The Ramsey Show - App - There’s No Fast Track to Financial Freedom

Episode Date: February 3, 2025

from the Ramsey Network it's the Ramsey show where we help people build wealth do work that they love and create amazing relationships I'm here with my good friend, George Camel. Good to have you here, bud. Excited to be here. Thanks for having me, Jay. Now you have a lot of options. Thanks for choosing me. It was nice to invite you on today. That's a lie. Well, we're here to take calls. It's a live show. 888-825-5225 is how you get involved. I hope you do. Talking about your life, your money. Let's get right to the phone lines. We've got Amir in Irvine, California. What's up, Amir? Hello. Hey, what's up? How can we help? Hey, guys. I'm a big fan. It's really nice to be on the show. Glad you're here. What's going on? Yeah, so I'm in a bit of a unique spot. I'm 18 years old and I'm actually, I trade futures. I'm

a day trader and I've recently started making a pretty large amount of money and I just want help, you know, managing it correctly and making responsible choices. When you say you've been making a lot of money, tell us real dollar amounts. Well, I've been averaging about $15,000 a week for the past five months. Okay. Last week, I made $25,000. Wow. What'd you start with? So how I actually trade is I'm a funded trader. I'm actually treated as an individual contractor and the firm provides me with capital to trade with after they've evaluated me. So really I just paid for that evaluation fee, which was only $150.

So you're not investing your own money? No. How do you get paid? So they take commissions off my trades, and then they give me the rest. So what's the rest? What do you get? It's a 90-10 split. I get 90%, then they give me the rest. So what's the rest? What do you get? It's a 90-10 split. I get 90%, then they get 10. Wow.

Listen, lucky ducky. That's wild. Lucky ducky. And I say that on purpose because I feel like this is sheer luck going on right now. And I only say that because a lot of the statistics show that day traders, I mean, statistically, it's like less than 5%.

97% of day traders who persisted for more than 300 days lost money so you are yes i have heard that you're not at the 300 day market and truthfully i have no ill will i hope you keep making money making money yeah but the the key that i would go is like if this was vegas we'd all be around you going dude cash in the chips and walk away all right literally, it's like you just won the lottery. And now you're playing with other people's money, which does lower your risk. You're not putting your own money. But my bigger question is, what are you doing with this $300,000 you've made in the last six months? Well, I've got most of it sitting in my bank account.

I still live with my parents, so I really don't have many living expenses. I'd say I probably only spend about maybe $1,500 a month. I've just been saving it up, and I've been planning on buying a nice car, but I don't know if that's the responsible thing to do. I would have like a house before you put all of your money in a depreciating asset to impress your friends. And trust me, they would be impressed. What's less impressive is invisible wealth where you're like, well, it's in the equity of my very reasonable home. Have you ever lived on your own before, Amir? No, never. I'm actually recently just turned 18. Okay. So I might differ with George only on timeline. I think it's a good idea to buy a house, but maybe not yet. If I were you,

my first goal would be like, listen, I'm going to get out of this house, my parents' house, and I'm going to go rent for a while. And I'd probably park that $300,000 like in an index fund and, you know, maybe look at your projection and say, okay, do I want to be a home owner in the next four years, in the next five years, whatever that is, if it's five years or less, I'd probably put it in a high yield savings account. But if it's more than or less, I'd probably put it in a high yield savings account. But if it's more than five years, I might park a good portion of it, you know, just in some sort of index fund and just wait until you're ready to do something. I like George's idea of doing real estate. But if you do buy a vehicle because you need one, just buy something that's modest. Like

I would not use this money as an excuse to inflate my lifestyle into such that's not real long-term yet, if that makes sense. I think you'll be a successful guy. We just don't know if you're going to make $300,000 a year from here on out. Does that make sense? Yeah, yeah. I understand. It's not obviously a linear thing. I wasn't planning on buying a supercar or anything. I'm looking at a 2014 Mercedes CLS. It's about $28,000. And I was just wondering if buying that cash would be a responsible thing to do or not. What do you make outside of like, is this your full-time job? Uh, it is now I used to, uh, do, um, like, uh, uh, gigs on apps like DoorDash and Inbreeds before I became profitable. Okay. And what did you make when you did that?

Well, it really depended because I was still in high school and then towards the beginning of this year, I was still in college. So I was only working about 20 hours a week. So maybe at most like 1500 a month, but some months I'd go up to like 25 here's the thing i'm all about you buying a car in cash i would treat this money like the the windfall that it is and so in that case if you wanted to take some of it and buy a car i'm not mad at that um do you have any debt i'm hoping not no no debt um yeah 2014 what would you say george i'm fine with it i mean it's. The thing that the parameter we look at is you don't want more than half of your income tied up in things with wheels and motors. And the truth is we don't know how sustainable this income is. And so what I would caution you against is losing out on

opportunity cost of, hey, $28,000 in a car that's going to be worth $20,000 a year from now may not be wise when I could put that into XYZ, an investment, a future home down payment fund, whatever it may be. So there's nothing wrong with getting a car. I think you're doing it in a reasonable way. You don't sound like a guy who's about to blow up his life to go flex on Instagram. I just know as an 18 year old, that would be my temptation. Yeah, I agree with George. You're 18. You have a lot of time to build wealth. And this is a really, really great head start as long as you don't lose it in the next 150 days. Yeah. This car to me doesn't sound super inflated. It kind of just sounds like,

I mean, it sounds like what it is. You were playing at the tables, you got lucky, and you got a lot of extra cash on your hands. But be really smart with it. And you're good to go. Yeah. One last question. What do you want to do with your life? Let's fast forward five years from now. Let's say day trading does not exist anymore. SEC makes it illegal. What are you going to do? Well, I'm actually currently in college studying biochemistry.

My dream is to become a doctor one day. Hey, do you come from a Middle Eastern family? I do. I feel that as a Middle Eastern guy. Every one of my family is a doctor but me at this point, or at least in the medical world. This money sounds like med school. Yeah, it does sound like med school.

That would cover all four years. Hey, that might be the reason this money was put into your lap. Not to blow on cool stuff, but to fund med school completely debt-free. You know how much of a unicorn that would make you when you graduate? Right. When all your buddies are bragging about like, oh, I just took on another 50 grand in debt. I'm at 400 grand.

These are the conversations my family now has. You know what I mean? Yeah. And so I'd love to see you set yourself up for a debt-free future. And to Jake's point, let's hold on and see what the future holds. And if it is med school, we've got it funded and mom and dad don't have to co-sign student loans to make this happen. That's pretty awesome. My guy got lucky. It really is the equivalent, like you said,

George, to going to Las Vegas, somebody gets hot on the craps table. And listen, I am the one telling them to roll again because I just love Las Vegas. But truthfully, day trading, the stats are there. There's no arguing with that. For him, the good thing is it's not his money. And it's crazy that he gets to keep 90% of it. I don't know what firm is hiring 17-year-olds to do this bidding on their behalf. That sounds very sketchy.

It's just a whole thing sketchy. And I believe Amir. I just think it's wild. We've taken many calls on the show, Jade. People losing $30,000, $150,000, even $300,000 by day trading. So don't look at Amir and go, I'm going to be the next Amir. No, you're likely to be the next person to call in broke. I know.

Amir got lucky, and lucky for him, he'll be able to pay for all of his med school in cash and be the first debt-free doctor. He created his own scholarship fund. This is The Ramsey Show. Rachel, do you ever get these sketchy text messages that are like, hey, you need to update your address and verify so we can get you the package you didn't order? Yes, I have, George. Sketchy and never trust them. And that's why we recommend Delete Me. They help with that. Yeah, they do. Delete Me actually goes in and removes your information from data broker websites. And it is an incredible service that everyone needs. And there's a lot of shady companies out there that solely exist to sell your personal data to bad guys. And that means your info, like your email address, your home address,

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Just go to joindeleteeme.com slash Ramsey. That comes out to less than nine bucks a month. Super affordable. It's amazing. So again, that's joindelete me.com slash Ramsey. Make sure to check it out, you guys. You're listening to The Ramsey Show on The Ramsey Network. I'm Jade Warshaw. Next to me, George Camel, bestselling author, host of the George Camel YouTube channel, which is always popping off doing amazing things. George, good to have you. Thank you. You as well. Let's take some calls. We got Matthew who's in Nashville, Tennessee. What's going on, Matthew? Matthew, you there?

Let's try it again. Are you there? Nothing. Can you hear me? Oh, there we go. There you go. What's going on, man? Sorry about that.

Not much. Long story short, I graduated college a year ago. I've been working at a pretty big corporation for the past year. They notified me a few weeks ago that I'm getting laid off in March. And in the meantime, I've actually gotten a job offer in Dubai. And I was wondering if I should take this offer. You know, worst case scenario, I stay out there for a few years and I don't have to pay any tax and just use that extra money that I'm not having to pay in tax as like a wealth building opportunity. Interesting. Is it the same line of work?

No, no, it's actually so I'm in a role right now, and this would be a sales role. Have you done sales before? No, I haven't. Interesting. And is it like purely commission, or is there like a decent base pay to get you started? No, the base pay is almost the exact same as what I'm making now, and then there'd be bonuses on top of that. And they said eventually they would like to try to make me a partner at the company. It was started by an American a few years ago in Dubai.

How did you get this offer? I'm just curious. I mean, it sounds like a pretty sweet deal to offer someone with zero sales experience. I actually met this guy in college at a bar a few years ago, and he knows I'm really interested in Middle Eastern politics, and I like to read and stuff. So he actually called me and said that this company was trying to bring in Westerners to represent them and work on a lot of their deals. And so he had me in mind and just gave me a call. And it was just purely coincidence that I'd just been laid off. How old are you? I'm 24. Okay. Does this get you taking this opportunity? Does it get you closer to where you want to be in the next 10 years? Yeah, absolutely. I mean, just, I feel like saving the money alone from having to pay 0% tax.

Have you looked into all the implications of taking a career outside of the States? I don't know. So I'm just asking, have you done the due diligence? Yeah. I mean, I've been looking into it. So pretty much the main stipulations are I have to stay out of the U S for, um, 32 days or less. Um, once I stay, once I'm in the u.s for more than 32 days i'll have to pay tax right right right um and then also if i make more than 114 000 i'll have to pay uh income tax in the united states okay so that was my that was my question so your your start is 114 you're starting or is it a little less than that? No. So the actual base is 72. My current job that I'm getting laid off from, I'm making 74.6.

And then with bonuses last year, I ended up making about 86. So my question was, Dubai is quite expensive, no? So I don't know if you're getting some sort of housing allowance. I want to make sure that I think this is great. First off, let me say I love adventurous people. I love travel. I've worked in over 92 countries, so I get it. I love that. We're just trying to poke holes to hit every angle.

