The Ramsey Show - App - Stop Swimming with a Boat Anchor Strapped to Your Ankle (Hour 1)

Episode Date: April 19, 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. Thanks for hanging out with us. We're so glad you're here. It's a free call at 888-825-5225.

That's 888-825-5225. Starting this hour off, Giovanni is with us in Phoenix. Hi, Giovanni. How are you? Well, the only way I could be better is with a brand new free pair of size 10 shoes, Dave. What's up in your world, man? Well, the church that I go to, not a very big church. Only a few of us are probably six-figure households. A lot of the money that the church gets in goes out to missionary, and they're very open, you know,

to where all the money is. We can see where all the money is going to. I've taken it upon myself to, you know, my tithing. My wife and I, you know, part of it we give in cash, but part of it, you know, I'm a technology guy and I'm an awesome musician. I like quality instruments, and those are not, you know, cheap. So between, you know, what the church needs are and what i like to do i tend to split my tidy and i just want to see what your take is on that okay well the um the point is not whether you're meeting some obligation with god the question is

what is he teaching us through this can you check a box is what you're asking. And I would back up and say that's probably just the wrong question. The purpose of the tithe, a tenth of our income going to our local church, that's what the tithe is. It says it's a tenth of your net increase is to teach us the rhythm of giving. As our income has rhythm, our giving has rhythm. And those of us that are evangelicals that attend a church or attend a church that is orthodox in some methodology, some kind of a doctrinal way that believe in the tithe,

then what we're taught and what has been taught for 1500 years is to give a tithe of your net increase it says in deuteronomy and so your your profits your taxable income in other words um but again that's not a thing that says okay god likes tithers better than non-tithers or he's waiting to bless you until you do this. He loves all his kids. He is instead saying, my son, the best way to live your life, the best way to have a great life is to be a giver. The baseline, the starting point for giving is a tenth of your income going into your

local church. I completely divorce myself emotionally from managing that money for the church, meaning it's not mine, it's God's. I lay it at the feet of the church. Whatever the church does with it, they're going to do with it. Now, if I think the church is being irresponsible financially, I will do one of two things. I would get involved with the leadership team and just challenge their responsibility, not based on my tithing, but just based on the fact that they're being irresponsible. And if I think they're being irresponsible continually, I'll leave because a financial irresponsibility means they're probably irresponsible with other things that are spiritual.

And that scares me. So none of that's coming up in this discussion, but just kind of some overall statements to think about. So what would I do if I were in your shoes? I would separate the purchase of instruments or the donation of your time for technology or the purchase of technology into the offering category, and it would be separate than your tithe category. That's a technical Bible study that I'm doing here with you.

Again, I don't think God's going to be mad at you if you do it the way you're doing it and not the way I'm doing it. That is not what I'm saying. But as you read through Scripture and begin to understand the difference in a tithe and an offering, an offering is where you do stuff with your time. An offering is where you do stuff like I've got a great guitar, and this church really is probably not going to purchase a guitar this nice, and I'd love to be able to play it while I'm there, so I'm going to donate it to them.

I think they need to get their act together on their website, so I'm going to jump in and help them. And those are great things that you're doing where you're donating your skills, your talents, your times, your time, and those kinds of things. That falls from a technical definition standpoint in the offering bucket, which is separate and apart from the tithe bucket. In other words, you could do the same things you're doing there with instruments or technology or time with any ministry, not necessarily your local church. The tithe is not called to be given anywhere except to your local church because it follows the model of the Old Testament storehouse.

Now, some people disagree with all the stuff I just said. That's okay. You can disagree with it. This is America. You have the right to be wrong. It's okay. I don't mind. It's okay.

Do whatever you want to do. Again, I'm not a legalist about this stuff and I'm sure not a prosperity guy, prosperity gospel guy, but you just enjoy the giving. Get, I will tell you this a hundred percent of the people that I find that have built wealth and enjoy their lives and have a good quality life are givers. Now, I meet people who are miserable at built wealth, but not many of them. Most people we see that build wealth are consistent givers. There's a direct correlation in those data points.

