The Ramsey Show - App - Shared Motivation Draws Couples Together (Hour 3)

Episode Date: August 29, 2019

Savings, Budgeting, Insurance, Retirement, Home Selling   Tools to get you started: Debt Calculator: http://bit.ly/2QIoSPV Insurance Coverage Checkup: http://bit.ly/2BrqEuo Complete Guide to Budgeting: http://bit.ly/2QEyonc Interview Guide: http://bit.ly/2BuGnZE   Check out other podcasts in the Ramsey Network: http://bit.ly/2JgzaQR 

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. Thank you for being with us, America. Open phones at 888-825-5225. That's 888-825-5225. Jennifer is in Missouri. Hi, Jennifer.

Welcome to The Dave Ramsey Show. Hi, Dave. Thanks for taking my call. Sure. What's up? I just had a quick question about our mortgage. I'd love to pay it off, and we bought our house before I really started listening to you full-time, so I feel like we kind of made a

mistake, but I'd just like to figure out if we have money saved in the bank, and I was just wondering if we should put that towards paying off our mortgage. Okay. Do you have any other debt? Nope, no other debt. Cool. What's your household income? I'm a stay-at-home mom, but my husband makes about $130,000 plus bonus. Awesome. Very cool. Good. And how much is the balance on your home mortgage? About $240,000.

And how much money do you have in the bank? We have $85,000 in the bank, and then we have about $280,000 in our retirement, and about $100,000 in our 401k, and $30,000 saved for the kids for college. Good. Okay. Well, I would not touch any retirement. What we teach, the process we teach, the shortest path to wealth is to be debt-free, everything but the house, and have an emergency fund of three to six months of expenses. That takes us through baby step three. Then you should be putting 15% of your household income aside for retirement.

You've obviously been investing in retirement and 401Ks and Roth IRAs and those kinds of things. And kids' colleges, baby step 5, you've been doing that. That brings us to Baby Step 6. So if we're out of debt and we have the emergency fund in place and we have our money going into retirement and kids' college is underway, any other money beyond the emergency fund that we have, we would put on the mortgage because we're trying to pay the mortgage off now. Okay.

And so how much of the $85,000 is your emergency fund? We'd like to keep probably $40,000 in there. Okay. Well, I'll just call it $35,000 and put $50,000 on the house. Okay. Okay. And that brings the house down to $190,000, and you make $130,000, and you'll probably have this house paid off in four or five years.

That'd be awesome. Okay. You know, just think about it. I mean, we've got $200,000 in four years. It would be $50,000 a year out of your $130,000. Five years would be $40,000. And your house payment is already how much? About $2,000. Okay.

So your house payment is already $24,000. So if you put an extra $20,000 other than what you're already paying on your house, you're going to be done in about five years. Okay. With this move. See, we didn't even count the bonuses. I was just looking at $130,000. But, I mean, and raises and everything else.

So you're probably done between four and five years on the house and everything. How old are you? I'm 43. Okay. And so, you know, if your house and everything is paid for before you're 50 and you're making, you know, $150,000, $200,000 a year, you don't have a payment in the world, you're going to be multimillionaires then if you continue to save and invest, right?

Yeah. Well, that's where you're headed for sure. Hold on. I'll send you a copy of Chris Hogan's book, Everyday Millionaires, because I think you're on track to be there. And it'll show you the rest of the thing, what to do, but it'll also show you what a whole bunch of other everyday millionaires did. It's a great book with great stories in it and great statistics in it. 140 of the statistics from the study that we did here at Ramsey on millionaires. Joe is with us in Texas.

