Chapter 1: What is discussed at the start of this section?
Brought to you by the EveryDollar app. Start budgeting for free today. Normal is broke and common sense is weird. So we're here to help you transform your life. From the Ramsey Network in the Fairwinds Credit Union Studio, this is The Ramsey Show. And I'm Rachel Cruz, hosting this hour with personal finance expert and good friend, Jade Warshaw. So we're answering your questions.
You can give us a call at 888-825-5225. All right, starting off, we have Nick in Kansas City. Hey, Nick, welcome to the show. Hi, how are you guys doing? We're doing great. How can we help? So I've had a life insurance, I believe it's a whole life insurance policy that my dad had started for me in about 2008. We've been paying about $500 a month into that policy since then.
And I was looking at it with my representative and And I only have about 150 in there, but I've had it for so long that I don't, from the research I've been doing, it feels like I should have been, um, should have never done it, but it seems like it's mostly front loaded. And so I don't know if I should stay into that, pull that money out, put it into something different.
And also what I could do, what kind of products I could explore Now that I'm making more money than way back in 2008, what I should be putting my money into, I've kind of decided I want to start a Roth IRA for my wife and I and a start. And then I have some extra money after that. I wouldn't know where to go after that. So you said the cash value is only $150,000. What's the death benefit?
Only $500,000. And how much did you say you've paid in? $500,000 a month. Oh, my gosh. Since 2008. Yeah. Yes. Oh, my word. Yeah. I mean, I'd get almost 18 years. Yeah.
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Chapter 2: How should I handle my whole life insurance policy?
I try to get out of it immediately today. Yeah, for sure. I mean, these are it is it's one of the worst financial products, honestly, that's out there. I mean, when you look at whole life or universal life, it's so crappy because what you're seeing is exactly what people experience because they're trying to mix an investment with insurance. And you never end up you never get ahead.
You really don't. And so versus if you had taken a. you know, just a policy that, yeah, a term policy that's so significantly cheaper and getting as much coverage. I mean, if you're a healthy young guy, you're only going to pay 20, 30 bucks a month. Like it's not a lot.
And if you had invested that remaining amount just in a mutual fund or in an index fund or a brokerage account, like what it would have been with the market. So I think, I'm sorry to say, Nate, but yeah, I feel like you're experiencing the the crappy product that whole life insurance is. And if you were to get out of it, um, is your next question. Have you researched doing that?
Because different companies, I mean, there's different holdings and fees and all of it. Have you looked at, you just went ahead and cashed it out? Yeah, a little bit. I have, and I, it, I'll be honest. That's why I've called you guys because I am so confused about the penalties, the, uh, I just I'm so confused. I feel like I've made a lot of good decisions in my life.
But this is one horrible one. Yeah, I would call them today. I mean, obviously, you would you're going to lose the death benefit like you're because you're canceling the policy. But some of that cash value should end up rolling to you minus fees. So I would call and find out exactly what that is. And then once you feel good about the information. Yeah, just cancel it because it's not serving you.
If you had taken that same money and invested it just in an index fund, it would have been more than double by now. It would have been closer to $300,000. So I think we both agree that that wasn't the best way to invest that money. And then if you're looking for... Coverage, yeah. Then just go to term coverage instead.
Yeah, I would contact Zander, Nick, Zander Insurance, because they'll shop their mortgage. They basically shop companies to get you the lowest rate for a term life. And I would go ahead and do that. I would do a term life before you cancel the whole life just because you have a wife. Do you have kids? Yeah, I have two kids.
Yeah, so I would make sure before you cancel the whole life policy, get a term in place. Again, it's going to be very inexpensive. You and your wife both need a policy. And, yep, do that. Then cancel the whole life. And once you get that cash out, like what Jade's saying is, then you can start applying it actually to invest. That's actually going to make you money.
Now, when this was purchased, was the intent to build wealth or was the intent for insurance purposes, for life insurance? What was the intent? It was... The intent, well, my dad did it with one of his friends, and he's been paying for it for most of the time. I worked for my father, but I didn't actually, I mean, I wasn't making a lot of money until maybe 2017.
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Chapter 3: What steps should I take after experiencing job loss?
Yeah, so that's a good word to the wise. When you're purchasing insurance, it should just be that. It doesn't have to be married with any other sort of investment thing. Insurance is insurance. Investments are investments. They're separate deals there.
And so just knowing that going forward, I mean, it's a really good call and a really good question because I think people get caught up in real life all the time. Yeah, so the next step, Nick – When we're talking about investing, do you guys have an emergency fund in place? Yes. Okay. Probably too much. Probably too much, though, what you said. You're just covered, Nick. You're just covered.
Covered all the way around. Like I said, I've made a lot of good decisions in my life. Yeah, sure. But my retirement is not one of them. Okay, so then let's be looking at that next. Yes, so the Roth IRA you mentioned, yes, absolutely. And your wife, even if she's not working, she can open up a spousal Roth IRA. So I would do those two as well.
I think the limit this year, if you get it all in place— It's $8,000. And sometimes it changes year to year. But you can fully fund that if you can, I mean, for this year, which would be amazing. And then be looking into, do you have a 401k at work? My wife has a 401k. Okay. I do not. You do not. Okay, perfect. So just as a household, you want to be investing 15% of your income.
So I would do those Roths first. Then your wife needs to be looking at her 401k and go ahead and go up to the match and as well, which you guys can do both. Yep, that's great. And then anything beyond that, you guys can continue to throw money at her 401k if it's a Roth, that's a great option. And then some people, you know, want flexibility outside of retirement.
So you could look into other options like, you know, an index fund, a brokerage account, a mutual funds, but all of those, again, they're not going to have the tax advantage like So we would say 15% of your income needs to be going straight into retirement. So that is 401ks, Roth IRAs.
And then anything above that, once you guys pay off your house and everything, you can look into some other options, which I feel like you guys, I mean, like you said, you're smart. I mean, you guys have made some great decisions so far. It's just this whole life policy sucks. And I feel like you're feeling the repercussions of that. Okay. Yeah. Awesome. Well, thanks for the call, Nick.
I appreciate it. So yeah, you guys, if you're looking at life insurance, again, term life is the way to go. It's so inexpensive. Winston and I just upped ours again. I think it was probably three years ago. And we had someone come to the house because you got to do all your health stuff to prove all your health. And yeah, and we get it back. I'm like, oh my gosh, because we even upped the amount.
We went ahead and upped the amount of what we were. And it was so inexpensive. Yeah. It really was not a lot. Yeah, it's not bad. Yeah. So if you're able to do that, you guys, so worth it. And again, Zander Insurance is a great place. It's the place Winston and I use to shop our health insurance because they shop multiple companies. It's not just looking at one company.
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Chapter 4: How can I effectively manage my student loans?
So, Matthew, I mean, you guys are doing great. I mean, you really are. And I just want you to shift that mindset. If you start to entertain debt, then it is the easiest road to go down because there are people and companies that are wide open, willing to accept you and make you feel great and justify you. any way to get you in because they're going to be making so much money off of you.
That is the industry, okay? That is the industry. And so when you can avoid that, and you guys are so young, and I'm like, please, if you can just avoid that, you guys together, and you make a pact and say, we are not going into debt. So we're going to pay cash for our cars. If we have to go on an anniversary trip next year, we're going to save up and pay for it. Like,
When you can avoid it and you guys are making 70 grand and you get out of debt and all that, you guys are on the positive end then financially. So don't continue to have these thoughts of debt because it just constantly will financially take you more in the negative. And it takes away from your net worth. It takes away peace of mind and all of it.
So if you can, and I would implore you to consider just living debt-free. And it's not exciting. The ego is not going to love it. We don't love the $5,000 car. It doesn't make you feel great. It doesn't make you... But it's not forever. Fall successful. Yes. But for a season. That's for a season. And then you guys can save up cash, sell the $5,000 car for $5,000.
That's probably what it's still going to be worth. That's right. Put it with another five. And that's a $10,000 car. And then you do it again and again and again until you guys are, yeah, at cars that you love, but you're paying cash for them. And it's going to be a slower process. But man, so worth it. Gotcha. I needed to hear this because I grew up in a family where you didn't buy cars.
We always bought cars for cash. That's the same way with her. And we were just kind of in a pickle of like, do we just keep doing this? Yes. Yes, you do. Yes. I needed to hear that. For sure. Yeah. Your parents have set up some great examples. Both of you come from a very similar background. And so stick with it. That's why we always say, you know, normal is broken.
Common sense is weird when we open the show because that's what's happening. So live within your means, Matthew. If you don't have the money, don't buy it. Don't be under that impression that if I can afford the payment, I can afford it. No, you have to be able to pay for things in cash. Finally, mortgage rates have dropped, and you know what that means.
People who have been sitting on the sidelines are about to jump back in to the housing market. So if you've been waiting to buy, this could be your window, but you've got to be prepared and do it the Ramsey way. You need to contact Churchill Mortgage, their Home Buyer Edge program. gives you peace of mind in a wild market. You can cap your rate for 90 days, so if rates go up, you're protected.
If rates go down, Churchill will drop yours automatically. And get this, Churchill will even back your offer with a $10,000 seller guarantee. So if your loan falls... Through, due to financing, the seller still gets paid. That's how confident Churchill is. Plus, when you shop as a Churchill certified home buyer, it's stronger than pre-approval.
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Chapter 5: How can I manage my savings during a financial crunch?
And if we don't bring in any money, I have to pull this amount out of savings. in order to cover our expenses. Like if you're down to a tee like that and you know that that fund is there for that, no, I would not throw that extra at the debt. That's totally fine. The paying off debt is above anything or anything that you can cut.
So I would look at your lifestyle and say, hey, is there anything in our regular expenses That we have, regardless of seasonality of the weather, that we can throw extra at the house. But no, that fund, I would consider your peaks and valleys fund to be able to literally pay your bills. So we don't tell people to get behind on their bills to pay off debt.
Stay current, which is what that fund is for.
Chapter 6: What should I do if I'm facing job loss and a high-risk pregnancy?
But anything extra that you can squeeze out of the budget and or any more work you can do in those slow periods. That's the T. That's the T right there is doing work in the slow periods. Yeah, go get another job during that time. And man, you could double up, which is great.
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Chapter 7: How do I communicate my financial situation to my partner?
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Chapter 8: What are the best strategies for managing debt while planning a wedding?
And we always love to spread the word about the show because we want to help people get control of their money. Absolutely. All right. Next, let's go to Trey in Houston. Hi, Trey. Welcome to the show. How are you doing? We're doing good. How can we help? So I'm about $4,000 in credit card debt right now. I don't have any other loans nor anything else.
And basically me and my girlfriend have been talking about getting married and I've been thinking about just engaging to her soon.
and stuff and she's been talking about homes and everything like that and we've been i've been talking to her about the show but i just want to know how can i tell my girlfriend that i kind of lied about my financial situation oh no you lied what happened so basically i only told her i was like two thousand dollars why did you lie trey why So at first, that's where I was at.
And then I started just, it started racking up over time. But I did get my first, well, my third apartment. And then I just, that was it. So let me make this, let me understand. When you told her you had 2K, did you have 2K? And then you accumulated another two without telling her that you accumulated, while you were accumulating the other two? Yeah. Yes. OK, that makes me feel a little bit.
Yeah, for sure. Yeah. So you didn't lie to her like up front, but you've not been honest with her since. When was that conversation that you told her 2K and now it's 5K? Was it a year ago or like two weeks ago? It was a couple of weeks ago. So you accumulated the 2K in two weeks? Yeah. Oh, okay. Doing what again? Did you say your third apartment? What was the 2K for?
2K was used mainly for basically a lot of the stuff that I have currently. I got a lot of new stuff that I really haven't told her about either. Like what? I got a lot of new stuff. Name it. I got a new bed. Okay. I got a new bed. I got, um, some other like, um, like pots, pans, stuff like that. Okay. Cause you just moved. Okay. So you're buying stuff for the apartment. So I moved not too.
So basically I moved not too long ago, but I've been at her apartment a lot of my time. Understood. So a lot of this stuff has been, and I've been at her apartment. So just tell her. What do you think will happen if you say, Hey, just so you know. She's listening now. So she's probably hearing me. Is she there with you or is she like at work listening and you're going to come home to Fury?
She's like listening on the... Yes, I'm going to... All right. Well, hi, Trey's girlfriend. I hope you're doing well. This is like Maury. Why did you make it like this, Trey? Okay. So what's your girlfriend's name? Can you say it since she's listening? Shayla. Shayla. I can say it. All right, Shayla.
Now you know, and we're trying to tell him he needs to come home tonight and tell you what happened, but he's telling you now. So the key here is you need to start paying this off. What are you making? What do you earn, Trey? So I originally earned about $48, but now I make around $50 because I got a 4% pay increase. Good. So I make around $50 a year. Good.
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