The Ramsey Show - App - What Should I Do With Large Sums of Money? (Hour 2)

Episode Date: April 21, 2021

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Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studios, it's the Ramsey Show, where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. I'm Dave Ramsey, your host. Thank you for joining us. Rachel Cruz, Ramsey personality, number one best-selling author multiple times, is my co-host today. We're here to answer your questions about your life and your money. Open phones at 888-825-5225. Travis is in Boston to start off this hour.

Hi, Travis. How are you? Hi, Dave. I'm good. How are you doing? Better than I deserve. How can we help? Thank you for having me. I discovered you about two and a half years ago, right before becoming a father, and you have completely changed my life and how I handle economics. And the reason for my call today is because we currently live in a house, and we have about $45,000 left in this mortgage, no other debts.

But we're entertaining the idea of buying a much bigger house with an in-law apartment that would allow my in-laws to move and stay with us for $650,000, which would obviously restart my mortgage clock. And the idea of being debt-free before the age of 35 sounds very appealing, but I also think that a new big house would improve our quality of life and actually make us happy as well. If you will approve of the new house, would you recommend selling or renting my current house? Okay. Well, I would always sell your house currently because you don't have the money to pay cash for the new one.

And so the only way we buy rentals is with cash. And so we wouldn't keep that property unless you were able to pay cash for your home, because in effect, you've borrowed money for the rental otherwise. So no, we're going to sell it for sure. What's the home you're living in worth? About $425,000. Okay. All right. And so we're talking about only a $250,000 mortgage, right? If I sell this house, yes. Yes. Well, that's no longer in question if you're going to do what we tell you to do. So I would tell you to sell the house. And then

you're going to put it on as short a term as you can, 15 years or less. What's your household income? $160,000. $100,000 and what? $160,000. $160,000. Okay, good. How old are you?

32, sir. You've done very well, Ron. Good job, man. I'm sorry. Travis, very well done. Very well done. Thank you. I've been man. I'm sorry. Travis, very well done. Very well done. Thank you. I've been listening to you nonstop.

We've been maxing out 401Ks, maxing out Roth IRAs, and we have a second baby coming in September, so we're getting ready for it. Thank you. Awesome. Congratulations. So your in-laws are how old? My in-laws are in their 60s, and they currently live in guise where both my wife are my wife and i are from okay they would move here no income they would pretty much

be staying with us and be babysitters in a sense well i'm not a big fan in general of mother-in-law and father-in-law apartments because it ends up with a weird house later when all of this doesn't work out. But this is a very unusual situation. A, you've got the cultural differences between Greece and the U.S. to where it would be more normal to have all the family in one house. In the U.S., we tend to be more individualistic. And that's just a cultural difference. Neither is right or wrong. It's just a different way of looking at things and doing things.

But, you know, I looked at a house the other day that had a mother-in-law apartment in it that was a dadgum house, you know, attached to the other house, and it was just like it made a weird house is what it did. And, you know, we weren't moving anybody did and you know and we don't we weren't moving anybody in with us so we don't want that you know so it just made a it made you have a hard property to sell later um so your configuration of the house needs to be fairly normal uh and it can't be some bizarre mother-in-law apartment thing off the side because you're gonna make

it very limited market when you get ready to sell it someday it is exactly what you're describing actually it is very bizarre we actually know the current owners we've known them for a very long time and the in-law apartment is 1900 square feet it's massive wow okay it's bigger than our current house the in-law the in-law aspect is bigger than the actual house we live in right now and the the main house is about 3,000 square feet. I think you're going to have trouble selling that house later. Very likely. Very likely. But if you're in it for 10, 15 years, do you... It doesn't matter.

I mean, you know, if it's a weird house when you move in, guess what? When you move out, it's still going to be a weird house. Yeah, but is the weirdness worth it, though, for your quality of life, considering you have parents immigrating in? I think, you know, in your situation, I don't want to make a case for them not to move in with you. I think moving in with you and moving to a bigger house is probably a better idea. I'm not sure the one you're looking at is the one. Because I'm going to do this in a way that the house can be utilized in a more traditional way when you leave.

