Transcript of Life Gets Easier When You Don't Owe Anyone New

Brought to you by the EveryDollar app. Start budgeting for free today. Normal is broke and common sense is weird, so we're here to help you transform your life. From the Ramsey Network in the Fairwinds Credit Union studio, this is the Ramsey Show. I'm Dave Ramsey, your host. George Campbell, Ramsey personality, number one bestselling author and host of co-host of the Smart Money Happy Hour. He is my co-host today. Open phones at 888-825-5225. Hannah is with us in New York, Syracuse to be precise. Hey Hannah, what's up?

Hi, how's it going?

Better than I deserve. How can we help?

Yep, so my husband and I are on Baby Step 2, um, and I have a husband who is way more of a spender than I am. And it's gotten to the point— we started the, uh, plan in January, and it's gotten to the point where I am now having to put money aside in a savings account, diverting it from my paycheck, because if I don't do that, he ends up spending it. And it's—

how old is this child?

Um, he's 33.

Okay. Does he actually have a psychological disorder, or is he just immature?

Um, so our income has—

it—

so 2 years ago we were close to, I want to say, $125,000. And in the past year and a half, our income has gone up to $275,000 a year. So there's been this massive shift in the amount of money coming in. And whenever we talk about it, he's very dismissive of it. He feels like it's fine, we make plenty of money, and, you know, we'll pay the debt off eventually. So we've never been able to get on the same page with that, and that's That's why I'm calling. Okay.

Well, I mean, you can't hide the liquor under your bed to keep your husband who drinks too much from drinking. You have to address the drinking problem. And so this is a behavior problem and a marriage breakdown, and there's not a tactical step that you can do to fix that. And so it's got, you know, if I were in your shoes, I'm going to force the issue because I disagree. I've tried. I worked at it really hard. I tried to out-earn my stupidity. I'm really good at making money, and I never was able to make enough to be where my income was bigger than my stupidity. Congress is trying it. They're not able to either., and your husband isn't able to either. And so, right, the arrogance that goes with that, that says, oh, I make a lot of money, I'm bulletproof— I've experienced that. I've looked at that idiot in the mirror. I know what he looks like. Looks like me. And so it doesn't work. It's not practical, and it's not addressing, you know, this lack of self-discipline. It's like, okay, I'm in good shape, and so I can eat whatever I want to eat and get fat.

You know, that doesn't make sense. You know, it's like, no, that's not where the good parts of life come from. They come from learning to delay pleasure for a greater good, not just being hedonistic and buying anything I want to buy whenever I want to buy it and pushing, filling up my cart on Amazon and hit submit, submit, submit, submit, and think that's where happiness is found. Instead, you know, actually achieving some goals. Now, you don't have to live on beans and rice if your income's gone way up. Maybe there's some things you can do depending on how intense you want to be on things, but you need to at least be intentional. And when you're panicking to the point that his behavior is this bad that you have to, quote, "hide the liquor bottles under the bed," it doesn't work. He's still gonna get drunk.

Right.

So you guys need to see a marriage counselor.

Okay.

If he's—

that was the answer.

Yeah. If he's dismissive of you to the point that your vote doesn't count and he can't hear this concern and address the concern and come to some kind of mediated point where, okay, we're— we are going to spend some money, but I'm willing to write down and agree to the money we're going to spend. Then that's fine. I mean, in today's world, Sharon and I can buy most anything we want to buy, but we still don't without A) talking to each other and B) making it part of a holistic plan. And so—

Right now you've got our money, but it's his plan. He does what he wants. It's not our plan. You guys never aligned on this. It sounds like you never were aligned with your financial values. You value being debt-free and he doesn't give a rip.

And the extra income can gloss over the cracks that are in what's going on in the relationship and in how he's treating you and even how you're treating him. And so instead, okay, I want to treat you in a place of honor and respect, and the only way I can feel comfortable doing that is that we are being mature about how we're handling this, and I don't feel like we are, to the point that I'm wanting to hide money from you. That's weird. You know, you really have to address this.

Yeah, the problem is it takes two emotionally mature and healthy adults to follow a plan and do it together. It's really hard to do it alone. You can kind of drag the other one through it. You can try to do it on your own, but man, it's gonna be a grind.

Yeah, and we just don't, you know, all the data that we've got now from having done this for 45 years, this coaching people, the data is pretty thorough, and the data tells us if you want to have a high-quality, long-lasting, sustainable marriage, a quality marriage, not a perfect marriage, but one where we introduce conflict and we resolve it, and we're aligned to certain values, and we like each other as a result, and we want to hang out, not only love each other, but we like each other, and we want to hang out together. But that takes work and alignment and constant adjustment. And that's why we admire people that have been married 50 years and didn't kill each other. It's like, "How did you do that? 'Cause I think I'd be dead by now." You know, it's like, right? And so, and the same thing with wealth. We don't see people building wealth. I mean, again, very often, but statistically, the data says that couples that work together very high probability of actually becoming wealthy. And the couples that don't work together and have to hide the liquor bottles under the bed, the Target bags under the bed, or hide the money in a savings account because my husband who makes $275,000 a year can't seem to be a grown-up enough to limit his spending, then, you know, those couples don't succeed financially or relationally in the data.

And so that's what we want for you guys, Hannah. We love you and we want you to win. And so we want you to go all the way to the source of this, down in the roots of this thing and clean it up. Yeah, you know, that's the problem with this. That's why the show has been so popular for so many years, is it's not really about, you know, 1 1 2 or 10 10 20. It's personal finance, and so we get to deal with all of our trash, and you know, that all of us have. And George and I are authentic and tell the truth about, you know, our own stuff, and Rachel is, all the people that are on here, all the Ramsey Personal personalities are. It's one of the things we do is we just go, hey, this is a human problem. It's not a math problem because it's— personal finance is 80% behavior, only 20% head knowledge. So relationships and how you function in them, huge indicator.

Yeah, and you add more people in, it multiplies the drama, the complexity, the emotions around it. So you really need to be aligned in order to win.

Oh wait, you're saying Children throw fits and want stuff.

Yeah, the tantrums aren't going to help, especially when it's coming from a grown adult. That makes it even more difficult.

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Alyssa is in Manchester, New Hampshire. Hi, Alyssa, how are you?

Good, how are you?

Better than I deserve. What's up?

Um, I just have a question regarding taking a loan out against the house Uh, would it be smart to do that, uh, refinance in order to pay off $14,000 worth of car, uh, what we owe on the car? Absolutely not, because we're just accruing more debt, right?

Yeah, you're not, you're not paying off the debt, you're just moving it. So what is your household income?

Uh, $40,000.

Okay.

And you owe $15,000 on this car.

Yes.

What's the other car worth?

We only have one car.

Okay. And what's the interest rate on this?

I think it's 6%.

Okay.

That's not too bad. I was afraid you were going to tell me 18%.

No, no, no.

You only have one car?

Yes.

And what's the car worth?

I think It's worth $24,000.

And you owe $15,000 on it?

Mm-hmm.

Hmm.

And your household income is $40,000?

Yes.

Hmm.

Well, what I would do is sell it and buy a $9,000 car and not have any payments. Okay, and then I would, with no payments— how much are your payments?

Uh, they're $470 a month.

Okay. And then for the next 10 months, I would pay myself a payment, 11 months, and I'd have $5,000, and I'd go buy another car so that we had 2 paid-for cars, a $9,000 car and a $5,000 car, and no payments.

Actually, good idea.

Do you see how that just broke the cycle of payments in your life?

Yes.

Pretty incredible.

Now, here's the thing. You don't have to panic because you're not about to get repoed. You don't have to give the car away. I want you to get $24,000 for it. I don't want you to sell it for $19,000.

Okay.

Because you need that $9,000 so that you get a good car as your main car. And then while you're driving that good $9,000 car, then you get— you save up and get a $5,000 car. And here's the fun thing. It's not necessarily how life works, but from a math riddle perspective, if you just want to say I'm like those old— remember, you're probably— they may not have had them when you were in school. When I was in school, we had math word problems and we had to solve the problem. They told a little story and you had to solve the math problem inside it. And so make it kind of into a math word problem and say, all right, if we had a $5,000 car 10 months from now that was paid for, and a $9,000 car, 10 months it was paid for. 10 more months from now, we could sell the $5,000 car for $5,000 and put $5,000 cash with it and have a $10,000 car. And 10 months later, we could move the $9,000 up to a— or 14 months later, we can move the $9,000 up to a $15,000. And then we could have a $10,000.

And, you know, if you map that out and kind of play it out, that's about 36 months I just outlined there. In 3 years from today, you could be driving a paid-for $15,000 car and a paid-for $10,000 car. If you just keep paying yourself one car payment of $500 a month, but you're already paying somebody else that car payment. But you're gonna have to be on a budget to do that, because once you don't have to pay the bank to avoid repo, it's harder to save money than it is pay payments, discipline-wise.

I'm curious, do you guys have any other debt?

We have school loans. My husband has school loans, Carlos.

How much?

We have about, I want to say it's $47,000.

Oof.

Is he the only income in the house right now?

I do get a disability. But he works at the post office. Yes.

What was his degree in?

He didn't end up graduating.

What was he pursuing at the time?

Uh, video game development.

Hmm.

Well, the income is the other lever to pull here because these student loans, they're going to be hanging around. You can't get rid of these things.

You can get a degree in video game development?

Apparently so, yes.

He didn't, but people can?

Yes.

Wow. Yeah, like a 4-year degree.

4 years, yes.

Okay, someone's got to make them.

I am officially an out-of-touch boomer. Just put me in the category, just put me in the boomer bucket. I never thought I'd see the day.

I'm sure it's a newer degree. Well, you can make good money doing it.

You'll have to— I knew that, but I always thought it was just somebody that kind of was self-taught techie. Yeah, that like a developer who went, oh, I could figure out, or like somebody that played Call of Duty so much that it became their duty or something. I don't know. I mean, I just thought it was kind of learned that way. I didn't think it was, um, I didn't know there was actual 4-year freaking degree. I wouldn't be surprised that a technology place maybe had a certificate or something in it. But I'm a little shocked that somebody's actually offering a 4-year degree in video game development. It is a big industry. I guess it's logical. It's just, um, it shows how out of touch I am. That's what I'm— how irrelevant I am. All right, Gideon's in Phoenix. Hi Gideon, what's up?

Oh, nothing too much. How you doing?

Better than I deserve. How can we help?

So I've got— I'm a college student. I've got an employer-sponsored IRA— 401k, excuse me. I'd like to start a personal IRA because I won't be in get this job forever, and I'll need to roll the 401 into my IRA. How would you recommend I go about doing that?

