The Ramsey Show - App - We Give You the Recipe To Win, All You Have To Do Is Follow It! (Hour 1)

Episode Date: September 6, 2022

Take our Audience Survey & Enter to Win a $500 Visa Gift Card: Click here to take the survey   Dave Ramsey & Ken Coleman discuss: Planning for an upcoming baby, Things to consider when building a house, Am I being scammed, When to invest in a 401k.   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   Learn more about your ad choices. https://www.megaphone.fm/adchoices Ramsey Solutions Privacy Policy

🎵 Live from the headquarters of Ramsey Solutions, broadcasting from the, what do we call it? The Pods Moving and Storage Studios. I'm just getting used to saying this. Yeah. Yeah. And the paid over 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.

We help people build wealth, do work that they love, and create actual amazing relationships. Ken Coleman is carrying me through the opener today, and the rest of the show is my co-host. He is the Ramsey personality over all career things, including the Ken Coleman Show and the number one best-selling book, Paycheck to Purpose. We're here to help you with your life, your money, your career. The phone number, 888-825-5225 is the answer. Lane is on the line to start off this hour. Lane is in Kansas City.

Hi, Lane, how are you? Hey, Dave, Ken, thanks for taking my call. Sure, what's up? Yeah, so I just had a quick question. So I currently have $14,300 left on the car. I could get that paid off in February, but I don't know if I should pay that off first or just save up for our first child child that's going to come in april

uh when you're having a baby on the way we tell folks to push pause on their baby steps push pause on their debt snowball and pile up cash okay so you i would not pay off your car i would just pile up cash as big a pile as you can have okay and just how stack cash like you were trying to pay off the debt. I would just pile up cash, as big a pile as you can have. Okay? And just stack cash like you were trying to pay off the debt, but just put it in your own account. Never touch it for anything unless there's an emergency. And then when mom and baby come home from the hospital and everybody's healthy and everybody's safe, you push play again,

which means that day you're going to pay off your car. Okay. Okay. You won't have lost anything except a little bit of interest on your car between now and the time baby comes and right now we're focusing on more important things than car debt and that's baby okay understand that i bet you do how exciting yeah it's very exciting your first one yes all right fun All right. Fun. Good for you, man. How old are you guys?

I'm 24, and she's 26. Cool. Yeah, so you're going to have several thousand dollars towards your baby step three above your $14,000 for the car debt, because the car will evolve. Just by paying the payments, you will have reduced the principal sum, and you're going to save more. And you said February was your target date, and April's a baby,

so you would have already saved several thousand beyond. You should have $16,000, $17,000 saved. And when you pay off the car, you've got a good start towards your baby step three then. Following me? Yeah, we currently have $7,400 saved up in savings right now. Oh, so you're not really working the baby steps. I mean, we are. No, you weren't either.

Baby step one's $1,000. Everything above that goes towards the car. But now the baby's coming. It's okay. We're going to push pause anyway, and we're going to pile up the cash. Okay. All right. Thanks for the call, brother.

Open phones at 888-825-5225. So, Ken, you might get called out on this show. Even if you're a nice young guy with your first baby on the way, I might still smack you around a little bit. Yeah. If you act like you're working the baby steps and you're not. That's right. There's a reason why you've got seven of them,

and they actually go in order and they make a lot of sense. Same thing with the paycheck to purpose steps. That's right you got to get clear and you know i'm kind of working this but i'm not clear it's no you're not working it yet so true you know there's a process here that's proven and we're going to go with that process yeah you gotta you gotta walk a plan you know no matter where you are in your life maybe it's physical fitness maybe it's some health stuff relationship stuff going on when you have a gap between where you are and where you want to be, there is always going to be steps to build that bridge, if you will, and you walk across that bridge to where you want to be.

And you've got to follow it. You absolutely have to follow it. And we're hardcore about it. And the reason is it works. Ish is a wish. Every time you ish it, you slow down your progress. And you lower the probability of actually hitting it. That's right.

So let's take his scenario. Let's say baby wasn't on the way. He's new to us, whatever he is. And he's going, okay, I'm going to pay it off in February. And he's juiced that savings. Baby step one is $1,000. He's juiced it to $7,400. And what he could have done, instead of kind of holding that back,

worrying about something, to play it out the way that you've taught it for decades, then he's so much further along in paying off that car. And it's just paid off by Halloween. That's right. Then that goes towards how quickly he gets his emergency fund set. And then that goes into 15%. And so everything fast forwards when you actually walk our plan out. Yeah. So, you know, just be ready that if you say, I don't understand them, that's okay.