And that will give you a much broader market. The house will do better. You have a higher likelihood of getting it sold. You're not going to get stuck with this white elephant, which is what these things are when you build these bizarre properties. And so you can do it if you want to do it. But the downside is you're going to have trouble getting out of it later. But I would say, Travis, to your original question, though, sell the current house current house you're in that's okay you don't have to wait until it's paid off

moving up it's okay and then moving it and put the $250,000 mortgage on as short a term as you can that's all okay uh but the house itself the actual you know the actual house uh you know be careful with that part of it because that's that's where you can get burned in this whole thing because um i mean there's going to be a day when you blink twice and mom and dad are in heaven and you've got this house with this empty wing you know and it just goes fast this life goes fast and and so that's what happens and then um you know you end up these people that were selling this property we were looking at that's what happened to them and you know the house is eight years old and they built it specifically for her mother and you know and and it's useless it's useless because it's just so bizarre for a traditional family using it right without a

mother-in-law i mean so i'm thinking about what am i going to put over there in that in that thing off you know it just it made me not want to do the deal. So, and that was three weeks ago. So, but anyway, you know, so you can decide, but that's, I think the ideas that you're playing with all work. Yeah. But just be careful

with where you put the final product in terms of you don't want to get stuck with something later. But you got a great heart and obviously you've done a great job. I was going to say, awesome, Travis. I mean, you're not even, you're 33, is that what he said, 32? Yeah, he's killing it.

Just killing it. That's great. So very well done. So very well done. Yeah, and here's the thing, too. To the rest of you, you know, you think about Latino countries, you know, often, you know, families all in one house. That's not unusual.

But again, Anglos, very seldom. Very seldom. We'll do just about, I mean, we buy the house next door for mom. Right. But we don't put them in our house as often, not as often as other cultures do. Yeah. And so that's where this thing called personal finance comes into play. It is personal because this is a family with a Grecian heritage.

And so that plays into the decision making. And it should. Yeah, absolutely. Absolutely. And that's a good thing. So we want to honor that. We want you to honor that. Your heritage and your cultural upbringing and tendencies and all those kinds of things.

But just in the midst of it, be wise. That's the whole thing. This is The Ramsey Show. Your number one wealth building tool is your income. For business owners, this comes as no surprise. As you're used to putting in extra hours and watching your bottom line. That's why Christian Healthcare Ministries, or CHM, is a great option for those who are faith-focused and budget-conscious. CHM is not health insurance.

Rather, it's a health cost-sharing program. It's not harder, but it is different. To learn if CHM is a fit for you or your business, visit chministries.org slash budget. Open phones at 888-825-5225. If you've been paying attention to the real estate market, you know it's out of control. It's crazy. Competition to buy a property, multiple offers, it's crazy. Inventory has been hitting all-time lows. Now, when inventory is low, it simply means there's more buyers buying than sellers selling,

which turns the pressure up. Buyers want to snag the right house. Sellers want to accept the right offer. This is not amateur hour. which turns the pressure up. Buyers want to snag the right house. Sellers want to accept the right offer. This is not amateur hour. To win in this market, you need a pro by your side, and that's why we find veterans and endorse top real estate agents, and we really go through and vet them.

We look at what they're doing. All across the country, we call them our endorsed local providers. These are high-octane, high-protein real estate agents, and you need someone like that in your corner to play in this market. If you're going to sell, I mean, it's a process right now. If you're going to buy, it's a process right now. And our agents have years of industry success, and they refuse to compromise your financial goals no matter what is going on out there.

So you can instantly connect with an endorsed local provider in your area. Text HOUSE to 33789. Text HOUSE to 33789 to find a Ramsey trusted agent near you. Can we talk real estate for a second? Yeah, let's do. So we were talking during the break about just even in nashville it's just it's crazy right now like our friends are trying to buy houses and they're they're asking like insane over asking price and they're still not getting it like it's just wild so

covid plays into this and i know real estate you know you look over decades and decades you see the influx of things going up and down i mean it's just like anything else but what do you i mean it just feels like it's insane right now and i don't know if that's just because we live in Nashville and Nashville. No, it's everywhere. So what does COVID cause people? Because I would think coming out of 2020, you almost are more conservative and you're holding tight and you're staying put because it still feels a little unstable, right? Like we're not even, I feel like out of all the stuff with COVID. So why, why the,. So why the surge?

