Transcript of Don't Leave Your Financial Future To Chance

Brought to you by the EveryDollar app. Start budgeting for free today. Normal is broken. Common sense is weird. So we're here to help you transform your life. From the Ramsey Network and the Fairwinds Credit Union studio, this is the Ramsey Show. George Campbell, Ramsey personality, number one bestselling author and co-host of Smart Money Happy Hour, is my co-host today. The phone number here is 888-825-5225. The call is free, and some say the advice is worth exactly what you pay for it. Josh is in Virginia Beach. Hey Josh, what's up?

Oh, not much. How you doing?

Better than I deserve. How can we help?

Oh, just trying to figure out what I need to do to get myself out of a financial pit.

What's going on? What happened?

Okay, well, I closed my business and moved down the Midwest, or moved to Virginia, to try to just go work for somebody else, get rid of the hassle, the whole nine yards there. And even though I'm making good money, I still got $6 in my bank account by the time I pay bills.

Hmm.

How much debt do you have?

About $100,000 combined with my old business, around $100,000.

Okay. And how much do you make now?

Um, I'm making right at $80,000, $85,000 a year at the new job I started. I was making about $80,000.

Good for you. Josh, when did you close? How long ago did you close your business?

Um, literally, actually my last day in my shop was the first of the year. Mm-hmm. And, uh, so I've been about 8 months now.

What kind of business was it?

It was auto repair.

How long did you have it?

15 years.

Wow. That's kind of heartbreaking, isn't it?

It is. Yeah. But there was a lot of bad decisions and choices there kind of led me into a financial pit and just, you know, so how much of the $100K is business debt and what kind of debt is it? Um, I got the taxes and they hit me with a bunch of penalties and everything. So I got probably about $70,000 in the taxes with penalties. Um, and then just the vendors and everything, probably about another $15,000, $18,000.

Okay. Um, that's, that's $85,000. And then the other $15,000 is what?

Yeah. Well, actually then I got, uh, a vehicle payment, which is, or my vehicle is $22,000. I still owe on it. And, uh, credit cards, I'm right about $3,000 in credit card debt.

Yeah. What's the vehicle?

Er, it's a Jeep Wrangler.

Okay, what's it worth?

Probably $17,000.

You single?

Yeah.

Okay, all right. Um, I've been through closing a business and the heartbreak of that and the gut punch that that was to my confidence. And so sometimes in these situations it's more about confidence and believing than it is an actual math problem. You've got a bit of a math problem, but it's not overwhelming. But it's also believing that Josh is a good guy, Josh can win, Josh knows how to do big things again. And Josh does. He ran a dadgum thing for 15 years, okay? You just made a few mistakes and got tripped up, and so now we've got to work our way out of those things. But if you're single and making $85,000, we can address these things and push your way through it. So if I'm you— how old are you?

I'm 42.

Okay, so if I'm you, I don't have anybody to tell what to do except the guy in my mirror. And so I'm gonna set up camp in the cheapest possible safe and clean one-bedroom apartment, and then I'm gonna start working all the time, spending nothing, and cleaning up this debt as aggressively as I can. You could think about selling the Jeep, but man, maybe not. It's not that big a deal. It's not your biggest problem. Your biggest problem by far is taxes. Are you paying anything on those right now?

Not yet. I mean, I've just been paying all the other debts and everything. I've been trying to pay all the personal debts.

And yeah, and the vendors that were your friends, right?

So trying to put, you know, and that's where my whole paycheck's now is going from Other than my Jeep payment, which it got behind and I had double payments up on it.

Yeah, you need to get it caught up. But what happened was, is you were in a tailspin and you were dizzy and the chaos came in. And so you were doing a bad job, a disorganized job because of the failure and the loss of confidence, failure on the business. And that's normal and I don't blame you for that, but I just want to give you permission to be where you are and now let's fight our way out of it. So Here's what I want you to do. I want you to get above this problem and get away from all the emotion and just look at the facts. The facts are we got $85,000 coming in. These $15,000 worth of vendors will work with you. They'll probably settle for pennies on the dollar. If you'll go to RamseySolutions.com and click on Tax Professional on the ELP side, they'll help you set up a payment plan on the tax and keep them from coming down on your head randomly, because they will randomly come in and screw up your life. Get the credit card paid off— Right. Get paid off, the vendors paid off, and then work on the taxes.

And so, you know, work these off smallest to largest. The good news is you have a very, very marketable skill for a side hustle called fixing cars. Did you come out of this with a tool set?

Yes. Okay. Yeah, I mean, and that's where— that was another issue I'm at right now is I'm renting a one-bedroom apartment. Good. Utilities, everything is $800 a month, which is dirt cheap.

Right, that's good.

Excellent. But if I could find something that I had a little bit of space to work, I could do side work and make money on.

Yep.

But that's also a gamble.

Well, I mean, here's the thing. I want you to go get some side work, and there are guys that roll up in the parking lot here at Ramsey and work on people's cars in the parking lot while they're at work. Mobile repair, and they don't need a space because they did— there's a brake job going on out in the parking lot right now, probably. Yeah, it's half the time I'm out there.

This is blowing up, and you can start it with nothing.

Yeah, because you— and all you need is your tool set, and you can do the basic stuff, some maintenance stuff. Obviously you can't pull an engine in the parking lot of their office, but, but you can do some of the other stuff and make some really good side money while you're doing this. And then, George, I think we need to put him on EveryDollarBudget. And take the $85,000 plus any side hustle money we can scrape together and then start working on that snowball.

Yeah, I mean, if you're saying your rent is pretty cheap, your expenses are pretty cheap, sounds like most of his income is going out to those debt payments. Well, but if we can throw a couple grand at that debt a month, we can clean this up in a couple years.

And I want you to call those vendors. I know you— they're the ones that are tugging at your heart the most. But if you owe a guy $5,000 and he hadn't been paid in 9 months, just say, hey man, I'm over here, I'm living in a one-bedroom, I'm broke. "Hey, what will you take to settle this debt? I want to stand up and pay you, and what would you take to settle it?" You owe him $5,000, he'll probably say, "Hey, send me a couple grand, we'll call it a day." Get that in writing so it doesn't come back to haunt you, and then send him a couple grand. They'll settle with you, though, vendors will. But the thing is, when you're a small business guy like that, most of those vendors are your friends. And so you don't want to pee on your friends, right? But in this situation, I'm just gonna ask for some mercy. You know, like when you're a kid, "Uncle," right? "You got me down, Uncle," right? So—

And they'll be shocked to hear from you.

Well, they'll be pleased that after 9 months that they got anything.

Exactly.

They thought you were gone, and that's the thing. So they'll settle with you. This is not like some stupid credit card company with some collector in a cubicle 500 miles away who can't keep a real job and is calling you 42 times. That's not who we're dealing with. We're dealing with a guy you know down the street.

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That voice.

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You got all the entertainment you could ask for.

Yeah, oh, it's gonna be something. You're gonna be, you're gonna be, entertained out.

But if you're bored, it's your fault.

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Hi, doing well. Thanks for taking my call.

Sure, what's up?

Um, so I initially attempted to enter into an agreement with my father to purchase a house that he had inherited from my great-aunt. Um, and I sort of had to compromise on the purchase price by giving him an upfront $5,000 to remove the lien that was on the house. That lien was a Medicaid lien. He could not sell the house unless that lien was removed. And so I did that with the understanding that we were good with the agreement and the purchase going forward. But he ended up using that money to remove the lien and then decided that he's going to sell the house for more money than our agreement because that's what's best for him. Um, you know, I, I told him that I expected to be paid back if that was his decision, but I feel like this is just another way that he has sort of, um, been dishonest and, and hurtful, I think, financially in our relationship. And it makes it complicated that he's also my dad, um, and I know that I'm called to honor this relationship, but I do feel like, um, there is a, there's some financial, um, issues between us that I'm having a difficult time navigating and just would like some advice on how to go forward.

All right.

Um, so you said another, so this is not the first time he's done something underhanded or dishonest to you.

I feel like this is the worst where it's not the first time.

It's a pattern. And you, you know that this guy is a crocodile.

The pattern is we're very generous with him and he loves our generosity. Um, you know, we've purchased transmissions that have happened.

No, that is not true. You're putting sugar on top. You're putting sugar on top of a crocodile.

He loves that he can take advantage of you.

You felt— have felt taken advantage of as a pattern. And yet you gave him $5,000, which you should not have done. Because by the way, you can have a lien removed from the house at the closing. You don't have to do it before the closing. So that you could have given the title company the purchase price and they could have removed the lien and then given him the net proceeds, which is the way a normal human does a transaction if you're not a crocodile.

Okay. All right.

So here's the thing. You've got to separate your— the— you do not honor— when the Bible says to honor your parents, it does not say to honor your parents' misbehavior. It's honoring the office of father, the office of mother. And that's like, for instance, I agreed with almost nothing that Joe Biden did or said when he was the president of the United States. Some of you loved him. I didn't. Okay. But the Bible calls for me to honor those that are in power and pray for them. So I'm going to honor the presidency, but not the things that Joe did as president. So I can honor my father, but I don't have to honor his cocaine use. I'm not saying my father does cocaine. That's not what I'm saying. But the point being, okay, that your dad, you can honor the position of father, and say, I honor you as my dad, but I cannot do financial transactions with you anymore because I can't trust you. Yeah, that's not dishonoring, it's just observation.

I think I know how this is going to turn out.

I do too. He's going to be pissed next time you tell— next time he can't take money from you.

Well, I think he's going to sell this house and he's going to feel real rich for 3 years, and he's basically selling the inheritance that could have gone, you know, to my grandkids that I was even willing to purchase and take on, you know, that responsibility to give something, you know, to—

I'm sorry, but there was no generational wealth with a crocodile. That was an illusion. Yeah, you need to let that go. That's gone. He's took— he owns the house and he decided not to sell it to you.

And once he sells and he's out of money, I know he's going to depend on me.

No, he's not. He's not, because I'm not going to give him any more money. You can't depend on me if I say no.

When he steps out that door, there's going to be no doormat named Julie waiting to fund his misbehavior again. So you get to set the boundary. There's no depending on you anymore.

You're not going to enable it. I'm not prepared to care for him in his old age.

No, no, absolutely not.

He's a grown adult.

He has nothing. He has no 401k. He has no savings.

That's his problem. Here's the hard part, Julie. Nothing you could do could change that. Because you just showed him, if you give him $10,000, it's gone. It doesn't matter. It's an endless pit.

This is— you do not owe him. You're a classic enabler. Okay? I mean, you're just handing out money thinking it's going to make everything okay. It never makes everything okay. It just makes it more of what it already is. You're not helping him when you participate in his crocodile tears. You're harming him. And so you just stand back and go, you know, I love you, you got issues, and I hope it all works out for you. And, you know, if you need— if you need— if you're out of food and you're hungry, I'll buy you a Kroger card, which does not allow alcohol or cigarettes on it. So it only allows food. So there you go.

What's he going to do with the proceeds from the house?

He's going to take them and use them and blow them. That's what he's done his whole life.

