The Ramsey Show - App - Can We Afford an Investment Property? (Hour 1)

Episode Date: May 9, 2023

Dave Ramsey & Jade Warshaw answer your questions and discuss: "We're $900k in debt", "When can we afford to buy a third rental?" from the blog: How to Invest in Real Estate, "Should I invest in my employer's 401(k) or a Roth IRA?" from the blog: How to Plan for Retirement, "I'm 10k upside down on my car", "Should I sell my condo to save for a house?" "Take out a loan to get by for the next two years?" Have a question for the show? Call 888-825-5225 Weekdays from 2-5pm ET Join a Personality-led FPU class. Click here! Enter The Ramsey Cash Giveaway for a chance at $3,000! https://bit.ly/TRSgvwy Shop our bestsellers during the $10 Sale! https://bit.ly/TRS10Sale Want a plan for your money? Find out where to start: https://bit.ly/3cEP4n6 Listen to all The Ramsey Network podcasts: https://bit.ly/3GxiXm6 Interested in advertising on The Ramsey Show? https://ter.li/s64ye3 Learn more about your ad choices. https://www.megaphone.fm/adchoices Ramsey Solutions Privacy Policy

Live from the headquarters of Ramsey Solutions, broadcasting from the Pods Moving and Storage Studios, it's the Ramsey Show, where we help people build wealth, do work that they love, and create actual and amazing relationships. Jade Warshaw Ramsey personality is my co-host today as we take your questions about your life and your money. It is a free call, and some say the advice is worth exactly what you pay for it. The phone number is 888-825-5225.

That's 888-825-5225. Brittany is starting off this hour in Green Bay, Wisconsin. Hi, Brittany. Welcome to the Ramsey Show. Hi, Dave. Thank you for having me. Sure. What's up?

I am calling and originally inquiring because my husband and I are about $900,000 in debt. We're both 29 years old, and we have a large logging business which consumes the majority of our debt um we're just trying to figure out what we can do to minimize this if not get rid of it completely and get on track to not continually adding debt but getting rid of it yeah so what is um give me a little breakdown on this apparently you've got a bunch of heavy equipment in the logging world right yes absolutely so we have two pieces of equipment right now um one is valued at around eight hundred thousand dollars and the other is valued around five hundred thousand dollars so those two big pieces of equipment. And what is owed on those?

So we have the smaller machine paid off so that there's nothing on that. That's full equity. And then we owe around $640,000 on the larger piece of equipment right now. Gotcha. Okay. And so that's $640,000 out of $900,000. Correct. Yeah. And so what is the other 250? So we have around 90,000 in vehicles. Personal? Personal? Yes, yes. Okay. That will be changing.

I'm not sure. Yeah, it's definitely going to be changing. So what's next? So we have only, well, around $7,000 in credit cards right now. What else? And we have $90,000 in a mortgage. Mm-hmm. Oof. Mm-hmm.

Okay, so there's no other business. Now, you're still $200,000 short or $100,000 short. Where's the rest of it? We got an SBA loan when COVID hit. So that's the remainder. What, $100,000, $200,000? $200,000. Okay.

All right. What's the net profit of your logging business in a year? Taxable income. Taxable income. Yep, around $300. Okay, good news. All right. Okay.

And you said you're going to be doing something to clear these vehicles, which is good because they're out of control. And so really, the bulk of this by far is one piece of equipment. Correct, sir, yep. Okay. So there's two ways to attack this. Number one, it's a little bit complicated, but just follow me through here. What we teach folks in Entrez Leadership, when they have a business that has debt, is you need to bring home the minimum you can operate your house with.

Let's just call that 100 for for discussion purposes okay okay and you bring a hundred home you clear off a bunch of these vehicles you use the hundred to get rid of the credit card debt and the the the mortgage you're just going to pay your mortgage until we get to baby step seven right but we're going to clear these vehicles by selling them and or reducing them with your hundred that leaves us two hundred thousand to address eight hundred thousand worth of debt at the business okay right and so if you say i'm going to put uh of that 200 i'm going to put uh 175 towards debt every year and $25 in retained earnings every year. I'm going to put $25,000 in retained earnings to buy new equipment and to fix the old equipment and for emergencies and that kind of thing.

