The Ramsey Show - App - A Debt Collector Is Calling My Wife - What Do I Do? (Hour 1)

Episode Date: June 10, 2020

Debt, Home Buying, Investing Tools to get you started:  Debt Calculator: http://bit.ly/2QIoSPV Insurance Coverage Checkup: http://bit.ly/2BrqEuo Complete Guide to Budgeting: http://bit.ly/2QEyonc Interview Guide: http://bit.ly/2BuGnZE Check out other podcasts in the Ramsey Network: http://bit.ly/2JgzaQR 

Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studios, it's the Dave Ramsey Show, where debt is done, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. My co-host today on the air, Rachel Cruz, Ramsey personality, number one best-selling author several times over. We'll be answering your questions about life and about money. The phone number, 888-825-5225. That's 888-825-5225.

Robin starts off this hour in Tennessee. Robin, your question for Rachel and me. Thank you so much for taking my call. Sure. So we are going to finish our six-month emergency fund next July, and we're super excited about that. Good. But we're trying to figure out what to do next.

We want to do Baby Steps 3B and save for a down payment on the house. However, we will be building on the land that we already have. Okay. And so our two options are just save for the down payment, and that will take about 31 months to get the big hefty down payment that we want. Or the second option is to pay off the land and then save for the down payment, and that will take a little over a year longer. What do you owe on the land?

We owe about $35,000 on the land. What's it worth? Oh, gosh, it's probably gone up. It's probably close to $100,000. Okay. You probably can start building as soon as you select your builder and get your plans drawn because here's what you'll do. You'll go to the bank and get a construction loan. They're going to pay off the first mortgage on the land out of the construction loan

so that they are in a first mortgage position, and they're going to add that $36,000 to your construction loan, and then they're going to disperse money as the house is being built. And they'll do all of that based on the fact that you've got a lot of equity in the land, so long as your final number, which is $36,000 plus your building cost, is a permanent takeout mortgage that you can get approved for. Okay. And it's okay to go ahead and put my house in.

I mean, we haven't been doing retirement and don't have much, but... It would be fine to park that on hold while you get the house built and you keep throwing money at the house. And that way you end up with a smaller debt at the end when the house is completed. Right. So there's a permanent mortgage. You go ahead and apply for the bank to issue the construction loan.

We'll require you to get your permanent mortgage approved, the one that you end up with, and then they give you a letter that says that they're going to take out the construction loan. It's called a takeout letter. The final mortgage is going to knock out or take out or pay off the construction loan that you end up with. And you've got to get all that approved. And of course, we're going to tell them, Rachel, it'll be 15-year fixed rate, right? Yeah, absolutely. Yes. And you and your husband, it's incredible, though, what you guys have done so far. I mean, the amount of effort and effectiveness that you guys have worked together as a team to now do this next dream of being able to build and then pausing retirement, continuing to pause that just for the build is totally fine as well.

Yeah, because you're not going to take that long. I mean, don't take five years to build the house. There's three pieces of paper you need when you're building a piece building a house and you need to hold your builder accountable and yourself accountable to those three pieces of paper it's your budget for the house build it is the blueprint of what we are building what what is on paper should be actually occur in person and it is the schedule of the three possibly the schedule is the most important because it holds their feet to the fire on staying on track with their subs it holds your feet to the fire on getting your freaking selections done so you don't slow your builder down and that's the number one problem that happens okay well my husband and i we just built robin

we just moved into our house in november so it's interesting you say schedule is the most important versus budget mine would 100 be budget because it's so easy to creep like you're like oh yeah we'll upgrade this you have to have all three it is the three points of the other thing but the thing that people mess up on more than they mess up on the budget or the blueprint is they mess up on the schedule. For sure. And if you drag out a one-year build into a three-year build, you're going to have budget creep, and you're going to have interest costs that's going to go through the roof on your construction loan, and it's going to be a relational disaster with your builder.

I hear you. I hear you. You're just a little bit more hardcore on that kind of stuff, I think, in a good way. I don't think it's bad. Well, Winston was the same way when you're building your house. It's managing a project. Yep. He was checking everything back to the blueprint, everything back to the schedule,

and everything back to the budget all the way through that project. I mean, he's in the real estate business. Oh, for sure. I'm just saying, as the woman picking out the selections. Yeah, well, you've got to go get it. The budget creep happens way faster than the schedule creep. Well, it will. On your part, it will.

