Transcript of Common Sense Beats Clever Money Hacks

Brought to you by the EveryDollar app. Start budgeting for free today. Normal is broke and common sense is weird, so we're here to help you transform your life. From the Ramsey Network and the Fairwinds Credit Union studios, this is the Ramsey Show. I'm Dave Ramsey, your host. George Campbell, number one bestselling author, Ramsey personality, is my co-host today. The phone number here is 888-825-5225. The call is free, and some say the advice is worth exactly what you pay for it. Michelle is with us in Austin, Texas. Hi, Michelle, how are you?

I'm broke. How are you doing?

Okay, appreciate the honesty.

There we go, straight to it, baby. Here we go. Oh my gosh, I love it. How can we help?

Okay, so single mom, um, and I've been living paycheck to paycheck my whole life. Started listening to your show and realized there is a solution. I just have to figure out, you know, there is hope, shall I say. I just have to figure out the solution. So my question is, should I go to some small school like real estate school or esthetician school to try to better my situation.

What are you doing now?

I'm in sales. I've been in sales my whole life.

What are you selling?

Well, I'm selling forklift batteries for forklifts, but I just started with the company and it's going to take me about a year to ramp up and start making commission.

Mm-hmm. And when you ramp up and start making commissions, what are you projecting that you'll be making?

Close to around $85,000 to $100,000 a year.

Okay. And what's wrong with that?

Well, right now I'm making $65,000 a year. And when I, um, I mean, my rent went through and I'm negative a couple of hundred dollars.

Okay. So you got a side hustle issue until you get your commissions going, not a career crisis. Okay, so I mean, estheticians don't make $85,000 a year, most of them. So no, I wouldn't go that direction. Real estate agents can make well in excess of $85,000. Most of them don't, but most of them don't sell a lot of houses either. So yeah, I mean, if you're gonna get in the real estate business, you're gonna sell a lot of houses, and it could take a while before you see some meaningful income. Yeah, again, you're starting again. It'll be 6 months probably with nothing, right? So you got some kind of side hustle, or you start real estate part-time while you're selling forklift batteries. I don't know, but, um, which wouldn't be a bad idea. And you don't really have to go to real estate school to pass a real estate test in Texas, unless they were— they may require a pre-licensing— they probably do a pre-licensing class, but it's just one class or something, isn't it?

Um, there's 6 classes that I would need to take. Um, I actually—

in order to sit for the license, uh, it's, it's one test and yeah, 6, 6, um, courses.

Principles 1, 2.

But you have to— all that's a prerequisite for taking the test?

I believe so.

Okay.

I started— I've done Principles 1 and 2 before.

I just Okay, I don't mind you, you know, let's take those classes while we're doing this and while we're working a side hustle to make sure the rent— let's first cover the rent and stay in the current job. And then, then once you've got that going, then if you want to go ahead and take the test, take the minimum number of classes necessary to take the test. Don't go, you know, getting a whole bunch of certifications in the real estate world until you've sold some real estate. So it's not, it's not necessary. If you find a broker that will that will sponsor you as your affiliate broker's license, pass the prerequisite classes, then take the test and start selling part-time as your side hustle. Once you've got the battery business up to income, then that's probably a thing. And then if you can get the real estate business to take off and it passes the forklift battery business, then you drop the forklift battery business, right?

Okay.

But I don't— today's problem is rent, and that's not solved by anything we're talking about except a side hustle.

Yeah, there's a long tail on this. So how much debt do you have?

My car would be my only debt. Well, I do have about $1,500 in dental work that I just had done that I'm financing zero interest, and then my car, I owe $19,000 on it.

Mm-hmm.

Okay, good for you.

And that's it.

And what's your rent every month?

My rent's $1,500 a month.

Okay.

I'm gonna look at your budget and do a detailed EveryDollar budget if I'm you and see what I can cut. And then, um, is there any chance there's anything at the Forklift business that you can do to create some extra income there while you're waiting on your commissions to come in without having to do some other side hustle?

Um, no, there's nothing. Um, it's just, yeah, I mean, I, I, I'm out there hunting my own, um, my leads. So, okay.

Just takes a bit. You're just knocking doors.

Yeah.

Yeah.

Yeah.

Getting a lot of rejection. Yeah. Okay.

Yeah.

That's, it takes a minute to get, it takes a minute to get the book of business built.

Yeah.

Um, so what can you sell? 'cause you're good at selling, and I can kinda tell from talking to you, I've trained salespeople my whole life, I think you're really good at it. You carry yourself very well. So what could you sell as a part-time side hustle that would make bank? Car sales on the weekend?

What kind of sales?

Car. Oh, never thought about that. They make money.

Okay.

Used lots the quickest.

Okay.

And, um, yeah, if you can find a dealer that'll let you work weekends and maybe some evenings or something, depending on what the hours the dealerships are running, um, might take a minute to get that going too, but you got walk-ups there. Some of the leads So sometimes it's fish in a barrel, right? Yes, yes. So I don't know, something like that. I'm just making this up. I'm spitballing.

You're using your current skills.

But I think your skill of selling is more valuable. I don't want you doing Uber Eats.

How'd you know?

Well, I want you doing— I mean, if you have to to make rent, do it, right? You've been doing what it took to make it for a long time. You're a single mom. But I want you to just— I don't want you to just fall into the normal default job. What is ways that you can use your skill set and your history and your experience. What were you selling before you were selling batteries? You know, that you could go back to and work part-time and work their evening leads that nobody else wants to work or whatever. I don't care what it is, as long as it's moral and you believe in the product. You know, I don't know, salespeople can do a lot of different things because that's a skill of being able to interact with people and having high emotional intelligence, and it just gives you the ability to do a lot of different things.

And we actually have a great side hustle quiz, Michelle, you can take that'll help guide you on this, ramseysolutions.com/sidehustle, and that'll help you at least get some ideas and get going on this. But I like the idea of, if you can make double or triple your hourly rate, instead of Uber Eats, you're doing something you have skills in, consulting, sales, that's a way better trade for your time.

30 years ago, one of my best friends at the time was a career counselor, and he always said, gather a bouquet of flowers from those are within reach. Oh, so what is it you automatically can do that you can reach, right? That's a good metaphor.

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Grace is in Atlanta. Hi, Grace. Welcome to The Ramsey Show.

Hi, thank you.

How can we help?

So trying to come up with some good checks and balance questions to ask ourselves to ensure a potential decision we're making is a good financial one, not just emotional one.

Good. I like that.

The fact you're asking the question tells me you're probably going to be okay.

Yeah, you're probably okay. But let's play with the concept for a minute because I think it's awesome. George, what do you think?

Yeah, I mean, I got a framework for spending. Is this about a big spending decision?

Potential home purchase.

Oh, okay.

Well, the parameters we have will help you with this. So walk us through what you're working with.

So we are currently Baby Step 7. Um, with our home paid off, this home based off what we would be selling our home for, ideally we would, after emptying a non-retirement brokerage account to help with the down payment, we'd only be carrying about a $40,000-$50,000 mortgage in theory, which you would pay off. Um, we were thinking less than 2 years.

What's your household income?

My husband's income is $140,000 salary and he usually gets between $20,000 and $40,000 in bonuses. So, We just said any bonus that comes in, lump sum payment.

Okay.

How old are you?

Uh, 32 and 34.

What's the current home worth?

$400,000.

What's the new home worth?

The offer we would consider is $535,000.

Okay.

And what's in the brokerage?

It would be just under $100,000.

Yeah, we have between two different brokerage accounts, we'd be able to, and part from just general savings, not emergency fund, we'd be able to put together about $150,000. Um, but we want to be able to give ourselves some cushion again, just, um, we'd have to put in a fence and have some expenses related to the new home. The other big factor is I'm due in 3 weeks with our second child.

Oh, how long?

Um, and that's where the emotions start playing in.

Yeah, for real. Uh, how long have you been debt-free?

Um, we paid off our home. I actually talked to you about it in 2024, a month before our firstborn was born.

Okay.

So you have a reputation of buying houses when you're pregnant. Okay.

I feel like that's just how it goes.

We paid off the house.

You did that, George, and I counseled you against it.

And every time we move, it's like the worst possible time, but that's how it goes.

Worst timing.

What's driving the urgency for this?

Well, why, why now?

The— so we had always said we'd probably move within the next 3 years. Nothing super set on that. Um, and I know it's a dick for George, so I don't want to say it, but like, it's one of the things— this house popped up I don't, I'm not going to say I have this amazing opportunity, but—

Oh, she knows my trigger word is we have an opportunity. Yeah, no, that's, that's, I appreciate that.

I listen a lot. Um, our, the current owner of the other house has already moved out of state and is carrying two mortgages. And they're the listing agent, unprompted, is who told us he is very negotiable on the price. And that's where we're thinking we can get that price down to the $535,000.

Do you know what the two mortgages total?

Uh, what his two mortgages? Yes.

Find out. That's your first offer.

Okay.

Get him out whole. That's it.

Okay. I know he, when I look at the selling records, um, he bought the house for $320,000.

I don't care what he bought it for. I care what he sold it for. I want to sell it. I don't want to buy it.

Have you had comps run by your real estate agent to find out what this house is actually worth?

Yes, and he has it currently listed at $575,000.

Okay, um, yeah, here's the thing. I'm gonna, I'm gonna lowball this guy. When the agent, when the agent unprompted says he's desperate, I'm gonna, I'm gonna just, I'm gonna hit him at his mortgage base and get him out and say, look, you, you're— I can set you free, man. I can set you free. You got, you know, you got no walking money, but you're set free. And that's where we're going to start on this. Um, And I'm really good at buying real estate at a deal, I'll just tell you. So anyway, that's the first thing. Now, the answer to your original question is, what is the framework? You obviously have listened a lot to this show, and you know that we tell people not to take out more than a 15-year fixed-rate mortgage, just more than a fourth of your take-home pay, and have at least a good 20% down payment if at all possible to avoid PMI. You've definitely destroyed all of that.

You're going like 90%.

You're like completely way over the top on that. The, the, um, The only thing that gives me any pause at all is, number one, I have to say, anytime I— it's very rare for me to run into someone who finally got completely debt-free that wants to go back into debt.

I don't.

I know, but you're about to, and that's weird. Okay, I'm gonna say that out loud. And the other thing that's weird is you're doing all this while you're pregnant, and you're gonna move while you're pregnant.

And I just can't, you know, having We are very maxed on space at our current home.

Yeah, well, so what? So will that moving truck. It'll be maxed on space. But this is going to be a little bit maxed on space and buy a house 9 months after the child's born. You probably got all the cash you need and you pay cash for the same house.

Yeah.

But if you said, hey, we're going to take on the $40,000 mortgage and pay it off in 6 months, we're not going to yell at you. That's different.

We're not going to yell at you.

But if it's going to take you years to pay off, that's the part that worries me.

Well, she said they'll pay it off in 2 years on average. Depending on the bonuses, right?

Ideally quicker, it's just the bonuses again.

