Transcript of Make Decisions Based on Facts, Not Fear

I'm Dave Ramsey. George Campbell, Ramsey personality number 1 best-selling author, is my co-host today. You can call in; the calls are live, and you are the reason we are here. The phone number is 888-825-5225. If you don't know, we're on the air from 1:00 to 4:00 Central Time every day, and have been for almost 40 years. And we're on 640 radio stations, and a whole bunch of those are live. And we're big time on YouTube, big time on Spotify, big time on podcasts.

You know, we don't have time to go out and find the weird. It just comes to us.

It comes to us en masse.

We don't have to cast calls here.

And we don't script it. We don't tell people what to say. You guys are entertaining enough without our help. So just come on.

It's a compliment.

Bring it on. We'll help you. Whatever your mess is, if you've screwed up something, we're welcome to it being a human being. If you've made mistakes with money, that makes you over 12. That's it. Everybody has. I've got a PhD in DUMB, and that qualifies me to do this show and to answer your question. Been there, done that, got all the T-shirts. So again, 888-825-5225. Jaden is with us in Boise, Idaho. Hi, Jaden. How are you?

Hi. Good, Dave. How are you?

Better than I deserve. What's up?

Well, I've got just kind of a general financial question, just because the money's getting pulled more directions than it can go. So I'll kind of give you our situation. When I was 28 and single, I saved up $100,000 to put towards building a house. I built a 3,000-square-foot house with plans. It's a two-bedroom house with plans to add on more bedrooms someday when I had a family. So now I'm 35.

A lot going on.

Yeah.

So do you have any debt other than the house?

We have no debt. Our cars are paid for. Our babies are paid off. We have no credit card debt.

You got emergency savings?

We have about a $20,000 emergency fund that we've saved. And the house is on a 2.5% interest rate, 30-year, and we've got about $209,000 left on it.

Okay. So your current job has a fuse burning. It's going to run out.

Yeah.

And.

That's kind of what I think.

And it's not the greatest job in the world. You're not paid like super-time.

I mean, I'm looking.

You didn't call me up making $500,000. You called me up making $50,000.

Yeah, yeah.

So what do you want? I think the biggest thing on if I'm in your shoes, the biggest thing I'm looking at is, what do I want to do? Not sit around and wait on them to retire. It's, what do I want to do with my life? What do I want to be doing when I'm 60? What do I want to be doing when I'm 55 that pays more than I'm getting paid now? And if that's get some farm equipment together and start a farm, and you can make $100,000 doing that, that's fine. But if you're going to make $40,000 doing that, that's not a dream. That's a nightmare.

Yeah. Yeah. It's hard to support a family on that.

I know. I know. So you know I think the income side of your equation is what I'm working on more than anything else. You've handled the rest of it. You've been very responsible and done a great job overall.

Okay.

How much is left every month right now once you cover all of your bills?

Are you saying after, like, putting into the Roth IRA and those types of things?

Are you putting in how much? What's the percentage you're putting in, a dollar amount?

I'm putting in $500,000 a month into our Roth. So I'm close to maximizing it. But my wife's pregnant, and we've got a baby to do. So I'm trying to save for that in case there's extra medical bills there. So I'm putting $500,000 a month, which I know isn't 15%, but it's about 10, so.

Right. Right. You're getting close. So again, I'm going to go back to you know let's pretend two things. Let's take the extremes, and that kind of wakes up my brain a little bit. Let's pretend you walked over there to the farm tomorrow, and they just said, "Hey, we're closing up. Friday's your last day." That's pretty extreme. That'd be like, "Oh, crap. What am I going to do?" Well, what are you going to do? And let's pretend this, that you could do anything you wanted to do. What would you do?

I mean, I'd like to farm. I'd love to raise my kids.

Can you make a good living doing that in your situation?

That's the big question. It's getting harder and harder to do in our area of the crops that we grow. And so that's I mean, that's the big question.

Farming is a business. It's a business with a big old heart, but it's a business. And so you know if I'm you, I'm going to run out a business pro forma, a business plan, that if I raise this many acres of this type of crop with this kind of equipment expense, I'm going to make $100,000 a year net profit, average. Some years better, some years worse, depending on the crop, obviously. But I want to have I'm going to aim at getting my income up and living my dream.

So in the meantime, as you try to get this business set up, you might find that you do something else in the agricultural space where you can get paid $60,000 while you try to build this thing on the side. Because what I don't want you to do is just leverage to the hilt trying to make it happen and buy all this farm equipment on debt when you're really not in a place to do it. So you can go slow. This doesn't have to be tomorrow, but let's aim to get that income up while being in this industry. And over time, I hope you get that dream where you're living on the farm and making $100,000. That's a great goal.

Yeah. I think there's something to aim at. But again, we have to you know the part about being a dad and a new dad is you get that reality shock, and it's like, I can't just do something that just because it feels good, it actually has to have math with it. I actually have to be able to make money to feed my family. That's goal one. Then feeding other people's family is goal two. And so I don't know. I don't know your world. I don't know what crops you're talking about and rotation. I have no idea what your profitability is. But that's what I'd be aiming at, starting a small business that makes me more money sooner rather than later.

Ruth is in New York City. Hi, Ruth. How are you?

I'm doing okay today. Thank you for taking my call, Dave.

My pleasure. How can we help?

So my husband recently passed away, like, five weeks ago.

Oh, my. I'm sorry.

Yeah.

How long were you guys married?

41 years.

Wow. What happened?

And I was actually his caregiver for 14 of them.

Ooh. So he's had health struggles for a while.

Yes, yes.

I'm so sorry.

And so now I'm navigating the transition as, like, my tax status is going to change because this is the last year I can be married filing jointly. I do have one my youngest child is 18, so she'll be going to college. So I believe I'll be able to be head of household this coming year.

Yes, ma'am.

And I'm worried because, like, the brackets still are not as good as they are when you're married filing jointly. And I have a lot of money in a traditional IRA. Even though I was basically a single parent, I only had one paycheck for the last 14 years, I was able to amass a little over $700,000 in traditional IRA. I have a Roth of $150,000. I have a brokerage statement. I have an HSA, a DAS checking.

No, no. They don't tax the whole $700,000 every year. They're only going to tax the amount you pull out of the traditional each year.

Right. So how much should I be pulling out? Like, should I be taking out the amount till the next tax?

What do you need to live?

Like, $100,000.

Okay. And you got the $150,000 in a Roth. Okay. And you have other income coming in other than these two lump sums.

Well, I'm working still, yes.

Okay. So how much do you make?

About $250,000.

Okay. So you don't need any of this money today?

No.

Okay. So that's the first thing. That's good news. Because our standard advice, and it pretty much always works, is don't make decisions, big decisions, right in the middle of the tears. Give yourself a little time to cry.

Yeah.

You've been holding everything together, one hand on one thing, one hand on another, taking care of him, running the household, making $250,000 a year for 14 years as his health has apparently deteriorated. And now after 41 years, you know you're best friends in heaven. And so if I'm you, I'm crying a lot.

Yeah, I am.

Yeah. I mean, it's because it's like a breath of air. It's just crazy. And so don't make big decisions in the middle of this. I would do nothing for a while, like, six months or a year. Nothing.

Right. But even though.

I'll come back to it. I'll come back to it. But I just want you to breathe. I want you to breathe.

You want to generalize to breathe. Okay, fine.

Okay. Yeah. And so I don't want you to take this advice and go do it tomorrow. Please. It's a bad idea. It's a bad idea. You'll regret it. And you'll be mad at me later, and it won't be my fault. It'll be yours. So just take your time.

I'm very mad at Uncle Dave.

Oh, I know. But you're an overachiever. I can tell by talking to you. You get things done, and you just go. And it's one of your ways of dealing with all this. So I want you to just ride this thing out a little bit. But now, we've established the ground rules. Now, then, how old are you?

63.

Okay. At 75, George? RMDs?

Is it now 75?

Yeah. I think they moved it to 75.

Yeah, for my age. Yeah, I looked that up.

Yeah. Okay. So 70, 75. So you've got 12, 13 years before you have required minimum distributions. The tax bracket thing doesn't bother me a bit. You're already maxed on the tax bracket at $250,000 before we do anything with this. So there's nothing you can do to cheat the tax bracket. You're just slammed. And so as long as you're making $250,000, anything you pull out is going to be taxed at your tax rate, period.

Right.

