The Ramsey Show - App - Are Franchises a Good Idea? (Hour 3)

Episode Date: October 15, 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'm Dave Ramsey, your host. You jump in, we'll talk about your life and your money. It's a free call at 888-825-5225. That's 888-825-5225. Jim is with us in Phoenix. Hi, Jim. How are you? I'm great, Dave. How are you today?

Better than I deserve. What's up? Well, I'm excited that you have led my wife and I on a clear path to a much better situation. Not that we were in a really rough spot, but it feels a lot better being where we are now. Amen. We are very quickly approaching the end of Baby Step 3. In January, we'll be six months plus. And so my focus now is four, five, and six, and reading your book and going through the classes actually more than once. And what I'm really faced with is our house.

We moved in in 2006, and we paid $252,000. According to Zillow and casual conversation, we're not at the $252,000. So after 12-plus years, we're not back to our original purchase price. That's weird. Yeah. Well, you know, Phoenix got hit really hard by the housing bubble. I also know it bounced back really hard. I'm sorry?

I also know it bounced back really hard. And a lot of people, even across the street, have doubled the price of the house they bought a couple years after we did. We bought on the right side, on the downside of the top, but we're still not back there. I guess maybe it's our neighborhood worse than others, but we're not there yet. As we approach 4, 5, and 6, steps 4, 5, and 6, I have two teenage sons. We're going to be faced with college here soon. I'm very excited to get back into our retirement planning, which we put on hold back at the beginning. And so now I'm just trying to figure out if we just forget the house and not put anything.

Well, they're in order of priority, 4, 5, 6, but done simultaneously. So the way that might sound would be you start with 15% of your income going into retirement. That's baby step four, period. Unless you're in an emergency situation, you do that. Now, and then you move on to kids college. You've got college looking down, you're looking down the barrel of a gun on college. And so that's probably going to take everything beyond your 15% going into retirement. And you're right, the house is probably on hold for a little while. You've got two teenagers and no college funds. You've got some catching up to do, right?

Yes, sir. Yeah, so you're going to probably, five is probably going to suck up all your extra money right now because of the situation you're in, the age of the kids, before you get to six. So you're just going to keep paying your kids, before you get to six. So you're just going to keep paying your house payment for now and get these kids through school. And as quick as you get school, quote, unquote, taken care of,

meaning that you've got enough money for them to finish without debt, then you start reaching over and knocking extra on the house at that point. And the value of the house or the in or the value of the house increasing or decreasing during that time uh would just dictate whether i keep that house but it wouldn't dictate whether i switch the baby steps right and is there an unconventional thinking that maybe we haven't thought of as far as the house i think we're we did do a um how loan several years ago to help us out with a loan rate decrease. That was good. But, again, we're still 24 into it.

I can't see paying money to go to a 15 even at this point. It would cost money to save money. It seems like it would just be well i would prefer yeah i'd prefer you pay extra on the house after you've gotten college for 16 year olds lined up that's what i'm saying right and so you're paying minimum payments on the house right now until we get this college thing now if you told me you had a one-year-old and a three-year-old i would say well let's just start something for kids college 50 100 bucks a month or something so we know we're kind of exercising that college muscle and then we'll reach over and knock the

house out you know uh but but in your situation what's your household income right at 100 a little bit okay that's good okay and you owe to something on the house still no we owe 177 oh good okay good so and the the kids are what age 16 and no they are uh 14 and 13 14 and 13 okay i thought somewhere like 16 man okay uh well and so you got four years and five years before they go to school if you watch what you're doing and they choose in-state schools, you probably could get that funded by the time they get there. And then you're done. And then after that five years, just whatever's left on the mortgage, we reach over and start

beating on it. Yes, sir. And of course, during that time, typically, your income's going to go up. That's what we work for every day, right, sir? Exactly. Well, I mean, typically, incomes over time go up, plus or minus situations, you know. But typically, that's what you're faced with. So you're heading in the right way.