He's going to pay off his debt. He's going to pay off his debt and then it's going to be gone. And my thought was, well, if he ever needed anything, at least we'd have an asset where we could pull out an equity line of credit or something. You know, if there was ever an emergency, we would have, we would have a source of wealth to help him. And instead of trying to—

he's not the problem. He's not the problem. You are. Because I can't get you in this conversation to recognize that crocodiles do one thing, and that's bite. And every time I talk about it, don't feed the crocodile, all you do is figure out a way to get the food out.

Well, I don't know how to navigate family holidays. Like, how do you even have a relationship?

I don't give you money. If you would like to come over and eat, that's fine, but I don't give you money. If the only way you want to come to Christmas is for me to give you $5,000, "I guess we're not gonna see you at Christmas." And if he chooses not to come, that's on him.

I think you're trying to save this relationship that is broken. With money.

With money. You're trying to grow this guy's character.

I recognize—

Julie, I can't help you. This is the 14th time you've argued with me, and you called and asked us what to do. What you have is a boundary problem. You are a classic enabler. Go see a therapist. Somebody needs to walk you through how to say no. You've gotten this so tangled up that somehow it's all gonna be okay someday. It's not gonna be okay. The guy's a freaking crook. I'm sorry he's your father, but he's a crook. He's a bad dude. Don't participate with him in his delusional crap. You're not helping him, you're not helping your family, you're not helping you. Get some help, girl.

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Stephanie is in Sacramento. Hi, Stephanie, how are you?

I'm good, how are you?

Better than I deserve. What's up?

Good. Well, I'm kind of in a dilemma. I'm currently on Baby Step 5, and I finally actually reached that 15% for my retirement.

Good.

But I'm gonna be needing a new car in the next year or two. So, I'm just wondering if you recommend backing off of investing to be able to save more in anticipation of a new car, or how should I navigate that?

Typically in a budget, if you're only putting 15% away and you have your emergency fund and you have zero other debt, you should have some margin to save for a car.

Yeah, I do. I have about $13,000 saved up right now.

Okay, and what's the car you're driving worth?

Um, it's probably worth about $15,000, but it, you know, it has 150,000 miles on it.

So if you bought a car today, you could buy almost a $30,000 car.

Right.

Yeah. What's wrong with that?

Well, I worry because the last 2 cars I've had have essentially blown up and I've been like forced to go into debt, um, to be able to get a new vehicle. So I'm just, uh, it just kind of worries me a little bit.

You're worried that a $30,000 car is going to blow up?

Well, no, not, not a $30,000 car.

That's what we're talking about, aren't we?

I guess so. Yeah.

I think you have the trauma from the past vehicle stuck in your head, and a $30,000 car that you do a pre-purchase inspection on and you buy a quality make, model, year, it's going to be just fine. So how much are you looking to spend?

Well, I mean, the new and used ones I'm looking at, similar to my current vehicle, are about that $40,000 range. So that's what my goal is. I'm trying to get to $40,000 and I'm just holding my breath.

What is your vehicle?

There. It's a 2019 Jeep Grand Cherokee.

Okay, and what are you wanting?

A brand new Jeep or almost brand new Jeep?

You want another Jeep?

Probably.

What were the ones that blew up on you?

Uh, I don't— should I, should I give that information over the radio?

Inquiring minds want to know.

Did they blow up or not? If they blew up, it's okay to say it.

I mean, my previous one before this was a different type of Jeep, and then before that was— oh, I can't even remember, but it was like a small little—

okay, are you shingle?

I am, I'm a single mom.

What is your household income?

I make about $6,000 a month.

Okay. How long have you been listening to us?

I, well, I actually, when I finished my school, I kind of did a deep dive to be able to pay off my student loans and debt by using your method.

Okay, so what do we say about cars, the maximum car you ought to purchase, do you remember?

Yeah, I think, is it like, I can't remember the ratio, but it's like a percentage of your annual income, right?

Which would not be $40,000. Yeah, it's too much. Okay, I wouldn't spend that much on a car in your situation. So I'd go get a $30,000. And, uh, and so two things I want you to come away with, and George said it and I don't want you to miss it: get a pre-purchase inspection. If you got a Christian Brothers Automotive in your area, go by and see them. They do a great job. If not, find a reputable independent car mechanic and ask them what they'll do, what they'll charge you for a pre-purchase inspection. Might be $100. Take it by there. The second thing I'm going to tell you is to read about the particular type of car that, that you're going, that you're thinking of purchasing and what the reliability factor is. 'Cause there's all kinds of gossip out there on cars, and it may or may not be accurate, but at least you want to read about it and try to figure it out.

You might learn that specific year, maybe—

You could also ask that guy, that mechanic, you know, does this car have a good reputation? Okay? I'll give you an example. The car you're talking about does not have a good repair reputation. It's not got a good repair reputation, so you may want to look elsewhere. But you can look around, make sure. They may have fixed them, they may be better in recent years, but 5 years ago I would have told you just don't buy that based on just what I've heard, okay? The one you're driving, okay?

And the last one you had blew up, so maybe it's time we switch makes and models and try somebody else.

Yeah, just check it out. That's the point. You don't do it based on a couple guys on a podcast. But I want you to check it out. I want you to read. If you can get a hold of something like Consumer Reports or anything on Kelley Blue Book is fine. There's lots of articles. Edmunds Car Guide's got really good articles on repair things and things that are going on. There was a few years ago— oh gosh, it's a long time ago now, so decades ago— but I remember Cadillac came out with a front-wheel drive, and they put an aluminum block engine in the thing, and they were— you couldn't find any of them with an engine in them. They'd all blown. Oh, it was a piece of crap. And so anybody looked at that Cadillac, looked at it cross-eyed, that knew anything about cars, they said, don't buy that car. That's 20-year-old information, okay? It's not current information, but— or older even, probably 30. But anyway, Point being, you can find out from a mechanic, from people that know cars, that that model has issues, that type of car has issues. Don't go that way.

And you can just research that and figure it out. And so I want you to do that, and then I want you to have the car checked out. And I think $30,000 is plenty to spend, so you've almost got enough now.

But please do not walk into the Jeep dealership because they're going to steer you to the new cars and say, "We can get your payment down to whatever you want it to be." No payments. You've got to go to an independent dealer where you're probably going to find the best price.

No payments. Paying cash.

No payments. No payments.

And if you're not a millionaire, always buy used.

Yeah, no payments. No car payments. Did I— did you hear me? No car payments, people. Car payments are the siren song of the middle class. If you want to be middle class or below the rest of your life, keep a stinking car payment. Well, I was forced to buy a car. Well, I had to buy a car.

Why—

yeah, that car's not safe. It needs an airbag. And you're talking to a guy who, when I was growing up, the only airbag in the passenger seat was your mother-in-law. Oh, sick burn. There was no airbags. So come on, guys, we lived through all of that. So you can get a car that's safe and reliable that you pay cash for and no car payments. It's the largest thing that people buy that go down in value, and they all go down in value like a rock. That's where Chevy got that. All right, open phones at 888-825-5555. -225. Steve is in Idaho. Hi Steve, what's up?

Hey, how are you doing, Dave?

Better than I deserve. How can we help?

So I have a house that I'm in the market to sell, uh, I'm up here in Bonners Ferry, uh, and, uh, for about $500,000, $550,000, and we want to move down to Coeur d'Alene, which is about an hour and a half south of here. Um, and I have a daughter and granddaughter that live down there, so we thought we'd be closer to the granddaughter and help out. She's a single mom, help out with stuff. And, uh, we would, when we would put, you know, put up ourselves, we'd just go down and buy something down there. But lately I've been thinking maybe I should just rent rather than buy.

How old are you?

What do you think of that? I am 68. Okay.

Are you in good health?

Oh yeah, pretty good.

Okay. So you probably make it to 88 or 90-something? Yeah, on average.

My dad made it to 98.

Okay, well, somewhere in the '90s then. All right, so we got 20, 25 years. So, um, the, the house that you're in, this $550,000?

Yeah.

How long you had it?

10 years.

Okay. What'd you buy it for?

Uh, $230,000.

So it doubled in 10 years. And guess what? 10 years before that, it was $100,000.

Yeah, probably. Yeah.

So you just lost $400,000 in this conversation while you were a renter.

Well, maybe, but—

No, not maybe. I mean, from '68 to '98.

Okay. Okay.

That's 30 freaking years. You lost, you lost $400 grand or $500 grand if you don't go buy a house.

I don't have to mow the lawn. I don't have to pay property taxes.

Hey, you gotta mow the lawn.

Right now.

You're paying property taxes as a renter.

Well, for $400,000 or $500,000, you can pay somebody to mow the lawn.

Yeah, I could do that. Um, so you don't think that's a good idea?

I'm positive it's not a good idea.

What would a house over there cost?

Um, I could buy— this house is, is about 3,400 square feet. Um, I could buy—

so you downsize and pay cash?

Yeah, if you pay cash for a house and you own it, your costs don't go up except the insurance and the taxes. If you're a renter, 100% of the rent goes up. Can you imagine how much your rent will go up in 25 years? You want to screw up your retirement budget? You want to mess up that golden rocking chair on the front porch? Yeah, be a renter. That'll screw it up. Don't do that, man.

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Today's question comes from Jill in Maryland. "When you say invest in something you understand, do you mean the investment category such as balanced growth and aggressive growth, or are you referring to the mutual fund details themselves such as admin fee, performance, what types of funds it contains, etc.? I want to invest for retirement, but currently my money is just sitting in a savings account because I don't know what questions to ask." Mm-hmm. So you say don't invest in anything you don't understand. So how do you understand it? I think part of that is knowing how the thing works, the mechanics of how a mutual fund works. A lot of us are putting money into this fund. It's across 90 to 200+ companies. We're rooting for the growth and revenue in this company, and therefore the shares we bought grow.

OK. Can you define a mutual fund? That's your start. Can you tell me how a mutual fund works in general? And then if you're gonna buy a growth stock mutual fund, as an example, can you tell me what that is? What the difference in that and a growth and income are? Not a substantial difference. Growth is buying stocks. It's a growth stock mutual fund, so it's buying stocks that are growing.

Because every mutual fund has an objective, so the objective is growth.

And it's usually in the name.

So growth and income. A bond mutual fund.

Growth and income will have bond and large company stocks. And it's the calmer of the two. Okay, that's the first two things. So what is a mutual fund? How do they work? Basics. Primitive. That like a 7th grader can understand it.

Okay?

Most 7th graders. And then secondly, the type of mutual fund you're looking at. And then thirdly, understand the history of the particular fund and the market in general. Okay? So, for instance, a lot of the mutual funds have really good— I was looking at one the other day with American Funds. Okay, so I'm not endorsing, I'm just saying they got a great brochure. So you can pull up the American Funds brochure on ICA, Investment Company of America, which is a growth and income. Okay, that thing's like 80-something years old. It's ancient. Been around forever.

It's got a good track record.

