The Ramsey Show - App - Shut Down Your Stupid Investment Plan (Hour 2)

Episode Date: July 9, 2018

The show about you

🎵 Live from the headquarters of Ramsey Solutions, 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. This is your show, America. Thank you for joining us. Open phones at 888-825-5225. That's 888-825-5225. Ryan starts off this hour in San Antonio. Hey, Ryan, how are you?

I'm a new favorite saying, better than I deserve. How are you, Dave? Just the same, sir. How can I help? Good deal. I have a question here for you i just found your show about two weeks ago and to give you a little background i was in about sixty thousand dollars in debt uh after college i graduated may 2017 and i was making dumb choices. I was still making child choices. I was doing what was feeling good. And so I decided to take a job out of state and move to Texas where I could be away from distractions, and I just wanted to knock out all of the debt.

So I also own a small IT business, and that business is cash flow positive. I bring in about an extra five grand a month with it now, and I work a full-time salary job. Now, all of my credit card debt has been completely paid off, and I was previously saving up for a house until I found your show. And I had about 25 grand saved up there, and I've been investing and playing in the stock market with about 10 grand. I took the 25 grand and I split it between my student loans and my card notes. So, but I still have the 10 grand and I'm having a hard time taking that out and taking

away my contributions to my 401k because my returns are better than my interest rates. Do you think that is still the wrong move to be making? With that $10,000, I usually, well, it's been growing progressively. It's at $10,000 now, but the risk is a lot higher, but I'm averaging about 10% to 14% a month on that. And my 401K is averaging about 9% a month right now. And my student loans have a 4% interest rate. I think you mean a year. I don't think your 401K is making 9% a month. Oh, I'm sorry, a year.

Yeah, I am sorry about that. That's okay. I thought I knew what you meant. Okay. So what is your income? Total. What do you want to make in the year? What do you make in the coming year?

No, your household income. What are you going to pay taxes on in the coming year? You got five grand from the tech business and you get your salary. About $130,000 before tax. How old are you? I'm 25. Good. And how much debt do you have i owe 10,000 more on my car and 15,000 on student loans zero credit card okay so here's the question that i think you're asking and um let's see if i am see if i'm correct. When you're 35, which way will cause you to have the most money? Investing in your 401k now and getting out of debt slower

and continuing your stock market game that you're playing or stopping all of that temporarily and knocking the debt out, freeing up the cash because you have no payments at all, using that money to invest, which one of those two ways will cause you to be the wealthiest at 35? The answer to the question is stopping the investing. Now, is that logical to you? I mean, it is logical.

So the thing is, here's what happens. Let me stop you, okay? I just tricked you, okay? Let me tell you what I did. I made you think long-term when I told you 35 years old. When you're presenting your case to me, you're thinking short-term. When you think long-term, your brain allows you to factor in risk. When you're comparing a 10% or a 12% rate of return to a 5% or a 10% interest rate on a loan,

you're not taking into consideration risk and the slowing down of your life and everything else. Here's what happens with your life, any part of our life, mine too. What you concentrate on is what you win at. No one wakes up one morning and goes, you know, I've never run a mile in my life. I'm going to run a marathon tomorrow. No, they get up and they train and they train and they train and they work a system and they work a process and they do the nutrition and they do the miles and they wear out shoes and they run and they run and they run out shoes, and they run, and they run, and they run.

And then they're not surprised when they are able to complete a marathon. And check that off a bucket list. When you're dating someone that you end up getting married to, you're unbelievably focused on that person to the exclusion of everything else to the point your friends are sick of you, you know, because you're focused on that one person. And that's called courting in the old days. And it causes people to get married. If you do not focus on her to the exclusion of everything else, she likely will not marry you. Very few people just, you know, love hanging out with people that don't focus on them.

