The Ramsey Show - App - Be Willing to Be Different (Hour 3)

Episode Date: September 2, 2019

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

Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studios, it's the Dave Ramsey Show, where debt is 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. Thanks for joining us.

Open phones at 888-825-5225. That's 888-825-5225. John starts off this hour in Spokane. Hi, John. Welcome to the Dave Ramsey Show. Hi, Dave. How are you doing? Better than I deserve.

What's up? Quick question for you. First, I want to say thank you. Because of you, I started listening to my wife, and we'll be debt-free at the end of this month. Woo-hoo! That's pretty dope. So one of the things that I did to go debt-free was I sacrificed in driving a car that deserves a name. His name is Sally.

And it's pretty much on its last leg. The amount of money it would take to fix it isn't worth what it's worth. Did it die? My wife and I are. Is it running? Not yet. So the biggest thing is it runs right now. You would never fix it.

If it dies, you would just sell it as salvage. Yeah. It has no heater core in it. And so once winter comes, it's rough. And so what I'm trying to do is decide if starting in September I get an extra paycheck because we get paid 26 times a year. And so I'll get an extra two grand in September. So my thought process is I have two options in front of me.

I can either, between September and October, save up four grand for a new car, or take and put all of our money in the emergency fund like we're supposed to, start immediately into Baby Step 3, and then if the car dies between now and December or wherever, use the money in the emergency fund to purchase a $4,000 car. But the car has no heat. You're in Spokane in December, we're discussing here. It's 12 degrees outside.

Yeah, I've been there. Okay, I know by Spokane. Okay, what's your household income? We average about $55 a month, take home $5,500. Okay, cool. And you're debt-free soon, right? Like any minute now. Yep.

Okay, so right now you're building the emergency fund. That's correct. Okay. So at the end of this, I would have, in the end of October, if I did it where I put the new car fund in there, I would have $1,800 in my emergency fund, $4,000 in my new car fund. And then I would purchase a new car for $4,000, and then immediately jump back into fully funding the emergency fund.

What would Sally bring if you sold her today 500 bucks yeah maybe a thousand maybe 750 yeah she's running if it's running she'll generally bring 750 i mean even if she's really ugly yeah i gotta sell it to someone in arizona where the heater core doesn't matter. Well, or somebody's got a water bottle. Yeah, exactly. So you end up with a space heater plugged into the cigarette lighter. This could be a fire hazard.

This could be a fire hazard right here. Oh, my God. I had a heater that just heated my face. Oh. Oh, yeah, it was good. So you've already done this one winter. But it was worth it, Dave. You already did this one winter.

I did. I did it. I have an hour commute one way, so I did it. In the morning, it would be six degrees outside. I'd have to work. Here's the way we have to analyze this, and the reason I'm talking to you about it the way we're talking about it, because it's a fair discussion, is in order to buy a car with this money,

we have to declare the car purchase an emergency. Because straight up, you are using the emergency fund to buy the car. Okay? okay i'm willing to do that with winters having no heater in spokane now the thing i might do is i probably don't change your budget a little bit i might sell sally and put 1250 bucks whether i'm by two thousand dollar car $250 weather and buy a $2,000 car, and then go ahead and grow my emergency fund, and then in the spring, upgrade. Copy that. With cash.

And that way we're not hitting the emergency fund for $4,000. Because the difference in a $2,000 car and a $4,000 car, I might have trouble calling an emergency. Buying a car and upgrading Sally might be an emergency. You see the difference? I do. So I'm probably buying a $2,000 car, selling Sally, put some money with her, and it's got heat,

and then I'm probably upgrading as soon as the weather breaks. That's a great idea. And you might upgrade to a $6,000 car by then above your emergency fund, right? Yeah. I mean, so you go from there. Our goal is to upgrade by then above your emergency fund, right? Yeah. I mean, so you go from there. Yeah, our goal is to upgrade both our cars at some point. Yeah, okay. So I was going to do a four, and then my wife was going to do a four.

Okay, well, then maybe we just change this around a little bit. But, I mean, I'd buy a two to get by, get through the winter. Sure. I'll call that an emergency. If I were in your shoes, would I do that? Yes, I would do that. I'm not freezing to death. I'm not. I mean, I got to? Yes, I would do that. I'm not freezing to death.

