The Ramsey Show - App - Your Future Self Will Thank You for the Sacrifices You Make Now (Hour 1)

Episode Date: November 17, 2020

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Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studios, it's the Dave Ramsey Show, where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. I'm Dave Ramsey, your host. Open phones at 888-825-5225. My co-host today here on the air, Rachel Cruz, Ramsey personality, number one best-selling author many times. We're going to be talking to you about your life and your money.

888-825-5225. Jonathan starts us off in Miami. Hi, Jonathan. How are you? Hi, Dave. Thank you for taking my call. I hope you're doing well. Better than I deserve, sir.

How can I help? All right. My question for you is the following. My wife and I are thinking about having our first child maybe sometime late next year. Now, my question is, should I save a bulk of the money for my child's education now when I have less expenses when I have a child? Or should I just try to do this as an 18-year plan, maybe two grand every year? And my wife and I are thinking about having two children. That's awesome, Jonathan. Well, you know, what would really walk you down is that there is a

plan for saving for kids college and the baby steps. Do you guys have any debt right now? No, we have no debt. That's amazing. Do you guys have an emergency fund? Yes, I have up to about six months. Okay.

So y'all are killing it. How old are you guys? I'm 26. She's 26 as well. That's awesome. Well, you won't start saving because you're at the point now where you would start saving for retirement and kids college, but you won't start saving until you actually have the baby. And yeah, at that point, I mean, considering where you guys are, if you want to just do a little bit at a time each year, you can. You can max out ESAs at that point if you

want to do more than what you can contribute there. You can open up 529 plan. But looking to see, okay, what do you think is going to happen? So my husband and I, we kind of just did a chunk about a year ago in our kids' college. And so that way we don't have to fund it every single year. We may look up in five years and put a little bit more. But we kind of go as really our investment professional kind of guides us, to be honest. Yeah. So, yeah, you're fine, Jonathan. You're such a planner.

You are so under control. Well done. Very well done. Thank you. You're not going to miss out on funding your kids' college. And I would not start. Number one, you cannot start a 529. You cannot start an ESA.

You can only start a mutual fund, and you would just earmark it with your own pencil that says, oh, this is for a future baby. And you could do that if you want to, but I think it's tremendous overkill. I think you've got time. You're going to get there. So all I would do right now is just work on baby steps four and six, which is your emergency fund. I mean, 15% of your income going into retirement and everything else going to get your home paid off.

And you just keep working on that. And then when baby comes, go ahead and start the 529. That'll be perfect. And make sure you pick out a 529 that allows you to select the mutual funds and you to control the mutual funds, meaning they don't automatically change based on the age of the child or anything like that. You're just locked in unless you move it. That's what you're looking for, and you'll be able to do that. Most of those allow you to put in up to $10,000 a year, and you do that two or three years lump sum, Rachel's talking about right after a baby's born

then it'll grow to enough and you'll be done so you'll be fine yeah and some people are weary about doing specific college funds an ESA or 529 because you know they're nervous that their child may not go to school or whatever that looks like so the I mean the reason we recommend that is for the tax benefits and the fact that we we would encourage going to a four-year school and getting that college degree, and you'll have the money for it there, especially Jonathan. I mean, you, of course, will. But some people are worried about that. They don't want to put that amount of money away specifically for just versus just doing a mutual fund. You know, I've been doing this 30 years, and the number of times someone said, oh, I have too much at retirement.

Oh, I have too much saved for my kid's college. It's never occurred. This is not a worry that ever comes up. So you're going to be okay. I mean, I talk to people that have a four-year-old. Well, what if he doesn't go to college? Well, you can move the money over to anyone in your family. Your wife can go get her Ph.D.

You know, I mean, you can move the money to anybody in your family. It used to be to siblings, but they've expanded it now. Yeah, I was going to say, and it's within two generations, right? Yeah. You're great. And you can use it for private high school if you want to when they get up in that age. So all the different things you can do with it. So the point is keep the government's freaking hands off your money and use a good college fund.

