The Ramsey Show - App - Should I Cash Out My Life Insurance To Pay Off My Mortgage? (Hour 3)

Episode Date: February 9, 2021

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

🎵 Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studios, 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. Ken Coleman, Ramsey personality, best-selling author, and host of the Ken Coleman Show, is my co-host today. Open phones at 888-825-5225 as we talk about your life, your career, because Ken's here, and questions you've got about, you know, getting the right job in the right situation,

especially at the right time, which is known as now. Again, phone number 888-825-5225 preston's in sioux falls south dakota hi preston how are you hi dave hi cameron how are you guys doing today better than we deserve sir how can we help uh dave i'm trying to figure out if we have self-insured and if you don't mind i've got some numbers here do you do you have better picture of what i got going on self-insured through what life as far as life insurance goes okay i'm uh 52 my wife is 53 and we have a net worth of what i figured out about 1.3 million good for you. Well done. We have a 20-year term life insurance policy, one on each of us, that expires in six years. Currently, I'm thinking about, we're in the crossroads of updating that or letting it lapse. If I die today, I'm figuring that my wife would probably have that $1.4 million.

In addition to that, I have a pension with a survival survivor on it, which is about $38,000 she would receive until she would die. What does she need to live a year? That's my problem. Right now, to replace that salary on that pension.

No, you're going to get that. She's going to get the pension of $48,000, right? Yep, yep. Okay, so what does she need to live a year? She's got $48,000. How much does she need total? I would say $100,000 a year. Okay, so we need another $50,000.

You've got $1.4 million. What's the $1.4 million invested in? I've got $800,000 in investments. I've got about $200,000 in the home, and the rest is in the savings. Okay. So if the $800,000 produced 10%, that would be $80,000. Yes. If it produced 6%, that'd be $80,000. Yes. If it produced 6%, that'd be plenty. I mean, you'd still be there.

Okay. And so the other thing I was looking at in six years when the policy that we have expires, I'm going to assume that $800 should be about $1.6. Would you agree with that? Yeah. $800 in investments should be pretty close to doubling that time? Yep.

Okay. Assuming it's invested in good mutual funds and you're making a 10-plus percent rate of return, that would get you there. We've been following your plan for 25 years, and we're following the steps. We're debt-free. And that plan that you put on there, it works. And if anybody's questioning it, feel free to give me a call. It works.

Wow. It puts us on a different level. So you didn't inherit this money. This is all from the ground up. No, Dave, I didn't inherit it. I'm not one dime inside. When my parents died, I was fortunate enough to cover you to actually pay for food. We came from a different side of the truck, and if we can do it, anyone can do it.

Way to go. I'm very proud of you. Excellent job. That's very cool. I loved his laughter when you said, so you didn't inherit this from the ground up, and he just laughed a laugh of knowledge. That's absurd. That's absurd.

Yeah, of no. And he was reminiscing the journey while he chuckled. You've got to love that. Yeah. I mean, you really have to be out of touch with life and have your head stuck up some kind of twisted ideology to think that people build wealth by inheritance. Because it is such a small percentage of wealthy people that did not do it themselves.

I mean, of all the 10,000 millionaires we studied, we found well in excess of 90% inherited either nothing or not enough to have made the millionaires. They got $5,000 inheritance or something like that. It's about 93% of millionaires in America are millionaires because of their own saving. Yep. And like he said, you come from a neighborhood where you end up having to pay for your own mom and dad's funeral. And so, I mean, that's not exactly uh privileged no not in terms of a racial thing but in terms of a an economic thing yeah nothing handed to them they they earned it you know there was also a high percentage uh and i wish i knew it my brain's a little little slow on

it you may know it high percentage of those everyday millionaires also loved their work. 68%. 68%. Thank you. As opposed to 68% of the public hate their work. Yeah. That's exactly what it is. 80% internationally. Yeah.

