The Ramsey Show - App - Should I Invest While the Market Is Down? (Hour 1)

Episode Date: March 27, 2020

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

Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studios, it's the Dave Ramsey Show, where debt is dumb, cash is king, and the paid off home mortgage has taken the place of the BMW as the status symbol of choice. I am Dave Ramsey, your host, joining me this hour, this day, to answer your questions here on the Dave Ramsey Show. Alongside me, my cohort in crime, Rachel Cruz, Ramsey personality, number one best-selling author, speaks, and you see her on media all the time. She was on Fox & Friends this week, a couple days ago. And so, Rachel, we sent everyone home from the office a week ago to work from home, and we've been doing the radio show in this massive building by ourselves

with just a handful of people for a week. It's weird. No. Well, we're trying to be six feet apart. I'm just wondering if I'm from you. It is weird, sure. if your dad catches it from you yeah that would be bad i don't want to give it to you if i have it that'd be great oh no um yeah do you know it would be sad in america if dave ramsey got it and you can't do the radio

that'd be terrible i just sit in here to the radio y'all just couldn't come in here yeah that's probably true we're gonna have to pull you off the mic eventually in life. No, we, yeah, I mean, like our company, Ramsey Solutions, I mean, over 900 people and we're in this new building. We just moved in in July and it's like just the energy that we have as a team. I mean, people buzzing around, doing stuff, meetings and all of that. I am an extrovert, so I just get energy from people. And having to shift that to being home, which is like what majority of you listening are having to do too.

Majority of people are working from home now. And it's just the video conferencing and meetings and kids. I mean, it's just a wild time. It is a wild time. But I told Winston, my husband and I, we were talking about this. I think it was just two nights ago. I'm like, you know what? Never probably, knock on wood, in the history of our world or our lifetime is this kind of thing going to happen again.

Like never again are you told you have to be home and work from home. So like these two weeks, what can we do to make the best of it? I'm like, it's just such a unique situation. What can you do? Because you can get really bogged down. I mean. I got to tell you, there's some of the funniest stuff landing on YouTube that people are doing. I am dying laughing at most of it, highly inappropriate.

But it is some hilarious stuff happening from people working at home. Hashtag among our team is going around on all the emails. It comes across hashtag working from home blows, working from home blows. I bet some people love it. Some of the introverts love it I'm sure they're they're yeah and if you don't have kids like if you can like I mean like having kids that's that throws a whole wrench in everything yeah because they don't understand a little yeah oh no no you're trying to and now Amelia joined one of my meetings last week or this week earlier this week week. Right in the middle of Zoom. Yeah, she just sat in my lap and she's like, are you talking to all these people?

I was like, yep. And so are you. Yep, here we are. But it's good. Yeah, it's great. And then last night was incredible. We had our Message of Hope event that was live streamed. And it was a great 45 minutes of just kind of.

Thank you to all of you that showed up and watched on YouTube or watched on our website or Facebook or wherever you were watching from. We appreciate you joining us. And it's posted now. It ended up being 50 minutes or 51 minutes long or something. It's posted on Instagram and on our, I guess it's on the YouTube. Is it up on YouTube yet, James? It is?

Okay, thanks, Zach. And so you can watch that. And it was Rachel and Ken and I just unpacking, you know, control the controllables. That's all you can do in these situations. As you were talking about with Winston, make the best of it. Control the controllables. And hopefully in another week we'll be largely back to work. Obviously people that are at risk and people that are symptomatic and those kinds of things. We don't want anyone ill or anyone harmed.

But the number of lives being completely devastated financially now has so far outweighed the corona that both are bad things. Right, right. And so it looks like the governor here mandated through next week that we're off as well. And so there's two weeks. We have one more week in Tennessee. I saw L.A. could be close to two months. The mayor came out and said that. Yeah, I saw that.

And they got a hotspot. And there's some other people with hotspots. Obviously, Tennessee has got some cases, but nowhere near the hotspots. And the guy that came out and predicted a half million or 500,000, I guess it's half a billion, was it 500 million? I don't know. He predicted some bizarre number of deaths. The statistician has revised it to 20,000. Oh, wow. I think it was 500,000 deaths. The statistician has revised it to 20,000. Oh, wow. Instead of five, I think it was 500,000 deaths. Yeah. Worldwide. And he's revised it to 20,000 now. Yeah. And that's good news.

