The Ramsey Show - App - Breaking the Cycle of Family Dysfunction (Hour 1)

Episode Date: March 5, 2019

The show about you

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 this hour, as we talk about your life and your money. It is a free call at 888-825-5225. That's 888-825-5225. Anna starts us off this hour in San Francisco.

Hey, Anna, welcome to the Dave Ramsey Show. Hi, Dave Ramsey. How are you? Better than I deserve. How are you? Better than I deserve. How are you? Oh, I'm doing somewhat well. I just wanted to call because I need help with my 23-year-old brother. He's living at my mom's apartment, and he has, like, no future aspirations,

and he's really verbally agreed to meet my mom, and I just wanted to know, like, how I could help him. Why do you and your mom tolerate that? Well, it's more like my mom does because he's, like, the oldest one in the house, and I don't know, like, she tends to forgive him a lot, but I tell her, like, you know, to just kick him out. But it seems like nothing's working at the moment, and it stresses me out a lot. Okay. Well, you can't help him or your mom unless they choose to want help.

The only thing you can control is you. And, you know, you started the conversation saying he was verbally abusive to you and your mom, and then you transferred it off to your mom. So one thing you can do is the next time he starts that crap with you, explain to him that he's going to die. I'm kidding. I'm kidding, but not much. I mean, son, I'm not putting up with this crap off of you.

You're a 23-year-old smart mouth, and you don't talk to me that way. Yes, he is. You're going to have to draw a line in the sand and go, this is not, you know, you're not allowed to treat me that way. Mom may go this is not you're you know you don't allow you're not allowed to treat me that way mom may put up with your crap but i'm not putting up with your crap yeah and you don't even do that i'm in the process of moving out of my house at the moment i'm only 19 i go to city college and um i'm transferring to uh probably state this year. So, yeah. How old are you?

I'm 19. Oh, he's your older brother. And you live in the house with him? Yeah. Oh, and you're leaving that house? Yes. Okay. Well, that's a good move.

That's a good move. You need to put some distance between you and all this dysfunction. And listen, here's the thing. You cannot fix your mom and you can't fix your brother. Yes. You're 19. You work on you. Yeah, I was thinking you were going to say something like that.

It's just really stressful because we live in low-income housing and I don't want to live there for the rest of my life. So I want to change my family tree. Yeah. Where are you moving to now? Well, I'm staying in the city. I want to live there for the rest of my life. I want to change my family tree. Where are you moving to now? Well, I'm staying in the city. I'm getting an apartment for $1,000 a month. That's no problem because I'm moving in with my boyfriend,

so we're both coming to work because we both go to school at the same time. How are you paying for all this? Well, I work at a financial firm at the moment. I work selling term life insurance and helping people get out of debt and all that. What do you make a year? I'm not really sure. I just started this job, but I did work at Big Lots before. I was getting paid a good amount of money, but not a lot. What's a good amount of money? I was getting

paid around $300 a month or something, $400. It was... If you make $300 a month, how are you going to pay $1,000 rent? Well, no. No, no, no. It's weird

with this financial firm because they said I could make like $300. I'm not really sure. It's just weird. I'm not sure. Okay, you need to be sure before you sign up for rent. Yeah. If you sign up for rent and you don't know how you're going to pay it, you're going to get yourself homeless, kiddo.

Yeah. So you need to have a plan of exactly how you're going to pay for things. Yeah. Where is your dad in all of this? Well, my dad, he's never lived with us. He abandoned us when we were like kids. So, yeah. Are you involved in a local church?

