The Ramsey Show - App - Should I Buy My Ex Out of a Rental Property That We Co-Own? (Hour 1)

Episode Date: January 13, 2021

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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. Chris Hogan, Ramsey Personality No. 1 best-selling author, is my co-host today. As we answer your questions about your life and your money, open phones at 888-825-5225. Chris, before we jump to the phones, I want to just take a minute and say thank you to our good friends, Pastor Craig and Amy Groeschel at Life.Church and the whole team at Life.Church in Oklahoma City. We were there yesterday, all day, pre-taping some things,

and then last night did our reset event from Oklahoma City last night. Craig spoke, and you and Rachel and I, and about 240,000 people were registered to watch it. It was the number two thing on YouTube in the world. The only thing ahead of us on YouTube last night was the impeachment hearings. And so you've got like one negative thing going on and one positive thing. One positive, that's exactly right. Where they're helping people.

And all of the speakers were on their A game. The delivery was incredible. Craig's talk was off the chain. And the team behind the scenes, our team and the technical team and the guys at Life.Church to be able to pull something like that off for 200,000 plus streams going through Facebook, YouTube, anything else out there, it was incredible. It really was. And, you know, in this time right now that we have

going on, people need hope. They need a plan that actually works. And I was just excited to be a part of it. And like you said, that church and the whole entire team there is absolutely just, they have the heart to serve. And so it was just a great opportunity to be there with them and to help people. Well, they're not only one of the largest churches in America, but they, if not the largest church in America, but their technical skill is world class. I mean, this is the these are the folks that put out the YouVersion Bible app that has a half a billion people around the world using it with a B. And, you know, I mean, that's pretty crazy. And on top of all of that talent and size and scale, there is not an icky person in the building. No. I've known Craig, Pastor Craig, for 20-plus years since he was doing the thing out of his garage.

And it has just grown leaps and bounds. And he has personally grown through that time. And just incredibly humble, loving yeah serving people yeah that's the word that i kept thinking as he was hanging out just talking to us just his heart uh his heart is to serve people and the whole team's that way the whole team everyone now not to mention they've got like a command central i walked by that thing, and I was like, this looks like a major news station. Yeah, I was like, let me go in there and turn some knobs. And I didn't, because I don't know what I'm doing.

Fox Business wishes they had a setup like that. I'm just saying, it's incredible. So, this event was obviously a blast. I was there. I had a chance to be a part of it. Can people watch this, Dave, after the fact? Yeah. Yeah, we were running it live, of course, last night. Andave after the fact yeah yeah we're gonna we're gonna we were

running it live of course last night and i think the guys are posting it today okay where you can go back reset 2021 yeah and it's time to get a reset it's time to get a fresh start it's time after 2020 to put that in your rearview mirror and that was our messages and showing you how to do that from each of our perspectives and from the actual thing, the actual delivery of the content, but the tactical things to take away and do. And, of course, we're running a special on Ramsey Plus, a bundle associated with it that was incredible. And thousands and thousands and thousands of people bought that last night.

And I want to tell you, I'm going to put out a tease here, and trust me, it will not let you down. Dave's take on the Three Little Pigs. That's all I'm going to tell you. But I want you to go watch this and listen to it because it is absolutely hilarious, but it's on point. Dave's take on the Three Little Pigs, Reset 2020. You need to go watch it. And then I want you to tweet me or post on my Instagram and tell me what you thought, because I loved that story.

I really did. Our modified version. You need to watch it, though. And it's so applicable right now in this big time. I'm going to end up with more children's books around here than anything else. I mean, with the Tortoise and the Hare, Three Little Pigs. You know, we just bring out all the bring out all the old the uh the old time hits from the fairy tales or whatever but seriously guys thank you guys all of you that

turned out hundreds of thousands of you watching that last night it'll be uh by the end of the week it'll be well over a million folks have viewed that and um it's just it was an incredible thing to be part of and to uh be able to put out there at a time when folks need something to focus on that is not crap out of Washington or not crap out of, you know, public shaming for this or that. And of course, there's always, you know, one or two negative ninnies out there, but that's just part of it. I mean, if you do anything of scale, you can expect the morons to show up. That's part of who shows up. Oh, yeah. If you get out of bed and leave your house, you're going to have somebody griping.

