The Ramsey Show - App - Why Reverse Mortgages Are a Terrible Product (Hour 1)

Episode Date: July 30, 2024

Live from the headquarters of Ramsey Solutions, it's the Ramsey Show, where we help people build wealth, do work that they love, and create actual amazing relationships. George Campbell, Ramsey personality, number one best-selling author, breaking free from broke. He's my co-host today. Open phones at 888-825-5225. You jump in. We'll talk about you right in front of you. Josh is in Charlotte, North Carolina. Hey, Josh, what's up? Hi. I hope you guys are well.

Better than we deserve, brother. How can we help? First, thanks for your time. My question is, how should me and my wife go from two incomes to zero? What do you mean? That's so confusing. How do we go from what happened tell me what the flip's going on i don't understand so i lost my job yesterday oh why um well it's a lot of details basically um i wasn't performing performing the job up to snuff. Okay. What were you making? 40 grand. What were you doing? I was a market

research assistant. Okay. And how long had you been in the job? Six months. Okay. And she lost her job yesterday too? No. She was actually planning to leave. She gave her notice about two weeks ago, and she's working through mid-August. Oh, so just really bad timing. Why was she leaving? She's been just overwhelmed with the work, and she didn't like it. So she was trying to pursue something that made her happy, and she was— And nothing was lined up. But she doesn't have a new job.

She just quit. Correct. Correct. Wow. happy and she was and nothing was lined up but she doesn't have a new job she just quit uh correct wow well that decision came back to bite you okay yeah like you're supposed to have the boat pull up to the dock before you jump off the dock yeah and you get wet otherwise yeah oh yeah my boat was there and then it sank not yours hers yeah have the new job before you give notice um she was gonna not work for a few months why i made enough uh because i've made enough to cover our 40 grand yeah you're rolling in it you guys have kids no do you have any debt uh only one student loan that's not due until november 2025 yeah how old are you two we're early 30s i'm 33 she's 32 okay all right so

um the the situation is is that you have two career crises simultaneously, and the answer is that there is a short-term answer and a long-term answer. The short-term answer is both of you go get six part-time jobs today. Today. I want you delivering pizzas, cutting grass, walking dogs, picking up dog poop, cleaning toilets. I don't care. I want you to working hard today, which is something neither one of you have been doing a lot of lately.

Can I give you some more details about kind of what happened with my job? How does that affect what you've got to do from today forward? I have to determine if I can still work. Okay. All right. My father passed away in April. And I have a bunch of mental health disabilities. And since he passed away, I've been going through trauma therapy.

And I got diagnosed with PTSD today. And I'm kind of broken a little bit because I've been having panic attacks. And that's the reason I lost my job is because my mental health has deteriorated to so much I couldn't understand what they wanted. And I was doing really, really well. And then my mental health just fell apart. Mourning an abusive parent is another beast entirely. Yeah, it is. We worked very, very hard.

I'm sorry. It's okay. I didn't want to give too much info at the beginning. Well, I mean, it affects the advice, so you're wise to do that. So, all right, there's a couple things here. All right. There's a couple things here. Number one. Can I give you one piece of info as well? Please.

Please. That's okay. Apparently I made this. Our overhead is extremely, extremely low. We only spend about $500 on bills. And we live for free because we live in a family home that's paid for. So we don't have very many bills. So that's why we have the safety of three to six-month savings because we have over a year and a half savings just to live on.

But we're not going to, but that's the security blanket we had so that she left her job, and then my dad died and just it all blew up okay all right um so the the the thing is you have to pursue a path of healing for long term part of extreme trauma i'm not a the therapist that would be deloney he's not here today um but part of dealing with trauma is uh he talks about it all the time facts are your friends and the thing that we do know from the financial side of the equation is that panic attacks are made worse when you have no income and you're broke and you have no sense of purpose so the dignity that hard work gives you even if it's mindless work uh can actually help with dealing with depression anxiety uh and panic attacks that's

what deloney tells us and that's also from a very practical standpoint what we've seen because being afraid about money while you're afraid about and dealing with all the other trauma issues at the same time makes it worse. Does that make any sense? Yeah, and the great thing is I'm not worried about money in the least. Like I said, our overheads way more i got that i got that but you should be you're 30 years old and you have no income coming in that should worry you i don't want you panicking over it and i'm not trying to throw you into a tizzy here but you should you know you're you're pretty chill about something you shouldn't be chill about.

