Building Wealth Starts With Setting Aggressive Goals
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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.

jade washall ramsey personality is my co-host today number one best-selling author and we're here to answer your questions about your life and your money open phones at triple eight eight two five five two two five andrew starts off this hour in miami hi andrew welcome to the ramsey show what's up and not too much thank you so much for having me mr ramsey sure um

So I had two questions regarding whole life insurance. I know your general principle, but I've never actually heard you discuss these two characteristics of whole life insurance or these two scenarios. So I was kind of curious of your opinion regarding the subject, if you don't mind. Sure. I'm an expert on my opinion. So the first question is like this.

Today in America, if a person is a single person is earning $150,000 a year or less, they can put up to $7,000 into a Roth IRA that grows tax free. But at $150,000 after taxes, about 130,000, a single person, pretty much anywhere in America still has plenty of money.

So let's say you're putting money into an investment brokerage account. My question was on whole life insurance, it also grows tax-free. I know it doesn't have the same rate of return, but if a person wanted to increase their long-term tax-free savings, would that be something you would consider as a viable approach that they've already maxed out their Roth IRA or if they have a company that's a Roth 401k, the sale can only max out at $7,000? How long ago did you take your job selling whole life?

I've actually only sold a couple of policies, but no, I'm not actually involved in the industry specifically. How did you sell policies if you're not involved in the industry? I am a licensed agent, but I haven't done it in a few years. Because you pretty much spouted their line perfectly. This is the whole life sales line. That's how I knew you were selling it. You nailed it.

Like you were just trained like three weeks ago. That's what it sounded like. Not picking on you, but you are representative of the industry. Okay, so let me help you with this. Let me help you with this. Whole life does not grow tax-free unless you lose money. And your basis for tax purposes in a whole life policy is the total of your premiums. So if you pay in $100,000 over a bazillion years,

into your whole life policy, and your cash value is $90,000, you have lost $10,000. And so, of course, there's no taxation. Or you can borrow your own money and pay them an interest rate to borrow your own money. And by the way, 100% of the time, borrowed money is not taxable. So whole life in and of itself does not grow tax-free. That is a falsehood. Mm-hmm.

If it actually made money and you took the money out, it would be taxable. But they never do because they suck so bad. The rate of return is horrendous, and the fees are so high. And so, no, I would never consider that as an option. Instead, I would... Listen, dude, if you put your money in a fruit jar as your side investment after you maxed out a Roth, you're going to end up with more money than you will screwing around with the whole life policy because they lose money.

I'm impressed that you sniffed that out as quickly as you did. Too much time in 30 years being hated on by whole life people. That was pretty impressive. I'm not going to lie. I'm impressed. Well, I mean, it's a scripted thing. Yeah, clearly. It's tax-free growth, which is a complete lie, y'all. It's not tax-free growth. If there is growth...

And you take it out, it's taxed. Period. But there never is because the rate of return is so horrible and the fees are so high.

So, here's the way whole life works for those of you listening. And he's talking about it as an investment only, but let's talk about it as an insurance product, which is what it is purported to be. And that's, you only have to have a life insurance license, not a securities license to sell the crap. So, the, which is easy to pass. If you can, if you can roll out of bed, you can probably pass your life insurance exam. It's not that hard. Securities exam, on the other hand, very hard. Now,

Whole life is 20 times more expensive than the same amount of term on the same person. So a 30-year-old buying a $100,000 policy, if say, for instance, they did that for $5, whole life would be $100. Okay. So where does the extra $95 go above the cost of insurance? Because term is only insurance. That's right. It goes into an investment called cash value, which is what he was bringing up.

Okay, the investment called cash value the first three years on a whole life policy your investment growth is zero 100% of your $95 a month in our example the extra 19 times you're paying for this you get zero in your investment So you open a bank account and you put in $95 a month for three years and the balance is zero. So

No one would do that, by the way, if they understood that. They do it all the time, but no one would do it if they understood that. You're right, which is our goal here is to make everyone understand it. Then once it does start making money, the average whole life policy in America today averages 1.2% with an inflation rate of 4.7%. Losing money. And...

So after you get past those two things, here's the worst part of the whole thing. So this little couple buys a $100,000 life insurance policy. They pay into it for 20 years. They have $20,000 in there finally after they got 1.2% and has nothing for the first three years. And then he dies. You know what they pay? They pay the life insurance. Just the premium. The face amount. What happened to the money I've been paying $95 extra to build up in my savings account? Insurance company keeps it. You do not get the face value plus the

Cash value. Let me ask this. Let me finish. So you have a savings account that the first three years you put money in, they keep all of it. After that, you make 1% on it. And when you die, they keep your money. Who would open this savings account? Nobody. But people do every day. It's the biggest. Let me tell you, it's the payday lender of the middle class. It's crap. Sorry, Andrew, but you asked.

So when do they, a guy like Andrew, if somebody said, I'm interested, let's say they had built up a certain amount of cash value. When would a guy like Andrew say, here's the right time to get at that money? So, you know, it's all a risk game, but so that you can get it before you die. Well, you can't get it before you die. The only way you could get it is cash the policy in.

Because if you borrow the money out before you die, they repay the debt to yourself to make sure they keep the whole cash value before they pay out the face value. So if you borrowed $20,000 in a $100,000 policy and you died with the loan out, you get $80,000 instead of $100,000. They pay back the loan so they make sure they get to keep it. Wow.

So the only way to get to keep the money is to cash out the policy. And then at that point, why get it to begin with? And you have lost money on it, so it's not taxable. Terrible, terrible, terrible. No, you're better off putting money in a fruit jar, darling. At least when you die, it's there. Assuming the family knows where the fruit jar is buried. But be careful with that one. That did happen to one of my relatives. We got cousins out there with metal detectors in the backyard trying to figure this one out. Don't do that one either. This is the Ramsey Show.

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Hey, thanks so much for taking my call. Appreciate it. Appreciate everything you do. Thank you. So basically I'm calling about my mom. I'm very concerned for her. She has a bad track record for being financially smart. And recently she just got into a relationship. It's only been about six months and he has a lot of money. So she thinks that she wants to quit her job and leave.

live off of his money and then sell her house and then that's her retirement so i don't i just don't really know like how to give her advice and she has asked me for advice she she did ask interesting she she did ask okay so the one thing that changes the whole discussion is the marriage date when are they getting married

That's exactly my point as well. Like, I'm telling her you need to get married before you decide to quit your job or decide to move in with him. But is there a day? Listen, if you quit your job and move in with somebody and sell your house that's rich, that's called a sugar daddy. We have a name for that. I don't care. He's a sugar daddy. He might be a nice one.

But that's what he is. No, you don't do that, mom. How did you get to be mom and not know that? Trust me, I don't know. So what have you said to her so far about it?

What have you told her so far? He wants to take care of her and she, you know, he supports her in any decision she wants to do. If she doesn't want to work anymore, that's okay. She'll, he'll pay for, you know, all the bills and she wants to sell her car. She also has a, she has 20,000 on her car right now. 8,000 in credit cards. You know, she's not good with her money. And I'm saying, what have you told her about this? Have you told her anything yet? I told her, I told her,

I told her that one, she needs to get married if she wants to rely on his income. Did you tell her why? Oh yeah. Um,

For sure. It's hard for her to listen to me because I'm not married. Ah, okay. Another strand. Well, it's you're her kid. That's strand one. Yeah, and that's another thing too. Yes, and then you've not been in the type of relationship that she's been in. At least that's the way she's going to view it, which is true. So you're fighting a current 100%. Let me tell you what. If you ask your mom's dad, he's probably gone, right?