And then I'm clearing this SBA loan and I'm clearing this piece of equipment. And of course, the other thing you could consider is that this piece of equipment was a mistake. And it needs to be sold to pay off the debt that was my question is it a completely necessary piece of equipment or is it something that you can do without so it is a necessary piece of equipment in order to maintain the business now could we get a less expensive option absolutely that would be you know no warranty, all of those things on that. Yeah. But it is an option to get a cheaper machine for sure. Well, I mean, you want to ask yourself, here's the thing you want to look at when you're buying

things for business. Anything you buy for business is an investment, okay? And investments aren't toys. So an investment for business is what is the minimum thing the minimum purchase that will do the job do the job requires that it has that it is uh especially we're dealing with fleet and you're dealing with equipment do the job means it has to start it has to operate can't break down all the time right so it can't be a piece of crap that's not doing the job but the other thing is we don't have to have the fanciest one with the gps on it and the microwave oven in the cab if you were to sell this piece of equipment and get a used piece what's the price difference there i own probably around 200 000 to purchase a used one oh no that would be the difference so we're still looking at our own so you buy you instead of four instead of 650 you'd pay for you'd have 450 in debt yeah absolutely

yeah yeah okay well here's the thing if i'm looking at this what i'm going to do to answer your question is we teach people take your net profit after you've taken a living wage out and put a percentage of all your net dollars towards growing retained earnings and everything else on the debt and no more purchases with debt until we have this debt cleared. Right. And then we pay cash for all future purchases. So you've got to make this piece of equipment last if you're going to sweat to pay it off because it's going to take you like four years to clear this.

Yes, yes, absolutely. But it's doable. I mean, it's doable. That doesn't mean it was a smart thing it doesn't mean it's what i would do it's not i mean the way i would go at it if you had it to do over i would have purchased the two hundred thousand dollar cheaper one and i would have saved up and paid cash for it because that's how i do stuff here i mean i've got tens of millions of dollars of hard assets in this building i mean this one room has about five miles of wire running through it, right,

where we do studio in, right? And so we've got cameras sitting here that cost a bazillion dollars. We've got everything else, all this stuff we have sitting around here. But, you know, we don't buy the – we buy what we call MF, minimal functional. Minimum functional. How can it function at a minimum? And because, you know, the thing is, if it's electronics, and for that matter, if it's a piece of equipment, it's got a shelf life before it's just not worth anything.

That's right. Yeah. Can you imagine if we're still trying to operate with non-HD cameras in this HD world? Yeah, it'd be ridiculous. That just tells me I'm old, right? I mean, I used to be on the air with non-HD cameras, you know? So before HD, I was on Fox Business when it was HD, and Fox wasn't. Wow.

Yeah, when they first came out. So there's a day, you know, but all of a sudden, those cameras, poof, instantaneously worth zero. Just like that. This is The Ramsey Show. Jade Walsh, our Ramsey personality, is my co-host today thank you for joining us america it's a free call at 888-825-5225 if you like this show we would appreciate some help we don't spend 300 million dollars on marketing and don't have our own football stadium like so bad uh but excuse me the allergies are bad this time here but the uh um

yeah and now we just um we just help people millions of people and so thank you if you spread the word you can do that by clicking share on your youtube or podcast and share it with the link with a friend you can share where you listen to the show on a talk radio station near you watching it on tbn you can leave us a five-star review one stars aren't helpful move on if you don't like it and um of course you can um subscribe click the follow the subscribe button on the uh youtube or on podcasts wherever you're listening any of those things help the old internet algorithm do its thing and push the show out to the front in front of people and we're able to help more people because you did those three things subscribe share and five stars that's the three things do them right now ready set go all

right now she knows whether she knows in salt lake city utah hi sheena how are you hi jade good thank you sure what's up? So my question is, my husband and I have two rental properties. The first one has 50% of its value mortgage, and we rent it on Airbnb and made pretty good money for the last three years. The second one we built with cash on our shop. And right now we're paying $3,000 on our personal house monthly to pay it off within the next five years. My husband would like to get a third rental in the next three years, but we're bumping heads on how to do this. I just want to pay off both houses and then get a third rental in 10 years.

