The Ramsey Show XX
[0] 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.
[1] Jade Washall, best -selling author, Ramsey personality is my co -host today.
[2] Open phones as we talk about you right in front of you.
[3] The phone number is AAA 825 -5 -225.
[4] The call is free, and some say the advice is worth exactly what you pay for it.
[5] Tyler is with us in Topeka, Kansas.
[6] Hey, Tyler, welcome to the Ramsey Show.
[7] Hi, Dave.
[8] Hi, Jade.
[9] Thanks for taking my call.
[10] Sure.
[11] What's up?
[12] My wife and I, along with our two boys, are ready to purchase a home financially.
[13] Emotionally, we're both at different places and having a hard time coming to an agreement on what to spend and even whether now is the right time.
[14] Okay.
[15] What's the problem?
[16] What do you want to do versus what she wants to do?
[17] We both want to move into home, but my wife really enjoys the security of having a large amount of money in the bank.
[18] Okay.
[19] So what's it going to cost you?
[20] What are you, like, what are you looking to spend?
[21] How much do you have saved?
[22] Tell me more.
[23] We've got up to $80 ,000 for a down payment buying probably no more than a $300 ,000 home.
[24] Okay, and is that $80 ,000 just the down payment, or do you have more money that you have set aside for your three to six months?
[25] Yes.
[26] What's yes, ma 'am, which is, you have an emergency fund in addition to the $80K?
[27] That's correct.
[28] Okay, cool.
[29] And what's your household income?
[30] Yeah, 140 to 160 depending on commissions and bonuses.
[31] Okay, there's no reason to not buy.
[32] I don't understand.
[33] No hesitation whatsoever.
[34] This is the time to do it yesterday.
[35] Y 'all go find your house.
[36] Every guideline you gave me fits and makes good common sense.
[37] It fits everything we're talking about.
[38] The only tradeoff is she wants to keep $80 ,000 in the bank and watch it go down in value while the house goes up in value.
[39] okay so you're trading a $300 ,000 house for what is now a $250 ,000 house because in 20 minutes that $250 ,000 is going to be $300 while you sit around and watch your cash okay yeah this is not this is not the time to wait because you understand what I'm saying the 80's still going to be 80 a year from now the 300's going to be $350 a year from now okay I got you and then it's going to be $400 and and your 80's still going to be 80.
[40] You probably need to sit down and explain that with the right attitude.
[41] Not my tone of voice, but Jade or Rachel's tone of voice.
[42] I don't know about mine.
[43] Maybe Rachel's.
[44] Yeah, Rachel's always the friendly one.
[45] She's the nice personality.
[46] But the, uh, yeah, it takes great joy in that.
[47] But anyway, the, uh, yeah, I, I think I would start with, you know, and some of that.
[48] I understand how you feel, but 10 years from today, waiting is not going to be our best plan.
[49] Would you agree?
[50] You know, and say something along those lines and say, you know, 10 years from the day, the house that we can buy for 300, we won't be able to buy anymore.
[51] And the 80 will not have gone up.
[52] And so the longer we wait, the less house we're going to be able to buy.
[53] How old are you guys?
[54] 28.
[55] Listen, I remember when me and my husband bought our first house, everything was in line and I still felt just a little bit trigger shot.
[56] It's a big purchase.
[57] It's the biggest purchase you're ever going to make.
[58] And so there is, you know, that apprehension there.
[59] But let her listen to this call and the experts are telling you that you're ready.
[60] Yeah, you're in good shape.
[61] Listen, dude, if you were a broke guy trying to buy a house and your wife is trying to talk you out of it, I'd call you stupid and tell you not to do it right here on the air.
[62] You know that.
[63] You've heard me do it.
[64] Yeah.
[65] I mean, because I love you.
[66] and I want you to win, right?
[67] And so I'm, you know, I would love to do it.
[68] That's it.
[69] I'm kidding.
[70] But not much.
[71] But the, yeah, so, yeah, seriously, you guys are in really good shape.
[72] You've done a good job.
[73] Waiting is going to cost you.
[74] And the only reason you're waiting now is fear.
[75] And in this case, it's false evidence appearing real.
[76] It's just you're doing something big you've never done before.
[77] And like Jade said, that is scary.
[78] It's valid to be scared, but it's not valid to let the fear rule.
[79] you yeah okay fair enough well i appreciate every you guys have done you've really helped us out a lot hey tyler how old are you two 28 all right cool you get you fit everything man everything you're lining up i mean you didn't call me up in you're 19 years old right and you have no money and your broke friend at the happy hour drink and three beers with you told you about house you're not that guy i mean you you actually have a clue well then there's like the perception right your perception really it's what your behavior is going to be.
[80] And I think right now so many perceive that it's, it's impossible to buy a house in this market.
[81] You'll never be able to do it.
[82] And they are actually doing it.
[83] Yeah, everybody's telling them that all their friends are going, no one can do it.
[84] You're all, it's all gone.
[85] All the opportunity is gone.
[86] Everyone under 30 is going to die homeless.
[87] You know, this is the crap that's on the internet.
[88] And it's just crap because we meet 26 -year -olds with a paid -for house doing their dead -free screen.
[89] That's true.
[90] So, I mean, we meet people all the time that are doing it and making it work.
[91] but they're just not over buying.
[92] That's right.
[93] And they're not buying crap they can't afford.
[94] That's right.
[95] Paul's in Chattanooga.
[96] Hey, Paul, welcome to the Ramsey Show.
[97] Thank you, Dave.
[98] I have a great situation to be in.
[99] First off, I thank you for taking my call, and I appreciate all the information and education that y 'all give to everybody on finances.
[100] But my question is, um we're looking to uh to open a roth account i have that available uh through my uh my employer um retirement um have a 401k with a roth option my question is after we've looked at all of our finances after we've become debt free house and all trying to allocate money i i think we've got enough to uh fully fund one roth but to accomplish all of our other goals, I don't think we can fully fund, too.
[101] So the question is, over time, would it grow more if we fully funded one Roth account with $7 ,000 a year?
[102] Not a dime.
[103] Not a dime.
[104] Two Roth accounts.
[105] $7 ,000 is $7 ,000.
[106] If it's in seven accounts or one account, it's still $7 ,000.
[107] And if it's growing at the, if all seven accounts are growing at the same rate, the $1 ,000 accounts will grow to the exact same total.
