The Ramsey Show - App - You’re Immune to Socialism if You Don’t Borrow Money! (Hour 1)

Episode Date: April 26, 2023

Dave Ramsey & George Kamel answer your questions and discuss: "Should I pay off my house or keep the mortgage?"  from the blog: How to Pay Off Your Mortgage Early, "This is socialized mortgage (and it amounts to nothing)", "Should I keep investing like I am?" Saving for grad school while paying off debt. 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 Interested in advertising on The Ramsey Show? https://ter.li/s64ye3 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 we help people build wealth, do work that they love, and create actual amazing relationships. George Campbell, Ramsey personality, host of the George Camel YouTube channel and co-host of the Smart Money Happy Hour with Rachel Cruz is my co-host. Today, we're answering your questions about your life and your money, and we invite them right now.

The phone number is 888-825-5225. Tom's going to start off this hour in Atlanta, Georgia. Hey, Tom, welcome to the Ramsey Show. Hey, Dave, how are you? Better than I deserve, sir. What's up in your world? Well, I have a question for you, and I hope all's good in your world, but I recently sold a company and finally have enough money to pay off mortgages

if I wanted to, and I wanted to know should I do that or should I keep them financed. I have a home under construction. It's a construction loan at 3.5%, which is going to change if I close with them under a 15- or 30-year mortgage to approximately 5.5%. And I have the funds to pay it off, and I just needed to know, should I pay it off? So what is that pile of money that you got? It's a nice chunk of change, and to pay off the house,

I don't think it would affect my lifestyle. How much did you get, Tom? I'm not allowed to say those exact numbers why who who's who your mama told you you couldn't no no no i'm under a confidentiality agreement oh okay was it seven figures what are we talking here north of a million yes okay well hey the reason i was asking was congratulations well thank you that's incredible well done touchdown tom well done hey it was a touchdown very happy fun 20 years fun how old are you I was asking was congratulations. Well, thank you very much. That's incredible. Well done. Touchdown, Tom. Well done.

Hey, it was a touchdown. Very happy. Fun. 20 years. Fun. How old are you? 53. Good for you.

And how much is the mortgage balance going to be? It'll be in June with the house is finished, it'll be around a million, and the home will be worth about two million because i've already put in a chunk okay so the the chunk of change under confidentiality is well north of five million then it's a good number yeah okay all right so so you can pay this off and still have a big old pile of freaking money that's that's what i wanted to make sure before i move forward in this so here's the thing a good way sometimes for me and i use it a lot personally to decide if i want to keep something or if i want to invest in something is i reverse engineer it okay let's just pretend your pile of money was five million

dollars and you had a million dollar mortgage okay and so if you pay off the mortgage you know you've got a pile of four million dollars and you have a paid for two million dollar house okay is that right i got my numbers right didn't i well yeah assuming assuming my assumption about the confidentiality okay so anyway that's our pretend scenario and now if the house if the let's reverse engineer it let's pretend that you had a two million million paid-for house, and you had $4 million in investments. Would you go borrow a million on your paid-for house so that you had $5 million in investments? No.

Same difference. Fair enough. And that tells me what to say. See what I mean by reverse engineering it? So you can even do that with a boat that's sitting in the driveway. Okay, the boat's worth $10,000. If I sold the boat, I'd have $10,000. Let's pretend I got $10,000 piled in the middle of the table.

