The Ramsey Show - App - Why Math Is Not Your Biggest Problem With Money (Hour 1)

Episode Date: August 3, 2018

The show about you

🎵 Live from the headquarters of Ramsey Solutions, 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. This half-hour, Ramsey personality Chris Hogan, number one best-selling author, joins me. Number one best-selling author of the book, Retire Inspired. So you have retirement questions, investment questions, or questions in general. Chris can answer them, and he and I will jump in together and take care of you. So you jump in, and we'll talk about you this hour, to you and for you.

The phone number is 888-825-5225. That's 888-825-5225. Again, Chris Hogan, Ramsey Personality, joining us this half hour. Author of the book, Retire Inspired. One of my favorite sayings of yours is, it's not an age, it's a financial number. Welcome back, Chris. Thank you, Dave. It's good to be with you.

And that's exactly right. I think, Dave, too many people think you're going to hit a magic age and the government's going to take care of you or something magical is going to happen. And I think more and more people are waking up and understanding it's a number they've got to understand what that's going to take and they've got to start to work a plan to get there i know that you're right and we all have this 65 marked in our head and i have talked to people over the years here on the air who call in and they say um well i'm b65 next year i'm gonna retire and i'm like you have no money how are you gonna do that well i'm just tired um sorry so am i but you're gonna be working you have no money so it is a financial number whether you're old or you're young if you want

to quote unquote retire, I had a friend of mine sold a business for a bazillion dollars when he was 32 years old and went fishing for two years. After that, he retired. Now he went back to work because he got bored and opened up another business. But but, but you know for two years he quote unquote retired at 32 years old years ago and uh you know he had that option because it's a financial number that's exactly right and dave i've had other people tell me why i don't have to worry about saving for retirement i'm just going to work until i can't work anymore and i'll never forget the guy that came in this office about eight years ago he was uh 48 years old and had been diagnosed with early onset alzheimer's at 48 dave and i'll never forget they're sitting there

talking to him and he was trying to make sure he had all his i's dotted and his t's crossed and he'd been listening to you for years and so he had a good set of monies put away but for people out there that tell me i'm just going to work until I can't work anymore, I have one statement for them, Dave. What if your body won't let you? Or your mind. Or your mind. And so that wake-up call needs to happen with more people to truly get them to start to engage this process. Yep, absolutely.

Wow. Wow, wow, wow. Well, Chris Hogan joining us this hour. If you want to talk about investments or retirement or money for that matter, the phone number is 888-825-5225. Now, one of the things you've picked up lately, I've seen you doing a bunch on this, that I think is just very important is this idea of income streams, streams of income.

Now, talk about that for a second, what you mean when you say that. Okay. Well, first of all, I want people out there to understand your 401k and 403b, it's not just an account that's holding money. The goal of those accounts is to at some point replace your paycheck. And as people start to think about that, Dave, they go, oh, so that money's sitting there. I'm growing it. So one day when I don't, I'm not working because I don't have to. Now I can draw money from that account and replace it. Also, other streams of income might be saving for retirement outside of retirement type

of accounts, meaning mutual funds, being able to utilize your IRAs, mutual funds, things of that nature where you're creating income that can come in to replace your check. And if you have enough nest eggs in rental properties or mutual funds or 401K mutual funds or IRA mutual funds, and you add all those together to the point that as a group, they make you more money than you are making you. When you and I were teaching in the Legacy Journey, we called that the tipping point. Yes.

The pinnacle point, rather, the pinnacle point. When you go across the top of the hill, and now you're riding downhill because your money's making you more money than you are making you. And that changes everything. It really does. It gives people awareness. And as I talk about the 401K and the 403B and that stream of income, I think more people are starting to look at those accounts in a different way. But I do want to emphasize, because someone called me last week, Dave, asking about buying an apartment complex. And then they started saying that four letter word alone. And so I want people to understand if you're investing in real estate,

you want to do that with cash. You want to be intelligent and it's going to take you longer and you're going to slow down, but it's not going to bring debt in your life, which is also going to bring risk. Well, when I hear you say income streams, I remember all the get-rich-quick literature. That's what they always pitch. You need multiple streams of income, multiple streams of income, and you can do this, this, this, multiple streams of income, whether it's some kind of a multi-level thing or whether it's some kind of get-rich-real-estate-nothing-down thing or whatever it is, you've got to be very careful when someone starts throwing that phrase around, multiple streams of income.