So it's good that, Giovanni, that you're doing what you're doing because that tells me you're heading in the right direction on a whole lot of different fronts. But it grows you spiritually when you do that rhythm of the tide and when you do the one-offs of the offering, the giving of the guitar or the giving of the laptop, you know, or the giving of your time to play either one of those things. TJ is with us in Gainesville, Florida. Hi, TJ. How are you? Hey, Dave. I'm doing good. How are you? Hey, Dave.

I'm doing good. How are you doing? Better than I deserve. How can I help? Well, I've been listening to you for about a week and a half now, and I was talking to my uncle about, you know, going through the baby steps and everything, and I'm currently on baby step number two. I've got $15,000 left to pay off on my pickup truck.

Well, my uncle disagrees with the baby step process. I've got $15,000 saved up right now. I could go ahead and pay off my pickup truck. But he says that I should go ahead and invest that money because my rate of return would be higher than the amount of interest that I paid over the next two years, which is the life of the loan. So I'm kind of curious on what you think about that. No, you're not. You know what I think about that.

You're not curious about what I think. I tried to explain to them, you know, I'm just following the process. Whose truck is this? Whose money is this? Yours or your uncle's? This is mine. This is my pickup truck. Then you have to decide not what I think about it, because you already know what I think about it,

but what you have to decide is who's right. Right. That's what you've got to decide. And I don't know if I can decide that for you. I'll give you the logic, okay? If we use his logic and you could borrow $2 million on your truck at that interest rate, you would. Which would be absurd, obviously. Right.

But if you use only the logic of, oh, I can borrow at one rate and invest at another. See, the problem with that logic is it leaves out risk. Dude, millionaires don't have car payments. If you want to be a millionaire, one of the steps is get rid of your car payments. Don't listen to broke people for financial advice. This is the Dave Ramsey Show. I'm Z Shad. One Dental is a company I've been telling my listeners about because I know these guys will save you money at the dentist. One Dental is a dental savings program that allows you to go to one of over 158,000 dental practice locations nationwide and save on things like cleanings, dentures, root canals, crowns, and even orthodontics. Here's the really cool part.

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Thank you, Dave. How are you doing today? Better than I deserve. What's up? Yeah, so I'm calling, I guess the core of my question is which baby step am I on? So me and my wife have about $68,000 in student debt. It is currently on an income-based public service loan forgiveness. So it's actually a relatively small payment.

But we do have more than six months in a savings account currently. We also have a small amount in investments. And so I'm kind of having a hard time with deciding whether to consider the student debt as part of our debt snowball. We don't have any other consumer debt besides that, just because the difference in payments and what we would pay if we consider that to be part of the debt snowball is just so large. Okay and how long have you been out of school? Well my wife's been out she graduated in 2007. I'm currently a full-time student but I have all my tuition paid for by the GI Bill. Okay that's good news. I'm talking about the $68 student, but I have all my tuition paid for by the GI Bill. Okay, that's good news.

I'm talking about the $68,000. Is that hers then? Yes, it's in her name. And because it's income-based, we only pay $61 a month. Yeah, forever, for the rest of your life. I'm sorry, what was that? I said for the rest of your life is what it feels like. So how old are you two?

Oh, I'm 28. My wife is 34 I said for the rest of your life is what it feels like. So how old are you two? Oh, I'm 28. My wife is 34. Yeah, and what's your household income? Approximately $55,000 a year. And what is the forgiveness date on this $68,000? We have six years left. Okay, that's unacceptable. Say again what your household income is.

It's approximately $55,000. She makes gross about $42,000. We take home about $31,200. So you're pretty much school full-time. Yes. So I get about $11,000 a year through the GI Bill, but I have a research assistant job, which very soon I'll be swapping that for a part-time job. Okay.

Good deal. All right. And how much do you have in savings? In our savings account, we have about $38,000. On an online savings account, we have about $25,000 in investments. Okay. And the investments are in retirement accounts or just regular investments? Just regular investments.

