The Ramsey Show - App - The Difference Between a Will and a Trust (Hour 2)

Episode Date: February 4, 2019

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🎵 Live from the headquarters of Ramsey Solutions, it's the Dave Ramsey Show. Where debt is dumped, 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. You jump in. We'll talk about your life, your money. It's a free call at 888-825-5225. That's 888-825-5225. Karin is with us in La Crosse, Wisconsin.

Hi, Karin. How are you? I'm doing well. Good afternoon, Mr. Ramsey. Good afternoon to you. How are you? I'm doing well. Good afternoon, Mr. Anzi. Good afternoon to you. How can I help? Well, I'm feeling a little overwhelmed, but it's coming from a happy place, I guess. We are in baby step number two. And before my son was born, I did technical writing for businesses like Pelicorp and Maytag.

And then I was a mom, stay-at-home mom, which I've loved. And so in order to sort of help us get to the end of our debt and finish that step. Once my son was a little older and in school, I decided to start baking at a farmer's market because I like to bake. And I went there and looked around and said, what don't I see here that I would like? And I started making it. And two years later, it's really taken off to the point where I'm just feeling really overwhelmed. And so I called the bake-away plan. I had one oven, and I pulled a lot of all-nighters and earned the money and bought a double-wall oven. Now I have three ovens and two mixers, but I still only have two hands. And I want to, you know, continue to sort of throw extra money at my husband's student loans. I think it's our student loans because it helps us eat the degree that he received.

And he would like me to sort of hang on to that and, you know, put it back into the business. But, you know, I'm really torn because I really don't have a dream to open a bakery. You know, I'm not looking to be the next Mrs. Fields. But I do want to get a little bigger. I was just this year asked to, you know to bake for a coffee shop, and our local co-op has been after me to do stuff, but I just can't physically bake that much in the situation I'm in. Anyway, I've never run a business, and I'm just not sure what directions to go in. So I guess that's my question is, you know, how much...

Should I be paying off the debt? Should I be reinvesting? What have your profits been so far? Well, in just two years, I've made about $10,000 in just two years. And we're talking, you know, cookies and cakes. And so it's not, this isn't a big money-making scheme. I understand. Okay.

All right. And what you can do is this. You set your goals on what you want the business to be because it's starting to – the fun that you were having is starting to leave because you've sold more than your production capabilities are, and it's starting to stress you. And so you either need to dial back and say, I'm just going to do less, or you need to dial up enough to get that stress off of you, and that would involve hiring someone and so forth.

I don't know if you're making enough to hire someone or not. It might be that you're looking at trying to get a short-term rental on a place that has a big oven, so you can just do a bunch at one time and increase your productivity that way. But at some point, maybe another set of hands, and maybe that's part-time, and you just do that. So to answer your question of what to put towards the debt and what to put towards the business, what we have done, and we started our business out of a card table in our living room to where it is today, and we had some things we had to do along the way at home, whether it was get out of debt or buy a mama a car or whatever, that kind of stuff.

And some things that were real legitimate needs, like your baby step two is. And we always just said a percentage of the net profit, and you decide what that percentage is with your husband stays in the business to grow the business, and the other percentage comes home, and you can say 20%. You can say 50%. I don't care. But once you do that, it takes this angst away of, oh, I feel like I should be putting it in the business. Wait.

Oh, I feel like I should be putting it all on the net. Oh, wait a minute. I should all be putting it all on the debt. Oh, wait a minute. I should all be putting it all on the business. No. I just say, you just say 20%. I left my 20% in the business. I'm going to make do with that, or my 26%, or whatever the number is, right? And then I'm going to put the rest at home.

And, of course, you're holding your taxes out on your profits, which would be a fourth of your profits you set aside for taxes at this level for your quarterly estimates. And then with that 20%, you've got a little extra, or that 40% or that 60%, whatever you're leaving in there, then you've got that to look at and go, hmm, what can I do with that to make me more productive or to put another set of hands on this temporarily so that I can go back to having a little more fun doing this, because this used to be more fun than it is right now, and give you a chance to kind of work on your business, not just in your business.

Because right now, you don't technically own a business. You own your own job. You own a cool part-time job right now. But when you have other people doing the work or some of the work, then you own a cool part-time job right now but when you have other people doing the work or some of the work then you own a business okay and that's your next step so i'm going to send you a copy of christy wright's book called business boutique equipping women to make money doing what they love and you ought to check out business boutique there's a lot of very smart ladies like you doing very smart things all around the country in business.

