The Ramsey Show - App - What to Look for in a Budget Car (Hour 1)

Episode Date: August 19, 2019

Savings, Insurance, Home Buying, Budgeting   Tools to get you started: Debt Calculator: http://bit.ly/2QIoSPV Insurance Coverage Checkup: http://bit.ly/2BrqEuo Complete Guide to Budgeting: http://bit.ly/2QEyonc Interview Guide: http://bit.ly/2BuGnZE   Check out other podcasts in the Ramsey Network: http://bit.ly/2JgzaQR 

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. We talk about you, your life, and your money. The phone call is free, and some say the advice is worth what you pay for it. The phone number is 888-825-5225. That's 888-825-5225. Mark is in Georgia starting off this hour.

Hey, Mark, welcome to the Dave Ramsey Show. Thanks, Dave. I hope you're doing well today. Better than I deserve, sir. How can I help? Yeah, absolutely. My wife and I have been following you since the beginning of 2019, and we're about to finish up Baby Step 3, so we're moving on to Baby Step 4 and 5. Boom, look at you. 15% of income is going to go into retirement, but I had a question today about kids college, so we've gone back and forth on do we want to do a 529 state plan or do we want to just use personally invested mutual funds the four types that you recommend on your website

and so anyway we're just trying to go back and forth on what's best for our family we've got about 12 years until our first of three children reach college age and so yeah any feedback you can provide would be awesome okay the only kind of 529s i recommend are ones where you could put the four types of mutual funds in there and you have full control and nothing is on autopilot some of the 529s lock you in you don't want that and some of them move the money around and make it more conservative as the child approaches college. You don't want that unless you do it. Okay? So you should pick the mutual funds.

They should stay in the freaking mutual funds you picked unless you changed it because it was a bad fund or something over time. But that's the type of 529 that I recommend. All 529s are, in some form, a state plan. Now, prepaid college tuition in a state plan 529 we never do okay because basically your rate of return on anything you prepay is how much it goes up in cost and tuition has averaged for 53 years 7.2 percent increasing in cost so you're making seven percent on your money or if you've been in the four types of mutual funds we're talking about outperforming the s&p you'd be making 11 or 12 on your money.

Okay. And so we want to go that route. It's going to outperform prepaid college. And, you know, you want to investigate some of the states. I don't know Georgia off the top of my head, but some of the states I've read several articles on how poorly run their plans are and they're they're in financial danger because like the rest of that particular state you know they're just suck and so our concern is would we be better to follow your plan yes individually with a smart investor

pro outside of it yeah and you can pick a 529 anywhere you don't have to pick your state necessarily okay but if your state allows you to have those four funds that's not fixed and it's not auto moved then that's fine i don't care i honestly don't know georgia off the top of my head so there's 50 of them i don't have them memorized this i'm just not that smart so um but you you know you can dig into it with smart investor pro they can tell you the easiest way to do it in your area is this. The ESA, the Educational Savings Account, for the first $2,000 a year is the same thing. You do pick the funds in it, and they do not move unless you move them. And it is not fixed.

You know, the funds aren't, you're not locked in. You're not in concrete, which is not what you want to do. Andrew is with us in Michigan. Hey, Andrew, how are you? I'm great. How's your day? Better than I deserve, sir. How can I help?

Well, I'll just break down what I got going here. My wife and I are about, we have $100,000 in debt. The majority of it is student loan. Our household income is about $62,000 a year. We're just starting the steps. I have $4,000 in my checking, and we have $6,300 in savings. And we're trying to, we're kind of spitballing some options here. We have a year-and-a-half-year-old at home and another one due in November.

Hey, life's good. Yeah, going great. And so we do have a car payment. We owe $5,000 on the car and we broke all of our loans down to their core, to the smallest ones. And the car payment is $320 a month. It's one of our biggest payments. And I was thinking, take $5,000 out of the savings, pay the car off so we could roll that $320 to the very top and start the snowball pretty big. Or should we kind of save it and see how things pan out with having a kid do here in a few months? Good for you. Well, what we tell folks to do when a baby's on the way is don't start your baby steps. Just push pause.