We're not going to pick on you for that. But, yeah, so do this stuff the way it – guys, we've had 10 million people go through Financial Peace University. This is not our first ride on this cabbage truck. So we want to help you we want you to do but but you know we the shortest right way from where you are to wealth is what we've laid out and we're going to do that with you every single time freddie is in iowa or i'm sorry louisiana hey freddie how are you very well sir thank you how are you better than i deserve what's? Sir, I'm fixing to retire. I'm seven years old. My wife is 62.

We have a home. We have a very small mortgage on it. We have five steps. It's a period in being construction. And she's laid up right now with a broke foot, and she'll be laid up until January. And every time I go up nine of them steps, like I was telling the gentleman a while ago, it's a landmine, and it's going to bite me one day.

We're wanting to build a new home on Slab, have it not necessarily handicap accessible, but more friendly toward our age. I'm wondering, the main thing I'm wondering about right now is, should we go ahead and do this in the next few months again, or should we wait a year or so? I don't want to get laid up and crippled where I can't do anything. I don't want you to either. And if I thought that was the only option, you know, we would talk about it.

But obviously it's not. I mean, you made it up and down those steps a bunch of times. You probably got a few more in you. But, yeah, let's go ahead and have a plan. I'm actually drawing a home right now. I'm thinking I'm probably going to build in the spring, and maybe if everything has calmed down a little bit but uh but the you know as you know the real estate world has been

out of control oh yeah crazy and so you don't want it you don't want to build a house in the middle of crazy and some builder act like they're doing you a favor oh yes we will consider building your home uh no you got this backward bud So I'm the one giving you money. So, you know, this, you know, kind of getting on the right side of that equation. And I don't know in your area if you're there. You could certainly interview a few builders and look at some plans and say, okay, this is what we want to do and see if you get, A, the right attitude, and, B, if they can give you reasonable pricing based on construction materials availability, supply and demand, and cost right now. Most of that has evened out after the pandemic economic suppression

when we shut down the world to flatten the curve. You all remember that? That was weird. And now we're trying to catch up on all the production that was not done in the factories, and it caused inflation. And so now that there's not as much scarcity and there's a little bit more abundance of the items, some of the prices are starting to stabilize, the components of a home. For instance, lumber prices, that kind of stuff.

So that's what we're facing right now. Check it out right now. But personally, I'm thinking it's going to be spring before it's going to get a little bit more normal. This is the Ramsey Show. ken coleman ramsey personality number one best-selling author is my co-host today if you're listening to this show there's a good chance you already know success in life doesn't just happen it takes daily goal setting as a matter of fact it takes goal setting that are broken down into daily bites we call that motivation right it's the kick in the pants to stay focused if you want to get better with your money if you want to have

a deeper spiritual life build amazing relationships in 2023 you need to be intentional with every day of your goal setting so we have created the new 2023 Ramsey Goal Planner. The Ramsey Goal Planner shows you how to set and reach your goals. And the best part is we completely redesigned it, Ken. And, wow, it's pretty cool. Dr. Jeloni, George Campbell, Rachel Cruz have written the ends of the months. It's beautimous. It's gorgeous. look at that much

thinner and a little larger format people this is what our customers were asking for we've been doing these for several years christy wright started it back when she was here and uh now it has moved on to the ramsey gold planter and it is uh actually this is kind of like my wife uses this month at a glance the cheap ones from walgreens as well and uh you can get the cheap one from Walgreens or you can get the good one from us. But in addition to that, of course, it's got a, what do you call it, a devotional each month to kick off your month with. And the first month is by Rachel from Romans 839. And then it goes through a day-by-day goal setting. This is designed exactly like you guys out there have requested.

This is like our sixth year of producing these, and every year they sell out early. They are technically not available today. We will start shipping them in October. But today they go on sale and pre-sale, and they're $49.99. So this is a nice product. This is not an El Cheapo. If you want El Cheapo, run over to Walgreens and get the month at a glance. That's the actual brand.

I'll give them an endorsement, okay? And I can give you Sharon Ramsey's endorsement on that. She has them back for 30 years or so. But she will be getting this one this year. Oh, yeah. I'm going to upgrade her. Does she know? Is this a surprise?

