The Ramsey Show - App - Advice on Respect, Boundaries and Family Guilt Trips (Hour 3)

Episode Date: June 6, 2018

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Live from the headquarters of Ramsey Solutions, 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. I am Dave Ramsey, your host. The phone number is 888-825-5225. That's 888-825-5225 that's 888-825-5225 adam is calling from ocala florida hi adam welcome to the dave ramsey show hello dave it's nice to talk to you you too um so so my fiance and i are here and we're uh we're kind of working through the baby steps a little bit

a little bit we haven't been through uh fpu but i've read the total money makeover and i've been listening to your podcast for about three years we've both been to the smart money tour um like i said we're working through about baby step two i make uh 55 000 a year um like i said we've been together seven years we do own our own home um she does not work currently. She goes to school pretty much full-time. So we owe about 10 or 11. I owe about 10 or 11 left on my truck. And outside of that, we're pretty much debt-free. Now, my question is, I don't know whether or not to consider... Something that's slowing us down is I'm trying to cash flow a lot of stuff. We're getting married in November. She's currently in school, taking a majority of her prereqs now with intentions of going to full-time for the core program for dental hygiene in June or August of next year.

And so we're just trying to keep from accumulating more debt, and it's slowing down our debt snowball just trying to pay things off. So I was just kind of trying to get an idea of, you know, what you kind of thought, what your ideas were on that. You said your income is what? I make about $55,000 a year as a fireman. Okay, and it takes $10,000 to be debt-free. Yes, sir. Now, I've also got some braces that are currently on.

They're not off, so that's about $1,500. What do you spend on the wedding? So we're spending, we're getting a little bit of help from her parents, about $3,000, maybe $4,000. But we're going to be coming out of pocket probably us about $10,000. We've already came out of pocket about three. So we've got, you know, six to eight left that will come out of pocket, maybe only seven. All right.

So if you want to be debt-free and be married in November, you need $17,000. Yes, sir. My intentions were to put the truck on hold, or not necessarily on hold. I'm getting my numbers together just a second. I wasn't asking your plan. So $17,000 pays for the wedding and pays the truck off, and then she's starting dental school as a dentist? Yes. No, sir, as a dental hygienist. Oh, dental hygienist. She's currently in school now, and we kind of cash flow the individual prerequisite classes as they come up.

And then the core program starts next year around June or August, depends on when she gets in. I didn't know you needed to have a four-year degree to go to dental hygienist school. She doesn't, but the way we have spaced out the prerequisites, they have taken about two years, and the program itself is equal. I thought she was going to school full-time. She is for the most part. I mean, she takes about two to four classes per semester. It's considered full-time, but, I mean, just kind of the way the classes and programs are laid out. I mean, this summer she's taken two classes.

Next semester she's taken two classes, but we're also being married, getting married. Last semester she took three classes. So it's pretty well full-time. She works a little bit with her mother under the table, but, I mean, it's only maybe $3,000 or $5,000 a year. Typically dental hygienist is full-time for two years it doesn't take a full-time student for two years to get ready to be a dental hygienist to get ready to start the program there's something broken in what you're telling me she so to start out she did not meet some of the score requirements in the college. So they tacked on some additional classes to get her ready for some of the curriculum, which has slowed her process down a little bit.

I did forget that. I'm sorry. Okay. And that makes a little more sense. Because typically when someone wants to go to dental hygienist school, they sign up, they go to school for two years, and they're a dental hygienist. That's the normal thing. Okay?

So that's what I was trying to figure out, how you have to be a full-time student to get ready to go. I couldn't get that, but what you're describing makes sense. Okay, cool. Yes, sir. So you're working, what are you working, three on and four off, or what? No, sir, I work 24 on, 48 off, and then I also work PRN four or five days a month at a hospital, which I'm trying to transition out of that to go be an instructor at a local state college,

which brings in a little more money. Yeah, you guys have got a lot of time on your hands that you need to be working and earning some money. Because $17,000 changes your life. Yes, sir. We're only 24, so we're trying to stay on track and keep out of debt. Yeah, I think $10,000 is reasonable for the wedding in this situation, or $7,000 more. contract and keep out of debt and uh yeah i i would i would you know i don't i think ten thousand dollars is reasonable for the wedding in the situation i think or seven thousand dollars more and i think um you know thirteen thousand dollar wedding it's not out of hand um but i don't think