[108] total is the single $7 ,000 account mathematically.
[109] So you would recommend me and my wife both open one instead of, doesn't matter?
[110] Doesn't matter.
[111] If you both want one and partially fund it, that's fine.
[112] I do want to ask you, though, because you started out by saying you had the Roth 401k.
[113] Are you saying that you're fully funding that, which is around 22 ,500, and then you're moving over to a Roth IRA?
[114] I just want to make sure that you're clear on what you've got and what you're funding.
[115] no we're we're trying to establish the uh the 15 % total okay um i thought you said the house was paid for yes the house is the 15 % total doesn't matter anymore you max out everything if you can keep the government's hands off of it so i i would if you can hit your other goals with the house paid for i'd max out the work roth max out two individual ross keep the government's hands off the money when you're in baby step seven the 15 % doesn't apply because you're debt -free we're we're stacking cash.
[116] But if you've got some other goals and you want to slow, you want to keep retirement down at 15 % temporarily, that's okay too.
[117] This is The Ramsey Show.
[118] I've been doing this show for over 30 years and some of the saddest calls I have taken are from situations that are completely preventable.
[119] Yeah.
[120] And what's so hard is I feel like one of those, especially the ones that I'm like, oh, it's terrible.
[121] People that call in and their spouse has passed away suddenly and they don't have life insurance.
[122] When you have to think through How am I going to pay my bills?
[123] I'm going to eat next week.
[124] Yeah, in the middle of all that grief.
[125] Like, it's just, it is.
[126] It's terrible.
[127] So life insurance is the one thing, especially as a mom with three little kids that I'm like so big on for people to get because it's inexpensive.
[128] Zander is the place that Winston and I actually get all of our life insurance.
[129] And it doesn't cost much because Zander shops among a gazillion different companies.
[130] It doesn't cost much.
[131] You just have to admit that someday you're not going to be here.
[132] You got to say it out loud and you got to say, I'm going to say, I love you to my family by taking care of them and taking the time to put this stuff in place.
[133] the cost of stinking pizza to get a free quote call 800 356 4282 that's 800 356 4282 or go to zander dot com so some of y 'all may not know jade and sam's story they were in the cruise line business for years and somewhat still are booking talent onto the cruise ships right now with sam sam's business and uh they were actually uh talent themselves at one point on some of the cruise ships So you've got to have mixed emotions about going on a Ramsey cruise.
[134] You're like the most experienced cruiser.
[135] I mean, I've been on a bunch of cruises, but nowhere near as you have.
[136] I mean, I'm excited.
[137] It's the best vacation you can take.
[138] Wow.
[139] Okay.
[140] Well, and you'll be working, but not working.
[141] I'll be working.
[142] It'll be working the same way.
[143] That's right.
[144] I'll be on the stage, but in a different capacity.
[145] Let's put it like that.
[146] And it's a completely different situation.
[147] That's right.
[148] Than being the entertainment because we're just.
[149] We're entertaining, but we're not the entertainment.
[150] So the Ramsey Cruz is coming up in March.
[151] It is not yet sold out, but it's approaching a sellout.
[152] If you want to come, it's the Live Like No One Else Cruise.
[153] You need to be on Baby Step 4 or beyond.
[154] We'll check your little Baby Steps card and make sure you are because we don't want you going on vacation with us and not getting out of debt.
[155] That'd be a wee bit hypocritical when we tell you not to go on vacation while you're doing this.
[156] So anyway, up to Baby Step 4, 4 and beyond, live like no one else cruise.
[157] Turks and Caicos, St. Thomas, Puerto Rico, the Bahamas, Dave and Sharon Remsey, all the Remsey personalities, plus Stephen Curtis Chapman, plus Manit Shohan from the Food Channel, plus Dina Carter, fabulous country music star.
[158] Remember, strawberry wine.
[159] Yeah, oh, man, what a great song.
[160] Yeah, anyway, and just a lot of other folks on the cruise with us that are unbelievable talent, and you're going to have an absolute blast.
[161] We're going to be with you the entire week.
[162] It's a seven -day, very high -end cruise.
[163] It's not at one of the cheapies.
[164] This is not Walmart on the seas.
[165] This is Holland America, the good stuff.
[166] I vouch for that.
[167] And, yeah, I've been on Holland America a couple times, and this is one of their newer ships.
[168] It's excellent.
[169] I've also been on the cheap stuff, and this is not that.
[170] Yeah, there's a difference.
[171] I'm just saying you do get what you pay for on the high seas.
[172] So there you go.
[173] Well, speaking about paying, Dave, a lot of people are like, do I have to have the, you know, however much it is up front.
[174] But the good news is you can book it with just the department.
[175] deposit.
[176] $600 deposit.
[177] March 22nd through the 29th, 2025.
[178] And we had one sold out.
[179] It was supposed to sail in March of 2020 when the only thing on the high seas was a virus.
[180] And so we weren't able to go.
[181] They shut the whole thing down.
[182] I mean, they shut the ocean down.
[183] They just pulled the plug on.
[184] It was actually dry sand.
[185] Go ahead and say it, Dave.
[186] I know you want to say Fauci pandemic.
[187] The Fauci pandemic caused all of it.
[188] But.
[189] You know, that's, but the, anyway, so now we're going to, five years later, we'll be on the high seas for real, and going to be amazing.
[190] Ramsey Solutions .com slash cruise, we'd love to have you join us for just a few cabins left, so you need to get your reservations done now, people.
[191] Lindsay's in Wichita, Kansas.
[192] Hi, Lindsay, how are you?
[193] Hi, I'm good.
[194] How are you guys?
[195] Better than we deserve.
[196] What's up?
[197] All right, so my question is, at what point do you prioritize paying off the highest interest versus the lowest balance snowball method.
[198] You mean snowball versus avalanche?
[199] Never.
[200] You always do the debt snowball.
[201] The avalanche is mathematically incorrect.
[202] You'll me tell you why?
[203] Okay.
[204] Because it sounds like it's mathematically correct, correct?
[205] You understand?
[206] Paying off the highest interest rate first sounds like it's mathematically correct.
[207] Should get you out of debt faster, right?
[208] Hello?
[209] Hello?
[210] Sorry, I'm still there.
[211] Okay, is that right?
[212] Is that why you're considering it?
[213] Kind of, yeah, I'm looking at these interest rates and the highest interest rate is about seven times our lowest interest rate.
