The Ramsey Show - App - Start Paying Attention and Get MAD at Debt! (Hour 3)

Episode Date: June 14, 2019

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Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studios, it's the Dave Ramsey Show, where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. I'm Dave Ramsey, your host. This is your show. Thank you for joining us. Open phones at 888-825-5225. That's 888-825-5225. As we talk about your life and your money.

Brittany's with us in Columbus, Ohio. Hi, Brittany. Welcome to the Dave Ramsey Show. Hi, Dave. How are you? Better than I deserve. What's up? So, I just have a question.

I have some student loan debt. and each month it accrues interest because I'm on an income-based repayment plan. So it accrues more, obviously, than I'm paying each month. So I'm just trying to see if I should move up on my debt snowball or not. No. No? It's going to pay it off in exactly the same time well i'm on the so i'm on the loan forgiveness but um like i only pay 38 a month so but you're going to get to it long before

loan forgiveness happens so the only thing that's going to happen is you're either going to pay extra on it by moving it up in the debt snowball or it's going to build up more of a balance, and the money you would have paid extra on it is now going to a different debt, and it works out exactly the same mathematically to move it up or not, even though the interest is running backward on you. I don't blame you for being aggravated by that, and I'm glad you realized it, and I'm glad it aggravates you because that's going to motivate you to get after it. Yeah, because this month, last month, I paid off some debt, and I thought I was doing good, and then I looked at it, and I'm glad it aggravates you because it's going to motivate you to get after it. Yeah, because this month, last month, I paid off some debt, and I thought I was doing good. You are.

I looked at it, and then I had a big balance, and I was like, what the heck? Yeah, you are. So how much have you paid off so far? We just started in May, and we were able to pay $1,250 last month to debt. Hey, that's a big deal. Yeah, I know, but then I got hit with $1,000 interest on my student loan. Yeah, but you were hit with that in January, February, and March too. Yeah, true.

You just didn't know it. You weren't watching, but now you're paying attention and it's making you mad. That's good. You're doing great. You got a great start. You're going to be fine. You'll be fine. How much total debt have you got?

Total debt, I have $70,000 70 000 okay and what's your household income um 82 000 what's our gross income okay all right well we just keep keep cranking on that budget let's let's get where we're throwing more than 1200 bucks because you need to be paying more than 15 000 out of 80 000 towards your debt with that with that big an income i want you to increase what you,000 towards your debt with that, but that big an income, I want you to increase what you're paying on your debt, but you've got a great start. You got a great start. Let's just crank it up, continuing to get more intense, continuing to get more focused. And you're going to get there. You're going to arrive at debt free at exactly the same time as if you move the debt snow or remove the student loans up into the debt snowball. It won't matter a bit.

But right now, you really do need the encouragement of knocking some off. You need to have that sense that we're moving in the right direction. Elizabeth's in Chicago. Hi, Elizabeth. How are you? Hey, Dave. I'm good. How are you?

Better than I deserve. What's up? I was wondering, my husband and I are in steps four, five, and six, and so we're, of course, contributing 15% to our retirement. And my company is now offering a Roth 401k, which they did not offer before, starting July 1st. So I was kind of wondering how to prioritize. We both are maxing out our Roth IRAs as well as taking advantage of company matches in non-Roth 401Ks. So how do we prioritize those accounts with our contributions?

Well, there's three pieces of this. There's the old IRA or the old 401K before you converted to Roth because you're going to convert to Roth right now. The balance from before, you don't need to convert it right now. But going forward, I would put everything in Roth. And so there's a current contribution, the past contributions, and the match. The past contributions are in a traditional. We're going to leave them there for right now.

The current contributions are going to turn into Roth as of July. That's awesome. They're going to grow from this point forward tax-free. The matching portion is never Roth. It's not allowed to be it's always in an after in a before tax setting and so at some point later on when you're really doing well you've gotten the house paid off and other things and you want to go back and do some more investing you can flip that traditional portion over to roth and pay the taxes on that portion

and you can flip any of the match over to Roth and pay that portion. I actually take my match and roll it to Roth every year, each year after the match is done here at our company. But I'm able to pay the taxes separately from that. Right now, you're still working on maybe step six to pay off your house, and I want you to limit what's going into retirement to only 15 of your income right now you remember that right yeah so for right now let's just stay 15 of your income but convert it to roth just like your regular iras or roth iras now but then go back later

and roll the matching portion and the old 401k into roth after you get your house paid off and you've got some extra money to do that. So, hey, good question. Thanks for joining us. Open phones this hour as we talk about your life and your money. Our question of the day comes from blinds.com. Find out for yourself why blinds.com is the number one online retailer of custom window covering.