So, you know, what you focus on on your career, you win at. When you focus on nutrition, your body is in better condition. When you focus on nutrition and exercise, your body is in a lot better condition, and so on. And this is true here. So when you focus on getting out of debt, to the exclusion of other things, on a temporary basis, you will hit that goal faster, more likely, and will then be positioned to build wealth. So all of that's a big, long, drawn-out answer to say,

stop your 401K, shut down your stupid investment plan with your stock, you're going to lose your butt on that, and pay off your car today, and then let's don't take money out of the 401K, but stop adding to it, and by this time next year, you're going to have an emergency fund in place of three to six months of expenses you'll be a hundred percent debt free you'll be saving towards your house and you can restart your 401k probably won't even take that long you're 25 you make 125 000 a year stop doing a bunch of crap and pay off the debt you only got 25 000 in debt you got 10 000 of it in that one stock account so we're down to 15 i mean you ought to be debt free in 20 minutes here,

it feels like. Really, focus on it. Don't try to do six things at once and do none of them well. And that's why we've had so much success, Ryan, helping people build wealth, because we first get them out of debt. And your most powerful wealth-building tool is your income. It's not the spread of your investments over your debt interest rate. As I've interviewed millionaires, I never interview millionaires and they say, Dave, you know, the way I made my money was I borrowed as much as I could at 5% and I invested it at 12. I never hear any millionaires say that. I mean, never, never. They say, I got out of debt, and when I didn't have any debt payments, I maxed out my 401K.

Oh, and then I turned around and paid off my house, too, in 10.2 years. That's the average time a millionaire pays off their house, 10.2 years. And with no payments at all, ding, ding, we start ringing the bell, and we become debt-free, and we start building wealth. Good question, man. Thanks for joining us. And, oh, by the way, to some of you people who are on Twitter, never have we talked to a millionaire and interviewed one that said they made all their money because they saved on the expense ratios on their mutual fund.

The reason they became millionaires is not because they concentrated on expense ratios. They looked at returns and consistent long-term investing. They invested and invested and invested and invested and invested. They didn't figure out reasons not to invest. Why do you people have a lot of theories and do nothing with a lot of opinions about money? You're pretty sickening. This is the Dave Ramsey Show. There are few things in this world that irritate me more than when people pay too much for their mortgage. So many of you are paying way too much and you don't even know it. I've got my good

friend Mike Hardwick with Churchill Mortgage here. Mike, how do you help these folks? It's unbelievable, Dave, how much people can save if they just make a simple call. We've helped thousands of your listeners save hundreds each month or take years off their loan, helping them to save thousands of dollars in interest over time. Folks, do yourself a favor. Make a quick call to Churchill Mortgage today.

I'm telling you, if you're paying a mortgage, you're potentially throwing money away that could be piling up in your savings account. It's true, Dave. With the rates the way they are right now, if you're making any mortgage payment these days, you're probably paying too much. Call Churchill Mortgage, guys. It's well worth a few minutes of your time.

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Blinds.com. Use the promo code Ramsey to get the best deal. Blinds.com. Katie is in Tennessee. Dave, if I have a $300,000 mortgage debt, should I still only get 10 to 12 times my income in life insurance, or should I get more to include that debt amount? 10 to 12 times should cover your mortgage payment if you're making your mortgage payment now. If your income now will pay your mortgage payment,

and you get 10 to 12 times that amount, let's say that you make $100,000 a year and you get 10 times that, that's a million dollars, and you die. Your spouse takes a million dollars and invests it. If it makes 10%, it creates $100,000. So $100,000 income is $100,000 income, and you were paying the mortgage with the $100,000 before, and now your spouse has got $100,000 off the investment alone,

and that's what 10 to 12 times will do, roughly. It's a rule of thumb. It's not an exact science, but it's very close, and it makes sure that you buy enough life insurance and that you buy term life insurance and that you buy term life insurance. You never buy cash value insurance. That way, you can afford to get enough, for one thing. The second reason is that cash value insurance, all the different versions of it, are a ripoff,

and you're much better off doing your investing in good investments. Levi's with us in Houston. Hi, Levi. Welcome to the Dave Ramsey Show. Hey, Dave. Thanks for taking my Ramsey Show. Hey, Dave. Thanks for taking my call. Sure. What's up?

Hey, so I've been listening to your show for about 12 years now. I grew up watching you on Fox Business, and I just really appreciate what you do for everybody. It's really helped me out. My main question is, what is your stance on VA home loans and why you don't like them? The only reason I don't like them is they're more expensive than FHA loans and conventional loans. That's the only reason. Now, they're not necessarily more expensive if you are a disabled veteran. Are you a disabled veteran?

