The Ramsey Show - App - To Change Your Future You Have To Let Go of Your Past

Episode Date: June 3, 2022

George Kamel & Dr. John Delony discuss: Why you need to pay off your student loans, Paying off the house vs. investing that extra money, Untangling a messy housing situation, How to know when you're ready to retire. Want a plan for your money? Find out where to start: https://bit.ly/3nInETX Listen to all The Ramsey Network podcasts: https://bit.ly/3GxiXm6

I'm out. From Ramsey Network, this is The Ramsey Show, where we help you get control of your money, get ahead in your career, and get on the path to being well. I'm George Campbell, your host, joined today by Dr. John Deloney, and we're excited to take your calls about life, money, relationships, boundaries, career, you name it. We are here for you to help you take that right next step. The number to call is 888-825-5225. That's 888-825-5225.

Michelle kicks us off. She's in Kalamazoo. Michelle, welcome to the show. Thank you. Absolutely. How can John and I help? I have a question. I have $54,000 in student loan debt. I stopped paying on student loans when everything happened a couple years ago. My payment was $687 a month, and now I'm realizing I probably should have continued to pay that since there was no interest. It would all go towards principal. I have approximately $9,000

in my savings account, which is kind of like emergency money. And I'm just curious if I should take out a chunk of that money to start paying down on that. Should I just start up my regular payments? What should I do to tackle that? All of it. So Michelle, what's your income? $60,000. Cool. Okay. And what kind of work are you in? I'm an occupational therapist. Awesome. Good for you. And is this $9,000, is that all the money you have to your name? That's liquid? That's liquid, yes. Okay.

So what we teach, Baby Step One, $1,000 starter emergency fund, and everything else is going to go towards the debt, which means $8,000 of your $9,000 goes towards the debt. Does that scare you a little bit? A little bit. Good. That's exactly what I want. I kind of want you to not be comfortable for a short period of time. So I want you to start doing the math and go, okay, $54,000, I make $60,000. Can I do overtime? Can I do some side hustles? Can I get rid of this debt in the next two years? Do you think you can do that? I think I could.

Michelle, 60,000 for an occupational therapist feels low to me. Are you at a place that you just love or are you being underpaid dramatically for the market? Well, I do work with kids, so that does pay a little bit lower, and I'm in a highly OT populated area. So I could pick up something with adults as a PRN weekend type thing in order to increase that. I would love, following George, I would love to, that angst you feel, you're going to feel super exposed. Like you are sitting on a sidewalk in a major intersection and you just got like a hand towel covering you up, right? You're going to feel like that with a thousand dollar emergency fund. I want you to channel

that angst into, I'm going to work seven days a week for the next 24 months and be done forever. You know what I mean? I'm just going to change all of this. Yeah. Michelle, if I showed up at your door every single month with $700 cash just for fun, would you be stoked? Definitely. Well, that's what you get to do for yourself when you pay these student loans off. And then think about what would I want to do with that $700 extra a month? Do I want to invest it?

Do I want to save? Do I want to finally go on that trip? Because right now, I feel like you've just been in this limbo of like, well, we'll see what happens and student loan forgiveness and there's no interest. But like you mentioned, right now is when you actually feel the progress where the loans aren't continuing to accrue interest and build and build and go, wait, it was 54. Now it's 58? I'll never get through this. And so I want you to take advantage of this time to make that progress. And if that means getting the side job, getting a different job, doing whatever it takes, slashing expenses, I'm totally good with that.

Okay. So pay the $8,000, like $8,000 of it off, and then start doing those actual payments per month. Absolutely. What was the total? $687,000 a month. No, no, no. The total debt was $54,000.

Oh, so it's $54,000. Okay. Yeah. Here's how, when I had six figures in student loans, I had a lot. I got too many degrees and a lot of loans. The way I got through it was the rule of tens in the front. So all I wanted to do was whatever it took to get that front number to be one lower. So today you're going to have a psychological victory because you owe $55,000.

