The Ramsey Show - App - You Can’t Outearn Bad Habits

Episode Date: April 22, 2022

Rachel Cruze & Ken Coleman discuss: Should you invest less so you can give more? The best way to move up in house, Deciding to stay home with the kids, Why earning more money doesn't equal winning with money, How to navigate the baby steps after a divorce. Want a plan for your money? Find out where to start: https://bit.ly/3nInETX Listen to all The Ramsey Network podcasts: https://bit.ly/3GxiXm6

🎵 Live from the headquarters of Ramsey Solutions, this is The Ramsey Show, where America hangs out to have a conversation about your life and your money. I am Ramsey personality Rachel Cruz, co-hosting today with the one and only Ken Coleman. Ken, best-selling author, Ramsey personality, your own host of your own show. Yeah, just your friend. And my friend. Just your friend. A couple desks over. The old pal, Ken. Yeah, you know what? Your political conversation friend. Now that is true. We love to have a good conversation. During election season, Ken and i are like two jabbering true story anytime there's a major debate on i'm gonna get anywhere from 10 to 15 texts from you

that's always fun we both love politics we do um but give us a call you guys 888-825-5225 it's a free call anywhere and these days we're talking about more than just your money we're talking about your career with ken here especially um, um, please call in with that. Cause he is the best when it comes to, uh, unpacking what your passions are, where you need to be guided to in your career, part of the career, part of your life, as well as relationships and mental health, all of it. So we are here for the discussion. So we're going to go to the phones. And Dawn from Traverse City is up next. Hey, Dawn, welcome to the show. Happy Friday, you guys.

Happy Friday, Dawn. How can we help? Dave is always talking to invest for the long run, long term. I don't have, I'm 56, and I only been investing in for the last couple years, but since 2020, I have maxed out on my IRA and I've got some stocks and bonds being done through my investor. And I'm wondering, I'm investing 22% a month, and I'm wondering if I back that off to 15% and then I could start giving to organizations.

I'm not debt-free because I sold my house last fall to move it into our apartment because my house doesn't allow me to maintain a home anymore. So I'm always going to have rental costs. Okay. So any guidance? What other debt do you have? Nothing. Oh, you have no other debt. Oh, I'm sorry. No, all my other debt was paid off in 2020. Okay. And then I sold my house in December. And what caused you to sell the home? My health. I needed to see another physician that wasn't in our area.

And being single, I wasn't able to maintain the house anymore. Okay. Okay. I'm sorry. I know that's kind of, that's a hard transition, but I think that's, that's wise. And I'm, and I'm proud of you for doing that because sometimes that can be difficult. Yeah. Well, to answer just the, your main question of the investing, I kind of perked up when you said that your financial guy has stocks and bonds. So I just want to make sure that what you're putting towards the money you're putting towards investing is going the furthest for you. And to be at 57, I would really be on this because depending on what I mean, I know what bonds are, but what they mean by stocks and if that single stocks or what it is. So I, Don, would go and take a whole look of the picture of your investment strategy and making sure that you're maxing out. You said you have

your IRA, which is great, and looking at any other vehicles of retirement and then looking into mutual funds because you're going to get better rates of return doing those things versus just sitting in bonds that don't create a lot. It feels like a lot of safety, I'm sure, for your financial advisor, for you because of your age, but you still have the ability to go a little bit more aggressive and to even make more. So I would back it down a little bit for sure if you want to, but making sure that that money is being invested in something that is going to give you a good rate of return. Dawn, I'm curious, how much do you have saved for retirement right now? I just got my statement, and it is at $74,000. And I meet with my financial officer next week.

Okay. Because he would like to cash out the stocks because I was with Marathon Petroleum, and he feels now that my crash, that went from $5,000 to $14,000. I just bought that. Yeah,000 to $14,000. I just bought that. Yeah, the single stocks game, Dawn. Yeah, so Dawn, Rachel's right. We don't want you in single stocks because of the volatility. It is a form of gambling in that you are putting yourself at tremendous risk.

