The Ramsey Show - App - The Great News About the SVB Collapse (Hour 2)

Episode Date: March 13, 2023

Dave Ramsey & George Kamel answer your questions and discuss: The great news about the SVB collapse, "Move in with my parents to save money?" "Should we buy whole life insurance?" Support Our Sponsor: Neighborly Have a question for the show? Call 888-825-5225 Weekdays from 2-5pm ET Want a plan for your money? Take our FREE 3 minute assessment: https://bit.ly/3nInETX Listen to all The Ramsey Network podcasts: https://bit.ly/3GxiXm6 Learn more about your ad choices. https://www.megaphone.fm/adchoices Ramsey Solutions Privacy Policy

Live from the headquarters of Ramsey Solutions, broadcasting from the pods, moving, and storage studios, it's The Ramsey Show, where we help people build wealth, do work that they love, and create actual amazing relationships. Open phones this hour as we talk about your life and your money open phones at 888-825-5225 george camel is ramsey personality co-host of the day with me and uh george i was not going to talk about this news story but apparently people are doing stupid butt things because of this news story so now we have to talk about it yes so we're not a news network but we wanted to maybe quelch some of the fears that are out there that have been sparked due to the svb fallout so

for those that don't know dave can you do like an explain like i'm five as to what happened with the silicon valley bank collapse yes okay the silicon valley bank was? Yes. Okay, the Silicon Valley bank collapsed last week, last Thursday, I guess it was. And the reason was pretty simple. Number one, you need to understand this about their bank. The vast majority of the customers in that bank were hedge funds, venture capitalists, and tech startups. They were not mom and pop.

Granny's CD was not over at this bank. That's not who they catered to. Okay? So to put that in perspective, FDIC insurance of $250,000 covers your up to $250,000 in government covers your deposits in the event of a bank failure. The typical bank, it covers 75 75 to 80% of the deposits. In other words, some people have, rich people have $500,000 or $800,000 or a million dollars or something in

your local bank, but most people are $250,000 and under. This bank was the inverse of that. North of 90% of the deposits are not covered. That means these were all multimillion-dollar customers sitting in that bank. So these were playas, and they done got caught. Okay, this is what happened. So this does not affect your local bank at all. It has almost nothing to do with your local bank. It's a bunch of Silicon Valley tech startups and venture capitalists from all over the place. I mean, I know I've got two friends in Nashville that are venture capitalists.

They had money in that bank, lost money. Okay. And, uh, but they play us. All right. They're not, they're not, this is not my, not granny's CD for God's sakes. All right. So your bank is safe. Calm your butt down.

This has nothing to do with that. And what happened was, typically what banks do, this bank included, in order to have a stable balance sheet, a balance sheet that is very safe to back up the deposits, is they will buy bonds. Now, if you didn't know, bonds have and in bond interest rates have an inverse relationship with bond prices. What that means is as interest rates rise, bond values go down. So they had a whole bunch of bonds that they bought when interest rates were 1.7%, 1.8%. Interest rates are currently about 4% on the bond market,

which means their bond portfolio had gone down in value dramatically, and they had billions in bonds. So on paper, they had lost money. On paper, they lost a ton of money. Well, then they got scared, and a couple people got spooked, and they start unloading a bunch of those bonds, and then the rumor mill kicks in. The venture capitalist boys come flying in like they do

and start scarfing the money, and they close the bank. And that's what the bank run is. They close the bank. When all the customers show up at once. So your local bank, A, is going to cover the vast majority of depositors. You're fine. B, there's not a bunch of players in your local bank. That's not who's dealing in there.

Even freaking Bank of America, which I hate, and I don't know why anybody would do business with them. They're horrible. But even they have almost, I mean, it's like 40% of their deposits are covered. Right. And it's like these guys had, it was all rich people, super rich people in there. So it's just, number one, you wouldn't have money in a bank. Okay, so bond interest rates have gone up. Bond values have gone down.