But not until it's time, Jonathan. Good job, buddy. You're doing great. Luke is in Charlotte, North Carolina. Hi, Luke. Welcome to the Dave Ramsey Show. Hello, Dave and Rachel. Hey, what's up?

So I have a question for you. By the way, I really enjoy your content, so thank you guys for doing what you do. Thank you. I think you have a great or offer you great service out there. So love listening to you guys. So here's my dilemma that I face. I have an ex-wife. We own a townhouse together.

We owe about $100,000 left on the townhouse. And I'm living in it currently. And we have both decided together in the divorce that when we go to sell the place. We're going to use the funds for the kids, potentially college, weddings, and then whatever's left over, we would split. And that worked for me at the time. But that puts me in a situation where I'm not really gaining anything, you know, in going forward from a house perspective. Exactly. You no longer own a house. You're just a renter.

Exactly. Exactly. So the big question that I have for you all is, we rented this place out before we got divorced. And it's in a good rental neighborhood, pretty easy to rent out the question, I guess I have for you all. And there's a couple of things that I want to ask. So the first question is for you,

for you, should I rent it back out and potentially look to buy? If I did work to buy, it would have to be over a 15 year fixed I couldn't I don't have the cash and it's expensive here somewhat right where I would want to buy

and then secondly I look at it as if I would stay till we paid it off we would we would in fact get the capital gains you know tax ahead of the way. If we were renting, then we would get hit with the capital gains tax. If I were to live here, then we would be able to save that.

How old are your kids? I'm just not sure what to do. How old are your kids? They are seven and nine. You need to move. You're talking about a decade of your life that you're handcuffed if you stay in the property. Yeah. Yeah.

You need to move and either rent it out or move and sell it now and take the money and put it in a fund. And the two of you manage the fund for the good of the kids because that's your agreement. But your life is on hold. You know, your real estate life is on hold for a decade. Not a good plan. Not a good plan at all. Yeah, you need to get out of there and either sell it or keep it as a rental. I'd probably sell it, probably be done with it,

and be done with this arrangement. You just put the money in an account that is set aside for the kid's future, whatever, and you don't have to worry about it then. It's over. And cleanliness of life is a good thing. This is the Dave Ramsey Show. I get asked all the time about what people need to do to improve their family's money situation.

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Disability is the leading cause of bankruptcies and foreclosures. That's why I send you to Zander Insurance. They've been helping my listeners find the right plans at the lowest cost for almost 20 years. Call 800-356-1780 or visit zander.com and compare online that's 800-356-1780 or zander.com Rachel Cruz, Ramsey Personality, is my co-host today here on the Dave Ramsey Show. Open phones at 888-825-5225 is our call-in number. Jennifer is in Houston, Texas. Hi, Jennifer.

How are you? I'm doing fabulous. I'm calling. I have a 15-year-old son. He has a job at Chick-fil-A, so he's got some paychecks coming in. He took your class. Both of my teenagers took the high school class at home. We just bought the package, so he has all the tools.

We've got him enveloped. We require them to save 40% of anything that they make, and then they pay their tithe. So there's another 50% that he just wants to blow on video games and video stuff, which I hate, and it's problems with we have to keep him under so many hours, otherwise his attitude has to be put in check. So would you advise we just let him blow all that money, or at what age do you start giving them more choices to either be successful or to fail? Well, here's the deal, Jennifer. For me, I'm probably more like your son. I was a spender. I didn't really keep track of a lot. I kind of

just, I wasn't that great with money as a teenager. And mom and dad, I mean, you guys, I would say, had levels of accountability that we kind of had to meet. But overall, there was a level of us just making mistakes. And for me, I appreciated that because I would rather learn from my own mistakes with the money I've earned. When I make a mistake, I feel it so much more than obviously if you were just handed money and you made a mistake with that money.