both of you are working as much as you can be working and so i want you to you know because really i mean between now and november if you were to make an extra 2 extra thousand bucks a month each your problem is solved just like that so it's not that big a problem and so the good news that's the bad news or the good news the bad news is the way you're going to solve it is you're going to work more and just be debt-free pay the truck off pay the wedding off and by november because we work our butts off between now and then and then when she goes off to when you're married and she goes off to dental hygienist school, you pay cash for that as you go along, and we know how we're going to pay for that. We're going to work our butts off.

So this is how it works. It's where money comes from. And, you know, you've got a good career and you've got a lot of time off, and she's not carrying a full load. This is not that overwhelming. I work 40 to 60 hours a week while I graduated from college in four years. That's a full load. Okay, so I know what a full load is.

And, you know, nothing suffered except my little social life. That was all. Very little social life. But you've got to decide what your priorities are. You know, you've got to get this deck cleaned up. You've got to pay cash for the wedding. We've got to get her into school. These are a lot more important than whether we go out to eat or not, you know.

So let's work more. That's what I would do. Hey, man, thanks for the call. I appreciate you joining us. Open phones at 888-825-5225. You jump in. We'll talk about your life and your money. Lacey is part of our community, our private Facebook group called, it's the official one,

The Ramsey Baby Steps Community. The Ramsey Baby Steps Community. You can join it on Facebook if you want. Do you have a recommendation as to how much money to save for kids' college? Depends on where you're going, when they're going. I mean, you know, obviously college is going to go way up in cost for a baby that's born today versus somebody that's getting ready to graduate from high school. So what you need to do is look at what the college costs today. The average inflation rate of tuition for the last 50-something-odd years has been around 7.2%.

And so people talk about college going up through the roof. 7% is a very high inflation rate, but that's what you can calculate. It'll go along several years and not go up at all, and then it'll go up 25%. And everybody goes bananas. But the average is about 7% a year. And so if you'll calculate what the school and dorm and food and everything costs today, you know, if I had a baby today, I'd want to be aiming at $150,000 probably. That would be my target for a state school.

And that would take it for a new baby starting today, roughly. But, you know, you've got to look at that and figure out where they are, what it costs now, what you think it will cost then. And then that gives you your target. And it's a different target depending on what they're going to study, where they're going to study, and how old they are. Are high health care costs getting you down? Are you confused trying to navigate your options? Do you wish you could find an affordable, biblical solution to your health care costs? Based on New Testament principles, Christian Health Care Ministries, or CHM,

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Sarah's in Utah. My husband and I are firm believers in the financial principles you teach. We have some intense financial goals that have the house paid off within five years, and we're living off of beans and rice and limiting our activities that cost a lot of money. My husband's family does not practice the same financial principles we want to follow and don't respect our decision to live such a restrictive budget. They pressure us to go on expensive trips, eat out with them, and spend money on activities that are way out of our budget. How do we help them understand and respect our financial choices?

You can't. They don't. You just got to do what you're going to do. Now, I will give you clarification on this, Sarah. I don't teach people when they're in baby steps four, five, and six to be on beans and rice and have absolutely no vacations and do nothing with money. Now, if you want to do that, that's okay. I'm not mad at you for being intense and wanting to get your house paid off in five years. I love the goal. But what we teach is beans and rice, rice and beans, scorched earth, no lifestyle in baby steps one through three. Until you're debt-free and have an emergency fund in place, you should be petrified and

go crazy. You ought to be terrified and go crazy until you get that foundation laid. Once that's laid and then you start putting 15% away for retirement, saving for kids' college and baby step six is pay off the house, you're also making some purchases and have increased your lifestyle, let the foot off the gas a little bit, so to speak, during those baby steps. And typically people even doing that are paying off their home in about seven or eight years. That's the typical thing we find with the total money makeover baby steps so that's a point

