The Ramsey Show - App - Run TO Something, Not FROM Something (Hour 2)

Episode Date: July 9, 2019

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🎵 Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studios, it's the Dave Ramsey Show, where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. I'm Dave Ramsey, your host. Thank you for joining us.

Open phones at 888-825-5225. That's 888-825-5225. You jump in. We'll talk about your life and your money. Emily starts us off this hour in Knoxville. Hi, Emily. Welcome to the Dave in Knoxville. Hi, Emily. Welcome to the Dave Ramsey Show. Hi, Dave.

Thank you for taking my call. Sure. What's up? All right. So it's a little bit of a long story, but I'll take it short. I graduated with my bachelor's in accounting this last December. I'm currently working on my master's. I've avoided student loan debts all the way.

I'm a big fan of yours. I've tried to stay away from loans, period. Good for you. Yeah, thank you. I'll be finishing my master's up this December. I've, again, avoided student loans, and I've paid out of pocket as much as I could. I did take out an auto loan for $12,000.

I needed a car fast, so kind of jumped in with that. I also took out a loan from a family member that has to be paid back within a year just to pay the remaining balance of school. That was $9,000. And I also just accepted a job in Nashville. I'll be moving there as an auditor for the state. I'll be making about $50,000 a year. But there's also the moving cost and everything that goes along with any new move. So my question with all that is, what's the best way to tackle the debt in the shortest amount of time, preferably? Okay. All right, so you're done. You've got the money with the situation you outlined to finish school, right?

Yes. And you'll finish when? I'll finish in December of this year. Good, okay. And are you working? Yes, I'm working currently in Knoxville. I work for a company in their accounting department, and I actually just finished working two jobs in the process,

making about half of what I will be making up this new job. The only issue is, of course, there's higher cost of living in Nashville than there is Knoxville, and also the moving cost. Well, I mean, your moving cost should not be substantial. You're moving from college. It's not like you're moving a 10 000 square foot house full of furniture i mean it shouldn't be a big deal i mean can you not work and enough between now and the time you

get out of school to save up the money to cover your moving costs well um i will be moving about next week or so officially the job begins next week. I'm sorry, I thought you graduated in December. Oh, I did. I graduated with my bachelor's this last December. I know, but aren't you graduating with your master's this coming December? Yes, and I've been doing that online. So I've been doing full-time work and also working on that full-time online. So you're moving, but you're finishing your master's online and you've already accepted the job. The job starts immediately.

Yes. Oh, I thought the job's starting in January. Okay, after you graduated. Okay. No, not yet. All right. So you don't, I mean, you don't have any time to save up any money before you move. No, and that's the issue.

And they do have educational reimbursement and also help with my CPA license prep. They do reimbursement for that. So it's a really good job opportunity. I couldn't really turn it down. It's what I've been looking for, but at the same time, I'd like to travel. Do they offer any moving expenses? No, they don't offer that at that job. What do you own you can sell?

Currently, the only thing that I could sell would be my car is what I was considering and going down to something cheaper, but I also don't have the cash right now to buy a cheaper car. Yeah, but I mean it doesn't have any equity in it, does it? No, I think it has like $2,000 maybe of equity, but that's it. Okay. Okay. Hmm. Do you have any friends or relatives in Nashville you could live with for 30 days while you put the money together to move out?

Unfortunately, no. I do have enough just to cover the basic moving costs. The thing is I'll be going from not paying rent to then paying rent and living expenses, which I've calculated to be about $1,500 a month after, you know, rent and utilities and all that. Yeah, but you'll have an income to cover that. True. Okay. But there's also the car loan I'm trying to get paid off.

No, I'm not. Okay, the car loan and the family loan are not the issue. I'm just trying to get you to Nashville. Can you not scratch and claw and with the money you've got saved make it into Nashville just barely eating a tuna fish sandwich and go to work the first day and collect a check the next week? Yes, I believe so. Yeah, I think if you can squeak into a rental and sleep on the floor for a month if you have to with a sleeping bag, I don't care, whatever it is, just barely get in here to Nashville and get yourself started. That wouldn't be an unusual way to leave college and go into your first job, by the way.

