The Ramsey Show - App - Will We Ever See 3% Mortgage Rates Again? (Hour 1)

Episode Date: April 5, 2023

Dave Ramsey & Rachel Cruze answer your questions and discuss: "Help! I'm struggling with budgeting", "Will we ever see 3% mortgage rates again?" from the blog: How to Buy a House in 2023, What to do with your money when the market is crazy, "My wife doesn't want to move for my new job" "Should I cash out an inherited IRA?" "How can I best invest for my kids?" Have a question for the show? Call 888-825-5225 Weekdays from 2-5pm ET Want a plan for your money? Find out where to start: https://bit.ly/3cEP4n6 Listen to all The Ramsey Network podcasts: https://bit.ly/3GxiXm6 Learn more about your ad choices. https://www.megaphone.fm/adchoices Ramsey Solutions Privacy Policy

Live from the headquarters of Ramsey Solutions, broadcasting from the Pods Moving and Storage Studios, it's the Ramsey Show, where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. I'm Dave Ramsey, your host, Rachel Cruz, number one best-selling author, co-host of the Smart Money Happy Hour, and Ramsey personality, and my daughter is my co-host today.

Open phones at 888-825-5225. You jump in, we'll talk about your life and your money. Jamie is with us. Jamie is in Springfield, Illinois. Hi, Jamie, how are you? Hi, Dave. Thanks for having me. I wanted to ask you and Rachel today, I've been following the Ramsey way for several years now, and I am on baby step seven. I'm 100% debt free as far as student loans, credit cards. I even paid off my mortgage a couple of years ago. Way to go.

A couple of months ago, a couple of months ago, a couple of months ago. Sorry. Um, I have my emergency fund, I'm saving for retirement, but where I'm just really kind of struggling and I'm, I'm afraid, I guess a little bit to, I'm not budgeting well. And so I'm afraid to like, just spend freely and not, I'm just not doing budgeting very well. And I guess that's what I want your knowledge or advice on. Jamie, what's causing you not to, do you think? What's the reason behind not budgeting well, would you say? I don't know. I honestly haven't, I've never done it well.

I think the gazelle intends to pay off all the things helped me to get there. And now here I am. I'm i'm like okay i'm making more i have a side hustle but i don't have anything that i have to pay so i think there was always that like you know yeah the urgency's gone basically yeah and now i'm like okay now what yeah totally well i think one thing that you said that for me because i'm more of a natural spender and all of it. So my natural bent is not towards budgeting and everything. So what you're saying, I'm like, I totally get it. But what I have found is that and you touched on it earlier.

So I want to just say your words back to you that you don't feel the freedom to spend. And so for me, that is what I have found so great about budgeting is it allows me to be able to spend and not second guess myself or not think about it. So I mean, I can tell you, Jamie, my husband, I were in baby step seven. I mean, we've been doing this for 12 years. And our budget, I mean, we just did April. And I'm like, it's so consistent. There may be like four or five categories that we change month to month. But for the most part, we know what we spend. And for us, it has become so simple because it's been so consistent. We're not in this flux of stuff, right? Like, especially on Baby Steps 1 through 3, there's so much of like, oh my gosh, where

can we squeeze out? Where can we look? But on Baby Step 7, you can kind of relax in that. And I think that makes almost budgeting can be a little bit easier because, again, those budgets are so much more consistent month to month. So I would be curious if you really did buckle down and do every dollar plus for just three months. I bet by the end of the summer, you're like, okay, this isn't as strenuous or as hard as I was thinking. And we talked about too in Baby Step 7 that you can up your lifestyle a certain percentage,

you up your giving a certain percentage and all of that. Again, it's a little bit more lax because, like you said, you're not having to be as focused and as intense with every single penny. So when you say you're not budgeting well, do you mean you're not pinching pennies or do you mean you're not functionally, tactically doing the budget well? I am not pinching pennies and i am not physically doing a budget you know i'm not following like every dollar app i'm just like guys at your stage we're not we don't tell you to pinch pennies at your stage all i want you just to do is to do it on

purpose and the writing it down makes you do it on purpose and to that end um like what is something that uh a category give me a category you enjoy spending on enjoy freedom in sure i mean clothes travel what vacations vacations okay all right see to me if you say this is what we're going to spend on a vacation this is what we're going to put aside for a vacation and then when i get ready to do the vacation the money is laying there because i put it in there um that's easier and the vacation is more relaxing and more fun than not knowing if i screwed something else up by going on vacation yeah yeah that makes sense that's what rachel's saying there's freedom in the plan because it you know, like, for instance, if it was clothing and you went and bought something in clothing and there was zero guilt because it was in the clothing budget. You know, I mean, that's what it's supposed to be used for, for God's sake.

