The Ramsey Show - App - My Fiancée Has $220,000 in Student Debt! (Hour 2)

Episode Date: April 14, 2021

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🎵 Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studios, it's The Ramsey Solutions, broadcasting from the Dollar Car Rental Studios, it's the 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, Anthony O'Neill, Ramsey personality, number one best-selling author, is my co-host today. As we talk to you about your life and your money. It is a free call. Some say the advice is worth exactly what you pay for it.

The phone number is 888-825-5225. That's 888-825-5225. Travis is in Jacksonville, Florida to start this hour off. What's up with you, Travis? Hey, Dave and Anthony. Pleasure to speak with you guys. You too. How can we help? I've been listening to you for about a month now

and I feel like I have a decision to make. Apparently the only debt I have is on my truck. I owe about $20,000 on it. I've got $20,000 sitting in a CD that I moved out of my Roth a couple years ago. Kind of a dumb decision.

I realize that now. But I wasn't making anything at the time with the credit union that I'm at. And so I have another $20,000 in my savings, so I have my three to six months emergency fund saved up. And your truck's your only debt. Yeah, so I guess my question is, it's only been in the CD for two years. Should I go ahead and pull it out of there and just pay the truck off? It's not in a Roth IRA today.

It's just in a CD, and you've already paid whatever penalty or taxes you had to pay, right? It was moved from a Roth IRA to a Roth CD. Oh, it is a Roth still? Yes. Well, it's still a Roth IRA then. It's just a CD in the Roth IRA. Is that what you're saying? Yeah, I guess so okay well it's it matters to give you the the correct answer okay if you simply cashed it out and put it into a cd and it's no longer in a roth ira then i would use the money and pay off the truck but if it is in a roth ira i'm not moving it out i'm going to move it out of that

credit union with a smart investor pro into some mutual funds in a roth and do a rollover so you need to figure out you need to figure out what it really is okay how old are you i'm 28 okay and you're single i take it i'm I'm engaged. Good for you. When are you getting married? We don't have a date yet, but probably return the next year. Good for you. And what do you make? I'm on track to make $84,000 this year.

Okay. I love it. So what are you seeing? I'm seeing the same thing as you, Dave, too. I'm curious, though, Travis, I want to focus on what are you going to do moving forward, you know, with your money? Because you're going to do that there. But what are you doing forward with your money as far as in to set you up to win long-term? Well, I've actually got an appointment this Saturday to sit down with one of your smart investor players.

Nice. To get it into some mutual funds. So that's what I'm doing right now. I still contribute to my Roth IRA and have a 401k with a 6% match. So I'll put 10% in there and 5% in the Roth IRA. Okay. Well, I'm going to put you on the – if you're going to follow our stuff and you said you've just been watching us for a few weeks if you're starting to believe that what we teach you

will cause you to be wealthy the quickest and easiest although there is no quick and easy but this is the shortest distance between two points if you're starting to believe that the way you would apply the baby steps to your situation would be one of two ways way way number one this cd is not a roth when you get into it and you just discover i cashed out my four my roth a while back and it's just sitting there in a cd if that's the case i use that money today and pay off the truck or after saturday you can take that paperwork into your SmartVestor Pro. They can tell you what you've got. You pay off the truck with that money. If it is a Roth, then you're going to roll it to mutual funds in a Roth with the SmartVestor Pro, and you're going to take the money, the other pile of money, and pay off the truck.

And then you're going to rebuild your emergency fund with no payments and with your income. Okay. That one's uncomfortable. That makes sense. you're going to rebuild your emergency fund with no payments and with your income. Okay. That one's uncomfortable. That makes sense. But that's following the baby steps exactly. You'd leave $1,000 in the bank, and you pay off your truck as soon as possible, or you sell the truck, one of the two, but I think you keep the truck in your situation. It's not an unreasonable truck.

You can do this, and you can rebuild your emergency fund in two months, three months. Because you don't have a truck payment anymore. Right now, you've got a $600 truck payment. And to make sure. Yeah. And Travis, this is the only debt you have, correct? No credit cards, nothing else. No student loans.

