The Ramsey Show - App - Quit Letting Broke People Give You Financial Advice!

Episode Date: February 27, 2025

Live from the headquarters of Ramsey Solutions, it's the Ramseysey show where we help people build wealth do work that they love and create actual amazing relationships jade washaw number one best-selling author ramsey personality is my co-host today as we take your questions about your life and your money we're gonna talk about you right in front of you honey that's how we do it and uh hey the phone number is free and some say the advice is worth exactly what you pay for it it's triple eight eight two five five two two five jump in and we will talk laurie is in salt lake city hey laurie welcome to the ramsey show thank you dave hey what's up well my dad is going to leave my brother next to nothing when he dies and he's not telling him. How do you know?

What did he tell you? He told me that he set up a trust with a fiduciary and that he was going to leave different amounts to us three children in different ways. And then he told me he had set up some other things in the trust to protect it. Okay. So you said that the brothers left out, but you just said he's going to leave something to the three of you. Is it a different amount of money? Yes. Tell us more. Yes. He's going to, he told me he's going to leave him $10,000.

And what did the other kids get? I'm not sure because he hadn't said, but my sister, he didn't tell me how much. He just told me that he was going to give her a large lump sum because she's the most fiscally prepared for the future, most fiscally responsible, makes the most, handles her money the best. Okay. What about you? Me? Yeah. So he set up monthly payments basically for 25 years. Oh, how much? $3,500 per month. Okay.

How old are you? I'm 58. 58? Yeah. Okay. This sounds like your dad is pretty controlling. It's a little bit gamesmanship manipulative, the way he's handling all this. Does that sound right?

No, I would not describe him that way at all. Then why isn't he just telling your brother? I think it's because he has experienced a serious lack of respect. And things have happened in the past that have hurt an already struggling relationship that struggled a lot pretty much from the very beginning. And he just doesn't want to do it. He's a year older. Okay.

All right. Well, I, wow. But it's not like a... Okay, number one, there is is no one no one is entitled to an inheritance your day it's your dad's money he can do with it what he wants to do with it okay right even if someone else thinks it's weird it's his money and he can do with it what he wants to uh he's trying to not stir up a problem with your brother it sounds like where there's already problems and this would just throw gas on the fire is what you're telling right okay yes so uh i don't and he didn't tell you um uh i i think he puts you in an awkward position

by you not having the information and not telling him brother, but I don't think he thought about that. No, he knows because I brought it up. I told him that he was putting me in a really awkward position. But you're not asked to administer it. You have a fiduciary that's a trustee, so there's no way you get blamed because you're not in the line of fire. You're not having to administer this to your brother. The trustee will. Does your other sister know that these are the plans as well?

Yes. So maybe the conversation, because here's where I'm getting at. I agree with what Dave said, but it's almost like he's not dealing with the problem now, but the problem will be yours when dad passes away because your brother, I don't know what kind of guy your brother is, but I would not want to, if I were you, I would not want to be in this situation where someone can feel resentment

towards me for something that someone else didn't deal with. And now you're in the situation to have to say, well, I don't know why he did this. And that weight can be on you. That's the part of this that I don't like. If I were sitting in your shoes, I brought that in your shoes.

I brought that up to him and he said he was concerned for my safety. So he set up in the trust as soon as he dies, I can either stay in the house for three months or I can move immediately and his trust will pay to get me out because he was concerned about the repercussions. I live with my father. will pay to get me out because he was concerned about i'm sorry whose house are you in i'm i live with my father i had to move in with him five years ago to help him because he needs a living caretaker i work full time but i moved across the country to help him five years ago and um i've tried um i did have a place on my own but i was traveling 30 minutes one way to help him on a daily basis. Would the narrative not be that your brother says, hey, because you were living with dad, you talked him into this? Yes, that's going to be the narrative.

But what about this? What threw me on what you said is the safety. He said if he's afraid for your safety, what kind of guy is your brother? That he would say that he he's never been violent to me or to my dad or to my family members but he's had violent interactions with other people on the other side of his family and I have actually had to ask my brother to leave my dad's house at one point because he was verbally abusing him when I first came down here to help or came up here to help my dad.

How old is your dad? You said he's 80? He's 83. Okay. All right, your dad is not handling this well. He owes you in return for your care of him uh even though it's not going to be pretty he owes that it lands on him and he needs to tell your brother while he's alive and if i'm you i'm going to demand that because this is this is going to land on you because of proximity it's going to look like you talked him into doing all this yes and so your dad your

dad is being a coward and he's letting this land on you and he i know he doesn't want to face it and he could just send him a letter he doesn't have to say say i'm here's what i'm doing i'm giving sister number one lump sum because she's responsible i'm giving sister number two that takes care of me monthly because she's not as responsible and since you and i don't have a quality relationship i'm only leaving you this and he needs to just send him a note that says that and um i love you but you and i as you know have struggled for many years and i don't and i am not going to bless that with my estate so you need to know that in the front end and this is my decision your sisters have had no input on this. I decided this with my lawyer.

And this is what's happening. And let him take the brunt of this so that the narrative is not reset in a vacuum. Because that's what's going to happen. That piece of you living with him and taking care of him changes the conversation. Before, I was a little bit like, eh, whatever. But now with you living there, it's going to look like you spent five years

manipulating the old man into getting money and cutting a brother out after you had to throw him out for being verbally abusive. It's going to land on you. There's no question about it. And your dad needs

to take care of that. That's unfair to you. If I was the old man involved, I'd be stepping up. This is The Ramsey Show. Jade Walshaw, Ramsey personality, is my co-host today. Thank you for joining us. Michael is in Toronto. Hey, Michael, welcome to The Ramsey Show. Hey, thank you.

What's up? So I'm currently 18. And by the time I graduate, I'm probably looking at $100,000 to $120,000 loan that I'm sitting at. And my current car is under my mom's name with her interest rates on it, and her credit got ruined by my dad leaving. And I'm looking to switch the car with way less percentage of interest, but I have to max out my credit cards for the down payment to put on it. And I don't know what to do, if it's even worth it or not.

What's your car? What do you owe on the car? I'm sitting, so I bought the car at $30,000. I'm looking at $41,000 right now. And you're a college student? First year, yes. With a $40,000

freaking car. What are you doing with a $40,000 car? You're a college student. I had a $70,000 car and another $60,000. I sold it. I made profit. But my mom's credit card ruined, and they gave me a 12% interest on it. And I didn't realize until yesterday when I checked, and I only had it for five months.

I don't think this is your mom's fault. You bought a $40,000 car, and you're in college. You get a $4,000 car. Do you make any money? What's your income? So I'm sitting at $1,000 to $1,500 from my work at retail. And I had side businesses before, and I had like about $70,000. I blew it all. And now I make maybe five hundred to a thousand dollars for my side businesses a month okay do you have any money saved nothing i'm in debt to my credit cards okay so the car you owe 41 000 on it if you sold it private sale what's it worth or your mom's right

now with a trade-in they're giving me 27 oh my gosh700. Oh, my gosh. That's a trade-in. $12,000 negative equity on it. Okay, but let's look at, that's your homework, is to look at the Kelley Blue Book value if you did private sale, because you're going to get more for it. I did. It's $30,500. $30,500.

Okay. If I were in your shoes... I can't. There's a lien on the car that I can't pay. Yeah, I mean, you make $1,000 a month. Your car payment's more than that, isn't it? My car payment comes exactly to $1,000. Oh, my goodness. So how are you paying it?

Credit cards? Basically everything at all. No, no, I can't put on credit. It's debit. Basically everything at all. I mean, if you make $1,000 a month and you spend $1,000 a month on your car, you don't have money to put gas in it and you don't have money to eat. This math doesn't work.

I don't know how. No, I make like $1,500. On a good month, I make $2,000. On slow months in retail, I make $1,500. Okay, so you got $500 to spare. You eat a little bit. You pay your insurance. You get gas. You've got nothing left. Okay, let me got $500 to spare. You eat a little bit. You pay your insurance. You get gas.

You've got nothing left. Okay, let me stop a second because I did a drive-by on something a minute ago I want to know more about. You had $70,000 in savings, you said, from a side hustle that you blew. Did I hear you say that? Yes. Tell me about that side hustle. Where did all that wonderful money come from? It came from I used to sell screen protectors and cases during COVID when I was 14.

Ah. And Amazon. Yeah. So no COVID, no business. Gotcha. Okay. Yeah. All right.

And I gave most of it to my mom after the separation. Mm-hmm. And she's sitting at least at $300 400 000 dollars herself yeah okay you're 18 your mother is not your responsibility your responsibility is to love her and cheer for her but not you aren't she's not your financial responsibility so this has got to stop and um unless you can create a huge income you need to get rid of this car and get a $2,000 car. I tried doing that, but I have to. I would put the $10,000 on a credit card.

I'd rather you have $10,000 on a credit card than $41,000 on a car. Amen. I can't. I can't put it on a credit card. Why? I have maybe $3,500 left on the credit that I can spend. Yeah, okay. Who do you owe the $41,000 to?

To a bank. Go down and talk to the bank about signing a note for the difference. Do that, right? And then what about on the new car? So that's the thing that doesn't make sense to me. On the new car that I looked at that I'm going to get, seeing monthly payments instead of 96-month loan. I didn't say anything about monthly payments.

I said get a $2,000 car. Cash. Because we tried when we went to the bank. I didn't want you to go to the bank. I want you to come up with $2,000 and go buy a car. Just buy a car. Buy a car? Yeah. Are you in school full-time?

Yeah. Are you on campus? You're at home or at home? Campus. Oh, like where do I live? At home. Okay. How close are you to campus?

What I'm getting at is you might go through two months where you don't have a vehicle and you make it work, and instead of using that $1,000 a month to pay pay for a car note you use it to save up and get yourself a little beater car is what we're saying i have one of your buddies take it away from campus okay all right okay here here's the thing we keep throwing suggestions out and the only answer you've got is it doesn't work so let me tell you what doesn't work your life the way you have it set up right now your situation sucks beyond belief the decisions you have made are beyond suicidal financially so you've got to throw a stick of dynamite in the middle of this freaking mess you've created and it's going to be really uncomfortable but you know what's going to be more uncomfortable you sit there in this pile of stuff and you're going to smell like this stuff as long as

you sit there in it coming up with excuses to sit there in it. So you have got to get rid of this mess. You've got to create a big you may need to quit school. You need to go get some dadgum money and start cleaning up this mess. So I want you working like 80, 90 hours a week, going to school on caffeine and doing what normal people do when they get in this instead of telling me, oh, my mom got screwed over by my dad when he left. I'm sorry, but that doesn't mean you buy a $70,000 car while you're in college and downgrade it to a $41,000 car and act like that's smart.

