The Ramsey Show - App - The “Great” News About the Fed Raising Rates (Hour 1)

Episode Date: June 16, 2022

Dave Ramsey & George Kamel discuss: The Feds raising interest rates, Borrowing against the house to make repairs, The difference between a will and a trust, Getting rid of an underwater car. 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

Live from the headquarters of Ramsey Solutions, it's the 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. We help people build wealth, do work that they love, and create actual, real, amazing relationships. The phone number here is 888-825-5225. George Campbell, Ramsey Personality, is my co-host today as we answer your questions. Well, George, everybody's talking about the Fed raising the Fed rate 75 basis points,

three-quarters of a percent of interest. And the Fed, of course, did this to stop inflation, to slow inflation. This is weird, okay? I don't know, understand, well, I do understand because it's political crap, but here's the thing, okay? If inflation is caused by by and there have been times in our history where the economy just gets booming and just the economy is just on fire it's just burning white hot and if inflation is caused by that a rise in interest rates will slow

inflation the inflation that we're currently experiencing was not caused by that it was caused by gas prices going through the roof because biden stopped domestic oil production because he's trying to be a greenie it's a problem inflation in this case is caused by biden bucks causing paying people to not work consequently they didn't work consequently the ones that were working charge more so it takes a 30 or 25 an hour person to put bread on the shelves now, and you used to pay them $10 an hour. And by the way, the price of bread reflects the cost of labor. So the disrupted labor market by government's interference caused this inflation.

Oh, and we had a supply chain disruption because of a pandemic. This caused this inflation. None of those things are affected by interest rates raising interest rates by the fed did absolutely nothing to stop this set of inflation so do it more they said well they're they're at the wrong party and they came late i mean that's the idiots in the government saying we got energy labor and supply chain are the real problems and none of those are impacted by interest rates. None of them.

None. I mean, you know, the gas prices are not the result of interest rates. They're not. The white-hot economy wasn't, there wasn't, well, it was white-hot in places. I mean, we had real estate booming. We had some other stuff, shortages and stuff. But the supply chain disruption was running lumber prices up. Lumber's back down 33% this month.

So you get ready to build a house, it's 33% cheaper on lumber than it was this time last year. Okay? So the inflation is correcting itself, and yet the Fed raises interest rates. But everybody's panicking and freaking out about this. The great news is that it doesn't do do much of anything except probably further drive us into a recession because this is slowing the economy down they're slowing the economy down which was already slowing down and heading into a recession so we're getting ready to have something fairly unusual which is inflation during a recession it's that's a fairly unusual economic thing

because usually the two are somewhat connected in this case because the the speed or the velocity the economy was not the cause of the economy was not the cause of the inflation you can actually have inflation caused by you know a horrible domestic fuel price policy or fuel supply policy right so biden is straight up causing that a sticker at the pump i did that he yeah he absolutely did Okay. He did not cause the supply chain disruption. That's not his fault. The Republicans are going to blame him for it because they want to get everybody that has a D in front of their name out in the fall. But he didn't do that.

It's not his fault. Okay. Because he can't control supply chain. The president doesn't have that. But he can influence the Fed. And the Fed apparently is dumber than a rock. Of course, we kind of knew some of these things. Because really, they used the wrong tool, they came to the wrong party, and they were late.

So what is the solution? If you're the Fed, what's your move? Just sit. The best thing you can do in a capitalistic economy is let it correct itself. It'll heal itself faster because it's people acting in their own best self-interest. And it'll heal itself faster if you let it run its course. Let these supply chain things run out. Do anything you can with policy or with regulations to smooth it

so that the stuff can get on out of the ports and get in people's stores again. That's what caused it, right? So the government screwed that up. You know, you got billions of goods sitting on the seas in the uh you know in the port at la billions of dollars sitting there for months and that's all just stupid butt government regulations that's all that is and so if you could smooth that out but you can't fix that you have to let it fix itself the labor market if you hadn't been throwing money at people, begging them to vote for you,