Because you've maxed everything out. And so the advantage to moving everything out is that you don't have RMDs later. And of course, from this point forward, it would grow tax-free. So one scenario, an extreme scenario, would be if you just pulled it all out at once. Okay? The taxes would be $210,000, $220,000 bucks, probably. And so you'd have $500,000. Okay?

Right. I'll follow your plan.

Yeah. So that's the extreme. And if you want to do it a little bit slower, you know I'm going to do a third, a third, a third over three years. If you're still making $250,000, it's not going to change the tax numbers, I don't think. You can get some professional tax advice to be sure. But what are you thinking, George?

Well, either way, like Dave's saying, if you wait a long time to do this, then the tax hit's going to be even bigger. So there's just a balance.

Because the amount's bigger.

So we're trying to find a sweet spot with your tax brackets and how much you're going to pay in taxes to at least mitigate some of the tax damage. But either way, on some end, you're going to be paying some big taxes.

I would be tempted to do it all at once. But I'm not I can't make a real solid case for that, except that every year you wait, you have more in there that is taxable. So we're making the problem bigger the longer we wait. And that's what bothers me because I just can't stand taxes. And so number one, I'm going to wait a year before I do anything. Number two, I'm either going to do it all at once or do it over about three years so that you don't ever have RMDs and so that when you leave this as an inheritance, whoever your beneficiary is on it, they'll have no income tax on it whatsoever.

Okay. What about the impact on ARMA?

For Medicare?

Yeah.

When would you be taking that? At 65?

Yeah.

Well, they're going to look back two years at your income. So I wouldn't artificially.

Right.

Yeah. So I wouldn't artificially try to lower your income. It's just going to be it is what it is for a couple of years until you're actually retired and your income goes down.

I kind of thinking if you're at $250,000, you're already hammered there too, aren't you?

Yeah, probably.

If you make $250,000 up to that, you're going to.

You're going to pay higher premiums.

The other thing is this. You can just buy health insurance if you've got a couple million dollars. You can just go buy some health insurance.

Right. Like, if I'm continuing at work.

Well, I mean, even if you just went in the marketplace and bought health insurance, it might be cheaper than doing the wrong thing with $700,000 bucks to try to get free government health care.

Right, right.

But as long as you have it through your employer, right, you're good to go there?

Right. But what about the money that let's say I spend $500,000 on taxes right now to make this change.

You wouldn't.

Not right now, next year.

You wouldn't.

Then what if that $500,000 were to just I would leave it in the market, and I would leave it in traditional, and then it would keep on appreciating in value.

Yeah. Yeah. It's not $500,000 in taxes. You'd have about $500,000 left over if you had $200,000 in taxes. But anyway.

That's all it would be was $200,000 in taxes?

Probably. I mean, you're about 30% is what I'm running. Yeah. $220,000. $220,000, $230,000. Again, you need to sit down with somebody.

Well, I'd have to figure out where to get that money from.

Well, you would take it out of that. Take $700,000 out, pay taxes, and what's left after taxes would be around $500,000. That's what I was saying. And that's a sticky thing. If you have any money that's not in this that you can throw at the taxes, instead of using this money for taxes, I wouldn't use the Roth money, but anything else. If you got another $200,000 laying somewhere else in a brokerage account, use that to pay the taxes and roll the whole thing to a Roth.

Okay.

It's a small number, and it's just an emotional thing. But it's not a big number. And number two, go slow. Give yourself some room to breathe. You've been fighting this battle a long time, kiddo. And I want you to just kind of relax a little bit and enjoy the ride. Nothing you do wrong, nothing you do here is going to be terrible. You've got $1,000,000. Way to go.

Well, if you don't have $1,000,000 yet and you're working the baby steps, you're getting out of debt, you got your $1,000 saved, you're paying off your debts or whatever, then we teach you to not see the inside of a restaurant unless you're working there. Work extra jobs, all of them, all the time because you're in that ditch and you need to get out. And until you get your emergency fund built, that's what we do. It's game long, baby. Work, work, work, work, work. And you have no life, and don't tell me otherwise. Because right now you got no life.

Seen some things.

Oh, absolutely. Matthew is in Atlanta. Hey, Matthew. How are you?

Hey. I'm good, Dave. How are you?

Better than I deserve. What's up?

Excuse me. I just had a question. And I was kind of looking for some advice on what to do as far as my career and finances go. Just for some context, I've listened to you and watched you on YouTube for a long time. I haven't done really what I was supposed to do as far as setting my family up correctly. But basically, where I'm at right now is I was working a pretty good career.

Matthew, you with us?

Yeah, I'm here. I'm sorry. So I was working a pretty good career and got injured on the job. And.

What was your career, Matthew?

I was in line work. I was installing fiber optic cables.

Yeah. What happened?

So I was working up on the side of the house and was on a ladder, got sworn by some wasp and fell off and landed on some big rocks and broke my back.

Ooh. Wow.

So. And that's actually the second time in my life that I've had a pretty serious back injury. When I was a teenager, I had a car accident and crushed my T12 vertebra. So it's just a couple things that've kind of stacked up.

Yeah, I guess so, brother. I'm sorry. Wow. How old are you?

I just turned 28.

When did this happen? How long ago?

Well, so it happened in 2024, at the end of 2024. And then I went on workers' compensation and kind of got drugged through the ringer with the insurance company and everything and ended up getting pretty screwed over with that.

So what's the status now for your income? Because it's been two years. How have you been getting by?

Yeah. So when I was on workers' comp, obviously, I was getting paid even though it wasn't they were kind of screwing me in that area. But anyway.

So did that end?

Yes, sir. It ended back in July of this year. And so with my injury, I'm not able to return to that line of work and do what I was doing. So I've applied at so many different places and really, really been looking and.

How mobile are you now? What's the state of your health?

So I'm wearing a back brace 24/7. I had recommended excuse me, three doctors had recommended that I get a back surgery prior to being out of workers' comp. And workers' comp would just never pay for it. And so when we settled, I got a little bit of a settlement. Not much. It was like 30 I came after attorney got paid and everything, I walked away with like 35,000 or something like that.

How much of that is left?

$6,000.

So you got 6 grand to your name.

Are you married, did you say?

Yes, sir. I'm married.

Does she work outside the home?

Yes, sir. She's a teacher right now. She's got her master's degree and all that. And so she's.

What does she make?

She brings in every month she gets paid once a month, she brings in about $3,100. She actually just got a little bit of a bump because she completed her master's.

Good. Okay, dude. So what's your level of pain?

So it kind of varies depending on what I do. Worst-case scenario, it's been where I couldn't even hardly move. I couldn't walk. My legs would give out up under me. But after I got out of workers' comp, I actually used about $5,000 of that to go to a there was a specialist here near where I live that they offered decompression treatments to kind of help rejuvenate and heal the spine and do things like that.

So if physical work is off the table, would this be more administrative work you could do behind the scenes? What kind of jobs have you been applying for?

Yeah. Honestly, I've been applying at everything. I've applied at restaurants just to serve because when I was like early 20s, I had been a server before. I've applied at so many different things.

That feels pretty physically demanding based on what you told us. But your wife is bringing in 3,100. What are your monthly bills? Do you guys have debt payments on top of your normal expenses?

Yes, sir.

How much debt?

Like I said, so outside of the home, we have about I believe it's about 80,000 outside of the home.

On what?

Yeah. Well, and I know one of the things is a truck. And we owe 23,000 on it. And I know I've talked to her, talked to my wife so many times, telling her that I need to sell it and all this. But I just don't understand how that works as far as like, okay, when we sell it, I don't have any equity on it or anything. So I won't get anything out of it. It'll just kind of be paid off.

Yeah, you'll need money outside of that to get you something else to get from A to B, but.

Right.

If you can even sell for 23, it frees up how much of a payment? Hundreds of dollars, right?

Yes, sir. It's like a $372 payment.

Yeah. So Matthew, what we're going to do is we're going to hook you up with one of our Ramsey counselors to walk with you through this as our gift. What's got to happen is you got to narrow your job search down to something you can actually do. You can't wait tables in your condition. It's not going to work. Your back's going to give out. So you're going to have to say, "What's my new career going to be? And what kind of keyboard warrior am I going to be? What am I going to use my mind for instead of my body? And then how do I get tooled up to make some money doing that?"

If you want to participate in this show, we are on the air live Monday through Friday from 1:00 to 4:00 Central Time. The phone number is 888-825-5225. Sarah's in Oklahoma City. Hi, Sarah. How are you?

Hi. Great. And how are you doing?