And then right after this call, you're going to go hit a couple of buttons on your computer. And that first number is going to be a four now. And then you can say, okay, how crazy can I be in the next 90 days and get that sucker down to a three in front, right? And I'm just going to,'m just going to drill on that front number. And that's how I keep going when I've had such a big number, is I want to just drop that front number, drop that front number. What's it do to our mortgage? Yes.

It feels so good. Like, all right, we just got another number down, right? So it feels good to keep plugging along that way. Are you doing an every dollar budget currently, Michelle? I'm trying to. No, there is no try. Yoda said that. Okay, so I'm not. Can we help you try? Can I gift you every dollar premium to help you? It'll track your transactions, connect to your bank, and make it even easier to stick to it. Yes, that would be awesome. Thank you.

That is my gift to you to give you a push on this journey. It also includes Financial Peace University. And big news, John, we just added new videos with John and I for the first time ever. We are now inside of Financial Peace University. Level up. So you can go check out that Why Spending lesson to help you in that area. And on top of that, it's all inside of Ramsey Plus. So there's coaching in there for help along the way with our team and a ton of tools and resources.

So that'll be our gift to you, Michelle. Would you call us back when you're debt-free? I definitely will. We'd love to hear it. Thank you so much. I appreciate it. Yes. We're cheering you on. This is a big one, John. You and I both had student loans.

You had way more because you're way smarter than me. I don't think that's how that works. I mean, you have multiple PhDs. I sat in more classrooms than you did, yeah, and accrued more. I have a Bachelor of Science in Communication. Yes. And I'm using that degree, yeah. I accrued more. I have a Bachelor of Science in Communication. Yes. And I'm using that degree, John. I'll have you know.

You are. I'm communicating right now. We both are using our degrees. I'm proud of us. And by the way, you mentioned something to Michelle. You said if I just showed up at your house every month, I mean once a month, I wish you'd show up at my house once a month, George. It would be great. You don't even have to bring $700.

You can just show up and hang out. I don't even have your address, John. You live that far off the grid. Do you even have an address? I do not. It's just like, take a right when you see the big oak tree with the mark on it. It's one of those. You'll never find Dr. John.

Don't say that, because there's some internet kids. I challenge you guys to find... Please don't do that. Yeah, you probably don't want to do that. Oh, that's good times. Because i'm waiting for you so i graduated with about thirty six thousand dollars in student loan debt i thought my parents were rich because my dad was like ah we got it taken care of what i didn't know was that was just meant he's gonna help me sign up for the loans that was nice very kind of him and so i graduated going oh i gotta pay this back now

that's how this works. And, oh, here's the monthly... I didn't understand what the monthly payment was gonna be versus how much I made. I didn't know I had to pay it back. I just didn't understand what that meant. What that felt like in your actual reality. I thought when I got my job, I would get all of this money.

And all of this money would give me a house and a car and food and... Because you deserve it, John. Love America. And I thought I was just a car and food. Because you deserve it, John. Love America. And I thought I was just going to have all this. And it was like, no, that's $800 a month or $2,000, whatever the number ended up being. I thought, oh, I can't do any of this other stuff.

And they're like, yep, keep paying. You know what I mean? I didn't know what it meant, but it's good. And here we are today, $1.7 trillion, 45 million Americans buried under this thing. The new American dream is to now be debt-free and not have student loan debt. Can you imagine all we're trying to do is get America to zero? That's it.

That's all. Just a baseline. Foundational. But that's what we're here to do. We want to help you win. Be free. It's your life, your money, your career, your mental health. We are here for you.

888-825-5225. This is The Ramsey Show. Your life, your money, your career, your mental health. We are here for you. 888-825-5225. This is The Ramsey Show. In an uncertain world, being a good steward of your money is more important than ever. While some circumstances can't be controlled, there are items within your budget you can take charge of, such as your health care costs. For nearly 40 years, Christian Health Care Ministries, or CHM, has provided a budget-friendly means of sharing for medical bills when our members need it. Learn more by visiting chministries.org slash budget. That's chministries.org slash budget. Christian Healthcare Ministries is a Ramsey Trusted Provider.

