The Ramsey Show - App - Should I Tithe? How to Figure It Out. (Hour 2)

Episode Date: October 21, 2020

Saving, Career, Budgeting Sign Up for a FREE trial of Ramsey Plus TODAY: https://bit.ly/31ricKt  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 Do you have a will yet? Get started here: https://bit.ly/3dvXSLJ 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'm Dave Ramsey, your host, Ken Coleman, Ramsey personality, host of the Ken Coleman Show, number one best-selling author of the book, The Proximity Principle, talking about careers and jobs and living your dream, is my co-host today. The phone number is 888-825-5225, 888-825-5225. Michelle starts us off this hour in Memphis.

Hi, Michelle, how are you? I'm good, I'm good. How are you? I'm good. I'm good. How are you guys? Better than we deserve. How can we help? Great. I bought my home two years ago for $215,000.

And just two years later, you know, I got married and I was able to sell my home, much to my surprise, for $250,000. Great. Yes. my home, much to my surprise, for $250,000. Great. My question is, I believe in paying tithes, and I was wondering, what is your opinion about paying tithes on the equity or the sale of your home? And if you think you should, how is it best to calculate that, considering closing costs paid, and I purchased it and sold it in minor improvement? Okay. Well, to start with, let's establish that as a Christian, you and I,

what my belief is doesn't really matter. It's what Scripture says. And so as best we can determine what the Bible says is what we should be following, you and me, people like you and me, right? Right. And so first and foremost, God wants us to be givers. And he's not really wringing his hands as to whether we figure out every perfect thing to give on, and so I always try to overgive like I over-tip,

and then when I get to heaven, I don't have to worry about it. But in other words, I don't spend a whole bunch of time and a whole bunch of rules. The tithe is a tenth of your income from Deuteronomy. It says a tenth of your increase, okay? And so what you have been increased is $250,000 minus $215,000, which would be $35,000, right? Right. And did you net $250 expenses selling um i netted 31 000 uh because i owed 205 for the payoff and then i had no no no no no no no it's not your increase is not over the payoff

you're equity because let's pretend you put down a hundred thousand dollars and you had already tithed on that hundred thousand dollars correct so that would that would have reduced your loan amount by that so you wouldn't want to tithe on that portion over your loan amount you tithe over what you paid for it versus what you sold it for that's your increase so you paid 21215,000, you told me, right? Right. And you sold it for $250,000 minus expenses, and so you netted somewhere in the neighborhood of $30,000, $25,000, it sounds like. Right, because I did pay a realtor's commission. I think that was about $10,000, $15,000.

Yeah, so what you need to do is just dig into your figures and say, what did you net after all your expenses minus $215 would be your net increase? That would have been your, quote, profit. Does that make sense? Yes, it does. You don't have taxes on it because it's under $500,000 married or $250,000 single, so you're fine on that as your personal residence. You don't have any issue on taxes. But that's how you would measure.

And so the same thing in business. Let's say you owned a business and you sold something. You made $100,000 gross revenue that year, and you had a $90,000 worth of expenses to operate the business. Your net profit is $10,000. So you would tithe on the 10, not the 100. You see what I'm doing? Thank you.

So what did you profit on something if you want to be real technical and figure it out? But we also need to really say loud and clear that it's okay to not tithe on that. It's okay to decide you want to do it a different way it's okay to tithe at the end of the story sometime on a house deal i'm fine with that i'm pretty i'm very diligent personally to tithe on my income but you know some people tithe on the increase of their investment if even if they hadn't sold it yeah and i i wouldn't teach you to do that but you can do whatever you want to do. The point is, the more detailed you get on it,

the more you lose the spirit of why God has us to be generous. Yeah. It's really about the first fruits. If you really look at it and you break it down, it's the idea that I've been given something, and so then I'm going to give back as a acknowledgement of the source that's the spirit that you're talking about so yeah you know if you want to tithe off of a bigger number and yours your your breakdown is different than dave's again that's that's between you and god because

