Debt Always Comes With Strings Attached

21:07Dave Ramsey:Go to knockbox.com slash Ramsey to get started. That's N-O-K-Box dot com slash Ramsey.

21:32Dave Ramsey:If you're tired of living paycheck to paycheck and feeling like you can't get ahead, join one of our free every dollar trainings. There's new trainings every week this month, and they're all hosted by one of the Ramsey personalities. Rachel Cruz or George Camel or Jade Warshaw will be in there helping you out. I'm going to show you how to stick to a budget and find thousands of dollars worth of margin using every dollar so you not only get out of debt, but you start building wealth. and you can ask any question during the live Q &A. A lot easier to get a question in there than it is on the show.

22:01Dave Ramsey:Hard to get down there. We're sorry for that, but there's only four lines. We're going to get so many people, and it's a lot of busy signals when you call here. But you can get in there. Sign up for free at RamseySolutions.com slash webinar. Free every dollar trainings with the Ramsey personalities. Dylan's in San Francisco. Hi, Dylan. How are you? I'm doing great. I'm excited to be on the show. Thank you, sir. So my question is, my wife and I have a bunch of debt, about$2.3 million worth of debt, but it's all really low interest rate debt. And I'm wondering if we should be trying to pay it off as quickly as possible, or since we can make more in high-yield savings or in the market, should we sort of take our time in paying off this debt?

22:51Dave Ramsey:What is it owed on? So$2 million on the primary residence at 2.4 % on a 30-year fixed. We have a rental residence, which has about a quarter million at 3%, 80 ,000 student loans at 1.6%, and then a car loan of about$40 ,000 at 4%. And what's your household income? about 1.5 million but that's new congratulations i'm up a lot yeah yeah way to go man i'm up a lot you're doing wonderful what do you do for a living i'm a lawyer as is my wife okay good well here's the the thing well real quick dylan do you love it do you love having 2.5 million like are you good? I'm okay with it. So our net worth is like 5.2.

23:45So I feel like it's manageable. I want to have no debt, but part of me feels like it's kind of backwards to pay down 2.5 % debt when you could earn 4 % in the savings account.

23:58Dave Ramsey:Okay. All right. It's a good question. Valid question. All right. So here's the thing. The thing that we forget that no one talks about and no one teaches is debt equals more equals risk more debt equals more risk huge amounts of debt equals huge amounts of risk huge amounts of debt as a percentage of your net worth equals huge amounts of risk let me illustrate okay you said you had a five million dollar net worth what if you had a five and a half million dollars worth the debt at 1%. You would feel that risk instantly because your net worth is not enough to cover. You have negative net worth.

24:41Dave Ramsey:You follow me? Right. And so even though the interest rate was great, you felt the risk increase when I just gave you the example, didn't you? I did. That would stress me out. Yeah. And so that illustrates accurately that debt equals risk because you can literally feel it in your physical body and you didn't even do it you just talked about it and your body started going you know and so that that that's your risk meter is measuring that you're feeling that so what is left out of your calculation of i can borrow this money at two percent and i can invest it at four i'm making a two percent spread or two and a half percent spread or whatever it is what's left out of that is you've not calculated mathematically for the risk okay and there is actually formulas to do that in graduate level finance um if you're comparing a risky mutual fund with a not so risky mutual fund we measure the volatility of the fund with a statistical measure of the height and distance to the valley of the you think the wavy line that represents the returns, you know what I'm talking about?

25:57Dave Ramsey:If it's a real tall wavy line and a real steep wavy line, that's a risky one, you know what I'm saying, versus a real smooth one would not be risky. The measure of that mathematically is called a beta in statistics. And you can actually use a beta to adjust the high risk versus the low risk mutual fund and compare them apples to apples. The reason I'm bringing all that up is there's actually, it's actually a thing until you talk about debt and nobody does it with debt except me and we started doing it with that a long time ago to say more debt equals more risk and so you would divide your supposed spread out by the extra risk you're taking using a thing called a beta and you would see that there's actually no perceived value after adjusted for risk and so you're kidding yourself is the mathematically is the point you're not really making the spread because the math formula that you're using is naive.

26:48Dave Ramsey:It left out the risk. So you're not being a simpleton at all when you pay off the debt. On the contrary, you're very sophisticated when you choose to pay off the debt, making this wonderful income you guys have just found yourself in, and you're extremely successful lawyers. Thank you. I'm so glad for you. I'm happy for you. I want you to win. So the other thing you ask yourself is if you extrapolate these things out way into the future, where do you want to be? You're how old? 29, maybe? I'm 48. 48? Okay. Wow. Okay. You sound youthful, Dylan. Okay. All right. Well, so when you're 68, when you're 68, do you want a$50 million net worth with a$25 million debt load?

27:34Dave Ramsey:All I want is$10 million. No, I mean, do you? Do you? I mean, I don't want to extrapolate this out. I don't want to 10x this if I'm you. And if you don't stop it, you're going to 10x it. And the only reason you would stop it is you decided it's not good. I decided I want to be free. I decided even though there's a little, I might make a little money, but adjusted for risk, I'm not really over the scope of time making a ton of money and it's not worth it. I can pick and choose my cases differently. I can grow my law career even more exponentially if I have zero things riding around on my shoulder when I'm making these choices.

28:17Dave Ramsey:And so I'm going to encourage you to work toward it. I don't think it's an emergency. I don't think you're bankrupt. I don't think you're stupid. I don't think any of that. But it's almost a philosophical discussion in a sense that we're having. It is a math discussion, and the math I pointed out is wrong. but it's not it's not going to cause you harm you can out earn this level of mistake it's not that big a deal but i wouldn't set out to say as my net worth grows i'm going to grow my debt and if i'm not willing to grow my debt as my net worth grows then must be because i don't think the debt's good and so since i don't want to 10x it why would i keep it anything that's great i want to 10x anything that's not i'd love for you to 10x your income i don't see anything wrong with that That'd be cool.

29:04Dave Ramsey:I wouldn't wouldn't call you out. Wouldn't say you're doing something wrong to do that. And so, yeah, that that that helps me. I am. But you are hanging out with some very sophisticated people who are not very sophisticated with their mathematics. If they're making you feel like a simpleton for paying off your debt, because I just walked you through a fairly sophisticated formula that you probably never heard before. I suspect I told it to a bunch of MBAs in a college thing the other day and they looked at me like I had invented fire. And so but the so that it's it's that's how it works. I would pay it off, but I wouldn't be in.

29:42Dave Ramsey:I wouldn't be breaking my back to pay it off. You make a million and a half dollars have a car payments ludicrous. It's ludicrous. Yeah, especially the consumer stuff. I get that. That's crazy. I get rid of that stupid student loan, that car payment. I pay that off in about the next two months. but we can make the argument about the rental house and the house a little bit more cogently but you still lose the argument counselor

30:07Dave Ramsey:session is adjourned i'm so proud of you man you're just killing it i'm just so happy for you that you're making all that money yeah because you work so hard to get there well on the other part and we talked about this in an earlier call but the the humanity of money it is not just about the math there is a level of peace and security and autonomy that you get when you You just own everything. I mean, it is like there's just something there. And so that element will not be in a formula or, you know, but it will be at night when you go to sleep and everything's owned. And there's just a level of peace.

30:39And there's not really a price on that. Like there's something there that's very real. And you can out chase and out earn the interest rates here and there, whatever. That can be the game you play. But as Dr. John Zaloni says, solve for peace, have peace in your life. We live too much of a stressful life. You have a stressful job, Dylan. You know, just eliminate some stress. Feel free, have autonomy over your life and money and those choices.

31:01Dave Ramsey:Yep.

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32:20Dave Ramsey:Mike's in California. Hey, Mike, how are you? I'm doing great. How are you doing? Better than I deserve. How can we help? Love it. I just have a quick question to cut to the chase. I had to take out a loan that I didn't want to take out because of some damage to a home I just purchased. I have, we're currently in a lawsuit to get that money back. So do I pay it off? Does that own intense the Ramsey way? Or do I, since I stand to make this money back, do I use my margin to not miss out on compound growth? No, you pay it off as quick as you can. Because when you get the money later, you'll have the money later.

33:02Dave Ramsey:But until then, you'll have the debt whether you win the lawsuit or not. Yeah. So we need to get rid of the debt. And they're independent of each other. Having the debt doesn't make you have a stronger case for the lawsuit. The lawsuit will be answered on its merits only. Heard. So, yeah, I'd be done with it. I'd be done with that debt as fast as I possibly could. I'm sorry you're going through that, though. That's a really – there's nothing worse than a home being broken except a home being broken and a lawsuit. These are two of the worst things you can go through. It's just awful. I'm so sorry.

33:37Dave Ramsey:Wow. Wow. Josh is in Illinois. Hey, Josh, what's up? Hey, how's it going? Better than I deserve. How can we help? All right, so I had a quick question. So I live with my two younger brothers, and one of them works full-time, and he fully does his part, and another one works just barely enough to just barely cover his part of bills. How old are these people? And I'm looking. So the one that's barely working is 20, and the one that is working is 23. And you're how old? 25. Okay. So you have one lame roommate, one good roommate, both of which happen to be brothers. Yes, my brothers, unfortunately.

