The Ramsey Show - App - Should I Sell the Rental That My Ex-Wife's Family Lives In? (Hour 1)

Episode Date: March 29, 2021

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🎵 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. Christy Wright, Ramsey personality, number one bestselling author, is my co-host today as we take your questions about your life and about your money. Open phones at 888-825-5225. That's 888-825-5225. Chad starts off this hour in Minneapolis. Hi, Chad.

Welcome to the Ramsey Show. Yeah. Thanks for taking my call, Dave and Chrissy. Sure. So, a little back story. Separated and divorced in 2020. Was able to contribute to all the bills through the divorce late last year and was able to pay off $30,000 in debt and actually paid off all of the balance of my student loan,

$7,000 this morning, so I'm officially debt-free. Good for you. That's awesome. Wow. Yeah, so 2020 was rough, but we got through some stuff. So my situation is I am currently living in a home owned by my company. For free, it's a great place. I just cover utilities. I'm sort of a

pseudo caretaker of the house with no plan to need to move off of that. Through the divorce, I gained sole possession of a rental that we used to live in. We only lived there for about a year, about seven years ago. So I'm aware of that. You know, there's probably, probably some long-term capital gains tax, um, on that. I owe 45, it's worth about one Oh five. So capital gains on that, I think is 20% of about 12 or so $12,000 to I've got, I've got a great renter in there. It's actually my ex-wife's family who's living in that house. And looking at with where real estate is now, me not needing a place to live, does it make sense to sell the house, pay the tax,

put that money that I would make on that into the market so that I have money for a down payment in the future? Wow, there's a lot of crap going on there. Uh-huh. All right. Yeah, I mean, to me, it's oxymoronic to say my ex-wife's in-laws are living in it and they're great renters. These things all go in one. That's in the same breath. He said that in the same breath.

I've got great renters and it's my ex-wife's in-laws. One sentence. Oh, okay. Okay, great. What's your definition of a great renter? They pay? They pay. They're clean. I'm your definition of a great renter? They pay? They pay, they're clean. I'm guessing you have a good relationship.

Sort of good relationship? Even through the divorce, myself and my ex-wife's family, we still get along really well. So it wasn't like this terrible back-and-forth divorce. Chad is just a nice guy. He's a nice guy. I mean, this is great. That's good. I'm happy for you.

Yeah, that's good. We're shocked. We're shocked, Chad, but it's good. It's good. There's nothing wrong with it. It's a good shot. So you don't have a home that you live in because your company that you work for furnishes you one. You're 100% debt-free.

You have your emergency fund in place or will have shortly. What is your income? $105,000. Okay. Plus a hot or cold bonus annually in February. Okay. Got one this year, but... So generally speaking, set aside the whole drama of

the divorce and the in-laws and all that stuff, and just say, okay, we have a rental property that we owe $45,000 on. Do I sell it? I don't know why you would. Well, so, looking at, you know, let's just say three years... So, I'm tied to that company. If I were ever to take that job. If you ever needed a house and you wanted to take the money out of that house, you could just sell it then. Right. Why sell it now? Well, because I don't know that the house is ever going to be worth more.

Why wouldn't i could i and well i'll be this with with the market that that i'm that i'm in it's a it's a rural town um only about 500 people um houses don't fly off the shelves um and i'm just looking at would i make a better return on my money is it an area of the city that is blighted i mean if you you wouldn't buy this piece of real estate as an investment were you buying real estate today um it i it's not a it's not a great um area for buying buying real estate as an investment why i don't know maybe i guess maybe it is i i is. I bought it on a foreclosure. That's not the point.

That's what I equated you. Why? You made a clear statement. Why? It's possible that your statement's correct. I wasn't saying you're wrong. I'm just understanding why. You're just saying it's a rural?

No, it's a row house. It's an inner city house, right? No, no, no. It's not an inner city. It's a rural. Rural. Oh, I misunderstood. 500 people in the town. So small town. People are not moving there city. It's a rural. Rural. Oh, I misunderstood. 500 people in the town.

So small town, people are not moving there often. It's hard to move. I get it. Only 500 people in the town. Oh. With no, you know, we're the closest large city is Minneapolis. Yeah, I probably would not buy that as a rental. I wouldn't disagree with you.

