The Ramsey Show - App - My Son Is Uninsurable...What Should I Do? (Hour 3)

Episode Date: March 22, 2021

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🎵 Live from the headquarters of 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. Anthony O'Neill, Ramsey Personality, is my co-host today. Thank you for joining us, America. Open phones here at 888-825-5225. Don's with us in Lexington, Kentucky.

Hey, Don, welcome to the Ramsey Show. Hey, Mr. Dave, Mr. Anthony, how are you doing today? Better than I deserve. How can we help? Me as well. Mr. Dave, I've got a question. I'm 63 years old. I've got about $360,000, and I had it in annuity.

I don't know. I wasn't told the truth about this annuity, and I found out about a year and a half ago. And so it kind of upset me, and I wasated with this guy. And so I just got out. I rolled the money over into an IRA and finally I found a bank that would give me 3.15% interest on that money, locked for five years. And that's what I've done with it because I don't know a whole lot about investing. And I was wondering what your thought process or thought on that is. Could that money be making me more than, I mean, is that a good thing that I've got it where I've got it locked at 3.15%? Or should I think now differently about going into mutual funds or things like that. Well, the good news is you got into something that is predictable and that you completely understand and have peace with.

Right. That's good news. And that part of your move is a good move. Could you have done better? Yeah, you probably could do better. I don't have my money tied up that way, and I'm not some kind of genius. So what I would tell you to do is to begin meeting with one of our SmartVestor pros and learning about mutual funds. I'm 60, so we're very similar in age.

My personal 401K, IRAs, and that kind of stuff are invested in mutual funds. They're invested across four types, growth, growth and income, aggressive growth, and international. Now, what you want to do is learn from, and I had a similar experience to what you had, but mine was 40 years ago to getting in with a guy. And what I learned from that is that it is my job to understand it or not move the money. You don't count on the guy. You count on you.

You're the guy. And so you spend time with a smart investor pro learning about these mutual funds, how they work, what the history on them is, and therefore you can kind of say, well, I kind of think based on that history, that gives me comfort to move some of this $360,000 over there, and you can do an IRA rollover and not have any taxes involved when you're ready to do it. There is no rush. Right. But let's just pretend that you make 10% on $360,000.

That's $36,000. Or you make 5%. That's $18,000. So we're having a $20,000-a-year discussion, roughly $2,000-a-month discussion here. Right. That's worth doing a little research over absolutely absolutely well i'm kind of like you i like bricks and mortar and real estate and um i've got i've owned uh

quite a bit of real estate uh apartment buildings and uh i don't know i've always thought about having plan a b and c yeah and uh I've had those probably for 30 years. They're paid for. I'm completely out of debt. I've probably got, I've got a nice, real nice $260,000, $65,000 home. It's bought and paid for.

So you're easily a millionaire. Yes. Well done. And, and, uh, you know, I'm retired,

uh, with 30 years of retirement. And, uh, I've pretty much done what pretty much done what you talk about my whole life, just old-school saving and paying out of debt and paying my way as I go. Well, what I'm prescribing here is not anything really fancy. It's just that it's new in your situation. And so if I'm you, I'm thinking I might be losing $20,000 a year based on what Dave's saying,

so I should investigate moving this sometime in the next 12 months and just go on a journey of learning. And don't go over there and meet with some guy and move the money the first day. Absolutely. Go over there and learn. I don't know. That's probably what I've done too soon when I started out on the first in annuity. Yeah.

And then I found out eight years later that it was just a horrible thing. Yeah. And so I just pulled it and put it in at 3.15 because I didn't know what I was doing. And I'm like you, I believe in if you don't know what you're doing, do nothing. Yeah. Yeah. So anyway, good information. Just hit SmartVestorPro at DaveRamsey.com.

It'll drop down a box. You can pick the one in your area that you like. They don't work for us. We do endorse them. And one of the things they have to do to get our endorsement is they have to have that heart of a teacher. And so they're not going to mind sitting with you, and they're not going to pressure you. And if you feel skunky with them, or if you feel a little slimy, get out of there. You shouldn't.

