The Ramsey Show - App - Should I Cash Out My Bitcoin To Pay Off Debt? (Hour 1)

Episode Date: March 30, 2021

Debt, Investing, Retirement, Savings, Home Buying Sign Up for a FREE trial of Ramsey+ TODAY: https://bit.ly/31ricKt  Tools to get you started:  Debt Calculator: https://bit.ly/2QIoSPV Insura...nce Coverage Checkup: https://bit.ly/2BrqEuo Complete Guide to Budgeting: https://bit.ly/2QEyonc Check out more Ramsey Network podcasts: https://bit.ly/2JgzaQR

Transcript
Discussion (0)
Starting point is 00:00:00 Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studios, it's the Ramsey Show, where dad is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. Anthony O'Neill, Ramsey personality, number one best-selling author, is my co-host today as we answer your questions about your life and your money. Phone number is 888-825-5225. That's 888-825-5225. Sherry's going to start off this hour in Boston.
Starting point is 00:00:58 Hi, Sherry. Welcome to The Ramsey Show. Good afternoon. Thank you for taking my call. Sure. What's up? I'm a retired teacher. My husband will be retiring in four years. He's a teacher also. We owe $45,000 on our house, which would be paid off by the time he retires. My question is, next June, we'll just owe $30,000 on the mortgage. Should I take $30,000 from my IRA
Starting point is 00:01:27 and pay the taxes on that and then use the $30,000 to pay the balance of the house and then use the payments that we would have had from the mortgage to put into my Roth IRA? What is your household income? With my pension of $59,000, my husband makes $83,000, so we have $147,000. Wow. Okay, good. And how much is in your IRA?
Starting point is 00:01:59 My IRA has $107,000. Why, with that huge income, can you not just pay off the house out of your budget this year? We are cash-flowing our daughter's college with Anthony's help. She got many scholarships and has some, but she is just a freshman in that, and we are paying off cash-flowing that. How much is that? That's a big amount, $33,000 a year that we're cash flowing. But you said you make $140,000, right?
Starting point is 00:02:32 Right. Yes. Do you have any other debt, Sherry? No, we do not. Good for you. Well, you're doing great. If it were me, I would not use the IRA to do this. I would use some of your fabulous income.
Starting point is 00:02:47 You're cash flowing $33,000, but you've still got income room. Maybe we don't do it in one year. Maybe we do it in two years. But let's pay $20,000 a year for two years and be debt-free. That's what I would do. Yeah. Yeah. I agree with him and Sherry as well.
Starting point is 00:03:00 I would take that up to $22,500 just to be right on the math at $45,000. But, yeah, I would take that up to 22,500 just to be right on the math at $45,000. But, yeah, I would not touch my IRA. I would save that for retirement and just get aggressive with it. I'd rather you be aggressive over the next two years so you can enjoy the rest of it than to be comfortable the next five to six years. That's just in my opinion. Yeah, that's a good move. Good move. All right.
Starting point is 00:03:21 Nathan is with us. Nathan is, well, I pushed the wrong button. Nathan is in Grand Rapids. Hi, Nathan. How are you? Great, Dave. Hi, Anthony. Thank you guys for taking my call. Sure. I'm a 22-year-old master student, and I currently have about $30,000 in student loans from my undergraduate degree. Okay, your phone, what your phone came out. You have how much in student loan debt? About $30,000 in student loans from my undergraduate degree. Okay, your phone, what your phone came out. You have how much in student loan debt?
Starting point is 00:03:49 About $30,000. $30,000, all right. Yes. I was very fortunate that I received a trust fund from my grandparents when I was in high school that I'll soon be able to access. At the time, it was worth about $33,000, and it has since grown to about $58,000. My question is whether I should use the money in that trust fund to immediately pay off all of my student loan debt, or if I should work and pay that student loan debt out of future wages
Starting point is 00:04:25 and then have that trust fund continue to accumulate and use that as a down payment on a house. When do you graduate? Hopefully as long as things go well this coming spring, so spring of 2022. How are you paying for the following this coming year? So I received a graduate assistantship, which covers all of the funds for all the costs for college. And then I get a small stipend as well. So I don't have to pay for my my graduate degree. And what are you living on?
