The Ramsey Show - App - Made a Huge Mistake & Financed a $54k Tesla!

Episode Date: April 5, 2022

George Kamel discusses: Saving money on transportation during inflation,  Dealing with estate taxes, Dreaming and planning for the future of your family, Taking a pay cut for a dream job. Want a plan for your money? Find out where to start: https://bit.ly/3nInETX Listen to all The Ramsey Network podcasts: https://bit.ly/3GxiXm6

🎵 Live from the headquarters of Ramsey Solutions, it's The Ramsey Show, where America hangs out to have a conversation about your life and your money. I'm Ramsey personality George Camel, and I am honored to take your calls and help you out today with whatever questions you have. For those of you that don't know me, I've been around here a long time, celebrating nine years at Ramsey Solutions this year. Started as an intern, worked in marketing for several years, worked as one of our hosts for live events and the video channel, if you were around for those days.

And more recently, Ramsey Personality, helping people with their money questions, their money problems, trying to educate people out there, help young people avoid debt, trying to help old people avoid debt. Everyone's involved here. And I followed the baby steps to a T and ended up in baby step seven with a paid four house last year. And man, what a journey it has been. These steps changed my life. And if I can help these steps change your life today, I will have done a good service. So open phones this hour. 888-825-5225 is the number to call. We'll talk about your life and your money. Daniela has decided to do that. She joins us in Dallas, Texas to kick off the hour. What's up, Daniela? Hello, George. Hey, how can I help today? We have a family question. I've got a family answer.

That's awesome. So my mom, unfortunately, is in poor health right now. We are actually in the process of finalizing her will to just make sure that everybody's going to be okay when she's gone. And what we're figuring out is that the estate will be split 50-50 between my sister and myself, with me being the executor. But there's one piece of the puzzle that I'm trying to kind of simplify, and I want to get your thoughts. Sure. So my car, or my sister's car that she drives is owned by my mom, and my sister is in her early 20s. This was the car that she got from my mom, you know, when she was still living in her household when she was a teenager.

So this is kind of like a leftover transaction that was never fully signed over to my sister now that she's a young adult. I'm thinking that to avoid probate with me being the executor and just kind of simplifying these transactions, if it's her wish that the car go to my sister anyways, couldn't we just sign over the title to my sister now, clean up that transaction, and then truly the will be 50-50 at that point upon execution when that day comes? Am I overlooking something like gift tax or other tax paperwork that we should consider? Yeah. Well, you're very wise to even be thinking through all that. And I'm so, so sorry to hear about your mom. Thank you.

So in Texas, that's where you are, right? The car is there. Are you all there? So this very state to state when it comes to gift tax, usually it just falls under the gift tax laws up to $15,000. So if the car is valued at $15,000, then you would be exempt. But in Texas, it's interesting. Based on my research, you will owe $10 in gift tax.

So you can sign over the title. You can do a bill of sale for $0 to gift this. Make sure that she signs the title properly. You guys fill all that out carefully. But it sounds like you're on the hook for $10 outside of your county's registration fees, title fees, all that stuff. Okay. Well, I did not know that. I would run it by a tax pro and a state attorney if you want to. But based on my research, which I like to research, that's what I'm finding for the state of Texas.

So you shouldn't have a problem doing that right now and not have that be part of the will and just put the car in her name. But I would do it by the book. So do some research for your county, your area. You can even call your county clerk's office and say, hey, listen, here's what we're trying to do. We just want to make sure that we follow the right steps. What are the costs involved? What do we need to do? What do we need to bring? And I'll tell you this from personal experience because I was at the county clerk's office yesterday and they were like, oh, your wife didn't sign the title and oh, we need your marriage certificate. So I'd call ahead of time so you don't have to go back and wait in line there again. Fantastic ideas, George with a

K. Oh, thank you so much. I appreciate the call. So sorry to hear about your mom, but I'm so proud of you for taking the right steps, for making sure that we have the will in place, for communicating about this. That's such a huge step that so many people don't take, and it causes relational damage, financial damage. And so I'm proud of you guys for handling this with maturity and care. Thanks so much for the call. All right. Corey joins us in Ann Arbor, Michigan. Corey, you're back.