And so what that says to me is that when you enjoy your work and you find meaning in it, you'll work a little harder because you enjoy it. You'll go a little harder to make more money. Not only harder, but you just tend to be better at it. Well, you do better. There's no question. Your performance is better. No question. little harder to make more money. Not only harder, but you just tend to be better at it. Well, you do better. There's no question. Your performance is better. No question. And so you make more money. Yeah, you get promoted, you make more money, you invest wisely,

and you're 52 years of age and he's self-insured. Yeah. Is what the answer is. He's a 52-year-old millionaire. 1.4 million. 52's young, Dave. Our average was 51. Wow. In the study. That's when they got there now he's he's been a millionaire a while he was a millionaire several years ago already because

he's at a million four right now yeah but um that's exactly what chris hogan found and and our team found when we did all the research and he published we published it in the book everyday millionaires and the white paper that you can even get at DaveRamsey.com if you want to read the whole thing. But and it's not sometimes I get accused of shaming people. It's not shaming people. It's quite the opposite. It's saying anyone can do it.

That's right. Anyone can do it. I'm so dumb. I did it twice. See, that gives you that authority, though. Hey, I've done it twice. I was a millionaire by the time i was 26 and i lost it all because i was stupid hey one of the most staggering uh pieces of data from

that study i remember when chris first shared it to me i about fell out of the chair but i was so excited to hear that i think the third largest group were teachers now i know for a fact that the median salary in the united states for teachers is 60 000 you soak on that for a minute for a minute, just in case you're going, well, this guy, who knows what he did. No, no, no, no, no, no, no. That's not what it's about. It's not about how much you make. It's about what you do with it.

That's it. Yeah. The average, I mean, teacher salary is the average salary in America. They're right at the- Is that right? Right, right there. $59,000. $69,000.

Okay, $59,000. Okay. Yeah, that's the average household income in America. And so- So that's doable. But here's what teachers do. Teachers believe in processes. Okay, 59. Okay. Yeah, that's the average household income in America. And so here's what teachers do. Teachers believe in processes. And they steadily invest and steadily invest. And if you put 15% of your income away and you make $50,000 a year, you'll have $5 million at retirement, not one. But you can't put 15% away because you're driving a car you can't afford.

You've got a boat in the backyard that costs you $500 a minute for the use that you actually get out of it, considering the insurance, the depreciation, and the payments you're paying on it. Talking to boat people in the middle of winter. Yeah, there you go. I was thinking about a boat. Now Dave just completely dashed that. No boat for me this year. It's true, though, but it's doable.

That's the point. It's doable. It's very doable. Very doable. This is The Ramsey Show. Over the years, I've heard countless horror stories from listeners about being harassed by debt collectors, receiving calls at work on their cell phones, and some even getting yelled at and threatened. That is not okay. There are laws against this, and there are people, attorneys, that can help make this stop if they are in fact breaking the law. Go to CollectionBully.com to learn more. Fill out a quick questionnaire that will identify if you are a victim of this type

of illegal harassment. That's CollectionBully.com. Ken Coleman, Ramsey personality, is my co-host today. Let's get real for a minute. Some of you are getting close to baby step four and you're freaking out because you know you need to save 15% of your income for retirement and you have no idea how to start investing. It's all brand new to you. It's okay.

A lot of people got questions. It's brand new. You got to have somebody to help you with it's all brand new to you. It's okay. A lot of people got questions. It's brand new. You got to have somebody to help you with it. You got to have somebody to walk with you. You need a pro like a SmartVestor pro. They can answer all the questions that you have in plain English. They do not sound like people in the industry. Sometimes sound like Charlie Brown's teacher.

Like, wah, wah, wah, wah, wah, wah, wah, wah. Y'all even know who Charlie Brown's teacher is? I do. Yeah. But, you know, when it comes to to investing you need to know what you are investing in you need to understand you need to sit down and work with a smart investor pro that has the heart of a teacher and they're going to teach you what's going on so never again do you need to sit around freaking out take your time learn learn learn learn, invest based on that. If you want to get ready, it's time to do it. Time to start investing.

