The Ramsey Show - App - Whole Life Insurance Is a Complete Rip-Off! (Hour 1)

Episode Date: February 1, 2021

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🎵 Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studios, it's the Dave Ramsey Show, where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. I'm Dave Ramsey, your host. Thank you for joining us. Open phones at 888-825-5225. That's 888-825-5225. Anthony O'Neill, Ramsey personality, number one best-selling author, is my co-host today, answering your questions.

888-825-5225. Anthony, back off a six-day quarantine in New York City in order to get to do six minutes on the Ryan and Kelly show. Yes, sir. I don't know if that's a trade or not, but it's a trade you made. It's a trade I made. And it was a good trade. It was a good hit. Yes, sir.

It aired last Friday, for those of you that don't watch Ryan and Kelly. Have I got that right? Yes. Yeah. Yeah. And it's a Ryan Seacrest and Kelly Ripa. Yep. But your segment was really strong.

It was well done. Oh, man. Thanks, Dave. It means a lot. It means a lot. Six days. I like how you said that. Six days for six minutes.

I didn't even really put the two and two together. It's a fair trade, I guess. You're willing to do things I'm not willing to do. But I'm old and uglier and not as desperate. You're just older, wiser, been in the game a lot longer than me, so I've got to put in a rookie style. I've already paid some dues where I don't have to do that crap. So, yeah, I mean, the requirements to do stuff in New York these days are untenable for most of us. But you paid the price to be there, and so your Instagram was real busy

because you were stuck in a hotel room with Uber Eats. Yes. And you got a lot of stuff done that week and then got to do the hit and then come on back here, and it airs on Friday. So well done. Thank you, Dave.

Thank you, Dave. It feels good, I mean, to be home. I didn't really understand how much I valued my home until I got back. Yeah. Well, the other thing about you being on, like Kelly and ryan is that you're you're cool enough to pull that off because i don't even use the same words

my cool factor i'm serious i'm in boomer land so uh yeah you you and uh you even had them back on their heels a little bit it was great it was fun it was fun afterwards um i didn't know that kelly had actually read my book debt-free degree so we was talking about that about her and her son and how she read it last year so it was just good to know that i was invited to be on the show because they wanted me on the show yeah so that was such a huge honor yeah that's very cool well done all right open phones at 888-825-5225 anthony is the host of The Table, which is a newly minted podcast. It's been on YouTube for quite a while. And this week, you want to tune in for sure.

I was telling Anthony before we got on the air, I listened to the first half of it on my walk this morning. It came out this morning. And, of course, it's Black History Month. Yes, sir. Or is it month? If I got that right? It's Black History Month, but we're doing it for just for a whole week on the podcast. Okay.

And you guys are walking through that. And so some good solid info there. The table is about having a discussion. Yes. Having a conversation about everything. Everything. Not just race. No.

But certainly concentrating on black history issues and black issues this week for sure. Yes, sir. And so be sure you tune into that and learn something it's it's uh it's a good open conversation by very bright and articulate people yeah they come around that table on different things last week was matthew mcconaughey yes and that was actually a real good one i actually had a blast you were a little bit fanboyed i really was i ain't gonna lie dave you were a little bit jacked up because one of my favorite movies is uh lincoln lawyer and so i was like okay this this the guy you know so you were yeah you were you were excited i had a blast interview it's a good interview but you were

real fired up i mean it was almost like when i first met you for the first time but after that yeah right now david's not even the same. You're not fooling anybody with that. Oh, that's great. That's fun. All right. Anthony O'Neill, again, my co-host today. Jamie Lee is with us in Salt Lake City to start this hour off. Hey, Jamie Lee, what's up?

