The Ramsey Show - App - Why Single Stocks Aren't Your Best Play (Hour 3)

Episode Date: June 4, 2018

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🎵 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. I am Dave Ramsey, your host. Thank you for joining us. Open phones at 888-825-5225. That's 888-825-5225. That's 888-825-5225. Richard joins us from Scottsdale, Arizona, to start this hour off. Hey, Richard, how are you?

I'm better than you deserve, Dave. How can I help? Okay, so my mother passed away a few months ago, and there was some funds left that were distributed between my siblings and myself. I received over $18,000 last week, which I took your advice and paid off almost all of my debt. Good. One credit card left, 2710.39 cents. I just received my, today, my stock disbursement.

That's, can I say the name of the company sure disney you got disney stock okay i got disney stock and uh 164 shares and it's trading at 100 bucks a share you know 99 105 somewhere in there so my intention is to transfer that money from the Disney to my brokerage account. Okay. I also have a Roth IRA, and those funds are not very good. You know, I put some money in there a few years ago, and it's all in one stock, which has taken a nosedive, so I'm in a negative there. I'm not too worried about it. Considering I'd have to sell off like 30 shares and get myself completely out of debt,

and that's going to take me like, I don't know, a week or so to do that, and then I can call you up and screen. So the question is, what should I do with the remainder of that asset? Okay. Which would be like, what, 130 shares, 130-something shares. You're right. I would become debt-free, and I'd probably cash out enough more to make sure I had my emergency fund in place. You probably heard me talk about the baby steps. And so that gets you through baby step three. If you've got a fully funded emergency fund of three to six months of expenses,

do you have any money in savings that's not in brokerage? No. Okay. Then once I've done that, then we're up to baby step four, which is investing. And it sounds like you've got some work to do there. You've got an underperforming IRA that's invested in something that's not doing well. And you've got some single stock left over at this point from Disney and whatever's in that brokerage account. I do not personally invest in single stocks.

I know a lot about it. And I own a lot of stock through mutual funds, millions of dollars worth, but I don't own a single, single stock because I don't like the risk associated with it. It's very, very difficult to make money playing single stocks on your own account, like virtually impossible. I'll give you an example. So I'm taking it that you would invest. I would get out of the single stock. And put it in a mutual fund. Yeah, I would cash it out, and I'd put it in mutual funds.

And there would be no taxes on it because your basis in it is what it's worth when you inherited it, which was this week, so you're fine. And I would cash out. By the way, I would roll that single stock that's underperforming in an IRA. How in the world did you get a single stock in an IRA anyway? But if you did that and it's underperforming, then get out of that, get that inside that IRA into some good mutual funds. And steadily, constantly, consistently investing in good growth stock mutual funds

in and outside of your retirement accounts that are available. There's a high correlation to that in people that make it to millionaire status. And so it's just real simple. It's real boring. And, again, I don't play single stocks. And that's no knock on Disney. It doesn't matter who you said. If it was Apple, which is probably one of the best performers out there,

I suppose it's done extremely well, I would still tell you to get out of it. Because it's what I would do if I woke up in your shoes. And I know I would do that because I don't buy single stocks and were I to inherit some, I would immediately cash them and roll them into mutual funds, probably within a few days of having gotten them. And it's that simple. So here's the thing. People play single stocks with their fishing buddies and their golfing buddies.

And they've all got a fishing story and a golfing story and a stock story. And they're all lies. They tell the story of the one time that they hit a good shot right down the fairway. They tell the story of the one time they caught a big fish. And they tell the story of the one time they picked a winner on single stocks. Most people never pick winners on single stocks.

And even if you use a broker. If your broker was so dadgum smart that he picked single stock winners, he'd be running a $5 billion mutual fund instead of being your broker. Think that through. I mean, what is a mutual fund manager except a very large broker? They have a whole research team that picks single stocks. They're going to pick better stocks than your fishing buddy and your golfing buddy. And this is how people buy single stocks.