Sharon and I weren't much different when we came in. We'd just gotten married, but didn't have two nickels to rub together and waiting on that first check from that first job, right? So I think that's the thing. Now, once you get here and you get in the job, and let's get the basic, you know, get food in the cabinets, get the cable turned on in terms of your internet or whatever, and, you know, get a used couch in the living room and that kind of stuff. Once you get that stuff covered, then we're just going to walk you on through the total money makeover baby steps.

The plan. The plan is one thousand dollars is the first thing you do you save up a little tiny starter emergency fund and then you attack your debts smallest to largest family loan and then the car the great news is you're not used to making this kind of money and you've got it or and or you've got extra hours on your hands because you're not used to only working 40 hours a week. And so, you know, you do need to finish this master's up without a doubt. But, yeah, let's take your $50,000 a year that you're generally not used to having

and let's start attacking these loans in the order of smallest to largest. It'll probably take you 18 months to knock them all out, but you could probably be completely debt-free in 18 months, then build your emergency fund of three to six months of expenses. And, you know, just if you've heard of the baby steps, that's them. And then you start long-term investing and start thinking about someday buying a house and that kind of thing. But a year from today, your life is going to be so much different. You're going to have a master's degree in accounting.

You're going to be making $50,000 a year. You're going to be 24 years old. And almost everything is going to be so much different. You're going to have a master's degree in accounting. You're going to be making $50,000 a year. You're going to be 24 years old. And almost everything is going to be paid off. Sounds great. That's where you should be, mathematically. Yeah. But it's just you've got a really tough 30 or 45 days in front of you. Yeah.

Oh, well. It'll be a memory you can tell your grandkids about. Gotcha. it'll be a memory you can tell your grandkids about gotcha that time i moved to nashville and barely had anything to move into the apartment with yeah you'll be able to tell that story right you got it kiddo you can do this i'm proud of you thank you for staying out of debt it sets your future up so well you didn't stay out of debt you bought a car and borrowed money from your family. But thank you for staying out of student loan debt anyway. You at least pulled that off. And you've got a great future in front of you, Emily.

You're going to do great. You're going to do fabulous. You're an amazing young lady. This is The news, guys. You need to stop and listen. The Fed decided not to raise interest rates. That means you've got a small window of time before rates rise again. Here's the deal.

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We've got a brand new event premiering this fall, Financial Peace Live. Do not miss this incredible night. If you're sick and tired of money problems, debt payments, the stress of living check to check, we're going to walk you through the baby steps, and we're going to give you the information and the inspiration. You're going to laugh, and you're going to cry, and you're going to believe you can have financial peace. Yeah. We're going to give you the momentum you need to cry, and you're going to believe you can have financial peace. Yeah.

I'm going to give you the momentum you need to kickstart your goals and get control of your money. September 12th is Austin, Texas, Chris Hogan and Anthony O'Neill. They also will be in Tacoma, Washington, October 2nd. Phoenix, Arizona, on October 10th. Chris Hogan and myself will be in Charleston, South Carolina on November the 20th. That is the four Financial Peace Live events this fall. And you need to check them out and get to one of them.

Bring your reluctant spouse. Bring your friends that think you're crazy. Bring your grown kids that you want to be responsible with money. Bring your grown parents that you want to be responsible with money. We'll show you how. We're going to laugh together. Nobody's here to pick on you. We're here to help you win.

You're going to be going, wow, I just went to a pep rally about money. And that's what it is. Check it out at DaveRamsey.com slash events or call the Ramsey Concierge Team at 888-22-PEACE, 888-227-3223. Joshua's with us in Bend, Oregon. Hi, Joshua. How are you? I'm good, Dave.

