The Ramsey Show - App - Pandemic Loan Forbearance: Should I Take It? (Hour 1)

Episode Date: October 19, 2020

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Live from the headquarters of Ramsey Solutions, broadcasting on the Dollar Car Rental Studios, it's the Dave Ramsey Show, where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. My co-host on the air today, Ramsey personality, two-time number one best-selling author Chris Hogan, joins me, open phones at 8 two-time number one best-selling author, Chris Hogan, joins me. Open phones at 888-825-5225. That's 888-825-5225. Jamie's going to start off this hour in Sarasota, Florida.

Hi, Jamie. How are you? Hey, Dave. I'm doing great. How about you guys? Great, man. How can we help? Awesome.

I'll go straight to the point. I've already called maybe a couple of weeks ago. I'm almost done paying off my home. Wow. And I'm very excited. And so because of that, I actually, I was thinking about installing gutters in my house and also a fence. Should I pay off my home first or should I install the gutters in my house and also a fence. Should I pay off my home first, or should I install the gutters first? Obviously, the home came without all of that. So,

which one should I focus on first? When will the house be paid off? Well, let's see. I owe about $26,000 on it. It should be paid off by sometime next year, probably beginning of next year. Beginning of 2021? More like, yeah, more like March, April, something like that. So gutters between now and February or gutters after February? Okay. Who cares? I'm thinking, yeah, okay.

It don't matter, man. I mean, you could do either one right how long you've been without gutters about two years honestly it's not been on my radar so that's yeah so like three months three months is kind of a whoopee right well i guess so i mean um everybody tells me how you know not having them affects the foundation of the home and i should have put him by now well Well, that's probably true. I wouldn't doubt that. I'm not saying never put in gutters.

The only question is between now and February. Chris, what do you think? Yeah, I agree. I think you stay the course, Jamie. You know, I mean, what's the big deal this far? I mean, three more months is not going to kill anything, and your foundation is going to be all right. Well, I can't really guarantee that, but I think you're right. Let me just throw some more dirt at it.'re right if your foundation is screwed it's already screwed pay the house off

it's a four month decision if you told me it was going to be four years maybe you slow down a little bit and do a few remodel things Dave he's on this trail he said gutters then fence and then what's next pool you know you got to slow down make sure you meet at the speed of your budget you just went from gutters to pool on one sentence you did that i watched you i know

but you know how people get you get that house paid i know how i get you've got to protect that thing and start to look and go hey i got here at the speed of cash i'm not doing anything until i have the money and then even at that i need to make sure it's something that's really necessary. So the answer would change if it was four years. That's right. You would slow down a little bit and you'd do some basic home remodel to protect the home. Four months, who gives a rip?

It doesn't matter. You're okay either way. That's the point. So good question, Jamie. Thank you for calling in, brother. Rebecca's in Los Angeles. Hi, Rebecca. How are you?

Hi, Dave. Hi, Chris. It's a pleasure to speak with you today you too how can we help okay so this is actually a follow-up call to i think a call that you guys got last week about pausing retirement savings if you're trying to quickly pay off your mortgage um my husband and i are we have a goal, two years, three months exactly, we want to be done with our mortgage. We both make really good money, but we both work in industries that are getting pretty slammed right now. I'm in entertainment and my husband is in aerospace. So we're a little worried that the good times are coming to an end. So we're trying to be really aggressive.

We have $347,000 left to pay off, and we both maxed out our 401Ks and IRAs right now. So if we stop doing that in these next two years, that's going to be for the whole year. Is maxed out in excess of 15% of your household income? It's basically exactly 15% of our household income. Okay, so you're doing baby step four. And then your question is, do you want to stop doing baby step four in order to accelerate paying off the house by that much? Exactly. Okay.

Rebecca, I love the mentality. I love the focus and the goal that you all have. And even the intentionality. But what I wouldn't do is steal from the future to try to fast forward your present. I think in that mindset, you guys could think of other ways to generate extra income to attack the house. But I wouldn't stop that compound interest from growing and moving forward for you. What's your household income? $380,000 before bonus.