It's the primary new area of small business startups, side hustles that are turning into serious money in some cases. In some cases, they just want to get big enough that it takes the stress away. And delegation does that. I mean, you get somebody in there helping, doing the stuff you don't want to do or doing more of the stuff you do want to do, whatever it is, then it changes your whole perspective on that. I mean, you get somebody in there helping, doing the stuff you don't want to do, or doing more of the stuff you do want to do, whatever it is, then it changes your whole perspective on that. So hold on. Kelly will pick up, and we'll get you a copy of Business Boutique sent out to you. And check out Christy's website, businessboutique.com. It is absolutely incredible. Open phones at 888-825-5225. There is one big, huge Ramsey community on Facebook. It's called the Ramsey Baby Steps community.

Beth is there, the Ramsey Baby Steps community, and says, What is the difference between a will and a trust? And how do I know what's right for me? Well, a will is your last will and testament. It is what you will to occur, what my will is, when I die. What is your will? What do you want to happen? That is your will.

And you write that out. Sometimes that involves the formation of a trust. But you do not use a trust instead of a will. Everyone needs a will. Not everyone needs a trust. And so you start with a will in your estate planning, and then you decide if you have a large or more complicated estate, whether or not you're going to need a trust in there as well. And a good attorney, a good estate planning attorney,

can help you with that. This is the Dave Ramsey Show. show. Let me tell you a story about two families that are very much alike in a lot of ways. Both families have two working parents and a couple of young kids. Each has dead and has struggled to make ends meet, but they're starting to make headway with their budgets and smarter decisions with money. They have dreams and plans, and the only real difference is that one family has the right amount of term life insurance and the other doesn't. Big difference.

If one of the parents die, and that does happen, their well-being would be destroyed. Paying for the mortgage, utilities, food, and that does happen, their well-being would be destroyed. Paying for the mortgage, utilities, food, and other bills would be impossible, let alone saving for education or retirement. That's why every day I talk relentlessly about getting term life insurance. Just go to ZanderInsurance.com or call 800-356-4282 and see how inexpensive it really is. Be the family that takes those deliberate steps to be different and responsible. It really does make you the hero of your story, and it puts you on course for better things

ahead. Jillian is with us in Rochester, New York. Hi, Jillian. Welcome to the Dave Ramsey Show. Hi, Dave. Thank you. It's an honor to speak to you. You too. What's up?

I'm calling. I have an honor to speak to you. You too. What's up? I'm calling. I have a question regarding a student loan. We've paid off so far $21,000 from not school loans, cash flow, $10,000 car. We've got a remaining $45,000, which is all the federal school loan. Our 10-year loan forgiveness program that we are involved in, I'm sorry, I'm jumping around a little nervous, the 10-year mark will be January of 2021, so approximately 24 months from now. What I was intending to do was, because there is that small possibility that it'll come through. I know it's probably not likely, but what I was going to do was to save up over the next two years

and then pay it off in a lump sum. I wanted to get your thoughts on that. So right now we're paying the minimum payment. Yeah, if you do, because that way you'll get the most in the forgiveness if it actually came through. But as you apparently are aware, almost no one is getting their loans forgiven. One article said 96 people out of 20-something thousand so far have had theirs forgiven, and one said it was 100,000 people have now applied, and 221 have had theirs forgiven. So the student loan forgiveness program apparently is a lie.

It's apparently a debacle. And so I don't want you to bank your future on that. But given that it's, you know, so if you were calling me up and you had seven years left, I would say, no, just pay it off. Two years, if you want to have $45,000 extra in your emergency fund for two years and then write a check if this thing doesn't go through, but if it does go through, you're $45,000 richer, yeah, I might gamble on that for two years.

Okay. But either way, you've got to put $45,000 somewhere extra. Right. Right? Yeah. Which is what you were saying you were going to do, right? Yes, yeah. We're definitely stocking away as much as possible right now.

Just take your normal emergency fund plus $45,000, and we'll call that the end of your baby step three, and you move on. And then when the two years runs, if it goes beautifully, you've got an extra $45,000 to do some stuff with. If you don't, then you write a check, and one more time, the government misled us. Now I have a question. I've heard refinancing with local banks. And I've heard you talk about settling for less if it's not a federal loan.