But on the part of the builder, they'll let the schedule run. Yes. And if you delay them by not getting your selections done on time, which is oftentimes the buyer's fault. Yes. It's not the builder's fault that they drag out and they don't. And if you don't get the selections done and they don't have the stuff to put in the freaking house, then they have to wait and then their subs are off balance and the whole thing starts

to fall apart. And then you blame it on your builder. And that's what people do. Not you. Oh, yeah. You didn't do that. But that's. We ran a tight ship around the cruise build.

Well, I mean, Winston built this building that we're in. He ran the project on it. And it was, so building the house was like a hobby, you know, after that. But, you know, we built several houses. We've had good experiences. But it creates tension and conflict at the exact right points that you want. The builder on the schedule, the builder on the blueprint, and the buyer on the selections and the budget creep.

Right, right. Because, you know, and the decorator comes in and selects carpet that doesn't fit the budget, and so you have to explain to the decorator, no, we have a budget. We don't just make this crap up. We're not in Congress. We can't just print money. And so, no to the $20,000 carpet. We said $5,000 worth of carpet. And so, we don't need the Taj Mahal in the basement. money and so no to the twenty thousand dollar carpet we said five thousand dollars for the

carpet and so we don't need the taj mahal in the basement this is an actual conversation we had but yeah yeah but that's the thing so and you know i built a couple of houses in the last decade and both of them were on schedule on budget and um actually appeared to be exactly what was on paper when we were done. It was amazing, you know, but people don't do that. They just go, let's just throw up a house over there. And then they're mad at their builder or the builder half-butt does his schedule and then they look up and doesn't push on the buyer to get their selections done.

And then the buyer blames it on the builder for running late. And it's actually the buyer's fault, but the buyer didn't know because the builder didn't communicate. And so it's all that kind of stuff that goes on. Everybody hates their builder. It's because of one of those three pieces of paper and a lack of communication and managing back to that project. And I need to write a book on this. I know. I was like, man, you're passionate about home building. Because so few people build a house well.

The number of people that build a house and have a good experience is very low. Yeah, it's true. That's what we were told. Oh, it's going to be terrible. And we loved it. I'm actually personal friends with the builders of our last two houses. Yep. I'm personal friends with both of them.

And, you know, and a lot of the subs, for that matter. But, you know, if they didn't want to bring it in on time, then I'm a really nasty bad guy because I required them to do what they freaking said they were going to do. This is the Dave Ramsey Show. Business leaders, now more than ever, we need people with the right skills to support our communities, especially the frontline workers who provide resources and care for those most in need. To help, LinkedIn is offering free job posts for healthcare and essential service organizations that need to quickly fill critical roles with the people who help us all. If you are hiring for one of these organizations, free job posts on LinkedIn can help you quickly find the right people for your frontline. LinkedIn jobs can help by screening candidates for skills and experience you're looking for

and putting your job post in front of qualified people who have what you're looking for. So you can find the right person to quickly fill critical roles. To post a health care or essential service job for free, or if you're in another industry and have hiring needs, visit LinkedIn.com slash Ramsey. LinkedIn.com slash Ramsey. Terms and conditions apply. rachel cruz ramsey personality also my daughter is our co-host today here on the dave ramsey show we're taking your calls at 888-825-5225 catherine New Jersey. Hey, Catherine, how are you? I'm great. Thank you so much for taking my call. So I wanted to ask you a question regarding baby steps,

numbers, numbers four, five, and six. So my husband and I, we are in baby steps four and six and not five just yet, but we will be soon because we just found out we're expecting our first child. Congratulations. Thank you. Thank you. We're so excited. In the meantime, between now and when the baby comes home, start paying off our mortgage or should we add to our emergency fund is my question. How much do you guys have, Catherine, now? Is it three, six months? What's the amount of expenses you guys have saved? Six. Did you say six?

Yeah. I mean, if I were you, I think you're great. You have no payments. You have a six-month emergency fund. I would just keep throwing money at the house because if something were to happen, the reason we always say to pause the debt snowball if you're in debt when you're pregnant is to pile up more money to have that emergency fund in the bank. You have some savings just in case something happens. But you guys have that already. So I would continue on, continue on down the baby steps. I think it's great.

And then when baby comes, it's a great first-year thing to open up that college fund. Me and my husband did that because, man, the interest and everything, the earlier you can do that, the better. And so you guys, I know, we'll go on to baby step five. But I would continue on what you're doing. Yeah, absolutely. So how much can you save during the nine months? Probably we could double our emergency fund debt up to an additional $25,000.

