The Ramsey Show - App - Academia Is NOT the Key to Success (Hour 1)

Episode Date: November 13, 2020

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Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studios, it's the Dave Ramsey Show, where debt is dumb, 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, number one best-selling author, Ramsey personality, Rachel Cruz joins me. Also, my daughter will be answering your questions at 888-825-5225. I guess you're actually my daughter first, and then you're number one best-selling author, Rachel Cruz. Sure. Switch the, yeah, you can switch the titles. Just have to get this straight. What's the right order of the announcement here? Depends on what we're doing, though.

Well, I was going to say, that's the weird thing about family business is I'm like, technically, I would be an author first, daughter second in this seat. Technically. You're the CEO first. It's kind of cold. Dad second. It's also true. I don't know.

That's probably true. That's how it works. Keep the levels. Anyway, we're not confused about helping you. Although we sound a bit confused. Open phones at 888-825-5225, 888-825-5225, to talk about your life and your money. Sarah starts off this hour in Syracuse, New York. Hi, Sarah.

How are you? I'm good, Dave. How are you? Better than I deserve. What's up? Hi, Rachel, as well. I'm really glad that you guys took you? Better than I deserve. What's up? Hi, Rachel, as well. I'm really glad that you guys took my call. I really appreciate it. Sure. So I'm a 22-year-old grad student. I just graduated my bachelor's this past May.

And my question today for you guys is, should I actually continue on with my grad studies, or should I try and enter the job market right now? What do you want to do, Sarah? Just for a little bit of background, I'm about $19,000 in undergraduate debt, but I've saved up $14,000 in this past year. And it's that chunk of money that I'm really trying to figure out what to do with. I saved it up initially so that I could cash flow my first year of graduate school that would cover all my tuition costs. But honestly, the pandemic has had me rethinking everything lately, and I just want to make sure that I'm making the best move for my future right

now. Absolutely. Well, I think we start with the idea that knowledge is better than lack of knowledge. So knowing stuff is always a good thing. It lowers your pain level if you know stuff, right? And so we're not against school or academia, but we also don't want people thinking that school or academia is necessarily the key to success because there are no studies that show that. Now, Rachel was asking, what field of study are you in? I'm going into public administration. I've actually worked in public administration for

the past year, and that's really where I found my career goal and interest in. So do you have to have this graduate degree in order to do that, considering you've been doing it, though, for the past year? What have you been doing for the past year? So I've been working for the state, actually. I don't necessarily need the degree, but I think that it would help me long term in the field. Okay. Well, Sarah, if I woke up in your shoes tomorrow, I would continue to stay in the job field that you're in, continue working what you've been doing because you're able to do the job without the degree.

Go ahead and pay down all your student loans. And then if you want to go back to grad school and maybe, you know, three, four years when you have saved up money, then that's an option. Cause even school now, I'm like, it's all going to be online. Like it's, it's, it's all, it's all funky now. Education is because of COVID-19 and tuition rates have not even, they haven't, they haven't decreased at all, even though everything's online. Like, it's just, it's such a wonky time right now. So if I were you, if you were able to do the job you want to do without the graduate degree, go ahead and work and do that. And then if you look up in a few years and say, no, I really do need this degree to maybe get a different job or, yeah, like you're saying, to advance something. So when you're 42, what is your job with your career path?

So I'd really like to work in public finance. So that's the career path. Because you'd be the commissioner of finance for the state of New York. That would be quite a goal, yeah. Well, I mean, you're 42. Why not? Yeah. I mean, we're dreaming, we're projecting out.

If not, you're the right-hand assistant who does all the actual work projecting out if not you're the uh the right hand assistant who does all the actual work and doesn't get any of the credit right either one's okay this is state government we're talking about okay yeah so you know but that's that's the that's your path okay now i am not an expert on that truthfully on that on that career field i mean i know a lot about a lot of career fields from having done financial coaching with the different fields, and so I've got an idea of what people make and those kinds of things. My perspective, with my limited knowledge, is that you will need the master's in public

administration to advance, because it's probably going to be a barrier for you to get into upper leadership positions within a state, because I think a lot of your peers will have that. Am I correct? Yes, that's what I was thinking, but I feel like what a lot of people do is they get a couple years in, and then they go back for the degree, and I'm kind of just taking a different route. Well, that's what I was going to suggest, which is kind of a combination of what Rachel said.

