The Ramsey Show - App - Should We Plan Financially for the End of the World? (Hour 3)

Episode Date: July 12, 2022

Dave Ramsey & Kristina Ellis discuss: Why you can't predict the end of the world (and invest accordingly), Counseling a kid who doesn't want to go to college, The best way to invest after selling a home, When to sell a car.   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

Live from the headquarters of Ramsey Solutions, 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 to work that they love and create actual amazing relationships. Christina Ellis, number one best-selling author and Ramsey personality, is my co-host today. Our phone number is 888-825-5225. It's a free call, and some say the advice is worth exactly what you pay for it. Starting off this hour is going to be Jeremy in St. Paul.

Hi, Jeremy. Welcome to the Ramsey Show. Hey, Dave. Thanks for taking my call. I was listening to a Christian Talk Radio guy out of Memphis area today, and he was talking about financial planner. And I called up and said, hey, do you know Dave Ramsey? Because he says this guy's not following everything.

He's going to be all right. And he said, well, I know who he is, but I don't know if he knows Bible prophecy very good. And I don't really agree with what he's saying. So I just wanted to ask you, give you a chance to respond about what do you think about Bible prophecy? Because he believes there's going to be a, someday Christ has come, there's going to be a premillennial, or he's going to set up a thousand-year kingdom, but before that, there's going to be a seven-year tribulation. And most believers I know feel that we're getting close, but every time I listen to you, it's like it's going to go on like it always has. So I just wanted to ask you about that.

Okay. Well, that's fair. Well, obviously, those of us that are people of faith that are Christians and have studied the Bible much know that the study of end times is eschatology, right? And there are three forms of thought around that, pre-trib, mid-trib, and post-trib, meaning tribulation. And so when are we going to be called to heaven before the tribulation, in the middle of the tribulation, or after the tribulation? And depending on which one of those you would fall into, then you'd be much more concerned about this.

If you're going to be called to heaven instantaneously in the air prior to the tribulation, then you would not care from a financial planning perspective. Correct? Correct. Yes, you're right. I know I heard you talking and so the only part the only people you would the only people that would worry about it would or that would be concerned about financial planning during a tribulation would be mid-tribbers or post-tribbers

does that make sense i absolutely i agree with you okay all right cool so then once we say that then we've got to say uh you know how many times since scripture was written have uh intelligent well-meaning people decided that they recognized the signs from revelation and that now we're in the end times you want me to tell you how many times? Every freaking year. Every year. I mean, in 1988, a guy wrote a book, 88 Reasons Jesus is Coming Back in 88. Missed that one. Right?

And you can go through every, and no man will know the time or the hour, Jesus said from his own mouth. Okay. Remember that? Yes, sir. Okay. And so, yes, there's some interesting, very mind-bending and spiritual questions that can be asked around the end times and the study of prophecy. But I'm going to stop real short of predicting the end times based on the fact that a bunch of people smarter than me and that guy who was questioning that on the radio in memphis a bunch of people smarter than

either one of us have missed it every single year for 2 000 years on when they thought he this was all happening i mean you i can show you some very interesting studies during world war ii that uh peep that real smart theologians were convinced uh hitler was the antichrist and they had real good lineups on line by line by line by line from revelations all the evidence that this invasion and this movement in the war and the extermination of the jews and all of that kind of stuff there was really good evidence that that was the end times oops missed it you are you are pre-trib though right or i don't think it matters for this discussion yeah no no reason no my point is i'm going to come to the same conclusion about financial planning,

regardless of whether I'm pre-mid or post-trib. Because in order to plan for the end times as a mid-tribber or post-tribber, you would have to believe you can predict them. And I'm telling you very thoroughly here that I don't believe that. I don't believe you can tell me sometimes i'm thinking it's going to happen every day but yeah hey and and as screwed up and toxic as this world is come quickly lord jesus okay i'm ready baby let's let's let's call this thing it's messed up it's sodom and gomorrah out there man it is a screwed up bunch of human beings out there running around.

They're all over the place. You don't believe me? Just open up a social media account. There's some bonkers people out there. And so from a faith perspective, yeah, but can we not look back truthfully as intelligent human beings and say, this has happened before. This has happened in Rome. This has happened with the Inquisitions. This has happened with the Salem witch trials. This has happened before. This has happened in Rome. This has happened with the Inquisitions.

