The Ramsey Show - App - “The Tenants Pay My Mortgage” Is Bullcrap! (Hour 2)

Episode Date: April 12, 2023

Dave Ramsey & Dr. John Delony answer your questions and discuss: Why more debt always equals more risk,  "Should I save for college or pay off the house?" "How do I pull money from retirement and not drain my account?" from the blog: How to Take Money Out of Retirement Accounts Downsizing after the kids are gone, What to do with extra income. Have a question for the show? Call 888-825-5225 Weekdays from 2-5pm ET 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 Learn more about your ad choices. https://www.megaphone.fm/adchoices Ramsey Solutions Privacy Policy

Live from the headquarters of Ramsey Solutions, broadcasting for 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. Thank you for being with us, America. It's a free call at 888-825-5225. Sebastian starts off this hour in Canada. Hey, Sebastian, welcome to The Ramsey Show.

Hi, how's it going? Better than I deserve. How can I help? So I'm a 35-year married four kids uh i recently bought a new house uh maybe three years ago paid cash a hundred and no nine hundred and twenty thousand i make eighty thousand a year and uh i have a lot of i have a couple houses in real estate, and my question is, should I try to pay down those mortgages

that my tenants are technically paying for, or should I try to invest for my retirement? Yes, you should do both. And by the way, tenants don't technically pay for anything. They maybe pay their rent, and then you maybe can use that money to pay your payments. So only beginner landlords say things like, the tenants pay the rent, because those of us that have owned rental property for a few decades know that that's a sham. So anyway, so you own two properties that you have debt on. How much do you owe on those two properties? No, I own six properties. Six

properties. I'm sorry. Okay. And you have how much debt on those six properties? $1.2 million. So an average of $200,000 apiece. Okay. And you make $80,000 a year? Yeah. Okay. Where did you get the $900,000 to pay cash for your house? I always had a tenant in my basement when I first bought my house at 18 years old.

And then I just paid off my house within maybe six years. And then I did upgrades in my house, and then I sold that for roughly $865,000. My first house was sold off, and then I paid that one cash. Excellent. This is sounding like a Breaking Bad situation. Okay, I'm glad you figured that out. Okay, so we're out of there, and we've got a nice paid for home you got a net worth in excess of a million dollars very well done and you're you said you're how old 35 good job very

good job sebastian well i'll tell you what i would do and that's why you called is what would i do if i woke up in your shoes i own um several hundred million dollars worth of real estate. I love real estate. I think it's a wonderful investment. And so I'm with you on the real estate, and you've done good on real estate. You've made money on real estate, so that's all good. What you don't want to do is fail to realize that debt equals risk. More debt equals more risk. Less debt equals less risk. No debt equals no risk, at least of that type of risk. And so what I would do is I would

start working to get those paid off. You don't have to panic to do it, but don't just sit there and pay the payments. Let's figure out a way any extra cash we find let's start throwing it at those while you're working the baby steps now your baby steps are uh you're out of debt everything but the houses and you are that aren't you yeah i don't have any good and you have an emergency fund of three to six months of expenses that is your rainy day fund and then once you've got the emergency fund in fund of three to six months of expenses. That is your rainy day fund. And then once you've got the emergency fund in place of three to six months of expenses, then you should start, here's the answer to your question, 15% of your income going into retirement.

And in Canada, you've got the equivalent of a 401k type retirement that you can choose good mutual funds in. And I'll be putting 15% of my income into that, and then money I can find on the table, I'm going to begin to clear this $1.2 million. In my case, I have prospered so greatly because I have no debt. So all the rents I get to keep, all the income minus the expenses of operating the property, I get to keep. I don't have to send it to the bank. And so the tenants are paying me.

They're not paying the bank. So would it make sense? I might sell a few of them. I was going to say sell two or three of them and pay off the other two or three. Out of the six, I'm going to pick out my least favorite two that have sweet equity, but I don't think they've got as good a future as the other four. I want to look at the four and say, you know, 20 years from now, these four are in great neighborhoods. I'm going to love owning these houses for 20 years.

But these other two, yeah, not so much. There's a few cars up on blocks on that street or whatever it is, right? I'm not, that one's not going to appreciate as much. I'm dumping those two, throwing the equity at trying to get the first one of these paid off. And then I would snowball these rentals. I would list the debts, smallest to largest, not though everything at that smallest debt rental, then at the next smallest debt rental, then at the next smallest debt rental.