34:26Dave Ramsey:All right. So I am currently working on paying off the last bit of debt that I have, and I was considering moving out at the beginning of next year. But I have this weird sense of guilt if they're going to be able to survive because the one brother would probably end up still staying with the younger brother. And the younger brother, I don't know if he's going to be able to drag his weight. So I feel like I kind of have to stay. And I was also thinking of staying anyways because I'm still working on paying off a car that I purchased a couple years ago. What's the motivation to move out just because of the financial craziness?

35:07um partially but also i have a girlfriend of two and a half years and sometime within the next two years i want to within the next year or two i want to propose and get married and then you know of course live with her okay where would you would you just go rent somewhere else is that you were thinking in the meantime yeah most most likely do you think you can find something cheaper cheaper i doubt it okay what do you make i make 57 000 a year okay all right um

35:39Dave Ramsey:okay you you make the decisions uh uh and you give them enough notice and you make the decisions based on what is the right thing to do uh propping up someone who will not work is not ever the right thing to do that's enabling misbehavior okay and so i you know you can you can love someone who misbehaves but you don't have to love their misbehavior okay like you can love your little brother but you don't have to love his laziness all right and so uh i would just tell them hey guys um this worked for a while we were a couple of we're three young guys coming out of the house we did it together it worked for a while and i'm ready because of this dating relationship i'm going to start talking about moving out and i'm giving you like four five months of notice here that that's what's going to happen and so you guys need to start making plans to be able to move somewhere else or to make up the difference with me being gone or i find another roommate they'll replace me um or whatever it is y 'all want to do but then what they choose to do with that knowledge is on them, not you.

36:53Dave Ramsey:So that removes all guilt. All I can do is present to someone what the situation is. How they react to it is their decision. Now, Josh, there's not a contract that you guys signed that you'd be breaking in any way, right? No, early ends in, I believe, the beginning of February. Okay, is that when you would move out then? Yeah, most likely. Okay, that's great. Yeah, yeah. I would tell your brothers. I'd tell your brothers over dinner. And then I would tell and then I would send an email to the landlord and copy your brothers that I'm making plans to leave in February. My brothers will let you know what their plans are.

37:31Dave Ramsey:But I will not be here after the lease expires. I want to let everybody know that and just and give everybody plenty of notice. The landlord knows what's going on. But that also gives your little brother gives your brothers a little shock to the system. It's like this is really happening. And talk to them in person first. Yeah, yeah, yeah, yeah. Don't send an email. That's what I said. Have dinner with them. Have dinner with them and tell them what's going on. Okay. Check their Gmail. And they're like, where's Josh going? Josh, don't make this about them. This is just what you're doing. Yeah. This is what I'm doing.

38:01Dave Ramsey:I just want to let you know what I'm doing. I love you guys. And it was fun for a while. And now I'm going to go do this. And, you know, it's not you. It's me. And so, you know, right? So when it comes to, you know, making this about me, I was considering staying with them because I currently have about$23 ,000 in that. It's a car loan. Well, sell it. See, I've looked into that, and I got it back in 2022 when it's stuff like super expensive. Kelly Blue Book puts you at, at most, I'm thinking maybe$9 ,300. Okay, well, you're pretty stuck. You probably need some extra jobs. I'd work my tail off and get some extra jobs.

38:41Dave Ramsey:I'd have$4 ,500 this weekend. Yeah, just have at it and tear into that thing. But I don't think that's a reason to stay. I think you can pay off that car or get rid of the car problem, whatever it is you do with it, whether you're there or not. Yeah, but I also heard him say the little brother is paying. He's barely making the bills is what he said, but he's doing it. So if it's a situation where you have cheap rent and it's not like affecting the real, I don't know. I don't know if there's like a reason to get out. Now, if he stops paying and then you have to pick up his slack, then that's one issue.

39:10Dave Ramsey:That's what's happening. We don't exit if everybody's bill is being paid.

39:18Dave Ramsey:It's time to go, man. It's time to go. Time to go. Open phones at 888-825-5225. You got to be real careful with the – here's the thing. I've learned it the hard way on the show answering these questions for 30 years and also in my personal life that the better angels in all of us, the nicer parts of all of us, all have the ability to enable. We all have the ability to want to make everything okay for someone else. And sometimes we want it more for them than they do. And that's when enabling happens. Enabling is never good. Enablers are always, when I'm talking to one, they're always the nicest people.

40:07Dave Ramsey:they're just the sweetest people. They just want everybody to be happy. And they're just helpful. But they took their sweetness to a toxic level and ended up giving a drunk a drink. Yeah, the drunk's really happy, but you just gave a drunk a drink. You just said, hey, here's some Jack Daniels, buddy. And so if you're covering for your little brother who's not working much and... Well, I agree if he wasn't paying the bills, but he said at the beginning of the call, though, his wording was, which I listened, The wording was, he's barely making his bills, but he's making, I mean. Yeah, but we know.

40:42Probably, yes, there will be a time.

40:44Dave Ramsey:The pattern is there. That's fair, fair. That there's going to be a problem. I can predict that. But would you pay an extra$500 in rent somewhere? Like, would you up the rent to move out? It's going to have to of some kind. But I think he's got to get in a functional situation if he wants to enter a functional relationship with a young lady. Yeah. Instead of hanging on back here, cleaning up behind him all the time. And so there's some gain there. Yeah. And I think it's going to be the best. The best thing for the person that you're enabling is when you stop. It's really good for them. It's like, I love you too much to participate in your crazy.

41:21Dave Ramsey:I am no longer signing up for the trip to crazy land. You taking a trip by yourself and you just got it. You got to talk this through, man, and just go, I love you. And no way. No, no. You go do that stuff by yourself. I don't do that. And I'm not going to help you do it, and I'm not going to finance it while you do it. Child of mine, parent of mine, uncle of mine, little brother of mine, whatever it is.

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43:04Dave Ramsey:Welcome back to the Ramsey Show in the Fairwinds Credit Union studio. I'm Dave Ramsey, Rachel Cruz, Ramsey host, Ramsey personality. Number one best-selling author is my co-host today. Robert is in Florida. Hey, Robert, how are you? I'm doing well. How are you? Better than I deserve. What's up? I am calling because my wife and I recently went to Montana for a couple weeks. first time we've ever really experienced a country other than the East Coast. We're close to retirement, and now we're considering buying a motor coach and spending two years, you know, still having a home base, but two years going on long trips and seeing national parks.

43:50It's just something that's in our gut that we want to do, but I know how you feel about things with motors and wheels and, you know, things of that nature. So considering our net worth, do you think, you know, we should do this or do you think we've lost our minds? Well, what's your net worth? Right around$3 million.

44:12Dave Ramsey:Okay. All right. So what would you spend for the bus? Probably$200 ,000. Okay. So there's a couple ways to look at it. One is you say, okay, when you just did this other trip, Did you take a coach, or did you just drive the car? No, we flew out there, and we bounced around. We went to Glacier National and a couple other really beautiful places. Beautiful, yeah. That's cool. Good trip. Okay, so the answer is yes, you can afford it. And the way I determine that is this. I use the burn the money in the middle of the floor analogy. Okay, so if I take$200 ,000 and I burn it in the middle of the floor, or I throw it out the window of the car on the interstate just to watch the traffic swerve, okay, does that change my life if I have$3 million?

45:05Dave Ramsey:No. Right. So if this is the worst possible decision ever, your life is still okay. So the answer is, yes, you can afford it. But then I'll give you some suggestions on things that Sharon and I have experienced. A correlation might be a second home. We have friends that go to the beach. And while they're staying at the beach, they go, I've always wanted a house on the beach, a condo on the beach. And it sparks their interest just like yours has sparked on this. They've never had a house that was a second home. And they've never lived on the beach. They stayed there two weeks. Yeah. So what I suggest to them is before you spend$2 million on a beach house, why don't you just go rent one for five months and live there and see if it's all it's cut out to be.

46:02Dave Ramsey:They came home and didn't like it and were glad they didn't purchase. So the correlation here might be, why don't you rent a motor coach for a month for$20 ,000? for$20 ,000, and let's burn$20 ,000 up before we burn$200 ,000 up and make sure it's as romantic and as much of a thing as you think it is. It might be and it might not be. You might be, I prefer to fly in private, charter, and rent an SUV than I do drive with all these yahoos. You might decide that. Right. And about the same amount of money, by the way. There you go. I know I'm not going to come out of this on top as far as money goes.

46:50No, you're going to lose the money. Oh, yeah. Oh, absolutely. But it's what you'll enjoy, Robert. So one couple doesn't like the beach. Well, we know plenty of couples that do and have a house, and they love it.

47:01Dave Ramsey:Go try it, and if they had liked it, then buy the house, right? If you like the motor coach after renting it for a month, go do that. But, I mean, the number of guys that buy a motorcycle, and it sits in the garage 24-7, and they drive it twice a year and they thought they were going to go on all these trips and stuff is a bunch. Okay? Yeah. And you could have rented a stupid motorcycle for the weekend and had the best motorcycle on the planet and gone and done rode through the fall leaves or whatever it is you want to do, right? It's okay. Go do that stuff. But I'm just saying try it before you buy it is what I would do.

47:34Dave Ramsey:I'd invest a little bit of money in that. Sharon and I actually did that on a second home area that we did. We rented a home for 30 days and looked at other homes in the neighborhood while we were there. And we loved it and ended up buying a second home in that neighborhood. And but we by that time, we had been there 30 days. We knew everything about all the ups, downs, sideways. We knew how bad it. And and that. And so, yeah, when you own another vehicle, you got one more thing that breaks all the time. I was going to say, that's the other thing is the maintenance side of it. It just breaks all the time.

