The Ramsey Show - App - Stop the Money Stress With Easy Budgeting (Hour 3)

Episode Date: June 15, 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. Going to start this hour off with Montgomery, Alabama. Rex is on the line. Hi, Rex. How are you? Hey, I'm doing all right. How are you? Better than I deserve. What's up?

I am trying to coach my mom. She's looking at buying a house. She has been following your program for a couple of years now. She's in baby steps four and five, but doesn't have a house for six. And I've tried to coach her about the 15-year fixed-year mortgage. But I'm concerned I might be giving her bad advice. I'm not sure if it's appropriate for her. She's 57 years old, and she has $37,000 saved for down payment.

And the main questions are, is a 15-year fixed too long for someone at her life stage? And the second question is, she's also looking at condos with these fees, these $400 fees. And she's really serious. She lives in Overland Park, Kansas, and it's just a very expensive area to live in. So a house might be out of the question. And I also don't know if it's good for her to get into a house that she'd have to pay or a condo that she'd have to pay those things perpetually in retirement. You're talking about the HOA fee?

Yeah, I guess it's an HOA that includes, like, maintenance in the yard, and it covers a couple of things like the roof and stuff. Sure. That's $400 a month, though? Yeah, $350 to $400 a month. Okay. For what price range condo? About $185.

Okay. A little rich on the HOA fee for a condo that About $185,000. A little rich on the HOA fee for a condo that price in Kansas. I mean, a little in part Kansas is expensive. I know, but the HOA fee is high. That's what I'm saying. Yeah, I hear you. The bottom line is to maintain

a series of condominium units that are $200,000 a piece, usually you wouldn't have an HOA that's $5,000 a year, you know. And this is approaching $4,000 to $4,800 a year. That's a little rich. My home, my HOA is not that high. And I live in a more expensive area. I guess yours is more than $185,000.

Yeah, I'm guessing, yeah. And, you know, I'm in a more expensive area. I guess yours is more than $185,000. Yeah, I'm guessing, yeah. And I'm in a more expensive area than Overland Park, too. And Nashville's not that dissimilar from Kansas. So that's my point. And I own several condos in this area, and I'm not in that price range, and I don't think of a single one I'm paying that high. So that sounds a little rich. It would usually be a little less than that. But but anyway aside from that um back to your other questions what is her income

uh she's about 105 okay well she's doing real well that's awesome and she's got she's uh we got her mutual fund set up she got 300 uh in her 401k divided into four different types great great well i love the condo for someone in her situation because she doesn't have to fool with maintenance. And that would take a lot of the joy of ownership away from her if she had to fool with all the exterior maintenance items. And so that part is excellent. I'm questioning the condo fee a little bit, obviously.

Check on that part. That's not the end of the world, though. A lot of places have an HOA fee. Condos in particular do. And so just look at that, shop it around, make sure it's right. But that doesn't bother me. And how about the 15-year? The other thing that doesn't bother me at all, the 15-year doesn't bother me at all, because here's the thing. I doubt she'll be in debt 15 years. I would imagine she'll pay it off early. All right. Because she makes $105,000 and she's only talking about a $180,000 deal here 105 and she's only talking about 180 000 deal here so

she's buying conservatively and um you know i think she'll end up chunking some extra money on this as she goes along before she hits you know at 65 years old that's eight years from now i'll bet the thing's paid for um and so i would just have her you know continue doing the baby steps which means 15 of your income going into retirement and everything else going at the loan balance on this. Any other extra money above the payment that you have, you throw it at the loan balance, and I think it's going to pay on off early.

She'll most certainly have it paid for before she's 70 if she continues to work up into her late 60s because she makes makes great income. So none of this bothers me. No, this bothers me. And the other I just got sidetracked on the HOA fee. But check that out and make sure that you're not, you know, got because what can happen is a condiment, a particular condominium project. This is what was running through my head.