This has happened with the Salem Witch Trials. This has happened. You can go back and find all kinds of times that you look out into society and go, society has gone to hell in a handbasket. It must be a sign of the coming of the age. And it's just, you just can't predict it, I don't think. And I know a lot of theologians and a lot of good good friends of mine that think they've got it dialed in but man i'm just telling you

that's a that's thin ice when you start thinking you're going to dial in the day and you you got this figured out that i mean there were people thought bill clinton was the antichrist i heard a whole thing on that and uh and he he obviously wasn't uh pretty obviously if he if he is he's a really bad one you know and so um poor bill but you know you got to start naming you know this invasion of this and this movement of that and you have to and you align all of that with the uh with the with the innuendo and the hints in revelation and it's a fun exercise to try to do it but when you go down that rabbit hole the thing you have to remember is you will be one of a bazillion people in the last 2 000 years that got this wrong that when you start calling the end times with certainty

so much certainty that you start changing your financial plan and how you're going to live your life uh then you're about to be wrong you're about to be wrong and so whether i believe it's post-trib mid-trib or doesn't matter what i believe that overshadows all of that is that you can't predict when the end times are, and people that say that they can are wrong, have been so far 100% of the time. They've got a 100% wrong guessing game so far. Now, one of these days, somebody's going to guess it and get it right, but I hadn't figured that one out yet.

So not betting my mutual funds on that. So that's where that comes from. And that's a great discussion, though, Jeremy. Thank you for giving me the opportunity to do something I don't get to do very often. That on that. Yeah. So that's where that comes from. And that's a great discussion, though, Jeremy. Thank you for giving me the opportunity to do something I don't get to do very often. That's fun. Yeah. It's a good one. That was a very good analysis.

Thanks for sharing that. Yeah. And it's just, but yeah, yeah, yeah, yeah, yeah. There's bad stuff out there. Don't get so caught up in it and that you're predicting something you're not capable of predicting. It's not within your purview. It's not within my purview either. This is The Ramsey Show. Let me tell you a story about two families that are very much alike in a lot of ways.

Both families have two working parents and a couple of young kids. Each has debt and a struggle to make ends meet, but they're starting to make headway with their budgets and smarter decisions with money. They have dreams and plans, and the only real difference is that one family has the right amount of term life insurance and the other doesn't. Big difference. If one of the parents die, and that does happen, their well-being would be destroyed. Paying for the mortgage, utilities, food, and other bills would be impossible, let alone saving for education or retirement. That's why every day I talk relentlessly about getting term life insurance. Just go to zanderinsurance.com or call 800-356-4282 and see how inexpensive it really is.

Be the family that takes those deliberate steps to be different and responsible. It really does make you the hero of your story, and it puts you on course for better things ahead. Christina Ellis Ramsey, personality, number one bestselling author, is my co-host today. Open phones at 888-825-5225. Well, everybody's got questions out there and theories and feelings about real estate. The million-dollar question is what's going to happen with house prices? Best way to figure that out hasn't changed ever. I've been doing real estate for 44 years, and the way you figure out what's going to happen with house prices

is the way you do everything, data not with feelings and data on supply demand inflation you're looking at interest rates and you know you then you've got a predictive model that you can do this with we're going to walk you through this actual data this thursday in our free real estate reality check is Is the real estate market going to crash? Is the bubble going to burst? Spoiler alert, no. Now I'm going to show you why, and it's free. Join us on this free live stream.

George Campbell, Rachel Cruz will join me. We're going to tell you what we think and why in great detail. It's going to be a bit of a class, a bit of an academic approach to this. And get your heads around what's going on. And then you get to make your decision because you're like grown-ups and stuff. And you can choose to not agree with us or to agree with us. And we'll still be okay. And we can even still be friends.

How's that? That's weird. Yeah. So July 14th, 7 p.m. Central Time. It's free. You need to pre-sign at ramseysolutions.com slash realitycheck to get on our platform, and we will deliver that puppy to you, and you'll be able to watch this. And I hope we can give you some real information that you can analyze then. Maybe it'll remove fear for some of you.