Would I go buy a boat? Yeah, I love boats. Okay, then don't sell your boat. But no, of course I wouldn't buy another boat. I hate the stupid boat. Well, then it's time to sell the boat. It's taking up space in the driveway. So you just reverse engineer it, and that's a sunk cost analysis. Yeah, this is a good situation to have,

but a lot of people, Dave, what they see on paper is, well, Dave, if I invested that money, I can make more than the mortgage interest. Wouldn't that be the smart thing to do? And the interesting thing is, when we did that largest study of millionaires ever done in North America, 10,1677 of them the number of them that borrowed on their house to invest and as a result built wealth was precisely zero we couldn't find one not even one that said i became a millionaire because i maximized the leverage on my personal residence and put that money in mutual funds not one well the millionaire guy on on tiktok told me differently dave well that's because not all those people tell the truth well he had an

online course that was going to show me how to do it i know for three thousand dollars oh that's how he made his money not through leveraging debt that makes sense yeah he's yeah you know if i that's why we put stuff on tiktok i mean i was going to avoid tiktak it drives that whole thing brought me nuts and we just started flooding it with ramsey stuff to try to flush out some of the sewage yeah just flush out some of the sewage if you just take up the space with clean water the sewage has to go somewhere else you know it's just oh my gosh so we thought okay we can either ignore this sewage mess or we can just put a bunch of cleanliness in there and oh these people yeah i mean yeah you you watch some of these guys honestly

most of you have good walking around sense if you'll take a second and just watch the body language of a couple of these characters you can 100 see they're lying that their scenario is i have 25 million dollars in mortgages and he's got a baby on his hip oh you've seen that one yeah that one went viral that one's just so that guy's so lying that is not true you just watch it watch his watch his eyes watch his mouth i mean the guy is just you don't have to to be an FBI trained to figure out this guy's not telling the truth, okay? So it's just a straight-up lie. So honestly, people, the data that we did in this millionaire study is airtight. I mean, we used all of the research techniques.

We used an outside research firm to make sure we weren't doing confirmation bias. We weren't falling for some of the other research methodology problems you can get into because we actually know a little bit about research and statistics here at Ramsey. And so this data is so freaking solid that if you don't agree with the conclusions, you're what's known as wrong. So, I mean, you just got to keep that in mind. It's just straight up the truth now uh so you know the number of whole lot the number of millionaires that made became millionaires because they bought

whole life life insurance precisely zero not one the number of them that leased their cars because this is what wealthy people do not now of them did lease their cars, but none of them told us that it was anything but a mistake. Okay, what was the dumbest thing you ever did with money? They would say, I leased a car, bought a whole life policy. These are the things that kept me from building wealth. Well, it's so much simpler and more boring than you ever thought. It's just put money in your 401k mutual funds. Pay off your house. It's a problem with this stuff. It's too boring, Dave. It's just really boring in your 401k mutual funds. Pay off your house. It's a problem

with this stuff. It's too boring, Dave. It's just really boring. We need a sexier approach. Make it real complicated. Do a lot of math on a board real quick. I need a whiteboard and I need to be to dance around and I need to do a double backflip and get a family partnership double twist off the high board and you have to come up with all this complicated crap because that's what wealthy people do. No, they don't. They live on less than they make they invest and they pay off their house and if you want real money it's what they really do build and sell a company that's that's the american way that's pretty cool now that's where most of your billionaires come from uh now if you want to study the forbes 400 they're all today billionaires and that's a thousand million

that's a different category that's not a one toaires, and that's a thousand million. That's a different category. That's not a one to five million dollar. That's a thousand million. You're not going to get to billionaire with your 401k boys and girls. Mathematically impossible. Okay? But you know, so there's some other tricks involved, some things involved, but none of them are the stupid stuff you read.

But anyone can become a millionaire. It's so much simpler than you think. Listen, social media is where you're getting your financial information. Even though we're on there, I'll just tell you it's a struggle. This is The Ramsey Show. Thank you for joining us, America. This is The Ramsey Show. George Camel, host of the George Camel YouTube show

where snark is an art form. Yeah, you've got to check this out. It's a lot of fun. We're having a great time. The feedback's been awesome. It's a spiritual gift of yours, this snark thing. Thank you. You've got this down.

And I highly respect people with a heavy level of snark. It takes intelligence. Oh, yeah. Not just anybody can do it at this level. So it's a professional, professional grade snark. Well, the feedback's been awesome. They're saying I'm like a young Dave Ramsey. Whoa!

