The Ramsey Show - App - What Do I Do With a $100,000 Commission Check? (Hour 1)

Episode Date: January 16, 2020

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Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studios, it's the Dave 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 am Dave Ramsey, your host. Thank you for joining us. Open phones at 888-825-5225. 888-825-5225. 888-825-5225. Grace is with us in Annapolis, Maryland.

Hi, Grace. How are you? Hi, Dave. Thank you so much for taking my call. I'm doing well. Great. How can I help? Well, I'm a 45-year-old self-employed graphic designer.

And my husband and I are out of debt except for our house, and we have an emergency fund, and we're just trying to work our way through all the insurances that we need, so we have life insurance and all that stuff, and I'm applying for disability insurance policy, and the company that's offering me a policy wants to permanently exclude my hands, which I clearly use my hands a lot for everything that I do which is related to graphic design. So I'm wondering, I know you recommend disability insurance,

but is there ever a time when it wouldn't be worth it, like in this case? Well, it could be, yeah. Most of the policies now are what are called own-oc policies, meaning if you can't do your own occupation that you are disabled. But they don't pay, you know, until 65. They just pay five years or ten years or two years or whatever. This one would pay until I was 65. Okay.

And they're offering me for total disability, they're offering me $3,250 a month and for partial $1,625 a month. But I would have to pay $2,177 a year. And I'm just trying to figure out, is it gambling? That's steep. All insurance is kind of gambling all insurance is you're transferring the risk of something happening and you're gambling your house is going to buy down and burn down when you have homeowner's insurance that's what you're doing

that's true too but so yeah so are you dealing with an insurance broker yes this shop several different places and this is the best thing they can find for you. Right. This one was the lowest one. They put me in class 4A, and so that was good. But then they said, you know, based on, I had been having some nerve pains in my fingers, and my doctor, without even running any tests, she was just like, oh, it's probably arthritis because you're 45, and that happens when you get older. Oh, so that showed up on your medical then.

And which is why they want to exclude my hands. Of course they want to exclude your hands. You've already got problems with them. That makes a difference. That's a big, yeah, that's a big, it wasn't so random after all. No, no, I didn't think it was random. I didn't think it was random, but it's just like I'm not, you know, I run marathons, I'm fine, I'm fit, but, you know.

But you might not be able to be a graphic artist, and that would make you declared disabled, and you'd collect from them. So, yeah, they're wanting to exclude that. That would be normal given that they found this on a medical transcript. So, yeah, that would be normal. Now, the only other way you could go, I'm not sure it's worth it. It sounds like it's awfully expensive, and, you know, if you became disabled, you're married, your husband has an income, you would be supported that way, I assume, right?

Yes. Okay. So I'd like for you to have disability insurance. This is awfully expensive and for no more coverage than you're getting. And given this exclusion, yeah, I probably would walk from it. Now, maybe a way to beat it is, are you a member of any kind of professional association? No, but I could be. The Graphic Artists of America Association or whatever you call it.

They have a guild. They have a guild. I'm not actively a member right now. Depending on how expensive it is to be an active member of the guild, they very well may offer a group policy through that that is much cheaper and might not even look at the medical. Oh, that would be great. So like if you're a home builder and you join the National Home Builders Association, you probably can get disability through there a lot cheaper than you could if you just went to your insurance broker so

that's a one way to another way to to beat this um but yeah i'm with you i think with you know given that you have this medical transcript and it says i have problems with your hands so they say we're going to exclude that and yet you every day use your hands to uh do graphics on the computer uh and so you know you're not really getting much coverage and you're paying a lot for it so i'm probably with you i probably wouldn't buy thanks for the call john is in detroit michigan hi john how are you mr ramsey i'm great how are you better than i deserve how can i help well it's an honor to talk to you. You too. I just received a large commission check, and I wanted to kind of see what to do with it. Congratulations. How much is it?