Maybe it'll return hope to some of you. Maybe it'll give you a little different strategy on what you were thinking about with selling or buying a house. We're going to show you what we think we would do. And here's exactly why from an intellectual perspective, from a study of economics and actual data, not a feeling. Not a feeling. Because there's a lot of feelings out there. A lot of feelings. And most of them are fear.

A lot of feelings and most of them are fear a lot of fear well there's so many opinions and so many articles coming out that say complete opposite things and people are confused and everything on the internet's true i mean abraham lincoln tweeted that last week so um you know that so that right yeah ramsey solutions.com sign up for the real estate reality check thursday night it is a free live stream join us blinds.com. Sign up for the Real Estate Reality Check Thursday night. It is a free live stream. Join us. Blinds.com gives us our question of the day. Find out for yourself why Blinds.com is the number one online retailer of custom window coverings,

free samples, free shipping, new promos all the time. You'll save even more. Use the promo code Ramsey to get the best possible deal. Today's question comes from Mike in Pennsylvania. My kid is most likely not going to college. I was always taught that everyone goes to college. How do I help him find his path? This is a good question, especially in light of so many of the discussions

we've been having recently around college and the pressure to go to college and take out student loans and the Borrowed Future documentary where we're exposing this toxic culture. You know, so many people have been told that you have to go to college to be successful. And that's the only way at all cost. And that's just simply not true. College is not for everyone. It's a great thing. We love education. I'm a big believer in education, but it's not for everyone. But for generations, it's been told that you have to go. So Mike, I do understand the concern about your kid not going to college. And one of the first things I would do is work through your own emotions around that. Try to think through, why do I feel this way?

What kind of fear do I have with my kid maybe not being successful? And what are your worries and concerns? Settle that in yourself and then approach your student and your child. Because the thing is, is it's so easy to kind of weave your opinion in and kind of get aggressive. And then the wall goes up and then your kid doesn't want to talk to you about anything. They don't want to talk about the future. And that line of communication is kind of closed. So what I do want is for you to still have that line of communication open and really ask your kid questions about what do they want to do and help them explore what that future could potentially look like set goals you know there's a lot of different ways to get an education it's

not just the traditional four-year degree you know maybe they go to work doing an apprenticeship maybe they go to trade school maybe they get a certificate there's a lot of different ways to get educated to have a successful career but you want them to be willing to talk to you and not just shut down because they think that you only want one thing. You know, keep that line open. There's so many different options. And then also, it's important to set clear boundaries. You know, if your kid is potentially lazy and is thinking, I don't want to go to college because I'm going to sit here and, you know, stay at home and kind of mooch off you for the rest of my life. Like that conversation needs to happen too.

You know, perhaps they do stay home for a period as they work and kind of figure out what's next. But it's important to kind of set that boundary of like, you know, maybe if you stay here, you need to pay rent. Or if you stay here, here are the rules. But one of the biggest things is just keeping that line of communication open and having those discussions yeah but because an eagle that doesn't leave the nest eventually is known as a turkey so um you know that that needs to happen but the the other thing is this you need to remember that

as a parent um somewhere along the line in our culture we have slipped a gear and um thought that okay once they're like 17 they're completely developed and they're allowed to do whatever they want to do and they're really really smart because they're young and beautiful no they're not they're young and dumb and they need a mom and they need a dad to look at them and go that's's not smart. You know, you need to tell them the truth because you've still got more influence even than you think you do. Even if they roll their eyes, you've got more influence than you think you do. Now, here's what would be at my house, okay? 100% of you that leave this house need to plan on a lifelong pursuit of learning.

If you don't keep learning, you're dying. If the last time you read a nonfiction book was 15 years ago, you've got a problem. If the last time you ever took any kind of a class of any kind was a decade ago, you've got a problem. I teach classes for a living, and I take classes. I read books like crazy that are nonfiction and fiction. And so I constantly have a book open. And so I'm going to tell Junior, I don't know why you're saying he's not going to school.