Well, your rollover IRA will be different than the IRA that you add to. There'll be two different account numbers. Rollover account numbers don't technically combine with individual IRAs that are opened. Does that make sense? Mm-hmm. And so, uh, but I, I, if you are interested in doing some investing and you want to learn about that, you could get in touch with one of the SmartVestor Pros that we men. It's really not that big a deal. It's not that hard. I mean, have you ever opened a bank account?

Um, it's been a while, but I think so.

Okay. How old are you?

19.

Okay. Well, it's about as much paperwork plus a little bit of opening a bank account. Like, if you go open a checking account or you go open a savings account, you have to fill out 4 or 5 pieces of paper and, you know, put your social down 4 or 5 times and that kind of thing. And it's like, you know, they— and then poof, you have an account. And the same thing is true of opening an IRA.

See, an IRA is not technically an investment.

You're actually picking a mutual fund, in this case, that was what we're recommending, to put the money in. Then the IRA is the blanket— the Individual Retirement Arrangement is what it stands for— the blanket that wraps around the mutual fund and keeps it warm from taxes. The IRA itself is not an investment. It's how the investment is treated for taxes. And you want to make it a Roth so that it grows tax-free. What year of school are you in?

I'm going into my— well, it's kind of weird. I did some dual enrollment, so I'm technically a sophomore, but because I did classes early, I'm also technically a junior.

Okay, and so what are you studying?

I'm getting my Bachelor of Biblical Studies in Missions from Crown College of the Bible in Tennessee.

Mm-hmm, good. And, um, How are you paying for all of this?

I'm working through it, working through college. My parents are helping a little bit, but I'm working mostly.

Good for you.

Saving up.

Good for you. Well done.

Do you have a Roth option with your employer for that 401?

I don't believe so. It's just a 401. I put in 3%, they match. That's all.

Okay. Um, That's okay. Let me back up 3 steps and say, before you did a 401 and before you did an IRA, my first concern is that you graduate with a degree that is usable in the marketplace, that you can go get a job and make a living with that set of information, and that you pay cash for that degree. If you do that, that is a better investment than a mutual fund.

Yes, sir.

Knowledge is— knowledge is the tool— tools in the tool belt, not the degrees, but the knowledge in your tool belt is what makes you— sets you apart in the marketplace. And you will be worth more than that mutual fund will be, ever. So I'm more concerned that you do that first before you do either one of these other things. But if you're already doing that, then— and it sounds like you're on a ministry track, which is wonderful, good— and then yeah, I'll Have a, have a 401, and if you want to add to that in addition to an IRA, that's good.

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You ever feel like a rat in a wheel with your money where you just run, run, run, run, run, don't seem to get anywhere? If you reach the point on that that you're sick and tired of being sick and tired and you're ready to say, "I've had it," then you start asking questions on this show. And you start going, "Okay, Ramsey, what do I do to get from here to there? What is the shortest distance between running like a rat in a wheel and actually having some money where I'm actually controlling my destiny, where I can retire with dignity and not have to eat Alpo?" at retirement because I counted on Social Security. Hey, there's a plan: work your whole life and count on the government, which is well known for their ability to handle money, to take care of you. Well, that would be stupid. So once you kind of break through that stuff and you go, I don't think so, and you're ready— what's the shortest path? Well, we call it the Baby Steps, and we've helped millions, tens of millions of families become Baby Step Millionaires by working through this process. And of course they do it with a plan, and the plan is a budget, and it's called EveryDollar.

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Hi Dave, hi George. Firstly, I just wanted to say how much I I appreciate the way that your show and Ramsey, while being, you know, faith-based and in values, is still inclusive and useful and relevant for those who maybe don't share all the same beliefs and values. I think that's rare in media today. And after listening to your show for the last 4 years, I feel like I'm much more able and open to respect and appreciate the opinions of those that don't share those. So thank you not only for what you've done for me financially, but also So, helping me become less of a dumb bigot.

Wow, that was cool. What a great phrase. You're awesome. How can we help you?

So, my question is around giving with intentionality and being generous with integrity. Currently, my giving, it consists of 3 charities that I've selected based on my values and things that are important to me, and they're on automatic monthly debits, and it feels like I'm just of picking a box each month versus being intentionally generous. You know, as mentioned, I'm not mentioned but insinuated, I'm not part of a faith-based community, but I love what I hear on the show about tithing. You know, this idea of giving to a community with shared values where you are both involved in and can tangibly see how those funds are used. I'm currently on Baby Steps 4, 5, and 6, on track for 7 in the next 6 months, and wanna make sure that as I'm approaching becoming outrageously generous, I want to make sure I'm doing it with integrity and intentionality.

So, I love that question.

As you're helping someone like me and—

It's just an excellent—

How do you detect— Sorry.

That's okay. It's an excellent question. Thank you. Thank you. Very, very well thought out.

Thank you.

Okay. So, as you said, what we're going to suggest is you find something that aligns with your values and something that— and honestly, it's something that kind of makes your heart beat. Okay, this thing matters to me for whatever reason. Either it's something in my history or something in my family's history, or I just care about it for some reason and it makes my heart— because, you know, the weird thing is, is that not everything that's valid is gonna be yours to do. Some things that are valid, they're not yours to do, they're somebody else's because they care about them. So I want you to find something that does do that. And then what we have done at Ramsey, in the family, is is it started out with— we were looking at that, and then we wanted to get a touch more sophisticated and really look into how that particular charity was operated. For instance, let's just say you were giving to something that was feeding hungry children. You were worried about food security, okay? Then you would want to know that a high percentage of the donation is actually going to feeding a child, not the bonus plan of the president of the charity.

And so you can— you can look at their books if they will disclose them. If they won't disclose them, we don't give to them. Okay, if they're ashamed of where their money is going, then we don't— Ramsey's don't give to them. So if they're transparent, then I can look and I go, hey, you know, 10, 15% of of their income goes for administration and salaries and overhead to operate the thing, and the other 85% or 90% or 75% or whatever goes to the actual thing, the drilling of the well to create the clean water for that community or whatever it is you're doing, right? I don't want that flip-flopped. I don't want 85% going to salaries and 15% going to the hungry kids. I don't want to give that $100. You follow me? So, I'm looking at the way the things operate, how well it's operated. In our case, we don't give to ministries or charities that borrow money because that would be inconsistent with our family's belief. It would make us seriously hypocritical. Now, that wouldn't necessarily be true of you. You could decide if you want to do that or not, but I'm just saying, that's one of the things we've decided.

So, then, back to your original question, what we do is we set some things on autopilot like that where we're automatically giving just out of— not necessarily because the thing is tickling us every month and tickling our heart and making us smile every month, but instead we just want that rhythm of generosity to be there as a part of who we are as people, not as a part of the thing. Then that's one bucket. The second bucket is we do look for some things that make us cry, that when we give to it, we read the letter from the person later and we cry. And I really want some of those. And then the third thing we do is that we allocate a small amount, and some of it— it's not a small amount relative, it's not a small amount, but it's a small amount relative to the total budget of the foundation. My daughter runs the foundation, and she's authorized to just randomly bless something. And I carry a pocketful of hundreds and I may just randomly bless something. If I'm standing at the gas pump and I'm looking at a lady and her kids' clothing is not great and the tires on her car are bald, she's probably a single mom, 52% of which live below the poverty level, and God might speak to me and say, "Buy that lady's gas and roll her car over there and put some tires on her car." And I got enough money in my pocket just to go do that one, and those are so fun.

That's the most fun you'll ever have, because that's really in your face.

I remember listening to an episode where you shared that, and I also heard an episode where you said you were in Australia. I'm Australian, and you love the Australian people. And I said to myself, if I saw Dave in a restaurant, I would be buying him dinner to say thank you.

Oh, you're sweet.

I hear you on the random acts of kindness.

Yeah, but I mean, the random acts are actually the most fun because you're right there in the face of the thing. The second most fun are the ones where you hear back later and say, you know, We just did a huge fundraising event at our farm the other day for a sex trafficking interdiction organization, meaning they send the ex-military guys in and get the girls out of the situation, and sometimes very forcefully. And it's basically really and truly saving somebody's life. And so we just did a fundraiser for that, and you meet some of those girls that were dragged out of that and saved, oh my gosh, you know, that's— there's no ticking a box on that. Your heart's changed forever. Oh yeah, you know, and so on. Every— you can mention that with a whole bunch of different charities or ministries that are out there. So you got— you probably want some different kinds of buckets, some spontaneous, to kind of keep your generosity pump moving and get some ones you can get involved in.

The closer you get to it, the more intentional it's to feel.

Yeah, exactly.

See if you can serve them. We have ministry time here where we actually can go do that for a week.

We're least likely to give to some big invisible thing where we have no connectivity to them at all. I mean, we do give to some large ministries, but we end up with some connectivity in there somehow. I want to— I want our family somehow to get the psychological income from the generosity. If you're planning a summer trip, you're probably spending a lot of time getting everything ready because responsible people prepare for things that matter. And travel has a way of reminding us life can change fast. That's why I recommend Mama Bear Legal Forms. See, a lot of people put off getting a will because they think it's complicated, expensive, or they'll have to sit in a lawyer's office for hours. But without a will, your family is left trying to figure out who gets what and who takes care of your children instead of grieving. Mama Bear helps you solve that problem. They make completing your will easy, affordable, and specific to your state. The whole thing is designed to help you quickly get a will done without hiring a lawyer. In fact, you can finish your will in less time than it takes to pack your carry-on bag.

So before you load up the car or get on a plane this summer, go to mamabearlegalforms.com and make your will. Use the promo code Ramsey and save 20%. That's mamabearlegalforms.com, promo code Ramsey. Speaking of fun things, and she was a fun caller for sure. Love that. "Dave, I want to take a moment and thank you and the team for the work you do. I'm a hospice chaplain." Wow. "I spend my days walking with people through some of the most vulnerable moments of their lives. Your teaching has shaped not only my own financial journey, but I'm working my way through Baby Step 2, and it's also given me tools I've been able to share with the people I care for at end of life." One of my patients wanted financial freedom more than anything. She told me her goal was to die without owing anyone money. Together, we worked through the Baby Steps slowly and faithfully, and she made it all the way to Baby Step 4 before she passed. Because of her hard work, her kids will be able to sell her house and have a little something left over. The peace she felt knowing she was not leaving debt behind was profound.

It was one of the most meaningful meaningful parts of her final months. She loved the EveryDollar app, by the way. It gave her a sense of control and dignity at a time when everything else was slipping away. Thank you for giving me the tools to be successful in my own life and for equipping me to help others find hope and freedom as well. Her story reminds me that it is possible and that the work that you guys do reaches further than you will ever see. Wow, that is not one I've run into.

That's special.

That's wild.

That's an angel walking among us right there.

For sure.

That's the Lord's work. And what a cool story to have her go, "This is the goal I want. This is the legacy I want to leave for my family is that of freedom." Man. And she did it.

Pretty amazing. Taylor is in Orlando, Florida. Hi Taylor, how are you?