But at the end of the day, any time you have a goose that's laying golden eggs, those golden eggs are a stream of income. And if that goose is your nest egg, your 401K, and you've got a million dollars in there, and so you pull off $100,000 a year, and you're making $100,000 a year on it, so you're basically breaking even. If you've got that, that's a stream of income. That is correct. And it doesn't have to be some kind of get-rich-quick thing where you go into debt and, you know,

I've got to do this because I've got to create multiple streams of income. There's a desperation weird sound that gets in people's voices when they do that get rich quick thing. You know what I'm talking about. I do know what you're talking about. I mean, I hear those all the time. And that's definitely not what I'm alluding to. I'm wanting you to really sit down and understand how your 401k is going to translate into a paycheck to you when that time comes. And so being aware of that, I encourage people to sit down with the SmartVestor Pro. These are investment professionals Dave and I trust that can walk through and really

help you start to understand it a little bit better. The RIQ is a way to do it quickly. You say, if I had this much money, how much would it generate for me? And what have I got to do to get this much money? This much money is your number. It's your retire-insp inspired quotient and your r iq and so um that that's the process you just got to look at that nest egg and say how much money is this going to create at six percent eight percent or twelve percent whatever i want to calculate it at and what do i think i can earn on it because i don't want to destroy the goose no i just want to get the eggs and that's all we're after yeah that's exactly right so you have to be smart about how much you're pulling off and what you're living on. But, Dave, I also want to point out, people ask me, is my equity in my home an income stream?

And I say, well, only if and when you sell that property and you get the equity. At no point in time am I encouraging you to ever get a HELOC, which is a home equity line of credit, which is also known as a mortgage. We're not wanting to go backwards. So if you're thinking about selling your home and you have equity, then yes, that could produce another piece of income for you. But that's another one of those get rich quick things over there that I hear. If you need multiple streams of income, get a reverse mortgage and go back into debt. That's the same thing.

So don't confuse what Chris and I are saying with the Get Rich Quick literature that's out there, because that's not what we're talking about. All we're saying is have a goose that's laying some golden eggs. And, you know, that's some paid-for real estate, that's some mutual funds, and or some mutual funds inside your retirement plans. Chris Hogan, author of the number one best-selling book, Retire Inspired Ramsey Personality, with me this half hour. We'll take a couple questions from you coming up after this break.

The phone number is 888-825-5225. This is the Dave Ramsey Show. Okay, I need you to listen to this, because one normal routine that everyone does can cause total chaos in your life. Folks, I'm talking about the simple act of using Wi-Fi. When you're on Wi-Fi anywhere in public or at home, you're at risk of hackers easily seeing every site you visit and search you're doing online. It doesn't matter if you're doing it on your cell phone or your laptop.

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That's hotspotshield.com slash Dave. You can be secure in seconds. Download Hotspot Shield today. Thank you for joining us, America. Chris Hogan joins us this half hour. Ramsey personality, author of the number one national bestseller, Retire Inspired. You can go to ChrisHogan360.com and use the R-I-Q, the Retire Inspired quotient. Know what your retirement IQ is. It takes just a few minutes to enter a couple numbers, and you will know what your road looks like to retirement success.

And then, of course, it's easier to stay on the road if you actually know where it is. And so have that guideline, and that's what Chris is here for. So, all right, let's go to Boston and talk to David. Hey, David, your question for Chris Hogan. Hi there, Mr. Hogan and Mr. Ramsey. Thanks for taking my call. Sure. So I had a question. I'm 23. I'm going to be 24 in a few months, but I'm currently self-employed and I contribute to a SEP IRA based on the fact that I can put up to 25% of my income in that and deduct it from my income so it's not taxed. I hear you on the show talking about the benefits of a Roth IRA a lot, and I used to do that when I started working, but I switched over recently,

and I was wondering if you think that's a smart idea or if I should stick with a Roth. Okay. And, David, how many employees do you have working with you? Sorry, it's just me. I mean, there are other people that work. I'm essentially an independent contractor, but there are other individuals that work in the company. Okay, all right. And so right now you are currently doing the SEP, and are you also doing a Roth or no?

