The Ramsey Show - App - Co-Owning a House With Someone in Chapter 13 Bankruptcy (Hour 3)

Episode Date: March 11, 2019

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🎵 Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studio, 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. Well, that's the first time I messed up the dollar car rental studio thing since we started it. You know, you've got to mess it up every so often.

Yes, I do these live every day, and yes, I goof up fairly regularly. It's part of my charm. All right, Andy is with me in Columbia,ia south carolina hey andy welcome to the dave ramsey show hi dave uh thank you for taking my phone call sure what's up okay so i'm actually a new listener and i find myself in a little predicament and i would like your opinion um i am a structural engineer by profession and and for the last few months, I've been considering maybe quitting my job and doing like flipping houses, pretty much. And I just don't know if it's the best thing for me.

No, it's not. Unless you have the cash to flip houses, do you? I do. You have the cash? I have the cash, yeah. How much cash do you have? I have $250,000. Okay.

Then I retract my statement. How long have you been a structural engineer? For about 10 years. What's appealing about flipping houses? Well, since I have a background in structural engineering, and I'm actually a professional engineer, too. I have a license as well. So I feel like I make okay money right now, but I feel like... How much do you make? By myself, base salary is $160,000.

Yeah, you make great money. Okay. But I feel like that would be the top that I could ever make, pretty much. Like, it's not like I can make more money, like, 10 years from now. So the appeal of Flipping like i can make more money like 10 years from now so what is that so the appeal of flipping houses is make more money uh yes and the fact that i could be like my own boss pretty much gotcha okay all right have you ever owned a piece of real estate yes i do own um rental properties oh you do okay how many um four right now but i'm not in the process of buying a duplex

are you paying cash for those yes i am okay all your properties are paid for yes sir you're 100 debt free yes wow way to go you're killing it congratulations well um what i would do is there's nothing that will keep you from doing your first flip while keeping your job. Well, it doesn't feel like I would like to like all my rental properties are in Atlanta, Georgia. So I would have to quit my job here in South Carolina and I would have to move to Atlanta and start flipping there. But the issue is that because I want to be around, like, my rental properties as well, and I feel like... Stop, stop, stop.

You can do flips or rental properties in any city. True. You can sell the ones in Atlanta and live where you are now if you want to live there. Where do you want to live? Atlanta. You want to live in Atlanta. Yes, I do. Okay, cool.

Have you ever had a structural engineer job there? Not in Atlanta. Like, I've had it, like, in other states, but not in Atlanta. And I kind of want to just go, like, full time. I got what you want to do. I'm just trying to figure out what's wise. I mean, you can go do this. You can go do this, but let me just tell you.

Here's the thing. Okay. The money is made on real estate at the buy. Yes. Particularly flips. And if you need to do a flip to create income to eat with, that puts pressure on you to do a bad deal. Okay, so my husband would be a full-time worker. So he would be the one that is, I guess, I would quit my job

and he would be the one that would be working full-time. What does he make? He's a structural engineer, too. So he's going to move to Atlanta and be a structural engineer there? Yes. Okay. And you're going to sell the property you live in in South Carolina? We're renting. Oh, you're renting there. Okay. And you're going to sell the property you live in in South Carolina? We're renting.

Oh, you're renting there. Okay. All right. And he makes how much? So right now, base is $130,000. And you guys in Atlanta will live on that and not a dime more? Yeah, not a dime more, pretty much. So you would have no household budget pressure to do a deal?

Yes. So my only concern is that the job that I have now, it's good. If I decide to go to Atlanta and get a full-time job, I'm looking at something around $110,000, pretty much. Okay, stop, stop. I ask you a question. So your husband's working in Atlanta. No, I know, I know.

In our scenario, you're going to sell everything, quit your jobs. He's going to get a job in Atlanta before you quit your jobs. And then you're going to move to Atlanta. You're not going to have a job. He's going to make $130,000 or so, and you're going to live on that. Thereby, there would be no pressure for you to do a deal. Is that right? Yes. And you have no pressure for you to do a deal. Is that right? Yes.

And you have $200,000 to do a deal with. Yes, but it's, like, so competitive in Atlanta, though. That's the issue, like, flipping houses. It's competitive everywhere. I know, I know, I know. Like, it's everywhere. But if you're looking at... Everything you do is competitive.

And it's a tough market to flip in because the market's hot. Yes. Exactly, yes. and it's a tough market to flip in because the market's hot. Yes. Exactly, yes. So it's a tough time. So, I mean, the point is you might go two years without doing a deal. I know, and I don't want to go two years without. You want to go full time without ever having done a deal. You've got to decide, kid. You're going to have to paint or get off the ladder.