Consequently, though, due to the bank crash and the closing of this bank, then they closed two others just like it because they were afraid they were going todic gets to pay for all this crap and fdic starts shutting it down when they smell anything looks just like this they shut down two more right and took them over they'll sell off the assets they'll collect all the money to recoup the insurance if there's any money left for the insurance and there won't be then they will just distribute that to the people uh the depositors the stockholders will get zip which is exactly what it was trading at 250 a share this is called capitalism when you screw stuff up you lose your money that's for those people that are in that bank that's what happened and they knew what they

were in every one of them knew what they were in again your grandmother's cd wasn't over there you're okay my local bank is fine i've got deposits in excess of 250 000 in my local bank in excess of all the limits in my local bank i am not worried about it one iota not a penny okay but the great news is the bond market freaked out because they kind of caused this with the interest rates going up and bond interest rates dropped bond prices went up translation your mortgage rates are cheaper today than they were this time last week if you were going to get a mortgage in the next month or so and get a house run to your mortgage company before all the dust settles on this this is a great time to get a mortgage go to churchill mortgage today and lock in your mortgage today

because this is an anomaly it may settle back up by two weeks from now all right but it dropped a quarter to a half depending on what kind of mortgage you're looking at because bond interest rates went down bond prices went up because these doobers were flooding the market with their bonds and the bond people went oh oh, look at us. We support all the local banks because almost every local bank everywhere buys bonds to put on their balance sheet to, quote, stabilize their balance sheet. It only stabilizes their balance sheet, which is the great joke of the bond market, if the interest rates are stable.

But when interest rates go up from two to five, guess what? Your bond prices go down and then everyone shows up and that bond you bought that was so stable now is worth less because you were betting on an interest rate market to give you a stability and that was a dumb move so here we go all that to say get your mortgage right now go to churchill mortgage today and if you think about buying a house and you're just kind of on the fence this is going to be your month baby this is going to be the time to jump in uh jump online get you a you know get a smart get a an elp with real estate whatever it is you got to do here this is the time and don't and people are going and buying gold george goodness banks are gonna fail it's like

they live in the wild wild west or something you don't know how the fdic insurance works the entire federal government would have to fail for you to not get your money out of your bank when you have less than $250,000 in your bank. Quit acting like you're... Don't cash out your bank. Dadgum conspiracy theorists. Don't cash out your investments. Everything on the internet's true.

Abraham Lincoln said that. I mean, come on, guys. You believe every conspiracy theory out there. These banks are not on the wire. They're not about to collapse. It's going to be like 2008. 2008 was not a banking collapse. It wasn't what happened.

Don't fall for the fear. Turn off the headlines. There's a lot of fear-mongering happening right now. Calm down. Calm down. You may need to turn off the news. It's not good for some of you. At least a week or two.

Just, it's not good for some of you. You really react poorly to the wrong information. This is The Ramsey Show. George Campbell Ramsey personality is my co-host today open phones at triple eight eight two five five two two five george one of the things we've noticed about millionaires over the years back to our bank failure story is that when um there's breaking news, right? Breaking news, which it does always, breaking something, right? The millionaire investor doesn't react.

They just sit back and kind of go, hmm, that's interesting. The get-rich-quick person, the broke person, the person who's destined to stay broke, overreacts, oversteers the car, and flips it. And go, that's it! I'm cashing out of everything, and I'm buying beanie babies! Because they lose their freaking minds, you know? I'm goinghing out of everything, and I'm buying beanie babies. Because they lose their freaking minds. I'm going to buy gold.

I knew it. Crypto was right all along. I'm in again. Bernie Madoff's my man. I mean, you bite off on some of the stupid butt stuff when you freak out. And if you catch yourself freaking out, and like your pulse rate is up, you're over-caffeinated, you know, and wait 24 hours and turn off the TV

and stay off of Tic Tac because it's going to tell you all the bad news and how the world's coming to an end. Breathe. Investors that become wealthy and stay wealthy are the ones that invest steadily calmly they do make changes but they do not over steer on one little patch of ice they just let off the gas and roll across the ice until the pavement's clear again. No sudden movements.

And then there's no spin out, no flip, no roll, no airbag release in your life. But the people that overreact tend to, and I can tell you, in my personal life, the times that I've lost the most money are when I overreacted to something. When I either was scared mad and I'm your it's what the lonely doctor only talks about all time. You know, when you're in the middle of trauma, facts are your friends breathe, wait 24 hours till your pulse rate comes down.