then you wouldn't have had the labor market disruption. It would have just, but it'll straighten itself out if you quit throwing money at it. And they have quit, I think for now, throwing money at it. So it all would be okay, but they've just exasperated every bit of this. And there's a vicious cycle there because as things get more expensive, you've got to pay people more in order to afford it. And so it keeps climbing. And see, what's happening is now with the economy slowing down, with a recession, it is receding two quarters in a row of the gross domestic product, which is the measure of all goods and services, the GDP. Two consecutive quarters of it being smaller is the definition of a recession.

So the economy is slowing down. And guess what happens? Those companies, they're not selling as much. That's the definition of an economy slowing down. and guess what happens those companies they're not selling as much that's the definition of an economy slowing down and guess what happens when they don't sell as much they start laying people off and guess what happens they don't have as much profit and so ball street looks over there and goes you're not as profitable and stocks down 20 percent since first year now we got a bear market to add to this mess and it's all because these doobers won't keep their fingers out of the pie. Just back off, bozo. Let the thing do its thing.

That's all you got to do. The economy isn't a magical thing because it's a bunch of individuals all acting in their own best self-interest, long-term and short-term, and people have generally pretty good thoughts out there. So the raise of the Fed, what's it do? It's the cost that one bank loans money to another bank. It's the interest rate. So the interest that banks charge is going to go up. Oh, wait a minute.

Credit cards isn't going to go up because it was already 18%. How much higher could that go? They're not going to raise it to 18 and three quarter. Okay. So what is going to go up? Car loans. They'll be more expensive student loan which is interest rates could go up if you if you if you're currently sitting with if you're not going to go borrow money on something other than a credit i mean if you've got a student loan it's fixed if you got a mortgage it's fixed even if you got a car

loan it's fixed but if you're going to go buy a new car it's probably going to be a higher interest rate a month from now than it would have been four months ago and if you've got an arm we would have told you not to do that anyway stupid you don't borrow money on a car you pay cash for it okay so it doesn't affect ramsey listeners because you don't have credit cards you're bet you're paying off the debt that you've got you're not going to go to a bank and borrow money. The Fed rate does not cause mortgage rates. Mortgage rates are caused by the bond market. Now, it influences it.

There's a relationship there. Typically, mortgage rates follow the Fed rate, but it mechanically is not connected. It's simply what banks loan to another bank. It's the wholesale cost of money between two banks. And so it doesn't cause mortgage rates mortgages are packaged together and sold on the bond market so whatever the bond market is doing is what drives mortgage rates but it usually follows it and guess what a bear market stocks going down generally what happens bonds they go up so that's going to actually help maybe offset it's a very complicated thing. Thank you for this crash course.

The point is, none of you need to panic. Just sit back and watch the circus. Well, what's fun about panicking is half the fun. Not my monkey, not my circus. You know? Just sit back and watch the circus. You know? I'm not in.

Let's get popcorn while we're at it. I'm not going to participate in your all's craziness. I'm going to watch you all. It's great. Don't do it. You see, your guys are going to be okay. Turn off the news because they're gonna cause you to panic they're peddling fear porn this is the ramsey show you know we did a survey recently looking for ways that we could serve you better one of the top things we

learned is that people need help when it comes to life insurance. Most people know it's a top priority and oftentimes money's not even the issue since term life is really just cheap. Some feel guilty for not taking action. Some need encouragement to follow through while others are confused about the options. This is why I hammer away every day talking about Term Life and Zander Insurance. You've got to get this taken care of, and Zander is the only company I recommend. They built their business to serve. Whether you just want information or you need that extra attention to get things done, in the end, they will help you make smart, confident decisions for your family.

