The Ramsey Show - App - To Win With Money, You Have To Focus on Your “Why” (Hour 1)

Episode Date: December 7, 2021

Home Buying, Home Selling, Retirement, Investing, Debt, Saving As heard on this episode: Sign Up for a FREE trial of Ramsey+ TODAY: https://bit.ly/3rZTUAx Tools to get you started:  Debt Calculator: https://bit.ly/2Q64HME Insurance Coverage Checkup: https://bit.ly/3sXwUn5 Complete Guide to Budgeting: https://bit.ly/3utmVXi Check out more Ramsey Network podcasts: https://bit.ly/3fHhbVE

Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studios, it's the 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. George Campbell Ramsey personality is my co-host today as we answer your questions about your life and your money. It's a free call and some say the advice is worth exactly what you pay for it. The phone number 888-825-5225. That's 888-825-5225.

Christian starts off the hour in Akron, Ohio. Hi, Christian. How are you? Christian? Yes, sir. Hey, how are you? I'm good. How are you, sir?

Better than I deserve. What's up? So I got kind of a weird situation. Me and my wife, we're 27 years old. We've been married for two years. The only debt we have left is our mortgage. We owe about 50,000 on it. Um, this, the state just did like an evaluation where they said it's worth like 200. Um, I don't love the property for a couple of reasons, but the biggest being,

um, she bought the house before we got married and her and her ex-boyfriend's name was on it. So when we got married, I kind of had to go in and change, you know, put my name on the loan and all that. It's just weird living in a house, number one, that we don't like. And it's just kind of weird for the both of us because her ex-boyfriend was living there for a while. So I guess the question that I have is, should we sell our house and buy another one, like try to sell it for $200 and then pay the bank their $50 and then try to buy within our means? Or would you save up 20% for a down payment on another house? Or how would you go about that, I guess? Well, I mean, you got 20% because you got $150,000 coming out of there, right? Well, correct, as long as it sells.

Well, it's got to sell before you buy. Okay. That would be, if I'm going to sell it, you don't buy unless you sell it. And so you could put it on the market and accept a contract contingent upon your ability to locate something that you like within 30 days or something like that. Okay. Why do you not think it's going to sell? I don't know.

I've just heard, you know, stories of people who got stuck paying two mortgages. You know, that idea kind of scares me. We just got out of consumer debt, so the thought of going back to... Yeah, you're not going to do that. You're not going to get stuck because you're not going to buy a house unless that one sells. So the way you would go about this would be

put it on the market and then... Accept an offer. Accept an offer. Try to find a house. Accept an offer. Contingent upon or subject to, is the phrasing, your ability to find a property

that is suitable to you and your wife within 30 days. And then you go shopping with the $150,000 that you effectively have in your pocket. Okay. But I'm out of there. You don't like the house, and it's got ghosts of boyfriends past, and, you know, I'm out, man. There's a lot of reasons to check out this deal. Now, here's the thing.

You're selling in an upmarket, and you're going to buy in an up market so just be ready for sticker shock right yeah be sure you can get a house that you will like that's within your budget correct would it be smarter to rent and then kind of wait and see if the market goes down i don't think the market's going to go down it might slow how fast it's going up but it but i don't think it's going to go down. It might slow how fast it's going up, but I don't think it's going to go down. The number of times the real estate market, the residential real estate market in Akron, Ohio has gone down overall is one time in 50 years, 2008. Okay. You know, it just doesn't go down much.

Sometimes it's kind of sluggish and slow and it's not increasing much but you really don't lose value in real estate very often it's very very unusual in a single family to lose value now you can get in a bad neighborhood or you can run the maintenance down and mess up the thing right but but in general if you maintain real estate in a decent reasonable neighborhood in a decent reasonable town which, which Akron certainly is, then you can pretty well be assured it's going to go up. It's just lately it's been going up at white-hot rates. It's kind of hockey-sticking, you know, up and to the right. So that's a problem.

But guess what? You're selling in that market and you're buying in that market. So you just give yourself some latitude. And, you know, if you go out there for 30 days and you absolutely can't find anything, then you have the right to step out of the deal. You've made that deal in your contract, and you've not messed anybody over. Now, Dave, in a hot market like this, are there sellers who go, I'm not going to take that deal, where it's contingent? It's not a seller.