[214] Yeah, and how much debt do you have?
[215] We're right about $23 ,000.
[216] And your household income is what?
[217] Right under $100 ,000.
[218] So the interest rate does not matter.
[219] You're going to be out of debt in one year.
[220] So the actual dollars paid in interest will be irrelevant.
[221] Okay.
[222] So, I mean, 10 % on $23 ,000 is $2 ,000 in a year.
[223] That's the most swing you could have in this whole thing.
[224] And you're not even going to have that much swing.
[225] Your whole swing in between the, if you ran out the numbers on two possibilities, you would find that the actual math is probably around $1 ,200 we're having this conversation.
[226] If you don't have a $1 ,200 problem, you have a $23 ,000 problem and a lifestyle problem and a process problem and you're spending money you don't have to impress people you don't like and you've decided to stop because you're smart.
[227] Way to go.
[228] Thank you.
[229] That's your problem.
[230] The problem is your mirror.
[231] The person in your mirror is your problem.
[232] It's not an interest rate problem.
[233] That's thing number one.
[234] Okay, let me walk you through this for a second.
[235] Because this is something I just in the last two years got my head around.
[236] I knew the debt snowball method was working better than the avalanche method because we helped literally millions of people get out of debt using it.
[237] And the avalanche method does not have, does not have the same success level.
[238] Avalanche method, for those of you don't know, is you list your debt's highest interest rate to smallest interest rate, thereby paying off the highest interest rate debt first, regardless of its size.
[239] And the debt snowball method is you pay off the smallest debt to largest debt, so you have some immediate success because you knock out the little one really fast.
[240] You get a little more excited.
[241] You knock out the next one, a little faster, a little faster, a little faster, a little faster, and every time you knock off another one, your hope increases.
[242] Here's what we have actually discovered, Lindsay.
[243] The math is incomplete when you only consider what we've talked about so far.
[244] If you're actually doing a real business case on this, you would also enter into the math equation the probability of actually completing the plan, finishing and becoming debt -free.
[245] If you put probability to it, the number of people that complete the debt snowball plan is vastly higher because they get excited and hopeful because they're knocking out the little ones, is vastly higher than the probability of people who create, who complete the supposedly intellectual version, highest interest rate to lower interest rate, but the probability is lower of completion.
[246] So when you enter in the math of probability of completion, if you're doing like a probability and statistics equation, you would never use the avalanche plan because almost no one actually finishes it because they lose hope.
[247] They get stuck in a large debt, the high interest rate, and they're just peddling and peddling and getting nowhere and they lose hope and 30 days in they quit instead of get fired up and wired up and plowing on through and that's the difference so you always use this and by the way um northwestern university actually did a research study on it and found that the debt snowball outperforms on average because of probability of completion the avalanche method and they actually then ended up printing an article in time magazine that said Dave ramses right after all Look at that.
[248] Who knew?
[249] Who knew?
[250] Well, it makes sense.
[251] You're shortening that feedback loop.
[252] So you're getting a good result.
[253] And every time you get that good result, you get that hit of dopamine that's like feel good.
[254] Yes, I did something.
[255] So yeah, you want to keep going.
[256] You need some wins.
[257] Everybody needs some wins.
[258] If you're brand new salesman, the first thing you need to is go make a quick sale.
[259] Anything.
[260] Yeah.
[261] Just even if it's a little one.
[262] You need the success, the confidence builder.
[263] The hope deferred makes the heart sick.
[264] Hopelessness makes the heart sick.
[265] the opposite of that is when desire comes it is the tree of life so when you get that hope because you pay off that little one you go whoa this might this is weird i never paid off a debt before my life there's another one knocked out another one look at that and there's another one i got another one and you start getting more and more and more pump because you're getting through it and your your your likelihood your probability of completion enters into it and when you actually convert that to a math formula the debt snowball is far superior because in the real world it's far superior and so it shows up in the map.
[266] Yeah, that's right.
[267] Yeah.
[268] The worst thing in the world is when you've been doing a workout plan that doesn't work and you stand on the scale and it never moves.
[269] Oh, God.
[270] It's like, I give up, cut the tape.
[271] Oh, oh.
[272] I'm done.
[273] I'm done.
[274] But if you see it, even just a couple of ounces, you're like, okay, it's working.
[275] And you keep doing the plan and you keep, and before you know it, you lost five pounds.
[276] Well, yeah, and it's the back away from the donuts for me. I got a, you know, no donuts, Dave.
[277] Son, it's a donut problem, son.
[278] Yeah, the guy in the mirror, right?
[279] Every time.
[280] It's so sad that most of our problems originate with a person in our mirror.
[281] Yeah.
[282] That's the bad news.
[283] The good news is most of your solutions originate with the person in the mirror and not someone in the White House.
[284] Thank you, Jesus.
[285] Or if broccoli could just be round and donut flavored, that could also.
[286] Put a little hole in it.
[287] A little hole in the middle.
[288] But it's still broccoli.
[289] It would have to be donut.
[290] Oh, this is just.
[291] He shouldn't even be in the same sentence, Jake.
[292] I know.
[293] This is The Ramsey Show.
[294] Dying without a will can cost your family thousands of dollars in legal fees and administrative costs.
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[306] And now you really have no excuse not to get it done.
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[308] Jade Washaw, Ramsey Personality, number one bestselling author, is my co -host today.
[309] Thank you for joining us, America.
[310] This is the Ramsey Show.
[311] The phone number is 3 ,8 -2 -55 -2 -2 -25, Erickson, Buffalo, New York.
[312] Hi, Eric.
[313] How are you?
[314] Better than I deserve, Dave.
[315] A long -time listener, a great fan of you and Jade, got you on Spotify and Facebook and all that.
[316] I appreciate you for having me. Thank you.
[317] So I was in a train accident about a year and three months ago, got caught between a couple of trains, and finally just settled that just a little over a couple weeks ago after the lawyers took everything, ended with about like two -step.
[318] $75 ,000.
[319] And my birthday's coming up on 7 -Eleven and just decided to pay off my house and my car.
[320] And that leaves me with just around $200 ,000.
[321] I tied $150 up in a CD at $4 and a quarter because I really wasn't sure what to do.
[322] And I don't really know if I trust the market that much right now.
[323] So I have about $50 ,000 left over.