Wherever you are in the process, whether getting a quote or getting your policy approved, please take the next step. Go to Zander.com or call 800-356-4282 and let them help. Well, imagine the energy of a jam-packed arena filled with people ready to experience what it means to live life to the fullest. All the Ramsey personalities are going to be there. It's called the Smart Conference. George will be speaking. I'll be speaking.

Rachel Cruz, Dr. John Deloney, Ken Coleman, Christina Ellis. We're going to be talking about, of course, money, of course, leadership, of course, marriage. And Craig Groeschel, Amy Groeschel from Life Church are going to come and teach on marriage. We're going to be talking, of course, about career and about mental wellness from Dr. John. We're going to cover everything. It's a day-long event. When you leave, you will be smarter. That's why it's called the Smart Conference. Pretty simple. Saturday, October 22nd in Dallas. It is about 35% sold out. There'll be about 8,000 folks there, so you've still got time to get your tickets. They're a whole $39.

With this lineup, we should charge $390, but we don't. So, visit RamseySolutions.com slash events and get your tickets and come visit us in Dallas. It's going to be a lot of fun. We're also doing four Building Wealth events in the

fall. They are all 85 to 90 sold out almost gone so be sure and check those out uh and make sure you plan on coming to one of those cities our question of the day comes from blinds.com find out for yourself why blinds.com is the number one online retailer of custom window coverings you get free samples free shipping and with the new promos they run every month you'll'll save even more. Use the promo code RAMSY to get the best deal. Today's question comes from James in Wyoming. He says, I'm 28 years old and I'm on baby step three. I'm looking ahead to baby step four where my fiance and I will invest 15% of our income into retirement. What are your thoughts on dividend investing? I was thinking after the house is paid off, the only thing better than no payments is having passive income from our

investments covering our living expenses. I want to achieve this before the age of 60 when we can start withdrawing from our retirement. Is this a good way to allocate our 15%? And if so, how does receiving a dividend work with a Roth IRA? Is it still taxed? Great questions from a 28-year-old. I'm impressed. Very good. Very good. Well, a dividend-paying investment would be typically what's called a blue-chip company,

a large company, like a General Motors. They're not usually very exciting in their price changes up or down, but they make a lot of money. And so when they make money, and when you own a share of stock, you're one of the owners of the company. You own a tiny little piece of the company when you own one share of General Motors stock. If they make a profit and they decide to distribute that profit to the owners, that's called a dividend. And so a dividend-paying investment would typically be large company stocks that are paying out their profits and are fairly predictable on that,

and people buy them for that and that only. If that's in a Roth IRA, the dividends stay inside the Roth IRA until you're 59 1⁄2. It's tax-free like anything else is. And what you would do is flip the dividends, and they reinvest back into more stock is what happens inside of that. You cannot pull anything out of a Roth IRA before 59 1⁄2 without getting penalized and taxed. And so we're not going to use that for something to get too early.

And I really wouldn't do it. If you want to invest, I would just do 15% of your income into the four types of mutual funds we talk about, growth, growth and income, aggressive growth, and international. If that gets too big and you're getting close to 50 years old and you don't have any money to support you between 55 and 60 or 55 and 59 1⁄2, then you might just start with something like some index funds, and that's called bridge investing at that point. Which is a taxable brokerage account where you just invest and it's all going to be taxed

when you take it out. But that could be a way. It's a taxable mutual fund. Yeah. That's what it is. So with your Roth IRA, just leave it in there. It'll be reinvested. It'll still help your money grow.

But I wouldn't worry about this as a passive income strategy. Yeah. You've been reading too many websites. Passive income is great when you're in retirement and you get the passive income from that investment from that roth ira and it's a tax-free income you don't need passive income um and so and typically these are the the calmest of the four types okay the growth growth and income it's a growth and income type stock that would be a dividend payment. The end income part. And that's those blue chip, big dinosaur companies.

