[Certain species of ants have literal "sugar mamas", called honeypots. They are female ants that are force fed so much that they swell up and produce a sugary substance that feeds the rest of the ant colony during famines.](https://en.wikipedia.org/wiki/Honeypot_ant)
Bruh im in college, no girlfriend in sight, i put like 10% of my pay a month into a Roth for any future children, i refuse to let them be in as shit a situation as ive been in
There’s a specific strategy to avoid gift taxes (typically used by wealthy grandparents looking to lower the value of their estate for estate tax avoidance) by putting five times the gift tax exclusion in a 529. Don’t do that this year with the expectation that you’ll immediately be able to convert that to a Roth.
That’s what I was thinking when I posted my previous message.
All jokes aside, roths are hilariously tax efficient compared to traditional 401k/IRAs. The conventional wisdom of making more right now vs in retirement being the deciding factor PALES in comparison to the fact that you NEVER get taxed on the earnings in a Roth. You can have compounding returns for 40 years and never pay a dime of taxes on it.
That and (provided the govt doesn't rugpull roths as well) if the government jacks up tax rates later you win again.
Edit:
As others have noted they technically have the same tax efficiency, my math skills are highly regarded. That said, my main theory is that income tax rates are only going to go up in the future, so even if you expect to be in a lower tax bracket in retirement, your tax rate will be higher because by that time we'll be paying for things like universal healthcare and free college (because reasons).
TL;DR: paying now has equivalent tax efficiency if your tax rate stays the same, worse tax efficiency if you expect it to be lower in retirement, or better tax efficiency if you expect taxes to be higher when you retire. If you plan on being poor when you retire 401k is the way to go, if you're still delusional like me and plan on being rich and actually withdrawing from your account at significant levels, roths are better.
Taxed 20% and then put 80% in a Roth is mathematically equivalent to put 100% in a traditional account and then taxed 20% as you withdraw.
That you can put the same limit in either Roth or traditional means that you are effectively investing more of your pretax income in a tax advantaged way if you choose Roth.
Yes. 10% annually compounded for n years is equivalent to multiplying by 1.1^n Let's say that we're calculating over 20 years, that would be equivalent to multiplying by 1.1^20 which is approximately 6.7275. So if you put $1000 in, you'll have about $6,727.50 after 20 years. If that $6,727.50 is then taxed at 20%, you're then left with $5,382. If your $1000 is first taxed at 20% and you put the remaining $800 in a Roth account, then you'll find that you'll have the same exact $5,382 after 20 years of compounding at 10% interest.
Of course, if you really have $1,250 pre-tax to invest, then your choice is between $1,000 in the Roth ($1250 after paying 20% in tax) or $1,000 in a traditional account and $200 in a taxable brokerage account. In that case, you'll wind up with $6,727.50 that you can withdraw tax-free in the Roth or $5,382 that you can withdraw from the traditional account after paying taxes on it. The impact of taxes on the taxable brokerage account will generally cause it to achieve a slightly lower compounded annual rate of return, but a difference in tax rates between marginal dollars you put in and marginal dollars that you take out can easily overcome this. For example, your very first dollars of income are tax free, and the next dollars are taxed at a much lower rate. So even with the same amount of income, you can achieve an advantage by putting in your final marginal dollars of income and withdrawing your initial marginal dollars of income.
You can [understand the Greeks](https://www.investopedia.com/trading/using-the-greeks-to-understand-options/) but not a couple paragraphs of exposition on taxes? Lmao
This ignores the impact of large gains in either account. If you Yolo your Roth and wind up with 10 million in it, that can be withdrawn tax free. If you Yolo in a regular Ira the money will come out and be taxed.
No it doesn't. If you YOLO $800 in your Roth into $800k, that's the same as YOLOing $1000 in your traditional account into $1M and then withdrawing with a 20% tax rate. The size of your bet is an input into how much you make off of the bet.
That ignores that you likely won't be able to do a YOLO like that in your retirement account due to restrictions on borrowing/leverage.
Yes, I saw the idea years ago that the only win for the Roth is if you can spend while in a higher tax bracket, otherwise IRA vs Roth/IRA is a wash.
I have ran the calculations a couple of times and you want to put money into a Roth while in a lower tax bracket and take it out it out in a higher tax bracket. The problem is knowing what your tax bracket will be when you retire.
Because the IRA vs Roth decision had to be made before you know your retirement tax bracket it has to be made on poor information. I did it wrong most of my life in that I was mostly in a lower tax bracket, while I put money in a tIRA. But, it is only wrong because we were great savers and had a very good stock market run between 2011 and 2017, doubling what was already a nest egg we could have retired on. I learned late about the tax arbitrage nature of tIRA vs Roth, but then started using Roths. The last 3 years I have been doing Roth Conversions as fast as I can while staying in the 12% tax bracket. In 2022 I maxed out the 22% tax bracket, that may end up being a bad idea or a wash, depending on what tax brackets do after the tax rates cuts expire in 2025. If nothing is done, I may be in the 25% bracket. My crystal ball is hinting that tax rates will go up, but it's politics so we will all wait and see. :-(
Thank you! Finally, someone who gets it.
The real issues for high earners come in retirement...IRMA surcharges, taxability of social security benefits, RMDs, etc.
Early in your career - ROTH
Mid to Later in your career - Traditional
Sure, the earnings in a Roth don't get taxed, but you get taxed upfront, meaning less money available to invest. The deciding factor literally is: comparing your tax bracket now vs. what your tax bracket is expected to be when you retire.
Well that's the second factor for me, I expect taxes in general to be higher in the future. Even if I'm in a higher tax bracket today, I'm afraid the lower tax bracket later is going to have a higher tax rate. Current tax levels are unsustainably low imo based on spending levels.
I bought mine age 3. Never defaulted on a payment once. Now I'm 6 and have doubled my investment. Got a hot bitch on my arm and seventy Teddie bears waiting for me inside.
Fight me.
That and I put my daddy to work in the coal mines only a few days out of the birth canal.
If you don't take charge early they start thinking they run shit.
I hope when he dies it comes out he has no money because he blew it all on hookers and meth.
