My Spouse Is A “Math Nerd” And Won’t Listen To Me

Summary

Summary of "My Spouse Is A 'Math Nerd' And Won’t Listen To Me" – The Ramsey Show Highlights

Episode Information:

• Title: My Spouse Is A “Math Nerd” And Won’t Listen To Me
• Host: Ramsey Network
• Release Date: December 19, 2024

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1. Episode Overview

In this episode of The Ramsey Show Highlights, the host addresses a compelling listener question centered around financial decision-making within a marriage. The listener expresses frustration over her accountant husband’s reliance on mathematical formulas to guide their financial strategies, particularly concerning whether to invest extra money for higher returns or to pay off their low-interest mortgage more aggressively.

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2. Listener's Question

[00:06] Listener B:
"Okay, my question is, I have been listening to you guys for about two or three months and I'm really gung ho. My husband and I are almost to baby steps four, five, and six. And I know you guys say to be intentional in those and do them together. So when you're in those steps, why should my husband and I not put extra money into an investment that has a 12% return instead of paying off our house that has an interest rate of 2.5?"
(Timestamp: 00:06)

The listener is enthusiastic about applying the Ramsey Network's financial principles but is conflicted due to her husband's preference for investing surplus funds in opportunities with higher returns compared to their low-interest mortgage.

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3. Host's Analysis and Research

[00:44] Host A:
"It's a great math question, and the reason is more than math. So we studied 10,167 millionaires, okay, and asked them, how did you become a millionaire? Did you inherit the money? Did you win the lotto? Are you a country music star? Did you save and invest? How did you do it? What's your age? What's your income? What's your career? So we could find some correlations again. And 10,000 people is enough to study, to draw some real airtight research based conclusions. And we got a lot of wonderful data from that. In other words, facts. Here's what's interesting. The number of those millionaires that said I became a millionaire because I borrowed on my home at a lesser interest rate so that I could invest more, which is effectively what you're talking about doing. You're not borrowing on it, but you're not paying it off, which is the same thing."
(Timestamp: 00:44)

The host emphasizes that the listener's question transcends simple mathematical analysis. He references a comprehensive study of over 10,000 millionaires to uncover the true pathways to wealth accumulation. Contrary to the listener's husband's strategy, the research found that almost none of these millionaires relied on leveraging their home mortgage to invest more aggressively.

Key Insights:

• Investment vs. Mortgage Payoff: Despite the math suggesting higher investment returns, the real-life data indicates that paying off the mortgage first is a common trait among millionaires.
• Risk and Taxes: Investing beyond mortgage payoff introduces elements like taxes and increased financial risk, which are often overlooked in purely mathematical formulas.

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4. Personal Insights and Experiences

[03:18] Host A:
"Let me submit to him that he's doing a naive, primitive, incomplete math formula because his math formula does not include risk and his math formula does not include taxes. And if he can quantify the risk. Exactly. And put it into a math formula, he's better guy than I am and I'm a math nerd from now on. But it is a real risk because we can all honestly say the more debt you have, the more risk you have. Agreed."
(Timestamp: 03:18)

The host critiques the husband's mathematical approach as incomplete, highlighting the omission of critical factors like risk and taxes. He underscores that increased debt inherently elevates financial risk, a factor not accounted for in the husband's strategy.

[04:12] Host A:
"My finance professor was broke. What's wrong with that picture? A broke finance professor is like a shop teacher with missing fingers. My grandpa was not broke, and he was also an accountant. The reason he was not broke, though, is he avoided debt like the plague because he was a child of the Great Depression and he had no debt. No debt. No debt. No way, no debt."
(Timestamp: 04:12)

Drawing from personal history, the host shares anecdotes about influential figures in his life who exemplified financial prudence by avoiding debt, reinforcing his stance against leveraging mortgages for investment purposes.

[04:21] Host A:
"But, yeah, I mean, because it's so polar opposite of what that generation that had common sense lived. So the problem, Hannah, is your husband was trained by a broke finance professor to believe an incomplete, inaccurate math formula."
(Timestamp: 04:21)

He critiques the financial education that promotes debt as a tool for investment, suggesting that such teachings are flawed and lacking in comprehensive financial wisdom.

