The Ramsey Show - App - Can We Buy a $400,000 Business? (Hour 2)

Episode Date: January 25, 2021

Retirement, Career, Business, Debt Sign Up for a FREE trial of Ramsey+ TODAY: https://bit.ly/31ricKt  Tools to get you started:  Debt Calculator: https://bit.ly/2QIoSPV Insurance Coverage Checkup: https://bit.ly/2BrqEuo Complete Guide to Budgeting: https://bit.ly/2QEyonc Check out more Ramsey Network podcasts: https://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. Open phones this hour as we talk about your life and your money. You jump in, we'll talk about your life. We'd love to have you. Dr. John Deloney is my co-host today.

Ramsey personality, best-selling author of the book, Redefining Anxiety. You can call here at 888-825-5225, and we will talk. Adam is in Cincinnati. Hi, Adam. Welcome to The Dave Ramsey Show. Hey, good afternoon. Thanks for taking my call. Sure.

What's up? My wife and I recently finished paying a full overhead except for our home, and I am blessed to get a 7.5% match on my 401k from my employer. Wonderful. When I'm calculating savings for retirement, do I do 15% excluding that match? Yes. Okay. And then should I put all of it into that,

or should I only put in to get the maximum match and then put the rest in a separate account? Well, the rule we use is we call it kind of rock, paper, scissors, except it only works one way, and that is match is best. So for sure, the first seven and.5 we're doing, right? I have to do 5% to get 7.5. You have to put in how much? 5%.

Okay, then the first 5% is a no-brainer, okay? We're going to do the match first, then we're going to do Roth. Now, they offer your 401K in a Roth. I'll have to check. I doubt it because we have a big company that we go through third party. So I doubt it. I think it's just a slate of index funds that we can choose to invest in. Who do you work for?

It's a company or a large? It's a large company. Well, most third parties are offering Roth. I mean, if they're like with Fidelity or they're with TIAA or they're with whoever, most of those would have a Roth available. If your company chose not to offer it, that would be what's unusual. Okay. So let's pretend both ways, and then you'll have your answer. Okay?

Number one, we're going to take the match. The second thing is we're going to take roth because the best thing is double your money in your case more than double your money five to seven and a half the next best thing is tax-free growth and the next best thing is the traditional which is tax deferred growth you don't pay taxes on the money and you get to grow money with what is going to be taxes someday. And so that's your last mathematical choice, but none of them are horrible choices. So we're going to take your 5% match, and then we're going to do a Roth. Now, if your company offers it, and you have good options, and you want to do it all there, that's fine. If you want to do a Roth as an individual, Roth for you and your wife, you can just get in touch with one of our SmartVestor pros and sit down with them.

They can help you select the types of mutual funds we pick, growth, growth and income, aggressive growth and international, spreading it across those four evenly. But then if you've maxed out Roth and you still haven't gotten to you putting in 15%, let's say, for instance, your company does not have a Roth and you go do a couple of Roths individually, and that plus your 5% is still not 15%, then you'd go back and do some non-matching traditional in your original 401k. So, Dave, I've worked at multiple places over the course of my career, and every place is different when it comes to match. When a company is thinking through what the match is, why does it vary so much? Is it a matter of how much money the company has, or is it we pay a little bit higher salaries here so we match a little bit lower here?

What's the thinking? It can be anything. Obviously, well, not necessarily obviously. In most cases, the match is vested instantly, meaning that if you leave, it goes with you. Right. Okay? Very unusual for it to not be.

The second thing, then, is you're using the match to not only be generous to the team, but in most cases, somebody wants it to give you a reason to stay. It's like compensation. It's like being paid well. It gives you a reason to stay. I get paid well here, so I want to stay here. So I got this great match. It's a bit of a golden handcuffs thing.

I wouldn't want to give up this match, and so if I'm going to give this job up, I'm going to give that match up. And, oh, boy. But if they go, well, they don't match anyway. And they put a match over here. So it's a competitive thing for hiring or retaining team members. It's a way to be generous. When I see a 7% match, that makes me think something, whether they're being super generous on the back end, or they

may compress salaries a little bit over here, or maybe I'm just a cynical guy there, or maybe they're trying to make it hard for you to leave. Yeah, 7.5 is unusual. That's high. I've never heard that high. Well, I've seen 10. I've seen up to 15. Y'all had an 8. Yeah, I did.

