The Ramsey Show - Quit Spending Like You’re in Congress!

Episode Date: July 11, 2024

📱Download your Ramsey Network App today! Dave Ramsey & Jade Warshaw answer your questions and discuss: "Should we borrow money from my parents to buy a house?" "How should I use a $500k inheritance?" "We are buried in $240k in debt," "What does it actually mean to be broke?" "How much should I help my son's girlfriend?" Support Our Sponsors: Zander Insurance: Go to zander.com or call 800-356-4282 for a fast and easy quote today. Health Trust Financial: Discover Top Health Insurance Plans, All in One Place. NetSuite: Free KPI checklist, visit netsuite.com/Ramsey  Christian Healthcare Ministries: Find out more at CHMinistries.org/budget Next Steps 📞 Have a question for the show? Call 888-825-5225 Weekdays from 2-5pm ET or click here! ☎️ Share your thoughts on The Ramsey Show & more! 🏠 How to Buy a Home Course ☂️ Protect yourself with the right coverage—take our coverage quiz! 🚢 The Live Like No One Else Cruise is booking fast! 💵 Start your free budget today. Download the EveryDollar app! Listen to more from Ramsey Network 🎙️ The Ramsey Show   🧠 The Dr. John Delony Show 🍸 Smart Money Happy Hour 💡 The Rachel Cruze Show 💸 The Ramsey Show Highlights 💰 George Kamel 💼 The Ken Coleman Show 📈 EntreLeadership Learn more about your ad choices. https://www.megaphone.fm/adchoices Ramsey Solutions Privacy Policy

Live from the headquarters of Ramsey Solutions, it's the Ramsey Show, where we help people build wealth, do work that they love, and create actual amazing relationships. I'm Dave Ramsey, your host, Jay Boshaw. Number one best-selling author, Ramsey Personality is my co-host today as we answer your questions. The phone number is 888-825-5225. Ryan's in Seattle. Hey, Ryan, what's up? Hi, long-time listener.

I just got an offer from my parents. They helped me buy a house. I'd enter into a contract with them where basically they would be the bank. They would fund the entirety of the purchase price, and I'd pay them back, including interest. They gave me a little bit better of a deal with the interest, um, at about six and a half percent instead of, um, it's around seven, seven and a half around where I'm at. Um,

and I was just curious on if it was going to be, uh, something I should do. I know we've talked about, or you've talked about, uh, not buying a home, uh, with somebody you're not married to, but it's, it is family kind of thing. So, um, the difference in interest, what does that amount to? I'm going somewhere with this. Um, cause that's the break you're getting, right? That's what they're offering you is a break on interest. That as well as they'd be purchasing 25% of the home and I'd pay off 75% of the home. And then when I sell it, they get their... So the purchase price is 400 grand.

Yeah. They would be giving back their $100,000 and then 25% of any profit that was made. So this gets very complex. Yes. Have you already done this? It's in the process of getting done right now. Can you and are you willing to stop it?

I think it's a great idea. It's not a great idea. It sucks beyond belief. It's a horrible idea. It's going to end in ashes. Please don't do it. Please don't do this. How old are you? 27. Okay. Just 10. When you're 30 and you're married and you want to refinance the house and you have to buy out the 25%, your wife is going to be so pissed at your parents. Don't do this.

The value would be going up. Don't do this the value would be going up don't do this you can't afford to buy a house sounds like if you can't afford to buy a house go buy you a house son do not do this you you guys are putting this all together like there's only one thing that can happen and it's everything works out perfect and a hundred percent of the time, everything does not work out perfect. Everything that comes at this, if you want to refinance, you want to sell, they don't want to sell. You are now in partnership with people for no apparent reason except a half a percent. No, no, no, no, no, no, no no no no no no no and to go back to the first thing it sounded like at

first your parents were just trying to offer you not and it's it wasn't a good method but it sounded like they were trying to offer you a break in interest and my thought would have been like calculate how much it is and just ask for it as a gift and then you go buy the house but they're really trying to make a profit and so it's two things going on. It's you trying to get a house before you can afford it and them trying to invest in real estate and they don't really have the money to do that either. So it's two things that are gone awry. This is really bad, Ryan. I really wish I could talk you into not doing it. I don't think I can though. I think you're too far into it.

Yeah, you're done. Okay. Good luck, son. Please don't do it. I'm going to tell you one more time. There's 47 ways this can go wrong and only one way it can go right. And you're going to experience one of the 47. I'm you called and ask our opinion. I've got 30 years on this microphone, 40 years of doing one-on-one coaching. have never seen a deal like this work out they always go sideways you're you're asking to have a strain in a relationship with your parents over a stupid house and you guys have these rainbows and unicorns and skittles in your head that this is all going to work out a certain way and honey it's not so you're going to do it anyway and you're going to learn it anyway and you're

going to learn the lesson the hard way but you can remember the time you called and we told you not to do it when you're sitting neck deep in the poop you just remember that dave and jade told you not to do it yeah because he's going to be neck deep oh he's going in the poop katie's in pensacola hey katie what's up hi dave and jade Thank you for taking my call. Sure. How can I help? So I just want to ask, what type of savings account should we keep the $110,000 that we have for a down payment on a home in the future? My husband is eligible to retire from the Air Force in three years, but we'll probably wait another two years, so five years total to maybe buy a home.

Yeah. Wow. Nice. Well, if you're going to play close to a five-year window, you can talk about putting some or all of it towards something like a standard and poor, an S&P 500 mutual fund, and you'll make some really good money on it. That's what I do. Okay. But it could go down in value. You know, $110,000 in and it might be worth $100,000. But that would be a highly unusual five-year.

Ninety-seven percent of the five-year periods in the stock market's history have made money. So I'm very comfortable with the risk if you put it in and leave it alone five years. If you're going to leave it alone three years, probably not. I'm probably going to go high yield. If you want to do a blend, I'd do some, like half of it in a mutual fund, an S&P 500 fund, and half of it in a high yield if you want to do a blend i'd do some in the like half of it in a mutual fund and an s&p 500 fund and half of it in a high yield but at least get some of this money working for you because we're talking about you know we're talking about the difference of about ten thousand dollars a year and what you would earn on the money so we're talking about fifty thousand bucks

of versus a high yield versus a uh a mutual fund over a five-year period of time. I also like the idea of investing it or doing the blend because once you put it, you know, you put it in an index fund or you put it where you put it, you're less likely to touch it. You're less likely to have something pop up like your friend's, you know, wedding in the Caribbean that you think would be a good idea to spend some of that money on, right? Whereas if it's in a high yield, it's easy to grab some of it. You invest it. High yields are a little too accessible. Yeah. Yeah. I like trying to keep it out of my own reach. I like to trick myself into becoming wealthy. Yeah. You know, and trick myself into actually accomplishing my goals. And yeah, that's a good point. You know, it's a very good point. Yeah. It's always a wedding in the Caribbean. I don't know why what is it with you in the wedding i don't know that comes up a lot is this a scar in your life it might be it might be a friend out

there somewhere that's but you know how it is now suddenly you need a new car oh yeah well you know for rednecks it's we need a bass boat oh i need Need a bass boat. I need a side-by-side to go deer hunting in. Oh, gosh. And they're only 20 grand. You got that sitting in the high yield. You know, that's all. Got that money sitting over there. Why would we pay a bank interest for the side-by-side?

Your brain starts fogging up. And it stops working. You can't see through the windshield anymore. Yeah, you're exactly right. That's fogging up, and it stops working. You can't see through the windshield anymore. Yeah, you're exactly right. That's a very good point. So I personally, I'm comfortable knowledge-wise with the history of the stock market, so I'm plunking all of it, if it's me, into an S&P 500, if you've got a four- or five-year window.

If you're a little less comfortable, do some there and some otherwise. If you're completely that freaks you out, just put it in a high yield. But you've got the downside of it's too accessible. You know, it becomes a bass boat fund, or I need to redecorate the kitchen fund, or whatever the crap comes up. This is The Ramsey Show. One of the questions I get all the time is, which life insurance company should I use for my term life policy?

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and Zander has made the process easy and convenient. Call them at 800-356-4282 or visit Zander.com for instant online quotes. We're going cruising, boys and girls. We'd love to have you go with us. We're doing the Ramsey Live Like No One Else Cruise. For those of you that are baby steps for and beyond, it's your opportunity to celebrate the milestone of getting into wealth building mode. All the Ramsey personalities, including Jade and I and my wife, Sharon Sharon will be with us the entire seven days on a high-end, very nice Holland, America, almost brand-new ship. We're going to Turks and Caicos, St. Thomas, Puerto Rico, the Bahamas.

And, man, this thing is packed full. We've got lots of fun, cool friends coming, like Stephen Curtis Chapman is going to hang out with us. Manit Chauhan from the Food Channel will be with us. We've got a lot of other celebs hanging, and you guys come out. It's all Ramsey people on the boat, all celebrating, all saying we lived like no one else now. By God, we're cruising like nobody else. There you go. It's March, March, March, March, March 22nd through the 29th this coming spring.

And if you don't want to pay the whole thing up front, you can save your cabin for only $600, and that'll get you going. But you need to do it because the cabins are going really fast. So get a cabin while you can. RamseySolutions.com slash cruise. Paul's in Buffalo, New York. Hey, Paul, what's up? Hey, how's it going, man?

Better than I deserve. How can we help? So, kind of a crazy life event happened lately. I have kind of a strange uncle. I know him, but probably haven't talked to him in 15, 20 years, and he passed away. And my mother, his sister, is an executive of the estate, and she calls me and says, he left you about a half a million dollars. You're the guy. I've always heard about a guy with a rich uncle it was you it happened it happened i always i never i didn't know where you were i've always heard about you though paul and buffalo the guy is he's paul and buffalo he's the guy with the rich uncle. Wow, that's so cool, Paul.

