Discipline Is the Difference Between Broke and Wealthy

Summary

The Ramsey Show Podcast Summary

Episode: "Discipline Is the Difference Between Broke and Wealthy"

Date: August 4, 2026
Hosts: Dave Ramsey & Rachel Cruze

Overview

This episode of The Ramsey Show centers on the theme that financial discipline is what separates those who remain broke from those who achieve wealth. Dave Ramsey and Rachel Cruze take live calls, offering actionable advice and tough love on budgeting, debt, relationships, and investing. Listeners are encouraged to challenge their own financial habits and marital dynamics, face the hard truths, and embrace the intentionality needed to build lasting wealth and peace of mind.

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Key Topics & Segments

1. Marriage, Money, and Family Dynamics

• Caller: Stacy from Portland, Oregon
  • Issue: Chronic borrowing from her parents at her husband’s urging, feeling burdened and isolated.
  • Insight: The act of going to parents for money is a symptom of deeper marital and financial misalignment, not the problem itself.
  • Dave’s Advice:
    • Both spouses must act as financial "grownups" and jointly decide where their money goes each month (02:20).
    • If agreement can't be reached, the issue is a marital—not monetary—problem. Consider counseling if needed (04:45).
  • Notable Quote:
    • “You and I are going to sit down together like two adults, not like one of us is a kid with a candy store with his hand out.” — Dave Ramsey (03:28)
  • Rachel’s Perspective:
    • One-sided control over household finances breeds resentment and unhealthy power dynamics (07:43).
    • “Both get a say and you’re both in the decision-making process. It’s not one taking care of the other.” (08:15)

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2. Wealth-Building, Baby Steps & Investment Philosophies

• Caller: Susie from Stamford, Connecticut
  • Issue: Aligning aggressive college and retirement savings plans with Ramsey principles
  • Actionable Advice:
    • Don’t contribute over 15% to retirement until the home is paid off (“baby steps four, five, and six”) (17:50).
    • Pay yourself a "house payment" into mutual funds once the mortgage is gone for powerful wealth building.
  • Notable Quote:
    • "Your most powerful wealth-building tool, folks, is your income. When you quit giving it to these stupid butt banks…" — Dave Ramsey (18:47)

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3. Evaluating Lifestyle and Daycare Choices

• Caller: Angel from Canada
  • Issue: Weighing between a luxury daycare and a more affordable, but still safe, option.
  • Advice:
    • In “baby step two,” stick with the less expensive option and buy your own food for daycare.
    • Luxuries come after reaching stronger financial footing (e.g., after emergency fund is complete) (27:10).
  • Notable Quote:
    • “The other part sounds luxurious to me. And you’re not in low-luxury mode in baby step two…” — Dave Ramsey (26:55)

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4. Investing with Personal Values

• Caller: William from Charlotte, NC
  • Issue: Investing morally and whether to manage single stocks or mutual funds to retain control and uphold personal values.
  • Key Insights:
    • Managing single stocks rarely outperforms mutual funds—professionals do better over time (37:20).
    • There are specialized funds (like the Timothy Fund) for ethical or faith-based investing.
    • True investment ethics often mean nuanced choices, not perfect purity.
  • Notable Quotes:
    • “When you go buy five stocks, you suck at part of it. You’re just not good at it." — Dave Ramsey (37:22)
    • “Everywhere you go, you’re interacting with the world somewhere. They’re always doing something that’s mischievous at a minimum.” — Dave Ramsey (38:22)
  • Discussion:
    • Even with effort, achieving total ethical purity in investing or spending is nearly impossible. Draw your moral lines but do not become paralyzed by perfection.

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5. Navigating Career and Income Shifts

• Caller: Kevin from Lincoln, Nebraska
  • Situation: Became debt-free, changed from high-paying project manager role to personal trainer with vastly lower income.
  • Dilemma: Facing tight finances, limited enjoyment, and lack of business growth as a personal trainer.
  • Advice:
    • Either commit to growing the business (including the tough parts like sales) or pivot back to higher earning potential using transferable project management skills (46:34).
  • Notable Quote:
    • “You’re at the treadmill stage: run, run, run, and get nowhere… sometimes it’s because you’re getting nowhere.” — Dave Ramsey (50:01)

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6. Budgeting, Sinking Funds & Marital Debates

• Caller: Ann from Akron, Ohio
  • Issue: Dispute with husband over how to track “slush fund” money in the budget.
  • Advice:
    • Money moved to a slush/sinking fund is considered spent when moved—don’t double-count when actually used (57:41).
    • Keep separate sinking funds for clarity; avoid pooling unrelated expenses into a single slush fund.

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7. Following (Not Bending) the Baby Steps

• Caller: Brock from Cincinnati
  • Q: Should he put less than 15% towards retirement if it allows him to pay off his house sooner?
  • Answer: No — stick to the plan. Put 15% into retirement, even if it pushes out the payoff timeline slightly (61:15).

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8. Frugality vs. Contentment in Marriage

• Caller: Josh
  • Concern: Am I too frugal, or does my wife need to earn more? Feels tension at home.
  • Lesson:
    • Budget and spending decisions must be mutual; don’t obsessively cheap out on everything if the budget supports better quality (73:38).
    • Live within the agreed budget, not feelings alone.

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9. Van Life vs. Homeownership: Risk, Wealth, & Adventure

• Caller: Adam from Albuquerque
  • Dream: Sell house, live “van life” across America, work remotely.
  • Advice: Not recommended as a 10-year plan; could be a fun, temporary adventure for a couple years while single (76:17).
  • Caveat: Lifestyle choices can impact social life and financial growth in the long run.

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10. Relatives & Real Estate

• Caller: Dennis from Denver
  • Opportunity: Young caller (24) with $170k—considering buying his mother’s rental to rent to her.
  • Warning: Mixing business and family, especially at a distance, is risky. Better to invest independently.
  • Invest Idle Cash: Cash sitting in savings loses value. Invest wisely, even in simple index funds, for long-term growth (112:24).

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Notable Quotes

• On Intentionality:
  • “Only with intentionality do spenders inject a grownup into their brain.” — Dave Ramsey (06:02)
• On Shared Responsibility:
  • “It’s not your job to cheap everything out. It’s the two of you’s job to decide how much we’re going to spend…” — Dave Ramsey (74:13)
• On Budgeting:
  • “Don’t use the phrase, ‘I’m going to put you on a budget.’ That’s lashing out, anger, you’re frustrated, you’re tired. Instead, ‘I need help. I don’t want to carry this by myself anymore.’” — Dave Ramsey (14:30)
• On Wealth Building:
  • “Your most powerful wealth-building tool, folks, is your income. When you quit giving it to these stupid butt banks…” — Dave Ramsey (18:47)
• On Will Inheritance:
  • “What you own when you die stands good for what you owe.” — Dave Ramsey (122:15)

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Memorable / Lighthearted Moments

• Backstreet Boys Surprise:
  • A previous caller, Rachel, gets a VIP experience at the Backstreet Boys concert thanks to a generous host and a nudge from The Ramsey Show (88:53).

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Closing Thoughts

This episode underscores that discipline, communication, and mutual support are crucial in both finances and relationships. Complexity isn’t what brings wealth or peace—it’s steady, shared intentionality, humility to learn, and the courage to have honest conversations. Whether dealing with day-to-day budgeting, big life transitions, investments, or parenting decisions, the Ramsey principles remain clear: Live below your means, work the plan, do it together, and never underestimate the difference discipline makes.

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Timestamps for Key Segments

• Stacy: Family Borrowing & Marriage Dynamics | 00:44 – 09:00
• Investing & Baby Steps | 16:04 – 18:40
• Daycare Dilemma | 22:31 – 30:00
• Ethical Investing | 32:31 – 41:48
• Career Shifts After Debt Freedom | 43:40 – 52:19
• Budgeting & Sinking Fund Disputes | 54:50 – 60:43
• Retirement vs Mortgage Prepaying | 60:58 – 62:55
• Frugality vs. Contentment in Marriage | 69:43 – 74:41
• Van Life Vs. Owning a House | 76:02 – 80:33
• Family & Real Estate Investing | 107:30 – 112:24

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For further resources, callers and listeners are encouraged to use the EveryDollar app, connect with a SmartVestor Pro, or utilize the free Ask Ramsey AI tool at RamseySolutions.com.

Transcript

[Dave Ramsey]

Brought to you by the EveryDollar app. Start budgeting for free today. Normal is broke and common sense is weird. So we're here to help you transform your life. From the Ramsey Network and the Fairwinds Credit Union Studio, this is the Ramsey Show. I'm Dave Ramsey. Rachel Cruz Ramsey personality number one best selling author, co host is Mark Money Happy hour and my daughter is my co host today. The phone Number here is 888-255-2225. The call is free and some say the advice is worth exactly what you pay for it. Stacy's in Portland, Oregon. Hey, Stacy, what's up?

[Caller]

Hi, YouTube, thank you for your time today.

[Dave Ramsey]

You too. How can we help?

[Caller]

So I have an issue with my spouse. We've created a habit in our marriage where we go, I go to my parents and ask for money and this basically comes from him telling me to do so. And I, I just really need help with this situation because I don't want to ask my parents for money anymore. I feel like we need to handle our own financial problems ourselves.

[Rachel Cruze]

How long have you guys been married?

[Caller]

Almost 20 years.

[Rachel Cruze]

Okay, and what's the main reason for going to them for money? Is this for big purchases, emergencies, monthly bills? What's the reason for it?

[Caller]

I would say it's a combination of all three. It's different every time. Just this last time, he decided to spend a lot of money doing a project for himself, and then that kind of left us behind.

[Dave Ramsey]

What kind of project?

[Caller]

Building a shop at our home.

[Rachel Cruze]

Okay, and how much money do you guys usually. Is it are you looking for when you ask them?

[Caller]

It's probably around 40 to $50,000 each time.

Yeah. Okay.

[Dave Ramsey]

All right, well, to start with, I think I can see behind the curtain that you are not involved in handling the money at all. He is. And so he brings you a want or a crisis that he hasn't figured out a way to handle. And you're kind of on the outside looking in and he says, oh, you've got to help with this because your mom and dad are like the infinite banks over there.

[Rachel Cruze]

Would you say that's true, Stacey?

[Caller]

So almost he actually has nothing to do with the finances.

[Rachel Cruze]

He sounds like the one that's checked out. And he's like, oh, well, we need some money because I'm doing this thing over here.

[Caller]

Yeah. He kind of just bends and, you know, waits for me to say, okay,

you know, here's the thing.

[Dave Ramsey]

That going to your parents is the symptom. It's not the problem.

[Caller]

Correct.

[Dave Ramsey]

Okay. And so You've got to fix the problem, and then you won't need to go to your parents anymore. And so how do we do that? Well, this is called a marriage makeover. We're gonna sit down, and we're gonna both be grownups. I refuse to continue to operate the way we've been operating. It's not healthy. It's not good. And I'm getting progressively pissed off at you. I mean, frustrated with you. I mean, bitter towards you. I mean, resentful, whatever, right? I mean, you know, you fill in the word right, but. And this is getting worse rather than better. And so we're gonna try a new thing. You and I are going to sit down together like two adults, not like one of us had a kid with a candy store with his hand out. And we're going to decide each month what we are going to do with our money. I'm happy to write the checks and pay the bills once we have agreed on where the money that we make is going to go. And I'm never going to my parents again for any reason, ever. So we've got to fix this, honey. We've got to get on the same page. It's messing up our relationship, messing up our money, and it's going to mess up our relationship with mom and dad eventually, because eventually they're going to get tired of it. They're probably past tired of it already, really. But so. But I mean, so if that conversation, sitting down with him and says, okay, we're going to get on the same team. We're going to be in agreement each month before the month begins where the money's going, and we're going to be in agreement on the principles that we are going to save. We're going to be generous, we're going to invest. And if we can't agree on those principles, then we have a different problem. That's not a money problem. It's a marriage problem. And we're going to sit down with a marriage counselor.

[Rachel Cruze]

And I think going back, Stacy, and looking at the pattern at which. What reasons, you did borrow the money, right? So it may be him and a lot of his projects. And it's like. So that means going forward, we can't do these unless we have the money. I don't know if you ask for big, you know, money for big vacations, and it's like, if we don't have the money for the vacations, we're not doing it. It's almost like putting out the reality of what has the state of the Union of like, this is what we've been doing. And now we are not gonna keep living like this. We can't.

[Dave Ramsey]

And so going forward, I need your help to carry the weight of this, because the weight of this is too heavy for me to carry by myself. And by the way, husbands can say that to wives. Wives can say that to husbands.

[Rachel Cruze]

That's right.

[Dave Ramsey]

Cause it's properly done. Two grownups are making the decisions. But what happens with a spender, and I'm a spender and Rachel's a spender by nature, is we don't think about the consequences. We just want the thing.

[Caller]

Yeah.

[Dave Ramsey]

And nobody. There's no grownup in our head when we start the process. And only with intentionality do spenders inject a grownup into their brain. And I got the opportunity to go broke in my 20s, so I had to learn the hard way. Rachel had to grow up in my house, so she had to learn the hard way.

[Rachel Cruze]

That's exactly what I was about to say.

[Dave Ramsey]

Yeah. Everybody's got their hard. But somehow an adult has to be injected into that spender's brain to where you can't spend like you're in Congress.

