The Ramsey Show - App - Buying a Car vs. Leasing a Car (Hour 2)

Episode Date: November 4, 2019

Debt, Insurance, Home Buying, Budgeting 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. Thank you for joining us. Open phones at 888-825-5225. That's 888-825-5225. Sarah starts off this hour in Maryland. Hi, Sarah.

Welcome to the Dave Ramsey Show. Hi, Mr. Ramsey. How are you doing? Better than I deserve. What's up? I have a quick question, two questions. One is about a PMI. I pay $250.50 every month.

The bank told me if I pay $2,500 now, they can remove that. If not, it will be removed after two years. What should I do? What are they charging the $2,500 for? Oh, that's because in order for me to remove that pmi i'm not at 80 percent yet oh so that you're that close to your 80 percent yeah so this is principal reduction it's not a it's not a cost it's you have to reduce your mortgage by 2 500 yes. This is, if I pay that $2,500, they will remove the PMI, which is $250. Make sure, you're still not saying this right.

Okay. You're not paying anything. All you're doing is paying off your house. If you're paying a fee of $2,500 that you never get back, that's a different equation than if you are simply reducing principal by $2,500, because you get that $2,500 that you never get back, that's a different equation than if you are simply reducing principal by $2,500 because you get that $2,500 back someday. Yes. See the difference?

So is this a fee or is it just principal reduction? Principal reduction. Then do it. Yes. It's a no-brainer. Okay. You have the money? Yes, I do. Okay. I have $ have thirty thousand dollars i'm on baby step two

yeah get it in writing from them before you send them the money so that there's no uh no problem with the communication that two thousand five hundred dollars in principal reduction will do away with pmi and if that will do away with pmi hey we're there I'm done even if it was a cost if it's two thousand if it's two hundred fifty dollars a month you'd have your money back in 10 months on twenty five hundred dollars so and it's not a cost which makes it absolutely a no-brainer Marty's with us in New York hey Marty welcome to the Dave Ramsey show hey Dave how are you better than I deserve what's up I'm new to the show. I've been binging on your podcast for a couple of weeks. I've been loving it. Okay. Um, uh,

I had a quick question for you. Um, should I, my lease is, um, on my cars up, uh, this month. Good. I want to know, should I lease a car or should I buy a reliable used car? But the lease payments for the car would be relatively cheap. It's not, you know, not a BMW, you know, it's like a $200, um, all, all, all everything, you know, rolled into it. No, no fees due at the beginning at the signing. Gotcha. What would you do? I, I, I really appreciate you calling and asking the question is because it's a great

question that's on the top of a lot of people's minds. So here's the thing. Leasing a car is an alternative form of financing a car. So if we were to take the actual lease payments on the average lease, in your case, $200, right? And you were to take the buyout at the end of the lease, those are the two financial numbers you would need to put into a financial calculator and then you compare that with the sticker price of the car the manufacturer suggested retail right you would find that this money that you're borrowing that you're renting is costing you on average 14.2%. That's the average lease yield.

Now, a lease is not technically borrowing money, so the Federal Trade Commission does not make them reveal that to you. Were this a car loan, you'd get this little ridiculous federal piece of paper that shows you exactly what your money is costing you, what your annual percentage rate is. And if they were to do that on a lease, you would find the typical lease, it varies, but I'm saying the typical lease is around 14%. And I've analyzed these things for 30 years and looked at them and run them through the financial calculator.

Smart Money Magazine did a full expose on them. Consumer Reports did a full expose. Consumer Reports' actual comment at the end of their full piece of research on a whole bunch of leases, did a much more thorough job than I have done, said their quote at the end of the article was, the most expensive way to operate a vehicle is to lease it. And this is even if I'm going to finance a car on a five-year payment plan or something like that. Well, number one, I'm going to tell you don't finance anything. And if you did, coming out of this, I'm going to tell you to –

we'll come back to that in just a second, but I'm going to tell you to pay it off as soon as possible, not for five years, because that's the second part of our equation, and then we'll come back. In all the years I've been working with people who started from nothing and built wealth, we call them everyday millionaires. They started from nothing and became wealthy. They typically say one of the things that turned their life around was they started asking, when they started looking at purchasing something, they started asking how much. So rich people ask how much. Broke people, and I've been both, brother, okay?

