The Ramsey Show - App - This Dream Will Become a Nightmare (Hour 3)

Episode Date: April 20, 2023

Dave Ramsey & Dr. John Delony answer your questions and discuss: "What kind of loan should I use to buy a piece of property?" "Student question: How can I be confident going out into the real world after graduation?" "Can we use emergency fund to buy new car?" Using an IRA vs. TSP, "Should I take a cash offer for my house instead of using an agent?" Have a question for the show? Call 888-825-5225 Weekdays from 2-5pm ET Want a plan for your money? Find out where to start: https://bit.ly/3cEP4n6 Listen to all The Ramsey Network podcasts: https://bit.ly/3GxiXm6 Learn more about your ad choices. https://www.megaphone.fm/adchoices Ramsey Solutions Privacy Policy

Live from the headquarters of Ramsey Solutions, broadcasting from the pods, moving, and storage studios, it's the Ramsey Show, where we help people build wealth, do work that they love, and create actual amazing relationships. Dr. John Deloney, number one best-selling author and host of the Dr. John Deloney Show, mental health expert, relationship expert, is my co-host today. The phone number here is 888-825-5225. That's 888-825-5225.

Michael is in San Antonio. Hey, Michael, welcome to the Ramsey Show. Hola. Hey, what's up? From Texas. Good to have you, brother. So, a couple of things. I finished FPU last week. Everything's paid off except my house

now. Good. So, me and my wife have been working diligently for that. Good. So, we're looking at moving out of the city. We found about a little less than 100 acres we want to buy. It's a pretty good price. But we're hearing a lot of different things. When we talk to a conventional lender, they're saying that we should, you know, go ahead and do our construction loan and everything, which bumps the whole loan up about $450,000. When we talked to just the land loan, there's like, no, just do the land loan,

but, you know, know that your down payment is going to be 20%, maybe 15%. Well, in talking with a friend, we were looking at all options. So we looked at a manufactured home option. And at the manufactured home option, which I'm kind of shocked that these homes look as nice as they do, but they have a program where they will go into the landowner, make a cash offer, which is significantly reduced, and we'll just say $500,000 at this point. And then they sell us the land for that cost with the manufactured home. All these people are telling me different things. Some of them have good points. Some of them have bad points.

It's hard to s sit through all of this. Thoughts? Always have thoughts. I'm an expert on my opinion. How old are you? I am 61. Okay. And what's your household income? About $121,000. Do you have any money? I'm sorry? Do you have any money? Oh, yeah. You mean like... How much money do you have? I have about, I don't know, $75,000 that's liquid that we could use toward the down payment and stuff.

That wasn't what I asked. How much money is in your retirement account? A couple hundred, I guess. I'm retired from the Army. I'm a disabled vet. Thanks for your service. Okay. So you're married and your wife, your total household nest egg is 200 grand plus 75 liquid.

Correct. You own a home now? Yes. Okay. So if I understand you right, you bought or you're trying to buy 100 acres that you're going to build a house on. Correct. Okay. Manufactured housings we don't do.

That's a fancy word for trailer. Okay. And that 100% of them go down in value, even the nice ones. We want to buy something that goes up in value, which would be a house. That make sense? It does. So your current house is worth what? $503,000.

And what do you owe on it 270 maybe okay so you got 200 there and you got 75 liquid and this property is 400 now the property is 650 650 000 and you're going to put a house on it. So you're going to have a million dollars in this project, and you make $120,000 and you're $61,000. Correct. Pretty steep. You know,

we run the numbers. We don't have any other expenses. That's the thing. I mean, we owe nothing anywhere. Yeah. Except you're about to. Except you're about to. Except you're about to be $650,000, $700,000 in debt when the smoke clears on this.

I don't like what you're saying. Okay, what price house are you putting on that? What price house are you going to put on this $650,000 piece of property? I mean, we want to downscale quite a bit to about a 2,000-square-foot house. What are you going to spend on it to build it? I'm thinking around $3,000.

