Transcript of Discipline Is the Difference Between Broke and Wealthy

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 in the Fairwinds Credit Union studio, this is the Ramsey Show. I'm Dave Ramsey. Rachel Cruz, Ramsey personality, number one bestselling author, co-host of Smart Money Happy Hour, and my daughter is my co-host today. The phone number here the number here is 888-825-5225. The call is free, and some say the advice is worth exactly what you pay for it. Stacy's in Portland, Oregon. Hey Stacy, what's up?

Hi, you two. Thank you for your time today.

You too. How can we help?

So I have an issue with my spouse. We've created a habit in our marriage where we go I go to my parents and ask for money, and this basically comes from him telling me to do so. And I, I just really need help with this situation because I don't want to ask my parents for money anymore. I feel like we need to handle our own financial problems ourselves.

How long have you guys been married?

Almost 20 years.

Okay. And what's the main reason for going to them for money? Is this for big purchases, emergencies, monthly bills? What's the reason for it?

Um, I would say it's a combination of all three. It's, it's different every time. Um, just this last time, um, he decided to spend a lot of money doing a project for himself, and then that kind of left us, um, behind.

What kind of project?

Um, building a shop at our home.

Okay.

And how much money do you guys usually—

is it—

are you looking for when you ask them?

Um, it's probably around $40,000 to $50,000 each time. Yeah.

Okay.

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

Would you say that's true, Stacy?

So almost. He actually has nothing to do with the finances.

I say he sounds like the one that's checked out and he's like, oh, 'Well, we need some money because I'm doing this thing over here.' Yeah, he kind of just spends and, you know, waits for me to say, 'Okay, you know, it's too much.' Here's the thing: the going to your parents is the symptom.

It's not the problem.

Correct. Okay.

And so you've got to fix the problem, and then you won't need to go to your parents anymore. And so how do we do that? Well, this is called a Marriage Makeover. We're going to sit down and we're going to both be grown-ups. I refuse to continue to operate the way we've been operating. It's not healthy. It's not good. And I'm getting progressively pissed off at you. I mean, frustrated with you. I mean, bitter towards you. I mean, resentful, whatever, right? I mean, you know, you fill in the word, right? But— and this is getting worse rather than better. And so we're going to try a new thing. You and I are going to sit down together like two adults. Not like one of us at a kid with a candy store with his hand out. And we're going to decide each month what we are going to do with our money. I'm happy to write the checks and pay the bills once we have agreed on where the money that we make is going to go. And I'm never going to my parents again for any reason ever. So we've got to fix this, honey.

We've got to get on the same page. It's, it's messing up our relationship and it's It's messing up our money. And it's gonna mess up our relationship with mom and dad eventually, because eventually they're gonna get tired of it. They're probably past tired of it already, really. But, yeah, so, but I mean, so if that conversation, sitting down with him and says, okay, we're gonna get on the same team, we're gonna be in agreement each month before the month begins where the money's going, and we're gonna be in agreement on the principles that we are going to save, we're going to be generous, we're going to invest. And if we can't agree on those principles, then we have a different problem. That's not a money problem. It's a marriage problem. And we're going to sit down with a marriage counselor.

And I think going back, Stacy, and looking at the pattern at which— what reasons you did borrow the money, right? So it may be him and a lot of his projects. And it's like, so that means going forward, we can't do these unless we have the money. I don't know if you ask for big, you know, money for big vacations. And it's like, if we don't have the money for the vacations, we're not doing it. It's almost like putting out the reality of what has been Yeah, the State of the Union of like, this is what we've been doing and now we are not going to keep living like this. We can't.

And so going forward, I need your help to carry the weight of this because the weight of this is too heavy for me to carry by myself. And by the way, husbands can say that to wives. Wives can say that to husbands.

Right.

And because it's properly done, two grown-ups are making the decisions. But what happens with the spender— and I'm a spender and Rachel's a spender by nature— is we don't think about the consequences. We just want the thing.

Yeah.

And nobody— there's no grown-up in our head when we start the process. And only with intentionality do spenders inject a grown-up into their brain. And I got the opportunity to go broke in my 20s, so I had to learn the hard way. Rachel had to grow up in my house, so she had to learn the hard way.

That's exactly what I was about to say.

Everybody's got their hard, but somehow an adult has to be injected into that spender's brain to where you can't spend like you're in Congress.

Yeah, I've tried to get him— because I have the EveryDollar budget app— and I've tried to get him to be a part of that and to have like monthly meetings.

But I don't want to ask him to do a budget. I want to ask him to help me carry the weight of the household. I'm tired of being your mommy.

Mm-hmm.

It feels like you're a little boy that comes wanting his allowance. "Baby, I want a new wood shop. Would you call your mother?" You know, "Oh my God!" You know? That's how it sounds in your head, because this way you've described it to us. And he needs to hear that that's how he sounds. And so, instead of, "Honey, I'm like a grown man, and I think a wood shop would be really cool, and here's how I think we can save to get that money. It may take us 3 years, and I may have to actually use some woodworking tools to build the stupid thing, but I figure out a way to get it," right? But that's what grown-ups do. And you can't just— but this is a relational marriage issue, and ask him to help you not do a budget, but to carry the weight of the decision-making in the household and be in agreement. And the best way to do that is a budget.

Yeah, and I think that's one of the weird dysfunctions in money when it comes to relationships and marriage is when one person's in control. And we hear this a lot from— again, it can be husbands or wives. You know, we hear both sides of it. Of one person has all the, you know, all the control, all the decision-making, whether because they want it or they're defaulted into it. And then the other one is just sits on the sideline and gets handed out what feels like— "La corona." Yeah, or an allowance or what. And it's this weird, it becomes a weird power. "Oh, he's my husband." Yeah, a weird power dynamic. And if you are married, you're both two grownups that you both get a say and you're both in the decision-making process. It's not one taking care of the other. It starts to get this, into this weird nuance. But that's the important part of, of having equal say in your marriage when it comes to your money. So you don't create that type of pattern.

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So adding to that last discussion a little bit, in most marriages, opposites attract. Larry Burkett used to say, "If two people just alike get married, one of you is unnecessary." It's a good thing that opposites attract. Typically, the spender marries a saver. And you savers need a spender in your life so you have a life. Because you would live in a cave, collect lint, and only come out on Triple Coupon Thursday. You spenders need a saver in your life so you don't have to eat Alpo at retirement. And so you need each other to balance this thing out, but that requires that you're working together, not that one of you assumes the role of parent, which is what Rachel was talking about as we went into that break. So, you know, "Mama handles the money and she just lets me do it." No, no, no, no, no. She's not your mother. She's your wife. And I call my wife Mom or Mimi, her grandmother name, but she doesn't function in my life as my grandmother or my mother.

"Okay, she's my wife." When you say, when the guests, when the grandkids come.

I call her that on the golf course. People look at me like, "She's not old enough to be your mother." Y'all do do that. "Hey, Mom. Hey, Mom. Mom, where are you?" Or "Mimi." But you're not functioning in that role, okay? That's the difference. And if you're the one that has been— and usually the nerd that likes the details also marries a free spirit that hates details. And the nerd's usually the one listening to this show, by the way, at least at first. The free spirit, when they do start listening to the show, finally are glad that it's occasionally funny because otherwise they would think it's a 401 meeting for their mother's company and then it's a root canal. No, we don't do that on this show. This is like real life. It's fun, funny, sad, happy, all those things. So that's why it's compelling and entertaining and why people, tens of millions of you, tune in, and thank you for that. But the last thing you nerds need to do, or you savers, or whoever it is that's got control of the money, is look at the other one and say, "I'm going to put you on a budget." That sounds like, um, you're going to timeout.

Okay? Instead, "I'm tired of carrying the weight of all of this by myself." and then finding out later you might have had a good idea that you never voiced. And so emotionally, we're going to carry the weight of running our household together. And financially, the nerd is probably gonna be the one that does the execution, that hits submit on the payment to the light bill or whatever it is, right? But the— and the free spirit's probably not gonna do that, but we are going to develop where the money is going before it leaves together, and that's called a budget. Not, "I'm going to put you on— I'm tired of you, dot, dot, dot, dot, so I'm going to put you on a budget." That will not work. Suddenly, this person who's been acting like a child will suddenly start acting like a grown-up and go, "No, you're not telling me squat. You're not gonna tell me what I'm gonna do." You know, you're gonna have that fight, right? You know, like a 4-year-old, "You're not the boss of me." You know, that kind of thing.

Yeah, and I would say to the spouse, if you are the one doing everything, and again, it's not always out of malice. We were talking to some friends the other day, and he even mentioned, he was like, "Yeah, just kind of by default, he just kind of takes care of everything." And he was like, and the other day, he mentioned to his wife, he was like, "Kolly, I'm so nervous about X, Y, and Z thing coming up." And he's like, even just saying it out loud, that's what he said, he said, "Even just saying it out loud felt good." And he was like, "And then I realized, oh my gosh, we really don't talk about this very much. I just end up doing it." And so again, it may not be out of this like malice, weird control of how you— it's just how it's been done. But then you don't realize even a small glimpse of even, speaking something about money to the spouse that never talks about it or is not involved, you suddenly feel what that weight lifting off feels like to have another adult in the formula with you. And I think that's what's important.

So start practicing that. And start that being the pattern within, you know, your marriage, because you are two adults, and one of you does not need to be carrying the whole thing.

Yeah. Multitude of counsel, there is safety. When two people can be in agreement, there's safety. And also, by the way, those of you that are doing the budget right now and the other one has no idea what's going on, another thing that you alleviate— this I discovered, didn't happen very often with Sharon, but it did happen a time or two— is when something would go sideways, my best plan that I did by myself, because she wasn't involved, it would go sideways, I got to experience, "I told you so." I'm like, "No, you didn't. You never told me." "Well, in my head I knew it was wrong. I knew that wasn't gonna work. I had a bad feeling about that." All these things come out. All that goes away because you cannot say, "I told you so," 'cause you were in on it from then on. So from then on, you never get another "I told you so." It's like we decided to do this thing and this thing didn't work. We decided and wished we hadn't. But we can't look at the other one and go, "You're an idiot." you know, that kind of thing.

And so, but don't use the phrase, "I'm going to put you on a budget." That's lashing out, anger, you're frustrated, you're tired. Instead, "I need help. I don't want to carry this by myself anymore. Would you please join me in managing our lives?" And that's what— and the best way to do that is write it all down and have a budget. Yeah, instead of, "I'm going to put you on a budget. That's like, you know, like you're getting ready to get fired from your job or something. Susie is in Stamford, Connecticut. Hi Susie, how are you?