And when you get them all clear, dude, you're going to have an emotional experience. You don't see coming because you have quit measuring risk in your emotions you don't feel it you're numb to it you're you're used to it you become satiated to it and when it goes away you're going to feel like someone lifted a 300 pound weight off your back i actually wonder if that's why he called because he's got a million dollar paid off house and then all of a sudden he's quietly racked up $1.2 million. He leveraged himself completely. Yeah.

And you just don't sleep. You don't breathe. If you're smart. But, I mean, sometimes you can become psychotic about it. My risk meter was completely removed when I was 16. Right after my wisdom teeth. And so, I don't measure risk i i i had to reinstall it with as a spiritual experience to say okay god says the borrower is slave to the lender

i'm not gonna be a slave anymore reinstall the risk meter i had to make a conscious act of my will to reinstall that because real estate people one of the things they do they take your risk meter out when you take the test they just hit it with a hammer and then hand it back to you you know you just you're just like oh the tenants pay the bill and let's flip that on its head i've got the exact problem on the opposite side of the scale and so the parable of talents i i have a tendency to go bury everything in the backyard and just sit and wait for the end times and i have to be responsible steward of the gifts in front of me and do something with them. Act like you're going to live.

Yeah. Yeah. You got to invest like you're going to live. And you got to invest in such a way as if things go wrong sometimes. Because they do. Hello. That's the risk meter. And so, yeah, if I'm in your shoes, I'm going to pick out the worst to clear them and then use my income and the increased income of the others to buy a couple of them now paid for and knock the others out and have like a three to a five-year plan of having them all paid for.

And I think you can do that if you're careful. That's what I would do. I think 15 years from now, you're going to – I know 15 years from now, you're going to end up in a better position than you would if you try to hold on to these and white knuckle your way through it is there any sort of um recommendation for somebody he's got a lot of house with a and i know he owns it all he's got a lot of house for a little salary and i know the idea is like i paid cash for it but man you're going to be spending a significant amount of your salary just an upkeep on a million dollar property like that just Just on your house. But maybe not. Maybe you own it, you own it, and you own it, right?

That doesn't bother me as much as the other parts of this one. I'm more worried about the million, too, than I am that house. I think that house, if it was two million, I might be going, yeah, that's probably a It's a lot of house. Yeah. But this is, you know, I'm good with that part. This is The Ramsey Show. Dr. John Deloney, Ramsey personality, host of The Dr. John Deloney Show.

If you've not tuned into his podcast, you need to. It's pretty fun, and you'll learn some stuff about yourself and about others and about relationships. It's good stuff. Number one bestselling book, Own Your your past change your future as well and john you have a big hit on your hands uh these questions for human cards there have become a uh a thing they are definitely a thing having a blast they're selling like crazy yeah yeah and uh why do we need questions for humans cards because we have lost the skill am i'm gonna say it's a character issue or some kind of you're a loser we've lost the skill of

being in the presence of other real humans and not waiting for our turn to speak but actually listening to somebody and actually posing good questions and engaging in dialogue we still know how to do it anymore and that's fine that's where we are let's figure it out yeah so because i my guess is we've learned to text we text each other we email each other we we don't fight each other we argue we felt down each other we have a lot of arguments especially on social media where we have much more courage and here's another crazy thing um that's that's emerged the number of parents who thought that their kids don't want to talk to them or the number of kids who think my grandparents don't want to talk to me or my parents just don't want to interact with me.

And so you've got people passing each other in the night and parents would do anything to sit down and have a great conversation with their kid. I mean, kids would do anything to have parents put their stupid phones down, look them in the eye, and ask them some deep, important questions. Or just some fun questions, some laughter questions. So that's what these questions for humans are doing, man. And it's been incredible. I would never in a million years would have anticipated the response.