the again the what we what we teach is what we believe which is you know you give of you the first fruits and so however you define that off the top that's the top that's anything else yeah of your of your net increase right deuteronomy 28 is pretty clear on that and that's the guiding principle but the big principle is this 100 of what we have for those of us that are people of faith is not ours anyway we're managing it that's exactly right and so it doesn't matter it's all his to start with and so i'm just managing it for him so i'm going to manage some of it by giving it over here into the local church as a tithe and a recognition as you said of the source and and looking at that so what we're looking at here is this is a whole lot more about spirit than it is detail and when you get there that's what i mean i always i joke and say

when i get to heaven i don't be wrong but that's just a joke the bottom line is i'm gonna get to heaven and it doesn't matter because i never owned any of it anyway and so it's not it's not relevant to get all and i'm not suggesting michelle's all twisted up about it but i meet people who spend an inordinate amount of energy legalistically trying to figure out how much they should give yeah and just just kind of ballpark it and then give some more and you really can't mess up generosity no yeah and and that you know what you tell us what my parents always modeled for us my brother and i you know it was it was it was always a phrase this is a churchy phrase for those of you listening you don't go to church very often but it was always tithes and offerings.

This idea that 10% is commanded and then offerings is this is above and beyond. And that's what you've talked about. And you've really modeled that in your life. You model it not just personally, you and Sharon, but you model it with the way our company gives and the way we give of our profits, the way we give of our time as a company. We go out and do things. And so it is a spirit of gratitude that we're talking about, a gratitude for the blessing, the gratitude to the source, and acknowledging that, hey, this is yours. And when we show that, the principle is, and we've seen the evidence of this, is that when we take on that spirit and we do it in a form of obedience and

demonstrate the gratitude then we are given more to manage we are given more to steward the more rules you put on your generosity the more you lose there's no gratitude fun of it yeah you feel like oh this is not fun anyway right right and giving is one of the most fun things you'll ever do with money and again that's not this is just expanding on the question. Michelle, you had a valid question. We're not suggesting it's not valid. It is very valid, and I appreciate you asking it, and we gave you the correct answer. But the point being that we get a lot of other stuff around this subject coming at us,

and it's really good to just be very, very clear. God's not upset with you. He's not mad at you. It's okay. And being generous, it changes everything. Generous people are highly attractive. You really can't mess this up. This is the Dave Ramsey Show. Folks, I love telling you about well-made, well-thought-out products. Today, I'm talking about Grip6 belts. I don't know about you, but I'm not a fan of traditional belts. They never fit right, and they're uncomfortable. Grip 6 belts are unique. Owner BJ designed a truly modern, minimalist belt made of high-quality materials with no holes, no flap, and no bulk. And the buckles come in really cool designs and are interchangeable. I personally own these belts in different styles, and talk about affordability I personally own these belts in different styles,

and talk about affordability, Grip6 belts come with a lifetime guarantee. And that means if you no longer like or fit the style of your belt, you can replace them for free. Plus, I like the way these guys do business. Grip6 is determined to help build and modernize American manufacturing. To learn more and get this month's Dave Ramsey special, visit GRIP6.com. That's GRIP6.com. this is the dave ramsey show ken coleman ramsey personality talking about careers and jobs and living your dream is my co-host. As we talk about your life and your money, 2020 has been exhausting.

The good news is 2021 is around the corner. That's why number one best-selling author Christy Wright created her all-new 2021 Goal Planner. The planner will help you manage your schedule, grow as a person, crush your goals, and whether you're focused on your spiritual life your personal your money your work your career having this planner is like having christy as your personal coach cheering you and uh christy's good cheerleader very good yeah if you can't get fired up around her you need to check your pulse yeah really especially i mean and even in her you know something like this goal planner thing she it's pretty amazing the best part is you get a 2021 gold worksheet that you start filling out right now,

and the 2021 gold planner is available in limited amounts in our online store. We're almost out, and truthfully, we've got one little order coming in to try to make it through the end of the year, but they don't sell after the first of the year. It's a calendar, for God's sakes. And so, I mean, we don't want to end up with any, so we always plan to run out early. So that means you are not going to get one if you don't get one. That's just a fact of how inventory management works, okay?