I'm back. Okay. Sorry about the mishap earlier, but you're here now. How can I help? No worries, man. I really appreciate you taking the call. What's going on? So I'm a little bit late to the party on the baby steps, right? That's all right. So, I'm a new listener as of a couple months. We love new recruits.

Yeah, yeah, good. So, I feel like I'm in a decent financial situation. My baby steps are a little jumbled up right now, but I'm nearly clear of that. So, here's my question. My dream, I've got a dream of owning some waterfront property, live in Michigan. And whether that be my primary residence or buying a place up north to kind of have a family getaway, you know, that's just always been my dream, something I'm looking to accomplish. So I'm wondering what steps do I need to take to get there? Because I have two small kids that I want to be able to enjoy this before

they're too old to give a crap about what dad's up to and going up north with them. Sure. How old are you? I'm 32. Okay. And you have a mortgage right now? You're in a home? Yeah, I have a mortgage right now. We owe about $238,000 on it, and it's worth about $350,000. Okay. What's your household income?

We're at about $225,000. Awesome. Great income. And so do you guys want to live there now? Would you sell your home and go live in that waterfront property if you could get it? So I would do that if I could do it around here because I don't want to change my kids' school system. They're in a great school system. They're settled, and we really like where we're at. I would prefer to either have a place up there that we can go during the summer.

His wife and I both work remote, but I don't think I would live there unless I could do it right around here. And the way property values are around here for me to get on the lake that I'd like to be on. Yeah. Okay, so do you have any debt outside of the mortgage? So outside of the mortgage, unfortunately, I'm in a fleece right now. But my plan is to buy that cash as soon as it's up, which is in a year.

Do you have an emergency fund? Do you have any savings? Yeah, so I've got $40K in emergency fund. I've got $107K in my Roth 401K. And my wife's 401K is at about $12,000, and then I've got about $8,000 saved up for my kids' college already. Okay. Well, here's what I'll tell you. You can rent somewhere in the summers if you want to spend a week at some waterfront property, but for now, we got to clean up the debt. Let's get the fully funded emergency fund in place, invest 15%, pay off our house, and we can get there to

that new property. And if you want to sell this one eventually and get in that new one, but do it on a 15-year fixed rate with a payment of no more than a quarter of your take-home pay, and make sure that you're putting a healthy down payment down, I want 20% or more. And you can do that. You have a fantastic income. You're going to get there in no time, but follow the baby steps in order. They work when you do them in order, Corey. Thanks so much for the call. Call me back from that waterfront property, man. Good for you. Most people know me as the guy who did stupid with a lot of zeros on the end. I made my first million dollars

in my 20s the wrong way and then went bankrupt. That's when I set out to learn God's ways of managing money and developed the Ramsey baby steps. By following these steps, I became a millionaire again, and this time the right way. After three decades of guiding millions of others through the plan, the evidence is undeniable. If you follow the Baby Steps, you will become a millionaire and get to live and give like no one else. My new book, Baby Steps Millionaires, is now available for purchase. When you order my new book, you'll learn how ordinary people built extraordinary wealth and how you can do it too. I'll walk you through how to invest, build wealth, and bust through the barriers preventing you from becoming a millionaire. Baby, step your way to becoming a millionaire.

Get your copy today at RamseySolutions.com. That's Ramsey Show. I'm George Camel, your host today. Open phones this hour, 888-825-5225. Well, all of our team here at Ramsey Solutions are abuzz about Dr. John Deloney's new book, Own Your Past, Change Your Future. It's on a pre-sale right now for just 20 bucks. Crazy how time flies and the pre-order is almost over. Feels like just yesterday. John has taken his two PhDs, his 20 years of counseling experience, and he's packed it into an easy to understand book. Even I can understand it, folks.