One of the things that we want you to do, we want to get you connected to a smart investor pro. I want you to go to RamseySolutions.com at the end of the call, and I want you to take a few minutes to get the names of several folks. I'd like you to look at three at a minimum, and I want you to have a meeting with them because these are people who Dave trusts. And you called saying, you know, Dave has said this for years on investing. So we put this system in place to be able to send folks like you to men and women who can really guide you through this, because we've got a couple things going on here. First, you're 57, and you've only got $74,000,

so you need to be aggressive. Your question was, I thought you said 20% of your income, you've been putting 20% of your income into stocks and bonds is that correct did i hear you correctly um 22 percent or 22 goes every month and it's um he has he gets to select what funds that they go into i understand i can't contribute any more to my ira okay so here's the point though i don't want you to start focusing on giving. I want you to first focus on getting with a smart vest or pro. I really want you to interview a few folks. Okay. I don't like the advice you're being given. I'm not trying to be unkind. Okay. But I don't think it's good advice for a 57-year-old single lady. And the other question I have is your health. Is it impacting your ability to work full-time yes i've been disabled since 1995

okay uh my i'm on my employer's long-term disability and long-term uh social security and they froze my retirement and then a couple just a couple years ago they sent a letter saying i could keep it with them but i'd be no longer grandfathered in, or I could roll it over. So that's when I rolled it over, and then that's when I started contributing to it. Gotcha. Okay. So you have a limited income through your disability and as well as your Social Security. So I really want you to be maximizing these dollars. Please, please, please, RamseySolutions.com and interview multiple people.

Rachel, why do we tell people to do that? Well, you want to be able to make sure that you have someone that you trust because this is a part of money that a lot of people get kind of like, oh, about because, Don, and what you just said is very common where it's like, yeah, I'm kind of trusting these people with everything. I don't really know why they're doing it. I kind of understand, but I don't. And you want someone that's in your corner that has the heart of a teacher and they can sit there and teach you and explain every single thing and why they're doing it. And the people that we trust, they go about the investing advice that we give here at Ramsey, again, to set you up for the best future possible, because we want you to get from point A to point B, and that is winning with money, becoming wealthy, being able to retire with dignity, Don, which I know you want to do all

of these things. And so we really do have a great group of people that help America with that, our Smart Investor Pros. So I would, Don. But the investing conversation, it's intimidating and it's hard. So making sure you have someone in your corner that you trust and you feel good about is really important. So Don, make sure to check them out. But thanks for calling.

This is The Ramsey Show. I just saw a study that really made me sad. It showed that families owning life insurance in the U.S. was at its lowest point since the 1970s. After what we've been through the past few years, I'm just lost on how people don't make this more of a priority. How are you going to make sure your family needs are met if something happens to you? This is why getting term life is an absolute necessity. Rates have never been cheaper and the whole process to apply is pretty simple, with many companies not even requiring an exam anymore. This is why I send you to Zander Insurance, and I have for almost 25 years.

They'll make sure you get the right protection at the lowest cost possible, and they're there for you and your family every day. I challenge all of you to make sure your families are protected. It needs to be a top priority. Call Zander at 800-356-4282 or visit zander.com. That's 800-356-4282 or zander.com. Welcome back to The Ramsey Show. I am Ramsey Personality, Rachel Cruz, hosting today with Ramsey Personality bestselling author Ken Coleman. All right. Up next is Megan from Dayton, Ohio. Hey, Megan. Welcome to the show.

Hi. How are you guys today? We're doing great. How are you? Good. Thank you for taking my call. Absolutely. So I had a question. We are, I guess, currently in Baby Step 7. Wow. And we, yeah, it's so exciting. And we bought this house in 2015, and we absolutely love it. But we are looking in the future to hopefully having, like, a ranch out on a few acres of land to do some like gardening and chickens and all that good stuff.