Depending on the bonus. Paying extra taxes. 1 or 2 years. None of that is dumb. You're all way over in the smart column. You're all fine. I can tell you that Sharon Ramsey would not move while she's pregnant. That would not be something she would do. Now Whitney did it, but George is a better salesman than me.

You won't have to do any of the moving. That's the good news.

Yeah, well.

No, that's part of the budget is to get movers.

You'll be yelling at everyone else.

Yeah. And if I can do the same exact deal a year from now and pay cash, I'm gonna wait a year just because I don't want to be in debt.

Even 6 months from now. Yeah, we said even 6 months from now, if this house popped up, we wouldn't have a hesitation.

Yeah, just because I don't want to be in debt. It's that simple. And it's like, you know, $535,000 houses in Atlanta are everywhere. And so, but if you want to say, "Okay, Lord, if we can get it at this price, we'll lay a fleece out there, then we're gonna think that we're gonna call that God saying to do it, and we're gonna put a lowball price on it, find out what the guy's two mortgages are." Maybe it's $500,000, and maybe you got no mortgage. You scrape it all together, or you dip down a little deeper into the savings than you wanted to, and you wait on the fence a minute. I don't know, whatever it is, right? You just kind of figure it out. But at our house, we don't borrow money, so we would not have been able to do your deal. We would have had to figure out some other way to either buy it at a deal or wait on another deal. Deal to pop up, an opportunity. Yeah, all that.

So yeah, the goal is just how quickly can we get back to Baby Step 7 if we're going to do this move?

Yeah, yeah. And there's nothing in— nothing we're discussing with you that's dumb, okay? You're very smart. You've done a great job. You guys are amazing. Congratulations, you're in the top 1% smart people out there. Excellent job. I'm just thinking with you that the first thing I want to do is avoid debt, and if not, how quick can I get out of it? And what are some techniques to do that? A lower price point would help. Waiting would help, and that would probably involve a different house, and so on. But I'm truthfully gonna have my real estate agent pull the mortgage deeds and figure out what the balances are on these things, or call the agent who's been so forthcoming and say, "Okay, what are the balances on those two mortgages?" And then go, "That's our offer." And let him write some checks to cover his fees and stuff. Come out of pocket a little bit and you get him out of Dodge. He's in trouble.

You got the upper hand. I've heard you say this, Dave: the person with the most information, options, and patience wins.

Exactly.

And you're in that spot. The more patient you can be, the more options you have, the more information you have about the mortgages and where they're at.

That was an 8-hour negotiation class in 2 sentences right there. I try to do it again. Do it again.

The person with the most options, information, and patience always wins.

Yeah.

And that's you.

And there's more than one house. Gather all the information about the deal you're doing. Know more about it than they know about it. And then be willing to walk away. Have patience.

Same goes for a car or literally anything else.

Don't get married.

But my last house, Dave, I lowballed by $80,000 and they took it first try. Because I ran the numbers.

Which means you should have gone lower.

Exactly. My real estate agent said you're gonna offend them. Apparently not.

Not enough. I should have offended them a little more.

Could have done a little more damage.

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Attention all nerds.

I'm listening.

I'm listening.

Nerds, I've been summoned.

Nerd warning. George and I are going to do the nerd event. It's called Investing Essentials. It's Dave Ramsey's playbook on investing, what I personally do, what I don't do, and why, and details on real estate purchases, how I analyze all of that, how I select mutual funds. And we're going to go into a bunch of, um legacy stuff, like how to, you know, some basics in estate planning and how to hand wealth off without ruining your kids and all of this stuff.

The relational piece is so cool.

And I gotta tell you, if you're having trouble sleeping, sign up for this. We will put you to sleep, unless you're a nerd, in which case you will be sitting on the edge of your seat.

You'll be taking notes.

And you will be run out of ink with your pen. You will just be taking notes everywhere. It's so dense, it's so full, it's so overwhelming, it's so boiling over with nerd stuff, you are absolutely going to love it. I think I'm not—

I think you really sold it there.

I don't think I sold a single ticket.

Well, it's September 1st and 2nd. Again, it's virtual, you can join from anywhere, and it's about 2+ hours both nights. So you're getting 4+ hours of content, uh, stuff we've never really talked about at length with the formulas and super tactical pieces.

Based on going over the notes the other day with you and the gang, I'm thinking if we get out in 2.5 hours each night, we're gonna be doing good. We just chock this thing full. It's everything. So you're gonna love it. And you can watch it on tape too. $199.

I need to watch this again. I need to take notes. We're gonna give you all that access to a replay. There's different tiers depending on how long you want the replay for. You'll even get Dave's notes along with it.

With one of the tiers.

With the slide deck.

You get the slide deck as well.

The slide deck alone will put you to sleep. Listen. Just put it on your TV and you'll just go, you'll just be gone. Just like that.

And the tickets start at $199. And if you aren't at least $200 richer over the course of your life from watching this stuff, then that's on you. That's all I'm gonna say.

Then you really aren't a nerd and you should not have been here. You should not have attended.

It is— it's one of our favorite events we do, and the people love when Dave goes deep. As much as Dave likes to joke that nobody wants to hear this stuff, well, we've only done it—

we've only done it a couple times, right? This is like the third time.

Do it like once a year.

Yeah, but I mean, just a couple times.

Yeah.

And it's not— so it— and, and a lot of you come. There's a lot of nerds.—

that people want to know.

And even if you're not a nerd, but you aspire to be a nerd.

Aspiring nerds are welcome.

Aspiring nerds are welcome.

We're going to answer your questions as well.

Insomniacs are welcome.

I'm going to use it for bedtime for my toddler.

I promise, kid will sleep all night.

Absolutely.

$199. It's a virtual event. It's September 1st and 2nd. You can click the link right now and go there in the show notes, or you can go to RamseySolutions.com/events. All seriousness aside, that's absolutely going to be incredible. Incredible. You will be blown away. I'm so excited to teach this stuff because I've had trouble sleeping. All right, Linda's in Boston. Hey Linda, what's up?

Hi, um, I'm good. How are you guys?

Better than we deserve. How can we help?

Um, I was, um, laid off and I don't know how long it will take me to find a job.

So my question is, when did you get laid off?

Uh, 2 weeks ago.

Okay, how's the job hunt coming?

It's, um, it's interesting.

What were you making before?

I was making a little over $100,000.

Doing what?

I was in sales, a business analyst.

Were you a business analyst or were you selling?

I was in sales operations. I support the sales organization.

Okay.

Wow.

Why'd you get laid off?

Um, reorg.

Instructor. Hmm.

Okay.

Was there severance?

There is.

How much? $90,000. Oh, awesomeness. Okay. Now I'm sorry, but that helps us to go. And the core of your question is what then?

So because I don't know how long it will take me to find a job, I'm curious if I should just sell my existing home and downsize and use whatever profit from the selling of the house to buy something smaller cash.

Absolutely not.

No, that's a drastic measure for a temporary problem. That's sort of a last worst, worst case scenario. You are up against the wall, but right now you've got some cushion, right?

My severance.

Yeah, yeah, right.

And that's assuming you don't find anything.

So if you get a job in 6 months, you just put $45,000 in your pocket if you get a job making the same thing. Yeah, you got a signing bonus. They did you a huge favor.

True.

Yeah, well, I—

yeah, that's right.

I didn't see—

I didn't think of it that way. I think I was looking at it more as some stability since, again, I don't know how long it will take me.

Well, you got a year. If you call me up and you got one month left on your severance, we'll have a different discussion.

Yeah.

But I'm also going to ask you why you suck at job interviewing if you've been looking for a year or two. But no, no, I said if you did do that— you didn't do that. But I said if you did, if you told me I've been looking for a job for a year and I can't find a job, I'm like, you're not very good at sales, you know. I mean, this is—

yeah.

So you're— but you're going to be fine because you have the people skills, right?

Yes, I do.

Okay. And that's what's— that's what's missing out there in the marketplace. People with people skills. Most people have been raised sucking on an iPhone and they don't know how to interface with human beings.

Right, right. No, absolutely, absolutely.

Now these electronic pacifiers are killing us. So, but human beings like you and me that know how to— and George know how to work with human beings.

I mean, there's a lot of stuff you can do, which means utilize your actual physical network of people that you know versus just applying on, you know, indeed.

Do not blindly apply for a job. It's a complete waste of calories.

So that was my other thing. Do I just go for the offer so that way I have a job?

No, no, no. Yeah, eventually, but, um, and I want you to pick up something, do something if you want to, but in the meantime, and I don't want you to take a job making less, I want you to take a job making more.

Yeah, that was my other dilemma. It's like, I don't, I mean, will I have to get paid the price cut?

Well, it's human nature when you've been devalued by a stinking corporation to think that you're not worth it. That's human nature. But I've been talking to you for 4 minutes and I know you're worth it. Okay, so you, girl, go get $120,000 job. $120,000. Say $120,000.

That's your number.

Yeah, $120,000. That's your number. And I want you to call me back and tell me you got $120,000 job within 6 months of getting laid off and put $45,000 in your pocket. Now Now let's go back to the house for a minute. Do you like your house?

It's kind of— I'm single, it's 4 bedrooms.

Do you like your house?

Yes, but I mean—

If you still had your job, would you want to downsize anyways?

Yes, I would.

Okay, then let's talk about downsizing, but I want to do it from a different narrative. It's from strength rather than weakness. You're not— there's no need to panic. You're gonna get $120,000 to your job within 2 months from today. And you know, you can just say Dave Ramsey's a liar if it doesn't happen. You're gonna do it. I can just tell. All right? And then downsize your house. Just because you don't like the house got nothing to do with being laid off by a stinking corporation.

Okay, that makes sense.

Just disconnect those decisions and you'll have more clarity and more patience because you're not in a rush.

You're not desperate.

Yeah, don't Don't be a motivated seller. Sell your house for what it's worth. There's no reason to panic.

And get a good agent. You can get one of our Ramsey Trusted Agents, ramseysolutions.com/agent, and they'll actually help you price it strategically and get you out of this thing. And maybe it'll coincide. You'll be moving, entering a new job. It's a whole new chapter.

That'd be okay too. Hey, hang on. We're gonna send you a copy of The Proximity Principle, which is a book that will show you, by Ken Coleman, how to work the people that you have in your network to help get you into— they know somebody that knows knows somebody. Sometimes it's just 1 degree or 2 degrees of separation that gets you in the door, not in a pile of applications. You don't want to just get in a pile of applications and call that job hunting. That's useless. So don't do that. And then the second thing we're going to send you is Finding the Work You're Wired to Do, which has an assessment with it that I want you to take just to verify what I think I already know about you, okay? Which is you got great people skills, You know how to deal with, you've got good emotional IQ, and that puts you in a different position. George, second one of those calls by a lady we got today. I need to remind America, the highest paid profession is sales. Higher than doctors and lawyers and Indian chiefs. Higher than everything.

The ceiling is there.

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Kirsten is in Fort Wayne, Indiana. Hi Kirsten, how are you?

Good, how are you?

Better than I deserve. What's up?

I am, my husband and I are in Baby Step 5 and 6, and we're looking for advice on when to stop funding our children's 529 versus paying off our mortgage.

Very cool. How old are the kiddos?