Starting point is 00:05:00 I'm living mostly on that graduate stipend, which is about $12,000 a year right now. And then I have a couple of side gigs as well. Okay. So you're not going into further debt? Correct. That's good. Okay. I'd pay off student loan debt today then.
Starting point is 00:05:17 Absolutely. Now, do you have any other debt though, Nathan? Any credit cards? No, it's just from student loans. Okay, so no credit cards, no car notes? No. Absolutely. I'll go ahead and cut that check today.
Starting point is 00:05:31 Yeah, I'll just be debt-free. And then that still leaves you with $20-something thousand laying around in that trust fund that you can use to start your life with after graduation. Yeah. You use some of that for your emergency fund and maybe some of what's left over above that for your down payment on your first house. Absolutely. But no rush on the house. You're doing great.
Starting point is 00:05:51 Now, Dave, let me ask you a question. I'm pretty sure America is thinking, well, why not, Dave, let the other $20,000 sit in the trust and let it grow? It could from now until graduation. But at that point, I would move it to an emergency fund and to a down payment fund. Yes, sir. And so it's invested is what amounts to you can leave it there yeah but i'd pay off student loan today absolutely out of it and be just be clear and and make sure then that you have a plan for no additional debt yes and it sounds like you got a plan for that sounds like you got a you know we
Starting point is 00:06:20 questioned you through that we walked through it so it sounds like you've got a way to pull that off and just make sure you stick to that plan. Yeah. Whatever it takes. And America, the reason why Dave asks, hey, how are you going to get through the rest? Because then we would have said, hey, take that money and cash flow the rest of your college experience. Yes. Then when you graduate, take the rest of it to pay off your student loans and then go into Baby Steps 3 and 3B. Because goal number one is no more debt.
Starting point is 00:06:48 Yes. There's no sense in with the left hand paying off debt and with the right hand going back in it. Right. You're just dog chasing its tail at that point. You're not making any progress. Yeah. So it's exactly right. Yeah.
Starting point is 00:07:00 That's the plan. And Anthony, he's done a really, really smart thing there. He's become an employee. Yes. In a sense of the plan. And Anthony, he he's done a really, really smart thing there. He's become an employee. Yes. In a sense of the of the school. And that sets him up to be a doing graduate work for free, for free. And when you look at it, I mean, I talk about this in my book, Dave, is figure out how can you work for the school to get a paycheck or to get your tuition reduced or free you know and sometimes some schools Dave now are doing we'll give you a small paycheck like you said twelve thousand dollars a year and your tuition for free that's a great program to go into but here's the thing Dave people are not stepping back and doing their research to see what's out there and by the way all the jobs at colleges that are universities that you can do
Starting point is 00:07:46 that would allow you to go there debt-free uh because you're an employee don't have to be glamorous right you can be the janitor yes sir yes you can be the janitor and for four years absolutely and go to school for free and sweep floors or bus tables or whatever yeah i mean you can be the the you can be the guy working out there driving the lawn tractor, right? Doesn't matter. With a weed eater. I don't care what you're doing. And so it doesn't have to be like you have some kind of white-collar high-tech job or something at the university.
Starting point is 00:08:20 I just want you to be on their payroll so you get the employee benefit of free tuition. That's it. Doesn't have to look good. That's part of the debt-free degree plan. Yeah. My philosophy is it doesn't have to look good to be good. Ooh. This is The Ramsey Show. Your number one wealth building tool is your income.
Starting point is 00:08:58 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. Anthony O'Neill Ramsey personality is my co-host today. I'm Dave Ramsey. This is The Ramsey Show. We're glad you're with us. The phone number is 888-825-5225.