No, it's a secret. And she doesn't listen to me on the air, so it's still a secret. It's absolutely locked in. I can say a lot of stuff and get away with it. That's true. Except her friends will tell her if I say something bad. So I have to only say good things. Learned that about 30, let's see, I've been on the air for 30 years.

I think I learned it 29 years and 12 months ago. Just recently. Yeah. But anyway, yeah, this thing's incredible. It's beautiful. Let me feel that this this thing's incredible it's beautiful let me feel that this thing's got some hardcore oh no see you got real serious weight to it this is also what do they call it on instagram if you're like if you're one of those people they have an opening party so you can i don't know there's something like that like a what

an unboxing unboxing thank you kelly in the booth because not my uh i'm not the focus group on the unboxing bunch i'll just tell you boxes are things that are very they're in the way of the thing i'm trying to get to um and so but the rest of you enjoy the process of thinking you gave yourself a gift or something but we're going to help you with that because this has got a great box so there you go you unboxing people will like it too who knew i i did that before today's show i didn't know that it's a thing ken all right obviously i even knew sort of about it that's impressive 49.99 starts to ship out in october you can get them starting today the new ramsey gold planner ramsey solutions dot com slash planner or just jump over in the store at ramsey solutions and we'll help you get

one all kidding aside it's an incredible product and And here's the thing. We do know this. In every area of your life, people who set goals win. Our friend Zig Ziglar used to say, if you aim at nothing, you'll hit it every time. And those that don't set goals, there's a high correlation between people that set goals, break them down into daily habits, and the ones that actually accomplish something, whether they're looking for a new job and career, whether they're trying to get out of debt, whatever it is. Yeah. I mean, listen, if you want to grow in any of your life you're going to have to come up with a destination and then what does it take to get there those steps to walk up that mountain

and this is going to help you it's a wonderful product we call the desired future you know what has to be true that's not true today for you to be that weight for you to have that spiritual walk for you to be in that kind of condition and so on that's the process so uh our question today comes from blinds.com find out for yourself why blinds.com is the number one online retailer of custom window coverings free samples free shipping and the new promos that run every month you'll save even more always use the magic word the promo code ramsey at blinds.com. Today's question comes from Robert in Kansas. I'm an appraiser for a civil engineering firm that takes state contracts for road projects. A competing firm asked me to work as an independent contractor on projects my employer is not working on.

I currently earn $5,000 a month, and this would bring in an extra $2,000 to $3,000 a month. I have not signed a non-compete and have not been told I can't moonlight. The chances of my current workplace finding out about this are low. Would you recommend taking on the extra work while I tackle baby step two? Based on what I see here, I absolutely recommend that you do it. But I wouldn't have this mindset of where I'm trying to keep it a secret. You know, if they find out about it, you know, you just need to be fully prepared to have a conversation with your leader. Every leader is different on these type of things.

But based on the information I have here in the question, it doesn't look like this is looking like a gray area. You never want to walk in a gray area with your leader or with the company that you work for. So if it's black and white and it's straightforward, non-compete it's not even uh anything that looks any way uh fishy and i gotta use common sense on this um then i'm fine with you going to make the extra money but that's why you're doing it and the fact that you're asking about it at all makes me wonder if you kind of have some kind of a tetch some kind of little check and i think there might be a little fear here there might be some reason you need to tell you need to tell your employer if that's if that's the case but if there's i don't know what you're afraid of because you're not you're not stealing their customers you're not competing in any way

you're not prohibited from doing outside work so there shouldn't be an issue that's right um you know for instance what comes to mind for me is we've got uh like 300 people that work here that are developers software engineers right and uh if they're not we don't have that requirement that they can't work outside of here sometimes some of them take on contract stuff on the side i'm sure uh and we don't we don't require them to disclose that uh we don't tell them they can't do that uh we would frown on it and it is in their employment contract that uh our employment agreement that they're not doing something in comp with our competitor but uh uh

but other than that you know if they're doing you know taking on a project for whoever that hasn't anything to do the spaces we're in then i as their employer would have zero issue with it that's correct and so if i had an issue with it it would be in my agreement that's correct that's right so they really wouldn't your employer really shouldn't have any right because they've never addressed it but the only thing that bothers me is you're even asking the question which makes me think something is weird but it's okay it's okay but yeah nothing you talk i'm with you what you put down in the email dude yeah, I would go do it. Open phones at 888-825-5225. Mitch is in Allentown. Hi, Mitch.