It's like the biggest lie on the planet. Wall Street Journal has done several pieces of research and published several pieces of research. The average person buying and selling single stocks averages about a 7% rate of return on their brokerage account using their broker and their best idea from their golfing buddy and something they read somewhere. And they watched the HBO movie Billions and thought they were that guy. Or series or whatever that thing's called. And you're just not. That's all fiction. On average, they make 7% rate of return.

By the way, the S&P 500, if you'd have just dumped it into that, would have paid you between 11 and 12 in the last 60 to 70 years. Wall Street Journal did a funny one several years ago. Many, many, many years ago. I used to use it in the old Financial to 70 years. Wall Street Journal did a funny one several years ago, many, many, many years ago. I used to use it in the old Financial Peace University lessons. They put all the stocks on the stock market, the New York Stock Exchange on the wall, and they blindfolded a monkey and gave him darts.

And he picked out and he threw darts and hit the stocks on the wall. And then they got brokers to come in and told the brokers that they could pick any stock anywhere on the wall and see if they got brokers to come in and told the brokers that they could pick any stock anywhere on the wall and see if they could beat the blindfolded monkey. Eight out of ten times the blindfolded monkey beat the brokers. Now, the little piece of funny research is rigged, actually, because when you are limited to picking only one stock and you can get no diversification at all you're fried the chances are less than 50 50 that you're going to make money on that in a given period of time

so it was really a rigged deal to illustrate the point that single stocks are not a good play for the typical small investor but it does make the point just same. You can't beat a blindfolded monkey. Come on. Really. It's pretty bad. So I can't, by the way, beat a blindfolded monkey. And I know a lot about this. All the licenses, all the letters after my name, all the degrees, all that crap, right? And I'm not going to take on the blindfolded monkey because the game is rigged in the regard of when you pick one stock, it's difficult to beat a diversified portfolio.

Nigh statistically impossible to beat a diversified portfolio. So it's a simple thing. What makes you the most money with the least risk? Ha, simple equation. This is the Dave Ramsey Show. show folks the real estate market is on fire all over the country if you're looking to buy a home and you need a mortgage don't sell yourself short by going and getting a typical pre-approval. That's a false sense of security, and it's just not good enough in today's fast-moving market. Instead, call Churchill Mortgage and get their certified home buyer program. I'm telling you, it's a game changer. Churchill helps my listeners become fully approved before they go

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Chris Hogan, Ramsey personality and number one bestselling author of the book Retire Inspired, will be with us for a half hour as we're talking about some really important millionaire information that we've come upon and we want to make sure you guys get. If you have questions about investing or millionaire or retiring inspired or everyday millionaire questions. Chris is the man. He's the voice. The voice. And he'll be with us.

So you can get online or get on the phone at 888-825-5225. Kelly will clean off a couple of places for some Chris callers to get in. In the meantime, in the lobby here at Ramsey Solutions, Vincent and Sarah are with us. Hey, guys. How are you? Good. How are you? Doing great.

Thanks. Welcome. Welcome. Where do you all live? Boston. Boston. Yes. That's a bit of a haul to Nashville.

That's right. Wow. Welcome. And all the way down here to do your debt-free scream. You know it. Congratulations. And how much have you paid off? $205,000.

I love it. Very well done. And how long did that take?? $205,000. I love it. Very well done. And how long did that take? Five and a half years. Wow. And your range of income during that time? About $120,000 to $175,000. Cool.

What do you all do for a living? I'm a nutrition professor. Ah, fun. And what kind of debt? Oh, and what do you do? I'm a banker. I work at Rockland Trust. Great.