I'm not. I got to tell you, man, it's a great story. You're driving this car with only your face got a heat on it for an hour commute in order to get out of debt. That was rocking, man. You were doing it, man. That's gazelle intensity right there. No gazelle in Africa has ever been that freaking cold, i'll just tell you you did it man you know that's what it it's penance for my wife it is well i did the same thing i drove that old cadillac i talk about in the videos you know i drove this guy loaned me a

cadillac with 478 000 miles on color on it was bondo and the vinyl roof was torn loose across the top so when i drove it it looked like a parachute on wheels i did did that. I drove that car for 10 years, one three-month period. And I went from a Jaguar into that, and then I went into a paid-for $2,000 car, or actually a $1,500 car. But anyway, so I did it, too, and so I'm not afraid to ask somebody to do it, but not for long periods of time and ridiculous. You've already done it once, and you've worked your way through this. You're going to be okay. You guys are never going to borrow money again a guy who has a space heater in his car plugged in to the cigarette lighter will never borrow money again this is a guy who's done with borrowing money

you know you're not you're not some little wimpy person who's going to fall off the wagon i do dave ish you're not that guy you're just not doing it. I mean, you're game on here. Very, very cool. What kind of car is this? I've got to get a picture of this car. What is Sally? It's a 96 Mazda B2300, so it's a little itty-bitty pickup. Oh, yeah, I know the car.

400, 300-pound man. Oh, yeah. I barely fit in the thing. A 96 Mazda pickup is Sally. That's correct. What color is Sally? Burgundy. Sort of.

If you can call it a color. Faded burgundy now. Oh, yeah. Yeah. How many dents? Seven. And no heater coil. This thing is a half a step above a skateboard man

that's right that's right you guys rock i'm so proud of y'all well done go buy your car brother but not a big one and then next spring let's upgrade that's what i'd do if i were in your i love it sally the truck this is the dave ramsey show 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, helps Christian families, churches, and ministries join together as the body of Christ to share their major health care costs. Christian Health Care Ministries is the original health cost-sharing ministry.

A Better Business Bureau-accredited organization, CHM members share to pay each other's medical bills. It's not insurance. It's Christians financially and spiritually supporting each other. It's what Christian Healthcare Ministries has done for over 35 years, and our members have shared over $2.5 billion in medical bills. To learn more, visit chministries.org. That's chministries.org. Christian Healthcare Ministries is a proud sponsor of Dave Ramsey Live Events. chministries.org. Thank you for joining us, America. Nick is in San Diego. Hi, Nick.

How are you? Hey, Dave. I'm great. How are you, sir? Better than I deserve. What are you? Hey, Dave. I'm great. How are you, sir? Better than I deserve. What's up? All right. Well, I found your program about two months ago, and when I found it, I mean, your books were sitting on my shelf for like three years, and I finally got in gear. I'm on Baby Step 2 right now. I'm going to be done by the end of the year with a $31,000 car. That's what I owe on it. And I'm going to have

the baby steps four, five, and six in process. I do own a home and I owe about $420,000 on it. My question is, I can dump about $40,000 to the principal of my home a year while still doing 15% of retirement and saving for my kid's college fund? Do I do that, or do I put that $40,000 into a mutual fund? No, you dump it on the house. Baby steps are 15% of your income going into retirement is $4,000, $5,000 is kid's college, and everything else goes on $6,000 until the house is paid for. When it's paid off, then you maximize all retirement

and all investing options that are at your fingertips. Here's what we found in studying the 10,000 millionaires that we studied. All the data indicates they pay off their home in an average of 10.2 years. And when their home pays off, we see a huge acceleration in their net worth because without a house payment and complete focus then on investing in generosity only, because you don't have any debt at that point, your wealth building goes into overdrive. Does that make sense?

Yes, that does. So you hold off on the mutual funds once the house is paid off. Then you max out everything. Yeah, because it'll just go boom, man. I mean, you have a mushroom cloud effect in the math at that point. And that's what we see. And so, you know, the data says that's the shortest path to millionaire. And here's what it does aside from that.

