Stop Buying Things You Can't Afford - You'll Drown

24:35One is idea work, okay? And this would be kind of the space that Dave and I are in. We create content. We take ideas like the baby steps to people to help them transform their life. So idea work. It could be a marketer, but it's idea-based. Another type of work is process work. I want you to think operational, finance, accounting, anything that's process-driven. And then you've got people-focused work, right? So that could be anything from medicine, a physical therapist. You could even say the type of work that Dave and I do is also people and ideas. And so our work falls into those two buckets.

25:11The fourth type of work is what I will call object work. In other words, I'm working with my hands. I might be a carpenter. I might be a plumber. I might be in the trades. And so if you look at work as idea work, people work, process work, or object work, why don't you just tell us what do you think of those four areas, where do you think your natural talent lies? To be honest, I would like to say people and idea work. I have passions that I'm trying to pursue now a little bit on the side that I like to do, like posting content online and digital photography, like doing photo shoots with people and stuff.

25:50There's things that I do outside of work, but my issue that I've run into is that obviously these things do not make me very much money, if any, right now. That's not the question. That's not what I'm talking about. That's not the question.

25:59Dave Ramsey:We're not analyzing the income. We're just trying to analyze what your gifts are. That's right, because you presented to Dave and I. I'm not clear. I don't know what I want to do. So what we want to do is begin to open up for you to see where you could end up. And now you're in a good job that you like, and it will become the foundation or the launch pad for where you will go next. So this also leads into, should you go to college? And the answer is, we don't know. But I can tell you, my simple grid is, if a degree is the only way to get qualified to do the work you want to do, yes. If it's the best way, yes.

26:35If it's not, there's another way. We don't know where you want to go yet. So let's say you're people and ideas. That's where you think your talent lies. And my guess is if I could give you a great job where you were people facing or people focused and you were taking some type of idea to make their life better, you would also probably be pretty passionate about that. Yes or no? Yes. Okay, great. Now, you don't have to answer this on the air. We don't have time to do a full-blown thing, but I'm going to give you some practical tools. There's three questions I want you to answer before you go to bed tonight.

27:04and then I want you to come back and revisit these three questions for the next seven days. Okay? Here are the three questions. You got something to write with or type with? Yes, I do. Okay, here we go. Super simple. The first question is, who are the people that I want to help? And I want you to answer that as long, as specific as possible. Who are the people I want to help? Describe them. All right, now the second question, what problem or desire do those people have? Now, you've probably already answered that question in the first description, but this is a process. Second question, what problem or desire do those people have?

27:41And the third question is, what solutions, could be plural, could be singular, to that problem or desire do I get most excited about? Now, I can tell you this, Connor. If you diligently ask and answer those questions and you keep revisiting it, I'm telling you, your heart and head will align and you will get clear answers. at which point you take those answers and you begin to look into the marketplace. Now, I'm going to gift you the Get Clear assessment and the book, Find the Work You're Wired to Do, so I'm going to hold your hand, but I'm just giving you the exercise that the assessment's going to lead you to.

28:16But here's what will come out of this. As you begin to see all of the type of jobs and or career paths that align with the answers to those three simple questions, now you will be able to answer the question you asked us which is do i need to go back to college and if the answer is yes well we don't have to go into debt you've already done that deal so we're going to pay off the we're going to we're going to save up the money uh in the job you have a second job a third job because you're young enough to do this and you will cash flow your way through whether it's trade school or some type of certification or a degree the next step is once I know what I want to do and what I must do, education and experience to get there.

29:00Now I will cash flow it. And you're not lost. You aren't stuck. And you aren't behind the eight ball. You've got plenty of time to figure this out. And that's the quick version. I want to get Dave's take on this. I think that's exactly what you're doing.

29:11Dave Ramsey:I don't want to add anything to add to that, except there was this mysterious thing that happened that got you thrown out of college that we drove past. We did. And I'm not going to drag it out and embarrass you here on the show. Yeah. But you need to address that too from a spiritual standpoint. what was the integrity faux pas that was so bad that you get thrown out of college for it? What was the character breakdown? Because you got to address that too so you don't go back. That was part of my healing process after going bankrupt at 28 years old and losing everything and having a brand new toddler and a baby in a marriage hanging on by a thread.

29:45Dave Ramsey:I've got to actually look in the mirror and go, okay, what kind of doofus builds a house of cards like this and allows it to come down on his head? what's broken with this guy in my mirror. And there's a lot. I mean, and so it begins a lifetime of walking with Jesus to figure that out and to build the character, build the integrity, build the thing so that whatever that thing was that tripped you, it doesn't trip your new plan again. We don't go back there. But probably what contributed to whatever that thing was was your boredom. That's a great point. Probably. Could be wrong. But hang on. Christian's going to pick up.

30:25Dave Ramsey:We're going to send you Ken's assessment. Take it as soon as you get it. Read over it. Go over it with people that love you enough to tell you the truth and say, this is you or this is not you. See if we nailed it with this assessment. I'm telling you, it's incredibly accurate. I'll be shocked if you don't find anything else. But it'll give you a good roadmap and a good direction to go. And then you can decide if you need additional education or not. You may or may not.

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31:47Dave Ramsey:That's fieldofgreens.com slash Ramsey.

32:03Dave Ramsey:Our question of the day is brought to you by Y-Refi. If you're struggling with defaulted private student loans. Y-Refi offers a great solution to get you back on track. For a low fixed rate and more flexibility, go to Y-Refi.com slash Ramsey. That's the letter Y-R-E-F-Y dot com slash Ramsey. Might not be in all states. Today's question comes from Carter in Maine. I'm 34 and married with no consumer debt. We live on a budget and I earn$125 ,000 a year, but here's where I'm stuck. We can't afford to live where the jobs are in our area. A modest home and a safe neighborhood within 30 minutes of my office is completely out of reach.

32:43If we did buy farther out, I'd be commuting eight to 10 hours a week. We're not looking for anything fancy. I just want my wife to be able to walk the dog and feel safe. The advice I often get is to find a job in a lower cost of living area, but those jobs don't pay enough to make up the difference. What would you say to young families doing everything right, but still feel like they can't afford having a simple roof over their heads. Well, your last question contradicts the meat of the previous question, and you can afford a simple roof over your head. Sounds like you can afford a pretty nice roof where your wife can walk the dog and feel safe.

33:20It just happens that the current role that you have is in a city where, again, you can't afford to live super close, and that's one of the trade-offs. Life is a series of trade-offs, and what I think I see here is is you're deciding in this season to consider this trade-off, the trade-off being the commute of eight to 10 hours a week. And that's what you got to decide on. You're in Maine. And so, again, you have agency. I'm not telling you like everybody else that you have to take a job you don't want to then be able to afford. I would rather be doing the work I love and have the professional mobility that it seems like you have than I would to settle and make a living choice based on that.

34:07That's my take. But I think that you're fine. And this is what I would call a season. And you've got to choose your trade-offs.

34:14Dave Ramsey:Yeah, absolutely. And either you wait a little while and go up the career ladder before you buy, because you live in a very expensive area and you live in a state that is very sparsely populated. and so it's expensive to live in and there's very few big population centers that, you know, they give you a lot of options for career. And so you may have to move to an area that is a population center to get your career going and then be on the outskirts of that in what we would call the suburbs so that you can afford to live and work there. But, you know, someone driving 45 minutes to work, 45 minutes home from work, fairly standard in America right now.

35:02Dave Ramsey:Yeah. It might not be fairly standard in Maine, but it's fairly standard in America. Yeah. I mean, if you live where we're sitting right now and you work in downtown Nashville, you've got a 35-minute commute without traffic. And so that's, you know, and we consider this Nashville. And we're not. We're one county out, technically. But, you know, so that's just not that unusual. Now, a two-hour each-way commute, I'm not going to sign up for that. But eight hours over five days, that's 45 minutes each way. Not too bad. That's not really the end of the world. So I'm sorry, but I'm going to be real blunt.

35:44Dave Ramsey:There's a lot of whining in this email. It's not fair in this email. And it is fair. It's perfectly fair. This is where you chose to live. It's where you chose to work. And you chose the parameters. You can also choose to be somewhere else if you don't like it. But it's like, wah, wah. I want to get a house, and I want it to be close, and I want it to be pretty, and I want it to be safe. And that's just not too much to ask. Well, yeah, it is, apparently. So you're going to have to deal with it. That's right. And you got to adjust your situation to your situation. And I don't care which one you do.

36:26Dave Ramsey:You can move to another state. You can move to another career. You can choose not to own right now, or you can choose to make the commute. But there's a price to be paid for greatness, my man. And you just got to choose your price. And the great news is, you know, you're in America. You get to choose. I just came back from Sharon and I just did a two-week trip in Europe, and some of the areas we were in were former communist bloc. And, of course, 1991, 1989, when the Iron Curtain came down, and yet I am still flabbergasted that someone speaking English to me with a Slavic accent indicating, you know, Russian or communist bloc area would do anything to have this guy's problems.