Didn't like that. Oh, yeah. They didn't like the way you walked out your front door because you slammed your door, Dave Ramsey. One way to avoid criticism. Say nothing, do nothing, and be nothing. These are not options for us at Ramsey. No. So the criticism is part of the table stakes.

It's part of the permission. It's part of the sign-up fee to be me, and I signed up. Yep. So bring it. Bring it. In the meantime, hundreds of thousands, now well over a million people are getting help for free. Yeah. And somebody figure out a way to bitch about that, okay?

So, really, unbelievable. But it was an incredible, incredible thing. And I just, I mean, I have gotten to do a lot of major events and arenas and other things that we have put on or I have spoken at large things, you know, 10, 20,000 people in live in an audience, that kind of a thing over the years. And those are it's a it's a it's an experience to do that kind of a thing. But this was, you know, a fairly small audience. You know, it's not a huge auditorium. Number one, number two was socially distancing.

And the other things that we abided by the local government's guidelines and everything. And, you know, but the number of the size of this online audience for this thing was, it was earth changing. Yeah. It was pretty amazing. So thank you, guys, all of you that tuned in. We appreciate it. If you haven't tuned in, like I said, we're going to post it, and you'll be able to jump on DaveRamsey.com, figure out a way to watch it somewhere. I don't even know how that works right now.

DaveRamsey.com slash reset. There it is. They're telling me that out of the booth. Yes. Hogan's shopping story. Just to hear Hogan talk about him grocery shopping, and the visual of that that goes into your head that will never leave, it's worth watching just for that. But the content was awesome.

And, again, you'll leave. It'll be worth the hour and a half, hour and 45 minutes it takes you to watch. And it'll be worth your time. And, again, it doesn't cost you a thing. So DaveRamsey.com slash reset. And we want you guys to reset. We want you to win. We want you to make choices where you're not vulnerable to everything that is going on out there.

There's sections of this nation, portions of the spaces out there that have completely lost their freaking minds. And the only way you can insulate yourself from the wackiness is to follow God's principles of handling money. And when you do, you put yourself in a position to be insulated. That's right. And that's what we're teaching you to do. Good times and bad times, these same principles will cause you to prosper. This is the Dave Ramsey Show. Your number one wealth building tool is your income. For business owners, this comes as no surprise, as you're used to putting in extra hours and watching your bottom line.

That's why Christian Healthcare Ministries, or CHM, is a great option for those who are faith-focused and budget-conscious. CHM is not health insurance. Rather, it's a health cost-sharing program. It's not harder, but it is different. To learn if CHM is a fit for you or your business, visit chministries.org slash budget. Chris Hogan, Ramsey Personality, is my co-host today. Open phones at 888-825-5225. David is in Washington, D.C. Hi, David. Welcome to the Dave Ramsey Show. Hi, gentlemen.

Thank you very much for taking my call. Sure. What's up? I have a question. My wife and I have a 529 plan for our son in the state of Virginia, and he's got one and a half years left until leaving for college. We think it's pretty much fully funded, so we're only putting small amounts into it now, but we're concerned that maybe our distributions are a little too aggressive now. So we've got like

78% in stocks, 18% in bonds, 4% in cash, And we wanted to just kind of know, should we back off of that a little, either now or next year or as we head into college? How much is in there? We have in there right now $165,000. Okay. Well done. Congratulations. That's fabulous. That is great.. Okay. Well done. Congratulations. That's fabulous.

That is great. Very fortunate. And when you say stocks, bonds, and cash, you're talking about it's a mutual fund selection. You're not in individual stocks or bonds. That's correct. We have mutual funds through American funds. Yeah. Okay.