[324] and I'm just looking for like how to be a good steward of the rest.
[325] And then once like December 24th comes up and that TDs matured what to put it in to gain the most potential on the money.
[326] How are you?
[327] You okay?
[328] Yeah, I am actually finished with all my medical.
[329] And I am back to almost everyday normal living playing volleyball again and pickleball and all.
[330] that so yeah my left hip uh got fractured i needed surgery and uh yeah so i recovered um from december 12th uh hip surgery uh what is about a little more than six months now but everything's great um talk to a therapist for a good matter of about nine months and uh i feel like i'm back in some of the best shape of my life um yeah that's great it's not every day you hear somebody say I got caught between a couple of trains like that's yeah usually usually people don't walk away from that so that's pretty cool man that's neat yeah no I'm truly blessed okay cool well it sounds like you've done the stuff we would teach you to do with the money uh you've been very careful thoughtful you've gotten yourself out of debt you've got a plan um so what is what is it that you actually need us to answer because it sounds like you've done So I guess I just, you know, I just threw it in a CD just because I'm not really sure what to do with it.
[331] I mean, and when I was in my 20s, I had a great paying job and went and, you know, borrowed money to go on trips.
[332] I'm actually going to El Salvador tomorrow for like a birthday trip because I was actually supposed to go to El Salvador right before my train accident or right after my train accident.
[333] I called them on the hospital bed, and they allowed me to cancel the non -refundable ticket, and they refunded me. So it's kind of like full circle.
[334] I went on a mission trip a few years ago, and so I'm going to revisit some friends.
[335] So I guess the whole point of the question is, like, where can I earn the most potential on the money if I don't really trust the stock market right now?
[336] It's at all -time highs.
[337] You know, obviously you're probably following that.
[338] Well, listen, I think that if you don't know what to do with your money and if you're unsure about how to invest it, yeah, sticking it in a high yield savings probably would have been my move.
[339] But I don't, I wouldn't want it to stay there.
[340] It's a lot of money, $150 ,000.
[341] I'd love if you would put in the time and kind of learn a little bit more about this with a smart investor pro and kind of get that confidence before you start investing it.
[342] Because I do think the best place for this money is invested.
[343] Let's say the $50 ,000 that you have set aside is your three to six months of expenses, and then once you learn and feel comfortable enough to invest this, you do that with the $150 ,000.
[344] That's what I would do.
[345] Now, what happens in the future?
[346] Do you start working again?
[347] So I'm a self -employed.
[348] I just drive for lifts because I don't see any value in going and finding a W -2 job that pays me $17, $19 an hour and then takes away taxes, where I make $25, $30 an hour driving lift, and then And I just write off all my miles from my car.
[349] But you still pay taxes?
[350] No, no, actually, Jade.
[351] I've driven ride chair for the past seven years, and I've never paid a dime in taxes.
[352] It means you're not making any money, then.
[353] Just because of all the write -offs, yeah.
[354] Yeah, the write -offs aren't fake.
[355] They're real.
[356] Your car's going down in value more than you're making, so that's why you're not making.
[357] So that's why you're not making taxes.
[358] Anyway, so the investing question works like this.
[359] How old are you?
[360] I'll be 35 on 7 -Eleven Okay And have a great trip by the way Hope it works out Thank you for you You've been looking forward to it a long time The way I look at investing Is I've been doing this on the air now For over 30 years And every single year for 30 years People have told me That they're not going to buy a house Because houses aren't going to keep going up in value They're going to tank and there's going to be a bubble every single year people have told me they're not going to invest in mutual funds because look how high they are they can't maintain that and every year both have gone up every decade both have gone up every five -year period both house prices and the mark and the stock market has gone up so i completely am a hundred percent trusting that both of those are going to keep going up long term now I don't know about tomorrow or this week or by November 3rd I couldn't get I couldn't tell you anything about that but but over the next decade I'm 63 I'm a hundred percent sure I'm going to make money in the real in the stock market going up by being in mutual funds and I'm going to make money by owning real estate and real estate goes up in the next decade I'm a hundred percent sure of that and there's very few things I'm 100 % sure of but in the short I've never seen a time in American history modern American history that you can look back that both of those things in a decade did not go up now can you trust the stock market between now and Christmas oh crap now I mean there's crazy people running to be in the White House I mean come on right when you look at the graphs I mean you can go back and look at the graphs as far back as you want they're going to watch them go up so yeah you need I'm with jade if I were in your show I think, Eric, you need to learn some more about it because you're afraid of it because you're watching the news and that's where you're getting your information.
[361] Bad place to get information, by the way, about reality.
[362] And so, you know, if you want to learn about everything that's wrong with the world, you can find that out on Fox and CNN, they'll tell you.
[363] But if you want to actually learn what the market has done, you need to sit down with somebody and look at the actual numbers and say, all right, in 1982, here's what it was, when I was 22.
[364] And I'm really glad I bought my first mutual fund in 1983.
[365] Can you imagine?
[366] Can you even imagine how sweet that little mutual fund is today?
[367] Oh, my goodness.
[368] I know.
[369] Listen, I sit next to you, so.
[370] It's a sweet baby.
[371] I like it.
[372] So you just, if you're thinking long term and you study the actual data, it'll help your fear dissipate.
[373] because and this is a case of not knowing and the fear comes from not knowing some things when you learn more about them you should become more fearful that's right oh yeah healthy fear and more careful and more wise in the handling of the thing whatever it is right and so fear uh fear is a good thing in that sense but fear that creates paralysis based on lack of knowledge is never a good thing so learn learn learn learn learn, learn, learn, and the more you know, the less you're going to want to do it or the more you're going to want to do it.
[374] Facts are your friends.
[375] Exactly.
[376] It's Dr. John Deloney.
[377] He's right about that, though.
[378] When we're, there's so many things I can think of, like the guy calling a little bit earlier, about buying his first house, his wife's afraid.
[379] Yeah.
[380] Facts are your friends.
[381] Yeah, it's usually a lack of clear knowledge on it.
[382] It's kind of a circulation of what you've heard people say, what you think might be going on, what happened to your friend a couple of years ago.
[383] It's like all those things kind of correlate together to inform your...
[384] Yeah, and, you know, we're at a disadvantage in our culture today because we have so much bad information at our fingertips and bad influences at our fingertips.
[385] It used to be the news media was actually, you know, in the 60s or 70, they were actually credible and you could trust somewhat what they were saying.