Welcome back to The Ramsey Show. I'm George Camel, joined today by Dr. John Deloney, bestselling author and host of The Dr. John Deloney Show. I host the Fine Print Podcast as well as the Entree Leadership Podcast, all of which you can find on the Ramsey Network or wherever you listen to podcasts. Open phones this hour, 888-825-5225. Fred joins us up next in Bristol, Vermont. Fred, welcome to the show. Hey, guys. Thanks for having me. Absolutely.

I have a question. So my wife and I currently own about about whether or not we should pay off the house or invest the money not being in such a higher tax bracket if we can hide the income in our IRAs or 401ks. So I just wonder what your thoughts are on that. I'd like to pay off the house. How much do you all make? We make about $250,000 a month. Okay, so you're pretty close to that.

Here's the thing. Pay the house off. Pay the house off. Yeah. Because you're holding a liability. Basically, you're trying to build a house on a teeter-totter, okay? Yep. And you're holding a liability that's going to be constant,

whether your income goes away suddenly, whether the market over six months drops 15% to 20%, which it has. So I love the idea of investing and dumping all this money into IRAs and stuff, but don't do it on a teeter-totter, on this liability. And I get her – well, she's doing this math. She's just doing the math. It's not good math. Yeah, but it's I'm paying 2% interest right now on our mortgage and I think I can earn 8% on the market and so I'm leaving 6%

on the table. That math, I get that. But that's not how risk works, right? Well, she also wants to put in a higher tax bracket. I don't know what it would do. What do you mean a higher tax bracket? How is paying off your mortgage going to put you what the higher tax bracket is. I don't really know what it would do. What do you mean a higher tax bracket? How is paying off your mortgage going to put you in a higher tax bracket?

Well, if we use the money, if we hide our income in an IRA or a credit card. There's no hiding income. You're not hiding income. This isn't a life hack. You're not hiding it. You're trying to find write-offs. Are you talking about writing off your mortgage interest? You're saying that the interest deduction on your tax is from paying the mortgage, right?

Yes, and not showing as much income because we pre-tax our contributions to our IRAs and 401ks. Yeah, so you're not hiding money. They're not like, what? We thought you made $48,000 a year. We had no idea you made $250,000. It's not like, what? We thought you made $48,000 a year. We had no idea you made $250,000. It's not like that. It does affect the amount of taxable income you have, but you're not hiding it from anybody. George, you may know.

I don't know off the top of my head how that works with brackets. Well, the brackets don't just make you pay that much more in taxes. It's all graded up. Right. So if you're $1,000 over into the next bracket, you're not now paying 27% on all of your income. You're only paying that 27% on the $1,000. Right. So it's not going to affect your life all that much.

Now, let me talk about the tax deduction because this one really grinds my gears, John. Here's what happens. Because we're in the 18th century. Let's say you pay $10,000 in interest on your mortgage, right? Yeah. And now you get to deduct that. So you call that a huge win. Now, when it comes down to tax time, what that really amounts to is about $2,500 of

tax burdens that you saved, right? You following me? Because you're not paying $10,000 less in taxes. The government just sees that you made $10,000 less in income. Therefore, it changes. So if you have 25% tax bracket, you're paying $2,500 on that money. So basically, here's what he's saying. You send us $10,000.

To the lender. No, to me and George, personally. And we guarantee you, because we love you, we're going to send you $2,500 in savings. Okay. See what we're going to send you $2,500 in savings. Okay. See what we're doing there? What it is, is you're trading a dollar for a quarter because you're going to send $10,000 to the lender in interest so that you can get

$2,500 from the government in savings. I would rather have to send nothing to the mortgage and pay my $2,500 every year. And also, you can only do that now if you're itemizing. It doesn't work with standard deduction. And also, if you have Roth, you can't deduct that either. So you mentioned 401ks and IRAs. Roth is after tax, so you're not going to get that

deducted. Right. Okay. So there's a lot of bad reasons to keep a mortgage, and there's very few good ones. And what's your mortgage payment right now? $850 a month. Okay. So take that amount back into your budget every month. Do all the math on how much interest you're paying. Start to have a vision for what that future looks like. And I think your wife will go, okay, fine.