Go ahead and take the job. See if the state won't pick up the bill, by the way, for the tuition. Because some state employees go to state universities free. Yeah. I think I should have clarified this. So my position is actually an internship for my program. It's not like a full-time position. Yeah, okay, but you're making money.

You've got your foot in the door. If you can land a position, an entry-level position, and get started, and like Rachel said, let's let this resettling of higher education occur over the next 24 months. We don't know how much it's going to change. I don't predict it's going to change a ton. But one thing that has happened is that we have Americans have stepped back because of the student loan crisis, punch one. Then punch two has been COVID sent everybody home,

and all of a sudden these kids are trying to charge full tuition for a study from home program, and everybody's going, I don't think so. I don't think I'm going to pay that for that. The value proposition has shifted, and so that's a one-two punch. They weren't really questioning tuition as long as everything was going along like it was. It's too freaking high. But they weren't yelling about it too much unless they were deeply in student loan debt because of it. Now with COVID and they're all having to go from home, they're like, I don't think so.

Value proposition is not there. So I think we're going to see some settling of something. It may just be a price adjustment where we all go higher education's knowledge is important but it's way freaking overpriced and so maybe we're going to have a thing so i'm with you rachel i think she goes to work for two years three years might get on with the state or a pub or a city that that has a tuition program and then you work your tail off and take your master's at night and finish it up so that by the time you're 28, you've got your master's and a bunch of work experience,

and by then you're going to have your career path dialed in. I like that plan. And debt-free. And you're debt-free, by the way. Yeah, all of it. So, yeah, that's what I would do. I don't think you're in a rush. And I think, and again, like you said, you can't predict it.

You don't have a crystal ball, but she probably will need a graduate degree eventually. But I do think it's been a theme, or at least it was a few years ago, statistically, watching the statistics and research. That's like the next step everyone does. They graduate with their bachelor's and they just, oh, yeah, I'll go to graduate school, right? It just becomes that next step. So the fact that you're kind of pushing the limit to say, what other options do I have? It's really healthy. It's really your critical thinking skills are kicking in. That's awesome. Yeah, I agree with that. It's not automatic. And again, we're not against master's degrees. We're against useless master's degrees or master's degrees that

have no market value. Translation, useless master's degrees. They're not required. If you're going to go into uh psychology and get licensed with a state you have to have a master's degree it's a precursor okay if you're going to run a 250 million dollar business it's helpful to have a master's in business but i don't have one and i grew this from a card table in my living room it's not a precursor to cause this to happen this is the the Dave Ramsey Show. I get the privilege every day to talk to smart, creative entrepreneurs doing great things for our economy. GRIP6 is no exception. BJ and the great team at GRIP6 know how to truly create smart products that are unique and makes everyone's life a little easier.

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with products sourced in the U.S. Give these products as gifts this season. To get the Dave Ramsey Show. Rachel Cruz, Ramsey personality, number one bestselling author, is my co-host. The crisis this year has left a lot of people feeling scared about their money, many times for good reasons. And all they know is that they never want to be in this situation again, but they don't know where to start. That's where you can help as a Financial Peace University coordinator online. Coordinators are everyday folks like you who walk people through our proven plan to get out of debt, save for emergencies, become wealthy and outrageously generous.

And never worry about money again. You don't have to be a money expert to be a coordinator. We take care of all the teaching. Rachel and Anthony and Chrisris hogan me and you can even lead a virtual class as a coordinator right from your home and just for leading we're going to give you a free ramsey plus membership for a whole year and that means you get all the best tools financial peace university every dollar that syncs up with everything the baby step tracker all the best tools, Financial Peace University, every dollar that syncs up with everything, the Baby Step Tracker, all the communities, all the Ask a Coach things, all the stuff is there.

You can stay focused on your own goals while you're helping people. As a coordinator, you can change someone's life, and you can show them the way to take control of their money for good. No more fear. No more sleepless nights. To learn about this and getting the free Ramsey Plus membership for a whole year as a virtual Financial Peace University coordinator, text LEADFPU to 33789. That's LEADFPU to 33789. Phil is with us in New York. Hi, Phil. Welcome to the Dave Ramsey Show.