And this book is not just for people who are healing from terrible trauma from their past. This is a book for everyone. It applies to everyone in every walk of life. Whether you're a single 30-year-old just looking to sharpen your mind, a 25-year-old who's out of college looking to make new friends, mom and dad who want to connect with their kids better, people coming out of abusive relationships, everyone. All of you have a story. All of you have a past. And we gave out some advanced copies of this book recently to some listeners, and the reviews were just, man, it was heartwarming, the feedback we've seen for this book. It's life-changing. So we've taught gods and grandmas ways of handling money for 30 years now. And our friend, Dr. John, he's paving

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All right, let's go to the phones. Eric joins us up next in Kansas City. Eric, welcome to The Ramsey Show. Hey, thanks for taking my call. Absolutely. What's going on in your world? So my question for you is, I've always heard Dave say you should never take a job that pays less than you're currently making. So my question is, is there an exception to that rule, and is it worth taking a pay cut for your dream job?

I don't know that I've heard him give that kind of advice consistently, that you should never take a pay cut ever. Now, if you're listening to my friend Ken Coleman, he would say, why can't we do the dream job and get paid well for doing it? I think that's the goal. But what's your situation currently? The current situation is I'm taking home about $62,000, and I'm working in manufacturing. I have a degree in criminal justice, which I used for a few years, but then when I was given the manufacturing opportunity, it was paying a lot more, so it made sense for me to take that job. So you saw the dollar signs and went, wait, I can make more over here.

Exactly. But now I'm getting really bored with it and kind of frustrated with some things going on at work, and I was given an opportunity to pursue my criminal justice degree in that field, and it would be about a $10,000 pay cut. So I'm just trying to decide what to do, and figured that would give you guys a call. So can you afford all of your bills if you had a $10,000 pay cut? Yes. The only debt we have is mortgage. Okay.

So this is you and your wife? Yes. We have a little eight-month-old. Oh, that's sweet. Well, here's the deal. I think that you can make up for this income pretty quickly, especially if you're passionate about it. You're going to be even better at it. So what is this job that you'd be taking?

Law enforcement. Okay. So this is starting salary? Essentially, you've never done this kind of work before? Correct. Okay. Well, listen, man, if I'm in your shoes and your financial situation, I'm going to take it and then I'm going to work my tail off to get the income back to where it was and even higher. And a year from now, two years from now, you're going to look back and go, man, I'm making $50,000, $60,000, $70,000 now because I really put the time in and I love the work I'm doing. So I'm okay with you taking this pay cut temporarily, knowing that we're going to get this thing back up to where it was.

Okay, that makes sense. And when you look at it this way, the reason you followed this plan, the Ramsey plan, is to have options, is to have freedom, is to have meaning. And that's what this has done for you because you don't have a lot of debt. You just have the mortgage, right? Right. And you have a fully funded emergency fund? Yes. You got financial peace,

man. And when you have financial peace, you can take a tiny step like you're taking right now into that job and not worry too much about it. So I'd encourage you to call into Ken Coleman's show. I'm curious to hear his thoughts, but I think he would say the same thing. Let's get this income back up and even higher than where it was. But temporarily, I'm okay with this if you've got this opportunity to step into law enforcement, which is what you told me you love to do. Yeah, that makes sense. I appreciate it. Yeah, man. Thanks so much for the call. Awesome. Love you taking that leap. All right. Zach is joining us up next. He's in West Palm Beach. What's up, Zach? Hey, what's up, George? Big fan. So here's my problem. I really want to be debt free. And over the last couple of years, I've been aggressively paying

off my house in December of 2020, paid it off. I own it free and clear. But then I screwed up. I screwed up. Dave would be very upset with me because the next day I went out and I bought a Tesla and I financed it over 72 months. The loan in the beginning was $54,000. I've been paying $810 a month for the last year and a half. And I'm at a point, you know, I have a fully funded emergency fund. I have a good amount of money in my retirement. My house is paid off. I have a good income. Definitely have financial peace. But I want to know if I should work on aggressively paying off my car or if I should invest that money in the stock market. No, we are paying off this car, man.