You're doing the stuff right. I'm just going to move that college thing up because you've got teenagers. And it's not move it up. I'm going to load it up before I move on past five, baby step five. Sadie is in Olympia, Washington. Hi, Sadie. How are you? Hi, Dave.

How are you? Better than I deserve. What's up? So I'm a really new listener. I'm probably at baby step maybe zero in just prioritizing. But listening to your show, it got into my mind. But my husband and I are very fortunate. We do have about a $2 million net worth, and we have zero debt.

Amazing. You've done all the baby steps then. You've done all the baby steps then. Okay, great. My husband's almost 40, and I'm 36. We have a 10-year-old and a 2-year-old. I'm sorry, a 10-year-old and a 2-year-old. I'm sorry, not 2-year-old, a 5-year-old. And we decided that we were going to relocate, and we purchased a franchise.

It's non-operational right now. We're gearing up toward operating. Okay. So that was kind of our vision is to invest in this and make it grow and, you know, move that direction. But I wanted to kind of get your take on franchises. And then we have a zero income right now, too. So we're living off of savings while we're going. You should be living off of investment income. If you've got a two million million net worth. Don't you have some income? Well, it's just growing.

We sold two homes, so we took some of that cash, and that was what we set aside for living expenses for the next few years. Okay. And then that's been kind of what we've been doing. I would hope if you have a $2 million net worth, if you were making 10% on it, you'd be making $200,000 a year on your investments, or at least $100,000 a year. I mean, surely your investments are making you something. Anyway, my take on franchises doesn't really matter much because you've already done one, but here's what I would tell you. You're going to find it to be a love-hate relationship. Most franchisees do, and most franchisors do.

The love is they teach you how to do something. They give you some market and some brand awareness that you might not have had on your own in the marketplace, and they teach you processes. They'll teach you how to run that particular business. It's all very valuable. Not always, but most of the time it's valuable and worth what you pay for it. That's the love part.

The hate part is for the rest of your life, you're going to pay them a percentage of your business, a royalty usually on gross sales. And after a while, you start thinking you did this by yourself, and you get kind of resentful of that. But right now, it's all love. So I hope it works out for you. It does for a lot of people, but that's what you have to guard against. This is the Dave Ramsey Show. You know what I've learned after talking to so many people who have been victims of ID theft? They feel violated and they have a sense of fear and intrusion.

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First of all, it's such a great honor to speak to you. And my question is, I've just immigrated to the United States, and I've lived a frugal life, like saved my money, been careful with it. But since I've arrived in the United States, I've had some of my acquaintances tell me that your frugal living will make your social outcast here if you do not buy an expensive watch, an expensive car, and all of those status symbols, you will be treated as a social outcast, and I'm keen to understand what would be your take on that.

Love it. Where did you immigrate from? United Kingdom. United Kingdom, okay. And where did you grow up? I was born in India. I immigrated to the U.K. when I was 17. Okay. And you're how old? 29. Okay. And how long did you live up? I was born in India. I immigrated to the UK when I was 17. Okay.

And you're how old? 29. Okay. And how long did you live in the UK? 11 years. Were you a social outcast there? No. Okay.

Well, where did you live in the UK? A city called Bath. Right. A pretty good-sized city. It's a nice city. Yeah, a very legitimate city. And you weren't a social outcast there for being frugal? No, but I was like—

Where do you live in the United States? I live in San Diego. Oh, there it is. You might be a social outcast there. No, I'm kidding. I'm kidding. There are people in San Diego that have common sense as well. So I don't know what crowd you're running with there,

but it's different than the one you ran with in India or the one you ran with in Bath, for sure, because they have been bitten by the bug of consumerism. But plenty of Americans in any city will not consider you a social outcast for having good common sense values. Now, that's assuming, you know, if your clothes are not necessarily expensive, but they're at least clean, and your watch, I'm worth well over $10 million. This building's worth $20 million that you're standing in. It's paid for. And that's my watch. It's pretty unassuming.