And so you can relax and enjoy the clothing purchase that way. And, you know, then you're not outside. You're not out of bounds and you just the the feeling of knowing you're you're not messing up things when you buy something because there's a a latent guilt with buying the wrong thing in the wrong time that puts you into a mess and you want to that's a good guilt because it keeps you from doing stupid butt stuff right but you're it takes away the fear that you're doing something stupid but if you've got a written game plan where everything's assigned.

And so I think the freedom is what I would reach for that Rachel's talking about. Okay. Just a mindset change. Yeah, it's going to give me, by doing my payoff for sitting down and spending that one hour and later spending 30 minutes, because it doesn't take 30 minutes to do it once you kind of got a rhythm going but you know and really getting good at it the freedom the payoff for that one hour is freedom i can without guilt without hesitation go out to eat because i got that go out to eat budget right and i don't have to go and we kind of blew it when you're not to eat again you don't have to

have that latent thing hanging over your head and i i just think that's a that you know um we used to call it uh before rachel kind of took it and said you know this this is it's freedom to spend this but we just used to call we said okay we're not going to call it a budget anymore we'll call it a spending plan yeah yeah because that's what it is i don't care what you do with your money as long as you do it on purpose because people seldom do stupid butt stuff on purpose. Let's sit down. Let's see if we can do a stupid butt thing right now. Nobody does that.

But it's like we just keep driving and driving. Oh, the car is out of gas. Who knew? Yeah. And I think, Jamie, the encouragement thing where you are, because you have been so diligent with your money, you have worked hard. I have a lot of room in this. And paid off debt. I mean, yeah, you have the margin diligent with your money. You have worked hard. I have a lot of room in this. And paid off debt. I mean, yeah, you have the margin, or you should,

I mean, have the margin to be able to say, hey, we're going to just do big categories within the budget and not every single one. I think the further back you are on the baby steps, the even more detailed and meticulous you need to be. And then as you start moving, it's like, oh, you can kind of make these bigger, wider categories and live within live within those and it's still okay but you're still doing it on purpose yeah let me give you an example that for the rest of you out there not for her

when you first start doing your budget you should have a separate restaurants envelope from your grocery store envelope you should have a separate category restaurants should be a separate category you shouldn't just say food. Because if you just say food when you're first starting, you'll eat out and you won't have any money to go to the grocery store. But when you separate those two. But then later on, when you've gotten under control, you've gotten rid of the debt, you've got the margin, then you could just have food. You know what's funny, though, about me? I'm like, I should retake my Know Yourself, Know Your your money assessment because i even might be more of a nerd than i realize because even though we're

on baby step seven and we've been again doing this we're not perfect at it but it's been over a decade i still like more individual categories because i just want more i just want to like you like the clarity i like the clarity of just the complete like i have a date but that's still that's not motivated by nerdism though that's motivated by the the complete, like I have a date night. But that's not motivated by nerdism, though. That's motivated by the freedom. I know. We have a date night in our food category. It's a separate food. Yeah, because I'm like, I want to enjoy our date night.

You want to go out to eat on date night. Yes, yes. Okay, I got you. All of it. I don't know. We're so specific on ours. But then you can do it without guilt. That's what you like about it.

Yeah, that's what I like about it. Yeah, I like it. It's a freedom. There's a freedom to it. And that's when budgeting is not a punishing process. It's a spending plan. This is The Ramsey Show. Rachel Cruz, Ramsey personality, is my co-host today.

Thank you for joining us, America. Open phones at 888-825-5225. Our question of the day is sponsored by Neighborly, your hub for home services. If you're moving, you have a long list of to-dos, but Neighborly's got the local pros like Housemaster, The Grounds Guys, Five Star Painting, and Junk King. There you go. To check items off that list. Now, in other words, Neighborly's got somebody to help you with just about anything around the house you need.