He wants to pay off our house and then finance the third rental. Is there an alternative to our ideas to get a compromise between the two of us? You don't have a problem on what to do. You have a problem on what your beliefs are. Correct. You have not agreed on your beliefs, and that's more important than the actual answer to your question. You guys really need to argue. You need to really argue through through because here's the deal debt 100 of the time equals risk more debt equals more risk less

debt equals less risk and no debt equals next to no risk. Okay? Correct. So if you borrow nothing down real estate crap from some idiot on Tic Tac and you go buy a whole 10 or 15 houses with nothing down, your rents aren't even going to cover your payments because you're fully leveraged and you're going to lose everything and go bankrupt because you took so much debt that you took on the ultimate risk and it will come home and kick your butt okay you're not suggesting doing that but uh your husband is more in that camp and you're more in the dave and jade camp which is we don't borrow money at all yeah he always looks for a deal he likes likes to get the houses. I get a deal, too. I own $150 million in real estate, and I always get a deal. Yep.

And I pay cash for it. I like that idea. It feels good. Yeah, I pay cash for it. I just don't buy it if I can't pay for it. And there's been times in my life that I've seen stuff come in front of me that I had to walk away from because the only way I could get it would have been to borrow money to buy it, and I'm not going to take the extra risk.

I'll wait. Yeah, Sheena, I think you know what we would tell you to do, and I have a feeling that you agree with it. The question is getting your husband on board with that idea. Correct. Your husband does not perceive debt as risk. With houses, correct. Period.

And 100% of the time he's wrong on that. Do you have other debt? Even people that love debt. Correct. Period. And 100% of the time, he's wrong on that. Do you have other debt? Even people that love debt. I mean, my friend Robert Kiyosaki believes you ought to borrow up to your eyeballs on real estate. He loves it. He loves debt. And he thinks I'm crazy. And we're friends.

It's okay. I like him. But he thinks I'm wrong, and I think he's wrong. And so, but he loves debt. But even he will tell you, more debt equals more risk. Because the margins are tighter, the cash flow is not there, and you get bit in the butt every time there's a little hiccup in the economy and your renter decides to go sideways on you,

whether it's a commercial renter or a residential renter. It doesn't matter. They go sideways. You can't pay your dadgum payment because the only way you could do it was they pay theirs. That's risk. Yeah. And I like our second one because it's paid for with cash exactly would

you be interested in selling off the first one to pay off your personal mortgage so the first one i want to move into as our retirement house it's smaller than our current house and you're nowhere near retirement yeah how old are you uh i'm 39 girl in 70 years we're going to move into that little house absolute we're going to have houses in the sky you are not going to be living in that house we don't even know what's going to be here in 70 years it's just bullcrap so i go back to that first question we want to move into something like that or smaller when we get to retirement but believe me you're not even going to own that house when you get to retirement right right right that's what i would do if you if you can

pull enough money to pay off your personal mortgage i'd sell off that now of course you're going to have to get the husband on board but i'd sell off that first one by you know pay off your personal mortgage and how quickly could you then save up to buy another house in cash yeah here's the thing. You've just got to make the decision, you and your husband. And you're uncomfortable with it, and he's comfortable with it. And you're uncomfortable with the fact that he's not being wise enough to actually say out loud, this equals extra risk. I can handle the risk, but it does equal extra risk.

If he would at least say that out loud, we would all be better off with him, even though he's going to go a different direction. But right now, it just sounds like he acts like that risk isn't there, and it's just there. It's there. It's 100% there. And people who say, let me tell you, here's how you know a person who has not been a landlord for very long or just wants to be a landlord,

100% there, an inexperienced landlord. The renters will pay my payments. been a landlord for very long or just wants to be a landlord a hundred percent they are an inexperienced landlord the renters will pay my payments this is someone who has not managed much rental property famous last words yeah that's just absolute horse crap because the renters are going to do what the renters are going to do period passive income and uh yeah it's passive i got your passive try Try collecting rent. There ain't nothing passive about it. Man. So that's just ridiculous.

