The Ramsey Show - App - What if We Don’t Use Our Kids’ 529 Plan?

Episode Date: April 28, 2022

Dave Ramsey & Kristina Ellis discuss: Selling investment properties to pay off debt, Why you should do a 529, How to handle debt collectors, How to pick funds for your 401(k). 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

Live from the headquarters of Ramsey Solutions, 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. Number one best-selling author and Ramsey personality Christina Christina Ellis, joins me as my co-host today. As we answer your questions about your life and your money, we help people build wealth, do work that they love, and have incredible, high-quality, real relationships. We're so glad you're with us, America. Open phones at 888-825-5225. Before we jump to the phones, we just want to say thank you to all of you, America. You have given Ramsey Solutions yet another number one bestseller, Dr. John Deloney's book.

We found out late last night is the number one bestselling book in the nation on its launch week. So congratulations to Dr. John, to the marketing team, to the Ramsey Solutions folks, but thank you guys. The reason that works is that we let you know that what Dr. John Deloney has to say is amazing, and you believed us, and you went and bought the book. And we appreciate that. We appreciate you being customers. We appreciate the opportunity to serve you.

You folks in every nook and cranny major metro market in the United States have come around and been faithful to Ramsey and all things Ramsey for many, many decades, many of you, and we're just thankful for you. We appreciate you. And this book is more than deserving of this. It is an exciting exciting exciting piece of writing all about the not so complicated approach to relationships mental health and wellness own your past change your future is a number one christina yes go dr john deloney i've heard

nothing but great things about this book and so many people are just saying it's changing their lives people who didn't think they needed their lives changed picked up this book and are just raving about it. So that's just amazing. I'm so proud of them. Well, I'm always happy as the owner of the company when I'm reading through the manuscript and I get choked up. So that always gives me a hint that this thing's probably a hit, right?

Because if you can get me to, you know, because i'm kind of seen it all done it all you know and that kind of stuff so but this is this is i'm going this is gonna this is gonna this is good it's good inside my brain it's good inside my life and it's good inside yours it's good inside other people's own your past change your future and uh the the lineup of people dr les parrot pat linchioni dr lynn jennings craig groschel michael go dr michael gomez dr mcmeeker dr henry cloud that endorsed the book is absolutely incredible and again thank you you guys out there no matter how good the book is um you know if you guys don't go pick it up it it doesn't help you you don't't get to tell other people about it, and it certainly doesn't become a number one. So we did not cause this book to be a number one.

You guys out there did by buying it and by supporting John and the efforts here. And we just want to say thank you and congratulations to Dr. Deloney on his first major number one book. Very cool stuff. It's so needed and so timely right now. I feel like every day I see an article about the mental health crisis and this going on and people feeling so much anxiety. And I just love this book empowers people to take control. They realize they don't have to live there.

They don't have to stay in anxiety. They don't have to keep struggling. They can change their future. Well, you know, what happened was we got kicked in the kneecap emotionally and in our mental wellness. And those of us that were pretty strong or were medium strong, we got a sore knee emotionally in our mental wellness from the stuff we've all been through in the last couple of years. And so we need a framework to process that, and we need some guiding steps, some things to do some guiding principles to uh do this now if you've got serious mental uh wellness mental health issues this is not a book about that this

is a book like for regular people to be better regular people hello you know have better quality relationships better things going on all right let's start with ben today on this hour ben is in chicago hi ben welcome to the Ramsey Show. Hey, guys. Thanks for taking me on. Sure. What's up? Hey, quick question for you.

So I'm 37. I've got roughly about $800,000 in that work. I'd like to be a millionaire by age 40. You will be. As close as possible. So here's my question for you. I have a primary house, and I have two investment properties. And over the past couple of years, I've accumulated approximately $30,000 in just loans, credit card debt, things like that that I just want to pay off. My question for you is I should be able to pay this off in two years, which I believe that's what your book says without having to sell any properties or things like that.

Should I just try to pay it off in two years, keep the investment properties and continue on with my plan? Or should I sell one or both investment properties and pay off all my debt into a big chunk at my primary residence and pay off that loan? Yeah. Okay. Well, the first thing that occurs to me that sounds weird is that $37,000 is such a big deal if you have $800,000. What do you make?

Sure. Between my wife and I, we make around two times a year. Okay. You don't have two years. You've got one year. Sure. That's completely wimpified. That's completely wimpified.