Welcome to the Ramsey Show. Hi, Dave. Hi, Ken. Thank you for taking my call. Sure. What's up? I have a question about the SSI survivor benefits, Social Security survivor benefits.

Well, I lost my wife six years ago from cancer. And prior to her passing, my children, I have two children, they started getting to receive these checks. And I didn't know anything about what I'm supposed to do with this. So I've been just storing that money away and saving it for them. So when they get older, they can use it for college, the cash flow college and whatnot. But now I received a letter in the mail because my son is going to be a senior and saying that any unused or unsaved money or anything that you've collected interest on, they want it returned. I'm like shocked.

I'm confused. That doesn't exist. That sounds like a scam. I mean, it's detailed in the letter about what it is, but I'm just looking at the part of it. If you save any money from your children, you return any unused money. No, that's not a thing. Okay.

SSI does not ask for a return of minor benefits if the parents saved it for the use of the minor it's just not they don't do that okay because i would either you're misunderstanding the letter or the letter you got's not really from them and it's a scam be careful be careful yeah it's just not a thing you did nothing wrong legally and certainly not morally um i probably would have done something a little different but that's not the end of the world. You still are a great dad. You took care of business.

When in doubt, I saved the money. That's never a bad default button. Right, right. That was my thought and option was to save until they really needed it for something, and I just did the beans and rice until we can, you know. So, I mean, if it comes up, what I would just say, if they actually did try to enforce that i would just say i spent every dime of it on their care and feeding the money i put

in savings was mine okay because it's just got a different pocket in it it was all into your account first and then you moved it so the exact same i just choose to same save the same amount of my money and you don't get access to my money. I spent this on their care and feeding, which is what it was for, so shut up. But I don't think it's going to come up. That's the point. It doesn't really matter. This is the Ramsey personality number one best-selling author, talking with you about your career, your extra job, your larger shovel, is my co-host today. The phone number is 888-825-5225.

In the lobby of Ramsey Solutions on the debt-free stage, David and Laura are here. Hey, guys, how are you? Hey, David. Welcome, welcome. Good to have you. Where do you guys live? We are in Southern Pines, North Carolina. Okay, great. Good to have you guys. And how much debt have you paid off? $253,000. Love it. And how long did this take? 38 months.

All right. And your range of income during that time? It was about $130,000 to $210,000. Okay, great. What do you all do for a living? I'm an army dentist. And I work as a digital operations manager for a healthcare system. Great. Very cool. Well, great income, $253,000 over basically three years. Excellent. What kind of debt was that? It was basically all student loans. We had a little bit on a car, but that was a significant amount of student loans. About $237,000 on student loans. Serious? Oh, yeah.

You jumped on this. Okay, so what happened three years ago, a little over three years ago, that got you started on this whole Ramsey thing? Yeah, so really coming towards the end of dental school, I started obviously freaking out about our debt. We both had out-of-state tuition for undergrad, and then I had a portion of dental school with the military. I didn't pick up for scholarship. So, um, I started freaking out the military pickup, uh, my, my

following three years. So I just paid the first year dental school. Okay. Um, so yeah, I started freaking out, uh, started trolling the internet, figuring out how we're going to get through this mountain of debt. Um, came across Ramsey Network, started binge watching the shows, and felt committed instantly. For me, it made sense. It was a foolproof plan. So the next step was basically going to Laura and trying to figure out how I was going to get her on board.

So convincing her how to buy Financial Peace University and then sit down and watch the videos, the DVDs. How did he do that? Well, I mean, buying them was easy i was watching there's a lot of dvds and i was honestly not freaked out by our debt the way dave was like it felt very normal all of our friends had not as much but they all had student debt and so i felt like oh we don't have credit cards like we're good um but then we had our daughter and she had a lot of um unforeseen medical stuff.

And she spent three months in the NICU and was diagnosed with a genetic syndrome that just kind of changed everything. And for me, I think I needed like a bigger why. Like the debt itself didn't scare me the way it did for Dave. I was like, oh, we can afford it. But just kind of having that bigger purpose is it that kind of got me a word. He didn't. Honestly, the more he was like coming at me, I was like, no, no, no. I don't like being told what to do sometimes.