How are you? Better than I deserve. What's up? Hey, I'm new to the process. I'll just give you a quick rundown. I'm on baby step two. I'm probably more gazelle intense than I should be according to my life. And my question is around my house. So my house payment currently is around $1,975 a month.

My take-home salary, well, my salary is $88K a year, and then I can get up to a $36,000 a year bonus. That's based monthly, based on performance. Historically trending, I usually hit pretty close to what about that is. So altogether, $120 a year. My current interest rate in my house is $4.99. If everything goes as planned, I'll be completely out of debt. I've been in my house payment in March of this coming year. Good.

So we have our house currently up for sale. It is listed with one of your ELPs, but the market in Bend was really, really hot, and then it just stopped. So 45 days, no offers on the table, and now I'm just thinking about it like if I want to buy a new house in Bend, average home price is $440,000. My house is worth about almost $400,000 right now. I sell it, I'll walk walk with around $100,000. Why are you selling it? Well, that was the question.

So we originally had thought we were going to sell to eliminate some debt. And as I got going through this, I just took your advice and got as intense as possible and cut here and cut there, and I'm getting rid of a car, and I now don't have to. I can pay this off in cash flow and everything. We don't absolutely love the house, but we absolutely don't hate it either. But to get another house in Bend, it's going to take a couple hundred thousand dollars to get to that 25% of my take-home pay that you suggest. So you'd be moving up in house? No. Well, honey, if you sell your house and you need a couple hundred thousand dollars more,

you'd be moving up in-house. The average home price in Bend right now is about $450,000. Your house is in Bend. I know it is. That's not logical. You have to be moving up in-house to a nicer house okay even if we didn't want to move up even if we wanted to stay exactly the same i would have to put the same amount of money down and my payment would be around what it is right now exactly 25 to get to the 25 percent room

it's going to be out of i just need to save more money to put down. So that's a possibility. I would stay where you are. That's what I was thinking, too. Yeah. Even though. Not necessarily forever, but for now. Right. So the follow-up to that is should I refinance? Because right now my rate is 4.99%. And I think I can get it to, well, if I go with a 15-year fix,

I can get it done to like 3.83. That takes my payment to about $2,500, $2,600 a month, which I can swing, but it's above, you know, the 25%. I's above the 25%. I wouldn't do that right now. Let's just sit where we are right now because that's a 1% move is all, and it's going to take you three years to break even. By the end of three years, you may be moving, but for today, you don't need to move to get out of debt. You don't need to move because your house payment is out of line. You don't need to move to get out of debt. You don't need to move because your house payment's out of line. You don't need to move because you hate your house, because you don't hate it.

You don't love it, but you don't hate it. And so I think you just calm down a little bit, sit right where you are. Let's get out of debt, and then let's reassess in 18 months when you want to talk about moving. And if you're planning to stay long-term at that point and rates are still low, I would look at refinancing. But for today, I would just sit tight on everything regarding your house and just ride this out.

Hey, thanks for the call. Sean's with us in Shreveport, Louisiana. Hey, Sean, welcome to the Dave Ramsey Show. Hey, thank you for having me. I appreciate you. Sure. What's up? Yeah, so I'm in a sales position, 100% commission.

My wife's a teacher. Net income is about $37,000, $38,000 for her. And I'm wondering if I should keep my career where it's at or look for a career that possibly has more stability with my salary income. I have a friend that sells real estate, straight commission, and he's made $300,000 a year for 10 years. He's plenty stable. Straight commission doesn't make you unstable.

Not selling stuff makes you unstable. Yeah, and in the market that I'm in, it's actually something you don't really believe in, but Upton Sinclair said it's hard to get a man to believe something when his salary depends on him not believing it i sell supplemental insurance cancer heart those types of things and there's ebbs and flows and sales and all that but so what are you thinking about changing to um recruiter position or hr okay and a lot of recruiter positions are commission based but have a salary as well right correct and lot of recruiter positions are commission-based but have a salary as well, right?

