The Ramsey Show - App - Student Loan Forgiveness Updates (Hour 1)

Episode Date: August 29, 2022

George Kamel & Kristina Ellis discuss: A recap of the latest facts on student loan forgiveness, Paying for medical school without debt, Looking for a higher-paying job, How much life insurance you need, Preparing for retirement, How to best use an inheritance. Want a plan for your money? Find out where to start: https://bit.ly/3nInETX Listen to all The Ramsey Network podcasts: https://bit.ly/3GxiXm6 Learn more about your ad choices. https://www.megaphone.fm/adchoices Ramsey Solutions Privacy Policy

Девочка-пай From Ramsey Network, this is The Ramsey Show, where we help you get control of your money, get ahead in your career, and get on the path to living well. I'm George Campbell, your host, joined today by bestselling author and Ramsey personality, Christina Ellis. And we are excited to take your calls on life and money and student loans because that's what's on your mind most likely. The number to call is 888-825-5225. That's 888-825-5225. All right, Christina, last week was just bananas. And you were doing a whole bunch of media around this whole student loan forgiveness issue. What is the kind of the take of the landscape as you've been doing media? It's been wild. There has been so many emotions, so many questions. Obviously, a lot of people

were waiting for this decision. It's been pushed down the road since March 2020. And a lot of people have been feeling anxiety and concern. An announcement was finally made. And it's just kind of had emotions all over the place. A lot of people are obviously happy. If you got your loans forgiven, I'm sure you're happy. There's a lot of people who are excited and celebrating. And there's a lot of people who are pretty angry. I actually posted something on my Instagram asking for people's feelings about it. Oh boy. Dangerous. I know it was dangerous. I got a lot of interesting comments. But probably about 80% of people who responded were pretty upset about it. They either, you know, paid off their loans, or they went to college debt free. They worked really hard to go to college debt free. Maybe they didn't go to college. They based their career decision out of, you know, not wanting to take out loans. And now they're like, oh, man man this is a huge thing not only in um that's not what they believed

what's going to happen to begin with but also for the taxpayer dollars how's it going to get paid for there's just a ton of emotion around this topic right now yeah i saw a video that was going viral it was an older one maybe from 2020 elizabeth warren and this father came up to her and said hey i've got a question for you i worked my tail off to pay for my daughter to go to college. Am I going to get forgiveness? Am I going to get money out of this? She said, of course not. And so he was going into this. My buddy was sitting here being lazy, not doing anything, and he's going to have his loans forget. And so there's a lot of uproar about this. And there's a lot of good reasons on both sides for people to be happy, for people to be upset. But I want to go over, in case you've

been living under a rock, and just go over the facts of what we know, because right now, it feels like there's more questions than answers. Right. And so, if you don't know, President Biden announced student loan forgiveness, $10,000 for folks making up to $125,000, or if you're married filing jointly, $250,000 is the limit. And if you received a Pell Grant, it's up to $20,000, which I am actually for, because the Pell Grant is for those lower income folks who couldn't afford to go to college at all. And so that one, I'm a big fan of. And the moratorium on student loans now ends on the payments ends December 31st. So

they kick that can down the road, no payments, no interest till the new year. And then there was also changes based to the income-based repayment program. And so they're capping at 5% of income instead of 10. So a lot of big changes there. That's the news without any spin there. But the question is, are these changes finalized? Yeah, that's a big question that I feel like a lot of people aren't talking about. A lot of people are celebrating right now. But it's important to realize that a lot of these changes could be challenged.