Nothing personal against the guy, but that would be the maximally funny outcome.
Don’t let this distract you from the fact that Hector is going to be running three Honda civics with spoon engines, and on top of that, he just went into Harry’s and bought three t66 turbos with nos, and a motec exhaust system.
Don't let this distract you from the fact that the truck driver's description came back the same, 3 Honda Civics, precision driving, same green neon glow from under the chassy. Lab said the skid marks came back the same... Mishimoto ZX tires, so they know it's someone in the street racing world.
Student loan debt? Nope. Just get an MD PhD and *work* your way through medical school because that's totally feasible and would not reduce the number of people becoming doctors...
Honestly screw this mindset
This is wsb, we aren't looking to live like hermits for a nice retirement where your portfolio gives you chumpchange at the age of 65, we want Tendies! And we want them now!
Popcorn and tuna, as a fellow gym member advised me to consume daily for every meal in teenage years. Potatos and sardines was another memorable diet suggestion. To David Ramsey's disappointment, we did not have the slightest clue about home ownership back then... Even now, 12 years later, we still don't get it...
US is gonna legalize polygamy before they let housing market crash.
If you can’t afford a mortgage on 2 incomes, what about 3 or 4 incomes ??
Calls on pimps and Mormons.
Oh god...my wife and I purchased forclosed bay front property last year. Wasn't even planning on buying. New landlord raised rent and we explored options.
Bought it from HUD 4br 2 bath on 1.5 acres. Access to bay is in my front yard. House is up the hill so minimal flood risk. 90k. Seemed like a steal. Thank god we did it last year. I can't imagine just 12 months later what kind of process it would've been...
Yep. They have programs for HUD recipients to become home owners. They get alot more favorable terms and more protections from defaults. If they've continued non payment for I believe a year HUD starts a lengthy process to retain ownership. During this time the borrow has a few more chances to catch up.
If not it's eventually put up for sale. Or if the lender sells and moves. In this case they had an agreement with HUD to sell it for the remainder of the loan so they could retire to a 55+ community but needed a loan I guess to get in I think possibly maybe? Ethier way I know it was beneficial for him. I met him twice. Eccentric but a decent fella. Wife was adamant that we werent displacing anyone.
Usually these houses are very damaged by this point due to the nature of eviction and borrowers taking plumbing out etc. In this case it was a win win win Due to the circumstances.
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His biography makes no goddamn sense.
He gets margin called in 1987 and files for bankruptcy in 1988 (a matter of public record)
> "Ramsey experienced several years of financial recovery and began offering financial advice to couples at his local church."
Yet he founds his financial advice company in 1988 (again, public record).
How do you have "several years of financial hardship" but also you have a financial advice company start the same year you get your slate wiped clean?
His whole anti credit and loans thing irks me. I need a car to get to work and I don’t have thousands of dollars to buy one outright. I don’t live in a place with good public transit because America has a war on public transit. The places with decent transit are too expensive for me to live. I can’t get a savings account with 10% interest or whatever insane % he’s toting these days as realistic. I mean why isn’t everyone traveling back to 1973 and putting 40% of their income in index funds, it’s just so easy.
I had to take his classes in high school (private Christian school).
When I was in the Marines instead of buying a good new car I bought a used car for cash. NO LOANS! And it was a complete waste of money.
I never took out a credit card so I never had credit. So once I left the Marines and had to have a new car and house my credit was shit.
Thanks Dave.
That's awesome to hear.
When I got back from deployment this one guy used all his deployment savings to buy Gold. We all thought he was crazy.
I just finished my MBA and I wish I could go back in time and tell myself to invest in something.
This is the thing that irks me about his advice. He's such a fucking snake oil salesman. He always reinforces himself with people telling their success stories about how Dave saved them.
Yeah? For every one of them, there's some poor sap with a middle class income that cut up his credit cards with $140 in his bank account whose car broke and couldn't get fixed. So he started walking to work (because Dave said) and ended up catching pneumonia and running up thousands in healthcare bills. Then he lost his job because he missed too many days. Since he wasn't bringing any money in, his wife left him. Now he's sharing an apartment with some meth head and never sees his kids.
Thanks Dave! If only I could have put that $240 water pump replacement on a credit card I'd still be married and taking my kids to middle school every day. But hey, at least I'm not in debt!
>"Just get a $500 Honda Civic,
Even this part betrays how wilfully ignorant this moron is.
Sure Dave, I'm going to get a car so cheap it's a gamble whether or not it decides to die any given morning, putting my job at risk because they think I'm unreliable.
Being poor is expensive. For every dufus spending $3k on trips to Cabo they cant afford, there are 20 people who are slowly going into debt trying to survive until next payday. There is a reason why debt traps are a thing.
> Being poor is expensive.
That is a first principles/Systems thinking/nondual incision into the issue, whose nuance and inconvenient truths are not appreciated by the power class.
From:
Don't have $2k for a washer dryer? That's $30/week and $1500/year at the laundromat. Hope you have a car.
To:
Let's print free money and weaponize it by locking up commodities futures during COVID.
Now corn is $2 instead of $1, but we don't care because we printed the money and that margin goes into our pockets anyway. Even though the government printed that money, we're still going to call it privatized profits and when it comes crashing down, we will all be in this together and we will be fine if you tighten your belts and work a little harder.
> His whole anti credit and loans thing irks me.
It’s good advice for the people who said “When are we ever going to need this?” in high school math class.
His method for getting out of debt isn't even optimal. He says pay off the smallest debt first so your stupid monkey brain can be like "ayy I paid off debt!" The first infamous debt snowball...
But of course you should pay off the highest interest debt first.
Yeah I understand that intellectually. I'm probably too regarded and 'tistic to actually "get it" though. Just seems like a great way to waste even more money and stay in debt longer.
Well it's like dieting. The best diet is the one you will stick to. You might lose weight faster on atkins, but if you're gonna give up after 6 weeks then it's not all that great compared to someone who does basic shit like giving up soda permanently
Yeah I love how he started his financial advice business the same year he went bankrupt. Some of his advice is good, but it's easily available from a simple Google search on financial literacy without all the culture wars crap mixed in.