Hi, Joe. Welcome to the Dave Ramsey Show. Hi, Dave. Thanks for answering the call. Sure, man. How can I help? So I look at my debt ratio and what I'm paying, you know, monthly, and I'm trying to get into, I've gotten into your channel over the past couple of days. I'm trying to budget

better. How do I budget the money that I have left over after, you know, each paycheck after my bills are paid effectively when I don't spend it consistently? I eat out a lot i i don't go to the grocery store consistently i buy you know dumb stuff here and there um how do i really take that money that i make and budget that effectively well if i hired you how old are you i'm 27 what do you do for a living i'm a police officer. Okay. If I hired you to come in and said, okay, here's a family in front of you, and they have this money, you could lay down a game plan in writing with sixth-grade math that shows where their money should go, correct? Mm-hmm.

That's really not the problem. The problem is then actually doing what the game plan is yeah as a police officer you run into people who aren't doing what they know they should be doing all the time and uh so you know they they are texting while they're driving, and they're not supposed to be doing that. So, you know, everything else, right? So anyway, all we're going to do is have a game plan.

Instead of driving with the rearview mirror, we're going to look out ahead, forward, and we're going to say, okay, before each month begins, we're going to give every dollar of your income an assignment, and the good news is you get to decide that but then the bad news is you have to stick to it so what you described was a certain amount of impulsiveness and it felt like it felt like you were not in control of that in some way the way you described it and you are in complete control of that.

How does, with, you know, because I work shift work, and some paychecks are a little bit bigger than others. Well, we just, we take our best guess at what this coming month is going to be. Based on the shift work you've got planned this coming month, what is your income going to be for the month of september right and you say okay what am i going to make on this check and i'm going to get a check on this date i'm going to check on that date i think the check is going to be about x and i think that other check is going to be about y and you just estimate it as best you can, jump on every dollar, and download the budgeting app. And it takes about 10 minutes then to plan where your income is going to go before it goes there.

And so, for instance, if you say, I think I'm spending too much on restaurants. I think I heard you say that. Then you would dial that back, and you would say, I'm going to spend this amount on restaurants. And when I have spent that amount, I can't go to a restaurant anymore. And I've done that amount, I can't go to a restaurant anymore. Mm-hmm. And I've done that with that app. When I'm budgeting that out, I'm not – there's a big, you know, about $1,000 a month that I don't know what to budget with.

So I don't know – You didn't finish the app then. I mean, you're supposed to give every dollar a name. And what you should do with that money is if you've got $1,000 extra, what am I going to do with that money? You should assign it to wherever you are on the baby steps. Baby step one, save $1,000. Baby step two is we're going to list our debts smallest to largest

and attack them in that order. And so if you find money in your budget because you got some extra shifts or just from good budgeting and sticking to it, you throw it at wherever you are on the baby steps. Good question. This is the Dave Ramsey Show. We've been voted one of the best places to work in Nashville 11 times. You want to know how we do it? Well, our team has been using LinkedIn jobs for years to find the best people from all over the country to come and help us change lives.

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That's linkedin.com slash Ram for yourself why blinds.com is the number one online retailer of custom window coverings you get free samples free shipping and with the new promos they run every month, you'll save even more. Use the promo code RAMSY to get the best possible deal. Rules and restrictions apply. Danes in Alaska, first off, I want to thank you from the bottom of my heart. I was deployed in 2018, took Financial Peace University, and it changed my life. Well, thank you for your service.

I'm getting out of the military soon because of medical reasons. Currently, I have $30,000 in my TSP. What are the benefits of keeping it there versus rolling it to a Roth IRA? You always take your company retirement plan, TSP, 403B, 401K, and roll it to a direct transfer rollover into an IRA. There's no tax implications of doing that. And then you can pick from any of about 8,000 mutual funds in the marketplace. So you have a lot better selection. You find stuff that outperforms your options in the TSP. Lots of mutual funds that outperform those options. And you've got more access and more control and more flexibility.

And so I always roll it, and that includes a federal government employee, military or otherwise, that has a TSP. So, good question. Number three line is Hillary in Georgia. Hi, Hillary. Welcome to the Dave Ramsey Show. Hi, Dave. Thank you so much.