I think it costs about $150. million that you're standing in it's paid for and that's my watch it's pretty unassuming um i think it costs about 150 bucks um problem is i don't care what you think and if you think if you think i'm cool because i have a watch i don't really think you're cool so um you know that's the thing you got to decide who you want to influence you um and where you want to end up. So what brought you to the United States? Why did you come here? It was a childhood dream that I had. I read somewhere that because this country guarantees freedoms to all people, the Supreme Court had ruled that no one can be forced to recite the Pledge of Allegiance. And that just got hold of me.

I was about 12 years old. And I tried to apply that in my school in India. Look at how naive I was. I didn't realize the American Constitution in my school in India, as naive as I was. I didn't realize the American Constitution doesn't apply in India. And I actually got, the teacher pulled me out. You got in trouble, yeah. I did. I got sent to the principal, and I said to the principal, one day when I make it to the United States, you won't be able to do this to me anymore.

So freedom. That is correct. Freedom. Okay. And now people are trying to take your freedom from you with forcing you to conform to something using a social pressure but not a law. Okay. And so I would treat it exactly the same way. As hard as you have fought through 29 years of your life to get to be standing here, I wouldn't surrender my freedom to stuff. All in the name of someone being impressed.

Generally speaking, here's a good rule of thumb. People who are impressed by things that you have or wear are not impressive people when you get inside of their hearts and inside of their minds they're what we would call shallow and so um the very people you might attract by having some bling by having some jewelry or some watches or the proper clothing are the people that you really don't want influencing your future and your character and your life. You've paid a huge price to get to be here and enjoy this freedom,

and so you're a man of character. And so the people that are telling you that are probably not people I would want to be influencing me. I might want to influence them and try to help them. But if I were in your shoes, I would say that doesn't need to be your inner circle that are teaching you how to live, mentoring you, discipling you, and so forth. And so, you know, check out folks that have a little more depth of character and aren't judging you based on what you drive. Now, again, it needs to be. If you drive an old car while you're trying to achieve a financial goal or something, well, it needs to be clean and maintained. You know, take good care of it.

But it doesn't need to be dirty. It doesn't need to be the same thing with your clothing or your hair or whatever else. You take care of the things that you have and manage them. But most wealthy people do not buy expensive things to impress other people. A few do, but most don't. That's how they became wealthy. Now, they do buy some expensive things. I buy some expensive things, but they're for me and for my family and for my wife and that kind of thing.

And they're not for what someone thinks. I've got a really nice home, but I didn't buy it for somebody else. We live there. And what you think about it, good or bad, doesn't really matter to me. And so, I don't know. Is that helpful? Is that a helpful part of the discussion? Is that what you were looking at?

Yes, sir. I think I needed to hear that. Okay. What are you doing for a living? I work in IT. In IT. Okay. What do you do?

A developer. You're a developer. Okay. All right. Well, you probably need to come to Nashville and work for us. Sonny, it's an honor to meet you, sir. It's a pleasure to speak to you. You've got quite a story, brother.

Quite a story. Well done. Thanks for stopping by. Thank you, sir. Open phones at 888-825-5225. This is the Dave Ramsey Show. Dee is with us in Atlanta. Hi, Dee.

How are you? Hi, I'm well. Thank you for asking. Sure. What's up? I wanted to ask if I should sue my tax preparer since she reported false information on our 17 taxes and as a result we are being charged that $10,000. You're being charged $10,000 in penalties? Yes. Not taxes?

I want to say they're taxes and penalties. It shows a percentage on the information as well as the cost. False information? She lied intentionally and you can prove that? Yes. Why would she do that? I guess to get us back more money. I don't know.