He's the seller. Yeah, on the buyer's side. It would just be contingent upon simultaneous closing is all, and there's not, you know, close them both the same day, and it shouldn't be a big deal. Yeah. I mean, it might be. There might be a buyer who wants all cash, no contingencies, no appraisals, no inspections. There's people doing stuff like that, but you just can't buy that house because you've got to get yours to close.

But you can find people that will sell a house contingent upon the closing of yours that's under contract. That's really not that big. Especially in a hot market. It's not that big a contingency. It's not that big a problem. So it would be different if it's contingent upon the sale and hadn't even put it up for sale yet. That one's a little tougher. But in a hot market like this.

Open phones, 888-825-5225. Roger's in San Antonio. Hey, Roger, how are you? Hello, Dave. Thanks for taking my call, and how are you all? Better than we deserve, sir. What's up? Well, let me give you a quick rundown,

and then my question is about my wife and I both being 75 and wanting to protect our assets. The quick rundown is we have zero debt on anything. Way to go. Retirement, thank you. Retirement income is around $98,500, which is net. And let's see, we have $93,000 invested in five stock funds through two investment companies.

We have over $370,000 in CDs, bonds, and fixed annuities. Net worth is about $1.4 million. Risk outlook, and that's the reason I'm calling, we spend less than we make. We're very, if not ultra conservative, and we want to protect what we have. No high risk, no high yield type of thing. What's the other million in? Two houses and land. Okay. Okay. So you worry about risk, but you still manage to put together a million for net worth.

Way to go. So what's your question? Well, thank you. Well, we've got this money that's 98, no correction, 93,000 in investments, and then over, like I said, 370 in CD bonds and fixed annuities. But CDs are now insultingly flat, and so we're trying to say, well, what do we do with CDs that are coming out of maturity now? I've got one, for example, for $122,000 that's out just as a couple days ago. And so we're wondering what would be the best thing,

given our very, very conservative risk level, go to what? Would I-bonds be one thing, for example? No. I mean, you can do whatever you want to do, but here's the thing. You're taking two kinds of risk. If you don't outpace inflation and taxes, you're losing purchasing power. So that's one kind of risk. And you've been accepting that kind of risk for quite a while with these stupid butt CDs and these underperforming bonds you're talking about.

I'll tell you what, hang on. We'll talk about this a little bit when we come back from the break. I want to make sure we unpack this beautifully for you because it's a really good question. George Campbell, Ramsey Personality with me today. Open phones at 888-825-5225. You've got a lot on your plate. A job, your home, your marriage, and your growing family. While you're enjoying the present, you can't help but think about your future and your finances. As you explore your options, consider Christian Healthcare Ministries

or CHM for your health care. Their generous maternity program and budget-friendly monthly programs have been a blessing to members welcoming children into their families. Visit chministries.org slash budget to see if it's right for you. Christian Healthcare Ministries is a Ramsey Trusted Provider. George Campbell Ramsey Personality is my co-host today. Open phones at 888-825-5225. Our last live show of the year before Christmas is always the giving show. The giving edition of the Ramsey Show.

And we need some stories from some of you that have been on the receiving end of someone being very generous and it changed your life or helped you during a rough time or whatever. And maybe you were on the giving end of someone being very generous and it changed your life or helped you during a rough time or whatever and maybe you were on the giving end maybe you tipped a waitress 100 bucks or you gave thanksgiving dinner to a family that couldn't afford it or maybe you paid somebody's light bill for a year i don't know what you did but generosity is the highest and best use of money and so we always want to encourage generosity it's why we teach you to have some money. And so we're going to do this show, as we always do, a giving show. It's one of our Ramsey Show traditions. And if you want to be on the giving show and you have a great story, we need your stories.

We need you to come on. So what you do is you go to RamseySolutions.com slash ask, RamseySolutions.com slash ask, and put giving in the subject line. Kelly and the production team will be in touch with you. We'll get you on the air, make you part of the deal. We're talking with Roger in San Antonio. Roger is 75 years old, making four net worth, got $93,000 in mutual funds, $98,000 income, $370,000 in underperforming CDs and bonds and so forth, wanting to know what he can put it into with virtually no risk because he hates risk.