For sure. For sure. Yeah. And I think unpacking some of, you know, not that kind of stuff last night, really with the event, but just more the idea of like, okay, facts are your friends. Dr. John Deloney, we quote him all the time now, but it is true. But I'm like gathering your facts and all of it. And it can't be hard in today's world. I'm like every media site, every link on Twitter, like everyone's a reporter, it feels like these days. So I'm almost like, I don't even know what's facts and what's not. It's hard. But last night, you know, we removed a bunch of that kind of clutter just to focus on like you and your family and what you can control.

And you set it up brilliantly. Your tone, I will give it to you. You were very. You were worried I was just going to take it by the woodshed. I told him. I was like, you can't be angry on this event, even though I know you're mad at this whole thing. But, like, I don't know. It just was a very refreshing event.

So those of you that haven't seen it yet, make sure to go check it out. Message of Hope. It's on YouTube. It's on all of our Instagrams, all the Ramsey personalities posted there. It's posted probably on Twitter and other things as well. So we appreciate you guys, all of you that joined us on that. It was a massive, massive online event. And very cool to get to do that with Ken Coleman and with Rachel Cruz.

So your calls today in the middle of the weirdness where, you know, you may have a fairly normal question, you know, pre-corona, post-corona, whatever, mid-corona. It's like a mid-trib, post-trib. Yeah, we can just get into revelations. I did say when Waffle House closed, that one guy predicted that. That's in the Bible that that's an indication of the end times. It doesn't close. Oh, if it does.

No, it did. They closed all of them. No, they didn't. Temporarily. Oh, sure. Okay, okay. They didn't go out of business. Oh, no.

Rachel, come on. Well, Cheesecake Factory came out. They can't pay their rent. They're not paying their rent on any property in April. So, anyways, I just know stuff is happening, so I just want to make sure Waffle House is still good. Well, I don't know. As long as we got Waffle House.

I don't know about them paying rent, but they're closed. They closed in 435 stores or whatever it was. They've got 335 stores. Just one guy said that. That's in the book of Revelation. Okay. I got you. The end times are here.

Waffle House is closing. Jesus is getting ready to come back, so there you go. Just kidding! Those of you that get upset about anything religious, oh, my gosh, thank you. Oversaved people, send me hate mail now. Open phones at 888-825-5225. We're going to take your calls about your life and your money in the middle of the crazy times. And, again, you're perfectly welcome to ask a fairly normal question or a uh

i'm freaking out coronavirus question and uh rachel and i are here to help you we'll walk with you through this the phone number here 888-825-5225 joining me on the air rachel cruz ramsey personality number one best-selling author several times over and of course my daughter as well so we're gonna have some fun and answer your questions and this is going to be a great friday edition of the dave ramsey show business leaders hiring right now may be the furthest thing from your mind but the fact of the matter is we will recover one of the smartest things you can do for your business is to be prepared. I want you to know my friends at LinkedIn are ready to help you find the right people for your business when you're ready to hire them.

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Justin is with us in Mississippi. Justin, welcome to the Dave Ramsey Show. Your question for Rachel and me. Hey, Dave, Rachel, thank you for taking my call. It's such an honor. Sure. Start off with my wife and I, we're on baby step two right now. And today at 4 o'clock, I have an appointment set up with Churchill Mortgage over the phone

to look at getting our house to a 15-year fixed rate. So my question is, we both have essential jobs right now, okay? So we're going to get paid. We're not going to lose it due to coronavirus, nothing like that. Should we go ahead and do this 15-year fix, even though that might take away from our snowball that we're paying on right now? Yes.

Okay. Yeah, it's going to raise your payment a little bit is what you're saying, although your interest rate is going to be dropping, I assume. That's right. Almost two. Oh, yeah. Yeah, it's going to make a lot of sense. Roll your closing costs in into the loan so you don't have anything out of pocket on that.