And so for me, learning from those mistakes, they were inexpensive. There was a level of safety because I was under mom and dad's roof versus the first time I made a mistake was out on my own. So I would say there's a balance of allowing him to feel the pain and the mistakes that he's making if you consider buying all the video games a mistake. But he's saving and he's giving. He's doing all three that we really recommend, which is giving, saving, and spending. So the fact that he's doing all three, the spending is the one that obviously he will

learn a lot from and where you easily can make mistakes. Yeah, I think there's a, probably for all of us with teenagers, there's a fine line between nagging the crud out of them and making sure they leave home with the skills to be an adult. Our friend Andy Andrews says, we're not trying to raise great kids, we're trying to raise kids who become great adults. And there's a difference. So my job, if I'm you, I'm talking to him and saying, my job is not necessarily to judge whether buying video games is stupid or not. I kind of think it is, but it's not my job to do that. My job is to make sure, as your mom or your dad, that you have spending, saving, and giving skills. Now, that means that if you continue to completely waste

your spending money then we're going to talk about it that you're wasting that because i want you to get it that you're wasting that i'm probably going to let you do it but i want you to get it because honey if you don't get your spending under control you're're going to be a 45-year-old doofus as a husband. Right? Okay. Because next time, I mean, when he's 45, it'll be bass boats. Right. So then I shouldn't be concerned about, like, too much video games.

No. About controlling how much he plays. Oh, well, now, controlling how much he plays and controlling screen time is a whole other discussion. But that's not having to do with spending. That's not having to do with money. That's got to do with his behaviors. Yeah. Yeah.

There is all kinds of data coming out on kids and screens, and none of it's good. Right. Right. The amount of screen time and video game time kids are doing is damaging a generation. There's no question about that and uh we did it but we parked them in front of a television or and popped in little mermaid you know but that was different than they live on their mama's phone when they're three years old man i mean it's there and there's data all kinds of data uh the level of porn addiction at 15 years old by too much online screen time is

out the man the statistics are scary so that's a whole different discussion i'm going to limit that just because i want his brain to work i don't want his brain i don't want him to become a vegetable but i'm not limiting that because of the space i'm sorry at what point do i say you can save if you want or you don't have to save like oh you need to you you're always going to save you're always going to spend and you're wisely and you can blow some of it and you're always going to give those are skills you have to do while you live here you also have to bathe and you also have to do your homework and brush your teeth these are skills you will need as an adult.

Thank you. Hey, hang on. We're going to send you a copy of the book Rachel and I did that was a number one called Smart Money, Smart Kids, Teaching Kids to Handle Money. There's another thing that goes on, Rachel, with this that's worth discussing, and she was not doing this. But sometimes you and I hear that parents don't feel like they have the right to tell a 16-year-old what to do with money they quote-unquote earned, in this case working

at Chick-fil-A. Now, she was not suffering from that problem, thank goodness, okay, but I just want to encourage parents, you not only have the right to do that, you have the obligation. It's called parenting. Yeah, yeah, we've heard people say do that, you have the obligation. It's called parenting. Yeah. Yeah. We've heard people say, well, it's their money. No, they're living under your home. So your rules are over the money that they earn at Chick-fil-A.

Yeah. I mean, that's an element of responsibility that a parent has to have. Yeah. I mean, we're not suggesting you scarf their money and buy cocaine for yourself with it. That's not the point. You know what I mean, we're not suggesting you scarf their money and buy cocaine for yourself with it. That's not the point. You know what I mean? This is not you're stealing your child's money. No.

But this idea that you're not in control of your own household and that you're not, that the inmates are running the asylum, you're not, they're making the decisions. I can't tell him what to do with that money. He can buy it. It's his money. Well, yes, by God, you can tell him what to do. As a matter of fact, you're supposed to tell him what to do with that money he can buy it's his money well yes by god you can tell him what to do as a matter of fact you're supposed to tell him what to do that's why god made you in charge of that house hypothetically you should be yeah so that's a big deal so you need to make them if you can't persuade them brush their teeth you need to make them if you