I'm so excited right now. Well, I'm honored to the Dave Ramsey Show. Hi, Dave. Thank you so much. I'm so excited right now. Well, I'm honored to talk to you. How can I help? So my husband and I are currently on baby step number two. We're super excited. We've paid off about $13,000 since March. So we're super stoked. So when we bought our house, I was not working at the time I was still in school. So my in-laws co-signed on the loan with us, but they had recently requested. Yeah.

Um, I mean, it was gracious, but now we, you know, all parties involved realize they need to be off the loan, but they've requested to be off fairly quickly. We have a lot of equity in our homes and we're kind of at the point where like we have the income where we could go to another house if we wanted but we're trying to just figure out like basically our only option is to refinance or to sell the house as far as we understand and we just don't know, like, what would be the best decision for us long term. And so they need you off the loan now. Yes, because they, and my father-in-law recently had some medical things come up, so they were basically like, can you have us off in, like, 90 days?

Why? Why do the medical things need that? I don't know. They have requested to get off as soon as possible, and so we're trying to honor them by doing that. So what is your home worth? So our home is worth about $315,000. And what do you owe on it? About $250,000.

Okay. All right. And would you, if this all wasn't going on, would you be staying there for a while? Not longer than probably a year or two. Then sell it. Okay. Because if you refinance, you don't have time to get the cost of refinancing back out with savings. Even if you've got a cheaper interest rate, and I don't know if you can or not. I don't even know what your interest rate is.

I haven't asked yet. But I'm guessing you have a 3% or a 4% interest rate, right? Yeah, it's about 3-2. Yeah, and that's about the market today. So you'd break even on the financing, and so your refinance cost is just lost. Right. And you're going to lose it because you're going to turn around and sell the house anyway. So I would just go ahead and sell it.

Okay. And then start looking and, you know, let's talk about taking that equity and just move that equity into another property on a 15-year fixed where the payment is no more than a fourth of your take-home pay. Right, okay. And, you know, the good news is your situation has changed substantially since the house was purchased. And so you can look at, so you can look at your overall situation and gauge what the appropriate amount is. With $65,000 or so down, minus some expenses when you sell, but with $50,000 down, what is a 15-year fixed rate?

It's about a 3% rate right now 3.1 something like that going to do to create a payment that's no more than a fourth of your take-home pay on a 15-year fixed rate and that's gonna that's gonna give you the formula of the neighborhood to be looking in and uh put the house on the market i would not refinance it um if you all have somehow not kept your word, like you promised them it was going to be done by last January and you've done nothing about it, and so that's built the urgency up, then you need to get real aggressive and get the house sold because you need to keep your word to your in-laws.

If they, on the other hand, have just said, we're going to change our agreement we weren't worried about it before and now we're suddenly going to be very very very worried about it well i'm not going to be in a super big hurry to like give this house away just to get that worry of theirs uh to go away we'll take care of it but you change the deal and it's going to take us a few months to get the house sold. And it's probably going to take you a few months no matter what you do. But that's what I would do. Just sell it and let's go ahead and move. So, good question. Thank you for joining us. CP is with us in Ohio. Hi, CP. How are you?

I'm doing well, Dave. Thank you very much for taking my call and helping me out. Sure. How can I help? So I wrote this down, so I wouldn't leave out any details. So my wife and I, we are on, I believe it's BabyStat 4B. We're saving up for a house, if I'm correct there. Yeah, 3B, we call it, but that's okay. 3B, yeah. And so yeah, we're saving for a house. But my question has to do with a life insurance policy. My father-in-law opened up a life insurance policy on my wife after she was born as soon as he was allowed to do so. And he opened a whole life policy up for her for $25,000, paying $180 on it a year. I just inherited that from him.

He gave it over to me. And the death benefit has now risen up to $33,000. But you no longer have, I talked to the life insurance policy people, you don't have to pay on it anymore. Not bad. Yeah, it's a choice. So it's locked at $33,000 and has a cash value of $5,500. $2,100 of it a cash value of $5,500. Uh-huh.