I have a 6-year-old, a 3-year-old, and a 9-month-old.

$1,000 a month. Okay. Well, I mean, there's a couple of things you can look at on that that I'm okay with either way. You've obviously done a very good job with your finances. Congratulations. Very few people get to where you are. What's your household income?

It, uh, after take-home, uh, or take-home after taxes and 401, it's $10,427 a month.

And you're how old again?

I am 33.

Oh, wow.

You guys are— And my husband is also 33.

You're gonna have so much money. $120,000. Oh my gosh.

How much is already in the 529s?

So our 6-year-old has $62,000, our 3-year-old has $32,000, and our 9-month-old has $8,000.

Are you working with a SmartVestor Pro?

Not yet.

Okay. Who's doing the 529s? Y'all just DIY them?

Yep.

Okay.

All right. Um, because George may be able to do it fast enough. Do it as an example with the $62,000. Which one did you do?

Yeah, I can do the $62,000 because that's the one that's coming up first, right?

And he's how old?

12 years from now?

He's, yeah, he's 6.

Well, okay, that'll be $204,000.

If you add nothing to it, you just let it coast, if you get an average 10% return, if you're in some good mutual funds in there, $200,000. So now you, you can kind of figure out, hey, let's say they go to an in-state school, factor in inflation over the next 12 years, $200,000 sounds good. Or you may decide, hey, let's put a little bit more in to get to $250,000 because they might get scholarships as well.

Well, the other thing is this: I don't want to overfund a 529.

Yeah, that's what we're worried about, is the overfunding.

Personally, I'm not sure $204,000 will be enough to send them to school, room and board included. Pretty sure it's not going to be enough 12 years from now, but it's going to be real close.

Okay.

And he might decide to go into a trade or something and doesn't need anywhere near that.

So, um, another kid might go to a super expensive school, and now we can use those funds and change beneficiaries.

So I'm probably not putting put any more in that one.

Okay.

And so what we just did was we just future-valued, meaning if you let it grow at a 10% rate or 12% rate or whatever number you want to use, you can use the Ramsey calculator on our website and do that. That's what George was using, okay, at RamseySolutions.com. Jump on there, it's free, okay. And you— we just future-valued what's $62,000 going to be worth in 12 years at 10%. That's all he put in, okay. Okay, and it came out $204,000, and then you have to ask yourself, is that enough? I don't think it's going to be enough, but it's going to be so stinking close with the kind of income you got and the other wealth you're going to have that I really wouldn't worry about it. I think I'd probably stop that one.

That's the other factor. You guys are going to be so much wealthier 12 years from now that you can likely cash flow any gap.

Mm-hmm.

And if you don't use it, you can roll over up to $35,000 over time with the new SECURE Act 2.0 into a Roth IRA for that I did see that, which is exciting.

It's kind of a pain though. I really, I wouldn't do everything counting on that. The only advantage of a 529 versus dumping money just into the kid's name is it grows tax-free. That's the only advantage. It's not that it won't grow. So you could open just a mutual fund in the kid's name, and until it reaches the point, you know, until it reaches the point that it actually pays taxes, which will be a while, but if it did pay taxes on it, you're gonna lose some of it to taxes. That's the only difference. And so I'm not putting any more in that kid's 529. That one. Now do the other ones.

Yes, your 3-year-old, for example, you'll have $142,000 by the time they're headed to college. You may want to fund that one a little bit more.

Yeah, what I might do is say, okay, if $204,000 is the baseline, I'm gonna set the other 2 up to land at $204,000 based on their age.

Yeah, maybe with inflation.

Yeah, or maybe a little more because of that. So I wasn't that sophisticated. I'll tell you what I did, which is kind of fun, just for the heck of it, because 529s weren't there when I our kids were doing this.

You had education savings accounts at that point?

No, they weren't even there.

Wow.

No, we just had UTMA, Uniform Transfer to Minors Act, which means I just opened a mutual fund in the kids' name. And all I did was, Denise is the oldest, and I put her in the calmest type of mutual fund, a growth and income. Rachel's the middle, so I put her in a growth. And Daniel was the baby, I put him in an aggressive growth. And I didn't put as much in his because he was the baby and it was going to grow faster, but it had more risk. Disc. And they all turned out about the same. Got really, really close.

It's a good experiment.

Just generally dropping them in there. I didn't touch them after that. I just dropped a chunk in there and went. And then what ended up happening weirdly, Kirsten, is this. In that case, by the time the kids got to college in our case, and this is probably what you're going to run into, they went to University of Tennessee, a state school, and I just wrote a check. Cash flowed it. And when they got out and got married, I handed them that UTMA account. Account to start their lives with. Now, you're going to have to use this 529 on education, so you're not going to be able to do that plan. But if you do a side deal and you don't end up— like, beyond the oldest child that we're talking about, $204,000 from $62,000, if you do a side deal and you just open a mutual fund in their name, a Uniform Transfer to Minors Act, UTMA, then— and you can do that with your SmartVestor Pro. They can help you figure all this out. Then what will happen is you could just hand it to them if they don't need it for college. And so it's perfect, it's perfect to do all that.

And that's how it ended up working out at our house. But again, those tools were not all available. I had to pay some taxes on their accounts as they grew.

There's more options now than ever.

Exactly.

Which is nice, but also can be overwhelming.

Yeah.

So we're actually walking through that in our Investing Essentials event. It's all the ways you could invest for your kid. What's the best account for what reason? Is it education? Is it whether it's a wedding, a down payment, whatever it is, there's the right kind of account to use.

Oh, we're going to cover that in the Nerd event?

That's right.

At least I am.

I don't know what you're going to do. I plan on it, because I've got young kids, so I'm thinking about this all the time.

OK. All right. Well, I've got grandkids.

Your kids have launched. They're OK.

I've got grandkids, but that means my kids have to think about it.

That's their problem now. You did your part.

That's fun.

Oh, man.

I love it.

Claudia's in Washington, D.C. Hi, Claudia. What's up?

Hi, Ramsey. So honored to be on the show. I have a big question for you. Should I change my car or should I repair it?

What's your car worth today if it was repaired?

Um, the dealer says $12K, uh, Carvana says $13K.

As is or if it was repaired?

As is.

Oh.

Before repairments.

What's wrong with it?

Um, so I just paid about $1,000 in repairments and I need to put $3,000 more according to the dealer because I need to do some repairs. Replacements like, um, wheel bearing and arm bushes, something like that. That will be a total, um, $3,000 more that I'll have to pay. So should I put that amount towards, um—

I don't think it's going to make your car worth $3,000 more.

You don't think so?

Do you?

You think the car is going to go from $13,000 to $16,000 by putting wheel bearings in it?

No, no, no, no, no.

Also don't know if you need wheel bearings or not. I want you to go get a regular mechanic, not a dealer.

It's an independent mechanic.

Deal like, like, go to Christian Brothers and let them do an analysis for you. Dealerships are not crooked, they're just super expensive, right? It's the most expensive place to get a car fixed.

They can pretty much charge what they want over there, like sometimes double.

So if they told you $3,000, Christian Brothers might tell you $1,500. I don't know, I don't know what your repairs are, and I'm not turning wrenches these days, so I'm not positive. But you check on on it and look at— okay, and the other thing you ask is, what, what is a reasonable repair to a car of this age and this miles? Because sometimes I run into somebody, Claudia, for instance, that has a $3,000 car that's 250,000 miles, and they're saying you need to redo the whole suspension. No, you don't. It's a $3,000 car. Nobody redoes the suspension on a $3,000 car. You drive them to the junkyard and you toss somebody the keys and you walk away. You know, you don't put $3,000 in a $3,000 car. And you don't redo the suspension on a 250,000-mile car unless you're rebuilding a classic car from the frame up. So just, you know, so some of these repairs that they suggest, yeah, you could do this, but no reasonable human would do that to a $13,000 car. And so a good mechanic will look at you and go, it's not common sense, okay, don't do it.

And if it was my wife's car, I wouldn't do it. That's the kind of mechanic I want. Right.

You might take your $3,000 you would have spent plus what the car is worth and go get you a different car altogether at that point.

Might be a better plan.

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Welcome back to the Ramsey Show in the Fairwinds Credit Union studio. Dante is with us in San Francisco. Let's go. Hey Dante, what's up?

Hey Dave, thanks so much for taking my call.

Sure, how can we help?

Yeah, so I've been with my girlfriend for about 3.5 years now, and I'm considering proposing. We're both fresh out of college, just lived together for about a year now, and we're doing pretty well financially for our age. The issue is that we're both Chinese, well I guess that's not the issue, but her family follows some traditional Chinese marriage traditions that my family does not. In her family, I'd be expected to give her parents about $30,000 to $40,000 as a dowry or bride price. Um, and there's also significant pressure to have a large traditional, uh, Chinese wedding. And then my girlfriend and I are both not particularly interested in having and spending a lot on a wedding, but I think her parents and extended family strongly expect it. Um, I like her a lot, I like her parents a lot, I think they're great, but my concern is just that even with our income right now, this would cause a pretty big hit, especially down the line for our savings.

Um, what is your—

what is your So we are both making around $175K each gross.

Each. So if you were married, you'd be making a $350,000 household income.

Yes.

Okay.

Okay. Now, so have you made the decision that you're going to honor both of these requests regardless? Or are you trying to work through, are you trying to work through if you're going to set a boundary here or not?

Or not?

I'll be honest, it's probably looking like, like I would say leaning towards yes for both. Um, the bride price is something that is, I think, just very standard in her family. It's something that if I, I guess for either of these, if we were to not do, um, either one, her parents would not either not approve of the marriage or be, I'd be on very bad terms with them to begin the marriage. And I don't want to be like that. So, uh, I'm, I am leaning towards doing both.

Okay, all right. And so it's $30,000, and then how much is the traditional wedding gonna cost? I would say—

I don't actually know, I'm not super well-versed in how much a normal wedding is even, but I would say we're looking at roughly $75,000 to $100,000.

I would guess. Yeah, that sounds right. Okay, so we need— let's call it $130,000 for the fun of it, and you make $350,000. And I mean, the first thing you've got to decide is that you're really going to do this, and both of you are going to do it in spite of whatever. Okay, that's hard because you sound— how do I say this properly? I don't know what the proper politically correct thing— you sound very Americanized, distanced from those traditions.

Yes, I personally, my family is very Americanized.

That's correct.

That's— I hope that wasn't offensive or something, but I just— no, you sound like this doesn't— it like Like, it's not something you would do in a million years, but it kind of goes with the package.

Yeah.

Now, is the expectation that you're going to personally fund all of this, or is she involved with her income? Is she willing to say—

I would say the dowry and the bride price is something that I would personally fund. Technically, her parents would actually give that amount back and more, but it would go into an account solely in her name. That, personally, I don't have a huge problem with.

Oh, wait a minute. You're not gonna have to pay for all of it.

No, the, uh, well, the bride price would be $30,000 from me to her, basically.

I got it. And then that goes into an account, and her parents are going to give you more money for this big traditional wedding?