48:03Dave Ramsey:It's just and you got insurance. It's just the more crap you own, the more repairman you have to know. Houses, cars, all that stuff. More money, more problems. More money, more problems. That's it. Yeah, that's it. I mean, I want you to try it out. I want you to go do it. You can afford it is the answer to your question. But before you turn this one weekend trip into this$200 ,000 decision, I would baby step into it, no pun intended. That's exciting, Robert. Yeah. From the way you were talking, I think you and your wife, I think this will be the retirement. I'm excited for you. You think they're going to like it?

48:35I think they'll like it. Yeah.

48:36Dave Ramsey:There you go. There you go. That's the thing. So, you know, if, well, Mark, I'm just, I'm not going. Raleigh, North Carolina. Hey, Mark. Hey there. Thanks for taking my call. Sure, man. What's up? So I'm at this crossroads. I'm 57 years old. I've been trying to do the baby steps. I'm all out of whack as far as the order, I'm sure. But sort of where I find myself is I'm looking at potentially work changing a little bit for me in the next, say, by the end of the year. or me changing myself. So basically where I am financially, I'm trying to figure out, I think I know the answer is I've got about 310 ,000 saved.

49:16Oh, about 240 on my house. I have about 450 in our IRA. And I was debating on, should I try to play catch up a little bit before this potential change happens as far as my income?

49:30Dave Ramsey:Or should I just pay the house off and be done with that? Pay the house off. And move on. I pay the house off by nightfall. I wouldn't have that money in the bank and have a mortgage. You borrowed on your home to have money in the bank. Right. Net-net. Yeah, net-net. So what are you talking about, Shane? You're going to make less income? Yeah. Why? Like right now between my wife and I. I'm sorry? Why? Just potential work downturn in work right now. What field are you in? I mean, advertising. okay and the other thing is I'm also looking at it as I may want to just change my life as well in other words not keep pursuing that but try to do something that has a little bit more impact and gives back a little bit more so I may be talking about just a life change in general versus pursuing that okay well you would be a lot more free to do that if you didn't have a house payment I mean that's kind of what I was thinking You read Halftime by Buford?

50:36Dave Ramsey:I'm sorry? Have you read a book called Halftime by Bob Buford? No, I have not. You ought to pick it up and read it. You're describing it. The second part of your life? Yeah, first half, back half, particularly with males. They spend the first half of our life in acquisition, the second half searching for significance. That's sort of where I'm at. I've done a lot of things to help a lot of people in the advertising world pursue what they wanted to do, and now I'm sort of like I don't feel like I've given back as much as I'd like to give back and actually make an impact, you know what I mean, on things in a positive way.

51:12Dave Ramsey:Yeah, I agree. I think that's cool. I think it's good. And you need to pursue those issues and take them to ground, either whether you do it inside your career or with a separate career. Either one's fine with me. Yeah, pick that book up. You'll like it. It's called Halftime by Bob Buford. It's a really, it's an old book, but it's a great book.

51:52Dave, we got a lot of calls on this show where life happens. One day someone's healthy, they're working, providing for their family, and then a curveball hits.

52:00Dave Ramsey:You know, we hear it all the time. A car accident, a cancer diagnosis, a heart attack, and suddenly everything changes. Yeah, and that's why you've always said that having term life insurance from Xander is essential because it protects your family if the worst happens. Yeah, that's right. You need 10 to 12 times your income in coverage. No gimmicks, no whole life junk, just straightforward term life protection. But there's another piece that people often overlook, and that's long-term disability insurance. Yeah, it's important to understand the difference between them. Life insurance steps in when you die.

52:36Disability insurance steps in while you're alive but can't work. So it replaces a large part of your income so the bills still get paid while you get back on your feet.

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53:49Dave Ramsey:Michelle is in Florida. Hi, Michelle. How are you? I'm doing all right. How are you all? Better than we deserve. What's up? So I'm calling for your advice today. I lost my husband about six months ago. I'm sorry. Thank you. How long were you married? Almost 30 years. Wow. Okay. so um he was just like a couple years we could have retired but he wanted to work for a couple more years and we have two homes they're both paid for um one is in florida and one is in utah and our plan initially was to go back and forth between the homes but now that he's passed i'm just i'm calling to kind of like what would they do um financially i'm just wondering if you think it would be better if I sold one of the homes or both the homes or, um, and, you know, diversify and invest that money or in the long run, what would be best financially for me?

54:55Dave Ramsey:Well, I mean, um, why would you keep both of them? well i was thinking that um mostly for investment like one i would live in and then the other so where are you planning to live i'm not i'm not sure yet i i kind of vacillate i would like to go out to utah i think but my job is here in florida my friends are here in florida but i would like to be in utah i do but They're grown. The last one launched this year. And where are they? Three of them are in California and one is in Georgia. Okay. Do you have grandkids? No. Not yet. Okay. But the potential would be California, it sounds like, mainly. Yes.

55:48Yes.

55:49Dave Ramsey:All right. So you're how old? I'm 55. Okay. And your life is currently centered in Florida? it is so what would what's the draw to utah again i just like it out west oh okay okay okay yeah i like and they're both paid for did he have life insurance michelle he he did he i mean honestly he left me in a really really good situation i have choices so i i have about uh you know i have over a million in like roth ira and 401k and I have about 600 ,000 just sitting in a high yield savings account right now that I'm trying to figure out what to do with. I would only want to own a home where I'm going to do life unless I was going to actively use something as a second home.

56:43Dave Ramsey:And I don't, I like the mountains is not I actively use Utah as a second home. Is this like Park City or? it's south of no it's south of salt lake um in the mountains or is it just in a suburbs it's in the wasatch it's in the suburbs it's in the like the wasatch valley area like i know yeah i know the valley for my house but it's a beautiful area okay um yeah another way to ask this sometimes as i reverse engineer it in my own head would i do it If I didn't have a house in Utah today, and I'm a six-month widowed, and I've got my life centered in Florida, I like Utah and I like the mountains. Would I go buy a house there, or would I just go up there and stay some?

57:32Dave Ramsey:I don't hear a house in this. Okay. I hear visits. Yes, it is visits right now because we were both still working. Yeah, and you're still working. I mean, you're not shutting your life down in Florida. No, well, not anymore. I guess you could. You probably have enough money to retire. But you're probably not going to go to Utah where you don't have any connections and sit around all day. No. That's weird. Well, not wise. That would be lonely. I guess I was wondering because my house is worth so much more here in Florida, and I thought maybe that wasn't wise either. No, I think you're fine. What's it worth?

58:11Dave Ramsey:What's the one in Florida worth? About 1.5 or 1.6. Yeah, you're fine. It's not. Okay. It's still not. And it's paid for. It's paid for. It is. And the house. Yeah, I don't think you're going to get the incremental joy and use out of the Utah house with him in heaven that you were going to have before. But I do think you still love the mountains and you'll probably go up there and visit some and do some vacationing there. Right. But you're probably not going to, and you don't want to rent it. That would be a horrible idea. Oh, okay. Yeah, renting something halfway across the country is really, you would never say, you never say I'm sitting in Florida and I'm going to go buy a rental house in Utah.

58:59Dave Ramsey:That just, that wouldn't be logical. You would want to buy a rental house in the area where you are if you want to own real estate. But, I mean, there's no rush. As you said, you've been left in a wonderful condition. And if you want to take some time and pray about it, it's only six months. You can take some more time if you want. I would not rent it. I would only keep it if you feel like you're going to get enough use of it to justify owning it and maintaining it and paying the insurance and the taxes, which is probably going to be$100 ,000 plus a year. Utilities, maintenance, taxes, property taxes, and so forth.

59:39Dave Ramsey:and making sure everything's taken care of just for it to sit there, to be there when you want to go visit. And I really think you could go to the montage at Deer Valley and stay for a long time for$100 ,000. All right, that makes sense. That's why I called you. Yeah. But also, I'm fine with 30 years of marriage and your life just got changed. And if you take a minute and cry and think about it, I'm okay with that too. Okay. But please don't rent it. Please don't rent it. You'll hurt your own feelings if you rent it. Because your dream is going to have renters living in it. Your old dream that's dead now.

1:00:18Dave Ramsey:And it's going to have renters. And you're not going to like that emotionally. Don't do that. Don't do that to yourself. So sell the house before you rent it. But I think you're going to sell it and you're going to enjoy the money in other ways doing some other stuff. Yeah. Put it towards the travel end of it versus owning it. Yeah. You can move about the country, as the commercial says. Wow. I'm sorry, Michelle, though. That's hard. It changes everything. Well, and it's probably a level of letting go of kind of what you said of what was supposed to be. So there's like a little bit of that grief.

1:00:52Dave Ramsey:It wasn't supposed to be this way. We were supposed to finish up working and then get to go to Utah. It'll be a sad selling for sure. Yeah. And it's not even from like a touristy standpoint. You know what I mean? like you wouldn't even want a vrbo like not even like long-term or short-term rentals you cringe yeah vrbo yeah no that's verbo i think i know but we're talking about we're talking about serious amount of maintenance now you're now running a hotel that's different than renters that's another step up of yeah that's oh man now you're buying sheets yeah this is oh no no no no No, no, no, no, no, no.

