The Ramsey Show - App - There's No Such Thing as a "Forever Home" (Hour 3)

Episode Date: July 13, 2020

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Thank you. Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studios, it's the Dave Ramsey Show, where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. I'm Dave Ramsey, your host. Thanks for joining us. We appreciate you being here. Open phones at 888-825-5225.

That's 888-825-5225. Joel is with us in Spokane, Washington. Hi, Joel. Welcome to the Dave Ramsey Show. Hey, Dave. Thanks. Good to talk to the Dave Ramsey Show. Hey, Dave. Thanks. Good to talk to you today. You too. How can I help? My question is, we are in, except six, we are pretty recently new homeowners.

And I was wondering, is it okay if we cash flow some home remodeling, or do we need to wait until we do all that home improvement stuff until we pay off the house? No, this is where you do it. You cash flow vacations or upgrades in cars or furniture or, you know, home remodels or repairs or that kind of stuff. This is where you do it while you're doing the baby steps four, five, and six. All this does, of course, is slow down the amount you're throwing at your mortgage and means you're going to keep the mortgage a little bit longer.

But that's part of the balancing act here. When you're in the first three baby steps, it's just gazelle intensity. No, you don't do anything but that step. Just game on. But when you're in the baby steps four, five, and six, you let your foot off the accelerator a little bit and you allow yourself to do a few things here and there while still keeping your eye on the goal of having the mortgage paid off soon.

Sure. Make sense? Yeah. Yeah, that's great. Thanks. Hey, thanks for calling in. Austin is with us in Tulsa, Oklahoma. Hey, Austin, welcome to the Dave Ramsey Show. Dave, thanks for taking my call.

Sure. What's up? So I recently got out of the military. God called me out into kind of starting up my own ministry. And so we sold our house, moved back to Tulsa area, renting my grandparents' home. But I have completely debt-free. I have about $80,000 sitting in the bank and living kind of off that, but God is providing not steady income, but where we're not having to dig in that too much. Basically wondering what you would do with that to make that money work for me so it's not just kind of wasting away until we have a steady income

and possibly use that for a down payment on a home. Yeah, cool. Very good job. Thank you for your service. What kind of ministry are you doing? So it's actually helping young men and equipping churches with the epidemic of pornography and sexual brokenness. Okay, good. Very good. Okay, and so you are providing coaching and information and some days materials, I suppose, along this line,

to sell into the people in the churches and the churches, right? Right. That's where your income is going to come churches and the churches, right? Right. That's where your income is going to come from for the ministry, right? Yeah, so mentoring and the speaking engagements, conferences, that type of thing. And how long do you think you'll have a sustainable income from that? Well, hopefully the next year or two, I would say. Okay. All right. Okay.

All right. Okay. I also am still in the Air National Guard, and I do have a little bit of money coming from the VA as well. Good. Okay. So while you're doing ministry to men in these situations, it's going to be essential for you to have a detailed game plan um he who is faithful with a little will be given more to manage scripture says and so you know the mind of man

plans his ways but the lord directs his steps and so it's incumbent upon you especially if you're going to be doing a ministry with men, to have a plan. Because if your personal home life is burning the $80,000 because you don't develop an income model to go with this ministry, then that's going to change the way you walk and talk in this ministry. And so, in other words, when you're dealing from solid ground, you're going to have a lot more calmness and a lot more strength and a lot more authenticity in the ministry.

But going in there with your finances unstable and burning and the 80 grand is beginning to burn down because of that, because your model, your income model hasn't been put together. And you can't just throw that under the bucket of the lord will provide that's irresponsible um take care of your own household first or you're worse than an unbeliever okay so god god's real clear on these kinds of things and uh i love what you're doing and i love and i don't have any doubt at all that god has called you to do it i'm. I'm not questioning any of that. I'm just saying that there's nothing lacking in faith or lacking in spirituality about you developing a model that says,

I'm not going to get into this $80,000 because I'm going to create enough income for my household. And then that $80,000, once you've got that, then that $80,000 becomes your down payment. But you've got to stabilize first. And right now, you're probably going to use a little bit of that 80, and that's not a sin. That's not the end of the world. But I don't want you just drifting without a detailed business plan, so to speak, for your ministry. The ones that manage well are given more to manage, parable of the talents.

And so I want your ministry to grow grow and i want it to be sustainable and um it's not going to be unless you're really intentional about the income side of the equation uh i'm part of this and i'm not i'm not suggesting you're all you'd be all about money or you'd be greedy and that's not what i'm saying at all i'm just saying it's it's a very spiritual thing to lay out a game plan and then let God direct your steps in that game plan. So, hey, proud of you, man. If I can help further, anytime, you call me back. You keep it up.