You get free samples, free shipping, and with the new promos they run every month, you save even more. The promo code RAMSY is how you get the best deal. Check it out. Blinds.com. Use the promo code RAMSY. Tony's in Massachusetts. How can I get my wife on the same page as I when it comes to side job opportunities?

We're on baby step two, and I was offered a side gig on Fridays and Saturdays worth an extra $400 a week. My wife isn't fond of the idea. She thinks I will never be home. Am I being overzealous? She doesn't want to get out of debt as bad as you do. I don't know how to fix that exactly. Other than the two of you need to start talking about why you're getting out of debt a lot more rather than what you're doing to get out of debt.

If she was fired up about getting out of debt, she would be kicking your butt out the door to do an extra job. But she's not fired up to get out of debt. That's what this is telling us. And why is she not fired up to get out of debt? Because she hasn't figured out why she wants to be out of debt. What would it be like to have no payments? What would it be like to have no payments?

What would it be like to be able to invest and become a millionaire? What would it be like to be able to increase our generosity? All of that is what happens when you get out of debt. You've obviously got that wrapped up, Tony. You've got that in your head. She does not. Otherwise, she'd be sending you out the door. My wife grew up on a farm farm and her dad owned a market,

which means they worked all the time. So I have never had an issue with my wife doing anything except why aren't you at work? She doesn't know anything else, and she has a pretty low tolerance for people who don't work a lot. So I'm blessed, I think. If I wanted to slow down a little bit, though, it just makes me into a wuss. Oh, well. Oh, there you go.

So, yeah, Tony, that's what's going on. You don't have a why. What happens, folks, when you first approach this whole idea of we need to get control of our money? Our money is killing us. We need to be able to invest and save for retirement so that we can retire with dignity. We need to be able to invest and save for our kids' college. We need to pay cash for stuff so that these banks don't own us. As soon as you start seeing that, you start figuring out how to do it,

and you forget sometimes to go back and say why you're doing it to the people around you. So you've got to spend some time with the people in your life that you love, talking about why we're doing this, why we're doing this, why we're doing this. And once they get your why, they'll be on board, as we say, and they'll be the biggest cheerleaders, and even more so, they'll actually help. This is The Dave Ramsey Show. This is big news, guys. You need to stop and listen.

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Just go to ChurchillMortgage.com or call 888-LOAN-200. Their team of experts will give you more clarity about your options and more peace knowing you're saving significant money in the long run. Call 888-LOAN-200. That's 888-562-6200 or churchillmortgage.com. Jan is with us in Canada. Hi, Jan. How are you? Hi, I'm great, Dave.

Thanks for taking my call. Sure. What's up? Well, Dave, my husband and I, we would like to buy a vehicle, and I'm a little unsure, but we're both a tiny bit unsure. And this morning he said to me, well, what would Dave Ramsey do? And so I was thinking, you know, because I really follow, we really try to follow your program. We have three months' worth of income saved.

We have no credit card debt. We live by a budget. You have no debt except your home. No debt except our home. And how much do you have saved for the car? We have $20,000 cash saved. For the car? Yes.

Okay. And what's your household income? A little over $75,000. Okay. What's the other car worth? Okay, we have two other cars. We've got a 211 and a 206. Both have, or one has $160,000.

What are they worth? 280. Oh, what are they worth? Mm-hmm. Okay, probably the one is worth probably $1,500,000. The other one is worth approximately $8,000. Okay, all right. And you make $70,000.