Listen, I love both of those things. I love you paying off the car, and I love you investing in the stock market, but we've got to do one thing at a time here. So how much liquid cash do you have to your name? Well, I have about $15,000 in an emergency fund, and then I got about another $25,000, $30,000. So, you know, I could pay it off, but then it would leave me very little cash. But, you know, I could make large payments over time, which is what I would feel more comfortable doing. But I don't know.

I'm just lost, and I need some guidance. Okay. Well, when I'm lost, I like to follow the path. And so the Ramsey Solutions Baby Steps is the path I want you to follow. And it starts with Baby Step 1, $1,000 emergency fund. You have that. Now, here's the scary news. Baby Step 2, we're paying off all the debt using the debt snowball. This is your only debt. You've got $43,000 left on the car. What's left? Yeah, exactly. $43,000 left on the car. And so we're going to pay this thing off. And that means everything but the thousand, we're going to throw at the car. Does that scare you a little bit? Yeah, that does scare me. You know what scares me? Making $810 payments every month. I know. I know. Dude, you work too hard to be this broke.

What's your household income? You're right. It varies. I'm a real estate agent. I've got a couple other businesses, so income is very inconsistent, but it's about $8,000 to $10,000 a month take home. Okay. Fantastic. So we're making six figures. You almost have the cash on hand to pay this off today? Just about. It might be a couple thousand short. Okay. Well, if I'm in your shoes, you're going to build up that emergency fund really quickly once you don't have an $810 payment in your life anymore.

And so that's what I'm doing, man. I'm going down to $1,000. Everything else gets thrown at this car debt, and next month you're paying it off. And once that thing's paid off, you're going to build up that savings account back up to where it was very, very quickly. And you're not paying interest to a lender, helping them get rich. You are absolutely right, because I'm paying $80 to $100 a month in interest. But here's what's stopping me. Can I tell you what's stopping me? Sure. So what's stopping me is when I play around with the investment calculator on Dave's website, brandthesolution.com, I always play around with

that retirement calculator. I think it's great. When I put $43,000 in a retirement account, and if I just get 6% on that $43,000 over 30 years, it ends up being $246,000. If I get 8%, if I get 8% on $43,000 over 30 years, it's $432,000. And at 10%, it's $750K. And I'm like, why would I put that $43,000 into a car when I could put it in my SEP IRA? Zach, the hilarious part is you are right. And you're going to be even more right when you take that $810 car payment and invest that into the market. So let's not play games here. Let's not do backwards math. If your logic is true, then you want 100% of your income that you can going into the market. And right now you can't do that because you owe a car payment. So let's get this debt cleaned up like tomorrow, dude. You can do this

and throw $100 out your Tesla every time you drive it because that's what you're doing with this interest man and that thing goes fast let me tell you that $100 will go real quick in the rearview mirror you got this dude pay off the debt come on back do your debt-free scream that'll be fun love it this is the Ramsey Show Thank you. Welcome back to The Ramsey Show. I'm Ramsey personality, George Campbell, taking your calls today about life and money. 888-825-5225 is the number to call. So over the last few days, maybe weeks now, we've been talking about how to combat inflation and protect your four walls. And our team here at Ramsey Solutions published

a great blog article that you can check out at ramseysolutions.com, all about just that, how to combat inflation and protect your four walls. The four walls that we talk about around here are food, utilities, housing, and transportation. So I've covered some quick tips on the first three, food, utilities, and housing. So I've covered some quick tips on the first three, food, utilities, and housing, and I wanted to just quickly talk about transportation, give you guys some hope, some encouragement, some tips to save in those areas as inflation keeps getting crazier and crazier. So let's talk about this. As you know, the average price of a gallon of gas has skyrocketed here in Tennessee. It's well over $4, probably higher where you are.

