The Ramsey Show - App - There’s Always New Versions of Old Stupid Stuff (Hour 2)

Episode Date: March 8, 2023

Dave Ramsey & Jade Warshaw answer your questions and discuss: "Should I start day trading?" from the blog: What Is Day Trading and How Does It Work? "My fiancée doesn't want to move into my duplex", "Do credit cards have more fraud protection than debit cards?" "Is our rental house holding us back from accomplishing our goals?" The best retirement option for you. 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 POTS 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. Jade Warshaw, Ramsey personality, is my co-host today. Open phones at 888-825-5225. You call, we'll talk about your life and your money. Justin's with us in Colorado Springs.

Hey, Justin, welcome to the Ramsey Show. Hey, Dave. Hey, Jade, my two favorite hosts. How are you? Better than we deserve. How can we help? Yes. I'm sure you guys don't remember me, but I called in about a month ago and I thought it was going to be a bad YouTube segment. Didn't end up being too bad.

Oh, yeah. I think I remember. Tell me more. Yeah. So we had the only debt we had was a truck and I had some questions about investing long term. And you guys laid out a really good plan for me and I'm kind of here just to give you a little update. Cool. Let's hear it. Yeah. So I didn't follow your plan to a T and hence why I'm calling. And so we had a third and we had about, I thought we had about a $30,000 truck grown. We actually had about 37, but you guys recommended we pull it from our

savings and pay it off. And we didn't pay it off that day, but we did pay it off in three weeks. So $37,000 in three weeks. So I wanted to let you know it was a very successful call. We followed you guys' tips and now we are officially debt free. And yes, and with that, I did quick math on it at the 650 monthly contributions we were doing on our truck and insurance on a rate of return of 10 percent average after 20 years. That's five hundred thousand and 30 years. It's over one million. Wonderful. Yeah. So in my question today and once again, I hope you guys take it easy on me with this. We did free up the cash and we did max out the 15% of our 401ks. And we do have an extra good chunk of money going to the house.

And do you have your three to six months emergency fund? We do. Okay. And the last show that Dave, you recommended, I follow up on my 529. It is in a mutual account and there's currently $15,000 in there. Okay, good. And now my question is, I do have a little bit more freed up money, and I know I think the answer to this.

I used to dabble a little bit in the day trading. Should I play around with that or just leave it alone? You know the answer. Yeah, you know the answer to that i mean okay the study the studies tell us 78 of the day traders lose money okay so it's not as bad as buying a lottery ticket but it's close okay yeah i uh about years ago when i was actually worked in the financial industry i used to do a little trading and i okay, but I know the market is a little bit different today. You know, the other study that's very interesting on day trading is this.

Day traders are a lot like fishermen. They remember the days they caught stuff, and they have a mental block on the days they didn't. Okay, yeah. And they go, yeah, the fishing's pretty good over there. I usually catch something, and you really don't, but you just remember the days you caught fish. And so it actually is weird. You probably didn't, but you block it out because it's like,

this is fun and I'm good at it. No, you're really not. You suck. And so don't do it. And I don't do it, and I know a lot about it. I don't fool with it. I would rather you get your house paid off and if you want to trade in something save up a pile of money and buy a piece of real estate okay you got

a lot better chance of making some money uh buying a piece of real estate selling it you know that kind of stuff then you do with cash no debt then you do after your house is paid off then you do messing around day trading but um i mean day trading it's just, again, I don't care what people do. You can do whatever you want to do. Yeah. But what I'm always looking for, for me, and I'm not going to tell you guys to do something out there that I wouldn't do personally. Yeah.

I'm looking for something that has a high probability of success. And so I don't really care what your broke brother-in-law's opinion is. And so that's why I didn't buy crypto. And now I look like a freaking genius. And I didn't buy Bernie Madoff. And now I look like a freaking genius, you know. And I didn't, and you know, I don't try to make my money at the craps table in Vegas. And now I look like a freaking genius.

