We’re About To Receive $1,000,000

Summary

Podcast Summary: "We’re About To Receive $1,000,000"

Podcast Information:

• Title: The Ramsey Show Highlights
• Host/Author: Ramsey Network
• Description: The Ramsey Show Highlights offers a quick, daily dose of life and money advice in under ten minutes. Experts like Dave Ramsey, Ken Coleman, Rachel Cruze, Dr. John Delony, George Kamel, and Jade Warshaw contribute insights as part of the Ramsey Network, delivering content seven days a week.
• Episode: We’re About To Receive $1,000,000
• Release Date: March 6, 2025

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Introduction

In the episode titled "We’re About To Receive $1,000,000," host Dave Ramsey and guest expert Jade Warshaw engage with a listener named Kevin, who is anticipating a substantial financial windfall of approximately $1,000,000 after taxes. The discussion delves into Kevin's financial situation, his family's aspirations, and the best strategies to manage and allocate this unexpected influx of money.

Kevin's Financial Situation

Kevin begins by sharing his impending receipt of around $1,000,000, prompting a discussion about how to manage this significant amount wisely. He explains that the windfall is a result of his wife's successful transition of her book of business to a different institution, highlighting that this is considered income rather than an inheritance. This distinction is crucial as it impacts tax implications and financial planning strategies.

Key Details:

• Current Debt: Kevin and his wife owe approximately $182,000 on their house. They initially purchased the property for $265,000, which has since appreciated in value.
• Property Value: The house is now valued at approximately $700,000.
• Mortgage: Their current mortgage stands at around $1,700 per month, which they estimate could yield about $2,700 in rental income if they choose to rent out the property.
• Income: The family's current income is about $350,000 annually.
• Emergency Fund: Post paying off a remaining $20,000 on a car loan, their emergency fund is projected to decrease to about $27,000, sufficient for approximately six months of expenses.

The Financial Windfall

Kevin explains that the $1,000,000 windfall is not an inheritance but rather income from his wife's professional activities. This influx of capital presents both opportunities and challenges as the family considers options for investment, real estate upgrades, and debt management.

Notable Quote:

• Kevin (00:06): "This fall, my wife and I will be coming into a significant amount of money. It'll be like, probably a million after taxes."

Expert Advice and Debate

Jade Warshaw’s Perspective: Jade focuses on the mathematical aspects of Kevin's situation, advocating for a straightforward financial strategy. She suggests using the windfall to pay off existing debts and then leveraging the remaining funds to purchase a new home in the desired neighborhood. Jade emphasizes avoiding the complexities and risks associated with becoming a landlord, especially when the rental income barely covers the mortgage.

Notable Quotes:

• Jade (02:50): "I wouldn't do that. Keep rolling."
• Jade (05:03): "But let me tell you why I don't think it makes sense and why I agree with Jake."

Dave Ramsey’s Perspective: Dave echoes Jade’s advice, reinforcing the notion that managing the windfall should prioritize financial stability over sentimental or emotional desires. He cautions against taking on the responsibilities of property management unless it aligns perfectly with their financial goals and current income. Dave underscores the importance of clear, financially sound decisions over emotionally driven ones.

Notable Quotes:

• Dave Ramsey (05:16): "Kevin, you don't need to be a landlord. And I just don't think it makes any sense."
• Dave Ramsey (05:35): "Kevin, don't fight me on this one. Don't fight me on this one."

Balancing Sentiment and Financial Prudence

Kevin expresses a strong emotional attachment to his current home and neighborhood, citing the lack of peer-aged children and the community's growth as significant factors in their desire to move. He highlights the potential future benefits of retaining the property as an investment and a place for family members to reside temporarily.

Notable Quotes:

• Kevin (06:28): "If I'm paying $1700, right. If I'm paying $1700 a month for this house, you know..."
• Kevin (07:41): "I feel like if we were to sell right now, we would be leaving money on the table because then, then wait. Just going up in value so, so much."

Recommendations and Conclusions

Both Jade and Dave recommend a cautious and calculated approach to managing the windfall. They advise against hastily relocating or taking on additional debts associated with purchasing a new, more expensive home without first securing their financial foundation. Instead, they suggest:

1. Debt Repayment: Pay off the remaining $182,000 on the current mortgage to eliminate monthly obligations.
2. Investment: Use the remaining funds as a substantial down payment on a new home, preferably in the desired neighborhood, to avoid the complexities of being a landlord.
3. Financial Stability: Maintain and potentially bolster the emergency fund to ensure financial security in the face of unforeseen expenses.

Notable Quote:

• Jade (08:13): "But you don't feel right about it, don't do it."
• Dave Ramsey (06:31): "It is not all it's cracked up to be, Tom."