Yeah, we want to make sure you're thinking of everything. So have you looked up, okay, once I'm converting this money, how much it's going to cost to live and really what a budget and lifestyle would look like on that salary. And you got to account for the worst. Like you got to pretend you're new to this in 72,000. Like you could, that could be your year. You know what I'm saying? So have you done that kind of math and that kind of research? Yeah, absolutely. So I've, I've been using like different programs, talking to different people. Obviously, like if I live in the Dubai Marina area, like where the Burj Khalifa is,

everyone knows that's going to be more expensive. But actually in like the suburbs area, it's pretty comparable to Nashville. It's not a little cheaper. And then from what I've heard and what I'm reading online is things like insurance are significantly cheaper, food costs, that type of thing. Just your day-to-day expenses are significantly cheaper. And the program I used was Numbio. And it said on average, Dubai is about 14% cheaper than living in Metro Nashville. So if you take this, that's good to know. If you take this, are you locked into a certain amount of length of time of contract? Or is it like if you get there

and you're like, this is where the birds get me out, you can just turn around and go? I mean, with the way I understand the permanent residency in Dubai, while I'm in that process, which takes about six months, I'll be, I'll pretty much have to stay there for that six months. But after that, I would be free to go whenever. Listen, bon voyage. See ya. Matthew's going to Dubai. I feel like I'm on Wheel of Fortune. We're going to send you. No, it sounds like I don't see any like red flags here. If you've done your due diligence on the company, this seems legit. You want to make this move. You're young.

Now is the time you can make this move without it affecting a bunch of other people like your family. And so if you were 38 with six kids, they'd be like, hey, let's pause before we do this move. But for Matthew, it seems like one of those things, it's a fun adventure. And if it doesn't pan out, he gets to say, hey, remember that time I lived in Dubai and got to experience that? Pretty awesome. Best case it works out. He's partner at the firm three years from now. I hope that's the case. Thanks for the call. Let's go to Dane in Denver, Colorado.

Dane, what's up? Hey, how's it going? Going good. Yeah, I'm glad I got you to. I absolutely love the show. So thank you very much. You bet. All right. So I guess I'll just give you my background. I have a question about should I pursue building a second home up in the mountains here in Colorado? Okay. We got about two minutes. So get into it. Okay. All right. Yeah. I have 940,000 in my savings in my retirement. I have absolutely no

debt. I own my current home, all my cars, everything. And I currently put 32% into savings right now. I wanted to know if I could knock that down to y'all recommended 15% and then take those, that extra money that I'm putting in extra in the savings to pursue the home. The home's going to be about $190,000. I've already cash flowed the property, the septic, the well, all that kind of stuff. Now I've just got to get the actual home. Yeah, how long would it take? If you went down to 15%, how long would it take to save up the $190 needed? I'm estimating like seven years. Whoa.

That's a long time, man. It is. How old are you? I'm 46. Okay. So we're not going to touch retirement. Can you promise me that? We're going to use savings outside of that.

So the question becomes, how do we make more in order to make this dream happen faster? Man, I do everything I possibly can. I have a good salary. I make $115,000. I have two side jobs. I'm actually starting up a little tutoring service to help people in my career. I have books that I've written. I gain revenue on. So, I mean,

I don't know what else I can do. Is this like a vacation house or will this be a rental? What will this be for you? It will be a vacation home for me and my family. It's about an hour and a half into the mountains. It's my dream since I've been five years old. My biggest, and I feel urgency here, I have two little kids, and I really want to get it done sooner than later so that they get to enjoy it. And that's the whole point. I could wait seven years. My gut's telling me to do it now, but my brain's telling me, you know,

be smart, cash flow it all, but I'll have, you know, an 18 year old at that point. And it's like, will it be worth it? Can you just go rent a place until it's done? And Hey, once a year, you guys go a few times a year, go rent a place up around there. We do travel a lot. Um, that's, this is our, you know, the only thing that we actually splurge on is our traveling adventures. Yeah. I mean, we do try to experience as much as we can. Yeah, I mean, you're right. You're 100% right. I do not need this.

I would just split the difference and go, we're going to rent a place. We're going to move at the speed of cash. This is a toy. We're not going to go into debt for it. And truthfully, you got a 15-year-old a few years from now, they're going to be like, Dad, I don't want to go. I want to hang out with my friends this weekend. That's what's going to happen.

So I don't want you to put this whole dream on the kids. Just say it's for you, and maybe the family gets to enjoy it too. Not bad, not bad. I don't know. One man's take. That's one man's take. It's a tough one, but I got to go with George on this one. This is The Ramsey Show. Hey, George Camel here with a not-so-fun fact.

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on the best moves to make for your situation or for your small business, especially if you've had some big changes in your life this past year, you could really use a great tax pro. So if that's you, which it probably is, go to ramseysolutions.com slash tax pro to find CPAs and enrolled agents that have been vetted by the Ramsey team. Don't put this off. Do this. It's in your best interest. Pony up the cash. It's worth it. All right, George, let's get to the phone lines. By the way, I'm Jade Warshaw joined by George Camel, but you knew that. Let's get to the phone lines. We've got Hayden, who's in Bowling Green, Kentucky. What's up, Hayden?

Hello. How are y'all? Doing good. How are you? All doing good. How can we help? I'm calling. I'm struggling.

Well, not really struggling, but after all expenses and everything that's a necessity paid, I have about $1,902,000 left a month. And I just don't know where it's going. It seems like I just spend it. So on paper, if you did what the paper said on what you spent, you'd have two grand. But you're saying it's disappearing. It's being spent. Yes. Do you want to know what this is a class this is a classic case you do what is called the treat yourself budget which is i budget for all of the things that are like uh necessities like i budget for my rent my car payment my groceries you know a

couple of you know my cell phone bill but everything else is up for grabs and you treat yourself and then next thing you know you're like where did all where did the money go so does that sound about right yeah yeah that does sound about right yeah like if you go to your bank account statement will tell you right if you go to your bank account statement and you add up all the things that weren't the necessary expenses, it would easily tell you what's going on, right? Yeah. So what would you say are the top three things this money is disappearing to?

Eating out. Are you sports betting? Gas station snacks. Definitely gas station. Okay, I just guessed all three perfectly. You know what? I find that gas station snacks is a big thing. Like that seems to be a high-ticket item here.

I don't know what it is. I don't go in there. I'm too nervous. I don't go in the gas station to get food. There's two things that just shouldn't go together. I don't know. But anyway. to get food. There's two things that just shouldn't go together. I don't know. But anyway. Do you have any other vices?

Are you like a dip, something that you're spending? Vapes? I don't know. No, I mean, I buy truck parts and different things. I mean, I dabble here and there spending. You single? I buy usually. No, I got a girlfriend.

Oh, well, that might be where some of it's going, I would think. Here's what I think you need to do. Okay, so A, I used to budget just like that. I was definitely the treat yourself budgeter who wanted to use the rest on. Like, it's up for grabs. That's the way I felt about it. You ate your vegetables. All right, you can get some dessert.

But the truth is, when you treat your money like that, you'll look up 10 years from now and there's a lot of regret because you go, oh my gosh, so much money passed through my hands and I was not a good steward of it. As a matter of fact, for most people, think about it. If during your working years, most people work 40 years, let's say you just make an average of $50,000 a year. That's over $2 million that's going to pass through your hands. And if you take this portion of it and you just go, oh, it's up for2 million that's going to pass through your hands. And if you take

this portion of it and you just go, oh, it's up for grabs. I don't know what happened to it. You can't really call yourself a good steward of your money. And chances are you won't be prepared when the time comes to retire or buy a house or any of those things that we want to do to feel the success of our finances. So what I would suggest is a zero-based budget, which is a form of budgeting that utilizes every single penny. And I just want to kind of clear up because a lot of people feel like budgets are kind of restraining, right, Hayden? And I have a feeling that you feel that way. Like you feel like a budget is something that's going to keep you from doing the things you want to do when really it's the exact opposite. Because if you were to do a zero-based budget, you'd not only be planning for those things

like rent and car payments and keeping the lights on, but you'd also go through and say, wow, I have $1,900 of margin. What is it that I want to do? Do I need to have $1,000 of savings? Do I need to build up a three to six months emergency fund? Is there debt I need to pay off? And if you've already accounted for those things, then you can say, okay, yeah, I want to spend a little bit on hunting and I want to spend a little bit on, I don't know, Wawa snacks. And so that's the beauty

of this is you get to decide. So let George and I help you decide. Do you have any debt? I have a truck payment and then a boat payment. Okay. How much do you owe on the truck? Around $34,000. And how much do you owe on the boat? Around $12,000. Okay. So that right there is a good indicator of what you should be using that margin for. What do you make a year? Last year I brought in around $80,000, but this year I'm working full-time and doing college, so it's dropped about $10,000, $15,000. So you're making about $65,000? Yeah, give or take.

Okay. Man, you've got a lot tied up in wheels and motors going down in value to be making $65,000. Mm-hmm. Have you ever thought about selling these two items and getting something cheaper? Well, the truck is what I use to make the money every day. I drive for work. I do, like, hot shot. Can you get a cheaper truck to do this with?

I don't think it's a $34,000 truck causing this. Yeah, I probably could. I mean, if you had a fifteen thousand dollar truck that was running great, could you do the same work and get paid the same? Yeah. Okay. That tells me the truck was for you, and yes, you do use it for work, but you can also get a cheaper truck, get out of this debt, free up more margin, and I imagine you don't have a lot of time to be on the boat when you're working and a full-time student. Yeah, I do plan on selling the boat this upcoming spring. What can you get for it? Oh, probably around $1,500, $1,450. Okay. So that's another maybe $2,000, $1,500 that you could put towards this debt. What George and

I are getting at is and this is an old this is what dave ramsey would say your biggest wealth building tool is your income right and so good for you that you have two thousand dollars of margin every month bad for you that you have this debt because what are your payments on the truck in the boat combined around thirteen hundred i could refinance them but i've just decided to try and pay it off. Yeah, I think that's good. But think about if you had that $1,300 back in your wallet plus the $2,000. That's a lot of money. And so if we can get these things sold or paid off, that's really where you're going to see the ultimate potential with that money.

And then we'd be saying things like, hey, with this margin, you could be investing 15%. And hey, you could be doing, do you see what I'm saying? Save up a down payment. Well, my only problem with that is, like, my parents, which I just turned 20, and they're more like, don't sell the truck. The insurance is going to blah, blah, blah. They're wrong. Hey.

Keep it and pay it off. If you have a paid-off vehicle, your insurance is going to be lower. If you have a used paid-off vehicle, your insurance is likely going to be lower than if you had something that's newer with payments. That's the truth. That's what I thought, but I don't know. Are they making the $1,300 payments for you every month? No.

They don't get a say in you getting rid of that payment because you're the one who has to pay it hey the truth is with parents like they have they have the best of intentions but sometimes they they only know what they know and so a lot of times it's like they do it one way so they pass that way on to you and even though it's a good intention it's not necessarily the right answer or the best way to do it. Does that make sense? Yeah. And so I think from where you're sitting, you can just be like, okay, thanks. That's when you just do the smile and nod and you're like, oh, okay. And then you go into your life and you do the thing that you know how to do in your own life. You can be kind and respectful. That's right. Do you have any money in savings,

Hayden? My parents got around 30 grand for me. I had a problem with my arm and surgery, so I got a... A settlement? A settlement coming in soon. Okay. And that'll be in your name? You said your parents have it for you. No, it'll be in my name. Okay.