Thank you. It's in the six-figure range. What's that mean? You made over $100,000 in one check? I did, yes, a real estate agent. And so I purchased a nice building and got a nice commission out of it. Very nice. Good for you. Congratulations. Yes. Okay. Thank you. I use any money that comes into my hands on the Baby Steps until I am at Baby Step 7, at which point all I have left to do is build wealth and give, right? And that is baby step seven. So are you debt free? We have a small credit card loan or a credit card payment of like $7,000. We have a couple of leases that I wanted to ask you about if I should turn in early and

purchase a used vehicle or... What's the buyout on the leases? We have three leases. Two of them are worth less than $1,000 for both of them, and then the other one is around the $4,000 range. No, I'm talking about to buy the car. Oh. The early buyout on the lease and you buy the car. I don't really want to buy them. I'd rather purchase a used truck. Well, use this money to

dump these leases and get into the cars in cash that you want to own. Okay. Okay. And use the money to pay off the credit card debt. And is there any other debt other than your home? No, that would be it. Okay. So we got the vehicles. We're completely clean now. We have zero debt except your house. Now we put an emergency fund in place of three to six months of household expenses yeah and you're in a high commission or you're in a commission situation which is highly volatile and so what that means is you're going to move to the six month side of that equation okay so you want six months of expenses set aside and once you've got that and you're completely debt free, then we'll make sure you're putting 15% of your income

into retirement. Do you have children? Yes, we have two children. You got college done? We're working towards that. So we've been, I just started listening to you maybe six months ago and we were doing things a little backwards. Good. We've been putting money towards the kids' education for two years, but we weren't debt-free. Good. Okay, so let's clear up the debt. And I think you're going to have enough to finish the emergency fund, get your cars in place, and still chunk some on the kids' college, right?

Yeah, I agree. So we're really dealing with baby steps two, three, four, five. You may have enough to throw with some at the house, but I think you're going to use up almost all of it by the time you get through five. Yeah, that's the plan. I'd love to put a little bit towards the house and try and start paying that off. Yeah, but let's get the kids' college wrapped up, and let's be debt-free, have an emergency fund in place, make sure you're putting 15% of your income aside for retirement.

Once you're doing all those things, then baby step six is pay off the house. So hold on. I'm going to send you a copy of the book, The Total Money Makeover, which walks you through the exact steps, exactly why to do them, exactly how to do them, and all the little nuances and questions that people have. It's like the FAQ of the baby steps. That's what The Total Money Makeover is. Baby steps on steroids. This is the Dave Ramsey Show. let's talk about low interest rates baby i know right now that churchill mortgage can get qualified buyers into a 15-year conventional loan for well under 4% with no discount points or no hidden fees. Listen, if you're even thinking about buying a home or

refinancing, do it right now. These rates are incredibly low. Here's what I'd like you to do. Take 10 minutes and call Churchill Mortgage and see what you can qualify for. So even if you have to get creative and buy something further out of the city to get something you can qualify for. So even if you have to get creative and buy something further out of the city to get something you can afford, now's the time to make the move. That's why I'm sending you to Churchill Mortgage. I trust them to look out for you and your budget. Don't miss this opportunity. You can secure these low rates now for up to 90 days through Churchill Mortgage. Go to churchillmortgage.com or call 888-LOAN-200. That's churchillmortgage.com.

NMLSconsumeraccess.org. Equal housing lender. 1749 Mallory Lane, Suite 100. Brentwood, Tennessee 37027. Thanks for joining us, America. Our question of the day comes from Blinds.com. They have a 100% satisfaction guarantee, which means even if you mismeasure, if you screw up your own order, they guarantee that. Now, who does that? Blinds.com does.

Site-wide savings right now, you can get your window blinds at 5% off, an additional 5% off, plus the sale that's going on. But you always use the slash Ramsey, use the Ramsey promo code. Christy's in Kentucky. My husband is the beneficiary of an inherited IRA. He's currently invested in an annuity, drawing 1%. Well, that sucks. We're discussing the possibility of cashing it out.

Yay. And paying off debt. Yay. If we cash it out after taxes, there will be enough to pay off all our debt except our home. This is not our retirement. What do you recommend? Oh, I would definitely cash that out. Number one, it sucks.

You have a horrible fixed annuity there. Good God, 1%. Somebody ripped your parents off, man. That's something else. What a horrible job. Anyway, yeah, and so, yeah, you're going to pay income tax on the entire amount. It is a taxable event. There is no penalties on this. And, yes, I do not recommend you cash out retirement, your retirement, to pay off debt and pay penalties and taxes.

