The Ramsey Show - App - The Power of Compound Interest (Hour 2)

Episode Date: June 20, 2023

Ken Coleman & Jade Warshaw answer your questions and discuss:  How do I get started investing? from the blog: How Does Compound Interest Work? Pursuing your passion while still providing for your family, "Is it unethical to use my G.I. bill to go to school?" Investing vs. paying off the home, "How can I get my parents to make better decisions?" The best type of account to use for saving money. from the blog: What Is a High-Yield Savings Account and Do I Need One? Have a question for the show? Call 888-825-5225 Weekdays from 2-5pm ET Join a Personality-led FPU class. Click here! Want a plan for your money? Find out where to start: https://bit.ly/3cEP4n6 Listen to all The Ramsey Network podcasts: https://bit.ly/3GxiXm6 Interested in advertising on The Ramsey Show? https://ter.li/s64ye3 Ramsey Solutions Privacy Policy

Oh Live from the headquarters of Ramsey Solutions, broadcasting from the Potts Moving and Storage Studio, this is the Ramsey Show where we help you win in your life, specifically your money, your work, and your relationships. I'm Ken Coleman, joined by Jade Warshaw this hour. The phone number for you to jump in is 888-825-5225. 888-825-5225. We'll start it off this hour in Champaign, Illinois. Faith is there.

Faith, how can we help? Hi. So I have a question. So I'm 18 years old, and I just graduated high school as a valedictorian. Oh, wait a second, Faith. Don't just skip by that. I know, right? A little slow clap for Faith, a valedictorian, ladies and gentlemen. Very nice. Congratulations. Thank you. So my parents, I've known you guys for 10 years.

My parents have blessed me and teach me everything about Dave Ramsey. And so I'm not touching that at all. I'm getting close to it. I know the whole situation. So I dedicated myself to getting scholarships and I got plenty enough to get a full ride. I don't have to, I don't have to worry about college. And so, um, you're like a unicorn. Yeah, really?

So now I'm working just because you know i love working i enjoy it and i'm trying to make as much money as i can to have a good future and so i was wondering what do i do should i start investing or what should i start doing i have a thousand savings savings and almost a thousand in my checking account. And then I have extra money on the side, like some other stuff. But I was wondering, you know, what you guys' recommendation for me, because I'm technically baby step three, but I was just curious on what I should do. Well, first off, you're a freaking rock star, girl. You're killing it.

I mean, valedictorian. She's working got scholarships got an emergency fund a little more cash we don't know how much cash she's got stashed in the backyard i mean i want to meet i want to meet your parents number one because they did some things right you know i'm saying they raised you right very very good um very. Um, how much are you making, uh, right now working? So I'm a waitress, so it's not guaranteed, but I make about, um, 60 to a hundred a night. Depends like tonight I'm going to work and I'll probably make almost a hundred. And then whatever I get per hour, I get seven 25 per okay very cool probably a night for just that but yeah so about

100 i'll probably make tonight and then yeah i mean you could definitely start looking into investing i think that that would be great um in your case probably just like a roth ira because you need earned income to put into that um but yeah i i totally would start i mean you're baby step wise and even you know we've got a set of baby steps that we have for young folks, basically, that they follow. And you followed all of that, you know, having $500 saved and, you know, paying for college debt free, paying cash for a car, you've done all of that. Um, and so yeah, you are at the point that you could start, you know, as long as you've got that earned income, you could start investing. And if I were you, I'd probably go ahead and start because look, at 18 years old, the amount can, we've got to talk about this, at 18 years old, that compound interest is going to be kicking. You know what I'm saying? We've got, and you know, so many people, I just have to talk faith.

So many people, they don't get to start until later in life. And I'm not mad at them. They're not doomed in any way. They're still going to be all right. But you starting at age 18 is amazing because what you're going to be able to accomplish, most people are not even going to ever be able to catch up to what you're going to be able to accomplish because of the time that that interest is going to continue to compound. You're going to be, I mean, how much do you think you could put away? I mean, would you be able to max out, you know, $6,500 in a year? Yeah, because last year I had about $10,000, and then I helped my parents with something.

