The Ramsey Show - Discipline Is the Difference Between Broke and Wealthy

Starting point is 00:00:02 Brought to you by the Every Dollar app. Start budgeting for free today. Normal is broke and common sense is weird, so we're here to help you transform your life. From the Ramsey Network and the Fairwinds Credit Union Studio, this is The Ramsey Show. I'm Dave Ramsey, Rachel Cruz, Ramsey personality, number one best-selling author, co-host,

Starting point is 00:00:27 is Mark Money App Bauer, and my daughter is my co-host today. The phone number here is AAA-8-825-2-2-25. The call is free, and some say the advice is worth exactly what you pay for it. Stacey's in Portland, Oregon. Hey, Stacey, what's up? Hi, you too. Thank you for your time today.

Starting point is 00:00:47 You too. How can we help? So I have an issue with my spouse. We've created a habit in our marriage where I go to my parents and ask for money. And this basically comes from him telling me to do so. And I just really need help with this situation because I don't want to ask my parents for money anymore. I feel like we need to handle our own financial problems ourselves. How long have you guys been married?

Starting point is 00:01:22 Almost 20 years. Okay. And what's the main reason for going to them for money? Is this for big purchases, emergencies, monthly bills? What's the reason for it? I would say it's a combination of all three. It's different every time. Just this last time, he decided to spend a lot of money doing a project for himself,

Starting point is 00:01:50 and then that kind of left us behind. What kind of project? building a shop at our home. Okay. And how much money do you guys usually, is it, are you looking for when you ask them? It's probably around $40,000 to $50,000. Each time? Yeah.

Starting point is 00:02:18 Okay. All right. Well, to start with, I think I can see behind the curtain, that you are not involved in handling the money at all. He is. And so he brings you a want or a crisis that he hasn't figured out a way to handle. And you're kind of on the outside looking in. And he says, oh, you've got to help with this because your mom and dad are like the infinite bank out of there.

Starting point is 00:02:44 Would you say that's true, Stacey? So almost. He actually has nothing to do with the finances. I say he sounds like the one that's checked. out and he's like, oh, well, we need some money because I'm doing this thing over here. Yeah, he kind of just spends and, you know, waits for me to say, okay, you know, it's too much. Here's the thing, that going to your parents is the symptom. It's not the problem. Correct.

Starting point is 00:03:12 Okay. And so you've got to fix the problem, and then you won't need to go to your parents anymore. And so how do we do that? Well, this is called a marriage makeover. we're going to sit down and we're going to both be grownups. I refuse to continue to operate the way we've been operating. It's not healthy. It's not good. And I'm getting progressively pissed off at you. I mean frustrated with you.

Starting point is 00:03:39 I mean bitter towards you. I mean. Resentful. Whatever, right? I mean, you know, you fill in the word, right? And this is getting worse rather than better. And so we're going to try a new thing. You and I are going to sit down together.

Starting point is 00:03:52 like two adults, not like one of us at a kid with a candy store with his handout. And we're going to decide each month what we are going to do with our money. I'm happy to write the checks and pay the bills once we have agreed on where the money that we make is going to go. And I'm never going to my parents again for any reason, ever. So we've got to fix this, honey. We've got to get on the same page, it's messing up our relationship and it's messing up our money. And it's going to mess up our relationship with mom and dad eventually, because eventually they're going to get tired of it. They're probably past tired of it already, really.

Starting point is 00:04:35 But, so if that conversation sitting down with him that says, okay, we're going to get on the same team, we're going to be in agreement each month before the month begins where the money is going, and we're going to be in agreement on the principles that we are going to save, we're going to be generous, we're going to invest. And if we can't agree on those principles, then we have a different problem that's not a money problem. It's a marriage problem, and we're going to sit down with a marriage counselor. Yeah, and I think going back, Stacey, and looking at the pattern at which, what reasons you did borrow the money, right? So it may be him and a lot of his projects. And it's like, so that means going forward, we can't do these

Starting point is 00:05:18 unless we have the money. I don't know if you ask for big, you know, money for big vacations. And it's like if we don't have the money for the vacations, we're not doing it. It's almost like putting out the reality of what has been the state of the union of like, this is what we've been doing. And now we are not going to keep living like this. We can't. And so going forward.

Starting point is 00:05:37 I need your help to carry the weight of this because the weight of this is too heavy for me to carry by myself. And by the way, husbands can say that to wives. Wives can say that to husbands. That's right. And because it's properly done to grownups are making the decisions. But what happens with the spender, and I'm a spender and Rachel's a spender by nature is, we don't think about the consequences.

Starting point is 00:05:59 We just want the thing. Yeah. And nobody, there's no grown-up in our head when we start the process. And only with intentionality do spenders inject a grown-up into their brain. And I got the opportunity to go broke in my 20s, so I had to learn the hard way. Rachel had to grow up in my house, so she had to learn the hard way. That's exactly what I was going to say. Everybody's got their hard, but somehow an adult has to be injected into that spender's brain to where you can't spend like you're in Congress.

Starting point is 00:06:31 Yeah. I've tried to get him because I have the every dollar budget app, and I've tried to get him to be a part of that and to have like monthly meetings. Well, I don't want to ask him to do a budget. I want to ask him to help me carry the weight of the households. I'm tired of being your mommy. Mm-hmm. It feels like you're a little boy that comes wanting his allowance. Baby, I want a new wood shop.

Starting point is 00:07:00 Would you call your mother? You know, oh, my God. You know? Yeah. That's how it sounds in your head because that's the way you've described it to us. And he needs to hear that that's how he sounds. Mm-hmm. And so instead of honey, I'm like a grown man and I think a wood shop would be really cool.

Starting point is 00:07:18 And here's all I think we can save to get that money. It may take us three years and I may have to actually use some woodworking tools to build the stupid thing. But I figure out a way to get it, right? But that's what grownups do. Right. And you can't just, but this is a relational marriage issue and ask him to help you not do a budget, but to carry the weight of the decision making in the household and be in agreement. And the best way to do that is a budget.

Starting point is 00:07:43 Yeah, and I think that's one of the weird dysfunctions in money when it comes to relationships and marriage is when one person's in control. And we hear this a lot from, again, it can be husbands or wives. You know, we hear both sides of it. Of one person has all the control, all the decision making, whether because they want it or they're defaulted into it. And then the other one is just sits on the sideline and gets handed out what feels like. Like that. Or, yeah, or an allowance or what. And it's this weird, it becomes a weird power.

Starting point is 00:08:15 Yeah, a weird power dynamic. And if you were married, you're both two grownups that you both get a say and you're both in the decision-making process. It's not one taking care of the other. It starts to get into this weird nuance. But that's the important part of having equal say in your marriage when it comes to your money so you don't create that type of pattern. When you're trying to hire, you don't have time to dig through stacks of resumes, hoping someone

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Starting point is 00:10:37 spender in your life, so you have a life because you would live in a cave, collect lint, and only come out on triple coupon Thursday. You spenders need a saver in your life so you don't have to eat alpo at retirement. And so you need each other to buy. And so you need each other to balance this thing out. But that requires that you're working together, not that one of you assumes the role of parent, which is what Rachel was talking about as we went into that break. So, you know, mama handles the money and she just lets me do it. No, no, no, no, no. She's not your mother. She's your wife. And I call my wife mom or Mimi, her grandmother name, but she doesn't function in my life as my grandmother or my mother. Okay. She's my wife. When you say when the

Starting point is 00:11:24 Yes, when the grandkids are. Yeah, so I call her that on the golf course. People look at me like, she's not old enough to be your mother. You all do do that. Hey, mom, mom, where are you? Yeah, but that's our Mimi. So either, but I mean, but you're not functioning in that role. Okay, that's the difference.

Starting point is 00:11:41 And if you're the one that has been, and usually the nerd that likes the details, also marries a free spirit that hates details. And the nerds usually the one listening to this show, by the way. at least at first. The free spirit, when they do start listening to the show, finally are glad that it's occasionally funny because otherwise they think it's a 401K meeting for their mother's company and it's a root canal.

Starting point is 00:12:05 No, we don't do that on this show. This is like real life. It's fun, funny, sad, happy, all those things. So that's why it's compelling and entertaining and why people, tens of millions of you tune in, and thank you for that. But the last thing you nerds need to do, or you savers, or whoever it is,

Starting point is 00:12:22 it's got control of the money, is look at the other one and say, I'm going to put you on a budget. That sounds like you're going to time out. Okay? Instead, I'm tired of carrying the weight of all of this by myself. And then finding out later, you might have had a good idea that you never voiced. And so emotionally, we're going to carry the weight of running our household together. And financially, the nerd is probably going to be the one that does the execution, that it's submit on the payment to the light bill or whatever it is, right?

Starting point is 00:13:01 And the free spirit's probably not going to do that. But we're going to develop where the money is going before it leaves together, and that's called a budget. Not I'm going to put you on. I'm tired of you dot, dot, dot, dot, dot. So I'm going to put you on a budget. That will not work. suddenly this person who's been acting like a child

Starting point is 00:13:22 will suddenly start acting like a grownup and go, no, you're not telling me squat. You're not going to tell me what I'm going to do. You're going to have that fight, right? You know, like a four-year-old. You're not the boss of me. You know, that kind of thing. Yeah, and I would say to the spouse,

Starting point is 00:13:35 if you are the one doing everything, and yet not, it's not always out of malice. I was talking to some friends the other day and he even mentioned, he was like, yeah, just kind of by default, he just kind of takes care of everything. And he was like, and the other day he mentioned to his wife.

Starting point is 00:13:46 He was like, Holly, I'm so nervous about X, Y, and Z thing coming up. And he's like, even just saying it out loud, that's what he said. He said, even just saying it out loud felt good. And he was like, and then I realized, oh, my gosh, we really don't talk about this very much. I just end up doing it. And so again, it may not be out of this like malice, weird control of how you, it's not. It's just how it's been done. But then you don't realize even a small glimpse of even speaking something about money to the spouse that never talks about it or is not involved. You suddenly feel what that weight lifting off feels like to

Starting point is 00:14:18 have another adult in the formula with you. And I think that's what's important. So start practicing that and start that being the pattern within, you know, your marriage because you are two adults. And one of you does not even be carrying the whole thing. Yeah. Multitude of counsel, there is safety. When two people can be in agreement, there's safety. And also, by the way, those of you that are doing the budget right now and the other one has no idea what's going on, Another thing that you alleviate this I discovered didn't happen very often with Sharon, but it did happen a time or two, is when something would go sideways, my best plan that I did by myself because she wasn't involved, it would go sideways. I got to experience, I told you so. I'm like, no, you didn't.

Starting point is 00:15:01 You never told me. Well, in my head, I knew it was wrong. I knew that wasn't going to work. I had a bad feeling about that. All these things come out. All that goes away because you cannot say I told you so because you were in on it. from then on. So from then on, you never get another, I told you so.

Starting point is 00:15:17 It's like, we decided to do this thing and this thing didn't work. We decided and wished we hadn't. But we can't look at the other one and go, you're an idiot, you know, that kind of thing. And so, but don't use the phrase, I'm going to put you on a budget. That's lashing out, anger, you're frustrated, you're tired. Instead, I need help. I don't want to carry this by myself anymore. would you please join me in managing our lives?

Starting point is 00:15:48 And the best way to do that is write it all down and have a budget. Yeah, instead of I'm going to put you on a budget. That's like, you know, like you're getting ready to get fired from your job or something. Susie is in Stamford, Connecticut. Hi, Susie. How are you? Hey, David, it is such an honor. I've been listening to you for 12 years now.