Nowhere in this conversation is smart. Smart didn't come up today. No, it didn't. It didn't even show up here. So, dude, you've got to get rid of the car, and you've got to figure this out some way or another. Now, we're giving you lots of suggestions, okay? Get a buddy that's in the neighborhood to take you to college.

Quit college for a year and take you a gap year and go clean this mess up while you work like a freaking maniac but you are man you you you cannot there's nothing in this that the math works sixth graders could tell you this math doesn't work this is a mess and so no you can't keep this car and no you can't keep this life the way it is it designed right now that's why you called and you can't get another car and i'm not going to argue with you about it anymore i'm through talking to you about it so you go fix this we gave you some suggestions but part of fixing it is you've got to decide that where i live the land i live in right now is the land of stupid, and I want to leave. That's the first decision you've got to make.

And we haven't even been able to get that far with you. So that's where you've got to go, man. That's where you've got to go. Open phones here at 888-825-5225. Now, Jade, let's just review the policies on this show. Review it. We love you. All of you.

If you've done something stupid, we love you anyway. We've done something stupid. I have a PhD in DUMB. Jade and Sam cleaned up $465,000 worth of stupid in their life. So no one's sitting here high and mighty talking down to someone. So we love you. We love you so much. We're going to tell you the truth.

We're going to start gentle and we're going to start by trying to help you move along. But if you want to argue with us while we're trying to help you, it's going to get nasty fast because we love you. I'm going to smack you upside your stupid head until you listen to the stuff that will make your life better. Now, we'll start with a gentle handshake and say, honey, this is the best way to do it. Well, Dave, I listen to you all the time, but I'm not selling the car. Well, you're an idiot. You got to sell the car.

That's how it's going to sound around here, honey. Okay, so we're going to serve you when you call here. You're not entertainment value for us. You're a calling for here. You're not entertainment value for us. You're a calling for us. You're a crusade for us. We want you to win. And we're going to do everything in our power, starting at first gently and turning up the heat by degrees during the time we're on the phone together until we have contact.

This is The Ramsey Show. Hey guys, I'm Jade Warshaw and I want to talk to you for a quick second about student loan refinancing. If your payment and your interest rate are burying you and you feel like you can't dig out, refinancing your student loan debt might make sense. That's because a lower rate could free up more money in your budget and a shorter term could help you pay down your debt faster. So reach out to the student loan refinancing experts today at laurelroad.com slash Ramsey. There you'll find helpful resources like a student loan rate table, a refinancing calculator and other tools. Plus, you can get an initial rate in just a few minutes. Laurel Road offers low competitive rates starting under 5%.

And you can get your interest rate even lower if you sign up for auto pay. But if your situation is more complex, sign up for a free 30-minute consultation with one of their student loan refinancing experts to get your tough questions answered. Listen, not everybody should refinance their student loan, so make sure you run the numbers. But for some people, it is the right move. Learn more at laurelroad.com slash Ramsey to find out more about their student loan refinancing. That's laurelroad.com slash Ramsey. Laurel Road is a brand of Key Bank National Association. All credit products are subject to credit approval.

Owning your own business is awesome. Owning your own business is freaking hard. It's hard. Part of the problem is you have a jerk for a boss. When you own your own business, your boss will work you into the dirt. They will work you like a rented mule. It's hard, y'all. And it's why most businesses don't make it. It's hard. And it's really hard when you don't have a clear path and you don't know how to go to the next stage.

You don't know what to do. Man, I remember. I've been doing this for almost 40 years. This thing called Ramsey, it started on a card table in my living room. And the number of stupid things I have done will fill three buildings. We have survived my stupid. I can bail my stupid. It's everywhere.

And I've done enough smart to offset it. And y'all know me for everything that was smart. But I'm telling you, man, I got, I man, I can just tell you, I could write two books on my stupid. Instead, what I did was we wrote a new book called Build a Business You Love, instead of one that beats you to death, and the new book, Build a Business You Love, is our entree leadership system that identifies the clear path to growing and getting a business that you love instead of one that beats the snot out of you because it'll just beat you to death and it's wonderful we love it those of us that are entrepreneurs we like the fight we're ready

to double up our fist and hit something we get it but it's tough and nobody tells you this stuff man well i can tell you because i've been there, done that, and we've coached over 10,000 small businesses. There are five distinct stages of business, and there are six things that drive the business towards growth and to propel you through those five stages. We're in the final stage of the five stages at Ramsey, the legacy stage where you work on succession and the next generation and so on.

The beginner stage is the treadmill stage, where you just run, run, run, run, run, run, run, run, run, run, run, run, run, run, and get nowhere. You just run your dadgum little legs off. And how do you get off that treadmill? Well, there's some specific things you need to do. We're going to show you. This is the baby steps for small business, the system.

It's a clear path and knowing exactly where to go, not based on some research project, but based on 30 years of doing it and on coaching small businesses with this exact system, 10,000 of them. Build a business you love. It comes out April 15th. It's on pre-sale right now. I'm really excited about this project. It's really good. And yeah, I mean, it's on pre-sale right now i'm really excited about this project it's really good and uh yeah i mean it's really good and you pre-order the book for 29.99 we're going to give you 350 dollars worth of stuff if you buy it now to bribe you to get you to buy the book early because it helps our marketing so shut up instant access to the entree leadership hiring playbook yep that's in there that's a big video that you're going to get to watch right now. Hiring and Firing, number one pain point of business people

is the humans that we love and the humans that we want to kill sometimes. They're called our team, and we love them. And, man, sometimes it's almost like having disruptive children. Early access to the e-book, the enhanced audio book, all of that's going to be there. It's $350 worth of stuff, $29.99. RamseySolutions.com slash store. Click the link in the description if you're a tuber or a podcaster.

Then we'll try to help you out. Andrew's in Louisville, Kentucky. Hi, Andrew. What's up in your world? Not much. How are you doing? Better than I deserve. How can we help?

Yes. So when I was 18, I'm 20 now, when I was 18, I went to get my first credit card from the bank, and they made it aware to me to get two credit cards out, and my dad's name, he made me a cosigner, and they were destroying my credit. I think my credit card was like $500. So

I made that clear to them, or aware to them, my parents. They apologized, they took them off, and then I've been real busy. I got married, had a baby, and just kind of haven't been too worried about my credit. I decided to them, my parents, uh, they apologized, they took them off. And then I've been real busy. I got married, had a baby and just kind of haven't been too worried about my credit. I decided to look at my credit, uh, today and realize that the one card they said they took me off and they did it. It was an Amex Delta card. Um, and, uh, it's maxed out at a thousand dollars, a thousand dollars when it's maxed out

at like 1300. So they're, they're over their limit on it. And it's been destroying my credit. So I wanted to see if you thought it was wrong of me to market as fraud or what route you would take in this to get it all off my credit history. Well, it is fraud. Let's be clear about that. Yeah, it is. You did not sign it.

No. If someone else signs your name, that's called identity theft. It's criminal fraud. If the criminal happens to be your parents, that's also an issue. But it's criminal fraud. So it is fraud. Jade's right. So mechanically, American Express is probably one of the worst companies on the planet regarding this stuff.

They are nasty. So those of you that have an Amex card at work, they will try to hold you liable if your company goes broke. And you're only a user. And you signed nothing obligating you to that debt. But your company runs up $11 million on an Amex card. And you're an employee user of an amex a company amex card you're gonna get screwed like you've never been screwed in your life this company is horrendous they are nasty can you tell i like them now um the first thing i would do

is uh i would go ahead and challenge this entry and say, this is identity theft. Remove this from my bureau. Now, what happens is the credit card companies download to the credit bureaus in mass, massive computer files once a quarter. They do a dump. Okay? And so the credit card, number one, if you dispute this based on fraud, they will contact Amex and ask Amex if it is fraud. Amex will not respond because they just don't bother.

Okay? Right. And then it will be taken off of your credit bureau report. And then two quarters from now, it will be dumped on there again in the next dump, and you get to do it again and again and again until you cut this dandelion off at the roots, which is your parents. So you need to get back on the phone with them and say, Dad, this is now harming our relationship

because I have a baby over here that needs a future, and you all not taking care of this when you fraudulently used my name has to stop, and I'm giving you 48 hours, or I'm filing a police report if you don't get my name off this freaking credit card. Now, you can be nicer than that if you want but that's the essence of the conversation right okay because your dad and mom are not only disorganized and sloppy they're horrible human beings for doing this to their own kid right right um so as far as telling them to get my name off of it and then mark me that's fraud um with them taking my name off it like well it's still going to affect my history

though right yeah no no it'll be it'll all go off if they remove the entire they remove the entire account and any mention of it because it's not in your name okay okay all right so this market is fraud and tell them to get my name off of it no this is not my card I'm challenging this entry on my bureau. Do it with all three bureaus, okay? With Equifax, TransUnion, TRW, all three of them, all right? You got to go to them individually, and you file. And I recommend sending them a certified letter, return receipt requested, or a FedEx. And in your letter, state, this is fraud. And write this down, federal fair debt collection practices act

federal law i am demanding that you remove this or prove it to be true within 30 days they will remove it but it will be put back on dump with the next computer dump from mx if your mom and dad don't get your name off of it right so you got to do both okay so one one one more uh time what is the name of uh one of those three agencies you said i have to go to just pull out you can pull it up online it's the three credit car the three credit bureaus equifax equifax trw and i got Yeah, okay. They just go to them and, okay. Yeah, go to each one of them because they're separate entities, and they're probably, you pull up all of them.

You can pull it up on something like Credit Karma, but you get sucked into a whole bunch of marketing junk you don't want to screw with. So I just go straight to the horse's mouth. Okay, sounds good. Alrighty, Dave. Hey, man, get after it. And listen, follow through on this you've got to put a bow on it because it's going to keep growing and it's going to get harder and harder

and harder to get rid of the longer this goes on so mom and dad need to take this off by friday friday and any of you that do this to your children, shame on you. You do not have that right to be a criminal with your own children. This is The Ramsey Show. What does the future hold for business? Ask nine experts and you'll get ten different answers. Economic growth or a recession. Business taxes will go up or down. AI will help us work or it

will replace us all. But there's no such thing as a crystal ball. That's why more than 40,000 businesses have future-proofed themselves with NetSuite by Oracle, the number one cloud enterprise resource planning system. Ramsey Solutions uses NetSuite and you should too. Whether your company's earning millions or even hundreds of millions, NetSuite helps you respond to immediate challenges and seize your biggest opportunities. With one unified business management suite, there's only one source of truth for the visibility and control you need to make quick decisions. NetSuite's real-time insights and forecasting help you see into the future with actionable data. And when you're closing the books in days, not weeks, you can spend less time looking backward

and more time focusing on what's next. And speaking of what's next, download the CFO's Guide to AI and Machine Learning at netsuite.com slash Ramsey. It's free at netsuite.com slash Ramsey. Thank you for joining us, America. Open phones at 888-825-5225. There are a few things in my life that I've run into that, other than things from the Bible, that I am 1,000% sure work. Teaching the seven baby steps that we teach here, the first one, save $1,000. The second one is get out of debt, everything but the house, using a debt snowball and gazelle intensity as if you're running from a cheetah.