Rachel's with us in St. Louis. Hi, Rachel. Welcome to the Dave Ramsey Show. Hi, Dave. Thanks for taking my call. Sure. What's up? So I just opened a business this year.

I'm a dog groomer. And about a year and a half ago, I heard the statistic that the five people you spend the most time with, you're going to be like them. And I kind of looked around and said, I don't want to be like these people. So I opened my own business. And so my question is, how do I find those people? Because I didn't grow up in the city I'm in. Okay. Well, the thing is you don't want to be stilted and weird about it. It's just developing authentic friendships,

and that generally takes time with strangers, right? So just give yourself a little space to do this. It's not like by the end of the week you're going to have six eagles that are automatically your people you run with, right? But you're going to run into folks and get in some business mixers, get into the Chamber of Commerce. If you belong to a church, talk to people in the church that own businesses and say, hey, I'm trying to kind of learn who some people are my age

or a little bit older than me that i can just have coffee with and get to know and maybe i can help them maybe they can help me but i don't really need anything from them i'm not trying to sell them anything i'm just trying to develop friendships with successful people and um what i've discovered is in my life rachel was that that didn't happen when i let's use a scale of one to 10. If 10 is like super unbelievable, hundreds of millions of dollars successful, okay? And like when you're starting a business, you're a two, okay? And so you're already more successful maybe than some other people, but you're just a two out of a 10. You're probably not going to jump and start hanging out with tens when you're a two.

I didn't. When I was a two, I started hanging out with threes and fours. And then when I was a three or four, I started hanging out with fives and sixes and so on. And so incrementally, your contacts and your network will change over time. But just get started with some people that are doing some small business startups like you are. Not a bad idea at all. So I think you're very wise to do this intentionally. And I would just find some social situations to plug into some folks and

give yourself a year to find five. This is the Dave Ramsey Show. For over 20 years, I've recommended Zander Insurance and their term life programs. I'm still amazed at how many families have no life insurance or not enough and would be financially devastated if a spouse or parent died. It's inexcusable since the cost of term life is just plain cheap. And Zander really has figured out a way to make it simple and straightforward. They only sell the plans I recommend, and their system is built to your needs. You pick your path. If you want to work

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Welcome to the Dave Ramsey Show, Chris. Hey, how's it going, Dave? Better than I deserve. What's up? So, I'm in a little bit of a weird situation here. My parents, they did your course and did all your baby steps and everything, and now they're worth several million dollars, and they own several houses. So me and my wife recently got married, and my dad sold us one of his houses,

did sort of an owner's finance type deal, and he did it at interest free. And the house is worth about $140, and he gave it to us for about $115,000. And so he sold it to us for about $115,000. And so I currently owe about $100,000 on it, and it's not exactly the house that we want to live in for the rest of our lives. He was just trying to help us out, you know, kind of give us somewhere to start out and everything. And so we're looking to move to another neighborhood where that price range for houses are around $100,000 to $130,000. So I was wondering, with the equity that I have in the house at about $140,000,

should we go ahead and sell the house and just throw that equity at our next house and only owe about $70,000 to $80,000 on our next house? Or should we just stay focused and pay off the house right away? Why are you moving down in-house? Well, it's not necessarily moving down. You're moving down in price. Right. It's a, we're moving to the historic district, and we're really kind of into more of the

older houses, and I actually do a lot of construction stuff and so i can fix up houses pretty well on my own and so um you know we just really like the style of the older houses and stuff and then we kind of figured that it would kind of be our forever home if we moved to this neighborhood well i'll help you with that there's no such thing as a forever home right very very few people less than% of the people stay in one house. The average house sells every six years. So anyway, how old are you? 22. And how long have you been married?

Six months. And what's your household income? So right now, my wife doesn't work. I make $75, and then she's going to start working the same, so it'll go up to about $100. Okay, good. And so she's going to start working soon, so it'll go up to about $100,000. Okay, good. And so she's going to be making $25,000? Well, I'm guessing on the low end.

You know, she's about to graduate with a natural science degree, so, I mean, I imagine she'll make more than that, but I'm just guessing on the low end. Okay. And how much debt do you guys have, not counting the house? So I have a $10,000 student loan that she took out before we were together. We don't take out student loans now. And so that's the only debt that I have

outside of the house. Before I moved, you guys are... I would get her settled into her job and I would be debt free. And then if you made a move... Outside of the house? Yeah, and I would be debt-free. Okay.

