The Ramsey Show - App - Sacrifice Your Starbucks to Stop the Crazy Spending! (Hour 2)

Episode Date: March 26, 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 am Dave Ramsey, your host. You jump in, we'll talk about your life, your money. It is a free call at 888-825-5225 that's 888-825-5225 canada is calling rick is on the line hi rick how are you hey dave doing good you better than i deserve what's up hey dave uh 25 household, probably 90 to 100K.

Saving up to buy some cows, debt-free. Anytime I talk to what I view as successful farmers, it always comes up, oh, you should get a loan for the cows. It's only about 2%. They've got all these programs. I guess I'm just looking for a reason or what's a good response and that it sounds good, but I know I probably shouldn't be getting the debt. Yeah. Well, I don't, I'm not required to respond to them. I'm just required to make my own decisions. No, no, no. I'm not really

to myself really. Okay. Like, cause these people are successful farmers in my books and that's kind of, I guess how they got to that point. Yeah, I knew a bunch of people in the real estate business I thought were successful too until the market turned down. And now they're all broke because they lost their real estate. It went down in value. They couldn't

keep tenants in it. They couldn't cash flow it. I was successful in the real estate business. I had $4 million worth by the time I was 26 years old starting from nothing. But I had $4 million worth by the time I was 26 years old, starting from nothing. But I had borrowed on all of it. And by the time I was 28, I lost it all. So, you know, the problem with success is you can take a snapshot in time, and you can't really see everything that's really going on behind the scenes,

and you can't see out into the future when there's a downturn what's going to happen. So what if beef prices were to be, like, volatile and go down? That's probably never happened. That would never happen, Dave. Yeah, you could get stuck with cows that you owe more on them than you're worth. I mean, being upside down on a car is painful. Being upside down on a cow is really painful. So, yeah, I'm just not borrowing money. the borrower is slave to the lender it is going to

require that you grow your business slower but you will survive the downturns and you'll always have cash and i just another question i had to decide to be the tortoise rather than the hair. Slow and steady wins the race. Perfect. As far as retirement, just with cash flowing these cows and all that, it takes quite a bit of your income out. Should a guy still be trying to do the 15% into his retirement?

Is it okay if I view that as a bit kind of like retirement? I probably wouldn't want all my retirement in cows. No. But I wouldn't mind if you, you know, basically you're running a small business is what we're saying. And you're going to invest some of your profits of your small business back into additional inventory. That's basically what a farmer is doing. And so, yeah, I'm always, the whole time I've been doing, I've been investing.

And you might kind of set your cow business over to the side and say, you know, if that's your whole business, if that's your whole household income, then the net profits after having reinvested back into next year's crop, so to speak, is what you would put 15% on. And so you will have already bought the cows before you calculated the 15% if that's the way you were doing it. Now, you don't want to obviously drain the whole thing down to nothing. So we do want to put something into retirement when you're at baby step four in addition to investing into your own small business. Lola's with us in Los Angeles.

Hi, Lola. How are you? I'm doing well. Thank you. I have a question. I have a CD that's going to mature at the end of the month. My friend recommended that I roll it over to a fixed index annuity. When I asked about a mutual fund, she said no because the market's due for a self-correction,

and they wouldn't recommend that. And she said an annuity would guarantee I would get my money and not lose anything. I'm really confused on which way I should go with this. Gotcha. Okay. How old are you? 43. Okay.

And how much money is in this CD? Very little. I mean, about $15,000. Okay. Good. Well, that's more than some of us got. So it's a good start. Well, here's the thing.

The market, the real estate market and the stock market, there's one thing you can count on. It's going to go up and it's going to go down. You can count on that. So is it going to go down from here? Yes. Is it going to go up from here? Yes. And you're only 43.

So over the last 20 years, what's the stock market done? It's gone down, it's gone up. In the last 20 years, it's averaged about 11% after it's gone down and gone up and gone down and gone up and gone down and gone up. And so you draw a line through those hills and valleys, and that's your average down the middle mathematically, and that's about 11%. And so that's where my money is invested. I don't own a single indexed annuity.