And I don't buy lottery tickets. And now I look like a freaking genius. And so all I do is figure, whatever broke people are doing and their suggestions are, I try to not do that. And then you look like a freaking genius and so all i do is figure out whatever broke people are doing and their suggestions are i tried to not do that and then you look like a freaking genius you know and so uh that's how this thing works and then you find out what rich people are doing and you know the number of millionaires that we studied out of 10 167 that made their million dollars or greater net worth that we studied in doing day trading precisely zero about as many as made it using airline miles with their credit card

yeah wealth gained hastily will dwindle we know that and my guy you know if you're if you're chasing after that chances are you're trying to get rich quick i mean let's just say it like that that's a good point here's the thing you gotta remember okay there's gambling i'm making fun of it yeah there's gambling and that's real gambling okay that's like we're playing cards we're playing the roulette wheel we're playing craps okay real game or betting on a sports team whatever that's real gambling all right then there is speculating which is where i'm trying to make a short term gain and it's usually a high gain right and then there's investing and investing is always over a long period of time investing

is always the tortoise where speculating is the hair and i don't know gambling's your drunk brother-in-law i don't know whatever i don't know but it's um drunk brother-in-law, I don't know, whatever it is, I don't know. But it's, you know, the tortoise is who we find when we study wealthy people. We always find tortoises. Yeah. I'm fine with being a tortoise, you know. Anytime I've ever posted about this, you know, about your rate of return and this and that, and people are always saying, Jade, you can't get a 10% rate of return. Where can I find that?

And I realize you're not, but they're not long-term thinkers because they're thinking how can i get a 10 return this year or right now or this week this week and i'm like that's not how it works you've got to be invested over time you've got to be in this thing for the long haul it's it's a habit and a muscle that you're building over time allowing that compound interest to grow for you so yeah it's just a different mindset it's just i'm the guy that always i wanted i always thought i was smarter than the average bear and i could figure it out and i could find a way to do the shortcut yeah and my wife every time i bring it up something that even sounds like that she goes you're scheming and scamming you're doing it again you're scheming and scamming you're trying to hide the p under a shell just do the smart

stuff quit trying to be quit trying to beat the system yeah you know it's like well i mean that you're the one the ones that always i love if you read our comments people ripping on us yeah it's like well ramsey's advice is good if you want to be middle class except for those millions of millionaires that we made but other than that yeah that's so funny because because this is somebody who's trying to speculate yeah and get rich quick and get rich easy and it best speculate and get rich quick and get rich easy. And the best way to get rich quick is get rich slow. Well, and everybody thinks that they've come up with a new and improved way. Yeah.

Right? Theirs is the new surefire way. Yeah. I mean, like nothing down real estate's new. It's like it's blown up like it's never happened before. Because it's on Tic Tac. That's what made it that way. I mean, it's new. It's blown up like it's never happened before. Because it's on Tic Tac. That's what made it that way. I mean, it's new.

It's not new. I was doing nothing down real estate in 1982 before any of you out there were a sparkle in your mama's eye. I mean, seriously. Unbelievable. Wow. It's not new. There's just new versions of stupid. That's right.

New versions. There's nothing new under the sun. Wow. Still stupid stuff. Good question, sir. Thanks for following up. This is The Ramsey Show. Jade Walsh, our Ramsey personality, is my co-host today.

Thank you for joining us. Open phones at 888-825-5225 with debt payments and now inflation stealing more and more of your paycheck we know a lot of folks out there just um scared and i understand i've been there it's not fun um but you're going to stay right where you are if you stay right where you are boy that was deep. I mean, seriously, you shouldn't have to live with that kind of stress. You want things to change? You've got to say, I've had it. I'm not living like this anymore. I've had it. And do something new with your money. We'll show you what to do. If you want to learn how to handle money, we can show you.

We've taught more people than anybody else. Ten million people have been through Financial Peace University. It's our nine-lesson course. You hear people talk about it when they're doing their debt-free screams. It'll teach you how to get out of debt, become wealthy, and outrageously generous the right way, the fastest right way. It's everything you wish you'd learned about on how to handle money. So decide you're done. I'm tired of being scared, tired of being stressed. way. It's everything you wish you'd learned about on how to handle money. So, decide you're done. I'm tired of being scared.