Okay, so $60,000 a year for two years is $120,000. So instead of two years and three months, it's going to be three years and four months. Oh, well. Yeah. Yeah. You can't make the two years and three months if you stay on your baby step four is what you said, right? No, we could this would just ensure that if there are layoffs or cutbacks or i know well if there's all that then you got a different issue that's true you just push pause on everything because we're screwed but right now you're neck deep in money you're just killing it i mean you're

making so much money it's unbelievable even for somebody in la you're making so much money, it's unbelievable. Even for somebody in L.A., you're making a lot of money. And you're putting $60,000 away a year. Yep. And to stop that for two years would only be $120,000. It doesn't really fix the issue. It's your vague worry something bad might happen is causing you to get off your path. True. The math doesn't back up your idea is my point.

Because you wouldn't do it. If you said, I can't make it unless I do this, then I would just say, oh, well, you can't make it. Go three years and four months instead of one year and two months. Or one year and two years and three months. I'm sorry. Add a year to the program and you're done. Because you're just slaying it with income. You guys are just amazing.

Yeah. And so, but you could do it either way but that's i i wouldn't do that i would do it the way we teach because it's high you know a lot of people a lot of people win yeah no and but it's easy you know you get caught up and especially people dave that are trying to fast forward they're brainstorming and always thinking of things to try to do. Well, you know, stupid people don't make $400,000. So by and large, I mean, there's a few that do. That's true. That's true.

By and large, these are bright people. They already know how to have a strategy for their life, and they're just trying to fine tune and look at the options and think through it. So really well done in that regard, Rebecca. So I just, you know, sometimes it helps me to reduce the question to an actual amount of money or an actual timeframe. And then I kind of have a, Oh, what the crap am I worrying about moment? Cause really we're discussing somebody that makes 380,000 and whether you pay your house off in two years and three months or three years and six months, you know, it's not going to

really change your plan that much. It's not going to really change your plan that much. It's really not going to change your plan that much. You're going to be okay if that was the actual question. And the odd thing is it's not even the actual question. The actual question is we're afraid it might happen, but nothing has happened yet. Right, which that's why you have the emergency fund. And I'm going to tell you, COVID has validated this brand and the need for an emergency fund more than anything else that has gone on in the last 15 years. The pandemic made us famous, Chris. Have that emergency fund.

Being out of debt and having a pile of money in case crap happens is suddenly really popular. We've only been doing it 30 years, but it's suddenly quite the fad. We're in vogue now. That means we're in style. That's scary. I know. You and I will never be in vogue. There's no chance we'll be in the magazine or the word, either one.

But I'm good with that. I think you are, too. I'm fine with that. The cover of Vogue, Hogan and Dave. Can you see us on there? Hogan and Dave, get your Vogue pose. Let's work on our poses. Get your Vogue pose.

This is the Daveave ramsey show over the years i've seen so many families suffer by not having life insurance it's not that they didn't care it's just that they didn't know so It's just that they didn't know, so they did nothing. That's a huge mistake. Listen, husbands and wives, moms and dads, think about it. If you died, how would your family pay the bills, the mortgage, food, and plan for a better future? This is what life insurance is all about, and term life is the only way to go. It's not expensive, and it's not complicated. Stop wasting money on cash value plans. You need 10 to 12 times your income in protection, and I recommend 15- or 20-year-level plans.

I also only recommend Zander Insurance, and I have for over 20 years. These are the only people I personally use, and they only offer the plans i recommend call them at 800-356-4282 or get instant quotes online at zander.com trust me these simple steps will let your family know how much you care Thank you for joining us, America. Chris Hogan, Ramsey Personality, is my co-host today here on the air. Open phones at 888-825-5225. That's 888-825-5225. Our question today comes from Blinds.com. They have a 100% satisfaction guarantee.

It means even if you mismeasure or you pick their own color if you screw it up they'll still replace your blinds for free free samples free shipping new promos all the time always use the magic word ramsey chris our question all right dave this comes from leah in wisconsin and she asks my lenders are offering a mortgage forbearance because of COVID. And I'm wondering if it's smart to take advantage of it or if I would be using it to my advantage and paying off my debts faster during that time. I've read up on it and it doesn't seem like there's a catch, but I know the mortgage company doesn't really care about the individuals. They just care about

money. I don't think there'll be any surprises when reworking my loan after the forbearance, but you never know. What are your opinions on this opportunity? Oh. What's your opinion, Mr. Ramsey? It's a trap. That's exactly right. Avoid it like the plague.