Is that something that can even be done through a local bank like have the local bank pay the federal government and then um start paying the local bank and then maybe settle out no you won't get any you won't get any forgiveness that way no okay and the only way that would work is if you got a local bank loan and then didn't pay it properly so they thought oh this this is a deadbeat i better take a deal the only reason banks settle is if they don't think they're going to get their money and so you wouldn't want to go purposefully destroy you know your your reputation as someone who pays their bills just to get a deal um that's that's not a that's not a strategy we would employ anyway so um no i wouldn't do that i think your first plan is the best plan, and that's just have $45,000 extra,

and then, you know, you're only slightly pissed off if they don't do it. You just write a check and pay it off, and you're done. And if they do do it, you have a woo-hoo moment, touchdown, and you got an extra $45,000 to move forward on some of your other plans in your Baby Steps. So, good question. Amber is in Orlando. Hi, Amber. Welcome to the Dave Ramsey Show.

Hi. Hi, what's up? I just had a quick question. We are on Baby Step 2, me and my husband. We make about $60,000 a year. And we have just under $40,000 in debt. Thirty of that $40,000 in debt is our cars. Ooh, a lot of car debt.

Yes, it's half our income. I owe $13,000 on my car. It's the one that we're under on. It's only worth about eight and i was wondering what i would you say i should sell it i probably sell the other one the his car yeah the 17 will it bring 17 um it it brings about 15 okay so they're both upside down but his is upside down a. A little bit more. So I can turn $17,000 into $2,000 worth of debt.

Yes. I'd rather be $2,000 than $17,000. Versus if I sell yours, you're so far upside down that it's not even relevant. If your numbers are correct, anyway. Okay. Selling yours doesn't accomplish much much because basically the amount that's upside down is going to be a new debt. You're going to have an unsecured loan at your local bank, local credit union for two

grand or you said the 13 is eight upside down. Did I hear that right? It's worth eight. Oh, it's worth eight. So it's five upside down. Yes. Okay. But still, that's almost half of its value.

Yes. And so you don't really move the net. You turn 13 into 5 or 17 into 2. You make more traction turning 17 into 2. You follow me? Yes. A net of 15 or a net of 8 difference. So it's twice as much traction, more than twice as much traction on your get-out-of-debt plan selling his car.

That's the one I'm selling. That's the one I'm selling. That's the one I'm selling. And then I'm getting my beater. And besides that, there's a federal law. You know what the federal law is? Wife gets the good car. Well, that's the other thing. I don't even like my car.

Yeah, but you're stuck in it for right now until you get it paid down a ways. You get paid off if you want to sell it and move out of it. That's fine. But, you know, out of your $40,000 in debt, almost half of it he's driving, and it's his truck, isn't it? Yes. It's his baby. I'm selling his baby.

That's okay. You'll get another one. I sold my baby one time. That's how I know know i sold a jaguar man and i was driving a hundred dollar hoopty that was the color of bondo after that so that's what i did and i know if i can do that you can do this so yeah that that's what you that's what you're gonna do joe's with us in abilene texas hey jo Joe. Welcome to the Dave Ramsey Show. Hey, Dave. Thanks for taking my call.

Sure. What's up? Well, I got a question for you. This year I was able to be awarded the Long-Term Incentive Plan Money Awards this year for the first time. Cool. I've attained about $45,000 after taxes. So my question is going to be, should I have about $60,000 in debt besides the $150,000 I owe in our house? Make about $260,000 a year

with my wife and I. And so my question is, should I wait the year to not have to pay the short-term capital gains taxes on that awards or should I go ahead and do it and take it out and pay off that $60,000 and get it out of the way? We have about

$20,000 in savings, $200,000 in retirement, and just wanted to kind of get your opinion on if I should go ahead and buy it to pay the short-term capital gains. So this is like a stock or something, right? Yeah, it's based on the performance of our company, so basically it's going to go up. That money is going to go up and down. Are you sure it qualifies for long-term capital gains? Well, it doesn't qualify now. I just got it awarded January 1st.

I know, but if it's just a comp plan in cash, it doesn't qualify. It's going to be ordinary income after a year. Okay. If it is some kind of a stock or an ownership-type position or an option or something like that, then it might qualify. Have you talked to your tax people to be sure that it qualifies? I have not. I just got an award this year, so I don't want to worry about it until after this year.

Yeah, but it changes the decision, so we need to know now. So I'm going to take the details to your tax person. If you don't have one, click ELP for tax prep at DaveRamsey.com. You can find our ELP for that. They'll help you with that and determine if it really qualifies. I can't tell what it is they're giving you based on this conversation. I can't tell if it's just pure comp or if it's some kind of ownership-type position. It's a publicly traded company, so it's going to be stocks based on that.