[386] and you weren't bombarded every minute with this magic wand in your hand by negativity.
[387] Yeah.
[388] And so it was somebody that's 14 years old that lives in their mother's basement that has an opinion on TikTok.
[389] Oh my gosh.
[390] And they're called an influencer.
[391] God help us.
[392] This is the Ramsey show.
[393] Hey, you guys, emergencies happen in life.
[394] Your dishwasher breaks and floods the kitchen.
[395] Your AC goes out in the middle of the summer.
[396] Situations like those are why we teach people to have an emergency fund.
[397] And when it comes to medical emergencies, there is a medical emergency kit from the wellness company.
[398] They're great for when you need medicines right away and can't wait for the pharmacy to open.
[399] And who has time to wait in line at urgent care?
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[403] So they're like having an urgent care in your home.
[404] Just answer a few questions at urgent care kit .com slash Ramsey and your medical emergency kit is shipped right to your door and use the promo code Ramsey at checkout to save 15%.
[405] I have one and you should too.
[406] That's urgent care kit .com slash Ramsey.
[407] Use the promo code Ramsey.
[408] Jade Washaw, Ramsey Personality, is my co -host.
[409] Guys, we could use your help.
[410] A bunch of you have been helping us, and we appreciate it.
[411] How can you help us?
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[415] That's a big deal.
[416] Jade was just telling me about a movie at the break that I need to go see.
[417] See, that's how you tell people.
[418] She said, and I'm not going to tell you about the ending.
[419] So there we go.
[420] That means I got to go see it to get, you know.
[421] That's right.
[422] Now, the difference is your friends will tell you about the ending on this show.
[423] But the, yeah, spread the word.
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[431] Wow.
[432] Justin is in Omaha, Nebraska.
[433] Hi, Justin.
[434] How are you?
[435] Better than I deserve.
[436] What's up?
[437] My wife and I have about 145 ,000 in student debt, and she kind of feels like it's her fault.
[438] so I'm trying to just help her, I guess, not really cope, but just figure out how to help her better understanding how to attack it from there.
[439] Well, was most of it hers when you got married?
[440] All of it.
[441] So I was pretty well, then it would be her fault.
[442] Yeah, that would be accurate, but we don't have to be shamed about her or guilty about it.
[443] It's just like, you know, apparently you thought she was worth it, so there we go.
[444] listen when I got married my husband had 200 ,000 of student loan debt so and it just kind of ballooned even more because of interest so was he worth it yeah he was he was oh boy Sam's definitely worth it and more Sam yeah and more Sam but I mean the point the point of me saying that is there that feeling is very real like it is uh it feels like I mean it feels like a weight it feels like the weight of the world is on you and you you feel bad about about it.
[445] The best thing that you can do, and this is just from personal experience, the best thing that you can do is really lock arms with her and never refer to it in her presence as her debt again.
[446] Our debt.
[447] It's ours.
[448] I'm with you.
[449] And I've been doing my best to not do that too.
[450] Yeah.
[451] And I mean, honestly, over time, that helps so much.
[452] And then, you know, coming up with a plan to attack, is this the only debt?
[453] Or do you guys have more?
[454] we have about 25 ,000 on her car mine is paid for okay did you guys just get married is this we've been married a little over two years what's your household income about 85 ,000 after test what does she do she's a speech pathologist oh that's good yeah what do you do I'm in golf okay as in a professional golf No, the other side.
[455] I'm a class A PGA member, but we're not.
[456] I'm not a professional golfer.
[457] I just help other people get better golf.
[458] Oh, she's an instructor.
[459] Okay.
[460] Yeah.
[461] Okay, good.
[462] And what do you make?
[463] I make about 42.
[464] And she's only making 42 as a speech pathologist?
[465] Yeah, so right after she got her graduate school, it's a little lower, and then once she gets her season, it goes up.
[466] Oh, when will she pass that?
[467] Next couple months here.
[468] Okay, and what will her income go then, too, then?
[469] She'll be at about 65 after that.
[470] Still sounds low.
[471] Hmm, okay.
[472] I was actually thinking speech pathologists generally made six figures, but what do I know?
[473] No, nope.
[474] Maybe not in Omaha.
[475] I was going to say maybe not Nebraska.
[476] Okay.
[477] Okay.
[478] But the, all right, so, okay, so you guys are going to end up making a little over 100 at that point.
[479] You got 145 plus 25.
[480] The car is pretty expensive.
[481] The $25 ,000 car is bothersome in the equation.
[482] It's not the end of the world, but it's a lot.
[483] I mean, you got, what, an $800 car payment, right?
[484] It's about $470.
[485] Oh, okay.
[486] That's better than I thought.
[487] okay good all right anyway so yeah you so you've got 160 ,000 bucks to come up with making a hundred and so if we do 50 a year uh that's three and a half three years and some change so we need to do 60 a year and be done in three years and that's going to be beans and rice rice and beans no vacations no eating out we're going to lean into this thing and we are going to clean up our mess and she is going to to maximize her career that she paid a lot to be in because i'm still got my head sideways a little bit got that german shepherd look right now on what she's making i just doesn't sound right so um i'm not i'm not an expert on speech pathology but i've been doing this a long time so i've interviewed a lot of people about what they make for what they do and so um anyway i want you to work on that i want her to get every squeeze every dollar out of this degree field that she paid a lot for to get a return on investment and because she's got high income potential and you got to do as much as you can do also to increase your income and in your field I suspect there's some side gigs so to speak that you could do that weren't with club members or whatever that where you're not in a conflict and I'd be working every tournament everything I could get my hands on to do that as well so all of that to say you guys maximize your incomes and I'm with I think you just change your pronouns and just go, look, honey, we've got debt.
[488] If you want to talk about it like it yours, it's fine, but I married you.
[489] It's now we.
[490] We're French.
[491] We, we.
[492] And this is what we do.
[493] And we are going to attack our debt.
[494] And out of the abundance of the heart, the mouth speaks, the Bible says.
[495] And so if you never again speak of it, except in terms of plural, our, we, that kind of pronoun versus yours, mine, if you never, again speak it, then that says that your heart has shifted.
[496] And as long as your heart is there, then eventually she will acquiesce to that because we are going to work on this together.
[497] We are going to knock this out.
[498] We are both going to sacrifice.
