The Ramsey Show - App - Should I Stay Gazelle Intense After Paying Off Debt? (Hour 1)

Episode Date: November 1, 2022

Dave Ramsey & Kristina Ellis discuss: Buying company stock, Staying gazelle intense in baby steps 4-6. Inheriting a million dollars, Renting vs. buying. Have a question for the show? Call 888-825-5225 Weekdays from 2-5pm ET Want a plan for your money? Find out where to start: https://bit.ly/3nInETX Listen to all The Ramsey Network podcasts: https://bit.ly/3GxiXm6 Learn more about your ad choices. https://www.megaphone.fm/adchoices Ramsey Solutions Privacy Policy

Live from the headquarters of Ramsey Solutions, broadcasting from the Pods Moving and Storage Studio, 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. We help people build wealth, do work that they really love, and create actual amazing relationships. Christina Ellis, number one best-selling author, Ramsey Personality is my co-host today as we answer your questions about your life and your money. The call is free

and some say the advice is worth exactly what you pay for it. The phone number is 888-825-5225. That's 888-825-5225. We're going to start off with Scott this hour in Fort Lauderdale. Hey, Scott, how are you? I'm good, Dave. How are you? Better than I deserve. What's up? So I work for a company that I get 10% of my salary, the ability to purchase company stock. The stock has been very, very fruitful over the 10 years that I've worked for the company. The way our stock purchase works is that we get to purchase the 10% of our salary twice a year in a six-month period. That's 15% below the lowest point in that six month period. So the, the, the sometimes when I get these, the stock at the six months, it can be 40, $50 a share better than the market value at the

time. When I read baby steps, millionaire and the money makeover, you talk more about putting your retirement into mutual funds. I've kind of considered that 10% as being part of my retirement. I take 16% out of my total salary with 6% in a 401k that my company matches. And then the other 10% is in company stock. And the stock has done nothing but gain in the nine years that I've been there, and some big jumps as well. So do I leave that in there and consider that still 10% of my retirement, or do I switch it like you talk about in the money makeover to mutual funds? Well, congratulations.

Sounds like you've hit a home run, man. It feels kind of good. And so, yeah, your theory has not been stress tested yet. And that'll come along. Okay. First, let me give you a couple observations first. Number one, your company stock purchase plan is no different than most of them. They're almost all exactly what you described, 15% below, lowest of the six-month average, whatever.

And so it's not like you're getting some huge discount that other people that work for a publicly traded company with stock options don't get. It's almost always exactly what you outlined. Very, very similar, if not. So it's good, but it's not the biggest deal. In most cases, if you look at a 52-week high, 52-week low on the charts, you will see a move of most stocks more than 15% up or down. And so that 15% discount can, as you said, cause, because it's down, cause a great purchase price, but but also can cause, you know, it can evaporate in about an eye blink.

Just because of the normal volatility of stock. Observation number one. Observation number two, single stocks are more risky than mutual funds. Okay. Period. No exceptions. Because you're violating the diversification rule. You know, you got all your eggs in one basket,

or at least that number of eggs are all in that one basket. And so you're taking more risk. Even though you've had the benefit of this company doing very well, it's gone up, gone up, gone up. I'm happy for you. I'm glad it went up. I don't want you to have hard times. But that can gloss over the fact that you're taking

risk because you haven't had a loss you've not anything that scared you that woke you up went oh this is risky so what we tell folks to do our standard rule of thumb is uh don't put more than 10 of your net worth in single stocks and you currently have more than that with the formula you're giving me. Okay. Okay. So the example of that always comes back to my mind was many years ago I was coaching a lady that had worked for Procter & Gamble, which is a fine company.

She had $800,000 in her 401K. It was all in company stock. It went in half the year she retired. So I don't, none of my 401k is in, I work for Apple is, is in Apple stock. Oh, that's a wonderful stock. Yeah. The stock purchase is a total separate deal. And to be honest with you, Dave, I haven't, I'm recently divorced a couple of years and I was lucky to get out and be debt-free. And, you know, I never really read your books because I didn't have any debt.