But your point is it's going to change your monthly payment, and it's going to go up a little bit, but we're locking in a great interest rate down at around 3% or so on a 15-year right now, and maybe even less. I don't know. It depends on what's going on with the loan and all that kind of stuff, but this is a great time to refinance. Yeah, basically we're slowing down your debt snowball,

but how much is your payment changing? Well, I don't know yet, but they did say it'd be almost 2% as far as interest rate. Yeah, savings on the interest rate, and you're going from a 30 to a 15, so you think your payment's going to go up, but you don't know how much. That's right. I don't expect too much. But like I said, since last July, we paid off right at $55,000. Yeah.

What's your loan balance? The loan balance is right at $127,000. Okay. So you're going to drop about $2,500 in interest, and you're going to pick up some. So that's $200 in the downside a month that's going to go down off your payment, and then your payment is going to go up because you're going from whatever remaining you have on that old $30 down to a $15. So you're probably not going to see much of an increase in payment. You might see $100, maybe $200.

It's not going to slow you down that much. Okay. That was it, guys. I appreciate It's not going to slow you down that much. Okay. That was it, guys. I appreciate it. Hey, man, thanks for the call. Go ahead and get it done. I feel like I've heard a lot of, this is the question that I'm getting a ton of,

is about the refinancing whole world. Because overall, interest rates are lower, right, than a standard time, even back in January. But I do know, I'm like, they fluctuate so much. And so being able to, like, lock in when it is low is so important because I feel like they even change daily. Like, I kind of keep track of it, and they fluctuate up and down. It is.

Well, the structure of the whole mortgage industry, Mike Hardwick at Churchill and I were talking this week, and the background behind the mortgages is really funky right now. It's really weird. It's kind of messed up. But you can still get a mortgage through, and you can still lock in some of these absolutely incredible rates while they're down. And so he's going from a 5 down to a 3 or whatever.

That's a very wise thing to do if you've got the steady jobs and so forth. Now, it's not wise to take cash out. We're not trying to borrow more because you're scared or because you want to wipe out your other debts. No, we never have told you to do debt consolidation. Not going to start now. But if you're sitting there with an adjustable rate mortgage or a balloon mortgage or something, you know, a 5%, 6% interest rate like that, it's a no-brainer to look at refinancing right now.

It makes a lot of sense. Natalie is with us. Natalie is in Alaska. Hi, Natalie. How are you? Hi. Thank you for taking my call. I'm doing well.

I hope you guys are, too. So I just have a quick question about a pickup truck. So my husband, we are in baby step three right now and about a third of the way there. And my husband is in love with his 92 Ford F350. And about three or four years ago, he bought it for about $2,800 and since then he's put about $8,000 into repairs and it's Kelly Blue Book is around $2,000 to $4,000. Why would you put $8,000 in repairs in a $2,000 truck?

Is he souping it up? Yeah, I know. Is he fixing it up or something? Yeah, he got it before we met. So he's like jacked it up and put wheels and stuff on it or something like that. It's not repairs. No. It's like improvements.

It's more the transmission and other things that have broken on it. I don't want him to keep the truck, but he wanted us to call to see what you think. Okay, if you're going to spend $8,000 in actually keeping a $2,000 car running, no, that's not wise. If you're not telling me he souped it up, jacked it up, and spent some money on customization or something, I don't know how in the world you could spend $8,000 on a $2,000 car. You had to work at that. Yeah. It's been over a few years at doing it.

Yeah. But, I mean, so here's the question, okay? You're sitting there driving a $2,000 truck, and another repair comes up that's $1,000. At some point, the car has, you've run the wheels off of it. It's time to move up in vehicle a little bit, sell the truck for what you can get for it, put some money with it in cash, and move up. So, Rachel, there's a formula that we use on,

when you're driving a hoopty like that. And you say, okay, I got a $2,000 truck. I've got a repair to do to it that's $1,500, okay? But I could sell the thing as is for $1,000. So if you put the $1,500 with the $1,000, you'd have $2,500. You'd have more than the truck is worth, and that tells you that it's time to sell the truck. And that's what they're facing there.