Yeah. Yeah. But if we were to ask him, they didn't know. That's probably not a good example. If we were to ask her uncle, he would have said, no, I'll bonk him on the head. Oh, right. Or I mean, even if you flip the script and put yourself in that situation, although I would love to think that she would tell you to do the opposite, but she might tell you to do the same thing that she's doing. So she would smell that one out. I don't, you know, your question is how to convince her.

All three of us know that this is a bad idea. Okay. Yeah. So I guess the thing is this. Okay. Here's the thing. Anytime, mom, you're making a great, huge decision, and there's a series of great, huge decisions you're making here, you have to play out the decision. Is it a happy, happy decision? Now, the way that works is this. You're happy if this works, and you're still happy if

If this doesn't work, if it all works and you just play house and the sugar daddy takes care of you, it worked. You're happy. That's your plan. But what happens if he dumps you in the street for a 10 year younger version, trade you in on a new model, mom?

because he can do that pretty easily here by waving the exact same carrot he waved in front of you and be sugar daddy to somebody else. So when he puts you in the street with no house, no car, and no job, where are you going to be? So you don't make big decisions like this, Mom, when one of the possible outcomes is devastation.

Bad risk management. Lack of wisdom. And I'm also just not in a position financially to help her. She's asked me in the past for money. That doesn't enter into how stupid this is.

Whether you give her money or not doesn't mean this is smart. And you're going to have to accept the fact that she's going to do, you could lay out the best argument in the world. Like perfectly, just eloquent, everything makes sense and she could still go and make this choice and it's going to be bad for her. And you're going to have

to just learn how to live with that and accept the fact that she's a grown woman and she's making a bad mistake and there's nothing in many ways there's nothing you can do about it and that's I think that that's the hardest part of being in a relationship with anyone that you really care about is they get to choose is there anyone in her life that's wise that she trusts her brother have him call her and scream at her

I'm serious. He really likes the guy, so I haven't seen him acting really towards the person. I asked if he was wise.

Oh, he's wise. He doesn't think this is a good idea. I'm not saying the guy's a horrible guy. I'm saying this is a horrible deal for your mom without put a ring on it, buddy. Well, the guy probably thinks if this is a I'm going to say in air quotes, a good guy. This guy probably thinks he's offering your mom the world. So maybe somebody needs to get in his ear.

and make him see, hey, we like you. We think that you're probably trying to take care of our mom, but can you do this the right way? Because this way, the way that you're doing it now makes us nervous because if for some reason it doesn't work out, she's on her butt, right? So maybe that's the way to go at this is if there's somebody that has the right relationship to talk to him, if he is really the good guy that you guys say he is, that should give him a light bulb moment to go, oh, I get it. Yeah.

Right. I think my mom just needs a reality check, too. The problem is she's not looked at the downside. Anytime you're making a big decision, you have to look at the downside. What's the possible negative outcome from this? And it'll keep you from doing some stupid butt stuff if you don't only consider sunshine, rainbows, and Skittles.

You know, it doesn't always turn out sunshine, rainbows, and skittles. Especially when the deal is set up poorly from the start, you're kind of asking for it. Yeah, that's true. You're asking to have your butt kicked. Life's going to come along and go, you was stupid. Here's your butt kicking. Ready? Here you go. And we all get to pay some stupid tax. We've all done some stupid butt stuff. And she's signing up for one here. This is a trip that's going to be harsh. Please don't do this, lady. Please don't do this. Put a ring on it or don't do it. It's pretty simple.

Because I got to tell you, it changes the chemistry. Well, I was going to say, there's no balance of power in this relationship. She sells everything she has. There's no way in the world she could live in a house probably that he lives in on her side. You know what I'm saying? She has no ability to keep up life. We need to bring back some of the vernacular from bygone eras. Let me hear it. A kept woman. You ever heard that one? Yes. That's very...

I don't want to say the word old, but that's that's ancient. Yeah, that's a kept woman. She's being kept. Yeah. For use. Yes. Oh, yeah. I don't give you a little chill. Give me a little chill. I don't like it. My dad's my grandpa stuff gets angry right then. So I just can't put a ring on it. Michael is in Charlotte. Hey, Michael, what's up? Hey, I'm good. How are you doing? Better than I deserve. How can I help?

I had a question. My wife and I are in the process of buying a house. We were pre-approved, and our loan officer told us she doesn't advise 20% down payment. We're in North Carolina. She says the appreciation rate in North Carolina... I don't advise you using this loan officer. She's stupid. Okay.

Yeah, I figured you would say something along those lines. I have a hard time understanding how that works out. Well, her thing is that borrowed money has no risk, so borrow all you can. Okay. My thing is I've met people who are up to their eyeballs in a mortgage and can't get out. They're stuck because of some idiot loan officer like this. By the way, she gets paid on what? What's her percentage on the loan amount?

Conflict of interest in this advice. Hello. I need more money if you don't put down so much. He needs to go to our real estate hub and find some folks who are going to actually help him. Go to RamseySolutions.com slash real estate. There it is. That's easy. A whole bunch of stuff there that'll help you, Michael. Yeah. But she's getting paid on that. You do need a loan officer. This woman's not smart. This is The Ramsey Show.

I've been doing this show for over 30 years, and some of the saddest calls I have taken are from situations that are completely preventable. Yeah, and what's so hard is I feel like one of those, especially the ones that I'm like, oh, it's terrible, are people that call in and their spouse has passed away suddenly, and they don't have life insurance. When you have to think through how am I going to pay my bills...

I'm going to eat next week. Yeah, in the middle of all that grief. Like it's just, it is, it's terrible. So life insurance is the one thing, especially as a mom with three little kids that I'm like so big on for people to get because it's inexpensive. Zander is the place that Winston and I actually get all of our life insurance. And it doesn't cost much because Zander shops among a gazillion different companies. It doesn't cost much. You just have to admit that someday you're not going to be here.

You've got to say it out loud, and you've got to say, I'm going to say I love you to my family by taking care of them and taking the time to put this stuff in place. The cost of a stinking pizza. To get a free quote, call 800-356-4282. That's 800-356-4282, or go to zander.com.

Jade Warshaw, Ramsey Personality is my co-host today. Thank you for joining us. Today's Ramsey Show question of the day is sponsored by WhyRefi. When you're trapped in a maze of defaulted private student loan debt, hard to find your way out, but WhyRefi can offer you a lifeline with custom refinancing based on your ability to pay and a lump sum payoff option you could qualify for after 24 months.

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Might not be available in all states. All righty then. Today's question comes from Ashley in Illinois. She says, my husband and I will be debt-free in about three years, house and everything. Congratulations. The house we currently live in is the house that he lived in with his ex-wife. I would like to get a place that is new to us, that we can create our life together. Is it stupid to get a mortgage when we are debt-free? That's a very good question. The simple answer is no, it's not stupid.