Man, that'll set you up for sure. Yeah. So if George and I were in your shoes, yeah, that 30 grand, I'd keep it aside. Let's call that if you're selling this boat and if you're selling the truck or deciding to keep the truck. That's an emergency fund plus some moving out money plus some down payment money. That sets you up, man. Yeah.

I would definitely downsize this truck. I would not pay it off with what you're earning and what your life is. I'd downsize it. Yeah. This is The ramsey show what does the future hold for business ask nine experts and you'll get 10 different answers economic growth or a recession business taxes will go up or down ai will help us work or it will replace us all. But there's no such thing as a crystal ball. That's why more than 40,000 businesses have future-proofed themselves with NetSuite by Oracle, the number one cloud enterprise resource planning system. Ramsey Solutions uses NetSuite and you

should too. Whether your company's earning millions or even hundreds of millions, NetSuite's real-time insights and forecasting help you see into the future with actionable data. And when you're closing the books in days, not weeks, you can spend less time looking backward and more time focusing on what's next. And speaking of what's next, download the CFO's Guide to AI and Machine Learning at netsuite.com slash Ramsey. It's free at netsuite.com slash Ramsey. You're listening to The Ramsey Show. Thanks for hanging out with us. I'm Jade Warshott. Next to me, George Campbell, taking calls all hour long about your life, your money. The number is 888-825-5225. This is a live show. So if you want to get into the conversation, all you have to do is call and we'll be there. All right. We've got Darren.

He's in Minneapolis, Minnesota. What's going on, Darren? Hey, I'm good. How are you guys? We're great. Great. Thank you for taking my call. So what I'm curious to get your opinion on is whole life insurance. I know that Ramsey Solutions is pretty adamantly against it and prefers term life. an opinion, our knowledge on using it for infinite banking, specifically for a business owner. A very brief backstory is I'm not a W-2 employee. I own my own business. My wife and I are living and giving like no one else. We are so thankful to Ramsey Solutions for helping us get there and just setting the example of how to live and give for the Lord. And, yeah, and my business colleagues who I look up to are using the cash value in their whole life policy to continually borrow against to purchase real estate and grow their business. And I have never done that.

We are a hard Dave Ramsey family. So this would be a new venture for me, but I'm curious if you guys have any knowledge on that. Can I ask you what's, I mean, you sound like a guy, like you said, you've kind of listened and followed it and it's worked for you to do things the Ramsey way. What's causing you to change course and say, well, I want to borrow against a whole life policy?

That is a great question. And I'm unsure, and that's why I'm here. I think partially because I know what we are doing works. But if I could be doing something that is both giving my money interest monthly and I'm able to use that same money essentially to buy real estate and I'm able to deduct the interest paid. I guess I don't know. Here's the truth. They're leveraging debt to do leverage real estate, and that's fine.

It makes sense for almost nobody to do a whole life policy, especially as an investment tool. And think about this. Why would a whole life insurance salesman be pitching this as an investment tool to get you to buy their insurance? It's the only people who actually say it's a good product is the people who sell it, which should be a giant red flag. Yeah, they're getting paid for it. And then your business buddies, they see these TikToks, and they're going, oh, my gosh, they gave it a fancy name. Infinite Bank.

It sounds cool, I will admit. Very intriguing name. Oh, I've read the book. All it means is, yes, and there's a book. Nelson Nash. Yes, I've heard of the book where they go, well, if you just read the book. How to be your own banker. How to be your own banker, and the concept is you're going to borrow against the policy.

The truth is you're taking a loan alone from the insurance company your cash value policy is collateral right so it's no different than taking out a HELOC against your house to go do real estate well it's it's against cash instead of against uh my whole equity but it's still right but it's the same concept it's going to have you know often variable interest rates sometimes the the idea that the you've got to have an interest rate low enough to even make the investment worth it and you're adding a lot of risk and complexity to your life all the while paying a huge commissions for a low return product and so here's what i would say what is your goal what are you trying to? And let's figure out a better way to get there. Sure. Well, for the record, we're buying and owner financing

homes for $30,000 and less. Believe it or not, they do exist. Is that your business? Yes. Okay. And so far, you've done a cash? They are reasonably nice homes. Almost 100% cash. We have a couple $30,000 loans on properties on a five-year term. That's why I did it, because it's five years and it's done. What's causing you to want to go different? Are you trying to just do more at once and go faster in your business? Are you looking to scale the business essentially, and you're looking to debt to do it? I'm looking to scale the business as debt-free as I can. This has taken me from an opportunity to set up my family to really setting up my kids for their future,

all while providing people homes that they can own and have for their kids. I mean, everybody wins. It's just, do I want... Yeah. I struggle with taking out debt. I worked hard and everything's paid off. And I just thought this could be a potential opportunity, I guess. And I've had multiple guys that are very, very successful that use it. That's what's confusing. I it. Here's the thing. That's what's confusing.

I mean, here's the thing. It's not what caused their wealth, though. They're using it knowing there's risk involved. They have a risk tolerance, and they're going, I'm willing to take this gamble. Yeah, people take out debt every day for businesses, and some people do well and some people don't. I mean, that's just the truth. Somebody could pay cash for a business, and that business could shut down, right?

Like the way you're doing it is not necessarily going to cause you to be successful or to be a failure. However, when you do add that element of debt, you are adding an element of risk. So if you were already likely to succeed, now you're stacking more chips against yourself. And if you were already likely to fail, then you're just going to fail harder. Does that make sense? Like that's the way that I see it. Really math and numbers kind of aside, I really just see it as adding risk. And do I need to add risk to an equation that was already working well for me? It was already building wealth for me. My answer would be no, I wouldn't do it. Yeah i think dave ramsey should write a new book called

be your own bank because dave is actually his own bank and he's done it debt free and it wasn't a i'm trying to do a debt free he just drew a line in the sand and said i'm done i'm gonna build a business debt free i'm gonna build a real estate empire completely debt free i'm gonna move at the speed of cash he could have moved a lot faster had he used debt, but he had tasted the fruit of that tree, and it did not taste good going through bankruptcy back in the 80s. And so I would caution you against it. You can do what you want. I'm wishing you the best either way. But you said you're a person of faith. I can't get this out of my head, Jay. The borrower is slave to the lender. Wealth gained hastily will dwindle.

Whoever gathers little by little will increase it. So I'm playing the tortoise on this one as a believer. And Darren, I hope you do the same. That's a very good point. That's very good. Yeah. Business is risky as it is. Why add more risk?

That's all I'm saying. Especially if I got a family now, it's like that adds a whole other piece to it. And so you can build generational wealth a whole lot of ways for your kids. I'm not doing it with a whole life policy. I mean, I just think about, let's say, let's say you've saved up. Let's play it on both ends. Let's say you've saved up, George, $60,000 and you're like, all right, I'm going to go all in on this business idea. That you feel that enough, like your own cash that you're kind of sliding those chips in the center to go, okay, I'm going all in on this because yeah, you can do your business plan and do

everything. But sometimes businesses fail, like they don't perform the way you want and you will be out that money, that cash that you had. Children recognize this is if a child works to make $10 to go spend a Chuck E. Cheese versus mama Jade given $10 to the kid and said, have fun. Oh, yeah. That kid's blowing that $10 in five minutes. Oh, yeah. Coming back for more.

When you had to earn that $10, you're like, oh, is skeeball worth another dollar? I don't want to cash this in quite yet. You feel it because you've earned it. That's right. That's so true. That's so true. My son just started on commission in the house. He's six years old.

And so it used to be you go to Target we give him money if he wants pokemon cards but now he does his chores and he the first week because his payday is on saturday the first week he said oh i don't want to get paid just hold on to it for me because it was heard comp is what he asked for comp he was afraid he'd spend it then after four weeks finally i was like listen like you you can be trusted with this money like you can give it save it spend it and so he got paid he got paid ten dollars for all of his chores and so he's just now he's like okay i'm gonna go and i'm gonna buy thoughtful yeah i think i'm gonna buy pokemon first you want to buy a fish tank then you want to buy pokemon cards he's like really thoughtful opportunity cost yeah it's it's and's true. It's such a small way of thinking of it.

But now he's thinking of all the options he has. He's not just going in on the first idea he heard because it's like, what if I get this and I don't like it? I spent my money on it. Gosh, I wish every American adult could have your six-year-old's wisdom. Because here's the thing, you turn 18 and they go, ah, just put it on the card. I know, you don't even think about it.

Take out the HELOC. Let's infinite bank our way out of this. It a different game when you go debt is not an option and it leads you to be more thoughtful yes with way more peace yes way thoughtful oh my god i will die on that hill i will die on that hill too i don't even con george i've been on this life for so long i don't even consider that like it doesn't even come into my brain as an option why would i do that to myself? All right. That does it for this hour.

Thanks for hanging out with me, George. Thanks for everybody in the booth. We'll see you next hour. This is The Ramsey Show. Live from The Ramsey Network, it's The Ramsey Show, where we are taking calls about your life, your money. We're helping people build wealth, do work they love, and create amazing relationships. This is a live show, so if you want to get your call on the line, the number is 1-888-825-5225. I'm Jade Warshaw.

Next to me is, let's just say, my favorite host, George Campbell. Whoa! You say that to all of your hosts. You're right. I do. You're all my favorites. I love you guys. That's right.

It's always a good time with George Campbell in in the chair next to me. All right. Let's go to the phone lines. Morgan, Washington, D.C. is on the line. What's up, Morgan? Hey, guys. How are you? I'm starstruck right now. I listen to the show every day. Oh, wow. It's exciting to talk to you, too. How can we help? Yeah. So I am a federal employee. I'm an attorney at one of the government agencies and I am considering taking Trump's buyout offer and I need some help on how to decide. I'm 26. I was married. I just got married in August of 2024. I make about $190,000 a year and I'm debt free. Okay. Me and my husband make $190,000 a year and we're debt free. So get the listeners up to speed

for anyone who's not clear on what you mean by Trump's buyout. Tell everybody what that is. Yeah, so Trump is offering full pay and benefits through the 30th of September this year, but I'd have to stop working now. So the catch for me... Oh, sorry, go ahead.

And this is in response to you either being a remote worker or fully in office, correct? Yes. So I currently work two days in office and two days at home. And that's been able to be working for me right now because it's, you know, only two days, but I work, I live about a hundred miles from the office. Oh, wow. So my school can use about two and a half hours and I've actually got an apartment in Silver Spring.

So we're floating two rents. Wow. So you drive in, stay for two days, two consecutive days, and then go home? I do, and I do it because I really love my job. I can't really practice what I do anywhere else. I can practice it for the other side, but not for the government. So that's kind of my hesitation. I really love my job, and I don't want to give it up, but my income as an attorney is a little bit more replaceable than my husband's. So the issue then isn't that you don't want to work from the office.

The issue is if you were to move, it would put your husband's job. It put him right. Okay. Yeah. Right. One of us would have to quit. So we're weighing whether it's him and he would be without income right away, or it's me and I've got kind of seven months of runway. So you're at 190. When you said you can only do your type of lawyering there, what does that mean? Yeah, so I work in Veterans Administration Benefits. Okay. And so it's only practiced in one court.

