The Ramsey Show - App - Why You Should Never Loan Your Kids Money (Hour 3)

Episode Date: May 23, 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. Jade Walsh, all Ramsey personality, number one best-selling author, is my co-host today. The phone number is 888-825-5225. Henry's with us in San Antonio. Hi, Henry, how are you? I'm doing great. I have a first world problem.

It's a problem that all of your listeners hope to have. Okay. Cool. My cars are paid for. My house is paid for. I have money in the bank to cover emergencies. I have a traditional brokerage account with about $150,000 worth of stock in it. And I have an IRA with over $3 million in the portfolio. And I only have $7,500 in the Roth. But I'm 77 years old, and Uncle Sam wants me to pull the money out of my IRA on their schedule, and my taxes on that is going to be going up year after year after year. I want to understand what I can do to try to pay the minimum lifetime income tax. Way to go.

How much of this did you inherit? Zero. Okay. And you got a net worth approaching $5 million counting your house, right? Well, no, no. Well, the house is only worth about half a million. Yeah, okay. So $4 million anyway yeah okay yeah but but no when when i turned 65 uh we had the cars and all the debts paid off

yep and uh i uh uh i had uh i had about 250000 in a 401k. Right. And my wife had retirement. Mm-hmm. Well, I've got Social Security. I've got her retirement. I can afford to be. You've done very well.

You've done very well. Congratulations. I decided I could go into some risk. Yeah. And I told the company i was retiring from i want to lump some yeah and they gave me about a quarter of a million dollars and so with that half a million i made some shrewd investments shrewd but reasonably conservative investments and that's grown by a factor of six in the last 12 years well it should

that's perfect that's well done very well done so you've got you got three million in a traditional and you have required minimum distributions rmds yes and they're they're they're forcing you to pull a percentage of that out based on your age each year it increases each year. It's on a curve. And when you pull it out, it becomes taxable. And you're asking how to avoid that. If you're going to consume that money, if you're not going to give it to a charity, I don't know of a way to shelter it. I don't need to shelter 100% of it. I do not know of a way to create a shelter for that.

It simply is traditional. Traditional is taxable. You're being forced to pull it out with required minimum distributions. We call them RMDs, and I do not know how to avoid that. Obviously, if early on you had rolled it to a Roth you would have paid the taxes on at that time of what it was worth at what it was worth at that time and it would now be tax free and Roths are not subject to RMD so I'm 63 I have moved everything into Roth for that reason and paid the taxes now so that the growth later I don't get bid on.

But I'm 14 years ahead of you right now, or you're 14 years ahead of me depending on how we want to look at it. But anyway, so you've done a great job, and the question you're asking is excellent, but there are no shelters for our income. The only thing you could do to the extent you increase your charitable giving to a certified 501, then you can, obviously that is deductible, but you're giving the money away to keep from giving anything to the government. So you're giving away, if you give away $1,000 dollars you would have paid taxes on that that would have been 300 bucks so you're giving away a thousand to keep from

paying the government 300 at that point but if you're if you're just depends on what your goal is your goal you asked how to avoid taxes the only way i know to do it's give it away uh because i do not know of another thing you can do with that um shelters it. Obviously, if you create any earned income at 77, this is all unearned income. But if you create earned income, then that qualifies you to continue funding Roth IRAs. But that does not help you shelter these RMDs. So let's talk more about that. So obviously, we always suggest for people to start with the Roth IRA or Roth 401k option for that reason. But for people who already have money in an IRA, we would say, hey, don't start rolling it over until baby step seven, right? So at what, I mean, obviously,

you know, he's 77 years old, he's got $3 million. At what point, if somebody's got a decent amount of money in an IRA, would you say, hey, it's not going to be worth it for you to roll it over, or I'd only roll over this portion of of it where does that kind of stop loss well if you've got the cash outside of the three million let's say he had told me he had another million dollars if he wanted to start converting big chunks of it to Roth pay the taxes out of that other million dollars but you're you're still not avoiding the taxes which was his question you're going to pay the tax yeah when you're anytime but at least let's say for instance that let's say for instance that um that we were talking to somebody who was 60 years old