The gazelle runs for its life. That's the intensity you use to get out of debt. You sell so much stuff the kids think they're next. You don't see the inside of a restaurant unless you're working there and you're not going on vacation because you're a broke person in debt and you are ears laid back, running headlong straight into this, getting rid of it, baby. And we're going to leave it all on the field. That's baby step number two.

And then you go on to building an emergency fund, retirement plan, kids, college, pay off the house and become very wealthy. Those are the seven baby steps. And in essence, and you can find those everywhere and the total money makeover book is where we outline them we've sold 12 million copies of that 10 million people have been through financial peace university where we teach those baby steps and how to implement them so tens of millions literally of people and there's tens of millions of you listening at this moment to this podcast on youtube and on talk radio uh so we know that easily 100 million people

have done some stage or some process of the baby steps and um with varying degrees of success because of varying degrees of commitment and sacrifice like you do with anything so it's it's a proven thing. It's not a theory that comes out of a test tube. The debt snowball is probably what we've become best known for. Now, this is where you list all of your debts except your home, smallest to largest. You pay minimum payments on everything but the little one. You attack the little one with a vengeance. You squeeze every dollar, every drop out of your budget, and you throw it at the little one. You work extra. You sell stuff. You clean out a savings account all the way down

to $1,000. You stop putting money in your 401k. You get term insurance and cash in your stupid whole life policy. You sell a car if it's too expensive. You do whatever you got to do, and you throw every dime at that smallest debt until it's gone. When that one's gone, you take the payment you used to pay there, and every dime you can squeeze out of everything else, and you throw every dime at that smallest debt until it's gone when that one's gone you take the payment you used to pay there and every dime you can squeeze out of everything else and you put it on number two and when number two's gone the payment from number one and number two are freed up the snowball rolls over again it picks up more snow and it attacks the third one and you're doing this with just increasing levels of hope increasing levels of sacrifice increasing levels of passion and every time the snowball rolls over and you get rid of another payment that's that much more money freed up in your monthly budget

to attack the next one down and it's been unbelievably successful but dave i gotta be i'm the person because i know what they say in the comments i i i see what people are asking and the bigger the biggest two questions are this. Dave, I've got my debt listed. What if I have a debt that the interest rate is just killing me? Why would I put the lower one first? Why would I list them small to largest if it means me having to pay this high interest loan for much longer? What about the math, Dave?

It's brain chemistry. A dopamine is released when you complete a task. There's a dopamine release. And it's called a feedback loop in psychology. And so when you have success at something, you're more likely to repeat the task. That's right. And the faster you have success and the more often you have success, the more you've got a feedback loop and the more the dopamine releases there.

And in a spiritual realm we would call this hope you start to believe it's going to work because it's working and then you lean in that much more and you lean in that much more and you lean in that much more and that's why this works because no one set set up sat down at their kitchen table and said hey let's go deeply in debt because that's a good idea. A series of behaviors put you into debt. And you don't fix a behavior problem with a math solution. You fix a behavior problem with a behavior solution. And the feedback loop, this positive feedback, I knocked out one.

Yeah, I knocked out another one. Yeah, I knocked out another one. Whoa! And you're down. You're beating on that student loan. You're beating on that big one. You're beating on that big one. You're beating on that car and you're, yeah. And now you're starting to yell at your neighbors.

Think there's problems over there, you know, because you're getting fired up because it's working and that's the dopamine release. That's hope that you starting to believe. And when I first started, I paid off the little one. I wasn't so sure. And the next one, well, maybe this will work. And then the next one, yeah, it's going to work. And the third was like, ah and and then your broke

friends start making fun of you and you want to punch them you know and so this is this is this is why it works and that's why the debt avalanche does not work that's right or consolidation you know when people exactly because you don't change your habits that's right the debt avalanche is where you it's a you know you list your it's mathematically correct well honey if we were doing math we wouldn't have credit card debt it's not a math problem it's a stupid problem that's what we have to fix the stupid not the math and so the math is you know we're going to list it highest interest rate to smallest interest rate because this interest rate is killing me and And here's the problem.

While that sounds like it's mathematically correct, it's not because your math that you're using is very naive and you left variables out of the math formula. Here's a variable you left out of your math formula, probability of completion. If your probability of completion is 80% or 90% with a snowball, but the math is running against you, net of probability of completion, it's going to beat the avalanche because the probability of completion is close to zero. Almost no one finishes that because there's no feedback loop, no dopamine release, no hope release, no sacrifice increase, no getting the spouse on board because this crap's starting to work. For the first time

in my life i'm telling money what to do instead of it telling me what to do i am not relinquishing this control ever again you start getting a little swagger man you're ready to go that's true and that's why this thing works and and why so many millions of people have gotten out of debt using the ramsey system which is just freaking common sense. But, you know, you people that think your debt avalanche is mathematically superior, no, your math is naive and your formula is incomplete because you don't know what the flip you're doing.

So Northwestern University did a study of the debt snowball versus the avalanche. And they concluded, because of probability of completion that the snowball was far superior because if you quit and you don't get out of debt using the mathematically superior which is not really mathematically superior it doesn't work that's right so you don't get completion you don't get to the goal so and then time magazine comes out and does a story on the northwestern studio northwestern study and they go turns out dave ramsey was right like we didn't already know that we've got like millions of proof text here we've got so much social proof on this that's unbelievable we beat your research project into

submission so good god people this is not that hard get your butt out of debt your number one wealth building tool is your income and when you're giving it to stupid bank of america lexus motor credit and master card who's your master of your life you're you know and you wonder why you work so hard to make a hundred thousand dollars a year and i got nothing it's because you're giving it all to these stupid banks and you've got to get back control of your life you just you work too hard to be broke people you need to retain control of your life this is so empowering it is so dave get a little bit more tactical because we know okay we're listening small so large okay dave i will do the debt snowball method but what where do cars

fit into that you're telling people all the time to sell their car. That's not my smallest debt. Do I do it first? Do I wait until I get to that on the debt snowball? When do I sell my car? The rule is if you can pay the car off and all the other debt within two years, not counting your house, and you like the car, keep it in the debt snowball and pay it off. but if the car is keeping you from making it out in two years if it's one of the reasons okay but if you got a five thousand dollar car and a two hundred thousand dollar student loan the car is not your problem that's right but you got a seventy thousand dollar car and a six thousand dollar student loan

and you can't make it out in two years well it's the car stupid yeah you know so get rid of the dumb car so can you get rid of the thing and do you like it well i hate it we'll get rid of it anyway then it's not you get rid of it even if you weren't broke because you don't like the stupid thing but i love the car and i can pay it off and all of my other debts with the money i have in savings and the money i can earn and using the debt snowball during a two-year period of time then keep the car i'm fine with that. Yeah. And the only exception would be the IRS.

That's the only thing that jumps to the top of the list. Fair? Child support. Child support. Anything like that goes to the front of the list because they're going to come get it anyway. That's right. And child support, you take care of babies before you do any of this. Shut up.

But the IRS is going to get their pound of flesh, so you need to put them at the front and get rid of them as soon as possible. They have collection abilities nobody else has. This is The Ramsey Show. Live from the headquarters of Ramsey Solutions, it's The Ramsey Show, where we help people build wealth, do work that they love, and create actual amazing relationships. Jade Walshaw, number one bestselling author, Ramsey Personality is my co-host today. Open phones at 888-825-5225. Mark is in Orlando.

Hey, Mark, welcome to The Ramsey Show. Hi, Dave. Hi, Jade. Thank you for taking my call. Sure. What's up? So my wife and I have done a wonderful job at saving and investing. You know, depending upon the age that we retire at, I don't think it's unrealistic that we could end up with a nest egg of between

$8 and $12 million. Well done, sir. Touchdown. Thank you. Thank you. So my question is, we're a Christian family. We have four younger, wonderful daughters between the ages of 7 and 13 right now. And I want to know what you feel is appropriate to leave behind as an inheritance, excuse me, because we're conscious of what the Bible says about money, and we don't want to spoil our children or teach them to rely on money as opposed to relying on God for their needs, you know, going forward after we pass. Do you not think it's possible to teach them that and with having built that character that they're then able to own this wealth like you are able to own this wealth?

Well, I'm not saying that at all. I just, you know, I never had a nest egg like that pass to me. No, I know. And so, you know. But do you think the only way to learn it is to start out broke? No, I don't think so. And the Bible does not say it's bad to leave an inheritance. As a matter of fact, it says the opposite.

A godly man leaves an inheritance to his children's children is a Bible verse. Totally agree with you. I just didn't know if there was maybe a line that maybe, you know, you might cross over like that's too much or something like that. That was my concern. It's not an amount. It's a principle. And so here's the principle. You are not obligated, biblically or otherwise, to leave the money to your children.

But to assume that it's going to damage them is not true. So what wealth does do is it magnifies the character of the person including you including me and including your kids and my kids and jade's kids okay it magnifies the character of the person so that the problems in my character are magnified when i've got wealth because it gives me power. Does that make sense? The good parts of my character are also magnified. So someone that has a problem with their temper when they become wealthy becomes a rageaholic and don't you know who I am?

Comes out of their mouth and stupid stuff like that, right? But someone who's generous when they become wealthy, we call them a philanthropist because they change entire communities with their generosity. So whatever it is, good or bad, is magnified. And so the first thing that we taught the Ramsey kids is you're not entitled to anything just because you hit the gene pool lottery. Right? Yep.

You're not entitled to anything, number one. Number two, in order to qualify to manage the Ramsey wealth, the next generation, you have to have a spiritual understanding of the wealth, and that is that you don't own it. God owns it. You're just managing it. And once you grasp that, you realize wealth is the reason you see the reasons that the Bible has warnings about wealth because it's heavy to carry.

It's a lot of responsibility to leave one of your children that becomes an adult $10 or $15 million probably by then each. Okay? Yes. And so you leave one of them $10 million. That's a lot of responsibility if their job is to manage it for God, for his glory, which includes taking care of your own household.