Hey, doing great guys. Thanks for taking the call. Yeah, so first of all, listening to all these other stories of all the stuff you guys are doing, it's super impactful. So it's really cool to just not know that it's not just me out here having all these questions, but really cool stuff, seriously.

Thank you.

But my question is whether or not saving 20% for the down payment on the house is actually like mission critical, or if that's something that's— I'll kind of give you the background of we recently discovered the Baby Steps We had enough cash to just pay off all the debts right away.

Wow.

Decided to go get debt-free.

Good for you. That was hard.

And yeah, well, it was a lot, but we've been blessed and we both have good jobs. My wife, or I guess fiancée technically, but soon-to-be wife, is about to start a new job and start making about $60 grand more than we had previously. Wow. So we have a lot of income that is coming in. We just now having recently paid off the debts don't have as much cash saved up as we used to. And we are debating whether or not it makes sense. We've never owned a home. So whether to do an FHA loan, 'cause we have enough cash to cover the payments. I know you guys teach to like a 15-year, but if we're gonna do stuff like that to afford it, we'd need to spend a lot more time saving up.

I just trying to weigh out— Fair. Okay, that would work too.

Good point.

But, um, anyway, the, um, uh, way to go. Congratulations.

Um, thank you.

The thing on the 20% down, um, we don't slap our fist on the table on that. We just remind people that if you put 20% down on a conventional loan, you avoid PMI, private mortgage insurance, which is about $75 per month per $100,000 borrowed. So it's a lot. Yeah, and it's basically foreclosure insurance, meaning that you're buying insurance. Private mortgage insurance, PMI, is you're buying insurance for the mortgage company that pays them in the event they have to foreclose on you and lose money on the house. Because you don't have a big down payment, they're worried that they're going to be upside down on the house at a foreclosure. And that's where that comes from. So, but no, we don't do that. We just say it's going to be more expensive if you don't. Most first-time homebuyers on the Ramsey Plan don't put down 20%.

Okay.

Most of them put down 5% or 10% or something like that, and they do do a conventional loan on a 15-year fixed where the payment is no more than a fourth of their take-home pay. The FHA loan, you can get in for a little less out of pocket. That's the biggest difference in it, but it is more expensive. The closing costs are higher, the gotcha fees at closing are higher. And the interest rates are a tick higher, just a little bit.

Gotcha.

So it's not a horrible deal, but it basically was designed for people to buy their first home or to buy a home if they don't have much money, and you pay a premium to get into that to save a little bit on the down payment stroke. But if you'll be patient, and now that you don't have any debt payments, build up a good strong down payment, not 20%, but 5 or so and get you a good fixed rate 15-year conventional. That's gonna be what we'll recommend 'cause that's the best deal for you guys.

Right.

And the 15-year, by the way, is cheaper. The interest rate's always lower on it than it is on the 30.

And you'll save way more in interest over a 30.

Yeah, that was kind of the— 'cause I know you guys talk about the 15 and I've been following the math as I do research here. I was wondering if having the 15 but having the more expensive monthly or if you set up like additional payments Beyond this, what, you know, if the 30-year has payment once a month, if you pay a little bit more than that.

Yeah, but as of this moment, as we're sitting here talking, the 30-year is 3/4 of a percent more than the 15. It's sitting at about 4.5, I'm sorry, about 6.5, and the other's at about 5.75, a 15-year is. Okay, so it's considerably cheaper. It's almost 1%. I mean, so if you borrow like $300,000, that's $3,000 a year. More you're paying so that you can wiggle around in your plan you just laid out, right? And that's all you're doing, you're just trying to wiggle your way into it. Just be calm, be a little bit more precise, slow down and build the cash up, build the cash up. And then it's your first house, you're not gonna buy the freaking Taj Mahal. You don't need a McMansion. Just get something, you know, move out of the city and out to the country. Dun dun dun dun dun dun. And, you know, get something that needs a little a little bit of work and get something that not everybody's like thrilled that you bought it. If some of your friends make fun of you, you probably bought the right house for your first one. But you know what?

The stupid thing around Orlando, Florida will go up in value. I mean, just put Mickey ears in the front yard, it'll go up in value. You know, I mean, it's gonna go up and you're gonna make good money on it in a few years and your guys are gonna be making more money and you'll be able to move up You know, it's your first house. And Taylor, do not buy this house until you are married. Yeah, period. No exceptions. Do not buy a house with someone you're not married to. I don't care if we call them a fiancé or not. You're not married. The law doesn't go, "Oh wait, they're a fiancé." The law says you're not married. It's your roommate, and that's a general partnership that has a whole different set of laws on it. Do not buy a house, people, with someone you're not married to.

If you listen to the show long enough, you'll hear that call call, and they're in a nightmare situation. And they thought, well, I thought I'd be okay, and life didn't work out as they planned.

Yeah.

And now you don't have the protections that you would have if you were married.

So here's what's interesting also, Taylor, um, this difference in a 15 and a 30. I guess I've been doing this, um, it's coming up on 40 years now, and, um, I've had the question from day one. Because if you add up the total, 30 payments on a 30-year and 15— I mean, 360 payments on a 15-year and 180 payments on 180 payments on a 15-year for your 15-year mortgage, and you add up including interest and principal, and you add up 360 payments for the 30— of the 30-year mortgage, and you look at them, it's hundreds of thousands of dollars more you pay for the same house. Hundreds of thousands in every case.

Especially—

I've been using that example to go, never do a 30. My whole— for 40 years I've been talking about this, and people go, well, I'm gonna take out a 30 and promise to pay it hit like a 15. Here's an interesting stat for you on promising to do stuff that you're not going to do. The FDIC has studied that, and they say that 97.3%— that's all of them— of the loans, the 30-year loans, are not systematically prepaid. They're often prepaid, but they're not systematically prepaid. Meaning I'm going to add the difference every month and I'm going to be very precise and very disciplined because I'm the one human on the planet. No, you're not. That's just absolute bullcrap. You're not. I'm very disciplined in my life. There's a lot of things I'm very precise on, I don't miss on, and I'm not gonna set myself up and make that promise to myself. And I teach this crap for a living. Instead, trick yourself into doing smart things like signing up for a 15% instead of a 30%.

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Welcome back to the Ramsey Show in the Fairwinds Credit Union studio. George Campbell, Ramsey personality, is my co-host today. Maria is in Los Angeles. Hi, Maria, how are you?

Hi, hi, Dave. Hi, everyone. Thank you for taking my call.

Sure, how can we help?

Yes, so I have a— my husband and I are in Baby Step number 5, and we have 529s for our daughters. The youngest is 10, the oldest is 20, and the new Trump accounts just came out. So we were debating whether to get an ESA or do the Trump accounts, not the $1,000, but the regular investing. And I wanted to know your thoughts on which one we should get.

You said you already have 529s?

Yes, yes. And we learned about the ESAs during the Baby Steps.

Mm-hmm.

But I'm just wondering—

I would just keep using your 529s.

Oh.

Much smarter for college than the Trump accounts. Because the Trump accounts are going to be taxable income. The 529, if used for college, is completely tax-free and it stays in your control.

Uh-huh. Okay.

So as far as the financial benefits, the 529 wins every time.

Hmm.

How much is in the 529 so far?

For each one, about $1,500.

Okay.

We just started doing this.

Well, good.

You got it going. You got it started. Good for you. Good for you. That's more than most people. Most people just talk about it. You actually did it. Good for you.

Thank you. Thank you.

The other great thing is the 529, way higher contribution limits. There's really no practical limit compared to a Trump account's $5,000 a year.

Yeah.

And the ESA is $2,000 a year. So you're good. The 529 plans have come a long way.

And Dave, you've seen some of these things. If you always pick a 529 plan that has the— you have the right to pick the mutual funds and move the mutual funds that are inside of it. So if I don't like one of them 3 years from now, I can get out of it and move it. Some of the 529s are fixed. You're locked in and you don't want to do those. But the mutual— the proper 529, the ones we like and recommend, will allow you to select the mutual fund to put in the 529, and if it's underperforming, you could deselect it and select a different one. And just like you could do with a Roth IRA or something like that, same exact process. And that's going to give you the best rates of return and give you the best tax benefits and the most flexibility over the ESA and over the Trump accounts, for sure. The Trump accounts are all right, but largely it's a Trump thump-my-chest thing. It's a thing Trump's going, "Look how great I am." You already could do most of the stuff that the Trump accounts are to do. It's not like it's something really substantially earth-shatteringly new, other than it's got a big T on it for him.

I did get my free $1,000, Dave, for my little guy.

That's true. You are getting free money from the government.

If you have a child born.

George is on welfare now.

Yeah, apparently. You know what I thought? I thought, I've given so much money to the government this year, I'd like a little bit back. So thank you for that.

Oh, that's it. It's not actually government money. It's actually some of my money coming back to me, because I've already given you more than that.

I see it as a tax refund.

I'm okay with that.

That's better than welfare.

It's a thank you from the government.

Yeah.

But if you've had a child born in 2024, '25, '26, '27, then you can get that free $1,000.

So I said I do get— You got two of them.

I got two. One was born in '25 and one was born in '23. So she missed the, uh, the boat on that one. But we shall see. It is cool as a retirement vehicle for your kids because what you can do is once it becomes a traditional IRA at 18, you can do conversions to Roth and let that grow tax-free for the rest of their life.

Which is an interesting math riddle to run out, but again, the practicality of you actually doing all of that all the way through is almost zero.

It's a good reminder, parents need to be investing 15% into their own retirements first.

Yes.

Then save for college next, because that's coming up a whole lot sooner than your kid's retirement. So this is a nice-to-have for people that—

This is like after you become really wealthy and you get bored and you're trying to come up with something else to do with money.

It's like a Baby Step 7 item for most people.

Yeah, and beyond. Yeah, it's like trying to figure it out. It's kind of like, you know, I did— I'll tell you what I did do that was in that category. So the kids were teenagers and they were working, some here at Ramsey and some at the mall and some babysitting and dog walking or whatever. So I filed a tax return like on Rachel Cruz Ramsey at the time when she was 13. And for some reason I remember it, it was $1,233. I don't know why I remember that. Let's go, Rachel!

All right.

I remember numbers, it's what I do. And so it's $1,233. I filed a tax return and the taxes on it were like— because she could not take a standard deduction because I'm using her as a dependent. So I had to pay taxes on the $1,233 because I filed that tax return for her on that, but that enabled me then— you can put up to your earned income into a Roth IRA. So she's 12 years old, I opened a Roth IRA and put $1,233 in it. And I paid a little bit taxes. Those were extra dollars coming out of my pocket. Didn't cost the kid a thing. The kid made $1,233, put it in her "I want to buy a car" account. That's what she did with it. But I actually filed a tax return on it, paid a little bit of taxes, and then put the $1,233 out of my pocket and put it in there. And then I ended up doing that subsequent years on all three of them.