We've vetted them pretty heavily, but, you know, you need to be comfortable. And, you know, you've been burnt once, and so it's okay to go in there with your shields up. I'm not moving a dime until I understand it. Yes, absolutely. And, you know, Anthony, that's the thing. There's something with something we're not comfortable with or we don't know about. We all want someone else to take care of it.

We sure do. That's a comfortable thing. We're not willing to be uncomfortable to grow. Yeah. And I'm just thinking about areas in my life that are that way. I mean, I think about, you know, I don't understand this, so would you just take care of it for me? No.

And I'll give you an example of that. Freaking taxes. It's right now, it's tax time. So I've got this massive, constant meetings just trying to get the dadgum IRS settled and all this stuff and get them all lined up in this thing the size of a phone book that we ended up filing and all this stuff and get them all lined up in this thing the size of a phone book that we end up filing and all this stuff. And I hate it because it makes me mad how much I pay in taxes. It's my money. I earned it. It feels like theft. And so I'm mad the whole time. And on top of that, it's intimidating as crud. It is. And so i have to force myself to meet with these guys who

are so smart and say okay i don't understand and do you ask a lot of questions oh god yes they hate me do you leave feeling more knowledgeable though yeah yeah because i'm not going to sign it until i at least understand the basics yes sir because guess who the irs is going to come knock on the door you not the guy right they're going to come see old Dave. Yep. You know? So I want to know enough. Now, do I go through, do I understand every little thing? No.

But, I mean, here's the big thing. Tell me how that worked. What is this? How's that work? I don't understand. And then next year they have to tell me again. Because I don't always keep it. You know, I don't always store that information well in my brain.

Right. But that's a similar thing for me, just being transparent, that I hate it, I'm mad about it, I don't want to do it, but it's my responsibility, and if I don't take the responsibility and learn enough about it, I get burned. But the good thing about it, though, Dave, is you have tax people

in your corner who are willing to teach you along the process. Yeah, and it can't be my financial anything unless you have the heart of a teacher. Yeah. And so bless his heart. He earns his money, you know. Especially with Dave Ramsey. Oh, man.

It's a hard thing. This is The Ramsey Show. You know, I get lots of questions about ID theft since it's a huge problem. Most people just worry about financial fraud, which is a big mistake. Tax refund fraud, for example, is out of control. Last year, the IRS paid out over $10 billion in fraudulent refunds. Thieves are stealing your refunds. They're also hacking into accounting and tax preparer firms to steal your personal information and use it for all kinds of fraudulent activities that aren't detected by pricey credit monitoring and prevention plans.

That's why Zander's ID Theft Plan is the only one I've ever recommended or used. They cover all types of ID theft, including tax refund fraud. Plus, they take over the work if you become a victim, protecting your money if you get hacked. They even protect your kids for free on their family plan go to zander.com or call 800-356-4282 it's just the smartest most affordable way to go Anthony O'Neill Ramsey personality is my co-host today here on the Ramsey Show in the lobby of Ramsey Solutions. Julie dropped by from Kansas City with a question. Hey, Julie, what's up?

Hi. Thank you for having me. I have two children, a son that's 28 and a daughter that's 19. And with your guidance, I'm going to have them graduating debt-free from college in just a couple short years. Congrats. So thank you for that. My son has cystic fibrosis.

He's 28. And cystic fibrosis is a terminal disease which makes him uninsurable. Sure. So he's healthy and he's working now in his career, but he's married and has a one-year-old son. So my question is, I will be self-insured in about five years. And so my question is, would I continue with my life insurance in order to help support his medical needs later in his life

that we're expecting for his bills. You're self-insured. So what will your net worth be? Well, currently it's about $500,000 and I'm at $53,000. So I'm expecting hopefully to be a millionaire by then or a little more. And I do have him. I've educated him on your system and he's following it fairly well he has a house now um and he's working towards his own goals

so i'm more concerned about the health concerns the medical bills later on as he um ages well i i know i would not get additional life insurance on you to take care of his medical bills were you to pass. You've got a good net worth. What I would do is consider allocating a larger portion of your estate to him rather than the other child. Okay, and I've actually already got my will established. I've talked to them both, and have 45 to both of them and then with the additional 10 allocated to specifically a trust fund for his medical that's under his wife's name there you go okay and that should take care of him right i believe well you've already done that i've already done that so how is he not

taken care of if you pass away then well i just i wanted to ask the question i was here and i've been wanting to ask the question i'm not i'm not being combative i'm just i'm just wondering it sounds like you've done it wait great job i mean yeah you did you you're like eight steps ahead of me you've already executed what i dreamed up that's excellent so yeah yeah that's um you know all you did was uh you know say we're going to 10% of my net worth additional to take care of the medical bills, and you've done some calculations that give you an estimate that thinks that that's going to take care of it. I don't know why you would need more.