No. Okay. If you're a traditional veteran with no disability qualifications the interest rate is slightly higher the funding fees are higher and the behind the scenes fees are all gotcha fees the only reason anybody ever buys a va loan is because they don't have a down payment okay and you can get in with no down payment and of course we don't recommend that it means you're too broke to buy a house is what that means. And so it really simply is because they're just more expensive.

Of the three, what are called conforming loans, FHA, VA, and conventional, conventional is typically a Fannie Mae loan, FNMA, Federal National Mortgage Association. Those three loans, an FHA, a VA, and conventional, VA is typically the most expensive. Now, there's exceptions, again, if you're disabled or there's a few other things here or there, but by and large, as a rule of thumb, you're going to want to go with a conventional loan. It's cheaper than an FHA. And the FHA and VA loans are both government-insured loans, meaning the federal government is insuring the bank against default.

And built into that is a bunch of gotcha fees, is what it amounts to. And typically, again, higher interest rates. So, hey, good question. So let's do a little mortgage primer right quick. Government-insured means this. If you take out a VA loan for $150,000 and you get foreclosed on, and the government takes the, or the bank takes the house, Bank of America has a VA loan on you, Countrywide has a VA loan on you, and Countrywide forecloses on you, and they sell the house that has $150,000 owed on it, and it only brings, well, a VA loan, they wouldn't sell it. A VA loan, what happens is as soon as they foreclose, they call the Veterans Administration, VA, and VA sends them a check for the loan balance plus all the late fees plus the interest rates. So Countrywide takes a loss on that foreclosure of exactly zero.

They deed the house over to the Veterans Administration. You and I, the taxpayers, are now the owners of that zero. They deed the house over to the Veterans Administration. You and I, the taxpayers, are now the owners of that house. And that house is then sold. If it sells for $140,000 and Countrywide got $152,432 to cover all their expenses, then the federal government takes a loss on the loan. And in that loss is the Veterans Administration's budget, and in that loss is the funding fee that funds the pool to cover the losses. So it's a federal government-insured loan, just like a student loan, a Sally Mae. It's a federally insured loan, meaning the bank is

taking no risk by making the loan. An FHA is issued through the Department of Housing and Urban Development, through HUD, and it's the same thing, basically. HUD insures the loan for Countrywide or Bank of America or whoever the mortgage company is. If you do not pay and they foreclose on, the mortgage company loses $0. They get 100% of what was loaned plus all the fees, pay and they foreclose on the mortgage company loses zero dollars they get a hundred percent of what was loaned plus all the fees foreclosure fees lawyer fees title fees late fees interest

rate fees bankruptcy fees any kind of fees that they paid out they get a hundred percent coverage they take zero risk and the federal government covers that loan 100 percent. And so the banks love making VA loans, and they love making FHA loans. However, VA and FHA have figured out a long time ago they have to cover a lot of these costs, and they put fees in there to cover all those costs. Fannie Mae is much more of an open market traditional mortgage in that a bank is making a loan and they're taking a risk. And if you don't pay, they could lose money when they foreclose. They could lose money on that house.

And so that's why they make you buy PMI, private mortgage insurance, that covers the first 20% of the sale price if you don't put down at least 20%. And because that covers them down to an 80% loan-to-value ratio, and so a $200,000 house, surely they can get $160,000 out of it, and surely they can get their money back. And that's the way they look at it. But that's a bank making a loan with some private insurance, not federal.

The federal government is not involved in that transaction. And it ends up being less expensive because guess what? Those loans fail less often. And FHA and VA loans, the VA loan was originally brought up as one of the benefits to our fine veterans. I just had the pleasure of meeting a World War II veteran a few minutes ago here in the lobby. And, you know, the original thing is the VA, the Veterans Administration, was put in place to provide benefits to the veterans. Sometimes it does a good job of that. Most of the time it doesn't.

The VA benefits are not really that good. I mean, when your only benefit for buying a house as a veteran is the most expensive way to buy a house, that's not exactly a great benefit. Didn't do a good job with that, right? And so it should be cheaper for veterans. That would be the idea, and not more expensive. I mean, philosophically, it should be. Not necessarily mathematically, not necessarily government policy or any of that crap,

but just philosophically, if you want to be a blessing to the veterans, don't charge them more than they could get the house for without using the VA. You know, duh. It's kind of basic in my mind, but they do. So that's it. And the VA will chase you after foreclosure for the amount they lose on you if you're a veteran. That's just really oxymoronic. But they will.