[Caller]

Yeah. I've tried to get him because I have the Every dollar budget app, and I've tried to get him to be a part of that and to have, like, monthly meetings.

[Dave Ramsey]

But I don't want to ask him to do a budget. I want to ask him to help me carry the weight of the households. I'm tired of being your mommy. It feels like you're a little boy that comes wanting his allowance. Baby, I want a new wood shop. Would you call your mother? Oh, my God. You know, that's how it sounds in your head. Because this way you've described it to us. And he needs to hear that. That's how he sounds. And so instead of, honey, I'm like a grown man, and I think a wood shop would be really cool. And here's how I think we can save to get that money. It may take us three years, and I may have to actually use some woodworking tools to build the stupid thing, but I figure out a way to get it right. But that's what grownups do. And you can't just. But this is a relational marriage issue. And ask him to help you not do a budget, but to carry the weight of the decision making in the household and be in agreement. And the best way to do that is a budget.

[Rachel Cruze]

Yeah. And I think that's one of the weird dysfunctions in money when it comes to relationships and marriage is when one person's in control. And we hear this a lot from again it can be husbands or wives. You know, we hear both sides of it of one person has all the, you know, the, all the control all the decision making whether because they want it or they're defaulted into it and then the other one is just sits on the sideline and gets handed out what feels like an ally or. Yeah. Or an allowance or what. And it be. And it's this weird.

[Sponsor/Announcer]

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[Rachel Cruze]

Yeah. A weird power dynamic. And if you are married, you're both two grownups that you both get a say and you're both in the decision making process. It's not one taking care of the other. It starts to get the, into this weird nuance. But that's the important part of, of having equal say in your marriage when it comes to your money. So you don't create that type of pattern.

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[Dave Ramsey]

So adding to that last discussion a little bit, in most marriages, opposites attract. Larry Burkett used to say, if two people just alike get married, one of you is unnecessary. It's a good thing that opposites attract. Typically the spender marries a saver. And you savers need a spender in your life. So you have a Life. Because you would live in a cave, collect Lent, and only come out on triple coupon Thursday. You spenders need a saver in your life so you don't have to eat Alpo at retirement. And so you need each other to balance this thing out. But that requires that you're working together. Not that one of you assumes the role of parent, which is what Rachel was talking about as we went into that break. So mama handles the money, and she just lets me do it. No, no, no, no, no. She's not your mother. She's your wife. And I call my wife mom or Mimi, her grandmother name, but she doesn't function in my life as my grandmother or my mother, okay? She's my wife.

[Rachel Cruze]

When you say when the guests. When the grandkids.

[Dave Ramsey]

Yeah, I call her that. On the golf course, people look at me like, she's not old enough to be your mother.

[Rachel Cruze]

Y' all do do that.

[Dave Ramsey]

Hey, Mom. Hey, Mom. Mom, where are you? Yeah, but that's our Mimi. So either. But I mean that. But you're not functioning in that role, okay? That's the difference. And if you're the one that has been. And usually the nerd that likes the details also marries a free spirit that hates details. And the nerd's usually the one listening to this show, by the way, at least at first. The free spirit, when they do start listening to the show, finally, are glad that it's occasionally funny, because otherwise they think it's a 401k meeting for their mother's company, and then it's a root canal. No, we don't do that on this show. This is like real life. It's fun, funny, sad, happy, all those things. So that's why it's compelling and entertaining and why people, tens of millions of you, tune in and thank you for that. But the last thing you nerds need to do, or you savers or whoever it is that's got control of the money, is look at the other one and say, I'm going to put you on a budget. That sounds like you're going to time out, okay? Instead, I'm tired of carrying the weight of all of this by myself. And then finding out later you might have had a good idea that you never voiced. And so emotionally, we're going to carry the weight of running our household together. And financially, the nerd is probably gonna be the one that does the execution, that hits submit on the payment to the light bill or whatever it is, right? And the free spirit's probably not gonna do that. But we are going to develop where the money is going before it leaves together. And that's called a budget. Not, I'm going to put you on. I'm tired of you. So I'm going to put you on a budget that will not work. Suddenly this person who's been acting like a child will suddenly start acting like a grownup and go, no, you're not telling me squat. You're not going to tell me what I'm gonna do. You're gonna have that fight, right? You know, like a four year old. You're not the boss of me. You know, that kind of thing.

[Sponsor/Announcer]

Yeah.

[Rachel Cruze]

And I would say to the spouse, if you are the one doing everything. And again, not. It's not always out of malice. We were talking to some friends the other day and he even mentioned, he was like, yeah, just kind of by default. He just kind of takes care of everything. And he was like. And the other day he mentioned to his wife, he was like, kali, I'm so nervous about X, Y and Z thing coming up. And he's like, even just saying it out loud. That's what he said. He said even just saying it out loud felt good. And he was like. And then I realized, oh my gosh, we really don't talk about this very much. I just end up doing it. And so again, it may not be out of this, like malice, weird control of how smart, it's just how it's been done. But then you don't realize, even a small glimpse of even speaking something about money to the spouse that never talks about it or is not involved, you suddenly feel what that weight lifting off feels like to have another adult in the formula with you. And I think that's what's important. So start practicing that and start that being the pattern within, you know, your marriage, because you are two adults and one of you does not need to be carrying the whole thing.

[Dave Ramsey]

Yeah. Multitude of counsel. There is safety. When two people can be in agreement, there's safety. And also, by the way, those of you that are doing the budget right now, and the other one has no idea what's going on. Another thing that you alleviate this, I discovered didn't happen very often with Sharon, but it did happen a time or two is when something would go sideways. My best plan that I did by myself because she wasn't involved, it would go sideways. I got to experience. I told you so. I'm like, no, you didn't. You never told me. Well, in my head, I knew it was wrong. I knew that wasn't going to work. I had a bad feeling about that. All these things come out. All that goes away because you cannot say I told you so because you were in on it from then on. So from then on, you never get another I told you so. It's like, we decided to do this thing and this thing didn't work. We decided and wished we hadn't, but we can't look at the other one and go, you're an idiot. You know, that kind of thing. And so. But don't use the phrase, I'm going to put you on a budget that's lashing out, anger, you're frustrated, you're tired. Instead, I need help. I don't want to carry this by myself anymore. Would you please join me in managing our lives? And that's what. And the best way to do that is write it all down and have a budget. Yeah. Instead of I'm going to put you on a budget that's like, you know, like you're getting ready to get fired from your job or something. Susie is in Stamford, Connecticut. Hi, Susie, how are you?

[Caller]

Hey, David, it's such an honor. I've been listening to you for 12 years now. And Rachel, such an honor to also speak with you as well. I can give you a little bit of my story.

[Dave Ramsey]

Okay, what's your question? First, what are you calling about?

[Caller]

I am calling because I'm trying to see if my plan follows Ramsey principles. I'm married, 36, stay at home wife, about $900,000 net worth. I followed you guys again for years and just wanted opinions about front loading retirement and 529 accounts for my kids. And then by the age of 40, setting up a bridge account and ideally pulling from that maybe 4 to 6% to cover expenses once the house is

[Rachel Cruze]

paid for so that you could stop working. Is that the goal to.

[Caller]

No. Always working, but doing maybe things that we like more, I guess, and maybe more time spent volunteering as well.

[Dave Ramsey]

Let's be clear. You did not ask if you'll be okay if you do this. You just asked if it aligns with what we teach. Because you're obviously doing great. You're millionaires and you're 36 years old. Congratulations, Very well done. And I'm guessing you did that starting from nothing?

[Caller]

Well, with a little help from parents paying for college, but other than that,

[Dave Ramsey]

they pay for college, but they didn't give you a half million dollars.

[Caller]

No, they did.

[Dave Ramsey]

Okay. All right. That's what I'm saying. So you guys have built a million dollar net Worth by the time you're 36. Way to go. Congratulations. That's excellent. Now, I would buy if you want to front load 529s and quit funding them after that, that's fine. I did that. I would not front load retirement above 15% until the house is paid off. Because That's B steps four, five and six working together. Baby steps four is 15% of your household income going into retirement. Five is if you want to front load college and finish it, that's fine. You can check that box. And then six is pay off the house early. But no, I would not load up and start doing bridge while the house isn't paid off.

[Caller]

That's the idea. The house should be paid off ideally within the next six years.

[Dave Ramsey]

Well, when the house is paid off, you're at baby step seven. You can do whatever you want to do. Then you can load up retirement. You could, if you want to dump a bunch in 401k at that point, max out everything and not do any bridge and then stop for a while and do bridge. That's okay at baby step seven, but not today. Your house isn't paid off today.

[Caller]

Okay, that makes sense. Perfect. That's very helpful for my kids.

[Dave Ramsey]

Yeah. I want the house clear. Here's the weird thing. It's actually going to work for you mathematically because without the house anymore, what we did, Sharon and I did, I took our house payment was like, I don't know, it was 1500 bucks or something. It wasn't a lot compared to today, But I rounded it up to 2,500 bucks and just set 2,500 automatically coming out of my checking account. I kept paying a house payment, but to myself in one mutual fund. That became effectively a bridge because I looked up, it felt like 20 minutes later, and that account was a million dollars. Just paying yourself a stinking house payment, you know, Just pay yourself a stinking house payment. Get out of the debt. You know, it's so powerful. Your most powerful wealth building tool, folks, is your income. When you quit giving it to these stupid butt banks that have been screwing you for years. When you stop giving them money, you're gonna have some. It's mag.

[Caller]

Foreign.

[Dave Ramsey]

Hey, I want to talk to you

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[Rachel Cruze]

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[Dave Ramsey]

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[Dave Ramsey]

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[Dave Ramsey]

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[Rachel Cruze]

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[Dave Ramsey]

One of the biggest mistakes with money that people make is thinking they can skip having a will because they're too young or too healthy or they don't own anything. A will helps protect your family. It gives clear instructions and can keep your loved ones from having to guess at what you wanted during a difficult time. Like, who's gonna take care of your children? Don't let the state decide that. Okay, if you're ready to create a will, go to mamabearlegalforms.com and if you're not sure where to start, text quiz to 33789 and we have a free quiz there that'll help you figure out what kind of option fits your situation best. We'll help you guide on this and it's just very important that everyone have a detailed will that is up to date based on the state you are living in today. If you have changed states, your will is not valid. If you moved to another state will probate law is state law, so wills. The laws are state specific. Angel is in Canada. Hi, angel, how are you?

[Caller]

I'm good. How are you, Dave?

[Dave Ramsey]

Better than I deserve. What's up?

[Caller]

Okay, so I'm basically nervous. Well, I've been looking into you guys for like two weeks now. And then I asked my husband, hey, check it out. Check the book. And then, okay, we've run through things. We're in baby step number two. And my question right now is, is it worth it or is it feasible in our income to pay a 2000 monthly daycare for my 14 month old child? So I can give you the numbers. Basically, we're earning 8200 in a month and we're currently renting 2600 all in parking, utilities, everything. Now I just have one debt left, which is a car loan that is at 22K. And the rest is just consumer debt, like food.

[Rachel Cruze]

Out of the 8,200, angel, how much is your income versus his in that number?

[Caller]

So I'm earning 4,200 and his is 3,000. And the extra thousand is a kind of here and there. It's not a fixed amount.

[Rachel Cruze]

Okay.

[Caller]

So that's why I sometimes budget.

[Rachel Cruze]

Just some side hustle stuff.

[Dave Ramsey]

The way you said that, it sounded like you could buy or you could get a daycare that's less expensive, but you want to do this more expensive one.

[Caller]

Yeah.

[Dave Ramsey]

Is that, is that right? Did I understand that right?

[Caller]

Yes.

[Dave Ramsey]

Okay, what's the cost on the other daycare?

[Caller]

Okay, so the other daycare is 840.

[Dave Ramsey]

Okay, so what do you get for $1,200 a month for a baby?

[Caller]

$1,200.

[Rachel Cruze]

2,000.

[Dave Ramsey]

No, 800 to 2,000.

[Rachel Cruze]

Oh, the difference.

[Dave Ramsey]

You're going to pay $1,200 more to move to Lux Daycare. So what does Lux Daycare do for the baby? That's $1,200 a month extra.

[Caller]

$12 extra. First he gets full hours. Like that's Monday to Friday. Now the other ones is just three days in a week. Now, aside from the full hours Monday to Friday, he also is getting full meals for the whole day. So that's six snacks and lunch.

[Dave Ramsey]

And then the other people don't feed them?

[Rachel Cruze]

No, you bring the food or the bottles or whatever.

[Caller]

Yeah, yeah.

[Rachel Cruze]

Angel, what's your. What, what's the, what's your comfort level with the other one? The $841, the 800?

[Caller]

I'd say maybe about seven over ten. I'm comfortable. They're. They're private. Actually, there's still one more that's cheaper than that, which is half, like 400 subsidy. However, when we visit them, it's not comfortable at all. Like I'm a first time mom and.

[Dave Ramsey]

Don't, don't do that. Now let me ask you why, if you did the 800 and it's only three days, what do you do? What do you do with the other two days?

[Caller]

I'll be taking care of him. Like I'll take off from work. My work demands me to be working weekends, so that means I get weekdays off.

[Rachel Cruze]

Oh, okay. So would, would you be. Do you have days off now or you would just switch your schedule to weekends?

[Caller]

Oh, I have days off now on weekdays.