Which compounded for the next 15 years.

So by the time they get out of college, all of their earned income had been put into Roth maths by me as extra. But that's beyond the Baby Steps. That's way past— you're out of debt, your house is paid off, you're doing everything you want to do with generosity, and I'm just going, "What's a math fun thing?" But I mean, you take that for a 12-year-old, what's $1,233 become by the time they're 76? A lot. Hundreds of thousands of dollars tax-free.

Way more than you think.

Pretty cool. And so, in addition to the other things. So you can do some stuff like that. I would do that kind of thing before I'd screw with the account.

Yeah, I just want someone calling in going, hey, my kid had to go in a bunch of student loan debt, but hey, they've got $1,000 in a retirement account.

That's not what you want. Don't do it in that order. You're exactly right. Stick with the baby.

Time and place for it.

Good point. Good point. I'm just shocked to hear you're on welfare. It's a new thing. Jonathan's in Jackson, Mississippi. Hey, Jonathan, how can we help?

Hey, Dave. Hey, how y'all doing?

Better than I deserve. What's up?

Well, I got good news, and I guess you could say good news too. Um, I just wrote the last check yesterday to pay off all our debt, about $62,000 total, house and everything. Well, the house was already paid for. Way to go, Jonathan!

How's it feel to not have a debt in the world, dude?

Different. Unusual.

Surreal. Yeah, for real. Good for you, man.

Well, thank you. I appreciate that. It was, uh, it was It was a lot of hard work. My wife and I both worked part-time jobs to get it done. And she worked actually part-time, full-time and part-time while pregnant. And we had our first child in January, and then we had to quit our part-time jobs. But we still didn't quit paying down on it.

Good for you. Congrats. Good for you.

What's your question?

So my question is, I haven't really, I've been so focused on that, I haven't really looked at our retirement accounts. So my question is, I have an old IRA, God, from years ago. And it's got a grand sum of 2 cents in it. And my question is, should I keep start recontributing to that and have my wife open up her own, or should we do like a joint retirement?

There's no joint retirement. There's no joint.

There's no—

it's tied to one person.

They always have one name on them. You can name her as a beneficiary, she can name you as a beneficiary in the event of death. Um, and if you get divorced, the judge will make you split it up anyway. But it's in your name and/or her name. So you're just— she can have an IRA, you can have an IRA, and you can have that— take that old IRA and start it. And so sit down with a SmartVestor Pro and start planning out your newfound ability to save and invest. Just jump online at RamseySolutions.com. That'll help you pick out one with the heart of a teacher, and you guys sit down and figure out whether you would need to roll that old IRA into some good mutual funds and all the stuff you're gonna want to do now that you don't have any payments. I'm so proud of you. If you run a business, you already know this. Bad information leads to bad decisions. And right now, AI is everywhere. But AI is only as good as the data data behind it. The best AI is built on the best data. That's why I recommend NetSuite.

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I'm good, thank you, Dave.

How can we help?

Okay, my question is, um, I just got married about 5 months ago. My husband is retired. He has like 10 properties, and his retirement income is from renting those properties. When we got married, he says, you know, um, I came in with debt. I have about $48,000 worth debt. Um, and, um, so he says, you just pay your bills, use your money. Okay, because I receive a pension, he said, use your money to pay your bills, you know, don't worry about any of the expenses. So, you know, he buys all the food, he puts gas in the cars, he takes care of everything. He's just kind of absorbed me into his, his house, his home. So I'm just wondering, is it okay to stay separate in our accounts while I get out of debt? And then should I they talk about moving into one account, or is it because he's so well established and maybe he, he should stay separate to protect his, his, his income?

Because if he has to be protected from you, he shouldn't have married you.

Oh, well, maybe that's the wrong choice of words, but, um, um, I don't know. I just wonder if you guys want—

Trudy, if you guys want to do this, you do whatever you want to do. I wouldn't recommend I recommend it. All the years of doing what we do, we see the couples that have the best marriages and the best wealth-building probabilities are the ones that work together and combine and make combined decisions. And so we don't have one playing daddy and one playing little girl. It's okay, little girl, I'll just take care of you. Or Mommy, Mommy's gonna put me on an allowance. I give Mom— I work hard, I give Mom the check, and then she tells me what I can do. And he's 60 years old or 40 years old, and mommy's telling him what to do in the form of his wife. No, that's not the healthiest form of relationships that we see. It sounds like you guys are both okay with it. If you want to do it, you're free, and it's America, and you can do what you want to do. But you're called here asking if you should do it. No, I don't think you should. I think he should write a check today and pay off the debt that you have.

And your pension ought to go into the same account that his income goes into, and we sit down and decide what we are gonna do with our money because we are now married. The preacher said, "And now you are one." Okay.

If you listen back to what you said, you basically said, "I'm gonna be punished until I pay off my debt, and then maybe he'll let me into his financial world." Right?

Well, or he's just being real sweet and saying, "I'm gonna take care of you, little girl, while you go clean up your mess." mess.

Yeah.

That's, that's just not a cool, I don't like that vibe.

Yeah.

What is your income compared to his?

Um, he's, I'm not sure how much comes in from the rentals.

It's, he's got 10 properties.

Um, but he's very, he lives very humbly. I mean, he doesn't even tell anybody that he has these properties. Only me and his son knows that he does.

Um, that's fine. So he's not asking to put it on a billboard, but he should tell his wife.

But if you make $2,000 and he makes $10,000, it's going to take you a decade to pay off your student loans if you're lucky. So that's where I'm going. If you combine this, it's done so much faster. He probably has the money sitting around to just knock it out.

Oftentimes, Trudy, again, if you guys want to do this, it's whatever you want to do. But you asked us, and so we're obligated to tell you what we think. We love you, and what we think is going to be best for the two of you. This comes up comes up most often in second marriages that are later in life. We don't have two broke 22-year-olds asking this question. Hey, they don't have 10 properties, right? But there's this weird thing that happens that you feel like, you know, like you're bringing the new family, the new marriage down, and he feels like he brought more to the, and that's just not how it works. It's a combining of our lives for unity. And so you've got to work through the emotions of that, both of you. And he's humble, he doesn't tell anybody. Well, he ought to tell his wife. Hello, I'm pretty humble about some things, and I ought to tell my wife, "Honey, this is what we made this year. This is what our tax return says. This is what we just, you know, we just closed that, we just "Got that thing signed and here's what we made on that." She has very little inner working knowledge of a lot of that, but she ought to know what's going— Sharon wants to know.

She needs to know. I get hit by the proverbial milk truck, she's going to need to know how this is going to work out and how she can function without me paying all the bills and so forth. These are two standalone adults, not what we would call a kept woman. And so that's what we would want for you guys. We would want some more of that. And guys, it's interesting. I didn't even know this. I found it out later as we've been talking about this and teaching it for all these years. The old marriage vows, I mean, you've heard them. Most people heard the standard marriage vows of, "In sickness and in health, for richer, for poorer, unto thee," and so on. But there's an actual set of marriage vows in the ancient Book of Common Prayer. Like if you're Orthodox or something, you would find it there. And it says, "In sickness and in health, unto thee all my worldly goods I pledge at the altar." In front of the preacher.

All of my wealth, income, toys.

It just became ours. It's now a "we." It's not a "mine." And it's not like I'm gonna pat you on the head and take care of you because you're somehow deficit and I'm superior and he's not that guy. This guy here, he's not— Trudy's husband's a nice guy. He's a sweet person, and he's not being that condescending.

He just lives so long in his own world, he's going, "Hey, let me just cover the bills.

You do this thing." "I'll take care of it. I got you covered, kid. I got enough money. I'll take care of you. I love you." And that's all he's saying. But the downside of that is then that Trudy doesn't— she doesn't have insight into how the whole thing's operating.

Operating.

And she should as his wife, I think.

Well, there's a lot of unity and excitement of just going, "We're gonna build wealth together," versus, "Hey, let me handle it. You do your little thing over here. I got this.

I'll cover the bills." And I run into it truthfully, it's a blue-collar thing more. The neighborhood I grew up in, it's like the mom takes care of the money and dad just works shift work and comes home, brings the check on Friday and plops it down. And they always call the wife, Mom, I just call my wife Mom. I call Sharon Mom, or Mimi. That's what I call her. We're on the golf course and I'm like, good hit, Mom, you know. And they're like, that's your mom? No, it's not. It's not my— goober. It's the mother of my children. But the, uh, so, but that's, you know, and so that's the neighbor, that's the, the vernacular I grew up with kind of thing. But it's like, you know, Mom only gives me so much allowance and I can't do but so much, says a 45-year-old guy working 60-hour weeks. And it's like his wife is his mother.

Yo, ball and chain.

The old ball and chain. That's exactly— yeah. And because she's assumed headship in the household, uh, and he just defers to her, then I'm on an allowance and I can't stop buying, I can't do, you know, I can't do that, we can't go fishing Saturday, I don't have the license, you know, all, you know, all that, all this stuff. It's the stuff I heard my whole life. It's like, well, You know, it's like, are you a child or are you like a man?

That can't be a quality, fun marriage. It's just very transactional almost.

It's almost a cop-out. Like, I don't want to be responsible, so I'm going to let her or him be that. And Trudi's not any of that. No. But this whole discussion, though, goes in the same bucket. But Trudi's is much, honestly, much more functional than a lot of the things we hear.

Yeah, and they'll be okay.

There's a kindness coming from her husband, I heard. Yeah, she received it as kindness.

You said, hey, you'll be fine doing it this way, but it could be so much better.

Yeah, I think it'd be better if the two of you both stood up like two adults and we— I, you know, I brought you in, you know, this is me, you're my wife, and we're gonna write a check today and pay off this debt. He's got— that guy has the money in his account right now to pay off that debt. And then it's just uncomplicated. Everything. And you didn't marry him for that, or you wouldn't have gotten married. He wouldn't have— he wouldn't have gone for that.

You would have smelled it a mile away.

Exactly.

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Buying or selling a home is a really big deal. You don't want to overpay for a house. You don't want to sell your house too cheap. You know, we had a caller the other day, George, that had listed their— his mother-in-law listed the house.

Oh boy.

For $335,000. It sold in 2 days. Days, the appraisal came back at $375,000, and he was wanting to know how to get his mother-in-law out of the contract because she had sold her house too cheap.

They left a lot of money on the table.

$30,000, $40,000. You know who I blame? Real estate agent.

Oh!

Who put this house on the market $40,000, 15% under what it should have been priced at.

She didn't do her research, didn't run the comps, didn't price it.