I mean, Biden put this out there and it could be challenged because a lot of people are wondering, can he do that? Can he do this without going through Congress? Is it going to be challenged by Congress, the Supreme Court? Yeah, there's just a lot of space and room for things to be changed. So, you know, hold it slightly loosely. I know that's hard to say for somebody who's really counting on this forgiveness, but just realize a lot of the stuff isn't finalized, especially some of the details. So if you're waiting on forgiveness, you can sign up at studentaid.gov slash subscriptions to get updates on the regular. They also promised that more details would be released in the next few weeks. So of course,

we'll keep people posted as we find out more. Yes. And of course, everyone's first thought was, well, how much is that going to cost? And it's up to the tune of about $300 billion, and that's just a ballpark number. And then you go, well, how many taxpayers are there, if that's who the burden is going to fall on? About 144 million taxpayers, which equates to about $2,000 a person just on napkin math. So that takes your breath away a little bit to go, we're going to forgive 10, but that's going to put two on every single taxpaying American, which is part of the outrage. And again, we don't know how this is going to be paid for, if it is going to be through taxes. They're saying, you know, of course, the White

House is saying, no, no, no, we're not going to raise taxes. It's going to come from the deficit that we're going to create in other areas. And so I'll believe it when I see it. But that's the numbers. Which is kind of crazy, because like an individual, we couldn't just be like, hey, I have a present for you. I have no idea how I'm going to pay for it. But, you know, here it is. And I think that's the question I keep getting is how is this going to be paid for? How is this going to be covered? And it's not entirely clear, but people are feeling a little nervous.

Another piece of the puzzle here is what is this going to do to the cost of college, which has already skyrocketed? And now it feels like colleges are going to be like, oh, sweet. Now's our chance to raise the price even more. Well, and that's the challenge is that it doesn't really address that. They say that they want to control the cost of college, but there's not a lot of specifics for how that's going to actually happen. They say they want accountability, but we need college costs to really be controlled because typically if loans are more available, colleges will take advantage of that. And especially with these new income-based repayment guidelines, it could really embolden people to take out more student loans.

If they're saying now that this is going to be capped at 5% of your income, it could be easy for students to say, well, hey, if it's going to be 5% of my income, why not take out a bunch of student loans? Because after college, I'm only going to have to pay for up to 5%. So what does it matter if I take out $50,000 or $100,000? And that's really concerning because that's still going to be a challenge to pay back. That is still debt. And I think it's just really challenging because we already have a struggle with 18-year-olds taking out student loans. A lot of times, they don't understand what that feels like after graduation to pay back. And now with these rules

changing, it's just really concerning for one, what it could do for the cost of college if colleges are going to raise prices as a result of that. And two, just if students are truly going to understand that this debt is not something they should take on. And another piece of the puzzle is the anger of people who are going, well, I paid off my student loans. What about me? And so the good news for those folks is that if you made payments during after the pause, then they're saying you're going to get a refund. And that's directly from the U.S. Department of Education. And I did find out how these refunds are currently working.

And this is based on someone saying, here's what my student loan servicer told me. So the student loan companies are not just writing you a check. What they're doing is they're taking your zero balance and reverting it back to $10,000 balance. So you're going back into debt with then the hope that the government will eventually forgive that. So that's what's actually happening. No one is just cutting checks going, here you go, here's your money back. They're just reverting the balances and then saying, now you can wait to see what the government does. Wow. And I've had a lot of questions from people saying, you know, I did pay on my loans during the pandemic. Should I seek out that refund or not? And I mean, I say it's really up to you. A lot of people that I've

talked to don't want to get that refund because they felt like it was their student loan. They paid it off and they're proud of that. And we've also told people that if you do get that refund, like it's okay. There's nothing wrong with that. It's just really what helps you sleep better at night. You know, whatever is going to make you feel more at peace. That's really what you got to do. But I'll be honest, I feel like $10,000 would make me sleep pretty good at night. So if it's, you know, if you're in my shoes, I'd be taking it if I had paid it and I'm going sweet. It's the exact same thing as taking advantage of, you know, a stimulus check, for example. That's something where the government saying, here's the money and we go, okay, I don't, even if you don't agree with it, you're still going to take the money and apply it to your

financial journey. And that's great. Yeah. I think I've talked to a lot of parents too, though, that they're, they're worried about the national debt. They're worried about this burden going on to their kids. And so I think just out of principle, they're kind of saying, I don't want to, but really, I mean, you could go either way, but the bottom line is we're all sleeping better when we're debt-free. And so make that a priority in your life, no matter how you got to do it, as long as it's legal. Okay, folks, don't get any ideas here. Don't be shady. Hey, folks, more of your calls coming up.

