The Ramsey Show - App - Should I Cash Out My Investments To Pay Off the House? (Hour 3)

Episode Date: July 11, 2022

Dave Ramsey & Ken Coleman discuss: Cashing out investments to pay off your house, Mandatory pension contributions, and why pensions are going away, Pay off debt now or save up and pay later?   Want a plan for your money? Find out where to start: https://bit.ly/3nInETX Listen to all The Ramsey Network podcasts: https://bit.ly/3GxiXm6

Live from the headquarters of Ramsey Solutions, it's the 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. This is the Ramsey Show. We help people build wealth, do work that they really love, and create actual amazing relationships. Ken Coleman, Ramsey Personality, number one best-selling author, is my co-host today. Open phones at 888-825-5225. Ken is the host of the Ken Coleman Show, heard on 75 radio stations, multiple millions on podcasts, and has done two best-selling books so far, all in the area of career, helping you find the job, the career that you love.

888-825-5225. Thomas is with us. Thomas is in Boston, Mass. What's up, Thomas? Hi. Thank you so much for taking my call. Well, I'm glad that you're doing better than you deserve. I love that phrase.

I'm 59 years old, and about a year ago, my father passed away, and we sold his house, and I received a portion of the funds, along with my brothers, about $175,000. About five years ago, I went through a divorce and I bought a small house that's appreciated in value of about $128,000. So my question is, and I have, let's see, I'll just kind of give you the lay of the land. I have about $100,000 in my IRA at my present job, $53,000 in a rollover from a previous job, a small pension that will also come from my present job if I stay there until I retire,

and $75,000 in cash in my bank account. That's the other chunk of money that came from the sale of the house. I gave an investment company about a hundred thousand dollars to invest. And, and then lately I've been thinking, you know, I've been listening to your show for a couple of months now. And the thing that really struck me lately is just, even though I'm older and I never made a ton of money in my lifetime, I've always been a working artist and the company I work for presently, I'm a, I'm a video 3d artist. I do a lot of animations and prototypical videos for, um, uh, engineers, um, scientific videos. Anyway, um, at Anyway, at this time, I thought to myself, you know, I bought this house, but gee, maybe I could pull the money back out of the investment company

that I put the money into. I know the market is not doing that great, but I've also heard you say that if um you know you pull money out you lose it's like jumping off the roller coaster so you lose even though the market's gone down in value a little bit how much is your mortgage so my mortgage is um 13 13 40 a month no, no, no. What's the balance? Oh, the balance? $200,000 left. The house I bought for $278,000 at the time. Okay. So if you used your cash and your $100,000 investment, you wouldn't have enough to pay it off?

No, but I gave them or close to it and the 75 that's in the bank I'd probably be 40,000 35 maybe 40,000 out from paying it off. And what do you make? In the next year or two. I make about 80,000 per year. Okay and when did you put the 100,000 into investments? I started it in January. Yeah, so you got $80,000 now. Yeah, it's gone down a bit. And that's what I was wondering, whether to just leave it in there and let it come back and find some other way and just start doubling up like crazy or whatever and paying the house off myself. So what I would do is take the $75,000 cash and throw it at the house and then I would start throwing money out of your income at the house as fast so what i would do is take the 75 cash and throw it at the house and then i would start throwing money out of your income at the house as fast as you can like you were saying

put another 40 on there and by then maybe the market will have come back up a little yeah and you know if it got back up to 100 that'd be the time you were within striking range but there's it um because you're going to lock in a 20 loss right now uh you bought high and sell low i wouldn't lock it in because it doesn't get you out of debt if it paid off everything i'd be tempted but you still got the house payment yeah and so what i would do is just wait so i'd throw 75 at it today and i'd throw everything else i could get my hands on at it until and then over the next months, six months or something, watch this stock market recover

and if it gets back up in that 100 range and it gets within where that 100 will pay off your house because you paid it down far enough, then when it'll pay off the house, that's when I'll pull it out. Okay. When it can pay it off. Yeah, because you've paid the house down

to where this account is at $100,000 or so, and it's going to back up to $100,000. You see what I'm saying? I'm sorry. Okay, so $175,000 does not pay off your house. You owe how much? No, I owe $200,000 left. Okay, so you need to pay $25,000 down on this house out of your income