Starting point is 00:16:09 Rachel, such an honor to also speak with you as well. I can give you a little bit of my story. Okay. Well, what's your question first? What are you calling about? I am calling because I'm trying to see if my plan follows Ramsey principles. I'm married 36, stay-at-home wife, about $900,000 net worth. I followed you guys again for years and just wanted opinions about front-loading retirement

Starting point is 00:16:38 and 529 accounts for my kids. and then by the age of 40, setting up a bridge account, and ideally pulling from that maybe 4 to 6% to cover expenses once the house is paid for. So that you could stop working. Is that the goal to? No, always working, but doing maybe that we like more, I guess, and maybe more time spent volunteering as well. Let's be clear.

Starting point is 00:17:08 You did not ask if you'll be okay if you do this. You just ask if it aligns with what we teach because you're obviously doing great. You're millionaires and you're 36 years old. Congratulations. Very well done. And I'm guessing you did that starting from nothing. Well, with a little help from parents paying for college, but other than that, there was all that. They paid for college, but they didn't give you a half million dollars.

Starting point is 00:17:34 No, they did not. Okay. All right. That's what I'm saying. So you guys have built a million dollar net worth by the time you're 36. way to go. Congratulations. That's excellent. Now, I would, if you want to front load 529s and quit funding them after that, that's fine. I did that. I would not front load retirement above 15% until the house is paid off because that's Baby Steps 4, 5 and 6 working together. Baby Steps 4 is 15%

Starting point is 00:17:58 of your household income going into retirement. Five is, if you want to front load college and finish it, that's fine. You can check that box. And then six is pay off the house early. But no, I would not load up and start doing bridge while the house isn't paid off. That's the idea. The house should be paid off ideally within the next six years. Well, when the house is paid off, you're at baby step seven. You can do whatever you want to do then. You can load up retirement.

Starting point is 00:18:27 If you want to dump a bunch in 401K at that point, max out everything and not do any bridge and then stop for a while and do bridge, that's okay. And baby step seven, but not today. Your house isn't paid off today. Okay. That makes sense. Perfect. That's very helpful for my time. Yeah. I want the house clear. Here's the weird thing. It's actually going to work for you mathematically because without the house anymore, what we did, Sharon, I did. I took our house payment was like, I don't know, it was $1,500 or something. It wasn't a lot compared to today.

Starting point is 00:19:03 But I rounded it up to $2,500 and just set $2,500 automatically coming out of my checking account. I kept paying a house payment, but to myself in one mutual fund. that became effectively a bridge because I looked up, it felt like 20 minutes later in that account was a million dollars. Just paying yourself a stinking house payment. You know, just pay yourself a stinking house payment. Get out of the debt. You know, it's so powerful. Your most powerful wealth building tool, folks, is your income.

Starting point is 00:19:31 When you quit giving it to these stupid butt banks that have been screwing you for years. When you stop giving them money, you're going to have some. It's magical. Hey, I want to talk to you for a second about love. And not love like in Titanic or something. I mean responsible love. The kind of love that moves you to take care of the people closest to you. And one of the most important ways to show that kind of love is by having term life insurance.

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Starting point is 00:22:23 So wills, the laws are state specific. Angel is in Canada. Hi, Angel. How are you? I'm good. How are you, Dave? Better than I deserve. What's up?

Starting point is 00:22:35 Okay. So I'm basically, I'm nervous. Well, I've been looking into you guys for like two weeks now. And then I asked my husband, hey, check it out, check it. check the book and then okay we've run two things we're in baby step number two and my question right now is is it worth it or is it feasible in our income to pay a 2000 monthly daycare for my 14 month old child so I can give you the numbers basically we're earning 8,200 in a month and we're currently renting 2,600 all in parking, utilities, everything.

Starting point is 00:23:18 Now, I just have one debt left, which is a car loan that is at 22K, and the rest is just consumer debt, like food. Out of the 8200, Angel, how much is your income versus his in that number? So I'm earning $4,200, and his is $3,000, and the extra $1,000 is kind of here and there. It's not a fixed amount. Okay. So that's why I sometimes budget. Just some side hustle stuff or something.

Starting point is 00:23:56 The way you said that, it sounded like you could buy or you could get a daycare that's less expensive, but you want to do this more expensive one. Yeah. Is that right? Did I understand that right? Yes. Yes. Okay. What's the cost on the other daycare?

Starting point is 00:24:11 Okay. So the other daycare is 840. Okay. So what do you get for $1,200 a month for a baby? $1,200? No, $200? $200 to $2,000. Oh, the difference.

Starting point is 00:24:29 You're going to pay $1,200 more to move to Lux Daycare. So what does Lux Daycare do? for the baby, that's $1,200 a month, extra. $12 extra. First, he gets full hours, like that's Monday to Friday. Now, the other ones is just three days in a week. Now, aside from the full hours, Monday to Friday, he also is getting full meals for the whole day, so that's six snacks and lunch.

Starting point is 00:25:04 And then... The other people don't feed them? No, you bring the food or the bottles or whatever, yeah. Angel, what's your comfort level with the other one? The $840 one? The $800, I'd say maybe about 7 over 10. I'm comfortable. They're private, actually.

Starting point is 00:25:27 There's still one more that's cheaper than that, which is half, like $400 in a month. That's a subsidy. However, when we visit them, it's not comfortable at all. Like, I'm a first time mom. Don't do that. Now, let me ask you, why, if you did the 800 and it's only three days, what do you do with the other two days? I'll be taking care of him. Like, I'll take off from work.

Starting point is 00:25:50 My work demands me to be working weekends, so that means I get weekdays off. Oh, okay. So would you be, do you have days off now or you would just switch your schedule to weekends? Oh, I have days off now on weekdays. Okay, but he still just goes to daycare while you're home, just to give you... Yeah, right now. Okay. He doesn't go to daycare yet because my mom is here with us right now.

Starting point is 00:26:16 Oh, okay. And he's leaving soon. So that's why we're, like, thinking of family, like, what do we do and all that, so. Okay. Now I get it. So to answer your question, if I understand what you told us right, the comfort of the child, the safety of the child, the love and care of the child, is equipping The difference is the number of days and food. Mm-hmm.

Starting point is 00:26:40 Yes, and my husband, I mean, we both went to both daycares. We're both comfortable. Yeah, I would do the less expensive one and buy my own food. That's what he said. That's what my husband said. The other part sounds luxurious to me, and you're not in luxury mode in baby step two, well, you have a $22,000 car debt. Mm-hmm.

Starting point is 00:27:03 Yeah. Well, that's why I called. Yeah. And I would say after baby step three, that's when you get to be a little bit more like, hey, I do. I like having this because I like to have my day. You know, like if you want to finagle some things then, then you totally could. You guys just put it in the budget and pay for it.

Starting point is 00:27:21 But until baby step three, I would see where I feel, again, I say this so cautiously as mom, like where I would feel comfortable. Yeah, as long as you're comfortable. We're not asking to do something where the child is not cared for. That's right. Yeah, yeah, yeah. But if you feel okay about it, then for sure. I mean, that saves you a lot.

Starting point is 00:27:38 Angel, if you sold your car, how much would you – could you sell it for? So I'm actually looking into that. So the car is worth 17 right now. Okay. And we actually put down payment like $5,000. It was a very, very bad decision to get that car. Do you have any money saved? Yes.

Starting point is 00:27:59 How much? So I have liquid. I have a cash of about $7,000. Okay, so you could write the check and sell the car. You could write the check and sell the car and then finish up Baby Step 3 is all you would have lacked. And then if you wanted to do the luxurious daycare, you could. But we would tell you to do that at Baby Steps 4, 5, and 6. And that's when you move from intensity to intentionality.

Starting point is 00:28:26 and it, you know, because it's not the only way the child has cared for adequately. And so, and that's what you're, you know, that first thing is safety and comfort, you know, for the baby and make sure. Right. Because first time mom, second time mom, third time mom, all dad's, you know, we, none of us want our child in a situation that's not cool. Yeah, yeah. Well, and I would say, too, Angel, be thinking about, I hate to say, private. priorities because that makes it sound bad. It's not a bad thing if you keep the car and just pay it off. That's fine. But also you're trading what you kind of want as a mom for that car. For a car. You know what I mean? So if you really want that better daycare, sell your car and you don't have to worry about it. Write a check out of the 7,000, cover the difference. Get you a beater and then you can do whatever you want to do. You got to get the emergency fund bill. But I think you could do that anyway with the 2000. Oh yeah, a couple months. Yep. Yeah. So.

Starting point is 00:29:26 I don't think that's going to kill you. But you know, but you're right, Rachel. We've even seen situations where we've got an SUV payment that's massive to haul kids around. And the mom's like, I want to quit and go home and be a full-time mom. And you go, okay, well, how much are you off? And you do all the math and it comes out about the SUV payment. Yeah. So like you're working to buy an SUV to haul kids around and you're not home.

Starting point is 00:29:54 And so, yeah, sell the SUV. That's, you know, that we've done that math. Well, it starts to get a good picture of what your stuff actually means to you because you think even people in Baby Step, you know, two, and they're working hard, they're working extra hours, they're working weekends, they're not having a life to get out of debt where some people, you know, you have an asset sitting there and that could save you four months of overtime. So sell the, you know what I mean?

Starting point is 00:30:20 Like credit card debt, you don't have no option. You got to pay it off. Your student loans, you got to pay it off. But when it comes to the car specifically, it is the one thing. And we're not mad if you keep it and, you know, work hard and pay it off. You can do it within... But she said it's the biggest mistake they made, so... Do it.

Starting point is 00:30:36 She doesn't like it. It's the biggest mistake they ever made, she said. Yeah, her car, yeah. Because I'm like an asset sitting there and it's taking time away from my family. The ability to have margin in my budget. You know, like, you just kind of start to realize this stuff is costing us. And, man, selling it, that's a lot of freedom. A lot of banks are happy to hold your money.

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Starting point is 00:32:37 Hello, Dave. It's so wonderful to finally get the opportunity to talk to you. I will get right into my question, but you've really changed my life. Well, you changed it. I'm proud of you. How can we help? Well, thank you so much. My question is for people who are established financially and looking to invest their money in safe but morally appropriate way. Specifically, my question is, can the average investor work towards putting our earnings into individual companies that we like and understand? I ask this because when we give all of our money to large investment groups, we lose control of the equity and give massive amounts of voting rights to groups that don't always have concrete or even good moral values, an example being Wall Street madness and corruption. And is this possible and how so?

Starting point is 00:33:32 It's an excellent question. Thank you. There's a lot that goes into this. If you were to invest in any company as a single stock, a publicly traded company, you have absolutely no control what they do, okay? The only thing you could make the, you could de-invest. I mean, you could look up and go, okay, that company's doing X or Y, that I don't agree with morally, and so I'm going to sell the stock off.

Starting point is 00:34:05 Okay? Yeah. So the problem is that a portfolio of single stocks underperforms a good portfolio of mutual funds dramatically. Mutual funds in general can fall into the category that you're talking about, where the voting rights are gone, and, you know, someone else, like a Black Rock or whatever, is, you know, they're holding sway over some of these companies or some of these mutual funds. And so, and even some of the boards of those companies get infected with that stuff.

