The Ramsey Show - App - The Best Way to Set Up an Annuity (Hour 2)

Episode Date: September 4, 2018

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🎵 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 am Dave Ramsey, your host. Thank you for joining us. It's a free call here. The phone number is 888-825-5225. Katie starts off this hour from Raleigh. Hi, Katie. Welcome to the Dave Ramsey Show.

Hi, Dave. Thank you for taking my call. It's an honor to be speaking with you. You too. What's up? My husband and I are on baby step two. We have $62,000 left just in student loans. It's my student loans. We took advantage of this excellent housing market and sold our house and cleared $40,000 from the sale of our house.

And pretty much the day the money showed up into our account, we found out that we are pregnant with our first child, and we are trying to figure out if we should put any of it or all of it or part of it towards the student loans, or should we just leave it there and save it until after baby comes? Wow. So where are you living? We bought a new house, so we used a tiny bit of the equity, so the $40,000 is what we have left. Oh, so you bought a house but didn't put as much down.

Right. Didn't put it all down. Okay. So the housing situation is settled and you still have $50,000 worth of debt but $40,000 in the bank. $62,000 in debt. $62,000 in debt. Okay. Yeah, I'm just going to let it sit there until baby comes. Okay. Yeah. Yeah, I'm just going to let it sit there until baby comes. Okay. It's not upsetting at all. We always push pause on your debt snowball or your total money makeover steps, whichever one you're at, when you get pregnant. And let's pile up cash as big a pile as we can get.

Because this is a, it's one of the most wonderful times of your life. Yes. And I don't want you thinking about anything but this. And the fact that you have this big old, huge, fat, sassy emergency fund sitting there causes you just to relax and be pregnant. Yes. That's fun. Well, as fun as being pregnant can be anyway.

But you're going to get to enjoy the whole process. And, you know, baby comes and comes home healthy, and you come home healthy, and there's no hiccups of any kind, then you're game on again. And you take that money out of the account at that point, and you throw it at the student loan debt, and we finish up that lousy $22,000 that's left as fast as you possibly can. What's your household income? $110,000. Okay, so you're going to knock that other $22,000 out in about three or four months,

I guess, five months. Really, really, really fast. Really, really, really fast. Whatever it is, right? We're not going to mess around with it. It's not going to be there for a year. It's not going to be there for two years. You're going to get done with it, and then you're going to build your emergency fund again and

you'll be rolling again all right thank you so much congratulations on the baby thank you so much beth is next in pittsburgh hi beth how are you good how are you better than i deserve. What's up? I have a son that is going to college, and we have $11,000 in his 529, and we have $43,000 in mutual funds, and we need about 33 total for him to complete his college. So I'm wondering where it would be better to take that money from. Where is he going to college for four years for $34,000? I'm sorry, what? You said you needed $34,000 for him to go to school or $34,000 more than you have? No, total.

And that will finish his schooling. So you have more than you need. Correct. And where is he going to school for $34,000 for four years? He has two years left. Oh. Okay. So that's two years of tuition.

That makes more sense. Okay. Yes. And so you've got the money. Right. So we need to set $34 thousand dollars aside to do that right now are you paying that that covers uh tuition or room and board or what that covers everything and we have eleven thousand and a 529 we use it for sure um should i use that first or should I use it more towards the end and give that a chance to grow more?

Because I'm going to have to use his mutual funds eventually anyway. I would use it last. I'm with you. But make sure you use it. Right. Yeah, clean it out. I mean, you don't want to leave anything in a 529 unless he's got siblings and you want to transfer it to a sibling, do you?

Yes, he does. He has a sister that is a year behind him. Yeah, if you mess this up, you can transfer to a sibling. But it sounds like you're going to need the money anyway, and you've got the money. Well done. You saved for college and sent your kids to school. Look at you. Yeah, we did things a little backwards.

We're not out of debt, but when my father passed away, he left that money that we put away for schooling, so that was a blessing in disguise there. It wasn't disguised much. It was just a blessing. It was good. And he left it straight to them,

so it wasn't your money to deal with anyway. You're just taking care of making sure they go to school with it. Good for you guys, and good for your dad. That's a good legacy right there. That's neat. Very well done. What's he getting his degree in? Software engineering.