It's not the worst thing. You could definitely do worse. And the reason that you're wanting to do this, I understand it. I just wonder if you go ahead and you are debt free within this three year time frame. I wonder if what the market will be like and if there's something that you can just simply say we're moving from one house to another. You may not have to go into debt anymore.

Uh, or if it's a small amount, I'm not mad at it. Um, I just think that you're really going to love the feeling of being free. And so when that time comes, you're going to step very lightly. You're probably going to be very lenient on the amount that you would be willing to borrow. And I think that that's a good thing.

Yeah, to answer your question, it's not stupid. It's not bad or evil. We just don't like debt. So if you have the ability to do something in cash, I think that that's a great thing. But I definitely wouldn't go crazy on this. Dave, what do you think? Here's what's interesting. It is assumed that I have to move up in-house to move out of her house. Yeah, they might be able to get something. Move down in-house.

It's a novel concept. So now we're getting to the root of why we really want to move. That's good. Dave, that is, listen, you're not wrong. I saw one with a jacuzzi and a skylight. Mine doesn't have that. They might be willing to consider that because she hasn't felt that freedom of no mortgage yet. Well, I'm just saying that these are not necessarily the same thing. You could move down in-house or you could move to the exact same price of house and be out of the ex's house.

Which I completely would definitely want to do. I would too. But you're right. There's probably a part that's like. Yuck, yuck, yuck. That would gross me out. I want out of her house and I also want into another nicer, better house. Well, I mean, moving up in house is one question. Moving out of the ex's house is another question. But even.

moving up there are two different questions but even if she just simply said it like that i i personally still would be like listen if you told me you were taking on at that point it's like hey jade we're we're moving up in house it's going to cause us to take on a hundred thousand dollar mortgage then my question would be like well how quickly could you save to get that done you have no house payment

So when you put it like that and go rent for two years, exactly. When you put it that way, it's like, well, it's a small mortgage. Then if it's a small mortgage, you could probably pay cash for it just as quickly. So I can tell you once I got out,

A herd of horses is going to drag me back in. You ain't going back. I know that's right. And that includes a dissatisfied wife. Nothing is going to drag me back in. You ain't going back. I know that. Never going back. So I get you want to move. Let's just go. We'll go rent. I get you want to move. We're going to move down. We're going to get us a little condo. Oh, yeah. Where the ex hadn't been. I get the move. But this lady is asking the same question we get when we have someone say,

hey, I have a $10,000 paid for car. It just got totaled. I don't really want to go in debt to buy a new car. Well, you don't have to. You get the $10,000 check from the insurance company and you buy a $10,000 car. But instead, you're using the car totaling as an excuse to move up to a $20,000 car. And somehow that equates to payments and you're going to act like the car being totaled caused this. No, you moved up in car. You just want to go up in car. Yeah.

The ex didn't cause this. They didn't cause the move up. They caused the move out. That's the other question of this. I'm like, listen, if your plan was to go into debt for a mortgage anyway, then why are you waiting three years until you pay this thing off? What's the point? That's a good idea, too. That's a really good. I like that the best thing we've said. Doug is in St. Louis. Hey, Doug, what's up?

Hi, how's it going? Thanks for taking my call. Sure, man. How can we help? Hey, so I've got some good news and I've paid off a lot of debt. And, um, but I want to talk to you about the emotional side. The guilt is still there. So, yeah, so we had some major medical bills and some home repairs on ourselves over a hundred thousand dollars in debt. Um, we decided we didn't want to pay the minimums anymore. So we, uh,

Paid off a third, settled a third, and then when my 99-year-old grandma passed away, we got a little money. So with the exception of our mortgage, my wife's two loans and a very small car payment, which we're going to pay off early, we are out of debt. Okay. What is it you feel guilty about?

And just still, even if we budget for it, a big purchase, it still feels uncomfortable. Or if you're going to the kids' activities and you run out of time and you work swing by McDonald's and you feel the occasional purchases, it still feels guilty. Are you doing a budget? Yes. Does your budget account for those occasional purchases? Yes. Are you able to accomplish your other goals with the occasional purchases? Yes.

Yes. Yes. It just still feels weird. Do you feel bad that you didn't pay? Is it because you didn't use your earned money per se to pay off all the debt?

It's more a mixture of, I guess I'm afraid to go back and then, you know, I've, I've really drastically increased my income. And so I feel a little like, you know, people who are having a harder time. Yeah. And then the other part of the guilt is, so we have a three-year-old and a five-year-old. And because of the medical stuff and because it just, it was just easier with

with my wife being home. When she's home, we meal plan better. We save more money because we don't need out. We don't save money because my three-year-old doesn't have to go to daycare. We save more money that way. But anytime you go visit family, friends, anything, it's the first, when she goes back, and it's like, well, I've increased my income. I think we'll be okay. They don't get a vote. Who gave them a vote? Yeah.

I know. It's in my head. And I guess what I'm trying to say is how do I get, we're doing fine, but how do I get all that voices out of my head? I assume that once you cut off the debt, it still takes a little bit before you feel that relief. Listen, I'll be honest with you. My husband and I paid off a big amount of debt and immediately you're like, yes, this debt's gone. But you do feel the residual effects of that throughout life.

like your day-to-day life. For me, it's, I would go to the grocery store. My armpits would still sweat when it was time to swipe my card. Still to this day, I have to stop myself from checking my account to make sure the money's there. So there's, there is that part of it that your body is just used to a certain response when it gets in those familiar circumstances. And I do think that that starts to fade over time. I think the best thing for me, one of the best anecdotes for this has been anecdotes for this has been the budget.

And just going over it and saying, okay, I planned for this. And reminding myself that I'm still doing all of the things that cause me to be a financially responsible adult. I'm still doing my investing. I am still planning for the future. I'm still being generous. Like when I tell myself, Jade, you're checking all the boxes. This is okay. Then it kind of causes my heartbeat to slow down. All the boxes are checked, including taking my wife out to a $300 dinner tonight. Okay.

No, I'm not talking about that. I'm talking about that. I think this woman needs somebody to take her to dinner, sounds like. And sometimes, to Dave's point, I do think you need to bust through those barriers a little bit and remind yourself why you did this. Why did I pay off this debt? There's a so that to it. And the so that wasn't so that you could be at home and fretting about every small purchase. That wasn't the so that, right? Exactly. Yeah, that's a good point.

And as far as the other people getting a vote, I can tell you there's a high correlation between people that build wealth and those that don't give a crap what other people think. Right. So you pretty quickly go, ah, you know, whatever you want to think about, that's fine. I mean, I got people that want to tell us what to do, but they've even voted wrong for the president. So, you know, I don't even, why do I want to listen to them? You know, you got to be careful who you're listening to, man. You don't get a vote. You don't get a vote. This is The Ramsey Show. ♪

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Hey, Dave. I appreciate you taking my call. I messed up big. Went behind my wife's back, racked up $26K in credit card debt in four months. Pregnant wife, I should say, and now she's filing for divorce. What did you jack up $26K on? Pokemon cards. Trying to buy a bunch and then sell them online, which didn't work out. Oh, okay. All right. She's filing for divorce.

