The Ramsey Show - App - Transformation Is Not for the Faint of Heart, but It’s Worth It! (Hour 1)

Episode Date: October 11, 2021

Debt, Savings, Investing, Home Buying 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. I'm Dave Ramsey, your host, and this is an exciting week for us here at Ramsey. We're so thankful you are with us. This is the week we actually launch our very first full-length documentary.

And since I had almost nothing to do with it, I feel like a proud grandpa. The only thing I had to do with it is my name is on the side of the building and I paid the people that did it. But, I mean, our team did an incredible world-class job on this. I watched it. I was spellbound, and I knew what was going to happen. So you can't miss it. It comes out Thursday anywhere great documentaries are seen,

including, of course, Apple TV, Google Play. What am I leaving out? I'm leaving out Amazon Prime, of course, Apple TV, Google Play. What am I leaving out? I'm leaving out Amazon Prime, of course, yeah. So lots of places that you go to look for good documentaries. You'll see it there. You can watch it at BorrowedFuture.com and pay us the money if you want, instead of paying those other people the money. You can rent it, buy it, like anything, like you normally would, a big-time screen.

Man, it's a cool thing. I'm so excited about it. And it's a cool thing i'm so excited about it and it's really good it's gonna piss some people off which is our entire goal around here if you are messing with and hurting people with your process expect us to be in your grill and that would include uh congressmen and senators uh that would include members of higher education that would definitely include sally freaking may and uh the deviant navient oh my gosh yeah and so on so there you go fun stuff yeah check it out borrowed future spread the word for us we'd love for this to be

a huge success and that way we could do like another one because we wouldn't have lost our tail on this one was that a little too much information okay it's not a great marketing promotion dave uh 888-825-5225 as we talk to you about your life and your money this is the ramsey show rick is with us to start this hour wilmington delaware hi rick how are you hey dave thanks for taking my call man really appreciate it my pleasure how can i help hey so i'm i'm 31 we have no personal debt and i run a construction business and we have about outside of our emergency fund we have about 50000 of what I would call investable cash. And what I want to do is I would like to buy a distressed property and fix it and move into a house like that.

Now, the issue with that, as far as I'm aware, I don't think that the bank will give me a loan and let me be the GC. I could be mistaken. I figured you'd know more about that. Are you a GC? Yeah, technically. No, I mean you you are licensed as a journal contractor oh yeah oh yeah yeah yeah yeah they'll let you do that sure okay are you now what i have understood was the bank from what i had gathered from conversations they said you cannot gc your own renovation project oh sure yourself that just depends on i mean you just hadn't found the right bank yet, but I mean, some

of them might not let you, but the only question they have, you know, at the core of the issue is this. Can you do the job? Will you do the job? They don't want to end up with a loan on a half-baked project where you lost your emotional steam and couldn't finish it. And so you would need to present like a plan and stuff like a budget and a schedule and your license showing you know how to do this and uh maybe a resume saying i

built this many properties or renovated this many properties or whatever i've been the business this long and so the banker goes oh yeah this guy can do it uh how about uh i've never renovated one i just passed my license i really don't even know what a hammer looks like. And I just kind of thought this would be fun. Banker says no loan. Now, if they say no loan, what are your thoughts on hard money and paying a higher down payment? I mean, theoretically, having more than 50% of the value of the house, but paying hard money, if that was not an option to go to the bank.

Oh, by hard money, you mean an unsecured loan at a high interest rate? Yeah. Why would you do that when you could do what I just described? How long have you been a GC? About six years. How many projects have you run? I've never flipped a house. That doesn't matter.

Have you GC'd anything? Of course. How many? I mean, a hundred. Okay. Why can you'd anything? Of course. How many? I mean, hundreds. Okay. Why can you not sit down and tell a banker that? I'm coming from, I don't know. I'm just collecting information.