Okay, so what are the rules I tell you about cars? Do you remember? Yeah, that's what I'm calling. Do you remember? No, I don't remember. Okay, all remember all right that's okay no big deal we tell folks not to buy things with wheels and motors total in their life that equal more than half their annual income because things with wheels and motors go down in value rapidly right we all like them i like them but you know your tractor your lawnmower your seed your boat your sea do your motorcycle your cars when you add all that together if it equals

more than half your annual income you have too much tied up in things that are going down in value because they go down in value rapidly, all of them. So if you buy a $20,000 car and you have an $8,000 car and a $1,500 car, you have approximately $30,000 tied up in things that are going down in value, and you make $70,000, you're less than half, and you can pay cash for it, which would, of course, be one of our guidelines. You're not going to go into car debt if you're asking Dave Ramsey. We know that. So this is within the guidelines. You're not going to go into car debt if you're asking Dave Ramsey. We know that.

So this is within the guidelines. If you want to spend up to $20,000, you can. What were you going to spend? Well, yeah, we were going to spend the $30,000 because it's in 2015 and it's only got $30,000. So you were going to spend

$30,000? Yeah. You were going into debt? And get rid of one of the cars. Get rid of one of the cars. But there's not enough... You get rid of the $8,000 car? No. We would save that one as our second car. Get rid of the really old car.

And then we'll only have two vehicles. I'm confused. You're going into debt to buy this car? Yeah. You called me? So that's a no-brainer. Yeah. In 30 years of doing this show, I've never told anybody to take out a car payment. Okay.

Not even in Canada. Okay. So what if we borrowed from our savings? Your emergency fund? Your emergency fund? Your emergency fund? And paid off within six months. It's not an emergency. Number one, you're buying too much car,

because now you're going to have $38,000 tied up in cars and you make $70,000. You need to move to... Yeah, both cars are all paid for. All our vehicles are paid for. I know. You have $38,000 in cars. Well, cars are all paid for. All our vehicles are paid for. I know. You have $38,000 in cars if you buy a $30,000 car and keep an $8,000 car. Is that right?

Oh, I see. I see what you're saying. You have too much of your money tied up in things that go down in value given that you make $70,000 a year. You can do whatever you want to do, kiddo, but there's not a chance anywhere that I'm going to tell you to take out a car payment. Not going to happen. And you're buying too much car. I think you've got car fever.

You probably need to take a cold shower. And I think you even got hot over this car, and it's a bad idea. I think I'd move down to about a $20,000 car is what I would do and pay cash for it or less. Caroline is with us in Los Angeles. Hi, Caroline. How are you? Hi, I'm good. How are you?

Better than I deserve. What's up? So my mom turned me on to you, and I'm so excited to do baby steps and actually pay off my student loan debt. But my problem is that I have a contract work job, so I know I won't have a job in October. So would someone in my case, would you recommend saving up, like, the emergency fund, or I guess not emergency because I know it's happening before I start on Baby Step 2?

Well, that depends on what kind of contract work you're doing and how unstable it is. There's lots of contract work that just goes from one contract to another. Last time you ran out of a contract, how long was it before you got placed again? The longest I've gone is nine months. How long ago was that? Two years ago. Yeah, and what field are you in?

I'm a TV writer. You're a what? I'm a TV writer. A TV writer. Oh, okay. Yeah, yeah. I write on television shows. I have to go find a new show. Pretty unstable. Sometimes it's a pretty good set. Yeah, pretty unstable.

Okay. Yeah. Yes, I would... How long is your typical... Well, you know, your contract's a season, really, unless they put the show back up. Yeah, it's usually, like, it's like six months of work, and then you're looking for a new TV show. So it's so unstable. So I've always just saved so much money and just never paid off my debt.

And now I'm like, I want to pay this off, but I also don't want to run out of money. Yeah, I'm probably going to build up three or four months of expenses, and then I'm going to start my plan. Just because you're right, I think there's a storm cloud on the horizon, and it pretty much stays there perpetually until you get that hit show that goes 10 years, you know, but that's not the norm. You and I know that. So I hope you get one of those, but I hope you write for friends someday, right?

But, you know, again, most of these things have a one- or a two-year shelf life at the best. So, cool. How old are you? Twenty-six. Cool. And you've already made a career in that. Well done. Good for you.