Is that a fair summary of what you told me so far? Yes, sir. That was right on. Okay. Thanks. So what I was saying going into the break is there's two kinds of risk. One is the risk of losing the money, which is the risk you're worried about. Putting it in something and it goes down in value or worse than that, it completely evaporates to nothing and that's the great fear of someone who is risk averse i'm risk averse like you are

okay but sometimes in an effort to avoid that kind of risk we embrace fully another kind of risk that we didn't even realize was there because the average inflation rate for the past 72 years has been 3.2 years, 3.2% according to the Consumer Price Index. In the last year or so, it's been, of course, a whole lot more than that. We've got crazy inflation with all kinds of weird crap going on with whatever the economics mess is that we have right now. And so it's even worse. But let's just use 3%, you know 3.2 or four percent 4.2 right in there somewhere in there is about every year we see a gentle increase in prices

over the years you're old enough like i am to have seen that so if you don't make that plus the taxes on the investment you're not even breaking even and so you need to make about 6% on your money or you're losing purchasing power. You're losing money every year. And so if you're not running fast enough away from that kind of risk, but not so fast that you run over the cliff on the other kind of risk, you'll get tackled from behind. And that's what you've been experiencing. This $370,000, I'll give you an example of that how how poignant this is can you imagine what four million or what four hundred

thousand dollars would be worth um 15 16 years later if you left it in a coffee can well i can tell you it would be 1.6 million is what it should have been in a decent something making 10 that's what it would have come out and if you left it in a coffee can you know it's got it's 400 000 so you lost 1.2 million in potential growth during that 16 years by burying it in a coffee can a cd is not much better that's true so that that's what i look at now having said all that i'm not a gambler i don't like losing money i work too hard for it so i'm not playing any fad stuff i'm not done i'm just looking for tried and true stuff and so and i'm thinking about what my timeline horizon is and okay so if i'm gonna leave the money alone a year what's safe if i'm gonna leave it alone

three years what's safe i'm gonna leave it a year, what's safe? If I'm going to leave it alone three years, what's safe? If I'm going to leave it alone 10 years, what's safe? And here's the interesting thing. If you look at just, for instance, a simple index fund, S&P 500 fund, if you leave it alone five years, the number of times you actually would have lost money is less than 3% of the time. And the average annual rate of return would be north of 10%. Average.

That's a 10-year horizon. That'd make you 85. But here's the thing. You're likely not going to touch this money. It's likely you're investing it for your kids. Yes, sir, that's true. And grandsons. Yeah, so you have a 10-year horizon or a 5-year horizon.

You don't have a short-term need for this $370,000. So that's why at 61, as a risk-averse person, I'm very comfortable when I have a long-term time horizon investing in something like some conservative, very easygoing, boring mutual funds. And all the get-rich-quick guys make fun of me, but then you're just a boomer, Ramsey. You don't understand.

You're an antique dinosaur. You don't understand how all these get-rich-quick things work. Yeah, I do. I've lost my butt in them. I know exactly how they work. And so I don't do them anymore. I don't like risk. So anyway, that's my pitch.

So you're saying, hey, you can move this $370,000 over to some conservative mutual funds, and the chances of you losing money over a five-year time horizon, very slim. Statistically, historically. And it's less depressing, literally, than putting it in the CDs or the bonds. So that's the move. Where's this income coming from, Roger, the $98,000? $98,000 is my civil service retirement, Air Force Reserve retirement, and a little bit of Social Security. Cool.

So you're not touching any of these funds anyways. You're going to be able to live off of that for the rest of your life? What's the guarantee on all of that income, obviously? All of that will be there. Yeah, there's nothing. None of that's going away. Thank you for your service, by the way. Yeah, thank you.

So here's another thing that helps me with risk. And I'm not, again, it's not a gamble, and I'm not putting the money up there, but if, let's just say that you picked the worst mutual fund in the history of man, and you lost all the money, and you're not even going to put it in one fund, so this is not possible, okay? Let me tell you how many growth stock mutual funds have gone completely broke to zero none ever okay because all those companies that they own would have all had to been worth zero so you would have had to make like home depot mcdonald's coca-cola hewlett packard ibm and apple all worth zero is the only way your mutual fund's gonna be worth zero because all