And what kind of debt was this $205,000? It was our mortgage. You paid off your house? We did. I'm looking at weird people. A banker with a paid-for house. Boom! I love it! Very good. Very good. Well done. Wow. So what inspired you to do that over the last five and a half years? It started with my friend Diana, who's listening now, so shout out to her. She let me know about your plan, and we didn't have any consumer debt, but I felt your plan, I read your books and everything and realized it really was a great plan for building wealth. And the ideas were just great, and I mentioned them to Vin, and he basically said, hasn't that been what I've

been saying all along? And, um, it was, that's maddening. That's so maddening. Yeah. I would say that I'm the Italian American, Dave Ramsey. There you go. I love it. I love it. Yeah. So, um, so from that point on, it really helped us focus. Um, and so we had been living within our means and loosely had a budget, but it helped us really nail that budget and set our priorities through the budget. And it also, we were on the same page generally, but it helped us really set goals and especially this big goal

and get united in that goal in a way we never had been. With Sarah's a whiz at, she's brilliant at Excel spreadsheets and making the budget. We went from third gear into fifth gear and we just kept going. And because of that, we really accelerated payments, accelerated everything to get out of debt completely. And we took FPU in 2014, and we coordinated it in 2016. At our church in Medford, we ran, at Grace Church, we ran an FPU session. And at first, it was funny, we did just a night of financial smartness or financial smart decisions, and we got a lot of pushback.

People were saying, you're saving, you're concentrating on that. When people should be concentrating, you know, they were telling us, maybe concentrate on getting more credit and more lines of credit, you know, HELOCs or whatever. And we were just like, no. You know the Dave Ramsey guy? And haven't you heard of him? And some of them didn't. And so we said, let's do a financial peace university at our church. For us, it wasn't getting out of debt.

It was really being among like-minded people. Right. Yeah. And or converting some to being like-minded. Exactly. I love it. That's good. Very cool. The session was a complete success. Everyone really enjoyed it. Got a lot out of it. Well, thank you. Thanks for leading Financial

Peace, too. That makes all the difference in the world when we have good coordinators like you guys. How old are you two? I'm 51. 52. And your house is paid for. It is. Have you pinched yourself yet?

This is real. What's the house worth? Well, it's appreciated a lot in the time. We bought it for a little over $400, and it's over $600 now. Love it. And it's paid for. I love it. Hey, that's just so weird.

That's awesome. I love weird people. Very good. Very cool. What do you tell people the key to getting out of debt is? When you're coordinating a class or somebody finds out you paid off your house, they go, how'd you do that? For me, it's believing that you can.

That's big. And for me, it's putting a priority on saving. People have little respect for saving and that should be number one. You should be able to have a budget. And my father, my grandfather told me way back when that before you pay for something

or buy something, you should have enough money to pay for it twice. And I firmly believe that, too. That's not a bad plan. I kind of like that. It keeps you from overdoing stuff all the time. Well done.

Very, very cool. What was the hardest part of this for you guys? I would say five and a half years, a lot of life happens in that time. So I think we were committed to it, but a lot happens in that time so um i think we were committed to it but you know a lot happens in that time just in the past year we've been through a major illness a broken bone and a death in the family so um i think this gave us something really positive to focus on um during that time sure it's hard to sometimes to keep your focus um when there's so much going on yeah it is it is very difficult.

And almost it's good to have the distraction of having something to focus on. Exactly. That's outside of something like that, too. So very cool. And you brought your daughter with you? Yeah. Her age and name? Emma is 12 years old, and Emma is really smart with her money.

She knows how to save, and she knows how to spend properly. All right. All right. Future millionaire we're looking at there. Very cool. And mom and dad are well on their way if you're not there already with your 401k accounts with your 401ks are you there we're there i love it millionaires i love it you guys are great very very well done very well done and that's how you do it folks just like that well we've got a copy of chris's book, and he'll be coming through the lobby here in a minute. I think he's already signed it, but if he hadn't, make sure he does because he's coming on in the next segment.

Chris Hogan's book, Retire Inspired. And as I said, that is the next chapter in your story to be millionaires. You're already on that chapter, and we'll just make it a go-for-deca-millionaire now. Sounds good. Ten of them. That works for me. So very good, you guys. Very, very well done.