Nope. Okay. Good for you. All right. That's it. So way number one is if it is a Roth, you use your other savings account, pay off the truck, and you roll the Roth to mutual fund Roth, okay, with your SmartVestor Pro. If it's not a Roth, then use that money and pay off your truck, and that finishes you at baby step three, and you start putting 15% of your income away, baby step four, into your 401k and your Roths.

And you can open a Roth with a SmartVestor Pro that day as well if you're doing that but if you're if it is if it is a roth you are out of money because you've used up all your money and you don't need to start any retirement plans until you get the emergency fund rebuilt yes because we got to walk back through that but it won't take you but a few months so by the time you get married you're going to be debt free and have your retirement well underway and have an emergency fund in place you're going to be in really really good shape it This is beautiful. Yeah. It's good stuff, man.

28. Man. Very smart. Jonathan's with us. Jonathan's in Orlando. Hi, Jonathan. How are you? Hey, I'm doing good.

Thank you for taking my call. Sure. How can we help? Hi. My question is, I'm debating if I should change the job that I have just because the income is not steady and is not consistent. And there's not much of it. It is a sales occupation. And there's not much of it.

There are some, correct, not enough that I see myself being in my older years and making Yeah, inconsistently making $100,000 a month is okay. So it's not the inconsistency that's the problem. You're not making any money. Correct. And what are you selling? Electronics. Electronics.

For who, yeah? Like one of those TV companies? Yeah, something similar to that, correct. Or cable companies. What are you thinking about transitioning to? That's the thing. I'm not too sure.

I know within my employer, I try moving up the corporate ladder. And yeah, even though there is a small increase in pay, what I've noticed is in sales management, sometimes you rely on others to make your income. And I think that's where I, as a go-getter, kind of feel uncomfortable. Yeah, what'd you make last year? What'd you pay taxes on last year? So, since it's inconsistent, last year I only made $30,000, but the year before COVID, I was able to make $55,000, $60,000. Well, I mean, if you can make $55,000 or $60,000, it's a different thing.

But if you want to move out of this, get in touch with Ken Coleman at kencoleman.com. He can give you the guidance on your career change. It sounds like you're changing careers is what it sounds like to me. Yeah. I think you've already decided that. You just want us to say it out loud with you. Inconsistent income is never the problem. It's the fact there's not enough income. As we continue to face challenging times, I hear that a lot of you have been calling Zander Insurance to see if term life insurance plans are still available. The good news is the insurance companies are starting to loosen up the restrictions

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the affordable coverage to give your family the peace of mind they deserve Anthony O'Neill Ramsey, personality, number one best-selling author of the book Debt-Free Degree, is my co-host today. Today's question comes from Blinds.com. Find out for yourself why Blinds.com is the number one online retailer of custom window coverings. You get free samples, free shipping shipping and new promos all the time always use the magic word the promo code ramsey today's question dave comes from sarah in wisconsin she says my daughter is a high school honor student student and is very ambitious she has twenty thousand dollars in mutual funds and twenty three thousand dollars in savings. Wow. Should we open an IRA for her with the $23,000? We already have $16,000 set aside for college. Dave, in Wisconsin, the average cost of college out there I saw was in between

$10,000 and $13,000 a year. Tuition alone. Tuition alone. So that means she's going to need about $40,000 to go off to college. And that's not counting room and board. Exactly. So my advice would be neither. Save all of that money for college. Agreed. So this way, you know, she can get through college without racking up debt. And then once she graduates college, I mean, with no debt, gets a job, then yes, let's go ahead and fully fund the emergency fund and start investing it yeah so let's let's pan back just a second we have an honor student yes yes that somehow has twenty thousand dollars in mutual funds wow somehow has twenty three

thousand dollars in savings yes what we have here is a kid that has amazing potential absolutely this kid's not a loser. Yeah. This kid's going places. And this kid may get some scholarships. And this kid is the best possible investment of that money. Yes. This kid, if you invest it into the kid, into their education, into a usable degree field.