Well, it's several things. But the baseline on it is there's a shortage on new housing because the lumber factory shut down. And a lot of the other components of the house, the factory shut down. Yeah, new lumber is just insane. So you can't get lumber. And then when you can't get it, it drove the prices way up on that. Yeah. And then there starts to be a frenzy around it, a feeding frenzy like piranhas.

You know, it's like crazy. And so the new housing slowed to nothing. And there's this gap of six or eight months of production of the components therefore the new houses and when you take the new housing gap uh supply out the inventory supply out then it shortens up the well i can't get a new house so i got to go buy a used house and so it doubles doubles down there twice as many people looking at half the numbers of houses and so you end up with the inventory shortage of new and used housing. And a shortage always causes, when you've got half the number of houses for sale, as there are buyers out there,

two to one, three to one ratio, four to one, whatever the ratio is, then just that alone did this. But what COVID did was it shut down not the real estate market because people were still buying houses during quarantine. They were buying them sight unseen on Zoom and other stuff. Right, right. But the factory shutting down, the supply chain getting screwed up, has screwed up the economy. That's what it was. So it's not that there's more buyers.

It's just that the inventory is – Well, and then the buyers go crazy. Yeah. And then the sellers go crazy. Yeah. And then the buyers go crazy. Yeah. And then the sellers go crazy. Yeah. And then the buyers go crazier. And so there's this cycle of just this feeding frenzy, and it's all emotion. And so, you know, you're seeing properties in lots of towns get multiple, multiple offers, you know, $50,000, $100,000 over asking price.

Yeah, yeah. And they line up through the whole weekend weekend and there's 62 offers on a house over the weekend that's not unusual in a lot of cities right now but that'll subside it'll just eventually the feeding frenzy calms down and then they'll just be this like hangover uh you know like the housing hangover after that'll just be like like the morning after you felt this ever i mean for four i've never seen it like this exactly yeah Yeah. But in the 19, what we are going to see out of this that you've never seen, your generation has never seen, is inflation. Inflation, the components that make up the inflation index, housing is one of them.

It's the biggest part of inflation. And when housing shoots up and oil shoots up, and oil has shot up too. Yeah, it has, yeah. And, you know, look at the gas pump. Oh, yeah. It's doubled. Oh, I know. I filled up my minivan two days ago.

Nobody's talking about it. But the gas pump doubles and housing goes up a bunch. Then all of a sudden you're going to see stuff like I saw in the 70s and 80s, which was double-digit inflation, where stuff's going up 10%, 15% a year. Man. And inflation was out of control, and the politicians, it took some real strong politicians to do away with it. It was out of control. How did they do away with it?

Well, I credit Ronald Reagan. I'm just putting the brakes on because it was out of control under Carter, and he comes in and shifted economic policy and just started opening up, doing away with regulation, opening up the markets. Because if you can flood the market with supply, it slows down the feeding frenzy. Because if you can get it everywhere, there's no scarcity. Sure, sure. Then the prices start to settle. You know, if there's an oversupply, prices go down.

If there's an undersupply, prices go up. Because there's people chasing it. Sure, supply and demand you know you know half the number of people chasing it as there are you know you got two houses for sale for every buyer well all of a sudden prices stabilize start to go down start to or at least quit shooting through the roof so they out of control upward inflation so we're probably going to see some actual inflation out of this which we've not seen in two decades but in 1982 or yeah in 1980s under carter the uh interest rates on housing was 18 17 i was in college selling real estate so guess what happened nobody's buying houses because your interest rate on the house is like a credit card it's insane yeah and so nobody's buying houses they're all on the sideline going i can't buy a house with these interest rates yeah

and so everybody that would have bought a house that year starts stacking up and you get pent up demand water behind the dam it's getting really spilled over the dam and so when rates came down from 18 to 14 i was selling real estate at 22 years old, and rates were 14, and there were cars lined up around the block in the New So division. It was like it is. Just that 4%. I mean, like it just. Yeah, but it was three, four years of nobody buying a house,

and the floodgates broke loose. 14 was enough to get them out of their house. Yeah. And it was like COVID. They lined up around the dadgum block buying these houses. And guess what? Prices went up. Interest rates continued to go on down, of course, over the years after that.