of clarification that um you know i want you i don't want you doing what you're doing and say it's because dave ramsey said do it because it's i don't i don't that's not what we teach and so it's okay i don't think you're wrong but i i think you're pretty, and you said you're extreme. Now, if you want to do something extreme and your family doesn't understand, that's just called being a grown-up. I mean, if you don't make some choices that are different than your family agrees with, I don't think you are a grown-up. Everybody makes choices. My kids make choices they're different than i would do in different things and i don't control or run their lives and i love them where they are i have family members that vote for the wrong party and i love them anyway so and i i don't i'm not going to respect their choice on that because i disagree with it i think

it's brain damage and that by the way they think i'm brain damaged and they still love me so it's okay you know i mean that's just it but but if they can't respect you versus your choices and give you room to live your life, then they have issues. They're called boundary issues. And so, you know, guys, this is what we're doing. And we love you all, and we're sorry if you don't understand, but this is what we've chosen to do. And if you think we're a little crazy, we're okay with that. We're the crazy cousins.

Just say that. It's okay. Most family has crazy in it somewhere. You know, if you don't think there's crazy in your family, it's probably you. Everybody's a little crazy somewhere. You know, it's all right. It's okay. Most family has crazy in it somewhere. You know, if you don't think there's crazy in your family, it's probably you. Everybody's a little crazy somewhere. You know, it's all right. It's all right. It's all right.

We can love you right where you are. That's what we're going to do. And so bottom line is I can't make people respect me or my choices. That's a choice that is theirs to respect me or my choices. That's a choice that is theirs to respect me. Or my choices. And, you know, it's not, I mean, in a situation the other day, I can't remember where I was. Where was I? I was doing something with one of my buddies who's very wealthy.

And they wouldn't take a credit card, and neither one of us had one. And we were both laughing because we've got the money to buy the store you know but we can't do business i can't think where was i but it was like you know well this guy has a right to decide how to run his business he owns the business but i have the right to decide i'm not going to borrow using i don't have a credit card and so i can't i can't go in there you know i can't go in there um i can't help you with this i can't go in there, you know. I can't go in there. I can't help you with this. I can't do business with you. So it's just, you know, you have to just, the part of the breakdown and the civility

and the way people interact with each other and families and, for that matter, in society is everybody claims it's tolerance, but it's not tolerance at all. Tolerance is I'm going to let you do what you want to do. I'm not going to make you do something. But on the to do. I'm not going to make you do something. But on the other hand, you're not going to make me do something. That's tolerance. But, I mean, we've renamed tolerance to where I want you to do what I want you to do, and then I'm going to call that tolerant because I am the ultimate arbitrator of morality.

And so I'm going to tell you what you're going to do. And that's where civility starts to break down in families and in our culture today. Big time. Big time. Crystal is in the The Ramsey Baby Steps community. And that's the private Facebook group that you can join if you ask for it and jump on there. It is the official Ramsey Facebook group. And there's some fun stuff going on in there.

My mother-in-law constantly has to borrow money. She's not disabled. She's not elderly. She works full-time and splits rent with a friend. She always needs money, and that's my husband, her son, and he can't tell her no. What should I do? Go down to Walmart on aisle three and buy your husband a backbone.

That's what you need to do. This is not a mother-in-law problem. This is a man problem. He needs to man up. He can't tell his mommy no. Oh, well, it's family. You're supposed to stick up for family. No, you're not.

If your family's doing cocaine, you don't give them the money to do cocaine. Well, it's family. It's family. It's family.'t give them the money to do cocaine what's family it's family a new family family that's what people say when they're when they're blindly supporting stupidity and misbehavior and that's all this is this woman is lazy and she's disorganized and she is a travel agent for guilt trips and your husband buys the ticket. No boundaries. Another boundary question there, by the way. And get Dr. Henry Cloud on here. We haven't had him on here in a while. You know, come on, Henry, help us with these boundaries, right?

He's a lot nicer about boundaries than I am. I'm pretty brutal about them. So, yeah, your husband needs a backbone, so he looks at his mom and says no. Because he's not helping her. When he gives her money, he's harming her. Because he's funding her delusion that her life is okay. He's funding her misbehavior. He's funding her not fixing what's wrong with her life.