You make a lot of money. Pay off a stink of debt, man. Cut up your credit cards. You're sloppy. And we did. Yeah. We took care of the credit cards and things like that. And my main goal was, you know, I just want to pay off the debt and become debt-free as soon as possible. Yeah, yesterday.

I didn't know if the best option were to sell an investment property to kind of jumpstart that or just continue on with my plan and just pay off the debt. No, just continue on your plan. Yeah, with that income, I think you can definitely tighten up your budget and get this paid off quick, and then you'll still have those investment properties moving forward to build wealth. I think y'all are motivated and got that goal, so just get at it. So, Ben, here's what I think I'm hearing, and you can tell me I'm wrong, and I'll accept that, okay? Okay, with your income, which is fabulous, and how great a job you've done building wealth,

for this $37,000, which is a very small number in your world, to have snuck up on you and just appeared there, that feels like just a level of disorganization, a level of laziness. Yeah, no doubt. Yeah, this last year we, you know, we were. You mailed it in. Yeah, exactly. And we were spending money that we didn't have.

Yeah. And you're just like, well, I can afford it and I can just buy this. And you relaxed and you kind of got fat. Exactly. That's what happened to me during COVID, by the way. I ate every donut in a 50 mile radius i got so fat it was unbelievable i put on i put on so much weight i i mean i had to go i had to have a donut ectomy it was awful and so so i understand what you understand what happened

it's not i'm not picking on you not like i don't do the same stuff but uh but i think that's what i'm hearing and so that's different than I mailed it in. I was sloppy, lazy, whatever we want to call it without being too harsh. Because it really wasn't that harsh. It was just, you know, just tighten it up, dude. And, you know, get back to doing what you know how to do. You'll be done. That's a different prescription for you than, oh, my God, you're so out of control and clueless.

Because you're not. Right. You're not. And I just want to, you know. No, you don so out of control and clueless. Because you're not. Right. You're not. And I just want to, you know. No, you don't need to sell those investment properties. You just need to get on a dadgum budget. You and your wife get together and go, hey, hey, hey, hey, hey, hey. We're not doing this anymore.

Right. It's that kind of thing, right? I didn't do it to me. I'd look in the mirror and go, listen, you're fat. Quit eating donuts. Golly. This is the Ramsey Show. You've got a lot on your plate.

A job, your home, your marriage, and your growing family. While you're enjoying the present, you can't help but think about your future and your finances. As you explore your options, consider Christian Healthcare Ministries, or CHM, for your health care. Their generous maternity program and budget-friendly monthly programs have been a blessing to members welcoming children into their families. Visit chministries.org slash budget to see if it's right for you. Christian Healthcare Ministries is a Ramsey Trusted Provider. Well, we've taught gods and grandmas ways of handling money and life around here at Ramsey for over 30 years. Now our good friend and Ramsey personality, Dr. John Deloney, is paving the way for how we talk about relationships and mental health.

The new book, Own Your Past, Change Your Future, is available for purchase. I just mentioned it's a number one bestseller as of yesterday. Every one of you listening needs this you have a story and you need to own your past and change your future john's taken his two phds and 20 years of counseling experience and packed it into an easy to understand book it's only 20 bucks ramsey solutions.com own your past change your future grace is in los angeles hi grace welcome to the ramsey show hi thank you so much for having me dave sure what's up so my husband and i um we're in baby step seven but we actually skipped baby step five because we cannot agree on how to execute baby step five.

We have three small children and he does not want to put money away for their college because he's concerned that what if they don't do a four-year college? Maybe we want the money more liquid so they can use it for a trade school or something else of that nature. They can use a 529 for trade school they can use it for trade school but what if well i guess he's concerned that he gets locked in there and then what if they just it's not locked you can take it out there's just a penalty on you don't get to keep all the growth tax free you get to pay a tax on the growth you pay a tax on the growth but the principal you would be able to keep

sure and you keep all the growth minus the penalty for the tax for taking it out and not using it for education okay and it's transferable it's transferable to siblings okay so what i guess what would you suggest we do in this situation i I mean, do we fund 529 for all three? I would suggest he gets some better knowledge than he has, which will lead him to a different decision. That would be helpful. Well, I mean, he's making us. It sounds like he thinks it's stuck in there.

