I Won $200,000 On A Game Show And Don't Know What To Do With It

Summary

Podcast Summary: The Ramsey Show Highlights
Episode: "I Won $200,000 On A Game Show And Don't Know What To Do With It"
Release Date: May 11, 2025

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Introduction

In this episode of The Ramsey Show Highlights, Nancy, a 70-year-old retiree, shares her unexpected win of $200,000 from the game show "Snake Oil with David Spade." Despite the substantial prize, Nancy finds herself uncertain about the best financial moves to secure her and her husband's future. Host Dave Ramsey, along with his co-host Chris, provides comprehensive financial advice to navigate Nancy's newfound wealth amidst her retirement circumstances.

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Nancy’s Financial Snapshot

Nancy begins by detailing her current financial situation:

• Game Show Win: $200,000 from "Snake Oil with David Spade" (00:07)

• Age: 70 years old, retired but still engaging in part-time work

• Existing Savings: Over $200,000 in a money market account earning 5.5% interest

• Mortgage: $85,000 remaining on their recently downsized home

• Income Sources:

  • Social Security: Combined $4,500 monthly for Nancy and her husband
  • Part-Time Jobs: Nancy earns approximately $600/month; her husband contributes a couple of thousand extra

• Monthly Expenses: Mortgage payment of $756 (02:54)

• No Additional Retirement Funds: Neither have 401(k)s or pensions

Nancy expresses uncertainty about how to best utilize her game show winnings to enhance her financial stability during retirement.

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Dave Ramsey’s Initial Assessment

Dave Ramsey evaluates Nancy’s situation by juxtaposing scenarios with different financial standings:

• High Net Worth Scenario: "If you had $600,000, I would tell you instantaneously, write a check and pay off your house today." (03:13)

• Low Net Worth Scenario: "If you had $100,000, I would tell you not to pay off your house because you would be starved." (03:13)

• Current Situation: Nancy falls in the middle with $200,000, prompting a more nuanced approach.

Ramsey acknowledges the dilemma of choosing between paying off the mortgage and retaining liquidity for ongoing expenses.

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Strategic Financial Recommendations

**1. Paying Off the Mortgage:
Ramsey suggests that paying off the $85,000 mortgage would eliminate the $756 monthly payment, providing substantial monthly savings. However, this action would utilize nearly half of Nancy's game show winnings, which could leave her financially vulnerable if not managed carefully.

**2. Investing the Remaining Funds:
To compensate for the reduced liquidity, Ramsey recommends:

• Emergency Fund: Maintain approximately $30,000 in a high-yield savings account to cover unexpected expenses.

• Mutual Funds: Invest the remaining $70,000 into a mutual fund through a Smartvestor Pro account. This approach leverages the historical average return of 11.8% in the stock market, potentially doubling the investment every seven years (05:17).

**3. Rebuilding Savings:
By allocating $1,500 monthly towards retirement savings, Nancy and her husband could rebuild their $85,000 mortgage payoff over approximately three years, considering both principal contributions and investment growth (04:17).

**4. Budgeting and Financial Planning:
Ramsey emphasizes the importance of creating a detailed budget to track and manage monthly expenses effectively. Utilizing tools like the EveryDollar app can aid in this process (00:02).

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Projected Financial Growth and Sustainability

Ramsey outlines a growth projection based on Nancy’s investment strategy:

• Investment Growth:

  • Initial Investment: $75,000
  • Projected Growth:
    • At Age 77: $150,000
    • At Age 84: $300,000
  • Assumptions: Consistent investment without additional withdrawals, leveraging the stock market's average returns (05:18)

• Debt-Free Advantages:
  Owning a paid-off home eliminates monthly mortgage payments, enhancing cash flow and reducing financial stress in retirement (06:03).

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Balanced Financial Health

Dave Ramsey underscores the necessity of balancing debt elimination with investment growth:

• Debt-Free Living:
  Having a mortgage-free home provides security and reduces fixed monthly obligations.

• Investment Portfolio:
  A robust investment portfolio ensures ongoing financial growth and sustains retirement living standards.

Ramsey cautions against depleting too much liquid cash for debt repayment, which could compromise financial security if unexpected expenses arise.

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Emphasizing Financial Discipline

The discussion highlights Nancy and her husband’s proactive steps, such as downsizing their home, which indicates financial wisdom and readiness to adapt. Ramsey reinforces the importance of maintaining discipline through budgeting and consistent investment contributions to achieve long-term financial stability (08:49).

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Conclusion and Final Advice

Dave Ramsey concludes by reiterating the tailored approach to Nancy’s unique financial situation:

• Immediate Action:
  Pay off the mortgage to eliminate the $756 monthly payment.

• Ongoing Strategy:
  Commit to investing $1,500 monthly to rebuild savings and secure future financial health.

• Budgeting:
  Create and adhere to a detailed budget to ensure that every dollar is accounted for and optimized.

• Professional Guidance:
  Engage with a Smartvestor Pro to navigate investment opportunities and maximize returns (07:02).