It sounds like you did your job, touchdown. Okay. And then some. Awesome. You've done a wonderful, wonderful job. What do you do for a living? I'm currently a staff accountant. I also have a second job at Home depot as for to help pay off my house i've just finished my call my daughter's

college fund just the other day she's a sophomore in college and um she has a scholarship and with her dad's help and my help and planning then we have her set on a path yeah and also i wanted to kind of let you know that um she told me one day she says you know um dave's like my stepdad so the evil stepdad evil in there yeah yeah that's fun well way to go very very well done I mean, you've worked this thing all the way through. Everybody's got a game plan. Very, very well executed. You're a rock star.

I'm so proud of you. Well, thank you. I appreciate that and appreciate the confidence. I just wanted to have that answer. I thought I did that. I think you've already covered him. Yeah. I think he's done.

Okay. Thank you so much. Thanks for coming by. Bye-bye. Wow, that's powerful. That's very powerful. So you already had it in place.-bye. Wow, that's powerful. That's very powerful. So you already had it in place? Yeah.

I mean, that's amazing. Now, those of you that have a special needs child often ask us about a special needs trust. The only difference in that and minor children, for minor children that have special needs or children that are of adult age. The only difference is, like when my kids were little, we had a family trust that would have been formed upon our death to take care of them until they reach adulthood, and then the money would be handed over to them. The only difference in that, a special needs trust with your will, is the money goes into the special needs trust, and it takes care of the special needs person out of the income created for the rest of their lives.

Okay. Instead of just until they're 18 or 21, and then the money's turned over to them. It's never turned over to them. There's an income created for life. Yes. It's like, in a sense, you would, in a college or university situation, they call it an endowment. You give enough money that each year it creates a scholarship off of the income yeah that the money creates and that's in a sense what you're doing and you fund that special needs trust with assets or until you've got assets you fund it with

some good term life insurance but like in in julie's case she's built up enough assets already to fund the estate plan exactly and so this is a similar situation, except cystic fibrosis is not special needs. It's just a medical condition with a tough prognosis. But she's done a wonderful job of thinking through it, planning through it, very courageous in the way she's addressed this. Very well done. Yeah. Good job.

Well, here at Ramsey Solutions, we want to transform so many lives that disruption spreads like wildfire across our country. Not only in financial, but also in mental health, in marriage, in career, in leadership. Imagine a world where it's weird to have a student loan. Imagine a world where the majority of people pay cash for their cars, where the credit card is a cigarette of the financial world. Used to be cool, but not anymore, baby. Where working a job you love and getting paid more than you've ever been paid in your life because of King Coleman is normal. Where your relationships and your boundaries are functioning the way they're supposed to

because of Dr. John Deloney and so on. Certainly going to school debt-free or paying off your student loans and getting rid of Sally Mae because of Anthony O'Neill. Imagine being part of causing that level of disruption through the whole country with the work that you're doing every day. That's why we have 1,000 people here at our company. We're creating digital products, services. We help transform people's lives with the goal of disrupting the toxic culture in America.

And you have to admit, America has issues. If you want to join us on this crusade, we're currently on the hunt for software engineers, Ruby on Rails, Java, C Sharp, front-end technologies. If you're a UX designer, SEO, content marketing specialist, a creative, great in sales or admin, we've got about 300 positions we're going to fill in this calendar year. So to find out about our available jobs, we won Best Place to Work, according to Inc. Magazine last year. Text WORKTHATMATTERS to 33789 or click the Dave's Hiring tab on the front page of DaveRamsey.com. Text WORKTHATMATTERS to 33789.