And then if you made a move. You're talking about outside of the house? Yeah, yeah, pay the student loan off. Mm-hmm. And that should only take you like six months or something, max. Right. And then make your move, and if you move then, you put it on a 15-year fixed,

where the payment's no more than a fourth of your take-home pay. And, see, that was kind of what I was wondering is should I even move when I would have interest on the next house when I don't have interest now? Well, it's not the end of the world. I mean, this isn't the house you wanted. It got you started. You've been there for, what, a couple years it sounds like. Yes, sir.

And you're going to stay a little bit longer and make sure you're debt-free before you make the move. And, you know, you can move into the historic property and so forth. I will warn you, having owned and renovated a bunch of historic properties, you might end up in a movie called The Money Pit. Right. And, you know, I know you know construction and you can do some of the work but i would not recommend that you uh get in a real real heavy rehab with a young marriage and young careers that you're living that you're living in i i think that you know if you want to do a few little odds and ends things and you do them with cash, that's fine.

But this move is being pushed by your wife more than it is by you. And she thinks the historic property is cute. Yes, they're cute when they're done. There's nothing cute about them while you're working on them. They don't build them like they used to, thank God, because they were horribly built compared to the construction technique that we use today. So I've done a lot of 1900 to 1920 renovations, done a lot of renovations from every decade for that matter.

And honestly, I'll never do another one. They're just a pain in the butt of that era. The cute is far outweighed by the trashy construction technique and the fact I have to rewire, replumb, you know, everything. It's just you can build a house a whole lot easier. So be careful with that. Don't get sucked into some kind of vortex there that you can't get out of. Maria is with us in New York.

Hi, Maria. Welcome to the Dave Ramsey Show. Hi, Dave. How are you? Better than I deserve. What's up? A's at the truth. Well, I'm calling because I need some financial advice.

I feel like I'm still getting jammed. I'm a single mom. My overall monthly income is $3,000. I get $1,000 a month for child support and then I bring $1,000 every two weeks. I do have a rent of $1,200. I pay child care, which is $200 a month. My utilities and phones don't over exceed $200. Stop, stop, stop. What's your question? Sorry. My question overall is I really need a car

but I don't believe this is the best financial decision for me to take and I don't really see my money stretching for the long run. I kind of see myself going paycheck to paycheck so I just wanted to know what would be the best way to avoid that and begin a savings and stuff like that. Gotcha.

Okay. Well, you started giving me your budget, and if I were you, I would take those numbers and put them in the EveryDollar app. It's free to use and begin to build. Which I do have. Lay your budget out and begin to squeeze it and squeeze it and then work extra extra, and squeeze it, and work a side job, and let's put together a couple thousand dollars cash to buy a car with in cash, and get a $2,000 paid for cash car. Now, let me tell you what kind of car that is.

That is a car that is so ugly, you have to give it a name. It's not a pretty car. It's a low miles it's an a car that is not pretty but it is mechanically sound so you're looking for low miles mechanically sound not pretty because you're looking for basic transportation that is reliable we are not trying to impress people with your cool car as a matter of fact quite the contrary we're going to impress people with your cool car. As a matter of fact, quite the contrary. We're going to impress people with the fact that you don't have any car payments, and that's going to be your first step up and out. If you take on a big car payment because you get

car fever, you're going to get yourself into a mess here. So avoid that, but take the child support, the income that you've got, anything else you can do to create some income on the short term. Very, very, very quickly squeeze every drop out of your life and out of your budget and get you a couple thousand dollars and pay cash for a starter car. And then we'll keep working through this. Keep working your career. Keep growing your career. Move up, move up. And every time you do that that you start working those baby steps and you start to build wealth and have savings at that point this is doable but it is not easy it starts though with the budget starts doing the written budget eddie is on twitter dave can i negotiate a credit

card debt do i keep it open or should i close my accounts? Well, you can negotiate any debt just about, other than student loan debt, that has gone bad. Meaning that, think about it in reverse. What if someone owed you money and they hadn't paid you for a while? At that point, you would go, yeah, I'll take 50 cents on the dollar if you give it to me in cash and go away, and I'm just going to consider myself lucky to have gotten anything. And if you've got a debt that you haven't paid on in a while, that's where the credit card companies start to get to. And so, but if you have a credit card debt that is current, no, they don't just suddenly go, no, we'll take less than what you owe.