You're about to be driving 20 minutes to go to Walmart. Yeah, there's not a vibrant enough market for it to increase a lot in value is what you're saying because the market's not very big. So that's why you wouldn't buy it again. Okay. Right. So when is their lease up? So through, I currently do not have a lease with them. Okay.

So we've just been kind of poking along at it. What do they pay in rent? $700. Is that market? Yeah, that's market. Okay. The mortgage on it is... Okay.

Well, we've got to take the whole thing into consideration. I'm not worried about the in-laws because you're not. Ex-in-laws because you're not. But with a standard tenant in there or with them, I'm going to offer them a slight discount on the rent to stay in the property with a 30-day notice to leave, which is what they have now because they don't have a lease. And the discount is to keep the property sparkling clean and show ready because we're putting it on the market if they don't want the property to be shown and they won't keep it sparkling clean for a slight discount in the rent and continue with the 30-day notice promise then they need to go ahead and leave and you need to put it on the market. Yeah, I think that's more so I just wanted to... Yeah, now how to couch that in a conversation where it doesn't feel like you're hitting back from the divorce

is an interesting discussion too, right? Right, right. And that's the delicate balance is that, you know, great... So it's also okay to wait a fall to do this and let this all get a little more water under the bridge, if you want to be nice to it, if you want to be super nice to it. Right, well, yeah. But you don't need the money, and there's no rush. No, I don't need the money, and there's no rush. No, I don't need the money.

But looking at if that money was in a mutual fund, could I be looking at 10%? Because obviously the longer they stay in the rental, the more principal that's going to be. It's completely okay to move them now. But the closer to the divorce you move them, the more they're going to interpret that as hitting back, regardless of what you say, because human beings are just going to act that way, I think. Do you think? Yeah, I think it just, yeah, the timing and the way that you present it is going to matter a lot.

Yeah. And, but there's no, even what you would make on it is there, oh, and by the way, your capital gains calculation is wrong. You need to talk to your tax guy. It's not based on the equity in the house. It's based on what you paid for it, minus the depreciation you've taken, which is your adjusted basis subtracting from your sale price. What you owe on it has nothing to do with the calculation. Hey guys, Rachel Cruz here. Ever feel like you'll never save money or pay off all your debt?

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Host of a major podcast movement. You ought to check it out. It's the Christy Wright Show. Go to figure. And it is absolutely exploding. Be sure you join her on her devotional, A 40-Day Journey Back to You. Living True, 40 Days to Get Back to You is a best-selling devotional that just came out back in the fall and it has done very very well thank you very much be sure and check that out our question of the day comes from blinds.com find

out for yourself why blinds.com is the number one online retailer of custom window coverings you get free samples free shipping and with the new promos they run every month you'll save even more use the promo code ramsey to get the best possible deal today's question comes from mason in grand rapids my wife has a dream of starting a wedding venue on a rural piece of land and i had the idea of combining my passion for pheasant hunting into this project. How do we fund buying the land and building a venue? I've actually gotten this question, not the pheasant hunting part, but the event venue on a piece of land or commercial space multiple times, Dave. And what I encourage people to do that have never had any experience in event

planning or event hosting to figure out how to prove their concept on a smaller scale. So is there some type of event space that you can sublease to prove your concept, get your feet wet, start to build your skills and say, okay, this is what we need when we build, when we buy. And then you're also going to get cash in the door while you're proving the concept to be able to fund buying either the land or the building or whatever it is that you want to do. But people start with this big dream, and I love that because they have a big dream.

But I want them to scale it back and say, what is a smaller version of that dream to baby step into it to prove it, get some cash in the door, and learn along the way. Your point is run some kind of a freaking test market. Yes. Some way to get out there and prove that you know how to do this a little bit. So in order to open a restaurant, you do not have to build a restaurant. Right. You start doing catering out of your kitchen. Right.