1:01:31Dave Ramsey:All right. Dean is in Pittsburgh. Hey, Dean, what's up? Hey, Dave. How are you doing? Better than I deserve. How can we help? So I got myself in kind of a bad situation here. I had an ex-fiance, and I co-signed a car refinance. When we were going to get married, she had over a 25 % APR on her car. She was drowning in the amount of interest she was paying, so I co-signed it, got it down to a 7%. five-year loan, and suddenly she stopped paying for it. Shocking. Yeah. She's not being cooperative with me or the bank. So, wait a minute. You don't have any ownership on the car, right? None at all. None at all, sir.

1:02:18Okay.

1:02:19Dave Ramsey:All right. How much is owed on this car that she's going to get repoed on you? about seven thousand dollars and it's a 2013 gs soul it's probably not worth more than a thousand and i think they'd be very lucky to get 500 okay all right um i got really bad news dude you can't the the amount of money is not worth suing her over you're going to lose some money here after they repo it and you're going to get your credit tagged after they repo it and you're going to end up writing the bank a check for three or four thousand dollars to get your name out of this mess before it's over you could start on that now if you wanted to offer them three or four thousand to release you and let them go after her but good luck with all that when i do something stupid and it costs me money man i call it stupid tax so when you write this check in the four column write stupid tax

1:03:29I'm happy to see you. I've developed a business mindset in Business & Media I've developed programs by Thank you.

1:04:01Dave Ramsey:How would they afford groceries? If anyone in your life depends on your income, you need life insurance. But how do you choose from all the options that are out there? Well, it's actually pretty simple. Life insurance is one job. Replace your income. And term life insurance is the only kind that does only that. The others, like whole life or permanent life, try to add in investing, and they dumb down the insurance part, and they raise the cost really high. You only need life insurance while someone depends on you financially. So if you're like most people, you need a policy worth 10 to 12 times your income for a term of 15 to 20 years.

1:04:38Dave Ramsey:And it should be a level term policy, meaning the premium stays the same. For more info and resources, use our free term life insurance guide. Go to RamseySolutions.com slash term life guide or click the link in the description and we'll help you out. Josh is in Pennsylvania. Hey, Josh, how are you? Good. How are you guys? Better than I deserve. What's up? So I'm calling in. We had$90 ,000 of debt. We have paid it down. We only have$28 ,000 left. And we have about$20 ,000 in crypto that I've had for years that has just kind of sat there like everybody else has. I'm just wondering, should I liquidate that to just get through baby step two here and just finalize everything?

1:05:22Yes. Simple answer. Yeah.

1:05:28Dave Ramsey:Anything that you had money in that was not retirement, we would tell you to liquidate it and clear your debt. Okay. And focus very intensely on your debt because when your debt is cleared up, you then have control of your most powerful wealth-building tool, which is not investments. It's actually your income. And when your income's all going out in debt payments, you've limited your ability to build wealth. Correct. I mean, look, followed you guys religiously for a while. Well, not too religiously. You've got$20 ,000 in crypto, so you weren't real religious about it. But the – I mean, semi. I mean, you went to church on Easter, but that was it.

1:06:06Dave Ramsey:And so anyway, the thing is, yeah, if you had the money in Apple stock, if you had the money in mutual funds, if you had the money in a money market account, if you had the money in a shoebox under your bed, we would tell you the exact same thing to liquidate it and pay off your debt as fast as possible. It just gives us a little bit more joy when it's something as stupid as crypto to tell you to do it. So, yeah. But yeah, definitely go do that for sure. When is a world that Dave Ramsey would ever buy crypto?

1:06:45Dave Ramsey:I don't gamble much. If it ever became a proven investment for you? Well, it's not going to be a proven investment because it's a commodity. And commodities are never a proven investment. That's a problem. Commodities like gold or oil. I don't buy barrels of oil either. Sure. Blockchain. Exactly. Exactly. And I don't buy blockchain. And so I don't buy crypto. So it's a currency. I don't buy the N and I don't buy the Deutsche Mark. You can invest in the Deutsche Mark or the N. They're a proven currency. You could look at the track record and see what the, how that is done versus the USD, right?

1:07:18Dave Ramsey:Or the Euro. I mean, you could, it's a currency. It's crypto currency. Yeah. And so a digital currency. So you could, you know, but I don't invest in currency. So crypto is no exception. It's just the least appealing because it has the least track record of all of them today. Someday, though, it could have a long track record and it could be very much more legitimate than it is now. Right now, it's just all the cool kids doing stupid stuff. And it's just it's maddening because people are using up their wealth building power that they could have actually become wealthy and they get screwed over trying to be cool.

1:07:53Dave Ramsey:And because it's very faddish, it's as dumb as beanie babies or um well you know really i mean people were buying beanie babies and i've had people call me on the show in the old days your wife my wife no no no she bought beanie babies like crazy but she never once said it was your college fund oh true yeah i had people put their kids college fund in beanie babies the princess diana bear we had a special yeah can you tell me one that is sold i got one the dog carries it around but i don't yet know one that is sold i know they're supposedly sold for ten thousand dollars but i've never seen one they're for sale on eBay, but no one's ever bought one.

1:08:29Dave Ramsey:So anyway, it's hilarious. I mean, you know, we had, you were a baby and there was a thing that went around. People decided they were going to, instead of investing in cattle and pigs, they were going to buy emus because emu meat was somewhat like ostrich meat. And we had emu, we had friends that bought farms and bought emus. I mean, this is the same, it's the same category for me. as crypto. I mean, it's just the same. It's just a fad and Beanie Babies. And so it's just because it's just something everybody's into and all the cool kids are talking about it and it's dumber than crap. And it's just, you know, people are just doing it in mass.

1:09:10Dave Ramsey:And so because they're losing their butts, they really are. Well, the amount of what's wild to me is the amount of scams. And the amount of scams. Within it and the amount of things people have lost. I mean, so much money people have lost in it. Yeah. I mean, the other day we took a call, Jade and I caught a catfish. I mean, Jade caught the catfish. The guy was catfishing this girl from Russia. She had never met him. And her boyfriend in Russia wanted her to cash out her 401k and put it into crypto with him. And she'd never met him physically. It was a complete, you know, romance scam over the Internet.

1:09:42Dave Ramsey:But they're using crypto to do it. So, oh, my God. I mean, that stuff's everywhere. We're getting that stuff in here by the tidal waves into our offices by email. Help us with this. Help us. We're not the FBI. We can't help you with this. It's just, you know, try not doing stupid stuff. That'll help. It's just, oh, my gosh. Wow. It was so sad, too. It's the first time maybe she ever realized that she didn't have a real boyfriend was when Jade told her. It was awful. Man. It was just devastating. That's why we all need friends. Yeah, right. People need people. John is in Louisiana. Hey, John, what's up?

1:10:18Dave Ramsey:Hey, how's it going, guys? Better than we deserve. How can we help? It's good. It's good. Hey, God, a blessing brought on us. My parents are gifting us their modular home and about three acres of land on their property. And I guess really I have a few questions, but my first one is, should we use the money that we receive from selling our current home to remodel and upgrade the place that we're receiving? Or should I pay off some debt with that money?

1:10:52Dave Ramsey:okay so many questions um how much debt do you have uh once my house is sold my current home i would have about 60 000 60 to 65 000 in vehicles that is it okay um so uh and but i mean you're getting money from your current home right yes yes i owe 140 we should sell around$190 to$210, somewhere in there. And you have other debt that you would use that money for, or you're asking whether to pay the cars off with that? Yeah, should I pay the cars off with it, or should I fix up the home? You should pay the cars off, or you should sell them. What do you make? What's your household income? Together, we bring home$77 ,000.

1:11:39Dave Ramsey:Okay, you don't need$65 ,000 worth of cars, hon. You're going to be broke your whole life. Right. But you got too much tied up in cars. OK, yeah, we do have a little plan with the no house payment. Obviously, we plan to pay both vehicles off in two years. Doesn't matter. You still got sixty five thousand dollars. You're going to turn into ten thousand. And you don't make enough money to do that. You've got too much of your life invested in things going down in value rapidly, whether it has debt or not. Yeah, John, we would say anything with motors and wheels, it should be half your annual income.

1:12:15So you guys should have closer to like$30 ,000,$35 ,000. Max, your cars are killing you. Yeah.

1:12:24Dave Ramsey:You owe almost as much on your cars as you do your house. Wow. Yeah, it's about half. I know. It's devastating. Okay, that's first part. Second part, modular house. Help me with that. Is this a trailer? The difference between a modular home, I got a definition pulled up, modular home and manufactured homes. The modular homes are factory-built homes that are essentially the same as traditional homes once assembled. So pretty much they're made with better bones. Okay, if I walk up to it, I can't tell that it wasn't stick-built. No. Okay. So there's wall sections put together, and they came on a truck, and that's modular.

1:13:09Dave Ramsey:That's the proper definition. But I can't tell that this house, it doesn't remind me of a trailer. It reminds me of a house. Yes, it reminds you of a shotgun-style house. Okay, then you can fix that one up. That's fine. But if you can tell, if it looks like a trailer, it's a trailer.

1:13:52Dave Ramsey:Natasha is in California. Hi, Natasha. How are you? Oh, I'm doing great, Dave. How are you? Better than I deserve. What's up? Yes, my husband and I have a little bit of debt, but we also have savings. And so I was wondering if it would be a good idea to take from our savings to pay down our debt. How much savings? How much debt? So total savings is$75 ,000,$45 ,000 in just a regular savings account,$30 ,000 in a separate IRA or simple IRA. Oh, so part of this is retirement money. Okay. Yes. All right. So$35 ,000 in, say it again. Oh,$45 ,000 in savings. Okay. And how much debt? And then$65 ,000 total.