I mean, when you don't have a payment in the world, it changes the way you think about money. It changes the way you think about your income you know because there's just you're free right even just starting your program has changed the way i think about money i mean if i go spend five dollars at a at a fast food now i cringe so i appreciate you for that well that's you know that's just up through baby steps two and three once you get those two down then you can let your foot off the intensity accelerator just a little bit and enjoy the ride a little more. But, I mean, the bottom line is you would pay off your house because if your house was paid for,

would you turn in and borrow on it to invest? No. I wouldn't borrow on a paid-for house to invest. And if that's the answer, then the same answer, it's the same thing in reverse to say, oh, I'm going to invest instead of paying off my house. Well, it has the same exact effect. You know, it's as if you were borrowing on your house to invest. And so it actually slows down the process when you try to say, well, I'm borrowing, you know,

I'm borrowing that money at 4%, but I'm making 12. And you're leaving risk out and you're leaving the power of cash flow out and you're leaving the power of choices that you make differently out when people make that statement. And so, um, the data says the real millionaires, not people with theories pay off their house in 10.2 years. And you can do that pretty easy in your situation. You're probably going to do it in about seven from today, based on the numbers you gave me anyway. Hey, thanks for being a new listener. Congratulations on your progress.

Christian's with us in Los Angeles. Hi, Christian, how are you? Excellent, Dave. Thank you very much. Long-time listener, first-time caller. Just a quick question. I was recently approached by a solar company. Usually, I send them quickly away because I'm not going to lease the panels.

I don't have the money to buy them outright. But there's a program that they're offering called the Power Purchase Agreement. I don't know if you're familiar with it. It's just financing the solar panels. Oh, so it's the same thing? even though I'm just buying the power. They say that they only go up 2.9% annually, and SCE, who I currently buy, is 10%. But I didn't feel comfortable with it, because I would never own the equipment anyway, and it seemed like they would pay off the panels or their costs a lot sooner than the 20-year contract that I would be in.

So I was just wondering if it was really different or not. No, it's not different. Solar panels are great if you can pay cash for them and you can run an analysis that says I get my cash back in five years or less, meaning the cost of the electricity and the amount of sun that you have in the area is what creates the analysis. I actually endorse solar panel companies in several cities around America with our local radio stations that I'm on, but I don't endorse them to be financed in any possible scenario. So write a check, and if you spend $10,000 on them or $12,000 or whatever it is,

you've got the money, you're just investing in it, and then are we going to save that much in electricity given our power rate, the rate of what we charge for electricity in our area, and given the amount of sunshine that's going to go into these panels. The good news is, man, solar panels, of course, have been around for decades. And the good news is the technology is, the quality of them and the efficiency of them, the technology is getting a lot, lot better, which makes the break-even to happen faster. You get your money back faster because they're that much more efficient than they used to be.

They kind of used to be clunky technology, and they're just doing a lot better job with them now. Some areas of the country, with the amount of days of sunshine that you get and the ability to store the power and some of the processes they've got with some of the power companies makes it really, really attractive. But I would never do it if I didn't pay cash for them. So, hey, man, thanks for the call. Jamie's with us in Rapid City, South Dakota. Hi, Jamie.

How are you? Hi, Dave. Thank you so much for taking my call. I sure appreciate your ministry to our family. Thank you. How can I help? All right. I have a question.

My husband and I, we have a house on 18 acres. The house is worth about $350,000, and we owe $185,000 on it. We're just starting Baby Step three, but after we're done with baby step three, we're wondering if it would be better. We just want to get out of debt and don't absolutely love where we live. So I'm wondering if it would be better to subdivide our property into nine acre plots, build a house, sell both of them eventually, or just keep it, keep building up equity, which it's done really well with equity, and pay it off, and then, you know, decide from there after we pay it off what to do.

Or you could subdivide it and sell the nine acres and throw that at your balance. Yeah, that's true, too. We could make more money if we built a house. Yeah, assuming the house sells. On it, but. Assuming the house sells and you don't have the money to build the house. True. So you'd be going in debt to do a spec house.