And I want her to fix what's wrong. I want her to be healed. I want her to fix what's wrong i want her to be healed i want her to win and so if i'm going to give her money i'm going to force behavior change that helps her and causes her to be wealthy later and i'm going to give her a leg up towards that with money but i'm not going to support her misbehavior because i'm too wussified to tell my mommy no. Man, we have a manhood crisis, don't we? Kathy is on Facebook. They currently have Primerica Life Insurance. It's not listed at Zander, so I wanted to know if you recommend it.

It claims to provide coverage until age 95. We plan to raise our coverage as our finances get better. Is this good or should I look elsewhere? Primerica sells term life insurance, and that's good. It is expensive term life insurance, and that's bad. So if you were to want to buy life insurance, you know, 15-, 20-year level term life insurance, and you go to Zander Insurance and you price it out, you will find it to be the cheapest because they're going to shop among a gazillion of the best and cheapest companies out there.

And what Primerica does is great. They sell term life insurance, and they sell investments in mutual funds, and that's all fine. But I'm not a fan of the actual products that they sell, and I do not endorse them, no. And that's why they're not listed on Zander. Because their prices aren't any good. It's that simple.

It's just like State Farm. You wouldn't buy a term from State Farm. You wouldn't buy a term from Nationwide. Their term sucks. It's very expensive. And so you can do much better at Zander Insurance. It's not just because they're my advertiser. It's a math thing.

Just go look at the price. Pretty simple. Zanderinsurance.com. You get a quick, easy quote. They don't sell your name to 14 people and you're going to get people out of timeshares. I told my listeners it's a horrible product and that, unfortunately, they didn't have a lot of options. Then a few years ago, I sat down with Brandon Reed, the owner of Timeshare Exit Team. Brandon walked me through the timeshare industry, and I learned that you can't sell them, the owner of Timeshare Exit Team. Brandon walked me through the timeshare industry, and I learned that you can't sell them, and you can't even give them

away. And then we talked about Timeshare Exit Team's process. Every ownership situation is different, which is why they have more solutions than any other company. And that's when they earned my respect. Don't call any of the imposters out there, and there's a lot. The only timeshare exit company I stand behind is Timeshare Exit Team. They have exited thousands from their timeshare burden this year alone. Yes, you will write

them a check, but they stand behind their guarantee. They will get you out, or they'll give you a full refund. Call 844-999-EXIT online at timeshareexitteam.com. Jim is in Atlanta. Hi, Jim. Welcome to the Dave Ramsey Show. Hello, Dave.

Hope you're having a great day. You too, sir. How can I help? Fine. Well, I'm getting ready to retire, and we have a net worth of about 1.6. And my wife is a little worried that there's not going to be enough income, but we're going to be able to put, without touching 401ks, about $100 less a month than we're putting in now.

My problem is I've got to convince her because she thinks we both need part-time jobs. That's cute. Well, it's a pretty simple math thing. Do you work with an advisor, a financial advisor? Yes, I have been, and he's looked at it, and he's told her three or four times that everything's fine, you're set to go, have a nice retirement. Yeah, so she just doesn't trust his judgment. Doesn't trust anybody's judgment.

I mean, we're old school. We both grew up in the 60s, and money was hard to find, and we've done a lot to save money. Obviously. You've done a great job. Did you inherit any of this? Maybe about 10%. So like $150,000? Yeah. Okay.

Wow. Okay. So you did this on your own. Well done. Very well done. So the $1.6 million is broken down how? Probably about $500 in our house that's paid for, and about 90% in 401ks, and that and about 10% in cash. Okay.

All right. And so you've got a million dollars in 401ks? Yes, right around there, yes. In good mutual funds, I assume. Yes, they are. Okay. Here's what I would do. I would pull up the track record on the mutual funds for the past five years.

Okay. On your actual portfolio. Have your advisor do that. And what is the average rate of return on our portfolio per year for the last five years? Let's pretend for the fun of it that that's 10%. Okay? Okay. Because that's easy math.

10% of a million dollars is $100,000 a year. So if our portfolio, darling, continues to grow at the same speed exactly that it has for the last five years, we can pull $100,000 off of it, and there will always be a million dollars there. Okay. And just show her that math. Okay, that's easy enough to do. If that math does not set her free, this is not a financial discussion anymore.