those stocks are in your mutual fund okay so But let's just pretend you lost the whole thing because I'm stupid and I don't know what I'm doing and I told you something bad. So if you lost the whole thing, you've got a million-dollar net worth with $100,000 of your income. Okay. You can't emotionally stomach the risk, but you can mathematically stomach the risk follow me yeah yes sir conceptually i i'm not depending on that money exactly actually not

not depending on that money uh for anything and so it's really going to go to the daughter and grandson exactly doing very well exactly so what you've got to do is you need to what let me tell you this okay so when i buy real estate um i buy in my town where i grew up and i know what that neighborhood is you know what i'm saying yes and so i can remember because i'm old i can remember when that house sold for a fourth or a third or a tenth of what it's selling now when i drive down the road i mean i sold the house for 42 000 when i when I was 18. I'm 61. That house is $242,000 or $342,000 now. I know that, right? So I can look at the history. It's just in my, it's imprinted in my brain because I've driven past it. So I'm looking at the historical

data on that street. I've watched that neighborhood go up or come down, deteriorate or clean up or re-gentrify or whatever's happening i'm watching the historical data on the neighborhood and because it's in a in quotes air quotes good neighborhood and it's got a historical 25 40 50 year track record of going up in value i don't think i worry about my real estate so my point being if you're to do what I'm suggesting, take your time and really understand with your SmartVestor Pro or with your investment advisor the history. If you really look at the history and say,

how many times on this mutual fund in the past 30 years would I have lost money? You know, if you looked at Investment Company of America, ICA, one of the biggest funds ever, or Fidelity Magellan, one of the biggest funds ever. I'm not recommending either one of those, but they're old funds, and they're huge. If you go back and look and say, okay, over 40 years or 50 years, under what scenarios would I actually have less money than when I started? You're going to get really comfortable with that level of risk once you see the historical data,

like driving down that street in the neighborhood. Yeah. You'll sleep better at night, Roger. Do the math. This is The Ramsey Show. We'll be right back. in the lobby of ramsey solutions on the debt-free stage. Anthony and Katie are with us. Hey, guys, how are you? How are you doing? Good.

How are you? Welcome, welcome. So how much debt have you guys paid off? $132,000. All right. How long did that take? 19 months. Good for you.

And your range of income during that time? 95 to about 140. Cool. Where do you all live? Hendersonville. Hendersonville. Oh, right here in 140. Cool. Where do y'all live? Hendersonville. Hendersonville. Oh, right here in Nashville. Okay.

Good for you. Good for you. And what do y'all do for a living? I am a pharmacy data analyst. And I fix cars. Oh, good. Good for y'all. Perfect.

Okay. So what kind of debt was this $32,000? Oh, God. Credit cards. Yeah. Credit cards. Car loans. If there was a store that had a name on it, we had a piece of plastic for it.

Yeah. Just all kinds of dumb tool bills, everything. Wow. So you were normal. Yeah. All right. So what happened 24 months ago that started this 19-month journey? Oddly enough, I was working, and I was working on a car.

And that was back in the day when Facebook would just play videos. And I had my phone over on my toolbox, and your music came on, and something told me in the back of my mind, don't skip this one. Because normally, you know, growing up in Nashville, you hear about Dave Ramsey and all this. Well, for some reason, something told me don't skip this one. I played it, and it was somebody that was going don't skip this one i played it and it was somebody that was going through the same thing as we were and it was their debt-free stream oh wow

and i believe that was the first time that god spoke to me yeah and went home and told her hey you know there's this there's this process that we can do and you know maybe it'll work for us and one step at a time um you know started in january because we rolled into the the new year making good money with nothing to show for it right all right it gets old it does you get tired of being tired yes you know and and then you hit then you hit a pandemic right yeah in the middle of trying to do all this right now that's fun yeah did that help your income or hurt it it helped me i work in health care so at one point i was working three jobs yeah i bet and the pandemic didn't affect me the tornado did because oh where i was working it caved the shop in so yeah we were out of work for a few months.

Until they found a place to set up shop, so to speak. Well, they rebuilt it, yeah. Oh, they had to rebuild the whole thing. Oh my gosh. That's wild. So you guys were kind of on a spending spree and you got to this point where you went, we can't live like this anymore.