can't persuade them not cuss out their elders you need to them, if you can't persuade them, not cuss out their elders. You need to make them, if you can't persuade them, save, give, spend, and work. Yeah, yeah, absolutely. These are life skills you need to exist on this planet and prosper. And so that's what Smart Money, Smart Kids was about. And that whole video curriculum, that whole curriculum is part of Ramsey Plus that Rachel did and I was in a little bit of it but mainly it came off of that book Smart Money Smart Kids and it's all about teaching you guys teaching your kids how to handle money what you do when

they're four what you do when they're 14 what you do when they're 18 and it makes it makes a lot of difference yeah the subject with with money and parents i mean it's a it's a one of those discussions that can feel uh intimidating it's one of those discussions that parents don't feel like they have the margin to even partake in because they're trying to just keep the lights on in their own home like i mean there's there's so many dynamics but i think bringing in money the conversation how you handle it in the ebb and flow of life making it a part part of the rhythm. It's something that's really important as a parent and to be open and honest and have discussions and have questions and talk about it. Like it's not a,

it's not an evil subject. So engage it as a parent. And the more your kids can handle their own money and learn to give it, save it and spend it for what they've earned. That's what changes in their brain. I mean, it clicks. It clicks with them, and it clicks so early. The old saying is teach someone the value of a dollar. That's the old saying. But what it amounts to is teach them to value things that matter. Like I grew up in a neighborhood where the majority of the men in the neighborhood,

their day job, they worked with tools, blue-collar jobs, in one way or another. And so tools were sacred. If you borrowed a guy's wrench, his pair of pliers, and you didn't take it back, that was a death sentence in our neighborhood, because that man made his living with those tools, and or did his side job with those tools. And tools made the world go round. And so knowing the value of tools and that they are sacred hand tools in that setting.

And so, like, I rented a chainsaw one time from a rental place and I sharpened it before I took it back. And the rental guy goes, who does that? I went, well, guys that grew up in my neighborhood. Because you take everything back better than you found it. It's full of gas and, you know, it's sharpened. And it's not damaged because tools are sacred. And so the money is that way. In that sense, you treat it with its value

and it gives the kid an operating paradigm. This is The Dave Ramsey Show. We'll be right back. Rachel Cruz, Ramsey Personality, is my co-host today on the Dead Free Stage right here in the lobby of Ramsey Solutions. Dan and Kristen are with us. Hey, guys, how are you? Hi, good. We're better than we deserve. I love it.

Welcome. Where do you guys live? We live in Ashford, Connecticut. It's a small town in eastern Connecticut. Okay. Not far from Hartford then. Yeah. 45 minutes east.

Okay. Well, welcome to Nashville. And how much debt have you paid off? Dave, we paid off $415,000. Whoa-lee! Oh my gosh, y'all. Wow. How long did this take?

Just shy of seven years. Okay. Wow. Amazing. And your range of income during that time? We started around $95,000 and ended around $160,000. Goodness gracious. What do you guys do for a living? I'm an inventory control specialist at a local university. And I'm an attorney. Wow. Okay. So is this law school debt or did you pay off your house? It was law school student loans, the BMW status symbol I thought I deserved after graduating from law school, and we paid off our house.

Woo! All of it. Look how weird, people. All right. Good seven-year goal. Wow. How old are you guys? I'm 32.

And I'm 35. And you have a paid-for house in Connecticut. Yeah. You are so weird. You I'm 35. And you have a paid-for house in Connecticut. Yeah. You are so weird. You guys are heroes. Well done. Very cool. And what a long, long, long journey. Seven freaking years. So tell us a story. What got you started on this and how did you make it for seven years? It actually all started with a couch. So we were pretty good at being normal. We were doing everything everyone else was doing. We bought a couch on a store card to get the