Uh, it's more, it's more likely not for the wedding specifically. It's more just for her to have, I guess, like a safety net. That's kind of how it works in Chinese tradition.

But can you spend that, all of that, on the wedding?

No, that would come from, I guess, our joint account.

Okay, so it is a net loss of $130,000 or so.

Okay, so let's say she covers $50,000, you cover $50,000 for the wedding, plus your $30,000 or $40,000.

Yes.

So you need to save up about $90,000 out of your income, let's say, over the next 12 months.

Yes.

18 months.

Yeah, and I guess my question was mostly just, is this something that I want to do? Is it something that I should kind of just say, like, screw it and let's do it now? Is it something that I should say I need to save up and hold on more part of this. How should I budget for it accordingly, I guess, is my main question.

Yeah.

Well, I don't emotionally, from the hillbilly culture, connect to this tradition, because most of ours are like shotgun weddings, right?

It's on the other end of the spectrum.

So, you know, I can't get my head around, but what I do want to respect is that you're going to be married to her for a long time, and it's going to involve her parents. And so I— but I tell you what I probably would want to do, and as respectfully as I could— are they in China, her parents?

No, her parents are in America.

Okay, that's even better. I would want the two of you to sit down with her and her parents and say, "We want to honor you, but you also need to understand that we were raised here." 'And that we would— if it wasn't for you, we wouldn't do any of this. The only reason we would do any of this is for you. Is there any amount of this that you would forgive and not force us to do?' Yeah, I think she's actually had a conversation with that, just individually, her with her parents.

And this is probably like a few months back, a year back maybe. And they were saying like, 'Oh yeah, like, if he does ever want to propose, these are the things things he's going to have to do. He's going to have to come up to us, ask for our blessing, state an amount, and that was $30,000 to $40,000 is probably the requested amount, and then also provide a bunch of extra gifts and stuff. I think that's their expectation.

Wow.

I would get real clear on the numbers and not let this become some unlimited thing that you just keep funding. At least that will give you clarity. I'd know what the numbers are for everything, the wedding, the dowry, and then figure out, okay, who's covering what? What's my portion? And then you set up a sinking fund. If you're gonna go through this, I gotta save $4,000 a month for the next 18 months to cover all of this.

Mm-hmm.

Are you in a spot financially to do that?

Man, this is hard for me, 'cause I'm having trouble, and you are too, that's why you called. I'm having a lot of trouble being required to write a $130,000 check that I have absolutely no desire to write. I'm having trouble with that. And so, but I'm not very compliant. I'm more defiant. And so, And so I don't know. I think if I'm— I would probably sit down with her father one-to-one and say, "Okay, I heard what you told my potential fiancée, your daughter, but I want you to hear from me. I don't want to do any of it. And so I want to figure out what I can do that is honoring, because the only reason I'm doing anything is to honor you." and I don't have to do any of it. She'll just go marry me. So we really need to talk about this. And so, you know, and just see if there's any budge here. I don't know. I mean, at the end of the day, would I sacrifice relationships with the in-laws for the rest of my life for an X number of dollars when I make $350,000 a year? No, I probably wouldn't.

But boy, do I hate black people.

—It does feel a little bit like that.

It's like a ransom note. —I mean, it's just a ransom note, yeah. But again, it's a cultural difference between being a hillbilly and being Chinese. And so I have to admit that intellectually, outside, that this is my emotions talking.

I would just be like, "Hey, come on." But I mean, what if he didn't make $175,000? What if he made $60,000? It's an unreasonable request.

Yeah, it's an unreasonable request. Anyway, but it's traditional. And, you know, it's the 15-year-old birthday party if you're Hispanic, right?

And we spend a little quinceañera, you get a brand new pony.

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Good, Dave. How are you?

Better than I deserve. What's up? Yeah. So I just had a question.

I'm, uh, thanks for having me on by the way too. I feel like, uh, you know, time's catching up on me with retirement and just really looking for a clear path to get back on track. Um, my question is, and is, you know, really should I, you know, just put off contributing to retirement? My wife and I both, we're both 42 years old. And just concentrate on our debt or continue contributing to retirement and find a way to pay off our debt. We're currently living paycheck to paycheck right now. Between the two of us, we make $235,000 a year. It's kind of embarrassing. And really, I think got stuck in these buy now, pay later type deals. How much debt do you have? A lot of credit cards. Uh, in consumer debt with student loans and everything, $187,000, not counting our mortgage, right?

How much, how much do you owe on your cars?

Uh, one car is $31,000 left on it, the loan, and the other is, uh, $17,000.

Okay, so what's the other $130,000?

Uh, credit cards and some personal loans and $30,000 in, uh, student loan.

So you just, you guys just, you borrow, you spend money like you're in Congress. How long you been making $235,000 and spending this kind of money?

I will say the last 6 months, um, my, my, I had gotten a new offer. I got the $50,000.

How long have you been making $235,000?

Um, probably at least a year and a and a half. Okay, what were you making before that? Uh, right around probably like $180,000 between both of us.

Okay, so it's fair to say there's absolutely no bridle on your spending until just recently?

Yeah, yeah. And when I just had an epiphany, actually, I was watching your TikToks that I— that show up on TikToks, your videos. I relate.

So I was abusing you on TikTok. Yeah. Yeah. And you're like, oh, Dave's going to get me.

Oh my gosh. Exactly. And I was like, I need to figure this out.

No, you know, I appreciate that. But the bottom line is the emotion is you looked in the mirror and said, I'm a 42-year-old man. I make $235,000 a year and we can't control our spending. This is disgusting. And it had nothing to do with my TikTok. You just really just came to an epiphany.

Didn't you? Yeah, I mean, at the end of the day, you know, and then just thinking about them like that, I feel like I can't even enjoy like fruits of my labor, like getting where I am, you know, making decent money.

Oh, you've already enjoyed the fruits of your labor and then some. You've spent every fruit of your labor and then fruits of other people's labor. That's $187,000 worth.

Yeah, well, a lot of it's on our kids, I would say. Well, then your kids have—

yeah, yeah, they need to learn a new word. You want me to teach to you?

I don't think the kids took out those car loans.

No, kids don't have car loans, but they go— you guys do anything you want to do whenever you want to do it without any thought of it, and that stops. You got— you're gonna have to grow up, all of you, all of the kids and you. No is the answer. We're freaking broke. We're broke. Exactly. Yeah, we're broke. Broke people can't do that. We're not going out to eat. We're not going on vacation. We're cutting up all the credit cards tonight. We're going to sell the $31,000 car, and we're going to live on beans and freaking rice, and all we do is work and pay off debt, and we're gonna clean this mess up in about 2 years. But you're gonna go to scorched freaking earth. You're gonna go all the way to the other end of the spectrum with great intensity. If you do that, you're gonna retire with millions of dollars. If you don't do that, you're gonna continue to be normal, and as you and I have both established in this call, Mike, normal sucks. Oh yeah, it's not fun. Your life is not fun.

Yeah, it's always— it's stressful. Yeah, and I'm always worried if I lost my job, what would happen.

Yeah, you'd be screwed, and you're gonna retire broke. So stop all your retirement. If you don't do this stuff, it's gonna catch you, because you guys, you're pretty extreme mess here. You're gonna have to take some extreme measures to reset your all's brains on how money works.

So, think about this, Mike. If you paused investing, could you then take home $10,000, $12,000, $15,000 a month with your income? Making $235,000?

Yeah, I think I do about $600 into my retirement a month.

OK, so we'll get that back on top of anything else that we can muster up. Sell the $31,000 car. That brings us to about $156,000 in consumer debt. Now, you throw $7,000 at that thing a month, you're done in less than 2 2 years. By 45, you have a fully funded emergency fund, you're completely debt-free, and you're investing in retirement 15%, which is way more than $600 a month.

And if you invest 15% of your income into retirement, which you can easily do with no payments, right?

45 to 65. So you're gonna have invested millions and millions of dollars at retirement.

But the next 2 years are gonna suck.

Yeah, it's gonna be awful. I—

your kids are going to hate Dave Ramsey. They're going to have to join the Dave Ramsey support group on Facebook. Yeah, why?

I keep telling them they need to learn how to save now and not, not, uh, yeah, because I mean, yeah, yeah, because you know what, you know what they're going to do when they grow up?

What you do.

More is caught than taught.

How old are they? Uh, 9 and 11. Oh, that's Perfect. You got time to save them. If they're teenagers, I don't know if you could turn it around or not, but you know, but right now they got— they get to watch their parents sacrifice to win, and they're going to remember it the rest of their lives. And when they inherit $10 million at your death, they're going to say, back in '26, Daddy and Mama said they wasn't going to do this anymore, and the whole life changed.

Right? Mm-hmm.

Someday that's what they're gonna be sitting on, but you're gonna be the old man that changed the whole thing someday. But not if you're not the young man that changes the whole thing. Yeah. You ready to do it? We'll help you, okay? I think you can do it. Yeah. And I actually— the reason I kept you on here so long is I think you're disgusted enough to actually do it. It requires a certain level of being pissed off to do it.

Oh yeah, I'm super mad.

I can sense it. And it's not mad at somebody, it's mad at the system. Situation and mad at the mess I made, and I'm not gonna do this anymore. I've had it. When you have that moment, and I can tell from talking to you, that's why I keep you on the line, you've had that moment. If you were just blowing me off on all this stuff, I would have already blown you off. So, but you, dude, I'm proud of you. I think you can do this, and I'm telling you, if you do what— so stop the 401, sell the $31,000 car, get on the EveryDollar budget. We're gonna give you the upgraded version for free. Get signed up on it. I'm gonna send you a copy of the Total Money Makeover book. You and your wife read through it and go, we want a life making $235,000 with no payments but a house payment, and we're gonna retire 20 years from today with tens of millions of dollars. And I think you will. The numbers say you will.

On the retirement though, should I go all the way down to zero?

Zero. Zero. You've got to focus on the enemy right now, and the enemy is your overspending that has created debt. And you got to focus on that with such intensity that people think you've joined a cult. Like, your broke friends are making fun of you. Look at Mikey, he makes $200 grand and he can't go out to eat. Mm-hmm. You know, well, kiss my butt. I'm not gonna be broke anymore. I'm changing. You do whatever you want to do, broke person. And you just move on. You may need some different friends. So this is the thing: you've got to reset your brain on how this stuff works to where you get above this problem and step on it instead of it stepping on you. Because this money subject's been kicking your butt your whole life. You've never been able to tell it what to do. It's always told you what to do. That changes this week, Mike. It has to. Because if you just make more, you're just gonna spend more until you say, "I've had enough." We just found that out when he got the raise to $235,000.

Yeah, a third of people making six figures are paycheck to paycheck. And a lot of people think, "Well, if I just made more," more, I'd get out of this.

I tried to out-earn my stupidity. I couldn't do it because I had a lot of stupidity.

The more you make, the bigger the zeros on the end with the stupidity. That's exactly right. Bigger mess you get to clean up.

So hang on, Mike, we're gonna send you a Total Money Makeover book. 10 million people have used that to get out of debt and become wealthy. I want you and your family to become wealthy and be able to do anything you want to do, but it's gonna cost you 2 years to clean up your last 10 years of stupidity. Purity.