That's so cool. I hate it when I get a half a million dollars out of the blue. So, it's a good problem to have, but I just don't really know what to do. I've been married for 21 years. Well, not married, but with my wife for 21 years. I'm 37. We have a house, and we have two beautiful kids. And I listened to your show for a while,

and I know it's very centered around getting rid of debt. But I just want to be smart. I've never had this type of influx of cash flow before, and I just don't want to make any mistakes and set my kids up and obviously take care of us in the immediate. Yeah, that's very wise because this kind of a hit really could change your family tree if you're careful with it. So that's very wise. And, um, and so when, how long before you actually receive the money, do you think? Um, I mean, they said it's, well, that's another question too. So

a lot of it is an investment and just from things I was reading online, I've seen people where, like, the attorney will liquidate all the investments, and then they get taxed really heavily on it, and I don't know. No, there's... Other things I was reading were, like, move it to a Roth and then inherit the Roth. I don't know. You can't move dead people's stuff into a Roth. It doesn't work. So that's that's that's internet um garbage um so the investments investments should not have any investments don't have any taxes honey so the the deal is this now the attorney

does if the attorney liquidates them or you liquidate them it doesn't matter you now become the owner even if he liquidates them okay you can ask him not to liquidate them and you can do it. But here's the, here's the tax law on that part. And then we'll move on to the rest of it. Okay. So let's say that, um,

part of the 500,000 is, uh, I'll just make up something. Home Depot stock. Okay. And uncle, uncle paid 50 grand for the Home Depot stock, but the Home Depot stock's worth 150 now.

Your basis as the inheritance in an inheritance is current market value. And so your tax is based on how much above current market value it is. It's called a stepped-up basis. Okay? Okay. You do not get taxed on what he paid for it. You get taxed only on what it's worth at the time of his death, and if you sell it within six months of his death, it is presumed to have been at market value by the IRS. Okay? So you got no taxes.

Okay. So you take all this stuff just if you want to liquidate all of it and have a half million dollar pile of cash in the middle of the table zero tax there's no income tax there's no inheritance tax cool now okay so that answers that question so we don't have that we can move on past that now then the reason i ask how long before you get it is I want you to start pretending like you were hired suddenly to manage someone's half a million dollars, and you've never done that before, which is exactly what's happened, right? God just gave you a half a million of his money, and God says, how are you going to manage this, son? And you're going, this scares me a little bit.

I want to be careful, and that's wise. So what you would do if you were hired by someone and you didn't know what you were doing, you would get some other people on your team that knew what they were doing. And so I want you to begin to gather up your own little personal committee, your own little personal board of directors, so to speak. So we're going to get a mutual fund broker, a SmartVestor Pro off our website in your. So we're going to get a mutual fund broker, a SmartVestor pro off our website in your corner. We're going to get an estate planning attorney in your corner. We're going to get some tax advice from an ELP and back up and make sure that Dave Ramsey actually gave you the right advice a while ago and check that with a pro, okay? And you can get an ELP,

a tax ELP off our site. We don't have estate planning attorneys on our site, but we've got people we recommend for tax in Buffalo and for, if you're going to do any real estate deals, you can go get a real estate person in your corner. If you need insurance, you need a good insurance broker in your corner. Every one of these people do not qualify to be on your committee unless they have the heart of a teacher, meaning your job is to manage their money.

Their job is to teach you enough about their specialty to help you manage the money. Got it. You don't turn it over to them and go, well, I just gave it to this guy to manage, and he lost it all. No, your job is to manage it you're taking advice from these other people and therefore their job is to teach you they have to have the heart of a teacher does that make sense it does and that will keep you out of trouble do not do anything with this money that you do not understand because it is your responsibility yeah because sometimes these people start talking it sounds like charlie brown's do not understand because it is your responsibility.

Yeah. Because sometimes these people start talking and it sounds like Charlie Brown's teacher. Wah, wah, wah, wah, wah, wah, wah, right? You remember that. And so, long time ago on that cartoon. But yeah, anyway, so all that to say, then we're going to have you work the baby steps, right, Jade? Yeah, Paul, what's your current financial situation? Tell us about your financial life before this money.

Yeah, well, that's another interesting thing. I just had a business of 13 years, and I sold it in January. So I have about $100,000 in assets that I still need to kind of get rid of. And I have about $20,000 in cryptocurrency. As far as debt goes, I have none, and my wife has none. don't have any debt we don't have anything yep mortgage yeah uh we own our house it's we i think we owe about 130 000 and it's worth about 300 okay so first thing i'd probably do after you have those people in place is i definitely want to pay off my mortgage and just be scot-free. And then from there on, I think Dave set you up to have the right folks in your corner to decide what you're going to do about this money, how you're going to invest it,

if it's going to be in the stock market, if it's going to be in real estate. And my recommendation is take $620,000 from Bitcoin and sale of business and inheritance and put at the top of the page and spend it. We just spent $130 of it paying off the mortgage. What are we going to do with the rest of it? Okay, I'll give you, and then I'll tell you one last thing on that. A lump sum invested in a good mutual fund or series of mutual funds, if it averages 10% or more, will double every seven years. You're 37, you said?

Yep. Okay. So let's pretend we put 400 in investments. When you're 44, you'll have 700. When you're 51, you'll have 1.4. When you're 58, you'll have 2.8. Yep. See how this changes your family tree?

Exactly. Well, that's the thing. Like said it's such it's a good problem but it's kind of it's intimidating it's kind of scary all at once you're like and the other two things you can do with money is have fun with it and be generous with it and you should do some of that with some of this money too notice i didn't invest at all you're debt free you're generous you have some fun, and you invest, and you keep your stinking hands off of it and let it double. This is the Ramsey Show. You've worked, saved, sacrificed, and been gazelle intense with your financial game plan, but do you have the right defense in place, like the right health insurance? Look, you can't walk past a doctor's office these days without getting a massive bill. And if you don't have health insurance, a major medical situation can undo all of your hard work.

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Go to healthtrustfinancial.com today. healthtrustfinancial.com. Thanks for joining us, America. Jade Walsh, walsh all remsey personality is my co-host john's in st louis hey john how are you not too bad by yourself better than i deserve what's up uh just calling to try to get a little bit of advice from you dave on ways that my wife and i can tackle our uh monster debt that we have. Currently, without our house, we are at $240,500. Good Lord. Yes. It is a monster. What is the monster?

Unfortunately, it's a lot of credit cards, student loans. It's a HELOC and a 401k loan, as well as two car payments. You never met a debt you didn't like. No, and unfortunately not. What's the income? Our salary-wise is $151,600. I broke it down to what our yearly is should be roughly 99,840. Okay. Okay. So it sounds like you guys, I'm just trying to get my head around how this happened. It sounded like you felt like you were making a good income and it was time to just go crazy.

Is that right? The credit cards is the biggest issue. How much is that? Unfortunately of the credit cards is the biggest issue how much is that unfortunately uh of the credit cards 46,962 as of uh last month okay um we got how much on the cars uh the cars itself my car is 28 728,700 my wife's's is $21,000. And mine's due to be paid off in four years. Hers is due to be paid off in three years.

Well, one of them's probably got to go. The $28,000 one, what's it worth? I'm not entirely sure. It's a 21 Kia Sorento. It's more of the family car. She has the more gas-efficient car. What does she have? A Nissan Altima.

Well, whatever one of these is the least upside down and of the most value, I'd probably try to liquidate one and get into a cash car. So, John, I don't really care if it's the family car. You people are broke. You're starving to death making $150,000 a year. You don't get to say it's the family car. You get to say everything's on the table. We're selling so much stuff the kids think they're next.

We're not doing anything until we get this mess cleaned up. Because you guys have been spending like you're in Congress for what 10 how long you've been married 10 years uh four years four years oh my gosh you guys did this in four years or did you get started early uh well i mean the student loans is all my stuff how much is that but how much did it unfortunately 80,000 okay well that is the biggest portion not the credit cards and then the heloc heloc is how much the heloc is where you go uh 46,000 okay and that was just this past year okay what'd you do with that which unfortunately helped us pay off a bunch of credit cards no you didn't you moved you moved it helped us consolidate off a bunch of credit cards. No, you didn't. You moved them. It helped us consolidate them, I should say.

Yeah, you moved them onto your house. And it didn't help you consolidate them. It put your home at risk. Yeah. So it's not a help. And you didn't stop spending. You're still spending more than you make, right? I would say yes.

Yeah. Have you cut up the credit cards? Nope. No, unfortunately not okay i own myself i'll use mine primarily for work related which i know dave you i've heard you talk about before um i've expressed in my work they should get us all credit cards so we don't have to use ours uh hopefully we can get that approved so i can stop using mine when i travel apparently Apparently that's not working for you. You have $46,000 in credit card debt and a HELOC that's $46,000. So it's basically $90,000 in credit card debt. So something's broken with that system.

Would you agree? Yes. You don't end up $ ninety thousand dollars in credit card debt when something's working so no use of plastic is going to be okay in your house you guys have to go cold turkey uh you don't you don't walk around with a flask in your back pocket if you're trying to quit drinking and so um man how much just curious, for the work part, because I want to know how much of that is an excuse, how much are you putting on your credit card every month for work? I mean, it's not that much.

The card that's got the biggest amount, I take the full blame for it. I'm putting mess away and stuff. That had nothing to do with work, yeah. My point is, if you're spending a little bit here or there for work and they're reimbursing you, you don't need a credit card for that. You shouldn't be doing that. Let's reset here for a second.

Does this scare you? Yes, because it's continual. And I would love for, as a family-wise, we would be better off financially. And the credit cards I look at, it's one of the scariest things. It's scary. It's not the math is not scary. What's scary is the pattern of being out of control and staying out of control. That's what scares me.

It's not sustainable. You know this is heading towards the wall, and you're going to T-bone the wall and just blow the whole thing up right you know that's what's coming because you guys just continue the same pattern that's you you know we're in you can't get out of a hole by digging out the bottom right i mean so um now how's your wife feeling uh we're both just as stressed with it okay are y'all fighting about this stuff uh we try to talk about it and she gets stressed and doesn't want to talk about it y'all are fighting about this i'm just yeah it would be weird if you're not having a bunch of

fights because this stuff is it's the number one cause of divorce in north america it's the number one cause of disagreement in marriage this is money problems and money fights and you got them all up around your ears. So here's what we're going to do. We're going to help you. I want to give you an overarching plan. I've been where you are, except worse. And I remember being terrified. And I remember my wife being terrified. And I remember us trying to kill each other. And I don't want that for you. Okay? But the plan I'm going to give you does not have a middle ground. It is not an easy process. The result is 100%. You're going to win and you're going to become a millionaire.

