You Can’t Outearn Bad Spending Habits Forever

Summary

The Ramsey Show: "You Can’t Outearn Bad Spending Habits Forever" – Detailed Summary

Release Date: November 26, 2024

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Episode Overview

In this impactful episode of The Ramsey Show, host Dave Ramsey and co-host Rachel Cruz delve deep into the pervasive issue of how poor spending habits can undermine financial success, regardless of one’s income level. Through a series of real-life caller scenarios, the show emphasizes the importance of disciplined financial planning, debt elimination, and mindful spending to achieve long-term wealth and financial stability.

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1. Struggling with Debt and Career Dissatisfaction

Caller: Elena from Huntington, West Virginia [01:03]

Elena reaches out feeling overwhelmed by $65,000 in debt, including student loans, credit card debt, and a car loan, despite earning a $50,000 annual salary. Dissatisfied with her job in property management, she aspires to become a NICU nurse but faces barriers due to her unrecognized diploma and substantial debt.

Rachel Cruz’s Advice [01:36 – 06:35]:

• Identify True Aspirations: Elena is encouraged to clarify her career goals rather than using education as an escape.
• Volunteer and Explore: Rachel suggests volunteering in a NICU to gain firsthand experience and assess her commitment to the field.
• Incremental Steps: While pursuing her GED and nursing education, Elena should consider maintaining her current job or finding a better-paying position to manage her debt.

Dave Ramsey’s Input [06:35 – 07:32]:

• Increase Income: Emphasizes the necessity of upping her income to combat debt.
• Side Gigs: Recommends exploring side jobs related to her passion for children, such as working as a nanny.

Notable Quote:

Dave Ramsey [07:26]: "You need more money right now. I mean, in my opinion, for the amount of debt that you have, you need to increase your income."

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2. Saving for Children’s Future

Caller: Joshua from San Diego [12:41]

Joshua seeks advice on optimizing his savings for his three-year-old daughter’s future. Currently, he’s placing funds in a CD yielding 5.29% annual return but is open to higher-yield alternatives.

Rachel Cruz’s Guidance [13:35 – 17:04]:

• Mutual Funds Recommendation: Suggests investing in a growth stock mutual fund with a solid track record as a better alternative.
• Uniform Transfer to Minors Act (UTMA): Explains the benefits and limitations of UTMA accounts, cautioning about loss of control once the child turns 18.

Dave Ramsey’s Perspective [16:00 – 17:04]:

• Balanced Approach: Acknowledges the need for higher yields but warns against overcomplicating savings.

Notable Quote:

Rachel Cruz [14:24]: "The downside with the UTMA is when they turn 18 years old, technically speaking, the money is theirs and you have zero control."

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3. Managing Mortgage and Escrow Accounts

Caller: Courtney from Dallas [21:52]

Courtney is curious about the benefits of not using an escrow account for home insurance and taxes, seeking to understand if managing payments independently is more advantageous.

Rachel Cruz’s Explanation [22:09 – 25:09]:

• Interest Earnings: Keeping escrow money allows funds to earn interest rather than sitting idle.
• Potential Pitfalls: Highlights common issues with escrow accounts, such as miscalculations leading to shortages or overages.
• Recommendation: Encourages using escrow only if mandatory but advises regular monitoring to ensure accuracy.

Dave Ramsey’s Input [25:08 – 25:46]:

• Convenience vs. Control: Balances the ease of autopilot payments against the potential loss of earning interest.

Notable Quote:

Rachel Cruz [23:03]: "Make sure that the amount being held out for taxes and insurance each month is 1/12 of the total of your taxes and insurance."

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4. High 401(k) Fees and Investment Management

Caller: Jerry from Norfolk, Virginia [25:57]

Jerry is alarmed by high fees ($300 per quarter) charged by his 401(k) administrator and is considering transferring his account to Charles Schwab for better management and cost efficiency.

Rachel Cruz’s Advice [27:15 – 29:28]:

• Verification: Urges Jerry to contact HR and the 401(k) provider to confirm if he is personally incurring these fees or if they’re covered by his employer.
• Alternative Options: Suggests exploring other investment advisors or firms like Ramsey’s SmartVestor for potentially lower fees and better services.

Dave Ramsey’s Commentary [29:28 – 30:22]:

• Legal Constraints: Clarifies that employers typically cannot switch 401(k) administrators without proper procedure, emphasizing the importance of verifying the charges.

Notable Quote:

Rachel Cruz [27:31]: "It would be very unusual, as a matter of fact, your employer shouldn't be paying that much per employee. That's an asinine amount of money."

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5. Balancing Military Retirement, Education, and Debt

Caller: Pierre from New York City [32:01]

Pierre, a medically retired military servicemember, is grappling with $1,800 in credit card debt and $4,000 in collections. With a monthly income of approximately $6,000 and three young children, he questions whether to prioritize debt repayment over providing for his children's Christmas.

Rachel Cruz’s and Dave Ramsey’s Guidance [33:03 – 41:24]:

• Immediate Action: Strongly advises Pierre to secure additional income rather than prioritizing non-essential spending.
• Debt Elimination Focus: Emphasizes the urgency of paying off debt to prevent long-term financial strain.
• Minimal Holiday Spending: Suggests keeping Christmas spending minimal, focusing on experiences rather than expensive gifts to reduce financial stress.

Notable Quote:

Dave Ramsey [36:25]: "What you need to do is start having money. ... I would be finding a job."

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6. Enabling Adult Children with Mental Health Issues

Caller: Justin from Dallas [43:16]

Justin discusses his struggle with supporting his adult children, one of whom has mental health issues and struggles with employment. Despite being on Baby Step Two with debt reduction, he feels conflicted about continuing financial support.

Rachel Cruz’s and Dave Ramsey’s Advice [44:24 – 51:01]:

• Recognize Enabling: Highlights the detrimental impact of financial enabling on both Justin and his children.
• Set Boundaries: Encourages Justin to establish clear boundaries and cease financial support to promote his children's independence and dignity.
• Support Without Funding: Suggests alternative forms of support, such as emotional backing, without monetary assistance.

Notable Quote:

Rachel Cruz [45:50]: "100% of enablers are sweet people. You are a sweet person. You are devastating your children. You're hurting them."

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7. Purchasing Investment Property Wisely

Caller: Joshua from Seattle [56:46]

Joshua contemplates buying a $200,000 investment property and is unsure if he is financially ready. With an income of approximately $200,000 from multiple jobs and a wife’s car loan, he seeks guidance on whether to proceed or delay the investment.

Rachel Cruz’s and Dave Ramsey’s Insights [57:17 – 82:40]:

• Debt-Free First: Rachel strongly advises waiting until being entirely debt-free before investing in real estate.
• Financial Stability: Highlights the risks associated with leveraging debt for investment properties, including potential foreclosure and financial strain.
• Long-Term Planning: Recommends focusing on paying off existing debts and saving before considering additional investments.

Notable Quote:

Rachel Cruz [58:56]: "Our rule we live by is we pay cash for it or we don't buy it. And we only start buying investment real estate after we're 100% debt free."

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8. Success Stories: Debt-Free Achievements

Featured Guests: Matt and Terry Hudson [64:36 – 72:20]

Matt Hudson, a software engineer with Ramsey Solutions, shares his journey of paying off a $133,000 mortgage in 11 years and three months, culminating in a debt-free home valued at $485,000. Ted and Terry emphasize the importance of budgeting, mutual support, and maintaining financial discipline to achieve such milestones ahead of their initial 15-year plan.

Key Takeaways:

• Consistent Budgeting: Regular monthly budget meetings to ensure both partners are aligned on financial goals.
• Additional Income Allocation: Redirecting extra income towards paying off the mortgage faster.
• Peer Support: Leveraging the Ramsey team’s influence and positive peer pressure to stay committed.

Notable Quote:

Terry Hudson [70:34]: "Having the budget and making sure that everyone's on the same page and that you're working towards the same goal."

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Conclusion

This episode of The Ramsey Show underscores a fundamental principle: no matter how much one earns, unchecked spending and poor financial habits can derail wealth-building efforts. Through empathetic listener interactions and practical advice, Dave Ramsey and Rachel Cruz empower individuals to take control of their finances, eliminate debt, and make informed decisions that pave the way for financial freedom and security.

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Key Quotes with Timestamps

• Dave Ramsey [07:26]: "You need more money right now. I mean, in my opinion, for the amount of debt that you have, you need to increase your income."

• Rachel Cruz [14:24]: "The downside with the UTMA is when they turn 18 years old, technically speaking, the money is theirs and you have zero control."

• Rachel Cruz [27:31]: "It would be very unusual, as a matter of fact, your employer shouldn't be paying that much per employee. That's an asinine amount of money."

• Rachel Cruz [23:03]: "Make sure that the amount being held out for taxes and insurance each month is 1/12 of the total of your taxes and insurance."

• Rachel Cruz [45:50]: "100% of enablers are sweet people. You are a sweet person. You are devastating your children. You're hurting them."

• Rachel Cruz [58:56]: "Our rule we live by is we pay cash for it or we don't buy it. And we only start buying investment real estate after we're 100% debt free."

• Terry Hudson [70:34]: "Having the budget and making sure that everyone's on the same page and that you're working towards the same goal."

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This comprehensive summary captures the essence of the episode, highlighting the critical discussions, actionable advice, and motivational success stories that resonate with listeners aiming to overcome financial challenges and build lasting wealth.

Transcript

[Dave Ramsey]

Hey guys. Black Friday week is here with five days of deals starting at just $12. Go to Ramsaysolutions.com store to check them out.

[Rachel Cruz]

Live from the headquarters of Ramsey Solutions, it's the Ramsey show where we help people wealth, do work that they love and create actual amazing relationships. Rachel Cruz, number one bestselling author, Ramsey personality. My daughter is my co host today. Open phones at 888-825-5225. Alaina is in Huntington, West Virginia. Hi, Elena, how are you?

[Caller (Elena)]

I'm doing good. How are you?

[Rachel Cruz]

Better than I deserve. What's up in your world?

[Caller (Elena)]

So I've been watching you for a long time, for years now. And I have just saved my $1,000.

[Rachel Cruz]

Good.

[Caller (Elena)]

And I am also drowning in student debt, credit card and my car loan. I do have a job. I make about 50,000. My debt is a little bit more around 65,000. I hate my job and I want to go to school, but I don't know if that's a good idea because of the amount of debt that I have. I'm trying to figure out what the best way is to get out of this mess.

[Dave Ramsey]

Basically, what's your, what's your current job? What do you work in that you're. You're not enjoying?