and they had uh three million dollars and if they had an extra million to somewhere else and they wanted to use that million to convert this three million to tax-free growth okay if you're 60 when you're 67 that's going to be six million dollars that's right all right and when you're 74 that's going to be 12 million dollars and it's tax-free because back when you were 60 we spent a million so it's worth it's worth it to do that because you got 12 million dollars there at 74 in our little scenario we ran that's tax-free. So if we had caught Henry back then, and if he had extra cash, he doesn't have the cash right now to pay it. No, he doesn't. Because he's got the big chunk of his wealth is in this 401.

So he doesn't have the outside cash to pay the taxes on the whole thing uh if he wanted if he's in great health and wanted to plan for the next decade and say okay this three million is going to be worth seven or eight 10 years from now and i would rather that seven or eight to be tax-free and not subject to rmds then i'll pay the taxes now uh and any of it he wants to think that way about he could pay the taxes but you don't cash the 401k out to pay the taxes it's extra money at baby step seven this is this is playing beyond getting out of debt that's right beyond basic investing now we're playing up in the in the stratosphere with strategies and um and i'll throw out a thing I threw out last night, too, on that wealth, on that investing essentials thing we just did. I mean, I'm 63.

100% of mine's been converted to Roth. Here's the beautiful thing of that. Not only am I not forced later on to do the RMDs. Your children. But I can never touch it and leave it to them, and there's still no tax on it. So let's say I live to 93, 30 more years. All that money I have in my retirement, how big that is going to be?

And it's 100% tax-free when inherited. Ding, ding, ding, ding, ding, ding, ding, ding. Now there's a play. This is The Ramsey Show. Hey, you guys. Health insurance costs are only moving one way, and that way isn't down. And if higher costs aren't enough, the wait times to see your doctor are longer, and it's harder than ever to get anything approved through the bureaucracy. So if you feel like the system is working against you, try a biblically-based alternative to health insurance, Christian Healthcare Ministries.

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a medical event. So listen, y'all, there's no better way to take care of health care costs. CHM programs start as low as $98 a month. So learn more today and join at chministries.org slash budget. That's chministries.org slash budget. Jade Warshaw, Ramsey Personality, is my co-host today. Today's question comes from Greg in South Carolina. Yeah, he says, my wife and I

are 35 years old and have four young kids. I make about $100,000 a year before taxes. We've been paying on my student loans for three years, and our student loans are one year away from being paid off. We pay about $1,000 a month. The loans were provided by a family member at 0% interest, and they have said they really don't care how fast we pay them off. Should we continue with the same intensity to pay these off, or is it okay to slow down and start investing and planning for the future? Seems like we should shift gears and start planning for the future. As they have said, they don't really care how fast we pay them off. What do you recommend? I'd pay them off. You said that you're one year away from having them paid off. So finish paying them off. One year is not going to stop you from shifting gears, as you said, and planning for the future.

Part of you planning for the future is you paying your debt off so that you can take those next steps. So I would do it. I would do it. I mean mean i think that family members might say oh we don't care we just want to help you out but i don't like i just don't want to owe anybody money and i certainly wouldn't want to owe my family members money you're a year out honestly even if you were two years out or whatever i would still tell you to pay them off and do do so with intensity and get them out of your life, period. Yeah.

And I don't really know how to ask them, but if they don't care if you ever pay it off, maybe they should just forgive it. That's what makes me think they really do care. Yeah. Yeah. Because if they didn't care, it would be a gift. Sick parent, toxic. We're trying to teach them a lesson. We're trying to teach them responsibility by making them pay it back.