Starting point is 00:34:43 So your observation is correct. My friend Vivek Rimsworthy wrote a book before he got into politics called Woke Capitalism, where he got into how the boards were infected even with some of these things. So it's a very cool philosophical discussion and really and a good ethical question in general that you're asking. So if you are, there are some mutual funds out there that pledge to only invest in stocks that align with X or Y value. Okay. So for instance, you could, there are some that are like animal rights. they won't invest in any company that the dolphins are getting caught in the tuna nets.

Starting point is 00:35:31 Okay, so they're worried about the animal rights. And so they refuse to do that. That's actually one that I had brought up one time. It actually happened. And so you can say I'm an animal rights advocate and I don't. Dave, explaining dolphins. Well, I mean, it actually came up. I actually was not on my bingo coat today.

Starting point is 00:35:50 I didn't think that was happening today. But yeah. So, but they do. They get caught in there and they die. And so that's what happens. We don't like that. And so anyway, the other side of that, of course, is the, you know, from a moral or ethical, from a person of faith. If you are a person like a Christian, like Rachel and I and Sharon and I are. And so, you know, I don't want someone investing in something that's completely or running their company in a way that's completely contrary to what I believe biblical values are. and I don't want to put money into that. What about retirement investing then?

Starting point is 00:36:25 Yeah, yeah. So then there's one company down in Atlanta that actually has a pretty good track record. It's called the Timothy Fund, if you're worried about on the Christian ethics side. And the Timothy Fund does their best to comb through these companies before they put them in the portfolio that they line up ethically with that. And it has not performed poorly. It's performed about like other mutual funds, roughly. It's not substantially better, not substantially worse. So that's there, and we've actually told people about the Timothy Fund for 20 years or 25 years.

Starting point is 00:37:00 I met those guys a long time ago when they were putting that thing together, and it has worked out. That's one part of the equation. Oh, sorry, my thought. No, that's fine. Go ahead. What's your question? Do you think that the Timothy Fund would also, on average, outperform individual? stock investment? Yes. Okay. Because all the research says that when you go buy five stocks,

Starting point is 00:37:24 you suck at part of it. You're just not good at it. Definitely. And these guys, the guys that do the analysis on this come to work in a car longer than your house. I mean, it's ridiculous. And they're very, very specialized and nuanced. They'll have one guy that does nothing but study the, got one guy that studies the automotive industry 24-7. And you and I can't keep up with that. I can't do that level of detailed research. I would spend all my time with my nose and my computer. Heck with it. No, thank you. Now, all of that being said, here's the other thing. When you buy a stock from a company, or you buy a stock in a company, like you buy a share of Home Depot, you realize the money does not go to Home Depot. It goes to the guy on the other side of

Starting point is 00:38:18 equation that's the seller of the stock. Yes. Okay, so when you buy a used Chevrolet from me, Chevrolet doesn't get any of the money. And so if you're pissed at Chevrolet about something, they're not even affected by the transaction. Now, if you buy a Nike shirt and you don't like what Nike stands for, then you gave Nike the money. That's different.

Starting point is 00:38:44 But when you're buying a share of stock, almost always you're buying it from another entity that has nothing to do with the company unless it's treasury stock issue. So it's really not there. And it's a slippery slope to get into studying and trying to figure out who's doing things that are wrong. I mean, then you can't go to that you can't bank with that bank because they support Planned Parenthood. And you can't go to that grocery store because right down the aisle there is some pornography. And you can't, and there's, you know, everywhere you go, you're interacting. Right. Everywhere you go, you're interacting with the world somewhere. And, and, and They're always doing something that's mischievous at a minimum.

Starting point is 00:39:21 And so, you know, you've got to decide where I'm going to draw the line on this and go, okay, if somebody stands for something that I oppose and it's their whole thing, I want to stay away from them. But if there's a corner of the market where I buy gas that sells penthouse, I probably don't know it unless I'm in there looking for a penthouse, right? What's that? A playboy magazine. Okay. And so It's like an 80s reference

Starting point is 00:39:49 An 80s reference Okay They're probably out of business Okay so I don't even know But anyway I got no idea But that's how But anyway

Starting point is 00:39:59 If there's something You've vehemently disagree with And it's in the corner of the market Right Okay I hear you You don't believe it's smoking weed But they sell wrappers

Starting point is 00:40:09 I'm with you I'm with you Right Well it's just like you're gonna boycott You know You're never gonna have a Starbucks coffee You're never going to have an apple bone.

Starting point is 00:40:16 I mean, like, yes. There's always something to be pissed about. That's right. That's right. It's a very, very slippery thing. So I have made the decision if something's in my face, I'm not going to do it. But I don't think I can do enough investigation or spend enough of my time to control to have 1,000 percent of all my dollars pure.

Starting point is 00:40:35 Right. Right. And I think, and I really don't think God's mad at me about that. And he's asking me to manage his money, by the way. I'm a steward. And so now if you're Muslim, you're not allowed to do any of it anyway by the Koran. You can't put a dime in those kinds of things, period. You don't have, it's not an option.

Starting point is 00:40:56 And so ethical question over, you cannot do, you cannot engage in things like that, period. And you can't even put money in a bank because you can't get usury to receive interest. And the Koran, if you're strictly following the Koran, you're not allowed to draw interest. And so obviously there's some Muslims that don't strictly follow the Quran. Like there's some Christians that don't as strictly follow the biblical interpretation of something. And so, but you know, so you've just got to look at things. But it is, I love your question because you're thinking and saying, my faith matters to me, my values matter to me. And I don't want to support things that are bad from a worldview standpoint.

Starting point is 00:41:39 That are against, yeah. I think that's wise. Yes, but I think to your point, when it's all being exchanged, again, it's not going to that company. Yeah. You are making money off that company when that company prospers. Sure. But that, you know, that's part of it. But it's a hard thing to figure out. Nice question. Thank you, sir. I've met plenty of people over the years who had a product that they wanted to sell, a side hustle that they wanted to start, or a business idea they couldn't stop thinking about.

Starting point is 00:42:28 But they never took the first step because getting started felt complicated. Shopify makes it much easier. You can build a professional-looking online store in no time flat with everything you need already built in. Then when customers are ready to buy, Shopify checkout helps more of them actually complete the purchase. That's important because abandoned carts don't make you money. And when you need help, sidekick Shopify's built. in AI assistant can help you troubleshoot, answer questions, and keep making progress. The point is you don't have to spend your time figuring out what comes next. You can spend your time getting

Starting point is 00:43:09 it done. All you need is the idea. Shopify handles the rest. Start your free trial at Shopify.com slash Ramsey. Shopify.com slash Ramsey. That's Shopify.com slash Ramsey. Welcome back to the Ramsey Show in the Fair Winds Credit Union Studios. Kevin is in Lincoln, Nebraska. Hi, Kevin. How are you? I'm doing well. How are you? Better than I deserve. What's up? Well, kind of wondering.

Starting point is 00:43:48 My wife and I became debt-free last year, paid off the house, got our emergency fund. Wow. Good for you. Yeah. Thank you. Thank you. I'm a poet to you guys. I wish I could say I did it strictly Ramsey, but it was more Dave-ish along the way. We probably could have got it done a lot faster had we been more strict. But then in about the last year of working on debt, I kind of started doing some soul search and was wanting to do something a little more personal rewarding as far as a career than what I was doing. And a few months after we became debt-free, I became a personal trainer and reduced my income by probably

Starting point is 00:44:28 anywhere from 66 to 75%. And now, I mean, we're getting by, but that's about it. We don't have a whole lot of extra at the end of the month. And now we've got, you know, things like house upkeep and wanting to travel and, you know, other financial goals that we'd like to achieve. What were you doing before and what were you making? I was a cell phone tower construction project manager making about 105 a year. So you're only making like 25 or 30 grand as a trainer?

Starting point is 00:45:02 Yeah, I'm going to take home about $1,000 every two weeks. I know I'm fairly new in the industry, and if I work hard, I can, you know, make more. But I just, I'm 50 years old. I don't feel like I've got the time to really put in the work. And the sales aspect of it, I'm not the greatest. I almost, you know, I'm not. So what I'm curious, Kevin, what the conversation. were. So you guys paid off the house, everything. You're like, wow, we don't really need a lot of money because we don't have a ton of bills. And so I'm just curious how you got from where you were to this. You just love training. And you're like, let me just do this and see what happens. Yeah, for the last, I don't know, maybe five years of working in the cell phone tower industry. I really started feeling like I was doing the devil's work, you know, with where cell phones and social media have gotten the world today. I've

Starting point is 00:45:59 don't feel like it's a net positive and I just was really feeling like I wanted to do something that was more rewarding, something that helps people. I've always been a little bit of a gym rat and I've heard other people say that I should be a trainer and so I decided to give it a shot and my wife was supportive. I mean, she saw how stressed out I was with the telephone tower construction. Let's establish this, okay? You gave it a shot. The way you're doing it today is,

Starting point is 00:46:28 is not working. That's why you called. Yeah. So something has to change. Either the way you're running your personal trainer business has to change, and you're going to have to make it profitable and triple your income, which you should be able to do, by the way. And you're going to have to get pretty aggressive about it,

Starting point is 00:46:53 and not in a mean or a pushy way or anything like that, but you're going to have to get excited about making a stinking profit. Or you need to do something else. And I don't think you have to go back to cell phone business, by the way. A project manager that can manage the building of a cell phone tower can manage a lot of different kinds of projects. You could easily get in the home building business as a general contractor. You could easily get into other things, just the project management science. of the science of project management.

Starting point is 00:47:29 It's wide open. We've got, you know, people all through our organization that manage projects here. It's their title. It's their function. And so, and they're not doing the devil's work. So, you know, there's a lot of different ways to apply your experience if you don't want to be in business for yourself. But if you want to be in business for yourself, you know, you're at the treadmill stage,

Starting point is 00:47:52 the beginning stage of this, and you're going to have to grow this business. and you're going to have to commit to doing the parts of the business you don't enjoy as much as the other parts in order to be able to stay in the business. Yeah. So if I enjoy writing books and speaking on the radio, but I'm not making a – you know, and the only way I can do that is I have to do the accounting and I have to do the marketing, which I don't enjoy as much. And I don't enjoy accounting. I don't mind marketing. But I'm saying if there's parts of running Ramsey in the old days that I don't like, like, I've got to do them to be able to do the parts that I do like.

Starting point is 00:48:33 And that's what you're not doing. Yeah. You kind of took your foot off the gas and you're just coasting along, helping people. You're like a gym rat that gets paid sometimes. Yeah, pretty much. Yeah, I kind of figure I'm spending about 48 hours a week at the gym and getting paid for about 30 of it. And about a third of that is minimum wage.

Starting point is 00:48:57 Yeah. You're not making a dollar an hour. Yeah. Yeah. Yeah. So you've got to change your business model and embrace the discomfort portions of the business. And if you want to, I mean, he said, like, otherwise, you need to go get a job. Yeah. Yeah, yeah, yeah. Because you've established by the way you described it is, hey, I wanted to do this. I did it. It's not working for my family. It's not really not working for me. I'm not, it's not as satisfying as the lack of money. Yeah. Yeah. I mean, that's that's it right there. it's not as satisfying as having that extra money and the freedom that comes with that. Yeah, I want to be able to take a cruise with my wife.

Starting point is 00:49:36 I'm stinking dead free, you know, and I'm not even making dollar an hour over here at the gym. So I get it. I get why you did it. I'm not shaming you for that. But you need to establish, okay, here's what has to be true in order for me to stay in this business. I don't want to do that. Okay, then you're not staying in the business. And I think it takes a lot to keep a small business running.