before you cash out this investment. Okay. And then if the investment has gotten big enough by that time that it will pay off the house 100%, that's when I would pay it off. Okay. And throw $75,000 at the house today. That's the mix of the thing. So, yeah, we don't time the market can we're not trying to

jump in or jump out of the market on the um uh based on what's going on uh and so if if this would pay off his house 100 i'd probably do it even with the market down but it doesn't he still got the cash flow drained he still got the 1300 bucks a month going with his mortgage and all we did was just lose 20 lost 20 000 bucks meantime we could let that roller coaster ride on through the ride and see how it does a little bit while we're doing this and that's why i'm trying to figure that out for the for the new listener the new viewer uh let's say that the market does recover which we believe it will obviously it gets it back up right yeah why pay off the house versus just continue to invest that a hundred thousand why would you recommend that well

several reasons one is that all of our study of millionaires and all of our anecdotal interaction with them for 30 years indicates that one of the key things that causes your net worth to get a million to 10 million your first 10 million10 million is a paid-off house, number one. There's a whole lot of data that indicates that that's a big part of people getting to a high level of net worth, which helps you have stability. The second reason you have a paid-off house, you're 59 years old. By the time we finish this routine, he's going to be in his 60s somewhere. Okay? Now, you do not want to enter your golden years with a mortgage. Having a paid-for home gets rid of the largest line item in your budget.

The biggest, the most expensive thing in the household budget is typically a mortgage. And if you don't have those expensive things in your budget, it requires a lot less to live. You've got a lot higher quality of life. You can do a lot of other things that you wanted to do in your golden years but couldn't do because you were strapped to a stinking house. I mean, you don't be 82 years old paying a mortgage. People do. They get stuck in that.

But that's not a target. That's not a desired future. So, good question. Open phones here on The Ramsey Show. We're glad you're with us. The phone number is 888-825-5225. Hey guys, George Camel here, and I'm so excited to tell you about the newest product from Ramsey. It's called Gazelle and it's a digital banking experience that will help you spend and save the Ramsey way with banking services provided by Pathword NA. You'll get a single spending account with no monthly fees and it's FDIC insured through Pathword NA. We're offering early access to our beta customers so you can help us make it the best experience it can be. Just go to ramseysolutions.com slash gazelle to sign up for the us, America.

This Thursday, we're going to be hosting a free live stream event called the Real Estate Reality Check. There's rumors of the market crashing, rumors of it going up, rumors and rumors and rumors, and everybody's got an opinion and everybody's got a feeling, and feelings and opinions won't get you there, and girls so what you need are facts and then you can decide for yourself i've predicted a whole lot of things correctly and i predicted a few things incorrectly i said very resolutely in 2008 we were not going into a recession. And I was so wrong. It was unbelievable. We obviously went into one. And, you know, this time last year, I told you there was going to be a bunch of inflation. I was right.

I picked that one. Okay. The real estate thing, I generally know because I grew up in that business and I've got a degree in that, which involves economics and other stuff. And so I feel really really good about analyzing the data there but i'll put the data out there for you i'm going to show you the charts and graphs and rachel cruz and george camel and i are going to discuss it um and uh rachel will be there she everybody likes rachel so that should be the nice part of the night her and george

yeah and um then i'll just be you know uh the other guy. And so, anyway, spoiler alert, the real estate market's not going to crash. But we're going to show you exactly why we think that. And then you can decide. You decide what you want to do. You know, some of you have already made up your mind. But you made up your mind based on fear and having a discussion, smoking pot with your brother-in-law. And, you know, you didn't have any facts that you were dealing with. you were just you know you're just high and had an opinion you know and that there's a whole lot of people run around and then they go buy a house the next week or don't buy a house

the next week because of this and that's just dumber than a rock man so i don't mind if you disagree with me but at least be intelligent while you're doing it okay at least have to have it based on facts not on feelings and and bogus you know red herrings while you're doing it. Okay? At least have it based on facts, not on feelings. And bogus, you know, red herrings that you're chasing on some conspiracy theory don't cut it. So here we go. We're going to talk you through every bit of it, and then you can agree or disagree. If you've got someone that's kind of scared but they need some hope, we're going to show them why there is real reason to have hope, not just because we're Pollyanna, but because there's actual facts and data that there's reason to have hope um not just because we're pollyanna but because there's actual