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5. Strategies for Couples with Differing Financial Approaches

[04:25] Host A:
"And Jay, you know, it's an interesting conversation because we get this question, like, all the time, once a week, right? And when I first started this journey, this journey being common sense money. I've got a finance degree. I've got letters and licenses of all kinds after my name that says I'm supposed to know something about money. But I'm 28 years old and I'm bankrupt because I borrowed too. Dead gum much money. And I'm an idiot. And I got the opportunity to start over."
(Timestamp: 04:25)

The host empathizes with the listener's dilemma, sharing his own past struggles with debt despite formal financial education. He highlights the transformative power of adopting common-sense financial principles over traditional financial teachings.

[03:59] Host A:
"And to not mathematically factor that into his formula makes his formula naive and incomplete. So I don't care if he's an accountant. He's wrong."
(Timestamp: 03:59)

He reiterates that even professionals like accountants can adopt flawed financial strategies if their mathematical models are incomplete, emphasizing the importance of holistic financial planning.

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6. Notable Quotes

• Host A on Research Findings:
  "Zero. We never had one tell us that, that that's how they became a millionaire was that they leveraged their home into investments."
  (Timestamp: 02:02)

• Host A on Financial Risk:
  "But it is a real risk because we can all honestly say the more debt you have, the more risk you have."
  (Timestamp: 03:18)

• Host A on Incomplete Math Formulas:
  "Let me submit to him that he's doing a naive, primitive, incomplete math formula because his math formula does not include risk and his math formula does not include taxes."
  (Timestamp: 03:18)

• Host A on Personal Financial Journey:
  "And I made the decision in those days on the basis of faith. I just said, okay, I tried it the academic way. I went broke, and I'm gonna try this Bible stuff, and it's common sense. Now, years later, I discover, oh, they left out risk. They let. The math formula is incomplete. These academics aren't so dad gum smart after all. Who knew?"
  (Timestamp: 04:34)

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7. Conclusion and Takeaways

In this episode, The Ramsey Show Highlights delves deep into the tension between mathematically driven financial strategies and holistic, risk-aware financial planning within a marriage. The host advocates for prioritizing debt elimination over aggressive investment, citing extensive research and personal experience. Key takeaways include:

• Holistic Financial Planning: Effective financial strategies must account for risk and taxes, elements often neglected in purely mathematical approaches.

• Debt Management: Eliminating debt, especially low-interest mortgages, can lead to greater personal freedom and reduced financial risk, contributing to overall well-being and prosperity.

• Challenging Financial Norms: Even professionals with financial expertise can adopt flawed strategies if they rely on incomplete mathematical models. It's crucial to evaluate financial decisions beyond surface-level calculations.

• Faith and Financial Wisdom: The host underscores the role of common-sense principles and faith-based financial teachings in achieving financial stability and success.

For couples navigating differing financial philosophies, the episode emphasizes open communication, shared financial goals, and a comprehensive understanding of the implications of debt and investment strategies.

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Note: This summary excludes advertisements, intros, outros, and non-content sections to focus solely on the meaningful discussions and insights presented in the episode.

Transcript

[A]

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[B]

Okay, My question is, I have been listening to you guys for about two or three months and I'm really gung ho. My husband and I are almost to baby steps four, five and six. And I know you guys say to be intentional in those and do them together. So when you're in those steps, why should my husband and I not put extra money into an investment that has a 12% return instead of paying off our house that has an interest rate of 2.5?

[A]

It's a great math question, and the reason is more than math. So we studied 10,167 millionaires, okay, and asked them, how did you become a millionaire? Did you inherit the money? Did you win the lotto? Are you a country music star? Did you save and invest? How did you do it? What did you do? What's your age? What's your income? What's your career? So we could find some correlations again. And 10,000 people is enough to study, to draw some real airtight research based conclusions. And we got a lot of wonderful data from that. In other words, facts. Here's what's interesting. The number of those millionaires that said I became a millionaire because I borrowed on my home at a lesser interest rate so that I could invest more, which is effectively what you're talking about doing. You're not borrowing on it, but you're not paying it off, which is the same thing. Okay? The number of them that said I delayed paying off my home so that I could invest more. And that's how I became a millionaire. You know how many of them it was out of 10,000?

[B]

Not very many.