But the path to get there is painful. Because you guys have a series of behaviors, habits, and even language that you use in your own heads and at each other that has got to completely change. Because your behaviors, your habits, and the language you use around this stuff, as soon as I start talking about the car, you start talking, it's a family car, as if it's a non-starter. It's not a non-starter. It's a family car as if it's a non-starter it's not a non-starter it's a stupid car and your family's almost bankrupt it's the enemy it's not the family car okay so you change your vernacular around this you go anything that is between me and freedom is the enemy. We are going to freaking war with our lifestyle and our former patterns of doing

things. We are not going to do this anymore. If you're ready to enter into that, I can show you how to do it. If you want to play around and think there's a math trick to hack you out of this, you got the wrong guy. I can't help you, but I can show you. I've shown millions of people how to get out of debt. We'll put you into Financial Financial Peace University I'll pay for it free and we'll pay for you to be on every dollar of the premium side of the app and get you in the every dollar app and you and your wife sit down together crap I'm not even going to put a coach in your corner we got one of our Ramsey coaches in your area I'm going to pay for a personal coach to coach you but only if you're willing to say, I'll do whatever I have to do to win. Okay.

All right. We can get rid of this fear, man. And here's the weird thing. Before the debt belief, the fear will be gone. You'll still have the debt, but you won't have the fear anymore because you'll see your way out. You'll see a light at the end of the tunnel that's not an oncoming train. The only thing you know right now is you're stuck, and you're not stuck.

What's stuck is the stupid crap that brought you to here. It's the same stupid crap that made me go broke. And they got Jade $460,000 in debt. The lady to my right paid it off, her and her husband. So you can do this when they weren't making anywhere near $100,500. So you hang on. This place is about hope hope but it's not about false hope you're gonna live like no one else man your friends are gonna think you joined

a cult you're gonna be going cray cray man completely different than anything you've ever done in your life but you'll be free in 36 months hang Hang on, I'll pay for it. Christian will pick up and get you taken care of, brother. What does the future hold for business? Ask nine experts and you'll get ten different answers. Economic growth or a recession? Business taxes will go up or down. AI will help us work or it will replace us all. But there's no such thing as a crystal

ball. That's why more than 40,000 businesses have future-proofed themselves with NetSuite by Oracle, the number one cloud enterprise resource planning system. Ramsey Solutions uses NetSuite, and you should too. Whether your company's earning millions or even hundreds of millions, NetSuite helps you respond to immediate challenges and seize your biggest opportunities. With one unified business management suite, there's only one source of truth for the visibility and control you need to make quick decisions. NetSuite's real-time insights and forecasting help you see into the future with actionable data. And when you're closing the books in days, not weeks, you can spend less time looking backward and more time focusing on what's next. And speaking of what's next, download the CFO's Guide to AI and Machine Learning at netsuite.com slash Ramsey.

It's free at netsuite.com slash Ramsey. Jade Walshaw, Ramsey Personality is my co-host. Open phones at 888-825-5225. We appreciate all the help you guys have been giving us and encourage you to continue to give us that help. And the help is you subscribe to the shows so if you're watching or listening on youtube or uh spotify apple google play whatever just click the follow or the subscribe button it makes a big difference in the way those algorithms are handled with those platforms to whether they put the show out or not how they push it forward to other people to see it.

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leave a nice five-star review we appreciate all of that we know you're doing it because our numbers are way up tim's in rono kai tim how are you hi dave thanks taking my call sure what's up uh so my wife and i had about halfway through baby step three. And so we're looking toward investing something that's outside of our, uh, my work TSP and her, uh, work 401k. Good. And we've reached out to a financial planner and I'm just one, I don't want to make another mistake with money cause I've done a lot of them. So I'm just wondering, you know, how much should I be paying this guy as a financial planning fee? And then did you go to a smart investor pro? We did. Okay. We did. Um, they have a smart investor pro that particular one has a, as a financial planning fee. Uh, yeah, they have, they have a, a, they call it a retirement planning fee. It's an annual fee.

And then there's then as I was reading in there, depending on what investment vehicle you're using, if it's like above $50,000, then it's a percentage. And then below that, it's the brokerage fees. Okay. Was the way I was reading it, but I don't understand that. And we're meeting with the guy tomorrow. Most of the SmartVestor Pros run on just managed accounts.

Managed accounts is simple. There's no commissions, and they charge 1% of the balance. Now, some of them do have a minimum, you know, $50,000 in balance or whatever until they get there. And you don't need to pay an annual fee i don't know what that's for just for planning because you're not going to be doing that much planning annually now you may want to pay an upfront fee to help you get your will started if you don't have one help you do some other financial planning things uh how much was that fee 600 okay that's not

unreasonable now okay okay all right because i mean i a lot of people there in the financial How much was that fee? $600. Okay, that's not unreasonable. No, okay. Okay. All right. Because, I mean, a lot of people in the financial planning world, there are people that do not sell anything. They do not sell insurance. They don't sell mutual funds. They don't sell wills. They don't sell anything.

And they just charge for their hours. That's called fee-based planning. Okay? charge for their hours that's called fee-based planning okay i don't generally recommend those because then you're also going to pay commissions on top of that and you can get the same advice basically for 600 instead of 4 000 uh or for uh you know if you move a couple hundred thousand bucks over there you're not going to pay anything but one%. And they're just going to take care of your plan, your annual planning and your other stuff too. There's not that much to this.

And so different smart investor pros run different things. But as to my knowledge, we don't have any fee only. All of them are managing mutual funds for your Roth IRA, your kid's college, your rollover from your old job or whatever. And they're helping you do that. And 1% on the managed accounts is what almost all of them are doing. I mean, my only question would be at this point in your investing, you haven't even begun yet, how much financial planning do you need each year? That would be my question. Not a ton, but 600 bucks is not,

you know, it's not 6,000. So the other thing but $600 is not, you know, it's not $6,000. That's true. The other thing you can do is this. Meet with that guy and just get a sense of the spirit. And as you're driving away, ask your wife. Do not ask her what she thinks. Ask her how she feels about that meeting. The reason i'm calling is based on how she feels okay what's what's her feeling well they sent us they sent us their disclosure agreement and the contract and she started reading the contract and she's like well wait a minute now we're

getting tied into a contract and there's all these different fees and whatnot and getting nickel and dime to death and i don't want to get involved in that. Okay. Go meet with them and see if that spirit changes. We have. We've met with them twice already. Oh, okay. Okay. Then don't do it. Okay.

You're interviewing them. Yeah. Click on SmartVestor Pro and go talk to another one. Okay. There's more than one in your area, and there's probably one just doing a 1% management fee, and so that really wouldn't be that unusual so yeah listen dude a hundred percent of the time my wife does not feel good about a business

relationship i'm entering into we don't do it period period and i will ask her i'll challenge her are you sure that's god's spirit not last night's pizza right i'm gonna double check but she will say no it doesn't feel right and every time that one wins proverbs 31 who can find a virtuous wife the heart of her husband safely trusts her and he will have no lack of gain huh look at that so yeah don't don't do it i don't care if it's our the guy might not be a bad guy sure but he's not your guy and that's it that's exactly it dave i like that you said it that way because somebody else might call the guy work with him and be like this guy's great how many there's been many times where somebody has recommended somebody to me they love them and then i go and i'm like that's not my guy yeah so it happens hey

christian i do want to learn a little bit more about this guy i don't think he's doing anything wrong but i want to learn a little bit about him so find out who it was okay i'm gonna put him on hold all right open phones at 888-825-5225 tom is with us in san diego hey tom how are you hey dave i'm good how are you guys better Better than we deserve. What's up? Wonderful. Glad to hear it. I am out here, and I'm trying to figure out what the right move is to do with my house. I went through FPU at the beginning of the year, and I'm upside down on the car payments. I make good money, but I'm at a very very high in debt to income threshold on my on my house payment what do you how much is your house payment 4,500 and what do you bring home

uh gross is about 140 145 what are you bringing home a month every month just over 11 yeah it's pretty high okay yeah it's and how much is your car payment 860 holy well there is a bigger problem yep and that's so this is the problem i faced i'm all about the dump the tahoe plan but because i'm too upside down on it there's no way what do you owe i hit really hard 30 number 30 39 okay and what what do you think it's worth well according to the like kbb estimates it books at like 24 private sale private and so trade would be like 20 yeah what'd you do tear it up no it's real negative equity from the other deal in it negative no i didn't um it was a it's a high interest oh wait a minute wait a minute wait a minute wait a minute what's your interest rate? $12,000. Okay. The $39,000 is probably not your payoff.

That's probably, when you do a subprime loan, they generally put it on the books on TOP, total of all payments. That's different than an early payoff number. You're asking for, did you ask what your account balance is and you got $39,000? No, I asked them what their pay of the 10-day payoff and they gave me a 20-day payoff which i've never heard of but okay that so that's an actual payoff number that was an actual payoff number what car is this there's a jeep man you got so screwed okay so the i'm really close to a breakthrough on being able to refinance this house and it would cut my payment

down significantly. But the trouble is because I have this, like I'm trying to go back and forth between baby steps one and two. And so I had my step one, I'm crushing step two. And then I got hit with like $20,000 of home repairs in June. And so I just got nothing. So it's starting all over. And so I just keep getting overwhelmed with it and starting all over. And so I just keep getting overwhelmed with it and trying to figure out how I should do it. Cause if I give up everything, I'll do it. Yeah. I mean, something's got to go and you need to decide what it is because nothing you're describing is fun. We got to get rid of the cheap and maybe the car, maybe the house you decide, but you can get more of both. So I wouldn't hang on to them

for dear life. I just say, okay, God, get me out of this. Do you ever feel like you're finally making progress towards your goals only to get quickly distracted by something else in your feed? Well, that's why we created the Ramsey Network app, your single source for content that keeps you motivated. The Ramsey Network app is designed to keep you laser focused on reaching your goals. Loaded with over 7,000 hours of Ramsey shows, this free app is the best place for uninterrupted content and no distractions. Plus, you can search specific questions to get more personalized content in seconds. So, for the days you need some extra motivation, you'll have proven advice at your

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Ramsey Personality is my co-host today. Open phones at 888-825-5225. Craig is with us in Minneapolis. Hi, Craig. How are you? Great. How are you? Better than I deserve.

What's up? So to start off with, we have no debt outside of what we owe on the home. But my question is, is investing money into solar panels to save money on utilities better or worse than investing in the market? So after the tax credit that you'd get, the 30% that just comes right off, you know, I'd get it back on next year's taxes. That equates to about a 7.8% return on what I would save. So obviously I don't have to pay tax on money that I saved, but if I invested it, I end up having to pay tax eventually on money that's invested. Man, you really want some solar panels, don't you?