Tired of being stressed. And you start Financial Peace University at RamseySolutions.com slash FPU. RamseySolutions.com slash FPU. Joey's in Boise. Hi, Joey. Welcome to the Ramsey Show. Hey, Dave. Thanks for

having me. Sure. What's up? Fiance and I are getting married in about three months. We are looking to buy a house. I currently own a house. I own a duplex. I rent out one side, live on the other side. The amount that I make towards the mortgage is about $800. It's two bed, one bath on my side.

We're looking at having kids pretty quickly on. So she kind of wants something bigger. She doesn't want to move into my place. So we're looking for a three bed, two bath, but with the housing market, what's done since I bought my place and then the interest rates are estimated monthly note would be about $3,600 a month. So she's very anti-debt, even less than her. She's really making the push for it. I'd rather stay in my place until we have to upsize. I mean, just looking for advice. What's your duplex worth right now?

About a half a million. Wow. Are you talking about selling it to do this deal? I'd rather not sell it. I'd rather not have a $3,600 payment. I know, that's right. Well, the payment on this duplex is $2,000. No, you missed the point.

Yes, yes. Yeah. The problem, the reason you have a $3,600 payment is you're trying to keep the duplex. So you think it's a better idea to sell the duplex and look for more? You should not buy another house unless you do. So you only have two possible decisions. One, sell the duplex and buy a house.

Two, live in a duplex with an angry new wife. Whew. Better to live on the corner of a roof than to be in a house with a nagging yes oh lord you don't want that trust me so you don't think there's merit in me trying to talk her into uh to moving into here giving that another try she said she doesn't want to do it do you really think that's smart, really? I mean, seriously? From a relational standpoint. I mean, it's not a bad place.

I get where she's coming from, though. It's not our own place. It's a bachelor pad. She's not moving in, dude. She wants a fresh start. She wants a place with you. She wants a place that doesn't have those smells. Mm-hmm.

Kathy. Sell it, man. You can always. Happy wife, happy life. Sell your duplex, get your property, and get your property where your payment is no more than a fourth of your take-home pay, household income on a fourth of your take-home pay. 15-year fixed. 15-year fixed. No more than that.

And if that's not 36, then don't buy a house. Then don't buy a house. Wait a minute. What are you pricing out? Because you're going to sell the – what will you take home after you sell this duplex? How much equity have you got? We've got about $140,000 in equity. Okay.

What's your household income? What's your income? What's her income? Our combined incomes are going to be about $130,000. Okay. And listen, I've been to Boise. I've been to Boise. You're looking in the wrong neighborhood.

You can find a house that's not the duplex and that is within your budget. You're trying to set up a thing where the only thing that's smart is staying in the duplex. And I've got to tell you, man's she's not going to do it. It's not it's not going to work. I mean, she might do it for a short period of time, but you're going to wish she didn't before it's over. Just don't do this. It's not I mean, but you're trying to make this somehow just a financial decision. What you got to remember is personal finance involves relationships. Personal finance involves relationships personal finance involves your life where your kids live your dogs live your wife lives all this kind of stuff

i mean and and you don't get to just get a pass on math because she wants a new house math is still math or because you want or because you don't want a new house and now you're trying to justify there's no houses in boise that we can all bullcrap seriously i mean boise's had a big bump in price i know that because california invaded it sure to you know they were running out of that state like their hair was on fire and boise was close so um no question about it that happened right but the? Yeah. But we know. We've seen the numbers, the flee from California. And so, yeah, it happened. I don't blame them, though.

Yeah, don't. Joey, the rationalization is dripping all over this conversation to where you try to guide the conversation the way where you want it to land. And it's just not going to work here yeah okay we're not going to do that i think you guys need to have a few more conversations about what you both want and what that looks like not just not just financially but just what does our life look like and it sounds like she doesn't want to live in a duplex next to duplex neighbors and she don't want to live in his old place yeah and that's not i mean i don't blame her guys listen that's a good point okay there's a even if it's nice

yeah here's what happens i gotta tell you statistically this would be i'm making this number up but i'm not gonna be far off north of 80 of the time young dude goes and buys even a nice house not a duplex not something not not a crummy smelly bachelor pad not nothing i mean just a nice place okay and then when he gets married later he discovers he bought the wrong house yep like 80 of the time because he didn't have her to tell him it was the wrong house and so it was the wrong house and so even if it was the right house it's now the wrong house and so you are moving so if you buy a house dude out there dudes you're 25 you're 24 and then you meet her yeah a few months later and you get married a year later you're going to discover you bought