No, no, no. I was under the impression you could only do one or the other, but you two obviously know much better than I do. Yeah, no, Sir David. You're actually allowed to be able to do both of those, all right? Oh, okay. And so, yeah. Now, we've got to remember this now. With the Roth, you can do up to $5,500, all right?

That's going to grow tax-free. But definitely still do the SEP that you're doing because that allows you to do up to 25% or up to a max of $54,000. So definitely plug into both of those and take advantage of all the tools at your advantage. Now, that's assuming you are debt-free, are you? Well, soon to be. I just started looking to be, unfortunately, but I plan to be within the next five months or so. Okay. If you're going to do it that quickly, that's fine. Otherwise, we teach people to temporarily stop retirement savings until they knock out the debt,

because when you don't have any debt, you've got your most powerful wealth-building tool, which is your income to build wealth with, obviously. Jennifer is with us in Cleveland, Ohio. Jennifer, your question for Chris Hogan. Hi. Hi. Thanks for taking my call. How are you?

Better than I deserve. How can we help? So my question is, for the last six years, my husband and I, unfortunately, have made very poor decisions, very impulsive spenders, not savers at all. And we're now not including our house. We're about $100,000 plus in debt. That includes my student loans, and I'm still in school racking up loans. So my question is, I know you say pause retirement until you're debt-free, but what about, so basically I'm getting ready to lose my job and transition to another company.

I'll no longer be able to, you know, utilize, it's the retirement fund, it's called SERS, it's a 403B. I can roll it, I can keep it where it is, or I can take it out. Whether I take it out now or later, it's a 20% penalty plus 10% at tax time. And then after penalties, it'll be about $5,000, and that'll be able to go towards our debt. So what I'm thinking is I want advice as to is it wise to take it out if it's going to go towards debt or should I keep it where it's at? You're still racking up debt, and should I keep it where it's at? You're still racking up debt, and you're calling me trying to get out.

You can't get out of a hole while you're digging up the bottom. No, we're in a really, really bad situation right now. So stop it. Well, I did the plastic to me that you talked about. All the cards are cut up. We don't use them. We're not currently adding to our debt besides the student loans that I have. I'm in my last year of my graduate degree, and I'll be done in May. And your degree is in what?

I'm a licensed social worker, so I have my master's in social work, and I'll be able to be independently licensed and can go into private practice. It'll open more doors for me, and so I'll be able to make a lot more money once that happens in May. We both drive for Uber and Lyft. So we have a one-year-old daughter. He works full-time. I work part-time.

So we're definitely trying to grow it. How much is your car payments? So my car payment is $228 a month. We owe about $3,000 on mine. His is $ 228 a month we owe about 3 000 on mine his is 263 a month we owe about 5 500 on his car and then we have um credit cards we have the um dental first basically we had to finance him some of the dental work that he had to have done. And then, yeah, student loans, our house, like I said, credit cards. So we're pretty much drowning. We're kind of like in a place where, you know, it's not funny,

but every week it's like, are we going to overdraft this week? Yeah, we probably will. You know, it's like, how much are we going to go negative? So you don't have any kind of a plan? We have zero savings. You have a plan. We have zero savings. You have no plan. We have no emergency. You have no plan.

You're not writing out your budget because nobody intentionally goes into overdraft. We do write out our budget, but... No, but it's a myth. Yeah. I'm not good at it. Neither of us are good with numbers. Neither of us are good with money. Neither of us are good with money. Listen, honey, it's sixth grade math.

That's a cop-out. What you're not good at is controlling you. Mm-hmm. You've got to control you. You guys are coming. How old are you guys? I'm 30. He's 35.