But I do recommend in almost every case you cash out enough of an inherited IRA to become debt-free. Athena is in Chicago. Hey, Athena, welcome to the Dave Ramsey Show. Hi, thank you so much for taking my call. Sure, what's up? So I'm at a crossroads right now in my life. I actually just left my husband about a month ago. It was not a healthy relationship, and I kind of uprooted my life where I was living and moved back in with my parents now. They've been really supportive. And I really want to kind of restart my life.

I have kind of like career goals that have nothing to do with what I've been doing in the past. And I wanted to ask your advice on what's the best way for me to get to my career goals, given my situation right now that I'm living with my parents and I don't have any debt and I do have some savings. I have my own car, but I don't have a job right now. And I, yeah, I'm just wondering what would be the best way to get to a vision that isn't really, like, has no roots right now. Wow. How old are you? I'm almost 30. I'm 29. How long were you married? Less than a year.

Oh, wow. Must have been bad. It was an abusive relationship, so it was good that I got out of it. Yeah. Yeah, you don't want to be in an abusive situation for sure. Yeah. And so were you working in a position before you said? What were you doing before? Well, I've been doing a lot of things. I have a, I guess you could say, a very prosperous degree. I'm really good at like analytics, working in Excel and I did all kinds of

different work and digital marketing and academia so I know I can go and make a lot of money so you have a degree in what now in applied mathematics and economics okay and you've used that in data management and data mining and so forth and you used to make how much? I've made anywhere between, using that degree, anywhere between about $40,000 to $70,000 a year. That sounds reasonable. Okay, and now that you've got some experience and you're in the Chicago market, you could do that again, but it's not what you want to do.

What is it you want to do? I want to, I have a dream. I mean, I love to write. So, but what I really am passionate about, I really want to help people. I'm really interested in like psychology and even something either going back and actually becoming like a licensed psychotherapist or just becoming a personal coach and being able to help people in other ways and maybe writing. So yeah, it's not really laid out exactly how, but I do just want to help people by like communicating with them and helping them with their problems. Probably got a lot to do with what you've been through, huh?

Yeah, it actually does. makes sense okay um well how long ago did you move in with your mom and dad it's been about a month um yeah i have i have a 30 year old daughter okay and so if i were talking to her with the limited information I've gotten in two minutes from you, so in other words, I don't know you extremely well, but I'm hearing several key things going on. You've been through a really traumatic, wounding, hurtful experience and process. And it's going to take you a little time to heal from that. So I would personally encourage you not to make a major career or educational path decision right now while this is all raw. I would give yourself about a year to heal.

And during that year, let's poke around on, let's go ahead and get back in the job market and get your good position, making $60,000 or $70,000 a year. I'm not saying do that the rest of your life. I'm saying give your emotions and your spirit time to recover. You'll make a better decision because, you know, things are pretty raw around you right now. Or you're a psychopath, one of the two. If you don't have some weird moments in every day right now with what you're a psychopath, one of the two. If you don't have some weird moments in every day right now with what you've been through, then you've got issues.

You're not a human, okay? And so you're not, you know, so give yourself a little time. And during that year, you know, join a nonprofit and volunteer coaching young women. Go by the domestic violence shelter and offer to volunteer and coach and sit and talk. Write a blog. Use your writing skills on some of your experiences and your thoughts as you spend this year healing. And so exercise some of the muscles in the area that you think you want to move into. That will keep you energized, moving in the right direction. And with the information you gather by exercising those muscles, the experiences you have during that year, with that, with the healing,

and with some money that you'll pile up during this year, you can make some really good quality decisions about this time next year about what you want to do. But there is nothing on fire here that says you have to start school and go get your PhD in psychiatry today. As a matter of fact, I think that'd be a mistake today to make a decision that's that big and that heavily invested based on the fact that you've got a heart for hurting people because you've been through hell. And I think it's wonderful you got a heart for hurting people. Larry Crabb says the best of us that are healers, including me, are wounded. He wrote a book called Wounded Healers. And those of us that walk with a limp because we've had something happen to us

or brought it on ourselves, and as in my case, going broke in my 20s, having to start over, those of us that walk with a limp, we are better healers because we understand when somebody's hurting. I understand people when they're hurting and scared financially, like people that have never been there don't. And you can intellectually grasp it. But when you've been where you've been, you see things differently. And I've never been where you've been. You've never been where I've been. But we see things through different eyes after that. So I think God will use this hard time in your life and use you