I think we have about $7,000 in retirement accounts right now, both Roth. Okay. Having studied people that build wealth for 25 years, millionaires, and having just completed a comprehensive study of 10,000 of them, what we find is that the highest likelihood, all the data points tell us, the highest likelihood of you being able to build wealth is to become debt-free other than your home as soon as possible, as quickly as possible, and then build your emergency fund and then start your long-term investing. So what that tells me is that the baby steps plan, which is first stop saving money until you have $1,000,

anything above $1,000 that you have, throw it at your debt until you are debt-free, and then build your emergency fund back of three to six months of expenses would be your next step. So all of that says that you should be debt-free within a matter of months. I would write a check for $25,000 and one for $38,000 onto that student loan, which would leave you just $3 what three thousand bucks or something in debt and um i'll leave you five thousand dollars in debt what it'll leave you and you should pay that off in a matter of a couple of months be 100 debt free you will not feel the change today because you're not making big payments you'll only feel a slight change when you're debt free today but all the data points again say that

you cannot drag this student loan around by the neck for 10 freaking years and be anything but but lame in the handling of your money and so you've done a good job from somewhere building up this cash i don't know where it came from but what I would do if I woke up in your shoes, and I don't know if you'll do it or not, but all the data tells me that the fastest way for Darius to become a millionaire is to be completely debt-free and not wait around six freaking years to start your financial life, waiting on the government to bail you out. It's just the dumbing down of your financial plan.

Because as soon as this happens, you know, you're going to build your emergency fund back, and then you're going to graduate, your income is going to double, and you're going to have no payments in the world, and you'll be able to build wealth very rapidly. And that's where I want to get you to. But whether you'll do it or not, it's tough to turn loose of that much money when you've been piling it up and you're 30 years old. But between now and 40, where do you want to be when you're 40? You're going to drag this thing around for six freaking more years?

I'm not. I'm not dragging the thing around. I mean, it's like trying to swim with a boat anchor wrapped around your ankle. It's a little difficult. Tony is with us in Wichita, Kansas. Hi, Tony. How are you? Fantabulous, Dave.

Thank you for all you do. Thank you, sir. How can I help? My wife and I are ready to start investing. Good. There are tons of options and plenty of things to digest when you start looking at IRAs, 401ks, etc.

And my opinion is that the best way to invest is to use some guidance from a financial planner. And we are talking to some of your ELPs. My wife says, why would I pay someone to do something that I can do for myself? Well, tell her to remove your appendix next time you need it removed. Do you work on your own car? Absolutely not. Okay.

Well, I'd say this is more expensive than a car. Absolutely. Yeah. So this is'd say this is more expensive than a car. Absolutely. Yeah. So this is not something you want to DIY. I'm not above turning a wrench. I'm not above doing some work that causes you to get dirty or sweat. I've done it all at one time or another in my life. But, you know, financial coaching is not something you want to do it yourself.

I don't do my own taxes and i know a lot about taxes and i'm fairly you know smart with business stuff i could probably read through the tax code and do a reasonably good job filing my taxes but i it would call i would probably screw up something cost me 20 000 bucks you know well that's my opinion is that we could cost ourselves thousands of dollars because you don't want to be so too cheap to spend a few bucks on some advice. The old penny wise, pound foolish. So what you're looking for in a financial coach with a smart investor pro,

if you're talking to one of the people we recommend, is someone that has the heart of a teacher. I'm not asking them to do it for you. I actually do want you to do it yourself but you've got someone that will guide you and teach you and say here's what i would do and here's why and you don't just do it because they said to or because dave ramsey said to you do it because you understand the investments and you agree with and then you make the investments. But I don't even select my own mutual funds. And I know a lot about mutual funds, a lot.

I've been licensed in the business. I've known, you know, I've been in the business. I've been all around it, all of that. But I don't do my own. Why? Because I don't look at them every day. I do this every day. And the guy that I work with, my Smart investor pro, he looks at them every day.

It's his whole life. He does one thing, that thing. And that's actually who I want doing surgery on me is somebody who does that type of surgery all the time and that knows what they're doing. I don't do surgery on myself. I don't do that. I got a sharp knife in the garage, but I don't do it, you know? And so, you know, I just don't do it. You know? And so, you know, I just don't do it. If I'm in your case, I'm going to sit down and pay, you know, some commissions or some fees or whatever it ends up being to get some advice.

I personally do that. And I'm the guy everybody comes to for financial advice. And so, you know, I don't know how to say it any other plainer than that. But it's just not a do-it-yourself program. Jump on SmartVestor at DaveRamsey.com. Put your info in. It'll bring down a list of SmartVestor pros in your area that have the heart of a teacher. As you said, you're planning to sit down with one of them.