Yeah, the sales are off. We have trouble keeping them in the stock. But we've got them. And we've got decks for everyone if you're dating if you're a married couple if you got a girl's night event a guy's night event parents and kids friends edition and they're flying off the shelves and so it's just a conversation starter and they're a lot of fun again a lot of them are humorous a lot of them are stuff that you know what's your first car what's the dumbest thing you ever did in high

school what all this kind of stuff right so all these decks will get you spending time laughing and learning and actually looking at each other instead of at screens. So pick up one, two, or even more of the questions for human conversation cards, conversation starters, a little deck of cards is what they are. And you can get them at RamseySolutions.com slash humans. And notice it's not an app. It's not an app. It's an app it's a physical product with your screen not on your phone yes it's humans looking at other humans i just think that's an important

thing yeah yeah we actually toyed with that man because it'd be so much easier and cheaper just to throw it online and but man there's something powerful about putting your phones in your purse or in your in your back pocket and pulling these things out. Yep, yep, yep, yep, yep. Open phones at 888-825-5225. Colby is in Greenville, South Carolina. Hi, Colby. How are you?

Hey, guys. How are you? Thanks for taking my call. Sure. So my husband and I are in baby steps four, five, and six. We have two kids, and we are really wanting to also pay off our mortgage. So we're wondering how do we split our extra income between 529 investing for our boys and paying off our home. There's no perfect formula, but what I have always done when I'm working with customers like you or I'm looking at it for myself is I'm trying to say, okay, how old are these kids and how much have I got to have to get them going into college?

I got to at least have a good start there, right? I got to see a way they can go to school debt-free and so if you've got a three-year-old and you want to do fifty dollars a month for now and then attack the mortgage a little more aggressively fine if you've got a 16 year old and you got no money for their college you're probably not putting anything towards the mortgage much right now because you're probably going to be trying to load catch that war chest up that's really really thin does that make sense it does yes it does and and and or i gotta have a plan i gotta have a way i'm gonna get there my husband was in the military my wife was in the military so i got gi bill or i've got this or i've got that but the plan can't be student loans right so how old are

your kids and how many um two four four years old, and one year old. And what's your household income? It should be about $200 this year. And how much do you owe on your home? $157 as of yesterday. Okay. If I were in your shoes, I would set up $50 to $100 a month with my SmartVestor Pro on each of these kids and their 529s just to check the emotional box and start to build the

muscle that I'm actually saving for college. But you're really not saving much money right now. And then I would use your fabulous income and pay off this tiny little mortgage you have really fast. And then you can circle back and easily finish out funding the college. You got plenty of runway here, plenty of runway. And I and i'll tell you i i think and dave tell me if i'm wrong here but the fact that you can get this thing paid off in two years 18 months i love the idea of almost deciding let's be just a hair under a gazelle intense and just to get this thing done and then let's let's live our let's have a fun life that's what me and my wife i mean i i like that plan.

If you can do it in this tiny little window, there's something about it. Let's just sprint and get it done. Yeah, the finish line's in sight. You can do a lot of stuff, you know. You find energy, a burst of energy in the last mile of the race. So you can do that. That's good. There's nothing wrong with that at all.

The whole thing is just be thoughtful and i i would not ever tell you to do zero towards kids college because i want you to start building that muscle and start have that system and process in place even though mathematically we're not really doing that much yet okay it's kind of like when you first start giving sometimes you start giving a small amount to start to build your generosity muscle and then over time you'll increase your giving to uh to a much greater level think of it this way it's about the identity shift we talk about i'm a person who saves for my kids college and it might just be 50 bucks this time because i'm also a person that doesn't owe anybody anything and we're going to sprint towards that yeah it's just an identity and instead i'm a person who gives yeah and the other thing is we are going to see

in this coming 15 years uh more of a an upheaval in higher education than in any 15 year period in recent memory i 100 agree with that yeah There's going to be a price war. There's going to be a come to Jesus with the culture on quit teaching stupid butt stuff that's not usable in the marketplace. There's going to be people are going to quit. I hope they quit paying for prestige that doesn't have any results um uh you know we we have taken the for the last many 15 year periods we have taken the uh the the common sense off of education yeah we've lost our we're dumb about education which is actually an irony of iron we've made it about dollars and

cents instead of common sense well not even i mean we don't even look at the dollars and cents we just go whatever it costs and no i'm not saying us i'm saying the business oh yeah they the higher ed people did they've been cleaning up so uh all of you ought to be watching borrowed future our award-winning documentary was one of the top documentaries year before last and uh still very valid but um you're in good shape. You're in good shape. You're going to be just fine, Colby. You're doing all the right stuff. But the epic student loan crisis is not over. We continue to make the stupid student loans.