No thank you. You wouldn't do it? No, I don't borrow money and go in spec houses. I would never tell you to do that. No. Well, even if we lived in the house for a couple years. You live in the house you're in? I mean, no.

No, I'm not, you know. I mean, I guess the top house, the house we're on now, we would sell and use that money to build our house down low. Oh, okay. I misunderstood. I thought you were just going to subdivide it and go borrow the money and build a house and hope it's sold. Okay. No, we would sell as we go. So we'd sell, build, sell, and then use the money from both of those to move forward.

Yeah, okay. If you want to do that, that's fine because you're not going further into debt in your scenario. And you're just saying, but I don't know. I mean, do you really want to be in the building business? That's really what you're saying. And I'm not sure I want to fool with all that. I'd probably just sell it. You know, if you can get more for the property by splitting it,

we'll get more for it by splitting it and sell it. Let somebody else screw with all that. If you really want to get in the building business, that's fine. But, you know, you can, unless you really know what you really want to get in the building business that's fine but um uh you know you can you can if you unless you really know what you're doing you can lose some money going that route so you're you're you're going in the building business and uh if you don't plan that out well and you don't know how to estimate construction properly and you know you get tied down you get stuck in a hole here you end up with a money pit. You can have all kinds of problems there if you're a brand-new home builder.

But, again, I don't know what your experience level is and that kind of thing and what your desire thing is. It's fraught with danger if you're not experienced and knowledgeable. Well, your plan is. So I hope that helps you. Thanks for the call. This is The Dave Ramsey Show. We'll be right back. In the lobby of Ramsey Solutions, Brandon and Trinity are with us. Hey, guys, how are you? Good.

Hey, Dave, we're great. Cool. How can I help today? Oh, you're here to do a debt-free screen. What am I thinking about? I'm losing my mind here. So where do you guys live? From Arroyo Grande, California.

Cool. All the way to Nashville. How much have you paid live? From Arroyo Grande, California. Cool. All the way to Nashville. How much have you paid off? $100,178. $100,178. Way to go. How long did that take? 10 months. Whoa. Yeah. And your range of income during that time? We started at about $65,000 and we're up to about $110,000 right now. Okay. So you didn't make $100,000 during that time. You must have sold something big. Yeah.

A couple things. Yeah. What was the big thing you sold? Well, a couple things. We got rid of two leases, sold a motorcycle, which is a couple thousand dollars. And then the biggest is I was in a car accident and we got that settlement right about that 10-month mark, which was $50,000. So you got $50,000 for that, and then you sold the car, two cars. What were they worth?

What did they sell for? They were both leased, so about broke even. We had to roll some negative equity into another loan. Were those lease amounts, though, in the $100,000? Yeah. Okay, so what were the cars sold for? $19,000 and $25,000. Oh, wow.

Okay, so that plus $50,000 is a lot of the whole thing. Yeah. Okay, and then you just cash flowed the rest of it. Yeah. Wow. But you guys went crazy. Yeah. You sold the cars.

You sold the motorcycle. You used the settlement. Everything. Boom. Right on the debt. What kind motorcycle, you used the settlement, everything. Boom, right on the debt. What kind of debt was it? Oh, gosh. Everything. Money to family, credit cards, student loans, the leases.

Yeah, and we cash flowed her master's program as well. Yeah. Wow. How long have you guys been married? Two years. Okay. So about a year into the marriage you look up and say we're changing directions here dramatically tell me what happened uh well brandon got on board first it took a while

for me to get on board he uh he just kept bringing up your name and i was like i don't know if i'm for this this just seems kind of weird and then yeah um never give up came on about that time and so we watched that documentary and I was just like full of tears and it just really touched me so very cool I'll get on board yeah we sat down and uh one of my friends Brent Vanderveen he turned us on to it and uh we sat down that night and we did our uh we did an excel spreadsheet with all of our debt we had no idea where we were and we saw that hundred we did an Excel spreadsheet with all of our debt. We had no idea where we were. And we saw that $100,000. I added it all up, and I said, oh, my gosh, we've got to change.

That was it. We knew it was bad, but we didn't think it was that bad. Yeah, when you add it up, you do have that old crap moment. Yeah. It's really bad. Okay, and then it's game on, right? Yeah, pretty much. Together.