[Caller (Elena)]

I work in property management. I'm an assistant property manager.

[Dave Ramsey]

Okay. And is it the field that you're not enjoying or is it the specific company do you think? Because you said you want to go back to school. I'm just curious what else is out.

[Caller (Justin)]

There that you're thinking?

[Caller (Elena)]

Yeah, so I think it's just the field. This is actually a Christian based company, which is super awesome. So I think it's just a field. I'm not happy here. It's just not fulfilling. I do love kids, so I've always wanted to pursue NICU nursing, but I graduated in Hawaii and the diploma I got from there is not recognized. I would have to go back to school for a GED and then go to college. But with all the debt and the mess that I have, it's just kind of overwhelming and I really don't know kind of where to go.

[Rachel Cruz]

Well, I think we're doing this a little bit backward. You want to run to something, not from something as far as your career goes. And so what I would do if I were in your shoes is I would very clearly identify and spend some time and some soul searching. And we'll even give you some tools to help you with this, identifying exactly what you want to do with Your life in this next chapter. Going back to school in air quotes is a really bad idea unless that particular degree is necessary to do the thing you want to do. Okay.

[Caller (Elena)]

Right.

[Rachel Cruz]

And sometimes when people are running from something, they air quotes go back to school as if that's going to solve anything. It's not going to solve anything. You need to actually be studying toward becoming the thing you want to be. Did you say you wanted to be a pediatric nurse?

[Caller (Elena)]

A NICU nurse.

[Rachel Cruz]

A NICU nurse.

[Caller (Elena)]

So yeah.

[Rachel Cruz]

Okay. And you're high school diploma does not count.

[Caller (Elena)]

Yeah. So I graduated from a competency adult community school and apparently that is not recognized nationally. And I have to go back for a ged, which is crazy because I've been using that pretty much my whole life. So.

[Rachel Cruz]

Okay, so right now you're a high school graduate that needs to pass a GED to prove it. Right.

[Caller (Elena)]

Basically.

[Rachel Cruz]

And then you would have to go through all your undergraduate and go through nursing school to be a nursing nicu. Okay. So what Ken Coleman would tell you to do that is one of our Ramsey personalities has written extensively on this idea is he would tell you to go over there in your off hours and volunteer in the NICU to rock babies.

[Caller (Elena)]

That is true.

[Rachel Cruz]

And talk to the nurses that are there and tell them it's going to take you six years to be one of them. Is it worth it?

[Caller (Elena)]

Yeah.

[Rachel Cruz]

Now, I'm a huge fan of nursing as a career field, but I like little babies. Is a long way from. I want to go to school for six years to be a NICU nurse. That's a different thing. It's a lot different. Okay. So because nursing at times is gross. Nursing at times is very stressful. Nursing at times will break your heart. Nursing at times will cause your back and your feet to hurt and ache. It's hard work. It's a great career field, but it's way different than I have a heart for children. You follow me?

[Caller (Elena)]

Yeah.

[Rachel Cruz]

So what I want you to do is get your arms around what it is you want to do and exactly what the cost is. And then we're. And I don't want you to spend six years and end up on in a field that you hate accidentally. You wouldn't want to do that. So number one, we don't want to go back to school in air quotes as an escape mechanism. Number two, we want to. If we're going to go back to school, let's make sure that whatever we're studying gets us there. And then number three, what are some interim steps we can take to move in the direction of the field while you're talking about going to school there. So while you're working on your undergrad and passing your GED and getting your undergrad going at your local community college there in West Virginia, which you can do your first two years there just fine, you're probably keeping the job you've got, or you're getting a better job, making more money, but maybe not in your career field. Or if you can find something where they'll pay you $40,000 a year to be in and around the medical field and you can get a sniff of what it is you're signing up for, then I would go along with that.

[Dave Ramsey]

Yeah. And I would tell you to Elena, just with the numbers you gave, not even thinking future just presents, right. You're, you're need the money you need. Yeah. And so what are things you can do? Because I would tell you, regardless if you wanted a career change or not on this call, part of the solution of you getting out of this debt is going to have to be upping your income. And so whatever you're doing beyond your current job, let it be around kids. Like, I would go on care.com and see if somebody needs a nanny from 6 to 9pm or whatever.

[Rachel Cruz]

Right.

[Dave Ramsey]

Like finding things in that that are going to make you more money to get out of debt and start your financial process and this ball rolling to get you ahead financially. But then also if you compare that with some level of your passion of what you're talking about while at the same time doing exactly what you're saying. But you're, you need more money right now. I mean, in my opinion, for the amount of debt that you, that you.

[Rachel Cruz]

Have, you can scratch the kid itch by joining the children's ministry at your local church.

[Caller (Elena)]

Yes.

[Rachel Cruz]

And they need your help, by the way, because they're always perpetually understaffed.

[Dave Ramsey]

And again, this isn't about.

[Caller (Elena)]

I do have a go ahead.

[Rachel Cruz]

You have a what?

[Caller (Elena)]

I was going to say something really important too, because I am a believer and a follower of Christ, but I did something really stupid. And when my sister passed away early this year, I would say I was super vulnerable and dealing with grief, not knowing how to deal with grief for the first time. And I ended up moving, of course, from my first job earlier this year, paying about 70,000 to live with my boyfriend. And now we're living this house unmarried. We're not seen eye to eye in terms of finances.

[Rachel Cruz]

That's easy to undo, isn't It.

[Caller (Elena)]

Yeah, move out. My dad always said. My dad always said, why pay for the cow when we can get the note for free?

[Rachel Cruz]

Right. So my dad's a wise man and so. Yeah, but you can fix that. You can just move out. Where were you living when you were making 70?

[Caller (Elena)]

In Arlington, Virginia.

[Rachel Cruz]

Can you get that job? Oh, that's more expensive than Huntington, West Virginia? I don't know that you were netting 20 more. That's a very expensive place to live. Okay. Yeah. I mean, you can, you can reverse that. You can say, hey, I'm doing something I'm not proud of and I'm not going to do it anymore. That's a decision. Just like the decision to do something wrong is you can make a decision to do something right. So go do that, kiddo. Hang on. We're going to get you signed up for Ken Coleman's everything. I want her to get the assessment and the proximity principle book and the whole thing. Are you working the baby steps? One of the smartest and most impactful changes you can make is to ditch your cash value life insurance plan, if you have one, and replace it with a term life policy. Listen, the only thing a cash value policy is good for is overcharging you for the life insurance and then paying you a crappy rate of return on your overpayment. Stop wasting your money and really focus on getting out of debt and growing your savings. For over 25 years, I've trusted and used Zander Insurance to find the best rates on term life insurance from the top rated companies. They keep the whole thing simple. You can apply online or over the phone and they even have low cost plans that don't require an exam. Go to zander.com or call 800-356-4282. Even if you don't have a cash value policy, if you're one of the 70% of people who have no life insurance or not enough, it's even more important to get this done. 800-356-4282 or zander.com Black Friday's here. We've got gifts for everyone on your Christmas list. Our best selling books like the total money makeover. Baby steps, millionaires own your past, change your future and more are on sale for just $12 each. The total money makeover, of course, is the roadmap that's helped people walk the baby steps. Over 12 million of them. Now we hear it all the time. Millions have become debt free. It's the proven step by step plan we talk about on the ramsay show just 12 bucks. And Rachel's newest kids book, I'm Glad when I Can Share is also here in time for Christmas. We launched it last week for sale and it's 1999. It is the third a series that's a trilogy and you can get all three if you want. And there's a package for sale right there for all three. And they're high quality paper, high quality everything. These are kids books that will survive toddlerhood. They're well built. 54.99 for all three. Check out the Black Friday [e-mail] store. And this thing took off. It did good.

[Dave Ramsey]

Yes, it did. I know.

[Rachel Cruz]

It's a great series.

[Dave Ramsey]

It is great. It's been, it was a fun project to do. And you know, talking about the intangible parts of money, you know, contentment and gratitude, generosity, those kind of topics I feel like are harder sometimes for to grasp and to teach your kids. So I was like, okay, how do we put that in a sweet children's book? So those are the three topics and they're short, you're welcome, parents. They rhyme, the illustrations are beautiful. And it's the same animals in all three books. So that's been fun. People buying each one as they've launched that they see the same characters. So you'll get to kind of follow them along on these adventures, learning about their topics.

[Rachel Cruz]

And the, the illustrator Lauren just did an incredible.

[Dave Ramsey]

Yeah, I mean, they're just, they're, I.

[Rachel Cruz]

Mean, they're beautiful, world class stuff. It's really, really real proud of this product. For those of you that got kids and grandkids, be sure and check them out because you do. Hey, listen, you know, you teach a child gratitude, you teach a child generosity. Generous people are just highly attractive. You're teaching your kid to be a high quality adult when they are grateful and generous. That's a. Because think about how many adults you wish were grateful and you wish their parents had taught them that. Hello. So I mean, that's part of being a good dad, a good mom, a good grandpa, good grandma too. By the way, do not think that Papa Dave is not above reading his daughter's books to his daughter's kids. I have been known to keep it all in the family here. It's happened. All right. Justin is with us in San Diego. Hi, Justin. Welcome to the Ramsey Show.

[Caller (Joshua)]

Hey, guys, good morning. Thank you for your time also.

[Rachel Cruz]

Sure.

[Caller (Joshua)]

I'm trying to figure out, I have a three year old and all the money that we get for her birthdays and like holidays and things like that. We just kind of been putting into a CD that's yielding about 5.29% annual return. And I want to give it to her when she's 18. It's like a life starter kind of fund. So I don't want to put it into a 529 or retirement fund. Is there anything better that has a higher yield or better return for her when she does reach 18?

[Rachel Cruz]

Are you saving for her college?

[Caller (Joshua)]

I'm active duty military and I just finished my master's so I've already transferred all of the benefits over to her. So I'm going to take her through community college and then I'll pay for that. And then pretty much all of her masters is going to be completed already paid for.

[Rachel Cruz]

Okay. All right.

[Caller (Joshua)]

She has all that already.

[Rachel Cruz]

Okay. The answer to your question is just a simple mutual fund. And when I'm doing something like that, I just pick a good growth stock mutual fund that has a long track record. And I did that for our kids because when Rachel was a baby there was no 529s or ESAs. And so we used just put the money in the kid's name and then it's taxed at the growth is taxed at the kids rate, which is nothing for a long time because they have a standard deduction. And so it's called an utma, Uniform Transfer to Minors act, which is, by the way, the exact same document you use to open up a savings account. If you put her name on that savings account, you opened that cd.