Yes, she already filed. Sounds like things were pretty rocky before. Yeah, it's not because of these Pokemon cards. That was just the final straw. Yeah, correct. We have three boys together, two to five, and our first girl on the way, she's 15 weeks pregnant. So what went on before this? What were the straws before this? How have you been behaving? Angry, short, not pleasant at all to be around, to be honest.

I appreciate your honesty. Yeah. So let me ask you, if you were to put her shoes on for a minute, what do you think regarding this purchase that she's angry about? The deceit, the betrayal. Good, good. That's good self-awareness. Yeah, in our world we call this financial infidelity because you busted the trust almost as if you slept with someone.

Yeah. That's the way it feels. It's the same part of the brain that you damaged. Yeah. That's what's going on. And so that's why I pushed her over the top. And then so the net of the thing is, have you been able to sell the Pokemon cards yet? No, I'm going here in a few. I'm just getting everything together so I can take it to one of the local shops here in Salt Lake to sell and pay back some part of this debt. What do you think they're going to bring?

I'll be lucky, honestly, if I probably get five grand. So how did you mess this up that bad? I'm confused.

So what had happened was I was trying to build a platform on social media, so I built an Instagram account where you buy followers, and I paid a lot of money on giveaways on an app called Whatnot, and that's how I really racked up the debt was buying these expensive giveaways to try to get people to come to my account. Okay, so you didn't really buy $26,000 worth of Pokemon. You really spent some of this money on the website. Yes. Yeah.

Trying to build a false front. Yeah. Yes. Look like you're bigger than you really are. A hundred percent. Did you tell her any part of this and she said, don't do it and you did it anyway, or you just kind of did it all? Yes. I started at, we were at four grand and that's what she knew of 4,500. And then I went and continued as things were already going to rocky path. I felt

I just, I self-indulged in myself and went all in on myself out of selfish greed and lust for fame that wasn't real. Are you in counseling? I am. Yeah, she went with me today to my appointment. Okay. That's good. Yeah. Yeah.

I say that because you sound like you're working through this mentally. At least it sounds like it in this very short call. Has she said anything to the effect of, here's what I need to see in order to stay with you? Or has she just said, that's it? Yeah.

She did. I looked up a video from you guys. I saw I came across your number last night, a financial infidelity. She used that word. And I told her, I said, look, I know I'm going to be served papers tomorrow. Next day. So if there's even a chance you'll stay with me, I would burn all these cards right now, work overtime and do whatever it takes. Wow. What'd she say to that? She said, well, I want to go through a therapist appointment. Good.

And the therapist said, why should she stay with you? I said, logically, she shouldn't. I said, she has no room to stand on that she should. And I said, but there's even a chance, even if in the end it's worth it to give a chance to my family. So let me give you a parallel. And we're not counselors. Dr. John Deloney is our counselor. But we work with people in these situations and have for 30 years so much that

that the parallel she's looking for, I'll tell you what, go pick up this book by Dr. Henry Cloud. It's called Trust. Trust. Trust. That's what this whole call is about. Broken trust. And in his book, he talks about how to build trust and how to rebuild trust when trust has been broken. Also recommend it for your wife. Okay. Because it'll give her the correct things, if she's willing, to demand of you that are the right things to demand of you.

Okay, and it should sound something like this What you're trying the way you rebuild trust is over a period of time You establish a pattern of never repeating the major offense here And you already told me what the major offense here was it wasn't buying on things on the internet. It wasn't Pokemon cards It was lying. Yeah, and

That was the major offense. And so if she enters back into this, if she were my daughter or my little sister, I would tell her to give you a shot, but you get one strike. Never again do you lie. You are so unbelievably honest that it's awkward all the time around your house. Do these jeans make me look fat? Yes. Yes.

You have to tell the truth all the time.

Awkwardly. And be proactive about making sure there's no place for mistrust to live. So you're sharing all the account passwords. You're putting the pin. You're sharing your location on your phone. I always say make it to where there's no foothold for that to even get in. And that way there's no questions. So let me kind of give you a correlation a little bit in my life. There wasn't a deception there.

But my wife did lose faith in me when we went broke because I was stupid, which was valid. It took years for her to trust 100% in my judgment. We made all decisions together and still make all decisions together, which gives her comfort that I'm not off chasing the moon somewhere like you were. You went off chasing a get rich quick thing, and I did too, and that's how I went broke.

Didn't cost me my marriage, did cost me bankruptcy because I was an idiot. Okay, I did it with more zeros than you did it, dude. So she, but it took her, I mean, we've been married 43 years. That was 35 years ago we filed bankruptcy. To this day, if I say a phrase a certain way,

I'll see her head tilt because it reminds her body. It reminds her emotions of those old days. And then I have to stop and rephrase and go, okay, here's what I was really trying to say. Oh, I can see her body react to this day. Now, it's not much. It's very seldom today because it's been a lot of years of a good pattern. Trust has been rebuilt. She trusts my wisdom now.

And, and, but it's with, you know, I had 30 years to work on that. Absolutely. So you've got to rebuild trust in your integrity. No strikes, no lying, no purchases that she doesn't know about the rest of your life. Not a freaking pack of gum. The rest of your life period. And it's like if you were, if you were an alcoholic and she says, I'm done, I'm

But I'm going to give you one more chance. One more time, you fall off the wagon, you're gone. Yeah. Yes. You're on a one-strike deal. And then you've got to lean into that. And it sounds like you're ready to do that. It does sound like that. It does sound like that. But I don't know.

Time will tell. She may not be ready. She may not want to do it. But this is how it works, folks. You've got to tell the truth and you've got to work together on money. High correlation between that and winning with money. High correlation in not doing that and losing with money. This is The Ramsey Show.

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do work that they love and create actual amazing relationships. I'm Dave Ramsey, your host, Jade Walsh. Our Ramsey personality is my co-host today. She's the number one best-selling author here on the show with me. We're answering your questions at 888-825-5225. Rex is with us in Columbus, Ohio. Hi, Rex. How are you? Hi, Dave. Hi, Jade. I'm doing well. It's a pleasure to talk to you two today. You too. What's up in your world?

So I'm 27. I got married just over a year ago, bought a house shortly after. We're on track, baby steps four, five, and six to pay off our home in about four years from now. Our first child is on the way due in five months. And my question is one about priorities. I really want to keep paying down this house ASAP. So my wife may not have a job in the future other than carrying family, but I also want to be generous with others.

And a buddy of mine went through a separation recently. He's a hard worker, not a bum, but he started from scratch saving up to buy a car. And I'd like to give him a beater for Christmas as a way to bless him and advance his future. But I worry if this is reckless financially while I still have a mortgage. What's your pregnant wife say? I just brought this up with her yesterday, and she's mixed about it. She's more hesitant than I am, but surprisingly, she was not averse. What's your household income?

Between $225,000 to $250,000 a year. How much do you have in your emergency fund? At least six months of expenses, about six months. How much? So I want to say it's like $30,000 to $35,000. How much are you spending on the beater? I'm thinking no more than $1,200. Oh, I'd do it. $1,200? Yeah.