Getting rid of mosquitoes, Molly Maid, Mr. Electric, Mr. Rooter. All those things fall under the Neighborly heading. And that's why we're so excited to have them sponsor here. Visit Neighborly.com today to schedule home service experts near you. And today's question comes from Mark in Wisconsin. In the current economy, what is a reasonable expectation as far as where home loan rates will end up by the end of the year? Is the 3% rate possible again, or do you think it'll stay where it's at? In looking at my numbers, it's depressing how much my mortgage payment would be after putting a lot of money down.

So I'm hoping for some light at the end of the tunnel. Oh, man. You know, I mean, I was listening to a thing off, I think it was like Yahoo Finance or something today. And I mean, they're thinking they're going to raise the federal raise again in May and June. So that's the thing, Mark. I'm like, I don't know. We don't have a crystal ball.

We have no idea. Is 3% rate possible by the end of the year no probably not no not by the end of this year no uh however we need to tell you that uh economists and weather forecasters are the only people that can be wrong most of the time and keep their jobs so when we predict that you know it's just like who knows but um realistically it takes it a little while to settle back down if the markets if the bond markets settle down and if the fed quits screwing with it and so um you know you've only got about you know effectively nine months less than that by the time we have this conversation

and all so i i know not by the end of the year will we ever see three percent again oh maybe i don't know maybe probably the the thing you got to think about is this um in 1978 i got my real estate license rates went from nine and three quarters to 10 that september for the first time ever we saw double digit interest rates they didn't settle back down below 10 they went all the way up to 18 in 1982 under jimmy carter and then they came back down and in the 80s i i don't remember when they came back down below 10 but it was probably a decade before they came back down below 10 and honestly having i was a young real estate agent at that time and having lived through it going up up up up up up and then it came down from 18 to 14 to 12

even to 11 when i went on the radio in 19 oh i know wait a minute i know it took more than a decade because i'm on the radio in 1992 and uh they had not gone below 10. And I was telling people, you'll never see it below 10 again. And I said that on the radio. And I was completely, obviously, I was completely wrong, right? And it went below 10, and it stayed in the 5, 6 range for a long, long time. The 2008 crash drove the rates down below 3, and they stayed in the 3 and below three until just the other day until just about a year ago so uh the point being that there's a large percentage of the history of

single-family homes prospering in the united states that the rate was much higher than 3%. 6%, 9%, even 11% or 12%. And the market moved. The market continued to move. The only difference was they didn't have three to compare it to. Yeah, that we've been spoiled to live in. You've got three to compare it to, and it pisses you off. It's all you've known. Especially for the millennials that are the ones that are probably in the major housing to buy.

Yeah, I mean, that's all we've known is that. Since 2008. Yes. And what I would say too, Mark, is when it comes to buying your home, we always say buy a home when it's good for you, regardless of what the market's doing. So regardless of whether the stock market is going crazy or it's down or whatever. For the most part, if you have the money and you have the ability to buy a home, then you have the ability to buy a home.

And if it goes back down, you can refinance. I mean, you can always still get a better interest rate, but it is depressing. I get it. I mean, I get it. Two points to go with my little story of perception there, okay? Oh, is the history lesson still going? The history lesson.

I'm so sorry. No, no, no. The point for the history lesson, going the history sorry no no no the point for the history lesson and then i'll land the freaking plane but the uh just circle you're just circling okay it's great 10 if you were at 10 18 months ago and it had come down to six six would not be depressing it's not the six that's depressing it's the change from three yeah that's what's depressing and because you saw what you used to could have had, okay? And that's what throws you off.

So if you bought a house at six, you're not going to die from it. And go ahead and be pissed off and get the stupid thing paid off, ASAP. And then because my interest rate on my home is precisely zero because I don't borrow money. So there's that. And you can save up and pay cash for a house, too. That's a weird idea. Oh, that's a really weird idea. But people do it, and it's not that unusual.

It's not as unusual as some of you think it is. So, wow, you know, don't tell me that because I've seen it. I've been doing this for 30 years. I see a lot of people pay cash for a house. So just start going, okay, I'm going to save 50 grand a year. I'm going to do that for five years. I'm going to do that for five years. I'm going to have 250K, and I'm going to buy my first starter house. Well, you can't get to, I know, wherever you are, I get it.