Oh, ding, ding. That's going to pay off. Very good. Okay, fun. Yeah, just make sure you clean the 529 out, and you're right. Let it grow as much as it'll grow. It's not going to grow a lot in two years, $11,000. It's not going to double.

I mean, it might make $1,000 or $2,000. But that's that much you don't pay taxes on. So, yeah, that's the way to maximize that instrument out for sure is let it sit there as long as you can. Good question. Thanks for calling in. Open phones at 888-825-5225. Paul's in Atlanta. Hey, Paul, how are you?

I'm good, Dave. How are you? Better than I deserve. What's up? So I found your show a couple days ago, and I've been thinking about the choices I've made lately. Uh-oh. You there?

Yeah. Yeah, I'm here. Okay. I plan on going back to school very soon, Uh-oh. You there? Yeah. Okay. Yeah, I'm here. Okay. And? I plan on going back to school very soon, but I have some debt I want to get rid of before I go back. How much debt do you have? I'd say about $33,000. On what?

On car payment. What do you owe on your car? I owe, let's see, $27,000. Mm-hmm. Okay. And you have $33,000 total, so what's the other six? Credit cards. Okay.

All right. And what do you make? I make $25,000 a year. Okay. Cool. How old are you, 26? I'm 23. Okay.

All right. Cool. Well, I have done so many stupid things, and if you've been listening to me, you've heard me say that, but it's true. And so what I try to do is not do the same stupid thing twice. And the fewer stupid things I do, the wealthier I get when it comes to money anyway, in general, for that matter. Because stupid things just cost money whether they're money stupid things or not but uh you have a car standing between you and your life goals your life goal is to get an education which is a great goal then you can get you a car later

when you're 23 years old you make $25,000 a year a $27,000 car is known as brain damage. Insanity. Crazy. So I don't even know how you got the loan. It's nuts. So if I woke up in your shoes, sir, I would name that car stupid and I would sell it. And I'd get on with the business of getting my education and do it really, really fast. As soon as I can. Even if you're not going back to school, that car has got to go. This is the Dave Ramsey Show. One question I get asked all the time is, do I need life insurance? Listen, the whole point of life insurance is to replace your income for someone who counts on you. So if you have a spouse or you have kids, yes, you need term life insurance.

It's the only way to protect them until you're out of debt and have built up your wealth. You're only digging a deeper hole if you waste money on cash value plans since it robs you of the ability to make real progress. And that's why I send you to Zander Insurance, and I have for 20 years. That's where I get all my insurance, and they only offer the plans I recommend. It is not expensive. It's not complicated. And Zander will be there as your guide every step of the way.

Visit Zander.com or call 800-356-4282. You need to get this taken care of. I can give you the advice, and I can tell you where to go, but it's really up to you to take that important step to get your family protected. That's zander.com or 800-356-4282. Thank you for being with us, America. We're glad you're here. If you're really good at marketing and you love what we do here, you're on board with this're really good at marketing and you love what we do here, you're on board

with this mission, giving people hope. Come check out the stuff that we're doing on hiring, our career opportunities. Some of the key roles that we're hiring for right now, we'll hire about 200 people this year, by the way. A director of marketing for our business to business channel. It's kind of like a major executive role. A paid media guru. We're looking for that. A savvy marketer to join the Ramsey Media Team. Digital marketers, all in all. We've got all kinds of marketing positions open.

All kinds of positions open, for that matter, including all kinds of developer positions. So check us out. Just go to DaveRamsey.com. Figure out why we have won the best place to work in Nashville 10 times. There's a reason. Now, click the Dave's Hiring tab on the right-hand side of the homepage at DaveRamsey.com. I was just outside meeting a whole bunch of our new guys that joined today.

I think we had 10 or 11 join today. So pretty fun stuff. Good times around here, people. We're glad you're here. Open phones at 888-825-5225. Ron is with us in Sonoma, California. Hey, Ron, how are you? I'm better than I deserve today, Dave.

How are you? Just the same. How can I help? Well, Dave, I'm on baby step two, and I've never met a debt that I didn't like. And my wife and I are in $140,000 worth of consumer debt. That being aside, we are working the steps and have a plan to pay off our debt in two years. We make a very good income here in California. We're making $246,000 a year. That's good.

