On a video posted on the Ramsey Everyday Millionaires YouTube channel this year, Dave Ramsey offered guidance to James about the best way he can save for retirement. James and his wife have been following the Ramsey Show for a while and decided to pay both of their cars off due to the money saving expert’s advice.
They had just refinanced their house to get a lower rate which he said has “really helped” his financial situation.
However, the only money they have is the equity in the house.
Mr Ramsey explained to them that there is no way for them to get that equity unless they sell their house, or do more borrowing, adding that he wouldn’t tell the couple to do that.
James said: “We’re just really concerned for our twilight years because that [the house] is the only thing we have.”
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He explained that the pension savings he has at the moment are “nothing to brag about”.
James continued: “I have no credit card debt, and about $25,000 (around £18,475.88) as a reserve emergency fund in cash.
“Other than that, I don’t have anything else.”
He feels he “will never retire”.
Mr Ramsey told James to start “chunking money into retirement”.
He said: “You need 15 percent of your income going into there.
“You do that for five or 10 years, you’re 65 or 70, you will have increased your retirement fund substantially.”
At the time, James was overpaying his mortgage payments by $200 (around £150) each month, and asked if he should continue to do this, or put this extra cash towards retirement.
He said: “If you want a good solid retirement, you’ll have a paid for house and a nest egg.
“You’ve got 10 years to do that, you need to aim at that.
“It’s not going to be $200 (around £150) a month extra, it’s going to be more than that.
“You have to be putting at least 15 percent of your income into retirement and chucking money big time on that mortgage payment.
“Get that stinking mortgage paid off man and build your nest egg up even bigger.
“You have five to 10 years to get the house paid off and build a nest egg.”
James said he was always going to get his house paid off within these ten years.
Dave said James needs to be putting 15 percent of his income into his savings, and then pay off his mortgage.
He urged James to follow his ‘Baby Steps’.
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