Rethink this. Look at what wealthy people are really doing. Now, I'm not talking about players like venture capitalists, what they're doing. I'm talking about people that have five, $10 million. They're steady. They're predictable. They're the tortoise. Don't oversteer. Yeah. Well, you've said that we are in the business of selling crockpots, not microwaves. And when you have that mindset, this blip in the stock market because of the bank collapsing, we go, okay, S&P is down down one percent big whoop i'm investing for the long term i'm not cash i'm not buying

today and i'm not selling today because of that although if i were doing one or the other it would be buying because i feel like it's on sale because it's an artificial short-term blip here mark my words put it on your calendar one month from today remind yourself to see if you even remember this the svp bank failure in the silicon valley one month from today see if you even remember it until you bring it up it won't be top of it won't be top of funnel it won't be something everybody's talking about it'll be a distant memory missed it's also a good reminder to not invest in single stocks i saw it was on the top of jim cramer's list for april of 2022 he got fried didn't he number one choice was silicon valley bank to put all your money in. It's a buy! How is it he says it?

How does he say it? I think that's it. It's a button? Yeah, he just smashes all the buttons. I love Jim. He's so fun. I wouldn't do anything he says, but he's so fun. I like him. I've met him a couple times.

I really like him personally. He seems like a fun guy. He's a lot of it. But his whole thing is single stocks, and of course, we tell people not to do that, and we don't buy single stocks. I just sleep better at night, not having a truck all day. Have you ever seen all the stuff? They trash that guy. I mean, of course, they trash not to do that and we don't buy single stocks so i just sleep better at night not having a have you ever seen all the stuff they trash that guy i mean of course they trash us so what do we know about they but um all people that follow the

jim cramer index that if you actually invested according to him how much you would have actually made it's horrendous but i don't know if it's accurate i mean you might have actually made money i don't know but i'm not it's entertaining as crud though i love the show it's fun to watch i don't again i don't buy single stocks so i'm not going to act. I don't know. But I'm not. It's entertaining as crud, though. I love the show. It's fun to watch. Again, I don't buy single stocks, so I'm not going to act on his advice. We don't have a dog in this fight. But I will tell you, too, on a personal level, he's a fun guy. He really is.

But poor guy. He's got, I mean. I think you need some buttons on the show. It's like the time that I said something about a tornado and, like, the next day one hit. Yeah. You remember that? That was poor timing. That was kind of Kramer's thing. said it tore up jack i mean like three people in our office lost their

houses you know and i'm making fun of tornadoes the day before like chances of a tornado hitting you're about nothing and then nashville just gets fried the next day i got destroyed there's a phrase for that it's aged like milk oh that didn't age well, Ramsey. Yeah, you're making fun of, like, they closed the schools in our area because tornadoes might come tomorrow. And I'm like, your grandparents are rolling over in their grave. Tornadoes might come tomorrow, so you close the schools today? I'm like, good Lord. Everybody buy a helmet for everything. I was going off on it, really.

And then the next day, we get just hammered with tornadoes in nashville and everybody like ramsey that didn't age well no it didn't i got destroyed if i could turn back time poor kramer he got the same thing it's his tornado moment we all have one little guy that does nashville weather service or whatever he was all pissed off at me oh everybody what's his name i don't i can't remember he's up he's got the big twitter account is it big it's big oh i didn't know i didn't know i called him a little guy maybe he's a big guy he's got subscribers now he has subscribers and stuff and stuff but anyway yeah he was pissed off because i made fun of his tornadoes and don't don't mess with the weather guys tornadoes you're really messing with that i'm not meteorologists are scary personal they They know too much. And one after you, apparently I got radars and stuff.

So more of the story is this. You're probably not going to die of a tornado or this bank failure. So me and Jim Kramer, we're both useless. Way to put a bow on it. Full circle. John is in Tacoma, Washington. Hey, John, how are you? I'm doing good. I hope we can be useful to me at

least. I'll give it a shot, brother. What's up? Uh, so last week my parents came to my wife and I and offered us to rent out their house to us, uh, while they traveled the country and live in different places for a couple of years. But if we did that, we would have to sell our house that we live in right now. And we kind of just want your opinion on this. I heard you're experts on your opinion. So you're right about that. Why would you do this? Well, I did dumb in 2020 when I bought this house because I justified it to myself as, well, it's the

same as paying rent around here, so why not buy a house? And I bought it at 3% down on a 30-year. Okay. So what do you owe on the house? $289,500. What's your interest rate? $2.875. What's the interest rate? $2.875. What's the house worth today?