Yes. No, it's not. That's an inexperienced landlord. That's true. So, guys, here's the deal. The borrower, the rich rules over the poor, and the borrower is slave to the lender. He who is impulsive exalts folly. Folly is an old word, but it basically is a fool in action.

A fool while moving is folly. You get to watch a person's folly. You're watching a fool make his life horrible, right? He who is impulsive is a fool in action the rich rules over the poor the borrower is slave to the lender now what does slavery mean well it does not mean literal slavery well whatever controls you you're a slave to yeah there you go but i mean it's not it's not literal it's not like a the sex slave trade or something like that. Right, right. But it is a thing where you have to keep working that job because you've got to pay that bill. Yep.

You've got to collect that rent, and you have to be mean to somebody you didn't want to be mean to. Yeah. Because you've got to pay that bill. It doesn't matter if your tenant has stage three breast cancer and can't work and she's a single mom. You've still got to pay the bill or she's going to get evicted when they foreclose on you so you've got to force her you cannot be generous to her because you are a slave to freaking city bank that's and so this is you don't you don't have the margin to be kind and strong and courageous when you're a slave slaves

don't think about generosity slaves think about tomorrow they don't think about five years from now slaves think about avoiding pain and hope the master is nice and no one's thinking like that dave people are thinking i get this house the renter pays every month i got this margin they're only thinking about the best possible scenario they're not thinking about the real world situation that you just described that I'm sure is happening every day on. 100%. Yeah, you know.

100%. So we love real estate. Like I said, I've got a bunch of it and I pay cash for it. The interesting thing is it cash flows like a bandit when you get it paid for. And so you can buy your next one pretty quick with the rents off of that one because you don't need the money. Well, you got time to get a good tenant in there. You're not.

And it's pure rent. Yeah. It's pure money. You're not siphoning off three quarters of your rents and going back to some stupid mortgage company. So you can save up and pay cash for the next one pretty quick. This is the Ramsey Center. Jade Warshaw, Ramsey personality, is my co-host today.

Thank you for joining us, America. We're so glad you're here. Hey, if you listen to this show long enough, you can piece together what we teach, and you can make some progress with your money. You can jump around and try to get all the puzzle pieces, and maybe you can fit some of them together on YouTube. Most of our stuff is there and all over the place, for that matter, on the Internet. Oh, and by the way, before it was our stuff, it was called Common Sense.

So it's all been around. But right now, what we have figured out is that it's hard to get to the level you should as fast and easy as you should without the proven system in detail brick upon brick upon brick upon brick and people walking with you now imagine if the person that was walking with you was like j Warshaw, like a Ramsey personality, like Rachel Cruz or Dr. John Deloney or Ken Coleman or Eddie Cullen or, wow, even George Campbell. I mean, there you go. These people walking beside you, they're actually going to be Financial Peace University coordinators. Yep, online. You can join a virtual class and they are going to coordinate

the group and in other words be there once a week to have a discussion with you hold you accountable get things going and you just did one of these it's your second one it's my second one we started last night dave um and just for anybody listening you literally have until tomorrow to sign up for my class you can still sign up we'll send you the video for the one you missed and then get started in person on lesson two. And I'm telling you, man, we had a blast last night. We had a good time. Well, the first class is you're nice. Well, and then later on, you get mean.

I tell it like it is. I actually had to tell it like it was a couple of times last night even already on the first class a little bit because you know the girl wanted to go to birthday parties instead of pay off debt and stuff like that so i had to tell her the girl the girl there's always one chantelle she knows who she's a she knows exactly and so is your whole group yeah that's right we We have a good time. Well, we have accountability because we love you. That's right. And we have encouragement if you're struggling and you're scared.