And I need to say it out loud because it makes more sense. A particular condominium project that is poorly was running through my head and i need to say it out loud because it makes more sense a particular condominium project that is poorly managed for an extended period of time they will raise the hoa fees to catch up on all the crap that they did when they that they should have been doing and you're not really getting value you're really cleaning up the mess from years past before you bought and or special assessments can come in because they haven't done their budget properly. They haven't managed things properly. And if you're seeing one that's that, then you'll see an artificially high HOA fee in those situations

because they're cleaning up, you know, deferred maintenance is what we would call it. All right. Amelia is with us in California. Hi, Amelia. How are you? Amelia. Three. Two. California. Hi, Amelia. How are you? Amelia? Three, two, and Mike's in

Tucson, Arizona. Hey, Mike. How are you? I'm doing good. If there was any better, they'd have to make two of me. I hear you. What's up, man? How are you, sir? Better than I deserve. I have a question for you. I have a couple of rental properties. One, my wife and I decided to get rid of just because it wasn't making sense.

The other one is a commercial property that has a value of probably about $300. I owe about $100 on it. I have a net income of about $2,200 a month. Nice. We have, after we close on our residential rental that we're getting rid of, we will have no debt left except for our primary residence. So my question is, do I hang on to that commercial property? How much do you owe on your primary residence?

Primary residence, I owe $245. Household income? Household income is about $100. Okay. And how old are you guys? I have, I owe $245. Household income? Household income is about $100. Okay, and how old are you guys? I have, I'm sorry? How old are you guys? 43. My wife and I are both 43. Okay, any money coming out of this residential rental?

The residential rental was pretty much a walk, and after listening to you beating the drum, I decided, you know what, this isn't making sense anymore. Let's just sell it. Okay, so you're not going to check when you sell it. Well, we are, but we're going to use the funds to pay off. We got a car loan, and we're going to finish paying that off. So we're going to come out with about probably $5,000 left. Okay, all right.

Is there any non-retirement piled up in any investments? What I have is in a 457, I got about $65,000, and I'm also in a position where I did 50% pension in nine more years from where I'm at now. Okay. But you don't have any piled up cash that's not in a retirement account? Not sizable, no. I probably got about, total probably end up having about $10,000 total. Okay.

Well, we need the emergency fund, of course, of three to six months of expenses set aside. And then you got $100,000 and then you got $245,000. I would not sell that rental unless you just don't like it. But I would say, hey, I got a $345,000 problem right here in front of me, which is my home plus this rental, and I want to get those things paid off, making $100,000. I want to do what it takes to cause that to happen over the next several years because I do want them cleared. And I'd rather clear your house first, but it's almost two and a half times more, so I might go ahead and clear that other one. It's got a great cash flow.

I'm keeping it and going to work to pay it off is what I would do. I hate to see people waste money, and that's exactly what happens when you spend hundreds of dollars a year on ID theft protection plans like Trusted ID, LifeLock, ID Watchdog, and any of them. Well, let's face it. Identity theft is a nightmare, and it's not going away. But there's no need to freak out and buy the most expensive plans out there because you

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Go to Zander.com or call 800-356-4282. Thank you for joining us, America. This is the Dave Ramsey Show. We're glad you are here. Open phones at 888-825-5225. All right. Erica is with us in Mississippi. Hi, Erica.

How are you? Hi, Dave. I'm doing very well. Thank you for all that you do, and thank you for taking my call today. Sure. What's up? Well, my question is in regards to buying land from a tax sale. Do you have any advice or any experience from that? Just to give you a little background on myself and the property, and I will try to make it brief. I'm 25. I'm a single mom to five-year-old twin boys. I make about $40,000 a year. I am on your plan. I've been on it for about a year and a half, and I've paid about $26,000 in debt so far.

The only debt I have left to my name is a student loan that is about a little over $11,000. I have temporarily stopped my debt snowball to try to purchase this parcel of property. Basically, the parcel of land is family property. The home that's on it is the home that my grandmother raised me in, but it was not in my grandmother's name. The property actually belonged to my great-aunt and my great-uncle, which was my grandmother's sister and brother-in-law. They let my grandmother and I live there.

My grandmother raised me, and they let us live there because my grandmother was taking care of their mother, who had Alzheimer's. So really long story short, my aunt and uncle did a lot of illegal things. They got family property put in their name illegally through crooked attorneys and such. My grandmother was going to take legal action against them, but she told them that in lieu of that, if my uncle would deed the property from his name to his and my name with full rights of survivorship, that she would not take legal action against them. So he did that, and my great-aunt passed away in, I believe, 2008. My grandmother passed away when I was 18 in 2010, and my uncle passed away in 2011. I was a minor.