I think your friend is an insurance agent. Yeah, I'm not sure. I'm just confused because I don't want to lose money. I think your friend's an insurance agent. She might be. Yeah, I'm pretty sure he is. I'm pretty sure he can't sell real investments. All he can sell is insurance products, and that's the only thing he can make a commission on, and that didn't affect his opinion at all. I don't sell any of it. You can buy whatever you want to buy.

I don't own a single indexed annuity. I've got all of my money in real estate that I paid cash for and in growth stock mutual funds in the stock market. I spread my personal IRAs and 401ks across four types of mutual funds, growth, growth and income, aggressive growth, and international. And that's all I do. That's all I do.

And it's worked for me because there's millions and millions of dollars in those things. It's worked out. It worked out pretty good. So that's what I would suggest. If you need some help learning a little bit more about all of this in detail, more than you can get here on the radio, obviously, I'm not in the business, but I'll tell you who I recommend. They're called SmartVestor Pros. Click SmartVestor

at DaveRamsey.com and put in your information. They'll drop down a list of the people in your area, SmartVestor Pros, that you can choose from which one you want to do. And they'll sit down with you with the heart of a teacher, and you'll not be confused anymore. So don't put money in something because your insurance friend said to. Don't put money in something because Dave Ramsey said to. Put money in something because you've studied a little bit, you understand the basics of it, and you make the decision based on that. So now you have two competing opinions, one that's right and one that's not.

You have to sit down with somebody and learn enough to figure out that I'm right. But that's the idea. Hey, thanks for the call. Brian's on Twitter, at Dave Ramsey. Can someone open more than one Roth IRA account? Certainly. I mean, you can have as many accounts as you want. The only limitation is the amount you can put in each year. And you can only put

in $5,500 per year unless you're over 50 years old, then you put in $6,500 a year. Each. You and your spouse, whether your spouse has an earned income or not. And so, hypothetically, you could open 5,500 IRAs that are a dollar each. I mean, under the law, you could. Now, finding somebody that'll do that is another thing, okay? But hypothetically, you could do that. And you can have an IRA that's one account. By the way, you can't combine old IRAs and new IRAs. So if you roll some money to a traditional IRA and you put money in an IRA next year,

you're not going to add to that rollover IRA. It's going to have a separate account number. So you can have an infinite number of them. You just can't contribute more than $5,500 or $6,500 a year per person against your earned income. This is the Dave Ramsey Show. There's nothing smart about smartphones if your wireless plan is blowing your budget each month. Pure Talk USA offers smarter wireless with unlimited plans starting as low as $20 per month. You never pay data overage fees, and we never turn off your data.

No contracts, no hidden fees, and if you're thinking our low cost means less coverage, think again. Our voice and data service covers 99% of Americans, and our 4G LTE network provides the fastest internet speeds like more expensive carriers. We operate on the largest GSM network in the U.S. to ensure you receive reliable coverage virtually anytime, anywhere. Plus, you can keep your same phone and number and add multiple lines to save more. We're so confident you'll love Pure Talk USA that we invite you to try our service risk-free. Visit puretalkusa.com or call 844-862-3677. Enter promo code SAVEDAVE and receive 50% off your first month. That's puretalkusa.com. Dee is with us in New York City. Hi, Dee. How are you?

Hey, Dave. Thanks so much for taking my call. Sure. What's up? Okay, Dave. So so much for taking my call. Sure. What's up? Okay, Dave. So here's the thing. I was thinking about selling my house, right? And I have tenants.