And oh, by the way, so is your wife. Okay? Let me rewind just a second, okay? My husband is dealing with mental health issues. His dad passed away last April, several months ago. That has made his mental health issues and trauma and ptsd and panic attacks come to the forefront he's really not functioning well at work so what am i going to do i'm going to quit my job because i don't like it i asked that's completely unwise

and and ridiculous yeah do what i take the blame i asked what? I take the blame. Why would you take the blame? He said he asked her to quit her job. Yeah. Okay. And by the way, losing the job is more trauma. That's another trauma that you've got to add to this now.

Both of you being gainfully employed short-term and long-term as soon as possible is helpful to mental health issues it's also wise i'm gonna sit at home and try to heal on my couch while doing nothing and my money runs out is not a good mental health plan it's not a good financial plan it's not a career plan so you you guys need to go back to work at some level, whatever level you can function, and she needs to yesterday. George Campbell Ramsey Personality is my co-host. Open phones at 888-825-5225. It's a free call, and some say the advice is worth exactly what you pay for it.

Dave is in Orlando. Hi, Dave. How are you? Dave, I'm wonderful. How are you? Better than I deserve. How can I help? Well, so first thing I want to say is thank you so much,

because my wife and I followed your steps, and we were debt-free and have been debt-free for quite a while. Um, the reason I'm, the reason I'm calling is I live in the villages. Um, I'm widowed. Unfortunately, two years ago, my wife passed away. Um, I have, I have no children. Um, so when I go, um, all everything's basically going to get liquidated and given away as donations and things like that. My house is paid off. It's worth about $410,000, $420,000.

And I want to get your opinion on, in my situation, if you think I could get a reverse mortgage to go out and have some fun with that money. You have any other money? Yeah, I'm good, yes. Well, what's good? How much money do you have any other money yeah i'm i'm i'm good yes what's good i mean how much money do you have yeah well i've probably got uh about 1.2 in in your mutual funds in your retirement accounts mutual funds retirement accounts and how old are you i'm 65. And so why would we not use $1.2 million for a fund? Well, I'm just saying I hate to see a lump sum of $410,000 just get liquidated and donated out there. If there is an opportunity to go maybe grab a little bit of that cash and go on a long trip or something like that you know i just want to find out if not a reverse mortgage do you have any other advice as to you know how i would be able to get my hands on some of those funds yeah just just for enjoying me because it's just sitting out there well you

got 1.2 sitting there too yep i know so you got a lot of enjoyment ahead of you congratulations by the way you've done very well and um the okay number one let's just state up front reverse mortgages are a very bad product okay okay um they have higher interest higher fees and a higher foreclosure rate than any other type of mortgage. And of course, there is an end to it. They'll only go to about 60, what, 60, 65 percent, George? Yes, I believe so. About two-thirds. Loan to value on it. And so you really can't get that much of this out. But I understand the basis for your question. Here's the problem with your question question you're 65 over the next 20 years if you live to be 85 which if you're healthy actually there's a fairly good statistical case to be made that

you would live that long um do you have any major health problems uh you know just a little bit of high blood pressure and you know as as with all this little overweight but nothing other than that yeah okay nothing 20 pounds dropped wouldn't fix okay um the uh i don't i don't know a guy like that but anyway yeah you and i are about the same age but the uh anyway so uh what would i do in your situation? The problem is if you put this property in danger by having debt on it of any kind, or you sell it to cash out of it, then you're very vulnerable in the largest, most expensive item on your budget, which is housing and housing goes up every year if you haven't

done something to lock in the cost by owning the four hundred thousand dollar property you've locked in all your costs and so you've got a very stable retirement situation um so though no i would not touch it because you're going to need a place to live for 20 years. And if you want to mortgage it, um, you know, the last two years that you're alive, if you happen to know what that is, if you want to mortgage it and go blow the money somewhere, that's fine. Uh, but I mean, you pretty much got to blow a million six between now and the time you die if you don't want to leave anything.

Okay, yeah. What is your retirement income now? Where does it come from? I'm bringing home about six grand a month. From what? Social Security and some current investments that are paying off for me now. Some annuities and stuff like that. So you're not even touching the 1.2?