888-825-5225. I'm George Campbell. She's Christina Ellis. This is The Ramsey Show. so i'm george camel joined today by christina ellis this is the ramsey show open phones 888-825-5225 yusuf joins us in Detroit, Michigan, Detroit. Uh, Yusuf, welcome to the Ramsey show. What's up? Hey, how are you guys doing? Great. How can we help today? Yeah. So I guess this is a kind of similar to student loans, but not exactly. So, uh, I graduate undergrad in December. Uh, I have about 20,000 right now in student. And I'm looking to go to med school

next year, hopefully. And so I know Dave and some of you other guys have answered questions about how to finance, or no, not how to finance, you guys don't agree with finance, and how to pay for med school. However, when it comes to like scholarships from the schools or whatnot, I don't really have any outstanding academic achievement or athletic achievement. So it's like almost 99% sure I'm going to have to take out loans. Now here's the bulk part of my question. Due to religious reasons, any interest on loans is like a kind of a no-no, whether it's paying interest or collecting any interest payments. And so for faith-based reasons, you know, I don't think I would at all feel comfortable, whether even if it's federal loans or private loans, because there's no way

I would pay it back quickly enough and that interest doesn't accrue. So I guess it's a two-part question. One, what would you say is the best way to pay for med school if it's someone like me who doesn't have like a 4.0 and the best grades in the world and the best MCAT scores and whatnot? But also, that's the first part. And then the second part is, you know, if where it's most likely going to happen, I'm going to have to take out loans. Is there any kind of organization or any way that you guys know of that I could get some kind of interest-free loans if I need to take one out for school? I'm going to let Christina run with this one first, and then I'll give you my take. Yeah, that's a great

question. I know med school is a challenging one. We get this question quite a bit because it is a beast to try to tackle sometimes when you're trying to pay for it. Like you said, some of these scholarship programs are pretty competitive. But one of the very first things you can look with med school that I think a lot of people overlook is your school selection. There are med schools that are super expensive, and there are some that are a bit cheaper. So the very first spot I would look at is what is the cheapest med school I can go to that I'm still going to have a great degree and be able to graduate debt free. Obviously, you can work while you're in med school. I know it's a very tough program, so that can be kind of hard, but try to work and pay as you go. And then another great option is the military or some sort

of commitment program where, of course, you're basically committing that you're going to work for a certain period of time, but they pay for your education, and you get experience as you go. Now, when it comes to the question about zero interest loans, I'm not familiar with any of them. Obviously, there's some different foundations and organizations to do scholarships and fellowships. But typically, when somebody is giving out a loan, they have a motive. They're in it to make money. Right. They want to make money. So I think that part might be tough to find, but I think you can still be really strategic in figuring out how to go debt free. What's your take, George? I totally agree. If this is something that is against your religious beliefs, then you got to say, I got to find another way.

And that might mean being creative. It might mean delaying med school. You said you've got 20K in debt right now. What is the urgency to go to med school? Could you work for a while and then save up and cash flow it? I suppose. I mean, I haven't really thought about it like that. However, you know, the minimum, you know, even in public in-state, you know, I'm in Michigan, even the minimum public in-state med school is going to cost around about like 40K a year. And so 40 times four gets me 160. And me or my parents don't, I don't know how long it's going to, I only have like a, well, in December, I'll have a Bachelor's of Science in Neuroscience. So it isn't exactly a degree

in which I can go and get like a high five-figure job right out the gate. So it wasn't something that I thought about. I did think about something called the MD-PhD program, where essentially you get

both an MD degree and a PhD degree. However, it's double the length. So instead of four years, it's eight years. However, it's double the length. So instead of four years, it's eight years. However, it's free. Actually, you get a stipend, you get paid. So I've been thinking about that, but I haven't actually never thought of just delaying it and just try to save up. No. I mean, if you can get into one of those MD, PhD programs, that's incredible. And it will take longer, but you also will leave there making an incredible income and zero payments.