I have a tenant, a good-paying tenant. No problems there. The thing is that I'm concerned about if I, you know, let her know that I'm selling the house, and then she moves out, I'm not going to be able to pay the mortgage while the house is on the market. Gotcha. How long does the tenant live there? About seven, eight years. What's the rent uh uh 46 50 babe this is a crazy

this is a four thousand six hundred fifty dollars a month yes okay and what is the market rent if she's been in there a long time are you charging her full boat or have you not raised her rent enough um um if she if she left what would you want the property for if you were just going to keep it as a rental what would it rent for probably the same thing now because okay right now she has the whole house yeah two families but she has the whole house yeah but the question is if she emptied it out and you re-rented it you would only be able to get 46 50 for it i probably could get a little more how much more how much yeah how much um maybe 55 55 okay cool all right so here's what i would do and i have done this and it's worked very successfully sit down number one in person with her is it just her

single lady yeah and two kids okay but she's not married okay so i would sit down with her in person it's very important that you do it in person and say i am thinking of the bad news is i'm thinking of putting this property on the market the good news is that's going to create a real opportunity for you and let me tell you what the opportunity is okay number one the market rent on this property would be about five thousand five hundred dollars if i keep it i would have to raise the rent to that and so you're not going to have to pay that i'm not going to raise the rent you got it okay so we just gave her about 900 bucks here right okay that we didn't raise the rent up to market so okay market rent is 5500 I'm not going to raise the rent because you've been so great here.

As a matter of fact, I'm actually going to lower the rent. Wow. I'm going to drop the rent from $4,650 to $4,500 if you will agree to help me sell the house. You're going to help me sell the house by doing two things. One, making it very available to the real estate agent to show and not being a problem child about it. Number two, you're going to keep the house so clean it looks like a model home while you're here. And in return, I'm going to knock $150 off of your rent, and I'm not going to raise your rent to market $850. So this is kind of like me paying you $1,000 a month to keep the house clean

and accessible while I sell it, and I will give you plenty of notice. I'm not going to put you on the street in three days. You have been a great tenant, and I want to work with you to cause this to happen and not cause you any undue hardship. Okay. All right. That sounds like a winner. And if they won't do that, you need to move them.

And then what? And you're going to have to figure out, you know, because you can't sell it with them in there. They'll mess up everything for a sale. Yes. Because nobody will be able to see it they'll get there and there'll be two dogs in the yard barking trying to bite somebody there'll be everything in the world you know what i'm saying and when you do go in there'll be clothes piled in every corner and dirty underwear in the hall and everything else right yeah and you'll never sell it with a tenant that is obstructing you because they can ruin the pie. So you've got to get her to buy in and go, listen, I'm paying you $1,000 a month effectively.

I'm not raising your rent $850. I'm actually lowering it in cash $150. That's $1,000. And if you don't think that's a great deal, and I promise you I will give you at least 30 days' notice or whatever. I mean, you probably got to give her 30 days' notice. She's probably on a month-to-month anyway, right? No, she has a lease. And that's the other thing.

When's the lease up? I mean, up to the renewal of the lease in September. Okay. Well, this is the perfect time to have the conversation. Okay. In September, if I keep the house house i'm going to market at 5500 okay i can't move you before september and so you don't need to put the house on the market until you know july okay no sense in putting on the market unless she's willing to break the lease

and intentionally and if you if you want the conversation now and go and i want you to allow me to break the lease and you leave with 30 days notice before september if you want to have the conversation now you got to add that as the third thing accessibility cleanliness and in the lease with 30 days notice yeah okay and for that i'll do a thousand dollars if you stay i can promise you in september i'm going to 5500 okay and i've done that i've done this several times with tenants that are high quality tenants i mean you got somebody paying five thousand dollars a month this is not a bad tenant here i mean this is a good person they make a lot of money their rent for god's sakes is five thousand dollars a month so you know i mean so this is not a dumb person you're dealing with so i think you

can sit down and have a civil kind great conversation with this kind of a person and a little bit of persuasion involved in letting them know how I laid it out here. And, you know, you're not doing anything illegal. You're certainly not doing anything uncivil. This will work. And it does work almost every time. All right, Kevin is with us in Orlando. Hi, Kevin.

