Short-Term Pain, Long-Term Peace

25:04Dave Ramsey:RamseySolutions.com slash events. Book your cabin before they're gone. They will be gone. Now, listen, it's after Labor Day. All you people that had the summer and vacation. Now, March is going to be here in about 20 seconds. Yeah. And it's only$600 to put your deposit down. And hold your cabin. Yeah. That's a deal. You can do that. And baby step four, you can afford it. And now you can afford it because you're not broke anymore. I love it. Looking forward to having you guys. It's going to be fun. Lee's in Salt Lake. Hi, Lee. How are you? Hi, I'm good. Thanks. How are you? Better than I deserve.

25:36Dave Ramsey:How can we help? Good. I am a single mom. I'm 29 years old, and I have a four-year-old son. I left an abusive relationship about four to five years ago, and it's just been me and my son. I homeschool. I've been working remotely for the past three years. And my job just announced that our company is shutting down and that I have about three weeks left. I have no debt. I'm on baby step three, trying to be on baby step three. I only have about$2 ,000 in savings. I've been applying like crazy. I probably put in 100 applications this past week just trying to find a remote job. But yeah, I was just calling to get financial advice, like what I should do.

26:22I'm just afraid because I don't have a lot of savings that, you know, will go home with if I don't get a job. I was only getting$2 ,400 a month. Okay. Okay. And you've just been applying for jobs that are just out there. Have you reached out to people in your community, in your network, and said, hey, I'm looking. Do you know of anyone? Yeah. I try to ask all my friends. I'm looking for a remote job. Why are you looking for a remote job? I was going to say, when you say only remote, you're narrowing your pool so small.

26:57Dave Ramsey:Like 90 % of the jobs just came off the table. Yeah. Yeah, it's because my son is still home with me. Yeah. Do you have family in the area? I don't. Where is your family? They're in Arizona. Okay. You may be soon. If you had an in-person job where you made double, could you do daycare?

27:22Possibly. If I can, I prefer to homeschool. I prefer you not starve. Yeah, I know. And get thrown out of your rental house. I've had that experience with daycare. Yeah.

27:35Dave Ramsey:I prefer you not get thrown out of your rental house and not have food. That's the first thing. We have to survive first. Then we can work on preferences. and you've got the fuse burning on a stick of dynamite. You've got three weeks is how long the fuse is. And then your world's going to blow up. So yeah, I prefer no longer is available. I think you've got to put in for whatever's out there, including in person. And I think I heard you say you had a bad experience with daycare. There's really great daycares out there. And my guess is that if you were making 24, you might have scrimped on the daycare that you were going to.

28:11but if you have a little bit of a higher paying job, you might be able to look at some nicer facilities. Is that fair? Yeah, I was making about$17 at my current job right now. I'm just not sure how much more I'd be able to make than that.

28:26Dave Ramsey:Yeah, you're starving to death. I think it's because you've narrowed your pool so far. I think that if you go out and you're looking at in-person jobs full-time, what's your area of expertise? What are you in, your field? um i i have a bachelor's in hospitality and tourism management you have a four-year degree in hospitality and you're making 17 an hour yeah you ought to be able to get out you ought to be able to go manage a hotel girl or manage a restaurant or get in or get in line to do that and make a lot more than that i think you've just narrowed your pool i know i've said that but i think that you're so tunnel visioned on taking care of the four-year-old the truth is he's going to be in kindergarten in a year anyway.

29:09Yeah. I think part of my problem too is that like I've just always wanted to be a stay-at-home mom and so that dream of homeschooling I have but yeah financially it's just hard. That's the hard part. So here's the thing you've got competing priorities because you've got this value of wanting to be a homeschool then you've got a priority that really is a responsibility of bringing in enough money for your family. You're the sole sole provider And so when that happens, sometimes you have to reorder your priorities. Even if it's temporary in this season, you're going to have to prioritize earning money for your family first.

29:44And the hard thing with priorities is everything wants to be number one, but that's just not reality. Math says that earning money at a career has got to be number one. And just remember, it's for a season, Leah. You might pop back and be doing so well that your season changes and you're able to shift in some ways. We don't know what that looks like, but just think everything is in seasons for life. It doesn't necessarily have to be like that forever.

30:11Dave Ramsey:You've come through an extremely emotionally damaging process, leaving an abusive relationship and clinging to this child and just trying to make sure the child is okay and surviving. And you're being a good mama bear and you're putting your arms around your baby and that's noble and that's exactly what you should do. we're not in the middle of all the emotion of your former abuse. And so we don't have that. All we see is that our friend Leah that we love needs to get a job so she can feed herself and her baby. And that's first. All the other stuff is second. And that includes remote work is second.

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32:52Dave Ramsey:Amanda is in Jacksonville. Hi, Amanda. How are you? Hi. I'm so excited to talk to you. You too. What's up? I need help convincing my husband that the mortgage tax benefit doesn't outweigh paying off our home tomorrow. Do you guys actually itemize? No. It's just whatever TurboTax. No, there is no mortgage tax benefit unless you itemize, and only about 4 % of Americans itemize. Then we do not. You do not have a mortgage tax benefit. He doesn't listen to you. No, it doesn't matter whether you listen to me. You do not have a mortgage tax benefit if you do not itemize, nor do you have a charitable deduction if you don't itemize, because you're taking the standard deduction, and the standard deduction does not allow you to list off other things that you want to deduct on your taxes.

33:58Dave Ramsey:Instead, you take one deduction, the standard one, and you waive the others, which are smaller anyway than the standard deduction. So you're probably not itemizing, so your mortgage tax deduction's mythology. It doesn't occur. You don't get one. Okay. So you have the money in the account to pay off the mortgage? Yeah, we have$235 ,000, and our house is$94 ,000. And why does he like being in debt? Well, we met with a financial advisor, like an intro meeting, and she was trying to convince him that we should invest that instead of paying off that. Oh, you need a different financial advisor. Mm-hmm.

34:44Dave Ramsey:You need to go to SmartVestorPro at RamseySolutions.com and find someone that has a brain. There is money. I mean, it almost feels like you could do both. And maybe that's the way you approach him. There's$234 ,000 sitting there in savings. You take the 94 and pay off the mortgage. You take another chunk and invest it and then keep your three to six months. Is your three to six months included in that 234? Yeah. Yeah, that way everybody's happy. He gets to invest a little, you get to pay off the mortgage, and you've still got your stack of cash there for an emergency. Okay, that sounds good. If he listens.

35:27If he listens. You know, we've done all the other things. We invest in our 401ks. Our kids have their Florida prepaid plans set up. They have their own checking account. What's the mortgage payment? What do you guys pay every month on the mortgage? It's about$1 ,200, but that includes taxes on insurance. I mean, and that's the other thing. I mean, I would sit down with him tonight. If I were in your shoes, I would sit down tonight and say, here's the money we have. I would like to do this, pay off the mortgage, and then once the mortgage is clear, whatever is left, let's say, I don't know what your taxes and insurance are.

36:07Let's just cut it in half.

36:08Dave Ramsey:How old are you guys? I'm 39. He's 43. Okay. Let's say, let's take$600 and let's start investing that every single month, along with the extra cash that's sitting in that account. And over time, Dave, do you have it in there? Well, I just put$1 ,500 a month for the next 25 years, okay? Which puts you guys into your 60s. You'll be 65, you'll be 67, okay? So$1 ,500, your house payment plus a little bit, is$2 ,364 ,000. that's what that house payment's costing you. Yeah. So anyone that tells you to keep that house payment is a mathematical moron. For a tax benefit that you're not eligible for anyway.

36:59Let him listen to this call. Yeah. Play this for him because he's wrong and we're right.

37:06Dave Ramsey:Well, and your financial advisor is not giving you good advice. They don't make commission on the amount you use to pay off your mortgage. They only make commission based on what you buy with them. Ding, ding, ding, ding, ding, ding, ding. So there's a little conflict of interest in that advice. I will actually defend the financial advisor and say it's probably not his motivation. He probably just believes the lie that a lot of people believe. But what we know from having done the largest study of millionaires ever done in North America, 10 ,167 of them the typical millionaire in their first one to five million dollars of net worth that we found like 80 to 90 percent of them fall in this category have a paid off home that's worth six seven eight hundred thousand and they have money that's gone into their 401k that's worth six seven eight hundred thousand those two numbers added together are a million to$2 million.