I assumed because I had heard people tell me, oh, you can't. People are idiots. You can bank this loan. You can bank this loan, dude. You need to go sit down with your local credit union, talk to the branch manager manager but don't go sit down with a dream and a wing and a prayer go sit down with a freaking plan a budget right yeah a project management process and go this is how i'm going to go at it i want to get pre-approved so i can start looking for a fixer-upper i've got 50k of my own money to put into this thing i'm looking at a price range of x and uh you know and I'm going to need financing for the rest of it,

which we will flip to a permanent mortgage at the end. Oh, and here's my takeout letter or my preapproval for a takeout letter from the permanent mortgage company. Your local credit union will make this loan all day long if you have an income and have paid taxes on an income and you've done hundreds of projects as a GC. So, no, you're not going to go buy a house on a credit card. That would be dumber than a rock, dude. Don't do that. All right.

Landon is in Memphis. Hi, Landon. What's up? Hey, Dave. I appreciate you taking my call. Sure. How can I help? So, I'm 24, and my wife is 23, and we are about four weeks away from putting our house off.

Wow. And, yeah, appreciate it. We have... What is your house really um about 170 you are a stud how did you do that so fast well and actually we're going to pay it off in about 10 months once we're done um i'm sure it'll have taken us 10 months we started out making about 40 grand a year and then i opened a small carpentry business and now we're up to about 280 000 a year and we just just i hate it when that happens yeah way to go man appreciate it yep appreciate it but my question is is that we're so intense um with what we do we we live

on about 1500 bucks a month right now just because we want our house payment gone that badly. So once we're done with that, you know, I've read Chris Hogan's book and, you know, read probably all the books in your bookstore twice. And all the millionaires that I hear or see say that they want bananas on their investing once their house is paid off. And so I'm just curious, what exactly is that number in terms of ratio to your income of you know what is bananas and giving i mean what is bananas investing what is outrageous generosity in ratio to your income or what is you know really living and having fun with your income and not being out of balance in those categories you know obviously you're not going to invest a hundred percent right and you're not going to give a hundred percent you're not going to give 100%. You're not going to spend 100%. Exactly.

So how do we figure that out? So you're on to it, though, though. You're on to it. Man, you're doing so good. Way to go. And what a great question, too. So when we're coaching people who are wealthy and you're almost there, we tell them there's three things they can do with money,

and you need to do all three intentionally. And I don't even care what the percentages are. You need to spend and enjoy some money. That's one number two you need to be generous and number three you need to be investing you brought all of those up and so just put a percentage on it um at our house we're christians so we tithe to our local church and so that's 10 the government takes 40 that leaves me 50 so when i get in i got 50 going out before I even burp. And then when the other 50, I need to assign to those three categories. Some to investing, some to enjoying, and some to generosity.

Additional generosity in addition to the tithe. And that's what I've done my whole life since I got my house paid off. And it'll cause you to become very wealthy, happy, and healthy. This is The Ramsey Show. People all over the country are discovering a faith-based and budget-friendly way of meeting health care costs through Christian Health Care Ministries. Christian Health Care Ministries, or CHM, is a nonprofit organization that helps members carry one another's burdens with health care expenses, and they have successfully shared each other's medical bills for nearly 40 years. See if CHM is right for you by visiting chministries.org.

CHM is a proud sponsor of Dave Ramsey Live Events. Thank you for joining us, America. This is the Ramsey Show. Open phones at 888-825-5225. Kathy is with us in Grand Rapids, Michigan. Hi, Kathy. How are you? I'm good. How are you, Dave?

Better than I deserve. What's up? So I have been through Financial Peace University a couple times. I've snowballed myself down to mortgage payment and student loan payment. Student loans will be paid off for public loan forgiveness in about two years. My mortgage payment is a 3.125% interest. I have about $80,000 left on that. Had to get a different vehicle. And this is kind of where the question starts coming in. So just because of timing and

how it worked out and being out of town and no cars available, I had intended to use some of $45,000 I had saved to get a new vehicle. Didn't know how I was going to piece it together, but long story short, what I ended up with was an auto loan of about $41,000 at 3.99% interest and that was by mistake. I know I can get a better rate than that so I'm trying to get in to refinance that auto loan but then my questions come in is that really like what should I do with this $45,000 I have saved? I'm 55. I only have 25,000 in mutual funds for retirement. What is your household income? Well, that just jumped. So it was at 56,000, and then in August it went up to 104.