Yeah, and $650,000 is like $950,000, so it's a million dollars, minus $275,000 that you've got to put down on it. And so you've got a $700,000 mortgage, roughly. Correct. Is that where we end up? Okay. If you were my dad and we sat down and we're just having chips and queso and trying to figure this out, I would tell you don't do this.

You're going to carry $700,000 of debt into the rest of your life. You don't have a way to pay that anytime soon. And, you know, I don't want to sign you up for debt to die, debt till you die. I don't want to sign you up for that. So I guess I get to play the part of dream killer here because I think your dream, I'm afraid your dream is going to turn into a nightmare.

Now, if you were to do this, and I'm telling you I would not do it. I'm going to ask you, please don't, for the sake of your family and your kids, to stress that $700,000 is going to put on your soul. At 61 years old. At 61 years old. Making $121,000. It's going to take years off of your life. Please don't do this.

It's going to be more of a nightmare than a dream when the smoke clears. The only way to do it is just to buy the land with a construction loan and build the house. And you're going to put $200,000 down out of the sale of your current house and the $70,000 that you have in an account. So you're going to put $275,000 down on the deal. And a construction loan then on the land also has first mortgage position on the deal and, um, and a construction loan then on the house, on the land also has first mortgage position on the land. It's the only way they do them. They don't do a land loan and then a construction loan. They don't do that. Construction lenders want first position. They don't want to be behind the land loan. So they're going to take out the land loan and roll it into

the construction loan. That's if you do a land loan, that's what's going to happen. So ever told you to get a land loan, doesn't know what the flip they're talking about if you're going to build a house because you're going to end up with a construction loan to put the house on there and they're going to pay off the land in the construction loan because they want first position then the whole thing is going to roll into a permanent final mortgage a conventional mortgage 15 year fixed on 700000 is not going to be a fun payment to make on $120,000 a year. It's not going to be a joyful thing. And if you flip that around, Dave, and you say, what did he say he has $200,000 left to pay off this house? He's got $200,000 in

equity when he sells his other house. So he 300 left to pay and then he's got um yeah and he's got 75 in cash so 275 is the net cash that's going to go down on this after he sells the house he's currently in i'd love for him to sell it and then dim down size get that sucker paid off and then vacation like crazy people yeah yeah i just go buy something else i wouldn't buy this land yeah no chance i just you can do it if you want but i you call me you made the mistake of asking and we'll 100 love you enough to tell you what we think we would do if we were in your shoes please don't do this this is the ramsey show earlier this week we announced our smart conference weekend is heading to the Windy City.

That's right. We're going to be in Chicago. September 15 and 16, all the Ramsey personalities, me, Rachel Cruz, Dr. John Deloney, Ken Coleman, George Camel, Jade Warshaw will be on the stage in Chicago to help you change how you think, how you behave, and help you manage your life all the way around for better. You leave with a plan to stop doing stupid stuff with money, jumpstart your career, prioritize your mental health, improve your relationships.

In general, if you go to the Smart Conference, you're going to be smarter, and you're going to be part of a live recording for the Smart Money Happy Hour podcast with Rachel Cruz and George Camel. And this is a Friday night, all day Saturday event. There are platinum tickets, super platinum tickets, whatever else. Check them all out. We got only 60 tickets. They're going to have dinner after the conference is over with me and all the Ramsey personalities.

Pretty cool. And just 60 of your closest friends. Very small, intimate gathering. But that's a super great. Those dinners get off the rails, man. Those are fun. And those are super pricey tickets, too the bottom line starter though if you just want to come general admission 79 bucks this will be sold out very quickly chicago 15 and 16 of september

ramsey solutions.com slash events and get your tickets now the ramsey show question of the day is brought to you by neighborly your hub for home services for over 40 years. Neighborly has an exclusive network of trained local service providers backed by the Neighborly Done Right promise. So if it's not done right, Neighborly will make it right. Visit Neighborly.com today to learn more. April is Financial Literacy Month. All month long, teachers and students in classrooms across America

are taking time to talk about the importance of learning good money skills. So we have a student question for our question of the day. All right. Today's question comes from Bryce in New Mexico. Bryce writes, I understand all the information I'm getting from the foundations and personal finance course I'm doing at school, but I'm still a little scared of the quote unquote real world.

