The Ramsey Show - App - Should We Pay Off the House? (Hour 1)

Episode Date: October 31, 2022

Dave Ramsey & Dr. John Delony discuss: Pulling from a retirement account to pay off a house, Investing for the long term, Replacing a vehicle, Rolling over a pension into a 401(k), How to use a $140k bonus, How the fed keeps screwing up the economy. 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 Pod's 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 love, and create actual amazing relationships. Dr. John Deloney, Ramsey Personality, number one best-selling author, is my co-host today as we take your calls about your life

and your money. Been a hot minute since we were on here together, both of us traveling and working and traveling and playing. It's good to see you, man. Good to see you. You're looking good. You're going to make it. You're getting handsomer by the day. Oh, that's true. That's definitely true. Oh, brother. I don't know. What have you been doing while you were gone?

That's scary. We head out tomorrow to a sold-out event in Sacramento. We've got the Building Wealth live event tomorrow night with Dr. Deloney and Rachel Cruz and George Camel and I and Ken Coleman. And so we'll fly out of here in the morning and head over to California IA and do an event there tomorrow night. Thank you, Sacramento. We appreciate you. Rumor is they need us, Dave. Well, rumor is every city we go to needs us, some more than others,

but there's no question about it. So we're excited. A lot of good things happening around here right now. Launch of the Gazelle debit card last week was absolutely mammoth and huge. Thank you for all of you that have already gotten your Gazelle debit card, the smart way, the Ramsey way to spend and save. Thank you for all of you that have already signed up for the spring smart conference, the inaugural event at the Ramsey Event Center, which will be completed by then.

It's sitting on the hill behind me under construction and will be done and ready to do events on in the spring. The inaugural event will be in April. Looking forward to that. And April 14 and 15, really, really excited about that. So a lot of good things there. A lot of tickets on that already sold. Most of the VIP and Platinums are already gone check all that out and the live events are up for sale for spring

most of them anyway we've got a couple of them in contract and you can check them all out at ramsey solutions.com let's start this hour off with james in billings montana hey james how are you i'm doing well dave how are you better deserve, sir. What's up in your world? Okay. Well, Billings is our closest town. I'm actually in Sheridan, Wyoming, but that's neither here nor there. The reason I called was my wife and I are wanting to get debt-free. We've using some funds from our retirement and annuities accounts. Cool. How old are you? I am 68. Okay. And how much money is in the accounts?

Right now, well, it's extremely down since the first of the year. Right now, it's about $710,000. What's it take to pay off your house? About $163,000. If I woke up in your shoes, I'd be dead free housing everything by the close of business today, my brother. Okay. Well, I just wanted to bounce that off of you. Let's pretend you had $600,000 and not $750,000, and you had a paid-for house. Would you go borrow money on your house to put it into the stock market?

No. Okay. Every day you don't pay it off. That's what you're doing. Okay. Does that make sense to you? Yes, sir, it does. Yeah. You're going to have some taxes you're gonna have some taxes on that so you're going to pull out more probably going to pull out uh 200 so get get your tax advisor look at what your taxes are going to be but obviously there's no penalty

because you're over 59 and a half but dude you've done a wonderful job you're millionaires well done so dave what's the i guess it ultimately becomes a gamble. My first instinct would be to say, okay, let's go ahead and do this, but let's wait six months to see if the interest rates are going to drop back off. But I guess that can be a fool's errand, right? I could end up perpetually waiting, right? Yeah, and you don't know. I mean, so I think the stock market will be back up, if that's what you mean. I don't know if it will be back up in six months.

It may be 12. I don't know. But I'm not pulling money out of the stock market because it's down. I'm pulling money out because I'm going to be debt free. You're going to pay the house off. Yeah, period. And so if the market was up and booming, I would have given him the exact same answer. That's right.