We saw 12, and then we saw 10. And I was on the radio by then, and I'm like, oh, you'll never see single-digit interest rates again ever in mortgages. Well, obviously, I was an idiot and didn't know what I was talking about because we've had single-digit interest rates. And now we've had, for a decade, we've had 2% interest rates and now we've had what we've had for a decade we've had two or three percent i was gonna say it's like went down to two percent last year yeah you know you watch these that's crazy that's the other thing you watch these interest rates go up with inflation yeah it'll shut this housing market down i was gonna say how yeah the correlation between inflation and the interest if you go from three to six this housing market will freeze like a

deer in the headlights it'll just stop stop. People will just stop buying. They'll just back up and wait. And you're going to see some of that back and forth now. It's going to be a little rocky, a little volatile. But this feeding frenzy that you've got right this second is not going to continue. Yeah. But you do not want to be buying a house or selling a house right now without a pro in your corner. Oh, sure.

This is not amateur hour right here. Yeah, yeah, yeah. It's really not amateur hour amateur it's just a bizarre this is how you can overpay for something or or you know not get them you could you could be off a hundred grand on what you could have got with an agent that knew how to manipulate the whole process yeah because it's basically a freaking auction in some of these cities on some of these properties that was one of ours in our neighborhood the builder did an auction. He was like, highest price.

And people were like, I mean, it was crazy. Just put them out in the front yard. It was crazy. I was like, what is happening right now? Yeah. Yeah. But that's that. I didn't know if it was just now.

Yeah. But it's an emotional frenzy. Well, and that's it, too. Buying a home. If you just back up and go, right now, I'm just going to chill and watch all these crazy people finish. And when they finish, then I'm going to walk back in there. Because you can't get a deal in most markets.

Let's add one more variable to it. All the people leaving California because they're sick of it, they're done. They're done with crazy land. All the people leaving New York because they're done with crazy land. And they're coming out of there like... Oh, they're everywhere. Chicago? Here's another shortage. U-Hauls. U-Hauls leaving California.

You can't find one. You can't find them. To rent one, you mean. You can't rent one. You can't rent one in New York. Because they're leaving. They're all leaving. And they're not coming back. Thank you. Reginald Cruz Ramsey personality is my co-host today as we take your questions about your life

and your money Kendra is in Houston, Texas. Hey, Kendra. How are you? Good. How about yourself? Better than I deserve. What's up? I have a quick question for you, you and Rachel. My husband and I had just finished Baby Step 3B, and we're closing on our first home.

Yay! And we have a 20% down. I know. Very exciting. We've worked a really long time. So we're very excited. But I have a good question in regards to that. So our lender contacted us this morning saying that we qualified for a property inspection waiver or essentially an appraisal waiver and where they would still like we don't need an appraiser to come out and appraise the thing they would give us the loan. Is that something we should do, or I just need a little bit of wisdom on that.

Okay. How much are you putting down? We're putting down $77,000. Okay. And what's the price range home? It is $300,000. Okay. Okay. Hmm, I have not run into this.

Are you getting a conventional loan? We are. We're getting a conventional loan, and we just locked our rate in yesterday. Okay. I think I'm learning something right now. I've never heard of them waiving an appraisal. So it's okay that they are. It's just unusual.

In the past, it was unheard of. So it may have to do with the hot market. It may have to do with the down payment size so they feel safe because you're putting a big chunk down, you know, that kind of thing. So here's the thing. The appraisal is an opinion of value. How comfortable are you that you're not dramatically overpaying? I would feel pretty comfortable. We didn't go, we paid basically off our list price,

which obviously we've done the comp, et cetera, with our realtor. Oh, you did comps. Okay, so you looked at comps. Yeah, they pulled everything. And you did comparable analysis using the comparable sales in the area, and that gave you an indication that the price is accurate yes that's correct that's what an appraisal is okay an appraisal a standard residential appraisal form has three comps on it and they adjust for the differences

in square footage and and attributes attributes and amenities and so forth. And so if you've got a four-bedroom versus a three-bedroom or a three-car garage versus a two-car garage or whatever, they adjust for that, and then they adjust 3,500 square feet to 3,700 square feet. And after the adjusted price, that other house that sold adjusted to look like yours equals X, the other one equals Y, the other one equals Z, and the average of those three is how a residential appraisal is done. So you've already done one.