How are you? Good, Kevin. How are you? Good, Dave. How are you doing? Better than I deserve. How can I help? Good, Dave. Thanks for taking my call. Dave, first I want to thank you all.

About two years ago, my dad died and left my mom a widow. And she needed about five grand to help bury him. And I didn't have five grand. Household income was probably about $115,000. I couldn't scrape up five grand. So it really got me under program, and about nine months, I knocked out all of my debt. Now, I'm sitting here now. I just opened up.

I just got my residential real estate license. Good for you. Congratulations. Thank you. Thank you. I want to know how to keep this going. I'm not going to get rid of my regular job that I have, but I have nights, I have weekends free, and I want to know about how do I get this thing off the ground.

Well, usually you enter this type of market with what's called your natural market, meaning people that you already know, friends, family, church members, people you work with, whatever. Okay? Okay. already know friends family church members people you work with whatever okay okay and what you've got to do is you have to race in your knowledge level to the point of competence okay you have to really become very competent and you may even want to uh tag team with an experienced agent on your first couple of listings first first couple of sales. And so you've got somebody walking with you to guide you through the process with them so that as a brand-new agent, you're not making a mistake on behalf of your client. Mm-hmm.

Okay? But usually where the clients come from when you first start in the residential real estate business is what's called your natural market. And, again, it's's not cold calling it's not somebody that never heard of you before it's somebody that already knows you as a good person they know you as someone who's um reliable and someone who's conscientious and uh you're the guy who's turned his finances around and they've watched you do that and that gives you credibility and so forth and and so then you're going to talk them into um settling you know letting you sell the first house and again i the first house i ever sold i was 18 years old i got my real estate license three weeks after

i turned 18 and uh a guy i there was one year ahead of me in high school had bought a house and i helped him sell it 42 500 in,500 in 1978. I still remember. I still got the commission check I got from it, a copy of it, that is. And so, but I certainly at 18 years old was too stupid. And my first sale, I was too stupid to do it by myself. And so I had my broker, which at that time was my mother, was the broker of our company. And she walked me through that sale and made sure I didn't mess this guy up in the process. And we did him a good job, but it wasn't because of me. It was because I had some help. This is The Dave Ramsey Show. Thank you. Matthew and Vanessa are with us in Los Angeles.

Hi, guys. How are you? Hi, Gabe. Good to have you. I see on my screen you're debt-free. Congratulations. How much have you paid off? $530,000. Whoa! How long did that take? 34 months. Good for you.

And your range of income during that time? Let's see, $195,000 to $214,000. Wow. What do you all do for a living? My wife, Vanessa, is a project manager, and I'm basically a project manager as well. Okay. What kind of debt was this? We had $64,000 in student loan.

We had a mortgage, our primary for $307,000, and a condo at $159,000. Okay. So your house has paid off? Yes. I'm talking to weird people. Yeah,000. Okay. So your house has paid off? Yes. I'm talking to weird people. Yeah, we know that. I mean, really weird. You live in Los Angeles, and you have a paid-for house.

Yes. Wow! How cool! So I'm guessing, looking at these numbers, you sold the condo. Yes. Okay. So how much did it bring? After we sold it, we received 000 from it okay so it paid off the 150 and 30 towards the mortgage yes very good very good

and then the rest of this you cash flowed yes wow did you have something in savings before that that you threw at it yeah we had um i'm guessing the numbers right now about 15 000 maybe something like that we just we kind of depleted everything we could just to kind of get this paid off and be done with so it was a house a condo and a student loan yes how much was the student loan again 60 64 yeah all right very cool so how long have you two been married? Eight years. Almost nine years. Okay. And something happened three years ago where you went, we're getting out of debt.

Tell me about it. What happened? Yeah, Vanessa, go ahead. Yeah, actually, my company was going through some layoffs, and so my job was being laid off. I got the severance letter saying I'm being severed. But a week after I was going to get severed, I found out that I got a job within the company, so I was able to stay on. But during this process, we were just looking at our finances and thinking,

we don't know when the day will come when we'll all be severed, so we need to position ourselves and our finances so that when it does happen, it's not going to impact us greatly. So that was a driver. So it, like, scared the crap out of impact us greatly. So that was a driver. So it, like, scared the crap out of you. Yeah. And you're like, okay.