Yeah. If you were. With much better hair. My age with hair, this is what you get. That's what you'd get. Check it out. Except, yeah, well. I'm more of a blunt instrument.

Yours is very. It's a very. Yours is. It's a fine tune. It's a scalpel snark. Yeah. Speaking of which. Your sledgehammer. The government is at it again, you were telling me. it's a fine tune it's a scalpel snark yeah speaking of which uh the uh the government

is at it again you were telling me dave while you were gone things happened while i was gone where did i go i don't know where you were but jade and i were hosting the show and i swear i got 1400 people sent me this on instagram and there was big headlines on the news that biden administration made big changes to mortgage rates and the high credit, good credit borrowers were going to pay the price to allow the riskier borrowers to get a discount. Okay. So the riskier borrowers are getting a better rate, not at the pay up charge as much. And this is socialized mortgage so that the people who did a good job are going to support the people that didn't do a good job by having a higher rate on the good job people and a lower rate on the bad job people.

Is this how it works? That sounds about right. So here's the thing, though. Sounds like socialism. I'm in. Yeah. Okay. Yes.

This is progressive. There's misinformation, too. So the low score folks, they're still paying more for their mortgages, but the gap has shrunk. Okay. And so to do that, they've increased the rate for the good score folks. They've decreased the rate for the bad score folks. But the punchline is that the actual rate change on all of these people is somewhere around an eighth of a percent. Eighth to a quarter is what we're actually going to see in the interest rate.

That's what we're seeing according to the mortgage industry. Okay. Translation. Washington just announced that they helped all the poor people and beat up on the rich people. And once again, they did absolutely nothing. They blew trumpets as if they were going into battle. And they didn't even have a BB gun. It amounts to about $10 a month for $100,000.

Changed your life. It absolutely changed your life. If you have a low credit score, Joe Biden just changed your life. Bull crap. Bull crap. This is in the same bucket of I'm going to pay off your student loans. When? When, pray tell, old Joe? Old Joe, when are you going to do this pray tell seriously not much time left

i mean i'm old but he makes old a whole new thing yeah wow so here's the thing dave that people don't understand if you follow the ramsey advice which dave has been preaching from the mountaintops for 30 years now guess what this doesn't affect? 15-year loans, which is the only loan. Guess who it doesn't affect? You. Because if you're following us, we tell you never take out more than a 15-year mortgage and never more than a payment of a fourth of your take-home pay and always put down a good down payment. And this program has absolutely no effect on that at all. By the way, if you have zero credit score, it doesn't affect you at all all you're going to get the same great rate you always got which is a premium rate uh on a zero credit score so if you're doing the ramsey stuff uh you avoided

socialism if you can be mad at the political stuff all day but financially sleep easy at night philosophically though you can't even really be pissed off because he really didn't do anything. It's too much credit. Too much credit. If you'll pay attention to the actual dollars that these programs that are supposed to save you coming from Washington create, the actual dollars, then you will realize that these people talk like they are doing something and they never do anything. And that's true of the Republicans, too, by the way. That's just politics in general. If you live in Washingtonhington your goal is to make a big deal out of nothing and act like you did something so that we all go oh i love them i'm going to vote for them again they took care of me you know one of the worst hate i got and i still think there's

a reddit an entire reddit thread on hating dave ramsey on this was remember when uh trump came out with the uh covet bucks and then biden we had biden bucks also in the both of them did it uh and they and they one of them i can't remember which one was said they gave out 1300 you're gonna everybody's gonna get 1300 and i was on fox news and i said if 1300 changes your life you really don't have a life oh ramsey he's out of touch with the real people ramsey doesn't understand it just listen if thirteen hundred dollars changes your life you don't have a life honestly you're gonna get canceled again dave you might trying to do well i mean it might feed you this week it might pay your light bill for a week but at the end of the month, you're still screwed.