But it's an unusual number. It's usually 5 or 3. Right, right. And most of them are. 78% of the companies match. Right. Now, something. So not matching anything leaves you at a disadvantage from the standpoint of hiring or retaining to other employers who do.

So it's a competitive advantage, so to speak. But probably it's a huge company. I'll give you a guess. Okay. 10, 15 years ago or more, they did away with their old pension plan. Okay. And they converted the money that they used to dump into that, and they moved everybody out, and a bunch of people were pissed. They moved them all into 401ks, and so they just did the math, and it came out 7.5.

And they left it. And they just did it, even if, and it came out 7.5. And they left it. And they just did it, even if you're not putting in 7.5. That's a real unusual thing there. They're giving a match that's higher than what he puts in. Right. That's very unusual. Yeah. I hardly ever see that.

That's just a free 2.5% then. Yeah. That's very unusual. So it has something to do with something else. Well, that's what I'm wondering. Probably. And I've never been a CEO of my own company that way. But the old-fashioned pension plans, like when I started the show 20 years ago,

there were a lot more pension plans than there were 401ks. And every year they just kept dropping and dropping and dropping and dropping. Because people started getting on the 10 key. Well, they're very expensive. And the 401k, you control your destiny. The team member controls their own destiny. They can become a millionaire, and lots of people have with their 401ks. Just steadily investing, and you can take it with you when you leave.

You roll it to an IRA when you leave. It's yours. The pension's got all these rules on it. Do I buy more years? Do I wait until I'm 62 or 63 1⁄2 or all this crap and nuanced stuff you have to get into with a pension. The 401k is just real clean, real simple. The cost to the company is two things, whatever you match, and the cost of the administration, which with 1,000 employees here, our administrative bill is, you know,

it's just south of $100,000 a year just to keep up with the dadgum regulations, you know. And that's money that just, you know, goes out to, quote, professionals to do this stuff. And, you know, I'm not mad at them or anything, but that's all based on federal regulations. Scared death somebody's going to screw somebody with a 401K. And so that's money that doesn't go into our team's account. But we've got a match here. And for a long time when we first started, our match didn't start until you'd been here a year. Yep.

Because we wanted to kind of make sure you're here before we start giving you money, you know, extra money. And so it was more like a long-term team member thing. Now, we started now at 90 days after everything else. We started immediately or whenever. When did you start? Remember? I don't remember. I don't remember if it was the first day or 90 days.

Like all our other benefits are set up, same way. But as we've gotten bigger and had a little more money, we've relaxed some of that. Good questions. This is The Dave Ramsey Show. I'm going to go on a little rant here for a minute. I took a call from a father who wanted to know how to plan for the care of his special needs daughter after he dies. Why is it that parents of special needs children are so deliberate in their planning while other parents have a tendency to be sloppy? Do the needs of your family matter less if something happens to you? Oh, I'm sorry. Did I just guilt trip you into getting some term life insurance? Well, then good. Your family needs you to step up. Having the right

amount of term life insurance is a matter of personal responsibility. If you want to use the new year as a reason for doing the right thing, then do it. Term life insurance is something every family needs, which is why I talk about it every day. It's not complicated, it's not expensive, and you need to do this now. Zander Insurance is the only place I recommend. Visit zander.com or call them at 800-356-4282. Please learn from other people's mistakes and get this taken care of. That's 800-356-4282 or zander.com. Dr. John Deloney, Ramsey Personality, is my co-host today. This is the Dave Ramsey Show. Do you feel like you'll never save enough money or pay off all your debt?

And after a year like 2020, most of America feels that way. But money should not be one more thing you have to worry about. And that's why in 2020 we are hitting reset. Because no matter what's happening in this crazy butt world, you can take control of your money. You just need the right plan. Ramsey Plus is our step-by-step plan that helps you get quick wins so you can make real progress on your debt. Because once you get all your debt out of your life, you get your money back. And you can be more generous and invest and become wealthy.