discount, of course. Then I lost the bill and we got hit with the late fee. We got hit with the interest. And the time we spent on the phone arguing with that store, we just looked at each other and said, it wasn't worth it for the small amount of money we were trying to save. We should have just paid cash and been done with it. So my dad is a longtime listener of yours. And so, of course, I'd heard about your program, but we were good at being normal. And we thought that we were ahead of it and, you know, that we were good with money and just could get you know away with using credit cards and um you know that $25 $35 late pay whatever that was that was enough to just trigger us never again so we got connected to your program i had a long commute to hartford at the time every day i listened to all three hours of your show on the

podcast and the rest is history. Wow. So the financial peace baby, you grow a financial peace baby, and there's like, I remember when I was a kid, there was this crazy bald guy dad talked about. So the $35 couch fee triggers that, and the whole thing comes rolling up. And seven years later, wow. So what made you guys want to do the house? Because I know the student loans, I know that there's certain debt that people are like, oh, I just want it out.

But to pay off the house and to be aggressive with that, it's impressive. Thank you. Yeah, I think for us, we just did out the math on how much we had left. And if we just kept being gazelle intense and focused, we could pay it off in less time than most people take to pay a car off. And that was just such an exciting idea for us. How much was the law school debt in the house? Law school was about $70,000. The BMW was about $30,000.

And then the rest was our house. Okay. So most of it was house then. Okay. Yeah. Very good. Wow. Very well done.

Yeah. Fun. Pretty incredible. So how much, once you got down to just the house, how intense did you remain? Did you let up a little bit? Because we recommend letting up a little bit. I know you do. We didn't really.

We just kept going. Pedal to the metal. We still did some trips, and we had some fun. Okay. Yeah, yeah. Travel was still a big part of it. So we've gone all over the world. We've been to Japan twice, Costa Rica, Nicaragua, all over the place,

Iceland. But we did it on a budget. Yeah, we did it on a budget. And that was definitely when we were in steps four, five, and six. But we were still gazelle intense. We ate a lot of breakfast for dinner. Eggs are a great budget food. But that was definitely our rice and beans. I love it. Very cool. That's amazing. So what's this house worth? About $350. And you're 32 years old. Woo! I love this.

And a great income and great careers. Oh, my goodness. So powerful. So what would you say to a young couple in their 30s and they were like, you know what? We are just doing the credit card thing. We still have some student loans, definitely have the mortgage, but like, oh, there's a stirring in them. And they're thinking, God, things could be different. Things could be different. What would your encouragement be through the sacrifice and through all that you guys have learned? I think for us, it's never too late to get started, but once you do,

your future self is going to thank you. I think we've been reflecting upon where we'll be in 5, 10, 20, 30, and the legacy we'll build and the position that we'll be in because we chose to make those hard sacrifices now. It's just, it gives me goosebumps. I love it. Live like no one else and later you can live and give like no one else. You're standing proof here. Absolutely amazing.

That is so freaking cool. All right, what do you tell people the key to getting out of debt is? Really, it is just get that budget together and be on the same page and just get gazelle intense. Yeah, yep. So someone that's going through a long slog,

seven years is a long time. You did interject some travel in there. You did some things to kind of let some steam off, which we do recommend when you're down to the house at that point. Not in baby step two, but when you're on the house, baby steps four, five, six. So how do you stick with a long-term goal like that? Because most people can't keep their attention for seven days, much less seven years. I think it was just looking at the why and what our future could hold. And it was really exciting and empowering to do this together. Not many people knew that we were following your plan.

We didn't really talk about it a lot. So for us, it was, you know, something we were doing together as a couple in our marriage and building our future together. And I think, you know, just keeping our eyes focused on the future was what kept us going. Now, I bet your dad and mom were doing the two-step. They had to be super excited. They're watching now. Thanks, mom and dad, for all the meals to save us from all the eggs for dinner. Lots of eggs in this story. Yeah, I like it. All right. And so what is the, oh man, that is just so impressive. I want to know the hardest part. Can I interject?

