Transcript of You Can’t Outearn Bad Spending Habits Forever

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Live from the headquarters of Ramsey Solutions, it's The Ramsey Show, where we help people build wealth, do work that they love, and create actual amazing relationships. Rachel Cruz, number one best-selling author, Ramsey personality, my daughter, is my co-host today. Open phones at 888-825-5225. Elaina is in Huntington, West Virginia. Hi, Elaina. How are you?

I'm doing good. How are you?

Better I deserve. What's up in your world?

I've been watching you for a long time, for years now, and I have just saved my $1,000. Good. I am also drowning in student debt, credit card, and my car loans. I do have a job. I make about 50,000. My debt is a little bit more, around 65,000. I hate my job, and I want to go to school, but I don't know if that's a good idea because Because of the amount of debt that I have. I'm trying to figure out what the best way is to get out of this mess, basically.

What's your current job? What are you working that you're not enjoying?

I work in property management. I'm an assistant property manager.

Okay. Is it the field that you're not enjoying, or is it the specific company, do you think? Because you said you want to go back to school. I'm just curious what else is out there that you're thinking.

I think it's just the This field, this is actually a Christian-based company, which is super awesome. I think it's just the field. I'm not happy here. It's just not fulfilling. I do love kids, so I've always wanted to pursue NICU nursing, but I would graduated in Hawaii, and the diploma I got from there is not recognized. I would have to go back to school for a GED and then go to college. But with all the debt and the mess that I have, it's just overwhelming, and I really don't know where to go.

Well, I think we're doing this a little bit backward. You want to run to something, not from something as far as your career goes. What I would do if I were in your shoes is I would very clearly identify and spend some time in some soul searching, and we'll even give you some tools to help you with this, identifying exactly what you want to do with your in this next chapter. Going back to school, in air quotes, is a really bad idea unless that particular degree is necessary to do the thing you want to do. Sometimes when people are running from something, the air quotes, go back to school, as if that's going to solve anything. It's not going to solve anything. You need to actually be studying working toward becoming the thing you want to be. Did you say you wanted to be a pediatric nurse?

A NICU nurse.

A NICU nurse?

Yeah.

Okay. Your high school diploma does not count?

Yeah. I graduated from a competency adult community school, and apparently that is not recognized nationally, and I have to go back for a GED, which is crazy because I've been using that pretty much my whole life.

Okay, so right now, you're a high school graduate that needs to pass a GED to prove it, right? Basically. Then you would have to go through all your undergrad and go through nursing school to be a nursing NICU. Mm-hmm. Okay. What Ken Coleman would tell you to do, that is one of our Ramsey personalities that's written extensively on this idea, is he would tell you to go over there in your off hours and volunteer in the NICU to rock babies. That is true. Talk to the nurses that are there and tell them it's going to take you six years to be one of them. Is it worth it?

Yeah.

Now, I'm a huge fan of nursing as a career in the field. But I like little babies is a long way from I want to go to school for six years to be a NICU nurse. That's a different thing. It's a lot different. Okay? Because nursing at times is gross. Nursing at times is very stressful. Nursing at times will break your heart. Nursing at times will cause your back and your feet to hurt and ache. It's hard work. It's a great career field, but it's way different than I have a heart for children. You follow me? Yeah. What I want you to do is get your arms around what it is you want to do and exactly what the cost is. I don't want you to spend six years and end up in a field that you hate accidentally. You wouldn't want to do that. Number one, we don't want to go back to school, in air quotes, as an escape mechanism. Number two, if we're going to go back to school, let's make sure that whatever we're studying gets us there. Then number three, what are some interim steps we can to move in the direction of the field while you're talking about going to school there.

While you're working on your undergrad and passing your GED and getting your undergrad going at your local community college there in West Virginia, which you can do your first two years there just fine, you're probably keeping the job you've got. Or you're getting a better job making more money, but maybe not in your career field. Or if you can find something where they'll pay you $40,000 a year to be in and around the medical field and you can get a sniff of what it is you're signing up for, then I would go along with that.

Yeah. I would tell you, too, Lena, just with the numbers you gave, not even thinking future, just present. You need the money. Yeah. What are But there are things you can do? Because I would tell you, regardless if you wanted a career change or not on this call, part of the solution of you getting out of this debt is going to have to be upping your income. And so whatever you're doing beyond your current job, let it be around kids. I would go on and see if somebody needs a nanny from 6:00 to 9:00 PM or whatever, right? Finding things in that that are going to make you more money to get out of debt and start your financial process and this ball rolling to get you ahead financially. But then also if you compare that with some level of your passion of what you're talking about while at the same time doing exactly what you're saying. But you need more money right now, in my opinion, for the amount of debt that you have.

You can scratch the kid itch by joining the children's ministry at your local church? Yes. They need your help, by the way, because they're always perpetually understaffed.

Again, this isn't about- I do have a- Go ahead.

You have a what?

I was going to say something really important, too, because I am a believer and a follow of Christ, but I did do something really stupid. When my sister passed away early this year, I would say I was super vulnerable and dealing with grief, not knowing how to deal with grief for the first time. I ended up moving Of course, from my first job early this year, paying about 70,000 to live with my boyfriend. Now we're living in this house unmarried. We're not seeing eye to eye in terms of finances.

That's easy to undo, isn't it? Yeah.

Move out. My dad always said, Why pay for the cow when you can get the milk for free?

I'm struggling in that area. Your dad's a wise man. But you can fix that. You can just move out. Where were you living when you were making 70?

In Arlington, Virginia.

Can you get that job? Oh, that's more expensive than Huntington, West Virginia. I don't know that you were netting 20 more. That's a very expensive place to live. Okay. Yeah, you can reverse that. You can just say, Hey, I'm doing something I'm not proud of, and I'm not going to do it anymore. That's a decision just like the decision to do something wrong is. You can make a decision to do something right. So go do that, kiddo. Hang on. We're going to get you signed up for Ken Coleman's Everything. I wanted her to get the assessment and the Proximity Principle Book and the whole thing. Are you working the baby steps? One of the smartest and most impactful changes you can make is to ditch your cash value life insurance plan, if you have one, and replace it with a term life policy. Listen, the only thing a cash value policy is good for is overcharging you for the life insurance and then paying you a crappy rate of return on your overpayment. Stop wasting your money and really focus on getting out of debt and growing your savings. For over 25 years, I've trusted and used Xander Insurance to find the best rates on term life insurance from the top rated companies.

They keep the whole thing simple. You can apply online or over the phone, and they even have low-cost plans that don't require an exam. Go to zander. Com or call 800-356-4282. Even if you don't have a cash value policy, if you're one of the 70% of people who have no life insurance or not enough, it's even more important to get this done. 800-356-4282 or zander. Com. Black Friday is here. We've got gifts for everyone on your Christmas list. Our best-selling books like the Total Money Makeover, Baby Steps Millionaires, Own Your Past, Change Your Future, and more are on sale for just $12 each. The Total Money Makeover, of course, is the roadmap that's helped people walk the baby steps over 12 million of them now. We hear it all the time. Millions have become It's the proven step-by-step plan we talk about on the Ramsey show, just $12. Rachel's newest kids book, I'm Glad When I Can Share, is also here in time for Christmas. We launched it last week for sale, and it's 1999. It is the third in a series that's a trilogy, and you can get all three if you want. There's a package for sale right there for all three.

