What You Need Is Some Financial Breathing Room (Hour 2)
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From Ramsey Network, this is The Ramsey Show, where we help you get control of your money, get ahead in your career, and get on the path to being well. I'm George Campbell, joined today by Ken Coleman, and we're here for you, America, here to help you take the right next step with your money, your life, your career, your relationships. So give us a call. 888-825-5225 is the number. That's 888-825-5225. If you need some confirmation, affirmation, motivation, education, inspiration, that's what Ken is here for. Wow. I'm just the eye candy.
I'm going to tell you, it's like you prepared to say that. I know you like words. I do. That is. You're a smith of the words. Big promise. Oh, I see what you did there.
Thank you. Uh-huh. Colleen joins us to kick off this hour. She's in Springfield, Illinois. Colleen, welcome to the show.
Hi, thank you for taking my call. Absolutely. I have a granddaughter who's nearly 17. Wow. She's worked a part-time job since last August, and I would like to start a Roth IRA for her, maybe invest in some mutual funds. But I've been talking it over with her mom and dad, and her mom seems to think I-bonds are better. And all I know is that they are tied to inflation, but I don't know very much about them. And I was just wondering what your thoughts are on those.
Well, Colleen, that's a great question, and you're very wise. Very wise. So here's the thing. I bonds are going to lock your money up. And there's a lot of fine print when it comes to these I bonds. A lot of people have been asking us about them. Should they be doing it? And there's just better options when it comes to investing. It's kind of this awkward. It's not great for short term and it's not amazing for long term. And so it's this weird in between. And so I'm not a huge fan of the I bonds, but I do love the idea of opening up a Roth IRA for your granddaughter. Now, this would be a custodial IRA, right?
Yeah.
Right. Okay.
And she does have earned income. Yes, she does. Okay.
I'm a fan of that side. I mean, have you looked into other options for her? What is the savings for? What's the goal here?
Just for her retirement.
Okay, retirement. Not college, not a car, just retirement. No.
Yeah.
Wow.
Just get her started so that maybe when she gets out of college, she might contribute to it, and I'll probably put a little bit in when I can and By the time she's 75 years old, why, she'll have a good-sized chunk.
Oh, Colleen, you're the best grandmother ever, like ever. Will you be my grandma? Yeah, George and I would like you to be our grandmother as well. How old are you, Colleen?
I'm 75.
Wow. So you're thinking, how do I create a legacy for my children's children? That's really cool. That's right. That's really cool.
Do you have money? What's your retirement look like? Well, I've got about a million and a half.
Woo! Yes. Way to go. And, Colleen, this is the fun part about this call.
How can I start a Roth IRA for my grandchild?
So you were right, your daughter's wrong, and you get to tell her, well, I'm still right after all these years. I called this guy, George, and he told me. Yeah, the Roth is absolutely the smart play.
It's not just... I've always wanted to go with, and there's three other grandchildren younger than the one that's 17, so I'm just waiting for all of them to get a job before I can start a Roth IRA.
If you tell them, hey, as soon as you get a job, we're opening this custodial Roth IRA, and you show them some numbers of what that money can turn into, their eyes are going to light up and go, I'm going to get a job tomorrow, Grandma.
Yeah, absolutely.
Absolutely. That's awesome. So the reason I asked about what is this for is if it's for retirement, I'm good with that. But if they needed to access the money earlier, I was going to mention something like the Uniform Gifts to Minors Act or the Uniform Transfers to Minors Act, the UGMA or the UTMA.
Not fun to say. You won't need it for college. They've got 529 accounts. Oh, great. These kids are set up. Yeah.
That's incredible.
Yeah, I hope they're not too spoiled.
No, well, hey, that's what grandmas are for. Colleen, we're so proud of you.
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Chapters
5 chapters
1
What is the main topic discussed in this episode?
0:31–3:33
2
How can I start a Roth IRA for my grandchild?
3:33–4:57
3
What are the advantages of I-Bonds compared to a Roth IRA?
4:57–16:06
4
How can I get my spouse on board with financial planning?
16:06–33:22
5
What tax strategies should 1099 employees consider?
33:22–40:48