Hey Dave, it is such an honor. I've been listening to you for 12 years now, and Rachel, such an honor to also speak with you as well. Um, I can give you a little bit of my story.

Okay, well, what's your question first? What are you calling about?

I am calling because I'm trying to see if my plan follows Ramsey principles. Um, I'm married, 36, stay-at-home wife, about $900,000 net worth. I followed you guys again for, for years and just wanted opinions about front-loading retirement and 529 accounts for my kids. And then by the age of 40, setting up a bridge account and ideally pulling from that maybe 4 to 6% to cover expenses once the house is paid for.

So that you could stop working? Is that the goal?

To, um, no, always working, but doing maybe, uh, things that we, we like more, I guess, and maybe more time spent volunteering as well.

Let's be clear, you did not ask if, um, if you'll be okay if you do this. You just ask if it aligns with what we teach, uh, because you're obviously doing great. You're millionaires and you're 36 years old. Congratulations, very well done. And I'm guessing you did You did that starting from nothing?

Uh, well, with a little help from parents paying for college, but other than that, that was all us.

They paid for college, but they didn't give you $500,000?

No, they did not.

Okay, all right, that's what I'm saying. So you guys have built a million-dollar net worth by the time you're 36. Way to go! Congratulations!

Thank you.

That's excellent. Now, I would buy— if you want to front-load 529s and quit funding them after that, that's fine. I did that. I would not front-load retirement above 15% until the house is paid off because that's baby Baby Steps 4, 5, and 6 working together. Baby Steps 4 is 15% of your household income going into retirement. 5 is if you want to front-load college and finish it, that's fine. You can check that box. And then 6 is pay off the house early. But no, I would not load up and start doing bridge while the house isn't paid off.

That's the idea. The house should be paid off ideally within the next 6 years.

Well, when the house is paid off, you're at Baby Step 7. You can do whatever you want to do then. You can load up retirement. You could, if you want to dump a bunch in 401 at that point, max out everything and not do any bridge, and then stop for a while and do bridge, that's okay at Baby Step 7. But not today. Your house isn't paid off today.

Okay, that makes sense. Perfect. That's very helpful for my plan.

Yeah, I want the house clear. Here's the weird thing. It's actually going to work for you mathematically, because without the house anymore, what we did, Sharon and I, You know what I did? I took our house payment, was like, I don't know, it was $1,500 or something. It wasn't a lot compared to today. But I rounded it up to $2,500 and just set $2,500 automatically coming out of my checking account. I kept paying the house payment, but to myself in one mutual fund. That became effectively a bridge. Because I looked up, it felt like 20 minutes later, and that account was $1 million. Just paying yourself a stinking house payment. You know, just pay yourself a stinking house payment. Get out of the debt. You know, it's so powerful. Your most powerful wealth-building tool, folks, is your income. When you quit giving it to these stupid butt banks that have been screwing you for years, when you stop giving them money, you're gonna have some. It's magical.

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I'm good, how are you, Dave?

Better than I deserve. What's up?

Okay, so I'm basically nervous. Well, I've been looking into you guys for like 2 weeks now, and then I asked my husband, hey, check it out, check the book, and then okay, we've run through Thanks. We're in Baby Step 2, and my question right now is, um, is it worth it or is it feasible in our income to pay a $2,000 monthly daycare for my 14-month-old child? So I can give you the numbers. Basically, we're earning, um, $8,200 in a month, and we're currently renting $2,600 all in parking, utilities, everything. Now I just have one debt left, which is a car loan that is at $22K, and the rest is just consumer debt, like food.

Out of the $8,200, Angel, how much is your income versus his in that number?

So I'm earning $4,200 and his is $3,000 and the extra $1,000 is, um, a kind of here and there. It's not a fixed amount.

Okay.

So that's why I sometimes budget just some side hustle stuff.

The way you said that, it sounded like you could buy or you could get a daycare that's less expensive, but you want to do this more expensive one. Is that, is that right? Did I understand that right?

Yes.

Okay, what's the cost on the other daycare?

Okay, so the other daycare is $840.

Okay, so what do you get for $1,200 a month for a baby?

$1,200?

No, $2,000.

No, $800 to $2,000.

Oh, the difference.

You're gonna pay $1,200 more— to move to Lux Daycare. So what does Lux Daycare do for the baby that—

for—

that's $1,200 a month extra.

The $12 extra— first, he gets full hours, like that's Monday to Friday. Now the other ones is just 3 days in a week. Now aside from the full hours Monday to Friday, he also is getting full meals for the whole day. So that's 6 snacks and lunch.

And then the other people don't feed them?

No, you bring the food or the bottles or whatever.

Yeah.

Yeah.

Um, Angel, what's your, what, um, what's the, what's your comfort level with the other one? The $840 one?

The $800, I'd say maybe about 7 over 10. I'm comfortable. They're, they're private actually. There's still one more that's cheaper than that, which is half, like $400 in a month. Subsidy. However, when we visit them, it's not comfortable at all. Like, I'm a first-time mom and don't do that. Yeah.

Let me ask you, why would you— if you did the $800 and it's only 3 days, what do you do? What do you do the other 2 days?

I'll be taking care of him. Like, I'll take off from work. My work, um, demands me to be working weekends, so that means I get weekdays off.

Oh, okay. So would, would you be Do you have days off now, or you would just switch your schedule to weekends?

Oh, I have days off now on weekdays.

Okay, but he still just goes to daycare while you're home, just to give you—

Yeah, right now. Okay, he doesn't, he doesn't go to daycare yet because my mom is here with us right now.

Oh, okay.

And he's leaving soon, so that's why we're like thinking of Plan B, like what do we do and all that stuff.

Okay, if— now I get it. So to answer your question, if I understand what you told us right, The, the comfort of the child, the safety of the child, the love and care of the child is equivalent. The difference is the number of days and food.

Mm-hmm.

Yes. And my husband, I mean, we both went to both daycares. We're both comfortable.

And yeah, I would do that. I would do the less expensive one and buy my own food.

That's what he said. That's what my husband said.

And he's like, the other, the other part sounds luxurious to me. And you're not in luxury. Luxury mode in Baby Step 2 while you have a $22,000 car debt.

Mm-hmm, yeah.

Well, so what I would say is—

That's why I called.

Yeah, and I would say after Baby Step 3, that's when you get to be a little bit more like, "Hey, I do, I like having this 'cause I like to have my day." You know, like if you wanna finagle some things then, then you totally could. You guys just put it in the budget and pay for it. But until Baby Step 3, I would see where I feel— Again, I say this so cautiously as a mom, like where I would feel comfortable.

Yeah, as long as you're comfortable. We're not asking you to do something where the child is not cared for.

That's right, yeah, yeah, yeah. But if you feel okay about it, then for sure. I mean, that saves you a lot. Angel, how much, if you sold your car, how much would you, could you sell it for?

So I'm actually looking into that. So the car is worth $17,000 right now.

Okay, okay.

And we actually put down payment like $5,000. It was a very, very bad decision to get that car.

Do you have any money saved?

Yes.

How much?

So I have, um, liquid, like I have a cash of about $7,000.

Okay. So you could write the check and sell the car. You could write the check and sell the car and then finish up Baby Step 3 is all you would have left. And then if you wanted to do the luxurious daycare, you could, but we would tell you to do that at Baby Steps 4, 5, and 6. And that's when you move from intensity to intentionality. And it, you know, because it's not the only way the child is cared for adequately. And so, and that's what you're, you know, that first thing is safety and comfort, you know, for the baby, and make sure, because first-time mom, second-time mom, third-time mom, all that, and all dads, you know, none of us want our child in a situation that's not cool.

Well, and I would say too, Angel, be thinking about, I hate to say priorities, because that makes it sound bad. It's not a bad thing if you keep the car and just pay it off. That's fine. But also, you're trading what you kind of want as a mom—

For that car.

—for a car. You know what I mean? So, if you really want that better daycare, sell your car and you don't have to worry about it.

Write a check out of the $7,000, cover the difference. Yeah. Get you a beater., and then you can do whatever you want to do. Whatever you want to do. You got to get the emergency fund built, but I think you could do that anyway with the $2,000. Oh yeah, a couple months. Yeah, so I don't think that's going to kill you, but you know, but you're right, Rachel. We've even seen situations where we've got an SUV payment that's massive to haul kids around, and the mom's like, "I want to quit and go home and be a full-time mom." "Okay, well, how much are you off?" And you do all the math, and it comes out about the SUV payment. So, like, you're working to buy an SUV to haul kids around, and you're not home. And so, yeah, sell the SUV. That's, you know, we get that. We've done that math.

Well, it starts to get a good picture of what your stuff actually means to you, because you think even people in Baby Step 2, and they're working hard, they're working extra hours, They're working weekends. They're not having a life to get out of debt. Where some people, you know, you have an asset sitting there and that could save you 4 months of overtime. So sell the car, you know what I mean? Like credit card debt, you have no option. You gotta pay it off. Your student loans, you gotta pay it off. But when it comes to the car specifically, it is the one thing. And we're not mad if you keep it and pay and, you know, work hard and pay it off. If you can do it within 12 months.

But she said it's the biggest mistake they made. Duet? She doesn't like it. It's the biggest mistake they ever made, she said.

Yeah, her car. Yeah, we don't like it. An asset sitting there and it's taking time away from my family. The ability to have margin in my budget. You know, like you just kind of start to realize this stuff is costing us and man, selling it, that's a lot of freedom.

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William is with us in Charlotte, North Carolina. Hi, William. How are you?

Hello, Dave. It's so wonderful to finally get the opportunity to talk to you. I will get right into my question, but you have really changed my life.

Well, you changed it. I'm proud of you. How can we help?

Well, thank you so much. My question is for people who are established financially and looking to invest their money in safe but morally appropriate ways. Specifically, my question is, can the average investor work towards putting our earnings into individual companies that we like and understand? I ask this because when we give all of our money to large investment groups, we lose control of the equity and give massive amounts of voting rights to groups that don't always have concrete or even good moral values. An example being Wall Street madness and corruption. Is this possible and how so?

It's an excellent question. Thank you. There's a lot that goes into this. If you were to invest in any company as a single stock, publicly traded company, you have absolutely no control what they do. Okay? The only thing you could make— you could de-invest. I mean, you could look up and go, okay, that company's doing X or Y that I don't agree with, I can't deal with morally, and so I'm going to sell the stock off. OK? Yeah. So the problem is that a portfolio of single stocks underperforms a good portfolio of mutual funds dramatically. Mutual funds in general can fall into the category that you're talking about where the voting rights are gone and someone else like a BlackRock or whatever is— they're holding sway over some of these companies or some of these mutual funds. And even some of the boards of those companies get infected with that stuff. So your observation is correct. My friend Vivek Ramsworthy wrote a book before he got into politics called Woke Capitalism, where he got into how the boards were infected even with some of these things. So it's a very cool philosophical discussion and really a good ethical question in general that you're asking.