Everybody's talking around about how bad they are, and we ought to forgive them. But we keep making them. Keep doing it, man. Which is so intellectually dishonest. It's unbelievable. But that's the definition of Congress, intellectually dishonest. And so, you know, if Congress had, you know, if you really cared about America, you'd quit making these loans that are destroying America. I mean, it's just dumb.

You're killing the next generation and the next generation. Even if they made an announcement, I've been thinking about how do you how do you unwind this even if they made an announcement kind of like they they made an announcement about um in 2020 whatever we we expect this many electric vehicles and in 2020 whatever we expect this much water reduction whatever if you said in five to seven seven years we're done college y'all have seven years to figure this out you got five years you got three years to figure out your life without this, but we're going to stop putting these loans out. That's more likely than doing what I would do, which is just shut it off.

Shut the spigot off, yeah. I'll just go, yeah, y'all have had enough. Y'all got enough. It's good. We're good. Now figure it out. But that probably is not going to happen, so you're okay. You don't have to panic.

Entire college towns would dry up if I did did that so that's probably not a good idea this is the ramsey show thank you for joining us america dr john deloney ramsey personality is my co-host today as we answer your questions about your life and your money. Today's question is brought to you by Neighborly, your hub for home services here at Ramsey. We believe in making homeownership a blessing and not a burden. So we recommend Neighborly's network of service professionals to repair, maintain, and improve your home. Find the help you need at Neighborly.com. All right. Today's question comes from Andy in Virginia.

When I get closer to retirement, how do I access the money in my retirement funds? Do I take a set amount each month? Do I only take money made off interest and leave the principal alone? How do I make the money last? That's the question, Dave. I love the simplistic mechanistic question here

man how do i do this well you can set it up with your broker you have the money in the mutual funds hopefully in your 401k your roth iras that kind of thing you decide which um of your different retirement accounts because most people aren't going to end up with more than one retirement account you may have a 401k from an old job. You may have Roth IRAs that you did. Your wife might have had a 401k rolled over. Those are all different buckets of money. You say, okay, out of those buckets of money, we're going to draw on this many. We're going to draw this much. And you can set a set amount and say, I'm going to draw this amount. I'm going to draw $5,000 a month. Or you can say, I'm going to pull a percentage a month. Or you can say, I'm going to draw this amount. I'm going to draw $5,000 a month. Or you can say, I'm going to pull a percentage a month.

Or you can say, I'm going to pull the gains. I would not say I'm going to pull the gains. If you've got the money invested in good growth stock mutual funds that have a track record that's 10% to 12%, if you pull off 10% of it, or let's say you pull off 10% of it or 8%, let's say you pull off 8% of it and it makes a 12%, then you've left 4% in there. If it makes 10%, you left 2% in there. So it's going to be growing forever.

You're not only not hitting the principle, you're not, it is continuing to grow so it will run in perpetuation if you do that so in other words if the the percentage that you're pulling off is less than the percentage average percentage of growth then you're going to come out so over a 10 year period of time if it averages growing 10 to 12 and you pull off eight every year you're going to not have touched the principle at all in the end. It will have grown. Now, it might or might not have kept up with inflation,

but if you've got a million dollars and you're pulling off 8%, that's $80,000 a year. And that's how you live. Do you pull out a lump sum? Does it come out monthly? I'd set it up monthly. Just get a monthly check on it. 8% divided by 12 and just have that amount coming out.

I want 8% of the thing coming out to me. Or you can say, look, there's a million dollars there, so I'm going to say $80,000 and have a monthly check come on $80,000 a year. It's whatever that happens to be. Or I'm going to pull $40,000 on $500,000. That would still be eight percent and so you know that that or you know i don't quite want to do that so i'm going to pull 36 000 which is three thousand dollars a month i have three thousand dollars a month coming off and it'll last forever if you do that what about a mandatory dis disbursement what is that you have

the required minimum distributions that begin at 73 on traditional IRAs and traditional 401ks. If you're doing this, you will easily meet that. Okay. You will easily meet that. So it's not a problem at all. If they're Roth IRAs, they don't have that. Okay. Or Roth 401ks.

So let's say you're in a situation like you, Dave, and you've got some rental properties that are generating cash flow. You're not technically working anymore, but you're still, money's getting deposited. And now you have this mandatory withdrawal that you have to make. Can you take that money out and just reinvest it? It becomes taxable when you take it out. The purpose of them making you take it out is so they can tax it. So they can get some money from you. Yeah.