Of course, my office was happening, and so I found out about it, and after my uncle passed, I took the deed to my local courthouse with his death certificate and went to get it put in my name and get his name off of it since he had passed, only to find out that the land was in my aunt's name the entire time, and it was not my uncle's to even deed over in the first place. Why was the deed not recorded before he died? I'm sorry? Why did you not try to attempt to record the deed before he died um it was recorded it was it was no it wasn't it wasn't you took the deed to the courthouse

only to find out it was invalid because it was in his wife's name well what happened was it was i apologize let me let me kind of redo that it was recorded with his and my name with rights of survivorship before he passed but then i drew up a quick claim the beating it from his and my name to just my name and i took that to the court house with the death certificate and that's when I realized that the property was in my great-aunt's name. Because I wasn't paying the taxes or anything, I was a minor, so my grandmother was paying the taxes, and I guess she didn't do her research. So he only had the rights of survivorship that he was quick-claiming to you.

Well, he didn't have any rights. Basically, he lied, and he drew up a quick-claim deed from his name to his name and my name, but it was never in his name. It was in my great-aunt's name. Yeah, but my point is, had you attempted to file that quitclaim deed years before, when it was drawn up, you would have discovered this then. I don't understand why you waited. Well, I didn't file the deed.

My grandmother filed it because at the time I was a minor. No, the deed was never filed. Okay. the deed my grandmother filed it because at the time i was never filed okay well i mean it it was oh the quit claim deed was filed but he quit claiming something he didn't own correct so it was invalid right well no it's valid it just i could give you a quit claim deed on that property i quit claiming claiming any ownership rights I have, which, by the way, are none. Right. And that's what a quit claim is. You quit claiming whatever ownership rights you have. If you have none, it's of no value, and that's what you're discovering.

It wasn't invalid. It was of no value. So we have a family dysfunctional mess. Why don't you just walk away? Well, the thing about it is I've been paying the taxes on this land since I was 19. Why don't you just walk away well the thing about it is i've been paying the taxes on this land so i was 19 why don't you just walk away you've been living there since you were 19 no i actually haven't been living there i i moved from there because there was there was some issues with family coming around trying to claim it was theirs and whatever else so i moved and i just

paid the taxes on it so that it wouldn't go to a tax sale and it means a lot to me so i would i found out that the law in mississippi is that if you don't pay the taxes for a year it will go to a tax sale which is held at the last week of august and i can buy it from the tax sale for the uh you know it'll go to the highest currently the the heirs of your aunt own the property no it's in my aunt's estate it's been in my aunt's estate i know that's the heirs of your aunt on the property then and so when you don't pay the taxes uh the estate's going to be notified that the taxes are no longer being paid and then the estate is going to start paying the taxes. Well, the only thing is nobody ever opened her estate.

She didn't have an estate. She didn't have a will. She has no money in an estate account anywhere. It was never opened. Well, the problem is I think you're going to run into the fact that there's a right of redemption. There is on most tax sales that goes out there many, many, many years. What is this property worth? According to the tax parcel, it's worth $99,000.

Tax parcel doesn't have anything to do with actual value. What's the actual value of the property? I'm not sure. I haven't paid to get it valued. Well, for sure, you need to stop paying the tax bill either way, even if you lose the property because you're not going to get this property. I don't think you're going to end up with it because you're going to have a right of redemption.

The owners, which are your aunt's heirs, can come back and redeem this for a number of years after a tax sale. And so, once again, you could go down and bid on this and think you own it again, and then they're going to come back and give you that money and take this property back again yes sir well um the only the only thing about that is in mississippi they do have three years uh from from that time to redeem it the original owner is the only problem is i'm the only one that's ever been paying the taxes doesn't matter kiddo okay can you not hear how much dysfunction and crazy is in your family i mean crazy crazy lines up at the door in your family and they're they're gonna

they're gonna show up and they're gonna you know this is gonna be a mess i mean you can try it if you want but if an investor goes down there to buy it which i bought property tax sales as an investor i know i can do nothing to this property for three years because anything i do to it i'm going to lose that money when the original owner comes back in under that rights of redemption and pays those taxes or and pays me back for whatever i pay for it at a tax sale and uh so you need to find out about the rights of redemption the three year do that does it only cover the taxes or does it cover whatever you bid at the courthouse steps? See, if it goes to the courthouse, it's going to go to the courthouse steps on a tax sale.