So, um, thank you. If you are— there are some mutual funds out there that pledge to only invest in stocks that align with X or Y value. Okay, so for instance, you could— there are some that are like animal rights They won't invest in any company that the dolphins are getting caught in the tuna nets. Okay, so they're worried about the animal rights, and so they refuse to do that. That's actually one that I had brought up one time. It actually happened. And so that— you can say I'm an animal rights advocate and I don't—

Dave explaining dolphin speech.

Well, I mean, it actually came up. I actually— It was not on my bingo card today. I didn't think that was happening today, but yeah. But they do. They get caught in there and they die. Not good. And so that's what happens. We don't like that. And so anyway, the other side of that, of course, is from a moral or ethical, from a person of faith, if you are a person like a Christian, like Rachel and I and Sharon and I are. And so I don't want someone investing in something that's completely, or running their company in a way that's completely contrary to what I believe biblical values are, and I don't want to put money into that.

So what about retirement investing then?

Yeah, yeah, so then there's one company down in Atlanta that actually has a pretty good track record. It's called the Timothy Fund, if you're worried about on the Christian ethics side. And the Timothy Fund does their best to comb through these companies before they put them in the portfolio that they line up ethically with that, and it has not performed poorly. It's performed about like other mutual funds, roughly. It's not substantially better, not substantially worse. So that's there, and we've actually told people about the Timothy Fund for 20 years or 25 years. I met those guys a long time ago when they were putting that thing together, and it has worked out. That's one part of the equation.

Do you think that the Timothy Fund— oh, sorry, my bad.

No, that's fine. Go ahead.

What's your question? Do you think that the Timothy Fund would also on average outperform individual stock investments?

Yes. Okay. Because all the research says that when you go buy 5 stocks, you suck at part of it. You're just not good at it. Definitely. And these guys, these guys, the guys that do the analysis on this come to work in a car longer than your house. I mean, it's ridiculous how— and they're very, very specialized and nuanced. They'll have one guy that does nothing but study the— got one guy that studies the automotive industry 24/7, and you and I can't keep up with that. I can't do that level of detailed research. I would spend all my time with my nose in my computer. Heck with it. No thank you. Now, all of that being said, here's the other thing. When you buy a stock from a company, or you buy a stock in a company, like you buy a share of Home Depot, you realize the money does not go to Home Depot. It goes to the guy on the other side of the equation that's a seller of the stock. Yes. Okay, so when you buy a used Chevrolet from me, Chevrolet doesn't get any of the money. And so if you're pissed at Chevrolet about something, they're not even affected by the transaction.

Now, if you buy a Nike shirt and you don't like what Nike stands for, then you gave Nike the money. That's different. But when you're buying a share of stock, almost always you're buying it from another entity that has nothing to do with the company, unless it's treasury stock issue. So it's really not there, and it's a slippery slope to get into studying and trying to figure out who's doing things that are wrong. I mean, then you can't go to the— you can't bank with that bank because they support Planned Parenthood, and you can't go to that grocery store because right down the aisle there is some pornography, and you can't— and there's, you know, everywhere you go you're interacting. Everywhere you go, you're interacting with the world somewhere, and they're always doing something that's mischievous at a minimum. And so, you know, you've got to decide where I'm gonna draw the line on this and go, okay, if somebody stands for something that I oppose and it's their whole thing, I want to stay away from them. But if there's a corner of the market where I buy gas that sells Penthouse, I probably don't know it unless I'm in there looking for a Penthouse, right?

What's that? A Playboy magazine, okay? And so it's like an '80s reference. It's an '80s reference, okay? Yeah, they're probably— Kelly didn't know either. They're probably out of business, okay? So I don't even know. But anyway, um, I got no idea. But the, uh, that's how— but anyway, if there's some— okay, if there's something you vehemently disagree with and it's in the corner of the market, right?

Okay, I hear— I hear you.

I hear you. You don't believe in smoking weed, but they sell wrappers, okay? I mean, with you.

Well, it's just like you're going to boycott, you know, everything. You're never going to have a Starbucks coffee. You're never going to have an Apple phone. I mean, like, yes.

There's always something to be pissed about. That's right. That's right. It's a very, very slippery thing. So I have made the decision, if something's in my face, I'm not going to do it. But I don't think I can do enough investigation or spend enough of my time to control to have 1,000% of all my dollars pure. Right. Right. And I think, I really don't think God's mad at me about that. And he's asking me to manage his money, by the way. I'm a steward. And so, now, if you're Muslim, you're not allowed to do any of it anyway by the Quran. You can't put a dime in those kinds of things, period. You don't have, it's not an option. And so ethical question over. You cannot do, you cannot engage in things like that, period. Prohibited. And you can't even put money in a bank because you can't get usury to receive interest. And the Quran, if you're strictly following the Quran, you're not allowed to draw interest. And so obviously there are some Muslims that don't strictly follow the Quran, like there are some Christians that don't as strictly follow the biblical interpretation of something.

And so, but you know, so you've just got to look at things. But it is, I love your question because you're thinking and saying, my faith matters to me, "my values matter to me, and I don't want to support things that are bad," from a worldview standpoint.

I think that's wise. Yes, but I think to your point, when it's all being exchanged, again, it's not going to that company.

You are making money off that company when that company prospers. Sure. But that, you know, that's part of it. But oh, it's a hard thing to figure out. Nice question. Thank you, sir. I've met plenty of people over the years who had a product that they wanted to sell, a side hustle that they wanted to start, or a business idea they couldn't stop thinking about, but they never took took the first step because getting started felt complicated. Shopify makes it much easier. You can build a professional-looking online store in no time flat with everything you need already built in. Then when customers are ready to buy, Shopify Checkout helps more of them actually complete the purchase. That's important because abandoned carts don't make you money. And when you need help Need help? Sidekick, Shopify's built-in AI assistant, can help you troubleshoot, answer questions, and keep making progress. The point is, you don't have to spend your time figuring out what comes next. You can spend your time getting it done. All you need is the idea. Shopify handles the rest. Start your free trial at shopify.com/ramsey. Shopify.com/ramsey. That's shopify.com/ramsey. Welcome back to the Ramsey Show in the Fairwinds Credit Union Studios.

Kevin is in Lincoln, Nebraska. Hi Kevin, how are you?

I'm doing well, how are you?

Better than I deserve. What's up?

Well, I'm kind of wondering, my wife and I became debt-free last year, paid off the house. Got our emergency fund. Wow. Um, thank you. Thank you. I owe it to you guys. Um, I wish I could say I did it strictly Ramsey, but it was more Dave-ish along the way. We probably could have got it done a lot faster had we been more strict. Um, but then, uh, in about the last year of, uh, you know, working on debt, I kind of started doing some soul searching of wanting to do something a little more personal rewarding as far as a career than what I was doing. And a few months after we became debt-free, I became a personal trainer and reduced my income by probably anywhere from 66 to 75%. And now, I mean, we're getting by, but that's about it. We don't have a whole lot of extra at the end of the month. And now we've got things like house upkeep and wanting to travel and other financial goals that we'd like to achieve. And—

What were you doing before and what were you making?

I was a cell phone tower construction project manager. Making about $105,000 a year.

So you're only making like $25,000 or $30,000 as a trainer?

Yeah, I might take home about $1,000 every 2 weeks. And I know I'm fairly new in the industry, and if I work hard, I could, you know, make more, but I just, I'm 50 years old, I don't feel like I've got the time to really put in the work, and the sales aspect of it, I'm not the greatest.

I almost, you know, I, I'm curious, Kevin, what the conversations were. So you guys paid off the house, everything. You're like, wow, we don't really need a lot of money because we don't have a ton of bills. And so I'm just curious how you got from where you were to this. You just love training and you're like, let me just do this and see what happens.

Yeah, for the last, I don't know, maybe 5 years of working in the cell phone tower industry, I really started feeling like I doing the devil's work, you know, with where cell phones and social media has gotten the world today. I don't feel like it's a net positive, and I just was really feeling like I wanted to do something that was more rewarding, something that helps people. Um, I've always been a little bit of a gym rat, and I've heard other people say that I should be a trainer. And so I decided to give it a shot, and, uh, my wife was supportive. I mean, she saw how stressed out I was with, uh, The telephone tower—

let's establish this, okay? You gave it a shot. What you're doing, the way you're doing it today, is not working. That's why you called. Yeah. So something has to change. Either the way you're running your personal trainer business has to change, and you're going to have to make it profitable and triple your income them, which you should be able to do, by the way, and you're gonna have to get, you know, pretty aggressive about it. And not, not in a mean or a pushy way or anything like that, but you're gonna have to get excited about making a stinking profit. And, or you need to do something else. And I don't think you have to go back cell phone business, by the way. A project manager that can manage the building of a cell phone, cell phone tower can manage a lot of different kinds of projects. Yeah, you could easily get in the home building business as a general contractor. You could easily get into project management. Yeah, other things are just the project management science of the science of project management. There's— it's wide open. We've got, you know, people in our— all through our organization that manage projects here.

It's their title, it's their function. And so, and they're not doing the devil's work. So, you know, there's a lot of different ways to apply your experience if you don't want to be in business for yourself. But if you want to be in business for yourself, you, you know, you're at the treadmill stage, the beginning stage of this, and you're going to have to grow this business, and you're gonna have to commit to doing the parts of the business you don't enjoy as much as the other parts in order to be able to stay in the business, right?

Yeah.

So if I enjoy writing books and speaking on the radio, but I'm not making a— you know, and the only way I can do that is I have to do the accounting and I have to do the marketing, which I don't enjoy as much. And I don't enjoy accounting, I don't mind marketing, but I'm saying if there's parts of running Ramsey in the old days that I don't like, I've got to do them to be able to do the parts that I do like. And that's what you're not doing. Yeah, you've kind of took your foot off the gas and you're just coasting along helping people. You're like a gym rat that gets paid sometimes.

Yeah, pretty much. Yeah, I kind of figure I'm spending about 48 hours a week at the gym and getting paid for about 30 of it. I don't know, a third of that is minimum wage.

Yeah, you're not making a dollar an hour. Are. Yeah, yeah, yeah. So you got to change your business model and embrace the discomfort portions of the business.