You must be really talented. Congratulations. Very good. Yes, I agree with you. I think you need to have a rainy day fund because you are in a very, very, very, very volatile industry. And you need to get ready. Because you could easily go nine months again, but you're back waiting tables long before then. But, you know, in between, or whatever it is you do in between.

Leland is with us in Orange County. Hi, Leland. Welcome to the Dave Ramsey Show. Hey, Dave. Thanks for taking my call. Sure. What's up? So I had a quick question. I, Dave. Thanks for taking my call. Sure. What's up? I've got a quick question.

I'm a real estate agent in Orange County. I'm 26 years old. Things are going well. I'm on a team out here. Right now, I virtually have no debt besides a car payment.

I have about five months of expenses saved. Way to go. Currently working on a down payment savings for a very expensive house out here in Orange County, as you probably know that.

My question is, in your opinion, should I finish college and get a bachelor's degree? I have about 20 classes left. It would take me about three years to finish because I work full time in this crazy animal called real estate. What is your field of study? I was just doing it just to get a degree in business, to be honest, just something just to get it done. So you're 26.

What do you want to be doing when you're 46? Honestly, it would be great to own investment properties and do ministry, you know, full-time and kind of have investment homes, pay my bills. So you love real estate. I found it through a Bible study, and here I am five years later, and I have no complaints. I mean, you're moving from brokering to owning is all the differences, but you just love the business. Me too, by the way. I got my license when I was 18 years old.

So, no, it's not. If you want to do it, it's a luxury item. But is it necessary for your career track? Absolutely not. Absolutely not. You're already successful in the real estate world. What did you make last year? Last year I made close to $90,000. Yeah.

Well, your income would not be one dime difference if you had a bachelor's in real estate. Is that right? Okay. I mean, how many times do you go on a listing appointment and they go, do you have a degree? None. True. Right. So, I mean, if you want to go get the degree, it's just a luxury item to go get it.

And it's not a bad thing to have it, but it doesn't affect your career track whatsoever. And by the way, pay the car off today. You save it for a house with a car payment. Your car paid off now. Or sell it and move down and car one of the two. This is the Dave Ramsey Solutions, Anna and Chase are with us. Hey, guys, how are you? Good. Good to have you. Welcome, welcome. So where do you guys live? Wichita, Kansas. All right, fun. And here to do

a debt-free scream. Yes, we are. Seems like it's taken forever, but it's been really short. Now we're here. So how much have you paid off? $65,019 months. There you go. Good. And your range of income during that time? We went from about $90,000 to about $110,000 now. Excellent. What do you guys do for a living? We both work at an aircraft plant. I'm in the office, and he's out in the shop. Ah, very good.

What kind of debt was the $65,000? It was mostly student loans, but we had a little bit of car in there that we actually ended up selling, and some phones and small personal loans. Okay. It was mostly student loans, but we had a little bit of car in there that we actually ended up selling. And some phones and small personal loans. Okay. So how long have you guys been married? About five years now. So what happened 19 months ago that set you on this journey? Go ahead.

Well, I was actually on maternity leave with our first son, and I had thought about staying home with him a lot during that time. And we were thinking we'd be able to do it that year. And then we started going over the finances, and it was not going to work. Not even close to what we thought in the beginning. Yeah. That kind of gave you the wake-up call. Yeah. Yeah. So that kind of gave you the wake-up call. Yeah. Yeah.

We realized at one point we were paying more for student loans than we were paying towards our mortgage. Yeah. And that was kind of like very eye-opening. Yeah. Time to get that cleaned up. Mm-hmm. Cool.

Cool. And then he came home one day and was talking about Dave Ramsey, and I was like was like what I'm the cynical one of us I have the gift of cynicism yeah and I'm the person that's either all in or not in at all and I'm glad I was all in yeah and so it took me about oh probably a couple weeks and I he'd been badgering me to listen to the podcast and listen and so one day i was just like okay i'll do it and after that it was it was all over from the day now once you hear a couple of these debt-free screams you're kind of like yeah we're doing this yeah yeah from the beginning anna was like we're going to nashville yeah no question no question we got to dial that up as part of

the equation yeah good good So here you are. You paid off $65,000 in 19 months. Way to go. I'm proud of you. You're heroes. This is great. Very good. So what do you tell people the key to getting out of debt is? Because you did it.