What mindset should I have about managing money on my own that will help me feel more confident? I'll let you handle the money part of this about the managing money, but I think it's important. We have a culture, Dave, that thinks we can think our way to confidence, that we can stand in front of the mirror and just chant things and that suddenly our bodies are going to feel more confident. It's not true. You gain confidence by doing. You gain confidence by practicing, by action,

by taking little steps towards something and having little tiny pebbles of success on this walkway. And so I would tell you to start making a small budget and stick to it and when you stick to it for a whole month um stop for a second and note that and be proud of yourself for it and then move on a little bit further boy you're exactly right i mean this this self-esteem movement has kind of gotten out of control in the last couple decades it's like if you just tell people you're wonderful you're wonderful you can't add and you can't read but you're wonderful well and you know the origin of that right is they they did those studies on the ceos and they said hey all these ceos who've

made it have they believe in themselves and so then they try to reverse engineer that by just telling a bunch of kids they believe in themselves yeah but you don't you don't have to really accomplish anything but you could just randomly believe in yourself which is dumber than a rock i mean you can't have high self-esteem if you can't do math and read so you need to learn the skills and the same thing's true what you're saying you can't have confidence if you haven't fallen and got confidence until you've done something you can watch other people write a book but write a bike you can uh watch a YouTube how to ride a bike. But until you ride a bike.

You don't have confidence. You're not going to have confidence. And until you fall over and scratch your little hands, you're not going to learn to ride a bike. And then get back up. That's confidence. So all of that to say, it's normal. And we're not putting you down at all for feeling scared. Actually, that's kind of wise.

I'm glad. Because you're saying, gosh, this is something I've never done before so it's a little scary i'm insecure about it i don't have false confidence because someone said ta-da confidence no nobody did that doesn't work and so instead what you're going to do the trick i would tell you to do though is um in spite of being afraid go and do the hard things but that's on one side of the equation is don't be paralyzed by it. On the other side of the equation is, though, don't act like there's no consequences. Right. Risk is real.

You know, back in my generation, they would say, don't bite off more than you can chew. And so that's what happens when someone calls here and they've got a $750 car payment and they make a thousand dollars a month they bid off more than they can chew my day it was don't let your mouth write checks that your uh but can't your butt can't cash that's right and that wasn't the word we used yeah so there you go and so uh yeah that's exactly the same thing though it's confidence it's confidence and so dav David did not walk up and slay Goliath. He first killed a bear and a lion. So by the time he came against the giant, he actually had skills that were proven.

He was not just a cocky, out of control, too much faith and no skills. God told me he didn't do that. He just walked up there and said, yeah, God told me, but I know I can do it. Because do it because they said you know you're gonna go out there and get killed and he goes no i'm not i killed a bear and a lion i know it looks like this guy's who's this uncircumcised philistine you know and that's that's what he said right and so uh it's the same thing it's confidence based on actually having done stuff and uh that so that's how you fix it. Take little steps to gain confidence and competence both, and the more competent you become, the more confident you will become, and the less fear you will have because your fear is well-founded.

Absolutely. Good for you, man. And I can imagine you're in high school and all this info is coming at you and all these questions and lessons. It's a lot, man, so good for you. Yeah, there's not an app for your life you have to go live it there's no there's no there's no shortcuts there's no click on it on your phone and it's all okay you know it you got to go do it and that's that's the you know the downside of

having a magic wand in your life in your hand your whole life mary is with us mary is in oklahoma city hi mary How are you? Hi, I'm doing well. It's an honor to be talking to you. You too. What's up? Well, my question is, I would like approval to buy myself a car that we've been saving up for for about four years. So you have the money in a car account that you saved the money for the car? Yes.