Yes. Well, here's the thing. Bonds have an inverse relationship, as you probably know, David, to the interest rate market. So as interest rates go down, bonds prices go up. Interest rates have been unbelievably low for an unbelievably long period of time. There's not a lot of places they're going to go but up in terms of major moves in interest rates in the next five years, okay, while your kid's in school. And so while bonds are typically pitched, if you read the standard financial planning writing, people pitch bonds as a stabilizer in a portfolio. In an extended low interest rate environment, my personal conviction is that they are a destabilizer because I think as interest rates tick up, those bond prices are going to go down. You're going to lose your butt on that part of the portfolio.

And so while it's supposed to be more safe than the stocks, I don't think it is in this current world, personally. So you can do what you want to do, but you called us. So that's an opinion. It's probably worth what you paid for it. Consequently, I don't own any bonds right now. Matter of fact, I've never really used bonds much in my investing at all, unless they're in a balanced fund or something like that. So then the question just becomes, do you want to be in cash or do you want to be in growth stock type mutual funds for the next three and a half, four and a half years because a piece of that money is not going to come out for four years, right?

That's right. Correct. So I'm probably going to stay, depending on how worried you are about the stock market, I'm going to, the less worried you are, I'm going to stay heavy, heavy, heavy in the gross stock mutual funds and a little bit of cash. And the more worried you are, the more I would be about cash. But I don't think it's unsophisticated. As a matter of fact, it's just a different way of thinking.

It's a different critical thinking set to avoid bonds, number one, and to number two, to say the risk represented by the market is not so substantial on stocks that it's going to drive me crazy. Well, and the mindset, Dave, I think this year has – or this past year, I keep going backwards here. The past year has shown us, as we looked at what happened to the stock market in March, and then how it rebounded and came back in October. Yeah. You know, for us to make sure that we remember, it's the long-range view, right? And I think that is, I'm going to keep beating that drum of riding the roller coaster, long-range view, look at what's going on, don't listen to what people are saying, watch what's happening. Yeah. long-range view look at what's going on don't listen to what people are saying watch what's happening yeah um i mean on the short term the only thing that disturbs me for the stock market sake more than anything else is just the level of political unrest oh i agree that's a short term

um i mean if you believe that the political unrest is going to lead to the uh the nation unraveling then you'd get out of the stock market completely i don't believe that uh but uh the stock market does not like an unpredictable world it likes a predictable world even if it's a liberal world or a conservative world right a democrat or a republican it just let me know what it is and i can predict it. And when things aren't predictable, so if a war springs up across the world, a geopolitical, it doesn't like that. This crap going on in Washington on both sides of the aisle is astronomically crazy. When the cities were burning last summer, without getting into reasons or agreement or anything like that, the stock market doesn't like it. Right.

Well, it's a living, breathing thing, as you've told told people for years and because it's living and breathing it's got feelings and so the stock market has feelings and so imagine if too much unrest or too much this or that happens there is going to be a reflection at some point yeah it's when people are worried it shows up right that's really what it comes down to because it depends on what they're worried about so anyway all that to say david i personally if you if it was my kid i would be heavy in stocks i'd be light to none in bonds and to the extent you're worried i would crank up my percentage in cash uh to the extent you're worried about the next two years of volatility. But if the thing goes down 10%, that would be almost, that'd be one of the biggest drops in 12 months in the history of the stock market, if it went down 10%. And that would be $16,000.

Doesn't keep your kid from going to school. So you're not really playing with huge, huge risk. You're not going to have a situation where you lose 50% of your money. That has occurred only two times in the entire history of the stock market, and I do not see that item on the horizon. It could be there, but I don't see it. And let's talk real quick here about, obviously, with student education and going to college. You've got $165,000 that you put away. As you start to look in-state at $10,000 a year, you've covered. Out-of-state tuition is $22,000 a year, and private tuition is around $36,000.

So you look at the dollar amount that you all have set aside, David. You all have done a fantastic job of being prepared. Now, finish the job, I guess is what I'd say. Help your young person make a smart decision, and don't pick a school based on a sports team, and don't pick something based on a mascot. Let's pick something that is fiscally responsible that you can pay cash for. There you go. Danielle is with us in Indianapolis.