All right, it's Vincent and Sarah and Emma. $205,000 paid off in five and a half years, making $120,000, $125,000. Count it down. Let's hear a debt-free scream. Tres, due, uno. We're debt-free. I love it. Well done. We're debt-free! I love it!

Well done. Well done. Well, that's how you do it. It's not any different than that. All of the data, all the stuff we're talking about, all the things we learn about. You know, Dave Ramsey is good for getting people out of debt, but he doesn't know anything about building wealth. Let me just tell you, this is how you build wealth. That's just so oxymoronic and stupid when people say that. People in the financial industry don't respect Dave Ramsey.

Well, people in the financial industry that don't respect Dave Ramsey, that means that they don't respect common sense. It's not me. I'm not personally offended. You know, all I just do is do the southern thing and tip my hat and say, well, bless your heart, right? Because that's all it is. Just bless your heart. right? Because that's all it is, is bless your heart. That's the thing. So, you know, you have to decide what really causes wealth.

What really causes wealth? Where does it really come from? And once you decide that, then you need to use that process when it comes to your money. Now, you don't use that process and exclude your family and lose your ethics or anything like that. That's not ever what I'm saying. But it's a pretty simple formula if you want to lose weight. We all know the formula. You lower your caloric intake below what you burn in a day and you will magically lose weight you can do that with a system you can do that with a counting

system you can do that you know being on a protein shake you can do that whatever you can increase your caloric burn by this neat thing called exercise, which also makes your brain clear out. And you'll probably see yourself get a raise at work because your brain will be clearer. It's not fogged up by milk duds. Right? Things happen when you just use simple, common sense things. I don't know anything about nutrition. No, I don't.

But you do. And I trust you. And you know something about wealth building. And I trust you. I'm just going to show you how to do it. I'm not going to do it. You're the hero. This is the Dave Ramsey Show. For years, I refused to endorse any company that claimed to

get people out of timeshares. I told my listeners it's a horrible product and that unfortunately, they didn't have a lot of options. Then a few years ago, I sat down with Brandon Reed, the owner of Timeshare Exit Team. Brandon walked me through the timeshare industry, and I learned that you can't sell them, and you can't even give them away. And then we talked about Timeshare Exit Team's process. Every ownership situation is different, which is why they have more solutions than any other company. And that's when they earned my respect. Don't call any of the imposters out there, and there's a lot. The only timeshare exit company I stand behind is Timeshare Exit Team. They have exited thousands from their timeshare burden this year alone.

Yes, you will write them a check, but they stand behind their guarantee. They will get you out, or they'll give you a full refund. Call 844-999-EXIT online at timeshareexitteam.com. Joining me this half hour, number one best-selling author and Ramsey personality, Chris Hogan, author of the book Retire Inspired, and hardest working man in media these days. He has been on the road getting after it. Where have you been last week? Oh, ripping and running, Dave.

I have been to, well, we were down at Summit. Oh, that's true. San Antonio. That's true. Beautiful. 2,500 business leaders that Summit. Oh, that's true. San Antonio. That's true. Beautiful. 2,500 business leaders that came out of there focused and ready. That was an incredible event. It really was.

One of the best events I've ever been involved in, including one I've done. So absolutely, absolutely amazing. So I was just talking to a gentleman at the break out here because I was talking about some of the data points on the basics of avoiding poverty. That if you follow what is called the success sequence, if you earn at least a high school diploma, work, and marry before having children, you have a 97% chance of avoiding poverty in the U.S. Don't have kids before you're married. You work and you at least graduate from high school before you're married. I mean, it's amazing.