$2,100 of it. How old is your wife? She's 25. Okay. Let me tell you how stupid this is. Okay. $5,500 invested would create, at 10%, $550 a year. Okay? percent, $550 a year, okay, which would buy term insurance for her of probably a million

dollars. Okay. So your free $25,000 policy, given that you're making nothing on your $5,500, is not really free. Okay. You see what I'm saying? Yeah. You're making 1% on $5,000 instead of making 10%, but they're giving you a tiny

butt little $25,000 policy and making you feel like it's free. Your lost investment dollars are what they're putting in their pocket, and they throw you a bone with this tiny little policy. These things are absolutely horrible. Okay. So get good term life insurance on both of you, 10 to 12 times your income each. And you can go to somebody like ZanderInsurance.com, and they'll shop a bazillion companies, get you the best price, and you choose.

But you should get, what do you make a year? Us together. No, no, no. What do you make? $33,000. Okay. So 10 times that would be $330,000. So put about $400,000 on you.

And what does she make? She makes $34,000. Okay. So same thing. Let's put $400,000 or $500,000 on each of you. You're going to find it doesn't cost hardly anything. It's going to cost less than, not going to cost much more than what you're paying for the stupid little policy. And when you cash it in, you're going to get $5,500 in your hand to actually do some things with,

like get out of debt, invest, have an emergency fund. All these things are smarter than keeping the money in a tiny butt little whole life policy and feeling like you got a free, there's no free insurance. Somebody's paying for it somewhere, sometime. This is the Dave Ramsey Show. Let's talk about low interest rates, baby. I know right now that Churchill Mortgage can get qualified buyers into a 15-year conventional loan for well under 4% with no discount points or no hidden fees. Listen, if you're even thinking about buying a home or refinancing, do it right now.

These rates are incredibly low. Here's what I'd like you to do. Take 10 minutes and call Churchill Mortgage and see what you can qualify for. So even if you have to get creative and buy something further out of the city to get something you can afford, now's the time to make the move. That's why I'm sending you to Churchill Mortgage. I trust them to look out for you and your budget. Don't miss this opportunity. You can secure these low rates now for up to 90 days through Churchill Mortgage.

Call 888-LOAN-200. This is a paid advertisement. NMLS ID 1591. NMLSconsumeraccess.org. Equal housing lender. 761 Old Hickory Boulevard, Brentwood, Tennessee 37027. Scott's in Nevada. Hey, Scott.

Welcome to the Dave Ramsey Show. Thanks, Dave. I appreciate you taking my call. Sure. What's up? I'm having a problem with really getting my wife on board. She's excited that I'm excited about your plan. She's happy to get the debt paid off,

but she wants to get her credit back to good, and I've read your book, Complete Guide to Money and the Total Money Makeover, but she doesn't have the attention span to read much. I've got a plan, and I've tried to get her involved, but she doesn't understand, and I have tried to explain. Okay. How old is she? She is 42.

How long have you been married? 25 years. Good for you. Okay. All right. There are things in this world that your wife cares deeply about, and thus far this has not been one of them. Is that right?

Well, it's not that she doesn't care. No, she doesn't care enough to do something about it. And so what that means is that you have a bigger vision for your money and what could happen than she does. She's okay kind of just coasting along. And so the answer to your equation is when she or anyone, for that matter, gets a bigger why, why I'm doing this, why would I bother to care about this? Why would I put my energy into it, why would I give this my attention, why would I sacrifice to win,

then the only reason you would do any of those things is if you have a why, a big reason. And so you need to pan back from telling her all these things you're going to do and what, what, what, what, what we're going to do, what we're going to do, here's what we're going to do. Okay, honey, that's great. I'm glad you're excited about it and what what what what what we're going to do what we're going to do here's what we're going to do okay honey that's great i'm glad you're excited about you go ahead none what what what what you've just been telling her the all the details and all the tactical things and you need to pan back and get above this with her and just sit down and have what Chris Hogan calls a dream meeting and say, okay, what if we had a couple of million dollars and no debt and we could start to do almost anything we wanted to do?