Hi, Danielle. How are you? Hi, Mr. Ramsey and Mr. Hogan. How are you guys? Great. How can we help? Good. So my fiance and I have been listening to your show for a month or two now,

and we'd like your advice on a student loan repayment decision. So we're getting married this May after I graduate from college. Congratulations. And I'll be graduating debt-free. Way to go. So I'll be graduating debt-free. I've already paid off around $8,000 in federal student loans from fellowship funds that I've been awarded during the past two years, and my fiance will graduate college later in December of this year and has around $9,000

of federal unsubsidized student loan debt and about $10,000 of private debt owed to his parents. I would like to pay off his federal student loan debt now so that it wouldn't accrue any more interest before he graduates and to just get it off of our shoulders as we prepare for marriage. But he wants to wait until after he graduates in December to pay the loan. So what do you guys think that we should do? Danielle, Dave is twitching over here. I felt that I've been around him for 15 years. I love that you have been intentional and that you're going to graduate debt-free. This is just impressive. Did you pay for it

or did your parents pay for it? I paid for it. I've received a fellowship for the second of $5,000 for the past two years, so that has helped me to pay for it. Well, I'm proud of you. And I would say this, and Dave's going to dive all over this. Love that you've joined

and you're listening to this. Love that you guys at a young age are talking about this. But Dave's going to dive all over this. Love that you've joined and you're listening to this. Love that you guys at a young age are talking about this. But I'm going to tell you something. First and foremost, I wouldn't be doing anything for his debt until you guys are actually married. Until he says, I do, and you do, and we do, then you can start to have a plan together. But prior to that, you need to stay focused on what it is you're doing. He needs to come up with a plan to try to attack that before you get married. Yeah, after marriage,

we can do a lot of stuff. Okay, so, I mean, say that we wait until we get married in May. Yeah, well, you do that either way. But you said in May, then do you pay it off or do you wait until December? It doesn't matter. If you've got the money, that's fine after marriage to knock it out.

The primary concern I've got is that he finishes with no additional debt. It would be a shame to pay it off and then not have the cash for him to finish that last semester in the fall. Yep. So if you've got that set up and you guys want to go ahead and start attacking it, there's not a wrong answer. Both of these are smart choices. It's A, smart, or B, smart. But all of it comes after May. This is the Dave Ramsey Personality is my co-host today.

Open phones at 888-825-5225. If there's one thing we learned from last year about investing, you cannot invest alone. You absolutely need someone in your life who knows the market better than you and helps you make smart decisions, teaches you as you're responding to all this crazy out there. Listen, I love DIY. Do it it yourself but i don't pull my own teeth i don't even work on my own cars anymore do it yourself investors do the same thing you pull your own teeth you'll make a mistake uh you lack the experience to make good investing decisions you invest in the wrong things you get caught up in trends you read some stupid article on the internet and there is a lot of stupid articles on the Internet. You make rookie mistakes.

And then a year like 2020 comes along, and all your mistakes are revealed. As Warren Buffett says, you can tell it was skinny dipping when the tide goes out. You see the mistakes. It's a bad idea. It is. And so, trust me, you don't need all of this.

Last year, let last year stay in the past. Say never again let your retirement be at the mercy of a dumpster fire. Text the word invest. Get with one of our SmartVestor pros. Text invest to 33789. Text invest to-789. Paul is with us in Grand Rapids, Michigan. Hey, Paul, welcome to the Dave Ramsey Show.

Hi, Dave and Chris. First, I'd like to say I really enjoyed your live presentation last night. Oh, thank you. And I want to give you a little background about myself. I'm an everyday millionaire. My wife and I, I i should say way to go we uh just kind of live a conservative life we don't want the best we're content with what we have we drive two small cars when we could afford a big suv we're just we're just content people

so we've been able to save and invest. Good. And my question is, right now I retired a year ago, and I've got money in traditional IRAs and in the Roth IRAs to the tune of about $500,000 for each one. Now I know the RMD is coming up when I'm 71. Right now I'm 65. But it makes sense to convert the traditional to some Roth or just stay with what I have. Well, obviously, as you convert it, do you have extra cash to convert it and pay the taxes with? Yeah, I probably have $400,000 on top of what I have here.