Well, one of the challenges with the MD-PhD program is you did say that you're more of an average student and don't really have any standout achievements. Those are pretty competitive programs to get into. They're similar to getting a competitive scholarship or a competitive fellowship. That being said, you may want to try for it regardless. I'm all about shooting for the stars and giving it a shot. I mean, you don't have anything to lose by trying, but those are typically pretty competitive. And with going with what George was saying about potentially working first, a lot of hospitals have programs with tuition assistance. So maybe you could even find a hospital where you can work in a research lab and potentially have them pay for part of your education as you move forward.

I think one of the biggest things is just being really creative and strategic. I love that you're saying, hey, I am not going to take out a loan with interest. Like that is a hard line. And I think whenever you make that hard line in the sand and you say, hey, I'm not doing this, no matter what happens, no matter what the cost, you're more likely to be strategic. I love that you're even calling into the show because that means you're thinking outside the box and you're thinking, what can I do? But, you know, look into how do you feel about possibly going into the military or serving in that way? I looked, you know, OK, so I'll say this. I'm a dual Canadian-American citizen.

And so I could technically, well, I'm only applying to med school here in the States. However, you know, I guess my biggest fear would be just, you know, actual deployment, like, you know, regardless, you know, let's say I'm in med school the next four years, and you know, all of a sudden, boop, we're going to war. Like, again, I, it's something that I thought of, but I'm just way too scared. However, you did mention something about hospitals and paying. I have over a thousand hours of research. I have three publications. And so I actually didn't know that if I, there are some hospitals here in the country, I'm not sure where exactly, but I didn't know that there are

some hospitals that will help pay your tuition. I didn't know that. Yeah. Yeah. I've talked to some students who've worked through it that way, but Hey, you just said you have three publications and a thousand hours you've already done. That's impressive. I'd hire this guy. Right. That's amazing. I'm like, Hey, you, you do still need to go for these fellowships and these scholarships. Cause that is impressive. Thank you. Uh, yeah, I guess, I guess for me, the best thing to do right now is I guess, first of all, get accepted because, you know, go because, you know, I need to go to med school first to even think about how I'm going to pay for it. And then, or I may have to just end up waiting a year and then applying for 2024. And hopefully I can find one of these programs or work at a hospital with a research lab that will help finance or help pay in exchange that I would do in my residency or I

would work for them after residency, something like that. But that's something to look into. Could you retake the MCAT as well? I get my MCAT score tomorrow. Ooh, all right. Fingers crossed, man. That could be a big help for sure in getting into a more affordable school, getting any kind of scholarship. I know it's tough. I don't want to just belittle the situation. It's very difficult to cash flow in med school. We're not trying to pretend like there's a magic wand. It's just easy. Just apply for some scholarships. But also, if I decide tomorrow that I want a $500,000 house, it's going to be hard to afford it when I just decided. Right. So a part of this conversation is, you know, going, all right, I want to go to med school. It may need to be four years from now to where I can cashflow this experience because I have family members who have done that. And they went, all right, I'm going to be a nurse for the next five years. And then I'm going to go to med school.

I'm going to be a nurse practitioner, wait a few years, get some experience, make some money, and then go to med school. And what you don't want to do is go, I'm just going to go $300,000 into debt at whatever school I get into. And I'll figure it out to do is go, I'm just going to go $300,000 into debt at whatever school I get into, and I'll figure it out later. Right. Because we have seen some doctors in some serious debt. And it's like, even though they have the great income, they are feeling incredible weight and anxiety. So you don't want to just go that route. And it may be delayed ratification. You may have to work, like you said, four years, do something else. But that extra little time can pay off huge in the long run. I know. In med school alone, I mean, you're like, okay, so eight years

from now, I can be doing this. It's a long journey. And it's something you got to really commit to. It's hard to quit halfway through. And then you feel like I just wasted a lot of time, a lot of sunk cost fallacy in there. So man, this is a big decision, but we're pulling for you. And the fact that you even called us wanting to have this conversation gives me a lot of hope that you're going to figure out a way, Yusuf. So thank you so much for the call. Keep us posted. We'd love to help along your journey. 888-825-5225. Let's talk about your life and your money. This is The Ramsey Show. Субтитры подогнал «Симон» I'm George Camel, host of the Fine Print Podcast and the Entrez Leadership Podcast, joined today by Christina Ellis, bestselling author and Ramsey personality. If you want to check out any of the shows I mentioned, including this one, which you're listening to, you can find them all on the Ramsey Network or wherever you listen to podcasts.