Hi. Yeah, I just have lots of questions, but I only have one to ask really quick. So we have whole life insurance and term life insurance, and our whole life policy costs us like $109 a month, and it builds up kind of an investment over the years. So currently we have like $2,000, almost $3,000, and we still have, I want to say, six years left in our whole life before the penalty goes away. So if we canceled now, we would lose the $2,000 that we've incurred in the last three years. But it does cost us $109 on top of the, like, $40 that we pay for our term life insurance. So I'm just wondering whether or not it would be worth it for us to lose the $2,000 now and save ourselves more money in the long run,

or if we would be better off waiting the next six years and then canceling after the six years is up. I really don't want to spend $3,600 trying to get $2,000. Those are the numbers you just gave me. Did you catch it? $100 a month for 36 months until you get to $2,000? Well, we would have like $7,000 or $8,000 by the end of the nine years. Not after surrender charges.

So, no, I'm getting out of here. You got a hole in your pocket, sew it up, quit putting money in it. Yeah. It's a bad idea. Yeah. No, the whole life life insurance is a complete ripoff. Yeah, yeah. I'm with you, Dave.

I'm sticking with a 10 uh the term life insurance and i'm definitely counseling that i thought she said six years she had left i was like no i'm absolutely that's almost six grand so even the 3200 compared to the 2000 i'm not doing it yeah no thank you yeah the uh the deal is this make sure you have the proper amount of term insurance in place before you cancel it and go to zanderinsurance.com. You can get a quick, easy quote there, a gazillion companies. And you may even be able to beat the current term policy you've got because I'll bet you got it through the same people. Yeah.

And if you're buying term through a whole life company, it's always way more expensive term because they want to show you that there's not much difference between the two, which there's a ton of difference between the two. Yeah, building up a cash value inside of a policy is a horrible thing. As she just told us, the first three years you pay extra to build up the cash value. And how much is in your savings account? Zero. How about you go down to the bank and put money into the bank?

And you put hundreds and hundreds and hundreds of dollars in there a year for three years, and then you go down there and they say, no, your balance is zero. Yeah, yeah. And for those of you who are listening right now, Dave said make sure you have the right amount. What we recommend here is that you have 10 to 12 times your annual income and a term life insurance policy. So I just want to make sure we added that in there. There we go open phones at 888-825-5225 life insurance is never in capital letters never highlighted never a place to invest money number one they keep all your money for the first three years after that they pay you one to two percent after that when you die they keep all your money for the first three years. After that, they pay you one to two percent. After that, when you die, they keep your money again. They only pay the face value

when you die. So if you build that up that whole life, in her case, it's got three thousand or seven thousand in it, and you die, they keep the seven thousand. They only pay the face amount. You've been paying for cash value buildupup extra 20 times extra because five dollars will buy you the same amount of term that a hundred dollars will buy you in whole life in monthly premium so you've been paying 20 times more in order to build up a cash value that they keep all of it the first three years it's got a horrible rate of return and when you die they keep your money it's a horrible plan it's the payday lender of the middle class. The whole life companies are screwing

you. Are you listening? This is the Dave Ramsey Show. If current times have shown us anything, it's that the least expected events can and will happen, and we have to deal with it. That's why everyone who has a family counting on them needs term life insurance. For over 20 years, the only company I've recommended is Zander Insurance. Not only because they search all of the top term life plans to find you the best rates, but over the years, they have constantly changed and updated their systems to make the whole process simpler and easier to get the protection needed. You can now apply with a completely touchless experience

with everything being done either over the phone or the Internet. They also have plans with super competitive rates that don't require an exam, allowing you to skip a step and get the coverage you need faster. Go to Zander.com or call 800-356-4282. Great rates and a simple process mean there's no excuse to not get this done, people. Anthony O'Neill Ramsey personality is my co-host today. Sam is with us in Washington, D.C. Hi, Sam. Welcome to the Dave Ramsey Show. Good afternoon. Big fan here.