I don't know why you've come to that conclusion, but not going to a four-year school. That's fine, but you're going to do something. You're going to engage in some kind of a CERT program, some kind of a trade school program, some kind of a code school, whatever it is you're going to do. You need to do something post-high school because you're going to be at a vast disadvantage. Your probability of poverty goes way up unless you engage in a lifetime of learning, and it starts with what your first post-high school decision is. Now, again, you want to be a diesel mechanic? I'm good with that.

I know diesel mechanics make it over 100K, and they love working in the grease, and they love turning the wrench, and they're good at it, and their engine whispers, they can do it, do it man i love them and you want to do that that's cool go do that you'll make more than somebody that gets a sociology degree with masters okay so have at it i'm good with that but the uh the idea that you get to do nothing post high school that's not even on the table and as his dad uh you need to influence him starting now on that and so okay we're gonna do something bubba what is it what is it we're gonna do okay game on all right and that's what you need to do here and plug into that that's going to be a big

deal and uh and as you said college isn't for everyone um and you know you did postgraduate work i didn't uh i did some postgraduate work i didn't for everyone. And, you know, you did postgraduate work. I didn't. I did some postgraduate work. I didn't complete a postgraduate degree. You did. But the, you know, the idea that somehow, okay, I wrote an app and I made a million dollars and I'm 19. Doesn't mean you're done, Bubba. It means you just got started and you got a really good start.

But if you think you're going to keep doing that over and over and over again for the rest of your life with absolutely no training, not happening. You got lucky and fell backward into that one. And so you need to figure out a way to replicate this, and usually that involves some form of education. Now, I'll hire people in the technology field all day long who don't have a four-year degree but have all the certs, and they've been to code school, and they can write code, and they know what they're doing. Most of the best ones don't have a four-year degree in that. So we got 300, 400 tech folk in the building. You know, we got coders and engineers, software engineers all over the building and hiring them every day. We love them.

And that four-year degree is not necessary there. But I really don't want you doing my accounting as my CFO if you don't have a four-year degree in that. Because that's pretty basic stuff, you know. And so you've got to decide what the training is for the career direction you want to go. Continuous lifetime of learning. That you need to demand, regardless of what little child boy wants to do here. We're going to lay out some other stuff here. That's going to be the plan.

This is The Ramsey personality number one best-selling author is my co-host today open phones at 888-825-5225. Maui, Hawaii is on the line. Jennifer is calling, says on my screen, you're debt-free. Jennifer, way to go! Thank you so much, Dave. It is such an honor to talk with you. You too. How much did you pay off?

$365,000. Whoop, whoop! How long did that take? It took me, I can't believe it still when I say it, three years and four months. Whoa. And your range of income during that time? Well, I'm a special ed teacher, and so initially my income was $53,000 after taxes, and I doubled my income up to $110,000.

Okay. And how did you double your income as a special ed teacher i know right um so i took on 13 actually maybe 14 extra side gigs um holy yeah what was the most lucrative one what's the one that made you the most money well i actually um i think it would be renting out the three bedrooms in my home sharing my space with other people of course being a landlord is definitely uh lucrative it's also i also did long-term yes it was a massive change in my lifestyle, but I just knew that I laid down the math and I said, you know what, I can just do this. If I can just have this lifestyle for just three years, I can be done. Okay, you didn't make $365,000 in English tutor online for a company that actually you suggested for kids in China. So I tutored them, and I pulled in about 50 hours a week doing that. So if I basically wasn't sleeping, I was working for three years.

I'm sorry, but still 110 times 3 is 330. Well, I also did, I ran a cat hotel in my home. So you made more than 110? No, no. So it was up to 110 in three years. So 365 in three years, I don't know, I made it happen with 14 jobs. You didn't make it with 110 times three that's 330 330 i must have had some money well i didn't get any inheritances no handout okay so i

might have had some extra money that i might have pulled out from my growing emergency fund to make it to pad it in there okay cool all right yeah right. I'm just trying to get there on the math. And also you had to eat during that time. Yes. Yeah. Okay. Well, it was also meal prepping for some single guys. I kind of think you made more than you thought you made.

Possibly, possibly. You were working so much you forgot to count it. It's possible. Way to go. This is pretty amazing. Yeah. Yeah, so what happened that got you started on this journey? Well, this is all a house.