I'm touching it a little bit, but it was kind of built to start paying me after I turned 65, and I just recently turned 65. So over the next few months, things are going to start paying out. Okay. So you could set up a situation where you had a $200,000 a month, $200,000 a year income pretty easy. Yeah.

Yeah. And really you would be deteriorating it maybe, but not a bunch. Okay. And with your other income that's coming in too. And so, you know, and you can do anything you want to do with $200,000 probably. Yeah. And not really mess up everything here. Now, again, if I were in your situation,

the last thing I would spend through would be the house. If you want to blow some money and have some fun, blow through the million, too, obviously leaving yourself enough to eat in your ancient years. How much are we talking here? You said you want to go on a fun trip. Is this like $10,000, $20,000? He just doesn't want to leave this. He didn't want to sit around, do nothing and leave

all this money to nobody that he cares about. Correct. That's the bottom line. So you do, if you could actually figure out a way to have spent through almost all of it by the day you die, you'd be happy. That'd be your mathematical goal that is that is my goal yes yeah so then we knew that date that would make things a lot easier for us you know i just i'd lay out a 20-year game plan what using the rate of return on your investment portfolio okay and uh have a 20-year game plan and so okay that dictates if if i want this 1.2 at a current growth rate of 11 on the mutual funds or whatever whatever growth rate you want to use, I need to spend X number of dollars or give away X number of dollars while I'm alive per year to end up with nothing when I'm 85 but a paid-for condo. That makes sense.

Yeah. You could kind of back out a portfolio game plan that way. It's just an aggressive spend where you've been the opposite for your whole life. That's how you've got a $1.6 million net worth. And barely touched it. It's amazing. That's impressive. I think you'll get joy out of doing some things generously with the money

and spending some of the money on just fun stuff um it way in excess of what you're used to it doesn't sound like he's been he's been spending a lot no that's my point yeah he's not broke so there's no need to add risk into his life at this juncture the the house should be the last thing you mess with though because that is your that's your point of sustainability. That gives you a place to live in peace no matter how old you are. And I guess I'm going to add one other thing. Because, Dave, the other thing that Sharon and I are doing, and our net worth is even more zeros,

and you're at a place you can do this too. You don't need to go to a nursing home. If something happens, you can prearrange with whoever, friends or family are around you to help you hire full-time help, and you can stay in that condo, you know, the rest of your life, and, you know, literally into your last days. And so, you can hire a that condo you know the rest of your life and you know literally into your last days and so you can hire a medical butler and have some higher quality of life and just just have somebody there to serve you and you've got your own assisted living game plan and a huge quality of life you've got the money to do that and so i want you to hold back enough to cover

that too well and think about over the next 30 years property taxes will go up his homeowner's insurance will probably go up so there's some factors to think about yeah that's that's not gonna he's not gonna run out of money on that but if you want to budget um in the last uh five years of your life um an extra hundred thousand dollars a year for help that's that's a good way to also be called fun you know that would also be because i'll guarantee you that if something happens that i'm debilitated or sharing is we're not going to an earth going to assist living we don't need to i mean we've got a beautiful home one level elevator or whatever we can do whatever we want to do and i'll just fill it up with help get one of those stair masters you can doters? Don't need that.

Don't need, got the elevator. But thanks, George. I just thought it was cooler. There's nothing cool about that at all, George. But the, anyway. You see what I'm saying? You got choices. You self-insure and you just bring in.

But people like us that have, like that Dave and this Dave, that have gutted it from the ground up, we don't think about bringing in help it's not we're not those kind of people but you need to think about it's a good idea absolutely they say that memory is activated by smell primarily. If you smell a certain smell, it'll take you back. The other thing that causes you to lock a memory in is deep emotion. If you're extremely angry or afraid, you have a clear lock on that memory. I have a clear lock on that from 35 years ago i remember exactly where i was in

which kroger i could take you there right now and i could show you the aisle wow like five aisles across i was the second one in because i that was the moment when I reached the point that I said, this isn't working. I'm standing there paying for food, and as I'm writing the check, because in those days you wrote a check, as I'm writing a check, I didn't know if there was money in the account, and I didn't know if there was money in the account, if I was actually using money that should be used to pay the light bill in other words am i trading this bag of groceries for my electricity getting