It's like, oh, geez, come on. Yeah, so, yeah, what we're going to do is we're going to keep them in debt to us because the borrower is slave to the lender, boys and girls, and when you eat Thanksgiving dinner with your master, it tastes different. Yeah. So, people, don't loan your kids so people don't loan your kids money don't loan your kids money never loan your kids money if you have some money and you want to give your kids some money fine but don't loan your kids money you freaking control freak don't loan your kids money i'm going to teach them a lesson

they're 30 they've already learned all the lessons you got okay they're past your lessons you control freak that's all that is if you want to bless your children bless your children and if they're worthy of being blessed they're good people and they're not going to screw up and you're going to help them move ahead and you've got some wealth and you're sharing it with your family that's great but don't loan your kids money that's from the old guy michael's in denver hey michael how are you doing awesome how about you too better than i deserve how can i help well um i took care of my parents until they passed away. Um, back in November of 2021 and, uh, June of 2023.

Wow. I'm sorry. And then I found out that, yeah, me too. It's been, it's been tough, but things worked out as far as financially were concerned for me because I was able to pay off my debt and, um, make sure that my dad was taken care of for as long as we possibly could all that fun stuff but I had an uncle that also passed away and he wants he I've got an inheritance coming to me from that and I'm trying to figure out what to do with it how much uh be about 200,000 wow wow you got the proverbial rich uncle

apparently i know somebody had it i've always heard about it you're the guy i'm the guy yeah no i i i am i have a 250 000 note left on my house and i have no other debt i have i have a 401k going with uh my work uh i've got i don't have an ira or anything like that or a Roth IRA set up yet i told them to do that okay but um i've got an hsa going i've got um you're already doing everything smart just pay off your house dude yeah okay i just i wasn't sure it won't pay off to the house fully. Yeah, but what do you make? At least drop it down. It would help. About $75.

Okay, so how quick are you going to pay off that little bit of balance? Well, I was thinking about re-amortizing the balance. I wouldn't re-amortize it. I'd pay it off. You don't want to do that. That's just going to give you lower payment. Pay it off. Right, okay.

Have you got any other money laying around? Unfortunately, no. I've just got the, I got 50K and a 401K and about 10 in an HSA, and that's about it. Okay. I have my emergency fund of about four or five months. And your parents' estate is not going to yield anything. The reason why I'm debt-free right now now the reason why i have a nice house and all that stuff is because of that okay so it already has yielded but it's not all of that but you're not getting any more from that okay hey can i throw something in here when was the last time

you did something really fun like a really great trip something for you? 15 years. Okay, you need to do that too. You need to do something fun, and you've been surrounded by a lot. What could you do that would just be mind-blowing for $10,000? There's a gaming convention I want to go to, but I could always do a cruise or something like that with some friends of mine. Yeah, do a cruise, gaming convention i want to go to but i mean i could always do like a cruise or something like that with some friends of mine yeah do a cruise gaming conventions that's small potatoes that's nothing compared to the cruise go on a really nice one what's the what's the location

you've always wanted to see australia new zealand there you go on an australia new zealand cruise it's going to cost you a little more to do it right it's going to cost you a little more right but jade jade's right jade's right drop 15 on that and go do because i gotta tell you man great barrier reef are you a diver by chance i am not i'd like to learn how to but i'm and just had a heart attack. Yeah, sure not dove the Great Barrier Reef in 2020. It is world class. It's amazing. Australia is a fabulous, it's a fabulous country. You need to go do it.

You need to go do it. Love to. Yeah, book you a nice cruise. Jade's right. Good, good, good idea. You know, he just sounded like he's been taking care of parents and rich uncles. He's been doing all the hard work. He's been doing the right things.

Yeah. He's a good guy and yeah you need it yeah and 50 so yeah go to the gaming convention and go to australia and then put the rest on your house and then sit down look at how quickly over the next three to five years we can knock off the balance of whatever's left on that house after doing that but you're exactly right folks we tell you there's three things you can do with money. Have fun with it, give it, and invest it. And you should always do all three. And I almost left out the fun one.

That's what I'm here for, Dave. Jade is here for the fun. That's what it is. Jen in Maryland, speaking of inheritance, Dave, I wanted to give a huge thank you for a recent comment about inheritance. Someone sent in a question about whether they were entitled to encourage others to pursue the baby steps since they had a leg up by getting an inheritance, just like that guy did. And he said, your answer relieved a burden from my heart. I wasn't completely aware of it.