And, Christina, 529 you can get too. Yeah, there's a lot of options with 529s. You can even use it for K-12 expenses. So if you notice that maybe your oldest isn't going to college you can switch beneficiaries and use it for k-12 use it on another one of your kids educations there is a lot of flexibility in it so I know it's kind of scary because it seems so concerning about if your kids don't go to school but there's a there's a lot you can do with it. But worst case scenario, you just simply cash it out. And let's say that you had put in $50,000 and it grew to $100,000. I'll just make up a number.

That wouldn't be right. But let's just say you made $50,000. Okay. You're going to pay taxes on the $50,000 growth. Or let's say you put $60,000 in and it grew to $100,000. That's probably more realistic. Okay. So you're going to pay taxes on the growth if you cash it in and don't use it for education, which you would have done if it was just in a mutual fund, by the way. Okay. You have to pay taxes on it. If you put it in a mutual fund, you have to pay taxes on it. So

you know, the only thing the 529 does is give you tax-free growth for education. So it's a Roth IRA for education in a sense, mathematically. So you can cash it out. You get to keep all of the money you put in, all of the growth, but you have to pay taxes on it and a penalty on it, like cashing out an IRA early. What is the penalty? i think it's 15 10 or 15 10 or 15 it used to be it used to be 10 and then it went up and i think it's come back down so i can't remember but it's not it's you're you're gonna get to keep some of the growth and all of the principle which is all you would have got. I mean, what you're going to lose here is the penalty versus if you had it in mutual funds.

So it's worth it. It's worth a try. Okay. Is it better than in like an UTMA? Yeah, because an UTMA you're going to pay taxes on once it gets to a certain size. UTMA is what I use for my kids i 529s weren't there when they were little there's no such thing so let's talk about an utmost because that's a really good discussion thank you for calling um an utmost stands for utma uniform transfer to minors act

in no case can a minor under 18 years old do a financial transaction of any kind they can't have a bank account so if you They can't have a bank account. So if you go down and open a bank account for your kid at the local bank, it's technically not in your kid's name. It's technically an UTMA. It's technically has their name on it, but it has you as the custodian of the account because children are not allowed to do contracts under contract law in america

okay so you open a bank account you do anything in a kid's name 16 years old you cannot you know you can't do a contract it's not binding so you go open a mutual fund in the kid's name with you as the custodian that's all an utmost is now it's taxed at the kid's rate, which is nothing until the mutual fund gets big enough that the income off of it is past their deduction, deductible, the standard deduction. Okay? And so you can get $10,000, $20,000 in there before you pay any taxes on it, but then you're going to pay taxes on it. So I paid taxes on the mutual funds that were in my kids' names once they got to a certain size, the kids did.

And so it ends up with less money in the account because I paid taxes than I would have if it was in growing tax-free in a 529. And so there's really very little downside of doing the 529. That's my point. That's why I was being smart, I like about it. Well, so, yeah, you're right. It sounds like that it's a better value. And then if they just don't go to college, cause my husband's gun shy, his sister had $450,000 in student loan debt. And so he's very like, you're not going to have any student loan debt, but you know, you're going to get, you're going to get scholarships. And if you don't go to college, you know, you're not going to,

if you drop out early or something, we don't want you wasting it. So if you can pull it out, if they don't. In the current environment with higher education having lost its shine with the epic student loan crisis and with how they've misbehaved during COVID, like they're trying to charge full tuition to do uh e-learning from home and you don't even show up at the actual location and that they want to charge full price and people are going i don't think i'm paying that for that and so higher ed's kind of got a couple black eyes right now and a lot of people are going look there's a whole bunch of people got a whole bunch of stupid butt degrees that aren't useful at all

and so there's a lot of people worried about you know maybe for your but i don't think you ought to throw the baby out with the bath water i think there's a valid use for higher education is it for everyone no and before i get a master's degree for 250 000 in sociology i'm going to go get a welding certificate and make three times what a sociologist makes. Okay. And so, you know, that's, you know, I'm with people on that. But this idea that all higher ed is bad, we don't believe that. Right.

Yeah. I would challenge you all to take that fear from the 450 and the bad experiences with higher education and turn it into motivation to save even more aggressively for the 529. You know, help set your kids up for success. Have them give that savings to them so that they have it available. Plus, inspire them to go for scholarships, like you said, and be really motivated to own their own journey to higher education. Yeah, you're right.