But after watching you with Robert Morris, I downloaded the first book and then went to the second book. And it really motivated me to kind of get my act together. So Ecclesiastes says, spread your portions to seven, yes, to eight, for disaster may come upon the land. And Apple is about as wonderful a single stock story as there is on the planet. Yeah. It's doubled. It's doubled. Yeah, it's crazy.

It's wonderful. I would have to get rid of some of it. They have more money than Egypt. They really do. I don't know what. They actually have more money than Egypt. They really do. They actually have more cash than Egypt. It's an incredible company. Hey, you mentioned you read the first two books

and that you originally had kind of stayed away because you weren't in debt, but I recommend you pick up Baby Step Millionaires. He did. That's what he's talking about. Oh, perfect. Oh, I did. I did. I read both of the books. I've actually listened to probably three times each. Well, thank you. So the whole question is, how much risk do you want to take? And I think we can all stand up and cheer and say Apple has done a wonderful job.

Of all the single stocks out there, it's the one that might be the most tempting. It is an unbelievable story. But I still, I'm just risk-averse enough to say, okay, I'm going with the scriptures that spread my portions to 7, yes to 8. I don't want my whole deal on one company. And you don't have your whole deal, but you got a lot of it. And so I'm probably going to be a little less apple-prone if I'm you. If I was ever going to do what you're doing, it would be that company.

Oh, my God, it's wonderful, okay? So, you know, if you want to keep doing it, keep doing it. I just want you to hear, I want you to feel that you're you're violating the diversification principle and that does nothing but increase risk inherently in that one bad iphone launch one bad lawsuit over a tablet or whatever i don't know what can happen i mean i have no idea what can happen but you know it's they get cancel cultured i don't know i don't know how this works but whatever it is i just don't want it's not in your control you're one of a bazillion employees you don't control this stock and so i i wouldn't be as heavy in it as you are but I will acquiesce and say if I was ever going to be.

Good Lord. The financial, regardless of what you think of the products or the people or anything else, the financials on that company are blistering good. Yeah, that's a great position to be in. It's crazy. It's crazy how much cash they have it's mind-blowing but yeah but aside from that i still well i mean i'm sitting here saying how much i'm a fan boy of their stock and i don't own a single share that says i follow the principles i don't buy single

stocks at all and if i was going to it wouldn't be more than 10% of my net worth, don't it? You can do what you want to do, but I'm not doing it. Thanks for the call. This is The Ramsey Show. សូវាប់បានបានបានបានបានបានបានបានបានបានបានបានបានបានបានបានបានបានបានបានបានបានបានបានបានបានបានបានបានបានបានបានបានបានបានបានបានបានបានបានបានបានបានបានបានបានបានបានបានបានបានបានបានបានបានបានបានបានបានបានបានបានបានបានបានបានបានបានបានបានបានបា Christina Ellis, Ramsey Personality, number one best-selling author, is my co-host today as we answer your questions about your wealth, your work that you love, and actual amazing relationships. Mike is with us in Philly. Hey, Mike, welcome to The Ramsey Show.

Thanks, Dave. Happy that you took my phone call, and thanks for giving me the tools to really change my life. I really appreciate it. I'm honored. How can I help? So I'm on baby steps four, five, and six. And ever since I paid off my debt and got my full emergency fund, I'm saving up for a house, but the last six months, I've been going over budget. And I just feel like I've sort of lost that gazelle intensity regarding my budget and expenses.

And I just wanted to know if you had any tips to help me sort of get back on track. Mike, what motivates you to succeed financially? What gets you excited whenever you think about saving and money? I don't know. I guess just the idea of living free and being able to do what I want. I mean, I was under so much pressure from debt for so long and such a big part of my life that like this it's this sense of freedom that's been really my you know i guess my passion or my uh uh it's how old are you you know what i mean i'm 37 what do you do for a living i work in philanthropy So you're a development guy? Yes.

