Don’t Take Financial Advice From Your Broke Friends!
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What is discussed at the start of this section?
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 as we answer your questions for free. And some say the advice is worth what you pay for it. So join us. The phone number is 888-825-5225. We're glad you're here. Thanks for joining us. Kristen is with us in Pittsburgh to start off this hour. Hi, Kristen. How are you?
How do we balance saving for retirement and paying for college?
I'm great, Dave. How are you?
Better than I deserve. What's up?
Well, I'm calling because my husband and I are both 55 years old. We have a good income, primarily mine.
What are the implications of selling our rental property?
We make over $300,000 a year and we have for about the past 10 years. And successfully paid off our student loans in a 10-year period over $125,000. Only owe about $35,000 on our $400,000 home mortgage.
Wow.
And have no revolving credit or debt. We don't drive cars that we have car payments on. We pay for those in cash. Um, we don't, you know, we don't have any kind of debt in that way. Our problem is that we don't have a nest egg. We're not saving. And so looking down the road, I want to be able to retire at some point. And I'm just trying to come up with some options of how we should be, um, taking our money and, and investing it and potentially not just paying our children's student, um,
How can we effectively manage our cash flow while supporting family?
payments, you know, to colleges out of the cash that we have, maybe using it for something different.
So you have some cash?
We do. How much? I get a nice bonus every year in March. How much cash do you have? Well, typically we have about $75,000 a year. How about typically right now?
How much cash do you have?
Oh, right this second? None, because we just paid two college tuitions.
Oh, so you got two in college?
We have two in college, one already graduated. Yes.
Okay, cool. Cool. Good for you. All right. And so you're cash flowing college out of your 300 K, but you have no debt except 35,000 on your mortgage.
Correct. Are you currently putting anything aside? 15%, 5%, anything into retirement? Yes. So I, we put in 10% in my 401k and then we also do an additional 5% in a Roth IRA.
Okay, so you're doing baby step four, 15% of your income going into retirement, right?
Yes. How long have you been doing that? We've only been doing that since, well, the bigger chunk of it, we were doing about 8% up until two years ago. And now for the past two years, we're up to 15%.
Okay, if you never get a raise for 10 years, you make $300,000 and you put 15% of your income aside for retirement for a decade, you will be rich. okay you're doing everything exactly right okay now and i mean i guess we need to define rich you won't be a billionaire but you'll be a millionaire now but let's let's play out though what you should be doing which is more than that um so okay you don't have any cash but you have an emergency fund
Yes.
How much is in it?
Well, I would say that it's just in our bank account. It averages somewhere between $10,000 and $15,000 just in our bank account. I would move that to a separate place. Let's move that to like a high-yield savings account and get it out of the checking account so that it's clear this is money for three to six months of emergencies. Maybe put a little bit more with it.
Yeah, it sounds a little low for three to six months.
Okay.
Yeah, and do you have any other non-retirement investments?
We have property. We have two separate properties. Oh. And my husband is an antique car collector, and so he uses a lot of car.
But you don't have any mutual funds or stocks or anything that are not in a retirement account?
No.
No other savings that you're leaving out here?
No. Now, the other property. So you've got properties that are cash flowing. Do they have debt on them? There's no debt on them, but they're not cash flowing. He uses them for his hobbyist. He's a hobbyist for his cars. So he uses them to house those. But potentially we could turn around and sell our house.
Yeah, you're good. You're full. So you need $35,000 to knock the house out. As soon as you knock the house out, $35,000, you've got to cover tuition.
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Chapters
8 chapters
1
What is discussed at the start of this section?
0:27–1:03
2
How do we balance saving for retirement and paying for college?
1:03–1:17
3
What are the implications of selling our rental property?
1:17–2:12
4
How can we effectively manage our cash flow while supporting family?
2:12–57:48
5
What insights do Dave and Jade share about financial transformations?
57:48–58:25
6
How do personal experiences shape financial decisions?
58:25–59:17
7
What strategies are suggested for paying off debt quickly?
59:17–59:49
8
How do they approach the topic of insurance in high-risk areas?
59:49–1:51:53