cut off and that for some it wasn't a panic attack i guess today you might call it that i i don't know i just became overwhelmed with this feeling of how stupid I was and how this level of terror, this constant knot in my stomach about if I'm – can't even cover basics of life because I'm buying another basic of life, food. And that's the last time I had that feeling what happened after that did a budget that was it i took away all the yeah because if you have if you have a budget laid out and it says you spend i'll make up a number today 800 bucks on groceries 700 bucks on groceries right thousand bucks on groceries whatever it is i don't know you just put it in there

you're going to spend that you also have the number in there for electricity so you know what you've got to spend on the grocery and there's not all this chaos and stress and fear associated with every single money transaction because it's simply a boring plan every dollar has an assignment before the month begins and it gets rid of that that i don't know grocery store terror attack whatever you call that what do you i don't know what you call that spill anxiety i'm sure there's a technical the gen z's come up. But, you know, it's probably got something to do with the price of eggs. But, you know, I distinctly remember being afraid. Which is unlike you, I might add.

I'm not afraid very often. I'm not a fearful person in general. But everybody gets afraid sometimes. But I remember going i'm out of control and i've got little children and a wife and i suck at this you know and and and you have a finance degree at that point i got a finance degree and i was making you know i had made and lost a million dollars by then, you know, and it didn't matter. I can't even buy a bag of freaking groceries without being overcome with

fear because I don't know what else I'm screwing up while I'm buying food for my family. You know, that's so basic, right? It's so, that's so dumb and and so i went home got a yellow pad out put the okay this is what we've got coming in this month this is what we're going to spend every dollar had an assignment you know we we're a christian so we're going to tie that our church that's the first thing we're going to do our generosity then we're going to do this then we're going to do this we're buying food we're going to buy lights we're not doing all this other crap and we're not going out to eat until we've covered these basic walls and we started living that way and and we've not had a single month of our lives that we don't have a plan for every dollar of our because it just gives

me such peace and that chaos is gone that's why we named our app every dollar that we built come a long way since the yellow pad yeah and there's like tens of millions of people using it and i guess you're you know and i hope most of you are having the same result where you don't have this overwhelming fear that no plan and chaos gives you plan and no chaos, no disorganization, only organized planning, and all of a sudden peace comes. It sounds so nerdy, but it really happens that way, folks, and you feel like you've got a race. Oh, absolutely, because you realize, oh, I thought we were spending. Where the flip has this money been going? We're not spending $200.

We spent $500. We've got to do something about this. Where is this money going? So it helps you choose reality to go here's how much we actually made here's how much we need to spend in order to hit our goals and i remember sitting in a a small group i stopped by it was over in knoxville tennessee i and i was actually a suburb of knoxville up towards the mountains and i stopped in this church that was doing a financial piece they said hey if you're coming if you're around come by so i stopped in there doing a financial peace class and i went and sat i was

sitting in a small group there's about 15 20 people sitting around and i'm just sitting there listening to them and they're they're some pretty funny stuff i mean but this one old guy sitting there in overalls and he's like yeah i done figured out why we got no retirement we've been eating it we got to eat every freaking night it's twelve hundred dollars last month he goes that budget's revealing you know that was a genius you know he's like i know why we got no retirement we've been eating it you know that it's exactly that's a typical american right nothing's changed plus or minus the overalls in the accent but oh come on i prefer the accent that makes it better well it's a true story i mean it's exactly how it happened was it were they weirded out that you were sitting in the class

yeah yeah it's like like elvis showed up to your jam session or something but yeah but the uh um but anyway they were the guy was just he's like this thing's revealing it is kind of a light you when you sit down and you do a budget on your EveryDollar app and you and your spouse are in agreement, for the first time ever, maybe, you've had a sane discussion about money that didn't involve drama, hyperbole, and a knock-down, drag-out freaking argument, right? So we actually are in agreement and alignment on our money instead of like, well, whatever you want to do, honey, with your eye roll, right? And that kind of crap, right? That sounded personal. I feel that sounded personal i feel like you know that definitely has happened i can promise you've been on the business end of that line i've been on the other side of that one yeah it's like whatever you want to do honey means i think you're stupid and you're about to wreck the car stop driving it that way that's what that means if those of you don't know if you don't speak passive

