How Much of My Net Worth Should Be Cash vs. Assets?

Summary

Ramsey Everyday Millionaires

Episode Summary: "How Much of My Net Worth Should Be Cash vs. Assets?"

Release Date: December 17, 2025
Hosts: Dave Ramsey, Rachel Cruze
Caller/Guest: Les from Greenville, SC

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Episode Overview

This episode centers on a listener question about the ideal breakdown between cash holdings and home equity for someone approaching retirement. Les, a 72-year-old with a compelling journey from bankruptcy to multimillionaire, seeks advice on whether to upgrade his home and how much net worth should be kept in cash versus tied up in property. Dave Ramsey and Rachel Cruze unpack his scenario, provide guidance based on the Ramsey method, and use Les’s story as inspiration for listeners seeking financial peace and wealth-building strategies.

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Key Discussion Points & Insights

1. Les’s Financial Situation (00:14 – 02:22)

• Background:

  • Age: 72 (wife is 69).
  • Ongoing business income: $300,000/year (expected to gradually decrease).
  • Net worth: $2.5 million (currently $2M in cash, $0.5M in home).
  • Considering: Upgrading home to $1–1.1 million ($1M in house, $1.5M in cash post-purchase).

• Home Purchase Intent:

  • Les is drawn to a limited-availability home site overlooking the city, with a potential home upgrade budget capped at $1.1M.

2. Timing and Longevity of Retirement Income (02:22 – 03:30)

• Les estimates five more years of sufficient business income before he’ll need to draw on investments.
• He expresses conservative intentions, only upgrading if it won’t compromise their financial stability.

3. Les’s Journey: From Bankruptcy to Financial Independence (02:56 – 03:42)

• Turning Point:

  • Les shares he and his wife attended Financial Peace University after bankruptcy at ages 57 and 54, respectively, with $320,000 in debt and no assets.
  • Achieved their first million in 10 years, second in the next five, and are on track for a third in three more years.

  “After bankruptcy and foreclosure at age 57… Nothing to our name, $320,000 in debt. Exactly 10 years almost to the day…We hit the first million, the next five years, the second million, we're on track that the third million would be in three years.”
  — Les (02:56)

• Hosts’ Reactions:

  • Dave and Rachel commend Les’s commitment and results, highlighting the power of discipline and long-term planning.

  “Well done, you guys. That's incredible. Absolutely incredible.”
  — Dave Ramsey (03:44)

4. Evaluating the Asset Split: Cash vs. House (04:01 – 07:47)

• Rule of Thumb:

  • Dave and Rachel emphasize there’s no strict “percentage” rule for cash vs. home equity in retirement, but discuss scenarios and guiding principles.
  • Upgrading to a $1M home while keeping $1.5M–$2M cash (even as income declines) is “totally fine” if all else remains stable.

  “You have 500,000 in your primary home now, it's just pulling out another 500,000 to upgrade to a million dollar home. And then you guys will have that 2 million in cash.”
  — Dave Ramsey (06:12)

• Ongoing Investment:

  • Les is contributing $150,000/year to investments, giving significant runway for compound growth.
  • Rachel advises considering the “doubling every seven years” rule of thumb for invested money’s growth.

  “Yeah, lump sum is going to double every seven years.”
  — Rachel Cruze (05:10)

• Spending & Margin:

  • Current household expenses: $7,000/mo ($2,800 for vacations).
  • Dave and Rachel agree there’s substantial financial cushion (“margin”) for Les’s lifestyle.

• Withdrawal Rates and Long-Term Planning:

  • The panel discusses safe withdrawal rates (e.g., 6%) and highlights the variability of market returns (e.g., 23% some years, 8% others).
  • Importance of personalized, long-term projections (preferably with a financial planner), especially for a retirement horizon that could extend 20 years.

  “Run all scenarios with somebody who’s looking at the market...there is the percentage of what you want to withdraw that makes sense from a historical perspective.”
  — Dave Ramsey (06:22)

• Significance of a Paid-Off Home:

  • Both hosts stress the freedom a paid-off home brings in retirement, reducing financial pressure and required withdrawals.