This thing has outlived its usefulness. Well, and she said he loves it, and I'm like, it's just amazing how we just attach ourselves to stuff, even like a truck, an old truck. It's probably like his baby. He had it since before they even got married, she said, or even before they met. And so it's almost like you just don't use math and logic as you have this thing. Because a logical person would say, okay, it's been this much. I'm putting $8, putting eight thousand dollars into a two thousand dollar truck yeah that's probably not going to make sense so let's spend the eight thousand and get a new car yeah and and do it so better yeah natalie that's that's for sure i can relate to being attached to a truck but not a two thousand dollar

one i'm having trouble we're doing i appreciate it though there's a little bit of like heartland nostalgic yeah all right emily is with us in ohio emily your question for rachel and me hi guys how are you doing better than i deserve what's up well not much but um sorry i'm a little nervous it's okay um so my question is as many americans are facing unemployment and this is possibly coming for me as well, I'm looking at the new stimulus package that was just passed. Thankfully, I've been blessed to never have to use welfare, and thankfully I've also listened to you guys, and I've budgeted, I have an emergency fund and everything, and I live below my means. Good.

But if all that, thank you. You guys have changed my life, so thank you. But if that runs out and I do have to draw on the stimulus package or welfare, do you know how that will affect my taxes or any negative implications to that? You're not going to have to because you're going to be working. What do you do? I'm hoping. I'm in health care, my particular field is um diminishing because

they're trying to limit um non-essential right now so what do you do unfortunately i'm an athletic trainer you're a what so athletic trainer says sports medicine i'm the person in running out of the broken bone on the field. Okay. Can you take a job temporarily at a hospital? I'm working within the hospital now, but as more and more people within my network are also facing this problem where there's not enough patients, more and more people are trying to have the same hours that I'm trying to work.

So what I'm saying is can you transfer from sports medicine non-essential and use your skill or your certification elsewhere in the medical field where there is an overabundance of patients and not enough people to help right now? I'm trying. Okay. I don't think you're going to be out of work if you can do that. You're going to have more work than you can shake a stick at. Or you can deliver pizzas or clean houses.

I mean, you're not going to be out of work, so you're going to be fine. The stimulus package, when it comes your way, is going to come whether you're working or not if they pass what they were working on yesterday. And it's not going to be taxable, of course. And certainly unemployment is not taxable. So it's not going to be taxable of course and certainly unemployment is not taxable so it's not going to affect your taxes in those cases but I really wouldn't plan that direction I'd be planning if I have to get if I have to stop working there I'm going to be working somewhere else that's what I'd be planning. If you do this one simple thing that we all do,

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You can try it for free for seven days. Protect up to seven internet devices and keep all of your internet connections secure. That's CyberGhost VPN. Download it today from your app store and be secure in seconds. Thanks for joining us, America. We're glad you're here. Open phones at 888-825-5225. This is the Dave Ramsey Show. Joining me, answering your questions, Rachel Cruz, host of the Rachel Cruz YouTube show, vastly popular,

as well as number one best-selling author several times over. Elizabeth is with us in California. Hi, Elizabeth. How are you? Hi, Dave. Hi, Rachel. Thank you so much for taking my call.

Absolutely. Sure. How can we help? Well, I have a family of four. I recently just gave birth to a newborn in February and me and my partner were itching to get a house and my big question has to do with social security payments. So I stopped working in 2017 when I was diagnosed with epilepsy. It was pretty out of hand and I'm getting I'm actually having my hearing next month and they may give me a larger back pay and I've had money in the past I've gotten inheritances and they've just kind of

melted away but now that I have these you know my family to take care of and we do have the goals of getting a home I don't know what to do if I do get a larger back pay. Obviously, step three is what we're on now. So that emergency fund is proving to be more important than ever. But yeah, if I get enough for the emergency fund and then there's some left over, I don't know what to do with that money to make sure that it doesn't disappear or that maybe it can go towards the property someday. Yeah, absolutely. Well, we always recommend you having a fully funded emergency fund of three to six months of expenses. And then beyond that, saving for a down payment. And I mean, you're in California, so real estate is, I know, absolutely insane.

But getting that 10 to 20... You love to get out. Okay, that's great. Yeah. And getting a 10 to 20% down payment. But what's the household income for you guys? My partner makes about $30,000 a year. It's pretty low for us. I do have a BA, but I can't use it currently until I get my condition under control. I'm out of luck.

