The Ramsey Show - App - Lock Arms and Beat the Money Monster Together (Hour 2)

Episode Date: February 26, 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, America. Thank you for joining us. Open phones at 888-825-5225. You jump in. We'll talk about your life and your money.

888-825-5225. Kate starts off this hour, Topeka, Kansas. Hi, Kate, how are you? I am better than I deserve, thank you. Good, how can I help? Yes, my husband and I are currently on Baby step two. We have roughly about 17,000 left to pay off. We make about 60, 65 a year combined. But we are currently living in a house that we have a mortgage on. But we were thinking about selling it and buying a different house that is closer to our family.

I'm just trying to decide if that is a good idea or if we need to put that on hold while we do Baby Step 2. If your payment on a 15-year fixed would be the same or less, I don't have any issue. Okay. We would be probably going up in house, especially up in price, because we would be getting land, because that's part of the reason we're wanting to move. We're in the city, and we want to go to the country. Well, I would not recommend you take on new expenses while you're trying to get out of debt. Right.

Pretty simple. But the good news is you can pay to get out of debt. Right. Pretty simple. But the good news is you can pay off $17,000 making $65,000. This is not like it's going to take you 10 years or something. I mean, it's going to take you 10 months. Yeah, we're actually, with the refund that we are getting this year, we will have two of our debts actually knocked out probably in the next month, and we'll be down to i think nine good good well i mean 17 000 out of 65 000 income you really ought to be done about

10 months oh yeah we're doing everything we can right now yeah so this time next year we're talking about moving instead of now okay because you got your emergency fund in place you got some equity in your current home? Yes, we have a little wiggle room. Cool. So when you sell your current home, you take that money, you buy the place out where you're talking about moving, as long as your payment is not more than a fourth of your take-home pay on a 15-year fixed rate, then I don't have any problem with the move.

And it doesn't matter whether I have a problem with it. The only reason I would have a problem with it is it's not good for you. It's not good for you. It's not going to affect me, okay? But I'm saying the point is what we're trying to do here is put in place something where over the long-term course of your life, you succeed financially. Okay. And I just don't want to put you in a place where you starve to death because you buy so much house you can't breathe, or you're just jumping around doing impulse-based decision-making on your feelings. So let's just kind of work through it.

You know, work through the debt, build your emergency fund, sell your house, take that equity, buy the next property, and as long as the payment's no more than a fourth of your take-home pay on a 15-year fixed rate, do the move. Do you feel like it would be best to just finish off Baby Step 2 and then do that, or should we wait until we have Baby Step 3 done as well? Baby Step 3 will be done shortly. It doesn't take long to do this. By this time next year, you should have both those done. Okay. 12 months is $23,000 out of $65,000.

You should be having your house on the market next spring okay but but you're gonna have to lean into the budget and knock this stuff out but i know i don't want you to move when you're broke i want you to have an emergency fund and um for your sake so i'm you know what you're saying is i want to move up in-house What you're saying is I want to do something that adds to the quality of my life, but it is not an emergency. There's nothing on fire. It's just a want.

And there's nothing wrong with spending money on a want. But you would spend money on a want after you have laid your foundations in your finances, which is your debt-free everything but your home, and you have an emergency fund. That's when you would buy a couch. That's when you'd move up in car. That's when you'd start going on vacations again. That's when you'd move up in house. Because that's the proper, you've got a foundation in your life to do this, to buy a want.

And then your want is not, because let me just tell you, an emergency is never a want. It's not something you want. So you've got to be prepared for emergencies. That's the process here. Luke is with us in Orlando, Florida. Hi, Luke. Welcome to the Dave Ramsey Show. Hi, Dave. Thanks for having me.

Sure. How can I help? Yeah, I'm a new listener. I've been a pretty avid Road Warrior podcast listener. Recently married in October, we've got about $90,000 in debt with $330,000 gross income combined with my wife and I. Wow, wonderful income.