And 21%, 4% of homes with married mother and father are on food stamps. 21% living together, and 28% of single mothers are on food stamps. And so doing this the right way, processes matter. And I was quoting that in a different hour, and a gentleman was out here and said, thanks for saying that in front of my young kids, my teenage kids, because it just goes, you know, whatever the culture is telling you, don't let the culture teach you processes, because the culture is stupid. You know, he didn't say it that way, but that's what I say. And, you know, all the way on the other end of that spectrum is this millionaire data

that you and I have been messing with, the company's been messing with, you've been messing with for the last year and a half, two years, as we've been doing this research project on how people become millionaires and who is really a millionaire, not what's the mythology around it. And processes matter. It really does. That's what I was sitting here being struck by, Dave, that there are causal links to people being successful. There are steps.

There are things that connect. And for people that are out there, I grew up in Kentucky, a little town, and did not have a whole lot of examples of people that were financially winning. But looking at it and understanding where I am and then getting to know you and this information, it allowed me to still plug into a process even in my early 30s. And so the good thing is, is that a process doesn't have an expiration date. It's got all to do with your effort and your decision to plug into it, regardless of where you are. And you know what else? It doesn't have an entrance fee.

You can just decide. I'm going to do it. Yeah. I'm just going to decide. I mean, you and I have met people, people out there listening. You met people just decide to quit smoking. Yeah. They didn't need a patch.

They just decided. Just quit. Just like that. You met people who just decided to quit smoking. Yeah. They didn't need a patch. They just decided. Just quit. Just like that. That's right. I know that's hard. And if you've got a patch, I'm not mad at you. But you have the God-given gift of choice. You can just decide.

I'm going to enter a different process. I'm going to decide to be happy today and notify my face. I mean, I'm going to decide to be a better husband. I'm going to decide to get in my 401k which is really one of the data points we found in this that was i mean i knew when we started the millionaire research we were going to find people became millionaires in their 401k i knew that i had no idea it was gonna be one of the primary things one of the biggest things dave one of the biggest changing points for people to become millionaires was plugging into a 401k this

little item you have access to in your job to be able to dig into it and do it. And Dave, by the way, I don't know what that article was talking about, you know, certain percentages, but I know 100% probability of another process called baby steps, that if you walk them, you'll end up somewhere better than you ever imagined because they work. And yet more than half of americans have less than ten thousand dollars saved for retirement and of those people that are actually saving a fifth of them twenty percent of them are borrowing they're putting money in their 401k turn around borrowing it back out and yet companies are spending billions of dollars

on their 401ks trying to be a blessing to their people and all they got is this merry-go-round where the money goes in the money goes out it comes in in the form of a you know a deposit there's not much in there they turn around borrow it back out and you know they're engaging in a process that guarantees they're not going to be wealthy that's it really does and people are looking at the 401k like an emergency fund that's exactly what that is and so they're just pulling it out they're activating fees paying uh penalties on it and not to mention dave here's the scary part about the 401k loans that not many people know you lose or leave that job that 401k loan becomes due and payable within 30 to 90 days which means you have to pay it back

and so people are they say well it's my own money that I'm borrowing from. No, you're borrowing from your dreams, and you're tapping Uncle Sam on the shoulder. Your emergency fund is what we teach you in baby step number three. It's the future you you're borrowing from, and the future you is going to be pissed at the present you. It's going to come back and wish it could slap you in the forehead is what it wants to do. What's funny is that our smart dollar team you've been working with them a bunch uh if you own a business or you work in hr and that kind of a thing uh our smart dollar team comes in and teaches the entire team with your help the

company's help of course uh takes them through the baby steps and puts them in the millionaire process and certainly that includes helping your 401k. The first thing that will happen, though, is we're going to get those loans cleaned up and get people out of the 401k until they get out of debt so they can get back in the 401k and do it right. And we're seeing 401k contributions go up, loans go down, employee retention go up. All these things happen when an employee is not preoccupied with discovering bondage.

