Ramsey Everyday Millionaires — Episode Summary

Podcast: Ramsey Everyday Millionaires
Episode: We’re Inheriting $1.3M—What Should We Liquidate First?
Date: November 7, 2025
Hosts: Dave Ramsey (A), Co-host (C)
Caller: Justin from Chattanooga

Episode Overview

In this episode, Dave Ramsey and co-host advise a long-time listener, Justin, who is about to inherit $1.3 million through a blend of retirement accounts and investments. Justin seeks guidance on which assets to liquidate first, hoping to pay off his mortgage and possibly transition to a single-income household to allow his wife to stay home with their children. The conversation covers tax implications of inherited accounts, asset prioritization, and maintaining disciplined financial habits after a windfall.

Key Discussion Points & Insights

1. Caller’s Situation—Asset Breakdown ([00:20])

• Justin's Current Finances:
  • $875K in retirement accounts
  • Owes $390K on mortgage (5.875%)
  • Home value: ~$600K
• Inheritance Includes:
  • $700K in traditional IRA
  • $300K in Roth IRA
  • $100K in brokerage account
  • $12K in HSA
  • $150K in annuity (with lump sum or 10-year payout option)

2. Prioritizing Liquidation ([01:52])

• Justin's Goals:
  1. Pay off the mortgage
  2. Enable his wife to stay home with their children
• Dave's Immediate Advice:
  • Use the annuity (by lump sum) and brokerage account first toward the mortgage.
  • Move the Roth IRA to a new Roth account and make it the “last money touched.”
  • HSA likely to be cashed out, as inherited HSAs can’t typically be rolled over.
  • With the new Secure Act, inherited traditional IRAs must be liquidated within 10 years—plan withdrawals to minimize tax bracket jumps.

Notable Quote ([02:07]):
"The annuity lump sum, you can roll that to a traditional IRA... [but] that's just clear money then. We're going to use that and the brokerage towards the house. That gives me 250 of it..."
— Dave Ramsey

3. Tax Strategy for Withdrawals ([03:10], [03:56])

• Use traditional IRA withdrawals (plus taxes) to cover any remaining mortgage balance.
• Spread remaining IRA withdrawals over ~5 years (vs. 10), to minimize “bracket creep”—the risk of moving into a higher tax bracket.
• Roth IRA should remain untouched and invested for future growth.

Notable Quote ([03:56]):
"You're gonna pull some of that $700K out, enough to get to there and enough to pay the taxes that it creates...I'm going to pull the rest out gradually over time to avoid bracket creep on your income tax brackets."
— Dave Ramsey

4. Lifestyle Impact and Discipline ([04:49], [07:23])

• Justin confirms that with the house paid off, they can live on a single income, needing only $1,200–$1,500/month extra, which can be pulled from inherited assets.
• Dave and co-host note Justin’s disciplined approach and how years of “paying attention” puts him in control, minimizing the impulse to make big lifestyle changes after a windfall.

Notable Quote ([07:23]):
"Looks like this guy's not changing his lifestyle hardly at all. He's going to be the same...he's been disciplined his whole [life]."
— Co-host

5. The Power of Proactivity ([07:36]–[08:34])

• Emphasis on knowing your numbers and actively managing finances as the core of wealth-building.
• Learning evolves from initial budgeting to mastery over complex decisions, like managing an inheritance.

Notable Quote ([08:10]):
"The first step is just getting on a budget and starting to pay attention to your monthly in-go and monthly out-go... that knowledge starts to compound on itself."
— Co-host

6. Educational Moment: Inheritance & the Secure Act ([08:34])

• Clarifies that inherited Roth IRAs are not subject to the Secure Act’s mandatory 10-year liquidation, as they are tax-free for the beneficiary.
• Dave advises listeners (especially those approaching retirement) to consider Roth conversions for future tax-free growth and ease of inheritance.

Notable Quote ([08:34]):
"Roth IRAs are not subject to the Secure act when they're inherited...You pay up, pay taxes and convert to Roth. Pay taxes and convert with extra money because then it grows not only tax free for this generation, but also for the next generation."
— Dave Ramsey

Memorable Moments & Quotes

• On the value of discipline:
  "He did not become a millionaire because of inherited money." — Dave Ramsey ([07:15])

• On strategic Roth use and tax law:
  "Like that $300K Roth he had, he can let that one run. The other one, he's got to cash it out because Biden wants his money." — Dave Ramsey ([End])

• On financial self-awareness:
  "You have to be proactive and happen to your money, not have it happen to you." — Dave Ramsey ([07:36])

Timestamps for Key Segments

• [00:20] – Justin describes his financial position and inheritance
• [01:52]–[03:09] – Asset prioritization and initial liquidation advice
• [03:10]–[04:49] – Tax management strategies for inherited assets
• [04:49]–[05:27] – Planning for a single-income household post-mortgage
• [07:07]–[07:36] – Reflection on Justin’s discipline and millionaire mindset
• [08:10]–[08:34] – Explanation of the Secure Act and importance of Roth conversions

Conclusion

This episode offers practical, step-by-step advice for anyone facing an inheritance, focusing on tax-smart liquidation, disciplined financial planning, and avoiding impulsive lifestyle changes. The key message: Know your numbers, make a plan, and use professional guidance to keep wealth working for you and your family—now and for the next generation.