Hey, Dave. Hey, Rachel. How are you guys doing? Great. How can we help? All right. So my parents don't have a retirement. They both are in their early 60s, and I'm just kind of wondering what you guys have as advice that I can give them.

Are they asking? Well, I mean, not really asking, but they're definitely, obviously, very well concerned about it. They have to work, you know, pretty much. They can't retire, you know. Okay. All right. pretty much they can't retire you know okay all right because i'm uh i'm getting ready to turn 60 and so i'm thinking in you know when a grown kid comes into a grown parent's household starts telling them what to do without being asked it's kind of a weird thing that's why i was asking

we call that the powdered butt syndrome once someone has powdered your butt they don't really want your opinion on money or sex so um the uh so you gotta have to tread lightly in order to get traction is what i'm saying you know they will listen to you because they probably respect you i respect my kids and i listen to you because they probably respect you. I respect my kids, and I listen to them. But it's a very difficult conversation, that direction. Yeah. And so there's going to be a lot of persuasion involved and so forth. And I think I would just start with asking a lot of questions.

And maybe if you've had some – have you had some success turning your money situation around at all? Oh, absolutely. Yeah, I follow your teachings. Let's see. Well, it might sound something like this. Hey, Dad, I've been doing this thing for about three years or whatever. I'm making up the story, okay? And this is what happened, and I did a couple things.

I got completely out of debt. And you know what? I'm able to really do some serious investing. And I know you guys are heading towards retirement, and if you'd like to do some really serious investing i would be honored to show you what i did and see if it's something you wanted to do and talk about your story more than like wagging your finger at him going you're so stupid you didn't ever save any money and i got the answer that one ain't gonna work yeah but I think one of your questions is, you know, are you wondering, too, Phil, like how to direct them and what to do? Like if they do say yes, we'd love the help, what do they do? So to follow that up, do they have debt?

Well, so I kind of have spoken to them, you know, about the idea of doing a debt snowball and such, and they've caught on to that very well, and it's been very good. They've started doing that. And, you know, their mortgage is very low. You know, their expenses are very low. They're not spenders by any means, you know. They just need to get organized and kind of be on top of it.

Yeah, so I think that encouraging them to get out of debt, get that emergency fund in place, and then at that age, at 60, throw extra. Yeah, just throw everything at retirement. Go crazy. But if you got completely out of debt but the house and the mortgage is low, then they could really jack up their retirement savings, and they could really build a nice nest egg in 10 years. Right.

That's what I was thinking. thinking yeah but the trick of it is as you've probably heard us talk about before your most powerful wealth building tool is your income and right now their income is being lost to two things debt and disorganization yeah and you get intentional get on a budget but you've got them doing you get them out of debt you got them doing that you've told them what to do and you you can just walk with them, be their cheerleader, encourager. And listen, the other thing is every time they get a little bit more excited, they can turn the heat up that much more. In other words, people, it's interesting to me that when they get started,

they're not as, they don't sacrifice as deep as once they've had a few wins. And you start having some wins and you think, I can do this's what reason that snowball works then you get you go deeper you go deeper and you sacrifice at a place that five months ago you would have thought was crazy and now you're doing all this crazy stuff because you're willing to do anything to get clear well that was like alex on the debt-free stage last hour that she talked about you know i oh yeah i was planning on 10 years paying it off and then eight years and then oh i was like really getting traction so i could do it in six and yeah it's like that it's the same thing once you start to see that light at the end of the tunnel yeah the momentum kicks in it's it's so strange you run a half marathon and you look up after running for

two hours um you can see the finish line for some reason there's enough left in your tank to sprint yeah because you can see it and you can still run in and and i wouldn't know i've never done a half marathon i'll take i'll take your advice i'm not bringing that up i'm not gonna i tried i trained for about two weeks and then i thought this is stupid running is stupid why would you do it so anyways kelly uh kelly in the booth said that it's in the bible only the wicked flee when no one is pursuing amen sister that's what kelly uh kelly in the booth said that it's in the bible only the wicked flee when no one is pursuing amen sister that's what kelly says so freaking men no not running unless somebody's chasing me it's terrible oh my goodness open phones at 888-825-5225 andrea is in baltimore

hi andrea How are you? Hi, Dave. Hi, Rachel. It's a pleasure talking to both of you. You guys are like a genius when it comes to this money stuff. Oh, bless your heart. How can we help today? So I just had a quick question.