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It's like a grown-up thing to do. And this is National Make-a-Will Month, like anybody cares, but it really is. Is. And so get a will, seriously. If you're ready to get one, go to mamabearlegalforms.com. And if you're not sure where to start, you can text quiz to 33789. We'll help you figure out which option fits your situation. All right, Brian is with us in Dallas. What's up, Brian?

Hey Dave, how are you?

Better than I deserve. How can I help?

Hi, so I'm wondering I'm wondering, since the rates are really high right now, my timeline is about 16 months or so to look into buying the house. Uh, should I look into getting an assumption loan? There's no such thing. There's not?

No. The only loans that can be assumed have to be reset and you have to qualify for them and they'll raise the rate.

Oh, right.

But you, you wouldn't go into their No, you can't.

Oh, where'd you hear this? Uh, yeah, TikTok.

But I heard it on TikTok.

Yeah, it gets a lot of clicks and views on TikTok, but they're so rare because of how many stipulations have to take place that they pretty much never happen.

Yeah, so in the, in the 1970s Loans that were FHA loans, HUD loans, were fully assumable without qualification, and the interest rate did not move. They did away with that in the early '80s, and that's the last time there have been fully assumable loans. All other loans have, for instance, in a Fannie Mae, a conventional deed of trust, paragraph 17, if you actually want to look it up, uh, in paragraph 17, it's called a due-on-sale clause. Meaning that the entire mortgage is due upon the sale of the property, and they will call the entire loan. Okay, now if that entity— let's say that's with a bank and they're using that and they have that Paragraph 17 in their deed of trust— if they want to allow you to assume it, they're going to qualify you and they're going to reset the rate to current rates. Otherwise, they would rather just get paid off because they'd rather get that 2% loan off the book. Bucks and reloan the money at 6% current rates. So they don't want that loan out there at the current rates. Now let's fast forward one more time, Brian, since you called and we're in the teaching business here.

The TikTok idiots, what they are suggesting is going to get you fried because there is a thing in the get-rich-quick real estate world where you just go in and you don't register the deed and you keep the property in the other guy's name and you agree to pay him by contract or contract for deed or whatever phrase they want to use for it, but once the mortgage company discovers that in effect the title has been transferred even though it wasn't recorded, they're gonna call the loan and foreclose on the property. So if you follow these TikTok morons and assume a loan without the bank's knowledge, hiding it from them, that's a fraudulent transaction. You're gonna get foreclosed on and lose all your money. And you should, because you're a freaking liar. You lied, okay? And that's what these guys are teaching you to do. It's a, it's a fraudulent technique. It's a lying, a technique by which you lie, and it's called contract for deed. You can do it that way, and it's a wraparound mortgage. These are all phrases we used in the '70s and '80s. '80s when we could actually utilize those old FHA loans legally and without being fraudulent, and we could wrap around them, we could do all kinds of stuff.

But you cannot do that with modern mortgage documentation. They have the ability to call the loan, and they will as soon as they discover you're screwing with them. And they should. And you need to cover the cash gap.

So whatever the home is worth, whatever the loan is, you got to cover the difference in cash.

Well, unless the flip this house tick-tock tucker wants to say, "Okay, you owe $140,000. We're going to sell you the house for $200,000. We owe $140,000 on it, and the last lady we bought it from, we never paid off her mortgage. It's still sitting there because we wrapped it, and now we're going to let you wrap it up to $200,000, and they're going to let you pay the whole loan to them, and they're supposed to pay the underlying and never transfer the title." Title's not in your name. It's a mess. And so you're what's known as screwed the first time something happens. Happens. I mean, the house burns down, the taxes are not in your name, you don't get notified, the taxes don't get paid, there's no insurance on the stupid house because you can't put the insurance in your name because the mortgage company knows whose name the insurance company's in because they got a copy of it because their name's on it too as a payable, as a payee in the event of a fire. And so, good Lord, it's just, it's just so crooked.

So if the interest rate's the deciding factor, just means you need to wait until you can afford that thing with current rates.

Yeah, and by the way, 6% is what we're sitting at today, 5.9% on a 15-year fixed. By definition, that is not high. By definition, that is low. And compared to historical data, it's dramatically low. 6% should cause a real estate boom. Interest rates are not what's holding people back, okay? In fact, you got all these other loans, you got no control of your money, money and you don't have the money to put— you haven't saved up the money and you're trying to buy a house you can't afford in a city you can't afford to live in. This is— these are the problems you get into. So yeah, please, Brian, don't listen to people doing real estate deals on TikTok. Good Lord, that's the worst possible— that's as bad as Reddit. These are the two sources of sewage. It's just— it's just raw sewage. You will die from salt raw sewage. Kill you. Oh, Jacob is in Oklahoma. Hi Jacob, what's up?

Hello sir, uh, I am currently in the Air Force and they are sending me from Oklahoma to Alaska. I currently only have a motorcycle and I'm trying to determine if it is a good idea to finance a more reliable car or purchase a cheaper, possibly issue-ridden car to save my cash reserves.

So your only options are go deeply into debt or buy a car that's going to explode on the interstate? That's what you just— Exactly. Okay, just want to make sure we were clear here.

What's the motorcycle worth?

Uh, it's probably worth around 6 grand.

Okay, why don't you buy a 6 grand car?

Uh, I just— I don't know if 6 grand is going to be a reliable enough vehicle. Absolutely. Oil.

It won't be pretty and it won't attract chicks.

You got a girlfriend?

But not right now. He's going to Alaska.

We'll find one over there. But here's the truth: there are $6,000 cars that will run just fine. Get a pre-purchase inspection, it'll cost you $100, $150. You'll know if there's issues ahead of time.

And you're probably better off just buying in Alaska. It's a little more expensive, but shipping one to Alaska is not cheap either. So how long you gonna be stationed there? Jacob?

The Air Force will cover the shipping of one vehicle, Oklahoma to Alaska. Oh, and I'll be in Alaska for 4 years.

Okay, yeah, then get you a great $6,000 car and cover the shipping. You don't have any other money, I take it, other than the motorcycle? I have about $15K in cash.

Oh great, so how expensive do you want a car?

Do you want— you don't want '21.

What do you make? Yeah, I make about $2,500 a month, but $30,000 a year or anything like that. So if—

so you've got You got $21,000 after you sell the motorcycle. How much do you want to spend on a car?

I was probably looking to spend around $10,000 to $12,000. Well, just write a check. You think that's a good idea as opposed to trying to save some of that money?

1,000% do not buy a car with a car payment ever. The rest of your whole life.

Taking on a car payment is a terrible way to save money.

It's a guaranteed way to stay in the middle class the rest your life. It's the most expensive thing we buy that goes down in value. I'd ride that motorcycle in the cold, baby, in Alaska before I'd go into debt. But you don't need to. Sell the motorcycle. You got $21,000. You pay $12,000 for a car, ship it up there, and you got a little money in the bank. And you're, you know, not a lot to do up there anyway, so just stack your money.

Hey guys, it's Rachel Cruze. When it comes to life insurance, most people fall into one of two camps: the ones who make a plan to protect their family, family, and the ones who hope everything will just work out. But hope isn't a financial plan. When you get married or have kids, your money decisions aren't just about you anymore. Your income helps keep the lights on, pay the mortgage, and put food on the table. And if something happens to you, will your family have protection or uncertainty? Well, at Ramsey, we recommend term life insurance at 10 to 12 times your income. With a 15- to 20-year term for the years that your kids are at home and your mortgage is still being paid off. That's why Winston and I have our term life coverage through Zander Insurance. They're an independent broker who works for you, shopping all the top companies to find the most competitive prices on coverage you need. Get instant quotes online in just minutes at zander.com or call 800-356-4282. To get your family protected with term life insurance. That's zander.com or 800-356-4282.

So when our grandkids turn 10, Sharon and I take them on trips somewhere. And Rachel's oldest daughter, Amelia, and Denise's oldest daughter, Lydia, were ready for their 10-year-old trip, so we took them to Washington, D.C., and we toured around all the monuments and all this stuff. And traveling with Papa Dave is cool because Papa Dave don't do anything except luxury travel anymore. That's right. So you got it made. So like, we get a VIP tour guide, so we like going in the back door not because it's Dave Ramsey, just because I wrote a check for the guide, right?

You paid for the premium experience.

You go in the back door and you get in 5 minutes before everybody else into the National Archives to see the Declaration of Independence. 35 minutes later, there's 2,000 people standing there. But yeah, you don't want to be in there in the middle of that. But I mean, it's wonderful to see this. So we went all around Washington, D.C., walking around with the grandkids and the tour guide and Mount Vernon and the Capitol and got to tour the White House. Melania's staff, First Lady's staff was very nice. To allow us to do that, set it all up. It was very cool. But the fun thing was, everywhere we went, we would run into somebody who recognized me. Rachel was with us too. Recognized me or Rachel and said, "Hey, thanks for what you do, and you changed our life, and can we get a picture?" or whatever, and all this stuff. And we're walking along the sidewalk, and this guy is sitting on the sidewalk with a cooler beside him, yelling, you know, "Cold water! Gatorade! Cold water! Gatorade!" Just a street vendor. And I walked by and he goes, "Shut up, Dave Ramsey!" And I said, "Absolutely, dude, who are you?" And I stood there and talked to him for a minute.

He goes, "Hey man, this is my side hustle. I'm making really good money selling bottled water to the tourists for getting out of debt. This is my side hustle." How cool was that?

That was incredible.

That was fun. And we got this one in too. So we run into a lot of different people and I got to hear a lot of wonderful stories. Hey crew, I saw Dave Ramsey and his daughter and grandkids at the Capitol Building about 2 weeks ago. I was walking through the Capitol with my 5 boys. I saw them. I wanted to shake his hand and thank him for saving me from a life of debt and endless years in the workforce. I've raised my 5 boys, my husband's single military income, all because I was introduced to Dave Ramsey and the Ramsey team around the age of 16. I followed the program ever since. At 36, I'm pursuing a flight career, debt-free. My husband's retiring from the military in about 5 years to start his own business. We're so grateful. This particular trip sent me over my budget, and I was just mulling that over in my head, when the budgeting master appeared in front of me. How great is that? Yoda, right? The guilt of my overstretched budget and what I would equate to financial idol of mine appearing before my eyes wrecked my whole day.

And she didn't even say hi! She walked away. Oh, that's fun. If you could convey my endless appreciation to him— well, we appreciate your endless appreciation.

It was nice she said, "I didn't want to disturb him or his family on their vacation." You're not ever disturbing us.

We're always honored to meet anybody anywhere anytime.

I disturb Dave more more than anyone.

I don't care, vacation or not. Maybe Rachel, but yeah. That's so fun. Yeah, so no, I mean, oftentimes somebody will say something nice to us.

Rachel told me one of the security guys at the White House, full camo, huge gun, he leaned over and said, "I make all the cocktails for Smart Money Happy Hour. I don't miss an episode." I was like, wow.