And I went through it again two years later in the department that I was hired into. Wow. And luckily, by the grace of God, I retained my job again. So still a volatile. Wow. We were set up for the second time, and the first time was, you know, let's get it together and not have to worry about it. The other thing, Dave, on that was, you know,

I kept looking at that mortgage on the condo, and we were paying the bank like $600 a month to say we had a rental in Rancho Cucamonga, and I just couldn't deal with that for a long time. Finally, it clicked, and I said, you know what? We just got to sell this thing. So she comes home. Vanessa comes home, and she's like, I'm getting ready. This is getting ready to get ugly. I'm going to get laid off.

And what did you guys do then? I mean, it woke you up. I get that. That's the cold water in the face. Then what was your next step? What did you do? We're basically, you know, we're Christians, so we said, you know what, God's in control. He has a plan here, and as we look at it now, we know what the plan is, and the plan was

to get us debt-free. And so we got there, but we just decided, you know, we need to buckle down. We need to really get rid of these unnecessary debts that we have and, you know, do what we need to do. So we basically just started by just determining that we want to go down this road and agree with each other that, hey, you know, if we want to do this, we need to not do this and not do that and be careful how we do this and be careful how we do that. So we just kind of determined to do that. So we stopped vacations. We stopped, you know, being crazy.

We're no longer gold members at Starbucks, you know, things like that. Okay, that works. So what do you tell people the key to getting out of debt is? Stop doing all this stuff? I mean, what are the keys? Well, I would think that's the biggest one is, you know, I mean, you know, sometimes you think things are better for you than others, and so we make coffee at home now, you know, and we enjoy it better.

We don't eat out as much, and that's just like our lifestyle now. And then a determination, like we said, you know, you've got to be determined to not do these things so that way you can. It's kind of like, you know, the man is always going to win. And I always told Vanessa, you know, we've got to stop letting the man win all the time. We've got to win. And Vanessa probably has a few things she'd like to say to add to that. I would assume being good stewards of what God has given us and just cutting back on, you know, spending.

We make our meals at home. We make our meals for lunch. You know, we eat the same thing every day for dinner. We don't change anything. So that's really helped us to cut back on a lot of our expenses. Okay. How did you guys get connected to us? Well, my niece, actually, Kimberly, and her husband, Michael,

we had already kind of, I was kind of always a saver, and I didn't like debt and all that, so I was kind of on that road. But, you know, we got married and had different things going on in the condo and different things, and Kimberly and Michael would always tell us about you, you know. And I had heard about you but never listened, but every time we'd, you know, be with them or something, they'd mention something about you. So I thought, I've got to listen to this guy more, you know. So the more and more I listened to you, the more and more I said, like, you know, we can do this.

I mean, we're already kind of doing some of it, but we can, you know, the snowball effect for the loans and all that just really helped us to do that. And so them telling us and us looking into more of it and me listening more and more to you and coming home and telling Vanessa, hey, I heard this and heard that, you know. That's kind of how we did it. And so my niece is, you know, I credit her for kind of telling us about you and just having that curiosity. So now that you have no mortgage, no debt anywhere,

you make $200,000 a year living in Los Angeles, no mortgage. I love it. How does that feel? How does that feel? How does that feel? Wonderful. It feels weird. I'll be honest. Never thought in years of always living in debt that I would be debt-free.

It's just a weird feeling, but it's really wonderful. Will you ever go back? Never. Never. Cool. We've got a copy of Chris Hogan's book for you ever go back? Never. Never. Cool. We've got a copy of Chris Hogan's book for you, Retire Inspired. We want that to be the next chapter in your story, and that's to be millionaires and outrageously generous as you go along.