You can get a full list of everything that's going on there. Good stuff. Good times. Claudia is in Dallas. Hey, Claudia, welcome to the Ramsey Show. Hi. Thanks for having me, Dave. Hello, Ayo.

Hope you guys are doing well. Great. How can we help? So I'm a single mom, recently divorced with two wonderful children. We have really worked our butts off this last year to get out of the divorce debt and through Step 4 in a year. Wow. Yeah, it has been a fight, but the kids have been on board and we've had excellent support. And so we're actually setting up their 529s this week. So we'll be through step five this week.

I'm really grateful, really excited. Cool. So we were, you know, we had in our goal, really excited about getting our dream home. Who's we? You got divorced. Who's we? Oh, the kids and I. Oh, okay.

You're sending them off to the salt mines every day. Get some work out of them. I was like, man, she loves her kids. Let's go. Well, they cut back on snacks. Okay, there we go. That's her contribution. All right.

Yeah. We had our dream home in mind, and so we've been focused on that. We found a home that we like it's within our budget um i've signed the contract done the inspection and appraise and everything is looking good so far but it's not our dream home and i'm thinking that if we wait and you know just keep chugging along at this and say for another year, we could have that dream home. And I'm wondering if you or me, would you? I would wait.

If you can do it, if you're going to get a better place in one year, I'd put it off one year. Absolutely. No questions asked. Wait. Anthony O'Neill Ramsey personality is my co-host today. John and Ashley are on the phone. If I can figure out how to do it. There it is.

John and Ashley are on the phone in Grand Rapids, Michigan, to tell us about their debt-free journey. Hey, guys, how are you? Hey, Dave. Hey, Dave, how you doing? Better than I deserve. How much have you guys paid off? We did $63,000 in 30 month. Good for you. Wow. Excellent. A lot of money. Over $2,000 a month for two and a half years. What was your range

of income during that time? We started out just over $90,000 and then ended at $105,000 take home. Excellent. Way to go, you guys. Yeah. Phenomenal job. Lots of envelopes. Lots of crinkly envelopes in our pockets. I bet. What kind of debt was the $63,000? We were pretty normal. So we had a 401k loan, unfortunately. And then we had credit cards.

We had student loans. We had an instrument. We had car debt. Medical bills. You name it. Yeah, you were like normal people. Very normal people. Yeah, far off.

So what happened two and a half years ago? What was the wake-up call? Well, we had our group. So we have two older kids. We have a 15 and a 17-year-old, and then my wife and I had twins. And about two and a half years ago, we were putting them in daycare and we were starting to really get a little tight overall on our budget. And we had more money, or excuse me, we had more month than money. And so we sat down and we looked at each other and Ashley said to me,

what would happen if your student loan didn't exist and we could use that money to pay bills? Well, we hadn't done your plan yet. And I said, you know, there's a guy I know who talks just like you were talking to me and my light bulb went off. And so I took out the, I had an old financial peace book and I said, Hey, let's, let's start this program. And the rest is history. Wow. Wow. Long history. Yeah. Well, went back and forth, Dave. Definitely. we had to get on board to do this because that's all it took. It had to be a team effort. So we had Saturday morning finance meetings that we argued over.

We put up an Excel spreadsheet on the TV. Our older kids kept looking at us and saying, we're never going into debt after this. After this conversation, I'm not doing that. I love it. That's fabulous, you guys. Well done. I love it.

Wow. How does it feel now that you're free? It's unbelievable. It's still surreal. We actually finished Baby Step 2, and now we've actually finished Baby Step 3, and it's still just the amount of focus that we have as a family and our dreams are right in front of us and it's just so exciting. So, I mean, we can't thank you enough, Dave. With your program, we were able to just change our lives. So, thank you so much. And it's bled into so many other things, like it's

financial freedom, but along the way, we learned how to communicate effectively as a couple we learned about money management putting every dollar with its name i mean we you have to do the envelope system to be successful and then we merged over to every dollar app and that was amazing to guide our conversations on saturday mornings and so when we just got into that, I mean, I really feel now it's trickled into our planning processes at work, like just having the discipline to go through the program. We called you Uncle Dave all the time. We'd be like, well, what would Uncle Dave say about this? Yeah, he wouldn't agree, so we're not doing that. And it really has honestly changed our lives.