Open phones, 888-825-5225. Julia joins us up next in Hartford, Connecticut. Julia, welcome to the show. Hi, thanks guys for taking my call. My question is, I work in a college and don't get paid a lot and money is very tight. And my children are 14, 15, and one of the benefits is that they get free college tuition. So I'm trying to decide, do I stay there for the next eight years or so to get that benefit or do I leave somewhere and make more money? That is quite the dilemma. So what does the school cost? Tuition alone is 40,000 a semester.

Today's rates for both of them to go four years each and commute, it will be $20,000 total. I'm divorced, so my half would be 10. What is your current pay at this college? It's $40,000. And how much do you think you could earn if you worked somewhere else? I'm going to say $50,000 to $60,000. Okay. What kind of work are you doing? I do paperwork in one of the departments. I'm not a teacher okay so what are you saying you'd go work at another university that would definitely pay more are you sure of this um maybe not necessarily university but um just another something else in my field you said

you do paperwork is that something you could do in the private sector maybe within a within a corporation that paid a little bit higher yeah okay So the 50 and 60 is also based on that estimate as well? Yes. Yes. Because I left a higher paying job for this job for the purpose of the education. But now after the divorce, money is very tight. And with my oldest being 15, the other concern is the child support will get split in half, and then a year and a half later, it'll be zero. Now, this college benefit where they get, you said it's free tuition, is that one of the benefits where they're eligible to go anywhere in the state,

or is it just at this specific college? This college, and then they can take, they can go to other colleges, and I believe it would be the same tuition amount that's credited. So tuition's $30,000, we get $20,000 credit. Okay. And then tell us more about your kids. What are they kind of thinking about for the future? Are they for sure going to college? At least in their minds? I mean, it changes daily. It could be an astronaut or a librarian or a bank robber. Great career choice. Yeah, they do want to go. My worry is you sacrifice your career, and then they go,

No, Mom, I want to go way over here across the universe. I don't want to go to that school. I'll be very unhappy. Do they have to apply and get in still? They're pretty much guaranteed in at my college if they go through the normal process. And I'm wondering, could you leave and then come back the year before they go to school or does it not work like that? What is the time you have to be there? You have to be full-time for five years. And at that point, I will have been in a full-time position there for five years. And I've been there coming up to seven. Okay. Have you talked to any leadership about the possibility of moving up within the college? Are there any growth opportunities with where you're at now?

It wouldn't be advancement. It would be horizontal. Okay. And this is actually after a pay raise that I just got. Okay. Do you love what you do? I do. But the money is so tight right now. And you're saying the child support would run out? How soon?

Yeah. My oldest is 15, almost 16, so a couple more years. And then what happens if you're still making the same salary? So my ex-husband is set to retire about the same time that the kids will be 18, and hopefully he will retire on time, and then I will collect on his pension. If not, I definitely need a second job or a different career. Have you had a conversation with your ex-husband about paying for college? Would he have money to pay for them if you ended up switching careers?

He would not. The money that we did have saved was used up by him. So there's zero in savings on my end. He drained the college savings for the kids? Yes. He used it on his self for school, which would have covered all their costs. That's brutal. Well, here's my thing. I don't want you to suffer for eight years in order to make this happen because the truth is they have options and they have time to work. They can cash flow, they can do scholarships, and Christina can talk your head off all day about all the ways they can do that. And so I don't want you to get so,

you know, tunnel vision on this is the only way and this is where they're going to go to school and have that plan fall apart. I'd rather you go work somewhere else, love it, and then we figure out a new plan for how we're going to pay for college. Right. That's exactly what I was thinking. I don't want to diminish the $40,000 a year because that is significant. However, I do feel confident you can figure out other strategies to graduate debt free. Obviously, yeah, that's where my area is. And I just love talking people through it because there are so many options, especially nowadays. And you have 14 and 15 year olds. So if you were talking, you know, your kids were in their senior year and it's next year that we're talking about, I'd be a little bit more nervous for you.