You just said, we're going to do a hard left turn, and here we go. Very cool. Very cool. Way to go, you guys. Thanks. Thank you. Incredible intensity, incredible focus on this. Yeah, our lawyer said take your wife to Hawaii, and of course we didn't do that.

We paid off our debt, so maybe someday Hawaii. So it was a bad car wreck, huh? Yeah, I was on the side of the road getting the mail, and someone came off and hit me head on. Oh! Yeah. Ooh, that took my breath away. Yeah, it was about 50 miles an hour. And it was right next to my parents' house, so I lived there my whole life.

So I was on the side of the road sitting there off the road getting the mail, reaching out, and I saw this car coming up. I thought it was pulling off the side of the road. People always pulled off right there, but it was quick. So I thought I was either going to get hit or robbed. I don't know what was happening. And then hit, and I was thrown off the road. Yeah.

Man. Nasty. Yeah. Are you okay now? Yeah, I'm good. I'm all good now. Good. Praise God.

Yeah, right? This is amazing. Okay, cool. So what do you tell people the key to getting out of debt is because you guys had a little bit of a different journey here yeah i think for us it was communication um we had a lot of detractors but the few cheerleaders that we had were so strong that i think you just need at least a couple of those in your life and then communicate well who were the cheerleaders brent was a big one he came every

week to our house and we did fpu in our living room oh wow yeah um and then his uncle was a huge huge cheerleader he helped give us a car that was a cool story we uh when we were telling him we were getting out of debt and we were selling all the cars i was actually on online looking for cars that day and i thought wow that car looks real familiar, and it was his. So I called him. I was like, hey, you're selling your car? And he said, yeah. So he worked out.

It was going to be $6,000. He said, just pay me $500 every couple of months when you can. And then he said he wanted me to come over that night. He wanted to give me windshield wipers or something. And he said, you know what? The Lord spoke to me, and I want to deed this to you. Whoa! And I broke down in to deed this to you. Whoa! And I broke down in tears.

It was powerful. Wow. Yeah. Way to go, Uncle. Right? I love it. And now you guys get to do stuff like that. Yeah, we're so excited. Because now you're not broke anymore.

Yep. Yeah, you live like no one else later. You can live and give like your uncle. Yeah! I think another huge thing is just being ready to be different because we've had a lot of people making fun of us i just went on a big trip and all the girls were laughing at me for pulling out my every dollar budget every time i swiped my debit card and you say you're debt free but they don't fully understand what that means so you have to repeat

it a couple times and just being willing to be different has been huge. Yeah, that's interesting. Well, and you probably have that running through your head. I mean, you're on this girl's trip. They're all making fun of you going, yeah, broke people making fun of my financial plan, which means I'm on track. Yeah, totally. You just smile, nod your head, and go, you people are crazy. She came home fired up from that trip. She said, they're all making fun of me on the trip.

And I said, we're doing something right. Let's keep doing it. That's exactly right. Normal is broke, and if broke people are making fun of you, you're on track. I love it, you guys. Well done. Well done. That's fun.

We should mention, too, that about less than two weeks after we found out we were debt-free, we found out we were expecting our first child. yeah we're due around christmas time what a great year you're having yeah i know it was a crazy year this is a great year yeah wow well good for you well i'm sure your parents are dancing a jig yeah yeah yeah they don't fully understand it but um they understand a baby's on the way for sure the for sure. The debt-free, they're definitely debt-free. They were just a little bit concerned about that. They didn't fully understand. But I think, yeah, they're on board now.

Yeah. Sharon's mother thought we needed counseling. Yeah. That's the thing. Yeah. I love it. Good for you guys. Well done.

Well done. Wow. Well, man, we got a copy of Chris Hogan's book for you, Retire Inspired. And, of course, you know that's the next chapter, that with your $110,000 income and not a payment in the world, you're going to become very wealthy now, become millionaires, some of those everyday millionaires we talk to all the time, and, of course, outrageously generous as you go along.

And, boy, you got a good model for that with your uncle. That was awesome. Great part of the story. Brandon and Trinity from California. $100,178 paid off in 10 months. Two leased cars sold. A settlement. Uncle gives them a car.