So my thought process is I'm trying to, you know, you have so many people, so many opinions, so much media. Is it better to buy sooner with less down or wait and save cash but risk the inflation and the houses going up in the next, what would probably take about four to five years to save up that money to get the bump up? How much is your current house worth? It's sitting at about $225,000. And what would the ranch properties set you back? They're looking at about $350,000, give or take, depending on which city, which we're flexible in, because we don't have kids, so school system and that doesn't exactly, is not a factor. How much money do you guys make a year, Megan? What's your income?

We're looking at about $90,000. Okay. Well, I mean, if you have $122,000 and you're wanting to go 350 it's 150 000 mortgage is kind of what you look at it um yeah and so you have more than enough to put down i mean i would i would just completely say hey just take the equity in the home and throw it at the new house and then you guys have 150 to pay down um if that's what you want to do. So, I mean, at this point, it's kind of a decision on what's best for you and your family and what you guys want at this because it's not completely outrageous numbers. I'd like to see the mortgage be a little bit less.

I mean, I hate for you going back in. That's what I want to know, Rachel. So, Megan, when you called, I know you're asking our opinion, but which way were you leaning? Were you feeling any sense of guilt because you've worked so hard to walk the baby steps out and your baby steps seven, and that's so exciting, and all of a sudden you're going, I don't want to take it. Yeah, okay. So that's where you're going.

Yeah, because I don't want another mortgage. Okay, then. All right. We have the goal of paying it off before we were 30, and I was 29 in nine months, and so that was a really big deal. So going into another mortgage takes your breath away because that is a lot. All right, so Megan, so how many years? I think you said it.

Did you say two or three more years to be able to save up the money to pay cash for the ranch? Did I hear that? It would most likely be four to five. Okay, so hold on a second. So you asked that question. You said, do I take this smaller mortgage out, which you've already told us what you feel and why you feel it. And we understand that. I wouldn't go backwards because I think you've got a false narrative, and I want to help you through this.

Waiting four to five years to save up that money to be able to pay cash for the dream, you're not going to pay that much more. You really aren't. This idea of inflation, I know inflation is freaking everybody out. It's like the new thing and everybody's throwing around this way, that way. The reality is that real estate increases are due to supply demand, not inflationary prices driving that up as much. Where we see inflation really hit people and kind of fluctuate and go up and down is in things like groceries, gasoline, things of that nature. The real estate market is the real estate market.

Is it going to go up in the next four to five years in the Dayton, Ohio area? Well, I think it would just by we see historical norms there. But in the grand scheme of things, the amount of money that that ranch, that dream, if you've got that in your mind, the amount of money that that's going to go up in four to five years, isn't that going to prohibit you from being able to pay cash for it? Yeah. And I would say, Megan, too, that this 90 grand is not going to stay flat for four to five years either. That's right.

You're going to be making more as you guys continue down. And so all of that. So yes. So I'm leaning with Ken on this one, too, where I'm like, man, just go back in and say $150,000, which again, in the grand scheme of a mortgage, doesn't feel like crazy amount. And we've told people on the show before, if you're going to take out,

maybe you take out a little mortgage to make a move you really want. It's not something we're going to yell at you for, but I think looking to say, okay, how much can we save up? And when that's your mindset, it's amazing the different decisions you make in life versus just defaulting to, oh yeah, we'll just take out a mortgage for the difference. So I would hold still, Megan, and I wouldn't let all these outside factors, just like what Ken was

saying, drive your decisions. A lot of that's based on fear. And obviously there's facts happening that we're seeing the inflation, we're seeing the supply and demand issue. But I think even when you get to that point of four or five five years you can kind of see it start to shake out and i do think even with real estate again we don't have a crystal ball so i don't want to predict anything because i was very famous of predicting the end of covid that was going to be july of 2020 you were famous for that i was like i didn't know that covid covid will be over in july that's what i said at one point i remember i I'm like, I will never predict the future. I will never again predict the future. But I do think this housing thing is bizarre in the amount

of what's going on. So I think once the supply and demand issue is fixed and there's more homes being built, I mean, it all kind of does stable out. So I would take a breath, Megan, and I wouldn't make a decision based on all these outside factors. And let me just say this, Megan, you also mentioned that there's other people. We heard it. When you listed out all these types of opinions, there are friends and family members who have tremendous influence on you, and that's normal.