You borrowed the money. You're paying us. We like you. And they're going to keep you around as long as they possibly can. And so that's, yeah, that's how I would do it. This is the Dave Ramsey Show. Eduardo and Megan are in Augusta, Georgia. Hey, guys, how are you? Hello, Dave. Hey, Dave, how are you? Hello, Dave.

Hey, Dave, we're great. Cool. I see on my screen you're debt-free. How much have you paid off? We have paid $593,000. Goodness. How long did that take? We did that in 24 months.

Okay. And your range of income during that time? Well, we started at $290,000, and then towards the end, it went down to $245,000 due to a career change made by Megan. Wow. What do you guys do for a living? We're both civil engineers, and I work as a construction engineer. Okay. I also worked in construction engineering at the beginning of the journey, but more recently made a career change, and I now can do engineering design while working remotely, and so I'm able to be closer to the kids now.

Very cool. Good. What kind of debt was this $593,000? Well, we owe $268,000 on two rental properties. We had a car loan, and everything else was our home. You paid off your house. We did. So you must have sold the rentals.

We did. We sold both of the rentals, and then we sold the car as well. Okay. Wow. And what did the rentals bring? They brought over, well, we had a total of $268,000 on the rentals. They brought over well we had a total of 268 000 on the rentals they brought over around a hundred thousand dollars above that yes okay so you sold them for 368 then you use the hundred to apply to the loan right other loans right that's right okay so of the 593 368 came from

the sale of the rentals paid off the rent, and the other 100 went to the debts. And how much did the car sell for? Well, we just took it back to the dealership. We actually wrote a check when we took it back. You mean you sold it back to them? Yes. Okay. All right.

And so how much of a check, how much did that car sell for after you wrote the check? What was the net? $25,000. Okay. All right. Cool. you wrote the check what was the net uh 25 000 okay all right cool so about 100 uh about 400 of this was selling stuff give or take and uh about four about another 200 of it what you cash flowed in 24 months that is correct and it all went straight into our home wow and what's your home worth? Around $320,000.

Very cool. Look at you guys. I'm talking to weird people. Yeah, it's amazing. It's a wonderful feeling. I bet. Well, I mean, you're making $250,000 a year. You have everything paid for, house and everything.

How old are you two? We are 38 years old. Wow. I was 39 wow you guys they did all of this before 40 years old very well done so what happened tell me the story what happened 24 months ago because you turned your whole lives upside down that's right so we went through uh financial peace university and i think the trigger for this whole thing was the day we were at the house and we added the debt, and I don't think we had ever realized how much debt we have. And then, you know, as we went through the class, you know, we realized that, you know,

with the lifestyle that we wanted to have and a healthy lifestyle and our kids and a very young family, you know, really that wasn't going to support the lifestyle that we wanted and the path we were heading to. So, you know, we decided to get intentional and, you know, attack the debt and, you know, we started planning for the future what we could do after we were debt free. Very cool. So, Megan, you're sitting down that night after class and you guys added up

all the debt and you looked down and you saw almost six hundred thousand dollars what did what were you feeling when you saw that yeah that was that class was such an eye-opener for me when we did the budget and checked our numbers. That, to me, it really made me realize that, like, we really, the lifestyle we had wasn't going to support this debt. These payments we were making each month, we would basically be doing them forever. So it made me realize, you know know that each month we were essentially all our money was going to payments or they were slipping through our fingers on any kind of random or fleeting purchases so um it it was an eye-opener it that was the monumental

class for me was the budget class and the numbers so when you saw that $600,000 number, did it make you scared or mad or how did you feel? I think, you know, to us, the $600,000, you know, it was more, you know, on the scared side. You know, we realized with the dreams that we had and the life we wanted to lead, we pretty much had to, you know, keep our jobs and, you know, continue the grind day to day because, you know, if one of the renters wouldn't pay or something was to happen, you know, continue the grind day to day because, you know, if one of the renters wouldn't pay or something was to happen, you know, I mean, with just one of our incomes, you know, it would have been very difficult for us to, you know, support our lifestyle. Amen.

So now you're there. You don't have a payment in the world. How does that feel? It feels amazing. I don't think we realized just how amazing it would because before we were just normal, thinking debt was normal. But once we got onto the plan and realized that we wanted to attack it and we hated debt, it just changed everything.

And now it just feels free. It feels peaceful. Again, we mentioned the career change I had made, and I really believe that was from this plan that really made us kind of make decisions more guided with how we wanted to live, not from the payments. Way to go, you guys. Congratulations. What do you tell people the key to getting out of debt is now that you've done it?