Pile up cash as high as you can pile it. Any money you would have paid to reduce debt from now on time, baby comes, goes in savings. Just a big pile. I mean, if you could put $100,000 in savings by November, which you can't, but if you could, that'd be cool. Okay, just pile it up as big as you can pile it. Because as soon as baby comes, and mommy and baby are okay, and everybody comes home from the hospital, there's no hiccups. There's no need for extra money other than what you've already planned for labor and delivery, that kind of stuff. Then whatever's in that savings account, you immediately take it and you put it on your baby step two,

which is where you list your debts, smallest to largest. So how many debts do you have smaller than the car? When you take the student loans apart, it's a whole pile of them. Okay. You know, we have a ton of them that are between $600 and $3,500. Yeah. So you have a lot of mosquitoes flying around your head. Yep.

And you're going to clean up a whole bunch of them with $10,000. Okay. You might not quite get to the car, but you're going to get to the car soon enough. Here's what you are going to gain, just peace of mind, because you have bazillions of people in your life that you don't want in your life, and you can cut through half a bazillion people with one fell swoop as soon as baby comes home. That's what I mean by mosquitoes. There is an emotional release to going dad gum man i just drew a bunch of red lines on this puppy through the draw lines through your

dad's snowball put it on the refrigerator right i just paid off a bunch of these things it's all the same math there's no magic to it but there is this hee-haw moment where yeah i just did that mic drop right and? Oh, yeah. It does feel good. And that enters into this whole process as much as the actual mathematics enter into it, just being excited, getting excited, staying excited, staying on task, sticking with it, those kinds of things. How old are you? I'm 33.

Cool. Okay. Perfect. You're doing great, man. You're doing great. What do you do for a living? I'm a professional surveyor. Okay. Perfect. You're doing great, man. You're doing great. What do you do for a living? I'm a professional surveyor. Okay.

Oh, that's a great field. Good for you. Long tradition. Yeah. Good stuff. All right. Hey, so here's what we're going to do. You're going to do nothing until baby comes in November 1, huh?

November 11th, I think. November 11th. Okay, cool. So nothing until baby comes, and then we're going to have Christmas, and we're going to lay this thing out, and we're going to get in attack mode on these debts and just mow through them as fast as you can mow through them. It's just like getting a weed eater out of the pressure washer. It's just fun, you know?

It's just like knock some crap down, you know? This is great, man. Get rid of that mildew. It's that kind of feeling. It's this sense of traction, this sense of things are happening. So that's what you'll do. And I want you two to go through Financial Peace University. That's going to be my gift to baby, okay?

Oh, thank you so much. I want Mommy and Daddy to be everyday millionaires and change baby's family tree, okay? We're going to do it. You go for it, baby. Hold on. We'll get you signed up. Ms. Kelly will sign you up for financial peace, the membership, and everything. This is the Dave Ramsey Show. We've been voted one of the best places to work in Nashville 11 times.

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they were easy to install and uh easy to work with it was absolutely incredible experience and so all this stuff i've been telling you guys for years i already knew it was true but just like this week last week i experienced it again so blinds.com this is why they're number one because they rock lanes in tex Texas with our question. Currently in baby step two, working my dad's snowball. My car is paid for. Has 175,000 miles on it. So I typically put 25,000 miles a year.

Okay. I'm worried it won't hold up much longer. What, another three, five years if you're taking care of it. Currently set aside $80, $100 every month for car maintenance. Now I want to save up $3,000 to pay cash for a new car to me. Should I stop contributing to car repair while saving for a new car? Should I pay less on the debt each month instead? If your car is not dead, drive it and work your debt snowball.