Thank you, sir. How can we help? Yes, sir. So I am turning 40 in a few months, and I just honestly wanted to validate my plans for retirement later this year. I have, I think I've positioned myself in a way to allow for that. And again, I just want to make sure that I'm not crazy. Okay. So as far as assets a little bit, I have about $1 million in a brokerage account, almost entirely in stocks. I have about $1.4 million in 401k and traditional IRAs and about $700,000 in Roth IRAs. I only have a mortgage as a debt, about $375,000 outstanding at about 2.6% and intentionally not paying that off

because of the low, you know, very low rate. My expenses in retirement are between $5,000 and $6,000, and net worth is about $4.2. What's the house worth? The house is about $1.1. Oh, okay. We have three kids, all under nine. So how much of this did you inherit? Zero. Oh, okay. All right, that gets me there. We have three kids, all under nine. So how much of this did you inherit?

No, zero. Zero. So you did this all the way from scratch. Way to go. Forty years old. You killed it, man. So proud of you. Thank you.

Very well done. Very well done. Well, there's not anything that we're going to tell you. I mean, you've got $4 million. I mean, you've done it. You know, I can give you some things I would do if I were in your shoes, but they would be fine-tuning is all. Number one, it's ridiculous, in my opinion, that you have a house payment. I just pay off my house today.

You know, you haven't borrowed a million against that house, and you could in order to invest it at a low interest rate. And the reason is you didn't like the risk, but this is a small enough risk that it didn't register on your risk meter. And I think it's just silly that you got a mortgage with that kind of assets. So I'd pay it off today. You know, you're asking what I would do. That's what I would do. The second thing is the $1 million in the brokerage account in stocks. Is that single stocks?

It is partly about, I would say, 80% single stocks and about 15-20% ETFs. Okay. Well, you've got enough there that you may be well diversified. I personally don't play single stocks. I've got a good deal more than that in the stock market personally between my 401ks and my other investments. But 0% is in single stocks. I don't like the risk associated with single stocks. And so I'm risk averse in that regard. And it is a misnomer that you can build a portfolio that is as safe in a brokerage account as you can build with a mutual fund. And so, you know, I would lean into those ETFs. that is as safe in a brokerage account as you can build with a mutual fund. And so I would lean into those ETFs.

I would lean into some index funds and some other things that are low turnover with that brokerage account and just let that sit there and grow. If you want to set aside a percentage of it to gamble with, it needs to be a small percentage, in your case, $300,000 or $400,000 max. But I don't personally gamble with any of mine, and single stocks are a heavy gamble. But other than that, I mean, you have done an incredible, incredible job. Yeah, and Dave, in everything that you said, I would have said the exact same thing. I was going to ask him, why not pay off the mortgage? 2.9%, yeah, that's a low rate, but you still have debt there.

You can be taking that money to do some other places. So, I mean, you hit it right on, Dave. Yeah, but obviously, you've done an incredible job, Sam. I mean, you're sitting there at 40 years old with that kind of net worth. Just be sure you don't think that you're ever going to get enough that you can, quote, unquote, quit, A, concentrating, and B, finding some way to serve. The human spirit is not designed to rest. It is designed to serve.

And you just won't find happiness in just a pile of money. It's wonderful to have a pile of money. We recommend getting one. But if you want a smile on your face, it's helping someone, serving someone, doing something. I've got many, many friends over the years that have had a liquidity event where they sold a company or they've just done as well as Sam has done. And one buddy of mine, he sold his company out for about $15 million when he was 32 years old. And he thought he was done. Yeah.

And he went fishing. Yeah. But he wasn't done. And he said, I got fat and I got miserable. Yeah. Yeah. And so 24, 36 months later, went on a diet and opened another business. Yeah.

Had to find something to do to serve something to do to engage himself in humanity fishing is fine golf is fine yes uh whatever your thing is is fine that's fine but when you do it every day uh and you do it all with the idea that that's going to make me happy and that's what you call retirement you're just gonna die yeah and that's why people retire and six six months later, they're dead. Yep. There's no meaning. There's no purpose.