They'll chase you harder than anybody else will. FHA completely forgives the deficit. They don't chase you. The veterans of penetration will chase their own people and chase them down and get the money out of their hide, man. It's brutal. We work with this stuff all the time after the fact of the foreclosures. So we get to see both ends of it, both sides of it,

and that's how you see it done. Conforming mortgage, while we're doing our little mortgage primer here, means in any one of those three cases, those loans conform to a set of underwriting standards. FHA loans all have exactly the same process for approval. If you violate one step of the process for approval, it cannot be an FHA loan and you lose your government insurance. Same thing with the VA. It follows an exact process, different, but an exact process to be approved.

Same thing with the Fannie Mae. It's all conformed. All Fannie Mae loans are just alike. And so you could take a, you know, I don't know, for instance, it wouldn't work exactly this way, but you package them together, and they're sold as a security. Fannie Mae bonds. You may have heard sold as a security. Fannie Mae bonds. You may have heard of your grandmother buying a Fannie Mae bond.

Well, all that is is four $250,000 mortgages put together that are all just alike because they are conforming. And then they sell them as a $1 million bond. And so you package it together. So that's how they sell the mortgages on the secondary market, how your mortgage gets sold to a different bank all the time. You always wonder how you end up with a different bank. They're packaging these loans together because they're all just alike. They're conforming to the same underwriting guidelines, so they're very marketable. This is The Dave Ramsey Show. Okay, I need you to listen to this,

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You can be secure in seconds. Download Hotspot Shield by Anchor Free today. Sid is with us in Dallas, Texas. Hi, Sid. Welcome to the Dave Ramsey Show. Hey, Dave. How are you? Better than I deserve. What's up? I was just calling in to get your opinion on it. I'm 26 years old, and I've saved up money to go into two different options, either into the real estate market because Dallas is booming and has a lot of growth that's happening or go into mutual fund

direction, right? So I just wanted to get your opinion on which one you think long-term would be better. How much money have you got saved? I have $120,000 saved, and I am at Baby Set 7, where I've already purchased my personal loan, just our first house, and already have paid down to 20%. Good for you. Congratulations. Very well done. Very well done. Thank you. Well, as you probably have already surmised, I always pay cash for my real estate investing. If you're not going to pay cash, that changes the answer. But if you're going to pay cash for it, real estate has a higher hassle factor than mutual funds. You deal with these things called tenants and renters, and stuff gets torn up and stuff breaks down.

Roofs leak, heat and air goes out, you know, stuff like that goes on. And so you've got issues to deal with to manage the property. So it's much more, it takes a lot more of your time. So the hassle factor is a very real part of the discussion. A well-purchased rental property, meaning you bought it at a good deal, it's in an area that's doing well so that you can put a good tenant in it as opposed to some not good tenant,

and the property's in good enough condition that it's not causing you constant maintenance issues and it's going up in value, it's a safe, good area. A well-purchased rental property should give you a considerable better rate of return than mutual funds. Typical mutual fund, I've got one mutual fund that's averaged 12.03% for 80 years. Most of my real estate, including the tax advantages and the increases in value, when you include all of that that's called the internal rate of return, the IR on real estate most of my real estate approaches a 20 irr but it has a hassle factor to it i have to deal with it you know and so it just depends on what you're up for what you have time for how you're going to do it and all that but real estate if it's purchased

properly again properly purchased you buy a bad. But real estate, if it's purchased properly, again, properly purchased, you buy a bad piece of real estate, it would be your worst nightmare. But you buy a bad mutual fund, it can be a nightmare. But a good piece of real estate, if you don't mind the hassle, will make you more money. Makes sense. I thought the property would be aimed at purchasing for real estate investment would be brand new to

get rid of some of that hassle risk which you're mentioning right that would get rid of some of it yeah but you still have to get the tenant to pay their bill correct so um i guess the other strategy out was was it would you suggest to do both uh do mutual and do the real estate one we get to a point where we can buy cash out. I would suggest that you do both over time. But I have ended up with a lot more of my personal wealth in real estate than I do in mutual funds for two reasons. One is it's gone up in value faster. And so, duh, the other one hadn't caught, hadn't stayed, hadn't kept pace.