[Caller (Joshua)]

I did.

[Rachel Cruz]

Okay. That's called an utma. It's an UTMA as well. Anything you do in a kid's name that's not 18 years old where the parent is the custodian falls under the utma. The Uniform Transfer to Minors Act. It's a law. Okay. It's a process because you can't contract and do financial transactions until you're 18 years old in America. So children can't have a standalone account. It's impossible. Parents have to be on it or someone has to be on it as a custodian and the utma. Now the downside with the UTMA is when they turn 18 years old, technically speaking, the money is theirs and you have zero control. So if you have a 17 year old heroin addict with $100,000 getting to come her way, you don't have control. Well, I mean, you don't have control of it.

[Dave Ramsey]

Maybe a 17 year old who likes to shop someone.

[Rachel Cruz]

I don't know someone has 17 year olds out there somewhere. Someone did. Okay, so you don't have control over this money. You're getting ready to fund her misbehavior if she's misbehaving at 17.

[Caller (Joshua)]

Okay.

[Rachel Cruz]

Okay. So be careful. You need to be aware of that. Or like with our kids, what we told them is if you're misbehaving, I'm going to steal the money and sue me. Good luck. But that's illegal. Okay. You can't really do that and I can't advise you to do that, so. But I'm not going to fund your misbehavior. I'm not going to save up a hundred grand for you.

[Dave Ramsey]

But come on, Justin's, I mean like he's going to give her money down that road. I believe you, Justin. You feel like a solid parent.

[Rachel Cruz]

Yeah, I'm. I'm sure his angel's not going to make any mistakes.

[Dave Ramsey]

No, I'm not saying that she's not going to make any mistakes.

[Rachel Cruz]

But the thing is this, that's what you're up against. Okay.

[Dave Ramsey]

So would you.

[Rachel Cruz]

I personally did not. I went that route for Urals College fund.

[Dave Ramsey]

Yeah.

[Rachel Cruz]

I did not go that route for the little savings account that he's dealing with. We kept that little savings account, birthday money and that kind of stuff in place.

[Dave Ramsey]

Right.

[Rachel Cruz]

And that was the money that helped seed the car first. Car.

[Dave Ramsey]

That's right. That's what I was going to say. Justin. Depending on the amount.

[Rachel Cruz]

Yeah.

[Dave Ramsey]

You know, this could be something that she gets earlier that is attached to something that she's wanting. Whether it is, you know, a car at 16, but something that is useful for her that doesn't necessarily have to be this like big investment and put it in a big investment fund. But would you still, I mean still with the longevity of being three to 18, you know that 15 years, you would still probably put it in. Would you still put it in a mutual fund?

[Rachel Cruz]

I don't mind 5% because it's not going to be that much money. Yeah, it's not going to be $25,000. It's going to be $2,500. So if it's putting birthday money in there, grandma's 20 bucks.

[Dave Ramsey]

Yeah. But if he wants to be funding more of his money, then you would do a mutual fund over here for more money to be putting in there for the daughter.

[Rachel Cruz]

Yeah, I would. But. And so to expand on that one step further, what we did do also was we took the kids little miscellaneous savings account and we added to It. And then when they started talking about being like 10 or 11 years old, we started talking to them about we're not buying you a car when you turn 16. We will match whatever you put in. We're going to do 401, Dave and I'll match whatever you put in. And so if you put in nothing, you're going to have a nice bicycle when you're 16. So get. You know, let's start talking about doing some chores and putting some money in, adding to this little account that we've already got started for you. And then they save up. And if I recall, you can correct me, but if I recall, you had somewhere around. With. You had somewhere around five or six thousand dollars and we matched it.

[Dave Ramsey]

I. Hold on.

[Rachel Cruz]

Okay.

[Dave Ramsey]

I had eight.

[Rachel Cruz]

Eight, okay.

[Dave Ramsey]

Thousand dollars and I put eight with it.

[Rachel Cruz]

And you got a little used fema. Sixteen thousand dollars. It was a great car.

[Dave Ramsey]

Took me all the way through college.

[Rachel Cruz]

It was a great little car.

[Dave Ramsey]

Is good.

[Rachel Cruz]

It sure did. And the other two siblings did the exact same thing. I will tell you parents, if you're going to use that matching idea, be careful. If you have. In case you have one of those kids that is a nerd super saver and this highly motivates them, you may end up having to match 30 grand if you don't put a limit on it. So I would suggest you put a limit on it. I did have one of those. Her brother named Daniel and he just about. It was ridiculous. And so we had to come around and negotiate a different thing. Not. I did match him, but he was generous with some of the money and used some of the money for his car because it was so stinking.

[Dave Ramsey]

And he bought your old Jeep or something. I mean, he even.

[Rachel Cruz]

Yeah, yeah, He's. He's just a conservative dude. But I mean, he saved everything. It was crazy. So put a limit on it. We will match it up.

[Dave Ramsey]

Well, he got a head start. Parents too. You know, I'm like four years shy. What? He had four extra years on us.

[Rachel Cruz]

Yeah, well, he watched you two and found out we were serious about this, that it wasn't a game. We weren't kidding. And he went, oh, crap, I really got to do this. And he turned on the coals and there you go. So put a limit on it and you can do match. And I use the small accounts for something like that. I use the UTMA for a big thing. If you're doing a big thing, Jerry, there that are. That's what I would do. If you're going that way. Justin, this is the Ramsey Show. Okay, here's the hard truth. Your investment dollars could be winding up in the pockets of companies that hold positions you don't agree with. People are unknowingly putting money into tech giants and household brands that don't match up with their core values. But here's good news. Timothy Plan is at the forefront of biblically responsible investing. That means Timothy Plan uses a strategy that lets investors chase competitive returns while staying rock solid in their beliefs. So if you're ready to invest with a clean conscience, it's time to check out Timothy Plan. Request [e-mail] to learn more or contact.

[Caller (Joshua)]

Your financial advisor today to see if Timothy Plan is right for you.

[Rachel Cruz]

Timothy Plan.com investing includes risk, including possible loss of principal. Before investing, carefully consider a fund's investment objective, risk charges and expenses contained in the prospectus or summary Prospectus. [e-mail] Read carefully before investing. Mutual funds distributed by Timothy Partners Limited and ETFs distributed by Foresight Fund Services LLC. Rachel Cruz, Ramsey Personality is my co host, number one best selling authority and my daughter. If you like what you're hearing here, we could use your help. You are our marketing plan. Spread the word on this show. Share the show. Click the share button. You can subscribe and you can follow and you can leave nice 5 star reviews and you can click the clip of the link out and make a copy of it and send it to your friend by email and go listen to this. This stuff's helping me with my life because that's what we're here for and we need your help. We need to have more people that we're helping. That's what we're doing. And thank you for those of you that have been doing that because our numbers are ridiculously up and we don't even have a stadium named after us like sofa or something like that. It is. You know, I don't. Sorry the allergies are bad but the. Yeah that you're our marketing plan. We're not dropping 300 million on a stadium. You're it. So thank you. We're either helping you or we're not. And that's what we're here for. Thank you very much. Courtney is in Dallas. Hi Courtney, how are you? I'm doing good.

[Caller (Joshua)]

How are you guys?

[Rachel Cruz]

Better than we deserve. What's up in your world?

[Caller (Justin)]

Nothing much. I was wondering if you guys could tell me what the benefit is of not using an escrow account to pay for home insurance and taxes.

[Rachel Cruz]

Two things One, you get to keep the money all year and earn interest on it instead of it sitting in an account that's not interest repair until you pay your taxes and pay your insurance so it accrues interest. And the second one is you don't screw up the accounting. And mortgage companies notoriously screw up the accounting on escrow accounts and they get out of balance and there's an escrow shortage. And then they raise your payment to make up the shortage or they just miscalculate something and you got somebody that's the lowest common denominator running the calculation too many times. And when I used to own a bunch of property with debt back in the day, I would say as many as 40% of the accounts were screwed up. So I don't know if it's still that bad because I haven't had a mortgage in 30 plus years. But, but, but I suspect it is still a problem. The benefit of using the escrow account is it's on autopilot. You don't have to think about it.

[Caller (Justin)]

Right.

[Rachel Cruz]

Okay. And most people don't manage their money well enough. They end up not having the money to pay their taxes or not having the money to pay their insurance. It sneaks up on them like Christmas.

[Caller (Elena)]

Yeah.

[Caller (Justin)]

And I know that some mortgage companies don't even give you the option. Sometimes they require you to use an escrow account.

[Rachel Cruz]

Correct. A typical conforming mortgage, meaning a Fannie Mae, FHA or VA will require it because they want to make sure that the house they have a lien against doesn't burn or isn't taken for taxes.

[Caller (Justin)]

Right. Okay.

[Rachel Cruz]

And so yeah, you don't really have a choice. I personally, if I were you, I would just use the escrow account, but I would stay on them to make sure it's the proper amount.

[Caller (Justin)]

Okay. How do you recommend staying on top of them?

[Rachel Cruz]

Well, you just want to make sure that the amount being taken out of your payment for your payment is principal interest. If it has escrow, it's taxes and insurance, piti. And you want to make sure the amount being held out for taxes and insurance each month is 1/12 of the total of your taxes and insurance. It shouldn't be one, it shouldn't be less than that because you're going to come up short and then they're going to have a shortage because they're going to pay it either way. They don't want to get, they don't want you to be behind and then, or there could be an overage. Let's say they're taking out more than they need to. And so just make sure that the numbers are right and just look at it once a year and make sure they're not. You know, if your taxes and your insurance actually go up and they don't change the amount being withheld for it, you're going to get behind. Right, right. That's, that's one of the ways you'd look at it. So that's the kind of thing you're doing. So I, I would use the escrow if I were in that situation. I don't recommend because I put everything on autopilot that I can just so.

[Dave Ramsey]

You don't have to. Yeah.

[Rachel Cruz]

So say everyone.

[Dave Ramsey]

Yeah. Even though it's not earning interest, it's.

[Rachel Cruz]

Not enough interest to matter.

[Dave Ramsey]

It's okay. Yeah.

[Rachel Cruz]

Yeah. And more people are going to screw it up by not saving up the money and the mortgage company is going to screw up the escrow account.

[Dave Ramsey]

Yeah, that's probably true.

[Rachel Cruz]

Totally.