I make about $40,000 a year, and I want to save money over 10 years. That way I'll be like 55 by then. So I can work part time and then totally retire at 65. I currently have what you call a bridge account. And right now it only has like about 22,000 in there. I was just trying to figure out my cost of living is around to live comfortably would be around like $1,400. And I just wanted to try to figure out a way so I can work part-time and do something I really like and just keep my job now because I have really good benefits with it.

So how much money do you think I would need based on a $40,000 a year salary? How old are you? I am 45. I'll be 46 at the end of the year. Okay. Well, the answer to your question is 8% of the nest egg will support you. You have a big enough nest egg to hit your goal. And so if in your bridge account you had a half million dollars,

that would be $40,000. Okay. And that's to answer your question. But I think there's a different answer. I'm not waiting 15 years to do something I love. Well, the thing with my current job, no other job offers this anymore so i am vested in their private pension so so i've been there for like it'll be close to 14 years at the end but it's not worth being miserable you make forty thousand dollars a year who says you can't get

a job making eighty thousand dollars doing something you love because i don't have a college degree you don't have't have a college degree. You don't have to have a college degree to make $80,000. Yeah, that's true. That's true. People do it all the time. I mean, I could do that, too. Hey, listen, here's what I need you to do.

I'm going to send you a book from Ken Coleman called The Proximity Principle. Ken does a show here on doing a career that you love, and it's going to teach you how to get into a career you love instead of just hating every day for the next decade because you have a nice pension. I'm not doing that. Gross. And then you're going to read everything King Coleman writes and all the downloads that he has and you're going to change your whole life with it by changing your career using his stuff. We'll be right back. thanks for joining us america rachel cruz my co-host ramsey personality number one best-selling author on the debt-free stage to do a debt-free

scream, Tim and Teresa are with us. Hey, guys, how are you? Good, how are you? Good. Welcome, welcome. And how much have you guys paid off? We paid off $165,000. How long did this take? Two years. Wow, good for you. Where are you guys from? We live outside of Chicago, Illinois. Ah, welcome to Tennessee. Thank you so much. Good to have you here. And what was your range of income during that two-year period? It was $165,000 to $218,000.

Nice. What do you all do for a living? So I'm a supervisor and a volunteer firefighter at an oil refinery. And I'm an occupational therapist. I work on faculty in a master's program for occupational therapy students. Very good. Good for both of you. Well done. Thank you. So what kind of debt was the 165? Mostly student loans, mine. About 80,000 of that was student loans. We had a vehicle that we bought before we realized we maybe shouldn't have. And then a loan to a

family member that we had to pay off as well. How much did you owe the family? $54,000. Oh! A third of this. Yeah. Wow. That probably felt good.

Yeah. Like you said, Thanksgiving dinner will taste a lot better now that we don't owe her any money. Yeah. Very nice. Very nice. Oh, my goodness. So what started this journey two years ago? I would say, you know, Tim's family is from near where we live in Illinois and my family, it's about 800 miles away on the East Coast.

And we were having a discussion about when we could afford to go back home to visit my parents and my sisters. And visiting family is really important to me, but it's just with all of the kids that we have had, you know, it's a significant expense. So, you know, Tim looked at me and said, you know, if we didn't have these student loans and this debt that we have, we could go home whenever we wanted. And it just hit me then that, you know, some of the poor choices I made in graduate school to not be as responsible with money as I should have and have accrued all those student loans was not just affecting me, but it's affecting my husband and then affecting my kids and their ability to go see grandma and grandpa. And so that was kind of what really made me tired of the debt and said, I've got to do something about this. And yeah, so that's kind of how it got started. Okay. How'd you find us?

I had seen your name mentioned in some like mom groups on Facebook and here and there. And, um, I just decided to investigate. I started listening to the podcast on my commute to work a couple of times a week. And then I had to, um, convince this guy to get on board. Oh, okay. So what did that look like? Was it? It was not easy. No, no. I was terrible with money or have been in the past. He's very good with money. He's a good saver, all of that. So at the time, we had separate bank accounts for the first six years of our marriage.