Starting point is 00:09:51 David is with us. David is in Dallas. How are you, David? Good. How are y'all doing today? Better than I deserve. What's up? Yeah, quick question. My wife and I have been debt free except for our house for the last few months. We have our savings plan saved up. We've gotten back into retirement savings and started saving for our kids' college.
Starting point is 00:10:15 We have three kids. Our oldest is 14. And we didn't have much saved for really anything until the last few months where we started really focusing on college. So should we continue to do that and hold off paying the house or paying extra on the mortgage while we try to catch up college-wise, or should we still do four, five, and six at the same time? You can do them at the same time, but you're probably going to have to focus on college out of that in order to make it, because you're getting a late start. You've just got a few years, and you're going to have to be real heavy on baby step five and real light on baby step six
Starting point is 00:10:49 or you can do nothing on baby step six until you get through the college thing that's okay right yeah what are you thinking for college are we looking at in-state yeah definitely um so yeah your phone your phone's cutting out. We're having trouble hearing you. Try again. Oh, I'm sorry. Can you hear me now? Yes.
Starting point is 00:11:11 Okay. Yes, definitely thinking in-state. We're in Texas with lots of options. But, yeah, I kept going back and forth on whether doing a little bit on six or just focusing entirely on five. And with your advice, I'm thinking it's probably best to just focus on five for you know the next few years at least yeah i think you get the college thing behind you because it's right at your doorstep yeah yeah otherwise you're going to end up you're going
Starting point is 00:11:34 to end up with a mortgage and still be trying to cash flow some college yeah yeah you got four years what's your household income real quick david uh my wife and I combined are about $165,000. Yeah, that's good. Because the average in-state school in Texas is going to be right around $10,000 to $11,000. So I think over the next four years, just really buckle down. Get about $40,000 in there. You should be straight for in-state school. Yeah, and start training the kids that that's their option.
Starting point is 00:12:00 Yes. Because you're not going to send them to a $60,000 a year school. Absolutely. You're not going to have the ability to. And so let me send you a copy of Anthony's book, Debt-Free Degree. Yeah. You can thumb through that, and it also kind of gives you a good conversational jumping-off point with the kiddos. Absolutely.
Starting point is 00:12:18 Go, guys, this is what we're doing. This is our plan. You're going to be working while you're in school, so you pay for part of it. You're going to be working right now to make sure your grades are stellar and you get trained up for your ACT tests so you can get the points there and qualify for more scholarships. You're going to do your part. And part of your part is go ahead and just set your expectations. You're going inside the state of Texas. Yes.
Starting point is 00:12:40 You know what, Dave? One of my friends told me something when you just said set their expectations. Unhappiness comes from expectations not met. So if you start setting the kids expectations at this level, you're going to end state. They're going secret to happiness. This is my golf game right here. I'm happy just because I don't expect much, right? That's true, man. You know, I had to deep dive into that. I was like, that's pretty good. I like that. I was like, okay.
Starting point is 00:13:15 All right. I love it. Ray is with us. Ray is in Louisville, Kentucky. Hi, Ray. How are you? Hello, Dave. It's a real pleasure to speak to you.
Starting point is 00:13:24 You too. How can we help? Well, in late 2019, my income roughly tripled. A good problem to have. And in 2020, I got real aggressive with paying off debt. I was able to clear off a motorcycle debt, all credit cards, and the last two items are now a house and a car. But one of the things I also did over 2020 is I bought Bitcoin,
Starting point is 00:13:47 and it's ballooned into this huge account now worth roughly $100,000. So one of the things I want to do with it is obviously pay off the car, but it's not quite enough to pay off the house. So I guess my question is, do I wait with this volatile asset, or do I sell it all and move it into something more traditional? Because over the course of 2020, I actually did the figures and it's earned me 649 percent. And the expectations are that it could go even higher. Now, it's a volatile asset. It swings now every day. You know, it was worth the swings now are more than it was worth a year ago.