No. You got the bug. You got the salesman's pitch down, man. So what you're saying is actually not true, because if you put it into a Roth, there's no taxes on it, and a tax rebate is just a cost savings. It's not a return on investment. Right. I'm not factoring in the tax rebate is just a cost savings. It's not a return on investment. Right.

I'm not factoring in the tax rebate on anything as far as... You said a 7% rate of return was the tax credit. Oh, no, no, no, no, no. I'm saying, so like, the system is like 57. I'd get the 17 or whatever back on the tax credit. So I'm looking at it. That tax credit is just a cost savings. That's all it is.

It's not a return on investment. And I'm not factoring that into any of my figures. Okay. What was your 7.6%? Me eventually putting in $40,000 and saving about $3,400 a year. Oh, okay. All right. So that's your 7%.

Okay, that is an actual return. That's my 7%. Okay. All right. Correct. So if you invest $40,000, you have a 10-year break-even. About, yeah. Yeah, that's because you're not in this you're not in the solar panel zone in minneapolis

you ought to have about a five-year break even on solar panels for them to make sense and the reason is is the technology is moving so quickly the solar panels today are excellent compared to five years ago and the solar panels five years from now will be excellent compared to that junk you're getting ready to buy so you need to break even on it really quick it's like buying a computer it's you know think about a five-year-old computer it's a joke it's a doorstop and so nothing is clunky as old solar panels but i'm a believer in solar but solar the numbers we've run on it you need to try to break even on it net net net cost uh not the 57 but the 40 i'll go with your tax credit being a cost savings so we're running the numbers on 40 but if you're only making 3400 on 40 you

got a 10-year break even 11 12-year break even um that's not good enough you need to make your money back faster than that on that kind of thing so i i endorse solar companies and some of the markets that we're in some of the talk radio stations and so forth but they're running five maybe seven year break evens but not 10 12 um so and by the way seven percent rate of return on technology that's deteriorating daily is not a great rate of return so seven percent rate of return on technology that's deteriorating daily is not a great rate of return so seven percent rate of return on a high yield savings account would be great but it's not great on technology so um that's going down so these guys and you've obviously run into a world-class

salesman because you can re you're regurgitating his stuff yeah really well and um but it's um no i i personally would not do that i just want to make sure because your break-even is too long i just want to make sure he wasn't thinking about this as an alternative to he was and that's the other problem it's not even on the same spectrum of investing just do your investing and then say am i gonna buy something else that gives me a break-even okay am I going to buy a I don't know a car that saves me on gas mileage there are two separate discussions if I got a guy I got a gas guzzler and I'm going to save x number of dollars on my car by buying it but it's a little bit more expensive what's the break-even on your gas mileage savings but that

has nothing to do with whether or not you're going to invest yeah you don't get to not do a Roth because you bought a car that doesn't eat gas. That's right. Or you put solar panels up that don't eat electricity. But what that tells us is he can't afford to do this because he's considering doing one over the other. That's what I'm getting to. I got my magnifying glass out.

Good, good, good job there, investigative. I like it. Cody's in Orlando. Hey, Cody, what's good job there, investigative. I like it. Cody's in Orlando. Hey, Cody, what's up? Hey, Dave. So I am over my head in a situation with a car that I financed. I took the car over, and now I'm in a position where my mechanic told me that the motors are in recall.

It's destined to blow up at any point. Of course it is. And I owe $14,000 on this car. And there is about a two-year waiting list for a new motor due to the recall on all of them. What vehicle is it? What is it? It's a 2018 Hyundai Sonata.

And Sonata's all the engines are blowing? It's burning oil causing the engines to blow up. It's internally burning oil. And it's a recall. This is not just you. It is, but it is not covered. I'm not under warranty due to the mileage on the car.

And so the car is at almost 160,000 miles. I took it over in a bad situation going through a divorce, didn't want the credit to get ruined, took over the car. Okay, so what do you owe on it? I owe $14,000. And what can you sell this piece of crap for? Trade-in, probably $2,000.

And I don't have anything in savings, but I have another car. My mom just passed away, and I inherited her car. No payment. What's it worth? About $3,000 trade-in. It's a little older. It's a 2012 with about 80,000 miles on it. All right.

What do you make? About $54,000 a year. Okay. All right. about 54 000 a year okay all right so and so i don't know if you uh if you trade in or whatever you got three thousand you need eleven thousand dollars right yes so where are you gonna get eleven thousand bucks you need eleven thousand dollars i don't get it yeah i don't have it i know where you're gonna get it i would have to work and save it that's right like a lot of work more than you're doing now like extra jobs okay like you can make you know fifteen hundred two thousand dollars

a month delivering pizza five nights a week okay and you're doing that in your mom's old car or you could run this sonata all the way into the ground till it blows i don't care because it's not going to be anymore you might as well get something out of it and um just run the crap out of it and you know door dash and pizza and anything else what do you do for a living right now i'm a i'm a cook at longhorn okay all right so anything you could do to get more and more hours at the best possible pay doing anything i want you working like a maniac and you know like have it like a i don't know five six month plan to be done with this five months would be two thousand dollars a month right yes sir find two thousand dollars a month for five months and then get rid

of this piece of crap and then you go okay that one's in my rearview mirror no pun intended i think he thought there was a oh there's not a hack was a... Oh, there's not a hack. Yeah, there was a hack. No, there's not a hack. Gotta work your way out, unfortunately. It is. It's called work. Lots of work.

It's a hack. Magic trick. Work all the time. It's a hack. This is The Ramsey Show. Hey, when you go against what society thinks is, quote, normal, like avoiding debt, for example, it might seem weird at first, and that is totally okay. We want you to be weird if that means doing things intentionally, including how you spend your healthcare dollars. And one way to be intentional is with Christian Healthcare Ministries.

CHM isn't health insurance. They're a health cost-sharing ministry that's helped hundreds of thousands of families like yours take care of healthcare costs without sacrificing their freedom. Find out more and join at chministries.org slash budget. That's chministries.org slash budget. Thanks for joining us, America. We're glad you're here. Jade Warshaw, Ramsey Personality,

is my co-host. Today's question of the day comes from Lauren in Missouri. Yeah, she says, I listen daily and hear the phrase, don't listen to broke people quite often. What is the Ramsey definition of broke? So we know who in our circles not to listen to. I love this question. Well, broke people, for me, a broke person is somebody who is not financially responsible. And you see that as the fruit in their lives, right? They may have cars in their driveway. They may have the house that's next to yours and they're your neighbor, but you get the sense that they're not managing their money properly. And sometimes I will say, Dave, it's hard to know because unless you know this person, you know, on that financial level, you

may not know how they handle their money. But if you see them pull out a credit card when it's time to pay for dinner, you know, if you see that their houses, if you have an idea of where they work and what they earn, and you're taking a look at their houses and their cars, there's certain little indicators that you're going, I wonder what type of, I wonder how they're managing their money. Now, on a personal level, when I think about broke, I think about paycheck to paycheck. And it's that person where your money's coming in and it's going out. You don't know what you're spending it on. You're not on a budget. And at the end of the day, because of that, you're not able to do the things that cause you to be a financially responsible person. You're not savings. You don't have savings. You're not investing for retirement. You are carrying

debt. You're still getting into debt, right? All of those things that we teach you to do, you're not setting your family up and your children up long-term for college and things like that. So that's kind of what I would place it in as far as what I would consider a person being broke or trying to gauge if a person is somebody that you don't want to take advice from? Wealth is not income. Wealth is not appearance. So if you're bling bling, you got a purse that costs more than most people's kids. You are driving cars that don't fit the neighborhood, meaning they're too nice. You know, you've got two $60,000 cars

sitting in front of a $400,000 house. You're broke. And if all your vacations are so nice they're on your Facebook page, you know, you're living, you're trying to put on the dog, as we say in Tennessee. You're trying to look like you're something you're not. That is not the definition of wealth. Tom Stanley, who wrote the book Millionaire Next Door, before he passed away, he wrote another book called Stop Acting Rich.

Broke people act rich and aren't. Yeah, they're trying too hard. I hesitate to do this because I got a sweet young man sitting here in the lobby with a great cowboy hat on. But in Texas, they say, big hat, no cattle. That's broke, okay? A lot of talk, no money. A lot of putting on the airs, no money. So wealth, by definition, is net worth.

What you own minus what you owe is your net worth. And so if you make $2 million a year and you have nothing in net worth, you're broke. You spend all of it. That's what it amounts to. And so it's not income and it's not what people it's not stuff that you show on instagram um and here's the thing most people that aren't broke don't give a crap what you think broke people care deeply about what you think and so that comes into because that's why broke people

are always giving you advice because they're afraid that you're going to outpace them because you're doing smart things that's a big indicator right there the the people who are yeah constantly yeah they got a lot of opinions about other people's stuff and they got no stuff that's a thing indicator yeah and so you know your typical millionaire we interview them on the millionaire baby steps millionaires what's the most expensive pair of blue jeans you ever bought 50 bucks 100 bucks and you know nobody nobody excited about that in the blue jean world i don't know that's big blue jeans money can i challenge the blue jeans okay i don't know i'm just i'm not saying that's an indication of broke i'm just saying the typical millionaire

when we interview them and then we say what did your wife spend maybe a hundred bucks okay but still they just don't they're not majoring in appearances and uh broke people generally major in appearances they try to look like they are something they aren't and then they have opinions about your money that are unsolicited you didn't even ask but they got a lot to say about it and it's sometimes in your family and here's the other thing here's what broke people are most people that's broke people 78 percent of americans live paycheck to paycheck. That's eight out of 10 houses on your street are spending everything they make to stay afloat.