And then from there, once you've proven some of that, you've proven that, A, people will eat your food and not die. Right. And that they want to buy it some more, then the next thing you do is you talk about renting a defunct restaurant somewhere for little or nothing where all the equipment's in there. Only after you've been doing this a long time do you build a restaurant from the ground up as a small business endeavor. And you know so much more. By the time you actually do that, you know so much more about what you need,

what you want, what your mistakes are. Yeah, like they might not come out to the country to get married at a pheasant hunting place. The number one thing I see people believe, one of the number one things, especially when they're starting out, is they have this idea, Dave, that if you build it, they will come. Yeah, it's a field of dreams. It's just not true. If you build it and you build something good and you try really hard

and you chase them down and you have really good marketing and you get really smart, if you do a lot of things, you can go find them and make this work. But it's not just I'm going to build an event space on a farm where my husband pheasant hunts and they're just going to show up. It doesn't work like that. Not online or in person, by the way. Just because you put a website up doesn't mean people are going to come to it. You have to do more than that. You have to be more strategic. So prove your idea on a smaller scale before you go buy some land yeah like be a pheasant hunt guide on other people's land or on your land with no facilities required right a day trip type of a thing before you build a freaking lodge yeah you know and um so make sure

you actually can find the birds son yes you probably know sowery wouldn't be doing this uh but i mean you know improve that other people will pay you for the privilege of hunting beside you because you're going to lead them into birds so um the same thing so i don't know this sounds like uh two ideas that need a lot more work, and you're getting ready to go broke screwing around with them if you go build big buildings with debt. I can see $400,000 worth of facilities here that nobody visits. Well, and to your point, which we didn't even hit on this, but these are two separate ideas that have nothing to do with each other

other than the fact that land is involved. And, Dave, one of the things I see a lot are lot you might be a redneck if you get married in a pheasant hunting lodge okay people because it's so easy to start a side business which is what i love helping people do through business boutique it's so easy to start something small on the side from home online whatever well because it's so easy dave people act on all of their ideas they start 15 businesses they're like oh i do hair and I do landscaping and I walk dogs and I cook barbecue. And I'm also an optometrist on the side and I do pheasant hunting and I do wedding planning. It's like, no one knows what you do. You're not known for anything. So pick one thing.

Except your multiple personalities. These are not related. These ideas are not related. So if you wanted to do them all conveniently at some point, they're marketed different. have separate markets separate brands separate purpose separate time frame no no bride wants to walk down the aisle with a gunshot in the background it's a true shotgun wedding it's a true shotgun wedding it takes on a totally different meaning yes it does all right so yeah um i mean you could hypothetically back into ending up with an All right. So, yeah. I mean, you could hypothetically back into ending up with an event barn on the property that had some lodging that could be used for both, but they really don't overlap. These are not.

I mean, you'd really have to push this. So, Mason, start small somewhere else. Don't be building buildings for brand-new businesses because you're wrong about what you think. The thing about business, you can always – there's three rules of business, and they always stand true. Here they are. It's going to take twice as long as you think. It's going to cost twice as much as you think, and you're not the exception. Those are the three rules of business. That last one's good, yep. And so – because you get all hyped up and piped up, and I do too.

I get all jammed up about my latest entrepreneurial idea that I had when I was walking this morning listening to an audio book. And I went, I can do that. And then all of a sudden you figure out a million dollars later you were wrong. So, yeah, take your time and proof text it. Yep. Find a way to test your ideas in the market. Ah, Lucinda is with us. Lucinda is in Charlottesville, Virginia.

Hi, Lucinda. How are you? Hi, Dave. How are you? Better than I deserve. What's up? Wonderful. So I am currently 10 years into my current career for which I took out a student loan. And my student loan is currently in collection.

I never really understood the difference between like default or forbearance and uh deferment so now it's landed in collection and i wonder if i can negotiate my student loan down back to like its original place this is a federally insured student loan yes okay uh no uh the principal balance that you borrowed is not negotiable and the interest that has been charged on it is not negotiable the late fees are negotiable and any other gotcha fees other than interest and principal might be negotiable but uh by and large the most of the number that you're looking at are your principal and your interest because you've really not paid anything on it for 10 years what do you owe about 38 000 and what do you make about 38 000 okay all right what do you do i do uh coding and billing medical coding and billing

okay 40 hours a week 40 yes okay you work for someone or contract i work for someone for a company okay um are you prohibited from taking in more work as a side job no actually i'm actually ready to do that i had a part-time job uh COVID, and then, you know, COVID came, and so I had lost that job. So if you took on 30 more hours a week of work of billing and coding, what could you make a month? About a couple grand? Maybe a little less than that.