Oh, if it's stock, then it does qualify. Yeah. Okay. Then, yeah, I would use your fabulous income to clean up your mess and let this sit for a year before I cashed it. Okay. Your fabulous income and that $20,000 that's sitting there, let's use that. And, yeah, because we're talking about a swing here of 20% on $45,000. This is an $8,000 decision.

Yeah, I'm waiting a year for sure, but I'm not waiting a year to get out of debt. Use your income to get out of debt. You make 260 grand. This is the Dave Ramsey Show. There's nothing smart about smartphones if your wireless plan is blowing your budget each month. Pure Talk USA offers smarter wireless with unlimited plans starting as low as $20 per month. You never pay data overage fees and we never turn off your data. No contracts, no hidden fees.

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That's puretalkusa.com. Thank you for joining us, America. We're glad you're here. So there was a study published that only 8% of people make it longer than six weeks into their new year's resolutions well that's pitiful so if that's you and you're one of the 92 that didn't make it six weeks get back on the horse i know you fell off or you slid off or you fell asleep and dropped off the horse, whatever it was, but get back on the horse. Time to make some real goals and stick to them. Get your every dollar budget going. Recharge your batteries and go again. Hustle and grind, baby.

Game on. Our five-minute coverage checkup will give you a personalized to-do list on your coverages and make sure you're in right shape on all that. And you can breathe easier. So go to your phone and text CHECKUP to 33789. CHECKUP to 33789. Or go to DaveRamsey.com slash CHECKUP. Vaughn is in Oahu.

Hey, Vaughn, welcome to the Dave Ramsey Show. Hi, thanks for having my call. Sure, how can I help? I just met the fiduciaries of my aunt and uncle yesterday, and I thought they were investing for them, and I found out annually for the last 12 years, both my aunt and uncle are spending $49,000 in a whole life insurance plan. Who's the, what kind of fiduciary?

Are they not, are they not capable of making their own decisions? No, they're just financial planners. They found over a decade ago and they've stuck with them. Oh, okay. By fiduciary, you mean just a financial planner. Okay. Yeah, that's what I meant. Well, this fiduciary's been screwing them for a while.

So how come you met with your uncles and aunts guy? Oh, because the financial planners, they're in California, and they come to Hawaii once a year. And I just happened to be at the house when they came over to show them their returns and financial planning because they're planning to buy a building for a business. Okay. So they're really not dealing with a financial planner. They're really dealing with an insurance agent that's posing as a financial planner. Yeah, they do invest, but they only invest $400 into a simple IRA for their business.

Wow. And their, what do you call it, expense ratio is 1.8%. Mm-hmm. Yeah. It is really high, I think. 1.8%. Mm-hmm. Yeah. It is really high. Yeah, I think that's a little ridiculous. And so when you broach the idea with your aunt and uncle that they should get a different person helping them with their money because they're in absolutely horrific investments, what do they say? Well, our grandma just passed away without any insurance,

or their parents just passed away without any insurance, so they're afraid of canceling the whole life plan and switching to the term, and the closer they are to retirement age, they think the term will be the same as the whole life plan. So, yeah. And how many years have they been putting $49,000 a year into a hole in the ground? Yeah. So, here's the thing. Over $500,000. Yeah.

Yeah. If it was just sitting there in a fruit jar, they'd have enough to bury them if they had made no return. Yeah. And they're not even going to get back what they put in. Yeah. So I don't know. I mean, here's the thing. Their cash value probably is $300,000.

So I don't understand what they're worried about, about being buried. Will $300,000 not bury them? I mean, are these people King Tut? Yeah, their life insurance plan is $1.5 million. No, they don't need life insurance. Two old people sitting together in their recliners that have a half a million dollars in mutual funds don't need life insurance. Because they've got enough to live on and they got enough to bury them why do you need insurance yeah if you've got money you don't need insurance kids are grown

and gone we're retired we're sitting here on a pile of money and you use ten thousand dollars of your million to bury one of you if you die you don't need insurance. That's a far stretch from your grandpa dying with no money. Yeah. You don't need insurance. So I don't know if we can talk them off the tree or not here. They're pretty far up it. But the answer to the equation is I would find out what their actual assets are and have those sit with a real investment professional

who actually could show them how to invest all of that, and they have enough to bury them, and they have enough to live on. If one of them dies, the other one's going to be fine, and have someone sit down and show them that, because I suspect they've got enough assets here in spite of the fact that they've been so poorly invested. Hopefully they haven't lost the entire half million dollars that they put into this whole life crap. So don't even switch to term? You don't need term if you got enough money no okay let me stop a second all right let's just walk this through with me on okay you're 60 how old are they uh they're 54 they plan to retire uh when they're 70 okay let's just say you're you're 54 years old, and you have a million dollars in mutual funds.