Wow. So what's a broke person? Most people. That's broke people. Most people. When you pull up a stoplight and five nice cars sitting around you, you're looking at five car payments. You're not looking at a millionaire that rolled up there you know he's sitting in a fifty six thousand dollar pickup truck yeah with a dadgum eight hundred and fifty

four dollar payment on it but by god i got me a truck you know bro work hard i deserve what you deserve what a payment a payment give me a break dude seriously and so that's that's you know our so our definition of broke people would be of wealthy people would be net worth and you don't get net worth by only earning an income and you don't typically get net worth by giving a rip what other people think and so putting on putting your vacations on facebook putting your your purse, your bling, your, I don't know, whatever it is, whatever it is that you think other people might think they're and be impressed with you. Yeah. Your car for sure. Your stupid car. This is the country where cars, you know, United States of America, cars are a status symbol. 100%. When I walk through, when I walk

through my neighborhood, I, when I see cars, I just see the payment amount that's all i see have you seen the thing that the guy did it's old but you are your car and he goes like okay this person is a subaru and this person is a oh it's hilarious because you're like making a statement about who you are i mean that is true so i'm not sure what i am i'm an old corvette i guess but there you go but uh but the uh or i might be a raptor but uh somewhere in there but because that's two of my cars but anyway uh so yeah but it's yeah the cars cars are you used to be a jaguar i used to be a jaguar i'm not gonna do it that's it is that like a is that like a broke cougar is that what a jaguar is i think so a male broke cougar listen when i go by

apartment complexes yeah and i see yeah they're sitting in a stinking apartment complex and there's a 40 000 car sitting out there i I'm like, this doesn't make sense. That is definitely broke people. Yeah, it doesn't make sense. 100% that's broke people. Okay, so yeah, that's what you're talking about. And I can't tell if this question's a little bit facetious or not, but we're giving you a serious answer anyway. So the answer is don't listen to most people. Yeah.

Because most people are broke. Most people don't know. And don't listen to people who are putting on images of wealth because they probably don't have any and really you get to know someone well enough you actually know what their net worth is you go this guy's 35 years old he's got a two million dollar net worth okay that's a guy you can listen to yeah and he's when you when you line that up that person is not spending the way you think that a, quote, rich person should spend. They're just not. They don't.

There's a reality to it where it's like, hey, this money is in investments. You're just living a normal life. Yep. You know? Very weird. That's an interesting discussion, though. It is. Yeah.

If broke people are making fun of your financial plan, you are on track. That's one of the things we always say is a great joke line. Yeah. And it's like if fat people are making fun of your financial plan, you are on track. That's one of the things we always say is a great joke line. Yeah. And it's like if fat people are making fun of your diet, then you're right on track. You know, it's the same deal, right? And so if you've been divorced 62 times, I hope this next marriage works for you, but I don't want to read your book on marriage. You ain't got this figured out, Bubba.

And so that's the deal. And that's what we're looking at it's a proof text in the marketplace as in business we would call it best practices i want to follow someone that has a series of habits that has caused them to win in this particular area of my life i'm concerned about so if you want to if you want to be married and have a great marriage find somebody been married 67 years and find out why she didn't kill him. It's a good thing, man. You need to know these things. It's smart.

It's smart. This is The Ramsey Show. Mark Twain said the best way to double your money is fold it over once and put it in your pocket. It'll come to you later, folks. Some of you haven't seen real money like actual cash in so long, you don't even know what that means. So there we go. Hey, speaking of making your money behave, you have to do that if you want to have some. Anything that you want to win at, you have to intentionally address the subject, the power of intentionality.

A budget is what we do in the wealth building world. If you want to become wealthy, you have to make the money that you have, your most powerful wealth building tool, your income, behave. It has to go where you want it to go to accomplish fun, to accomplish generosity, and to accomplish wealth building. So we say to give every dollar of your money before the month begins an assignment. That's why we named the world's best budgeting app EveryDollar. And now, years later, tens of millions of people in America

use EveryDollar, the app for budgeting, every month to manage their money oh you're not yet well you should be you should have FOMO you should go get this done download every dollar for free in the app store or google play today and you and your spouse can sit down put each of it on your phone and boom we're off to the races we're going to make this behave. Mike's in Chicago. Hey, Mike, what's up? Not much, sir, not much. How can we help? Okay, so years ago, my mother-in-law was living with me and my wife.

We bought the family house that she was living in. At that time, she only owned 50% of the house. Okay. Um, the other half was owned by the sister-in-law at that time. The, her husband died. So I mean my wife bought the house 50% went to the sister-in-law, my, you know, my father-in-law sister. Okay. And we, her mom was like, Hey, can I live with you guys? If that's okay. And I said, sure. Fine. After a couple of years later, um, I, she, me went for a car ride and I asked her, you know, I was just curious. I said, like, mom, how much do you have like retirement and stuff like that? And she, like, mom, how much, do you have, like, retirement and stuff like that?

And she's like, no, I really don't. And she's like, I only have maybe, like, $80,000. And I was like, wait a second. And I was like, you're 72 years old. You only have $80,000. What if something majorly, like, happened? And she said, well,

I figured you guys would help me out. And I was like, what? And she's like, well, I figured all, if all the money goes gone, I figured you and my daughter would help me out. And after that conversation,

I, I saw, I talked to my wife about it, and my wife was appalled to it. And then her mom moved out and is living on her own now because it was putting string on to my marriage. Why was she living with you in the first place? Because my wife felt kind of... Well, when we bought the house, 50% of that house... Do you own the whole thing now? Yes, I do, sir. I couldn't understand the story.

Okay, so that part... So now mom has moved on, and what's your question? How do I bring up... understand okay okay so that part so now mom has moved on and what's your question how do i bring up like she's already like that's what i'm saying like if she has only 80 000 to like live off of and that was like three years ago so she's 75 now she's yeah she's up there she's 75 does she does she have uh social security coming and she lives on that yes okay so she's probably not using the ad except when there's an emergency right i mean yeah we don't know i mean we don't know we're guessing she's not working because i yeah she's not working i didn't bring it up again because my wife's like that's not your business but at the same time like if mom's living under my house i want to know she's not how much yeah she's not

she's not now okay but at the same time if something did go wrong let's say she's out of money let's say so you feel like she's not you feel like she's not just using social security survive she's pulling actively off of that nest egg, and you're worried that that's going to run out. That's going to run out, and then I'll be the escape. Me and my wife will be the escape. And my wife does have another sister. What's your household income?

I make over $95,000. What does your wife make? My wife makes over maybe, let's say, $95,000. What does your wife make? My wife makes over maybe let's say $30,000. Okay, so you've got $120,000 household income in Chicago, Illinois, and we just don't know about mom. So here's the thing. You can decide to do one of two things.

You can just lay this down and not worry about it, which is probably what you need to do. Okay. You're not obligated morally or ethically to step in and make her life perfect if she has not managed her life well, regardless of what her expectations are. And your wife has been trained by this woman that she's supposed to take care of her mother. And her mother has told everybody, you all are all going to take care of me and there may be a little bit of a surprise when you stand up and say no we're not so that's one possibility and you and your wife need to get on the same page and say okay when mom comes begging we're not going to be her backstop okay that that's that's what that's one option and you got to decide if you not going to be her backstop. Okay, that's one option.

And you've got to decide if you're going to do that, you've got to decide that as a unified front, the two of you, the two of you. The other option is to go and completely invade her life. Because if you're expected to take care of her if she fails, then you have the right to keep her from failing i agree if she if your wife and her mother are expecting you to take care of this woman then you should go over there and sit down and open up all of her books and put that one lady on a freaking budget and be in control and be looking over her shoulder.

Otherwise, I'm not your backstop. I'm not going to be responsible for you unless I get full say. Yeah, because is she healthy? I mean, she's healthy. My point is if the time comes. She could make it a decade. I mean, she's healthy. My point is if the time comes. She could make it a decade. I mean, she could. Yeah.

Right. But if the time comes where she needs home health care or she needs, do you know what I'm saying? That is you on the hook for that. No, it's not. So for that reason. Not him. But if you go option two. Yeah.

Option two. You got to go over there. You got to go over there and put her on a budget where she lives on Social Security and she takes her hands off the 80 and you put it in an account where she can't touch it without your help you have to take over her if you're responsible for her finances you should take over her finances otherwise i'm not going to be responsible for it i'm not going to allow you to drive your car in the ditch and then bitch because you don't have a car that's not an option i'm with it yeah so the problem is is that your mother-in-law and your wife are both passive-aggressive and you're getting ready to get aggressive aggressive and this is going to stink up the whole thing so but you know

there's not you guys have been trying to walk down the middle of it it's none of your business but we have to take care of her no it is by god my business if i have to take care of her that makes it my business that's how that works so but i'm not gonna you know you can't have it both ways you can't go we have to take care of her but she's allowed to do whatever she wants no it's not okay because that that that's his fear and it's a valid fear the hard part about that and what you're saying is exactly right. The hard part about it, though, is if the two option doesn't help, and the parent-in-law says, I'm not giving you access. I'm a grown person. You know, da-da-da-da-da.

Then I'm not giving you help. Then you have to take your hands off of it. But then the time will inevitably come as the child where you will see, Dad, they need my help and you but you've already chosen to do this so either way the sucky part of this and the teaching part of this is do not put your children in this situation amen because at the end of the day they're screwed no you're you're danged if you do danged if you don't either way because it is hard to sit back and watch somebody struggle even though you tried to help do you see what i'm saying so there's no and then it sucks when you have to financially

help somebody who should have helped themselves so there's no good side of it just do right and handle your money the way we're teaching and don't wait until do this to your kids yeah for real that's that's the point i like that point. This is the Ramsey Show. Jade Warshaw, Ramsey Personality, is my co-host. Kurt is in Philadelphia. Hi, Kurt. How are you? I'm good. How are you? Better than I deserve. What's up? I'm wondering if you have advice for me. I have about $7.8 million in financial assets, with the bulk of it $6 million in tax-deferred IRAs, 401ks, and 403bs. I'm a 66-year-old guy, and I'm taking Social Security amounts to about $3,600 a month, and I have a pension of about $1,000 a month. My problem, and I think you can see it, is that in seven years,

I'm going to go off a cliff with required minimum distributions on my tax-deferred accounts. And I can't solve this. This is going to boost me into the highest tax bracket, I think, and trigger IRMA and other kind of penalties. Is there any answer for me? God, I hate it when you got $7 million worth of money. Way to go, man. You did great. I just wish it wasn't all in tax deferred. Oh, my gosh.

I didn't realize that until too late. Yeah. So, okay. So is it all 401k or what is most of it is? It's IRAs. The bulk of it is in 401k and 403b, but some of it's in IRAs. Did you say some of it was taxed, was like a 457, just deferred income? Yes, yes, yes, 457b, that's what it is, yeah.

How much of it is that uh geez you would ask me that i think it's about half half of it is half of the six million is in that wow i'm trying to think through the math. So the extreme answer that is not the answer, but this is helping me run the math while I'm live here on the air with you, is if you just moved it all to Roth, you would pay taxes on all of it now. In one fell swoop. If you did. I'm not suggesting that. I'm just trying to work that through in my head because that's basically going to cost you about 30 cents on the dollar. And so that's going to cost you like $2, $2.5 million.