I received an inheritance from my father, a nice amount, not life changing, but I've always felt a little guilty like i had it easier because of that than other people and i have rarely taken good care of the money and i have more than i started with i've used the required minimum distributions for very positive family experiences like trips i could have blown that money but i didn't i've been a good steward and i shouldn't feel guilty thanks for telling me i shouldn't feel guilty. Oh, gosh, not at all. Amen. You know what? I think, Dave, that the footprint that Ramsey has had in society, I think we're going to see more and more people who leave inheritances and that say, oh, I received, I had a rich uncle or I had rich parents.

And that's great. Like, that's the whole point. Like, it's generational wealth that you're building and a good man is leaving an inheritance so that you can also do the same thing. top of that you've taken care of other people in your family you've been a blessing to your community and then you leave an inheritance also see this is why you do the stuff we teach here it's being a grown-up and stuff this is the Ramsey Show. This show is sponsored by BetterHelp. All right, so I was born and raised in Texas,

and I love the myth of the lone cowboy. You know, the guy who doesn't need anyone or anything. It's a fun story, and it's a lie. In our self-obsessed society, we're obsessed about our own diets, our own workout obsessed about our own diets, our own workout routines, our own jobs, our own social media feeds, everything. It's easy to forget that no one can do life alone. And I don't care if you're an introvert, an extrovert, or whatever you want to call yourself, we all have to have a community and a support system to do life with. It's time to shift the focus from doing it all by ourselves to knowing that we can only be well and whole when we ask for help. Therapy can be a great source of help and support for any area of your life. And if you're thinking about starting therapy,

try BetterHelp. BetterHelp is 100% online therapy, so it can fit with your schedule. To get started, just fill out a short online survey to get matched with a licensed therapist. And if it's not the right fit, you can switch therapists at any time for no extra cost. This month, start to build your support system with BetterHelp. Visit betterhelp.com slash Ramsey Radio to get 10% off your first month. That's betterhelp, H-E-L-P,.com slash Ramsey Radio. Jade Warshaw, Ramsey Personality, is my co-host today. The best way to make the most of your learning how to use every dollar from you guys. When people get on this budgeting app, and it's the world's best budgeting app, and they lay out a full paycheck planning, and they start working the baby steps, it changes everything.

Everything. Can't be stopped. Yeah, I'm about to start rolling out another series of webinars on EveryDollar, so stay tuned. Yeah, very cool. Well, you can download the EveryDollar app for free at the App Store or Google Play or at the website, EveryDollar.com. If you want to hook it to your bank, there's a small charge to do that, and we put in all of these other features when you do that, like the paycheck planning, and we coach you along through the baby steps. And it's a pretty stinking incredible experience. So that's how I would go at it if I were you guys. You need to get this on your phone right now.

You and your spouse sit down and start making your money behave. Sarah's in Virginia Beach. Hey, Sarah, welcome to the Ramsey Show. Hi, Dave and Jade. I appreciate your time. Sure, what's up? I have your time. Sure. What's up? I have a handful of problems. I'll start.

I have a debt problem. I have a marriage problem. And I have a home problem. Uh-oh. So I have roughly $60K in consumer debt that I've been... So I guess I might rewind. I kind of casually started following the baby steps to hospital, and I have my car paid off.

But I keep getting set back to step one. And so I got really serious about it at the beginning of the year. And I also have $124,000 in student loan debt. In addition to the $60,000? Yes. Okay. I'm in the last year of my Ph.D. program. And fortunately, very blessed to be able to work on that full-time while I'm in the last year of my PhD program and fortunately very blessed to be able to work on that full time while I'm working.

So that's very good. A PhD in what? Aerospace engineering. Okay. What are you making at your job? $115,000. When you finish the PhD, what will that do to your income? Unknown.

I'm a civil servant, so I would assume... You probably will step outside of civil service if you want to maximize an aerospace PhD, right? Correct. I do have several benefits, so that is something I can do. You don't have any benefits that are equal to double your income. True. That's true. You can double your income if you have a Ph.D.

and you step outside of the government crap. Okay. Anyway, what's up? So I'm trying to pay off my debt. I have about $1,700 in child care expenses every month. As far as the marriage problem goes, so, okay, so sorry. And Baby Step, almost two, I'll be back to my $1,000 emergency fund at the beginning of June. Okay.