Yeah. That car has gone down a little bit. So, I mean, they used to be in pricey or even the beaters. I mean, I'm just telling you, if I woke up in your shoes today, I, I would do that in two seconds. It's a very small part of your world. It's a good point. But if I may add one more piece, um, I am considering a career change relatively shortly. Uh, although I'm, uh, again, I'm making a hundred K and the rest about one 25 or so is, is my wife. Um,

I worry about my future at this company. I don't feel as though I'm doing a good job as I have in other roles. It doesn't seem like a good fit for me. So you make $100,000 if you lost your job, $1,200 don't help you. That's a good point. Yeah. I mean, for me, that doesn't change it much. What you're talking about is how far in the future, you know what I'm saying?

So for me, I mean, if it really made you feel that weird, you could say, well, I'm going to spend $1,200 on this and then I'm going to add an extra $1,200 to my, like you could balance it in a weird way to make your brain feel better. And I think when you do that, you'll realize, oh, this wasn't that big of a, it wasn't that big of a deal. What's interesting is, is that this tiny little bit of stress really shined a big light on your career thing and means you need to get off your butt and do something about that. That's a good point.

Right. You need to act on it instead of wait and let something happen to you. Yeah. Are you concerned that when you have this baby, your wife's not going to want to go back to work after leave? I don't think that's the case. She's working from home now, so it's relatively manageable. Okay. But I do still want to have, I want to give her the opportunity to not feel trapped in her job. Yeah. I hear that. $1,200 does not keep her from coming home. You losing your job might.

Right. So these are way different decisions. One's 100K, one's 1.2% of 100K. But kudos to you for thinking in the way of generosity like that. I love things like that. It's the reason that you go through and do the baby steps so that you can do those sorts of things. So really good. And also what's weird is this, 10 years from now, you'll forget you did it. Yeah. You'll never remember. It's such a small piece. He'll remember it the rest of his life, but you won't.

I promise you, I don't remember what I have done. Yeah. I don't. Good. I have no idea. Bailey is in Fort Worth, Texas. Hi, Bailey. Welcome to the Ramsey Show. Hi there. Thank you for taking my call. Sure. What's up?

Hi there. So my husband and I, we have recently been binging your guys' show, and we are preparing now with our Baby Step 1 and are about to start our Baby Step 2. Looking at our debt, we've made some real dumb decisions, and my husband's credit cards, there are several, we have let all go into default over the last couple of years. Mine, however, are current. I have three.

And so when listing them, since we know we've gotten all the information about paying them in full, you know, settlement in full with a prepaid debit card, all that sort of stuff. But I just don't know how to go about listing them smallest to largest since they will be a lump sum. I would do two separate. I would do two debt snowballs, one for current debt and work it first and then work the old bad debt second.

Okay, and then our car loan is actually now a personal loan from a friend. Should that be gross? Yeah, that might. I'd want to attack that very quickly. That's on your list of current debts, right?

Right. It is just one of the larger ones because my credit cards are all relatively small. However, because it's a debt with a friend, it really is hanging over my head. How long have you had it? How long have you had the debt with a friend? One year. We've been paying and we're current, you know, we're paying them all monthly. And how long will it take you to pay off the first few things in your snowball, those few credit cards? My first three are only $10,000, so probably about five months. What's your household income?

Currently, it's at $100,000, but in the next six months, we're going to go up to $160,000. Good. Well, it's not going to take you that long then. Yeah. You better get more than $2,000 a month rolling out of $160,000, kiddo. Yeah, it's just not going to go up until February, so we are impatiently waiting. Okay. Well, you need to go ahead and cut your eating out off the budget too. Have you been paying the friend or you haven't been paying the friend? We have been, yes. Okay. What do you owe on the car?

$10,000. Oh, you'll knock it out. Yeah. It'll be gone by summer. If it makes you feel better, just tell them, hey, we're doing this debt snowball and we list them smallest to largest. You're number four and our plan is to pay you off this year and so that we're not running this thing out. Yeah, you should be done with them by April or May. Yeah.

Okay, that is our hope. And then just go ahead. No, it's not a hope. It's a math thing. Yeah. Hey, run the math out. Have you done the math on this to see what your projected date is? Because if you haven't, you need to jump in every dollar. You need to do your roadmap so that you know. We have downloaded every dollar and we are using that. Okay, then that is the accountability there. And just from somebody who's been in your shoes, you need to speak that way. Because if you run everything, if you...

verbalize everything as if it might happen, it might not, then chances are it might not happen. So you need to verbalize it in the way of, well, we'll be done with that in April. And then when we're done with this one in January, do you see what I'm saying? You need to use that and let that be your vocabulary because that's going to inform what you actually do to accomplish this goal. Yeah. How fast do we go through 20 grand, 10 in credit cards, 10 in car, making 100 bleeding into 160? Pretty stinking fast. Yeah.

Pretty stinking fast. This is the Ramsey Show. This show is sponsored by BetterHelp.

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J.D. Walsh, all Ramsey personality is my co-host today. Open phones at 888-825-5225.

The old motivator from another generation, before there was a Zig Ziglar, before there was a Tony Robbins, before there was a Dave Ramsey, Earl Nightingale said, what you can conceive and believe you can achieve. Jade, with that last call, you said the same thing to her. You need to be so dialed in on your numbers that you are speaking truth.

the future, March of 2025, as if it is fact. That's right. Because the math is telling you that it is a fact and you don't use language like, I hope. Maybe. Maybe. Hopefully. Sort of. Kind of.

Tells me you haven't dialed in your numbers exactly. You need to get a little bit nerdy with your numbers. And because here's what really happens out there in the real world. In the real world is almost always...

you will get out of debt faster than your first plan you lay out thinks you're going to. 100%. That is so true. I remember, because some people know this, some people don't, but I used to listen to the show long before I ever got to work on the show.

And I remember you used to say, Dave, when you start working the plan intensely, you get on a moving sidewalk. It's like at the airport when you go and you can either walk normal or get on that little sidewalk and it makes you walk a little bit faster. That is so, so true. I think you just open yourself up to opportunities when you say, I'm going to go lightning fast. I'm willing to do whatever work it takes. Then you begin to see the opportunities around you to go faster. Yeah, I think God just looks down and goes, oh, there's a smart one.

I think I'll help this one. Who wants to do it my way. Yeah. Yeah. They want to get out of debt. I think I'll just lift them right along here. Fly little bird. Yeah. That's right. And you just, you look up and you, well, that's supposed to take nine months and it took seven. That's right. But what I was saying to you on the break, and this really does segue into every dollar is most people have never said, I am going to do insert specific task and

And I'm going to do it in this time frame, insert specific time frame. And this is going to be the exact outcome. And once you do that for the first time, and a lot of people for the first time they do that, it's when they do their every dollar budget and when they pay off their debt. Once you do that, it creates a confidence on the inside of you that, oh, I can actually say something, do it.

and hold myself accountable. That is, it breaks open a whole new world of possibility and confidence in yourself. So that alone. You know, like we're approaching the first of the year and we're going to do the goal setting talk. Yeah. And we always do that. And it's something I've taught Entree Leaders for 25 years. And I learned it when I was 12 years old, going to these motivational seminars with my dad and the real estate business. But I want to lose weight is not a goal. No.