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Yes, it did. I know.

It's a great series.

It is great. It was a fun project to do. Talking about the intangible parts of money, contentment and gratitude, generosity, those topics I feel like are harder sometimes to grasp and to teach your kids. I was like, Okay, how do we put that in a sweet children's book? Those are the three topics. And they're short. You're welcome, parents. They rhyme. The illustrations are beautiful, and it's the same animals in all three books. So that's been fun, people buying each one as they've launched, that they see the same characters. So you'll get to follow them along on these adventures.

Learning about these topics. The illustrator Lauren just did an incredible-Yeah, they're beautiful. It's world-class stuff. It's really, really- Real proud of this product. For those of you that got kids and grandkids, be sure and check them out because you do. Hey, listen, You teach a child gratitude. You teach a child generosity. Generous people are just highly attractive. You're teaching your kid to be a high-quality adult when they are grateful and generous. Because think about how many adults you wish were grateful, and you wish their parents had taught them that. Hello. I mean, that's part of being a good dad, a good mom, a good grandpa, good grandma, too, by the way. Do not think that Papa Dave is not above reading his daughter's books to his daughter's kids. I have been known to keep it all in the family here. It's happened. All right, Justin is with us in San Diego. Hi, Justin. Welcome to The Ramsey Show.

Hey, guys. Good morning. Thank you for your time also.

Sure.

I'm trying to figure out. I have a three-year-old, and all the money that we give her for her birthdays and holidays and things like that, we just been putting into a CD that's yielding about 5.29% annual return. I want to give it to her when she's 18 as a life starter fund. I don't want to put it into a 529 or a retirement fund. Is there anything better that has a higher yield or better return for her when she does reach 18?

Are you saving for her college?

I'm active duty military, and I just finished my master's, so I've already transferred all of the benefits over to her. I'm going to take her through community college, and then I'll pay for that, and then Pretty much all of her master's is going to be completed. I already paid for. Okay. She has all that already.

Okay. The answer to your question is just a simple mutual fund. When I'm doing something like that, I just pick a good growth stock mutual fund that has a long track record. I did that for our kids because when Rachel was a baby, there was no 529s or ESAs. We used just put the money in the kid's name, and then it's taxed. The growth is taxed at the kid's rate, which is nothing for a long time because they have a standard deduction. It's called an utma Uniform Transfer to Minors Act, which is, by the way, the exact same document you used to open up a savings account. If you put her name on that savings account you opened. That's C. D? I did. Okay, that's called an utma. It's an utma as well. Anything you do in a kid's name that's not 18 years old, where the parent is the custodian, falls under the utma, the Uniform Transfer to Minors Act. It's a law. It's a process because you can't contract and do financial transactions until you're 18 years old in America. Children can't have a standalone account. It's impossible. Parents have to be on it, or someone has to be on it as a custodian and the utma.

Now, the downside with the utma is when they turn 18 years old, technically Technically speaking, the money is theirs and you have zero control. If you have a 17-year-old heroin addict with $100,000 getting to come her way, you don't have control. That's my most extreme example ever. Well, I mean, you don't have control I'm not going to need it.

Maybe a 17-year-old who likes to shop.

I don't know.

Someone had a 17-year-old out there somewhere. Someone did. Okay, so you don't have control over this money. You're getting ready to fund her misbehavior if she's misbehaving at 17.

Okay.

You need to be aware of that. Or like with our kids, what we told them is, If you're misbehaving, I'm going to steal the money and sue me. Good luck. But that's illegal, okay? You can't really do that, and I can't advise you to do that. But I'm not going to fund your misbehavior. I'm not going to save up 100 grand for you.

I know, but come on. Justin's done. I mean, he's going to give her money at 18. I believe you, Justin. You feel like a solid parent.

I'm sure his angel is not going to make any mistakes.

No, I'm not saying that she's not going to make any mistakes.

The thing is this, that's what you're up against. I went that route for your old college fund. I did not go that were out for the little savings account that he's dealing with. We kept that little savings account, birthday money and that stuff in place. That was the money that helped seed your first car.

That's right. That's what I was going to say, Justin. Depending on the amount, this could be something that she gets earlier that is attached to something that she's wanting, whether it is a car at 16, but something that is useful for her that doesn't necessarily have to be this big investment and put in a big investment fund. But would you still… I mean, still with the longevity of being 3-18, that 15 years, you would still probably put it in.

Would you still put it in a mutual fund? I don't mind 5% because it's not going to be that much money. It's not going to be $25,000. It's going to be $100. We're putting birthday money in there. Grandma's $20.

Yeah, but if he wants to be funding more of his money, then you would do a mutual fund over here for more money to be putting in there for the daughter.

Yeah, I would. To To land on that one step further, what we did do also was we took the kids' little miscellaneous savings account and we added to it. Then when they started talking about being 10 or 11 years old, we started talking to them about, We're not buying you a car. When you turn 16, we will match whatever you put in. We're going to do 401, Dave, and I'll match whatever you put in. If you put in nothing, you're going to have a nice bicycle when you're 16. Let's start talking about doing some chores and putting some money in adding to this little account that we've already got started for you. Then they save up. If I recall, You can correct me, but if I recall, you had somewhere around $5,000 or $6,000, and we matched it- Hold on.

Okay. I had $8,000. I put $8 with it, and you got a little used beamer.16,000 car.

For $16,000. It was a great little car.

Took me all the way through college.

It was a great little car. It was good. It sure did. The other two siblings did the exact same thing. I will tell you, parents, if you're going to use that matching idea, Be careful in case you have one of those kids that is a nerd super saver, and this highly motivates them, you may end up having to match 30 grand if you don't put a limit on it. I would suggest you put a It was a limit on it. I did have one of those, her brother named Daniel, and he just about... It was ridiculous. We had to come around and come negotiate a different thing. I did match him, but he was generous with some of the money, and use some of the money for his car because it was so stinking much.

He bought your old Jeep or something.

He's just a conservative dude. But he saved everything. It was crazy. So put a limit on it. We will match it up to- Well, and he got a head start, parents two.

When you're implementing it, you're implementing it. I'm like four years shy. He had four extra years on us.

Yeah. Well, he watched you two and found out we were serious about this, that it wasn't a game. We weren't kidding. He went, Oh, crap. I really got to do this. He turned on the calls and there you go. So put a limit on it and you can do match. I use the small accounts for something like that. I use the UTMA for a big thing. If you're doing a big thing, Jerry, that's what I would do if you're going that way, Justin. This is the Ramsey Show.

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Sorry, the allergies are bad. But you're our marketing plan. We're not dropping 300 million on a stadium. You're it. So thank you. We're either helping you or we're not, and that's what we're here for. Thank you very much. Courtney is in Dallas. Hi, Courtney. How are you? I'm doing good.

How are you guys?

Better than we deserve. What's up in your world?

Nothing much. I was wondering if you guys Could you please tell me what the benefit is of not using an escrow account to pay for home insurance and taxes.