But you've got to do what's right for you. So I think Rachel said it right. I don't think that there's anything wrong with either one of these decisions, but it's very clear to Rachel and I what's right for you. You said it. You don't want to ever have a mortgage again. So you determine what's right in this situation. That's right.

All right. Up next is Jordan from Salt Lake City. Hey, Jordan. Welcome to the show. Hey, guys. Happy Friday, and thank you so much for taking my call. Absolutely. Thanks for calling.

How can we help? Well, Rachel, I saw your story on Instagram. Yeah, girl. Thanks for calling. How can we help? Well, Rachel, I saw your story on Instagram. Yeah, girl. Thanks, Jordan. All of a sudden, I'm left out. Let me pull up your story while you guys are talking. I went on Instagram because I hosted last hour by myself. Oh, I saw that.

And I said, Instagram, help me out. And Jordan. She called. What do the kids say? She got the memo or she got the assignment? She understood the assignment. I don't think the kids say either one of those things. She understood the assignment.

Okay, Jordan, let us help you. Let us help you. Well, I am 33 years old, and my husband and I have three kids, eight, four, and one. And I have been going through a debate for the past, I guess, two years. My husband and I moved out from Tennessee here to Utah beginning of 2020. And I had actually planned to stop working at that time and just kind of, you know, see what happens, maybe stay home with the kids. And because of COVID, I was actually able to continue doing my job from home because everything started to go remote yeah and i've been able to continue working as a clinical

pharmacist um from home and i've been making about 120 to 130 per year my husband yeah my husband is an engineer for the government and he makes 120 a year but he is projected to go up on his income each year um and so i've been wondering for a while now if I should stay home with the kids because, you know, they're getting older and I feel like I'm missing out on things. But at the same time, I love my job. I love working. My contract is set to end at the end of June. And, you know, I'm just kind of torn whether I should keep working or I should stay home. I think one of the best pieces of advice I got when I was a mom with three and kind of was like, oh gosh, I don't know what to do, you know, because you're kind of pulled in

all these directions, is life is so seasonal, Jordan. It's so seasonal. So even if you said, hey, I'm going to work till the end of June and I'm going to just pause for two years for two years until the kids get in school or what you know whatever that time frame is and then I can reevaluate and then once they're in school full time it's like oh well this maybe I can't pick up some more you know what I mean like it doesn't have to be this all or nothing for the rest of your life you can have seasons right and so if you're feeling this tug that you feel like you've had and you guys financially

are going to be able to do it and it's not a big burden for you as a family, that's a choice you totally can make and say, hey, I'm going to pause for about two years on the work thing, focus on the kids, and then I'm going to press play again

later down the road because you're right. The kids are here at a snapshot and moms that have that heart to be home, especially if you guys have sacrificed and gotten out of debt and have the ability to, I think it's awesome. I think it's awesome and you can always go back. Always go back to work, Jordan. But thanks for

calling. I so appreciate it. Fellow Instagram follower. Hey, I ask and they answer. I love them. I love them. They respond. Love the gram. Well, building wealth is a hot topic right now. Everyone is talking about it. Everyone has an opinion on it.