Okay. So I guess you're going to have to go back through Financial Peace University. You flunked. I did with that car thing horribly. Yeah, you did. And then you just called and asked me how to refinance a car debt and keep the car debt while you have the money in the bank to pay it off. You just did that. Like, I really want to know what's the best thing to do like i

do have the money you know what the best thing to do is you went through the class twice but then i have nothing like i don't because you bought a car you can't afford yeah okay yeah you're that's one of the things i've been wondering is if i just need well here's the thing if you if you use your 45 000 to become debt-free other than your student loan, which is another problem, by the way, did you know that 2% of the public student loan forgiveness people actually get it forgiven, 98% of not? Yeah.

No, I didn't know that. So I don't have a lot of hope for your plan um how much student loan debt have you got um there's 69 000 left okay all right so they did recently now you can do what you want to do and obviously you regularly do that um so here's what i would tell you to do okay and this is going to be very consistent with everything that I taught you in that class, okay? Okay. We're going to walk the baby steps. You have $100,000 in debt, 40 of it is a car, 69 is a student loan, and you have $45,000 in the bank.

You have a car you can't afford. You need to sell your car. You need to take $10,000 of the $45,000 and go buy you a $10,000 car. And then you need to use the rest of the money and pay it on the student loan. And then you need to get on a debt snowball, beans and rice, rice and beans, on a debt, on a budget where you don't have any life until you get that student loan paid off because the federal private student loan forgiveness program is an absolute scam i just gave you the real numbers 98 percent are not forgiven two percent half that equals a lot of people who bet on the government keeping their

word and they were lied to and you're one of them. If I woke up in your shoes, I would treat that student loan like it was a cancer, and I would pay it off really, really fast. I would get rid of the car and undo the mistake that I made there. Probably going to have to write a check to do that. God help you. A little stupid tax check there. And then you move on from there.

Now, you get that student loan paid off. Then you build your emergency fund of three to six months of expenses. And then you start investing 15% of your household income, which in your case will be $15,000 a year, $16,000 a year, until you get your home paid off. You're going to do all of this by the time you're 60 and and then you're probably going to have your house paid off shortly after that if you'll stay on a plan and quit losing your mind and driving the car in the ditch no pun intended so um but this is what people do and we all do it we all make mistakes you made a mistake now you've got a choice are you gonna you going to double down?

I'm going to keep that car. You keep the car. That's fine. It's your decision. You're like a grown woman and stuff. But you called me and made the mistake of asking me what I would do. And then I am duty bound to tell you again

what I would do. Good luck with it, kiddo. You call me if I can help. Open phones at 888-825-5225. Daniel is on the line in Orlando. Hi, Daniel. How are you? Hey, Dave.

I'm doing good. Thank you. Good. How can I help? Me and my wife, last month, we're paying off the house this month. So that's end of all debt. Um, I do have a, we own our own business and I'm at the end of the lease and I'm looking to purchase office space and we've been discussing, I mean, we've, we've made an offer on a property

as far as the, like a lease purchase. And they have come back with owner financing. And I was just wondering if there was other ways that we can take care of this. Yes, there are. Good. Great question. So you're 100% debt-free house and everything? As of this week.

Way to go, man. Congratulations. Feels pretty dead gum good, doesn't it? sent that free house and everything as of this week way to go man congratulations feels pretty dead gum good doesn't it so the last thing we'll do is jump back into the fire we finally got out all right now here's what i did i did this exact thing for our business many many years ago okay i didn't have the money to buy the office building that we were moving into it was worth about five5 million at the time. And I don't borrow money. You probably heard the rumor.