[Rachel Cruze]

Okay, but he still just goes to daycare while you're home Just to give you.

[Caller]

Right now.

[Rachel Cruze]

Okay.

[Caller]

He doesn't, he doesn't go to daycare yet because my mom is here with us right now.

[Rachel Cruze]

Okay.

[Caller]

And he's leaving soon. So that's why we're, like, thinking of plan B, like, what do we do? And all that stuff.

[Dave Ramsey]

Okay. If. Now I get it. So to answer your question, if I understand what you told us, right, the comfort of the child, the safety of the child, the love and care of the child is equivalent. The difference is the number of days and food.

[Caller]

Yes. And my husband. I mean, we both went to both daycares. We're both comfortable.

[Dave Ramsey]

And, yeah, I would do the less expensive one and buy my own food.

[Caller]

That's what he said. That's what my husband said.

[Dave Ramsey]

The other part sounds luxurious to me. And you're not in low luxury mode in baby step two while you have a $22,000 car debt.

[Caller]

Mm. Yeah.

[Rachel Cruze]

Well, so what I would say, that's why I called. Yeah. And I would say after baby step three, that's when you get to be a little bit more like, hey, I do. I. I like having this because I like to have my day. You know, like, if you want to finagle some things, then. Then you totally could. You guys just put it in the budget and pay for it. But until baby step three, I would see where I feel. Again, I say this so cautiously as a mom, like, where I would feel comfortable.

[Dave Ramsey]

Yeah, as long as you're comfortable. We're not asking to do something where the child is not cared for.

[Rachel Cruze]

That's right.

[Caller]

Yeah.

[Rachel Cruze]

Yeah, yeah. But if you feel okay about it, then for sure. I mean, that. That saves you a lot. Angel. How much? If you sold your car, how much would you. Could you sell it for?

[Caller]

So I'm actually looking into that. So the car is worth 17 right now.

[Rachel Cruze]

Okay. Okay.

[Caller]

And we actually put down payment, like 5,000. It was a very, very bad decision to get that car.

[Dave Ramsey]

Do you have any money saved?

[Caller]

Yes.

[Dave Ramsey]

How much?

[Caller]

So I have liquid. Like, I have a cash of about 7,000.

[Dave Ramsey]

Okay. So you could write the check and sell the car. You could write the check and sell the car and then finish up. Baby step three is all you would have left. And then if you wanted to do the luxurious daycare, you could, but we would tell you to do that at baby steps 4, 5, and 6. And that's when you move from intensity to intentionality. And it. You know, because it's not the only way the child is cared for adequately. And so. And that's what you're. You know, that first thing is safety and comfort. You Know, for the baby and make sure. Because first time mom, second time mom, third time mom, and all dads, you know, none of us want our child in a situation that's not cool.

[Rachel Cruze]

Well, and I would say too angel be thinking about, I hate to say priorities because that makes it sound bad. It's not a bad thing. If you keep the car and just pay it off, that's fine. But also you're trading what you kind of want as a mom for that car, for a car. You know what I mean? So if you really want that better daycare, sell your car.

[Dave Ramsey]

Good trade.

[Rachel Cruze]

You don't have to worry about it.

[Dave Ramsey]

Write a check out of the 7,000, cover the difference, get you a beater, and then you can do whatever you want.

[Rachel Cruze]

Whatever you want to do.

[Dave Ramsey]

You got to get the emergency fund bill. But I think you could do that anyway with the two.

[Rachel Cruze]

Oh, yeah. A couple months. Yep.

[Dave Ramsey]

Yeah. So I don't think that's going to kill you. But, you know, but you're right, Rachel. There's. We've even seen situations where we've got an SUV payment that's massive to haul kids around. And the mom's like, I want to. I want to quit and go home and be a full time moment. And you go, okay, well, how much are you off? And you do all the math and it comes out about the SUV payment.

[Rachel Cruze]

Yeah.

[Dave Ramsey]

So like you're working to buy an SUV to haul kids around and you're not home. And so, yeah, sell the suv. That's, you know, that we get that. We've done that math.

[Rachel Cruze]

Well, it starts to get a good picture of what your stuff actually means to you. Because you think even, even people in baby step, you know, two, and they're working hard, they're working extra hours, they're working weekends. They're not having a life to get out of debt where some people, you know, you have an asset sitting there and that could save you four months of overtime. So sell the car. You know what I mean? Like, there's like credit card debt. You have no option. You gotta, you gotta pay it off. Your student loans, you gotta pay it off. But when it comes to the car specifically, it is the, it is the one thing. And we're not mad. If you keep it and pay and you know, work hard and pay it off, you can do it within.

[Dave Ramsey]

She said it's the biggest mistake they made.

[Rachel Cruze]

So do it.

[Dave Ramsey]

She doesn't like it. It's the biggest mistake they ever made.

[Rachel Cruze]

She said, yeah, her car. Yeah. An asset sitting there and it's taking time away from my family, the ability to have margin in my budget. You know, like you just kind of start to realize this stuff is costing us and man selling it. That's a lot of freedom.

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[Dave Ramsey]

William is with us in Charlotte, North Carolina. Hi William, how are you?

[Caller]

Hello, Dave. It's so wonderful to finally get the opportunity to talk to you. I will get right into my question, but you have really changed my life.

[Dave Ramsey]

Well, you changed it. I'm proud of you. How can we help?

[Caller]

Well, thank you so much. My question is for people who are established financially and looking to invest their money in safe but morally appropriate way. Specifically, my question is, can the average investor work towards putting our earnings into individual companies that we like and understand? I ask this because when we give all of our money to large investment groups, we lose control of the equity and give massive amounts of voting rights to groups that don't always have concrete or even good moral values. An example being Wall street madness and corruption. Is this possible and how so?

[Dave Ramsey]

It's an excellent question.

[Caller]

Thank you.

[Dave Ramsey]

There's a lot that goes into this. If you were to invest in any company as a single stock, publicly traded company, you have absolutely no control what they do. Okay. The only thing you could make the you could de invest. I mean, you could look up and go, okay, that company's doing X or Y that I don't agree with with morally. And so I'm going to sell the stock off. Okay.

[Caller]

Yes.

[Dave Ramsey]

So the problem is that a portfolio of single stocks underperforms a good portfolio of mutual funds dramatically. Mutual funds in general can fall into the category that you're talking about where the voting rights are gone and someone else like a BlackRock or whatever is. They're holding sway over some of these companies or some of these mutual funds. And so even some of the boards of those companies get infected with that stuff. So your observation is correct. My friend Vivek Remsworthy wrote a book before he got into politics called Woke Capitalism, where he got into how the boards were infected even with some of these things. So it's a very cool philosophical discussion and really. And a good ethical question in general that you're asking. So thank you. There are some mutual funds out there that pledge to only invest in stocks that align with X or Y value. Okay. So for instance, you could. There are some that are like animal rights. They won't invest in any company that the dolphins are getting caught in the tuna nets. Okay. So they're worried about the animal rights and so they refuse to do that. That's actually one that I had brought up one time. It actually happened. And so you can say I'm an animal rights advocate and I don't.

[Rachel Cruze]

Dave explaining dolphins.

[Dave Ramsey]

Well, I mean, it actually came up. I actually, it was not on my bingo card today. I didn't think that was happening today. But yeah, so. But they do. They get caught in there and they die.

[Rachel Cruze]

Not good.

[Dave Ramsey]

And so that's what happens.

[Rachel Cruze]

Not like that.

[Dave Ramsey]

And so anyway, the other side of that, of course, is the, you know, from a moral or ethical. From a person of faith. If you are a person like a Christian, like Rachel and I and Sharon and I are. And so, you know, I don't want someone investing in something that's completely. Or running their company in a way that's completely contrary to what I believe biblical values are. And I don't want to put money into that.

[Caller]

Retirement investing then.

[Dave Ramsey]

Yeah, yeah. So then there's one company down in Atlanta that actually has a pretty good track record. It's called the Timothy Fund. If you're worried about on the Christian ethics side. And the Timothy Fund does their best to comb through these companies before they put them in the portfolio that they line up ethically with that. And it has not perform poorly. It's performed about like other mutual funds, roughly. It's not substantially better, not substantially worse. So that's there. And we've actually told people about the Timothy Fund for 20 years or 25 years. I met those guys a long time ago when they were putting that thing together. And it has worked out. That's one part of the equation.

[Caller]

Oh, sorry. My bad.

[Dave Ramsey]

No, that's fine. Go ahead. What's your question?

[Caller]

Do you think that the Timothy Fund would also, on average, outperform individual stock investment?

[Dave Ramsey]

Yes.

[Caller]

Okay.

[Dave Ramsey]

Cause all the research says that when you go buy five stocks, you suck at part of it. You're just not good at it.

[Caller]

Definitely.

[Dave Ramsey]

And these guys, the guys that do the analysis on this, come to work in a car longer than your house. I mean, it's ridiculous. And they're very, very specialized and nuanced. They'll have one guy that does nothing but study the. Got one guy that studies the automotive 24 7. And you. And I can't keep up with that. I can't do that level of detailed research. I would spend all my time with my nose and my computer. Heck with it. No, thank you. Now, all of that being said, here's the other thing. When you buy a stock from a company or you buy a stock in a company, like you buy a share of Home Depot, you realize the money does not go to Home Depot. It goes to the guy on the other side of the equation that's a seller of the stock.

[Caller]

Yes.

[Dave Ramsey]

Okay. So when you buy a used Chevrolet from me, Chevrolet doesn't get any of the money. And so if you're pissed at Chevrolet about something, they're not even affected by the transaction. Now if you buy a Nike shirt and you don't like what Nike stands for, then you gave Nike the money. That's different. But when you're buying a share of stock, almost always you're buying it from another entity that has nothing to do with the company unless it's treasury stock issue. So it's really not there. And it's a slippery slope to get into studying and trying to figure out who's doing things that are wrong. I mean, then you can't go to the. You can't bank with that bank because they support Planned Parenthood. And you can't go to that grocery store because right down the aisle there is some pornography and you can't. And there's, you know, everywhere you go, you're interacting. Everywhere you go, you're interacting with the world somewhere. And they're always doing something that's mischievous at a minimum. And so you've got to decide where I'm going to draw the line on this and go, okay. If somebody stands for something that I Oppose. And it's their whole thing. I want to stay away from them. But if there's a corner of the market where I buy gas that sells Penthouse, I probably don't know it. Unless I'm in there looking for a Penthouse. Right. What's that, a Playboy magazine? Okay.

[Rachel Cruze]

And so it's like an 80s reference.

[Dave Ramsey]

An 80s reference. Okay. Yeah. They're probably out of business. Kelly didn't know either. They're probably out of business. Okay. So I don't even know. But anyway, I got no idea. But that's how. But anyway, if there's. Okay, if there's something you vehemently disagree with and it's in the corner of the market.

[Rachel Cruze]

Right, Okay, I hear, I hear you. I hear you.

[Dave Ramsey]

You don't believe in smoking weed, but they sell wrappers. Okay.

[Rachel Cruze]

I mean, you. Well, it's just like you're going to boycott, you know, everything. You're never going to have a Starbucks coffee. You're never going to have an Apple phone. I mean, like, yes, there's always something

[Dave Ramsey]

to be pissed about.

[Rachel Cruze]

That's right. That's right.

[Dave Ramsey]

It's a very, very slippery thing. So I have made the decision. If something's in my face, I'm not going to do it. But I don't think I can do enough investigation or spend enough of my time to control, to have 1000% of all my dollars pure.

[Rachel Cruze]

Right, right.

[Dave Ramsey]

And I really don't think God's mad at me about that. And he's asking me to manage his money, by the way, I'm a steward. And so now if you're Muslim, you're not allowed to do any of it anyway. By the Koran, you can't put a dime in those kinds of things, period. You don't have. It's not an option. And so ethical question over. You cannot do. You cannot engage in things like that, period. And you can't even put money in a bank because you can't get usury to receive interest. And the Quran, if you're strictly following the Quran, you're not allowed to draw interest. And so obviously there's some Muslims that don't strictly follow the Quran. Like there's some Christians that don't as strictly follow the biblical interpretation of something. And so, but you know, so you've just got to look at things. But it is. I love your question because you're thinking and saying, my faith matters to me, my values matter to me, and I don't want to support things that are bad from a worldview standpoint.

[Rachel Cruze]

That are against.

[Dave Ramsey]

Yeah, I think that's, I think that's wise.

[Rachel Cruze]

Yes. But I think to your point, when it's all being exchanged again, it's not going to that company.

[Dave Ramsey]

Yeah. You aren't taking money off of that company. When that company prospers, sure, but that's part of it. But it's a hard thing to figure out. Nice question. Thank you, sir. I've met plenty of people over the years who had a product that they wanted to sell, a side hustle that they wanted to start, or a business idea they couldn't stop thinking about. But they never took the first step because getting started felt complicated. Shopify makes it much easier. You can build a professional looking online store in no time flat with everything you need already built in. Then when customers are ready to buy, Shopify checkout helps more of them actually complete the purchase. That's important because abandoned carts don't make you money. And when you need help, Sidekick, Shopify's built in AI assistant can help you troubleshoot, answer questions and keep making progress. The point is you don't have to spend your time figuring out what comes next. You can spend your time getting it done. All you need is the idea. Shopify handles the rest. Start your free trial at shopify.com Ramsey shopify.com Ramsey that's shopify.com Ramsey Ramsay. Welcome back to the Ramsey show in the Fair Winds Credit Union Studios. Kevin is in Lincoln, Nebraska. Hi Kevin, how are you?