So I gave them some money because we were looking to pay for our cars because we flip cars, my parents do that, and we also have a business, so I help them with that. We have a photo booth business. So I know I love the entrepreneurship and building businesses. I have some questions about that, but I won't belabor it. So you giving your parents the money, was that a car for you? Yes. So, yeah.

So it just helped paying for a car because i'm 16 you got to get one and so now we're selling it and i'm gonna buy because they kind of help me pay for it like i pay pass they pay pass okay so you're not you're not giving them money for their side business all right our red flags went up for a second we're gonna go ahead and pull those back down okay so um yeah well so what i try to do is when they have their business, that's me, like I don't want any money from them because they feed me,

they house me, that's me helping them. So what this is going to look like is you, I would bring my parents in on this because it's just a great thing. I would check out one of our SmartVestor pros

and I would sit with one of these ladies or gentlemen and they're going to have the heart of the teacher. They're going to answer your questions. They're going to let you know what your limits are, what you need to make, what you can contribute. And they're going to help you. They're going to help suggest ideas

of how to invest this money. Of course, with Ramsey Solutions, we suggest four different types of funds and they're going to go through all of that growth, growth and income, aggressive growth, international. and they're going to help you say, this is what we think, but they're not going to force you to do it. They're just going to walk you through that. And of course, at the end of the day, you don't invest in anything that you don't understand, and you can take your time. And you've got your parents there. And this is just,

I think this is a really cool opportunity for you to learn. It's a really good opportunity for you to just start exercising that muscle of investing. And again, SmartVestor Pros, come on, Ken, I can't talk about that enough. These folks know what they're talking about. They're vetted. They follow Ramsey principles. And a great experience for you, Faith, to sit with them and let them teach you to where you understand it, get your mom and dad's input. But yeah, you could put as much as 500 bucks a month in at the rate you're working. You're such a rock star. You got some money saved as well. So you can max out that 6,500, I think pretty easily. And I just think that's wise. If you were my kid and you were in that situation, I would absolutely

say do it. Really proud of you. You are an overachiever. My goodness. I'm just thinking back to when I was Faith's age and I feel like a loser. I mean, I've got some- Oh, definitely. Me too. You know what I mean? I'm like, man, I thought I had it together. Oh man. I was like, dude, where's my car? I was not on it. Dude, where's my car? Oh my gosh. All right. So let's talk about, so here's a young person who has figured it out. I think she said she'd been listening to the program for 10 years and good old mom and dad, and she's figured it out. She's busted it. You were talking about on paper, she is set up beautifully, valedictorian, full ride, all of these things. But these young people are still getting an enormous amount of

bad information, dubious advice from Instagram, TikTok, commercials as to what they should be doing early on with their finances. And you can get in a trap at 18 with just credit cards or feeling like, oh, it makes sense to take out student loans. And all of a sudden, before you even understand what you've done, you've built a financial trap. Yeah. I mean, I think their intent is right.

I think that young people are seeing, okay, debt has affected my parents. I've seen the way debt can affect things. And I think that they want to get ahead. I think they're interested in building wealth, but they're looking to social media, TikTok, and sometimes they're getting the wrong information. It's a good intent, but a wrong strategy. So I'm glad that she's got connected with Ramsey.

And we're going to teach you the best way, the safest way, and the most strategic way to build wealth fast. That is a fact. Don't go anywhere. A few messages, and then Jade and I will be back here on The Ramsey Show. Hey, you guys, health insurance costs are only moving one way and that way isn't down. And if higher costs aren't enough, the wait times to see your doctor are longer and

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So listen, y'all, there's no better way to take care of health care costs. CHM programs start as low as $98 a month. So learn more today and join at chministries.org slash budget. That's chministries.org slash budget. Welcome back to The Ramsey Show. I'm Ken Coleman, joined by my colleague, Jade Warshaw. Excited to have you with us. The phone number to jump in is 888-825-5225. Time for our question of the day. Today's question of the day is brought to you by Neighborly, your hub for home services. Now, if the weather is warming up, it's time to enjoy your outdoor space. Neighborly's Mosquito Joe service can help make your outdoor area pest-free. I got to call them