We have a really big shovel to get out of our hole. But I've obviously done a lot of stupid things with my money. And one of the things was investments. And it's one of my biggest concerns because working as a correctional sergeant, I have a 457B plan. And currently, there's $58,000 in that account, but I used three different loans on that money. $18,000 of it was for our down payment on our house. I had another personal loan of $4,500 and another one of $3,500. And I'm reaching, I've gotten to the point to pay off the $3,500 and the $4,500 loans. That's going to leave about $26,000 of it available that's no longer tied up in loans. Now, when I was putting this money into the account, I had talked to my financial advisor with the 457, and she had mentioned that if my intentions were to use it for a down payment,

I should probably just keep it in a general money market type account to really make sure that the money was safe. Now that I'm paying down this debt, I'm not investing more into the 457 right now, but I do want to know if it would be a smart decision now that 50% of it's paid off and I'll be paying off that other 18 here within the next 18 months, that being one of my highest debts on my debt snowball. If I should then, as soon as I pay off these two lower loans, go and change my investments into the four mutual funds that you recommend. They are available on that. Yeah, you got bad advice. You should have never taken it out of that, but it's not that big a deal. You can put it back now, and you'll pick up the pace again from this point forward because the portion that is loaned is earning nothing

except what you pay yourself interest. The rest of it is what will be invested properly in the four mutual funds. And so, yeah, I would be in growth, growth in income, aggressive growth in international spread across those. As you said, the good news is you've got a really big shovel. The bad news is you're in a pretty good hole. So you've got some digging to do, and you're in the path to do that. And so all you're doing now with this call is just fine-tuning your process.

And, you know, that's what I would recommend. Yeah, definitely would go ahead and move into the mutual funds immediately with the portion that's invested. Matt's with us in Mason City, Iowa. Hi, Matt. How are you? I'm doing well. How are you?

Better than I deserve, sir. How can I help? All right. So I currently run a small business on the side of a part-time job that I work for, a consistent income. And it consists of mainly odd jobs, small construction, lawn work, snow removal, things like that. And I am currently doing it out of a 17-year-old compact sedan. So loading up lawnmowers and snowblowers and things like that into the trunk of a car is relatively inefficient.

And I have been kind of searching for a pickup truck to buy something along the lines of a Toyota Tacoma or Chevy Colorado. One of the smaller ones in the $5,000 to $10,000 range and was wondering what your thoughts on putting a loan on that would be if I was certain that it could improve the work efficiency enough to make the payment and the insurance on it. Yeah, debt only works for people that are certain. And I'm old, and I know you're not certain. You just think you're certain. Okay. I'm certain that something's going to happen

and you're going to break your leg and not be able to work. I'm certain something's going to happen and something else is going to come up and you're not going to be able to do this stuff you're certain of. And so that's when you get your butt in trouble with debt. So, no, you call the Dave Ramsey Show, dude. We do not tell people to borrow money because we want people to win with money.

And the last thing you're going to win with is a car payment. So what have you made with your side business? What kind of income have you got coming in? Last year alone, I hadn't run any sort of advertising. It was just kind of word of mouth through friends and family. And doing that two days a week, I pulled in about an extra $7,000. Okay, so what do you think you're going to pull in in the coming 12 if you don't buy the truck? If I don't buy the truck, I'd like to see about $10,000 come in.

Okay, so let me just tell you, as a business person, you never invest the entire income of an entire year from a business in one piece of equipment there's no roi on the planet that makes sense i'm going to make 10 000 and i'm going to spend 100 of that on a truck that would not be wise and you know it's like if you're running a business and making a million dollars we're going to buy one piece of equipment for a million dollars that's going to cause you to go broke. And so your investment is too heavy based on your return from a business perspective. Certainly from a finance perspective, borrowing money is a bad idea.

So what I would do is say, what's old Bessie that you're driving, the old beat-up car, what's it worth? $500? $1,000? $600. Okay. And how much money can you scrape together in cash? Well, we've got currently we have about $4,000

in savings and I have a $3,000 investment account that I have full access to. Here's what I would do. If you're making $10,000 on your business before your expenses, then you don't want to spend $10,000. Let's say you had $100,000 in the bank.