Which one are you going to do? No, it makes sense. It makes sense, yes. You've got to be willing emotionally to take the risk or you can't just jump out there and if you do not say to yourself i'm not doing a deal for two years unless it's a good one if you don't go in there financially and emotionally able to do that you should not go full time because you're going to run around and pay too much for something and flip it and lose money. Yes, that makes sense.

And that's dumber than dirt. Don't do that. Just because you got emotionally all twisted up or because you got financially twisted up, and this is where people lose their butts flipping houses. I probably own 2,000 pieces of real estate in my life. I love real estate, and I used to flip for a living before there was cable TV to tell you how back in the day it's what i did and and but the money is made at the buy and properly estimating your uh your your expenses on the rehab and so what are you going to have to spend on the

house and what are you going to pay for it and then don't have over 70 percent of market value in it because when you sell it you're going to have 12 it, and then don't have over 70% of market value in it because when you sell it, you're going to have 12% costs off the top, and you're going to make 10%, 15% on the thing. You don't get rich on these things. Occasionally, you hit that home run that they talk about in the seminars, but that's just seminar talk. The real world is this is a grind,, you're going to do 10 houses,

and you might make $30,000, $20,000 apiece or something, and you're going to roll most of that money back into another deal, and you're not going to be putting a lot of money in your pocket for a while because you're starting with only $200,000 seed money. So this is going to take a little while. And you better have the emotional and financial mathematical margin to have patience, or you're going to pay too much, and you're going to short-circuit everything you've built so far, and you're going to wish you had been a structural engineer.

You can do this. It's doable. You can find deals and flip them. They're out there. Don't buy ugly houses, and don't buy stuff that needs a bazillion dollars in renovation, because you're not in the renovation business. You're in the flip business. You get caught up and get confused about that, too. in renovation. Because you're not in the renovation business, you're in the flip business. You get caught up and get confused about that, too. The contractor ends up making more than you're making on the deal. This is the Dave budget each month.

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Amanda is with us in Minneapolis. Hi, Amanda. Welcome to the Dave Ramsey Minneapolis. Hi, Amanda. Welcome to the Dave Ramsey Show. Hey, Dave. How are you doing today? Better than I deserve. What's up? Good.

So my husband and I are working on the baby steps right now, but he co-signed for a mortgage with his mother before we were married. And so I'm just conflicted. Yeah, I'm conflicted. I'm not sure. Do we add that on there? Right now it's, I mean, it was almost foreclosed upon, and then she filed for bankruptcy, so right now it's protected

because she's in bankruptcy, but I just don't know what to do there. So she's in a Chapter 13 bankruptcy? Yes. Paying payments. How long has she been in a Chapter 13 bankruptcy? Yes. Paying payments? How long has she been in that? I think only about a year now, almost a year. Okay. And so, of course, you quit, your husband quit getting any information about the loan once it went into bankruptcy, correct?

Correct, yeah. So I had to call to get that information. Yeah, they're not allowed to contact him as a cosigner if she is in bankruptcy. They can't contact her either. They have to do everything through the courts, okay? So they can't just passively let you know. You have to proactively check in. And even then you may find that they are going to block you a little bit

because they're scared of the court telling them not to bother a creditor, a debtor. Okay. Okay. Anyway, so how much does she owe on this house? Does he owe on this house? $220,000, so how much does she owe on this house? Does he owe on this house? $220,000, principal balance. What does mom make a year? I'm not sure.

It's got to be over $50,000. He's making $50,000. So she doesn't make the money to be able to pay for this house, does she? No. That's what got her in trouble, didn't it? Yep. pay for this house does she no that's what got her in trouble didn't it yep so when is your husband going to talk to his mom about selling the house that she can't afford uh we've had that conversation and ever since then she's just decided that she doesn't want to talk to us about it anymore um so we aren't really in good standing with her. She just believes that she deserves the house,

and she's going to go down with it if it goes away. Do you know what kind of loan it is, FHA, VA, or conventional? I do not know. I would find that out, okay? Okay. I hope to God it's an FHA, because here's what's going to happen with the information you've given me. She's going to default on the bankruptcy because she's not going to pay the payment.