So you're going to take it out. It's a taxable event. So I have this income. Now, what do I do with that money? You can do whatever you want to do with your money. You can invest it. You can give it. You can do whatever you want to do with it. But to take it out. It's a taxable event. So I have this income. Now, what do I do with that money? You can do whatever you want to do with your money. You can invest it. You can give it. You can do whatever you want to do with it.

But it's coming out, and you're going to pay taxes on the required minimum distribution beginning at age 73. Okay. So either way. Except for that part where it's like me and I'm not working because I still work. Correct. Yeah. Just to be clear. Okay.

I was pretending you were 73 oh how do you know i'm not working when i'm 73 well that's only 10 years this is an uncomfortable conversation john i think it's very comfortable one of us is living in reality you're thinking i'm going to be playing more golf and spending more time in Cabo. That's what you're thinking. I think you're going to be 73. I'm just saying.

That's how that works. All right. Joanne is with us in Boston. Joanne, get us out of this. How can we help? Hi, Dave. Thank you. Thank you for taking my call.

Sure. I have a question. Should I sell my house and downsize? I'll give you my numbers. I'm 59. I'm single. My salary is $152,000. My house is worth $950,000.

I owe $380,000. And also I have 401K. It's $450,000 in the 401K, and my savings is $20,000. Why would you sell your house? That's a good question. There's a couple reasons. I live in Massachusetts. I'm remote.

And I was thinking to go southern New Hampshire and get away from some of the taxes. Okay. So you want to move to a different state. Yes, which is only 20 minutes. It's that close. Yeah, and I was also thinking now I'm 59, I'm single, and I have to mow the lawn and do the yard work.

Well, if you bought a house in Jersey, would you not have to mow the yard lawn? Oh, I was thinking a townhome, so I wouldn't have to sell. That's not a thing. Okay. Yes. Okay, so you're thinking of getting something that helps you get rid of the maintenance

that's a little newer and a better tax situation. Yes. If you spend exactly the same money, it'd be a net gain in lifestyle and no change in your finances. Right. I was thinking a bit smaller. Yeah.

If you move down, then it's kind of a net gain. Right. But you don't have to do this for your finances. Your finances are not out of control. But you're wanting a better quality of life by moving down. Well, that's kind of a no-brainer do it just do it okay yeah i mean you're you're not gonna you're not going further in debt you're not gonna bankrupt yourself by doing this you're going the other way you're gonna free up money uh have a lesser mortgage which you could get paid off going

into retirement which is the thing you need to be doing. You need to be aiming at getting that paid off. So if you bought a townhouse in Jersey, what would it cost? She's going to New Hampshire. Oh, New Hampshire. I'm sorry. What would it cost? I keep sending you to Jersey. You did something wrong, apparently.

Probably, it looks like $550. Instead of $950? Yeah. Yeah, I can get a townhome there i've been looking so you're paying cash yeah yeah i'm doing this for sure move tomorrow yes because if you got no house payment now we're going to pile up cash even more so let's play this out you got 450 in your 401k and now you got no house payment and you said your household income is 152 you're single right yes okay so the 450 if it's invested in

good mutual funds in your 401k if it's not make sure it is will double about every seven years you're 59 and a half when you're 66 that's 950 okay so when you're 73 that magic number that old old people those old people shut up john it's two million dollars yeah okay so when you're 73 if you've got this invested in good mutual funds you're going to have two million dollars if you add nothing to your retirement and a paid for house house. You have no bills, yeah. I think we call that a touchdown in the Super Bowl. Yeah, I think so, too. Yeah, and you're going to be adding even more to it,

so you're going to have $4 million. That's going to be fun. Yeah. This is great. This is great. And you don't have to cut the grass. I mean, there's all these benefits. There's all these benefits.

Because those old people can't cut grass. Yeah, that's it. She's going to be these benefits. Because those old people can't cut grass. Yeah, that's it. She's going to be getting it. And you won't be in New Hampshire. I mean, you won't be in New Jersey. You'll be in New Hampshire instead. So there you go. I was trying to send her there.

I really was. You were trying hard. I think it was Alzheimer's. No, I think in addition to being really good with numbers, you are also a geography savant. That's outstanding. Outstanding. And sarcasm. No, I think in addition to being really good with numbers, you are also a geography savant. It's outstanding. Outstanding. And sarcasm is your spiritual gift.