37:22Oh,$125 ,000?

37:24Dave Ramsey:anything to have this guy's problems. I'm unaware of high crime areas. And they're 20 or 30 years the other side of communism. I mean, you know, but they still, they would go, yeah, this, anything. If this was my problems, I'd have had no problems. While we're calling stuff out, I had a hard time with, I'm just unfamiliar with the crime rate in Maine. I don't think it's very high. Yeah. When he said that part, I was like, what? If it's unsafe to walk your dog, it's usually because of a bear. That's exactly what I was thinking. If it's Smokey the Bear we're worried about, then okay. I just am unaware of the – but anyway, I think this is a situation where everybody wants everything that they want at the same time.

38:07And I just have never met anybody of success that I look up to that always had it at one time. Trade-off.

38:14Dave Ramsey:Amen. Bella's in Oklahoma City. Hi, Bella. What's up? Hi, Dave, Ken. Thank you both so much for taking my call today. Sure. How can we help? I would like to go back to school. I do not want to take out any more student loan debt. I'd like to cash flow it. Why? Why are you going back to school? The first time that I went, I went for something stupid. I didn't really use it. Why are you going back to school? Not why you didn't go the first time. Why are you wanting to this time? I'd like to make better money, and I would really like to obtain some hard technical skills to be able to do that. Okay, so what's your specific plan?

38:54What major, what degree are you wanting to get, and what do you think that's going to do for you? I'm kind of torn between two pathways. I would either like to go to something like cybersecurity, and then on the other hand, something maybe a little bit more in the wheelhouse that I'm currently in, in the medical field. What is that? An associate degree. What are you doing in the medical field? I work in specialty pharmacy currently Do you need a degree to move up Well I can tell you the answer on cyber security You do not need a college degree to get into cyber security No not necessarily that halfway But I would like to do something like a boot camp Because of the structure I've tried to do the three things But I kind of flounder in that lack of structure and I've tried to just be real with myself and say, if I'm going to do this, I need something that is going to, like the accountability factor.

40:00No, I'm going to tell you right now, the idea that because I've got some personal flaws that I don't like and I'm going to go to college and the structure of college is going to help me get through this flawed. I hope you get good at beer problems. I just think it's the wrong solution. But here's the bigger issue. You're not clear enough yet to make a decision on college. You're just not.

40:22Dave Ramsey:You just generally are dissatisfied and ambitious, which that's good. Yeah. But you're getting ready to fire a rocket and don't have a target. That's right. You need a very clear, precise target before you pull trigger on firing this rocket. Okay. And it can't be just money-based. It can't be I want to make more money. So I'm going to give you a really tried and true strategy. It's called the proximity principle. I want you to get around people in that health space of what you're saying, pharmaceutical something. You need to actually spend time with people that are doing that role. Good, bad, and ugly.

40:58Think high school book report. That's all this is. Ask enough questions to where you could do a high school level book report on that career path. Same thing with cybersecurity. Do the same thing. And if your head and heart aren't going ding, ding, ding together on either one of them, I got good news and bad news. The good news is you're not going to spend any money on either one of those. The bad news is you've got to start over. But that's the process that's before you, before you think about education on any level.

41:26Dave Ramsey:And we'll send you the book and the assessment of finding the work you're wired to do that Ken put out. I'll send it to you as a gift so you can enjoy taking that. Hopefully that will help aim this rocket ship that's called Bella.

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43:34Dave Ramsey:Live from the headquarters of Ramsey Solutions, it's The Ramsey Show, where we help people. Build wealth, do work that they love, and create actual amazing relationships. Ken Coleman, Ramsey personality, number one best-selling author and host of the new big hit right now on Ramsey Networks. It's called Front Row Seat. Hey, Ken. Yes, sir. What are some of the people you have interviewed for Front Row Seat in the past that have dropped in just the last few weeks or might drop in the next few weeks? Yeah, well, we just had John Maxwell drop two weeks ago. That's going crazy. He's dropping some leadership bombs.

44:16We've got Michael Knowles, who's a conservative commentator. Daily Wire guy. Daily Wire. That one just dropped Tuesday. It's blowing up. He's got quite a following on YouTube. And I'm really excited. Just in a couple weeks, we're going to be releasing a conversation with Jimmy John. And if you love a good sub sandwich and you're thinking, I wonder if it's that guy, it is, in fact. Great, true American dream story. Started out with used sandwich equipment, and he only offered three sandwiches. And it's such a great story. He's got a great heart. He's a great character. And he gives some unbelievable—

44:49Dave Ramsey:He's moved to our area and has become a friend of Sharon's and mine. They came over for dinner the other night. Yeah. And he was telling us a story at dinner, and I'm crying. Yeah. And everybody else at dinner table's laughing and crying. I mean, he's an entertaining dude. Very good guy. And a great guy. Billionaire, multi-billionaire. And so I said, hey, you got to go on Ken's show. So I'm grateful for that. Apparently it's a great show. It is. It's a masterclass for entrepreneurs. He gives real wisdom. It's not a guy who's ever going to write a book, but he gives real practical advice, a very inspirational story, probably one of the sweetest stories I think I've heard in a long time of somebody who invested in him.

45:26And that's all I'm going to say. You don't want to miss it. He gets choked up telling the story. And so that's just a sample of some of the stuff. We've got some really fun stuff. Gary Sinise, American Hero. When's Gary coming out? Gary releases next Tuesday.

45:39Dave Ramsey:Okay. And that's a powerful story. That is a genuinely nice man, too. Another friend of Dave. Lieutenant Dan. That's right. That's it. Yeah. So they can catch it on YouTube or wherever you listen to podcasts. It comes out every Tuesday morning. Sylvie is with us in Colorado Springs. Hi, Sylvie. How are you? Hi, I'm doing okay. Thanks for having me on. Sure. What's up? So, recently started reading the Total Money Makeover. and we're on baby step two, feeling really overwhelmed and thinking that we've gotten ourselves into a situation because of some unwise decisions. Some background on that, my husband and I were doing okay.

46:18The only debt we had was student loans, but we were living in my in-laws' basement apartment. We decided we wanted to get a house. We moved close to my family. We got a house that my parents had to co-sign on because we couldn't afford the loan, and we decided that we could afford the house if we built ourselves a basement apartment and rented it out and now it's been about a year and a half.

46:40Dave Ramsey:Stretching and reaching yeah. Yeah. So you bought a house you can't afford is what we're saying for sure. I mean no no period I mean you got a cosigner and a renter is the only way you pulled it off. Yeah. This is for sure you can't afford it. They don't even have renters yet. Yeah. No our basement is half finished it's just framed. My husband's been trying to do it himself, and it's been a lot more work and a lot more time and a lot more cash intensive than we thought it would be. We've got like$10 ,000 on credit cards just from the basement renovation. We've got$14 ,000 that we owe my mom because she also gave us cash for the down payment.

47:16What is the house? What do you owe on the house? We owe$400 ,000.

47:21Dave Ramsey:Okay, and what's your household income? We make a little over$100 ,000 a year. That's pretty new just as of a few months ago. My husband's been getting some promotions and raises recently. You need to call a Ramsey trusted real estate agent and put the house on the market this week. So the one issue is that I'm worried we can't get more than$400 ,000. You don't know. You don't think. You've worried about it in the middle of the night. You have no data. Okay. If a good real estate agent comes out there and tells you you're screwed, then maybe you're screwed. But right now we don't know. Maybe. Okay.

47:57Dave Ramsey:So what did you pay for it? Um, we are deal with whoever we bought it from was that, um, we paid three 80 and they gave us 20 ,000 in concessions. And so our loan is 400 ,000. I got that. And, and so, uh, and how long ago did you buy it for three 80? Uh, a year and a half. Okay. Yeah. You may have trouble getting out of it. That's possible. But even, even if, even if you come out with 15 or$20 ,000 worth of debt to write a check to get out of it and go rent, you're going to be better off than you are right now. You are completely handcuffed. And I'd stop the madness on this basement. Stop now.

48:36Yeah, so we stopped everything that we haven't already bought the supplies for. We literally have like a hole in the side of our house because we created a new entrance and haven't put the door in yet. So we're going to do that because we already have bought the door, but we're going to stop everything else that we haven't bought our supplies for.

48:53Dave Ramsey:Yeah, you need to call a realtor. go to Ramsey solutions.com and get a Ramsey trusted real estate agent over there this week and start talking to you about what we can list it for and what you've got to get completed on this renovation before we can actually put it on the market. Cause right now it's so torn up. Nobody's going to look by it unless they've got imagination and they're going to discount you for that. So you got to get the freaking door in and some of these other stuff, paint the walls, get the stuff done, get it ready to sell. And let's see if we can't get enough out of it to break even and get free.