Final Thoughts

The episode underscores the importance of balancing emotional desires with sound financial planning, especially when faced with significant monetary changes. Kevin is encouraged to assess both his immediate and long-term financial goals, ensuring that his decisions align with his family's overall well-being and financial health. The expert advice provided by Jade and Dave serves as a guide to navigate the complexities of managing a large windfall responsibly.

Additional Notable Quotes:

• Kevin (06:51): "And it could just be sort of the house that we have that lets the kids roll through."
• Dave Ramsey (08:22): "They are both on different ends of the spectrum. And boy, oh boy, I've been married long enough to know how that turns out."

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Conclusion

In "We’re About To Receive $1,000,000," The Ramsey Show Highlights delivers a comprehensive discussion on managing a substantial financial windfall. Through Kevin's real-life scenario, the episode emphasizes prudent financial planning, debt management, and the importance of aligning financial decisions with personal and familial values. Listeners gain valuable insights into balancing emotional attachments with financial responsibility, ensuring that significant financial gains contribute positively to long-term stability and prosperity.

Transcript

[Dave Ramsey]

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[Kevin]

This fall, my wife and I will be coming into a significant amount of money. It'll be like, probably a million after taxes.

[Jade]

Wow.

[Dave Ramsey]

What's going on?

[Kevin]

And so I want to be smart about it. My wife and I kind of disagree about this. So she wants to move. There's an area of our city that she really wants to move into. It's incredibly expensive.

[Dave Ramsey]

I know where you're talking about if you're in Charlotte. I know.

[Kevin]

Yeah. Yeah. So. So our neighborhood doesn't have very many kids, and our oldest has no one his age. So that's. That's a big portion of why. Why we want to move about. We owe about 182 on our.

[Dave Ramsey]

Kevin, Kevin, Kevin, Kevin. You're going so fast. We got a couple questions for you.

[Kevin]

I'm sorry.

[Dave Ramsey]

No, no, you're doing great. How old is your child?

[Kevin]

My oldest is. Is 11.

[Dave Ramsey]

Okay, so you got 11 year old. And then how. What is. What is creating this windfall? What's the. What's the 1 million coming from?

[Kevin]

My wife. She's a rock star. And so she. She's selling or she's. She's moving a book of business to a different institution. That's one of her. What's one of her incentives?

[Dave Ramsey]

Okay. Okay. So this is. So this is considered income. This is not an inheritance. That's why I asked that.

[Kevin]

I was.

[Jade]

That's a big deal. So tell me more about the numbers you want to move. You gave me the reasons why. I don't know how good those reasons are, but I digress. Tell me the numbers so we can see this makes sense.

[Kevin]

Okay. So we owe about 182 on our. On our house. We bought it for 100. We bought it for 265.

[Jade]

What's it worth?

[Kevin]

It's now. It's now probably worth about 700 on the low end, I would say.

[Jade]

Okay.

[Kevin]

It does need a renovation. We've. We bought it when we had nothing. It was kind of an up and coming neighborhood, and it has just exploded. So our mortgage right now is about 1700. I could rent it as is probably for about 2700.

[Jade]

I wouldn't do that. Keep rolling.

[Kevin]

Okay. So. And basically that's. That's kind of what I want to. What I want to know is I kind of want to keep the house because I think it would be. It'd be a great rental. I also just love the house. I love the neighborhood.

[Jade]

If it was paid off, I wouldn't necessarily disagree with that. If you were also paying for your next house in cash.

[Kevin]

Yeah. So, so then that's so the next house. The houses in this neighborhood go for like 1.5.

[Jade]

Okay.

[Kevin]

So. So, you know, we could rent it, we could sell it. If, if we rent it, we could. We would need to do some renovations like kitchen, bathroom in our current house. But. And so.

[Jade]

Well, I don't think you can have.

[Kevin]

Your take the million and put it all towards the other home. Should we take 100 or two and put it towards renovations for this property and 1300 on the other home?

[Jade]

Yeah, I don't think you can have your cake and eat it too on this. I think that there's a really clear path forward, which would be if the. You've got. You're gonna have 1 million, the house you own is worth about 500, a little less once, like, fees and everything are accounted for. And the house you want is 1.5. That's the money right there. So without looking at the other factors, because I have to ask you more questions, but let's just say, hey, I want a house that's 1.5 million. Selling your current house gets you the 1.5 million to pay cash for it. I wouldn't do a situation where I do a little bit on this house, rent it while it still has a mortgage, and then put a little on the next house and have a mortgage there. I feel like there's a way for you to do this really clean and come out on top. The only way. The only other way would be to take the 182 and pay that off and then buy a less expensive second house and then you could do to the. The two things at one time. Does that make sense?

[Kevin]

Yeah, from a math perspective, it makes sense. Yeah.

[Dave Ramsey]

Yeah. But let me tell you why I don't think it makes sense and why I agree with Jake.

[Jade]

Wait, wait a minute. What's the other perspective other than math? We're talking about money. That's right.