All of that goes with the deal. So all the meanness aside, it's not really mean. It's just us telling you the truth. And in a world where everyone lies and doesn't tell the truth, telling the truth sounds really harsh. It sounds hurtful, but it's actually the best medicine. That's right so hey george or rachel or jade or john or ken or eddie would love to work with you and be your coordinator and all the personalities are leading financial peace university rachel and jade started yesterday but

you can still get in to sign up for a class go to fpu.com fpu.com or go to ramsey solutions.com and just find the fpu and you'll find the personality page take fpu with a personality it's a fun idea we've never done this before in all the years of doing this financial peace university and it's quite popular very very big deal brandon is with us in Huntsville. Hi, Brandon. How are you? I'm good. How about you, Dave? Better than I deserve. What's up?

Okay, I wanted to get your advice on my retirement investing. So my employer offers a Roth 401k. Great. If I put in 7%, then they will match 5%. Correct. So my question is, should I put in 7% into my Roth 401 and put 8% into a Roth IRA, or should I just put all of my 15% into the Roth 401? I'd put 15% into the Roth 401 because it is a Roth version and there's the match there. And then if for some reason your 15% maxes out your Roth 401 because it is a Roth version and there's the match there. And then if for some

reason your 15% maxes out your Roth 401k, then you can move over to a Roth IRA. It's amazing that they offer that benefit. That's a great benefit. That's a great deal. Now, two things. One is that's assuming that the mutual funds in your 401k are good ones. Okay. You got good track record mutual funds in there. If you do, then Jade's exactly right. Now, if your 401k are good ones. Okay. You got good track record mutual funds in there. If you do, then Jade's exactly right. Now, if your 401k is weak, I'd still take the match because 100% rate of return before we start helps even a weak one go. Okay. So, or not 100%, but close.

Five on seven, right? And then you would go over to Roth and get really good, juicy mutual funds if yours aren't juicy there. But I suspect yours are probably fine, and so I'd probably do just exactly what Jade said, if you're comfortable with the quality of the mutual funds in the 401K. Now, you know the match portion is not Roth. It's not allowed to be. Okay. The match portion will be traditional now at the uh once you're in baby step seven you can

roll your traditional match per per portion into a roth but you'll have to pay the taxes on that amount of money when you do that i would not do that until you're in baby step seven okay i do that every year i'm on the company so oddly enough, I match myself. How whack is that? And then I roll it over into a Roth and pay the taxes on the match portion every year because the companies are required to match with traditional 401k dollars. But you got a sweet deal, Brandon. He sure does. That's a great deal. It's a good match.

And the fact that they've got the Roth, that tells me their mutual funds are probably high quality. So you're probably high quality. So you're probably just fine. Austin is with us in Chicago. Hey, Austin, what's up? Hey, Dave, how's it going? Good, man, what's up? Well, I've been struggling for a year here since I made the new college graduate stupid decision

and bought a car. You're right, that's stereotypical, man. love it what'd you buy man uh 2018 jeep compass a compass wow yeah big time big time all right oh man how much do you owe on how much do you owe on this piece of crap? $21,000. No! Yep, yep. It's been hurting. What do you make? About $63,000 right now.

Should be bumping up to $75,000 come January 1st. Good, good. And that's working 40 hours? Yes, yep. How can we help you sir i just want to know because i've been teeter-tottering on this because i owe 21 the trade-in value is like 10 5 wherever i go give or take a thousand yeah and like i'm like, I want this thing out of my life. Did you trade a car with negative equity in on this thing? No, no.

I went from a 2005 Toyota Corolla 0 to 100 with this 2018 Jeep Compass. So how in the world do you lose $10,000 in value in one year? Because that car sucks, Steve. I know it sucks, and I think they overcharged him for a sucky car but we did hey everybody I talked to you said that they were stunned by the sticker price what I paid for it and then on top of that and you said you're how old I'm 25 that's awesome hey this is great news because you have the whole rest of your life to never make that mistake again.

That's true. Oh, Lord, I won't. Because you, by God, have thoroughly learned this lesson. I'm so sorry. What a horrible thing to go through. So you're $10,000 upside down. You owe 21. What other debt have you got?