But the average house price in America today is about 300. So, you know, let's talk about how you get 300K together. Or let's talk about putting a huge down payment and then getting it paid off as soon as possible so you don't have to be pissed off or depressed or whatever emotion it is that's associated with it. with it so yeah perception is part of the issue the actual math part of the issue and then it just get you know turn it as a positive and as a motivator to push you on out of debt sheree is with us in philadelphia hi sheree how are you hi to you both

i'm so excited i love your whole team team. Thank you. Thank you so much. How can we help? So I'm moving to a new job, and so is my husband. He was recently laid off. Our question is, what do you advise we do with our current 401K in such a volatile market? Leave it as is or move into something else? What do you mean something else? Something, a Roth, I'm very confused that, you know, we, again, the 401k, I have it through

principal and to move it to a Roth, like as far as the different mutual funds are available, the Roth, I don't know which one would be best for us. We were advised by two different people to hold off doing anything because the market is you know just um everything is i i guess uh it's not in the best shape okay those people are stupid yeah yeah let me tell you why let me tell you why if the market is if the market is down and you have your money in mutual funds and you sell those mutual funds and you move over to an ira and you do a rollover on your 401k which is what i'm going to tell you to do and you buy mutual funds while the market is down you sold while they're down you bought while they're down no net loss

okay it doesn't you don't lose money if you sell when it's down as long as you buy when it's down now if you sell while it's down and you wait until it goes back up to buy, well, yeah, you would lose money. But why would we tell you to do that? We don't want to do that. This is a great time to sell and a great time to buy as long as you do it all on the same day. Yeah. So, yeah, you need to get with a SmartVestor Pro and, you know, get your –

And don't leave it at your current employer. No, right. So that's – and they – I don't know what they are. Yeah, because, Cherie, I mean, it's the same pool you're working in if you're taking it from a 401k to an IRA, right? It's all within the market. So not leaving it with your employer. Go ahead and roll it over to a traditional IRA. So here's what I'll do.

And let's explain to you why, okay? So if you don't have a good advisor go to ramsey solutions.com and click on smart investor pro and sit down with someone that has the heart of a teacher and here's what they'll teach you okay that when you sell the mutual funds in the 401k in order to roll them over to an individual ira traditional 401k to a traditional ira there's no taxes. Okay. Okay. Number one. Number two, you're selling growth stock mutual funds in your old 401k. You're buying new growth stock mutual funds in the new IRA. That's your rollover. But both are down. And so you're going to have a net net on that. No problems. So no taxes, no loss in the market. But you've now got an advisor in your corner.

You are controlling what the money goes into. You get to speak over it. Your IRA is in your control. The 401k back in an old employer is clunky and hard to deal with and has limited options. So that's why we tell you to move it. Rachel's exactly right. This is The Ramsey Show. we measure success on the show are all up meaning there's more of you out there than there was last month and a lot more than there was the month before thank you very much and those of you that told your friends and neighbors to come visit thank you and we're going to ask you continue to

do it uh there's three ways you can help us because we do not spend a bazillion dollars we don't spend 300 million dollars a year on uh marketing like um we don't have our own stadium like so if i excuse me i'm sorry i got allergies um but the uh you know we don't have our own stadium like so if i excuse me i'm sorry i got allergies um but the um you know we don't have a big football stadium named after us so you got to help us all right so what do you do well you can subscribe if you're a youtuber a podcast follower right uh you can tell people about the show if you're watching it or listening to it on radio you can tell people about it if you're a youtuber digital by sharing it they've got a sharing mechanism you can send the link out go listen to us yeah do all that and leave a five-star review that helps it pushes the pushes the show

forward and some of the algorithms and causes people to see it that might not see it otherwise uh and you know if you want to leave a one-star review you got the wrong show because mama said don't do anything if don't don't say anything if you have anything nice to say. So just, you know, go somewhere else if you don't like the show. But leave us a five-star, subscribe, follow, share, all of those things. It's a big help. We really appreciate it. Daniels Weathers in Huntsville, Alabama.

Hi, Daniel. Welcome to the Ramsey Show. Hi, Dave, Rachel. It's great to be on. Yeah, good to have you. How can we help? Well, so I've got kind of a conundrum at our house. I've accepted a new job about eight hours away, and I start this Monday.