You still wouldn't spend $10,000 on a business that only makes $10,000. That's called going backward. So what I would do is i would upgrade and let's get rid of six hundred dollar bessie and let's buy a two thousand dollar truck and pay cash for it you have the money okay and then go get your kick kick this business in the tail and make us both wrong and make meaning that you don't make ten thousand you make 15 or 20 on the side i i've got a friend of mine that made300 last year just doing odd jobs and renovations. He's making more than home builders are making, doing odd jobs and renovations.

He's got a big business he's grown out of, just like you started. Because people need what you're doing. And if you show up on time and you're honest with your pricing and you're clean, like you wear clean clothes and shave and everything, you know, then you're going to get a business coming out your ears. If you'll just show up on time, do the work correctly, you know, don't charge way too much, but charge a good amount. People love guys like you doing what you're doing.

I think it's a great business idea. But pay cash for a $2,000, $3,000 truck, and don't pay any more than that with the business the size it is right now. And let's go make some money instead of spending money. This is the Dave Ramsey Show. We'll see you next time. In the lobby of Ramsey Solutions, Zach and Allison are with us. Hey, guys, how are you? We're great. How are you? Better than I deserve. Welcome. Where do you live?

Grand Rapids, Michigan. Very cool. And all the way to Nashville to do a debt-free screen. And a little vacation too, I think. There you go. Make sure that happens. So how much debt have you guys paid off? $152,000 in three and a half years. Good. Excellent. And your range of income during that time? It ranged from $75,000 to $95,000. Cool. What do you guys do for a living? I'm a registered nurse. What do you guys do for a living? I'm a registered nurse. And I work in customer support for a data center maintenance company.

Great. Very cool. What kind of debt was the $152,000? 95% of it was student loans. Ah. Whose? Can't it just be both? It's ours.

It's ours. We're married. But Zach brought it into the marriage. Okay. I did. I did. So what's your degree in? Criminal Justice Studies. Okay.

Very good. Good. And so $152,000, three and a half years, you knock it out. It's almost all student loans. What happened three and a half years ago? Did y'all just get married? How long have you been married? Almost six years.

Okay. So a little ways into the marriage, you go, Oh, this thing's got to go. What happened? Tell me the story. Well, it actually started with my mother and father-in-law. After we got married, they gave us a book with a bald guy on the front of it. It said, Total Money Makeover. We just kind of put it and said, Thanks, and we put it on the bookshelf.

Ah, okay. And every few months, my mother-in-law would ask, have you read the book? What did you think of it? Zach brought you a lot of debt. Have you read the book? And then we lived out of state at that time, and we had the opportunity to move back to Michigan. And my mother and father-in-law said, you guys have a lot of debt. Why don't you move in with us, pay off some debt, and then you'll be on your way.

And they asked, did you read the book yet? And I said, no, we probably should if we're going to live with you. And we read it, and there's been no looking back since. Oh, yeah. Okay. So, Zach, what did you see in there that made you decide to do this, that it would work, other than your mom driving you crazy? Maybe my wife saying it's a great idea is a good start.

Yeah. You know, kind of going with her on the rule book there. Okay. That's a good answer. That's a good start. Setting ourselves up for success. Also, us having our daughter, Josephine, that was a big, that was a wake-up call.

Yeah. Realizing we have to change this. Gives you a reason. Absolutely. It's game on now. This is like real-time adult stuff now. Babies are here. Yeah.

Yeah. I hear you. It does. It does. I remember when we had our first one, it was like, oh, this just got real. Yeah. Yeah, there was some very serious conversations. You were a part of it, I mean, almost every single night.

Oh, my gosh. So thank you very much. Well, thank you. We're proud for you guys. Very, very well done. What do you tell people the key to getting out of debt is? I would say the budget, hands down. It gave us a game plan.

We knew what to do. It kind of gave us a sense of freedom that we knew what we could spend. We knew we could live comfortably. And towards the end of this journey, we paid off our debt. We felt great. But he was in a really toxic work environment. It just wasn't a good fit. So knowing that we could live off of one income, he went ahead and he quit his job and found a better job. Yeah. It's great.

