The Ramsey Show - App - Borrowing Money in Small Business Is Suicide! (Hour 1)

Episode Date: October 9, 2019

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Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studios, it's the Dave Ramsey Show, where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. I'm Dave Ramsey, your host. Thank you for joining us. Open phones at 888-825-5225 as we talk about your life and your money. That's 888-825-5225. Starting this hour off is going to be Chase in Nevada.

Hi, Chase. How are you? Good, Dave. How are you doing? Better than I deserve. What's up? Hey, so I was calling because my wife and I are on baby step two, and it's going to be a little bit before we can pay everything off.

And I currently work for my family business, and everybody's on board saying congratulations, get on board, and let's get this debt taken care of for us. And they started telling me that I do need to keep credit cards, though, because I may have to personally guarantee loans with our company one day is that something that's like normal is that gonna happen uh well i guess that's up to you if it's gonna happen because the banks have been telling them before that they have to personally guarantee loans because they've been saying that hey there's that it happens and so so how many how many of your family members are involved in this family business?

Currently, right now, there's five of us. And I will eventually be an owner. So there's two owners and then three. There's three generations working there right now. There's three that are not owners and two that are owners right now. And I will be one of the owners one day. Okay. So you have to decide if you want to spend the rest of your life in debt.

Okay. You have to decide that. Because that's going to be an essential part of this discussion. I got to tell you, I think you're walking into a minefield, and I think you're going to get your leg blown off. Okay? Okay. And I don't want to start a minefield, and I think you're going to get your leg blown off. Okay? Okay. And I don't want to start a bunch of trouble for your family, but you made the mistake of asking me my opinion, and I'm an expert on my opinion.

So the thing is this. Family business can be done really well, and we do it. We've studied it for years. It's very possible to have a high-quality family business. Borrowing money in small business is suicide. It's double, triple suicide when there are four or five principals or three principals that are all co-signed on it together. Because if it doesn't get paid, they can come after any one of you with this personal guarantee. And not just for your portion

honey for the whole puppy so your two your two brothers decide they're going to do cocaine one of them another one's going to run off the secretary and leave you holding the bag uh that's happened before and uh guess what you got the whole enchilada baby you got the whole debt there is no way i'm signing up for this trip you're taking okay so i'm be i'd be love to be involved in this family business i'd love to be an owner but you got to know as long as i'm an owner there won't be any debt here we're going to cash flow we're going to cash flow this business what my talk was that i if i when i take over because i will be the the majority owner that i'm going to change it to move to that way. Then you don't need to worry about borrowing money.

Okay. Because you're not going to borrow money at that point, right? Exactly, exactly. So if you're not going to borrow money from the point that you take over on, and you're not going to borrow money in order to be able to take over, meaning buying someone out or taking the existing loans off the books or whatever, and you're not going to have to do all of that to become sitting in this majority owner position, then there's no reason for you to have to have credit. But the good news in this situation is you are going to be a majority owner, and so you

get to make the call. One of the world's worst things you can be is a minority owner in a small business. You have absolutely no power in all the problems. It's going to be a few years before I take over because I'm just 29, so one day I will own it. So it's going to be a little bit because it's my mother that's the main owner and then her brother and his kids and grandkids that work there. Gotcha. Okay.

But your mother owns majority interest apparently. Yes, she owns 65%. And that's going to pass to you and yes and your cousins and uncles and all will have the other 35 okay exactly and so who was it instructed you to get a credit card your mom or your uncle uh my mom was the one that was saying that you need to have credit and my dad as well who's just he just he's married into the family he knows about it and says that you need to have credit and my dad as well who's just he just he's married into the family he knows about it and says that you need to have it in order to personally guarantee a loan because yeah that would be true if you're going to personally guarantee a loan but i would recommend yeah they've had to personally guarantee machinery that was over a million dollars yeah before and