So I went to the guy, and he said, well, I'll owner finance it. And I said, fine, here's how I want the terms to work, and these are to your advantage. I want to pay payments for lease exactly like the payments would be with an option to purchase. And the value of the option goes down just like the principal would have gone down. If I don't purchase it, you won't have to foreclose. You still own it.

And so I have the option to buy it for five years. And during that five years, I scratched every nickel out of the corner of the couch, and I bought my first office building for $5 million. At the time I closed on it, keep in mind I did this for five years for $5 million. By the time I closed on it, it was worth $12 million. He was crying. He did not want me to close, but I had the written option. So a lease with a sliding price option to purchase is exactly the same numbers as an owner finance, but you are not in debt. You are leasing, and he doesn't have to foreclose if you screw up.

He just evicts a tenant that didn't pay their lease on time. And if you don't exercise the option, he's going to have a building that he's got a ton of equity in that he's going to be glad you didn't exercise the option. So it's good for him. It's good for you because you're tying up the property and you've got a locked-in price that you can buy it at at any time during that period of time. And now you've got your goal with no payments in the world to start scratching and

clawing come up with money by that building otherwise you finance it with a bank and um or you finance it with him god forbid you know and then something like a pandemic or something like that might happen and you have no revenue coming in and you can't um oh and then you get foreclosed on yeah see during the pandemic i was really scared like everybody else was but one thing i wasn't scared of was foreclosure because i don't have any mortgages including the building i'm broadcasting from which is kind of ridiculous so but it's just worked out i mean you keep doing this stuff 30 years it works and that's where we've been doing it because i'm like old and stuff hey man that's

how i would do it it's a good question and you've done really well congratulations i'm very proud of you this is the ramsey show We'll see you next time. in the lobby of ramsey solutions on the debt-free stage david and christy are with us hey guys how are you doing good sir welcome good to have you where do you live we live in uh corrington which is outside of knoxville yeah fun i was born in maryville oh sweet right around the corner welcome guys good to have you nice to be here all the way over here to do a debt-free scream how much did you pay off eighty five thousand dollars how long did that take uh took about 30 months wow and your range of income during that time? Christian, when we first got married, I was making $50,000, and I am up to $80,000. So together, we're making close to $100,000 a year.

All right. Very good. Good for you guys. So what kind of debt was the $85,000? Dave, there was stupid debt like credit cards. I had financed solar panels. We had done some uh renovations to the house there was a heloc there was a car and cell phones just kind of normal yes sir just

like normal people most everybody's that way right normal sucks though it does yeah so what happened 30 months ago started you on this ramsey journey uh christy and i were on our way uh to the outer banks on our honeymoon and she got to know know who Dave Ramsey is there and back. Oh, my gosh. That's not fair. Yes, I... Your honeymoon trip you put me on? Yes, sir.

Dude. I learned about you on my honeymoon, literally. Unbelievable. This guy. Yeah, seriously. So he introduced me to your beliefs and theories and philosophies on how to become debt-free, and I just jumped all in. Oh, just like that. So you waited until the honeymoon to spring this on her?

Yes, sir. You never brought it up before? No. I don't know if I admire you or i'm scared of you that's devious wow good for you guys how does it feel to be free two and a half years later oh my god it's amazing we can lay down at night not knowing we can lay down at night knowing that we don't have anything to worry about yeah if I lose a job, we've got our emergency fund. Everything's taken care of.

Wow. You guys are in great shape. Good for you. Very well done. I'm proud of you. Thank you. That's a cool thing. Very cool.