It's hard. Yeah, coming at them usually ain't the way. That doesn't work. That's good. Okay, so you finally sit down now that you've got this huge why. And you start watching the DVDs. What clicked? What made you think, Laura, that this was going to work?

Well, what really happened is the first year of those three years we were davish we were kind of doing it my way where i was like oh we'll budget a little bit but i i would just wasn't committed and then um we had watched them and then we kind of watched them again especially like the the first couple um and then it just started working like when we followed your plans that's when we, like we paid off 40 the first year. So the second two years, we paid off over $200,000. And I was like, okay,

once it starts working, you can't deny it. You're like, all right. Game on. Yeah. I've got a question for both of you. David, how did you handle the relationship part

when you were Dave-ish? And then Lauren, I want your perspective because you weren't completely on board from the beginning. Then you were kind of Dave-ish. Seems like you kind of just were patient or what was that relationship tension like until we got all in, all on the same page? I mean, I think it was just that it was relationship tension, right? I mean, I took over the budgeting. I was using an app and using a sales spreadsheet and basically just making the money disappear.

Each paycheck, I was basically just dumping it at student loans. I mean, like I said, those second two years, over $8,000 a month was going out the door to Sallie Mae. So I guess I was just kind of plowing ahead, and then I think the momentum kind of caught Laura when I was sending these numbers of snapshots of the debt going down. I think that's when it really started to be like, okay, it's real for her. He was very patient. He was very patient with me.

Okay. Very, very cool. Well done. Well done, you guys. Very well done. All right. Now, when people hear you paid off this kind of debt, $253, months um that's that's herculean i mean you guys are heroes when and they say how did you do that what do you tell them the key is i for me it personally i just don't think there's like a really like a secret sauce to me like you guys basically have like the perfect cookie recipe and it's just you just have to follow the recipe i think that's easier said than done but for someone like myself if you give me the ingredients I can just follow the recipe so I guess Laura could maybe answer that question better yeah I mean Dave doesn't buy anyways like he's not a spender spending is that's not a thing that's fun to him so for him to like commit to the

process I don't think it was outside of his comfort zone anyways and so if you are someone like me who gets joy out of shopping and going on trips and doing all these things, like you have to almost like tune out the things around you and also retrain your brain. Like just because you have a certain income doesn't mean you like deserve nice things yet. Like you might need to suffer a little bit to get there, but if you do suffer, I mean, once we're on the other side of it, it's, it's totally worth it. And in retrospect, you're like, dang, that was really fast. Like it doesn't feel that long now that we're done. If you, if you do the rip the bandaid off, if you don't do the ish. Yeah. The ish we'd

still be paying. So yeah. It'd be another five years. Yeah. And that was the best thing is like when we did it, you know, during the pandemic, we fortunately did it at a good time because we were locked inside. We had a daughter that was kind of immunocompromised, so we stayed inside and we just basically hammered out debt and student loans being on pause. We were just making insane principal payments. So how's baby doing? She's great. She's wonderful.

So she's with us. Her name is what? Addison. Addison. Yes. Little Addison. Okay. You may not get her back from Janelle.

It looks like Janelle's found her a buddy over there. She might be sleeping for the Yes. Little Addison. Okay. You may not get her back from Janelle, it looks like. Looks like Janelle's found her a buddy over there. She might be sleeping for the screen. We'll see. That's all right. We can have it. We can have it. Good stuff, you guys.

Very, very well done. Very well done. Very proud of you. We've got a copy of Baby Steps Millionaires for you. Next chapter in your story for sure. How ordinary people build extraordinary wealth. How you can do it. If you can pay off $250,000 in 38 38 months i think you're going to be millionaires and also a copy of

financial peace university the new videos and you can give this away it's a one-year membership to that you can give it away or you can go through it again yourself of course and we've also got the total money makeover for you to give away to someone. No, Addison's with us. She's wide awake and ready to go. Ready for the debt-free scream. Good stuff. All right, David and Laura and Addison from North Carolina, $253,000 paid off in 38 months, making $130,000 to $210,000.

Count it down. Let's hear a debt-free scream. Three, two, one. We're debt-free! Yeah! scream three two one we're dead free yeah well done you guys well done well that's that thing you and i were talking about back at the beginning of the hour the uh the this idea of okay here's a proven plan submit to it and i kind of get it because i'm always the rebel i always question everything on the one hand but on the other hand i don't pay a personal trainer 150 bucks or whatever and uh then go you know i don't like that part of your advice and i got a keg and he's got an eight pack you know, I don't like that part of your advice. And I got a keg and he's got an eight pack, you know? And so I don't, you know, I can't really argue with his results versus my results.