Oh, wow. Okay. You know, what you might do, I mean, Rachel's exactly right. I completely agree with what she's saying there. What you could do is pay the majority of it towards the mortgage, like she said. You might hold back like $5,000, and just as soon as the baby's born and you get the Social Security number, you can go ahead and start a 529 then and have that pre-funded. You know, you have to have a social on them, so it takes a few months to get that

and get everything done after they're born. um, you know, you have to have a social on them. So it takes a few months to get that and get everything done after they're born. But, um, but as soon as you get social security number, you can open the 529 and their name is after they're born. So if you want to kind of pre-fund baby step five, a little bit, since baby's on the way, you could do that as a slight modification on what we're talking about, but I would, I'm with Rachel. There's no reason to add more to a six month emergency fund. You should be fine there. Now, obviously, if during the pregnancy you encounter some complications, yeah, you stop and you pile up cash and, you know, get ready for if there's some kind of a complication. But as long as everything's going according to plan, then we just stick with it. Good. Very good. Richard's in

Texas. Hey, Richard, how are you? I'm doing okay. Yourself, David and Rachel? Great. How can we help? Can a debt collector call my wife about my debt? Because last Friday, I called this particular debt collector to settle two or three of my accounts, and I got everything in writing for the two accounts that I settled, but later on that day, they called my wife about the third account.

Where did they call her, at home? Yeah, they called her at home. Okay. Did they discuss the account with her? No, they just said, we need to talk to Richard, so we want to settle for the account, I believe. Okay. Well, technically, they're not supposed to discuss your account with anyone. Certainly, they can call your home, and if your wife answers, they can talk to her.

Just say, you know. Because we have cell phones. We don't have a landline. Oh, okay. So they got her number? How'd they get her number? I have no clue very interesting okay well what i would do then here's the thing if they if they have contacted someone other than

you and identified themselves as a debt collector or you know discuss your account with them they violated the federal fair debt collection practices act and write that phrase down it's the federal it's federal law the fair debt collection practices act and say now i'm trying to decide i'm going to call them back if i'm you i'm trying to decide based on the fact that you violated that act when you called someone other than me being my wife and discussed my account with her if i'm going to sue you based on that act and i'm thinking that's probably a really good idea because i think the debt i can get the debt forgiven when i sue your butt now if you guys want to settle and make me a sweet deal i'll work with you here but otherwise i'm getting ready to go for the jugular

okay i can do that and if you quote that act to them you now know more than they know you know how i know this the average time on the job for a debt collector is under 90 days oh wow their training consists of 15 minutes and how to dial the phone because they ain't gonna be working there as soon as they find a better job so their turnover is like you know they turn over like toilet paper there it's just it's something else and so and you're dealing with a low common denominator of human and so they think they can get away with this kind of bullying and when you hit back and start threatening them with a lawsuit and with the federal fair debt collection practices act matter of fact talk to their supervisor if you want to and because they might have been there for like a whole six

months or something and they might have actually heard of this and it might scare them into giving you a good settlement but that's that's what happens and you can look that act up online you can quote it chapter and verse if you want it's not hard to get information on it but the uh but most third-party collectors violate the law every day by and large credit card collectors scum absolute scum well and he did the right thing when he said his other two debts that he had talked to them he got things in writing yeah and it was there which is exactly exactly what you need to do because you're dealing with scum you know that's what you're dealing with you're dealing with scum. You know, that's what you're dealing with. You're dealing with hardcore.

You know, there's a gradient of collectors from scum to not such scum kind of a thing. Like the highest quality collector you'll deal with is on a mortgage. Typically, they've been on the job a while. They know their stuff. They know what the actual foreclosure is going to look like. You know, they're going to have to walk this account all the way through, and they've done it before. The bottom of the barrel is a credit card collector, especially a third-party credit card collector where it's a debt buyer buying it for pennies on the dollar. And then they're just a boiler room. You walk up, and it's

just a whole sea of fluorescent lights and a walk-a-mo in the cubes, right, and with little headsets on. And they're just dialing for dollars all day long and as soon as they can find a better job which is like cleaning out septic tanks you know they they leave as soon as they can and so because it's just it's a horrible job because all you're doing is dissing people oh the humanity to sit there all day and copy oh yeah and the threats well and be nasty because nasty is what nasty is what works scares people and so they're going letting the fear take over is important it's really important yeah just i try to give people the visualization of what you're dealing with

and that way they're not it takes some of the teeth out they're not as scary once you know who they really are and then they change their names to something funny like when i was going broke we had one lady call her name was Mrs. Savage. And then another one was Mrs. Baskerville, as in the hounds of Baskerville. She was going to hound me into the hounds of hell, right? It's like, yeah, right. This is your name, Mrs. Jones. Thank you very much.