He or she, the agent, sucked. So you need to get a real estate agent. You make a real estate mistake, it's not a— they don't— you don't make $100 mistakes on real estate. You make $10,000 figures at least on real estate. So you need to get a high-octane, high-protein professional real estate agent. We vet the agents that we put on our website to recommend to you. They're called Ramsey Trusted. They do, you know, 50 to 300 transactions a year. They don't do 2 transactions, and they actually know how to do a comparative market analysis and appraisal to get your house on the market for the right price so you don't call me up and say, my mother-in-law just sold her house for $40,000 too cheap.

Ouch.

RamseySolutions.com/agent, and you can find a Ramsey Trusted Agent for free, or click the link in the description if you're on YouTube or podcast. Andrew is in Cincinnati. Hi, Andrew, how are you?

Doing pretty good. Thank you, Dave and George, for taking my call.

Sure, how can we help?

So my question is, well, first I want to start off by giving the context. I recently just gave my life over to Jesus Christ and I'm taking the Bible seriously with my life. And by doing that, I've discovered, I've discovered that I have a PhD in BUMB, just like you would say. And I'm new to the Ramsey Baby Steps. I have $41,000 in debt, $25,000 um, a part of that total combined debt of an auto loan, um, $9,000 in one credit card, to about $1,300 in another credit card, and a $5,000 debt that I owe my parents. Um, my girlfriend— I'm 32 years old.

Okay, what about your girlfriend? Say that again.

So I just broke up with my girlfriend. She didn't want to go to church, didn't believe in God. So I want to do a 180 with life and be a good steward and a leader to myself and my community and my future family.

Wow, man, you have been through it. Look at you, uh, you're on— you are on fire. Good for you. Okay, and what do you make a year, sir?

I make $52,000, have my primary job. My secondary job as a real estate agent, I've made about $25,000.

Okay, so $75,000 $500,000. All right, very cool.

Yes, sir. Very cool.

Well, as you've already figured out by poking around the Ramsey stuff, um, we are also Jesus people, and we build the systems that we use based on biblical principles. Now, not everything we teach is from the Bible. Some of it is— the implications are from the Bible. But like the Bible says, the borrower is slave to the lender. So we take from that, I don't want to be in debt, which is why you called. So that kind of is the way we— now, how do How do we get out of the debt? Well, that's not necessarily a biblical thing, but it is a cool thing because here's part of your young faith experience as you're brand new in all of this. What you're going to discover is that God is going to use this money subject to help you with the transformation you're going through in all parts of your life because you're going to become a different person as you go along. The process of getting out of debt, and as you go along, the process of handling money properly. And becoming the different person is actually the goal. The money stuff is a side goal.

Does that make sense?

Yes, sir. Yes.

And so I'm real proud of you. Thank you for giving us all that context. I'm proud of where you are at this moment. Okay, so $75,000 a year, and you probably heard about the Baby Steps. They're not in the Bible. We made those those up, but they work.

It's in second opinions.

It's in second opinions, second hesitations, yeah. And so, yeah, you're going to first save up $1,000 after being on a budget. Now being on a budget is a biblical thing. God talks about planning all through Scripture. Jesus said, "Don't build a tower without first counting the cost, lest you get halfway up and you're unable to finish, and all who see you begin to mock you and say, 'This man began to build and was unable to finish.'" So you don't build a house without a blueprint. And you don't build a life without a budget. So you're gonna do a budget on every dollar. We're gonna hook you up with that and pay for it. The upgraded premium version will give you a year's worth of it when we get off the line here. So you're gonna do your budget, and in your budget, first thing you do is you find $1,000 and set aside as your starter emergency fund. And then we're gonna list these debts smallest to largest. Um, $1,300 worth of credit cards will be your small one. And we're gonna pay minimum payments on everything but the little one and attack the little one with a vengeance.

Now, are you paying your parents' payments on the $5,000?

Yes, sir, I am.

Okay, good. Okay, so keep paying that minimum payment, keep paying your car payment, and keep paying the $9,000 payment. And then all other money we squeeze out of the budget after we've got our Baby Step 1, $1,000, we're gonna throw at that $1,300 credit card and cut up all the credit cards when you get off the phone. Phone, okay?

Yes, sir.

Get a debit card. It'll do everything your credit card will do except go in debt.

And where I broke up with my girlfriend, um, she had her house on land contract, and I helped her pay all of that. And, um, so of course I wasn't able to pay down a lot of my debt. So I think my next question is, I literally moved in with my parents. Should I seek independence and just go rent while I'm doing this? Should I live with them? Should I save up for a home? How exactly should I go So you've been there for 2 weeks? Yes, sir.

Yeah. Well, you don't want to stay there indefinitely, but you're in the middle of a chaotic, transformative period of your life.

Okay?

You have a breakup, a move, a reset spiritually. You are adjusting, you know, your— the other parts of your life to align with the spiritual connection. With your newfound faith. And so all of those things are good. I'm okay with you using your parents as a safety net, but not as a hammock.

Yes, sir.

So I would establish a period of time I'm going to stay here, assuming that it's not a toxic environment, assuming it's a good environment, a period of time I'm going to stay here, and after that I'm going to be out. And so, you know, maybe you sit there 6 months and you use that 6 months rent-free to really knock out a few of these small debts and get some wiggle room in your budget. I don't think a 32-year-old is gonna want to stay there for 3 years unless you're weird.

No sir.

Does that make sense? So I mean, so let's just kind of find that balance. Maybe 6 months is the number, maybe 3 months is the number. I don't know. You look at at it and you figure it out. But yeah, start, you know, let's get our feet under us and get, you know, touch ground here and then say, okay, based on that wisdom and what my budget's telling me, I'm gonna make a much better and much more informed rental decision. I mean, I'm gonna rent the cheapest thing I can possibly rent, but be out on my own and have my adult dignity back, so to so to speak. But using them as a safety net is fine. And so people often— I always tell, we're always hard on parents, have their kids in their basement and all that kind of thing. But people always say, "Ramsey says never do that." No, we actually do think there's a moment in time that for a short period of time that mom and dad can be a great safety net for adult children. You just don't want to be a hammock.

When there's crisis, transition, all of that.

Yeah, we don't want to be a hammock. And not for Andrew because he's not in this situation, but, but for, you know, everybody else, I mean, that's the thing. I am— for everybody else, you know, the— an eagle that doesn't leave the nest is a turkey. So you just can't— that's a problem. So we've got to work that out. But, you know, can you come home and heal if the eagle got, you know, got damaged? Yeah, you can. And it And he's in a healing period, a changing, a metamorphosis period right now. And so good for you and good for your parents that that's available to them, available to you, that you got a good relationship with them. So yeah, let's do a little bit of that and then you go up, but go ahead and figure out how long that is. Is it 3 months, 6 months, 9 months? What is it?

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Today's question comes from Michael in Alaska. How do you protect your debit card while shopping, either online or in a store? I'm worried about someone accessing my bank account funds. Simple question. I've got a lot, I've got a lot of ideas here. As a sort of the mixture of my worlds of tech and finance.

Have at it.

One of the main things, and this is great with modern technology, is Apple Pay. So Apple Pay blocks your actual card number at these transactions, and it's a tap-to-pay, so your card is never actually used or exposed. So that's one way. It's encrypted. Another one, and this one's actually a new advertiser on my YouTube channel, but I've used them for years, they're called privacy.com, and they create virtual card numbers that you can lock to merchants with spending limits, time limits, one-time use. So I use those when I shop online because your actual debit card number is never exposed. It's a virtual card number that's attached to your bank account or debit card. So that's pretty cool too.

Most websites, including ours, and you know, I've learned about this because of owning Ramsey, otherwise I probably would have never learned about it. Um, when we accept your debit card to purchase a Total Money Makeover book or George's book on our website, the number is not stored literally. It is tokenized, is what they call it in the tech world. And so it's encrypted, in other words. And so we have a token, an encrypted token on you then, that when you come back, you can use the same card very easily. So like if you return to a website of any kind where you do shopping, shopping, that's what's happened. If it's a decent website, if it's sophisticated in any way, they will have tokenized it, meaning they're not— in their database to be hacked is not your entire card number. We simply do not have your entire card number. It's gone.

We could get it if we wanted to.

But we have access to your account through that token only, and so it keeps fraud from actually happening because we would have some liability. Responsibility if you got hacked through here. We don't need the PR problem of that. So if you're dealing online, you're going to run into that a lot with reasonably sophisticated sites. The second thing is that you are not liable for charges on your debit card that were fraudulently made, just like you're not on your credit card. So I— and I've heard people incorrectly, and that's a minimum, ignorantly I've heard repeatedly, say, on other financial shows, "Well, you'd never get a debit card because credit card protects you in the event of fraud." Debit card gives you the exact same protections. Look it up on Visa.com. Look it up.

It's the—

Zero liability policy.

It says it right there. It's got a little paragraph called the Zero Liability Policy on all Visa and MasterCard products. Products, whether it's a Visa credit card or a Visa debit card, a MasterCard debit card or credit card, zero liability in the event of fraud. So if someone steals your number and buys stuff, and this actually happened to Sharon a week and a half ago. Oh, wow. Our bank contacted us and said, "Did you buy $10,000 worth of Louis Vuitton?" Louis Vuitton in South Carolina last week. And we're like, uh, no, we did not. Uh, weren't in South Carolina, and Louis Vuitton was not on the Christmas list. So, um, didn't happen. And, uh, they're like, okay, $84,000 worth. These people, whoever, wherever they grabbed her number, wherever they scarfed her number, they hit Louis Vuitton and coach all over America. And I don't know how they were doing it.

Wow.

But it was hitting my wife's— it was hitting my checking account with my wife's debit card. And you know what it cost me?

$0.

$0. You know what it cost old Louis Vuitton? I don't know. I don't know. Did they actually let those purses and suitcases get out the door with the fraud? They might have. But when they got back and the charge was denied, maybe they recalled the order. Maybe it was an online order. I don't know, but it was $80,000.

That's wild.

It was a lot. I think they knew whose card they'd gotten a hold of.

Yeah, they went ding, ding, ding.

I think we just hit the lottery. So we don't know what happened, whether it got picked up, whether somebody took a picture of it in a back room, or where it happened, but that happens with credit cards, it happens with debit cards. It's identity theft, and there's fraud online, and there's fraud in stores, and there's ATM, you know, gas pumps, or have, you know, the artificial things where they— the crook is scanning your number and keeping your number and that kind of thing. I've heard of all of these things happening. I have never lost a dime, and I've had a debit card for as long as there have been debit cards, probably 30-something years.

Wow.

I've never lost a dime. Now, I have had all kinds of situations where the— Pete, they come— the bank sends me the email that says, is this you? Or the fraud department will call and say, is this it's you, and the 800 number rings on the phone, right? But they do that with your credit card as well. They'll check a lot of times.

One good notice.

If it breaks the algorithm— so like, if we head out of the country, we just spent 3 weeks in Argentina, if we head out of the country, we email my banker, my private banker, and say, "We're gonna be in Argentina. That is us. Those charges are us.