Starting point is 00:14:30 So I guess I'm just kind of nervous about keeping this large amount of cash in this volatile asset, but still having to worry about a house that I'd like to pay off in the meantime. Yeah, you got Vegas problems, man. I mean, you walked up to the slot machine, put a quarter in, and it dumped a bunch of quarters out, and now you have this temptation to think that's a plan. And thus is the problem with anything that is an extremely volatile asset, to use your phrase,
Starting point is 00:15:09 and also unpredictable, which is the volatility. So you're asking me what I would do? I would cash it all out tomorrow. I wouldn't have been in it in the first place, though. Well, I'm single. I felt like I could afford to take the risk. I had a snowball plan for all the other items. And the next two, you know, the next two items are online. Well, that's what the guy told me when he was playing the roulette wheel, too.
Starting point is 00:15:30 Yeah. So, I mean, you know, I can afford to lose the money, and I call this entertainment. And he lost, you know, I stood there and watched him lose $10,000 at the blackjack table. So, you know, you can do whatever you want to do but you're asking me what i would do uh i wouldn't have been in the first place and i wouldn't stay in it and i would cash it out tomorrow and i would put the money on some common sense things yes instead of playing instead you know you're sitting here explaining to me all the problems with the investment yeah and you know you already know what you need to do
Starting point is 00:16:06 yeah you just want somebody else to say it out loud and he's trying to justify it with his age like i'm young i have time to lose money i don't care man i'm young i do not have time to lose money lose money does that mean i can get over my stupid later right you know i'm in debt i have a car that i probably well i want to say that you probably can afford the car, but you couldn't afford the car because you finance it. But anyways, what I'm saying now is I agree with Dave. Be young, be wise, cash it out, pay off the car, and take your fabulous income and use that to build wealth with.
Starting point is 00:16:41 That is a much more proven strategy to build wealth than playing volatile assets. Yeah. You know, buying gold or buying commodities or buying Bitcoin or buying currencies. I mean, there's a lot of volatile. You can do options. I mean, you can be playing, you know, you can be selling short on the market. You can be day trading. There's all kinds of things you can do.
Starting point is 00:17:02 Right. And occasionally make money at it and most of the time end up losing it all. Right. And Bitcoin is in that category. I mean, it's a high risk play. And I don't know if the numbers have changed, Dave, but isn't it right around nearly 80% of people lose money?
Starting point is 00:17:17 On day trading. On day trading. Yeah. Bitcoin, but, you know, Bitcoin's had a fabulous run in the last year, but that doesn't mean it's an investment you need to do right i mean gold had a fabulous run for for a while there but that means investment you need to do right uh these commodity plays or in currency plays are just dangerous yeah and so you do what you want to right but i i have zero money invested in that type of thing i work too hard for it and i really don't have any desire to lose it um the government takes enough of it without me losing it and then you know that that it's up
Starting point is 00:17:49 but again you you know you you're looking at the rate of return and you're measuring that against your risk and you're going to make that call yeah uh and but you ask us what we would do and that's what you'll get here is we're an expert on our opinion here at ramsey solutions we want to transform so many lives that disruption spreads like wildfire across our country imagine a world where it's weird to have a student loan where people pay cash for their cars where the credit card has become the cigarette of the financial world imagine getting a job you love because you've been listening to Ken Coleman.
Starting point is 00:18:28 Imagine being part of an organization that causes that level of disruption with the work you do every day. At Ramsey Solutions, that's why we have a thousand people at our company working together to create digital products. If you want to join us on that crusade, we're on the hunt for software engineers, Ruby on Rails, Java, C Sharp, front-end technologies, We'll be right back. jobs by texting WORKTHATMATTERS to 33789. WORKTHATMATTERS to 33789. in the lobby of ramsey solutions on the debt-free stage, Eric and Alicia are with us.
Starting point is 00:19:48 Welcome, guys. How are you? We're awesome, Dave. We're blessed. Good to have you. Where do you guys live? Ocala, Florida. Oh, cool.