facts and data that there's reason to have hope and so we're going to show you what's going on yeah there's some crap going on out there man i mean it's a mess we're probably going into a recession not officially yet we've definitely got inflation that we've not seen in decades right now is that going to stick around we've got higher interest rates i say high they're not higher they're higher they're not high it's still six percent is not exactly high you're talking to a guy that's listening to guys sold real estate when rates were 18 and 15 in the early 80s and people were buying houses and it's credit card interest rates on houses and so you know it's you know six percent is not high but it is higher than three

yeah and so it's enough reason to be bothered about it so that's the kind of stuff we're going to be covering it's this thursday july the 14th at 7 p.m tell your friends it's free uh just go and register to watch it uh we'll be broadcasting it from our website at ramsey solutions.com slash reality check to get signed up we'll send you the link and voila you'll be broadcasting it from our website at ramseysolutions.com slash reality check to get signed up. We'll send you the link and voila, you'll be able to do it and make things happen there. Good stuff. All right, Melissa's with us in Mesa, Arizona. Hi, Melissa, how are you? Dave, I'm better than I deserve. How are you? Just the same. What's up? All right, so I'm on Baby Step 3B, but my question is about Baby Step 4.

I'm a part of Arizona's retirement pension, which is a required 12%. And so I've already been contributing anyway through my Baby Steps 1, 2, and 3. You had to. But what I'm wondering is if I should start my Baby Step 4 by investing the difference in the market right now because it's down, and how much should I be doing to get to my 15%? Okay. Well, here, you know, you have to do the 12%. As you said, it's mandatory.

It's not an option. So we recommend, as you know, in Baby Step 4, putting 15% of your income. So you're certainly going to put in at least 3%, right? Okay. 12 plus 3 to get you to 15 right okay now i discount the pension somewhat for two reasons one is you have absolutely no control over what it's invested in they decide now i'm not i'm not predicting that the arizona pension is weak and is going is weak and is going to go belly up and you're going to lose your money. I don't think that's going to happen. Okay?

But you don't have any choices here. And when you don't have choices, you don't have control of your destiny. So I can't mathematically treat that the same as when you put money in your 401K and you have the choice. Follow me? Yeah. The second thing is that pensions are more highly regulated because so many of them did go broke back in the day that the federal regulations on pensions require them to invest so much more conservatively than you would or I would

that the rate of return on the pension sucks. And so most pensions – Yeah, I think you said about seven. Yeah, about seven is where they're going to sit. They're going to invest just aggressively enough to get up to that, and after that they've met their guidelines and they don't want to take any chances and they don't want anybody leaning in on them from the government rigs, looking over their shoulder or something like that.

So you can depend on seven where, you know, in my mutual funds, I've been investing for 30 years. I've averaged about 12. Okay? Right. So that's a big difference. If you got 11 maybe, it'd still be a big difference, right, if you average what the S&P 500 has.

So because it's not going to perform as well and I don't have control over it, I don't want to count it at a full 12%. So I'd put in at least 5% more in addition to this. And if you want to get it. Yeah, yeah. And so you'd be at 17 effectively instead of 15. But we're kind of discounting that 12 a little because you don't have control of it and because it's got a poor rate of return that's how i view it now you can

do whatever you want to do but that's just that's my analysis of it and what i would do if i woke up in your shoes that that kind of a thing and ken we're seeing in the job market the pensions are just about gone yeah and and here's the deal do we trust state governments to really make the best financial decisions it depends what state you live in you know but there are some where it's highly questionable and so yeah you make a very good point no illinois yeah you know jeez yeah you can mess up christmas up there people i've never seen anything like it um so but um this really hedging protection is what the advice you're giving there. It's like, hey.

But some states, I mean, like Tennessee, we have a constitutional mandate for the budget to be balanced. That's right. And so Tennessee, by governance, by the documents in place, has run better than some of these areas. So that pension is going to be a lot more safe in that state than it is in Illinois. That's right. Than some of these areas. So that pension is going to be a lot more safe in that state than it is in Illinois. That's right. And so, but that's the, and I have no idea what Arizona's doing. I have a respect for the state of Arizona, so I suspect it's probably pretty good. Much more. But I don't have anything to base that on other than a feeling.