A bunch of these guys were checking into the Senate building, and one of those guys leaned over and said, yeah, Smart Money Happy Hour. Different guy too. Yeah, the Smart Money Happy Hour is right popular, George. There's a few people out there in Washington, D.C.

watching your drunk talk. They need to decompress after all the drama over there. So that's what we're here for.

Exactly right. Well, thanks to all of you. We appreciate all of you that listen and all of you that say nice things. We really do. Thank you very much. Jordan is in Cincinnati, Ohio.

Hi Jordan, how are you? I'm good, how are you?

Better than I deserve.

What's up? Thank you so much for taking my call. And I want to say on behalf of my family, thank you. My parents took SPU when I was a kid and they changed our family tree, which has set my sister and I up for success. Wow. Which leads to my question. Very cool. At 30 years old, my husband and I are sitting at $140,000 in retirement. Using your retirement calculator at that 10% rate of return and a retirement age of 65, $4.6 million without me contributing anymore. Is there ever a point in time that you can consider Baby Step 4 done or complete?

No, I know I always invest. I didn't stop investing when I had a first million dollars. I kept investing because the money then gives me options for a couple of things that are very important spiritually and emotionally to me. It just does 3 things. One is it gives me additional security, which is not a big deal once you get past $5 or $10 million. You're not worried about that. And the second thing it gives me is the ability to completely, as you said about your parents, change my family tree. And, you know, $10 million does a lot more than $1 million. And the third The third thing it does is it increases my ability for generosity. And so, I mean, if you had $10 million, you're making $1 million a year in growth. You can give away $1 million a year and still have $10 million for the rest of your life. That's kind of fun, by the way. I highly suggest it. So no, I don't stop building wealth. I always enjoy some. I always have a generosity factor that's substantial and more substantial. The percentages don't change a lot, but the numbers change.

And I always have investing. My whole life I have, and I teach everybody that, and I've always done it. I wouldn't tell you to stop enjoying it, except for a short period of time while you're in Baby Step 2, right? And no, I get what you're saying, but I don't know what you're gonna do what you can do with all the money you're wasting in the meantime. So you can do all of that and still have a great life. You can keep investing 15% of your income the rest of your life and still have a wonderful life.

Yeah, money is a tool. And so you have more money, well, you have more options for what you can do with it.

Money equals options.

That's what it is. And so I like having options. And we don't know, I mean, to factor in 35 years, we just don't know what your future holds and what, you know, life events are going to happen. I'd rather be investing for the future and have more than I need than not enough.

Yeah, and you know, if it's— if you don't need it and you don't want to give it to your family, give it away. Help somebody with it. You've got the gift of getting an early start, the gift of getting an early education, and you've done very well so far. But you do only have $140,000. It's not much really in the scope of life. So let's go get some more. And that's not greed. It's just saying this gives me options, it gives me security, it gives me the ability to be generous, and it gives me the ability to change my family tree and, and make sure that this is the last ugly Ramsey in this branch to be debt— in debt and bankrupt. You know, it can stop here if I teach them and I leave them zeros, lots of zeros. You teach them, you leave them lots of zeros, and you know, I can be the last I mean, somebody's got to be old man Vanderbilt, right? Somebody's got to be old lady Rockefeller. Somebody's got to break the chain in this family and change it. Break the curse of poverty, the curse of being in debt, the curse of mediocre mindset and stupid socialism ideas.

Somebody's got to break those curses off of my family, and it might as well be me. Be me, and it might as well be you. And so that's the way I look at it. I don't, I don't want to get stuck with any of that anymore.

And the math is incredible when you look at the ROI of a dollar when you're 30. I mean, if she puts in $1,000 a month, let's say, for the next 35 years, instead of that $4-point-something million, she'll have $8.3 million. And that's only— she's put in an extra $400 grand to get an extra $4 million out. That's a pretty sweet vending machine right there. So as far as, you know, your money goes, better than Chuck E. Cheese. Pretty good bang for your buck right there. And again, it changes the life you can have and the options you have and your family tree.

Yeah, so the answer is no, I wouldn't. I would have a steady stream of generosity, a steady stream of enjoyment, and a steady stream of investing the rest of your life. And that's how— what I've done also. I didn't ask you to do something I didn't do, and it's made me a really good life. If I wasn't me, I'd want to be me. All right, Sophia is in Salt Lake. Hey, Sophia, Sofia, what's up? Oh no, you're not. No, you're not. We're at the end of the hour. We're going to come back to you, Sofia. There's another hour and you're going to be just fine. Don't worry about it. And you poor people that don't know how to get that other hour, well, we're going to teach you about YouTube and podcasting, I guess. We'll get you there, I promise.

Welcome back to the Ramsey Show in the Fairwinds Credit Union studio. Susan is with us in Orlando. Hi Susan, how are you? Good, thank you.

My husband and I would love to know if we are being too generous too soon. We opened up a nonprofit cat cafe over 2 years ago for our son who's 24 years old who has Down syndrome. Syndrome. And we adopt out cats. We partner with Easter Seals so that other people with disabilities have work experiences. And we also use it as a ministry by playing Christian music, giving away Bibles and Christian literature.

But okay, help me with this because I, I need to understand what a cat cafe does. Is an adoption center.

An adoption It is. It's like a living room environment for the cats to roam around while people come in and visit and socialize with them and then have the ability to adopt them out.

Okay, so your question is, how are you being too generous? So you set up and operate this whole thing? Yes. Out of your pocket? Yes. As a gift? Yes. Okay. All right. And of course, you did not expect it to be a business. You expected for this to lose money. Correct?

We were hoping to break even.

How would you do that? Do people pay fees to adopt the cats? They do, correct. Okay, and but they're not doing that often enough, or are you not charging?

We don't have enough.

We did increase just recently the cost, but we're not getting enough customers or community involvement. So it might be just because we've only been around for a couple years and the word isn't out yet. Um, how much are you losing every month doing this? We're losing $4,000 a month.

And, and, and what is your net worth? $1.7 million. Okay. So $50,000. How old are you?

I'm 48 and my husband is 60. Okay. I earn $187,000 a year.

In addition to what your investments do. Okay.

Correct. And I'm still, we are investing $18,500 per month. Or total.

But I mean, you can handle, with the numbers you're giving me, a $50,000 a year donation to the world of cats, or whatever we want to call it, right? This is a— have you formed it as a nonprofit?

It is. It's a 501, so we do get tax benefits.

Okay, but you do not solicit outside donations, only fee for the cats?

We have a little bit, but self-reportedly we have not done well with asking for money.

Yeah, that's not shocking. Okay, and how many cats did you adopt out, say, in the last 12 months as an example?

Um, well, it's 232 in the last 2 years, so about 115.

Okay, all right, so 10 a month. Okay, and they charge— and you charge charge what?

Um, well, about $150 per cat, but we give most of that back to the rescues so they can continue their efforts. They microchip, they vaccinate, um, they spay and neuter the cats.

Before they send them to you? Mm-hmm. Correct. So these are all rescued animals?

They are. So how much are you actually bring it in.

That's included though. Oh, but so it's just your operation. So yeah, so you break even, you don't— you're not collecting any fees towards your operations, so your operation is just all out of pocket. Yeah, $4,000 a month.

What do you— are you leasing a building for this? Is that what's going on?

We do, we do lease a space, and then we also employ a couple part-time employees, and then you know, cat food and litter. Also, it's a gift shop, so a little bit of merchandise as well. Okay. I did look back in the last 6 years, our net worth did still increase by $700,000. So it's definitely—

I don't think it's killing you. I think it's just emotionally bothering you. Yeah, I'm anxious about the losing money because it's just like the business, the, the business model of the nonprofit is not what you thought it was going to be.

Right. Yeah. I think we definitely need to be better about asking for help. We're both nurses, so we're usually the helpers and not the people asking. Yeah.

Can you get volunteers?

We can. Mm-hmm.

Okay, so here's what I would do in this situation. I would treat it emotionally like it's a small business that's losing money. And in that case, what I want to do is I want to say what must be true for me to be happy that we're doing this. And that's a number, okay? I'm not happy— you've established that— at $48,000 a year, right? Not because it's hurting your net worth, or not because you can't afford it, but because that number bothers you. It's that simple, right? Okay, the juice isn't worth the squeeze. Squeeze, right? The benefit of helping is not worth $50K to you. It doesn't seem to balance the scales. So how much would you be willing— you don't have to answer me, but you got to answer you— how much am I willing to feed this thing, no pun intended, right, to and still be okay with that? Okay, it might be that you could do something else that was $5,000 a year that gave you the same sense that you were after with this. And I don't know what it is, but it might be that we— okay, this methodology that we were using here to be a blessing to the animals and our special needs child is not paying off, so we've got to find another way to be blessing to the animals and blessing the special needs child.

And it could be that you just take the existing shelter and you make a donation and your child volunteers there, there, and you set up a room at that shelter in your name that you give them a one-time gift that keeps it going, or gets it going, and then they keep it going, or whatever. I mean, it could be you just find out a different method to try to do some of the same original motivations, or we change this model. I'm afraid, just on the outside looking in, if you charge more, you're probably gonna have no adoptions, because there's only a certain amount people are gonna pay.

They'll go elsewhere to adopt a cat, right? If it's half the price. So that's not a lever we can tweak much.

Significantly. Yeah. And if you don't make the donation back to the animal center, they'll continue to send you animals anyway, because you're a methodology to help the animals find a home. Right? Correct. Yeah, so you don't have to make that donation back. And so at $100, you know, that, that's $1,000 a month, $1,500 a month, right? Right. So I don't know, but you got to decide what must be true here for me to be okay, because I'm not okay today.

And maybe you look at, you know, local businesses that will sponsor you. For a couple hundred bucks a month, you'll advertise for them in the shop, and I'm gonna get good at asking for for money. Yeah, you're in the fundraising business.

I'm going to, you know, or I don't want to do that, and so I'm not gonna do it anymore. And we're, you know, you could close it, that's an option, you know, just— but I'm gonna sit around and creatively think, okay, if I wasn't doing this at all, what would I do today that would be the number that I'm okay with? $2,000 a month, I'm okay with that. Whatever. What would I do today to do that? And would I make a $50,000 a year donation to, you know, Cats R Us or something? I don't know. And this is the part where we say there's more way— more than one way to skin a cat. No, you don't say that. I was waiting for it. You can't say it here. You got to say it on this call.

Okay.

Hey guys, George Campbell here.

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34 years on the air, first Cat Cafe call.

And not the last. May there be many more. They're getting popular, that's all I'm saying.

Well, I mean—

There's dog bars too, by the way. I know you're a dog guy. And you're all about horses, so— I love a horse cafe, but I think the smell would turn people away from drinking their coffee.

I'm not even gonna— yeah. Hey, if your private student loans are in default, when you've fallen so far behind that the loan is underpaid, considered unpaid, why Yrefy may be able to help. Yrefy helps borrowers in tough situations explore low fixed-rate refinancing options that fit your budget. Go to yrefy.com/ramsey. That's the letter Y-R-E-F-Y dot com slash Ramsey. Might not be in all states.