I mean, this is just blessed, blessed, blessed right here. 65 to 110 income. Count it down. Let's hear a debt-free scream. Ready? Three, two, one's hear a debt-free scream. Ready? Three, two, one. We're debt-free! There we go.

There we go. I love it! Man, oh man, oh man. That is fun. You know, when you're not broke and God says, hey, that car that I own, that I let you manage for me, that I let you be a steward of, I want you to give it to them. You can say, yes, Lord, yes, Master, because you don't have two masters. You only have one. God is the only master of your life, and you can actually listen and heed his voice when he says to do something like that.

But when you have two masters, when you have debt, because the borrower is slave to the lender, translation, if you're a slave, there must be a master involved, wouldn't you think? Mm-hmm. Jesus said it's hard to serve two masters, because you'll love one and hate the other. But they're in conflict with each other. This is how this works, people. I love it.

This is The Dave Ramsey Show. Our scripture of the day is Psalm 73, 26. My flesh and my heart may fail, but God is the strength of my heart and my portion forever. My friend Seth Godin said, If failure is not an option, then neither is success. Pam is with us in Fort Lauderdale. Hi, Pam. Welcome to the Dave Ramsey Show. Hi, Dave. It's great to talk to you today. You too. What's up?

I have a question about uninsured motorists should i or shouldn't i i do i want to make i just want to make sure everybody's taken care of and cars are fixed and people are fixed that's the purpose of carrying insurance is to transfer the risk of that and it's just it's that expensive. It's not that big a deal, and I would include it. If you're going to cut, there's other places you can cut, like raising your deductible and getting your premiums down that way, taking on some of the risk yourself, which I do carry a very, very high deductible on my vehicles so that my cost goes way down on all the portions of insurance.

But, yeah, I carry it on me. Ryan is with us in Lansing, Michigan. Hi, Ryan. How are you? I'm doing well, Dave. How are you? Better than I deserve. What's up?

So I recently got married, and we're planning to make a move from Lansing to Grand Rapids in January. And we're trying to figure out if we should rent or buy a house. Well, congratulations. You should rent. I thought that's probably what you were going to say. Yeah. All right.

Do you have any debt? We have about $10,000 in debt. Okay. And so I would want you to get clear of debt. I would want you to be married a year, and I'd want you to get clear of debt. I would want you to be married a year, and I'd want you to have an emergency fund of three to six months of expenses, plus your down payment. And that's going to take you a little time.

Sorry. We have about $40,000 in the bank right now. Okay. And how much debt do you have? $10,000. Well, write a check and pay it off. Yeah, we're planning on doing that. Okay.

Like I said, I just got married on Sunday. Oh, you said just recently. I didn't know Sunday. Oh, my gosh. Okay. Well, I'll give you a week to get it done. That's fine. Okay.

Yeah, I appreciate that. But, I mean, when you get over there to Grand Rapids, you need to learn that city. It's a wonderful city, by the way. You need to learn the city and you figure out where, you know, after you live there for six months or a year, you're going to finish up your emergency fund. You probably got that, it sounds like. And then you start saving for your down payment on your house. But get to know each other.

Be married a little while before you rush out and start looking at houses. You'll make a different decision with a wife that you know better does that make any sense yeah it makes sense we met in grand rapids so we know the city pretty well and uh well that's we're comfortable there so at least there's that well let's let's you know let's take six months then and get a little place for six months and make sure the emergency fund's finished up. It sounds like it is. And then really see how big a pile of money we can pile up for our down payment. And maybe it doesn't take a year.

Maybe it takes six months because if you know the city and that's where you met anyway and that kind of stuff, that's helpful. And maybe you've got family around there. And we always just say it takes a year of being married to know how close to your mother-in-law to buy. You know, you don't want to be too close. And you want to be close enough. Amen. Thanks for the call. Congratulations on the marriage.

Betty is in Idaho. Hi, Betty. Welcome to the Dave Ramsey Show. Thank you for taking my call. Sure, what's up? I'm an 87-year-old widow. I have, in addition to my own home, I have two houses that I rent, one of which I have been renting to my granddaughter for about four years. She and her husband want to buy the house, and I'm thinking that they are hoping that I will

finance for them. They haven't specifically addressed that. I have suggested that they look into mortgage and financing options, and then we can discuss it. If they can't qualify for a standard mortgage, would I be risking a lot if I financed it myself at my age i don't know that it's it's due to your age but it just um it sets up a problem with relationships it's tough enough to rent to family but then the borrower is slave to the lender and you just changed her from your granddaughter to your slave when you do that so i would never ever take my grandkid and put them in debt to me i wouldn't do that i'd rather i would rather them just rent until they can you know until they can get their self in an order to buy if they can't get a mortgage it's the same reason

you don't want them owing you a mortgage true true so i i think i think you're risking relationship issues there that i wouldn't want and so um you know depending on how many grandkids you've got and how what your estate looks like you know you might could make a gift of a portion of it or something if you wanted to and help them get in it that way um but um you know just got to decide how much of that you're going to do and so forth but i i if you're going to sell it i would just sell it and take my money out of it and do some investing with that money and to make sure that your income is taken care of but we don't want them in there not and then them not having to be able to pay because they lost their job and then you're the bank. And, oh, that just really makes me want to cry.

James is in Minneapolis. Hi, James. Welcome to the Dave Ramsey Show. Hi, Dave. Thanks for taking my call today. Sure. How can I help you? I'm at the end of a car lease, and I'm not sure if I should buy it out or if I should

sell the car. Do you have the money to buy it? Well, I have a $59,000 income, and besides the car, I have $67,000 in debt, and the buyout price is $15,100 plus taxes and fees. And you don't have $15,000? And I do not have $15,000. I'd have to take out a loan for it, and I thought that was kind of contrary, and they kind of want answers, and I'm just like...

No, I think I'll just turn it in, and I think I'll get me a little beater to drive while I get the other stuff paid off. And once it's all paid off, then I'll save up and move on to a better car with cash. But no, I'm not going to finance a $15,000 car purchase while we're trying to get out of debt. Well, the problem I have is right now i leased it for 45 000 and i have got 70 000 miles in this car with a 15 cent mile penalty so if i turn it in i got 70 000 miles you're 70 000 over i am uh 35 000 miles over which equates to how much of a penalty? About $4,000. Jeez. Man, I hate leases.

Oh, you are so stuck. Well, what's the car actually worth if you look it up on Kelley Blue Book? So Kelley Blue Book gave me two answers. One was 14.2 and one was 12-8. I believe the 12-8 was trade-in and the 14-2 was if I were to try and sell it myself. And so they want you to buy it for 15. That's what my contract says I have to buy it for. It's $15,100 at the end of the lease.

But I should clarify the lease ends in January, January 23rd. Yeah. But here's the thing. If you buy it for 15 and it's worth 13 you've lost two if you turn around sell it the next day and if you write them a check for four you've lost four so you know you might buy it and finance it and turn around and sell it but you've got to find the 4 000 to cover the miles or find the 22,000 that you're in the hole, right? Right.

So you can negate the $4,000 by buying it and turn around and resell it immediately. And if it's worth, again, if you pay $15,000 for it and you sell it for $13,000, then that's losing $2,000. Do you understand? That makes sense. Or you hand them the keys and you lose $4,000. So I might buy it and flip it it but i wouldn't buy it to keep i'm not going to finance the car to buy it to keep uh you currently have the car financed if you finance it again for 10 minutes while you turn around and resell it um that's fine and i

would try to negotiate with them and get them to sell it to you cheaper than 15 since the stupid car is not worth 15 and you might mention that to them you know like if i hand this back to you you guys are going to lose money on this car so why don't you go ahead and sell it to me cheaper and see if you can get them down on it and and go ahead and get it financed but and then flip it over as fast as you possibly can. Get out of it, though. Don't keep it. That puts us out of the Dave Ramsey Show in the books. Our thanks to James Childs, our producer, Kelly Daniels, our associate producer, and phone screener. 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. This is James Childs, producer of The Dave Ramsey Show. Once again, you made The Dave Ramsey Show one of the top five most downloaded podcasts last year. To get your daily dose of motivation and inspiration, subscribe today.