I haven't looked at it. That's right. And to your point, though, even private sector, the pension is really a thing of the past. So having a real solid strategy that we teach here, we were meeting recently going over the numbers long term. The advice you just gave, I mean, double check him on this, folks. He's right. If you just look at that investment strategy that we teach at Ramsey Solutions, it's going

to pay off long term. And so don't rely on just the pension. I think that's incredible advice. That's extra. Not a whole lot extra, but it's a little bit of gravy. And as you get your house paid off and you're in Baby Step 7, you know, you're going to max out everything. Everything. And you're going to have really sweet stuff aside from the pension.

And then, as you said, at that point, the pension really becomes gravy. Yeah. But, you know, when I started 30 years ago, like 70% of the company still had pensions. Oh, yeah. Now it's probably 10%. What is the reason for that? It wasn't economically smart for the companies, I'm guessing? Well, the 401k came in like a rage.

Yeah, certainly a better option. And guess what? You don't have to put any money in if you're the company on the 401k. Nowadays, about 80% of the people, 85% of the companies match something on the 401k, but it still costs the company nowhere near as much as funding a pension as a benefit. Wow. And so the cost goes way down for the employer, and the result is actually better for the team member. It's correct.

You know, and when it's all said and done. Now, the difference with a pension is, you know, in her case, she's mandatory as to put it in. Yep, that's correct. But in a lot of cases, the employer is completely furnishing, inishing in the old days the pension but those days are pretty much gone so the bad news is it's up to you the great news is it's up to yes this is the ramsey show Thank you. Ken Coleman Ramsey personality is my co-host today. We love doing debt-free screams. We extra love doing debt-free screams in the lobby of Ramsey Solutions. And we extra, extra love doing debt-free screams in the lobby of Ramsey Solutions

when it's one of our own team members. And that's true today. Dylan Foley is with us and his wife, Kate. They are part of our team, part of our family here at Ramsey, have been for just a little while, but have gotten to be debt-free. Congratulations, guys. Thank you. So proud of y'all.

Very cool. All right. Tell people how much debt you paid off. We paid off $120,000. Very cool. And how long did this take much debt you paid off. We paid off $120,000. Very cool. And how long did this take? Took three years. Good for you.

And I won't ask your income because half your team is standing around. That would be completely tacky and unfair. It's probably tacky and unfair that I do it to other people, but I'm not going to do it to you. So, way to go, guys. Now, tell us your story. You started here how long ago? I started in September, Dave. Okay.

Just the other day, it feels like. Coming up on your first year, though. Coming up. And what here how long ago? I started in September, Dave. Okay, just the other day, it feels like. Coming up on your first year, though. Coming up. And what do you do here? Remind everybody. I work with Smart Dollar. I'm a relationship manager with Smart Dollar. Which means you?

I manage relationships, work with clients in the HR world with different companies all over the U.S. Yeah, where companies are wanting to put SmartDollar, which is our program in as an HR benefit to have their employees learn how to handle money. It's called SmartDollar and has the EveryDollar product tied with it and everything. And so everything from small businesses to huge companies like Costco have had all their employees go through it and pay for it as a benefit for their team, and you help people do that. Yes. Okay, I'm just making sure I get this right. Because I'm supposed to turn this into an ad for your boss, right?

Okay, so just making sure we get this dialed in. Way to go, man. So proud of y'all. Okay, $120,000 in debt was what kind of debt? So it was a little bit of credit card, a little bit of medical debt, and the big chunk of it was student loans. My student loan. Your student loan?

Yeah. Okay, so what do you do? I'm a nurse. Oh, very cool. Okay. So how much of the $120 was student loans? It was about $100. Okay.

Yeah. How long have you all been married? Three years. Okay. All right. And did you move here to take this job to Nashville? Yes. Yes, from the Bronx.

Oh, wow. Big culture change. Yeah. Small one. Small one. Yeah, from hot pretzels to grits. Nice. Well played, Dave.

I like that. Very well played. I like that. That's good. Way to go, guys. Yeah, so obviously it's working out for you. You stuck around. Yes.

So good. We're glad to have you. Good stuff. And you had to be well, you're well into this journey, almost two years into the journey when you come here. So tell us your story. How did you end up here and how does that weave into the whole story? Yeah, so Dave, I was a full-time musician for a little while back in my single days and And I was playing all over, and I was actually on a trip up to Buffalo with an accordion player. And he said, Dylan, you know, we got the seven-hour trip. Do you mind if I catch up on some talk radio?