I got divorced, and there's nothing that sets you into a sense of reality than going from two-person income to a one-person income. And I bought out my ex-husband on the marital home. And so that's when I realized I needed to just, I didn't want to be in debt. And I wanted to have a place where I could take care of myself financially and not worry in the future.

So this is house and everything you paid off. Yes. So I was debt-free, always kind of had that lifestyle of debt-free. And it's funny because when I did the buyout process, so this is the price of half of a house on Maui. So the house value at the time of the divorce was about $700,000 and change. And so half of the house value was $365,000. Oh, so this was all about buying him out or paying off the loan from buying him out.

Correct. Yeah. Okay. Wow. So now you own a three quarters of a million dollar. More than that, it's probably worth eight or 900 now, right? It's at 1.2. And it's 100% yours.

It is all mine. And I'm telling you, like, I know you say that the grass is going to feel different under your feet. And it really does. But I do want to say just it really, you got, no matter what you do in this process, there's a little bit of dissonance in my joy right now that it's finished. It's kind of like there was so much joy to the effort process while I was doing this. It was quite liberating to know that I was on the right path. And I feel like sometimes when you know that you're on the right path, sometimes that's the reward.

And, yeah, it's just you got to get ready for that. You know, when you have a big goal, you do the debt-free scream. And I'm so grateful to be on the air. But there's also a message out to people that are doing this that, you know, just get ready for that feeling of like, well, now what, you know? And if you attach joy to the effort process while you're in there accomplishing your goal, I think you're just going to, you realize you're practicing self-love, you realize you're doing the right thing that needs to be done for your future. And, you know, I think that in itself is the reward that people should really focus on. It's

just have fun. It's about, you know, you're doing the right thing for yourself. Have fun in the process and really look at what you're doing for your future, for your children's future, for your kids or, you know, just you per se. So that's just kind of my biggest take home with all of this is, and I don't hear that enough, you know, just in general, but I see the excitement in all the people that have supported me and people that are also doing the same thing. They're just so excited, like, I just did an extra 5K towards my mortgage, and you're like, way to go, you know.

That is joy right there, and that's what kept me going the whole time. And I'm going to miss that. You know, I'm really going to miss the support from people as well. There's joy in both traction and in struggle. And that's what you're saying. And, you know, we forget that. We live in a culture who tries to create comfort and safe places in all of this and and you're actually much better at life when you can engage the challenge and you're right there's more fun to it uh you know if you don't

engage a challenge there's not as much joy i agree with you completely embrace the embrace the suck this some of the stuff sucks and you just got to lean into it and you just embrace it and go with it and it is it is and and we can we've both been there too and so we can you know kind of completely we're both sitting here agreeing with you and also uh experiencing the same thing again just watching you do it well done yeah and you mentioned you mentioned cheering when when 5 000 was paid off that people were cheering for you who are your biggest cheerleaders in this process i have to say it's crazy but it's strangers and here's another thing that is common probably for a lot of people that the people closest to them don't understand you know your family might be like what are you doing who are you to say that you're going

to be owning a you know multi-million dollar home on maui as a single woman like what you know sometimes the family doesn't understand. Some of my family members were supportive. Others just didn't understand. And then some people closest to me, my closest friends were like, you're going to do what? So, um, I felt I reached out online and found these informal support groups of people that are paying down the mortgage on social media. Um, and I got to say, they were the ones that kept me going. I already had the mindset to be debt-free. It was always my lifestyle, my family, my parents were also debt-free growing up.

But when, you know, my life goes sideways in a divorce, I knew what I had to do, but it wasn't as lonely in the process. You know, now I'm alone in life, and I felt that way, but I didn't feel alone in the process of building up, you know, paying off the mortgage. And it was through those Facebook groups. Tremendous power and community. That's beautiful. Hey, we got a copy of Baby Steps Millionaires for you.

In this process, you became one. I'm so proud of you. Great. And a copy of Total Money Makeover for you to give away. And someone that's caught up in your enthusiasm, wake here. They're going to bould over, and they're going to want to start. Also, Financial Peace University membership for a year. All of that we're going to send to you.

We're so proud of you, Jennifer. Well done. Thank you. Thank you so much, guys. $365,000 paid off in three years and four months, making $53,000 to $110,000 or more. Count it down. Let's hear a debt-free scream. Three, two, one.