Multi-billion-dollar fund. And they've got a great brochure. So you could say, okay, what does this fund do? It's a growth— what does this fund do when the market's up? What does this fund do when the market's down? What does this fund do when there is a— when the president decides to bomb Iran? And you look back in history and it'll have different dates of things that happened and what that fund did and what the market did during those dates. The reason you want to get a little bit of a history lesson is that you're trying to be comfortable when things happen in the current or right over the edge of the future, that you don't get nervous and jump out. Okay, so if you've studied the roller coaster and the roller coaster is safe, because what goes down— what goes up will come down, what goes down will go up, and we can ride the roller coaster with safety, then it's just the thrill of the ride. But if we think the thing might come unjointed while we're on it and land on our head, then we're not going to feel good about that. But that's knowledge of that roller coaster.

An example would be this, okay? If you drive down the street and you're looking at homes and the vibe in the air, the way the homes are kept up, the way cars are parked, the people walking around, you're looking at them, you don't feel comfortable. Well, you're looking at what's going on in the neighborhood and you're making a decision. This isn't a neighborhood I should buy in. You're driving down the street, everything's very calm. We don't even see any cars. All we see are 25-year-old oak trees, you know. Well, this is an older neighborhood that's very settled. Feel comfortable with that. And you can look at the track record of that neighborhood and say, in the past 20 years, what has that done? And this other neighborhood might be trending the wrong way. And so, same thing with mutual funds. You get comfortable with the track record, the history. And you've heard the disclaimer, "Past performance is not indicative of future returns." That is disclaimer bullcrap. Of course, past performance is indicative of future returns. If you look at the past performance of Scottie Scheffler, who just won a golf tournament, it is indicative of whether he's going to win next week or not.

You know, if you look at the past performance of Michael Jordan, you can tell he's gonna win basketball, right? It is indicative. Of course it's indicative. And, you know, you look at the past performance of this neighborhood, it's indicative that houses are gonna continue to go down. This place has turned into a ghetto. Of course it is. So ignore that. Look at the past performance. Get comfortable. This fund has outperformed the S&P 500. 19 of the last 20 years. Okay, you think it might do it again? This fund has never outperformed the S&P 500. You think it ever will?

Probably won't.

You think it ever will? I mean, this is pretty basic common sense stuff, right? So A, what is a mutual fund? B, what's the category of mutual fund mean? What am I buying? And C, the track record of the fund and the market. If you understand those, you don't have to understand 12 fees. If you understand those, you don't have to look at expense ratios. That stuff doesn't kill you. What kills you is getting scared and jumping out.

Or investing in the wrong thing, which is a lot of where that advice comes from. If you can't explain it to me and you got all your money sitting, sitting in it, that's dangerous.

Which is exactly why the crypto bros are all mad at me, because the crypto has only one reputation: none.

And they can't even agree on the definition of it and what it's doing, what it is, or what it is.

Well, it's blockchain, you just don't understand. Yes, I do understand blockchain. I understand mining it. I understand the electrical costs. I understand all that. None of that matters. What matters is what's the track record of this sucker? Scares me to death.

That's quite the roller coaster.

Way up, way down, way up. I mean, what's the track record of gambling with a slot machine? Lose all your money until just before you leave, and then you make your money back, so you stay another 4 hours and lose all your money again. That's the track record of a slot machine. So understand what the track record of this stuff is, okay? And then decide whether this is a stupid idea or a good long-term investment. And that's the route I would go. So, but this lady, Jill George, she's in your and my category. When you ask questions like this, the mutual fund details such as admin fee, performance, what types of funds it contains, etc. It'll be stocks it contains. You're probably nerding out a little much there. I think she probably has a natural tendency towards nerd. I don't want you to go so far into this that you get paralysis of the analysis and don't do anything. The number one key to investing is do some. Standing on the sidelines looking at it, do some. A guy asked me the other day, he said, "You've had 8 bestselling books. How do you write?" And I said, "You start writing." And one day you'll finish.

How do you know if you're a writer? If you're writing, right? We don't talk about it. No. How you know if you're a good writer? You probably never will. I'm still not a good writer. I'm a good salesman. So none of these books are dadgum literary works of art, I can tell you that.

But it makes it very readable for people like me.

I know, stop that.

5th grade reading level.

That's what I am. I'm the guy that puts the cookies on the shelf for regular people, but where we all reach them. But that's it. I'm happy with that. But what makes you a writer? Write! What makes you an investor? Invest! What makes you a wise investor? Invest over time and make money.

And you can be a super nerd and be broke.

Oh, all the time.

That exists. So you don't need to know about all the nitty-gritty. Now we do that, like our Investing Essentials event. We actually do walk through this. We have a chart and graph and here's how to pick the mutual funds. So we get a little bit nerdy.

If you're having trouble sleeping, we are doing an event you can watch and you'll go right to sleep. Sleep. It's the super nerd event. It's called Investing Essentials. George loves it.

I have a good time. It wakes me up. It energizes me to choose mutual funds.

It's the type of event that I said that I got in business to not do, and now I'm doing it.

So— Sorry. The people demanded it. They're like, "Dave, go deeper.

We want to learn more." I know, it's Dave Ramsey's Investing Playbook. I'm going to show you what I do, all the nerd analysis I do on real estate. I'm going to show you all of it, and you're going to love it if you're a nerd. But if you're not, you're gonna be going, "Ah, you know, I just cured my insomnia." There's a few tickets left, I think. It's a virtual event, so of course there's tickets left. There's room, always room in that room. I like that. Yeah, come on out, guys. It's gonna be what, September 1st and 2nd?

Yes, and again, it's virtual, so you can join us from anywhere. There's even a replay you can catch if you can't make it each night for those 2 hours.

We'll do our best to make the root canal not hurt.

Once you start going into formulas for internal rates of return, that's like some Goodwill hunting stuff there. Dave, I got to admit. As a dad of young kids, I'm starting to think a lot more about the world they're growing up in and how I'll help them make sense of it as they get older. And that's why I like World Watch, a video news service for preteens and teens. Because one thing I know for sure, if you don't teach your kids how to understand the world, somebody else will. And these days, that could be TikTok, YouTube, Instagram influencers, or whoever happens to show up in their social media feed. World Watch's 10-minute videos help young people understand what's happening in the world through a Christian worldview without all the outrage, negativity, and noise that is everywhere these days. The reporting is factual, engaging, and designed specifically for preteens and teens. And WorldWatch creates opportunities for something every family needs more of: meaningful conversations. Instead of just reacting to headlines, kids learn how to think about what's happening in the world, and parents get a chance to keep those conversations going at home. Because when my kids are old enough, I want them informed, not overwhelmed.

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Welcome back to the Ramsey Show in the Fairwinds Credit Union studio. David is in Columbus, Ohio. Hi, David. How are you?

I'm doing great. Good.

What's up?

Well, I appreciate all your advice for over 20 years since I read that first Total Money Makeover.

Well, thank you, sir.

I got, um, one and a half questions. I can give you the logic behind them. I give you as much of my situation as you want. And if you agree with me, I may have some questions of how to implement it. Want to start with the questions?

Sure. Have at it.

All right. Uh, should I set up a trust that would pay each of my three sons 25% of their individual incomes per year? Until their individual retirement age when they will receive a final cash disbursement. That's the first question.

How old are your sons?

They are 37, 41, and 49. Okay.

All right. Um, it's not the thing I like about the plan. I've never heard this before. Is the idea that if they don't work, they don't get anything.

Exactly. I want to encourage them to build their own lifestyle instead of me buying them a lifestyle.

Yeah, instead of turning them into trust fund morons. I mean, babies.

That's the plan.

Exactly. I like that.

What's your estate worth right now?

Uh, right now it's about $2 million net worth.

Okay. You've done a great job, David. Yeah, I love that plan and I've never heard that. I'll probably steal it. It's that good.

I like it a lot. I want I want it to be out everywhere.

Yeah. And, uh, the thing I want to guard against with a few additional provisions in the trust is that if someone is completely off the ranch, um, I don't want them getting anything. I'll give you a bizarre example, okay? And you may have heard me say this on the air, is just to wake people up. If one of them is doing heroin, I don't want to give them the money for an overdose.

Correct.

Okay, and so if one of them is doing X or Y that you don't approve of or that you think is harmful to themselves, we don't want to fund that in any way. Okay, so if you're making $100,000 a year, no, I'm not gonna give you $25,000 a year if you're doing heroin. So somehow or another, if there's— there's got to be some kind of a character or, um, I, I would want it, uh, there is in my trust, uh, or more, or, um, ethics type of a thing to protect them from themselves, not because I'm trying to control from the grave, okay? Because people become more of what they are. So 25% of what they earn, and then they get a lump sum upon what, retirement?

Yeah, full retirement age, like whatever.

So at 65 or whatever you want to call it.

68, yeah.

Okay, all right. And the money is invested until then, correct? Okay. And you're gonna, um, splice this off as like you got $3 million, like a million, million, and a million to pull this off?

Uh, no, I want to do it differently because I think you should— the money is unrecoverable if you didn't work. So it's one lump sum. The trust would have all the money and each of them pour individually from the same trust.

Yeah. That way the ones that are making more are going to drain it down more.

Yeah, exactly.

And then we're all going to get the same amount at retirement.

No, no, no. The oldest one will get a third of it when he gets to 60.

Okay. I see.

The second one will get a third of what's remaining at the time. Correct. Okay, all right.

It's not a bad formula, David. I kind of like it.

As it stands, are they people of character, working full-time, married, healthy?

Right.

Okay, so this isn't coming from anywhere.

I'm independent now, but I just don't want to drop, you know, $250,000 to $1 million on them at one time.

Well, are they all— do they all have homes right now?

No, none of them do. They're all renting.

Okay, because I'm just wondering, there's another sort of train of thought which is help the kids when they need it most, which is in their 20s, 30s, 40s, versus at 65 when they've already built their own wealth. So it's another thing to think about.

It's not a bad idea. You could put a thing in there that you'll do a 50% or 100% match for down payments.

Well, what I thought, to answer that question, that's the second half question, is should I start giving them, uh, 10% of their incomes $100,000 now while I'm alive, just for a birthday gift. Would that enhance their current lifestyle? No, 10% while I'm alive. Yeah, but I'm not, I'm not going to buy them into a house they can't afford, you know.

No, I'm not saying to do that, but there is a, you know, I'm 37, so I'm the age of your youngest kid, and if I'm not a homeowner yet and I want to be and I'm working hard but homes are expensive, man, I'd love a gift now versus 65 or 25% of my income staggered. So there's just something to think about there.

You can play with the numbers both ways and see how it ends up.

But yeah, you would need a— so the will will tell you who gets what. The trust will then control the timing of all of that. So you would need something like a revocable living trust in order to set up something that could be formed upon death.

Yeah. A family trust is formed at death.

But I could choose to do something with the housing now while I'm alive.

Exactly.

There's nothing to stop that.