All right. John is in Texas. Hey, John, your question. Hi, Dave, Rachel. How are you? Great. How can we help? Doing great.

Hey, I've got a little bit of a kind of a rags to sudden riches story. I was a school teacher and a minister for about 20 years. Got into real estate after two decades and have steadily seen my income triple, even quadruple over the last few years. I was making $150,000 the following year and then $250,000 and made $370,000 this past year. Look at you. Way to go. Well, very, very fortunate, very blessed and just kind of scratching my head trying to figure out what to do. We want to do it right. We don't want to go out and buy a lot of things. So I've been,

I've started listening to you guys. You've been a huge, huge blessing to me. I'm literally listening to you guys 24-7. So we paid off all of our debt. We have no credit cards, paid cash for all of our cars, uh, owed on one car, paid cash for that pretty quickly. And I've since started attacking the mortgage. And so I paid about 130,000 off the mortgage. We still have about two 50 to go. Uh, we live in McKinney, Texas. So we're down about $250,000 and I've got about $100,000 in the bank and probably have another $90,000 coming in just in the next two months. So I have zero in retirement and I've got four kiddos, one in high school, and we have zero, say, for college. Okay. Well, just walk your baby steps, brother.

Make sure you have the emergency fund in place and baby step three. Start saving 15% in your income. Set some money aside for college, and then let's finish off that little mortgage. You're kicking butt and taking names. I'm proud of you. This is the Dave Ramsey Show. Hey, folks. Father's Day is just around the corner. If you're looking for the perfect, unique gift to give dad, I've got it. Grip 6 belts.

If dad's like me, he's not a fan of traditional belts. They never fit right and they're uncomfortable. Grip6 belts are exceptional. Owner BJ designed a truly modern minimalist belt made of high quality materials with no holes, no flap, and no bulk. And the buckles come in really cool interchangeable designs. I personally own these belts in different styles and talk about affordability grip six belts come with a lifetime guarantee that means if your dad no longer likes the fit or style of his belt he can replace it for free plus these guys do business right they make their products and source their materials in the u.s. So show Dad you love him and get a GRIP6 belt.

To get the Dave Ramsey special, visit G from Blinds.com. They have a 100% satisfaction guarantee. That means even if you mismeasure, you pick the wrong color, they'll remake your blinds for free. You get free samples, free shipping. With the new promos they run every month, you'll save more use the promo code ramsey to get the best possible deal rachel you got our question yes today's question is from hannah in virginia she says i want to start a family but my husband wants to wait until we can afford it and we are on a budget and the only debt we have is his truck and the usual bills we own our home we've been married

two years going on three. What's your opinion? When do you think we should have a baby? He makes on average $2,500 every two weeks. And I'm a stay at home wife. Well, Virginia, we always recommend whether it's getting married, having a baby, you do it on your plan. The money stuff comes second. You have to know, obviously, that babies cost money. They're expensive. Probably where you are financially is going to determine probably the stress that comes with all of that as well. So if you're in a better place financially, obviously the stress of having a baby is a little bit lower, but that should not stop you from having one. So your family planning needs to be on your time.

And I mean, yeah, you guys, if that's your only date you have is this truck, I would just pause paying on that. Stay current on it. Don't pay extra on it. And then save up, pile up a big emergency fund in the bank when you get pregnant.

And then after you come home, baby comes home, go ahead and just throw the rest at the truck. But waiting until there's a quote-unquote good time to have a kid, there probably never will be. Something in life always is going to be in the way. There's always going to be something. So, yeah, if I were you guys and you want a baby, go have a baby. There you go.