In today's world, a 175,000-mile car has still got a lot of life left in it. Now, is it cool? No no it passed not being cool a long time ago it's not cool it's not a cool car but you're broke okay today's were i mean when i was like in the 70s when i bought my first car the 60s when some of you bought your first car cars if you had a hundred thousand miles it was done cars today will run 300 000 if you take care of most of them i mean there's some crap out there you can buy some of these stupid little cars but i mean a decent vehicle a good pickup truck or whatever you take care of it you can run the dadgum wheels off that thing two three hundred thousand miles if you want now i'm not driving a car. My Raptor, I drove it in this morning. It turned over eleven thousand miles. OK, so I'm not driving a piece of crap

anymore. But I did for a while. I drove like no one else. So later I can drive like no one else. And that's what you're doing, man. So sorry, but one hundred seventy five thousand doesn't impress me is like, oh, he's poor. The poor guy's almost walking. No, not really. Just keep putting gas in it, Bubby, and get there, okay? Just drive it and get yourself out of debt and do the thing, man. Now, if the car lays down, it's a different story. You got to get to work. You're going to have to stop everything. You're going to have to build up $3,000, buy you another hoopty to get through the end of your debt snowball.

But that's what you do, man. You drive what you got or you hoopty your butt through the debt snowball. Because it's not forever. Most of you run your debt snowballs in 18 to 24 months. Some of you six months. And you whine like somebody just threw hot water on you or something. Like, oh, it's six months. It's 18 months. I'm old.

Out of the scope of your life, that ain't spit. Work the deal, man. Work the deal. Now, again, if the thing lays down, I understand. You're going to have to stop. You have to do this. But you live like no one else, man, so that later you can live and give like no one else. No discipline seems pleasant at the time, but it yields a harvest of righteousness. Matt is with us in Kansas. Hey, Matt, welcome to the Dave Ramsey Show.

Hi, Dave. How are you? Better than I deserve. What's up? Hey, good. My wife and I are debt-free. We have been for about the last 11 years. Way to go.

I'm a residential contractor. I build spec homes for cash. And currently, my plan has been to, we build a house for ourselves about every two years and sell it and, and take the equity from it, build our new home and then have the gain left over, which in our state, if you live in the house the last two out of the five years, you don't have to take out the gains back. That would be a federal law in every state, yes. Okay, okay.

So, that being said, I also want to build up my rental portfolio. Currently, we only have one rental paid for in cash. But am I better off continuing to keep my home and keep it as a rental, or am I putting too much stock in the capital gains savings that I'm making off these houses, seeing that I'm building it myself, putting my own sweat equity into it? Well, I mean, it's a real number. You're not paying a dime on it if you live there for two years, and then you roll it to another one. At some point, you're just going to get tired of moving all the time

yeah and so you're just going to be going hey we're living here and you know we're not doing that this cycle this cycle we're going to pile up some cash and build a rental next cycle we may may roll the house again but this every two years thing man i grew up in the real estate business my mom and dad were in the business and our furniture was trained to jump on the truck. I mean, we did the same stuff. It was the same routine, right? But it gets old after a while. I'd rather have a root canal than move now.

And so I hate it. So you just got to measure all that against the personal implication, the implication of your household emotionally and everything else, against the actual dollars that you're saving by doing the capital gains. But, I mean, if you had one property that just jumped way up, you know, that'd be pretty, you know, you get a $100,000 gain or something, and that's a zero tax on that puppy, that'd be sweet, right? So you don't want to miss that on that but now i would pay cash for my rental and i probably would just just skip a cycle

to do it meaning don't roll the house quite so many times stop just pile up some money pay cash for a rental it's that simple but you don't necessarily have to roll your personal residence into a rental because you probably are living in a nicer house than you actually want to rent might not be i don't know how much you've done this but you might you might be too don't pick out your rentals by default pick them out to be rentals uh kevin is in pennsylvania hi kevin welcome to dave ramsey show well hi dave thank you for taking my call sure how can i help we we moved our uh our son into his first apartment at college. He was on campus for the first two years and he's starting his junior year and we put him in an apartment and we're covering college and we're covering the apartment. And I just didn't know,

it's pretty meager beginnings and he probably has less than a thousand to 2000 in personal value there. But should we get rental insurance for him? Because the minimum I can get coverage on is $15,000. It's $135 a year, so it's peanuts. But it does come with personal liability as well. Okay. It's probably got a $100,000 liability built into that package, doesn't it? Well, I asked him if he would have a grease fire and burn the place down

if it covered structure and they said the the landlords actually covered that what it covered is if somebody has a slip and fall at their place it would cover them that's a liability personal liability is uh they're playing beer pong out back and one of them falls and busts his head and decides to sue because daddy's on the lease. Okay. And that's why you should. Go ahead. Yes, I would buy it. It's only $200, wasn't it? $135.