And I would. I would sit down with one of them and just learn. Learn. You don't have to do anything with them. Learn. That's what you're looking for, Someone with the heart of a teacher. Not the heart of a salesman. This is the Dave Ramsey Show. With more frequency than you know, I get calls and emails from people dealing with the recent loss of a spouse or a parent.

You can hear the struggle and the heartache that they've been experiencing. And at a time they should be grieving, what breaks my heart the most is the strain and tension that they're going through because of money, especially when it's a situation that could have been avoided. If you have a family, it is your responsibility to have term life insurance. It's one of the things you do to say, I love you. And yes, this is an ad for Zander Insurance. But since this is one of the most effective ways I have to get my point across, so be it. For over 20 years, I've been telling you about the importance of term life insurance and protecting your family. Listen, you need to check out Zander.com or call 800-356-4282. I can't say it enough.

Protect your family. It's what you're supposed to do go to zander.com or call 800-356-4282 In the lobby of Ramsey Solutions, Tyler and Whitney are with us. Hey, guys, how are you? Doing great. How are you? Better than I deserve. Welcome. Where do you guys live?

Piedmont, Alabama. Fun. Welcome to Nashville. And here to do your debt-free scream. Yes, sir. Love that. Very good. And how much have you paid off? $82,600. Very good. And how long did that take you? 31 months. Excellent. And your

range of income during that two and a half years? Started out at about 75, finished up about 176, and we're currently at just over 200. Wow. Nice jump! What do you guys do for a living? What happened to your income? I'm an assistant plant manager in the chemical industry. And I'm a board-certified family nurse practitioner. Okay. So I'm guessing, like, you just started doing that nursing thing during this time. Is that what caused that?

Yes, yes. I was a registered nurse at the beginning, and then I finished up about a year ago with my nurse practitioner degree. Okay. And so is that where all the income went zoom zoom or yours jumped up too Tyler? Mine jumped up about 50 percent from what I was doing before about 35 percent. And you guys are cruising that's awesome way to go what kind of debt was the 83,000? We had two vehicles Tahoe and a Silverado a couple of credit cards cards, about $10,000 in student loans.

We bought a timeshare, which was like the worst mistake ever. $6,000 on that, and that $82,600 just adds up a little bit over time. You were just normal. Yeah, pretty much. Just doing like everybody else, just diddy-bopping along, getting in debt. Right. Love it, love it. What happened 31 months ago that put you on this get-out-of-debt, debt-free journey?

So I finished up grad school, and she had started back. And the worst, she went to work in part-time, which was fine. And then the hospital she worked at shut down the labor and delivery unit. So we were on an unsustainable trajectory. Pretty much everything I made is what it took us to just get by. And so we just decided we can't do this anymore and so we signed up for FPU at church on um in February of 2015 and and kind of got started make too much to be this broke pretty much exactly right now highly educated broke people yes yeah

that's that's fairly normal man that's what happens out there but there's a little wake-up call a life bump a bump in the road for life gives you a wake-up call. Yeah, absolutely. And about that time, the church starts teaching Financial Peace University, and you guys jump in. Right. We also wanted kids, so we had a daughter during this time. That's why it took us 31 months. So for about six months, we just packed everything we could into savings, getting ready for Hattie Grace when she was born.

And so she turned a year old just about two weeks ago. Awesome. Very fun. Cool. Well, good for you guys. This is awesomeness. Proud of you. So what do you tell people the key to getting out of debt is?

You went to Financial Peace University. You pay off $83,000 in 31 months. What's the magic? Communication and a budget. So she didn't know what I made, and I didn't really care, she didn't know what I made, and I didn't really care that she didn't know what I made. We had separate checking accounts. We just didn't communicate.