You and God decide when. The money doesn't decide. But you do need to be on the same page and you do need a. But you do need to be on the same page, and you do need a plan, and you do need to be executing the plan together. That's just good exercise for your relationship and your money. I mean, if you're doing all of that, then that does lower the stress if the only thing you've got left is the truck payment. And you pay aggressively on the truck until you're pregnant, like Rachel said,

and then stop paying everything but the minimums and then pile up cash until baby comes. And, yeah, exactly. So we don't tell people to wait to get married or to wait to have kids until they're out of debt. Never have in 30 years of doing this show. It's just inconsistent with the way we're real careful about here is we don't suggest to you anything that we haven't done or aren't willing to do or that is inconsistent with the way I'm currently living or something like that. So, you know, when I tell you to drive a hoopty, for instance, I drove a hoopty. You know, I drove an old piece of crap car while I was getting out of debt.

So I'm asking you to do something I haven't done. Same thing when folks work on our team here. Almost every job in this building, with the exception of computer programming, I have done or am willing to do. And I'm not too proud to set up chairs. I'm not too proud to stack boxes into a truck if I need to. I don't do those things today, but I'm not too proud to, and I'm not too proud to ask you to do it if it's your job. And so, same thing with you guys. You're not too proud to ask you to, you know, you're going to have to sell so much stuff

the kids think they're next. You're going to have to live on beans and rice, and Dave and Sharon Ramsey did that. And so, we're not, and Rachel and Winston Cruz would be willing to, if they found themselves in that mess, in order to get there. And so, they know how to pay a price to win, and that's what is necessary in this process.

Tyler is with us in Oklahoma. Hi, Tyler. How are you? Hey, Dave. I'm well. I'm originally from Columbia, Tennessee, and a longtime listener all the way back to the 90s. Wow.

And thanks for caring about people and our financial health. Well, thank you, sir. How can we help? Well, I'm a laid-off oil worker, Dave, and thanks to your teachings, I am debt-free and I'm able to navigate this downturn. My question, Dave, is as a fiscal conservative, I'm a little bit concerned. With the money supply increasing by $3 trillion in one year, the printing press is churning and the Federal Reserve is manipulating markets by even buying junk bonds. We've got double-digit unemployment, and we have a president who is calling for negative rates

and who, politics aside, is objectively a fan of debt and bankruptcy. So with that said, my question to you, sir, is where do you see inflation going if they continue this printing, and what do you say to people like Ray Dalio who say gold should occupy a place in the portfolio as a hedge against inflation? That's my question. Well, you've been listening to me for a while, so you know I'm not going to tell you to buy gold. Yes, sir.

You knew that before you called. I don't know Ray, and I don't know what his teachings are, but I don't buy gold, and I don't recommend people buy gold. And we can talk through why. Let's pretend for a second that hyperinflation occurred, okay, that your worst fears with your scenario occur, okay? And we go back to the Carter administration, and we had 10% and 12% inflation a year, which we haven't really seen since then. Let's say that that happens due to the oversupply of money and this trillion dollar, these three

trillion dollar bailouts. And that's what you're worried about. And I agree with you that is what they've been doing up there is unwise for sure. I don't think it's going to take us the same place you think it's going to take us to. But let's just pretend it did, that it takes us to a real heavy inflation rate. There is no promise that gold follows that on an inverse relationship, meaning there is no promise that the value of gold goes up as the value of the dollar goes down because they are not tied together in any way. There is no index.

We do not operate on the gold standard anymore. And so gold goes up like all commodities, oil, gold, silver, agricultural products like wheat. These are all, they go up based on a perceived shortage or they go down based on a perceived oversupply. When there is a shortage of gold is when people are greedy and they think that they're going to make a bunch of money on gold so they rush gold or anything else and when there is a or when they're afraid and so like during coronavirus gold went up stock market went down people are afraid because they have an emotional attachment to gold they don't have to the other commodities that thinks that makes them think that gold is a safe place it is not it's not safe it is a golden colored rock it has no intrinsic value except the fact that two different people are fighting over

it and that's the only thing that gives it value. The same exact thing that gives a green piece of paper with the president's face on it value. It has no intrinsic value. It's a green piece of paper. The only reason it has value is that people want it from one another and will accept it from one another. That's the only thing that gives it value. And so my friend Rabbi Lappin talks about money is spiritual in that sense, in that it is based on trust. It is not based on

mathematics. And the trust that I can train a green piece of paper or a bar of gold or a golden cufflink or something for something else, then that's what makes it valuable. And so in the event that an economy collapses, we do not automatically rush out with bars of gold to the quicksack and fill up our car. It's not how it works. The first thing that happens in a completely collapsed economy is it returns to a barter economy. And I can show you examples of that. Take, for instance, New Orleans after Katrina.