Better than I deserve. What's up?

Great. Thanks for taking my call.

Sure.

So my husband has been in the military for 17 years, and I am a stay-at-home mom. We've got five kids. We've been following your advice and been completely debt-free for 15 years. We drive older cars and always live within our means. We have never purchased a home. And we just showed up to our new base. And so we move every two to three years with the military. And we've always rented on base. So with the military, we get a housing allotment every month that's tax-free.

Excellent.

And so we can live on base, and that is utilities included. So if we move off base, we can keep that allowance to cover our own housing expenses, whatever we decide to do with it. There's very few rentals nearby so we would need to buy. So we have three options. We can stay on base and rent like we always have and surrender our housing allowance to the base. We could buy a house with roughly a $450,000 mortgage.

We've been working with the military for, gosh, 35 years, I guess. And your scenario is very standard. The problem is, number one, you do not buy a house and keep it as a rental every time you move to a different base because you're going to have rentals scattered all over the United States. And that's a really bad way to become a landlord.

Okay.

And just in order to have a place to live. So we're going to take that one off the table. Bad idea. If you're going to buy, here's the formula. Okay? Talk to the real estate agent in the area, and you can go to ramseysolutions.com and click on Ramsey Trusted for one of the agents, the high-protein agents we use in your area. Most of the time, it doesn't work to buy. And here's why. The house has to do two things for it to be a good buy since we're not going to keep it. It has to go up in value enough that you don't lose money as a result of having bought it with commissions and everything off the sale, right?

Okay.

So I want to know how fast homes are going up in that neighborhood currently, not in 2020, today.

Okay.

And generally speaking, house prices are not going up right now. They're pretty much sitting standard. So most of the time, you're not going to find that to work. If it goes up, let's say it goes up 10% a year, in three years, that'd be 30%, right? Then you could sell it, make a profit, pay some expenses, and still make a profit. That'd be okay. Second number you're looking for is DOM, average days on the market.

Okay.

When someone in that neighborhood, not across town, not with a piece of ground, not different house prices, that neighborhood puts a house up for sale, how fast does it sell? If it's 27 days, okay. And if it's going up 30%, going to go up 10% a year, okay, we can sell it quick and we can make a profit, then that's a buy.

Great. Okay.

You're not going to find that where you are right now. Okay? But if it says 275 days, it's going to take you nine months to sell it. You're going to be somewhere else and being paying payments on this thing. Or your money's going to be trapped from your brokerage account. So I don't think it's going to be a great idea to buy. I think you're going to want to rent as cheap as you can rent and put as much money away for a house when you leave the military as you can get ready to have a house fund, be paying into a house fund, and create a chunk of money like your brokerage account is.

Okay.

How much is in the brokerage account?

250.

We've got total brokerage about 300,000.

Okay. And you can keep adding to that. And how long do you think he'll continue to be in the military?

7 to 10 years.

Okay. So now we kind of know. If we keep investing for 7 or 10 years at the current rate, here's how much money we might have in that brokerage account. And that kind of gives you a home fund.

But you got $2,700 to work with to go look for a rental.

Okay. Yep.

I'm going to go look for a rental because I don't think in Oklahoma City you're going to see heavy appreciation rates right now and short days on the market right now. You might find it. I might be wrong. But it's going to be a pretty popular neighborhood that's going up in value and sells easily. And then you don't get trapped when they move you because we're 100% sure they're going to move you.

Yep. Happens every two to three years.

Exactly. So I would probably rent. But let's say you're in the Navy and you're in San Diego and you can afford to buy. Well, you're probably going to see increases in value. And you're probably going to see short days on the market in fairly normal real estate markets. Right now, the real estate market's kind of just kind of sitting in the doldrums a little bit. It's not really going up in value. It's not really exciting. It's not going down in value. It's not crazy, but it's just kind of sitting there looking at us. Just looking at us. And so that's the thing.

It's almost half are having to slash it to move it.

I don't think I used the word slash. It said price cut.

Oh, you know.

We don't know how far they went down.

5,000 off.

But they went down. But let's not create clickbait headlines. But the Oklahoma market, Oklahoma City market is a good market. I would buy a house there in a heartbeat, especially when you consider the median house price is $259,000. That's right in the middle of the market.

What's great is if you're in the position to actually buy a house, you've saved up that down payment. Now's the time you can negotiate.

This would be the time to buy.

You don't have nine people knocking on the door day one.

A city like that right there, that's a great place to buy and a great price range and everything. But 450 is not the normal there. 450 is almost double the average house price. So let's deal with the actual reality, the actual numbers, not what our emotions are telling us.

Not all homes are half a million or a million dollars. Now, if you look at Bay Area or New York City, sure. But in generally, not everyone lives there. Huge population.

So an actual starter home in Oklahoma City would be like under 200K. Wow. See, people don't talk about that anymore. Ooh, I've been priced out. No, you haven't. You just don't live in Oklahoma City. And so that's pretty cool, actually. That's a sweet situation. And you're right, George. If we have that many houses with price cuts of some amount, we don't know, then you are in a buyer's market.

Under two months, that's doable. But if it's six months, that changes my opinion.

Yeah. I mean, when 1978 got in the real estate business, we always took 90-day listings because it took on average 90 days to sell a house. 53 days right now in Oklahoma City. Not exactly a dead market. If you've ever thought, "I don't even know where to start with life insurance," you're not alone.

Welcome back to the Ramsey Show in the Fairways Credit Union studio. If you want to be a caller on this show, it's pretty simple. Dial this number, 888-825-5225. George Campbell, Ramsey personality, co-host of Smart Money Happy Hour, and number one best-selling author is my co-host today, Rachel's in Atlanta, Georgia. Hi, Rachel. How are you?

I'm good. How are you, Dave?

Better than I deserve. What's up?

I have been having a lot of internal back and forth about taking some time off of work. I'm just not certain that it's a wise financial decision for my family.

Okay. Why would you be taking time off from work?

I think it's a combination of feeling a little bit of burnout and a little bit of lack of passion for what I'm doing. So I think obtrusively wants to regroup and maybe take the time to mentally just figure out what I'm doing, what the purpose is behind it, and what do I want to do moving forward.

What do you do?

I'm in operations and some administrative work as well.

What do you make?

With bonus potential, it could be up to 150.

What's your husband make?

My husband, with his bonus, at the minimum, is sitting at about 225 now.

Okay. Well, mathematically, it's pretty simple. Can you live on 225?

Yes, we can. I think my hesitation is not necessarily can we live off of it, but what am I doing to set us back for a comfortable and hopefully potential early retirement.

Well, you can become multimillionaires on $225,000 in Atlanta, Georgia.

Yeah.

And you sit on your butt.

Everything feels overwhelming.

The math is that. The math says you can sit on your butt and he could go, "And with 225, you guys can be millionaires." Now, but is that good for Rachel? I don't think so. Because I got a feeling Rachel just needs to reset. And that doesn't necessarily mean from hero to zero.

Yeah.

So why don't we reset? How much PTO do you have?

Definitely not enough to.

How much PTO do you have?

I think, well, I guess when it resets the next calendar year, it's about three weeks.

Okay. And how many children do you have?

Two children.

What age?

And we generally high school and middle. And we rely on PTO pretty heavily. We do enjoy to travel. That's one of our core things. It's something that's really important and meaningful to us. And our core memories are kind of intertwined into that with our children.

Yeah, it doesn't really work if mom hits the wall and has a nervous breakdown. I don't want that to be the core memory either. So here's what I'm thinking. Instead of going I mean, George, jump in here. But I'd like for you to take a week off with nobody and go somewhere by yourself. Go to a monastery and spend the week in prayer without saying a word. Go to the mountains and rent a cabin and spend the week writing and thinking and taking assessments on your personality style and just reset and think, "What do I want to do with the rest of my life?"

Okay.

Your screen here says a year. That's a pretty big sabbatical to eat, pray, love. I think you can figure this out in a more sustainable amount of time than taking 365 days. And this might mean you go to counseling and get to the root of the burnout. Because I'm wondering, is it the job or is it something within Rachel? And it really was never the job.

I think.

Because I don't want you to go from this job to another job only to realize you're feeling the same exact way.

Yeah. I think it's a combination. I think there's a piece of that. And I think that we work really hard and we live relatively below our means. And we built what we have in just about under a decade. And so there's a piece of me that's just like, "We've done so much. And I feel like we've come so far. Do I deserve a break?"