Yeah, I guess we kind of essentially have, yeah. Yeah, so the only reason you would need one is if you were unsure about the price, and I'm not unsure about it after listening to you. Okay, okay. I just didn't want to do anything, I mean, because I didn't even know that was an option until we did the research. I didn't either. I've never heard of it. So I'm didn't want to do anything. I mean, because I didn't even know that was an option until we did some research. I didn't either. I've never heard of it. So I'm learning something with you right here. But you see my point. The only reason you would buy an appraisal is to protect you and you're okay.

Okay. Okay. I just didn't know of like us doing kind of our own and with a realtor, if anything would be different. It might be a tiny bit off, but it's not. I mean, where your realtor pulled the comps from is where the residential appraiser is going to pull the comps from. So very likely it would be the exact same comps. Or, you know, if you pull five, three of those will be on that form probably. Okay, cool. If they're close in geographic proximity and close in date of sale

and fairly close in attributes it's not good to compare a 3,500 square foot house with a 7,000 square foot house okay it's not good to compare one that sold last year at this time last month and is and within five or ten percent of square footage and five or ten percent of the same attributes you mean you've got a very good comp then, right? You see what I'm doing? Right, yeah, I do. Yeah, that's how it's done. So I think you're very safe.

Okay. I find out I'm very risk-averse when it comes time to purchasing a home. Yeah, but I'm risk-averse about everything. But let me tell you what does away with risk is knowledge. Okay. And that's what you're does away with risk is knowledge. Okay. And that's what you're doing. You're gathering knowledge here. And so you're not trusting me, I hope.

I'm trying to get you to say you understand this and you know what your value is. And so you're safe. Yeah. But when it's your first home, can you tell me what you said? So, yeah, it's one of the largest purchases you'll probably ever make in your lifetime. And so you're thinking, oh, gosh, I want to do it right. So I get that. Yeah, and in times past, mortgage companies always required an appraisal to protect them,

to not make a loan that's too big on a house that's not worth what the loan is or something. And in times past, that's what the appraisal was always for. It was required by them for them. But you got the benefit of the actual safety, extra safety coverage. But the methodology for the appraisal and the comparative market analysis is identical. And so, you know, your real estate agent can do an appraisal that is the same thing your appraiser would do if they're a decent real estate agent. Ryan is with us. Ryan's in Chicago.

Hey, Ryan, how are you? I'm doing well. How about you, Dave? Better than I deserve. What's up? Hey, Dave. I'm calling in. I recently found you on YouTube.

Like a lot of callers, I've been listening to you, getting a lot of knowledge, now trying to put things in practice. I recently went through a divorce. That was not my choice. And as worse, yeah, thank you for your condolences there. And as everything, kind of the dust settled, I'm kind of picking, I'm on baby step two. I only have one debt. Uh, I kind of foolish. I bought a European luxury vehicle for about 50,000. I owe about 20,000 on it. And after all of the community assets have been divided up, I ended up with about 25,000 in precious metals, about 120,000 in cash and some toys,

boy toys, like a motorcycle, about $15,000 and some other items. So I had one outstanding debt for $20,000 on a vehicle, but I kind of feel stuck in stasis. I'm kind of in a hybrid step. I just started investing 10% with my company matching 6% of pre-tax into the 401k. And then with the assets on hand, I've lost some money in cryptocurrency. I've lost some money in the stock market. We had to sell our home because of the divorce. And so now as I'm taking stock at a little over 40 years old, what do I want to do with the cash on hand? It's just sitting. And I kind of find myself frozen a little bit, not really knowing what to do with it. I don't have a lot of faith in what the stock market is going to do. So I thought, well, hey, first-time caller, short-time listener, would love to get your advice.

Okay. Well, Ryan, I'll speak up in part of this. So a couple of things. I mean, you have, yeah, $125,000 in cash, and so that will cover the car debt that you have. So I would do that ASAP. I would take the remaining probably $100,000 and figure out how much your expenses are per month and set some of that aside. So we always talk about getting a fully funded emergency fund of three to six months of expenses. And you would not put this in the market, you would put it in a high yield savings account or a money market account, that fully funded emergency fund. And

then from there, bump up that 10% that you're investing to 15%. And I would say with the metals, I mean, commodities are just a tough thing to have money in. So I don't know what you would say, Dave, but I would sell those and not have that around. I mean, $25,000, and that's a lot. That'd pay off the car. Yeah, that would, $20,000. So the five-year performance of silver and gold has been very favorable for those who have held it. You would still go ahead and sell that? A 50-year performance of silver and gold absolutely sucks.