to be a healer in the future, which is what your desire is. But let's give it a little time to decide exactly how tactically how that's going to manifest itself and go make 80 grand next year and bank all of it and get yourself out on your own and be a self-sufficient, confident, competent young woman that regains her confidence after an abusive thing. That's an important step. And, you know, that's what I would tell my own 30-year-old daughter is let's decide today not to decide,

but to begin to take little baby steps in the right direction, exercise some of those muscles. And I think there's a lot of wisdom in that. You're going to do what you're going to do. But that's what I would do if I woke up in your shoes. Or if I heard this from my own daughter, that's what I would tell her. This is the Dave Ramsey Show. Thank you. Business leaders, right now you have the opportunity to take your business to the next level this new year. You can start by hiring the right people to help your business grow. At Ramsey Solutions, we post on LinkedIn Jobs because they are the best at matching the right person with the right job. LinkedIn Jobs screens candidates with the skills you're looking for so you can hire smart and fast. The thing I love about LinkedIn is they look

beyond just the work skills and put your job post in front of qualified candidates who match your business requirements perfectly. That's how LinkedIn makes sure your job post is seen by the people you want to hire. People with the skills, qualifications, and other interests that will help your business grow. It's no wonder a hire is made every eight seconds on LinkedIn. So this year, set your business up to succeed. Get started today and get $50 off your first job post. Visit linkedin.com slash Ramsey. That's linkedin.com slash Ramsey. Terms and conditions apply. In the lobby of Ramsey Solutions, Mark and Jennifer are with us. Hey, guys, how are you?

We're doing great. How are you? Welcome, welcome. Where are you guys from? Cochran, Georgia. All right, cool. What's that near? Close to Warner Robins.

Okay. Right in the middle of the state.cha okay cool welcome to nashville i'm here to do your debt free scream yes good t-shirts let me see be weird be uh debt free hashtag and live like no one else right all right very good so how much have you guys paid off we89,000. Good for you. And how long did that take? 32 months. Okay. And your range of income during that time? We started off at $80,000 and now we're at $115,000. Okay. Good. Very good. What do you guys do for a living? I'm a government employee. I work for the Air Force as a supply chain management. Gotcha. And I'm a billing specialist over nursing homes. Okay. Wonderful.

Good for you guys. So what kind of debt was this? $89,000. We had two car loans, credit cards, personal loans, medical bills. Yep. You guys were normal. You were normal. Even normal.

Yeah, coming from debt everywhere. How long have you been married? Six years. Six years. Very cool. So what happened two and a half years ago, 32 months ago, that changed the direction? Our story actually kind of started a little bit before that, Dave. In January of 2015, our daughter was born as our first child.

And I've heard you say this a million times, that having a child would make you start acting like adults. And that just happened to us. We started talking to each other, and what kind of dreams do we have for Hannah, our daughter? And one of the dreams was we wanted to pay for her college. And we started looking at our finances and seeing what we could do. And lo and behold, you know, when you got payments coming out years, you don't have any money to save for college. Right. And so we just started before we even started on your plan. We were very unorganized.

We had she had a checking account. I had a checking account. We hadn't combined our incomes or anything. And so we decided to combine our incomes, get a checking account we hadn't combined our incomes or anything and uh so we decided to to combine our incomes get one checking account and uh i started looking online just you know how to get out of debt and and save money and and you you came you know number one on the list and uh we uh i looked online i found a class financial peace university i. I signed us up for that, and I talked to Jennifer. I was like, Jennifer, we need to do something different because what we were doing wasn't working.

So Hannah Grace was the wake-up call. Hannah Grace was the wake-up call. So, Jennifer, when he comes in and goes, I found this class. I signed us up. We're going. What did you say? I thought he was crazy. Yeah.

I went ready for it. Yeah. crazy yeah i went ready for it yeah yeah but uh it was just it was just eye-waking uh experience to go through financial peace university even before that we uh we decided to get on the same page and uh one of the first things we did we sold my truck and uh let me tell you about this truck dave this was our third time paying this truck off. We were just in a habit of taking out title loans and any kind of thing we wanted to do, and we were on our third time paying for this thing. And so we decided to sell it.