I mean, another big thing was perspective. It changes your interview process when you're not broke. It's really tough. Because you kind of go in all tensed up, like, oh God, I need this job! You know, or you kind of go in and go, yeah, I want to see if you guys are worthy of me. That is absolutely true.

Very cool. Good. So how long did you live with in-laws? A little over a year. Okay. So out of the three and a half. That got it started, though. Yep.

Got it jump started. Yes. And then you get your own place and just tear into it and knock it out. And very, very cool. So the budget did it, and having a big why did it. That's good. Very good. Having the baby that comes along that gets things real good.

Very, very fun. So you had mom and dad as a cheerleader, obviously. And who else was cheering you on? I would say my parents were. Oh, okay. Absolutely. Yeah. I have a friend at home.

We were kind of doing the budget and doing this Dave Ramsey thing together. And so we were great supports for each other. That's a big deal. Yeah. Yeah. Well, very cool. Congratulations, you guys. Very proud of you.

Thank you. How does it feel to not have 152,000? It's amazing. I can't even explain it. I don't have that sick, sinking feeling in my stomach every time Sally Mae adjusts the interest rate and adjusts the payment. I don't have that feeling anymore. What about you, Zach? It's just nice to be us, and it's just us in this relationship.

It's the freedom. Got the other woman out of your life. That's what it is. Sally Mae was not kind. She's a horrible mistress. She's an ugly old woman. That's great. That's good.

Very fun. Congratulations. Well, we got a copy of Chris Hogan's book for you, Retire Inspired. It's a number one bestseller, and we want that to be the next chapter in your story that you become millionaires now and outrageously generous along the way you're definitely on your way congratulations thank you very well done all right it's zach and alice in grand rapids michigan 152 000 paid off in three and a half years making 75 to 95 count it down let's hear a debt-free scream three two one hear a debt-free scream. Three, two, one.

We're debt-free! Love it! Boom! Just like that. Very, very well done. Awesome. Nicole is in Mesa, Arizona. Hi, Nicole.

Welcome to the Dave Ramsey Show. Hello, and happy birthday. Thank you. That was yesterday, but thank you very much. How can I help? Mine was Friday, so we celebrated together. Good. Good September babies.

Yeah. Yes. I need my Uncle Dave. I'm a longtime listener, and unfortunately, my son's dad died two years ago, and he is now seven years old, and there was a lawsuit. The guardian at Latam had contacted me, and they want to put his settlement into an annuity. I know how you feel about annuities. I'm not sure I have any choices at this point. And I've contacted them to ask if there's another investment fund we could use.

And my question is, if there's not, what are your suggestions for distribution options? They're giving me, like, at 18 he gets this much, he could get a distribution every year until he's 25, or he could get another lump sum later, and you can stretch it out for as long as need be. Because they're wanting to handle this through an insurance product which is an annuity and because the rate of return on it is going to be horrible right uh assuming that that you're going to teach your son how to behave with money as he grows up which i think you're going to do um and you're not you know you're not going to raise some kid that's got all kinds of problems, then mathematically, the best

thing to do is get all the money as fast as you can get it. Okay. And so distribution is as early and as big and as often as they will do. Because all we're doing is moving it out of that annuity, and then we're going to put it in something good. Right. It's not like your kid needs the money. then we're going to put it in something good. Right. It's not like your kid needs the money. He's not going to need the money.

That's not the issue. But I just want to get it out of that and move it into something for his good that's going to perform a whole lot better than a simple annuity with an insurance company. There are two kinds of annuities. There's a fixed annuity, which is a horrible rate of return. I hope that's not what they're talking about, but they probably are. And so it's going to pay a little bit more than a CD, like 1%, 2%, okay? Or there's a variable annuity.

Maybe you can get them to do a variable annuity, where the money is invested in good mutual funds inside of the annuity. And then still take that life. Do you know what they do? The quote is from that life. I was met life. The insurer. That's who the guardian at Latam is choosing to get a quote for the annuity.

Then I would fight that. You have a right to push back on that and get someone different to manage it. Because you can get a much better annuity product out there than a MetLife product. And get it into a variable annuity that, you know, if I get in touch with one of our smart investor pros and make them the investment company, they can do it just as easily. But still, in any case, take the money as fast as they will distribute it, not because he needs it,'re glad you're here. Thanks for joining us, America.