Because here's the deal. You're right. They don't care about you. Avoid it like the pandemic. They don't care about you. And all they're going to do is they're going to figure out some catch to have you come in and rework in your own words leah which means restart it means go back to square one well probably forbearance actually means patience

the word literally does so it could be that you just have to catch up those net back payments on a payment schedule where you pay two payments a month or payment and a half a month which dave come on you've got people that have had their jobs lost or hours cut if they can't afford the one payment why on earth would you think they could afford two you know i think we need a new kind of mask for people to wear to keep the bs out where you're going there's more of that than there is COVID. Yeah, it really is. I mean, so, Leah, listen. Honey, stay focused. Keep paying on that home. You were right to be suspicious.

It really is. If it sounds too good to be true, it probably is. So, Leah, where the concept of a forbearance comes from is when someone gets behind on their mortgage with one of our certified financial coaches. Some of our – what do you call them? That's not what we call them. The Ramsey preferred coaches. Preferred coaches. Yes.

Anyway, the people we trained. I used to do this. Chris has done it too. When someone comes in to us and sits down and there are three or four payments – let's say there are four payments behind on their house. Foreclosure usually does not occur. Ninety-nine percent of the time does not occur until later than six months. So there are

four payments behind. How are they going to catch up? Well, we jump on the phone with a mortgage company and we work out a forbearance agreement. If you look up the word forbearance in the dictionary, it literally means patience. That's what it means. So what do you do with someone's four months behind? Well, we work out a deal where they pay two payments a month for four months, and then they're caught up if they can. Or a payment and a half a month, and they can do that for eight months, and then they're caught up. And so that's a workout plan, a forbearance plan for someone who's behind.

So what your mortgage company is offering you is either one of two options. One is they're properly calling it a forbearance, and they're offering you the opportunity to get behind and then work out a plan to get caught up later, and that's not to your advantage. The second thing they could be offering you is to get behind, and then they are promising you some kind of a program to roll it into the mortgage, which is what you were talking about, and reset the mortgage. That is not a forbearance, technically. Technically, that is a refinance. That's a refi.

That's exactly right. Or a recasting of the mortgage. And those terms are not set in the marketplace. It's not a standardized product in the marketplace. And so I'm not sure exactly how they're pulling that crap off or how they intend to do that if they're recasting the mortgage. Because in most cases, that's going to require you to requalify. It may even include some closing costs.

We saw some of that recasting and resetting, throwing the payments to the back of the loan and that kind of stuff during the 2008 crisis. We sure did. And it came back to bite people then because they end up upside down in their home, owing more on their home than it's worth. Yeah. People were thinking that there was a mortgage fairy. They're not forgiving that payment. They're just slapping that bad boy on the end. And so it's just extending the amount of time you're in debt.

So again, be clear and reach out to one of our financial coaches. If you have a question or an issue unique to your situation, go to DaveRamsey.com. Click on financial coaches. You can get connected to a coach in your area to walk through your situation personally. And order these new masks that we're selling. They're $12.95 a box. I'm kidding. They keep the BS out.

And have Dave and I's face on each side of it. It says, it's a trap. They're blocking stuff. Run. That's right. Hogan blocking. That's fierce right there. Well, it could be for one play.

It was. Well, it was a long time ago. Back was. Well, it was a long time ago. Back in the day, it was fierce. It was. Now it's just fierce in your mind. All right. Hey, guys, I want to ask you something. What if you went through this whole pandemic thing and you kind of got crunched?

A lot of people did. And you had that never again moment. Never again am I going to be here. This is the last time something's going to come out my family and I'm not going to be ready. I want the emergency fund in place. I want to be out of debt. That's what Ramsey Plus is all about. It's one membership coaches you step by step through our best products. You're guided through the three big hitters. Financial Peace University, over six million people have gone through that class. It's a class everyone should take.

The premium version of the world's best budgeting app, EveryDollar, and our new Baby Steps tracking app. Plus, you get a ton of different courses, tools, access to the financial coaches Chris is talking about, and you get to watch a lot of the streaming events. The upcoming Smart Conference is free for Ramsey Plus members, as an example. Ramsey Plus at DaveRamsey.com. Start your free trial and see if it's something you want to do. You will want to do it, and we're pretty confident of that.

That's why we do a free trial. That's how this stuff works. DaveRamsey.com slash Ramsey Plus. Start the free trial right now. Steven is in Salt Lake City. Hi, Steven. Welcome to the Dave Ramsey Show. Thanks for taking my call. Can you hear me? Sure. What's up? Okay, perfect. Yeah, so I have

kind of a two-part question. My wife and I just finished Baby Step number two last month, so we're officially debt-free. Good. Probably about four or five months ago in the middle of it, her car, it was a 2005 Toyota Corolla, broke down, and we had to get a new car. So we bought a 2012 Fiat for three grand. Cool. And that got us through the rest of our time. Good. My question is, though, is that I have a car.