I want to lose 30 pounds, okay, over 10 years, and how many times? Do you want to lose 30 pounds? Gosh, hopefully just once. Yeah, it's like, well, I mean, hello. So, okay, so these are still not a goal. It's a wish. It has to be specific. It has to be measurable. It has to have a time frame. As soon as it has all three of those things, then you will do the long division math immediately that you learned somewhere around the fourth or fifth grade, hopefully, and

And that is, I want to lose 30 pounds. When? Oh, 90 days. Oh, you mean 10 pounds a month. Oh, you mean two and a half pounds a week. Oh, I'm going to increase my aerobic activity, my water intake, and decrease my bread and sugar intake. And I will lose two and a half pounds a week. It's magical. You don't even need Oprah.

I mean, that's how it works. That is how it works. Because you dialed it in, but it's specific, it's measurable, you spoke it because it's in a certain time frame, and then you know if you're on track or not. Yeah. And once you do it... And that's why doing your every dollar budget works. That's right. Because you can look at it and go, am I accomplishing what I said I was accomplishing? And so, yeah. Yeah.

Let's get into it. This is how it works, ladies and gentlemen. So check it out. You can download every dollar for free in the App Store or Google Play. Do not miss this. People who win at anything are doing that intentionally. Winning is a series of intentional acts. David's in Fort Smith, Arkansas. Hi, David. Welcome to the Ramsey Show. Hey, what's up?

I got a problem. My insurance company is wanting to, they say it's illegal for them to insure my automobiles because I have such a low credit score.

I've been very wise with my money. I have no bills. I don't borrow a lot of money. I don't need money. Who's your insurance company? Huh? Who's your insurance company? Shelter insurance. Shelter. Okay. Yeah. Okay. The agent that you're talking with is either an ignoramus or a liar or both. They sent me a letter. Hmm? They sent me a letter. Oh, okay. They're lying. It is not illegal to...

to issue insurance to someone with a low credit score. It might be unprofitable for them, and here's where this comes from. The University of Florida, in conjunction with the University of Pennsylvania, 25 years ago did a study that shows that people with low to no credit scores file more claims more often, and so the insurance business across the board took the FICO score and used it to raise rates. But it has nothing to do with legal issues.

So my credit score is zero and has been for 30 years. Do you think I have trouble getting insurance? No, but I have old automobiles. I have a 2007, a 2014. I have nothing new. I have a 2011 Harley and a 2000. I have nothing old. Everything's got a lot built-in insurance on it. You see what I'm saying? I have nothing with full coverage insurance. Don't need full coverage insurance. You have debt?

No, I'm debt-free. You have a zero credit score? I have a zero credit score. Okay. Well, then what you need to do is fire your stupid insurance company, because they're stupid.

and get you another one. So go to ramseysolutions.com and click on ELP for endorsed local provider. And you can find the insurance for home and auto. It's called PNC, property and casualty insurance. And those agents don't work for a single company. They work for you. They will shop among many companies and get you the best deal. And you can decide, you know,

how to do that. But it is not illegal to issue insurance on someone that has a zero credit score. They are following a false premise because the research that I just referenced that's 20 years old or 25 years old was incomplete research in that it is valid in the sense that if you have bad credit because you don't pay your bills, you are more likely to file a claim and a higher claim. That does make sense because you're broke.

Now, but if you have a zero credit score, I'm not more likely to file a claim. I'm a multimillionaire. That's dumb. I'm less likely to file a claim. That's dumb. All right. So obviously the research is incomplete for a guy like David or a guy like me. David's got plenty of money. He just drives beaters because he wants to. That's what he said.

And that reminds me of that same way of thinking with rental cars. I feel like it's the same thing. You know, I just came, I was leaving, where was I leaving Denver? And I wanted to rent the car and then drop it at another airport. And they said, you cannot do that if you don't have a credit card. And I said, what's that got to do with it? Because of the theft. There's entire gangs.

that are running debit card theft. They're stealing these. The size of the rental car business is unbelievable, and the size of theft that they deal with is unbelievable. That's what the guy was telling me. That's exactly what does it. So we learned that when we had Dollar Rent-A-Car as a sponsor here for a while. We talked them into being the world's best debit card only. They took the debit card for Ramsey listeners, and we did that for a while. And then, of course, with COVID,

Everybody went bankrupt, including Hertz that owned them. And so then they come back as dollar. Dollar came back as $2.

and they got a new CEO and a new leadership team and decided they weren't going to take debit cards anymore, which means we had to take them off there because we can't endorse them anymore. So we lost a sponsor, and they lost a bunch of customers because that was stupid. But anyway, we learned all this. They showed us the data back in the day, why it was so risky, because they're literally, and I'm not making this up, gangs that steal cars from rental car companies. On debit cards. And they use a debit card to do it.

And the worst location in the world is Las Vegas, by the way. Yeah. But yeah, for some reason, if you pick it up and drop it off at the same location, you can use it. It's fine. Well, that's because they think they're going to get the car back at least. So crazy. The idea that you're leaving California and never coming back is scary to them. This is The Ramsey Show.

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Jade Walsh, all Ramsey personality is my co-host today in the lobby of Ramsey Solutions. Casey and Jesse are on the debt-free stage. Hey guys, what's up? Hey guys, how are you? Welcome. Where do y'all live?

Ruston, Louisiana. Oh fun. Welcome to Nashville. How much debt have you two paid off? We have paid off $205,960.46. I love it. How long did this take? 23 months. Whoa, you're cooking. And what kind of income range during that two years? $110,000 to $140,000. Wow, nice. What do y'all do for a living?

I'm an equipment manager for a golf course. Okay. And I'm a payroll administrator. And what did you sell? An old home. These numbers don't work. Yeah, exactly. We sold some land and a rent house nightmare. Oh. And a lot of other things. We sold so many things the kids thought they were next. I love that. So what did the rent house nightmare bring? Oh,

It brought $122,000. Good. And what did the land bring? About $25,000. Okay, cool. And what kind of debt was the 206? A maxed out home line of credit on the Nightmare Rent House, a camper, car, credit cards, and

phone loans and medical bills. Y'all were normal. Everything but student loans. You were normal. You had it all. Yeah. That sucks. We had to have it all. It really did. It was horrible. How old are you two? I am 36. 38. And how long have you been married? 17 years. Okay, so two years ago, three years ago,

You had a I'm sick of this, sick and tired of being sick and tired moment. I've had it. What happened? Tell us the story. So I actually listened to your book a few years before our journey. We were already drowning in debt. And I listened to the total money makeover. It was like, he is so right. We have got to get out of this debt. We'd have so much margin in our life.

But I don't want to listen to your plan. I want to do my plan. So we... You're the first person to ever do that. We've raised the limit on the maxed out home line of credit and maxed it out again. There you go. And then found ourselves in even more debt. This was the third time we consolidated our debt.

each time we doubled the debt. And didn't change habits, go back in. No habits changed. So two years ago, we're drowning again. The renters hadn't paid rent in six months and we had a variable interest rate on the rent house. So the feds were going up. So we went from $300 interest payment to $900 interest payments. Yeah, it was bad. We couldn't do it. We literally couldn't.