That means you can finally start spending and saving money without worry and get the security that you need right now. So here's our challenge. Decide on a total money reset this year. Then start Ramsey Plus. Commit to working hard the first 90 days. Watch all those small daily wins. We will show you exactly

what to do the first 90 days. Turn into lifelong habits so you never feel out of control again. You can get a free trial at Ramsey Plus for free just by going to DaveRamsey.com slash reset. DaveRamsey.com slash reset.

Nick is with us in Greenville, South Carolina. Hi, Nick. Welcome to the Dave Ramsey Show. Hey, Dave. Thanks for taking my call. Sure. What's up? Four years ago, I got stupid.

I'll check 13. Moved in with my sister. She kicked me out in July, so I came homeless. Ain't no big deal. Made a dog jump in the truck. Well, I made the last payment on that Chapter 13 today, and when can I tell them they can have this truck? You made the last payment on the Chapter 13 today.

You're living in your truck what kind of truck you're talking about a semi yes sir okay so you're driving over the road yes sir and i'm so tired of this okay now i do have the va so you know i don't really need like the down payment or anything i'm just curious you know i know it's not gonna i don't know that is was the truck did you have it financed in the 13th oh no sir no sir i'm a company driver i'm not an owner operator oh it's not your truck no sir okay all right so you're just you're just you and the dog are living over the road and you're sick of the road and you finally got your 13 closed up so all your bills are behind you yes sir i mean i'm debt free except i just don't have a house yeah so what are you going to do for a living if you come off the road i don't know if i may i may go back to

run in city or find something completely different okay cool what do you make now about 60 do you have any debt at all um no sir okay do you have any money um after today no okay i think you got two hundred dollars and you're done and you're done so you're going to be driving a little while longer agreed yes sir yeah i mean i'm not trying to jump out of it today. I mean, I'm just looking realistically, how long am I looking at this? 20 years or too long. I got you. I got you. We need a better plan.

This one doesn't scale well. I got you. And I agree with you, by the way. How old are you? 42. Cool. You're obviously single. Yes, sir.

Okay. All right. What I would do is rent before you buy. I wouldn't worry about buying today because with the Chapter 13, it's obviously messed up your credit. You filed bankruptcy. And, yeah, you can get in on the VA, and they'll be more lenient on that. But I wouldn't today. Instead, if I were in your shoes, I would say, all right, if I drive X number of months, let's just pick out.

You pick out a number. Let's call it six months. I'm going to drive for six more months, and I'm going to pile up $10,000. Okay? Okay. I'm just making this up. Whatever the numbers work out. You decide.

If it's eight months, fine. If it's five months, fine. I don't care. And if it's not $10,000, if it's eight months fine if it's five months fine i don't care and if it's not ten thousand dollars if it's eight thousand dollars that's fine but you need a little nest egg between you and life because life's been kicking your teeth in for a while okay okay a little pad like ten thousand dollars would make you walk a little more a little strut a little more rather than walk right yes sir okay and then i would just get me an inexpensive one-bedroom apartment rental get me an inexpensive two thousand dollar car that i pay cash for and i would line up a job that gets me

off the road i'm sorry my pickup was my pickup was included in the check 13 and that's paid off oh good so you got a car i don't even have that okay yes sir what's it worth uh 16 ford f-150 i had an offer for 16 six i think okay 16 six all right that's a lot of car for where you are right now if you want to hold on to it you can i don't care you got it paid off uh or you can sell it today and have $15,000 in cash in your pocket, right? Right. That'd be tempting to me and get me a $5,000 truck and have $10,000 in my pocket and go ahead and start looking for a job to come off the road and looking for a little one-bedroom apartment to come off the road and get your life set because your rhythm right now is throwing gears.

That's your whole rhythm. And I want to reset your rhythm into not being out of town you and the dog have an apartment uh or a little little small home of some kind something it doesn't have to be much because you're not going to be there forever you're going to be there for two years while you finish this transition out of the 13 and off the road does that make any sense yes sir and nick there's some there's some literature out there there's some nerd research out there that talks about what it's like to sleep in your own bed for 60 days for 90 days and your whole body your whole mind starts healing itself and there's

something about showering in your own place and sleeping in your own place, and suddenly things clear up when it comes to thinking, right? Then this new job, this new what am I going to do next, some of those things get a little more clear because you get a little more stable and a little deeper sleep. If I were you, I'd start looking for a job today. As soon as I found one, I'd sell my truck, get me a $5,000 truck, and come off the road. And if you can do that in a week, I'd do it.