So that's my only other piece of advice to you is just make sure that you stay engaged. And I think that may be a little bit of why I stay engaged. Number one, I stay engaged because I'm having so much fun. Yeah, you are. But, you know, I lost the need mathematically to work a long, long, long time ago. And so what I'm doing now is for fun. And it's for the, I don't know, there's a thrill of the engagement, being in the ring and swinging. And, Dave, I think that's the goal is do what you have to do so you can do what you want to do.

And you're in the season of doing what you want to do. That's a good line. Do that again. You know, it's just a goal is do what you have to do so you can end up doing what you want to do, and you're in the season of doing what you want to do. That's a good line. Do that again. It's just a goal. It's do what you have to do so you can end up doing what you want to do. It's an Anthony O'Neill version of live like no one else so later you can live and give like no one else. There you go. I like that. I like it too, Dave.

Thanks. That may be a good book title right there. There it is. What was it Zig Ziglar used to say? That's where I stole it from. He used to say if you'll do the things that other people won't do, then later you can do the things that other people can't do. Yes, sir. And so you paid the price to win, Sam, and you've really done an incredible job.

I just want you to get out of it all you're supposed to get out of it, spiritually, emotionally, relationally, and financially. Andrea is with us in Rochester, Minnesota. Hi, Andrea. How are you? Hi. I have a little bit of a two-part question for you. Can you hear me okay? Sure. Okay, perfect. I'm really excited to talk to you, Dave. Long-time listener and fan. My husband is currently finishing his fellowship, and so essentially our income is going to change drastically in July.

And he's a physician, I'm a physical therapist, and when that happens, you have a mountain of student loan debt. So essentially my question is when we're working our baby steps, are we going to need to invest some in retirement while we work step two just to reduce our taxable income? No. Okay. You need to reduce your debt.

How much debt have you got? You're going to blow my mind. I don't even want to hear this. It's $400,000. $400,000? Yeah. Yeah. You don't need to be investing anything.

You need to be scared out of your brain. You need to be investing anything. You need to be scared out of your brain. You need to be freaking out. I know in your world it's normal, but it's whacked. Yes, it's terribly, terribly. So get it knocked out and get it knocked out as fast as you possibly can. You don't need to worry about that. Anything else right now? Yeah.

Yeah. Beans and rice. Beans and rice. Rice and beans. For me, it's tomatoes and hot dogs. Tomatoans and rice. Beans and rice. Rice and beans. For me, it's tomatoes and hot dogs. Tomatoes and hot dogs? Yes, sir. Yeah.

Doctors eat tomatoes and hot dogs? No, I'm just saying. Yeah, Anthony. In the same meal? Yes, sir. Yes, sir. Tomatoes, hot dogs. Freaking strange. Yeah, it is.

That's just weird. But that's what I grew up on, Dave. James, do you eat tomatoes and hot dogs in the same meal? I don't. Good. I'm glad. You ever heard of it in the same meal? I feel better about it.

Only from you. You've talked about it before. But no, seriously, though. You mean, what Dave is saying is absolutely right. I mean, I don't see why do you want to invest. Well, because I don't want to pay taxes. And here's the thing. Do not get sophisticated.

Get scared. Yeah. And when you get sophisticated. Do not get sophisticated. Get scared. Yeah. And when you get sophisticated is when you get stupid. Absolutely. And the thing is, you really need to be very basic and very simple and very primitive in these early days and get the debt cleaned off as fast as you can with as deep a sacrifice as you can to where your broke doctor friends are thinking you're crazy. Because let me just tell you, the only thing more likely to be broke than a music star is a doctor.

Doctors who are broke and make a lot of money are like a stereotype. They're everywhere. This is the Dave Ramsey Solutions on the debt-free stage. They're here. Bill and Tara are with us. Hey, guys, how are you? Good, how are you? Welcome. Where do you guys live? In Ohio.

Oh, cool. Welcome to Nashville. And how much debt have you two paid off? $53,065. I love it. And how long debt have you two paid off? $53,065. I love it. And how long did this take? 16 months. 16 months. And your range of income during that time?