And if you want to—

I mean, he said, like, if otherwise you need to go get a job. Yeah, yeah, yeah, yeah. Because you've established by the way you described it is, hey, I wanted to do this, I did it, it's not working for my family, it's not really not working for me. I'm not— it's not as satisfying as the lack of money.

Yeah, yeah, I mean, that's, that's, that's it right there. It's, it's not as satisfying as having that extra money and the freedom that comes with that.

Yeah, I want to be able to take a cruise with my wife. I'm stinking debt-free, you know, and I'm not even making a dollar an hour over here at the gym. So I get it, I get why you did it. I'm not shaming you for that, but you, you need to establish, okay, here's what has to be true 'in order for me to stay in this business, I don't want to do that.' Okay, then you're not staying in the business.

And I think it takes a lot to keep a small business running. You have to love it and believe in it. And if you don't, you sound a little bit on the fence, Kevin, just from your tone. I mean, you may just, I don't know, what I'm picking up is you might be better off, I mean, honestly, go work for someone for 10 years till you're 60, make a good living, and You know, there's a lot of stuff you could do working on your own as a project manager.

If you looked at this as a project, you know, that's fine. So I'm gonna send you a couple books. I'm gonna send you Desired Future by Henry Cloud, which is you need to say out loud what my desired future is, and then immediately he says to ask yourself what must be true that's not true today. So my desired future is I'm gonna stay in this, I need to make $70,000, $80,000 a year. And what's the path there and the things I have to do that are uncomfortable to get me there? That are ethical, but they're uncomfortable. It's not stuff I enjoy as much as I do the actual teaching of a personal trainer. Or I'm gonna hire some people, or I'm gonna open a gym, or I'm gonna— I don't care. But decide what it is and then decide if that price is one you want to pay to get there. Because right now you're the CEO, the Chief Everything Officer, and that's what you got to decide. And then I'm also gonna send you our latest business book, My my latest bestseller actually, Build a Business You Love, 'cause you're at the first stage of the 5 stages of business called the treadmill stage, and you just run, run, run, run, run, run, run, feel like you get nowhere, and sometimes it's 'cause you're getting nowhere.

And I remember that stage in this business, and it wasn't a fun stage. It was exciting because it was all on me, but you're exhausted at the end of the day, and you don't know what you did. It's just chaotic. And so I'll talk you through both of those. So I think you're gonna make a good decision either way because I think you've already decided what we're doing is not working.

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Well, we wish we could get to every call on the show. Sorry, we can't. There's only so many hours in a day and so many phone lines that you can get through on. But if you got a question about money and you want an answer for your situation, head over to our website at RamseySolutions.com and click on and use Ask Ramsey. Ask Ramsey is our free AI tool that's built and trained only on proven Ramsey content, proven Ramsey principles. So it's gonna give you the exact same answer with like 3 or 4 years of this show all downloaded into the tool, all of the books we've written downloaded in the tool, all the thousands of articles on our website about money, from what we think about this or that downloaded into the tool. So it's gonna give you an answer. Might not be quite as snarky or sarcastic as I am, them, but it might be. You better be careful. We've been trying to add the sarcasm to it, and it's working. So check it all out. Ask Ramsey, completely free. Ask your question at RamseySolutions.com or click the link in the description if you're on podcast or YouTube.

All right, Ann is with us in Akron, Ohio. Hi, Ann, how are you?

I'm doing well, Dave. How about you?

Better than I deserve. How can we help?

It's great to have you and Rachel on the line because I have a debate with my husband, and I really I need both of your inputs.

Yes, we love a debate. Cannot wait to know if you're the winner, but we will tell you.

I mean, I feel like I'm the winner, but of course you probably—

you probably are, and you probably are.

We can already tell. Yeah. Okay, so what's going on?

Do our monthly— oh, so we do our monthly budget together, and, uh, we have a slush fund for stuff like vacation items, you know, just bigger expenses that come along monthly. And then we have money going towards down payments and that sort of thing. My husband says that our slush fund should be considered spent money, so we put it on the budget as spent money. But I say we should count each individual charge, like for hotel rooms, for food, and everything. So what do you guys think?

So you're talking about you're setting money aside for Christmas, and when you take it out of the budget, how do you take it out of the budget if you don't show it as spent That's what I was gonna say.

I was telling him that. Um, so we're going on our honeymoon, which is a year delayed, um, to Italy, and we are buying like hotel rooms and stuff monthly. Like we spend like for excursions.

You would reduce the savings that you have for the honeymoon. You've already set the money aside. And took it out of the budget for it to put it in the honeymoon account, correct?

I mean, it comes out of a slush fund monthly, like whenever we do have the money for an item.

I don't know. I mean, so you're running all of your savings for different things out of one account?

Not for everything.

It's, it's, uh, you didn't have a separate honeymoon account that you're saving money into?

We don't have a separate separate honeymoon account now.

Okay.

So what is this slush fund then?

So the slush fund pretty much are, um, like vet appointments can typically come out of there. It's pretty much money set aside for things we know we need to spend our money on and we just take it out of our checking account into a separate account on the side. And then that way it doesn't get spent by accident. Not that we would actually—

Okay, so, yeah, so the question is, when you're booking the hotel this month, is that considered money that should be coming out of this month's income? Is that what you're saying? Versus the slush funds? And so it looks like it has been spent?

Yeah, I know it's kind of confusing. Okay. No, it's not.

The way you're doing it is confusing, but it's pretty simple. If you're setting money aside out of your budget, so you have your budget,, and my budget says I'm setting aside $100 to go into an account that's gonna pay for my honeymoon. Okay? That money's already come out of your budget once. Yeah, it doesn't need to come out twice. And then when you spend it, it doesn't need to come out again. Your books aren't gonna balance.

Yeah, I guess that's true.

It can only come out once.

And it already came out because it's sitting in the slush fund.

Yeah, when you moved it out of your monthly budget into this side— we call them sinking funds in EveryDollar. And so if you have a sinking fund for Christmas and every month you set aside $100 for Christmas out of your budget, your budget has already set that money aside and there's $1,200 in there for Christmas then, and you get ready to go buy Christmas, you don't take it out of your budget again. You've already been taking it out all year.

Does that make sense? Is that answering your question?

Yeah, it does actually, because, you know, I was always considering it like a monthly expense because sometimes we pull the money out, but then we have to add it back in.

It's kind of— Well, I think your slush fund is probably, in general, is too confusing. So what I would say is you don't need sinking funds except for specific things. Okay, a slush fund that picks up 5 different items is going to be really confusing. It's gonna be hard to track it. Okay, so if you do car repairs and vet bills and doctor visits all out of the slush fund instead of having set money aside for each of those things, separately, then you're going to stay confused. So that's why we have sinking funds. You know, you don't have one fund that covers 8 different categories.

I know, but the fund in EveryDollar is not going to a separate account. No, I know that. So that's what— but so it could all be in that one quote-unquote what she's calling a slush fund, and all her sinking—

the money can be in that fund, but there needs to be sinking funds established in EveryDollar for each one. So that when you can look at every dollar and go, "Okay, for 4 months we've been putting $100 aside for car repairs. We have a $500 car repair. We only have $400 in the car repair envelope." Then that's a problem. We gotta move some money around. But if you have a $300 car repair and you've got $400 in your car repair slush— your car repair sinking fund, you're okay.

Yeah, but it's all coming out of one large account that she sees. And so, it may be that the vet bill is more, you know what I mean?

Yeah, well, I wouldn't have a vet bill slush fund. I'd just cover that out of my monthly expenses. But I wouldn't be setting that aside. But I mean, for Christmas, Christmas should be separate than car repairs. They should have different accounting for them. And so that's why we have the different sinking funds. You don't need 42 sinking funds. Most of this needs to be rolled back into your monthly budget and just be a monthly thing. But the answer to your question is, if you've already taken it out of your budget once, you can't take it out again when you spend spend it. That's it. Because you're going to double—

I can't tell who won then.

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

Um, my friends can tell me that I'm not doing this correctly. So if I could pay my house off within 5 years, but it means I'm not investing quite 15%. Should I stay on this trajectory or should I— How much are—

how much— what percentage would you be investing?

Roughly 9 to 10%.

Okay, so 5% off, and your income is what?

$90K.

Okay, so talking about $5,000 for 5 years, we're talking about $25,000. So it doesn't extend the time you pay off your house but about 6 months. Okay. You're not making as much headway by doing this as you think you are. Okay. So no, I would put 15% of my income in. Okay.

So you're saying bump it up and just follow the Baby Steps quite literally then, right? Yeah, absolutely.

Quite literally. Yeah. That's what Dave's talking about.

It's a great phrase. It's a great phrase.

Yeah, we did not give you a range in Baby Step 4. And the reason, Brock, is this: I've run the math scenarios out. I've been doing this 35 years, and I've run the math scenarios out at all income levels. You know, unless you're making $1 million a year or $10,000 a year, I didn't run those out, okay? But I ran them out $100,000, $200,000, $50,000, $90,000, whatever, back and forth. And it doesn't— the big thing is, is that I want a substantial growth in your nest egg in retirement while you're getting the house paid off. And the average person is paying off their home doing this in 7 years while putting 15% away in Baby Steps 4, 5, and 6.

And he said 5 years.

That's the average. Yeah, so he's already better than that. Well, he's better than average because he's not putting in. So he's probably gonna be more like 6 years after I change this. But that's all. It's really not gonna change it that much.

And the compound interest of the growth you're missing out add-on in the market. Yep, probably worth it.

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Today's question comes from Aaron in Indiana. "Hi, Joe and Joanna. My wife and I are buying a house and have a couple of questions. Should I insure my house for the sale price of the home and upgrade that if the house goes up in value? Also, should I reduce the amount of home insurance once I get to Baby Step 7?" Excuse me. Sorry, I have a cold.

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

Yeah, and no, I would not reduce the amount of home insurance.

Now, I wouldn't. We haven't. None of us have. We fully insure our homes. Now, I've raised the deductibles considerably on my car and homeowners.

And life insurance is one that you could become self-insured eventually.

Like, that would be one insurance that you've got enough money that your house and kids are okay, if there's kids at home, without life insurance, then you're self-insured by becoming debt-free and having a pile of money. So that's a Baby Step 7 thing. You can get rid of life insurance. I kept my life insurance for quite a few years after that, but not for any financial planning reason. It was just Sharon wants it, SWI. And some things are just SWI, Sharon wants it. And it wasn't that expensive, and so I kept it for a few years. And then a few years ago, She said, "I don't want it anymore. I think I'm going to be OK." I'm like, "I think you were OK a long time ago." But anyway. Because all of our estate plan is predicated on me dying first.