And it's the least exciting, the least rate of return. It's the lowest rate of return of the four types we talk about and that I own. So I'm 61. I did none of what you're talking about. All I did was buy real estate that I pay cash for and invest in those four types of mutual funds in my 401k. And really, that's really all you need to do if you, you know, up to tens of millions. I mean, you don't need to get fancy. It won't make you a billionaire, but you won't be broke and you'll be a millionaire and a multimillionaire.

You'll end up somewhere in between. Absolutely. Ryan is in Tampa. Hey, Ryan, welcome to the Ramsey Show. Hello, gentlemen. Thank you so much for taking my call. Sure. What's up?

Well, my wife and I are in our early 50s. The past 10, 12 years have been pretty tough. We got hammered in 2008, and we're both self-employed. On top of that, we'll just take responsibility for making really bad financial decisions and kind of always being behind the eight ball. So we find ourselves now not much in retirement. We're not saving much money. We have a house that needs about $50,000 to $75,000 in repair, but it has $400,000 in equity. And so my question to you, would you borrow against it, fix the house, live in it, not having, again, still much in the bank to do much with, or would you sell and start from scratch?

What's wrong with it? Windows. It's built in the 20s, so it's just one of those homes that... What would it sell for today? As is, that's the tough question, anywhere between $8,000 and $850,000. If you repaired it, would you like it and want to stay there? Well, that's a whole other level. You know, your wives have that security organ I think you've talked about in the past.

My wife is emotionally attached to this house. It's where we raise our kids. And what's your household income, sir? About $150,000. Okay. It varies because I'm a photographer. My wife owns a small hair salon. We got hit pretty hard with the event industry and COVID and whatnot,

so we've been still recovering from that. You ought to be back. Yeah, but events and just slow, you know, just slow. There ain't nothing slow in Florida. I did two events down there for 3,000 people just the other day. Right. That's a whole other phone call as far as rebranding and remarketing and just trying to

to kind of reinvent at the same time it's all correlated yes but no i think your attitude is the biggest downer in the whole situation yeah you had the snot beat out of you and you're tired um just say the least yeah and it's it's not you're not as excited and hopeful about running a business as you used to be yeah you're you're really good yeah you're really good well i've been there i'm an entrepreneur man when you get the crap beat out of you there's there's days you just want to you know the old saying is an entrepreneur is anybody who can go from sheer terror to sheer exhilaration and back every 24 hours right yeah for sure and and the problem is is you you are already struggling and kind of limping and then kovat just kicked you in the teeth for about eight more months

and just took all the fun out of all of this yeah i don't want to make excuses because i'm not i didn't hear an excuse i'm just reading your mail man it's not an excuse it's just a reality it is so you guys have any debt ryan that's the thing dude we got about 50 grand in personal debt between cars and credit cards okay let's pretend something okay let's pretend i could flip a switch which i can't right i can't but let's just play pretend for a second and suddenly you were excited and your wife is excited about your business because you were wanting to go make a whole bunch of money with these businesses and we take this 150 and we jack it up and we get busy and we work like crazy people like we're excited 18 year olds or something like we don't know any better okay and

we go make a bunch of money and we get get new clients because they see our enthusiasm and the light in our eyes and the spark in our step and all that and you get this thing moving you can make 175 now if you're making 175 000 a year how long does it take to come up with a hundred thousand dollars two years two years i'll help you two years one year you're debt free the next year you rehab the house you don't have a house problem you don't even have an income problem you've't have a house problem. You don't even have an income problem. You've just got a, your gas tank is empty problem. It's a spiritual thing, dude. And I don't, I'm not blaming you and I'm not saying shaming you. Cause I've been right where you are.

I kind of felt the same way part of the time during COVID. It was all, I got, it got old, man. It got real old. These jerk wads telling everybody what to do. I got sick of them. That alien Fauci. Oh my God, send him back to whatever planet he was from. Unbelievable.