  “Having a paid off house is a huge, huge upside to when you start actually pulling some money from retirement of how much you actually need to pull when you don't have to pull a mortgage or rent.”
  — Dave Ramsey (07:37)

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Notable Quotes & Memorable Moments

• On Wealth Building:

  “Money long term [is a] marathon, you guys. But it works. If you do the right stuff over and over again, it works.”
  — Dave Ramsey (07:48)

• On Financial Recovery and Discipline:

  “We said, well, when Dave showed us the path, we said we're committing to this. We're doing this almost 10 years. Exactly.”
  — Les (02:56)

• On Upgrading the Home:

  “If it doesn’t stay within 1 million or 1.1, then the deal’s off the table.”
  — Les (02:06)

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Key Timestamps

• 00:14: Les introduces his scenario and asks about net worth allocation.
• 02:56: Les reveals his inspiring bankruptcy-to-millionaire story.
• 03:44: Dave congratulates Les on his transformation.
• 04:35: Les discusses potentially managing finances himself versus hiring a planner.
• 05:10: Rachel explains the potential for Les's investments to double over time.
• 06:12: Dave and Rachel discuss the safety of Les’s proposed asset split.
• 07:37: The importance of a paid-off home in retirement.
• 07:48: Dave summarizes the episode’s lesson on the long-term process of wealth building.

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Takeaways

• Flexibility, not rigidity, in retirement asset allocation: No strict percentage, but ensure stability, liquidity, and peace of mind.
• Invest in Financial Education: Transformative, as illustrated by Les’s story.
• Compound growth and margin matter: Aggressive ongoing investment and controlled spending expedite wealth accumulation.
• Paid-off home enables freedom: Reduces retirement expenses and withdrawal pressure.
• Work with a financial advisor: Especially when approaching major life transitions, even if you’re financially savvy.

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Episode Tone: Encouraging, practical, and inspiring; full of praise for financial discipline and the power of focused, methodical wealth-building.
Main Message: Steady commitment and smart asset management—centered on debt freedom—create lasting financial security, no matter your starting point.

Transcript

[Les]

This episode is brought to you by SmartVestor. Connect with an investing pro near you at RamseySolutions.com SmartVestor and up next, we.

[Dave Ramsey]

Have Les in Greenville, South Carolina. Hi, Les, welcome to the show.

[Les]

Hi. What a pleasure to speak with you.

[Dave Ramsey]

Oh, well, thanks for calling in, Les. How can we help today?

[Les]

My question is, is there any rule of thumb or percentage of how much of our ass that we could have tied up in our home versus cash? Our current situation is I'm 72, my wife is 69. And we still have income from our business of 300,000 a year, but that will slowly curtail as we enter more of a semi retirement mode. But we're currently two and a half million net worth. Two million cash. Half million in the home. We were looking at a potential purchase or upgrading or wouldn't this be nice in a home? We're a little bit spoiled. We've had two occasions where we've lived on the water, on a lake in our town. We have a small, they call it a mountain, but it, it's a small mountain that is overlooking. Yeah, but it, it has a limited number of, of home sites or it's quite old. A lot of the homes are quite old up there of about 120 overlooking the city with mountain ranges in the west.

[Rachel Cruze]

And so you're wanting to upgrade. Upgrade from the 500,000 or second?

[Dave Ramsey]

Second or upgrade?

[Les]

No, no, it would be primary home.

[Dave Ramsey]

Okay.

[Rachel Cruze]

What's it going to cost to get that house in the, on the big hill?

[Les]

If it doesn't stay within 1 million or 1.1, then the deal's off the table. But then that would be a shift of we'd have a million in the house and one and a half million in cash.

[Rachel Cruze]

How long will you continue to draw the 300,000 and how quickly do you think it'll like. What will be the rate of deplenishment?

[Les]

I would, based on my projections, it won't completely end, but I projected that in five. It'd be five years before we'd even have to start drawing off of any interest or anything in our investments.

[Rachel Cruze]

Oh, five years. Okay, that's great. And in the meantime, will you continue to invest from the 300,000? Please say yes.

[Les]

Oh, oh, heavens, yes. Here's brief background story. After bankruptcy and foreclosure at age 57, my wife's 54, who walked into a Financial Peace University class. Nothing to our name, $320,000 in debt exactly 10 years almost to the day. We said, well, when Dave showed us the path we said we're committing to this. We're doing this almost 10 years. Exactly.

[Dave Ramsey]

Wow.

[Les]

We hit the first million, the next five years, the second million, we're on track that the third million would be in three years.

[Dave Ramsey]

Yes. Unbelievable.

[Les]

So, gosh, Less.

[Dave Ramsey]

Well done, you guys. That's incredible. Absolutely incredible. Yeah, so I am. Do you guys.