that's just like buying machinery on credit and so we have to uh you know i've got a lot of stuff in this building i just built this over a million, and we paid cash for all of it, and we had to watch what we're doing. And the actual headline in the newspaper was, Ramsey Breaks Ground and Will Build at the Speed of Cash. And so I told them, I said, we run out of money somewhere along the way. We don't have the money to finish. Just put a little board on the window, and we have a little money,

and go back to construction when we got some money. But God blessed us, and we were able to have the money to finish just put a little board on the window and we're like what do we have a little money and go back to construction we got some money but god blessed us and we were able to have the money with good planning and uh forth for thought and so forth to have the money to finish all the way through but um but that's how we do we run our business at the speed of cash and i'm not going to get myself or my business in debt and by the way all small business debt is personal debt because it all requires a personal guarantee. That's no different in your situation. So I suspect there's going to be some awkward conversations in your future, sir.

But they'll be worth having. Thanks for the call. Open phones at 888-825-5225. Brad is with us in Illinois. Hi, Brad. Welcome to the dave ramsey show hey dave thanks for taking my call sure what's up so i a recent listener uh and i like the last four months simple question for you i'm kind of burning through the baby steps pretty quickly right now good and i know it's a little far in, but when it comes to paying off my mortgage, I have a very low interest rate.

I have 2.875 on a 15-year mortgage. And I did do your financial calculator online. And it showed that if I start paying early on my house in mid-next year, June, July, I will only save roughly like $6,000 over the life of the loan. Would it be beneficial for me to pay it off early? I know getting out of debt is key. Or should I invest the extra $1,500, give or take a month, into other investments? That's the equivalent of borrowing on your home to invest. Yes, and I get that 100%.

Then you wouldn't have asked the question if you got it 100%. Because you knew I wasn't going to tell you to borrow money on your home to invest. You knew I wasn't going to. Right, right. Yeah, so don't do it. Hey, thanks for the call. Open phones at 888-825-5225. You jump in.

We'll talk about your life, your money. This is your show, folks. It's all about you. And yes, it is my opinion, but that's what you're calling me for. And so I'm going to do that. But we don't just sit and carry on with me all the time. I'm talking with you about your situation. The frustrating thing for some of you about the show is that these principles we've laid

in place have worked for so long, so many decades, for so many millions of people, that they're probably not going to change when you call. I'm probably going to tell you the same thing I told the last caller to do, and the one before that, and the one before that. So it's kind of boring for some of you. Like some of you sit in the car and you know the answers. You play answer the question before Dave does. Because it's predictable, you know.

But one thing about integrity, it's always consistent. One thing about consistency, it's an element of integrity. This is the Dave Ramsey Show. Do you know who is a prime target for identity theft? Your children. Kids have no debts or credit history. Their personal information is just as easy to get, but the theft could go completely undetected for years. Every day all over the country, young adults are starting down their own path in life by opening a bank account or renting their first apartment,

only to find out that they somehow already have credit card debt, a mortgage, or even a criminal record. It's devastating, but it can be fixed when you have an ID theft protection plan from Zander Insurance. They monitor all personal info for the entire family. And they take over all the work if you become a victim. Best of all, your kids are covered for free on their family plan. Call them at 800-356-4282 or visit zander.com. It's just the smarter, more affordable way to protect your entire family. And it's the only plan I provide to my team. Zander.com or 800-356-4282. amy's with us in rhode island hi amy welcome to the dave ramsey show

hi thank you i'm excited to talk to you you too how can i help? I have a son who's 18 years old. He is a classical musician. He plays symphonic tuba. He has a gift. He has a passion, and he puts forth extraordinary effort. He is at a private music school. He's a freshman. All the private music schools are about $70,000. He received $25,000 in scholarships. For each of the four years, he'll be going to this school. Unfortunately, that doesn't cover it. He took out a $38,000 loan, which is scary, but I don't know how to encourage him going forward. I don't see how he can do that for four years. Then the kicker is my parents are everyday millionaires, and they keep telling me to let him take out the loans

because eventually I will inherit money and be able to help him pay them off. So I don't know. It doesn't sound like a good idea, but I don't see how he's going to be able to. Let me slow down just a second. You said $70,000 a year. That's with room and board, yes. Okay. And so for four years, we're going to have $280,000 invested to be a gifted tuba player.