It's really true. When you think about this, you've got consumers out there, 24% of their income is going to consumer debt. 24%. That's going to credit card debts, is going to car loans. And so as an employer, if you own a company out there, the best thing you could do for your team member is to help them to understand how money works and how they can make it work for them. We're going to walk them through the process we've got videos dave you rachel and i we all teach we're talking to people not talking at them and it changes the spirit of everything when people understand how it works and also how they can begin to take back control there you go wow so when we discovered that the primary thing was 401k that leads people into being

millionaires then um what we realized was that the employers it's beyond just an employee benefit if you're listening to me and you're an employer or you're a leader in a company that's a 401k you have the opportunity to help your people be millionaires. How does that sound? I mean, that's different. That's different than I want my 401k plan to be healthy. That's different than, oh, we give them a retirement plan. I mean, millionaires, you could be looking at the janitor that's a millionaire, a future

millionaire, and it's your fault as the employer that they become a millionaire because you put a blueprint in place that shows them how to do that. And so the smart dollar team put together the millionaires at work blueprint and millionaires at work will fool you. They don't they don't dress different. They don't look different. They just come to work. And you know what position they're in doesn't necessarily mean anything. It's that they have a blueprint.

They have a plan that they're following. Millionaires at work, you go to smartdollar.com slash blueprint, and you could, as an employer, as a leader, as an HR director, you could be responsible for, directly, people become a millionaire. That's kind of rewarding. That's a big deal. You know what I call an HR

director or an employer that does that, that cares enough about their team members to truly help them really get things in place, I call them heroes, Dave. Amen. I call them heroes. Amen. Because you have an opportunity to not only impact the people working with you, but their kids.

I mean, imagine that kind of legacy. The number of times we take a call when you and I are doing an everyday millionaire call an hour, and I say, if you could talk to the 25-year-old you, what do they always say? Somebody came alongside me. hour and they say i say if you could talk to the 25 year old you well they always say somebody came alongside me my old supervisor at work told me boy you need to get in this 401k girl you got to do this this is the only way out of poverty you got to do this and they put their arm a mentor led them and showed them and it was often a leader in the workplace and we hear that story all the time and and they credit that person 30 years ago as causing them to be millionaires.

Yeah. It was for me, Dave. My head coach that I went up to Pennsylvania to go to grad school talked to me and told me, you need to sign up for this. Really? I was making $13,500 a year. I said, Coach, I can't afford this. He said, you can't afford not to. Oh, boom.

Game-changing moment for me. There we go. Smartdollar.com slash blueprint. And you can get the Millionaires at Work blueprint for those of you that are in a position to cause people to be millionaires. You could use your leadership for something that mattered other than just making widgets.

Ooh. Smartdollar.com slash blueprint. Chris Hogan is my guest this half hour. You're back with your questions and comments on this subject, along with I'm sure we'll have something else to say about life and money, right here on the Dave Ramsey Show. Hey, business leaders, are you hiring, posting your position at job sites, and waiting and waiting and waiting for the right people to see?

Well, you need ZipRecruiter. ZipRecruiter knew there was a smarter way, so they built a platform that finds the right job candidates for you. ZipRecruiter learns what you're looking for, identifies people with the right experience, and invites them to apply to your job. These invitations have revolutionized how you find your next hire. In fact, 80% of employers who post a job on ZipRecruiter get a quality candidate through the site in just one day. And ZipRecruiter doesn't stop there. They even spotlight the strongest applications you receive so you'll never miss a great

match. The right candidates are out there. ZipRecruiter is how you find them. ZipRecruiter, the smartest way to hire. Just go to ZipRecruiter.com slash Dave, and my listeners can post jobs on ZipRecruiter for free. That's right, free. That's ZipRecruiter.com slash Dave. Our scripture today, Proverbs 19, 21.

Many are the plans in the mind of man, but it is the purpose of the Lord that will stand. Dwight D. Eisenhower said, In preparing for battle, I've always found that plans are useless, but planning is indispensable. Yeah, there's a process, but the process is never pure. Whatever it is you're going to do, you're going to have to adjust and think on the fly. Chris Hogan joins us this half hour answering your questions with me. Number one best-selling author, Ramsey Personality.