Text the word INVEST to 33-789. Text INVEST to 33-789. Reagan is with us in Cleveland, I'm sorry, Cleveland, Ohio. Hi, Reagan. How are you? Hi, Dave. Hi, Ken. How are you guys?

Better than I deserve. What's up? I've got a question for you. I'm 24 right now, and I'm actually on my trial period of Ramsey Plus. I'm working on getting all my finances in order where they need to be. I'm on, I guess, baby step two. I'm finishing up grad school in May and I just accepted a job offer that starts on March 1st. My question is, I'm getting engaged

in about a week and a half. Congratulations. Thank you. And I'm curious who I should put as the beneficiary of a term life insurance policy. I'm about to take one out about after I get engaged. And I know you're a big proponent of keeping finances separate until marriage. I'm just wondering, should I put her as a beneficiary? I wouldn't. I mean, unless you have a child with her, do you? No, sir. No, sir. Okay. Then no. I mean, I would not put her... I would change it to her name as soon as you get home from the honeymoon or the week before marriage or whatever, something like that.

But I suspect you're going to be engaged a little while, and you're probably not going to get married two weeks later, right? Yes, sir. I think that we're shooting for something like January of 2022. Yeah. I would just put – I don't even know that you, yeah, you can go and get some term insurance if you want to, but, you know, and truthfully, changing the beneficiary on your term life insurance is not that big a deal. It's not that hard to do.

It's a one-page form. If you do it analog, if you do it digital, it's no big deal at all. But, yeah, I would not. I would name a, you know, like your parents or somebody like that as a beneficiary right now. And then after you're married, I would change it. You're right. I'm a big proponent of keeping it separate. And the opposite is true for those of you out there.

When you do get married, you do need to change it. Ken, we had a call. I think it was Hogan and me on the air a couple of weeks ago, that the couple had been married seven years and he died and he had never changed his beneficiaries. And his dad got all his 401K, got all his life insurance, and he had three kids. They've been married seven years and he'd never gone in and changed it. So me and Hogan had a bit of a rant there on get your dadgum stuff changed. It's the opposite end of the spectrum of this guy.

But, yeah, you know, you get married, you just need to sit down and go through the paperwork and be a grown-up and, you know, make sure your beneficiaries are all changed to your new spouse. I've got a question for you, and it's a true technical question. Maybe it's too small so help me um why wouldn't he the day before a couple days before the wedding go ahead and get it changed then yeah in case something that'd be fine awful which you don't want to think about okay i mean you know but i just didn't know if you were specific on that yeah you know week before week after but not not not no after, but not a year ahead. Because too many things happen, too many things can go on, and then, you know, it's, you know, I'm not even sure you need life insurance until you get married. That's true.

In this case. Yeah. So, I mean, if you were a single guy out there, that might be the answer. It might be that you wait. Yeah. I was wondering, what's the benefit? Now, if there's a benefit at his new job that's term life insurance and they're providing it, he just has to name a beneficiary, then that's a different thing.

Right. But I thought he said he was purchasing it. He did say that. And I was wondering, why would a single guy need to get term insurance? Doesn't. Doesn't. Okay. Yeah.

You don't. If you're single and you have a little bit of money in the bank to bury you if something happened to you, then I really. Yeah, outside of that, that's the only expense. You don't need a bunch of life insurance at that stage of the game. He's just a responsible young man. He's very excited. He just got his first job. Yes, he is.

Congratulations. Yeah. He's getting engaged. He just is trying to check boxes off. He's doing the right thing. He is. He's being smart about all that. So, good stuff.

Brad's with us in Wisconsin, Appleton to be precise. Hi, Brad. How are you? Good, Dave. Pleasure to talk to you. First time caller, long-time listener. Well, thank you. How can we help?