So then I'll go back to Baby Step two. But the marriage problem keeps coming up, and, like, divorce and separation is constantly coming up. And I'm wondering if I should pause the Baby Steps to try to, like, save money. Yes, yes. Okay. steps to try to like save money yes yes okay and so the third problem on top of that is um in february i had a dishwasher leak that like flooded my kitchen and ended up having like a mold problem and the insurance company didn't remediate properly and so we went back and forth with them a lot and they halted all work, so I have a half-demoed kitchen,

and they decided they didn't want to deal with it and just paid us out. My husband hasn't agreed to take the payout, so I have two insurance checks sitting on my kitchen table right now and no kitchen, and I'm about four months into that. So I'm wondering, what do I do about that? How many children did you say you have, hon? I have two. What age? Three and six.

Okay. I'm sorry. You are completely overwhelmed. You got babies, you got a PhD, you got a moldy kitchen, and you got a marriage on the rocks. There's a lot going on. Yeah. It's definitely trying to swim.

Yeah. So what we need to do is choose which battle we want to fight that's where i don't know what to do like i i don't know like so if the home is worth it like i'm not necessarily sure if i'm ready to throw in the towel in my marriage i don't know that and i would never encourage that um unless someone's getting abused but But, yeah, I think you need to sit down with a good marriage counselor, whether or not your husband will go. He won't go. I know, but you go without him.

You can go, yeah. And you start making decisions using that marriage counselor as the help for your brain to think clearly. When are you done with the PhD? Well, so far I'm on track for defense in spring of 2025. Okay, so you've got a while. Can you put that on hold for three months? I'm unsure.

Once again, with my agency or my department, I have been asked to finish their PhD or take a leave of absence to finish it I'm not sure but that's really I'm just saying I would go into I would go into this I would go into this whoever's managing the PhD program and say I'm in the middle of a bunch of personal crises I need 90 days to get through okay and then I would sit down with a marriage therapist and say we're going to decide what we're going to do here in 90 days to get through okay and then i would sit down with a marriage therapist and say we're going to decide what we're going to do here in 90 days if you're staying then we're going to deal with the house if you're not staying he gets to deal with the house you're going to take the kids

and go to an apartment okay so what do i do about the equity in the home? You're going to get that as part of the divorce if you do that. Okay. So, I mean, to add to this, I did pick up a side hustle. You don't need a side hustle. You make $100,000 a year, and you've got 73,000 things coming at your face at the same time. You need to set some of those things down and decide which battle you want to fight. I'm going to set the PhD to the side for a minute. I'm going to set the moldy kitchen to the side for a minute, and I'm going to work on this marriage and make a decision about it, and he's going to

decide we're all in and we're working on this together, or we're going to pull the plug on this puppy, and he gets the moldy house and has to sell it as part of the disillusionment in the divorce agreement. And then we'll restart the PhD while you live in an apartment with two children that has an actual kitchen. So do I just continue saving money until... Yes, you pile up money. You are in the middle of a freaking hurricane. I hate the idea of not paying off my debt. You're going to get your debt paid off. You're going to pile up money right now because you're going to need a big old pile of money

for all these different transitions you're going through. Okay. I want you to get out of debt, but getting out of debt is not the top of your list right now. You're in the middle of a storm. No, you're in the middle of several storms. Okay. At the same time, you just gave me a list of storms. I don't want any one of your five storms

okay okay i don't want to be raising two littles with a moldy kitchen a phd program and a husband who's off the ranch and and then i'm going to worry about debt in the middle no we're not worrying about debt right now you got to get some of this stuff cleaned up and get get up an emotional situation where you've got some some headspace to be able to get back on the phd properly and then be able to get back on the debt and finish the phd get your income up get a fabulous career go make two three hundred thousand dollars a year with that and um go raise these kids with or without this marriage depending on what the conclusion of that is i hope it stays together but you've got the you know you're not focusing on the marriage you're focusing on everything else and you're not focusing on the