$400. Okay. Doesn't sound like you're hurting too bad to me. Is the mortgage a huge part of your take-home pay? When I bought it, before I was married and it was huge, but now it's less than $25,000. But if we were to pay it off like a 15 it would be more than 25 yeah but you're right around the bubble and you got a great interest rate and the house has gone up in value why are you moving again do you have other debt well no we're on baby step four and six it's just

we feel like if we sell the house we might be able to save up faster and get a bigger down payment and we're not in love with the house either like you know i bought the house is going up faster and get a bigger down payment. And we're not in love with the house either. Like, you know, I bought the house. That house is going up faster than your account you're going to be saving up in. Okay. Yeah, it makes more sense to pay down your current mortgage than it does to go save up. Are you going to live for free in your parents' house? It'd be two or three.

We would write up a contract. Would it be free? No. We would pay the mortgage and utilities, which averages out to about $950 a month. No, I'll pass. Stay right where you are. You got a low interest rate. Your house is going up in value.

You don't hate your house, but you're not staying there forever anyway. While it goes up in value, just keep paying on your house. Let mom and dad get them a renter. Even if I'm on a 30-year mortgage? You can pay it like a 15, even if it's a little over the bubble. You're in four, five, and six. Start paying it like a 15 and work the system. Nothing's on fire here.

This isn't worth uprooting your life for. Yeah, you're not house poor. You're not stuck. I agree with you. I would not have bought it the way you bought it, but the way you've ended up has worked out for you in spite of that. And so you're in a good place today. the lobby of Ramsey Solutions on the debt-free stage. Jacob and Ashley are with us. Hey, guys, how are you? Fabulous. How are you doing? Welcome. Where do you guys live? Independence, Missouri. Oh, cool. Good to have you. How much debt have you paid off? $61,000. All right. How long did this take? It took 16 months. Okay.

And your range of income during that time? We started about $126,000 and ended at $144,000. Very cool. What do you all do for a living? I'm a registered nurse. And I'm a truck driver. Ah, very good. What kind of debt was your $61,000? All of it was student loans.

Ah, you're nursing? Yes. Okay. Very good. Some of both. I had student loans from school a long time ago that were never paid off. Okay. All right.

Good. So how long have you guys been married? This May will be two years. Okay. So right after you got married, you looked up and said, boom, we've got to attack this. Is that the story? What happened? Well, it actually started about six years ago.

I had gotten in credit card debt, and a friend of mine gave me her book. I started listening to your radio show. So I did the snowball debt with my credit cards. That kind of turned into, as we were dating, we both owed about the same amount on our vehicles. So we're like, well, let's just make this a competition between each other. And so our dating just kind of went with it a bold went with it do you let her win at that point for courtship how does this work yeah make me nervous well she won because i had to stop giving all my extra payments to my pickup because i had to save for a ring you know but i couldn't

tell her that so i kind of had to keep that one kind of tucked off sounds like she won i won she won again and she keeps winning and you're smart because she won i won she won she won again and she won again and she keeps winning and you're smart because she won i'm just saying you were smart there's a figure out a way to let her win that was a good move but i don't even think you had to let her do anything she's gonna win anyway but there you go well done good stuff she was on a on a mission to get done and so you're working on the cars and then you get married and the student loans are all that's left so we kind of cash flowed our wedding and honeymoon in that process. And then from the day that we got married, we had a combined debt of $61,000.

So that was what we did in the 16 months. Oh, very good. So you'd cleared the cars, and previous to that, you'd cleared the credit cards. Yep. Yeah, all right. So here we go. We wanted to go in with as little baggage as possible. Yeah, very good that's

the way to do it so i'm curious was it easier once you combined incomes to attack this collective debt yeah i mean for sure we were in our individual debt snowballs when we were dating and then of course engaged we never mixed anything until the day we got married like literally until after the honeymoon actually but while we were engaged we had a fund for the wedding we had an idea of what we wanted to spend and we kind of held each other accountable real real specific goals and what we gave to that so that was finished off we paid for the wedding in full the honeymoon in, and it was early enough that we could make a couple more payments on my truck and then her on her student loans before the wedding day and paid off the truck right there.

