How Much Should We Invest If Our House Is Paid Off?

Summary

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Podcast Summary: Ramsey Everyday Millionaires

Episode: How Much Should We Invest If Our House Is Paid Off?
Date: November 14, 2025
Host: Dave Ramsey (with Chris Hogan)
Network: Ramsey Network

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Episode Overview

In this episode, Dave Ramsey and Chris Hogan talk with a caller, Charles from Topeka, Kansas, who has paid off his house and all debts and now wonders how much he should invest each month. The discussion explores living debt-free, optimizing investment strategies at Baby Step 7, and the importance of sticking to proven financial principles. The episode also highlights the psychological benefits of reaching financial milestones and emphasizes the value of proactivity and the Ramsey Baby Steps.

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Key Discussion Points & Insights

1. Celebrating Financial Freedom

• Caller Charles shares his recent accomplishments:

  • Second home purchased with cash.
  • All other debts paid off.
  • Net worth of $600,000–$700,000.
  • About $2,000 surplus cash each month.

• Positive emotions from debt freedom:

  • [00:29] Charles: “I'm sleeping good, I'll tell you that. Coffee feels good every morning.”
  • Dave Ramsey congratulates Charles: “[00:32] I bet you are. I'm proud of you, man. Way to go.”

2. What to Do with Surplus Money After Paying Off the House

• Charles asks: How much should I invest? Is it okay to enjoy some of the money?

  • [01:06] Charles: “I want to know how much monthly I should throw into, like retirement or, you know, custodial accounts for the kids. Because I, you know, kind of want to do some dumb stuff and go on vacations and do things like that.”
  • Dave Ramsey reassures him: “Oh, that's not dumb. You've earned it. You should go do those things.”

• Dave outlines the three priorities for money at Baby Step 7:

  • [01:11] “There's three things I can do with money at Baby Step 7. I can have fun with it, and I should. I can be generous with it, and I should. And I can invest it and I should.”

3. Kids’ College Savings and Investment Strategy

• Children’s custodial accounts and 529 plans:

  • [01:26] Dave Ramsey: “You could put some in there. I wouldn't overload it too much. If you want to put some in a 529 instead and be thinking about college, that's fine... But you don't have to go hog wild on that.”

• Retirement investing targets:

  • [01:32] “You should be putting at least 15%. You should have been before you paid off the house. 15% of your household income going into retirement accounts. But at this stage ought to be doing more than that.”

• Customized planning:

  • Advises Charles to work with a SmartVestor Pro to map out investment plans (e.g., Roth IRAs, Roth 401(k)s).

4. The Power and Discipline of the Baby Steps

• Chris Hogan reinforces the effectiveness of the Baby Steps plan:

  • [02:48] “The baby steps are not a suggestion. This is a tried and true plan... it creates massive financial and personal and relationship momentum. It just does.”

• Dave on regaining control and proactivity:

  • [03:23] “You're setting yourself free. Yeah. You're working like crazy and you're actually getting traction. So many people with money feel like a rat in a wheel... Number one habit of highly effective People. They are proactive. They happen to things. Not everything happens to them.”

• On changing bad habits and breaking financial cycles:

  • [03:56] “If you keep doing the same thing over and over again, expecting a different result. That's the definition of insanity... If you can't seem to break the cycle. We'll break the cycle then.”

5. The Psychology and Momentum of Early Financial Wins

• Getting through Baby Step 1 ($1,000 emergency fund):

  • [04:29] Chris Hogan: “We talk to people all the time, how hard it is for many people just to get through baby step one, which is to get $1,000. And when you're broke, you know how hard that is. But there's something about that. It propels you beautifully into baby step two.”

• Growth in confidence and self-control:

  • [04:45] Chris Hogan: “[Baby Step 1] is a tiny little confidence builder... You did something that you didn't think was going to be possible. And that's the magic of these baby steps.”

• Following the steps in order for best results:

  • [05:04] Dave Ramsey: “Work the baby steps not out of order. One through seven. One is before, two is before, three is before four. That's how that works. And so don't call me up and ask me to change them. Okay? It'll be better for you and me both if you don't do that.”

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Notable Quotes & Memorable Moments

• Charles (on life after debt):
  [00:29] “I'm sleeping good, I'll tell you that. Coffee feels good every morning.”

• Dave Ramsey (on enjoying accomplishment):
  [01:11] “There's three things I can do with money at Baby Step 7. I can have fun with it, and I should. I can be generous with it, and I should. And I can invest it and I should.”

• Chris Hogan (on the Baby Steps plan):
  [02:52] “The baby steps are not a suggestion. This is a tried and true plan... it creates massive financial and personal and relationship momentum.”

• Dave Ramsey (on proactivity):
  [03:46] “Number one habit of highly effective People. They are proactive. They happen to things. Not everything happens to them.”

• Chris Hogan (on the value of early momentum):
  [04:45] “It is [hard] sometimes. And you get through that hardship. Guess what happens. Your shoulders come back a little bit. You feel a sense of what Dave just talked about, self control. You did something that you didn't think was going to be possible. And that's the magic of these baby steps.”