I'm like, yeah, sure, sure. So he puts on The Ramsey Show, and we listened to that. We're big with accordion players. A wild, crazy group. The accordion people love us. Yeah, we got that group dialed in. What do you play? I play the fiddle.

Oh, yeah. That's perfect. Yeah, yeah. That's great. Good accompaniment. Okay, so cool. All right. And what made you decide to move to Nashville?

Oh, my gosh. Well, part of it was getting out of New york during the covid times oh yeah kate being a nurse and uh yeah you were stuck weren't you yeah i was in the middle of it up there you know we we started working the program in 2019 after we got married and then 2020 covid hit and it was just uh it was hard it was really hard you know uh kate had um two miscarriages and uh it was just uh it was a really hard time and we got covid and we got covid too yeah of course right and there's not and there's not a lot of fiddle and accordion work at that time either this is true this is true yeah yeah it

definitely dried up the music stuff wow so uh nashville's a whole complete culture change so are you refugees or is this now home? Oh, this is home. This is home. This is home 110%. Okay. Very, very cool. Not to mention, Dave, there's a fiddle every other house here in Tennessee.

Yeah, he has no trouble finding other fiddle players. Now, those accordion guys, they're a little more rare. We're not sure about that. All right. So he turns on talk radio and you come home and tell her we're going to try this. Well, yeah. Yeah. So this was before Kate.

I was on tour, and I started working the plan myself and managed to get out of debt at the time. And then we met, and then we got married, and then we started working the plan. So, yeah. Okay. All right. And so you knew what to do with that $100,000 in student loan when you met her. It was go time. Yes.

It was go time. Came on and didn't have to talk you into it, I guess. Not really. No. I was ready. All right. Very cool. All right.

Now that you've done it, what do you tell people? Because you get to tell people every day on your job. Yeah. You know, what's the key to getting out of debt? Yeah. Yeah. I would say communication, perseverance, sacrifice, and prayer. Ooh.

That's a good list. Dylan, write that down. That's your sales pitch. Right there. She just dialed it in for you. Yep. That's what you can. Next time you're talking to an HR manager, some company's deciding whether to have this.

This is what they do. Yes. Yeah, because this is the real world. That exactly works. Say it one more time. Communication, perseverance, sacrifice, and prayer. That's it. That's a formula for success right there.

In anything, but certainly in getting out of debt. So, Dylan, what do you say? Well, definitely the prayer, hope and don't worry. That's what I was... That was a big mantra during all of this, was pray, hope, and don't worry. That was a big mantra during all of this. Pray, hope, and don't worry. Be anxious for nothing. I love that. Let's stay there. When you say don't worry, what were you guys fighting worry against? What were you worried about? It was just a constant push of can we do this?

It was 120,000 000 it felt like a bear remember in the and then in the middle of a bear attack you get like two miscarriages lose your jobs covid and a government that's gone crazy exactly but this is hard time to have a bear attack yeah yeah man wow wow that is perseverance right there. It really is. You know, it's interesting. You know, the smart dollar is an incredible benefit for people, and the data shows that when people are debt-free and don't have money worries, they're able to come to work and actually focus on the task at hand and to excel. Both of you on the other side of this, what is it like for you now to be a nurse,

to do what you do without the stress of debt. What's it like? Oh, so much freedom. There's so much freedom in it. It's so refreshing, you know, to not have that worry. And you don't have to stay in a toxic environment. You've got choices. Yes.

And, you know, they start going cray-cray, you know. It wouldn't happen here, but it could happen at the other place. You can just go, see ya! Yeah. Oh, man. It's really true, though. When you're not worried about debt, you go, I can get a paycheck somewhere else. I'm not going to stay in a place that doesn't value me.

Yeah. It changes your career choices. Man, I'm so proud of y'all. Thank you. You're amazing. You got the whole team down here to cheer you on. Yes. Life is good.

Very, very cool. Very, very well done. Well, we've got copies of all the books and stuff for you on. Life is good. Very, very cool. Very, very well done. Well, we've got copies of all the books and stuff for you. You know that drill. Baby Steps Millionaires and Total Money Makeover, all to help you. And you've already been through Financial Peace, but we'll give you another one. You can give that to somebody as a free giveaway, one of your buddies or something. And so we're so glad you're here on the team. You're obviously a sharp young couple. Honored to have you. Great. Thank you great thank you so much very very very well done all right dylan and kate from nashville oh wait wait a minute there's is is uh no you're kate i'm sorry dylan and kate i got it backwards okay i'm losing my mind i thought there

was a kid i'm looking at the parentheses wrong i'm sorry on my notes oh my bad all right dylan and kate part of the ramsey team. Goodness gracious, Dave. $120,000 paid off in three years. We're not going to tell their income. Count it down. Let's hear a debt-free scream. Three, two, one. We're debt-free!