Yeah. A degree field where you get a job, not left-handed puppetry. Yeah. Not some kind of stupid, but, you know, job, not left-handed puppetry, not some kind of stupid but crazy nuanced degree, but something where there's actually use in the marketplace for the knowledge with this amazing young woman, then the money that she will make extra because of that education and because of that education being debt-free

is much greater than the money she would make on that Roth IRA and a mutual fund. You said it well, Dave. So what's a better investment? The kid. Yes. Because this is a kid worth investing. Yes. Into herself.

Yeah. You investing into her because her future is freaking bright. Absolutely. And so just give her some guidance on going to a college you pay cash for give her some guy or that she gets scholarships and gets to go free to i don't care where it is where's the cheapest place to go to school within reason that you can pay for now this kid may be able to go to an expensive school and they give it to her absolutely that's possible very possible and still you're going to need another thirty thousand dollars to get through four years of just miscellaneous crap yeah books uh you know travel or you know whatever housing

i don't know what it is you're going to be into something so you're going to need this money even if she gets a free ride to muckety muck school yes or she just goes to state school and pay state tuition either one yeah now you know we add to that. If you want to lower the cost of education, let's start taking college equivalents in those AP classes and knock out. I mean, we talked to one the other day. I don't remember if it was you, Amir, Ken, and me, but that the kid was out of school

in two and a half years because they took college equivalents in high school. I mean, that's golden. I will hope that this smart, young, Modern student. Yeah, she's doing that because she could actually go in there, go into school.

I talk about this in debt-free degree. She can go into her college experience as a rising sophomore. Yeah, yeah. And then that saves you right there. One-fourth of it. Exactly. Of whatever it is.

Whatever it is. And you already have $60,000 with the 20, 23, and 16K. What's the worst-case scenario, money-wise, mathematics-wise, to this woman's point? The worst-case scenario is you don't need hardly any of this money, and she gets out of school four years from now, three years from now, with $40,000 in the bank, and it's made no money for four years or three years. And now you invest it. What'd you lose?

But that's not a bad thing. What'd you lose? You lost the potential income on a mutual fund for three or four years while you did the right thing, and then that's investing this studly kid. This kid's amazing. Absolutely. So this is the kind of stuff Anthony talks about all the time on the table, and he also talks about it in debt-free degree.

Yeah. You can go to college debt-free. Just because the stupid government, which can't balance its own books, suggests student loans and won't stop this epic disaster called the student loan program that is screwing up people's lives all over America, just because it's normal out there to get a student loan in a world that's broke where normal sucks doesn't mean your kid has to get a student loan. Maybe your kid has some sense because mom and daddy grew a brain. Right.

Right. And had a little backbone. Yeah. And tells the kid how things are going to be. Because after all, it's a kid. They're not grown-ups yet. And they're not mature enough to make that decision on their own. Yeah, a guy called me up, and he's, like, from Michigan, and says, I've saved $80,000, but what am I going to do?

My kid told me they're going to go to a more expensive school. And I said, well, see, you ruined that whole thing back at six years old. Because at six years old is when my kid figured out they don't tell me stuff. I tell them stuff. Exactly. So then we get control of who are the freaking inmates running the asylum or not. Yeah. That's what we're doing there.

Oh, changing subjects. A few weeks ago, the IRS announced that it's pushing the federal tax deadline back. Everyone in the U.S. now automatically gets an extra month to file, with the date moved from April 15th to May 17th, and that's for federal returns, folks, not estimated quarterly payments and not necessarily in your state. If you have stated cup tax due, it'll depend on your state. Why did it get pushed back?

Well, the pandemic is still affecting things, and when you throw in the very recent tax changes, April 15th deadline was looking like a lot of trouble for a lot of people. With the change to May 17th, you've got an extra month to not just file, but also to pay your tax bill. If you're in Texas, Oklahoma, or Louisiana, your tax date from the IRS is still June 15th because of the storms that hit you. So what does all this mean? Well, it means you have extra time, most of you do, to file most of your taxes. But if you can file now, especially if you're due for a refund,

you should do it immediately. And that advice comes from the IRS, which doesn't matter. We don't take advice from the IRS. If you need help filing either online or with a trusted tax advisor, Ramsey can hook you up. Text TAX to 33789. Get it done. Text TAX to 33789.