So then I listened to your book again, and this time it sank in. It's okay. My plan obviously isn't working. I had prayed numerous times, God, please increase our income so that we can get out of this. And he said, no, I'm cutting you off. You obviously are bad stewards of my money. You've got to learn this lesson. So then I said, let's do this. And at the time, our marriage honestly was on the rocks. Casey was dealing with some heavy depression. And I was like, I'm not sure how I'm going to get my spouse on board because he wanted nothing to do with the finances. I'd given up.

I was done. Well, did the weight of this add to the issue with depression? Correct. It was a big portion of it. Okay. A lot of it did. So I did the only logical thing, which is say, hey, I'm going to sell this gift that you bought me on credit a few years ago. Why don't you ride with me to make sure that I'm safe as I sell this item? Uh-huh. And I trapped him in the car listening to Total Money Maker. Yeah.

It didn't go well. He made fun of the book. You know, it can't be that easy. It's just seven easy baby steps. A baby could do it. It's so easy. I was not a believer at first. You're not listening.

He says it's not easy. I like it. I like it. I'm on my own. Give it a few days. So when he comes home and... I listened to a few of the debt-free screams. I started listening to the podcast and heard a few of them, and it was very inspiring, very emotional for me. And I said, you know what? If these folks can do it, who some were worse off, some were not as much, but they were able to do it. I thought, why not?

Why can't I? Made it real. Yeah, it did. It finally did. And now you're here doing that for somebody else. That's it. That's it. Let me ask you a question because I'm researching this exact thing. There was something that when you first heard the baby steps, you had an emotion that caused you to say, I'm not going to do it exactly like they teach. I'm going to do it my way. Casey, you had an emotion that caused you to say, this guy, this is not a baby step. This is, you know, for adults, whatever you thought. What was that emotion that caused you to initially kind of back away from it? The...

Was it fear? Was it, I just want to be complacent? It seemed insurmountable. It seemed insurmountable. Like this is impossible. I thought I was going to live to my death, working and in debt. I grew up knowing it.

I was in the mindset of can we afford it? That's the culture I grew up in. It's not can we afford it, can we afford the payments? That's the word. That's how I grew up. I'm like, this can't be done. And what about you, Jessie? What was it that caused you to say, I'm going to do it my way? This sounds good, but I'm still going to do it my way. Well, I don't want to take the time to have to go through all of this. If I can just wipe it clean and have a...

payment in one thing versus working and taking years. I mean, when we initially looked at the snowball calculator, we were at 2031 paying off all this debt and we did it in 23 months. That's right. It was just, but the snowball calculator did not include selling off everything. Right. It did not at first. It did not. Yeah. When you, when you plug that in, it changed the numbers. It did. It did.

It did. And we had, I mean, life happened. All the plumbing busted when we had a freeze in that rent house. Oh, my God. This house is cursed. It was. The renters had destroyed it. I mean, flooring was gone. There was a lot of fecal matter everywhere. Oh, great. Animals, animals. But we did have a real estate pro, Ramsey Pro, and he helped us through the whole thing. Yeah. I mean, I would work at night, get off work, go to the house, and clean. Yeah.

And then Casey worked a ton of overtime. We door dashed. You gave plasma. Yeah, yeah, sure did. Wow. But once you start going, and I used some debt-free chart trackers as well, it just kept us motivated of knocking this out and getting ahead. How does it feel to be free?

Amazing. Amazing. It's so nice. I wish everyone could feel this way. It's awesome. Our daughter made homecoming court, and we're like, we have to go buy two dresses now. And we could just afford it. This was within the past month. We had margin, yeah. It's been so fantastic. We get to buy. Exactly, yeah. That's so good. Very cool. Very neat.

The Facebook group, the Baby Steps community that y'all have really helped as well. Just looking through and seeing other people's stories, which, Jade, you became a personality about a few months as we started. And your story really helped motivate me a lot, you and Sam. I was like, okay, they have way more depth than I do. I don't feel nearly as bad. Let's do this. Oh, I'm so glad. So what would you say to that person who's listening today?

And they're where you were. Casey, they're going, this is not as easy as you think it is. Jesse, they're saying, I'll do it, but I'll do it my way. What would you say to that person? You can do it. It's not impossible. Just start. Budget and start. Because if you just look at it, it has a whole...

It is. It's overwhelming. You're like, we're never going to get out. But if you just start and really follow the steps and start with baby step one and then start with baby step two and pay off that little debt, each credit card down, which is so exciting to us. Like now we have more money to throw at that debt. That's right. I mean, we started at only being able to put an extra $200 a month towards this debt. By the end, we were throwing over $3,000 a month at it. Yeah.

Yeah. Ding, ding, ding, ding. Yeah. Yeah. And 23 months out of your 17 years was hell. Oh, wait a minute. A lot of the other was hell, too. Okay, okay. Yeah. But this hell got you out. That's it. Yes. You got it. Amen. You paid a price to win. Mm-hmm.

Way to go. I'm proud of you. Very good. All right, bring the kiddos up. Let's get their names and ages. Looks like they survived the cutbacks. They sure did. They sure did. We got Emily here. She's 15. Way to go, homecoming queen. Wade just turned 13. I love it. I love it. I love it. Well, this is excellent, you guys. Proud of you all. Thank you. Well done. Who was cheering you on? Friends and family.

Coworkers. Yeah, yeah, coworkers. Yep, sure was. Everybody was pretty much cheering us on, especially when they heard how much we owed. Yeah. I love that you're debt-free. My favorite part of your story is that cloud of depression has lifted off your house. Yes, it has. That makes me cry. That's a powerful story. Marriage is a lot better now. Marriage is way better. We're...

The transformation over the past two years is unbelievable. I mean, I had given up on our marriage practically, but after counseling and this, I mean, we're stronger than we've ever been. Y'all are amazing. Well done. All right, count it down. Let's hear a debt-free scream. Three, two, one. We're down!

$206,000 paid off in 23 months. Oh, but everything in the house is transformed. Hello. Depression, marriage, everything's transformed. See, the debt's all tied into this.

It's not a stand-alone subject that you can compartmentalize. It's woven its way into your life. It's time for you listening to get it out. They were here to tell you that. I hope you heard it. This is The Ramsey Show.

Hey, if you're like me, this time of year feels bananas. Thanksgiving just flies by and then you blink and the kids are out of school, family's 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.

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Jade Walsh, our Ramsey personality, is my co-host today. Hey, guys, if you didn't know, I love talking to you about money. We also help small businesses, about 10,000 of them across America. And we have a podcast called Entree Leadership. It was actually the very first podcast we ever did at Ramsey. And it was run by other Ramsey personalities and interview style and stuff over the years. I took it over about two years ago and started taking calls from people.

from small business people about leadership and small business questions. It's called Entree Leadership Podcast. It's very popular in that world. And if you want to be part of that and you run a small business, you got a question about it, you can call and leave us a voicemail there at 844-944-1070, 844-944-1070. Or you can go to EntreeLeadership.com slash ask, leave your question, and our team will get you set up to be a caller on

on there. Also, a reminder that this is the last portion of the show that is broadcast over YouTube and podcast. There's another portion coming up.