If you go, wow, I hit the lottery. Oh, God, quick, buy my house. I got $1,300. You know, I mean, is that just dumber than crap? It's a very temporary Band-Aid on a bigger problem. It lasts about a minute and a half. And so truly, mathematically, it's not a philosophical statement. It's not an old rich boomer doesn't understand you stupid butt people seriously that's just dumb okay thirteen hundred dollars mathematically doesn't change your life a quarter of a percent an eighth of a percent

change in your mortgage one way or the other does not change your life and if you're being wise in the way you're taking out a mortgage or you're not taking out a mortgage at all guess how much it affected my interest rate zero zero i am immune to socialism wow because i don't borrow money you don't play the game of the system and you don't have to win the stupid prizes of the system amazing how that works wow i'm serious this is but i yeah yeah i mean we announced when you know when we announced um that we were going to forgive student loans right when we before election and then promptly did nothing for a year and a half a year and eight months but in august prior to the midterms an executive order is issued to forgive the student loan that's sus timing as the

kids might say sus very sus no doubt that was sussy was very sussy very sussy on his part they dangle the carrot to try to get the vote and they do nothing and they and here's the thing people call us and they say well dave why would i pay off my loans why would i the government because it's only ten thousand dollars and oh by way, have you noticed it has never freaking happened? Did you notice that part? Did you notice that it's like, I promised, it's a political promise. How old do you have to be before you understand that this is not going to happen? I mean, we need to distribute little vials of cynicism to this generation

and let them become cynical about Washington like the old people have. And because we are suspect of everything they do there because it is all for show and not for dough. I mean, it doesn't change your life. I've been doing this a long time. For 30 years, I've been coaching America on how to build wealth. And for 30 years, I still am waiting on Washington to change my life.

I get up every morning and I say, Lord, Lord Jesus, when is Washington going to change my life? Does he even answer that one? No, he's not. I feel like he's got better things to do. He's still laughing. He's just laughing. It is a trick. Even if it's a promise or something

that actually happens like this mortgage situation, it's not changing your life. So if it's a promise or something that actually happens like this mortgage situation, it's not changing your life. So if it's all over the news and Fox has acted like it's a socialist conspiracy coming out of the White House. It's a good talking point for the news media. Well, they're trying to burn down the White House because Biden changed the mortgage thing with a stroke of a pen. He didn't really change it. It's like 10 bucks and everybody that gets a 15-year mortgage it doesn't apply to you and so you know it's it's it's

irrelevant it didn't once again hot air no substance you know that's just it's just full it's like a chinese spa balloon i mean it's just hot air no substance right now it's just full it's like a chinese spy balloon i mean it's just hot air no substance right down it's just more crap well and it's more reason to follow the ramsey plan because if you follow it you don't have to worry about the one what the next headline is going to be in the next mortgage rate you just sleep better at night going all right i'm going to get a 15 year loan pay it off and then by the way trump didn't get rid of fauci either so i mean it's not like he's a savior okay so you can be mad at me if you're a lefty or a righty or whatever just all of you get in line Boy, Trump didn't get rid of Fauci either. So, I mean, it's not like he's a savior, okay? So you can be mad at me if you're a lefty or a righty or whatever.

Just all of you get in line, right? But the bottom line is if you're waiting on the White House to fix your life, let me give you a hint. The secret is not in the White House. The secret is in your house. Get yourself a mirror. Look in the mirror and go, you the problem and you the solution. Because that's where your help is going to come from, boys and girls. It's not coming from the island of misfit toys. This is the Ramsey Show.

George Campbell Ramsey personality is my co-host today in the lobby of Ramsey Solutions on the debt-free stage. Brooke is with us. Hey, Brooke, how are you? Hi, I'm good. How are you? Better than I deserve. Where do you live? Pittsburgh. Ah, welcome to Nashville. And how much debt have you paid off, Brooke? $78,000. Good for you. How long did that take?