I know. I don't see... I mean, maybe. Where do you make, I don't know enough about the music world. The only thing I can think of is an orchestra position. I don't know any soloist tubas that have ever sold millions of records off the top of my head as a consumer. I don't know of that. So he would like to play in a symphony orchestra.

He will not make back that money Like he'll make like $40,000 a year Right Unless he's in the Boston Philharmonic or something Even then But I don't understand He can't get the training he needs At a private school

Excuse me, at a public school My point is though That the training's not worth it So what do I tell him? To change dreams? I would live my dream a different way because this dream is quickly becoming what's known as a nightmare. Yeah.

You're going to have a guy making $35,000 a year that has spent $280,000 and $200,000 in debt waiting on his grandparents to die to get him out of this. Which sounds terrible. It is awful. It's a horrible use of your family's legacy and your family's money. And it's not to say that the young man isn't gifted. I'm not putting down tuba players and I'm not putting down his gift.

I'm just trying to be wise in loving my son well and not usher him into a bear trap that tears his leg off. Yeah. And all in the name of a dream. Right. Because he's gifted. And I don't doubt that he's gifted. But me and him, if he's mine, we're about to have a come-to-Jesus meeting,

and that's going to sound like, I love you so much, I will not participate in things that harm you. Okay. And we need to take, I'll help you, I'll coach you, I'm your biggest cheerleader, I'm your biggest fan of your giftedness and of your musical ability and your instrument of choice. I'm your biggest fan. I'm your mom. Nobody loves you more than that.

And it's like federal law. We're required to love you even when you're dumb. And you're not being dumb. You're brilliant. But I want to walk with you and help you. And, honey, what we're doing here together, and I'm standing on the sidelines watching a car wreck with my son in the car. I don't want to participate in this. I don't want you to do this.

I want to find some other way for you to live out your giftings with and your passions in the music world in a way that becomes, that doesn't trap you. Can you imagine who he's going to be when he's 42 and your parents are still alive? Yeah. You know? Yeah. You know? Yeah.

That's right. The 42-year-old version of him is going to hate you guys for not stopping this train wreck. That was a beautiful way now that I have of presenting this, and that's what I called for because I knew the answer. But thank you for helping me put it into words for him. Well, it's all about helping. It's all about loving somebody. It's not just trashing them. Right.

And if he knows something that I don't know or you know something I don't know, I'm willing to learn. I just, sitting outside the music business, I'm in talk radio for a reason. I can't even carry a tune. I don't even know anything about it. But, I mean, I've observed the music business in Nashville for years, and I know what the percentages are of making a living, much less making it big. And that's with people that play instruments and genres of music

that are more widespread through the public and actually monetize. But even then, I mean, the joke around Nashville is, how do you get the next country music star's attention? Waiter. You know, everybody in this town can play and yodel, you know? the joke around Nashville is how do you get the next country music star's attention? Waiter. Yeah. You know, everybody in this town can play and yodel, you know? Yeah. And yet a whole bunch of them never get to.

The number of people that were on American Idol that now work on my team will blow your mind, you know? And so it's a very difficult world, the show business world, to start with. And then you take a nuanced slice of that a small slice of that and i fear for this young man's future and i and i and i'm like you i love him i want him to do good hey thanks for the call you know that's a really good discussion right there y'all and that mom is if she follows through on this, is being a great mom, and it's going to be awkward. It's going to be hard.

But the times that I've been a great dad, they were awkward times. The times that I've been a great Papa Dave, Grandpa. Yeah, those are awkward. Yeah, we got getting ready to be number six, six and under the grandbabies. You don't think they don't have some interesting discussions with Papa Dave and they run around screaming in my house like a bunch of pterodactyls. You know, it's like, hey, man, were you raised to go outside? If you're going to, you know, so, but, you know, you just it's part of parenting.