Starting point is 00:19:55 And welcome to Nashville. How much debt have you paid off? About $379,000. Ho, ho! How long did this take? Just over eight years. Wow, very good. And your range of income during that time?
Starting point is 00:20:06 We started at only $36,000. We ended up around $150,000, some of that range. Wow, what do you all do for a living? Well, right now I'm in real estate, and Alicia is a work-at-home mom. Very cool, very cool. So I'm guessing with that amount of money, that linked the time you paid off your house. We have a paid-for house, Dave. I am looking at where, people!
Starting point is 00:20:24 That's right, that's right. I am looking at where people. That's right. That's right. I love it. Well done. What's this house worth? About $300,000. Very cool. Very cool.
Starting point is 00:20:33 You have a paid for house. Yes. Absolutely. You have a paid for house. Yes. That's so cool, y'all. It is. That is so cool.
Starting point is 00:20:39 Well, tell us the story. What happened? I love your t-shirts, by the way. Thank you. The turtle always wins. The turtle always wins. And the shell. He's got a paid for house. Oh oh a paid for shell all right i got it i get it now all right very neat so um when 2012 we had a financial crisis and uh i was a teacher at the time and
Starting point is 00:20:59 you know we had a low income and i always had had the conviction that Alicia would work from home and have our kids at home. And Alicia had a miscarriage twice, so we had all the expenses of a baby twice with no baby. And so we had medical bills piling up. We had credit card debt. We had car debt. We had a mortgage, just everything you can think of. And I was actually taking a class from a coworker, and she kept saying, Dave Ramsey this and Dave Ramsey that. I think, who the heck is this Dave Ramsey guy?
Starting point is 00:21:29 And what's his problem? And so I went up to her. I said, is there a book I need to get or something? She said, you've got to get the Total Money Makeover. So I drove straight to the Christian bookstore. I bought the Total Money Makeover, and it was like somebody throwing me a life preserver while I was drowning. Wow. It was life-changing for sure. Absolutely. And then Alicia read it. Yeah. over and it was like somebody throwing me a life preserver while i was drowning wow it was it was uh
Starting point is 00:21:45 life-changing wow sure absolutely and then alicia read it yeah so i'm i'm not i'll be honest i'll give me a novel you know i'll read that yeah then i and i said i looked at your book and i'll be honest i was like i'm not sure if i want to read this so i i but i i started and and i loved it you know i loved and i tell every person person that because we give these books out like candy to whoever we can. Thank you. And so whenever I tell people, you know, they look at the cover and they're like, oh, you know, I'm not really want to read this kind of book. But what got me are the testimonies. I love just seeing that was my favorite part.
Starting point is 00:22:17 Just seeing the testimonies of the people that were there. and that's why today is such a big day for us and exciting because I was waiting for this day when I can be a part of those testimonies and be on the other side and say, we're here, we did it, and you can do it too. Wow. You often ask who your biggest cheerleaders are, and Alicia says all the time, you guys were. We didn't have a lot of people.
Starting point is 00:22:39 You know that dog look, you know, that dog look that you talk about? The confused German shepherd? Yeah. We get that look a lot, you know, because we're battling up against the culture. And it's no small thing. But you guys have been such an encouragement to us. The podcast, the books, the YouTube show.
Starting point is 00:22:55 And there's actually a picture in the pictures that we sent because we flipped houses in this journey. And every time we'd flip a house, it helped us move forward. And one of those, we were on on the third house we're packing boxes and i'm like we're doing this again oh no and so i was like um i needed some kind of encouragement because i was tired so on the tv we put on um the youtube show and that that's the picture right there and look what it says up there it says uh being debt free is worth the sacrifice and that was a moment i mean i was packing wow that that podcast that just having you on got me through that time wow because i was like we can do this and it's going to be worth it now if you live like no one else later you can live and give like no one else yes god's been
Starting point is 00:23:43 so faithful house and everything yes and the other thing that was really encouraging was way this is back at podcast we learned we listened way um a while ago as you talked about you sat down with a millionaire and you asked him for a book and reference and he said you gave him the tortoise and the hare he gave you the tortoise and the hare book and um and that has really been our mantra and just kind of what's got us through. Because it is gazelle intensity. And when you think gazelle, you think fast, right? But it's not always fast.