Okay. How much is in your car account? We have saved $48,000. In your car account? Yes. Okay. How much is in your emergency fund? Our emergency fund has $36,000. In addition to the $48,000? Correct. Okay. And how expensive a car are you wanting to buy? Well, the dealership oversold us, and it's going to be about $57,000. $57,000.

Well, hold on. I thought you said you had $48,000. Yes. What do you mean they oversold you well um we've been trying to get this car for about six months now and one finally popped up and walk away it was walk away don't do it walk away you can't afford it don't do it you don't have the money i know i know i know just don't do it don't do it. Don't do it. We've been working so hard for it.

I know. What's your household income? $166,000. Okay. And what's your net worth? Without the house, it's $400,000. Yeah, we're debt-free right now. Okay, what's the house worth? The house is part of your net worth.

$650,000. Okay, what's the house worth? The house is part of your net worth. $650,000. Okay, so you're millionaires. Okay, so you can afford to buy a car that's $57,000, but I don't think you want to buy this car that's $57,000. I think you want someone to tell you that you're getting screwed. Maybe. They marked this thing. They oversold you. What's's that mean they marked it up

over sticker well it's a trim level higher than i wanted oh okay what kind of car is this toyota sienna we've got a two-year-old son and um one on the way corolla will do just fine. Sienna's the van, right? Yeah. Correct. That's a wonderful car. It's a great car. $57,000? Okay. So, no, I mean, you just haven't found the car that you want yet. Because you have a $48,000

budget to buy a car, and you decided that, right? And, you know, they didn't oversell you. You almost overbought. You almost overbought. Yeah, don't blame them. Go get a Highlander. You can get a Highlander for $45.

They're great cars. Or go buy a slightly used one, one of the two. I'm okay if you've got a million-dollar net worth buying a new car, as long as the total of all your cars doesn't equal more than half your annual income. This one's $48 or $50, and your income's $166. So as long as the other car is not more than $30, and your income's 166. So as long as the other car's not more than 30, you're okay doing this deal, but not this deal because you don't have $57,000. You just, you got to say no and go do what you want to do

and not what they want you to do. dr john deloney ramsey personality is my co-host today in the lobby of ramsey solutions right on the debt-free stage is cody and emily hey guys how are you good are you better than i deserve where do you live reynoldsville pennsylvania cool welcome to to Nashville. And how much debt have you guys paid off? $138,291.03. Excellent. How long did this take? Five years and 11 months. Five years, 10 months, 23 days.

All right. And your household income during that time range? range it started out at 71 835 dollars and 35 cents to 124 687 dollars and 19 or 16 cents what do y'all do for a living bro you count pennies man we would uh sorry um i'm a child care provider okay i'm a mechanic for the department of defense and army reservist okay thank you for your service wow what kind of debt was this 138 I'm a mechanic for the Department of Defense and Army Reservist. Okay. Thank you for your service. Wow. What kind of debt was this $138,000?

It was $40,000 was her student loans, and then $98,000 was our house. You paid off your house? All right. Looking at weird people. Very cool. What's this house worth um i'd say 150 okay excellent excellent good for you guys well done thank you how old are you two 36 yeah and i'm 34 and you have paid for house yep none of your friends that age do no no that's pretty stinking cool way to go guys all right what happened five years and 11 months

ago that put you on this ramsey stuff um we got married in 2015 um my mom she got us fpu for a wedding gift and then um that was yeah 2015 and then we didn't get FPU until 2017. Oh, I sat around for two years. And when she first gave it to me, I'm like, great gift. Thanks, Mom. Thanks, yeah. I really appreciate that. But then I started talking to the guy at work,

and then he said there's a radio show. So I started listening to the radio show. I worked as an outside salesperson, so I would get in a truck, and I'd turn on the radio station and listen to you, and it started making sense, and I came home and told it to her. I said, this sounds like maybe we should do this.

What'd you say, Emily? I was really negative i wanted nothing to do with you honestly how come i just it didn't sound like it would work she i was just not even open to it at all and she yeah she had her own way of doing a budget she did everything for us she still does everything for us uh but she had her own way and i said i need to start getting in on this um so i said here's the every dollar buzzer app she said no i have this i said but this way we can both look at it and we can be on the same page and uh so fighting and fighting about stubborn yeah my way is always better than his. His is always better than mine.