[Caller]

I'm doing well. How are you?

[Dave Ramsey]

Better than I deserve. What's up?

[Caller]

Well, kind of wondering. My wife and I became debt free last year. Paid off the house. We got our emergency fund.

[Dave Ramsey]

Wow. Good for you.

[Caller]

Yeah. Thank you. Thank you. Oh it to you guys. I wish I could say I did it strictly Ramsey, but it was more Dave ish along the way. We probably could have got it done a lot faster had we been more strict. But then in about the last year of, you know, working on debt, I kind of started doing some soul searching of wanting to do something a little more personal rewarding as far as a career than what I was doing. And a few months after we became debt free, I became a personal trainer and reduced my income by probably anywhere from 66 to 75%. And now, I mean, we're getting by, but that's about it. We don't have a whole lot extra at the end of the month. And now we've got, you know, things like house upkeep and wanting to travel and, you know, other financial goals that we'd like to achieve.

[Dave Ramsey]

And what were you doing before and what were you making?

[Caller]

I was a cell phone tower construction project manage. Making about 105 a year.

[Dave Ramsey]

So you're only making like 25 or 30 grand as a trainer?

[Caller]

Yeah, I might take home about a thousand dollars every two weeks. And I know I'm fairly new in the industry and if I work hard, I could, you know, make more, but I just, I'm 50 years old. I don't feel like I've got the time to really put in the work and the sales aspect of it. I'm not the greatest. I almost, you know, so I'm curious,

[Rachel Cruze]

Kevin, what the conversations were. So you guys paid off the house, everything. You're like, wow, we don't really need a lot of money because we don't have a ton of bills. And so I'm just curious how you got from where you were to this. You just love training and you're like, let me just do this and see what happens.

[Caller]

Yeah. For the last, I don't know, maybe five years of working in the cell phone tower industry, I really started feeling like I was doing the devil's work, you know, with where cell phones and social media have gotten the world today, I don't feel like it's net positive and I just was really feeling like I wanted to do something that was more rewarding, something that helps people. I've always been a little bit of a gym rat and I've heard other people say that I should be a trainer. And so I decided to give it a shot. And my wife was supportive. I mean, she saw how stressed out I was with the cell phone tower can.

[Dave Ramsey]

Let's establish this. Okay, you gave it a shot. The way you're doing it today is not working. That's why you called.

[Caller]

Yeah.

[Dave Ramsey]

So something has to change. Either the way you're running your personal trainer business has to change, and you're going to have to make it profitable and triple your income, which you should be able to do, by the way. And you're going to have to get pretty aggressive about it. And not in a mean or a pushy way or anything like that, but you're going to have to get excited about making a stinking profit or you need to do something else. And I don't think you have to go back. Cell phone business, by the way, a project manager that can manage the building of a cell phone tower can manage a lot of different kinds of projects. Yeah, you could easily get in the home building business as a general contractor. You could easily get into project manager. Yeah. Other things, just the project management. Science of. The science of project management. There's. It's wide open. We've got, you know, people in our. All through our organization that manage projects here. It's their title, it's their function, and so. And they're not doing the devil's work. So, you know, there's a lot of different ways to apply your experience if you don't want to be in business for yourself, but if you want to be in business for yourself, you know, you're at the treadmill stage, the beginning stage of this, and you're going to have to grow this business and you're going to have to commit to doing the parts of the business you don't enjoy as much as the other parts in order to be able to stay in the business.

[Caller]

Right.

[Dave Ramsey]

Yeah. So if I enjoy writing books and speaking on the radio, but I'm not making. And the only way I can do that is I have to do the accounting and I have to do the marketing, which I don't enjoy as much. And I don't enjoy accounting. I don't mind marketing. But I'm saying if there's parts of running Ramsey in the old days that I don't like, I've got to do them to be able to do the parts that I do like. And that's what you're not doing. You've kind of took your foot off the gas and you're just coasting along helping people. You're like a gym rat that gets paid sometimes.

[Caller]

Yeah, pretty much. Yeah. I kind of figure I'm spending about 48 hours a week at the gym and getting paid for about 30 of it. And about a third of that is minimum wage.

[Dave Ramsey]

Yeah. You're not making a dollar an hour. Yeah, yeah, yeah. So you gotta change your business model and embrace the discomfort portions of the business.

[Rachel Cruze]

And if you want to, I mean,

[Dave Ramsey]

he said, like, otherwise, you need to go get a job.

[Rachel Cruze]

Yeah, yeah, yeah.

[Dave Ramsey]

You know, because you've established, by the way you described it, is, hey, I wanted to do this, I did it. It's not working for my family. It's not really not working for me. It's not as satisfying as the lack of money.

[Caller]

Yeah, yeah. I mean, that's. That's. That's it right there. It's. It's not as satisfying as having that extra money and the freedom that comes with that.

[Dave Ramsey]

Yeah. I want to be able to take a cruise with my wife. I'm stinking debt free, you know, And I'm not even making a dollar an hour over here at the gym, so. I get it. I get why you did it. I'm not shaming you for that. But you need to establish, okay, here's what has to be true in order for me to stay in this business. I don't want to do that. Okay, then you're not staying in the business.

[Rachel Cruze]

And I think it takes a lot to keep a small business running.

[Dave Ramsey]

Oh, yeah.

[Rachel Cruze]

You have to love it and believe in it. And if you don't, you sound a little bit on the fence, Kevin, just from your tone. I mean, you may just. I don't know. What I'm picking up is you might be better off. I mean, honestly, go work for someone for 10 years till you're 60, make a good living, and, you know, there's

[Caller]

a lot of stuff, call it a day.

[Dave Ramsey]

A lot of stuff you could do working on your own as a project manager. If you looked at this as a project, you know, that's fine. So I'm gonna send you a couple books. I'm gonna send you Desired Future by Henry Cloud, which is. You need to say out loud what my desired future is. And then immediately he says to ask yourself what must be true. That's not true today. So my desired future is I'm gonna stay in this. I need to make 70,000, $80,000 a year, and what's the path there? And the things I have to do that are uncomfortable to get me there, that are ethical, but they're uncomfortable. It's not stuff I enjoy as much as I do the actual teaching of a personal trainer, or I'm gonna hire some people, or I'm gonna open a gym, or I'm gonna. I don't care, but decide what it is, and then decide if that price is when you want to pay to get there. Cause right now you're the CEO, the chief everything officer, and that's what you gotta decide. And then I'm also gonna send you our latest business book, my. My latest best seller, actually build a business you love because you're at the first stage of the five stages of business called the treadmill stage. And you just run, run, run, run, run, run, run. Feel like you get nowhere. And sometimes it's because you're getting nowhere. And I remember that stage in this business, and it wasn't a fun stage. It was exciting because it was all on me. But you're exhausted at the end of the day and you don't know what you did. It's just chaotic. And so I'll talk you through both of those. So I think you're going to make a good decision either way because I think you've already decided what we're doing is not working.

[Rachel Cruze]

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[Caller]

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[Rachel Cruze]

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[Dave Ramsey]

Well, we wish we could get to every call on the show. Sorry, we can't. There's only so many hours in a day and so many phone lines that you can get through on. But if you got a question about money and you want an answer for your situation, head over to our [e-mail] and click on and use Ask Ramsey. Ask Ramsey is our free AI tool that's built and trained only on proven Ramsey content, Proven Ramsey principles. So it's gonna give you the exact same answer with like three or four years of this show. All downloaded into the tool. All of the books we've written downloaded in the tool. All the thousands of articles on our website about money from what we think about this or that. Download it into the tool. So it's gonna give you an answer. Might not be quite as snarky or sarcastic as I am, but it might be. You better be careful. We've been trying to add the sarcasm to it and it's working. So check it all out. Ask Ramsey completely free. Ask your [e-mail] or click the link in the description if you're on podcast or YouTube. All right. Ann is with us in Akron Ohio. Hi, Ann. How are you?

[Caller]

I'm doing well, Dave. How about you?

[Dave Ramsey]

Better than I deserve. How can we help?

[Caller]

It's great to have you and Rachel on the line because I have a debate with my husband, and I really to need. Need both of your inputs.

[Rachel Cruze]

Yes, we love a debate. Cannot wait to know if you're the winner. But we will. We will tell you.

[Caller]

I mean, I feel like I'm the winner, but of course, you probably.

[Rachel Cruze]

You probably are. And you probably are.

[Dave Ramsey]

We can already tell. Yeah.

[Rachel Cruze]

So what's going on?

[Caller]

Oh, so we do our monthly budget together, and we have a slush fund for stuff like vacation items, you know, just bigger expenses that come along monthly. And then we have money going towards a. And that sort of thing. My husband says that our slush fund should be considered spent money, so we put it on the budget as spent money. But I say we should count each individual charge, like for hotel rooms, for food and everything. So what do you guys think?

[Dave Ramsey]

So you're talking about you're setting money aside for Christmas, and when you take it out of the budget. How do you take it out of the budget if you don't show it as spent money?

[Caller]

That's what I was gonna say. I was telling him that. So we're going on our honeymoon, which is a year delayed, to Italy, and we are buying, like, hotel rooms and stuff monthly. Like, we spend, like, for excursions.

[Dave Ramsey]

You would reduce the savings that you have for the honeymoon. You've already set the money aside and took it out of the budget for. To put it in the honeymoon account. Correct.

[Caller]

I mean, it comes out of a slush fund monthly, like, whenever we do have the money for an item.

[Dave Ramsey]

So you're running all of your savings for different things out of one account?

[Caller]

Not for everything. It's. It's.

[Dave Ramsey]

You didn't have a separate honeymoon account that you're saving money into?

[Caller]

We don't have a separate honeymoon account now.

[Dave Ramsey]

Okay, so what is this slush fund then?

[Caller]

So the slush fund pretty much are like that. Appointments can typically come out of there. It's pretty much money set aside for things we know we need to spend our money on, and we just take it out of our checking account into a separate account on the side, and then that way it doesn't get spent by accident. Not that we would actually.

[Rachel Cruze]

Okay, so, yeah. So the question is, when you're booking the hotel this month, is that considered money that should be coming out of this month's income? Is that what you're saying, versus the slush funds. And so it looks like it has been spent.

[Caller]

Yeah, I know it's kind of confusing.

[Rachel Cruze]

Okay.

[Dave Ramsey]

No, it's not. The way you're doing it is confusing, but it's pretty simple. If you're setting money aside out of your budget. So you have your budget, and my budget says, I'm setting aside $100 to go into an account that's going to pay for my honeymoon. Okay. That money's already come out of your budget once.

[Rachel Cruze]

Yeah. It doesn't need to come out twice.

[Dave Ramsey]

And then when you spend it, it doesn't need to come out again. Your books aren't going to balance.

[Caller]

Yeah, I guess that's true.

[Dave Ramsey]

It can only come out once.

[Rachel Cruze]

And it already came out because it's sitting in the slush fund.

[Dave Ramsey]

Yeah. When you moved it out of your monthly budget into this side, we call them sinking funds in every dollar. And so if you have a sinking fund for Christmas and every month you set aside $100 for Christmas out of your budget, your budget has already set that money aside, and there's $1,200 in there for Christmas, then. And you get ready to go buy Christmas, you don't take it out of your budget again. You've already been taking it out all year.

[Rachel Cruze]

Does that make sense? Is that answering your question?

[Caller]

Yeah, it does, actually, because, you know, I was always considering it like a monthly expense, because sometimes we pull the. Then we'd have to add it back in. It's kind of.

[Dave Ramsey]

Well, I think your slush fund is probably, in general, is too confusing. So what I would say is you don't need sinking funds except for specific things. Okay. A slush fund that picks up five different items is going to be really confusing. It's gonna be hard to track it. Okay. So if you do car repairs and vet bills and doctor visits all out of the slush fund, instead of having set money aside for each of those things separately, then you're going to stay confused. So that's why we have sinking funds. You know, you don't have one fund that covers eight different.

[Rachel Cruze]

I know, but the fund in every dollar is not going to a separate account.

[Dave Ramsey]

No, I know that.

[Rachel Cruze]

So that's what.

[Caller]

But.

[Rachel Cruze]

So it could all be in that one quote, unquote, what she's calling a slush fund. And all her sinking funds, the money

[Dave Ramsey]

can be in that fund, but there needs to be sinking funds established in every dollar for each one. So that when you can look at every dollar and go, okay, for four months, we've been putting $100 aside for car repairs, we have a $500 car repair. We only have $400 in the car repair envelope. Then that's a problem. We gotta move some money around. But if you have a $300 car repair and you've got $400 in your car repair, slush your car repair, sinking fund, then you're okay.

[Rachel Cruze]

Yeah, but it's all coming out of one large account that she sees. And so it may be that the vet bill is more. You know what I mean? Like.

[Dave Ramsey]

Yeah, well, I wouldn't. I wouldn't have a vet bill slush fund. I'd just cover that out of my monthly expenses. But I wouldn't. I wouldn't be setting that aside. But I mean, for Christmas, Christmas should be separate than car repairs. They should have different accounting for them. And so that's why we have the different sinking funds. You don't need 42 sinking funds. Most of this needs to be rolled back into your monthly budget and just be a monthly thing. But the answer to your question is if you've already taken it out of your budget once, you can't take it out again when you spend.