You definitely have to be on the same page with your spouse. It's so important. And you can't listen to what other people are trying to tell you to do because most other people aren't on track. Yeah, they're both. Yeah. Everybody's got a cynic. It's just a matter of whether you want to listen to that. Yeah.

I hear you. So what was the biggest budget fight you guys had? Actually, we're not really fighters. We're more like we hold things in and then eventually. But we never really had a blowout. Really? Yeah. We've been pretty much on the same page the whole time.

You said, let's do this. You sat down and did a budget. Yeah. You just dialed it up. Yes. Okay. Yeah. Yeah.

It takes a lot of grit, hard work, and dedication. Did you sell anything big? The car we sold was about 10. So we probably could have kept it in the scheme of things, but I decided it was my car. And so when he came and said, we need to sell your car, I was like, I don't know about that. She didn't want to at first but eventually i decided to do it for my pride reasons like i figured out that i was holding onto that car a little too tight so so we sold it and then paid cash for a trailblazer and And it worked well for us. Which we became debt-free back in March.

And less than two weeks later, the car that we got after the Hyundai that we sold, we got in a wreck. Yeah, I got in a wreck and totaled it. It wasn't my fault, and no one was hurt. But, yeah, so we used the insurance money and got a van for cash. Yay! Yeah. That worked out. Yeah.

People had told us, like, well, you could just use that for a down payment. And we were like, there's no way we're going back into debt. You kind of missed the point. Yeah, we went on your website and we listened to the negotiating video all the way down to Oklahoma, which is where we got the van from. All right. And we got $500 knocked off. Very good. Good for you guys. Well done.

Very well done. What was the hardest part of this for you all? It was definitely like gaining all of this new information and then learning that not everybody wants to hear your opinion. Because at first I was like so excited and I wanted to tell everybody everything, but a lot, they don't want to hear it. Yeah.

Especially because right in the beginning, um, from an outsider's point of view, nothing has changed. Right. Um, all they see is you making sacrifices and not everybody wants to do that i mean people are content so um the hardest part for me was um working so much a short story

here i um was working so much one week that i didn't see my kids awake. I've got two sons, Leland and Latham, three and one. And I was working so much, I didn't see them awake for three days. And at daycare on the third day, my wife walked through the door to pick them up, and my son started crying because he missed me. Yeah. He's definitely the daddy's boy or oldest. That's great. Well, the good news is that happened one time, and now you're done, right. Yeah. He's definitely the daddy's boy or oldest. That's great. Well, the good news is that happened, you know, one time, and now you're done, right?

Yeah. You're completely free. You got that as your motivation from now on. So very cool. Well, congratulations, you guys. We've got a copy of Chris Hogan's book for you, Retire Inspired. We want that to be the next chapter in your story, that you become millionaires and outrageously generous along the way. And I think you're on the way.

Very well done. All right. It's Anna and Chase. Is it Case or Chase? Chase. Chase. Okay. Make sure I get that right.

From Wichita, Kansas, $65,000 paid off in 19 months, making $90,000 to $110,000. Count it down. Let's hear a debt-free scream. Three, two, one. We're debt-free! You did it! Wow! Well done.

Well done. Kenneth is in Afghanistan. Hi, Kenneth. How are you? Pretty good, sir. How are you? Pretty good, sir. How are you doing today? Better than I deserve, sir. How can I help?

Question for you, Dave. I was just introduced to you about a week ago. I'm a co-worker. I had good things to say about you, so, you know, it's my day off. I had your book, skim through it. I'm looking at your YouTube videos, very informative, and it's my day off um i had your book skim to it and i'm looking at your youtube videos very informative and it's awesome thank you so my question is um i have a rental property i owe 95 000 on my interest rate at the time or right now it's 5..3. What's it worth? What's it worth? $120.

Okay. My mortgage is $736 that I pay out of pocket. I rent it out for $11. The rental fee to the agency is $110. Yeah, you're not making any money. Yeah, I'm making some. No, not after vacancy and heating air going out every so often or a water heater going out. You're breaking even.