38:04Dave Ramsey:And that's the typical person that does this. The number of millionaires, not broke financial advisors with an opinion, the number of millionaires who said, Dave, the reason we became a millionaire was we didn't pay off our house and we invested the money instead. And that caused us to be a millionaire. The number of 10 ,000 millionaires that said that was zero. Can I ask another stat? How many people in all your years on radio who you have guided to pay their mortgage off, how many have called back and said, Dave Ramsey, you fool, I paid off my mortgage and you ruined my life? I can tell you that there are entire websites devoted to hating me, entire segments of Reddit devoted to hating Dave Ramsey.

38:55Dave Ramsey:I mean, type in Dave Ramsey sucks. It goes on for days. Never will you find a single person that said, Dave told me to pay off my house and I hate Dave for that reason. Not one, not one. No one regrets it. If Amanda, you all pay off your house and you hate being debt free, you can go get a new mortgage and get back in debt. but I've never heard anyone do that. I've never seen it. I just woke up and I just felt all clammy and I anxiety and I was having a panic attack and it was four o 'clock in the morning because I don't have a mortgage. No one has ever said that. And so I had to rush down and get me a new mortgage because I just couldn't have peace when I was completely debt free.

39:43Dave Ramsey:No one has ever said that. You know, this is, this is, if you think about it, it's kind of freaking common sense. until some goober tries to put a half-butt math formula to something that left out all the other aspects of this. The number of people who said, you know, I got a divorce because we just couldn't get along after we paid off our mortgage. The paid-off mortgage was the end of our marriage. Zero. Nope. Zero. Nobody. Nada. None. Wow. I mean, that's a big stat. You've been sitting in this chair for a long time. Almost 40 years. Yeah. I mean, it's just like and there's everyone hates me for some reason or another.

40:31Dave Ramsey:Except that one of them. That's a good point. That's just very interesting. You know, now the people that live in a test tube and they want to argue about concepts. But I'm talking about the they all hate me on this because they are the financial planner that this guy went to. Right. But the people who actually did it, never a problem. Cut up your credit cards and pay off all your debt. I've never even had anybody get mad at me that actually did it for that. I've never heard it. Yeah. For that. Dave, I hate it that I paid off my car. I feel too peaceful. I hate you, Dave. I've never had that one.

41:09Dave Ramsey:These are not things we get. We get a lot of hate. But a lot of it is from people that have been drinking Haterade. and they're just stuck on some, they don't want to do something or they don't agree with it, but they've never done it. That's right. So they really don't have the experience. If you've ever actually been a hundred percent debt free, if you've had the unbelievable thrill of placing scissors across a credit card and saying, take that Citibank, discover this, I'm done with American distress. And if you've ever had the pleasure of a placectomy, I promise you, you will never go, oh, I so miss my credit card.

41:50Dave Ramsey:You know, those airline miles, I can't fly anywhere because I don't have any airline miles. No, you can go anywhere you want to go because you got money. And no blackout dates. Money. You know, all those airlines, they take money. I know, that's right. That's the thing. And this is how this whole thing works. That's so fun. That's a great question, Jade. Thank you. Yeah. Yeah, it's just an interest. It's so humorous. It is. When I run into somebody, I was at a restaurant this weekend. We stopped in. Lady came over the table and she said, thank you. And, you know, she's someone who actually did it.

42:22Dave Ramsey:She's not someone who talked about the theory of it. Yeah, that's the difference. That's the difference.

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44:05Dave Ramsey:Welcome back to the Ramsey Show in the Fairwinds Credit Union Studio. I'm Dave Ramsey, Jade Walshaw. Ramsey Personality is my co-host today. Hazel is with us in Salt Lake City. Hi, Hazel. How are you? Good. How are you? Better than I deserve. What's up? um I am just wondering what kind of advice you have for blended families I um I have three teenagers um from a first marriage and I have two toddlers with um my current husband and my older boy's dad does not like to pay his portion of the bills and it makes my husband really upset so much so that he then has a hard time wanting to pay anything for my older boys and I am totally supportive of having joint accounts like you guys teach, but my husband just hasn't wanted to do that since we've been married for almost seven years.

45:03And now I'm wondering if that's even a good idea because I find myself paying for things on my account and not telling him, which I know I shouldn't be doing. But also, I have to pay for certain things when it comes to my older kids. And I'm just looking for some advice. The three teenagers, they're in the house. They're not like 18 and 19, right? They're in the house? Yeah, I have a 19-year-old that is leaving soon. But yeah, they're all in the house right now. And so when you say he doesn't want to combine money, it's not just...

45:37Dave Ramsey:He doesn't want to pay for those teenagers. He doesn't want to pay for the fact that you have kids. How did y 'all not discuss this before you got married? I know. Well, we did. That's the thing that I have a hard time with is he had a different attitude before we had our own children together. And since having his own children in the house, like the attitude has just been so different towards my older teenagers. So he even treats the boys differently? To me, he does. When he is with them face to face, he's kind to them. But when it comes to like paying for sports, paying for school, just things that like parents pay for, it just causes an argument every time.

46:25You don't have a combining money problem and you don't have a who pays for what problem.

46:32Dave Ramsey:You have a marriage problem. Yeah. I had a feeling that's what you were going to tell me.

46:42um what's the best way to talk about this with him with a mediator and counseling okay yeah and and i would talk to him about it tonight i would say the more i've thinking been thinking about this we've got some issues in our family and i think you and i need to talk about them and i would love to do that with a counselor because i think they can give us an unbiased look at what's going on and offer some unbiased advice to us and give us some tools to work

47:09Dave Ramsey:through this because otherwise this is not going to go well because if you make me choose between my boys and you you we don't want to have that choice to have to be made and you're starting you're forcing me to do that and I'm not going to do that yeah it's not what I signed up for it's not what we agreed to before we got married and now it's come up again and again and again and now I feel like I'm having to sneak to take care of my own children, and that ends today. Right. Okay. Yeah. Okay. I appreciate that. How long have you been married? Next month, it'll be seven years. So you want a prediction?

47:53Yeah.

47:54Dave Ramsey:It's going to be okay. Okay. Because I think as soon as you call him out and he sees what he's doing in the mirror, he's going to stop because he's a good man. Yeah, he is a good man. That's my prediction. I just don't think he's seen himself in the mirror lately. And this discussion with a good counselor puts a mirror up in front of this behavior, and I think he'll stop. I also want to add this, and I may be wrong, but you've been married seven years and you've got two little ones. If this just started when the other two were born, my guess is it may not have much to do with your boys and it may have to do with him feeling like he can't provide for this family okay and so are y 'all coming up short on money no no he makes good money we have a decent savings um i i actually don't know really what he's got in his like 401k and and roth and because he just he's always just kept that separately he's always said like yeah we should combine it but we He never did.

49:01Yeah, he never did.

49:02Dave Ramsey:But this little bit of secrecy on your side and on his side both is starting to really cause, it's going to grow into a problem unless you nip it. Yeah. So you guys need to come clean and say, we have five children in this house we are going to care for. As long as they are in this house, we are going to care for them equally and totally, both of us. And we are going to disclose 100 % of the financial transactions in this house and all the passwords to everything starting now. That's a real marriage when there's that level of trust and that level of alignment on our goals and our visions. It's going to increase the quality of your relationship to no end, but you guys got some sandpaper to get there.

49:48Absolutely.

49:49Dave Ramsey:It's going to get some rough edges knocked off to get there. And so that's the direction. So, yeah. And Hazel's like, I knew you were going to say that. We're fairly predictable around here. Yeah. And honestly, and I know people are afraid of that, but that's one, I feel like that's one of the great benefits of marriage is you've got this other person that you can be your 100 % self, that you don't have to hide a bunch of things and you don't have to hide who you are and the things that you're struggling with. You have a person. That's the whole point. Yep. It's, yeah. Crazy. Yeah, but I, this guy doesn't say, I think he's just, I think you're right.