Because if she wants to do math, hey, let's dance. But you're going to have to do the math back and go, that doesn't work. That's not how that works. We're not hiding money. This isn't a life hack. And if you pay that sucker off, it's like an $8,000 raise. Right. Right. Annually.

Just by paying your house off. Do you all have the cash to pay it off? We don't have liquid right away. I mean, we could probably pay half of it in liquid cash right now, but we just don't have enough to just, boom, take care of it. You have that much liquid cash over and above your emergency fund? Or that is your emergency fund? Yes, we do.

Okay. Well, no, we've got an emergency fund, but we could take money in the bank and pay half the mortgage. So George just walked you through the math part. I walked you through the risk and leverage part. Here's the most honest answer George and I can both give you. That when we fully fund our emergency funds, all the rest of that money went to our mortgages. Okay. Does that make sense?

So I'm just telling you what I do in my house, me and my wife and my kids do. And I can give you all the theories all day long and play math with you. I'm just telling you here's what I do in my house is I dump all of our extra money onto mortgage. And George just paid his off. And so that's just how we live our lives. I like to keep those accounts separate too because all of a sudden the emergency fund, you've got all this extra cash in there, and it gets a little bit squishy as to what this money is really for. So keep the emergency fund separate. You can have a separate account if you want to save up and throw that on the house.

But I just did it out of every paycheck. Every time I got a paycheck, I went, great, this is all gravy. I'm throwing it at the mortgage. And we did it in 26 months, and I don't regret it, and I don't miss the tax deduction. I can tell you that much. Okay. Yeah, go be free, man. Go be free. Thank you.

Okay. I appreciate you guys taking my call. Absolutely, man. And, hey, when you tell your wife, tell her specifically, George said she was wrong. Oh, boy. Not me. That was George. John is a saint.

He can do no wrong. Thanks, John. No, I'm just kidding. America loves John. Hey, thanks so much for. That was George. John is a saint. You can do no wrong. America loves John. Hey, thanks so much for the call, Fred. Appreciate you, man. Good stuff. So we got big news, John. Big news for America. What is it? You don't even know. No one tells John anything around here. We are super excited to announce our team just launched some incredible updates to Financial Peace University. I know that. You and I are in it. Okay. Hey, relax, man. I'm just reading the news.

I'm excited about it. I'm just reading the news. Just read the news, man. This is still the same timeless plan and principles we always teach, but now there's brand new content to help you stay in control of your money. And the two of us are extra excited because we are in the course now. We made it inside of the matrix, John. I know.

I looked at the cover today and I went, we did it, mom. Can you believe it? I never thought, I mean, Financial Peace University is the thing that changed my life back in 2013. And so now to be a part of that, I just, I'm pinching myself.

Just such an honor. So if you, John, I know you worked real hard on your talk for this, NY Spending. We co-taught this course and really brought a lot of fresh life to it. You with a lot of the psychology of spending, how companies go after our brains. And I kind of covered here's how they're going after your wallet thanks to how they're going after your brains. So it's a really, really strong course. Really proud of the work we did there.

I also covered Baby Step 3 in the emergency fund and tried to bring some life to that, bring some jokes to it. I don't know if they were funny. They weren't in the crowd, so hopefully people watching at home think they're funnier. We laughed at you backstage. I felt those laughter, John. Thank you. So here's the deal. If you're already a Ramsey Plus member, you can log in right now and check out that new content. And here's the better news. If you've never given Financial Peace University a shot, now's the time. You can get started at a special price of just $99 for one year of access to FPU and all of the extra perks inside of Ramsey Plus. Just go to FPU.com and check it out.

Let us know what you think. That's incredible. It's reverse inflation. That's how that works. Instead of getting more expensive, we put out something brand new, and we lowered the price. Blessed to be a blessing, John. Pretty cool, man. That's what we say around here.