Chris is in Pensacola, Florida. Hey, Chris, how are you? Doing fine, Dave. Thank you. How are you? Better than I deserve. How can we answer? What can we answer for you today?

I hope Chris is doing well, too. Oh, yes, sir, I am. I'm glad to be with you. Good. You know, my original question is about my daughter and her husband. They've been married about a year and a half. He's in the military. And honestly, listening to your show, my first question was going to be, which tool out of the tools that you guys offer should I buy them?

Because I want to buy them a gift. I've been talking to them about budgeting and saving and I know now after listening that you're going to tell me to buy them Financial Peace University, a membership to that. But my second question was that they're going to be getting out of the military in about 18 months. Would you recommend to them to get their, you know, three- to six-month expenses saved along with the emergency fund before they worry about getting out of debt? Well, what I would do is not say we're going to sidestep the baby steps,

but instead we just might say we're not going to start our baby steps until we make that transition. Is she working? She does, yes. Okay, so they would have that income? Yes, before he gets out of the service. They're in Connecticut and going to be moving back to Florida, yes. Okay, but what does she do for a living?

She's a bank teller. Okay. So she would get a new job when they move to Florida, and he would as well. Okay. Well, we can fix the Financial Peace University part. We'll give that to you to give to them as our gift, and just tell them I said thanks for serving, and we appreciate it. It's a one-year membership, and they can go ahead and start now. And what I would do is begin the process of building up enough cash to make the transition.

As soon as the transition is done, boom, we kick it into high gear and run those baby steps, run the gauntlet of those. And that's exactly what I would do is do that. But I don't want to change the order of the baby steps. It's just a matter of do we start or not. Instead, we've got a storm cloud coming. We're getting ready to be laid off is what we're saying. He's getting ready to lose his job.

And so we've got to get ready for that, and it's a predictable event. We know it's happening in 18 months. And so we've got to prepare for that and then start your baby steps once you've made that preparation. It's almost like Chris told a story about getting ready for Y2K, right? That's right. I mean, you know it's coming. And so for him, I would also encourage him to get his resume updated, start to reach out to his network of friends,

and really get prepared for becoming a civilian back in the civilian world. But at the same time, remember, we're not taking on new debt. So they need to find a place to rent, get intentional, and then follow the formula. You want to get the $1,000 in place, attack debt, then build up your emergency fund. Kevin's in Nashville. Kevin, your question for Chris Hogan.

Hi, guys. Well, so a little bit of backstory here. I'm a recent college grad. I'm 20 years old. I just got my bachelor's in chemical engineering. I'm completely debt-free. I've got a stable car situation, and I'm a recent college grad. I'm 20 years old. I just got my bachelor's in chemical engineering. I'm completely debt-free. I've got a stable car situation, and I'm just looking.

Should I be looking to rent in the meantime an apartment or something in order to build wealth to buy a house, or should I be looking to buy a house now so I'm not throwing away money at an apartment? Congrats! Yes. You got the new big job? I do. I'm starting at $73,000 a year with a $10,000 signing bonus.

When's that start? August. Woo-hoo! Way to go, Kevin. Fantastic, Kevin. Listen, I love the path that you are on, my friend. It's not an accident. You've been focused.

Listen to me. Until you know where you want to be, there is not a problem with your renting. Renting does not throw away money. Renting allows you to be intentional so you can save up to buy a home the right way. And so if I'm you, I'd get that mindset, start to save up money for a down payment. Minimum 10% would love for you to go in with 20 so you can avoid PMI, which is private mortgage insurance. It protects the bank, not you. So stay focused, be intentional, and then don't be in a rush to buy. Slow down and be clear.

Yeah, rent is not wasted money if you have a plan. That's right. It's patience. And so what I would say is, you know, you're in the middle of a bunch of transition right now. You've had a lot of victories in your life. Congratulations. Well played. I would rent for a year minimum.