About four years. Good for you. And your did that take? About four years. Good for you. And your range of income during that time? $26,000 up to $70,000. Wow. Nice jump. What do you do for a living? I'm a registered nurse. Okay. What was the 26? That wasn't nursing. I was a ticket agent at an airline. Okay. And you finished nursing school and boom, boom. Yes. So you got a much, much better career. Yes. Not that ticket agent is a horrible thing, but you make a lot more money now. Yes. Yeah.

Good for you. So $78,000 was what kind of debt? Your typical debt. I started off going to the university not really knowing what I wanted to do, changing my major. So a lot of the debt was about $42,000 of living on campus and old loans. $4,000 was between two credit cards. And $12,000 was a car loan.

So you were just fairly normal. Yes. Broke. Yeah. And then the additional $20,000, I paid cash for the rest of my nursing school. Okay. When did you graduate nursing school in Pasture Bars? 2021.

Okay. So two years ago. So halfway through this program boom income goes way up yes and we've knocked this finish it off yes i'm suspecting the majority of this was done in the last two years the majority yes but i was still working on it when i was making like limited income as well good for you so how'd you get tied into this ramsey stuff um well somebody actually tried to hand me your book when I was working as a ticket agent. And I honestly, I set it on a shelf. I was like, who's Dave Ramsey? Why are you bothering me? Yeah, yeah. I was like, what's this book? Trying to give you a ticket.

Yeah. And eventually, when I was working as an agent, I was just living paycheck to paycheck. I couldn't keep up with anything. I was always getting down to zero. That's when I got the credit cards. And I started putting my money on the credit cards and everything. And then I picked up the book again and I was like, I really need to start paying off my debt. So that's when I started the baby steps and just worked gazelle intense since then. Okay. So you picked the book up and really that's when it took off. Yeah. So, but you had to get to a point where you felt enough pain to go, all right,

I'll try anything. All right, here's this book that's been collecting dust let's see what it has to say exactly and it made sense to you yes so a customer randomly handed it to you yeah they did something nice yes because ticket agents take more abuse than just about anybody on the planet yeah it was a very hard there's some nasty human being when it comes to ticket agents yeah and i was doing it in washington dc too yeah that'll gather some really nasty humans okay some arrogant nasty humans yeah so i'm serious i have what for twenty seven thousand dollars a year you took a lot of crap i did yeah whoa who let's go ahead and just say it who were you working for uh which airline yes oh my gosh i've worked for american airlines that's okay we're not mad at america It's not their fault. It's the customer's.

I mean, honestly, boys and girls, if you're going up to the ticket agent and you're an American Airlines person and you're really pissed off because the pilot screwed up or the mechanic screwed up and your flight is delayed, it is not the $27,000 of your employee's fault at the counter. Have some class and be nice. Okay, now we do that. There we go. We just took up for you.

Thank you. The old you got the old you the old you yes the new you is a successful nurse and debt free yes i'm so proud of you yeah and i also did um like on the side i did um uber eats door dash instacart i walked dogs for wag i cleaned apartments i i went through like um the apartment complex and found old things, refurbished them, and sold them. Wow. And sold a lot of my first books. Out of all the side hustles, what made you the most money?

Well, being a nurse, working full time. You could get extra hours. Well, yeah. And I also had, it's called PRN nursing, where you can, it's like you don't have benefits, but you can pick up extra and you get a higher hourly rate. So I did that. At one point, I um 16 days in a row like yeah just between like both jobs um it was yeah so ot or prn big time best best gig yeah

yeah yeah for sure good and i got to watch a lot of dogs too that was one of my favorites some people would go away on their trips having fun spending money i was getting to play with dogs and make some extra money too there it is what do you charge for dog sitting dog walking um it just depends any like anywhere like an hour walk like 30 dollars it's amazing versus like a weekend maybe like people are out there complaining going dave there's no work to do no side hustles i want to do something from home and you went and busted your butt and was making 25 30 40 bucks an hour yeah yeah i did a lot of side hustles good for you was it worth it it was so worth it i'm just emotional right now yeah really it's it's crazy it just occurs to me that