It's peanuts. It was more just the principle, the whole thing I was trying to understand. It's not the content for theft or fire that you're worried about because it's not worth anything. It is worth it just to get the liability portion of it. Okay. The slip and fall that's that's what i and it's worth earning 35 for you to make sure this is not in your life that's a plan so

very cool hey man thanks for the call open phones at 888-825-5225 jennifer is on twitter do you think that a couple needs to be completely out of debt before getting married? No. Absolutely not. Nobody's ever getting married. No. You do need to be on the same page. Like, one of you is like, I'm a princess and I'm going to buy everything, he said, right? If you're going to marry one of those, you don't want to.

That's a problem. You need to be on the same page. We're going to get out of debt. We're not going to use debt. We're going to become wealthy. We're going to change our family tree. We're going to be outrageously generous. We're going to think about others. And we're going to think about the future.

We're not going to think about, oh, it's Friday. Woo-hoo! Which is what children do. Adults devise a plan and follow it. Children do what feels good. Are you marrying a child? I'd be more concerned about that than whether they have debt. But if you're marrying a full-grown adult that has debt and they're ready to get rid of it and you're going to help and we're going to work together on this, game on.

Game on. No, you do not need to be debt-free to get married. I don't think. You can do whatever you want, but you ask my opinion, which I'm an expert on. This is the news, guys. You need to stop and listen. The Fed decided not to raise interest rates. That means you've got a small window of time before rates rise again.

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Their team of experts will give you more clarity about your options and more peace, knowing you're saving significant money in the long run. Call 888-LOAN-200. That's 888-562-6200 or churchillmortgage.com. Thank you for joining us, America. This is the Dave Ramsey Show. Chris is with us in Nebraska. Hi, Chris. Welcome to the Dave Show.

What's up? Hey, Mr. Ramsey. Thank you for taking my call today. I appreciate it. Sure. I've got a question about, I'm in a baby step four, five, and six, and I've got two vehicles. I make $61 a year, and they're both equal in value to about what I make a year. I'm trying to figure out if I need to sell one to get a good jump start and a kick start on my kids' college fund,

or what necessarily your opinion would be in that area. Well, here's the thing the sixty thousand dollars that you have invested in two vehicles in 20 minutes is going to be thirty thousand yes and you make sixty so losing thirty thirty $40,000 over a couple-year span while making $60,000 makes it very difficult to build wealth mathematically. And so the formula that we came up with, and we just made this up. There's no scientific thing. The bottom line is these stupid things with motors and wheels that we all love, I love them.

Cars, boats, man, anything that goes wooden goes wooden wooden i just love it you know i'm just a guy all the way through so the problem is they all stink and go down in value so they're all fighting against our wealth and so what we've came up with is just don't have too much of your life mathematically tied up in things that are going backwards. Right. And so you do. You have too much tied up in things that are going backwards. A good rule of thumb, we say, is if it's got a motor or wheels in it and you add it all up together at your house and it all equals more than half your annual income,

you have too much tied up in things going backwards in order to win, and you've got your full annual income. So these cars, they're just smacking the crud out of you, man. So yes, yes, yes, yes. All of that to say, that's how I came up with it, though, was just the bottom line is, you know, if you made $150,000 a year, you could more afford to lose $30,000 than you can. And that's what it would take for your cars to make sense.

Gotcha. Okay. It's still no fun to lose $30,000, but, you know, I got a friend that made $15 million last year, and he bought a Lamborghini, and the stupid thing will go down in value like $100,000, you know? But, you know, probably by the time he got at home actually but the but you know he made 15 million that's like everybody else buying a biscuit you know it doesn't even show up mathematically on his chart so uh but it's just a different world

to think about but he can notice he can afford to take the hit on a lot of vehicles. And you'll get there. You'll get to where you can afford to do that, even if your income never got that high. If you make $60,000 and you're worth $3 million, you can afford to take the hit. But that's not your case because you're trying to fund kids' college. So, yes, you've got too much cars. You need to back down to no more than $30,000 in vehicles. You don't have to panic about it. But long-term, that game plan is making you