I'd be like, let's get going now. But at 14 and 15, I mean, that's when my mom talked to me about going debt free. And that gives them time to really put together a strategy to start building up their resume throughout high school, to work jobs when they're in high school, to start really thinking about how they can stand out in the scholarship application process. And I think if you're less stressed, if you're not feeling that weight of money worries, you're going to have a lot more time to pour into their lives and to help them figure out how they can go to college debt free. I think that's going to be a win kind of in both directions. They're going to learn a lot through

the process of figuring out how to pay for their own education. And you're going to feel a lot better being able to provide for yourself and your family and not feeling that weight and financial stress. Well, Julie, I want to gift you two things before we go here. One is Ken Coleman's book, From Paycheck to Purpose. That's for you to advance in your career, get paid more, do what you love. So hang on the line. Austin will send you that. And we're also going to gift you a code to watch Borrowed Future, our documentary on the student loan crisis, with the kids, and then start a game plan, start a conversation for how we're going to do this thing. So hang on the line. Austin will pick up. We'll get you both of those. David joins us up next in Pinehurst, North Carolina. David, welcome to the show.

Hey, Jordan and Christina. How are you guys? Doing great. How are you? Good. Good. Living the dream. Your phone sounds like you're a robot. Can you fix that for us? How are you? Good. Good. Living the dream. Your phone sounds like you're a robot. Can you fix that for us? How is that? That's a little better. What's going on?

So, a question for you guys. I got a little bit of context first. My wife and I recently became debt-free. We're actually coming on the show, not tomorrow, but the following Tuesday to do our debt-free stream. Oh, awesome. Congratulations. So, we'll hopefully get to meet you guys next week.

But currently, we're sort of working on bumping up our life insurance. We both have insurance through our employers, term insurance. We both work outside the home. We have pretty fairly equal incomes. We have one child. We don't own a home. We're debt-free now. Like I said, we both have term policies.

You're breaking up on us here, David. So what's your income and what's her income? We're both making about $100 now. Each? Yes. Awesome. Okay. And how much is offered through work?

So we both have about a half a million dollar policy now. Okay. So that's a great start, but we always say you don't want to rely on that because if you switch jobs, that's over and you get a restart and now you're paying a whole lot more to sign up for term life later in life. So you want 10 to 12 times your income, which for you guys, you're looking at a million dollar, $1.2 million policy each. And I would just tack that onto the 500 you already have. It's not going to cost that much. How old are you two? We're both in our mid-30s. Mid-30s and both healthy? Yes, very healthy.

Go jump onto our website, RamseySolutions.com and click on Trusted Pros. Get connected with Xander and you can actually play around with those term life quotes online. And they're surprisingly affordable for young people who are super healthy. I'd go ahead and lock that in now before you come here for your debt-free scram. That's a huge step you guys are taking. So, George, we did go through Xander, and I guess the question is for us is that my salary projected to be probably 5 to 10 fold over what it was in the next 10 years or 15 years. So, what would you look out? Would you increase the power amount since we're locking in rates now? And would you decrease the length of the term based on, you know,

our screen financially stable now? I would still do a longer term since you guys are younger, and you can always add more later. What we did was I got my new one in place that was cheaper, and I got rid of the old one. Sometimes it makes sense to just add another one on top of that, and you can kind of ladder it. So you can go either way. You can do the math and see what's more affordable. But as long as you've got that in place, you're going to be debt free soon, man.

That's awesome. Way to go. How many times have you found yourself saying, one day, when you're thinking about a goal that you have, one day I'll be able to buy a house. One day, I'll be happy with my career. Or one day, I won't have to battle with anxiety anymore. Well, stop waiting around. Whatever your one day is, you got to start now. That's why we created Smart Conference. It's the one-day event, get that, where we tackle all areas of your life. We could all use that kind of boost right now.