It can be practiced nationwide, but I can only practice it for the veterans instead of the government. If I take, you know, to buy out and try to find a new job. And then there's a question of I've never practiced that kind of law before. Will I like it? You know, they have a different set of skills. What about your husband? What does he do and can he do at other places? So he's in supply chain and logistics, which, you know, definitely can be

practiced anywhere. But the federal government does most of the jobs in D.C. and there's a 90 day federal hiring freeze right now. And what's he make? He makes about with bonus about eighty five thousand. OK, so his is the lesser of the two incomes. So just looking at this like pragmatically, just looking at the the facts it feels like his job would be easier to replace and it's less income to replace whereas yours would be there's only one place to practice it and do what it is that you do and you make a higher income so based off of those two thoughts it feels like going to dc would be a better choice what does he think about that um he's so supportive and wonderful he's kind of willing to to do whatever you know we

kind of think is best i guess my hesitation is eventually i would like to maybe get to the point to hang like you start my own practice and so so I would need some rehearsal at a different firm. Were you thinking that even before this Trump thing? Or did that just spark it up? Yeah. So it might be kind of a golden opportunity to get out of the lease that I'm in in D.C. How easy is it to get out of the lease? It's a 60-day notice to get out of the lease.

So a month to month, thankfully. Okay. That's interesting. And from what I've read, we're not sure about the legal underpinning of this, if he can actually do this. So my fear is kind of what happened with student loan forgiveness is the student loan companies went,

hey, Jade, here's a $20,000 check as a refund, and we're going to reinstate your student loan balance. Good luck with the government forgiving it. So my fear is they say this, you leave, and then they don't actually make the payments. So do you have any, I may be wrong in this, do you have any other information that would help, you know, solidify this decision? I may only have assurances from the government. That's exactly my fear. Assurances from the government is enough to send my skin crawling. That doesn't make me warm and fuzzy on the inside.

So I think there is a lot of risk here, but if you're willing to handle that risk and go, listen, I'm going to land back on my feet. Worst case, I'll go find something else to do. We're okay financially. We're debt free. If you're in that position and you go about this like, hey, it's a new adventure. We're going to find something ASAP to replace the income and not just wait until September 30th to make a decision, then I would be okay with it. Do you have kids? Yeah. No, we don't have kids. And kind of on the security front, we've actually been saving to buy a car in cash.

So we've got our emergency fund plus the car cash fund. So I think together we've got about $40,000 cash tucked away, which kind of adds that extra layer of security to maybe go out and try something now. Can you live on $85,000? Yeah. um yeah so after after retirement and everything we bring home like we see 76 or about yeah 7600 a month um so yeah i think we could live on 85 that includes um that's before funding our ross iras as well okay so what i think that well i think what will give you a lot of peace if you decide to stay where you're at and start your own thing and keep your husband's job on the line. I would do an every dollar budget. If you don't have it,

we'll make sure you have it and really play out what would your budget be on $85,000. And maybe there is a little bit of gap there that you have to fill in and then you can come up with, okay, what's our plan going to be? Because we don't want to dip into emergency funds if we don't have to, right? And then you can really put together a solid plan and there will be less question marks in this whole thing. I kind of like the idea of you stepping out on your own. Not going to lie. I'm always going to almost always going to vote that route though.

And generally what we find is people leave the, you know, the government public sector, they end up doing better in the private sector, especially if you're going to start on your own or go work for a firm somewhere. I think in your line of work, you're not going to have trouble finding it. And so that also gives me peace. I don't want to make this sound like carte blanche advice for anyone with a government job to do this. But in Morgan's situation, I mean, it sounds like you guys have thought through all of the different angles of this to go,

we can make this happen and it's going to benefit us. Yeah, it feels fortuitous that this happened to kind of get you thinking about your other options out there on your own, which is really very cool. That's kind of the same thing that happened to Sam and I during COVID. Everything shut down during COVID. And that's when I saw the email come through from Ramsey Solutions that said that they were hiring personalities. And it just felt like this fork in the road. Hey, if we're going to change up our life, the world's already in flux and chaos. Might as well. Might as well at least consider it. Like I wasn't looking, but when a great offer comes and in her situation, her stepping on her own is a great offer. There's no real reason not to

explore it further. And we're so glad you did explore it, Jade, because you're here next to explore it further. You know? And we're so glad you did explore it, Jade, because you're here next to me on The Ramsey Show. And we're best friends. Who would have thunk it? I love it. I love calling you

my best friend and then you just look at me. It feels good. I don't want to give you the response back, but it feels good to hear it. Let me say that. Yeah, I'm glad that I could

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Yeah, that's a big one. All right, let's go straight to the phone lines. We've got Seth. He's in Portland, Oregon. What's going on, Seth? Yeah, hi there. Thanks for taking my call. Big fan. First time caller. I am 45 years old. I have about $690,000 in my 401k and I owe about $460,000 in my house.

I would like to, considering paying off the mortgage, living life completely debt-free and then reinvesting the monthly mortgage payment into mutual funds, stocks, IRAs. Along those lines, I know the taxes and fees are significant, but so is living life debt-free without a mortgage payment. So I wanted to hear your thoughts. So you're talking about taking the money out of your 401k at a penalty to do that? Yeah. Oh, no, I definitely wouldn't do that. Why are you feeling the rush?

Tell us more. Well, I think I'd just like to not have the mortgage payment there and be able to have the freedom to do more investing with the same money every month, essentially. Yes, yes, but you're taking, I mean, I have not run the numbers on this, but you would be taking such a hit plus the penalty and that time that that amount of money over time, what it could have been versus you investing just your mortgage payment. Does that make sense? I'm thinking about that. Tell me, have you run like tell me about the numbers you've run. Or is this just a piece play? No, I've kind of run them a little bit.

I ran them by my tax accountant. She said it would cost me probably some of the neighborhood of about another 50 grand maybe to pay off the taxes and fees and penalties involved. So we'd have to take out probably some of the neighborhood of 500, maybe. She's not thinking about opportunity cost of that month, the growth of that money over time. Have you plugged that into an investment calculator to see what half a million left alone if you don't add anything to it for the next 20 years, from 45 to 65, what that'll amount to? I'll do it. Jade's going to crunch the numbers. Let me talk to you while she's doing that. I want to talk

about this mortgage. It sounds to me like maybe you bid off more house than you could chew. Is this mortgage payment a big chunk of your take-home pay? Take-home's about 11, and the mortgage payment's about three. Okay, that's reasonable. We recommend 25%. You're a little above that, but nothing's on fire. Why not just chip away at it every single month with as much as you can throw? So if you're investing 15% of your income to retirement, how much extra could you throw at the mortgage? That's a good question. Maybe, yeah, maybe a few hundred. Yeah. Only a few hundred bucks is the margin you have on 11 grand?

Well, there's a lot of things in the budget. And I have four kids, a couple of them starting college fairly soon. So I'm doing some saving on that side of the thing. Okay. Are you helping them cashflow college? Yeah. Okay. When will that end, the season of trying to get the kids through college? Well, I've got one who's in now, and he's got probably three years left. And then I've got a 14-year-old who will probably start in four years, so we're probably nine or so years away from that. Okay. And have you been investing money into a 529, or is this just straight savings and cash flowing payments from each paycheck?

Yep, just serving where we can as we can into more of a traditional savings. Can I jump back real quick? Seth, you may have said this, but let's pretend that you did your deal and you took this money paid off your house. How much would you be investing every month at that point? Because I just want to line this up for you. Probably somewhere in the neighborhood of the $3,000, I would think. Okay. So let's just run this comparison side by side. If you were to keep the money where you have it and put $1,500 aside every month, you'd end up with around $4.5 million, right? If you were to drop it down to zero and just say, I'm going to invest $3,000 for the same term, 10 years, at the same rate of return, it would be $2,000,000, $2.2. You see what I'm saying?

So that's a big drop off. It's a big difference. So I hope that kind of mathematically frames up the equation here. Back to George. Yeah, I think you've got good intentions and heart behind it. You're not trying to do something frivolous or stupid, but nothing is worth giving the government an extra 35% of my retirement and unplugging all of that growth just to have a paid-for house. And trust me, I want you to have a paid-for house, but I would find other ways to do it with future income, savings, anything else

you can do. And you're going to make more money over time. The kids will get through college. And so you'll be in a season where you can throw a few grand out of your 11K take-home pay toward the mortgage and get this thing knocked out. So what I would do is sit down. You have a wife? Yeah. I would sit down with her and go, hey, we want to pay this thing off. Let's have a six-year, seven-year, eight-year plan to get rid of this mortgage. Let's have a six-year, seven-year, eight-year plan to get rid of this mortgage. Here's what that looks like. And year one might be slim because the kids are going through college. Year four, maybe we're putting away 50 grand a year at the mortgage.

Maybe more. So I'd use our mortgage payoff calculator and start crunching the numbers. That's the tool I would rather you use to figure this out versus looking to the 401k or any other retirement plan. And as a reminder for anyone out there, if you withdraw funds in most cases before 59 and a half from these retirement accounts, the IRA, the 401k, you will be dinged with a 10% early withdrawal penalty on top of the full income taxes, maybe state income tax as well. So just crunching the numbers. What's the opportunity cost? You could lose half your money from this retirement account. You pull out $200, you pay $100. I would say that was a bad trade.

Yeah, that's not good. That's not good. Listen, he's trying to solve for peace. I get what he's trying to do, but it just was the wrong method. Thanks for the call. All right, let's see if we can take care of Chris in Boston real quick. Chris from Boston, Massachusetts. What's up? Hey, guys. Thank you for taking my call. You bet. So I guess the quick of it is about a year ago, I got an inheritance of about $350,000 and I fell in love with it, but I don't know if that's the best use for some of that money. I'm looking at the payments per month. It's about $3,000, and it's just a scary number to look at, and I'm not sure if that's the best place to put it right now or if I should keep it invested. You broke up on us

when you were telling us. What did you fall in love with? This condo I found just outside of Boston. What's it cost? I don't know if I should... Outside of Boston, Massachusetts. Yeah, what does it cost? $350,000. $350,000. So you would essentially use the... Would you use the whole inheritance to pay for it in cash?

Well, that's the thing. I don't know if I should use the whole thing because it's all invested in mutual funds and ETFs right now. But I don't know if it's better to not have a mortgage payment or if it's better to just put the 20% down and try to go just off of what I make. What's the rest of your financial snapshot? Do you have any debt? I've got $13,000 left on student loans and about $8,000 left on a car. And do you have three to six months of expenses? Yes, I've right now got about $35,000 saved up. Okay, so just walking through the baby steps with this would be you paying off the debt first, clearing that out, stacking up three to six months, and then with this condo, I mean, you're going to be, there's going to be some tax implications, I'm sure, on the growth. And when you pull that out, and then let's see, there's

probably going to be some fees. So you could get pretty darn close. What's your living situation now? So right, I moved back with my parents just to save some money. So I could stay here for, I mean, a couple more years, but it'd be nice to kind of be out on my own again. Yeah. Who left the inheritance? It was my uncle. He had passed away a few years ago and left it to myself and my sister. Wow. Quite the legacy. That's impressive. Yeah. Yeah. I'm with Jade on this. You take your 35 savings. Let's knock out the student loan and the car loan today. That leaves you with 14 grand. Sell off a big portion of this inheritance and be aware of the tax implications of that. I would check into that with a tax pro. And whatever you can throw at the condo, I would throw at it to get to as completely debt free as possible. Because then what's going to happen, Chris, you're going to have a mortgage payment freed up that you could then invest. Love it. And so either way, you can crunch the numbers and do the math all day. I think the freedom and peace that will come with not having a mortgage payment at your age, dude, you're going to be so unbelievably wealthy

if you just use your income to throw into investments then on and thereforeth. Two calls in a row where people are trying to buy their homes completely outright. I love that. To have no mortgage payment. Come on, speak to that, George. The ultimate flex in today's world, I think, is having no mortgage payment and telling your friend, oh, you got a 2% mortgage interest rate. How about 0% with no payment?