Exactly. And I think I'd probably go pretty generous on that if you can figure out a way that you feel like you're not, quote, spoiling them, unquote. But if I can get them all in a paid-for house pretty quick, if they're behaving and they're good, you know, reputable human beings, I'd want to try to do that more so than the other stream of income, or as much as the other stream of income. So I might lean a little heavier over on that side while you're alive than the other. But it's a neat formula. It does— it's got a good incentive plan in it. I like the way it's thought out. And, you know, they keep somebody from, you know, sitting on the back of a yacht saying, "Peel me a grape," you know, because that's what you get into. And we don't want to create a reality show out of our children. And so that's—

the good news is, you know, it's not like you have $25 million. We got $2 million right now.

So $250,000 probably won't destroy your child where they go, "I can retire today on a beach." Yeah, you know, you get them in a paid-for house by some formula, some methodology, I don't care what it is, that continues along the same idea of incentivizing, inspiring, lifting up, rather than allowing them to, you know, be a financial lobotomy. That's what we want to avoid. So very cool, neat idea, David. I just learned something.

Now, Dave, I don't know how you set up in your family. I know you guys have an annual planning sort of conversation with the trust, but what are some of the sort of mainstay things everyone needs to think about regardless of the size of their estate? Because I've heard you say it doesn't need to be equal, like not— it's not like every kid has to get a third.

No, no, and they're not in his formula. They're getting based on, you know, they're proving themselves, so to speak, and I love that, and not based on age or anything else, so, um, just on performance. So I think the biggest thing is this, and David is, he's past this, but some of you we're talking to, like you and Whitney have little kids. The biggest part of estate planning is raising good kids that money won't ruin. That's 90% of the problem, is if you raise twerps and you give them money, they're very wealthy twerps. I mean, it's all it is. And so, you know, it's all about parenting and raising kids that know work ethic, that have generosity, that know how to save, they know how to function as emotional and spiritual adults.

So the question is, do they have the character to then carry—

to carry the weight of— you're preparing them to carry the weight of wealth that's gonna be left to them.

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I can't stand it, but it's just there. It's called Medicare. Medicare, when you look it up in the Greek, means confusing.

Mm.

And people get more tripped up over this than anything else. So let's just start out some of the main questions we're getting on this. Our guys ask us to go into it and just cover the basics on this. First question is, what is Medicare?

What is Medicare? So this is a federal health insurance program primarily for people 65 and older. So you hear people signing up, "Hey, it's my 65th birthday, time to sign up for Medicare." Very exciting rite of passage. And some Medicare coverage comes directly through the federal government. That's Parts A and B. We'll talk about that. And other coverage comes from private insurance companies that have to operate under federal guidelines.

Side note, you often hear in the same sentence Medicare and Medicaid.

Different.

Medicare, Medicaid. Medicare, Medicaid. They have nothing to do with each other. Medicaid is welfare. Medicare is available regardless of your income.

So the way I think about it—

when you turn 65, you can sign up for Medicare.

Medicare is about age. Medicaid is about income and assets that helps you—

or lack of income and assets. Yes.

So let's go through just the 4 main parts. Part A I think admissions. So this is hospital coverage. This is the part you've generally paid Medicare taxes toward while working. So all those payroll taxes going toward Medicare, it's covering this part.

What we used to call hospitalization.

Yes. And then you've got Part B. So in my head, I think basics. So think medical coverage, doctor's visits, outpatient care. And these two parts together, this is called Original Medicare.

It's what it was originally set out to do. And then we decided it's a federal program, so let's complicate it.

But of course, it doesn't cover everything, so now these supplemental plans came to be. So you've got Part C, which is Medicare Advantage. So think C for combo. So it's a private all-in-one alternative. It combines Parts A and B, and you can also add a few other things like dental and vision and all that. And these plans do typically have more restrictions on which doctors and providers you can use.

Yeah, so, but keep in mind, Medicare Part C is the one you pay for. Yes, because that's part A and B you've already paid for with your taxes. You paid for all of it, but you're paying for with your taxes. Okay, so A and B the government furnishes, C you purchase, and it's your add-ons to A and B.

Yeah, it's the combo plus the add-ons. Then you got Part D, easy to remember this one, think drugs. Prescription drug coverage is Part D. And outside of those parts, there's something called Medicaid.

And again, you pay for that.

Yes, you're gonna pay for that as well with a premium. And then Medigap or Medicare supplement plans think this is covering the gap. So private plans to help cover some of the deductibles, copays, other costs that Original Medicare doesn't cover.

Alright, question 2: Which Medicare plan should I get?

It depends. Everyone's least favorite answer. So there's hundreds of plans available and it's good to get personalized help from a qualified Medicare advisor.

But that would be— you automatically get A and B, and what type of C plan, what type of add-on plan, and what type of prescription drug or any other supplement Medigap plan, those are the ones that get confusing, and you're buying them.

Yeah.

So you need to get someone to look at your situation, give you a customized response to your particular situation of which of those you need, if any. You're not required to buy anything. We don't—

With anything this big, there's always going to be some grifters, scammers out there. So the federal government has actually taken legal action involving major companies over allegations that there was financial incentives that influenced how Medicare Advantage plans were marketed or sold. And these plans can have more restrictions on which providers you can use. Doesn't mean they're a bad option. They can make sense for some people. But if you're getting pressured towards, hey, you got to get this particular policy, it could be because that's what pays them the most. So you want to be aware of that.

Probably is, yeah. If somebody's steering you a certain way and they haven't done a full analysis and shown you why this is the best for you, but instead just blindly do what I say, this is the science. Yep. You know, give you a Fauci answer, right? Then don't do that, right? Okay, number 3: when do you sign up?

So there's 2 major time frames to know. The first is your initial enrollment period. So this is a 7-month window, the 3 months before you turn 65 the month you turn 65, and the 3 months after. So it's sort of bookended there. So I'm born in May, so February through August would be my initial enrollment period the year I turn 65. And this one's really important. If you miss the appropriate enrollment window, you can get some long-term penalties associated with that on certain parts of Medicare. And then the other one is annual enrollment period. So this one's ongoing, October 15th through December 7th each year, and you can make certain changes to your Medicare coverage. Yeah, so those are the two to know: the initial one and the annual one.

Let me stop you a second there. If you are in a situation like I am in where you don't need Medicare— I have a Ramsey plan, I'm over 65, I missed the enrollment window— they're not going to send me a bill for penalties. They'll only send me a bill for penalties if I later on choose to sign up. But I have my healthcare taken care of without the government with health insurance plan here at Ramsey and with wealth. And so I am not in Medicare. A lot of people are in that situation, especially people that listen to this show. So don't be thinking you're going to get a penalty unless you join late, later. And you do have annual enrollment period, October 15th through December 7th, where you can make changes and everything else.

So the last piece here is a lot of people think, okay, great, I got Medicare, so my long-term care is covered.

No.

No. What's the difference here? Medicare primarily covers healthcare expenses like doctors' visits, hospital stays, prescription drugs. Long-term care is very different. We talk a lot about on the show— nursing home— long-term care insurance, which is, that's your nursing home, in-home care expenses, and Medicare generally does not cover those ongoing custodial long-term care costs.

Medicaid will pay for a welfare poor person's nursing home. They will not pay for someone that is not poor for the nursing home. And so we have people doing stupid things like Medicaid fraud, welfare fraud, where they move a bunch of assets out of mom and dad's name to make mom and dad appear poor so they can put them in the welfare nursing home.

Bad idea.

Bad idea. That's criminal activity, and you will run into serious problems doing that. Do not do that. And by the way, set yourself up so you don't need welfare. Hello, this is saving money for retirement, becoming a millionaire. That's what we're doing here. So long-term care insurance, if you've got assets under $1 million, and you're over 60, go buy long-term care insurance has nothing to do with this discussion.

That's right. And remember, the purpose of insurance is to transfer risk that you can't take on from you over to the insurance company. That's why you pay that premium. And Medicare and long-term care coverage, they, they address different risks. So you got to plan for both. And what's really cool, Dave, is we have a great partner called Chapter that helps people navigate this crazy messy water that is Medicare. And we have a whole guide that we created for Medicare that actually walks you through this and much more. It's a great asset to send to people that that you love that might be in this phase of life, or you might be in it. So if you wanna check that out, you wanna learn how to choose a Medicare advisor you can trust, just go to ramseysolutions.com/MedicareGuide. We'll also drop a link to that in the description.

So here's the thing. A and B, which is hospitalization, doctor, the basic coverage, outpatient, that kind of stuff, is furnished by the government. C is add-ons that you can do to, to soup that up. That's where people get tangled up. D is prescription drug coverage. That's also where people get, and Medigap. That's what— these are the 3 things. So C, D, and Medigap are where people get tangled up, and that's where you need a pro that can help you untangle this and look and go, in your situation, you don't need that. You just need this. I would self-insure through that over there. I wouldn't buy that. I would just buy a little bit here. And a pro can look at that. A pro can look at it and go, look, you're pretty vulnerable. You need to buy 3 things here. And they can help you customize it to your situation, and that'll keep you from getting screwed. This whole space is scummy. It's full of people that are inept, incompetent at best, crooks at worst. And so you need to get with someone like our guys at Chapter that can sit down and walk you through this and you understand what you're doing and where the advice is coming from.

Always, Ramsey people are always gonna tell you, you need the heart of a teacher. Whoever we're sending you to needs to have the heart of a teacher to help you walk walk through this. It is, it's complicated, but it's not, it's not so complicated you can't figure it out. It's really not rocket surgery. You can do it, but it's good to have somebody on your team to teach you and walk you through it. RamseySolutions.com/MedicareGuide. Check out the folks at Chapter.

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Hey guys, if you like this show, we could use some help. Please hit the subscribe button, please hit the like button, all those things, and share the show. Send a link or a share button, whatever it is you got on your particular platform, and let people know we're here. We would appreciate that. James is in Memphis. Hey James, what's up in your world?

Hey Dave. Just trying to work through my day here. Decided to call in.

Certainly. How can we help?

Trying to figure out if, uh, I can retire from my business early. And, uh, my wife and I are kind of nervous about it and needed some advice. Okay.

Why do you want to retire early?

Well, I'm a home builder and some of mostly what I've done for the past 15 years is spec home building, and I'm not wanting to continue that route.

Okay, all right, that's different than retiring. I mean, you can start building custom homes.

Well, I've done that also, and there's quite a lot of competition in our area, and just, just kind of lost some passion for the business.

Okay, so what do you want to do with your life?

What do you want to do with your life? Well, I'm on a vision quest to figure that out. I don't exactly know, but just something a little more fun and not as stressful.

Okay, all right. Don't mind you doing that. The idea of— sometimes when people say retire, they mean sit down at 53 years old and do nothing for the next 40 years, which is not good for you. No, and I'm not recommending that.

So currently you're retiring from something instead of to something.

Yeah, and I would retire to something. So does your business have a value, or will you just close it?

I would just close it. Yeah, it's home-based. There's no value to it, really.

Okay, but you made a good living, and it's been, been good to you. So we're gonna find out what our next phase is. So what's your net worth now?

$3.2 million.

Good for you. And how much of that is in retirement accounts?

Uh, $400,000 roughly.

So most of it is not in retirement accounts?