There's going to be other people there to bid, and whoever bids buys it, and they can have it bought back from them either for the tax bill or for whatever you bid any time during that three years. You need to find out that distinction in Mississippi. But you make 40 grand a year you're a single mom i think you're chasing air kiddo i i would walk let crazy have it just go get you a life this thing is just so it's such a barrel of twisted fish hooks there's so much crooked crap going on in this story, and I've only lived with it for two minutes, and I'm already tired. I can't imagine how exhausted you are dealing with this amount of crazy.

And so, truly, I would walk away. I mean, if you want to fight for it, give it a shot, but you've got to have the money, and you don't have any money. You're $11,000 in debt still on your student loan. So I would recommend you not buy property, even this one, maybe especially this one. But if you want to try it, you've got to line up a loan for whatever you're going to go buy, whatever you're going to pay for this. But you're not going to be able to get title insurance.

You're not going to be able to get any kind of a traditional mortgage because nobody's going to insure this thing. It has to be a cash transaction. That's why investors bid on these things. But I, you know, give it a run if you want to, but I think you're just inviting more and more drama into your life. And if you were my daughter, I would tell you to just move on with your life. Let it go.

It's a house. It's a piece of property. Let it go. This is the Dave Ramsey Show. Hey, business leaders, are you hiring, posting your position to job sites, and waiting and waiting and waiting for the right people to see? Well, you need ZipRecruiter. ZipRecruiter knew there was a smarter way, so they built a platform that finds the right job candidates for you. ZipRecruiter learns what you're looking for, identifies people with the right experience,

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Just go to ZipRecruiter.com slash Dave and my listeners can post jobs on ZipRecruiter for free. That's right, free. That's ZipRecruiter for free. That's right, free. That's ZipRecruiter.com slash Dave. In the lobby of Ramsey Solutions, Andrew and Kara are with us. Hey, guys, how are you? Fine, Dave. How are you? Better than I deserve. Welcome. Where are you all from? Gallatin.

Oh, right here in the neighborhood. Mm-hmm. All right, from Gallatin. Good. Good to have you. So, here to do your debt-free scream. Absolutely. Love it. How much have you paid off? $62,000. Good deal. And how long did that take you?

About two years. Good deal. And your range of income during that time? I started off about $80,000, worked up to $100,000, and keeping moving on. Good for you. What do you all do for a living? I sell construction equipment. And I'm a stay-at-home mom. Oh, very cool. Good. She works harder than me.

I tell you. I'm sure of that. So $62,000, what kind of debt was this? Student loans, car loans, some renovation stuff. Normal stuff. Just normal. Just popping along. How long have you two been married? Almost seven years.

Okay. So five years into your marriage, something happened, and you said, okay, normal's not working. We've got to pay off the debt. What happened, and what did you do? God kind of got real with us, and I've always been kind of an entrepreneur, and a lot of my investments I had going on, just nothing seemed to work out. Like everything I tried to do, I was losing money on it. And one of the things that we weren't doing is we weren't really managing the money that we had.

And I think that was really it. We started to kind of sat down and kind of got kicked in the tail and thought, you know, we need to limit our liabilities and worry about the money going out as well as the money coming in. Okay. So, Kara, Sharon used to tell me all the time, sometimes she'll still say this, you're scheming and scamming. Sounds like he was scheming and scamming a lot. Yeah. So, but he, he got enough or you got enough or what happened? How'd you get him to stop?

How'd you get him to see that? Because all of a sudden he started worrying about the outgo. He thought he could out earn his stupidity before that. We had a lot of, just a lot of financial issues. Okay. Um, and that kind of got us. Okay. So it piled got us kicked to the start. Okay.

So it piled up and the stress hit. That was it. Yeah. So what was the bill you were looking at that made your hands sweat that night and you guys were looking at it going, uh-uh? It was a lot of little stuff. We planned on, we bought a house, we had a baby, we were renovating, and then all these little things piled on top.

Okay. And then the deals you're working on didn't work out. Exactly. You're right. Right. And so all that just piles up and piles up and piles up. Because I remember my heart racing trying to balance my checkbook and discovering I had left off a check and I was going to be in overdraft. Right.