So I've got to say, if I'm going to do this or, you know, if I've got a PGA golf instructor who can play 20 strokes better than me, I'm going to go, you know, I think I like my stroke better. That's right. I really, I don't, you know, I appreciate like my stroke that's right i really i don't you know i appreciate your input but i'm sort of gonna swing like that uh i'm really not you know that part's not comfortable for me oh well you know and so it's just this thing of submitting to someone that you're paying who has proven that they're performing at a level you're not yeah

it's right it just it just removes all frustration. This is a hard journey. Let's make no mistake about this. If you're new to the program, walking the baby steps, while the plan is simple, it's hard enough as it is. I can think back, Dave, the early days when my boys were into Legos, trying to build those elaborate Legos. You know what? Follow the instructions or else you're in for a world of frustration.

Just follow the instructions. I don't even want to talk about little Bolt A4 and Bolt A6 to put some of this stupid butt stuff together. The bikes and all the toys. Follow the instructions. Just shoot me. It works. You end up doing it three times. This is the Ramsey Show. សូវាប់ពីបានប់ពីបានប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពី Ken Coleman Ramsey personality is my co-host today.

Open phones at 888-825-5225. Matthew's in Washington, D.C. Hi, Matthew. How are you? I'm good, Dave. How are you? Better than I deserve, sir. How can we help? Hi. So I just had, I guess, two questions about retirement investing. I don't know much about investing. I recently started a new job and

trying to set all of that up. So I've heard that you should consider your current salary or tax bracket now versus what you expect to be in retirement and then base choices off of that. But I guess my specific questions are, one, what is your advice on 401k versus roth or versus having some combination and two what are your thoughts on a good investment option or options once i choose the type of account um cool a little bit of backstory about me i'm i'm doing i currently set it up just out of just blind guessing i'm currently doing six% in traditional and 3% in the Roth. I make about 120. So yeah. Okay. Well, the first thing we would tell folks to do, Matthew, is to make sure you're out of debt and have an emergency fund in place before you start investing.

Are you out of debt? Okay. I have about 32 in student loans. Okay. I would temporarily stop your 401K until you get that paid off. And I'll pay that off with great intensity. You need to do that very, very fast because I don't want you missing this 401K for very long. Very quickly. Beans and rice, rice and beans, no life until you get this paid off. Really fast. Okay. Like your hair's on fire.

Okay. Then once that's done, I want you to have an emergency fund of three to six months of expenses. In your case, that's going to be like $20,000. This is a fund you don't touch for anything except for big-time emergencies. This is not a, I decided I want to go to the Bahamas for the weekend fund. This is an emergency. That's not an emergency I want to go to the Bahamas for the weekend fund. This is an emergency. That's not an emergency, by the way.

An emergency is a negative thing. It's an unexpected event, okay? So then once you've got that, then we suggest you put in 15% of your household income into retirement. And that's what we call baby step four. The first three are getting a thousand dollars and getting out of debt and having an emergency fund is one two and three then baby step four is 15 of your income into retirement that is where we come to answering your original

question okay but that's going to be more than you're putting in now by the way so here's the way the math will work out for you how old are you 27 okay a hundred percent of the time here's how the math will work out best for you regardless of tax brackets and there's a whole bunch of different reasons because a lot of these goobs that write these articles do not consider how people actually live when they get to retirement and we do because we work with people that are in retirement that have a million dollars in their 401k we work with them all the time so we actually see what they do here's what they do they don't use any of it the income off of it is what they live off of if you got a million dollars they produce a hundred thousand dollars a year okay right and so you know the in reality if you

follow this stuff you don't end up actually trying to figure, oh, Roth, oh, traditional, oh, back and forth. Here's how it works 100% of the time. Number one, get all the match you can get. Because 100% return on your money, which is a match, you can't screw that up with taxes or a bad investment. Okay? So always take 100% return on your money before you start a hundred percent

so get all the match you can get then the second thing you do is all the roth you can get because roth is tax free at 27 years old when you get to retirement 97 of the money that is in your retirement plan will be money that is growth you will only have put in about three to four percent and the rest of it will be growth the growth is either taxable or it's not taxable it's either roth or it's traditional okay and so you want it to be roth if you got a million dollars taxes is 250 000 no taxes saves No taxes, saves you $250,000. Pretty simple equation. I like that.