Yikes. And that leaves you $5 million 100% tax-free and 100% tax-free growth from now on. And when you leave that money in the estate, there won't be any tax to your heirs because it's in a Roth. Inherited traditional becomes taxable, of course, to the next generation because you hadn't yet paid taxes on it. And, of course, Roth has no RMD.

Right. So that's the extreme that makes me want to shoot somebody when i think about two and a half million dollars going to stupid government uh so that's not my answer but i'm trying to think through that solves all the problems except the one except the two and a half million dollar problem, right? Yeah, yeah. So is there some iteration off of that where we get the enough of it out of, and we take enough pain that we get the RMDs down? Or do we want to just bite the bullet and be done and rip the Band-Aid? Oh, that's so harsh. That's the cliff. And that's the cliff and that's that's the problem i'm facing i can't do enough over the next seven years to really make a dent oh you can

do it all you could roll it all to a roth unless i yes unless i do it all at once well you can do half of it i mean you can do you can do enough you're just going to pay taxes on it yeah yeah yeah that's no no penalties just taxes and any of course you got to manage if you're trying to manage tax brackets like you said you move a hundred you start bumping brackets you move 200 you're in another bracket you know and so you're starting to get into bracket creep and that's why it's pretty much going to be 30 percent because that's what you're saying you can't do enough at a low tax bracket to do any good. No, you can't. That's the other.

One end of the spectrum is you get slaughtered. The other end of the spectrum is you bleed to death a drop at a time. Oh, gosh. You know? And that's, God, that is an interesting. I'm not disagreeing with your guy. You are heading for a cliff you can stop it but the the the antidote is very painful oh i don't know what to do if he did half and took

you know still gonna still gonna have rmds that are going to be, so you got three and a half million, the RMDs that start at 72 and a half. Uh, that's yeah. So here's the formula you could run. Here's another formula. That's not a full, full bleed out. Okay. Um, you could run and say how much, what's the most I can leave in and the RMD doesn't trigger Irma and the RMD doesn't put me in the top tax bracket? Okay, so what's the most I can leave in and then take the hit on the rest of it and go ahead and move it to Roth? That's somewhat of a middle ground. There's nothing in this equation that's not painful, though. There's pain somewhere in this equation.

That's what I was afraid of. I thought maybe there's a magic bullet somewhere i don't i don't if there is i don't know it um i have systematically i'm 63 and i've systematically moved a hundred percent of my stuff to roth over the past decade for that reason because i knew i was going to have rmd coming down my throat and i knew from an estate planning standpoint i'm likely to never touch any of it you probably will never touch the mass vast majority of this it's going to your heirs and so you've got another problem if you go the rmd route is your heirs are going to get this tax problem because the inherited iras and under the new stinking biden rules they're going to make

them take that money in uh like five years or it's either five or ten years they got to pull it all yeah you can't leave it it's worse than rmds inherited iras have required distributions on them now wow that's more that they're more than the rms, a lot more. The SECURE Act, that's what that Biden crap was called. And so because they, what happened was people were rolling it to the inherited IRAs and never touching it. And so the government was never getting their money. And so they figured out they want their money out of there. And so they're requiring these inherited IRAs to be liquidated.

I believe it's 10 years. I believe it might have moved it even to seven but it's really fast huh kurt i don't know i i i don't have good advice for you on the air live right this second i will think about it and um um but there's a way i can circle back the knowledge that i have yeah you're welcome call back in and we'll put you back on we'll do this again but the knowledge that i have is um might not have the bullet if there is it doesn't have the bullet if there is a silver bullet out there and i'm kind of thinking now the more i sit in this if i'm in your shoes i might just and i'm thinking more about your kids i might just move it all i might watch the election and see what happens with uh tax rates after the election

because trump had lower tax rates in than biden does on people like you and me uh because we're evil and we must be punished we've built wealth and so um and you're feeling that right now you know you feel this is what tax policy does to people right here work your whole freaking life and then you get screwed by the government again so um as soon as i can anticipate the lowest possible tax bracket for this money i might move it all. And then I'm done with it. I got rid of Irma. I got rid of RMDs.

I got rid of inheritance problem, but I also got rid of 2 million bucks. Yeah. And you're 66 and you know, what's going to happen to that 5 million is that when you are 73, it's going to be $10 million. And when you're 81, it's going to be $20 million. And if you're healthy, that's a high probability, actuarially speaking. And so $20 million is going to be taxable instead of $7.6. That's another reason I might go ahead and do it. So do it now.

I'm not advising you to do that, but at this moment, that's starting to feel better than the other crap that we're all sitting here talking about. None of this feels good. It's a shame that a man works his whole life and starts from nothing and ends up with 7.6 million dollars by saving and he's 66 years old and he has to sit and decide which way the government's going to screw him that's a shame you people that vote wrong you should be ashamed of yourself this is

the ramsey show live from the headquarters of ramsey solutions it's the ramsey show where we help people build wealth do work that they love and create actual amazing relationships jade washoe ramsey personality number one best-selling author of the book money's not a Math Problem. She's my co-host today. Open phones here at 888-825-5225. Lynn is in Madison, Wisconsin. Hi, Lynn. How are you? Hi. Thanks for taking my call. I appreciate it. Sure. What's up? So we have a son who is 22, putting himself through flight school. He's been living with us. There was

agreement made last year because he's doing it debt-free, which is what we're trying to help him do because flight school is not very cheap. He met a girl last year who is actually an orphan. Her parents passed away when she was 11. Not a good upbringing. She's currently 20. She essentially moved in to our house in January. So she's never had that basis, that base knowledge or education of anything essentially. So we're really trying to help her out. And we've purchased SPU for them to work on, which she's a little bit hesitant to do. But she lives paycheck to paycheck, obviously. She's not paying rent for us because we're trying to help her out, but we're trying to get her to save. She's a child care worker, so she doesn't make much.

I'm just, how much is too much to help out, I guess? And are there any other resources out there for people who would be in her same situation where she's basically had nothing, has been made to be dependent on a lot of people and trying to break that um to kind of get them out into the world as functioning adults well what dr john deloney would say would be that she needs to be reparented yes because she never had parents she never had parents i She never had parents. I mean, she's been busted through the foster system or whatever, and now when you attempt to do that, she's resisting you. Right.

Okay. So since she's been living with us, there's also the sense of entitlement because we are, you know, we've worked all the baby steps. You know, we're currently trying to pee off our house early. Who has a sense of entitlement? You or her? She has gotten more of a sense of entitlement. She feels like she's entitled to what?

A lot of our stuff. And I don't know if that's because I've been trying to help her out and been giving, you know, her stuff. Like I'll pay for some clothes here and there or whatever. You don't really want me to tell you this, do you? You know what the real problem is, don't you? I feel, yeah, I think I do. She shouldn't be living there. Yes, I do.

She has nowhere else to go. When did move yes she does she had a place to go before she came there yeah that's what i'm trying to find out what was she doing before she moved in so she was living with a sister um at an apartment she was paying um very minimal rent um what was wrong with that? They moved and kicked her out because she wanted to start a family. So that is no longer an option for her to live with them. You know what normal 20-year-olds do? They get a roommate and four jobs. Or three roommates and two jobs. Yeah.

Yeah. And they don't have the option to move in with their boyfriend while his mother looks over their shoulder which is just really weird i know it is it's an uncomfortable situation and i'm we're trying to i'm not sure you're doing her any favors i'm trying to be gentle but i don't think you're doing no and that i don't think you're really helping her i don't i don't think you're helping her because you know she's she under she's been playing um survival for so long that she smells on you that what she can get away Which is anything. Yes. Yes, I agree. Listen, in any other scenario, if you took the foster care and the hard, you know, the fact that she lost her parents,

if you kind of just remove that for a moment and just look at it for what it is, she's 20 years old. She doesn't make much money. She's just getting started into adult land. Then that's kind of how you have to take it take it at this moment otherwise i do think that you're going to place too much into the emotional side of it which is what you've done and right to dave's point yeah what would she do she'd earn more money over time she'd find an apartment with roommates she'd be dating your son in a more normal environment, not her living there. And I think that that's what it is. And I think that sooner that you cut this cord, the better it's going to be for everybody long term.

If this was my daughter, Denise runs our family foundation. Okay. And occasionally the some of the local law enforcement folks will call us and there's a crisis with someone and my daughter will come around that person and will help get them up, get them set up with some money, get them set up in an apartment, get them set up with their utilities, get them started, right? But we always want to create a situation there for that person that is sustainable, that the math works three months from now once we get it started, not that it's constantly dependent back on us. Because it's not good for that person to be 100% dependent on a foundation for the rest

of their life. We can help them get started. And then what we always do is we walk the person over to their local church and put some folks around them to mentor them and disciple them. So if it's a young lady like this, we'd put some older ladies around her and say, this is how you're a woman. This is how you're a woman of confidence and of composure and strength. And this is how you behave. And this is a spiritual walk. And this is a proper emotional walk.

And they talk them, they reparent them, disciple them, mentor them into more of a normal functioning person because they've come out of this horrible background and experience. And that's their only hope to be a 40-year-old that functions from this 20-year-old point. And so we're trying to play long ball here, but we don't have the complication of none of us are sleeping with her. Right, right, which is the other issue. Yeah, absolutely.

Yeah, I just don't know where to look for the resources i think if i think if i were in your all shoes i would i would set her up in an apartment and help her get started if you want to spend a few thousand dollars you've got it it sounds like and get her get her out of your son's bed put her in an apartment put her in and put get help her get some roommates pay her first three months pay her utilities help her understand about getting some jobs walk her into the local church get some women around her that are not her potential future mother-in-law right and then if their relationship survives it has a chance of being somewhat of a good marriage it's starting on such a toxic level with so many different interplays that it's not starting in a good place.

It's not good for him or her. Because 10 years from now, this weirdness is just going to be more weirdness if y'all don't work on it. That's probably what Sharon and I would do if we found ourselves in your shoes. I don't think we would find ourselves in your shoes. But if we did find that, that's what I would do if I woke up there suddenly. Ouch. You're a sweet person. You're trying to help.

