you, Dave?

Better than I deserve. How can I help? So my wife and I were both 26 years old. She's currently a stay-at-home mom. I am working. My gross income every year is around 84. Our only debt we have is our house, which is about 130. The twist is that we have a fairly good amount in a traditional brokerage account, somewhere to the tune of about $530K.

Where did that come from? So I inherited right around a little over $2K, and then fortunately the stock market has been doing very well for me, so that's where the rest has come from. Wow, good for you okay let's pretend let's pretend you did not have 530 in that account but you had 400 in that account and your house was paid for okay if that was the case would you go borrow 130 000 on your home to move your brokerage account from $400,000 to $530,000?

Yeah, I guess that's a good point. Would you? No. I probably wouldn't. I was trying to get Korean. I didn't know if I could use dividends. You know, with her not working right now, we have a one-year-old. You're 26.

You have a half a million freaking dollars. You only owe $100 on your house. Pay your house off today. Okay. Today. All right. And then use your income that you don't have to pay out in house payments and your brokerage account and continue to grow your investments.

You've done fabulously. But if you would not borrow on your home today to increase your investment account, then you would need to decrease your investment account by the amount of the mortgage. It's very logical. I mean, what's your home worth? It's probably worth $230,000, but we've got an amazing deal on it, $185,000. So if you had the opportunity to borrow $500,000 against that house that's worth $230,000, and you could put all of that in that brokerage account, would you?

No. Okay. Let me tell you why you answered no before I even did it for you, right? Because when I propose an absurd amount of borrowing, it makes you realize that borrowing has risk associated with it, and it kind of makes you go gulp. $500,000 mortgage? Gulp.

I'm not doing that. Well, why not? The brokerage account is doing so good, you know. Well, the reason is risk is involved, and we don't know that the brokerage account will always doing that. Well, why not? The brokerage account is doing so good, you know. Well, the reason is risk is involved, and we don't know that the brokerage account will always do that. You've had a good run-up. Good for you. I'm glad for you.

I'm happy for you. But it doesn't always go up. We know that. Sometimes it goes down. And so if I'm in your shoes, I'm going to wake up by morning, and my house will be paid for. Kelly is with me in St. Louis. Hi, Kelly.

How are you? Hi, Dave. How are you? Better than I deserve. What's up? Well, unfortunately, my husband and I are divorcing, and when he retired, he took all of his pension, and we put it into investments with an investment firm.

And our divorce would be finalized in the state of Illinois, but we're trying to figure out, the state of Illinois says everything is split 50-50. And the only way to split the 50-50 would be to take the money out of the investments. No, that's not true. And we're looking at a tax liability pretty substantial. That's not true. The broker can just change the names on half the account on a divorce situation. Okay, well, we were just trying to figure out how to amicably work this out

because we did a, know um my you know my soon-to-be ex-husband you know he didn't want to go out and take out a mortgage against our home i mean we are debt free yeah good who's keeping the house um we have a house and a rental property so i believe he'll keep one and i'll keep the other. They're about equal in value then. Well, one home has 120 acres with it, and the other home is in a different setting. They're about equal in value? Are they about equal in value? Excuse me? Are they about equal in value?

No, I would say one is probably 50 to 75% less in value. Okay, and how much? And so you're equalizing that out with the investment account, right? Well, we hadn't got that far yet. The investment account has a little over 1.2. Okay. Well, here's the thing. Is the investment account, it should be in retirement accounts, is it not?

Well, he received it at the age of 62, and he just rolled it into an investment account. Yeah, that's in a retirement account. Okay, so this can be split in a divorce with no taxes, and it rolls into your IRA in your name, and it's done all the time in a divorce. And so whatever portion of the investment account that is going to go to you, you're going to roll into an IRA, and you're going to have no taxes. So someone's either giving him bad information or he's playing games. I don't know which it is. Okay, well, I mean, we each do have other IRAs.

But you can roll. If he had a million four in his 401k at his company and he was still working, you can take half of that in a divorce and roll it into an IRA for you with zero taxes. And this is the

same kind of a thing here. So what you need is probably some independent advice, independent from his investment advisor, because I smell a bit of a rat here. I'm not positive, but maybe this isn't as amicable as everybody's acting. So you just need some side advice, and just make sure that your investment advisor understands what I'm saying, that this can be rolled over to you without any taxes. So we can split his quote-unquote retirement and whatever portion of it to offset the 75%

differential in these two pieces of real estate. So whatever portion of it is yours, whether you're getting the more expensive real estate and less of the retirement or the less expensive real estate and more of the retirement to where it nets out the same, where 50% of the total is still yours, then that's what you're after and that's what the state is telling you. And by the way, that's reasonable because I have a feeling you guys have been married a long time and horrible situation. I'm so sorry for you.

But if you need some independent advice, just check SmartVestor. Click SmartVestor at DaveRamsey.com, and you can find who we recommend for investing in your area. They'll sit down with you, and they can guide you through this process. It's done all the time. And taxes should not be a hindrance in what we're describing here. Not at all. And make sure you have your own legal representation separate from his.

It can be amicable and two attorneys can work it out. And that way you you got somebody watching out for you 100 and that's what we want to hear thanks for the call open phones at 888-825-5225 you jump in we'll talk about your life your money dan is on twitter dave what is your favorite way to give around Christmastime? In person, always. And I think we all share probably the idea of creating a wow moment for somebody, whoever it is. And that usually is someone that didn't see it coming. so you catch them off guard and they have that that takes their breath away just a little bit that's the favorite kind of giving we all do um as a leader of this company over the years i've

enjoyed giving raises that do that you catch somebody they don't they don't think they're you know they get a little more than they think they're up for you know and it's like wow this is a good day can't wait to get home tell my husband tell my wife whatever right wow and that's the kind of thing um you know we told our team at the christmas party that we were giving away one car at our costco shopping spree and then we kind of wowed them and gave away two more. So we gave away three cars total the other day to our team. And you don't think a gasp didn't go through that audience of 750, over 1,000, 1,500 people, including spouses there when we started with the second car.

Oh, and even the third one. Now, that was fun, y'all. That was fun. I got a generosity hangover out of that, I'll just tell you. This is the Dave Ramsey Show. Hey, guys. This is Blake Thompson, Chief Production Officer for the Dave Ramsey Show. Here's a tip.

To keep from missing Dave's classic facial expressions to some of those calls, make sure you watch him live. Just visit DaveRamsey.com slash show each day from 2 to 5 p.m. Eastern. Enjoy.