It's an emotional discussion and she's not being reasonable in other words okay if it's simply she's a hard-working lady who saved her whole life and is just concerned that we continue that we don't go crazy and we're okay then let's set a budget you know where it looks like our investments are going to make a hundred thousand let's set a budget where we pull off no more than $80,000 a year. Can we do what we want to do on $80,000 a year plus Social Security income? Right. We both have Social Security.

We both have retirement programs. Oh, okay, on top of that. And so you go, this is our budget. And you could even go bizarre if you want. How much is all of that not counting pulling income off your nest egg? I'm sorry, your pensions and your Social Security total up to what? About a net of about $5,500 a month put in the bank. Did you say 65 or 55?

55. 55, okay. And so we're talking $65,000 a year. Now, what do you think you guys are going to spend to live the life you want to live at retirement? We'd probably spend just about what we're doing now, about 60 to 65. Okay. And so here's another way to explain it to her then as an example. All right. We're going to live our normal life without touching the investment income. The income is going to continue to grow at $100,000 a year.

I'm going to spend half of that to have fun, and it's still going to grow at $50,000 a year. Do you see that, darling? And she's going to go, woo-hoo, let's go on a cruise. Yes, she will. At least I hope so. Because, in other words, we're not even going to spend half of the dadgum income, much less never touch the goose that's laying the golden eggs. You're just in such great shape.

You're in such great shape. You're in such great shape. So it makes me feel, you know, I'll give her those, and I'll have the consultant bring down the last five years, and here it is, you know. This is real numbers. Yeah. And so you're not listening to Dave. You're not listening to me.

You're not listening to our advisor. Look at the math. Tell me what's wrong with this plan because I'm not working a freaking part-time job, darling. This is absurd. Look at this math. We're going to go play golf. We're going to go fishing. We're going to go on a cruise.

We're going to give some money to the kids. We're going to have fun with this. We've worked like no one else and lived like no one else, and now we're in a position with almost $2 million to live like no one else. Well done, sir. What did you guys do for a living? I was in sales, and she had been in HR. What was the best income year your household income ever was? What was the biggest income year? Probably household income, whatever it was? What was the biggest income year? Probably about $180.

Never made over $200? Never made to $200. Consistently, some between $125 and $135 consistently for the last seven, eight years. Five years ago, we made a conscious effort, pay the house off, pay the cars off, pay everything off. Way to go. And we did. Very well done. You have played this perfectly.

You've done it. I mean, you are an everyday millionaire. You are a rock star. Well done. I'm so honored to talk to you. Thanks for calling in. But that's what I would do. Say, okay, we're going to set our budget up on 65,

and we're only going to spend half of the money coming off the nest egg, which means not only will we never touch the nest egg, but it's going to grow by $50,000 a year. So next, you know, in two years, we're going to have a million one in there. In three, in four years, we're going to have a million two in there. That's crazy. It's awesome. That's an everyday millionaire I was just talking to, folks. Now, why do I stop for a second and ask them questions?

For you. You. Because you, some of you think all millionaires inherit their money. And all of our data points say almost none of them do. It's less than 10% of millionaires become millionaires because of inherited money. Now, he inherited some money, but it didn't make him a millionaire. If you got $1.7 million, it wasn't because you inherited $1.70. That's not where it comes from.

It came from steadily, consistently investing in his 401K. A few years ago, I'm quoting now, I paid off my house and cars, and I don't have any debt, and it's continued to build wealth. And out of his $1,600,000, $500,000 was his house. It's a model case study everyday millionaire. Usually about a third is a paid-off house. If your net worth is between $1 million and $5 million, it's usually around a third, really between $1 million and $3 million.

Around a third is a paid-for house, and the other two-thirds is in retirement savings in your 401K and your Roth IRAs and good growth stock mutual funds. They didn't get rich quick. They didn't hit the lotto. They didn't play in the NFL or the NBA. These are people that do it all the time. So why do I ask them questions?

I'm going to do it tomorrow, and we're going to do an Everyday Millionaire Theme Hour with Chris Hogan. Mr. Everyday Millionaire, yeah. We're going to talk about it again tomorrow. But why do I do this? Because I want you guys to not believe the mythology that some of these cray-cray people out there are saying about where wealth comes from. Wealth comes from you. It's not a government program.