From $50,000 to about $70,000. Good for you. What do you guys do for a living? I work in customer service. And I work in the accounting department. All right. Very good. What kind of debt was the $53,000?

Quite a bit of college loans? Quite a bit of credit card bill, or I'm sorry, college loans and a little bit of credit card bills. Okay. And his car. And his car. Oh, his car. All right. Not your car, but his. It's his fault. What happened 16 months ago? I found a job that I really hated and I wanted to quit it. And I knew that we financially couldn't afford it. So I found the debt-free snowball and I made a huge wall of it. But there it sat. And a few months later, I was scrolling on a – I was diagnosed with MS a few years ago.

So I was scrolling on a Facebook page and they said that the average life expectancy is 62. And I was like, I'm not living like this anymore. I want to see the country and live and not have to worry about the debt. Hey, man. So how are you doing with your MS? I'm fine. I haven't relapsed in a few years. That's good.

Good, good. All right. Fun. So she comes home and says, we're doing this. What did you say? I was kind of hesitant at first. Yeah. You know, I was like, oh, things are going to be fine, you know.

But she's like, no, we're doing this. So I kind of went along for a little while. She kind of had to pull me at first. But once I started seeing, the first deck came off. The second deck came off. And I started getting excited. I'm like, all right, came off. And I started getting excited. I'm like, all right, this works. And I got on board.

And she wasn't pulling me along so much anymore. It was both of us working together. And that's important. It's a big deal. Yes, it is. A big part of it. Now, you went up to $70,000. So as you're on this journey, what did y'all do to get this extra $20,000?

Anything possible. Well, we door dashed, Grubhub, Instacart, all the fancy stuff. Which one was your favorite? I got to ask. None of them. None of them at all. We still do it and we still hate every minute of it. It's a lot of long days, but I mean, if you want it, well, you got to want it.

If it's just a dream or a wish, it's not going to happen. You got to want it. There's going to be a lot of long days. You're working on what first job you go out to do your side hustle at night you're going to come home late it's not fun but it's a short time and it's worth it so something something made you believe it was worth it what was that i don't know i guess you thought it was going to work didn didn't you? Yeah. Yeah. And I really, at my job, I started listening to you nonstop. And I was listening to everybody on the stage. And I was like, this works.

Like, I come up with a lot of crazy ideas it follows me along with. But, you know, this one I was like, you know, let's just try it. And if it doesn't work, it doesn't work. But it did. Yeah. Wow. Very, very cool. Congratulations.

Absolutely. So I got to ask this question. You said that you didn't like none of the stuff doing it. But what was outside of that, working the extra jobs, what was the hardest thing, the hardest no throughout this process? I'd say the budget. You know, in the video you talk about, somebody talks about a fight over just a couple of dollar movie rental. And we had that exact fight over a chocolate Easter bunny from the Dollar Tree. Fighting over the chocolate Easter bunny.

And he's even hollow. Who knew? Now, you said something that I'm curious. You said you all are still doing extra jobs right now, even though you're debt-free. What's the purpose behind keeping that right now? Oh, we're paying cash for a house. Oh. Well, hopefully by the end of the year.

Are you serious? Now, can I ask you how much of a house you're going to buy? It's going to be small since I am sick. I don't want an extravagant house. So, probably around $50,000. Wow. Wow. Look at you. Cash. Go, go, go, go, go, go, go. I love it. So, well done to extravagant house. So probably around 50. Wow. Wow. Look at you. Go, go, go, go, go, go, go.

I love it. So well done, y'all. Well done. I'm very proud of you. And I got one more question, Dave. All right. The average person makes about $48,000 to $52,000 in America, right? So you all are right there.