Two things. One, you get to keep the money all year and earn interest on it instead of it sitting in an account that's not interest-bearing until you pay your taxes and pay your insurance. So it accrues interest. The second one is you don't screw up the accounting. Mortgage companies notoriously screw up the accounting on escrow accounts, and they get out of balance, and there's an escrow shortage, and then they raise your payment to make up the shortage, or they just miscalculate something, and you got somebody that's the lowest common denominator running the calculation too many times. When I used to own a bunch of property with debt back in the day, I would say as many as 40% of the accounts were screwed up. I don't know if it's still that bad because I haven't had a mortgage in 30 plus years, but I suspect it is still a problem. The benefit of using the escrow is it's on autopilot. You don't have to think about it.

Right.

Okay. When most people don't manage their money well enough, they end up not having the money to pay their taxes or not having the money to pay their insurance. It sneaks up on them like Christmas.

Yeah. I know that some mortgage companies don't even give you the option. Sometimes they require you to use an escrow account.

Correct. A typical conforming mortgage, meaning a Fannie Mae FHA or VA will require it because they want to make sure that the house they have a lien against doesn't burn or it isn't taken for taxes.

Right. Okay.

Yeah, you don't really have a choice. I personally, if I were you, I would just use the escrow account, but I would stay on them to make sure it's the proper amount.

Okay. How do you recommend staying on top of them?

Well, you just want to make sure that the amount being taken out of your payment. Your payment is principal interest. If it has escrow, it's taxes and Insurance, P-I-T-I. You want to make sure the amount being hailed out for taxes and insurance each month is one-twelfth of the total of your taxes and insurance. It shouldn't be less than that because you're going to come up short and then they're going to have a shortage because they're going to pay it either way. They don't want you to be behind. Or there could be an overage. Let's say they're taking out more than they need to. Just make sure that the numbers are right and just look at it once a year and make sure they're If your taxes and your insurance actually go up and they don't change the amount being withheld for it, you're going to get behind, right? Right. That's one of the ways you'd look at it. That's the thing you're doing. I would use the escrow if I were in that situation. I don't recommend because I put everything on autopilot that I can.

Just so you don't have to. Yeah. Everyone. Yeah. Even though it's not earning interest.

It's not enough interest to matter.

It's okay.

Yeah. More people are going to screw it up by not saving up the money, then the mortgage company is going to screw up the escrow account.

Yeah, that's probably true. Totally. We have a part of our website that talks all about this in all real estate at ramsey solutions. Com/realestate. It's our real estate home base because it's one topic when it comes to your money that we get so many questions. If you guys need more resources, there's free stuff, videos and articles and calls from the show. There's so much there to help you in this topic of your money when it comes to your home.

Ramsey solutions. Com/realestate. Honestly, that portion of our site is massive because we get so much question on real estate, and it's really a nice resource to help you. Yeah, for sure. Good stuff.

It's a good question, Courtney.

Yes, excellent question. Jerry is with us in Norfolk, Virginia. Hi, Jerry. Welcome to The Ramsey Show.

Hi. Thank you. So my question, I have a bunch of accounts. I have a Charles Schwab brokerage account. I have Charles Schwab IRA, traditional, and a Charles Schwab Roth. Now, I also have a principal. Now, Principal is the company my employer handles our 401.

So I was looking at their website, and it looks like they charge me about a hundred bucks a month to have that account.

I have the option. Yeah, I thought that was high.

That's wrong.

Well, that's what it says under fees.

You have a 401k, and they're charging with your company?

Correct. I'm a hospital employee.

Is it a 403B or 401k?

401k.

They're charging you $100 a month, $1,200 a year.

Actually, $300 a quarter, if you want to be specific. But yes, basically, it says it right here. Plan Administrative Services, 288.70..

Is that being deducted from your account or is your employer paying that?

I don't know. I'm just looking at the website where it says plan fees. So I'm assuming I'm paying it.

I'm not because you shouldn't be.

Okay, well, that's a plus.

It would be very unusual. As a matter of fact, your employer shouldn't be paying that much per employee. That's an asinine amount of money.

Yeah, I thought so.

I don't pay anywhere near that. I got 1,200 employees with a 401k plan here. Not even close to that. I would fire those people in a heartbeat if they were charging me that.

How do I find out if I'm paying that then?

Call HR.

On the website, it says plan fees.

Yeah. Well, it can be a the plan fee, but the plan wasn't instituted by you. It was instituted by the employer. So it's possible they're being charged that. That's just ludicrous. I would call HR and I would call principal both and ask them. Okay. Just call principal and go, Hey, I got a 401k, and I'm looking at the statement here, and this feels like you guys should be wearing a mask like your robbers. Oh my gosh. No, really. That's just ridiculous.

What was your question, though, Jerry? Your original question you called in.

So my question was, I now have the option of instead of the money going to principal to take care of it, I can have it go to Charles Schwab, which then I would have 100% control.

The hospital is allowing that?

Yes. I don't know if that's new or not, but I was actually talking to them and they said, If you want, we can have it go to Charles Schwab account. I'm assuming it's some lockdown type account. But then I would have total control to buy, sell, or do whatever I want with it. But that scares me because at least with principle, I have, theoretically, an expert looking after it versus me, the amateur, looking after it. I'm basically looking for your advice. Is the 1,200 that I thought I was paying worth an expert looking at it?

No. But you can get another expert. You don't have to do this other thing. Okay, I'm seriously confused. I have no idea what the flip your company is doing because a company has a single 401k administrator. If principal is their administrator, they cannot send your 401k money to Schwab. It's illegal. They can't do it. You can't have four different 401k companies at your company. There's no such thing. It doesn't work. I absolutely have no idea what you're up against. The only thing I can do is tell you to call one of our smart investor pros and see if they can unravel this for you. Just go to ramseysolutions. Com and click on Investor. By the way, they can help you if you're going to be doing side investing. This is the Ramsey Show.

This show is sponsored by Better Health. This month is all about gratitude, and most of us have people in our lives who we're grateful for. One of those people for me is the great Jean-Noël Thompson. He taught me how to be a dad, a husband, a professional, and had a balance caring for a bunch of people all at the same time. We all know if somebody else we can be grateful for, but there's one person that we often don't take time to thank, ourselves. We don't always acknowledge that we're surviving, that we're moving forward, and that we're working towards a better life and better relationships. And in a world where everything's gone bonkers, it's not always easy. So here's my reminder to thank the people that you love, thank the people in your life, and thank you. Sometimes we need some professional help to talk to somebody trained to help us discover true gratitude for ourselves and others especially in the holiday season. That's why I recommend Betterhelp. Betterhelp is 100% online therapy. You can talk with your therapist at any time, so it's convenient for your schedule. Just fill out a short online survey to get matched with a licensed therapist.

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Rachel Cruz, Ramsey personality, is my co-host. Joshua is in Seattle. Hey, Joshua, how are you?

Doing good. How are you?

Better than I deserve.

What's I recently retired from the military, medically retired from the military. After I had gotten out, there was about a month of no household income whatsoever. We ran into some financial hardship. With Christmas coming up, I have three young children, and I'm I'm wondering, should I sacrifice their happiness, Christmas morning, to continue to pay off this debt? I've about $1,800 in credit card debt and about $4,000 in collections right now. Roughly bringing in about About five and a half, $6,000 a month.

$6,000 a month? How old are you, Jocelyn?