these rich people pay money to go to the gym and they pay her to walk their dog it's amazing is this coming through well the exercise is free yeah we know that well but when you go to the gym and you can't get a parking spot close to the door you gripe right so i mean this is how this is how backward we are okay just just yeah way to go thank you how's it feel to be free um liberating it's just you have to once you experience it like you don't really realize like how great you're gonna feel um my whole life has changed and i know like my whenever, whenever I have a family, like their life's going to change too. So. I'm proud of you. Outside of money, what were those changes you would say,

here's what I'm, I've experienced. Oh my gosh. Thanks to debt freedom. Just like you guys were talking about previously, just like accountability and like looking at yourself in the mirror and being like, you're the problem. You have to fix it. You know, you can't depend on anyone else. And I actually have something so funny to share. You're going to be kind of disappointed. But when they were offering the refund, like if you paid off student loans during COVID, which is what I took a big advantage of, that zero interest, that's when I was really going hard on it.

You hammered it instead of standing back waiting. Yeah, that's good. Yeah, but what I did, I actually was like, well, maybe I can get that $20,000. They're going to pay it. I just paid all this money off. So I got my money refunded back to me all of it it hit my bank account and I was like oh my gosh I'm rich and I was like no I'm not that's like debt that's all debt so my loans got reinstated

I had the money back to me and I just had this like guilt shadow like over my whole body and I'm like Brooke what are you doing you just spent four years like building up this whole new character like all these like traits that you didn't have before you're like the sacrifice the dedication the taking accountability saying no to people all this stuff and I was like I was like you are paying that debt so then like when I once it came back into my account I was like don't depend on the government you have to do this now like they're never gonna pay that and so then the next day I paid it and I just like again yes you got two dead friends yeah i did yeah that's good that's good i like that they're not gonna pay it for you yeah well you got you change you changed who you are and so you change the way

you talk to yourself yeah that's what nothing's gonna stop you now yeah no challenge no you're amazing or dr john deloney the other day you said if anyone talked to me the way i talked to me i would hit them you know yeah so but you change all the negative stuff the opposite so who was cheering you on um my my best friend and my fiance were two really big cheerleaders um they're here with me today um but i i actually had a lot more people telling me i was crazy than i had supporting me but i just that spur you on or hold you back? I just tune them out. I'm like, I know you guys are all broke and you have so much debt and you have like six credit cards and like, I'm not going to listen to you.

But if your broke friends are making fun of your financial plan, you're right on track. Yeah, exactly. Good for you. And soon they're going to be asking you, hey, what was that? Oh, by the way, Brooke. Exactly. Yeah, Brooke, what was that thing you were doing? Yeah, good for you.

The total money makeover i've tried so much to talk about it and people just be like not wanting to listen i'm like if i could have took the younger me when the person like handed me the book i probably would have like had them smack me in the head with it like can you just follow these steps because your life will change like it will truly change yeah we're not recommending smacking people with my book we already get accused of thumping the bible we don't want to thump brooke okay now good job listen well done hey we got a copy of the baby steps millionaires book for you the total money makeover book and so you can hand those out and a a subscriber a membership to financial peace university if you've not been through that

go ahead and go through it if you have then give it away and we want you to continue on this journey and become a Baby Steps Millionaire. And then we want you on the Baby Steps Millionaire Hour. Okay? You're going to be there. You're going to be there. I'm proud of you. How old are you? I'm 30.

Excellent. Very, very well done. All right. Brooke from Pittsburgh. Partly ticket agent. Partly successful nurse. Partly a dog walker. $78,000 paid off

in four years because she changed Brooke. I'm so proud of you. Count it down. Let's hear a debt-free scream. Three, two, one. I'm debt-free! Yeah! Yeah! Woo-hoo!