Your kids are grown and gone, and your house is paid for. Their house is not paid for yet. Okay. Well, we've got to find out a few of these things. But if they have enough money and they don't have any debt, their need for insurance is gone. There may be, for the next five or six years, a need for insurance. I'm 58 in good shape, not great shape, but good enough that I can get term insurance, and it's not that stinking expensive.

If I need some, I paid a premium this morning, as a matter of fact, if I want some term insurance, I can get some. And it's nowhere near that kind of money. I mean, geez, man. I mean, for what they're spending, they could buy like $60 million worth of term insurance at 54 years old. I mean, this is just ludicrous, assuming they're reasonably healthy. But the point of term insurance is to replace income that you are creating for your family. But if you don't need to replace income you're creating for your family because you have

enough money, then your need for insurance has gone away. Is that logical? Yeah, that's logical. And so what we've got to do is sit down and look at how much money they, if they took all the money away from these goobers that they're with, I'm trying to be nice. Oh, this is just so devastating. Because they've lost.

Take out the cash value, you mean? Yes. Yes, for God's sakes, get it out of there. Because you know what happens to cash value when you die? No. They keep it. Oh, it okay all you get is the face value of a whole life policy so whatever the cash value is is gone and they paid through the nose for this over uh this is a five to a ten million dollar mistake they've made over the

last decade that's how bad this is. This is why I can't breathe right now. Okay? And it's not even my aunt and uncle. So, anyway. And I can't allow them to go another decade and make another five to a $10 million mistake, all in the name of I need to be buried. Yeah.

That's my point. Because Grandpa was poor when he died. Well, they're not poor. They got enough money to plant them. died. Well, they're not poor. They got enough money to plant them, okay? So that's not the issue here. The issue is how to maximize these dollars for a much better rate of return than one of the worst financial products on the planet is cash-valued life insurance. It's absolutely horrendous. Horrible rates of return.

Highest fees ever. And when you die, they keep your money. Horrible rates of return. Highest fees ever. And when you die, they keep your money. Oh, it's horrible. It's the payday lender of the middle class. And so, yeah, they need to run away from this person as fast as they can with all their money. I don't know if we'll be able to talk them into it because they're pretty entrenched in this stupidity. But, oh, man, it's a $10 million error. And over the next decade, it's a $10 million error, and over the next decade it's another $10 million.

That's how far this thing's... This is not even close to fiduciary. Fiduciary means you're supposed to be acting in someone else's best interest, not screwing them. This is the Dave Ramsey Show. Thank you. rick is in louisville Kentucky. Hi, Rick. Welcome to the Dave Ramsey Show. Hey, Dave. How are you?

Better than I deserve. What's up in your world? Well, had a couple questions. Got an IRS hang-up currently going on right now, just to give you the basics real quick. Me and my fiancee make a gross combined income a year around $105,000, $110,000. I took my taxes a couple years, tax year 17, return 18, to a woman that I probably shouldn't have, and she done my taxes pretty badly and uh as a result um i now i i just did the amendment and now i owe the irs um we're thinking at least somewhere around 4400 we're currently on baby step two um we've got the credit cards paid off all i have left is about 18 000 on a car and 18

000 on a bike um the only kind of stipulation of this irs thing is we we don't really know like we sent the amendment but we don't really know when they're gonna like send me back the quote-unquote love letter to explain, like, you know, how to pay it, when to pay it, you know, how much interest and penalties, if there is going to be any, that kind of stuff. And I kind of was wondering, do we put off paying the bike and the car? So did you have a tax professional help you with the amendment? Yes.

A competent one? Yes. Obviously. amendment yes a competent one yes obviously one that one that deals in truck drivers you know taxes and the whole per diem thing and all that yep okay all right and you understand that with your girlfriend there is no we under the law there's a you and a her okay so you you can't file marry filing jointly when you're not married. So you have a tax problem. Now, which of these debts are yours, the car and the bike? Technically, yes. Well, not technically. They're yours.

I mean, it's just straight up. If she goes away, if she goes away, that bike and that car loan is sitting there looking at you. And what do you make? I make, I gross about $78 to $88 a year. Gross revenue on your trucking or gross profit that you pay taxes on? Well, I'm a company driver. Oh, okay. So how did you get behind on your taxes?