Look for that." You don't need to fight it.

Because that'll trip the algorithm, and the whole stinking thing will get shut down, and I'll be down there with no money. That's not a good idea, right? So, but I let them know. But, but the algorithms are all— they're excellent. They're getting better all the time. The identity theft protection that Zander has is there as well, but I've never had to access that for any of this. The debit card is as safe as the credit card, period. And especially if you keep up with your stinking banking.

Yeah, the big part is just paying attention.

If you never look at your checking account but once a year a year. Well, no wonder you got screwed, because you're screwing yourself. You're doing a bad job of handling your money. You need to know what's going on with your money. So same thing. So, you know, that—

that's— I get text every transaction that comes through, goes to my phone.

Really? Yeah, every single transaction. That would drive me bananas.

I guess it's probably when you're using at a point of purchase.

I don't get— I don't get it at all. I don't get a single—

you're missing out. It's a good time. It's the only people that text me is my bank. I can't get a hold of my wife.

It's a banker party.

Feels good to get a text.

Sounds like Party to me, that would drive me bananas. I don't need all that activity, but I do need the protection though. I don't want some crook loading up on Louis Vuitton with Sharon's name. I don't want that happening, and they tried. Man.

They tried.

And we were happy to sign. I think they sent, oh, they did. The bank sent over an affidavit, 'cause this was an unusually large.

Yeah, that's like a police report level.

Yeah, so we signed affidavits and everything for them to put in the file.

Did they do a search of your house to make sure there was no Louis in there?

Well, they would find Louis in there, but they would be older than last week, and they would have been actually paid for by us. So yeah, and not stolen by us. But yeah, wow. Not in my closet, but in my wife's. But anyway, yeah.

I covered all this, Dave, in my book. In the credit card chapter of Breaking Free from Broke, I literally have a spot about the fraud protector. That's the archetype of the credit card user who says, "Well, credit cards are safer. And I go through all the nitty-gritty details, the Electronic Fund Transfer Act and all these 17 ways you can stay protected. And it's really a nothing burger. It's more paranoia at that point and a justification to keep your credit card more than it is reality.

Mm.

So I want to just convict everyone out there going, well, I don't want to cut it up because fraud could happen. There's a higher likelihood you put yourself into debt than fraud happening if you're using that credit card.

Well, fraud, you really should— the only way you're gonna catch it on your credit card is if you look at the statement and go, I didn't charge this. The only way you're gonna catch on your debit card is if you keep up with your statement, keep up and charge this. So you actually have to freaking pay attention to your life or you're gonna crash. Because that— I mean, there's crooks everywhere. There's more people— there's people that work harder at being crooks than they do at their job, and they're even better at it than they are at their job.

So, and if you lose your debit card, you got to lock that thing immediately. So like Fairwinds, which has been an awesome partner, I've got their debit card. If I lose the Fairwinds someone's debit card, I go into the app and hit lock. No one can use the card.

So I'm pretty sure our bank has that one too.

Yeah, there's a lot of these protections these days that it's actually safer than it's ever been to use a debit card.

Yeah, and it may actually— because it's more— the algorithms are more sensitive, it may actually be even safer than a credit card.

I believe it.

But they do have the same exact fraud protection. You get charged zero. That's Visa and MasterCard's guarantee on their written agreements. Welcome back to the Ramsey Show in the Fairwinds Credit Union studio. I'm Dave Ramsey, your host. George Kamal Ramzi, personality, number one bestselling author, is my co-host today. Mike's in San Diego. Hey Mike, what's up?

Great to speak with you guys today.

You too.

I'm calling to find out if you all think we're— I, we, uh, my wife and I are potentially contributing too much to retirement, uh, to a time when maybe a little bit further down the road we'll, we won't have access to that money for a while. And there's some other things we could be doing with it.

Okay. Are you out of debt?

Yes, sir.

House and everything?

Yes, sir.

Good. Way to go. How old are you guys?

Uh, we are 41 and 39.

Good for you.

Okay.

And how much is in your retirement accounts now, total?

So because we have two different jobs, we have access to a number of different accounts. So between the 401, the 457, and the 403, we have $600,000. And then in an after-tax brokerage, we have $600,000. And then we've got $100,000 and change in a 529, and then $40,000 in an emergency.

Excellent.

Okay. And then—

So if you have $600,000 in a brokerage account, I assume the $600,000 in after-tax brokerage is invested in Good Mutual?

Funds? Uh, yeah, well, it's between that and, uh, uh, S&P index funds.

Okay, good mutual funds. Yeah, I mean, you're earning market returns then on those investments, which means that $600 is going to double about every 6 years or so. Okay, so when you're 47, it'll be $1.2 million. And why would you need more than that before you're 59 and a half. Oh, by the way, when you're 54, 53, you'll have $2.4 million if you don't add anything to the brokerage account.

Right.

I think the key there is we have the ability to contribute in pre-tax money, right? So saving us quite a bit in our income to both a 401, a 457, and a 503.

Yeah, but you said, your question was, am I currently putting too much into retirement? Wasn't that your question?

Correct. Yeah, so we're maxing out all of those accounts.

Yeah, but it's only $600,000. And then the other $600,000 is in after-tax, right?

Correct.

Okay. And you said, I'm afraid I'm going to have too much of it tied up and I won't be able to get to it. But my point is, your $600,000 is going to be $2.4 million before you get to 59 and and a half, and that's if you don't add anything to it in the brokerage account, right?

That's the brokerage.

But yeah, yeah, what do you— what do you— and the other account will be growing faster because you're putting more into it. That's, that's me saying if you don't put anything into the $600K. So what is it that you think you're going to need to buy that's millions of dollars before you're 59 and a half?

Well, we are in San Diego, so, uh, so houses not cheap.

Do you not own a home yet?

We do.

Okay, and it's paid for?

Yes, sir.

And what does it cost? What's it worth?

Uh, probably $1.7 million.

Way to go! You guys have done so good, man. Congratulations. You got a lot of money. So, uh, what's your income?

Um, paycom is around, depending on the year, um, and bonus, maybe around $300,000.

Okay, man, you guys have just— you've done a wonderful Wonderful job. Way to go.

So what are those future goals? You said there's other things that we want to do. What are the— have you guys laid those out to see what they're going to cost, when they're going to hit?

Well, the big one for us is, um, is we'd love to either invest in real estate locally, which given the area we're in is a challenge because it's so expensive, or even potentially upgrade in-house. But given where we're at, right, you sneeze wrong in the wrong direction and your taxes go through the roof or whatever else, uh, with respect to, you know, homes here. But, you know, because we're contributing close to $75K toward retirement, um, if we were able to reallocate some of that, then—

Are you putting money into the $600K after-tax account at all?

Um, not right now.

Okay.

No.

Okay. All right.

If you guys make $500,000, that's 15% of $75K. So I think you guys, you know, obviously you can invest more than that. Your house is paid for, but it doesn't sound like you're contributing so much. You're filling them up, you're maxing them out, and then once you reach the point where you don't have access to those, you can go to the brokerage.

Yeah, so real estate— the answer overall is to be investing, and you're doing that. And so, are you gonna have enough at retirement? Yes, you're gonna be in great shape. You're already in great shape, and you're only, you know, you're only 41 and 39 years old. So, because you've just done a wonderful job, so now it just becomes a nuance of how we want to flesh this out If instead of maxing out all available retirement and keeping the government's hands off of it, if instead of doing that you said, "I'm gonna put 15% into my Roths and my 401 Roths and so on, and the rest of it I'm gonna put over into this other brokerage because I want to do some other things like buy some real estate for cash, and that's gonna be my other investment that I want to do." then that, you know, that's a decision and you're not wasting the money. It's good. Both are going towards investments. Both are going towards good quality investments. So I don't have a problem with it at all. You're gonna have plenty for retirement. Now what I would challenge you to do is to monitor that as you go along.

So let's say that you said, "All right, we're gonna put $75K into retirement. That's 15%." Like it was Baby Step 4. You're not at Baby Step 4 anymore. You're at 7. But let's just just say, okay, we're gonna, we're gonna put $50,000 in, everything else we're gonna put in the after-tax brokerage account, and when it gets big enough, we're gonna buy a piece of real estate with it. That's okay. But what I would do is, you're doing that, then is I would monitor going along and say, you may look up someday and go, okay, now I've got enough in there, or I'm putting too much in that $600,000. I could be keeping the government's hands off of more of this money by maxing out a few of these other things and come back and max out max out everything. In my case, what I personally did in your situation— my income was different than yours— but I maxed out everything to keep the government's hands off of it and then piled up cash for after-tax investments. And I still do. I still use a simple brokerage S&P 500. I don't even have it in a brokerage account.

It's just an S&P. And I just throw cash in there. I get a big royalty check from a publisher and I just chunk cash over there. And when that account gets big enough, I go buy a piece of real estate with it. That's my personal strategy. It's not any fancier than that. And so, but I'm maxing out all the other stuff, even at 65 years old, just because I get so pissed off about how much of the government takes from me and I wanna get it all in any kind of tax-protected account I possibly can. But you could, you could limit that for a little while and get that $600,000 up to $2,000,000 and then start that plan.

Yeah, that's really the key there, which is kind of, it's hard not to contribute to some of those accounts because of the tax benefits.

But I also want to do these other things sooner than I'm going to be able to if it's all over in that other account.

Yeah. Yeah.

So maybe max out the ones with the best tax advantages and then move to the brokerage once you get that piece of property.

So if you put $75,000 away in your retirement, how much more could you throw at your after-tax brokerage account beyond the $75,000?

It depends on how much we want to have fun during the month.

I know, I know. How much you thinking?

I think it's really—

$5,000?

How much you thinking? A couple thousand at least.

Okay, all right, then that's not a big deal.

Deal.

Yeah, the big thing is going to be keeping it invested well, and it's going to double on your investments, but in 6 years, 7 years. All right, let's cut to the chase. It's easy to get discouraged about crazy house prices and interest rates, but when you have the right real estate agent to help you buy and sell the right way, you'll have confidence to make smart decisions. Ramsey Trusted Agents aren't just experts who guide you through buying or selling. They're people you can trust to have your back from the first call to closing. Housing Day. Find a Ramsey Trusted Agent near you at ramsaysolutions.com/agent. That's ramsaysolutions.com/agent. Thanks for joining us, America. So the net worth calculator is happening, George.

Oh yeah, coming up in a few episodes, I'm gonna be walking through the latest data on net worth by age, as sort of America's financial report card, if you will. And I want to know how our audience stacks up. And here's my bet: I bet you that our audience has a much higher average net worth than most of America. So here's the challenge: we're gonna include a link in the show notes of this episode to our Ramsey net worth calculator.

Net worth calculator.

