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Chapter 1: How can I avoid pulling money out of my retirement for emergencies?
Live from the headquarters of Ramsey Solutions, broadcasting from the pods moving in storage studios. It's the Ramsey Show, where we help people build wealth, do work that they really love, and create actual amazing relationships. Jade Warshaw, Ramsey personality, is my co-host today.
As we answer your questions about your life and your money, the call is free, and some say the advice is worth exactly what you pay for it. The phone number is 888-825-5225. That's 888-825-5225. Frank is in Myrtle Beach to start us off. Hey, Frank, welcome to the Ramsey Show.
Hey, how are you?
Better than I deserve, sir. What's up?
Question, 53... I feel like I've done everything right except for retirement. House was paid off a couple years ago. I have a college fund for my kids, two kids, 18 and 15.
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Chapter 2: Should I pay off my mortgage using life insurance money?
All my cars are paid off for them. I have a small – I got invested in a – Wait a minute.
You cut out. You're cut out. You have a small what?
Yeah. I'm vested or I have like a pension or a retirement, whatever you want to call it, with a company that I work for. I got vested for working for them for 13 years. So there's a small amount of retirement that's going to come from that. Okay. So it's not much. You know, 13 years, it's probably not going to pay out that much. I have some income property. What's your question, Frank?
So at this stage of my life, what can I do to, you know, I don't, you know, 12 years away, what can I do to supplement my income, to supplement my retirement?
Chapter 3: What strategies can help me build wealth like Dave Ramsey?
I keep contributing to a 401k or a Roth IRA, and I've pulled the money out for hardship several times.
Why?
I've never been able to. Just pay bills. I shouldn't have done that. I've made a couple of mistakes doing that.
Okay, you have debt now?
No debt.
Do you have an emergency fund of three to six months of expenses?
$30,000.
Okay. So the chances of you needing to pull out money with the $30,000 buffers, close to zero, isn't it? Have we not corrected this problem? Sounds like we have.
Well, should I be contributing to a Roth at this point?
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Chapter 4: How do I pay off debt while managing a low income?
Yeah, if you're going to use the $30,000 to pay bills instead of the Roth. If you have an emergency pop-up, don't cash out your freaking Roth again, right? You use the 30K. That's what it's for, right?
Yeah, but our income's pretty low right now. It's only about $30,000 to $40,000 for myself. My wife's about $25,000. My health problems haven't been able to go full-time. I've never been able to really contribute the maximum.
up for a 401k um and i can't right now either why not well i think you can max out all you can put in and i think you can max out your roth iras you guys need to tighten your budget up and do a written budget you've got to do it you've got to do it i mean you got you you said you're 63 i mean dude it's time i mean it's like past time it's time to do this you got nothing better to do than pile all your money in a pile in a 401k and roth ira as fast as you can
If you've paid off all your debt and you've saved up your money and you don't have 15%, the math ain't mathing to put towards retirement.
Exactly. That means your budget's not right. You have $50,000 income. Yeah.
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Chapter 5: What is the Debt Snowball Method and how does it work?
Sit down, do a written budget with your wife and the two of you focus in and say, hey, we've got to make up some lost time. Yeah. And you can do it. It is possible. It's not too late. I mean, you're not going to end up with $2 million from that. But you are going to end up with a good nest egg and take that vested amount and roll it to a 401k.
You need to jump into RamseySolutions.com and click on SmartVestor Pro and find a SmartVestor Pro in your area and sit down with them. And you and your wife develop a detailed game plan on how you're going to load this puppy up. Got some catching up to do.
Yeah. But he can do it. They just got to do it.
He does – it sounds like in the past that they had debt, didn't have an emergency fund, and were putting money in their 401K. And this is why people freak out.
Chapter 6: Should I pause my financial baby steps to move?
We say when we first start our program, do not put money in your 401K until you are debt-free other than the house, baby step two, and have the emergency fund because you will use your 401K like he did as your emergency fund. Dumb. Won't work. Bad idea.
Yeah.
Not dumb person, dumb idea. That's right. Different thing there. So, yeah, you've got to do these things in that order. That lays the foundation to be able to win. Michelle's in North Carolina. Hi, Michelle. Welcome to the Ramsey Show.
Hi. Thank you.
Chapter 7: What are the benefits of having an emergency fund?
I'll get right to my question and then give a little bit of background and hopefully you can figure this out for me. So my question is, should I have additional money withheld from my W-2 as a teacher to avoid owing money at the end of the year, as I have this year for the first time in my life, or focus on paying down high-interest debt? and I have about $20,000 of high interest debt.
You should have the proper amount pulled out of your check for taxes, the amount you're actually going to owe, no more, no less.
That's the question then that I have. For some reason, they cannot seem to figure this out. Who's they? My employer.
Oh, that's not their job.
Okay, how do I figure this out? Because I don't know how much they should be taking out.
Okay, how much extra did you owe this year?
$2,100.
Okay, and so that's suspiciously like about $200 a month. Has anything changed in this year versus last year for your tax situation?
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Chapter 8: How can I increase my income to pay off debt faster?
No.
Buy a house, get rid of a kid. No longer got a dependent.
No, my son's 19, so he was already out the year before.
They're going to be the same as last year. Your income's going to be about the same. No big financial events that are causing a tax change.
No.
Then you could simply tell personnel to change your withholding by $200 a month and you'll be okay.
Okay.
That's an easy way of doing it. The more complicated way of doing it is actually sit down with a tax professional, do your taxes for this year. You're not going to file them, but do them and go, I owe exactly this amount. Divide that by your paychecks and make sure that much is coming out of your paychecks. And that would be exact. The IRS withholding tables are incompetent and wrong.
They're from the IRS. Don't be shocked.
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