It's worth $5,000, $5,000 or $6,000. It works well. But I don't really feel comfortable leaving her in this $3,000 car. How long have you been uncomfortable with her driving that car? Probably about a month or two into it when one day she called me and she's like, it won't turn on. We had to bring it in. We had to replace the terminal.

You're violating federal law, though. Federal law is wife gets the good car. Yeah. Yeah, that's a bigger question. We're on Baby Step 3. No, your car. She gets your car. Yep. She doesn't know how to drive it.

It's a stick. So we have a weekend project. Learn how to drive a steering wheel. That is true. So that is a good thing to get her into, try to get her to drive that car. Listen, I don't want her driving that freaking hoopty either. So how are we getting her out of it? What's your plan?

So two things that are coming up. We're saving up for baby step number three, our three to six months of expenses. Good. And I'm in college. I'm about to finish community college. I have grants through the rest of the time. So until next fall, her into a new car, or should I do baby step number three, or should I save up for my semesters? I think you can do all three by September, don't you? I know I can, yeah.

Okay, then which one's most important? To me, it would probably be getting her into the new car. Wrong answer. I don't know if it's probably, it would be three to six months of expenses. There you go. That's the right answer. Okay. And then the next answer is her car, and then the next answer is your stuff, because your stuff doesn't, you don't have to have it until September.

For sure. The next question is, we make $72,000 a year before taxes, and my car is worth about $5 six thousand hers is worth three now um sent it to fiat i lived in italy for about two years where they manufactured it and i just have a personal like sentimental value for this car you were afraid for your wife to drive it i have for her to drive it listen get you a fiat later when you're rich right now you're a broke college student. Your wife's in a hoopty.

Let's not try to hold on to this thing. Let's get rid of it. You need all the dollars you can get to get her a better car. Yeah, put the sentiment in your pocket. Nostalgia is better when you have some money. That's right. Yeah, you can get you an old Fiat. I got an old Corvette.

I got a 1960 Corvette. Go get a little Matchbox. Go get a little Matchbox Fiat. I got a full-size one. I know yours is full-grown, Dave. Chris Hogan, Ramsey Personality. Number one best-selling author is my co-host today here on the air. In the Ramsey Solutions Lobby on the debt-free stage, Chris and Tracy are with us.

Hey, guys, how are you? Good, Dave. We're great. Thanks for having us. Good to have you. Where do you guys live? Las Vegas, Nevada. Oh, fun. Well, welcome to Nashville. Good to have you. Where do you guys live? Las Vegas, Nevada. Oh, fun. Well, welcome to Nashville.

Good to have you. And all the way over here to do a debt-free scream. Yes, we are. I love it. How much have you guys paid off? It was $292,000. Woo! How long did this take?

40 months. 40 months. Good. And your range of income during that time? We started in 2017. In 2016, we made $135,000. That was just me working. Every year since then, we've been over $200,000.

All right. Wow. Tell me the stuff you all paid off. Well, Baby Step 2 was just my student loans for pharmacy school. Okay. And then the remainder was our mortgage. Oh, look at it, weird people. Yep.

A paid-for house in Las Vegas. What's the house worth? Probably about $350,000. Woo- paid-for house in Las Vegas. What's the house worth? Probably about $350. Woo-hoo-hoo! I love it. Very cool. Tracy, who started this journey? Oh, my goodness.

We were real hesitant to start, but once we did, we were both just on the same page together. Why were you hesitant? What was the problem? Well, we didn't want to commit. Well, for one, we didn't think we had a problem. We thought we were just living. We didn't have credit card debt, so we didn't think we needed you. You were.

You were. So what was the impotence? What caused this? What caused you to decide to do this? So we have a really good friend, Paul Salik, at our church, hosted an FPU class. And he had been bugging us for years to do it, and finally we said yes, and it's been life-changing ever since. Wow.