50:31Dave Ramsey:Maybe there's a sense of scarcity. I think something's going on there. And he's pissed at the ex for not doing his part. Yeah. That's a valid, that's a valid reaction. And he's like, come on, man, take care of your kids. Come on, man, man up. But in the process, he's not man enough. Yeah, he's just taking out his feelings in the wrong way. And I really do think that. I got a feeling this is a good guy. Yeah, I really do. And I call you out if you're not, believe me. I'm pretty quick, especially somebody being a wuss, you know. But this guy, I think he's a good dude. I think you just got to have some clarity here and, you know, some exposure therapy.

51:08Dave Ramsey:Expose yourself to yourself kind of thing. Like, oh, look at who I am. I don't like that. I don't think I am that anymore. Ready, set, go. And therapy is a good thing. I think all couples need to visit the office of a counselor here and there. I think it's a good practice just to make sure that everything's going good. You don't just have to go in a bad time. We've been married 44, 45 years almost. And at 10 years, we went bankrupt at seven years. And we didn't kill each other then, but we didn't have the money to leave. So we just kind of stuffed everything. And about three years later, when I started making money, all that stuff kind of resurrected.

51:44Dave Ramsey:It all started coming out. And so we ended up in the marriage counselor's office. And I thought it was so that a murder didn't occur or something like that because I was afraid she was going to kill me. and um but what it ended up being was it was like going to a personal trainer they teach you the right way to do the exercise that's right they teach you the right nutrition the right tools to win in that area and so i looked i looked at it as i was just going to class i had a personal trainer that's right for relationships and man i got a lot out of it's so helpful

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54:39Dave Ramsey:Well, we wish we could get to every call and a question here on the show. We can't because you can't get through on all these phones. Sorry about that. If you have a money question and you want an answer for your situation, head on over to our website and use Ask Ramsey. Ask Ramsey is our free AI tool that's built and trained on proven Ramsey principles. You'll get an answer the same way we'd answer it right here on the show. Ask your question today at RamseySolutions.com or click the link in the description if you're listening on podcast or YouTube. Evelyn is in Knoxville. Hi, Evelyn. How are you?

55:15Hi, I'm doing great. How are you guys?

55:18Dave Ramsey:Better than we deserve. What's up? um so i'm in a little bit of an impasse right now i'm trying to figure out if i should go back to work full-time right now or just wait wait it off wait what off um to go back to the full-time course right now i'm doing a part-time job in the evenings while i stay home with my daughter during the day okay so you're considering going back to work because you need more money or because your daughter is getting older? Like what's causing you to hit this crossroads? Yeah, good question. I got a call from a former coworker saying there was a position available soon.

56:01And my husband and I are maybe set four. So we are trying to right now do the best that we can with our income. We don't have a very high income and he's trying to find a job right now that pays more. And yes, I just wondered, yeah. If you're, if you're telling me we don't have a high income and he's not working much and you're working part-time, I am looking for, I would be looking for a full-time job. What, how much are you guys bringing in every month? Oh no, he is working much. He's working a full-time job. He's just not making as much as he wants to. Right now we are.

56:38Dave Ramsey:What's he make? He makes 50, 50 K. Okay. Okay, and what can you make at the new full-time gig? $50K. And the tradeoff is that you currently make how much at your part-time? Right now, because it's a server position tip base, so it would be about$20 ,000,$25 ,000 a year. Okay, so you can double your income, and you have one child, and the child is how old? Two. Two, and so the child will be in daycare. she's two did you hear that she would she would be in daycare then correct if you took the job correct yeah okay so the trade-off is uh do i want to put a child into daycare my child into daycare so that i can make twenty five thousand dollars a year more correct yeah and that's where i'm at a bit of an impasse that's not an impasse it's just a decision neither one neither one is the wrong answer you're in baby step four is there a reason that you need the money does your mortgage fit within what he earns and what you earn part-time?

57:45No, the mortgage does before when we made, we both had an income. The mortgage does not fit into his income. So right now the mortgage went up, so we're at$14.56 a month.

57:59Dave Ramsey:Okay, so if you don't take this job, can you stay in that house? yes uh the way that we're making it work uh so basically we started i started aggressively putting money towards the not me sorry listening to you guys aggressively and then because of that started putting lots of money into the mortgage so this is the first month that we're kind of taking a step back just to invest because we were not investing the 15 percent um we were just wanting to be done with the mortgage, but that'll take a while. So we are trying to figure out. I still think this is high for you because if you're telling me he's bringing in after tax around 34, is that true?

58:47No. So he would be 2 ,800. Okay. Even less. He does have a pension. No, no, no. Just after tax dollars.

58:55Dave Ramsey:After tax. After tax, you should have around$3 ,334 a month. Yeah. And then you, with the$2 ,500, I mean, what are you bringing in,$1 ,500, if that? It's about$2 ,200 is the average or the median. Okay. Okay. I mean, it's... So combined, it's about$5 ,500 every month. It's tight, but you can make it work. I see what you're doing. So it does come down. Okay, we can make the house work. We can make the house work. So the only question is, at this stage, do you want to work full time and not have the server job, and your child will be in daycare? Neither one is a sin. Neither one's horrible. It's a personal choice.

59:46Okay?

59:46Dave Ramsey:If you told me you were going to make$10 ,000 more, you're going to spend that on daycare. So I wouldn't do it. Right. But you're going to make$25 ,000 or$30 ,000 more, and his income is going to go up. So if you want to go back to your career, back to your old company, that's fine. But just because they have a position available doesn't mean they won't have one later. You could say, third option is, I'm going to continue like we are temporarily. And maybe in two years or three years when Junior goes to kindergarten, maybe then I'll go to full-time. Yeah. because daycare won't be quite as expensive when I've got school.

1:00:23Dave Ramsey:So anyway, all of that. And so you just got to work it through that way and decide. I don't think there's a wrong answer. I don't either. And I like what you said, Dave. You can go on a path and then look up and go, does this still feel right? If it does, keep going. If it doesn't, you make changes. It doesn't have to be forever. That job is not the only job, and it might not even be the only time that job is there. That's right. So didn't even ask what the field was, and that might have even added to that. April is in Atlanta. Hi, April. How are you? April. April. How are you? One more time. April, April, April.

1:01:03Dave Ramsey:Three, two, one. All right. We'll go back. Karen is in Oregon. Hi, Karen. How are you? Good. Thank you. My question today is I'm 61. and I have retirement money and I put it. I'm no longer working out of the house. I'm taking care of my mom. But I went to a fiduciary at our credit union and he put it in stocks and bonds and I feel like they're too risky for my age. I started last year and I've been losing ever since. I know it's a long-term thing. You've been losing in the last year? yeah oh well it's not too risky it's just the wrong ones it's awful how much did you start with and how much do you have now well um it started with about 84 and the first quarterly thing i looked at i lost 5 000 and which quarter the first quarter of this year no it would have been i put it in like july of last year and then december when i got my first statement, I had lost$5 ,000.

1:02:16How much do you have today? Do you know? I would say I'm down$8 ,000 from the 84.

1:02:22Dave Ramsey:This guy is the world's worst picker of funds. He's the world's worst picker of funds. While you've done that, I've been in a hundred percent growth stock mutual fund, and I've almost doubled my money while you'd lost$8 ,000. And I'm 66. Oh, no. My husband also went to him and lost money in the first thing. He said, it's a long-term thing. No, it's not a long-term thing. You don't do long-term when the market is going up and your investments are going down. You don't do that long-term. That's just immediately over. Do not pass go. You're fired. So, yeah, go to RamseySolutions.com, click on SmartVestor Pro, and pick out a SmartVestor Pro that you can sit down with that has the heart of a teacher.

1:03:11Dave Ramsey:and never again put money in something because someone else says to do it. Do it because you understand it and you select it. Yeah. If you pull up, Dave, you always have that S &P 500 thing. If you pull up that and look at it, you can see the fact that you've lost apparently quarter over quarter and$8 ,000 year to date is crazy work compared to what the stock market is actually doing. Yeah, let's see. It's 12.24. It's up today since the first of the year. Year-to-date, it's up 12 % since the first year. That's not an$8 ,000 loss on$84 ,000. That's a$12 ,000. It's an$8 ,000 gain on$84 ,000. That's right.

1:03:51Dave Ramsey:That you should have had. And that's just if you only did what the S &P did. Which means he's got. That's all. He was not doing well. Horrible. Scary.

1:04:11Thank you.