I'm 24.

Thank you for your service. What happened that you were medically discharged? Are you okay?

I was injured in line of duty. My back was injured, and they decided that I could no longer serve how they needed me to.

Are you okay for other things, though? Are you back to doing a job now?

I'm currently not working. I'm drawing pension from the military.

Why are you not working?

I'm currently going to school full-time.

Okay. Why?

I've always worked more labor type of jobs, hard on your body.

What are you studying?

I'm I'm going to the school for a business administration with a major in project management. Okay.

You just started?

Yes, I did just.

I just started- You're planning to not work for four years?

Yes.

Is your wife working?

No. We have three young children. She's a stay-home mom.

Okay. When I went through four years, I worked 40 to 60 hours a week while I was going to school.

Absolutely.

You need a job.

Yes. I have been networking a little bit, trying to get an internship or an apprenticeship somewhere.

I don't want you to get an internship or an apprenticeship. I want you to get a job. Okay. You need money. Yes. I'm aligned with you using your military benefits to get a degree. I'm not aligned with you not working for four years while you have three kids and you're calling me about them having no Christmas.

Absolutely. No, of course. But I I'm bringing in around $63,000 a year.

I know, but you're calling me about not being able to buy your children Christmas and you're not working.

Absolutely. That's just because of the… Well, obviously, military doesn't pay very much. I just got our active duty, and we hit a- Okay.

So, Joshua, I think here's the hard thing. If I could- Go ahead. Well, if I can just be pretty frank with you. Absolutely. What you have done, service for our country, incredibly grateful for you and all military families out there. I can't even imagine what you all go through. So I'm so appreciative. But now on this side, you're 24, you have a wife, and you have three kids. And there's a reality of a world that is, Hey, I'm a grown up, and we have responsibilities, and we don't get a choice just to go do what we want. We have to do what we need to do. What you need to do is start having money in. If I were you, Joshua, and I don't know how far you are into this, maybe one semester of school, but if it's too much of a load not to be working full-time, and maybe you're driving Uber. But I'm just saying, even for a year or two, this is where you want to go, but you guys are underwater financially. To me, there's not a choice to go to school. I would be finding a job.

Well, you can go to school and job.

Yeah, that's a lot, though.

I work 40 They got- They got 60 hours a week and graduated in four years.

I know, but they have $4,000 in collection. I know.

So go to work. Yeah. Here's the thing. When does classes let out, dude?

I'm currently online, fully online.

Okay, good. So you control when you want to go to class?

Yes.

Oh, that makes it even better. So you can work like an eight-hour day.

Yeah, but we did just have a new one. That's another reason.

Honey, your wife is at home with three kids. That would be like her job.

Absolutely.

You need money. You need to go get a job, Joshua. Like right now, you need to be doing GrubHub and Uber and something else by the end of the day, and you can buy your baby's Christmas. And by the way, the newborn don't even know it's Christmas. So this is not an issue here, okay? You feed them and change their diaper, they're a happy puppy. All right, so let's move on.

Up until about five years old, they don't really know.

They don't have any idea what's going on here. But dude, You can't call me up and act like that you can't fund Christmas. This is Thanksgiving. You got a whole freaking month. You can save up the money for Christmas by working during this month. That is the answer to your equation. Go get six part-time jobs that equal 8-10 hours a day and do your stinking online at night while the babies are asleep. I wrote financial piece from 10:00 PM to 3:00 AM. That's when I wrote that book because I had babies I had to feed, and I couldn't sit there and go, I'm now an author. I don't work anymore. I didn't have that as an option. The freaking electric bill guy didn't care if I was an author. He wanted money or they cut off my electricity.

And he's pulling the 6,000 from his pension.

He's got a lot of money coming in.

But is that Robin from his retirement? No.

No, no, no, no. His military retirement is huge because he's a military disabled.

Because he's disabled. Okay. He's getting a bazillion dollar. I was thinking this is taking from when they were to retire.

He's got a bazillion dollars coming in. No, it's just that he makes $72,000 a year sitting on his butt. He's going to school. And they pay for him to go to school. We, the taxpayers, and we should. That's fine. But, dude, the answer to your question is, not only do your kids have Christmas, you keep working after Christmas, and you will They really need $5,800 to be debt-free. You can have that by March. So first, let's go get the kids some Christmas, and then let's get Joshua out of debt by March.

And Joshua, can I just tell you, too, as a mom with little kids, especially if they're a newborn, a two-year-old. He's 24, so a two-year-old and a three-year-old. I'm assuming they're all under six, I would think. They don't know. Go to the target section, and they just want to open up gifts. They don't really care what's in it. They just want to have the wrapping paper and the experience of opening gifts. Go so cheap. Go so cheap. That stuff is going to be thrown out by April anyway with all the crap we buy. So even that, and that's for all of us.

Well, I got to tell you, Rachel, when she was little, We would spend all this stinking money on the kids' Christmas, and then dadgum, Uncle Mac would go to the Dollar Store and come in with a garbage bag full of toys that were garbage. And he was a bigger hit than we were, and he spent $20, and we spent $200.

And let's just say, too- Uncle Mac was the fun uncle. That's right. In this consumer-driven world, and especially in this season, I think his phrasing was, and this is not to pick on you, Joshua, because this is everyone, to make my kids happy. It is just stuff. We are such a disconnected culture anyways. The amount of people that we are on devices and phones and TVs and screens. Your kids want you, parents. They want You. Go find an experience to do with them, and that's going to create more memories.

Not Joshua. They want him to go to work. Do what? I said his kids want him to go to work. They don't want him.

They want him to go to work. Well, he needs to go to work, and he needs to be with them when he can. He can be with them a little bit later.

Right now, he needs to go to work. Right now, he needs some money. You know what I'm saying? You call me up and tell me you can't buy your kid's Christmas. I'll cry for about 30 seconds until I find out you don't have a job, okay? And then my crying is done.

I know, but my point is, last Last Thanksgiving, we took the kids to a school parking lot, and they rode bikes around. We all rode bikes around for an hour, and they still talk about… That's what I'm saying is kids are so low maintenance. So, Joshua, don't put that pressure in parents out there this Christmas.

And by the way, they already had the likes. It was built in. That was like a freebie. So there we go. Yeah, there you're fine. Wow.

Joshua, you got this. You can do it. Go to work.

You got this. We are proud of your military service, and we love you so much. We're going to tell you the truth. Don't call here if you don't want that. This is the Ramsey Show. Do you ever feel like you're finally making progress towards your goals only to get quickly distracted by something else in your feed? Well, that's why we created the Ramsey Network app, your single source for content that keeps you motivated. The Ramsey Network app is designed to keep you laser-focused on reaching your goals. Loaded with over 7,000 hours of Ramsey shows, this free app is the best place for uninterrupted content and no distractions. Plus, you can search specific questions to get more personalized content in seconds. So for the days you need some extra motivation, you'll have proven advice at your fingertips. It's time to get serious about your goals and shut out the distractions for good. Simply search Ramsey Network in the App Store or Google Play. If you're listening on a podcast, just click the link in the show notes to download our free Ramsey Network app today. Live from the headquarters of Ramsey Solutions, it's the Ramsey Show, where we help people build wealth, do work that they love, and Create actual amazing relationships.