Because again, I so relate to you guys. I mean, we're around the same age and I'm like, I just know what everyone else does, right? And when you say, okay, no, we're going to have boundaries and limits with our money. We have this big goal that is so crazy. Like it can be hard at times. So what was the hardest part? Definitely at the start, it was saying no to friends going out spending that money but after a while that got

easier and then it was just off to the races it's awesome and then you had a little pandemic in the middle of everything so it all shut down anyways i know i know that money yeah yeah money away changes everything yeah so proud of you guys. Way to go, heroes. Got a copy of Chris's book for you, Everyday Millionaires by Chris Hogan. That's definitely the track you're on. You're well on your way to that. Very, very, very well handled.

Absolutely. Dan and Kristen, Hartford, Connecticut area, $415,000 paid off in seven years. House and everything. They're weird people making 95 to 160. Count it down. Let's hear a debt-free scream. Three, two, one. We're debt-free!

Woo! Woo! Yeah! Hey, that's how it's done. That's how it's done. That's how it's done. Listen, if you want to get on your debt-free journey, we're giving away $500 a week between now and Christmas with a $5,000 grand prize.

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This is the Dave Ramsey personality is my co-host today. Open phones at 888-825-5225. Link is in Hartford... Whoa, wait a minute. Hold on. Wrong button. There we go. Link is in Hartford, Connecticut. Hi, Link. How are you? Hi, Dave. I'm so happy to talk with you. Thank you so much

for the show. Thank you. How can we help? Well, I have a question. Every time I've had a question in the past, I've been listening to you. You've kept me out of trouble. And I've found the answer to my question somewhere in your show. But this time I haven't. I have a house.

My family's been in real estate for a long time. I've been very blessed. And I own the house that I live in. And I have a house that's a potential rental, but it's been passed down to me. It was my mom's. My mom passed away a couple years ago yesterday. I'm thinking about selling it, and basically I'm worried that potentially I'm throwing away the blessings that I have and trying to figure that out. Close family friends suggest that this is the right thing to do

based on goals and projects that I have, and other close families say this is the wrong thing to do because I'd be better off just holding on to it and doing nothing and selling it or investing in it 10 years from now if I wanted to hold on to it in that way. And of course, debt for me is not something I want to do. A lot of people suggest that, but I'm not going to look at that sort of solution to it. So my options are limited from that.

Why is it not rented? It was rented until about four or five years ago, and the tenants that were there were not taking good care. And the gravel driveway, I like to tell people, the gravel driveway turned into gravel plus Barbie doll. It became a real mess, and we had to tell them to leave. We, meaning my mom and I, told them they needed to leave. And since then, I've been working in my off time trying to clean it out I've gotten it mostly cleaned out and also start to repair for five years well I've I work full-time

and well not exactly five years completely on because I spent a lot of time at the house where I live repairing the roof and building a shed to hold the wood for the winter and I've had a lot of what is the house that we're discussing worth um right now I have an offer for 100k I've had other offers for 60 to 90 and take it after repairs take it I think yes all right you need to get out of this thing and when you when you're so stagnant on something that for five years it has not been repaired or cleaned out and made rentable again uh you you don't have the time the energy or the focus to get this thing up and running you need to get rid of it. That's a good way to look at it. It's a burden to

you. It's not a blessing. That's a good way to look at it. Link, when he just said that, does that feel like relief to you? A little bit. I tried to explain this to my family. I feel like in life I entered with a parachute, yes, but I landed in the water, and I'm trying to swim with this parachute and take it to land because I know it will be a great tent for me when I get there. That's not a bad metaphor, but you've been swimming for five years and you're tired. That's true. And this parachute's getting heavier than the tent that it's going to make so i like your metaphor that was well played uh but the thing is did you live in this particular

property ever i lived there briefly um it has some emotional attachment because it's been in the family for as long as i've been in the family um and my mother and my uncle have worked there when they were young, fixing it up. My grandmother bought it. Okay. I lived there briefly, but I'm more attached to the place that I live right now. In fact, I'm in the town next to Dan and Kristen, who just did their debt-free screen, so it's really awesome to see that, two people from this tiny corner of the state.