Correct. And a great recruiter can make a ton of money, probably more than you're making now. Agreed? Agreed. Now, if you know how to sell and you'd be recruiting for companies that you believe in, you probably can make more money doing that if you like that field. What's drawing you to that field? I mean, I was an attorney in college. I know how to recruit.

I know how to sell. I've been doing it the last couple of years. Well, you know how to do a lot of stuff you don't want to do. What's making you want to do this? The fact that I haven't made more than $25,000 in three years in this sales position. Okay, so you're running from something. I'm asking why you're running to recruiting. What is it about recruiting that made you go over there?

Because you could have sold a lot of different things. You could sell cars. You could go in the financial services world. You could do a lot of different things. Why recruiting? I'm not saying it's wrong. I'm just asking. Well, I mean, that's the first couple of things that have popped up on the places I've looked.

I don't really have a real reason. I'm proud of that. Okay. All right. Let's stop then a little bit. I agree you need to change. You're not making any money. You're not proud of what you're doing.

Two reasons to change. I agree you need to change. Now, let's not just run from something. Now, let's be very intentional about what you're running to. And so let's say, gosh, if I could do anything in the world that I wanted to do and I could make really good money doing it, what would make me smile just at the thought of getting up and going and doing that every day? And it's not just

i need a job make more money that sucks that that gets old after about 90 days but what what gets you fired up man i mean you know what what would make you go man i did good things with my life i help people get a house so because i'm a real estate agent or i help people do this or well i don't care what it is but what is is it if you could do anything you wanted to do? So I do think you need to change. I don't think you've figured out what you need to change to yet. You could check out Ken Coleman's show. He'd probably be a big help to you.

It's a podcast. It's on XM. It's on 30 plus, almost 40 radio stations now across America. It's all about careers. I'm going to send you a copy of Ken's new book called The Proximity Principle. It's all about finding the career you love. And I want you to investigate Ken and his materials and really hone in on something that you're aiming towards, not just running from something.

I don't think recruiting is bad. I think it's just a little random. And you didn't really give me a good reason because you don't have a good reason why you picked it out this is the Dave Ramsey Show We'll be right back. Mark's with us in Corpus Christi, Texas. Hey, Mark, welcome to the Dave Ramsey Show. How are you doing, Dave? Better than I deserve. How can I help?

Yes, sir. So I've kind of found myself in an interesting scenario. I graduated school about a year ago now, and I work offshore on oil tankers, and I'm home for about two weeks out of six. Within my parents, still making $109,000, and kind of wondering whether I should look at renting or buying, but I do want to get out of their house soon. But I don't know if I'm going to end up where I am long term.

So trying to decide between renting something or buying something I can actually gain equity in. I wouldn't buy until you know where you're going to be for a while. Okay. How old are you? 24. Okay. I would rent for a while. And let's just see what's going on. And, you know, your best option would be to get something like with two or three roommates for two reasons.

One is it lowers your cost substantially, and you're never there, so you're the ideal roommate. Right? Yeah. I'm actually home. Out of the 14 days I'm home, I'm only there for about eight. And that's what concerns me about renting is actually throwing money away because I'm not there and throwing money away because I'm not gaining equity. Wherever you are.

But you're throwing your money away when you're renting anyway, but really what renting is is patience because when you buy something that it's such a permanent decision that you need to have a situation where you say i'm going to live in that property for three years or you don't need to buy right so and you're not really there right now you're making a ton of money you're a young guy you're never really there right now. You're making a ton of money. You're a young guy. You're never home. So anything you can do to just have an inexpensive place to camp that's not your parents when you get home for those two weeks out of six, right? Yep. And so, again, I think you're the ideal roommate. And so you don't need much of a spot.