So you wish you would have listened to him sooner. Yes. How far into that class before you went, maybe we do have a problem? I think it was the very first class. He had us line up our debts, and I remember in, when I graduated from pharmacy school, I had taken out $115,000 in debt. And six years later, after paying like $10,000 a year, the principal had only gone down about $5,000. Yeah. So it was going to stay with you forever. Exactly. Yeah. So you said, okay, game on. Game on. We're going to, we're going to knock this puppy out. Very cool. Tracy,

what kind of sacrifices do you guys make as you got really into the process? Yeah, I'm glad you asked because in the beginning it felt strangling. Like I couldn't bite anything. And I remember fighting with Chris about how I really needed eyelash extensions. You know, those are things that you ladies that are listening will know. Those are very important things. And we came to the agreement that that was not exactly a need. And so since then, it's just so funny because after we paid off that massive student loan,

I remember saying, Chris, when we get through with this, I just want to have just a little bit bigger of a budget. I just need more. I need to be able to spend more. And sure enough, we paid off that big student loan balance. And I realized I really didn't need more. In fact, those things that I thought that I needed, I didn't even want anymore. Yeah. There's something that happens in the contentment bone. You get stronger. You get more and more and more content. And then when you buy something, it's like, that's cool. Yeah.

It's okay to buy it, but it's not like, ah! There's no drama around it. It's a little bit boring. Right. In that regard, yeah. So who are your cheerleaders through this process? You mentioned the FPU class and your friend, but anybody else? Yeah, I mean, our family was hugely supportive.

I know while we went through the journey, we had a lot of our family members become debt-free as well. Oh, wow. On top of that, we've become debt-free as well. Oh, wow. On top of that, we've facilitated two FPU classes. Oh, thank you. So all those members, yeah, of course. So you're big-time, big-time coordinators on everything. Yep. I think we also, we were each other's cheerleaders.

And that's one thing, that this has strengthened our marriage so much. Before we didn't even, money wasn't even on my radar. I just spent it like it wasn't a thing and now we talk about our finances every day with our kids that are with us here we talk about finances every day and i feel so proud to be raising three boys that are going to be financially smart amen you're a good boy mom too aren't you she you? She is. Fantastic. I can tell. I can tell. That's awesome. Very cool. You won't have to fight with them about eyelash extenders.

Hopefully. Hopefully. Well, so cool. How does it feel to have no payments, not even a house payment? It feels surreal. I mean, it's funny. When I look back on it, I had planned to pay my pharmacy loan for 30 years and now that payment that used to go obviously towards my loans is now going to towards my my children's college fund so that they'll never

have a payment um for for student debt much better cause that's emotional yes that's emotional i mean the change that broke off of you from the other thing keep your family from ever being in chains again that's pretty cool right the other thing that's just so amazing is that through this process, I was able to, I stay at home with my three boys, but I have an online business called stayfitmom.com. And I was able to make that a very contributing revenue source for our family when we did the debt snowball and baby step two. And every day I woke up excited about going to work knowing that we were making huge strides for our family yeah yeah when you could throw some extra wood on the fire that's very very cool fire gets really hot it burns this stuff up well done y'all thank you well done

okay so two-time coordinators you pay off 292 000 you have a paid for house you got boys that are being trained in how to do this you're're changing your family tree. What's the secret to getting out of debt? You're experts. You got to run for your life. Yeah, we love all the sayings, you know, you can wander into debt, but you can't wander out of debt. So anytime someone asks us, we just, you know, start throwing out all those Ramsey quotes. And that really is inspiration. I remember one that you really stuck with me that said, if your kid needed a vaccine, you would do anything in your power to get that vaccine for your kid. And that is the mentality that we went into paying debt with. We were going to fight with every bone of our body to crawl our way out. And that's literally how it felt. I felt like it took emotionally, spiritually,

mentally, physically, everything that we had to get through this. For 40 whole months. That's right. 40 whole months. Three years and some change. And you don't even owe money on your house. And you're how old? 34.

34. Oh, my God. Unicorns. Looking at two unicorns. I love it. We'll bring the boys in. Introduce them. How old are they and what are their ages?

We have Siege is 12. 10. He's 10. We're a little Yeah, we have Siege is 12. 10. He's 10. We're a little nervous, Dave. Siege is 10. Milo is 8. Uh-huh. And then Oliver is 4.

Come on, Keith. All right. And have the guys been practicing their debt-free scrims? Yes, they have. All right. Let's see how good the practice has worked out. All right. It's Chris and Stacy, Siege, Milo, and Oliver.

$292,000 paid off in 40 months, making $135,000 to $200,000. That includes their house and everything. Count it down. Let's hear a debt-free scream. Three, two, one. We're debt-free! Woo! Yeah!