1:14:40Dave Ramsey:On what? One is a business vehicle, and one is a business credit card, and a consumer credit card from our personal. Okay. They're all consumer, by the way, because the business was not loaned any money. It doesn't have any money. You signed them personally. Yes. You qualified them as business. No one else did. Okay. Just to help you. The law doesn't see it that way. In other words, the bank doesn't see it that way. They didn't loan that business any money. It doesn't have any money. So, is that your husband's work truck? Yes. What's he do for a living? We own a film production company and an event production, so it hauls all our equipment.

1:15:21Dave Ramsey:Gotcha. Okay. How's the business doing? Is it making money? Well, yes. Yes, we make money. Good, good. Congratulations. Thank you. All right. Well, what we teach folks, in the business, you should be holding back some of your profits in the business account for retained earnings, which is a savings inside the business to cover the ebb and flow of business and cash flow. Okay? Okay. So you ought to be keeping some cash over there to cover different bills that come in before the customers pay their bills. Okay? Payables versus receivables, cash flow. and probably even for some growth. If you wanted to buy some equipment or things like that, you'd have a little cash over there.

1:16:07Dave Ramsey:So start setting aside a percentage of your profits in the business to keep there in the business. Then what comes home we work with to run the household, and that would include paying off all of our debts.

1:16:23Dave Ramsey:What's your household income off of this business? What's the taxable income? The total taxable income is$184 ,000. The profit? For both of us. No. That's not profit. Currently, yeah. You only pay taxes on profit. Okay. Oh, yeah. So then that would be our profit. Okay. My husband also has a 9 to 5. He also earns a salary. Oh, I see. Okay. Okay.

1:16:56Dave Ramsey:All right. Yeah, I want to clear these debts, whether they're labeled business or whether they're not as fast as possible. So, yeah. So anyway, and on the personal level, what we teach folks is what we call the baby steps. And the first baby steps have only$1 ,000 saved. Everything above that, that's not a retirement we would throw at the debt. So the answer to your question is, yeah, we would take most of this$40 ,000 and throw it at the debt. but in your situation I probably need to pull some of that$40 ,000 and set it in the business account to make sure we've got enough to cover the slush I'm talking about.

1:17:27Dave Ramsey:Yeah is there any savings in the business right now? Do you have any money set aside? Not savings it just sits in the active account. No but I mean how much is in there? Oh good question. About we roll over maybe about three to four thousand a month. Okay. Or some months are good, some are, you know. Yeah, you need to keep a little in there so that it doesn't drain back out of the house, okay? And then past that, we're going to pay off the debts smallest to largest, and I'm going to pay the$40 ,000, all of it, but$1 ,000 at these debts. It sounds like that's going to clear up everything but the truck and a big bunch of the truck.

1:18:11Right, yes. Yes, we owe$39 ,000 on the truck,$39 ,000.

1:18:15Dave Ramsey:Okay. And so you've got$16 ,000 in other debt? Yes. Okay. Yeah, cut up the business credit card. Quit using a business credit card. Make the business cover itself. A debit card is all you need there. Make it cover itself. It has to cash flow its own deal. It has to create money, not drain money. And so when you sneak off money over on the side on the credit card, it makes you feel like you're doing better in the business than you actually are. And so you've got to get rid of that problem from a business management or acumen standpoint. And then if we pay that credit card off and cut it up, we pay off 16 out of the 40, and then we start throwing chunks and chunks and chunks at this car.

1:18:57Dave Ramsey:You can be done with this car by Christmas and be 100 % debt-free and then rebuild your savings. Your emergency fund, a fully funded emergency fund in your personal, is three to six months of expenses, which in your case is probably$30 ,000 or$40 ,000 again. I want you to get back up to that$40 ,000 number by this time next year. But you could do that. You could be debt-free and be back to your$40 ,000 number by this time next year if you concentrate on it and tighten up your budget really tight. Yeah, and the fact that you guys have other jobs. I mean, he has another full-time job too on top of it.

1:19:29Dave Ramsey:It's a total of$184 ,000 household income. Of everything. Yeah, that's what she said. So it's good. Yeah, you guys can do that. That's reachable there. Megan is in Delaware. Hi, Megan. How are you? Hi, I'm well. How are you? Better than I deserve. What's up? I'm calling regarding two investment condos that my husband and I own. We've owned them for about 20 years. We have a fiduciary advisor who's advising us to sell them and buy one or two multifamilies in a different state where we could possibly or hopefully get more rent compared to what we're getting now. And my question to you is, should we do that, or should we sell the apartments, just take the equity and get the tax hit, but then just have the equity and not have any more investment properties anymore?

1:20:20Yeah.

1:20:22Dave Ramsey:Multifamily is very intense to manage because it's multifamily. And being in another state is a nightmare as far as I'm concerned. I own several hundred million dollars worth of real estate, and I don't own any multifamily in another state. Oh. Yeah, I think that's part of our problem, too, is we're overwhelmed. We have kids, and we both work full-time, and we're overwhelmed thinking about how we're going to have energy. I think this fiduciary advisor is telling you what he wishes he could do, not what you should do. Mm-hmm. Yeah. Yeah, she owns a lot of multifamily. Oh. That's kind of how we found her.

1:21:02You found her because you were looking to do multifamily? No, we found her because it was hard to find an investment or an advisor who would help us with our real estate because we have so much equity and so much of our wealth is in real estate and our 401Ks. Oh, I see. Yeah, I wanted somebody who specialized in it. Yeah, okay.

1:21:24Dave Ramsey:Well, I mean, you got fair. Yeah, yeah, that's a fair assessment. And but she's going to take you. I mean, you know, when you're a hammer, everything's a nail, right? Well, if you're tired right now, Megan, then that's that's that's triple quadruple tired. You're not getting rid of the tired. Megan, we better back on. I want to ask her. Sure, sure, sure. Megan, how if you sold if you sold both of those, how much would you guys net out if you sold your condos and didn't buy a multifamily? So they're worth$1.6 million together, and we own one of them outright, and we have$120 ,000 left on the mortgage with the other one.

1:22:03Okay. And what's in your 401k? My husband and I together have$4.5 million. Way to go. Gosh, well done. Good job. Well done.

1:22:14Dave Ramsey:Thank you. Proud of you. Yeah, if you don't want to own real estate anymore because of the hassle of it, then you don't want to own multifamily in another state. Okay. If you do want to own real estate, it's okay. I'm so worried down the line because I hear you and so many wealthy people who have a little bit of both. And I'm afraid if I sell it, then I won't have any more real estate. Is that okay? That's a good question. It's okay if you don't want real estate. I mean, I know people that hate the idea of owning real estate because it is a – real estate gives you a much greater rate of return than the stock market will, but it's also a much greater hassle factor.

1:22:55It is, yeah.

1:22:56Dave Ramsey:You don't have a tree fall on the neighbor's yard when you own a mutual fund. Yeah, and if you guys are tired, Megan, I would, I mean, just, you could sell them and then spend a couple of years just investing. And then if you guys want to get back into real estate, you can, you know. Or go into a type of real estate that's much less intensive. Like you could roll this into a 1031 exchange and go buy some warehouses on triple net. And they don't take up any mental calories versus multifamilies the other end of the spectrum on mental calories.

1:23:53Transcription by CastingWords health insurance, identity theft protection, and more. And when you're ready to get the coverage you need, you can connect with a Ramsey-trusted insurance pro who will only get you what you need at the best price. Go to ramseysolutions.com slash insurance, ramseysolutions.com slash insurance.

1:24:36Dave Ramsey:Welcome back to the Ramsey Show in the Fairwinds Credit Union Studio. Rachel Cruz, Ramsey personality, number one bestselling author. My daughter is my co-host today. Sarah is with us in Detroit. Hi, Sarah. How are you? I'm great. How are you? Better than I deserve. What's up? I am calling. I am recently divorced and the mom of two teenagers, and I'm trying to figure out my best path forward with my retirement money. I was never the one in the marriage who focused on this. And so in listening to your show, I'm really all over the map with my baby steps. But the one thing I do have, I was able to keep my 401k with the divorce.

1:25:23I have$933 ,000.

1:25:27Dave Ramsey:Wow. Good for you. Not bad for somebody that didn't know what was going on. You got a million bucks, girl. I know. I know. I'm 47. I'm a child welfare worker. And with my job with the state, I'm actually able to convert that 401k to a Roth IRA. And I hear that you say on your show that Roth is better than 401k. So I'm trying to determine if that is how much would I be paying, like tax implications. Is this smart to do at my age? Are you still working? I am still working. I can retire in about five years. I don't anticipate retiring in five years given my income. In time. I would change your current contributions to be Roth only, but that's different than the 933.

1:26:20Dave Ramsey:Anything of the 933 that we move to a traditional is going to be taxed. Now, I'd like for you to do that over time, but in context with a bunch of other things going on, not just go, hey, let's write a$250 ,000 check in taxes and move$800 ,000 over instead of$950 ,000, OK, or seven thousand instead of nine hundred fifty. OK, because that's what it's going to do to you. And I wouldn't do that. OK, it's going to cost you two hundred fifty grand taxes to move this right now. And I wouldn't do that. Oh, wow. Yeah. OK, so. But I do want you to systematically move it over a number of years in context with everything else you're doing that we've not gotten to yet.