Yeah, baby! I think it's so cool that we can just change. You see that emotion? You see that emotion? Oh, yeah. Yeah. Couldn't hardly get it out. This is what happens when you change your life.

Be not conformed to this world, but be transformed by the renewing of your mind. This is The ramsey show paying off debt smart saving and investing is smart being generous is smart protecting your finances from emergencies people overlook that all the time there's 10 kinds of insurance coverage you might need based on what your life looks like today, and we built a tool called the Coverage Checkup Tool. And, hey, we want you to check that out. It's completely free to use, and we can connect you with Ramsey-trusted insurance providers and make sure you get your plan in place really fast.

Seriously, could be the most important five minutes you spend. So go to RamseySolutions.com slash checkup. It's a free five-minute program, the coverage checkup tool. Make sure you get rid of the gimmick insurance and keep the right kinds of insurance and don't overpay for the right kinds of insurance. But, hey, you've got to play defense and offense to win the game. Insurance is defense so not having that'll break your butt ramsey solutions.com slash check up also ladies and gentlemen

a whole bunch of you are new to the show we know that based on our ratings increase and our rankings increase as well so thank you for joining us. We're glad you're here. And if you want to, if your cabin troll might be understanding some of the, I don't know. Vernacular. The vernacular. The Ramsey tribe lingo. Then, hey, we'll teach you baby steps and debt snowballs and all that kind of stuff. Go to RamseySolutions.com. Click on the GSA, the Get Started button.

The Get Started button. The Get Started button. It is free, and it will get you some help and show you where you are and where you can go next and all that kind of good stuff. Bill's in Chicago. Hey, Bill, welcome to the Ramsey Show. Hey, Dave. Hey, George. Thanks for taking my call.

Real quick, just wanted to say thanks for what you and your team do. It's truly life-changing. Well, thank you, sir. How can we help? Yeah. I have two questions that might be related, but because I'm a little older, we're maxing out my 401K. Should we keep doing that or do step six kind of as written? And how much should we put toward college savings?

What's your percentage right now going into your investing? Right now, about 25% of gross salary. Okay. So if you dial that back down. How old are you? 50. I'll be 50 next month. Oh, you're ancient.

Time is running out. Where's your nest egg at right now? Total retirement is $173,000, thereabouts. Okay. So if we dial that back, let's say to 15%, how much more money would that give you every month to put away for college and throw at the house? That would give me an extra 15, an extra, oh wait, about an extra $1,500 a month. Okay. Yeah. And so, voila, we just funded college and started paying down the house. Because you're going to be okay on your wealth building side, but you need to get the house paid off.

And, of course, we've got a safer college, or the next generation is going to be having to, you know, consider student loans, which we don't even want on the table. That's not even an option. How old are the kids? Well, they're kind of a little spread out. I've got a 17-year-old and a 9-year-old. So I've got a junior who's coming up to college and then, you know,

a 9-year-old that's got some time. So you're likely cash-flowing the junior because you've got nothing in there. We do have about $35,000 aside for him. You're cash-flowing some of it then. Okay. Yeah, yeah. That'll be gone in a year easy. Sure.

Depending on what the situation is, a year and a half anyway. So then you've got to cash flow the rest of it, and then we've got to start thinking about the nine-year-old so it doesn't put the squeeze on us later. And so, yeah, you just back into the math on how much of the $1,500 goes towards the college plan, and it's probably a lot of it. You're probably not putting a lot extra on the house, but four, five, and six should be done simultaneously.

You are not making ground by putting all of this into retirement and nothing in college and nothing on the house. Because if you don't address these other things, they're going to come up and hit you in the back of the head. Yeah, okay, gotcha. You got to get it all on. That's back of the head. Yeah, okay. Gotcha. You've got to get it all in. That's why we run four, five, and six simultaneous.