Mark, let me ask a question on your behalf, because when I hear your question, I have thoughts of my own, because here's the thing. If you live to be 80 and your kids are older when they start receiving this wealth, in some ways that feels a little bit better. It's like, okay, they've got to experience life. They're not dependent on this money at that point. But what if the worst were to happen and they got access to this money earlier, right? Maybe when they're in their early 20s.

How, Dave, then would you disperse this amount to where it is helpful to them? It's not too heavy at one season. Or would you disperse it? What would you do? Well, ours was set up until they reached 25 to have some kind of different dispersion. So like when they're minors, it was to be managed. And in order to qualify for a disbursement at 25 in the trust, they would have to have done this, this, and this. Be walking with God actively.

So in other words, we don't want to fund a cocaine habit on the back of a yacht for a reality star. That's not what we want this money to go for. And so if you're going to do that, then you don't qualify anymore under the trust. Right. But is there a limit that you'd give a 25 year old? As a disbursement? No, I didn't. I had it at 25.

We turned it all over to him. Oh, wow. It's I mean, we haven't turned it over. I know. I'm saying you would have. And mine are now, the youngest is 33. But today, if I die, it's just dispersed. But if any one of them decides to live a life that disqualifies them as a manager of God's money, then they're not going to be able to get any.

They're taken out of the trust immediately. And so because it's not really my money and it's not really their money, we are managing it. One of the beauties of managing it is you get to enjoy some of it, but most of the managing of it is a weight of generosity and a weight of other things. So what I want you to avoid, Mark, is this. There is a thread that runs through some of our Christian churches that

says that money is bad. Money is not bad. It's not good or bad. It's amoral. It doesn't have morals. What it does is it exposes the morals and character of the people that it touches. Does that make sense? Absolutely. And so our job as parents is to raise children that become qualified stewards meaning they're they're working on means they're that yeah and then i leave it to them and i don't think anything about it uh because i am well aware that the temple was built by Solomon atop Mount Moriah in Jerusalem. And in today's dollars, it would be somewhere around between $10 and $20 billion building. It was not built with Solomon's money. It was built with his dad's money.

It was inherited money, David's money, Solomon's, David's son. It was inherited money used to build the temple of god and so you know we're sure that god uses families that have character generationally to manage his goods so it's not unchristian to do this. What you don't want to do is leave it to someone who it does harm to because they've got a problem in their life and it expands the problem. Well, I think too, we're used to seeing, it's almost like we're filtering it through. Oh, you see a lottery winner. They win a bunch of money. They have this huge amount of money that comes into their life or an athlete who has this huge amount of money come into their life. And

before you know it, they've... And I've sat with those guys in nfl many many times and what i'm dealing with is a 21 year old who has one skill in all of his life skill buckets he has one bucket he plays football he does not do anything else and and that is exposed when he gets a $10 million signing bonus, and he loses it almost instantaneously. 3.8 years is the average NFL career, and most people leave the NFL broke. Hmm. The exception would be mainly the offensive line, because generally those are the smartest guys on the team. This is The Ramsey Show.

Hey, you guys. I'm not a fan of the big banks, and you probably already know which ones I mean. But I do like credit unions because they're nonprofit organizations that focus on their members. And I'm proud to endorse Fairwinds Credit Union because they share the Ramsey mission of helping people get out of debt and live generously in fact they design products to help keep you from going into debt in the first place fair winds has been in business for over 75 years and they serve hundreds of thousands of members worldwide you can feel secure because your deposits are federally insured by the NCUA up to $250,000.

It's easy to join and Fairwinds partners with more than 5,000 credit union locations around the country so you can bank in person wherever you live. But if you prefer the online experience, you can log on to Fairwinds and do anything you could do at a physical location. So go to fairwinds.org slash Ramsey to learn more. And while you're there, look at the combined checking and savings account bundle they created just for Ramsey fans to help you take control of your finances.

That's Fairwinds, F-A-I-R-W-I-N-D-S dot org slash Ramsey. If you're not a math nerd, if you're a normal person, when you start thinking about investing, investing, sounds intimidating, doesn't it? Hard to figure out. I think I'm going to do this wrong. I'm scared. Well, you know, the same thing's true when you haven't ever driven a car and you're 12 years old, but they teach you to drive a car a little bit at a time.

And as your knowledge increases, your competency increases, and we let you leave the parking lot of the church where you were practicing right and that's where we taught our kids to drive a car in the parking lot of the baptist church right and even even do it even uh change gears on a straight shift so that they can actually function in this world you know you need to be able to drive investing it's the. It's the same thing. So George Campbell and I are going to do a two-night event, two hours plus each night. Not the same double. It's two full nights of investing essentials. It's a virtual event.

It's next week, March 4th and 5th. Tickets start at $199. The first night we're going to cover some basics on investing and then go deep on miscellaneous investing like, for instance, mutual funds and that kind of thing. We're going to lay some principles in place, teach you so that you feel confident and competent when the word comes up, you yawn and go forward, right, instead of freak out. And the second night, I'm going to unpack my personal real estate playbook, stuff I've never taught but one other time, and that was at this same event this time last year. And I'm going to spend about two hours on real estate.

I own several hundred million dollars worth of real estate. I've got a degree in finance and real estate, multiple other letters and licenses after my name in that business. I grew up in the real estate business. I love real estate. I'm a real estate nerd. And so those of you that want to learn how to do real estate investing properly, it's going to blow your mind for some of you that have been on TikTok, but I'm going to show you the right way to do it by somebody that really did it, not lives in their mother's basement with an opinion. So have at it. You can join us. So

it's March 4th and 5th you'll want to be through both nights because they tie together but it is standalone complete information and uh it's the only place you're ever going to get it so we'd love to have you george camel has really got some amazing stuff he's put together for this i'm so excited get your tickets at ramsaysolutions.com slash events or click the link in the show notes on the podcast and the YouTube. Raleigh's with us in Seattle, Washington. Hi, Raleigh. How are you? I'm doing well, Dave. How are you? Better than I deserve. What's up? Good, good. I am so, so excited to talk to you guys. I recently got married three months ago to my beautiful, beautiful wife, and we found out, what, four days ago now that we're expecting our first child.

That is awesomeness. Way cool. We're super excited. And scared to death, that's great oh yeah it's both crazy emotions right now um anyway and uh my mother-in-law loves to listen to your show and i've listened to your show for a couple years now so that's how she's going to find out um we're going to listen to the show together and that's cool it'll be awesome we just did an on-air baby announcement to mother-in-law that's so cool yep thank you for that honor thank you for that honor. Thank you for that honor. Yeah. Yeah. Thanks for letting me. My question involves health insurance. I want to get my wife health

insurance as soon as I can. And I just don't know anything about it. So I wanted to know what you think. Is it through your employer? Does your employer offer it? Does hers offer it? Or is this you guys just out in the market on your own yep we're kind of on our own looking for options okay okay well um we have an uh an endorsement on health trust financial and they will help you find a person in your area that will sit down with you and go over the options that are available on the marketplace from Blue Cross Blue Shield to all kinds of other things. And they're going to help you shop around and, you know, customize and build a thing just for you.

But in the process of that, Raleigh, it's just like anything else we teach here. You don't do what someone says to do. You learn from them and you make the decision. So their job as the health trust rep sits down with you is to teach you and say okay here's three options we think option number three is the best one better than one and two and here's why and they teach you and you understand that and based on that you pick it you don't pick it because dave ramsey said or somebody dave ramsey sent says you understand it okay i? I do, yes.

Now, do you all have any money saved? Yes, we do, yep. How much? We have an emergency fund, and we have about $6,000 in house savings. How much is in your emergency fund? $10,000. Okay. Is everyone in the home healthy?

Yes, we are, yep. Is anyone overweight or smoke? Nope. Okay. You're probably going to want to look at an HSA, a health savings account program. Okay? Okay. It's a very high deductible, but a much lower premium.

Okay. You pay very little monthly, but when you do have an event, it's a much lower premium. Okay. Pay very little monthly, but when you do have an event, it's a lot more out of pocket. Okay. Okay. But if you're not using medical care, that's the reason I ask about health, if you're not using medical care very often, the HSA is the least expensive way to keep good coverage in place

because you're not blowing through the deductible and you're getting the benefit of the lower premium that's probably what you're going to find out when they sit down with you okay now i do not know um she's pregnant that's a uh quote pre-existing condition and i do not know what you're going to be able to do on labor and delivery for sure if you can find coverage for normal labor and delivery, it might be expensive since it's after the fact. Okay? Right.

And now a lot of policies will cover a complication in the birth of a child but not the actual normal labor and delivery cost. Okay. And so if the child had, God forbid, something like a heart issue or something, and they did heart surgery or something like that, a policy might cover that, but it wouldn't cover the normal labor and delivery. So you need to learn about what it does cover and doesn't cover for the infant as you're looking at this stuff, okay?

Now, if it does not cover normal labor and delivery, here's a technique for you, you're gonna this is gonna be awesome so the when you go to the hospital to have a baby is the only time people want to go to a hospital it's good pr for hospitals to deliver babies they like it because it's the only time now every time other time you're there you're sick right right? Right. And so it's a positive experience. So hospitals love labor and delivery. And so what you can do is schedule an appointment with the hospital administrator that your OB is planning to use. Go sit down with them and say, our OB is suggesting this hospital.

We'd like to use it, but it's depending on this conversation. Normal labor and delivery here is $15,000 or whatever your OB tells you, okay? And we are willing to prepay in cash for the labor and delivery. This is if your insurance does not cover it, okay? But we want a discount if we prepay in cash, so a they get cash they don't have to collect from you b it's a positive experience and they want you there uh c you're going to go to a different hospital if they don't make a deal with you okay you'll reserve your walkway power and you will probably get your labor and delivery 25 to 50 percent uh of of face value meaning they're going to discount at 75 percent okay okay if you do what i just told you to do um but because they don't this does they never get this request because

almost all labor and delivery is covered by policy and people do they just get full vote from the insurance company but if you go in there with cash and say i don't have insurance coverage for this now you may be able to get insurance coverage if you do just forget this whole conversation okay yeah but but if you don't that's how you handle this and you can get a a serious bargain that's good on labor and delivery um you there's hardly anything else you can do that on but this is a positive experience they want you there they want you to come have a positive experience at their hospital so you remember them for later things it's it's a pr move basically i when i when i was shopping for insurance back in the day when i was pregnant i was looking at like dave said i

was looking at high deductible plans so i could have the hsa and i cared about with out-of-pocket maxes because when you are having a kid you don't know all that may arise and so just knowing and having that piece of saying okay i know that no matter what when the rubber meets the road this is my out-of-pocket max, my stop loss. That also helped me have some peace about it and make a choice. Most of your HSAs are going to be in the $10,000 to $20,000 range. That's right. Out-of-pocket max.