But I want you, I want you to get after it. George Campbell Ramsey personality is my co-host. Thank you for joining us, America. You can stop by our Ramsey Solutions headquarters. We do this show live on the glass from 1 to 4 Central Time every day. And it's free to attend and visit our visitor center and get free chocolate chip cookies. And you can watch the zoo animals inside the glass perform. It feels like that. The whole thing.

Yeah, there you go. And also in the lobby, there's usually 50 to a couple hundred people somewhere out there uh especially this time of year hanging out and so come hang out with some of your other friends and get some free coffee some free cookies and uh some uh entertainment that's worth exactly what you pay for it so there you go on the in the lobby on the debt free stage alan and jamie are with us hey guys how are you good great welcome where you guys live mitchell mitchell south dakota south dakota okay what part of south dakota it's on the east side about an hour west of sioux falls got it okay cool cool nothing flat out there just complete

mountainous right you sure you will go there it's flat as a board. Lots of corn and soybeans. I love it. What do you guys do for a living? We own our own sanitation company, and she works at Muth Electric. Okay. Yep, I do accounting for an electrical contracting company there. Cool. How much debt you pay off? We paid off $133,960.70.

Way to go. And how long did this take? 12 months. Look at you. Ding, ding. And how long did this take? 12 months. Look at you. Ding, ding. And your range of income during that time? About $70,000 to about $85,000. Okay.

My brain hurts. Yeah. So, okay. So what kind of debt was the $134,000? We had about $35,000 in student loans. We had some business debt. That was about sixty two thousand for our garbage trucks over another repair loan for one of the garbage trucks for about twenty

one thousand and then a fifteen thousand dollars to my parents okay but you did not make a hundred and thirty five thousand during the 12 months so where did the money come from we sold my rental houses over in a neighboring town oh okay yep and so that was a big part of it. There was some savings as well that helped contribute towards that. Okay, so you sold a rental house or two? One. Okay, what did it sell for? $55,000.

Oh, okay. All right, so that was about half of this. Not quite. Not quite, no. 40% of this. It definitely helped, yeah. That helped a bunch. And then you had some money in savings.

How much? I honestly can't remember. I think 30-ish, something like that. So that now puts you well up over half. Yeah. And then you attack the rest of it. Now the numbers start to work. That's good.

Yeah. You guys still busted it. This is impressive. Yeah, you still went after it. And it was dramatic change. I mean, you start just going, wah, wah, wah, wah. You're getting after it. So what happened?

Tell us the story. How did you get connected to Ramsey? So I started listening to the show February of 2021. At work, we can listen to music or podcasts or whatever. So I actually got a recommendation from a coworker of mine to listen to the Ramsey show. So I started listening to it, and I just became hooked to it. And I started talking to Alan about it.

I kept talking to him. And I think I pretty much annoyed him into doing it. But yeah, I just kept talking about it. We got to do this. We got to do this. We got to pay off your loans. The interest was delayed on it and everything. Let's just do it. Let's just get it done. This is the time to pay off these student loans. And then for a while, we were kind of actually like ish, to be honest. We were doing most of it right, you know, and then we had the, one of our garbage trucks needed a new motor in it. And that was over $20,000. And I got mad. Like I was just done. I'm done with this. I went and got the second job. I, Alan got other jobs and we were just working, working, working. Cause I was just so mad that we had to take out one more loan.

I almost felt kind of slimy actually just because we finally had to do that. We had to do that and I didn't like it. And yeah, we just got mad and we just worked and worked and worked and worked. And yeah. That's when the rental house went up for sale. Yeah, we were actually just in the process of getting it. It needed a little bit of work done

before we could sell it. But we went, put that up for sale. We were just selling things left and right. I was going through some of our stuff and just selling on Facebook Marketplace. Whatever we could do to get any extra dollars, we put every single penny that we had towards the debt. Along those 60 to 70 hour work weeks.