Well done, you guys. We're very proud of you. Matthew and Vanessa, Los Angeles, $530,000 paid off in 34 months, making $195,000 to $214,000, including the sale of a condo that yielded $180,000. So count it down. Let's hear a debt-free scream. Ready? Three, two, one.

We're debt-free! Yay! We're debt-free! This is how it's done. Wow. Absolutely. Absolutely. Well done, well done.

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Because Zander is not a life insurance company. Zander is an insurance broker that represents multiple lines of insurance, and they shop among all those different companies and get you the best deal automatically when you go to ZanderInsurance.com, which is why I buy my insurance through Zander. But they're a broker. They're not an insurance company, which is the best way to buy all insurance, because they can shop among many and get you the best deal. This is the Dave Ramsey Show. Thank you for joining us, America.

Kelly is with us in Louisiana. Hi, Kelly. How are you? I'm good. How are you doing, Mr. Ramsey? Better than I deserve. What's up? Well, first of all, I want to tell you, my 16-year-old daughter is the one that turned me to you. Awesome. Yes. So she's already building her life. My husband and I got married six years ago.

And three years after we got married, I got medically retired from the military. And within a year of me getting out, we ended up having to file bankruptcy. And that's two years ago. So within the next year, we should have our bankruptcy paid off, which will keep us out of debt. But I don't know where to start after that. Due to the Chapter 13 repayment plan, we're very little on extra funds. So I've been able to get our emergency fund, so Baby Step 1 done. And obviously Baby Step 2 is through the paper. You're completing your Chapter 13 when in the next year okay all right which is early is it not yes they're usually five years it's three to five years and um i have some back

pay coming in that will be able to pay it off okay when you pay it off is there any debt left that was not in the chapter 13 do you have any debt at that point? No. Okay, so you're debt-free with $1,000 at that point, correct? Yes. Very good. That's Baby Step 2 completed. Baby Step 3, have you heard this before?

Yes, the three to six months' worth of income. Expenses set aside as your emergency fund. So we go to the $1,000 account. We throw any money we can squeeze out of our budget at that until that's done. Without the Chapter 13 payment, you're going to have money, right? We figured it out. We'll be able to put almost $5,000 a month into savings. Wow.

So it won't take you long at all to complete baby step three, right? No, because we went from $60,000 and then dropped down to a little bit over $20,000, and that's why we ended up filing bankruptcy. And then between my pay and my husband's new job, it brought us up to $110,000. Wow. So you're in great shape going forward. How old are you guys? I am 33, and he's 41.

Okay. So when you finish your emergency fund of three to six months of expenses, what's your next baby step? Wouldn't that be the college? No. That would be 15% of your income going into retirement. Okay, yes. And how old are you?

You have a 16-year-old, so college is going to be here before that. I'm lucky enough that my kids' college is covered for them. Okay. So I don't have to worry about that. Well, you probably have to worry about some things for college because tuition is covered, but books is not. Yes. Housing is not.

Exactly. But you've got military, you've got GI bills, what you're talking about. Because I'm 100% disabled, my children's tuition is fully covered. In Louisiana, their tuition is fully covered, and then they get a housing stipend. Oh, good. Okay. So a lot of it is covered. So baby step four is 15% of your income going into retirement.

Five is we're going to do whatever you need to do for college, which is not going to be a lot, thank goodness. And then baby step six is pay off your home early. Do you own a home? Yes. No. Okay. And that's one other question I was going to ask,

because we're able to put so much into savings a year, would it be better to wait five to six years and to buy a house and pay it with cash or to actually purchase a home it's not a bad it's not a bad thing and I believe me I love the 100 down plan you would you would delay your baby steps if you're going to do that after you get baby step three. You have to have your emergency fund in place, and then you start saving for the home, and that's either the down payment on the home or whatever. I wouldn't delay retirement more than about three years, maybe four, but at the tune of $60,000 a year, four years is $240,000.