And a lot of those people say it's hard to get out of debt making that income. How would you encourage that person right now that's listening to you saying, I only make $52,000, but I have 60, $70,000 in debt. What's your first piece of advice and words of encouragement to that individual? Find something that works for you. Something that, um, you know, you're at least somewhat interested in, or just something that's, that's definitely doable. What works for us may not work for someone else. You have to find what works for you and just decide you're going to do it, stick with it, and work hard. Because like I said,

it's a short time to give up initially to live like no one else in the end. There you go. Amen. Good for you guys. I'm proud of you. How's it feel now that you're free? Amazing. How long have you been married?

Going on eight years. Were you ever debt-free during your marriage? Unfortunately not. Not until now. Right. I'm so proud of you guys. Very well done. Thank you for coming all the way down here to share your story.

Thank you. Thanks for having us. Very well done. We've got a copy of Chris Hogan's book for you, Everyday Millionaires, and that's for certain what your next chapter in your story is and i paid for a fifty thousand dollar house a good start well done you never know where you're gonna be in 10 20 years so you're you're heading in the right direction very very well done bill and tara from dayton ohio fifty three thousand dollars paid off in 16 months making 50 to 70 count it it down. Let's hear a debt-free scream. Three, two, one. We are debt-free!

Yeah! That's what it sounds like when you've been Instacarting. Instacarting. Grub-hubbing. Door-dashing. Doing things you don't want to do so you can eventually do what you really want to do. Just what we were talking about. Just what we were talking about. Just what we were talking about.

Just before the break. That's exactly right. Yes. There's a price to be paid. Yes. The Bible says no discipline seems pleasant at the time, but it yields a harvest of righteousness. It causes change. It causes transformation.

Here's the thing. Not only they get out of debt. Yeah. But not only is their relationship, but their relationship is impacted positively. They learn to get on the same page. I mean, once you've had the chocolate Easter bunny fight, you're at a whole new place in your relationship. You really are, Dave. That's a different one from the dollar store, right?

It really is. Which means it's old chocolate Easter bunny. He's a little aged. Yellow gray around the bottom there. Expiration date is gone. Not to say the dollar store would sell an expired Easter Bunny, but they might. They might. It could happen.

That could be why it's a bargain. I've been to the dollar store quite often. That's funny, though. But all kidding aside, once you've done that, once you've worked like this so that you don't have to work anymore, you'll never go back. They won't go back and look at them, Dave. They're saying, hey, we're still doing the things that we don't want to do because we want a house. And so not only do we want to be debt-free, but we want to be financially free and purchase our house cash. New grooves in your brain.

Find out for yourself why Blinds.com is the number one online retailer of custom window coverings. You get free samples, free shipping, and new promos all the time. Use the promo code Ramsey. They've got our question of the day, Anthony. Today's question comes from John in Texas. My wife and I have about $150,000 in student loans with about $25,000 being private and the rest to my knowledge being federal. With the new executive order stopping federal loans until September 30th of this year, would it be wise to take the federal loan payments we are currently making and apply those payments entirely to the private loans?

And once that 25K is paid off, apply the payment amount back to the federal loans. My quick answer is do not cheat the debt snowball. Right. Okay. Just line them up from smallest to largest and just attack it going that way. I get it. You want to go after the things that are still having interest right now. just line them up from smallest to largest and just attack it going that way i get it you want to go after the things that are still having interest right now but right now we want i want

you to focus on gaining momentum gaining excitement i want you to go after the smallest one first yeah and unless i misunderstand this is mistyped uh either in the retype or the initial uh there's not an executive order to my knowledge stopping federal student loans i think it stops the interest yes it doesn't say that here but it is interest on that and that doesn't matter you still There's not an executive order, to my knowledge, stopping federal student loans. I think it stops the interest. Yes. It doesn't say that here, but it is interest on that. And that doesn't matter. You still need to list your debts, smallest to largest, attack in that order, get rid of them, regardless of the interest rate, get the momentum of having some wins, get the momentum of knocking things out as fast and as hard as you can.