[499] We are going to clean this loan mess up so that we have a good future.
[500] Yeah.
[501] Yeah.
[502] Love is the only thing that really drives out that shame that she's going to feel.
[503] And that's the way you do it is just by coming alongside her and it being a wee.
[504] The good news is with their situation, he said her income's going to go up 60 some odd thousand dollars.
[505] No, 260.
[506] Oh, 260.
[507] From 40.
[508] Oh.
[509] If I miss it, unless I misunderstood him.
[510] I may have misunderstood him.
[511] But either way.
[512] I hope it goes up 60.
[513] Goes from 40 to 100.
[514] That's going to be very helpful.
[515] Well, that's what I'm saying.
[516] That makes more sense.
[517] That makes a two -year plan instead of a three -year plan.
[518] Yeah.
[519] Okay.
[520] I like that.
[521] Either way they're going and they're paying it off.
[522] Yeah.
[523] Either way, we're going to lean into it.
[524] It took you guys longer than that.
[525] And, you significantly longer.
[526] You accepted each other and didn't shame each other in that process, and that's how you all did it.
[527] Yeah, that's a big key.
[528] Now, I always say, like, I don't take much credit for that.
[529] Like I always say, I don't know if I was very wise or just like love is blind, but, you know, I just didn't see it any differently.
[530] It's both of ours.
[531] Well, I mean, we did it in a little different setting, but I mean, it was our income.
[532] Yes.
[533] And I have never, I don't remember ever saying to Sharon, I brought this money home.
[534] I'll decide what I want to do.
[535] I don't think I've ever said that.
[536] I think that's equally important.
[537] Yeah, equally important.
[538] Our debt, our income.
[539] Yeah.
[540] For 38 years, she's not had an income earned outside the home.
[541] Well, yeah, because what spouse wants to feel like I'm getting to have some of your income?
[542] Yeah.
[543] That's a recipe for somebody.
[544] That's a recipe for disaster.
[545] It's a power play.
[546] It's a relationally unhealthy, number one.
[547] And it becomes a manipulation and all that kind of stuff.
[548] Like, you know, well, only when we have a big fight.
[549] is when I yell at you would say, it's my money.
[550] Yeah.
[551] But other than that, I say, it's our money.
[552] You know, and it's like, yeah, if you're going to play that, that's a power play.
[553] That's a manipulation play.
[554] And then that's when you find out what's in the heart out of the abundance of the heart, the mouth speaks.
[555] So when someone is saying something, you need to listen because it's coming from inside of them.
[556] Oh, yeah.
[557] Because if the words that people use do matter.
[558] And so I'm listening to that.
[559] I'm watching that.
[560] I'm thinking about that.
[561] So you're going to be on the other side of that, Justin, and you're going to be on the other side of that.
[562] You're going to be just fine.
[563] Yeah.
[564] Y 'all are going to, the point is bust through it, and it doesn't matter.
[565] And over time, both of you will adopt the proper pronouns regarding your money.
[566] That's right.
[567] This is The Ramsey Show.
[568] Hey, folks, Dave here.
[569] And I know some of you listen to the show waiting for a call that answers your specific question.
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[579] 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.
[580] Jade Walshaw -Ramsi personality, number one bestselling author is my co -host today.
[581] Open phones at AAA 825 -5 -225.
[582] Maya is in Salt Lake City.
[583] Hi, Maya.
[584] How are you?
[585] Doing great.
[586] Thank you for all the work that you all do.
[587] Thank you.
[588] How can we help?
[589] I am calling because we have two debts left.
[590] We have our primary mortgage, and we have the mortgage on our rental property, and we're wondering which one we should pay off first.
[591] Cool.
[592] How much are they?
[593] The rental property has 130K balance, 3 .78 % interest.
[594] Our mortgage is 457 at 2 .75 % interest.
[595] Household income's what?
[596] 530.
[597] Whoa.
[598] Come on now.
[599] Rocking it, girl.
[600] Good for you.
[601] A lot in the last two or three years.
[602] I'm happy for you.
[603] Way to go.
[604] Successful people in Salt Lake.
[605] What do you do?
[606] We're very grateful.
[607] Very blessed.
[608] My husband works for Delta.
[609] And in the last year and a half, he switched over to the captain's seat.
[610] So we're very happy.
[611] Yeah.
[612] Yeah.
[613] That's awesome.
[614] And he's gone a lot, too.
[615] Oh, okay.
[616] Wow.
[617] Well, good for you guys.
[618] I'm so proud for you.
[619] Okay.
[620] So the only trade -off in my mind is this, is I always do a risk analysis.
[621] first and the way I look at that is if everything went sideways, which you're a long way from everything going sideways, you're square in the middle of prosperity, right?
[622] But if everything went sideways and I was going to lose one of these, which one would I want to lose?
[623] Well, I'd want to lose the rental.
[624] So it's always the second to pay off unless it has a super small mortgage.
[625] And I could just knock it out real fast.
[626] Now, relative to your income, What would be your plan to have both of these paid off?
[627] How long will it take you?
[628] Making 500 you need...
[629] Making 500 you need 550, right?
[630] Right.
[631] Right.
[632] So we were figuring three years.
[633] Okay.
[634] So really it doesn't matter because in three years both of them are gone.
[635] Yes, sir.
[636] Yeah.
[637] And so if we said that, then really we're talking about of the three years, two years is your house, one year's the other, give or take.
[638] not quite yes sir but more of it's the house so hmm well that see the speed at which you're doing it kind of makes me on the bubble I don't really care so what would I do if I will I'll tell you how I'm thinking about it with your first risk assessment the one that you'd want to lose I'd want to know what the rental property is worth what is it worth it's worth about 300 300 And your home is worth what?
[639] $7 .90.
[640] Ooh, interesting.
[641] I'm paying off my house.
[642] I'm paying off the house too because if you had told me that the rental was worth plenty of what it would take to pay off the primary, I might say, oh, go ahead and pay it off.
[643] If you came, like you said, if you had a risk scenario and you came on hard times, you could always sell it and pay off the primary, but it wouldn't bring enough to do that.
[644] Right.
[645] So that's why I would go with Dave.
[646] Yeah, and you're going to pay it off.
[647] So, and I'm thinking of the non -math benefits that end up being math benefits, like peace.
[648] Like when you pay off your home, you feel different than when you pay off your rental.
[649] Agreed?