Open phones this hour as we take your calls about your life and your money. The phone number is 888-825-5225. Number one best-selling author, Ramsey personality, and co-host of the Smart Money Happy Hour, Rachel Cruz. My daughter is my co-host today. Thank you for joining us. Theresa is with us in Fortworth, Texas. Hi, Theresa. How are you?

Well, how are you?

Better than I deserve. What's up in your world?

I know. I have grown children that I need off my payroll. I'm on Baby Step 2. I've oversaved, actually, on one. I can't seem to get any further because I have a 30-year-old that works part-time. He says he can't find a job. His resume is three-pages long. He has no education, no skills per se. His father, we couldn't go way back, was abusive. So he was put in a mental place for a while for PTSD and some bipolar issues. So when he gets out of that, and now we I don't have a full-time job. My daughter is wanting to start back to school in January, and I'm still doing a student loan from when she was doing it before. I know I'm enabling, and I don't know how to stop, and I don't want them living on the street. I can go on for a date.

Let me help you. If they're 31 and they're on the streets, it's their choice.

I know.

Not It's yours.

I don't know. It's hard. You don't want them to be that way.

I don't want them to be that way either, honey.

From what you outlined, is he taking care of himself, like, medically?

No, he does not take care of himself.

No, he does not. Medically, though? No. Like, take medication, all of it for bipolar?

Is he- He'll start it, and he doesn't take it. He'll start it, and he doesn't take it. Does he live in your house? He does not because that would cause conflict. I put him in an apartment. He had a beautiful apartment, and I took him out the beautiful apartment, and I put him in a crap hole. It's literally a crap hole. Thinking he'll go, Oh, this is good.

There's a chance he can afford that.

No, it's still 1,200. I'm still helping pay for it.

What you have to ask yourself is 10 years from today, what is best for him? What is best for your daughter? What is the most loving act you can give them? I'll answer that for you.

Please do.

That they have the dignity of having stood on their own two feet like adults.

Okay.

You are taking their dignity away from them.

I'm writing. I have screamed, cried, prayed. God thinks I'm just being funny now.

100% of enablers are sweet people. You are a sweet person. You are devastating your children. You're hurting them.

I teach. I know better. I know how to make my children at school problem-thought.

If you get it through your head that you're harming them, you'll quit doing it.

Okay.

You've got to actually accept the reality that you're harming them.

Okay.

Once you do that, you'll quit doing it. You wouldn't ever give a drunk a drink You wouldn't ever give a bag of heroin to a heroin addict. You would never do that. You're too sweet a person. Right?

Yes, absolutely.

Because you're bringing harm to them.

Yeah, but I will say there's a level of complication and complexity from what you just outlined that he has issues. I mean, he spent time in a mental facility.

He has mental health. How long ago?

Oh, God. That's been a good five years ago. They both have this abusive father thing going on, but they can't get rid of it. I'm like, Let it go. Let it go.

We'll go see a therapist. The thing is this, okay? We've tried that. I'm not suggesting that you're mean-spirited or even that you just announced suddenly in a fit of anger that I'm done, I've had it. That's not what we're suggesting. But I would say that I'm going to look at this young man at Christmas and say-And daughter. And daughter and say, Okay, I can do 60 more days of this, and so I'm making that number up. You can decide whether you want to 30 days or 60 days. You can't go longer than 60. I won't let you. All right? Okay. But I'm going to support and I'm going to give you some help for the next 60 days. This is your warning. You need to ramp up to get ready to receive zero as of February, as of March 1, the end of February.

Okay.

You tell them that they're in Christmas here and you say, I love you, and I'm really so sorry that I have mis handled my relationship with you because it's kept you from going and being all that you want to be. I'm going to be so proud of you when you go and be all that you're supposed to be. I'll be cheering for you. I'll be here to cry with you.

Also, Theresa- I'll take my feedback. Yeah, and, Theresa, just know you're not in a place to be able to help someone financially. You're in baby step two. You're broke. You have debt, right? I know. That's part of the equation. Honestly, I think Maybe there's other options if you were on the other side of all of this financially, of things of like, okay, but you don't have money to help them.

If you were a multimillionaire, I would tell you exactly the same thing, though. But you can say, Hey, mom's broke, and part of the reason I'm broke is I've been supporting these adult children, which is an actual oxymoron. This is a weird phrase we use, adult children. What does that mean even? I'm not able to do it anymore, and I'm not going to do it anymore because I've come to realize that I'm bringing you harm when I'm doing that. The good news is I'm giving you a little warning. The bad news is as of March 1, you will receive zero from me going forward, except my love, my prayers, and my cheerleading, but there will be no more money after this date. You set the date and make it very clear. Don't hedge around it and don't go, Well, if you can... No, shut up. Very clear. This is the date. It's a contract. Then follow it up with an email just reminding you what I told you over Christmas. I love you. I'm cheering for you. I'll be here for you. If you need a meal, come over. I'll feed you dinner. But there'll be no more money after March 1.

I'm broke and I'm having to clean up my mess, and I'm cheering for you to go be your best self. Okay. Are you going to do that because you love them so much? You're going to make them have their own dignity?

I love you so much. I'm going to do that for everybody.

You're sweet. You are the sweetest lady. Enablers are the nicest people.

But it's so… I mean, Trisha, seriously, though, as a mom, it's devastating. I mean, that would be so difficult if you really did believe, if I'm not helping my child, they're going to be on the street.

If you really do- If that's really it- If you don't believe that you're bringing them harm, you're not facing reality. I know, but- Because it's not a sustainable life to live without dignity.

I hear you. I know, but it's just hard. Without a work ethic. I'm just empathizing with Teresa.

It's hard. That's why you bought your own milk shortly after getting out from under my control. I don't buy stuff anymore. You're going to make your own. Oh, I know. Make Make your own way, little pig.

I know.

Make your own way. There's a big bad wolf out there. Be careful. Make your own way. I'll be cheering for you. Hey, guys, I've never done this before, but I'm partnering with a nutrition company, Field of Greens. Each fruit and vegetable in Field of Greens is selected by doctors to support heart, liver, and kidney health, plus metabolism for healthy weight. And your doctor will notice your improved health or Field of Greens will give you your money back. I can get behind a promise like Go to fieldofgreen. Com/ramsey and get 15% off with promo code Ramsey. Fieldofgreen. Com/ramsey. Hey, guys. Dave Ramsey here, and I got a big announcement. I'm coming to a city near you live on the money Me and Relationships Tour with Dr. John Deloney. This is the most interactive event we've ever done. You get to decide what we talk about. You do not want to miss this. We'll be coming to Louisville, Durham, Atlanta, Phoenix, Fortworth, and Kansas City in April and May of 2025. Get your tickets and more information at ramsey solutions. Com/tour. Rachel Cruz, Ramsey personality, is my co-host. The Ramsey Show Mission of the Day is brought to you by Yrefi.

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Today's question comes from Daniel in Alaska. I tithes and donate extra to the church where my family and I attend. Our donations this year will be around $20,000 in tithes and offerings. The church is not registered as a nonprofit organization. Should I keep donating giving big sums to them? We still want to give our tithes, even though we don't get a 503 nonprofit letter, but we are hesitant in donating more because we're afraid we won't be able to claim it on our taxes.