Yeah, I go to, I'm a Catholic, so I go to church a little bit. All right. I want you to sit down with your priest or someone on the staff there and let them help you walk through some of the decisions you're making. I agree with you that it's a good time to leave a toxic environment that you're in, and I don't think you can fix your, you called how to help your brother, I don't think you can help your brother. You've got a really big job just taking care of yourself right now and and giving yourself a little distance where you can love your brother and your mom at a distance but not up close because they're not very lovable up close and you need to get out of this cycle and break the cycle and that's what you're doing but that's

going to be all about earning an income and balancing out your situation financially so that you can buy groceries and those kinds of things. So I'll help you. You hold on. I'm going to give you a copy of the book, The Total Money Makeover, which will help you put together a budget. But that's going to involve you getting a handle on what you're going to make and not some vague promise from a financial firm. It sounds like your own commission. And you need to really get to the bottom of what your actual income is before you sign up for leases and figure out where you're going to be.

And you need someone to coach you in life outside your family, and that's why I'm sending you to your priest. And hopefully he can walk you through some of those things, or maybe a coach or a counselor there on the staff of that church can walk you through some of those things, or maybe a coach or a counselor there on the staff of that church can walk you through some things. Tell them you need some help breaking this family cycle of misbehavior and abuse and of not performing in the marketplace and ending up and staying generationally in subsidized housing,

and you need some help breaking all of that. I'll give you a copy of the book. You call me any time you need some help breaking all of that, I'll give you a copy of the book. You call me anytime you need some help and you get some people in your life that can show you how to win. That's the best gift you can give your brother and your mom is an example that it can be done. And let's start right there. And I think that'll take you where you need to go. Thanks, Anna. You call me anytime, kiddo. Open phones at 888-825-5225. You jump in. We'll talk about your life and your money.

It is a free call anywhere in North America. Daniel's on YouTube. Should I add the total of the lease payments for this coming year as a debt in Baby Step 2? $3,600. Or just keep paying it and continue with baby steps four, five, and six. Well, I don't know what lease payment you're talking about. If you're talking about a car payment, I'm going to get the car paid off. You can pay a lease off early.

You find out what the early buyout is on the lease, and you write a check as if you were paying off the car early. Now, you can't send them a little bit at a time. You have to do it in one lump sum. And so you would build up the money in savings until you have the money to pay off the car lease, if that's what it is. If it's lease payments on a house, no, that's just your monthly rent. And, you know, you don't have a baby step six yet because you haven't bought a house. You finish up baby step three, you start saving for a down payment on a house.

If we're talking about lease payments on a house. You finish up baby step three, you start saving for a down payment on a house. If we're talking about lease payments on a house, but if you're talking about lease payments on a car, that's just debt. Let's find out what it takes to pay that car off and let's get her paid off as fast as you possibly can. And that's just one of your baby step two items at that point. So, hey, thank you for following us on YouTube, Daniel. This is the Dave Ramsey Show. Tax fraud, medical ID theft, account takeover, employment fraud. These are just a few of the identity theft events that Zander's ID Theft Team has helped resolve for their clients lately. The reality is breaches are all too common and hackers are using new, sophisticated methods to steal and use your personal information.

Everyone is at risk, even your children. This is why it's crucial to have ID theft protection that covers all types of identity theft, and the only plan I have ever used or recommended is from Zander Insurance. Zander covers all types of ID theft, they have smart prevention services, and they take over all the work if you become a victim. They even have stolen funds protection, and your children are protected for free. It's just a mistake to be unprotected anymore. Call 800-356-4282 or visit zander.com. Sarah is with us in Saratoga Springs.

Welcome to the Dave Ramsey Show, Sarah. Hi, Dave. How are you? Better than I deserve. What's up? So my husband and I are debt-free, and we're in Baby Step 3B. And I was wondering where in the saving up process for a house should we start the process of looking for an ELP and starting the underwriting process? Okay. Well, obviously, before you start looking for a house, because it will tell you what price range to look in, it's going to be there. Do you have an idea of where you're going to be aiming in terms of price range?