[Rachel Cruze]

That's it.

[Dave Ramsey]

Because it's. You're going to.

[Rachel Cruze]

I can't tell who won, then your

[Dave Ramsey]

books aren't going to balance. And I don't know who was voting for which side. So we still don't know who won. But you know who won. You'll have to go back and figure that part out later. But yeah. Ouch. Brock is in Cincinnati. Hey, Brock, what's up?

[Rachel Cruze]

Hey.

[Caller]

How you doing, dude?

[Dave Ramsey]

Better than I deserve. What's up?

[Caller]

My friends can tell me that I'm not doing this correctly, so if I could pay my house off within five years, but it means I'm not investing quite 15%, should I stay on this trajectory or should I.

[Dave Ramsey]

How much are. How much? What percentage would you be investing?

[Caller]

Roughly 9 to 10%.

[Dave Ramsey]

Okay, so 5% off and your income is what,

[Caller]

90k?

[Dave Ramsey]

Okay, so talking about $5,000 for five years, we're talking about $25,000. So it doesn't extend the time you pay off your house, but about six months.

[Caller]

Okay.

[Dave Ramsey]

You're not making as much headway by doing this as you think you are. Okay, so no, I would put 15% of my income in.

[Caller]

Okay, so you're saying bump it up and just follow the baby steps quite literally then, right?

[Dave Ramsey]

Yeah, absolutely. Quite literally. Yeah. That's what Dave phrase.

[Rachel Cruze]

Yeah.

[Dave Ramsey]

We did not give you a range in baby step four. And the reason Brock is this. I've run the math scenarios out. I've been doing this 35 years and I've run the math scenarios out at all income levels. You know, unless you're making a million dollars a year or $10,000 a year, I didn't run those out. Okay, but I ran them out. 100,000, 200,000, 50,000, 90,000, whatever, back and forth. And it doesn't. The big thing is that I want a substantial growth in your nest egg in retirement while you're getting the house paid off. And the average person is paying off their home. Doing this in seven years while putting 15% away and baby steps four, five and six.

[Rachel Cruze]

And he said five years.

[Dave Ramsey]

That's the average. Yeah. So he's already better than. Well, he's better than average because he's not putting in. So he's probably going to be more like six years after I change this. But that's all. It's really not going to change it that much.

[Rachel Cruze]

And the compound interest of the growth you're missing at add on in the market.

[Dave Ramsey]

Yep, probably worth it. A lot of people think buying a home starts with going to an open house and falling in love with a kitchen. But if you're buying a home the right way, that's not where you start. You start with a trusted guide like Churchill Mortgage. Churchill will show you what actually makes sense for you, you real numbers, not what a bank will approve and not what some self serving realtor hopes you'll stretch to afford. What I want for you is confidence that you're not guessing. Confidence that you're buying a home that you'll own, not one that owns you. That's why I've recommended Churchill Mortgage from the very beginning. They take the time to walk with you, answer your questions and help you stop. Start with wisdom so you can move forward with clarity. Listen, if you're thinking about buying a home, don't start with an open house. Start with a trusted guide. Go to ChurchillMortgage.com and get started today. That's ChurchillMortgage.com this is a paid advertisement in MLS. Id 1591NMLSconsumerAccess.org equal housing lender. If your private student loans are in default, when you've fallen so far behind, the loan is considered unpaid. Why Refi might be able to help why Refi helps borrowers in tough situations. Explore low fixed rate refinancing options that fit your budget. Go to yrefi.com Ramsey that's the letter Y, R E F Y.com Ramsey might not be in all states.

[Rachel Cruze]

Today's question comes from Erin in Indiana. My wife and I are buying a house and have a couple of questions. Should I insure my house for the sale price of the home and upgrade that if the house goes up in value? Also should I reduce the amount of home insurance once I get to baby step seven? Excuse me, Sorry, I have a cold.

[Dave Ramsey]

Okay. No, you don't insure the entire house because it includes the lot and the insurance company won't let you if they're smart because they're going to look at the house and look at the appraisal value of the house in the area and at least come close on I guess on it. And so what does it take to build your home today on a vacant lot that looks like your lot? That is what would be left if the house burned and you'd have to build it with a bill builder. And so that is the amount you would insure what it takes to replace the house on that lot.

[Rachel Cruze]

Yeah. And no, I would not reduce the amount of home insurance now. I wouldn't.

[Dave Ramsey]

We haven't, none of us have. We fully insure our homes now. I've raised the deductibles considerably on my car and homeowners and

[Rachel Cruze]

life insurance is one that you, you could become self insured eventually. Like that would be one insurance that

[Dave Ramsey]

you if you've got enough money that your spous and kids are okay. If there's kids at home without life insurance then you've self insured by becoming debt free and having a pile of money. So that's a baby step seven thing. You can get rid of life insurance. I kept my life insurance for quite a few years after that, but not for any financial planning reason. It was just Sharon wants it swi and some things are just swi. Sharon wants it and it wasn't that expensive and so I kept it for a few years and then a few years ago she, she said I don't want it anymore. So I think I'm going to be okay. I think you were okay a long time ago. But anyway because all of our estate plan is predicated on me dying first.

[Rachel Cruze]

So that's the, that's the assumption. No, but the, but the home insurance, even if you could pay for the home that like you it was still. Yeah. Would not reduce it.

[Dave Ramsey]

I've got, I've got expensive cars and I don't fully insure self insure the cars. Now again I carry a, a massive deductible which brings the premium. Way down, way down. And the same thing on my home. I've got a massive deductible because, let's say pretend that you're living in a $2 million house, okay? I'll just make up a number. If you got a $50,000 deductible, that's not gonna kill you, but the 2 million might if the thing burns. So that'll take a chunk out, right? So if you want super low premiums, you can run your deductibles up. But I don't just cancel the insurance. No, I haven't. I carry it on my cars. I carry not only liability, but I carry replacement value. And I will also tell you to say, when it comes to homeowners insurance, to go with stated value, where you state the amount, and then as the cost of building that house goes up over the years on that lot, building that same house back, raise your stated value, you need to review your homeowners and your car insurance once a year. I've got stated values on my cars. So if the car is totaled, this is how much I get. I don't have to negotiate. This is the amount. It's a set amount. Not gonna get more, not gonna get less. It's preset. No negotiable. Well, the car's depreciated, the radio didn't work. I'm broke. I'm not getting into all that. The car's either totaled or it's not. Write me a check or two. Or fix the car. One of the two. And so stated value. And that has helped a lot. Again with expensive automobiles. And so you want to look at that. And I run a very, very high deductible. And with stated value, it. Change it and update it. I just finished my review with Xander on all my whole package last week as a matter of fact. And so I just. Looking at the car values, how we change them, the how home values, where we reset them and everything thing, because it does not automatically adjust. Replacement value is no longer a thing with most insurance. Most insurance, it's the amount you state. And you want to make sure you keep that adjusted. Josh is in Tampa. Hey, Josh. What's up?

[Caller]

Hey, Dave. It was a pleasure talking to you.

[Dave Ramsey]

You too. How can we help?

[Caller]

Hey, so I just really want to ask. I'm trying to understand maybe is me or not. I'm trying to understand if I'm too frugal in my marriage or should I ask my wife to get a higher paying job. I'm trying to tread lightly here.

[Dave Ramsey]

What about Josh? Does he need a higher paying job?

[Caller]

Yeah, no, absolutely. You're absolutely correct. So I think, you know, for me, I always try to find the cheapest possible things or that we can afford certain things. Things, because I feel like that's the only thing that we could afford. Every time I, you know, I say book a trip or, or shop for things, I always look at the cheapest, cheapest possible things. And I could almost feel this tension with my wife, like, oh, not again. And I just want to preface this with I just recently became debt free. And that's literally after paying 10 years of credit card.

[Dave Ramsey]

What is your household income, Josh?

[Caller]

So together we make around 105,000 a year. Okay.

[Dave Ramsey]

And so you. On 105,000, you have to cheap out on everything to exist. No, you don't.

[Caller]

Right. So I've calculated every single dollar that I could get, and I feel like at the end of the week, I have about $300 to spend.

[Dave Ramsey]

See, there's a lot of feeling going on, and math doesn't have feelings. That's the third time you said I feel like. Which tells me you're not doing a detailed written budget that you and your wife are agreeing on on every dollar.

[Caller]

No, no, we did it together. And she sees it. However, I don't think it sort of clicks in her head like, no, we can make it work. Work.

[Dave Ramsey]

No, every dollar. When you, the two of you finish every dollar with 105,000 and no debt, $105,000 income, you have $300 left every week.

[Caller]

Yes, every week. And that's money that's also being contributed towards our 401k Roth IRA. It's also obviously paying the groceries, the house.

[Rachel Cruze]

Yeah.

[Caller]

And at the end of the, you

[Rachel Cruze]

guys bring home, what, 7,500, 8,000amonth.

[Caller]

Yeah. So I. Together, we probably bring in around. Yeah, you're right. Seven thousand a month after taxes and.

[Rachel Cruze]

Yeah.

[Caller]

And all that.

[Rachel Cruze]

How much is your mortgage payment?

[Caller]

$2,000 a month.

[Rachel Cruze]

Okay.

[Caller]

And then our groceries is our biggest expense of $800.

[Dave Ramsey]

Okay, well, there's a couple things going on. Okay. You have a tendency to be cheap. That's nothing wrong with that. My wife has that same tendency. Okay, that's not a bad thing. All right, but. But what you're saying is, is your wife has not joined you emotionally in the every dollar budget committee meeting once a month. And the two of us as adults look at this and say, we have X to spend on groceries. We have Y to spend on travel, we have Z to spend. You don't make 500,000 a year. You make 100,000 a year. So it is going to run out. But you also don't make 40 either. So you know you're above an average household income in America.

[Rachel Cruze]

Yeah. So if you have $800 for groceries a month and I don't know who does the grocery shopping, Josh. But yeah, if you're going to and you're nickel and dime and every single little thing and you're getting the cheapest of the cheap and all of this and then you guys still have money left over in that category, then that means you can up some of the quality of the stuff you're buying. So you just have to like, you

[Dave Ramsey]

have $800 to spend.

[Rachel Cruze]

Yes, yes.

[Dave Ramsey]

Not $500. $800.

[Rachel Cruze]

Yep, exactly.

[Dave Ramsey]

So spend the $800 on groceries.

[Rachel Cruze]

When you guys are planning a trip, you guys need to decide together what hotel you're staying at that that is

[Dave Ramsey]

within the budget that you set for the trip.

[Rachel Cruze]

That's right. Yes, yes. So, yeah, you pro. It's probably at both end, Josh. You probably do need to chill out a little bit. But also you, you know, you guys have $5,000 after your mortgage is paid to say, what? How are we going to live our lives with this? And so it is important to know where it's going. But yeah, you should have more, I would think more than, yeah, 300. After all the debts, it's not your

[Dave Ramsey]

job to cheap everything out. It's the two of you's job to decide how much we're going to spend on a category and then live within that category. If it means cheaping some of it, fine.

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[Dave Ramsey]

Adam is in Albuquerque, New Mexico. Hi, Adam, how are you?

[Caller]

Pretty good. How you doing?

[Dave Ramsey]

Better than I deserve. What's up?

[Caller]

Well, I kind of have a crazy one for you. I'm thinking about selling my house and buying a van and doing the van life thing.

[Dave Ramsey]

The van life thing? What does that mean?

[Rachel Cruze]

You're gonna live in a van down by the river? Adam, where are you going?

[Caller]

Yeah, it sounds crazy at the surface. I understand. I'm 30, single, no debt besides my mortgage, and I work fully remote and I previously worked in construction and lived in RVs and traveled. And that's where I saved the most amount of money in my life is when I did that. And now I have a house and I feel like all I do is spend my money. It's about a little over 40% of my take home pay.

[Rachel Cruze]

How much do you make a year? Did you say?

[Caller]

135?

[Rachel Cruze]

135. Okay. Okay.

[Dave Ramsey]

Well, 40% of your take home pay we're not going to recommend, but I don't know if that justifies a van. I mean, that's a pretty, pretty extreme swing from that. So you're, you just travel around living in the van, working remote?

[Caller]

Yes, sir. Yep.

[Dave Ramsey]

Okay. Campground to campground, I take it, right?

[Caller]

BLM land. There's some things you can do for free. There's some things you can do where it's paid.

[Rachel Cruze]

Okay, do you know how long are you thinking? Do you have a time frame or are you just. You're not tethered down to anything specific so you just like. I just want to see what happens.

[Caller]

No, I'm not. Not tethered down. I originally bought this house to be close to family, but I end up just sitting here working my remote job and, you know, not really wanting to be in the area. Kind of want to get back out on the road and travel and see things. I feel like I've. I've followed the Ramsey plan fairly well.

[Dave Ramsey]

Except for that 40% of your take home pay house payment.

[Caller]

Yes, sir. I hear that one in my brain every day. And then I also hear, you know, if I sell my house and buy a depreciating asset, I also hear that in my brain every day.

[Dave Ramsey]

So if you do the van thing, the answer to your question is regardless of it's cool, it sounds fun, it sounds like an adventure. It's not a good 10 year plan.

[Caller]

No, no.

[Dave Ramsey]

It's not a bad two or three year plan.