Starting point is 00:50:01 You have to love it and believe in it. And if you don't, you sound a little bit on the fence, Kevin, just from your tongue, I mean, and you may just, I don't know, what I'm picking up is you might be better off. I mean, honestly, go work for someone for 10 years until you're 60, make a good living and call it a day. You know, there's a lot of you could do working on your own as a project manager. If you looked at this as a project, you know, that's fine. So I'm going to send you a couple books. I'm going to send you desired future by Henry Cloud. which is you need to say out loud what my desired future is.

Starting point is 00:50:31 And then immediately he says to ask yourself, what must be true that's not true today. So my desired future is if I'm going to stay in this, I need to make $70,000 a year. And what's the path there and the things I have to do that are uncomfortable to get me there that are ethical, but they're uncomfortable? It's not stuff I enjoy as much as I do the actual teaching of a personal trainer. or I'm going to hire some people or I'm going to open a gym or I don't care. But decide what it is and then decide if that price is when you want to pay to get there. Because right now you're the CEO, the chief everything officer. And that's what you got to decide.

Starting point is 00:51:09 And then I'm also going to send you my latest business book, my latest bestseller, actually, build a business you love because you're at the first stage of the five stages of business called the treadmill stage. And you just run, run, run, run, run, run, feel like you get nowhere. And sometimes it's because you're getting nowhere. and I remember that stage in this business and it wasn't a fun stage. It was exciting because it was all on me, but you're exhausted at the end of the day and you don't know what you did. It's just chaotic.

Starting point is 00:51:34 And so I'll talk you through both of those. So I think you're going to make a good decision either way because I think you've already decided what we're doing is not working. Hey guys, it's Rachel Cruz. If you're working the baby steps, every major expense deserves a second look. And health care is one of the biggest. expenses in most families' budgets. And that is why I recommend that you check out Christian health care ministries. CHM isn't insurance. It's a health cost-sharing ministry. That means members

Starting point is 00:52:39 help pay one another's medical bills, and they've been serving Christians since 1981. CHM programs start at just $115 a month. And here's why that matters. If you are paying more than you need to for health care, that money could be going toward paying off debt, building your emergency fund or reaching your next financial goal. And your monthly cost isn't based on your medical history or where you live. Y'all, a lot of families find CHM gives them more room in the budget. That's why so many members say they're better with CHM. And right now, new members can receive a 50% credit towards their first month of membership. Go to CHministries.org slash budget and use promo code Ramsey. That's CHministries.org slash budget and promo code Ramsey.

Starting point is 00:53:27 Well, we wish we could get to every call on the show. Sorry, we can't. There's only so many hours in a day and so many phone lines that you can get through on. But if you got a question about money and you want an answer for your situation, head over to our website at ramsysolutions.com and click on and use Ask Ramsey. Ask Ramsey is our free AI tool that's built and trained only on proven Ramsey content, proven Ramsey principles. So it's going to give you the exact same answer with like three or four years of this show,

Starting point is 00:54:14 all downloaded into the tool. All of the books we've written downloaded in the tool, all the thousands of articles on our website about money from what we think about this or that, downloaded into the tool. So it's going to give you an answer. Might not be quite as snarky or sarcastic as I am, but it might be. You better be careful. We've been trying to add the sarcasm to it and it's working. So check it all out.

Starting point is 00:54:35 Ask Ramsey completely free. ask your question at ramesysolutions.com or click the link in the description if you're on podcast or YouTube. All right, Ann is with us in Akron, Ohio. Hi, Ann, how are you? I'm doing well, Dave. How about you? Better than I deserve.

Starting point is 00:54:53 How can we help? It's great to have you and Rachel on the line because I have a debate with my husband, and I really need both of your input. Yes, we love a debate. Cannot wait to know if you're the winner, but we will tell you. I mean, I feel like I'm the winner, but of course, I would say that. You probably are. You probably are.

Starting point is 00:55:13 We can already tell. So what's going on? Oh, so we do our monthly budget together, and we have a slush fund for stuff like vacation items, you know, just bigger expenses that come along monthly. And then we have money going towards the down payments and that sort of thing. My husband says that our sloth. fund should be considered spent money. So we put it on the budget as spent money. But I say we should count each individual charge like for hotel rooms, for food and everything. So what do you guys

Starting point is 00:55:52 think? So you're talking about you're setting money aside for Christmas and when you take it out of the budget, how do you take it out of the budget if you don't show it as spent money? That's what I was going to say. I was telling him that. So, We're going on our honeymoon, which is a year delayed to Italy, and we are buying, like, hotel rooms and stuff monthly, like we spend, like, for excursions that's season. You would reduce the savings that you have for the honeymoon. You've already set the money aside and took it out of the budget for it to put it in the honeymoon account, correct? I mean, it comes out of a flush fund monthly. Like, whenever we do have the money for an item like that, it's supposed.

Starting point is 00:56:40 So you're running all of your savings for. for different things out of one account? Not for everything. You didn't have a separate honeymoon account that you're saving money into. We don't have a separate honeymoon account now. Okay, so what is this slush fund then? So the slush fund pretty much are like that appointments can typically come out of there. It's pretty much money set aside for things we know we need to spend our money.

Starting point is 00:57:12 on and we just take it out of our checking account into a separate account on the side and then that way it doesn't get spent by accident not that we would accidentally spend it. Okay so yeah so the question is when you're booking the hotel this month

Starting point is 00:57:28 does that considered money that should be coming out of this month's income is that what you're saying versus the slush fund and so it looks like it has been spent yeah I know it's kind of confusing okay no it's not The way you're doing it is confusing, but it's pretty simple.

Starting point is 00:57:46 If you're setting money aside out of your budget, you see, you have your budget, and my budget says, I'm setting aside $100 to go into an account that's going to pay for my honeymoon. Okay? That money's already come out of your budget once. Yeah, it doesn't need to come out twice. And then when you spend it, it doesn't need to come out again. Your books aren't going to balance. Yeah, I guess that's true.

Starting point is 00:58:08 It can only come out once. And it already came out because it's sitting in the slush fund. Yeah, when you moved it out of your monthly budget into this side, we call them sinking funds in every dollar. And so if you have a sinking fund for Christmas, and every month you set aside $100 for Christmas out of your budget, your budget has already set that money aside, and there's $1,200 in there for Christmas then, and you get ready to go buy Christmas. You don't take it out of your budget. Again, you've already been taking it out all year.

Starting point is 00:58:38 Does that make sense? Is that answering your question? Yeah, it does, actually, because, uh, You know, I was always considering it like a monthly expense because sometimes we'd pull the money out, but then we'd have to add it back in. It's kind of confusing. Well, I think your slush fund is probably in general. It's too confusing. So what I would say is you don't need sinking funds except for specific things.

Starting point is 00:59:02 Okay. A slush fund that picks up five different items is going to be really confusing. It's going to be hard to track it. Okay. So if you do car repairs and vet bills and doctorate, doctor visits all out of the slush fund instead of having set money aside for each of those things separately, then you're going to stay confused. So that's why we have sinking funds. You know, you don't have one fund that covers eight different subjects. I know, but the fund in every

Starting point is 00:59:31 dollar is not going to a separate account. No, I know that. So that's what, but so it could all be in that one quote unquote what she's calling a slush fund and all her sinking. The money can be in that fund, but there needs to be sinking funds established in every dollar. for each one so that when you can look at every dollar and go, okay, for four months, we've been putting $100 aside for car repairs. We have a $500 car repair. We only have $400 in the car repair envelope. Then that's a problem.

Starting point is 00:59:58 We've got to move some money around. But if you have a $300 car repair and you've got $400 in your car repair slush, your car repair sinking fund, and you're okay. Yeah, but it's all coming out of one large account that she sees. And so it may be that the vet bill is more, you know what I mean like it. Yeah, well, I wouldn't have a vet bill such slush fund. I'd just cover that out of my monthly expenses, but I wouldn't, I wouldn't be setting that aside. But I mean, for Christmas, Christmas should be separate than car repairs.

Starting point is 01:00:25 They should have different accounting for them. And so that's why we have the different sinking funds. You don't need 42 sinking funds. Most of this needs to be rolled back into your monthly budget and just be a monthly thing. But the answer to your question is if you've already taken it out of your budget once, you can't take it out again when you spend it. That's it. Because you're going to double. And I can't tell who won then.

Starting point is 01:00:45 Your books aren't going to balance. And I don't know who was voting for which side, so we still don't know who won. But you know who won. You'll have to go back and figure that part out later. But, yeah, ouch. Brock is in Cincinnati. Hey, Brock, what's up? Hey, how you doing, Dave?

Starting point is 01:00:59 Better than I deserve. What's up? My friends can tell me that I'm not doing this correctly. So if I could pay my house off within five years, but it means I'm not investing quite 15%. Should I stay on this trajectory or should I follow the baby? How much? What percentage would you be investing?

Starting point is 01:01:20 Roughly 9% or 10%. Okay, so 5% off and your income is what? 90K. Okay, so talking about $5,000 for five years. We're talking about $25,000. So it doesn't extend the time you pay off your house, but about six months. Okay. You're not making as much headway by doing this as you think you are.

Starting point is 01:01:42 Okay. So no, I would put 15% of my income in. Okay. So you're saying bump it up and just follow the baby steps quite literally then, right? Yeah, absolutely. Quite literally. Yeah, that's what's a great phrase. It's a great phrase.

Starting point is 01:02:01 Yeah. We did not give you a range in baby step four. And the reason, Brock, is this. I've run the math scenarios out. I've been doing this 35 years. And I've run the math scenarios out at all. income levels, you know, unless you're making a million dollars a year or $10,000 a year, I didn't run those out, okay? But I ran them out 100,000, 200,000, 50,000, 90,000,

Starting point is 01:02:22 whatever, back and forth. And it doesn't, the big thing is, is that I want a substantial growth in your nest egg in retirement while you're getting the house paid off. And the average person is paying off their home doing this in seven years, while putting 15% away. And Baby steps four, five, and six. And he said five years. That's the average, yeah. So he's already better than that. Well, he's better than average because he's not putting in.

Starting point is 01:02:47 So he's probably going to be more like six years after I changed this. But that's all. It's really not going to change it that much. And the compound interest of the growth you're missing out on in the market. Yep. Probably worth it. A lot of people think buying a home starts with going to an open house and falling in love with a kitchen. But if you're buying a home the right way, that's not where you start.

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Starting point is 01:05:05 budget. Go to Y-refi.com slash Ramsey. That's the letter Y-R-E-F-Y.com slash Ramsey might not be in all states. Today's question comes from Aaron in Indiana. My wife and I are buying a house and have a couple of questions. Should I insure my house for the sale price of the home and upgrade that if the house goes up in value. Also, should I reduce the amount of home insurance once I get to baby step seven? Excuse me. Sorry, I have a cold. Okay.

Starting point is 01:05:38 No, you don't insure the entire house because it includes the lot. And the insurance company won't let you if they're smart because they're going to look at the house and look at the appraisal value of the house in the area and at least come close on a guess on it. And so what does it take to build your home today on a vacant lot that looks like your lot? That is what would be left if the house burned, and you'd have to build it with a builder. And so that is the amount you would insure. What it takes to replace the house on that lot. Yeah. And no, I would not reduce the amount of home insurance.

Starting point is 01:06:20 Now, I wouldn't. We haven't. None of us have. We fully insure. homes. Now, I've raised the deductibles considerably on my car and homeowners. And life insurance is one that you could become self-insured eventually. Like, that would be one insurance that you could drop off. If you've got enough money that your spouse and kids are okay, if there's kids at home, without life insurance, then you're self-insured by becoming debt-free and having a pile of money.