1:27:02Dave Ramsey:OK, so you've done a great job. Congratulations. You're a millionaire. and from this point forward you're going to make contributions in the Roth. So call HR, change your 401k from this point forward to be Roth contributions, okay? Roth 401k. Roth 401k. Okay, she's asking about a Roth IRA. You have a Roth 401k. Got it. Is this Roth IRA now? No, it's not. I have the ability to switch it over to a Roth IRA. No, yeah, yeah. You can switch it to a Roth 401k. You can't switch it to a Roth IRA unless you quit. Okay. Gotcha. Okay. You can't move a 401k while you're currently employed. But you could. But you could roll it to the Roth 401k and do the same exact thing.

1:27:45Dave Ramsey:That's what I was talking about. Do you have a Roth IRA, Sarah, or just a traditional IRA? It's a traditional 401k. I just have the traditional 401k. Yeah. Well, she should open a Roth IRA as well. Yeah, that wouldn't be a bad thing. Are you debt-free now? So I only have, I'm working on it. I just have final lawyer's fees that I have to pay, but I should hopefully in the next, in the next two months, I should hopefully be done with that. Good for you. But then I do have to save up for my, um, three to six months. That's, and it's crushing me to not continue putting money in my 401k or opening up the Roth.

1:28:25That's okay.

1:28:25Dave Ramsey:You need, you listen, you've been through hell and you need an emergency fund. You're going to feel better when you've got 20 or 30 grand laying around, and then you go back to your 401K. You're okay. You're not going to retire with Dog Food Kid. You got it. You did it. You're a millionaire. Thank you. Okay, you're okay. Thank you. The only question now is just how we can maximize it, not are we on – you're not going to be homeless. I mean, you're good. So we're in good shape. So what I will tell you is jump on RamseySolutions.com and click on SmartVestor Pro and find someone in your area. That's the people that we recommend in that world that will sit and spend some long-form time with you and catch you up.

1:29:05Dave Ramsey:Because what you are is a smart, intelligent person that does not have this particular information. Correct. And so you've got a little bit of learning to do, but it's not difficult learning. And the SmartVestor Pros, we will not send people to, investment people, unless they have the heart of a teacher. because I want them to teach you so you're making the decision with the information they give you, not my guy told me to. Okay. I want you to be confident and competent going forward because that creates a sustainable situation. But what it's going to look like, Sarah, is pausing all that retirement right now, not doing anything with it, pausing it, getting that cash saved for your emergency fund, And then what it'll look like in four years, probably, is that you're going to have a Roth IRA as one account that you're going to be funding.

1:29:58You're going to have a 401k traditionally and then a Roth. And so you'll and then slowly moving some of that money over time.

1:30:05Dave Ramsey:And then I would move some of that traditional to Roth each year without tripping your tax brackets. That's right. That's right. And that's what they're going to help you do. Yeah. And so over a 10 year period of time, you're going to move it all to Roth. but instead of just writing a singular check up front boom and taking the hit i wouldn't do that um i'd move it gradually and let someone help you do the math on that and show you why you're doing it that way rachel's exactly right but yeah you'll get the lawyer's fees and the emergency fund cleaned up and then you can start your 401k back but start it back as a roth and you'll be doing a roth individual on the side and then the last step will be to gradually start moving some this 933 into Roth inside your 401k unless you leave.

1:30:44Dave Ramsey:And if you leave, you can move it inside of an IRA. Either one would be fine. So very good. Very good. Wow. She's done great. It's great, Sarah. We have talked to several multimillionaires today. An unusual number for one particular day. Yeah. Four million, eight million, three million, a million with her. Pretty cool. It's great. Pretty cool. Folks are doing better out there than a lot of people think folks are doing out there. It turns out the stuff that we're talking about around here works. Some people are doing it without us talking about it because they never heard of us. Some people are doing it because they followed exactly what we told them to do, and they become Baby Steps millionaires.

1:31:24Dave Ramsey:But either one works. I mean, we're just happy. We're happy for you when you succeed. And we're going to love you enough to tell you the truth, whatever the situation is, and help you get things aligned so that you can succeed in all of these things. And the interesting thing is that we keep coming back to on this show and we have from day one, personal finance is 80 % behavior. It's only 20 % had knowledge. The mathematical knowledge to become extremely wealthy you learn by the sixth grade in most schools. Okay? Compound interest is multiplication. That's all it is. It's not if you know how to do multiplication, you're ready to go.

1:32:08Dave Ramsey:So, you know, and then you can add and subtract into a budget until if you're spending more than you make. So it's not about that. It's about controlling the person in your mirror, becoming a person of character, developing only quality relationships and exiting toxic ones or redeeming toxic ones. Whatever, so that they're no longer affecting the whole process because this whole thing works together. your spiritual walk, your relational walk, your behavior, the way you take care of your body, the way you treat each other and your family. All of these things enter into whether or not you actually can become financially successful.

1:33:09Hey, what's up? Dr. John Deloney here. The new dates have dropped for the Money and Marriage Getaway over Valentine's Day weekend in 2026. This is your chance to hit pause on everything in your life and reconnect with your spouse over a long weekend in Nashville, Tennessee. Me and my friend Rachel Cruz will be digging into topics like sex, money, communication, and more. This weekend is happening on February 12th through the 14th, and early bird prices start at$749 per couple, but the prices will be going up soon. Get your tickets today at RamseySolutions.com slash events.

1:34:00Dave Ramsey:Ramsey Show Question of the Day is brought to you by Y-Refi. You may think no one can help with your defaulted private student loans, but Y-Refi is different. They work with borrowers in tough spots without judgment. Check them out at Y-Refi.com slash Ramsey. That's the letter Y-R-E-F-Y dot com slash Ramsey. Not available in all states. Today's question comes from Jill in Michigan. I recently got engaged and we're trying to figure out how we should be splitting the wedding expenses. I understand that you always recommend that married couples combine finances. But what do you do in the stage where you're moving from a boyfriend to a girlfriend to engage and planning a wedding when most of the costs will come out of our pockets and not from our parents?

1:34:44Yeah, it's a great question, Jill. I mean, I can tell you what Winston and I did. We just opened up a separate checking account completely and put our wedding money in that.

1:34:53Dave Ramsey:The wedding checking account. Yeah, we called it the wedding checking account. And then used debit card, wrote checks and stuff out of that account. But from the splitting expenses, I think you got, I mean, however much you both have to spend on the wedding, that's going to be the budget. And it may be coming more from him, more from you, I don't know, whatever you guys decide the total is going to be of what you guys can afford. Yeah, the amount percentage-wise of who comes from who, that doesn't bother me. So if it's a$20 ,000 wedding and it's 10 and 10, that's great. If it's 5 and 15, that's great.

1:35:25I mean, I don't care. But yeah, I would put it in one account and then you guys just use that account as the wedding account. And then once I ended up just migrating all of our money to that account eventually and closed out our other two. And that became our joint checking at that point.

1:35:43Dave Ramsey:Post-wedding. Post-wedding, yeah. Yeah. So, yeah, I think the main issue is you sit down and say, OK, with my budget and my debts and my savings, here's what I can contribute to the wedding. And with your budget, your debts and your savings, what can you contribute? And we both come to a number and it doesn't have to be the same number. I agree with Rachel, but it does need to be laid out ahead of time. So you say, OK, I can put in five and I can put in 15. We've got our 20. Okay. And then you've got, and we both have a clearly aligned goal of, and here's when I'm going to be able to do that when I sell this car or when I do that.

1:36:19Dave Ramsey:And that's how we're going to be able to fund that. And then that'll help you come up with your wedding budget. And then I'll go a step further beyond the question and tell you, we had in classic Ramsey style three uh wonderful fun parties that were weddings that were honoring to god and we had a blast at all three of them all three kids they were absolute fun celebrations we like to party and um that was the positive and the other positive was was that all three of them uh were and huge compliment to all three Ramsey Gen 2s. They laid out a game plan. They put a number on it, and then they broke it down line by line what we're going to spend on the wedding, and they stuck to it, by and large.

1:37:15Dave Ramsey:And so no one had a little four-year-old in the cereal aisle meltdown, bridezilla fit, and no mother-in-laws had a bridezilla fit like some of these things you see on these reality stuff and all that. This was just like, okay, here's a project, and it's going to cost this. The dress is going to be this. The reception is going to be the big number usually. And if you're going to throw a party, it is. And here's the videographer, and here's where we pay the preacher, and here's what the venue costs. And you're running a project like you're building a house. Here's what the carpet costs. Here's what the lights cost.

1:37:52Dave Ramsey:And that's the budget. And we stick to that then. And we don't go, oh, you know, we can do without the lobster flown in from Madagascar or whatever. Oh, my gosh. I will say, because it's a story you wrote in Smart Money, Smart Kids. I did go over a little bit with the chairs at the reception. You did. Do you remember that? I do remember that. And I was like, hey, I just need a couple. You had to have the gold chairs. No, no, no. No, no, no. It was just, yes, when everything shook out, there was a small deficit. But it was not. No, it was not significant. And it really was. But in Rachel fashion, I spent every last penny of my legends.