That is on the Ramsey Network app and on some talk radio stations around America. And so if you want, the Ramsey Network app is completely free. So you can finish this version of the show, video or audio or both, and just jump over the Ramsey Network app. It's completely free. There's all kinds of stuff you can do there, like search calls by subject, find

Find out what we've got to say about any certain thing. Type it in. You can type in an email and send it to us. We'll answer it here on the air. We do a lot of stuff that's really fun over on the Ramsey Network app, so be sure you check all that out. Ryan is with us in Hartford, Connecticut. Hey, Ryan, welcome to the Ramsey Show. Hey, how are you guys? Sure. What's up?

Hey, so I have a bit of a problem. I never thought this was going to happen. So in 2018, my father passed away and he left me and my brother a 401k plan. Fast forward five years.

I got a check in the mail this morning for about $245,000. The original account balance was about $300,000. And what's happening is they gave me the check and I have to pay the IRS that $55,000 difference from the $300,000 and $245,000. I called them and asked them if they could roll it over. And they said once they issued the check, there's nothing that can be done. Who told them to issue the check?

Not me. Apparently, the company my father worked for, I didn't either get a read or... I'm sorry, I didn't hear you. You cut out. Apparently, the company your father worked for, what? Yeah, they have a five-year plan, I guess, for the death benefit that if it's not rolled over to something else within five years, they must close the account and just issue a check-out.

It was super confusing. The way they explained it to me, I was on the phone with them for an hour and a half this morning with my 401k company. And they pretty much said, once we issue the check, there's nothing that can be done. There was no workaround. Yeah, there is. They had until this, that's what I'm saying. I'm sure you don't have an extra 55 grand laying around.

No, so the way it worked is my account balance was $300,000. It started at like $215,000, and over the years I got it up to $300,000. They issued me a check for $245,000. They already took the money out and sent it to the IRS and issued me the difference. Yeah, they have to withhold 20%. That's the rule.

If you take a withdrawal. But this is an involuntary withdrawal without any contact to you or anything, which is completely, at a minimum, unprofessional. What caused you to wait the five years as opposed to rolling it over? Because the 401k plan my father was invested in had really good options. All of those same options exist in the open market.

Yeah, and I have my own personal investment accounts, and I do it with that as well. Don't rock the boat if the boat shouldn't be rocked. So the way I figured is the 401k plan was perfectly fine. I kept it in there just because the investment options were fine. It was just a retirement account. I was treating it like a retirement account. I wasn't going to touch it until I was 65. I'm 30 now. What do you like? I make...

I'm a truck driver, so I make about $110,000 a year. And I also own a small business that I make about the same. Okay. Under the SECURE Act that Biden passed, you have 10 years to liquidate the 401k completely. You should have been liquidating it at one-tenth a year from the time the SECURE Act passed two years ago. And you've not been doing that. I didn't know about that. I know.

So I'm trying to figure out how that plays into this and how hardcore. All right, let's pretend that we figure out a way to lean on them and they cancel the check and put the money back into the 401k so that you can roll it over within 30 days, which is what they should do if they're

are people of integrity. This is a problem. It's not technically unethical. It's just so nasty that it ought to be unethical. Yeah, it's a big investment. It's going to cost you, you know, $20,000, $30,000 and that you don't have. It cost me two years to get it.

It cost me two whole years of gains because of this. No way. I never thought I would be upset to get a huge check in the mail, but I did. And I'm upset because I should have had it rolled over. It should have been huger. He should have called me. Yeah. All right. So here's what I'm going to suggest you do. And I don't think it'll work, but it's the only thing I can think of.

All right. Okay. Go to RamseySolutions.com and click on SmartVestor and find a SmartVestor Pro in your area that you like after talking to them on the phone. They may be able to call on your behalf and talk them into undoing this and immediately rolling it, and they'll help you with the rollover. Okay. They may be able to cite a regulation or something that I'm not aware of

Um, because this is when you started talking, I thought you were going to tell me this was a tiny little 401k, like a $10,000 and they were just cleaning out all the little ones. Sometimes they do that when a company sells or in the event of an inherited 401k like you've got. Um, but this is huge. This is a lot of money. And so this is, and with no notification at all, this is particularly nasty, um,

And so if they had simply notified you, you could have quickly rolled it over and avoided this, right? And they said they notified me, but I'm very... Oh, wait a minute. You're a truck driver. You're a truck driver. Once a week. They did notify you then. I checked my accounts. They said they did, but I never got enough information. So you've never seen evidence of them? Ask them to prove that they did.

Okay. Good idea. I mean, I don't think you've got a basis for suing them, but I'd be tempted to. I really would. I mean, because you're talking about $25,000 or $30,000 cost here. That is unnecessary. $55,000 they took out. No, honey, it's the taxes on $55,000. The $55,000 is going to be taxed.

Not penalized. No, when I got my experiment, like the summary of what my original account balance was $300,000. They cut me a check for $245,000. I understand. They took $55,000 and they sent it to the federal government as tax withholding, and it's not all taxable. Because you're going to roll the rest of this. If you take the check in your hand and you roll it to a 401k, the only harm that's going to come to you is the taxes on the $55,000.

Which is going to be $15,000 or $20,000. Oh, so I'm going to have to pay another $15,000. Honey, you haven't paid anything yet. Okay, they withheld your money, $55,000, and sent it to the federal government. Then what you do is you file a tax return of what is actually due to

And what will be actually due is not $55,000. It'll only be the taxes on $55,000 if you take the check in your hand and put it into an IRA traditional within 60 days of right now. So you need to get on the phone with a SmartVestor Pro right now because at least we need to do that.

Okay, I will. So the worst case scenario, if you follow through on what I just told you, is taxes on $55,000. Because the government has $55,000 of your money as if you're going to get taxed on the whole thing, and you're not. Okay. Because you're going to roll the portion in your hand, which is 80% of it, into a traditional to keep you from getting taxed. You've got 60 days to do that from the time withdrawal. So, folks, you can pull your money out of 401K.

They have to withhold 20%, but you have to put 100% into an account within 60 days to avoid taxation. That's what the problem is. You can't do that because they've already sent it. But he can't do that because they've got 55 of his money over at the IRS now. And so if you just take the 55, then you're going to pay some taxes, but not 55. So there we go. This is The Ramsey Show.

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What's up, Kelsey? So I've lived with crippling anxiety for as long as I can remember. How do I stop it from constantly coming up in different areas of my life? What does crippling anxiety mean? Paint me a picture of that. All right, so you're ready to jump in? I'm ready to jump in. We're going to check in with Kelsey 30 days, 60 days, 90 days. I cannot even function because I'm just crying.

My mom left us when I was four. I truly felt like for a while I had no family. She's experiencing things that really hurt a long time ago. Tell me about this boy. He triggers me a lot.

Scared of losing Paul, scared of doing the wrong thing, scared of not being enough. It just feels like it would be exhausting to be Kelsey. It is. Whenever somebody's playing whack-a-mole with their anxiety, when it just keeps moving, that tells me the underlying system's not okay. How do I get my inner child out of this relationship? Because I feel like she's running the show. One of two people that's supposed to never leave took off. How is this burden? You're burdened, that's right. To the one person.

Who should carry it? All of it. Did you ever tell that little girl that it wasn't her fault? I don't know what to do. You either have to choose to let this guy love you or you got to choose to let this guy go.