So whether it's crypto or single stocks or zero down real estate or the metaverse, man, everyone is just freaking out about all these new things that are happening. And so that is why we decided to take our building wealth live event on the road this year. So Vegas, Orlando, we are coming to you here in the next few weeks. And then we're going to be going to Sacramento, Minneapolis, and San Antonio this fall. And so we're gonna tackle all of these kind of get rich quick schemes and dive into saving, investing, and retirement, and really talk about how do you build wealth?

How do you build wealth that stays with you, that's not fleeting, but really does help you change your life, change your family tree, and be extremely generous to others. So we're gonna be in Vegas May 5th, Orlando May 19th, and then in the fall, Sacramento November 1st, Minneapolis November 10th, and San Antonio November 15th. And it's going to be Dave Ramsey, George Camel, myself, Dr. Don Deloney, and Ken Coleman. We're all going on the road.

We're hitting the road again, Ken. It's right. And I'm thinking about renting a Elvis costume for the Vegas event. It hasn't been approved by leadership yet, but I think it'd be a fun moment. If you came out. No? The booth is saying no. I think it'd be great.

I think it'd be great. We'll see. So you guys come check out those events. Our live events are always fun. They are. We enjoy it. We have fun. And we want to laugh and learn and hang out with you guys

so here's what's fun about that building wealth event a little tease yes there's some table talk yeah all of us together and you kind of you kind of um you kind of moderate and make it happen i'm i'm i'm a moderator no no but you talk too i mean you're talking you're not just oh that's fair i guess moderators don't yeah no i have an opinion in the night, too. Oh, we know. We know. So this one's going to be fun. It's going to be great.

So Dave does like a keynote at the front end of the event. And then the back end of the event, it is just all of us literally sitting at a table and talking through these topics that are so big. And so it's fun. It's our version of The View. Yes. Yeah, it should be fun. Oh, so great.

So tickets are just $25 or you can get a four pack for $60. So you can bring friends. Again, it's going to be amazing. Go to RamseySolutions.com slash events to get your tickets. Again, RamseySolutions.com slash events. Okay. So Ken, you had this article and we're talking about this topic, which I thought was just fascinating, about the number one concern of American employees.

Yeah, Gallup recently pulled over 13,000 American employees to ask them what was most important to them when deciding to accept a new job or not. Now, this is very relevant because we're still in what they're calling the great resignation. Just to give people who aren't familiar with the term what that actually means is that since August of 2021, Rachel, we've had almost 30 million people change jobs. It's unbelievable. It's extraordinary. Wages are up because there is a high demand for workers. We have more open jobs available in America right now than we have people that are unemployed. We're at 3.4% unemployment. So these are all historic things.

And so the labor market is white hot in that companies are offering much bigger paychecks. They are offering tuition, full tuition reimbursement. They're offering crazy benefits, signing bonuses, all this. So Gallup polled 13,000 people and the number one concern for American employees in taking a new job, not surprisingly, 64%, said a significant increase in income or benefits was very important to them. But here's the irony. All right. They're saying that's the number one thing, but still feeling the crunch of inflation. Yeah. So paychecks are bigger, Rachel, but the overall wealth, or let's call it money health situation in America is as worse as it's ever been.

Credit card all-time high. Yep. And what we talked about on the KCOMA show on this deal is that if you make a move just for a paycheck, and then you're not managing that increased paycheck correctly, guess what? You've got no benefit at all, and you may have made a move just for a bigger paycheck, and then you regret it. In fact, we're seeing this in the data. So what we're saying here is that while we understand why people want more pay, what they really want is more margin and we're even seeing that high income earners aren't immune to this

problem just because you get the bigger paycheck doesn't mean you make financial progress talk about that well it's crazy it's one of the biggest myths out there it's like well if i just made more money everything would be okay correct but it's not always the case you guys know because if you make more money and you still have bad habits with money those bad habits follow the more money, everything would be okay. But that's not always the case, you guys. No. Because if you make more money and you still have bad habits with money, those bad habits follow the more money. It happens. And so, yes, some research found that 64% of consumers live paycheck to paycheck in January of 2022.