I'm debt-free! Yeah! Yeah! That is how it's done! Beautiful. This is The Ramsey Show. Thank you. Our scripture of the day, Hebrews 10, 35 and 36. So do not throw away your confidence. It will be richly rewarded.

You need to persevere so that when you have done the will of God, you will receive what he has promised. James Crook said, A man who wants to lead the orchestra must turn his back on the crowd. Christina Ellis, Ramsey personality, number one best-selling author, is my co-host today as we answer your questions about your life and your money. Jake is next in Murray, Kentucky. Hi, Jake. Welcome to the Ramsey Show. Hey, Dave. Jake is next in Murray, Kentucky. Hi, Jake.

Welcome to the Ramsey Show. Hey, Dave. Thanks so much for taking my call. Sure. It's an honor. Honored to talk to you. I just want to, yeah, well, thank you. I was going to say just real quick, I actually wrote a book about eschatology,

and you were spot on with the first caller. I enjoyed hearing your answer to that. Oh, I'm honored. Thank you. Yeah. So my question is, uh, my wife and I just sold, we closed in our house last week. Uh, we're able to, we had enough equity that we're, we're on baby step seven now. So we just bought a house debt free, uh, glory to be

the God. Uh, we're going to have when, when everything clears and we get all the renovations done, we're going to have about $100,000 left over. And I'm in the teacher's retirement, and so we're kind of behind on retirement a little bit. And I was curious if there's a way to take that money and do like a backdoor Roth IRA, like going to an IRA and then backdoor it, or what do you suggest to do with that?

Well, you don't need to do a backdoor ira a roth unless you make over two hundred thousand dollars a year household income do you um no no i do not okay then you can only do regular roths and that would be all you would need the backdoor is a method for someone with higher income to still get their money into a roth that's all it is but it's the same amount it's not an additional Roth. It's still the same number of dollars going into your retirement. So that's not going to fix it. So basically, you've got $100,000 to invest in. You're 100% debt-free. Is that what I'm hearing? Yes, sir. Yes, sir. Absolutely.

Well, what we always try to do is three things at the Ramsey House. We want to enjoy some of it, be generous with some of it, and earmark a certain amount and then be done with it. And also the third thing is to be investing some of it. Now, on the portion that you're investing, what I do at Baby Step 7 is two things. I either buy real estate that I pay cash for or I put it in good growth stock mutual funds. If you're going to do the second one, which is probably more likely because you don't have $300,000, you've got $100,000, you could buy a nice little house maybe in Murray, Kentucky for that. That would be a rental if you wanted to, if that's the business you want to get into or if you want to fool with that stuff.

If you don't, then you would buy a mutual fund that has what's called a low turnover ratio. And what that means is the mutual fund does not sell the stocks inside the mutual fund hardly at all. They don't turn over much. Okay? So you're looking for something that has like 5% turnover ratio. And what that means is 95% of the stocks inside the mutual fund are not sold every year. They sit there.

Why is that important? Because you're only taxed in a mutual fund on what you take out or what they sell inside. And so if they sell 100% of it every year, they had 100% turnover ratio, which some of them have a 200% turnover ratio. But if they sell all the stocks and roll them over every year, 100% of the gains are taxable every year. If they're not selling them with a low turnover ratio, it's not taxed until you sell it. So it works like this. If you buy a share of stock, let's just make it up, Home Depot, okay,

and you bought it for $50, I don't even know what Home Depot sells for, but if you bought it for $50 a share and it goes up to $70 a share, you do not pay taxes on the $20 gain until you sell it. Does that make sense? So as long as you don't sell that stock and it just grows and grows and grows and grows and grows, all that capital gains growth is realized, but you don't recognize it for tax purposes until you sell it and so capital gains growth like that is is is in a sense tax deferred growth and so a low turnover

mutual fund is a whole bunch of stocks in there that aren't being sold and so you're not paying taxes on the growth until you sell it if you hold it more than one year it's going to be taxed at capital gains rate 15 rather than at your ordinary income rate of 30%. So that's even better. So it's a low tax when you do pay it and no tax until you cash it out. An easy way to find a low turnover mutual fund is just holler at one of our smart investor pros, they can help you pick one out. Or even easier than that, you can just buy a no-load S&P 500 index fund. Most of those have a 3% or 4% turnover ratio, like a Vanguard or a Fidelity or whatever, somebody like that, and just buy you an index 500 mutual fund because what they're doing is matching the index, so they hardly ever sell the stocks.