It's part of grandparenting. It's part of good relationships is being kind enough to have the courage to say things out loud that everyone else is thinking. And so if your child has a path that is their dream, but it's going to lead them into a financial nightmare, then it's really not a dream. It's a series of bad decisions is what it is. And you've got to look at that. I mean, I'm not against people having a music degree. I'm not against people having an art degree. I'm not against you having a degree in sociology. But don't spend $250,000 for a master's degree in sociology

so you can work for the state making $38,000 as a caseworker. That's dumber than a rock. Don't do that. Because you have a big heart and you care for broken families and children that are struggling. I got a big heart. I care for broken families and children that are struggling. I want you to be able to help them. But a $250,000 investment for a $38,000 job?

This is known as dumb. And this is where people have said, oh, we have to quit. You know, college education is no longer worth it. Yeah, college education is worth it. It's worth every dime you pay for it at an inexpensive, good, solid state school in a field of study that will ROI. When I was in school, we had a field of study called logistics. They now call it supply chain.

And come out with a four-year degree in supply chain from the University of Tennessee. I talked to a kid, young man, that graduated two years ago from the University of Tennessee with a degree in supply chain, paid $12,000 a year in tuition to go. His job coming out of college was $83,000. His first job. And he'll be making 120 in 30 minutes in that field. I mean, his career track is straight up. Now, that's what's known as a return on investment. That's education that has great marketplace value.

And this is what we coach people in if we're smart moms and dads and grandparents. And grandparents, if you're everyday millionaires, don't tell your kids to go do something stupid. And when you die, they can use the money to pay it off. Oh, my gosh. It's like, you know, I'll pay for your drug rehab after i'm gone i just don't that's not a loving act what a sweet lady what a sweet lady a great call this is what this debt-free degrees book's all about anthony o'neill's book he's out there on book tour right now check it it out. I'll tell you more about it later. This is the Dave Ramsey Show. Thank you. Steve is with us in California.

Hi, Steve. Welcome to the Dave Ramsey Show. Hey, Dave. I just discovered you last week, so thanks for taking my call. Honored. How can I help? So I'm a lawyer, a couple years out of law school, and I just got a new job at a big law firm making about $200,000 a year. Wonderful. Yeah. So I've got about $88,000 in debt, but after having listened to you for a week, I know I'll have no problem paying that off real quick this year. Good.

My question for you is I know this job isn't very sustainable. I work like 80-plus hours a week, lots of stress, and I don't particularly enjoy the work, but I'm good at it. I want to eventually leave and become a government prosecutor, but that'll be a huge pay cut. So I kind of wanted to get your advice on how long I should stay in my current high-paying job to kind of set myself up for financial success and, frankly, to capitalize on the years of school that I've been in. So you're on the standard meat grinder, one, two years out of school, lawyer thing, and if you survive the meat grinder,

you might become one of the 47 partners? Right, right. I don't see that happening for me just based on my interests but you know i get i'd get huge raises every year huge bonuses every year so it seems like i'd be throwing money away to leave you know without spending some time in this job but kind of wondering how long that needs to be well i mean mathematically mean, mathematically, a long time. Physically, emotionally, spiritually, not long at all. Right? And that's what you're saying. That's the juxtaposition or the paradox you're facing.

So I certainly won't stay there long enough to get that $88,000 gone, right? And you just got the job. Right, right. So what would be your ideal game plan? I'm thinking two years. I could definitely do. But I'm just trying to think, like, I don't have a house. And then if you take the job as a prosecutor in the prosecutor's office, you'd make what?

Probably 80, 80K a year. So 80 to 100. So more than cut in half. Yeah, yeah. And it would probably max out at like 120. Yeah. I'm in the kind of weird position of my income peaking early in my career rather than later. Well, with that job, but not in other forms of law. That's right.