So check it out, DaveRamsey.com, and check out the goal-setting gift pack that comes for free a $30 value. This is Christie Wright's 2021 Goal Planner Limited Supply. Brad is with us. Brad's in Indianapolis. Hi, Brad. How are you? Doing great. How are you? Better than I deserve. How can Ken and I help? So my question is this. I'm 45 years old. We have a single income household. A little bit of a shocker. Two years ago, after 20 years of marriage, my wife turned up pregnant. I have a beautiful baby boy and I've been in my industry for 22 years. I have done very well over the years. Average between $125,000 to $180,000 a year. Good for you. Well done. My question is this. The company I work for has decided recently to change pay structure.

Primarily, in years past, we were a gross profit percentage, and they've gone to a flat rate commission, which is substantially going to drop my pay this year. The question I have is, do I stay with the company I'm with now, or do I try to make a change to a competitive company with a product I'm not familiar with? First question I have is, you said the flat rate commission is going to dramatically affect your pay this year. Did you choose those words intentionally, meaning is there an opportunity in year two and three where you get back to where you were or even go beyond that, or is it going to limit you from now until there would be another change? From now until another change, which the company is saying we will have another change first of the year. No idea what that is. Okay.

What would be the disadvantages for you, the cons, in moving to the competitor to sell a product that you don't have as much knowledge of? With somebody with your experience in sales, do you see that being a real negative or you're just a little bit uncertain about it, which causes you to have pause? Well, in this industry, product knowledge is everything. And I've been in this industry for, you know, 20 plus years. How long have you been with this company? This company, five years. Okay. So the first three the year is 45 days right a moment say again the first of the year 60 days away right yes i mean why can you not wait that long to see what happens okay if they if because i'm with you you know i'm producing you cut my pay i'm looking yeah okay i got that but at the first of the year they may change it back because this was a COVID move.

It sounds like where their cost savings to try to stay open. They actually did this January 1st of this year. So, yeah, it was done pre-COVID. Yeah, okay. Then I'm wrong on that part. But the bottom line is if it changes back at the first of the year because they've already lost some other talented people, you wouldn't want to have jumped ship, would you? No. Yeah. I would wait until the first of the year because they've already lost some other talented people, you wouldn't want to have jumped ship, would you? No.

Yeah. I would wait until the first of the year anyway. But if after the first of the year they're still going, you know, you're worth about half what you used to be worth doing the same amount of work, I think I'm out of there. Yeah. Exactly. So the question becomes, is it the same industry, just a different product,

if you go to the competitor? Correct. Yeah. Well, I mean, you know, what do you feel about your confidence level on a scale of 1 to 10 that you could learn the new product pretty quickly and be very successful? Long term, I think it's a 10 easily. But there's a learning curve. There's a customer base that you have to acquire.

And a lot of our customers don't necessarily transfer over easily. They are very brand-specific customers. I just think you've got to do some more homework because I think Dave's right. I'd sit tight, but in the sitting tight, you've got 60 days for you to do some real homework. This is college research paper level stuff. This is difficult. And you need to really learn about the competitor. You need to learn as much as you can about their pay structure.

If there is a learning curve, how would that affect your income? And get closer to what it looks like to be an 8 or a 9 right out of the gate. And if you compare apples to apples, if they don't change your comp plan, your current company, and you would go to the competitor and there is a learning curve, what are those two income ranges look like side by side? I think it's just good old-fashioned research so that you're not as scared about making the move. Yeah, I think, but I'm with you. I mean, I was working for a company in my 20s and, you know, was one of their top sales guys. And they said, we're going to move you over this other project.

Only the commission rate's half. And I went, so you want me to do twice the work to make the same money? That's my reward for being one of your top people? Well, that's just what you're going to do. And I'm like, well, it's not what I'm going to do. It's America. I don't work here anymore. That's right.