The $450,000 in debt should lead you the other way, to make you into a savings maniac. Right. Right, that his sister had so yeah uh but i guess he just he's paranoid about the whole process now i get that i understand that i've that's why i'm addressing it but yeah i i think there's very little downside and um you know and i do think there's a huge value to a usable four-year degree i i you know all three of my kids four-year degrees sharon and i four-year degrees um you know my uh father-in-law is very very proud that

of his 13 grandkids 12 of them have four-year degrees you know he's very proud of that and he should be he should be that's very good you You know? And so, but again, we're not for useless degrees. We're certainly not for student loan debt. But none of that's necessary. So all of that to say, we had college funds, and we told our kids from the time they were little, this is your college fund, this is your college fund, this is your college fund, which presupposes that, by God, you're going to college. Right. You know, and it's kind of like drilled in. It's like a little bit of a brainwashing thing here, you know.

So, yeah, so I didn't have, I wasn't wringing my hands that they might not go because I really wasn't giving them a choice. So, but I'm an old school dad that way. So that's the way that works. Hey, good stuff. Good stuff. Thank you for calling, Miss Grace. That's a good question.

I like talking about it. And we have the expert here, Christina Ellis, to talk about it. Ramsey Personality joining me this hour on The Ramsey, personality, bestselling author, is my co-host today as we answer your questions about your wealth building, your work that you love, and real, actual relationships. In the lobby of Ramsey Solutions on the debt-free stage, Ethan and Delaney are with us. Hey, guys, how are you? Good. How are you? Welcome guys how are you good how are you welcome where do you guys live uh napoleon ohio it's about a south hour or a half hour south of toledo okay not far from bowling green then pretty darn close yeah yeah cool cool i actually have been to bowling green

a time or two and a good friend of mine is from there scott hamilton okay yeah the ice skating guy yeah yeah cool well welcome to nashville so how much debt have you guys paid off 115 000 good how long did that take 17 months way to go and your range of income during that time started around 65 and peaked around 205 whoa what do you guys do for a living i'm a nurse uh I'm an insurance agent. What happened to your income? So when we first started the journey, Delaney was not working. She was finishing up school. Oh. And then about three months after we paid off our house, but that's what the debt was.

Whoa! Yeah. Look at it work, people. Yes! But yeah, so we started the journey about three months. I'm sorry, started working about three months after we started the journey to golf. Okay, cool. Yeah, and so lots of nursing available, huh?

Yes, I picked up a lot of hours. I could tell. And knocked the house out. What's the house worth? Just over $200,000. What do you got? How old are you two? 27.

26. And they have a paid-for house. That's incredible. So impressive. What happened that got youall started on this journey? It's kind of interesting. We're going back to our first date, darn near four or five years ago. But we started talking, we asked the right questions on our first date, brought up Dave Ramsey talking about finances and all that good stuff. You two are a couple of romantics. Exactly.

Dave Ramsey on the first date? I didn't even talk about Dave Ramsey on the first day i didn't even talk about dave ramsay on the first day exactly but no so that's kind of where it started um we were both in the right frame of mind and started our marriage outright you know followed the baby steps we both had our own personal experiences of kind of going through your program and seeing how things worked um so kind of brought up right and then um got married in 19, 2020, July, we bought our first house. Wow. Right in the middle of COVID. In the middle of COVID.

Why not? So right when Delaney was finishing up school, she started working, picked up a ton of shifts, worked for both of us, going really well. We knew it would probably take about five to seven years, like we had paid it off early. But actually last year around March or April around this time, we found out that Delaney was expecting. Yay! Your life is awesome.

Oh, yeah, just perfect. So, no, so we kind of went through that. We wanted to pay it off early. It was actually when Delaney was coming home from work after one of those long shifts. She said, I think we can do this before the baby comes here. I was like, yeah, you're full of it.

I didn't think we would be able to. I'm the nerd. Again, I was trying to crunch the numbers and said, I don't know if this will work out. Like I said, Delaney picked up a ton of shifts. I think people thought that, not that we were getting divorced, but if we were still together or not because we'd hang out with friends, hang out with family, she would not be there just because she'd be working all the time. So I have to give her a lot of credit for that.

You just game on, girl. You're like, you wanted that house paid off with that baby cam, huh? Yep, that was my goal, our goal. I like it. I like it. Well, that's a nice thing, though, to be able to bring a baby home to a debt-free house, huh? Yeah. It's a different kind of feeling.