Broke people ask how much down and how much a month. In this entire conversation, all you've talked about is how much down and how much a month. So you've got to stop that, dude. You've got to start asking how much because that's the part that kills you. How much down, how much a month says i'm going to be in debt to the man and i'm going to pay payments to the man the rest of my life and i'm going to be normal which sucks and you don't want to do that so we broke down the lease is a bad idea how much looking at analyzing these decisions based on your monthly rather than the

total purchase price is a bad idea. Now, let's back up and look at your particular situation. How old are you, and what do you make? Okay, three years old, and I'm bringing about, say, $125 between me and my wife. Oh, good for you. Great. Congratulations. And so how much money do you have saved, not counting retirement?

So I'd say $25,000. Like a little emergency fund or a little miscellaneous savings account with $25,000 in it? Yeah. Okay. And the used car you were considering purchasing, how expensive? What was the price on it? I'm looking around, but I would say $14,000, $15,000. Okay.

Just write a check and buy it. Just write a check and buy it out of your $25,000. You write a check right now. When you get ready to turn the lease in, when you get ready to do that, you've got $25,000. Buy a $15,000 car. That leaves you $10,000. Then your next order of business in your budgeting and financial plan is to rebuild your emergency

fund, because $25,000 is probably about the right amount, and I want you to get it back up there. Do you have any other debts, not counting this car situation? I have a student loan, but my parents are taking care of that. Is it in your name or their name? Relatively low. It's in my name. How much is there?

Relatively low. My whole schooling my name. How much is there? Relatively low. My whole schooling was like $35,000. How much is in your name in student loan debt? I don't even know, but I would go $10,000, $15,000. Okay. Well, I would love for you to go get rid of that as soon as you can, too. And so would your mom and dad, by the way. You make $125,000 a year. I appreciate that they're taking care of it.

If they're a day late, it dings your credit. If they're a month late, it starts to step on your credit. If they get in real trouble, it's your loan. You're going to end up paying it. That's the legality of it. And so if I were you, I would want that cleared out of my name as soon as possible. Hey man, appreciate having you as a new listener. This is the Dave Ramsey Show.

Folks, let's cut through the bull. Interest rates are exceptionally low, so you're missing out if you have not called Churchill Mortgage to see if you can save money on your home loan. Lots of other companies are out there claiming great deals, but don't get lured by slick advertisements. No-cost refinance offers do not mean they're free. Churchill Mortgage has a no-bull refinance. This means there are no hidden fees. They will shoot straight with you. Yes, Churchill can offer loans with no closing costs, different down payment options, or of course, a traditional refinance. The key difference is you

can trust my friends at Churchill to let you know what you're getting up front so you can make the smartest choice and save the most money. Go to churchillemortgage.com. Do it today while rates are low this is a paid advertisement nmls id 1591 nmls consumeraccess.org equal housing lender 761 old hickory boulevard printwood tennessee 37027 Kelly is with us on line two in South Carolina. Hi, Kelly. How are you? I'm doing well, Dave. How are you today? Better than I deserve.

How can I help? My husband and I own a small agency, and I'm trying to figure out if it makes sense for us to buy a long-term disability for him and the other employees. I think I've decided we really only need it on him, but it's pretty pricey. He's 59, and we would buy it for six years and it would be about $7,200 a year. So I don't know how to analyze

what makes sense to do. That does sound pricey. What business are you all in? Media agency. Radio, actually. Doesn't sound like you're at risk physically every day i know unless you're doing like political talk somebody beat you up or something

oh my gosh um that's that sounds high not okay there's two things i would do um how many people on your team what's the size of your team? Three and a half, if you will, so three full-time and a half. Okay, so it doesn't – I doubt you're going to get much of a break on the group, but have you shopped this with an independent insurance agent that shopped several different companies? Yes. In fact, that's from whom I got the quote, as well as Xander, and both are, you know – Right around the same. Sort of the same. both are, you know, sort of the same.