30 hours a week? Maybe a little less. 30 hours a week worth? Bring home a couple grand in a month? Yeah. Oh, yes, yes, definitely, definitely. Okay. All right.

And so $2,000 into $38,000, that gets us out of debt in less than 20 months, right? Yeah, and i'm ready i just i've been a little hesitant to call you know and speak with these people because i know once i give them information everything will start over yeah you don't if i don't have the money only reason you need to give them you don't need to give them any information you just need to get information on exactly what your balances are and try to negotiate away any late fees but not the interest in the principal. The reason they won't negotiate that away is the government has guaranteed they're going to get that money from the government if you don't give it to them.

So there's no reason for them to negotiate it down. But get a solid number and then start putting $2,000 to $3,000 a month on it, and you will be done in under two years. You have to address this issue now. Christy Wright Ramsey Personality is my co-host today here on The Ramsey Show in the lobby of Ramsey Solutions on the debt-free stage. Mark and Kerry are joining us, which can only mean one thing. They're debt-free. Way to go, guys.

Yes, sir. Thank you for having us. Absolutely. Our honor. So how much have you paid off? We were $8.89 shy of $150,000. I'm going with $150,000. That's a rounding error.

Okay. And how long did this take you? 22 months. Wow. And your range of income during that time? Just over $100,000 to $111,000. Cool. What do you guys do for a living?

I'm in sales, and she does the harder job taking care of the kids in the household. That'll do it. That'll do it. Where do you guys do for a living? I'm in sales, and she does the harder job taking care of the kids in the household. That'll do it. That'll do it. Where do you guys live? Eleanor, West Virginia, near Charleston, Huntington, West Virginia. Beautiful area of the country. Yes, sir. Beautiful mountains up there.

Wow. Well, welcome to Nashville. Congratulations. Thank you. Very well done. What kind of debt were you in? $150,000. Well, some people would say it's dirt and some building materials, but we just call it our house.

You paid off your house? It was all mortgage. All mortgage. Wow. Wow. Look at it, weird people. You guys are amazing. How old are you two? Well, when we did it, one of us has since turned 36, but we were both 35 when we finished it off.

Okay. All right. Way to go, man. Yes, sir. And a paid-for house. What's this thing worth? Probably $250, $275 somewhere in the ballpark. Oh, you got no payments in the world.

You're not even 40. You rock. That's right. Wow. Woo-hoo. That's amazing's amazing guys i love it so what started this journey because most people don't i mean you're weird i mean just most people don't think they can do this and you just said i'm doing it well um we've and i guess part of that we had a little money we at the end knocked out a big chunk that we always sat on thought it was our comfort and stuff and finally finally had to get over putting it, you know, where the money was going.

It was still ours one way or another. But I guess going back a little while, not to get into too much of my job. I love my job and I love my bosses. But their tactic of, I guess, being a sales manager maybe was more of a doom and gloom. You know, if we don't get this done next month, who knows what's going to happen. And I got to a point where it was like, I don't want to rely on what may or may not i want to know what i control and uh at that point we started and went after the house we said we're getting this done and if they try to use some of those we're it kind of bounces off you know not that

we're in a little hard to be scared when you don't have a mortgage. Yes, sir. Yes, sir. I like it. I like it. That's fun. So how did you guys get connected to us? Well, this job that I was in, when I first started my career, I had kind of a small territory, and part of it was eastern Kentucky, and there wasn't too many stations down there. One of them, a little hick country station, and you happened to be on there.

I fit right in. Right at home. I thought it might suit you. Right at home. But I ended up listening to it, and that's how we happen to be on there. I fit right in. Right at home. I thought it might suit you. Right at home. But I ended up listening to it and that's how we kind of got on board. And actually, I'm not a huge reader. I read some if it's something that's really interesting. And actually, my wife bought me the book when I started talking about you.

That kind of got us involved and kind of took it off and we went from there. But probably on the house, we slowed down as far as we weren't totally focused. And then all of a sudden, like I said, that kind of just ignited some of those things and we decided we're going to get after it. And here we are. Wow. So did y'all have debt, other consumer debt, before you started paying off the house when you listened to the show?

No. Early in our marriage, we did just a little bit. But it was something that I remember the first time. We had a car payment a long time ago, but it was something that never sat well with us. You know, we paid off that one and, you know, I don't know, 10 months just because we wanted to get rid of it. And then we never went with that and never sat on it. But like I said, we kind of got focused and honed in on the house. Yeah.