What got you around, Emily? After the first class or two, I would say. Oh, you went to the class. You actually went. Okay. Yeah. 2017, we started going. So you started seeing that you thought it might work after all.

Yeah. I only went to the class because it was gifted to us. Yeah. And because he wouldn't shut up about it. Cody, are you are you are you a schemer do you always have a plan like hey what if we do this i'd say she's like yeah yeah so this sounded like another one more hey honey we're gonna sell essential oils and except this time it was dave ramsey right yeah yeah but then you get in the class you start

saying it for yourself yeah right very cool very. How does it feel to be completely free at 34, 36 years old? Amazing. That feels great. Was it worth the sacrifice? Oh, yes. Absolutely. So our journey was we did the baby steps. Baby steps two, we got finished up in 2018 it was february 2018 emma was born

um and so we were saving up we weren't we weren't uh putting in a monthly payment we were saving that up and emma was born nothing nothing medically was wrong we smacked it down on there and we were consumer debt free yeah and then uh we went to three four five years on the rest of them and then last year uh beginning of last year like we got like sixty thousand dollars left on our house i said we could kick this out in a year a little over a year so i started working all those apps you can download on your phone you know uber all that good stuff grocery delivery was a big one for me um that made me money but uh i would leave at 6 30 in the morning um i won't get home until like 11 um because i'd be out there

emily you on board with all that it was rough but it was worth it you can see the house getting knocked out right yeah and now he's home and we have him every evening every weekend now emily's like hey some people probably need some groceries delivered yeah yeah um it was it was rough there for a little bit um there was a in july i was just worn down like man this is is it just one year of my life i can get this done and never have to do it again um it was a nice sunny day uh the kids were out playing and cody we call him fella um cody jr he said dad you gotta go back to work Dad, you got to go back to work? I said, yeah, got to go back to work.

He said, why? And he was all sad and pouting on the seat there. I snapped a picture with my phone and said, this is why I'm doing this. That's awesome. So I never have to do it again. Exactly. Yeah. Way to go, guys.

Congratulations. Very proud of you. What do you tell people the key to getting out of debt is? I'd say doing a budget. And working together. You have to be on the same page. Make a goal. Well, first, dream.

Have that dream. This is our dream right here. Well, my dream. It might not be her dream, but it's to be standing right here. Yeah, wow. But that's my dream. So make that dream and then create that goal and work towards that goal very cool good for you guys well emily what do you what do you tell

the husbands and wives out there that are just rolling their eyes when their spouse comes with another scheme just be open to it listen maybe even try it a little bit. You never know. Nine times out of ten, he's right. Oh, well, there's that. You said that like, ah, it hurts. He does. That's better than me, Cody. I'm not even that good. Yeah, that's good.

Way to go, guys. You celebrate that one out of ten, right? That's right. That's right. Hey, we've got the Live and Give Bundle for you, the Baby Steps Millionaires book, number one bestseller, and you guys are on your way to be millionaires uh the total money makeover book and of course the another financial peace university membership you'll be able to give those to somebody and help them on their journey

or enjoy them yourself whatever you need to do all right bring the kiddos up and tell us their names and ages this year's emma she's five this year's cody j. We call him the fella. He's three, and that's Colton, 17. All right. Way to go, guys. Very good stuff. Excellent, excellent work. All right. It's Cody, Emily, Colton, Emma, and Cody Jr., and $138,000 paid off.

House and everything. Five years and 11 months, making $71,000 to $121,000. Lots of extra hours. Got her done completely free at 34 and 36 years old. Pretty stinking amazing. Well done, guys. All right, count it down. Let's hear a debt-free scream.