Every bank account was separate. We tried to divvy up who paid for what. When we went out to dinner, we'd say, who's going to pay for this? And we thought it was working for us, but it really wasn't. And so his attitude was kind of like that he was good with money and I was the problem. And I had to fix it myself. And I had to tell him, I said, just like on a sports team, you're only as good as your weakest player. And I'll own that I am the weakest right now. That's fine. But it's not an issue of me not trying hard enough.

It's an issue of I need help, and we need to figure out how to do this together. And so the other thing that helped was sitting down and doing the math, doing the budget, showing him that it would be possible. He didn't believe it was possible in two years. And the math didn't lie. Yeah, it's right there. Okay, that's interesting, the point about combining your accounts, combining the idea that you're a team together. Because that's the one piece I know for me, the pushback, the number one pushback I get. Yes.

Oh, people hate when I say, you need to combine accounts. You are a team. So talk me through that side of just your marriage and marriage and you guys, like how much did that change your perspective? Uh, there was a lot of trust that, uh, had to develop, uh, for that. And I think, uh, that was probably the most difficult thing for me because, um, I was a saver. She was a spender, right? Uh, but I think, you know, especially over time, uh, the first couple of months of it was rough, but the numbers didn't lie. And the trust got better and more frequent and just it became natural. And then after that, it was, okay, how fast can we do this, right? Yeah.

Right. So you guys feel like you have a stronger marriage today than two years ago? Oh, yeah. Two years ago? Yeah, absolutely. That's awesome. Yes. Yeah.

And I would say that, like, we just, it was hard for me. Like, yeah. Two years ago. Yeah, absolutely. That's awesome. Yes. Yeah, and I would say that, like, we just, it was hard for me. Like, those student loans were mine. I didn't want Tim to feel responsible for it, but the reality was, like, we have four kids.

We, you know, I work part-time. We're trying to manage this household together. We needed to manage our money together and just accept that we were one unit.

And then I think the most remarkable thing for me was to see how much power our money had combined versus separate. But that's when things started changing is when we put it together and just had one powerful weapon to pay off this debt. Did I mishear something? I kind of think I heard Tim say part of what made him able to do that was he started believing that he could trust you. Yeah. Yes.

You became trustworthy. Right. I had to show him. That doesn't mean, I'm not saying you have to prove yourself to your husband or something like that. That's not my point. No, I did. But my point was it is easier for people to trust actions instead of words. And so the fact that you were really doing this, it wasn't just for your latest grand scheme.

Right, exactly. You were doing it, and you were actually living this. And he goes, well, I can go with that. Right, and every month it got a little bit easier. Like every month when there was money at the end of the month to put towards debt, every month when we didn't overspend on our budget categories and every dollar,

every month just kind of rolled into... Trust is built. Trust is built, and this works for us. And that's how we kind of rolled into trust is built trust is built and this works for us and and um that's how we kind of continued on you know we're we're good at following a system once we got the system it worked it just was the initial convincing well both of your businesses are systems yeah your careers are systems your systems people so and how are the how are the kids i see four yeah five due in november how was it doing that because you're you guys are you know you're being parents full-time hands-on little ones all of it how how was that um i'm actually thankful we did it while they

were young instead of um when they were older you know when you have young kids a lot of time is spent at home anyway um i also think it's pretty easy to convince kids that anything is magical and exciting. Friday nights, we make pizza at home and we watch a movie together. So Friday night pizza night is a big deal in our house, and they think it's a big deal, and they don't know that. It's a budget deal. Right. Yes, exactly. They don't know that it's partially to save money and all of that.

They just think it's fun, and they have great family memories of Friday night pizza night. So little things that we might be doing to save money can still be made magical and exciting for the kids. And now when they are older, we're going to be able to do stuff that costs money, and they'll remember that. So what do you tell people the key to getting out of debt is? You did it. You're successful. You paid off $165,000 in two years. You're heroes.

I'm proud of you. Thank you. So for me, I guess communication and teamwork. Teresa had mentioned it earlier. You're only as good as your weakest link. So I think her and I being on the same page and doing it together helped because if she was doing her own thing and I was doing my own thing, it wasn't working before, at least for me. And I would say you just have to talk about money. I was a person who would never check my bank account because I was too afraid of what it looked like and what that number would be and if I was overdrawn or not, you know.