Go pound sand. Exactly. You're so confused yeah so and i you know i never forgot stupid corporate america doing stuff like that and how we develop our comp plans here yeah so i mean you know what we try to do is figure out a way to pay people that are doing good stuff why so they do more of it right oh my god why is this hard yeah it's just a neat concept but no corporate america goes we can we can raise profits by cutting out the very people that are producing yeah well that's dumber than america i

mean it's just dumber than a rock it is it's it's either dumb or manipulative and sometimes it's both exactly they're basically looking at uh brad and any of his co-workers they're going we we dare you to leave us we dare you're not going to leave this. You got it too good. I mean, I'm not saying they're saying that specifically. You were overpaid before. Yeah, that's a real quick way to devalue your people and then devalue your company because good people are going to go, I'm out. Yeah, well, I mean, here's what you're going to do. You're going to lose the best ones.

That's exactly right. Not the worst ones. That's right. The fearful people, the people that don't think they can do more will stay. And they're not the ones producing. And that's why it's manipulative. They're playing poker. I'd call them.

I'd call the bet. Like California talking about a 54% income tax. Yeah, well. You can't collect income tax on people that don't live there anymore. They will leave. And they are. You idiots. They are in droves.

In droves they're leaving. So you're not going to raise your dadgum revenues. All you're going to do is all your producers are going to leave, and you're going to be left with the non-producers. See how that works out for you. It's a dumb. I mean, it kind of just violates common sense. The same thing here, though.

I mean, I had a guy years ago. I've used this example teaching leadership for years. We had a guy, and he works on our team now still in one of our senior leadership roles. But back then, we had given him the assignment in one area to bundle two or three products together and sell them into a large situation. And so it was like a couple million-dollar sale. And while he's sitting there with this company, he realizes he can add in another thing and make it not a $2 million but a $3 million sale.

But his commission structure doesn't pay him on the other million dollars. So he went ahead and did it thinking he wasn't going to get paid, but because it brought in an extra million dollars. Well, you know, how long it took me to decide to pay him on that extra million dollars, just number one, it's the right thing to do. Number two, I want him to do it again. Why is this hard to figure out? Oh, my gosh yes oh wow

you know yeah let's just screw the guy that just brought in an extra million yeah stupid yeah that that's the situation brad so we completely understand your mindset i would ride it out to the first year let's see where we are see if somebody grows a brain back where you work this is the d Ramsey personality is my co-host today in the lobby of Ramsey Solutions on the debt-free stage. Elizabeth is with us. Hi, Elizabeth. How are you? Hi, Dave. Hi, Ken. How are you? Great. So good to have you. How much debt have you paid off? $46,000.

All right. How long did this take? 18 months. Good for you. And what was your range of income during that time? It started about $30,000 and went up to like almost $50,000. Good. What do you do for a living? I'm a caregiver for elderlies and I'm a nanny. Oh, good for you. Oh, that's fun. So what kind of debt was the $46,000? Well, Dave, $22,000 of that was student loans, and the rest of it was consumer debt. Okay. Car payment in there, too? No, no car payment. No, just consumer debt. Okay. So what happened to you 18 months ago that put you on this journey?

Well, 18 months ago is when I really got gazelle intense and I got crazy about getting extra jobs, I put my goal to be done in 18 months. I was working two jobs, and I decided to get a third to go gazelle intense. Look at you. Thank you, and get everything. So wait a minute. What were your three jobs? Nannying and care for the elderly.

And retail. And retail. Yes. Okay, so what paid the best as an extra job? Nannying, for sure. Oh, okay. All right. Very good.

Very good. Okay, so you said gazelle and tents, so that means you plugged into our stuff somewhere around 18 months ago. How'd you find us? So my story actually begins two and a half years ago. I heard from you, my sister, Laura, she introduced me to, to your program and I kind of heard it. I was um, ish, as you would say. And then I decided that enough was enough I was second tired of being second tired and I decided to take it into a um put it into motion I said I took what you says what you say about what's the best place to go when you're broke is to work and that's where I was I love it all of my friends were thinking

oh she's getting rich and I wasn't I was taking care of my business and I didn't care what other people said yeah good for you thank you good for you so was at that 18 month mark when you got sick and tired of being sick and tired did a certain thing happen that just woke you up or was it just kind of built up well it was it was building up i um got serious because i i have people around me my friends were getting married and getting houses and i thought well why what's going on i'm missing out And I realized that I needed to get serious and be on a plan to actually get somewhere, not just kind of wobble around. Now, once you got started and you really started to take the baby steps seriously and you're in that debt snowball and you pay off those first couple,