Okay. So it's embarrassing. You know, it's humiliating that we don't have an emergency park. When you get sick and tired of being sick and tired, you're going to control you. Because you don't have to buy crap that you're buying. Going into overdraft is not an accident. It's an intentional act of disorganization and impulsing. Mm-hmm.

And you can stop it. Listen, let me ask you this. You said you had a child, right? Mm-hmm. If you went into overdraft again and it cost your child his life, you suddenly could stop going into overdraft, couldn't you? Yeah. Because all of a sudden it didn't matter enough.

It just hadn't mattered enough. You're going to have to get mad enough to change. Okay. And, hey, you're studying this stuff. It's your graduate degree it's behavior modification for goodness sakes it's a socio-economic problem you're fighting here so you you got to get on that listen and and the sidebar is you don't cash out your 401k you don't cash out your 403b unless it's to avoid a bankruptcy or a foreclosure and you've got bad information it is

a 10 penalty plus your tax rate, your household tax rate. And if your household tax rate is 10%, then we've discovered another problem. Your husband doesn't make any money. What does he make a year? Like 35. Okay. Yeah, your household tax rate is probably a little higher than 10% then, and that's what you're going to be facing.

So, I don't know, Chris, what do you got to add? No, I would just say, Dave, she hit the nail on the head. She said they're both impulsive spenders. And what she has to do now is begin to become really focused spenders. They've got to sit down and really decide together that they're going to change their habits so they can change the legacy for this child. This child is depending upon mom and dad acting like grownups. And this is exactly what has to happen. Any money they come into right now without a plan, they're going to

waste it. They're going to impulse it away. And I would love to see Jennifer and her husband really sit down and get plugged in, get into Financial Peace University and learn the habits of managing your money. Jennifer, if you'll hold on, I'll have Kelly pick up. We'll put you guys into Financial Peace at Chris's suggestion there and send you a copy of his book as well. But here's the thing. Dumb people don't get graduate degrees. This is not a lack of intellect.

It's a lack of the emotional ability to control impulse, which is called maturity. And so you guys can do this. It has to become important enough. If I hired you for $100,000 a year to manage money for a couple called Jennifer and her husband, you could do it. Even though you're quote-unquote not good with numbers. But if I said, hey, Jennifer, I'll hire you for $100,000 to take care of this couple's money for the next year, you suddenly become a dadgum budgenista. You'd be in charge of budgenistas, right?

I think you just created a word. I think I just did. I like it. You never know about me. It could happen. Chris Hogan, ladies and gentlemen, thanks for joining us, Chris. Thank you, Dave. This is the Dave Ramsey Show. Thank you. Can you believe this real estate market?

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This is a paid advertisement. NMLS ID 1591. NMLSconsumeraccess.org. Equal housing lender. 761 Old Hickory Boulevard, Brent Solutions, Cody is with us. Hi, Cody. How are you? Good. How are you? Better than I deserve.

Where are you from? Mitchell, South Dakota. Wow. That's a bit of a haul to Nashville. Yeah. 15 hours. Wow. All to do your debt-free scream?

Yes. Well, congratulations, sir. Thank you. How much have you paid off? $29,465. I love it. And how long did that take? 12 months.

Good for you. And your range of income during that time? $28,000 to $32,000. Okay. That doesn't add up. What'd you sell? I sold my motorcycle. Which brought how much? $4,000. It was my dream bike. Oh, what was it? It was a 2008 Buell 1125R. Oh, okay. I built it

myself. You did? I redid it, so. Oh my gosh. Wow. So that was part of the debt. Yep. What was the rest of the debt? $9,000 of mutual funds that I sold off. Oh, okay. All right. Now the numbers are starting to make sense in 12 months. Yeah. Okay. Unless somebody's paying you to live somewhere.

Okay. Good. All right. So that's 13 of the 29. Yep. And then the rest of it you cash flowed? Correct. Okay.

Yep. Okay. Beans and rice, rice and beans. A lot of mac and cheese. A lot of mac and cheese. Broke people food. Yep. Beans and rice, rice and beans. A lot of mac and cheese. A lot of mac and cheese. Broke people food. Yep. Yeah.