It definitely is. It's scary enough to drive with them in the car the first time. Coming home from the hospital, actually, it was funny. We had a huge snowstorm. So usually the drive would take about 40 minutes from the hospital to get home. I think it took an hour and a half. I don't know if that was the weather. I think it was the weather, but it was just kind of crazy.

Well, plus you were driving a wee bit more careful than you usually do. A little bit, yes. Yeah, y'all are such shining examples. You've done everything right. What would you tell people who think, you know, I can't do this. This is too hard. What was the hardest part for you all? Honestly, I mean, for me personally, I would say not seeing Delaney.

There's a lot of sacrifices that, you know, we both put in. I mean, more of her just picking up those extra shifts. I mean, I think there were four or five bonus contracts that, I mean, spanned, you know, six weeks at a time picking up extra shifts. I mean, she was doing 60, 65 hours a week minimum. While pregnant. While pregnant. I slowed down at the end, though.

Where's your Superman cape, girl? I mean, my gosh. But, no, she is a big reason why we're here. So we're very lucky for her. Who were your biggest cheerleaders? Definitely our parents, I think. Like I said, Delaney went through the experience with her parents, so I think they were your biggest cheerleaders uh definitely our parents i think um like i said delaney went through the experience with her parents so i think they were definitely big cheerleaders my parents were big cheerleaders as well my grandparents so yeah very cool well you

guys have got an incredible incredible head start oh my gosh no no payments of any kind you own your house free and clear you're not even 30 years old. First baby's here. Life is good. Two great careers. I mean, you guys are in amazing shape. Very well done. I'm so proud of you guys. No, thank you so much, too. Such an honor to meet you. You're amazing. Very well done. What's next? What's your next goal? You're so young. You've got all this time ahead. We were just talking about, I mean, we'd love to travel, maybe take a couple of trips. We'd eventually like to build a house. But just kind of laying low. I mean, it's nice just not being able to have to talk about money or anything like that. I mean, we still talk about money, but just the issues that could arise.

It's just our marriage is great. Not that we struggled with that, but no, it's just— Well, she's home more now. That's good. Yeah, for sure. And I'm part-time at that, too. So, I mean, when she goes back—actually, going to be going back here in a couple weeks off of maternity leave. But she's part-time, and we're even debating whether she'll go back entirely at all.

So it's just very cool that we can be at that point in life, though. Ding, ding. I love it. Very, very well done. Well, we got a copy of the number one bestseller, Baby Steps Millionaires, for you. Because that's for sure the next chapter in your story. You are going there for sure. Thank you.

Probably three or four years you're going to be there. It's pretty amazing. And also a copy of Total Money Makeover for you to give to someone and rock their world, cause a holy ruckus out there somewhere. It's kind of what we do around here. So thanks for that. You guys are incredible. Very, very well done.

All right. Are we going to put baby in the shot we have to right so how old is it tell us about this is mccoy he's three almost three months old so three months old mccoy way to go dude made actually the last house payment uh two weeks before he was born yeah so perfect so amazing he has no idea how great his parents are. You guys are awesome, man. You've changed your family tree. What a great shot.

We can just sit here and look at this for a minute. Norman Rockwell right here, man. I'm just telling you. Wow. Amazing. Well, we won't make him cry. You yell as loud as you want to yell, but you're not required to make him cry. That's not our goal here.

Ethan and Delaney from the Toledo, Ohio area, and Mr. Three-Month-Old McCoy. Yeah, $115,000 paid off in 17 months, making $65,000 to $205,000. Lots of overtime, house and everything. They're not even 30. Count it down. Let's hear a debt-free scream. Three, two, one.

We're debt-free! Yeah! Woo-hoo-hoo-hoo! Yes! This is how it's done. And if you can get that kind of start, if you can get that kind of start, oh my gosh. Right? What a fantastic example.

That's incredible yeah you you know it and you know there's always you know i spoke to a group of high schoolers this morning uh local in our area here i went by as a favor to a friend of mine uh that's the teacher and um he teaches our high school curriculum and has since it began and um really sharp high schoolers but i i mean i'm talking to them and i'm thinking you know this is so hard this life thing and this is so easy this life thing you know if you can just work i mean delaney got figured out how you fix this i just work well you're pregnant yeah well i just work you know well i mean i want my house paid off you know i know only one where's money come from work you know work work you know

just work it's just it's a thing isn't it yep wow it's impressive i feel so much inspiration from this young generation i feel like often people just Z or millennials, and then you have people like this show up on the debt-free stage and just prove such a great example. It's so inspiring and exciting because it shows it can be done no matter what your age is. Well, that's exactly right.