You're going to hear from the nation's top thought leaders on money, career, mental health, relationships, marriage, and leadership. This is like the Ramsey buffet. This event is hitting the road. We're going to Dallas, Texas on Saturday, October 22nd, and event passes are selling fast. VIP and Platinum, already gone, sold out. But we still have general access passes for just $39 for a whole day event. Best-selling authors and world-class speakers include Rachel Cruz, Dr. John Deloney, Ken Coleman, Christina Ellis, Dave Ramsey,

and I'll be there too in full force, guys. This is a fun event. And not to mention, we've got some special guests, Craig and Amy Groeschel from Life.Church talking about leadership and marriage. It's gonna be awesome. Lots of surprises, very entertaining, live music just for 39 bucks. You can't beat that, Christina, come on. That's going to be awesome. Lots of surprises, very entertaining, live music, just for 39 bucks. You can't beat that, Christina. Come on. That's incredible.

Go get your passes. It's worth traveling. A lot of people fly all over the country to see us at these big arena events. So it's worth it, worth the drive, worth the flight. RamseySolutions.com slash events is the place to get your passes. This event is going to sell out. Can't wait to see you guys there. So, Christina, before we went into the break, we were talking to our friend who's coming to do his debt-free screen soon, and he was asking about life insurance. And I wanted to clarify because we ran out of time, and his phone sounded like he was from outer space.

But we say you want 10 to 12 times your income in a life insurance plan, term life only, no whole life, run as far away as you can from anything that says permanent or whole life in there. And the reason we say to get a 15 to 20 year term life policy is because if you're following our plan, if you go all in on this stuff, meaning you have a 15 year fixed rate mortgage, you're going to be self-insured by the time the policy runs out. So you're going, well, what about what happens in 15 years? Don't I need life insurance? You shouldn't because for 15 years, you've been investing 15% of your income. You now have a paid for house.

You've tons of money in the bank, tons of money in retirement, no payments, which means if something happened to you, which by the way is the only reason you need term life, don't get this on your one-year-old. They don't need it. You do it to replace income. So unless your one-year-old is crushing the game, they don't need life insurance. Then you'll be self-insured after the term is over. So if you're interested in learning more,

every single person needs this if someone relies on their income. So parents, this is you. Spouses, this is you. Jump on ramsaysolutions.com and connect with our friends at Zander. And it is super, super affordable to get term life, especially the younger you are, the healthier you are. This is super easy to do and it is worth your time to do it. Well, I think it's one of those things that so often it's kind of easy to not prioritize that. It's like you feel like it's going to be this thing that's going to take a long time and you just kind of put it off. But this is something that's so important. If something happens and you have children, do it today. This will probably take about 30 minutes of your time to get on and sign up.

And a lot of them have no medical exam, and you can complete them online. Right. I chose to have someone, you know, someone comes by the house, they take some blood, and make sure that you're in good health. But if you've had recent blood work done, a lot of times they can use that as well. So there are a lot of options out there. So get connected to them. They will find you quotes from the top rated companies around the country. They're not beholden to one company, which is what we always tell you to do. Shop

independently to get the best rate. Get that in place today. All right. Open phones, 888-825-5225. Baltimore, Maryland is where we're heading next. Evan joins us there. Evan, welcome to the show. Hey, how are you guys doing? We're doing great. How can we help? So I'm 21 years old. Me and my wife just had our first child. Congrats.

Thank you, thank you. And I work for the railroad. I'm a fourth-generation railroader. Wow. That's rock and roll, man. Yeah. I'm on track to make a hundred thousand this year you know and uh my wife wants to know we should be pocketing any money aside the 401k setup even though he had the railroad pension um so uh in in reality i've seen two sets of grandparents

retire on the railroad right now off this railroad pension and they're not hurt for money and they never invested because we don't get any any match whatsoever because of the retirement i don't collect social security on this retirement either um so basically it's just investing money for ourselves in the future whatever we want but my question is should i be what is the details of the pension? Is this mandatory? Are you contributing anything? Yes, I contribute about 30% of my paycheck. Wow, that's a big chunk. No wonder you can retire. Well, I'm going to be paying it for the next 40 or 38 years. I've already invested four. So, I mean, should I invest in a 401k? I mean, in all reality,

wouldn't that just be like money set aside for like as play money, so to speak? I mean, it never hurts to do more, but we only want you to do more than 15% after you are in baby step seven, which means you have a paid for house. Do you guys have a paid for house? No, I still owe $140,000. Okay, so here's how we look at pensions. Because they're finicky, you don't have control over it, but if you are making mandatory contributions from your own paycheck, meaning the company isn't paying in, you are, we count that at about half. So you told me they're making you contribute 30%? Yeah, so I have my tier, so it's a%? Yeah, because I have my tier.