I used to eat tuna fish when I was broke. Sharon would make me a tuna fish sandwich. I still, when I smell tuna fish, my net worth goes down. Yeah. It's broke people food, man. I know it's supposed to be health food, but yuck. All right. $29,000.

Congratulations, dude. Thank you. I mean mean you killed it you sacrificed yeah i had to say no a lot of times when you got rid of the bike man then part of your heart went with that yeah that was the last thing i got rid of actually that's what became debt-free that's what knocked it over the top in 12 months what happened 12 months ago to put you on this journey well actually 14 months ago i'm sitting in my brother's apartment, and he actually became debt-free using your baby steps in 2013, and he was writing down on a sheet of paper, giving me a plan and a budget, and I was giving him my income and everything, and I looked at him dead serious, and I said, you're nuts. This is weird. I can't do this,

and it took me a good two months of him nagging me and just kind of figuring it out to really get on board. So is this your older brother? This is my older brother, yeah, Brandon. So he's thumping the younger brother going, you're being stupid. You've got to stop it. Yep. Good for him. Good for him.

So, yeah, it took me two months, and then I started on the journey. He said, okay, all right, I'm going to do it. Were you a little bit like he kind of nagged you into it, were you a little bit reluctant at first and the steam picked up as you went along, or did you just go all in? I mean, after that two months, I really just went all in. Like right when I started, I went all in. Okay, very cool, very cool.

Is that your brother you brought with you? Yes, my brother and my dad. All right, guy's trip. Yeah. Very cool, good. Well, I'm brother you brought with you? Yes. And your dad, maybe? My brother and my dad. All right. Guy's trip. Yeah. Very cool. Good. Well, I'm sure your dad's proud as well. So, very cool.

Well, that's pretty neat. You have a big brother that does something like that. Bust your chops for your own good, huh? Yeah, for sure. How old are you? I'm 24. And how old is he? He's 28.

28. 27. Oops, sorry. Three, four years. 27. Depends on when the birthday lands. Yeah. Sometimes he's three years. Sometimes he's four, yeah. Yep, for sure. Very cool. Good? Oops, sorry. Three, four years. Depends on when the birthday lands. Sometimes he's three years, sometimes he's four.

Yep, for sure. Very cool. Good. That's neat. That is neat. So where did he pick up this information? Do you know? Actually, my cousin used to work for you.

Oh, who's that? Kiza. Oh, yeah. Okay. Kiza White. Yep. Yeah, for sure. She's a great lady.

Yeah. Very sharp. Well, very cool. Good. Good. Well, that'll get it going right there. She's a great lady. Yeah. Very sharp. Well, very cool. Good, good. Well, that'll get it going right there. That's excellent, man. So 24 years old and you're out of debt. Yeah, the one thing I wanted to mention too is in the summer of last summer,

I actually created a business called Cody's Lawn Care, and that also supplemented trying to pay off my debt. So, yeah, I just started it in the back of my Jeep and got a mower and just started mowing lawns. And I even picked up leaves and I washed windows for an old lady, too. It's amazing what people pay you to do if you ask them. Yeah, and they'll pay you a lot of money, too. They really will.

You don't make bad money at all doing that stuff. It's real because nobody wants to do it. It's awesome, man. Way to go. You're taught hard work somewhere along the line, weren't you? Yeah, for sure. Yeah, cool. Good for you, brother.

Very well done. So what do you tell people the secret to getting out of debt is? Well, I got three things here. My first thing is have a budget and a plan. Use all cash. I use complete cash the whole time. And then follow the baby steps and celebrate the little wins. Yeah. So knocking out the little debts as you go along with the debt

snowball, that's a big deal. Yep. Better keep you out there raking leaves. Yep, for sure. Yeah. Very cool. Well, congratulations, sir. We're proud of you. I'm sure your family is. Yeah. And one thing I want to say, I just really want to thank my mom because I stayed in the basement of her house for six months, and I couldn't have done it without her. So I really want to thank her as well. Cool. And everybody that's been around me, my friends and family. So, yeah.

That cut the rent down then. It made your cost of living go way down. For sure. So you could throw it all at the debt. Yep. But it was just for a period of time. Are you back out now, right? Yep, I'm back out now.