And you'd already looked at, gosh, when we get to put this together, it's going to go zoom, zoom. Yeah. Yeah, we did the math plenty of times before the wedding day, so we knew about what time we were looking at, and we kept to it real strict. Okay, newlywed couple time, ready? Who tried to mess up the wedding budget which one of you which one of you had picked out something that you had a little fit because you couldn't do it he kind of wanted more things

really i was one like we can stick to this budget more he was like oh this looks cool this looks cool yeah but it was the good stuff i wanted a good photographer and a good DJ. Other than that, I just wanted a great honeymoon. The rest of it was on her. I'm with that. You got to have the dance party and the good photos. Sounds like a guy. I thought it was going to be the flower arrangements.

Good pictures, good food, and a honeymoon. That's all I care about. The rest of it, yeah. I care less about the bouquet. For sure. Good for you guys. Well done, you guys. Well done.

That's fun. All right, now that you did it you're superheroes nobody in america has done what you've done hardly it's pretty amazing you're standing on the ramsey solutions debt-free stage you did it i haven't paid off 61 000 in addition to all the other stuff in the story but after you've been married you you paid off $61,000 in just 16 months. What's the secret to getting out of debt? I mean, just the dedication and the discipline of doing it. And we'd kind of like check in with each other every couple of months. Like, okay, well, we've paid this much. Let's, you know, we just kept checking in and stuck with it.

Yeah, we communicated a lot. We communicated very consistently in detail about everything associated with the debt payoff every check or every month or if we put in extra shifts or whatever we just kept really a close tally on exactly how long this is going to take you're both you're both very much goal-oriented anyway sounds like we tried when you laid it down you said okay let's do it game on every little thing every slice yeah we uh we sold we had two motorcycles we had fun with them but we knew we could sell them and they were selling high at the time so we sold those put the money on it they're kind of a dime a dozen anyway we could replace

them anytime so um at that point i uh, um, the debt forgiveness that they had pushed off was getting ready to come to an end or not the forgiveness, but the interest was getting ready to come to an end pretty soon. So we really wanted to get as much knocked out as we could before that. But when they offered the, uh, debt forgiveness, um, it was about a week before we were set to make our final payments. And it was- Like we're not stopping now. There was no reason. We're here.

We're not trusting it. We're just doing it. There was no reason to stop. All the momentum we had built up at that time, we were right there in front of it. And if we had have said, let's go ahead and let them finish off this for us, we'd still be sitting there with these balances right now. Wow. So you did a little debt eviction instead of debt forgiveness,

which I think is the better path because you're in control at that point. Yeah. Man, you guys are amazing. So, George, the script, the narrative that he just laid out is the narrative of people that win versus I'm going to wait on the government to fix my life or the people that don't win. And so this is, you know, it's i take control i take agency i take

control of my life of the controllables in my life and i'm not going to sit around and wait on the dmv to make my life better have you ever thought about government service as an oxymoron seriously so i'm not going to wait on washington to make my life better i'm going to go take this thing and i'm not If they had stopped based on the news, they'd be sitting here right now in debt and they wouldn't be on that stage. And a year from now, same thing. And a year from now,

same thing. So people that take control of their lives are the ones that win. I'm so proud of y'all. You're rock stars, man. You're amazing. I can't say rock stars anymore after that Super Bowl commercial. It was amazing. Very well done. Good work. Very cool. You're heroes. I't say rock stars anymore after that super bowl commercial but yeah this is it was amazing very well done thank you good work very cool you're heroes i can say that for sure i appreciate it because in america today you're highly highly highly unusual we got a copy of uh the whole live and give bundle for you that's the baby steps millionaires book number one

bestseller that's the next step on your journey for sure the total money makeover book you can give to someone that's inspired by your story and say this is what we did same thing with financial peace university membership we're going to give you all three and people buy that live and give bundle and give it take pieces of it give it away we're going to give it all to say thank you for coming from independence missouri to nashville to do your debt-free scream newlyweds jacob and ashley they are goal-oriented people goal-oriented people win you just can't stop them 61 000 paid off in 16 months make it 126 to 144 count it down let's hear a debt-free scream three two one

i love this so much We're dead free! Yeah! I love this so much. It's powerful. Go ahead. It's just amazing to me that they decided we're not going to wait. I get messages every day and people are going, George, should I wait? Because what if?