So other than the hard arguments that you all had every Saturday morning, what would you say was one of the most difficult things throughout this journey? For me, it was the single focus, like the single task focus. So when the process tells you you need to stop investing, you need to do things that may not make sense to you, but make sense to the plan. And so focusing on the single task accomplishments and making sure that it makes sense to Dave and not sense to you was really the thing that I learned because, you know, I got myself into this mess and I needed somebody else. We needed somebody else to get us out. So that was the big revelation, I think, for me.

I think the biggest thing, too, is finding that our value isn't in the stuff that we buy. Our value is not placed in that. So why were we buying things? Like what were we searching out and running down a rabbit hole and just continually purchasing things for no reason? Because that's not where our value lies. And so we learned that. We also learned that John loves to spend, and he'd reign that in. We already did. But we've been just, what we're ultimately excited about is being incredibly generous because we have freed up funds where we can now start being incredibly generous.

Now, you all have four kids I'm seeing here on the screen. It looks like a beautiful family. I'm curious, throughout this process, how was that relationship or how was your kids' involvement in this process? I know you said that they want to avoid debt, but how did you all incorporate them as parents, educating them along this journey? Yes, it was really great because they were part of the envelope system with us. So they would see me pull out that cash. I would put the envelopes in with them. They would go to the grocery store.

Our older kids would send them in for groceries, and they'd have to take envelopes with them. And then even with our older daughter, she is 17. She's a senior in high school. And we talked about emergency funds. She has a great job that she has a little sidekick on the side and she is putting money aside and has an emergency fund and her car broke down and guess what? She had money in her emergency fund. Wow. And kind of full circle. She is back in school and she's in a financial peace class.

Lessons in personal finance. Yes. Her curriculum at school. And so she's been able to give tips to her class and to her teacher. Yeah, for real. Which has been really funny. But you know, the other thing is, is the kids have a long commute to school. And so before our daughter was driving, John would drive them 35 minutes to school and they would listen to your show, Dave. And the kids would start, you know, at first they were rolling their eyes. Don't take offense to that because they're teenagers. But then they started reciting things about what Uncle Dave would do. Well, Mom, you wouldn't believe what these people were doing on Dave's show today.

And it was hilarious. Wow. But it sunk in because, you know, we're practicing what we're doing. You guys have truly changed your family tree. Absolutely. You didn't just pay off some debt. You guys have truly changed your family tree. Absolutely. You didn't just pay off some debt. You changed everything. Way to go.

So proud of you guys. Well done. Well done. Thank you, Dave. Okay, one more time. What's the key to getting out of debt? You said submit to the plan, right? You have to.

I would say the key to getting out of debt is putting all the guns at one target. Getting through those stages, focusing on the task in front of you. You can't accomplish with baby step three until you get to two. And now we're on 3B, and we're not going to try to move to four until we get accomplished with 3B. So stay the course. All the guns on one target. That's a good line. I like that.

Well done. Until that one falls, you just keep shooting at that one target. Exactly. There's a reason for that, and it works, and it gets you momentum, and the emotions that are required to go through 30 months of deep sacrifice like you all have been through. It's the only way you can fight through it. Way to go, guys. Way to go.

We got a copy of Rachel Cruz's latest bestseller, Know Yourself, Know Your Money. I think you guys will enjoy it. It is done very well. Hit the New York Times. And so we'll send that to you as our gift. So you got the whole gang there to do the debt-free scream? They're still in practice right now. So they're not here with us.

We couldn't bring everybody together, so it's just us, but we're excited to do it. And you wouldn't have heard anything. We have three-year-old twins, Dave. Come on. I love it. We never got through the conversation. All right, John and Ashley, Grand Rapids, Michigan, $63,000 paid off in 30 months, making $90,000 to $105,000. Count it down. Let's hear a

debt-free scream. Three, two, one. We're debt-free! Yeah! Woo! You know what, Dave? As endorsed by Uncle Dave. I'm trying to tell you, but one of the things he said that I love, that I got to

use this in the future. I'm going to steal it from him. It may not make to tell you, but one of the things he said that I love, that I got to use this in the future. I'm going to steal it from him. It may not make sense to you, but does it make sense to the plan? Yeah. That is like, I hope America hears that. My best thinking got me here, so I need some new thinking. Yes, sir. That's, you know.