So what was the hardest part of this for you guys? We had both been through bad relationships. Christy was the first person i had combined my money with in years and that's hard beginning to trust yeah we trust each other with our lives we both had trust issues that would be normal yeah i mean you get scars from the other one and it's hard not to bring that in and make that the new way of doing things instead you forced yourself past that discomfort exactly but that was hard very hard but it was it's been well worth it yeah so any big fights because of that y'all like have a big fight i mean sure and i do no not really not really uh us putting our money together and and sharing it's it's been a

blessing more than anything. You know, the weird thing is unless somebody's hiding money in that case, you actually know more of what's going on. So it increases trust. Right. Which is the weird thing because I actually know what you're doing. You know what I'm doing because we are doing it, right? Right. And so it is an easier way to work through that, the scars of the past, by combining it. But some people, they just can't face the ghost of Christmas past, so to speak.

And you guys were brave enough to do that. Well done. Thank you. I allow him to manage all the money, pay the bills, like the electric and the water. But you know what's going on. Oh, yeah. Okay. the bills like the electric and the water but you know what's going on oh yeah okay he keeps it on his telephone so anytime you know he can bring it up and show me exactly what's been paid and what

we've got savings and what we have in checking and then i have a separate checking um that i use for groceries and for our children's things all right um i have two kids from a previous marriage, and he has a daughter in college from a previous marriage. And we sit down and budget every month, and I sit down and go over what we have, what we're going to do with it. So everybody knows what's going on? Yes, sir. That's the whole thing right there.

Right. We're completely honest with each other. That actually has the opposite effect. It increases trust, which is opposite of the reason people don't do it. So very good. Way to go, guys. Thank you. Good start for the marriage, too.

That's neat. Very, very fun. All right, what advice do you have? Somebody's listening, and they go, I just got married. I got trust issues from the former one. And I just, I don't know, man. I don't know. Can you do this if you're not 22?

And, you know, can you do this if you're a little bit older than 22 or 25 years old or whatever? What advice do you tell people the key to getting out of debt is for you guys? You've got to work together. You have to believe in each other and believe in what you're doing and know that it's for a purpose higher than just you know you're not planning for tomorrow or next week you're planning for five years down the road 10 years down the road 20 years down the road and i work with a young young man he's 26 his name's josh and i'm'm constantly, we're talking about finances. So he kind of, he listens, and I think I've probably got him going toward the Dave Ramsey track.

All right. I've got a 12-year-old and a 14-year-old, and he has a 20-year-old. And guess what they got for Christmas last year? Tell them. They got FPU. We have infected your whole family and my 11 year old at the time actually wrote a report on it and he separated all of his money into the save the give and the other spend packet yeah that's That's fun. Very good. Way to go, you guys.

Again, we're very proud of you here. Congratulations. Thank you. You're heroes. You pushed through some difficult stuff. And this stuff is this thing called transformation, changing into something you weren't before. It's a hard thing. And it's not for the weak of heart.

It requires some backbone. and you guys did it. I'm very, very proud of you. Heroes taking control of your life. Great job. We've got a copy of The Legacy Journey for you. That's the next chapter in your story to be everyday millionaires. You might already be there. Who knows?

And you knocked all this out. Very cool place to be. And a copy of the Total Money Makeover for you to give away and infect someone else's honeymoon, maybe. Yeah. It's not the first time I've heard that story, but you were a little bit brutal with that. Hey, hon, let's go to the Outer Banks and listen to this all the way over there. But it worked out. I love it.

Very cool. David and Christy, Knoxville, Tennessee, $85,000 paid off in 30 months, making $50,000 all the way up to now $100,000. Count it down. Let's hear a debt free scream three two one we're debt free this is how it is done boys and girls this is how it's done. Don't miss that. Very, very cool stuff. Oh, man. You know, there is two sides of this money equation. There's offense and defense. Offense is investing your money well.

Defense is getting out of debt. Defense is having the right insurance in place. So once you finally get stuff all lined up, then something happens. You don't have to start over. And so most Americans don't have enough car insurance as an example. You might be one of them. You get into an accident. You don't have enough insurance.

You have to pay for your own car repairs, your own medical bills. Of course, the other driver's car repairs and their medical bills and their passengers' medical bills. It can be thousands and thousands of dollars. You've got to have the right car insurance. It's one of the reasons we created the network of endorsed local providers. These are insurance brokers. They don't work for one company.