That's what I'm signing up for. Mic drop. Listen, I'm getting there, George. Let's go, Jay. Slow and steady. Let's go. This is The Ramsey Show. Hey, you guys.

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All right, our Ramsey Show question of the day is brought to you by Y-Refi. Y-Refi refinances defaulted private student loans, which are different than federal student loans. YRefi refinances your defaulted private student loans, and they build a custom loan based on your ability to pay. So kick your private student loan debt out of your life by going to YRefi.com slash Ramsey. That's the letter Y-R-E-F-Y dot com slash Ramsey. Remember, it may not be available in all states. Today's question comes from Amy in South Carolina. We saw a financial advisor recently who recommended putting part of my husband's 401k into an annuity.

He recommended this so we do not lose money and my husband would be able to draw up to 8% during a seven-year period. I would assume you do not think this is a good idea, correct? But we do not understand stocks or mutual funds at all. Tells me your financial advisor is not a great educator. He is 65, his health is failing, and he's afraid that if there's a dip in the stock market, something happens to him, he will not leave me with much. Can you advise as to what we should do with his 401k to secure it better? Okay. Number one, fire your financial advisor yesterday. This person is an insurance salesman, not a wealth strategist who exists to help you understand what you're

investing in. Yeah. A financial planner who's advising an annuity, that's a wolf in sheep's clothing. So let's talk about the different pieces of this. So an annuity is a contract with an insurance company with a promise of a stream of income. And so who do they prey on for this? People who are scared. Annuities prey on fears of market risks under the guise of protecting your nest egg. But it's less like a bank vault and it's more like a prison that you're paying to be in. Annuities are very expensive, complicated products. There's fixed annuity, variable annuity, indexed annuities. And I've talked with Dave about this offline. And he said, hey, the only one that we would be okay with in very unique circumstances is variable annuities.

And that's only for the ultra wealthy who are trying to diversify their risk. But for this situation, this person is saying, I'm not making money from you investing in your 401k, but I can make money if I use some of that money for an annuity and I can get a commission off of that. Yeah, I was going to say there's fees associated with that and the rate of return is so poor. Terrible rates of return. You can do way better investing on your own

and that's where you need education on stock markets and mutual funds and index funds. Because here's the deal. If you make 8% on an annuity, you think I'm crushing it. The S&P 500, the overall U. u.s stock market did 24 percent last year let's go and you're gonna go why is my portfolio not making that much well it's because you have crappy investments in there but even over time let's say you know obviously this year the year before those were just like really benchmark like amazing years it could be negative 24% this year for all we know.

But even over time, you're going to find that if you're invested over time, you're going to still be around 10 to 12% if you're invested in good mutual funds. So what's wrong with keeping it where it is? I'd be interested, George. She doesn't say how well their performance has been in his current 401k. What's in here? We don't know if there's, hopefully there's term life insurance. I have a feeling there isn't

because he's saying his health is failing. He's afraid that, you know, he won't leave me with much. This is where term life could be a game changer on top of getting self-insured, which means from, you know, in your 20s, 30s, 40s, 50s, you're following the baby steps, getting rid of debt, investing for the future, getting the house paid off to when you're 65,

you should have a sizable nest egg there. I don't know their situation, where they're at, but no, the financial advisor is screwing you over here. I would fire them. I would jump on ramsaysolutions.com, click on trusted pros, find someone you can trust who's not going to sell you crappy products that you don't need. And let's talk about this angle real quick, because when I see this, and I don't know, I'm reading this into it. When I see this, I see a couple who's probably been married forever and they're facing a health crisis and it's scary and it's easy to kind of panic and go, what do we need to do and do this and do that? And it's quite possible that someone is taking advantage of that. Oh, you need something to do. Here's what you do. You know what I mean?

And so it's just a reminder. And she did the right thing by asking the experts, but it's just a reminder that, move slowly when you do, when you're gonna make big moves with your money, make sure you're seeking wise counsel, that you're not doing things out of fear and out of the circumstance in the moment, but you're really getting the right information.

Yeah, it's very sus. And here's how you know it's sus. These are the same people that always send you those flyers in the mail that's like, we have a free dinner for you at this steakhouse. And all you need to do is sit through a little presentation at the end. These are pitching annuities. So if you've got one of those in the mail, it's not unlike timeshare presentations. Where it's like, hey, I get it. We get a free steak dinner. We'll listen to the pitch while we eat. And all of a sudden they dupe 12 people out of fear into buying into these annuities. And the dinner is not very good. Yeah. You can do better. All right. One cocktail. Come on. Let's go to the phones. We've got Wade in Salt Lake City, Utah. What's up, Wade?

Good afternoon. I'm looking to protect a home for my wife, and it requires a little bit of explanation. So if you could bear with me for just a moment. Sure. After a loss of a business and our home back in 2003, my father-in-law graciously acquired a home for us to live in, with us making the payment amount to him as rent. But eventually, because of Parkinson's, I was forced to retire in 2019. And I had only worked about six years for an employer where money was set aside in a 401k.

Prior to that, it was all self-employment. But along the way, we managed to clear most debts. But we fell behind in rent to my father-in-law due to some smaller payments than agreed upon or, at times times no payment at all. In 2024, I pulled about half of that 401k out to catch up a little with my father-in-law. And he recently proposed that if we could arrange a second similar amount, he would be able to finish paying off the house and he would then relabel our arrangement as a rent-to-own agreement that was fulfilled and he would sign the house over to my wife. Okay. What do you have to give him for that to happen? I took the second half of my 401k was only about $40,000 at that point after the COVID period and stuff that took its toll. And it was meager. And so I took the rest of a couple of weeks ago. I drained that last part of my 401k and gave that to him.

I felt that was in exchange for a house. That was a good investment. Is that the amount that your father requested, $40,000, or was that all you could give? How much did your father say he needed to close this deal? No, that was what he asked for. I had taken out half in 2024, and he told me if I could give that same amount to him again one more time, then he would consider things fulfilled.

How old are you, Wade? I am 61. Okay. So you gave him the money, and he should have been able to pay off the mortgage and sign it over to you. What happened instead? Well, here's the thing. In addition to progression of my Parkinson's,

I've had one kidney removed due to cancer, and my remaining kidney is failing, as is my liver. And I worry that I may find myself faced with a transplant procedure, or worse, that it won't happen until after my wife has to retire and that our insurance will be limited to Medicare only at that point. So I'm a person who likes a plan B, C, and D. And before my father-in-law signs that house over, I'm concerned about how to protect it for my wife. I have nothing to leave her except to leave her debt-free and a little bit of life insurance. Are you saying there's collectors coming after you guys?

No, no. But what I'm worried about is that if this home is in her name only, which it will be, is I undergo future medical procedures. Oh, I see what you're saying. We're against the clock. He's concerned that if they rack up debt for his medical, that it'll go against the house. I would look into a homestead exemption,

and I would talk to an attorney in your area who knows your state laws because it differs wildly, and I'm not here to give you legal advice on that. But we are wishing you the best, Wade. It's a lot. And I don't want your father-in-law taking advantage of you. It's given me some red flags. I would proceed with caution.

Yes, this is The Ramsey Show. Best of luck to you, Wade. Hey guys, I'm Jade Warshaw and I want to talk to you for a quick second about student loan refinancing. If your payment and your interest rate are burying you and you feel like you can't dig out, refinancing your student loan debt might make sense.

That's because a lower rate could free up more money in your budget and a shorter term could help you pay down your debt faster. So reach out to the student loan refinancing experts today at laurelroad.com slash Ramsey. There, you'll find helpful resources like a student loan rate table, a refinancing calculator,

and other tools. Plus, you can get an initial rate in just a few minutes. Laurel Road offers low competitive rates starting under 5%. And you can get your interest rate even lower if you sign up for auto pay. But if your situation is more complex, sign up for a free 30-minute consultation with one of their student loan refinancing experts to get your tough questions answered. Listen, not everybody should refinance their student loan, so make sure you run the numbers. But for some people, it is the right move. Learn more at laurelroad.com slash ramsey to find out more about their student loan refinancing. That's laurelroad.com slash Ramsey. Laurel Road is a brand of Key Bank National Association. All credit products are

subject to credit approval. You're listening to The Ramsey Show. I'm Jade Warshaw. Next to me is George Camel, host of the George Camel YouTube channel. If you've never seen it, you ought to check it out. It's part of the Ramsey Network. If you didn't know, we do have a Ramsey Network app. It's the only place that you can get full episodes of shows like the Ramsey Show. You can download it for free using the link in the show notes or by searching Ramsey Network in your app store. That's how you get the third hour of the show. The full show is there, but if you want to listen to the third hour, you must into the app so if you're on the radio stay tuned after this hour but everyone else if you

want to finish the show you'll have to go into the app all right into the unknown i was just thinking i knew you were and i considered it and then i was like those notes are high i'm actually shocked you didn't belt it out on radio into the the unknown. No, I won't do it. Okay. And the FCC just took us down. I know they did. All right. Reagan is in Chattanooga, Tennessee. What's up, Reagan? Hi, can you hear me? We can. Okay. So my husband and I have been married for almost a year and we just found out that we are pregnant. Very unexpected. Congrats. Thank you. So I kind of have a two-part question. My first question is, what do we need to do financially to prepare for the baby in the next nine months? And also,

should I quit school in order to be able to work full-time i'm currently in grad school and i'm working in the evenings i uh didn't take any loans to uh do grad school um but i am most of it is being paid for uh by my university and then i only owe like a couple hundred dollars um i will owe only a couple hundred dollars at the end of the semester, so I'm just trying to get some advice on that. That's awesome. So what are you going to school for? So I'm getting my master's in Bible and theology. Up until this point, I've been thinking that i want to teach i don't know if i want to teach um like higher ed or um like junior seniors in high school and just start teaching

with kind of a higher paying salary um but i also don't know with the baby if i want to stay at home so that's part of my um cont with, you know, should I keep going if when the baby comes, I'm like, no, I really want to stay at home. So yeah. So what would you do? Okay, so if you didn't go to school, it wouldn't be you doing a different career, would just be you staying at home? What does your husband do? So that's kind of been a rocky situation over the past couple months um he left his full-time job uh he was the director of soccer operations for a local pro soccer team um and it was just a really bad situation he was like just being treated pretty rough and was not being compensated for it either. So he left in November.