I left my previous job about two weeks ago, so I had a two-week period there of just kind of being home and together and get the house kind of set up. And, uh, my plan is that I'm going to be leaving this weekend, heading to the new job, uh, using her, uh, my wife's brother's spare room for a couple of weeks and then looking for a place to rent, uh, while we're in, uh, and letting them stay here and finish, and finish school year and stuff like that. But there's some apprehension from her wife about the move, and she's kind of feeling like we're really set up well here

and not wanting to move the kids and worried about interest rates and stuff like that for the purchase of a new home. I'm a little bit confused. Why didn't we discuss all this before you took the freaking job? Well, you know, we kind of did. It seemed like a good idea at the time. For me, it's a promotion. It's a pay raise.

It's a bonus increase, and it's actually moving back home for us to an area that we're from. So there's lots of family around and everything. And the kids actually seem to be pretty excited about it, or at least my son, who's six years old. He's excited to go be near all his little cousins. Daniel, what is her number one reason? Is it the kids? Is it interest rates? Because all of this can be fixed.

Or does she have a life in Huntsville that she loves and she doesn't want to leave? There's not a life in Huntsville that we're in love with. She likes kids' school that they go to. We send them to a private school here. She's uncertain about schools in the area that we're going to, but they're schools that we went to and came from. Again, I don't understand why y'all didn't discuss this before. None of that has changed.

Did you take this job and half talk to her? Well, no. I mean, like, we talked about it. You know, I tried to paint the picture of once I got the job offer, so I went to the interview, and once I got the job offer with the raise and the bonus of what we could do because we could, we're going to, we have a lot of equity in our account. I mean, but she didn't raise these concerns then.

Not exactly, no, or at least she says i bet i didn't listen won't listen to him um knows that that's that's kind of what i'm thinking like you bulldoze this and now you're paying for it did i miss something yeah yeah. Yeah. No, no. Oh, Daniel. Oh, no, man. Okay. Well, you got, I mean, you start Monday, so you're going to have to make some, you're

going to have to make some decisions. You guys are going to have to have a come to Jesus meeting and, and you have to lay out, I mean, she needs to lay out all of her concerns where she's frustrated with you if you didn't really listen to that and own that. You guys look at the schools, do like get as much information as possible because interest rates, I mean, whatever, rent for a year and we just hadn't,

yeah, interest rates, I wouldn't do that. There's schools everywhere. I understand people love their school. I love where our kids are, but if you had to move for a job, there's great schools in every city that you can find, right? I mean, for the most part. So all of that can be overcome. My issue, though, Daniel, is that the problems that she's bringing up can be solvable.

But I think she's probably thinking, holy crap, you just went and did all this. And I may not be on board. Yeah. How old are you guys? 34, 35. Okay. So you've been married, what, 10 years? Yeah, actually.

Okay. We've been married 40 years, and my wife says we've had 33 good years of marriage. And she's referring to the first seven when her voice didn't get heard that's how i recognize this stuff so quickly because i'm you many years ago okay and um and and so one of the here's the skills that sharon and i had to learn number one i had to slow down and listen. Proverbs 31 says, Who can find a virtuous wife for her worth is far above rubies. The heart of her husband safely trusts her, and he will have no lack of gain. I used to do a lot of what you did here, which is half listen, half let her talk, and then I go and did what I wanted to do.

And that's what you did. And so you need to own that she also needs to own the fact that she was being too freaking timid and she needs to freaking speak up i mean she you know she may have hate well no you don't know no i'm listen you are i don't know i wouldn't put that on her. I'm putting it on both of them. I am too. Their communication style sucks, okay? You all did not talk up through a major life thing where both of you were heard because she didn't speak loud enough and you didn't shut up long enough.

And both of you got to work on that. And if you don't, I mean, Sharon and I had to work on it. It took us a long time. And now we loudly communicate and often so uh but the uh you know it's a good hillbilly fight sometimes but at least we both get heard and i have a rule i do not move forward on major decisions of any kind especially financial decisions without sharon completely looking at me and saying, okay, I'm heard. I have some concerns.