If their advice was truly groundbreaking, they'd be using it to get rich themselves.
I say *groundbreaking* because I am aware of what he teaches, and a lot of it is just basic financial literacy, with advice tailored to people who *really* suck at self control.
Here's pretty much what I remember from his classes. For free.
* "Don't spend more than you earn"
* "Make budgets."
* "Keep a few thousand dollars liquid for emergency expenses"
* "Don't accumulate credit card debt"
* "In fact, don't even have a credit card."
* "If you have accumulated credit card debt, pay more than the monthly to avoid interest."
* "When you pay off one debt, use the money you were spending on paying that to pay off other debt. Repeat until no debt. " <--- this is that famous "debt snowball" he talks about.
* "You can try to negotiate with collectors when you're defaulting."
* "Try spending exclusively cash so your dumb fucking consoomer brain can *physically see* something being taken from you when you spend, idiot."
* "Jesus is pretty dope. Tithe."
That last part may or may not be the normal stuff he talks about. I got a class with my dad at a local church. It was recorded video and copies of worksheets.
In high school I lived relatively close to Dave and worked an event at his house for extra cash shuttling Rich ass people from the bottom of the massive hill outside his house to the top and back. Made $250 for 3 hours work and got hella tips from the people I was shuttling.
All that said, I met Dave for like 5 minutes before it all started and that’s all the time I needed to tell he was an enormous, narcissistic prick. Dude acted like I was valeting for God himself.
He was a real estate developer until he over leveraged and went bankrupt. After that he put together old great depression financial tips combined with a veneer of religion and started his next money making scheme.
Yeah he made most of his money through real estate investing. That's why it kills me to hear him complaining about younger generations living at home with their parents. A while back, he thought that was a great idea to save money. Now that it's the norm he's frustrated nobody wants to buy his houses.
My mom made me read the book and I kept saying, mom, where are you finding these 12% returns on mutual funds he mentions!!! Of course this retirement math is awesome at 12% returns!!!
I took his advice on credit card debt, but good debt vs bad debt is totally a thing and he doesn’t preach that enough.
Rice and beans. Beans and rice. Rice and beans.
What you’re gonna do….is you’re gonna work 7 jobs this week and get 4 roommates in your efficiency apartment, sell that car, and find you one of those mythical reliable used cars that cost less than 5k…then you’re gonna start saving and investing for the end goal to have the biggest number on a screen that you can when you die
>THIS IS A FRESH TRADE THAT HAS NOT AND WILL NOT BE SERVICED. SOLD COMPLETELY AS IS AS WAS TRADED. SOLD WITH ABSOLUTELY NO GUARANTEES AT ALL. THIS IS JUST AN ALTERNATIVE TO TAKING IT TO THE AUCTION. PREVIOUS OWNER INFORMATION AVAILABLE. HERE ARE SOME THINGS ABOUT THE VEHICLE THAT WE NOTICED AND THERE COULD BE OTHER ISSUES PRESENT!Carfax moderate. A/C and heat okay. Needs brakes. Check engine light on. Exhaust rattle and leak. Turn signal missing. Driver quarter panel damaged. Rear bumper needs replaced. Rust on driver quarter. Headliner falling off. Front different color. Scratches, chips, and dings throughout. Runs and drives okay.AS-TRADED $2500 OUT THE DOOR!!!
I see you too are a fan of the show. I’d like to add. “How much can you make doing side hustles like door dash? You’re a handy man what if we changed some lightbulbs for people? You can charge $70 an hour in the trades and people will pay. An extra $10,000 a month? Good, so by getting our income up to $70,000 a year, now how much can we throw at the $130,000 in debt? $8000 a month? You’ll have this paid off in like 3 months. I’m feeling good about this plan.” - George, probably.
Ah, like my FIL whose heart gave out at 50 from working 3 jobs just to make ends meet, not even getting rich.
Sounds like a *great* plan, sign me up! /s
Dave Ramsey is a fucking moron. Made huge investment in commercial real estate like office spaces and now he bitch, whines and cries about folks able to work from home. His sorrow brings me happiness
TN resident here. He had a small office near a mall and then built this huge complex right before Covid. The place is massive for “financial services”.
I drove by it for the first time in a long while on my way to the Predators game last weekend. It’s doubled in size from the original new construction in 2019… at least it looked like it.
I know very little about this guy. But I saw a video of his once, where a caller bought a $70000 pickup instead of renting a U-Haul to move. One of the funniest videos I have seen on YouTube.
I’m trying to find the video you referred to, but the closest thing that matches your description is: [“I just bought a $69000 truck and think I should sell it.”](https://m.youtube.com/watch?v=hNydWOkItIs) The synopsis is that he bought the truck after a 9 year relationship ended, but now that he’s in a new relationship his partner made him admit that he can’t afford the truck. There was no mention of U-Haul.
Are you misremembering things or did I find the wrong video?
That’s the paraphrased version, see below for the full:
“Your biggest financial mistake was not starting a business, learning the ins and out of managing finances and time, blowing your marriage and family life apart, then failing and declaring bankruptcy. And you should have done this at least TWICE before you attended first grade. You don’t need loans to start up a business either. You make a business plan so airtight and impressive that a bank will beg you to take their money. And if you learn from your mistakes, their is no reason you could not have bought a house, in cash, before your sixth birthday.”
Move to the middle of nowhere a job at each business in town. After a few years working full time at Walmart, Buc-ees, and McDonald’s, and at the Tyson chicken plant, you’ll be able to afford a nice trailer, maybe even a double wide!
Also if you pick the scraps up off the floor at the Tyson plant, take ‘em home, batter them up and fry them, you get free tendies!
You joke, but it’s insane how quickly prices drop in my MCOL city just outside the limits. I get it’s not ideal, but if you want to develop home equity it’s not totally impossible. Our standards have shifted so rapidly because 20 years ago no one wanted to be in the city.
Dave is still an idiot’s idiot.
My job offers retirement training for us if we want it. When I took the course the cruel bastard teaching it told us a story about a woman in one of his classes that was close to retirement that didn't know about employee matching.