And I've got fond memories of just me and my old hound dog in a one-bedroom apartment for a couple of weeks. It was awesome, man. No doubt. Right? No doubt. And just kind of, you know, and then just kind of get, you know, off the road, no bankruptcy, no crap flying around your head, and you get a calmer, more peaceful

rhythm to your life. And then that allows you to start growing your career into the future. That allows you to start, you know, plugging into a good church. That allows you to start working out again. That allows you to, you know, think about buying a home two years from now start setting some goals on all of that and um if you were my little brother that's what i tell you to do if you want to keep the truck and wait four months or five months and pile up some cash that's fine i would personally you know i think you'll get you another truck someday soon and i i would rather

personally be off the road and get this fresh start if I were you than own the truck. But that's just me. You get to decide that as to how quick you want to do that. But to me, that is an unusually large item value-wise in this story. It stands out in this story. And so I would use it to reset my life and get in a slower, peaceful rhythm that I can use to build my wealth, build my body, build my spirit, build relationships again. Because you're just gone all the time. You're just throwing gears, man.

When you're sleeping in a truck, you're not all the way asleep. You're not sleeping for seven, eight hours at a time. You're not getting that. You don't have that place to anchor into. And it sounds like there's some relationship stuff you need to work on. Well, let's go back and call on your sister and slowly start to heal that or heal in some of those old relationships, man, but having a good place that you anchor in so that you're steady and you're having that just peace, man.

Then that's a great place to start healing. The great news is you're free from the bankruptcy. It's all in your rearview mirror. So you've got a whiteboard. You've got a brand-new day brand new year, brand new thing. As soon as you can find a job, if I'm you, I'm going to sell the truck and come off the road. Yeah. And I start looking today.

You do whatever you want, but that's our advice for you, listening to you. And I really, really appreciate the kind of guy you are. You're a guy that just scratches and scraps, pushes through, makes it happen. Me and the dog jumped in the truck and got her done. Man. You know, I love that. Making $60,000, doing a great job, man. You're working your butt off.

You're going all the time. I love that. And I think the next phase is going to be so much better for you. Yeah. You've got some real cool things in the next 12 to 24 months for you if you make real careful, wise choices. This is the Dave Ramsey personality is my co-host today. Open phones at 888-825-5225. Adam is in Dallas. Hi, Adam. Welcome to the Dave Ramsey Show.

Hey, Dave. Thanks for taking our call. Sure. How can we help? My wife and I, we are currently working through Baby Step 2. We are about halfway through that process. And my question is, my wife is, she's an operator of a woman's retail store. And we eventually are going to have the opportunity to purchase that store outright. At the end of 2020, she receives kind of, I guess it would be like a bonus from the company. So our question is, do we put that aside in some type of fund to save to purchase that business down the road,

or do we throw that at our snowball and try to help us get out of Baby Step 2 with that money? I'm a little bit confused. This sounds like a big company on one hand. On the other hand, it sounds like a local boutique, and she's buying out a single store. Or is this a chain? Or is it a franchise? It's not a chain. There's multiple stores.

Ours would be the local store in the little town that we live in that we would be purchasing. And other people do that in their towns? Or is this the first time the company sold one of the company stores to a former employee? Right. This would be the first time, yeah. Do you have any idea what the store is going to cost? We have a figure, yes. How much?

We know the number on that, $400,000. Okay. Well, let's just talk about the business aspect for a minute then. I want to buy a $400,000 business. You're in debt in Baby Step 2, which tells me you do not have any money, right? Not the kind of money to buy that store right now i know well if you're working baby step two you should not have any money but a thousand dollars and all of it should have been applied to baby step two unless it's in a retirement account right is that where we are i mean that's where we are yes sir okay so you don't

have a hundred thousand dollars in a mutual fund sitting to the side somewhere? No. Okay. What do you make? About $75,000 a year. What does she make? Around $100,000. What's the net profit on that store?