This is the Dave Ramsey Show. We're glad you're here. Open phones at 888-825-5225. Ann's with us in Minneapolis. Hi, Ann. Welcome to the Dave Ramsey Show. Hi. Thanks for taking my call.

Sure. What's up? Well, I have come to a new chapter in our book with our family. My 16-year-old got her first job all by herself. Yay! Yeah. So I don't want the money burning a hole in her pocket. She is one that if she gets any money, she's like, oh, what can I buy?

She does have a savings account. It is under our name, so we have to get it out for her. So she doesn't have a debit card, which I don't think would be smart on our part, but she wants to know what she should give. She always wants to give at church, and I do want her to start doing that, but I'm trying to figure out the happy medium. And I thought, well, I i told her i'll call you okay that's fun well one of the things we tried to do when ours were teens was to uh lengthen the rope

now the rope was tied around their waist metaphorically when they're little kids you hold the rope real close because when they're three they'll kill themselves if you don't protect them right uh and so that's true as teenagers too but you need to give them more and more rope more and more freedom to make decisions even make a few mistakes while under your wing so that because what you're doing is training them for adulthood because when they leave you want them to stay gone until they have grandbabies and then they can come back. But you don't want them living in your basement, okay? So the point being, we want to teach her. The role with this is not about the money.

This money is a teachable moment. This job is a teachable moment. She's not going to learn anything or do anything at this job that's going to change her life. But she is going to learn about work. And that will change her life. And with money, there's not enough money that we're dealing with here that's that'll change her life and uh with money there's not enough money that we're dealing with here that's going to change her life but her handling it is going

to change her life so it sounds like this uh if i'm her dad okay uh and so god help you if you're rachel cruz or denise whittemore or daniel ramsey okay because this is how you grew up my job as your dad is to give you the equipment and the knowledge and the skills to win as an adult. And so I am going to do my job. You are going to get that equipment, whether you like it or whether you don't. You're going to get that knowledge, whether you like it or whether you don't. The good news is you're going to like it most of the time. So adults that handle money well do three things with money.

They give some, they save things with money they give some they save some and they spend some and so you're going to do a budget and whatever money you bring home we're probably going to do it on a percentage basis because you probably don't have a steady job as a 15 year old you're going to take a percentage that you and i decide and agree on and you're going to give that you're going to take a percentage and you're going to give that. You're going to take a percentage, and you're going to save that. You're going to take a percentage, and you're going to spend that. Now, what percentage of your check do you want to spend? What percentage do you want to give?

And what percentage do you want to save? And if they give you something reasonable, go with it. You know, I want to give 10% at my church. Okay, good. We'll go with that. And I want to save 20%. Good. And I want to spend the rest. That sounds good to me. Let's do that. Okay. The point is you're trying to teach them to have all three of those muscles, those money muscles, to have some tension to them. The giving muscle, the spending muscle, and the saving muscle. You

want them to be able to work, give, save, and spend. Work, give, save, and spend. If you can do those four things with money, make money, and then give, save, and spend. Work, give, save, and spend. If you can do those four things with money, make money, and then give, save, and spend it properly, you can win at 54, at 24, and at 14. So that's where we want to take her to. And then I'm going to enforce that she does that. Now, after we get that in a little bit of a rhythm, the next thing is I am going to open a checking account and let her have a debit card for her spending and teach her how the checking account works because i want her to have that rhythm the funny thing is the oldest child denise didn't ever bounce to check rachel cruz

bounced checks like the third week she had the stupid thing no yes and now she's the money guru go figure that's how god works right but right? But anyway, so I come home. And can you imagine me and Dave Ramsey's kid and bouncing checks? Oh, my God. So, yeah, she had stuff bouncing all over the place. So I said, well, you know, you're not in Congress. You can't keep spending money when there's no money in there. We covered this.

You didn't keep up with it. You didn't keep your checkbook balanced. You didn't keep it reconciled. You didn't know how much was in there. So I taught them the skill of how a checkbook operates. Okay. So then when they went to college, all three of them stayed on budget. All three of them did not bounce checks in college.