There it is. It's just over there and it's cold. It's north and there's taxes and Yankees. Yeah, that's right. That's right. This is The Ramsey Show. Thank you for joining us, America. Open phones at 888-825-5225. Dr. John Deloney, Ramsey personality, is my co-host today.

Sue is with us in Tampa, Florida. Hi, Sue. Welcome to the Ramsey Show. Hi. Thank you for taking my call to both of you. My husband and I are in baby step seven, and he's 63. I'm 61. Currently, I'll be retiring from my job in July when I turn 62, and at that point, we'll have a surplus of about $2,500 a month. And I was just wondering, since we're in Baby Step 7, we still fully fund our envelopes. We contribute to our

four grandchildren's savings account for college. We have the sinking funds for a car. What do we do with that extra $2,500 a month? What's your household income? After July, it will be $89,000 a year. Okay. There's no wrong answer. Generally, what I always try to do when I find, quote, extra money laying around is I try to stay. I'm going to divide it some way among three areas.

I'm going to invest some. I'm going to increase my generosity some, and I'm going to enjoy some. joy some and uh like like when i'm working with uh if i sit down with a like a professional athlete let's say a football player that's making 10 million a year and uh what we tell them to do is to set a basic budget maybe 100 150 000 a year to live on and then everything above that let's break it down into percentages and say okay this percentage we're going to enjoy this percentage we're going to enjoy, this percentage we're going to invest, and this percentage we're going to be generous with. And that's what Sharon and I do. When we get an extra check in, say, from a publisher, maybe I get a royalty check from an old book I wrote.

Back in the old days, I still get those checks. That's extra money. It's found money. We've already got percentages that we apply to it for generosity enjoyment and additional investing and of course you've got to set your taxes aside so what we do in our case is i won't give you the exact percentages but i will tell you that my taxes are 40 on everything because i'm rich and i must be punished that's like a washington dc rule right so So I got to pay a 40% tax. I'm an evangelical Christian, so I tithe 10% on all of my incomes. So that's 50%, 40 and 10. Then the other 50%,

I automatically set those two aside because those are just automatic. Then the other 50%, I put some towards investing a percentage, some towards enjoyment, which allows me to buy some ridiculously wonderful things and to go to some ridiculously wonderful places. And it's just crazy. And it doesn't even take a high percentage to do it. But then, of course, also increase generosity, increase investing. So enjoyment, generosity, investing, always be doing those three things. And also, John, that's even where you start teaching a two-year-old a five-year-old i was just about to say um i tell this story not not for the praise but just to give a picture um one of my favorite things to do when we have quote-unquote found money we have money that's in excess of our budget hank and i have breakfast and i got this idea from

you and daniel like we have breakfast every tuesday morning and we go to Waffle House and teaching him the experience of comically over tipping and watching the waitress's eyes light up. And sometimes they'll put the lean on something because they need like that. That was a light bill. Right. My son now is so excited. I'm having to hold like, hey, man, like that's you can you can't tip 150% on. He's bringing his own money because he wants to participate in that. And now you're shifting the whole family tree. And so when you get 2,500 bucks, how fun would it be to go on a date and go somewhere nice and then just

absolutely take care of somebody in a magical way? Do it once a month. Walk through the kitchen and hand out $100 bills. Golly, man. I mean- After you had a wonderful dinner, know that kind of stuff it's and and you got to remember when you're making 2500 when you have 2500 extra bucks it's easy to separate yourself from that waitress that is like a a piece of dental floss away from it all falling in on 100 bucks makes a huge difference sometimes it could be great gift absolutely so yeah the increased generosity and that you can include that in tipping if you want a random acts of generosity walk around the

gas pumps and pay for people's gas just to watch their minds be blown and um you know buy a car for somebody yeah you know it's just that you can buy a two thousand dollar car change somebody's life it's crazy you can buy ten of them for twenty thousand i mean it's it's just a lot of fun so it's the most fun you'll have with money but you need to be doing all three you need to have some enjoyment you need to have some generosity some increased enjoyment some increased lifestyle some increased uh generosity all of those things that's a really good question sue so just sit down and say okay out of my you said she had 2500 is that what she said extra 2900 what is just give a number to it i'm going to put 500 to this i'm about a thousand of that and i'm going to put 500 you know whatever it is and add it up and make but

every dollar still has an assignment oh and guess what when you're enjoying the enjoyment portion knowing that you've been noble with your generosity and knowing that you've been wise with your investing increases the enjoyment of the enjoyment portion because there's no regret. There's not that little voice saying you can't afford this. You can't afford this. And there's not a little voice saying you're, you're selfish. You're evil.