[Dave Ramsey]

Yeah. And we, and we have a part of our website that talks all about this and all real [e-mail] real estate. That's kind of our real estate home base because we just, it's one topic when it comes to your money that we get so many questions. So if you guys need more resources, there's free stuff, videos and articles and calls from the show. There's so much there to help you in this, in this topic of your money when it comes to your home.

[Rachel Cruz]

Yeah. Ramsey Solutions.com real estate. Honestly, it's the, the, that portion of our site is massive because we so get, we get so much question on real estate. And it's really, it's really a nice resource to help you.

[Dave Ramsey]

Yeah, for sure.

[Rachel Cruz]

So good stuff.

[Dave Ramsey]

Good, Good question, Courtney.

[Rachel Cruz]

Yes, Excellent, excellent question. Jerry is with us in Norfolk, Virginia. Hi, Jerry. Welcome to the Ramsey Show.

[Caller (Jerry)]

Hi. Thank you. So my question, I have a bunch of accounts. I have a Charles Schwab brokerage account. I have Charles Schwab IRA Traditional and a Charles Schwab Roth. Now I also, well, I also have a principal now principals, the company. My employer handles our 401. So I was looking at their website and it looks like they charged me about a hundred bucks a month to have that account. But I have the option. Yeah.

[Rachel Cruz]

Yeah.

[Caller (Jerry)]

I thought that was kind of high myself.

[Rachel Cruz]

That's wrong.

[Caller (Jerry)]

Well, that's what it says under fees.

[Rachel Cruz]

You have a 401k and they're charging with your company.

[Caller (Jerry)]

Correct. I'm a hospital employee and There is.

[Rachel Cruz]

A 403B or 401K.

[Caller (Jerry)]

401K.

[Rachel Cruz]

And they're charging you $100 a month? $1,200 a year.

[Caller (Jerry)]

Actually, $300 a quarter, if you want to be specific. But yes, basically a hundred. Yeah, it says it right here. Plan Administrative Services, 288.70.

[Rachel Cruz]

Is that being deducted from your account or is your employer paying that?

[Caller (Jerry)]

I don't know. I'm just looking at the website where it says plan fees, so I'm assuming I'm paying it.

[Rachel Cruz]

I'm not. Because you shouldn't be.

[Caller (Jerry)]

Okay, well, that's a plus.

[Rachel Cruz]

It would be very unusual, as a matter of fact. Your employer shouldn't be paying that much per employee. That's asinine amount of money.

[Caller (Jerry)]

Yeah, I kind of thought so.

[Rachel Cruz]

Yeah. I don't pay anywhere near that. I got 1200 employees with a 401k plan here. No, even. Not even close to that. I would fire those people in a heartbeat if they were charging me that.

[Caller (Jerry)]

Okay, well, how do I find out if I'm paying that, then?

[Rachel Cruz]

Call hr.

[Caller (Jerry)]

I said on the website it says plan fees.

[Rachel Cruz]

Yeah, well, I mean, it can be a plan fee, but the plan wasn't instituted by you. It was instituted by the employer. So it's possible they're being charged that. That's just ludicrous. I would call HR and I would call principal both and ask them, okay, just call. Call principal and go, hey, I got a 401k. And I'm looking at the statement here, and this feels like, you know, like you guys should be wearing a mask, like you're robbers.

[Dave Ramsey]

Oh, my gosh.

[Rachel Cruz]

No, really? That's just ridiculous.

[Dave Ramsey]

What was your. What was your question, though, Jerry? Your original question. You called in.

[Caller (Jerry)]

So my question was, now I now have the option of. Instead of the money going to principal to take care of it, I can have it go to Charles Schwab, which then I would have.

[Rachel Cruz]

Hospital is allowing that?

[Caller (Jerry)]

Yes. Yeah, they. I don't know if that's new or not, but I was actually talking to them, and they said, if you want, we can have it go to Charles. Charles Schwab account. So I'm assuming it's some kind of lockdown type account, but then I would have total control to buy, sell, or do whatever I want with it. But that kind of scares me because at least with principal, I have theoretically an expert looking after it versus me, the amateur looking after it. So my basically looking for your advice is the 1200 that I thought I was paying worth an expert looking at it.

[Rachel Cruz]

No, but you can get another expert. You don't have to do this other thing. Okay, I'm seriously confused. I have no idea what the flip your company is doing because a 401 a company has a single 401k administrator. If principal is their administrator, they cannot send your 401k money to Schwab. It's illegal. They can't do it. You have a single. You can't have four different 401k companies at your company. There's no such thing. It doesn't work. Okay? So I absolutely have no idea what you're up against. The only thing I can do is tell you to call one of our SmartVestor pros and see if they can unravel this for you. Just go to ramseysolutions.com and click on Smartvestor. By the way, they can help you if you're going to be doing side investing. This is the Ramsey Show.

[Caller (Teresa)]

This show is sponsored by BetterHelp. This month is all about gratitude and most of us have people in our lives who we're grateful for. One of those people, for me, is the great Jean Noel Thompson. He taught me how to be a dad, a husband, a professional, and how to balance caring for a bunch of people all at the same time. We all know of somebody else we can be grateful for, but there's one person that we often don't take time to thank. Ourselves. We don't always acknowledge that we're surviving, that we're moving forward, and that we're working towards a better life and better relationships. And in a world where everything's gone bonkers, it's not always easy. So here's my reminder to thank the people that you love, thank the people in your life, and thank you. Sometimes we need some professional help to talk to. Somebody trained to help us discover true gratitude for ourselves and others, especially in the holiday season. That's why I recommend BetterHelp. BetterHelp is 100% online therapy and you can talk with your therapist at any time so it's convenient for your schedule. Just fill out a short online survey to get matched with a licensed therapist. Plus, you can switch therapists at any time for no extra cost. Let the gratitude flow with BetterHelp. Visit betterhelp.com deloney to get 10% off your first month. That's Better Help. H E L p.com/deloney.

[Rachel Cruz]

Rachel Cruz, Ramsey personality, is my co host. Joshua is in Seattle. Hey Joshua, how are you doing?

[Caller (Pierre)]

Good. How are you?

[Rachel Cruz]

Better than I deserve. What's Up.

[Caller (Pierre)]

So I recently retired from the military, medically retired from the military. And after I had gotten out, there was about a month of no household income whatsoever. And we kind of ran into some financial hardship. And with Christmas coming up, I have three young children and I'm wondering, should I kind of sacrifice their happiness Christmas morning to continue to, you know, pay off this debt? I've about eighteen hundred dollars in credit card debt and about four thousand dollars in collections right now and roughly bring in about six. About five and a half. Six thousand dollars a month.

[Rachel Cruz]

Six thousand dollars a month. How old are you?

[Caller (Pierre)]

I'm 24.

[Rachel Cruz]

Thank you for your service. What happened that you were medically discharged? Are you okay?

[Caller (Pierre)]

So I was injured in line of duty, My back was injured, and they decided that I could no longer serve how they needed me to.

[Rachel Cruz]

Are you. Are you okay to the. For other things, though? Are you able to. Are you back to work doing a job now?

[Caller (Jerry)]

So.

[Caller (Pierre)]

I'm currently not working. I'm drawing pension from military.

[Rachel Cruz]

Why are you not working?

[Caller (Pierre)]

I'm currently going to school full time.

[Rachel Cruz]

Okay. Why?

[Caller (Pierre)]

I want to. I've always kind of worked more labor type of jobs. Hard on your body.

[Rachel Cruz]

What are you. What are you studying?

[Caller (Pierre)]

I'm going to the school for business administration with a major in project management.

[Rachel Cruz]

Okay. And you just. And you just started.

[Caller (Pierre)]

Yes, I did just. I just started.

[Rachel Cruz]

Planning to not work for four years?

[Caller (Pierre)]

Yes.

[Dave Ramsey]

Is your wife working?

[Caller (Pierre)]

No, we have three young children.

[Rachel Cruz]

She's.

[Caller (Pierre)]

Stay home, mom.

[Rachel Cruz]

Okay, hon. When I went through four years, I worked 40 to 60 hours a week while I was going to school.

[Caller (Pierre)]

Absolutely.

[Rachel Cruz]

You need a job?

[Caller (Pierre)]

Yes, I have been networking a little bit, trying to get an internship or an apprenticeship somewhere.

[Rachel Cruz]

I don't want you to get an internship or an apprenticeship. I want you to get a job. Okay. You need money. Yes. I'm aligned with you using your military benefits to get a degree. I'm not aligned with you not working for four years while you have three kids and you're calling me about them having no Christmas?

[Caller (Pierre)]

Absolutely. No, no, no, of course. But I'm. I'm bringing in around $63,000 a year.

[Rachel Cruz]

I know, but you're calling me about not being able to buy your children Christmas and you're not working.

[Caller (Pierre)]

Absolutely.

[Rachel Cruz]

That's.

[Caller (Pierre)]

That's just because of the. Well, obviously military doesn't pay very much. I just got our active duty and we hit a.

[Dave Ramsey]

So, Joshua, I think here's the hard thing.

[Rachel Cruz]

Go ahead.

[Dave Ramsey]

Well, if I can just be pretty frank with you, you know what? What you, you know, have done service for our country, like, incredibly grateful for you and all military families out there. I can't even imagine, like, what you all go through. So I. So appreciative. But now on this side, you know, you're 24, you have a wife and you have three kids, and there's a reality of a world that is, hey, I'm a grown up. And we have responsibilities and we don't get a choice just to go do what we want. We kind of have to do what we need to do. And what you need to do. Right, is start having money. And so if I were you, Joshua, and I don't know how far you are into this, maybe one semester of school, but if it's too much of a load not to be working full time, and I. And maybe it's. You're driving Uber. But I'm just saying, even for a. Even for a year or two, this is where you want to go. But you guys are underwater financially, so to me, there's not a choice to go to school. Like, you don't have. I would be. I would be finding a job.

[Rachel Cruz]

Well, you can go to school and job.

[Dave Ramsey]

Yeah. That's a lot, though. But in 40 to 60 hours a.

[Rachel Cruz]

Week and graduated in four years.

[Dave Ramsey]

I know, but they have $4,000 in collections, so, like.

[Rachel Cruz]

So go to work.

[Dave Ramsey]

Yeah.

[Rachel Cruz]

So here's the thing. When does classes let out? Dude?

[Caller (Pierre)]

So I'm currently online. Fully online.

[Rachel Cruz]

Okay, good. So you control when you want to go to class.

[Caller (Joshua)]

Yes.

[Rachel Cruz]

Oh, that makes it even better. So you can work like an eight hour day.

[Caller (Pierre)]

Yeah, but we did just have a newborn.