She couldn't pay the house payment outside of bankruptcy. Inside of bankruptcy, you have to pay the full payment plus something on the back payments in order to keep the bankruptcy active. She's not going to do that. 78% of Chapter 13s fail nationwide. So there's an 8 out of 10 probability she's going to fail plus we know what her situation is it's higher than that she's going to fail okay so let's anticipate that let's not be shocked that she didn't fail plus she couldn't pay the payment to start with so she's struggling already it's a sad situation okay now when she fails they're going to kick her

out of bankruptcy and then the foreclosure is going to begin again. If it is an FHA loan, when they foreclose, they do not chase the borrowers for deficit balance. So the only thing that will happen to your husband's credit is it will have a foreclosure on it, but they will not chase you to owe them another $10,000, $20,000, $15,000. He's going to have a foreclosure on his record. Okay. There's not anything he can do to stop it, except sue his mother, and he really can't even effectively do that as long as she's in bankruptcy so um you know she's not gonna budge he's not gonna make her budge she's gonna go down and he's gonna get foreclosed on so hopefully it's an fha loan and i would go ahead and call the lender and find that out and then just not worry about it anymore i wouldn't pay a dime on it i wouldn't think about

it again it's gonna going to go down. She's not going to deed the property over to you, which would be the only other way you could handle it. Then you could sell it to avoid a foreclosure, right? But I assume it's got as much owed on it as it's worth, probably, doesn't it? Yeah, I think they only own the house for, I don't know, maybe seven months before they were behind on payment. Yeah.

And how long has she been in the Chapter 13? Less than a year. Yeah. Okay. Yeah. My prediction is she won't make it another year. That's my prediction. And I'm sorry. I wish I wasn't right, but I'm right.

So if he could take that, if she would give him the house back or she would agree to sell it, they could sell it to avoid this foreclosure. But I'm not writing a check for a dime into this thing if I'm you guys. Not a dime. Okay. It's just going to go down, and she's just going to have to find her a place to live, and it was a bad deal. Everybody that did this deal was stupid, the mortgage company,

your husband, and his mother. It was just a dumb, dumb thing to do all the way around. So it's sad. I'm so sorry you guys are facing this. Now, your worst case scenario is it's not an FHA, that it is a VA or a conventional. I'm almost positive. Are either one of them veterans?

No. It's not a VA then. Okay, so it's probably either an FHA or a Fannie Mae. Fannie Mae may come after him for the difference. And so if they sell the house for $200,000 after foreclosure and they owed two and a quarter, they're going to come

knocking on your door wanting $25,000. You can settle that for $0.10, $0.20 on the dollar at the time if it comes up after a year or two after the foreclosure. But I'm not worrying about any of that today. Okay. I would keep my finger on the pulse of it just to know what's going on,

but I'm not fretting. I'm not going to worry about it. It's not going to cost you any cash for three to five years at the worst-case scenario. Best-case scenario, it's not going to cost you any cash at all. But in no case is your husband going to get out unscathed. His credit is dinged every time she pays a payment late. Yeah. And his credit is dinged again when he gets foreclosed on because he's a cosigner.

This is why we tell people to never cosign in these situations like this. This is heartbreaking. So you guys go live your budget, work your baby steps, get yourself out of debt, get yourself in a good position just to protect your family. And maybe somewhere down the road you've got some extra wealth and maybe you want to help mom in some regard if she behaves, but probably not.

Okay. All right. Is that okay? We'll keep working those baby steps yeah yeah just keep working them on your side don't spend a lot of emotional or spiritual energy fretting about this or being angry at her your husband signed up for it too okay all right well thank you very much yeah she's obviously being an obstinate jerk but there's just no sense and i'd spend all my time and energy if i were you on your family and on changing your family tree so this never happens again. Valerie's in Dallas, Texas.

Hi, Valerie. Welcome to the Dave Ramsey Show. Hi, Dave. First-time caller. How are you? Better than I deserve. How can I help? My question is, so I'm a planner.

I like to know where we're going in five years, at what point we'll be. And in five years, I already see myself and my husband being on baby step seven, having our mortgage paid off and everything. Great. My question is, at that point, maybe we give some more, do other things, but what do you do with your money? We don't know anybody who is debt-free, so they go on vacations and feel guilty. And, you know, what can you do at that point? Can you, you know, go anywhere you want, spend money like you want to? Because we'll be 33 at that point.

Wow, look at you. Well, I mean, I don't know what you want means, but it's money that you have. What I suggest folks do when they're at Baby Step 7 is just set a percentage on their budget. A percentage of our income and our investments we're going to spend on lifestyle, enjoying money. A percentage we're going to give and a percentage we're going to continue to invest. And so as sharons of my income, we've been unbelievably blessed with income. As our income has gone up, then our giving has gone up, our enjoyment category has gone up, and so has our investing. And that way we're always doing all three. And you'll find something to spend it on, even if you're not a big spender.