Correct.

Okay. What's it invested in?

I have to, I have to sell some stuff. Um, we have a very nice home with some additional acreage and I have, uh, a plot of land.

What's the home worth?

With the acreage, it's $1.5 million. Okay.

All right.

All right.

So you got $1.5 million otherwise. All right. $1.7 million otherwise. And how much the extra acreage, the other acreage you're getting ready to tell me about, plot of land, is worth?

What?

I have a plot of land that's worth just over a million, I think, and I have some heavy equipment that I own. Mm-hmm.

Which you won't need, so we'll sell that. What's that worth?

$400,000 roughly.

Okay, okay. So, I mean, if you took the plot of land and the heavy equipment and sold it, you'd have about $2 million to invest. That should create $150,000-$200,000 a year in income for you while you go on your next vision quest. If you want to keep the land and the house and only sell the equipment, you're gonna be short of funds. So I mean, just do some rough numbers if you want in your head. Just say, okay, whatever amount I'm gonna put to work for me, if I put it to work at a good mutual fund, it's making 10 or 12. If I pull 10 off which I wouldn't want you to pull that much off, but just easy numbers, 10. So I got $1 million, 10's $100,000. I got $2 million, 10's $200,000, right? $1.5 million, I got $150,000 to work with. That's the maximum you could pull, and I wouldn't want you to pull— I'd rather you be 8% or below on your drawdown. That way that lump sum will run in perpetuation. Does that make sense?

Yes, sir.

And meanwhile, you gonna make a living doing the next fun thing and don't even need this money.

Right.

What were you making on average in the business? What were you bringing home?

I mean, the good years we'll make $500,000. Last year we lost money. This year we'll make a little bit. It's just been a roller coaster for—

Always is.

Since I've been doing this. Yeah. Yeah.

Yeah. It's a scary, it's a scary business. So you got stuff under construction now?

I have one spec home and I've done a few customer-paid jobs this past year that have been pretty good. Mm-hmm. Okay. All right.

Well, I mean, you really do need to figure out where your feet are gonna land and then what we're gonna put in a pile to create income. And it sounds like the land, the plot of land I think you called it, and the heavy equipment would be a big enough pile to live off of. But then also you need to figure out while all that's happening how we're gonna make a living, what we're gonna eat with, and so on. And I'm sure you've got some cash laying around, but Um, yes, I just don't— a 5-year plan of generating zero income, still trying to find yourself, is not a good 5-year plan.

Yeah.

Do you know your yearly expenses, how much it takes to run your life?

Uh, for our personal, it's yeah, about $90,000. You know, we get— we can have a little bit of fun and that pays for our groceries and everything. Right.

You guys have no debt?

No debt. Well, I have some debt. Yeah. Business debt.

So I'll have to pay that off in the process.

How much business on that house, on one spec or otherwise?

The one spec, oh, about $400,000. I had one bulldozer that I owe $250,000 on. And then I have one of the land pieces of land I owe $200,000 on. Okay.

So you got to clear all of that while we're clearing this, but you're going to sell off the spec and you're going to sell off the dozer and the piece of land. If it's in the plot that we were talking about selling, it's just gonna reduce the size of the golden egg, of the goose that's laying the golden eggs, right?

Correct.

And so, yeah, you just—

you're—

so, okay, so you've got assets. It'll shorten your runway there, but yeah, but I mean, I don't think you're gonna make $0. You need to lay out a plan with your SmartVestor Pro. I said I'm gonna liquidate these things and put them in good income-producing mutual funds to live off of, and meanwhile, go find yourself and figure out what your next chapter is, and that's gonna be fun. And let me give you a hint, okay? The interesting thing is this, James. All of our data shows that people, especially in a situation like you're in, it's even more accentuated. The highest income decade of your earning life is in your 50s. Mm-hmm. Okay, and the reason is it takes about that long to quit doing all the stupid stuff and, and to hone your craft and hone in on what you're good at and nail it. And so my point being that if you choose this carefully, it might not just be fun, it might be more lucrative than anything you've ever done in your life. It would not be unusual for you to make triple the income you used to make by the time you're 58.

In this scenario. So being more fun does not necessarily mean I don't make money. Yeah, it could mean that you just hit— you just hit the sweet spot, you know, and it— and that you just nail it and it got— and the ball goes over the fence. You know, you swing the bat and it's that certain kind of sound when it makes contact and it goes right over the fence. And that's, that's where you're sitting. You know, you've done stuff that what you call stress, other people would be completely debilitated by. What you call fun, other people would call stress, because you've already learned how to run a business and juggle and handle subs and run, run down timelines and deliver properties and keep the stinking bank off of you. I mean, doing what you've been doing, running, running, you, you've been pretty massively successful to get where you are doing specs and not go broke. So tip of the hat to you, sir. I think you're in a really good position.

You got some homework here to sell off all this stuff, pay off the debts, and kind of see where you land with that pile of money. Give yourself a little bit of runway, but let's aim at something.

The number of times that we've talked to people in a wealth— that in a situation where I'm dealing with wealthy people, that they went bankrupt early, had to find their way like I did, and then they sold out of something or did a major business model shift away from something they were working on but used the same sets of everything to go a different direction. And in an AI world, that's not a bad thing to do. And then they quadruple their income and they just are— they're just printing money. It's like they got a printing press in their basement. You know what I mean? It's just like they're bailing it.

Especially with entrepreneurs, they have a hard time not entrepreneuring. They're just going to find their way to the next problem to solve. It's what they do. It's hard to stay put.

It could be something that's an invention that's been scratching at the back of his head, itching at the back of his head.

Yeah, what's the biggest problem you've experienced in 15 years that you think you could solve? Yeah, that's a fun, creative decision.

¡Hola!

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How are you guys?

Better than I deserve. What's up?

Hey, so my question today is to just kind of find out more about wills and trusts and what to do moving forwards. So I guess a little context, I'm 22 years old. My wife and I got married right out of college last May. Fast forward a year to this May, we welcomed our first baby home. Yay! And, uh, and, uh, while she was pregnant, we were doing the stork mode thing, just piling cash. So So once all the hospital bills were paid, as of August 1st, we became debt-free.

Look at you. Well done, sir.

Thank you. Um, I have a disability and term life insurance through Zander, and my wife's working on getting her life insurance now. So kind of with all that, don't really know much about wills or trusts or anything and how that expands with more kids. So I'm just calling in to get any advice or direction on that, if you wanted to share kind of what you guys do with your family.

Such a great question.

You're the most mature 22-year-old I've ever met. I wish I was you at your age.

Man, you're gonna be so rich and your family's gonna be so well taken care of. Well played, sir. Well played. I'm proud of you. Good work and a great question. Okay, so some basics on wills. Number one, a will is state-specific, so it has to be written for the laws of your state. And you're in New York, and New York's one of the weird states, so you really have to make sure. California, New York, Texas, Louisiana, 4 weird states on wheels, okay? 'Cause Louisiana's French-based law, everybody else is English-based law. California's granola, New York's close. And so that's what you're runnin'— and Texas is not— doesn't even think it's a state, it thinks it's a republic. So it's got all these weird laws. So all of that comes into the way they make laws and how they put 'em in place. So it needs to be state-specific. And one way to get that is the, the advertiser we've had for years that helps you do a quick, easy will, which is exactly what you need, from mamabearlegalforms.com. So just go to mamabearlegalforms.com and they'll help you print it all out. The second thing is I would recommend you look at what's just called a mirror image will, and that means your will and your wife's will look exactly alike if you both die.

and before we both die, it all goes to her if it's you, it all goes to you if it's her. Pretty simple. Okay, so the wills, if you laid them down beside each other, it looks like they came off a word processor and they were exactly the same except the names were changed to protect the innocent, right? I mean, that's all it is. So that's the second thing, just mirror image will. You leave it all to her, she leaves it all to you. The insurance, the primary beneficiary on her life insurance is you. The 401 primary beneficiary is you. Your 401 primary beneficiary, your life insurance primary beneficiary is her. Your secondary beneficiaries on everything, that this is the last thing I'm going to teach you, is to do a children's trust if both of you die. So how's this baby going to be taken care of if both of you die? All the life insurance proceeds dump into the children's trust, and the 401 dumps into the children's trust, and it's only formed if both of you die while the children are minors.

Okay, okay.

That's how mine was set up when my children were minors. But that's, that's why the secondary beneficiary, meaning both of you are the The primary beneficiary is dead, so they go to the secondary beneficiary. Okay, so primary beneficiary is the opposite spouse, but the secondary beneficiary on everything for all of— for both of you is going to be the children's trust because you're leaving your money to your kids. Now that's a very simple way to do it, and then you name who the trustee is. That's who's taking care of the money, and you can state in the trust what you want it invested in. How it's paid out towards the kids while they're minors, all of that. And ours was set up to where the— and then the guardian of the child is a separate person typically than the trustee.

Oh, okay.

Because they're not—

person handling the money is different than the person taking care of the kid.

You may have different people for that, and it's wise.

Yeah, and so if the person taking care of the kid gets a monthly check from the investments in the children's trust in the event both of you die, then they got child support on steroids because they're getting a nice check to take care of these kids, to raise them. And in addition to that, we had in there our child— if they had a major medical, they could do an additional drawdown on the trust to not put a burden on the family that's raising them. First car purchase, they could do a small drawdown on the trust. And college, they could do a drawdown on the trust. So there's no debt involved and not a burden on the family that's raising them. Then when they're— after they graduate from college, they're 22, the trust dissolves, the money goes— their portion of the trust dissolves, the money goes to them. Or you can stagger that out and give them a little bit over the next few years until they're 30, however you want to do that. That's a fairly standard, fairly easy thing to think through. Mama Bear will walk you through every bit of that. And that's exactly what I did when I was your age, and that's what I would recommend.

Yeah, I was just looking up mine on my Mama Bear, because I can just sign in and look at the documents, which is awesome. So I was checking ours out, and there's there's a few major decisions, Stephen, you need to make. That's the hardest part. It's not actually getting the will done. You can do that in 20 minutes. The hardest part is who do we trust to take care of our children? That's the guardian. Who's gonna take care of the financial side? Financial power of attorney. And then you've got the healthcare power of attorney. Who's gonna make medical decisions if I can't? And so those are really the big things. And then of course there's the who gets what, which is pretty simple in your case.

Yeah, that I would recommend what we said on who gets what. The healthcare stuff is just to unplug or not to unplug.

Unplug?

That is the question.

That's the healthcare power of attorney. And so typically the spouse is the primary on that, but if there was a car wreck, one of you is in a coma, the other one died, who's a secondary on the healthcare power of attorney on whether to unplug this coma or not, right? All that kind of stuff. That's the kind of junk you're looking at, and it doesn't take long once you identify who those people are. Oh, and by the way, you should let them know. You should talk to them. I'm gonna ask you to raise my child if I die, and don't let that be a surprise, you know.