Yeah! Whoop, whoop, whoop, whoop, whoop, whoop, whoop, whoop. Yeah! That's how it's done. You know, that is a real-life example of the migration that has occurred in our country. Yeah. To where she can now be a nurse, and he can work, and he's in a town where there's lots of musicians. Yeah. nurse and he can work and he's in a town where there's lots of musicians and uh they wouldn't

have been here if it hadn't been for you know several of those things that ganged up on them but they said hey we got to go do something different and look at them starting a new life good stuff good stuff this is the ramsey show We'll see you next time. Our scripture of the day, Psalms 149.4 For the Lord takes delight in his people. He crowns the humble with victory. Eleanor Roosevelt said, We do not have to become heroes overnight, just a step at a time, meeting each thing that comes up,

seeing it not as dreadful as it appears, discovering we have the strength to stare it down. You know, it's funny. I think Eleanor Roosevelt probably had better quotes than her husband. as dreadful as it appears, discovering we have the strength to stare it down. Yeah. You know, it's funny. I think Eleanor Roosevelt probably had better quotes than her husband. Oh, without a question, she gets more print after her life in presidency, his presidency. And see, there's a good Democrat. See, we're good to Democrats sometimes.

So, got to have some fun with this. But, no, my favorite quote of hers and i don't know if i can get it exactly right is the um great minds uh or small minds talk about people uh mediocre minds talk about events and great minds talk about ideas yeah or something about like that that's very close to it um yeah this you know talking about people you know that's always the smallest mind in the room yeah and the big mind the the noble mind will be talking about ideas you know discussing ideas arguing ideas and uh instead of just name calling and flame throwing yeah chris is with us chris is in hville, Tennessee. Hi, Chris. How are you?

I'm good, Dave. How about yourself? Better than I deserve. What's up? Well, I call you with, I feel like it's a good problem to have. Me and my wife, we've been married three months now or so. We have a two-year-old daughter. I opened a business going on about one calendar year ago. I mean, i'm making

more money than i would ever thought possible good for you my question for you is i have you know i've only got really three debts i have a car 65 000 in a car for her i have a vehicle myself 33 000 when i own it and we have a house, $405,000 on the house. The only catch on the house is being self-employed. The house is a 5-1 arm mortgage at current rate is 4.25%. We bought it about actually right when we got married. We got married and moved into our house. So we're three months into the house.

My question is... What do you make? My wife makes about $55,000. I make about $410,000 now. Why do you still have car debt? Well, so here's my thing. The first year that I was in business, you know, I bought equipment.

I bought things to help my business, paid for it cash. And the rest of it, I was just redneck rich. We went out to fancy dinners. We went everywhere. We bought everything. $400,000 worth? Yeah. Well, not, I mean, I have about $60,000 in savings.

You're saying $400,000 was your profit on the business last year that you paid taxes on? No, well, yes. $400,000 was your profit on the business last year that you paid taxes on? No, well, yes. $400,000 was my income. All I have overhead now is fuel, and that's taxes. I'm a single employee. I don't have any employees or anything. Okay. So how much money?

Do you have any money? Yeah, I've got about $60,000, give or take, in the bank sitting there. Yeah, pay off her car today. Okay. And then go pay off the $33,000 car today and then go pay hers off next month. Okay. My question essentially was, being self-employed, I make very good money now, I feel. Do I throw everything that I have at the mortgage, being a 5-1, or do I kind of pay it normal or pay it a little hard and put money in the bank

and then towards the end of the 5-1 pay it off real hard? And that way, if there is any sort of a recession, not huge. How projectable stable do you think this income stream is? If I make $400,000 now and we get a recession, I think I may be able to – it may drop down to $220,000-ish, you know, about half. But, I mean, that's still great money, I feel. But I'm in the concrete business. So, I mean, as long as there's still some sort of construction,

we still are going to be doing work. Okay. Wow. And you're, again, I'm going to verify it because I want to make sure I've got your business acumen straight. You're saying this $400 is taxable income that you paid taxes on? Yeah, I make about $1,800 a day. It's not your gross.