And number two, I'm a real estate guy. I've been in real estate business my whole life. Mom and Daddy were in the real estate business. I got my license when I turned 18. I love real estate. It doesn't, I can, I love it. I just enjoy the process. The imperfect market, the fact that you can find a bargain, you know, and I can smell

one out and tenants, I love tenants. We have great tenants because we don't let people that aren't great move in. And know it's not any harder than that and the ones that aren't great they got to leave so you know we have great tenants that's all that gets to stay and so um you know we don't have any trouble with it we're nice to folk and they're nice to us and uh but some people they have just all these nightmares they can write stories and books of bad tenant experiences, which means you're a bad landlord because you let them in there in the first place. So all of that to say, I love real estate. I always have. But I also believe in diversification.

So if you look at Dave Ramsey's net worth, it's composed of three things. The value of this company, which is the vast majority of my net worth, a bunch of real estate, and a bunch of mutual funds net worth, a bunch of real estate, and a bunch of mutual funds, but a double bunch of real estate. But it's because I bought it in 2008 for, you know, 20 cents on the dollar. I mean, if you buy something for $2 million and, you know, what, 10 years later, it's worth 20 million, it's easy to, you know, kind of throw off things, you know, and that's what it did.

So that's the thing. That's what you can get into, though. And you can take that $120,000, $150,000 and get started on that because you're on fire, man. You got a great start. You got your house paid for. You're young. You're being smart.

You're asking good questions. Just take your time. Be the tortoise. Don't be the hare. And just buy something that's smart. Don't get desperate. Don't get something that's smart don't get desperate don't get in a hurry don't get you know all hot and all got the fever got to buy a house got to buy i got this money's burn a hole in my pocket i got to buy a rental property and just take your

time man that's where the bargains come from is patience and just just keep poking around till you find the right deal and i you know sometimes you go a while without buying something because it's hard to find a deal right now in this hot market. But that's okay. That's okay. Hey, good question. Mary's with us in Colorado Springs. Mary, how are you?

Yes, hi, Dave. Thanks for taking my call. Sure, what's up? Yeah, I am sitting here with my 13-year-old daughter, and she loves to bake, and she's looking to start a cupcake business. And I was just curious, well, she was curious, I was too, how we go about doing that. Like, what would her first step be? What you would recommend. Well, that's fabulous.

Congratulations. I love that. Oh, thank you. Thank you. I've got a friend named Cordia, and she is nicknamed the Bun Lady. And she started her baking business here in Nashville a few years ago. Got a little account making all the hamburger buns for McDonald's. So she's done pretty good.

Oh, wow. Yeah, she's done pretty good. It's worked out good for her. Oh, that's great. So, yeah, you never know. A lady-owned business with a little baking where it'll take you here this could it could work out for you so here's what i'm gonna do i've got we've got it we've got a whole tool kit called the teen entrepreneur tool kit i actually think i got the box laying

here i do i do the teen entrepreneur tool kit that and that anthony o'neill did our ramsey personality that speaks to teens it's the the Small Business Guide for Teens and Their Parents, and it's a whole box of goodies to teach you how to start and set up the business and how to run it, how to price it, how to market it, how to think about it, how to set your goals, how to calculate your profits, and then you start looking at how much you want to produce and how much you do want to work, because you want to control that. Because the big benefit, Mary, for your daughter, your daughter's name is what? Caitlin.

Caitlin. Caitlin. Okay. The big benefit, Caitlin, is not the amount of money you're going to make now. It's the lessons you're going to learn while you're making the money. Okay. So when I was your age, I was cutting 27 yards. And I learned how to keep i learned how to keep

a profit and loss statement i learned how to work with people and make customers happy i learned how to repair lawnmowers i learned how to weed eat and uh work i learned how to work and be hot outside and get poison ivy and uh i learned all of that stuff but you know what it's interesting i'm 57 now and some of those lessons i learned when i was cutting grass when i was 12 uh are still part of how i run this business uh like i have i have no tolerance for lazy people as an example a very low tolerance in terms of being on my payroll particularly because i outwork all of them and you know so you you're gonna learn a lot of great lessons right now it's not necessarily you're going to get rich at 13 years old but the stuff you learn may make you rich later because it may make you a confident business

lady in the marketplace and by the way the most the the the area the space that is exploding the most in business right now is small business side hustles that have grown into massive ventures by ladies in their 20s and 30s. It's the fastest growing area right now is women in business that are confident, competent young women that are getting after it. And it's a great market. So I'm so proud of you. You hang on. This is a $49 toolkit, but it's my gift to you So I'm so proud of you. You hang on. This is a $49 tool kit, but it's my gift to you. I'm proud of you.