Y'all been weird all along. You're just a little weirder now. A little weirder now i love that so carrie 22 months you guys had to lean in and sacrifice what was the hardest part of this um i don't know if it was really that hard in a lot of ways just because i'm a rural person so having the budget was actually easier for me and he would think you know i wasn't interested but i just would say like okay what is the budget for this what's the budget was actually easier for me and he would think you know i wasn't interested but i just would say like okay what is the budget for this what's the budget for that and so he said it and i just followed it and so i mean i didn't know what she said as far as she i said

it she implemented it i mean one thing i wanted to say when i was on the stage especially here the last few weeks i'm not an emotional type, but I'm getting there. But I've never been so humbled in knowing what she did when, for probably the first 12 months, I didn't get it. I mean, I kept telling her, you've got to be involved because you hear the people that aren't, both of them, meeting. We never met, went over a budget the whole time. She didn't care to look at it. The thing is, she was more in than most people even think about being in you know she let me uh you know she would tell me tell me what my budget is and then halfway through the month she goes how much do we have left in groceries i'll be like oh

here it is and she'd just keep it under and uh very humbled by what she what respect and trust she put in me to lead us in the right direction and i didn't want to fail her that's part of the reason i kept pushing to do it shorter and shorter and shorter and you know we pushed harder to get to the point that plus i want to do it while she was still i mean one of us was still 35 or both we both we both were wearing the older woman thing out here i'm older than maddie come on come on don't let him get away with that kick Kick him in the shin. It's only 10 months. That's about how much older Sharon is than me. So I'm married to an older woman for about 10 months a year.

Yeah. That's right. Matt's three months, and he reminds me during those three months, on the radio, well, one of us. Oh, he's two. He did two. Wow. Well, it's a good trend, then. All right.

Way to go, you guys. We're very proud of you. So you have no payments in the world. No, sir. How does that feel? No, it's good. You know, you didn't realize, but it was a weight that was lifted when it was over. So it was good to be done.

Yeah. You feel free. Yes. You do. Yeah. And you don't realize it until you get there what that feeling feels like, you know, because you're working, you're working, you're working, and then when it's over, you're like, oh, it does feel lighter. Yeah, it's almost surreal.

Yes, it is. Well done. Very, very well done. What do you tell people the key to getting out of debt is? What did you all do, the key things that made this possible? To me, it was all about focus, which you put your focus on, your sights. I think you had somebody in there recently talking about putting all guns on the target. You know, we were focused on what our goal was.

And I'm pretty, you know, she said I can get single track minded. You know, I'm on, I get on one track and I'll follow that until the end, you know, to the station we're getting to. But just being focused on what we were going after. And that's all we cared about. It's amazing, too, because when you started telling your story, you talked about you didn't want anybody holding anything over your head or being able to scare you with this situation or what if this happens. It's like nobody has anything on you now. You've got all the power, all the options in the world.

Absolutely. When you're debt-free, that's one of the things we try to help people understand. It's not just financial. It's also the sense of power and control and options that that financial freedom allows. And you guys have that. Well done, y'all. That's amazing. Well, as young as you are, if you just start investing just a house payment from now on,

you'll be multi, multi, multimillionaires. Yes, sir. I mean, that alone. Wow. Very cool. So you changed your family tree. You brought the kiddos with you. What are their names and ages?

Go ahead, Mom. We have Landon is 10 and Jalen is 7. Cool. Awesome. So have they been practicing their debt-free scream? Do they know what we're doing? Let's see the side on, well, I don't know, to your right side of the stage. Have they been practicing maybe the other side?

Not so much. They might join us. We'll see. All right. Very cool. Well, their family tree's changed. I'm proud of you guys. We got a copy. We'll see. All right. Very cool. Their family trees changed. I'm proud of you guys. We got a copy of Rachel Cruz's book for you, Know Yourself, Know Your Money, New York Times bestseller.

Great. And hopefully that'll help you guys out as you continue on your wealth building journey. Very, very, very well done. Good stuff. All right. It's Mark and Carrie Landon and Jalen from Charleston, West Virginia. $150,000 paid off in 22 months, making $100,000 to $111,000. Count it down.