Okay, cool. Well, one thing, one clarification. Once you're in Baby Steps 4, 5, and 6, we don't teach gazelle intensity. We say move from intensity to intentionality. But even that, you're violating because you're going over budget. You're not being intentional because you're not doing with your money. Your money's not doing what you want it to do because you're goofing up. That's what you're telling me. So even that, you're not being intentional because you're not living on your budget

so that you can buy the house, right? Now, is your budget too tight? It probably is. Are you single? Yes. are you a saver or a spender by nature i used to be a spender but i think i've become a bit of a saver except that part where you fell off the budget and didn't save yeah well i mean i'm still i i you know to be perfectly honest i'm that i'm still putting money into my retirement account uh that's just you should be from my yeah you should well that's okay if you do if you want to do that while you're saving for the house that's not that's okay

sometimes baby at baby step 3b people stop their retirement and sometimes they keep retirement going while they're saving for a house either one's okay nothing is violated there you're more asking about motivation so if your budget is reasonable for you to live on you're not having to strain and hold your breath like you were back in baby steps one through three instead you're just you know you went from a sprint to now you're in a marathon you feel the difference yeah and if in that cadence that rhythm your budget is reasonable then you've got to start asking yourself okay what do i want more this donut or this or are these eight pounds that this donut's going to put on me these are questions i ask myself every day so i mean it's like like i saw a bumper sticker one time i said nothing tastes

as good as it feels to be thin yeah you know i might argue that but that's a good bumper sticker so you know um but the uh uh you know you know is it worth it to not do that thing that's a budget buster in order to get your house yeah you probably need to get like pictures of houses that you like and put them on your refrigerator that's not a bad idea that's not a bad idea kind of get a visual in front of you that's punching you in the nose every so often and you're going wait a minute i've already spent my restaurant budget if i go out to eat three more times this week and screw around with this money, I'm not ever getting a house. Yeah. Yeah. That's what I was going to say is it's so important to have your why be clear. Like you need to know why you're fighting,

why you're saving, why you're budgeting. I love that you're in philanthropy and you're already a giving person. One of the huge motivations of getting to Baby Step 7 is so that you can give and live like no one else. So like Dave said, get a picture of the house that you want. Take some time by yourself and just think through, you know, why am I doing this? What is inspiring to me whenever I reach Baby Step 7, when I have that paid for house? You know, what can I do with that money? How can I give back? What charities are excited about? The other thing that helps most of us is to have community around us while we're trying to be accountable and to be encouraged and to have some people in our lives and so if you've been

through financial peace university i have not okay i'm gonna put you through that and get you into some of those groups and let those and just tell those groups you need to be real with a group and go hey group y'all got to hold me accountable because you're going to be, you know, the good news is you're single and you don't have to convince somebody else to do this. The bad news is there's nobody ragging on you if you mess it up. Yeah. And so, but you, so you need some people in your corner that are calling you out and reminding you what's real and what's important because you already know all this stuff. You're obviously a bright guy. You know how to do this. So, pretty man i think you're gonna be fine the good

news is you actually had a budget that said wait a minute you're off the bat you're off the path you hit the guardrail get back in the lane it's telling you right it's screaming at you and that's you didn't even have that before so now the numbers hold you accountable they wake you up and go wait wait wait wait rick is in springfield missouri hey rick welcome to the ramsey show thank you dave thank you kelly how can we help oh man i just inherited a million dollars from my mom i'm disabled and i don't know what to do i'm married i got two special needs kids um i get like eleven hundred100 a month in disability check. And now with all this money coming, I need help so that it's not just poof up in smoke. Wow.

I need to invest it so that my wife has a reasonable income. I'm going to be 50 this year. Wow. What's the nature of your disability, sir? A car accident. I got caught up in a 45 car pileup. Yeah, but I mean, what happened to you? Oh, I had an out-of-body experience.

I mean, what is your disability? The union told me that I'm not able to perform my duties. I used to get down in a 40, 50-foot hole, and now I feel like the walls were going to cave in on me, so I wasn't able to do my job. I guess paranoia of my job. So anxiety from the wreck and so forth. Yes, PTSD is what they said I had. Okay, that's fair. How long ago was that?

Back in 2008. Okay. Have you ever tried to do anything else? I don't like leaving my house in today's society. Me neither, but I get you. But, okay. Does your wife work outside the home? No, she's a home goddess.