They shop among a bazillion different companies and get you the best possible deal, the best value on the coverage that you actually need, the right amount of coverage, not too much, not too little, but with somebody that actually is working for you. They're shopping for you to get the best deal. You want to learn about that? The average person doing this saves about $700, and it's free to check it out. It doesn't cost a thing to get a quote. You can't argue with free for maybe 700 i'll take free for maybe 700 text auto to 33 789 to connect with a ramsey trusted elp for car insurance text

auto to 33 789 this is the Ramsey Show. Our question of the day comes from Blinds.com. This is a wonderful American success story, this company. They have a 100% satisfaction guarantee. That means even if you mismeasure when you're ordering your window blinds, maybe you're like me, you pick the wrong color. I always do that. They'll remake your window blinds for free. You get free samples, free shipping, and with new promos all the time, you save even more.

Always use the promo code RAMSY. Our question of the day was, I was listening to the show when you talked about the types of insurance we need. I started looking on your site, and we saw a shield by the protection, by the provider's names. What does that mean? Well, that's the thing we've just instituted in the last few months. What we figured out was that when I endorse something like a SmartVestor Pro, an ELP, Zander Insurance, Churchill Mortgage, those kinds of companies, which all of those I've endorsed for decades, literally, that really the reason you would go to them is because you trusted me. And you trusted me because and you trusted them because I trusted them. And you trusted me to be trusted. Right.

So it was trusted. So we started calling it Ramsey trusted. And they put a little shield on these will not put a Ramsey Trusted Shield on someone unless we've done detailed, in-depth vetting on these guys. And they're reliable. They line up with our mission. They have to be a quality company that's doing stuff the way we do it in order for us to endorse them and put the Ramsey Trusted Shield beside them.

And so, you know, like the Good Housekeeping Seal of Approval, except this one actually means something. I'm not saying that one doesn't, but I really, if I am a customer and I'm buying something on the Good Housekeeping Seal of Approval, I have no idea what that means. I don't know what they did in order, if that window is Good Housekeeping. It might be that they put it idea what that means i don't know what they did in order if that window is good house it might be that they put it through rigorous testing i don't know i'm a customer consumer and i don't know that so i'm telling you what this is this is a seal that we it means that we've done extensive work on that company with that company and we trust them

and the rule of thumb that we use around here is, are they reliable enough? Are they competent enough? Do they line up with the advice we give here? Do they have the heart of a teacher? And are they going to take great care of you? Would I send my own best friend there? And if they would, then we'd put the seal on it. Now, I've got to be truthful with you all. I've been in radio for almost 30 years.

In the early days days we were so desperate to sell ads that i endorsed things not that were evil or bad but i just kind of cringed when i did it because i need we need the money and it wasn't a sellout but it kind of was because it was like i finally started asking myself if i if my friend went over there would i be okay with that and i'm like, ooh. And I just don't want that feeling in the back. You know how that's on the back of your tongue when you do something like that? And it's like greedy or whatever you call it.

I don't know. It was just short-sighted. And, man, I hit a point early in my career. I mean, probably 25 years ago or something like that, that I just said, you know what? I don't need money that bad. Even if I know what? I don't need money that bad. Even if I need money, I don't need it that bad. Even if we're trying to accomplish some kind of goal, I don't need money that bad. And I don't really care how much money it is.

I don't want that feeling that I would send one of you guys who I've never met there. And then if my friend called me, well, Dave, would you really go to that mattress company? And if I went, ooh, no, I'd never go over there. I just thought it was just an ad. But I put my voice on it, my reputation, my name on it. Or one of the other Ramsey personalities did. And Ramsey then stood behind that company and we're going, ooh. See, we don't do that.

We just don't do that. We just don't do that. That's what the shield means. It's trusted. It means we would send our best friend over there and we'd send anybody that works here out of our thousand team members over there. And so we feel proud to send you over there, not to see perfect people because I hadn't met any of those, except some of you that bitch all the time. But and that proves you're not perfect.