I like that. So check it out. Send John some hate mail. Send me all the love. FPU.com. We'll be back with you. This is The Ramsey Show. I'm George Camel, Ramsey personality and host of the Fine Print and Entree Leadership Podcast.

Joined today by the host of The Dr. John Deloney Show. You guessed it. It's Dr. John Deloney himself. And your best friend. Yes, that too. No. We're trying to convince America that John likes me. And so this is his attempt.

No, I've been trying to- You invited me over your house already this hour. I've tried to be your best friend multiple times. Call me your best friend. Yeah. Fine. You win, John. We're in?

You win. Yes. We're best friends now. This is huge. It's that easy. You want to go do karate in the garage? No, absolutely not. Oh, man.

Then we're not best friends. That was a movie reference for those of you wondering. John doesn't actually do karate in his garage. I literally actually do karate in my garage. Doesn't shock me. It's a whole other conversation. Well, this is about you, America, not about John and our friendship. So give us a call and make this stop.

888-825-5225. That's 888-825-5225. Mario, who's our new friend, he's in Houston. He's on the line. Welcome to the show, man. Hey, hi, guys. I have a family crisis and kind of a financial crisis as a result. I just broke up with my fiancée, and she moved out.

Sorry to hear that. I'm sorry, say again? I'm so sorry to hear that. Yeah, man. Yeah, thank you. We just recently built a new house at $700,000 and it's got a $350,000 mortgage. Oh no. And if we sell right now, it's at least a $50,000 loss based on all the realtors. Um, my thought is if I buy her out, her portion, and take on the $350,000 mortgage,

between myself and my mom, I have $350,000 in cash. Do I pay down some of that mortgage with that? Do I even do this? Do I even take this house so that we don't lose the $50,000? It feels like there's some sunk cost fallacy happening here. Dude, I would sell the house. Well, you're hanging on to this thing, but it's going to be a curse more than it's going to be a blessing.

Mario, you're going to, listen, you're going to you're going to mess up your relationship with your mom with the money. Everything changes when you owe your parent money. You're going to have to figure out you have to get with the attorneys and figure out what's

the buyout fee and are we going to get this all signed off so I'm going to pay. Dude, I would take the hit and sell the house and don't buy a house with somebody that you're not married to moving forward. Just because it's so complicated to unwind it all. Is her name on the lease? I mean on the

mortgage? Yes. And on the title? Yes. Okay. So you're going to have to refinance this thing anyways. I don't know that the bank's going to allow you to refinance on your own. Can you afford this? Yeah, I think it comes at $350,000. But what's your buyout going to be, $175,000?

Her buyout would be about $125,000. How do you figure? Because that's how much she put in. Oh, okay. All right. And who's going to pay for the loss? Yeah, that makes you fully responsible for the loss. I would be fully responsible,

and I'm willing to do that because I don't want her to lose the money. She's got less money to begin with, and I don't want her to have to take it on. I'm willing to live in the house for a year or two and sell it. At that point, the price would hopefully not go down on the value of the home. It's a new build. It's a brand new house. It's just that, right. And the actual base value of the house from the same builder has gone up in price, but because there are no recent sales, the realtors are telling me you're going to max out at 700,000 at best. And you know, when you do that, you're paying them $50,000 for the sale.

So it's a $50,000 loss at least. And I could cover the mortgage if I needed to. It would be 50% of my pay as is. Hey, Mario, Mario, Mario, you're trying to make this work, man. You've had a lot of loss. My guess is this breakup with the fian fiance has been sometime coming, which means you've been living in chaos for a season. Is that fair? A little bit. Yeah. I mean, the other issue is that if I move out now, I'm having to find an apartment and the apartment prices are

fairly high as well. The cost of the apartment is going to be effectively the same. It may be a little bit more if I just was able to pay down the mortgage itself. My mom is living with me anyway. So, and between us, we can cover at least a majority of the mortgage. And I'm not saying put everything in it just because I need to have some money saved, maybe a hundred thousand. So have a hundred thousand dollar mortgage as a result. So here's the thing. You've got a plan. Yeah. You've got a plan.