She stays at home and takes care of the kids. And y'all make it on $1,100 a month, huh? Super budgeted. Wow. Okay. Well, the million dollars, like you say, could go go poof and i appreciate your fear about that and the way to keep you from doing that is to put some folks in your corner to teach you not to do it for you i do not want you going and doing something because i said to do it or someone

else said to do it the job of the people in your corner they need to have the stock market and i'm scared of that it's okay if you're in the stock market i don't care if you're there that's that's where my my personal retirement is in the stock market in my 401k i'm not worried about that what i am worried about is you putting money in something that you don't understand and that someone else told you to do it and you're at you know then then that then the money's gone and you're a victim of that i don't want you to be in a victim i want you to be a victor thank you so you are in control you make the decisions you sit down with someone if you want to talk to someone that does investing the way we teach here on the air you can click smart investor at ramsey solutions

it'll connect you up with brokers that do mutual fund investing the way i personally do it and you can begin to learn about it. If you're scared of the stock market right now, that's reasonable. But, you know, you can't be scared of everything and have this million dollars make any money. It's going to have to make a little bit of money on something. And putting it in a coffee can and burying it in the backyard, we don't even have coffee cans anymore,

putting it in something and burying it in the backyard. We don't even have coffee cans anymore. Putting it in something and burying it in the backyard is a bad idea. That's going to cost you $100,000 a year. So you need to have a little bit of courage, but your courage is going to come from knowledge, not being rash or being a gambler. You learn about buying a house before you buy a house, and then you don't make a mistake buying a house. This is The Ramsey personality, number one best-selling author,

is my co-host. Open phones at 888-825-5225. Thank you for joining us, America. Amy's with us in Dallas, Texas. Hi, Amy. How are you? I'm great, Mr. Ramsey. How are you doing?

Better than I deserve. What's up? I think it's a quick question. I know you stress mutual funds, but I was just curious. If I have researched and both have a proven track record of 10% to 12% growth over the long haul, does it matter if I choose an ETF or a mutual fund, really? No, they do about the same thing. Okay.

The thing you don't want to get into, and if you're reading about ETFs and you go down the rabbit hole on one of these stupid Reddit threads or something like that, then you may find people using ETFs to try to time the market and jump in and out. I've never gone on Reddit my whole life. Good. That's a wise thing. I haven't gone back in a long time, but my team tells me from time to time stuff that's going on.

But, yeah, it's like reading the comments after an article. You understand why some species eat their young and so um but the uh uh it does dumbest humans on the planet but yeah the uh anyway the etf if you go if you get off i'll use another one if you go off on one of these stupid tiktok things or something like that so where you're getting all this financial advice from goobs or trying to figure out some get rich quick thing okay don't use an etf that way if you're simply using it like a mutual fund it basically is a mutual fund it's kind of how it acts okay great i mean it's very very very similar would you agree with what you've learned about it yes i i think i was mainly going for a more efficient tax thing so i didn't have to like

plan for the mutual fund less tax efficient that's what i was going for so you've maxed out all your retirement yes sir excellent and you're 100 debt-free house and everything yes sir way to go how old are you uh 33 husband's 32 ding yeah the etf will give you the same benefit on the tax efficiency that like a S&P 500 would, an index fund. If you buy a low turnover mutual fund, that means they don't sell the stocks inside of it very often, has a low turnover ratio. That's what I do in your situation, baby step, post baby step seven stuff. You're 100% out of debt, 100% maxed out on retirement. Now, where can i put some money and

not get my butt taxed off right exactly and and so the etf will let it sit there and basically it's capital gains growth a low turnover mutual fund like an index 500 sp 500 would it's basically capital gains growth so you don't pay taxes on it until you cash it and if you've held it a year and cash it then you're going to be taxes taxed at capital gains rate rather than full ordinary income rate so it's very tax efficient i love them for that purpose yeah in your setting super super yes but just don't want everybody else out there listening at 22 million listeners thinking oh i can buy and sell and i'm going to jump in the market and out of the market and use the etf to do it which is a lot of times when you hear people doing these stupid motley fool articles or something like that that don't know what they're doing,

they're teaching you to do that kind of stuff. Timing the market is bad, but ETFs in general, I don't have any issue with them. I'm super impressed. 33 years old. Killed it. Baby step seven. Mic drop. I love it.