broker than you should be while you're trying to build wealth. Your most powerful wealth-building tool is your income, and when you're putting it in things going down in value, you're running the race backward. It's just hard to do. Ken is with us in Ohio. Hey, Ken, welcome to Dave Ramsey Show. Hey, Dave, how are you doing? Thanks for taking my call. Sure. What's up? So I had a question for you. So I'm around 62. I have a pension from the military, a partial pension from the reserves,

and a health care with that. And I don't have any other income right now. I just had some really good savings, and I'm trying to establish myself with writing and consulting, as I was doing before we had returned from Germany. My question is, I have a little over $300K in investments, and I have about $59,000 left on a mortgage on our house. That's the only debt my wife and I have.

And should I parcel those out to pay off the mortgage, or should I just keep doing what I'm doing? How old are you? I'll be 62 in November. Okay. Are these in a retirement plan or non-retirement investments? Yeah, so one's a 401K, one's a thrift savings plan, some are life plans, one's just retirement funds that I accrued when I was working in the university.

But they're all in some kind of a retirement thing where you haven't paid taxes on them yet. That's correct. Is there any after-tax investing that we're discussing? I don't understand that. Is there any of the $300,000 that is after-tax investments, meaning you've already paid the taxes on it, it's just growing, it's not in a retirement plan itself. So a couple of those are not. I know, so for example, a couple of the mutual funds, those, you know,

I don't think I have to pay taxes on any of these, as I recalled. I mean, I get taxed every year by the IRS, but I think if I liquidate them, I don't think I pay taxes on them. Oh, you do. TSP's taxable. Oh, okay. Yeah, you've never paid taxes on it. It's pre-tax investment.

Unless you dumped a bunch in a Roth late. They just started Roth about two years ago. And your 401k's taxable when you take it out. It's not got a penalty because you're over 59 1⁄2, but it is taxed at your tax rate. And so in order to get 60, got to pull 90 okay or so um that's what i'm that's what's running through my head so i would use up the ones that are not in a retirement and i think you can pay off your house with that it sounds like uh-huh that's what i'm good yes i definitely would yes definitely

absolutely 62 years old pay for house 250 000, $250,000 in the bank, in retirement investments. You're heading in the right direction. Very cool. You say pull the ones not in the retirement? Exactly, because they don't have any taxes on them. You've already paid taxes on them. Okay. If you pull $59,000 out of the TSP, you're going to pay a fourth of that in income tax.

Okay. So to net $59,000, you'd have to pull like $80,000. And what about the 401K? Same thing. I'd pay a tax on that. Yes, federal income tax on that. Again, there's no penalty. If you were under 59 1⁄2, you'd have a 10% penalty plus your tax rate.

And we would not be doing this then. But I don't even think you're going to get into those things. I think you've got $59,000 that's not in a TSP, not in a 401k, not in one of the old retirement plans. It's just an investment that you did, I bet. Yeah, so I'm looking at it. I have a TIAA retirement fund with 58k in it. Liquidate that one. Well, that...

CREF might be a 401k. Is that an old 401k from something? I don't think so. You probably need to dig into it and find out. So if you need some help with it, get in touch with one of our SmartVestor pros. They can tell you. But I would do the ones that you didn't have to pay tax on

and let the ones that are taxable just sit there and grow. But yes, I would pay this off. I definitely would pay off your house. No doubt about it. So that's the plan. Hey, good question, man. Thank you for joining us.

Open phones at 888-825-5225. This is the Dave Ramsey Show. You jump in, and we will talk. Patrick is next in Pennsylvania. Hi, Patrick. Welcome to the Dave Ramsey ramsey show hey dave how are you better than i deserve what's up all right well we just talked last week i was a guy that borrowed 28 000 dollars to go to out of state school and you obviously didn't advise that so now i'm sitting in my dorm room that i just moved into on friday i packed up all my stuff and i'm leaving i'm leaving today um wow how'd that go with mom you know she's supportive good

that's all i could really ask for amen amen yeah and then i i told you about this $3,000 I had in investments and I have $1,000 in cash. So if I withdraw my investments, I'm probably going to take a hit for early redemption. So it's probably going to be around 2,500 bucks and I have 3,500 bucks in cash. And I already applied to the community college like you advised me to do. I did that last night. I got accepted today. Wow. So I'm going there in spring. And how much is that community college?