Okay. The long track record. I mean, and so I don't buy stuff. I don't buy entire investment classes based on their five-year returns. It's a high risk play. You can do it if you want to do it, but I don't have any money in precious metals. I don't have any money in Bitcoin. Bitcoin's made a bunch of money this year.

A lot of money. But I don't do short-term plays. I do long-term plays. I'm the tortoise, and every time I read the book, he wins. So, yeah, I'm cashing the metals out, paying off the car. What Rachel said, finish your emergency fund. Just speed fast. Go fast forward right through those baby steps, dude.

Hold on. I'll send you a copy of the Total Money Makeover since you're a new listener and it'll show you the baby steps in detail. And if you'll just follow them, you'll be a millionaire in no time. I'm sorry for your hurt. Your broken heart's part of this decision-making paradigm. Rachel Cruz, Ramsey Personality, number one best-selling author. My daughter is my co-host today.

Open phones at 888-825-5225. Carol is with us in Fort Wayne, Indiana. Hi, Carol. How are you? I am fine. Thank you very much. Sure. What's up? My husband and I have been blessed that we are already in step seven. Yay! We have no debt.

The house is paid off. We're in our early 60s, and I'm wondering, how do we now relax and enjoy that we're in this position? Congratulations. Thank you. We are still nervous to spend money. Yeah. Cautious. Uh-huh. Uh-huh. Well, you had a still nervous to spend money. Yeah. Cautious.

Well, you had a lot of years of using that muscle. Yes. And so how much money do you have? What's the nest egg? We have around a million dollars in assets. Good for you. Oh, in assets. Okay.

So how much of that is the house? Probably $250,000 to $75,000. Okay. okay so how much of that is the house probably 250 275 okay so seven eight hundred grand in your retirement or in mutual funds or whatever then right yes okay good for you good for you yeah this is something carol i feel like we we hear a lot from you know whether it's baby step seven or even baby step four or five and six after people have done their emergency fund and gotten out of debt, it's like they emotionally haven't caught up to where they are. And you guys, are you guys retired? Not yet. My husband will retire probably in two, three years.

Okay, okay. Yeah, so I think that this is, it's a very normal place to be in that question and kind of that hesitancy to just enjoy. And so for me, I know numbers and facts help me a lot. And so it's not like this idea, you're just going to go crazy and spend whatever you want, because you guys are at this point, you know, you're going to still have a budget, you're still going to live on it, you're going to be able to increase your lifestyle percentage points. And so you guys can do that, run out the numbers.

And that's when you can get comfortable when you say, okay, yeah, we can do this. And when you actually have the numbers in front of you and it's not just this idea in your head, that's going to help settle some of that emotion. Right. And you suggest doing that with a financial advisor or running it on our own? Both, probably. yeah right and you suggest doing that with a financial advisor or running it on our own both probably but but uh you you've got to get them into you have to get the numbers into your heart to relax um and so what i do uh what sharon and i often do is because you know we're in a financial place that our emotions may never catch up to. Having gone bankrupt and then having struggled and fought and been frugal for so many years,

and then you live like no one else. Then later, when it's time to live like no one else, then it's hard to relax and do it. So the rule we kind of use is whatever the thing is that we're thinking about doing, and we go, are we crazy you know we ask ourselves okay if we take that much money let's just make up a number let's say you were going to go buy a twenty thousand dollar something that feels luxurious to you it feels like you might be out of control it feels a little crazy okay you know what i'm talking about i mean you're going on a cruise or you're buying a car or you're buying i don't know i don't care what it is a twenty thousand dollar thingy okay then the quite the way the way we visualize it is we say all right let's put twenty thousand dollars cash in

the middle of the kitchen table and burn it oh did our life change and in your case the answer would be no other than you almost threw up when I said it. But mathematically, you got a million dollars, house and mutual funds and retirement. And so if you just took $20,000 and just completely screwed up and it just disappeared, it evaporated. That's.002%. It doesn't matter.