Well, I think the key is being intentional, as you say, to stay focused, follow your budget, and make sure that you realize what is a need versus a want. And I think before going through the program, you know, all our wants were needs, and we learned that we were wrong. Well done, guys. Very well done. Proud of you. Did you have people cheering you on or people thinking you're crazy?

Yes. Well, no, I mean, we had a lot of people support us, you know, and they understood why we were doing it. And, you know, mainly now after we're debt-free, I think a lot of people are curious about, you know, why we did it and how we did it. And, you know, we hope that, you know, all the people on your podcast that we listen to every day inspire us. You know, hopefully we can do the same thing for other people. Amen. Well done.

Well done. We've got a copy of Chris Hogan's Retire Inspired book for you, number one bestseller. That needs to be the next chapter in your story where you become millionaires, you're well on your way, and be outrageously generous along the way. Well done, you guys. Great. Thank you.

Thank you. Eduardo and Megan, Augusta, Georgia, $59 593 000 paid off in 24 months includes the sale of rentals and a car totaling almost 400 of that 600 so still 200 of it cash flowed making 290 to 245 100 debt free house and everything before they're 40 count it down let's hear a debt-free scream three two one way to go you two that's how it's done right there man oh man oh man i love it very well done now you just think about it a three hundred thousand dollar house is paid for so the payments what two thousand bucks a month put two thousand bucks a month from age 40 into a good growth stock mutual fund to age 65

you know how many millions of dollars that is? Just the fact they don't have a house payment. So their net worth, if they just continue generally on the path that they're on, if they fully fund their 401ks, the house continues to grow in value, their net worth by the time they reach 65, 70 years old is going to be in excess of $10 million. But they make really good money. How many broke people do you know that make $200,000 a year?

I know a bunch of them. I met a guy that day making $175,000 a year and he didn't have nothing. He didn't have spit. But not that couple. No. They decided they were going to take control of their lives. No victim talked there. They're in control.

This is the Dave Ramsey Show. Thank you. Our scripture of the day, John 3.16, For God so loved the world that he gave his only begotten Son, that whoever believes in him shall not perish, but have eternal life. Martin Luther King Jr. said, I've decided to stick to love. Hate is too great a burden to bear. Ryan is with us in Indiana. Hi, Ryan. Welcome to the Dave Ramsey Show.

Thank you, sir. How are you? Better than I deserve. What's up? Well, I had a question. I'm potentially buying a house off of a family member, and I was wondering if there was a way to do it where I wouldn't have to pay interest and where credit would kind of be irrelevant uh i'm a little bit confused i mean obviously if you

pay cash for it you would not have to pay interest and credit would be irrelevant no kidding right but um if there's debt involved um credit is of some kind is going to be uh relevant and certainly there's going to be interest okay so there's no way to buy it on like a rent to own or um i guess not through a bank where you wouldn't you could you could buy it and they could uh owner finance it and not charge you interest. That technically would work. I wouldn't recommend that because I wouldn't want to owe a family member money. Yeah.

So how much is this house? We're working on it right now, and my fiance is going to live in it next year, and then when that's over, I should be in a place with no debt and emergency funds saved up, so then we're going to purchase that as soon as we get married. Okay, so you're supposed to get married like next year? Yeah, next year. And whose house is it? It's her parents' home. Her parents own a rental property or something that's paid for? Yes, yeah. Okay. And does she have brothers and sisters?

Yeah, she has a brother. Okay. And how much is this house worth? I'd say after we fix it up, it'll be worth probably $65,000. No, I mean now what it's worth, because after you fix it up, it's your house. But what's the house worth to them if they were to just put it on the market today as it sits and sell it? $50,000. Okay.

All right. Do they want to give it to you? I don't think that's necessarily an option. I'd say we'll have to pay something for it. It'll probably be below market price. Okay. Do they need the money? No.

Okay. Well, they have the opportunity to set you up, so I'll give you another option. It doesn't sound like it's going to happen, but I'll go ahead and teach you about it so at least you have the information an individual can give another individual fifteen thousand dollars a year without any gift tax okay there's four if you're married to her there's four individuals involved mom and dad you and your wife so dad can give you 15 his daughter 15 his wife can give you 15 and his daughter and her daughter 15 that's a total of 60 000 and so they could give you this house in four separate components like that and pay no taxes on the transaction, and you would have a debt-free house.