Yeah, we're definitely blessed to have that kind of income. What do you do for a living? I'm a software salesman. Okay, way to go, man. Yeah, so both of us doing that. About $35, man. Cool. Yeah, so both of us doing that. About $35,000 in student loans, about $30,000 in per car,

and then my car is a lease but with a payoff of $22,000, and then some miscellaneous credit card debt of about $5,000. We've got about $30,000 in savings and about $50,000 we just sold in an employee stock purchase program. I just kind of wanted to see what you thought of paying off which item first. savings and about $50,000 we just sold in an employee stock purchase program. And I just kind of wanted to see what you thought of paying off which item first. My idea was to pay credit card, then student loan, then her car, then my car. I just wanted to see what your insight was so that we can retire wealthy.

Okay. So you said you've been listening to the podcast. Yep. So what's the answer? I guess it would be to do the debt snowball, list them biggest to smallest, go with the smallest one first. Exactly. Yep. So what's the answer? I guess it'd be to do the debt snowball, list them biggest to smallest, go with the smallest one first. Exactly. Yep, yep. Go to the smallest, so pay off the credit card. And do it.

Dude, I mean, you got $80,000. You have $90,000 in debt. And you make $330,000 a year. You're debt-free by the end of the month. Yeah, that's true. And so it doesn't matter which one you pay first you're gonna pay them all and then you're gonna build your emergency fund you're killing it you're comfortable getting rid of the whole 80 nest egg paid all off and then build it again you've been listening to the podcast i'm very

comfortable you make 330 000 a year i don't think000 a year. I don't think you're going to have trouble. All right. Here's the thing. Let's kind of talk through it for a second because I'm not just being flippant. All right. Let's say that by the end of March, you are 100% debt-free, and you have $1,000 in your account. That is the completion of Baby Step 2.

Does that sound familiar to you? Yes, sir. Okay. The next completion of Baby Step 2. Does that sound familiar to you? Yes, sir. Okay. The next step is Baby Step 3. Finish your emergency fund of three to six months of expenses. You make $330,000 a year. This income, given that you've just gotten married, is a new thing. You don't have a lot of expenses. Correct. So almost all of this income can go towards baby step two. So if at the end of March you're debt-free, at the end of April, you should have $15,000 in the bank.

Yeah. At the end of May, you should have $30,000 in the bank. Right? Yeah. I mean, if you can't save $15,000 a month making $300,000 with no expenses, we need to smack your budget in the head. Yeah. I mean, and so then you're done.

So we're not really talking about some, you know, five years you go with no pad or no cushion or no rainy day fund. We're talking about five minutes that you're going to go. So just do this. Just follow these steps straight through. Just run the lane, man. Run the lane. It works. Just get the total money. Hold on. I'll give you a copy of the total money makeover. Just run right down those baby steps as fast and as hard as you can. You're going to be there so fast. You're going to be so wealthy. It's going to be unbelievable

if you'll just follow a system. This is the Dave Ramsey Show. Why in the world would you trust some random guy in a cube when getting your mortgage? Do you really think he cares about your long-term money goals? Well, he doesn't. Those companies care about getting you into whatever home loan program they're pushing that week. When it comes to ordering a cheeseburger, the meal deal works fine. But let's get real, people. We're talking about the largest investment you'll probably ever make, so don't be naive and trust an order taker who pressures you into a pre-packaged loan. My friends at Churchill Mortgage have been helping my listeners for over 25 years. Call Churchill Mortgage and get custom solutions

from an expert within 10 minutes. It's simple. They'll shoot straight with you and quickly show you the real way to save money. Call 888-LOAN-200. That's 888-LOAN-200 or visit churchillmortgage.com. This is a paid advertisement. NMLS ID 1591. NMLSconsumeraccess.org. Equal housing lender. 761 Old Hickory Boulevard. Redwood, Tennessee 37027. Thanks for joining us, America. Gina is with us in Phoenix. Hi, Gina. How are you? I'm good, Dave. How are you?

Better than I deserve. What's up? I have a question. I'm a single mom to a teenage son. My husband passed away about two years ago. Hmm. And I'm getting ready to put the house up for sale in a couple months, and I'm wondering what to do with the proceeds, if I should put it all towards a down payment of downsizing.

Should I pay off my car? Should I put the money towards his college education? What do I do? Okay. And so what is your income? Around $50,000. Good for you. Okay.

What do you do? Mental hygienist. Okay, good. And you're moving why? House is too big. I can't afford the payment anymore. Son is getting Social Security until he graduates from high school, which is kind of like an extra paycheck a month for me.