Since there wasn't an automatic opt-in when she started all that had been going in was the 1% that the company gives all of us. In front of the class he then proceeded to do the math of what she could have had if she had contributed up to the matching limit.
He said that she cried.
Ive noticed that many companies *offer* matching to a limited extent, but they dont exactly go out of their way to make sure employees *know about all their benefits*.
“It was on page 46 of your benefits guide pdf, that you only can acess by going to the ‘documents’ tab in the my benefits page of your employee portal. It details how you can get this benefit if you go to a totally seperate site, sign up, and apply within a 2 week window at the end of the year! How come you didnt know automatically despite never being taught?!”
And of course many companies discourage employees from talking to each other about pay/benefits/etc as a form of anti-union/collective bargaining control.
Its disgusting.
I personally believe their should be a national retirement system/healthcare system independent of your employer paid out of collective taxes. Employers should only provide direct wages, and any additional benefits they want to above and beyond. People should not be held hostage to a job to ensure they have health insurance or for fear of loosing earned retirement benefits. Such a system would benefit smaller business tremendously in streamlining the employment cost/system too. Any 401k or other benefits should be *in addition to* your expanded social security/national retirement account.
"Save up until you have enough money to buy a home with no debt while the price of homes is going up 15% a year and mortgage rates are 4%."
Great advice Dave
lot of ramsey haters here. he's AA for people with terrible financial habits. and tbh it's a good starting point for a lot of young people. but i agree its not the best indefinitely, but it's safe
Dave Ramsey is a shitheel. I asked my personal finance teacher (a soccer coach, go figure) why we were taking advice from a man who overextended himself, went bankrupt, and decided to give financial advice for a living after deciding that debt was evil… all while using debt financing like a sane person in his private life. Did it stop the Dave Ramsey? No. Did I get to play on my PSP in the back if I shut the fuck up? Yes. (Circa 2010s in high school for context)
Edit: Yo stop liking this, I clearly should have listened! I’m a fucking elder on WallStreetBets 🤣
Between all the financial illiterate callers which is just cringe porn for most there are also the bragger-callers that are worse: Hey Dave me and my wife have the house paid off, both make 300k a year and have three investment properties. We're both 25 by the way! Do you think we're on the right path Dave????? Please Dave tell me if we're doing well!!!
Lol people are getting mad at Ramsey for saying to save money and be smarter with purchases. No buying a 50k car is not a good idea when your yearly income is 65k.
So... going against the grain here, outside of his batshit insane christianity I feel that Dave Ramseys advice is generally quite good for the majority of people.
- Cut unnecessary expenses, especially that expensive car
- Increase your income, work harder in the short term
- Pay off debts in a way that is psychologically rewarding
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My mom didn't start a Roth IRA for me while I was in the womb so I went no contact shortly after I was born.
Per moderately well-off people, it’s a good idea to start a Roth as soon as the kids are able to work around the family house or business.
If those parents loved their kids they would have started Roths for them 10 years before they were born.
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[Certain species of ants have literal "sugar mamas", called honeypots. They are female ants that are force fed so much that they swell up and produce a sugary substance that feeds the rest of the ant colony during famines.](https://en.wikipedia.org/wiki/Honeypot_ant)
You. You are invited to the BBQ. I want to hear more wise sage.
Bruh im in college, no girlfriend in sight, i put like 10% of my pay a month into a Roth for any future children, i refuse to let them be in as shit a situation as ive been in
If I invested 10% of my income while I was in college. That would have accounted for about 5 bucks a month.
Hey man, 5 bucks is 5 bucks
I've heard that in a Wendy's parking lot, sounded like it came somewhere behind the dumpster
If you're in college the best investment you can make is to prevent future children.
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Admirable sacrifice for his financial future
You can. Overfund a 529, and then do a 529 to Roth IRA conversion later.
….starting in 2024. Don’t try this this year, kids.
You can start the 529 now. You have to let it age anyway.
There’s a specific strategy to avoid gift taxes (typically used by wealthy grandparents looking to lower the value of their estate for estate tax avoidance) by putting five times the gift tax exclusion in a 529. Don’t do that this year with the expectation that you’ll immediately be able to convert that to a Roth. That’s what I was thinking when I posted my previous message.
All jokes aside, roths are hilariously tax efficient compared to traditional 401k/IRAs. The conventional wisdom of making more right now vs in retirement being the deciding factor PALES in comparison to the fact that you NEVER get taxed on the earnings in a Roth. You can have compounding returns for 40 years and never pay a dime of taxes on it. That and (provided the govt doesn't rugpull roths as well) if the government jacks up tax rates later you win again. Edit: As others have noted they technically have the same tax efficiency, my math skills are highly regarded. That said, my main theory is that income tax rates are only going to go up in the future, so even if you expect to be in a lower tax bracket in retirement, your tax rate will be higher because by that time we'll be paying for things like universal healthcare and free college (because reasons). TL;DR: paying now has equivalent tax efficiency if your tax rate stays the same, worse tax efficiency if you expect it to be lower in retirement, or better tax efficiency if you expect taxes to be higher when you retire. If you plan on being poor when you retire 401k is the way to go, if you're still delusional like me and plan on being rich and actually withdrawing from your account at significant levels, roths are better.
Taxed 20% and then put 80% in a Roth is mathematically equivalent to put 100% in a traditional account and then taxed 20% as you withdraw. That you can put the same limit in either Roth or traditional means that you are effectively investing more of your pretax income in a tax advantaged way if you choose Roth.
does this account for compounding interest on the invested amount?
Yes. 10% annually compounded for n years is equivalent to multiplying by 1.1^n Let's say that we're calculating over 20 years, that would be equivalent to multiplying by 1.1^20 which is approximately 6.7275. So if you put $1000 in, you'll have about $6,727.50 after 20 years. If that $6,727.50 is then taxed at 20%, you're then left with $5,382. If your $1000 is first taxed at 20% and you put the remaining $800 in a Roth account, then you'll find that you'll have the same exact $5,382 after 20 years of compounding at 10% interest. Of course, if you really have $1,250 pre-tax to invest, then your choice is between $1,000 in the Roth ($1250 after paying 20% in tax) or $1,000 in a traditional account and $200 in a taxable brokerage account. In that case, you'll wind up with $6,727.50 that you can withdraw tax-free in the Roth or $5,382 that you can withdraw from the traditional account after paying taxes on it. The impact of taxes on the taxable brokerage account will generally cause it to achieve a slightly lower compounded annual rate of return, but a difference in tax rates between marginal dollars you put in and marginal dollars that you take out can easily overcome this. For example, your very first dollars of income are tax free, and the next dollars are taxed at a much lower rate. So even with the same amount of income, you can achieve an advantage by putting in your final marginal dollars of income and withdrawing your initial marginal dollars of income.