Let's hear a debt-free scream. Here we go. Three, two, one. We're debt-free! Yeah! Oh, you've got to love it. That's awesome. Congratulations.

That's amazing. Man, house and everything. At 36 years old. I mean, just like you said, the options, the possibilities of what they can do now, this young. That's incredible. Turns into a lot of money. Turns into a lot of money. When you quit making banks rich, the odd thing happens, you make yourself rich.

It's an amazing correlation. This is The Ramsey Show. We'll be right back. Well, if there's one thing we all know by now, you cannot invest alone. You need someone in your corner, someone in your life who knows the market, knows about investing, that can talk you off the ledge when COVID happens or whatever it is, right? Look, I love do-it-yourselfers. I'm a do-it-yourselfer, but I don't even work on my own cars anymore, and I certainly don't pull my own teeth. And I know a lot more about investing than most of you and i don't do my own investing i don't do get caught up in some reddit group investing in game stock game stop uh you make

rookie mistakes you get greedy you lose your butt and you get into all kinds of problems it was fun to watch it was kind of an interesting news story for about 36 seconds but it's not an investment strategy when i christy i remember um you and rachel were probably little girls and beanie babies were crazy yeah yeah yeah and um we consequently have a lot of Beanie Babies. The grandbabies play and the dogs play with the Beanie Babies now. My mother-in-law just gave Carter a little hedgehog. I was like, where did that come from? She was like, it's our Beanie Baby collection that was going to make us rich.

Yeah, that's it. That's it. I had people call me on the air saying, I'm moving my kids' college funds into Beanie Babies. Beanie Babies, sure. And I, of course, was not nice to them and ripped them to shreds for being so dadgum foolish. But this is the kind of crap you do. You get caught up in whatever the latest thing is. I remember, you know, when the Iraqi Dinar, we're going to buy the currency in Iraq, a failed country,

which, of of course makes it a very stable currency what a dumb butt idea you know and people do stuff like this and they put money in things they shouldn't put in that are faddish or new or what listen don't do that you're trying to you're trying to build wealth so you need somebody in your corner and we have put together a group of people we recommend called SmartVestor Pros because you're a SmartVestor and they're the pro to help you. And they're going to teach you and you're going to understand investing and they're going to calm your little butt down so you don't do stupid butt stuff like beanie babies.

Does that sound absurd? Sounds absurd. And then the second round was somebody told me that some of those beanie Babies my dog was playing with were worth $5,000 on eBay. So I jump on eBay and they're listed for $5,000, but no one's ever sold one. Right. Sure. Listed, but doesn't actually amount to anything. I can't find any confirmed sale of Beanie Babies over $100 in the last decade.

You can list anything for about anything. Doesn't mean that's the value. You can list it, yeah. My wife is looking at a piece of real estate. She goes, but they're asking, and I don't care what they're asking. It doesn't matter what they're asking. It has nothing to do with the value. You can ask anything.

So text the word INVEST to 33-789. If you're ready to do some investing, we'll hook you up with a smart investor pro who will give you a calm, a la boring, steady, predictable result plan, which is the way you build wealth. The tortoise beats the hare every time I read the book. The hare is running around all over the place buying beanie babies. But the tortoise is slow and ugly and wins. Text INVEST to 33-789. One thing I'm sure of, not a single SmartVestor pro in the history of our involvement has recommended Beanie Babies as an outlet. Okay, so other than something for your baby kids to play with or your baby dog to play with. That's simple.

Text INVEST to 33-789. INVEST, 33-789. And SmartVisitorPro will help you get your stuff going for your baby step four retirement, five kids college, your long-term wealth building tools, all of this stuff. Preston's in Greenville, South Carolina. Hi, Preston. Welcome to the Dave Ramsey Show. Hey, Dave. Long-time listener, first-time caller. Well, Preston. Welcome to the Dave Ramsey Show. Hey, Dave. Long time listener, first time caller.

Well, thank you. First of all, I want to say hello to you and Christy, and I want to thank you for helping save my financial life. Well, bless your heart. Thank you, sir. How can we help today? Yes, sir. Well, it feels like a rhetorical question, and after hearing your debt-free scream, it's both intimidating and kind of inspirational because the question I have is I'm completely debt-free except for my house, and I only owe $80,000 on the house. And I know it may sound crazy, but I just had to ask the question anyway. In about two years, I could use my 401k to pay it off if I had to, but I feel like in the meantime, I could use the money that I make just to pay it off, and I was just wondering, is that a good idea more than anything else? How old are you?