The boys did it. They stepped up. Well done, boys. Yeah. Fantastic. Fantastic. That's how it's done. Yeah.

You just saw a family tree changed because mom and dad got on the same page together, cheered each other on, and followed a plan that actually works. Changes everything. It changes it all. And so if you're sitting out there and you heard that scream and you have it in your heart because you want to do that as well, please know this day that it is available for you. You're not stuck. You just stopped. And you need to start working a plan that will help you.

So get plugged over. Get over into Ramsey Plus today. plus today don't let another day go by with you wandering around frustrated and irritated your relationship holding on by a string because you haven't taken the step it's time to start no more no more and i know what's available for people dave when they walk through this with the right information yeah yeah well it's you're right all of us at any area of our life, we need the steps to take and proof that the steps are going to work. Yeah. Because it's going to be painful to transform. Transformation is not without pain.

Yeah. It causes stuff to break loose inside of you. And like she said, she went from this need to shop to where I don't feel like I need any of it. Yeah. That's a transformational heart right there. It really is. The heart is transformed. Godliness with contentment is great gain.

Yeah. And contentment is probably the most powerful financial principle there is. And it involves being transformed because I really thought if I just bought more stuff, everything would okay i thought if i could just get a bigger one better one faster one everything would be okay i'm not against you having stuff just don't let the stuff have you this is the dave ramsey show Thank you. Ramsey Personality, Chris Hogan is my co-host today here on the air. Carmen is in Los Angeles. Hi, Carmen. Welcome to the Dave Ramsey Show.

Hi, Dave and Chris. My question is, my husband and I are 62 years old, and we would like to relocate to Brentwood area in Tennessee from LA. And I would like to know if what your thoughts are about us being able to retire. We are raising four grandchildren. We've had them in our home for the last five years. And last year, we actually went ahead and we adopted them. So we're emotionally and just physically exhausted. And my husband is the one working full time, I work a little part time. And so we make about $100,000. We are debt free. Our home is worth probably around $700,000, and we have a million dollars in retirement. And we have also funded $50,000, 529s, for each of the three, excuse me, four children. How old are the kids? The kids are 5, 7, eight, and 12. So if it was my

husband and I, retirement would not even be a problem. You know, we would know we would have this amount of money, but when you have four children, you don't know what the future holds. And so, I don't know. That is my question, is what are your thoughts? What do you mean you don't know what the future holds? You don't know what the future holds if you retire with no kids. What's the difference? What is the uncertainty that four kids adds to the future? It's certain they're all going to want to eat.

It's certain they're all going to want cars. And it's certain they're going to college, and that's why you have a college plan for them. What's uncertain? The uncertainty is will our money last? Oh! You know, a couple versus... Oh! So if you invest a million dollars and it makes 10 or 12% in good mutual funds, and you pull off 8%, I'm just making this up, and you left some in there, you didn't take all out what it made, okay?

Right. 8% of a million would be $80,000. You sell your house in California, buy a $700,000 house in Tennessee, and you live in, because you've got a paid-for house worth $700,000 in California, right? Yes. Which means you're living in a cracker box, right? Which means you're going to get a raise, Carmen, as soon as you get to Tennessee soil. You're going to get a really nice house compared to that.

I mean, it's not a mansion, but for $750,000, you can buy a decent house in Tennessee versus what California costs. So, I mean, you're going to get a nicer property, and you've got to live on $80,000 a year and feed these kids. Can you do that? We can. Yes. Okay. Then the money would never run out because you're not touching the money. All you're doing is cashing the eggs that the goose is laying.

Just don't get into the goose. Leave the goose alone. Live off the eggs. Yep. And make smart decisions moving forward financially, just like you guys have been. You're out of debt. You've got your house paid off. So you're not going to come here and go backwards and take on a mortgage. Why are you moving to Tennessee? Just cost of living?

Well, cost of living and just what the California schools are kind of teaching the children. We are, we want to just a little bit more, less crazy lifestyle for them. Okay. That's fair. A more traditional setting for them, a little bit more less crazy lifestyle for them. Okay. That's fair. A more traditional setting for them, a little less. Correct. Yes. Might not be politically correct in Tennessee.

I'll just go ahead and warn you. That's okay. And we might not care if you care. So I'll just go ahead and warn you. Some of us are sensitive, Carmen. Don't let Dave scare you. Some of us are sensitive. Yeah. Don't let Dave scare you. Some of us are sensitive. Yeah, none of them are in this room.