Okay. And just miscellaneous cash. Obviously, if you roll $500,000 into a Roth, it all becomes taxable. And so you're going to create taxes of, what, $100, $150, something like that out of that. And if you want to do that, and then that does away with your RMD issue, because my guess is part of what's bothering you is you don't need any of this money. You want to let it roll. Well, basically, I'm hoping to pass it on to my children,

and it might be less messy to do that if it's in the raw. Agreed. Agreed. It just hurts to think about the taxes on that. Yeah. The math will work out this way. You will recoup at about the 10-year mark. And so if you're not that 500 that's in the traditional if we say all right today we roll it

10 years from today you'll be glad you did prior to that uh you won't be you would have been rather you'd have been better off to have left it in there and pay the taxes on the growth the continued growth and pay taxes on whatever you have to draw down on rm as you pull it out. And so that, you know, if you guys are in good health, I'm probably rolling it. Because basically that extra tax money you pay has the same exact effect mathematically as having invested that. If you don't reduce the 500 by the tax and you allow the whole 500 to stay in the Roth, it has the same effect of putting another 150 into a Roth or whatever your tax bill is. Have you calculated the tax bill? Well, not really, but I think we're probably in the 20%, 25% range.

Okay. So then 100, then, is what we're talking about. And, you know, what could happen is it might cause bracket creep if you do it all in one year. You may want to straddle a calendar year. You may want to do some this year, some in 22 to get with your tax guy and tax person and run some calculations on when you move it. But overall, if you guys are healthy, I'm moving it. Yeah. No, that's good.

And Paul, I'm going to tell you this. I love the fact that you have this legacy mindset and you want to pass some on to your kids, but I want you and your wife to enjoy it. Like, I want you guys to go do some stuff, take some trips, get you an RV, right? You know, I mean, I want you to start to live and enjoy this because you all have been very intentional. You've worked very hard to reach everyday millionaire status. Congratulations.

Your hard work and diligence and consistency paid off. Yeah. Well done. Very, very well done. It sounds like with the house, depending on what the house is, it's probably a $2 million net worth. Oh, easy. Yeah. So well done.

That's pretty incredible. And, you know, it's not your nature to be frivolous with money that's not what chris is suggesting uh but you did work you know you did live like no one else so now you should live and give like no one else and the gift portion is part of your legacy that you're planning with the kids and all of that but i don't want you to uh you know eat stale tuna fish and day old bread so the kids get $4 more. Yeah, no. To me, I think that's ridiculous.

So it's important. But yeah, definitely talk to a tax professional. And Dave, the thought of being able to straddle it over the year and spread it out, that's very wise, as well as your investment professional so you can know exactly where you are, the timing, and what to do. And also, real quick, as we talk so much about SmartVestor Pros, you all, I really and truly want you to make sure you get connected with one today if you're not. In these times, with all the stuff that's going on, it is imperative that you have someone

that you can reach out to to just have a conversation about their thoughts on what's going on or what could happen. You don't have to speculate. You don't have to listen to the talking heads on TV news. You can talk to a pro. And I really want you to know they're not going to judge you. They're there to help you. So definitely reach out.

Go to DaveRamsey.com. Get connected to a smart investor pro. There you go. Open phones at 888-825-5225. Abigail is with us in Austin, Texas. Hey, Abigail. How are you? Hi, Dave. I'm great. Thank is with us in Austin, Texas. Hey, Abigail. How are you? Hi, Dave.

I'm great. Thank you for taking my call. Sure. What's up? So I own three rental properties, and one of them I own with my ex-husband. I own 75%. He owns 25%. Joyful.