He makes, you know, just the salary is big, so, you know, that could be a factor. What did you say? Say that again. His salary is big, and so that's probably a factor, but I just don't know if it makes sense to do it or not. What's the rest of your wealth situation look like uh we are all set no debt um and a high net worth over a million uh-huh yeah okay so if he lost his ability to earn an income due to disability you could put you could make it you could you'd be okay yes we would. And that's the purpose of it is to make sure that you're covered.

And so you can self-insure through this. $7,200, I'm with you. That feels high. I think so, too. I mean, we run a tight ship, so we could afford it quite easily. And, you know, I've had the benefit of, you know, benefiting from this. I lost a husband, and it was nice to get that help in a time of distress. Absolutely, yeah.

Yeah, life insurance is essential. And long-term disability generally is a mandatory part of financial planning. I mean, it's something you want to look at for sure. The only memory I have of it is we bought it here uh when we were probably i don't know 40 or 50 people and uh i i just and ever since then we bought it it's one of the it was the one of the first benefits we were able as a small business to actually afford to provide to our team at no cost to our team and uh and the cost per person since then from 40 to 900 team members, it's ridiculously low.

And, of course, I'm on that policy as well, and I'm 59. But it's ridiculously low. Now, they don't cover my income. They only cover disability up to $300,000 a year. And so they don't – I mean, we've got people here that make more than that, and they're not covered except up to that. And so I'm not covered beyond that. But, you know, by and large, you're buying disability insurance for white-collar people flying a desk every day.

As a group, it generally, as a small business owner, is a good purchase because of the price. But apparently you've not found that to be true in your situation. I would not do what you're talking about. I agree with you. That feels high, and I would instead just self-insure, especially since you're in the condition financially to be able to do that. Well done. Well played.

It gives you lots of options that way. Jason's with us in Texas. Hi, Jason. How are you? Hi, Dave. How are you? Hi, Dave. I'm good. Hey, I was wondering if it made sense for me to buy a rental property. Well, not a rental property per se.

It's going to be my home in the future. But I'm thinking about buying one and putting a renter in it, putting about $2,000 or $3,000 a month of cash with it, get it paid off in about five years. And just wondering if you thought that made sense or if I should just keep stacking the cash and pay for it in cash in five years. But the reason why I'm hesitant on that is because property is going up 3.5% to 4% a year in my area. So I kind of want to lock one in right now on price.

And so why would you not move into it is it a resort property or something no right now i've gotten a divorce recently and moved back up um to the area i'm in my parents are 91 and 93 and i'm so you're not living in the area when you said property in my area you mean property in the area you left no property in the area i'm going to make home it's it's up in east texas yeah but that's not where you're living today yes it is yes it is i live with my elderly parents okay help them care for them okay so you wouldn't buy it because you're taking care of them in terms of you wouldn't move i'm trying to understand if it's the houses in your area why would you not live in the house now?

And I guess it's because you're taking care of your parents? Right. Okay. And so I'm here in this home. Okay. I would wait and stack up cash. I would not. Here's the thing.

I've owned a bunch of rental property in my life. I own a bunch now. And I love real estate as an investment. One of the most emotional, and I'm very unemotional about it. It's just a stinking house. Even when a house, I move into it. I'm pretty unemotional about it. But one of the few times I've had an emotional experience with a piece of property was when it was a house I used to live in that I rented or I was thinking about moving into it and I had it rented. It just doesn't go well.