But, yeah, I'm kidding around with you. But, yeah, I completely agree with you, in other words. And, yeah, it's a good move. Here's the thing I heard, and I want to warn you against it. You've been through some kind of a tremendous upheaval in your family, some kind of trauma. Correct. your family some kind of trauma correct and i kept um the uh the three-year-old the um five-year-old and the seven-year-old for 48 hours this weekend with my wife and i'm exhausted and i got to send them home yes and you got to keep them the whole time. So you said we're exhausted.

Be careful because when you're exhausted, you're prone to make bad decisions. Because you feel entitled, like I deserve this. I took on these kids, Lord. Lord, I did this, and so I deserve to go buy a car on payments. Or I deserve to get something. I deserve to get this nice thing that I can't afford thing, whatever the thing is that I can't afford. But all of us have a tendency when we're tired to get entitlement fever and say, I deserve.

I've said it. Chris has said it. Everybody has said it at one time or another. And you are doing a noble and a wonderful thing taking this on. I have no idea the circumstances. You didn't tell us. We didn't ask. Yeah. But there's some kind of a mess there and you are taking on a big old task. You really are. And I want to tell you thank you on behalf of these kids. I don't know if anyone has told you, but what you all have taken on is a major task. But I want you to hear me. There's

not an amount of stuff in there that's going to make them kids happy. They need to be loved, and they want your attention. And so when you're 80, that five-year-old is going to write a book about his hero, the grandmother. I still talk about mine, and she's been gone for 20 years. Yep. So you are changing lives with your presence, you and your husband both.

Just make sure you guys are staying connected. You and your husband working on the friendship. Get here, get connected in with a good church. You can have a place to drop off those kids for about four or five days so y'all can take a trip. That's important. This is why Baptists invented Vacation Bible School. I'm just saying.

It's a traditional value. It really is. It really is. They keep your sanity, too. Paul's with us in Fayetteville, Arkansas. Hey, Paul, how are you? I'm good. How are you?

Better than I deserve. What's up, man? Well, just like I said, me and my wife, we love the show, and we appreciate what you do. Thank you. How can we help? Well, my wife and I, we're trying to decide on our retirement, and we both work for the same employer. She's been there for quite a long time. I'm new. I'm still in my first year. She has a 401k with somewhere around $150,000 in it. I'm just now starting mine. We're not sure if we should be doing a 401k or a Roth 401k.

Roth. Mm-hmm. Yeah, no question. I would not convert her 150 to Roth because that will create taxes for you. But all your contributions going forward, you want them to grow tax-free, right, Chris? That's exactly right. And, Paul, here's why, buddy. With the traditional, when you go to take out money at 59 1 59 and a half you're going to have to pay taxes on it but with the roth because you're

using after-tax dollars the government can't touch it anymore buddy so how old are you i'm 45 and my wife is 42 what's your household income uh around 150 000 excellent so if you save like we teach you to save you get out out of debt, build your emergency fund, start saving 15% of your income while you're paying off your house, you work the Ramsey baby steps. If you do that, you're going to have in this 401K at 65, somewhere in the neighborhood of $3 million. Okay?

I like that. If it's in good mutual funds and you do what we teach, 15% of your income going into retirement after you get out of debt and have your emergency fund. You do this stuff, you keep listening, we'll show you how to do all of it, okay? Now, here's the point. That $3 million is either going to have taxes on it when you take it out or it's not. Not is Roth and yes is traditional. Taxes on $3 million, somewhere around $750,000.

That's how I made that answer so quickly. I just said Roth. I didn't even listen to you, right? I just said Roth. You heard me. I didn't even ask about your details. I didn't get the nuances. I didn't do a financial plan on you.

I just said Roth because I'm assuming you're going to invest and we're going to either pay taxes on $3 million or we're not. So it's kind of like a no freaking brainer, dude. That's what it comes down to. And that's why you just go, if you can spell it, Roth is probably what you want. It's the way to go. If you're going to be investing. And you're serious about it.

If you're 65, maybe not. And you don't have to convert the other one to Roth. I wouldn't fool with that. It's going to create taxes on that $150,000, and I wouldn't do that right now. Right now you've got some other stuff to do. That puts us out of The Dave Ramsey Show. In the books. This is James Childs, producer of The Dave Ramsey Show.

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