[Les]

Grateful, you folks?

[Dave Ramsey]

Oh, well, no, less. I mean, you're the one that did it. I mean, seriously. And would you say 20 years ago.

[Les]

It'd be 16.

[Dave Ramsey]

16 years ago. Okay.

[Les]

Yeah.

[Dave Ramsey]

Incredible. Yeah. So I think from, from the rough math.

[Rachel Cruze]

Yeah.

[Dave Ramsey]

If you guys are able to, you know, be able to get this 300,000, and I know you have to live on some of it, but. Yeah, in four years, that could easily become another million to throw in. So I think if you guys keep it around that million dollar mark from just the rough math of even if you just didn't even add the other million, but you had the 2 million, you know, and if you're living off 6% or whatever it may be, I think you're. Yeah, you're going to be. You guys will be totally fine. Do you have a good financial planner?

[Les]

Yes. I kind of hesitate because I've been kicking around just doing it myself.

[Dave Ramsey]

Sure.

[Rachel Cruze]

Yes.

[Dave Ramsey]

No, that's fair. Yeah. Yeah. So I think. Yeah, I think sitting down and kind of running out all the numbers with someone, because if you're 72 and in good health, I mean, you could live another 20 years. But I think. Jay, did you.

[Rachel Cruze]

Yeah, I was just looking through it. I mean, you're, you should be putting away at least 3750amonth. Is that, does that feel about right for you?

[Les]

Yeah. Currently or more. We're putting away 150,000 a year.

[Rachel Cruze]

Okay, great. And so you have to consider. Yeah, lump sum is going to double every seven years. So let's say, like you said, it's at least five years that you'll continue to get that $300,000 income, so.

[Les]

Well, no, it's going to incrementally reduce.

[Rachel Cruze]

Reduce. Okay, but what's it cost to run your household? You've got a lot of margin. Correct.

[Les]

Right. Current to run the household is 7,000, but at this point, 2,800 of that a month is designated to vacations.

[Rachel Cruze]

Yeah, exactly. So you've got plenty of margin.

[Les]

Not. Yeah, that.

[Rachel Cruze]

My point is you should do this. That's. My point is you're gonna have plenty of money. You guys have done well. You, you've got a great income. It's Going to dwindle, but it's still going to be a really great income for the next five years, even as it continues to slowly go down. I'm okay with the. You're, you're doubling in house and I, I'm okay with it, Rachel. I'm, I'm.

[Dave Ramsey]

Yeah, I mean, I think the million, you have 500,000 in your primary home now, it's just pulling out another 500,000 to upgrade to a million dollar home. And then you guys will have that 2 million in cash. Yeah. And then you'll be putting some money away.

[Rachel Cruze]

Catch.

[Dave Ramsey]

Continually. And then I think from there. Yeah, I mean, I think you've got a great nest egg and yeah, I think you'd be totally fine. But again, I think running all scenarios with somebody who's looking at the market, looking at rates, looking at how aggressive your funds are, how not aggressive they're putting, I mean, whatever that you're invested in. I would be running some long term numbers because you know, there is the, the percentage of what you want to withdraw that makes sense from a historical perspective of what the market makes. Right. So like of course, one year, you know, or last year was like 23% or something crazy.

[Rachel Cruze]

It was crazy. Yes. Wild.

[Dave Ramsey]

And then some years it's gonna do 8%. Right.

[Rachel Cruze]

So.

[Dave Ramsey]

So to be able to find that happy medium. And I know people have different percentages of their opinion. Financial planners will be more conservative, which is great. I think Dave's is a little aggressive and what he says that you can pull out, he's like, it's fine. The market's a big bunch. Yeah. But we run in those long numbers long term for you and your wife over the next, you know, map out 20, just see, see what it brings you. But yeah, you should be, you should be totally fine. Les, I think you're being very conservative. And again, it's not this percentage, but the fact that everything's paid off too. Because that is one thing we, we think about going into retirement, having a paid off. That's right. House is a huge, huge upside to when you start actually pulling some money from retirement of how much you actually need to pull when you don't have to pull a mortgage or rent. Like, man, that saves you a ton.

[Rachel Cruze]

Right?

[Dave Ramsey]

So Les, well done. You and your sweet wife, I mean, 16 years ago decided to change the game on what you guys do with your money. And it just proves that money long term marathon, you guys. But it works. If you do the right stuff over and over again, it works.