It just doesn't go well. You're not going to like the experience. And I'm not saying all renters are bad or anything like that. We have great renters. I don't put people in property that don't take care of it. But no one takes care of a house like you would take care of it if you were living in it and you owned it no one does and so even the best renter in the world you know and so uh you just i wouldn't do that and i know sometimes people call me and say hey we're going to retire on the coast and five years or eight years and we want to go ahead and

buy our condo over there we're going to rent it out in the meantime and i'm like you're not going to like that experience because then you got to move in behind a renter in your dream property for your dream time in your life in a dream retirement setting and you're gonna you're not gonna like that experience it's not gonna be good for you and i'm gonna tell you the same thing dude i wouldn't do it so just pile up the cash pay pay cash when you're getting ready to buy. And you're going to be there soon. You're in a transitionary time in your life right now, and we don't know exactly how long you're going to be sitting exactly where you're sitting. Thanks for the call.

Hey, a couple of things on Dave Ramsey Show updates that we need some help with. One, we're going to be doing another Everyday Millionaires theme hour next week. And if you're an everyday millionaire, meaning you have a million-dollar net worth regardless of how you got it, I don't care how you got the money, we want to hear your story because we want to hear from real millionaires, not people with political agendas or your broke brother-in-law with an opinion. Well, you know all those people. I saw, what was that duber that was the mayor

up at chicago robert rice or something i saw his tweet this week and he's like uh note to everyone all all wealth is inherited and i'm like note to robert you don't know what the flip you're talking about so here's the thing we did the largest study of millionaires ever done, over 10,000 millionaires in this study. 79% inherited zero. So if you inherited your money, I'm cool with that. If you hit the lotto, I'm cool with that. If you are an NFL sports star, I'm cool with that. If you're a country music get fiddler, I'm cool with that.

Wherever you got your money maybe you just actually worked and saved some money which is how most of these people did it i'm cool with that we want to hear stories from real millionaires not people with political agendas not people with an axe to grind not people trying to soak the rich not people trying i want to hear from real millionaires how'd you do it and what's your advice to people who want to hear from real millionaires. How'd you do it? And what's your advice to people who want to have some wealth? And so email me at DaveOnAir at DaveRamsey.com. DaveOnAir at DaveRamsey.com. And put Millionaire Theme Hour, Everyday Millionaire Theme Hour in the subject line.

Kelly will talk to you and get you set up for the show. We want to hear from you. This is The Dave Ramsey Show. Business leaders, if you're not using LinkedIn Jobs, you are missing out. Our Ramsey Solutions Company page on LinkedIn has over 100,000 followers. That's over 100,000 potential like-minded people our team communicates our current openings to. We also post on LinkedIn Jobs because we know the right person will have an impact on our company for years to come, and LinkedIn Jobs matches the right person with the right job. It's no wonder a hire is made every eight seconds on LinkedIn, and over 600 million members visit LinkedIn to make connections, learn and grow

as professionals and discover new job opportunities. In fact, LinkedIn members add 15 new skills to their profiles and apply to 35 job posts every two seconds. Get started today with LinkedIn jobs and get $50 off your first job post. Visit linkedin.com slash Ramsey. Terms and conditions apply. In Tempe, Arizona, Kevin and Bethany are with us for a debt-free scream. Hey, guys, how are you? Hey, Dave, how you doing?

Better than I deserve, man. How much you guys paid off? $95,000 in 18 months. Wow. And your range of income during that time? $90,000 up to $130,000. Cool. What do you all do for a living? I'm a credit union loan officer. And I'm a registered nurse.

Great. What kind of debt was the $95,000? A lot of stupid. We got multiple cars from a failed small business get-out-of-debt quick plan, multiple credit cards, medical bills, and a home equity line of credit. Wow. What happened 18 months ago that set you guys on fire? So we came home from a trip to China to visit family about two years ago and had a pretty decent pile of debt. And Kevin's current plan wasn't working. And I had previously, we had done

your plan back when we first got married and been pretty much out of debt before our first daughter was born. And I kept hinting back that it was, we should probably get back to you, just kind of get back to the FPU. And finally, when we get back from the trip, he jumped on board to finally doing it again. And the irony was, is I was kind of dragging my feet this time because I wanted to see if this really was going to happen or if it was another one of his this is not going to last type thing so finally decided and agreed do FPU again online in March of that next year, so 2018. And that's when I finally was all on board. We had some of the best conversations, some of the best breakthrough in our marriage beyond