Yeah. So we're always going to lead you to. Now, if he had $200,000 to his name, that's his total nest egg, and he's going to be broke after he pays off the house? No, I'm probably going to tap the brakes on that one that one okay because i don't want to clean out the nest egg that is one ratio i'm looking at okay that's why i'm asking how much he had in there but he's got plenty left over he's gonna have over half no liability is worth its weight yeah and the peace that you have when you don't have a house payment in weird and wacky times yeah it's

a there's you know oh it's halloween you know i mean whole freaking year's been halloween right and uh and so i mean the god there's goblins in dc apparently and so you know um you know the whole and everybody's like oh i'm scared yeah well one way to not be scared is um no debt Don't owe anybody. It changes everything. Dawn is with us in Detroit. Hey, Dawn, how are you? Hi, thank you, gentlemen, for taking my call. Sure, what's up? I only have less than 10 years to be investing.

And what do you mean when you keep saying you need to stay in for the long haul with your investments? Well, a study that I did several years ago, and I've not updated it in fairness, but it's probably fairly accurate still. I looked at all of the potential consecutive five-year periods, like 1955 to 1960, 1956 to 1961, and so on, all the way up the calendar since the stock market opened. 97% at that time, again, I've not updated this, 97% of the five-year periods made money. Okay. And so that told me if I leave it alone five years, I'm probably okay.

Okay. And so when I say long-term, that's kind of the minimum. 67% of the three-year periods made money okay so two out of three times you'd make money right right but that's not that scares me when we talk about the question the way you asked it if you had a three-year window i'd be going you know right now here's the other thing to add to your equation though that sometimes financial planners and and the like don't do is that let's say you got a million dollars and you retire. Okay. Ten years from today. Okay.

It's not like you're going to cash it out that day. It's still going to be in the market. You may be taking off some of the earnings to live on and to enjoy, but it's not like, oh, 65 oh 65 clean her out that's not what people do and so likely you're if you've got 10 years of working life let's say you're 55 and 65 is the 10-year mark you're likely going to leave this money alone for 30 plus years okay right because you're going to be living off the interest you're not going to just cash it in like i'm 62 i've cashed nothing in i'm just going to let it sit there and grow. I'm living off of, I still work, but, I mean, I'm living off of that.

But if I retired today, I've got plenty of other investments other than the stock market that I wouldn't touch. Wouldn't touch my retirement. So my retirement's probably not going to be touched while I'm alive. Okay. while I'm alive. Okay, because I know there was a freeze on my investments for 33 years because I was on disability with the company. And then I found out they sent a letter to ask me if I wanted to roll over and go under there. Oh, roll over. No, roll over. Yeah, if you can get out there, get out of there for sure. And roll it over to an IRA. No taxes on it. Yeah, that's very cool.

Yeah, but long term is five years or more. And keep in mind, you're probably not cashing it in, people, when you get to 65 anyway. Like the guy before, he was 68. He's not cashing that other money in. Just enough to pay off his house. The rest of it's going to sit there. He's probably living off of nothing.

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Open phones at 888-825-5225. So the government is planning to hand out more free money in terms of forgiven student loans, or so we hear. What if that forgiveness doesn't wipe out all your student loan debt? That means you're still in debt. That means they did not fix your problem or your life. And that means you're going to have to fix your problem in your life, which, by the way, the sooner you realize that, the better off you're going to be and the quicker you're going to have a life. People who wait on Washington to give them a life have a life that sucks. I mean, think about a life brought to you by the DMV.

There you go. This is what happens when you live by government prosperity. Socialism doesn't work. So waiting on the government to fix your student loan debt is a wish. Don't do this. What I will give you is a guarantee. I will guarantee you that millions of people, literally millions of people, have paid off their student loan debts as a result of going through Financial Peace University. And it's a proven plan to pay off all your debt in just a couple of years, not decades, not millennials. You just get

it done, and then you get your life back, and you're able to be incredibly generous and build wealth and do all kinds of things when you don't have any stinking payments, including having evicted Miss Sally Mae. So start Financial Peace University right now. Go to ramseysolutions.com slash FPU. Kick Sally Mae out. RamseySolutions.com slash FPU. All right. It looks like Matthew's in Atlanta. Hi, Matthew. Welcome to the Ramsey Show. Hey, Dave. Thanks for having me. Sure. What's up? All right. So I want to start off with I'm a big fan of Baby Steps. I'm 24 years old.