Because at 59 1⁄2 in my state, you can use your 401k without penalty. Okay, so you're 57 1⁄2, give or take. Right, yes, sir. Okay, and how much is in your 401k today? What about 210? Okay. And what do you make a year? I read it about 80,000.

Good for you. Well, you've done real well. Congratulations. The two primary things that we found when our Ramsey team did a study of the largest study ever done on millionaires in North America, the two primary things we found that they did for their first $1 to $5 million in net worth was they got their home paid off. That was a big chunk of it. And they had a big chunk in retirement savings.

So you're heading correctly on both of these issues. And so anything we can do to get that house paid off, the fastest we can get it paid off, the faster you're going to build wealth and the more wealth you're going to build. So, yeah, you're going to go ahead and pay that off in the next two years with your income. Sure. Yes. That's the goal. But I was just actually, well, I feel kind of silly asking you this question.

No, it's not silly at all. It's a good question. It's a silly answer. No, it's not silly at all. It's a good question. It's a good question. But my point is you want a big bunch of both at the end of the game, a big bunch of paid-for house and a big bunch of money piled up in your investment account when you get there. So, Christy, what we found was, and he's right on track to be there, by the way, was that these millionaires, the typical millionaire in their first uh what was a in their first little bit of wealth their first million to five million dollars had about a third of it in their home was paid off and a lot of them hit this model exactly like a statistically significant

number and uh and about two-thirds was in their 401k or the roth IRA so we find somebody with a million and a half net worth half million dollar paid for house and a was in their 401k or their Roth IRA. So we find somebody with a million and a half net worth, half a million dollars paid for house, and a million in their 401k. And we found that over and over and over and over and over and over again. And he's really on track to be there probably in about a decade, if he doesn't do much else. If he gets the house paid off, that house will probably be worth $500. And his $210, he'll be adding to it during that decade, and it'll be growing and doubling on its own

because he's got it invested, I hope, in good growth stock mutual funds. So he'll be right there. Yeah, the hard thing, and we've received this call so many times, or some version of it whenever I've hosted with you, but the hard thing is when you get close to the finish line, when you get close to either paying off your last debt, if it's just consumer debt, or your house, if that's the baby step that you're on, you get so antsy to do it, to be completely debt-free, that you start looking at ways to fast-forward it and say, okay, how can I take money out of my retirement to get it paid off quicker and then I'll rebuild my retirement?

But that's the reason I think it's this good reminder that it's the slow and steady wins the race. You want both. You don't want to sacrifice one to be able to fast-forward the other. You're still going to get there. It's not that you're not going to be able to pay off the house. but it's, I think, some people, and we've had that call even with consumer debt. Should I take money out of my retirement to pay off this last debt? And we're like, no. You want to make sure that you are still letting that money grow and not paying the penalties on it.

You know, when I went broke in my 20s, one of the things I did was I wanted to talk to old rich people. I'd been young and rich. I didn't want his opinion. Right. It didn't work out well. So I wanted to talk to people with no hair and gray hair that had money and talk to old rich people. And so how did you do it? And they knew what I was looking for.

They knew I was looking for a magic pill. Quick. They knew I was looking for a jack-in-the-beanstalk. I need the beans, right? I need looking for. They knew I was looking for a magic pill. Quick. They knew I was looking for a, you know, jack in the beanstalk. I need the beans, right? I need the magic. I need the special sauce. I need the recipe. And more than one time, I would have an old person kick back in their chair, cross their

arms and say something like, well, you know, the best way to get rich quick is don't. You're like, that is not what I wanted to hear. What do you mean, don't get rich? No, don't get rich quick. That's the quickest way to build wealth is don't get rich quick. Because get rich quick leads you into stupidity. The Bible says he who hastens to be rich will not go unpunished. If you're in a hurry, you're not going to go unpunished.

Get rich quick always leads you to broker, not to richer. Ha! There's no shortcut to any place it's worth going. It's common sense. It's not popular in an instant culture. But it's the truth. This is the Ramsey Show. This is James Childs, producer of The Ramsey Show.

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