Yeah. Yeah. Okay. So did you, you didn't buy this as a rental. It was your house, and you turned it into a rental when you moved out of it? No, I just, I bought it as a rental. You did? Oh, okay.

Yeah, I just saved up the money, and, you know, there's guys been telling me, you know, make your money work. I went down that route. So my question is that I don't have a mortgage. I don't live in America. I'm just over here. I go on break, and I come back over here and work. So right now I have $90K in my 401. I have, I think, I'm looking at it right now, 15,000 in mutual funds. So I was

wondering, should I keep contributing to my 401k or should I just dump all the money to the rental property? I'd probably dump the rental property. I don't think it's making any money. I think you're breaking even on it. I like rentals, but I don't like rentals that are this tight. This thing's too tight. There's no fun here for the risk you're taking particularly. And then I would load my 401K up and continue to do that. And then continue to do some other investing just in mutual funds. And when that gets big enough to pay cash for a rental maybe the next time you're stateside, you might consider it at that point.

But a rental that's this leveraged, that's got this much debt on it, it's just not fun. Hey, thanks for the call. our scripture of the day romans 5 3 through 4 we also rejoice in our sufferings because we know suffering produces perseverance, and perseverance, character, and character, hope. Nolan Keller said, Character cannot be developed in ease and quiet. Only through the experience of trial and suffering can the soul be strengthened, ambition inspired, and success achieved. Merlee is in New York.

Hi, Marlee. How are you? Hi. How are you? Better than I'm calling? Sorry. Go ahead. Go ahead.

Your phone is messed up. It sounds like you're in a barrel. Can you hear me now? Yes, ma'am. Thank you. Okay. How can I help? So I'm calling because, well, one, one i have good news i paid off my student

loan monday yay so yay i'm excited about that but i'm also calling because i also have some bad news i made a big mistake and had put my ex-boyfriend's phone under my name and the phone bill under my name and we ended up switching it over to him, the responsibility, but they never switched over the actual phone payment to his name. And so now I'm stuck with the phone bill. And I've been trying to call the company back and just been getting the run around and they sent it to collections. What do you mean you're getting the runaround?

Well, they're not getting back to me as to why the phone payment wasn't put under his name as we had talked about, and no one seems to have an answer. Okay. How much is the bill? $760. Okay. And where is he? He's, I mean, we don't speak, so.

Yeah. Okay. Well, there's 763 reasons for you to call him and tell him to pay his bill. Right. Can you do that? I mean, I was hoping not to have another interaction, but. Yeah, I'm hoping you didn't have to either, but you kind of ruined that idea when you signed up to pay his phone bill. Right.

And then you need to call this company and have a really detailed conversation with them, not a runaround, a really detailed conversation that says you're not liable for anything else from this day forward. Right. I mean, when I spoke to them initially when I received the bill, A detailed conversation that says you're not liable for anything else from this day forward. Right. I mean, when I spoke to them initially when I received the bill, they told me, like I called to inquire about it and why,

and they told me to ignore it, which is what I did. And then a couple of months later I got another letter from collections. So this ignoring it is not working. No. So you can't ignore it. So if anybody else tells you that, say, no, I'm not going to ignore it. Because you're not ignoring it. You idiots are sending me collection letters, and you're sending me a collection, and you need to get this done.

You need to get it fixed immediately. And just keep calling them. Make yourself a nuisance to this company until this is cleared up. What happened here is you were sloppy in your decision-making. As you said, you did something really dumb. You signed up for his bill. Then the second thing that happened was you were sloppy in your follow-through to make sure it was taken care of.

You have to close the loop on all these business transactions. You have to weave it together and in such a way that it absolutely doesn't have any room to move, meaning that you have gotten detailed confirmations in writing that all these things are put behind you over and over and over and over again on each one of these things. Anytime this stuff happens, you can't just do a drive-by and expect these companies that are incompetent to have your best interest at heart, because they just don't. Jay is in Canton, Ohio. Hi, Jay.

How are you? Good. How are you, Dave? Better than I deserve. What's up? My brothers and I had lost my father in December. I'm sorry. And he left us an inheritance.