That's it. If your best thinking got you into a mess, you need some new thinking. Come on. You need something else to align yourself to and go, okay, I've got to try something. I've got to do a different thing over here. Yes, sir. And a friend of mine said, you know, I couldn't get your stuff to work until I submitted to the plan. Submission is a dirty word in our culture.

Nobody wants to submit to anything. Wow. This is The Ramsey Show. Our scripture today, Colossians 3.23, Whatever you do, work at it with all your heart as working for the Lord, not for human masters. Vince Lombardi said, It is time for us all to stand and cheer for the doer, the achiever, the one who recognizes the challenges and does something about it. Amen.

Open phones at 888-825-5225. Anthony O'Neill, Ramsey personality, is my co-host today. Best-selling author as well. And Brian is with us in Asheville, North Carolina. Hey, Brian, how are you? Doing well, Dave and Ayo. How are you guys doing? Better than I deserve.

How can we help? So my wife and I are on Baby Steps 456, and we've recently been reviewing our retirement investing plans. I have a 401K, a real 401K through my employer, and my wife has a 403B through her employer, but that feeds into an annuity. And I was saying how you would recommend us allocate the 15% of our retirement income. Okay.

Well, by and large, you know the rock, paper, scissors thing. We're going to take the match first, then we're going to do Roth, and once we've filled up all Roth and match, then we will go to the third one because match beats Roth beats traditional. And so do you have a match on your 401k? Yes, I get a 3.5% match on my 401k, and my wife's match is a little tricky. They automatically contribute 5%, even if she doesn't contribute anything, and then they'll match up to 2% after that.

So if she puts in 2%, they match 7%. Okay. Wow. Well, I would put in her too, even though the investment's lousy, because you're getting 100% return on investment before you start. Yep. Right. Okay, so I put in her too and your 3.5%.

Whatever past that then, I'm going to fund it all over in your 401K because you can get into good mutual funds and it's Roth. Past that, I would do individual Roths. Yes, we are. We're maxing out our Roth IRAs right now. Both of them. And you're maxed out your 401k? No, I'm currently putting in 10%.

She's putting in 10% in her 4-3-T. Yeah, I would not put 10% in hers because she's stuck in that stupid annuity. Right. I did recently switch it over to a variable annuity. That's better if that's available. Yeah, you can get into some mutual funds that way. That's going to be okay. You could be okay.

Some of the variable annuities are okay. Have you got good mutual fund options inside of that? They're not great. They're not as good as the ones that we have through my 401k or our IRAs, but, you know, it's better than the fixed annuity. Yeah. Okay, so here's the way I'd work the math. What is your household income?

$170. Okay, 15% of that in a dollar figure. Okay. Take out then your 3.5% match from that, her 2% match from that. Then I would take out the individual Roth IRAs from that. And then I would fill up your 401k because you've got better mutual fund options than she does, right? Right. If all of that does not get you up to that 15% number,

which is going to be, what, $27,000 or something, right? Yeah, $26,000, $27,000 in that range. Yeah, somewhere right in there. If all of that doesn't get you up to that number, then put some into that variable annuity above the 2% where you're going for the match. But the weak sister in the discussion is the variable annuity, even though it's not super bad. Okay, great.

Is that right? Am I missing something? No, no, that's right. We were just wanting to make sure that, you know, we didn't realize it was an annuity at first when it all got set up, and then when we, you know, went through it, we evaluated our investment strategy, we noticed that it was an annuity, and I didn't know much about it, and then I did some research and figured out they weren't that great.

No, no. That's the problem with the 403Bs. A lot of the teacher situations, the insurance companies have gotten in instead of the investment companies, and so the investment quality is just horrible. But the difference maker can be a good variable annuity. At least that way you're getting to some mutual funds because you're going to make two, three times the rate of return on that that you would have on that fixed annuity. Okay, great.