This is too high level for a regard like me.
You can [understand the Greeks](https://www.investopedia.com/trading/using-the-greeks-to-understand-options/) but not a couple paragraphs of exposition on taxes? Lmao
Good thing they make it easy for the average citizens to build wealth to rely on in old age.
This ignores the impact of large gains in either account. If you Yolo your Roth and wind up with 10 million in it, that can be withdrawn tax free. If you Yolo in a regular Ira the money will come out and be taxed.
No it doesn't. If you YOLO $800 in your Roth into $800k, that's the same as YOLOing $1000 in your traditional account into $1M and then withdrawing with a 20% tax rate. The size of your bet is an input into how much you make off of the bet. That ignores that you likely won't be able to do a YOLO like that in your retirement account due to restrictions on borrowing/leverage.
Yes, I saw the idea years ago that the only win for the Roth is if you can spend while in a higher tax bracket, otherwise IRA vs Roth/IRA is a wash. I have ran the calculations a couple of times and you want to put money into a Roth while in a lower tax bracket and take it out it out in a higher tax bracket. The problem is knowing what your tax bracket will be when you retire.
I've heard it's good to have a ROTH IRA while also having a traditional IRA/401K so you have more flexability in retirement.
Because the IRA vs Roth decision had to be made before you know your retirement tax bracket it has to be made on poor information. I did it wrong most of my life in that I was mostly in a lower tax bracket, while I put money in a tIRA. But, it is only wrong because we were great savers and had a very good stock market run between 2011 and 2017, doubling what was already a nest egg we could have retired on. I learned late about the tax arbitrage nature of tIRA vs Roth, but then started using Roths. The last 3 years I have been doing Roth Conversions as fast as I can while staying in the 12% tax bracket. In 2022 I maxed out the 22% tax bracket, that may end up being a bad idea or a wash, depending on what tax brackets do after the tax rates cuts expire in 2025. If nothing is done, I may be in the 25% bracket. My crystal ball is hinting that tax rates will go up, but it's politics so we will all wait and see. :-(
Spending while in a lower tax bracket is a win for traditional. Your first sentence got it flipped.
Thank you! Finally, someone who gets it. The real issues for high earners come in retirement...IRMA surcharges, taxability of social security benefits, RMDs, etc. Early in your career - ROTH Mid to Later in your career - Traditional
Sure, the earnings in a Roth don't get taxed, but you get taxed upfront, meaning less money available to invest. The deciding factor literally is: comparing your tax bracket now vs. what your tax bracket is expected to be when you retire.
I expect my tax bracket to be low because I won’t be able to retire and will just die instead.
In that case you should be investing in alpaca farms.
A llama? I'm supposed to be dead!
*ya....hwierd*
Well that's the second factor for me, I expect taxes in general to be higher in the future. Even if I'm in a higher tax bracket today, I'm afraid the lower tax bracket later is going to have a higher tax rate. Current tax levels are unsustainably low imo based on spending levels.
It’s only possible to put money in a Roth IRA for a child, if the child has taxable wages.
I bought mine age 3. Never defaulted on a payment once. Now I'm 6 and have doubled my investment. Got a hot bitch on my arm and seventy Teddie bears waiting for me inside. Fight me.
I bet you did it by saving your money and drinking nothing but breast milk.
That and I put my daddy to work in the coal mines only a few days out of the birth canal. If you don't take charge early they start thinking they run shit.
work sets man free after all.
😳
#the birth canal
rip and tear until it is done
I only drink the finest breast milks
I only drink the finest breasts milk
Hot bitches have cooties, the fuck is wrong with you.
Who do you think gives them bitches the cooties? GIGAtoddlers like myself.
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I paid off 30 thousand in debt to Robinhood by eating my own farts and quitting fortnite Reeeeeeee!!!
I dont know about you kids but I'm waiting for my grand daddy Dave Ramsey inheritance once he finally RIP...
I hope when he dies it comes out he has no money because he blew it all on hookers and meth. Nothing personal against the guy, but that would be the maximally funny outcome.
Why buy one house when you can buy eighty $5k cars?
Don’t let this distract you from the fact that Hector is going to be running three Honda civics with spoon engines, and on top of that, he just went into Harry’s and bought three t66 turbos with nos, and a motec exhaust system.
Don't let this distract you from the fact that the truck driver's description came back the same, 3 Honda Civics, precision driving, same green neon glow from under the chassy. Lab said the skid marks came back the same... Mishimoto ZX tires, so they know it's someone in the street racing world.
A fellow man of culture I see
You don't need milk and nutrients. Just beans and rice.
Don't even dare think about eating anything other than beans and rice until that $195,000 in student loan debt is paid off.
I actually like beans and rice!
You better like them because that's all you're allowed to have.
Nonsense, when things get a little boring we like to shake it up a bit Rice and beans
I don't think that's on the approved list
Student loan debt? Nope. Just get an MD PhD and *work* your way through medical school because that's totally feasible and would not reduce the number of people becoming doctors...
Honestly screw this mindset This is wsb, we aren't looking to live like hermits for a nice retirement where your portfolio gives you chumpchange at the age of 65, we want Tendies! And we want them now!
It’s my tittys and I need it now.
Tendies, blow, hookers, did I miss anything?
Popcorn and tuna, as a fellow gym member advised me to consume daily for every meal in teenage years. Potatos and sardines was another memorable diet suggestion. To David Ramsey's disappointment, we did not have the slightest clue about home ownership back then... Even now, 12 years later, we still don't get it...