I have my own apartment. Good for you. Perfect. That's exactly back out now, right? Yep, I'm back out now. I have my own apartment. Good for you. Perfect. That's exactly what should happen. Very well done, man. Good job. Got a copy of Chris Hogan's book for you, Retire Inspired. Thank you.

That's the next chapter in your story to be a millionaire. And you're on your way. I'm ready to be. You'd be surprised how quick it's going to come. Because you have the work figured out. You've got the budget figured out. You've got the savings figured out. You've got the budget figured out. You've got the savings figured out. You know how to move money around now.

You're in control of stuff that 54-year-olds don't have control of. So you're doing really well. So Hogan's book will help you go that way and be outrageously generous along the way, of course. For sure. High correlation between people that build wealth and generosity. So always keep that in mind. Very well done. All right, it's Cody from Sioux Falls, South Dakota.

$29,000 paid off in 12 months, making $28,000 to $32,000 a year. Count it down. Let's hear a debt-free scream. Three, two, one. I'm debt-free! That's how you do it right there. Love it. Absolutely fabulous.

Absolutely fabulous. Man, that is awesome. Good, good, good, good call. Good story there. Very well done. Tasha is with us in Columbus, Ohio. Hi, Tasha. How are you?

Hi, Dave. I'm good. How are you? Better than I deserve. What's up? All right. We really value your opinion in our house, and we are remodeling our kitchen. We're in Baby Step 3B.

We've been saving for this. I mean, we meet with the contractor tonight, but I'm just having some anxiety about how much we want to spend on our new kitchen. Okay. So I just wanted to get an okay or no, that's too much. Okay. Number one, do you have the cash? Yes. Okay. And it's above your emergency fund and you're out of debt except your home. Yep. We did our debt free stream earlier this year with you and we um awesome cash for it and we have it ready to go it's just it looks so nice in my account it's just kind of perfect anxiety like what is the house what's the house worth we bought it for 140 and i looked at the houses in our neighborhood not too much for sale right now but i've seen between 140 and 170 okay it's what they're going for right now. So what do you think yours is worth today, as is?

Probably, I mean, we only bought it two years ago for $140, so probably between $140 and $150. Okay. Let's just call it $150. I'd say it's gone up. Most places have. But the other houses in the neighborhood go up to $170. What's the most expensive one in the area that's sold that you know of in the immediate street or so?

Well, we do have some. There's a little nicer neighborhood that's attached to our neighborhood that they go for $270. No, that's not. But people don't look on your street for that house. When they're looking on your street, what's the most expensive? The highest I've ever seen is $170. and that's out that's so let's pretend yours is worth 150 you wouldn't want to be more than the top of the neighborhood when you're done which means 150 plus 20 takes you to 170 so you wouldn't want to spend more than $20 on this kitchen unless you're going to live there 10 or 15 years and live up some of it.

Yeah, our goal is to pay it off and buy our next house for cash. So we're looking at 10 years to be able to pay it different off and pay cash. What are you estimating on the kitchen? About $20. Okay. I wanted it at $15. And when we got the contract, we had the good, warm, fuzzy feelings with this guy, and he came in at $18,000, but that doesn't include some of the upgrades.

So now we're just kind of like, do we want to pay? I'm not going over $20,000 if I'm in your shoes. If you're going to overbuild your neighborhood, you're not going to get your money back. You've got to sell the house for $170,000 to come out on the discussion at $20,000. So if I'm you, that's my cap on my budget. If you've got the cash and you've got and you got the 20 above your emergency fund, I would do it. This is the Dave Ramsey Show.

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and with the new promos they run every month, you're going to save even more. Always put in the promo code RAMSY, and you'll see the best possible deal out there. Blinds.com. Promo code RAMSY. Rules and restrictions apply. Today's question comes from Lewis in North Carolina. When putting 15% toward retirement, do we include our employer match or does all of it come directly out of our income? Well, you would take the employer match, but the 15% I talk about in Baby Step 4 is you put 15% of your money into retirement.