I'm going to pay for it in cash. I know. How much is it? It's going to be around $7,000 tuition. A year? Yes. The tuition I'm paying right now is $27,000. That was a good $20,000 savings then.

Yeah. Thank you. But so now, from now until spring, spring semester starts in about four months, I have a job lined up. I applied last night. I've been all over the place, but I applied last night. I'm going to go meet with the guy. All right, I'll tell you what.

Hold on. We'll come back from this commercial break. We'll get the rest of your questions. This is the Dave Ramsey Show. I'm going to go. All right, so now I've got a little time. I ain't got a commercial bearing down on me. Last week, Patrick called in, was signed up for a $27,000 a year out-of-state school, was taking out a student loan for the whole thing, had $3,000 a year out-of-state school was taking out a student loan for the whole thing at $3,000 saved. I suggested he go back home and take a community college instead of going into debt for his first two years and work and figure out a way to get through. He said his mom, his other siblings had gone there, and his mom really wanted him to go to this school.

I said, well, mom will just have to be disappointed. He did it. He quit the school. He's moving back home he's got three thousand five hundred dollars and he's starting the community college it's only seven thousand dollars a year in the spring and then he calls back in this week with another question so that's where we got to is that a right summary is that you patrick is that who i'm talking about yeah yep that's first uh yeah summary right there I'm at. Cool. So because you're taking out a student loan, did you just turn around and pay it right back?

I walked down to the office. I said, I want out of here. They said if you withdraw from all your classes, it's going to be automatically sent back to third party and federal. So it's all going right back. Okay, cool. That was easy. All right. And so now your question about the $3,500 is what?

All right. So I'm going to community college. My sibling is right with me now in out-of-state school. She has the car that we shared. I'm going to need a little commuter car for whenever I go to school. Yes, you are. So I'm going to work my butt off like you like to say and whenever i go home uh i'm still not going to have a car obviously so i'm going to walk a mile and back

and just press shirts every day until i have enough money you got enough money you got $3,500 $3,500 for like a reliable a reliable car? No, but it's better than walking. But it's only a mile, Dave. I know, but you can make more money working lots of places if you have a car. Yeah, that's what I'm saying. I know, so go buy you a $2,000 or $2,500 car. A $2,500 car? Yeah.

Now, let me tell you how to do that, okay? Let me tell you what you're looking for, because you can actually get a fairly reliable car for $2,500 car yeah now let me tell you how to do that okay let me tell you what you're looking for because you can actually get a fairly reliable car for $2,500 what you want though is you want a car that is ugly this is chick repellent okay that's what this car is. No one is going to think you are wealthy. Ugly. But low miles, fabulous mechanics. And we care nothing about the appearance. All we want is something to get us back and forth to all these jobs so we can pay for cash for community college and we can work our butt off.

That's all we want. Okay? Let me give you an example. A few years back, and i've told this story before so some of our audiences heard it but you haven't heard it so a few years back i had my car was in the shop getting worked on and i asked one of my guys i said hey man after work can you give me a run down to the shop so they don't have to come get me you can just drop me off down there and pick it up he pulls up in front of our building with the most god-awful car you've ever seen in your life i'm riding in this

thing to the shop it was fabulous it was a 1994 ford granada it was a land yacht it had hail damage so it had pock marks all in the hood and the trunk. It was a color formerly known as red, but was bleached out to pink. Okay? Get this, though, dude. Get this. In 1994, the actual miles were 16,000 miles. It was his great aunt's car.

It had been left sitting outside, got hail damage. She left it sit there. aunt's car it had been left sitting outside got hail damaged she left it sit there she never drove it it was basically under all that crap was a brand new car you know but we called it we called we named you have to name a car like this its name was big red but it was really big pink it was really big pink but it was big red that was his name because he you know what he paid for it? 500 bucks. But this car, man, you could have gotten in this car and driven to California and not thought anything about it. It had 16,000 actual miles on it. It was in stellar condition except for the way it looked. And the way it looked was like a cartoon. It was so bad.