And now I went to being a person who checked every dollar regularly. And then we every Saturday after breakfast would check in and talk about money. And we would have conversations monthly about the budget. And so you just need to talk a lot about money. Cool. Let's get the kids into the shot for the debt-free screen. Let's get them all in there. It's Marley, Flynn, Bridget, and Nolan, right?

Yes, sir. All right. Well, there's a beautiful family, you guys. We're so proud of you. We've got a copy of Chris Hogan's book for you, Everyday Millionaires, because that's the next chapter. You're going to be there before you know it. These guys are incredible. Very well done.

Tim and Teresa and the gang, $165,000 paid off in two years, making $165,000 to $218,000. Well done. Count it down. Let's hear a debt-free scream. Three, two, one. We're debt-free! Yay! Love it!

That is how it's done. A great family. So good to see them winning like that. This is the Dave Ramsey Show. Oh, my God. Rachel Cruz, Ramsey personality, number one bestselling author, is my co-host today here on the air. Kylie is in Kansas City. Hey, Kylie, how are you? Hi, Dave. Hello, Rachel.

My husband just popped in and said we should probably know the answer to this. Like, we're coordinators, but I think we've just had a little bit of hesitancy and want a little bit more confidence, I guess. We've been doing the baby steps for about four years and we started with $134,000 in student loan and non- mortgage debt. And we found this house. We live about three hours away from family and we found this house that's pretty perfect for us for $80,000. And we just closed on it last week. So we have like a bridge loan for that. And we have our house in Kansas City under contract, and it's looking like we'll have about $132,000 in proceeds from selling our house. So we're just trying to decide, like, do we pay cash for this house in our hometown? It needs about $30,000 to $40,000 in renovations to be livable.

We need to pay off our student loans. We have about $16 five hundred left in that. We need about four thousand dollars for baby steps three. And so we just want to make sure we're like stewarding this money well and making a good choice with this halt on student loan payments and things like that. We've had some people kind of say it's dumb to just throw all your money at student loans right now. We don't owe anything. You should just hang on to that. Some people are stupid. Some people are stupid. You're a Financial Peace University coordinator.

You know the answer to this. I guess we're just nervous. So what would you tell somebody in your class? What is the Ramsey answer to your question? So work the steps. So pay off our student loans. Square away baby step three. And then I guess that's the issue that we're having with paying off the house and the renovations is just if things come up that it ends up being more expensive than we thought. Like we've done our due diligence and what needs to work on the house but there's always surprises that i don't want to back ourselves into a corner and then not have the cash

on hand to get it livable what is your household what is your household income 120 000 okay and what does it take to get confidence in the bids on the rehab because you're not confident in your rehab bids i think about 40 no i said what does it take for you to get confident that your rehab bids are accurate i guess just knowing once we start i think that's the surprise aspect no no no no no no, no. You are not confident that the rehab bid is accurate because you've told me four times that once we get started, we think we're going to uncover something. Something's going to come up. It shouldn't come up.

A rehab is a project. A project is estimatable. Get more bids. Get more contractors to look at it. Do more in-depth. figure out ways to get fixed pricing on some of these things so that you know you've got a complete job for x price and let's get more confidence in the rehab bids before you start the rehab okay okay because it listen if you were a hundred percent sure or 98 percent sure which you feel

like you're about 60 sure to me that it was going to cost you $30,000 to fix this house up, you could run this out and answer the question by running the baby steps. But the place you're stumbling is every time in the conversation you get to the rehab portion, you say, well, that part I'm not sure about, and that's what's scaring me. Yeah. Am I wrong? Did I miss something no i it's just i just think there's so many unknowns once you start tearing a house apart because it's an older home and you're worried that yeah they pull up the floor and it's all rotted underneath then you got to do the foundation again so yeah i mean you've

been in real estate your whole life dave so so, so speak on that a little bit. So pull up a piece of the floor and look at it. Right. Like we did. So when we closed on it, we found out there was like beautiful hardwood floors underneath the carpet. So that was like a big win, but like the foundation needs work and this is, this will be our fourth house. So we're a little confident in flipping it. Like we're not newbies. We're not getting in and in over our heads i don't think too much but like we've never had to do foundation work and what if like i don't know sometimes i feel with contractors it just like adds up and then adds up and adds up and it's in a new town where we haven't worked with people like what if we just end up with a bad contractor you've got to manage the project better than you're outlining for me