Well, quick question. I'm 53 years old. My wife is 51. We are everyday millionaires. Thanks to you and your guys and your program. Great. But I do have one small debt that looks like my

home mortgage. It's still $45,000. That's keeping me. I want that gone. We do have two each of a variable life insurance policy, which cash value is about $35,000 in there. Would you recommend taking that out and just throwing it at the mortgage and leaving me with $10,000

left to pay on it? Yeah. You don't with $10,000 left to pay on it? Yeah. Yeah. What's your – you don't have $10,000 laying around in an account somewhere? Well, yeah, I do. Yes. Okay. We could pay it all off.

Yeah. So let's just pay it off. I mean, I don't want to just, you know, come up short. But the answer is, yeah, I would pay off your mortgage, and, yes, I would cash out variable life insurance. Now, if you do need term life insurance, you would need to get that in place first. Now, you said you're everyday millionaires. Are you in a position that if something happened to you without any life insurance, that she would be okay?

Yes. She's a teacher. She makes about $60,000, and we have no other debt available. You know, we have no other debt. I make plenty to cover that person as well. And you have substantial investments, it sounds like. About $820,000, I believe, in investments, yes. Okay.

And cash right now. And so that money could be invested and create an income to replace your income if something happened to you. Yes. Okay. Then, you know, if you consider yourself self-insured, then you don't need, you know, and it sounds like you are. If the kids are grown and gone and the mortgage is paid off, I mean, you're in great shape. So, yeah, I'm cashing that puppy out.

It's a horrible place to have money, and the little tiny mortgage is a horrible thing, so let's just get rid of a bunch of horrible things. One conversation. And a celebration. You can tell it's really nagging at him. Touchdown. I don't know if he caught that. Go. Like, you can pay that off.

Today. Yeah, Dave said, you're free. Go. You probably got $45,000 in one of those other accounts. You can just write a check today and pay it off. That's for sure. Not in a retirement account. And then just replenish it with this.

Now, if you only have $45,000 cash to your name anywhere, then don't do that. But I suspect that, you know, I'm hearing lots of zeros in this discussion, so I think you're okay. Open phones at 888-825-5225. Aaron is with us in Louisville, Kentucky. Hi, Aaron. How are you? I'm doing great.

How about yourself? Better than we deserve. How can we help? So probably geared more towards Mr. Coleman. I am at currently the job I'm at isn't a bad job. I just don't really make a whole lot of money, but it is pretty secure. You know, when everything was shut down or whatever, I still had my job. And it was considered, quote, unquote, essential or whatever. Sure. But I have to really work a lot of hours to really make any halfway decent money.

And so I just don't want to do that forever. I'd like to start pursuing trying to find something better. But I'll just be honest. I'm fearful that, you know, as soon as I go out and get something, something crazy happens, they shut down again, and then I can't work whatever job that I'm getting. Let me set you free. I get that.

We'll come back to you after this break. We can get to that. We're going to come back to you after this break. I'm going to put you on hold and bring you back around, Aaron, because I want to give you a good, solid answer, and let Ken spend a minute with you right here. This is The Ramsey Show. Hey guys, Rachel Cruz here. Ever feel like you'll never save money

or pay off all your debt? We know 2020 didn't help, but it's a new year and you can hit reset with your money. It's time to focus and get debt out of your life so you can have more money to save and spend worry-free. We're here to help. Ramsey Plus is our step-by-step plan that gets you quick wins

so you can make faster progress on your debt. And that debt is gone for good. You get more money back in your pockets. The best part is you can try Ramsey Plus for free. And once you become a member, you'll get a free federal e-file with Ramsey Smart Tax and the audio book of my brand new bestseller, Know Yourself, Know Your Money. You'll have everything you need to finally get your money under control. To become a member of Ramsey Plus, go to DaveRamsey.com slash

Ramsey Plus. That's DaveRamsey.com slash Ramsey Plus. Or call our Ramsey concierge team at 888-22-PEACE. Welcome back to the Ramsey Show. Ken Coleman, Ramsey personality, is my co-host today. We're talking with Aaron in Louisville, Kentucky. And, Ken, I'll let you pick it up.