And so let's talk about gas real quick. Gas rewards and cashback programs can be some good options for you right now. We've got a grocery store called Kroger here, and they've got some rewards programs. If you're already buying your groceries or you're not even buying anything, I get three cents off every gallon. Not going to change your life, but hey, every little bit helps. And there's some great cash back apps out there like GetUpside and GasBuddy that can show you deals around your area and give you cash back for the gas that you're already getting. And speaking of GasBuddy, that's one of my favorite apps to track the cheapest gas prices. The cheapest gas is not always at my local wholesale club like Costco or Sam's Club.

Sometimes it's at the local shell down the street. And so you can use GasBuddy or Waze to find the cheapest gas prices in your area. Some great apps to have there on your phone. Some other ways that you may not have thought about, make less trips. That's right. Make one trip instead of seven. If you've got some errands to run, just plan better, people. That's all I'm asking you to do. And carpool. America's favorite pastime, carpooling. That's right. Great way to have some human connection while saving some money,

whether it's to the office, to school with the kids, kids' soccer game, whatever you got going on. Figure out a way to have less cars on the road, less gas being purchased. Now, when it comes to transportation, we got to talk about car prices. The car market is still pretty wild out there. I'm hoping for good things to be happening sometime soon. But let's talk about some ways to save on cars. Number one, the best way to save, just don't buy a car right now. I don't know why, but it's like when the car market goes crazy, we all want to go out and get a car.

So let's just slow down and go, do we actually need a car right now. I don't know why, but it's like when the car market goes crazy, we all want to go out and get a car. So let's just slow down and go, do we actually need a car? If the answer is no, I wouldn't be buying a car right now. That's it. So if your car is working, it gets from A to B, let's just take a chill pill. Number two, shop around for auto insurance rates. This one is huge. You just have had your auto insurance for years and years and years. You haven't shopped around and that can free up, you know, 30, 40, 50 bucks in your budget every month when you realize you're not getting that great of a deal. So check out our friends at Zander Insurance. You can go to ramsaysolutions.com. We can help you shop around all of the best auto insurance companies to get you the best deal on those premiums. And carpool with coworkers. We mentioned this, but this is another way that you can get around some of the craziness is carpooling. You know, here at Ramsey Solutions, we have over 1,000 team members.

James lives nearby. Kelly, you know, maybe a carpool to save some money on gas for a little while. And, of course, sharing a car. If you've got a second car, maybe you and your spouse share one for a little while. That can be a huge help. And lastly, if you do have to get a car, budget for it. Pay cash. Don't get ripped off at the dealership.

And I know out there they're going to say, hey, finance. You'll save $1,000 by financing with us. You say, no, thank you, sir. And you check that contract out for the sale, and you look and see all of the different fees they tacked on there, and you say, nope, nope, not paying that, not paying that. I'm walking away. That's what you do. I don't want you to pay anything more than sales tax and maybe a small, small dock fee. Anything outside of that, their premium care, their warranties, avoid that like the plague. They are ripping you off. So find a reputable dealership. Maybe go private sale and negotiate on Facebook Marketplace or Craigslist. Do what you got to do, but do not get ripped off during

these crazy times. So there you go. That wraps our series on how to combat inflation, protect your four walls. Hope that was helpful. A lot of empathy for you all out there dealing with this, trying to find the margin in your budget, which is what it comes down to. How do we spend less? How do we make more? How do we have that margin so that we don't feel the pinch of inflation? All right, open phones this hour. We are headed to Micah in Albuquerque, New Mexico. Next, Micah, how's it going? Hey, I'm doing all right. So my question is, I'm wondering if I should sell my house. Situation right now is where me and my wife are both 24 years old. We have a gross income of $70,000. Our house has $86,000 in equity.