That's the assumption. No, but the home insurance, even if you could pay for the home, it would still— I would not.

Yeah, would not reduce it. I've got expensive cars and I don't fully self-insure the cars. Now, again, I carry massive deductible, which brings the premium way down. And the same thing on my home. I've got a massive deductible, because, you know, let's say, pretend that you're living in a $2 million house, okay? I'll just make up a number. If you got a $50,000 deductible, that's not gonna kill you, but the $2 million might if the thing burns. So, I mean, that'll take a chunk out, right? So if you want super low premiums. You can run your deductibles up, but I don't just cancel the insurance. No, I haven't. I carry it on my cars. I carry not only liability, but I carry replacement value. And I will also tell you to say, when it comes to homeowners insurance, to go with stated value, where you state the amount. And then as the cost of building that house goes up over the years on that lot, Building that same house back, raise your stated value. You need to review your homeowners and your car insurance once a year. I've got stated values on my cars, and so if the car is totaled, this is how much I get.

I don't have to negotiate. This is the amount. It's a set amount. Not gonna get more, not gonna get less. It's preset. No negotiation. Well, the car's depreciated, the radio didn't work. I'm broke. I'm not getting into all that. The car's either totaled or it's not. Write me a check or or fix the car, one of the two. And so stated value, and that has helped a lot again with expensive automobiles. And so you want to look at that, and I run a very, very high deductible. And with stated value, it change it and update it. I just finished my review with Xander on all my whole package last week, as a matter of fact. And so I'm just looking at the car values, how we change them, the home values where we reset them and everything thing, because it does not automatically adjust. Replacement value is no longer a thing with most insurance. Most insurance, it's the amount you state, and you want to make sure you keep that adjusted. Josh is in Tampa. Hey Josh, what's up?

Hey Dave, it was a pleasure talking to you.

You too, how can we help?

Hey, so I just really want to ask, I'm trying to understand, maybe I'm trying to understand if I'm too frugal in my marriage or should I ask my wife to get a higher paying job? Uh, I'm trying to tread lightly here.

What about Josh? Does he need a higher paying job?

Yeah, no, absolutely. You're absolutely correct. So I think, you know, for me, I always try to find the cheapest possible things that we can afford certain things. Things because I feel like that's the only thing that we could afford. And every time I, you know, let's say book a trip or shop for things, I always look at the cheapest, cheapest possible things. And I could almost feel this tension with my wife, like, oh, not again. And I just want to preface this with, I just recently became debt-free, and that's literally after paying 10 years of credit card What is your household income, Josh? So together we make around, uh, $105,000 a year. Okay.

And so you, on $105,000, you have to cheap out on everything to exist? No, you don't.

Right. So I've calculated every single dollar that I could get. And I feel like at the end of the week, I have about $300 to spend on—

See, there's a lot of feeling going on, and math doesn't have feelings. That's the third time you said, "I feel like," which tells me you're not doing a detailed written budget that you and your wife are agreeing on, on every dollar.

No, no, we did it together, and she sees it.

However, I don't think it sort of clicks in her head, like, no, we can make it No, every dollar, when you, the two of you finish every dollar with $105,000 and no debt, $105,000 income, you have $300 left every week.

Yes, every week. And that's money that's also being contributed towards our 401k, Roth IRA. Uh, it's also obviously paying the groceries, the house, and Yeah. And at the end of the month, you guys bring home what, $7,500, $8,000 a month? Yeah. So I, uh, together we probably bring in around, yeah, you're right, $7,000 a month after taxes and yeah, and all that.

How much is your mortgage payment?

$2,000 a month. Okay. And then our groceries is our biggest expense at $800 a month.

Okay, well, there's a couple things going on, okay? You have a tendency to be cheap. That's nothing wrong with that. My wife has that same tendency, okay? That's not a bad thing, all right? But what you're saying is, is your wife has not joined you emotionally in the EveryDollar budget committee meeting once a month, and the two of us as adults look at this and say, we have X to spend on groceries. We have Y to spend on travel. We have Z to spend. You don't make $500,000 a year, you make $100,000 a year. So it is gonna run out. But you also don't make $40,000 either. So, you know, you're above an average household income in America.

Yeah, so if you have $800 for groceries a month, and I don't know who does the grocery shopping, Josh, but yeah, if you're going and you're nickel and diming every single little thing, and you're getting the cheapest of the cheap, and all of this, and then you guys still have money left over in that category, then that means you can up some of the quality of the stuff you're buying.

So, you just have to like— You have $800 to spend. Yes, yes. Not $500, $800. Yep, exactly. So, spend the $800 on groceries.

And then, when you guys are planning a trip, you guys need to decide together what hotel you're staying at.

That. That is within the budget that you set for the trip.

That's right. Yes. Yes. So yeah, it's probably a both/and, Josh. You probably do need to chill out a little bit, but also, you know, you guys have $5,000 after your mortgage is paid to say, how are we going to live our lives with this? And so it is important to know where it's going. But yeah, you should have more, I would think more than $300 after all the debts paid.

It's not your job to cheap everything out. Out. It's the two of you's job to decide how much we're going to spend on a category and then live within that category. If it means cheaping some of it, fine.

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Adam is in Albuquerque, New Mexico. Hi Adam, how are you? Pretty good, how you doing? Better than I deserve. What's up?

Well, I kind of have a crazy one for you. I'm thinking about selling my house and buying a van and doing the van life thing.

The van life thing? What does that mean? You're going to live in a van down by the river?

Adam, where are you going?

Yeah, it sounds crazy at the surface, I understand. Um, I'm, I'm 33 single, no debt besides my mortgage, and I work fully remote. And, um, I previously worked in construction and lived in RVs and traveled, and that's where I saved the most amount of money in my life, is when I did that. And now I have a house, and I feel like all I do is spend my money. It's about a little over 40% of my take-home pay.

How much do you make a year, did you say?

Uh, $135,000. $135,000.

Okay, well, 40% of your take-home pay, we're not going to recommend, but I don't know if that justifies a van. Um, I mean, that's a pretty, pretty extreme swing from, um, that. Um, so you, you're, you just travel around living in the van, working remote? Yes, sir. Yep. Okay, campground to campground, I take it, right?

Uh, BLM land, there's some things you can do for free, there's some things you can do, uh, where it's paid.

Okay. Do you know how long? Are you thinking, do you have a timeframe or are you just, you're not tethered down to anything specific? So you're just like, I just want to see what happens.

No, I'm not tethered down. I originally bought this house to be close to family, but I end up just sitting here working my remote job and not really wanting to be in the area. I kind of want to get back out on the road and travel and see things. I feel like I've followed the Ramsey Plan fairly well.

Except for that 40% of your take-home pay.

House payment. Yes sir, yes sir, I hear that one in my brain every day. And then I also hear, you know, if I sell my house and buy a depreciating asset, I also hear that in my brain every day.

So if you do the van thing, the answer to your question is, regardless of— it's cool, it sounds fun, it sounds like an adventure, it's not a good 10-year plan. No, no, it's not a bad 2 or 3-year plan.

And if you save that much money and put put it aside by the time you're done with everything to be able to put roots down, put roots down somewhere.

You're 33 and single, and we're pretty much ensuring you're going to stay single if you're going to live in a van.

You could say that. Yeah, I would say it's more of like, you know, a 5-year or less plan. And it's just— and there's some women—

well, there might be, but I'm just saying your chances just went way down on that.

So I would—

that's debatable, but no, it's not. You just— you cut out 75% of the female population that want to live in a van.

Are the good ones, without a doubt. There you go.

You need a good van girl. That's what you need. Yeah, that's fun. I like you. You're a lot of fun. All right, now, yes, I would sell it, and yes, I would do it. What I would do is put a time limit on it so it doesn't become some kind of weird way of life. You don't want to be 63 and still doing this, right? Right. That's not good for you career-wise. It's not good for you socially. It's not good for you financially because of what you said— you're in a depreciating versus an appreciating asset, all those kinds of things. But if you did this for a period of time while you're, while you're untethered and don't have responsibilities and it's fun for you— I did hear you just, you let— you're a rambling man. I mean, you like the road. You know? And I think that's cool. That's fun. Go do it. Go do it. Yes, I would go do it, but put a time limit on it. And make sure you are saving.

It's the same kind of mindset. People go and move back home to save money, and then they really don't even end up saving money because they just end up spending it.

So, really make sure— I've saved up to this point, right? I've got over $300,000 in retirement, and then I also have about $90,000 cash sitting there ready to go.

Okay, well, you may have just plugged it back in.

25% of the female population.

Your bachelor eligibility just went up again.

Okay, that's great, that's great, that's good to hear.

Oh man, I was gonna ask, I was gonna ask how much a van costs like that. Yeah, I think he's gonna be okay. Junior's in Fayetteville, Arkansas. Hi Junior, what's up?

Hey, how you doing? Better than I deserve.

How can I help?

Well, I have, uh, I have a considerable amount of money that I'm investing, and I have a friend that's a financial advisor, and He's, uh, giving me some mutual funds, uh, to invest in, to purchase, and he's not charging me. And my question is, uh, is it okay to go with him and just bank the 1% that typically, uh, they charge, like a Fidelity or E-Trade, or would I get a better return if I went with E-Trade and somebody was actually watching over it?

Well, I would not go with E-Trade because you're— I would want you to develop a personal relationship a financial advisor that is watching over everything and meeting with you, like our SmartVestor Pros that we recommend. But we don't recommend E-Trade and we don't recommend Fidelity. Fidelity's not a bad company, they've got some good mutual funds, but I want you to sit with a financial advisor. And I don't mind them charging you a percentage. You will recoup on that. So what's the total amount you're investing?

I have, I have like my individual account, I have about $619,000. I have some RSUs that are going to mature. I'm going to sell them in about 2 weeks. That's $276,000. Then I have a 401 that's $47,000.

So you're bumping up to $1,100,000.

Yeah, yeah. Over $1,000,000, about $1.2 million.

Yeah. Okay. And I think when you sit with some of the financial advisors, there's breakpoints on that as well when you start getting up to that $1,000,000 mark. So, meaning that the commissions won't stay exactly the same. So, yeah, I would sit down with a SmartVestor Pro and have somebody talk you through that. You can find them at RamseySolutions.com. But the data is this: DIY, do-it-yourself investing, does not yield the same rates of return. And the main reason is that you get enamored with the romance of some company or some particular stock or thing instead of just looking at cold hard numbers. The second reason is fear. And when you read the wrong headline on the Fox News or CNN website and it triggers your fear button and you start talking about pulling all your money out at usually the exact wrong time to do it, you need someone to talk you off the ledge. Edge. And so all the research that we have on investing says that a person who has a calm, conservative, trusted voice in their ear to stay in the market and to carefully analyze these investments rather than getting caught up in the, the internet romance bullcrap of something, then they're gonna keep you on track and you're going to build more wealth over the scope of your life than when you DIY.