Ramsey’s guidance aims to provide Nancy and her husband with a balanced financial plan that prioritizes both debt elimination and investment growth, ensuring a secure and comfortable retirement.

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Notable Quotes with Timestamps

• Nancy:
  "I recently won 200,000 a little over on a game show and I'm 70 years old." (00:07)

• Dave Ramsey:
  "If you had $600,000, I would tell you instantaneously, write a check and pay off your house today. If you had $100,000, I would tell you not to pay off your house because you would be starved." (03:13)

• Dave Ramsey:
  "If the mutual fund, the stock market since it began has averaged 11.8%. That lump sum that you've got that you're gonna put in there will double every seven years." (05:17)

• Dave Ramsey:
  "You’ve got some problem here. So you got to have some cash in addition to the paid for house." (07:30)

• Dave Ramsey:
  "We're not struggling with reality." (08:55)

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Timestamp References

• 00:02 - Advertisement Mention
• 00:07 - Nancy Introduces Her Win
• 02:54 - Mortgage Details
• 03:13 - Dave Ramsey’s Financial Scenarios
• 04:17 - Rebuilding Savings Strategy
• 05:17 - Investment Growth Explanation
• 05:18 - Continued Investment Strategy
• 06:03 - Benefits of a Paid-Off Home
• 07:02 - Final Investment Advice
• 07:30 - Importance of Cash Reserves
• 08:49 - Downscaling as a Positive Step
• 08:55 - Realistic Financial Planning

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This episode provides valuable insights into managing unexpected financial windfalls during retirement, emphasizing the balance between debt elimination and investment growth to ensure long-term financial security.

Transcript

[Dave Ramsey]

Brought to you by the EveryDollar app. Start budgeting for free today.

[Nancy]

Well, I recently won 200,000 a little over on a game show and I'm 70 years old. That's more money than.

[Chris]

Can you tell us which game show are you allowed to.

[Nancy]

The game show was called Snake Oil with David Spade. It was just on for one season.

[Chris]

Oh my gosh.

[Dave Ramsey]

Very fun now. So have you gotten hit with the game show tax yet?

[Nancy]

Yes, I have. And that was approximately 55,000. Yeah, it was California taxes and it's pretty expensive.

[Dave Ramsey]

Okay, so that's your 200 is left over after that or you have one 45 left?

[Nancy]

I have 145 left.

[Dave Ramsey]

Okay. All right. Way to go, Nancy.

[Nancy]

I know, that's awesome.

[Dave Ramsey]

So what are you gonna do with your hundred and fifty thousand bucks?

[Nancy]

So, Dave, that's what I want to know. I'm not sure what to do. I'm 70 years old and basically retired. We're retired, my husband and I. And I work very part time and so does my husband because we're still able to. And we fill up to it. And right now I have the money. I have actually a little over 200,000 in a money market, which is a pretty good interest rate, 5.5. So. And then we recently downsized and I owe about 85,000 still on our house. And I'm not sure if we should pay the house up. I love keeping.

[Dave Ramsey]

Is 200 your entire nest egg?

[Nancy]

Yes. Besides the equity in our house.

[Dave Ramsey]

Right. But you don't have any other 401k retirement?

[Nancy]

No, no.

[Dave Ramsey]

Do you have pensions coming in?

[Nancy]

We just have Social Security and between two of us, that's about 4,500.

[Dave Ramsey]

What's it take you to live a month?

[Nancy]

Gosh, I don't actually know. That's terrible. I don't know exactly.

[Dave Ramsey]

Are you living on the Social Security or Social Security plus your income?

[Nancy]

Yes. Well, we both work part time too. I make very little money working a part time job. If I'm lucky, I make 600amonth. It's just kind of a fun thing I do. And then my husband makes a couple thousand extra working part time besides our Social Security. And of course we're not going to be able to do that for, you know, ever seen as though we're in our 70s?

[Chris]

How much is your mortgage a month, Nancy?

[Nancy]

It's about 756amonth.

[Chris]

Okay.

[Nancy]

Or it is. It is 756amonth.

[Chris]

Yep. Yep.

[Dave Ramsey]

So the answer. The answer to your question is I'm not sure what you should do. But we can talk it through together.

[Chris]

Okay.

[Dave Ramsey]

If you had 600,000, I would tell you instantaneously, write a check and pay off your house today. If you had 100,000, I would tell you not to pay off your house because you would be starved.

[Nancy]

Right.

[Dave Ramsey]

And you're kind of in the middle. It scares me that we're getting ready to use half of your money to pay off your house. But it also scares me that you go into your 80s with a mortgage.

[Nancy]

That's right.

[Dave Ramsey]

So those two things are competing here because we've only got 200,000 to work with. So, you know, I guess I would say if you do some other things, and I'll give you those things, I would pay off the house. The other things are I would set up an automatic draft into a mutual fund, possibly a Roth retirement account with a smartvestor pro to the tune. If you pay off the house, you don't have a 756 payment anymore. So I'm gonna make it at least 1000, maybe 1500 every month going into retirement.