That buys a lot of house in Lafayette, Louisiana. Not in Lafayette. Well, actually, I'm moving to Phoenix. That's where my husband's new job is. Oh, okay. Well, it doesn't buy as much house there. But $240,000 will still buy you a property in Phoenix. Yes.

And if you can save $60,000 a year in four years, you could pay cash for something. Yeah. Yeah, I'm good. I would not wait five or six years. I would save up that, and then I would start your baby steps again. And, of course, by then the kids are going to be in school and whatever you have to come out of pocket for school. But you're not going to have a lot out of pocket for school in your situation.

So that's the good news. And you said so your child can return to Louisiana if you're living in Phoenix? She is graduating a year early, and she's already been accepted to the university here. Okay. So she'll start, she graduates this May and then starts school in August. Okay, before you guys leave. Yes. Okay.

When are you leaving? I leave in July, but, before you guys leave. Yes. Okay, when are you leaving? I leave in July, but she'll already be enrolled. Okay, and he leaves now? He's already gone. Okay, all right, so you're doing a little bit of commuting back and forth to make this college thing work. Yes. Okay, all right, very cool.

Yeah, I'm going to save up and pay cash for a house but uh only about three or four years worth uh and then save up and move up in house later you know as you get your wealth building and so forth going but you know just follow the baby steps and healing will come to your finances healing has come to your career into to your household income. And if you follow some basic, solid, clear path steps, you're going to see healing come to the math around all your finances as well. And it's just the Total Money Makeover book. I mean, it's the baby steps straight up. It's exactly how it happens.

Hey, thanks for the call. We appreciate you joining us. James is with us in Atlanta. Hi, James. How are you? Hey, I'm doing outstanding yourself, Dave than i deserve what's up a um one quick question i wish i was calling in for my debt free screen but we're on step six we're getting that way i give you books away christmas to a bunch of employees thank you and um and uh you are a good name to some, and some people use it as a bad word.

I've heard the rumor. I've heard the rumor. Hey, quick question for you. I'm in a situation where I could retire. I don't know if I want to, but I'm in a situation to stay an employee, and they give you three options. One is like one option for the rest of my life. One is a little bit less for the rest of me and my wife for the whoever lives the longest and then there's a middle option for me as long as i live and then if i die she gets half for the

rest of her life so do you have any thought about this is not an option no okay all right um if you have other assets or term life, other in savings, or term life insurance to take care of your wife if something happens to you prematurely, you'll come out better mathematically taking the option that gives you the most possible money and then invest that difference. Okay. Probably after taxes, it's about $2,400, I guess, the difference. Okay.

Yeah, so if you invest $30,000 a year and take the lesser option, I mean take the option that offers no survivability, you buy a little term insurance out of that $30,000, pretty quickly that $30,000 is going to be hundreds of thousands of dollars, see now the difference is not 30 i'm sorry it's the difference is like 2400 per year after per year oh okay unless you said per month okay so it's not a lot of difference then no okay well you can sit down usually these things are calculated out to where you're better off taking the most possible money and investing the difference. Because what you're investing it in is going to pay more than that pension is paying, which is usually around five, five and a half right now. And they don't say they're paying that, but that's how their stuff is calculated based on because there's federal regulations that dictate how a pension has to behave. And so most of the time, you know, they're padding it by calculating everything on a low rate of return.

And so usually if you sit down with your smart investor pro, you sit down with your person who helps you with your retirement savings, your retirement investing, and they crunch the numbers out, usually you're better off to invest the savings, the extra money that you get, buy some term insurance until that grows to enough to create the same amount of income left over after you die as you would have gotten from the state. Usually. Now, sometimes I see it's not calculated out that way, so it's always not a bad idea to

run the numbers out and get somebody to help you do that. Click on SmartVestor at DaveRamsey.com.com you can find the smart fester pro in your area this is the dave ramsey show hey guys it's james childs producer of the dave ramsey show and this hour the show is over thanks for making us the third largest talk radio show in the nation. You're one of 12 million weekly listeners on 575 stations. Find a station near you at DaveRamsey.com.