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1:05:48Dave Ramsey:jade i talked about this a little bit the other night on the investing essentials and after our last call i'm going to talk about it again for just a second all right conventional wisdom isn't it's not wise. If you follow conventional wisdom on the average diet in America, you will be obese. If you follow conventional wisdom on the proper way to be married, you won't be long. If you follow conventional wisdom, you would get a credit card when you turn 17 or 18 so that you can build your FICO score. Why? So that you can borrow money to buy a car. Why? To build your FICO score so that you can borrow money to buy a house.

1:06:44Dave Ramsey:Why? So that you can build your FICO score to make the banks rich. Because your FICO score is not a measure of winning with money, but conventional wisdom says to build your FICO score. Conventional wisdom also in the financial planning world says that as you get older, you're supposed to move your investments to less risky. And if you read anywhere on the Internet among the stupid thousands of articles that are out there, they teach a thing that the financial planning industry has called conventional wisdom, called the asset allocation theory or asset allocation model, which means that you allocate more of your assets to bonds and money markets as you get older so that you are safer.

1:07:32Dave Ramsey:That is conventional wisdom, and conventional wisdom isn't. Here's why. As you move your money from good growth stock mutual funds into bonds, they underperform dramatically. As we told the last caller, year to date on the S &P 500, my stock, growth stock mutual fund in an S &P has averaged 12.2%. You know what the bond market has averaged since the beginning of the year? Less than 1%. Oh, gosh, I was going to guess higher. That's bad. And so she calls up and says, I have followed conventional wisdom and my fiduciary, which is a funny term for someone that's supposed to have your best interest at heart, but used conventional wisdom and screwed up everything.

1:08:24Dave Ramsey:So this bozo with the credit union put her into bonds, some equities, and some cash, which is what conventional wisdom says to do when you're 61. And so she's lost$8 ,000 when she should have made$8 ,000, which is a$16 ,000 swing, which is somewhere around 25 % on$84 ,000 that she's off because she followed the advice of someone who was giving conventional wisdom. Conventional wisdom is what normal people, everyone believes without question, and they just follow each other around until they walk off a cliff together. Yeah, because he didn't notice that she was losing. Yeah, and she was told that she should be in something safer, and yet she lost money, and so her response was, I'm not in something safe enough, instead of I'm in the wrong thing.

1:09:22Wow.

1:09:22Dave Ramsey:She believed the lie about part of it, but didn't understand the situation. So the idea that you need to move to all of your investments to a safe haven of bonds and cash where you make no money as you get older is absolute bull crap. It's mathematically stupid because there's two kinds of risk with money, boys and girls. There's a risk of actually losing it because it goes down in value. There's another kind of risk. If you don't make 4.2 % on your money, which is the inflation rate, then you are going backward in real purchasing power. Oh, as a matter of fact, if you're going to have to pay taxes on it, you need to make a little over 6 % in order to net 4.2 % after taxes to break even with inflation and taxes.

1:10:08Dave Ramsey:If you're using the asset allocation model and you're in bonds and cash as a part of your portfolio, 40, 50 % of your portfolio, you're not even keeping up with inflation. You've gotten tackled from behind. And God willing, she lives from 61 until, I don't know, 80 or 81. So what usually happens to a Ramsey follower if they follow the stuff is they're in the four types of growth stock mutual funds, no bonds, no cash. And we don't tell you to change that as you get older. And here's why. Because if you follow the stuff we're talking about, the guy a while ago, we said, if you just put your house payment away, it was going to be$3 million, right?

1:10:45Dave Ramsey:$2.2 million is what I got, right? So you're going to have millions of dollars in these mutual funds. I'm 66. I have millions of dollars in my mutual funds. Now, if I have millions of dollars in my mutual funds and they go down this year, am I okay? You'll be just fine. I think I'll be okay. But they went up 12.2 year to date. And last year they were up 18. And the other years they're averaging over 12. In the last five years, that$2 million would have become$4 million in five years just by leaving it alone. Meanwhile, someone following conventional wisdom that's my age has lost millions of dollars in opportunity.

1:11:28Dave Ramsey:Millions. Oh, and guess what? I'm 66. You think I'm ever going to touch that money probably? No. I might live off of the income because it'll generate two. If you had$2 million, it'll generate$150 ,000,$200 ,000 a year in income and not ever touch it. So am I ever even going to touch it? No, I'm not going to touch it. So it doesn't really matter what it's in. as long as it's producing income. And so who am I actually investing it for? Oh, me when I'm 96, because if I'm 66 and I'm healthy, statistically I make it into my 90s. Now, if I'm not healthy at 66, we can change that, but I'm healthy. So knock on wood, I make it into my 90s.

1:12:10Dave Ramsey:So I have 30 years to outpace inflation, and if I go with conventional wisdom, my$2 million will be worth less than it is now, in actual real purchasing power because of adjusted for taxes and inflation so that's just asinine use your own brain to think about these things don't use somebody who follows everybody else around yeah don't be normal use your own brain so that pisses off half of the financial planning world which really keeps me very happy it's one of my goals in life April is in Atlanta, Georgia. Hi, April. What's up? So I have the dumbest dumb question. Like, honestly, you know, so I am married.

1:12:58I have we have a mutual income of a lot of money. I mean, we make about half a million dollars a year between the two of us. You know, so we are in a good financial place. But the thing is, is I also know that we've been married for about 15 years. I also know that he has always put money away in investments that he has controlled. And so I have never really looked at that. I know it's about maybe two million at this point, like the last time I ever, you know, looked at it. Um, so my thing is, is now we're, we're thinking about divorce and we, and this is a real situation for us is that we, it's not that we don't love each other anymore.

1:13:46It's just, it's just not working anymore. And it's, it's, it's a mutual decision. Um, but my thing is, is at this point, do I just walk away from this money or, you know, because he's kept that separate from me for this long. I have money, too. I make$260 ,000 a year. So how much money do you have?

1:14:11Dave Ramsey:How much money do you have in investment? So I have about a million and one. I'm looking at my investment account right now. I have about$1.1 million in investments on my own, in my own money. So he's got$2 million. You've got$1.1 million. The law in Georgia does not say you have your own money. So the law in Georgia is 50%. I know. Right. All of it goes in a pile. All of the money goes in a pile, and we split it down the middle. Yes. Yours and his are not yours and his. It's ours until we split it. Right. We have two children. They're nine and seven. You know, like, so, and he has done, let's just, let's be very honest.

1:14:56You know, he's lived a really good dad life.

1:15:00Dave Ramsey:So the question is, all we can do is tell you how great this guy is, and I'm divorcing him. Yeah. This is so strange. You may have kept your money separate, but it's yours together. The money goes in a pile, and you split it down the middle. It's what the law says. And if he doesn't abide by the law, it's not going to be good for him. This good dad is not going to go well with the judge.

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1:16:59Dave Ramsey:The Ramsey Show Question of the Day is sponsored by Why Refi. If your private student loan payments are out of control and behind, you might feel stuck like you're out of options. Why Refi was built for borrowers in difficult situations. Helps you explore refinancing options that fit real-life budgets. Visit whyrefi.com slash Ramsey. Might not be in all states. Okay. Today's question comes from Steve in Vermont. He says, you often say investing in mutual funds and real estate are your two go-to options. Would you ever suggest REITs as an alternative to purchasing real estate in order to get in at a lower price point?

1:17:42I've never heard you do that. But I've always heard you say if you're going to have 5 % to just play around with and do things like crypto, single stocks, REITs would kind of fall into that category.

1:17:56Dave Ramsey:You know, REITs used to fall into that category. I think you're right. REIT stands for REIT, Real Estate Investment Trust. And it's basically a mutual fund that buys real estate. But there's a lot of different types. There's a lot of different types. And when they first came out, I don't know, 25 or 30 years ago, I first started seeing them, I just told people stay away from them. Because in those days, the fees being charged to manage the property was so high that the yield to the actual rate of return on buying the mutual fund was low. Right. And these days, though, I've seen a lot of the current REITs that are yielding up around what you might make on a regular gross stock mutual fund.