He started coaching at a local high school, just like a private Christian school, and they had told him in his initial interview, like, since you're going to be a head coach, we want you to be on staff full time. We just don't know what that will look like yet. So at the moment, well, ever since then, we've been getting kind of stipend money, but we've kind of been struggling because you've been waiting on the full-time thing to come. So what's your plan on it? How long are you guys going to wait? Well, so he just actually got a job because he had been looking for anything after probably a month. It was kind of like, okay, we can't, we can't really sit around at this point. So he'd been looking for anything. Um, but there, he wasn't having much luck. So he just picked up a serving job just

to like bring in some money. Um, so we're kind of just like bare bones at the moment, but, uh, December we got a ton of money for Christmas. We are very blessed with our families. They help us a lot. And then for the next few months, we actually, with rent, are getting help from our church. So it's really, really tight. It's really tight if you're getting... Yeah, you need to get out of school and work because your family needs you to, and this is, regardless of the baby situation. I'm going, hey, this is an emergency. Yeah, it's an emergency. Your husband needs to work more. You've got to work more. And I wish it were different because on the flip side of this,

if your husband was getting paid and his income was enough to sustain you, I would actually have asked you how much longer until you're done with school. Because part of me, if you're like, listen, I have this dream of getting this master's, I want to be a teacher. There's seasons in life. And so you might want that education for later on after your kids are in high school and you want to go back to work, right? So there's part of me that's like, you have a really great deal now where they're paying and you're only paying a couple hundred dollars. If you could take advantage of that, I think that's a great thing. But me that's like, you have a really great deal now where they're paying and you're only paying a couple of hundred dollars. If you could take advantage of that, I think that's a great thing.

But to George's point, you guys can't eat. Like there's no money coming in. Well, I am working at night. So that. Yeah, but you just laid out the whole financial framework. Obviously, whatever you're bringing in at night, thank you for your effort, but it's not causing you guys to make ends meet. You know what I'm saying? So what are your total bills each month?

Food, rent, everything. Yeah, so our food is, I've been trying to stay under- Just give me a total monthly number. What is a total? Are you spending four grand a month in expenses yeah so our yeah to me like minimum and i know what you're gonna say we have not been having insurance i am adding that though because of the baby so i kind of in our

budget included an extra 200 because he also will need, he needs vision insurance really bad. So it's our like break even is about $4,300. Okay. And you're getting just gifted money now, but what is the actual money you guys are bringing in? A few hundred bucks? So I bring in about two grand just serving at night. So I work five days a week.

The restaurants only open five days a week. And then because of the stipend money we've been getting, it's really been about like kind of $3,500 because he's been also subbing a little bit at the school just over the past couple months. Okay. And you said you guys do not have health insurance currently not at the moment but um i'm visiting my family right now and my

mom and i are working on that tonight because we know it is a necessity let me just let me just poke a quick hole i think you said your husband is bringing in 3500 and you're bringing in 2000 that would be enough to cover your bills so something's not right i'm sorry yeah no i meant i didn't say that right i meant um probably like 1500 his portion is 15 bringing the total to 35 which means you guys are underwater every month by about 800 bucks i see i see okay yeah this is is he working 40 hours doing whatever? Not at the moment. Okay, he's got to start working 40 hours today.

I'm talking about today. I needed some fire under his butt. I know he's been through a lot. He's been treated unfairly. But right now it's like, I got to provide for my family. And I got a kid. I got a baby on the way. It's time to just do whatever it takes.

And he needs to find long-term employment ASAP with benefits if you're going to stay home. And so staying home, it's a math equation. I wish I could just say, well, if you want to stay home, just stay. It's going to cost you guys. And if he can't provide and you're going to go into debt to do this, the answer is no. Yeah. Do you guys have debt now? Oh, yeah. Okay. How much debt? What's the total debt load? Total is about like 110. Okay. And is that including your renters, right?

Or do you own? Sorry, can you say that again? Are you renters or do you own? Yeah you say that again are you renters or do you own yeah no we're renting an apartment okay so what kind of debt is the 110 real quick so our cards are um credit cards are about almost 14 000 a little under um his car my car's paid off. His car is almost also $14,000. And then we have $85,000 in student loans, but we are on the safe plan. Okay. So, and since I went back to school, I haven't, they put mine on pause, so I haven't been paying. But his payment is only like $25 a month. Right. Yeah, that's a weird thing about those student loans.

The payments are low, but it's a boogeyman in the closet. And you feel the effects of it, even though you're not making that monthly payment and the piper wants to still be paid. OK, so my advice is you've got to work, work, work and work some more. He's got to work and work some more. And yeah, I would try to work and go to school because you need a degree so that you can get this professor's job so that you can make some money. I don't see you staying home with the baby anytime in the near future. I wish it were different. Hang on the line. We're going to send you every dollar premium. That's our budgeting app that you can use for everyone else. Go check it out in the app store. It's going to help you get a plan for every single one of those dollars coming in. From the Ramsey Network, it's the Ramsey Show. I'm Jade Warshaw next to me George Camel

we are inside the app taking calls about your life and your money the show is still live 888-825-5225 is the number to call all righty then I think that's all of the house cleaning I have unless you want to discuss the Grammys we can move on you cleaned up nice I did all right Brayden in Columbus, Ohio. What's going on, Brayden? Hello. Hi. Hello. Hello, Brayden. It's Jaden George. Hi. I have a car that I'm upside down on and I just need some help figuring out what to do with it. Oh, tell us more. Okay, so we got this car last year in the spring, and it was $25,000, and it has an APR of 24%.

And now, yeah, now I'm only making $600 a week. That's like our total household income right now. And I just can't catch up on it. I'm like behind $2,000. You think? What's your monthly payment on it? It's like $645. 24% added pain and regret.

That's what APR stands for. You know that, right? Yeah. You learned the hard way. Okay. So what's this car worth? I think it's only worth like 10,000 less. So like 15,000. Oh my. And you still owe 25? Yeah. Okay. You have nothing in savings? Nope. Nothing. And what were you doing? Were you making more before? It sounds like you had a big dip in income. My wife and I were making like $4,000 a month at

Walmart. Okay. And then now I'm working for my father-in-law and I'm only making $600 a week. Well, he's not paying you enough, or you need to go make more. Why'd you switch? Yeah. We moved south from where I was living, and he was really my only option at the time. Okay. Okay. So what are you guys making combined now?

What's the new income? It's just that $600 a week. She stays home with our son. Wait second how old is the son five months okay okay okay um do you you tell me what's wrong with this situation i want to see if you can understand what's going on here i mean i we can pay for like food, everything. There's nothing wrong with that, but it's just this car. It's the payments way high. The APR is way high. Like that's really just my problem is that this, this car is just way too much money. You're right. The car, the car is one of many problems. So you are right. The car is an issue, but another issue is your income is

that is an issue. How old are you? I'm 22. Okay. You guys are just getting started. Your income is quite low. It's not a living wage. I mean. Okay.

Okay. And then you've got a young one at home. I understand her want to stay home. What can she do for work? Can she work at night after the baby goes down? I'm sorry, say that again. Can she work at night after the baby goes down? I'm sorry, say that again? Can she work at night when the baby goes down? She probably can't. She applied to the Columbus Sheriff's Department to do something in there, and that will help. And I was applying to the Columbus Police Department to become a police officer, but I had a foot injury and I wasn't able to do the physical part, the physical test of it.

So that's delayed me. Okay. So we'll have to look for other options. You guys' number one full-time job right now is to find full-time jobs. Like that's, when you go, when you get home tonight, there's no Netflix. There's no, no internet. There's only you guys sitting down and brainstorming ways that you can make money and the good news is if you devote that time and effort you're going to come up with some really good ideas um because you need that you got because you got to

get out of this car yes you're right but what you need most is just some cash some money coming in in the form of income that is steady and every single month okay how come how come you're so upside down in this why is it only worth 15 um i'm not really sure why i'm so upside down in it it's like when the baby was born we kind of just slacked back and the money the income came down and it's just been kind of thrown how does that affect the car's value? Did you trade in a negative? Rollover, negative equity? Yeah.

Oh, like the car's value? Yeah, what is it worth, private party value, if you searched on Kelly Blue Book? What could you get for it? $15,000. On Facebook Marketplace, you get $15,000? Yeah. Okay. Have you tried going to a local credit union to get a loan?

No. Like, I don't know anything what to do with that at all. That's why. Okay. Do you have another car? No. This is our only car. Okay. So you're going to need enough to get a beater car, and you can find one out there for my guess is in your area probably three or

four grand will get you something will get you from a to b get a pre-purchase inspection on it pay the hundred bucks to do that so you're not getting a lemon that's going to have a bunch of repairs but that's your goal if you can go to a credit union and get the difference that you're underwater on that'll help you sell it right so let's say you it's worth you owe 25 it's worth 15 you're 10 grand underwater so if you can get a $10,000 loan from the credit union, that will help you clear the title to get rid of the car. You following me? Try to get $13,000 so you have some for a beater.

So then you get an extra $3,000 or $4,000. So it's a $14,000 loan total that you use the extra $3,000 or $4,000 to get you the beater car. Now you're out of this loan. You're out of the APR. You've lowered your interest rate to whatever the credit union's terms are, and you've lowered your debt load. So that would be your best bet if your credit's not shot. My guess is if you had a 24% APR, you had terrible credit to begin with.

It wasn't too bad, it just didn't have a long credit history. It was like 700-something, but since then it's definitely dipped. Okay. Because you guys are making $26,000 a year, and you owe $25,000 on your car. Does that not sound insane? That does sound very insane. Okay, good. You're tracking.

But we're going to get you out of this thing. It's not going to be easy. You're going to have to downgrade in car for a season to get out of this thing and then find long-term gainful employment where you can make more, get an emergency fund in place as soon as possible do you have any other debt um it's less than 10 000 i know that on what it's just in like um my wife and i have a credit card and a lot of it's hospital bills from the baby um so i think i owe my grandma for the first car i had. I want you guys, I want you cutting up those credit cards. You're in a situation where right now you've got, you're a fork in the road, right?

And I know what it feels like to be 22, 23 years old. I had more debt than you did. And, you know, making $30,000 a year, $26,000 a year. And right now you're up against a very important crossroads. The choices that you make going forward, Brayden, are going to be very crucial for you. And so cutting up the credit cards now, because when you're up against it, you're going to reach for those. And I don't want you reaching for them. I want you to reach for a job instead and another job after that. And so if you can really take this

advice to heart, if you can do exactly what George and I said and sit down and say, what can we do to make the most of our time? Because we've got to clean up this mess and we've got to clean it up as quickly as possible because the older this child gets, the more needs they require, the more expensive they get. Do you see what I'm saying? So you've got a pivotal, like I feel it. You've got a pivotal point right here. The good news is you can turn it around and I think you will turn it around. I want to send you a few things to help, right? And I'm going to send you a copy of my book, Breaking Free from Broke. This is going to give you the guide to getting out of this mess and staying out and finally building wealth. And I'm going to gift you Ken Coleman's book, Find the Work You're Wired to Do. It comes with a get clear career assessment. That's what you

need. You need a career. You don't need a job. That's what's going to get you out of this mess in the long run. Yeah. The good news is they can do it. The bad news is it's not easy, but it's going to build something inside of you that no one will be able to take away. And that's called confidence, my friend. Confidence. This is The Ramsey Show. You're listening to The Ramsey Show. I'm Jade Warshaw. Next to me, George Campbell.