just the money stuff. Cool. And we haven't looked back since. Cool. So what kind of areas of your marriage other than the money stuff. Cool. And we haven't looked back since. Cool. So what kind of areas of your marriage other than the money stuff? I would say communication. The other thing is that when you start to talk about your money, you say it on your show and the Bible says it,

where your treasure is, there your heart is also. And we didn't realize, but as we started to talk about our money, our hearts were starting to align on what we valued, what we saw as our future, you know, our kids. It started to encompass pretty much every area of our life. That's very cool. So, Bethany, the way you describe this a couple of different times in that storyline, it sounds like that sometimes you felt like Kevin was chasing a rainbow here or there.

That's a good way of putting it, for sure. And he'll put it this way for sure, is that the hardest part for him was submitting to a plan that wasn't his own. Oh, me too. And honestly, I was waiting for that, I guess, is kind of what I was looking for. And once that happened, like he said, we just kind of all areas of our marriage, just kind of the communication came back to like the beginning pretty much so kevin that is a um that's a very cool statement um because there's a lot of us out here that are hard heads and uh you you started out as a hard head and then something clicked and you said okay

i'm actually gonna follow the rules. What happened? I think the more and more that I heard other people submitting to the plan and I heard the testimonials and I continued to see whatever I was trying to do not working, I was like, you know, looking in the mirror and i'm like uh you know the only person that you have to convince is yourself yeah it's already pretty much on board so um it it was a it was a mixture of of you could say hearing the hope and and and seeing that my plan really wasn't working yeah bethany sharon ramsey would be more brutal than you when she were discussing this. She would say, like, after Dave finally figured out he was going to live on biblical principles and submit himself to that plan, that he became someone I could trust for the first time.

That's how brutal she would be. That's pretty right on there for Mrs. Ramsey. That's pretty right on there for Mrs. Ramsey. That's very cool. That's a healing place in your marriage. I've experienced that one myself. And yeah, she looks at you different now. She feels different when you're in the room now. You don't represent risk anymore. And it changes everything. So, you know, we laid in place that Proverbs 31 process at our house where, you know, I trust my virtuous wife and I will have no lack of gain. And so we don't do big decisions without her being in agreement. And that includes hiring, you know, nowadays hiring leaders.

But in the old days, it was just hiring anybody. I wanted her to meet him and she doesn't work down here. All those kinds of things. It changed everything for us. So that's a great story, you guys. What do you tell people the key to getting out of debt is? The key to getting out of debt, for me, it has to be getting out of debt and staying out of debt because we had mentioned that we had done it before and I would say cherishing the process

as much as the end result um it's not it's not a bad thing to let the discomfort and the pain and the sacrifice hurt enough so that it forges out a disgust to where you never want to go back that was deep I like that one very good powerful and for me it just probably was being okay with your journey and not allowing comparison or others progress to detract from where we were in our um in our own personal journey great you guys are rock stars this is fun very very well done we're proud of you congratulations heroes well done you got your life back you got each other back life is good very very good so very cool all right we have a copy of chris hogan's book for you everyday millionaires you're going to be one before you know it and that's coming up

here in just a moment so uh yeah that's the next chapter in your story to be millionaires and outrageously generous along the way way to go you two very very cool all right it's kevin and bethany tempe arizona 95 000 paid off in 18 months making 90 to 130 count it down let's hear a debt-free scream three two one Three, two, one, wind up free! Love it! Woo! That's how it's done right there, man. Be not conformed to this world,

but be transformed by the renewing of your mind. This world is broken. Marriages are messed up. Kids are messed up. Careers are messed up. Finances are messed up. Normal sucks. Be not conformed to this world.

How do you keep from doing that? How do you keep from being just like one of those other people? You submit yourself to principles that they're not using. And you say, I learned the law of gravity. I no longer jump off of buildings. I found the sidewalk. It left a mark. I've got scars. I've got a PhD in DUMB.