Currently just finished building a house. Did a lot of the work myself with the help of friends and family and was able to build a house for under $200,000 in this crazy market we're in. But basically, I'm at a point with that project kind of depleted my savings, but I'm starting to have some serious truck troubles. And I know you are anti-car payment, and I'm just trying to figure out what I kind of need to start preparing for. Because it's an old pickup truck. It's got almost 300,000 miles on it, and it leaks oil. It doesn't have AC. It's just basically it needs new tires.

It just needs a lot of stuff, and if not, it probably needs more than the truck is worth. All of that was happening while you were building the house. Yes. So why did it now become a dadgum emergency? Well... I mean, that was happening six months ago. It was leaking oil. Yeah.

Six months ago, it had 298,000 six months ago. It was leaking oil. Yeah. Six months ago, it had 298,000 miles on it. Mm-hmm. So I'm not going to give you permission to turn it into drama now when you didn't then. Yeah. Okay. What do you make a year? About 36,000.

Okay. What other debts do you have? I have some debt to some family members to help me kind of seal the deal with getting the house finished in time. Because with all the material rate increases. How much do you owe your family? Right at $50,000. And what's this house worth? About $300,000? No, it appraised for $500 way to go man congratulations okay thank you um

what do you do for a living to make 36 000 a year um i work for a local property management company doing maintenance um so basically we manage rental properties and i i help fix them when they break okay good for you okay two things i would do if i woke up in your shoes okay i was pushing on you because the the change in the truck is not material only the change in your situation other in other words the truck was not a crisis before but it became a crisis now that you finished the house and you looked up and went oh crap look what i did yeah yeah and so uh and you go what if this thing falls down on me well here's the thing probably you've got six months before the thing lays down.

Okay. But very likely you've got three months. Would you agree with that? Okay. Yeah. Because you just looked up and went, this roof looks bad. It's probably going to leak, but it's not yet leaking. And that's kind of what we're doing here.

So that's the way I'm analyzing this. And if I'm missing something, you can argue with me. That's okay. Okay. So what I do in your shoes, man, you have a gift in knowing how to work with your hands, and you can make a lot of money building decks on the weekends or doing maintenance, handyman work for somebody on the weekends. And I'll bet you you could pile up $5,000 or $6,000 in two or three months side jobs.

Yeah. pile up five or six thousand bucks in two or three months side jobs yeah and i i do have a woodworking business that i'm kind of in the process of starting up do you make any money i haven't made i haven't turned a profit yet okay i want you to go make some money to buy i don't i'm not i'm not talking about your dreams i want you to go make some money to buy a truck okay like a five because you're driving a two thousand dollar truck we need to get you into a six or an eight thousand dollar truck so you need five or six grand okay and you need that in the next 90 days and you need to get that as extra income way to go and this next truck is not going to be pretty and people your buddies in the construction trade are going to make fun of you when you pull up to the

side they already do though that's right and so none of that's going to make fun of you when you pull up to the site. They already do, though. That's right. And so none of that's going to change. My fear is that you've got a house now, and you've started flexing your muscles a little bit, and you think guys in houses should drive cars that look like X or Y. Yeah. And I don't want you to start getting too big for your britches. You owe your family.