Yeah, we're thinking somewhere between $250,000 and $275,000. We were looking to save up about $60,000. And how long will it be before you get there? I think about a year and a half to two years. Okay. All right. Cool. Well, I mean, when you get within six months range of where you think you're going to be,

and it sounds like you've done some pretty good calculations on getting there. You've obviously been very intentional, very goal-oriented, and so that's all a good sign. But when you think you're about six months out, I'd start talking to a mortgage company, get with Churchill Mortgage, and there's pre--approval but there's also a thing called certified which is one step beyond pre-approved which basically puts you in the seat of a a cash offer when you're getting ready to do the you get do the purchase and if you get churchill mortgage to certify you as a buyer that's helpful and then sit down with a couple of different elps interview them get one that you're comfortable with on the real estate world and then start outlining you know what you're going to do.

What I would not do is jump from agent to agent in terms of being a buyer. I think there's tremendous benefit in finding someone that you trust that's going to fight for you called a buyer's agent, and they're going to fight for you to a find they're going to put up with you looking at a bunch of different things because it's your brand new deal for you you're going to rule some houses out that you thought were there you're going to go oh never do a house with that i always want this and you're going to have those things you have to have and don't want to have um in the house and those kinds of things and you know then they're going to narrow it down and then they got to fight for you and help you not only find the property

but then, you know, get the best possible buy on it. And so I would align with Churchill and get certified. I'd align with an ELP that you really like personally and that you trust their competence. You think this is a professional that's going to have your best interest at heart. And I would do a buyer's agent deal with them where you just, they work for you and represent you, and they're like your right arm.

They're the one out there punching holes and stuff and making it happen for you. Dan is with us in Minneapolis, Minnesota. Hi, Dan. Welcome to the Dave Ramsey Show. Hi, Dave. It's an honor to talk to you. You too, sir. What's up? So my question to you is I'm a business teacher, and I teach personal finance, and I've been doing it for 25 years. And I actually just put together a workshop that I'm going to do tomorrow for our staff.

Awesome. And I have 45, over 45 teachers coming in, and the title of the workshop is called Accomplishing Money Goals. Good. And I'm using your baby steps, and I'm hammering hard on six and seven myself right now. Good for you. And so what I was just wondering, a little advice from you, what I might, I know one thing you've talked about in the past is that you've got to get real with people. So I'm even going to share some of the mistakes I've made through the years of dealing with money.

But do you have any good advice for me just to get everyone real and talking with me? I always teach kids kids but now i'm dealing with a lot of adults well if the teachers that you're teaching are as good a teacher as you are um in other words you obviously you you stated several things right off the bat that tells me you know how to teach the easiest sale in the world is to a salesperson. The easiest teaching in the world is to a great teacher. It's easier to teach teachers because they grasp the process of learning. They've studied it as a science, as an art form. And so, you know, in that regard, you might even tell them what you're going to do from a teaching perspective and say, okay, here's what I'm going to do. I first want to explain to you that there's a problem that some of you think that there's not a problem,

and some of you don't think that everyone has this problem. You think you're the only one that has this problem. So we're going to normalize the problem, and we're going to admit there's a problem. And you talk about your story of failure, and then I would throw in some statistics of financial failure that are in the marketplace today. We have an approaching $1.5 trillion student loan debt problem. We have car debt just broke a trillion dollars. We have a record level of bankruptcy filings. We have 78% of Americans are living paycheck to paycheck.

Normal is looking good and broke. That normalizes the problem. And that says to people sitting there that if you don't think you've got a problem and you've got a bunch of payments, you've got a problem. Or if you're sitting there thinking, I'm the only jerk in the room, well, you're not. Most of the people in the room are broke. And you talk about your story to prove that, their story to prove that. And that's how I started speaking years ago. I still use that model often when I'm doing a keynote.

And then you say, okay, I mean, classic persuasive speech model is present a problem, solve the problem. Right, right. And so first we're going to normalize the problem and discuss it and kind of roll our eyes and go, oh, well, we're all kind of in a mess, and aren't we a hot mess, and da, da, da. And then you go, okay, here's how we fix it. Perfect. Excellent. I have some of those things even in my slide presentation already.