And that's going to go away. Yeah, that's going away, right. Going away, yeah. And obviously then there was no big life insurance policy. There was, and there is some left. What was big and how much is left? Around $500,000. And there's about a little over $100,000 left.

We went through a probate situation. He left quite a bit of debt business and otherwise. Oh, I see. Okay. And so $500,000 worth of debt. No, that was the life insurance. I thought you said the life insurance was $600,000 and there was $100,000 left. No, there was $500,000 and there was about $100,000 left.

Okay, so you went through $400,000 to clean up his old business debt and miscellaneous. Okay. Yes. All right. And what will be your net proceeds from the sale of the home? It will be, right now we're guesstimating about $140,000. Okay. And what price range home are you thinking of buying um i'm not sure i'm not pre-qualified yet um around 200 000 okay all right um i would be debt free of that, paying off your car,

and I would set your emergency fund aside, and I would put down a really, really, really healthy down payment on the house, like most of the rest of that money, leaving you roughly $100 to try to figure out how to get him through school because he's going to have to do some other stuff to get through school anyway in this situation. Okay. Right. And let's walk through how you go through school debt-free if you're broke.

We'll pretend like he's broke completely. He's not completely broke, but let's pretend like he is for a second. The first and most important thing is to choose a less expensive school, in-state tuition or community college to get started. Get your costs down. We're going community. Good. We're going community.

Get your costs down is the most important part of the education equation because if something is $10,000 and another one is $40,000, people don't even look at that if they're borrowing money and creating messes, okay? Then the second thing we want him to do is we want him to plan on working a lot. He needs to work his way through college a lot. By the way, most of us did, and that's okay. It's not going to hurt him a bit. It's good for the young man, okay? The third thing is his new job right now is applying for scholarships like i

want him to apply for close to a thousand scholarships in the next 18 months he'll get turned down for almost all of them but if he gets 30 out of 1 000 and they're two thousand dollars a piece he just went to school you follow me and it's a great part-time job. The turn down, the rejection ratio is huge, but it averages out. You can make $200 an hour, I mean, you know, because you go get that money that way. The number of hours it takes to fill these things out, that is his new job, and you've got to ride him on this. You've got to crack the whip like you're his boss and his job is,

and he's getting paid for the job, and he goes in every day and he sits down at his desk and he fills out scholarship applications, and that's his job. Because he'll get some scholarships if he does that. But if you apply for three, he'll get none. Okay. It's a law of large numbers, okay? So what I'm trying to do there is if we've got a plan to get him through school doing those kinds of things that enables you to take the vast majority of this money other than paying off the car and setting aside an emergency fund and using it to uh clear

or using it as a down payment on the house and getting a very very small mortgage that way which was your reason for selling in the first place? Correct. Was to downsize and get something you could manage. And so we really want to play through on that. How much do you owe on the car? Around $10,000. Okay.

And you make $50,000, so if we put $10,000 on that and $10,000 aside for an emergency fund, that means you've got like $120,000 to put down. And you're debt-free, and you put whatever you buy on a 15-year 15 year fixed rate and the payments no more than a fourth of your take-home pay now we've got you set up for future success and now we've got to use the hundred that's in the bank and the other strategies that we talked about to help get him through school meanwhile you're also thinking about your retirement planning and starting to invest but right, that school's bearing down on you pretty hard, and you've got to look at that. So, hey, thanks for calling in.

If you need more help, you call me anytime. I appreciate you being with us. Open phones this hour at 888-825-5225. Let me see here. Oh, she's gone. Okay. Meant to ask her because she was young. I just ran into a lady in the lobby at the commercial break whose husband was killed in a motorcycle accident.

They were Financial Peace University coordinators, and he was in his 40s. And she was saying, you know, a horrible, horrible situation, obviously, a couple years back, just like that lady's situation. But they'd gone through Financial Peace University, and they'd gotten Mazander Insurance, and they had a really nice large-term insurance policy, which you guys ought to have your term insurance in place. 15-, 20-year level term, 10 to 12 times your income. Now, let's pretend that you make $100,000 a year.