We had some good equity in it, so we had cash to pay for a vehicle. We went ahead and funded the Babestep 1. And then when we started Financial Peace University week 1, that just added fuel to the fire. And we just started running and sold everything we could. Sold my car. Sold your car, too. Sold my car. Both of them.

About a year later, we decided it wasn't going fast enough, so we got more intense. And we sold her car. Unfortunately, we were upside down, and we had to borrow a little bit to cover it and then just get about a $2,000 car. Yeah. But, you know, overall, our debt dropped about $9,000. Yeah. So I think that was a smart move.

Yeah, pretty incredible. Yeah, you guys, you went crazy. So with all the cars going out, you know, leaving, people had to be shaking their heads going, these two lost their minds. Some people were, but we had a lot of cheerleaders, too. We had great families. Our parents, you know, both of our parents were on board, and they were supportive. That's good. Even times where, you know, a $2,000 car broke down and we can borrow a vehicle just to get to work.

They were very supportive, so we appreciate them and love them. Well, that makes a lot of difference. It sure does. It does. So, Jennifer, you go into Financial Peace University after he signs you up early in this process, and you were like, I think this is crazy. How long did it take you in the class before you started going, I think we need to do this? I mean, the first three months was kind of hard, you know, but after that, I was in it

to win it, you know, so I was all for it. Very cool. I was seeing it was changing our lives. She started seeing that the debt count was going down and it was actually working. It felt like we were getting a raise. Yeah, it did. It did. Well, and you had the same goal.

We've got to take college for Hannah Grayson. Right. We've got to do this right. Right. Very good. Very good. What do you tell had the same goal. We've got to take college for Hannah Grayson. We've got to do this right. Right. Very good. Very good. What do you tell people the key to getting out of debt is? Go ahead.

I say the first thing is just be willing to, when you get kind of knocked off the horse, per se, there was a couple times where we had to go to our $1,000 emergency fund. And that kind of takes the breath out of you when you do that. But when it happens, just pick yourself up and keep going. Don't quit because there's light at the end of the tunnel. Good. I like that one. Good.

What about you, Jennifer? What do you tell people the key to getting out of debt is? I would say be on a budget, and you've got to work together. You've both got to be on the same team, and you've just got to stay with it. What was your biggest budget fight when you started doing the budget? I think she wants the newer clothes, and sometimes we just said, let's wait until later, just use what we've got. We're not going without clothes and things.

Shopping. Shopping. She likes shopping. So how often did that come up? Just one big time or what? I mean. Not very often. It was just kind of, you know, we got along pretty good.

We wanted to work together. Sometimes you have a big fight and sometimes you just whine a little. Yeah. Whine. Try more whining. Exactly. Good job, you guys. Well done.

I'm proud of you. I know your parents are. Well done. So you brought Hannah Grace with you. We did. We did. Can I say something real quick, Dave? Sure.

I just want to thank you all for the Financial Peace University, because that class just changed our lives. We not only did it show us how to get out of debt, but we got our life insurance. Jennifer didn't have any. I had very little at work. We both rode our wheels. We got that straight. And we started contributing to, like, HSA and just other stuff besides just getting out of debt. That Financial Peace University is awesome.

Well, thank you. Thank you. We actually coordinate a class. We did three at our church and then one at our sister church in our town. So we've done it four times in the 32 months. Well, I appreciate that. That keeps us motivated, too, just to be a coordinator. It's a big deal because when you put the whole package together like you've done with the proper insurance and the life insurance, the wills, all that kind of stuff,

there's a different kind of peace than just getting out of debt gives you. Yeah. And because you're just being diligent all the way through to make sure you've got your family cared for. Exactly. And we show you how to do every bit of that. Thank you for bringing that up. I'm proud of you guys. Well done.

Appreciate it. Very well done. Mark and Jennifer and Hannah Grace from Georgia, they paid off $89,000. They sold two of their cars. 32 months, making $80,000 to $115,000. Count it down. Let's hear a debt-free scream. All right. Three, two, one. We're debt-free! Love it! Love it! Well done, you guys. Very well done. Diligent.