1:18:38Dave Ramsey:And so you're getting up around 10%, 12%, 15%, somewhere in there. I've seen REITs that are doing that. And so if you wanted to do a REIT as a way to get to real estate, I would. That'd be okay. Pick out one with a good track record. Get with a SmartVestor Pro. They could help you pick one. We have a really great article also on Ramsey Solutions, and it goes through the different type, the equity, the mortgage, the hybrids, and it'll kind of explain all of those to you. Equity is basically buying real estate with equity, which is what I would do. That's what you want. That's the one I would do.

1:19:12Dave Ramsey:Because this is a way to put in$10 ,000 and be in the real estate market without having to buy a house. Right. But you do want to stay away from the mortgage ones because those actually take on debt in many cases. Exactly. Exactly. It's exactly right. So, and that article is on our website, can give you more detail. But overall, I would not do this until you are ready to buy real estate, which would be baby step seven. Yeah, your home is paid off. Your home is paid off and you've got, you know, 15 % or more going into the four types of growth stock mutual funds that we talk about growth, growth and income, aggressive growth.

1:19:49Dave Ramsey:This is not a substitute part of your 15 % on this. It's not a substitute for your normal investing plan with the baby steps. Okay. It's in addition to. So let's say your house is paid off and you're putting 15, 20 % away for retirement and you got some extra money and you're thinking about buying real estate with it. Yeah. But you don't quite have enough to do that yet and you want to buy REIT instead. I love that. That's an okay place, but that's the only time. And that's a very small percentage of our listeners. True that. They're there. Yeah, that's true. That's very true. So you got to get there first before we talk about it.

1:20:20Dave Ramsey:and no, I would not do a REIT instead of gross stock mutual funds. And I think that's what Steve was asking. In addition to, yeah, he's got the real estate bug and he's wanting to get in there quick and get in there easy and that's not what we want to do. So you're going to buy it like you do any long-term investment. You plan to hold it 5, 10, 20 years, that kind of thing, and then you're going to be all right. John's in Columbus, Ohio. Hi, John. How are you? Good. How about you? Better than I deserve. What's up? Hey, so I had a question for you. I wanted to really weigh the pros and cons. So I know you're not really for bankruptcy, but I wanted to see what you thought in my situation.

1:21:06It would be a Chapter 13, so I'm about$200 ,000 in unsecured debt. That includes anything from payday loans to high-interest credit cards. I'm spending around$9 ,000 a month, and I think I bring home around$11 ,800 after tax. So not much left. I've tried to do like the debt snowball and just not really getting anywhere.

1:21:43Dave Ramsey:What is all the debt? $200 ,000 unsecured? Yes. What do you owe on your cars? So I got one car. I think I owe right around$27 ,000. Is that in addition to the$200 ,000? Yes. So, I mean, it's a Tesla, so I don't have to pay for gas. So, I mean, I don't know if that really makes up for it. No, it doesn't make up for it. You've got$27 ,000 worth of debt, well, you have$200 ,000. How did you get$200 ,000 in unsecured debt? That's a good question. So, I was a realtor, and right around the time COVID happened, I wasn't making much, maybe like$12 ,000 a year. and I just started you know having to take out loans and that cover basic living expenses and then it just kind of grew from there so you went a long time without working so $200 ,000 worth of time without working because you're putting your life on credit cards instead of picking up a different job wow is it just you John or do you have a family a wife No, I have a wife.

1:22:58So, I mean, I'm the one bringing in the income. But I didn't really have any gaps in employment or anything. But, yeah, I was, like, making$12 ,000, and then I slowly progressed. I mean, over the last five years, I went from$12 ,000 to$200 ,000.

1:23:10Dave Ramsey:Well, that is a gap in income. If you tell me you're making$12 ,000 a year, that's not enough to eat. And if you told me you lived on$200 ,000 worth of borrowed money, that's a gap in income. Or you were spending more than, you know, one of the two. I think it was just the payday loans, like the amount. So, like, because my salary is right around$200 now, but with the payday loans and stuff, it's like I had to get, I had to. How much of the$200 is payday loans? It's probably$35 ,000 to$40 ,000. It's not the payday loans then. You've still got$265 ,000 or$165 ,000 worth of other stuff. Does your wife know about this?

1:23:54Dave Ramsey:She does. Okay. All of it? Yeah. Okay. How long have y 'all been married? I don't know. For about two, three years, but we've been together for 10 years. Okay. All right. Well, this is a very, very scary thing that you're in and to go through, sir. I've been there, and I know how it feels to stand in the shower and scream and cry because I was so scared I didn't know what to do next. So it's a mess. It's a real mess. You're really not bankrupt. And bankruptcy is really not going to solve your problem because a Chapter 13 is 60 months of paying payments on these. And there's a formula that's going to dictate that you pay a large sum of it, not all of it, but a large sum of it back.

1:24:43Dave Ramsey:And if you're going to pay a large sum of it back into Chapter 13 over 60 months, then you can also pay a deal, work a deal with these people and work it through. We have an advertiser named Guardian Litigation that helps people in these exact situations. And it's much easier and quicker than bankruptcy. Your credit is destroyed and it's going to continue to be destroyed. Good, because John doesn't need to be borrowing money again. So that's a good thing. So just continue that idea. Your credit's destroyed. And then what is the most efficient way to clean this mess up? Chapter 13 is not. When you run the actual formulas that are required by law against this debt, you're going to pay back a lot of this, not all of it, but a lot of it, because you make a lot.

1:25:39Dave Ramsey:and so if you made$14 ,000 a year then you wouldn't be paying back much of it but the formula is based on your income and so you're and the law wants you to pay as much as you can pay in bankruptcy or not in chapter 13 that is and it's called a wage earners plan so I'm going to put you on hold and we're going to connect you with the folks at Guardian Litigation and see if they can help you I think they can and basically what they're going to do is they're going to go through with each one of these and make a deal with them and stop the interest and lower the balance and then pay it out. And the good news is if you keep paying, you know,$5 ,000,$7 ,000 a month, you're going to be out of this in a period of time that's shorter than five years and you won't have filed bankruptcy.

1:26:26Dave Ramsey:Hang on to your marriage, brother. Sit down with your wife. Tell her you love her. You're important. You make a lot of money now. You can clean this mess up and learn from it and never be back here again. I did.

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1:28:05Dave Ramsey:Welcome back to the Ramsey Show in the Fairwinds Credit Union studio. Jade Warshaw, Ramsey personality, is my co-host today. Noah's in Charleston, South Carolina. Hi, Noah. How are you? Hey, Dave. I'm good. What's up? Hey, so me and my wife both work full-time and are in ministry full-time. We just had our first kid a year ago, and we bought a new house whenever we had him just to fit our family better. And now we're in way over our heads, and I'm kind of stuck at what to do next. You're in way over your head with your mortgage? Yeah. It's our only debt. We don't have car payments. We don't have student loans.

1:28:54Did something change that caused you to be in over your head or it was kind of like that from the beginning? No, it wasn't always like that. We had a home that we purchased for a good price and we were able to sell it and make a good bit of money on. and the next barrier to entry cost-wise for the housing market that we're in was pretty substantial, and we thought we could make it work,

1:29:26Dave Ramsey:and it is just not working. Okay. Okay, so from the day you signed up for this current home, you've been over your head. Yeah, pretty much. You bought a house you can't afford, so what are you going to do? Yeah. How much is it? You're either going to make more money or you're going to sell the house. Which is it? Uh, we're, we're both like in top kind of pay for the jobs that we're in for the ministries that we work for. What do you make a month? Uh, our monthly income is$6 ,630. And how much is the mortgage? Uh, our mortgage is$2 ,962. Yeah. Okay. 50%. Yep. Yeah. Noah. But we, I mean, we luckily put Noah.

1:30:16Dave Ramsey:the education you got to go in the ministry didn't include math. Most of the time it doesn't, unfortunately. I'm messing with you, man, because you already knew the answer before you called. You bought a house you can't afford, you can't keep it. It's killing you. We're trying to figure out. It's taking all of your fun. The psalmist says the blessings of the Lord have no sorrow added to them. This is not from God. It's sorrow.

1:30:54Yeah. Charleston just has such a high housing market.