What would that mean to us as a couple? And then shut up and let her tell you what she would want to do if you were in that situation and that's starting to be what her dream is it's starting to be what her why is she may tell you she's always wanted to travel to italy and you didn't even know that she may tell you she's always wanted to own a farm and you didn't even know that with horses on it and you didn't even know that or cows on it and you didn't even know that i don't know but let's find out if if you could dream again uh and then take that one step further and again as chris hogan says put those dreams keep discussing those dreams until they're they're

fleshed out and they're high def dreams hd high definition where they have a lot of detail I'd like to go on a cruise someday okay where and and what where would you like to see on the cruise where how long would you like to be on the cruise would you like to do a luxury cruise would you like to do a land package but for the cruise for two weeks or after that um you know uh would you want to go in the summer or the winter? And really start to nail that down and go, okay, I don't care what the thing is. I'm making up things here, trying to come up with. But what would, you know, I've always wanted to give to this ministry. I've always wanted to spend three months on the mission field. I've always wanted to help starving children in Haiti and and go work in an orphanage i don't know

what the thing is right that that that that gives her some excitement but that you need to learn that because then that is the reason to do all this crap we don't get out of debt just to get out of debt we get out of debt so that we can build wealth so that we can be outrageously generous so that we can have a higher quality of life and you got to get behind the so that's and what's happened in your situation scott is you personally have already gone there you went well god if i could get this mess cleaned up we could do this and we could do this and we could do this and and so then you turned around and instantaneously went to work on cleaning the mess up and she's like man scott's kind of going crazy over here well that's cool good for scott you know instead of going well what in a flip

we don't have a we don't have a joined goal here we don't have a our goal is not set together instead she's just watching all this positive activity out of you which is good and she's she's affirming that but she's kind of a disinterested party watching you like a zoo animal. And so instead of being the other tiger that's in the hunt. And that's what it comes down to. What are you hungry for? And when Sharon Ramsey gets on something like that,

she'll work me to death. And I don't even need to work anymore. It's just don't give the woman a goal. Oh, man, don't give her a dream because she'll make me go get it. And that's that's good because that means we're working together, and that means we have a shared vision for our life. We have shared goals. We have shared fears.

We have shared whys. We have shared motivation. And that's what draws couples together more and more and more when they're doing this stuff. But the thing Sharon used to do when we were first married, the classic Southern Belle line is, well, it's passive-aggressive, right? Whatever you want to do, honey. Whatever you want to do, honey. It's kind of like, bless your heart.

It can mean a whole lot of different stuff. Whatever you want to do, honey, generally means, I kind of think you're crazy, and when you mess this up, I'm going to tell you you were an idiot. But whatever you want to do honey and so you know you just decide you go ahead whatever you think's right no not anymore not anymore i get on the same page with my spouse and it changes everything it's a really good question and i did learn this the hard way because I bought a whole bunch of real estate in my 20s. My wife never even saw it. She never even saw the deals. Whatever you want to do, honey.

She never even saw the deals. And I don't do deals like that anymore. I don't do stuff of size. We don't make big decisions here at the company without our spouses involved, my spouse involved. If the Ramsey family's involved, the in-laws, the married to my kids are involved. You know, we involve. In the multitude of counsel, there's safety. And Proverbs 31 says,

Who can find a virtuous wife for her worth is far above rubies. The heart of her husband safely trusts her, and he will have no lack of gain. Boom. Melissa is with us. Melissa's in California. How are you, Melissa? I'm great. How are you, Dave?

Better than I deserve. What's up? All right. I'm a new listener, and I'm really excited about changing my family's future. Go ahead. I'm self-employed, and I want to contribute more for my retirement. I have a FDIC IRA, but I also have a Roth IRA, which got opened up a while back, kind of on accident. I contribute the $5,500 that I can every year to the FDIC IRA. FDIC. You mean you've got it at a bank?