[Kevin]

I know, I know.

[Dave Ramsey]

Well, his wife, he wants to stay, so Kevin wants to stay where he is.

[Jade]

The wife.

[Dave Ramsey]

The wife wants the. The nice upgrade of the neighborhood.

[Jade]

That's true. Listen.

[Kevin]

That's true. That's true.

[Dave Ramsey]

I know. So let me. Let me throw.

[Jade]

Okay.

[Dave Ramsey]

Okay. As to why I like Jade's idea and I want to give you real numbers, Kevin. Okay.

[Jade]

But before you do, we have to ask a couple of key questions to even see, does my idea work? Because we don't know. Do you guys have debt? Do you have Tell us about your debt. Tell us about your income. Tell us more.

[Kevin]

Okay, so. So I. We. I do. I do have a car. So we have about 20,000 left on a car. I'm going to. I'll pay that tomorrow. Okay, so that's. That's done. After. After I pay the 20,000.

[Jade]

Do.

[Kevin]

Thousand left on my car, our emergency fund will be down to about 27,000. It should be about 115 for six months. For six months? Yeah.

[Jade]

Dang. Okay.

[Dave Ramsey]

Yeah. They're crushing it.

[Jade]

Love it. What's the income?

[Kevin]

Our. Our income is currently about 350.

[Jade]

Let's go. Okay, good.

[Dave Ramsey]

So here's the deal, all right? I've heard everything I need to hear, Jade.

[Jade]

Yeah, me too.

[Dave Ramsey]

Kevin. You don't need to be a landlord. And I just don't think it makes any sense. Here's why. Okay? You only are talking about right now. If you use. You owe 1700amonth. You're paying for it on mortgage. You said it was about 2700 that you would get in rent. That's a thousand bucks a month. That is a.

[Kevin]

On the low end. On the low end.

[Dave Ramsey]

Kevin, don't fight me on this one. Don't fight me on this one. That's a whopping $12,000 a year. Let's up it a little bit. You're going to make $15,000 a year gross on renting this house. Yes or no? Gross.

[Kevin]

Sure.

[Jade]

All right.

[Dave Ramsey]

Yeah. Now I know you're talking about putting money in it to renovate it, just to rent it. It's just burning cash. I would sell it. Pay off the debt that you have left and take, like Jade said, take the rest of it and put it to the down payment with the million dollars and buy a sweet house in a sweet neighborhood, cash. Because you're not making much money even if you pay it off. Jade gave you a second scenario. You pay off the 182. Now you're in it. You're still only clearing about 25 to 30 grand a year. And I'm being generous because that's gross. That's not including reno costs.

[Kevin]

Maintenance.

[Dave Ramsey]

Maintenance.

[Kevin]

Dude.

[Dave Ramsey]

It is not all it's cracked up to be, Tom.

[Jade]

Okay, we talked earlier about money and the math part of it, and you are right. There's more to money than math. It might not weigh as heavily, but is this like the house that you had your children in? Is this the house? Like this clearly has some sentimental value. It feels like it's more about that than the real estate side.

[Kevin]

There is Certain, there are certainly sentimental value. I mean, If I'm paying $1700, right. If I'm paying $1700 a month for this house, you know, and just also looking at trends of, you know, kids moving back in with their parents and everything, like, I could, I could, I could probably in 10 or 15 years, I could probably, you know, afford for my son to live here temporarily, you know, to get his life set up whenever he graduates from college or my, or my other two kids, you know, and it could just be sort of the house that we have that lets the kids roll through. I also think it's a great investment like this, this area that we're in now is just exploding and has become very popular. And so I feel like if we were to sell right now, we would be leaving money on the table because then, then wait. Just going up in value so, so, so much.

[Jade]

Why then tell me this. I think now I'm sensing something else. It's like we've got this million dollars. It's going to be burning a hole in our pocket. We've got to do something with it. What would, what would it look like to just say, hey, let's, let's sit on this for a minute? Because in any other scenario, whenever somebody comes into a large amount of money like that, we tell them to wait, like, chill out for a minute, get used to the. I'll tell you what it is.

[Dave Ramsey]

His wife wants it. That's the challenge.

[Jade]

And I know, I think you're moving too fast.

[Kevin]

She, she, she wants to move into this. I mean, our, our life is in this other neighborhood. All of our friends are in the other neighborhood. Our kids friends are in the.

[Jade]

But you don't feel right about it. If you don't feel right about it, don't do it.

[Dave Ramsey]

This is a therapy session.

[Jade]

Yeah.

[Dave Ramsey]

I mean it.

[Jade]

Yeah.

[Dave Ramsey]

They are both on different ends of the spectrum. And boy, oh boy, I've been married long enough to know how that turns out. Create your free every dollar budget today. The simplest way to budget for your life.