And, well, he and I, we actually get along very well. He's a realtor. I'm a realtor. We see eye to eye. So there's no disharmony around the management of the property. So the deal is this, because I'm interested to know what you would do in this situation. Given that interest rates are so low, I inquired with my mortgage banker about refinancing. So right now, it's at four and a half percent. And she told me we could get down to 2.625%. But at that time,

my ex-husband said, you know, do you want to buy me out? Because he's like, I don't want to refinance and expend the loan, whatever. So she did let me know that we could roll it all in together. The problem is that, uh, so the houses, the value is somewhere around 400 to 425. And so my share would be around a hundred. And when I just run the numbers, um, it looks like I would negative cashflow by a couple thousand dollars per year if I took on that additional debt load. And so, you know, I just wanted to get your opinion about what you would do in the circumstance. My ex-husband is fine to continue as is, you know, not refinancing.

So what is the current mortgage is 200? The balance, you mean? Your current balance today is what? 120. 120, okay. All right. All right, I'm coming up on the clock. Hang on.

We'll come back from this break. We'll talk this through with you. This is the Dave Ramsey Personalities, my co-host today. We're talking with Abigail in Austin, Texas. All right, Abigail, let me go back and make sure I got my numbers right because my head's spinning a little bit here. You got a rental property you own with your ex. It's worth $400.

You owe $120. You own 75%. He owns 25%. You're talking about refin from uh an interest rate in the high fours to an interest rate down in the twos which makes a lot of sense he doesn't want to do that but in it while it all came up he said hey just buy me out is that what you told me that's all that's exactly correct and you told me that if you were to refinance and buy him out, that you would be negative cash flowing per year. Okay.

Well, that's where I got lost because, let's see here, you've got a $280,000 equity, but you should not be buying him out on the $280,000. You should buy him out based on $ uh based on 400 minus about 40 for expenses and so you've got about a 240 000 equity does that sound about right um uh i got lost there okay okay if you're buying a partner out on a piece of real estate you don't do it at retail you do it at what it would be net in a sale. And so if you sell a $400,000 piece of property, you guys are a real estate agency. You might not have the commissions, but the commissions you would have made,

if you paid out a commission and you had other miscellaneous expenses and you negotiated a little bit, the $400,000 would be discounted by about 10%, at least. You might net 90% of the gross amount, right? Okay. And so that would be $40,000 off, and you've got a $280,000 equity, so there's a $240,000 equity. So his portion is only worth about $60,000. Okay.

See how I did? I mean, that's fair. That's not ripping him off that's not ripping you off nobody's getting a deal here but uh you know i have the same thing set up in my estate plan if i've because i've got a bunch of real estate if one of the kids wants to buy out one of the other kids on a piece of property so they don't have to own it together uh they do it at an 80 percent ratio hmm because because it's not fair to do it at full appraisal it's not that that's craziness because that's not the way they because i can't get that they can't get full appraisal net net net so anyway 60 and 120 is only 180 of a mortgage on 400, I do not understand why that property is not cash flowing.

Okay. Well, in that scenario, I mean, that changes things. I was thinking that I would be adding $100,000 to the balance. Well, there's no way it's $100,000. This is $280,000 at the most. So you're saying this is because it's the equity versus the balance. In other words, he doesn't get full value because he doesn't get full value. It is the equity. Because the only thing, if you guys sell it, you get 75% of the equity.

He gets 25% of the equity after expenses. Agreed? Right. Yep. And so his 25% is only worth 25% of the equity after expenses. That's what his position's worth. Your position's worth 75% of that. If you were in a court, for instance, and this was a negative breakup,

that's how the judge would make you calculate it it because that's the proper way of doing it. Because if you guys put it on the market and sell it, that's what you're going to net. He's going to net about $60,000. Right. Okay. And so, anyway, at $120,000 mortgage today plus $60,000 or plus even $80,000, which is which is too much that's only $200,000 mortgage on a $400,000 property that should cash flow okay um I don't know unless this property is is the rental market in this particular neighborhood sucking no no no no no I mean