But there's no perfect people out there, and so there's no perfect companies or perfect experiences. But I am proud to endorse my friend Jeff Zander at Zander Insurance for over 20-plus years, over 25 years, I guess it is now. He's become a personal friend. All of my personal insurance is there. And if you're my best friend and you call me up offline at my house in the evening, Dave, would you really go to Jeff saying, yeah, I did.

And yeah, you should go there. It's where you're going to get the best price on your life insurance. Shut up. And they're great people to work with. So, I mean, that's what the little shield thing he means is like, would you send your friend there? Any of you got a friend that if he tells you or she tells you to go see a movie, it's an automatic, no, I'm not going to that movie because they have no taste in movies? I've got one of those friends.

His name is Tom. And if Tom says go to that movie, it's 100% guarantee I'm not going. He sent me to a movie one time called Dude, Where's My Car? This is his taste in movies, which is a classic cult kind of a movie now, I guess, about a couple of stoners who lost their car, right? But, you know, this is Tom's taste in movies. So if he sends you there, you don't trust Tom anymore for that. And that's how Ramsey Trusted works.

We want to be the opposite of Tom's movie picks. Trustworthy. Worthy of trust. Christopher is with us. Christopher is in Duluth, Minnesota. Hi, Christopher. How are you? I'm great.

Thank you for taking my call. Sure. What's up? All right. So I am a 54-year-old father of six. He is 7 to 18. We're in baby step 7, but I've got a baby step 5 question. Cool. My oldest daughter is a freshman, and she very unexpectedly was rewarded a full-ride scholarship. Wow, Good for her. Yeah, it was. And my son, my second oldest, he's already enlisted. He graduates early and goes in the military in December.

So my question is, is we have... And they're paying for it. Right, right. So we have been very blessed. We have $400,000 in our 529. We tell the kids, if you earn your first year of school with scholarships or work, we will pay $30,000 a year the next three years. We've met that goal now because of her getting that scholarship.

Do I put all that money into a money market? Do I keep it spread across the funds? The next oldest... She got her free ride for one year? No, for the whole four years. You're going to pay her $30,000 a year? We were. She paid for her first year of school.

She got that money back. Now, we were going to give her $30, 30 a year for the rest of the other three years, like to help her with tuition. She doesn't need tuition. She's got a free ride. I'm confused. Right, right. So what are you doing with the 30 a year now?

It's in that 529. I know, but what was your plan to do with it now that she got a free ride? You don't have to give her 30 a year. You're planning to give it to her anyway? No, no. It's going to go to her brothers and sisters. Ah. So that's the deal with, you know.

Okay. Okay. She doesn't get any of that. She's on her own, sort of on her own, and we'll kind of help her, but she's on her own now because she got the scholarship. Okay. And so your only question is how to distribute it, whether you move it to money market or whether you leave it invested right i would leave it invested leave it invested okay yeah because the difference is substantial even if the uh even if the investments do poorly they're still going to be four or five x what

that money market's going to be okay unless they went down and they just you know they could go down who knows you know our next child is 14 i'm just worried well if there's a downturn then we'd be below because we have four or three of the next four or one year apart yeah but before there's a down i mean it would have to be a substantial downturn to be meant to mess you up and an extended and extended and substantial like go in half and stay down five years okay which would be like there's only two times in history that's happened in the united states okay so i'm not worried about that one now i don't think this affects your plan but just for clarification for those listening like in the case of your daughter if you get the paperwork from the school showing the value of the scholarship,

you are allowed to remove that much from the 529 tax-free and turn that in on your – you have to file a form with your tax return. But you're allowed to remove that much. Say she got a $13,000 scholarship for tuition for the year. You can take 13 out with no taxes and no penalties. But you need to pair it up with the paperwork in case of an audit and make sure everything's taken care of. This is the Ramsey Show. Did you know over 18 million people listen to The Ramsey Show every week?

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