But the problem is we're very overextended on bills. Right now, our net income each month is about $4,700, and about $4,200 of that is going out to bills. Ouch. Now, when you say bills, do you mean debt? On the way, in about seven months, and we're not going to be able to afford our bills when she goes on maternity leave. So my question is, does that seem like a viable option? We would be able to pay off all of our debt and make things a lot easier on ourselves. Yeah, I mean, it's a last-ditch option. I don't love the idea of just selling the house as our first option.

But it can be an option if you're willing to do that and rent for a while and you've got some equity in there, you can clean up the debt. I mean, this can be a great thing to sacrifice to get yourself in a better financial position. Okay. So when you say you have $4,200, what kind of bills are these? Is this all debt, consumer debt? Not all of it. A good majority of it is. I have about $1,200 in debt. So my mortgage is $1,300. You have $700 in car payments. And then I had to purchase some tires, and that's $300 a month. And that's a big chunk. $300 a month for tires? Yeah. Do you own a monster truck? $600 for the tires.

So you're paying $300 a month for tires. When is this thing paid off? What's the total amount owed? Total amount owed right now is $1,200. We did get pretty rough APR. APR came out to 18%. And I believe we still have about a year left on that because of the interest rates.

You have a year left on the tires? Yeah. To pay $1,200 off? You're paying $300 a month. Yeah, yeah. My brain hurts. I don't think the math is right on that, but let's talk about your situation here. You asked, should we sell the house to get out of debt. You have how much debt total? What's the total amount? Total debt is $22,000. $22,000 in debt, and you bring home $4,700 a month. Correct. What are the cars worth?

My car is worth $15,000, and my wife's car is worth $8,500. Okay. What's on the loans for those cars? Her car, we owe $2,800 left. And on mine, I just, I mean, I made a bad decision. I just bought it. And so I owe $15,000 on it. Well, it looks like we're selling a car before I sell the house, you know? I mean, that's a big move to go ahead and sell your house. And I'm okay with it, but I don't want you to look at this like it's some kind of leapfrogging shortcut. I mean, this is a big deal. And so if we can avoid selling the house and get out of this debt, which you're telling me if you sold the car, you would then be down to $7,000 of total debt? Yes, correct.

And you're thinking it's worth it to sell a house to get out of $7,000 of total debt? Yes, correct. And you're thinking it's worth it to sell a house to get out of $7,000? Well, yeah, my thinking was if I sell the car, this car that I just got, it'll save us $500 a month. So our bills would go down to $3,700. I just don't think this is that dire of a situation. You're not $200,000 in debt here. Sell the car.

We're going to get a beater. Save up some cash. Get a beater car. If you have to sell your wife's car too and you get two beaters, I'm okay with that if it means avoiding selling the house. Okay. Because you're going to have to rent the top of the market in Albuquerque, right? Right, yeah. Which is going to be higher than what you're paying right now in the $1,300 a month on the mortgage.

So I think this seems like a better solution in your head, but on paper, it doesn't make sense. So, man, if I'm in your shoes, I'm selling both cars. I'm getting beater cars with what's left that you have in cash, and then we're going to tack the rest of the debt, which is going to be, what, close to $5,000 at that point? Making $4,700 a month take home. And now you freed up those car payments. You can do this, man. Just follow the baby steps. One by one, focused intensity. You can do this without having to sell your home and rent at the top of the market. We're rooting for you, let me know if I can help in any other way. This is The Ramsey Show. show. Our scripture of the day comes from Hebrews 4.16.