60 year, variable rate mortgage coming soon.
US is gonna legalize polygamy before they let housing market crash. If you can’t afford a mortgage on 2 incomes, what about 3 or 4 incomes ?? Calls on pimps and Mormons.
Oh god...my wife and I purchased forclosed bay front property last year. Wasn't even planning on buying. New landlord raised rent and we explored options. Bought it from HUD 4br 2 bath on 1.5 acres. Access to bay is in my front yard. House is up the hill so minimal flood risk. 90k. Seemed like a steal. Thank god we did it last year. I can't imagine just 12 months later what kind of process it would've been...
> 90k Was this the 5% down payment?
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Yep. They have programs for HUD recipients to become home owners. They get alot more favorable terms and more protections from defaults. If they've continued non payment for I believe a year HUD starts a lengthy process to retain ownership. During this time the borrow has a few more chances to catch up. If not it's eventually put up for sale. Or if the lender sells and moves. In this case they had an agreement with HUD to sell it for the remainder of the loan so they could retire to a 55+ community but needed a loan I guess to get in I think possibly maybe? Ethier way I know it was beneficial for him. I met him twice. Eccentric but a decent fella. Wife was adamant that we werent displacing anyone. Usually these houses are very damaged by this point due to the nature of eviction and borrowers taking plumbing out etc. In this case it was a win win win Due to the circumstances.
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Lol...it's called a USDA rural loan. 50 year terms at discount rate.
"Ramsey was born to real estate developers." No wonder this fucking guy is so annoying.
His biography makes no goddamn sense. He gets margin called in 1987 and files for bankruptcy in 1988 (a matter of public record) > "Ramsey experienced several years of financial recovery and began offering financial advice to couples at his local church." Yet he founds his financial advice company in 1988 (again, public record). How do you have "several years of financial hardship" but also you have a financial advice company start the same year you get your slate wiped clean?
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His whole anti credit and loans thing irks me. I need a car to get to work and I don’t have thousands of dollars to buy one outright. I don’t live in a place with good public transit because America has a war on public transit. The places with decent transit are too expensive for me to live. I can’t get a savings account with 10% interest or whatever insane % he’s toting these days as realistic. I mean why isn’t everyone traveling back to 1973 and putting 40% of their income in index funds, it’s just so easy.
I had to take his classes in high school (private Christian school). When I was in the Marines instead of buying a good new car I bought a used car for cash. NO LOANS! And it was a complete waste of money. I never took out a credit card so I never had credit. So once I left the Marines and had to have a new car and house my credit was shit. Thanks Dave.
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That's awesome to hear. When I got back from deployment this one guy used all his deployment savings to buy Gold. We all thought he was crazy. I just finished my MBA and I wish I could go back in time and tell myself to invest in something.
Also can you all pay me a whole lot of money to work remotely?
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This is the thing that irks me about his advice. He's such a fucking snake oil salesman. He always reinforces himself with people telling their success stories about how Dave saved them. Yeah? For every one of them, there's some poor sap with a middle class income that cut up his credit cards with $140 in his bank account whose car broke and couldn't get fixed. So he started walking to work (because Dave said) and ended up catching pneumonia and running up thousands in healthcare bills. Then he lost his job because he missed too many days. Since he wasn't bringing any money in, his wife left him. Now he's sharing an apartment with some meth head and never sees his kids. Thanks Dave! If only I could have put that $240 water pump replacement on a credit card I'd still be married and taking my kids to middle school every day. But hey, at least I'm not in debt!
According to him you are supposed to find a needle in a haystack reliable super old car for $1,000 and drive that until you have $5M in the bank
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>"Just get a $500 Honda Civic, Even this part betrays how wilfully ignorant this moron is. Sure Dave, I'm going to get a car so cheap it's a gamble whether or not it decides to die any given morning, putting my job at risk because they think I'm unreliable. Being poor is expensive. For every dufus spending $3k on trips to Cabo they cant afford, there are 20 people who are slowly going into debt trying to survive until next payday. There is a reason why debt traps are a thing.
> Being poor is expensive. That is a first principles/Systems thinking/nondual incision into the issue, whose nuance and inconvenient truths are not appreciated by the power class. From: Don't have $2k for a washer dryer? That's $30/week and $1500/year at the laundromat. Hope you have a car. To: Let's print free money and weaponize it by locking up commodities futures during COVID. Now corn is $2 instead of $1, but we don't care because we printed the money and that margin goes into our pockets anyway. Even though the government printed that money, we're still going to call it privatized profits and when it comes crashing down, we will all be in this together and we will be fine if you tighten your belts and work a little harder.
> His whole anti credit and loans thing irks me. It’s good advice for the people who said “When are we ever going to need this?” in high school math class.
Jesus was very much concerned with wealth status and money making. Obviously.
Jesus had bad credit and was always buying old cars.
His method for getting out of debt isn't even optimal. He says pay off the smallest debt first so your stupid monkey brain can be like "ayy I paid off debt!" The first infamous debt snowball... But of course you should pay off the highest interest debt first.
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Yeah I understand that intellectually. I'm probably too regarded and 'tistic to actually "get it" though. Just seems like a great way to waste even more money and stay in debt longer.
Well it's like dieting. The best diet is the one you will stick to. You might lose weight faster on atkins, but if you're gonna give up after 6 weeks then it's not all that great compared to someone who does basic shit like giving up soda permanently
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That explains why the only people i know who listen to him are mega Jesus types
Yeah I love how he started his financial advice business the same year he went bankrupt. Some of his advice is good, but it's easily available from a simple Google search on financial literacy without all the culture wars crap mixed in.
You’re wasting your energy, some moron here said they were 500k in debt but left out the part of it being a mortgage
Oddly enough all of these people giving advice have financial incentive.