Yeah, we were both working at least that for a week. Working like wild people. Yep. And now you're debt free. Working like wild people. Yep. And now you're debt-free, everything but the house. Yep. How's that feel? Fantastic. I remember the day when we paid off the garbage truck,

because that was the last biggest loan. We both, I swear, I think I grew a couple inches. I felt like I lost 20 pounds. It was on cloud nine for the longest time. And it was just the best feeling in the world. And I looked at him like, we are never doing this ever again. And we got our emergency fund for three to six months. Sorry.

Three to six months emergency fund done and everything. So now we're on baby step four and six. And after this trip, when we get home, we're going to start paying off the house early. So it feels good. It feels wow you guys are impressive that was an impressive year i mean i'm exhausted just hearing about it you guys busted you got sick and tired and decided we're not going to ever be in the situation again no never again and now you're running the business debt free yes love to hear that yeah and when we paid off the garbage trucks that's when fuel prices really started to go up.

And I remember when that happened, Alan was kind of like, what do we do? Do we raise our prices? Do we do this? And I'm like, wait, what? Hold on. Like, we don't have this truck payment anymore. Let's just take a deep breath. Let's see what happens.

And we haven't rose prices yet. I hope we don't have to, obviously. But if we do, we do. But yeah, it's just like, well, we don't have to do this right now. Let's just take a deep breath because we don't have this debt anymore. You've got the margin. Yes. Yeah.

You make decisions differently now. Yes. With calmness. Yes. That makes them better. Or at least an extra deep breath. Yeah. You guys are very, very, very well done.

I'm so proud of you. Dr. John Deloney talks about that your body physically carries the stress, and that equals stress. And so there is truly a physical release when you get out. You do feel a little taller, feel a little lighter, because your muscles are more relaxed. You will make better decisions. You sleep a lot better.

You do sleep a lot better. And you didn't even't realize it no yeah you know didn't even realize it how long y'all been married it'll be three years in september okay and so two years of normal and then a year of busting it yep and and now you're free will you ever go back no no never again no way to go you guys y'all are in a great business, by the way. The data on the business that you're in indicates you're going to be very wealthy. It's a very hard business, hard work. It's very hard. Very hard work.

And it's not glamorous. No, but it's very profitable, and there's always a need. It's not like this is something people can do without. They've got to have your help. And so there's really good numbers on that. So I'm proud of you. You've got a bright, bright future. We've got a copy of Baby Steps Millionaires for you,

how ordinary people became extraordinarily wealthy, and how you can too. You guys are on your way. You're going to be millionaires before you know it. And also we've got a copy of total money makeover for you and i'm going to give you a one-year subscription to financial peace university get you signed up for the membership on that and that's a part of ramsey plus of course and uh if you've done all of that already and you want to just give it away to somebody who needs a blessing you can do that too we've done that with a friend of ours already so that's our gift to you and then you do with it you re-gift it at at your will we're happy to happy to have you do either one a lot of people buy financial peace university

and give it as gifts already so not unusual at all very well done you two alan and jamie mitchell south dakota 134 000 paid off in 12 months, making $70,000 to $85,000. It all happened when they got mad. Count it down. Let's hear a debt-free scream. Three, two, one. We're debt-free! Yeah!

Woo! Wow. Here's what happens. When you want something so bad that nothing else matters, you let go of the rental house. You let go of the savings. You let go of your pride. You let go of your need to impress others. You let go of stuff so you can get the thing that matters the most.

And that's what happens. That's exactly what happens when people get mad. They get sick and tired of being sick and tired, and they finally say, I've the most. And that's what happens. That's exactly what happens when people get mad. They get sick and tired of being sick and tired, and they finally say, I've had it. And that'll happen. I mean, with all this economic crisis, I think people are starting to get mad and going, I'm not in a good financial position. If the pandemic didn't wake up, maybe the Biden-demic will wake you up. This is The Ramsey Show. Thank you. George Campbell Ramsey personality is my co-host. Elliot is in Miami.