And again, inflation's at an all-time high, everything. But 48% of consumers earning more than $100,000 a year are living paycheck to paycheck. So that represents a six percentage point increase from December. So within one month, that big of a difference. And so yeah, we're seeing again, half of income earners, high income earners over six figures are living paycheck to paycheck. So what's happening is we're making more,

but we're spending more. And so what's the solution to this? It's what we teach at Ramsey Solutions, this idea of the baby steps. If you've got debt, if you have no idea how you're spending your money. So we're talking about eliminating debt, which of course reduce your costs. We're talking about getting very clear on where you're spending your money. What's the outgo? What's it going to? That's budgeting. These are all core methodologies of the baby steps. And it really comes down to this. Financial peace is so vital to you being able to fund your future. And I'm struck by every time we have a debt-free scream, whether it's an individual, Rachel, or a couple, once we hear the story and we hear the emotion and all the things and you get on the other side of that and what they're dreaming about, what they're planning for, they can actually

fund it. Yes, and do it. And you guys, I'm telling you, so not only does it give you that level of freedom when you're in control and you know what you're doing, but I can't stress it enough, the character that's built through this process is so key that we just want instant results. We want instant gratification when we want something, we want it now.

And we don't appreciate the process through it all. Because again, until you're learning to change your habits, you're going to be in the exact, it's still you. It's still you. That's going to be just getting more money and it's going to be funding more of your bad habits. So changing those habits, it is so crucial.

I remember when Winston and I, we built a home and moved in November of 19. I don't know how we like God's timing, but I remember being in our old kitchen. It was right before we moved, and I was pregnant with a third. We had a little one in a high chair and amelia was running around and food's everywhere i mean they're just screaming you're just it's just chaos goldfish you're stepping on goldfish it's just it's chaos been there and i remember i looked over winston i was like i just can't wait to be in my new kitchen oh and he was like babe this exact same scene is going to be happening in a little bit of a different color kitchen it's gonna be a

little bit whiter but that's true it's literally the same thing and i was like i know and like why in a split second do you feel like no if i go get something better higher income whatever it is it's just everything's going to be okay but you're the you're in it you're still in it a better kitchen doesn't mean a better life dun dun that's your next book how do you think oh sure my next book yeah yeah i can get three pages out of that if i try really hard but i do think that when people think i get a better better paycheck i'm gonna get a better life and that's absolutely not the case because what happens is with a bigger paycheck watch this instead of bigger paycheck equals better life here's. Bigger paycheck means bigger problems. That too.

Mo' money, mo' problems. Mo' money, mo' problems. Man, that's good. Now there's the book. We've got to bump out with that. There's the book title. Mo' money, mo' problems by Rachel Cruz. It's an absolute instant classic. But it's true.

I mean, well, keep going further in that though. I'm curious what you mean by that. What? The bigger the money? Oh, so the bigger the that, though. I'm curious what you mean by that. What? The bigger the money? Oh, so the bigger the paycheck, the bigger the problems. Bigger the debt. Like, if you're not changing your habits. So I already have a behavior issue.

You were talking about it. I was just reinforcing what you said, which is that if I don't have control of my budget, I don't have control of credit or debit and all the junk that I'm spending on, and I get more money, it doesn't fix anything. It just means I keep pouring more fuel on an already existing fire. That's what I mean. Bigger paycheck, bigger problems. Now, when we fix our behavior, we save after we've paid off debt, we invest, we get our behavior in order, then the bigger paycheck, now bigger progress. That's the difference. Got to to change your behavior got to change that behavior

this is the ramsey show We'll be right back. Welcome back to The Ramsey Show. I'm Ramsey Personati, Rachel Cruz, in this hour with Ken Coleman, Ramsey personality, Ken Coleman, bestselling author. And we are here to take your calls, America. It's a free call anywhere in the country at 888-825-5225. So up next is Scott from Houston, Texas. Hey, Scott. Welcome to the show. Hey, good afternoon, Ken and Rachel.