[Nancy]

Okay. Okay.

[Dave Ramsey]

And we can rebuild the 85,000 in just a couple of years doing that.

[Nancy]

Okay.

[Dave Ramsey]

Because that's 1,500 is 18,000 a year plus growth. So two years would be 36, four years would be 72. So it's going to take you about three years to get your 85,000 back if you do 1,500amonth. So if you all are willing to get on a detailed budget and sit down with a Smartvestor pro and open a good mutual fund and move some of that other hundred and something that's left into that mutual fund, too, so that it's growing, I want it growing more than 5%. Now, I do want you to keep about 30,000 as your emergency fund in the high yield savings of the money market. But the other 70 or so, after you pay off the house, 80 or so, you should move that as well into a mutual fund. Now, let's talk that through for a second, and I'll show you why I'm doing that. Okay?

[Nancy]

Okay. Okay.

[Dave Ramsey]

If the mutual fund, the stock market since it began has averaged, meaning some years, not some years more, right. Has averaged 11.8. If it didn't do that well, and it only made 10, the money, that lump sum that you've got that you're gonna put in there will double every seven years. And so let's not counting what we're adding to it monthly, but just taking that 75,000 or so, I'm gonna call it 75 for math. At 77 it'll be 150, not counting what you add to it. At 84 it'll be 300, not counting what you add to it.

[Nancy]

Okay.

[Dave Ramsey]

And that's if you continue to have your lifestyle be at Social Security plus part time jobs or less, or you're not tapping into this money.

[Nancy]

Okay. Okay.

[Dave Ramsey]

So you'd have 300,000 in a paid for house plus what you're adding to it. Probably close to a half million dollars when you're in your mid-80s.

[Nancy]

Wow. Well, that sounds pretty good.

[Dave Ramsey]

In a paid for house. That all sounds good.

[Chris]

But you gotta follow through your mid-80s too. I mean that's, I mean, I mean mid-80s.

[Nancy]

I know, I, I mean I'm a really young 70, but mid-80s, that's a ways away.

[Dave Ramsey]

Well, I can tell you just want a game show with David Spade. That's not an old 70. Okay. That's not an old 70 right there. So you're awesome. I love you. So, yeah, I would pay it off, but only if you guys agree to, number one, get on a tight budget and detail out where every dollar's going. So that. Number two, I can put 1500amonth away.

[Nancy]

Okay. Okay.

[Dave Ramsey]

And sit down with a smartvestor Pro.

[Chris]

Go to ramseysolutions.com and if that's too much, 1500. If they can't swing it, I still would.

[Dave Ramsey]

They can swing it. She got, she's got 6,000, $7,000 a month coming in and she doesn't know where it's all going other than it's getting spent. And so I mean, he's making a little money, she's making a little money. And they got 4,500 Social Security, so they can swing that. I don't know how long they can swing it, but they could do it for three years. They get the money back for the 85.

[Chris]

Yep, yep.

[Dave Ramsey]

That's, that gives me comfort.

[Chris]

That's the goal.

[Dave Ramsey]

It gives me comfort.

[Chris]

Those three years.

[Dave Ramsey]

Yeah. Otherwise we leave them sitting there with almost no money or too, too small a nest egg and, and a paid for house. Because what we have run into over the years, folks, is somebody gets to retirement and they have a paid for house and no money. They end up digging up the bushes and trying to eat them because there's no money to eat with. Right. I mean, you got some problem here. So you got to have some cash in addition to the paid for house. We want you debt free, but you got to have some cash, some sacrifice and not eating Some investments, not just cash, but some investments that are outside of your home. But having a paid for home going into retirement creates a sustainability way beyond somebody has debt going into retirement.

[Chris]

Yes. Well. And considering the mortgage is usually the highest line item for people of what they're paying every single month, and that's money. I mean, 800 bucks is pretty good. You know what I mean? Like, yeah, there's a lot of mortgages, a lot more than that.

[Dave Ramsey]

Oh.

[Chris]

So definitely being able to pocket that every single month and being able to use that to live off of versus having to pay the mortgage, I mean, that's where the math. That's where it gets crazy.

[Dave Ramsey]

Yeah. And you know what? The other thing gave me comfort and I didn't realize it till you're saying that they've already downsized. Mm. She downsized.

[Chris]

Say that. That's right. That's right. Yeah.

[Dave Ramsey]

And so these people are already noticing where they are. Yeah. They're not. They're not struggling with reality.

[Chris]

Yes.

[Dave Ramsey]

And so that gives me comfort too, because they're reality based people and their.

[Chris]

Decision making is wise.

[Dave Ramsey]

It's clear. Yeah, it's real clear. And long before they got to this phone call. So that, that, that.

[Chris]

Snake oil. David spade snake oil. 200 grand, man. I thought she was gonna say prices. Right.

[Dave Ramsey]

Or something. 200 grand from Snake oil. I didn't. She did. This is the Ramsay Show. Create your free everydollar budget today. The simplest way to budget for your life.