Today's question comes from Tim in New Hampshire. I'm planning to retire at the end of the year, and I'm wondering if I should take an $80,000 lump sum from my employer or take a monthly monthly payout from my retirement benefit. I'm debt-free and on Baby Step 7. What would you advise? It's a fun math equation. Now, I don't know the monthly payout. That would have been nice to know as a part of this. But generally, if you can take the lump sum and you don't necessarily need it and you can invest it, it might be better off depending on what that payout is.

It almost always is. Okay? So, there's two things going on with a pension, and that's what we're talking about most Most likely. The pension regulations require that the money is invested in such a way that your typical return on a pension is around 6 or 7% versus a good growth stock mutual fund, which would have averaged between 11 and 12%. Okay? So, number one, when you're getting that monthly payment, it's based on a lower rate of return. Not good. Number 2, when you die, if you take $80,000 and put it in a mutual fund, someone gets the $80,000 or whatever it has grown to. If you die with a pension, nothing, zippo, nada. Oh, you could have survivor benefits, and then when your spouse dies, nothing, zippo, nada. Okay, so now we always take the lump sum because it's a lot more when you die and a little more while you're your life. And typically, here's the thing, in other words, if you take the $80,000 and invest it, it typically will create more monthly income than the pension because it's invested better. That's what it amounts to. So yeah, we almost always, when we run the calculation, we tell you to take the lump sum.

It's a lot better when you die and a little bit better while you live.

And it's in your control.

That's the most important thing. There you go. There's that too. Sophia is in Salt Lake City. Hi, Sophia. How are you? Yeah.

Hi, how are you? Great.

How can we help?

Yeah, I just had a question. So my husband and I own a house. We have one car payment and a little girl. Um, my husband doesn't like our house. He wants to move into an apartment so that we can save money for a better house. Is it better to move into an apartment or stay into our house and build equity?

Okay, why does he not like your house?

I think he just doesn't like it because he— we feel like we're spending more money, like watering the lawn, or like it's just kind of smaller. It only has 2 bedrooms, so we can't really grow our family into it. And there's some things that need to be done with it, and I think that's just spending more money.

So he just doesn't like the idea of home ownership at at this point?

I think so. I don't know. No, I think he really does love— he wants to get a house, and I think this one just doesn't feel like the right one for him.

Okay, but you have one child and two bedrooms, so right now it works for your family. He just doesn't like watering the lawn.

Yeah, that's what I'm hearing. Money spent. Yes.

So how much is this mortgage compared to your income? Because you said it's also a financial burden.

Yeah, so our mortgage right now is $2,900. Our income is $6,200.

Hmm, so that's eating your lunch right there. It's about almost half your take-home pay. Yeah, yeah. You just bought too much house to begin with, and so now he's seeing all of this.

You spent too much. I don't know if you bought too much house. That's a very expensive 2-bedroom house.

Uh, yeah, it has a basement. They call it the basement downstairs a room, but it really isn't. Doesn't have a closet.

What will this house sell I'm sorry, phoning a friend, I think. I think she's asking him right now.

Yeah, I don't know exactly.

I know that we—

yeah, so what I would do is find out, figure out what it would sell for. It just seems like it's very expensive. $3,000 a month for a 2-bedroom in Salt Lake City, it sounds out out of whack. Like you bought in a neighborhood that's like pretty chic or something. I don't know. I don't know what you're doing.

The problem is if you go buy a 3-bedroom, it's probably gonna be more expensive. So it doesn't help your financial situation.

Well, maybe if you stay in the same neighborhood, but maybe you need to be in a different area. So no, I would not long-term be a renter. No, I would not buy a home that is 40% of your take-home pay unless your income is going up dramatically over the next 2 years. You're gonna be pinched because that's— you're what we call house poor because by the time you pay all your bills and pay your house payment, you don't get any money. You're broke. And so you bought a house you can't afford in terms of the payment. And so yes, if your income's not going to go up and you don't like the house, then it is time to get out of this house. And if you rent for a short period of time, 1 year or something, while you reassess and reevaluate where you're going to live and get a payment that you can actually afford on a 15-year fixed rate, then I would change and go that way. Yeah, and so, you know, those are all decisions you guys can make, but the answer is yes, we would sell this house unless your income is going up because your payment is too much as a percentage of your income for you to have a quality life.

The payment's gonna eat you.

And get rid of that car debt as well. So if you reset, go rent, pay off the car loan, save up an emergency fund, stack up a bigger down payment, you'll be in good shape.

Dalton is in Memphis. Hey Dalton, what's up?

Hey Dave, George, it's good to talk to you.

You too. How can we help?

Thank you for taking my call. Sure. Yes sir. So, uh, the question is, um, uh, I can give you the question, give you a little backstory. So we had, uh, last June our house flooded. Um, thankfully we did have flood insurance, so we were able to, um, we rented for a little while And through some other problems that we had, we chose not to move back. And so the renovations took about a little about a year and we bought another house. That house is now on the market and it is completely paid for. So we have only one mortgage. And my question is, it's been on there for about, come up close to 70 days. Do we just wait it out? Um, um, keep lowering the price, or at some point think about maybe renting it out.

Are there other houses on the street that are— have sold or for sale that are in the flood zone?

One, one directly did, but I guess she's technically not in it, but she did have some water damage because it was, uh, more of an astronomical flood than it— than the, the plain says it is.

Um, and you've had no showings, no offers in 70 days.

Lots of, lots of showings. Um, a couple of very interested parties. The flood insurance is what's backing people out of the deal.

Well, they can buy flood insurance. Why wouldn't they not do the deal?

They just don't want to be in a floodplain. They don't want to— that and the price of what it's going to cost to have the flood insurance. Additional costs. How much is the flood insurance? Uh, the one I just, the policy I just bought was about $2,500 for the year. And what's the house priced at?

$299,000. Okay. That's 1%. That's not killing this deal.

It's an extra $200 a month.

You could give it, you can give them 10 years of flood insurance to still make a deal, right?

We just haven't had any offers. It seems like the area here is very stagnant. Stagnant. Um, I've— my realtor is pushing this every day, and every property that they have at their firm is just sitting.

Okay, so it's not flood— it's not a flood zone issue then?

No, well, that just seems to be the slow market. It's not helping. That just seems to be not helping.

Yeah, it's not helping, but I don't think it's killing your deal. But if you're sitting in a market where nothing's selling, lowering the the price doesn't matter. That won't cause a sale until you get down to a giveaway price. I might look at changing realtors. If you're not using a Ramsey trusted real estate agent, you may want to take a change in realtors. Sometimes that'll move the property.

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Lee is with us in New York. Hey Lee, what's up? Hey, how are you? Better than I deserve. How can we help?

I hear you. I'm trying to get where you're at. Oh my God, I'm so happy to be here. Ah, real quick, I'm 54 years I've been on Baby Step 2 for 18 months. I paid off $38,000. You go, girl. Awesome. Thank you so much. I'm so proud of you. Thank you. I appreciate it. And that's why I'm here. I have gone against everybody that I know. I've been hearing about how I need to take a break. I'm too old to work 2 jobs. You need credit. You're crazy. It's— I've been all surrounded by naysayers. A lot of losers around you. Oh my God. Yes. I even was like, you know what? I made a payment today and somebody had the nerve to say to me, look at You bragging?

Goodness, you need some new friends.

Uh, exactly. I haven't had a pedicure since 2024. I've been living off of boiled eggs and Quaker Instant Oatmeal. I didn't even make way to buy myself a new bed. I've been sleeping on a futon mattress.

Are you, are you, are you done? Are you finished?

Yes, today is the day that I make my final debt payment. On what?

What are you paying off today?

Oh, today is a credit card. I had 3 credit cards. Who is it? What credit card? Uh, Citibank.

Oh, I hate them. I'm so glad it's not in your wallet.

No, it's not. I just— today I just wanted to do it just surrounded by people who actually understand what I've been going through.

So you're gonna make your payment live on the air right now? Right now. The final payment.

Yeah. Mark the moment.

I love this. Yes! Ah, this is so fun. I'm so proud of you. Oh, thank you, Dave.

I've been watching y'all for years.

What do you make a year?

I started at $81,000 and I went up to $93,000. I work in a restaurant. I have 2 restaurant jobs.

So if you, uh, if you look back, you're 54. When was the last time you were 100% debt-free? Oh God.

Oh. I was 30-something.

Wow. So 20, 25 years.

Yeah. Yeah. Went through a divorce. My dog died. Like it's been a whole thing. This 18 months has been crazy and I just, I just been hearing about how I'm doing the wrong thing.

Well, you've been doing the right thing. The only thing you're doing wrong is who you're hanging out with, but yeah, I don't hang out with anybody. Well, whoever it is that you yapping at you, you need to get them some duct tape. Yeah, but the, uh, you're just so cool. I love you. You're awesome. Thank you. Way to go. You're such a winner.

I'll change my life. Y'all changed my life.

You changed your life. We just got to observe it. Yes. Thank you.

You're an inspiration.

Now let me ask you, okay, everybody's telling you you're crazy and you hadn't had a pedicure and life's been tough for 18 months. Was it all worth it?

Yes. Yes. Because you know By listening to everything, listening to your show, I got a financial advisor through Ramsey. I have an IRA, I have a 401k. I was minus $40,000 net worth and now I'm almost $200,000 net worth because of you. I didn't do it.

You did it.

Quarter million dollars.

I'm so proud of you.

Life insurance and everything. I did all this stuff and I'm like, I just want to do this last one. I want somebody to understand and celebrate with me. Well, you got the right people.

We all want to celebrate with you. You're fun. Oh my goodness, I'm just—

I'm so happy to be here.

Awesome. Very cool. So what are you gonna do? You're gonna like hit submit on the payment button or something and say bye-bye city?

Of course it's not working. I'm trying to get my Face ID to work.

Oh gosh. Well, it doesn't recognize you because you hadn't had a pedicure.

I've had it open all this time and now it won't. Of course, it's my life.

That's the devil in that technology trying to block a blessing.

Seriously, I've had it open all day.

What's left on the, on the balance that you're about to pay off?

$1,092.53.

All right, amazing.

Very cool. Well, I think we can count it. I know you're going to be able to pull it off once you get off the pressure of being on the air and trying to do the face and all that stuff. But yeah, all right, so here's what I want you to do. I want you to tell me, now that you're debt-free, how's it feel?

It feels great. I can't believe this. I've had this open all day waiting to do this, and now it's not going to let me. Oh, I'm so sad.

It's okay, we're gonna count it. It's the same thing.

If it happens 30 seconds from now, it'll still— it'll still be magical.

Oh, I'm so sad.

You'll work it out. I can't believe this happening to me right now.

I tell you what, I tell you what we're gonna do.

You're count down and scream, "I'm debt-free!" We're gonna put you on hold. Christian's gonna check back with you in a few minutes, and if you get the thing working, we'll bring you back on the air, okay? Okay. And if you don't, we'll just know— we'll just know that you did it at home, okay? Yes. All right, count it down. 3, 2, 1, "I'm debt-free!" Scream it!

3, 2, 1, "I'm debt-free!" Yeah!

Yes, you are!