That's a possibility. If they chose to do that, that's how the transaction would occur. See your tax professional, get the proper documentation done so nobody gets nailed with gift tax. But as inexpensive as this house is, they could do that. Do they have other wealth? They own their farmers. They own a bunch of ground and then their own home,

but nothing else out of that. Okay. So somehow they would, to make it fair, they'd have to do something for her brother if they did that, right? Yeah. Yeah. And so that's probably what's going on. Plus they may be saying, well, you need to earn it or whatever, that kind of a thing.

Now, if this house was not in the family, is this a house you would still buy? I think it would be a really good fixer-upper kind of beginner house for a young family. Okay. Yeah. Okay. Well, what I would do is just if they don't want to do the gifting, which is perfectly fine, they don't have to, and you don't want to approach it like somehow you're entitled for that because you're not. But if they chose to do that, it could set their daughter up beautifully

because without a house payment, dude, you guys could rock it in terms of building wealth. You could really do well. I know. And that's where I'd like to get you to. So what will you be making and what will she be making after you're married? I'm 23 right now. I currently make about $80,000, but I have $30,000 in debt, so I should have that paid off.

And an emergency fund by next March is my estimation. And then she is in college still, but she'll graduate and she'll be a teacher, so probably another $40,000 or $30,000. Okay. I think you can probably walk in as a debt-free newlywed couple making $120,000 a year. You can probably walk into your local credit union and borrow $40,000, $50,000 pretty easy.

Okay. And that's what it's going to take to buy this place because you're going to turn around and pay it off in two years. Mm-hmm. Right? Yes, sir, yep. I mean, because your ratio of your income to this amount, I mean, you're killing it. This is a great starter place for you.

This is a really good plan. I like it. And so because you're being super conservative on this little house, and it gets you started. And, yeah, I think that's what I'd do. I'd swing over to the credit union as soon as you're debt-free and you're married and, you know, you get settled in. Ask them if you can rent the house for one year from them with the option to purchase it in writing,

the rental in writing and the option to purchase it in writing, the rental in writing, and the option to purchase it in writing with the amount settled on. Because this so far has been a vague discussion, and you don't have your amount settled. And I'd like to get the amount settled, because if the amount's $70,000, you're not buying this house. It's not worth $70,000. Right? Yes,000. Right?

Yes, yes. A deal is $30,000 on this house. Right? Yes, yes. So if they're not going to give it to you, maybe they're giving you a deal. That's what you indicated earlier. And so you get all that settled. What is the option price?

What's the right price to do it with and um and that's settled and the rent amount is settled rent for one year during that year i'm very sure with the kind of income you have with no debt at all you should be able to sit down in person in the credit union with the branch manager and i think they'll make you a little loan like that that you pay off very, very, very quickly. And no, we won't even need closing costs on that. No closing costs, no points, just lock it in and knock it out. Well done. Christy's in Baltimore. Hi, Christy, right quick, what's your question? Hi, thank you for taking my call, sir. Sure, how can I help? My question is really, what is your target? What do you shoot for for retirement when you can breathe a sigh of relief and know you've made it?

Great question. Well, first, I want you to go to Chris Hogan's website, chrishogan360.com. Okay. Because that has the R-I-Q on it and the retire, inspire quotient, and it's a little app there that very quickly and completely free will help you calculate in detail your retirement but the quick and dirty answer to your question is if you have a lump sum that you can live off of eight percent on and you're investing it in mutual funds and averaging 12 then you'd'd be okay. So $500,000 is $40,000 a year.

A million is $80,000 a year. Okay. Okay. And so if you need a million dollars to live on $80,000 a year, then that's your target. So if you can live on 8% of your nest egg and you're willing to invest it in carefully selected good growth stock mutual funds that are making 10 to 12 then you will come out over the long period of time you won't have to touch you won't have to touch the nest egg it'll just you can live off the the eggs that the goose

is laying you don't have to kill the goose you just get the golden eggs that's all you need you just need the income it creates and don't kill the goose and that's the principle so if you can live off of eight percent six percent seven percent something like that of your nest egg then you're gonna be okay the thing is it never works out exactly that way you either end up with a lot less than that or a lot more than that depending on how good choices you make and so it becomes irrelevant because no one lives on exactly has the exact perfect size nest egg. No one ever does that. That's theory, which is known as crap.

So that puts this hour of The Dave Ramsey Show in the books. We'll be back with you before you know it. In the meantime, remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus. This is James Childs, producer of The Dave Ramsey Show. And that's The Walk Daily with the Prince of Peace, Christ Jesus.