Churches don't have to be 501(C)(3)s to be deductible. It's not required by the code. The IRS code does not require that. They have to be formed as a religious organization. They can't be involved in politics, and they can't be running a for-profit under the same roof of some kind. But if they're operating as a true stand-alone church, and their job is to minister to the flock and take care of the widows and orphans, and serve the community as a typical church would, you are fine. The IRS does not require them to be a 501(C)(3).

But he says, Yeah, but I'm afraid we won't be able to claim it in our taxes.

You can. It's deductible. Oh, okay. The IRS does not require that they be a 501(C)(3) to deduct it.

I'm sorry. Okay, I hear you. It's not required. Also, Well, I don't know. To me, the giving aspect, giving out of your heart's desires and what you want, and the tax write-off is just an added great thing. But that's not the main motivator. I wouldn't not give to somewhere because you don't get a tax deduction. Exactly. That feels weird to me.

Exactly. Now, I will ask this question, though, Daniel. We've had Financial Peace University taught in 50,000 churches in North America. We interface with the church community all the time. We're a huge supporter of the bride of Christ. We love the church. Most churches go ahead and apply for and get their 501(C)(3), just so there's no question by anyone about what's going on over here. Maybe it's a startup, maybe it's a church plant in the early in the process. But I would want to ask leadership why they haven't gone ahead and applied for it. Because getting a 501(C)(3) certificate when your church is really not much of an effort, I'm curious why they wouldn't do that, and I would ask them that, but I wouldn't not give, and I would not worry about whether everything's a deduction. Now, if they're running a political action committee out of the back, back there, out of the back room, you could lose your deduction there. That's one of the guidelines. But if they're running an actual church, then You're not going to have any trouble with the tax issue. But I still would ask the question, why not? I don't understand.

I can't think of a biblical reason to not do the paperwork. It would be like, Okay, we have a church building, but we didn't buy fire insurance on it. Well, why? Well, we're trusting Jesus. Jesus sent the insurance guy there. You probably ought to buy insurance on your building. I mean, that's like it's in second Patience. I mean, God.

He's been using that joke for 30 years. I know.

It just keeps giving. It's the dad jokes that just keep working. As long as they keep working, my ratings don't go down. That's good. Yeah, I would get insurance on my building, and I would get a 501(C)(3) if I was the pastor of a church, if I was on the leadership team of the church.

So asking why would be good. Just be out of curiosity. But also don't be giving just to get tax deduction. Exactly. But you can get the tax deduction according to you.

And even if it's not. And 100%. You can ask Papa Google. He'll tell you. It's right there. It's right. Pop right up. I'll answer your question for you. All right. Pierre is in New York City. Hi, Pierre. Welcome to The Ramsey Show.

Hi, Dave. Hi, Rachel. How are you guys?

Better than we deserve. What's up in your world?

Not much. Just wanted some financial advice. I'm in a unique, for me, at least, position. I'm thinking about I'm thinking about maybe buying an apartment, an investment property for 200,000. I just want you guys to advise if I'm ready for it, not ready for it, or maybe I should just put on the back burner.

Okay. Are you out of debt and are you going to pay cash for the apartment?

Sorry, I should tell you my situation. Currently, I have two jobs. My income I have about three income. My salary is about 200,000, more or less. Also, the house that I currently live in, I make about $3,000 comes in in total. My only debt is my mortgage and my wife's car, which is about $25,000. Okay.

All right. Well, Pierre, I own a bunch of real estate. I love real estate. Rachel's husband is in the real estate business. He owns a bunch, they own a bunch of real estate. Both these families sitting here love real estate as an investment. The rule we live by is we pay cash for it or we don't buy it, and we only start buying investment real estate after we're 100% debt-free home and everything. That's the rule we live by. But having done that, you will thoroughly love the real estate business when you get into it. It sounds like you want to do it. But if you buy this apartment right now, it's probably going to cause you financial problems, not blessings, because you're broke. You got a freaking car payment. You don't go buy a $200,000 rental property.

I could pay for a little more of my situation. I understand it. A little more in the situation. I have 50K in the bank.

Then write a check and pay off your car today.

Understood. I could do that.

Yeah, you should do that.

I also had another question for you also. I was thinking of saving up to 100K and actually pulling a heel off on my house. I know you're really against it, but I feel like it will be a lot easier to pull the heat lock out the house how I have an income… Well, I have money coming in from the rental of my primary residence.

Pierre, are you 24?

I'm actually 32.

32, okay. Because you sound like I sounded when I was 24. I used to say stuff like that. Ambitious. I used to say stuff like that when I was broke, and it made me broker, okay? Because here's what you're not anticipating. You're not anticipating all the things that are going to go wrong when you own a rental property and the renters that don't pay. Now you got a heat lock on your house, and now you have to come home and tell your wife we're losing the house because the apartment deal went sideways and we're getting foreclosed on. You don't want to have that conversation. I'm so stupid. I had that conversation when I was your age, and you don't want to have that conversation. You want to do this debt-free, but you're going to go ahead and do it. I hope it works out for you. I don't think it's going to. You asked me, so I told you the truth because I love you. I don't think you should do this. I think it's a really, really bad idea. But I don't think I can stop you. I think you're going to go learn the lesson the hard way.

Some of us are knuckleheads, and it's just how it works. We have to get bonkers on the head to catch it.

Pierre might be listening and might be reconsidering. We don't know. He's not. Because I think what's difficult is in the present, all of that sounds good. You can line it up, a situation, and say, Oh, if this sits in there, and I have that, and that carpet, and it's all working, all these moving pieces. And here's the problem, too, Pierre. When you start leveraging yourself like that, statistics show us, and studies are showing us that stress goes up, anxiety goes up, lack of sleep starts to occur. And you're trading your peace of mind for complications of trying to build wealth. And you're doing it in a really fast way, in an ineffective way, because it's going to cause other issues in other parts of your life. So be as peaceful as possible, pay off the car, work and pay down your mortgage, and then say, Hey, let's save up and buy. And in 10 years, 5, 10, In 15 years, you guys could be wheeling and dealing, and it's all your money and with a lot of peace. So just do it the right way. Everything you're talking about can be done. Just slow it down and do it with cash instead.

The best way to get rich quick, get rich slow. This is The Ramsey Show. What does the future hold for business? Ask nine experts and you'll get 10 different answers. Economic growth or a recession. Business taxes will go up or down. Ai will help us work, or it will replace us all. But there's no such thing as a crystal ball. That's why more than 40,000 businesses have future proofed themselves with NetSuite by Oracle, the number one cloud enterprise resource planning system. Ramsey Solutions uses NetSuite, and you should, too. Whether your company is earning millions or even hundreds of millions, NetSuite helps you respond to immediate challenges and seize your biggest opportunities. With one unified business management suite, there's only one source of truth for the visibility and control you need to make quick decisions. Netsuite's real-time insights and forecasting help you see into the future with actionable data. When you're closing the books in days, not weeks, you can spend less time looking backward and more time focusing on what's next. Speaking of what's Next, download the CFO's Guide to AI and Machine Learning at netsuite. Com/ramsey. It's free at netsuite. Com/ramsey.