DIY it. And so, I know a lot about this stuff, and I don't DIY my mutual funds. I have a SmartVestor Pro. Rachel and Winston have a SmartVestor Pro.

I'm curious if the friend was doing it out of just—

I think he's just saying, "Pick this fund and this fund." I don't think he's actually managing. He said he's showing me which mutual fund. Oh, I gotcha. And not charging him for that. But there's more in this than just simply which mutual fund to pick. There's staying in it. There's understanding new things that come on board. Different things you can get into as you get above that million-dollar mark. There's gonna be some things that you can do that are very nuanced, very small things. They're not gonna make you rich, but they're also gonna stabilize your life and stabilize your future with that. So no, Junior, I would not go with E-Trade. I would not go with Fidelity, and I would not go with my free friend who told me which mutual fund to buy over the lunch. Instead, I would do what I do. So my advice is consistent. I'm not telling you to do something I don't personally do. My personal accounts are with one of our SmartVestor Pros and have been since I started that program all these years ago.

Yeah, and these guys and women who are in this position, if you find a good one, and our SmartVestor Pros, you know, for sure that is, they live and breathe this stuff. And again, there are nuances in that world that you can take advantage of that you will never get by just, yeah, doing it yourself. And when you have that much money, Junior, that— I would. I mean, I know we joked about tax loss harvesting one time on the show. But it's these little things that add up over time. And they know about that stuff. And they can educate you and show you. And it's good for you. Take advantage of those things. But you're not going to get that with just someone randomly telling you to pick 2 or 3 different types of mutual funds and that's it. So, there's some, some nuance to it and detail that I think could be to your advantage for sure.

As your business grows, everything becomes more complex. There was a time when Ramsey Solutions had two too many disconnected systems and not enough visibility across the business. We wasted too much time chasing information instead of making decisions. That's why we got NetSuite. NetSuite brings your financials, inventory, CRM, and more together in one place. More than 43,000 businesses trust NetSuite, including Ramsey, and now they're taking the next step with NetSuite Next, making it easier to put AI to work across your entire business. NetSuite Next helps you make the most of your time, automating routine work like forecasting demand and following up on overdue accounts. With NetSuite Next, AI is built into everything you do, so you can ask it questions just like when you're talking to a member of your team. And right now, Now you can try NetSuite Next for free. If your revenue is at least 7 figures, go to netsuite.ai/ramsey. That's netsuite.ai/ramsey. Welcome back to the Ramsey Show in the Fairwinds Credit Union studio. Rachel Cruz, Ramsey personality, and my daughter is my co-host. Day. So a few months ago, we had another caller named Rachel that reached out asking if she could do a once-in-a-lifetime opportunity to see her childhood friends.

There's a lot of drama in the question, can you tell? She wanted to go see the Backstreet Boys at the, uh, at the, at the— what do you call the stupid thing? The Sphere. The Sphere. I couldn't make it come out of my brain. I couldn't drop it out of my brain.

Okay, at the Sphere, she wanted to go It was drama. It was real. She was drama. No, it was all true and real. It was her personal friends. To the heart of all millennial women in the world.

Her personal friends. Yes. The Backstreet Boys. Well, she obviously knew our answer. We're not going to tell you. We told her, you know, we understand. Rachel particularly understood and empathized. I had no sympathy whatsoever. And just no. And then Rachel's like, "Oh, but I understand." Well, it turns out, Kevin with the Backstreet Boys— what a good man—

was listening, and a friend sent him the clip.

Yeah. Oh, that's what it was. Yeah. And he got in touch with us through DMs, I guess it was, and mine or yours or somebody's, and means that somebody was watching my DMs because I don't. I don't even know what that means other than there's a way to message me.

Anyways.

Okay, tell the story. So, he offered to send Rachel to the Backstreet Boys. So, we got him on the air with Rachel. Not this Rachel. Caller Rachel. Caller Rachel. And then we were going to pay for the hotel, so she had no net cost, and she got to go do the dream because Kevin was so generous. And it was great. We had him on the air, her on the air. So fun. Yes. And so, she just got in touch with us. Apparently, she went the other night. Yes, I think it was last night. And sent us all the pictures and the VIP backstage experience, and Kevin gave her a shout out from the stage.

She said, "My childhood friends," like on her shirt.

Backstreet Boys are my childhood friends. There they go. So good. Very cool. And she had a great time, and she wanted to send a huge thank you out to Kevin, the Backstreet Boys, for hosting Rachel and for giving her this once-in-a-lifetime opportunity. That's pretty Pretty cool. So fun. It was a fun thing to get to hook up somebody with super famous and super generous people like those guys. Very neat. Awesome. Very neat. Amber is in Atlanta. Hi Amber, how are you?

Hey Dave, hey Rachel, I'm good. How are y'all?

Better than we deserve. What's up? Perfect.

So my husband and I have been on our debt-free journey for about 18 months. Good. We've paid off $45,000.

Wow, way to go.

Oh, we worked really hard and we're both really proud of the progress that we've made because we've always been, um, just paycheck to paycheck, nose to the grind working, trying to make ends meet. And we, um, had been married for 21 years. And so for that time, it, that's kind of how we've always lived. Um, so we decided last year after a thing at our church, we're going to get our lives together. We're going to become debt-free. And I know that you always talk about, um, the Bible verse of not being a slave to the lender. So that's kind of what I keep in the forefront of my mind. So my question is, my husband and I, over the last year and a half, his income has doubled. Wow. And yeah, he changed jobs about 6 months before we decided to work on our debt-free journey. And so it's been such a blessing, and God has truly blessed us through that journey. Amen. So we have our house left, which is about $190,000, and I have $28,000 left in student loan debt. Um, the journey is getting weary. So my question is, how do we keep lifestyle creep from getting out of control while staying focused on our debt-free journey?

You tap back into the exact same spiritual nobility that caused you to do this in the first place. Something happened at church church, and God spoke to your minds and said, "You guys need to straighten up, because you're not doing this right," and you said, "You're right, Lord. You're right, Lord, and we're gonna not be slave to the lender anymore," and you went— after 21 years of doing it wrong, a new dog learned new tricks. An old dog learned new tricks.

That's for sure. Yeah, right?

And so you're a completely different couple. Couple and completely different people than you were 36 months ago. That's worth it. Yeah. And so, you know, yes, you're wary, but yes, you're— that 28,000 is going to go as fast or faster than super fast because the 45,000 was in the early days of the thing, and now you see it working. But you just got one left, and you're looking up that hill, and you're going, it's a steep hill, and I'm tired, hard, but you just reach down inside and you say, all right, this is what the Lord gave us to do, and this is what— it's changed our lives because it's changed our whole mindset.

How do you— how do you feel different, Amber, with the $45,000 paid off versus the $28,000?

I can't believe it. Yeah, I can't believe we actually did that because I didn't even realize it was that much until I sat down the other day and we kind of hit mid-year, and I was like, okay, I need to do a checkup and see where are, how everything's looking, you know, what does the rest of our year look like kind of thing, and what are, what are we aiming for for the next 6 months. Yeah, as I added it all up, I was like, oh my gosh, it was gone way further.

Okay, so, and I would want you to know that, like, as it's going, do you know what I mean? Like, if you have a great month and you guys put an extra $800, $1,000 $1,000 more to the debt than what you had planned out, that should be a more, that should be the energy boost to keep you going. You know what I mean? I'm thankful that you guys got further than you thought, but I don't want that to be a surprise. I would be in your numbers probably a little bit more so that you know the end too, Amber. You feel the progress. And you need to know like, hey, we're gonna put an extra 3 grand towards this debt. You know what I mean? And we're gonna be done in 10 months. 10 months.

We've got a saying on the wall back here that says, "What got us here won't take us there." Oh, that's good. I like that. And in my 40s and 50s, I ran 15 half marathons, which are 13.8 miles, okay? And oddly enough, there's this thing in the half marathon world that happens at 9.5 miles, and at that point you've been running well over an an hour. And at the 9.5-mile mark, your nutrition starts to run thin, your hydration starts to run thin, and you're certainly not running on any sugar high or excitement high. You're just trying to finish now. And so you're looking, you go, it feels like that the next 3 miles of that 3.5 miles is going to be longer than the first 9. There's something that happens, and it's a mental thing. And like I said, I've done 15 of them back in the day, and I remember every time I hit that 9.5, I I was like, oh crap, why do I do this? You know, this is, this is killing me. And but you're already 75% done, you know, and you— but you're still— your mind starts playing tricks with you, and that's all it is.

So here's the thing, I think you guys are way better and way stronger than you think you are.

Well, thank you for that, because one day we're gonna make it to where we get to come do our debt-free scream.

You are, and you're gonna stand on the debt-free stage right outside this window window, and you're going to remind me of this conversation because we got your back, kiddo.

Yeah, and Amber, you guys are doing exactly right. I mean, on average, it takes people 18 to 24 months. So you're about to— you are doing it. You're doing it.

If God told you to do this, it's okay to ask him for the strength. It's okay to pray and say, Lord, I need some extra boost right now. As a matter of fact, he kind of enjoys that.

Hey, what's up guys? It's Jade Warshaw.

Listen, summer spending adds up so fast between vacations and road road trips and camp fees and events and all the extra gas and grocery runs, money can get tight before you know it.

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Are you sick and tired of being sick and tired with your money? Ready to get it under control? Work so hard, don't seem to get any progress, feel like a rat in a wheel. Debt hanging over you? You sick of MasterCard? Yeah, I bet. Hey, you don't have to live that way. Our EveryDollar budget app will help you find extra money every month and build you a personalized Ramsey plan to get out of debt so that you can build wealth. In just 15— the first 15 minutes, you're gonna find thousands of dollars in hidden margin. It always happens. You're gonna feel like you got a raise. Don't be normal. Normal sucks. You want to be a new, whole new plan, every detail under control. Check out EveryDollar. It's free in the App Store or Google Play. Renee is in Boston. Hi Renee, what's up?

Hi, thank you so much for taking my call. I'm a single parent researching the best ways to pay for college college. I have 2 sons. My older son went into the trades, aka no college debt. My youngest son is starting his freshman year at a private college in New York in a couple of weeks. The good news is—

where'd you get the money for a private college?

We have $72,000 in need-based scholarships.