That is a microcosm, a small economy. It completely collapsed. And there was a period of weeks that you really couldn't trade a bar of gold for anything but a pair of blue jeans or a can of gasoline. You could trade bottled water. You could trade for almost anything. And it became just basically a barter, oftentimes a black market barter economy. And that's the first thing that happens when an economy collapses. People don't return to gold.

They don't go to their safe and get out diamonds. They go to their safe and get out bullets. That's what happens. And so think through the reality of that. And then from there, some other organization comes to power, a new government is formed, and then a new form of currency occurs. For instance, I have on my shelf, a Green Beret brought me back a handful of paper money with a picture on it of Saddam Hussein, the former government of Iraq.

And obviously, that paper money has zero value except as a souvenir. No one will accept it in exchange for something else. And they never went to the gold standard in Iraq. They went to black market barter economy after they were overthrown until a new government went into place which guess what printed up new colored paper money that's what they did so i don't buy gold it has a crummy track record as an investment this is the dave ramsey show folks save cash by fixing your major appliances yourself.

Get your parts from my friends at Appliance Parts Pros. We just heard from a listener who said he saved his family at least $500 by getting his parts and expert advice to fix his leaky fridge and dishwasher from Appliance Parts Pros. These guys carry over 2 million appliance and outdoor power equipment parts and offer easy returns. Order your parts today at AppliancePartsPros.com. My co-host this hour, Rachel Cruz, here on the Dave Ramsey Show. Ramsey personality, best-selling author. Open phones at 888-825-5225. Gilbert is next.

Hey, Gilbert, welcome to the show. Yes, how's it going today? Great. How can I help? I had a question. So I'm currently debt-free besides one thing. When I was young, I helped my mom purchase her first home, but the house is actually fully in my name. And I was trying to see what's the best route for her to get it transferred to her name, where she won't be having to pay extra fees from what she's already paid.

Is it paid off? No, she owes. No, no, you owe. You owe. She doesn't owe anything. Well, yes, of course. So you owe how much on the house? Fifty-five.

And what's it worth? I would say about $120,000. Oh, excellent. Okay. Well, if you transfer the deed to her, it does not get the name off the mortgage. The name on the deed doesn't matter to me. The name on the mortgage is what you want to be off of. Okay?

Yes, and we've done that. We're kind of both on the deed, but I was seeing something about an assumption loan or something like that, where she would just take over what's owed. Yeah, they don't allow that without qualifying. Can she qualify for a loan? I believe last time I checked, her credit score was like 720. Okay. Well, she ought to be able to borrow $55,000. What'd she make?

I would say around $30,000 a year. Okay. All right. Well, here's what I would do. It's a small loan, so a typical mortgage company is not going to want to fool with it. I'd drop down to the credit union. Is she a member of a credit union by chance, or you? Yes, she is.

Great. Go down there and get a home loan. Okay. Go down there and get a home loan to pay off in her name, and then you can quit claim your other half of the house to her. Okay. Okay? Because they will make a $55,000 loan on a $120,000 house for a person with a 720 credit score making $30,000 a year. That's a makeable loan.

Okay. Now, the last piece of this is you will need to see your tax person and you probably want to write this down, the unified estate tax credit. Because if you give someone more than $12,000 or $14,000 a year, forget this year, I think it went up to $14,000, but you're going to be taxed on gift tax. And when you give her $70,000 worth of equity in this house, you're going to be taxed on that if you do not claim it under the Unified Estate Tax Credit. And so you need to see a tax person and get some help with that, you know,

before you file your taxes next year on this calendar year, if you do that during this calendar year. But if she goes and gets a mortgage and pays off the mortgage, in other words, she's buying the house for $55,000 is what she's doing, and you're gifting her the equity. Okay. And so it's a transaction as if she was a buyer, and that's what she needs to tell her credit union, and that will work. These things are very dangerous when you do something like this

because you can really get stuck. Well, there's a lot of implications, a lot of taxes, a lot of fees, everything you're saying, and if you're not doing it right, then that's when you get in trouble in the long run. Well, you can get in all kinds of relational mess, too. If she had gotten into a pinch, what's he going to do? Not pay the bill. What's he going to do, evict his mother?