You don't need to take up much room. And so, like, you know, you guys rented a three-guys, rented a three-bedroom house together, and you took the worst room. And you get the best deal. You know, you don't pay a full third or something, right? And you don't have to worry about splitting food with them, and you don't have to worry about splitting anything with them because you're not there. You're looking for a place to camp a couple of weeks out of six. And so you just want something where you can have a place outside your parents right now and a place to hang, you know, when you're in, a place to hang your hat when you're home. There's no shame in staying with your parents right now either for a little

while because you're never there would you consider um i'm in a i'm in a resort area would you consider a resort property that would rent it when i wasn't using it that i could block off the two weeks i was home if that could cover half to three-quarters of the mortgage? That'd probably be a cool idea. I'd wait a year to do that. Gotcha. I just have, I mean, you're 24, you're making a pile of money. I think a lot of stuff's going to change 12 months from now. I don't think you're going to be doing things exactly the way you're doing them 10 years from today.

Right. And so buying a resort property is a very permanent decision uh and resort properties either go way up in value or way down in value they don't just kind of hang out in the middle like regular properties do so it's a higher risk real estate play but it is a good way to you know to handle the rental you could vrbo it uh or have a management company rent it on the times that you're not there that wouldn't be a bad idea at all. But I really, I would just try to find some roommates for a year and just kind of see how things end up before you start writing checks to buy something.

How much money have you got saved? I've got my emergency fund, and then I've got about another $40. Okay. All right. Have you priced like a little one-bedroom condo in a resort setting? The one-bedroom condos, I'm looking at about $150, and I could have it paid off. And if I put what I have down, I could have it paid off in nine months. Yeah.

You might want to do that. That'd be okay. That's not the end of the world. Just keep it conservative. And try to buy something with the idea that it's going to be easy to resell. Right. And what concerns me about the resort properties, the $700 to you know maintenance fees

every month in those properties yeah but if you can keep them full enough to offset your cost and you get the thing completely paid off in a short period of time it's it's not that big a deal you know so it's up to you it's up to you that just it's it's it's not a big a deal. It's up to you. It's up to you. It's not a sin. You're not like being completely financially stupid to wait one year to do anything and just pile up a bigger pile of money. If you had $150,000 cash in an account right now just to buy something, what would you buy? Probably a single-family home. Then that's what we need to talk about is to the resort yeah and talk about having a management company run a vrbo on it for you

or you put a couple of roommates in it buy you a three-bedroom house and put a couple of roommates in it you make money off of them you you know, as the owner of it. Let's talk about doing that. And then when you're, you know, they're watching the property while you're not there because you're out of town, they're watching your stuff. You know, there's no boarded up house half the time kind of thing. And then you, that's not a bad play. But again, when you buy something like this in your situation the house needs to be

boring easily sold because there's a lot of houses like it you know so think about uh i'm 26 and i i don't want to get stuck with this house because i made a decision when i was 24 and it's a weird house or something so yeah a little three bedroom and put a couple of renters in i mean a couple of roommates in there that pay a lot of money to you and you know you pay that off in nine months that doesn't scare me if you want to go ahead and do that that's fine but do it boring do it boring you're doing good man you're making a lot of money. Congratulations. Very well. Very cool. Open phones at 888-825-5225. Dan is with us in Fort Myers, Florida.

Hey, Dan, how are you? I'm blessed. Thank you for taking my call, Dave. My pleasure. How can I help? Yes, sir. I'm calling because my main concern is retirement. I'm 45 years old. The Lord's been very good to us. We're very blessed. We have our home paid for.

The only debt that I have the money in there that I could pay the car off, which is my plan to do. I have about 93,000 total in retirement accounts, 83 in a 403B and about 10.5 in a Roth IRA, and just wanting to see what the best counsel would be for us to be where we need to be in retirement years. Good for you. And what do you do for a living? I'm a pastor. I pastor a small church.