It's not luck. It's not a government program. It's not luck. It's not inherited. It's not for the rich and famous. It's not for the super bright. It's not for the super high income earner. A high percentage, like almost all of them, I can't remember, it's like 85%, 86%, have never made over $200,000 household income in their life.

And so all they did was just steadily invest and pay off their house and never borrow money. It's really what they do. And so can you do that? Yes, you can. Will you do that? Only you know the answer to that. But if you don't, there's nobody to blame but you. It's not society's fault.

You're not a victim. This is the Dave Ramsey Show. With more frequency than you know, I get calls and emails from people dealing with the recent loss of a spouse or a parent. You can hear the struggle and the heartache that they've been experiencing. And at a time they should be grieving, what breaks my heart the most is the strain and tension that they're going through because of money, especially when it's a situation that could have been avoided. If you have a family, it is your responsibility to have term life insurance.

It's one of the things you do to say I love you. And yes, this is an ad for Zander Insurance. But since this is one of the most effective ways I have to get my point across, so be it. For over 20 years, I've been telling you about the importance of term life insurance and protecting your family. Listen, you need to check out Zander.com or call 800-356-4282. I can't say it enough. Protect your family. It's what you're supposed to do. Go to Zander.com or call 800-356-4282. Our scripture of the day, John 5, 8, Jesus said to him,

Get up, take your bed, and walk. Frank Lloyd Wright said, Get up, take your bed, and walk. Frank Lloyd Wright said, business is like riding a bicycle. Either you keep moving or you fall down. This is true. You will fall over from a lack of momentum if you stop. I completely agree with that. Paula is with us in Seattle.

Hey, Paula, welcome to the Dave Ramsey Show. Hello, thank you for taking my call. Sure, what's up in your world? Well, I'm about 59, coming up on 59 and a half, and I'm still working, and I'm questioning whether I should be putting that 15% into 401k and savings, or should I start to look at the mortgage and the second on the mortgage of the house and pay that off? How much, what's your income? It's commissioned, so it goes $125,000 to $150,000. You're single?

I am, divorced. And what do you owe on the house total? I owe on the house total $250,000. Okay. And you make $150,000, and you're $60,000. Okay. And how much of that's the second mortgage? About $50,000.

Okay. And how much is in your nest egg today, your retirement savings? $610,000. Okay. All right. If you do nothing with that, it will double about every seven years if you have it in good growth stock mutual funds. Yes, that's what I have, sir. Okay.

And so at 67, if you've done nothing but pay off your home, you would have over a million dollars in a paid-for home. Yes. Okay. So I'm not scared for you is what I'm saying. You have done a wonderful job. I'm a little nervous about this mortgage, and I want to lean on it pretty hard. How hard are you willing to lean on it? Because I want the house paid for before you quit.

When do you plan on quitting? Oh, it can't happen soon enough. I would like to tomorrow, but I understand the reality. I will work part-time. I will come up with something. I'm a fan of Christy. Well, no, I'm talking about paying off your house. I mean, if you worked two years, if you stopped your 401K and you worked two years like a maniac, you can pay off the house.

Yes, I could. I mean, but you're going to live on nothing. It might take two and a half, it might take three years, you know, two and a half, three. Depends on what you make and all that, right? But, yeah. Right. three depends on what you make and all that right but yeah right and so yeah i would stop my 401k and i would go headlong into this house for two to three years and be done and then i would retire and start my christy right thing and i'll and start my my business yeah or you can start your

business on the side if you just want to go absolutely crazy you know a side hustle side hustle be fine. So, yeah, that'd be great. So hold on. I'll give you a copy of Christy Wright's book, Business Boutique, Equipping Women to Make Money Doing What They Love. You're definitely a go-getter, kiddo. You are after it.

I'm proud of you. And you're going to be fine. But you do need to make paying off this home a very quick priority, and then you can afford to shut down the income. Because if you're sitting there with a paid-for house, and at that point, $800 to a million in mutual funds, and you retire, you're in great shape. You did it. Ta-da.