George, let's talk about it. I'm all flustered over here, Jade. I mean, the nature of our jobs, people call in. We want to give them advice. We want to help them out. We feel empathy. Like, we feel we've been there. Both George and I have made, let's start with that, George.

Both you and I have made our fair share of mistakes with money. Both of us have had our share of debt. Both of us have had our share of debt. Both of us have had our share of regret. And both of us have had to work very, very hard to clean up the messes we made. And that's part of what lets us sit in these chairs today, right? But when it comes to car payments, that's kind of like almost, I mean, it's without feel. When somebody calls into the show, George, Jade, I'm struggling struggling here's the layout it's almost always a car right it's almost always a crazy car the last call the apr 24 payment was what 625

something like that yeah and i can't help but i get i get antsy george because i'm like it's not it's what i this is what i told ge George on the break it's not like you go into the car dealership and you just kind of have to close your eyes and sign and you don't know what the payment or the terms are going to be until you get home a month you know or a month later you know what the terms are before you even leave the place right and yet somehow and still we sign on the line knowing full well what this means and so here's the thing i have empathy if you're like hey i need a four thousand dollar car to get me from a to b to get me to work i don't have the money if you took a loan out for that i would say hey i understand yeah but taking out a 25 30 000 loan when you make 30 grand a year 40 grand it's insane

it's absolutely wild it's harder to have empathy when you're doing basic napkin math going, is this going to help my family or hurt them? And I don't buy the excuse of, well, Jade, they need something reliable and safe for my kids. Listen, a 2012 Civic is more reliable than most of these fancy new cars out there with all the fancy technology and doohicks and gadgets on them. Yeah, a 2012 Civic. And that's the other thing.

There's this part of it where, and John and I have talked about this before, if you sign up for a certain income and you're like, you know what? Like that guy, he was like, yeah, we were working at Walmart making 4,000 bucks a week. I'm good. I'm happy with that.

Listen, I'm not mad at you if you're happy with that, but you have to also say, well, if I'm going to do that, then my car needs to reflect that choice. And it's not a $25,000 car when you make $25,000 a year. It's like a $4,000 or a $5,000 car, right? Like that's where he's got to sit if he wants to sit at that income.

And to his point, like they were 22, they were just getting started. But George, let's go through some stats about cars. Hit me. That'll kind of help people think about it. Okay, these are just some that I've collected over time because I think that they're interesting. This is what Jade does for fun, by the way.

She just collects car loan stats. Okay, so 85% of people who buy new cars either take out a loan or a lease to get one. So if you're buying a car, you are in the top 15% basically. So that makes you very smart. Average used car payment, average new car payment, last I checked was around $734. Does that sound about right? And defaults are up. They've risen quite a bit since COVID. So part of that reason is because we're seeing higher interest rates, people are paying more

per month for their car. So- Cars got super expensive and we all just went, okay, we'll just take out more debt. Sounds an awful lot like the student loan crisis we find ourselves in. Yeah. Tuition goes up. We all go, Hey, we'll just take out more student loans. Who cares? So listen to this. So the average new car loan is around six years six years of you paying 525 dollars a month which now you're overpaying because of interest for that 31 000 car you will end up paying almost 38 000 because of interest and here's the kicker george so this is a six-year term we're talking about if you had followed our advice and just said yeah I'm gonna buy a car in cash let's say it took you some time to and then you said okay for five years instead of paying car payment I'm gonna invest uh my car payment what I would have

paid at the same you know the same return you would have $58,000 $525 over six-year term, over $58,000. That's painful. That's brutal. That's why we say it's the car payment that keeps Americans middle class and broke. While your car continues to go down in value. So here's the math I do in the car loans chapter of my book, Breaking Free from Broke. I go, so you're going to buy a $40,000 car. You're going to pay $50,000 after all the interest is paid.

And by the time you pay the car off, the car's worth $16,000 because of depreciation. Do you not see how insane that is? It's painful. You paid $50,000 for a thing that's only worth $16,000. Yeah. So here's the advice. Buy a used car until you're a millionaire. And even then, pay cash. Yeah. And guess what? Most millionaires even don't buy new cars because they go, why would I prepay the depreciation? Yeah. Yeah, that's most millionaires even don't buy new cars because they go why would

i pre-pay that appreciation yeah yeah that's right millionaires don't buy let someone else pay the depreciation let's talk about the loss of value after one minute this is what it says if you buy a shiny brand new 35 000 car it loses somewhere from 9 to 11 percent of its value the minute the minute you drive it off the lot. It instantly becomes a used car. Instantly. The very thing you were afraid of. After one year, 12 months, guess. Oh, I think, is it another 15%?

20%, another 20%. 20%. After one year, and then five years, we talk about this all the time, 60% of the value. Just like that. And so, yeah, so just to clarify before, when I said the five-year thing, I was saying like if you had taken our advice five years ago and taken that loan and invested it for five years, because the stock market's been crazy, that'd be the $58,000. But say you started today and it was just a normal rate of return, not in the 20s like

we've been seeing. Yeah, over 10 years, it's $109,000. Over 20 years 390 000 because most people george they they get locked into car notes and they're paying it across their entire working lifetime 390 000 over 20 years 1.1 million over 30 years insane this is your car y'all are driving your nest egg. 40 years. Let me keep going. 40 years would be $3.4 million.

Hope you like the car. I'm sick. My stomach is sick at this. And they go, well, Jade, we didn't have money to invest in retirement, so now we're broke and we have to live. You did have the money. You chose to give it to a lender instead of build wealth for your own family. This is the cost. Three point. I mean, a lot instead of build wealth for your own family. This is the cost.

Three point, I mean, a lot of people are like, Jade, 40 years, that's a long time. I'm like, not really. Our guy that just called, he was 22 years old. At some point, you will be 65. Even if you're 25 today.

I know 40 years sounds like an invisible number, but it's going to happen. It's going to happen. Would you rather have money or would you want to be broke still paying a car payment? And let me, okay, because this just came to me. Let me hit it with the cherry on top george because

we're talking about one car oh one car double it most people are a two-car family right kelly kelly's looking at me like jade this is crazy she's in the booth she's producing because james is not here but that's a lot of money george you double that 3.4 million are you telling me are you telling me right now that it's almost seven million dollars for a couple of people who get together and they have car payments their entire life and you combine their their possibility for compound interest it's almost seven million dollars that's it's sick cars make me just want to throw up and listen i i i practice what i preach jade i drive a what 12 year old car now yeah i could buy it i just know i'm too good at math right to be that dumb george i'm with you i have a 2013 cadillac that for some reason dr

john deloney thinks is like brand new it's still pretty swaggy it looks swaggy but it's old take care of your stuff people get a car wash get old. Take care of your stuff, people. Get a car wash. Get it detailed. Take care of your stuff. Do the regular maintenance. Yeah. And I promise you, you won't have the itch for a new car if you just clean up your nasty

car, which by the way, you're going to make that new car nasty too. You're the problem. You're the common denominator here. Keep your car clean. Get the oil changed. If I get in your car, is it going to be spotless? I got two french bulldogs there's hair everywhere i got a baby now she's throwing food back there but i do i do try to

take it through the car wash at least once a week good for you that's my big splurge i'm on the unlimited car membership by my house so that's my big splurge for you know 20 bucks a month that's me living jade you know me i do know you you're looking for a deal everywhere you can find one sniffing it out oh my gosh so based on what we just talked about, because everything I just said about investing is you taking that car payment and investing it in the S&P 500. So that brings me to a social question. It's Randy from Instagram. George, he asks, do you still think investing in the S&P 500 is a stable place to put your money? Seems like it's been crazy volatile in the last couple years. I don't know what year this guy's living in, but, you know, up 24%.

The year before, I think it was up 22%. The year before, it was down 20%. It's going to be volatile in the short term, but I invest for the long term, and I recommend everyone else does too. You're going to see average 10% to 12% returns. Right on. Pretty dang good if you just ride the roller coaster. Pretty dang good if I do say so myself.

Man, car payments, avoid them. Invest your money. Pay yourself. This is The Ramsey Show. You're listening to The Ramsey Show. I'm Jade Warshaw. Next to me, George Campbell, taking calls about your life and your money.

All right. Ramsey trusted pros shop the market and compare insurance quotes so that you don't have to. Okay. Your pro will compare pricing, discounts, and bundle deals for you at no extra cost. They'll save you time and money to work with a great agent. These agents will make sure that you have the coverage you need and nothing you don't. Working with them is a smarter way to shop your insurance. Ramsey Trusted Pros are interviewed, vetted, and coached to make sure they're market experts who have your best interest at heart. So connecting with a pro

is a smarter way to shop your insurance, and it's the best way to get insured the way we teach here at Ramsey. Did you know one of the easiest ways to get insured the way we teach here at Ramsey. Did you know one of the easiest ways to save on insurance costs is to bundle your policies? So if you want to get started at ramseysolutions.com slash bundle, you can do that. Or you can click the link in the description if you're listening on YouTube or podcast. Very good. Love it. All right, let's head to those phone lines. We've got Lisa. She's in Fayetteville, Arkansas. What's going on, Lisa? Hi. Well, I need some advice.

My husband and I are in our 60s, and we've finally done the things late. I know we're late to the party, but we paid things off and we've saved about a hundred thousand dollars a little more than that okay um and we already realize that he's going to need to continue to work pretty much as long as he can we're good with that um and but we don't know what to do with our money we're not we're just admittedly we don, we're not real money savvy. We've got it in a CD right now, but I know that's not going to make us very much money in the, you know, future. So yeah, that $100,000, that's all in a CD? I'm sorry? The CD, is that all of your money is in a CD, that $100,000? We've got $50,000 in a six-month CD and $50,000 in a money market.

Okay. And you don't have any retirement accounts to your names? No, that is it. We have about, oh, in another smaller savings in our checking, we've probably got about $20,000. Okay. You guys have a mortgage? No, we have no debt. Oh, great. And you have a paid for home or are you renting? Yes, it's paid for. Good. Okay. What's your home worth real quick? I'm sorry? What's your home worth? I don't know. We bought in 2012 when, you know, it was really the best time to buy. And I know it's gone up, but we haven't looked into that. I mean, if you had to guess, what would you say?

If you Googled your address, it would tell you a guesstimate. I'm sorry, if I did put my address where? Just in Google. If you put your address in there, it'll give you a guesstimate on some of these sites. And they're not going to be accurate, but it'll be in the ballpark. It's not going to be hundreds of thousands off. So just a way to find out what Jay's trying to get at is how much equity do you have in your home? Because this might be part of your retirement plan is do we need to sell and downsize and use some of that money to live off of or invest? Right. Well, am I willing to do that. Our home is fairly modest. I would guess from some of the homes that have sold around us that it would probably sell around $350. Okay. Just curious.