That means you need a million to a million two on you, not $500,000. If you make $50,000, then $500,000 to $600,000 is 10 to 12 times your income right but if you have four hundred thousand dollars in debt and a wife and a teenage child you're under insured at five hundred thousand you see that last call i took how much would that call be changed by another 300 grand another 300 grand would change the whole complexion of that discussion she'd be paying cash for her house and would have had the money to send the boy to college another 300 grand instead of 500 800 now i don't know what the gentleman's income was that passed and i'm not picking on him i'm not saying he did something wrong but i mean you're looking at the he had a lot of business debt she said four hundred thousand dollars worth of debt she had

to clear up and that only left her a000 after she paid off all of the debts, except her car and her house. So her operating, I mean, she cleaned up his business debts is what it was, and that had to be done. There wasn't any way around it in the probate. She did the right thing, and they did. And at least she had that, because if she hadn't had that, she'd probably been bankrupt. So that's what you're looking at folks and and if you're

you're 40 years old and you know you don't think you're gonna die you're gonna die i just don't know when you're gonna die i'm 57 and i'm trying to figure out when i'm gonna die but i don't know and so i have to make sure this calendar year coming up that my estate plan, my will, my assets, and my insurance is in place, and a plan is in place to take care of the people that I'm leaving behind that I love that depend on my income. How do we do that? And so the typical way for most of you that have a couple kids and are married, you put 10 to 12 times your income on you in term life insurance zanderinsurance.com is where i buy mine and that's where leo was talking to a minute ago his husband got his because it's very inexpensive if you shop around and get the

best possible deal and that's what they do They shop among a bazillion different companies. It's an insurance broker. That's how you want to buy insurance always. But go there and shop. And you'll see what I'm talking about. If you're 35 or 40 years old, the difference in $500,000 and $800,000, it's the cost of a pizza. And it changes everything.

So I don't know, again, but what the income is in those exact situations here. But I've just had that in the past 45 minutes. I've met two young widows. It means I'm supposed to talk about this for a minute. Tax fraud, medical ID theft, account takeover, employment fraud, these are just a few of the identity theft events that Zander's ID theft team has helped resolve for their clients lately. The reality is breaches are all too common and hackers are using new, sophisticated methods to steal and use your personal information. Everyone is at risk, even your children. This is why it's crucial to have ID theft protection that covers all types of identity theft, and the only plan I have ever used or recommended is from Zander Insurance.

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You get free samples, free shipping, and with the new promos they run every month, you'll save even more. Use the promo code RAMSY to get the best deal. Rules and restrictions apply. Juan's in New York. He says, I've been engaged for three months and we're getting married in August. I want us to be on the same page financially. When's a good time for me to introduce her to Financial Peace University? You're late.

You should have already introduced her on the second date. I'm kidding. But yeah, not much. Listen, the number one cause of divorce in North America today is fights over money and money stress and money problems. If it's the number one cause of divorce, whatever it is, you address that in pre-marriage counseling. Deeply, deeply address it. Because, you know, if you're on completely different pages with money, that tells us if you don't get on the same page prior to getting married, you are going to struggle in your marriage 100% of the time.

All of us struggle in our marriages, but, I mean, you're going to have real struggles. I met a lady one time. She said, we've been married 32 years, and we've never had a fight. And I said, it's because you lie. of course you had a fight in 32 you've been married 32 minutes you've had a fight shut up i don't believe that stuff but i'll tell you what a lot of pastors and a lot of friends and a lot of marriage counselors are using financial peace university the nine-week course at your church, as a part of a pre-marriage counseling because it forces you to talk through everything, investing, your views on wealth, your views on doctrine regarding wealth,

your views on paying bills, your views on buying stuff you can't afford, money you don't have to impress people you don't really like. You figure out if you're marrying a princess, you figure out if you're marrying a guy who won't work. You find these things out when you start talking about money. And these are disturbing things to find out after marriage. So we strongly recommend it. Of course, we're big believers, but lots of people are doing it as part of a pre-marriage counseling rhythm. Jason's with us in Winston-Salem, speaking of

getting married. What's up, Jason? Well, well, Dave. Honored to speak to you. How are you doing? Better than I deserve, sir. What's up in your world? Well, me and my girlfriend, who is a good Christian woman, the problem with good Christian women, they are all taken. So I've got one, and I want to hold on to her. We are in Financial Peace University together right now, and we've been discussing about getting engaged and married. And I planted the seed of what would Dave think about getting engaged while we're in baby steps too. Absolutely I would. You absolutely.