Like the way you talked about how you got into this house, I did it for $200,000. And then you quietly whispered, and I had to go ask mommy for $50,000 too. Right? So there's a little bit of flexing and a little bit of reality. Let's do this all the right way and let's work like a maniac

for the next 12 to 18 to 24 months. Pay off mom and dad. Get yourself a truck that you can rely on and build your business. You're worth more than off mom and dad, pay out, get yourself a truck that's, that you can rely on and build your business. You're worth more than $36,000, my friend, with the skills you've got. Yeah. You need to be making more money overall. That's a, that's a Ken Coleman thing there. But, but as far as what you called about, as far as the truck, 90 days, $2,000 a month is 60, six grand, sell the truck for two. That's an $8,000 truck. That's a move up. That's not a permanent

solution, but that keeps you from being left on the side of the road without anything working. You're probably going to put some tires on it in the meantime, too. You might blow a tire. That's very real. I don't know how bad the tires are. You've got to look at them. If you can make it four months with the tires,

because tires do not increase the value of a $2,000 truck. Putting $1,000 truck. Yep. So putting $1,000 worth of tires on there doesn't solve anything except keep you from being stranded. So that's what I would do. And the second thing I would do is I would just run down to the credit union, if you can talk them into it, to loaning you $50,000 on a $500,000 house fixed rate on a one-year note and pay it off in one year and go ahead and pay off mom and dad today.

Yes. Because Thanksgiving dinner tastes different when you owe your relatives money. The borrower is slave, the lender, and it changes relationships, and I wouldn't want that even for a year if I were in your shoes. But if you don't have any choices, then you just need to do what John said and roll up your sleeves, and after you get the truck, let's go and get the the family loan cleared after that so but uh great job 36 grand sitting in a half million dollar house almost paid for he man he dave he's on a precipice he is right on that edge where 24 year olds become 25 26 year olds

and he can look up and owe nobody anything and And be a millionaire. And be a millionaire in short order. Or he can also have. He could fall backwards into normal. A 2024 F-350 dually and plus this and plus a bunch of tools. Owe more on that than he does on the house. And be in a mess. He's sitting right on that precipice, man. You could fall off into stupid right here real easy.

Real easy, man. From two guys who did it, right? Yeah. This is true. And who did it, right? Yeah. This is true. And why did it involve trucks in both of our cases? Both of our cases. There you go. There you go.

Man. Yeah, we know the type. We look at them in the mirror. Yeah. Oh, there you go. Hey, nice call, Matthew. And overall, man, I got to tell you, this is pretty impressive. 24 years old, $50,000 house.

Very impressive. Very well done, sir. But yeah, John's right. Don tell you, this is pretty impressive. 24 years old, 50,000-odd on a $500,000 house. Very impressive. Very well done, sir. But, yeah, John's right. Don't fall the wrong way on this. Lean up the hill. Don't fall back. This is The Ramsey Show. ស្រូវានប់ពីប្រាប់ពីប្រាប់ពីប្រាប់ពីប្រាប់ពីប្រាប់ពីប្រាប់ពីប្រាប់ពីប្រាប់ពីប្រាប់ពីប្រាប់ពីប្រាប់ពីប្រាប់ពីប្រាប់ពីប្រាប់ពីប្រាប់ពីប្រាប់ពីប្រាប់ពីប្រាប់ពីប្រាប់ពីប្រាប់ពីប្រាប់ពីប្រាប់ពីប្រាប់ពីប្ Are you sick of planned obsolescence?

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Doing great. Awesome. Welcome. Good to have you guys. Where do you guys live? Burlington, Iowa. Awesome. Welcome to Nashville. And how much debt have you paid off? We paid off $132,000 in 31 months. Good for you. And what was your range of income during that two and a half years? Well, we went from about probably $125,000 down to about $90,000 and finished out about $210,000. Whoa.

What do you all do for a living? So I am partnered in a Jimmy John's franchise. And I oversee restaurants on a daily basis, owner-operator. So, you know, COVID, all that silliness, all that nonsense that put us down, and then things obviously really recovered. Oh, and so that's why we go down to 90 and then back to 10. Sure, sure. So things are booming now.

Yeah, very good, very good over the last couple of years. Very good. Well, that's a great franchise. Well done, man. Awesome. Thank you, sir. I appreciate you saying that. Good stuff, good stuff.

Very cool, very cool. So what kind of debt was the $132,000? Credit cards was a lot of it. Business loan for him. Big, obnoxious bed. Medical debt. A big, obnoxious bed? Yeah, yeah.