Three, two, one. We are debt-free! Yeah! Yeah! Way to go go you guys man i'll tell you what if you're out there wondering if you can do it you can do it you can do it it's painful when your little one looks at you and says daddy why are you leaving that was i've never even heard that or thought of that that's that's that was wise i'm taking a picture and i'm gonna keep this thing close to me so i can see it that's why i'm doing this i remember later that we paid a price to win that's right and uh it wasn't a it wasn't a decade of overwork

one year it was one year one year and we're free we're free free never have to do it again so the weird thing is if you don't do it right you get to do it over that's right that's right but now you can go to all the baseball games you can go to all the dances you can go to all the rehearsals don't miss a thing you can be a dad this is the ramsey show our scripture of the day proverbs 22 29 Do you see a man skilled in his work? He will stand before kings. He will not stand before obscure men. Calvin Brodus Jr., a.k.a. Snoop Dogg, said,

If it's flipping hamburgers at McDonald's, be the best hamburger flipper in the world. Whatever it is you do, you have to master your craft it's true it is amazing if you become the best at something uh whatever it is you see a man skilled in his work he will stand before kings i struggled at uh fielding ground balls as a kid i was a good pitcher and i was a good hitter but i struggled with feeling fielding ground balls and i remember at a young age my dad said if you can hit they'll find a place on the field for you and there's this like if you will focus on something and get really really good at it they'll stand before king they'll figure it out for you that's right alex is with us in norfolk virginia hi alex welcome to the ramsey

show hey thank you for taking my call sure what's up if I had a investing question I guess where to where I should be allocating where I'm putting my investments in so I have the I'm in the military so I have a PSP that's doing fifteen percent into and then I've had an IRA that I've had that I haven't really added because that's the which is RothD, which is Roth. Both of them are Roth. And then I had a taxable account that I've been also putting money into in addition with a thought process of that being like a down payment for a house at some point. I don't know when that would be. Good.

So I just didn't know, should I, because I do plan on getting out of the military in about two years, currently working on my degree. So it should be better since I'm transitioning out to put that in the IRA. Doesn't matter. Doesn't matter. Yeah. I mean, the only advantage the Roth IRA would have over the Roth TSP is you might have mutual funds that would outperform some of your TSP selections. And by far, the C plan in the TSP is the best.

We tell folks to put 80% in that, 10% in the S, and 10% in the I. Don't do any of the auto-adjusted garbage. Yeah, okay. Just pick C for most of it. C is a common stock plan. It models the S&P 500, and it outperforms everything else in the tsp spades all over the place the s is small company and you just the only reason i'm putting 10 in there is because it's really volatile it's up and down but some years it has an incredibly

good year the i is the international and the only reason i'm putting some in there is so you don't have all your money in the U.S. economy only in terms of your investments. And so I'm trying to model, based on the production of those funds or those indexes in there, you know, what we would do otherwise. Now, if you go out into a SmartVestor Pro and sit down, you don't get a match, do you? It's a 5%.

Okay, you've got to do that before you do anything. Because 5% free money is free money. You're going to do that. I'm assuming you're debt-free and have your emergency fund in place, right? Correct, yeah. Good, okay. We were talking like we knew we were on the same page. I'm making sure we weren't.

All right, so you're doing great, man. How old are you? I'm about to turn 20. 20, what? What branch of the military are you serving? Coast about to turn 20 20 what what branch of the military you serve in uh coast guard thank you i had a coast guard trainer sitting out here in the lobby yeah i was just talking to him at the break yeah he's in town doing that so very cool hey so alex thanks for your service hey this is going to be hard and it's going to be counterintuitive for you. This is the easy part for most of us mortals, is you're going to have to make peace with doing the same boring thing

over and over again for a long, long time. You're a go-getter. You go knock stuff down. You plan way ahead, and you're going to have to just make peace with, I'm going to put 15% as a count. The rhythm of automatic. Yeah. It's boring, dude. It's boring. If you you do that you're going to be on man you're so way to go man i'm so proud of you that is excellent excellent stuff very very well done yeah i i would make sure i get the match

80 c 10 s 10 i and do that at the TSP and a Roth. And then if you want to do something outside with your SmartVestor Pro, if you want to put some of your money over there to a total of 15% between the two, then you might get four mutual funds, growth, growth and income, aggressive growth, and international, that grouping would outperform the CSI. You should be able to actually get funds that do outperform those. But that's not going to be the secret. The secret is that you're freaking 20 years old and you're brilliant. You are the secret sauce of success in your life.