Yeah. Yes, but you might be defining break wrong.

Okay.

It could be that you deserve to start your own business that you get great joy from. It could be that you change careers and move into something that gives you all kinds of fulfillment that you don't have where you are. Break doesn't mean sit on your butt necessarily. You know the old saying, "If you have a job you love, every day is a vacation"?

You're right.

Yeah. And you're way past that. You've just been hustling and grinding and are out of breath. I'm just saying, move off the track for a minute, get your breath, then let your mind clear up, and you'll make better decisions than a cold turkey quit or somehow walking through Europe by yourself for a year is going to solve this. Because it's not. Because it's inside of you. You're going to go with you wherever you go.

Okay.

You mentioned this idea of retiring early as a goal. What's behind that?

Yeah. That's just one of our goals. That's financially what we're working towards.

I mean, technically, you could retire now if you wanted to. You said you don't need the money. You can cover all the bills and then some with 225.

Just me. No. Yeah, but I don't yeah. I think the goal is for us to retire together at some point. That's what I'm trying to not take away from is selfishly making a decision that then my partner.

Earl Nightingale used to say that the problem with hitting goals is not what we're willing to do to get to the goal. It's what we're not willing to give up to get to the goal. You've listed like three or four different things in this conversation that sound like to me you think they're non-negotiables, like memories and retiring early and, and, and, and, and, and, and, and, and all of that has got you trapped to the point that you're talking about taking an entire year off, which means you're quitting your job. And so it might just be you adjust your job to where you can breathe a little better or you take a different career path or I don't care.

It's different.

Yeah. And so I don't want that for you. I think financially, y'all are fine. You can live on 225,000. And you just have to decide we're not going to make as many memories and we're not going to do some of the stuff. But you can live on 225 and you can make a lot of money.

Might retire a couple of years later than you had in your mind, but okay.

He had in his mind because you're not. You're retired now. But I mean, if you just quit cold, you mathematically can do it as the answer. But I just kind of don't think that's what you I don't think that's who you are. I think you want to do something. You've just been doing the wrong thing at the wrong pace.

We can help you with the soul search. We'll send you a copy of Find the Work You're Wired to Do. It comes with a Get Clear Career Assessment. You can do that without quitting your job. You can do that this weekend and sit down with your husband and start dreaming a little bit. And that might get you on the path.

Maybe you and your husband take a dream vacation for four days and plant the kids with the grandpa, grandma, like it happens to me sometimes. I love it. And.

Your face doesn't show it.

You spend that weekend dreaming. Okay, let's reset this dream. We've been living on less we make. We've been plowing the field. Let's reset the dream. What's the new dream look like?

It's like having one of us with you all the time. Start every dollar for free. Download it in the App Store or Google Play. Jamal is with us in New Orleans. Hey, Jamal, what's up?

All right, Jamal. Quick question, brother. I appreciate you for you taking the time. I ran across a million dollars. I was in an injury working at oil field. I took 500,000, put it in the S&P 500. And I put another 100,000 in the money market. I bought me a little small house about 30,000. When I get through fixing it up, it'll probably be worth 150. Took some looked out for my daughter from school. You know, UL, that's a expensive college. I got a little car for her. And looked out for mom and my son.

So you can live off your veteran's disability?

Yes, sir.

Good for you. That's a pretty good start, Jamal. That was a really good start. I've heard people do a lot of dumb things when they get this kind of money. And you were very conservative and very smart to get started.

Yeah. So you invested half. You got 100K just in savings for emergencies and other things. You bought yourself a cash car.

It's in the money market.

Okay. How much is left over, if anything? Or is that all allocated?

Close to allocated. Probably about 25,000 I got put up for remodeling my house, fixing it up. I do a little construction on the side. I got a little small, I think it's called handyman business, but I do tile work, stuff like that. I do a little work every time I get a little bit, a little part-time.

So today, there's a half a million in S&P. And how much is in the money market today?

100,000.

100,000.

And no debt anywhere?

No debt.

That's sick.

I guess. I got a little small truck about.

Anything go for you.

You will continue to live on your how old are you?

I'm 41.

Okay. If you continue to live on your disability and don't take any of the half a million out, and you leave the 100,000 there for emergencies and so forth and living your life.

It's about a year now. Right at about a year in February.

Yeah. So that 500,000 is going to double about every six or seven years. So when you're 48, it'll be a million. When you're 55, it'll be 2 million. When you're 62, it'll be 4 million. And when you're 69, it's going to be 8 million if you just don't touch it.

Okay.

Sitting where it's sitting.

If I add anything to it?

If you don't add anything to it and don't touch it. That's just your math to tell you how smart you are. Now, can you do better? Yeah, probably, but not a lot. This is not a bad plan. It's not a horrible plan. What I would tell you is this. Managing money is like anything else that when you were smart because you only put it in something simple that you understood. And that was very wise. You didn't try to get too fancy, but you also didn't bury it in a coffee can in the backyard.

Yes, sir.

So I would just challenge you to do that just so you continue to learn because in anything we're working on that matters, our marriage, our parenting, our physical bodies, our spiritual walk, our money, we need to continually be learning and getting better.

And if you just do that, plus what you're doing now, which is living on less than you make, continuing to build wealth for the future, living on that disability, you're going to be in great shape. I mean, I just crunched the numbers here. Half a million bucks, if he just adds his 500 bucks to it a month for 20 years at 11% average rate of return, that's almost 5 million bucks right there.

That's 61.

It's pretty impressive.

At age 61, yeah.

So if you continue that on, it's just going to keep compounding. So you're doing great. If you can just learn to not touch that and act like that money doesn't exist, future you will be very thankful.

And that little calculator that George just used, by the way, is on our website.

We'll drop a link.

You were looking at it on yeah, we'll drop a link to it. If you're watching on YouTube or Spotify, you can jump in there and use that calculator to figure out this stuff anytime. The calculator I was using is in my brain, and here's the number, okay? Here's an interesting math riddle. It doesn't work perfectly, but it works pretty close. It's called the rule of 72s. If you take an interest rate and divide it into the number 72, it tells you how long it takes your money, a lump sum adding nothing to it, to double.

Here's a good example right here on the calculator. 500 grand just left alone for 21 years. So that's three buckets. 7, 7, 7. Look at that. 4 million dollars at a 10% rate of return. So 500 into a million. Seven years later, it's 2 million. Seven years later, it's 4 million. That's the basic math.

That's how it works. And so just take your interest rate and divide it into that. Tells you how many years it takes for it to double. That's what I was doing. George was a little a lot, a thousand times more sophisticated over here with the Ramsey stuff.

I just like to double-check, Dave. Keep him honest over here.

Make sure his math is not off.

You're like a magician who showed people how the trick works. Now they're less impressed. How did Dave do it?

How did he do that so fast?

He's a prodigy.

Not at all.

He's goodwill hunting over here.

Not even close. Not even well, maybe hunting, but not goodwill. All right, there we go. So hey, the good news is so let me tell you what Jamal did that was smart. He was real careful to not blow the money, number one. Go buy six new cars and mama a new $500,000 house. And then the money's just gone. He was number one, brilliant. And most people don't have the self-restraint to do that. He's a disabled veteran, so he's probably had some discipline in the military to learn some of these things.

And even getting a reasonable car, a reasonable home.

I mean, $30,000? That's pretty reasonable. For the house, not the car. Wow.

Pretty wild.

Today's question comes from Kurt in Wisconsin. I'm 31 years old and contribute to both a Roth 401(k) and Roth IRA. But I'm confused on how I use those funds when I retire. When you say to live off the interest earned, does that mean we should withdraw only the dividends or interest paid to the fund without selling the funds that have been acquired? Or do we withdraw a certain percent of the whole balance every month to use toward living expenses? Great question from Kurt. So this is really about we talk about accumulation, how to build wealth, but when it comes time to decumulate and start using it, what is the best strategy?

Yeah. So here's the thing, Kurt. If you say, say, for instance, you had a million dollars, which you're probably going to have at the rate you're going with what you're talking about. We don't know your numbers, but you're starting at 31. I'd be shocked if you don't reach at least a million dollars by the time you're at retirement age, okay? So let's say you got a million dollars. And let's say it's invested in good growth stock mutual funds that are averaging what the S&P is averaging of 12, 12.5%. This year, it's 12.5% to date, okay? If it's making 12% and you pull off less than 12%, it will always be there.

And you stay invested wisely. Because if you go to 60% bonds, that's going to really hurt your returns.