I have the 78% of people in America with paycheck to paycheck, so I'm putting a lot of those kind of things in there. The last thing I'm putting on mine, just so you know, on the end, I've got a picture of a stool, and I'm telling everyone, and I have it in color-coded, and I'm going to have them draw the picture of the stool and go, what do you have for your retirement? And in each leg, that they start drawing the leg and talking about what those legs are in the retirement plan. So, like for me, 403B is one leg, Social Security, owning your home, another leg, all these

different things, TRA that I have and all these kind of things, which most of these people will probably have quite a few of those because we're all teachers. So it'll kind of work that way too. So I'm kind of doing this just so you know. One of the reasons I'm doing this is because when I'm done teaching high school, I really do have a passion to do things like what you're doing, talk to adults about this. Gosh, if I could get a nickel for every time at conferences,

I have a parent come up to me and go, I wish we would have had this class when I was in high school. And here in Minnesota, it's not mandated to take personal finance, but my school, I get always seven or eight sections a year, and I just love it, and the kids grasp it and want to tie into that, too. Wonderful. So I'm just kind of, like I said, just always keeping, you know, even as you move on, what do I want to do when I'm done teaching?

And I'm not going to just sit on a stool and do nothing. I've got to keep going. No pun intended, yeah. Very cool. Well, good for you, man. I love the visual and I love your efforts. Keep it up. And if I can ever help you, you let me know.

And, you know, we've got the high school curriculum from here as well that you can plug in. So excellent job, efforts. Keep it up. And if I can ever help you, you let me know. And you know we've got the high school curriculum from here as well that you can plug in. Excellent job, man. Let me know. Proud of you. Lonnie is with us. Lonnie's in Naples, Florida. Hi, Lonnie. How are you? Hi, Dave. How's it going? Better than I deserve. What's up? Hey,

me and my wife, we're getting ready to build a house. And then her and her family decided they weren't sitting down on family business. So we put a stop to a house, and then her and her family decided they wanted to sit down with family business. So we put a stop to the house, put our property up for sale. We got to be in Naples another two and a half years, and it's pretty expensive to rent. And we have enough money in the bank that we could buy a house for now. But I'd like to have that money so we can have our house built where we're moving to later on. And I was wondering if it would be all right to probably get a mortgage instead of trying to pay rent because it's expensive.

Or should we just buy a house? I would either rent or I would pay cash for a house. I probably would rent. Because here's the thing. If you, you know, just go find something cheap and rent or just call it patience. Why are you moving in two and a half years to start a business somewhere else no they they've had a family that's been here for years and uh they decided they were going to be done with it in two years and uh i can get a better job what i do up north florida and be around family and get out in busy city um and why do you have

why do you have to wait two and a half years why can't you go ahead and do that because they're going to wait two years to shut the? Why can't you go ahead and do that? Because they're going to wait two years to shut the business down. I know, but why can't you go ahead? It's not your business. Yeah, but my wife's a major part of it, and I don't want to be away from my family going to work and all that. No, I mean, why can't she step away then?

It's not her business. No, she can't. No, it kind of is. She's inclined with it with her parents. So she can't really. She's a major part of it. Why don't they shut it down sooner? They kind of want to get it 40 years in.

Okay, so she's a major part of it, but her whole future is on hold for two and a half years while they wind down to hit an arbitrary 40-year mark. This is not fair to you guys. We need to re-talk this deal. But anyway, rent. Rent. Because you're going to be going sooner than you think you're going. This is the Dave Ramsey Show. The last thing I want you to feel is buyer's remorse, especially when you offered thousands more on a new home to win a bidding war. If I've taught you anything, it's that blindly throwing money at a problem is a stupid plan

and something you'll regret for years. The key to avoiding this rookie mistake is to call Churchill Mortgage and get certified. This easy program puts you miles ahead of your competition because you are pre-underwritten. Your interest rate is secured, and yes, you can close within 14 days don't fall into the trap of offering more money just to compensate for a poor plan call churchill mortgage today and get certified call triple eight loan 200 or visit churchillmortgage.com this is a paid advertisement nmls id 1591 nmls consumeraccess.org. Equal housing lender. 761 Old Hickory Boulevard, Brentwood, Tennessee 37027. In the lobby of Ramsey Solutions, Matthew and Brittany are with us. Hey, guys, how are you?