1:31:00Dave Ramsey:We're in the lower entry-level housing market. You don't get a pass on math with that phrase. What I was going with was, would it be smart to relocate and find new jobs? be smart to go back to the neighborhood and the house you sold yeah what was wrong with the one you sold so it was built in the 1940s um it had we had put 30 000 into it before we moved in and then it needed about another 115 000 um if we were going to live there because it had really bad mold and um the main plumbing line needed to be i mean that that uh price point of home, that square footage, couldn't that fit a family of three?

1:31:50Yes.

1:31:51Dave Ramsey:Yes. Yeah. But in the market here, that is like$480. That is absolute hogwash. Okay. Charleston, South Carolina is not the most expensive market in the United States to where you cannot live on$6 ,000 a month and buy a home that you can afford. You simply have justified and rationalized buying a house you cannot afford. And, honey, you're going to have to sell it. It's killing you. You do what you want to do, what you called us. And I think you move out a little bit further and have a little bit more of a commute and get out in the country, so to speak, the suburbs, one county over, and you find a home that you can afford that doesn't have mold.

1:32:34Dave Ramsey:And you put yourself into that home. My good news is the market in Charleston is strong, and so you'll probably be able to sell this and get out of it whole. You're probably not going to lose money. And you can probably hang on a little while. You don't have to panic. So you don't have to fire sale the thing, but you need to get a sign in the yard this week. Yep. And it needs to be gone by Thanksgiving. Bye. We bought something we couldn't afford. Everybody listening to this just about has done that one time or another. Absolutely. It's just harder to go backwards when it's a house. It's easier to take something back to the store, but when it's a house, you feel a type of way about it.

1:33:16Dave Ramsey:Well, it's even hard to go and look at houses in the neighborhood that you can afford after you looked at houses in the neighborhood you can't afford. Yeah, because you've set the bar higher and now you've got a door back. If you go drive a Lamborghini, it's hard to settle on an Audi. Oh, man. It's just hard. Yeah. I mean, and if you actually owned a Lamborghini that you couldn't afford and you have to sell it to get a used Audi. I don't know why I'm picking on Audis today, but a Volkswagen, a used Jetta. How's that? Go get you a Jetta. No, don't. The secret to happiness lowered expectations. Exactly.

1:33:54Dave Ramsey:Exactly. And so, yeah, well, the thing is, in an effort to create a good situation for your family, the two of you made a bad math decision that the irony is it has caused your family to be in a bad situation. And so while the actual environment is nicer, everything about it reminds you that you made a mistake. Yeah. When you drive up in front every day. It was an emotional thing because they knew going in. They couldn't do it. That they couldn't do it, but they told themselves, oh, we'll just eat peanut butter and jelly. God will work it out. No, he won't. God can do math. He doesn't work it out.

1:34:34Dave Ramsey:He says you have to sell your house. That's brutal. He brings miserable. He brings misery to you until you sell it. It's hard. I'm sorry, Noah. Yeah, that's tough. But there's no question, honey. You just did something and you got to undo it. You got to go back to the last time you had a good life. And it was before you bought this house. That's the last time. And then, yeah, you're going to move out. But no, don't believe this line. Charleston, South freaking Carolina, is so expensive you can't afford to live there. It is expensive. They have expensive houses, 100%. Well, they do in every town.

1:35:08Yeah, I'm just saying you don't have to pick one of those.

1:35:10Dave Ramsey:Freaking Amarillo has expensive houses that you can't afford to live in. But every town has a house that you can't afford to live in, or$7 ,000, or$16 ,000, or$17 ,000. I don't know. And some counties you can't even afford to live in. The county we live in is the 11th wealthiest county in the United States, Williamson County, Tennessee, just south of Nashville. And it's full of big old stinking houses. It sure is. That are hard to buy a house in this county. And you probably don't live in this county if you make$5 ,000 a month. You probably don't unless your grandmother gave you a house. I mean, that's it.

1:35:49Dave Ramsey:But that's okay. You can live one county over and there's lots of houses. That's right. As a matter of fact, my wife and I were kind of doing our drive around yesterday and we drove down into one of the counties and went, look, nice, affordable homes. And they're not that far out of town. You can actually do it. You just have to drive in that direction instead of the other direction.

1:36:21Thank you.

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1:38:27Dave Ramsey:Start every dollar for free in the App Store or Google Play. Brandy's with us. Brandy's in Indianapolis. Hi, Brandy. How are you? Hi, I'm good. How are you? Better than I deserve. What's up? um so i just wanted to call in and um see what your opinion is on this so i have an opportunity to buy my cousin's company um he has been running it for a very long time like about 36 years and um he's you know he's getting a little older so he's wanting to sell his company but keep it in the family, and he's wanting to sell it for$4.2 million. It is quoted at like$6.6 million. So I guess the question is he— Quoted?

1:39:17Dave Ramsey:Who quoted it at$6.6 million? Well, he said it was estimated because he was going to sell it. So I'm not sure what revenues he went down to get like how much it came up with that. And what does the company do? um so it is a blind company it's a wooden blind company um and shade do you work with window covering no it's a um it's my mom's cousin so like okay so have you ever run a business or a window blind company or anything like that um so i run a program where i work now but it's not like a company or a business. What kind of program? What does that mean? When you said you run a program. I run an emergency housing program out of Vermont for the state of Vermont.

1:40:12Okay.

1:40:13Dave Ramsey:So you've never run a business. You don't know anything about business. You work for the government. And what makes you want to do this? um so he has um made himself like it i mean he makes really good money doing it he's very successful it's something that you know i've always had like a um desire to and i've always told him like hey you know i really want to take over that company when you're ready um How many employees does he have? He has 12. Okay, and do you have any idea what the gross revenues or profits are on this business? He said, I think after taxes and everything, the gross was$800 ,000 a year.

1:41:08Okay.

1:41:10Dave Ramsey:You think that's the net profit? Yes. Well, he said it was$4 million, but like after everything, it's$800 ,000. Okay. All right. I love the idea of you making a lot of money and winning. I love the idea of you owning a business and having a desire to run a business. I'm really scared that that you've got a gap that you've got to close in your knowledge level of what a business is, how it runs, and how to run one, because you're going from zero to 120 seconds here, and you've never done anything like this. And there's a lot more to it than it looks like from the outside. And I don't want your dream to turn into a nightmare.

1:42:06Dave Ramsey:and I'll give you one indicator. Okay. When I ask you what the gross revenues or the net profit was, you didn't even know what I meant. And that's, that's accounting 101, which you have to understand to be able to run a business. Okay. And I'm not picking on you. I'm just saying you've got a gap of knowledge that you've got to fill or you're going to get your head taken off in this deal. I also think you have to be bought into, maybe you're not in love with wooden blinds, but at least the mission of what they're doing to be the owner of this company. I feel like you're very interested in the money you might make and maybe less interested in what it is that the company does.

1:42:51Dave Ramsey:Running a business is very hard to Jade's point. She and Sam own one, I own one, And it's a lot of work. And it's going to be when you work for yourself, you've got the meanest boss in the world. You'll drive yourself harder than anybody. So goal number one for Brandy before you go forward is you're going to have to go on a crash course on basic business and basic business terms. and if you could get your uncle to, your cousin, I mean, to hire you for a year and mentor you in how to operate the business, that would increase your probability of success light years. Yeah, he had mentioned doing, like, a business class with him.

1:43:38They have three a year here in Indiana, and then also I'm working with them, like, for six months.

1:43:46Dave Ramsey:Yeah, I want him to mentor you on how business works and what the problems are that he's facing and be truthful in everything. Now, I'll take you the first step in, okay, to help you with this because I think, well, I can't tell from the numbers you've given me because of the definition of terms. But I'm afraid this business might be overpriced even at 4.2. And I assume he's going to finance it for you and you're going to pay him out of the profits, correct? Yes. Okay. It would be like a 10-year payback. That's how he did it. No, it needs to be. What do you make today? What's your income today?

1:44:26Like$120 ,000.

1:44:27Dave Ramsey:Okay. I want you to pay yourself$120 ,000, and I want you to give him all the other profits until you reach the agreed number. If the agreed number is 4.2, and you can do that in three or four years, that's the thing to do and get it done. Get it over with. Don't stretch it out 10 years, and don't make it fixed payments. Make it a percentage of profits. Profits, percentage of profit. After all expenses are paid, that's profit. Yeah, that's going to save your butt too. Okay. Now, gross revenue is the total dollars that come in. That's at the top line, they call it, of the profit and loss statement, the P &L.