And so that's going to, again, that's your deductible plus. That's right. But your premiums could be as much as 50 percent off doing that. So anyway, go to Health Trust Financial. You can find them on our website and sit down with the guys and they'll help you out with this. This is The Ramsey Show. Rachel, do you ever get these sketchy text messages that are like, hey, you need to update

your address and verify so we can get you the package you didn't order? Yes, I have. George, Sketchy and never trust them. And that's why we recommend Delete.me. They help with that. Yeah, they do. Delete.me actually goes in and removes your information from data broker websites. And it is an incredible service that everyone needs. And there's a lot of shady companies out there that solely exist to sell your personal data to bad guys. And that means your info, like your email address, your home address, your kids' names, your name, everything is just out there for scammers and spammers to find. That's right. And then once they remove your information, then they're going to send you a detailed report telling you where they found your information, when they removed it, how many hours they've saved you. I mean, it is incredible. So

detailed and it's beautiful. I love these reports. So far, get this, they've reviewed 27,000 listings on my behalf, removed me from 240 data broker sites, and saved me 77 hours of time. It's incredible. Absolutely amazing. And Winston and I now get fewer texts, weird emails, spam calls, all of it. I love it. So you got to be sure to check them out. Ramsey fans get 20% off their annual plans. Just go to joindelete me.com slash Ramsey. That comes out to less than nine bucks a month. Super affordable. It's amazing. So again, that's joindelete me.com slash Ramsey. Make sure to check it out, you guys. Jade Walshaw, Ramsey personality is my co-host today. The Ramsey Show question of the day is brought to you by Y-Refi.

When the payment on your defaulted private student loan is as much as some mortgages, it's hard to get ahead. That's when Y-Refi can help. Refinancing to a low fixed rate loan built just for you. Find out more at Y-Refi.com. That's the letter Y, W-R-Y-R-E-F-Y.com. Slash Ramsey. Might not be in all states. Okay, today's question comes from Ethan in South Carolina.

He says, my wife and I are both 28 and just got married. I am an employee benefits consultant and she's a trauma nurse. Together we make about 200,000 before any commissions that I receive. We also are debt free. We have about $150,000 in investments, $30,000 in a money market account, and are investing our 15% towards retirement. Very good.

If I were your son, how would you recommend buying a house? We have been waiting for interest rates and housing prices to drop, but I always hear there's never a perfect time to buy. Is now the time for us to jump in? Yeah, Ethan, I think you're feeling the way a lot of people are feeling that are in your shoes, right? They're saying, okay, these interest rates are high.

Should I wait? Like, truthfully, I have the money or I could start to save up more money, but I don't know is now the right time. And I would say the right time to buy a house is when you can afford it. Like not based on the market, not based on interest rates. Otherwise, you're trying to like play a timing game. But if you can afford to save the down payment and you can afford to get a mortgage where

the payment is no more than 25% of your take-home pay all in, then get the house. And later on, if mortgage rates go down, you can always refinance, right? Like there's, you have options. You don't have to stay in that high interest rate. So for you guys, I think this is great. You have a great income. It sounds like you've got your three to six months of expenses. You are investing. Yeah, you're doing really, really well. At this point, I would start saving up because it sounds like the $30,000 you have in the money market is your emergency fund, and you should not use your emergency fund as a down payment. So I just want to make that clear. Got $150,000 in investments, unless that's return, but you can use that.

Yeah, that's a good point, Dave. It doesn't say, but if that $150,000 is in like stocks or just kind of like a brokerage sitting there, you could definitely use that, and I would. Yeah. Okay. Interest rates are going to do what they're going to do. We don't know. House prices are not coming down. We do know that.

There's a serious shortage of housing. There are more buyers than sellers, and there's no fix on the horizon for that. That's called a supply-demand pressure. It's seventh-grade economics. When there is a shortage of anything, the price holds steady or goes up. It does not go down, and interest rates don't cause it to go down. So interest rates have been up for about 18 months, and house prices have not gone down.

Okay? It's that simple. rates have been up for about 18 months and house prices have not gone down. Okay. It's that simple. The median house price is exactly what it was 12 months ago. It's 400,000 nationally and it's not going anywhere. So that's what you're seeing. So don't wait on house prices to come down. So marry the house and date the rate. You can refinance your interest rates if they go down

or pay them off and have a zero interest rate. That'd be cool. And if you want to get a pulse on what's going on in the market and you want to start learning more and leaning into that process and learning, you should visit our real estate home base because you can go on there. And I mean, it's just chock full of all the information that you're going to need to kind of see what's going on on learn about areas that you don't feel as confident in and ultimately get set up with one of our Ramsey trusted real estate agents that can help you through the entire process so that's what I would do if I were you in your shoes or if you were my son which is yeah perspective is the thing so I'm old so I've been walking around in the

middle of the stock market thing for 40 plus years i've been walking around in the middle of the stock market thing for 40 plus years i've been walking around this real estate thing for 40 plus years and let me tell you i every year i've been on the air for over 30 years talking about this every year someone says oh the stock market's artificially high it has to come down what goes up must come down hadn't done it went down a little bit here and there but it came back up more and it went down and can you imagine if you had invested 32 years ago in a growth stock mutual fund how much that would have gone up oh man oh and let me help you with this. 1978, I sold my first house for $42,500 as a real estate broker. I was 18 years old.

Can you imagine if you owned that house from 1978 that that guy paid $42,500 for? Man. You understand that's an $800,000 house now. But they have to come down. No, they don't. Nope, they don't. Nope. They don't. And they never have.

Yeah. There's no historic data that indicates that. So date the rate, marry the house, get a house bought when you have the money. And if rates come down and you can get a cheaper rate than 5%, which is so freaking high. I don't know how you people are surviving i love when you talk about the 80s rates yeah it's whining about five percent but anyway yeah it's because it's compared to three instead of compared to 12 if it was 12 and it went down to five everybody'd be celebrating there'd be mardi gras on the streets but instead it went from three to

six and down to five and everybody's oh god we're dying yeah okay so you better get a house because the next round of real estate prospering these houses are going to shoot up again so you're ready to get a house go get one guido's with us in albany new york hey guido what's up pleasure to speak with you uh my situation is wife and I have no debt. I'm retired. I'm 65. She will be 69 next month. She still works in a scientific position. She makes 72K. She gets her full social security, which is about 18.5 banks. We don't have car payments. she bought a car april of last year uh financed it briefly at one point i paid it off last month okay what's your question all right i am constantly barraged by family members trying to find out what my retirement income is.

Why? Why? Why is it they think they're business? That's what I don't know. Is it your kids? No, we have no kids. We have no kids. Brothers, cousins.

Are they vultures? I guess they are. They're neighbors across the street friends it's nobody's business you know it's strange i never have anybody ask my uncle uh is there a way to put this to bed i mean i keep hearing i have several cards some from the 70s 80s i'm like you i like old. I like to work on my cars. Some are pretty. Some are not.

I hear, you ought to get rid of all those old cars. Go out and lease. Lease? Never going to happen. I don't need to impress anyone. The only person I need to impress, I see every time I shave. There you go. I worked in Europe for a while.

I think Guido, I think that's just what you say. I mean, I just think you say, hey, I appreciate the advice and all, but what I'm doing seems to be working for me. And if that works for you, you can do that for you. And if they ask about your income, I just say, that's personal business. I don't disclose that. the only debt we have okay is the mortgage which is about 93 we have 10 years to go on a 50 at 2.8 percent for somebody that doesn't like talk about your income you give out your information a lot maybe you're talking about it with them too much we don't we we know it's an alias. Okay. I suspected. Yes, yes. And by the way, I did not spend my formative years in this country, neither did my wife.

That's okay. All right. I think the thing is this. I think you've got a wonderful story and a wonderful situation, and people wish they were you. They want to know how you did it. They want to know how you did it. And I would just say, you know, we don't disclose our personal details. I will tell you that we live on less than we make, and we're very frugal and very careful,

and it has paid off for us over the years. And God has blessed us, and we've been able to get some nice things. It's a blessing to not depend on Social Security. I don't disclose my personal income. I don't think to anyone. My wife knows and my tax guy knows. Yeah. Our CFO here knows, but I don't.

And if anybody asked, I would just gently say, oh, you're kidding. I don't talk about that kind of stuff. Would you say it gently, Dave? I would. And then the third time, I'd say, none ya. None ya. None ya, dadgum business this is the ramsey show

well this is the last segment that is on podcast and youtube you can get the rest of this show on the ramsey network app and that gives you video audio and all kinds of searchable stuff so you can not have to listen through 15 hours to get the call you want if you want to call on a certain subject you can just put it in the ramsey network app you can email us in the ramsey network app it's all completely free so download and use the ramsey network app and we'll get you all of this show every day madeline is with us in Indianapolis. Hi, Madeline.

Welcome to The Ramsey Show. Hi. Thank you so much. I was actually just calling because I currently live with my boyfriend at his parents' house. We've lived here for about two years, and we are getting engaged this year, and we're running out. Obviously, we don't want to be engaged or even married living here we've been doing the snowball effect for a little bit but

it's still in the process how old are you i am 23 okay all right um because your sweet little voice you sound like you're 12 i wasn't sure um okay um well thank you that's um the okay so we don't have debt because we aren't married who has debt you or him i have just debt from my car it's about uh for me to completely pay it off it's about 27 000 he has debt from his vehicle and debt from credit card bills from starting his business. And are you both working? We are, yes. How much do you make?

Yeah, what do you all make? I make $30,000. I work at a bank that I'm interviewing to move up, so hopefully making more soon. And it fluctuates with him just because he owns a contracting business but it's normally i would say a year like 60 to 70 000 so why are you guys living i mean why aren't you married making a hundred thousand dollars a year at 23 and pay these debts off we haven't gotten married yet just because everybody around us have told us that we're kind of young so to wait what um okay well you're acting like you're married so what are we waiting on what's the difference in your mind

because your actions aren't showing difference yeah because your actions aren't showing everybody around you includes his parents who don't want y'all to married, huh? They've kind of told us to wait a little bit. Just his brother got married last year, so we were kind of trying to give him his moment and waiting. But he doesn't want to wait any longer, and neither do I. I would suggest you all get married this weekend and move out next weekend. We actually have an opportunity to move into a cabin on his grandpa's land when we, it is $15,000 that we have calculated to renovate it.