And that's not what we teach. I don't teach to do that. I never have taught to do that. And so if you're going to put the money in money markets and make 3%, you can't pull off 8% without destroying the nest egg. You're going to kill the goose that's laying the golden eggs. So let the goose stay healthy. Live off only the eggs. That's the idea. And if you've got it big enough that you can live off the eggs only, it'll run in perpetuation.

It'll just have even more when you pass and someone's going to inherit that, which is cool. But the technical thing here is you are selling off shares to create that money.

You're just telling them how much money you want them to send you. Send me 8% a year, and that's $80,000 bucks. So send me $80,000 bucks a year on a monthly basis or a biweekly basis or whatever. Or $60,000 bucks or whatever it is you want to live on. I don't care.

Most people asking this question will never have a problem running out of money in retirement. That's sort of the catch-22.

Yeah. That's where all the theories break down on the internet. All these stupid people on TikTok like, "You're not going to have enough money." Well, your theory breaks down because you got it invested poorly because you believed in this mythology called asset allocation. And you move it all into bonds when you turn 65, which is dumber than hell. But people do it all the time. And so because their stupid financial advisor told them to do that, because he believed the stupid financial advisor that trained him. And instead of actually using your own brain and thinking about this, I'm 66.

What counts it?

Other than that, I don't have any.

No bars.

And I have real estate that I paid cash for, and I have good growth stock-type mutual funds. Period. And guess how much of it I'm touching? None of it. I still make a lot of money. I don't need to touch any of it. And you guys are the same way. That's what really happens in the real world, George. To your point, all these theories break down when you actually put them into the real world and people start doing real-world stuff. So you've been investing from age 30 to age 65, so what, 34 years in good growth stock mutual funds, and you suddenly change that.

And most people, the studies are actually showing that most people actually end up with more than they started with from retirement to when they pass.

Really?

So that's the fascinating part. Is that 2 million usually ends up being 5 or 6?

You know, and here's the number on that. There's a curve on that. I'll bet you. I'm going to jump in with a set of assumptions. Watch out. Careful.

Okay. I like it.

But I mean, if you got 300 grand and you're trying to live off the income of that, you're not going to end up with more later. You're probably going to end up chipping away at that goose, not just the eggs. Because you're only going to be making about 20 grand off that thing, right? But if you got up close to a million or more, you're going to be able to live off of what it's producing, and then it will continue to grow. So the rich get richer and the poor get poorer.

That's a good quote, Dave. Write that down.

Somebody should quote me on that. I mean, seriously. But that's it. You keep doing the stuff that got you rich, and it makes you richer. How does this work?

Dance with the one that brought you.

This is not hard. So yeah, I live on less than I make. I drive used cars. And I don't. But I mean, dance with the one that got you. What got you here? What are the principles? I stay out of debt. I'm continually generous. I'm tied to my local church. So on. I mean, what are the money principles that got you here? Then keep doing them. Don't make it hard. Everybody thinks when they get a little bit of money, they need to get fancy. Don't get fancy. That's what I loved about our caller earlier from New Orleans, Nollins, right?

Hey. Great to be talking to you guys. I love what you guys do. And thank you for taking my call.

Sure. How can we help?

All right. I have $84,000 in consumer debt. Six of it is for student loans. Three of it is to Verizon. And 75 is on a vehicle.

Good Lord.

Now, yeah, I know. Now, on top of the 75, I'm upside down on that 30.

What?

And if I wanted to get rid of it, yeah.

What? I mean, did you roll Stupid into this deal?

Yep.

So this is the second round of Stupid?

Yeah.

Wow. What did you buy? What kind of car is this?

It's a 2025 Ford Explorer ST.

Jeez, you kill me. Okay. So you're telling me you owe 75 on it and the Stupid thing's worth 35 or 40?

45, yeah.

Who says?

45 is what I think I can get for it.

Why do you think that? Where'd you get that number?

KBB.

On dealer trade-in or retail?

That was not trade-in. It was a sale.

Yeah, you need to get rid of that car, man. God, I might have got you a $3,000 paid-for car. You're killing me.

You're going to have to come up with a difference. Either save it up.

Yeah. Borrow it.

Get it from your credit union. But that thing is crushing you.

Yeah. You got to get that thing out of the driveway. There's no excuse for keeping that three more days. If you're in a really bad debt situation, I know how scary that is.

Drew is in Auburn, Alabama. Hi, Drew. How are you?

Pretty good. Thanks for taking my call, Dave. I'm hoping to get some insight from you. I moved from Detroit to Auburn, Alabama, and in doing so, I basically cut my income almost in half. And I'd like to upgrade housing next year. And the only way I can do that is if I cut back on my 401(k) contributions. And I wanted to get some thoughts on that.

What was your income?

When I was in Detroit, I was around 125 to 150. And in Auburn, I'm going to be somewhere in the mid-70s.

Okay. Was this for work? What was the cause of the move?

Yes, for work. I had an opportunity that came up, and so I was like, you know what? I'm going to try it.

Okay. Are you married?

I am not.

Okay. Single? Making somewhere in the 70s? And how much do you currently have saved?

In my savings, I have 40. And in my IRA and my 401(k), I have around 600.

All right. So you have 40K. Is that outside of your emergency fund?

That's just savings in general.

Total savings is 40. Okay.

Yes.

And are you saying you'd need to pause investing just to save the down payment, or would you have to pause investing or slow down investing in perpetuity to make this work?

Well, I'm 50, and I've been doing the catch-up. And so I'm putting in 50% of my paycheck where I get paid biweekly. And like I said, I'm putting in 50%. So that's 30, what is it? 32,500 this year?

Yeah. Okay. So how much are you going to cut back to?

I'm looking at spending about 1,000 a month.

All right. That would put you even over 15%, which is what we'd recommend until you have a paid full house.

I would reduce your retirement contributions to 15% of your income until you purchase a house and have it paid off.

Okay.

No more retirement savings above 15%.

No, nothing above 15.

Right.

Really?

Yeah, really.

Because I've had it maxed out.

I can tell. You've killed it. You got 600 grand. Way to go. You also don't have a house.

I have a house here. I paid cash for it, but I want to upgrade.

Oh, I see. Okay.

How much is it worth?

Bucks and a half.

Okay. And you're going to upgrade to what?

The stuff I've been looking at is around 250 to 300.

Okay. Well, you could do that tomorrow and put 20,000 down in the sale of your house, and then pay it off in three or four years by doing what we're talking about.

Okay.

So that would be like a $130,000 mortgage that you could knock out pretty quick.

I was looking to spend around 100. So that's kind of what my thing was. And I was going to make up the difference in cash.

Yeah. Wait a minute. How much cash do you have?

I mean.

You said you had 40 cash. You don't have the difference in cash.

I was hoping something would move here. Back when I was in Detroit, I was working two jobs. There's no opportunities for that here.

I'm not saying you did anything wrong. I'm just saying you have $40,000. You need to keep 20 for an emergency. That gives you 20 plus 150 on the house. That's 170. You don't have the cash to pay cash for the house today, right?

No, I do not.

Do you want to save up the cash before you make the move, or do you want to make the move and then pay off the little loan quickly?

I would rather make the move and then pay off the loan quickly, yes.

Okay. Then take 20,000 of your cash and the proceeds from the sale of your house and buy the house that you're talking about buying, and put the other thing on a 10-year loan, but pay it off in three.

Okay. That was also my plan too. So okay. Dave, I got one other favor I'd like from you.

Okay.

Can you start a dating website? I've met so many women that just are not on the same level financially that I am.

I bet.

I mean, I've been called a gold digger more times than I should.

I'm looking for a financially stable woman. There you go. Hey, come on to the Ramsey Cruise. We're going to have a singles event on the cruise. That's your best bet.

Oh, really?

That's the only in-person version.

I've got a bad idea.

It's going to happen, Dave. The people clamored for it. And so we said, all right.

Are we really doing that?

We're not doing an app, but we're going to have a night with an event.

Not doing an app. For sure.

For anyone that's saying.

Probably we're not doing an app.

Just any solo travelers. It doesn't have to be that you're looking for love. Just if you've traveled solo, you want to make some friends. There you go.

A solo traveler.

But no, the app feels that feels like dangerous territory. Don't you think everyone would want to be on that app to find people who are fiscally responsible?

I know. For all the wrong reasons.

They'd only be looking for Baby Step 7, Baby Steps Millionaires.

Sugar Daddies Are Us. That would be the name of the app.

