EntreLeadership - Advice on Accepting Credit Cards and Buying a Truck

Episode Date: May 20, 2020

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It's an Autrey Leadership theme hour this hour. This is the Dave Ramsey Show. Ken Coleman, Ramsey Personality, and Executive Vice President of Entry Leadership, Daniel Tarty, are my co-hosts for the hour. Arthur is in California. Hey, Arthur, welcome to the show. How can we help?

Hey, Dave. I did your financial piece aeons and decades ago and became dedicated to not using credit cards. And I am a small date girl. where I grow dates and do farmers markets. I have resisted taking credit cards because of the three and a half percent that it cost me. That's three and a half percent.

It's 100 percent profit that's out of my pocket. And also just because I believe in the philosophy that you guys teach, which is not using credit cards, but increasingly I'm starting now in this last year, especially starting to actually lose sales because people don't have anything but plastic. Is there an alternative to credit cards that doesn't cost me 3.5% and where I'm still protected against fraud, credit card, you know, you're limited on fraud at 25 bucks. But is there something like that, another vehicle that we can use? As far as a merchant?

Yes, I'm a merchant receiving. Yeah, that's what I'm making sure you're talking about that side of the equation. As far as a merchant, I'm not aware of one. We take debit cards here at Ramsey. We do not take credit cards. And our service that we use allows us to do that. But we do pay the fee. I don't remember if it's three and a half on our volume or not,

but on small volume it is three, three and a half. So that's fairly normal. And that is a, you know, a lot of our sales, the vast majority of our sales are online. So to not be able to take plastic in the debit card form would put us out of business. It does cost us business that we don't take credit cards, but we're willing to take that because we tell people not to use credit cards. We're not in this, but we're in that, the business of teaching about that, you're not.

So if you were to just get something like a square that pops into your phone and you can just run a card down it, those are probably three, three and a half percent, too. Yeah, they're about three percent. But it's a very easy way in a farmer's market setting for you to take plastic, but you're going to have the fee. I don't know of anything that is feeless on the merchant side. You're going to. You know, Arthur, I would look at this as you're saying that it's costing you sales right now. Would you rather have 0% or would you rather have 97% of that sale and give 3% as a –

I mean, what you're getting as a convenience when you're paying that commission to the merchant, the card merchant, is probably worth it to get those additional sales. And I mean, you've got to make a personal decision. I mean, like Dave's saying, there's no way we can take credit cards with what we teach, but it's core germane to exactly, you know, this is how we teach people to do it. I don't know if you want to use your business to enforce those same principles or not, but that's a personal decision, and we're not going to beat you up if you choose to do that. Well, he's not going to be able to change their habits anyway.

So, you know, why hurt yourself? It doesn't change their habits when we don't take it either. That's right. but it would make us into hypocrites. Exactly. Which is different than if you're selling strawberries. That's right. You know, and so, or whatever.

He said dates. Yeah, if you're selling dates, okay, or whatever. So, I mean, if you're in the restaurant business and you hate credit card debt, but you choose to continue to accept credit cards, that's not, it's not inconsistent because you're not putting people into debt there. Now, what you don't want to do in a business where you accept financing of some kind, if you're against debt is to encourage your responsibility or participate in irresponsibility or subprime stuff and those kinds of things.

I wouldn't ever tell you to do that. But in your case, Arthur, I don't think you're being inconsistent. You can do whatever you want to do, but I don't think you're being inconsistent. And honestly, I think I hear you're more concerned about the three and a half percent anyway. Thomas is in Georgia. Hey, Thomas, welcome to an entree leadership theme hour. How can we help? Thank you, Daniel.

Thank you, Ken. I just want to say first, I wouldn't even be asking this question if it wasn't for you, too. I was stuck in a job, Ken, that I was absolutely miserable, making great money. I'm an electrician. Long story short, I left that job last September, and since January 1 day this year, we're projected to make about $400,000 this year, which is I'm just humbled. I'm blown away at what God has done. but my question is I'm struggling with a truck.

I really want a truck. I want something nice. I'm driving a 10-year-old F-150 with no air conditioner in Georgia. You know, that's all I need to say. But emotionally and mentally, I'm struggling because I've just, I know vehicles are a bad investment. I'm not talking about buying new $40,000 to $50,000 F-250 diesel. And so I want something nice, but I want to do the right thing. and emotionally, I'm just, I'm going back and forward.

It occupies too much in my head space. Please, please clear this up for me, help me out. All right, so you're paying cash for a used truck. Yes, sir. And you're going to spend how much? I would say 45. Okay. And you made 400 grand profit?

Yes, sir, before taxes. Okay. If you wanted to buy that truck for personal use only with a $400,000 income, and you're paying cash, there's no problem with that. If in addition to that, if in addition to that, it has a business, actual business use, then that adds to the case. But if you just call me up and said, I don't own my own business, but I work and I make a salary of 400 grand, and I want to buy a $45,000 car, and I have the cash, I would tell you to do it.

Assuming you're debt-free, are you? Okay. Yes, sir. I don't own a home yet. I've got about 80 save for retirement and about 110 in a brokerage account. But we don't own a home. I know you would definitely disagree with that. I'm not freaked out about it.

I mean, you're going to buy a home. You're making serious money. And this truck purchase doesn't keep you from buying a home, does it? No, sir. There's nothing wrong with this purchase. Yeah, I also really like that it's an investment into your business. You want to do it, and the percentages match up if you're just doing it for personal use. but in business, you shouldn't have any expenses.

Everything you spend money on should be an investment. And so part of what this truck's going to do for you is allow you to go to the jobs and do the work, and that's what generates the revenue. And that causes your business to run. And so we talk to people on the other extreme of this sometimes where they're trying to use their business to get every little thing they've ever wanted and buying toys. Well, it's rationalization. That's not what you're doing.

I think you need to give yourself permission to make a wise decision, which is buy use and pay cash. but it's going to be good for your business. Thomas, I'm proud of you. You've made some great moves here, and you're overthinking this. Get out of your head. You've gotten permission from the guy who's giving you great clarity before.

Don't think twice about this. Move forward, man. Give yourself permission to celebrate and savor the victory. This is a great opportunity for you to drive an nicer truck. You've earned it. It's within the ratio,

as Dave is so beautifully laid out. You know, we can't feel bad about the spoils, a victory. You know, that's part of winning, and it's okay. Well, say more about this, because it's very common for a business owner to start out with very little means, and they're used to struggling in a day job

and not making a lot of money, and then they start doing what he's doing, and he's making $400,000. Well, there's two things you have to be careful. One end of the spectrum is don't use your business to rationalize purchases. And you go, I need that for business. No, you didn't. That's just bullcrap.

Okay, now he might. I'm not saying that. You don't want to fall on that in the spectrum. The other in the spectrum is you're making more money you've ever made in your life, and the math has grown faster than your emotional capacity to wrap your arms around the math. And so that's happened around here. I mean, this company will do $200 and something million this year, top line. I'm from Antioch, Tennessee. That blows my mind.

I can't emotionally keep up with the numbers sometimes. I mean, we spend more on, you know, computers or more on, coffee than I used to make. You know, I mean, it's just, it's like, you know, and so you can't emotionally get your head around it. That's it. And that's, you know, and I still can't. Sometimes you still react to a thousand dollars.

It's about the time I get my emotions caught up. We make more money. So I just, it screws it up, you know? I mean, it's just, but, you know, when he went from nothing to 400K, it takes a little while. There's still that little boy out in the street going, what the crap. Who can't process $45,000 on anything? Exactly.

Much less a truck. Exactly. Yeah. This is the Dave Ramsey Show.