Then if in addition to that, at Baby Step 4, your employer gives a match of some kind, that's just extra gravy on the biscuit. That's all. So, no, I want you putting 15% of your income out of your money into your retirement. Mike is with us in Minneapolis. Hey, Mike, how are you? Hey, Dave, I'm doing real well. How about yourself? Better than I deserve.

What's up? Hey, so I just started listening about a month ago, and it's been great traveling around, listening to all your advice. It's been perfect, and it's perfect timing for me. I'm 26. I'm making about $100,000 a year. I got some debt, but nothing out of control. And I'm trying to, I'm just starting to really plan for my future, frankly.

I've got a 401k and that kind of stuff. But I started talking to a financial advisor, and they're pushing me to start towards a cash value life insurance plan. You don't have a financial advisor. You have an insurance agent. Yeah, well, yeah, the Northwestern Mutual guys. Yeah, they're not financial advisors. They're insurance agents. Yeah, yeah, yeah. So, you know, we're talking about the planning,

and, again, I'm just starting to think about all this stuff and who the heck these people are, you know. Yeah. And they're pushing me towards this cash value, and my thought is, you know, the way they're trying to explain it is, hey, part of it is going to defer over, you know, if there's disability, and the other part comes off a term and then into the cash value. And, hey, after five five six years of contributing to this thing it has cash value you can use it as a yeah so what happened all your money in the first five or six years oh it all went to fees huh yeah and that's what i'm kind of you know the way they

explain it i'm like okay so in seven years i can leverage that for a percentage for a loan i know you you know i just started listening yeah so you say so you save money and they take all your money for the first five or six years in fees and then when you finally get some money if you want your money you have to pay them interest to borrow your own money and that's essentially how it works yep that's exactly how it works oh and here by the way you paid extra for this money all this time and when you, all you get is the face value going to your heirs. The amount you save, they keep. So there really is no savings benefit to what they're offering.

It's a savings account that has a poor rate of return, and when you die, they keep your money. Oh, okay. And that's why no one in the financial planning world pushes cash value insurance. The only people that do that are cash value insurance people, not financial planning people. And that's how I knew you weren't dealing with that, because they're the only people that sell it. It's the people that believe that stuff. And everybody else, traditional financial planners, all kind of laugh at that stuff. And truthfully, Northwestern Mutual is the worst. They're the most expensivefully northwestern mutual is the worst they're the most

expensive of all of them and so they're horrible but it's basically i call cash value insurance the payday lender of the middle class it is an antiquated really bad product and so now you need to get somebody else to talk to different than that i'll send you a copy of the book the total money makeover to walk you through the thing thing. And you're single or what? Yeah, I mean, single. I've got a girlfriend. She's the one that turned me on to this. We're talking about doing the class here in town. Oh, cool. Awesome. Let me send you a Total Money Makeover book. As long as you're single with a little money set aside to bury you and no one's counting on your income to eat,

you don't have dependents, you probably don't have a lot of need for life insurance. And that's why I'm, like, questioning it. I keep saying, oh, it's not really life insurance, it's just cash value. And I'm going, I don't know. Well, it is life insurance and cash value combined. So that part is correct. But the bottom line is, can you do a better investment than cash value?

And the answer is, yeah, a freaking fruit jar is a better investment than cash value. So, yeah, do your investments with good investments. Do your insurance with insurance, and don't bundle them. When you put them together, that's when you're going to get into trouble and be drawn back into this. But let me send you a copy of the book. It'll walk you through every bit of that. And then if you want to sit down with somebody to help you with your investments, get somebody in the mutual fund world that's a financial advisor in those worlds

that are actually selling real investments, not cash value, because cash value is definitely not an investment. It's just a really expensive, bad insurance product is all it is. So, yeah, hold on. I'll have Kelly pick up, and we'll send that out to you. And if you want to do something, again, if you're ready to do investing, whenever you're ready to do that, just click Smart Investor at DaveRamsey.com, and you can find the people we recommend.

I'm not in the business. I don't care what you do. But we have people ask us all the time, you know, where do I find somebody that's not trying to sell me that kind of crap and that's just doing, you know, the right kind of investing stuff. And these are people we recommend for that reason. Sam is with us in New Orleans. Hi, Sam.