Starting point is 01:06:51 So that's a baby step seven thing. You can get rid of life insurance. I kept my life insurance for quite a few years after that, but not for any financial planning reason. It was just Sharon wants it, S-W-I. And some things are just S-W-I, Sharon wants it. And it wasn't that expensive. And so I kept it for a few years. And then a few years ago, she said, I don't want it anymore. So I think I'm going to be okay.

Starting point is 01:07:14 I think you were okay a long time ago. But anyway, because all of our state plan is predicated on me dying first. That's the assumption. No, but the home insurance, even if you could pay for the home, that, like, you, it would still, yeah, would not reduce it. I've got, I've got expensive cars, and I don't fully insure, self-insure the cars. Now, again, I carry a massive deductible, which brings the premium way down, way down. Way down. And the same thing on my home, I've got a massive deductible.

Starting point is 01:07:48 Because, you know, let's say, pretend that you're living in a $2 million house, okay, I'll just make up a number. if you got a $50,000 deductible, that's not going to kill you. But the $2 million might if the thing burns. So, I mean, that'll take a chunk out, right? So if you want super low premiums, you can run your deductibles up, but I don't just cancel the insurance. No, I haven't. I carry it on my cars.

Starting point is 01:08:15 I carry not only liability, but I carry replacement value. And I will also tell you to say, when it comes to homeowners insurance to go with stated value where you state the amount and then as the cost of building that house goes up over the years on that lot, building that same house back, raise your stated value. You need to review your homeowners and your car insurance once a year. I've got stated values on my cars. And so if the car is totaled, this is how much I get. I don't have to negotiate. This is the amount. It's a set amount. Not going to get more, not going to get less. It's preset. No negotiation.

Starting point is 01:08:55 Well, the car is depreciated. The radio didn't work. I'm not getting into all that. The car's either total or it's not. Write me a check or don't. Or fix the car, one of the two. And so stated value. And that has helped a lot, again, with expensive automobiles.

Starting point is 01:09:10 And so you want to look at that, and I run a very, very high deductible. And with stated value, it changed it and update it. I just finished my review with Xander on all my whole package last week, as a matter of fact. And so I'm just looking at the car values, how we changed them, the home values where we reset them and everything, because it does not automatically adjust. Replacement value is no longer a thing with most insurance. Most insurance, it's the amount you state,

Starting point is 01:09:36 and you want to make sure you keep that adjusted. Josh is in Tampa. Hey, Josh, what's up? Hey, Dave, it was a pleasant talking to you. You too. How can we help? Hey, so I just really want to ask, I'm trying to understand maybe it's me or not.

Starting point is 01:09:54 I'm trying to understand if I'm too frugal in my marriage. Or should I ask my wife to get a higher paying job? I'm trying to dread lightly here. What about Josh? Does he need a higher paying job? Yeah, no, absolutely. You're absolutely correct. So I think, you know, for me, I always try to find the cheapest possible things that we can afford certain things,

Starting point is 01:10:18 because I feel like that's the only thing that we could afford. And every time I, you know, I say book a trip or shop for things, I always look at the cheapest, cheapest possible things. And I could almost feel the tension with my wife, like, oh, not again. And I just want to preface this with, I just recently became debt-free. And that's literally after paying 10 years of credit cards and loans and money. What is your house all income, Josh? So together we make around 100. $105,000 a year.

Starting point is 01:10:56 Okay. And so on $105,000 you have to cheap out on everything to exist. No, you don't. Right. So I've calculated every single dollar that I could get. And I feel like at the end of the week, I have about $300 to spend on money. See, there's a lot of feeling going on, and math doesn't have feelings. That's the third time you said I feel like, which tells me you're not doing it.

Starting point is 01:11:22 a detailed written budget that you and your wife are agreeing on on every dollar? No, no. We did it together, and she sees it. However, I don't think it sort of clicks on her headlights. No, we can make it work. Every dollar, when the two of you finish every dollar with $105,000 and no debt, $105,000 income, you have $300 left. Every week, yes.

Starting point is 01:11:50 Every week. And that's money that's also being contributed to. George our 401k, a Roth IRA. It's also obviously paying the groceries, the house, and at the end of the... Do you guys bring home, what? $7,500, $8,000 a month? Yeah, so I, together, we probably bring it around, yeah, you're right, $7,000 a month after taxes and all that. How much is your mortgage payment?

Starting point is 01:12:23 $2,000 a month. Okay. And then our groceries is our biggest expense at $800. Okay, well, there's a couple things going on. Yeah. You have a tendency to be cheap. That's nothing wrong with that. My wife has that same tendency, okay?

Starting point is 01:12:41 That's not a bad thing. All right. But what you're saying is your wife has not joined you emotionally in the every dollar budget committee meeting once a month. And the two of us as adults, look at this. and say, we have X to spend on groceries. We have Y to spend on travel. We have Z to spend. You don't make 500,000 a year.

Starting point is 01:13:04 You make 100,000 a year. So it is going to run out. But you also don't make 40 either. So, you know, you're above an average household income in America. Yeah. So if you have $800 for groceries a month, and I don't know who does the grocery shopping, Josh. But, yeah, if you're going and you're,

Starting point is 01:13:23 nickel and diamond, every single little thing, and you're getting the cheapest of the cheap and all of this, and then you guys still have money left over in that category, then that means you can up some of the quality of the stuff you're buying. So you just have to- You have $800 to spend. Yes, yes. Not $500, $800. Yep, exactly.

Starting point is 01:13:42 So spend the $800 on groceries. And then when you guys are planning a trip, you guys need to decide together what hotel you're staying at. That is within the budget that you set for the trip. That's right. Yes, yes. So, yeah, it's probably at both and, Josh, you probably do need to chill out a little bit. But also, you know, you guys have $5,000 after your mortgage is paid to say,

Starting point is 01:14:04 how are we going to live our lives with this? And so it is important to know where it's going. But, yeah, you should have more, I would think, more than 300 after all the debt's paid. It's not your job to cheap everything out. It's the two of you's job to decide how much we're going to spend on a category and then live within that category. If it means cheaping some of it, fine. As a dad of young kids, I'm starting to think a lot more about the world they're growing up in and how I'll help them make sense of it as they get older.

Starting point is 01:14:48 And that's why I like World Watch, a video news service for preteens and teens. Because one thing I know for sure, if you don't teach your kids how to understand the world, somebody else will. And these days, that could be TikTok, YouTube, Instagram influencers, or whoever happens to show up in their social media feed. World Watch's 10-minute videos help young people understand what's happening in the world through a Christian worldview, without all the outrage, negativity, and noise that is everywhere these days. The reporting is factual, engaging, and designed specifically for preteens and teens. And World Watch creates opportunities for something every family needs more of. Meaningful conversations.

Starting point is 01:15:25 Instead of just reacting to headlines, kids learn how to think about what's happening in the world, and parents get a chance to keep those conversations going at home. Because when my kids are old enough, I want them informed, not overwhelmed. And right now, you can get a 30-day free trial. Just go to worldwatch. Dot News slash Ramsey or use promo code Ramsey to get started. That's worldwatch. dot news slash Ramsey.

Starting point is 01:16:01 Adam is in Albuquerque, New Mexico. Hi, Adam. How are you? Pretty good. How are you doing? Better than I deserve. What's up? Well, I kind of have a crazy one for you.

Starting point is 01:16:11 I'm thinking about selling my house and buying a van and doing the van life thing. The van life thing. What does that mean? You're going to live in a van? Down by the river? Adam, where are you going? Yeah, it sounds crazy. It's surface I understand.

Starting point is 01:16:30 I'm 33 single, no debt besides my mortgage, and I work fully remote. And I previously worked in construction and lived in RVs and traveled, and that's where I saved the most amount of money in my life is when I did that. And now I have a house and I feel like all I do is spend my money. It's about a little over 40% of my take-home pay. How much do you make a year? Did you say?

Starting point is 01:16:57 135. 135, okay. 40% of your take-on pay, we're not going to recommend, but I don't know if that justifies a van. I mean, that's a pretty extreme swing from that. So you're just travel around living in the van, working remote? Yes, sir, yeah. Okay. Campground to campground, I take it, right? B-LM-Land. There's some things you can do for free. There's some things you can do where it's paid.

Starting point is 01:17:30 Okay. Do you know how long are you thinking, do you have a time frame or you're not tethered down to anything specific? So you're just like, I just want to see what happens. No, I'm not tethered down. I originally bought this house to be close to family, but I end up just sitting here working my remote job and, you know, not really wanting to be in the area. I kind of want to get back out on the road. and travel and see things. I feel like I've followed the Ramsey plan fairly well. Except for that 40% of your take-home pay house payment. Yes, sir.

Starting point is 01:18:03 Yes, sir. I hear that one in my brain every day. And then I also hear, you know, if I sell my house and buy a depreciating asset, I also hear that in my brain every day. So if you do the van thing, the answer to your question is regardless of it's cool. It sounds fun. It sounds like an adventure. it's not a good 10-year plan.

Starting point is 01:18:26 No, no. It's not a bad two or three-year plan. And if you save that much money and put it aside by the time you're done with everything to be able to put roots down. Put roots down somewhere. You're 33 and single, and we're pretty much ensuring you're going to stay single if you're going to live in a van. You could say that. I would say it's more of like a five-year or less plan, and it's really to find where to put roots down. Well, there might be, but I'm just saying, your chances just went way down on that.

Starting point is 01:18:59 That's debatable, but... No, it's not. You just, you cut out 75% of the female population that want to live in a van. Well, maybe that's a small percent, yeah. Are the good ones left out there. There you go. You need a good van girl. That's what you need.

Starting point is 01:19:14 That's fun. I like you. You're a lot of fun. All right. Now, yes, I would sell it, and yes, I would do it. What I would do is put a time. limit on it so it doesn't become some kind of weird way of life you don't want to be 63 and still doing this right right that's not good for you uh career wise it's not good for you socially it's not good for

Starting point is 01:19:36 you uh financially because of what you said you're in a depreciating versus an appreciating asset all those kinds of things but if you did this for a period of time while you're while you're untethered and don't have responsibilities and it's fun for you i did hear you just you just You're a rambling man. I mean, you like the road, you know. And I think that's cool. That's fun. Go do it.

Starting point is 01:19:57 Go do it. Yes, I would go do it, but put a time limit on it. And be, make sure you are saving. It's the same kind of mindset. People go and move back home to save money. And then they really don't even end up saving money because they just end up spending it. You know, so really make sure. I've saved up to this point, right?

Starting point is 01:20:15 I've got over $300,000 in retirement. And then I also have about $90 cash in there ready to go. Well, you may have just plugged it back in 25% of the female population. Yeah, your bachelor eligibility just went up again. That's great. That's great. That's good to hear. Oh, man, I was going to ask him how much a van costs like that.

Starting point is 01:20:37 I think he's going to be okay. Junior's in Fayetteville, Arkansas. Hi, Junior. What's up? Hey, how you doing? Better than I deserve. How can I help? Well, I have a considerable amount of money that I'm investing.

Starting point is 01:20:49 and I have a friend that's a financial advisor, and he's giving me some mutual funds to invest in to purchase, and he's not charging me, and my question is, is it okay to go with him and just bank the 1% that typically they charge like a fidelity or e-trade, or would I get a better return if I went with e-trade and somebody was actually watching over it? Well, I would not go with e-trade because I would have to be. want you to develop a personal relationship with a financial advisor that is watching over everything and meeting with you, like our smart investor pros that we recommend. But we don't recommend e-trade, and we don't recommend Fidelity. Fidelity's not a bad company. They've got some good mutual funds, but I want you to sit with a financial advisor, and I don't mind them charging you a percentage.