Yeah, I understand that. So how are you guys eating? I mean, like, what's your budget look like? We're doing a lot of dried beans, a lot of dried rice, and bulk buys of proteins, and we have a... So your Social Security check amounts to how much right now? I'm not getting one oh you're not getting one at all okay so if they approve this you'd start getting a monthly check and they would give you back to 2017 in a lump sum yeah okay that's what i'm mostly worried about

is it just disappearing i've gotten inheritances in the past they just melted well i think i think what you've got to do is i think you're very wise to be worried about that because what you're recognizing is is that if you don't hide it from yourself a little bit, it'll sneak away on you in the middle of the night. And so I think you open up a separate savings account that is not connected to the ATM and is not connected to your checking account. And that makes it difficult to move the money if you wanted to impulse and buy a couch. Yeah.

It makes you stop and think, right? And so this is a separate savings account that you've at least got to go online and physically move the money around or go down to the branch and physically move the money around. And that's when you would stop and go, a minute i'm getting ready to be stupid here i'm about to spend our house money on this thing or this trip or even this emergency instead of working through the emergency fund and figuring out a way to get you know some part-time jobs and stuff from there yeah that's my that's my only fear with the situation that I keep hearing is having to dip back in. Yeah.

And it's like inheritance has kind of caught your slack, if you will. But, I mean, the basics of money is like money flows in and money flows out. And if there's not enough money flowing in, in order to flow out, then you start to get underwater. So I just want to make sure that you guys, I'm so thankful you have that emergency fund, but trying to almost, I mean, like you were saying, even physically put it away put it away but even I would say emotionally it's okay what do we have to do now to keep our household afloat which is very difficult when there's a when there's a medical situation depending on what the 30,000 plus depending on what your social security turns into that's fair yeah it's the two of you with a baby uh thirty thousand dollars in California

is uh half of the national average. So if you take average as roughly the middle of the income, this is $59,000 in America household income. Currently, you all are at half of that with a baby, and let's put in there you're in California, okay, very expensive to live there. So you've got a really tight budget. That's why Rachel was was saying how are you eating and she wasn't meaning what dishes are you cooking she means where's the money how are you paying

bills because you got a tight tight tight budget right now uh and that's and so you know it would be pretty easy to see something that looks like a necessity so something needs to adjust your location, your incomes, your careers, your jobs. Something needs to adjust to be working your income up and or living in a less expensive environment. All right. Lee is with us in South Carolina. Hi, Lee. Welcome to the Dave Ramsey Show. Hey, guys. Good afternoon. My question is, what should we be investing right now in this downturn? Well, I mean, the stock market's down for one thing, obviously, and so continuing to fund your 401k with good mutual funds is what I'm doing.

And I'm in the middle of building a building over here next door for the next piece of growth for Ramsey Solutions, so I don't have a bunch of spare cash to throw into mutual funds while they're on sale right now, or I would have. But I am continuing my steady 401K. Rachel and Winston, you know, they're doing their 401Ks, so that's down. Other things you can look around winston you know they're doing their 401k so that's down other things you can look around you know if there are things that you are normally purchasing that are down real

estate is not down right now uh interest rates are down on mortgages and so refinancing is a good time right now uh but as far as straight up investing the biggest thing that's on sale right now is the stock market yeah and i've heard a lot of people, you know, because everything is quote-unquote on sale, they're trying to get in there and like do different things and all of that. But we're still pretty boring even in a downturn with the market of just doing mutual funds. I mean, so a lot of people are asking, oh, is there a single stock? Is there something I should kind of dip in and go around? We're pretty simple and just like, hey, it's mutual funds. So you're still going to get a great deal on that. But at the end of the day, being able to diversify your risk and not going after these single stocks.

But I've seen a lot of people in talks of that. They're trying to like bend the system, do all these like kind of different things because it's down. But don't take the common, you know, I mean, use the common sense approach of mutual funds all the way, diversify that risk. You know, that's a good point because what happens is people lose money in stuff like investing in mutual funds or investing in the stock market in general. They lose money when they're fearful and they pull at the wrong time. They also can lose money when they're greedy and they're saying, you know, I'm going to jump in. Yes.

You know, it's like that kind of a thing. And you're not doing that, Austin. That's not your thing. I mean, Lee, I'm sorry. That's not what you're suggesting. You're just asking an honest question. The timing is good. What can we do?