And I was that tight. And I remember being scared that way. And I'd get sweat in your palms, you know, when you're scared. And, man, I was that tight, and I remember being scared that way. And I'd get sweat in your palms, you know, like when you're scared. And, man, I remember that. I don't ever want to go back there again. It's such a weird place to be. And now looking back on it, it seems like it was 20 minutes ago, but it was many, many years ago, of course. And so that's in your rearview mirror now.

Okay. So the stress built up, then what what did the conversation sound like one of you come to the other one and said what well i i guess we we both grew up listening to you i've listened to you most of my life so we knew the right steps to take it was just needed that kind of kick in the pants to all right time to grow up who sat down and said we got to do this dave stuff uh i think i kind of been pushing him yeah and then finally he like agreed yeah okay then it was his idea when i was on my knees then it was his idea okay all right cool well good for y'all and then what did you do you sit down to do a budget or did you go to the class or what'd you do um

yeah we sat down did a budget she's awesome with um organizing we set up like the previous uh debt free screamer had they we set up a sheet with a, we had free written out and kind of segmented up, and we started just kind of breaking everything down and just marking those off a little bit at a time. And it's amazing how fast the snowballs take off. Color them in. They start getting big

fast, yeah. Very cool. Good, good. What was the one debt that when you paid it off, you said, I hate you people. I'm so glad you're gone. I. What was the one debt that when you paid it off, you said, I hate you people. I'm so glad you're gone. I think it was the student loans. Student loans. Yeah, monsters.

They've just been hanging around forever. Yes. And they don't go away until you hit them really hard. Right. And you've got to kick Sally Mae to get her out of the house. She doesn't want to leave. Yeah. It's very, very real.

Well, congratulations, y'all. How does it feel? Thank you. Still kind of surreal, I guess. We still haven't tried to hammer down the next step. Yeah, you got no payments. You make $100,000. Yeah.

Life is good. Yeah. Very cool. Really good. Good for you guys. And you brought the young man with you, your young gentleman. What is his name? This is Lincoln.

Lincoln. And Lincoln is how old? Three. Just turned three. Oh, all right good age perfect okay his legs don't work but she stood him up and he just collapsed that's fabulous okay good job hey lincoln how you doing man dave say hey or don't yeah that's good oh fun we got a copy of chris hogan's book for you retire inspired because that's the. Oh, fun. We've got a copy of Chris Hogan's book for you, Retire Inspired,

because that's the next chapter in your story as you guys become millionaires now. That's right. And outrageously generous along the way. Congratulations. Thank you. Thank you. Very well done. All right, it's Andrew and Kara and Lincoln.

$62,000 paid off in two years, making $80,000 to $100,000. Count it down. Let's hear a debt-free scream. Three, two, one. We're debt-free! Yay! Love that. Good job, you guys.

Good job. Very, very well done. That's fun. Well, we're getting a lot of those these days. We were actually talking about it in a staff meeting this morning. The number of people, you know, I listen to you and my parents were going through Financial Peace University 20 years ago, 15 years ago. And now they're in their 20s or 30s and they're Financial Peace babies. They're getting out of debt themselves with their own babies.

And it's cool. And, you know, it can start all the way back with graduation, can't it? Graduation season's almost over, but if you've got a high school graduate in your life, we've got the perfect gift. This is one of the hottest books we've put out in a long time. This thing has gone crazy, man. I'm so happy it has sold so well. It's the Graduate Survival five mistakes you can't afford to make in college by our own ramsey personality anthony o'neill along with rachel cruz and you

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So the Graduate Survival Guide, five mistakes you can't afford to make in college. Anthony O'Neill, Rachel Cruz. You can get it at DaveRamsey.com or call Customer Care. They'll send you one right out. 888-22-PIECE, 888-227-3223. Charlie's in Buffalo, New York. Hey, Charlie, how are you? Pretty good.

How are you, Mr. Dave Ramsey? It's such a pleasure to speak to you. You too, sir. How can I help? Well, you see, I'm 14, and my whole life I've just been saving up the money I get from birthdays and from a lot of stuff like that. But I'm in eighth grade, and I'm finishing it up, and I'm getting to the point where I feel like I can do something with it. So earlier today I had a man come over to our house,

and we were talking about investments in a mutual fund and i in deciding whether or not to invest a thousand dollars into a mutual fund and then just leave it and never touch it until like i retire well we turn into a lot of money charlie that would be absolutely be a fabulous experiment to look back when you're 78 or 74 and you go, man, look what I did when I was 14. That's pretty cool. How much money do you have total? I have about $1,800 in the bank. Okay.