Starting point is 01:21:42 You will recoup on that. So what's the total amount you're investing? I have like in my individual account I have about 619 I have some RSUs that are going to mature I'm going to sell them in about two weeks that's 276 then I have a 401k that's 47 so you're bumping up to a million dollars yeah yeah over a million but 1.2 yeah okay and I think when you sit with some of the financial advisors there's break points on that as well when you start getting up to that million dollar mark so meaning that the commissions won't stay exactly the same. So, yeah, I would sit down with SmartRester Pro and have somebody talk you through that. You can find them at Ramsey Solutions.com. But the data is this. DIY, do it yourself, investing, does not yield the same rates of return. And the main reason is that you get enamored with the romance

Starting point is 01:22:44 of some company or some particular stock or thing, instead of just looking at cold hard numbers, the second reason is fear. And when you read the wrong headline on the Fox News or CNN website, and it triggers your fear button, and you start talking about pulling all your money out at usually the exact wrong time to do it, you need someone to talk you off the ledge.

Starting point is 01:23:11 And so all the research that we have on, on investing says that a person who has a calm, conservative, trusted voice in their ear to stay in the market and to carefully analyze these investments rather than getting caught up in the the internet romance bull crap of something, then they're going to keep you on track and you're going to build more wealth over the scope of your life than when you DIY it. And so I know a lot about this stuff and I don't DIY my mutual funds. I have a smart vester pro. Rachel and Winston have a smart vestor pro.

Starting point is 01:23:49 I'm curious if the friend was doing it out of just... I think he's just saying pick this fund and this fund. I don't think he's actually managed. Okay, okay. He said he's showing me which mutual fund. Oh, I gotcha. Yeah. And not charging him for that.

Starting point is 01:23:59 But there's more in this than just simply which mutual fund to pick. There's staying in it. There's understanding new things that come on board. Different things you can get into as you get above that million dollar. Mark, there's going to be some things that you can do that are very nuanced, very small things. They're not going to make you rich, but they're also going to stabilize your life and stabilize your future with that. So, no, Jr., I would not go with E-Trade.

Starting point is 01:24:30 I would not go with fidelity, and I would not go with my free friend who told me which mutual fund to buy over lunch. Instead, I would do what I do. So my advice is consistent. I'm not telling you to do something I don't personally do. my personal accounts are with one of our smart vester pros and have been since I started that program all these years ago. Yeah, and these guys and women who are in this position, if you find a good one in our smart vestor pros, you know, for sure that is they live and breathe this stuff. And again, there are nuances in that world that you can take advantage of that you will never get by just, yeah, doing it yourself.

Starting point is 01:25:08 And when you have that much money, Jr., that I would. I mean, I know we joked about like tax loss harvesting, you know, one time when this show, you know, yeah. But it's these little things that you, you know what I mean, to add up over time, and they know about that stuff. And they can educate you and show you. And it's good for you. Take advantage of those things. But you're not going to get that with just someone randomly telling you to pick two or three different types of mutual funds and that's it. So there's some nuance to it and detail that I think can be to your advantage for sure.

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Starting point is 01:26:58 aI slash Ramsey. Welcome back to the Ramsey show in the Fair Winds Credit Union Studio. Rachel Cruz, Ramsey personality, and my daughter is my co-host today. So a few months ago, we had another caller named Rachel that reached out asking if she could do a once-in-a-lifetime opportunity to see her childhood friends. There was a lot of drama in the question. Can you tell? She wanted to go see the backstreet boys at the, at the, at the, at the, at the, at the, at the, what do you call the stupid thing? The sphere.

Starting point is 01:27:36 The sphere. I couldn't make you come out of my brain. I couldn't drop it out of my brain. Okay. At the sphere. She was. It's not drama. She was real.

Starting point is 01:27:42 No, it was all true and real. It was her personal friends. To the heart of all millennial women. My personal friends. Yes. The back street boys. Well, she obviously knew our answer. We're not going to tell you.

Starting point is 01:27:56 We told her, you know, you know, you know, you know, you. We understand. Rachel particularly understood and empathized. I had no sympathy whatsoever. And just no. And then Rachel's like, well, but I understand. Well, it turns out Kevin with the Backstreet Boys. What a good man.

Starting point is 01:28:11 Was listening. A friend sent him the clip. Yeah. Oh, that's what it was. Yeah. And he got in touch with us through DMs, I guess it was. And mine are yours or somebody's. And it means that somebody was watching my.

Starting point is 01:28:27 DMs because I don't. I don't even know what that means other than there's a way to message me. Okay. Okay. Tell the story. So he offered to send Rachel to the backstreet boys. So we got him on the air with Rachel. Not this Rachel. Caller Rachel. And then we were going to pay for the hotel. So she had no net cost and she got to go do the dream because Kevin was so generous. And it was great. We had him on the air, her on the air. So fun. Yes. And so she just, you just, you know, got in touch with us. Apparently she went the other night. Yes. I think it was last week.

Starting point is 01:29:01 And sent us all the pictures and the VIP backstage experience. And Kevin gave her a shout out from the stage. She said, my childhood friend, like on her shirt. Backstreet boys are my childhood friends. So good. Very cool. And she had a great time. And she wanted to send a huge thank you out to Kevin, the Backstreet Boys, for hosting Rachel.

Starting point is 01:29:23 And for giving her this once-in-a-lifetime opportunity. That's pretty cool. So fun. So fun. It was a fun thing to get to hook up somebody with super famous and super generous people like those guys. That's awesome. Very neat. Amber is in Atlanta.

Starting point is 01:29:37 Hi, Amber. How are you? Hey, Dave. Hey, Rachel. I'm good. How are you all? Better than we deserve. What's up?

Starting point is 01:29:45 Perfect. So my husband and I have been on our debt free journey for about 18 months. Good. We've paid off $45,000. Wow. Way to go. We worked really hard, and we're both really proud of the progress that we've made because we've always been just paycheck to paycheck, notes to the grind, working, trying to make ends meet. And we have been married for 21 years, and so for that time, that's kind of how we've always lived.

Starting point is 01:30:16 So we decided last year after we think of our church, we're going to get our lives together. We're going to become debt-free. and I know that you always talk about the Bible verse of not being a slave to the lender, and so that's kind of what I keep in the forefront of my mind. So my question is, my husband and I, over the last year and a half, his income has doubled. Wow. And, yeah, he changed jobs about six months before we decided to work on our debt-free journey. And so it's been such a blessing, and God has truly blessed us through that journey.

Starting point is 01:30:50 Amen. So we have our house left, which is about 190,000, and I have 28,000 left in student long debt. The journey is getting weary. So my question is, how do we keep lifestyle creep from getting out of control while staying focused on our debt-free journey? You tap back into the exact same spiritual nobility that caused you to do this. the first place. Something happened at church, and God spoke to your minds and said, you guys need to straighten up because you're not doing this right. And you said, you're right, Lord. You're right, Lord. And we're going to not be slave to the lender anymore. And you went, after 21 years of

Starting point is 01:31:41 doing it wrong, a new dog learned new tricks, an old dog learned new tricks. That's for sure. Yeah. Right? And so you're a completely different couple and completely different people than you were 36 months ago. Mm-hmm. That's worth it. Yeah. And so, you know, yes, you're weary, but yes, that 28,000 is going to go as fast or faster than super fast because the 45,000 was in the early days of the thing, and now you see it

Starting point is 01:32:13 working. But you just got one left, and you're looking up that hill, and you're going, it's a steep hill, and I'm tired. But you just reach down inside and you say, all right, this is what the Lord gave us to do, and this is what it's changed our lives because it's changed our whole mindset. How do you feel different, Amber, with the 45 paid off versus the 28? I can't believe it. Yeah.

Starting point is 01:32:36 I can't believe we actually did that because I didn't even realize it was that much until I sat down the other day and we kind of hit mid-year and I was like, okay, I need to do a checkup and see where we are, how everything's looking, you know, what is the rest of our year look like, kind of thing. And what are we aiming for for the next six months? Yeah, in my four. And as I added it all up, I was like, oh, my gosh. Was it so it was gone way further. Okay. So, and I would want you to know that, like, as it's going, do you know what I mean? Like, if you have a great month and you guys put an extra $800,000 more to the debt than what you had planned out, that should be a more.

Starting point is 01:33:18 That should be the energy boost to keep you going. You know what I mean? I'm thankful that you guys got further than you thought, but I don't want that to be a surprise. I would be in your numbers probably a little bit more so that you know the end too, Amber. You feel the progress. And you need to know, like, hey, we're going to put an extra $3,000 towards this debt. You know what I mean? And we're going to be done in 10 months.

Starting point is 01:33:39 We've got a saying on the wall back here that says, what got us here won't take us there. Oh, that's good. I like that. And in my 40s and 50s, I ran 15 half marathons, which, you know, which are 13.8 miles. Okay. And oddly enough, there's this thing in a half marathon world that happens at nine and a half miles. And at that point, you've been running well over an hour. And at the nine and a half mile mark, your nutrition starts to run thin, your hydration starts to run thin, and you're certainly not running on any sugar high or excitement eye. You're just trying to finish now.

Starting point is 01:34:19 And so you're looking, you go, it feels like that the, next three miles of that three and a half miles is going to be longer than the first nine is there something that happens and it's a mental thing and like i said i've done 15 of them back in the day and i remember every time i hit that nine and a half i was like oh crap why do i do this you know right this is this is killing me and but you're already 75 percent done you know and you but you're still your mind starts playing tricks with you and that's all it is so here's the thing i think you guys are way better and way stronger than you think you are. Well, thank you for that.

Starting point is 01:34:59 Because one day we're going to make it to where we get to come do our debt-free free free. You are, and you're going to stand on the debt-free stage right outside this window, and you're going to remind me of this conversation because we got your back, kiddo. Yeah, and Amber, you guys are doing exactly right. I mean, on average, it takes people 18 to 24 months. So you're about to, you're doing it. You're doing it. If God told you to do this, it's okay to ask him for the strength.

Starting point is 01:35:20 It's okay to pray and say, Lord, I need some extra boost right now. As a matter of fact, he kind of enjoys that. Hey, what's up, guys? It's Jade Warshot. Listen, summer spending adds up so fast between vacations and road trips and camp fees and events. And all the extra gas and grocery runs, money can get tight before you know it. To really get your money under control and keep it that way, you're going to need a plan. And that's what you'll get with the every dollar budget app.

Starting point is 01:36:16 It helps you track your spending, free up cash to put toward debt. debt and savings, and it's the simplest way to make a plan for your money before the month begins. So, no more wondering where your money's going. You're telling it where to go. Download every dollar in the app store or Google Play and start for free today. Are you sick and tired of being sick and tired with your money? You're ready to get it under control? Work so hard. Don't seem to get any progress. Feel like a rat in a wheel. Debt hanging over you. You sick a master card. Yeah, I bet. But, hey, you don't have to live that way.

Starting point is 01:37:06 Our every dollar budget app will help you find extra money every month and build you a personalized Ramsey plan to get out of debt so that you can build wealth. In just 15, the first 15 minutes, you're going to find thousands of dollars in hidden margin. It always happens. You're going to feel like you've got to raise. Don't be normal. Normal sucks. You want to be a new, whole new plan, every detail under control.