Yes, sir. And that changes the whole process. Absolutely. Well done. Good stuff. Good catch, sir. And that changes the whole process. Absolutely. Well done. Good stuff. Good catch, Dave. This is The Dave Ramsey Show. We'll see you next time. Anthony O'Neill Ramsey personality is my co-host. Open phones at 888-825-5225.

Alexa is with us in Atlanta, Georgia. Hi, Alexa. How are you? Hey, I'm great. How are you? Better than I deserve. How can we help? So, my husband and I followed your plan starting about a year and a half ago and we paid all of our debt off, which we're super excited about. And now we still have really worked hard for saving and we've saved about $170,000 in cash and our car, not our car, our house is worth $450,000 still owe $270 on it. Typically at the end of every month, I work for myself and I pay myself the bare minimum and I have about $5,000 a month

left over. We're trying to figure out if we should take that whole $5,000 a month and throw it at our mortgage monthly or if we should be investing that. Are you doing Baby Step 4 right now, investing 15% in and investing into your kids of college already as well? Yep. Okay. Are you out of debt? Yes. Yeah. You have an emergency fund other than the $170,000 in cash? Yes. So to be clear, this 170 is on top of you at six months, right? Yes. And so you tell me, what are baby steps four, five, and six? So I have only listened to your podcast.

I have never taken your course. Okay. So that's why I'm looking at that. Do you have an understanding of that at all, or do we need to kind of back up to there? I need to back up to that. Okay, fair enough. Yeah, yeah. So baby step four is when you invest 15 of your gross income your household income so are you and your husband doing that yes okay are you doing more than that no okay okay exactly

15 of your income is going into retirement yes okay so baby step one is a thousand dollars saved you've done that two is debt free dollars saved. You've done that. Two is debt free except the house. You've done that. Three is an emergency fund of three to six months of expenses. You've done that. These are the progressive steps that lead you the shortest distance between where you are today and wealth. Okay. And so then baby steps four, five, and six we do simultaneously. Four is 15% of your income into retirement. Five is kids' college. And six is pay off your house as fast as possible,

which leads us to the last step, which is seven. And then you're just nothing left to do then but build wealth and be outrageously generous. So you have $170,000. And before I answer this question for you, how much is in your savings account right now, your emergency account? So basically we have about $12,000 in that account. And what's your household income?

And we just leave it sitting there. I would say about $120,000. Okay. That's not three to six months of expenses. Right. Yeah. That's exactly why I wanted to ask that question. So I would up that up to about $25,000. Yep. And then the rest of that, I will go ahead and just dump straight onto your mortgage. So I wouldn't just do $5,000. I would put the extra $5,000 towards it, but I would go ahead and dump the rest of the, that should be what, about $150,000, $145,000, $145,000, put that on a mortgage.

That's going to bring you down to about $100,000 and something, and just go ahead and tack it from there. Yeah, and you're going to be debt free. You're going to be debt free in two to three years. Yes. Okay. Okay. That's why we're just making, like i i want to take the course at our church

and we have it and we kind of just like jump the gun and so that's fine that's okay i just didn't i just didn't want to i didn't want you to i didn't want to assume you knew all this stuff and weren't doing it i wanted to understand where you were not to pick at you but just to make sure that that we could take care of you so um yeah the uh uh i think the thing to do is our purpose is to say, okay, out of the 10,000 millionaires that we did research on, how can we get you to look like them as soon as possible? Got it. And that is typically a paid-for home and a pile of money in a 401K and Roth IRAs as the first $1 to $5 million of net worth. Got it.

Okay. After that, your net worth will start to change in its composition probably. But the first $1 to $5 million, it's going to be largely a paid for home and a big pile of money in a 401k and mutual funds or Roth IRAs and mutual funds, that kind of a thing. And that's where we're leading you to is because the paid-for home with your income and at your age is going to lead you into wealth very quickly. Because think about when you don't have $5,000 a month going on the mortgage,

you've got $7,000 a month going on to or $8,000 a month going into investments because you don't have a house payment anymore. How quickly that's going to turn into a million dollars. Really, really quick. That's pretty cool. It's pretty cool. Really cool. Great job.