And you're right. I do get inspiration. It's like you people out there that are the old people like get-off-my-lawn people or whatever, all you want to do is trash this other generation.

I got news for you. There's some dead some dead beats in every generation and there's some rock stars in every generation and these people there's rock stars in this generation we see them all the time america our culture is in good hands when it comes to the quality of young people we're seeing coming through here every week and the stuff they're doing, how mature they are, how smart they are, how hard they're willing to work. You're going to be okay out there, boys and girls. It's going to be okay. This is The Ramsey Show. Christina Ellis, Ramsey Personality Best-Selling Author, is my co-host today.

Thank you for joining us. Open phones at 888-825-5225. We appreciate you being here. Nathan is with us. Nathan is in Omaha, Nebraska. Hi, Nathan. How are you? Hey, Dave. Pretty good. How are you, sir? Better Hi, Nathan. How are you? Hey, Dave.

Pretty good. How are you, sir? Better than I deserve. What's up? Well, good answer. Long-time listener. Just wanted to get some advice in regards to a collection company. Yeah, the most fun people on the earth to deal with.

Anyways, I got a letter in the mail basically saying that, hey, notifying you that the law office, we're going to sue you if you don't respond within 20 days over a past due credit card bill for 625 bucks. All right. Um, I was able to get ahold of them today, negotiated a little bit lower discount rate with monthly payments. Here's where it gets a little sticky. Um, they, when I asked them, okay, how do I submit the payments? You guys want to use a debit card for autopay? You know, whatever. They said, okay, how do I submit the payments? You guys want to use a debit card for auto pay, you know, whatever.

They said, we don't accept card payments. Okay. So I figured, okay, is it just over the phone or, you know, you have a website? No, no, no. They don't accept debit card payments at all. Period. The only way that you can send in payments is via checking the mail or on the website or over the phone, providing the writing number and account number for your checking account.

Now, they did give me an alternative, which was mailing in a money order, but doing the math there, it wasn't, again, not a very large balance. Got it knocked down from $625 down to $550. Won't you just pay it? Well, my household income after tax is $1,600. My expenses are about $1,300. Okay. Have a garage sale this weekend and pay it.

I don't have much to sell off. I even got rid of my car about six months ago because I got a nice little work-from-home job. So you don't own a vehicle? I do not. No, I decided to actually sell it to pay off some other student loan debt. So I had about $4,500 still with my associates that I paid off in full by selling my car.

In Omaha, Nebraska? Yes, sir. How do you get around? I work from home. I have... I know, but you have to leave home occasionally, like go to the grocery store or... Yeah. So I go to the grocery store just by picking...

I literally live about maybe an eighth of a mile away from my local grocery store they're open till midnight just go over there grab what i need every couple of days and just carry it home okay what do you do for a living um so i actually work for the billing department for a pretty big hospital in the state of tennessee um i'm not going to mention who they are that's's okay. Your job sucks. Yeah, it's not fun. Yeah, you make no money. Yeah. And thus the problem.

I mean, you have an income crisis, and it's reflected in the fact that you can't even cover a $550 bill that's laying here. I'm not picking on you. I'm just telling you, look, there's two sides to this equation, the outgo side, the income side. You can't cut expenses far enough to prosper on $1,600. Yeah. So you've got to do some things to get your income up. That probably involves you saving up some money and getting you a car so that you can get around and go make some money because you need some money. So I would change your strategy overall is what I'm saying.

Now, as far as these people go, just call them back and tell them you're not going to be able to do it right now. Just tell them to jump in the creek. You don't have any money. There's nothing they can get. You don't have anything. Yeah. I don't have any money, and when I get some money, I'll call you and just make you a settlement offer, and we'll just work it out, and I'll send you one check.

And then go about the business of getting your income up and get some money together, and then do it in one lump sum. We do not recommend doing payments with these goobs because once they've got your bank information they're going to clean your butt out and you're going to be a problem because they you can tell a credit card collector is lying if their mouth is moving yeah um so what i do about this whole court summon thing because right now there's not a court summons. They just threatened you. Yeah. They hadn't actually sued you. Yeah.