What kind of sacrifices do you have to make? Were you selling things? I know you were working some extra jobs there. What kind of things happened for you guys to feel the progress on the journey? Well, I'm the social butterfly. So not going out

to Texas Roadhouse every week and not going out with friends and not going to concerts and that kind of stuff is what we sacrificed. You know,

if we made that a step in the baby steps, Texas Roadhouse would become very offended. Just target them and go, you can go somewhere else, but you can't go to Texas Roadhouse. Can't do it. So you were cooking at home. I like it.

You had Texas Roadhouse in your house, it sounds like. Yeah. Okay. We brought it home. Making plans with friends. You know, we'd tell them, we'd love to hang out with you, but instead of going and spending $40 to go eat and tip and all this, why don't we'll cook something, we'll come hang out, we'll play cards.

Yeah. And we had a group of very solid friends that were on board and very supportive with that because it was all about the fellowship. It wasn't necessarily about going out to eat. It was just the social aspect of being together. Exactly. And going out to eat is not really about the food, you know, because you could buy that same food for about 10 cents on the dollar,

what you pay at a restaurant if you just cook it at home, you know. And probably a better food in a lot of cases. No offense to Texas Roadhouse, but, you know, there you go. Not a personal attention. You just have to throw peanuts on your own floor. That's all I'm saying. Who's cleaning that up? Not me.

Wow. So it sounds like you guys had some great cheerleaders. Did you have anyone that thought you were crazy for doing this thing? Oh, yeah. Of course. We had people that said, you know, there's no way it'll work. You know, it's old school philosophy. It's outdated.

You know, you can't do anything without credit or leveraging debt or anything these days. But then it comes around May, and I'm like, hey, why don't I sell my truck and let's move this on. So I sold a beautiful Duramax that I had to Carvana, and now I'm driving my – you don't like it being called a Dave car, so I'm a beater. Okay. I'm driving a 2002 Buick Regal. Woo! The High classy touchdown yeah yeah well now you don't have any debt and so now you can start to save up and buy and drive anything you want to right bigger bigger plans

than that um a big proponent of what actually kicked this journey off is, do you mind if I, okay. It's fairly emotional. But for six years, we've been dealing with infertility. And we're looking at doing in vitro fertilization, which every attempt is $15,000 or more. Yeah, yeah. Better investment than a Duramax yes yes we'll get better returns 100 i like this yeah cool that that is our that's wonderful that is our why

hey that's that's uh you get freed up you can do that and then it doesn't break the bank so to speak you know and uh sometimes they hit first time sometimes they don't hit first time and it's not gonna be the end of the world. Emotionally, it'll be a roller coaster, but financially, you'll be able to do it, right? Yeah. Pretty cool. I'm so proud of y'all. That's an awesome goal.

Thank you. It's very cool. I can't think of anything better to do with money than babies. It's about the best thing you can do with money. It is a good investment. They'll take care of you if you treat them right. Well, hypothetically, I don't know about that part. If you take care of them and treat them right they will bring you grandbabies now that that's better makes it worth it but yeah if i don't know how great grandbabies are gonna be i've been nicer to their parents but there you go so hey good stuff you guys that's

amazing i'm so proud of y'all okay sum it up when your crazy friends that were making fun of you for being crazy not the supportive ones the other ones uh, say, okay, you paid off $132,000 in 19 months making $95,000 to $140,000. How did you do that? What do you tell them the key to getting out of debt is? Stay focused. Embrace the suck. Amen. Because life sucks either way.

You know, there's hard parts. You're going to pay a price. Right. So sacrifice a little bit for a better tomorrow instead of spinning your wheels living the same way day after day like we were. Yeah. I can see y'all five years from now with a big old pile of money and a couple kids. I can't wait for that. Pretty cool.

All going to Texas Roadhouse. Yes. There we go. In the Duramax. Load them up in the Buick. No, the Duramax is gone. Load them up in the Buick. We're going to Texas Roadhouse.

I like it. And paying cash by God. There you go. Oh, you crazy man. I love y'all. You're amazing. It's very cool. Very cool.

We got a copy of the Baby Steps Millionaire book for you. An early release copy because the book comes out in January. It's on pre-sale right now. And we'll also give you a copy of the Total Money Makeover for you to give to one of those supportive friends or maybe even one of the ones that weren't. You can just give them a, hey, this is what we did, by the way, and we're debt-free. How do you like me now?