Yeah, so, Aaron, where we left off, where we went to the break, you're in a situation where you've got a good, stable job, but for you to make any decent money, you're having to work some crazy hours, and your concern is that if you go take something else and do something else, which is what I heard you say you want to do, you're worried that if things go bad, you're going to be stuck, and you will have left a stable job. So there's some fear there. Did I about capture that? The hand on the nail.

Okay, great. So let's just talk about what you want to go do. What is it that you want to go do? Describe that type of work. Well, I mean, if I could pick anything, I would try to grow my photography business. But as far as just to go enter another job, I mean... No, hold on, hold on. I love this.

Hold on. I love this. Let's talk about the plan to go do what you really want to do, which is photography. So is that... Tell me about that. Is that weddings, all types of family photography? What does that look like? I mean, currently that looks like anything that I can snap a photo of, honestly.

Right. I mean, weddings is... There is really good money in weddings. You do, you know, portraits well enough, you know, there's decent money there as well. So the only reason I ask that, is that the type of photography that you want to do? I don't really have anything specific that I want to do in that. I just want to take photos, I guess. Okay. All right.

So here's what I want to do. I like how broad. Okay. That's okay. So what I want you to do, I've got a quick homework assignment for you over the next couple days. I want you to begin to make a list of the type of photography that you most love to look at.

What moves you when you see photos? What kind of photos? Is it photos of cars, classic cars? Is it photos of sunsets? I don't care what it is, but I think you've got to get in tune with, this is the kind of photography that I get inspired by that I like to consume.

Make a list of people who are doing that, begin to look into that, and do some research into what that looks like, how you can get paid, what those rates look like. Just become a student of that future, because that's what you want to do. Now, let's move to a better day job.

What do you think, from a talent standpoint, that you could go do in your area, Louisville, Kentucky, and put yourself in a much better paid situation? What would you look at? Just another day job that's more stable. What are you thinking? Honestly, I don't know. What I was thinking about was just hitting the streets and just trying to see who's offering jobs and, you know, what hours they're offering.

And, I mean, I'd like to be in somewhere that's somewhat kind of like what I, as far as hours go, what I do now as far as, like, I start work real early in the morning, and there's the potential of getting off at a decent time during the day where i still have time to spend with my family but you know like i said a while ago to do even do that i just don't make enough money sure okay so here's the deal do something that paid better that have those kind of hours all right so here's what i want you to do i want you to think about what you do best just your basic talents that you can that you can take to the marketplace.

And you're good at your job now, correct? Yes, sir. What do you do? I'm a mailman. I don't work directly for the post office. I work for a contractor. So let's look at other jobs. Let's just start looking in Louisville, Kentucky right now, jobs where you can be in a car.

You kind of can set your own schedule, certainly that early morning because you've got a nice rhythm there. Let's look where I can make some money driving, whether that's a delivery truck, you know, for you've got your national companies, you've got local companies, you've got food delivery. Just start looking to anybody out there that's looking for a very dependable driver, delivery, maybe some logistics work, maybe in a warehouse. You've just got to say, hey, here's what I bring to the table. I'm dependable. I can do this. And you start looking out there and saying, these are the jobs that are out there, and this is what they pay.

They pay more than I'm being paid now, and I don't have to work as many hours. This is just a simple research play. Turn it over rocks and find it. Now, I want to address your fear. Unless you're applying for something that is some brand new company, some startup that has no history. You have enough common sense, I trust you, Aaron, to be able to determine whether or not this is a risky move.