i ran rehabs for years. I built houses. We built buildings, commercial buildings here. And there's, you know, when we dig a hole next door over here, which we did the other day to put a building on, and the building's up now, we don't know in Tennessee whether we're going to hit rock or hit a sinkhole. It's an unknown. And so we can blow up a budget on a $50 million project

because you can have a million-dollar swing, and it can all go into a hole in the ground, right? And so what do we do to offset that? Well, before we set the budget, we do some core drills over there, and we find out what the flip the soil is, and then we go, okay, we've got some bad stuff over here in this corner, so we're probably going to add an extra $200,000 on that. And it's just another zero in your numbers, but it's the same process.

You manage the risk of the project by continuing to unfold and gather information on the project and tie things down. You can't just run around with your hair on fire going, I don't know, I don't know, I don't know, I don't know. That's too much stress. You can handle it as long as you know what it is, and you can manage through it, and you can decide, okay, we're going to have to not do this portion of the renovation until we have the money out of $120,000 income. So if I'm in your shoes, I'm going to do that. I'm going to get a lot more detailed in my due diligence, get actual contractor bids, multiple contractor bids on things I'm really unsure about.

You're unsure about the foundation. Let's get three or four bids, talk it through. You're going to start to see some trends in the way those guys are talking about that, and you're going to go, okay, I feel very confident now after talking to four different people that we'll be able to do it for X. And it's not 100%, but your confidence level goes up versus one guy goes, I don't know, with these foundations, once you start, you don't know what you're going to get. Well, you just got fired.

Okay, I'm going to get me another one, right? And so you just got to manage the risk on your project. That's what you're doing. And really, before you pay off the bridge loan you get all those numbers together but you do certainly finish getting out of debt you finish your emergency fund and then you're sitting on enough to we think pay off the house and do the rehab in the balance in the remainder but you've got them you got to get your details honed down tight tight tight tight pretend like i hired you to do rehab, and you had to report to me for the accuracy of your estimate.

And you were working for someone else, in other words. And then that forces you to not be sloppy with managing the risks on these details. Rachel's husband, Winston, runs all of our real estate. This is what he does all day long, isn't it? Oh, yeah, absolutely. Well, and that's what I was going to say, though, too. It's your family home. It's in a new city.

Again, those unknowns are there. And when you don't have choices, you don't have options, and you feel stuck in something, that's when the stress happens. But just like you said, though, I'm like, get a couple of bids. Get options. When you have options, that gives you power to say, okay, this is what we're in. This is the reality of what's going on versus it just being all up in your head, and you have one guy that tells you one thing, and that's it.

Okay, so, Kylie, at this point, you're debt-free, you have your emergency fund, and you have $110,000 sitting in the bank, and you have an $80,000 bridge loan. Okay? That's roughly where you're going to end up. And so you've got about $30,000. We have $30,000 for the renovation if we pay off the bridge loan, which was $80,000. And so now you've got to manage the project to get the house livable within $30,000 and then stage anything above $30,000 in phases to come out of your income,

which, by the way, you have no payments, and you make $120,000 a year. And so you can stage into that. I do not think this $80,000 house is going to, and you make $120,000 a year. And so you can stage into that. I do not think this $80,000 house is going to eat much more than $30,000. If it eats $40,000, the other $10,000 is in two phases, a $4,000 and a $6,000 phase that you cash flow out of your income, and you'll be able to do that easily because you have no payments. So that's how you're going to work it. But the stress will go away. Jim Collins talks about this in leadership and in business all the time.

And Dr. Deloney talks about this too, that a challenge does not cause anxiety and stress. The unknown causes anxiety and stress. And so that's what you're looking at right now. That's what I keep coming back to in your situation. The unknown is what's driving you nuts and making you go crazy and not follow the steps that you know to follow so all i'm trying to do is get this into a known situation we're gonna if you can get this house livable and i'll bet you dollars to donuts you can within 30 grand of rehab then you're gonna have a paid for house and you're probably gonna have some other work you want to do that you're

gonna cash flow and you're gonna do that in phases that's what the numbers sound like to me great job kylie thanks for being a coordinator by the way this is the dave ramsey show hey it's kelly associate producer and phone screener for 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 section or head over to DaveRamsey.com and click Dave Recommends. Thanks for listening.