Hi, Dave. Thanks for having us. Absolutely. Welcome. Good to have you. And where are you guys from? Queen Creek, Arizona. And that is Phoenix?

A little outside of Phoenix. Yeah, okay. Cool. Welcome. Good to have you. And all the way to Nashville to do A little outside of Phoenix. Yeah, okay. Cool. Welcome. Good to have you. And all the way to Nashville to do a debt-free scream. That's right. How much have you paid off?

We paid off $235,000. Whoa! How long did this take? It took four years. Very good. And your range of income during that time? We started out around $50,000, and now we're around $200,000. Wow, big jump.

What do you guys do for a living? I'm a nurse practitioner. I work in the ER. And Brittany is a full-time mom. There you go. I love it. Good for you. And so I'm guessing nurse practitioner, that's all student loans?

Most of it. Most of it? Okay. What was the rest of it? We had a love letter from the IRS. That was about 10 or 11. Aren't they sweet? They're just sweet. And we had a little

bit of medical debt. Okay. Like five or so. Okay. So when did you get out of school? So I graduated with my graduate degree in 2011-ish. But most of my debt was actually from an expensive undergraduate experience that I had. Ah, okay.

Poorly chosen, I take it. Financially, certainly, yeah. Okay. All right. Very good. Cool. So what happened four years ago? Because you're several years out at that point.

Sure. So we got married in 2014. We had a beautiful wedding. We had a great honeymoon. We spent the week in the Caribbean and had a new job lined up once we got home. And actually, our story is a little similar to yours. I was sitting at the table in our kitchen. I got a phone call from a debt collector.

And they said, you know, we're here to collect the debt. And I said, okay. I had saved some money at that point, so I wanted to start taking care of it. And they said, you owe us $105, at that point, so I wanted to start taking care of it. And they said, you owe us $105,000. How would you like to pay for that? And it brought me to tears.

So that night, Brittany got home from work and I broke the news to her. We had talked about this a little bit before we had gotten married. But unfortunately, I had not taken responsibility for the amount of married. But unfortunately, I had not taken

responsibility for the amount of debt. I knew that I had a lot, but I didn't know how much it was. So when you wrote it all down, it was kind of an oh, crap moment, huh? Yeah, to say the least. So we talked about that, and we had a plan. We were going to get after it. And then the next week, I got another

call. I owed $83,000, and then I owed $35,000. And so I just sat on the sofa one night just in tears. I didn't know what to do. We were overwhelmed. So what did you do? So at the time I was working and going to school and we drove a lot, or I drove a lot. And so I would listen to you on the radio.

And at the time we were actually living in California. We were going to a small church led by Rick Warren and the financial peace. Little known pastor. Nobody ever heard of Rick. Right, right, right. So financial peace was offered at the church we were going to at the time so we took the class. Okay. And so that, you said, we've got to have something, let's try this. Yeah.

And you went into the class scared out of your mind, hopeless, not knowing how. I mean, I'm afraid I'm going to get another one of these $100,000 phone calls here. Yeah. And guilty. I felt really guilty. Really? Why? Well, you know, we got married, and I came into our marriage with a lot of debt.

Oh, you just felt like you brought her a burden. Yeah. I felt guilty for the amount of financial strain that I was putting on our family. Sure. And so I felt a responsibility to take care of it. Gotcha. Okay. So what happened in Financial Peace University, Brittany? Well, it was a little overwhelming when everyone writes down how much debt they have. And when we looked at ours compared to the total of the class, it was a large portion of that.