How are you? We're having a blast. Doing great. How can you? We're having a blast. Doing great. How can we help? Good. So I want to keep this brief because I know other callers want to get through too. But Rachel, since this is an opportunity to finally speak with you, I got to tell you, your in-laws are awesome people.

Oh my goodness, Scott. How do you know Buddy and Helen? Well, I didn't know if we wanted to name names or not. Oh, they claimed me. Well, and his grandparents are awesome, too. Wow. Yeah, Buddy Sr. So back when you and Winston were in college, we went to church with Buddy and Helen.

Okay, yes. Back in the day. And so his sister Charlotte and her friend used to babysit all of our kids. Oh, my gosh. While they were still in high school. What a small world. Wow, I've got to tell you, that is so... Yeah, and they would always invite us.

They invited all the people with young kids to come swim in their pool. So that's how we got to know them over the years that I lived there. Who the heck knew? Scott dropping from the Wayback Machine. We don't always get the personal touch here on the ramsey show but i love that scott well thanks for saying that yes they are they are wonderful i am blessed with really cool great in-laws so that's awesome well how can we help today so the reason i was calling um due to a recent divorce um i am trying to figure out if I need to kind of refresh the baby steps because

that had an impact not only on the emergency funds and we had the sale of a house, but it also impacted my retirement savings. And so I guess what I was trying to resolve is one, the proceeds from the house, should that be saved for the purchase of a future house in a couple of years? Or should that be used to replenish the savings, the emergency savings we had and possibly reconsider how to contribute to retirement since that took a hit too? Yeah. So when was the divorce, Scott, can I ask? Yeah, it was March. In March, okay.

It just ended in March. Okay, so everything is final and assets are done. Yeah, so you know you have a good idea of what you have versus what she has. Correct. And so when did the house, has the house sold? The house sold in February. Okay. Yeah, it went really quickly. And so Scott, do you have any debt? You have no debt still, correct? Correct. Okay. And how much will you get for the sale of the house? How much? So what's left after we paid off things and moved and all of that,

there's $40,000 left, which came from the sale of the house. And then the emergency fund that we had went to pay all the miscellaneous expenses. So that's been depleted too. Okay. So you have no emergency fund at all right now? Correct. And I've been waiting to make a decision just to kind of let things settle. Yeah. And then have the chance to call in. What was your emergency fund together? Because now we're separate.

So what, actually, that's a relevant question. I just answered my own question. Let me ask it better. What is a three- to six-month emergency fund for you right now? So six months would be about $30,000. So you got that right now. That $40,000 is yours. Right.

Okay. Yeah, and then you have the 10 leftovers. That's the question. Yeah, for sure. So, yeah, so I would put $30,000 of that away just as your, as that buffer emergency fund, that fully funded emergency fund. Um, and then let's just see, okay, what, what are my next steps? Cause if you want to own a home again, uh, and you know, that's coming up, you can use that 10 grand, uh, definitely for that. If you know that's something you want to be doing soon here in the future. Yeah. I would put it towards that. But if there's not a, nothing on the horizon, like you think, okay, it's going to be another

year or two before I buy or purchase, then I would go ahead and go to baby step four and start funding retirement. But I'm okay leaving that 10 grand just in a money market account or something right now, knowing that you're going to be purchasing a home in the near future. And just to kind of, I don't know, like be okay with right now. Do you know what I'm saying, Scott? Like, I mean, it's very fresh. I mean, it just was finalized in March.

And so taking some time and not make any big knee-jerk reaction out of a big life change like this, I feel like is always wise. So I'm really sorry that that happened. That's always a hard deal. Well, it is, but we're, I mean, we're handling it like adults and we're great co-parents and so everything's going well. But yeah, I just, again, it was okay. Is that considered, like your dad says, found money from the sale of the house or should it be saved all for down payment in the future? So that answered the question, though.