You know, you're a millionaire plus at that point, and you've done a great job. Wow. That's two of them I've talked to in two calls back-to-back. Pretty impressive. Nona's with us in Wisconsin. Hi, Nona, how are you? Hi, thanks for taking my call, Dave. Sure, what's up?

Hi, so I was wondering, I am wanting to start a business, a coffee shop, and I'm just working on the business plan right now. So I've been trying to figure out what the expenses will be. And I'm wondering, before opening the shop, should I save like a three to six months of the projected expenses? No. Or how much should I save before opening? Well, obviously you need to pay cash for anything you're doing with the opening. Right, right, of course.

Okay. But then past that, once you've done that, then you have to have more savings. Well, you need some cash reserves in case you've got a hiccup or two as you go along. But you don't have to have three to six months saved at that point. I would, once you start making a profit, set aside a portion of your profit to build up your retained earnings. But you're retaining some of the earnings at that point, meaning that as you make money,

we're going to save some of it for business purposes before we take it all home. So I would wait to build up your emergency fund by and large until you're open and profitable but you need enough to make sure you can run and stub your toe a couple times as you as you get the thing kicked off because i don't want you to be cash poor and almost get there you know okay yeah well i'm just i'm just worried that i if i save the money for like one month just to get it open and what happens if i don't make enough money in the first couple of months to pay all the bills yeah you need to cover your opening expenses until you become profitable. That's different than an emergency fund. That's just planning to stay open until you're profitable. And so how many square feet is the coffee shop?

I haven't really found an exact location yet, so I'm not really sure. I think it would probably be around 7,000 to 1,000 square feet. Okay. And why would I come to your coffee shop instead of one of the other ones? Because... Sorry. That's okay.

My goal is to work with other small businesses to do everything in the coffee shop and also be environmentally friendly and sustainable. So I haven't really found my target audience quite yet on that. I'm still working on that as well with the business plan. The question I just asked you is called your brand differentiation. Okay. How do you separate yourself from your competition? Why do I want to buy one pair of jeans versus another, one car versus another,

drink one cup of coffee versus another, or drink a cup of coffee at your place versus someone else? And you need to think through there's going to be a few people that will become come in because of environmental issues but not many right most people are going to come in there because your coffee rocks and the environment is booming and there's something some kind of a vibe in there that i love and so you've got to think about what it is you're trying to put into the marketplace that causes somebody to drink coffee at your place instead of wherever else, instead of the competition.

And the competition could be McDonald's. The competition doesn't have to be Starbucks. The competition could be the cafe down the street, the Meat and 3, that's got sausage and eggs in the morning, you know, and their coffee's not that good. But everybody goes down there. Why? Because the community, right, or whatever. So you've just got to think that through, and that's why I challenged you on that.

Because if you've got all of that stuff dialed in, that helps you. You're presenting a very unique, fun thing that's exciting that people want to do because it's different and they like the different part, the brand differentiation. They like that it's different. And that's what you're aiming at here. So I want you to work on that part of it. I'm going to send you a copy of Christie's book as well, Business Boutique, Equipping Women to Make Money Doing What They Love. Did a business boutique segment here. That's cool.

That's wonderful. And so just make sure you've got all of that dialed in. And I would jump on business boutiques community there at the business boutique academy and try to, you know, try to get some insight from some of the other ladies. Some of the other ladies in the academy, I'm sure, are looking at coffee shops somewhere else, and they might be able to give you some real insight on stuff like brand differentiation and how much of an emergency fund that you set aside you know how much you want how much and it's not you know it's really how much advanced cash i need until i'm profitable how long is it going to take me to be profitable and you can

learn that as you study other people in the same industry, even if they're not in your town. So you can learn both of those things from them. It's best practices are what you're looking for here. So, really good question. That puts us out of the Dave Ramsey Show and the books. Our thanks to James Childs and Kelly Daniel. They're in the booth. I am

Dave Ramsey, your host. We'll be back with you before you know it. In the meantime, remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus. Hey, it's Kelly Daniel, associate producer and phone screener for The Dave Ramsey Show. Did you know that in 2017, Dave Ramsey Show listeners paid off $50 million of debt? That's pretty impressive. And it could be you this year.

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