Andrew is in Boston. Hey, Andrew, welcome to The Ramsey Show. Hey, thanks for having me on. Sure, what's up? So I'm 24 years old i'm engaged and i'm about to marry somebody with 220 000 in student debt hee-haw should doctor or lawyer uh no she's she's going to be a doctor of veterinary medicine okay good okay all right yep so i'm saving up enough money and plan to have enough cash by the time she's done with school to be able to pay off that debt in cash.

Wow. What are you doing? Yeah. I'm a chemical engineer. Okay. What are you making? I make about $135 a year. Wow. And when do y'all get married? We are getting married in two months. And when does she graduate she graduates three

years from now so just to give you a breakdown on the debt she has 60 from undergrad she's one year in so she has 40 from that and then each three years is accumulating another 40 so are you going to cash flow hers from this point forward that's that's my question i'm not sure because yeah i would do that i would do that before i paid on the existing debt yeah you got a good income and a good plan and a good head on your shoulders one thing about chemical engineering they taught you math right yeah now is she working while she's in college as well no she's not probably not is she no i mean it's hard for veterinarians yeah it's a school eight to. Is she? No. I mean, it's hard for veterinarians. Yeah.

It's like going to med school. Yeah. It's hardcore. Yeah. Yeah, man. I don't think you should be saving to pay off debt. I think you should be cash flowing. Cash flow is job one.

Any money above being able to cash flow her way out that you can throw back at the debt is job two. Yes. So what about investing then? None. Let's get her out of school and get this cleared up debt is job two. Yes. So what about investing then? None. Let's get her out of school and get this cleared up before we do anything. She's a good investment, like we were just talking about. This is a good investment. She's going to make a great income, assuming she chooses well on how to use her DVM.

There are DVMs that make more than medical doctors, lots of them, because they chose how they were going to operate their practice in a way that was successful with money. Now, some DVMs get caught up in, you know, going $200,000 in debt and then don't make any money because they're not careful on how they build their career. We'll be right back. Anthony O'Neill, Ramsey personality, is my co-host today as we talk to you about your life and your money. It's a free call at 888-825-5225. Joe is in Austin, Texas. Hi, Joe. Welcome to the Austin, Texas. Hi, Joe. Welcome to the Ramsey Show. Hello, sir.

Long time listener. You too. I love your ministry, and I love what you and your disciples do. Thank you, sir. I really do. I would not be where I'm at today if it was not you. I'm proud of you. And I mean that.

Just a quick question. I'll get right to it, sir. I've been in the TSP funds now for over 20 years. And I'm in the CSI funds, as you recommend. Yes, sir. But I'm wondering, when I get ready to retire, sir, do I just keep it like that, or do I shift the funds? I would roll it out to an IRA in good mutual funds, because you can find mutual funds that will outperform that mix in the TSP. Okay.

So get with a Smart Investor Pro and do an IRA rollover into an IRA and pick out some mutual funds that you want it spread into. How much have you got in the TSP? I'll have about $600,000. Ha-ha! Way to go, Joe! Yeah, baby! Wow. Wow.

I love it. How old are you? Right now I'm 58. 58 years old and you have 600 000 bucks so and uh is your house paid off uh no no it's not sir um yes well i'm selling my house sir and i'm i'm buying a new one and i I got it. I bought this purchase. I'm purchasing this house at the perfect time. I purchased it at the low end,

and I'm going to be selling my house at the higher end. So I'm going to be throwing 50% down. The property's going to cost me about $400,000, and I'm throwing $200,000 down on it on a 15-year mortgage. Yeah, so you're almost a millionaire already because of you i didn't give you any money you did it well the advice you gave me and i never make any big decisions without check i listen to you every morning uh i don't make any big decisions without trying to reach the show or research it first. Wow. Well, I'm honored.