molding kitchen you're focusing on everything you got 73 things you're trying to do at one time and none of them are getting done and so you need to kind of force rank what's real here and what's important okay moldy kitchen is not real not important i can get a different kitchen screw it okay uh phd can go on hold but wait we're taking a 90-day sabbatical on that screw it it's sitting to the side period done not not not negotiating and i'm telling you what i'm doing i'm not going to do it for 90 days okay that because i have other stuff in my life that is more important than the phd i have more important stuff than dealing with contractors on a moldy kitchen because the stupid insurance

company didn't do their job okay so now what am i down to i'm down to feeding my kids and healing my marriage or systematically ending it because it's already ended and we just have to admit it. One of the two. Then when we get that solved, we can start to deal with the other stuff. We've got to force rank these things based on what's real and what's important first. And then you can work your way through these problems. Gosh, I'm sorry, honey. You got a boatload.

This is the Ramsey Show. Our scripture of the day, when pride comes, then comes disgrace. But with humility comes wisdom. Proverbs 11.2. C.S. Lewis said, humility is not thinking less of yourself, but thinking of yourself less. Daniel is with us in Milwaukee. Hi, Daniel. Welcome to The Ramsey Show.

Hi, Dave. Thank you for taking my call. Sure. What's up? So two weeks ago, me and my wife found out that she has preeclampsia. She called me on her way to the hospital after a routine appointment. And now we're facing the prospect of no longer being able to do a natural birth and kind of overwhelmed with some health care expenses here. The cost of a pregnancy in the area seems to be between $25,000 and $35,000, which is about the balance of my entire emergency fund.

You don't have health insurance? I have a Christian-based health share. And we signed up. As soon as we got married, changed our name. And then we found out about a month later that we were pregnant. And we were about two days too late for being covered. Have you contacted them and told them this story?

I have, yep. And there's no policy adjustment available? They're not going to help at all? They're not. They will cover the baby as soon as he's born, but the birth is entirely on us. Okay. What's your household income?

$120,000 a year. And when did you get this news? About a week and a half ago. Okay. All right. Baby's going to be born in seven days here. Okay. Here's my experience. I would get on the phone with your OB, not your OB's secretary, your OB. I want to talk to him or her personally on the freaking phone.

I don't want to talk about practice management. I don't want their crap. I want to talk to the guy, the gal on the phone. You got it? Then I want you to tell them what's going on. No insurance. I need an advocate, dude. That's what you're telling him.

Is your OB a man or a woman? He's a man. He's fantastic. We're really lucky to find him. Great. I'm glad he's fantastic because he's getting ready to be super fantastic. So I need him to help you get in contact or even shop among hospitals that when you pay cash for this in advance that they give you a 50 discount they'll do it yes yeah the the hospital we're going to does say that they offer you out 45 or

50 discount for cash payers and that still comes out to roughly $25,000 to $30,000, depending on if it's a C-section or not. And with this being high risk, they can't necessarily determine that. No, we won't know that until we know it. Okay. Exactly. So you've already run that to ground then? Correct, yeah. So it's looking like it's going to be after the cash discount around the amount of my entire emergency fund, which is about five months.

The great news is you're getting ready to have a baby, and the great news is you've got the money to pay for it. I don't know anything else to tell you. All right. Yeah. You pay it. You pay the bill. You just pay the bill. That's what your emergency fund's for.

This is called an emergency. The definition of an emergency is an unexpected event that you could not have anticipated this this pregnancy going sideways is an unexpected event that you couldn't have accepted you couldn't have anticipated i'm sorry but your emergency fund is getting used when you bring that baby home you're going to not think anything about the 25k,000. It's no big deal. You can get you some more money. All right.