Do you have any idea? Net profit on the store? Do you have any idea? Net profit on the store? You know? Around $100,000. After she's paid her $100,000, right? Yes. Okay. All right.

Well, $400,000 is not a bad purchase price on it then. That's a fairly reasonable valuation if it includes all fixtures, inventory, receivables, and everything. That's not a bad price. The biggest problem is you don't have any money. Right. Okay. Let's go back to your original question and then let me solve the problem on buying the store, okay? Because I want to try to do both, if that's okay with you.

Sure. Number one is how big is her bonus coming um it was 30 000 and how much debt do you guys have left in baby step two we are right at 45 okay okay so let's pretend that you set $30,000 to the side, and you don't use it to get out of debt. Then you've got to pay off the $40,000 yet, okay? Or let's pretend you use the $30,000, and you get out of debt that much faster, and in the exact same period of time that you could have paid off $30,000 worth of debt, you could put back the $40,000 or $30,000 worth of debt, you could put back the $30,000. Right.

So if we go to the end of this and there's $30,000 in your account and you're debt-free, you'll get there in exactly the same speed regardless of whether you pay it down on the debt and then you use the fact when you're debt-free to build the account back to $30,000 or whether you use the $30,000 to knock it out now and then you build the account back to 30 i mean you leave the 30 alone and you just pay through it or you use the 30 and get out you're going to get out in the same speed okay at the end of the story now so i'm going to pay it on the debt for that reason um and because you need to be debt free before you talk about buying a 400 000 business the second thing I'll tell you is that 80% of the small businesses fail in the first five years, and the number one reason they fail is cash flow problems, which falls under two headings.

They screw up their taxes. They don't hold their sales tax back. They don't set their quarter lease aside on their income taxes. And the second thing they get into in cash flow is they get into debt. So you go, don't have any money, or you put down $50,000, and you take a $350,000 loan for a store that's making $100,000, and a pandemic hits, and you go out of business, and you're bankrupt. And that's what normally happens eight out of ten times.

I would tell you do not do that. I want you to buy the store, but I do not want you to buy it that way with $350,000 worth of debt, with a $50,000 down payment, with an SBA loan on your home. There is a high probability you're going to fail and go bankrupt in that scenario. And I know you don't think that's possible, but it's very freaking possible. I've been doing this 30 years, and I see it all the time. So I don't want your dream of owning this store to turn into a nightmare. Fair enough.

Here's what I would do. Number one, one possibility is you just pile up cash after you're out of debt so high that you pay cash for the store. That's one possibility. Now, that's going to take a little while. But you make $175,000 a year. how quickly can you come up with $400,000? Probably four years, you know, something like that. Are they going to give you that long to buy it?

Well, I guess we're in a good, unique situation as far as purchasing the store. The $400 400 000 would be interest-free right so it would just be they're gonna loan it to 400 000 outright well not necessarily um we still have to come up with the money but um it's it's interest-free um you know we're not gonna have to go take out a loan or anything like that. Yeah, but you're going to owe them the money. We'll just not call them the money. You're going to owe them the money.

Right. And until you pay them, they can come take it back if it fails. Right. Yeah. So they're going to owner finance it. Great. That's the best of all worlds. Let me do one thing.

If I can talk you into changing the structure just a little bit. And you've got to talk them into this. And since they've never done it before, there's no reason they can't be talked into it. Here's what I want to do. I would propose to them that if they're going to finance the store for you at zero interest at $400,000, that is an awesome deal. Thank you so very much. I want to pay you every bit of the profit above $75,000 salary instead of $100,000 salary.

I'm going to give you 100% of profits above that until the $400,000 is paid. That's going to pay that store off in three years, four years. Okay? Now, here's the nuance to that. I said all the profits above $75,000, and you guys can easily make it in your house with your wife making $75,000 instead of making $100,000, you making $75,000. You got $150,000 income in my scenario, and 100% of the profits, which is now $104,000, if our numbers are all right here, are going towards the $400. Are you following this? Yes, sir.