So it's a two-tier system. I have my tier, and then she has hers. So I pay in full, and I basically pay half of what I put in for mine for hers. So basically, she gets a pension. It's like one and a half. Oh, interesting. Well, if you're telling me 30%, we would count that at half at 15%, which means you're right on track.

So you would not need to contribute any more. So I would then focus all extra money on paying off that house early and saving for college, which you got a newborn, so you got plenty of time to cash flow the college experience. Yeah, he's 10 months tomorrow. Oh, man, what a bright future. And can I just say, what a rock star, 21 years old, $100,000. Do you have a college degree?

No, no. Never went to college one day. Boom. That's incredible. I think you are a shining example of the trades and that there are alternate options to making incredible income very early on. Absolutely.

Do you enjoy what you do, Evan? I do. I love it. That's awesome. Man, we're so pumped for you. So yeah, I would stay the course. You're already doing that 30%. That's plenty. Man, we're so pumped for you. So yeah, I would stay the course. You're already doing that 30%. That's plenty right now. Once you guys hit baby step seven, you pay off the house,

then you can start, if you want to fund a Roth IRA, if you've got other options like a 401k, then I would look into alternative investments like that. And that will allow you to retire early to have, I'd rather have way too much in retirement than not enough. Right. And at 21 years old, if you walk out this plan, if you pay off the house and then start investing extra and above, I have no doubt y'all are going to be baby step millionaires by what, 30? Oh, absolutely. That's incredible. Incredible. All right. Leslie joins us up next in Los Angeles. Leslie, welcome to the show. Hi guys. Thank you for taking my call. I appreciate it.

Absolutely. What's going on? So, well, first and foremost, I'm newly pregnant. I'm due in December. Congrats. I recently, thank you. I recently just came across, well, not came across, my father, my grandfather left me an inheritance of $55,000 plus some cash. So I'm in the process of personally paying off all my debt. I just have my student loan that'll be paid off by the end of the month. Awesome. My question is this, because I'm trying to follow the steps. My husband has no debt except for his auto loan. And then he has, we have a mobile home together that we still owe money. So I'm kind of battling in between, should I pay off his auto loan or should I go ahead and invest some of that money?

You guys are married, right? So what do I invest in? So why would you not pay off his auto loan? I have to be quite honest, I have no idea. I don't know. We played around with the idea because we're trying to save all the money we can. So I'm literally just sitting on this. I put it in a high yield savings and I'm just sitting on it.

And he's just like, we need to save the money, save the money because of the baby. What's the total amount of all the debt you have outside of the mobile home? $10,000. Oh, write a check and pay everything off today, including the auto loan. What's left on the mobile home? $140,000. Okay. Whatever's left over, you can apply to that and start knocking that off.

Are you investing 15% of your income beyond that? No, because I'm unemployed. And so I know that he has his 401k and everything set up with his job. So he's investing in that. But I was wanting to take a little bit of that cash that I got to invest, but I don't know what to invest in. Okay. I think it's super important to make sure you have an emergency fund as well, too. So once you get that debt knocked out, we want to have a three to six month emergency fund

and then focus on investing. Yeah, there's a time and place for it. But if we got to pay off all the debt, then we start investing, then we're focused on paying off the mortgage. Thanks so much for the call, Leslie. That puts this hour of The Ramsey Show in the books. My thanks to all the folks in the booth and my co-host, Christina Ellis, and to you, America. Thanks so much. We'll be back with you before you know it. Do you love a good day, Brandt? Want to see the latest Ramsey Show videos going viral? Check out your favorite moments from the Ramsey Show on YouTube. Go watch and subscribe to the Ramsey Show channel on YouTube.