All three of them. And it wasn't a miracle. It was a trained skill. And we weren't a bunch of nerds. We didn't sit around and have money meetings or anything like that. We just said, I'm going to teach you to brush your teeth. I'm going to teach you to drive a car. I'm going to teach you to mow grass.

I'm going to teach you how to balance your checkbook. And I'm going to teach you how to give, save, spend. Work. That's all it was. It was just the rhythm of our life. It wasn't some kind of nerdy thing or anything like that. And the good news is it's all adult activities, and so she will like that. Teenagers all want to do adult activities.

Yeah. They just don't want to always do them right. So that's where we have to come alongside them. But I think if you'll keep those couple things in mind, work, give, save, spend, and then let's move towards a checkbook with a debit card after a few months, and then you watch over that. Okay. I looked over.

I know where every dollar went even in college where all their money went to i had full full visibility to their grades full visibility to their which they have to sign a thing in college now for you to do that full visibility to their checkbooks why it was my freaking money that's why well yeah and i'm not going to let them misuse it and misuse their life they're're there for a certain task, and that task could get your butt to class. And so, you know, we're going to follow all of that along, and that's how we did it. Now, we're old-fashioned parents. We don't believe, you know, we believe the inmates don't run the asylum.

And so that's old school. And some of you, you think your children need more freedom or whatever. That's fine. That's fine. None of mine are in counseling, to my knowledge, because of my treatment of them. They were all taught how to have control, self-control, and they learned that first from dad control. That's where that came from, and mom control, for that matter. Sharon can be a really tight hillbilly woman when she wants to be.

So anyway, that's how I would do it. I would get after it that way. Hold on. I'm going to give you a copy of the book Rachel and I wrote together. Actually tells the story in the book of her bouncing checks. It's a cute story. And it's called Smart Money, Smart Kids. It's for parents on how to teach your kids how to handle money.

It's the number one bestselling book. I'll give you a copy of it. Alex is with us in Evansville, Indiana. Hi, Alex. How are you? I'm great. How about yourself? Better than I deserve. What's up? Well, I wanted to ask you what you would do in a position like myself.

Just to give you a little bit of backstory, I'm 18. I'm currently going to school at Purdue, and I have a I keep saying I Purdue, and I have a job at a local foundry working part-time now, but during the summer I work 60 hours a week to make as much money as possible. Good for you. Yeah.

Currently I'm working about 24 to 27 hours a week, making $500 a week. That's before taxes. Way to go, dude. How are you paying for school? No, I got really lucky. I got a full-ride scholarship. I was just really lucky. Well, that's not luck.

It's not luck. How did you get a scholarship? Academics or athletics or what? Academics, but it wasn't through the school. It was actually through my community. They're really big on higher education, and I was blessed, I guess you would say. Well, and you worked your butt off to get the grades, too. You can be smart and lazy.

You weren't lazy. Yeah. Good for you. So what are you studying? Electrical engineering. Good. Very cool. Oh, man, you've got a great life ahead of you. You what are you studying? Electrical engineering. Good. Very cool. Oh, man, you've got a great life ahead of you.

You know how to work. You're studying good stuff. You've got a leg up. Well done. Well, what I would do with all this money you're making is I would just pile it up. I want it to be your insurance policy to ensure that Alex graduates a Boilermaker with an electrical engineering degree and no debt. In case something falls through on some of those scholarships or something, I want you to have enough money piled up to make sure you get out of school.

The best investment Alex can make is literally and mathematically in Alex because with what you're studying, getting that degree and getting it without any debt sets you up to make so much money. You're going to do so well. Man, I love it. Well done. Now, you get out of school and you got all those scholarships and that money's still sitting there. Well, it helps you start your life.

You're ready to go then. Then you can start investing, start talking about buying a house, start talking about doing some other things. But I'd just be patient right now. Pile that money up and make sure you get through school with no debt. That's your number one job. Job one, man. This is The Dave Ramsey Show. Hey guys, this is Blake Thompson, Chief Production Officer for The Dave Ramsey Show. Here's a tip. To keep from missing Dave's classic facial expressions to some of those calls. Make sure you watch him live.

Just visit Dave Ramsey dot com slash show each day from 2 to 5 p.m. Eastern.