Your nuanced choice within the law is causing that, not the law. Sure. Because, I mean, you could stay on the other track and actually step back from the 80 hours, go open your own boutique firm and make $300 or $400 10 years from now, depending on the area of practice you're in and so forth, what city you're in in California, all those kinds of things. So all of those things are possible. So what's the allure of the prosecutor's office that's worth $100,000 a year? Kind of what I've always wanted to do, but going through law school,

I did well enough to get this high-paying job, so I kind of listened to my professors and they said you know you got to go do this that's not the question able to the question okay the question is what is so fun about being a prosecutor that it's worth you paying 120 000 a year for the privilege dropping from 280 slightly better quality of life but also just kind of what my passion was going through school i like the criminal law aspect of it i like the justice aspect of it and you can't do that on the defense attorney side uh that was a passive aggressive question

huh i could get the criminal law experience on the defense attorney side but not necessarily the the kind of calling towards doing justice in my mind yeah okay um well i just i i really i mean i appreciate that and i i appreciate the nobility of the call that's on you. I don't have a problem with any of that. But what you're asking me, I'm just trying to reframe your question back to you to give you some ways of thinking about it. I'll give you an example. In this Borrowed Future podcast, we were talking about in a meeting this morning that we're doing on student loans.

It's out there and it is real popular right now. Seth Godin said, you can spend $200,000 to go to college or you can spend $10,000 and go to community college and have $190,000 in your pocket to open a business with. And that's kind of how I'm trying to frame this up. I'm using that kind of mindset to say, okay, yeah, you're going to get down from, but there's more than two options in this scenario. That's fatalism. We know there's more than two options. More than 80 hours a week, and you grind up into meat, and there's nothing left of your life. You have no marriage.

You have no future. You have no relationships. All you are is a worn-out lawyer making $250,000 three years, four years from now. You don't want to do that. I'm with you on that. I've got no problem with that. I wouldn't want to do that either. Right, that's what i'm scared of the only other option is not a pay cut in half and the only place to get justice is not in the prosecutor's office and so start thinking about

you know that's why i ask about defense as an example um i don't know i if i'm in your shoes though i'm going to start thinking of ways i can have high quality of life which is 40 to 60 hours a week and i can make 250 trending towards 350 with my law degree in california and tickle the justice bone right and i'm just going to start thinking about that and i'm going to start asking around you got two years to work on this problem because you're going to stay there for two years anyway. Right. So go talk to some of the prosecutors.

Go talk to some of the defense people. Find people that are of high moral quality and noble character that are in the law. They're there. They're not all over the place, but they're there. And sit down and talk to them and say, this is what's happening. Go talk to a judge. Go talk to a federal judge. Ask him if you can have coffee.

Because judgeships don't just come out of the prosecutor's office. I have two friends appointed into judgeships this year. Both of them came out of private practice. Right. And that tickles the justice funny bone about as much as anything does sure sure so in federal judgeship's pretty good gig so anyway the the um i'm just thinking through this with you you just got to figure out a way to say don't get trapped in the uh the nuanced thinking that there's two options anytime somebody presents me two options and neither one of them sound fun,

I always say C, not A or B, C, none of the above. Start again. Take the essay version of the test. Let's do the multiple choice version. And let's dig down into this in the next two years and let's find out what your options are. I think you can find something that will do all that. If you want to be a prosecutor, I'm not mad at you.

But I don't want you to make a $120,000 to $200,000 a year decision based solely on an improper view that that's the only way to create justice in the land is from that office. That would not be true. But, hey, thanks for the call, man. It's a good discussion. I appreciate talking with you about it. Mary is with us. Mary's in Kentucky. Hi, Mary.

How are you? Hi, fine. How are you? Better than I deserve. How can I help? It's really nice to talk to you. You too. I have been trying to implement these practices for a really long time, and my husband and I are married.