We weren't on a budget. I was an engineer and pretty much had always been able to out-earn my stupidity. And it got to the point where you couldn't do that anymore. And so, you know, we communicate now. We have monthly budget meetings. We do the whole nine yards. You know, it's made a huge difference in our marriage. I would also say never stop giving. We never stopped tithing the whole time. And even times that came up in the church, we still gave, even though we may not have as much at the

end of the month to put down to our debt. But the Lord was more than great to us the whole time. So never stop giving as well. Amazing. y'all well done i love that those are good principles so how long have y'all been married almost seven years okay and so two and a half of that you've been doing this so you you were in there four and a half five years and then all of a sudden now we're going to sit down together we're going to combine the money we're going to combine the income we're going to combine the problem and attack it together that's exactly that first budget meeting must have been interesting yeah i had like a i had a fourth generation spreadsheet for a budget you know i mean i was really into pivot tables and the whole few match um it's pretty yeah it was pretty interesting to say the least the first

three or four were pretty rough. Yeah. Had some good fights then. Oh, yes. Good. That's real, man, because that's what usually happens. And especially when you've been going along with it, that's separated. And then it's just like a collision more than a meeting. Yeah. That's cool.

But the good news is now you're singing. Now you hit the lane and you're running down the lane. Everything's going good. Yes. Yes, sir. Very good. Well done, you guys. Well done.

Do you have people cheering you on? Not with us, but we've got a lot at home that are listening. Okay. Did you have people making fun of you along the way? Oh, yes. I'm sure. Yeah, we did. Not to our face anyway, but I'm sure.

A lot of support from family. Especially my family, we're really supportive. We had a few friends that were kind of laughing at us pretty pretty good bit yeah okay we actually had an opportunity to teach financial peace last um september yes in our church so that was a good experience too yeah that that makes you finish it for sure yes yeah you got you got to play through when you're leaving it would be a good example so yeah absolutely otherwise you're just being a hypocrite. That's perfect. Well done, you guys.

Well done. Proud of you. Thank you. Very good job. We've got a copy of Chris Hogan's Retire Inspired book for you. I want that to be the next chapter in your story, which it will be. With these numbers, these are incredible, to be millionaires and continue that giving, that outrageous generosity as you go along.

So very, very well done, you guys. Excellent job. giving that outrageous generosity as you go along so very very well done you guys excellent job tyler and whitney gadsden alabama area piedmont 83 000 paid off in 31 months making 75 now making 200 count it down let's hear a debt-free scream three two. We're dead free. Yeah. Love it, love it. Well done. That's how you knock it out right there. Man, that is fabulous. Great job.

Open phones this hour at 888-825-5225. Tamara is in Los Angeles. Hey, Tamara, welcome to the Dave Ramsey Show. Hi, I'm so thrilled to be on the show today. Well, we're honored to have you. How can we help? Thank you. So we sat down and we kind of planned out all the baby steps the best that we could,

and we have a great shovel we're working with, and I just want to make sure that we're going to be able to get to the goals that we want. But we got stuck at seven because we're kind of having a hard time figuring out where the light at the end of the tunnel is and how we're going to get to that last and final step, which I'm also a lover of real estate ever since I was a child, and I would love to purchase a single-family home with cash flow. But living in the Southern California area, Los Angeles, you can barely get a beater for $600,000.

So how are we going to do this? Because we're 10 years away from that or 8 to 10 years away from getting to step number 7. Okay. Before everything's paid off, you're 100% debt-free, it takes you 7 years or 10 years. So I think we'll be maybe anywhere from 7 to 10 years. What's wrong with that? But once we get to number seven, isn't that going to take another ten years to accrue the wealth to purchase the home?

I don't know. What's your household income? Well, my husband's at $110,000, and I'm at $161,000. Okay. So you're making $300,000 a year, and you have zero debt at that point of any kind. Mm-hmm. How much can you save making $300,000 if you don't have any payments in the world? We will have one big payment, and that's going to be three kids.

Hopefully by then we have two now. Private school costs around $1,000 a month. We live in a really bad school neighborhood, I guess you could say, relatively speaking. But our house was cheap, so we bought it, and it's great. So if you're sitting there with a paid-for house, and you're making three or by then maybe $400,000 a year household income, how much can you save? A lot probably, now that we're getting into that.

And then what do we do with that? Do you put that in like a mutual fund for five years, wait for it to grow, then pull it out and cash flow the? What I did at that stage is I just threw it in an S&P 500 fund, and I didn't necessarily have to wait five years. I just throw it in there. That's what I do now. If I get some extra money, I throw it in an S&P.