Starting point is 00:24:13 Sometimes you've got to just, you know, the turtle. And you're still going. We're still going to do this. And not give up. Because you see all these other people and all, you know, everything going on around you. And people want you to spend. And people want you to, you you to live like everyone else. But it was just the turtle.
Starting point is 00:24:29 We always kept that. The turtle always wins. We're going to get there. And God was faithful. And he brings those, what do you say, those movable sidewalks underneath you. Yeah, it's like that focus intensity, that gazelle intensity that you talk about so much.
Starting point is 00:24:43 It's like, I love that analogy. If you start moving in the right direction, it's like God puts that moving sidewalk under you, and somehow you get there faster. And there's power in those principles. I mean, do not be weary in doing good, because in due time you will reap a harvest if you don't give up. And so that's kind of our mantra. It's a marathon and not a sprint. That's why we made the shirts, because you've got to got to have that big why and you got to have big goals. And, you know, you just got to keep focused and have that intensity along the way.
Starting point is 00:25:12 So I'm curious, though, over eight years to the people listening right now, they're like, yo, that's a long time. And they sound like it was so easy. But I know that it wasn't. I'm curious for the people listening, what was the hardest thing that you all had to endure and how did you all get through that season? I think a lot of it, we had an income problem. You know, you often talk about, you know, we had a spending problem, but we also had an income problem.
Starting point is 00:25:40 And I think that was just all the hard work, all the hustle. I mean, we sold cars for a while. We sold dog treats. I got licensed to sell life insurance. We gave music lessons, you know. And I finally settled on real estate. And now Alicia's running a cleaning business, a new construction cleaning business. But it was just all that hard work, hustle.
Starting point is 00:25:59 You know, we work day and night. And you can't keep that up forever. You know, at some point, like you guys talk about, you got to let off the gas a little bit, you know, but if you've, if you've got a big enough why and you've got those goals ahead of you, you can force yourself to do quite a bit. And, uh, and we just hustled. And that was probably the hardest part is, is just the sacrifices that you make along the way, you know,
Starting point is 00:26:21 not just not eating out and those kinds of things, but just your time, just working all the time. And I would have to say that that's probably it. But we had a lot of encouragement. I mean, even my son, he started a business along the way. He was six years old and he was inspired by all the hustling we were doing that he wanted to start a business. So, you know, at six years old, he's starting this little business. And I remember at one point he had only $20 that he had, he brought it to us.
Starting point is 00:26:48 He said, Daddy, I want to give this to you as part of the Get Out of Debt Fund. Let's get them in the shot for the debt-free stream. What are their names and ages? Noah, and he's 11, almost going to turn 12. All right. He wants everyone to know that. Very cool. Mercy is seven.
Starting point is 00:27:04 We are proud of you guys. Congratulations. How's it feel now that you're there? Yeah. How do you feel? It's nice being out of debt and not having another bill every month. I think he's going to make it.
Starting point is 00:27:21 I love it. That's so cool. Well done. All right, it's Eric and Ashley. Happens all the time. I'm sorry. No worries. I can't get it out. Alicia, Noah, and Mercy from Ocala, Florida.
Starting point is 00:27:35 They paid off their house and everything. $379,000 in eight years, making $36,000 to $150,000. Count it down. Let's hear a debt-free scream three two one this is how it's done wow Wow. Woo-hoo-hoo! That's right. Eight years. Yes. But they don't owe anything. Nothing.
Starting point is 00:28:09 Nothing. I mean, no mortgage. Those kids' lives are changed. Their grandkids' lives are changed. Absolutely. Their grandkids' grandkids' lives are changed. Absolutely. And when they got done screaming, I watched Noah turn around and hug his father. Like, that just means his life and the little one has changed.