at what point did you really begin to get some momentum and excitement that, hey, I'm making real progress. I can do this. Like after six months is when I got my snowball rolling really well. That's when you start to believe it's going to happen. Yes. It's like, wow, this is real. This is real. I'm so proud of you. Thank you. Thank you. Who are your biggest cheerleaders? My biggest cheerleader is Robin Leiter. She's my mentor and my best friend. And I also have my sisters, Alexa, Lucia, Laura, and my brother Ricardo. They're with me through my whole journey. And that was very important. When other people said it's not possible, I thought it is possible. Amen.

Yes. So what do you tell people the key? The main thing you have to know if you want to get out of debt is what? Staying on a budget and having commitment to yourself. Because God is with us always and he has a plan for everybody and um yeah when you think that it's not possible you turn to god and he will help you and show you the way amen well done very well done proud of you hero you took control of your life how's it feel to be dead free it feels amazing dave i can go on a trip anywhere in the world that i want and i don't have to bring any debt back with me because i will be cash flowing

everything from now on that's great i bet you are we've got a copy of chris hogan's book for you everyday millionaires because that's for sure the next chapter in your story you're going to be a millionaire thank you thank you dave just like i told you you're going to be debt free i told you you're going to be a millionaire so i want you toave just like i told you you're going to be dead free i told you you're going to be a millionaire so i want you to go do it okay yes yes and i i wanted to say that chris hogan and all the team i'm so so thankful for this opportunity and i know that somewhere out there there there's someone that needs to hear that it's possible yeah and don't listen to all the people that tell you it's not it is absolutely possible and you can do it you did it starting at thirty thousand dollar income that's so impressive

thank you and i almost doubled your income with that hard work stuff and that third job that's good stuff all right elizabeth from grand junction Colorado, $46,000 paid off in 18 months, making $30,000 to $50,000. Count it down. Let's hear a debt-free scream. Three, two, one. Praise the Lord, I'm debt-free. Yeah. Woo! I love it

yeah that's how it's done right there oh my goodness I never get tired of seeing the emotion not that every debt free screen needs to have emotion that's outward because there's so much emotion inward but it's amazing to see a young lady like this who works so hard.

You've got to figure she didn't sleep a lot, Dave. She didn't do a lot. She sacrificed. And to see that burden come off of her and to see her at the finish line right there, I know that touched a lot of people that are listening. And it's so fun to see that. You can just see the relief. This happy weeping, it's beautiful.

And I love what she said i hope people listen to that because that that's one of the greatest messages that you can do it even when you think you can't you can do it yeah really great and you know when you look at the math on this it says it tells you what she's been through making 30 000 up to 50 000 that's almost doubling your income from picking up the second job so you're right she was working a lot. A lot. A lot of kids, a lot of diapers, a lot of brats. Come on. It wasn't easy for her.

A lot of retail, which is worse. You get to deal with brats there, too. That's actually worse than the nanny. Oh, yeah. I deal with toddlers easier than the dadgum public. But, yeah. Because in retail, people are just mean to people. But, I mean, it's just, that's hard work.

And $46,000 done in 18 months. That's how it's done. You do it with a plan. And you execute. And you know what it takes. And don't listen to the other people. Don't listen to the haters. Everybody's got a hater.

Everybody's got somebody out there telling you it can't be done. And she's just inspiring, man. She is. And the journey that every person goes through, Dave, is they get to the point where they go, okay, I would rather be uncomfortable than miserable. And she decided, I'm going to be uncomfortable. She's working the three jobs. She's not hanging out with friends. She's sacrificing this. That's for a year and a half.

Yeah. I mean, you can't even remember what was going on a year and a half ago. No. It was 20 minutes ago. I mean, if you're over five years old, a year and a half is not long. No. No. You live like no one else.

You pay a price to win, and later you can live and give like no one else. Yeah. You can see it. It's so worth it. All that sacrifice, all of that temporary pain of sacrifice is worth it over and over and over and over again. And to see her joy. She can travel. She can go where she wants to go.