You're clearly a smart guy. You've got a plan. And so you're going to do what you're going to do. I'm telling you. If I was in your exact shoes, I'm from Houston. If I had woke up in Houston, I got engaged in Houston.

So if me and the person who's my wife now, if we'd broken up, I would have sold the house and taken the hit and moved into an apartment, paid a lot of money, and unshackled myself from what was to begin playing for what will be. You are hoping, you are taking 50% of your take-home income, carrying your mom on a house note on a prayer that the next two years the economy pumps the house back up i don't know if you've watched the news but the next two years look like it's gonna be a little bit of a rough ride i would i mean george hop in i would not be looking for the next 24 months for things to just go through the roof now i'd be out to lunch on that but i would take the hit and walk away that's what i would do now if you move to an apartment, mom would be with you, right? Yes. And so you'd be splitting that rent.

I think you can find a place that's not 50% of your pay with mom to rent for a while until we figure out what's next. Because it sounds like you don't need a house this big anyways. I don't, but now we're going to a house a third apartment the third besides hey brother that's ego most situations and mental things you know what i mean i know it's going backwards it's ego that's ego man you're you're you're you're retooling you're because you had plans in your life those plans are different now and there there's a move in mixed martial arts that we used to practice and that is it sometimes you find yourself in a bad position up against the cage up against the the ropes up

right and you literally can't get out you're stuck and so we used to drill over and over how to ride the round out because there is no offense happening here you got you're curled up in a ball you got somebody on top of you raining down punches. I've got to finagle and take this for this season until the bell rings. I can get up and reset. That's where you are. You broke up with your fiance. You bought a $700,000 house with a girlfriend.

It's already going to cost you money to get out of it. It's going to cost you half your life to stay in it. You've just got to turtle up and say, okay, we're going to go to an apartment, we're going to retool, and then we're going to take the next 24 months and figure out what comes next. And it feels like a step back. It's not, man. This is you protecting yourself and protecting your mom and protecting your future and making wise decisions when things are crazy. Yeah. Have you talked to your mom about this? Yeah. What does she think? Just curious.

Well, she wants to be able to help me, and she thinks it's better just to pay down the mortgage, keep this house. And so later I can always get a roommate or another roommate, a student or somebody to come in from my work that could be helping pay down some of the mortgage. And we've had the problem is, you know, she's had money in the bank from a home sale that hasn't been earning squat. And so. Has she been saving for retirement?

Is she retired? Yeah, she's retired. Are you her retirement plan? Basically, yes. You are her retirement plan? Yes. Dude, don't sink what little cash she has left into this hole. Don't do that, man.

Yeah. Listen, I absolutely understand. Both George and I are— We're not trying to minimize this at all. No, dude, this is hard. This is hard. I hear it on you. It's hard, man.

It's the reality of the situation. I'm trying to make— I want my ex-fiancee to not have to be screwed either that's the thing I got you but hey once the relationship is split now this is a business transaction because we made a business deal together it felt like love at the time but it was a business deal and now that we're split this is a business proposition so it may be that she takes $25,000 of the $50,000 loss or whatever it gets split out. You take what you put in.

She takes what she put in. All that, right? This was a decision you guys made together, which means all of the risk is on both of you. It's not just on you. So I don't want you to try to be a hero here and roll over and have it be a giant financial predicament. You're not being unkind by saying, hey, we're going to split the losses because that's what we're doing in this relationship. I'll take $60,000, $40,000 here. I broke up with you. You still love me. We're going to split the losses because that's what we're doing in this relationship. I'll take 60-40 here. I broke up with you.

You still love me. We're going to sell this house. Whatever we got to do. And it may be that you go back and talk to the builder who's got somebody else lined up and they're about to put a shovel in the ground without a real estate agent. And you go to the builder and say, hey, my life just blew up. Do you have somebody else in line that would be interested in this house? Because I don't want to lose $50,000. Maybe I can lose $25,000. Maybe I can lose $10,000.