We got the music and everything. Got the whole backdrop.

That's pretty good. The confetti fell in the studio. Just snuck in a debt-free scream right there. Wow, pretty cool, pretty cool. All right, check back with her in a few minutes and make— if she can get up, we'll let her push the submit button. On the scout's honor. First time we've done that one, I think. Way to go, very cool. Jeff is in Tyler, Texas. Jeff, what's up?

How's it going, Dave?

Better than we deserve, sir. How can we help? I knew you were going to say that.

Hey, so me and my wife have been extremely blessed. We are 45 and 46 years of age, got 4 children. We have— I make about $330,000 a year. Wow. Have been for a little while now. We are out of debt except for our house finally, which is fantastic. My biggest question is we've got about $650,000 in a 401 and one— when I get on the Dave Ramsey investment calculator, it's, by the time we retire, it's a pretty dead gum big number. And I'm really, really worried about our investment strategy. If we continue maxing out our 401 like we have been doing with my company match, and when it comes to required minimum distributions—

Your company doesn't have a Roth 401?

Well, so they have a Roth IRA. I'm not 100% sure about a Roth 401. If we do, I'm not aware of it, but that's something that I could I could look at.

So 80% of the companies that have a 401 have a Roth option.

Okay, I'm sure that they probably do. Then, then start your contributions from today forward being Roth.

That's the first step. Okay. Yeah, because there's no RMDs on Roth, right? Okay, no required minimum distribution at 73. Then the second thing is let's get the house paid off, and when the house is paid off, I'm going to start moving all of it at once, or at some point, or move chunks of it, whatever, however we need to do it, whatever your bracket creep is. On your income, whatever you're looking at. I think you're probably creeped out on the actual brackets. But anyway, I'm gonna move chunks of it to Roth and pay the taxes as a part of my investment strategy so that all of the growth from this point forward is tax-free, and so that I avoid RMDs. And you got time to do this, so get the house paid off and then cash flow the taxes that are created without having to touch the Roth, without having to touch the amount. So let's say you're $600,000 in there, you move $200,000 over, it creates $40,000 in taxes. You got the extra $40,000 because you don't have a house payment anymore, and you just pay that $40,000 in taxes and you move the whole $200,000 over.

And you do that in like 3 chunks or 4 chunks or whatever, and you get it all moved over there. And then by the time it gets there, it's gonna be millions and millions of dollars. As young young as you are. Yes, sir. And so, yeah, you're— you've, you've anticipated a problem way in advance. Congratulations, that's called wisdom.

Fantastic.

Yeah. And then there's an added benefit that you hadn't even got to yet. I didn't even think about this stuff in the old days. I did all Roths and converted everything to Roth as fast as I could, as long as, as long as I can look back. And I had no— I wasn't even thinking about RMDs at the time, and I wasn't thinking about estate planning either. But here's the thing, you can name a beneficiary on this Roth. There's no taxes, no income taxes to your heirs.

They're going to love you even more. Yeah.

And if it's a stupid traditional, they got 10 years under the Biden Act, the Biden Secure Act 3.0, that they make you cash it. They make the heir, an inheritance diary, make you cash it out. It's a sort of RMD on an inherited required minimum distribution. Institutions to get— you got to get all out of there in 10 years, and none of that applies. So all mine's Roth, so my kids have no problem with any of this. It all goes to them. No taxes except estate taxes, but that's a different issue. Hey guys, Dave Ramsey here. Every day on this show, we help people work through real money problems and figure out what to do next. Now you can get that same kind of help anytime with Ask Ramsey. Ask your money question and get answers built on Ramsey principles. Principles we use on the show. Whether you're making a decision or just want something explained, Ask Ramsey is here to help. It's fast, simple, and free to use. Go to RamseySolutions.com and try Ask Ramsey today. That's RamseySolutions.com. Our Scripture of the Day, Isaiah 40:31: But those who hope in the Lord will renew their strength.

They will soar on wings like eagles. They will run and not grow weary. They will walk and not be faint. Ayn Rand said, money is only a tool. It will take you wherever you wish, but it will not replace you as the driver. Well, I got to tell you, every dollar our best app ever in the financial world that walks you through the Ramsey process and builds a budget for you and gives every dollar a name, every dollar an assignment, is absolutely exploding. The number of people that are signing up for this is going crazy. It's awesome. You can start it for free in the App Store or Google Play, and it will walk you through the whole Ramsey process. And in the first 15 minutes, when you're just filling out the stuff, it's gonna help you find margin for from day one. And then I'm going to show you how to apply that margin to the fastest, quickest way to build wealth. It's free in the App Store or Google Play. EveryDollar. So, Lee in New York was able to push the button and she made it. And we're not going to put her back on after all, but she got to do her debt-free screen.

We confirmed it. And we have confirmed that Citibank is no longer in her life, which is awesomeness, awesomeness, awesomeness. Mark is in New York as well. Hey Mark, what's up?

Hello, thanks for having me on. Sure, how can we help? Yeah, so I'm getting married this coming summer. Uh, my fiancée and I are working through a bit of a concern. She is in her fourth year of college, going to graduate this spring. Um, the way she financed through college was her parents had told her that they were taking care of it and there was going to be a small loan in her name. So there's a small loan in her name right now, and now they're saying that they have a very, very large Parent PLUS loan that they're just telling her about now that they expect her to pay back when she graduates. We're looking to figure out how to navigate that.

I'm sad for you, man. You're marrying into a weird family. Yeah, this is gonna be a long, drawn-out bunch of drama. You getting married a year from now? Yeah. Okay, well, I mean, the answer to your question is simple, but the results are not gonna be. The simple answer is your fiancée is not liable for a Parent PLUS loan legally. And if she did not tell them about the loan, if she did not say, 'Mom and Dad, y'all sign up for this,' and I'll pay it, then she's not morally obligated either. And from the story you're telling, she didn't even know about it, much less agree to pay it. Is that correct? Correct. Okay.

How much is the loan?

Uh, her federal one, I believe, is $35,000. That's the small one? That's the smaller one. The parent plus one, the parent plus one is $100,000. Good.

And she's going into her senior year.

Correct.

So she's got a year to go and they're gonna pay for that with loans as well?

That— I had used the total for all 4 years, like, we know the total numbers that we have.

So she's covered until graduation at this point through the student loans?

Yeah. Okay. No, they already— have they already paid her tuition for the entire entire year?

They had put up the Parent PLUS loan for it, so in theory, yes.

Well, I mean, if they paid the tuition, they can't unpay the tuition. Yeah. Okay, because when she tells them, no, I'm not gonna pay this, I didn't agree to, they're gonna be pissed. Yeah, they don't have a right to be, they're jerks, but they're gonna be pissed. How How old are you? 23. And, um, what will you two be doing for a living?

I'm going to be working in the medical field and she's going to be a teacher.

What does medical field mean?

It's like staffing.

Okay. And you have a 4-year degree? Yes. And do you have student loans? I do not. Okay. Well, this is just an old guy talking now. When you marry a young lady who is getting ready to fracture the relationship with her parents, it's going to be very, very hard for her. She's going to be in a lot of pain, and so your marriage is going to be impacted by that pain.

Right.

The wedding might be a little awkward is what we're trying to say?

Well, life is gonna be awkward. There's some dysfunction here because these people are jerks. You don't spring a $100,000 loan on somebody that didn't agree to pay it out of the blue after they get engaged going into their senior year, and we don't call you a jerk. You're a jerk if you do that. This is your kid that you promised to take care of the education, and then you changed your mind Okay, now if that's what really happened, then these people are jerks. Now, if there's another part of the story we're not getting, then there's a different thing. But when your daughter— your wife says to her parents, "I'm not paying this," it's not gonna go well, Mark. And I don't think she should pay it, but it's not gonna go well. She's gonna have a— you're gonna have a negative experience here. Count on it.

Yeah, and I could sense them throwing that they did a good thing back at her, but I don't feel it.

How did she think this was all being paid for if they just sprung this $100,000 loan and said, oh, by the way, we took this out, you got to pay?

They were taking care of it and she was going to have a small loan, so she was going off what was on her credit report for the federal loans.

They were taking care of it, but they— she didn't have any idea that they didn't have any money.

No. If Dave says, hey, I'm taking care of dinner, I assume that means Dave is paying and has no expectation of me to pay him back. So the communication here is terrible.

Wait a minute, George, how did I get in this?

I'm just saying I'd like a free dinner. Thought I could squeeze that in.

Oh man. Yeah, Mark, this is a problem relationally. It's not a problem legally, and it's not a problem morally. So the answer is I would— don't you get involved, but I would tell her to tell her parents that, "Mom and Dad, I did not agree to pay this, and you can't spring it on me in the 11th hour and turn me into a pumpkin. It's not gonna work. I'm not gonna do pumpkin. You get the pumpkin. You signed up for it, and I'm not paying it. I'm so sorry. I hope you understand that you didn't tell me about this. I didn't sign up for it all along. If I have integrity, and if you'd told me about it up front, I would have— could have made the decision to whether or not to take this on, but you can't just come along and drop this like a freaking atom bomb into my life, and I'm not gonna pay it. I'm sorry, I love you, but no.' And then they're going to go 'meh meh meh,' and you're gonna have to listen to your wife talk—your fiancée talk about her parents—and they're gonna say maybe you're gonna be the therapist for a while.

Listen now—for the next 30 years! Because after it's not this thing, it's going to be something else with these people. These people are screwed in the head.

I wouldn't expect a nice wedding get from them.

I wouldn't expect anything that isn't caught drama associated with it for the next 30 years. I really wouldn't. I mean, these, you know, integrity is integrity, and this is just gonna bleed over into everything else that goes on here. If you— now, I am questioning whether this is really what's happening or not. It's bothering me, but I'm going off of Mark's word that this is what his fiancée said, and he's got it very dialed in, and his mind. But I'm wondering if there's other conversations that the fiancée forgot or something like that. So, but if it went down exactly the way he laid out, then we're just gonna blame it all on the parents being dysfunctional, screwed in the head, and whatever.

Parent PLUS loans are one of the worst. I hate Parent PLUS loans. Not just financially.

This comes up all the time. We hear this call all the time. Parents do Parent PLUS loans, and then they meant to do it, then they get a divorce, and I can't I can't afford it, so you gotta help me because I'm stuck because your daddy left me after 23 years.

Yeah, even if they say we're gonna pay it.

This is what happens. This is what happens when you do these stupid butt student loans. And let me help you guys, $35,000 is not a little student loan, Mark. It's a big butt student loan. Especially for a teacher. And $100,000 is 3 times a big butt, okay? That's a lot. It's 3 big butts.

That's horrible. So many big butts.

This is ridiculous. Y'all, I mean, we've got now gotten dumbed down to where we think $35,000 is a small one. That's a big— that's ridiculous, you guys. No, no, no, no, no, no. None of this is okay. And you parents, stop doing this crap. Don't put your kid in a school unless you can pay for it or they can pay for it or both of you together pay for it. This is stupid. Have some integrity, community. —cruises up families generationally. This is what your Congress is doing to you. That puts this hour of the Ramsey Show in 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.