I got $85,000 in student loan and $7,000 in credit cards. Okay. Well, you're stuck so here's what you're gonna do you're gonna work like a maniac you need two more jobs i've been thinking about that too yeah i want you to you know you're not gonna see the inside of a restaurant vacation and certainly not bar hopping on the weekends and chow town definitely got a few of those so we're gonna uh we're gonna work all the time and because here's a let's just pretend that you made 90 and you're single and you don't can't spend any money because all you do is work right you'd have a big old pile of money out of 90 to knock out what amounts to about $100,000 worth of debt. What's your living situation?

Right now, my fiance and I are actually renting. Okay. When are you getting married? Not until 2025. Why? Give us some time to clean up this mess. You can clean up a mess as a married couple. People do it all the time. It's fair enough.

Does she have debt? Yes. I don't know exactly the number. The mess is that if you guys work together as a married couple, you're going to do this a whole lot faster, a whole lot more efficiently. And so that's what I would recommend. I wouldn't recommend waiting until everything's perfect to get married because you already decided to get married and figured out neither one of you is perfect.

So, yeah, hang on. I'm going to give you a financial peace university. I want you to go through that. And I really do. I want you to gear up, get about six jobs, and I want you to tear into this debt like your life depends on it because, dude, it does jade washall ramsey personality is my co-host today thanks for being with us america open phones at 888-825-5225 bill's in hartford connecticut hey bill how are you

hi dave and kate thank you very much for taking my call. Sure. What's up? So I have a question. So I own a condo with my wife, and I was wondering, is it possible to rent instead of owning a condo to save up to buy a house? Why? What is your opinion?

Why? Oh, I owned, so I live in an apartment kind of in-house and me personally i like a house better like the house is the best okay but i mean you want to buy a house i got that but why don't you just uh does the condo have equity um i don't i mean uh well here's the thing um i bought over 160 000 and it could probably sell now for 185 000 because um that's what my neighbor sold his for okay so you're not got much equity by the time you by the time you pay expenses you're just going to get out you think so yeah yeah yeah yeah twenty thousand dollars you're gonna spend you're probably gonna spend most of that on commissions and expenses to sell the property i mean not maybe not quite

that much but yeah very well could so um yeah you're not going to come out with a big pile of money or anything when you sell it um and then you're going to go rent something and save up a down payment well what are you paying what are you that's what he said is that what you said yep yeah what are you paying now every month um so the mortgage um this is including the kano fees is 12.32 a month do you think that you would be able to rent for cheaper than that well um, I looked online and rent ranges from $1,200 to $1,500 to $1,300 in Connecticut. Yeah. Yeah.

So a one or two bedroom. So you're not going to do any better. Well, okay. So here's the situation. So stuff like, say, for example, the furnace went out. I had to pay $4,000 to replace it. Yeah, because you own it. Yep.

I mean, would it benefit me to live in a place where I don't have to pay for to fix things up? I wouldn't do it. I would stay where you're at. If it was some drastic, you know, if you had a bunch of equity in there that you could get your hands on, that would be one thing. If you found that it was going to be a drastic change, you know, between renting and what you're paying now and ownership, you know, you could consider it. But for you, there's no real difference. I mean, you got to put your emergency fund aside, you know, for things that pop up. And yes, home ownership or condo ownership in your case does come with things that, you know,

you're on the hook to repair. But in your case, I think there's no reason that you can't start saving for a home now. How much do you earn every month? $5,300 after taxes. Yeah. Okay. So here's the thing. Three years from today, between now and three years, if that's what it took, or four years or five years, if that's what it took to buy the next house to save up to buy the next house during that three four or five year period of time rent is going to go up every year okay and the value of your condo is going to go up every year but your payment is not so i would stay in the condo and keep my expenses low even though you just had this horrible thing having to buy a furnace and that's kind of made you go kilter on it sideways but jade's exactly

right i would sit right there until i can save up my down payment and or the condo grows more in value and will help provide you with the down payment for the next move yeah i don't disagree with you that a home is a better standard of living for most folks, especially in early stages of your life, moving towards marriage, kids, that kind of stuff. So I think your direction is a good direction. But what I would do is sit tight and let's have this fixed low payment and deal with whatever repairs, but also get the benefit of increased value. And while you're trying to save up and buy something.