Dave doesn't want his name plastered on that.

You don't want this mug on that.

Oh, boy.

Oh, we have heard that from ladies and from gentlemen, though, that it is difficult to find financially responsible singles.

I've already come up with the app names. I thought Endorsed Love Providers was pretty good.

Oh.

Thoroughbreds Only? I thought that one was awesome.

You think that's better than Sugar Daddies Are Us?

I think it's a better selling point. It's a little tamer.

It's a little scary. Oh, there's so much cougar.

We'll workshop it.

I just can't think about it. Oh, my gosh. Oh.

That one's on the cutting room floor. Sorry.

You know what? It isn't. After all the joking and laughing since you and I are both happily married.

Thank God. I don't have to be on a dating app.

Yeah. I can't imagine how hard it is out there in the world to find even just somebody for set the money stuff aside. Just find somebody that's not cuckoo. I mean, it's just because there's cuckoo everywhere.

Something's in the water.

I mean, people are cuckoo for coconuts.

Is it the fluoride? I don't know what's going on.

I can't even imagine. I'm so far on the other end of that that I can't grasp the idea. But yeah, man. See, that's why our estate plan has me dying first.

That makes sense. I didn't know you could do that. You could just plan for that to happen.

Yeah. Well, apparently, yeah. Yeah.

Well, Sharon's a picture of health. So she's going to outlive us all at this point.

That's probably true.

That's probably true.

Gluten-free lifestyle. Yeah. The Grim Reaper's scared of Sharon. I'm just saying. That's fun, though. Very cool. So the thing is, let me tell you what he did. He put himself in a position that he had choices. He made a move to a different I mean, Auburn, Alabama, Detroit, Michigan, two very different cities, two very different things to walk down the street. And you might like one better than the other, but he made a lifestyle decision, was able to take a considerable pay cut in order to do that, and still had 600 grand, and still had a paid-for $150,000 house, which honestly, in Auburn, Alabama, is not bad.

They got fancy.

The Auburn people are going to be pissed at me. The median is 471.

Maybe he's in the outskirts. He might be in the outskirts.

That's high.

High college, Kelly.

I mean, it's a small town. It's a little college.

But it's a highfalutin college town.

You know what? It's a college town, and that's driven the prices up.

And Auburn people, they have that Auburn money.

What is that?

Auburn University. As a guy who lived in Mobile.

What's Auburn money?

Well, Auburn University, a lot of wealthy families want to send their kids to a good SEC school. And so they have the money to just go buy up some houses over there.

I've never heard of having Tennessee money.

That's true.

You have Auburn money, Tennessee. You got Alabama money in Tallahassee.

See, that's the thing. Alabama, different. It's a more working-class.

We're both dead.

It's just a little more working-class. I can say that. I lived in Alabama. I had to make my choice pretty quickly if I was going to be an Alabama fan or an Auburn fan.

So I mean, you have Georgia money if you're in Athens?

I think so. I bet Athens. I bet the median listing price over there is pretty high.

Yeah, I bet it is. It's a cute little town. I bet it is too.

I think just think the more expensive the college, the higher the median listing price around it.

Athens, Georgia, 464. There it is.

There you go.

See, I told you. I knew that one. Yeah. I imagine Tallahassee is going to be high too, though.

Now, I don't know about Knoxville.

Or Tuscaloosa. 422. Look at them. Holding up.

Way to go, Tuscaloosa.

See, George, you just got put in your place.

I'm not trying to slam the.

Listen. You said there's no Alabama money. They said it. 422, median house price.

Ah, egg on my face.

Tusca freaking Lusa.

Mobile. That's where I live. 279. Let's go. Working-class folk over there making it happen.

That's where you went to school. That's Mobile money right there.

That's what I'm talking about.

That's what George is. George has got Mobile money.

That's where I come from.

Mobile. Welcome back to the Ramsey Show in the Fairways Credit Union Studio. George Camel, Ramsey personality number one, best-selling author is my co-host today.

Hey, Dave. This is a pleasure to speak with you and George. I think I couldn't find a better duo to get on the phone with. So I really appreciate you guys for answering my call.

Thank you. How can we help?

Yeah. So a little bit about me. I'm in a situation where my wife and I, we've been aggressively paying our debt off since 2023. We were both in real estate. We've been in the real estate business for the last eight years, nine years as my wife. And we both switched occupations slightly. On past 2023, I'm an acquisitioner for a singular investor, which is commission-based. And then my wife is the director of property management and assets. So she's the one who helps flip these homes and we sell them off.

How old are you?

I'm 31.

And you're running out of time?

I feel.

What do you know that we don't?

Well, I know. I've done financial peace with my church twice. And this second time around, a lot of my good friends who have been doing Dave Ramsey, I see them investing. Obviously, they're out of their debt, but man, I just feel like I'm behind the ball.

Okay. So comparing to other friends who are further ahead, you feel behind. Let's just rephrase it to be clear. Okay. That's a fair thing to feel. And you're right. There are people who are always going to be doing better with you in life. But I would just run your own race and go, "Man, I'm 31 and I'm still carrying a bunch of consumer debt. This sucks."

IRS.

Especially the IRS debt. How do I get out of this fast? And we have found the fastest path is to direct all of your focus, all of your energy towards that one thing, which is debt payoff. And when you do a bunch of things at once, you're doing some good things, right? You're investing, you're saving, you're paying off debt. But it's not with focus intensity. And that causes you to, number one, slow down debt payoff, and number two, get a little more comfortable. Because if you pause investing, it'd make you angry, wouldn't it?

Yeah.

Would that anger then fuel you to get out of debt faster?

It would. I'm not even paying into any sort of investment. I have.

It's already angry.

More focus on.

You're already there.

Yeah. I'm already.

So how much longer to knock out the IRS debt and the other debts? All 74,000.

You're going to have to increase the depth of your cut in your budget. 26,000 a year reduction is going to take you three more years. I'd rather you do it in two.

Especially making 150. How little can you guys live on in a year?

Yeah. You need to chop your lifestyle more.

Yeah. When we purchased our home in 2021, it was definitely a little bit higher than our debt-to-income ratio of where we wanted it. Right now, we're only paying 2,180 a month for our mortgage. And we have one car that's fully paid off. We just have one car that has a $26,000 debt. It's kind of at break-even if I try to sell it right now. And we don't spend a lot of money externally.

If you make 150 and you only paid down 26, you need to cut further.

Yeah.

Because you guys are making, what, 9 grand a month take-home?

I'd want to put 35 or 40 so I'd be done in two years, not three years.

Yeah.

And another thing you can do is you can sell a car. How bad do you want to invest?

I want to get there. I don't want to stay in this position of just paying debt to go for it.

So would it be worth driving a cheaper car in the meantime?

And be done in one year.

Yeah.

Cut the budget to the bone and sell the car. You're done in one freaking year. And then this whole conversation is not even needed to be had. But you're going to have a year from hell. And your wife's going to have to be on board because otherwise, you're going to have an unhappy spouse in this too, and you don't want that.

No, we're full unity here. And he's the one who does the budget. I come in. We strategize. We use the everyday dollar.

So I tried four years to out-earn my stupidity. You are an abundance person. You're a person that believes in abundance. You're not a scarcity guy. You've always been able to make money doing something. You go out and find deals. You know how to do this. So I'm an abundance guy, and I tried to out-earn my stupidity for years, and I finally had to cut my spending. I finally had to look in the mirror and say, "You spend too much money." I thought that it was the federal law that you had to spend 250,000 if you went into Costco or Sam's.

Whoa.

It was freedom. The willpower. No five gallons of peanut butter. Nothing.

Not even a hot dog.

Didn't even buy a hot dog. Not even a dollar 50 hot dog. There you go, man. But that's the thing. You got to break that part inside of you that's keeping you all from cutting this to the bone and selling that car. And then you're going to be freed up. Because when you got no payments and you start making 150, two little kids in Orlando, Florida, you can make some money, man. I mean, you can stack some cash. You're going to be a millionaire. But if you keep screwing around with the freaking IRS, oh my gosh, that'll kill you. They'll kill you, man.

And let's say they paid cash for a car, 6, 7, 8 thousand dollars, whatever. You saved it up real quick. That would bring your debt down to 48 grand.

Do it one year.

Listen, 4 grand a month going towards that debt, it's gone in a year. Which means if you take home 9, you got to live off 5. That's the simple math. The hard part is doing it.

And you got a $2,100 house payment.