Okay, does that— is it $72,000 or is it more?

No, it's $72,000, which leaves me to pay $14,000 per year. Of what? Uh, tuition.

Oh, I thought it was $72,000. So tuition is— so the tuition at the private school is $86,000 a year?

More than that. Okay. I think it's $93,000.

Okay. And what, what pray tell is this young man studying that's worth $100,000 a year?

Yeah, but they gave us $72,000. I know.

And in need-based scholarships, which means I only have to pay back—

what do you mean?

I gross $113,000.

Okay, can you just pay $14,000 out of pocket then? That's what I'm thinking about doing. Yeah, paying $14,000 out of pocket.

Okay, that's gonna— that then you really don't have a question if you just do that. That's okay. What I, you know, and it sounds like it's what you're gonna do. What I will tell you from our research is, and we had an award-winning documentary called Borrowed Future on student loan debt, which you're not talking about student certain loans. But what we found is, is the biggest mistake people make in college is the school they choose. Okay, now I don't know if you can find a school that's only $14,000 out of your pocket somewhere else, or if this guy— does he have great grades, or is it 100% based on needs with you making $115,000 a year? I can't imagine the need of that?

He has great grades and he was recruited by the football coach.

Oh, so he'll be playing? Yes. Oh, okay, so it's— so there's an athletic component to it?

Well, sort of. You said it's need-based.

Yes, it has to be need-based because it's a Division III school.

Okay, gotcha. And again, he's studying what you told me, but I already you forgot? Economics.

Okay, okay, cool. All right, so if you can do this and he can play football for 4 years and you can come out of pocket $14,000 a year and you can cover that and cash flow it for 4 years and he gets a degree for the equivalent of $60,000 out of pocket, then that's not going to be a bad deal, right?

Yeah, that's what I think. Yeah.

But if he could have gotten 100% free ride somewhere else, 100%, nothing out of pocket, then I'm going to argue—

nothing I'm aware of.

Yeah, well, you didn't try. He got recruited from one place, and you went where they called you, but— and because they gave you a big old number, but it wasn't a big enough number. So yeah, the philosophical thing— if I were you, I would do do the deal, okay? But the philosophical thing I want to lay out there for you, and more importantly for all of our tens of millions of listeners, is that where you go to school does not matter, okay? No one has— you know, you go in to see your doctor, you don't ask him where he went to school. You go in to hire a lawyer, you don't ask them where they went to school. You go in and sit down with an economist, you don't say, "Where'd you go to school?" unless they got a PhD from freaking Harvard, and then somebody will bring it up. It's like they're vegetarian, they feel like they have to tell you. But other than that, it's not a thing, right? So other than that, it's not a thing. So you just don't go somewhere just because, and don't go somewhere by default. But it sounds like this deal's not super bad.

But if you told me you were coming out of pocket $40,000— Yeah, you wouldn't be able to afford it. I'd be resetting his whole expectation about where he goes to school. I'd say go to school somewhere that you can afford to pay cash for. Or it's beginning of August. Or if you came out of pocket, or if you told me you're going in student loan debt to do this, I would just say no, there's another way to do it, and you can go to a different school and you can afford it. By the way, folks, the average in-state tuition in America today is $14,000. That's what she's paying out of her pocket. So all the free money that they gave her just brought the cost down to what the average state tuition is. Now maybe not in New York. She's in New York. I'm not sure that state tuition will be true in New York, but I don't know who all offers in-state tuition in New York. It's a state college, but I'm gonna guess and say that one's higher than the average. But still, you know, you cannot justify coming out of pocket $100 grand a year year for a school that you could get virtually the same curriculum and the same textbooks in a lot of cases by going to a state school.

78% of the CEOs of publicly traded Fortune 500 companies went to a state school. Where you go to school does not matter. Matter. Whether you go to class or play beer pong matters. Whether you learn something while you're there matters. Whether you study something like economics that's usable in the marketplace, that matters. And so this is a sharp young guy, obviously, and so the good news is she's got the money to cover the $14,000. The $14,000 is not unreasonable, and, you know, as long as they don't rescind the scholarship. If they rescind these scholarships or these things, you know, and he gets hurt playing football, then he's going to a different school if he's mine. Because we're not coming out of pocket $50 grand so you can finish up where they started me with a $70,000.

And it's a pretty debatable topic, but even college sports at a 3D— you know what I mean? A school, it's not like it's SEC and football, right? Like, you have a full-time—

Well, the only reason he's— it's just a job. Football's a job. It's a $72,000 a year job. That's it. Totally.

That's what I was going to say is at that point, you are going 'cause they're paying for your—

well, and then they take that team and they go play a big school, and that school pays them a million dollars for beating the crap out of them. Yeah, that's what happens. So that's where it comes from. But that's true. Oh man. Oh yeah. Well, hey, what's crazy too is his deal is not a bad deal. Sure, totally. Always look— always look at lots of options and don't just set the thing up on based on where you're going to school. It's the number one one mathematical mistake in the whole college equipment, whole college decision-making paradigm.

Yeah, well, average tuition, I just looked, was $12,000. Room and board is $13,000 to $15,000. Yeah, you're starting to pay more for room and board than the actual tuition.

Tuition. They're gonna, they're gonna price themselves out of the market if they keep it up. Some people are gonna— it's like she said, she got one went in the trades, he's gonna end up making more than the economist, right?

Yeah, the diesel mechanic will make more than the economist.

Economist. We're done here. That's what's going to happen. $120,000 a year diesel mechanic right now. So, um, yeah, sounds like Renee's a good mom. She got two boys she's raised, both of them coming out, they're both productive. Well done, Renee. Very cool. Good for you, Renee. And I hope it goes well.

I hope he doesn't get injured. I hope it— and he loves it.

Yeah, hopefully it works out perfect. If it doesn't, pull him though, put him in a school you can afford.

¡Hey guys! Dave Ramsey here. Every day on this show, we help people work through real money problems and figure out what to do next. Now you can get that same kind kind of help anytime with Ask Ramsey. Ask your money question and get answers built on Ramsey principles we use on the show. Whether you're making a decision or just want something explained, Ask Ramsey is here to help. It's fast, simple, and free to use. Go to ramsaysolutions.com and try Ask Ramsey today. That's ramsaysolutions.com. Dennis is in Denver. Hi Dennis, how are you?

Hey Dave and Rachel, thank you for taking my call.

Doing well, how about yourself? Better than I deserve. What's up?

Awesome. Um, so I'm 24 years old. I have about $170,000 in in a regular savings account. I'm embarrassed to say that, but that's what it is for now. My question is, my mother is currently renting a home. She has been renting the house for quite some time, about 5 years now. She doesn't own a home herself, and the home is worth about $180,000. I could cash flow it and have her pay rent. She's the one encouraging me to do this to build some equity over time and also Um, so I'm gonna have some income from the rent that she'll be paying me. I'm wondering if that's a wise decision to make.

Hmm. Where'd you get $170,000 at 24?

I've been working since I was 16. And to be honest with you, I just have accumulated that much, uh, over the years. I have, um, I take home about $3,900 a month and I have no no debt, no payments at all, no car payment. And I also don't pay for housing, as it's a benefit through my employer. What do you do? I'm a property manager for a ski resort. Okay, wow.

Well, you've done really well, sir. Congratulations, very well done. Thank you.

How old is your mom? She's 60, and she's looking to live in that grand house, uh, for 5 to 7 more years before she retires and goes back to her home country. At least that's what she says. Yeah, but it's, it's unknown.

Okay. Is the house nearby?

Is it in Denver? No, actually it's in the outskirts of Houston, Texas. Yeah.

Okay. Okay. What's her home country? Just curious. Honduras. Okay, cool. Doesn't affect the answer, I was just curious, but, um, um, So I think your mom wanting you to own a piece of real estate at 24 that's going up in value is a good idea. I think renting to relatives is a really, really, really bad idea. And I think owning rental real estate in a town you don't live in is a bad idea. Okay. So this is going to go sideways. Always. Something's gonna happen. Somebody's gonna get sick. Something's gonna shift. You're gonna get married. Your new wife's not gonna like the arrangement. Something's gonna happen somewhere. I would rather, if your mom needs some help through those years, which it doesn't sound like she does. She's paying her rent now and she's working. And when she retires, she's gonna leave and go to Honduras. So she's probably in pretty good shape. After all, she raised you and you're pretty frugal. So I'm guessing she's probably doing a pretty decent job. But anyway, I would just live your life with your $170,000, and if you need for some reason to, you know, if you want to help your mom at some point with some cash, that's fine.

But I don't think this is the best way to help your mom, and it's not the best way to help you.

Right. And she doesn't need the help at all. She just is encouraging me.

She just thought it'd be a good idea.

She just wants you to own real estate.

And it's something going up in value. She wants to pay her son. She'd rather be paying you than a landlord. Like, I understand how she got here. It's just when you look at all the facts, it's probably not the best route.

When the heat and air goes out and it's $8,000 next year, right, you got a problem, you know. And when this or that happens, you got a problem. And by the way, you're supposed to go up on the rent every year when you're a landlord. That's how it works. Well, he went up— that's your mom.

Well, he wouldn't do that for 5 years.

I know, I know. And So you're not getting the right rate of return on your $770,000. So you're not gonna go, you're not gonna go up on the rent and you should. And, but you can't, 'cause it's mom.

You can't, 'cause it's mom. What is sweet mom is gonna be retiring.

Sweet mom, that's right. She needs to just rent and then execute her plan. He needs to execute his plan.

I agree. Keep it separate, Dennis. But I understand how she and you thought maybe this could be a good idea. But at the end of the day, probably not the best.

After sitting in this seat for 35 years, I can tell you that very few people have called up and go, "Oh, that really changed everything," except in bad ways. And so—

If anything, Dennis, I would recommend you put your $170,000 or part of it, half of it, into the market. You could be making more return on that. That is one thing I would say is do something with that money you have saved.

All sitting in checking is not good. That's right.

That's right. Yeah.

So, you need to move some of it somewhere and start thinking about where you want to live. You got free housing right now, so that's okay. But I would park the vast majority of that and at least S&P 500, or sit down with a SmartVestor Pro and let them help you develop a game plan for investing that. Because the crazy thing, y'all, not just him but everybody else, just think about this, okay? In 2023, the market went up— the S&P, Standard Poor's 500, which is the 500 largest stocks, and you can buy that in a mutual fund— went up 26%. In 2024, it went up 25%. 5%. In 2025, it went up 18%. Year to date in '26, it's up over 10%, and we're not even at the end of the year yet. Okay, or you can get 3.5% on a high-yield savings account. So basically, had you been invested— if you're out there and you've been invested for those 4 years, you would have doubled your money. And by the way, I have some money sitting in an S&P. Always, that's where I park money while I'm waiting to buy a piece real estate.