So there you go. Hey, was it worth all the trouble? Absolutely. 100%. How's it feel now that you're free? Free. Free. Just that.

Very good. Good for you guys. Powerful. I love it. What a rock star couple i almost said put a texas roadhouse gift card in the book that you give to the unsupported friend at least they get a meal out of it they get that one time well you got to put it on page 62 so they have to read down into it to find it yeah that's good i like this this is good fun fun all right anth Anthony and Katie, Nashville, $132,000 paid off in 19 months, making $95,000.

The $140,000 didn't skip the Facebook video. Count it down. Let's hear a debt-free scream. Three, two, one. We're debt-free! Yeah! That's how it's done. I love it.

That's how it's done. I love it. That's how it's done. Well, a high percentage of these debt-free screams are people that have gone through Financial Peace University. It is available through a Ramsey Plus membership now, including the every dollar premium version, which connects to your bank, and the whole thing runs together. The average family pays off $5,300 in debt and saves $2,700 in the first 90 days. That's an $8,000 change in position in just 90 days. Not a bad return on investment. But you've got to do the work.

And you're going to pay a price. Just like Anthony said, you're going to pay a price. So a price of mediocrity or a price to not be mediocre. RamseySolutions.com slash FPU. If you want to give Financial Peace University to someone for Christmas, or you want to sign up and say, Hey, 2022, I'm coming at you, baby. RamseySolutions.com slash FPU. We'll be right back. George Campbell Ramsey Personality is my co-host today.

Open phones at 888-825-5225. Christy is with us in Fremont, California. Hi, Christy. How are you? Hi. Thank you for taking my call. Sure. Appreciate it. Sure. What's up? So my question is, I just turned 68 in November

and I've been holding on to getting my Social Security benefit so that I could maximize it at 70. But now I'm having people tell me that do the math, you should take it now and do something with that extra money because by the time it would take me like to age 84 to break even if I don't take it now.

So I just want to know your thoughts on that. Yeah, I'm in the boat of taking it. And one reason is you can do way better investing that money yourself if that's what you want to do and depending on your financial situation than waiting to get a few extra $100 a few years from now. So that's what I'm doing if I'm you. And again, when you crunch the numbers, you can see, man, that's going to take me a long time to really ROI on this decision. And so once you do that, it becomes clear that taking the money now and having control of it is going to be in your favor. Yep. He's right.

The one thing I have been doing, cause I was the last birth year that I could take a half of my husband. So I have been doing that for the last two years. And that's basically been paying my Medicare costs, which is great. Plus some extra. Um, but I sold my business, um, this year and with capital gains and all that, who, uh, my Medicare costs have gone through the roof so i'm thinking maybe i should just take my own benefit and have a little extra i mean more left over to do something with amen amen that's amen but mathematically what george is saying is right if you didn't do that with it if you just said the way to do the math is not i

mean you can take it and use it that's sure i would do that but that's why i said amen but if you just took the math you took the money now and you invest it from now until 70 the amount in that investment would offset the difference and the extra you would have made if you wait till 70 to start take it does that make sense yeah it's like I've looked at it, and right now the two years is about $68,000 is what it would be. There'll be more than that because you'll be investing it all along. Yeah, that is true. I would be doing something else with it. You end up with $100,000 paying you $10,000 a year.

That's $800, and you're not going to make $800 extra by waiting until 70. No, no. I'm staring right at it on this piece of paper, and you're certifying that for sure. Yeah, that's exactly right. So, yeah, that's the way this works. If you take the Social Security, folks, if you do this at 63, you can do it. I mean, whenever you want to do it. It depends on what your tax situation is but if you can aside from taxes if you just take that

money and invest it and say okay in an investment here's what it would be worth at 65 versus 63 and here's how much more i would get at 65 if i wait you're going to get more off of that lump sum investment income that that lump sum creates than you would have extra in social security payments because the social security system sucks it's a negative rate of return and oh by the way when you die that hundred thousand dollars we're talking about with her is going to be in the investment when you die if it's at social security guess how much you get zippo zero nada you don't leave it behind they keep it because well they have to prop up their broken destructive system that they've engaged all of us in

it's um social security is the dmv of retirement if you just think going to the dmv and how frustrating and horrible experience that is that's what social security is when it comes to retirement just to help you out. It sucks. And they're both part of the government, so go figure. Who knew? Government efficiency, an oxymoron, like Fauci math. All right, Dylan is in Atlanta, Georgia.