But—

and I'll ask you to be the trustee. Well, who's raising the child? So-and-so. And so-and-so's the trustee. Tell them who the trustee is gonna be, who's gonna be handling the money, and who's gonna be handling the kid. Let each one of them know in the event that something does happen. In the unlikely event, honestly, statistically very low chance that both of you are gone, down before these children are adults. Very low chance.

Can you create the trust like through Mama Bear legal forms?

The trust is created technically upon death, but it's instructed in the will. The will says to create— the will states to create this trust upon death of both people if the children are still minors.

Okay. And are there any like backup guardians or trustees, I guess, if you were all in an accident?

Well, the guardian, if, yeah, I guess if the whole family's on an airplane or something, yeah, I guess you could. I didn't. I didn't go that far. Typically, there's standard terminology in this that a successor trustee or a successor guardian can be appointed, but again, statistically, this is such a low probability, I really wouldn't. I'm not worried about that. If you've done all the other, I think you've been diligent.

All right, thanks so much.

Way to go, man.

Man, you are on fire.

And this is perfect, it's actually National Make-A-Will Month. I know you've been celebrating all month long.

Yeah, I got candles on a cake and—

not!

You're kidding, it's Make-A-Will Month?

Well, I want to mention to him—

what do we not have a month for?

Well, I wanted to give him a will for free on behalf of Mama Bear.

Oh, on behalf of that?

Do that. Hang on the line, Christian, let him have— the guy needs something for free, he's killing it.

He's just crushing Crushing it.

He's killing it.

He deserves it. And for the rest of you, we actually have a cool thing running right now. RamseySolutions.com/willsquiz helps you figure out if you need a will, if it works for you, if a simple online will works, and there's a 20%— 25% off promo code there.

Yeah, it helps you figure out if Mama Bear will handle it or if it's super complicated, whether you need an attorney. Everyone needs a will that's an adult, period. 78% of Americans die without a You know what's odd about that statistic?

100% of us will die.

78% of Americans live paycheck to paycheck. Oh, interesting.

You think it's the same crowd?

You think? People that don't pay attention don't pay attention. Who would have thought? You know, so if you're gonna just be, you know, mediocre with your money and not be proactive, then it shows up in a lot of different areas.

Man, well, when I'm gone, I want people to think, "I didn't like the guy, but he handled his business. He had a will. He had term life.

He had it all going on." He's a bit controlling, but he was good at it.

He was a super nerd. That's how you say I love you to your family. Hey guys, George Campbell here. There are a lot of things you probably shouldn't ignore: your check engine light, that weird smell in your fridge, the smoke detector that's been beeping for 6 days, and maybe most importantly, your phone bill. The things we ignore have a funny way of costing us the most, and your phone carrier is counting on you ignoring that overpriced bill month after month month so they can keep charging you more and more. But that's not the case with Boost Mobile. You don't need to keep overpaying when you can pay just $25 a month for Boost Mobile's unlimited plan. And the best part is you can bring your phone, keep your number, and pay just $25 a month forever. That price will not go up. It is inflation-proof. There's no contracts, there's no hidden fees, there's no catch. And since most smartphones have an eSIM these days, you can switch from the comfort of your home just like I So it's okay to notice when you're paying more than you should, but you shouldn't keep doing that. Stop overpaying for your phone service.

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Welcome back to the Ramsey Show. In the fair winds TransUnion studio. George Campbell, Ramsey Personality, is my co-host today. Mary is in Las Vegas. Uh, not working. Hold on, let me try that again. All right, I'm gonna try one more time and then you guys are gonna do something else. Uh-oh.

All right, let's see if we can get Mary. There she is.

Mary, are you there?

Hi, yes, I am. Hello.

Good, good.

I'm, I'm actually pushing the right button now. How can I help?

Um, okay, thanks for taking my call, Dave and George. Okay. So, my question is, well, I'm contributing to my Roth PSP, and ever since I listened to your show, I started becoming more intentional about that. But I do have about $26,000 in my traditional PSP of like those contributions. And I'm wondering, is it worth converting that $26,000 to the Roth PSP and then paying the taxes now? And then additionally, I get a 5% match from the federal government, but that goes is also into their traditional. So should I convert that at the end of every year? Or what should I do with this money in the traditional?

Yeah. Where are you in the Baby Steps?

I am, well, I don't have debt. I have an emergency fund and I'm investing 15% and I don't have a mortgage. I don't have kids.

You don't have a house yet.

You're renting?

Correct.

I rent.

Correct.

What do you make? What do you make?

I net, or I gross $100,500 and I net $97,000. Good for you.

Way to go. You're doing so good. Congratulations. How old are you?

I'm 36.

Well done. Very well done. Thank you. So, um, yes, I would convert the $26,000, and yes, I would convert the match at the end of each year and pay the taxes. And you're gonna have to do that out of additional savings, and that has the effect of putting actually more money than 15% into your retirement, but not much. It's okay. So you're probably going to have $4,000 or $5,000 in taxes on the $26,000, and whatever the match is, you're going to have, you know, a little bit on that. That's not— but I'm the same way. I actually own Ramsey Solutions, so I match myself, and I'm required to match it in traditional, and so I roll it to Roth at the end of each year and pay the taxes.

Oh wow. Okay.

And so I've done— yeah, so yes, I would go ahead and do that. Now, as I've said to do that, now I want you to recognize that that that $4,000 or $5,000 or whatever it is in taxes on the $26,000 is going to reduce your down payment savings, your down payment amount that you have saved towards a house, or it's going to slow down by $5,000 or $6,000 of that. I still would do it because it's a small amount and it gets your stuff all cleaned up and it gets it all in the Roth column.

Okay, cool.

But I want you to recognize that's $5,000 that could have gone towards the house down payment fund.

Sure. That's the trade-off. Yeah, I understand.

And so if you had a mortgage, I would really tell you to put it towards the mortgage instead. But because it's a small amount, I'd be tempted to do it anyway. So if you were like working 4, 5, 6, 7 at the same time here, instead you're just doing 4, Don't have kids, don't have a mortgage, so that makes it a little easier to do it in your case. And the last thing is, what is your TSP invested in?

So I have it in the CS&I funds.

You have been listening to Ramsey.

Yes, yes, a lot.

Very good.

I'm very impressed. You passed the test with flying colors.

Very cool.

Thank you.

Absolutely. So that's the Thrift Savings Plan, ladies and gentlemen, that a federal employee has, or the military has. And it's their version of a 401. Some branches actually also have a 401. And they have 3 or 4 different things you can put the money in. The F is a fixed, which sucks. The rate of return's horrible. The G is government bonds, horrible rate of return. The C is very close to an S&P 500 index fund. It's common stock is what it stands for. The S stands for small company, so that's like an aggressive growth stock mutual fund. The I stands for International. Those two have not kept up with the C, and so we have told people to put 80% or 90% into the C and split the difference left over between the S and the I, which is exactly what she does. They also have a really lame-o plan that you can put the money in and it automatically moves around depending on your age, your risk tolerance—

which means it's going to be way too conservative and it's really sucky, terrible returns.

Really sucks.

But I'm looking at the 12-month returns here just for the CS&I Fund and they blow away G and F, of course.

Yeah, so what are they?

16% over the last 12 months for the C fund, 14 to 15% for the S fund, and 35% for that I fund.

Whoa!

Because as we've seen, the volatility in the U.S. market—

International markets are doing well.

International is boosted up with all the U.S. volatility.

And the G is 4% and the F is 6%, right? So just like I told you, they suck. You don't want your investing at 4% when inflation rate's 4%. You're just treading water. And if you got it in traditional, you gotta pay taxes on it, so you've lost money after inflation when your long-term investments are making 4, 5, or 6. You're not even treading water. So you've gotta be doing better than 6 on your long-term stuff to beat inflation and taxes.

But the general parameter is don't do any conversions until you're in Baby Step 7, 'cause that money's better off used to knock down the mortgage versus—

If she had $260,000 in traditional, I'd tell her to just wait.

Yeah. Do it in chunks later on.

Save up and buy your house. Get your house paid off. And when your house is paid off, like you said, at Baby Step 7, then I would work on converting that $260,000.

But normally, if you're investing in the traditional side, we tell you, hey, just pause that, and for the new contributions, go on the Roth side.

And that's what she's done. Mary has been listening, George.

I'm so impressed.

She's doing the Ramsey Plan. I mean dialed in.

She ever wants a non-government job, apply here, Mary. We could use you. We're no government, but we could use you.

We do not have a TSP. By the way, if you've got a TSP, it's not horrible to do 100% C and forget it. That's like investing in S&P and forgetting it. For those of you that are Bogleheads that like passive investing in the S&P index and all that crap, the equivalent would be just buy C and inside the TSP, and it's going to give you a great rate of return.

You're missing out on the small cap and mid cap.

Yeah, which is like 16%. And the other one, the C, was what?

C was 16%, S was the 14-15%.

Oh, the I was 30%.

They're fairly close. Yeah, that I fund, just that's the last 12 months. Not a great picture.

It spiked up. But honestly, the C has outperformed everything else long-term. If you look at like a 20, 30-year return, you would see that. Yeah, and so you're in good shape. She's done everything so smart.

By the book. A lot of smart people on today's show. I'm very inspired.

Nice.

The kids are going to be alright, Dave.

So George, recap: match beats Roth beats traditional.

Yes, that's the investing strategy that we recommend because the match from your employer is going to give you an instant return on your money.

100%.

We have a match here at Ramsey. I put $100 in, Dave's giving me another $100. That's incredible. So we start there.

I gotta chill.

Then we— thanks, Dave, appreciate that. Then we go to Roth, which means you're using after-tax dollars. You're not going to get the deduction, but that money now is going to grow tax-free, and the government's not going to get their grubby hands on it ever again. That's incredible. And then we move to traditional if we've run out of Roth options and that 15% threshold.

The only way— if your company offers a 401 Roth, and you have personal Roths, and you do backdoor Roths if you've got higher income, the only way you would run out of Roth Roth and have to go to some kind of traditional is if your company didn't offer Roth. Yeah, that'd be the only thing, the only way.

And there's even like, we have a mega backdoor 401.

Yeah, and you can do all of that more, do it all Roth. Pretty incredible if the company offers Roth. So you got, you got all kinds of ways you can do this stuff.

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Well, if you feel like a rat in a wheel and you're sick and tired of run, run, run, run, run, getting nowhere, the only way you get out of something like that is you have to plan your way out. You get above the problem and lay out a game plan. In the money world, that's called a budget. A budget is you telling your money what to do instead of wondering where it went. When you're spinning your wheels, it's not 'cause you're doing it on purpose, it's 'cause you're not doing it on purpose. Pretty simple. And if you want to follow the Ramsey Plan, the details, the baby steps, the right things, like Mary calling a little while ago and she had everything nailed down exactly, we can show you exactly what to do, when and where, by following the EveryDollar budget app. It will lead you not only through building a budget, that's the basics, but also help you find thousands of dollars in hidden margin and then what to do with it to fastest— to find the fastest path from where you are to out of debt, to out of what— to into wealth.

So EveryDollar is free. You can start it for free in the App Store or Google Play. Don't be normal. Normal sucks. Sam is in New York. Hi Sam, how are you?