That's a good thing. Make sure you're really helping. This is The Ramsey Show. Buying a house in this weird real estate market is weird selling a house in this weird real estate market is weird if you want to do it right you really need a pro in your corner somebody that does a lot of transactions not your aunt sally who got her license three weeks ago sorry aunt sally you don't qualify to be a Ramsey-endorsed local provider that's Ramsey-trusted. We love you.

We hope you do good in the real estate business, but we don't want you to sell a half-a-million-dollar house for somebody we love, and you've never sold a house. You need to be doing 30 to 50 to 100 transactions, 200 transactions a year, and then you can possibly become Ramsey Trusted. So if you want to know who's Ramsey Trusted and is a high-octane, high-protein producer in your area, you can do that for free at ramseysolutions.com slash agent. Teddy is in Traverse City, Michigan. Hi, Teddy, how are you? I'm doing great, Dave. What a pleasure to speak to you today. You too, man.

What's up? Well, I've been in debt most of my whole life between cars and I bought my wife and I bought a house. I am self-employed. My wife is retired after 32 years. I make about $70,000 a year in salary. I have $1,400 a month in rental income from a home that we have purchased and paid off. My wife makes about $400 a week in side hustle, and she draws $1,500 a month from her 401k. Last year, we got a HELOC loan for a home addition. So I still owe about $100,000 on that. I owe $20,000 on the mortgage on the house we're living in now that we put the addition on, as well as $20,000 on a car.

We got about $1.1 million in retirement, and of that, $210,000 is liquid investments. So my question is, we've been working the debt snowball, but do I sell some of my investments and pay off this debt and just get it over with? Yep. Yep. How old are you? I'm 62 and my wife is 65. Yes.

If you take, you said 1.2 and we turned it into 1 and you're 100% debt free, I'll take it. I mean, you said you had $210,000 that was liquid. I do. You can do it with... It's not tied up in retirement that's liquid oh it's not retirement at all so you're not even going to have taxes on it yeah i know well maybe maybe a little gain on it it may have been sitting there gaining but but it's not might

have a low capital gain but so it's not even going to be a 200 hit it's uh be 100 150 hit whatever but either way um you're 100 debt free now that only works teddy if you stop borrowing money oh yeah i'm sorry america i've been in you know borrowed cars bought to buy cars i know i'm real frugal i'm real you know you're not you're 66 with a stupid car payment isn't that that you're a millionaire with a car payment yeah don't do that no sir all right brother hey seriously if you go pay all this off and then run up another debt you're just going to eat your nest egg up i can't wait to come and stand on the stage you've inspired me i love it brother i love it you're a good man congratulations on being a millionaire good very

cool very cool isn't it funny how hard it is to get the culture out of our veins it's very i mean it's it's yapping at us around every corner you know everywhere you look every corner that's why when someone's debt free house and everything we say you're weird. Yeah. Because you are. Weird just means unusual. It doesn't mean bad. Well, what makes you weird is you've decided to become independent in a culture that teaches you to constantly be dependent. That's what the weird is.

Wow. Let it roll around in the brain for a while. That's strong. That's strong. Well done. done all right let's do it charlotte's in cincinnati hey charlotte how are you hey good afternoon dave and crew uh thank you so much for taking my call i sure thoroughly enjoyed listening to your program um my question is my, just a tiny bit of my backstory is my husband passed away in 2012. And, um, as a result of insurance money coming in, we, uh, were able to get debt free, my

daughter and I, and we have stayed debt free, thank God. And, uh, she just finished her freshman year in college. Uh, we have a cafeteria 529 plan, um, projected. You have a cafeteria 529 plan projected. You have a what 529? It's what's called a cafeteria 529. Oh, cafeteria. I didn't hear the word. Okay, cafeteria. Okay, I got you. Yeah. All right, good. That's a good plan. So yeah, so we've got our college paid for as far as that's concerned, but um unfortunately the way that it's grown there's a trajectory of being like an eighty thousand dollars surplus at the at the end um it's and i found out that i could only put thirty five thousand dollars in a ross ira in her name that's true after she's 30 okay yeah so i'm a little bit concerned about like

can i take any of that overage i mean so how much is in the 529 total there's probably right now 189 000 okay and how much did you put in and how much is growth well that's just it like it i only i think at the time i only put in like i don't know 85,000 okay she got 100 growth you got 100 growth yeah and of that 80 is going to be if he keeps growing there's even going to be more and so you'll'll have an 80-overage. Is that what we're saying? Yes. Is she getting any scholarships? She is.

Okay, you know you can pull that much out. The equivalent of the scholarship can be pulled out each year. No tax. The equivalent of the scholarship, okay. So if she gets a $10,000 scholarship, pull $10, thousand dollars out that's actually an incentive to get more scholarships yeah okay because i i guess my tax preparer he doesn't know about that is there any place that you could direct me as to where i could find good solid information about this kind of stuff a different tax preparer because that's pretty standard information i'm not even good at taxes and i know it so yeah um you know if that's if that's one of our elps i'm sorry but if it's not check one of our endorsed local providers for

taxes in your area and get a second opinion on it but you're allowed to pull the equivalent of scholarships out athletic academic whatever the basis for the scholarship is um every year and there's zero tax on it so she gets a scholarship pull that much out do you know how much she got in scholarships like last year i mean it was i don't know it was around 10 000 i think yeah okay all right that's not going to alleviate the problem completely because if it's times four it's's only 40,000, right? And, um, uh, and she's 80 over. So you're gonna have another 40 and I really wouldn't screw around with the Roth IRA at

age 30. I just go ahead and cash it out. You don't get, uh, it's not a hundred percent tax. You're just taxed and penalized on that amount of growth only. That's why I was asking you what you had in it and so the calculation is not as severe as it sounds um so let's say you end up pulling 40,000 bucks out because we just got rid of 40 with the scholarship idea um you know you might have five thousand dollars in taxes it's ten it's ten percent yeah is that the rate yeah on the growth yeah yeah so i could in essence take

that money out and use it say like for home improvements and use it for anything if you pay the taxes on it and there'll be the taxes and the penalty there's a tax and a penalty both but it's maybe a 10 or 15 000 out of that 40 you're going to lose but it's not 100 so they don't take the whole thing and rather than try to screw around with something for a 22 year old wait until they're 30 and these idiots in Washington change the law six times between now and then no I just cash it out take my head and go on and go hey we paid for college and we had a little leftover good life's good yeah yeah there you go a good question thanks for calling so you know that's a very unusual problem uh yeah it's a good i think it's a good problem of abundance yeah i mean the only other

thing is if they left it i mean it can pat like it could her as the beneficiary she can pass it to her kids when the time you know when the time comes that's way out there but yeah now we got 800 grand that That's true. At that point, if you take the penalty, it might hurt a little bit more. I think I'm going to go ahead and just be done with it and just say, hey, we did a great job. We might have even done too good a job, but just so slightly. Just so slightly. When I hit a golf ball a little bit too long, I just say I hit it too well. That's all it is. is the ramsey show jade washaw ramsey personality is our co-host today i am dave ramsey your host

erin is with us in lexington hi erin what's Hi. Thank you for taking my call. My husband and I are wanting information on how to gift a home to his sister. We had bought the house for his mom in 2002, and she has since passed. And his sister moved in and helped take care of his mom when she had Alzheimer's. So now we would like to be able to give her the house without too much tax implication. You can do it with no taxes potentially. What's owed on it? Nothing.

Okay. What'd you pay for it? We paid $120 for it. What'd you pay for it? We paid $120,000 for it. What's it worth? We haven't had it appraised, but Zillow says $226,000 to $263,000. Okay. And what's your AusNet worth? A little over $2 million. Okay. Good. All right.

Well, basically, you have a $20 million. It changes every year a little bit, but it's in that range, federal tax exemption. So all of your assets up to $20 million can pass to anyone else at your death with no federal income tax or no federal estate tax. Okay? Okay. So your estate is not taxable, nor is it likely to be. Okay. That's important because you can gift using part of your estate tax exemption,

part of that $20 million exemption, you can gift prior to your death using the unified, write this down, unified estate tax credit. Okay. Unified estate tax credit. And basically, if you had, we'll use an example, if you had a $20 million exemption and you use up $250,000 of that, well, now you have a $19,750,000 exemption. You're using up some of your exemption

before you die right okay and it doesn't matter because you're not going to use it all so it's okay no great okay now so if you don't do that you are going to be liable for a gift tax of approximately 55 of the value of the house. Okay. So you're going to get hit with over $100,000 in taxes if you don't do that. So you need to go get an estate planning attorney and or a tax attorney in your corner that can help you do this the right way because you need to write this up and and you probably would i probably would spring for an appraisal just to be super careful to prove to the irs the value that you transferred under the unified estate but it's not going to be even close but even even the same i'd want some kind of documentation in the file is to the value. Okay. In case you're ever audited. And then with

your income tax return the following year after you do the gift or the year you do the gift, you do it in 24 when you file your 24 return, you'll have a statement with that that goes that you did this and then you've got the documentation in your file for the rest of your life. So if it ever comes up. But basically, if you do that, it should be zero tax. Okay, great. But you're going to pay a little bit to an attorney to make sure you're doing it right, and it's worth every penny.

Perfect. Make sense? Thank you so much. Yep, it does. Hey, thanks for the call. That's great. Open phones at 888-825-5225. I'm trying to find our little cheat sheet. It's $27.2 million this year.

Wow. For a couple. That's for two people, okay? And you can transfer, not using that, up to $18,000. That's the gift tax exemption per individual so another trick jade that we tell people all the time is if um in this case it's not so but like if you're up out there listening and you want to give money to your grown kids who are married and you're married so you could give each of the kids 18,000 that's 36 your spouse could give each of the kids 18 000 that's another 36 so in a calendar

year you know you can transfer 72 000 yeah that's with zero tax and not even touch the estate tax exemption and so if if you were dealing with uh if you wanted to say for instance put a a note on this house for 220 or 210 at 72,000 you could be done in three years and never use up any of your estate tax exemption how is there is there any line between what can be considered an estate tax exemption or it can whatever you choose anything you're gifting you're avoiding gift tax by using this okay but i'm saying it doesn't have to be something like a home or something. It could be anything of value that you're afraid you're going to get gift taxed. I mean, if you're leaving your grandfather's pocket knife, you don't have to worry about it. But I'm saying if you start talking about something that's north of 10 grand,

you start to worry about whether the IRS is going to look in over your shoulder and try to hit you with a gift tax. And you don't want to get hit with a gift tax because, as I told you, it approaches 55% in most cases. So you want to stay away from that one. Dalton is with us. Dalton is in Nashville. Hi, Dalton.