I'm not living like this anymore. Then you change everything. And you get yourself in a position where you can not only build wealth, but be outrageously generous. You know, Christmas is right around the corner. The giving season's here. Sometimes a small gift or an act of kindness makes a huge impact. Sometimes you're in a position and you can do a big gift and it makes

an impact. I want to hear some of your giving stories for the Christmas time. We call it the generosity effect. What effect have you had on someone else or someone had on you? And then it actually paid forward. You can see the ripples from it. I want to hear some of these generosity effect stories. Email me, Dave on air at Dave Ramsey dot com. Put my generosity story in the subject line. You've gotten in a position that you're giving or have been given to and it changed everything. My generosity story in the subject line. Email us at Dave on air at Dave Ramsey dot com. We'll use your story here during the holidays, I can promise you. This is the Dave Ramsey Show. We'll be right back. Beth is with us. Beth is in Colorado.

Hi, Beth. How are you? I'm good, Dave. How are you? Better than I deserve. What's up? I have a son who is a senior in high school going to an unknown college next year. When his father and I divorced seven years ago, it was written into our divorce decree that we would split his college expenses 50-50. And unfortunately, I've been unemployed for five months. And so I'm a little bit concerned about how to stay out of as much debt as possible if I don't find a new job by the time he goes to college. And the reason I'm kind of so concerned about it is because I've been applying for jobs for this whole five-month period, and I've not received even a bite on an application. So I realize this is kind of a what-if scenario, but I do want to be prepared if my employment

situation doesn't change. Hmm. Well, your employment situation has to change because you have to eat this college situation or divorce degree aside. How are you eating for five months? Well, I am getting unemployment right now. That will end in June.

And that's enough to live on? Well, no, I am remarried as well. However, my new husband and I, we share expenses as far as, you know, bills and the mortgage and utilities, all of that kind of thing. But none of our finances, as far as our children, cause we don't have any together. We've got, we both have kids from our previous marriages. None of our finances regarding them, um, are, are joint because, you know, we've both got very different situations, but he's also been divorced from his first wife for seven years, but she continues to take him back to court constantly. And so we just have never merged every single part of our finances. Okay. So I can't really expect... What does he make a year? Man, I want to say probably about $55,000.

Okay. If you don't legally merge your finances, you need to emotionally and relationally merge them for the good of your marriage, and you don't even know what your husband makes, that's not okay. You guys have got to pull this together. Well, it's just right around there. You okay. You guys have got to pull this together.

You've used this as an excuse to keep this separate and to keep separate lives and acting like you've got a roommate here. And that's a problem. It's going to cause problems for you. So you do whatever you want to do. I'm not going to tell you to borrow money to do this. And so that leaves you with a couple of options one is to um as you said you've been diligently hunting you'll continue to do that i'm sure you'll land something um but if i were your husband i would help you with this until your finances change because of this

um and so i don't think that's out of line. I understand you have an agreement with your roommate to keep things separate, but I don't agree with it. I don't mind your, and you don't agree with me and that's okay. You're going to do whatever you want, but you called and asked me, so you ended up getting me. So that's how that works. But the deal is that if I were your husband i would want to have more of an integrated life with you even if legally we separated the stuff because of the constant child support hassles and because of the technicalities of you know raising two kids and all this kind of thing and there aren't neither one of them yours i get that part that part's okay

but you guys really need to be up in each other's business a whole lot more than you are and have combined decision making and have combined futures and combined future goals and combined pain and combined carrying the weight of the household and it's not like well i can't carry my half right now so i guess i'm going to get evicted it's not like, well, I can't carry my half right now, so I guess I'm going to get evicted. It's not, no. And I can't do what I'm supposed to do for my son right now. So I'm not going to tell you to go borrow to do this. And I would either make it up with income and or if I were your husband, I would be willing to step in until you get your employment situation straightened around

and help you with this process for better for worse for richer for poorer sickness and health unto thee all my worldly goods i pledge this is the old book of common prayer marriage vows and so it's how i live my life i understand if you don't want to do that i'm not mad at you about it i just think you're wrong hey thanks for the call open phones at 888-825-5225 megan is in kansas hi megan how are you hey dave i'm good and i know you're better than you deserve fairly fairly predictable we did our debt-free screen with you a couple years ago, and now we're two babies in a business later. And so it's an honor to be on the phone with you. I am an entrepreneurial kind of CPA.