[650] Agreed.
[651] Yeah.
[652] Like when we paid off our cars and you know that you can get to and from work and not have to.
[653] Yeah.
[654] I'm dropping the kids off at school.
[655] It felt so good.
[656] Yeah, like the stupid thing doesn't start.
[657] At least it's mine.
[658] You know, that kind of stuff, yeah.
[659] I also think there's something of it.
[660] I'm like, if anybody's living in the paid for it.
[661] house, it's me, not the renters.
[662] Yeah, I like that too.
[663] There's that thing.
[664] Yeah, I mean, if you owed like 45 or 50, I just knocked the rental out like it was a credit card debt or something and just knock it out quick.
[665] But it's kind of on the bubble because of the way the math works in your scenario.
[666] So, you know, I'm for the peace and the non -math benefits of being debt -free on your personal residence, I'll put it in line first.
[667] Keep in mind, we're only having a discussion here of one year.
[668] Yeah.
[669] That's the only difference is which one's paid by one year.
[670] Yeah.
[671] That's the only difference.
[672] If you put the rental in front, it delays that by one year.
[673] If you put the rental behind, it makes it sooner by only one year.
[674] So it's not a if, it's not, it's not a 10 year issue.
[675] But with her math, that's what we're talking about.
[676] So it's not, it almost doesn't matter.
[677] But just if I was going to get right down to it, I'm going to knock out the personal residence because I think so many good things happen that people don't even anticipate when they're debt -free on their house, then I'm going to put them there as soon as I can.
[678] 100%.
[679] Hey, let me be a Pharisee real quick.
[680] Okay.
[681] So let's pretend that the numbers...
[682] And by the way, your folks notice interest rate did not matter in that discussion.
[683] No, not at all.
[684] Not at all.
[685] Over three years, it's irrelevant.
[686] Let's pretend that the numbers worked out a little bit differently, and we were vying for her to pay off the rental first.
[687] I know there's people who are listening going, well, Dave, she shouldn't have bought a rental anyway if she didn't pay for it in cash.
[688] Why would you tell her to pay off the rental first and not the primary?
[689] I don't liquidate real estate unless it's causing a problem.
[690] Yeah, for her, it's not.
[691] I liquidate a car and a heartbeat.
[692] I'll sell your car on you in a moment.
[693] Well, it's also depreciating.
[694] Yeah.
[695] Well, I mean, and cars are just landa stupid when it comes to money stuff.
[696] Yeah.
[697] But real estate, it's so cumbersome.
[698] and expensive to liquidate, and it's time -consuming and everything else.
[699] I got a house for sale right now.
[700] My personal residence is for sale.
[701] And it's just, it's a thing.
[702] You know, it's a thing.
[703] And so, real estate's the, if you call in and you're in trouble and you're in deep stuff up to your neck, I'm going to start selling off the kids, three of the dogs, I'm not everything, but the house is the last thing I'm going to sell unless you're just, unless you got a mortgage payment that's, you know, 50 % of your take -home pay and you've got to get out of it.
[704] All right.
[705] I'm going to play another game.
[706] Okay.
[707] Because I like this.
[708] All right.
[709] The Pharisee, the devil's advocate, whatever game this is.
[710] Because I get into other people's brain.
[711] Okay.
[712] Now there's a guy listening.
[713] He's like, well, I make $500 ,000 a year.
[714] I already live in a house that's $457, but I'm looking at a piece of real estate that's $300 ,000.
[715] Why can't I go buy it using the same?
[716] Because the goal, the number one goal in the whole discussion is to become debt free and stay debt free.
[717] It's not.
[718] Now, if she called me up and said, I've got 10, rentals, I might be liquidating some of those.
[719] That's right.
[720] In order to get to debt free faster.
[721] Mm -hmm.
[722] And pick which one.
[723] Okay, pick the one you don't like, and dump it, right?
[724] That kind of stuff.
[725] I'm probably, and you've heard me do that if you listen to this show all the time.
[726] So, because the shortest distance between where you are now and wealth is not your income.
[727] It's the, it's the freedom of your income, not going to someone else in the form of debt payments.
[728] That is what builds wealth for, again, for the first one to $10 million worth, that's what all of the data shows us.
[729] And so freeing up your income, it becomes my number one goal here and not going into debt to buy real estate.
[730] That's not my number one goal.
[731] As a matter of fact, it's the antithesis of our number one goal.
[732] So good question, though.
[733] It's a good clarification to bring it up.
[734] And, you know, people bring up all kinds of things.
[735] Here's the point.
[736] A hundred percent of the time, that's all the time.
[737] the borrower is slave to the lender a hundred percent of the time that you engage in debt you are submitting yourself to some form of mathematical relational some kind of slavery a hundred percent of the time and a hundred percent of the time you call this show we're going to tell you not to do it this is the ramsie show this show this show is sponsored by BetterHelp.
[738] Hey good folks, the back to school madness is upon us.
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[757] com slash deloni jade washaw ramesi personality is my co -host today thank you for joining us america samson birmingham hi sam how are you i'm doing good dave how are you all better than i deserve what's up so i'm going into my third year of law school uh this next year and i finance law school through student loans and now my grandmother who has, you know, a lot of money in checking account, she is offered to pay my student loans through our, you know, loan servicer so that I can pay her back without interest.
[758] And so I'm just wondering if, because I've heard you kind of go against inter -family loans and saying that that might rub the relationship.
[759] And I don't want to do that with my grandmother, so I was just wondering if I should tell her that that's a good thing to do or if just taking a gift, maybe, you know, less than the full amount of the loans.
[760] I just am wondering how to navigate that.
[761] Yeah.
[762] Wow.
[763] So how wealthy is your grandmother?
[764] She is, she's very wealthy.
[765] What's very wealthy?
[766] I don't know what that means.
[767] Is she worth $10 million or $1 million?
[768] or $500 ,000, what's very wealthy?
[769] I would say $2 to $3 million.
[770] Okay.
[771] And how many grandkids does she have?
[772] She, including my mom, she has four.
[773] Kids or grandkids?
[774] Grandkids?
[775] I think maybe five or six.
[776] You don't know how many cousins you have?
[777] Well, some of them, some of them aren't under my mom's dad.
[778] so I'm trying to think in my head.
[779] Okay, so, but I'm asking your grandmother has three million dollars that presumably will be left to her kids and grandkids, correct?