And it's not a risky move because the reality is the type of work you're doing and the type of work you can do, you don't need to worry about it disappearing. You just can't live life that way. Just move forward. Go get a better paying job that you don't have to work work these crazy hours and for the amount of hours you're working maybe you get two jobs hey aaron is this safe to say your job sucks well yeah it's safe to say that and it's steady so it steadily sucks right yeah steady is. Steady's not all the time. It steadily sucks. I guess the thing. Dude. Dude.

Say that out loud. I mean, really. You need to hear that. And let me just tell you. If you keep doing what you've been doing, you're going to keep getting what you've been getting. Yeah. So it is time to do something different. I don't know.

You can change your day job. Yeah. You can start the photo thing on the side. Definitely do that. But, dude, let's do something. Yeah. Because right now, we got sucks on steady. Yeah, and by the way, if something good falls apart, sucks still there.

You can go back to it. There's nothing to be afraid of here. There's nothing to be afraid of. Well, I mean, yeah, I'm afraid that you continue to do what you're doing. That's what I'm afraid of. Oh, I like that. That's exactly right. But here's the thing.

Here's the thing here's the thing there there is no security no none except your own ability that's right and you're not even using your own ability here you you know you're just you you've got an entry level base yeah job that sucks yeah and you know and so you're not even you're really not losing anything if you lost this because you know if you can develop a skill you are always going to be employed at that skill yeah because you know that you're you're only as secure as your ability to go land something else and you if apparently if you're breathing, you can land this job. That's right. But see, here's where his fear is coming from.

His fear is coming from he simply doesn't know. He hasn't done the research to see all the different types of jobs he can do in Louisville. Once we see one job, two jobs, three jobs, four jobs, five jobs, seven jobs, he goes, wait a second. Oh, I can do those. Now I'm not so afraid. But we talked about this before. People would rather deal with the misery than the uncomfortableness and so he just needs that nudge go the devil we

know go find it and then do it yeah it's just here here's the thing it's you're stuck and you gotta get unstuck yeah i mean but you've dug your own ditch here this is your you know we know what a rut is? Zig Ziglar used to say it's a grave with both ends kicked out. That's exactly right. Nobody says it better than that. That's what it is. And by the way, this is a rut of your own doing.

Yeah. So change it. Yeah. Today. If you keep doing. If you do nothing that Ken just told you to do. And a year from now, you're still doing that. Yeah.

It's your fault. That's right. Your fault. Let's talk. And let me tell you. You're being paid about half of what you're still doing that. It's your fault. That's right. Your fault. And let me tell you, you're being paid about half of what you're probably worth. Oh, absolutely. He's driving a mail truck. I'm looking for a local company that does a lot of deliveries. They've got manufacturing, a lot of parts.

I'm looking for something like that. I've been doing Uber Eats. He could double his income. Oh, for sure. By the way, let's talk about this security thing, because you just mentioned it. It made me think about this. I get this call a lot. It's a false thing.

Totally. I get this call a lot on the Ken Coleman Show. You ready for this? Hey, Ken, I'm at a contract. Let me just tell you. Having made payroll as a small business guy, and the first 10 years of this business, the people were on my payroll, I'm scared. I'm scratching, trying to make sure I got the money to make payroll on Friday, and they

thought they had a secure job. If you've ever made payroll, you know nobody is secure. That's right. That's right. We get this call a lot. Ken, I'm on a contract right now, and my contract's coming up, and I feel like I've got to move into something with a more stable salary. They think salary versus contract, and the reality is you could be a salary employee

and get fired. Let go. Furlough. Just ask the pandemic. Yeah. So just because you have a salary position doesn't mean that you're immune to having your job removed from you well i mean here's an idea if you're self-employed and you have your own photography company every day you get up you

leave the cave you kill something and you drag it home that's called security there you go that's where security comes from yeah and i remember i, you know, serious money the first time I ever got up close to seven figures. And my sweet granny, who my grandpa worked for one company for 38 years, never changed because he lost everything in the Depression. And he was so thankful for the job that he never left. Of course. Never left. And that generation did that. Oh.