49:24Dave Ramsey:You are standing neck deep in a bear trap girl. So we don't have like walls downstairs. It's just framed right now. And we have to put a lot of cash into it even to buy drywall. I understand. I understand. I don't know what you've got to do to get it ready. I just know that you've got to get out of it and you can't make a bunch of excuses as to why you can't get out of it until you talk to a real high quality, high octane real estate agent that can tell you okay you can't get rid of this house as long as that crap's down there you're gonna have to go finish that drywall okay that's fine but now we know we got to do or well i can sell it just fine and it'll bring 460 right now with that stupid bear studs down there okay then let's put a sign in the yard and get rid of this stupid thing there's nothing about this that says blessing it all says curse okay so if if we can't sell it for more than 400 ,000.

50:19Dave Ramsey:Then you're going to have to borrow the money. You're going to borrow the money, the$10 ,000 because you sold it for three 90 or whatever it ends up being. But, but you're going to have to start working a plan aggressively to where as soon as you possibly can, that you're out of this house and no excuses to keep it. It was a bad deal. You stepped into a mess. You bought something you could not afford. And now you've got co-signers and borrowed money on credit cards and mother-in-laws and renters that aren't even there yet. Oh my God, what a mess. And also you could do something that you just couldn't afford to do.

51:01Dave Ramsey:You guys just made up a mythical plan that nobody could execute. You know, I'm going to do all these renovations. When? Because I'm at work. Yeah. Okay. There's that, you know, and here we go. You're going to be sitting here five years from now and this house is still going to be hanging around your neck like a millstone. You've got to get rid of this thing as fast as you can with as little loss as possible. If you get out of this and put$5 ,000 in your pocket, you need to run out of the attorney's office after the closing and stand in the parking lot and do a dance. That's what you need to do and just go, I'm free!

51:40Dave Ramsey:Yeah, that's not debt-free. I'm just house-free. Folks, buying a home is sometimes not a blessing. Take note.

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53:56Dave Ramsey:When you do a smart thing a stupid way, it's stupid. It's no longer smart. That was deep, wasn't it? Well, I mean, here's the smart thing. Getting a car that's reliable to get you back and forth to work. Going and leasing a car that costs more than you make in a year is doing a smart thing, buying a car, a stupid way. And so you made it stupid. I've done that. All of you have done that. If you've made mistakes with money, you know what that makes you? Over 12. everyone has everyone's done something done with money and i think one of my pet peeves i guess because my parents were in the real estate business growing up and i got in the real estate business immediately three weeks after i turned 18 i got my real estate license sold a house two weeks later to a guy who buys a house from an 18 year old i'd managed to pull it off anyway so i love real estate and i love the idea of home ownership and all of our data around becoming a Millionaire says that home ownership and getting a paid-for home is a key element to your first one to five million dollars of net worth.

55:12Dave Ramsey:So if you want to become a millionaire, there's really two basic things you have to do, the data tells us. One is steadily invest in your retirement, like 401ks and Roths in good growth stock mutual fund over a 10 to a 15-year period of time, and the other ones get a nice home that you can afford and get it paid off. if you do those two things the data says you are more than likely going to be a millionaire as soon as that happens and and it's about a 10-year curve to a 15-year curve something like that but then we took that uh or we took the idea of hey getting uh getting extra skills get getting an education a four-year degree it's a good thing but we turned it into a stupid thing because we did a smart thing a stupid way and people go 250 ,000 dollars in debt to get a degree in left handed puppetry.

56:01Dave Ramsey:And so you turned education into something stupid, which is oxymoronic as it can be. So buying a home is the same thing. Broke people shouldn't buy homes. Well, that's mean. No, that's love. Because you know what happens if you're broke and you buy a house? You get broker. That's why they call them brokers.

56:33Dave Ramsey:When you're broke and you buy a house, a house will bury you. And so I live in my mother-in-law's basement and I want out, so home ownership is on the horizon. No, it's not. You're broke. So you've got to work and, you know, start getting yourself out of debt, build some savings, and get yourself up on solid ground before you buy a house. Otherwise, the house is going to snap your neck. It's going to crack the whip on you. So buying a home is not a blessing when you're broke. If you are living in your mother-in-law's basement and you want to be free, I don't blame you. Go rent a one-bedroom apartment.

57:17Dave Ramsey:This is what normal human beings do. They don't go buy a half-million-dollar house with a cosigner. Let me tell you, if you have to borrow money to do this stuff, You shouldn't be doing it. If you're going to borrow money to buy a house, a 15-year fixed with no co-signer is the maximum we're going to do. But co-signing is straight-up dumb. If you have to get a co-signer, it's because you're broke. It's because you're not credit worthy. The bank who loves to lend money more than my dog loves to eat, which is a lot. The bank loves to loan money more than anything else. They want to loan money. And if they won't loan you money, it's because you don't need to be borrowing money.

58:04Dave Ramsey:Hello. So Proverbs, and it's even in the Bible, Proverbs 17, 18 says, one lacking in sense cosigns for another. If you look it up in the CEV, the contemporary English version, it says, if you cosign for someone else, you're stupid. That's what the Bible says. Wow. So don't be buying a house because always buying a house is a good idea. Always going to college is a good idea. No, it's not. Going to college is very smart if you know exactly what you want to do and you're studying to do that thing, and it is a thing that doesn't have you end up being a barista, a failed college student that got a degree in something that's absolutely nuanced and worthless and you've got a freaking master's degree in it which makes you double stupid same thing buying a house let's go buy a house in a way that the home becomes a blessing so you're out of debt you have your emergency fund in place you take out a 15-year fixed rate loan where the payment is no more than a fourth of your take-home pay.

59:17Dave Ramsey:And you don't need a co-signer. That's it. And then you're ready to start talking about buying a house. Until then, the house is not a blessing. It's going to snap your neck like a twig, man. And there's all these smart things that are out there. And it's like, there's this, it's an entitlement thing. And it's like, well, it's just not fair that people can't buy a house and you shouldn't make fun of broke people. Well, good God, I've been broke people a couple times in my life and I've decided I don't like it. So I'm not going to do it anymore. I'm going to do what it takes to not be broke people.

59:50Dave Ramsey:I'm going to work like a maniac, save like a maniac and not spend like I'm in Congress and have a plan, you know, and execute, execute, execute. And you know, so it's the same thing with a career. It's always smart to be a doctor. No, it's not. Yeah. If you hate being a doctor, that's a dumb idea. My dad always wanted to be a doctor. That's a dumb reason to be a doctor. I don't want to be your patient. No, thank you. And so we do these smart things in dumb ways and they destroy our lives because people put them in the bucket as no matter what, no matter what the cost, it's worth it to own real estate.

1:00:28Dave Ramsey:It's worth it to go to college. No, it's not. No, it's not. You think about that last call, that young couple, of course, they're miserable, you know, living with a set of parents or in one case, a set of in-laws. And so what happens is we go from, we don't want this part of our life. So then we go, what do we really want? And we skip the whole, what do we actually need? And what they needed to do was look for a one bedroom apartment over some old lady's garage that they could get for an absolute, I mean, next to nothing for the transitionary period. That's all a young couple needs. I know when I was born, my mom and dad were living in a one bedroom apartment above a drugstore and that's all they had.

1:01:08And I was okay. You know, I'm messed up for completely different reasons, but not that one. Yeah. You know, and I just think that there needs to be this exercise on what do we need? What we need is four walls and a roof and it's okay to rent. And that's the crux of what you're talking about. Everybody wants the house. And so we suspend logic because of desire.

1:01:31Dave Ramsey:Well, I mean, it is everybody makes fun of the baby boomers and, oh, you bought your house for a basket of strawberries or whatever. Yeah. George loves saying that. He dropped that one on me the other day. That's great. But the truth is what we've done is we've adjusted the house. The typical home in America today is 2 ,000 to 3 ,000 square feet. so when my parents moved to nashville in 1963 they bought a 1000 square foot one and a half bath which means there was a half bathroom in the master the doors were holocor i don't even know if you know what that is i don't what is it these doors that are almost like paper mache like in a movie when they bust through the door it's so thin it's It's a couple of tiny pieces of wood with some other stuff.

1:02:27Dave Ramsey:That's kind of what they were. And so, you know, there was zero privacy in this house. You could hear it's a tiny little house to start with. And I spent the first 16 years of my life in a 1 ,000-square-foot home, one-and-a-half baths, three bedrooms. And the bedrooms, I mean, you could put most of the house in this studio right here. Yeah. But if you ask somebody to move into that today, oh, well, no. You can't even find that today. Nobody even makes it. I mean, it's just a half notch above a tiny house. Yeah. You know? And I'm not suggesting tiny houses. Don't get confused. Oh, my gosh. Folks, let's just calm down a little bit here and live within our means.

1:03:17Dave Ramsey:It's a new concept. I've made it popular again.

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1:05:11Dave 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 are new trainings every week this month, and they're hosted by one of the Ramsey personalities. Today was George Campbell, by the way. We're going to show you how to stick to a budget, even find about$9 ,000 of margin on average. That's like a head start using every dollar. So you can get out of debt, start building wealth, and we're going to coach you right through the steps using this digital framework. And you can ask questions during the live Q &A, so it's kind of like this show but easier.