I'm so proud of you, Joe. Gotcha. Very, very well done. Yeah. So, you know, you retire from the federal government, and you have the Thrift Savings Plan, the TSP. You had it invested properly in that. But the C plan is the Common Stock Index Plan, and it's pretty much like an S&P 500 index. And the I is the international, and the S is the small company.

You can sit down with a SmartVestor Pro and find a better mix of mutual funds that will outperform those three indexes. Not by a ton, but by enough that it's worth doing. And also, that way you've got it under your thumb to manage it all these years in retirement because you're only 58. I mean, you're going to be managing this for 30 years at least, right? I mean, to 88, right? So, you know, you've got a lot of years to make this money perform,

make it do what it's supposed to do. So very good job. And by the way, Anthony, that's just a reminder. Anytime you leave, whether it's retirement or otherwise, you always take your 401k, your retirement plan with you in the form of an IRA rollover. And the reason is, number one, you've got better control and you're watching it more closely. Number two, you've got a lot more options.

There's 8,000 mutual funds to choose from to put your ira into and most for like 401k say dave i think it's right around like four or five options right maximum of maybe 12 or something like that i think we got 10 or 12 here yeah but and we've got really good options here and you're not gonna i mean if i were to retire which i'm not ever going to i'm just gonna die but um but the uh I were to retire, I would roll it to an IRA. But I don't think I would get substantially better options than the 401k options I picked for my 401k plan here at Ramsey. I mean, I picked them out. Right.

So me and the SmartVestor Pro, you know, we designed this plan because I'm no good mutual fund. So I'm not going to outperform this 401k substantially but most of the time you could yeah yeah yeah that's simple i love it phoenix is our julio is with us in phoenix i'm sorry hi julio how are you how are you doing better than i deserve what's up in your world uh so i have a couple questions for you um i'm selling my current house and want to take the equity from this house to put down the debt payment on the other house i'm going to buy a question is how much of the equity should i put down all of it unless you have debt do you have debt. Do you have debt? By the time I finish the sale and purchase a house, I should be out of debt.

Good. So do you need the money for anything other than buying a house? I don't have any money on retirement, so I was wondering if it's wise to save some size for retirement and put the rest on the house? No, I would just start putting money into your retirement, 15% of your income going into retirement after you're out of debt and have your emergency fund in place.

Here's the thing. Having money going into a 401k and having a paid-for house are the two elements we most often find in our data points of people who become millionaires. And so your highest probability chance of becoming a millionaire is paying off your house and building money in your 401k and your Roth IRAs, right? So if one of the goals is paying off the house and putting as much down on the house as possible, it gets you closer to having a paid-for house. Okay.

Now, let me ask you this, Julio, too. One of the key things we talk about is having an emergency fund outside of your equity do you have anything sitting in outside of a savings account for emergencies no not right now that's what i was thinking maybe i should take some of the equity you probably should do that yeah yeah yeah you should do that because i don't want you moving into a house broke yeah there you go right yeah but no I would not use it for retirement, and no, I would not use it to buy a car, and no, I would not use it to go on vacation. I would use it to get out of debt on your house as fast as possible.

So beyond your, other than the emergency fund, I would throw it all at the house. That's a good catch, Anthony. Yeah. Good job there. Open phones at 888-825-5225. Alyssa is in Cincinnati. Hey, Alyssa, welcome to the Ramsey Show. Thanks for having me.

Sure. How can we help? My husband and I, he's sitting right here with me. So we are on Baby Step 2. We have around, we're 25. I have, I say we because we're married now. We got married two months ago. Congratulations.

Thank you. So we have about months ago. Congratulations. Thank you. So we have about $30,000 in the bank. The only debt that we have is my student loans. I'm a nurse. He's a firefighter. So we have $32,000 from my student loans, and then his paramedic school, he just started about a month ago. By the end of it, it's only a year.