We have a four-year-old daughter, and I'm trying to – I grew up kind of like – well, we had a single mom and kind of like – well, she just – sorry. She passed away recently. I'm sorry. How long ago? In December. So she scratched and clawed and worked three jobs to raise you kids? Yep.

A lady of great nobility. Yes. But we, like, you know, we grew up kind of without a lot. And I just don't want my daughter to grow up that way. So I have this really hard time. Every time I start getting on track, I'll be like, well, we deserve that, or she deserves that. And it's really more like the mentality of it, and I wanted to see if you could address that.

Yeah. How to? I would be honored to, and I'd like to spend a minute unpacking it with you. Do you mind hanging through a break with me? Sure. Because I'm heading into a commercial break. Okay. Hang with me.

We'll come back and talk about it, because I think you're facing stuff a lot of people do have faced. So, good question. Thank you for joining us. We'll be right back. What a great question. This is the Dave Ramsey Show. Thank you. Mary is with us in Kentucky, raised by a single mom. Shortage of money in the household growing up, which there usually is.

52% of single moms live below the poverty level. And her mom just passed away not long ago, so it's emotional for her to talk about. So when her kids come wanting something, it's hard for her to say no. She feels like they're entitled everybody's entitled that and we just make it happen even if we're doing it out of balance in the budget or even worse going into debt how do i avoid that was her question is that a fair summary mary yes yep it is okay and she's only four but mostly it's like her education and stuff like that you know i i just you know i want of course you want the best for your kids so you know okay so um

do you suffer uh from psychological disorders due to the lack when you were a child um i mean my my mom definitely did i think no i said to you oh well yeah i think i have a definitely have like a i don't know what i would call it like a paranoia about it yes for sure no i mean i mean are you like in treatment with a psychiatrist a counselor a pastor are you on medication due to the problems oh yeah yeah i mean i do see a therapist and yes i have you think it's all due to that yeah yeah we grew up a pretty turbulent uh childhood so was that the moment there's difference between the turbulence and the money yes well both and we had both so but i think you know that lack all the time you feel

and my mom tried her best to keep us like in good schools and stuff but then you're the one that doesn't have anything you know and you know that it gets in your soul like i understand yeah yeah i've got i got a friend that grew up he's worth about 20 million dollars and he grew up dirt poor which uh you're from kentucky i'm from tennessee some people don't know what that means that means he grew up in appalachia in a house that the floor was dirt. Right. Yeah. Yeah. So poor white trash. Right.

And, you know, I had to overcome that. He's worth $20 million now, probably somewhat as a result of that. That's why I was asking about how this had affected you. Because my contention is that sometimes growing up that way, the horrible parts of it, the shame and the degrading parts of it are not worth anything. I'm with you on that. And certainly that's not going to be your child's issue anyway. We're not going to be near that stuff. But sometimes those end up being pluses.

Okay. I know lots of people that were raised in lower middle class homes or even lower income homes, but the homes were full of character. It sounded like there were other problems in this house, but there was no money, but there was lots of character and lots of love. Yes. And then they came out actually better than some kids who get everything they asked for, which we used to, when I was a kid, we called those kids spoiled brats. That's not a phrase you hear. You don't hear that phrase anymore where you say i spoiled they spoiled their children like they ruined them people don't say that anymore but that's i still see those kids but

they don't call them that anymore it's probably politically incorrect or something so all of that to say if i'm in your shoes just listening to you um I think you're a really, really, really good mom. And I think you love your kids so much you would do anything for them, which is the definition of a good mom. And what you have to be careful of there is you have to define what a good life for the kid is. I'll give you an example. A kid who never experiences sacrifice, strain, delayed pleasure, or work hard enough that they sweat, if a kid has never experienced any of those, they've not been raised very well.

Right. I know a lot of people like that, and I definitely don't want her to be like that. That's a trust fund baby looking for a reality show, right? Right. And so we want your kid to experience some lack because money is always finite. There is never enough money to buy everything you want. Right.