today. I saw a mosquito last night on my patio that was big enough to carry a toddler away. So I need to get this service. We live in the southeast here where they look like birds. Oh yeah, they eat some sandwiches. Yeah. It's not fun. So if you want to be outside and enjoy your outdoor experience without getting bit by a mosquito, Mosquito Joe services for you. This is just one of the services at neighborly.com where you can reach your local Mosquito Joe today. All right. Today's question comes from Brandon in New Mexico. He says, I work at a job that provides well for my family, but I'm not passionate about it and I feel exhausted. How do I balance pursuing what I'm passionate to take a pay cut for a little while just to get

closer to the career I love, and that lines up with what I want for my future and my family. Wow. Interesting. Love this question, Brandon, and you've got a false choice, and this happens a lot. The choice that's lined up in this question is, do I pursue what I'm passionate about, which might take a short-term pay cut as a reality of a step to move forward towards the life that I want, that includes what's good for my family, work that I really find meaning in, or do I stay in a job that pays really well? And this is a false choice. And the reason it's a false choice in the way he's worded this way and Brandon, why you're positioning this way is because you are more worried about what other people will say

than what you believe. In other words, you believe it's right to take this other job. You've already got it in mind. It's as clear as it can be to me, or it's another direction that's been made clear to you. And so it's a false choice because you are worried about what friends and family will say because you're walking away from something that's prestigious. And what looks like a step backwards to them is a step forwards for you. And it's not their job to understand it. It's not your job to make them understand it. You could certainly explain it, but it's your life. It's your future, your family's future. So in this situation, I'm okay as long as we can budget for it and we can plan for it. We don't want to make this move and put ourselves in bad financial

straits. There you go. But if we can sacrifice, plan, make some life changes to absorb what would be a small pay cut or a significant pay cut I'm okay with if we can absorb it and we're not miserable and resenting the decision six weeks in. So this is the idea here. We can't just do the heart. The heart tells us and now the brain helps us figure out the plan. That's so good. And let's do some common sense with this, but I'm okay with this. And I think, again, it's a false choice. You must choose to take the path that is purposeful.

And purpose isn't just, I was created to do this kind of work. This is the lifestyle that I believe I'm supposed to live for my family. We are not just occupational people. That's right. We are relational people. And we spend, I mean, we spend so much time working and at our jobs. If you're not doing something that gives you energy, that you enjoy doing, that feels purposeful, man, that's just, that's no way to live.

It's like, and in your family unit, like if mama and papa ain't happy, ain't nobody happy, right? That's the truth. That should be a pumper sticker. That's good. Let's go to Dustin in Orlando, Florida. Dustin, how can we help? Hey, what's up, Ken? How you doing, guys?

We're having a blast. What's going on with you? How can we help? Yeah, so my major question is, is it immoral or slightly wrong to go back to school using my GI Bill and then throw the money that I get for my housing allowance for that, to throw that at my baby step two? Is it unethical? What do you think? Well, I don't know.

Is it the GI Bill or the housing allowance part it's the housing it's the housing allowance uh from the gi bill um so a little bit of back info um make around uh 70 to 80 000 um a year um you were taking a look at it. I'm 90% disabled. I get my money from my VA disability, which covers my mortgage and my everything, housing allowances and stuff

currently. I'm looking at going back to school, looking at getting a business management degree because I do love the job I'm looking at going back to school, looking at getting a business management degree, because I do love the job I'm currently in. After getting out of the military, I was reading your book, and it really gave me, like, okay, yes, going into this job field that I'm currently in, what I really wanted to do. Okay. Dustin, let me jump in really quick, because I want to make sure I'm understanding this right. I got a little confused. So you're in a current job right now, correct? Yes. What are you doing and what are you making? I am actually a roller

coaster mechanic. I make about $75,000 a year. Okay. All right. So $75,000 as a roller coaster mechanic. And then what is your disability payments that you got for your service in the military? So my disability payment is right around $2,666 a month. That's part of that. I counted that into that. Oh, it's a part of the $75,000. Yes, I kind of counted that as oh okay so why wouldn't you use why wouldn't you use your disability income to pay off your debt

and use the housing allowance for your house i mean yeah it's just kind of moving the funds from one yeah and i'm questioning why are we going back to school do you want because you just told me that my book helped you pick out this mechanic job. Do you really want to go into business? Well, just like with, it would still be, basically just to move up and to progress in the company. Going from being the, you know, the low level mechanic, moving up into, you know, supervisor. Okay, here are two things. Number one, you don't need a – what was the degree you were looking at?