Right. I mean, this is set up to fail. This one actually has worked out if she can get the loan and get it out of his name. But you're right. There's a lot of things going on, but there's relational problems here. And if you just start transferring titles around, that does not get rid of the liability for the mortgage, number one. Number two, you may activate taxes you didn't know about or think about.

And so sometimes people do that with an estate planning or something like someone's, you know, 80 years old, and they say, well, I'm going to just give my son the house. It's paid for, and they just sign the deed over. Well, it activates all this gift tax, but nobody ever files it, and so if an audit ever comes up, they're going to get hammered. And so you've got, you cannot just give somebody this amount of money without, you know, using something, some kind of a tool,

like the Unified Estate Tax Credit or something else, to get rid of the gift tax. But the other thing is I'm always going to try to figure out another way to accomplish some of these goals without putting yourself in all these potential downsides. Well, and on the other side of the spectrum, a house obviously is a major asset, but seeing it, people with cars, co-ssigning going into something together like that i mean it almost always ends up in a mess yeah rarely do you hear very seldom works out very very seldom works out and by the way they're in the old days you there were fha and va loans were fully

assumable without qualification they don't exist anymore okay when you transfer a house now without the mortgage company's permission it activates a due on sale clause. They can call the entire loan due and foreclose on you. So you can't just move the title to her name without her getting the mortgage done over in her name. And they're not going to let her just assume your mortgage, almost never. And if they do, it's going to have such fees on it that the credit union will be a better deal. Edward's with us in Afghanistan. Hey, Edward, what are you doing in Afghanistan?

Hey, sir, I'm a retired Army pilot over here doing the same thing for a little bit of extra money. How are you today, sir? Better than I deserve. Very cool. Well, thank you for your service. How can we help? Well, thank you for your service. How can we help? Well, thank you.

At front, there's a very small delay, and I don't want to hold your show up, so I'm just going to throw everything on the table real quick. We are debt-free except for the mortgage and the empty master, so it's great all around. We have a good six-month emergency fund set aside and got some savings going, and we are aggressively attacking our mortgage the house is worth 310 today I got it down to 217 I've got about eight months left on this job before I go home and finally grow up and find something in the local area so I can be home with my wife with that

income change coming up I should have between now and then another $100,000 against the mortgage, bringing it down to about $116,000. Is there any advantage for switching to a 15-year mortgage at that point just for breathing space to get more money towards the principal as I go? The goal is to have the house paid off pretty much three, three and a half years from where I'm sitting today. Yeah, it won't change. It won't put more money towards the principal. The only thing it would do is give you a lower payment potentially than you've got because you're going to be refinancing $100,000 instead of the original $370,000. But it doesn't change the amount going towards the principal. You've got a lot going towards

the principal now. So if you can make the payment that you've got now, I would stick with it because I think you're going to pay this mortgage off in just a few years the way you're going. Obviously, this Afghanistan gig has put big chunks on it, and it's going to be smaller chunks once you come home, but that's very cool, very cool. So how much are you making over there doing this? Between my job and my retirement, and my wife is a retired nurse now. It wasn't even a matter of dessert. It's hard on the body, that job.

So we're making now about $300, $315. Yeah, what are you making doing the pilot gig in Afghanistan? Just the pilot gig in afghanistan just the pilot i'm making it um yeah just the pilot part is uh probably around 260 yes wow okay so you went over there to just load the treasure chest and then come back home yeah we we came over here to uh pay off all the debt and uh and we're getting this mortgage done so that we can finally live, give, and invest. That's our goal. That's amazing.

Very cool. Well, you're paying a price, but you're getting paid for the price. So that's pretty cool. That's a heavy gig. You start flying a plane in Afghanistan, that's not without risk. Oh, no. And he said he did it mostly to go pay down the debt in the house. Some people don't want to drive Uber.

He's all Edwards in the Middle East right now. I mean, like, that's hardcore. That's hardcore. So well done, Edward. And thanks for your service, for real. That's huge. I'm worried about delivering a pizza and Edwards flying over Afghanistan. That's funny, Rachel. Hey, man, thank you again for your service. That's funny, Rachel.

Hey, man, thank you again for your service. That's a pretty cool call. I appreciate you joining us. That puts this hour of The Dave Ramsey Show. This episode is over, but if you heard about an event, product, or service and didn't have a chance to write it down, don't worry. We list everything you've heard about during this episode in the podcast show notes or head to DaveRamsey.com.

Thanks for listening.