1:05:46Dave Ramsey:Sign up for free at everydollar.com slash webinar. Bob is in Miami. Hey, Bob, welcome to The Ramsey Show. Well, thank you for taking my call. Sure. My question is this. Back in the mid-80s, I had a young family, and I was convinced that, hey, I should have life insurance. Well, I got hooked up with a life insurance company at the time. It was called Mutual Life Insurance of, well, the Mutual Life Insurance Company of New York. You know, obviously the name now I think is just money. But I was, I actually signed up for one of the, what they refer to as the vanishing premium policies. And the story was you pay, you know, for 10 years.

1:06:28Dave Ramsey:And I think I paid like$145 a month, came out of my checking account for 10 years. And the deal was that I was thoroughly convinced by the obviously the life insurance person that, hey, once this is done, you know, you won't have to pay another premium ever. You're done for. And so after the 10 years was up, I think I may have had one year where I didn't make a payment. But then the next year, it was like$350 ,000, and then I think the year after that was$450 ,000. And so for about three or four years, I actually made those payments and hit about the$2 ,000s. And I was in a little bit of a money slope or a crunch.

1:07:08Dave Ramsey:And so I just said, hey, you know, these guys at the time, the policy value was close to$40 ,000 that I paid in over all that time. And so I'm thinking, geez, they've got my money. They've got it invested somewhere. I mean, and finally, I realized that so much of what they were charging me was these exorbitant processing fees and all. So anyway, I got ticked off the situation, and I didn't make any payments for five years. Well, after that, between the premiums as well as the 9 % interest rate, and I think at the time it was even higher. It might have been 12 or 14 for those early 2000s. But anyway, long story short, and 25 years later, my outstanding balance is about close to$80 ,000.

1:07:57Dave Ramsey:And again, I've never taken any cash advances other than what they've pulled out to pay for the premiums over the years. So I was hoping that you might have some sort of an answer to whether I should just write this policy off and say, hey, screw it. It was a$150 ,000 policy. They're showing a cash value of how much against the$85 ,000 in the loans. I think right now I think they're only showing about$800 on it. Oh, that would be net. Okay. Oh, okay. That means you're out of an$85 ,000. They would take the policy out of force. They'll cancel on you if you run out of cash value and keep borrowing against.

1:08:41I think I'm getting pretty close.

1:08:42Dave Ramsey:Yeah, so you're about to cross the lines and they're going to cancel on you. That's what normally happens with these things. The lines cross and they implode. How old are you? I was 70. My wife and I are both 71. What is your net worth now? Well, you know, I've got five residential real estate homes and probably worth about$2 million. They're all free and clear. If you died a day at 70 years old without any life insurance, is your wife okay? Oh, yeah. Okay. Just call them and cancel it. You think so? Oh, absolutely. I mean, we should have done this about 30 years ago, but we'll go ahead and do it today.

1:09:25Dave Ramsey:I was in the impression that there were some lawsuits on this kind of stuff saying that this kind of thing was illegal and it was taking advantage of people. It should be illegal, and it is taking advantage of people, but I'm not aware of any class action on it. You may be right, though. I haven't heard that. But if you can find a class action on it, then I would. But, yeah, you got screwed royally. There's no question about that. No, I know. I mean, I had a point in the end of the future. You were lied to and everything else, and that's what these people do. It's just a horrible, horrible product, and the guy that sold it to you has been out of the business for 30 years.

1:09:59Dave Ramsey:He's off doing something else now. Yeah, well, he's actually passed away a few years ago. But long story short, yeah, it was a real ripoff. And I look back and I say, gee, what a mistake that was. You know, wow. Now, in regard to you had asked me about the net worth, that was kind of a second part of my question, if you have a few moments. Again, I've got the five houses, free and clear. I've got about another$100 ,000 kind of like in savings and stuff like that. is it prudent given the current market time that I should sell one or two of those homes and put that money in? My wife and I are both 71.

1:10:36Dave Ramsey:I mean, should we do that or is it better holding on to the real estate? It all depends on whether the real estate that you have is good real estate. It's going up in value and it's cash flowing and you like it. If I hate it, if I hate it, the neighborhood's deteriorating, yeah, I'm going to probably drop those. But if you like the properties and you think they're positive things to own, you actually make more money on rental property that's managed well than you do on mutual funds, but it turns more hassle because you have to deal with these things called tenants. So thanks, Bob. I'm so sorry that happened to you.

1:11:12Dave Ramsey:All right, folks, let's recap that. There's no such thing as a paid up whole life life insurance policy. In this case, they named it a brand name called Vanishing Premium. vanishing premium David Copperfield's involved now bullcrap okay so what he did for 10 years was he prepaid his life insurance and overpaid dramatically for 10 years by overpaying he threw a bunch of money into a savings account called cash value then they started using that savings account to pay the premiums until as he got older, the premiums kept going up and they burnt up the savings account. That's what he described. Okay.

1:12:02Dave Ramsey:So anytime someone in the life insurance world tells you that you can make your premiums go away, they are a liar. Because as long as you are breathing, there is a probability of your death. And as long as there is a probability of your death, there is an actuarial table, a mathematical factor that tells us what it takes to cover you for life insurance. And so it's based on probability of death. That's why old people life insurance is more expensive than young people life insurance, because the probability of death is higher when you're old. Duh. Okay. So, but, but anytime someone says they can make that go away.

1:12:44Dave Ramsey:No, they can't. It's somewhere in there. And in this case, he just overpaid. He paid way more than he needed to. And the extra they threw into a bad investment. And the bad investment was not big enough to continue to pay the increasing cost of giving him coverage as he aged. And now they have burned through all of the money that he prepaid and overpaid. And they're getting ready They canceled on him at 70 years old, which seems kind of timely because, well, you're more likely to die at 70. So looks like they milked this thing at about the right time, didn't they? Hmm. Think about how this math works.

1:13:24Dave Ramsey:What a screw job. But this is cash value life insurance at its core. This is a particularly egregious type of cash value. Another type they'll come up with, they'll call it single premium. Just give me$100 ,000. dollars. We'll put it in an investment. That's your premium. And you never have to pay, you never have to pay premiums again. Well, no, no kidding. You know, really no kidding. Of course you don't put a hundred thousand dollars in a mutual fund. It would create $10 ,000 a year in income. You buy a lot of life insurance for that for the rest of your life and not have it completely self-destruct like Bob's deal did.

1:14:07Dave Ramsey:So, I mean, think about it. If you give somebody a bunch of money, what's the opportunity cost on that money? What could you have done with that? And how much life insurance or other investments could you have bought with it? A lot! God, these people. It's amazing how powerful words are. They just put vanishing in front of premium and duped hundreds of thousands of people because it's a fun word. Vanishing premium. I'm going to come up with a product. It's going to be called Vanishing Wastelite. Yeah, you need to... I don't know what it's going to do, but it's going to... You should wear a hat with a rabbit.

1:14:36Dave Ramsey:It's like, come on. Wow. Vanishing premium.

1:15:05Dave Ramsey:folks if you like what you hear help us out by subscribing or following the show click those buttons, that subscribe button, that follow button, leave us a nice five-star review. We appreciate those. That helps a lot on the algorithms. So thank you for that. And of course, you can do all kinds of other stuff like share the show, let people know we're here, cut the link out, send it to your friend, go, Hey, check these guys out. We appreciate it when you do that. Our numbers are up way up and we know that's because you guys are talking about it in a positive way out there. Thank you so very much for that.

1:15:37Dave Ramsey:We appreciate you. Jake is in Knoxville. Hi, Jake. How are you? Hey, Dave. Thanks for taking my call. And how are you guys doing today? Better than we deserve, sir. How can we help? Excellent. So I'm a baby steps millionaire, and I'm trying to figure out how to manage steps four, five, and six. Just quick rundown. I've got two million in the 401k. I've been contributing the max allowable that the government allows to contribute since about 2010. And I'm considering dropping that down to the company match, which is 6 % and putting the remainder and either a bro liquid brokerage account to contribute to kids, to continue contributing to kids college or to just dump it into the house, which has two 25 left on it.

1:16:21What's your income? Mine comes 250 ,000 and my wife's just got a job as a teacher. So she'll be making about 50.

1:16:29Dave Ramsey:She got$300 ,000 income. Yeah. Yes. You know, normally we say 15 % of your income going into retirement so that you have some. And kids' college is baby step five and then pay off your house is six. And you're how old? 42. How old are the kids? Kids are 12 and eight. And we do have$125 ,000 saved for them already. We've been putting$1 ,200 into a college fund since they were born. Yeah. I'd probably just keep doing that, and I would drop it back to the match. And let's just get this house paid off. Because you're sitting out of balance way heavier than the 401K, and yet your house isn't paid off.