Hi, Elliot. How are you? Hey, I'm doing well. How are you all? Better than we deserve. What's up? I got a question regarding estate planning and basically which way you guys suggest to go, whether it be a will or a trust. I have a friend

who I'm 30. I've got a friend who's also around that age and his estate planning attorney was pushing him towards a trust. I was under the impression you only really needed a trust if you were you know a gazillionaire type deal so i just wanted to get your thoughts your impression was correct okay okay let's talk it through for a second you do need a will even if you have a trust you need a will still okay and you can get one at mama bear legal forms.com what's your net worth uh my net worth is right around $750 to $650, depending on what day I look at it right now. Good for you. Well done.

Awesome. Okay, so the only thing a trust, an irrevocable trust does for you is the items, the assets that you retitle after forming the trust, and the trust will cost about $3,000. A will will cost $300 to $500. Okay? forming the trust and the trust will cost about three thousand dollars a will will cost 300 to 500 okay the only thing the trust does for you is it it does absolutely nothing on federal estate tax you do not have a large enough estate to be taxed on a federal level the only thing is each state has you file probate on your estate when you die, your heirs would, and they file with the probate court, and each state has a probate tax.

Typically, they're 3%, 2%, something like that. I don't know what Florida's is. Okay? There's a lot of Tennessee's is less than 2%. Okay? Okay. So that's what you would save on the amount that you put in the trust you'd save two percent okay and yeah and that's actually that's the reason that the attorney was pushing them that way he's essentially saying your kids will save

the money you can your kids will save the money in the long run exactly here's the problem okay whatever you put into that trust every time you do a transaction with it you have to involve the trustee it's an absolute pain in the butt okay could you expand on that a little bit yeah every time you do a transaction on the item that is in the trust it's an absolute pain in the butt you have to go get a trustee to sign everything. If you put your house in this trust, you can't sell your house without involving the trustee. Okay. They have to come to the closing.

They have to do all the stuff. They have to sign the contracts. They have to do everything because you no longer own the house. The trust now owns the house. And so operationally for a young guy like you, because you're going to the house the trust now owns the house and so operationally for a young guy like you because you're going to do a lot of deals with these assets throughout your life operationally having them all in an irrevocable trust is an absolute pain in the butt and i got to tell you my net worth is well in excess of what is needed for estate planning on the federal level

hundreds of millions of dollars and i do not have a trust of the type that we are talking about because i operationally even at 62 years old don't want to screw with if i get ready to sell a piece of property i don't want to screw with having to do with all this stuff so now i do have some trust in my estate plan of a different type and a different ilk but um that's more of a liability yeah but asset protection you know the truth is i if i were you i wouldn't do it and and i haven't done it and mine is and i've got a lot larger net worth than you so we we don't recommend spending the extra three thousand dollars and putting yourself in a position of all this hassle

to save 20 grand well and when you think about it what does the estate planning attorney have to gain well he's going to make 10x selling you a trust versus getting you a will and that's like a whole life insurance salesman well except that this actually does work sure you know it's not a crappy product if it's a two if it's two percent on a million dollars it saves you 20 saves your estate 20 grand if you've paid three thousand dollars to do that that's a fair trade not counting all the fact that you got to go through all the freaking hassle of operating everything this way and it's just it's now as he gets older and if he has a few million dollars and a bunch of assets

that you're not going to do anything with you're going to let it sit there you're never going to touch it while you're alive or you have a piece of property that you absolutely are never going to touch while you're alive you can throw it into a trust, and it won't get probated. So that's helpful in that regard, but it's a pain in the butt. Not a fan, not a fan, not a fan. Kevin is with us in Philadelphia. Hi, Kevin, what's up? Hi, thank you so much for taking my call.

How are you? Better than we deserve, sir. How can we help? So I am in the process of engaging or proposing to my girlfriend next weekend. Fun. So I've been, yeah, I'm excited. So I've been trying to save or I've been saving for a wedding and stuff for, you know, our house. That we're possibly getting married next year.