aggressive that's what it means so um but that you that don't know, if you don't speak passive aggressive, that's what it means. So, but that, the budget gets rid of every bit of this. Because it's like, you don't get to say I messed up the money because we did it together. If it's messed up, baby, you was in it too. You know what I mean? That's the thing. So we decided this crap together. And that's why this EveryDollar app is so freaking successful successful so you guys go download this thing as fast as you can you get at the app store for free and google play and all

that and you can go to everydollar.com if you want and do it on your desktop i don't care and if you want the upgrade version it's a couple of bucks it's not much and you can connect to your bank and it's got all the paycheck planning features and the baby step features in it and all that stuff but tens of millions of people are doing this now. It is the world's best budgeting app. And it was born because this redneck hillbilly standing in line at Kroger 35 years ago going, you're an idiot talking to myself. I'm not living like this anymore.

I don't want to be this scared anymore. I don't want to be this incompetent anymore. I don't want this taste on the back of my tongue that tastes like regret. I don't want that anymore. And that's how this app was born. It's not like, well, we decided we're going to do a budgeting app. No, this is like bull crap. This stuff stops now.

We need to do this. This stops now. And if you're there, we got the tool, baby. This will do it for you. It is a financial epiphany. If you want to start reading from the same sheet music instead of having just musical chaos in the house, wondering what the flip's going on, this is it. It's that shared thing we both look at for accountability and go, we both agreed to this,

and if we stick to it, we're going to have this thing called money. And I promise you, if you're married, your spouse is not like you if two people just alike get married one of you is unnecessary y'all are different one person hates your spreadsheet i guarantee it one of you is a nerd one of you is a free spirit one of you is a saver one of you is a spender one of you is screwing with the thermostat all the time, and the other one is like, don't you understand how thermostats work? Don't touch it. Leave your hands off the thermostat. If you turn it way down, it cools off faster.

No, it doesn't. That's not how it works. This is how marriage works, boys and girls. If opposites attract, you need to get on the same plan together. Everydollar.com. This is The Ramsey Show. George Campbell, Ramsey personality, is my co-host today. Thank you for joining us.

Maya is with us in Atlanta, Georgia. Hey, Maya, welcome to The Ramsey Show. Hi, Dave. Hi, George. Thank you so much for having me. Sure. What's up? So I wanted to first say that I am 27, and I'm currently in my master's program, and I'm making $35,000 a year. At the end of my master's program, I'll make between $70,000 to $85,000. Cool. what's your master's in?

It is in applied behavior analysis so helping people change their behavior through no career autism work right now. Excellent, good career feel, good for you. Thank you, thank you.

So I wanted to bring up a question, So I am in a awesome relationship. And with this individual, he is a soldier and we've been dating for a year and a half now. We've gotten to see each other, have we worked financially, meet each other's families. And we've now started to have the conversation about what it would look like to come together, right? He's been married before. He is open to being married again. And my hesitation is because we're both believers and because I know that I have $46,000 in debt. It was not my plan to come into a marriage with this amount of debt, right? So I'm starting the baby steps now. So when we do get married, it's not a baggage that I'm bringing into the marriage. So my question is, as a woman who has a boyfriend, right, how do I present this conversation to him of, hey, let's, A, right, let's do it right and get married after he comes back from deployment and he has a daughter

and I've met his daughter first, or we think of another option because I don't want to shack, right? I don't want to play house at all. Is that what he's wanting? Yes. And he said that it would be for the progression of our relationship. That's not a thing. Yeah.

Okay. She knows that. What's his rush to do this before getting married? I think it's because he's seen me in a hard place for the past year financially. And I was living with my mom, and so by him seeing me in a hard place. When does he come off deployment? So he comes from deployment September of 25. Where is he? He's not currently deployed, but he is away. of 25. Where is he? He's not currently deployed,

but he is away. He will deploy in January. He goes to Europe. Okay. So if you were married, you would go with him to Europe? No. It's a combat zone, so I wouldn't be able to go.

Okay. How long will he be deployed in January? Nine months, so from January to September. Okay. So if you were married, you would be at home with your husband deployed for nine months? Correct. Okay. And where he lives, my current job, I could just transfer there because there's another office.