I'm hung on that. I'm like, that's just fantastic. You go, girl. Abigail's with us in Rapid City, South Dakota. Hey, Abigail, what's up? Hi, it might be a little windy where I am. I am currently working and I'm outside, but my boyfriend and I are looking to move in together and we can't agree on whether to rent an apartment or buy a house together. Buying a house together without being married just doesn't seem right to me,

and I'm looking for some advice. Well, I think you're definitely on the right track with that. I would not recommend buying a house with somebody you're not married to. That can open up so many doors to complications. What's your kind of timeline for wanting to make a move? Within three to six months. Okay. How old are you guys um we're 20 and 22 20 and 22 okay if you're willing to talk about buying a house and you're willing to move in together

why aren't you willing to get married um we're we're young yet um we are high school sweethearts young people get married all the time yeah i know and we've been talking about it i think we'll probably get married within a year or two or we're uh i'm calling because we're gonna have a serious conversation this weekend because um i want to get forward with our our plan of when we're going to get married and how much the wedding should be possibly self yeah okay so um you you called asking advice about the house and about the whole situation i'm going to give you more than you ask for okay okay there was a the brookings Institute did a study that said in America, if you do three things, your probability to avoid poverty is statistically astronomical. In other words, the likelihood of being in poverty, if you avoid these three things, is very, very high marry before you have a kid have your first child after age 20 and get married before you live together

that's a statistical analysis okay and um the chances of divorce for people that live together before they get married are four times higher than people who get married before living together. Statistical evidence. Hmm. Interesting. so yeah if uh my youngest is 30 uh when they were in their 20s if we had had been having this conversation i would say why do you think you can beat the odds there must be some reason behind all of this there must be some reason behind all this so if bubba is willing to sleep with you and buy a house with you

he should be willing to marry you that's my dad talking all right okay see i told you he's getting more than you looked for no and you know what abigail it's not because i'm trying to make you mad it's because i care about you kiddo and i want you to win and you called here looking at a win yep i did so thank you so don't buy a house for god's sakes with somebody you're not married to because when you break up it's very very difficult when somebody dies or becomes disabled it's very very difficult when someone gets on drugs it's very very difficult yeah i thought just like even applying for a loan when we're not married would be complicated and i just didn't want to do that and also we're just dating i didn't want to have to

deal with the burden of homeownership yeah so agreed agreed so yeah rent for sure um and uh but you need to consider these other statistics as well uh i kind of got the vibe you're not but um that's okay it's my job to tell you it's your job to decide what kind of got the vibe you're not, but that's okay. It's my job to tell you. It's your job to decide what you're going to do. You're like a grown-up and stuff. Well, and you have a few days to think about it. Like really take some time, think about it, pray about it,

evaluate before you have this conversation, get your own emotions settled because, I mean, I think you do have an opportunity to really have some of those harder conversations about where is this relationship going, what's the timeline, and sounds like you know you guys have a at least the ability to have the conversation so if that conversation is happening this weekend you know just take some time before it happens to consider what dave said and see if there's a more wise way to approach it yeah if you're serious enough to make all these big life decisions then you're serious enough to

make a big life decision so how old were you when you got married 23 23 i was 22 yeah so young people get married all the time and you've been married how long 10 years and i got 40 that's amazing so you know it works yeah it's an amazing thing yeah yeah and um there you go well in successful marriages they're built on those hard conversations like being willing to have those hard conversations about yeah maybe he wants to move in with you or he wants to wait longer to be married but then you have to have your boundaries as well the part of your brain you're using to make a permanent commitment when you buy a house is a pretty similar part of your brain that you use to make a permanent commitment when you decide to get

married because once you're in the house deal i mean you you got the you got the brand on your forehead you know i mean you're there and you're you're stuck in this deal and so um it's a very very similar set of critical thinking skills that get you there now i know you're in love and i know all this and i know he's very persuasive um well especially if you're buying a house too like you're signing love, and I know all this, and I know he's very persuasive. Well, especially if you're buying a house, too. Like, you're signing on a dotted line for that as well. That's pretty intimidating if you're not married.