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Rachel Cruz, Ramsey personality, is my co-host today, my daughter. One of our favorite things in the world to do is talk to one of you when you're doing your debt-free scream because you paid a price to win. You've lived like no one else, and now you're ready to live and give like no one else. We even put a debt-free scream stage in the lobby of Ramsey Solutions. People come by and watch this show, and then they sign up and do a debt-free scream on the debt-free stage. Our favorite of all is when one of our own Ramsey family, Ramsey team members, has become debt-free, and they are on the stage. That would be true of Matt Hudson and his wife, Terry. Matt, congratulations. You did it. Thank you, Steve. Well done, Terry. Way to go. Thank you. Wow. Matt, as a software engineer with us, has been with us 12 years.

Yeah, I know. I was like, I know Matt's been here. I was like, Has it been over 10 years? And you had 12 years.

Yeah, 12 years in the financial piece area, Ramsey Plus, working with every dollar and working with financial piece and all that. You've seen a lot here over that 12 years. How much debt have you all paid off? This was our mortgage. It's $133,000. Way to go. Oh, my gosh. How long did this take, total? Eleven years and three months. Okay. Great. After you came here, right after you came here, you got the mortgage and you said, All right, we're doing this. Our oldest son is 11. For the first year I was here, we were both working and we didn't have kids yet, so we saved up a really nice big down payment, got our house with a 15-year mortgage, and Terry quit work after Everett was born because it was a priority for her to stay at home when they were little. In the past few years then, with her being able to go back and Work part-time, then we've made some really good progress to be able to get it knocked out early. Way to go. What's the house worth?

It's worth 4,485.

I love it. I'm not going to go into your personal stuff since half the Ramsey team standing around, and I'll tell your business in front of your coworkers, that would be unfair. I won't ask what your income is or what you have in your 401k that we have here. But you guys ought to be approaching Millionaire, and I'm proud of you as soon as you get there. I love having millionaires work on our team. That's the most beautiful thing I can think I've ever heard. Way to go, you guys. Thank you. So very, very proud of you. Congratulations. Working at Ramsey is weird to start with because we're a weird bunch. But paying off debt while you're working here, it's like peer pressure to do it, isn't it? Yeah.

He says it's a good thing he works here because he's the spender.

Which is true. Okay. Are you spending money on gadgets? Just, yeah. You're a software engineer, so I'm guessing. Yeah. Yeah, gadgets. You pick an expensive hobby, I'm probably into it.

Okay.

All right. Terry, but you use the coworkers here and you to rein him in then.

In the budget That meeting, it's a good thing for both of us to get on the same page. That's been a big key for us is to have that monthly conversation to make sure we're both working towards the same things and have our priorities together.

Yeah, that's a great deal. Well done, you all. I'm so proud of you.

That's a big deal. I mean, to have no mortgage.

Paid for half a million dollar house. How old are you two?

I'm 42.

I'm 47. Wow.

Very cool. Our goal was by 50, so we're glad we beat that. You did it.

You slid in under the bar.

Okay, so tell me, because when people are on the ladder baby steps, when they're in four, five, six, a question we get a lot is, Okay, so how much should we be throwing extra at the mortgage to pay it all faster? Just walk through high level how you guys decided month to month or season, maybe it's season by season, year to year. What did that look like of putting extra? Was there sometimes that it was like, No, we didn't because we were saving for a vacation? Were there sometimes that you're like, All the extra goes on? What did that look like for you guys?

My youngest started kindergarten the year of 2020. I He was planning to go back to work when he started kindergarten, but with COVID being so unpredictable, I was like, Let's just hold off. I started working part-time in 2021, and we had decided that all of my paycheck would go to house payoff. We lived off of what Matt made and hit our savings goals with that for vehicle replacement and stuff like that, but all of my paycheck went to house. Okay, so great.

Are you still going to continue to work part-time?

Or now that-Yeah, we've got some other goals. We want to do some house renovation, some vacation, and of course, college funding. Yeah, that's awesome.

What are you going to do with the house?

We want to get some new floors. We want to update the living room. We really haven't done much to upkeep the house since we bought it, so we just want to make it prettier.

Yeah, there's a lot of things we put off because it's like, Well, we're almost We almost have the house paid off, and once we get that done, it'll- Well, you got no payment now. You got all this room. Yeah, you get there fast. Putting new flooring in, it goes a lot quicker when you don't have a mortgage.

Totally. It's so great, you guys. Amazing. How does it feel when When you guys paid it off and you sent it? What was that like?

It was amazing. We were at Chase five minutes before they opened, and we're taking pictures outside of Chase. Then the employee saw us, and he's like, Are you Terry and Matt? Come on in. He told us the payoff balance and wrote the check, and we're just sitting there like, We just did it. We did it.

I love it. And go to the parking lot and do a little dance. I like it. Very well done. Well done, you guys. All right, working here, does that make harder or easier, seriously? I think it made it easier because it's just like you said, you have that positive peer pressure. It's not weird that we were not borrowing money and that we were paying extra on the mortgage and that thing. It It's just, I don't know. You have the benefit of your coworkers not making fun of you. Yeah. That's an interesting thing to have. Quite the opposite. They might be making fun of you if you weren't doing this. Yeah. We're just handling money weird and everybody else is doing the same thing. It's not like you're an oddball around the people you work with for doing it. Well, obviously, you don't have to work at Ramsey to do this. Millions of millions of people have. We've got tens of thousands of debt-free screams on the YouTube channel that people can watch, people from all incomes and areas of the country and situations have overcome all kinds of things. But what would you tell folks that are listening and watching the main thing from your perspective, Terry, that you have to do if you want to get out of debt?

What is the key to getting out of debt?

I think it's having the budget and making sure that everyone's on the same page and that you're working towards the same goal, and then also to daydream about what happens after. That helps you stay focused because for us, it was 11 years, which felt like forever. We had to keep up with our dreams. So focusing on that after the house payoff, too.

When you mapped it out the first time, what was your prediction of how long it was going to take?

We thought we would be done by the time our oldest entered high school, and he's in sixth grade. We got done about three or four years early.

You thought it was going to be 15 years, and it was 11? Yeah. Most people bring it in earlier than they originally planned. Yes. That's not unusual at all. Good job, you guys. Very proud of you all? Great job. All right, bring the kiddos up. Everett and Spencer are with us. Good-looking young men. Who's who and what's the ages?

This is Everett. He's 11. And this is Spencer.

He's nine. Okay. So Everett came the year we bought the house, and now he lives in a dead-free house because his mom and dad are heroes. Way to go, you guys.

We're very proud of you all. It's so good to see you guys, too. I feel like Terry, I just see you at Christmas parties every year. It's good to see you outside of it, and I'm so happy for you all.Thank you, guys.So excited.

All right. Everett and Spencer, you guys have been practicing debt-free scream? You know how to do it? You better get ready, man, because this is your minute. This is your moment right here. You're going to be famous in just a second. Matt and Terry Everett Matt and Spencer. Matt Hudson from the Ramsey team for 12 years, he's been with us. They paid off the house in 11 years and three months, $133,000. House and everything. They're weird, they're heroes. Count it down. Let's hear a debt-free scream. 3, 2, 1. 3, 2, 1.

We're debt-free.