Okay. So now we have another, what, 2,800 to live on.

It's called beans and rice. Rice and beans.

For all of other expenses.

Beans and rice. Rice and beans.

So Roberto, I would do an every dollar budget.

You can ramen noodles.

Tonight. Do that budget.

Tuna fish. Ugh.

I know. Dave's not eating tuna again after what you've been through.

Makes my net worth go down to think about it. Yeah. It's awful. Yeah. I mean, jeez. But yeah, that's what you have to do. It's a pain in the butt, Roberto.

There's no magic wands.

It's not easy. All I can promise you is it's worth it.

Hey. Thanks so much for having me. I'm calling because after graduating college, I was presented with my portion of student loans to pay. My parents helped me get logged in, and this is what I owe. It was $28,000, which I was so proud I paid it off within 13 months. That was a little over two years ago. Ever since then, I've been living debt-free, saving really well.

The way you're saying left in my name, did you sign these?

No. I knew that college was going to I knew that my parents couldn't pay for college. We never had a great conversation about it before going, really any conversation, which I wish we would have. So no, the remaining loans were a complete surprise.

So they fraudulently signed your name.

Essentially.

It's called I didn't know. Essentially, it's called identity theft. It's a criminal act.

Yes. But obviously, I mean, it's my parents, so I can't or I would never. And they're obviously in a really bad spot if they couldn't even take out the loan in their name. So I can.

Okay. So today, there's 39,000 more in your name that you did not sign for, but it's in your name. And there's how much in their name?

In just their name?

Mm-hmm.

Nothing that I know of. That's what came up on my report.

Well, it wouldn't have. Their name only would not come up on your report.

But you're saying it was like a parent-plus loan? What was this? You said it was joint.

Okay. So the total of the whole thing outstanding today is 39,000. Some of it has your mom's name and your name. Some of it just has your name that was fraudulently signed. Correct?

That's right.

Okay. And what do you make a year, honey?

Roughly 65,000.

And have you said anything to your parents about this?

Yes. I've talked to my dad about it, and I think it was a major blow to him. I know their finances are separate, which obviously we don't agree with. So this seems like it was a huge surprise for him. And I know he's upset and that financially for them, life has not been easy, but they certainly don't help. I don't agree with their spending. And obviously, I mean, they've hardly paid down the principal.

Okay. Well, I'm sorry, but the bad news is there's not much middle ground. Okay? One is you treat this like what it is, which is identity theft, and you file a police report, and you begin the process of being an identity theft victim, and you have them removed, and you report the criminal, which is your mother. That's option one. You took that off the table a minute ago, but that's one option.

Then they'd go after her for the money.

Yeah. And option two, which is to me, I just got to tell you, Alex, I cannot think of a worse form of child abuse. There is a worse form of child abuse. This is a horrible form of child abuse. There's a lot of worse, but this is child abuse. I can't imagine doing this to my children and in any way justifying that in my mind as being a good deed.

You need to freeze your credit today with all three euros.

Anybody that would do this to their own kid cannot be trusted. This is horrible. I feel so sorry for you.

Because you're going to feel guilty for going after them, or you're going to feel resentful for paying a debt that wasn't yours. So either way, it's a lose-lose.

And the other option is, as I said, there's no middle ground because you're not going to do what I just suggested. You already said that. And so your other option is pay it.

Yep. That is in my mind, I'm willing to pay the half that is just in my name.

No, you don't get that option. You got to pay the whole stinking thing. Because let me tell you what they're going to pay. Nothing. They're not going to pay a dime. And you're on the hook for the whole thing if you don't handle it as identity theft. You either is or you isn't. There is no middle ground.

Do you think I could have them refinance the joint into just their name?

Well, yeah. If you could get them to do anything.

And you told us they're broke. They probably can't even do that.

But there's no refinance program in student loans that takes off people's names. It only puts more people's names on. So if they could go to the bank and borrow the money against their house and pay it off, that's fine. Go get a loan for 40 grand and pay off your loan. You shouldn't have stolen your own kid's identity. They should do that, but I don't think these people are going to do that. Do you?

I don't know. It's so shocking. And I wish they would get help. I wish they would live a little bit differently because I've got two younger siblings that are also going through college.

Holy crap.

I would check on them and their credit report.

Yes. Yes. And obviously, we should have had conversations going into college.

Yeah. You need to have a preemptive strike here to keep them from doing the same thing to your brothers and sisters.

But what relationship is left anyways from this?

Denial. Just act like it didn't happen.

I mean, even if you went after them, is that going to change a relationship that's already been tarnished by this situation?

I would never go after them.

Okay. Then you're going to pay $40,000. Because if you have any expectation that these people are going to pay anything, you're being naive.

And that balance will just grow.

Yeah. You need to just plan on paying this off as fast as you can, just like you did the other thing. And you don't get any halves because there is no halves. It's what's called joint and several in the law, meaning that when you co-sign with someone else, you're both obligated for the entire debt until it is paid. So just because your name's on half of it doesn't mean you get half of it. That's not how it works. So I'm sorry, kiddo. Yeah. You got a screwed-up family. I hope they're not doing that to your brothers and sisters. And I hope you have enough backbone to keep them from doing it to your brothers and sisters.

Tim is in Dallas. Hey, Tim, how are you?

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

Better than I deserve. What's up?

All right. So my wife and I own a business. She works in the office. I work in the field. We have no employees, though we're hoping to hire next year. In addition to our business, we also have a large social media following for our business, which has fueled our success. Our business has no debt anymore, but we personally have about 150,000 in debt. That's down from more than 250,000 about a year ago. We think we can be done with the rest in the next year to year and a half. So that's all great. Unexpectedly, we've been approached by a larger company who has offered to buy us out.

The temptation when you've got something like this in front of you is to think about the short term, but the wisdom will give you the long-term perspective. And so what I always do in a situation like this is 15 how old are you?

38.

38. Okay. So when I'm 58, 20 years from now, which of these two choices will I be glad I did?

That's a great question.

My tendency, because I'm a small business owner and I've grown this business from a card table in my living room, and I've had lots and lots and lots of opportunities to sell pieces of or all of this thing over the years for lots and lots of money. But my joy comes from doing this and running it and making the money associated with it, not just from the lump sum check that would come in the door and then me be working for someone else. So because that's who I am, my answer would be easy.

Yeah. That's how we felt about it as we were looking at it. Because on the one hand, we've been grinding this out ourselves, and we're sort of exhausted, but we can kind of see the end. But on the other hand, we sort of really, really enjoy what we do, and we'd probably be able to make a bigger impact on the industry as a whole that we work in. And so that's what we were trying to tease out. The good news is that we should be able to be done with our debt in 12 months either way.

Yeah. If the debt wasn't there, would you do this deal?

If debt wasn't a concern, I probably would not do the deal.

Then don't do the deal.

Understood.

You're going to be done in 12 months anyway.

That's what we think. As long as nothing crazy happens in the universe.

Well, welcome to business. Something crazy is going to happen in the universe. I can't control that. But if you can keep making similar money and you're done in 12 months and you get to keep your deal and your dream is still alive and you get to put the foot on the gas at a reasonable level rather than all the way to the floor where you're exhausted, yeah, you need to move to the next stage of business. I'll send you our latest bestseller, Building a Business You Love, talks about the five stages of business. You got to get to the point that you've got some delegation going where there's revenue being produced in the business by someone other than you.

That's right.

And that'll get rid of the burnout feeling you talked about.

If this was an eight-year journey to pay off debt and you could just kill it in one fell swoop, I would say, "Man, that's a pretty sweet deal." But based on what you're saying.

One year?

Yeah. And if this business believes in your business that much, you should believe in your business that much. If they think they can make it even more profitable.

Ooh, I like that.

So I would go out, "All right, how do I triple this business in the next couple of years?"

Yeah. Yeah, absolutely. And getting clear of the debt will put you in a position to do that. It'll help you make better decisions too. Very good. I love it. Good question. David is in Columbia, South Carolina. Hey, David, what's up?

Hey, how are you doing? It's nice to talk to you guys. So I wanted to call in today to kind of ask a retirement question. So my wife will be receiving pension when she retires, which isn't normal nowadays, so it's kind of hard to compare. And also, we have a few paid-off rental properties that will generate income. I'm just kind of curious if we should still be or I should still be investing or saving 15%.

Absolutely.

Towards retirement.

Absolutely, you should.

Yes?

Yes. Absolutely. You need some money other than the rentals and other than her pension. Yes.