I've talked about them, but I think we need to go ahead. I hear what you're saying, and we come to total agreement, both having voiced our thing and done this. Okay, so what does he do? Starts on Monday. I think you go back and you apologize, but you need to own what you did here. She needs to own and then say, okay, now, what do you want to do? Do you want me to go in and quit

the job that i've accepted or do you want to make the move and if the move goes bad and it's horrible then we can make another move if we have to that would actually be my suggestion is remember that this is maybe not forever uh it feels like to her it's absolute and there's no going back and she's especially since family's there and everything it feels like to her it's absolute and there's no going back and she's especially since family's there and everything it's like you're about to go plant roots is what it you know what it kind of feels like but giving her the dignity of the option of like hey if this goes bad and we're not enjoying it and give it a year we'll come back or we'll go another place yeah yeah but yeah you got to own the fact you didn't listen and she needs to own the fact she

didn't speak up and then y'all got to decide what you're going to do before monday don't wander off up there while this is in a fog this is not going to go well you need clarity yeah before you do this especially moving my suggestion would be that both of you own your part in this horrible communication plan you have and address that for the future and go ahead and take the job. And I suggest she goes along with that with the caveat that we could leave in a year if it doesn't work. That's what I would do. But you're going to have to give her an out, man. You didn't listen.

This is The Ramsey Show. Rachel Cruz, Ramsey personality, is my co-host today open phones a 888-825-5225 so uh new product out huh well it's been out for a little bit and it's just become it's a it's a popular one. And so we have a new color, a limited time color of the Rachel Cruz Slim Wallet. The Slim version. Yes, which is the metallic blush, which is my favorite. This is the one I personally carry. Sounds like a lipstick color. I know.

Well, it's just beautiful. All the ladies appreciate a good metallic, yes, material. So the Slim Wallet is great. It's $34. We're actually marking it down a little bit. So there's a little bit of a sale. And I love this wallet. We have the Rachel Cruz original wallet that has multiple dividers within it.

So if you're doing the envelope system and you need different categories, that's a great option for that. But for me, in this season of life, I'm traveling. I'm moving my wallet from purse to purse. I mean, it's just three kids, everything. So I'm like, I needed something smaller that I could use in and out of a store and not have to take my whole purse. So we came up with this idea. So there's one envelope inside that would carry at least one category.

You could even maybe put two in there if you were able to divide it. And places for your cards. So insurance card, license, debit card, gift cards, all that. Handgun carry permit. That could be in there too. You have to have that with the blush. So it's there. But the Rachel Cruz Slim Wall, if you don't like metallic blush,

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Metallic blush. It's beautiful. Things I thought I would never say on the radio. Okay. The Slim Wallet. Metallic blush. It's beautiful. Things I thought I would never say on the radio. Okay. And I just did. You're welcome. Steve is with us in New York City. Hi, Steve.

Welcome to the Ramsey Show. Hi, Dave and Rachel. Thank you for taking my call. Sure. What's up? I have, I inherited an IRA from my father. It's got $49,000 in it. I was wondering if I should cash that out and pay off a couple of loans that I have.

Yes. Yes. Well, that's a good answer. You're going to pay taxes and no penalties. If you do not cash it out, you're required to cash it out one-tenth a year for 10 years to where within 10 years it's all out anyway. Right. That's the law.

Okay. And so you're going to be moving $2,900 a year out anyway, and you pay the taxes each time you do that. So it's not like you can avoid these taxes. They're coming, and I would just go ahead and pick them up and be done with the debts. How far does that move you through your debt snowball? Well, it's, it's, um, I have, um, a $9,000 loan that I had taken out from my 401k. I have $9,000 left on my mortgage and I have a $14,000 boat loan and no other debt.

You owe more on your boat than your house. It's a nice boat. or not a nice house yeah i don't know it's just that i've been paying it for a long time i'm kidding with you it's great it's just unusual agreed yeah okay so wait a minute let's see 18 and 14 and so what is that? $32,000 makes you debt-free. Have you got any cash? I've got about $10,000 in cash, and I've got about $500,000 in my 401k. Okay. There you go, Steve. So what I would do is cash this out.