That's the type of thing you're looking for. Maybe not quite as bad as Big Red, but this thing is not going to be getting any awards for sex appeal. You are wanting something here that is reliable because you're not going to drive it long. Because you, sir, are a man that is decisive. You make decisions when you hear information and you act on them. I'm amazed you did this. I'm so proud of you. I mean, I really, talking to you last week, I wasn't sure you were going to do it.

Because everything I was telling you to do is against your family go against whatever you know you're already signed up the path of least resistance would have been to sit your butt there and stay in debt and you didn't go on the path of least resistance you went uphill you know how to go uphill to win you know how to pay a price to win you're the kind of guy i love helping regardless of if you're 19 or if you're 109 it doesn doesn't matter to me. But you're the one that gets things done. So you're going to be great. You're not going to drive this car for very long. One year later, you'll have a better car because you're going to make a lot of money

because you're going to work your butt off while you're going to community college and you're going to pile up money and you're going to be sitting there going, I got like $20,000 laying here. I think I'm going to upgrade this car and go to school. And that's where you're going to find yourself by the time I talk to you again this time next year. You are on your way, dude.

Touchdown. I love it. Michael, one more saved from the student loan plague. Michael in Florida, how are you, Michael? I'm good. Good to speak with you. Better than I deserve. How can I help, sir?

Well, my question is in reference to the TSP fund. I'm a GL-level employee with the government, and therefore we're under the TSP plan. Know it. I was listening to one of your podcasts, and I heard that you liked the money broken up between the CVS and the I-Fund. You heard correctly. Okay. So when I went and did the math, I got an average of return from the dates of inception on all the funds,

C being the best, G being the worst. But the I-Fund came in 400-point basis below what the F-Fund came in, which is the aggregate bond market, which has an inverse relationship to stocks. My question is, why not have just the CNS fund with a 50-50 or a 60-40 split, which has a 9% to 10% return in lieu of the I-Fund? Well, you could do that, and for the last 12 years if you had done that all of the numbers you just gave me would have been exactly perfect however if you go back

25 years what you'll find is the other inverse relationship which is as the u.s stock market goes down generally we see the eye go up The eye is overdue for a recovery. As a matter of fact, I recommend four types of mutual funds and non-TSP. Growth, growth and income, aggressive growth, and international. The international is in the same categories, in the same condition that that eye fund you're talking about is. If you did the analysis, you'd find the exact same crap. So much so that after 30 years of doing this on the radio, I went back with my SmartVestor Pro, and we did a full analysis on this. I was considering pulling the eye, the international, out of my mix after have ended up costing you a huge rate of return when you look at a 30-year span.

Now, when you look at a 10-year span, it's not so. But the I is overdue to be the big dog on the porch. The international category is overdue to be the big dog on the porch. I left my personal 401k mix with an the equivalent of an eye the international category and so i did not move the one on the tsp either but the good news with you is you're going to be just fine if you do your plan you're going to be fine if you do my plan you're going to be fine because what we're talking about here is a theoretical discussion and because we don't know exactly what the future is going to hold i'm I'm betting that something that's had a pattern over 50 years

is probably going to cycle back through, and you're betting the bond market, which I really wouldn't bet. But anyway, here's the thing. What we find is that what you're doing causes wealth more often than the returns causes wealth. You're paying attention, and you're putting money in the investment. People who pay attention and put money in the investment outperform all these people with theories who do nothing except discuss it and they have no money so the fact that you're actually paying

attention and you're putting money in the investment i don't care which one you do i got a real good reason for the way i do it and but I'm not going to argue with you much. You're on bead. Get after it, man. Just get them. Do it. This is the Dave Ramsey Show. Hey, it's Kelly,

associate producer and phone screener for the Dave Ramsey Show. If you would like to do your debt-free screen live on the show, make sure you visit DaveRamsey.com slash show and register. We would love for you to come to Nashville and tell Dave your story.