Starting point is 00:28:24 Yeah. That's exactly how it works. Well done, you guys. Well done. We're so proud of you. Wow. Excellent, excellent stuff. Wow.
Starting point is 00:28:33 This is The Ramsey Show. Thank you. Anthony O'Neill Ramsey personality is my co-host today. This is the Ramsey Show. Thank you for joining us. Open phones at 888-825-5225. Rachel is with us in Anchorage, Alaska. Hi, Rachel. Welcome to the Ramsey Show. How can we help? Thanks for taking my call. Sure. My husband and I, we worked through the baby steps. We're on baby step seven. We paid off our house. We have a
Starting point is 00:30:03 self-employed aircraft maintenance business and our current agreement with the building owner is to rent it for one more year and then purchase it a year from now um for 250 000 um so we've been stockpiling cash for that so we have about 200 000 saved great to buy the building great so in the meantime i've been watching and i found a residential property that i've been watching for a number of years is for sale i don't want to buy it to live in so to buy a house on to build a house on so i'm trying to figure out the best value of our money, and can we do both? Well, you can do whatever you want to do, I guess. But should you do both?
Starting point is 00:30:54 I don't borrow money, you know that. And I certainly got to Baby Step 7, and I'm finally debt-free. I'm not going back in debt. There's nothing I want that bad. There's a lot of things I would like to acquire as an investment or to grow or to do things with this business, but if I don't have the money, I can't do them because I don't borrow money. Right.
Starting point is 00:31:11 Yeah, yeah. But I guess what I'm wondering is are buying the building for the business, is that considered a personal investment property? Yeah, I mean, you'd be paying. You would say to pay cash for a personal investment because you would say to pay cash for personal investment property, so... I say to pay cash for everything. Yeah. Yeah.
Starting point is 00:31:32 Yeah, so, you know, whatever I'm going to do in this scenario, I'm going to pay cash for. And if my cash is limited, which is always the case, right? We always have a limited amount of cash. Then my choices are limited to that cash so let me ask you this what's the other piece of property is a piece of raw ground correct how much is it 230 230 what's your household income what are you making a year taxable income um i don't our adjusted is about 80 okay so you're going to do one of these and you're not going to do the other uh anytime soon anyway um what i was thinking of is plopping down
Starting point is 00:32:17 a little bit on the on that land as an option for a year and try to scratch the money together but you can't do it in a year no and i don't know how long an option they would consider on that piece of land but you you've got an option on the building that's going to expire we know what that is well purchasing this building for your business will it help you expand as far as in bringing more revenue um we've got to hire more employees and we're not sure we're ready for that oh but you're buying it you're already in the building using it correct yeah so really what it saves you is what you're paying the landlord and rent you become your own landlord right correct yep yeah yeah that's a interesting one yeah i'm i'm buying the building if it's me okay because um i know what i've got there and uh you can buy either one
Starting point is 00:33:07 because but the land when you buy it is going to it's not going to create any cash change in your life there's no return on investment other than you're going to build on it someday and enjoy it but there's not a mathematical transaction where you're going to get money as a result of buying this land you are going to get money as a result of buying this land. You are going to get money as a result of buying this building, and that's the savings on what would have been rent, right? Correct. Yeah, so that's how I'm making that decision, but it's up to you. I mean, how much is the rent on the building?