The diligent prosper. The Bible says. The diligent prosper. You know what diligence is? It's excellence in the ordinary. Every day. When you do stuff like you get your HSA funded, you get your will in place, you get your life insurance in place, and you get out of debt. See, that's the diligence.

That's the excellence in these ordinary things, and this causes your family to prosper. Well done, guys. Very well done, Mark and Jennifer. I'm very proud of you. This is The Dave Ramsey Show. One of my favorite parts of this show is hearing your debt-free screams. You guys are our heroes. You've kicked debt to the curb and you've saved for the future. Now we want to celebrate with you. If you have lived like no one else and are currently in baby steps four through seven, well, it's time to enjoy some money.

And the perfect place to do that is on board our first ever live like no one else cruise in March. That's right, just a couple of months away. But get this, it's not too late to book your cabin. So don't miss your chance. This Caribbean cruise is going to be an incredible seven days at sea on a stunning new ship with amazing experiences. I'm talking all of our Ramsey personalities and other world-class entertainers.

We're stopping in the Bahamas, Puerto Rico, St. Thomas, and Turks and Caicos. It's going to be an amazing, debt-free celebration designed just for you. Don't miss the boat. Head over to RamseyCruise.com today to reserve your room. Christy's with us in Asheville, North Carolina. Hi, Christy. Welcome to the Dave Ramsey Show. Thank you, Dave. Thanks for everything you do and you and your team.

Thank you. How can I help? My new job offers a dependent care flexible spending account. Cool. Is it worth it for paying for daycare? Yes, yes, yes, yes, yes, yes. Because what you're doing is anything you put in there is pre-tax. So let's say $1,000. Let's take $1,000. thousand dollars if you put a thousand dollars in there there's no tax on it and if you take that thousand dollars and you bring it home it turns into 700 okay and so if that were

true that means every time that you pay the daycare a thousand dollars you paid 700 of it and the government gave you 300 dollars to put with it great okay now what i was thinking that but that kind of it's it's pre-tax way to pay for daycare it's an excellent benefit for an employer to put in an excellent excellent benefit and so great flexible spending accounts the only negative is anything that's left in there at the end of the year, they keep. So do not overfund it. Okay. Slightly underfunded. So what is your daycare budget a month?

A month is $565,000. So that would make it $6780,000 for the year. And the max I can do in the FSA is $5,000,000. Well, there you go. You're underfunding it automatically then, so that's perfect. Yeah, I would put the whole $5,000 through there, which is going to save you about $1,500 a year. That's a nice benefit.

Definitely. Thanks, appreciate the call. Andrew's next in Canada. Hey, Andrew, how are you? I'm good, how are you? Better than I deserve. What's up? Okay, so we have just recently paid off our house. Yay! And yeah, so we are completely debt-free, and just wanted to ask you a question about next steps. Okay. Okay, so we live in a two-bedroom townhouse. It's pretty tight.

We have a family of four and one on the way. So we are okay here for a little while, but in the next few years, we want to save up and pay cash for a larger place. Good. Okay, so my income is roughly $100,000 a year. My wife, now that she is on maternity leave, really isn't making anything. Is she going back to work? She won't be, no. Okay, so you have $100,000 household income.

What's your townhouse worth? $240,000, $250,000. And when you move up, what price would you move up to? Roughly $400,000. Okay, so you need $160,000. It's gone up in value during that time, so you need $100,000. How long is it going to take you to save $100,000? Well, our question is, I am putting away the 15% a month, and my employer matches 4%.

So we have the 19% of my income that's going into retirement. My question is, would it make sense to go back to baby step 3B? No. And no. No. And no. No. What is your age? I'm 30, and my wife is 29. Okay.

Well, you've got plenty of time. You're going to be okay. And two, here's what's going to happen. During the next three years, five years, whatever it is, your income is going to go up, and the value of your townhouse is going to go up. Of course, the value of what you're trying your income is going to go up and the value of your townhouse is going to go up. Of course, the value of what you're trying to buy is going to go up too, right? So we're not dealing with a fixed item to do forecasting with. The fixed item, your income is not fixed.