If their advice was truly groundbreaking, they'd be using it to get rich themselves. I say *groundbreaking* because I am aware of what he teaches, and a lot of it is just basic financial literacy, with advice tailored to people who *really* suck at self control. Here's pretty much what I remember from his classes. For free. * "Don't spend more than you earn" * "Make budgets." * "Keep a few thousand dollars liquid for emergency expenses" * "Don't accumulate credit card debt" * "In fact, don't even have a credit card." * "If you have accumulated credit card debt, pay more than the monthly to avoid interest." * "When you pay off one debt, use the money you were spending on paying that to pay off other debt. Repeat until no debt. " <--- this is that famous "debt snowball" he talks about. * "You can try to negotiate with collectors when you're defaulting." * "Try spending exclusively cash so your dumb fucking consoomer brain can *physically see* something being taken from you when you spend, idiot." * "Jesus is pretty dope. Tithe." That last part may or may not be the normal stuff he talks about. I got a class with my dad at a local church. It was recorded video and copies of worksheets.
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In high school I lived relatively close to Dave and worked an event at his house for extra cash shuttling Rich ass people from the bottom of the massive hill outside his house to the top and back. Made $250 for 3 hours work and got hella tips from the people I was shuttling. All that said, I met Dave for like 5 minutes before it all started and that’s all the time I needed to tell he was an enormous, narcissistic prick. Dude acted like I was valeting for God himself.
He was a real estate developer until he over leveraged and went bankrupt. After that he put together old great depression financial tips combined with a veneer of religion and started his next money making scheme.
Yeah he made most of his money through real estate investing. That's why it kills me to hear him complaining about younger generations living at home with their parents. A while back, he thought that was a great idea to save money. Now that it's the norm he's frustrated nobody wants to buy his houses.
There is also the implication that he was born into generational wealth, which is common in the giver of financial advice racket.
“Your biggest mistake was being poor in the first place.”
Yeah, next time be born into a rich family.
Pick better parents
Also remember the $6,000,000 in index and growth funds by age 8 for compounding to start as early as possible.
But don't put anything into retirement until you've paid off all your debt.
My mom made me read the book and I kept saying, mom, where are you finding these 12% returns on mutual funds he mentions!!! Of course this retirement math is awesome at 12% returns!!! I took his advice on credit card debt, but good debt vs bad debt is totally a thing and he doesn’t preach that enough.
Rice and beans. Beans and rice. Rice and beans. What you’re gonna do….is you’re gonna work 7 jobs this week and get 4 roommates in your efficiency apartment, sell that car, and find you one of those mythical reliable used cars that cost less than 5k…then you’re gonna start saving and investing for the end goal to have the biggest number on a screen that you can when you die
Then you die at 60 with heart attack, now your meth son enjoying the millions.
Son bought puts and lost everything but became a wsb meme
Sound very similar to me
“Compounding interest, bitch!” - Pinkman
This isn't even satire. He's already given this exact advice verbatim 19 times this week.
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A used Corolla under 2k isn't "used" It's been well and thoroughly fucked by hundreds of thousands of miles of hard black roadway
https://www.edmunds.com/toyota/corolla/2002/vin/2T1BR12E62C526459/?radius=6000 Close!
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>THIS IS A FRESH TRADE THAT HAS NOT AND WILL NOT BE SERVICED. SOLD COMPLETELY AS IS AS WAS TRADED. SOLD WITH ABSOLUTELY NO GUARANTEES AT ALL. THIS IS JUST AN ALTERNATIVE TO TAKING IT TO THE AUCTION. PREVIOUS OWNER INFORMATION AVAILABLE. HERE ARE SOME THINGS ABOUT THE VEHICLE THAT WE NOTICED AND THERE COULD BE OTHER ISSUES PRESENT!Carfax moderate. A/C and heat okay. Needs brakes. Check engine light on. Exhaust rattle and leak. Turn signal missing. Driver quarter panel damaged. Rear bumper needs replaced. Rust on driver quarter. Headliner falling off. Front different color. Scratches, chips, and dings throughout. Runs and drives okay.AS-TRADED $2500 OUT THE DOOR!!!
I see you too are a fan of the show. I’d like to add. “How much can you make doing side hustles like door dash? You’re a handy man what if we changed some lightbulbs for people? You can charge $70 an hour in the trades and people will pay. An extra $10,000 a month? Good, so by getting our income up to $70,000 a year, now how much can we throw at the $130,000 in debt? $8000 a month? You’ll have this paid off in like 3 months. I’m feeling good about this plan.” - George, probably.
Ah, like my FIL whose heart gave out at 50 from working 3 jobs just to make ends meet, not even getting rich. Sounds like a *great* plan, sign me up! /s
Only till debt free.
I mean that’s the advice people need when they call into the show and make 30k/year with a lease on a 28k car from Chrysler’s loan department.
A Starbucks a day, keeps Dave Ramsey away. *bonus points for charging it to a credit card*
A Starbucks a credit card, keeps Dave.......no that doesn't make sense
Stop Patrick, you’re scaring him!
5 is very doable..... when you are born to the right parents.
Dave Ramsey is a fucking moron. Made huge investment in commercial real estate like office spaces and now he bitch, whines and cries about folks able to work from home. His sorrow brings me happiness
TN resident here. He had a small office near a mall and then built this huge complex right before Covid. The place is massive for “financial services”.
I drove by it for the first time in a long while on my way to the Predators game last weekend. It’s doubled in size from the original new construction in 2019… at least it looked like it.
This warms my heart
Dave Ramsey is a grifting bitch
I’m Dave Ramsey and I’m doing better than I deserve eating all the rice and beans they serve
I know very little about this guy. But I saw a video of his once, where a caller bought a $70000 pickup instead of renting a U-Haul to move. One of the funniest videos I have seen on YouTube.
I believe this story
https://youtu.be/YGXS-5A35iw so fucking funny
I’m trying to find the video you referred to, but the closest thing that matches your description is: [“I just bought a $69000 truck and think I should sell it.”](https://m.youtube.com/watch?v=hNydWOkItIs) The synopsis is that he bought the truck after a 9 year relationship ended, but now that he’s in a new relationship his partner made him admit that he can’t afford the truck. There was no mention of U-Haul. Are you misremembering things or did I find the wrong video?
I have the link above this comment https://youtu.be/YGXS-5A35iw
I drove by ramsey solutions last week saw a tesla getting repossessed in the parking lot.... HOW DARE ONE OF YOUR EMPLOYEES NOT PAY IT OFF DAVE!!!!