Starting point is 00:33:41 $4,500. Yeah, $30,000 a year. See, that's 35% of your household income. I'm right there, Dave. I'm right there with you. I'm buying the building, Rachel. Yeah. Because it's $30,000 a year. Yeah. Right. Swing on this. Now, I would talk to that landowner, and I would consider renting that land with an option to purchase it for five years or something like that to try to get it tied up and meantime start piling up cash and then pay cash for that land right right but i mean if you could if you
Starting point is 00:34:17 could give them uh 10 15 20 000 bucks or something, and so much a year for renting the thing or something like that, for the option to buy it, and that option money applies to the purchase price, and say, I want a five-year option to buy, and I'll give you $30,000 for that or $20,000 for that, and tie it up and just see if they'll do it. I mean, they may let you do that. Then you get to park that, and then it's like a layaway plan for land, right? Right, yes. If we have the money sooner, shall we purchase the building sooner,
Starting point is 00:34:55 or shall we wait until our agreement of a year from now? Oh, I'd buy it as soon as possible because it does away with the $30,000 a year expense. Heck, I mean, he may not accept it, but I'll offer him $200,000 cash right now. May or may not accept it, but it doesn't hurt to try and see. Cash due. So, you know, we can do the $250,000, but it's going to be a little while longer. If you want to close it right now, we'll do $200,000. Yeah.
Starting point is 00:35:18 Okay. Worst thing you do is say no. Right. Sometimes people need cash. And you don't know it. and it's just a powerful thing you know it's a powerful purchasing thing yeah yeah so wow good stuff way go you're doing so good rachel baby steps this is these are great problems to have really is i have no debt at all. Land or a building. And I have $200,000 saved. Yeah.
Starting point is 00:35:49 This is horrible. I don't know how she's getting through. I do. It's great. Way to go, girl. I'm just so proud of you. I'm devastated. This is amazing. Absolutely amazing.
Starting point is 00:35:57 Syed is with us in Kansas City. Hey, Syed, how are you? Hi, Syed. I'm doing good. Good. I have almost $2.5 to to 4 million in stocks right now. And my question was, as for debt, I am not debt-free. I'm still paying for my mortgage, but other than that, everything like my cars,
Starting point is 00:36:19 I don't have any loan in cars and in career. So I don't have any debt other than the house um so i did really good in stocks and my question will be because i don't see a big increase in in in stocks what i have you know made profit in 2020 especially during this pandemic in 2019. So my question will be, how can I divide my investment into properties and stocks in different portfolio and also in businesses? This is what I'm struggling for right now. Yeah. Where'd you get this money?
Starting point is 00:36:57 Well done. So from stocks, I work in a video conferencing tool company. I'm an electrical engineer by profession. So I got stocks and in this pandemic, you know, the stocks really zoomed. So I sold a few, invested in a few other stocks and those are
Starting point is 00:37:15 also doubled or tripled. Well, good for you. I'm proud for you. Good stuff. Well, you know, Syed, of course, you can do whatever you want to do as always. I mean, you've done extremely well. Congratulations. I do not play single stocks. It's too much risk for me.
Starting point is 00:37:33 I've been broke, and I don't want to be there again. And so I buy very conservative investments and make conservative returns on them, and I'm happy with that. So I personally only do two things with money. I buy real estate that I pay cash for, and I buy mutual funds. And, you know, it's worked out for me. I've got several hundred million dollars in real estate, and I've got quite a bit invested in mutual funds as well. And so, you know, I very seldom go backward.
Starting point is 00:38:08 It almost always goes forward. And when you hardly ever go backward, you don't have to go forward as much. So that's my plan. So if I woke up in your shoes, I would say I've had a good run, and I'm going to use some of this money to buy some real estate that I pay cash for that's income producing. And if you want to get into that world, you've got some money to do it for sure. I'm going to pay cash for the real estate, no debt, pay off your house, and I'm going
Starting point is 00:38:36 to start investing in mutual funds. What are you thinking? I'm right there with you, Dave. Mutual funds and real estate. I love real estate. Can't wait to get into it myself. You've had a pretty good year on some real estate. I have, yes, sir.
Starting point is 00:38:47 Well done. That's right. That puts this hour of The Ramsey advice in their life? Let them know about the Ramsey Call of the Day podcast. It's a quick hit of advice about life and money in under 10 minutes. Check out the Ramsey Call of the Day podcast wherever you listen to podcasts.

There aren't comments yet for this episode. Click on any sentence in the transcript to leave a comment.