[A]

Zero. We never had one tell us that, that that's how they became a millionaire was that they leveraged their home into investments. Isn't that interesting? And yet the math that you bring up is actually accurate. I mean, there's, you know, you can borrow money or you might have a mortgage at 3% and you can make 10, 12, maybe 14% in the last 12 months. You can make 30% on an S and P. Okay, which is not normal. But, but you know, you're 12%. I don't argue with it. All the difference is is that you're going to be paying taxes on the money unless you're investing it into a Roth. And you know, you've also taken more risk because you're home. So something happens to people when they get their home paid off. The freedom that they sense in their relationships, in their Careers causes them to prosper more and faster than the difference in the interest rates. And so that's the only explanation I've got for it. And I will tell you this. Here's an interesting thing you can do. Go ahead and pay off your house, and if you hate it, just go get another mortgage.

[B]

That's where I am. I really want to do that, But I'm also married to an accountant who said he knows the math and he's the problem. I see it.

[A]

Let me submit to him that he's doing a naive, primitive, incomplete math formula because his math formula does not include risk and his math formula does not include taxes. And if he can quantify the risk. Exactly. And put it into a math formula, he's better guy than I am and I'm a math nerd from now on. But it is a real risk because we can all honestly say the more debt you have, the more risk you have. Agreed.

[B]

Yes.

[A]

And to not mathematically factor that into his formula makes his formula naive and incomplete. So I don't care if he's an accountant. He's wrong.

[B]

Right? That.

[A]

That's the thing. I mean, now, how do you convince him of that? I don't know.

[C]

That's a different story.

[A]

You've been convincing him is wrong since he's wrong since you got married. So maybe you can work on it.

[C]

Yeah. My biggest question for him would be, what. What is his ultimate goal and why.

[A]

Are you guys doing his ultimate goals? Bill. Wealth. And he thinks he's leveraging the money. Right? Am I right?

[B]

Yes. Yes, you are right.

[A]

Yeah.

[C]

But I guess my question is, is it a. Let's say. Let's say he says, my. My goal is to have $8 million. Right. Is it a time frame? Is it a time frame he's so caught up on? Or is there a way that you can present that argument and say, hey, we can still get there. We're just going there in this order, and this is going to give me more peace. Do you see what I'm saying?

[A]

Yeah, Hannah. He was trained by the same people I was trained by. My finance professor was broke. What's wrong with that picture? A broke finance professor is like a shop teacher with missing fingers. My grandpa was not broke, and he was also an accountant. The reason he was not broke, though, is he avoided debt like the plague because he was a child of the Great Depression and he had no debt. No debt. No debt, no debt. No way, no debt. When I started going in debt like a crazy man to buy houses in my 20s. He said, I'm going to throw you out of the family. You couldn't be one of ours. You're too dumb. He didn't say that, but he made me feel that. There you go. But, yeah, I mean, because it's so polar opposite of what that generation that had common sense lived. So the problem, Hannah, is your husband was trained by a broke finance professor to believe an incomplete, inaccurate math formula. And you can play this back for him, but. And Jay, you know, it's an interesting conversation because we get this question, like, all the time, once a week, right? And when I first started this journey, this journey being common sense money. I've got a finance degree. I've got letters and licenses of all kinds after my name that says I'm supposed to know something about money. But I'm 28 years old and I'm bankrupt because I borrowed too. Dead gum much money. And I'm an idiot. And I got the opportunity to start over. My wife would have left, but she didn't have a car. I mean, it was awful. Horrible. And I was a brand new Christian. And so I started learning from this guy named Larry Burkett that the Bible had financial principles. And I read in there, the borrower is slave to the lender. And then I read in there, he who is impulsive exalts folly. And then I read in there the blessings and cursings to the house of Israel as they cross the Jordan after Moses has led them in the wilderness. The blessings are, you will be so wealthy, you will be a lender. The cursings are, you will be a borrower. Every single thing in Scripture that I was reading as a brand new believer was negative about debt. And yet my intellect and academics all told me that to borrow money like her husband, the accountant. And I struggled with exactly the same thing. But I made the decision in those days on the basis of faith. I just said, okay, I tried it the academic way. I went broke, and I'm gonna try this Bible stuff, and it's common sense. Now, years later, I discover, oh, they left out risk. They let. The math formula is incomplete. These academics aren't so dad gum smart after all. Who knew? Create your free every dollar budget today. The simplest way to budget for your life.