Starting point is 01:37:33 Check out every dollar. It's free in the app store or Google Play. Renee is in Boston. Hi, Renee, what's up? Hi, thank you so much for taking my call. I'm a single parent researching the best way to pay for college. I have two sons. My older son went into the trades, aka no college debt.

Starting point is 01:37:57 My youngest son is starting his freshman year at a private college in New York in a couple of weeks. Where did you get the money for a private college? We have $72,000 in need-based scholarship. Okay. Is it $72,000 or is it more? No, it's $72,000, which leaves me to pay $14,000 per year. Of what? Tuition.

Starting point is 01:38:27 Oh, I thought it was $72,000. So tuition is... So the tuition at the private school is $86,000 a year? More than that. Okay. I think it's 93,000. Okay.

Starting point is 01:38:46 And what, pray, tell, is this young man studying? That's worth $100,000 a year. Yeah, but they gave us $72,000. I know. And need-based scholarships, which means I only have, have to pay back. What do you make? I gross 113. Okay. Can you just pay 14 out of pocket then? That's what I'm thinking about doing. Yeah. Paying 14 out of pocket. Okay. That's going to, that, then you really don't have a question if you just do that. That's okay. Um, what I, you know,

Starting point is 01:39:24 and it sounds like it's what you're going to do. What I will tell you from our research is, and, um, we had a award-winning documentary called Borrowed Future on Student Loan, debt, which you're not talking about student loans. But what we found is, is the biggest mistake people make in college is the school they choose. Okay. Now, I don't know if you can find a school that's only 14,000 out of your pocket somewhere else, or if this guy, does he have great grades or is it 100% based on needs with you making $115,000 a year?

Starting point is 01:40:01 I can't imagine the need of that. He has great grades, and he was recruited by the football coach. Oh, so he'll be playing? Yes. Oh, okay. So there's an athletic component to it. Well, sort of. You said it's need-based.

Starting point is 01:40:20 Yes, it has to be need-based because it's a Division III school. Okay, gotcha. And again, he's studying what you told me, but I already forgot. Economics. Okay, okay, cool. All right. So if you can do this and he can play football for four years and you can come out of pocket $14,000 a year and you can cover that in cash flow it for four years and he gets a degree for the equivalent of $60,000 out of pocket, then that's not going to be a bad deal, right? Yeah, that's what I think.

Starting point is 01:40:54 But if he could have gotten 100% free ride somewhere else, 100% nothing out of pocket? then I'm going to argue. Not that I'm aware of. Yeah, well, you didn't try. He got recruited from one place. And you went where they called you. Because they gave you a big old number, but it wasn't a big enough number. So, yeah, the philosophical thing, if I were you, I would do the deal, okay?

Starting point is 01:41:23 But the philosophical thing I want to lay out there for you, and more importantly for all of our tens of millions of listeners is that where you go to school, does not matter. Okay? No one has, you know, you go in to see your doctor, you don't ask him where he went to school. You go into hire a lawyer, you don't ask him where they went to school. You go in and sit down with an economist. You don't say, where'd you go to school unless they got a PhD from freaking Harvard. And then somebody will bring it up.

Starting point is 01:41:51 It's like they're vegetarian. They feel like they have to tell you. You know, so, but other than that, it's not a thing, right? So other than that, it's not a thing. You just don't go somewhere just because and don't go somewhere by default. But it sounds like this deal is not super bad. But if you told me you were coming out of pocket 40 grand, yeah, you wouldn't be able to afford it.

Starting point is 01:42:13 I'd be resetting his whole expectation about where he goes to school. I'd say go to school somewhere that you can afford to pay cash for. Or at the beginning of August. Or if you came out of pocket, or if you told me you're going in student loan debt to do this, I would just say, no, there's another way to do it. and you can go to a different school and you can afford it. By the way, folks, the average in-state tuition in America today is $14,000. That's what she's paying out of her pocket.

Starting point is 01:42:42 So all the free money that they gave her just brought the cost down to what the average state tuition is. Now, maybe not in New York. She's in New York. I'm not sure that state tuition will be true in New York. But I don't know who all offers in state tuition in New York. It's a state college. but I'm going to guess and say that one's higher than the average. But still, you know, you cannot justify coming out of pocket a hundred grand a year

Starting point is 01:43:11 for a school that you could get virtually the same curriculum and the same textbooks in a lot of cases by going to a state school. 78% of the CEOs of publicly traded Fortune 500 companies went to a state school. Where you go to school does not matter. Whether you go to class or play beer pong matters. Whether you learn something while you're there matters. Whether you study something like economics that's usable in the marketplace. That matters.

Starting point is 01:43:51 And so this is a sharp young guy, obviously. And so the good news is she's got the money to cover the 14. The 14 is not unreasonable. And, you know, as long as they don't rescind this scholarship. If they rescind these scholarships or these things, you know, and he gets hurt playing football, then he's going to a different school if he's mine. Yeah. Because we're not coming out of pocket 50 grand so you can finish up where they started me with a 72,000.

Starting point is 01:44:16 And it's a pretty debatable topic, but even college sports at a three, you know what I mean? At school, it's not like it's SEC. and football. You have a full-time. The only reason it's just a job. You have a full-time. It's a $72,000 a year job. That's it.

Starting point is 01:44:31 Totally. That's what I was going to say. At that point, you are going, because they're paying for your college. And then they take that team and they go play a big school, and that school pays them a million dollars for beating the crap out of it. Yeah, that's what happens. So that's where it comes from.

Starting point is 01:44:45 That's true. Oh, man. Well, what's crazy to is really. His deal is not a bad deal. Sure, totally. Always look at lots of options and don't just set the thing up based on where you're going to school. It's the number one mathematical mistake in the whole college equipment, whole college decision-making paradigm. Yeah.

Starting point is 01:45:09 Well, average tuition, I just like to was $12,000. Room and Board is 13 to 15,000. Yeah. You're starting to pay more for room and board than the actual tuition. Tuition. They're going to price themselves out of the market if they keep it up. It's wild. Like she said, she got one went in the trades.

Starting point is 01:45:25 He's going to end up making more than the economist. Right. Yeah. The diesel mechanic will make more than the economist. We're done here. That's what's going to happen. 120 a year diesel mechanic right now. So, yeah.

Starting point is 01:45:39 Sounds like Renee's a good mom. She got two boys she's raised. Both of them coming out there, both productive. Well done, Renee. Very cool. Good for you, Renee. And I hope it goes well. I hope he doesn't get injured.

Starting point is 01:45:49 I hope it and he loves it. Yeah. Hope it all works out perfect. If it doesn't pull him, though. Put him in a school you can afford. Hey guys, Dave Ramsey here. Every day on this show, we help people work through real money problems and figure out what to do next. Now, you can get that same kind of help anytime with Ask Ramsey.

Starting point is 01:46:52 Ask your money question and get answers built on Ramsey principles we use on the show. Whether you're making a decision or just want something explained, Ask Ramsey is here to help. It's fast, simple, and free to use. Go to Ramsey Solutions.com and try Ask Ramsey today. That's Ramsey Solutions.com. Dennis is in Denver. Hi, Dennis. How are you? Hey, Dave and Rachel.

Starting point is 01:47:31 Thank you for taking my call. Doing well. How about yourself? Better than I deserve. What's up? Awesome. So I'm 24 years old. I have about $170,000 in a regular savings account.

Starting point is 01:47:45 I'm embarrassed to say that, but that's what it is for now. My question is, uh, my mother is currently renting a home. She has been renting the house for quite some time, about five years now. She doesn't own a home herself. And the home is worth about $180,000. I could cash flow it and have her pay rent. She's one encouraging me to do this to build some equity over time and also, um, some have some income from the rent that should be paying me.

Starting point is 01:48:12 I'm wondering if that's a wise decision to make. Where'd you get $170,000 at 24? I've been working since I was 16, and to be honest with you, I just have accumulated that much. Over the years, I take home about $3,900 a month, and I have no payments at all, no car payment. And I also don't pay for housing as a benefit through my employer. What do you do? I'm a property manager for a ski resort. Okay. Wow.

Starting point is 01:48:50 Well, you've done really well, sir. Well done. Well done. Thank you. How old is your mom? She's 60, and she's looking to live in that current house for five to seven more years before she retires and goes back to her home country. At least that's what she says. Yeah.

Starting point is 01:49:07 But it's unknown. Okay. Is it a house nearby? Is it an endemic? No, actually it's in the outskirts of Houston, Texas. Yeah, okay. Okay. What's her home country?

Starting point is 01:49:19 Just curious. Honduras. Okay, cool. It doesn't affect the answer. I was just curious. But so I think your mom wanting to you to own a piece of real estate at 24 that's going up in value is a good idea. I think renting to relatives is a really, really, really bad idea.

Starting point is 01:49:40 and I think owning rental real estate in a town you don't live in is a bad idea. Okay. So this is going to go sideways. Something's going to happen. Somebody's going to get sick. Something's going to shift. You're going to get married. Your new wife's not going to like the arrangement.

Starting point is 01:50:00 Something's going to happen somewhere. I would rather, if your mom needs some help through those years, which it doesn't sound like she does, She's paying her rent now and she's working. And when she retires, she's going to leave and go to Honduras. So she's probably in pretty good shape. After all, she raised you and you're pretty frugal. So I'm guessing she's probably doing a pretty decent job. But anyway, I would just live your life with your 170.

Starting point is 01:50:26 And if you need for some reason to, you know, if you want to help your mom at some point with some cash, that's fine. But I don't think this is the best way to help your mom. And it's not the best way to help you. Right. And she doesn't need the help at all. She just is encouraging me. She just thought it'd be a good idea. She just wants you to own real estate. And it's something going up in value. She wants to pay her son. She'd rather be paying you than a landlord. Like, I understand how she got here. It's just when you look at all the facts, it's probably not the best route. When the heat and air goes out and it's $8,000 next year, you got a problem. You know, and when this or that happens, you got a problem.

Starting point is 01:51:08 And by the way, you're supposed to go up on the rent every year when you're a landlord. That's how it works. Well, he went with his mom. Well, he went and do that for five years. I know. I know. And so you're not getting the right read of return on your $770,000. So you're not going to go.

Starting point is 01:51:23 You're not going to go up on the rent. And you should. But you can't because it's mom. You can't because it's mom. Not his sweet mom. It's going to be retired in five years. That's right. She needs to just rent and then execute her plan.

Starting point is 01:51:33 He needs to execute his plan. That's right. I agree. Keep it separate, Dennis. But I understand how she. and you thought maybe this could be a good idea, but at the end of the day, probably not the best. Sitting in this seat for 35 years, I can tell you that very few people have called up and go, oh, that really changed everything except in bad ways.

Starting point is 01:51:53 And so. If anything, Dennis, I would recommend you put your 170 or part of it, half of it, into the market. You could be making more return on that. That is one thing, I would say, is do something with that money you have saved. All sitting and checking. is not good. That's right. That's right. Yeah. So you need to move some of it somewhere and start thinking about where you want to live. You got free housing right now. So that's okay. Yeah. But I would park the vast majority of that and at least an S&P 500 or sit down with

Starting point is 01:52:22 the Smart Investor Pro and let them help you develop a game plan. Yeah. For investing that. Because the crazy thing, y'all, not just him, but everybody else, just think about this. okay. In 2023, the market went up, the S&P, Standard and Poor 500, which is the 500 largest stocks, and you can buy that in a mutual fund, went up 26%. In 2024, it went up 25%. In 2025, it went up 18%. Year to date in 26, it's up over 10%. And we're not even at the end of the year yet. Okay. Or you can get 3.5% on a high yield savings count. So, So basically, had you been invested if you're out there and you've been invested for those four years, you would have doubled your money. And by the way, I have some money sitting in an S&P.