Like, for instance, she claimed that we have a business that we don't own. She claimed that we are paying for cars that we don't own. She claims that we were paying for mileage for this business, again, that we don't own she claims that we were paying um for mileage for this business again that we don't own that's weird yeah i mean did your husband have something to do with this no he doesn't he he says we should sue her no i mean just randomly out of thin air she dreamed up a business that you don't have and cars you don't have and mileage that you don't have. Right. Now, we have a church, but, you know, churches don't get taxed.

So there was no, there's nothing in the documentation that mentions anything about the church. It doesn't use our IEN number. It doesn't use our 501c3 number. It's just this random. Are you doing work outside the 501c3 as evangelists that you're being paid outside of the church? No. You don't do speaking engagements and get paid for that on the side?

No. Everything's through the church, 100%. Yes, and even for the church, we don't make any money for the church. It's its own entity. We both work independently through another company. I see. You're bivocational pastors.

Okay. Yes. Okay. Well, I think if there are, I don't know, you need to see an attorney is the answer to your question, because I don't know whether you have grounds to sue someone or not. This is a very bizarre thing that someone would do this just out of the blue. It's not a mere mistake. I mean, it's a complete fabrication.

And so, I mean, this is like fraudulent activity on your behalf. Now, you signed the tax returns, though, didn't you? No, everything was digital. Yeah, but you had to see the tax return. You didn't allow someone to send in tax returns that you didn't see, surely. You may have trouble. I don't know. You need to see an attorney and ask them.

My guess is the most you could hope to get back would be the penalties, the taxes you already owed and you still owe. The penalties are due to them not being paid on time due to this, and I think that's the most you might get back. I don't know. Ask an attorney. Can you believe this real estate market? Home shopping has become so competitive. There's a ton of new buyers in the market, and bidding wars are the new normal.

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Hey, guys, how are you? Good, Dave, and you? Better than I deserve. Welcome, welcome. How much debt have you two paid off? We've paid off $81,165.60. Cool. How long did this take?

18 months. Good for for you and your range of income during that time um during that time we started at about 120 and we had kind of a temporary increase to about 155 to 160 ish but then we'll kind of go back down to 125 okay what do you guys do for a living um i'm a stay-at-home homeschooling mom. And I am a contractor working overseas. Okay. What do you do? Well, I primarily work as an aircraft mechanic and inspector. Oh, okay. I'm advising in non-destructive inspection.

Gotcha. Okay. And so what kind of debt was the $81,000? It was mostly credit cards, and then we had a car, a tractor, and a Disney Vacation Club timeshare. Oh, goody. And you guys had a little bit of everything. How long have you two been married? Almost 21 years now.

Okay. What happened 18 months ago? Well, I had, because my work is kind of cyclical, I work about 60 days on and 60 days off overseas. I, for a long time had, or for the first couple of years of my employment, I had the opportunity to do extensions. And we used those extensions, which kind of worked out like overtime, to kind of cover expenses and make things fit and all that. And then about 18 months ago, I was told that we wouldn't be getting any more extensions. So I was overseas at the time in an area where I couldn't really call Steph.

I had to do everything by text, and I texted her and said, here's what it's looking like, which understandably, the way we were doing things upset her quite a bit. Yeah, your income just dropped in half. Yeah, yeah, it just took a big hit to the income there. And she was pretty upset about that. So we were considering cashing out my 401K to pay things off and to kind of make ourselves whole again. And then what happened at that point is when we got done texting that night, I was, like you said, very upset. I started looking into the 401k option. I didn't like that option

because we've already in our past of 20 years cashed in a couple of my small retirements when I quit jobs. And so I called my brother at like 11 o'clock at night. He works nights so I can talk to him and I called my brother, Charlie, and he kind of ripped me is what he did. He called a Dave Ramsey on me because he said that, you know, we made too much money to be this broke and he told me that we could, you know,

he started telling me we could sell this or sell that. And he started talking about selling the car and selling the tractor and selling the truck and the van. And I kind of came up with excuses for everyone and, you know, wasn't really listening very well and hung up like in tears, just crying and tried to go to sleep, but couldn't and ended up getting up out of bed, went into my office, got on the computer, and started making a spreadsheet. And I sat down, and the first thing I looked at was the car. It was the only vehicle, other than the tractor, that we owed money on still.