And so we knew we... You were over half of the class's debt? Yes. Oh, no. And some of the youngest people there, I think. So we just got really serious about it and just were 100% committed to it. And as long as it took, we were going to get there. How did you keep the fear and the shame that I keep hearing in your story

from paralyzing you? I turned it around and made it a – I turned it into a strength, actually. We started using the dead snowball. And a lot of those – the federal loans, they're $3,000, $2,000, like little ankle biters, right? So you pay off that and you feel confident. So you go on the next one and you go on the next one. So it starts steamrolling and it starts to become a little game. You check the statement.

You know, this one's now paid off. Now this one's now paid off. Now this one's now paid off. And so, you know, I used it as a, you know, I turned it into almost a game, I suppose. Anytime we do one, we'd have the letter that said we completed that loan. I used it as a, you know, I turned it into almost a game, I suppose. Mm-hmm. Like a. Anytime we do one, we'd have the letter that said we completed that loan. We'd put it on the fridge or somewhere that we could see all the time. Kind of encourage us.

Amen. Throughout our journey. Amen. Very good. So you celebrate all along. So out of the four years, how much of that four years were you making close to 200 or 200? The last year we were making 200 for the majority of this we were making about 150 okay all right so the 50 was just kind of the start point

you jump up to 150 cruise along and then for the last couple of years you're at 200 or so yes and that knocks off 235 000 in four years yes you climb mount everest man it certainly seems that way yeah you did the views got to be great it's it's peaceful christmas was fun this year i bet you got lots of money and no debt that's right yeah you really are i mean you felt the burden of this i could just see your body language when you're talking about it yeah you're just talking about it's gone now but just talking about you, you started sinking again. Your weight, it's just wow. Yeah, that burden on your shoulders and on your just emotionally just thinking about

that, not having to think about that anymore. It brings a level of peace and hope. We have two little boys that as if I didn't feel guilty enough to bring this into our marriage, I certainly didn't want to make this an ongoing issue for my children to have to suffer from my educational wants. Right, right. And so how old are you guys now? 33.

Oh, man. And two babies, and you're debt-free, and you make $200,000. Touchdown, baby! Woo! I love it. You're rock stars, man. You did it. You did it. That was a hard fight you're rock stars man you did it that was a hard fight you've been through yeah it was

a fun story that I wanted to share I was driving a car it was a 99 Mazda I called it the Mazda Roddy it leaked everything oil transmission fluid the exhaust valve on the top it was smoking all the time.

It shifted hard. The transmission was going over 55 miles an hour. You're doing this. I love it. You know, so you pull in the parking lot, your car smoking next to the guy's Mike buddies, you know, brand new BMW. Right. You know, so I took it as a badge of honor. I love it.

Yeah, you do. You got to have a car with a name while you're doing a fight like you've been doing. Yeah. Yeah. So did the car die finally? It did. Yeah, you do. You've got to have a car with a name while you're doing a fight like you've been doing. Yeah. Yeah. So did the car die finally? It did, yeah. It finally was not running anymore, so I upgraded to a 2008 used Ford Focus. I love it.

Yeah, well, that thing probably brought 200 bucks, didn't it? Actually, the funny story about that, too, is that it wasn't running for a while. I had parked it down the corner, and I wasn't driving it, and I drove by every now and again just to make sure it was still there. One day, there was a letter on top of it, and it got hit. It was hit by someone else. No one was hurt. I wasn't in it. The person who hit it wasn't hurt, but the insurance wrote us a check for the value of the car, which was much more than I could have sold it for.

Wow. So it wasn't much. It was more than zero. Amen. Amen. So that helped as well. Not bad for a parked car. Yes.

I love it. Good for you. That's fun, guys. So what do you tell people the key to getting out of debt is? I think a big thing is the budget. Knowing exactly where every dollar's going is really important because if not you just you're just spending and you think oh i didn't spend that much and before you know it there's nothing there and you wonder where it went um another big one i

think is is being on the same page together yeah you know and really knocking it out i'm proud of you guys well done thank you we got a copy of Chris Hogan's Everyday Millionaire's book for you. You're going to be there in 20 minutes. Only 33 years old. Two great babies. What are their names and ages? Noah's two and a half. Jacob's seven months.