Yeah. Okay, all right. I'm wondering if I can contribute monthly to my Roth, or what I can do to build my retirement fund as a self-employed person. Good for you, okay. Well, you can do six thousand starting this year, and seven thousand if you're over $50,000. And I would not have it at a bank because the rates of return are horrible. And so I would take the one you've got and all future ones, and I would roll them into other new Roths that are going into good growth stock mutual funds. I personally invest my personal 401k, and what I've recommended to our listeners for years is growth,

four types of mutual funds, growth, growth and income, aggressive growth, and international. And you can set those up to come drafted automatically out of your checking account. If you want to do $6,000, it's $500 a month, that kind of a thing. And just get with one of our SmartVestor pros, and they can help you. They don't work for me, but these are the people I recommend for help in this area. I personally use one of these guys for advice. Click SmartVestor at DaveRamsey.com.

You fill in a little information. It will drop down a list of the people in your area we recommend, and you will select who you want to work with. our scripture today Romans, 3 through 4. Not only so, but we also glory in our sufferings. Because we know that suffering produces perseverance. Perseverance, character. And character, hope. That is not Romans 4.

That is Romans 5. John Wooden says, Be more concerned with your character than your reputation. Because your character is what you really are, while your reputation is merely what others think you are. Open phones at 888-825-5225. Up next is going to be Jesus in California. Hey, Jesus, how are you? I'm doing well, and yourself, Dave? Better than I deserve.

What's up? I'm on Baby Step 3B with $20,000 saved. I paused investing this year and was going to start again in 2020, but my girlfriend and I are seriously considering getting engaged and married next year. Cool. I'm wondering, should I use my $20,000 saved to pay for the wedding and keep saving until we get married? Sure. Or use the money and start putting towards retirement next year, too, though.

That's fine. How old are you? 27. Yeah. And what do you make and what does she make? I make $50,000. She makes about $40,000. Does she have any debt?

Yeah. She's on baby step two. How much debt does she have? About $15,000. Okay. Well, we've got several goals going here. Okay, there's three goals on this list. Assuming you get engaged and get married next year, right?

Mm-hmm, yes. And there can be in any order, order but we got to pay for a wedding we've uh got to buy a house and we got to pay off her fifteen thousand dollars in debt after you're married okay yeah and those are the three goals all of those are going to require you temporarily stop your retirement planning and it might be for a couple years you do you do that but that's not not the end of the world i don't want you for a couple years you do you do that but that's not not the end of the world i don't want you stopping at five years but will you save up and pay cash for a little wedding uh you may use the 20 000 say okay that's our earmark we're gonna do that

set that aside boom okay the next money that you save would be for paying off her 15 000 as soon as you get home from the honeymoon. Okay? This is you saving. She's working on it also while you're engaged. And then the next money that we save above that will be for the down payment, which will probably be a year, maybe a year or more after we're married. Yeah, we definitely talked about wanting to wait for that too.

Yeah. Yeah. So just, you know, the third thing would be the down payment. Okay? we're married yeah we definitely talked about wanting to wait for that too yeah yeah so just you know the third thing would be the down payment okay we want to have the emergency phone in place be debt free and have paid cash for the wedding and then we'll work on the down payment and that's that's the process so congratulations the good news is you guys are talking about it you're thinking about it and all of this stuff's not just happening to you, which makes you a very unusually wonderful 27-year-old. All right, Olivia is with us in Georgia. Hi, Olivia. How are you?

Hi, Dave. Thanks so much for taking my call. Sure. What's up? So I am a new listener. Just found you on YouTube a few weeks ago, and I realize I've made a lot of mistakes in the last few years. So I have a house that I cannot afford. I'm paying around $3,000 every month between mortgage, the HELOC, and my home association fee. I have car debt around $16,000. And I have credit card debt around $24,000.

Wow. And I'm wondering if I should sell the house. Yeah. What do you make? $85,000. Okay. And you're single? I'm single, but I have a five-year-old daughter. Okay. And you're how old? I'm 38. Good for you. Okay. All right. $85,000. And so your take-home pay is like six grand. So your house payment's about 50% of your take-home pay.