Great. You've done a great job, Pastor. Good job. Okay. Well, I think you're right. I'd write a check today and pay off the car and then i would make sure my emergency fund is complete after that so your first goal may be to rebuild that up to three to six months of expenses 10 months is a little rich but uh if you can pay

off the car and you're still in the three to six month range then let's just do that and then that checks both those boxes simultaneously um and then we suggest you put 15% until you get your house paid off, but your house is already paid off. So you'd be at what we call baby step seven. I want to invest 15% to 20% of your income from this point forward in Roth IRAs and your 403B. Make sure that all of that is invested in good growth stock mutual funds. And I recommend, and I personally invest in four categories, growth, growth and income, aggressive growth, and international.

And if you need some help doing that, just click smartvestor at DaveRamsey.com and it'll drop down a list of the smartvestor pros in your area, people that we endorse and recommend. And when you select which one of those you want to sit down with, they have the heart of a teacher. You need to learn about this stuff and be investing very carefully and very diligently, and I think you'll retire with dignity. You're young. You've got a lot of time to still invest.

You're going to do great. Benjamin is in Los Angeles. Hi, Benjamin. Welcome to the Dave Ramsey Show. Hey, Dave. Thanks for taking my call. I really appreciate it. Sure. What's up?

Okay, so I work on a contract basis, and I just found out that I've reached the max amount of extensions on my contract. So as of right now, my ending work date is August 27th, and the last paycheck I'll get is first week of September. continue to add money into the snowball through my debts, or should I continue to add up my emergency fund since I don't know exactly if I'm going to have a job at that point? Yes, stop your baby steps. Okay. Just stop everything and pile up cash for the emergency that's coming. Okay. Until the everything and pile up cash for the emergency that's coming. Okay. Until the emergency subsides.

But here's what that looks like. What do you do for a living? I work for YouTube. I work doing manual video curation and image ingestion. Okay. Is YouTube contracting you no i'm contracted out by like a subcontracting firm but the work is done for youtube indirectly yes correct and they will not allow you to re-up more times than you have yeah i've had my because

my contracts they're at six month basis and i've maxed them out i've had three contract renewals and they have a company rule where you can't do more than three why um i think it's just some sort of legal deal since it's not an actual um company position it's for an outside contractor Yeah. So what are you going to do? I'm trying to figure it out. And that's why I'm a little worried because part of me has been thinking about moving for some time. And now that I'm hit with this little bump in the road, I'm not sure if I should pack the stuff up and get headed to what's next or I should wait till I get this whole new job, whatever that is rolling. But I've spent the last year and a half

since I've been doing this job, like really trying to go after my debt and now that this happened it's where do i want to take this now the editing skill set that the curating skill set that you're using it does what where else is that applicable where i mean you are in the film capital of the world i mean right la so yeah i was working as editor beforehand yeah so i have i have editing skill sets a little bit of base coding knowledge now like with image ingestion so any kind of like larger metro area whether it be chicago uh like portland now has some of that like austin texas la obviously nashville a little bit, yeah. Yeah, but it's anybody that's doing a lot of video work, whether it is YouTube-based, you know, any of the Netflix stuff going on,

the Amazon Prime stuff is exploding. Yeah, anything like content creation, definitely. Yeah. Hmm. Interesting. Because I've got 6,600 saved up right now, and I have $1,900 in credit card that is left over, and then I've got $3,000 in a car loan and $4,000 in a personal loan.

You could almost be debt-free, but then you might have no money coming out of this contract. So I don't want to do that. You can do that any time. We can do that any time in the next 60 days if you as soon as you solve your income problem as of the end of august then you restart your baby steps and you would take all money that is saved and throw it at the debt okay gotcha but you've got but until then we're just going to pile up as big a pile of cash as we can get to make whatever transition this is,

whether it includes a move or whether it includes 30 days of downtime with no income or whatever it is. But I think you start going, okay, what am I going to do with my life? We're not going to wait until August to start looking. You go get something now. Yeah, exactly, for sure. And if they're dumping you in the street you got no loyalty to them you're not getting a severance package on a contract so if you find something tomorrow just start okay cool all right and then that solves your problem and you know you then you take whatever money you've got in savings push play

on the baby steps which means you'd have no more than $1,000 in savings, and you'd throw everything else at the debt in baby step two, which is right where you are. But I wouldn't do that right this second until we get this solved, and I'd spend all of my energy right now solving what do I want to be when I grow up, which is what I ask myself when I'm 50 or when I'm 25 every day. Randall is with us in Idaho. Hi, Randall. Welcome to the Dave Ramsey Show. Hi there, Dave. Thank you very much. So I'm 32 years old, and I've finally started taking retirement seriously.