$8,000 bed. Okay, and financed it. Yeah, 0% though, right? Yeah. Yeah, okay. It was a seven-year loan, but we got, obviously. The way you said that was like credit cards business a bed i bought it before her oh okay it's like you how long y'all been married we've been married two years okay hey you bought yourself an eight

thousand dollar bed yeah it wasn't a wise decision most of my buddies still sleep in sleeping bags man when i was single john i did have just a box spring and a mattress so wow you love yourself more than i loved myself honestly like that good for you man thank you oh my gosh wow so what happened what turned all this around you got married and that that accelerated it in the middle of it right sure yeah so um well you saw his shirt um my brother-in-law with the painting about money actually is who turned us on to you. He went through the plan and he was on maybe step four, five, six, actually completed step seven. Oh wow. And then we sort of half butted it for a little bit, um, in the beginning and still had credit cards. And then of July of 2020, my wife was

working at a car dealership and lost her job from covid and we just were very very low and we then ramsey plus just came out that summer and we signed up for it and we did the fpu on zoom and uh watched all the videos did that and it just um got rid of the credit cards and really ran our budget down sold everything um facebook marketplace lots of that stuff and sold most of my watch that's why your income was going down and life looked dark extremely dark yeah it was as low as it possibly could have been at you know march of 2020 you weren't sure the world wasn't over right right i mean you even weren't right you know and the restaurant business was still being just pummeled

by the government regulations yep and it was hard to know if i was going to have employees what was going on somebody sneezes they can't come to work for five days so i remember yeah it was very very tough so but um you know that's when hayley came in started working with me in the business and that's that's what we do together so oh good okay all right definitely so the heck with the car dealers we're gonna get in the restaurant business yeah exactly yeah i love it i love it we make. How did that conversation start? Did you say, hey, honey, I can help? Or did you finally say, I'm crying, uncle, I need help?

I kept asking him. I'm like, I would not have to go look for a job if my husband gave me one. I'm like, I know the business. I can come help. I know how to make sandwiches. And there it is. Yeah. Wow. Way to go, guys. I'm proud of y'all. Well sandwiches. And there it is. Yeah. Wow.

Way to go, guys. I'm proud of y'all. Well done. How's it feel to be free? It feels amazing. Incredible. It feels incredible. No, just having cash in your wallet, like you said.

Yeah. When you don't have debt, you have money. And it really feels amazing. We cash flowed moving into our new house even this year. Bought our new house, cash flowed it. We actually put a thing on the Facebook page that a few years ago we were over a hundred thousand dollars in debt and didn't know what was going on this year we were able to buy a new home on a 15-year fixed mortgage with a good down payment 20 and yep ready to roll life's awesome it's every day i wake up and i just can't

believe how beautiful it is tell me about um be real specific people say like it feels great um we've got peace what does that actually mean for you two like what is different now it means i mean honestly we we still talk to each other about finances but if he goes and buys something that he needs for work his shoes are 260 dollars that he wears to work but he's on his feet for 12 hours for most of the days so i mean it it's it's just fine so we just look at each other like hey i bought new shoes cool yeah that's fine one thing we learned from financial peace was to set that limit for couples of what the threshold is. And I'll actually tell a quick story.

I once had a chip in my windshield and I went to get it quoted and they said it was $400. I said, okay, and do it. So I told Haley that night over dinner and she goes, are you kidding me? And I said,

why don't you need a windshield? She goes, yeah, but it's over the limit. And accountability. Yeah. Hey, that's why it's over the limit. Accountability. Yeah. Hey, that's why your business is taking off, man.

If it's life or death, make the call then. But just text me first next time. Good for you. But that's y'all practicing new communication. Teamwork. Practicing teamwork. That's right. I love it.