For sure, yeah. Yeah, well, it's a great question. So, yeah, that emergency fund, go ahead and have that. That's going to have a level of stability for sure financially and then keep that $10,000 around and continue to save up down payment, especially if you know you're wanting to purchase something soon. So it's a great call. All right, up next is Elliot in Chicago.

Hey, Elliot. Welcome to the show. Hey, how are you guys today? Doing great. How can we help? Good. So I've got a question. My wife and I are expecting our first child in the next couple of weeks.

Nice. Congratulations. Yeah. Thank you. Thank you. We're excited. So getting things ready here. So we've been working with some advisors that we have long-term relationships with regarding some disability and life insurance. And just wanted to call and get your all's opinion on, you know, if there's kind of a standard formula that you look at or, you know, how much is too much and what do we really need in order to be safe moving forward?

Yeah, that's great. For life insurance specifically, correct? Yeah, yeah. I think, you know, we both have a couple policies in place and we're being advised to up that a little bit more and not sure if we should go with, you know, whole life or supplement with term. So those are the questions I have. Yeah, great question. So term 100%. I would not do whole life insurance because what whole life insurance is, is you get a policy that's very expensive and then they take some of that money and it's cash value, quote unquote. So then they go in and put it in basically an investment, a terrible savings account with a really low rate of return. So the rule of thumb I always use, Elliot, is you never want your insurance

and your investments to be together. They should always be separate. So by having just term life insurance, it's so inexpensive. We use Zander Insurance. My husband and I do, and they're amazing. Just go to zander.com. You literally put in your information.

They will shop all of the top policies around from all different companies and get you the best policy. So it's really inexpensive. My husband and I actually, we just did ours again. I think it was last year. And I still was shocked by how inexpensive, which granted, we're younger and healthy and all that. I did it too a couple years ago. And I lost weight like a wrestler and got the preferred rate. You can really do it.

You can do it. You can get a good rate if you're healthy. But it's inexpensive. It's crazy. So what's your... And then I would say to Scott, or I'm sorry, Elliot, real quick. You want to get 10 to 12 times your annual income. And your wife, even if she's going to stay home with the baby, so if she's working, then again, 10 to 12 times her income.

But if she's home, I would get about a half a million dollar policy on her, even if she's a stay-at-home mom. So yeah, you both will want term life insurance. And it's a great move. I'm so glad that you guys are looking at this because it's really important, especially now you've got a little baby coming. Yeah, and you're giving the financial advice, but I don't want to miss this. No cheeseburgers, no quarter pounders for a good week.

It's got to really get lean before the blood test. I'm telling you, folks, somebody's got to tell you. Saves you money. It does. Actually, I will say. The cholesterol for dudes is based on that junk food you eat. I'm telling you. And if you smoke cigars or drink alcohol, don't do any of that either because I did know somebody,

and they got the results back and everything was crazy. And they're like, what? And no one told them not to have a glass of wine or something. I am a man of the people. I'm telling you guys, watch the diet. Lose some weight. By the way, your wife will be thrilled with that. It's like multiple benefits there.

You get it all. So Elliot, again, term life insurance, send it 12 times your income, and don't eat that burger the night before. Yeah, no quarter pounders. That was for old Ken Coleman. Ken, thanks for hosting today. Hey, great being with you. Always fun. I want to thank everyone in the booth. Kelly, James, Ben, Zach, Andrew, everyone back there.

Thanks again, America, for listening. This is The Ramsey Show. Hey folks, Ken Coleman here. Did you know The Ramsey Show is one of the most popular podcasts in the world? Get your daily dose of advice on life and money. Check out all of our shows from The Ramsey Show is one of the most popular podcasts in the world? It's your daily dose of advice on life and money. Check out all of our shows from The Ramsey Network wherever you listen to podcasts.