It's about $8,000. So there's that. So he used to drive a Ford F-150. We sold that, thanks to your plan, sold that and paid so that we had about $24,800 left on that loan. And then we sold it for $27,500. We made money off of that, which was nice, and then paid for a Camry in cash. So we have no car payments. I was driving a 2011 Chevy Cruze, and then it crapped out on me. So I had that one for six years, and the engine shot. So I guess our question is, with the $30,000 that we have in the bank and keeping the debt in mind, obviously, which direction should we go and how much we should pay for a car for me? Because I'm currently carless right now. Well, for the first thing I'm going to say,

you're going to take 8,000 of that and you're going to put that towards the school. So that way we're not racking up any more debt. Then I'm taking the rest of that and I'm going to sit there and talk about, okay, I'm going to buy a cash car as cheap as possible. And then I'll put the rest of that towards my debt. If you need a car, now the key thing is if you need the car, if you don't need the car, if y'all can work another six months with sharing cars, great, I'm putting it all towards the debt. But $8,000 of cash flow to school, so we're not racking up any more debt. And then I'm going to buy a cheap, very cheap, affordable, reliable car

and then I'm putting the rest of it towards my debt. $2,000. And then you put $8,000 for the school. That leaves you $20,000 to throw at the 32 student loan. You've got $12,000 in student loans to pay off as your next big goal. And you start working. You keep working. Your debt's snowballed at that point.

And then when you get out of this mess, you're going to move up in cars because you're both driving crappy cars. Yeah. anthony o'neill ramsey personality is my co-host today open phones at 888-825-5225 i'm dave ramsey this is the ramsey show chad is with us in minneapolis hi chad how are you very good how are you? Very good. How are you? Better than I deserve.

Praying for your city, brother. Yeah. You and me both. How can we help today? Looking at what do you suggest for life insurance for blended families? I have four children. She has two. I'm the breadwinner between the two of us.

And right now I currently have some policies, you know, set up for my children. She really has nothing. We just bought a house that would house all six. Both of us have 50-50 custody of all of our children. If something were to happen to either one of us, we would essentially lose custody of the other's children. How do you recommend sort of dividing out and planning for life insurance when I want to help support my wife, but I also want to support my current wife, but I also want to support my children. And how do I come up with that formula?

Ten times to 12 times what each one of them would need per year in the event of your death. Okay, so let's run some numbers. Let's just play a game here, okay? So let's just start with your current wife has three children from her former marriage that would still be with her were you to pass away. Let's start with you, okay? Yep. What would she need from you to make sure your wife is taken care of upon your death per year in income?

Do you have any assets? Do you have a bunch of debt? What kind of situation are we in financially? Neither one of us have any debt. We have equity in our homes. I make $120,000. She makes $40,000. The house that we have is way bigger than, like if something happened to me,

there's no reason that she would need a six-bedroom house for her and her two daughters. So she would likely sell the house. You don't have to do it right now, but the answer to the question is run the scenario out, and let's just throw out a number. Okay? Let's say that you wanted to make sure, in addition to her 40,

that she had another 60,000 a year coming in. Mm-hmm. Okay? So 10 to 12 times that for her. On you. Okay? Right. And so, you know, that sounds a lot like 750 000 bucks i'm making these numbers up it might not be that but i'm still teaching you how to do the formula okay then on your kids

they're going to your ex-wife but you want to make sure that they're okay and you would cover the equivalent of child support plus some probably plus college and cars right right and so uh three kids through college three kids you said there's three right no i've got four four okay how old are they uh 13 to Okay, and you want to support them, not your ex, but them. Right. To make sure they have, that she has the money to raise them, and that they've got the money to go to college. It's probably another half a million dollars. Right. And that would give them like $3,000 or $4,000 a month, plus have a pile of money there when they get ready to go to school. And that money, the beneficiary on that money is a family trust

that you put directions in the trust. It's formed upon your death. The life insurance beneficiary is the children's trust, and the trustee will conduct the money the way you want them to conduct it. And so in my old trust, when our kids were minors, it said it would be invested in the four types of mutual funds I teach, growth, growth and income, aggressive growth and international. And then the trustee is to disperse $3,000 a month to or whatever number of dollars a month to the mother for care and feeding of kids.