No, you're broke. You don't need to be renovating someone else's cabin. Why can't you just get an apartment like everybody else? You don't have any money and you're broke actually have we have donkeys so we are not able to move into an apartment because we have donkeys that we have in our backyard why where did those come from and what are you using them for um we actually breed them to sell the baby donkeys, but we had to get rid of a lot of them because we couldn't afford it. I can't believe I'm asking this question. How many donkeys do you have?

We only have two right now. And what are they worth? And what are they worth? The female is probably worth $1,000, and the male is probably close to $1,100. Perfect. Okay. worth a thousand and the male is probably close to eleven hundred perfect okay so i'm going to tell you what i would tell my daughter if she was 23 and she called up and was in this situation i can't imagine that happening but let's say she did okay i would say sell two donkeys get married and move out within the next three weeks into an inexpensive apartment you have a hundred thousand

dollar a year income clean up this mess of debt that you have, and then start saving to buy a nice property and a piece of ground later and restart your donkey business later. If that's your dream. I suspect your dream's going to change about the time children start coming. Yeah, 100%. Yes, we... We don't revolve our major life decisions around donkeys in the backyard.

That is a good principle of life, Dave. Yes. Oh, boy. Oh, this is great. This is so fabulous. Madeline, you're a sweet girl. But I think you're listening to everybody else except the two of you and i think you and your husband and b need to move out uh and get

you an apartment and get married right now and then you need to clean up your debt mess and if the donkeys are keeping you from doing that then we need to get rid of the donkeys um and that's not a metaphor that's an actual fact william is in harrisburg hey william what's up in pennsylvania hi everything's doing very well thank you i'm glad how can i help mr ramsey first thank you i hooked into you about 15 years ago, and you've changed my life. Oh, I didn't change it. You did. I'm proud of you.

Well, because of your input. Well, thank you, sir. I have about $100,000 that I need to put into my house because of water abatement and mold. It's been going on a while. We've been in the house for 30 years, and I've just been putting it off and putting it off. Yeah, that's what I mean. It's been going on a while. So I have about $800,000 in retirement, a mixture of Roth IRAs and traditional IRAs.

How old are you? I am 67 years old. Okay. Retired. How many bids have you gotten on the work? Say again? How many bids have you gotten on this work? About three or four of them. Okay. So you got a good average. You know that $100,000 is an accurate

number. It's not one guy sticking you. Correct. Oh, good. Good for you. Not your first ride on the cabbage truck. Okay. Good. Okay. Yep. So it's a simple answer, good. Good for you. Not your first ride on the cabbage truck. Okay. Good. Okay. Yep. So my answer is. It's a simple answer, dude.

Take $100,000 of your $800,000 and fix your house. Mm-hmm. Okay. Not through a home equity loan. No. We're not borrowing money when we have $800,000 in the bank. Okay. And here's the reason I ask.

I have a pension and Social Security that puts me at about $85,000. Yeah. So if I take $100,000 out of my retirement, I'm going to have to pay 30% tax on much of that. Yeah. Yeah. That's right. Still pay the 30% tax. Absolutely. I'm not going in debt.

Not when you're a millionaire. And you're a millionaire. No. No. I appreciate it. Easy enough. That's easy, man. That's a good question.

Well done. Good question, sir. I appreciate it. Easy enough. That's easy, man. That's a good question. Well done. Good question, sir, and good answer. Open phones, 888-825-5225. Another way of asking yourself these questions like William's asking is always reverse engineer it, folks. That's true. And say, if I had $700,000 in my retirement account, would I go borrow $100,000 to have $800,000 in?

No, I wouldn't same thing the thing that's throwing him is he doesn't want to pay the tax well why do people feel and if he has traditionally has required minimum distributions coming up at 72 and a half anyway that's right that's right right around the corner so he's gonna have to begin to pull this money down anyway i think people think when they roll money into their house they won't feel it as debt like it's almost like in their mind it doesn't count as debt take a heloc and do this hundred thousand so yeah you're um williams he's a saver he is another way of saying it is he's a cheapskate he didn't fix a mold issue that got worse while he's sitting on 800 grand yeah yeah dude go fix your house type one syndrome

now this is really what you've uh you've been saving too too harshly here brother yeah that's it's good very very good ah so jade do you want to talk about the donkeys i'm still trying to get my emotions around that one yeah i i didn't completely lose it on the air that's pretty good laughing Laughing. I was close. I thought you were going to have to phone a friend and see if George would say to sell the donkeys. Oh, George! I forgot.

We should have brought in, channeled our inner George. I know. Where is he? We need him. So the horse people were after George. Now the donkey people will be after me. How do you get into it? For making fun of the donkeys and saying sell the donkeys.

Yeah. I don't even know how you get into how that becomes your dream in life what set of parents lets the girlfriend move in with their son and bring the donkeys that's over the top it's over the top mom i'm bringing a girl home and a couple of donkeys great here's the room upstairs i'm thinking my mom would have said you're not my child oh man we would i wouldn't have survived i'm bringing the donkeys yeah if we could make up these calls that were this good

we'd make them up but instead we just take calls from normal people this is the ramsey show live from the headquarters of ramsey solutions it's the ramsey show where we help people build wealth do work that they love, and create actual amazing relationships. Jade Walsh, our Ramsey personality, number one best-selling author, is my co-host today. Open phones here at 888-825-5225. Nicholas is in Chicago. Hi, Nicholas. How are you?

I'm doing well. Thanks. Thank you both for taking my call. Sure. My call is regarding a Roth conversion that I think I'm going to do. My position and background is net worth about $15 million. I retired at 45. I sold off a medical practice. My wife is still practicing, but I've transitioned into managing our real estate. So now I file as a real estate professional. Heavy into real estate.

Got about $8.5 million worth of real estate. Spent off $900K in revenue. About $2.5 million in debt. Low rates, $3.5 or so. Sitting on a SEP of about $2 million. Brokerage account of $2.7 million. About $300K in cash. The question is, with the $2 million SEP, I'm looking at almost a $700K tax hit when I convert that.

With my real estate professional status, if I continue to buy real estate and use the depreciation to offset my wife's income as well as that Roth conversion, should I be going about it that way or should I liquidate my brokerage account to pay the taxes on the Roth conversion coming up? So how do we fund the Roth conversion on a $2 million SEP, so it's a half a million dollar problem, give or take, right? $800,000 maybe, right? Yeah. My strategy up until this point has been, two years ago, I used up all of the depreciation out of all, all the real estate that I've

accumulated in the last six years. Um, on just this past Tuesday, two days ago, um, I, I completed a deal, um, on another piece of real estate. And initially I was going to go in and just pay cash for the deal. Um, I ended up financing half of it because I wanted to hold on a little cash just in case I could have a little flexibility just in case I am facing a large tax bill on this Roth. I'm 45. You can choose the year to do the Roth. You don't have to do it this year.

You can do it whatever year, right? I understand. My intent is, you know, when I do the Roth conversion, I understand, you know, it eliminates the RMDs. But I'm not sure I'm ever going to need to touch the money. My intent is that, you know, I leave it there until I die, until my wife passes, and we just give it to the kids, you know, 30, 40, 50 years from now. Okay. Let's stop a second. So the no, I would never borrow money to cover your Roth conversion, and that's effectively what you've done.

I would get back to the debt-free position. Number two, depreciation schedules are independent of whether you do this conversion. You don't need a depreciation schedule to do the conversion. All you need is the cash to cover the conversion, the tax liability created by the conversion. So, yes, I like the idea, and I've moved all of my stuff. You know, to give you a point of reference, I'm sitting on about $600 million in real estate, and I moved all of my stuff to Roth and simultaneously do every year.

Like every year I do a match here myself at Ramsey, and it has to in traditional. And then at the end of the year, I roll it to Roth every year and I do a backdoor Roths every year. So a hundred percent of my retirement is now in Roth. It's not in traditional. I don't have any traditional left. So, and I did all of that just to avoid the income tax on the growth. Now, though, I'm sitting here at 64, and I'm looking at estate planning, and I'm taking all these calls from people, and the Biden administration changes the ruling on the inherited IRAs under the SECURE Act, and you have to liquidate an inherited IRA in 10 years. And so if you leave a $2 million traditional SEP, they're going to, well, by then it may

be $20 million and the kids are going to be liquidating that at $2 million a year for 10 years and getting taxed on it then. And you avoid all of that. So the RMD avoidance is excellent, but I've now come to realize I accidentally did something brilliant in my estate planning because my kids have no mandatory withdrawal. The Roth IRA passes tax-free, zero tax on it, and no mandatory withdrawals and no nothing. Does that step up? Yeah. There's no stepped-up basis because there's no basis.

It's not taxable. Okay. There's zero tax on a Roth IRA, inherited or otherwise. So when you take this SEP and convert it to that, whatever it grows to in the future, just compound interest, just let the thing sit there and cook, you know, $2 million and you're only 45, we're talking $20, $30 dollars if you lived in your 70s and that one account and that one account then is completely tax-free for your kids instead of a 10 year burden under current tax law now who the crap knows what's in the four and a half trillion

dollar tax cut that the congress just passed this week and has not gone through the senate yet so i don't know what they're going to do with all that. I have no idea. But based on current facts today, I feel like a genius that all mine's in Roth. All of that to say, I'm probably just going to scrape together the cash and either do it over a two- or a three-year period if I have to so that I can cash flow the tax hit, or if you've got the $800K, just do it. I'm moving this up into a roth period and it's independent of uh the real estate deal and it's independent of the depreciation schedules those stand alone and make sense or they don't make sense on their own accord they don't extrapolate

from this discussion does that make any sense well i think i'm kind of using depreciation as a tool to to knock down that tax bill. Yeah, but it just knocks down all of your tax bill, though. When you make, you got a piece of income property throwing off 900K, it knocks that tax bill down. Right. Right? And you don't have enough depreciation on those properties to offset the cash flow on the properties, even. No, no, i don't okay so you're you're going to get the use of the depreciation schedule regardless of this

roth discussion that's my point is there a typical allocation that you would say you know a third of my net worth should be in real estate or equities or vice versa no i um my real estate's done much better than my equities have done and so i've got a lot more in it as a result i bought a bunch of stuff in 2008 at 15 and 20 cents on the dollar and it's worth so stinking much now that there's no way any mutual fund could ever keep up with that um so i mean mean, it's like a bazillion times difference. And I'm not going to rebalance the portfolio because the real estate kicked the mutual funds butt. No, thank you.

Understood. But I'm also, I don't abandon either market. I'm not 100% in either one. If you want to be, that's okay. And I'm very comfortable with real estate, obviously. I'm a real estate guy by trade before I did all this 30 years ago.