We had my minivan was paid off. My minivan is now over 200,000 miles, but wasn't worth a lot, so I didn't see that being helpful. But we had a unique opportunity with the car because we happened to own one of the Volkswagen diesels that was part of the scandal. Yeah, you could come out of that on top. Yeah, and they were offering us, you know, we could do the buyback or keep it, and we were planning to keep it, but I looked at the options and started looking at if we did the buy back and got the cash settlement and got rid of the payment and the position it would put us in, and it actually had us at that point

to where we would pay off in 36 months. And so at about 2 or 3 o'clock in the morning, I called my brother back and told him what I'd been doing, and he said he would buy us FPU for Christmas and allow us to do the program at home. We kind of live in the middle of nowhere. And then I told him that I would text Pat the next day to talk to him, and I was a little nervous because the car was kind of Pat's, and I didn't think he'd be on board with it. Yeah, you got the minivan. Now Pat's driving the tractor.

Yeah, exactly. He's like, I'm not driving the minivan. But yeah, I texted him, and surprisingly, he was like, I told him about my spreadsheet, that I'd made this nice color-coded spreadsheet, and I sent it to him. And surprisingly, he came back with, let's do this. So, Pat, you were ready, too.

You were sick of this. Oh, absolutely. Yeah. And then you come home, and you guys go to Financial Peace University. Well, we didn't end up going to it. We did it through the program at home. The home study. Okay, I got you.

Yeah, our church is an hour and a half away right right now nowadays you could just watch it all online but it was different then yeah very good you guys so what is the key to getting out of debt you paid off 81,000 in 18 months what did the volkswagen sell for uh the volkswagen the well they paid off the loan of $17,000. Okay. And then we also got about an $8,000 cash settlement on top of that. Okay. So you got 25 of the 81 with that one move. Yes.

Yeah, all right. And then what is the key to getting out of debt then? You did it in 18 months. I would have to say, for me, it was communication, close communication, to where both of us know exactly what's going on with everything all the time, rather than in the past where I had largely let her kind of control everything. Which she did as good a job as i could possibly expect exactly but she was by herself yeah but she was by herself i didn't have a full understanding of what was

going on right how it was being done exactly where we were i knew small numbers i did not have the big picture and you know guys being visual, the spreadsheet gave me the big picture in color-coded clarity. So, Stephanie, you lost some of the control when Pat got involved, but you gained someone else's shoulders to help carry the load, right? Yes. It became amazing. Actually, what happened with Pat with this was beyond flabbergasting to me, because he got so on board that what, and God honestly had a huge impact in we started. And then about, maybe about a year into it, he gets a call. He was home during one of his trips. And he gets a call from work saying he'd just gotten back three weeks before, but they needed him to come back a month early.

And he gets off the phone, and he's like, what do I do? And I'm like, I don't know. Do you want to go back? And he's like, well, what would it do with our debt? And so we were out of town, and I don't even know how I got my spreadsheets or numbers if I just knew them, but I sat down and was sitting in my brother's house actually calculating, and I'm like, you know what?

If you do this, we could be out of debt in June instead of, you know, another year and a half. And it was like, wow. And I think he jumped on board, and he actually told them that he would extend for the month if they would give him an extra two weeks on the end as well that would guarantee us to get it all paid off in that time. Congratulations, you guys. We're so proud of you all. Thank you. We've got a copy of Chris Hogan's retire-inspired book for you.

That is the next chapter in your story to be millionaires and outrageously generous as you go along. Patrick and, go ahead, right quick. Can I share one other thing that was kind of... You've got ten seconds. ...for me was, one of the big keys for me was

setting an example for our kids. I think teaching our teenagers about this has made a huge difference. That was... Patrick and Stephanie, $81,000 paid off in 18 months. Making $120,000 to $155,000.