[Rachel Cruz]

That's another reason your wife is at home with three kids. That would be like her job.

[Caller (Pierre)]

Absolutely.

[Rachel Cruz]

You need money, you need to go get a job, Joshua. Like right now, you need to be doing grubhub and Uber and something else by the end of the day. And you can buy your baby's Christmas. And by the way, the newborn don't even know it's Christmas. So it's not issue here. Okay? You feed them and change their diaper, they're happy. Puppy. All right, so let's move on.

[Dave Ramsey]

About five years old, they don't really know.

[Rachel Cruz]

Yeah, they don't have any idea what's going on here. But, dude, you can't call me up and act like that. You can't fund Christmas. This is Thanksgiving. You got a whole freaking month. You can save up the money for Christmas by working during this month. That is the answer to your equation. Go get Six part time jobs that equal eight to ten hours a day and do your stinking online at night while the babies are asleep. I wrote financial peace from 10pm to 3am that's when I wrote that book. Because I had babies I had to feed and I couldn't sit there and go, I'm now an author. I don't work anymore. I didn't have that as an option. The freaking electric bill guy didn't care if I was an author. He wanted like money or they cut off my electricity.

[Dave Ramsey]

Because if he's. And he's pulling the 6,000 from his.

[Rachel Cruz]

Pension, he's got a lot of money coming in.

[Dave Ramsey]

But yes. And that's, but is that, is that robbing from his retirement?

[Rachel Cruz]

No, no, no, no, no, no. This is. His military retirement is huge. Because he military disabled.

[Dave Ramsey]

Because it's disabled. Okay, okay.

[Rachel Cruz]

He's getting. I was thinking, I was thinking this.

[Dave Ramsey]

Is taking from their, like when they.

[Rachel Cruz]

Want to retire, got a bazillion dollars coming in. No, it's just that he has, he makes $72,000 a year sitting on his butt and, and they pay and they pay for him to go to school and they, we the taxpayers. Yes, that's fine.

[Dave Ramsey]

Yes.

[Rachel Cruz]

But dude, that. The answer to your question is not only do your kids have Christmas, you keep working after Christmas and you only need $5,800 to be debt free. You can have that by March. So first let's go get the kids some Christmas and then let's get Joshua out of debt by March.

[Dave Ramsey]

And Joshua, can I just tell you too, as a mom with little kids, like especially if they're a newborn, a two year, I mean he's 24, so a two year old and a three year old, like I'm assuming they're all under six. I would think they don't know, like go to the Target section and they just want to open up gifts. Like they don't really care what's in it. They just want to have the wrapping paper and the experience of opening gifts so like go so cheap. Like go so cheap. That stuff is going to be thrown out by April anyway. It's all crap we buy. So like. Yeah, so even that. And that's for all of them. I mean that's for all of us.

[Rachel Cruz]

Well, I gotta tell you, I mean Rachel, when she was little we would spend all this stinking money on the kids Christmas and then dadgum Uncle Mac would go to the dollar store and come in with like a garbage bag full of toys that were garbage and he was a bigger hit than we were and he spent like 20 bucks and we spent like 200. And let's just say too, Matt was the fun uncle.

[Dave Ramsey]

That's right. And in this consumer driven world, and especially in this season, you're like, I want to. You know, I think his phrasing was. And this is not to pick on you, Joshua, because this is everyone to make my kids happy. It is just stuff like the most. Like, we are such a disconnected culture anyways. Like the amount of people that we are on devices and phones and TVs and screens. Like, your kids want you parents, they want you. So, like, go find an experience to do with them and that's going to create more memories.

[Rachel Cruz]

Not Joshua. So they want him to go to work.

[Dave Ramsey]

Do what?

[Rachel Cruz]

I said his kids want him to go to work. They don't want him. They want him to go to work.

[Dave Ramsey]

Well, he needs to go to work and he needs to be with them when he can.

[Rachel Cruz]

He can be with him a little bit later. Now he needs to go to work right now. He needs some money. You call me up and tell me you can't buy your kids Christmas, I'll cry for about 30 seconds and until I find out you don't have a job. Okay? And then my crying's done.

[Dave Ramsey]

I know, but my point is last Thanksgiving, we took the kids to a school parking lot and they rode bikes around. We all rode bikes around for an hour. And they still talk about like, I'm like, that's what I'm saying is kids are so low maintenance. So Joshua, don't put that pressure. And parents out there this Christmas, like.

[Rachel Cruz]

And by the way, they already had the bikes, so there was a bit built in that was like a freebie. So there we go.

[Dave Ramsey]

Yeah, there you fine.

[Rachel Cruz]

Wow.

[Dave Ramsey]

Joshua, you got this.

[Rachel Cruz]

You can do.

[Dave Ramsey]

Go to work. You got this.

[Rachel Cruz]

Hey, we are proud of your military service and we love you so much. We're going to tell you the truth. Don't call her if you don't want that. This is the Ramsey Show. Do you ever feel like you're finally making progress towards your goals only to get quickly distracted by something else in your feed? Well, that's why we created the Ramsey Network app, your single source for content that keeps you motivated. The Ramsey Network app is designed to keep you laser focused on reaching your goals. Loaded with over 7,000 hours of Ramsey shows, this free app is the best place for uninterrupted content and no distractions. Plus, you can search specific questions to get more personalized content in seconds. So for the days you need some extra motivation, you'll have proven advice at your fingertips. It's time to get serious about your goals and shut out the distractions for good. Simply search Ramsey Network in the App Store or Google Play. If you're listening on a podcast, just click the link in the show notes to download our free Ramsey Network app. Today, live from the headquarters of Ramsey Solutions, it's the Ramsey show where we help people build wealth, do work that they love and create actual amazing relationships. Open phones this hour as we take your calls about your life and your money. The phone number is 888,002. Number one best selling author, Ramsey personality and host co host of the Smart Money Happy Hour, Rachel Cruz, my daughter is my co host today. Thank you for joining us. Teresa is with us in Fort Worth, Texas. Hi Teresa. How are you?

[Caller (Justin)]

Well, how are you?

[Rachel Cruz]

Better than I deserve. What's up in your mind?

[Caller (Justin)]

No, I have grown children that I need off my payroll and I'm on baby step two. I've over saved actually on one and I can't seem to get any further because I have a 30 year old that works part time. He says he can't find a job. His resume is three pages long. He has no education, no skills per se. His father, we couldn't go way back, was abusive. So he was put in a mental place for a while for PTSD and some bipolar issues. So when he gets out of that and now we don't have a full time job, My daughter is wanting to start back to school in January and I'm still doing a student loan from when she was doing it before. I don't, I'm, I know I'm enabling and I don't know how to stop and I don't want them living on the street. I can go on for days.

[Rachel Cruz]

Let me help you. If they're 31 and they're on the streets, it's their choice.

[Caller (Justin)]

I, I know.

[Rachel Cruz]

Not yours.

[Caller (Justin)]

And, and I don't know. It's hard.

[Caller (Joshua)]

It's.

[Caller (Justin)]

You don't want them to be that way.

[Rachel Cruz]

I, I don't want him to be that way either, honey.

[Dave Ramsey]

When he has some, I mean from what you outlined, is he taking care of himself? Like medically take care of himself medically though, not like take medication, all of it for bipolar. Like is he, he, he'll start it.

[Caller (Justin)]

And then he doesn't take it and he'll start it? He does not because that would cause conflict. And I don't, I put him in an apartment. He had a beautiful apartment. And I took him out of the beautiful apartment and I put him in a crap hole. It's literally a crap hole. Thinking he'll live.

[Rachel Cruz]

There's a chance he can afford that. The, the.

[Caller (Justin)]

No, it's still 1200. It's still 1200. I'm still helping pay for it.

[Rachel Cruz]

All right, so what you have to ask yourself is 10 years from today, what is best for him? What is best for your daughter? What is the most loving act you can give them? I'll answer that for you.

[Caller (Justin)]

Please do that.

[Rachel Cruz]

They have the dignity of having stood on their own two feet like adults. You are taking their dignity away from them.

[Caller (Justin)]

And I have screamed, cried, prayed. God thinks I'm just being funny now.

[Rachel Cruz]

100% of enablers are sweet people. You are a sweet person. You are devastating your children. You're hurting them.

[Caller (Justin)]

I teach. I know better. I know how to make my children at school.

[Rachel Cruz]

You know, if you get it through your head that you're harming them, you'll quit doing it.

[Caller (Justin)]

Okay?

[Rachel Cruz]

You've got to actually accept the reality that you're harming them.

[Caller (Justin)]

Okay?

[Rachel Cruz]

And once you do that, you'll quit doing it. You wouldn't ever give a drunk a drink. You wouldn't ever give a bag of heroin to a heroin addict. You're. You would never do that. You're too sweet a person, Right?

[Caller (Justin)]

Okay. Yes, absolutely.

[Rachel Cruz]

Bringing harm to them.

[Dave Ramsey]

Yeah. But I will say there, there's a, a level of complication and complexity from what you kind of just outlined that he, he, he has some. He has issues. I mean, he, he spent time in a mental facility. He has mental health.

[Rachel Cruz]

So how long ago?

[Caller (Justin)]

Oh, God. So that's been a good five years ago.

[Rachel Cruz]

Yeah.

[Caller (Justin)]

And he, they both have this, you know, this abusive father thing going on, but I can't get rid of it. You know, I'm like, let it go, Let it go.

[Rachel Cruz]

Go see a. The, the thing is this, okay? I'm not suggesting that you're mean spirited or even that you just announce suddenly in a fit of anger that I'm done. I've had it. That's not what we're suggesting. But I would say that I'm going to look at this young man at Christmas and say, and daughter. And daughter and say, okay, I can do 60 more days of this. And so I'm making that number up. You can decide whether you want to do 30 days or 60 days. You can't go longer than 60. I won't let you. All right, okay. But I'm going to support and I'm going to give you some help for the next 60 days. This is your warning. So you need to ramp up to get Ready to receive 0 as of February, as of March 1, the end of February.

[Caller (Justin)]

Okay?

[Rachel Cruz]

And you tell them that during Christmas here. And you say, I love you, and I'm really so sorry that I have mishandled my relationship with you because it's kept you from going and being all that you want to be. And I'm going to be so proud of you when you go and be all that you're supposed to be. And I'll be cheering for you, and I'll be here to cry with you.

[Dave Ramsey]

And also Teresa.

[Rachel Cruz]

Yeah.