All right. Seven months. That's fun. All right. It's Matthew, Brittany, Noah, and Jacob. $235,000 paid off in four years, making $50,000 to $200,000. Count it down. Let's hear a debt-free scream.

Three, two, one. We're debt-free! I love it. I love it. I love it. You just heard the sound, didn't you? Sometimes you get to hear that sound here on the air. That's the sound of a family tree being changed.

Did you hear it? Oh, it was right there in front of you. This is the Dave Ramsey Show. Lisa is with us in Naples, Florida. Hi, Lisa. Welcome to the Dave Ramsey Show Naples, Florida. Hi, Lisa. Welcome to the Dave Ramsey Show. Hi, Dave. Thanks for having me on.

Sure. What's up? Hey, my husband and I are on Baby Step 2. We recently read Total Money Makeover, and now we're obsessed. We listen to all your podcasts, and we are really excited to get out of debt. We have $41,000 in debt, and we also have, we made a mistake that we didn't know until we read Total Money Makeover. We have a Florida prepaid college fund for our two children. There's currently $14,000 in there, and we're wondering,

do we leave that in there, or do we apply that to our debt? C, none of the above. I would not apply it to your debt. It's probably not going to help you that. What's your household income? $120. Okay, you're going to be able to knock the debt out fairly quickly anyway. I would move it from that to a $529, so it'll perform better.

Okay. Okay. Yeah, so just get with the SmartVestor Pro and move the $14,000 out of the prepaid into a 529. You want a 529. Technically, the prepaid is a 529. There's about three or four types of 529s. The type you want is not the one you've got, but the type you want is the kind where you control the mutual funds and they don't move unless you move them that are inside of your kids college fund and that will outperform the prepaid college let me tell you why okay let's walk through the numbers

okay college tuition inflation rate for the last 50 years has been around 7.2 percent okay and so when you prepay you are making seven percent on your money because it's going up seven percent a year so that's that's what you make when you prepay something is how much it inflates or how much it goes up and so you're making about seven percent on your money assuming florida tuition goes up at the same rate that it has in the past on the contrary and so all you're doing is breaking even with the increase in inflation or the increase in tuition costs you're not making any money on your money for purposes of college so in every percentage point that you can beat seven you're actually building some money for the college in addition

to the money you put in. And so that's why I want you to be in good mutual funds. And, you know, the group of mutual funds that I'm in, good growth stock mutual funds spread across growth, growth and income, aggressive growth and international have averaged north of 10 percent, most of the time up over 12 percent. And some people don't like that, but I don't really care if you like it or not. My funds have done that. And it's not rocket science to find them.

And so do they do that every single year? I said no. I said averaged. So just check with one of our SmartVestor pros at DaveRamsey.com, people that we tell you to go to to do this stuff, and they'll sit down with you and help you figure that out. Alan is with us. Alan is in New Orleans.

Hi, Alan. Welcome to the Dave Ramsey Show. Hi, Mr. Ramsey. Thanks for a few minutes of your time. Sure. How can I help? So I have some debt that I need some advice of getting out of. Some of this is business. Some of this is business.

Some of this is personal. So I'm total combined about $300,000 in debt. Yeah. You have 225 of that as a house. Oh, okay. Okay. Yeah. And then I got 53,000, about 54,000 is two cars and three credit cards.

And how much of that is cars? $44,000. Okay, so $44,000 on cars and $10,000 on credit cards. Yeah, close to $10,000 on credit cards. Okay, got you. That's personal side. So I closed the business recently, and I got left over some debt, which makes up the rest of the amount that I owe.

What kind of debt do you have left over from the business? Strictly credit cards. And how much is that? $23,400. Okay, that's not business debt. It occurred because of a business, but it has your personal name on it. Yeah, it becomes mine. Yeah, I understand that.

So you have $33,000 in credit card debt. Yeah, it becomes mine. Yeah, I understand that. So you have $33,000 in credit card debt. Yeah, combined, yes. Well, it is combined. It's all in your name. Yes. In your mind, it's separated because of what caused it, but legally, there's absolutely no separation. Yes.