Thank goodness. Because she's going to hear this, and if you said no, then when I propose and I'm not done with snowball. No, I've had people call me and say they made their fiancé get out of debt before they'd marry him. I'm not sure I'd marry somebody that made me do that. I hear you. No, this is, listen, the point is not whether you're both perfect or not. The point is whether you're both pointing in the same direction. That we are.

And if you're working together to have the same direction, and you can beat the money monster, dude, you can kill any monster that comes at you. But you lock arms to do that. You don't turn on each other. Exactly. And so you can work through it. I don't care. You notice I didn't ask how much debt you've got or how much debt she's got i didn't ask any of that

the whole thing i'm worried about is you're pointed together at the same direction okay and um you know i had a dad call me up one time he's like my daughter wants to marry a guy who's got a hundred thousand dollars in student loan debt and i said good she should that wasn't what he thought i was gonna say he thought i was gonna say now don't let her marry him you know but no the guy's he's a young dude. He's getting after it. He's making some money already. He was already starting to pay off his debt.

I mean, he was a guy who left the cave, killed it and drug it back. That's who you want your daughter to marry. Shut up, you know. And he'll work his way through that as long as they're both on the same page about getting out of debt. And so that's what we're pushing for. And, now, you don't get to buy a $22,000 ring. You know that. Oh, no.

We've discussed budgets and it can be a simple family wedding and you don't need to go overboard. You don't get a headlight when you're broke. You get a chip. That's right. Later on, you get your headlight. There you go. You can upgrade later.

That's Sharon. Okay. It'll work. The chip is in the safe. That's Sharon. It'll work. The chip is in the safe. It's nostalgia, okay? She's not wearing it on her hand, I can tell you that. So you're in good shape, man. Congratulations.

And I hope everything goes great for you. Chad is on the line in Dayton, Ohio. Hey, Chad, how are you? Pretty good. How are you? Better than I deserve. How can I help? So my wife and I are going to go into financial peace university class right now.

And finally, after 13 years, we're getting on the same page with our finances. Good. But we're in a position where I'm 40 years old. I'm kind of having trouble hearing you. Can you make sure you're talking directly into your phone, please? Yeah, how is that? Is that better? Much better. Thank you.

Okay. Sorry about that. So I'm 40 years old, and unfortunately, because of stupidity in my youth, I have over $300,000 in student loan debt. And so we just got done with the retirement and college planning class, and in the steps it says to get to a point where you are debt-free other than your home before you start doing that so you had 325 000 in debt from college are you a doctor or a lawyer i was a stupid youth who took out student loans for stuff i didn't need to

and what is your degree in? Operations research. Operations research. And what does that mean you make a year? About $100,000. That's good. What does she make a year? She's a stay-at-home mom. Ouch.

Okay. What potential do you have to increase your income? At my job, probably about 2% to 3% per year. Not a whole lot as far as I get some more experience. I might be able to get a little bit more, but it's not like it's going to be huge chunks of money like last year. What about a side hustle of some kind? That's one of the things that I'm looking at. I'm actually trying to use the skills that I have to start some side business.

Unfortunately, the company that I work with... What could she do while she's at home with the kids to make some money? We're not sure. We're exploring those options now. We figured out, okay... Okay, I'm going to send you a copy of Christy Wright's book, Business Boutique, Equipping Women to Make Money Doing What They Love. I don't necessarily want to pull her out of the home, but there's probably some hours in the day she can redeem and turn into money, and you guys need it. Do you own a home?

Well, so we ended up having to combine homes with my mother-in-law because she was not financially prepared for retirement, and we couldn't afford both our bills and her bills. And so she has her home, but it's mortgaged. So it's going to help get that paid off. So wait a minute. What is her home worth? I think it's somewhere in the neighborhood of about $65,000 to $75,000. And that's where you live? Yes.