Yeah! Way Way to go, you guys. Like any good software engineer, he's very precise. They had a plan, and they executed it early.

Yep.

Wow.

Knew what they wanted. It's incredible. Absolutely incredible. I mean, to have a paid-off house, that's just… It's crazy.

When normal is broken, America, your goal is to be weird. So one of the best compliments you can hear around the Ramsey Show is if We call you a weirdo. It's because you're doing very smart things in a culture that has nothing smart to do. This is The Ramsey Show.

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Get early access to some of our best deals, meaningful gifts for family and friends as low as $8. You can shop our best-selling books like the Total Money Makeover, Baby Steps Millionaires, Own Your Past, Change Your for just $12. Audiobbooks and ebooks are only $8. The Rachel Cruz Wallet in Black, Camel, Brown, and Champagne are on sale this week. Questions for humans, conversation cards starting at just $12. The Black Friday sale also includes the brand new Rachel Cruz Children's Book, I'm Glad When I Can Share. The previous three books are available. You can get the three book set. It is a trilogy. This is the last one, and you get the whole three book set on sale right now. If you got grand babies or babies and you need bedtime stories, that's the best. It's all there at ramseysolutions. Com/store, and even more. Eric is with us in Key West, Florida. Hi, Eric. Welcome to The Ramsey Show.

How are you doing today, sir?

Better than I deserve. What's up?

Yeah. Like many investors, I pay my financial advisor an asset under management fee. In my case, it's 1%. My wife and I have been married for 20-ish years, and the time, we've built our assets under management to about half a million dollars. We have other assets, but under management from them, about half a million dollars. That would be $5,000 a year for their fees. A couple of years ago, my parents passed away, and we inherited a substantial sum. So now our asset center management are a little over 2 million. My questions or my problems are two. First, by doing nothing extra, no effort on their part, suddenly my advisor has gone from 5,000 a year to 20-some thousand a year for doing the same work. The other thought is, when it was $5,000 a year, I could stomach that. Now I'm thinking, over the next 20 years, Even if my assets remain flat, that's 400,000. And if they go up, plus lost investment opportunities, that could be 500, 600, 700, $1,000 that I'm losing. So are there any alternatives to asset-centered management fees? Are there any recommendations you can make?

That's a very standard way of running a brokerage, I mean, an advisory company right now. Most of our smart investor pros run a very similar fee base. I have seen some of them, the fee decreases as the asset percentage decreases as the asset's under managed increase. When you've got a portfolio the size of yours, it probably could be less than 1%. Some keep it there. Then the question you've got to say is, Okay, what am I getting for this money? I'm a firm believer in having an advisor. I'm like you, though. I want to know what I'm getting for what I spend. I think I'd have a conversation with them about two things. One is, tell me exactly what you told me. Guys, this is a lot of money, and I'm not sure what I'm getting for my $25,000 a year. Show me what's... Because I can buy a nice car once a year for what I'm paying you all. Okay? And have a whole basement full of cars in a couple of years. What is it I'm getting for what I'm paying you? And show me your value. Or do you have any a sliding On a scale, now that this has gotten so much more?

Like a lot of times when it's over a million dollars, you start to see things slide down. Do you have anything that you run a less percentage on on a portfolio this size? Ask them that question. Those two questions. One is, show me why... Make the sale again. I'm not mad at you, but show me... Right now, I'm confused, disillusioned about what I'm getting for 25 grand a year.

The effort hasn't changed or the process, the strategy hasn't changed. It's the same thing, right?

Then the third thing I would do is jump on ramsey solutions. Com and click SmartVestor Pro and talk to some of our SmartVestors. They're in the exact same business, they run the exact same. Most of them run a management fee like that. It's usually very standard in the business. The industry runs about 1%. Some people do three quarter, some do a sliding scale. When you got more assets under management, some don't. But I mean, they're not ripping you off. I don't think that at all. But you're asking a valid question that you deserve an answer to. It is enough money that it's fair to ask the question. I would ask the smart investor pros I ask any of them, do you have a sliding scale when a portfolio gets this size? I got about two and a half million. I'm really concerned that I'm paying a 1% fee on that because I don't know what I'm getting for that. It's not a belligerent thing. There's no belligerence in your voice, by the way. You're not being a jerk about it. You're just going, Okay, I'm sorry. I probably wouldn't use the phrase, You're doing no more work.

That's a bit insulting. But I would say, What am I getting for what I'm paying you? Why would I do this? And what's going on here? Because I do value what they do, and I think you should, Eric. I think you ought to have someone in your corner to talk to. Rachel has a SmartVestor Pro. She and Winston meet with. I have one that Sharon and I meet with. In my case, they do less than they might for Rachel and Winston because we do all our own estate planning. Off to the side, and we do all of our own, for that matter, I do all my own selections on the mutual funds.

Yeah, what I found, Eric, the value for us is that they're looking at more than just investments. I mean, ours, they're looking at taxes and if there's real estate involved that you can sell within this five-year period and get this. They're strategizing with you everything from our giving to investing. They're looking at the whole thing, and that's always helpful. But my question, Dave, to you, is there ever a point from Eric's perspective, which I know is not a lot of people out there to have this substantial amount of money, just investments, that you would ever pull a million out and do your own and put in an index fund and keep a million in? Do you know what I mean? Spread out where you're not… It's not all under someone's- No.

I would get happy where I am. If I can't get happy there, I'm going to get happy somewhere else. I want somebody in my corner, and I want it all in one place, invested in different things, but under one set of eyes, there's no advantage to diversifying your advice. No, I think that's just bifurcating your brain.

Well, not your advice, but would you ever just individually go open up a Vanguard and just put your own money in for the S&P or something?

Do you know what I mean? The only thing I do there is I do have an S&P that independent of these guys, but that's just me throwing money in there, extra money laying around until I get some money for a piece of real estate that they don't have anything to do with.

Then you're going to go buy it out of that.

I don't going to buy it out of that S&P. I don't invest in the S&P. I park in the S&P. Which last year was a really good thing. It made 30%, but not a bad parking spot. That's- Yeah, it's a good point. I'll be happy where you are. I don't want three different investing. It's like I'm not going to go to three different churches because I agree with them. No, it's not. You need to find a home and deal with the discomfort of the home and the comfort of the home.

That's good.

Yeah, that's what I would do. It's a good question. It's an excellent observation, Eric. You're not asking the wrong question. You're asking the right question. I would just ask it carefully and somewhat humbly, but it's a fair question that I'm going to dig to the bottom of. Three things. One is shop around, go talk to some other SmartVestor pros, see if they have a sliding scale, ask your guy if he's got a sliding scale, and ask your guy why he's worth 25 grand a year. What am I getting for that? That's all fair questions and should be asked. That's you managing your money, and that's as it should be. Well done, sir. Very well done. This is the Ramsey Show. Hey, you're still here? What are you doing? You do know that the rest of today's show is playing right now over on the Ramsey Network app, right? All you got to do to finish the episode is search Ramsey Network in the App Store, Google Play Store, or just click the link in the show notes to download the app for free.

Yep, you heard me right, for free.

Then right there on the home screen, you can watch the rest of today's show. Bada bing, bada boom. All right, I'm getting out of here. Enjoy. We'll see you on the app.