the wrong house oh i'm laughing because that's what happened with sam and i you did it too he did it he had a house with his uh you bought the wrong house sam and he did and was with his mom you know him and his mom went on it together oh they were doing a mom investment yeah in 2008 no longer an investment timing and uh well no i'm saying we had to sell it in 2008 bad timing but i'm like i don't want to live in this little townhouse that you bought and had girlfriends and see what i want with your mom i don't want to live up in there i need something fresh i need i need a fresh house and fresh furniture i'm the fresh wife that's that i knew it was coming i see that you just personified it for me yeah that's perfect that's perfect very well done yeah joey uh you see you know now you got Jade going. I'm just saying. You ain't got a chance, dude. So, yeah, we're all on your wife's side.

Fresh. We need fresh. No remnants. No remnants of the former life. Yes, I don't want to see it. Because I'm looking, I'm saying, who picked out that lamp? No, no. I don't want to know that.

I don't want to know. Who bought that lamp? No, I don't want to know. I don't want to know that. Yeah. I just turned that lamp on. I got, I got. Yeah, I got the willies. I don't want to know i don't want to know that no yeah i'm turned i just turned that lamp on i got i got yeah i got i got the willies i don't know who's been up in here and i don't want to know that's fabulous i love it so i'm speaking for even if it's not that it's just

you it's not yours you didn't pick it that's right if everything else was okay and it's fun to do that i mean let's be honest he's never had a date in his life and there weren't any of that that's true still you didn't pick it yeah it's fun to go out and look for a place and and shop with your husband to be your wife to be like enjoy that and and see it as something that you can do together and bring you closer together learn about each other fresh fresh gotta love it this is the ramsey show jade washaw ramsey personality is my co-host today when i started on the radio about 31 years ago it was much to my surprise after about a year that we had a bunch of listeners and then my second surprise was that people actually wanted me to say nice things

about their company, and they would pay me to do that, called endorsements. And Churchill Mortgage came on that year. Churchill Mortgage has been with me now for 30 years on the air. The number of times that a host of any kind, a show of any kind, can say they have endorsed a single company for 31 years is almost zero uh either the company goes sideways the host goes sideways or becomes irrelevant gets thrown off or whatever but i've managed to stay on and they've managed to keep taking care of their customers and we've managed to keep saying go to churchill mortgage for 31

years and but soon after that we started having people come to us and they wanted us to endorse them and it was like and i actually took on what you know in the early days we were trying to make a living and i actually took on a thing and then one of my ran into one of my friends he goes hey do you really do that would you really tell me to do that and i had to go uh no i just i just didn't know and i felt ashamed you know, because I had done that. And then so we developed a rule like, you know, 29 years ago or whatever it was around here that we don't endorse, we don't put anything on the air, and we especially don't put one of our voices on it saying, go do this unless we would send our best friend there our little sister there or whatever your mama there right and so if we that's a smell test we use around here and so all that to

say you know we're thrilled to endorse zander insurance and churchill mortgage and thrilled to have pods moving in storage as our uh as our studio sponsor and to tell people to use them to move. And today we've got a new sponsor joining us on the question of the day that we do each day. The new sponsor is Neighborly, and they're the sponsor, and they've got all kinds of different companies out there that are the Neighborly companies, like you've heard of, like Mr. Re Reuter or you've heard of Mr. Handyman or Mr. Electric. We actually endorse Mr. Electric individual franchisees in some markets and individual cities that I've voiced the ads for for a local radio station that kind of a thing. So neighborly has got a whole bunch of different services from five-star painting to Molly Maid.

Most people have heard of molly made oh yeah um mosquito joe uh again mr electric mr handyman mr rooter mr rooter is a very very popular big big brand and they've got a bunch of these things precision overhead garage door service uh that they have as franchisees they're the franchisor and so neighborly is a company we've checked out and they use smart And they use Smart Dollar. They use our stuff to teach their team. That's great. About money.