Okay. Now, if profits drop because there's some weird pandemic or something happens, you're not bankrupt. Because all you've pledged them is 100% of the profits above 75. So if the stupid thing goes down, drops way down, and doesn't net $100.25 above 75, it nets $1,000 above 75, you're going to give them $1,000 and take home 75. And you're not in bankruptcy court, and they're not foreclosing on you. Oh, if profits drop to zero one year, you're going to give them zero, because they get 100% of the profits above 75. And if this all works out the way you all think it's going to perfectly,

which, by the way, it never freaking does, you're going to be completely out of this in 36 to 48 months under my scenario. And you've done it interest-free, and they've accomplished their goal of selling you the store. It's a wonderful idea, and it doesn't bankrupt you if there's a freaking pandemic. This is the Dave Ramsey Personality, is my co-host today. It's tax season, or almost. Eww. What's worse than a pandemic? Taxes.

Almost. Almost. Almost. So by the end of this month, employers must send you your W-2, your 1099s, and many people put filing their taxes off until later in the spring because, well, who wants to sit down and do taxes? The only people that rush into it are the ones that are getting a big refund, and a lot of them don't even rush into it. But, folks, let me tell you, this year you'd be wise to start your taxes as early as possible. 2020 was crazy. And a lot happened that can affect your taxes. If taxes were confusing or complicated to you last year, this is not the year to do them alone.

Our team has partnered with tax professionals across the country who will help you get your taxes done right and done now instead of later. So text TAXPRO to 33789 and we'll get you some help with your taxes. That's TAXPRO, no spaces, to 33789. Tax Pro. Dr. John Deloney, Ramsey Personality, is my co-host today. Nicholas is in Miami, Florida. Hi, Nicholas. How are you?

Hey, Dave. Hey, Dr. John. How are you guys doing? Great. How can we help? First, I want to say thank you for taking my call. I appreciate it. Sure.

So, recently separated from the military, March of 2020. Not by choice, might I add. Made a few bad decisions, hung around some people that I shouldn't have, and ultimately got separated early. It wasn't on terrible terms. It was still an honorable discharge, but I just couldn't finish my contract. So early on in my time in the military, I purchased a vehicle, just as you do. As you know, a lot of people do in the military as soon as you get that paycheck.

So I purchased the vehicle for about $22,000, put zero down on it, and the payment came up to around $470,000, put zero down on it. And, uh, the payments came up to around four 70 around that a month. Um, I made the payments for about the first four months or so. Um, and come the fifth month or one, the fifth month came around, I missed a payment and then just snowballed from there. And I didn't end up paying on the car for about a year and a half um and for the better part of a year and a half uh around like a year three months and the car never got repossessed um during that entire time wow um are you still you still have the car so it got repoed in um may of 20 so i i got the car in June of 2019.

Yeah. Paid for it for about the first three to four months. So now you have a repo. Okay. Yeah. Or sorry, not 2019. I got the car in June of 2018, and then I got repoed in May of 2020. Paid for it for about the first four months.

So car got repoed, and, you know, they sell it for about the first four months. So, um, car got repoed, um, and, um, you know, they, they sell it to auction and then what's your question? I wanted to know what should I do? Because I, I, I owe, I owe, uh, about this often is settlement of $2,400 for the car. During the time that I got the car, I also bought a pair of tires, and I didn't end up paying on that, so I own the tires. The tires are about $1,200. I got a settlement offer for that as well for about $250. Okay, so $2,700 solves your problems.

And I have $1,000 in credit card debt. Okay, $3,700 solves your problems. And I have $1,000 in credit card debt. Okay. $3,700 solves your problems. What's your income? So I just got a job. I make, conservatively speaking, about $1,500 a month. And as of right now, I am a full-time student. I was looking at purchasing a vehicle.

That was like the main thing. I wanted to purchase a vehicle this week, actually. I'm about $3,000 saved. And I wanted to get a car, but I wanted to know. How are you getting around now? I use my grandma's car. And is it an extra car, or why are you able to use her car? Well, she doesn't really drive much.