Hello, I'm doing well. How are you?

Better than I deserve. What's up?

So I was wondering— so I guess I'll start with, I'm 26. I have I have 2 roommates right now, and I've been living with roommates for the past 3 years now. I'm hoping to get my next place by myself without any roommates, but the cost of that is significantly more than to continue living with people.

Sure.

And so I guess my question is, how do I know how much I should be saving? Because I've been watching so many of your videos about, and especially George's, Out on the Street. And if you start investing now, now, how much you'll have when you retire. So I guess, how much can I— how much should I feel comfortable to spend now versus throwing even more into saving and investing in retirement?

Good for you. Good question. Well, keep in mind that George, when he's on the street, generally is making fun of people.

Yeah, I do the Jim Halpert look to the camera like, you guys seeing this? I actually just did one on the cost of living in New York while we were over there. I said, "What's your rent payment?" for New York residents. So, that was really interesting to find out how much people are paying. How much are you paying in rent currently? You're one of 3 roommates?

I am. Right now, I'm paying $1,300 a month.

Woo!

So, $3,900 is the rent?

Is it split evenly?

$3,800. I get a slightly larger room for an extra $100.

She has an extra 4 square feet, so she pays a little bit more. So you want to have your own place, that's the goal. What would that cost? A reasonable place, not a swanky, you know, penthouse, but what's the place you're looking at?

I think like reasonably the least I could get something for is around $2,600, $2,700.

Okay.

And like that, it's about double.

What's your after-tax monthly income?

Um, I take a lot out right off the top. Between ESPP and, uh, do Roth 401?

So without the investing, if you just said, "Hey, here's the state and federal taxes. Here's what I'm really making." Sure.

I would say probably I'm taking home about $120,000 a year.

OK. So let's call it $10,000 a month. So that's about 27%.

Yeah.

So a rule of thumb we use is when you're buying a home, Don't let your payment be more than a fourth of your take-home pay, not counting 401 and ESPP. Okay, so that's about where you would be with this rental number, and that shouldn't choke you to death. But keep in mind, when you're renting, 100% of the time it's patience while you wait to buy. And so we're buying patience. We're not buying a house. Buying somebody else's house for them. But we're not buying a house. And so you're buying time, you're buying patience. You don't want that to be your long-term goal. With that in mind, I'm trying to save towards a purchase someday. How old are you?

I am 26.

And you don't want to be 36 and still sitting there paying rent.

I definitely don't want to. And I— my partner, I've been with him for almost 6 years now, so I'm hoping hoping that I get to be a part of a dual income rather, rather soon.

And so we can combine and, but I don't really want to work on his, uh, how aggressive he is. 6 years.

Yeah.

Yeah. Painter, get off the ladder, dude.

What are you guys waiting for?

I could not tell you. I'm not waiting on anything.

Oh boy.

Okay. That's a discussion for another day. But to Dave's point, what you're dealing with here is opportunity cost. What you're giving up by getting your own place is about $16,800 a year that you could have been saving towards your down payment.

Yeah.

Yeah.

So if you're okay with that and slowing that goal down because you want your own place, that's fine. As far as the parameter goes, you're, you're pretty much right there.

If your life goal, the way you see your life unfolding, to getting a home is to having a dual income, and that's not an unreasonable goal, we should put a timeline on that.

Yeah.

In other words, he needs to put a ring on it.

I would love that.

Yeah, and that's the old— that's old grandpa talking, okay? But yeah, you know, if you find one like Sam, don't let her get away. Hello. And so, because because it sounds like this, okay? If I think this is 5 years and for quality of life I'm willing to give up $16,000 or $18,000 a year to live by myself, and that's all you're buying because you're not buying a house and you're taking that out of your down payment fund, but if we're doing that for 2 years and then we're going to be married, that's one thing. Or we're gonna put $40,000 or $25,000 away, $30,000 away, and stay with roommates so that when we do get married, we've got more money to put down and buy a house faster. So if I knew— if I was in your shoes, okay, I'm not telling you what to do exactly, but if I were in your shoes and I knew I was gonna be married within 18 months to 2 years, which is very reasonable if you've been together 6 years, but if I was— if I knew that was gonna happen, then I would stay with the roommates because I'd be planning towards my married self rather than my today self.

But if I don't know, if I don't know, and I may have to kick Bubba off the ladder because he's not going to come to the table, we don't know what's going to happen there. If I don't know and I want to have this quality of life, I might go over and do the thing for $2,700 and kick the can down the road a little bit on buying.

I guess the other question similar to that is I've got it between I wouldn't touch anything in retirement, but like just in brokerage and other things I've got, I think my net worth right now is around $370,000. I've saved things because I can't count on them, but at least right now. Um, but would it be worth it to even consider just buying, buying a place for $200,000 and depleting some of what I have invested?

You're saying you could buy an apartment or condo for $200,000?

No, it'd be $200,000 down.

Maybe not in New York, maybe somewhere outside.

But I'm gonna be in New York for $200,000. Yeah, not in Manhattan.

But again, if you can do that with the parameters and go, all right, it's gonna be about a quarter of my after-tax monthly income after the down payment, you could consider it. But I would still wait to see what the future—

and I'm only— no, I'm not gonna wait. I'm gonna present this in a conversation. Hey, if you're not gonna come to the table, I'm gonna go buy a house. Yeah, because I'm gonna go— I'm gonna make a plan for my life to be whole without you, because it appears you're not gonna be around. You're either here or you're not, and this sort of thing ain't working. I mean, you're not gonna be as blunt or crazy as I am, because I'm already married, but you see what I'm saying? It's like, if you're gonna come to the table, we'll wait and buy a house together. But if you're not, I think I'm gonna go buy a house, because I'm gonna start planning my life and make it whole as if you're not here because I don't know if you're going to be here or not.' And you can phrase that however you want to phrase it but that's really— I would tell him what's up instead of going 'Hey! I'm gonna go buy a house for us!' No no no no no no no no us here buddy.

Yeah, I don't need me like well I'm gonna move in that sounds fun.

Me yeah, no me buying a house for me. That's what we're doing. You have done so well Sam and let me tell you the better The better you have your financial foundation laid like this, the more confident you are making relationship decisions that are good long-term decisions. You don't feel trapped. That's a really good smart place to be, young lady. I'm proud of you.

Hey guys, George Campbell here. Do you ever feel like insurance companies only care about your money and not what you actually need? Well, there's a better way. When you go to Ramsey's Insurance Resource Hub, you'll start feeling confident that you're getting the right coverage that's truly best for you. You'll find helpful info on everything from life insurance, health insurance, identity theft protection, and more. And when you're ready to get the coverage you need, you can connect with a Ramsey trusted insurance pro who will only get you what you need at the best price. Go to ramseysolutions.com/insurance. ramseysolutions.com/insurance.

Never been a better time than right now to find a job doing what you love. At Ramsey, we're on a mission to provide hope to everyone in every walk of life, and we need more talented team members to join the mission. We are growing. Especially for roles in paid media marketing, email marketing, analytics engineers, and you can come do work that actually matters at Ramsey. Check out ramseysolutions.com/careers and click the link in the show notes. Benjamin and Laura are with us on the debt-free stage in the lobby of Ramsey Solutions. Hey guys, how are you? Hey, welcome. Where do y'all live?

Baltimore, Maryland.

Maryland. Fun, fun. Well, welcome to Nashville. And how much debt have you two paid off? $282,000. Way to go. And how long did that take? About 7 years. All right. And your range of income during that time?

$151,000 to $210,000.

Good. What do you guys do for a living?

So, I'm an application systems analyst technical lead for an investment advisory firm.

Okay. And I work for a ministry that helps people living through addiction. Oh, good for you. Wow, good jobs. Well done. Very cool. All right, and your shirt says mortgage-free, so I'm guessing you paid off house and everything.

House and everything.

Way to go! Looking at weird people. And you guys aren't that old. How old are y'all?

I'm 39.

And I'm 47. Excellent. And what's this house worth?

$480,000.

$480,000. Way to go. And how much in your nest egg, in your retirement so far?

So, in IRA and 401s, we have $430,000. In addition to that, we have another $230,000 in the emergency fund, sinking funds, HSA, 529, company stock, and now that the house is paid off, ETFs in a brokerage account.

Wow. So, you're running what, $1.5 million net worth?

$1.1 million.

$1.1 million. Okay. All right. Well, very good. Way to go, Baby Steps millionaires.

Yep.

Look at you. In 7 years! That's amazing. Well done. I'm so proud of y'all. Congratulations.

Thanks.

How's it feel to not even have a freaking house payment? Awesome.

Free.

Free. Yeah, that's exactly how it feels. Was the whole thing the mortgage?

No.

What else was in there?

I came into our marriage with $12,000 in IRS debt. I had $1,000 in debt to Maryland and a $1,000 dental bill that was around so long it was like a pet.

Wow.

And then you met Laura, who analyzes everything very carefully, I can already tell. And she said, "We're not doing this." Am I right?

Yeah.

So, absolutely.

So you guys have been married 7 years?

Yep.

Yes.

This is tracking now. So you get back from the honeymoon and she says, "All right, down to business." Oh no, before there was a honeymoon, she already said it was down to business. It was the prerequisites.

We paid off the IRS and the dental and the Maryland state the day we got back from the honeymoon.

Yes!

And that set us back to Baby Step 3 for a couple weeks, and then we had to very quickly adjust because, um, Jacob.

Because my, uh, our older son, my son Jacob, he was in, um, he went to college right after we got married, and we were cash flowing a lot of his college. So you did that in addition to all this?

Yep.

Wow, way to go, guys. Well, very cool though, very good. I mean, all the goals are hit and you knocked it out, and then you start on the mortgage. Yep, that's it. And 7 years later, you're millionaires.

Yep.

Wow.

So when you're in your 30s and you had IRS debt, or you're in your 20s, your mid-30s, and you had your IRS debt and all that, you ever think you'd be a millionaire? By now? I never thought of it, no. I didn't think that it was possible at that point in time. And one of the, one of the big things that held us back, held me back, was, was debt. And we, we learned a lot through Financial Peace University. I just got real gazelle intense about it.

Yeah, so originally I took FPU in the fall of 2013, somebody at my church paid for 11 scholarships, and I have no idea who paid for it, and it completely changed my life because Liam at that point was only 6 years old, and I was a single mom making $55,000, and I paid off $75,000 in 3 years. And then 3 months later, I met Benjamin, and I told him that I was 3 months into an 18-month plan where I was going to save up $60,000 and buy a house an hour away. And yeah, and that didn't scare him. And then—

no, it impressed him. I said, "You can't stop a train once it's on the tracks." That's it. I heard the locomotive going, "Woo, yeah, here we go." Yep.

And so, 5 months after we met, he asked me out, and I had a 48-item RFP. And he met almost all of the requirements in my RFP, except number 12 was he needed to date me.

Wait a minute, wait a minute. I know what it is, but tell the public what you gave your date.

A request for partner.

Oh, oh, okay, all right.

And there was 48 items he had to check.