I do tax and accounting, but I go help small business owners in their office, just kind of their CFO, outsource CFO. And our tagline is Helping KC Business Thrive, and I love it. Every single day, I love what I do. This guy called up. He's a manufacturer, and he's kind of getting started. He's experiencing some growth and he's real excited, but he said, also, I love this concept of profit first. And I would love a CPA that's trained in profit first. And I thought, well, that's, I don't know if that's gimmicky or real thing. And I looked it up and it seems like it's really just a way to behaviorally make

it so that you put profit first. But it's like you open all these bank accounts and you put money and you call it profit. And then you pay your expenses. And so I think he's an engineer and then he's got like a business degree on top of that. And I'm thinking you're just creating kind of more headache and administrative work for yourself than you need because you have the ability to focus on profit. So I was just wondering if you're familiar at all with Profit First as like a movement. I see that it's not gimmicky, and maybe it's for the person who doesn't understand profit and loss.

But I'm wondering if you – I thought Dave would probably agree with me on this. I do. I've never heard of it. But what you're describing, everybody tries to find some kind of dipsy-doodle thing where you can go around the barn twice and kick your heels together and all of a sudden it all works. And really, it's revenue minus expenses equals profit. Yeah.

And none of that happens if you don't love your customer. Right. And profit is a sign that your customer loves you back. Yeah. Profit is the applause that your customer gives you for doing a good job. The reason I've sold 7 million total money makeover books is because the book helps people.

That's where it comes from. And so I don't put profit first. I actually put people first. And profit is a byproduct of that. Yes, I'm in complete agreement. And I didn't really after reading all about it i thought well if that's the kind of cpa you want or whatever i'm really not your gal because i'm not going to

spend time opening up 10 bank accounts for you just so that you put money in the right one if you move the p around if you move the p around and put it under five different shells it's still one p right you can you can run it through six bank accounts and it doesn't grow from running it through bank accounts. Yes. I mean, and if you can't, if you're not disciplined enough emotionally to go revenue minus cost of goods sold minus expenses equals profit, you probably don't need to start a business. I mean, that's like sixth grade crap right there. Yep. I did that stuff mowing lawns when I was 12.

Right. You know, it's just not rocket science and you know you quickly learn to ascertain the you know do estimating properly on the time you're going to spend on a project the cost of the project the cost of the goods sold and you know and then you develop are we really making money here i mean you know i took one yard to cut for three dollars it took me 10 hours to cut it i didn't want that yard anymore you know, I took one yard to cut for $3. It took me 10 hours to cut it. I didn't want that yard anymore, you know. And so you learn that stuff, but you don't have to run it through four bank accounts to figure it out. It's just it starts to be basic math and common sense. So I honestly do not know the system that you're talking about, but the way you're describing it, that's the sense I get is that it sounds very, it does sound gimmicky to me.

And there's no amount of moving money around through bank accounts that makes money grow. And by the way, I don't think you should put profit first. You can put your customer first wisely thereby creating a profit. You have to keep your business model in mind. You have to look at what your expenses are. That's right. But if you don't love your customer, if you're not a fan of your customer, if they're a necessary evil for you to be in business,

you're probably not going to make it. You've got to love them. We teach that around here to over 900 people every day. We exist in this building for those of you that are not here. This is The Dave Ramsey Show. This is James Childs, producer of The Dave Ramsey Show. Did you know you can now listen to The Dave Ramsey Show on Pandora and Spotify? For all the ways to watch and listen, check out our show page at DaveRamsey.com slash show.