And if there's any major medical, the trustee can disperse for that. They can disperse for their first car up to X, and they can disperse for college, and whatever is left after college is handed to the kiddo. Right. Ex-wife has no money access. Trustee of the trust is not kin to ex-wife. Correct. And that's like your brother or whatever, that kind of a thing or something like that maybe well probably wouldn't be your current wife because she probably doesn't want to deal with all

this later but um that's probably that'd probably get real messy and toxic but um but anyway someone you trust that's why we call them a trustee and you've put all this in your will and so i'm gonna guess and say you know you're making a making $100,000 and some change. You're probably going to need a little over a million dollars, but that's about what it would have been in a traditional setting. We're just divvying it up. As a matter of fact, you could do one policy for $1,000,002, and current wife gets $7,000, kids trust gets $500,000 in the beneficiary.

You can have one policy and have a split beneficiary. And it's cheaper. It's cheaper to buy one policy. And again, I'm making those numbers up. I'm not suggesting a million, too, but it's probably going to land something about like what we just talked out unless you want to raise it or lower what you're giving them monthly and what you're taking care of.

If your ex-wife is a multimillionaire, you may not be that concerned with this. Right. She makes more money than I do, so I'm not too worried about the kids' day-to-day life. It's just making sure that there's something, you know, in the event that something happened to me, like my inheritance coming to me would get divvied out to my children through that trust so that they'd get it when they're of age. Exactly. You can use the trust for the assets as well as the beneficiary position in the life insurance. So you're controlling all of it, and the ex isn't going to control it but

and you know i don't know what kind of basic what kind of speaking terms you are with your ex but i would go ahead and tell her exactly what this is going to look like i didn't ask her i'm going to tell her right right yeah this is what's going on i read the will while i'm still alive yeah and that kid that way everybody can go ahead and be pissed off if they want to be pissed off now Right. Yeah. This is what's going on. I read the will while I'm still alive. Yeah. And that way everybody can go ahead and be pissed off if they want to be pissed off now. Right. We'll get this out of the way. And there's no, well, Dave really meant.

No, Dave's going to tell you what he meant. We're going to go and do that now. And that just gets rid of the movie scene from the bad movie with the, you know, the crazy stepchildren or whatever, all this stuff in these movie scenes on the will. And so you get a will and you get life insurance. And that's a great guy preparing for his wife and his children. Absolutely. Let me ask you another question. I'm seeing that a lot of families now.

Well, not a lot. I've had quite a few people ask me, hey, how much life insurance should I take out on my 100% healthy child? None. That's what I was thinking. I just want to make sure I'm saying the right thing, America. Thank you. Well, I mean, the only exception would be if you're completely broken, you have no emergency fund. You can get a child rider on your current policy that's about $10,000 or $15,000 for like $50 a year.

It's an attachment to your existing policy. Yeah. And what that would cover would be burying your kid if something happened to 50 bucks a year. Okay. It's an attachment to your existing policy. Yeah. And what that would cover would be burying your kid if something happened to them, God forbid. Right. Right. Because you don't have the money for a burial. Yeah.

But if you've got $25,000 in your emergency fund and you're debt free, you would, God help you, pay that out of your own pocket. Right. And through your tears, obviously. What a horrible thing to experience. But children are not creating an income that has to be replaced. Now, if your child is doing diaper commercials and making $100,000 a year, we might talk about it. But otherwise, they ain't working.

Right. And so we don't need to replace their income. And 99% of child life insurance is crap whole life investing for college stuff, and it's trash. I agree. Just wanted to make sure I asked the question, America. Here's the thing. Anytime something sounds kind of weird to you, it means it's a ripoff.

So let me give you an example of that. Gerber makes baby food. Don't buy life insurance from gerber that just sounds stupid when you say it out loud it really and they sell whole life life insurance wait what they do you can buy a gerber life insurance policy on your little baby and get screwed i mean they just will rip you off. It's unbelievable. So if your life insurance came from a baby food company, you might have got screwed, really. I mean, how hard is this to figure out?

Wow, there you go. Just a thought from old Dave today. Here we go. That puts this hour of The Ramsey show in the books. This is James Child, producer of the Ramsey show. Did you know the Ramsey show is one of the most popular podcasts in the world? Subscribe or follow today wherever you listen to podcasts.