Maybe you can walk away that way. But if I'm you, brother, I'm selling the house. Yeah, absolutely. Sorry, man. This is The Ramsey Show. I'm George Campbell. To my right, Dr. John Deloney. You're listening to The Ramsey Show. Give us a call, 888-825-5225.

Glenn joins us up next in Kansas City. Glenn, welcome to the show. Oh, thank you. Thanks for taking my call, George. Happy to do it. What's going on? Oh, you can label me tentative to retire. I like that. So I just need a third party opinion. You know, I work with a financial advisor and I do way too much reading, but I just wanted to

run through my scenario and see if you guys think, do I need to keep working in this economy or, you know, can I pull the plug at 59 and a half? Okay. Just make sure you pull the right plug. Yeah. Yeah. No, not the life support plug. Keep that one in the wall, brother. That's right. So hit us with the numbers. Okay. So I'm about 80% tax deferred, 20% Roth. I've got, by the time I retire, I imagine I'll have about $1.5 million. And of that $1.5, I'd have about $90,000 cash.

I planned on waiting to collect Social Security until I'm 70. My wife is going to continue to work until I'm 62. So then, you know, so I was going to try to spend down cash in the first couple of years and then work on the tax-deferred money and try to stay under $80,000 a year total tax commitment. our total income so you're going am i ready to do this when when's your plan to do this to actually retire currently uh 13 months three days uh 36 minutes something like that wow what do you do for a living um i'm power plant manager okay cool so what's your current income? About $150,000.

All right. And you're not looking to replace all of that $150,000 in retirement? No. Right now, I only come home with about half of my income. I put quite a bit into my Roths and savings accounts, so I could live off $80,000. And you'd be happy? Because that's really what it comes down to is what's your picture of retirement retirement and do the numbers match up to that picture? Okay, I'm speaking for myself. I'd be happy. I don't know if my wife would be happy. What does she think about all this? Does it make her nervous for you to quit working? Absolutely. Yeah, that's why she wants

to keep working. She works remote and we want to relocate. So I have no interest in paying down my mortgage. I always overpay, but I'm going to take the equity out of this home and put it in another home where we relocate. But yes, she's nervous. Here's a couple of things that I would do if I'm in your shoes, and I'll let George, obviously he's way smarter with the numbers side. Before I quit, before I retired is a nice way to say that, I would take my wife on a retreat of some sort, go out for a day or two, and literally spend a couple of hours being highly intentional about telling old stories.

What are some things in our marriage that we loved, some of the adventures we've had, our kids? Some of the stuff has been great. I talk about some of the stuff that's been hard. And then I would shift the conversation. And this might take half a day. And I would talk to her about this before you do it. And you spend some time by yourself and her some time by herself.

What do we imagine the next potentially 40 years to be like? We often think like, oh, I'm going to retire at 60. You might be 40 years, my man. Okay. 30 years. What do we want that to look like? To George's point, if you both don't have a unified picture of what retirement looks like or the next phase of your life is going to look like, you're going to run into a brick wall. And what we're going to do is we're going to blame that crash on money. We're going to blame that crash on my wife. She's going to blame that on my husband. She's sitting around the house. But all of that is tied into we were not unified in where we were headed when we started

off on this new journey. The second thing that's important is you need to know the research on people who just up and retire is not great. They fall apart. And so you've done the math. What I want you to begin to consider is maybe you're done at 60 managing a power plant. We want to get out of this town. We want to get out of this state. We want to go somewhere different, somewhere hotter, somewhere cooler, whatever. We're going to buy a new house.