Meaning they lied. Okay. They're going to sue you someday, but they're not going to sue you before you get your... Listen, a year from now, you can't be sitting where you're sitting. You understand that, right? Oh, yeah. Well, I actually got another job offer. It's a standby offer for a claims processor with an insurance company.

And that should be starting, if the procedure becomes available, somebody bails. I'll be getting that job started here in about a month and a half. And that's going to be about a 35% increase with my current income. Well, I think with this amount of money, this $625,000, which is now $550,000, you can make that amount this weekend. You can go around the neighborhood, see if you can mow lawns, offer to paint someone's house, even go to Target and get a job this weekend and work for the next few weeks. You can tackle this pretty quickly. I even contemplated going to the local plaza center and donating some plaza to a knockout because it took me up to the machine, took a needle in my arm, and helped save a lot and get paid for it. So I thought about even doing that.

Well, that's okay to do if you want to do that. I don't ever tell people to do stuff I wouldn't do because I don't do that, but I've done almost everything else that was legal and moral to go make some money. So Christina's right. Go make some money and pay this thing. And then here's the deal. Do not give them any money unless it's in writing and never give them your bank information under any circumstances.

Because they lie. They will take $625 out of your account after you have it in writing and promise that it's $550, and you're not going to sue them for $200, and they know that. Exactly. That was my main concern. They're freaking crooks, okay? Ninety-nine percent of them.

They're horrible companies. We work with them all the time and they're just horrible so no you cannot trust them and if you're out there and you work you're a credit card collector and you don't like what i'm saying then go get a good job and then you can like me so because your job sucks so don't do this so anyway yeah christina's right go make some money clean this mess up and do it in one lump sum, and you can send them a money order. You can send them a prepaid debit card. They'll take that, believe me.

If it's a lump sum one time, but do not give them access to your checking account ever in an adversarial situation like this, and do not give them any money until you have it in writing, and you keep a hard print. If it's an email, print it off. Keep a hard copy with a copy of the receipt where you sent the money stapled to it in a file for the rest of your life because they'll come back around they'll forget or joe that used to work here didn't have authority well toughies i got it in writing and yeah but you can't be like i don't remember who i talked to now you got to have it, and you've got to have the receipt stapled to it for the rest of your life.

But the bad news is that you have an old credit card debt. The good news is it's only $500. Right? Yeah, you can get this out of your life quick. Get these people behind you. These people are shady. This is stressful. You want to knock this situation out as quickly as possible.

And like Dave said, keep records. Like you just want to make sure these people don't come around and try to haunt you again. I bet you there's a lot of stuff you could do in 48 hours that's legal and moral that would make that kind of money. I mean, you just put your head to it out there. Your point, that's absolutely valid. I love that. All right. Patrick is in Columbus, Ohio. Hi, Patrick. How are you? Hey, how's it going, Dave? Better than I deserve.

What's up? Sure. My question is, so my company, I'm on a pension, but they just started offering a 401k, too, and it has a Roth 401k. Good. So I have where I can pick my retirement, what age I want to be when I retire. I have the target date,

and then I have where I can actually pick. So I was wondering, when I'm actually going to pick my mutual funds, do I go lifetime of the mutual fund or only go back like 10 years? Because lifetime is about eight and a half and then at 10 years it's sitting around like 11 or 12 percent either one's fine i mean you've got a 10-year track record of 11 or 12 it's probably a fine fund there's nothing wrong with that um

okay i would not use target dates target dates adjust the portfolio without your input based on asset allocation theory, which I don't believe in. Okay. I don't adjust my portfolio. I just keep investing. I'm 61. I'm investing in the same things I was investing in when I was 31. Because they work. I don't need to adjust it. You're getting old.

I don't care. I'll just keep investing, you know, because it works. And if I'm 61, there's a high probability when I'm 91, 30 years from today, that I'm going to need some money. So I need to keep investing aggressively. So, yeah, pick the four funds that we talk about. Don't use target dates. And, yes, a 10-year track record is just fine.

Work for you? Yep, that works for me. That sounds great. All right, good stuff. Christina Ellis, Ramsey Personality, my co-host today. James Childs in the booth, Ben on the board, and Kelly in the booth, and Zach hiding behind the monitor. I'm Dave Ramsey, your host, and we'll be back. Dave here.

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