1:17:13Dave Ramsey:Yeah. I want to get that balance straightened out a little bit, rebalance these accounts, so I'm going to violate the baby steps, which is something you hardly ever hear us do. But your situation is very weird. you've done an amazing job of saving and if we'd have caught you 10 years ago you know your house would have been paid off right? Yeah probably so Yeah because you'd only been putting 15 % away and you've been maxing this stuff you're a savings animal way to go congratulations so what's your home worth? My home's worth about$600 ,000 Okay cool Yeah and we don't plan on leaving there anytime soon Yeah, so you're going to be worth$3 or$4 million when you're 45 years old, and congratulations.

1:17:59Dave Ramsey:That's pretty stinking cool. But yeah, you do want to get this house paid off, and I would lean into it hard for the next couple years, and I would back down to match and just keep the$1 ,200 going in the kids' thing. That's not a big deal, but your case is highly unusual, yeah, but I love that you've done it. I'm proud for you. I'm certainly not going to argue with a guy that managed to get$2 million by the time he was 40-something years old. That's pretty cool, Ken. It's incredible. And I just want to make this point. There are a lot of people that are new to the show, and you're listening, you're watching this.

1:18:31This is a young guy who's already achieved that, and the income is not insane. $250 ,000 is great. $250 ,000 is a great income. Yeah, he's not making$750 ,000. Right. But he has really been diligent to save. It is very, very possible to do this. And here's a guy that committed early on$1 ,200. I think it was a month. No, that's toward the kids. Yeah, for the kids. What I'm saying is it's just –

1:18:54Dave Ramsey:$125 ,000 in that account. Yeah, just tremendous discipline. It can be done. But you have – if we had kept him on, we could have learned all the things they said no to over the years to get to those numbers. But to have$2 million in your retirement account at that age? Yeah, you're going to reach the point you're going to be able to do anything you want to do. Oh, for sure. Pretty quick. Okay, let's just kind of talk about something for a minute. It's good to remind you guys. Here's how a math thing works. There's an old math trick that's accurate called the rule of 72s. The rule of 72 says if you take an interest rate and divide it into the number of 72, it tells you how long it takes a lump sum to double.

1:19:35Dave Ramsey:So if your interest rate was 7.2, divide that into 72, it would tell you in 10 years a lump sum would double invested at 7.2. Invested at 10 % every 7.2 years, it'll double. Okay? It's an easy one, too. So if we take$2 million at 42 years old and he never adds anything to it, when he's 49, if it's invested in decent mutual funds averaging less than market returns, down around 10%, when he's 49, he's got$4 million. When he's 56, he's got$8 million. Keep going, boys and girls. When he's 63, he's got$16 million. when he's 70, he's got 32 million. This guy's changed his family tree. That's if he doesn't add anything to it, if it just sits there and he doesn't touch it.

1:20:32Dave Ramsey:Just that 2 million. That's not his house. That's not his additional investing. And so I'm talking to a young man there that if he lives into his 70s, he's probably going to be worth north of$50 million.

1:20:49in Knoxville, Tennessee at 42 years old.

1:20:53Dave Ramsey:He's got this started. So that's when I say I'm proud of him. I mean, that's pretty impressive. When you think about how these numbers work, this is how you change your family tree. Now, do you, you know, is money, everything? No money's not everything, but when you have 50 million, you're not worried about the cost of Advil. If you have a headache. Okay. If you have$50 million and your car breaks, you get in one of your other cars. That's a good point. Well, that's a real nuisance. That's a problem. That's an inconvenience. The tires are worn out. Oh, that's an inconvenience. I'll drive the other car this week.

1:21:35Yes, it's the blue one.

1:21:36Dave Ramsey:Yeah, we'll just have to select a different vehicle today. And so, again, we're not saying money is everything. But what it does do is it gives you margin and it lowers your stress level because you're able to do things for you and your family. You're able to help others. Your generosity factor can go through the roof on this stuff and still have an incredible life and still change your family tree. A godly man leaves an inheritance to his children's children, Scripture says. So these are real things that people do out here. And so when I hear these communist socialist types that are out there going, well, the American dream is dead, I submit to you, Jake from Knoxville.

1:22:25Dave Ramsey:I don't think it's dead, Ken. No. Nor, by the way, did he mention any inheritance. This is just discipline. Oh, I'm positive he had no inheritance. Yeah. 100 % sure. Phoenix is on the line, and that's Lyndon calling. Hi, Lyndon. How are you? Good, Dave. How are you doing? Better than I deserve. How can I help? There we go. Yeah, good to talk to you. I kind of need a little bit of advice here. Okay. So, summing it up quickly, we have about$90 ,000 in debt right now. Over three cars, one motorcycle, three grand in student loans, and 10 ,000 in credit cards. One of the vehicles, one of the cars is up for sale, and one of the motorcycles is up for sale.

1:23:05Good. That'll give us about$5 ,000, and it'll knock about$30 ,000 off the debt. Perfect. It gives about five grand in cash. Now, my wife's income is stable. She makes about four grand a month. She needs an SUV with work. She has to carry sensitive medical material around. So her car is kind of set. My income is very sporadic. Some months we make four or five grand, you know, three, four grand more than we spend. And some months we make five grand less than we spend. I own a business, just started it last year. It's yearly recurring services. This is our first year.

1:23:38Dave Ramsey:are in the process of signing all those first customers up next year. What will you pay taxes on on your business? What will be your taxable income? About 20%, I believe. No, no, honey. I mean, what will be your taxable income? How much income will you have on the business that is taxable? Oh, sorry, yeah. We make together about$120 ,000 a year. No, honey, what do you make on the business? About$65 ,000. Okay, so out of all this volatility, you're still clearing$5 ,000, a month average. Yeah. Some months it's zero, some months it's 10 grand. I know, but five grand a month average. I got that. So all you got to do is just leave a little money in the business to cover the back and forth.

1:24:20Dave Ramsey:That's all you do. Leave a little bit in there and then work your plan at home and you'll be fine. You're really on track. You're doing well. And of course, the more money you make, the less the volatility matters. Tell me you're making 400 K in this business. There's some months I have a negative. I don't really care. You're fine. Hey, good question, man. Thank you for joining us.

1:24:59Dave Ramsey:I was sick and tired of being sick and tired. bankrupt with a toddler and a brand new baby at home, scared doesn't even begin to cover it. But I got mad enough to change. I started using God's and grandma's ways of handling money. That journey became the total money makeover, a plan everyday people can use to take control of their money. Millions have changed their lives following the plan in this book and found hope. Start your makeover today at RamseySolutions.com slash store.

1:25:45Dave Ramsey:Live from the headquarters of Ramsey Solutions, it's the Ramsey Show, where we help people build wealth, do work that they love, and create actual amazing relationships. Ken Coleman, Ramsey personality, host of the new hit, Runaway hit on Ramsey Network's front row seat. Be sure and check out this long-form interview product that Ken has put out. It's absolutely incredible. Some of the names you won't believe on there. You're going to be amazed. The phone number here is 888-825-5225. Ken is my co-host today. Alex is in New Haven, Connecticut. Hi, Alex. How are you? Good. How are you? Thanks for taking my call.

1:26:33Dave Ramsey:Sure. What's up? So seven years ago, I was asked to co-sign a house for my grandparents. They put down the down payments, and then I became co-owner with my mother. Now I'm at a point where I need to get out. I feel like I'm at a different point in my life where the cost of living in Connecticut is sky high, and I have the ability to be mobile with my job and work in a different place where I can build wealth. I was wondering if you had any advice on how to get out of this. Wow. So you and your mom are 50-50? Morally a third piece between my grandfather, my mother, and myself, yes. Oh, okay. And you're co-signed with your grandfather and your mother?

1:27:25My grandfather put the down payment. My mother and I legally own it on paper. Oh, okay.

1:27:32Dave Ramsey:So the two of you are on the mortgage and on the deed, but morally he owns one-third because of the down payment. Yes. I see. Okay. And what is the house worth? Online it says$575 ,000. And what's the current mortgage? $240 ,000,$250 ,000. Okay, so it's$300 ,000. So your share is worth$100 ,000, give or take. Does that sound right? About right. Okay. All right.

1:28:03Dave Ramsey:I don't think you're going to get your money out, kid, unless they're all willing to sell. I don't know. Probably not my grandfather. So he's 80-something, upper 80s. So that was the only thing. Does he live there? Who lives in there? We all live in the house together. Oh, joyful. Okay. Yeah. So I was 25 when this deal went down. Now I'm in my lower 30s, and I'm like, wait a minute. Yeah. Took a little while to realize how dumb it was. Okay. It didn't sound great at the time, but I wasn't too concerned. That's where my brain was. Yeah, gotcha. Yeah.

1:28:51Dave Ramsey:So what's your mother's financial situation? Not the greatest. I don't think she has much retirement. And is she retired? No. She'll probably be working for the next 15 years. What does she make? 70, 75. Okay.