You know, she's up 76. She doesn't really drive at all. So she just has it for emergencies, really, for her. So how much longer? Could you drive it for two more months? Yeah, I could. Good. but i could but it's not i mean it's not going to inconvenience her she's not driving it you just don't want to how old are you uh 22 ah okay all right yeah so and i and jumping into crap jumping into crap that you can't afford has caused you pain right time to stop doing that making decisions that you know aren't right has

caused you pain man you know this is not smart so i'm going to take 2 000,000 of your $3,000 and get rid of $2,000 of the $3,700 worth of debt, which means I'm going to get rid of the tire debt and the credit card debt, and then I'm going to save towards $2,400 to settle that stupid debt with a repo. And you're going to be done with that in about a month and a half because you need to be working like a maniac, like six jobs, while you're in school full time. I want you to have no personal social life at all. I want you to do nothing but make money and clean up your dadgum mess. Because this is so stressful, dude.

It's not fun. I can hear it in your voice, man. It's not fun. It's hard for you to even think through this clearly because the stress is so overwhelming. Am I wrong? No, no. It's driving you nuts. You're not even sleeping good, are you?

Yes, you hit it right on the nose. Yeah. I've been there, man. I've been that scared and freaked out. And let me just tell you, if you will work like a maniac, live on beans and rice, use $2,000 towards the $3,700 problem that you have, and then knock the $2,400 out in a month and a half to two months from now, and then save up and buy you a car for $3,000 in cash, by September, you're going to be debt-free driving a car that you paid cash for

and working a plan called your education towards having a great life in the future. Now you've got control of your dadgum life. Right. That sounds appealing to me. Yeah, I agree. Honestly, my plan was, and I know, especially hearing what you just said, I know you're going to disagree with it. I was going to get a car for around $6,000.

You don't need any more debt, honey. Man, don't do it, dude. This has not been a blessing in your life. You call me up stressed out, not sleeping, because you've got debt and repos on tires and cars and credit cards and no and no no peace that's why we call our thing financial peace two words that don't go together you know so please don't do that honey you do whatever you want to you're 22 you're grown man you're allowed to do it it's legal but that doesn't mean it ain't stupid don't do it i

want you to reverse engineer the last 24 months of your life, man, and look at the decisions that haven't worked and don't voluntarily walk back into them. You've already done it, man. Taking out a big loan. It was probably a Jeep. It was stupid. And putting big tires on it was stupid. And you've been given a gift to settle at the price that you've been asked to settle.

It's a gift, settle at the price that you've been asked to settle. It's a gift, brother. Yeah. Take it. You told somebody, I will pay you, and you didn't, and they're offering you a way out. Do it. Go see one of the counselors that you paid for at this college. Go see somebody. Get your head screwed on straight, and don't make stupid decisions on top of stupid decisions.

You're smarter than this, man. I know you are. Ask yourself, what's going to give me peace? A new car payment is not on the list. And doing the same thing that got you in this mess in the first place isn't the journey out. Take a new road, man. Yeah. First step to getting out of debt, don't borrow anymore.

Man. Big step. Big step. You can do it. You call me back if we can help you anyway. We're here to help you, man. I've been right where you are. I've been scared, and I've been living in the poop that I made, and that's where you are.

And just, you know, the trick is don't keep doing it. And I feel myself getting passionate because I've been there too, man. Pacing my house. It's just like, yeah. You're walking around. I figured this out. Sweating the palm of your hands. Yeah.

It's just not fun. It's not fun. So we feel for you. We're not shaming you. We're not picking on you. Two old guys that the palm of your hands. Yeah. It's just not fun. It's not fun. So we feel for you. We're not shaming you. We're not picking on you. Two old guys that have been there, man. Yeah. We just, yeah.

I love you, man. I don't want to see you hurt. Yeah. Hold on. Kelly's going to pick up. I'm going to send you a copy of the Total Money Makeover. Thank you for your service to our country, sir. This is the Dave Ramsey Show. hey it's kelly associate producer and phone screener for the dave ramsey show

this episode is over but if you heard about an product, or service and didn't have a chance to write it down, don't worry. We list everything you heard about during this episode in the podcast show notes or head to DaveRamsey.com. Thanks for listening.