Well, okay. so tax year 2017, I had my ex living with me and her two kids, and so I cleaned three all year. Oh, okay. Had nothing to do with being a truck driver. Okay. All right, so you're an employee, and you make 87? 80. Okay. And the proper amount of taxes are?

Proper amount of taxes. And you owe $18,000 on a bike and $18,000 on a car. $36,000. Yes, sir. Well, I can tell you when your IRS bill is due now. As soon as you mail it in, you're supposed to have a check with it. And the tax preparer could properly calculate that. There may be some adjustments on interest or penalties later,

but you need $4,400 yesterday. So you have three debts, $4,400 plus penalties to the IRS, $18,000 and $18,000. Am I missing something? Nope. Do you have any money? Yeah, we've got about...

We don't have any money, dude. no way i have about i'm sorry uh i have about 3 000 savings okay and i'm currently taking out about 12 every week good okay well the first thing i do is get ready for the irs you need a war chest so you need five grand in savings uh let's call it six6,000 in savings. What we call your baby step one is $1,000 as a starter emergency fund, and you're going to need $4,400 plus penalties, so I'm going to call that $5,000 plus one is $6,000. So your first goal, number one, is roll up your sleeves, beans and rice, rice and beans, no life, get on a tight budget, and quickly turn that $3,000 into $6,000 to get ready.

And as soon as that IRS love letter comes, you write them a check that day and you send it back, and you don't think anything else about it, and you put it behind you. Okay? That's thing one. Okay. Thing two is you've got too much money tied up in things that go down in value with motors and wheels.

Mm-hmm. Yeah. Even though it's right at or less than half of my yearly income. It's all debt, though. Yeah. Yeah. So if you can be 100% debt-free in two years starting from today and you want to keep both of them, that's fine.

I'm thinking November of this year. Maybe December. Okay. All right. to keep both of them that's fine i'm thinking november of this year maybe december okay all right so you really are on beans and rice then yeah okay all right and then keep them then keep them both but you're pretty heavily invested in things that sit in your garage while you drive a truck right yep okay yep i know that um you know uh she's willing to help me with this, too. So as far as paying the debt, me and her have kind of gone on the same page with that. Even though it's technically my debt. I would strongly recommend that she not do that unless you have put a ring on her finger. I have.

Okay. So when are you getting married? We're thinking sometime in June. Okay. Well, then she can pay your debts. Okay. So when are you getting married? We're thinking sometime in June. Okay. Well, then she can pay your debts. Okay. Because she'll be yours and you'll be hers and all that from the law's standpoint, the spiritual standpoint and all that. Yeah.

Good. Okay. Cool. Then that's going to be the way to go about it. But don't mix your money with your roommate until you are married because you will find out what the law says about roommates is different than what the law says about wives and what the taxes say about that. And so just a bad plan all the way around. So good, good.

We're cleaning this up. By December, you're going to be a completely different man, debt-free and married. Wow. And no IRS chasing you. Your life's going to be Merry Christmas. Yeah, this is going to be great. Things are changing for you in a good way, brother. I'm glad to hear it. Thanks for calling in.

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Open phones this hour as we talk about your life and your money from the Facebook community, the official Facebook community. It's called The Ramsey Baby Steps Community. Sherry says, Dave, we've got a fully funded emergency fund completed. We're wondering

what options do we have to make more interest than just normal savings still be accessible? None. Your emergency fund is not to get rich with. It's to protect the things you get rich with. It's insurance. Everybody say insurance and say not an investment. It's not an investment. It is insurance.

And so my emergency fund is sending in a money market account, making 1%, which just completely sucks. It is not there to build wealth, though. The emergency fund is there so you don't cash out your 401K to fix your transmission. You don't cash out your 401K or your Roth IRA to pay your house payment when you get laid off from work. Your emergency fund is there for emergencies. It's insurance. Insurance costs you money. Investments make you money. And insurance costs you money to protect the things that make you money,

like your house or your investments and so forth. So that's what we're going to do. We're going to not worry about it. I mean, you can be wise about it. If you can make one instead of.25, that's fine. But you're never going to get rich on your cash position, your liquidity position. Your liquidity position is there to remove risk so you don't jump off the roller coaster every time some of your investments go up and down, up and down, up and down, up and

down. And they do go up and down, up and down. That's part of investing. It has some volatility to it, and it doesn't affect you in real estate or in good mutual funds if you have a cash position to allow life to happen without having to tap into that stuff. So that's what we do there. Good question. Appreciate you joining us on the Ramsey Baby Steps community.

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