And if you try that, it's like trying to take enough drugs to be happy. It won't work for you. So, you know, we don't want to give her that we don't want her to have the severe lack where she feels threatened or unsafe or shamed or something like that uh but entitled right and i and so what i'm trying to say is let's redefine what good mom is okay good mom is not swinging the pendulum from the where you grew up all the way over to the entitled brat right good mom is we're going to control the environment better because we have more money than mom did and we've learned from some of the other mistakes as

great as mom was we may learn from some of the other mistakes that she did and so we're going to swing the pendulum not too far the other way. And the way you do that is you go, okay, the definition of a good mom is my kid needs to learn to work. My kid needs to learn to be generous. My kid needs to learn that the substance of life is what's in your heart, not what's in your garage or your bedroom wall. The substance of your life is not the version of iPhone you carry. It's character and love and kindness and compassion and honesty and work. And so the things in your heart, you install those things in her heart,

and you keep her safe and fed where she doesn't feel the lack to an extreme like you did, then you're a great mom. If you allow this to go to the other side, then you've taken your good intentions and used them to ruin your kid. That's what you're afraid of. That's why you call me. Yep. Yep. Yeah.

I have a hard time giving her that sense when i don't feel that way though like i feel like scared well what if we don't have money to do this you know and so i don't want her to pick up on me feeling like that you know well that's true but here's the thing it's that's your job as mom your mom is to carry the big stuff right right kid doesn't carry the big stuff they don't carry house payments they don't carry they don't she's four she doesn't carry the worries of how college is going to be paid for that's your job you carry those worries and you square your shoulders and you spend time in prayer and you talk to god about it and say god help me carry this and you carry it

and you can do it but you're not going to pass that on to her you listen you i think you think you're more anxiety ridden than you are i've been listening to you for 10 minutes here on the air and there's a lot of verbal cues when people are freaked out and you don't have any of them or i can hide it really well yeah maybe you may be an excellent imposter but i doubt it i'm pretty good at this i've been doing it 30 years so you might be i don't know but i i really think you're doing better than you feel like you are. You carry the big stuff. You let her experience some victories, a lot of safety, and some pain under control.

Rachel Cruz came in at 14 years old. We gave her her first checkbook. The oldest child, her older sister, never bounced a check in her life. She's a rule keeper. Rachel bounced one the first week. Actually, bounced three the first week. I let her experience the pain. I made her go to the bank.

Her mother drove her down there and sit down with the banker and apologize for lying because when you write checks on an account, there's not money in there. That's lying. And we don't do lying if we're Ramseys. Yeah, that poor child was abused by her mean old daddy you know what she ain't bounced a dadgum check since so something worked i want them to feel pain under my wing where it's controlled pain so that when they get real pain they know how to handle it because pain's coming conflict is coming and you got to have those tools and that's our job as moms and dads.

You're doing a great job. Hold on. I'm going to send you a copy of the Smart Money, Smart Kids book that Rachel and I wrote together. Actually, that story's in that book of me making her go down there. Her version of the story is even funnier because she's full of freaking drama. But she was always that kid. But, yeah, read that book, and that will help you with the money parts of teaching your kid about money.

Smart Money, Smart Kids is for parents to teach their kids how to handle money. But built under the how to handle it is this whole thing of what do we derive from having money around? Safety, security, the acquisition of things that are fun. You can't buy happiness, but you can buy fun. Fun can be purchased. It's always temporary, though. And there's always a newer one and a bigger one and a better one. And there's no end to that thread that you pull on the sweater.

It's called materialism if you keep pulling that thread. It's called conspicuous consumption, and you're looking for love in all the wrong places, as Mickey Gilley used to sing. Or was that Lee? That was Lee that sung that urban cowboy music. Remember that? Looking for love in all the wrong places.

That's what you don't want to let them do. That's what the culture does. And then they end up deeply in debt, buying stuff they can't afford, with money they don't have, to impress people they don't really like. This is The Dave Ramsey Show. Hey, it's Blake Thompson, Senior Executive Producer for the show.

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