It's hard to get out of either one, marriage or house ownership. Both are messy. So, yeah, you need to be really sure what we're doing here with permanent decisions, long-term decisions. This is The Ramsey personality is my co-host today here on the Ramsey show. I am Dave Ramsey. Open phones at 888-825- 5225. Amy is with us in Dallas, Texas. Hi, Amy. How are you? I'm doing well,

Mr. Ramsey. How are you, sir? Better than we deserve. What's up? I have a quick question. I'm pretty sure I know the answer because I'm no stranger to you. But my husband and I work for a large cap company, to be descriptive.

And over the years, we've built up a stock balance through ESCP options that we've received, all those kind of things. Should I sell it and put it into mutual funds? What's it all worth? From the background? What's it all worth? It's worth about $700,000,

which is about 30% of my net worth. I'm maxing out all my retirement already, and I'm not in a position where I have to sell it, so I'm torn. Okay. So I was coaching a lady with Procter & Gamble about, time gets away from me, it must be 25 years ago, and I honestly have no idea what Procter & Gamble stock is doing today. It might be wonderful.

But she had $750,000. It was her whole nest egg, and she had it all in company stock. She was a P&G employee. P&G is a good company, by the way. Again, I have no idea about investing in them at all. But this is just an observation of what happens when you have all your money in company stock or 30% of your net worth in company stock. It went down 68 percent and her 700,000 turned into like 150,000 because she violated the rule of diversification and um the the rule of 10 percent yeah maximum of 10% of your net worth.

And the reason for that is if it evaporates and became worth zero, you're still okay. You've still got 90%. But I don't really want you to lose 30% of your net worth. And I'm not saying your large-cap company is going broke. I'm not predicting that. I doubt they will if they're large-cap, honestly. But I just personally wouldn't take that much risk, and you already knew that. You knew I was going to say that, right?

Yes, I had a feeling. I guess I'm torn because it's like, it has gone down a little bit. If you had $700,000 in the middle of a table in cash, would you go buy this stock or would you put it in mutual funds? I am still torn on that decision because, you know, I was like, oh, it's low. You would bet 30% of your portfolio on one company. I don't know. I don't know. That's why I'm so torn.

I do know. That's dumb. I was trying to get you to say it, but I'll just say it, okay? I know. Don't do that. That's too much of your net worth that you've got at risk in one play. And you're emotionally involved because you work there. You're still impressed with the company.

Right. And here's the weird thing. They can be an impressive company, and their stocks still suck. Yeah. I mean, you can still like them and still think they're good people and still get your head taken off. Okay. Now, I guess the second question is, should I sell it all at once or should I space it out over time?

Is it doing pretty well right now? I mean, it's okay. I mean, I'm still ahead, I guess. But I don't think anybody in single stock is doing well right now. I don't think you're going to sell it all at once. Yeah. Because I'm trying to just get you to sell it all at once. Yeah. Because I'm trying to just get you to sell some of it now. So I think it's probably better for you to ease out of it as long as you actually do it.

I'm not going to let you off the hook, though. You do need to get rid of, at least get down to where it's no more than 10% of your net worth. Okay. Yeah. And then if you're just dying to own it, then that's fine. Listen, my net worth is several hundred million. I don't have a single, single stock in my portfolio, not one. I don't like the risk.

I don't like the risk. Yeah, I mean, I guess I'll continue to gain on it because I get it like every year as a – Yeah, so it's going to build back up. So you really need to cut it down to about 5%. Right. Yeah. So you don't have to do this again in two years. Right, yeah. Okay.

Spread your portions to seven, yes to eight, for you do not know when disaster may come upon the land. Ecclesiastes. It's even in the Bible to diversify. Wow, how wild is that? I always say, because you do not know when a pandemic may come up on the line. You just don't. I mean, you can't, you just can't do that. I mean, I don't even want all my money in one type of real estate. I'm a little heavy in these buildings

right here, but because I've got, because I own all these buildings and they're worth several hundred million, but, um, you're grateful, but, but but it's I believe I'm okay because I'm the tenant too but the but who knows I mean see that's that could be a problem but um but yeah you just you just got to be careful to not uh put all your eggs in one basket because some idiots twirl in the basket I like the way you said if you had 700,000 on the table what would you do with it I think that's a good way to kind of disconnect from the fact that it's her company, that she kind of has a bias already because it's where she works. I think that's a good way to kind of separate things.