But still, it's still out of everything. You've got some really good options available to you, and if they're all in high-performing, good growth stock mutual funds, the mix like we're talking about, and you're taking all these matches, the last thing I would get to would be that variable annuity. But I don't think you're going to need it. I think you can get to $26,000, $27,000 is what we're talking about here, depending on how your incomes are allocated but there's nothing uh that says legally morally relationally that you have to put the same amount in hers as yours right you can fill yours up and not put any in hers because she's gonna get it all that's how that works it's all hers anyway who's got your name on it now legally if there were a divorce or something you've got access to each other's retirement plans and so um lots of people do have to do all kinds of stuff with those

in the event of that or in the event of death obviously you put the spouse down as your beneficiary so it doesn't matter where it's parked all that matters is in terms of that kind of stuff what matters is which area performs the best where you're going to get the best mutual funds so um yeah again rock paper scissors matches first roth is next after that traditional and then after that traditional and anywhere along the way you're looking for quality options with the investment the mutual fund and you know the mutual funds that are available to you, and the ones available through that variable annuity, he was saying in that case were not that great.

There are variable annuities that have good mutual funds in them. Absolutely. They're out there, but that's still a second choice. Yeah. Now, let me ask you this, Dave. I know some people are probably thinking, well, Dave, they're matching 7% because they put 5% in. It's 3.5% of his, 2% of hers. Right. Not of 170. Exactly. Yeah. Got you. And so that's why you have 5% in. It's 3.5% of his, 2% of hers. Right.

Not of 170. Exactly. Yeah. Got you. And so that's why you have to back in. If you use the hard dollars, the real dollar amount, that'll get you there. And so you say, we're going to make up that number. We called it $27,000, okay?

Right. And you say, okay, 3.5% of his income, let's say he made $ thousand right right of their 170 right okay then that's going to be thirty five hundred dollars out of the 27 000 then two percent of her income if she's making 70 out of the 170 then that's going to be another fourteen hundred dollars yes sir okay so we're working our way off at 27 yes and then we go look at his ira or his 401k and go what's the max i can we do the two roth ira six thousand000 each. That's another 12,000 off that 27,000. So now we're getting down to the rest of it going over into his 401k. Can he get the rest of it covered there?

If it spills over one more time, every time these buckets spill over, right? Yes, yes. So you spilled over from the match. Now you spilled over from the Roths. Now you spill over from the match, now you spilled over from the Roths, now you spilled over from the Roth 401k, and the last spillover is going to be over into that variable annuity, if there is any. I don't think in their particular, but if they made $200,000, they would have some of that variable. Absolutely.

They'd be up there, because you wouldn't have used up your $30,000, because that'd be 15% of $200,000. Yes, sir. So you wouldn't have gotten there. But that's how you back into it. If you use the real dollar amount, rather than trying to figure out the percentages because the percentages drive you nuts. Really well. Because you've got to use your household income.

You want to get 15% of your household income. And when there's two different incomes, you're back and forth. It'll drive you nuts trying to calculate. It really will. It's really easy just to make it sixth grade math and start taking chunks off until you get down there. That lines it up a lot, a lot faster. Yeah.

So here's the deal. When a company matches, you put in $3,500 and they put in $3,500. Even if the investment isn't great, you still made 100% of your money. Yeah. That's why match is first. Absolutely. Even with her 2% and the lesser thing. Yeah. And then tax-free is better than no taxes until you take it out, which is tax-deferred.

Yes. But you're going to pay taxes. So you've got a million dollars tax-free or a million dollars taxable. Yeah. That's a $300,000, $500,000 swing, depending on who's in office and what the tax law is, in terms of how much you end up with your nest egg after taxes, your after-tax efficiency. And so match is first. Use that up.

Spill over to Roth. Use that up. Spill over to traditional as your last. And if you can't get it all done with all those, then you've got to do something else like low turnover mutual funds. Yes, sir. So you can get there. Absolutely get there. Good hour, Anthony. Hey, thank you, Dave. Good job, James Childs. Kelly Daniel in the booth. I am Dave Ramsey, your host. We will be back with you before you know it. In the meantime, remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus.

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