Your taxes will not be due on it until April 15th of 2024, and so I would use 100% of the money towards this, and I'd take three of the 10 and be 100% debt-free. I'm sorry, say that again? Okay, you got $10,000. You need $30,000 and $29,000. So you have $39,000 total

if you cash this out and you wait until pay your taxes until next year, of course, right? Right. Okay. total if you cash this out and you wait until pay your taxes until next year of course right right okay um well they'll take the taxes out immediately i believe no they'll take 20 they're not supposed to i thought that was how it works no that's how it works on a 401k it should not work that way on an inherited ira inherited ir, you should pay your taxes in the following year. So yeah, that's what, anyway, I would pay off all the debts and have $7,000 left. If they don't withhold on you, that's what will happen. And then I would immediately build that $7,000 up to

three to six months of expenses, but I'd be 100% debt free. Okay. Sounds like a plan. The boat will drive better if it doesn't have payments. I know I used to have payments on a boat years ago. Yeah, yeah. What kind of boat is it? It's a 26-foot Searay.

Oh, nice boat. Yeah, it is a good boat. Yeah, it is. I enjoy it. I enjoy it a lot. That's my summer. That's my summer home. Yeah, I love it.

Well, Ramsey's are boaters, too. We love the lake and the boats and the stuff, and so dragging the kids around behind it and all that stuff. Different kind of boat. A little bit. Not much, though. 26-foot sea rate. I mean, you've got a 23-foot Mastercraft.

I mean, so not a lot different. Talking boat shop here. That's it. That's it. I can't really contribute. It's not a yacht. It's a three-foot longer than your Mastercraft. So anyway, so anyway that's good stuff so there we go it's a little yacht yeah okay nice boat good job good job steve congrats on being debt free yeah way to go

peggy's in lexington hey peggy what's up hi um well i am a 65 years old, retired. My husband has dementia. He's had it for 12 years. We don't have any debt. We own our home. But I'm in the process of starting a trust fund for my children. And my understanding is I can invest money through the trust fund once it's completely set up. And I just wanted your advice on how to move forward with all of that. Why are you doing that? That was the advice of an attorney.

Who sells trust funds. Okay, who sells trust funds. An irrevocable trust fund. Yeah, why? Who sells trust funds. Okay, who sells trust funds. The Irrevocable Trust Fund. Yeah, why? Because my husband has dementia, and we don't have any long-term care insurance, and I know that's what you would say. Well, it's too late now.

And he was 52 when he got dementia, so, you know. Highly unusual. He has the early onset. So anyway. So he's 64. So, you know, he has the early onset. So anyway. So he's 64. How's he doing? He is physically he's okay, but mentally he's, yeah, he has had constant care. But I have him at home with me.

I'm sorry, hon. It's been a long 12 years isn't it yeah and we've had lots of you know when he first got it he got scammed once because he could still take calls and stuff like that so but you know we've made it through all of that but um i'm just i didn't know what to do to prepare for my future so i went went to this elder. Okay, so the reason for the trust is to keep from losing it to a nursing home? Well, and just to protect. The way the lawyer said it is to protect your assets. From what?

Well, I guess the nursing home. I don't have money. Okay. How much money have you got? And I'm not going to put him in a nursing home unless I absolutely have to. Yeah, I understand. How much money do you have, honey? We have, hold on, I'll let all this in.

We have about $115,000 that's waiting to be transferred into the trust fund in just cash. And then I have a $40,000 cash value on a whole life. He's got a $30,000 cash value on a whole life. He's got about $165,000 in, I guess it's a 401, and I've got about $110,000 in an IRA. Okay. I don't know what you're trying to protect it from, and you don't either. And so you're doing something because someone told you to,

and you don't know what you're doing. And so I'm going to tell you don't do it because you don't know what you're doing. You can't tell me why we're doing this. You're doing it because some lawyers have to do it. Let me tell you, they're stupid lawyers. If he has to go to a nursing home, then our assets will be protected. I'm not sure they will in an irrevocable trust, especially because they've got a five-year look back.

And if you're going to put him in a nursing home, you're probably not going to want to put him in a Medicaid nursing home where the government pays for it because that's called welfare. And welfare fraud laws are very airtight. I think you need to get a second opinion before you make this move. I think you're going the wrong way. I think you need to learn some more about this, and you need to get another opinion.

This is The Ramsey Show. Hey, it's Rachel Cruz. If you like what you heard in this episode and want to know more about getting started on the Ramsey baby steps, go to RamseySolutions.com and click the Get Started button. We'll help you figure out the best next step for you based on your specific situation. That's RamseySolutions.com and click Get Started button. We'll help you figure out the best next step for you based on your specific situation. That's ramseysolutions.com and click Get Started.