The Ramsey Show – How Should I Be Investing Right Now? (Hour 3)

Intro

In this episode of “The Ramsey Show,” Dave Ramsey discusses various topics related to investing and personal finance. He provides insights on investing strategies, homeownership, debt management, and more. Listeners can gain valuable advice on how to achieve financial stability and build wealth.

Main Takeaways

Investing and Homeownership

• Investing in a more stable market is preferred over micro homes.
• A condo or townhome may be a better option for someone who is frequently away for work.
• Choosing the right option for your life and work is important.
• It’s important to invest in something that is known to be stable in the long run.
• Owning a home is a wealth-building tool and can keep the biggest monthly line item stable.
• Renting can be costly and fluctuating in the long run.
• It’s important to do a cost-benefit analysis when considering renting or buying a home.
• Tiny homes may not be the best investment due to the cost of land and permits, and lack of demand.
• Getting creative with living situations, such as getting roommates or finding an inexpensive townhome, can be a good alternative to renting or buying a home.
• It’s important to aggressively attack debt and build an emergency fund before considering buying a home.

Investing Strategies

• Five-word investing strategy: match beats Roth beats traditional.
• Start with retirement plan through employer to take advantage of match.
• Max out Roth options (401k and IRA) before considering tax-deferred plans.
• Use mutual funds for investing and work with a Smart Vester Pro for guidance and education.
• Use an HSA as a life hack investment tool.
• You can invest with an HSA once you meet a certain threshold.
• After turning 65, you can withdraw money from an HSA for non-medical expenses and it becomes like a traditional 401k.
• If you can’t get an HSA, open a taxable brokerage account for general investing.
• Self-employed individuals have options for investing, such as solo 401k’s and CEP IRA’s.
• Consistency in savings rate is key, not overthinking investment choices.
• Prioritize saving for potential medical expenses during storm mode.

Debt Management and Financial Freedom

• Baby step 2: pay off debt, baby step 3: save 3-6 months of expenses.
• Prioritizing peace and freedom during a tumultuous time.
• Sacrifices made to prioritize peace and freedom during tough times are worth it.
• Consider selling sentimental purchases to free up funds for emergencies.
• Prioritize paying off debt and building an emergency fund before making big purchases.
• Pausing debt snowball is only necessary during storm mode (unexpected emergencies).
• Financial sacrifices are worth it in the long run, and following a solid financial plan will pay off.

Additional Resources

• George Camel’s new project simplifies complex financial topics, busts viral money myths, and talks with real-life millionaires over coffee.
• Free webinars about budgeting are available at everydollard.com/budgeting.
• The budget is a tool that you can use to get your money right.
• EveryDollar is a free budgeting tool with features that help you plan even with irregular income.

Caller’s Situation

• Caller Simon is 20 years old with $290,000 in investments, most of which came from inheritance.
• Simon wants to become financially free at a young age and is considering investing in real estate.
• Dave suggests finishing college first and owning a personal residence before investing in real estate.
• Dave advises Simon not to rush into investing and to avoid bad investments by staying disciplined.
• Simon has an inherited IRA, but he needs to do more research on the 10-year rule and consult with a tax professional.
• Dave encourages Simon to invest in real estate but warns him not to get hung up on cash flow and to invest with cash.
• Dave recommends following the Burm method for real estate investing and listening to experts who live a normal life rather than those who promote real estate hacks.
• Dave reminds listeners that with discipline, anything is possible, and encourages them to check out the Ramsey Show on YouTube.

Summary

Investing and Homeownership

The podcast discusses the pros and cons of investing in micro homes, condos, and townhomes. It emphasizes the importance of choosing the right option based on one’s lifestyle and work requirements. Owning a home is seen as a wealth-building tool, providing stability and potential financial growth. Renting, on the other hand, can be costly and unpredictable in the long run. The podcast suggests exploring creative living situations, such as getting roommates or finding affordable townhomes, as alternatives to renting or buying a home. However, it highlights the need to prioritize debt repayment and building an emergency fund before considering homeownership.

Investing Strategies

The podcast offers insights into various investing strategies, including prioritizing retirement plans with employer matches, maximizing Roth options, and utilizing mutual funds. It also suggests using an HSA as an investment tool, especially once a certain threshold is met. Self-employed individuals are advised to explore options like solo 401k’s and CEP IRA’s. Consistency in savings rate is emphasized over excessive focus on investment choices. The podcast also highlights the importance of saving for potential medical expenses during storm mode.

Debt Management and Financial Freedom

The podcast discusses the importance of following the baby steps, which involve paying off debt and building an emergency fund. It emphasizes the value of peace and freedom during challenging times, and the sacrifices required to achieve financial stability. Selling sentimental purchases to free up funds for emergencies is suggested. Prioritizing debt repayment and building an emergency fund before making major purchases is also emphasized. The podcast reassures listeners that financial sacrifices will pay off in the long run.

Additional Resources

The podcast mentions George Camel’s project, which simplifies complex financial topics and features conversations with real-life millionaires. It also highlights the availability of free webinars about budgeting and recommends EveryDollar as a useful budgeting tool, especially for those with irregular income.

Caller’s Situation

The podcast features a caller named Simon, who seeks advice on investing in real estate. Dave Ramsey advises Simon to prioritize finishing college and owning a personal residence before diving into real estate investments. He emphasizes the importance of staying disciplined and avoiding bad investments. Simon’s inherited IRA and the 10-year rule are discussed, with Dave suggesting further research and consultation with a tax professional. Dave encourages Simon to invest in real estate but cautions against getting fixated on cash flow and recommends following the Burm method. He concludes by reminding listeners that discipline and following a solid financial plan can lead to success.

Conclusion

This episode of “The Ramsey Show” provides valuable insights into investing, homeownership, debt management, and financial freedom. Listeners can gain practical advice on building wealth, making wise investment choices, and achieving financial stability. With the right tools and resources, anyone can navigate their financial journey and achieve their goals.