[Dave Ramsey]

And Teresa, you just know you're not in a place to be able to help someone financially. You're in baby step two. You're broke, you have debt. Right? I'm like, so. So that's. I mean, that's part of the equation. I mean, honestly. And I think, you know, maybe there's other options if you were on the other side of all of this, financially, of things. Of like, okay, but you don't have money.

[Rachel Cruz]

If you were a multimillionaire, I would tell you exactly the same thing, though. But you can say, hey, Mom's mom's broken. And part of the reason I'm broke is I've been supporting these adult children, which is an actual oxymoron. This is a weird phrase we use, adult children. What does that mean? Even. But the. But, yeah. And I'm not able to do it anymore. And I'm not going to do it anymore because I've come to realize that I'm bringing you harm when I'm doing that. And so the good news is I'm giving you a little warning. The bad news is, as of March 1st, you will receive zero from me going forward, except my love, my prayers, and my cheerleading. But there will be no more money after this date. And you set the date and make it very clear. Don't hedge around it and don't go, well, if you can. No, shut up. Very clear. This is the date. It's a contract. And then follow it up with an email just reminding you what I told you over Christmas. I love you. I'm cheering for you. I'll be here for you. If you need a meal, come over. I'll feed you dinner. But there'll be no more money after March 1st. I'm broke and I'm having to clean up my mess. And I'm cheering for you to go be your best self.

[Caller (Justin)]

Okay. Okay.

[Rachel Cruz]

Are you going to do that because you love them so much? You're going to make them have their own dignity?

[Caller (Justin)]

I love you so much. I'm going to do that for everybody.

[Rachel Cruz]

You're sweet. You are the sweetest lady. All the enablers. Enablers are the nicest people.

[Dave Ramsey]

But it's. But it's so. I mean, Theresa, seriously though, like, as a mom, it's devastating. I mean, like, that would be so difficult if you really did believe. If I'm not helping my child, they're gonna be on the street.

[Rachel Cruz]

If you really do, if you don't believe that you're bringing them harm, you're not facing reality.

[Dave Ramsey]

I know.

[Rachel Cruz]

Because it's not a sustainable life to live without dignity.

[Dave Ramsey]

I hear you. I know, but he's not.

[Rachel Cruz]

Work ethic.

[Dave Ramsey]

Empathizing with Teresa. It's hard.

[Rachel Cruz]

That's why you bought your own milk shortly after getting out from under my control. I don't buy stuff anymore. You go make your own.

[Dave Ramsey]

I know.

[Rachel Cruz]

Make your own way, little pig.

[Dave Ramsey]

I know.

[Rachel Cruz]

Make your own way. There's a big bad wolf out there. Be careful. Make your own way. I'll be cheering for you. Hey, guys. I've never done this before, but I'm partnering with a nutrition company, Field of Greens. Each fruit and vegetable in Field of Greens is selected by doctors to support heart, liver and kidney health plus metabolism for healthy weight. And your doctor will notice your improved health or Field of Greens will give you your money back. I can get behind a promise like that. Go to fieldofgreens.com Ramsay and get 15% off with promo code Ramsay. Fieldofgreens.com Ramsay hey, guys. Dave Ramsey here and I got a big announcement. I'm coming to a city near you live on the Money and relationships tour with Dr. John DeLoney. This is the most interactive event we've ever done. You get to decide what we talk about. You do not want to miss this. We'll be coming to Louisville, Durham, Atlanta, Phoenix, Fort Worth and Kansas City in April and May of 2025. Get your tickets and more information at Ramsaysolutions.com Tour Rachel Cruz, Ramsey personality, is my co host. The Ramsey show question of the day is brought to you by why Refi if you've made student loan mistakes with zeros on the end? Well, we're not judging you, but we are saying it's up to you to do something about it. Contact why refi? They were created specifically for people with defaulted private student loans, not government loans. If that's you, go to yrefi.com ramsey. That's the letter Y, R, E F y.com/ramsey might not be available in all states.

[Dave Ramsey]

Today's question comes from Daniel in Alaska. I tithe and donate extra to the church where my family and I attend. Our donations this year will be around $20,000 in tithes and offerings. The church is not registered as a nonprofit organization. Should I keep donating Big sun sums to them? We still want to give our tithes even though we don't get a 503 nonprofit letter. But we are hesitant in donating more because we're afraid we won't be able to claim it on our taxes.

[Rachel Cruz]

Churches don't have to be 501C3s to be deductible. It's not required by the code. The IRS code does not require that they have to be formed as a religious organization. They can't be involved in politics and they can't be running a for profit under the same roof of some kind. But if they're operating as a true standalone church and their job is to minister to the flock and take care of the widows and orphans and serve the community as a typical church would, you are fine. The IRS does not require them to be a 501.

[Dave Ramsey]

But he says I'm. Yeah, but I'm afraid we won't be able to claim it in our taxes.

[Rachel Cruz]

You can, you can. It's deductible.

[Dave Ramsey]

Oh, okay. Okay.

[Rachel Cruz]

The IRS does not require that they be a 501C3.

[Dave Ramsey]

Oh, I'm sorry.

[Rachel Cruz]

Okay.

[Dave Ramsey]

I hear you. And also, I don't know, I. To me, the giving aspect, like giving out of your heart's, you know, desires and what you want and the tax write off is just like an added great thing. But that's not the main motivator. I wouldn't not give to somewhere because you don't get a tax deduction.

[Rachel Cruz]

Exactly.

[Dave Ramsey]

That feels weird to me.

[Rachel Cruz]

Exactly. Now I will ask this question though, Daniel. Most churches, and we've had Financial Peace University taught in 50,000 churches in North America. So we interface with the church community all the time. We're a huge supporter of the bride of Christ. We love the church. Okay. And most churches go ahead and apply for and get their 501C3 just so there's no question by anyone about what's going on over here. And so maybe it's a startup, maybe it's a church plant and they're early in the process. But I would want to ask leadership why they haven't gone ahead and applied for because getting a 501 certificate when your church is really not much of an effort. I'm curious why they wouldn't do that. And I would ask them that, but I wouldn't not give and I would not worry about whether everything's a deduction. Now if they're running a political action committee out of the back. Back there. Yeah, out of the back room. Yeah. You could lose your deduction there. That's one of the guidelines. But if they're running an actual church, then, you know, you're. You're not going to have any trouble with the tax issue. But I still would ask the question, why not? I don't understand. I can't think of a biblical reason to not do the paperwork. It would be like, okay, we have a church building, but we didn't buy in fire insurance on it. Well, why. Well, we're trusting Jesus. Jesus sent the insurance guy there, so you probably ought to buy insurance on your building. I mean that's like called. It's. It's in second hesitations. So. I mean.

[Dave Ramsey]

He'S been using that joke for 30 years. I know.

[Rachel Cruz]

It just keep. It just keeps giving. It's the dad jokes that just keep working. So that's. As long as they keep working, my ratings don't go down the. Yeah, that, that. Yeah. I, I would get insurance on my building and I would get a 501C3 if I was the pastor of a church. If I was on the leadership team of the church. Yeah.

[Dave Ramsey]

So asking why would be good. Just be out of curiosity. But also don't be giving just to get the tax deduction. But you can get the tax deduction.

[Rachel Cruz]

According to you and 100% just. You can ask. Ask Papa Google. He'll tell you. It's right there. It's right. Pop right up. Hey, I'll answer your question for you. All right. Pierre's in New York City. Hi, Pierre. Welcome to the Ramsey Show.

[Caller (Joshua)]

Hi, Dave. Hi, Rachel. How are you guys?

[Rachel Cruz]

Better than we deserve. What's up in your world? Not much.

[Caller (Joshua)]

Just wanted some financial advice. I'm kind of in a unique. Unique for me at least position. I'm thinking about. Well, I'm thinking about maybe buying an apartment, an investment property for 200,000. And I kind of just want you guys advice if I'm ready for it. Not ready for it. Or maybe I should just put on the back burner.

[Rachel Cruz]

Okay. Are you out of debt and are you going to pay cash for the apartment?

[Caller (Joshua)]

So sorry, I Should tell you my situation. So currently I have a two jobs, my income, I have about three incomes. My salary is about 200,000, more or less. And I also, the house that I currently live in, I make about three, $3,000 comes in in total. My only debt is my mortgage and my wife's car, which is about 25,000.

[Rachel Cruz]

Okay, all right. Well, Pierre, I'm, I own a bunch of real estate. I love real estate. Rachel's husband is in the real estate business. He owns a bunch, they own a bunch of real estate. And we both, these families sitting here love real estate as an investment. The rule we live by is we pay cash for it or we don't buy it. And we only start buying investment real estate after we're 100% debt free home and everything. That's the rule we live by. But having done that, you will thoroughly love the real estate business. When you get into it, it sounds like, it sounds like you want to do it. But if you buy this apartment right now, it's probably going to cause you financial problems, not blessings because you're broke. You got a freaking car payment. You don't go buy a $200,000 rental property.

[Caller (Joshua)]

So I, I could pay. So a little more of my situation, I understand it a little more situation, I have 50k in the bank.

[Rachel Cruz]

Then write a check and pay off your car today.

[Caller (Joshua)]

Understood, Understood. I could do that.

[Rachel Cruz]

And yeah, you should do that.

[Caller (Joshua)]

I also hadn't, I also had another question for you also. So I was thinking, I was thinking of saving up to 100k and actually pulling a HELOC on my house. I know you're really against it, but I feel like it would be a lot easier to pull the HELOC off the house. How? I have an income comp. Well, I have money coming in from the rental of my primary residence.

[Rachel Cruz]

Pierre, are you 24?

[Caller (Joshua)]

I'm actually 32.

[Rachel Cruz]

32. Okay, because you sound like I sounded when I was 24. I used to say stuff ambitious. I used to say stuff like that when I was broke and it made me broker. Okay, because here's what you're not anticipating. You're not anticipating all the things that are going to go wrong when you own a rental property and the renters that don't pay. And now you got a HELOC on your house and now you have to come home and tell your wife we're losing the house because the apartment deal went sideways and we're getting foreclosed on. You don't want to have that conversation I'm so stupid. I had that conversation when I was your age and you don't want to have that conversation. You want to do this debt free, but you're going to go ahead and do it. So I hope it works out for you. I don't think it's going to. And you ask me. So I told you the truth because I love you. I don't think you should do this. I think it's a really, really bad idea. But I don't think I can stop you. I think you're going to go learn the lesson the hard way. Some of us are knuckleheads and it's just how it works. We have to get bonked on the head to catch it.

[Dave Ramsey]

Pierre might be listening and might be reconsidering.