Well, good mutual funds. But what you're suggesting, Rachel, is I'm going to try something super risky right now because I'm so excited that everything's on sale. That's a kind of a greed. Right. That's more than just wise, steady investing. And so beware of that greedy thing. There is a famous Warren Buffett saying, and he doesn't mean greedy like a lack of virtue type greedy,

but he always says be greedy when others are fearful and fearful when others are greedy. And he doesn't mean be fearful, sucking their thumb in the corner or being greedy like something from a movie. But his point is be investing when people are not investing. And when they're not investing, maybe, you know, or when they are investing, maybe you shouldn't be that kind of thing. He's always once he's a contrarian, be opposite of what's going on but just be beware that um if you get desperate you get stupid and if you get greedy you get stupid so rachel's point is don't dive off into some weird thing or some single stock or some you can get scammed with this kind of stuff going on right now uh that you know the opportunities to

jump in right now and the coronavirus is, this is awesome! You know, that right there is a good, you start feeling that kind of an emotion. That's not what he's saying. But you're warning against that. So, yeah, I think just continuing to do your 401k investing. And if you have some extra money that you want to leave alone 10 years, yeah, it's a great time. The stock market's on sale.

When I was a kid, they used to have blue lights at Kmart when there was a sale, and you'd run over to where the blue light was and buy whatever it was on sale. And so that's what's happening on the stock market right now. There's a blue light on. Welcome to the Dave Ramsey Show. Rachel Cruz joins me answering your questions about life and money. Austin is with us. Austin is in Tennessee. Hi, Austin.

Welcome to the Dave Ramsey Show. Hey, how y'all doing? Great. How can we help? Me and my wife, we sold our house about two weeks ago and we ended up walking away with around 60 000 and soon as we got the money we paid the caller off and we have a five acre track of land we're trying to figure out to pay it off or hold off on that or how should we do it what are you going to do with it i'm going to build on it at some point.

Now? Maybe a year from now. Where are you living? We just started renting after we sold the home. Okay. Well, what's the payoff on the land? It's $32,000. Okay.

And how much of the $60,000 have you got left after paying off the car? $45,000. Okay. All right. Do you have an emergency fund? Yes, we do. Okay, good. Do you have any other debts?

No, that's it. Wow, it feels pretty good, doesn't it? It does. Yeah. I'd pay it off today. Yeah, the bank's telling us don't pay it off, and I'm thinking pay it off. Yeah. Well, banks are in the business of loaning money, and so we don't really use them for financial advice.

They would keep you in debt forever, my brother. Yeah. So, yeah, I'd pay it off today. And here's what we would do then take the balance that little bit of money that's left and set that aside and start adding to it for additional money to use for the building when you get ready to build you can take the paid off land to the bank and they will take they will loan a construction loan against that property and against the house that's being built. Okay?

So it kind of acts, the paid off land kind of acts almost as your down payment for your construction loan. And then, so let's say you spent, I don't know, I'll just make up a number, $200,000 to build a house, okay, in addition to the land. And so they would loan you the $200,000 and it would come out as the house is being built to pay the builder on the construction loan. The draws are taken against the actual progress of the building. And then when the house is completed, that loan would be converted to a permanent mortgage, a traditional mortgage, which you would have already been

pre-approved for on a 15-year fixed and the house payment would be no more than a fourth of your take-home pay if you're following our stuff. But my point is there's no downside to, you know, if you break ground next spring, a year from now, on that house, that paid-for property is going to allow you to do that. Now, if you're going to buy another house and that five acres just going to sit over there i wouldn't pay it off i'd sell it okay but if you're going to build on it then you know it makes it's the same as making a down payment on your next house to pay it off you see what i'm doing yeah i got you yeah so let's go ahead and get plans going to build on it pretty quick here um i don't i mean i wouldn't be renting a long time.

I'd get some plans drawn, pick out a builder. Rachel, you and Winston just went through building a house. It's quite an experience. Yeah, it's fun. We actually enjoyed it. Some people hate it, and they get stressed and all that, but we personally, we loved it. It helps that Winston is a real estate guy and a project manager extraordinaire, though. Yes.

And he's detailed in all the things. That's what I mean. He took care of a lot of things. Every piece of the schedule. If it was up to me, we'd still be building, probably. Yeah. The builder would already have shot himself. I know.