Yes.

And he checked every single one except for one?

Except for two. So one, when he asked me out, he said, "I know we have to make compromises before, because you prefer the mountains and I prefer the beach." And I said, "Where are we going to live? Are we going to live at the Strait of Gibraltar? I don't want to live at the Strait of Gibraltar. What about Ireland?" Ireland, it rains too much in Ireland. I don't want to live in Ireland. And he said, "I was thinking that we would live in the mountains and we would have a mural of the beach. And so the second item that he didn't check off yet was Dave Ramsey follower, on same page financially. So I agreed to go out with him under the condition that he complete FPU before he proposed.

Wow, that is wild.

All for one date.

And this didn't scare you at all?

FPU, for those of us in the business world, is request for proposal. In this case, it's request for partnership.

Yes.

Oh my gosh.

Wow.

That's impressive. I'm surprised he checked off 46 of them first day.

I mean, you picked well. I mean, the chances of that happening alone are pretty low. That's— this is amazing.

Wow.

Very cool. The cool thing though, Benjamin, too, like you said, you got Gazelle intense, and it wasn't just because of that, because of her demands. I'm guessing it— what you do for a living You observe people who change behaviors permanently, and they usually do so fairly radically. It has to be radical for it to even be effective. Yes, yes. It's all or nothing. And so you applied that, I'm guessing, whether you consciously or unconsciously applied that knowledge to this subject. Absolutely. Yeah. Absolutely. It was learning how the deaf percentages work against you when you owe money and work for you when you, when you invest the money. It made a night and day difference in how to see that. Yeah. And so then it wasn't like, oh, I'm having to do this to get this girl. It's more like, this works and I'm freaking doing it all in. Yeah, she's just incredible. Whether it's either way, either way. Yeah, I got you. Well done. Y'all, that's very cool, very cool. What was the church you went to Financial Peace in?

Lighthouse in Glen Burnie.

Okay, very nice, very nice. Well, thank you guys so much. We're so proud of you. What do you tell people? You both been through Financial Peace, you've been married 7 years, and you went from in debt and to paying off mortgage and everything, and now a net worth of over $1 million in 7 years. What do you tell people the secret is?

So I told them 3 things. One is the budget is foundational. If you don't get the budget, nothing else is going to work. Two, marriage is a partnership, not a roommate agreement. Make sure you're on the same page financially. And three, I— we started coordinating FPU in the fall of 2021, and I would tell my class to set three types of goals. You set realistic goals, ridiculous goals, and mathematically impossible goals. And you tell people what your mathematically impossible goals— so I was telling my class that my mathematically impossible goal was I was going to pay off my house before I turned 40. And I have achieved every one of my mathematically impossible goals. When it was just me, I would barely make it. We actually did it 8 months early.

Wow, that's amazing. Well, yeah, you need— we call them God wow goals. If God shows up, we can do this, but otherwise we can't do it by ourselves. The math says we can't. Mathematically impossible goals, and then that's great. And your class is— man, can you imagine being in her class?

I feel like everyone should go through her class. We need to put this at scale.

Yeah, this is great. Yeah, coordinators, Financial Peace coordinators, when they're like this, the people that go through their class, their lives are all changed. They don't have a choice. You don't have a choice. You can't be in the class, you got to do an RFP.

Let's get to it.

So you guys are amazing. All right, and you brought Liam with you. Does he want to come You want to come up for the debt-free scream? Yep. All right, how old is Liam?

He's 19. He's been following this journey since he was 6.

I love it. Count it down, let's hear a debt-free scream! 3, 2, 1.

We're debt-free!

Yeah!

House and everything, baby!

Woohoo!

¡Hey, guys! Dave Ramsey here. Every day on this show, we help people work through real money problems and figure out what to do next. Now you can get that same kind of help anytime with Ask Ramsey. Ask your money question and get answers built on Ramsey principles we use on the show. Whether you're making a decision or just want something explained, Ask Ramsey is here to help. It's fast, simple, and free to use. Go to RamseySolutions.com and try Ask Ramsey today. That's RamseySolutions.com. Our Scripture of the Day, 1 Peter 1:6, "So be truly glad. There is wonderful joy ahead, even though you have to endure many trials for a little while." Winston Churchill said, "The pessimist sees difficulty in every opportunity. The optimist sees opportunity in every difficulty." every difficulty. Braden is with us. Braden's in Atlanta. Hi, Braden, how are you?

Good, how are you? Thank you for calling. Thank you for taking the call.

Sure, what's up?

I have a question. Me and my fiancée are looking to get married and move out, and our options right now are either move out into an apartment, or my parents gave me the option of of paying to finish the basement and then living down there for a couple years while we saved up to put a down payment on a house. I just want to know what the smart move would be there. Uh, I currently have an income. She does not. And we are both in college still.

Hmm. When will you both graduate?

Uh, next year.

Like May of '27?

Should be. Yes, sir.

Okay, and what will her degree be in?

She will work in physical therapy.

Okay, is she finishing her master's in PT or undergrad?

It will be— it will be more like an associate's degree to work in physical therapy assistant.

Oh, okay, so she's not gonna be a PT. Okay, all right.

PTA, sorry.

That's okay. And what will your degree be in?

I will be graduating with an accounting degree.

Okay.

All right. And sitting for and passing the CPA, I assume. Your master's in accounting?

Uh, no, I will be going a different route. I will be going into like corporate finance route.

Okay.

All right, cool. No problem.

Good, good, good.

All right. Um, and when are you getting married?

Uh, September of '27.

After graduation?

Yes, sir.

It's about a year from now.

Okay.

Yes, sir. We want to graduate and move in together at the same time.

Good, good. So it doesn't matter until then?

Yes, sir.

Okay.

All right.

Do you have student loan debt or other debts?

I do not. She does. It's about $10,000.

Okay. All right, so you probably can save up enough to pay off the student loan debt when you come home from the honeymoon in September of '27, correct?

Uh, I plan on having that paid off by the end of this year.

Oh, don't pay off her debt until you're married to her.

Okay, that's not a smart idea?

No, it's not a smart idea. Um, okay, you don't pay people's debt that you're not married to, but I would have the money saved up to do that, and on return from the honeymoon, write a check and pay it off. Yes, I would do that. I'd be ready to do it.

Okay, yes sir.

And she's not taking out any more student loan debt, right?

No sir. Okay. It will stay at about $10,000. Okay. Hmm.

Okay, the way we answer questions on this show and the way I've talked to George and all the others to do the same thing is, what would I do if I were in your shoes?

Okay?

Okay.

Your parents offer is a kind offer, but there is a huge advantage to a young couple to be separated and have their own entity, their own physical entity, in terms of the first year of marriage relationally plugging in with each other, not having the in-laws above your head. Yes, I agree. So the relational advantage of that is very, very real, and it actually— the weird thing is it'll actually parlay over into your finances. In other words, the more adult the two of you are, because you're a separate entity and not plugged still into mommy and daddy in any way, the better your first few raises are going to be, your first few job decisions are going to be, and all that kind of thing. It all kind of goes with the same territory. And there's— you know, we've seen those data points for years doing what we do. So, for the sake of your marriage and even indirectly the byproduct of your finances, I would just rent the cheapest one-bedroom I could.

Okay. I guess to add to that is if we lived with them, our other costs like utilities and groceries, I most likely wouldn't have to pay car insurance. Insurance. So there will be quite a few other costs that would not be there if we did live with them.

I think it's a net positive still.

But you guys will be grown adults, probably making $150K household income starting out with no debt. So you're going to be able to afford rent and save up for a down payment with no issue.

So when my daughters were 4 to 7 years old, they had in the playroom 2 pretend dresses that they wore all the time. One of them was a wedding dress and one of them was a princess dress. When your fiancée was wearing her pretend wedding dress at 7 years old, she was not visualizing living in your mother's basement.

That makes sense.

And walking upstairs to breakfast to see your mother-in-law. As much as you might love each other, you'll love each other more or if you live in different spaces.

Again, it's a kind offer, but the unintended consequences offset the advantages as far as I'm concerned. And I wouldn't do it, and so I have to tell you what I would do. George, you're—

I'm in the same boat. I mean, I moved out when I was 20, and so I wasn't like a living-at-home kind of guy. And there's times where we'd say, "Okay, it makes sense to live at home for this season until this thing, but I don't like the idea of just, "Well, cheaper and we can save money to save up the down payment." You guys are going to be in great shape starting off. 6-figure household income.

For those of you out there that are in these situations, this would not be hard relationally at all for Braden because he just steps right back into the family script that he's been in his whole life. It's going to be 10x harder for the one that it's not their parents. Not because the parents are mean or not because they're not loving or anything like that. It's just awkward as crud. It's just weird. And so, I mean, even like when we first got married and we went back to Sharon's parents for Christmas, and we stayed in her old bedroom, that's just weird.

It is just strange.

You know, that's just, "This is the bed you were in in high school." It's like, "Ugh." And I can do that for about 3 nights, and after that, I'm going home.

And I resort to like my childhood self. When mom starts folding my laundry, she's bringing me meals, and I go, it's hard to feel like—

when your mom brings a meal, it's a good thing. You can't pass it up. The baklava is unbelievable.

May Campbell's cooking. You better be ready.

You better be saddling up. Jordan is in Albany. Hey Jordan, what's up?

Hi Dave, how are you?

Better than I deserve. How can I help?

Good. Thank you so much for taking my call. So I bought a car about a month ago, and I am wondering wondering if I should sell it because I'm having a bunch of regret about it. It's a newer car and I—

you think it's gonna— you think it's gonna be more of a curse than a blessing?

Yes.

Because of the— how much did you pay for it?

Uh, $25,000.

And what are your payments?

About $365 a month.

Okay.

What's owed on the loan?

$25,000? Oh no, you paid $25,000. What's the loan No.

So I put down $2,500 and then it was $25,000 in total. Does that make sense?

Yeah. So $22,500 is what's owed today.

Yes.

Okay. And what is your household income?

Um, so I'm single. I live with my parents. Uh, so I bring in about $2,600 a month. Um, I just picked up some tutoring and I'm I've been doing that this summer, so that's upped my income about $1,000, so $3,600, and I'm planning on doing that throughout this school year as well.

Good for you. It is too expensive a car for your situation.

Mm-hmm.

We tell folks not to buy a car that's more than half their annual income, and you did.

Yeah.

And I would sell it.

Yeah.

It's gonna— you know, I would buy something about $12,000 in your situation.

Okay. Okay. Yeah. I also, I have a bunch of student loan debt and I thank you for all your advice and stuff. I've been putting a lot of money towards those as well.

Way to go.

But it's a, it's a hefty, it's a hefty amount.

And now you've just added another chunk to it. You know, you had this another, put another $22,000 on top of that before you get out of debt. So now I even take back my $12,000. I would go cheaper than I'd buy something super cheap, get to work, clean up the student loan debt, and then and only then move up in car.

One day you'll have a $22,000 car.

But not today. I wouldn't. I'm with you, Jordan. I think your brain is telling you the right thing. That puts us out 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.