Let us then approach God's throne of grace with confidence so that we may receive mercy and find grace to help us in our time of need. Stephen Covey said, Effective people are not problem-minded, they're opportunity-minded. They feed opportunities and starve problems. Good stuff. Our question of the day comes from Blinds.com. Their 100% satisfaction guarantee means even if you mismeasure or pick the wrong color,

they'll remake your blinds for free. You get free samples, free shipping, and with the new promos they run, every month you're going to save even more. You can use the promo code RAMSEY to get the best deal. Today's question comes from Jacqueline in Michigan. She says, I'm in baby step two currently, and I have about $28,000 in student loan debt to pay off. I have no other consumer debt. I'm 30 years old and would love to purchase a

house in the next few years once my debt is paid. However, I'm terrified of going into debt again with a mortgage. What's some advice for a first-time homebuyer who is scared of the additional debt of a mortgage? Well, Jacqueline, I love that you've got some pause about this and you don't see this as monopoly money, which is how a lot of people see debt, they just go, well, what's $500,000 of student loan debt? What's $500,000 of mortgage? But I will say that a mortgage debt is going to be very different than a student loan debt. With student loans, you're kind of paying for the past. You're not really building for the future. And the one nice thing about mortgage debt is you have an asset. You

have a home. It's going to appreciate. It's going to build in value. You're going to own it once it's paid off versus your student loans. I guess you own that piece of paper once it's paid off. Good for you. So to your point, I'm going to pay off all my student loan debt. I'm then going to build my emergency fund up to three to six months of expenses. And then I'm going to focus on baby step 3B, which is saving up for that down payment. And the best way to avoid this being a frightening experience where you have regret and remorse and you're losing sleep at night is for this home to be a blessing and not a curse. That means we're going to take the patience. We're going to save up 10 to 20% down. 15-year fixed rate mortgage is the only one. A 30 year mortgage

is a coffin. I mean, you're 30 years old. I don't want you to be 60 still paying this thing off. So we're going to get 10 to 20% saved down or more. We're going to get a 15 year fixed rate mortgage. And I want the payment to be no more than a quarter of your take home pay. So you can jump on to RamseySolutions.com, use the mortgage calculator and start to figure out what that looks like for you in your area in Michigan for a reasonable home. If that means you need to put a whole lot more money down in order to afford the payment to where it's a quarter of your take-home pay, I'm okay with that. It means we have some patience. We're going to keep saving. But that's truly the best way if you're scared of additional debt is to make it such a reasonable payment that you have margin left over and this mortgage is not causing you to have financial ruin. And so that's the way I would

do it. That's the way I have done it. And I've got a paid for house now. And let me tell you, I have no fears when it comes to money. Now, I'm scared of like snakes and clowns, but mortgage debt, I am no longer afraid of. So thank you so much for the question. All right, let's go to Eric. He is in Chicago, Illinois. Eric, welcome to The Ramsey Show. Hey, George, thanks for taking my call. Absolutely. What's going on with you? How can I help? I am calling today looking for probably just a little reassurance. My wife and I, we've had our quote-unquote grown-up jobs for about 15 years now, investing in our company's 401ks. Okay. But it wasn't until I started listening to the show that I realized

it's a little bit more complicated than that with match beating IRA, yeah, match beating IRA, beating traditional. And so I'm basically just, sorry, a little nervous. That's all right. You're doing great, man. I'm here for you. Appreciate that. Basically just looking for a little reassurance that our blind depositing of funds into our just standard company 401ks doesn't have us missing out too much on the future. Great question. So yeah, what we say is that match beats Roth beats traditional. Match is free money. It's 100% return on your investment. If you put in 100 bucks, they're going to match 100 bucks,

up to a certain amount. Followed by that, we love tax-free growth around here. And so you're going to use after-tax dollars with the Roth, and then you can we love tax-free growth around here. And so you're going to use after-tax dollars with the Roth, and then you can withdraw it tax-free in retirement. Followed by that, we move to traditional, which you're going to pay taxes on when you withdraw it, but you don't pay taxes on it now. So that's what that refers to. So it depends on your situation. Do you have a Roth option through your employer for your 401k, or is it just traditional? It's just the traditional 401k. Okay. And they do have a Roth option through your employer for your 401k, or is it just traditional? It's just the traditional 401k. Okay.