And once you have a paid-for house and the kids' college is covered, well, now we have a whole lot more money to catch up on wealth building as well. But you don't even have to because he's going to – I mean, he's only 50. He's got $200,000 already. He keeps putting 15% in. Ten more years. He's going to have a million dollars, a million and a half dollars in his 401k when he gets to 65 now it's 15 years yeah so um with what he's putting in at 15 percent with that and uh and then we've take care of kids college and in 15 years get the house paid off then he's going to be sitting at 65 probably worth four or five million dollars so uh but if you don't

do this then you've got a mess at college and you're going to bump up on 65 and still be looking down the throat of a mortgage and so that's why we do this this way we've actually developed the system as he said by the book but the book is not just some random series of thoughts it's uh highly developed and polished over 30 years of helping 10 million people in our millionaire study we also found that they got paid for houses and they paid off fast they don't pay it off in 30 years right they paid off an average of 10.2 exactly susan's in chicago hi susan welcome to the ramsey show hi thank you very much sure what's up? I am trying to figure out if I should continue to try and save for grad school while I'm finishing up paying down my debt,

or if I should use what I have saved to pay on my debt and then start over, basically. What are you going to study in grad school? I would like to go away to study curation and conservation for probably art history. It could be human artifacts, too. And that's going to cost what? When I do the research, it looks like it can range between $20,000 and $30,000, depending on the school. Okay. This sounds like it's a passion area.

Have you actually looked at what you make as a result of doing this? So it can vary a lot. It depends on what type and the size of the museum you work in. If it's somewhere small and local, it could be down to $40,000. If you work at the Met or the Smithsonian, it could be in six figures. What are you doing now? Right now, I work for the airlines repairing medical equipment when they damage it. What do you doing now? Right now, I work for the airlines repairing medical equipment when they damage it. What do you make now? I make $60,000 a year as of January. I just got a promotion that came with the raise.

Awesome. And then I have a side job that is closer to the passion. I got hired on by my alma mater to be an assistant in their art collection. And that started in February. And I make between $560 and $700 a month, depending on the number of hours I can work. Okay. And how much debt do you have?

Left, I have $47,000 even. Okay. All right. All right. All right. The math that you just gave me says that your degree, the money you're spending on your degree has a return on investment of increasing your income of very close to zero. Yeah, it depends on where i go yeah yeah and so i mean smithsonian's like

a fairly small percentage of the jobs yeah no no no i don't anticipate i would be there you're making more now than you would make at an entry-level job after getting the degree yes and so spending twenty thousand dollars to get a degree to make the same or less is a zero rate of return is what I'm saying. Yeah. So this is 100% passion play. It's not a return on investment play, which is okay. But that just helps you decide which one you want to do first. And that tells me get out of debt first.

Yeah. The goal has always been pay off first and then go to grad school. It's just trying to figure out when to save the money to go. Yeah, after you get out of debt. Do you have any money saved now? I have about $3,600-ish in savings at the moment, and I have a $3,000 tax return coming from the Fed that I didn't anticipate. We suggest to people work what we call the baby steps,

and the first step is reduce all savings that you have down to $1,000. So I'm going to use a tax return in $2,600 to throw at your $47,000 worth of debt, and then I'm going to put my budget on beans and rice, rice and beans, no life. I'm going to work all the time, and I'm going to attack this remaining $40,000 and get it paid off as soon as possible. When it's paid off, then I will save up the money to get the degree to move towards your passion that is not going to change your income dramatically. It might change it a little. It might change it negatively dramatically. It might change it a little.

It might change it negatively, but it might change it a little positively, but there's not going to be an ROI. You're not spending $20,000 to make $200,000. You're spending $20,000 to get into your field. That's what you're doing. This is The Ramsey Show. Hey, George Camel here. If you love the show and you want a deeper dive on your money journey, we've got a weekly newsletter that gives you helpful articles and tips on following the Ramsey way.

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