She can do what she wants to do. There's an unbelievable transformation in your life, folks. And so no matter what it is in your health, your money, getting sick and tired of going in on Monday morning and being nauseous before you get into the door of work. Life is too short to work a dead-end job. You know, whatever the changes that you need to make, you need to accept the fact that it's going to be very, very difficult for a short season. But on the other side of that, it's always, always worth it.

Good stuff. This is The Dave Ramsey Show. Thank you. Ken Coleman Ramsey personality is my co-host today. Open phones at 888-825-5225. Rick is with us. Rick's in Las Vegas. Hi, Rick. What's up, man? Hey, good afternoon. Can you guys hear me okay? Absolutely. How are you? Hey, good.

Hey, it's an honor to talk to you guys today. I've been listening to your show for a long time and just really enjoyed leaning the wisdom you had to share with the world. And thank you for that. Thank you. And I just have to say that I love your multiple personalities, all your Dave Ramsey personalities. They're just all superstars, and I love it.

Thank you. Yeah, very kind. But I just wanted to ask real quick, my wife and I are working on baby steps four or five and six. And in looking at our monthly budget, we're curious about ratios for personal spending. Um, over the last four or five years, our income has doubled and, but our monthly, our, our, our blow money has just kind of stayed constant. I'm curious, do you have any kind of rules or rule of thumb, I guess, or ratios for that?

No, there's some principles to put around it. Number one, when you're in four, five, and six, you're no longer in gazelle intensity. You move from intensity to intentionality. And so all I want you to be doing now is doing stuff on purpose, which is what you're doing by asking this question. So that's excellent. Number two principle is if your blow category really should have,

it's so big that it really, you know, I've met people that half of their budget was blow category because they wouldn't categorize it. And so they just throw it all in the miscellaneous category because that's lazy it's intellectual laziness then um and so if the print you know and so if if you're if 50 of your budget is your blow category that means you should have put categories to some of it you know what i'm saying like food is not blow money that kind of thing or eating out or his eating out his lunches while he's at work that might be at a category rather than a blow category if your blow category is getting too large your

fund category is getting too large the other extreme is when people get it down to the infinitesimal and they've got like six dollars in there and they make three hundred thousand a year you know and that's just it starts to be that's that's when you've gotten legalistic and you need to relax and let up so those are kind of the three things that are going on so what's your household income so we're about 160 right now okay and so how much is allocated for your fund money how much is allocated for hers uh we each get 150 a month not enough. It's about 2% a year. Yeah, not enough. I mean, 2% of our income, I guess.

Yeah. I mean, when you make that kind of money, that's not enough. Yeah, okay. You probably need double that. Okay, yeah, that's kind of what I was thinking. $300 a month when you make $160,000 a year is not going to mess up your wealthy plan. I have a question for both Dave and Rick. All right, so Dave, here's my question, and Rick, you put some details to it.

Is it a good exercise, Dave, for both of them to kind of go, what do I want to do? We've worked hard. We've sacrificed. As you said, they're no longer in that gazelle intensity. They're in four, five, and six. Still disciplined, still focused. But is there an activity that is good for either them as a couple or individually? So, you know, Dave and I love the game of golf.

You know, Rick, I don't know what your hobby would be, but is that a good exercise to start and go, if I did that sum within reason to kind of come to that number, or is it good to just kind of go, well, let's double it or let's triple it? Feels like to me it should be on purpose for that account. It's not that much money. No, it's not. As a percentage. It's pocket money.

So, Rick, what would you like to do more of, I guess, is my question. I'm kind of one of those Utah gun nuts. I like to save up and buy guns and ammo. It's a great example. I'm not like a scary kind of gun nut but i just kind of a hobbyist kind of a deal you know and i like to go out to lunch sometimes with the guys at work and and things like that so there we go we have two activities a month for all that i would separate the guns out of this and i would say i have a gun category right i'm saving up for that and if she

wants a purse category i don't care uh because every time i buy another gun it costs me another purse it's just it's a swap out but the uh uh that's good though but the you know the the uh the lunch with the buddies is one category lunch with the buddies is miscellaneous that's a that's an occasional thing this is more impulse things little things nickel dime things pocket money i I use mine for tips. Like, you know where my car is parked with the valet? In front. And it stays there. You know why?