And they do have a match? They do have a 3% match. Okay. So in this case, we're going to take the 3% match in the 401k. It's the first thing we do. Beyond that, I would go to a Roth IRA, to our Roth options, and fully fund that. What's your household income? Before tax, $200,000. Okay, you're right there on the cusp. So look into the rules for this year

to make sure that you are still eligible to deposit money into that Roth, because there are income limits with the Roth IRA. Okay. But you should be right there at the cusp. You may be good. So I'd fully fund that, and beyond that, I'm going back to the traditional to finish out the 15%. Okay. So it's a good question to ask. Over the plane.

Yeah. I would still look into it, make sure that the numbers are adding up here, but get to that 15%. You're doing the right things. Make sure that you're invested in good growth stock mutual funds inside of that 401k because the 401k is just a shell. So you've got to be investing in something in that. So make sure you're investing in things with a proven track record, diversifying across the four types that we talk about, and you'll be just fine, my man. I appreciate the reassurance there. I'm here for you.

You sound confident. You sound like you're walking taller already. All right, let's move on to Kevin to close out the salaries in Denver. Kevin, what's up? Hey, good afternoon. How are you? Doing great. How can I help? Well, I have a good problem, but nonetheless, it's a serious problem I've run into. Went through a divorce eight years ago and had very little cash and living in my brother's basement and parlayed what I had taken from the divorce into three properties and I just sold one. Okay. Well, now I have $800,000 sitting there in a 1031 exchange. Wow. And I do not want to chase this real estate market.

Now with the 1031, you're going to have to roll it into another property. Or pay a lot of capital gains tax. I don't like that option. I don't either. I've talked to numerous financial planners and stockbrokers, and everybody has their own idea what to do. What's the general consensus? For myself, it's pay the piper, pay the tax.

What's the tax implications here? What are we talking? We're talking about $200,000 of that $800,000. So you'd be down to $600,000? Correct. And you're telling me I want to be out of the real estate game? I'm still in the real estate game with a rental property and the property I live in. And I could pay those two properties off and be debt-free, or I'm 63, and it's either get out of debt or go into some type of insurance plan or annuities to create retirement income in the next few years. And that's the dilemma. Yeah, I mean, you could have some cash-flowing properties that are paid off as part of your retirement strategy. And you could invest any difference into a taxable brokerage account.

You can do some catch-up contributions with other tax-advantaged retirement accounts. But there's a lot of complex things going on here. Have you worked with a good, reputable financial advisor that you like, or are they all giving you different advice? There's two certified financial planners I've been working with, and they do not know each other, and each one of them gave me almost identical plans. What was that? Half the money would go into an annuity with either immediate residual income or I could postpone the income until I retire.

The other 50% of the money would go into a indexed life plan, which in five years, I could withdraw money from tax-free. Man, there's so many fees involved with all this, and it sounds like the financial advisors are the ones winning. I would get in touch with the SmartVestor Pro, get a third opinion. You can do that at ramseysolutions.com. I want you to make an educated decision here. There's a lot of zeros on the end of this, and so I think you're wise to take your time, move slow, and make the right decision when you feel good about it. That's the important part. Thanks for the call, man. That puts this hour of the Ramsey Show in the books. My thanks to all the folks in the booth making the show happen

today, and you, America, we appreciate you listening in. We'll be back with you before you know it. Remember, spend wisely, save intentionally, and give generously. This is The Ramsey Show. Hey, it's Rachel Cruz, co-host on The Ramsey Show. If you want to do your debt-free scream live on the show, visit RamseySolutions.com slash debt-free scream. We'd love for you to come to Nashville and tell Dave your story. That's RamseySolutions.com slash debt-free scream.