Count it down. Let's hear a debt-free scream. Okay, Hunter's going to count us down. Here you go. Three, two, one. We're debt-free! I love it! Our Scripture of the Day, James 4.10,

Humble yourselves before the Lord, and He will lift you up. President Harry S. Truman said, It's amazing what you can accomplish if you don't care who gets the credit. Very true. Very true. Actually, several different presidents have been credited with saying that. I hope it was Truman. I also saw it was Reagan once. It's been around everywhere.

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So if you're interested in being a financial coach, we'll show you how. Don't miss our free live webinar Thursday, this Thursday, October the 18th. To register for our free webinar, text the word COACHING to 33-789. That's COACHING to 33789. That's COACHING to 33789. And don't forget, by the way, we sold 1,000 of these on Saturday at the Smart Conference. The Everyday Millionaires. Oh, yeah, Everyday Millionaires, How Ordinary People Built Extraordinary Wealth and How You Can Too. The book is on sale, pre-sale now.

It's based on the largest millionaire study ever conducted with 10,000 U.S. millionaires surveyed. The results will blow you away. And if you want to learn what this study says, Chris Hogan, number one bestselling author, Ramsey Personality, has written this book. It will be out in January. If you preorder it for $20, we're going to bribe you to preorder it. $50 worth of free items, the Everyday Millionaire's audio book and the Everyday Millionaire's e-book, both sent with the book in January. Immediately, you will get a lesson from Hogan called How to Retire Inspired

and a video lesson from me as well called It's Okay to Be Wealthy. Check all of this out at ChrisHogan360.com or DaveRamsey.com. Scott's in San Francisco. Hey, Scott, welcome to the Dave Ramsey Show. Hey, Dave, thanks for taking my call. Sure, what's up? Hey, so I've got a question for you. So my dad has a small business here.

I've been working with them for about seven years now and it's getting more serious. I just started a family, so I'm trying to take over the business and kind of make things better. And every time around this year, this time of the year, he wants to buy new trucks and new tractors because he starts panicking

because it's getting close to tax season. And he seems to think that's the best way to offset the amount he's going to owe for taxes rather than saving money. I mean, he's never been able to save his whole – he's done a business over 25 years, and he's never been able to save, really. Well, that's why. Yeah.

You know, it's because he keeps spending money on debt to buy stuff that he doesn't even need to save on taxes. All right. The math that he's't even need to save on taxes. All right. The math that he's doing is unbelievably faulty. Okay. So let me give you an example. What would be a typical purchase? What would be the size of the equipment?

A $50,000 item, $100,000 item? $50,000. What? $50,000. Okay. So if he buys a $50,000 item, in years past, he could not write that all off in one year. He had to write it off over five years. So it's a $10,000 a year write-off.

And if he has a $10,000 a year write-off, it doesn't save you $10,000 on your tax bill. Okay? Instead, what it does is it would save you about $2,000 on your tax bill. Now, what we're saying is that he borrowed $50,000 to save $2,000 a year on his tax bill for five years. That's insane. Yeah, the math is really, really faulty there. And so what happens is entrepreneurs either don't think this through and or use this as a rationalization to buy toys inside their business that they really can't afford. So you guys have to quit buying equipment until you can pay cash for it. And then you're going to buy older used equipment, only equipment you need to do the job.

We don't buy anything here in our office if we don't have to have it to get the job done. We don't buy anything for the tax write-off his theory the way he explained it to me is he has to have all new trucks and tractors because it has to be moved because it has to be safe he doesn't want to buy something that's old that's going to break down because when it won't be safe until it breaks down and it's out for 10 to 15 days he just lost a lot of money that's the way he explains to me and i tell him you're telling me all two-year-old and three-year-old tractors aren't safe and break down all the time. Again, asinine.