1:29:15Dave Ramsey:um well i don't hear your 80 something year old grandfather buying you out and i don't hear your broke mother buying you out so there's only one way out because i mean if your mother made 200 000 a year and she could go get a mortgage a new mortgage and borrow enough extra to give you 50 or 60 grand and you could go away, I would suggest you take a deep discount and take that and leave, okay? And that would also get you off the mortgage, which I'm actually more concerned about you getting off of the mortgage liability than I am you getting your money out of this, because you didn't put any money into it.

1:29:56Dave Ramsey:But if you go live somewhere else and then she doesn't pay the bill because you're not there to help support this house anymore, you're going to get foreclosed on. Right. And we can't do that. That doesn't make sense. So. I have a quick question. You said you're mobile and what you can do. I work for Boltley. Okay. So it seems like you probably want to spread your wings and go somewhere else. Is that true? Yeah. The cost of living here is actually ridiculous. What do you make? $100 ,000. Okay. If you were to go somewhere else, you pay one-third of the payment? Yeah, that's what I was wondering.

1:30:41Yeah, so I'd probably do a third of the mortgage, which is like$700. Industry rate on the mortgage is$4.25. And then the living expenses probably brings me up to like$1 ,500 and just regular bills.

1:30:55Dave Ramsey:See, the problem is the answer to your question is how do you get out is the property gets sold. But I don't know where your grandfather and your mother live then. Yeah. I don't know how I can move off to be successful while they also continue to be successful. If you live somewhere else, I'm guessing you've thought about this before you called us. If you live somewhere else, have you run some numbers on how much you could reduce your current cost of living? I just see, I don't know if I have the numbers exactly. But I see there are, like, other places, let's say Delaware, for instance, where, you know, for the amount of houses you get, the amount of money is, you know, and cut it in half.

1:31:42Dave Ramsey:Okay, so if we could find a place to park your grandpa and your mom, we would sell the house, and everybody would get their money out, and everybody would be going on their merry way, okay? He'd have$100 ,000, your mom would have$100 ,000, you'd have$100 ,000, and we'd be out of this convoluted, horrible idea that you guys have engaged in. But if they don't have a place to live with$100 ,000, that's not going to work. Nobody's going to sign up for that, okay? So I think I'm going to begin a lot. If you can figure that out, that's the way to do it. If you can't figure that out, and I don't know what to tell you on that right now, so I can't figure it out yet.

1:32:27Yeah, it's just the—

1:32:29Dave Ramsey:I would tell your mom, when Pop dies, we're selling the house. We have had that conversation. And we're also the family gathering house, so I'm slowly trying to— I don't—that's irrelevant. They can just go rent an apartment. I mean, they go rent a music hall, a dance hall, or whatever. I don't care. I don't have to be the dadgum event center. That's ridiculous. So, no, Mom, Mom, Mom, Mom. When Pop dies, we're selling the house. You have to. Because I have to get off this mortgage. And I'm not going to demand that we do this now and put everybody in the street. But you need to know, I'm going to Delaware.

1:33:08Dave Ramsey:I'm going to keep paying my share until he dies. And when he dies, we're selling the house. Okay? Yeah. And you need to have that like a very kind and low-key but very blunt conversation. I don't want any nuance around this. and follow it up with an email. Mom, this is what we talked about. This is an uncomfortable conversation, but I'm letting you know I cannot stay in this until you die. But I will stay in it until Pop dies. Okay? Right. And I had that understanding at 25 that it wasn't until my grandparents, you know what I mean? Yeah, I know. But everybody has short memories because these ideas of the kind of crap you all have signed up for is just a horrible deal.

1:33:57Dave Ramsey:Who would, so moms and dads and grandparents, don't do this to your kids. You're not blessing them. You're trapping them.

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1:35:17Dave Ramsey:Sylvia is in Houston. Hi, Sylvia. Welcome to the Ramsey Show. Thanks, Dave. Thanks for taking my call. Sure. What's up? So I'm 56 years old and I would like to retire by 65 at the very latest. And I'm starting to stress about if I'm on track and how to manage the next nine years financially so that I'm in a good position. How much is in your nest egg now?

1:35:48Well, so I have like 1.2 million in my retirement account. I owe, so I have$125 ,000 in my savings account, but because I'm self-employed, I put the money there to pay for my 401k, my quarterly taxes, my office overhead, and everything like that. And my income is very inconsistent. So some months I make

1:36:16Dave Ramsey:What is your annual income? It's usually between$350 ,000 to$400 ,000. Okay. And do you have any debt? Yes, I do. I still owe$292 ,000 on my mortgage. I'm on track to have that paid off by 2033. Like within the next 10 years, I'm on track to pay that off. Okay. All right, so nine years from now, your house is paid for. Your 1.2, if it's in good mutual funds, will be 2.4, probably more like 4, probably around 4 million. Okay. If it's in good mutual funds, is it? Yes, I have it professionally managed. So the rate of return is close to 11%. Okay, good. All right, and it's going to double. And then your lump sum that's already there is going to double in seven years.

1:37:14Dave Ramsey:okay so your 1.2 will be 2.4 and you've got nine years so let's call that 2.4 let's call it three three and a half something like that and plus you're going to be adding to it so let's go ahead and call it four and a paid for house and you'll be 65 yes okay paid for house and four million and no other debt. Well, I do have some other debt. How much? I mean, at that point, you were. Well, and that's one of my questions is, because I'm self-employed, I'm solely responsible for funding my 401K. So my question, one of my questions today is, do I put more money towards my 401K or do I pay off my car notes?

1:38:01You pay off your car note.

1:38:02Dave Ramsey:You stop putting money in retirement until you get your car paid for. and then you quit borrowing money. Quit what? Quit borrowing money. Okay. Okay. Stop it if you want to retire with dignity. Okay? If you quit borrowing money, you pay your car off, and then you start your 401k, and you make 300 grand. You're going to do it this year. Okay? You're going to do it by Christmas. So it's not the end of the world. Pay it off fast. Get done with it. And then systematically pay off your home. And I try to get my house paid off faster than your plan. I think your plan's a little weak. but either way either way either way at nine years you're going to be sitting on four million dollars or more in your mutual funds with a paid for house okay now okay if you invest that continue to invest that at 11 and you were to pull off eight and it grows by 11 every year until you die you're going to continue for it to grow by three because you're going to consume eight 11 minus eight is three.

1:39:01Dave Ramsey:You follow me? Yeah. Okay. So if you let it grow by three to cover some inflation, pull off eight. So eight is going to be$240 ,000 a year.

1:39:17Okay.

1:39:18Dave Ramsey:That's what$4 million at 8 % is. And you're not even touching the 4 million and you're growing it by 3 % a year. and that's you in nine years okay you're fine but you got to execute this you can't go screwing around i'm doing a bunch of stupid stuff right but i mean if you execute the plan that you already were on and we just fine-tuned that's where you'll be so you're saying to maybe not fund my 401k this year no for two or three months how much do you own your stupid car on my car i owe 15 and on and it's only one year old so i've been because i pay extra um my car i only owe 15 it's one year old uh my that's at four percent my son's car that i pay for is 11 percent how old is your son it's 11 he's in he's in college he's 19 and so i still and i have college tuition at about 25k a year you need to pay off these stupid cars and quit borrowing money You'd have too much money coming in to be borrowing money on cars, particularly 11 freaking percent.

1:40:23Dave Ramsey:My God. No, no, no. I'm sorry. It was$11 ,000 at 2.5%. I misspoke. But car debt with your income and your net worth is just lazy. Okay. You know better. Okay. It's just, you know, you know better. Just clean that mess up. Okay. So, so I can pay off. So take the money out of my savings account, pay off both these cars tomorrow. Yeah. Yeah. Yeah, and then rebuild your savings account, and you probably can still do your 401k this year with money you make. Yeah, I can fund part of it, just maybe not the max, right? Yeah, but you're still going to be okay. You got nine more years, and you're going to get your house paid off now, and you're going to have$4 million, and you're going to be living on a quarter million dollars a year.

1:41:05Dave Ramsey:It's a pretty good situation. I'm not sure she heard you. She's still living in the present, and I already took her down there to nine years. Yeah, I thought that was means. I'm pretty comfortable at nine years. Yeah, I think that's means for celebration. But you've got to execute all the way through. You've got to keep going. You've got to do the whole thing. And don't stop. Ava's in San Jose, California. Hi, Ava. How are you? Hi. Good. Thank you. Thanks for taking my call. My question is about where to keep my money. I am with U.S. Bank. It's where I always have been. But I've heard of this online banking called SoFi.

1:41:42I don't know if you've heard anything about it. Oh, yeah.