1:38:27Dave Ramsey:Of the three kids, this one here is the one that went over, yeah. But it was enough that it made a really good joke. And we make fun of her for the next 25 years, so that's it. But it's good family legend stuff. But anyway, the point being you lay out a budget and you say this is the number, and that means we're going to spend X on dress, Y on reception, and we can't do the open bar or we can or whatever we're doing. Yeah. Right. Yeah. Yeah. And you look at the cost and you can't just say, oh, none of this matters because of romance. Yes, it does. You're going to screw up the romance. Yeah. With the money.

1:39:01And it's honestly, and it's, and it's good learning. I mean, I know people, depending on when you're getting married.

1:39:06Dave Ramsey:You always have to make choices. Yes. Yes. And I remember we had to do stuff like in the actual church, the pews, you know, the, the flowers on the side and all of it. We had to nix those and do berries instead. We were getting married on Christmas because we didn't have, our flower budget was over. So it was like, okay, we got to cut flowers somewhere. Where, where are we going to cut it? So it is. You are figuring it out, but it's a great test run as a couple. Now, the guy usually doesn't care. I feel like it's usually the girl that probably has more opinions and emotions around it all. There might be some mothers or mothers and law involved.

1:39:35Well, yeah, that too. Thank God not for me. Anyway, it's good. It's good.

1:39:39Dave Ramsey:You learned some boundaries there too. Yes. But do not enter this. And this couple here isn't because the way she's asking this, I can tell she's not guilty. but do not enter this like I have unlimited ability to spend just because I have a right to this entitlement thing on weddings is out of control and you know and it's partly because we have 16th birthdays now that are out of control and then that extrapolates into a wedding that's out of control and so and I don't care what you spend it's the out of control part I don't like okay i mean a friend of mine but they spent 125 000 on the wedding the other day and uh that didn't bother me a bit they got billions of dollars and that's not a big deal uh so uh but it's the it's the that the this supposed grown woman and the supposed grown man that she's marrying cannot be told no one can tell them no like they're little spoiled brats or something, and that drives me bananas.

1:40:41Dave Ramsey:But if you're paying for your own, you've got to tell yourself, no, like Jill's doing. So Jill's not guilty of that for sure. But, guys, just be careful with that. It can get out of control really, really quick. Frank's in Alaska. Hey, Frank, what's up? Not much. How are you? Better than I deserve. How can I help? Great, great. So I am looking at retiring about a year and a half, or leaving my job at least. My wife's going to keep working. We have a house mortgage at$300 ,000. Our house is currently worth probably about$650 ,000. I have two vacant lots right next door to me that are completely paid off.

1:41:15And I'm looking at possibly building a duplex on one of these lots and living in one side as a way to become mortgage-free within my retirement. I don't want to go into retirement and carry a mortgage.

1:41:30Dave Ramsey:So you'd sell your house? Well, that's a question. My mortgage for my house right now is like$1 ,300 a month, and I know I can rent it out for like$3 ,000 a month. And I'm thinking about just holding on to the house and using that as a supplement the income to pay off the mortgage on the duplex. I thought you were going to be debt-free. All right. How did you not end up debt-free? I thought you told me you were doing this to be debt-free. Well, yeah, I'm looking to be mortgage-free. You're not mortgage-free. Yeah. You've got a mortgage on the house. And the duplex. No, he's clearing the duplex.

1:42:08Dave Ramsey:How are you clearing the duplex? Well, clearing the duplex, well, I have$200 ,000 to pay down on the duplex in cash. And then eventually selling the house to use that to pay down on the duplex. Okay. So, no, I would not do your plan. If you want to do something to become debt-free, do it. but don't half do it and eventually do it. You need to pull the trigger on the whole thing at once when you get ready to do it. No, I would not do this. I don't buy rental properties, investment properties with debt, period. It adds to risk. It doesn't reduce risk. So if you want to sell one of the vacant lots and sell your home and take the equity from your home and$200 ,000 and build a duplex and move in half of that debt-free, we can talk about that one.

1:43:01Dave Ramsey:the downside then is that your tenant lives next door to you the upside is your tenant lives next door to you yeah just knock knock knock uh yeah hi this is leaking hello the light bulb's out happy retirement something's dripping over here yeah doesn't sound fun to me but some people can to it.

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1:44:52Dave Ramsey:Alexander is in California. Hey, Alexander, how are you? Good, and you? Better than I deserve. What's up? I'm in a predicament right now, and I need your advice. Okay. My mother passed away early March, and she has a life insurance policy for about$300 ,000, and it's split between me and my brother. My mom read out the policy when we were minors in case she died of her disease that she passed away of not that long ago. And the money is being held by my aunt and my grandma. I'm sorry. No, wait a minute. Stop that. That's not possible. Okay. Your mother bought a life insurance policy and it had a beneficiary.

1:45:33Dave Ramsey:Oh, I'm not sure how that stuff works, but. Well, I'm telling you, that's how it works. Okay. And the beneficiary is who the check should have been written to. Now, did she make your grandmother the beneficiary, or did she make you the beneficiary? The paperwork says the money is supposed to go to me and my brother. What paperwork? My stepfather gave me the paperwork of what the insurance policy was. Okay. How old are you? I just turned 18, February 27th. When did your mother pass away? March 2nd. After you turned 18? Yeah, I believe it was two days after I turned 18 when my mother passed. I'm so sorry.

1:46:18Dave Ramsey:It's all right. And your brother is how old? My brother just turned 24 a few days ago. Okay. So if you were named the beneficiaries, the check should not have been sent by the life insurance company to anyone but you. I'm confused how it got sent to your grandmother. I think it's because my stepdad said that I think it was written to my aunt and my grandma, but it states on the paper that the money is supposed to be split between the children, which is me and my brother. No, honey, that's not how life insurance policy works. There's no paper that does that on life insurance. You haven't seen the paperwork, have you?

1:46:59I have the paperwork.

1:47:00Dave Ramsey:But you've not looked at it and understood it. Okay. All right. So I don't know what has happened based on the story you're telling me, because you're getting told by family legend that paperwork says something. But I don't think it says what you think it says. And here's why. OK, a life insurance policy has a beneficiary on it. The beneficiary gets sent the check, period. If the life insurance company sends the check to someone else, they're going to lose all the money because the beneficiary is going to sue the life insurance company for all the money. And the life insurance companies just simply don't do that.

1:47:41Dave Ramsey:They will not write the check to anyone that's not the beneficiary. okay so i think i'm guessing because you don't know and i can't tell but i'm guessing that this policy said that the life insurance was to go to your grandmother and a will or a verbal agreement with your mother said it was supposed to go to you once it went to your grandmother thinking that you were going to be a minor at the time yeah i think that's the way my stepdad explained it yeah but i think the reason their grandmother has the money is she was actually the beneficiary Okay. And unless you can produce a piece of paper like a will or something else in writing, not family legend, but in actual writing that your grandmother owes you that money because that was your mother's written will and desire.

1:48:33Does she have a will, Alexander? Do you know?

1:48:37Dave Ramsey:I have no idea, to be honest. So when you talk to your grandmother about this, what does she say? Well, I talked to my aunt about it because it was written off to both of them. So they both got their own checks, which split the money. And what did they say? Well, my aunt told me about it and my stepdad told me about it around the same time. And every time I bring it up to my aunt, like the story always changed, like the amount of money changes or like the way she explains that the money will be spent changes. I mean, I'm not so close to her. Hey, you're breaking up, Alexander. We can't hear you're breaking up, hon.

1:49:23Dave Ramsey:Are you back? Wherever you walked, walk back. There you go. Yeah, you're there. Thank you. Thank you. All right. My bad. Every time I do talk to my aunt, it's like something changes about it. or like she has like a new rule of what the money will be spent on or something like that

1:49:45for you or for herself uh for me and my brother so she says what you have to spend it on college or you have to spend it for a down payment or like what what does she say well she'll bring up college or she'll bring up like me moving out to the bay area with her and going to college out there and I pay her rent. But if I ever ask her for money for like something maybe I seek interest in or like to put towards my future, she's always iffy about it and saying that it's not what my mother would have wanted.

1:50:19Dave Ramsey:Okay. You do not have a legal problem. You have a relationship problem. This cannot be solved by a court of law because you don't have any standing. Unless there's a will somewhere. And if there's not a will and you don't get your hands on a will that dictates, but a will very seldom dictates what happens to life insurance policies. It only dictates what happens to an estate. So you can have a will and it won't, it does not supersede what the life insurance policy said. So the life insurance policy, I'm afraid that you are going to have to develop a relationship with your aunt that is not adversarial and that she needs to become convinced this is for your own good.

1:51:04Dave Ramsey:She thinks she's supposed to manage this money, that your mom wanted her sister to take care of you. That's what she thinks. and she's got some weird definitions of what take care of you means and they're different than your definition um but you're 18 and you've just lost your mom and that's part of the deal so um but i i i'm not a i'm not a lawyer alexander you could go spend some money with a lawyer if you want i think you're wasting it uh because i don't think you're i think you're going to from a legal sense persuade your aunt to use the money that is in some way that is good for you how much is it how How much does your aunt have and how much does your grandmother have?

1:51:43Dave Ramsey:$300 ,000,$150 ,000 each. Is that right? Yes, correct. Okay. And your grandmother has some as well? Yeah, my grandmother has her check put in a separate bank account from hers. And what does she tell you? You haven't talked to her? No, I haven't talked to her yet about it. It's mainly my aunt trying to be in control of it all. That's why. Okay, well, I haven't heard anything that your aunt was using it for herself. I've heard that you are not in agreement as to what's good for you. She wants to use it for one thing that's good for you. You want to use it for a different thing that's good for you.