You know what to do, and you're not going to mess this up. Joyce is with us in Phoenix. Hi, Joyce. How are you? I'm fine. I do have a quick question i'd like to have to comment on um the housing market here in phoenix is volatile and we're looking to sell our house for the next five to seven years probably several times a month we get a postcard in the mail offer to buy your house for cash it It's crap. Don't do it. Okay. Can you explain why?

Yeah, because it's people doing flips that went to some TikTok real estate class, and they're trying to buy a house at wholesale and flip it for retail. You can get a lot more for that house if you put it on the market with a traditional high-octane, high-protein realtor and sell it retail to a family that wants to live in the house because investors have to buy below retail in order to sell it at retail and make a profit. I did it for years. There's nothing illegal or nothing even scummy about what they're doing.

They're just trying to buy a house cheap. I bought a lot of foreclosures back in my 20s. I bought a lot of estate sales back in my 20s i went to auctions back in my 20s because in every case i'm trying to buy a property cheaper than it was actually worth so i could sell it for what it was actually worth and that's what they're doing make sense okay does that make sense to you thank you okay that's how it works so yeah i get those cards too by the way everybody does i guess everybody's got a mailbox gets them probably

so i think that i think you should answer one dave i think that'd be hilarious well then i'd have to have the guy come to my why would i want to do that john i don't know i just think it'd be funny it's like sure. Come over to my house. Let's talk. Just because I don't have enough to do. That's right. Jennifer is in Austin, Texas. Hi, Jennifer. How are you? Right quick before we run out of time.

How are you? Good. What's up? Real quick question. We have two homes. One, we are renovating. We carry $265,000 on. Second one, we are living in while we renovate, it is paid

off. When we move out into our primary residence, is it more beneficial to sell that secondary home to liquidate it and put it on mutual funds for retirement or to sell it and pay off our homestead and invest the rest? B. Here's the thing. When we've studied 10,000 millionaires, we found that the typical path to the first $1 to $5 million of net worth is a paid-off home, personal residence, and mutual funds invested in good 401ks and Roth IRAs.

And so I'm always going to have the series of goals where you're putting a baby step four, you're debt-free with the emergency fund in place, putting 15% of your income away towards wealth building and retirement. Baby step five is kids' college, and six is pay off the house early. When you get the house paid off, then that takes you to baby step seven. There's nothing left to do then but become very wealthy and outrageously generous. And you do that by maxing out your 401ks and maybe paying cash for some future real estate investments after that.

But your first big hurdle is a debt-free personal residence and be aggressively to the tune of 15 of your household income funding your retirement and your wealth building if you'll do that that's the fastest shortest correct way with almost no risk towards building serious serious wealth yeah i like yeah i just i just get right my head around paying a mortgage on something. While I got the money sitting over here and something else to pay it off. Yeah, yeah. It's just, it seems backwards. Yeah, yeah.

But it doesn't, but the culture. It's the soul tax. The culture that's broke teaches you to do that. Right. Well, and I get, if you. There's a lot of noise out there. If you take a yellow pad and you write it down and it's 10% return and I get 6% here, I can make 4 here. That 4% is my sleep tax.

Yep. I just want to go to bed. Sleep tax. Sleep tax. That's better than stupid tax. Thanks to the guys in the booth. Or James Taylor Swift tax. Austin, Ben, James, Zach, and Andrew, the booth dudes, did a great job.

John, you too, on the show. That puts us out on 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. Hey, it's Dr. John Deloney. If you like what you heard in this episode and want to know more about getting started on the Ramsey Baby Steps, go to ramsaysolutions.com and click on the Get Started button. We'll help you figure out the best next step for you based on your specific situation. That's ramsaysolutions.com and click Get Started.