Okay. And just kind of chill and let's just pile up some cash and let's make sure that new job stable and after a year you're going to know uh we are staying in this area i am staying in this area and uh then you may want to buy are you uh are you dating anybody steady uh yeah i have a steady girlfriend okay all right in a year you'll know more about that too yes because uh speaking from an old guy's seat if you buy a home before you're married you will buy the wrong home and you'll get to do it over but if you want the next question then would be i currently have ten thousand dollars in savings so I have a little bit of a buffer.

Good. The money that I now make, what is the best way to invest it young? Well, we would start just what we were talking about earlier, the 401K in your good growth stock mutual funds. I'm sure that company you're going with has one, and I'd start putting 15% aside into that. And I would not put any more than that in right now into good growth stock mutual funds and i'd start as chris said build up your big down payment for your home a

year from now you ought to have a really sweet down payment and you will have already begun your 401k journey and you'll look back in 10 to 12 years and go i started my millionaire journey when i was 20 years old wow that's pretty cool i'm proud of you kevin that's a big deal dave hey man i mean for this young man again debt free so for everyone out there that says you can't go to college debt free you're wrong we talk to them all the time we find them and we do and that's a future millionaire again the data points are all there with that guy that's right okay. He's intentional. He's thinking. He has a life. But he's making good money. He came out of college debt-free.

He's going to be an investor. He can't stop himself from doing it, just the way he asks the questions. Plus, with his degree, he's a math guy. So he's always going to be running that. And that guy, he's going to do this stuff. He really is. He's going to do this stuff. He's going to win. Alex is in Atlanta.

Hey, Alex, welcome to the Dave Ramsey Show. Hey, Dave. Hey, Chris. Thanks for taking my call. Sure. What's up? My question really has to go in the topic of boundaries. And before I ask my question, I did go ahead and order Dr. Henry Cloud's book.

It looks like I really need his advice on this. We all do, brother. It'll take a few days. Thank you very much. So my question is really just a little background. My dad has never been very good with money, mainly due to failed business ventures and free divorces. He recently reached out to my brother, sister, and myself,

asking if he can borrow some money. My brother and sister went ahead and loaned him, no question asked. Actually gave it to him and said, we don't want it back, just take it. Whereas I myself said yes at first without any due diligence. Big mistake. I did not consult with the missus because I'm very emotionally attached to him. When I did bring it up, we conflicted on one point, but we went ahead and she said, well, go ahead and loan him the money or give him the money.

So really my question is twofold. One, if a family member or anybody asked for our money and I am in a position where I can give it without expecting it back, do I have an obligation to do due diligence to see where this money exactly is going or can I just give it no questions asked? Yes, you have an obligation. What if they're doing cocaine? Yeah, I'm pretty sure What if they're doing cocaine? I'm pretty sure my dad's not doing cocaine.

No, I know, but you could have caused their death. Correct. So, I mean, if they're doing heroin, you could have caused their death. And so my point is, are you financing misbehavior and insanity? If so, you're not helping. I know deep in my heart, yes. Meaning, I know that money's going to go to waste. But my point is, if you're going to give somebody money, help them, for God's sakes. And financing their insanity is not helping them. Right.

And he's feeling that tug, Dave, from his dad. Yeah. That emotional. Yeah. And love. His dad's playing the guilt trick. And money, those are two separate things. Yeah.

And again, don't make that mistake. Or love them enough to really help them. You have to change your behavior. You really do. In order to get the money. That's really helping. It is. And you've got to do due diligence to know that.

And I like how they gave it. They didn't loan it. That's a good thing. Yeah, that's a way to do it. Chris Hogan, thanks for hanging out. Thank you for having me, Mr. Dave. That puts this hour of the Dave Ramsey Show in the books. We'll be back with you before you know it.

In the meantime, remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus. Hey, guys, this is James Childs, producer of the Dave Ramsey Show. I'm excited to announce that we're now carried on 600 radio stations across the country. To find one near you, head to DaveRamsey.com slash show. Did you know, statistically, when it comes to life insurance and protecting your family, that women are more likely

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