You guys are doing amazing. You're really doing great. Hang on. We're going to send you a copy of the book, The Total Money Makeover, which gives you all the baby steps on steroids, so you get all the nuances and details of when and why and all that kind of stuff. Greg is with us in Philadelphia. Hi, Greg.

Welcome to the Dave Ramsey Show. Hey, how are you doing today, Dave? Better than I deserve. How can we help? So my question is, my wife and I currently live in a duplex. It's owned by my father, and we pay about $800 a month. And what we wanted to do is we wanted to purchase the property from my father and then

rent out the other floors and just try to turn a profit on that and show him to see if that would be a good investment or not. Okay. Walk through that one more time. I got lost. Oh, sorry about that. That's my fault. My father, my father owned a duplex and my wife and I are currently living in one of the units. So we pay $800 a month in rent and he wanted to sell it to us for $200,000, which is pretty good for the market around here compared to other houses on this, other rental properties on the street. And then what we, our plan to do was there's actually three total units to triplex, but only two of them are currently in livable

condition i was going to fix up the basement and then start renting that so my my question was would it be a good idea to do that or just continue to like right now we're pretty financially stable we have no debt what's your household income household Household income combined is like $90,000. How long have you been married? Three years. Okay. I think if you were renting from someone else, you would not be considering the purchase of a duplex. You'd be considering the purchase of a home. Yeah, yeah.

But so you don't think it's, I mean, just in terms of just the financial investment, you don't think it's a good investment. I mean, I'm pretty good financially. I have $65,000 in index funds. I have $32,000 in a savings account and then $50,000 in a 401k. You're doing great. You're doing great. I just think that making $90,000 a year is a couple married three years. The number of times you want to live in a duplex and and rent the place next door is very it's very rare yeah i mean some people do and i don't and i

don't think it makes you a financial genius to do it and i don't think it makes you a financial uh stooge to not do it and so um i i i mean i might buy a duplex but i'm gonna buy it later after i get my home and get it paid off and And that's where I was going with you, too, as well, Greg. I mean, right now you're a young couple making good money. Just go buy a home first. So Dave and I, neither one of us are saying buying a duplex is a bad decision where you are. But we're saying right now, take care of home first, get a quality home for your wife or yourself, and then down the road, pay cash for a duplex to where it can really turn into instant revenue for you. Yeah, that's the thing.

This sounds like you're doing all of this based on the math of being a landlord and the math of, you know, I'm already paying $800 for one side and I can have my tenant next door. And you feel like you're a sophisticated investor and all this math, math, math, math, and you're not thinking about quality of life. The problem with having a duplex and living in one side is your renter is next door. Does that not say it all? I mean, you know, you want to have good boundaries as a landlord, and it's very difficult to do when your renter is next door. I mean, you can do it. It's possible, but it's just a very difficult scenario to pull off and to do it well.

And so I think if I'm in your shoes, I'm avoiding that. Yeah, I am too. I am too. Trust me, I've even thought about it. I don't want it. I don't want it at all. I want a house. Well, there's't even thought about it. I don't want it. I don't want it at all. I want a house. Well, there's something going on right now.

Real estate has become, as an investment for people in their 20s, has become a really popular subject. Yep. As if it's the way. And it is a great way to build wealth. It's also a great way to be poor if you don't have substantial wealth. I mean, substantial. Yes, sir. This is the Dave Ramsey Show.

This is James Childs, producer of the Dave Ramsey Show. You can listen to Dave, Rachel Cruz, Chris Hogan, or the rest of the Ramsey Network anywhere with the Ramsey Network app on your smartphone. Catch all of our full shows, browse by topic, or send clips to your friends. Head to the App Store and download the Ramsey Network app today.