[Rachel Cruze]

And if you save that much money and put it, put it aside by the time you're done with everything to

[Dave Ramsey]

be able to put roots down, put roots down somewhere, you're 33 and single and we're pretty much ensuring you're going to stay single if you're going to live in a van.

[Caller]

You could say that.

[Dave Ramsey]

Yeah.

[Caller]

I would say it's more of like, you know, a five year or less plan. And it's really.

[Dave Ramsey]

Well, there might be, but I'm just saying your chances just went way down on that.

[Caller]

So I would. That's debatable.

[Dave Ramsey]

But no, it's not. You just, you cut out 75% of the female population that want to live in a van.

[Caller]

There's maybe that are the good ones left out there.

[Dave Ramsey]

There you go. You need a good van girl. That's what you need. That's fun. I like you. You're a lot of fun. All right. Now, yes, I would sell it and yes, I would do it. What I would do is put a time limit on it so it doesn't become some kind of weird way of life. You don't want to be 63 and still doing this.

[Caller]

Right, Right.

[Dave Ramsey]

That's not good for you career wise. It's not good for you socially, it's not good for you financially. Because of what you said, you're in a depreciating versus an appreciating asset, all those kinds of things. But if you did this for a period of time while you're untethered and don't have responsibilities and it's fun for you. I did hear you're a rambling man. I mean, you like the road, you know, and I think that's cool. That's fun. Yeah, go do it. Go do it. Yes, yes, I would go do it. But put a time limit on it

[Rachel Cruze]

and be make sure you are saving. It's the same kind of mindset. People go and move back home to save money and then they really don't even end up saving money because they just end up spending it, you know,

[Caller]

so really make sure I've saved, I've saved up to this point. Right. I've got over 300,000 in retirement and then I also have about 90 cash sitting there ready to go.

[Rachel Cruze]

Well, you may have just plugged it back in. 25% of the female.

[Dave Ramsey]

Yeah, your bachelor eligibility just went up again.

[Caller]

Okay, that's great. That's great. That's good to hear.

[Rachel Cruze]

Oh, man, I was gonna ask.

[Dave Ramsey]

So fun.

[Rachel Cruze]

I was gonna ask him how much a van costs like that.

[Dave Ramsey]

I think he's gonna be okay. Junior's in Fayetteville, Arkansas. Hi, Junior. What's up?

[Caller]

Hey. How you doing?

[Dave Ramsey]

Better than I deserve. How can I help?

[Caller]

Well, I have. I have a considerable amount of money that I'm investing and I have a. Have a friend that's a financial advisor and he's. He's giving me some mutual funds to invest in, to purchase, and he's not charging me. And my question is, is it okay to go with him and just bank the 1% that typically they charge like a Fidelity or E Trade? Or would I get a better return if I went with E Trade and somebody was actually watching over it?

[Dave Ramsey]

Well, I would not go with E Trade because I would want you to develop a personal relationship with a financial advisor that is watching over everything and meeting with you. Like our SmartVestor pros that we recommend, but we don't recommend E Trade and we don't recommend Fidelity. Fidelity is not a bad company. They've got some good mutual funds. But I want you to sit with a financial advisor and I don't mind them charging you a percentage. You will recoup on that. So what's the total amount you're investing?

[Caller]

I have, I have like my individual account. I have about 619. I have some RSUs that are going to mature. I'm going to sell them in about two weeks. That's 276. Then I have a 401k. That's 47.

[Dave Ramsey]

So you're bumping up to a million?

[Caller]

Yeah, yeah. Over a million. About 1.2.

[Dave Ramsey]

Yeah. Okay. And I think when you sit with some of the financial advisors, there's break points on that as well when you start getting up to that million dollar mark. So. Meaning that the commissions won't stay exactly the same. So, yeah, I would sit down with SmartVestor Pro and have somebody talk you through that. You can find [e-mail] but the data is this DIY, do it yourself. Investing does not yield the same rates of return. And the main reason is that you get enamored with the romance of some company or some particular stock or thing instead of just looking at cold hard numbers. The second reason is fear. And when you read the wrong headline on the Fox News or CNN website, and it triggers your fear button and you start talking about pulling all your money out at usually the exact wrong time to do it. You need someone to talk you off the list. And so all the research that we have on investing says that a person who has a calm, conservative, trusted voice in their ear to stay in the market and to carefully analyze these investments rather than getting caught up in the Internet romance bullcrap of something, then they're going to keep you on track and you're going to build more wealth over the scope of your life than when you diy. And so I know a lot about this stuff, and I don't DIY my mutual funds. I have a smartvestor pro. Rachel and Winston have a SmartVestor Pro.

[Rachel Cruze]

If the friend was doing it out of just.

[Dave Ramsey]

I think he's just saying, pick this fund and this fund. I don't think he's actually. Man.

[Rachel Cruze]

Okay, okay.

[Dave Ramsey]

He said he's showing me which mutual fund.

[Rachel Cruze]

Oh, I gotcha.

[Dave Ramsey]

Yeah. And not charging him for that. But there's more in this than just simply which mutual fund to pick. There's staying in it, there's understanding new things that come on board, different things you can get into. As you get above that million dollar mark. There's gonna be some things that you can do that are very nuanced, very small things. They're not gonna make you rich, but they're also gonna stabilize your life and stabilize your future with that. So, no, Junior, I would not go with E Trade, I would not go with Fidelity, and I would not go with my free friend who told me which mutual fund to buy over loan. Instead, I would do what I do. So my advice is consistent. I'm not telling you to do something I don't personally do. My personal accounts are with one of our smartvestor pros and have been since I started that program all these years ago.

[Rachel Cruze]

Yeah. And these guys and women who are in this position, if you find a good one, and our SmartVestor pros, you know for sure, that is, they live and breathe this stuff. And again, there are nuances in that world that you can take advantage of that you will never get by just. Yeah. Doing it yourself. And when you have that much money, Junior, that I would. I mean, I know we joked about like tax loss harvesting, you know, one time on the show, but it's these little things that you, you know, I mean, the add up over time and they know about that stuff and they can educate you and show you and it's. And it's good for you, take advantage of those things. But you're not going to get that with just someone randomly telling you to pick two or three different types of mutual funds and that's it. So there's some, some nuance to it and detail that I think could be to your advantage for sure.

[Dave Ramsey]

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[Rachel Cruze]

The Sphere.

[Dave Ramsey]

The Sphere. I couldn't make it come out of my brain. I couldn't drop it out of my brain. Okay. At the Sphere. She wanted to go see.

[Rachel Cruze]

It's not dropped.

[Dave Ramsey]

She was drama.

[Rachel Cruze]

No, it was all true and real.

[Dave Ramsey]

It was her personal friend to the

[Rachel Cruze]

heart of all millennial women in the world.

[Dave Ramsey]

My personal friends, the Backstreet Boys. Well, she obviously knew our answer. We're not going to tell you. We told her, you know, we understand. Rachel particularly understood and empathized. I had no sympathy whatsoever. And just no. And then Rachel's like, oh, but I understand. Well, it turns out, Kelly, Kevin with the Backstreet Boys, what a good man.

[Rachel Cruze]

Was listening and he, a friend sent him the clip. Yeah.

[Dave Ramsey]

Oh, that's what it was. Yeah. And he got in touch with us through DMs, I guess it was. And mine are yours or somebody's and means that somebody was watching my DMs. Because I don't, I don't even know what that means other than there's a way to message me.

[Rachel Cruze]

Anyways.

[Dave Ramsey]

Okay, tell the story. So he offered to send Rachel to the Backstreet Boys. So we got him on the air with this Rachel.

[Rachel Cruze]

Call her Rachel.

[Dave Ramsey]

Call her Rachel. And then we were going to pay for the hotel. So she had no net cost and she got to go do the dream because Kevin was so generous and it was great. We had him on the air. Her on the air.

[Rachel Cruze]

So fun.

[Dave Ramsey]

So she just got in touch with us. Apparently she went the other night.

[Rachel Cruze]

Yes, I think it was last night.

[Dave Ramsey]

And sent us all the pictures and the VIP backstage experience. And Kevin gave her, gave her a shout out from the stage.

[Rachel Cruze]

She said, my childhood friends on her shirt.

[Dave Ramsey]

Backstreet Boys are my childhood friends. There they go.

[Rachel Cruze]

So good.

[Dave Ramsey]

Very cool. And she had a great time and she wanted to send a huge thank you out to Kevin, the Backstreet Boys, for hosting Rachel and for giving her this once in a lifetime opportunity. That's probably pretty cool.

[Rachel Cruze]

So fun.

[Dave Ramsey]

It was a fun thing to get to hook up somebody with super famous and super generous people like those guys. Very awesome. Very neat. Amber is in Atlanta. Hi, Amber, how are you?

[Caller]

Hey, Dave. Hey, Rachel. I'm good. How are y'? All?

[Dave Ramsey]

Better than we deserve. What's up?

[Caller]

Perfect. So my husband and I have been on our debt free journey for about 18 months.

[Dave Ramsey]

Good.

[Caller]

We've paid off $45,000.

[Dave Ramsey]

Wow. Way to go.

[Caller]

We worked really hard and we're both really proud of the progress that we've made because we've always been just paycheck to paycheck, nose to the ground, working, trying to make ends meet. And we have been married for 21 years. And so for that time, that's kind of how we've always lived. So we decided last year, after they get our church, we're going to get our lives together. We're going to become debt free. And I know that you always talk about the Bible verse of not being a slave to the lender. And that's kind of what I keep in the forefront of my mind. So my question is my husband, over the last year and a half, his income has doubled.

[Dave Ramsey]

Wow.

[Caller]

And yeah, he changed jobs about six months before we decided to work on our debt free journey. And so it's been such a blessing and God has truly blessed us. Through that journey.

[Dave Ramsey]

Amen.

[Caller]

So we have our house left, which is about 190,000, and I have 28,000 left in student loan debt. The journey is getting weary. So my question is, how do we keep lifestyle creep from getting out of control while staying focused on our debt free journey?

[Dave Ramsey]

You tap back into the exact same spiritual nobility that caused you to do this in the first place. Something happened to church and God spoke to your minds and said, you guys need to straighten up because you're not doing this right. And you said, you're right, Lord. You're right, Lord, and we're going to not be slave to the lender anymore. And you went after 21 years of doing it wrong. A new dog learned new tricks. An old dog learned new tricks, that's for sure. Yeah, right. And so you're a completely different customer couple and completely different people than you were 36 months ago. That's worth it.

[Caller]

Yeah.

[Dave Ramsey]

And so yes, you're wary, but yes, that 28,000 is going to go as fast or faster than super fast because the 45,000 was in the early days of the thing. And now you see it working, but you just got one left and you're looking up that hill and you're going, it's a steep hill and I'm tired. But you just reach down inside and you say, all right, this is what the Lord gave us to do and this is what. It's changed our lives because it's changed our whole mindset.

[Rachel Cruze]

How do you feel different, amber, with the 45 paid off versus the 28.

[Caller]

I can't believe it. Yeah, I can't believe we actually did that because I didn't even realize it was that much until I sat down the other day and we kind of hit mid year. And I was like, okay, I need to do a checkup and see where we are, how everything's looking. You know, what does the rest of our year look like kind of thing? And what are, what are we aiming for for the next six months?

[Dave Ramsey]

Yeah.

[Caller]

As I added it all up, I was like, oh my gosh, it was gone way further.

[Rachel Cruze]

Okay, so. And I would want you to know that like, as it's going, do you know what I mean? Like, if you have a great month and you guys put an extra 800, a thousand dollars dollars more to the debt than what you had planned out, that should be a more that, that should be the energy boost to keep you going. You know what I mean? I, and I'm thankful that you guys got further than you thought. But I don't want that to be a surprise. I would be in your numbers probably a little bit more so that you know the end too.

[Dave Ramsey]

Amber, you feel the progress and you

[Rachel Cruze]

need to know like, hey, we're gonna put an extra three grand towards this debt. You know what I mean? And we're gonna be. We're gonna be done in 10, 10 months.

[Dave Ramsey]

We've got a saying on the wall back here that says, what got us here won't take us there.

[Caller]

Oh, that's good. I like that.

[Dave Ramsey]

And in my 40s and 50s, I ran 15 half marathons, which are 13.8 miles. Okay? And oddly enough, there's this thing in a half marathon world that happens at nine and a half miles. And at that point, you've been running well over an hour hour. And at the nine and a half mile mark, your nutrition starts to run thin, your hydration starts to run thin. And you're certainly not running on any sugar high or excitement high. You're just trying to finish now. And so you're looking, you go. It feels like that the next three miles of that three and a half miles is going to be longer than the first nine. There's something that happens, and it's a mental thing. And like I said, I've done 15 of them back in the day. And I remember every time I hit that nine and a half, I. I was like, oh, crap, why do I do this? You know?

[Caller]

Right?

[Dave Ramsey]

This is killing me. But you're already 75% done, you know, but you're still. Your mind starts playing tricks with you, and that's all it is. So here's the thing. I think you guys are way better and way stronger than you think you are.

[Caller]

Well, thank you for that. Because one day we're going to make it to where we get to come do our debt free screen.

[Dave Ramsey]

You are. And you're going to stand on the debt free stage right outside this window, and you're gonna remind me of this conversation. Cause we got your back, kiddo.