We don't argue about money ever. So it's been an amazing feeling going into marriage and just not even really caring or worrying about money, honestly. Yeah. Just being intentional and knowing our goals, working together for it. When you pan back, what do you tell people the key to getting out of debt is? Lose the stupid credit card. Those credit card points are the biggest scam you'll ever fall for.

It is so crazy. When we were doing this, when we first started, we tried to do it Ramsey-ish, and we tried to still have a credit card. And we actually got a tax return. And Haley said, well, we have this money from this tax return. We'll go ahead and pay off this one bank loan. And I said, we can't because we still have a credit card payment

to make this month. And we need to pay off that $3,000 we put on the credit card last month so I could get $30 in points or some nonsense. And it was July 2020 when we finally cut them up. And before I was with her, I think we had like eight credit cards. It just kept completely out of hand in my twenties. And they're just, I cannot, everyone out there listening, I was back there listening one day, three years ago, and Dave was saying no credit cards. And I was laughing to myself in my car saying, you're just giving away free money. No, you're not. Those people are winning. They're taking it from you stop them use a debit card use cash take cash to the grocery store if you need to yep get your gazelle debit card that's

exactly right and guess what every waiter or waitress you tip with cash is way more happy than getting that stupid number written down on the card because they don't have yeah yeah it keeps brandon out of it hey uh one one one quick side question uh what's it like to have a brother-in-law who is right? It's not fun for me. Actually, yeah, he kind of got that right. He's got it on the back of his shirt. He goes, I'm the brother-in-law with an opinion. But my line is always the broke brother-in-law with an opinion.

And he's on baby step seven, so he doesn't really qualify. And his advice was, go get into financial university. My brother-in-law has been right a few times in my 20 years, and man, it's hard. Because he just knows, right? My brother-in-law is smarter than me. He's a better human than me. And so it just, I feel it. Have you come to terms with that?

Yeah, we're really blessed. We have amazing, I have an amazing brother and sister-in-law. They actually drove us down here, and they said they weren't going to miss it for anything, and they were there to cheer us on. And every time we paid something off, we would would tell them and they were the first call we made screened to them when we were debt free when we made the final payment in june good for you yeah well done you gotta have people man that's what that's awesome very well done good job you guys very cool well we've got a copy of total money makeover for you to give away and inspire someone

like he inspired you that time uh The Baby Steps Millionaires book, which is the latest number one bestseller on all the millionaires we're seeing. And that's the next chapter in your all story. You are well on your way. And, of course, a Financial Peace University membership for a year. You've already been through it. You'll be able to give that away. Absolutely.

And get somebody started in the process. So thank you, guys. Thanks for making the trip down here. You're amazing. I'm so proud of you. Well, well done. Good stuff. Thank you.

Ricardo and Haley, Burlington, Iowa, $132,000 paid off in 31 months, making $125,000 to $90,000 to $210,000. Count it down. Let's hear a debt-free scream. Three, two, one. We're debt-free! Yes, sir! one we're dead free James it'll be interesting to go back and look how many of these dead free screams in the last two weeks have been 30 months I've seen a bunch of them I had two in a row last week I remember

and so the year of COVID I mean 30 months is january basically uh give or take you know and so as you know the year of covid they start out the year normal and then the whole dad blame world falls apart and then it didn't fall apart and then you didn't die and then we did flatten the curve but nobody cared and then you went and got yourself a life all because of this it's turned out this well in a weird backward way, has ended up being a blessing for a lot of people. They got their lives straightened out. And I'll say you on behalf of the country,

thanks for walking in the middle of a storm and telling everybody, calm down. It's going to be okay. Here's a plan. Take the next right step. It's going to be okay. It's going to be okay. We did that together, all of us here at Ramsey. This is the Ramsey Personality, is my co-host today.

Rob's with us in Philadelphia. Hey, Rob, what's up? Hey, Dave. Thanks for taking the call. Sure. It's very cool talking to you. Big fan. Thank you.