And then when I see a piece of real estate, I use some of that money and just buy me a piece of real estate. Oh, I see. You see, as we were planning this out, I needed to get that final boost to kind of say all right we're going to fiercely go at this um but i mean really if you're making 400 000 a year and you got no payments seven eight years from now um i mean i'll be able to save 600 000 every two or three years oh wow two to three years okay well think about it i mean 200 000 a year for three years is 600 right okay no you're making 400 you know you ought to be able to wander away wander your way into that i think you're gonna be fine here's the thing the average millionaire

the typical millionaire we talk to and we've studied a bunch of them pays off their home in about 10 years typical person working this stuff is paying off their home in about 10 years. A typical person working this stuff is paying off their home in about 7 or 8 years, which means they're on their way to being a millionaire a little quicker. But that's how this is working. And you're on track. You're fine. You don't have to see all the way through. Thank you. In the lobby of Ramsey Solutions, Alex and Stephanie drop by. Hey, guys. How are you?

Hey. Thank you. Welcome, welcome. How can we help today? Sorry. That's okay. We are currently debt-free except for our mortgage. Good. And we are looking for, we want to know how to prepare for Stephanie to lower her work and income so that we can, that she can stay for...

The second baby. The second baby, yeah. Okay, she got a baby and you want to go home and be a full-time mom. Part-time mom, basically. I'm a nurse, so I work three 12-hour shifts. I want to take it down to two once we have a second baby. Okay, cool. So, well, it's a fairly simple thing.

What would your income drop by? And start living on that now. Okay, so calculate what your income will become if you do that, and start living on that. And you'll know you're living on that if you put the rest of it in the bank or towards your debt or something, right? So, you know, whatever the numbers, let's say it drops by $8,000 a year, whatever it is, $10,000 a year, $20,000 a year, whatever it drops by, okay? Then you need to live on what your new income would be if you did that. And you know you're doing that if you're banking the difference so you need to live on you at two days a week instead of you at three days a week and one day needs to go in the bank does that make sense yes yes that proves to yourself that you're really

doing it because otherwise you're kind of like well i think we can do it maybe and we'd like to do it and then you don't and then you going, you know, putting that extra day a week on a credit card and run yourself back up into debt or something. And so just because you didn't plan it out, you have to learn to live on the new income. So go ahead and practice that now. And you know you're doing it by banking the difference. Is that logical? Yes.

Very cool. Well, congratulations. Is baby two on the way? No, not yet. Okay. So you're just kind of thinking through how to do this. Just planning. Yeah, well, that'd be a great way to do it.

What baby step are you on? Are you out of debt? Yes. Yes, we're in four, five, and six. Okay, so that's easy then. You're just going to pile up some extra money for the fun of it right now. Not to get ready. The extra money is not to feed the money that you're short.

Now, we're not going to subsidize that because that money will burn up but it's in order to practice living on a lower income than you have been is that is that logical yes absolutely you got this congratulations thanks for stopping by guys thanks thank you this is the dave ramsey show adam is with us in portland oregon hi adam how are you I'm doing well. And yourself? Better than I deserve. What's up? Well, I started listening to you at the beginning of the year, and I have gone through the necessary steps to start figuring out my budget and figuring out where my finances are so I can start getting to where I wanted to be

when I first bought my house about 13 years ago. The situation is my house is worth about $130,000 more than what my mortgage is. And so what I'm looking at doing is trying to pay off all of my debts, which I have about $11,000 in credit cards, and a second mortgage and a first mortgage. All of that would be wiped out with selling the house, taking the equity to pay that. How much is your second mortgage? The second mortgage is about $17,500. Okay. And what's your income? It's about 50. Okay. All right. Cool. Do you like your house? I like the house, but the mortgage is just too much for what I make. It put me at about 50

some odd percent on my amount. so it's just too much. Yeah, I hear you. Yeah, it's got to go. Unless your income is going to shoot up, it's got to go. Well, I'm trying to figure that out, too, but based on where I am today, I want to make assumptions that are safe on what I earn currently. Yeah, but, I mean, if you have a job today that you're shooting up through the ranks and your income is going to double in the next two years,

then that changes the answer of versus I got a job where I get 3% cost of living raises or something, right? Yeah, that's pretty much where I'm at right now. Yeah, so your trajectory right now is not going to save this deal. This deal is bad, 50%, because you're house poor. You can't do nothing because it's a stupid house. Yeah, and it was originally bought with someone else which was a huge mistake but uh you know when they were paying half the mortgage the rent as it was you know my half the mortgage was a reasonable amount it'd be less than what i would have paid on rent but they so your girlfriend