And we feel really good about the company, Neighborly. We feel good about the types of services that they provide. And we're honored to have them as a new endorsement here on the Ramsey Show, a new trusted member of the Ramsey Show. And they are our Neighborly Question of the Day sponsor. Our Question of the Day is brought to you by Neighborly, your hub for home services. When you need to make repairs, schedule routine maintenance,

or find local help for home improvement projects, Neighborly is your source for reliable home service providers in your area. Go to Neighborly.com to start your search. Today's question comes from Ruth in Virginia. My debit card has had fraud two times in a two-week period. It's time-consuming to change all the auto payments and to get a new card. Some people say that credit cards are harder for thieves to do fraud than on a debit card. What is your experience and opinion with this? Is there any truth to that theory? Also, some people recommend using a credit card for all purchases and paying it off at the end of the month. I know that you advise against doing that method. Can you shed

some light onto why this is an unwise method? Happy to. I love that you called it a theory because that's honestly what it is. I'm going to be honest with you. You asked for my opinion and my experience. I have never, ever had problems with using a debit card. And I have experienced much fraud. There's been plenty of times where I saw the guy, I saw the transactions from Best Buy popping up on my screen as it was happening around Christmas time. And I just called the bank. And I said, someone's got my information.

This is a fraudulent purchase. I mean, lickety split the money was back in my account. And you can look, and I was just talking with Dave about this. I think a lot of people get hung up because if you look at some of these acts, the Electronic Funds Transfer Act, and some of these things,

it'll say there's some slight differences. But at the end of the day, the actual contract on your MasterCard, right, that trumps that, and it's zero liability. It's the same. If you look up MasterCard and Visa and look at the actual agreement online, it says for debit cards and credit cards, you have the exact same fraud protection you have zero liability zero zero now if your debit card in a two-week period has you had fraud two times your credit card would have

had fraud two times because wherever you're using that thing is being picked up somewhere it just means somebody has your information now and if they get your credit card information you're using that thing is being picked up somewhere. It just means somebody has your information. And if they get your credit card information, you're going to have to change your credit card. Same thing. You're going to get the same phone call from the same bank, and they're going to say, we have activity that does not look like it is your normal activity, and we're going to stop all charges until we verify this.

You get that from debit cards. You get that from credit cards. With my bank, it's an automated thing. They call up, and I have to push one, and I have to push about three things. I verify that, verify that, verify that. So I was down in Mexico, Cabo, a few weeks ago, and they're like, what are you doing in Mexico? You're a hillbilly.

And I'm like, so they, you know, weird charge, weird charge, weird charge. And I'm like, no, not weird charge. It was me. I'm here. And so, yeah, but the's that the algorithms follow the pattern of the purchases for a debit card or a credit card, because here's the thing. In either case, credit card or debit card, you are not liable for a transaction that was not yours. If you have a visa or a MasterCard product, that is their agreement with you, period. So in either case, if Best Buy or I don't know, whatever place in Taco Bar Mexico, right, is showing up, that means somebody

got your number and it wasn't you in this case. It was me in your case. It wasn't you. But if they let that money go, the bank lets that money go out of your account if it's a debit card or just against your credit card they can't get it back they lose money that's right so in and they lose the exact same money on a credit card fraud as they lose on a debit card fraud and so they run the same theft and fraud algorithms to track to see if you're doing it's no different it's no different so if you don't like having to change everything and get a new card with all your auto payments uh with a debit card you're gonna have the exact same thing happen with your credit card it has nothing to do with debit or credit has to

do with where you're using the stupid thing. Right. You're running somewhere where somebody's picking the thing up. And you need to look at your somewhere you're going where somebody's got a fraud reader or a card reader that's stuck in the thing. Or your passwords suck. Something. Somebody's getting your information.

I know some of the guys around here, they like privacy.com because you can buy things online and you can basically use a incognito card so they're never seeing your information so that's an option for people who are looking but I like that and I kind of want to address Dave the second part of this question which is saying some people recommend and I this is again this is the thing that everybody is doing and since everybody's doing it don't do it which is i put all my purchases for the month on my credit card just to make it easy dave so i don't have to think about it you know i just go to the store swipe it and then at the end of the month i can just pay it

off when my check comes in i put all my purchases on my debit card and comes on my checking account what's the difference well one day, I just used my money. That's all. You got to have a brain. Oh, and at the end of the month, you're going to use your money to pay it off. Yeah. That's dumber than a rock. You just have to have your brain turned on.