Yeah. Well, I mean, here's the thing. She's a player. She's got a high risk tolerance because her thing is, oh, it's going up. It's going to be a great investment. And so she's got that high risk tolerance thing going. But I've been on the other side of that when i see the thing turn back down and so um i'm not going to um to lead you

that way and you're right what happens is even if you're not connected to the emotion of the company you can be connected to oh i really believe in this company stock i think this you know i'm going to buy apple i believe it i don't own any i don't work for apple i own an iphone is my extent of my investment but i believe apple's a great investment so i'm now i'm emotionally connected to this single stock and that's probably a great stock if you were going to do one i don't i don't pick single stocks i can't don't don't take my advice on that i'm using that as an example but the um but but uh you know you can become connected to it and what that does is it it makes you say all right well maybe i wouldn't put it all in there then why are you because it's the same transaction and that that sunk cost analysis makes you look at it that way leland

is in phoenix hi leland how are you I'm doing all right. How are you? Great. How can I help? So, current officer, lieutenant, and I'm in the middle of selling a rental house that I own free and clear. It's in Esco right now. I plan on getting around $205,000 and then whatever they take from it. Cool. So, I'm sitting at my current debt right now. I owe 17 on cars and 90 on a house,

and I'll be completely debt-free. Okay. But I also own land that I plan on building and retiring on. When? The land's free and clear. When will you build? build well that's my question i'm going to retire in about 10 years i want to start building within the next five it takes you five years to build a house well no i got to get the subdivision and everything it's

not going to take me that long but it's about a five hour trip back and forth and i have family that can do it but i want to at least start the foundation within five years so that i it will be done within like two years of my retirement dude you are a planner that's absurd you do not need to start you don't need to build a house for five years it'll be rotted by the time you get it under roof no okay you need to build a house in 12 months really i mean unless you're building some gargantuan thing or something, then you're not. So, yeah. But you do need to save some money and keep planning and moving in that direction.

So, you're going to be debt-free and you're going to invest the rest of the money in like a mutual fund to get ready to build on this property in seven or eight years, right? Yes. Okay. Yeah. That was my question. Do I put it all towards a mutual fund? Yeah. Or do I... You don't need it for seven or eight years....and keep paying on the debt that I put it all towards the mutual fund? Yeah. Or do I...

You don't need it for seven or eight years. ...and keep paying on the debt that I have? No, you pay off all the debt you have. You're 100% debt-free. Okay. And then that's going to... Yeah. How much...

What's your tax bill going to be on this thing? That I have no idea. You got to set that money aside, too. I need it. Yeah. So pay off your house, pay off your car, get on a budget, never borrow money again. Raise your right hand. I'll never borrow money again.

I'll never borrow money again. Okay. And then you've got to pay your taxes, and it sounds to me like you're going to have like 70 grand left over to put in a mutual fund towards your house. Okay. And I'll throw it in a mutual fund and call it a day. Should I throw it in my 457 that I already have going? Nope. Or should I be pulling all that out? You can't't a 457 is deferred comp and this is not comp

you can't you can't you can't it has to run through your work in an ira yeah you don't even need to put it in an ira just put it in a mutual fund get in touch with one of our smart investor pros because you're just parking it for seven years how old are you Okay, and you're in the military, right? No, no, no. Corrections. Oh, okay. You said lieutenant. You threw me.

Okay. Cool. All right. You're good. You got plenty of time? No, you don't want that in a mutual. I mean, you just want a mutual fund, not in a retirement account. And in all your planning, I think it'd be awesome if part of that plan is building that house with cash.

To set that as part of your goal is building that house five years from now. Seven years. Seven years from now with cash. We're not doing that. This is The Ramsey Show. Have you been inspired to make a change with your money? Want to know where to start? Take our three-minute money quiz to get a plan you can follow.

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