What if the government? And I go, just repeat that back to yourself. What if the government? Stop right there. You that back to yourself. What if the government? Stop right there. You know what to do. But people live in fear and they get paralyzed by the what ifs. Well, here's what's really interesting. I mean, I've been doing this so long now that I pick up just because of 30 years of standing in front of debt-free scrims. You pick up the little nuances in their body language with each other,

the way they're talking about it. Like I said, you know, who almost broke the wedding budget? And they're like, that's a dumb question. Neither one of us. Did you see that? They kind of got this quizzical look on their face like, no. Are you going to take the fall? Nobody, you fool.

I mean, he tried, but nobody was going to break the, we had a plan. We're sticking to the plan. We're sticking to the plan. We're sticking to the plan. Because we're not victims. We're victors. And it's perfect. I mean, that couple, having conquered that in the first 16 months of their marriage,

can now conquer, they can slay any dragon that comes at them because they know how to fight together. Because that same mentality works in every area of your life. You don't have to fight each other. You need to fight together. Because that same mentality works in every area of your life. You don't have to fight each other. You need to fight together. The enemy's outside your house, not inside your house. This is The Ramsey Show. So when was the last time you were excited about a Monday?

What if instead of waking up exhausted, you felt exhilarated? That you can't wait to get to work because it's another day to fulfill your passion. You know, sometimes around here I get tired, but I don't dread coming to work. I might be tired because we're on the road. We're working a bunch of hours. Travel is draining, all that kind of stuff, but I don't hate it. In a world where the bare minimum Monday trend has taken the place of quiet quitting, it's clear people are craving meaningful work, but finding the career you were born to do can be difficult

when you don't have the right tools. That's why career expert and Ramsey personality Ken Coleman created the Get Clear Career Assessment to help you discover your top talents, passions, and a clear mission statement that will help you find the work that the world needs you to do. After taking the quick assessment, you'll get a custom report with everything you need

to take that first step towards a meaningful career. And that's not mythology. It really works. Go to RamseySolutions.com slash Get Clear. RamseySolutions.com slash get clear. ramseysolutions.com slash get clear. So, George, our ratings are up on podcasts, on YouTube, everywhere we go. And I think the reason is that people are doing the three things that we ask them to do, and it's very helpful to us, guys.

All kidding and snarkiness aside, it's very helpful if you will do a couple of things. Yeah. Number one is share the show. So you've got friends, you've got a social media account, just posting a link, telling them about it. Super helpful. The other one is subscribing. So you might listen to the show. You don't realize you're not subscribed. You're not following on Spotify or YouTube or all of these places. And that helps us as well. And so the other thing you can do is leave a review. And so if you enjoy the show, we love to read those reviews and see what you guys think about the show. And don't be snarky and just leave negative reviews.

You can save those for the YouTube comments or something. We want to spread hope, and the way you do that is by telling people how the show has impacted you. Mama said if you ain't got anything nice to say, don't say anything at all. That was before the Internet existed. a they've got their bullhorn out there now everybody's got an opinion but it listen just you know if you don't like the show quit listening it's okay we can deal with that i always wonder who those people are every day they're listed as a hate listen or something just find a new show hate listen i don't listen to things

that make me mad every day i I don't hate listening to anything. Yeah, you've got enough to get you riled up. You don't need that. Well, that's true. I have that. There's a special kind of boredom where you have to seek out things to make you angry. You need help. Yeah, there's kind of an addiction to it almost now.

It's kind of weird. But anyway, hey, please help us subscribe, follow, and leave a five-star review. John is with us. John is in Fort Collins, Colorado. Hey, John, and leave a five-star review. John is with us. John is in Fort Collins, Colorado. Hey, John, welcome to the Ramsey Show. Hey, thanks. How are you doing? Better than I deserve.

How can we help? Well, maybe not a quick question, but a question. I just retired at age 63. I have health insurance and a severance pay, sort of an early retirement thing until I hit 64. But the questions I have, and I can answer questions you have with regards to our portfolio, but do we need long-term care insurance? If so, how do I fund it? And then also your thoughts on maybe taking a pension that I have that I can take as a lump sum and putting some of that into

an annuity to offset the market. Never considered that before. And to your point on some of the previous calls, don't want to make any fear-based decisions, especially on the LTC case. So we'd welcome your insight. Okay. Long-term care insurance, if you do buy it, never buy it bundled with other insurance products.