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Timestamps for Important Segments

• 00:16 – 01:11: Charles describes his financial milestone and asks investment questions
• 01:11 – 02:00: Dave explains priorities at Baby Step 7 (fun, generosity, investing)
• 02:00 – 02:48: Specifics on investing for kids and retirement strategy
• 02:48 – 03:23: Chris and Dave discuss the power and discipline of Baby Steps
• 03:23 – 04:29: Dave on proactivity, habits, and taking control of finances
• 04:29 – 05:04: Chris and Dave on the psychological impact of early Baby Steps and following the right order

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Summary & Final Takeaways

• Living debt-free enables both responsible investing and enjoyment—it's not an “either/or.”
• A minimum of 15% of household income should go to retirement, with more possible at Baby Step 7.
• Don't overload children's accounts, but do prepare for future education needs.
• The rigor of the Baby Steps plan provides structure, momentum, and confidence—always follow them in order for the best results.
• Financial progress isn't just about money—it's about transforming your habits, mindset, and quality of life.

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Transcript

[Dave Ramsey]

Foreign.

[Chris Hogan]

This episode is brought to you by SmartVestor.

[Dave Ramsey]

Connect with an investing pro near you at RamseySolutions.com SmartVestor Charles is in Topeka, Kansas. Hey, Charles. What's up?

[Caller]

Hey. I just got a question. So I recently purchased my second home and I was able to buy it in cash. And we paid off all our other debts this year.

[Dave Ramsey]

Doesn't that feel great? It does.

[Caller]

I'm sleeping good, I'll tell you that. Coffee feels good every morning.

[Dave Ramsey]

I bet you are. I'm proud of you, man. Way to go. What's your net worth?

[Caller]

Oh, probably around, you know, six or seven hundred thousand.

[Dave Ramsey]

Good for you. Way to go, man.

[Caller]

All the cars.

[Dave Ramsey]

Good for you.

[Caller]

But, yeah, so after child care, all my bills, groceries, that kind of stuff, I have about 2,000 left over. And I want to know how much monthly I should throw into, like retirement or, you know, custodial accounts for the kids. Because I, you know, kind of want to do some dumb stuff and go on vacations and do things like that.

[Dave Ramsey]

Oh, that's not dumb. You've earned it. You should go do those things. Yeah. So you've just got to lay it out and parse it out and go. Okay. There's three things I can do with money at Baby Step 7. I can have fun with it, and I should. I can be generous with it, and I should. And I can invest it and I should. As far as kids, custodian accounts, how old are the kiddos?

[Caller]

Six months and two and a half.

[Dave Ramsey]

Okay. Yeah. I mean, you could put some in there. I wouldn't overload it too much. If you want to put some in a 529 instead and be thinking about college, that's fine. Or education of some kind. Trade school also qualifies for 529. So whatever they're going to do, they're going to need some training post high school. And yeah, I'll be preparing for that. But you don't have to go hog wild on that. And you should be putting at least 15%. You should have been before you paid off the house. 15% of your household income going into retirement accounts. But at this stage ought to be doing more than that.

[Caller]

We were trying, but we were in a house that we probably shouldn't have been. But I bought a fixer upper and it all worked out in the end.

[Dave Ramsey]

Okay, so you got that behind you. So now you can put at least that away. But you ought to be putting it a minimum of 15. But at baby step seven, I'd like to see you'd be doing more than 15% of your income into retirement and be doing something towards the kids college and something towards fun. And there ought to be room in this budget to do all that. And just sit down with your smartvestor pro and lay out your game plan on how we're going to invest, what we're going to invest in. And you know, lay out your Roth IRAs, load them up, load up the Roth 401ks at work if you've got them, and so forth. And then you'll look up in just a few years and it'll be millions and millions of dollars. It's kind of amazing how quickly it grows, how fast this life goes for that matter. Yeah.

[Chris Hogan]

You know, for folks that are listening, watching, we have a lot of new folks coming all the time. This is a great call as Dave's giving that advice. You gotta understand the baby steps are not a suggestion. This is a tried and true plan. And you refer to it privately, you know, in our building, in our meetings, that it's a clear path developed over time as you walk through with people in real life money situations. And I'm telling you the fundamental truth about the baby steps, Dave, is that it creates massive financial and personal and relationship momentum. It just does.

[Dave Ramsey]

It does. And the. Because you're getting, you're setting yourself free. Yeah. You're working like crazy and you're actually getting traction. So many people with money feel like a rat in a wheel. They feel out of control. They're reactive instead of proactive. And when you get the other side of all of that, guys, it really turns things around in every area of your. Stephen Covey, all those years ago had that book and it's still on the bestseller list. I look up total money makeovers on there. 7 Habits of Highly Effective People is on there. Number one habit of highly effective People. They are proactive. They happen to things. Not everything happens to them. So if you're in a situation and you don't like where you are, happen to it. What is it we're gonna do? What are we gonna. What kind of dynamite are we gonna throw in the middle of this? Pull the pin on the grenade, light up the room, baby, let's go. There's something's gotta change here. And if you keep doing the same thing over and over again, expecting a different result. That's the definition of insanity. That's what the 12 steppers tell us. And so, you know, I can't seem to break the cycle. We'll break the cycle then. Yeah.

[Chris Hogan]

You know, it's genius how we know, we talk to people all the time, how hard it is for many people just to get through baby step one, which is to get $1,000. And when you're broke, you know how hard that is. But there's something about that. It propels you beautifully into baby step.

[Dave Ramsey]

Two, which is where it's a tiny little confidence builder.

[Chris Hogan]

It is. And it's hard sometimes. And you get through that hardship. Guess what happens. Your shoulders come back a little bit. You feel a sense of what Dave just talked about, self control. You did something that you didn't think was going to be possible. And that's the magic of these baby steps. Work the baby steps not out of order. One through seven.

[Dave Ramsey]

Yeah. One is before, two is before, three is before four. That's how that works. And so don't call me up and ask me to change them. Okay? It'll be better for you and me both if you don't do that.