Because of how much freaking money I gave him. Yes. Because he's out there in the cold, and he's parking an expensive car, or in the rain or the heat, and he's parking an expensive car. He's probably working my get-out-of-debt plan. And so that's what a lot of my pocket money goes for but i you know you just decide what you want it's like pocket money that's what it's for but if you've got a category gun is a category i could say tipping is a category and i could just have a tip thing if i wanted to walk around

with a tip jar in my pocket i guess but uh but that's, you know, where does your cash go? It's just walking in the front pocket of your pants. Where's that cash going to go? And it ought to be fairly simple, normally fairly inexpensive things. Normally. And that's what we get to. So it's a good question. It's a good exercise.

Here's the good news about the whole discussion with you, Rick. You guys are doing it on purpose you move from intensity to intentional yeah and as long as you're being intentional and you're being thoughtful now you're telling your money what to do you're not going to be wondering where it went you're not going to fall back into stupid all of that's there all of that's part of the category so will is with us in dallas texas hi will how are you hi dave great. How are you about yourself? Better than I deserve. What's up? Awesome. Hi, Ken. So, Dave, I remember you mentioning on a previous show that at one point you questioned whether international funds should stay in your

like recommended investment mix. Yeah, because they have been sucking for so long. They had. And I noticed those rates of return as well when I was kind of divvying up my investment. But you looked like you determined, like, yes, they should stay in the mix. I was wondering if you could explain the math and analysis behind that. Well, it certainly didn't have to do with track record, because the last 15 years the internationals have brought down the portfolio of splitting your mutual funds into four types, growth, growth and income, aggressive growth and international. Internationals brought down the average of my portfolio.

And so I'm talking about it. I'm looking at it. I can't find one. The category in general is not performing up to the standards with the other two, other three. And so I sat down with one of our senior guys in the SmartVestor program who also handles my investments. I said, man, let's run a bunch of hypotheticals on this. I want to see over 20, 25 years, over 30 years, what would have happened if we'd done this without the international. And let's go back 15 years, let's go back 20 years, let's go back 30 years,

and let's run the scenario with three good funds you know growth growth and income aggressive growth and then add an international or don't end and add an international either do it thirds or do it fourths and let's run it out the weird thing was is that it has been a while it's been over a decade since this has happened but when all the international has a tendency that we discovered in those in those hypotheticals to run on the inverse of the others, meaning that when the other three are down, which are primarily U.S. stocks, are down, the international has a tendency to pick up and pick up the slack. And that's when it performs.

So it runs opposite, and pulling it out caused the overall returns to be down, which surprised me because the thing is lagging. Now now that would not be true in the last five years that would not be true even in the last 10 years probably not even in 15 but i don't i run hypotheticals on my investments over you know 15 20 30 year periods of time because that's what i'm projecting out into the future uh and so you know i'm talking to a 30 year old that's going to be 65 and he needs 35 years and so what it amounts to is because they run the inverse that's why we left it in there it ends up being better but it was a i was i was within an eye on my gut just looking at the historical data on the thing i was ready to pull them out yeah i was ready to go okay after

25 freaking years i'm going to change this mix for me and for everybody else which would be like admitting i was wrong in a sense but i didn't mind that because what's the what's the math tell you you know and then we discovered this anomaly when we ran the hypotheticals which is fascinating i'm glad you explained it that way because i would not have guessed that it yeah and the math doesn't lie so i left it in there and i left it in my personal as well. So my personal, I still have a fourth in international. It's that simple. Ken Coleman, Ramsey Personality with me this hour.

Thanks to James Childs and Kelly Daniels in phone screener for The Dave Ramsey Show. This episode is over, but if you heard about an event, product, or service and didn't have a chance to write it down, don't worry. We list everything you've heard about during this episode in the podcast show notes section or head over to DaveRamsey.com and click Dave recommends. Thanks for listening.