Business management. You don't need a business management degree to move up in management if you're in mechanics. That's number one. Now, I'm not telling you not to do it. I'm trying to figure out the math on this deal. So if you go get this business management degree, are you doing it part-time?

Yes. I would be trying to pull as much time as i could um with working i work nights uh 40 hours a week um but i work four tens so i'm off three days a week okay now we're starting those three days okay so you could pull this off without being fried is what i'm hearing yeah yeah okay uh because i heard disability i'm just trying to make sure all this is feasible here because this is all about hey should i go to school so that when i go in back into school you're going to get a housing allowance from from from the government correct correct and what's that additional housing allowance going to be? Rounding up $2,000 a month. Go ahead. No, no, that's all right. I was going to say, so my screen says, is it unethical to use my GI Bill to go to school? I want you to explain to me why you feel that's

unethical. I'll be honest, it's not my forte of study, but why do you feel like it might be unethical? What's the part that's hanging you up? And I can, we'll try to help you with that part. I guess, I guess for me, it's partially like, is it cause you can pay?

I mean, so, I mean, my, my work also does a tuition assistance program, but knowing that I could take this GI Bill and essentially get this degree for free, and also it would help me essentially by the end of having the degree would get me out of Baby Step 2 and Baby Step 3.

It's not unethical for you to use the housing allowance to then pay. What he's saying is, I'm getting housing allowance, which I don't need. Can I use it to pay off debt? And I think the answer is yes. Yeah, I would say use the housing allowance to pay for your housing, and then that frees up money in your budget. If that makes you feel better to do it that way, do it that way. Yeah, I mean, you don't need the degree, but if you want the degree,

you're getting it free. Thanks for your service. You've earned it. You've earned it. So there's nothing unethical about doing this at all. I think that's his big hang-up. Well, I don't need the housing allowance, but I get it anyway. But hey, I put it towards paying off what he currently has.

I would use it. It's an allowance. Whenever I got an allowance, I did whatever I wanted with it. That's the way I look at it. There's some wisdom. This is The Ramsey Show. Welcome back to The Ramsey Show, where we talk with you about your life, specifically your money, your work, and your relationships.

All three of those areas are interconnected, and if you're not winning in one of them, it tends to affect the others. And we want to help you. I'm Ken Coleman, joined by Jade Warshaw. The phone number for you to jump in on the conversation is toll-free, 888-825-5225, 888-825-5225. Let's go to Lori, who joins us now in Sacramento, California. Lori, how can we help? Hi, thanks for taking my call. I'm 61 years old,

thinking about setting myself up for my retirement. And I have about $1,000 at the end of every month. And I'm wondering, am I better off putting it towards my mortgage or putting it into investment? So you have, are you totally debt free? Totally debt free totally debt free awesome so and are you currently investing 15 percent uh no right now i'm only investing the match at my 401k okay so tip following our steps what i would tell you to do is invest up to 15 of of your income, that's baby step four, right, into your retirement. And then anything above and beyond that, we would put on the mortgage to pay off the mortgage. How much do you have left on your mortgage? About $230,000.

Okay. Are you still working? Oh, yeah. Okay. Perfect. Love that. How long do you plan on working? Until my mortgage is paid off. Okay. Nice. So what is 15% based on our baby steps? What's 15% of your take-home?

I take home, I make about $100,000 a year. Okay. Okay. So what's your, let's see, what's that 15% number of your take-home roughly? Oh, that would probably be about $1,500 maybe. Yeah. I was thinking it was a little bit more than that thousand at the end of the month. So at this stage, Jade, are we putting all thousand in there? I think we are. Yeah. You want to get to the 15%? I mean, and if, and if I'm, if I'm putting, rather than putting the, the extra into my 401k, that's kind of what I was thinking. Should I put it into a roth instead after tax and uh

or does that matter at my age so yeah the way we do the way we teach it is um match beats roth beach traditional so if you have a match on a traditional 401k you could invest up to the match and then you could move over and invest in a roth and max that out. And if you still had money to go, you could come back to your 401k and continue to do that as far as you could make it until the match or until the limit, I should say. Does that make sense? Right, right, right. Yeah, that does. I did want to ask a question, though, because we do find this sometimes. Are you finding it difficult to have 15% left over to invest? No. Okay. I just wanted to check.