I want you to imagine it doesn't have to be a job, but I'm going to volunteer at, I'm going to get really involved in local, whatever. I am going to start bagging groceries. I want you to have a thing that you go to, not that you go from. Just the data on it is, the data has convinced me that I, retirement is no longer a thing I'm interested in. Spending money and building wealth no longer a thing I'm interested in. Spending money and building wealth, those are things I'm all excited about, but not having something that I get up and go to every day is something I'm no longer interested in solely based on the psychological data. So that's where I would tell you when you're having the conversation,

should I retire? And then the number comes in here, George, with actual data. Yeah. So Glenn, you said you'd have about $1.5 million in 13 months. Yeah. And that's if the market bounces back? No, that's taking in the losses that I expect. Okay. Dude, you really want out of this thing, huh? Well, I mean, she just wants me to be happy,

and I do have a strategy, an exit strategy, and it's going to be working with my kids. So both my kids live in another state, and I really enjoy doing things for them. So I think that's what's really going to make me happy. So I'm not worried about myself. I think my wife is worried about getting her nails done and getting her hair done. And I'm a pretty tight individual when it comes to spending money. And your wife is saying, I don't want my life to suck for the next 30 years because Glenn retired too early. Because Glenn didn't want to work, right?

Exactly. So we've got to take that into account. Hey, don't be dismissive of that, okay? I know it can be annoying, like, you mean I've got to work so you can get – yes, that's exactly what that means because you all are a team, right? So let's have that conversation. So, Glenn, you've heard of the Trinity study? No. You said you read a lot, so I figured.

But basically – I've never heard of it. The study shows that a safe withdrawal rate, if you take out 4% from your nest egg every year, then the money will not run out. It will continue to, you know, outpace. If the market's at 8, 10, 12%, you will continue to have your principal amount in there, which means when you croak, you'd still have 1.5 million, ideally. And so I would start to look at that with your financial advisor. So we've done cash flow, and the 4% rule is not really something. I guess I've looked at it that way, but every online calculator shows that there's no way you can retire.

So that's what I keep seeing. But he says I'm good to go. The financial advisor says, yeah, your plan checks out? Yeah. And that's if you're withdrawing, what, $70,000 a year into retirement? No, that was like at a $120,000. Wow. That feels high.

Yeah, and that's kind of why. But that was covering insurance and other things, too. Okay. And since I don't have to, I back it back down. That's just a larger percentage of the $1.5 million. You're looking more like 8% withdrawal rate at that point. Exactly. Which then you go, that money is going to run out then in the next few decades.

And so just take that into account. I would still run the numbers. You mentioned waiting to take Social Security. You might be better off taking it sooner and investing that money. And so I'd still run some numbers. I'm going to give you some homework there to work out with your financial advisor. I'm not saying you can't do it. I just want you to get a real clear picture of what your lifestyle is going to look like in retirement, where you guys want to go. And I'd also encourage you to go into retirement without a mortgage payment. You mentioned that you're

hanging on to the mortgage. You're paying a little bit extra. I want that thing to be gone before Glenn says, I'm done working. I think that'll give your wife some peace of mind as well. Yeah. The fewer liabilities you take into a no work season of your life, the better. And even if you think, well, I can invest this, the difference between my 3% mortgage and that I get all that, but we're just talking about risk and liability. And when you look at your wife and say, we owe nobody anything, here's what we're going to do. That's a different conversation. I'm just talking about neurological safety, brain safety.

It changes the way you make decisions. Your brain goes, whew, okay. So if the worst-case scenario happens, we're still sitting in the same house because we own it. It's ours, right? And we just got to scrounge up enough nickels to pay the taxes every year on it. That's different than, no, we're going to be homeless. What's left It's ours, right? And we just got to scrounge up enough nickels to pay the taxes every year on it. That's different than, no, we're going to be homeless.

What's left on the mortgage, Glenn? About 280. Okay. Yeah, I don't want to be taking that when I retire in 13 months and still have payments on $280,000 worth of loans. So I'd also look into getting rid of that or downsizing,

pay cash for your next place, and then I'll feel real good about this retirement plan. Let's have a conversation as a couple. What do we want this thing to look like? Make it a two-day retreat. Enjoy one another. Have a good time. But let's get some real concrete pictures.

Absolutely. That puts this hour of The Ramsey Show in the books. We'll be back with you before you know it. Do you love a good day, friend? Want to see the latest Ramsey Show videos going viral? Check out your favorite moments from the Ramsey Show on YouTube. Go watch and subscribe to the Ramsey Show channel on YouTube.