That's absolutely dumber than a rock. You don't want to have your brain turned on. That's just dumb. You want to just be able to swipe it and not think about it. I don't want to think about my money, and I want to have some. But yet magically. This is oxymoronic. Yet magically, you'll have just enough from your paycheck to pay it off.

Well, we know that's wrong. Let me help you with this. We know that's not the case. People who don't think about money don't have any. That's how this works. A trillion dollars, Dave, of credit card debt. That's what we're at. And we're new record.

$993 million. New record in card debt, too. And the default rate is sky high. You know what? Me and you, we got a long career ahead of us. We sure do. Stupid is still on parade in America. Job security.

We got lots of job security. Jenny Craig and us, we got a lot of work to do. This is The Ramsey Show. Welcome to The Ramsey Show. Jade Warshaw, Ramsey personality, is my co-host. Thank you for joining us. Heidi is next in Phoenix. Hey, Heidi, welcome to the Ramsey Show.

Hi, it's so good to talk to you guys. You too. What's up? My husband and I have our mortgage here in Phoenix, and then we also have a paid for property that when we moved, we kept it and have rented it out. And as we've talked about our finances, we're just trying to decide if, even though we both like the idea of the rental, if hanging onto that is holding us back from, because we could sell it and pay off our home that we're living in and have no mortgage, which is the only debt that we're holding on to.

But the rental does bring in $1,900 a month, and there's no mortgage on that property. So our idea was like down the road it's going to be a great asset to have, bringing in income. We just don't want it to hold us back from progress right now. Okay. What's your household income? He's at about $130, and then I'm just due.

I stay at home, but I bring in sometimes up to about $10 or $12. Okay. Let me tell you what's happened, okay? This did not occur. The reason it's bugging you. Here's the reason it's bugging you. This situation did not occur as a result of an intentional strategy. It occurred by default. You moved to Phoenix and rented out your old place.

Right. And so, and we know that's true because if you rent it in reverse, you would never do it. Meaning, let's try this. Where's the rental again? rent it in reverse you would never do it meaning let's try this where's the where's the rental again it's in utah okay let's pretend let's pretend we were living in phoenix with a really nice paid for house and someone came up and said hey go borrow on your house and buy a rental in utah you would laugh at them yeah okay but yeah you actually you so you didn't actually do that as a strategy obviously but that's the net result of having backed into this by default that's why it's bothering you and what that tells what that tells me is is i would sell the rental and pay off your

house it bothers me because if i if i'm you and i have a a mortgage in the home on the home that i'm living in and there there's a house several states away that's debt-free somebody else is living there i want the debt-free mortgage i want to live in the house that's debt-free that's the way i feel about it if you were going to uh borrow on your home to buy a rental that cash flowed nineteen hundred dollars you would do it in your own town. Right. Yeah. And so I'm going to sell it.

I'm going to pay off your house. And I'm going to use your fabulous income and this new peace of mind that you have to say, hey, how quickly can we put aside $150,000, $200,000 and pay cash for a nice rental in our area? And let's begin. If we like rentals, and you said you you did then let's start building up a rental portfolio a little bit at a time you know how fast you can do that without a house payment it's really ridiculously fast with your income i love that plan and the peace of mind you're you really you you're you're just gonna breathe deeper you're gonna sleep differently i mean it really does happen uh dr john deloney talks about this all the time. He quotes a famous psychologist who says the body keeps the score. Yes. And when you carry stress,

even if you don't even if you don't realize you're carrying stress, you're carrying stress and debt is stress by definition. Small debt is small stress, big debt, big stress. Right. But it's still stress. And so your body is storing that and and what people don't realize is when you have zero debt that releases all of that kind of stress out of your body you literally physically physiologically yeah have a change absolutely it's ridiculous and so that's why why we tell people we try to make it funny and make it stick okay it doesn't work in phoenix but we would say you know if you pay off your house, take off your shoes, walk out in the backyard, the grass feels different.