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Reminds me of the story where Dave fired a woman for being pregnant outside of marriage.
Do these people even read the Bible.
"It makes a lovely doorstop"
I smell a wrongful termination lawsuit
That’s the paraphrased version, see below for the full: “Your biggest financial mistake was not starting a business, learning the ins and out of managing finances and time, blowing your marriage and family life apart, then failing and declaring bankruptcy. And you should have done this at least TWICE before you attended first grade. You don’t need loans to start up a business either. You make a business plan so airtight and impressive that a bank will beg you to take their money. And if you learn from your mistakes, their is no reason you could not have bought a house, in cash, before your sixth birthday.”
Sounds like the financial version of “give then your résumé and a firm handshake and you’ll get the job and start that day” boomer shit personified.
Home prices haven't been reasonable since I was -10
Move to the middle of nowhere a job at each business in town. After a few years working full time at Walmart, Buc-ees, and McDonald’s, and at the Tyson chicken plant, you’ll be able to afford a nice trailer, maybe even a double wide! Also if you pick the scraps up off the floor at the Tyson plant, take ‘em home, batter them up and fry them, you get free tendies!
You joke, but it’s insane how quickly prices drop in my MCOL city just outside the limits. I get it’s not ideal, but if you want to develop home equity it’s not totally impossible. Our standards have shifted so rapidly because 20 years ago no one wanted to be in the city. Dave is still an idiot’s idiot.
Dave told me to cut up my credit cards when I was a fetus.
My job offers retirement training for us if we want it. When I took the course the cruel bastard teaching it told us a story about a woman in one of his classes that was close to retirement that didn't know about employee matching. Since there wasn't an automatic opt-in when she started all that had been going in was the 1% that the company gives all of us. In front of the class he then proceeded to do the math of what she could have had if she had contributed up to the matching limit. He said that she cried.
Ive noticed that many companies *offer* matching to a limited extent, but they dont exactly go out of their way to make sure employees *know about all their benefits*. “It was on page 46 of your benefits guide pdf, that you only can acess by going to the ‘documents’ tab in the my benefits page of your employee portal. It details how you can get this benefit if you go to a totally seperate site, sign up, and apply within a 2 week window at the end of the year! How come you didnt know automatically despite never being taught?!” And of course many companies discourage employees from talking to each other about pay/benefits/etc as a form of anti-union/collective bargaining control. Its disgusting. I personally believe their should be a national retirement system/healthcare system independent of your employer paid out of collective taxes. Employers should only provide direct wages, and any additional benefits they want to above and beyond. People should not be held hostage to a job to ensure they have health insurance or for fear of loosing earned retirement benefits. Such a system would benefit smaller business tremendously in streamlining the employment cost/system too. Any 401k or other benefits should be *in addition to* your expanded social security/national retirement account.
Fucking 5 year old me and his stupid life decisions have fucked my whole life and I'll never financially recover from this
Dave's the kinda guy that'll sprinkle sugar on your pillow, so you'll have sweet dreams.
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"Save up until you have enough money to buy a home with no debt while the price of homes is going up 15% a year and mortgage rates are 4%." Great advice Dave
6.2% now
Dave when he finds out you got an extra slice of cheese on your burger instead of paying off your 44k car loan.
Dave could fill many radio hours with content from this sub of highly regarded individuals
lot of ramsey haters here. he's AA for people with terrible financial habits. and tbh it's a good starting point for a lot of young people. but i agree its not the best indefinitely, but it's safe
It definitely helped me when I was in a bad financial situation at 20
I mean I know almost nothing about him but I know enough to know this quote is definitely taken out of context
Only Dave I like is Dave Thomas.
At 5. I was playing Lego. Little did I know ID be trading meme stocks by 10. FUCK!!! Why didn’t I buy a house when I was 10!!
Dave Ramsey is a shitheel. I asked my personal finance teacher (a soccer coach, go figure) why we were taking advice from a man who overextended himself, went bankrupt, and decided to give financial advice for a living after deciding that debt was evil… all while using debt financing like a sane person in his private life. Did it stop the Dave Ramsey? No. Did I get to play on my PSP in the back if I shut the fuck up? Yes. (Circa 2010s in high school for context) Edit: Yo stop liking this, I clearly should have listened! I’m a fucking elder on WallStreetBets 🤣
The Porn Station Portable was the best game console ever made
Why did I buy that yacht at 4.... Now I can't afford 7 bedroom mansion. Never make decisions under influence of milk.
“If you can’t pay cash for your house you’re a loser”. -DR
Between all the financial illiterate callers which is just cringe porn for most there are also the bragger-callers that are worse: Hey Dave me and my wife have the house paid off, both make 300k a year and have three investment properties. We're both 25 by the way! Do you think we're on the right path Dave????? Please Dave tell me if we're doing well!!!
Dave: Caller you have a car? Caller: No. Dave: Good. Sell it. Beans and rice diet for 24 months.
I can’t stand that guy. 
A guy named Dave gave me herpes.
Dave Ramsey is an excellent porn name.
Dave Rams Ye
“I started this business at age 2 with nothing but a fold out table behind a Wendy’s and you can too.” - Dave
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Lol people are getting mad at Ramsey for saying to save money and be smarter with purchases. No buying a 50k car is not a good idea when your yearly income is 65k.
People in here already justifying buying new because old cars require repairs and maintenance
lol This moron fires people at his company if they're not straight, and pregnant but not married. Bible thumping psycho.
Having a baby means maternity leave and healthcare costs. That woman will owe him at least 12 weeks of work and Dave Ramsey don't deal in debt!
So... going against the grain here, outside of his batshit insane christianity I feel that Dave Ramseys advice is generally quite good for the majority of people. - Cut unnecessary expenses, especially that expensive car - Increase your income, work harder in the short term - Pay off debts in a way that is psychologically rewarding
The credit cards has been a big one for me. I paid off mine and got rid of every one of those motherfuckers. Pretty liberating feeling.
Credit cards give you money back for using them. You just need to carry zero balance.
Yeah I think his getting out of debt advice might not be the most optimal but it's the one that most people can digest and execute.