They just buy the index and hold them. And then whatever that group of stocks does, top 500 stocks does is what you're going to have you're going to have a 10 12 percent rate of return on that with no taxes at all until you sell it or virtually no taxes until you sell it so low turnover ratio of course the same thing happens with real estate you buy that little rental house for 100 000 it goes up to 200 000 in value you don't pay taxes on that gain until you sell it. So again, you've got tax-deferred or capital gains type growth. And that's what some of these idiots are referring to when they say things like, you know, rich

people don't pay taxes. The secretary at Warren Buffett pays more in taxes. No, she doesn't pay more in taxes. She pays a higher percentage of her income in taxes because she's paying income tax, not capital gains tax. And if you live off of this type of investment, you live off of capital gains because you've built wealth. And so it's just good planning. And it's not like the tax system is broken or something or somehow rich people are getting a break and poor people aren't getting a break. Believe me, rich people pay stinking taxes.

I mean, there's a lot of years of my life I would trade my income for the taxes I pay a year now. A lot of years. And so, you know, you don't get out of paying taxes on your income. But when you've got investment income that's growing this way, it's virtually, or it's tax deferred, and it's then tax, somewhat tax favored. It's awesome. That's good motivation to keep investing. That's incredible. Moves in that direction. Eric's with us in Champaign, Illinois. Hi, Eric. Welcome to the Ramsey Show. Hi, Christine and Dave. I hope you guys are well. Great. How can we help? So let me just say I'm horrible with money.

I'm bad with money. I have no idea how to manage it. Four years ago, I traded in a car I was upside down on and for another new car. Two years later,

I refinanced it. Well, I owe $19,000 on it and just out of curiosity, I took it to the dealership over the weekend to see how much they'd give to me. They said they'd give me $28,000 for it. So, I mean, that's a nice hefty profit. Would it be a good idea for me to just go ahead and sell that back to the dealership, take that money, buy some sort of a used car and, you know, get, just get rid of that debt? Or should I just spend the next three years because I know it's a reliable vehicle and try to pay it off over the course of the next

three years? I mean, if you do that now, you could still have $9,000 to buy a used car. Is that right? Yes, yeah. I mean, if I were in your shoes, that's what I would do. I would sell it back to the dealer and then go get a $9,000 car and get rid of that debt instantly. What do you make? About $60,000. Okay. That's what I would do.

Okay. Yeah. Here's the thing, though. That absolutely will not work until you start handling money and stop buying cars on payments. If this is the last one forever and ever, amen, you changed your life with this transaction. If this is just a move you make until you impulse again, then this was just a, you know, we were just spinning our wheels. We're just being a rat in a wheel then i don't want you to do that okay okay this is the first step of you completely

changing your life and never say out loud again i'm stupid with money because i'm about to teach you about money okay i'm gonna put you through financial peace university you're gonna be a freaking expert when you're done if you'll go take this class and i'm gonna give it to you okay are you are you serious i'm dead serious but you gotta go take the class if i'm going to give it to you okay are you are you serious i'm dead serious but you got to go take the class if i give it to you i i will i i certainly will okay and now when you're a millionaire you go buy this from some guy who says he doesn't know how to handle money okay so i'll buy it for 10 people who's i'll buy it for 100 people don't over promise calm down just calm down right now what i want you to do is go to the class and get out of debt, okay?

And get your competence up and your confidence up so you never go in debt again. Now, that puts a stake in the ground when you sell this car. And in that case, I'd sell the car, Eric. Well done, Christina. That puts this hour of the Ramsey Show in the books. We'll be back with you before you know it. In the meantime, remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus. Dave here. You can find all of our shows with the Ramsey Network app on your

smartphone. It's the only place to listen to the entire back catalog of episodes. Download the Ramsey Network app in your favorite app store today.