So you don't have a home? No. We are in a Chapter 13. We had to walk away from ours because we couldn't afford both homes. There's some information that's handy. Okay. How many years have you

been in the 13? One. So we've still got another four years to go. Yeah. There you go. This is not going to be easy. Listen, you have to clean this mess up because these student loans don't die until you do. And so everything you try to counterbalance in your brain with going over here to do retirement and investing, as tempting as that is, is going to be offset by Sally Mae kicking you in the teeth every time you go take a nap.

And so you're going to have to increase income from every possible source. How much other debt other than the $325,000 in student loan do you have that's in the 13? In the 13, we just have our two vehicles. And how much do you owe on your two vehicles? $50,000, I think. $50,000. $50,000. Did you say $55,000?

Yes. Okay, you need to sell both of those and close out your 13. And get you two $1,000 cars. You guys are freaking broke and you're spending like you're in Congress. No wonder you ended up in a 13. Two $1,000 cars. You guys are freaking broke and you're spending like you're in Congress. No wonder you ended up in a 13. $50,000 in vehicles with $325,000 in student loan debt, and she stays home with the kids while you make $100,000? Dude, there's no way this math works.

So you're going to start amputating some crap and doing some 180s all over your life. 180 into work, 180 out of spending, drop the cars, drop the 13, increase the income, and attack these student loans. And it's still going to take you five years. Thank you for joining us. We're glad you're here. This is the Dave Ramsey Show, where we give you the same financial advice your grandmother would, only we keep our teeth in. Kyle is with us in Austin, Texas. Hey, Kyle, how are you are you i am awesome dave thank you so much for taking my call sure what's up in your world sure so my wife and i just started baby step 3b we're saving up for a house down payment and hope

to have that ready in about 15 months in line with our lease timing we're very familiar with your how much how should i buy formula and it's awesome and that our goal. But we have some income fluctuations coming up through the next several years, up and down. I'm going back to school, and I can explain in more detail. I wanted to ask kind of which income numbers you think we should use to help determine how much house we should get. Well, if you use the highest income number and it fluctuates for a period of time down, it's going to put you in a strain, right? Sure. Absolutely. The current situation is basically we're $165,000 now, down to $100,000 while I'm in law school.

My firm will help pay for it, and then up to over $200,000 post-law school. So we're kind of not sure what to use in there. Law school, two years? Law school, three years, plus I'm going to have to put about $10,000 forward myself for the school itself in addition to the firm will help out. Right. But I'm saying in terms of time that we've got a $65,000 drop from $165,000 down to $100,000 and then three years later back up to $200,000. That's exactly correct. Yes, sir.

Okay. All right. So I think I would want to be heavy on the savings if I was basing it on a 150 or 160 income. Because, you know, basically what we're saying is your house payment is going to end up being about 50% of your take-home pay for three years. If you base it on 165. And that's a formula that's not going to cause disaster. But if there was a problem on top of that, it could really cause you to have to sell the house. Yeah, so is there something to be said?

Is it what you're getting at? Is there something to be said for really putting some money in the bank to float during that period of time if we use that 160 number as our threshold? When do you start law school? Yeah, I would most likely start law school in about two and a half years from right now the plan is to be in the house about a year before starting law school yeah i just i think if you base it on 165 you could make it if you base it on 165 but that three years is just a real you've set yourself up for some risk it's not a guaranteed failure but when you got a high house payment as a percentage of your take-home pay

while you're trying to get through law school, I don't want you to have financial stress. Sure. No, I hear you completely, and we debated literally just waiting until after law school to buy, but that's like five years from now. Yeah, I almost said that. That's why I asked when you're going to start.

So I'm going to buy something like based on $120,000 income. Sure. Perfect. And then I'm going to move again five years from now after I'm making $200,000. Yeah, perfect. No, we were going back and forth between those, and that sounds like a great option. We really appreciate your insight on that. Just somewhere in there.

I mean, I'm just trying to figure out a way so you're not pinched and in stress while you're in law school. Law school is tough enough without inviting financial stress by a decision that we had control over. So, good question. It's an interesting discussion. Chris is with us in Indiana. Hi, Chris. How are you? I'm good, Dave.

How are you? Better than I deserve. What's up? Well, my in-laws approached my wife and I thinking of giving us a large percentage of what would be our inheritance from them here in the next couple years or sooner. I guess their fear is that if they go into a nursing home or some situation like that, that would soak up a lot of those resources. And I just had some qualms about it. You know, it's their money. I wanted to get your thoughts. It doesn't work.