Yeah. You're evil because you have a nice car. You should, you know, you should, you're going to hell because everyone knows that not the Christians don't drive nice cars. Correct.

Because I mean, it's the proper car is a 1974 Honda Accord because the Bible says, and Jesus said, and they were all in one accord. That's right. It's a Bible joke, right? So there you go. So otherwise you're going to hell, right? But, no, I mean, it's just ridiculous the way people think out there.

And it also removes you from all the judgment of all the guilt trippers like uh because no one has any concept of the of of what someone else does with generosity well and that's if there's no way you can know what everybody you can unless they just crumpet every single thing they do and then it's not generosity it's it's ego right if you're right hand to know what your left hand is doing man then people aren't going to know and they're going to judge you and that's fine that's on them yeah i'm going to sleep well at night yeah just you know at your funeral and as you walk into the pearly gates there'll be two additional parties for all the people that you blessed over the years that's how that works and um because you know there'll be people walking up to your grandkids going you

had no idea what your grandmother did that that that happened with my grand i get choked up here that happened my granddad people showing up out of grandmother did. That happened with my granddad. I'm going to get choked up here. That happened with my granddad. People showing up out of the woodwork saying, oh, man, your granddad sent us $500 back in the 80s when we couldn't breathe, and we were able to fill in the blank. And he didn't make a lot of money, man, so it was just a way of being. Best investment on the planet.

All right, Kevin is with us in Greenville, South Carolina. Hi, Kevin, how are you? Hey, Dave, good afternoon. Good afternoon, Dr. Hi, Kevin. How are you? Hey, Dave. Good afternoon. Good afternoon, Dr. John Delaney. I'll be real quick. I just wanted to give you guys a call and ask you a question, Dave. I had a buddy.

I'm hoping you can help me solve an argument that I had with a buddy here that I talked to Ramsey with a lot. He was telling me that you, I work for a large car manufacturer in Greenvilleville south carolina i'm pretty sure you can guess which one bmw and uh yeah maybe and so we have a lease program an associate lease program fabulous right now i'm looking so that's funny that you say that because he told me dave ramsey recommends leases and i'm like no i don't i don't recommend leases but your bmw lease programs for employees is not a car lease. It's an employee benefit. Okay. A car lease is you get screwed.

If you go to the BMW dealership and you lease a BMW, you're getting screwed. It's a horrible plan. But you have an employee benefit that they pay for your tires your gas your insurance they pay for everything and it costs you almost nothing to drive this car comparatively to driving your own car yeah and the thing that bugged me was the car payment but you know i mean it's still a payment that we have to pay yeah but if you listen if you just break okay let's say you go buy a $25,000 car let's pretend you're out of debt and you had extra money okay if you just break, okay, let's say you go buy a $25,000 car. Let's pretend you're out of debt and you had extra money, okay? If you've got a $25,000 car and you're driving it around,

for the gas that you would pay a payment on, you've got to pay the gas payment to the gas pump. You've got to buy tires. You've got to change the oil. You've got to buy insurance. And the stupid $25,000 car is going down in value every day you own it. Okay. Those are all payments too.

Okay. You're just not writing one check for all of them. In this case, you're getting the use of a vehicle with everything furnished. Am I correctly outlining your employee benefit? Yes, you are. Okay. It's a deal. I would do that deal if I worked for BMW because you're not borrowing money. They're giving you an employee benefit for a set

number of dollars a month that you can't possibly drive a car anywhere near that nice for that amount of dollars. It's a bargain, but it has nothing to do with leasing a car. They call it lease, but it's not even a lease. You can turn it in each month. It's not even that. You're not stuck in it. You get fired, you're out of it. It's easy. So it's not debt. It's a whole different program. This is The Ramsey Show. Hey, it's Dr. John Deloney. If you like what you heard in this episode and want to know more about getting started on the Ramsey baby steps, go to ramsesolutions.com and click on the Get Started button. We'll help you figure out the best next step for you based on your specific situation. That's ramsaysolutions.com

and click Get Started.