Here, here it is. Go calculate your net worth. Let us know in the comments your age and your net worth, wherever you're watching. We're going to compile the comments and see how our audience stacks up against the data. So head to the show notes if you're on YouTube or podcast, take the net worth calculator and put it in the comments with your age. That'll be a fun—

it's all at ramsaysolutions.com, right?

That's how you find the calculator, and we'll link it directly in the show notes if you jump down there.

Okay, that's the easiest way. All right, yeah, because it's my scientific research deep in the internet there on the Ramsey page. There's Ramsey Solutions pages. So, um, yeah, net worth calculator is a good measure because that's, um, you know what, we need to teach people better to use that. We're actually working on adding a net worth calculator, automatically does it inside your EveryDollar budget. Oh, to track that where it tracks all your stuff and then constantly is updating, you know, like you hook it to your mutual fund accounts and you hook it to everything. It'll add up investments, real estate. You'd have to do your real estate by but you just open up your EveryDollar and you go, "Oh, my net worth went up." Like Warren Buffett says, stock price goes up on Berkshire Hathaway, his net worth goes up. All he's gotta do is just calculate the stock price. So same kind of thing. But the net worth is an actual measure of your financial health, as opposed to, say, the stupid-butt FICO score.

You got an 850 with negative net worth, you're not crushing it.

You're crushing paying the bank too much. Yeah. And so if you said, I actually have a net worth, a positive— I mean, most people have a negative net worth, by the way. You owe more than you're worth. If you got nothing in savings and debt, I've got $100,000 in student loan debt and I live in an apartment, you have a negative net worth. Okay, so that's 'Cause your net worth is what you own minus what you owe. Assets minus liabilities, which is the actual measure of financial health. If you want to set long-term goals, like 50-year goals, 30-year goals, and you say, "I want to be a millionaire," well, a millionaire is a net worth goal. That's your— what you own minus what you owe equals $1 million. If you owe nothing and you own $1 million worth of stuff, you are by definition a millionaire. And, and people like, well, I don't, I don't make— you don't make a million, it's not about how much you make. Like a millionaire, Dave, this is not a how much you make thing, this is how much you keep thing. A lot of people make $1 million and got nothing.

Welcome to sports world, right? Welcome to the NFL. The NFL. Okay, I got nothing, honey, but I made a lot of money. Or other people didn't make nothing and they saved all of it and they got millions of dollars. So your net worth is actually not your income, is actually your measure of financial health. It's one of the primary measures, and we've gotten away from it because the banks have taught us to get screwed by them. They've taught us thoroughly. What's in your wallet? Not your card. My money. That's my answer, Samuel L. Jackson. I'll tell you what's in my wallet. Had got nothing to do with you. Nothing to do with you. Actual Benjamin Franklin in my wallet, looking at me, smiling.

He's always—

that's what's in my wallet. So I mean, you know, you— but they've taught us over and over and over with these dadgum You know, more money is spent advertising Visa, MasterCard, and American Express, and Discover than almost any other product in the world.

That should tell you something.

Hundreds of millions of dollars a year spent advertising, teaching you that you can't live without those goobers.

You need the rewards, you need to up your score, you need more lines of credit. That's what's pitched.

Yeah, you're walking through the airport and they're yelling from the telly table, you can get airline miles, sign up here. Like a carny. It's like a carny. And it just like the carny, when you go over and pay your money, you don't get the stuffed rabbit because the game is rigged. Just like a carny, only it's Southwest Air is the carny, and they're standing in front of you while they're telling you to put your seatbelt on selling you a credit card from the aisle, and the stewardess is doing it. You don't think these people are good at what they do? They're better at what they do than you are at what you do, because you bought it, people. So the banks, their job is to sell you on believing that the FICO score is a measure— which, how do you get a FICO score? You borrow money. So that why? So that you can borrow money. So why? So you can borrow money. Is this a dog chasing its tail or what? It's a dog chasing his tail with NASCAR stickers all over it that look like banks. Just look, visualize your dog, put Bank of America, Fifth Third, put all the bank little stickers on your dog and then teach your dog to chase his tail.

Now you got a FICO score.

It's a great representation.

It's exactly what's going on right there. So you look like NASCAR, looks stupid. So don't do this.

I had a fun interaction on a Delta flight this stewardess walked up and he said, close your ears. And then she did the pitch for the credit card.

She recognized me and she went, I'm sorry, George, I have to do this, it's my job.

She apologized ahead of time.

I appreciate that. That's funny.

I went, la la la la la, I can't hear you.

George standing behind her going, no, don't do it, it's not worth it. Dive on the grenade, George.

I'm not a good salesperson for your credit card pitch.

But share Seriously, if we did on the Ramsey Show just a tiny bit as good as they do selling debt, about selling the net worth calculator, which is an actual measure of winning, because as your debt goes down and your savings, investments, and real estate values go up, you are winning. That's the definition of net worth. If we get this net worth calculator to be the thing rather than the FICO score, wow, we would have actually done something.

Your net worth is intangible, whereas the debt gets you the thing you want right now.

The net worth takes time to build, and the net worth requires that your emotions be mature. The FICO score requires that your emotions be immature.

They want you to be impulsive.

They want you to be a child, a baby child. I want it, I want it, I deserve it because I work so hard.

Hard. And they'll tell you that in the marketing.

They'll literally say, "You work so hard, you deserve it." And we say, "You work so hard, you deserve a break." McDonald's, "You deserve a break today," right?

Oh, that's right.

Yeah, that's good marketing. "You deserve a Big Mac." Is that all I deserve? Wow. I'm really not doing very well, Lord, if that's all I deserve is a Big Mac.

That's a dark future.

I think fine dining is what I deserve.

You deserve a steak, but settle for McMuffin today.

Settle for a McMuffin, get you a McRib. We're not sure what that rib came out of, but we're just saying it's a rib.

Whatever it is, it's not alive anymore. That's all we know.

If it ever was, it's a zombie rib. Yeah. So, oh my gosh, guys. So hey, net worth, net worth, net worth, net worth is how you measure success. And if someone says, well, a million dollars is not enough, it's not It's not enough for some of the things you want to do. A million dollars will not buy you a jet, not a good one anyway. A million dollars will not buy you 7 cars. People that have a jet and 7 cars are billionaires. They're not millionaires. A billion is a thousand million. If you have a thousand million and you spend 8 million of that on a jet, you're okay. If you have $8 million and you spend $8 million of that on a jet, that was dumb. Okay, so I mean, this is how the net worth works, right? I mean, you're looking at your ratios and you're going, okay, that makes sense. That's a million. No one, no one should have a million dollars. A millionaire is— net worth is a math thing. It's not a moral construct. It's not a spiritual discussion. I can have that argument with you too and teach you about capitalism, how it is more intimately moral and ethically moral than any other form of government or economy.

But that's not got anything to do with being a millionaire. It's just the byproduct. Millionaire is the byproduct of being free, having liberty to get up, leave the cave, kill something, and drag it home and not have it forcefully taken from you by your government. Oh wait, they do that. It's called income tax.

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 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. Jennifer is in Philadelphia. Hi Jennifer, how are you?

Hi, I'm great. How are you guys today?

Better than we deserve. What's up?

Excellent. So, um, I had a question. I'm a bit stuck right now. I am recently divorced. Um, my ex-husband and I, we own a home. It's probably worth at least $300,000. $125,000 remaining on the mortgage. He's offering to let me stay in the house and split the equity later, but I have some student loan debt and car debt. Um, if I sell and get out of the house, I feel like the equity would wipe out all of my debt and leave me with a decent emergency fund. So I'm just wondering, should I sell the house to get a clean break or try How old are you? I am 47.

You kids at home?

Um, one, 19, 19 years old.

Yes.

How long were y'all married?

We were married, um, 19 years.

Wow, I'm sorry. Yeah, it's a hard thing to go through.

It absolutely is.

Yes.

What do you make How much do you make? I make, so gross pay this next year, I'll be making a little over $100,000.

And you said you're 40 what? 47?

47, yes.

Okay.

What's the mortgage payment?

The mortgage payment right now is $1,890. And that's something that I've struggled with.

My answer is more emotional than it it is mathematical.

Uh-huh.

And I'm answering this as what would I do if I were in your shoes, okay? But it's the way— it's the way I function, so I'm not sure it applies to you. You'll have to decide that, okay? But for me, I think you make $100,000 a year, you're 100% free if you sell this house, 100% of this heartbreak heartbreak is in your rearview mirror. You're not walking into the same bedroom anymore. You're not walking into the same kitchen anymore.

Correct.

And you have zero debt and you make $100,000 a year. You turn the page and chapter 2 begins.

Okay.

I love the cleanliness of that and what that opens up your world as a world of possibilities. Abilities. Your life becomes a new adventure after this tragedy and this heartbreak and whatever, whatever words we want to use for the past year and a half that you've gone through this, or whatever it's taken to get this done. And, um, it's just been hell. And to put all of the burning embers of that trash fire, that dumpster fire, in the rearview mirror— for me, and I'm making 100 $100K and I'm completely free. I can do whatever I want. I like that more than I like this house.

Agreed. That is, that is my thoughts recently. It would be, that would be a great feeling to be debt-free and planning for the future and the next chapter.

Yeah, knowing what I know now, I'm going to turn the page and chapter 2 is going to be a chapter of possibility. Abilities, not burdened by anchors from the past.

Yes, I just—

I, I personally think I get great hope and joy out of that idea.

Uh-huh.

Yes, absolutely. And that is what I need right now. I need some— I need some joy and happiness back in my life again.

Yeah, it cleanses some of the heartache, and hope, hope replaces some of the rage. And, you know, I, you know, anytime you go through a life-trashing thing— I mean, I've not been through a divorce, but I've been through a bankruptcy, lost everything. And, you know, and what they say about bankruptcy is it's a fresh start. Well, only if you do it right, you know, and only if you clean off everything when you do it. And we did, and we had our fresh start. But man, it was, uh, you know, we're standing there in ashes for a fresh start. Yeah, you know, and, and in a sense, a little bit, that's what you're doing. But you got, you know, you got a— there's a lot of positives in chapter 2 already. Freedom, adventure, sun is out, there's $100,000 a year income. I don't, I don't have— you didn't tell me you got two 2-year-olds to deal with.

I mean, no, you know, no. Yes, I'm very, I'm very close.

Yeah, the 19-year-old can figure it out. Well, that's not— we're not that far off and not put them in the therapist's office too quickly anyway.

Yeah, yeah, yeah. I'm encouraging him to listen to you and your show and your team so that he makes responsible decisions, especially over the next few years of his life.

Yeah, that he doesn't use this family not turning out like he wanted it to be an excuse to do something dumb financially. That's a good idea on your part. Wait it way to go. So yeah, I don't know, George, I like this plan.

Well, I think should you sell the house just to pay off the debt? Probably not. But for the reasons you mentioned, I love. And then the byproduct of that is, man, I get to just get rid of this debt, have an emergency fund, probably for the first time in a long time.