That's exactly it. And I want to make sure that if he has debt, he pays that off first. Absolutely. Clear your debts and be working on your income during that time, too, which will affect what you can buy. Dave is in Philadelphia. Hi, Dave. Welcome to the Ramsey Show. Hi.

Thanks for taking my call. Sure. How can we help? Hi, Dave. Welcome to the Ramsey Show. Hi. Thanks for taking my call. Sure. How can we help? So I'm expecting my income to increase pretty dramatically in two years. But in the meantime, I'm having trouble paying costs, including two kids in daycare. So my question is, is it okay to go into debt, take out a loan, or is it better to become extremely frugal and cut costs as much as possible?

C, work more. None of the above. So what is this guaranteed income increase that's dramatic in two years? Explain to me what's going on. My wife is doing a medical residency, so in two years she'll be done with that and get a job as a doctor. Yeah, that will increase things pretty dramatically. That's great.

And how much debt will you guys have? Right now we own a house, and aside from the house, we have about $25,000 in student loan debt. And is she borrowing to finish medical school? No, she has no med school debt. Wow. The student debt is mine. Okay. So she'll graduate debt-free in two years.

She's done with medical school. She's doing her residency right now. But, I mean, she'll finish and pass her boards after residency and become an MD. That's correct. Okay, excellent. And no more. So what's she making in residency about 70,000 and what are you making about 110,000 you explain to me why you can't get by on 180 and you have to borrow money because you can't get by on 180,000 dollars something's

not right we are child care costs are about $80,000. $180,000? And you're going to explain that with child care costs? Hold on. How much are you paying a month in child care? It's about $80,000 a year. Why? You bought them in college?

The base tuition for the child daycare we use is 25 000 per kid then we pay extra for early care and aftercare and it doesn't go during the summer so during the summer we need a nanny there's there's cheaper route i know that they're gonna be as nice as i can dave you guys have lost your minds there's cheaper routes oh you Oh, you think? There's cheaper routes. That's all I can say, because here's the thing. Well, you got them in some kind of dadgum. I mean, are they going to Harvard? What the crap? It is a pretty fancy day.

But then you can downgrade. You think? They're not even in school, and you're already paying $25,000 a head? Yeah. Come on, dude. That's just dumber and crap seriously downgrade it's time to uh it's time to to take the the kids off filet mignon i don't care how much money you make there's not enough money in the world that doesn't make that stupid gosh

find you a free summer camp anything during the summertime we're gonna borrow money now we're gonna take out student loans for the four-year-old because that's what we're coming down to don't do it no you make 180,000 yeah i think you need to become frugal if that's what the definition of living on 180 grand is yeah you're killing me daycare is expensive daycare can be expensive but it doesn't have to be that expensive let's just put that out there a kid yeah i think not unbelievable i think not i think not no uh yeah i think i think you can just i'm having trouble here i think he can get i think he can get it for half that half that yeah yeah in pennsylvania i gotta believe that yeah yeah yeah yeah if not if not we're opening a daycare tomorrow i know right dave's kids heading off to philly load up the truck and head to beverly

oh my gosh there's gold in those daycare hills this is like george's doggy daycare people man the things we now call necessities in this culture so sweet guy you're a nice man i'm sorry to make fun of you but that's crazy and y'all need to cut that out that's not a good investment your children are precious and yes they're worth whatever but you don't need to be nuts about it yeah and and this is crazy especially when you tell me you're talking about borrowing money to cover this is crazy especially when you tell me you're talking about borrowing money to cover this expense among others because you got what two kids or three kids at 25k a piece two is 50k for daycare for two kids that's too much i think we can universally agree

among all the listener base yeah nope it's too much and uh then then guess what you've solved your problem you don't have to borrow money dude but seriously if you say out loud in america today i can't make it on 180 000 so i need to borrow money just the fact that you enunciated that is a problem this is the Ramsey way. Just go to ramseysolutions.com today to sign up for our newsletter. Again, that's ramseysolutions.com to sign up for our weekly newsletter.