[Rachel Cruze]

Yeah. And Amber, you guys are doing exactly right. I mean, on average, it takes people 18 to 24 months. So you're about to. You are doing it. You're doing it.

[Dave Ramsey]

If God told you to do this, it's okay to ask him for the strength. It's okay to pray and say, lord, I need some extra boost right now. As a matter of fact, he kind of enjoys that. Hey, what's up, guys?

[Caller]

It's Jade Warshaw.

[Dave Ramsey]

Listen, summer spending adds up so fast between vacations and road trips and Camp

[Caller]

fees and events and all the extra

[Rachel Cruze]

gas and grocery runs.

[Dave Ramsey]

Money can get tight before you know it. To really get your money under control

[Caller]

and keep it that way, you're going

[Dave Ramsey]

to need a plan. And that's what you'll get with the EveryDollar budget app.

[Caller]

It helps you track your spending, free

[Dave Ramsey]

up cash to put toward debt and savings. And it's the simplest way to make a plan for your money before the month begins. So no more wondering where your money's going.

[Rachel Cruze]

You're telling it where to go. Download EveryDollar in the app store or

[Dave Ramsey]

Google Play and start from free today. Are you sick and tired of being sick and tired? With your money ready to get under control? Work so hard, don't seem to get any progress. Feel like a rat in a wheel debt hanging over you? You sick of MasterCard? Yeah, I bet. Hey, you don't have to live that way. Our Every Dollar budget app will help you find extra money every month and build you a personalized Ramsey plan to get out of debt so that you can build wealth. In just 15. The first 15 minutes, you're going to find thousands of dollars in hidden margin. It always happens. You're going to feel like you got a raise. Don't be nice. Normal. Normal sucks. You want to be a new whole new plan. Every detail under control. Check out every dollar. It's free in the app store or Google Play. Renee is in Boston. Hi Renee. What's up?

[Caller]

Hi. Thank you so much for taking my call. I'm a single parent researching the best ways to pay for college. College. I have two sons. My older son went into the trades, AKA no college debt. My youngest son is starting his freshman year at a private college in New York in a couple of weeks. The good news is, where'd you get

[Dave Ramsey]

the money for a private College?

[Caller]

We have $72,000 in need based scholarship.

[Dave Ramsey]

Okay, does that. Is it 72,000 or is it more?

[Caller]

No, it's 72,000. Which leaves me to pay 14,000 per year.

[Dave Ramsey]

Of what?

[Caller]

Tuition.

[Dave Ramsey]

Oh, I thought it was 72,000. So tuition is. So the tuition at the private school is $86,000 a year?

[Caller]

More than that. Okay, I think it's 93,000.

Okay.

[Dave Ramsey]

And what, pray tell, is this young man studying that's worth a hundred thousand dollars a year?

[Caller]

Yeah, but they gave us 72,000. I know in in need based scholarships, which means I only have to pay back.

[Dave Ramsey]

What do you make?

[Caller]

I gross 113.

[Dave Ramsey]

Okay, can you just pay 14 out

[Caller]

of pocket then that's What I'm thinking about doing. Yeah, paying 14 out of pocket.

[Dave Ramsey]

Okay, that's gonna that then. You really don't have a question if you just do that. That's okay. What I, you know, and it sounds like it's what you're gonna do. What I will tell you from our research is, and we had a award winning documentary called Borrowed Future on student loan debt, which you're not talking about student debt loans, but what we found is, is the biggest mistake people make in college is the school they choose. Okay? Now, I don't know if you can find a school that's only 14,000 out of your pocket somewhere else or if this guy, does he have great grades or is it 100% based on needs? With you making 115,000 a year, I can't imagine the needs need of that.

[Caller]

He has great grades and he was recruited by the football coach.

[Rachel Cruze]

Oh, so he'll be playing.

[Caller]

Yes.

[Rachel Cruze]

Okay, so there's an athletic component to it.

[Dave Ramsey]

Well, sort of. You said it's need based.

[Caller]

Yes, it has to be need based because It's a Division 3 school.

[Rachel Cruze]

Okay, gotcha.

[Dave Ramsey]

And again, he's studying what you told me, but I was forgot.

[Caller]

Economics.

[Dave Ramsey]

Okay, okay, cool. All right, so if you can do this and he can play football for four years and you can come out of pocket $14,000 a year and you can cover that and cash flow it for four years and he gets a degree for the equivalent of 60,000 bucks out of pocket, then that's not going to be a bad deal, right?

[Caller]

Yeah, that's what I think.

[Dave Ramsey]

Yeah, but if he could have gotten 100% free ride somewhere else, 100%, nothing out of pocket, then I'm going to argue.

[Caller]

Not that I'm aware of.

[Dave Ramsey]

Yeah, well, you didn't try. He got recruited from one place and you went where they called you. But. And because they gave you a big old number, but it wasn't a big enough number. So yeah, the philosophical thing, if I were you, I would do the deal, okay? But the philosophical thing I want to lay out there for you and more importantly for all of our tens of millions of listeners, is that where you go to school does not matter. Okay? No one has, you know, you go in to see your doctor, you don't ask them where he went to school, you go in to hire a lawyer, you don't ask them where they went to school, you go in and sit down with an economist, you don't say where did you go to school? Unless they got a PhD from freaking Harvard. And then somebody will bring it it up. It's like they're vegetarian. They feel like they have to tell you. But other than that, it's not a thing. Right. So other than that, it's not a thing. So you just don't go somewhere just because. And don't go somewhere by default. But it sounds like this deal's not super bad. But if you told me you were coming out of pocket 40 grand.

[Caller]

Yeah.

[Rachel Cruze]

You wouldn't be able to afford it.

[Dave Ramsey]

I'd be resetting his whole expectation about where he goes to school. I'd say go to school somewhere that you can afford to pay cash for

[Rachel Cruze]

or at the beginning of August, or

[Dave Ramsey]

if you came out of pocket, or if you told me you're going in student loan debt to do this, I would just say, no, there's another way to do it. And you can go to a different school and you can afford it. By the way, folks, the average in state tuition in America today is $14,000. That's what she's paying out of her pocket. So all the free money that they gave just brought the cost down to what the average state tuition is now. Maybe not in New York. She's in New York. I'm not sure that state tuition will be true in New York, but I don't know who all offers in state tuition in New York. It's a state college, but I'm gonna guess and say that one's higher than the average. But the. But still, you know, you cannot justify coming out of pocket 100 grand a year year for a school that you could get virtually the same curriculum and the same textbooks in a lot of cases, by going to a state school, 78% of the CEOs of publicly traded Fortune 500 companies went to a state school. Where you go to school does not matter. Matter whether you go to class or play beer pong. Matters whether you learn something while you're there matters whether you study something like economics that's usable in the marketplace, that matters. And so this is a. This is a sharp young guy, obviously. And so the good news is she's got the money to cover the 14. The 14 is not unreasonable. And, you know, as long as they don't rescind the scholarship. If they rescind these scholarships or these things, things, you know, and he gets hurt playing football, then he's going to a different school if he's mine. Yeah, because we're not coming out of pocket 50 grand. So you can finish up where they started.

[Rachel Cruze]

Me with a pretty debatable topic. But even college sports at a three. You know what I mean? At school it's, it's not like it's SEC and football. Right. Like that you have a full time.

[Dave Ramsey]

Well, the only reason he's. It's just a job.

[Rachel Cruze]

You have a full time job.

[Dave Ramsey]

$72,000 a year job.

[Rachel Cruze]

That's it. Totally. That's what I was going to say is at that point you are going to. Because they're paying for your college.

[Dave Ramsey]

Well, and then they take that team and they go play a big school and that school pays them a million dollars for beating the crap out of them. Yeah, that's what happens. So that's where it comes from. But that's true.

[Rachel Cruze]

Oh man. Well, what's crazy too is rude.

[Dave Ramsey]

His deal is not a bad deal.

[Rachel Cruze]

Sure, totally.

[Dave Ramsey]

Always look at lots of options and don't just set the thing up based on where you're going to school. So number one, one mathematical mistake in the whole college equipment. Whole college decision making paradigm.

[Rachel Cruze]

Yeah. Well, average tuition I just liked it was $12,000. Room and board is 13 to 15,000. Yeah, you're starting to pay more for room and board than the actual tuition. Tuition.

[Dave Ramsey]

They're gonna, they're gonna price themselves out of the market if they keep it up. Like she said, she got one went in the trades. He's gonna end up making more than the economist, right? Yeah. The diesel mechanic will make more than the mechanic. We're done here. That's what's going to happen. 120 a year diesel mechanic right now. So. Yeah. Sounds like Renee's a good mom. She got two boys she's raised. Both of them coming out. They're both productive.

[Rachel Cruze]

Well done, Renee.

[Dave Ramsey]

Very cool. Good for you, Renee.

[Rachel Cruze]

And I hope it goes well. I hope he doesn't get injured. I hope it and he loves it.

[Dave Ramsey]

Yeah, overall it works out perfect. If it doesn't pull him though, put him in a school you can afford.

[Caller]

Sam.

[Dave Ramsey]

Hey guys. Dave Ramsey here. Every day on this show we help people work through real money problems and figure out what to do next. Now you can get that same kind of of help anytime with Ask Ramsey. Ask your money question and get answers built on Ramsey principles we use on the show. Whether you're making a decision or just want something explained, ask Ramsey is here to help. It's fast, simple and free to use. Go to ramseysolutions.com and try Ask Ramsey today. That's ramseysolutions.com. Dennis is in Denver. Hi, Dennis, how are you?

[Caller]

Hey, Dave. And Rachel, thank you for taking my call. Doing well. How about yourself?

[Dave Ramsey]

Better than I deserve. What's up?

[Caller]

Awesome. So I'm 24 years old. I have about $170,000 in a regular savings account. Embarrassed to say that, but that's what it is for. Now. My question is. My mother is currently renting a home. She has been renting the house for quite some time, about five years now. She doesn't own a home herself, and the home is worth about $180,000. I could cash flow it and have her pay rent. She's the one encouraging me to do this, to build some equity over time and also some have some income from the rent that she'll be paying me. I'm wondering if that's a wise decision to make.

[Dave Ramsey]

Where'd you get $170,000 at 24?

[Caller]

I've been working since I was 16, and to be honest with you, I just have accumulated that much over the years. I have. I take home about $3,900 a month, and I have no. No debt, no payments at all, no car payment. And I also don't pay for housing, as it's a benefit through my employer.

[Dave Ramsey]

What do you do?

[Caller]

I'm a property manager for a ski resort.

[Dave Ramsey]

Okay. Wow. Well, you've done really well, sir. Congratulations. Very well done.

[Caller]

Thank you.

[Dave Ramsey]

How old is your mom?

[Caller]

She's 60. And she's looking to live in that current house for five to seven more years before she retires and goes back to her home country. At least that's what she says. Yeah, but it's. It's unknown.

Okay.

[Rachel Cruze]

Is the house nearby? Is it in Denver?

[Caller]

No, actually, it's in the outskirts of Houston.

Texas.

Yeah.

[Rachel Cruze]

Okay.

[Caller]

Okay.

[Dave Ramsey]

What's her home country? Just curious.

[Caller]

Honduras.

[Dave Ramsey]

Okay, cool. Doesn't affect the answer. I was just curious, but. So I think your mom wanting you to own a piece of real estate at 24 that's going up in value is a good idea. I think renting to relatives is a really, really, really bad idea. And I think owning rental real estate in a town you don't live in is a bad idea. Okay, so this is going to go sideways. Something's going to happen. Somebody's going to get sick, something's going to shift. You're going to get married. Your new wife's not going to like the arrangement. Something's going to happen somewhere. I would rather if your mom needs some help through those years, which it doesn't sound like she does, she's paying her rent now, and she's working. And when she retires, she's going to leave and go to Honduras. So she's probably in pretty good shape. After all, she raised you and you're pretty frugal, so I'm guessing she's probably doing a pretty decent job. But anyway, I would just live your Life with your 170. And if you need for some reason to, you know, if you want to help your mom at some point with some cash, that's fine. But I don't think this is the best way to help your mom, and it's not the best way to help you.

[Caller]

Right. And she doesn't need the help at all. She just is encouraging me.

[Rachel Cruze]

Just thought it'd be a good idea.

[Dave Ramsey]

She just wants you to own real

[Rachel Cruze]

and it's something going up in value. She wants to pay her son. She'd rather be paying you than a landlord. Like, I understand how she got here. It's just when you look at all the facts, it's probably not the best route.

[Dave Ramsey]

When the heat and air goes out and it's $8,000 next year.

[Caller]

Right.

[Dave Ramsey]

You got a problem, you know, and when this or that happens, you got a problem. And by the way, you're supposed to go up on the rent every year when you're a landlord. That's how it works.

[Rachel Cruze]

Well, he went.

[Dave Ramsey]

That's your mom.

[Rachel Cruze]

Well, he wouldn't do that for five years.

[Dave Ramsey]

I know, I know. And she's. So you're not getting the right rate of return on your 770,000. So you're not gonna go. You're not gonna go up on the rent. And you should. But you can't. Cause it's mom. You can't. Cause it's mom.

[Rachel Cruze]

The sweet mom is gonna be retired.

[Dave Ramsey]

The sweet mom. That's right. She needs to just rent and then execute her plan. He needs to execute his plan.