How are you? Hey, Dave. It's nice to talk to you again. I talked to you back in 2018. Was I nice? Yes, you were. I believe to you back in 2018. Was I nice? Yes, you were. I believe you set me up for success. Good.

Well, you're back, so there's that. That's a good sign. Where is it? Another load of questions. I'm 27 years old now, and I got out of the Army since then. I was in the Army when I called you last, and I'm a federal agent with the government now. Wow. I just bought a house.

Cool. And I'm in Tennessee. I'm moving south of Nashville, and I was wondering, I have a sum of savings that I've saved up, thanks to you, or largely to you, and then I'm looking at getting married in the next six months. Yay! Fairly, yeah.

Your life is good. Yeah, the Lord's been good to me. I'm really blessed. But I'm just, my question is, where do I put that sum of savings that I have and in anticipation of getting married within the next six months? And she has a sum of savings. Where do we need to put that? Do we throw it on the house? How much is it? It's not super significant.

I have about 60 just liquid. And I have another 50 something in my TSP. And then she has around $100,000. And what is that? Where's her $100,000? It's in a high-yield savings account. Oh, okay. How much do you owe in the house?

$400,000. Okay. And you have any debt other than the house? No debt. Neither one of you? Neither of us. Excellent. And she owns a business um like a boutique type well children's clothing um business and she makes around 50 a year but again i'm not married to her yet so i don't quite factor that in right so the okay that's good to know uh so

the 60k that's yours are you calling that three to six months of expenses? Or is that separate from... It's part of it. I would say part of that, yes. What part? That is incorporated into that savings. Where does the emergency fund end and the fund money begin? So how much of it is emergency fund? $15,000 to $20, 20 okay will that work when you're married i probably bump it up to 30 okay okay so we've got 30k that's kind of disposable at this point

right that 30k that you're gonna after you're married that would be your emergency fund and you got 160 to work with she got 130 to throw at the mortgage what about the wedding uh she's pretty she's more frugal than i am i'm pretty frugal so um we're looking at um doing a very small wedding and i think her dad is willing to pay for most of it most of it so maybe you guys spend just a couple thousand. Right. Right. And she doesn't want me to buy a huge ring either. So other than you're planning for whatever your honeymoon is going to be, I would probably when the time comes after you guys get married, this hundred thousand, it might be somebody that you want to put towards the mortgage and start working on paying the mortgage off because you've got the three to six months of expenses. Whatever is left is going to go to beef that up a little bit more and pay for the wedding. And that's what I would do if I were in your shoes. This is the Ramsey Show. Our scripture of the day, Proverbs 28, 19, whoever works his land will have plenty of bread,

but he who follows worthless pursuits will have plenty of poverty. Ann Landers said opportunities are usually disguised as hard work, so most people don't recognize them. John's with us. John is in Charleston, West Virginia. Hi, John. How are you? I'm good, Dave.

How are you? Better than I deserve. How can we help? Well, I recently had a car turtled out, and I guess my question is how much should I be spending on a new vehicle or what would be reasonable to spend on a new vehicle? And the reason I ask that is because I originally spent about $36,000 on this vehicle. Insurance is looking to pay out about $10,000 more than that. And that's about what it's looking like.

I'd be able to purchase another one of those. I'm sorry, your car went up in value? I guess so. I purchased it about three months ago. You're going to get a $46,000 check for a car you bought for $36,000? Yeah, outpador. I went and paid cash for it. And, yeah, I'm getting about closer to $47,000.

Wow. I got a check from insurance. Congratulations. You hit the jackpot. Yeah, I got pretty lucky. I guess lucky and unlucky. Yeah, is everybody okay? Yeah, I was only me in the vehicle and uh the person that hit me ran off so i have no idea if they're okay but they totaled a car

and ran off wow sheesh all right so what vehicle do you want to get what are you wanting to do uh the vehicle i had was a uh toyota rav4 prime, it's a plug-in hybrid vehicle. I loved it cause I could drive on electric range and it would cost like $30 a month to drive like a thousand miles. So what do you want now? I'd love to have the same thing, but I can't really justify spending $10,000 more for something that I bought three months ago for $10,000 less. So what would you get instead? I was looking at several different cars. Maybe there's a Jeep plug-in hybrid that's a bit closer to me and is a little bit cheaper, but still more than what I spent on my original vehicle.

So you have $10,000 more to spend than you had before. It sounds like you don't necessarily want to spend that on my original vehicle um and uh so you got you have ten thousand dollars more to spend than you had before it sounds like you don't necessarily want to spend that on replacing a vehicle what would you spend the other ten thousand dollars on what's more important to you is what i'm trying to get at do you have debt that you're trying to pay off is there something else you want to do with it um no i don't have any debt uh well i have a mortgage mortgage that I got several years ago. I have like a 3% interest rate on it. What's your household income? It's just myself, but I make about $90,000 a year.

Okay. I mean, if you don't want to spend all of it on a new car, you don't have to. But for a lot of people, this is moment to to maybe upgrade if they want to it it just sounds like you kind of have your eye on what you want to spend and you want to stick in that price range and that's fine i don't think anybody's going to convince you to spend more than you want to spend it's not a hard and fast rule but a rule of thumb that we use all the time is don't own things with wheels or motors that uh equal total more than half your annual income. So if you make 90, 47 is slightly above that. So that's right on the bubble.

37 is not on the bubble. You can afford it. You're paying cash for it. You have no debt. You've been frugal. So anywhere in there is fine. I wouldn't go to 60 in this case. If I were in your shoes, I would probably say the insurance check is the most i

would spend and anything less is certainly fine okay yeah okay thanks for the call brother eugene's in dallas hi eugene how are you i'm doing good how are you better than i deserve what's up uh so i just have questions and you know like the best way to pay our student loan. Currently married and we're making a little bit, but, you know, we're kind of confused on how to go about it. How much are they? 117. How many? Is it busted into lots of little loans? Yeah, it's like three of them.

Only three? Yeah. Okay. Is it your only debt? I also have a car that I'm paying as well. Okay. So the best way to go about, is it just the car or do you have other debt? Other than a house. Okay. Just the car and the house.

Okay. And what do you owe on debt other than a house? Okay. Just a car and a house. Okay. And what do you owe on the car? $15,000. Okay. And what's the smallest student loan debt? It's $18,000. Okay. So technically your car is first if we're listing our debts smallest to largest to do a debt snowball. Technically you do your car first, which in your case might be a great thing because what's the payment on the car? I'm paying to my host family. So essentially I pay $500, but I chose that amount because I wanted to get it done first. I can always decrease it. Well, either way, the point of me saying that is once the car is paid off, it's freeing up $500 to start throwing at these student loans. So are these federal student loans? They are. Okay. So the good thing about a federal student loan right now is you can kind of take advantage of some of the

IDRs that will allow you to temporarily have a lower minimum payment so you can pay off this car quickly and then take all of that money and throw it at the smallest student loan debt, which in this case, I think you said was $18,000. But I want you to still check and see if that's busted up any smaller because sometimes they are by even by semester when you took it. And when you do that, you satisfy the minimum payment. And then whatever your extra payment, which is going to be as much as you can scrounge up, you can literally throw it at that smallest increment of the debt so that you can knock it out quickly. It all goes towards the principal. So I challenge you to take a look at that because they might be even smaller, with smaller account numbers.

What's your household income? Got it, got it. Currently between the two of us, it's 207. 207. Okay, and you have 117 and 16. I would challenge you to live on beans and rice, do nothing, don't go on vacation, don't go out to eat and be debt free in a year radical 10 10 12 000 a month throwing at this okay like like scorched earth man go hard yeah

why not you can live on a hundred thousand and knock this out or a little less we can we can definitely but currently she we don't live in the same state so she lives in alabama as i said she's in school and we have a house over there and like we have like about eighty two thousand dollars equity on the house so she's gonna move here soon so you know my thought was soon take in the next few months like in the next three to four months okay Okay, let's get the house up for sale. Yeah, so I wanted to, like, you know, ask whether, like, it would be a good idea to put the equity. Yes. Absolutely.

Yes, use everything you can get your hands on to clear this debt up. Because when you're 100% debt-free, then you can save like a maniac for your emergency fund and then save like a maniac for your down payment on your next house. But the great news is you're getting ready to be completely debt-free fairly quick, and then you'll build that emergency fund at the speed of light like we were talking about, and then go ahead and start doing the house. You're going to be in really good shape to do all that. Very good.

Yeah, with a $207,000 income, that's pretty impressive. You can go a lot of places with that. Absolutely. Jade, there is all the years of teaching people to get out of debt so that they have their income freed up to build wealth with, which is what happens. This is how you become wealthy. We have learned that the faster you can get out of debt,

the higher the chances are that you actually do, that you actually get out. Absolutely. I mean, you guys went forever. You're like seven years. Yeah. That's very unusual. That's rare.

That's very unusual. I mean, but, and most of the people we talk to running their total money makeover with gazelle intensity, no eating out, no vacations, beans and rice, rice and beans. They're debt free in 18 to 24 months. Yeah. Most people. In his case, he's going to sell the house. He's going to be there in just a few months. Yeah.

That's lucky for him that he had that asset to sell. But there is that correlation between, I almost feel like it's a combination of you've got to feel a level of uncomfortableness. Yeah. Your depth of sacrifice. Yeah. That allows you to go faster. It increases the speed and the increased

speed increases the probability of ever doing that's right but that uncomfortability factor is a big part of it it's a big one yeah that that ouchy that period of time where you go through hell but just as the country song said just keep on going well yeah you put yourself in the hot pot and that way you're like hey i gotta get out to get out of this pot. I am not going to stick around here. Life is not fun like this. It's not. I want to be free. Yes.

That puts us out of the Ramsey Show and the books. We'll be back with you before you know it. 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. Dr. John Deloney here. Mental and emotional health challenges, broken relationships, it's all just part of life, but they don't have to define you. The Dr. John Deloney Show is here to help. It's a caller-driven podcast where you can get practical advice on dealing with anxiety, loneliness, depression, relationship challenges, your kids, and so much more. Listen to questions from our callersers or if you're

walking through a tough situation and need some help give me a call you were never meant to do life alone and that's what this podcast is all about follow along on apple spotify youtube or the ramsey network app remember you're worth being well