Okay. Well, that's fun. Yeah, I, you know, it doesn't have a ton of tie-in. It doesn't have a ton of emotional to it. And I think you're spending a lot of time trying to keep your family happy in this discussion. You brought it up several times what they think, and they don't really get a vote because none of them are out there shoveling the Barbie dolls out into the dumpster. None of them are out there fixing the broken drywall and the busted pipes. None of them are over there cleaning out the gravel driveway making it where the thing's rentable we know this because

it's not rentable and it's gone on for a long long time and so for whatever reason you don't have the time the emotional bandwidth the whatever to get this thing up and running and so it is you are trying to swim with a concrete block tied around your ankle. And not to keep strings attached to the cell of the home, but once it happens, I mean, there's a way to honor your mom's legacy of using that money, maybe to, like you said, you're fixing up your current home, maybe to put it, use that money to help with your current residence or to do something meaningful with that money. So it feels like, yeah, I'm passing on the legacy versus just like blowing it on a car or something. I mean, even though you could use it

for a car, you can do whatever you want with it. But I, again, not to put strings attached to it, but I think part of the emotion that could be easy to walk through is if you say, okay, I'm going to take the money I'm going to earn from this home, this hundred grand, and actually use it to better my life and to better my legacy. And that's just an honoring thing you can do for your mom. Exactly. Exactly. All right. Well done, sir. Well done.

Open phones at 888-825-5225. Raj is with us in Philadelphia. Hi, Raj. Welcome to the Dave Ramsey Show. Dave and Rachel, huge fan of you guys. Thanks for taking our call today. We're honored. How can we help?

So my wife and I, we came here to this country five years ago from India to do our master today. We're honored. How can we help? So my wife and I, we came here to this country five years ago from India to do our master's. And after our master's, we got great jobs, you know, thanks to the country and also our hard work, I guess, and also the Lord. We got into some good paying jobs and all of a sudden things that we couldn't have imagined were reachable. So we did splurge out in the beginning. We got some some good paying jobs and all of a sudden things that we couldn't have imagined were reachable. So we did splurge out in the beginning. We got some credit cards and and then we realized that at the end of the month, we had more days to cover than the money, although we were making good money. So we got to know you and then we did a complete 180 turn, paid off about sixty two thousand dollars in 10 months.

So, again, thanks to you guys and now we are at baby step four and we are doing that 15 percent uh investments every month and i'm a big uh money nerd um i'm a data uh scientist by background so uh um i'm so my question for you today is, we do allocate funds to our 401k and also the Roth IRA per your instructions. But every day I look at it, and it's amazing to see how the money grows every morning. But I'm a little confused on which fund would I choose, and is it okay to change the funds within those groups based on how they perform? Because within those four different sections you mentioned, some perform well over another in a given week or month, right? So what is your advice on that?

I look at mine once a year, and I have mine split up 25% in growth, 25% in growth and income, 25% in international, and 25% in aggressive growth. And I do not obsess over it. I don't look at it every day. It is not unusual for me to go an entire 12 months without even looking at the balance because I did not buy it as a day trader. I bought it as a long-term investor. Now, if I do look at one and the fund category, let's just say the year, the follow-up, the previous 12 months, that that growth and income fund did 4%

and all the other growth and income funds in the space were doing 10% or 12%, then I've obviously got a bad fund. I'll go ahead and make a move then and move into a better growth and income fund. But I'm comparing it to other funds in the space, or what did that particular category do? What did the aggressive category do? What did the growth and income category do? What did the foreign funds, the and income category do what the uh the foreign funds the international funds category do and did this fund underperform over a long period of time being a year

uh that category um and and then based on that i might move one uh consequently i almost never move a mutual fund because i buy stuff with good long track records that are known companies, and they tend to perform up to what the category is doing. And so I hardly ever change funds. You're going to have a tendency, because you're a data nerd, to jump in and out of funds, and that's going to cost you more than it's going to make you. So I go with a buy and hold strategy and I've made a lot of money doing that. So that's the way we do it, Raj. Thanks for calling in. This is the Dave Ramsey

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