I'm getting right now I mean it definitely cash flows right now, I mean, it definitely cash flows. Right now I'm getting, it's actually two houses on one lot and combined at $2,450 total rent. That's not much on the $400,000 value. Well, actually, you're correct, but we've had very long-term tenants. To the point that you're discounted your your rental by uh i mean that thing ought to be making one percent a month anyway you ought to be making four grand on that well actually no we then maybe you need to sell this property you may need to sell this property because your cash on cash return or your internal rate of return on this after you're doing noi and everything as deeply as you've got

this thing discounted this is not a good property i wouldn't i wouldn't hold that yeah and abigail i'm gonna tell you pure not even based on numbers based on life based on on simplifying your life and putting you in the driver's seat is i'm not gonna own a property with an x i'm not and so you know i'm gonna either buy out as dave was talking about, or I'm going to sell this thing. Just real simple. There's no reason for you to have to continue to go around and around. And I know things are going well right now. But you and I both know it's just going to take a hiccup.

It's just going to take something for old stuff to come back. Clean your life out. Get this thing. Get it gone. And then you can go buy a home the right way well there's like three or four different things going on here there's that and that's a reason to get rid of it uh we've got to get the calculation if you're going to do the buyout down to what it should be and not overpay for the buyout and so at least a 10 discount on

your gross reducing your your equity by 40 grand and then the third problem is discovered late in the phone call and that is is that you guys are not making very good money on this property if you have four hundred thousand dollars invested in a piece of property you need to be grossing thirty five hundred to four thousand dollars a month on that uh in most markets and austin texas is not a bad market and so you ought to be making somewhere in that uh approaching one percent a month on it in top line in order to have justified tying up that much money into something so the and i i listen i got a lot of property if i have a long-term renter i don't always get full market but i'm not running at 60 percent of market ever well i think the

thing she was trying to wrap her head around is, Dave, you just gave her a PhD in real estate, and she's a realtor. And me too, just looking at this and talking about how to discount it before you sell it. And so, you know, that's not something everybody knows, being aware of, because you're right, you are going to have fees, you are going to have expenses, so you can't just do a straight 25% or whatever it is in someone else's position no i mean that would be the deal of the year for him it would be a great deal all right zach is with us zach's in kalamazoo hi zach how are you i'm great hi dave

and chris uh thank you for taking my call uh so my wife and i are big fans we had a great date night with reset last night so thank you for that thank you so you. So I'll get right to it. So I have three kids and need help figuring out how to allocate money into ESAs for each of them based on age and that. So my kids are six, and then I have two twins at the age of two, and then I have one more on the way in March. Yay! Thank you. Well, you know, what I would do is just sit down with your Smart Investor Pro with a financial calculator, and you can decide. You're talking about how much money to put in based on their age, right?

Yeah, because we've got next to nothing started for anybody. And so we've got the six-year-old, and obviously he's closest. And so we're wondering, like, do we throw a little more in his bucket? Yes, you would. You would, and that's fair. That's not unfair. Equal is not fair. Fair is not equal. So what is correct is to sit down.

I mean, the technical way to do it, and I'm enough of a nerd, I would actually do this. I mean, I would just sit down and say, all right, we're looking at X for college, and let's just make up a number. I want $100,000 in this account. It's probably not enough, okay? But I want $100,000 in each of their accounts. What have I got to put in for a six-year-old to do that? What have I got to put in for a four-year-old to do that? And what have I got to put in for a zero to do that, a zero old?

Because you can't start that account until they're born and you get a social security number anyway but you could sit down and calculate that and you know if you wanted to like say per month and then that and then if it comes out and the total of those numbers is more than you're ready to do on your baby step five it still gives you a ratio if If the six-year-olds double the zero, double the new baby, then whatever you put in for the new baby, double it for the six-year-old. Right. Or whatever you put in for the six-year-old, take half of that and put it in for the baby. So you'll get a ratio of, even if you don't fully fund today, which is fine to not today.

You got young enough, you'll catch up later. You know, if you, if I just want you on Baby Step 5 and start doing something. Yes. And that's going to put, give you peace of mind and clarity for the future. Amen and amen. Good job, Zach. Well done, sir. Congratulations.

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