So anyway, you've done really well, Nichols. I'm very proud of you. And it sounds like you're kind of enjoying it. Yeah. He seems to. Just managing the family book of business here. That's pretty cool, dude. And you're 45 years old.

You have 15 million already. And you're going to be $100 million by the time you get there if you'll just keep tinkering with it. I mean, just compound interest from 45 to 80. That's going to get in there. Just do a little math. It's pretty incredible. This is what happens when you're smart early. Wow. Very helpful. This is The Ramsey Show. Thanks for joining us, America. Jade Walshaw, Ramsey Personality, is my co-host. Open phones at 888-825-5225. Lindsay is in Roanoke, Virginia.

Hi, Lindsay, how are you? Hi, I'm doing well, Dave. Thank you. How can we help? So, me and my husband have different opinions on how to handle a debt. We were working on baby step number two, and we had paid off $9,000 last year to our debt. And we are now working on our next snowball. And then our son got diagnosed with leukemia. So we paused everything and dealt with that situation at hand.

And so we're five months into our diagnosis. And we set up a GoFundMe for him in order to help allocate some funds for traveling expenses and treatment because we were unknown of what was going to happen. We are now set in our treatment plan and our medical team is a lot closer than we anticipated. And so now we're sitting on about $7,000 in his GoFundMe account. And I want to sit on it and hold on to it just in case because we still have two more years of treatment. And my husband wants us to use a portion of it in order to pay off our next snowball, knowing now that we can build that back up in less time than it would take to actually pay off that debt. I don't think people gave you money for your debt snowball.

That's my thing. That's my thing is the money was allocated for our son and for his medical expenses. And, like, we're not currently using it for any of that because our team is a lot closer and everything, and we want to sit on it. How old is he? Five. lot closer and everything and we want to sit on it how old is he five and when he's 21 if there's still money in that account use it for his college but until then it's not until then it's not your money yeah it was good it was given for him and his care correct and that's that's where i'm coming from is is like yes it's in in our hands, so to speak,

but it was meant for him and for his medical needs and stuff like that. And just because he's doing better. Jade says you win the argument. Yeah, you win. You're right. You're right. Tell your husband Jade said. I will tell my husband that we are a team, but this is what I think we should do.

No, the other thing is this, okay? It's over the scope of a decade, it's an irrelevant amount of money. Yeah. It's not $700,000. It's $7,000. Yeah. So right now in the middle of all the drama that is your life with a five-year-old with leukemia, oh my gosh, I can't even imagine. It feels like a lot of money.

Because it's heartbreaking and it's scary and you can't breathe. And it feels like a lot of money because people loved you and loved him and gave this money for him. So it feels very emotional. And it should okay so that's why it became a big discussion about a little bit amount of money right this is the first time we've ever had any sort of money discrepancy on what to do with extra funds we've always been on the same page with it and that's how we were able to do nine thousand dollars down last year in debt and so this one we're like do we touch that or not and we're just crossing hairs and no you don't and it's because here's the thing

it's an ethics breach you know it and he knows it and it's going to affect the way you think about life and each other more than seven thousand dollars. Well, we wouldn't have all of it. It would only be a portion of it. It doesn't matter. If it's $2, it doesn't matter. It's not your money. It's for him and his care. And I like what Dave said because if you, in your heart,

feel like this is unethical for us to do this, and your husband goes ahead and does it anyway, that is going to create, it's going to change the way you're viewing him in the relationship. That's a big problem. I think they're going to argue about it until they decide. But that's good. That's a good answer.

But yeah, but the answer is I would never touch that, period. I just, I couldn't. Listen, if you can give it back, give it back. Yeah, well, I mean, or just sit on it. And because you're just five months into the diagnosis, you still got to. Yeah, there's still a chance they might need it. Things could change. The story's not complete.

Kim is in Denver. Hi, Kim. Welcome to the Ramsey Show. Hello. Hi. Hi. Hi. So I'm debating whether I should pay off my house.

I'm 60, and I'm debating if I should pay my mortgage off or if I should wait until I turn 67 to pay my mortgage. Why would you wait? Well, I've been putting money aside to, you know, kind of pay it off sooner. my my financial advisor keeps telling me not to pay it off right right now and because he gets commission on the money you're going to use to pay it off so um and it's funny because he told me he goes you know what dave's going to tell you he's going to tell you to pay it off oh good and but um my reputation precedes me but i just didn't know in regards to i mean i have how much do you owe on your home i owe 214 and how much do you have in nest egg

how much do i have in what your nest egg with mr Financial Advisor. I have a total with all of my accounts, I have about $380,000. Okay, so you'd only have $100,000 left. Do you have other cash? She said total. That's my total right now, and then I'm semi-retired. I get a monthly pension, and I'm doing part-time contract work. So I've been putting $1,500 a month towards my investments. Yeah. Here's the thing. When you settle into retirement, I want this house paid for, and you're really close.

It's a little scary to take 200 of your total 300 and put it on the house that's pretty scary right i mean if you do that you're gonna have to take the 1500 plus anything else you can scrape together you need to put about 2500 a buck bucks a month into uh investments since you don't have a house payment because i want you to build this back up really really quick so run the calculation of 2500 a month into your investments how quick you have 200 more in there it's pretty quick probably about three years right and i'd be more than that it'd be about four years but um anyway i'm doing that in my head but you know run it on a calculator sit down with your mr financial guy in general i, you know, run it on a calculator. Sit down with your Mr. Financial guy.

In general, I want your house paid off. It's a little, but the balancing act in your situation is we're using up too much of your nest egg for it to be 100%. If you told me you had 500, I'd do it in a heartbeat. If you told me you had 500 or more, I'd tell you to do it in a heartbeat. But when it's 200 of your 300, it's kind of on the bubble. But I'm still, I love being debt-free so much. I try to get everybody to do it. But if you do it, you've got to set up an automatic draft on your checking account, $2,500, $3,000 a month going in to recoup the 200 that you took out of your nest egg.

Because I want you to rebuild that uh before you're 65 67 and wherever in that range there i think you'll have it back in about four years i think i'm doing that right but um 36 000 yeah yeah i'll be about four years yeah so um if you're putting it in good mutual funds with mr financial advisor Advisor. Mr. Financial Advisor, yeah. Well, I mean, they don't ever want you to take it out. They always say, well, they would have you borrow on your home to put money in a brokerage account with them. Yeah, they would.

And I don't. Obviously, he knows that I don't tell people to do that. So he said, Dave's going to tell you. Well, Dave did tell you. So there you go. But I am giving you a warning that it's a little bit scary because of your numbers. That's very scary. I'm looking at, I mean, she's going to have to be committed from 60 to 67

to keep doing the work that she's doing. So she's bringing in an income. She's got extra to invest. Well, you got rid of the house payment. So you take that, put a little with it, and do $3,000 a month and automatically into a mutual fund. And you're going to be okay if you do that. And I think you won't have any trouble in that with your pension

and everything else you've got coming in. But I think that's the trick. And there you go. That's all you can do. That's simple. Hey, thank you for the call. Open phones here at 888-825-5225. This is The Ramsey Show.

Mark is in Salt Lake City. Hey, Mark, welcome to The Ramsey Show. Hi, thanks for taking my call. Sure, what's up? Question, I work for the federal government, and with the layoffs that are potentially coming very soon within the next 90 days, I'm just trying to figure out the best way to prepare for it, you know, whether pay off debt or save as much as possible. That's kind of where I'm at. Okay.

What do you do? I'm a program manager for the Air Force. What are you going to do? After the layoff, I have no idea. That's what I'm just trying to figure out. Yeah, that's where I'm at. Okay. All right. Anytime there's an impending problem on the horizon that is coming,

and this one's coming, you batten down the hatches, you get ready for the hurricane. So what that means is we stop all baby step activity, and we pile cash up as high as we can pile cash. Now, in the next 90 days, if you do that, and you just go to beans and rice, rice and beans, stacking cash, how much cash can you stack? Let's see, probably an extra uh uh

12 000 good and how much do you have now i have 12 000 in emergency funds okay so now you'd have 24 000 for survival is it just you or are you married do you have a family just me okay how old are you i i do i am 47 okay all right and then the other thing is this go get a job and quit yeah don't wait till it okay yeah don't wait till they don't wait till they come on unless they're given severance they're given severance if you stay through the end but they may give you a package to leave early do you know um they haven't announced yeah that's what i'm waiting to see yeah yeah that's what i'm waiting to see yeah yeah that's what i'm waiting to see because i would get a severance package but it would it would only be like a quarter of my salary so well at least i would start looking i would start seeing how

i would go get a job right now and if you have 24 000 plus severance and then you sign up for a new job all of that money in the bank is like a signing bonus okay yeah i mean don't wait until this comes at you go get go fix it now if you get a job today right i would quit tomorrow i mean or as soon as you know what the severance situation is i would you know i would but i'd be i'd be actively looking as if you were unemployed today okay good yeah because i mean if you wait then all the jobs will be taken well not only no they won't all be taken but there's you know you you're there's no reason with this much notice that you can't land something in 90 days what do you make right um 130 okay all right

cool and as a pro when you said program is that as in coding programming or managing projects? Managing like a project team, engineers, financial managers, all the people. Yeah. You may or may not be in Salt Lake City when the smoke clears, right? Right. And I got a house, but I just put it on the market to sell it if i had to move stuff yeah that's another reason i wouldn't wait i'd start looking about this now because it could it could uproot your whole situation you could end up moving and so for that reason and

you don't know how long it's going to take you to find something new so i would start today yeah definitely anytime you know that that it's coming at you you know meet it head on run straight into the fire and you know and that's what you know because here's the thing this this turns out to be a net positive if you get a hundred and fifty thousand dollar a year job in a town of similar cost of living and you put a severance in your pocket and all the savings in your pocket during this 90 days so the whole experience becomes a net positive then instead of a net negative but it's all in how fast you replace this income because you got because you lit a fire under your butt and go get something and that's exactly what i'd do matt's in sydney australia hi matt how are you down under

yeah g'day how are you dave it's finally good to speak to you. Cool, how can we help today? Yeah, I'm in quite a unique situation. Like, I mean, unfortunately I'm in a fair bit of debt, but I'm wondering how far into a new relationship should I tell my significant other that I have about $83,000 in tax debt? Tax debt? Wow, how in tax debt. Tax debt. Wow. How'd that happen?