1:41:45Dave Ramsey:A little bit about it. I'd stay away from those people. They're about the only thing I can think of that's worse than U.S. Bank. But, you know. Oh. No, you need to go to just, listen, you need to go to your local community bank or go to a good credit union like Fairwinds Credit Union that we endorse. And these are banks that actually know the human beings that do business with them. People that you're talking about, you're a number with. Oh, I see. Yeah, and then get you a good high-yield savings account to park your emergency fund in. Fairwinds Credit Union is an endorsement of ours. We endorse them because we believe in credit unions, we believe in good ones, and we believe in good small town, small community banks, but we don't do business with the Wells Fargo's and the Bank of America's, the U.S.

1:42:32Dave Ramsey:banks, the Fifth Thirds, and God help you, the SoFi's. Oh, we'll help you get out of debt. Oh, bull crap. you're gonna shovel so much debt down your throat you won't be able to breathe hey how you think you sponsor a stadium it wasn't by helping you get out of debt i can tell you that there ain't no ramsey stadium we noticed that okay so it'd be great though dude do what i said that'd be great it's funny he's asking dave ramsey if he's heard of sofi is like asking a catholic if they've heard of the pope well the pope would be an authority for the catholic and sofi would not be an authority Just the idea of, yeah, I'm fairly familiar.

1:43:15It's run across my desk a few times.

1:43:17Dave Ramsey:I've heard of Chevrolet Ford. Right. Oh, man. That's fun. Yeah, a good high-yield savings account with a click and mortar is fine. Just make sure you're checking and you're looking at what you're doing. I personally bank at regional bank in our area is our primary, and then another regional bank is our secondary. And then I've got a few odds and ends accounts, but I don't do any business with the Bank of America or the fifth thirds of the world. I mean, think about it. The one I can't get past was the old Wells Fargo. They had 200 ,000 employees that committed fraud. Wow. In the last little debacle they had.

1:44:08Dave Ramsey:I can't even imagine having 2 ,000 employees and then having them commit fraud. And then somehow they're still open. It's like, gee. It just shows the power and the size of that kind of money. It's unbelievable.

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1:45:43Dave Ramsey:in the lobby of ramsey solutions there's always about 50 to 200 folks come by sit and watch the show we do it on the glass from one to four every monday through friday so come and watch and hang out it's a free coffee it's wonderful the homemade chocolate chip cookies are amazing and also in that same lobby is the debt-free stage and that's where erica's standing hey erica how are you hey i'm good how are you guys better than we deserve welcome good to have you where do you live i live in denver fun and here to do a debt-free scream how much have you paid off 206 000 i love it two months in 22 months yep okay and what was your range of income during this time um i started at 100 and I went up to 250 annually.

1:46:30Dave Ramsey:In two years? Correct. What in the world do you do for a living? I'm a forensic accountant. Ah okay so you just kind of came out of school and went crazy? No actually I was working a salaried W-2 position to start and just doing some side hustles in the beginning and then a few months into the progress I actually got cut loose from that job and took a couple different routes to finally figure out that I was going to go off on my own and do independent contracting. So that's what I did and have been. And it doubled your income. Yeah. Yeah. Exactly. Very impressive. Yeah. Very cool. Well, that makes a lot of sense then on how we can get after 206 ,000.

1:47:14Dave Ramsey:What kind of debt was that? Mostly student loans. About 71 % of it was student loans. then the rest of it was some credit card and then a little bit in cell phone and medical loan and things like that. Okay, cool. So your degree's in accounting? Correct. I assume. Okay. I have a master's as well. Good for you. Yeah, I can imagine. Wow. So what made you decide to get this fired up and this intense? Because you went after it, girl. Yeah, I'm just, I mean, I'm a disciplined person to begin with, but I think coming out of school, there was a lot of pressure around, you know, I need to start paying these things off.

1:47:52But in my first job, I wasn't making a whole lot of money and just couldn't figure out how I was going to do that exactly. But started dating somebody who's here with me today and could tell that he had his financial picture together. And as we.

1:48:06Dave Ramsey:And he didn't have a master's degree in accounting. No. And as he and I got to talking more, you know, we wanted to have deeper conversations about finances and I just couldn't bring myself to have those conversations. I was embarrassed and that ultimately told me that this is an insecurity that I need to fix. How'd you find out about Ramsey or get tied to us? Well, my mom actually did FPU and my dad did too. And when I was in high school and my mom paid off a bunch of debt using your program as well. So that comes back to memory when you're sitting with this embarrassment, you called it. Yeah.

1:48:41Yeah. And you know, just, I kind of remembered your program through the years and figured, you know, I got to give this a try. I got to fix something because this isn't working for me. I don't like this stress and embarrassment and insecurity I'm feeling. Okay. I got to ask a disciplined person, self-described, and obviously you've proven it. This is unbelievable. Thank you. How intense, and I mean practical, what were you doing? Did you even live a life other than sleeping, working, and putting money away? Give us an idea of what you did. Yeah. I mean, I worked all the time, as you guys say to do all the time.

1:49:12So initially it was just side hustles. I worked in the day and overnight where I could. And then as things got better with my day job, I picked up any other independent contracting gig I could get. So I was working all the time. I had to cut away from traveling, which I love and fun and trips. And often had to say no to some of these friends who are here with me today because the goal was more important than that. It's cool to see them here though, Dave, you know, because even if they thought you're crazy they don't know because they're over there admiring you oh they did they thought i was crazy

1:49:49Dave Ramsey:so 22 months though i mean you you turned up the heat and beans and rice no life leaning in completely single person i don't have to talk anybody into this i'm just going to go do it and i'm going to knock this out fast with great gazelle intensity um was it worth it absolutely i would not go back yeah and i tell everybody that even if they still think it's crazy and nuts what i did i'm like it is so much better on the side of it and i was just saying to somebody a few minutes ago where we're waiting for the segment that i just don't feel guilty anymore about taking these trips or having fun i feel like i earned it you did that's why you feel that way yeah yeah and uh you more than earned it i mean you did something highly unusual which is uh That's the sign of being a successful person, by the way.

1:50:38Dave Ramsey:But, yeah, pretty impressive. Yeah, because I wonder if you had done it at half speed, like on a 44-month schedule rather than a 22-month schedule, if you'd even made it. Yeah. Well, initially, that's the way it kind of looked was that it was going to take much longer. Yeah. I think beginning looking at it. But you turned up the heat on the income. Yeah, and each time I got a new opportunity, it just opened up more money. It opened up better work-life balance or, you know, people that I worked with in my office. It just became better and better and better. So all of a sudden, you know, the timeline shrunk little by little.

1:51:11And here I am at 22 months later, done. How much did your skill and experience as a forensic accountant play into your crunching numbers and budgeting? My guess is your budget is unbelievable. Oh, yeah. I'm a total nerd. I'm down to the last cent. That's what I thought. yeah i i really am detailed about that kind of thing yeah it was 71 percent was their student loans okay i'm very specific i picked up on that i'd be terrified to submit a budget to you i really would you should you should that's fun i'm very proud of you thank you i'll talk to your mom and

1:51:46Dave Ramsey:dad at the break a minute ago getting a picture they're they're just busting at the seams they're so proud of you yeah and they should be they should be it's very very cool way to go how old are you? 31. Wow. Oh, man. Okay. Now when the income levels off to normal now, I mean the hours level off to normal, what do you think your income is going to stabilize at? It's actually still at the 250. Oh, is it? Okay. So you've just been able to get the right kinds of clients, but in a normal amount of hours now. Yeah, exactly. Like I can work as much as I want to. So I think that number I provided is more on the safer side, more conservative, but I could work limitless if I really want to.

1:52:23Dave Ramsey:Of course it was. Yeah. Of course it was conservative. Okay. All right. So that's not, I mean, that wasn't like you working 90 hours or something. Yeah. In the process, of course I was working. You got there, but I mean, but today you don't have to work that 90 hours to get that number. No, I don't have to. That's what I'm saying. Right. Exactly. Way to go. There's a young guy over there that is hoping it stays that way. He might get to see you now. Yeah. That's good stuff. All right. So someone listening, that doesn't have a master's degree in accounting, what do you tell people the key to getting out of debt is?

1:52:57Dave Ramsey:What was it emotionally or mathematically? What was the key? A few things. One, just being disciplined. And I kept using the metaphor that, you know, even when you go, people want to go change their body to look different. A lot of people don't want to do the hard thing, which is diet and exercise. It's just the discipline factor of, like, you've got to buckle down. You've got to say no to stuff. You have to cut off the credit card use. I think things really changed when I started using a budget massively I used a lot of visualization too so one thing that I always practiced in my overnight job was listening to the podcast and pausing the debt free screen and pretending that was me and how would I respond to this and just using that visualization I said you know I'm going to get here I'm going to be right here on the stage she's rehearsed this once or twice you know well you should have I'm glad you did Yeah.

1:53:47Dave Ramsey:That's amazing. You know, what you said there really does matter. You have to see. When you can see yourself doing it, that's called hope. And people that don't have hope don't move forward on whatever it is. And it's interesting, too. With a master's degree in accounting, and I've got a degree in finance, we weren't taught how to do a budget, a personal budget. That didn't ever come up. I mean, a business budget or to analyze a P &L, yeah, and see where the problems were and what the issues were with the cash flow, which is your forensic accounting, what you're doing. But you're doing analysis, obviously.