Let's see. I'm 57 years old, about a month away from the end of Baby Step 2. And that's not the nature of my question. I have an employer pension plan that is terminating, and they're offering me some choices, like an annuity that would pay $550 a month forever, or an $80,000 lump sum that I can roll into a company-sponsored Roth or 401k. No, just roll it into an IRA in your own name. In my own name? Yeah. Okay. And put it into the types of mutual funds we talk about, growth, growth and income, aggressive growth, and international.

Wow, that's exactly my second question. If I would stick with those four absolutely always recommend absolutely exactly what i would do here's the thing when you have a company pension plan and you die it dies when you die when you move the 80 000 into a mutual fund it doesn't die when you die it's in your name and it goes to your estate to your heirs so you get more money on death and by the way you're going to make more money than that annuity was going to pay you by being in good mutual funds over the long haul i mean you might not in the next 10 minutes we've got some uh economic issues we're dealing with right now and um so there you go but yeah jump

online at ramsey solutions.com get with one of the SmartVestor pros. They'll help you get into those four mutual funds and help you do the direct transfer rollover so no taxes are withheld and you'll be ready to go. Garrett's in Atlanta. Hi, Garrett. How are you? Good.

Thanks, Dave, for taking the call. Sure. Appreciate it. And we won't get into the football game this Saturday since I'm in Atlanta. Okay. I was just kidding. I was going to ignore it and let you go. We'll send you a condolences card next week. Oh, yeah.

I hope. I sure hope I send you a condolences card. All right. What's up? Love it. So my wife and I for the last 10 years, and I would say me, probably been on the, originally for about 10 years, been on the Ramsey Light syndrome. The past two years, we've done a really good job of going through financial peace and really

hitting the dead hard. In the last year, I've had a really good situation with my income as far as I'm in sales so coming January 2023 I'm gonna have a pretty significant bonus from some really good accounts that I landed last year so in looking at that we're going to be able to pretty much wipe out most of the debt that we have left in baby step 2 besides the house and just trying to understand kind of with another large chunk of money kind of sitting there well congratulations how much are you getting uh it should be probably pre-taxed around 140 000 but good for you yeah so we'll see 100 grand clear then and you'll be able to do some stuff how much debt have you got not counting your house because you said most of sort of kind of so

i don't know what you're talking about yeah it's around basically probably a little over thirty thousand dollars so uh you may a hundred percent debt free nothing but the house if you're at a thirty thousand dollar check correct okay all right so why most of so why the most of sort of kind of language then well i guess there's some things obviously my wife and i communicated and talked about maybe wanting to do which is potentially a small little cash house upgrade right paint the house kind of patio small okay but that's purchases that's not debt right and so i really but being in being in sales i want to make sure that i'm comfortable when you talk three to six months i feel like this commission as you know can go up and down not it's not three to six months. When you talk three to six months, I feel like the commission, as you know, can go up and down.

It's not three to six months of income. It's three to six months of expenses. Okay, right. Your expenses don't go up and down. And then, obviously, what account to put it in? You always say money market. Is that still the best option right now, considering the economy and everything? You're not trying to make money with the emergency fund.

You're trying to protect the things that are making money. Great. And I, I guess I need to get on my smart investor bro. Cause I need to find somebody with a good mutual fund situation. So I'm sure you have a few of those. Just jump online and do that. But here's the thing. You just, here's what I had to learn to do.

The first time I got to check that size, it's kind of mind blowing. And our human tendency is okay. I'm going to have a hundred thousand. So we, in our mind we kind of spend three hundred thousand oh man right or eight hundred thousand if you're in the deloney house right and so you gotta back down and just go okay i'm gonna take i'm gonna write down the number a hundred i'm gonna take 30 out of it and i'm 100 debt free i'm gonna take 25 out of it and i'm gonna have an emergency fund and I'm going to take $25,000 out of it, and I'm going to have an emergency fund,