Just curious. Well, I'm an Uber driver. I've been driving Uber for about eight years. And, you know, I was young and stupid in my 20s when I started, and I didn't believe in paying the tax. And down under, we have a thing called GST which is like general sales tax they pay on top of tax and even if we earn under 75,000 a year which I think is unjust but now I'm in a situation where my girlfriend knows I have some debt and I've told her I have tax debt but she doesn't know

how much I owe. Yeah how long you been dating? We've been dating for probably, it's a very, very new, probably like three weeks, but we've known each other all of the summer because it's currently summer in Australia. Yeah. I mean, the way I'm thinking about it is it's a very new relationship. If you're doing, it's almost like the way it comes up is organic, right? If you're right now, you're in a mode where you're like, I got to pay this debt off, I'm working extra. Yeah, it makes sense to say,

in a conversation organically, I've got to work extra because I've got this debt, this tax debt that I'm paying off. I don't think there's anything wrong with saying that. I think it's just normalizing conversations about money. But if you're afraid that something like that would scare her off, i think it's also an opportunity to see what type of person she is and how she responds to that right so i i would not

intentionally withhold it with the idea of i don't want to tell her this but at the same point you've known her three weeks so it's not like you have to sit her down and say i have to tell you something i have this debt does Does that make sense? Yeah, yeah. I've actually known her for three months, but we've been actually physically a couple for like three weeks. It's still pretty new. I mean, listen, if you feel like you're hiding it, like if you feel like you're intentionally saying I'm doing things to not tell her, then I would not do that. But if it's not come up or, does that make sense? I would be right there in the middle. Let me ask you this, okay?

Let's say she has $200,000 in tax debt. Yes. When would you want her to tell you? Well, I'm not too bothered about it. She has $50,000 in savings, but she also lives at home and i would tell her that if she even if she hadn't let's say she had a piece of information about debt on her that you didn't know about when would you want her to tell you switch your moccasins walk a mile in her shoes when to switch idea? When would you want to be told?

Probably three months in would be fine. You're kind of three months in. There you go. And it sounds like you have had real money conversations if you know that she has $50,000 saved. So that was probably your organic time to tell her about the debt. Yeah, I mean, anytime you're working extra and she doesn't want you to work extra, you go, I got to because I got this $85,000 in in debt and you just drop it like that and keep walking yeah and uh if she passes out then i guess we got a problem you know so she'll come to she'll come to oh patrick's in panama city florida hi patrick how are you

pretty good dave thanks for taking my call jade sure dave what's up uh so i just wanted to know i just well a second opinion i've been i think i know what you guys might say but you know i just want the first for sure uh so i owe 13 600 on my truck the payment every uh two weeks is $166. What do you make? I make $1,100 a week. Okay. All right. And you owe a total of $13,000. Okay. What's your question?

Yes, sir. Just should I get rid of it? No. I mean, I'm just really upside down on it. No. Okay. Do you like the truck? Yeah.

No. Then don't get rid of it. But I would work extra, and I would stop spending at restaurants and happy hour, and I would not go on vacation until I got the truck paid off. Beans and rice, rice and beans. Lean in. Knock this thing out really, really fast. I'm talking like by Christmas.

It needs to be paid off. Okay. Yeah, I start Financial Peace University through my church March 3rd. Awesome. That's perfect. Then you're going to get it done by Christmas if you do that. But I think you keep it. It's not a $33,000 truck and you make $1,100 a week, which I would tell you to sell it.

But it's $13,000. You can do this. You can do this. This is The Ramsey Show. Our scripture of the day, Proverbs 22. For humility is the fear of the Lord. Its wages are riches and honor and life. Andrew Carnegie said, if you want to get rich, think of saving as earning.

Ooh, I like that one. Good stuff. Monica is with us in Houston, Texas. Hey, Monica, welcome to The Ramsey Show. Hi, Dave. Hi, Jade. Thank you so much for your help. You bet.

Sure. What's up? My dad is 75, and he's had a stroke, so he has difficulty in communication, and he's asked me to visit his financial planner with him to decide what to do with an annuity that isn't making any money. So I was wondering what kind of questions should I ask the financial advisor, what should he do with the money, are there any penalties, things like that. Okay. Well, what the financial advisor's job is, as far as I'm concerned, and you may have to help them with what their job is, is to have the heart of a teacher.

Okay? And so if I'm you and I'm sitting down there and I'm going to say, okay, tell me exactly what this annuity is. It doesn't seem to be making any money. What our options are and what you would do with it. And here's the important question. Why would you do that with it? And let them kind of explain to you what the details are and teach you. And then you look at it and say, okay, it's not making any money.

The surrender charge is small. So we're going to take the money out and we're either going to put it in an investment account or we're just going to put it in a high yield savings, but we're going to take it away from this annuity. Okay. If there's a huge surrender charge, maybe the option is to roll it to a different annuity with that goes into good mutual funds, which is called a variable annuity, and you may want to try to do that. But if you can move it without some kind of horrendous, you know, throat punch surrender charge, you're going to want to move it.

I was thinking to put it in. I didn't want to go high yield. He's 75 and not the best of health, but I was thinking make an index fund would probably be the best way for him. Either way. Depending on. Either of those is fine. I mean, high yield savings is fully liquid.

That's just a simple savings account at money market rates. You know, has he got plenty of money? No, not really. And it's only $35,000 in the annuity. How much total does he have? How much total does he have? How much total does he have? He hasn't told me all that, but I wouldn't think that it would be even in the high tens of thousands. He doesn't have a ton.

He was mostly off of Social Security. So a lot of it is in this annuity? To tell you the honest truth, I'm not sure. But it probably is. Well, I mean, if he's got tens of thousands and 35 is in the annuity, even if he's got 100,000, a third of it is the annuity, right? True. Well, hopefully you can learn that when you meet with the advisor

and you can kind of see what he's got. Is he giving you any kind of a power of attorney in this process as well? I think we already have one through my mom. He's just asking me for my advice. Your mom has power of attorney? I think so already have one through my mom. He's just asking me for my advice. Your mom has power of attorney? I think so, yeah. But he's asking me for advice. Everybody's together on it.

He's asking information. That's nice. That's a good position to be in, and it sounds like he's being humble about this and not secretive or weird or something. So, yeah, I think you just gather up the information and make sure um is is he um his uh his communication is impaired but is it are his decision making skills impaired no he's got aphasia he just the words he says are different

than the ones he thinks he's saying yeah yeah okay so I mean, he can sit there and grasp what the guy's saying, and you can too. And then you guys go back home and talk about it, and maybe he needs to type it out or something so that he gets the right words to tell you what he wants to do. But, I mean, you can say, Dad, this is what I think I would do. And if you want to take a minute and write out, since he's struggling with putting the right words in the right order, if there's a way he's communicating clearly, that's all i'm saying and he could tell you too because it sounds like he's capable of making the decision he just wants some extra

input given that he's fragile right now that's smart exactly that's very wise and what would be an exorbitant um um surrender charge what? Half of it or something like that. I'm getting it out of there, given the situation you told me. I mean, only if they got like a $12,000 charge or something. But I can't imagine that. How long have they had it in that? Do you know? I don't.

I don't. It's probably been a good while, though. Yeah. Are you going to guess and say more than seven years? Yeah. Yeah, probably. You may have zero surrender charge. That'd be great.

Because most of them evaporate around the seven-year mark. Nice. Okay. So if that's the case, then it's a no-brainer. You get it out of there. See, all an annuity is is a savings account with an insurance company. And there are two types. There are fixed annuities,

which is a savings account with a fixed interest rate, usually today's world, 4%, something like that. I'm guessing that's what he's got because it's underperforming. Okay. The second type is a variable annuity, and that is a mutual fund inside of an annuity, and there is no point in that even in this situation. Okay?

They're sold quite a bit by people in the insurance world because they don't have a securities license to sell mutual funds, so it's a way for them to create an air quotes investment to sell to someone and act like they're real investment advisors when all they are is insurance agents. That's usually where these things come from. That's what I'm gathering. Okay, well, thank you so much for your help. Is this financial advisor an insurance agent?

I'm sure he is with everything you've said. Yeah, it sounds like it. Don't tell me the company name, but is the company name an insurance company? I honestly don't know. He's only ever told me the man's first name. I don't know who he's with. Okay. If you figure out that it's a life insurance company, then just get the money out of there.

Get away from it. Yeah, don't even talk to the advisor. We're not even discussing it i'm gonna go i'm gonna go jump on ramsey solutions.com and get a get one of our uh smart investor pros that are actual and actual investing advisors and they'll sit down with you help you get the money moved into something good and so forth i got it you know i just now had a bad feeling run down my spine that that's what this is but it could be sometimes a financial advisor will sell an annuity but usually if they do it's a variable that's what's spooking me here and a variable should be performing because the market's done well yeah so i'm not sure unless it was something he got into a long time ago and you know did some other things since then and got an

advisor who knows it's possible but he doesn't have much money no he doesn't only 100 grand so he's not been playing much with it yeah it's interesting it's interesting yeah monica so the thing is gather information facts are your friends make sure the person is explaining it to you in a way that you understand that's their job if they can't do that get the documentation and take it to somebody who can like a smart investor pro and uh so if you get an insurance agent that does political double speak uh then you've got to get away from them to even get the answers straight and uh but if they'll actually tell you what the flip's going on i think you're going to want to just move the money and i think it's old enough you shouldn't have a surrender charge and it makes

it a no-brainer to move it you do not need an annuity here it It's not a valuable document. It's not a valuable financial instrument in this situation. So there's no point in it, especially with 35,000 bucks. It's not worth it. They're feeing you to death. So, wow. Good question. Okay. Well, let's just keep on that for a second. One of the benefits of a variable annuity and a fixed annuity, but we never do fixed annuities in any circumstances, is there's a couple things. Number one, you can name a beneficiary on them, and they pass outside of probate. So if you've got an estate tax problem, which that gentleman does not have, he didn't have enough money, but if you have an estate tax problem, you can pass the money directly to a beneficiary and it is not taxed for estate tax purposes just the second thing with variable annuities that they're doing out there is some

of them if you hold them for a little while three years two years there's a uh a principal protection if you're in a variable annuity a mutual fund if the market goes down you put a hundred thousand in the market now it's worth sixty thousand they'll cover the hundred interesting and so you give you they give you principal protection and they'll cover the hundred interesting and so you give you they give you principal protection and they'll guarantee you at least an interest rate of a floor like a five percent rate of return when when would you suggest it for someone i'm 64 and have a lot of wealth and i don't own one i don't like them because i can get the same guarantees just by understanding the marketplace true that and i don't have to pay I can get the same guarantees just by understanding the marketplace.

True that. And I don't have to pay the extra fees to the insurance company to put the thing together. So pretty simple. That puts us out of the Ramsey Show and the books. We'll 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.