Thank you very much. I just wanted to say that every dollar has been absolutely fantastic for our marriage and this process and getting us to this point. Thank you very much. Man, I'm so sorry you're facing this, Daniel. Your wife's going to be okay. The baby's going to be okay. Your finances are going to be okay. The great news is you all have done such a good job with your lives and with your money you've already run to ground something that

most people don't even know exists which is a 50 discount on labor and delivery if you prepay you've already got that before you offered me the 25 i thought i was turning 25 into 12 but you'd already turned 50 into 25 i mean and the only other thing is. You're doing good. Watch everything like a hawk. Yeah. As they're. Yeah.

Look at every stinking expense because making sure they didn't triple charge you for the $8 a piece Tylenol. Because that's what you're going to see on the invoices. And, you know, really audit the bills as they come in because it's like real money. Yeah. They're paying here. Especially for babies. They put everything in there. Insurance companies and people don't have to pay attention to medical bills. really audit the bills as they come in because it's like real money we're paying here especially for babies they put everything insurance companies and people don't have to pay attention to medical

bills and sometimes you get triple billed on stuff and um hospitals aren't evil they're not trying to steal from you they're just incompetent in their billing processes and they overcharge through the nose yes eight dollar tylenol is a real thing yeah per pill it's nuts so um yeah and just you know but they you know that's what insurance covers it so nobody looks at it right and nobody nobody says this is nuts oh no he'll be looking he'll be looking at it this guy's on it you're on it daniel you're you Daniel. You're like a superstar dad and husband. Wasn't that interesting when it's your money, you suddenly care very deeply about what's on the receipt?

Absolutely. Absolutely. Yeah, if everybody was on an HSA with a high deductible and you watched what the money went to for the high deductible, then health care costs would be driven down by marketplace pressures. That's right. So that's the deal. But insurance just makes everybody blind and lazy. Zach is with us.

Zach is in Indianapolis. Hey, Zach, welcome to the Ramsey Show. Hey, Dave, how you doing? Good, man. What's up? Yeah, so me and my wife are currently paying off student loans. We have $13,000 left to pay off. And so our plan was pay that off by around December

and then start saving for a down payment for a house. Good plan. Yeah, so... Well, I would throw one thing in there first. I would want you to get three or six months saved up before you start saving for that down payment. Yes. Yep. So my step grandmother, so my step mom's mom is getting married and she has a house that she is not going to need. And so, uh, she was going to sell the house. She just kind of wants to be done with the house and not have to worry too much about it.

Um, but she offered that me and my wife could rent it with the understanding that we would own it at the end of two years or get financing for it um with the understanding you would own it at the end of what two years to get financing to go ahead and buy it oh not you would own it outright i was about to say no no no no no yeah so she said that she wants to keep our rent exactly what it is right now which is very low we We're only paying $800 in rent. Should we keep it that way? And she said that 100% of the rent money would go toward the purchase of the house and that the price would be locked in at $225 right now. What's the house worth?

I think my question, $225. Okay, so it's not a bargain. It's just a little bit of rent credit. Yeah. You wouldn't have bought this house if this deal didn't come up. I don't think so either. You don't even like this house. It's not our dream house.

No, I'm not that. You just don't even like it. The only thing that got you was she thought, I'm getting a bargain because I'm getting my rent credited. And the rent's low, and that's the only thing that got your attention. If you were driving down the street and there was a for sale sign in this house, you would not have called on the sign. You're getting $16,000 of rent credit, give or take.

Yes, but the other thought is we would be living with low rent. You are now. The question you have to ask yourself is rent aside because you'll be able to save up a lot with that low rent aside you're you already have low rent you have to ask yourself would you have bought that house with it being sixteen thousand dollars cheaper and the answer probably is no it's not like you're making bank on this deal and you probably wouldn't have even had your eyes on this house if she hadn't said anything. It's not a good reason to buy.

It's not a deal. It's not a deal. I'd walk. I would just rent where you are and pile up cash. You would not have picked out this house, Jade's right, if it was on the market for $225,000 minus $16,000. So what, $209,000 or whatever that comes out. You would not have bought that house. The only reason you're getting sucked into this was the relationship.

And then for a second, you thought you were getting a deal. Don't do it. That puts us out of the Ramsey Show and 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.