And you can rebuild and buy a house pretty quick. And I'd personally rather live in a different house if it's me.

Yeah, my guess is if you chose again today, you'd probably choose a different home based on your season of life.

Um, I probably would. I'd want this a similar style, but maybe just, just downsize a bit would be perfect.

Yeah, yeah, yeah. I mean, I don't, I don't know if I was single if I would live where I live. I never thought about it much, but I guess I would. I don't know. A lot of the reasons we're in there is because of Sharon, so I don't know if Sharon— to think it's the reason we're in that particular neighborhood.

Sharon wanted to live in a society, Dave. You wanted live in the woods.

There you go.

You know, she won. She won. Her vote mattered a little more on that one.

Well, it's because that's how we've been married for 45 years. I told her if she leaves, I'm going with her.

So she took that to heart.

We're not doing anything else. Yeah, yeah, I love that. I think it's— there's a fun thing about having an encore. Guy talked about an encore career. You know, you lose your job in your 40s or 50s, and it was your big thing. And a lot of people end up with their encore career. And think about what an encore what an encore is. The curtain goes down, the audience is on their feet cheering, the curtain goes up, you take a bow, the curtain goes down, and then the curtain goes up and you play another set. That's the encore, right? And so that's what this is. It's the turning of a page, chapter 2, the curtain has gone up, it's your encore.

It's like the old ShamWow commercial, "But wait, there's more!" You always love that. We always want more.

—Ginzu knives. It's not over. Oh, what would America do without infomercials? I love it. QVC went bankrupt.

No way. They did. Dave, you should have been supporting them. Probably not. Yeah, can't see Dave calling in.

Mike Rowe, you know, Mike Rowe's career started on our buddy. He started on QVC. That's where he was doing— yeah, that's where he started. That's fantastic. They found out he had a great voice and he entered theater theater because of his voice. He does. He left QVC.

What I wouldn't give to have a voice that deep and rich, and a great singer too. He does like opera.

Oh yeah, big time, big time. It's fantastic. Yeah. And, and he went from theater to Dirty Jobs. Now figure that one out. But yeah, he's a Renaissance man. Well, that he is for sure. But, uh, and I love that idea. This chapter 2 thing is a good thing. Well, you can either treat it— life, the, the next— what's the next thing? And there's just all this freedom I'm going to come and adventure and I'm going to backpack Europe or something. I mean, I'm not, but—

Just kind of get prepared for the journey.

What is it you want to do?

Sisterhood of the Traveling Pants. What's your thing? Yeah. I love this concept of most people either treat it like a comma or a coma. You get to choose. Are you going to let this be—

That's a preach. Is that like a sermon? That sounds like a sermon. I might.

Maybe I stole that from a pastor. I don't know.

You might have stole that from Sunday morning sometime.

But I just love that idea.

That's a great line.

Are you gonna let this control you, keep you frozen, stuck, or are you gonna go, all right, there's a comma, the sentence is not over? Yeah, that thought might be, but it's a continuation here.

So I know when we filed bankruptcy, I did have that. I had a period of time where I just sat around and moaned and blamed everybody else. And you know, that's what you do when you do something stupid, you blame other people, right? And like, McDonald's serves hot coffee, who knew, you You know, it's like, I'm gonna sue you, you served me hot coffee. Well, you'd sue me if it was cold, you know, 'cause you're that guy. But yeah, but instead, you know, I sat around, blamed other people for my stupidity. And then I actually went to breakfast with a buddy of mine, and I was whining. And he said, you whine a lot. Ouch. He goes, you need to, you got a lot of lemons, you probably ought to make some lemonade and stop the whining. I went, oh, don't you love a good friend? Friend. Comma, not a coma.

You can use that one, Dave.

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Our scripture today is 2 Corinthians 8:11, "Now finish the work so that your eager willingness to do it may be matched by your completion of it according to your means." Marvin Phillips said, "The difference between try and triumph is just just a little oomph. I like that. Ah, the right insurance acts as a shield around your loved ones and your wallet if disaster strikes. Our free insurance coverage checkup helps you figure out if you have the right coverage by giving you a personalized action plan with clear next steps. Go to ramseysolutions.com/checkup and take the free coverage checkup and find out if you have the protection you need. Danielle is in Toledo. Hi, Danielle.

How are you? Great. Thanks for taking my call. Sure. What's up? Our— my question is our youngest child will be going to college in just over 2 years. So I've been reading about applying for financial aid, filling out the FAFSA, all of that stuff. And I keep coming across suggestions that it is better if the parents, and especially the child, use their tax. Cash. And I'm not comfortable with that. We've had our son take the Foundations course. We've gone through Financial Peace University. He's been saving up from his church job for college, and that goes against what we've taught him. And we feel he should pay for part of his college, but we also don't want to mess up our chance at financial aid.

Well, there's several types of financial aid. There's scholarships, obviously. Obviously, that are not based on financial need. They're based on academics, citizenship, other things, and we always suggest you go get as many of those as you can, and there's billions of dollars of those out there floating around, literally. Then we also— you know, there are grants that have to do with specific situations, nuances, demographics of your life or whatever, and grants are fine, there's nothing wrong with those. Financial aid that is needs-based, like a Pell Grant, is for poor people, and when a website or a person suggests that you spend all your money in order to qualify for welfare, that's like saying quit your job so you can get welfare. No, we're not doing that. Like you said, that runs against what you believe, and we're not doing than that. So that's the spirit in which these people are, you know, but financial aid is not all income or asset-based, but that that is, that is for poor people, and if you're not poor people, then don't spend your money or hide your money and act like you're poor people. So don't do that, you know, and then that solves your problem.

So what I would tell you to do is to begin to look at the cost of a particular college versus another college, that is a bigger difference number than anything you're going to find in FAFSA. Okay. And FAFSA really is a funnel to get people into student loan debt, is mainly what it does.

That won't be allowed.

There will be no student loans. Yeah, good.

And, you know, and if you qualify for a certain type of scholarship or grant, uh, fine, take it. There's nothing wrong with with that, but you're probably, you know, based on what you're telling me, you're probably not going to qualify for Pell Grants.

Yeah, I mean, it's interesting to see the actual formula. I was looking it up. Your parent income is the biggest factor, so spending down all of your savings and cash is a very small portion of the Pell Grant for the FAFSA formula. The Student Aid Index is what they call it. It's what they use for the formula. The parent assets is only 5.64%, so $10,000 in savings is only going to add $500 $100 to the parents' portion that is counted toward FAFSA. The student portion, the asset's flat 20%. So he's got— if he has $10,000 he has saved up, $2,000 would be factored into the student aid index. So it's not as big of a deal as people think, and the income matters far more.

Here's the thing. The truth is, is that we don't find people hardly ever that get through college using FAFSA. They've chosen a 4% loan. Let's say you're student loan loans. Now, you know, so FAFSA is really not the ticket. School choice. School choice is the ticket. Working while you're in school is the ticket. Applying for scholarships. And looking for scholarships is the ticket. Those are the 3 things, and we find people doing all 3 of those all the time. I mean, we had Christina Ellis that was with us for years here, is world-renowned on getting scholarships. She wrote a book called How I Got $500,000 in Scholarships. She ended up going to Vanderbilt and getting her MBA. An MBA paid for in full, and all of her undergrad too. And she was the daughter of a single mom who had no money. And so, you know, but it wasn't FAFSA. She went and applied. She made it her job in her junior and senior year of high school to apply for scholarships. Her mother made it her job. She wrote so many essays her fingers bled, you know, kind of thing. But she got half a million $1,000 worth.

Hello! That means free college anywhere you want to go. And so, and it's— the book was a bestseller, and she's still out there, and she's wonderful if you can find her information anywhere. So yeah, that— but that concept is there, and that's what I would lean on. And then I would lean on school choice and what mom and dad can contribute and so on. But I wouldn't— I wouldn't burn a lot of my brain calories trying to manipulate the FAFSA formula as the moral with this story.

Yeah, not worth it. You're better off taking that time to just save up and pay cash.

And for sure, don't spin down— oh God, man, people are so— you know what this is? It's the quintessential discussion between a scarcity mindset or an abundance mindset. A scarcity mindset says the government will have to take care of me because the little man can't get ahead. So therefore, why try? And therefore, I'm stuck. Or I— or spend it down, or move all your money out of your name so that you go into a Medicaid nursing home, and that way the Medicare— the nursing home doesn't steal your money. As if they stole your money! They provided a service. They don't steal money. They provided a service. They took care of you old people. That's what they were doing. And, you know, but they stole— they took all the nursing home— with the nursing home got paid. You go to a restaurant, you pay them for the You go to the car dealer, you're paying for a car. You go to the nursing home, they stole all my money. See, that's a scarcity mentality. Now go for an abundance mentality and going, I'm gonna stack cash and scholarships and a good inexpensive school and study something because knowledge is the key, not degrees and not where you graduated from.

Your knowledge is what moves you forward. Your degree is freaking worthless, and the only thing more worthless than your degree is where you went to school. That's so laughable, it's so stupid, I can't believe it. So choosing a school where you get quality knowledge to use in the marketplace and paying a reasonable fee for that, and, and your kid works while they're in school, And let me tell you what, working while you're in college is not child abuse. Most of us worked while we were in college. Shut up, you entitled brat. You're gonna work while you're in college. We don't have any money. We're broke, and we're not gonna take out welfare. You're gonna work. That's how this is gonna be. We're gonna go to school. Well, my friends are— I don't give a crap what your friends. My girlfriend— I really don't care what your girlfriend friend's doing, because she won't even be your girlfriend by the time you get there. George knows about this.

Yeah, that breakup is impending. I tell you from personal experience.

This is how a boy from Boston ends up in southern Mississippi. Yeah, that hurt.

Dave doesn't even know where I got my degree from, if you tell you. That's how, that's how little he cares.

I missed it. I missed it. No, I got it. I got it the other day. We were telling the story the other day. That's why I remembered it. Yeah, good. But it really, it's, it's Danielle. That's a Great question. Thank you for calling in with that, and thank you for being a good mom and thinking this through. And get that senior front and center on all this decision-making where they're emotionally bought into what they're gonna have to do to get through school. 54% of the people that start college finish. Wow. That means colleges are failures. If you get a 54 on a test, they give you an F. 54% of you that start college finish. Ever.

So then think about the ones that took on debt.

The last thing you want is an almost degree. That's a really bad degree. The almost degree, that's a really bad one because you got all the student loan debt to go with it. So, and an interesting thing, people who pay for their school and their parents are paying for their school have a higher degree of completion. You know why? Skin in the game, baby. Skin in the game. In Jesus' name. That puts this hour of the Ramsey Show in the books. We'll be back with you before you know it. In the meantime, remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus.