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The Ramsey Show

The Power of Compound Interest (Hour 2)

20 Jun 2023

Transcription

Transcript generated automatically by AI and may contain errors.

Chapter 1: How do I get started investing?

29.073 - 56.444 Ken Coleman

Live from the headquarters of Ramsey Solutions, broadcasting from the Potts Moving and Storage Studio, this is the Ramsey Show, where we help you win in your life, specifically your money, your work, and your relationships. I'm Ken Coleman, joined by Jade Warshaw this hour. The phone number for you to jump in is 888-825-5225. 888-825-5225. We'll start it off this hour in Champaign, Illinois.

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56.925 - 58.827 Ken Coleman

Faith is there. Faith, how can we help?

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59.819 - 66.21

Hi, so I have a question. So I'm 18 years old, and I just graduated high school. I was a valedictorian.

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67.012 - 75.587 Ken Coleman

Oh, wait a second, Faith. Don't just skip by that. A little slow clap for Faith, a valedictorian, ladies and gentlemen. Very nice. Congratulations.

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76.128 - 76.689

Thank you.

Chapter 2: Is it unethical to use my G.I. bill for school?

77.29 - 103.325

So my parents, I've known you guys for 10 years. My parents have blessed me and teach me everything about Dave Ramsey. And so I'm not touching debt at all. I'm getting close to it. I know the whole situation. So I dedicated myself to getting scholarships, and I got plenty enough to get a full ride. Wow. So I don't have to worry about college. You're like a unicorn.

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103.345 - 104.727 Ken Coleman

Yeah, really.

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105.618 - 125.462

So now I'm working just because, you know, I love working. I enjoy it. And I'm trying to make as much money as I can to have a good future. And so I was wondering, what do I do? Should I start investing or what should I start doing? I have a thousand savings savings and almost a thousand and, um, my checking account.

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Chapter 3: Should I invest or pay off my home first?

125.482 - 137.829

And then I have extra money on the side, like some other stuff. But I was wondering, you know, what you guys' recommendation for me, because I'm technically baby step three and, But I was just curious on what I should do.

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138.049 - 148.884 Jade Warshaw

Well, first off, you're a freaking rock star, girl. You're killing it. I mean, valedictorian. She's working. Got scholarships. Got an emergency fund. I mean, emergency fund.

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148.904 - 153.811 Ken Coleman

Got a little more cash. We don't know how much cash she's got stashed in the backyard. I mean, my goodness.

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153.831 - 158.597 Jade Warshaw

I want to meet your parents, number one, because they did some things right. You know what I'm saying? They raised you right.

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Chapter 4: How can I help my parents make better financial decisions?

158.678 - 165.767 Jade Warshaw

Very, very good. Very, very good. Yeah. How much are you making right now working?

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166.128 - 188.471

So I'm a waitress, so it's not guaranteed, but I make about $60 to $100 a night, depends. Like tonight I'm going to work and I'll probably make almost $100. And then whatever I get per hour, I get $7.25 per hour. Okay. $30 probably a night for just that. But yeah, so about $100 I'll probably make tonight.

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189.091 - 210.516 Jade Warshaw

Yeah, I mean, you could definitely start looking into investing. I think that that would be great. In your case, probably just like a Roth IRA because you need earned income to put into that. But yeah, I totally would start. I mean, you're baby step wise. And even, you know, we've got a set of baby steps that we have for young folks online. basically, that they follow.

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Chapter 5: What is the best type of account for saving money?

210.556 - 230.952 Jade Warshaw

And you followed all of that, you know, having $500 saved and, you know, paying for college debt-free, paying cash for a car. You've done all of that. And so, yeah, you are at the point that you could start, you know, as long as you've got that earned income, you could start investing. And if I were you, I'd probably go ahead and start because, look, at 18 years old, the amount can...

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230.932 - 248.916 Jade Warshaw

we've got to talk about this at 18 years old, that compound interest is going to be kicking. You know what I'm saying? We've got, and you know, so many people, I just have to talk faith. So many people, they don't get to start until later in life and I'm not mad at them. They're not doomed in any way. They're still going to be all right.

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249.036 - 264.773 Jade Warshaw

But you starting at age 18 is amazing because what you're going to be able to accomplish, um, Most people are not even going to ever be able to catch up to what you're going to be able to accomplish because of the time that that interest is going to continue to compound. You're going to be, I mean, how much do you think you could put away?

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264.813 - 269.528 Jade Warshaw

I mean, would you be able to max out, you know, 6,500 in a year?

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270.942 - 283.597

Yeah, because last year I had about $10,000, and then I helped my parents with something. So I gave them some money because we were looking to pay for our cars because we flip cars.

Chapter 6: How do I balance pursuing passion and providing for my family?

283.677 - 291.847

My parents do that. And we also have a business, so I help them with that. We have a photo booth business. So I know I love the entrepreneurship and building businesses.

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291.907 - 300.457 Jade Warshaw

I have some questions about that, but I won't belabor it. So you giving your parents the money, was that a car for you?

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301.52 - 302.661 Jade Warshaw

Yes. Okay.

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302.681 - 303.162

So, yeah.

303.182 - 303.302 Jade Warshaw

Okay.

303.342 - 312.994

So, it just helped paying for a car, because when I was 16, you've got to get one. Okay. And so, now we're selling it, and I'm going to buy, because they kind of help me pay for it. Like, I pay tax, they pay tax.

313.014 - 316.618 Ken Coleman

Okay. So, you're not giving them money for their side business.

Chapter 7: What are the benefits of a high-yield savings account?

316.638 - 317.359

No, no, no. Got it.

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317.379 - 317.619 Ken Coleman

Got it.

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317.78 - 321.204 Ken Coleman

All right. Our red flags went up for a second. We're going to go ahead and pull those back down. Okay.

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321.684 - 331.476

So, yeah. Well, so what I try to do is when they have their business, that's me. Like, I don't want any money from them, because they feed me, they house me. That's me helping them. Okay.

331.456 - 348.444 Jade Warshaw

So what this is going to look like is you, I would bring my parents in on this because it's just a great thing. I would check out one of our SmartVestor pros and I would sit with one of these ladies or gentlemen and they're going to have the heart of the teacher. They're going to answer your questions.

348.664 - 353.312 Jade Warshaw

They're going to let you know what your limits are, what you need to make, what you can contribute and share.

Chapter 8: How can I maximize my savings and investments effectively?

353.292 - 372.193 Jade Warshaw

They're going to help you. They're going to help suggest ideas of how to invest this money. Of course, with Ramsey Solutions, we suggest four different types of funds and they're going to go through all of that growth, growth and income, aggressive growth, international. And they're going to help you say this is where this is what we think. But they're not going to force you to do it.

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372.213 - 389.134 Jade Warshaw

They're just going to walk you through that. And of course, at the end of the day, you don't invest in anything that you don't understand. And you can take your time. And you've got your parents there. And this is just, I think this is a really cool opportunity for you to learn. It's a really good opportunity for you to just start exercising that muscle of investing.

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389.475 - 397.645 Jade Warshaw

And again, SmartVestor Pros, come on, Ken, I can't talk about that enough. These folks know what they're talking about. They're vetted. They follow Ramsey principles.

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398.226 - 417.733 Ken Coleman

And a great experience for you, Faith, to sit with them and let them... teach you to where you understand it, get your mom and dad's input. But yeah, you could put as much as 500 bucks a month in at the rate you're working. You're such a rock star. You got some money saved as well. So you can max out that 6,500, I think pretty easily. And I just think that's wise.

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418.073 - 428.187 Ken Coleman

If you were my kid and you were in that situation, I would absolutely say do it. Really proud of you. You are an overachiever. My goodness. I'm just thinking back to when I was Faith's age and I feel like a loser.

428.728 - 428.828

Yeah.

428.808 - 432.039 Jade Warshaw

I mean, I've got some- Oh, definitely, me too. You know what I mean?

432.059 - 433.704 Ken Coleman

I'm like, man, I thought I had it together.

433.724 - 438.801 Jade Warshaw

Oh man, I was like, dude, where's my car? I was not on it.

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