This generation, these last generations don't, including mine. left of course never left and uh that that generation did that oh this generation these last generations don't including mine but i mean i'm making serious bank owning my own business and my sweet granny would say now honey when you're gonna get a real job wow you still want me to get secure yes you know and she's sweet as she could be god rest her soul yes but she wanted me to be secure and i was making more yeah you know it was, you know, just, but, you know, self-employed. Get up, leave the cave, kill something, drag it home, man. And you got to change it, Aaron. You got to change it, man.

Just because it's steady, it just steadily sucks. Change it. Our scripture of the day, 1 Peter 1.13, Therefore, preparing your minds for action and being sober-minded, set your hope fully on the grace that will be brought to you at the revelation of Jesus Christ. John F. Kennedy said, There are risks and costs to action, but they are far less than doing the long-range risks of comfortable inaction. Exactly what we were just talking about. We've been talking a lot about that.

So that's for our last caller. There are risks and costs to action, but they are far less than the long-range risks of comfortable inaction. The way I like to say it is, would you rather get to the end of your life and reminisce, or would you have to regret? Or regret. Yeah. It's a nasty taste in the back of your mouth, this regret thing. Dawn is with us in Asheville, North Carolina.

Hey, Dawn, what's up? Hi, Dave. Can you hear me? Yes. Oh, good. Thank's up? Hi, Dave. Can you hear me? Yes. Oh, good. Thank you so much for taking my call. It's a blessing to talk to you. I have a friend who is

dealing with the offer of a lump sum settlement, and I know you're going to say to take it, but she and I have run the numbers, and I can't figure out why she should take it. Okay. Okay. A lump sum settlement on a lawsuit? No, no.

Her husband was disabled and died, and she gets monthly payments from the state of New York. And they have offered, now that her youngest child is no longer a minor, they've offered to pay out a lump sum instead of continuing to send her the money every month. Okay. And how much was the lump sum? Okay, the lump sum is $225,000. And how much are her payments she's receiving? She's 61 years old, and she gets $2,000 a month tax-free.

Okay. So she's getting $24,000, and she gets $225,000. And when she dies, the payments stop, right? That's correct. And when she dies, if she has $225,000 in the account, that goes to her heirs, correct? Yes, sir. Did you have that number in your mind? I did have that number in my mind.

There's a $225,000 swing at death. Yes. Zero or $225,000 at death. And if you invest $225,000 well, she will make almost as much or as much as she's making now although it will be taxable okay so she made 10 it'd be 22 000 a year that's 20 not 24 000 a year but i mean if you invest it well she'd be able to get 24 000 a year out of it and uh and there'd be money left at death okay so they my own when i ran the numbers because the state says they use 87 as a life expectancy and when i ran the numbers it was like 647 000 that's not how the numbers work okay the numbers work on what is your monthly income off of the lump sum and the lump sum survives death?

It's not a total dollar because you're looking at how much I need to use the lump sum for her to get as much income as she would have gotten otherwise. And in this case, it's very you are right. It is very unusual in that she might actually make less per month if she takes the lump sum and invests it, even invests it well. So what I'd recommend you do is sit with her with a SmartVestor Pro and have someone actually map out some real investments and not just deal with theory here on the air, and let's consider then what she could really do.

But the big difference here is upon death. There's not going to be a big difference while she's alive. Because it's not like they're paying her like a 7% and she could make 12 or make 10. That sounds like she's got a really nice income. It actually sounds like they've miscalculated this. I think they've screwed up the calculation. I would go back to them and ask them, say the lump sum sum seems awfully small i think you made a mistake would you check your calculation because i think the lump sum should be bigger because i can't believe the state of

freaking new york is competent enough to have run the numbers out based on a 12 rate of return they didn't they've not got that money invested at that i just tell you they're not that smart okay i mean this is a state government number one and it's the state of new york They've not got that money invested at that. I just tell you, they're not that smart. Okay? I mean, this is state government, number one, and it's the state of New York, number two. So let's just keep this in mind. What are you saying, Dave? I'm not sure. I don't know if I understand what you're saying, Dave.