You go make a bunch of cupcakes out there and learn a bunch of lessons while you're doing it. Get after it. This is the Dave Ramsey. You know, most of us have gotten behind on our bills at one time or another. That's nothing to be ashamed of. It happens. And many of us know the embarrassment that comes with those harassing calls from collectors. Some of these guys are just scum.

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then you need to visit CollectionBully.com. These folks will connect you with an attorney who I know can help you. These attorneys know how to stop collection agencies from bullying and threatening you anymore. CollectionBully.com. Go to CollectionBully.com today. That's CollectionBully.com. so that teen entrepreneur toolbox that i just gave away to that young lady you know i remember asking my dad when i was a kid i need some money and he said you need a job you know what i'm talking about you had a dad like had a dad like that, a mom like that, maybe a grandma like that.

I don't know. So the Teen Entrepreneur Toolbox is a way that your kids can get a job. Yeah, it's good. It's good for them to learn to work. But I'll tell you, the fastest growing segment in our economy right now, period, overall, is the side hustle, the small business, the startup small business. And when we do surveys of teens, the number one thing they want to learn is entrepreneurship. It is very popular with the kiddos. And parents want them to learn it.

That's what's interesting. So the teen toolbox, the teen entrepreneur toolbox, includes a step-by-step small business guide for teens. And it can be doing anything, mowing grass, babysitting, doesn't matter what it is. You learn leadership, you learn interacting with customers, you learn self-confidence, poise. There's really good stuff when the kids do this instead of, you know, being a full-time gamer, you know.

It's good. It's really good. The Teen Entrepreneur Toolbox is $49.99, and you get $24 in free bonus items, including a free audio book and e-book and a video by Anthony that will teach you and your teen how to set these smart goals. This thing's flying off the shelves. It's been one of the fastest-selling things we've ever put out, especially in the teenager space.

And the Small Business Guide for Teens, the Teen Entrepreneur Toolbox. Sadie's in Lexington, Kentucky. Hi, Sadie. How are you? Hi, Dave. Thanks for taking my call. Sure. What's up?

Me and my husband, we've been talking, and where we live, there's a house right beside us, and it's on the market, about $84,000, and it's butted up house right beside us and it's on the market which about 84 000 and it's butted up like right against us and we have a fence separating us but um we have been talking about buying that house and you're gonna think i'm crazy but we didn't want to keep it we just wanted to tear it down and flatten out the land and maybe put a pool there. And we live in town, so we kind of live on a busy street and stuff too, but we were just afraid if somebody bought that house that when they moved into it, they would kind of run it down and make our property go down. But I have heard you talk about kind of overbuilding up the neighborhood,

like you don't want to make your house, you know, way more valuable than the other homes in the neighborhood so i was a little when when you bought your home was that house there yeah and you weren't worried about it then well no but uh we that's true okay but we are wanting a little bit more space you have eighty four84,000. Well, that's what I was wanting to ask you. Yes, we have it, but I'm concerned about should I invest that, which we already are investing,

or do you think that we're financially capable of buying this? Is your house paid off? It is. Very good. What's your household income? It's between $95,000 and $100,000. And how much do you have saved not in retirement?

$130,000. Okay, cool. Okay. And so here's the thing. Basically, you're going to lose money on this transaction in order to get buffer zone. Okay? Because if we take that house and tear it down and we put a pool there, it does not add $84,000 in value to your home, does it?

From my husband's end, yeah. And so you're going to lose money on the transaction. Right. But that's okay if you're willing to do that. You can afford it. You've got the money, and you're going to just lose money. So what do lots in the neighborhood sell for? Just regular lots?