1:52:23Dave Ramsey:And you want control of it. And I don't think you're going to get control of it. Your mother didn't leave you in control of it. She left your aunt in control of it. That's what it sounds like. And I don't think there's any piece of paper anywhere floating around that's going to give you control. not in the story you told me. I'll be shocked if you find it. If you find it, then I would take that piece of paper, whatever it is, the will or anything else you can find, and sit down with your aunt in person and say, this piece of paper says that I need this money, and if you don't write me a check, I'm going to have an attorney ask you to write me a check.

1:52:55Dave Ramsey:And then you would seek legal counsel. But I don't think you're going to find that piece of paper, Alexander. I don't think it exists. I think this was a handshake between your mother and her sister. And her mom. and her mom to take care of her boys. And the boys just don't agree with what take care of is defined as. That's what it sounds like. You hearing me? So if I were you and your brother, A, I would look for this paperwork and not be adversarial about it until you find the paperwork. And if you don't find the paperwork, or if you do, buy an airline ticket or get in a car and drive and sit down in person with your aunt and start trying to come to some alignment on what she thinks is good for you and what you think is good for you.

1:53:45Dave Ramsey:Because I don't think the story is changing as much as you think it's changing. I think that you've gone through a lot of tragedy and hurt and heartache and you want to do what you want to do and she's telling you no. That's what it sounds like.

1:54:26Thank you.

1:55:02Dave Ramsey:our scripture of the day 2nd Timothy 2 15 do your best to present yourself to God as one approved a worker who does not need to be ashamed and who correctly handles the word of truth Theodore Roosevelt said far and away the best prize that life has to offer is the chance to work hard at work worth doing Amen Hey, the Ramsey Gold Planner is out and for sale. Sets you up for 2026. It's jam-packed with monthly content from Jade, Rachel, and Dr. John Deloney to help you start each month on track with your money, your faith, and your relationships, and then follow through on your goals. We sell out every year.

1:55:41Dave Ramsey:Don't wait. You can get yours for$49.97 at RamseySolutions.com slash store or click the link in the show notes. Jake is in Boise, Idaho. Hi, Jake. How are you? Oh, staying out of trouble. So can't complain too much. Good. Thanks for having me on. My pleasure. How can we help? So issue or problem that came up is we had a murder happen right next door. Whoa. Oh my gosh. My wife is a stay at home mom with a 202 at home, like two little ladies. And so obviously like she was at home and everything went down and all that fun stuff with all the cops showing up. But so she doesn't feel safe there anymore.

1:56:21It wasn't like a gang violence thing. It was just a crazy guy. Yes, I guess you could call it random. It's like a crazy guy decided to go after some family members. I'll put it that way.

1:56:35Dave Ramsey:I'm sorry. Say that again? Yeah. A crazy guy decided to try and just succeeded in killing one of his daughters and then tried to kill one of his other kids. Wait a minute. The murder was domestic violence, gone crazy. He knew the people he was killing, and they had nothing to do with your family. Correct. So this is not a crime spree in the neighborhood. This is crazy people lived next door. Yes, sir. Okay. So why would your wife be afraid? Well, she was at home through the whole deal. No, no, but do you have crazy people in your family that are going to come attack you? Because that's what happened.

1:57:15Dave Ramsey:Not that I know of. Well, that's what happened, right? Not that I know of. It's fair. It could be. I feel the same way, Jake. I feel the same way. Pretty sure no. Could be sitting next to one of them. Oh, brother. No, seriously. So, I mean, I would be afraid. I would be, it'd be logical to be afraid if this was a random act of crime in the neighborhood. But this was associated with the family and the people in the, a family member did this to another family member. Am I correct? Yes, that's correct. So there was no danger presented to your house except for stray bullets. Yep, exactly. Okay, so now that he's gone, there's no danger other than all the ickiness of this.

1:58:00Yes, exactly. That's my very logical brain. That's not a very emotional brain. I'll put it that way. It is emotional, and it's logical, but emotions need to be run by logic,

1:58:14Dave Ramsey:and we need to accept both. They're both – it's valid to say a traumatic thing happened next door. It was traumatic to me and my wife and my little girls. The cop cars were everywhere and people died over there. But that's traumatic. And dealing with that trauma is a valid thing. And that's a sweet thing for you to do and you and your wife to work on together. That's different than we're in danger. Yes. Okay. And they're very separate things. Yeah. Okay. All right. I'm back with you now. I had to catch up because I didn't know the story enough. All right. I'm sorry you all have been through this.

1:58:48Dave Ramsey:How old are your babies? Under two. One just turned through yesterday, or today, and then another one is five months old. Oh, so the five-month-old has no idea, and the two-year-old might have seen a cop car. So really it's your wife was traumatized by it. Yes, that is 100 % correct. Because I don't think the two-year-old grasps probably what's going on. Oh, yeah. Yeah, the kids are just fine. They thought it was a fun thing. And what's she saying, Jake, your wife? So because of all this, she's saying she wants to move. Yes, exactly. She just doesn't feel safe going on walks in the neighborhood anymore, doesn't want the little ones playing out in the backyard as much.

1:59:30But she is feeling like she needs to move, and I want to be able to provide that for her. Okay, let me stop you. Dr.

1:59:36Dave Ramsey:John Deloney would say that she's not going to feel safe anywhere. Mm-hmm. because the lack of safety is not due to the actual presence of crime. It's due to the trauma. And the trauma is inside of her, and it's going to go wherever you move. Okay. This happened like a couple weeks ago. I've been talking to my wife quite a bit. She still feels how she feels. Do you guys have any advice on navigating? Yeah, I think you guys need to see a therapist. She's been through hell. You need to have somebody help her with her trauma. Yeah, I mean, I'm not faulting that she has these feelings. I would feel the same way.

2:00:14Yeah. Oh, it's weird. It's creepy.

2:00:16Dave Ramsey:It's super weird. but it's not it's also the the cause there was yeah there was a break-in of you know if there was a random if there were people there were people breaking in rachel's neighborhood there was guys going in and knocking doors in and stuff in her neighborhood and they caught them uh so everybody feels safer now in her neighborhood okay um and but that was not associated with a single family thing if if the if the next door neighbor's 16 year old stole his mother's diamond brooch and sold it to buy drugs, that doesn't make you scared unless he's going to come in your house to steal your diamond brooch, right?

2:00:51Dave Ramsey:And so there's no logical reason to be afraid when you're walking except that you've been traumatized. And that means if you move across town, you're going to be afraid when you're walking still. Does that make sense? Yes, it makes perfect sense. So I don't care if you move, but I don't want you to think moving is actually going to fix it. That's going to solve her fear. It's not going to solve it. okay so i i would i would challenge i think i'm okay with you moving i might move but i'm not going to move because i don't feel safe okay because that tells me that i haven't dealt with my trauma yet so i would sit down with a therapist i really would because i think your wife's really been traumatized no it's fair well there was a murder in the neighborhood next to us and it was terrible but it was a family-oriented thing um we would be traumatized yeah it's you're So scary.

2:01:43But also my kids will still ride their bikes in that neighborhood because it wasn't to your point.

2:01:50Dave Ramsey:It's not a drive-by shooting. It dangers people around you. Right. It's not what's going on. But your wife has now internalized it is what I'm saying. And that's okay. I understand. It's a wound. Trauma is a valid thing for her to be scared and to have gone through this. but to extrapolate that to if I live on the other side of town I won't be afraid when this had nothing to do with the house then that's that that means you got something else to work on yeah so I would see if it was me we would sit down together and see a therapist six months of that and then if it's for some reason it's still not good then maybe try the move I don't know I might move anyway just ickiness I can move off of the memory the memory is weird because it'll always be the murder house as long as you live there i mean it's weird like um so yeah i bought a house one time when i was buying and selling real estate that a guy had been killed in and it was like it had a stigma the neighborhood but the people that bought it had no idea and it wasn't i mean i didn't have any idea when i bought it sure i didn't care i was buying a foreclosure right right and so uh but it was but it's still there's an ickiness i mean a life was ended there it's weird it's just strange.

2:03:01Dave Ramsey:So the ickiness is a reason to move, but not if you're actually using the I don't feel safe, then that tells me she needs some other stuff. She needs some other help with this. And that's okay. It doesn't mean she's a bad person. It doesn't mean she's, you know, it just means she went through some trauma. But don't take that with you to the other side of town and then go, well, I can never go outside the rest of my life and walk. because one time, 42 years ago, there was a murder next door, and I never dealt with my trauma. That's how stuff develops, and so you don't want to live there. And I'm channeling my inner Dr.

2:03:38Dave Ramsey:John Deloney. I know. I was going to say, you said internalize? You were using some. Using some John Deloney words. Yeah, I know. I was like, man, trauma goes with you. Well, I've been hanging out with him. I've been learning from him. He's a smart dude. It's good. So there we go. It's real, though. So real. It's so sad. I'm sorry you all have been through that, Jake. I know. And I'm just glad. I'm glad everybody's okay. And what you don't want to do is make a stupid financial decision based on the heightened emotion either. So just let some stuff settle. Be calm. Yes. Go do some work. And then if you guys need to make a wise decision to move, do that.

2:04:08Dave Ramsey:And ickiness is an okay decision. But there's nothing wrong with that. 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.

2:04:34Thank you.