It's not your gross. $1,800 a day is your gross revenue. Yeah, gross. You have business expenses out your gross. It's not your gross. $1,800 a day is your gross revenue. Yeah, gross. You have business expenses out of that. What is your net profit? I literally only pay fuel. Fuel and taxes is what I pay per day. And then the rest is profit for me.

Okay. All right. Wow. That's wonderful. Okay. So because whatever the equipment is involved, you've already paid for it. So that's no longer. Yeah, I's wonderful. Okay, because whatever the equipment is involved, you've already paid for it, and so that's no longer on you. Yeah, I paid cash. You've got some repairs here or there or whatever on that, but nothing major.

Little stuff. Yeah, the first year was paying. The equipment's about $150,000. Okay, here's what I want you to do. You've explained this beautifully, and Ken, I think he's analyzed it well in that he feels like he just reached up and got the gold ring, you know what I mean? And it's almost surprising to you

that you're making this kind of money. I hear that in your voice. Oh, gosh, I'm shocked. Yeah, and you feel blessed, and that's a good position to be emotionally. emotionally now what i want that to lead you to do is instead of letting that lead you to be sloppy i want it i want you to feel the weight of the responsibility of that kind of money and which is kind of the opposite end of the spectrum of redneck rich okay yes sir and so that's going to involve like i'm

going to start treating this very very seriously like i'm a rich guy because you are okay and now i've got a now what is the smartest thing i can do so that when this story is over you have 20 million dollars and if you'll behave and and have a nice life i'm not talking about live in a cave and collect lint but i am talking about you know just behave and and be diligent and intentional with every one of these dollars you you easily could have 20 million dollars when this story is finished okay but you're you're going to have to just do, all I want you to do is just do everything on purpose instead of waking up with a financial hangover

when this is over. I totally understand. My question would have, you know. Yeah, and that means pay off these cars and just turn around and pay this house off. You make $400,000, act like you make $100,000, and let's clear a bunch of this debt, and you're sitting there with paid-for cars,

paid-for house. Now there's nothing left to do but incredible generosity enjoy life and invest for the future i like that and you can do all three beautifully and i'm talking like 36 months from now i mean that sounds great that that makes me smile thinking about that you know but that means you're not going to be living like you've been living for the past two years. Oh, well, honestly, I ran out of stuff to buy. I can tell. Then I called Dave. I listened to you on and off, especially before I had a business.

I made about $55,000 a year. My wife made about the same as what she made and i took a risk open my business and so we're talking about let's just use some round numbers just to wrap this up okay here's what i'm doing my head for you all right i'm hearing 450 and 400 on the house and 100 on cars did i cars. Did I hear that right? $450,000 income. That's it. Okay. And so if you lived on $100,000, that would be $350,000, not counting taxes. Yeah.

And that pays off $100,000 worth of cars really, really fast. You've got some money in the bank. We already paid off some today. And then it's going to pay off the rest. You know, you're not going to knock that house out. I'm telling you, 36 months is doable. Can see that i understand so my question was with with you know the recession with the i don't have any idea what that's going to do to your business that's why i was asking you about that if you think the recession is going to slow down so much you're not going to get the

concrete work and it's going to go down to 220 so what keep living on 100 and it slows down how fast you get the house paid off whoop-dee-doop-dee house is still going to be down to $220,000. So what? Keep living on $100,000 and it slows down how fast you get the house paid off. Whoop-de-doop-dee. House is still going to be paid for in under four years, and you're still young and you still have tremendous upside potential on this income. He's in a sweet spot. Yeah, he's going to crush it. But, you know, I'd get out of that.

I think the question is, does he want to get out of that arm quickly or just pay it off before the arm runs out? I just pay it off. Yeah, so there's your answer. You know, pay it off. If you're going to take 10 years to pay it off go get it refinanced but you're not you shouldn't if you do this irresponsible because you make so stinking much money clean it up man clean it up you'll be glad you did you'll be glad you leaned into this and made this a project treat it like you're managing a concrete project. Knock it out. Get her done.

Amen. Thanks for the call. That puts us out of the Ramsey Show and the books. We'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. Hey, folks, Ken Coleman here. Did you know The Ramsey Show is one of the most popular podcasts in the world? Get your daily dose of advice on life and money.

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