Yeah, if you want to put a blank lot with no house on it on the market next door to you, that lot, what would it sell for? What's the dirt worth? Probably 25 okay all right so we know we know later on you could sell it for for 30 or 40 so you're going to lose 50 grand plus the cost of the pool it'll go up in value but you're going to lose somewhere around 50 grand on the transaction depending on when you sell it someday if you sell it someday. What would you do? Hmm? What?

What would you do? Would you invest that money, or would you do, like, if we didn't plan on, I'm 33, my husband's 36, if we didn't ever plan on moving, which I know you really can't say that because you don't really know what the future holds, but what would you do? Given your net worth, I wouldn't lose 50 grand a day you have 100 if you if you told me you had a million three hundred thousand in the account instead of 130 000 i might do it okay but basically what you're buying is peace of mind and space you're not buying an investment there's no investment return on this it's a loss and so you're paying you're paying for the peace of mind of nobody being next to you and the

opportunity to put a pool in and have an expanded yard and so forth and that's okay to do the house that i live in i bought the adjacent 20 acres for that reason now that i paid i paid price i paid dirt price for it i mean I just paid for the dirt. I didn't tear down a house. And someday I can sell it, and it'll have gone up in value. So it at least will go up in value. But I didn't buy it as an investment. I bought it so there were more trees between me and people.

That's why I bought it. Would you do it with a net worth of like $650,000? Well, that's your net worth. That includes the value of your home and your 401Ks and your 33. Yeah. The net worth is like $650,000. Well, that's your net worth. That includes the value of your home and your 401Ks and your 33. Yeah. It's okay. The question is, do you guys want to lose?

Let's just say you're going to lose $50,000. You're just going to write a check and throw it out the car window as you drive down the interstate for $50,000 in order to have this peace of mind. If you guys can get there to where you're comfortable doing that emotionally, then that tells you if you can do it or not. Okay? It's a throwaway money. It's not an investment decision. It's a lifestyle decision. The same thing could be said, let's say this.

Let's say that you desired, one of your great desires in life was to go on a cruise and take your mother and father and his mother and father and you were going to go on a cruise that was three weeks long and it was 50 000 bucks for the three couples okay you can afford to do that i wouldn't know well i mean, well, you might not want to go with them, but I'm trying to come up with some appealing scenario here. I messed up. No, I appreciate it. Yeah, you see, the point is, can you afford to consume,

instead of invest, 50 grand? Yeah, you probably can. Do you want to to at this stage i kind of doubt it financially speaking i kind of wouldn't but if you really you know if you really really really really really want to do it then do it you know it's not a big deal and i i'm i own several of my i own several lots adjacent to properties that I live in. You know, my lake house, I bought adjacent lots to that, too. Same thing, just to give me a distance between people and me.

I like people, but I like them when I want to like them. Instead of knocking on my door at 4 in the morning. And so, you know, that kind of stuff. So anyway, it's the same concern you've got there. Is somebody going to move in next door and trash the place? And then you've got some goober hillbilly living next to you or something. You know, you've got a problem with that. So you've got to think through that.

And is it worth $50,000? It's more worth $50,000 to you than it is your husband. I can tell that from talking to you. But you cannot call it an investment. You call it consumption. Because I think we've established this transaction loses money. So are you going to consume some money? The money is likely never coming back to the tune of about $50,000, give or take here, in order to just have this buffer.

And is that worth that to you? I'd be more tempted to just move than I would do that. But it's up to you. You can do whatever you want to do. Good questions and interesting discussion. Thanks for the call. You know, that's one thing you do. As I meet wealthy people, it's one thing they do.

They do what she was doing. She was very wise. Because she's asking a question. She realizes it's an emotional decision. And she's trying to work through it mathematically and emotionally. It's good to do both. And it's okay to do something on an emotional basis. Just admit it.

Don't act like you were smart. Just say, I wanted to do it. Shut up emotional basis just admit it don't act like you were smart just say i wanted to do it shut up and just admit it and that's called enjoying some of your wealth you're just admitting it you're just going i just wanted to do it shut up no other reason and that's a good enough reason if you can afford to write the check this is the d Ramsey Show. Hey, it's Kelly, Dave's phone screener. We finished 2017 with a bang as the fourth most downloaded podcast of the year.

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