And everything is in a trust. And the way the trust is written, it gives us the opportunity to keep that money in trust. Would you suggest that we keep that? There's no point. You know, okay, okay. I mean, he left about a million dollars. Okay, so each of you got about 300 grand. Yeah, yeah.

And how old are you? I'm 52. Okay, are you going to misbehave with the 300 grand? No. No. You're not a 14-year-old, you don't need a trust. Okay. Okay, and there's no tax benefit to the trust, and there's no investment benefit to the trust.

And so what are you going to do with the $300,000? Invest it. Okay. You got any debt? No. You don't owe on your house? Well, we owe $40,000 on our house. Let's pay that off.

No other debt. Okay. Let's pay that off. Okay. So there's only three things you can do with money you should invest it you should give it and you should enjoy it okay and i think doing all three would probably make your father smile yeah yeah now one other question one of the he has an ira in there that he had solely in my name.

Now, would you suggest just, like, cashing that out? No, that's called an inherited IRA, and you can roll that over. You're required to pull a certain amount every year out and become taxable on an inherited IRA, but you don't have to pull it all out at once. And I would let it just sit there and grow if you don't need it. How much of the $300 is in that? $220. Oh, okay, a ton of it.

Okay. Well, I would make sure that that's all invested in a way that you're okay with inside the IRA. But an inherited IRA is not a bad thing. And so if you get with your investment broker, if you don't have one, go to smartvestor at DaveRamsey.com, click smartvestor, fill out the stuff. It'll drop down a list of the smartvestor pros in your area. You can select the one that you would like in your area among the ones that we recommend. They'll sit down with you and help you and guide you through that process and help you get that rolled over into an inherited IRA,

and that way you can pick some good growth stock mutual funds. I personally, Jay, I spread my investments in mutual funds across four types, growth, growth and income, aggressive growth, and international, and all with a 10-year track record or more and so that i know what i'm getting into something very stable very conservative portfolio quincy's in detroit michigan hi quincy how are you hello dave finding yourself sir better than i deserve what's up all right quick question i made a dumb decision i took a buyout in 2013. I was teaching. So long story short, they're going to pay like $42,000 over a five-year period. I took my pension out.

I tried a business thing. It didn't work. So my question to you is, the buyout will complete in October. It will be worth about $55,000, give or take. My pension payback amount is $58,000 plus interest. So I said, I'll just take the money from the fall freebie, throw it at that. However, they told me I only can do a plan-to-plan transfer, so I can't use that money towards the pension unless I cash it out.

And since I'm only 44, I'm pretty sure that would be a pretty steep penalty. I would not put it towards the pension. I wouldn't catch your pension up. So you say what? I would not put it towards the pension. I wouldn't catch your pension up. So you what? I would not buy pension years. Okay. It's a bad investment. I think you're better off to have the investment in good mutual funds.

You own the money. It doesn't die when you die, and it'll give you a better rate of return. Okay, because I'm 44, so I've got a few more years to you know work or whatever so i was just thinking as far as a guaranteed income with the pension but then there's a risk a chance that the pension may not even be there but here's the other thing when you die the pension's worth zero okay if you put 58 000 in a 401k or in a or in an an IRA rollover from your 403b, okay? You put $58,000 in there in good mutual funds. In seven years when you're 51, that'll be worth about $110,000.

And then in seven more years when you're 58, it'll be worth about $230,000. And in seven more years when you're 65, it'll be worth about $500,000. So you've got a half a million dollars in your name when you die that you can use for retirement that that pension would have been worth zero. You see? Yes, sir. Yes, sir. Yeah, so that's why I'm not going to have you buy years into a pension.

I'd rather you own the money because if you'll leave it alone and let it grow as an investment, it'll be a great nest egg for you in retirement, and it doesn't die when you die. So that's why you controlling your money is a lot better off than a pension controlling it. Never buy years into a pension. Never. That puts us out of the Dave Ramsey Show and 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. Hey, it's Kelly, associate producer and phone screener for the Dave Ramsey Show. This episode is over, but if you heard about a product or service and didn't have a chance to write it down, don't worry. We list everything that is mentioned during this episode in the podcast show notes section. Thanks for listening.