1:54:26Dave Ramsey:But we weren't taught to do, okay, the light bill is this, and here's the grocery bill, and here's what the rent is. That never came up. Personal finance is not part of an academic training in our world. Right. And so for you to sit down and do that, it's kind of like, it sounds so stinking obvious that a master's in accounting would do that. But I'm so proud of you. Well done. All right. Erica from Denver,$206 ,000 paid off in 22 months, making$100 to$250. Count it down. Let's hear a debt-free scream. Three, two, one. I'm debt-free. Yeah.

1:55:03Love it.

1:55:05Dave Ramsey:Woo-hoo. Man. She's on fire. Wow. What a story.

1:55:43Dave Ramsey:Our scripture of the day, Psalm 1611, you make known to me the path of life, in your presence is fullness of joy, at your right hand are pleasures forever. Claude Pepper said, life is like riding a bicycle, you don't fall off unless you stop pedaling. Folks, buying or selling a home right now is a big deal, and we're here to make the latest trends easy to understand. If you want to know what's happening with prices, with inventory, with interest rates, you can find all of that with market trends. Go to ramseysolutions.com slash market or click the show notes when you're ready. Jennifer's in Little Rock.

1:56:18Dave Ramsey:Hi, Jennifer. How are you? Hi, sir. Thank you so much for taking my call. Sure. What's up? Well, I'm desperate for some sound advice. My mom is in the middle of escrow. She's actually very near the end of escrow trying to sell her home. Very late in the process, we discovered that there were three liens on the home from a loan that my dad took out in 2007. Now, my dad died in December of last year, and this was news to us. My mom did not know about these liens. And since we feel like we're running out of time, we don't have any answers questioned as far as if my dad ever tried to pay these back if the person ever tried to collect over the last 18 years.

1:57:01So my question is, do we continue with the sale of the house and cut the lien holder a significant check due to the supposed interest at the crude? Do we pull out of the sale of the house?

1:57:15Dave Ramsey:Have you been in touch with the lien holder? The lien holder has been negotiating with the real estate office, and they've let us know in no uncertain terms that she is difficult to work with. Not a very nice person. What's the lien from? We don't know. Our best guess is that he was trying to borrow some money to help the house not to be in default way back then. Who did he borrow it from? He borrowed it from an ex-co-worker, and she is listed as the trustee, and her company, her real estate company, is listed as the beneficiary. But this is all we know. All we know is that there are three. Okay, so you actually have, you've had contact, and they gave you a payoff amount, and you just don't like it.

1:58:01Well, no, they haven't. We have been told that she wants the amount that was owed plus interest.

1:58:08Dave Ramsey:That would be reasonable. Right, but she won't let us see anything. And we were told this week, actually, that she would give us numbers. We've asked for a promissory note. We've asked for any indication that any of this has ever been touched, paid, or sought after over the last 18 years. How much is it? So the loan was$33 ,500, and so we're looking at upwards of$67 ,000. And what's the equity in the home? It's still a very large amount. My mom is trying to sell it, and so far she might only walk away with$180 ,000. She's selling it for$900 ,000. And you said there's other liens. Well, it's all three separate liens to the same person in the total of$33 ,500.

1:58:53Oh, I got you.

1:58:54Dave Ramsey:Okay. All right, well, you've got two choices. One is you get a number, a solid number from this person, and you pay them that amount, and you get clear title, and even if you don't like it. Two is you delay escrow. Just call the buyer and go, we can't sell it because we can't get settlement on this lien. I can't give you clear title. The contract you sign up says you have to offer them clear title, and you can't because you can't get to the bottom of this lien and then you sue the woman. Okay. That's what, that was the other option is do we just give her the money and then come back for it? No, no, no, you, no, you don't give her the money if you're going to sue her.

1:59:29Dave Ramsey:You stop the sale. Okay. Don't sell the house. Okay. Give her, give her nothing. Don't give her money to buy the attorney to fight you with. And that's the other aspect. We've been turned down by two probate attorneys and one real estate attorney who refused to take our case, and we don't know why, but we don't have access to my dad's bank accounts, and we know that he was given a large sum of money before he died that we are hoping and praying that maybe he applied to this loan, but we just don't have the time to research because we're not sure how much. You think this woman is ripping you off, is what you're saying?

2:00:08Yes, yes.

2:00:09Dave Ramsey:You think she's been paid and she's acting like she didn't? Yes, yes. I mean, She's threatened to foreclose on my, when she found out that my dad had died and that we were seeking to, you know, fulfill this loan or whatever. She said, so sorry for your loss. I was actually about to foreclose on this property. So it's been very difficult. You're going to have to get, you know, it's not unusual for you to ask some kind of forensic proof on how the balance was ascertained. And, you know, why do you not have access to your dad's, how long ago did your dad die? It was this last December. And unfortunately, he was not good with money.

2:00:47So my parents... No kidding.

2:00:49Dave Ramsey:And so the... But I mean, why do you not have access to his accounts yet? Well, we tried to get it through probate. But like I said, we've had two attorneys tell us that this is too much of a big mess. And either they don't want a part of it, or it just, I guess, doesn't matter to them to try to pursue this for us. But your mom didn't have access? No, she did not. She was not listed on the account anyway. And when she tried, she just walked out. a good attorney yet. I mean, it's not a big deal to get access to accounts. And if you get access to the accounts, then you can tell whether he actually paid something and you've got proof that he paid something against this lien, but we don't know what the original lien is.

2:01:27Dave Ramsey:There's no paperwork on any of it anywhere. Right. Right. Yeah. Yeah. So we're asking for more time, but we're feeling backed into a corner with escrow closing. You have a choice. You have a choice. You either delay the closing and sue the woman and get the thing in probate and get the account information out and do a full forensic on it and figure out what's really owed if anything on this lien or you just write her a check and move on with your life yeah yeah and by the way just to be very clear i don't know that this woman's a crook your dad is the one sorry that's to blame for all this oh yes not not this woman she probably she very legitimately loaned him hard cash at some point and he didn't document squat and she wants her money back i i really don't hear anything wrong with what she's doing except that she's a bit of a butt that's the only thing i hear from her okay but she could be just disgusted with your family that's very possible i mean so i i'm going to give you a better than 50 chance she's giving you real numbers.

2:02:38Dave Ramsey:I don't hear anything here that sounds crooked to me. Um, other than the fact that she's got an attitude. Uh, but if you think that if you have some reason to believe she's cooking the books, then the only thing you can do is delay the closing or stop the sale completely, lose the buyer, get another buyer later after you sue her and get to the bottom of this and you get the, you get the, you know, but you may go through$20 ,000 in legal fees only to find out that you actually owe all this. Uh, that's very possible. But now I will tell you in your defense, since I took up for this lady, the lady ought to be able to just provide you guys with some basic documentation and go, look, your dad loaned me.

2:03:20Dave Ramsey:I loaned him this much money. He never paid on it. I'm aggravated with him. So therefore I'm aggravated with y 'all, even though you didn't do anything technically, but he loaned me 33 ,000. I loaned him$33 ,000 on this date. I never have received anything. Here's the interest rate. Here's the promissory note, or here's the email that we use to do the agreement with. I don't care what's, what's the structure of this loan provide some kind of documentation so that she's got a little bit more credibility rather than just flipping you the bird. But, um, uh, but it doesn't sound like, um, nobody in this whole story has done a good job.

2:03:57Dave Ramsey:Um, your attorneys haven't done a good job. Your real estate agent hasn't done a good job. Your dad didn't do a good job. This lady hadn't done a good job. So nobody in here is blameless, but, um, but I got a feeling just listen to this, that your dad borrowed 33 ,000 from her and never paid her. That's just kind of what it sounds like. That's fits the pattern of the other stuff he did. So you may want to just add up the interest on the 33 ,000 and pay her and move on with your life and then go get probate attorney and try to get those accounts unlocked and figure out if there's any money in there and then be shocked if there is.

2:04:31Dave Ramsey:Wow. Could a forensic accountant help with this? Yeah, but you've got to be able to get a hold of the information. Yeah, so the probate's first. Yeah, the lady that just did the debt-free scream could help her, you know what I mean? Well, I was wondering if a forensic accountant could do the research on the lady who loaned Dad the money. But you've got to be able to lay your hands on documentation. Somebody's got to have a file somewhere. Yeah. E-file or hard copy, either one. You've got to be able to say, here's the actual promissory note, here's the terms of the note. They, you know, and so, yeah, he's in default.

2:04:59Dave Ramsey:and I was getting ready to foreclose. Ouch. What a mess. Yeah, I think you... It's a coin toss, Jennifer. I don't know which one I would do. I'd want to learn a little bit, as much as I could learn. I got a feeling she's probably got a fairly legitimate claim. That puts this hour of the Ramsey Show and 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.

2:05:32Thank you.