Only buy freestanding policies way too expensive the other way all kinds of hooks and gotchas and loops and the other stuff just if you're going to buy long-term care insurance just go to an independent insurance agent have them shop long-term care only there's a lot of these companies are bundling with whole life other life insurance products that suck they're horrible the ratios are nasty bad and uh and boy do they know how to sell it it's a it's a slimy product so anyway having said that uh just long-term care if you need it now here's the thing here's your long-term care exposure if you're under 60 you have almost no long-term care exposure. If you're under 60, you have almost no long-term care exposure. You said 63, though, didn't you?

Yes, I'm 63. My wife is 60. Okay. So now you're starting to have some long-term care exposure. Long-term care meaning nursing home care or in-home care in the ability you had a long-term debilitating situation, early-onset dementia or Alzheimer's or whatever, or you just get old and the nursing home comes into play, whatever it is, all that kind of stuff, all right? So now, here's the statistics for you. The typical long-term care situation is the average person

stays two and a half years, and right now it's running 80 to a hundred thousand dollars a year so this is a 250 000 average exposure so if you have five million dollars you're self-insured you just pay for it okay okay if you have five hundred thousand dollars i don't i want you to get long-term care insurance. Because typically what happens is 75% of you ladies out there will outlive your husbands. And the typical scenario is Papa goes into the nursing home, burns through $200,000 or $300,000. Of the $500,000 nest egg dies and leaves Mama with only $200,000. Or burns through 300 grand.

That's all they had. And, uh, that sounded like a lot of money till, and then they're mad at the nursing home, like the nursing home did something wrong. And so you don't want to do that. So what's your net worth,

John? Um, net worth is 4.2 million. I was self-insured. Okay. And just, it's funny you say that because I was thinking based on our you know i've been following you a long time and helped us tremendously over the years but um we did meet with an advisor

that had recommended one of these insurance products and it made no sense to me because as i'd look at it what you were paying for that would be 20 000 a year for my wife and i and the long-term care piece that came with the insurance really wouldn't be enough to cover more than six months. I'm glad you cleared up. Here's what's going to happen at our house, okay? We won't be going to a nursing home. I've got, like you, I have a substantial net worth, okay?

If something happens to me and I am bedridden or i need assistance we will bring in full-time care it's as cheap as a nursing home and it's a highly increased quality of life now and if uh if sharon if something happened if something happened to one of us and the other ones left behind the kids are going to pay the bill and i'm or i'm going to pay the bill and the kids are going to make sure the person's showing up and taking care of me in the house because i'm rich enough that i'm a full-time freaking nurse taking care of me that's what amounts to right and that's really can you do that for a hundred grand a year pretty dadgum close right right and that's what a nursing home costs so that's it's not like you're

spending twice as much because you're some rich guy or something you're gonna but that's what's going to happen at the ramsey's um will not only i'm not mad at nursing homes i think they do a wonderful job and and they serve a wonder and so it's a actually a ministry for a lot of people a lot of situations but choosing that versus me and and a series of staff taking care of my wife if something happens to her and she's there, that's what we're doing. I'm not going to do it by myself. I'm going to get help, but I'm going to get medical staff because we can afford it.

That's why we worked our butts off all these years, you know? I remember that. Any feedback or any suggestions on where that would come from? Because, of course, the market's declining now. Right now, I don't have to dip into the portfolio. If you wanted to get $100,000 a year, where would you get it? It's not that big a deal. Well, I'd have to pull from my investments now.

Whoopie. Okay. $100,000 out of $4.7, I think you'll probably be okay. This could go on till you're 162 yeah okay i would also consider firing your advisor john because it sounds like they're an insurance salesperson in advisors clothing and that worries me um it's somebody we've met that says no i don't want to give too much detail it's fine's fine. But I always get a little nervous when someone goes, yeah, my financial advisor is trying to sell me on whole life.

Yeah, you got a whole life insurance salesman. Yeah, because I've got to tell you, there's no smart investor pros that sell whole life. People in the financial business don't sell that crap. The only people that sell that crap are insurance people. That's it. I mean, and then they say, well, I'm a financial advisor. Bull crap. You're an insurance agent. So different. George is right. And so your new friend is an insurance agent. Let's just call them what they are. And they sell bad long-term care just for the record. Wouldn't want anybody

to be confused about this. This is The Ramsey Show. Dave here. You can find all of our shows with the Ramsey Network app on your smartphone. It's the only place to listen to the entire back catalog of episodes. Download the Ramsey Network app in your favorite app store today.