Hi, Dylan, what's up? Hey, how's it going? Great, man, what's up? Oh, nothing. I just had a couple questions for you. Okay. So I've got about $40,000 in savings, and I want to figure out what's the best way for me to invest it.

How old are you? 24. Good for you. Way to go, man. That's impressive. So you've got $40,000 just sitting in a savings account right now? Yes, sir. Okay. And what are you saving this money for?

Oh, well, nothing specifically. I bought a house when I was 19 years old or 20 years old, and I just made a bunch of money off of it, and part of that savings is from that money. And so now that I have all of it, I want to be able to turn it into something else. Yeah. So are you renting right now? No, I'm actually living with my dad while I'm building a house, but this will be money left over after the house is built.

And paid for in cash? Not in cash. Oh, okay. Do you have any other debt? This is all the debt I'll have. Okay. Do you have any other money saved of any kind? No, this is all I have.

Or, I mean, $40,000, like, out of what I'll have left over after I have to put the money down for the house, it'll be about $50-something thousand, but I was going to keep some of that money for emergencies. So you need this money for the new house? This will be the $40,000 is money that I'll have left over after the down payment for the house. But you could put it as an additional down payment. All right, so you have an emergency fund in place. What do you make a year? About $90,000.

Okay, baby step one, save $1,000. Baby step two is debt-free, but the house. Baby step three is your $10,000 emergency fund. You've done it, okay? Baby step four is 15% of your income going into retirement. You need to start that now out of your budget. 15% of your income should be going towards retirement. Baby Step 5 is kids' college.

It sounds like you're single, are you? I have a fiancée and a six-month-old child. Okay. Then kids' college is Baby Step 5, and 6 is pay off your house early. And so this money would be used as an additional down payment to get you closer to having your home paid for and above your 15% in Baby Step 4 and then above your kid's college in Baby Step 5, we're going to apply everything else to this house and get the house paid for as fast as we can because a paid

for house with $100,000 income, dude, means you're going to become a Baby Steps millionaire very quickly. And if you haven't gotten the loan yet, make sure you do a 15-year fixed rate loan, and I want that payment to be no more than a quarter of your take-home pay. So start crunching the numbers, see how much you've got to put down to get there, and the more the better. If you can put 30%, 40% down, that's fantastic. Steve's with us in Indianapolis. Hey, Steve, how are you?

Fine. Thank you for taking the call. Sure. Real quick question. Okay. How can we help? Okay. Real quick question. My wife and I are in our mid-70s. We have a home in Indianapolis and a home in Florida.

No debt. I have a million and a half in the market, and my concern is with the Biden administration's policies and so forth as to whether I should take that out of the market because I'm afraid of the inflation and everything else and what it might do to the market. In what way is it in the market? What's it invested in?

Well, it's in equities and bonds and so forth, so I would have to put it in. I'd have to keep it in the market because of any capital gains, but just put it in something a lot safer than maybe equities and so forth. When you say equities, you're buying single stocks? Yes. Well, I've got a manager that manages my portfolio. Of single stocks, that's the equities.

You're not buying mutual funds? No. Okay, that's what I was asking. So you've got a lot of risk. Well, congratulations, you're a millionaire. Well done, a couple of houses. You've worked your butt off, Steve. I have.

How much of this did you inherit? None. Okay, cool. All right. Well, I would begin to gradually move some of it out and maybe buy some real estate that you pay cash for. Probably going to give you a little more peace of mind. And will not give you the return that mutual funds will give you, but it will give you a lot less hassle. And depending on what kind of real estate you buy, of course. And I definitely would be moving from single stocks in a managed portfolio into mutual funds.

A million and a half is tough to have a real wide diversification with that amount of money. It's a lot of money, and you've done wonderfully. But I try to be in mutual funds first, and then I begin to move some of it out into some paid for real estate. If you want to hide from Biden, that's a better place to hide than in mutual funds. This is The Ramsey Show. Hey, it's Kelly, associate producer and phone screener for The Ramsey Show. If you would like to do your debt-free scream live on the show, make sure you visit theramseyshow.com and register. We would love for you to come to Nashville and tell Dave your story.