Okay? Well, you cannot make yourself look broke when you're not broke in order to get the nursing home provided by the government on welfare government free nursing home from the government is for welfare it's for broke people and if you if you move your assets out of your name the government can look back five years on some things and 10 years on the other and disqualify you from getting free nursing home care you don't qualify from for welfare because you gave all your money away. Yeah. That's what it amounts to. It's called fraud.

They call it welfare fraud. That's what the government calls it. And they will come down on their head if they find all of this, and they'll look back five years, and if they smell a rat, they can go back ten years. And so their motivation for doing this is wrong. How old are they? Just in their late 60s. Tell them to go get long-term care insurance.

Okay. To take care of their nursing home bill. And, you know, here's the thing. The nursing home bills are not, I mean, they're bad if you're broke but how much money these people got oh i just think it'd be on the order of a hundred thousand i i'm not i'm just speculating they've not given me any real numbers then they need to get long-term care insurance immediately and it's going to cost them you know twenty five hundred thirty five hundred dollars a year and it's worth every penny of it to protect their money.

But no, they do not need to transfer assets in order to falsely qualify for welfare. It's not only morally wrong, it's legally wrong, and the government will come down on them if they catch them doing it. And they do look at this stuff. And the average nursing home stay is only about three years so it would eat up a hundred grand okay if they did go into a nursing home and don't have long-term care insurance but most long-term care insurance policies now cover about three years of nursing home care so i would spend the money on long-term care insurance and i would go get it today if I was in this situation.

I would not try to hide assets to falsely qualify for welfare. You are right to feel funny about this. Lynn is with us in Chicago. Hi, Lynn. How are you? Hi, Dave. Thank you for taking my call. Sure.

What's up in your world? In my world, I'm trying to decide if I should be putting my 24-year-old out. He's still living here with me, and I'm trying to make that decision. Why is he still living there? Number one, I didn't know any better until about three years ago that I was supposed to guide him financially. So I took your class, and while he was going through college... He graduated from college? He graduated, yes. What's his degree in?

He graduated from college, graphic designing. Okay, has he got a job? Yes, full-time. Why does he live at home? Well, he asked me if he could do his master's and there was a piece to it. The reason why I thought about it, I'm calling you is because I had, I had no savings. I was, um, about $12,000 each month in debt, each month I did my budget, but I took the class and I told him while I think about it, he must take the class too. So he took the class also and out of the class, I decided, well,

maybe he could stay here to help me dig myself out. So now I'm on step four by him being here because I make him pay his rent and everything. We just split it. Um, but he wants to do his master. So I'm thinking, should he continue to stay here while I start on my retirement? Because I have absolutely not a penny in retirement. Um, as of next month, I will start on my retirement because i have absolutely not a penny in retirement um as of next month i will be starting my retirement um thing so if he wasn't there you couldn't make it um in the beginning i could not because i was so now i was in the negative now yes i could make it okay so he's not staying there now he's not staying there now for you. And why is he staying there for him now if he goes and gets his master's

so he has a free place to live? Well, it won't be free because he paid half of everything. How will he be paying while he's getting his master's? Well, his job gave him a huge, what you call, raise. And it was because they don't have a program where they pay for master's degrees. So they gave him a huge raise. So with this raise, he planned to pay for his master's. What does he make?

With no student loans. What does he make? He has no student loans. He's debt free. Good. What does he make? He's at 62 now what do you make i'm at 50 about 50 okay i make less i don't think there's any emergency here and there's not any abuse or any really bad situation

i do think it'll be advantageous to him emotionally live on his own away from his mommy he's 24 he makes 60 000 a year he's working on his master's you're on your own away from his mommy. He's 24. He makes $60,000 a year. He's working on his master's. You're on your own. You can care for yourself. It'll be really good for him emotionally to have his own place, maybe with a roommate or something. And if you want to get a roommate to help your numbers work, that'd be fine.

But there's no emergency, but sometime in the next six months, if I were his dad, I would have him move for his good, for his emotional growth. This is The Dave Ramsey Show. 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.