Does that sound right? Yes. Ooh-wee. Yeah, that house is gone. Unless you see your income doubling in the next couple of years do you i might i mean i'm not a year at my job yet and i'll probably get an increase and i'm due a bonus i don't know how much it'll be maybe four or,000 paid next month. What would be the increase? Maybe like a 2% or 3% increase.

That doesn't sound like doubling in two years. No. Yeah, you have a house you can't afford. Okay. I also do child support, which he's in a rear over $87,000 to pay. So I'm trying to go after him for that. It's obvious he's not reliable as a part of this equation. Right.

Yeah. I'm sorry. You do have a house you can't afford. Okay. Okay. It's killing you. I mean, it owns you, right? When you run your budget out, you can't breathe because of it.

Yeah. I just barely break even. Yeah. You're a single mom, and you're working your butt off. You're doing real good. I mean, your career's doing good. What do you do for a living? I'm a technical recruiter.

Okay. Well, you're doing great. Good job. Thank you. And you're making good money, and, you know, you've got a plan. You just bit off more than you can chew. And so instead of, you know, enjoying time with your daughter when you're at home, you're just sitting around looking at these numbers, and they're freaked out all the time.

Yes. That's why you looked me up on YouTube. You know, that's why you were looking for some help. And so it's just you're going to have to amputate some things, and then you'll be able to get traction to clean up the other things. And so, yeah, I would buy a house that the payment is about half of what this one is. Okay. Okay.

That makes sense. It would just give you a lot. Give you your life back. That's all. I mean, that's the thing we're looking for here. All right. Travis is next, and Travis is in Indiana. Hi, Travis.

How are you? Doing good. How are you? Better than I deserve. How can I help? Hey, I just got a real quick question. I'm trying to get some clarification on which type of financial advisor is the best way to go. The assets managed way of being paid like a percentage or the commissions based? Either one is fine if the person is of character. The managed accounts typically charge about 1%. So over 10 years, you would have been charged 10%.

The commission is charged up front. It's typically 5.75%, and then it's not charged again. And so if you put in $100,000 and you pay five and three quarter versus paying 1%, it would take you about six years to break even. But everything after six years, on a 10-year scale, the commission is cheaper than a managed account. Most of the people in the business are going to managed accounts now. If you're paying around 1%, you're fine on doing that. I'm okay with you doing that. It solves a lot of the fiduciary crap from the DOL and so forth.

There's nothing wrong with it. It is a slight bit more expensive long-term. Right. So when you get closer to retirement, though, it becomes quite a bit more expensive if you were just doing the commission basis. Exactly. Because the more money you've got, the more the 1% is on versus the commission you only pay on what you put in. You don't pay commission on the growth. Right. Okay. I just wanted to see if you preferred one or the other.

All right. I appreciate it. I personally use A-share commissions, but I'm not super opposed to the other. And our SmartVestor pros, most of them do it both ways. Some of them have gone pure managed accounts. But most of them will go either way if you talk to one of our SmartVestor pros that we recommend in the SmartVestor program. But, yeah, it's a smoothing, and it keeps everybody involved in the whole process all the time, and that's not a bad thing.

But if the person's got good integrity and good teacher, the heart of a teacher like we're always talking about, you'll be fine either way. Hey, thanks for the call. Open phones at 888-825-5225. You jump in. We'll talk about your life and your money. It is a free call, 888-825-225. You jump in. We'll talk about your life and your money. It is a free call. 888-825-5225.

What's the best way of paying down a credit card? Lump sum or extra payment for several extra payments throughout the month? A credit card is capitalized once a month, and so it doesn't matter. Will you pay 10 payments in one month or one payment in one month? It has exactly the same effect on the reduction in the debt and the savings on interest good question that puts us out of the dave ramsey show in the books i'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 This is James Childs, producer of The Dave Ramsey Show.

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