And currently I'm a truck driver over the road. I have no rent, no apartment, no bills except a cell phone bill. And I'm currently maxing out my 401K and my Roth IRA. And I'm just curious, like, all the extra money that I have coming in, what can I do, maybe something tax-deferred past that? I don't have access to an HSA, so I'm just curious what you would do with any extra funds past that. Good for you. Well done. Well done.

Okay. And so you have absolutely no debt? Zero debt. And you have your emergency fund? I do. Okay. Good. Good.

Then you are maybe step seven at this point. You have no, you don't even have, because you don't have a house, you're living in the truck, right? Yes, live in the truck, stay with friends and family when I'm home, and life is good. Yeah, and that's the plan right now. Okay, cool. What I would do is this. I would use probably an S&P 500 index fund, and it's a no-commission fund, and it's not going to outperform the market.

It's going to perform just what the market does. It's pretty boring, actually. But the good news is it's pretty boring. And the other good news is it basically grows tax-deferred, and here's why. It has what's called a low turnover ratio they almost never sell the stocks turn them over that are in the mutual fund so any of the increases in value in the stocks are just growing at a capital gains basis meaning that you don't pay taxes on it until you cash it out so it works like this if. If you bought a share of Home Depot for $50, I don't know what it goes for.

I'm making this up. Okay. But if you bought a share of Home Depot for $50 and it goes from $50 to $70 in value, you don't pay any taxes on that $20 in increase until you sell the stock. It's growing on a capital gains basis, which basically is deferred income or tax-deferred growth, right? Right. Okay. And that's what this mutual fund I'm talking about with low turnover ratio is.

It's growing, and each of the stocks inside the mutual fund, since they're not being sold, it's a buy-hold scenario, are growing tax- tax deferred on a capital gains basis. And if you hold it at least a year, you'll pay taxes when you do cash it out on a not on ordinary income, but on capital gains only a 15% in your case. So you're going to be in great shape there. Now, here's the cool thing. You start throwing money in that account, and that's what I did, by did by the way when i got to your stage it was a little different scenario i wasn't in a truck but uh when i got to your stage i just start throwing everything above maxed out retirement in these low turnover mutual funds and then what i did is as they got large enough

i look up there's a couple hundred thousand bucks in there i go buy a piece of real estate with it you may or may not do that but you may reach a point you get married start a family more want to get off the road and buy a house and if you were sitting there with two or three hundred thousand dollars in this account to do that with that'd be very cool uh yeah that sounds perfect kind of my idea is to get a piece of land and build a house eventually probably like 10 years down the road yeah and this this would be the great way to do that. And it's growing at stock market rates. It's growing.

The S&P 500 basically is the market. It's the index that mirrors the market the closest. And so you're going to make good money on your money, by and large. I mean, it's going to be up and down like the market is, but you're going to make good money on it. And you're not going to pay any taxes on the gains until you cash it out. And then when you do, it's at a cheaper rate, at a capital gains rate. So I love that strategy in a situation like yours, and I actually personally do that. I throw extra money that way until I get enough in there to buy some more real estate.

So, hey, good question. Thank you for joining us. Thanks to James Childs, our producer, Kelly Daniel, our associate producer. I'm Dave Ramsey, your host. We'll be back. Hey, it's Kelly, associate producer and phone screener for The Dave Ramsey Show. If you would like to do your debt-free scream live on the show, make sure you visit DaveRamsey.com slash show and register. We would love for you to come to Nashville and tell Dave your story.