[780] Yes, sir.
[781] How many siblings do you have?
[782] I have one sibling.
[783] Okay.
[784] All right.
[785] And your mother has how many brothers and sisters or half brothers and sisters?
[786] she one just passed away so she has three okay all right because the reason i'm trying to do all this i'm trying to add up if your share of the inheritance is 140 we might ask her to just advance you your inheritance but not lonely to you not loan it to you gifted to you to only to put on the student loan okay or any any share of your inheritance that she does want to advance to you as a gift.
[787] I would accept that gladly and put it on your student loans.
[788] Even if it was an obligation to put on student loans, I still would accept that.
[789] Would I accept a loan to save the interest?
[790] 100 % no, never.
[791] Okay.
[792] Yeah, and I guess so in my head, my mom would be devised some money to the will, but...
[793] I don't know how the estate, plan is working and I guess that's something you need to find out is there any of this money there's three million dollars that's going to come your way when your grandmother passes if the answer is zero then obviously she cannot advance you against your inheritance because the answer is zero yes so if it's all coming to your mom and her brothers and sisters and they're not leaving any to the grandkids directly which is not that unusual by the way if then then you don't have an inheritance out of this and so or if your mom wanted to agree to accept the amount that your grandmother gives you less as an advance on her inheritance and it go through to you now that's okay if you want if you guys the three of you want to talk that out you and granny and mom okay I'm fine with that if you don't want to talk about don't do it and if you but in no circumstances are we going to do alone if I'm you who's having these conversations is it you and your grandmother talking directly or is this that you're fine are you finding out about this by way of your mom or whoever how's a conversation look so it started with a phone call with my my grandmother and my mom on the line and so i told my mother and grandmother that you know she probably needs to talk to her a stay planning attorney and my grandmother's kind of like well i can go down to the bank and get the money right now and I'm like, well, you can, but you also get screwed by gift tax.
[794] Your advice was correct.
[795] Yeah, I just, I wanted to see what the relationship was, because it does feel presumptuous in many ways to be like, hey, just give me some, give me my inheritance in advance.
[796] Like, I could see that feeling awkward, but, yeah, he didn't bring it up, though.
[797] Yeah, he didn't bring it up.
[798] Yeah, I'd say, Granny, I'm not comfortable doing alone.
[799] If you and mom want to talk about a way that this is, that this is an advance on some of the estate plan and either mom's share or my share or however it works is reduced by the amount you want to give me to reduce the student loans.
[800] I can talk about that as a gift and we'll put it on the student loans, but I don't want to be in debt to you and I'll just work it out.
[801] And thank you so much for the kind to offer.
[802] I honor you.
[803] I appreciate that.
[804] I know you've got plenty of money, but the idea of me having to pay my grandmother payments makes me ill and I would never want to do that because I love you too much.
[805] And that's how it sounds.
[806] Does that make sense?
[807] Yes, sir.
[808] Yes, sir.
[809] That's where my head was at on it.
[810] Thank you all very much.
[811] Yeah, thank you for calling in, man. I appreciate it.
[812] And so family does this stuff.
[813] You know, mom and dad are going to loan the grown kids, money to buy a better house, so their grandkids have a better place to live.
[814] but we'll do it at 4 % interest because of going rate 6, and I can't make that down at the money market anyway.
[815] So you just pay me what I was going to make on the money, market.
[816] I've heard that story like, I don't know, a bazillion times.
[817] And sometimes it all works out, but usually at least one or two people in the equation.
[818] You know, here's what I discovered.
[819] Okay.
[820] When we went broke, Sharon's dad, who is one of the nicest men, he may be a saint.
[821] Yeah.
[822] He's one of the nicest men I've ever met.
[823] And just a kind, good man. We went broke and he loaned us some money to keep our house.
[824] to bring the house up current.
[825] Oh, so when we filed bankruptcy, we could keep the house.
[826] And I never thought anything about it because I'd borrowed it up to my eyeballs and just went bankrupt.
[827] Hello.
[828] I mean, you know, and that's where I came up with a saying Thanksgiving dinner tastes different when you eat with your master.
[829] Don't I know it?
[830] Because here's the thing.
[831] It bothered him not at all.
[832] He never thought a thing about it.
[833] He's a nicest guy.
[834] Didn't bother him a bit.
[835] But he was the master.
[836] It bothered his.
[837] daughter, my wife, not at all.
[838] Because as far as she was concerned, Daddy was helping and that's what Daddy's do.
[839] Not a big deal.
[840] It about killed me. You had sweaty armpits, yeah.
[841] I had, yeah, that's how I lost my hair right there.
[842] I'm just saying.
[843] So, and he never said an unkind or shaming thing to me once.
[844] Yeah.
[845] Never one time.
[846] And yet I carried all of this.
[847] It just ate at me. in silence.
[848] And it was after I paid it off.
[849] And years later, when I'm learning this borrower, slave to the lender thing, I'm learning this.
[850] I'm going, well, that's what happened.
[851] Yeah.
[852] I changed my relationship with my father -in -law, who I love dearly, to master.
[853] And even if your master when you're a slave is a kind master, you are still a slave.
[854] Yeah.
[855] That's so true, Dave.
[856] We did the same thing with our, we were upside down on a hummer of all things.
[857] Oh, God.
[858] And we knew that's almost as bad as my jaguar i know it's bad yeah we're jaguar was the one yeah that's same stuff but bad credit you know couldn't get alone for the difference so our mother -in -law who i would agree one of the most generous people i know lent us the money and it just i mean i couldn't pay it i couldn't pay it off fast enough because it just yeah so from their point of view it's generosity and its kindness and they and they uphold all of that but they never thought anything about it Yeah.
[859] And it didn't bother them a bit.
[860] Listen, being the master is not hard.
[861] It's being a slave.
[862] It's hard.
[863] No, that's right.
[864] That's the easy position in the story.
[865] And so, yeah, that's a good, it's a really good call, Zachary.
[866] Thank you.
[867] Not Zachary.
[868] I'm sorry.
[869] Sam, that's a good question.
[870] And it's a valid question.
[871] Moms and dads do good things bad ways.
[872] Grandmothers do good things bad ways.
[873] That's so true.
[874] Because they're ignorant about it.
[875] They just don't know.
[876] Just mean well.
[877] Ignorance is not malice.
[878] It's just, I don't know.
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