No, for a really long time, I've been living beneath my means, and I've always saved at least 10% off the top. And then right now I'm putting 25% away in, but it's my ish account. So I only have like 12,000. That's my fake emergency fund. Okay, but she called it an ish account, which I love.

I'm going to put that in my pocket for later. It is my ish account. So, you know, I should give putting 25% away for the last, you know, five or 10 years. So how much is in the issue account? Only about 12,000 right now. Hold it, hold it, hold it. Okay. I'm going to dig deeper. So you've been putting away 25% of your income for that long and you've only got 12 500 that's not that's not an emergency fund that really is an ish account it really is an ish account so that's you that's just your slush fund

like whenever i feel like doing something i go i go to that account right right i don't know i think okay that's costing a lot of money it well i mean i didn't do too stupid of stuff with it i didn't like buy a car or i did a house remodel okay out of that account okay and so this is easy that shoot up a huge so this is easy you're going to be able to put the full 15 percent in because you're just putting less money into ish okay you know i love that i'm not mad at her for paying cash for you know that's what you do you pay cash for renovations. She's been disciplined. Uh-huh.

Although I just, I want to make sure it's, I feel like it's been a little too much because she could have been investing that money. Yes, yes. But in the grand scheme of things, there's enough discipline for you to now fully fund Baby Step 4 and never stop. What do you have in investing, what do you have in retirement so far? About $325,000. Okay. Yeah. Let's keep rolling with it. What's the house worth? The house is worth about maybe $550,000. There we go. Okay. Yeah. When we get to the end of this, you're going to have a million dollars. That's exciting. But yeah, let's swap it instead of doing 10% into retirement and 25% into ish. Let's get those balances right. And like Ken said, you've got good habits. It's just making sure they're going down the right lane. And so now we're focusing on investing. And you've got three to six months of expenses saved for emergencies, correct?

Correct. Okay. And then if you've got sinking funds or an ish fund for whatever you know of that's coming up. But here's the thing. If there's nothing coming up, that money that's sitting there in ish can be put to good use. Well, this is where I'm going to go. I'm sitting here listening to this, Lori, and it's not going to take much for you to put the full. So let's take $1,500.

Okay, you've already got $1,000 in surplus. We play around with those numbers you've been pouring into ish and then deciding to take back out of ish. And we've easily got to $1,500 a month to get us to baby step four. Now we're rolling. Now here's the deal. You could juice that a little bit for a while, right, and not put the money in the ish account, right? You could do a little bit more, but you could pay off that house.

I'd like to see you pay off the house because I'm asking you, if you weren't putting this money into the ish account and you were putting it on the house, how many years ballpark do you think it would take to pay off the 230 on your house? I think eight years. Woo i mean that's good that's got you at uh below the age of 70 and you are a millionaire plus plus yeah and and just anybody who's listening if i wasn't so ish i would have been done that's and that right there that's the mic drop moment. That's what we needed to hear is, you know, you got to mess around and find out.

If you don't get on it and do these things, do the right thing with your money early on. But the good thing is, sounds like she's avoiding debt. The good news is, Lori, you've got this. You just got to decide what you want more i think this is a priority issue and i think it's just you sitting down and going where do i want to be 10 years from now and what decisions allow me to get there quickly look i'll take an ish account over debt any day of course i just thought that that's what she called it that was so fantastic love that i absolutely love that all right let's go to Hannah in Salt Lake City.