[Rachel Cruze]

That's right. I agree. Keep it separate, Dennis. But I understand how she and you thought maybe this could be a good idea. But at the end of the day, probably not the best.

[Dave Ramsey]

After sitting in this seat for 35 years, I can tell you that very few people have called up and go, oh, that really changed everything, except in bad ways.

[Rachel Cruze]

And so, if anything, Dennis, I would recommend you put your 170, or part of it, half of it, into the market. You could be making more return on that. That is one thing I would say is do something with that money you have saved.

[Dave Ramsey]

All sitting and checking is not good.

[Rachel Cruze]

That's right. That's right.

[Dave Ramsey]

Yeah. So you need to move some of it somewhere and start thinking about what, you know, where you want to live. You got free housing right now, so that's okay. But I would park the vast majority of that and at least s and P500. Or sit down with a smartvestor pro and let them help you develop a game plan.

[Rachel Cruze]

Yep.

[Dave Ramsey]

For investing that. Because the, the crazy thing, y', all, not just him, but everybody else, just think about this, okay. In 2023, the market went up 20. The S&P, Standard and Poor 500, which is the 500 largest stocks and you can buy that in a mutual fund, went up 26%. In 2024 it went up 25. In 2025 it went up 18% year to date. In 26 it's up over 10%. And we're not even at the end of the year yet. Okay. Or you can get three and a half percent on a high yield savings account. So basically, had you been invested, if you're out there and you've been invested for those four years, you would have doubled your money. And by the way, I have some money sitting in an S and P always. That's where I park money while I'm waiting to buy a piece I of rent real estate. And so during that five year period of time, the money that I've got sitting in there doubled. That's crazy, y'.

[Sponsor/Announcer]

All.

[Dave Ramsey]

So like if it's a million dollars, you got $2 million, that kind of thing. If it's 170, you got 340. Now the market does not always do that. That's an unusually good four year period of time. But that's a lot, y'. All. That's crazy. Crazy. And so, you know, just leaving money in a fruit jar in the backyard buried because it's quote safe. No, it's not. Because you're getting beat up out here by inflation. So you need to be investing at a rate that's higher than taxes and inflation, which is higher than 6% on your long term investing because you got to cover taxes and inflation. Inflation runs about 4.2 and then you're going to have income tax of some kind on that money somewhere. So when you got money like he's got sitting there, be Rachel's point. Get it to where it's working for you. Andrew is in Tampa. Hi Andrew. What's up?

[Caller]

Well, I've got a interesting problem. I am truly blessed. I'm in a very strong financial position. But you've got me getting, I guess anxiety because I burnt through my baby Step three, I had a couple of very large ticket recent expenses that fortunately, you know, I had that fund, was able to pay it. So, you know, just not having. I'm super cash poor right now, but was want to know your opinion on borrowing against a 401k since I can pay it back to myself with interest at roughly the rate that the market's moving?

[Dave Ramsey]

No, it's not the rate the market's moving and it's more like 5 or 6%. You don't pay yourself back on 401k loans at market rate. You mean the market on a market on a high yield savings account, maybe, but not the market on the. Not what the S&P 500 is doing? No, that program's not available. But anyway, the answer is no. I would never borrow on a 401k under any circumstances. The only time I would take or use 401k money is to avoid a foreclosure or bankruptcy. You're nowhere near of that. How much money did you have in your emergency fund?

[Caller]

Well, going back to Covid, I had quite a bit, but I used that to buy a business and I now own four locations and that's doing real well. And I'm keeping all of that money separate to continue to grow that business.

[Dave Ramsey]

How much money's in that business?

[Caller]

So how much money is in the business?

[Dave Ramsey]

How much money are you? You said I'm keeping all that money. How much is is in there?

[Caller]

It makes about 300,000 a year.

[Dave Ramsey]

Good. And all that money is just sitting there and retained earnings?

[Caller]

Well, no, I've used it to buy properties and open additional shops.

[Dave Ramsey]

Okay. How much cash is sitting in there right now?

[Caller]

In the business account? About 180.

Right.

[Dave Ramsey]

Okay. And how much was your emergency fund recently until you had these unexpected big purchases?

[Caller]

Was about. It was about 100,000.

[Dave Ramsey]

Why'd you have a hundred thousand in your or in Your emergency fund? 3 to 6 months of expenses should be in your emergency fund. You don't have three to six months of $100,000. Okay, so I'd take some of your 180, maybe 30 or 40 or whatever the three to six months of expenses and move it over there, set it in your emergency fund and call it a day. Sam, you spend hours researching before making a major purchase like a home or car. But it's also a good idea to put in the work searching for the right insurance coverage to protect your biggest assets. I recommend using Ramsey Trusted Pros. Whether you're looking for car, home or any other type of Insurance. Ramsey Trusted providers have been coached and vetted to serve you like we would. Find what you [e-mail] insurance. Our scripture of the day, Psalm 37, 23 and 24. The Lord. The Lord makes firm the steps of the one who delights in him. Though he may stumble, he will not fall, for the Lord upholds him with his hand. John Maxwell says, a man must be big enough to admit his mistakes, smart enough to profit from them, and strong enough to correct them. Whew.

[Caller]

That's good.

[Dave Ramsey]

Mikayla is in Philadelphia. Hi Mikayla, how are you?

[Caller]

I'm good. How are you guys doing?

[Dave Ramsey]

Better than we deserve. What's up?

[Caller]

I'm calling because I'm wondering what it means to be a beneficiary on a will. And if, if that person who is the holder of the will, if they pass away, does the beneficiary inherit any debt?

[Dave Ramsey]

Okay, the second answer is no. The first answer is there's not really anything called a beneficiary. There's an heir. You can name an heir, you can name who you're going to leave money to. You can name, you can take a. There are certain kinds of things, like your 401k, you can put a beneficiary on that. Life insurance has a beneficiary on it. An annuity can have a beneficiary on it. But a will technically doesn't use that term. It would be more that you're just the heir or the person that has willed the money. A will also has, and this may be what you're talking about. I'm not sure. They will assign someone to manage the affairs of the estate and follow the directions of the will and that's called the executor of the will. Is that what you're thinking of?

[Caller]

I think so.

[Dave Ramsey]

Whose will are we talking about?

[Caller]

This is my grandmother's will.

[Dave Ramsey]

Okay. She's just. If she's simply leaving you money, it's that simple. Okay.

[Caller]

Okay.

[Dave Ramsey]

The executor, as the word implies, executes. Executors execute the terms of the will. So if the will says you get $5,000 of grandmother's money, your cousin gets $3,000 of grandmother's money, your mother gets that piece of land, your brother in law gets that piece of jewelry or bible or whatever, then the executor's job is to do what the will says and execute that and give you that money, your sister, that money, your brother in law, whatever, all that stuff. Right. It's their job to do that. But in no case does the debt get assumed by the person. Now, okay, if there's something like a house that has a mortgage on it, okay, the executor would sell the house and whatever the net is would be distributed to the people in the will.

[Caller]

Okay?

[Dave Ramsey]

But you do not. And if they die and they don't have enough money to cover all of their debts, the person in the will will get nothing because the debts have to be paid before money's destroyed.

[Caller]

Gotcha.

[Dave Ramsey]

Okay, but in no case are you suddenly gonna have debt on you because your grandmother had a mortgage. Okay, but now let's let me make it. You know, that's the law. Now, if we go a step further, just make this even more complicated, but let's say your granny had a house that she owed a hundred thousand dollars on, and the house is worth a half million dollars. Okay? She dies and she leaves you the. The house. Now, you have inherited a house that has a mortgage, but you're not on the mortgage. If you want to keep the house, you're going to pay the mortgage because they're going to take the house, but you're not on the mortgage. They're not going to report it on your credit report. They're not going to sue you if

[Rachel Cruze]

they foreclose, there's no change in the documentation. How about the deed?

[Dave Ramsey]

The deed can go into your neighborhood, but you don't owe the mortgage. Okay, but if you want to keep the thing, or if she leaves you a car and it's got a car loan on it, if you want to keep the car, you're going to pay the debt. Okay, but you're not technically on the debt. Like if she left $50,000 in credit card debt, you don't just get the $50,000 in debt. Debt does not. Is not inherited.

[Caller]

Okay.

[Dave Ramsey]

Is that logical?

[Caller]

Yes, very. Thank you.

[Dave Ramsey]

Okay. Hope I didn't give you too much.

[Caller]

No, you're good.

[Dave Ramsey]

Just throwing everything at you. So, folks, when someone dies, to make it simple, what you own when you die stands good for what you owe. So only your net worth after all debts are paid can be distributed to your heirs. And so it's like sometimes I run into people who are kind of. They don't know how this stuff works. It's like, my grandmother left me a car, but the bank took it. Well, no, your grandmother left you a card with a debt on it and you didn't pay the debt. That's why the bank took it. The bank didn't do anything wrong. That's why they have a lien on the car title because they get their dadgum money. But if someone is penniless, they're a pauper. They live in an apartment. They don't own a piece of real estate, and they got $60,000 in debt and $40,000 or $60,000 in credit card debt and $40,000 in student loan debt. And they don't own anything of value and they die. That debt is not inherited by their heirs. That debt is just simply lost. The company that loaned them that money loses the money. Student loan doesn't get paid. The credit cards don't get paid. And so if that's your father, that passes away as a pauper is what we would call it poor. You would just get copies of the death certificate and send it to Citibank and say, you get nothing, honey, because he died with no money and nobody paying this. But you don't get to keep his car and not pay the credit card debt either, because what you own stands good for what you owe when you die. Jacob's in Salt Lake City. Hi, Jacob.

[Caller]

How are you doing? Great. How are you guys doing?

[Dave Ramsey]

Better than we deserve. What's up?

[Caller]

Yeah, I had a question about qualified HSA funding distributions. Are they a good idea in terms of working your money with a traditional IRA in a smart way?

[Dave Ramsey]

The only thing I've used HSAs for in that way is I fully fund mine every year and I've never used it. And I've got it invested in mutual funds, and so it's become a third type of retirement savings. But I don't move it around. I haven't done qualified distributions. I haven't done anything. If I had a big medical event and didn't have the money, I could pull that money out of there. But I got several hundred thousand dollars in an HSA because I started it the first year, George W. Bush started it, and I fully funded it every single year. And when he got above 100 grand, I dropped. I put it in the mutual funds. Actually, I think there's more like a half million in there now. But anyway, doesn't matter. A lot of money in there. And so it becomes. But only after you're at baby step seven do you do that kind of stuff. Don't be putting money loading up that thing and not paying off your house. That makes sense.

[Caller]

Yeah, it does make sense. I just have a traditional IRA that is not really doing anything. It's from a previous employer. I haven't rolled it over or anything like that. I wanted to See if, like transferring some of that money into my hsa. No, no, no.

[Dave Ramsey]

You don't need that money in your hsa. No, you want to keep that as an ira. Roll it from there from a traditional into a traditional IRA into a good mutual fund that's doing something. Get a good smartvestor pro to help you with that. We don't use the HSA instead of IRAs. No, no. IRAs are much more flexible. A lot more things you can do with them than you can with the hs. But by the way, sidebar, if you.

[Rachel Cruze]

From a tax perspective, though, the HSA do what? From a tax perspective, the HSA grows.

[Dave Ramsey]

It grows just like the traditional.

[Rachel Cruze]

And isn't it. And it's pre tax. That goes in too.

[Dave Ramsey]

Yeah, you don't.

[Rachel Cruze]

Yeah, you, you.

[Dave Ramsey]

So it's like, it's like a traditional.

[Rachel Cruze]

You void double taxes.

[Dave Ramsey]

It's like. No, you get double taxed if you don't. If you don't use it for medical, you get, you get taxed.

[Rachel Cruze]

Not at the end, at retirement.

[Dave Ramsey]

Yeah, yeah. When you pull the HSA out at 65 and you start using it for retirement. Retirement money, you pay income tax on it. Just like a traditional 401.

[Rachel Cruze]

Why did I feel like the growth was tax free?

[Dave Ramsey]

No, it's tax free if you use it for medical. No, you buy a Tylenol. They don't. There's zero taxes.

[Caller]

But

[Dave Ramsey]

it's a lot of Tylenol.

[Rachel Cruze]

My hsa.

[Dave Ramsey]

Yeah, but your hsa, I mean, it's. But it's. You got a big old traditional lump sum sitting there and there's not anything you can do with it except that. So. But no, I wouldn't put more money in there than that and I wouldn't do any of that until that's a baby step seven and beyond type strategy where you've maxed out 401ks, mega Roths, mega backdoor, everything, you know, mega 401ks, everything, all going into Roth. You can't do anything else. And I think, okay, here's a little bit more money I can keep the government's hands on.

[Rachel Cruze]

Yeah. And again, you can't get to it. Well, unless for medical. Right. Until retirement.

[Dave Ramsey]

65.

[Caller]

Yeah.

[Rachel Cruze]

So it's stuck in there.

[Dave Ramsey]

Again, I can get mine, but I don't need it. So I'm not going to. I mean, I'm just going to let.

[Rachel Cruze]

Sit there and grow.

[Dave Ramsey]

Just let it sit there and grow. That's what it's for. Never was intended to be used by me. That. That was just keeping the government stinking hands off my stinking money. That puts us out of the Ramsey show in the books. We'll be back with you before you know it. In the meantime, remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace. Christ Jesus, Sam.