Starting point is 01:53:15 It's where I park money while I'm waiting to buy a piece of real estate. And so during that five-year period of time, the money that I've got sitting in there doubled. That's crazy, y'all. So like if it's a million dollars, you got $2 million, that kind of thing. If it's $170, you got $3.40. Now, the market does not always do that. That's an unusually good four-year period of time. But that's a lot, y'all.

Starting point is 01:53:42 That's crazy. And so, you know, just leaving money in a fruit jar in the backyard buried because it's, quote, safe. No, it's not because you're getting beat up out here by inflation. So you need to be investing at a rate that's higher than taxes and inflation, which is higher than six, on your long-term investing. Because you've got to cover taxes and inflation. Inflation runs about 4.2, and then you're going to have income taxes some kind on that money somewhere.

Starting point is 01:54:12 So when you've got money like he's got sitting there, be Rachel's point. Get it to where it's working for you. Andrew is in Tampa. Hi, Andrew. What's up? Well, I've got an interesting problem. I am cruelly blessed.

Starting point is 01:54:27 I'm in a very strong financial position, but you've got me getting, I guess anxiety because I burnt through my baby step three. I had a couple of very large ticket recent expenses that fortunately, you know, I had that fund who was able to pay it. So, you know, just not having, I'm super cash poor right now, but I was one to know your opinion on borrowing against a 401K since I can pay it back to myself with interest at roughly the rate that the market's moving.

Starting point is 01:55:01 No, it's not the rate the market's moving. And it's more like 5 or 6%. You don't pay yourself back on 401K loans at market rate. You mean a market on a high-yield savings account maybe, but not the market on what the S&P 500 is doing. No. The program's not available. But anyway, the answer is no. I would never borrow on a 401K under any circumstances.

Starting point is 01:55:28 The only time I would take or use 401k money is to avoid a foreclosure or bankruptcy. You're nowhere near that. How much money did you have in your emergency fund? Well, going back to COVID, I had quite a bit, but I use that to buy a business, and I now own four locations, and that's doing real well, and I'm keeping all of that money separate to continue to grow that business. Yeah, how much money's in that business? So how much money is in the business? How much money are you said, you said I'm keeping all that money? How much is in there? It makes about $300,000 a year.

Starting point is 01:56:02 Good. And all that money is. sitting there and retained earnings? Well, no, I've used it to buy properties and open additional shops. Okay, how much cash is sitting in there right now? In the business account, about 180 right now. Okay, and how much was your emergency fund recently until you had these unexpected big purchases? It was about 100,000. Why don't you have 100,000 in your emergency fund?

Starting point is 01:56:29 three to six months of expenses should be in your emergency fund. You don't have three to six months of $100,000. Okay, so I'd take some of your 180, maybe 30 or 40 or whatever, three to six months of expenses and move it over there, set it in your emergency fund and call it a day. You spend hours researching before making a major purchase like a home or car, but it's also a good idea to put in the work searching for the right insurance coverage. To protect your biggest assets, I recommend using. Ramsey trusted pros. Whether you're looking for car, home, or any other type of insurance,

Starting point is 01:57:37 Ramsey trusted providers have been coached and vetted to serve you like we would. Find what you need at ramsysolutions.com slash insurance. Our scripture today is Psalm 37, 23 and 24, the Lord makes firm the steps of the one who delights in him. Though he may stumble, he will not fall for the Lord upholds him with his hand. John Maxwell says a man must be big enough to admit his mistakes, smart enough to profit from them, and strong enough to correct them. Woo! That's good. Michaela is in Philadelphia. Hi, Michaela. How are you?

Starting point is 01:58:27 I'm good. How are you guys doing? Better than we deserve. What's up? I'm calling because I'm wondering what it means to be a beneficiary on a will, and if that person who is the holder of the will, if they pass away, does the beneficiary inherit any debt? Okay. The second answer is no. The first answer is there's not really anything called a beneficiary. There's an heir. You can name an error. You can name who you're going to leave money to. You can name, you can take a, there's certain kinds of things like your 401K. You can put a beneficiary on that. Life insurance has a beneficiary on it. An annuity can have a beneficiary on it, but a will technically doesn't use that term. It would be more that you're just the air or the person that has willed the money. A will also has, and this may be what you're talking about, I'm not sure, they will assign someone to manage the affairs of the estate and follow the directions of the will, and that's called the executor of the will.

Starting point is 01:59:31 Is that what you're thinking of? I think so. Whose will are we talking about? This is my grandmother's will. Okay. Okay. If she's simply leaving you money, it's that simple. Okay. Okay. The executor, as the word implies, executes. Executors execute the terms of the will. So if the will says you get $5,000 of grandmother's money, your cousin gets $3,000 of grandmother's money, your mother gets that piece of land, your brother-in-law gets that piece of jewelry or Bible or whatever, then the executor's job is to do what the will says and execute that and give you that money, your sister that money, your brother-in-law, the bob, whatever, all that stuff, right?

Starting point is 02:00:17 It's their job to do that. But in no case does the debt get assumed by the person. Now, if there's something like a house that has a mortgage on it, okay, the executor would sell the house and whatever the net is would be distributed to the people in the will. Okay. But you do not, and if they die and they don't have enough money to cover all of their debts, the person in the will will get nothing. Yes.

Starting point is 02:00:50 Because the debts have to be paid before money is distributed. Gotcha. Okay. But in no case are you suddenly going to have debt on you because your grandmother had a mortgage? Okay. But now let's let me make it, you know, that's the law. Now, if, let me go a step further, just make this even more complicated. But let's say your granny had a house that she owed $100,000 on and the house is worth a half million dollars.

Starting point is 02:01:16 Okay. She dies and she leaves you the house. Now, you have inherited a house that has a mortgage, but you're not on the mortgage. If you want to keep the house, you're going to pay the mortgage because they're going to take the house. But you're not on the mortgage. They're not going to report it on your credit report. They're not going to sue you if they foreclose. There's no change in the documentation.

Starting point is 02:01:42 How about the deed? The deed can go into your name, but you don't owe the mortgage. Okay. But if you want to keep the thing, or if she leaves you a car and it's got a car loan on it, if you want to keep the car, you're going to pay the debt. Okay. But you're not technically on the debt. Like if she left $50,000 in credit card debt, you don't just get the $50,000 in debt.

Starting point is 02:02:04 Debt is not inherited. Okay. Is that logical? Yes. Very. Thank you. Okay. Hope I didn't give you too much. No, you're good. Just throwing everything at you one thing.

Starting point is 02:02:17 So, folks, when someone dies, to make it simple, what you own when you die stands good for what you owe. So only your net worth, after all debts are paid, can be distributed to your heirs. And so it's like, you know, sometimes I run into people who are kind of, And they don't know how this stuff works. It's like, my grandmother left me a car, but the bank took it. Well, no, your grandmother left you a car with a debt on it, and you didn't pay the debt. That's why the bank took it.

Starting point is 02:02:52 The bank didn't do anything wrong. It's why they have a lien on the car title, because they get their dead gum money. But so, but if someone is penniless, they're a pauper, they live in an apartment, they don't own a piece of real estate. they're um and they got 60,000 dollars in debt and 40,000 dollars or 60,000 dollars in credit card debt and 40,000 dollars in student loan debt and there's, they don't own anything of value. And they die. That debt is not inherited by their heirs. That debt is just simply lost that the, the company that loaned them that money loses the

Starting point is 02:03:29 student loan doesn't get paid. The credit cards don't get paid. And so if that's your father that passes away as a pauper, is what we would call it poor. You would just get copies of the death certificate and send it to Citibank and say, you get nothing, honey. Because he died with no money and nobody paying this. But you don't get to keep his car and not pay the credit card debt either,

Starting point is 02:03:56 because what you own stands good for what you owe when you die. Jacobs in Salt Lake City. Hi, Jacob. How are you? Well, I'm great. How are you guys? doing better than we deserve what's up yeah the question about qualified HSA funding distributions are they a good idea in terms of of working your money with a traditional IRA in a smart way the only thing I've used HSAs for in that

Starting point is 02:04:28 way is I fully fund mine every year and I've never used it and I've got it invested in mutual funds and so it's become a third type of retirement savings. But I don't, I don't move it around. I haven't done qualified distributions. I haven't done anything. If I had a big medical event and didn't have the money, I could pull that money out of there. But I got several hundred thousand dollars in an HSA because I started at the first year, George W. Bush started it. And I fully funded it every single year. And when he got above 100 grand, I dropped, I put it into mutual funds. I actually, I think there's more like a half million in there now. But anyway, doesn't matter. A lot of money in there.

Starting point is 02:05:07 And so it becomes, but only after you're at Baby Step 70 to do that kind of stuff. If you don't be putting money loading up that thing and not paying off your house. That makes sense? Yeah, it does make sense. I just have a traditional IRA that is not really doing anything. It's from a previous employer. I haven't rolled it over anything like that. I wanted to see if like transferring some of that money into my HSA would be a good idea.

Starting point is 02:05:35 No, no, no, no. You don't need that money in your HSA. No, you want to keep that as an IRA. Roll it from there, from a traditional, into a traditional IRA into a good mutual fund that's doing something. Get a good smart vester pro to help you with that. We don't use the HSA instead of IRAs. No, no. IRAs are much more flexible.

Starting point is 02:05:52 A lot more things you can do with them than you can with the HSA. But, by the way, sidebar, if you do. From a tax perspective, though, the HSA. Do what? From a tax perspective, the HSA is great. It grows just like their traditional IRA. And it's pre-tax that goes in, too. Yeah.

Starting point is 02:06:08 You don't, yeah, you, you avoid. It's like a traditional. You avoid double taxes. It's like, no, you get double taxed. If you don't use it for medical, you get, you get taxed. Not at the end at retirement. Yeah. Yeah, when you pull the HSA out at 65 and you start using it for retirement money, you pay income tax on it.

Starting point is 02:06:24 Oh. Just like a traditional 401. Why did I feel like the growth was tax-free in an agency? No, it's tax-free if you use it for medical. Oh, that's okay. You buy Italian all. They don't, there's zero taxes. But.

Starting point is 02:06:34 Yeah. She gets some mucinics after the show. It's a lot of Tylenol. It's my HSA. Yeah. But your HSA, I mean, you've got a big old traditional lump sum in there, and there's nothing you can do with it except that. So, but no, I wouldn't put more money in there than that.

Starting point is 02:06:49 And I wouldn't do any of that until that's a baby step seven and beyond type of strategy, where you've maxed out 401Ks, mega Roths, mega backdoor, everything, you know, mega 401Ks, Everything. All going into Roth. You can't do anything else. And I think, okay, here's a little bit more money. I can keep the government's hands off. Yeah.

Starting point is 02:07:08 And again, you can't get to it. Well, unless for medical, right, until retirement. 65. Yeah. So it's stuck in there again. I can get mine, but I don't need it. So I'm not going to, I mean, let's sit there and grow. Just let's sit there and grow.

Starting point is 02:07:21 That's what's for. It never was intended to be used by me. That was just keeping the government's stinking hands off my stinking money. That puts this hour of the Ramsey's showing the books. We'll be back with you before. You know what? In the meantime, remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace. Christ Jesus.

The Ramsey Show - Discipline Is the Difference Between Broke and Wealthy

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