In Phoenix, it'd be sand. But yeah, I mean, that's, you know, but watch out for the cactus. We act like it doesn't matter, but one of the studies that we did on the state of personal finance did say that 50% of people have said that their finances have had a negative impact on their mental health. Yeah, and she's not got high stress here no she doesn't she's just saying i want to be smart yeah that was that was her matters that's a good good statement very good statement heidi and a good question so that's

what we would do in your case um and it doesn't really matter if other people think that's smart or not uh what matters is how do you feel when you're done with it how you gonna feel when you pay off that house and breathe ronda's with us ronda is in san antonio hi ronda how do you feel when you're done with it? How are you going to feel when you pay off that house and breathe? Rhonda's with us. Rhonda is in San Antonio. Hi, Rhonda. How are you? I'm great.

How are you guys? Better than we deserve. What's up? Good. I have a question about retirement. I'm a teacher, taught for 15 years, and left the profession about five years ago. So I have three choices in how I can do this. I can wait for 11 years, which I'll be 66 and I'll get about $1,600 a month and medical. I'm eligible to purchase medical. I can take it now in June early and get $650 a month, or I can take out the lump sum of $59,000

and roll into a Roth or some investment. Ding, ding, ding. So 11 years gives me medical, which I'm self-employed right now, and I'm paying for myself. So which one of those mathematically sounds like a good plan? Well, without running it, I can't tell you in detail for sure, but here's what I do know, and it works almost every single time I run my calculator,

like 97% of the time. If you take the $59,000 and you were to invest that in good growth stock mutual funds, and the stock market has averaged 11.8% since it began, and let's say it didn't do that well and you only made 10% on it, you're going to end up with more than the other two options because it will grow to enough in 11 years to give you more than $1,600 a month income. And it will today provide you right around $600 a month. That's about what it would do. So it's about the same today on that. Now, here's how I know that that almost always happens. You're dealing with a pension fund and pensions are regulated highly by the federal government. And what they're allowed to invest in is very limited.

And so they have to, by regulation, run these it will grow to produce is all calculated on about 7%. If you instead invest it at 10% or 11%, obviously you're going to be 7% and the income that it's going to produce is going to be greater than 7%. The other thing that happens that just makes the formula completely blow up is you die right when you die the pension goes away completely right when you die and there's 60 000 or seven years from now there's 120 000 or seven years after that there's000, which is probably what's going to happen in your mutual funds in an IRA that you transferred this lump sum to. When you die, they don't keep your money. That goes to your heirs. It's private property.

So that blows the math. So all of that would trump health insurance? Absolutely. A quarter of a million dollars probably trumps health insurance, yeah. Sure, that makes sense. Yeah, and so, yeah, you're going to be buying your own health insurance whoop-dee-doop-dee and you would not do the 650 monthly and just invest that i did you said eight percent even in a roth but even with the fact that you know i wouldn't go to a roth because roth is going to make this taxable. Oh, really? It's earned income.

It is earned income. I can't roll it to a Roth? If you can roll it to a Roth without it being taxed, but I don't think you can. I think it has to go to a traditional to keep it from being taxed. It has to go to IRA. Okay. Yeah, Roth IRA. Okay, I don't know that.

Yeah, click Ramsey Solutions. Click on the SmartVestor Pro and sit down with one of them. They'll help you do the rollover. And they can advise you and tell you exactly what's going to happen. And they can even run these numbers to show you. And if it doesn't turn out the way I'm saying, but it will. I would be shocked, yeah. Then, yeah.

I mean, because it's just the regulations put this together makes you go do it this way. So, yeah, you're better off if you're alive and you're a whole lot better when you die and tennis you're not better but your heirs are better they either get zero or if you live 14 years it's a quarter million yeah i'm yeah option three for the win ding ding ding ding ding ding ding ding yeah yeah yeah the um and what's interesting is, she's a teacher, obviously, but 78% of the companies have done away with pensions. Pensions are almost gone. Yeah. Almost no one in the private sector offers a pension. About the only place you still find it is in the antiquated governmental halls of stupidity.

That's not shocking. Yeah. So, yeah, I mean, so teachers have it, you know, but you don't find, you know, going to work for a tech company, they don't offer you pensions. They just don't do it. It's that simple. Hope that helps you, folks. This is The Ramsey Show. Dave here.

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