Welcome to the Dave Ramsey Show. Hey, sir. How are you doing today? Better than I deserve. What's up? So I got in touch with you about four months ago to start listening to your show, My Lieutenant Turned Me On To You, and since then me and my wife have drank the Kool-Aid, shaved the head,

and we're rolling. Cool. We have $80,000 in debt, roughly $85,000, $90,000 in income. Our question is, my wife just got offered a job that would take her income from $50,000 to $180,000. Wow. It would require her to go work on an oil rig for three weeks, though. Three weeks and then two weeks at home. Whoa.

Yeah. What does she do? What does she do? She's a paramedic at the City of New Orleans. Oh, okay. All right. So she would be gone three weeks and then back two weeks. Gone three weeks and back two weeks.

Now, the way you said this a minute ago, you sound like you're in the military, right? Yes, sir. Are you in the area or are you going to be deployed? I'm actually in the National Guard. Oh, okay. So I'm stationed here in New Orleans. I have my civilian job, a quick service restaurant. Gotcha.

Okay, so they're not shipping you off somewhere anytime soon that you know of? Not anytime soon, no, sir. Okay, all right. Because if you were going to be gone anyway this starts to make more fun right but if you're going to be home and she's just gone and you know gone three back to gone three back to that could get old fast it can especially with the two little ones we have a five-year-old and a two-year-old yeah um okay i got the way i answer questions on this show sam is what would i do if i woke up in your

shoes i am a person that likes my home i like uh my little nest i like my little family to be there i like all of that um i travel a lot but i it's not because i love travel it's because of what we do some but um my favorite place is home. And so if Dave and Sharon were in this situation, we probably emotionally, when we were your age, would not have been able to pull this off. What you're prescribing is a lot of money, which is wonderful, but a very difficult strain on the family.

And it would require a certain kind of family that can do that. that now a military family is kind of used to doing this kind of stuff similar yeah more used to doing this stuff than than a civilian family like mine right so you know maybe you guys are tough enough to pull it off but you just got to weigh out the the strain on you the strain on the kids the strain on her emotionally and everything else uh relationally uh and how long can you do this and um you know six months nine months i mean if you can hold your nose that long hold your breath that long it's a lot of money and that's wonderful i can tell you that very honestly i don't think the ramsey family could do it i don't think we were strong enough uh we could have i guess if we had to because somebody was dying or something we'd

have been able to do whatever we could have done we've been through some all kinds of hell but uh but but i i just it's it tears us it would tear us at a place that that we don't really want to be torn at and it wouldn't be worth the money to us so we probably would not do it for that reason but that's not to say it's a bad thing so i think the two of you will pray about it and talk about it but it's not an automatic yes just because of the money money's wonderful but that doesn't make it an automatic yes has to be something you all are very comfortable lay out your guidelines lay out the boundary lines of what you would do and when you would do it and how you would do it if you were going to do it.

You're certainly not going to do it for five years. This is the Dave Ramsey Show. Hey guys, this is Blake Thompson, Chief Production Officer for The Dave Ramsey Show. Here's a tip. To keep from missing Dave's classic facial expressions to some of those calls, make sure you watch him live. Just visit DaveRamsey.com slash show each day from 2 to 5 p.m. Eastern. Enjoy. Did you know, statistically, when it comes to life insurance and protecting your family, that women are more likely to be uninsured or underinsured than men.

This doesn't make any sense. Women make up half the workforce, contribute mightily to family incomes, and in many cases are the breadwinners and take care of their families 24 hours a day. This is one of the most overlooked areas when it comes to financial planning. Maybe it's a relic of the past, but a loss of income or the need to replace family care is equally important for women as it is for men. Single moms, working moms, and stay-at-home moms all need term life insurance. Rates are actually lower for women, which is why I send you to Zander Insurance.

They shop the top term life companies to find the lowest rates available. You can compare rates online at Zander.com or call 800-356-4282. This is something every family has to deal with. That's Zander.com or 800-356-4282.