Yeah. Okay. All right. Well, I would not delay marriage on your $46,000. If both of you were of the same mind that we get rid of the debt as fast as we can, I'd get married regardless of where the debt is. I would not use that. I agree with you.

I would not move in together. And so then based on that, we've just got to figure out when we're going to get married and it sounds like sooner rather than later a good friend of mine's uh daughter got married a couple years ago to a green beret and uh four weeks after they were married he was gone for seven months and can't even and can't even talk about where he was. Totally top-secret missions, right? And so because the Green Berets, SEAL teams, and those kinds of folks go places, and most people don't know they're there.

So, matter of fact, that's the whole goal is nobody knows they were there. They're in and out, and mysterious things happened, and then they come home. And so, you know, that kind of stuff. So that's what you're marrying and you're going to have some of that so she married got married literally and i think they had a month together and then he was gone for seven or eight months and and um that was about four or five years ago and they've got three kids now so um and and he's still good he still goes

out on missions and um young, very young couple. But anyway, that's what you're signing up for, it sounds like. And so I'm saying they didn't wait until his deployment was over. They got married. And then he went on deployment. You know, he took off and did a mission. And he was gone seven, eight, nine months, whatever it was. And so it was kind of like your guy.

So all of that to say if I'm in your all shoes and you're both ready to get married, get married. Okay. Now. Okay. And it solves all your problems. But the progression of our relationship is absolute bull crap. Yes, sir.

I don't think your debt needs to have anything to do with this. Exactly. You pay it off as you can pay it off. If it's paid off before you're married, that's great. If not, it's our debt together. I don't want you to feel like this is some shame and baggage you're bringing into this, because guess what? He gets Maya.

That's way better than some student loan debt that we're going to knock out real quick. Correct, correct. One last question. I'm not a very forward woman right so i don't want to be the one to say hey i know we've had this conversation we talked about this let's go get married that's not me i could well what i what you can say is uh you said you said you wanted me to move in and you know i've been praying about this and thinking about it and as a christian i think the bible tells us not to do that and so i'm not going to do it so when you're ready to get married we'll move in together when you want to do that

okay but i mean you know you're answering his question you're not asking him to get married you're just saying you know uh i'm you know i'm okay with the progression of our relationship being an engagement a short engagement engagement, and a marriage. Followed by a man. And after that, we will live together. And that's how I'm willing to do it. That's what you told us your values are. You said, I'm a believer, I'm a person of faith,

meaning you want to follow what the book says, and you think that God has a plan for your life, and it's not shacking up. It's what you said. And just tell him that's not shacking up. It's what you said. And just tell him that. That's not forward. It's answering his question. You're not forward.

You're just responding. And he's a soldier. He can handle direct feedback. Trust me. It sounds like some of the stuff he's doing right now, he's in a situation where he gets direct feedback a lot. He's like, I don't need it at home too. I suspect that, yeah.

Yeah, and just go, you know, if you want to talk about how we go forward in our relationship in that context, we can do that. But I need to give you the answer to your question, and that is I'm not going to live in the same house with you, sleep in the same bed with you until we're married because it's against my values. And that's an okay answer. It's not prudish. It's just it's who you you are and you're allowed to be you by the way and here's the alternative that we have seen time and time again well dave we've been together for nine years and we live together and i just don't know if he's ever gonna that's what happens well and you know i'm still confused about who owns the mustard exactly well we still split the grocery bill like we're roommates oh gosh you know, I'm still confused about who owns the mustard. Exactly. We Venmo each other.

We still split the grocery bill like we're roommates. Oh, gosh. You know, it's just nuts. I can count on zero fingers how many times I Venmoed my wife. It's just not a way. It's not how God intended. It's not what Venmo is to be used for. It's just weird.

I can count on zero fingers how many times I have Venmoed. There we go. He's not there. Sharon prefers checks. she's old school period i'm just saying at all of any at any time to anyone ever so i don't even have the app i don't even know how it works i would love for someone to venmo request you for like dinner we split that dave i need 548 it's happened i just said you know here's 10 you know give it up Give it up. And so now you owe me. So there we go. You've got the Costanza.

I don't like being in debt. Dave has the George Costanza wallet, but instead of cards, it's just filled with cash. It's amazing. Not true. That's funny, but it's not true. This is The Ramsey Show. Thank you. I'll see you next time.