Very good. Good job. Then what are you going to do for a car? It's going to be the starting out Dave car. Okay. Where are you going to get the money for it when you're 16 in two years? Well, I plan to get a job here once I get my working papers. Okay.

And how are you paying for college? I'm going to get a job, obviously, and I'm going to try and work summers and just do whatever I can, really. That's cool. All right. Because the possibility is you're going to end up using this money for a car or for college, and you keep that in the back of your mind as you're doing this. And those are okay goals as well as retirement. So it's pretty cool for you to be thinking in the way you're thinking.

It's the right way to think, but also keep your goals out there right in front of you, exactly what you want to do. Good to talk to you, sir. You're way ahead of the game. This is the Dave Ramsey Show. By the time I was 26, I had $4 million worth of real estate, and then I lost it all because I didn't do it the right way. That's why I feel so strongly that buying real estate is an incredible way to build wealth,

but only when you're debt-free and do business with people who have your best interest at heart. My friends at Churchill Mortgage have been showing people how to build wealth through real estate for over 25 years. Their whole program is engineered around having better information so you make smarter decisions for your family. Whether you're buying your first home or your last, Churchill Mortgage is the only lender I would trust. I trust them. My team trusts them. And so should you. You need to call Churchill Mortgage today at 888-LOAN-200. That's 888-LOAN-200 or churchillmortgage.com. This is a paid advertisement. NMLSID 1591, Equal Housing Lender, 761 Old Hickory Boulevard, Brentwood, Tennessee 37027. Our scripture today, 2 Corinthians 8.21

For we aim at what is honorable, not only in the Lord's sight, but also in the sight of man. Thomas Jefferson said, Honesty is the first chapter in the book of wisdom. Hmm, good stuff. Our question of the day comes from Blinds.com. They have a 100% satisfaction guarantee that means even if you mismeasure or pick the wrong color, they'll remake your blinds for free. With Blinds.com, you get free samples, free shipping, and with the new promos they run every month, you're going to save even more.

Always put in the promo code RAMSEY and you'll see the best possible deal out there. That's the magic word, RAMSEY, at Blinds.com. Today's question is from Dustin in Georgia. What are your thoughts on a Gerber baby life insurance plan for our new baby? It would be $22 a month for $35,000, and that doubles when he turns 18. Is this a good investment? Okay, let's just say out loud that you are discussing buying a financial investment from a baby food company. Let's just say out loud that you just said that.

Does that not make you giggle just a little bit how stupid that is? I mean, really? You're going to buy an investment from a baby food company. It's a whole life life insurance policy on a baby. So let me help you with this, Dustin. It's a whole life life insurance policy on a baby. So let me help you with this, Dustin. It's stupid. Really, really stupid. Like, don't do it.

The money. Okay, let's try this. Let me just do this. $22. Put this in the calculator because I just can't stand it. Okay, and 18 years it was 18 right yeah okay all right let's do this again 18 and put it all in the calculator here and let's see so okay if you were to invest the 22 dollars in a decent growth stock mutual fund

per month from 0 to 18 now let's go back remember the Gerber whole life life insurance rip off baby plan from the baby food company. Says if you put $22 a month in you get $35,000 in life insurance and it doubles when he turns 18. They didn't say that you could cash it in for $70,000. They said you'd have $70,000 worth of life insurance. Which, let me help you with this, that means you can have about a $10,000 or $12,000 cash value. Roughly.

I'll be off a little bit, but I won't be off much. However, if instead of getting ripped off, you were to put the $22 in a decent growth stock mutual fund for the same period of time, you would have not $10,000 or $12,000, not $70,000 worth of life insurance, but $125,000 on average with average mutual fund growth rates. Hmm. Interesting. If I'm half wrong,

you still came out way ahead. So the answer is never buy life insurance as an investment. Let me say it again because some of you get confused because you missed the part where i said never never buy life insurance as an investment the math never works and never is like never works and this little gerber policy is an example of that. As a matter of fact, the math is even worse on it than the typical rip-off adult whole life policy. I mean, you can get ripped off by Prudential. You could get ripped off by New York Life.