It's absolutely asinine. That's just ridiculous. Okay? And here's the other thing. It's kind of a Dr. Phil moment. He's worked his butt off all these years, and he has no money. And Dr. Phil would say, how's that working for you? It's not, you know? So how's that theory of yours working out here it's not working out and so i don't know how to tell you

to tell your dad what to do he's probably not listening to you and he's probably not gonna listen to me he's at the point now where he's finally starting to listen because i've taken over everything in the last two years if you're running it if you're running it then if you're running it then you get to make the decision, and you and I have just decided. I don't want anybody to be unsafe, and I don't want to have equipment. I've got probably a million and a half dollars in equipment sitting here within 15 feet of me right now while we're doing this show.

I can't have that equipment going down. The show would go down. That would cost me a lot of money, just like that. But we also don't buy equipment we don't need, and then we make a decision whether we're going to buy it new, and we certainly pay cash for it, whether it's cameras or computer systems. And in your case, it's actually heavy equipment. We don't own any heavy equipment.

A couple of pickup trucks to do delivery and stuff around here, and one bus that keeps running us between buildings but other than that we don't have any big stuff like that but still i can't have that bus breaking down all the time but i bought that bus used donald harris drives our bus every day runs us back and forth between our little shuttle between our things and it's it was a used shuttle and i paid a tenth for it what a new one cost and I paid a tenth for it, what a new one cost. And it's run, I mean, it's broken down a couple times. And we rented a shuttle for that day when it broke down.

Kept moving. Put it in the shop and fixed it. But, I mean, for that little bit of inconvenience, it's safe. And it's been reliable enough to get the job done and not shut us down. And so that's a minor example, but it's filling in the same metaphor. And so, yeah, you can make this work. Buy used, pay cash for your equipment. Otherwise, all you do is work for nothing.

All you do is end up with no money for all your work. And, you know, the heavy equipment dealer gets all your money, and that just doesn't work for me. I don't want to live that way. Josh is in Savannah. Hey, Josh, welcome to the Dave Ramsey Show. Hey, Dave, how are you doing? Better than I deserve. How can I help?

So my wife and I just moved from Alabama to Georgia almost a year ago. And we have our tags for our cars are coming up to be renewed. And in Alabama, you pay for your car tag taxes yearly, but in Georgia you do it all in one sum at the beginning. And one of our cars is completely paid for, so we're going to keep it. There's no decision to be made there. But we have another car that we owe about $11,000 on that we've been contemplating selling anyway.

We recently started your steps. And so we've been kind of thinking about selling it anyway, and we have to renew our tags at the end of October, which would be a lot more money than it would have been if we had been in Alabama. How much? How much did it cost to renew your tags? About $400 for the team. Okay, and what's your household income?

Just under $80,000. And what other debts have you got, not counting your house? We have student loans for me and my wife, one for $29,000 and one for $20,000. Okay, and that's it? Yes, sir. Okay. You like this car? It's fun. It's not what we um we got it as a family car we we recently had a baby and it's it's not as much room whenever we test drove it it's not

as much room as we thought it would be once we got the strollers and the well if you want to move to a different car that's fine i don't think you have to do this financially and you certainly have to do it over 400 for the tags um that's not. I don't think you have to do this financially, and you certainly don't have to do it over $400 worth of tags. That's not the way you make the decision here. But basically, you've got a pile of debt you're trying to get through. Can you get through that in two years and keep this car? Yes. And is this car, the total of your car is less than half your annual income?

Yes. And those are the two guidelines we use on whether to keep a car. So this car is very keepable if you want to keep it. If you want to sell it, you can sell it. It's your car. It's not a problem. Thanks for the call. That puts us out of the Dave Ramsey Show and the books.

Our thanks to James Childs, our producer, Kelly Daniel, our associate producer, and the phone screener. I am Dave Ramsey, your host, and we'll be back 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, guys, this is James Childs, producer of The Dave Ramsey Show. I'm excited to announce that we're now carrying on 600 radio stations across the country. To find one near you, head to DaveRamsey.com slash show.