your girlfriend that you weren't married to you bought it with right yeah yeah well not a smart move yeah okay good i'm not picking on, but I just get this question a lot, so I wanted to say that out loud for all of our listeners. Don't do that crap, because Adam will tell you it was a bad idea. My 20s were full of things to never do again, and that was number one on the list. Most of us, brother, most of us. I got that. So the idea I have is to basically take the equity of the house, which is about $130,000, if I saw it based on what I'm giving rough estimates of for,

take it to pay off the 11, about 11 and a half in credit cards, all the mortgages that would leave me after the realtor fees with about $90,000 once I got a baby step three taken care of, the emergency fund. Good. And then taking that and buying a house that's about $100,000 less is what I'm thinking about doing. I think that's perfect. And a 15-year fixed rate mortgage where the payment's no more than a fourth of your take-home pay. And that's exactly what I'm looking at. Yeah, that's right where you are. And cut up the credit cards and never use them again. one of them got paid off at the beginning of this month

yeah but i mean when you pay them all off they'll grow back if you don't cut them up yep then that's that's the plan they're like dadgum weeds you can't get rid of them unless you dig them out by the root so and get on a budget and that kind of stuff i think you got a good plan adam i really do and you just put some of the stupid stuff in your rearview mirror, and we've all got stupid stuff in our rearview mirror. Our hope is that there's not much stupid stuff out the windshield. That's what we're hoping for, all of us. Daniel is with us in Washington, D.C.

Hi, Daniel. How are you? I'm good, Dave. How are you? Better than I deserve. What's up? I had a question about investing for retirement. I know you recommend 15% to put into retirement when you're investing.

Yes, sir. I was wondering how you would split that up if you were going to do two different systems. See, I work for the government, and our primary mechanism is the first savings plan. Right. My company will match up to 5%. Right. But it's also a tax-deferred system. So I would rather get something like a Roth IRA that goes tax-free,

but how would you divvy up that 15% between the two? Okay. The TSP has a Roth option now. Okay. And so you can do that as well. And we're heavy on the C there, like 80% C and 10% S and 10% I in the TSP if you go that way. So here's your order of attack. And you just keep chipping down this list until you get to 15%. Okay.

The best is the match in a Roth. So if you've got a TSP with a match or an employer with a match in a Roth, 401k, that kind of a thing, the best is a match with a Roth. The second best, mathematically, is a match without a Roth. Because here's the deal. Up to the match. Here's the thing. If you put in 5% and they double your money, even after you pay taxes,

you're going to come out ahead of tax-free because you doubled your money the instant you put money in with the match. So up to the match, the traditional is better than a non-matching Roth. The next thing down the list is a non-matching Roth, whether that be a non-matching Roth, a TSP. Actually, I'd probably pick a non-matching Roth IRA before I did TSP because you've got better selections in the open market than those three TSP selections that you've got as far as rates of return.

You get better mutual funds than the TSP has offered in it. You can beat that because the C plan is basically an S&P 500 fund, and you can beat the S&P if you get a good advisor to help you pick mutual funds. Now, if you're not a good advisor, you probably can't find one that beats the S&P, but there's plenty of them that do. So, anyway, so matching Roth, non-Roth with a match up to the match. So you max out that match you get the five percent there the five percent there whatever we're at eight percent three percent whatever it is your match is

then once you get past any matching then i would do a traditional i mean i would do a regular individual roth and then i would maybe look at the roth tsp to get me there so as you keep chipping down there you may end up going back to your TSP and raising up, putting some non-matching section in there, or back to a 401K and raising up and putting some non-matching in along with your match to have gotten you all the way to the 15% of your household income. But your target is take your household income times.15, and that's the dollar amount I'm trying to get to as I weave my way down through this labyrinth of choices that you've got. So, hey, good question. That puts us out of

The Dave Ramsey Show and the books. Hey, it's Blake Thompson, Senior Executive producer for the show. You know, you can listen or watch Beanyware with the Dave Ramsey Show app on your smartphone. Catch the full show or watch the highlights and check out Dave's upcoming guests. Head to the App Store and download it today.