Hannah, how can we help? Hi, I am curious on how to start a hard conversation with my parents about what to do with the money that they're going to come into. I kind of have an idea of what they want to do and I just don't think it's the best thing for them. So how do you have conversations with parents about money? Girl, look, when you figure it out, you come and let me know because look, it's hard. And I don't know, I'll be honest with you, I don't know that it's hard and i don't know i'll be honest with you i don't know that it's always our place to do that and if if we do see you don't say like if we do see okay my parents are not making good decisions and you want to step in i i admire that and I applaud that but they're grown folks and it's very very hard for parents

to take advice from kids Dave calls it powdered powdered butt syndrome and it's it's basically like they raised you and then you're coming in saying hey I think you should be doing this with your money like what are you worried about it's true true. Them misbehaving? Well, they're 52, and they've been broke their entire life. This is the first time they're going to have any positive money, and it's going to be roughly about $400,000. So, Hannah, here's the deal. Jade is right. We're running into a commercial.

Here's the thing. I think that you can be clear with them about the opportunities. Instead of tell them what not to do, why don't you go and go, hey, I'm so excited about this windfall of money. Here's what you can do. Can I help? Can I coach? Can I hold you accountable? Suggest The Ramsey Show. Welcome back to The Ramsey Show. I'm Ken Coleman. I'm joined by my colleague, Jade Warshaw. We're here for you, America. 888-825-5225.

So the job market and the economy are in a weird place right now. We hear all these different things. Jobs are being added but unemployment spiked uh interest rates still gonna be jumping up a little bit we're told and yet you know uh inflation is kind of dipping a little bit so you get all these mixed messages it's a weird economy and it's uncertain and And so that uncertainty causes people to just freak out. And so a lot of people looking for jobs, opportunities in new cities or

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An agent who'll do more than find you a home, but connect you to the right place for you, and that is a Ramsey Trusted Real Estate Agent. They're local experts who go above and beyond to serve you, and you can trust them to guide you. If you want to connect with Ramsey Trusted Agents all over the country who are ready to help you buy, sell, and hit the ground running in your new home. You can find them in your area by going to ramseysolutions.com slash local agents. That's ramseysolutions.com slash local agents. You want to know what I loved about my Ramsey agent? I would like to know. I'm going to tell you real quick. When we said this is the price point, that's what she showed us. She wasn't trying to get us. That's it.

That's all I wanted to say. I like that. There was no angle. No angle. It was just serving. How is the new place? Loves it. Love it.

The Warshaws are settled. Love it. And yes, we love it. We love our house. Our realtor, incredible. I see her on my morning runs in the morning oh that's nice that's nice really really great there's some extra accountability you know you don't want to sell somebody a bad house and see them jogging it's not a good look no it's

great we got exactly right she understood when we said hey we're doing this this no credit you know we're doing it 25 percent it's like she understood all of the Ramsey language. That's what you need. All right. There you go, folks. Again, if you're new to us, these are men and women that we have vetted and we hold them to a high standard of service that Jade is talking about or else they're out.

So again, those new to this, check them out, ramsesolutions.com slash local agents. All right. David is waiting for us in St. Louis, Missouri. David, how can we help? Hey, guys, thanks for taking my call today. You bet. My wife and I should finish our fully funded emergency fund just at the beginning of this next month. And we've been saving that just in the traditional savings account with the quarter of a percent interest.

And I know that a lot of people use the high yield savings accounts online with like Betterment and Marcus and things like that. And I just wondered if that's something we should consider, because I'm not sure how I feel about having it with that extra degree of separation where there's not a bank I can market into. I actually, what you're seeing as a con, I see as a pro. Obviously, you're getting a higher interest rate when you're going with some of these high yield savings accounts. I use Ally. There's a lot out there, Marcus. There's Betterment, Yes. And I actually like the fact and I actually suggest the fact that you make your savings account at a separate institution and that you make the three to six months money a little more difficult to get to. I mean, obviously, you're not investing that money. You want it to be you want to be able to get to it liquid. But with those accounts,

yeah, it's like you have to transfer it over to your bank and that might take a day, which is not a bad thing because it gives you, it makes you think through, do I really need to pull this money out of my emergency fund? And I actually think that that is a great degree of protection, especially depending on your temperament. If you're the type of person who really struggles with keeping your money separate and not touching it, it's good. And for some folks, I'm like, hey, don't even get the debit card. Like some of those savings accounts, they're like, and we'll send you a debit card. I'm like, why do you need a debit

card on your savings account? You need to just, when it's time, if it's time, transfer just what you need into your account and you're good to go. That's my take on it, Ken. Well, I agree with you. That's what Stacey and I have. So our emergency fund is in a high yield account that takes 24 hours. You can get it. And by the way, any emergency, it can wait 24 hours. You're not going to be up a creek without a paddle. Yeah, you'll be fine. You're fine.