You're going to see some increases. And the value of the townhouse is not fixed. And, of course, your target is not fixed. And of course your target is not fixed. Um, and so we don't know exactly where you're going to end up there, but, um, no, I would stay at 15% if I were in your shoes and then I would just save aggressively. I would take extra jobs, any other money that comes your way, inheritances, bonuses, anything else, throw that in the house fund. Don't consume it. Anytime you can get your hands on anything, just throw it in the house fund, throw it in the house fund, throw that in the house fund don't consume it anytime you can get your hands on anything just throw it in the house fund throw it in the house fund throw it

in the house fund and um but we know if you save thirty thousand dollars a year that in three years and some change you'd have another hundred thousand to put with this townhouse you'd almost be there so i think you're three i think you've got a three-year plan. You might have a four-year plan, something like that, while doing the 15%. But it's going to be tight. That'll be a tight budget to do that. But you got your house paid off. I'm not going to send you back into debt.

You know that. And you didn't have to go back into debt either. You're a smart man. Cindy's in Mobile, Mississippi. Hi, Cindy. How are you? Hi. I's in Mobile, Mississippi. Hi, Cindy. How are you? Hi. I'm from Mobile, Alabama. I would think so. I'm looking at Kelly going, where are you from, woman? Okay. How can I help? Well, we're new to the Financial Peace University. We're entering our third week. And my husband is the fiduciary for his brother who passed away. He was a 100% disabled veteran, and he left quite a large

estate. My husband has an attorney in Mobile who is taking it to the court. It'll be six months, and then it'll be distributed. And my husband, I'm just concerned that the Veterans Administration will come around any day, or maybe three years from now, and say, no, we need that money back, because it wasn't used for Mike. And I don't know if that will happen or not. I'm sorry, the money that came from the VA is in the huge estate? Yes. So they gave him a lump sum due to his disability? No, he was 100% disabled, and every month he received money

from the Veterans Administration, and my husband paid all his, you know, care bills and everything like that. But because Mike would give it away on the first day he got it, the Veterans Administration said we need a family member to watch over his estate. And so my husband's been doing that for 20 years. Oh, my goodness. And now the estate grew. No, it's not.

They're not going to come after that. They paid a disabled veteran for being disabled, and a family member managed it well for the good of the veteran who has now passed. They've got no standing whatsoever to come after that. Okay. All right. No, I think you're fine. Is your husband the sole heir?

No, no. He had written a will with my brother. Mike had written a will with my husband's help to give some to his nieces and then distribute it amongst his surviving brothers and sisters. Okay. So how much was the size of the estate? I think it's around250. I think each of the three surviving siblings are going to get $70, and the five or six nieces will get $10,000 each. I'm not really sure. There's also some gold coins. Your husband's a good man, isn't he? He was, very much.

And we ended up taking Mike to all his Veterans Administration appointments that the last few years of his life because the VA health care was not sufficient unless Mike had a representative there because Mike was 100% disabled. So we miss him. We'd rather have him back than the money. Oh, definitely, definitely. But your husband took good care of him. That's what I was saying. Yeah, Mike is doing better than we are, or was.

But we're going to get there because we have Financial Peace University on our side. You've got a $70,000 jump start now, so life is good. Cindy, thank you for calling, and I appreciate you taking care of him. Open phones at 888-825-5225. You jump in. We'll talk about your life and your money. It's common sense for your dollars and cents. Dave, can you please explain the difference between Roth 401k and Roth IRA

regarding limits, taxes, et cetera? Can you have both? You can have both. Does the $5,500 a year limit still apply? It applies to the IRA. You can fully fund a Roth IRA and a Roth 401k in the same year. You have a $5,500 limit for your Roth IRA unless you're over age 50. Then you have a $6,500 limit.

Your maximums for 401ks are $18,500 that you can put into a 401k, plus whatever your company matches if they do. They cannot match. You can put in a Roth. The match will be in a traditional, and you can roll that to a Roth and pay taxes on it, the matching portion if there is a matching portion. So they're excellent. They grow tax-free, all of the above.

We always suggest you put it in good mutual funds across four types, growth, growth and income, aggressive growth, and international. Always pick mutual funds with long track records that have outperformed the S&P, and they do exist, lots of them. That puts this hour of The Dave Ramsey Show in the books. This is James Childs, producer of The Dave Ramsey Show. Did you know you can now listen to The Dave Ramsey Show on Pandora and Spotify? For all the ways to watch and listen, check out our show page at daveramsey.com slash show.