1:45:06Dave Ramsey:Every other expense that comes out down the page, what's left at the bottom before you pay income tax, not before you pay other tax, but before you pay income tax, is your taxable profit on the business. This business is worth a maximum of four times that number. I'm a little bit afraid that number is$800 ,000, which means that this business is worth 3.2, not 4.2 or 6.6. Okay, so you need to get a good valuation on it, And I recommend an outside party give you an evaluation like an accounting firm, and you're going to pay them$1 ,000 or more out of your pocket to give you an evaluation, place a value on the company.

1:45:55Okay?

1:45:56Dave Ramsey:And obviously, we're not going to pay more than that. But your success is going to be based on two things. One is that you pay a reasonable price, and two is that you get a crash course in running a business from your cousin and from everything you can read between now and the time he walks out the door for the last time. You become a maniac in personal growth on running a business because it is a different pace. Whatever pace you're used to working for for the state of Vermont, the pace of running your own business is 2 or 3x. you're about to go from wandering along to full-on freaking sprint and you're gonna stay in sprint until you collapse that's what it takes to run a business it's not for everybody and you need to do some soul-searching and go do I want to bust it at that level because 60 hour weeks are normal for the self-employed and guess what?

1:46:55Dave Ramsey:You own the business. You don't get sick time. You take Tylenol and you go to work when you own the business. You don't get time off for anxiety. You go to work and increase your anxiety.

1:47:52Transcription by CastingWords 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.

1:48:24Dave Ramsey:Cheryl is in Hartford, Connecticut. Hi, Cheryl. How are you? Hi, Dave. I'm well, thank you. How are you? Better than I deserve. What's up? I found you guys about five years ago, but that was like two months after I opened a Robinhood account, which I've basically done nothing with because I don't know anything about the stock market. And it has a small balance in it of roughly$3 ,000. And I'm just trying to figure out, should I close this account and apply it to one of the other steps that I'm following or do I just leave it alone? How's it invested? In the random stocks that I know nothing about.

1:49:05I basically just picked some stocks that I knew, Apple, Amazon. Are you on baby step two? I'm on baby step four. Baby step four. Okay. You know, are you investing with your 401k at work? And yes, I do 15 % at work. I would take the money out of Robinhood and I would just invest it in a Roth IRA and I would do it through, I'm going to call a more reputable brokerage is what I would choose.

1:49:36Dave Ramsey:Yeah, like a smart investor pro, sit down with them or take it out and go on a cruise. I don't care. Yeah. But everything you said, everything you said about it says you've already made up your mind. Okay. Okay. Since you opened the account, you've spent some time with us and others somewhere that made you realize, I should not be putting money in things I don't understand. You phrased your sentence that way, correct? Yes, that's true. Okay. And so you've got money in things you don't understand, so we should do away with that. Okay. We've got money in single stocks, which I don't own a single single stock, not one.

1:50:09Dave Ramsey:Okay. So I do away with that. And lastly, I'm engaged in paying monthly for a service that I'm not using. I have a Roth IRA that I had from an old 401k from another job that I just rolled into a Roth. Should I just roll it into that one? You technically can't because it's not a Roth. You just have to open a Roth separate. It could all be in the same mutual fund. It could all be with a SmartVestor Pro. It could all end up on one statement, but it'll be two lines and two account numbers. Okay. Because you can't technically combine separate accounts like that. So, like, if you had a Roth 401k with a SmartVestor already and you rolled over a 401k from an old job and you put it over there with the SmartVestor, it'll still be there.

1:50:59Dave Ramsey:And it can still be in the same mutual funds, but it'll be a separate account number because each account rollover is a separate account number. They technically don't combine. But other than that, yeah, you could put it all in a way that you are comfortable with the way it works, you understand it, and you're not paying a monthly fee for a service you're not using. Okay. Now, the purpose of Robinhood, the app, their stated purpose is to democratize, meaning make available to everyone, the ability to buy and sell single stocks. Okay? And they do that. They do that very well. They most famously got in the news during the GameStop debacle when there was some people playing margin and just about broke them, screwing around with the GameStop stock.

1:51:51But if you want to buy and sell single stocks as a hobby or, you know, gradually, not day trading, you know, it's not a day trading platform.

1:52:03Dave Ramsey:but you want to screw around with buying and selling single stocks and owning single stocks. That's what Robinhood is for. That's what it does. And we don't teach people to do that. So obviously we don't, we're not mad at Robinhood, but I just don't, I, the people that buy and sell single stocks on average make about 7 % and the market makes about 12. So you can throw it in a S and P 500 or a better mutual fund, either one, and end up with almost double what you would end up buying and selling single stocks on your own account anywhere, including Robinhood. Take from the rich and give to the poor, right?

1:52:44Dave Ramsey:Yeah, that's democratize. Now, that's the idea. However, you're not. You're taking from the poor because that's who's playing single stocks on Robinhood. Rich people aren't on there doing that. This is people that they read that they wanted to buy stocks and this was a way to do it. And like her, she's got$3 ,000. Okay, it's not rich. So there you go. It's interesting, very interesting. The only other time I've heard a corporate entity say democratize they did it was at the formation of Southwest Air. The founder of Southwest Air said, I want to democratize air travel. I want to make it available to the regular people, common men.

1:53:27Dave Ramsey:That's democratize. And they did. they changed up the no seating and they lowered prices and they limited their uh their uh destinations they didn't have you know just one or two destinations at the start and they were very efficient they run one type of airplane so the parts are all interchangeable they did a lot of things to keep prices down prices down to make air travel available to the regular guy that's the only other time i remember hearing democratize in a corporate statement but And in both cases, they did do it. You know, Robin Hood, we don't teach to do what they do, but they did make the trading of stocks with an app very easy for someone that wants to screw around with it.

1:54:09Dave Ramsey:We don't recommend it, but they did follow through on their mission. All right, Mason is in Nashville. Mason, how are you? Doing pretty good, Dave. How are you? Better than I deserve. What's up? I had a feeling you'd say that. But so long story short, I've been at my current job for about eight, nine months now. And frankly, I am miserable. I left what was kind of a dream job for me to do what I'm doing now, you know, better stability for the family. I'm married. I got two kids, three and one month old. And I'm just it's mind numbing if I'm being completely honest. And for the last five or six years, I've been flipping four wheelers and motorcycles and that kind of stuff.

1:54:55An hour for hour, that is starting to surpass by no small margin what I'm making at my current job. And it's kind of got me thinking, when does the side job become the main thing?

1:55:09Dave Ramsey:I don't care what you're making per hour. I care what you're making. Yeah. How often do you make more doing the flips than you do at your real job? I flip. In a month, what are you making on flips? On flips? Profit. Probably about profit$2 ,000. And what do you make at your job? $27 an hour there. I just don't have the time to put into the four-wheelers and side-by-sides and that kind of stuff. How many hours are you working? 40 plus, and it's an hour commute each way. 40 plus? Plus one? Yeah, 42, 43, something like that. Whoopee. You've got plenty of time to do flips. you got a phone in your car for your hour commute you're doing flips yes sir it's it's a lot of time in labor and stuff i'm i'm i'm doing restorations more or less not just picking up stuff that's already running and driving and stuff i'm so you're not doing flips you're buying been doing restros correct yes sir yeah that's different and so hour by hour you're not making anything when you're doing$2 ,000 on that?

1:56:20My record is 61, almost 62 an hour, all the way down to, you know, there's some I've made 25, but that's on the low side. I'm making 27 at my job currently.

1:56:28Dave Ramsey:If you're going to run your own business, you're going to quit working by the hour. You need to start working by the month. Correct, yes. And you're making$2 ,000 a month. You're not making spit. So you're not making enough at the flips to get away from your miserable day job. And you're bringing home$4 ,000 a month from your day job?

1:56:52Dave Ramsey:I'm sorry, you broke up. My wife and I were making$110 a year combined, so call it seven a month between the two of us. What do you make? Yeah, probably$35 to$4. $35 to$4. Okay. So when you make$4 ,000 a month, three months in a row from your flips, you can quit your day job. Okay. Profit. Profit. Yes, absolutely. Not$61 an hour for one hour. Right. No, no. A monthly profit. So, in other words, when you make the leap from the day job to the business, don't make it a leap. Make it a step. The boat should be right beside the dock. Just step in it. Don't jump and hope you get there. Otherwise, you'll be in the lake wet.