Okay. Yeah. And your husband's working. Are you working as well? I haven't been. I don't have a real big earning potential and I haven't worked for several years. So, you know, that kind of limits, but I'm willing to. We kind of like... I mean, even working a retail job, Lisa, you could be making 20 bucks an hour easily. Right. That's about 40 grand a year to get you guys set up for a decent retirement. Because right now, you're right, things are looking bleak to try to live off 100 grand for the rest of your life. It's not going to cut it. Yeah, I know. That's why I'm

asking what you think, you know, besides what we've been doing. And like I said, he's going to continue to work as long as... What does he make? This past year, about $120. Amazing. And how old is he? He's 67. And if he works till 70 and starts drawing Social Security at the max amount, do you know, have you guys calculated, have you checked to see how much that will be?

On those things, you know, you get that update every so often. I think it was, I don't remember. I want to say around 2000. Okay. Okay. So around 2000. And did you ever, did you work enough during your lifetime to draw any sort of social security? Very, I mean, some, but I have, you know, when our children were born, I stayed home and worked,

and I did go back to work for a while. Did you draw enough? Did you work enough that there's a benefit for you? I'm sorry, I was talking. I didn't hear what you said. So when you guys check your social security, obviously there's the payout for your husband. He's kind of worked his whole working career. Is there a benefit for you as well? Did you work enough? Yeah. I mean, I know there's a little, it's not significant. If you had to guess, do you know how much it is? We're just trying, George and I are really trying to help answer your question. I know. I'm sorry. It's minimal. It would be very minimal. Okay. So here's some napkin math for you. He might need to be working into his 70s. I'm sure you've talked to him about that. Okay. And let's say you start with $50,000 in your investments and you're able to put away $3,000 a month into an investment, not a CD, but something that's going to give you a higher rate of return in the long term.

Right. That could give you half a million dollars at 75. Right. Now we're talking. If we have half a million bucks plus some show security, we're not going to be, you know, having a lavish retirement, but we can eat, we can survive. And so that's going to be the game plan. And that's if his body allows him to work. And so you working on top of that is really going to help this equation because the key is you guys need to shovel as much as you can into investment accounts, not CDs. And that means investing into the stock market, into mutual funds. So these are not single stocks and individual companies. We're talking about a basket of like 200 stocks so that you're diversified, meaning all of your eggs aren't

in one basket. Right. And does he have any retirement plans through his employer? No. Okay. But you will have access to an IRA. That's a retirement account that's available to anyone with earned income regardless of who their employer is. And so both of you can fund an IRA. You will have something called a spousal IRA, and that will allow you guys, especially with your age, to do catch-up contributions. And so the limit, I believe, is $7,000, but for you guys, I think it'll be $8,000. So if both of you can pile away $16,000 a year right there, that's already going to start to get the power of compound growth working for you, which is when your money makes more money. That's what you need for this

to grow. Obviously, time is not on your side as it was in your 20s or 30s, but there's still hope. But at this point, it's going to be your savings rate, not compound growth that works the magic, which means you guys need to put as much of your amazing income away as possible, which means we are not going on vacation. We are not living retirement now because we want to be able to make it the next 30 years. Yeah, I agree with what George said. You picking up a job is going to be pivotal in this. And there's plenty that you can do. I mean, like George said, you can do retail and make $20 an hour and be really good at what you do. Right. Okay. Yeah. And like I said, I'm willing to do that. Would you be willing to watch our Financial Peace University course with your

husband? It's nine lessons. Actually, that's how we accomplished what we have so far. Well, that's a big piece because you called in saying, I don't know what I'm doing. I don't have the financial literacy. And that course is a great way to gain that new information and really start putting it into action. So can I give it to you again? Will you go through it again now

with this new filter of I want to retire with dignity? It's probably been updated too since. Sure. Okay, wonderful. You hang on the line. We're going to gift you Financial Peace University. Sit down with your husband, watch all nine lessons again. Worst case, it's going to

light a fire under you guys to go, we need to do better. The best time to plant a tree was 30 years ago. The next best time is today. And if you guys have some fight left in you, we can retire with dignity and make this happen. But no more CDs. We got to get our money working for us. Yeah, George, these calls are tough. You know, you can't depend on Social Security. That's the moral of the story. Social Security is a small fraction of what you earned. And it's not the way to have the retirement that we all hope and dream for.

It was not meant to replace 100% of anyone's income. That's right. That's right. It was meant to supplement. But there's hope and we're here to offer it. And there's hope for you, Lisa. and there's hope for you, Lisa, and there's hope for you too. This is The Ramsey Show.

You're listening to The Ramsey Show, our Ramsey scripture and quote of the day. Psalm 1-3. They are like trees planted along the river bank, bearing fruit each season. Their leaves never wither, and they prosper in all they do. Anne Rand? Is that how you say her name?

Rand? I don't know. I always struggle with this one. Let's go with Anne Rand. It rhymes. Money is only a tool. It will take you wherever you wish, but it will not replace you as the driver. Oh, hey, that still tracks. Yeah, that's good. Old school wisdom. Old school wisdom. I like it. All right, let's head straight to the phone lines, George.

We've got Kristen in Houston, Texas. What's up, Kristen? Uh-oh. Are you there, Kristen? There we go. There's Kristen. Can you hear me? Yeah. I can hear you. That was my fault.

That's how you know it's a live show. Financial stress and a mess here. Stress and a mess? We can do that. How can we help? Yes, ma'am. Okay. A little background.

I've been married for about 19 years. We have 10 children. That explains the stress. Holy moly. Ages 6 to 17. Our oldest will be graduating this year and we're wanting to help him by paying tuition and also matching what he's saying for a car so we're getting into those years okay um my husband and i went through financial peace as newlyweds almost, or actually I think right before we got married almost 20 years ago, I've used every dollar app for several

years and do know where every dollar goes. Um, but we, so my husband owns a plumbing company. He does not have employees. So he works his tell off. And we have been in a financial difficulty since around the time of COVID. And so he used to work more normal hours. Now he's working like up to 80 hours a week. In 2021, we bought an RV park and we were really excited about it because we had always dreamed to have an investment and such,

and my dad sort of helped us. And to get this going, it was a shutdown park. So when we got it, it was not making any money. The people prior to us had gone to prison, and it just got shut down due to no one running it. Hey, it's a low bar. Yeah, so we bought it and probably spent too much on it. What did you spend on it? Renovation, $1.2 million.

Wow, okay. On an unprofitable RV park? Yeah, it's about 10 miles from Texas A&M, so good location. Debt? Debt to do it? Do what? Did you use debt to get it? Yes, we did. So we had to do a 20% down payment.

Half of the 20% we had and half we borrowed from family. Oh, my gosh. I manage the RV park, answer know, answer all the phones, make all the reservations, do everything and homeschool our 10 children while my husband goes out and work. So fast forward me to today. How has it been profitable? Have you guys earned back the money or what was the arc on it? When were you scheduled to earn it back and earn through? Okay, well, it put us into a bunch of, you know, debt and difficulty because basically my husband was trying to supply our monthly budget, which is hefty with 10 children, plus

the RV park expenses until we made money on it. Which was, when were you supposed to make money on it? Like, what was the projection of that? We didn't really, we thought within like a few months of opening it, but we did some renovations first. Some buildings were messed up, had a fire, things like that. So we had to do some fixing. On top of the $1.2 million,

you went further into debt to do the renovations? Yeah, we did. So how much debt total? About $1.45 in is what we're in that. The park is worth about $1.45 right now. If we could get it up $20,000 net a year, then it would be worth $1.75. What is it netting a year right now? It is netting, you know what, I have a thousand numbers sitting in front of me to be able to tell you everything, but I don't have that number. You don't know what you're netting a year? It's not making, well, yeah, it's, I mean, we're not making.

Is it $10,000 or $100,000? What's the, what's the what's the hundred i mean we bring in okay our monthly expenses are about seventeen thousand and that's about what we bring in so you're breaking even almost so it's not even profitable well it's far from profitable because you have to pay back the debt to be profitable, by the way. Yeah. And the part of the monthly expenses is the debt, you know, of it. And then throw another complication. And we tried to refinance the RV park at the end of 2022. And we went through a trusted line of people.

My dad owned motels and stuff. We went through his hotel broker, his favorite long guy. But long story short, we ended up in a loan scam. We lost $70,000. I left an honest online review for the company and they are currently suing me in our RV park.

So you're being sued. You're being sued. Is it, I mean, is this real or it's not like, is this a threat or do you think it's really going to come through? Oh, it is an actual lawsuit. So are you spending money to fight it? What are you doing? I have, I'm not spending a dime to fight it. I have learned how to follow motions myself and handle it because my husband's working and I just get a bite from everyone I know who's smart. He makes about $210,000 a year. Okay. Can we sell this RV park now for $1.45? You think it would really sell?

Absolutely. RV parks are like a hot thing around here. I think it would definitely sell in a hot minute for 1.45, but can we sell it? Well, we've got a lawsuit against it. I doubt. I think we have to just close that, you know? How long will that take, do you think, to resolve the lawsuit? I filed a motion to dismiss based on never being served. We weren't served. We found out about it once we had a default judgment against us. They have admitted to us not being served, but I don't know. These can drag on and on, so we haven't even had a hearing. Okay, so let's imagine the lawsuit's settled.

You're able to settle for $1.45, does that get you completely out of debt? That gets us totally out of RV park debt and mostly out of personal debt. How much other personal debt will you have? About, well, you know, that sounds like a lot, but a couple hundred thousand. Yeah, that sounds like a lot, Kristen. That is a lot. What do you mean a sound it is it's a couple hundred thousand two hundred thousand or four hundred thousand like how much is a couple hundred thousand okay so family let me add this in there my so my dad died right about a year ago he had his order nicked um in a outpatient surgery he was like he owned

motels shopping strips restaurants what have you so he was like my business advisor and he we were had lived and kind of moved around in our rv for bit. And he was, I think he maybe just had this sense of wanting to help us get into a house before he went, you know, not that he knew he was going to go, but part of our major debt personally is owed to my dad, who's no longer here, but I will absolutely pay every penny to my mother because that's just who I who i am and how much of the 200 000 goes to your mom real quick 195 does she need the money is she broke no no so this is just a moral obligation she's good with us um have you talked to her about it oh yeah she knows we'll pay her she just wants us to get where we need to get. Okay.

She's good. We're good. Back to the income. Your husband's working 80 hours a week. You say he's making $210,000. Can't he just hire some contractors and take some of the heat off him, but also take a percentage of what they earn and turn this into a little subcontracting business? So he wants to. He doesn't always have enough that's the problem it's kind of like real estate or something sometimes he's booming and has a ton of jobs and sometimes right but since they're subcontractors he would only be hiring them as needed that's the way that model would work kristen oh my goodness it's tough out here it's time to go back through financial peace university it did not stick the first time we got to go back through Financial Peace University it did not stick the first time we gotta go back through this and go

okay let's get out of this mess let's set up our family for peace instead of risk for this investment that didn't pan out I'm so sorry it's a real tough situation but you gotta get out of this ASAP that does it for today's show George thanks for being my host thanks to the folks in the booth we'll see you next time on the Ramsey Show