Okay, so Roth. Everything Roth until you run out and you can't do any more. Then, if you still hadn't gotten to 15% and the only other option available to you, which is not true in your case, is non-Roth or traditional, then I would do it. I would do some traditional. So in your case, is non-Roth or traditional, then I would do it. I would do some traditional.

So in your case, you're going to take all the match, you're going to switch your 401K to all Roth, and then you're going to do an individual Roth as well to get you to 15% of your income because you're probably, you might get there all at work, I don't know. It's going to be borderline, though. But, yeah, if you can get it all in the 401K, that's just fine, too. Then the last thing you ask about is what to put the money in here's what mine is in here's

what ken colman's is in sitting next to me and here's what um we've recommended for 30 years and it continues to work i spread my mutual fund investing in my retirement across four types evenly, 25% each. Ready? Growth, growth and income, aggressive growth, and international. And I look for the fund in the selection that I have in your 401k that has the longest, best track record in each of those categories. Warning ahead of time, the underperforming category of the four is the international. It's not done as well.

Okay. But I still want some overseas. I don't want 100% bet on the American economy. I'm trying to diversify across types of funds and types of stocks and over the long haul that'll play out every single time i got a letter on my desk it came in this morning from a guy who started 19 years ago he's got three million dollars and all he's done is those four funds starting from nothing all he's done is those four funds and the weird thing was the letter is now he's spooked and he's wondering if he should keep doing that's just hilarious but yeah no i'm 62 i got millions of

dollars in my retirement and it is all in those four funds my i don't ask people i don't tell people do stuff different than i do it so matthew you're a new listener we're honored to have you hang on we're going to give you a copy of total money makeover and um send it to you and it's going to give you the details on the baby steps and the details on what we just talked about i want to encourage you matthew really quickly because you heard what dave said you got this high right now you're on the air you're going to get off the phone and when dave said to pause 401k you said yes you nodded your head we could feel it but you're going to probably have some friends and family members try to talk you out of that to do both at the same time and the reason that dave and we at ramsay solution say pause is we want you to get all that momentum of having one singular goal and

that is to get rid of that debt then you're going to catch up you're not going to fall behind at all but i just wanted to warn him because you know you hear that it's like going to a conference and a speaker gets you all fired up and then you go back to the real world and other people who don't prescribe to this kind of thinking and living or people who don't understand why we teach what we teach will tend to be naysayers. And you've got to guard yourself. Blinders on here. Blinders on.

Real life kicks in. I mean, you come home from the marriage conference and he leaves his underwear on the floor. I mean, it's just real life kicks in, right? I mean, that's just how it works. And so that's a good warning. And here's the other thing, Matthew. One of the things we have around here is if your broke friends are making fun of your financial plan, it means you're right on track.

So you just, you know, if broke people are arguing with you, then you're doing the right thing. So your most powerful wealth building tool is your income. And as long as Sally Mae has her own spare bedroom at your house, as long as Navient lives in the basement, you got a problem. They're sucking your paycheck away. And so you have to smack them in the nose and get rid of them as fast as you can. It's vital that you get control of your most powerful wealth-building tool because saving 15% of $120,000 is no picnic,

but it can be done if you don't have any payments. Yeah, and so when you prescribe rice and beans, beans and rice, that is a struggle, but it is designed to streamline you getting out of this process, and now it's all just compound interest and investing and doing those things you talked about. And so's that's the thing you got to understand uh there's a reason why you say you have no life it's to get done as fast as possible get through the storm as quickly as possible you know what you can do if you got three or four million dollars and no debt a lot more than you can do when you're broke you know i mean you got these choices you got options in and that's

the idea that's what we're wanting to take you to. We want you to be a Baby Steps millionaire. And that's the next step after you get through this stuff. So it is hard. It is living like no one else so that later you can live and give like no one else. No discipline seems pleasant at the time, but it yields a harvest of righteousness. That one's the Bible. That wasn't me. This is The Ramsey show.

Dave here. We just launched a brand new audience survey for The Ramsey Show, and we'd love your feedback. You could be entered to win a $500 Visa gift card. No purchase necessary. Take the survey at ramsesolutions.com slash survey. We'll see you next time.