And you're exactly right. And we do that because we just... By the way, we try to cash flow small emergencies. Yes. Let me tell you something. When you fully get into this plan and you really embrace Baby Step three you don't want to touch that butt off for that when you have to dip into that i get cranky i had to get on myself recently because uh you know i got teenagers and that means cars oh and you know a couple thousand dollars i'm sitting there looking

at and i was like i had to get on myself you know why as I was moping around the house you're getting in it right about pulling money out of my emergency fund and I should have been like thank you lord for my emergency fund but I was so cranky about having to dip into it they were like Ken you got money you need to chill I know I like to leave it over there I like to look at it and go oh oh, there it is. So, David, do you see what we're saying here, David? I do. I do.

I kind of have a piggyback question off that real quick. Okay, we can do that. Yeah, we got a strong back. Now, in our primary checking account, I usually like to keep $10,000 in there to always be able to start off the month with that. Am I doing overkill with that? Yes. Or should that just be with the emergency fund too? I mean, what's your income?

Well, this last year was $115,000. Yes. But this next year, it'll be a little less because my wife's finishing her graduate degree. Yes, it's overkill. It's overkill. I applaud your discipline, but man, you're too scared. Yeah. You don't need to start off with 10 grand every month. You get, okay. Do you have any debt? Let's go back. Let's go. Okay. So there's no debt. You need three to six months. And honestly, depending on your situation, and this is for

anybody listening, we say all the time, three to six months of emergency. Well, Jade, Ken, how do I know if it's three months or six months? It's really dependent on a couple of criteria that you can look at. How stable is your income? If you're married, are both of you working? Do you have stable jobs? If so, three months is good. Do you have good health? Are you in and out of the hospital a lot? Maybe that's something you need six months because you're doing deductibles and things like that. If you're single and it's just one income, maybe you want six months because it only takes one thing to knock out your paycheck. These are the things that we're thinking of. So for you, figure out what's best three to six months and that's it. Put it in a high yield, put it off to the side, and then you're in baby step 3B if

you're trying to buy a house and after that you're investing take that 10k you better put that in an investment account and let it work for you instead of losing money sitting in a checking account due to inflation you're just losing money on that 10k does that make sense to you it does i just like having that accessible for this for our regular budgetary expenses. If you're not careful, what it'll cause you to do is not stick to the budget because you'll go, oh, we've got this 10K sitting here. So we don't really have, it's almost like, and I use this lightly, but it's almost like you could apply the credit card mentality

because you've just got this net of money sitting there, just like a credit card would. You go, well, I don't really have to stick to my budget because there's just money sitting here. David, do you ever use it for that? In other words, how often do you find yourself dipping into that 10K cushion because your budget's off? Very rarely. Dude, you're so tight, you squeak.

You don't even use it, man. And listen, I'm not making fun of you i'm like dude i had a feeling that he's so disciplined that he's never touched it i can i just tell you something i think it's a healthy dose of fear and what i mean by healthy dose is you're responsible because of that fear but to jade's point it's actually limiting you and i think you need to let go man you got the white knuckles think you need to let go, man. You got the white knuckles out. You need to let go, man, and use that 10 grand better. You feel me?

Now, I do love a cushion. I do love a cushion, but that's too much of a cushion. Yeah, that's too much. He needs to chop that down by 90%. I think you need to take about $60 of that and go get your mall massage. He's a loosen up. Not in the mall, Ken. Come on, those guys do a great job. They really do. Don't look down at it. You're the one who I pass by in the get your mall massage. He's a lucid. Not in the mall, Ken. Come on, those guys do a great job.

They really do. Don't look down at it. So you're the one who I pass by in the mall getting a massage. No shame. Face down, drooling on the floor. Mall massage. There you go. This is who he is, America. That's a fact, folks. You'll thank me for it later. She's Jade Warshaw. I'm Ken Coleman. This is

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