That is true. That is true. I just appreciated Austin's common sense. When he made the bank comment, he said, you know, the bank's telling me to keep it, but I think I just need to pay it off. And I'm like, yes, that's it. I mean, like that gut instinct that we have as consumers, it is still real. I mean, listen to that. You know, most people have common sense, but there's always somebody trying to tell them not to use it. Yes, exactly.

Beth is with us in Pennsylvania. Beth, your question for Rachel and me. Hi, guys. My question is how much life insurance should we be purchasing? My husband, he'll be 59 next month, and I'm 54. We just started your FPU in January, and we're on baby step two. We have two children still at home, one's 23, one's 22. So I was... Why are they still at home? Well, one's still in college, and one's getting married probably within a year.

Oh, good. Okay. All right. Good. And so they're gone. I mean, so basically, uh, and you're paying off your debts now. Do you have any money saved in your 401k? Um, yeah. So we stopped, we just stopped paying into the 401k. So my husband has about 80,000 in there. We just stopped this month. I own a house cleaning business. So in 2018, I was bringing home about $80,000,

but I incorporated last year, so because of taxes, they were just really hard to... So now my income is about $22,000 a year, and his is about $67,000. Okay. about $22,000 a year, and his is about $67,000. Okay, so if something happened to you, he would need to replace your income. Yeah. Possibly, okay? Yeah. And so, you know, you could put $200,000 or $300,000 on you.

If something happened to him, you would need to replace his income. But not for long. I mean, for a while. It's not like you've got two-year-olds. You have 22-year-olds. So you don't have to raise children. You don't have to have a, you know, your husband's working, you're not, and you have to raise kids for 20 years.

That's not what we're talking about here. Basically, your kids are grown and gone. How much do you guys owe on your home 217 000 yeah okay i mean we usually say about 10 times your income on you 10 times his income on him check with zander insurance and if you're both healthy you can get we did we did go with zander i mean we, they're in the process. Good. So I haven't given an okay yet because when we go with like the $500 on him, if I was going with $500, it would really up our budget. It's just, you know, I guess because of our age. What's the quote?

Well, so for both of us it would come up around just around 220 a month yeah i'd be about right that sounds right yeah okay yeah and and the point being if he dies you've got you've got five hundred thousand dollars to work with and if you die i assume you got about 200 000 on you right right yeah that's fine and here's the thing the further you're out of debt and the faster you build your 401Ks up, the faster these can go away. You don't need this for 15 years. Okay, so I can request a lesser term?

Yeah, I might look at a 10-year. Because at the end of 10 years, you should have built a nest egg. Exactly. Following Financial Peace University. See, if you had a half a million dollars in the bank and no house payment, at your age, with these kids' ages, you wouldn't need insurance. Right. And you've got $80,000.

Yes. So you're $400,000 off, and in 10 years you can do that easy. So I wouldn't take out over a 10-year in your situation, and that will get your costs down some when you do that easy. So I wouldn't take out over a 10 year in your situation and that'll get your costs down some when you do that. But the purpose of life insurance is to replace lost income in the event of death if the person is counting on the income. So the purpose, you know, the point is, Rachel, we get self-insured by building up wealth. Right, exactly. And that's the amazing thing if you think about it, because even like a

whole life thing, you get into all the different types of life insurance. And that's why term is so great is because, again, our goal for you is to eventually not even have to have it, to eventually get to a place where you are completely out of debt, your house is paid for, you have money in retirement, and you're good. You're good to go. And that's a that's a great place to be in something a huge goal to work towards absolutely good stuff so the idea is folks until the kids are grown and gone there's three things you need to have happen to become self-insured you alleviate the debt as the debt goes down your need for insurance goes away the kids are are growing up. The older they are, your need for insurance goes away gradually. And as your wealth builds

in, for instance, your 401K or IRAs, your need for insurance goes away. So you've got a million dollars in your 401K, no house payment. The kids are grown and gone.

You're probably self-insured. Yep. You probably can, the person left behind is probably going to be okay. That puts us out of the Dave Ramsey Show in the books.

Rachel Cruz joining me today on the air. This is the Dave Ramsey Show. This is James Childs, producer of the Dave Ramsey Show. You can now listen to the Dave Ramsey Show on Spotify, Pandora, or anywhere you listen to podcasts. For all the ways to watch and listen, check out our show page at DaveRamsey.com slash show.