Okay. I mean, that was, I guess, pretty straightforward.

Yeah. And if you need some help setting it up, just go to ramseysolutions.com and click on SmartVestor Pro. You can do the depending on your age, the Roth IRAs are 7,500, right?

That's right.

7,500 each. So that's 15,000 you could do automatic draft out of your checking account into Roth IRAs. It's simple. If you need to do more than that, there are some other things you can do as a self-employed business owner to do more of the simple IRA, which is like a 401(k) for small business, or a SEP IRA, either one, in addition to your Roth. But if 15,000 gets you to 15%, then just do two Roth IRAs, one on her, one on you, have it automatically drafted from your checking and put it into good growth stock mutual funds, growth, growth and income, aggressive growth, and international.

And you'll feel better having some diversified investments there outside of just the pension and that rental income because those pensions aren't probably not returning much.

Eric's in New York City. Hi, Eric. How are you?

I'm good. Thank you. So I discovered your show maybe about a year or so ago, and I enjoy listening to it. In the last few years, I've been setting up all my arrangements and setting up trusts for my family. And one of the things that came up was my mortgage. I want to pay it off. The people I've been talking to have advised me not to. I have about 96,000 left on the mortgage.

And your net worth is what, Eric?

About 11 million.

Okay. Why are you pissing around with a $96,000 mortgage?

Well, my portfolio I understand where they're coming from. My portfolio.

I don't understand where they're coming from. That's dumber than crud. Why are you pissing around with you have $11 million and you still got a mortgage? And you know in your heart before you called, that was dumb. No. Get rid of that mortgage yesterday. And get rid of anybody that's telling you to not get rid of it.

Okay.

Man, that's just you got $11 million. It's like paying off this mortgage is like me buying a biscuit.

And you made a million just in the market this year so far. That's just a tiny percentage of that. So you're not getting rich off this low-interest mortgage. It's a burr under your saddle.

But I'm making 8% more of my money.

No, you're not.

I'm dealing with.

No, you're not. You hadn't paid taxes yet when you did that. Net of taxes and net of risk, you've made almost nothing. And besides that, your time is worth a lot more than screwing around trying to make $2,000 on something.

Do you have it in liquid cash outside of retirement?

Of course.

Got it in checking.

Cash is about 4 or 5 millions.

Got it in checking.

Right. Check the day and get rid of it. This is just a mathematical gymnastics in your brain. The amount of money you're actually making on what you think is a spread here is laughable. Nah, I wouldn't do it. If I could borrow $10 million at that rate and reinvest it, I wouldn't do it. It's not worth the risk. I don't want to screw it. It's not worth the my life is so good. All my mortgages are 0% interest because I don't have one. All my credit cards are 0% interest because I don't have one.

That's the best strategy.

And you know what I do have? I got cash flow. Ding, ding, ding, ding, ding, ding, ding, ding, ding. Oh, and the guy not wanting you to pay that off, he's making a commission on the money that he's telling you to leave in investments.

It's called a vested interest.

It's called a conflict of interest.

There we go.

Our scripture today, Colossians 2:8, "See to it that no one takes you captive by philosophy and empty deceit according to human tradition, according to the elemental spirits of this world, and not according to Christ." Paul Samuelson says economists have predicted nine out of the last five recessions.

That's funny.

Yeah. Economists and weather forecasters, the only people that could be wrong most of the time and still keep their job. All right. Dylan is with us in Houston, Texas. Hi, Dylan. How are you?

Hi. Doing well. Can you hear me?

Yes, sir.

Hi. I had a question. I wanted to see I've heard you talking about a will. I'm trying to see what's the best way possible to inherit my grandmother's property. When she passes, I'm going to be taking it over. So I wanted to see I know you always talk about having a will, but we had gotten a Ladybird deed done. I wasn't sure if you're aware of those, but I wasn't sure if that was a good kind of legal form to have for me to inherit the property. I just kind of don't want anyone to backdoor me or anything like that. So I just wanted to know what your opinion was if I should get a will or if a Ladybird deed is okay.

I'm not sure I understand. Your grandmother's house is going to go to you?

Yes.

Okay. A Ladybird deed is just a life estate. It's nicknamed Ladybird after Ladybird Johnson. And you're in Texas, so Lyndon Johnson was from Texas. That's where it comes from, okay? But all it is is a life estate. So you're telling me the house has been deeded to you, or if you finish this transaction, will be deeded to you now with your grandmother having a life estate.

I kind of wanted to avoid I am.

No, no. Is that what you're telling me is happening?

Yes. So I'm already in the house right now, but.

You're in the house.

I'm in the house. She's not there.

Where is she?

She lives in another house.

Okay. And so she's going to she's given you this house in your name already, but she has a life estate to the house that you live in.

No. So she does own the property and then what do I do?

That's not a Ladybird deed.

Okay. So then what does that specifically do? Because whenever I looked it up, at least it said whenever a person passes, this is just kind of like a beneficiary to who gets that property.

No. It's a life estate product is what it is. And life estate means that you deed it to someone today and that person owns the property, but they have no rights to the property until the person dies, the other person. So when your grandmother dies, it's already in your name, and then you would have access to it. But until then, normally, the person would stay in it. So for instance, if my wife if I left my house to my kids and I put it in a Ladybird or put it in a life estate product or a life estate in there, then it's in my kids' name upon my death.

Okay. I guess the main part of it was just I was trying to avoid kind of like paying taxes on it to when I do get the property into my name.

Taxes on probate in Texas are almost nothing. You don't have much taxes in Texas on probate. So it'd be just a little bit here or there. But what's the property worth?

I think it's around 230, 250-ish.

Yeah. Okay. What is it, George?

I'm looking it up now. I'm also curious, Dave, if just a transfer-on-death deed would have solved this. A much simpler way to achieve it if she wants it to go to you upon her passing.

You could do that. But you could also just have a will. It just says it goes to you. And it just goes to you.

I'm saying there's no probate tax in Texas, no state-to-state tax. There might be some court and attorney fees.

So zero taxes.

Yeah. I mean, that's.

So anything you spend on this is going to be so let me walk you through one other piece of this, all right? The property is worth $230,000 today, correct?

Yes.

Okay. If she dies today and it's already in your name from a tax basis, when you get ready to sell it, nothing to do with the probate tax, talking about capital gains tax, your basis is what she paid for it, which is probably close to nothing, right?

Yeah. So that's the thing is that she's acting as the bank. So I am paying her, but I'm trying to avoid having to pay a tax for it.

So what are you paying?

I'm paying the 200 and I'm basically paying 200K, but I'm giving it to her. I don't have a loan. I don't have anything like that. It's just she's acting as a bank, pretty much.

Okay. So the property's already in your name?

No, sir. It's in her name.

Oh, worse yet. Okay. Okay.

Yes. That's what I'm saying.

But you're paying payments as if it's yours?

Yes, sir.

Yeah. That's a contract for deed is what that is. Okay. Or a land contract, it's sometimes called. Nothing to do with life estates, nothing to do with Ladybird. Okay. That's very dangerous also because if something happens that she gets sued and she were to look like she had a car wreck and someone sued her because she accidentally killed someone and they sued her, they would take all of her assets, which would include the house that you don't own because it's not in your name. So the house should be in your name and you should be paying her payments.

That's a complex way to buy a $200,000 house.

Yeah. So guys, don't do land contracts or contract for deeds. I've run into it too many times because the property is not in your name. And let's say you pay on it for 10 or 15 years, you pay it down 100 grand, you still don't own the house. And someone that owns the house could get sued and lose the house that you thought was yours. They could take a lien against that house. And so you just don't do land contracts and you don't do contracts for deeds. So, Dylan, you guys are an example of someone who needs to get legal advice before you do all these transactions because you've made about six mistakes in this entire conversation that are pretty dramatic and I'm worried for you.

And the only downside of deeding it while she's alive is losing the step-up in basis.

It's already gone. She sold it to him.

It's officially sold.

He bought it for 230,000.

Oh, that's the contract for deed part.

No, no. If he gets it in his name, he bought the house for 230,000 because he got a mortgage against it for 230,000. So he got a basis. He's got a new basis.

That part's over.

230,000. So there's no stepped-up basis for the mortgage.

So it might as well deed it officially now.

Yeah. If you're going to give somebody a property, do it at death because of stepped-up basis. But that doesn't have anything to do with this transaction because this is prior to death and he's actually paying her for the house. So that becomes his basis. Wow. 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.