1:57:40Dave Ramsey:So, if I could just work more, I could make more. Now, you've got plenty of time. You're only working 40 hours. You're going to business for yourself, you're going to find out 80 is pretty standard.

1:58:12Dave Ramsey:All right, let's cut to the chase. It's easy to get discouraged about crazy house prices and interest rates, but when you have the right real estate agent to help you buy and sell the right way, you'll have confidence to make smart decisions. Ramsey Trusted Agents aren't just experts who guide you through buying or selling. They're people you can trust to have your back from the first call to closing day. Find a Ramsey Trusted Agent near you at ramseysolutions.com slash agent. That's RamseySolutions.com slash agent.

1:58:48Dave Ramsey:Our Scripture of the Day, Proverbs 25 and 4. Remove the dross from silver, and a silversmith can produce a vessel. Thomas Sowell said, those who complain that the government is not supporting the creative arts have just never looked at federal bookkeeping.

1:59:06Dave Ramsey:That's pretty good. But I have not heard that one. Joe's in Anchorage. Hi, Joe. How are you? Sir, I'm good. Thank you for taking my call. My pleasure. How can we help? My question is, should I sell a rental property that I bought back in 2023? And I'm happy to give you details in the backstory, or you can go ahead and ask me questions that you think are relevant. Why would you sell it? So I don't live in it. And ultimately, it's costing me about$800 a month with a property manager that I'm bleeding between an HOA payment and a mortgage. So you have a rental property that's losing$800 a month. That's correct.

1:59:47Dave Ramsey:I would sell that. Okay. What's keeping you from wanting to sell it? You sounded hesitant. So I bought it for$365. There's about$358 left on the mortgage. And CMAs are telling me right now that it costs about$300, or the value is about$330. So I think it would cost me about$40 ,000. So it went down in value? Correct. Why? I'm not sure, but it's not unique to the house. It's a townhouse, so there's a lot of similar properties in the neighborhood, and they're all just going down. So there's been sales as low as$300. It's going down in value and you're paying every month to own it. That's correct.

2:00:30Dave Ramsey:Wow. So how are you going to get out of it if you're upside down? Well, I can just continue to pay the$800. No, I mean, if you sold it, do you have the$30 ,000 that you're in the hole on? Yes, I do. So I've got my wife and I, so we're in the Army. We bought this house because we thought we were going to get out down in Colorado Springs where I bought it. But ultimately, I did not end up getting out of the Army. I'm now up in Alaska. And we're planning on getting out again here in about two years. I'm sorry. So it's not in Anchorage. It's in Colorado Springs. Yeah, sure. Yeah. Colorado Springs.

2:01:08Correct.

2:01:09Dave Ramsey:That market is not struggling. It's going up. Is there something wrong with the property? Anything? No, there's not. I think I just overpaid for it. I'm going to be completely honest. Okay. Well, there's three strikes. It's gone down in value. It's out of town and you're losing money on it month over. There's no reason. This sounds like a nightmare. There's nothing here that's positive. So, yeah, I'm definitely getting out if you can get out. But get online at RamseySolutions.com and find one of our Ramsey trusted real estate pros and make sure that the CMAs that you got are correct. because, I mean, you've owned it since 23.

2:01:53Dave Ramsey:This is 26. It should have gone up in value, not down, in Colorado Springs unless you've got some kind of a unique problem to that neighborhood. And maybe that neighborhood's got a micro problem. But macro-wise, Colorado Springs is a healthy market. Unless he really overbought, which I don't know. He may have overpaid. And, you know, huge army base in Colorado Springs. I've spoken there. It's a wonderful, wonderful place, and there's a lot of military there, so it's possible that a young military guy got taken advantage of. It's possible. Hope not. I hope somebody wouldn't do that to our military, but somebody does every day.

2:02:32Dave Ramsey:So I'm sorry. Wow. Chris is in Detroit. Chris, how are you? I'm doing great, and I hope you both are doing great too today. Better than I deserve. How can we help? Right. Right. Okay, here it is. Last week, I lost my cousin. I was in charge of loss, meaning she died. I was in charge of money that she left behind and also funeral expenses. So after funeral expenses, I'm left with about$23 ,000. Um, she was raising her eight year old granddaughter due to mom and dad, both being addicts. Um, the little girl now she's going to a good living situation, but now I have the$23 ,000. I would like to invest that money.

2:03:29However, I hesitate to put it into her name because what happens at age 25 or 30, if for some reason she was to fall into that same line.

2:03:43Dave Ramsey:Was there a will? There was no will. Whose name is on the account with the$23 ,000? Mine. It's in your name. It's not in your cousin's name. It's in my name. Right. My cousin who passed away, I was a joint holder on that account with her. We were the only two names on that account. Okay. Well, I appreciate what you're trying to do. What I would do is get with a SmartVestor Pro, and you can just open an account on behalf of the child and manage it and just keep up with the whereabouts of the child so that at some point you'll be able to turn it over to her. As it makes money, you're going to be taxed if it's in your name.

2:04:32Ah, okay.

2:04:34Dave Ramsey:Gotcha. And I'm not positive that you're operating on correct assumptions. So I want you to have the SmartVestor Pro look at the way the account was titled. Did she have on the account a POD paid on death to you? Yes. Okay. Then it is your money now. And you can do with your money what you want to do with your money. I would not put it in the name of this child. I agree with you. And if you want to use it on the memory of your cousin, if you want to use it for the good of the child, just open a mutual fund and just watch that mutual fund and just keep a label on the file in the file drawer that I've earmarked this for this kid and let your family know that this is actually not your money, but you're managing it in your name.

2:05:29Yeah, yep, I've already done that. So mutual funds, in other words, is that the same as a high-yield savings account? No, it's much more.

2:05:37Dave Ramsey:It'll do a lot better than high-yield savings. Yeah, because you've got a long term. I mean, you've got 10, 15, 20 years before this child's going to need this money. Yeah, she's only eight. But, yeah, she's eight years old. All right. Well, I appreciate that. Appreciate what you guys do. And thank you so much for taking my call today. Thank you for being there for that baby. Yeah. Yeah. High-yield savings account is very different from a mutual fund in that way. If you have it in a high-yield savings account, it's sitting at a bank and making 3.5%. If you invested in mutual funds, hopefully you're upwards between 10 % to 12%.

2:06:10And it's invested money, which is what you're looking for, which is why we suggested a SmartVestor Pro.

2:06:15Dave Ramsey:To help teach you about that, you learn about it, and you do a good job investing. That's exactly right. And so, guys, the situation that Chris found herself in there, that one went well. That can go sideways in a heartbeat if you don't properly do the documentation. and so her cousin who was ill needed to have left a will with mama bear legal forms or somebody to dictate how all this was to go down and to clarify that the money was left not to her daughter but to chris if that had not had a paid on death on that account probably half of the 23 000 had to go the eight-year-old today oh and that's scary because there's no will and that money was her mom's money and it goes to her blood relative in most states and so but if it had paid on death to chris which is what chris said then it all none of it went to the child it all went to chris chris's half and her cousin's half now goes to her on death then there's no nothing but i mean that's that one little change on that account and that eight-year-old be sitting on uh eleven thousand five hundred dollars and in this better situation whoever knows how that money well gosh yeah because without a will the state is now even deciding where the eight-year-old goes guardianship wise which is tough well sounds like they've gotten something lined up and that was approved by the state but the same exact thing you your child is left at the behest of the state and the last thing you want is the same people that run the dmv deciding anything for your kid so no it's So this is why you need detailed power of attorney prior to death, health care power of attorney.

2:08:05Dave Ramsey:You need a will. And it's really not that expensive or that hard to do at Mama Bear. And that's why we have endorsed them. Chris pulled this one off. They pulled this off. They got out. But truthfully, one little stroke of the pen and this could have been a nightmare. That's right. That puts us out of the Ramsey Show in the books. We'll be back with you before you know it. In the meantime, remember, there's ultimately only one way to financial peace, and that's to walk daily. with the Prince of Peace, Christ Jesus.