You could get ripped off by Northwestern Mutual. You could get ripped off by a lot of these whole life companies if you want to. And you wouldn't be ripped off as much as you would by Gerber mathematically here now you'd be putting more money in so you'd lose more money but mathematically percentage wise the 22 will turn into more than it would have if you put it with those other companies but it you know sucks still sucks at the end of the day, it's just a matter of how bad something sucks. And this is all bad. Never use life insurance as an investment vehicle. It never works for you. It always comes out better if you do your investing in an investment. Yeah, that's why they call it that. And if you need life insurance, just buy some inexpensive life insurance that is life insurance only, like term life insurance, in other words.

And that's what I have done for 30-something years. And it's worked out for me. I'm a multimillionaire. And that's one of the reasons I am, because I didn't give my money to these rip-off whole-life companies. And my babies were not insured by Gerber Life, a baby food company selling life insurance products. Really, right there should have been a hint. Okay? Kind of sometimes if you're looking at investment products or money things if you look at where it's advertised and what's advertised around it it will sometimes tell you that you're

not supposed to do it i'll give you another example let's pretend that your latest financial thing you're wondering about is advertised on television and the advertisement running next to it is a self-insert catheter or a walk-in bathtub or a snuggie that tells you that the life insurance or the the the the financial product being advertised is crap and so let's think about who advertises right next to walk-in bathtubs self-insert catheters and snuggies uh reverse mortgages with the funds or magnum pi yeah and who else advertises there um what's that guy well i can't remember he played in a mel gibson movie that was a really cool movie he was the bad guy he got killed he was the medium level bad guy uh but he does the gold coins thing, you know, with the bad teeth guy.

Yeah. He's got, like, caps on his caps. I can't think of it. He's an actor, but he does the gold coins event. He does the gold coins. So the gold coins is right in there. Yeah, it fits right in the mix here. What else is advertised there?

Hmm. Oh, we'll get you out of your income taxes for free. We will get you out of your income. You don't have to pay income taxes. I can show you how to get out of your income taxes for free. We will get you out of your income. You don't have to pay income taxes. I can show you how to get out of your income taxes for free. You've seen that one? Is the IRS hounding you? You've seen those ads?

What are they advertising? Right next to Snuggie, right next to a self-insert catheter, and right next to the walk-in bathtubs. So that tells you right there the quality of your financial products. And, you know, Gerber Life is right there in that same bunch of people in that same neighborhood no they're not advertising on the cable tv but think about it i mean what are they doing it's a baby food company please please really i mean you buy your car there too i mean i got a car i got a gerber life car i got a gerber Life blue jeans.

Really? I mean, you just don't think of them that way, do you? I mean, I don't think the baby food's bad. But maybe they should have stuck to that. Here's the trick. They probably make more on the life insurance. It's really profitable because it's crap. Oh, it's really profitable because it's crap. Oh, it's really profitable because it's crap.

So here's the thing. No, we don't do Gerber Life insurance. We don't do any life insurance that is an investment because here's the deal. One more time, let's walk through it. $100 a month going out the door for whole life life insurance for those of you that are an adult. Now, we did $22 a month here and showed you how bad it was a minute ago. You can buy the same amount of term life insurance for about $5 a month that you could spend $100 on for whole life. is going into the quote-unquote investment side to build up your cash value, which has an average rate of return with whole life of 1.2%,

on universal life of 4.2%, and on variable life 7.3% after fees. These are outside studies that I'm quoting that have absolutely nothing to do with you in the life insurance business. Now, they tell you all kinds of other rates, but that's the actual after-fees rate of return that you can expect. And when you finally build up a cash value because you put $95 out of every $100 in there and you die, they pay the face amount. They pay the life insurance amount.

What happened to your savings account? They keep it. It's the payday lender of the middle class, people. It's a piece of garbage. Stay away from cash value, life insurance of any kind, investment life insurance of any kind. Never use that as an investment. 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, Dave's phone screener. We finished 2017 with a bang as the fourth most downloaded podcast of the year. Thanks to all of you for listening and helping us spread the word. Are high health care costs getting you down? Are you confused trying to navigate your options? Do you wish you could find an affordable, biblical solution to your health care costs?

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