[Rachel Cruz]

We don't know he's not.

[Dave Ramsey]

Because I think what's difficult is in the present, all of that sounds good, right? Like you can line it up a situation and say, oh, if this sits in there, and I have that and the carpet, you know, and it's all working, all these moving pieces. And here's the problem too, Pierre. When you start leveraging yourself like that, statistics show us, and studies are showing us that stress goes up, anxiety goes up, lack of sleep starts to occur. And you're trading your peace of mind for complications of trying to build wealth. And you're doing it in a really fast way, in an ineffective way, because it's going to cause other issues in other parts of your life. So be as peaceful as possible. Pay off the car work and pay down your mortgage. And then say, hey, let's save up and buy. And in 10 years, you know, five, 10, 15 years, you guys could be wheeling and dealing and it's all your money and with a lot of peace. So just do it the right way. Everything you're talking about can be done. Just slow it down and do it with cash instead.

[Rachel Cruz]

The best way to get rich quick, get rich slow. This is the Ramsey Show. What does the future hold for business? Ask nine experts and you'll get 10 different answers. Economic growth or a recession. Business taxes will go up or down. AI will help us work or it will replace us all. But there's no such thing as a crystal ball. That's why more than 40,000 businesses have future proofed themselves with NetSuite by Oracle, the number one cloud enterprise resource planning system. Ramsey Solutions uses NetSuite and you should, too. Whether your company's earning millions or even hundreds of millions, NetSuite helps you respond to immediate challenges and Seize your biggest opportunities with one unified business management suite. There's only one source of truth for the visibility and control you need to make quick decisions. NetSuite's real time insights and forecasting help you see into the future with actionable data. And when you're closing the books in days, not weeks, you can spend less time looking backward and more time focusing on what's next. And speaking of what's Next, download the CFO's guide to AI and machine learning at netsuite.com Ramsey it's free at netsuite.com Ramsey hey, if you're like me, this.

[Caller (Teresa)]

Time of year feels bananas. Thanksgiving just flies by and then you blink and the kids are out of school, families in town and somehow there's glitter everywhere. Pure chaos. Let's face it, the last thing you need right now is money stress. If you want to lighten your mental load this year, do yourself a favor and go download everydollar. It's my favorite budgeting app and it can help you create a game plan for your spending so you can focus on what really matters this time of year. Listen, the holiday season is going to be busy. There's no getting around that. But let's be busy enjoying our families instead of stressing out about money. Head over to the app store and download EveryDollar right now to get started for free.

[Rachel Cruz]

Rachel Cruz, Ramsey personality, is my co host today. My daughter. One of our favorite things in the world to do is talk to one of you when you're doing your debt free scream because you paid a price to win. You've lived like no one else and now you're ready to live and give like no one else. We even put a debt free scream stage in the lobby of Ramsey Solutions and people come by and watch this show and then they sign up and do a debt free scream on the debt free stage. And our favorite of all is one of our. One our. When one of our own Ramsey family Ramsey team members has become debt free and they are on the stage. And that would be true of Matt Hudson and his wife Terry. Matt, congratulations. You did it.

[I]

Thanks, Steve.

[Rachel Cruz]

Well done, Terry. Way to go.

[J]

Thank you.

[Rachel Cruz]

Wow. So Matt is a software engineer with us, has been with us 12 years.

[Dave Ramsey]

Yeah, I know. I was like, I know Matt's been here for. I was like, has it been over 10 years and. Yeah, 12 years.

[Rachel Cruz]

12 years in the, in the Ramsey, in the financial peace area, Ramsey. Plus working with every dollar and working with financial peace and all that. So you've seen a lot here. Over that 12 years, how much debt have y'all paid off?

[I]

So this was our mortgage and so it's 133,000.

[Rachel Cruz]

Way to get. How long did this take? Total?

[I]

11 years and three months.

[Rachel Cruz]

Okay, so after you came here. Yeah, right after you came here, you got the mortgage and you said, all right, we're doing this.

[I]

Yeah, we. So our oldest son is 11. And so for the first year I was here, we were both working and we didn't have kids yet. So we saved up a really nice big down payment, got our house with a 15 year mortgage, and Terry quit work after Everett was born because it was a priority for her to stay at home when they were little. And in the past few years, then with her being able to go back and work part time, then we've made some really good progress to be able to get it knocked out early.

[Rachel Cruz]

Way to go. What's the house worth?

[J]

It's worth 485.

[Rachel Cruz]

I love it. I love it. Well, I'm not going to go into your personal stuff since half the Ramsey team is standing around and I'll tell your business in front of your co workers. That would be unfair. So I won't ask what your income is or what you have in your 401k that we have here, but you guys ought to be approaching millionaire and I'm proud of you as soon as you get there. I love having millionaires work on our team. So. And that's the most beautiful thing I can think I've ever heard. Way to go, you guys.

[J]

Thank you.

[Rachel Cruz]

So very, very proud of you.

[Dave Ramsey]

Congratulations.

[Rachel Cruz]

So working at Ramsey is weird to start with because we're a weird bunch. But paying off debt while you're working here, it's like peer pressure to do it, isn't it?

[I]

Yeah.

[J]

He says it's a good thing he works here because he's the spender, which is true.

[Rachel Cruz]

So you're. Are you. Are you spending money on gadgets?

[I]

Yeah, just kind of.

[Rachel Cruz]

Yeah. You're a software engineer, so I'm guessing. Yeah, yeah.

[I]

Gadgets. I just have a. Like you pick an expensive hobby. I'm probably into it, so.

[Rachel Cruz]

Okay.

[Dave Ramsey]

All right.

[Rachel Cruz]

All right. And Terry. But you use the co workers here and you to reign him in then.

[J]

And the budget meeting. It's a good thing for both of us to get on the same page. So that's been a big key for us is to have that monthly conversation to make sure we're both working towards the same things and have our priorities together.

[Rachel Cruz]

Yeah, that's a Great deal. Well done, y'all. I'm so proud of you.

[Dave Ramsey]

That's a big deal. I mean, to have no more half.

[Rachel Cruz]

A million dollar house. How old are you two?

[J]

I'm 42.

[I]

I'm 47.

[Rachel Cruz]

Wow. Very cool.

[J]

Our goal was by 50, so we're glad we beat that.

[Dave Ramsey]

You did it.

[Rachel Cruz]

You did it. Slid in under the bar.

[Dave Ramsey]

Okay, so tell me, because when people are on the ladder, Baby steps. You know, when they're in 4, 5, 6. A question we get a lot is. Okay, so how much. How much should we be throwing extra at the mortgage to pay it off faster? So just, like, walk through high level. How you guys decided month to month or season? Maybe it's season by season, year to year. Like, how. What did that look like of putting extra? Was there sometimes that. It was like, no, we didn't because we were saving for a vacation. Were there sometimes that you're like, all the extra goes on? Like, what did that look like for you guys?

[J]

My youngest started kindergarten the year of 2020, so I was planning to go back to work when he started kindergarten, but with COVID being so unpredictable, I was like, let's just hold off. So I started working part time in 2021, and we had decided that all of my paycheck would go to house. Pay off.

[Dave Ramsey]

Okay.

[J]

We lived off of what Matt made and hit our savings goals with that for, like, vehicle replacement and stuff like that, but all of my paycheck went to house.

[Dave Ramsey]

Okay, so great. Are you still going to continue to work part time or now that.

[J]

Yeah, we've got some other goals. We want to do some house renovation, some vacation, and of course, like, college funding, so.

[Dave Ramsey]

Yeah. Yeah, yeah. That's awesome.

[Rachel Cruz]

So what are you gonna do with the house?

[J]

We want to get some new floors. We want to update the living room. Just. We really haven't done much to upkeep the house since we bought it, so we just kind of want to make it prettier.

[I]

There's. Yeah, there's a lot of things we put off because it's like. Well, we're almost. We almost have the house paid off, and once we get that done, it'll.

[Rachel Cruz]

Well, you got no payment now. Yeah. And you got all this room. Yeah.

[I]

Yeah. Fast putting new flooring in. It goes a lot quicker when you don't have a mortgage, so.

[Dave Ramsey]

Totally. It's so great, you guys. Amazing. Amazing. So how does it feel when you. When you guys paid it off and you, like, sent. You know, what was that like?

[J]

It was amazing. We were At Chase, like five minutes before they opened. And we're taking pictures outside of Chase, and then the employee saw us and he's like, are you. Terry and Matt come on in. And so he told us the payoff balance and wrote the check. And we're just sitting there like, we just did it. We did it.

[Rachel Cruz]

I love it. Whoa. And go into the parking lot. Do a little dance. Yes. I like it. Very well done. Well done. You guys. All right. Working here, is that make it harder or easier? Seriously?

[I]

I think it made it easier because it's just like, like you said, like, you have kind of that positive peer pressure. Like, it's not weird that we were not borrowing money and that we were paying extra on the mortgage and that kind of thing. Like, it was just. I don't know.

[Rachel Cruz]

You have the benefit of your co workers not making fun of you. Yeah, that's an interesting thing to have. Yeah. And quite the opposite. They might be making fun of you if you weren't doing this, but. Yeah, yeah.

[I]

Like, we're, you know, just doing. Handling money. Weird. And everybody else is doing the same thing. So it's not like you're an oddball around the people you work with for doing it so.

[Rachel Cruz]

Well, Obviously you don't have to work at Ramsey to do this. Millions and millions of people have. We've got tens of thousands of debt free screams on the YouTube channel that people can watch. People from all incomes and areas of the country and situations have overcome all kinds of things. But what would you tell folks that are listening and watching the main thing from your perspective, Terry, that you have to do if you want to get out of debt? What is the key to getting out of debt?

[J]

I think it's having the budget and making sure that everyone's on the same page and that you're working towards the same goal. And then also to, like, daydream about what happens after that helps you stay focused. Because, like, for US it was 11 years, which felt like forever, and we had to keep up with our dreams. So, like, focusing on that after the house payoff, too.

[Rachel Cruz]

Hey, when you mapped it out the first time, what was your prediction of how long it was going to take?

[J]

We thought we would be done by the time our oldest entered high school and he's in sixth grade. So we got done about three or four years ago.

[Rachel Cruz]

We thought it was going to be 15 years and it was 11. Yeah. Okay. Most people bring it in earlier than they originally planned.

[Dave Ramsey]

Yes.

[Rachel Cruz]

Yeah, that's not unusual at all. Good job, you guys. Very Proud of y'all. Great job. All right, bring the kiddos up. Everett and Spencer are with us. Good looking young men. And so who's who and what's the ages?