So right now I own a, or not own, finance a Toyota Camry 21. I owe $32,000. Not too long ago, a couple weeks ago, I had to replace the transmission, and because of that, there is a negative equity of $8,000. I'm thinking whether or not you can... Whoa, whoa, whoa. Sorry. Go ahead.

Wait a minute. Replacing the transmission does not cause negative equity. Really? Yeah. Your car did not go down in value because you put a new transmission in it. Oh, okay. It would go down in value if it was sitting on the side of the road with no transmission but you paid to replace it right yeah the car is operating just fine

yes transmission was installed by reputable firm yes who told you the car went down in value because of this this is this is kind of my my assumption oh okay all right you're great news you're wrong okay good i'm happy um so the problem is i i make only 40 000 a year and you need to sell the car yeah yeah you need to sell the car but we need to find out what the cars really work jump on kellybluebook.com at kbb.com and put in their private sale. So if you sold it individual to another individual, what you could get for it, not trade-in value, because you're not going to trade it, you're going to sell it.

And how much do you owe on it again? $32,000. Okay, and what did you say the model was? It's a Toyota Camry 21. A 21. Okay. I'm going to guess and say you probably can get out of it. It'll probably sell for enough to pay it off.

Used car market's white hot still. Still a shortage on cars. Yeah. And I might be wrong, but just look it up, see what you can sell it for, see what it'll bring. Do you have any money, Kevin, in the bank? Yes, I have about, I think, $10, thousand dollars saved he's got to buy an engagement ring and he's got to get out of this car yeah so we want you to get you like a five thousand dollar car and get rid of this thing

so that you get your life back because you have no payments at this point and man you're going to be able to pile up money so fast because that car payment stinks, man. That's like a $650 car payment, isn't it? Yep. Ouch. Almost like I've done this before. And once she says yes, you have no one to impress. So it doesn't matter if you're driving a $5,000 car. Oh, and by the way, if she is only impressed with your $32,000 car,

she's not the one. Yeah, you're right. That's fun. Congrats, man. That's exciting stuff. Yeah, you're getting ready That's fun. Congrats, man. That's exciting stuff. Yeah, you're getting ready to change your whole life. You're getting ready to be engaged and no payments. Life is good for you.

Yeah. Get on the line. Let's figure out what this car is worth, and let's get rid of it, brother. And get you a little cheap car that you'll pay cash for. And then save like crazy and move up in car later. You don't have to drive a hoopty the rest of your life, but you need to be driving one right now so you can get your life back. Because right now, car companies taking Toyota's taking all your money.

I'm just shocked that a year old Camry had the transmission go out. That's pretty wild. You know what? That's a good point. I'm like, is that under warranty? Well, there ought to be a factory warranty, not an extended warranty on that. But he said he paid for it, so too late now. But, who knows i'd

look into that though for sure yeah too late i'm fighting that probably too late what drives me crazy though is people going well dave you can't find a car for under fifteen thousand dollars right now there's no clunkers listen i go to auto trader i do sort by lowest price to highest and there's plenty of cars are they beautiful no do they work just fine barely it'll get you around you'll be okay and they they're going for three four five there's still cheap cars out there but you're not going to impress anyone driving down the road with it give it a fancy name call rusty yeah old bluebird did you have any names for any of your clunkers oh yeah they all had names were they female i feel like that's kind of the thing for guys yeah no i had had the one that was Bondo colored, and we called it Bluebird.

Oh, I like that. Because it's kind of like blue-colored Bondo. Yeah. Makes it prettier. I'm not sure what the real color was because it was mainly repairs. It was just duct tape. Yeah. It was really ugly.

When I drive a nice car now, I just remember old Bluebird, and I figure I drove like no one else, so now I can drive like no one else. There it is. This is the Ramsey Show. Do you love a good day, friends? 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.