and then I'm going to allocate for home repairs, actual home repairs and actual bids. We're not going to accidentally take on more home repairs than we have money because that puts you back in debt, okay? But you need your emergency fund in place and debt-free, and I'll call it $25,000. I just made that number up. I don't care what it is, but that's $55,000, which leaves you 55 which leaves you 45 and the kitchen and the painting is 25 okay and so now i've still got 20 and i can you know start some investing for the kids college and some stuff like that then with that and we get to fix up the house and we paid off all the debt and we have the emergency

fund all in one fell swoop but if you don't freaking write it down, it'll blow up on you. Understood. And if a GC knows you have, I don't know, around $50,000 to spend, they're going to put a $100,000 bid in front of you and make it really hard to walk away from. Yeah, because there's a lot of stuff

you can do to a kitchen these days. Yes. And let me challenge you one more. Take $10,000 of that off the top and give it away oh definitely give some of that money away be tithing for sure um and giving let that be a spirit of um first fruits man yeah generosity the whole process hey dave help me with this real quick um and i don't we don't have very much time in in a minute help me understand what is

happening with the economy because it feels like people are still hiring, businesses are still making money, and that I don't fully understand it, but the Fed's trying to crash it. Yeah. They're trying to run it up against the wall, and I don't understand that. Well, because you're a logical human. No one's ever said that before. Yeah.

It feels like they're trying to run it into a bridge. They've said out loud they want to cause unemployment. Help me understand even the rational line. The concept is if we slow the economy down because of unemployment, then the prices will stop going up. It's in an effort to squash inflation. The problem is that's not what caused inflation. A speedy economy isn't what caused inflation it was horrible domestic policy on oil turn the spigot off the prices go up no kidding

okay so a biden sticker i did that for sure yeah the other parts of inflation were covered related not covered related they're quarantine lag they're quarantine related you shut down the factories on cars there's no cars so the price of cars goes way up you shut down the factories on cars there's no cars so the price of cars goes way up you shut down the factory on producing lumber there's no lumber so the price of lumber goes up oh wait now we started the factories back so now there's cars again now there's lumber again it's starting to smooth out lumber's back down that's what i mean so if you wait a hot minute if you wait a hot minute and quit screwing around with it trying to fix it with the wrong tool quit using a hammer on a phillips screw i

mean really and that's the problem and that's why everybody's so pissed off even bernie sanders came out and said this is the wrong thing it's yeah well me and bernie sanders agreed on something yeah i know i felt my feet getting cold i was like hell's freezing over exactly it's like dave and bernie agree about something well that's Twice in six months, we agreed about something. I'm not near as smart economically, but I remember at the start of deer season last year, the shelves in the ammo department at Academy was wiped out. Yep. And then I went there the other day, and they are full top to bottom. And my first thought was, the factories must be catching up.

Yep. And then I thought, well, maybe I'm missing something, but why are they trying to drive this thing in the ditch? Well, there's two things that cause prices to go through the roof, okay? Two potential things that we're discussing here anyway. One type of inflation is what we had in the 70s, and it was just a white-hot economy. Everything kept going up, and everybody got away with it. And so it went up again, then it went up again, then it went up again.

And it was just prosperity heaped on top of prosperity, mix in a little greed, and boom. Okay? And there was a monetary policy in those days, in the late 70s, early 80s, very similar to this. George Volcker had the Fed back then. And I was actually an adult and remember this. But, you know, and so they did the same thing. They just jacked rates up to freeze, to slow down the economy.

But that inflation in the 70s was a different kind of inflation got this inflation was was domestic oil production related and quarantine supply demand curve related gotcha and if they don't if they leave it alone they're gonna mess it up further that's what it feels like when i keep opening the grill to screwing it up my briskets yeah the more i open the grill the more i screw it up if i just leave it it alone. Exactly. If you just let it cook, let it cook, it'll turn out. But now, we're trying to get people elected next week, so there you go. This is The Ramsey Show. Hey, it's John Deloney, co-host of The Ramsey Show.

Did you know over 18 million people listen to The Ramsey Show every week? A lot of those people listen on one of our 600-plus radio stations across the country. To find a station near you, go to RamseySolutions.com slash show.