And so during that 5-year period of time, the money that I've got sitting in there doubled. That's crazy, y'all. So like, if it's $1 million, you got $2 million, that kind of thing. If it's $170,000, you got $340,000. Now, the market does not always do that. That's an unusually good 4-year period of time. But that's a lot, y'all. That's crazy. And so, you know, just leaving money in a fruit jar in the backyard buried because it's, quote, safe— no, it's not, because you're getting beat up out here by inflation. So you need to be investing at a rate that's higher than taxes and inflation, which is higher than 6% on your long-term investing, because you got to cover taxes and inflation. Inflation runs about 4.2%, and then you're gonna have income tax of some kind on that money somewhere. So when you got money like he's got sitting there, be— Rachel's point, get it towards working for you. Andrew is in Tampa. Hi Andrew, what's up?

Well, I've got an interesting problem. I am truly blessed, I'm in a very strong financial position, but you've got me getting, I guess, anxiety because I burnt through my Baby Step 3. I had a couple of very large-ticket recent expenses that fortunately, you know, I had that fund, was able to pay it. So, you know, just not having— I'm super cash poor right now, but I was wanting to know your opinion on borrowing against a 401 since I can pay it back to myself with interest at roughly the rate that the market's moving.

No, it's not the rate the market's moving. It is more like 5 or 6% You don't pay yourself back on 401 loans at market rate. You mean the market on a high-yield savings account, maybe, but not the market on the— not what the S&P 500 is doing. No, that program's not available. But anyway, the answer is no. I would never borrow on a 401 under any circumstances. The only time I would take or use 401 money is to avoid a foreclosure or bankruptcy. You're nowhere near of that. How much money did you have in your emergency fund?

Uh, well, going back to COVID, I had quite a bit, but I used that to buy a business, and I now own 4 locations, and that's doing real well. And I'm keeping all of that money separate to continue to grow that business.

Yeah, how much money is in that business?

So, uh, how much money is in the business?

How much money are you— you said I'm keeping all that money. How much How much cash is in there?

Uh, it makes about $300,000 a year. Good.

And all that money's just sitting there in retained earnings?

Uh, well, no, I've used it to buy properties and open additional shops.

Okay, how much cash is sitting in there right now?

Uh, in the business account, about $180,000 right now.

Okay, and how much was your emergency fund recently until you had these unexpected big purchases? It was about $100,000. Why'd you have $100,000 in your, or in your emergency fund? Uh, 3 to 6 months of expenses should be in your emergency fund. You don't have 3 to 6 months of $100,000. Okay. So I'd take some of your $180,000, maybe $30,000 or $40,000 or whatever, the 3 to 6 months of expenses and move it over there, set it in your emergency fund and call it a day.

You spend hours researching before making a major purchase like a home or car, but it's also a good idea to put in the work searching for the right insurance coverage. To protect your biggest assets, I recommend using Ramsey Trusted Pros. Whether you're looking for car, home, or any other type of insurance, Ramsey Trusted Providers have been coached and vetted to serve serve you like we would. Find what you need at ramsaysolutions.com/insurance. Our scripture of the day, Psalm 37:23 and 24, the The Lord makes firm the steps of the one who delights in him. Though he may stumble, he will not fall, for the Lord upholds him with his hand. John Maxwell says, "A man must be big enough to admit his mistakes, smart enough to profit from them, and strong enough to correct them." Woo, that's good. Michaela is in Philadelphia. Hi, Michaela, how are you?

I'm good, how are you guys doing? Better than we deserve.

What's up?

I'm calling because I'm wondering what it means to be a beneficiary on a will, If that person who is the holder of the will, if they pass away, does the beneficiary inherit any debt?

Okay, the second answer is no. The first answer is there's not really anything called a beneficiary. There's an heir. You can name an heir. You can name who you're going to leave money to. You can name— you can take a— there's certain kinds of things like your 401, you can put a beneficiary on that. Life insurance has a beneficiary. Beneficiary on it. An annuity can have a beneficiary on it, but a will technically doesn't use that term. It would be more that you're just the heir or the person that has willed the money. A will also has— and this may be what you're talking about, I'm not sure— they will assign someone to manage the affairs of the estate and follow the directions of the will, and that's called the executor of the will. Is that what you're thinking of? Of? I think so. Whose will are we talking about?

This is my grandmother's will.

Okay. If she's simply leaving you money, it's that simple. Okay? Okay. The executor, as the word implies, executes. Executors execute the terms of the will. So if the will says you get $5,000 of grandmother's money, your cousin gets $3,000 of grandmother's money, your mother gets that piece of land, your brother-in-law gets that piece of jewelry or Bible or whatever, then the executor's job is to do what the will says and execute that and give you that money, your sister that money, your brother-in-law the Bible, whatever, all that stuff, right? It's their job to do that, but in no case does the debt get assumed by the person. Now, okay, if there's something like a house that has a mortgage on it, okay, the executor would sell the house and whatever the net is would be distributed to the people in the will. Okay, but you do not— and if they die and they don't have enough money to cover all of their debts, the person in the will will get nothing because the debts have to be paid before money's distributed. Distributed. Gotcha, okay. But in no case are you suddenly going to have debt on you because your grandmother had a mortgage.

Okay. But now let's— let me make it, you know, that's the law. Now if— let me go a step further, just make this even more complicated. But let's say your granny had a house that she owed $100,000 on, and the house is worth $500,000, okay? She dies and she leaves you the the house. Now you have inherited a house that has a mortgage, but you're not on the mortgage. If you want to keep the house, you're going to pay the mortgage because they're going to take the house, but you're not on the mortgage. They're not going to report it on your credit report. They're not going to sue you if they foreclose.

There's no change in the documentation. How about the deed?

The deed can go into your name. Name, but you don't owe the mortgage. Okay. But if you want to keep the thing, or if she leaves you a car and it's got a car loan on it, if you want to keep the car, you're gonna have to pay the debt. Okay. But you're not technically on the debt. Like if she left $50,000 in credit card debt, you don't just get the $50,000 in debt. Debt does not, is not inherited. Okay. Is that logical?

Yes, very. Thank you. Okay.

Hope I didn't give you too much. No, you're good. Just throwing everything at you. Do one thing. So folks, when someone dies, to make it simple, what you own when you die stands good for what you owe. So only your net worth after all debts are paid can be distributed to your heirs. And so it's like, you know, sometimes I run into people who are kind of— they don't know how this stuff works. It's like, my grandmother left me a car "but the bank took it." Well, no, your grandmother left you a car with a debt on it, and you didn't pay the debt. That's why the bank took it. The bank didn't do anything wrong. That's why they have a lien on the car title, so they get their dadgum money. But if someone is penniless, they're a pauper, they live in an apartment, they don't own a piece of real estate, and they got $60,000 in debt and $40,000— or $60,000 in credit card debt and $40,000 in student loan debt and they don't own anything of value and they die, that debt is not inherited by their heirs. That debt is just simply lost.

The company that loaned them that money loses the money. Student loan doesn't get paid, the credit cards don't get paid. And so if that's your father that passes away as a pauper, is what we would call it, poor, you would just get copies of the death certificate and send it to to Citibank and say, you get nothing, honey, because he died with no money and nobody paying this. But you don't get to keep his car and not pay the credit card debt either, because what you own stands good for what you owe when you die. Jacob's in Salt Lake City. Hi, Jacob, how are you? I'm doing great.

How are you guys doing? Better than we deserve.

What's up?

Yeah, I had a question about qualified HSA funding distributions. Are they a good idea in terms of working your money with a traditional IRA in a smart way?

The only thing I've used HSAs for in that way is I fully fund mine every year and I've never used it. And I've got it invested in mutual funds. And so it's become a third type of retirement savings. But I don't move it around. I haven't done qualified distributions. I haven't done anything. If I had a big medical event and didn't have the money, I could pull that money out of there. But I got several hundred thousand dollars in an HSA because I started it the first year George W. Bush started it. And I fully funded it every single year. And when it got above $100 grand, I dropped I put it in the mutual funds. I might actually— I think there's more like a half million in there now. But anyway, doesn't matter, a lot of money in there. And so it becomes— but only after you're at Baby Step 7 do you do that kind of stuff. If you don't be putting money loading up that thing and not paying off your house. Hmm, that makes sense. Yeah, it doesn't make sense.

We— I just have a traditional IRA that is not really doing anything. It's from a previous employer. I haven't I haven't rolled it over or anything like that. I wanted to see if transferring some of that money into my HSA— No, no, no, no. —would be a good idea.

No, you don't need that money in your HSA. No, you want to keep that as an IRA. Roll it from there, from a traditional into a traditional IRA, into a good mutual fund that's doing something. Get a good SmartVestor Pro to help you with that. We don't use the HSA instead of IRAs. No, no. IRAs are much more flexible. A lot more things you can do with them than you can with the HSA. HSA. But by the way, sidebar, if you—

from a tax perspective though, the HSA— do what? From a tax perspective, the HSA grows just like the traditional. And it's pre-tax that goes in too. Yeah, you don't— yeah, you, you— so it's like a traditional. You avoid double taxes. It's like—

no, you get double taxed if you don't— if you don't use it for medical, you get, you get taxed.

Not at the end, at retirement. Yeah, yeah.

When you pull the HSA out at 65 and start using it for retirement money, you pay income tax on it. Just like a traditional 401.

Why did I feel like the growth was tax-free in an HSA?

It's tax-free if you use it for medical. You buy a Tylenol, there's zero taxes.

She gets some mucus out of this show.

It's a lot of Tylenol. With my HSA. Yeah, but your HSA, I mean, you got a big old traditional lump sum sitting there, and there's nothing you can do with it except that. So, but no, I wouldn't put more money in there than that, and I wouldn't do any of that. Until— that's a Baby Step 7 and beyond type of strategy where you've maxed out 401s, mega Roths, mega backdoor, well, everything, you know, mega 401s, everything's all going into Roth. You can't do anything else. And I think, okay, here's a little bit more money I can keep the government's hands off.

Yeah, and again, you can't get to it, well, unless for medical, right, until retirement, 65. Yeah, so it's stuck in there again.

So I mean, I can get mine, but I don't I don't need it, so I'm not gonna, I mean, I'm just gonna let it sit there and grow. Just let it sit there and grow. That's what it's for. It never was intended to be used by me. That was just keeping the government's stinking hands off my stinking money. That puts this hour of the Ramsey 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.