It's like most people buying a biscuit. That sounds hard to get in your mind wrapped around. I know, but mathematically and logically, what I'm saying is correct, isn't it? Yes, it is. Em it is emotionally it's hard to accept and that's the difference and so we just have to ask ourselves and and we do this in two areas consumption and generosity yes because we uh one of our great motivators is generosity. And so you can get out of control with that and have given everything away and be eating, you know, be on the bread line or whatever, you know. And so we ask ourselves, if we make this gift that feels like it is the largest.

I mean, it's more than we made some years, you know. But now if we make this gift, I mean, you probably had a year like I did where you didn't make $20,000, didn't you? We did. Yeah. And so if I give a $20,000 gift, you give a $20,000 gift away for us, that's more than we made in a whole year back in the day. So in our emotions, it feels like, wow! But you're not even going to know it's gone because it's $20,000 out of a million. That's true.

Well, we keep saying to ourselves we can't take it with us. Well, that's true, yeah. Yeah, I mean, you know, I just read my buddy Andy Andrews just did a post. He said, you know, you can own hotels in Boardwalk or you can rent on Baltic, but at the end of the story, no matter which one you do, all the pieces in the board game goes back in the box so here's what i want you to do i want you to work on generosity and i want you to work on that exercise to say all right let's buy something let's look at something we've always wanted in quotes dot dot dot that when i get there someday i'm going to do dot dot dot i'm

going to travel to that place i'm going to buy that thing whatever that is okay and i want you to put that amount of money in the middle of the table and both of you talk about it and process the intellectual understanding that it doesn't matter because it's a small enough percentage of your world that it's like most people buying a biscuit we'll do that so like i got a friend that i went it was he and i were talking about this same thing a few years ago i went to a an event with him and he's a billionaire he has a thousand million not one million he has a thousand million that's a lot and he had just bought a hundred and twenty five thousand dollar car and it was the first new car he had ever bought. And it's a really nice Mercedes, $125,000.

And he was feeling a little bit guilty, like maybe he should have given that money. And he got hate mail. Somebody sent him hate mail because he shouldn't have, as a Christian, he shouldn't have spent that much money on a car. And he's feeling a little bit guilty about that. And on the other hand, too, he's like, I don't know if this was wise or not. He's just like a little kid. He's a billionaire.

I can understand where he's coming from. Yeah, I know. But he's a billionaire, and buying $100,000. I mean, when you have $1,000 million and you spend $100,000, I mean, it's like somebody's dropping a dollar bill out their window of the car. It doesn't show up mathematically. And, by the way, it's none of your business what he drives you get to do your own thing all of you out there you don't get to pass judgment on other people although you think because of social media it's your freaking job but you know so carol i

want you to increase your generosity to the level that it makes you touch this same nerve, and I want you to increase your spending on a single luxury item that makes you touch this nerve, and that'll cause you to be able to relax. So we increase our giving, we increase our spending, but only if we do it wrong or when the money's just gone, it didn't change our life. Yeah. And it's a great exercise to think about it because because again the emotions have not caught up with the math and

so you're having to get pushed through it but once you start to do this carol over the next you know year or two you'll get used to doing it yes and you're not you're never going to be a rash out of control spender you will You will not do that. You just can't. It's not possible for you to do it. The number of people that I've seen that think like you think, that lose everything because they overspend, are zero. They're just not. People just don't make that trip.

You will never go over to the land of stupid. You'll be so far away from it that it's just not in the cards for you so you're safe you're safe you're going to be okay but what i want you to do is just learn to enjoy some of the money and learn to be generous with some of the money at a level that it really doesn't affect your life but it really increases your enjoyment for all the years of hard work and saving you that's what i was going to say you guys have sacrificed like you've earned it saying carol so yes have some fun live like no one else and now you get to live and give like no one else and that's the whole thing and there's nothing wrong with that morally spiritually there's nothing wrong with it financially

you are great you're amazing i'm so proud of you. This is The Ramsey Show. Hey, it's Kelly, associate producer for The Ramsey Show. This episode is over, but if you heard about an event, product, or service and didn't have a chance to write it down, don't worry. We list everything you've heard about during this episode in the podcast show notes section or head to theramseyshow.com. Thanks for listening.