[J]

This is Everett, he's 11.

[I]

And this is Spencer, he's nine.

[Rachel Cruz]

Okay, so Everett came the year we bought the house and now he lives in a debt free house because his mom and dad are heroes.

[J]

Oh, thank you.

[Rachel Cruz]

Way to go you guys. We're very proud of y'all.

[Dave Ramsey]

So good to see you guys too. I feel like, Terry, I just see you at Christmas parties every year. So it's good to see you outside of it and I'm so happy for y'all.

[Rachel Cruz]

Thank you.

[Dave Ramsey]

So excited. So excited.

[Rachel Cruz]

All right, Everett and Spencer, you guys been practicing debt free scream. You know how to do it? All right, you better get ready, man, because this is your minute. This is your moment right here. You're going to be famous in just a second. Matt and Terry, Everett and Spencer. Matt Hudson from the Ramsey team. For 12 years he's been with us. They paid off the house in 11 years and three months. $133,000 house and everything. They're weird. They're heroes. Count it down. Let's hear a debt free scream. Three, two, one.

[I]

We're debating.

[Rachel Cruz]

Yeah. Way to go you guys. Like any good software engineer, he's very precise. And they had a plan and they executed it early.

[Dave Ramsey]

Yep.

[Rachel Cruz]

Wow.

[Dave Ramsey]

Knew what, they knew what they wanted. It's incredible. Absolutely incredible. I mean they have a paid off house like that's just, I mean it's crazy, crazy, crazy.

[Rachel Cruz]

It's when normal is broke in America. Your goal is to be weird. So one of the best compliments you can hear around the Ramsey show is if we call you a weirdo, it's because you're doing very smart things in a culture that has nothing smart to do. This is the Ramsey show.

[Dave Ramsey]

Hey, listen up guys. Black Friday deals start right now. Yep, you heard that right. You don't have to wait until Black Friday or even leave the house to get great deals. On our most popular gifts you can get our best selling hardcover books for just $12 and audiobooks for just 8. Give like no one else this season with gifts that actually mean something to your loved ones. Go to Ramsaysolutions.com store to shop the deals today. That's Ramsaysolutions.com store.

[Rachel Cruz]

Rachel Cruz, Ramsey personality is my co host. Thank you for joining us, Americ. It's a free call if you want to call anywhere in North America. This is the Last segment that you'll be hearing on the podcast, the next segment of the show is on the Ramsey app. The third segment is always on the Ramsey app every day. Ramsey network app is a free download and if you want to go further with Ramsey there, you can have calls that are picked for you. You can filter by topic. You can always get the third segment of the show and you can send us emails. You can do all kinds of stuff. So download the Ramsey Network app. It's completely free and it's a way to get access to things earlier and really for you to control your listening environment a little more than you can on the normal podcast or YouTube broadcast or talk radio. Talk radio stays exactly the same. What you've always gotten, you're always going to get exactly that as long as your local station carries us there. And that's perfect. And we're glad they are. Ramsey's Black Friday sale is going on right now. Get early access to some of our best deals, meaningful gifts for family and friends as low as $8. You can shop our best selling books like the total money makeover baby steps, millionaires own your past, change your Future for just $12. Audio books and ebooks are only $8. The Rachel Cruz wallet in black, camel brown and champagne are on sale this week. Questions for humans cards, conversation cards starting at just $12. The Black Friday sale also includes the brand new Rachel Cruz children's book I'm glad when I can share and the previous three books are available. You can get the three book set. It is a trilogy. This is the last one and you get the whole three book set on sale right now. So if you got grandbabies or babies and you need bedtime stories, that's the best. It's all [e-mail] store and even more. Eric is with us in Key West, Florida. Hi Eric. Welcome to the Ramsey Show.

[Caller (Joshua)]

How you doing today, sir?

[Rachel Cruz]

Better than I deserve. What's up? Yeah.

[Caller (Joshua)]

So like many investors, I pay my financial advisor an assets under management fee. In my case it's 1%. My wife and I have been married for 20ish years and over the time we've built our assets under management to about half a million dollars. We have other assets, but under management from them about half a million dollars. That would be $5,000 a year for their fees. Well, a couple years ago my parents passed away and we inherited a substantial sum. So now our assets under management are a little over 2 million. My questions are you know, or my problems are 2. First, you know by doing nothing extra, no effort on their part. Suddenly my advisor has gone from 5,000 a year to 20 some thousand a year for doing the same work. The other thought is, you know, when it was $5,000 a year, I could stomach that. Now I'm thinking over the next 20 years, even if my assets remain flat, that's 400,000. And if they go up, plus lost investment opportunities, that could be 500, 600, $700,000 that I'm losing. So are there any alternatives to assets under management fees? Are there any recommendations you can make?

[Rachel Cruz]

That's a very standard way of running a brokerage, I mean an advisory company. Right now Most of our SmartVestor pros run a very similar fee base. I have seen some of them. The fee decreases as the assets under percentage decreases as the assets under manage increase. And so when you've got a portfolio the size of yours, it probably could be less than 1%. Some keep it there. And then the question you've got to say is, okay, what am I getting for this money? And you know, I'm a firm believer in having an advisor. I'm like you though. I want to know what I'm getting for what I spend. And so I think I'd have a conversation with them about two things. One is tell them exactly what you told me. Guys, this is a lot of money. And I'm not sure what I'm getting for my $25,000 a year. Show me what's. Because I can buy a nice car once a year for what I'm paying you all. Okay. And have a whole basement full of cars. Right? And so in a couple of years, so I mean, what is it I'm getting for what I'm paying you and show me your value and, or do you have any kind of a sliding scale now that this has gotten so much more? Like a lot of times when it's over $1 million, you start to see things slide down. Do you have anything that you run a less percentage on on a portfolio this size? Ask them that question, those two questions. One is show me why, you know, make the sale again. Why do I. I mean, I'm not mad at you, but show me. I. Right now I'm, I'm, I'm confused, disillusioned about what I'm getting for 25 grand a year.

[Dave Ramsey]

The process, the strategy hasn't changed. It's the same thing, right?

[Rachel Cruz]

Then the third thing I would do is jump on Ramsaysolutions.com and click Smartvestor Pro and talk to some of our smartvestors, they're in the exact same business. They run the exact same. Most of them run a management fee like that, you know, and it's usually the, you know, it's very standard in the business. The industry runs about 1%. Some people do three quarter, some do a sliding scale. One, you got more assets under management, some don't. But, I mean, they're not ripping you off. I don't think that at all. But you're asking a valid question that you deserve an answer to. And it is enough money that it's fair to ask the question. So I would ask the smartvestor pros and ask any of them, do you have a sliding scale when a portfolio gets this size? I got about two and a half million. I'm really concerned that I'm paying a 1% fee on that because I don't know what I'm getting for that. And it's not a belligerent thing. There's no belligerence in your voice, by the way. Okay. You're not being a jerk about it. You're just going, okay, I'm sorry. And I probably wouldn't use the phrase you're doing no more work. That's a bit insulting. But I would say, you know, what am I getting for what I'm paying you? Why would I do this? And what's going on here? I mean, because I do value what they do. And I think you should. Eric, I think you ought to have someone in your corner to talk to. Rachel has a smartvestor pro she wants to meet with. I have one that Sharon and I meet with, and they don't. In my case, they do less than they might for Rachel and Winston because we do all our own estate planning off to the side. And we do all of our own, for that matter, do all my own selections on the mutual funds.

[Dave Ramsey]

But yeah, what I have found, Eric, the value for us is that they're looking at more than just investments. I mean, ours are looking, they're looking at taxes and like, if there's like real estate involved that you can sell within this five year period. And get this. I mean, like, they're, they're kind of strategizing with you. I mean, everything from our giving to investing. I mean, they're looking at the whole thing. And that's always helpful. But my question, Dave, to you. Is there ever a point from, like, Eric's perspective, which I know is not a lot of people out there to have this substantial amount of money, just investments that you would ever pull a million out and do your own and put it in an index funds and keep a million in. Do you know what I mean? Like spread out where you're not. No, it's not all under someone's.

[Rachel Cruz]

No, I would get. I would get happy where I am.

[Dave Ramsey]

Yeah.

[Rachel Cruz]

And if I can't get happy there, I'm gonna get happy somewhere, somewhere else. I want somebody in my corner and I want it all. I want it all in one place, invested in different things, but under one set of eyes. There's no advantage to diversifying. Your advice? No, I think that.

[Dave Ramsey]

Well, not your advice, but would you ever just individually go open up a vanguard and just put your own money in for the S P or something? Do you know what I mean?

[Rachel Cruz]

I mean, the only thing I do there is I do have an S P that is independent of these guys, but that's just me throwing money in there, extra money laying around until I get some money for a piece of real estate that they don't have anything to do with.

[Dave Ramsey]

And you're going to go buy it out of that.

[Rachel Cruz]

And I'm going to buy it out of that S and P. I don't, I don't invest in the S and P. I park in the S and P. So. Which last year was a really good thing. It made 30% but not a bad parking spot. But the. Yeah, so that's.

[Dave Ramsey]

Yeah, that's a good point. I'll be happy where you are.

[Rachel Cruz]

I don't want three different investing. It's like I'm not going to go to three different churches because I sort of agree with them, you know. No, it's not. You need to find a home and deal with the discomfort of the home and the comfort of the home.

[Dave Ramsey]

That's good.

[Rachel Cruz]

Yeah, that, that's what I would do. It's a good question. It's an excellent observation, Eric. You're not asking the wrong question. You're asking the right question. I would just ask it carefully and somewhat humbly. But. But it's a fair question that I'm going to dig to the bottom of. So three things. One is shop around. Go talk to some other smartvestor pros, see if they have a sliding scale. Ask your guy if he's got a sliding scale and ask your guy why he's worth 25 grand a year. What is he. What am I getting for that? That's a. All fair questions and should be asked. That's you managing your money. And that's as it should be. Well done, sir. Very well done. This is the Ramsey Show. Hey, you're still here.

[Dave Ramsey]

What are you doing?

[Rachel Cruz]

You do know that the rest of today's show is playing right now over on the Ramsey Network app, right? All you gotta do to finish the episode is search Ramsey Network in the app store, Google Play Store, or just click the link in the show notes to download the app.

[Caller (Joshua)]

For free.

[Rachel Cruz]

Yep, you heard me right. For free. Then right there on the home screen, you can watch the rest of today's show. Bada bing, bada boom. All right, I'm getting out of here. Enjoy. We'll see you on the app.