Okay. So what do you make a year? I started negotiating with the credit card companies. Yeah. Are you behind with them? Yes. Okay. over six months. Okay. Now, just for the business part of the debt, which I understand is still mine, but just on the business part.

Yeah, okay. And so $23,000 you're behind on, $10,000 you're current on. Yes, that's right. Okay, and why are you behind on the $23,000? You weren't able to pay it? No. Okay, what do you make a year? Make $80,000.

Okay. All right. And so you have cars that you can't afford. I'm sorry. Your wife makes what? My wife has some additional income of $14,000 a year. Okay. So we're at $94,000.

Yeah. And you've got almost $50,000 in car debt. So you have cars that you can't afford. They need to go. Yeah. That's about $1,000 in car debt. If you have cars that you can't afford, they need to go. Yeah, that's about $1,000 in payments right there between the two of those. Yeah, those need to go away. Okay, and then back to your question on the credit card is what? So I have two credit cards with the bank.

I owe about $8,300 out of the $23,000 that I owe. They said they'll be willing to accept the payment 50%. If you give them $4,000, they'll settle it? Yes. After six months? Yes. Okay. That's not bad.

Usually they'll go less than that. But the bottom line is you need to make sure you get it in writing and that you settle them and you pay for it. But the truth is the $23,000 in credit card debt is not your problem. Your cars are your problem. Yeah, I see that too. Just to let you know some additional stats, I have about $9,000 left in cash in my business account,

and I got $6,000 in an emergency fund personally. And unfortunately, last year, because of closing my business and switching to a new job, I did not pay any taxes to the IRS, so I will have a big tax bill coming. What is a big tax bill? I haven't got my taxes done yet for 2018, so I don't know what it is. Do that before you settle this credit card. Okay. You need to get the IRS out of your life first before you settle this credit card. Okay. You need to get the IRS out of your life first before you do anything else.

How long will these credit card companies go in until they decide to sue me? Years. Okay. They're going to call you every 20 minutes. Have you already discovered that? Yeah. They're a pain in the butt, but they're pretty harmless. It's just like a mass of mosquitoes coming at you. It doesn't kill you.

It just aggravates the crud out of you. And I want you to go back and clean them up, but you want to get the IRS out of your life first. It's much higher penalties and interest, and they have unlimited power. The credit cards are quite the opposite. They're going to discount deeply, and you have to really, really really really get way back there before they actually do come after you and you're going to address it long long before then so um what did you actually make in profit on your business in 18? um i i couldn't tell you because i haven't got my taxes done yet i know would you guess for me

because you closed it i'm guessing you didn't have much profit. I stopped about 2017, and I was actually doing really, really well. I was making more money than what I am now, but I had to close it for some personal reasons. So when did you not pay taxes for? 18 or 17? 18. Okay, but did you make any money in 2018? I did. Now, January 2018, I took on a new job, and I was getting paid $800 a week. And then I had some additional funds that I paid myself in the beginning of that year, so I think about total I took in is about $50,000 for 2018.

Okay, so you might have a $10,000 or $12,000 tax bill. Yeah. All right, and you've got that money in your accounts uh yes yeah well let me tell you paying the irs is a paying the irs is known as a freaking emergency yeah okay so you have fifteen thousand dollars to your name you no longer have a business and legally you never had one anyway because this all stuff's all in your name the cash is in your name the debt is in your name so we cash is in your name. The debt is in your name. So we've got $15,000 to work against, $33,000 in credit cards, and $44,000 in cars, and probably a $15,000, $10,000 tax bill.

So go get your taxes done today and figure out what it is and then pay them. I think you're going to have the money to pay them. And then start working on settling these credit cards as fast as you can and working your way down from there. And let's get on a written budget, and let's get in control, and let's start turning this thing around. You can do it. You've been through a hard time, but you can do it.

And if you need some more help, you call me anytime. That's what we're here for. This is 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.