What are you getting? Are you getting at something? Yeah, I'm saying I think I have a math problem here. Yeah, I think you're right. Yeah, so anyway, I would go back and challenge them on the lump sum. and then the second thing i would do is get a a smart vestor pro click smart vestor at davramsey.com sit down with them or get them on a zoom or whatever you need to do in your area to feel comfortable and all that stuff uh and um you know run some numbers out on some real investments you can run what's called a hypothetical on a mutual fund portfolio. And you say, if we bought these four mutual funds and we had owned them for the last 20 years,

what would they have turned out to be? And what kind of income would they have created? And that's called a hypothetical analysis. And it is using the history, but to project the future, which you can't technically do. You know, you remember that stupid butt line that Feds make everybody use in the investment world is, you know, past history is not indicative of the future. Of course it is. Right.

That's just stupid. Jared is in Colorado Springs. Hey, Jared, how are you? I'm doing well. Good afternoon, Dave and Ken. How are you guys? Great, man. How can we help?

Well, we have a rental and I am contemplating selling it. It's actually my wife's old house before we got married. But I think it might be a peak time to sell in Colorado. And I'm afraid of what the market's going to do. It's been a really consistent rental for the past six years. What are your thoughts on selling in order to pay off our home mortgage? Not a bad idea. I would not use the fact that I think that the real estate market is going to go down in Colorado Springs as my reason because I don't think that's true.

Okay. Colorado Springs is a reason because I don't think that's true. Okay. Okay. Colorado Springs is a vibrant, awesome market. It's got that proximity to Denver, and Denver's nuts on real estate prices. And so it's a wonderful town. I mean, Colorado Springs is an incredible place to live, work, own real estate, everything. And so I don't think you're going to see prices go down there in the future. But if you're done with rentals, you had a nice run,

and you'd like to use that money to pay off your mortgage, you'd love the idea of being completely debt-free, hey, Dave Ramsey's not going to argue with you on that, dude. Laura is with us. Laura's in New York City. Hi, Laura. Welcome to The Dave Ramsey Show. Hi.

Thank you for having me. Sure. How can we help? Well, I am a licensed massage therapist and a dancer, and I'm wondering if I should change professions. My parents think I should go back to school because the job market is hard with the things that I do. You're a licensed therapist and a dancer. Yes.

Are you a professional dancer, as in Broadway? I'm a professional dancer. I have not done Broadway. Okay. Have you made a living doing that, or have you made your living as a therapist? I have currently been making my living as a licensed massage therapist. Okay. But it doesn't sound like you want to go back to school.

It sounds like Mom and Dad think you should go back to school. Please don't live their dream. Yeah. Yeah, that's the problem. Actually, I have been living their dream for a while. That's also why I went into massage therapy. What do you want to do? What have you dreamed about? You've dreamed about something.

Anybody that's creative like you has had a dream. You've got no problem with imagination. What is it? What do you want to do? I want to do acting, but I mean, I have been auditioning. I did get some small background. Okay, so listen, Laura, I want to set you free. In order for you to be an actor, you've got to stay in it in it this is a long game and i can't speak to your talent i'm assuming right now that you're

not delusional that you actually have the talent to do it uh you've got to be a massage therapist or something else you've got to have a day job or two that gives you the flexibility to audition that is simply the game we're in nashville always say, how do you get the next country music star's attention? Waiter. Order an appetizer. Yeah, you're going to have a plan that gives you the freedom to keep pursuing. Don't you give up. There's always a chance to go back to something else. You need to walk through this and figure out what your long-term dream is.

Has it shifted? But don't live your mama's dream. That's a bad plan right there. That's not going to even make her happy. It's not going to work out for you. That puts this hour of the Ramsey Show in 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. Have a friend or family member that needs a daily dose of 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.