Sharon's really, really tight, and I've become tight over the years. So we just watch and we're careful but we do some luxurious expensive things too uh so you you'll kind of get in a rhythm of that as long as you don't spend more than you've got allocated to that category that channel then you'll be fine this is the dave ramsey show We'll be right back. In the lobby of Ramsey Solutions, Daniel and Melissa are with us. Hey, guys, how are you? How's it going? Good, how are you?

Welcome, welcome. Good to have you. Where do you guys live? St. Louis, Missouri. St. Louis. Welcome to Nashville. Thank you. And all the way down here to do a debt-free scream.

Yes. Good for you. How much have you paid off? We have paid off $137,200. All right. And how long did this take? Exactly three years. Cool.

And your range of income during that time? We started off making about $66,000 a year, and our highest was $180,000. Whoa! But we're down back to $120,000 now. What do you all do for a living? I'm a business analyst at a large health care insurance corporation. During that time, I was at the end when it went up. I was selling cars, but I left that as soon as we were finished, and I went into project

management for an HVAC company. Okay, cool. So now we're back to $120,000. Yes. Okay. All right, cool. So you did what you wanted to do once cool. So now we're back to 120. Yes. Okay. All right, cool. So you did what you wanted to do once you were debt-free, huh? Yeah.

Yes. All right, good, good. Good for you. How old are you two? I'm 27. 25. Okay, so I'm guessing you got married about three years ago. Exactly.

Yes. Okay, and what's this debt breakdown, this $137,000? It is two car loans, two bachelor's degrees, and two master's degrees. Whoa. We like to do things in pairs. There we go. Absolutely. Okay.

So what are your master's in? Management. Yeah, business management. Management. So you MBAs? MSN. Yes, MSM. Okay.

All right. Perfect. And I'm guessing that's where you met then. Yes, college.N. Okay. All right. Perfect. And I'm guessing that's where you met then. Yes, college. Okay. All right. So you got married. You got a big pile of debt.

You got cars and student loans coming out your ears. Yep. How much of the 137 was total student loans? About 100. Yeah, 100. Almost exactly 100. Okay. All right.

And 30-something thousand in car debt. Yeah. And so what happened when you got married? You said, okay, something's got to change here. Yeah, well, right before we got married, I had heard of you before, and I'm like, well, I'm pretty good with my money, but I was nowhere near Dave Ramsey good with money. So I kind of looked you up, and I did the home study by myself,

and so that's when I kind of went to him, and I'm like, so after the wedding, I think we should take a lot of our wedding money and throw it at our debt. So that's kind of what I suggested to him. Yeah, that was the little starting chunk, a couple grand to go toward it. Okay, just to get the process started. Yeah. All right.

Yeah. But both of you have business minds and analytical minds, obviously, with your master's level training and that stuff. You wouldn't have got out of school if you didn't. Yes. So then you sat down at this and started looking at it. What was it that made you think, I need to do this now and I need to turn up the heat? Probably, I just, I knew we wanted to do so much in life and we are big travelers and we wanted to go on lots of vacations

and his family lives in florida so i knew we were going to want to do a lot of traveling um so i really wanted to get out of debt so we could do those lots of fun things, and I wanted to get out of debt before we bought a house and had kids. That was my big goals. Okay. So, Daniel, what did you say to all of this? Yes, ma'am? Yeah, pretty much I just kind of followed along. In the beginning, I wasn't as involved into the process,

but when we were getting really close to the end, I started getting a little bit more excited about it because we could start doing fun things again. It was helpful, especially when it was getting tough in the last year, year and a half of it, to kind of see an end goal and see that we'd get back to being able to do fun things again. How much of it did you pay in the last year of the three years? About half of it. Okay.

Maybe a little less. All right. So you were making increasing progress, but your income was increasing. Yes, significantly. year of the three years about half of it okay yeah maybe a little less but all right so you were you were making increasing progress but your income was increasing yes significantly yeah okay all right very cool congratulations how's it feel feels good it feels really good it's so weird to like see our budget every month and we have all that extra money to just do with whatever we need to well not only do you make good money but you're used to living on nothing. Yeah.

Yeah. There's a big gap right now. Yes. It's like, oh, wow. Exactly. We still didn't really change our spending habits. Go to Florida for lunch. Yeah.

We still haven't really changed much of our spending at all. So, I mean, we're kind of trying to get into a house now. So, we're still staying that portion of the process until we have enough to put down at home and all that. Yeah, very good. Yeah. And get the emergency fund. So other than the two of you, newly married couple, who were your cheerleaders? All of our family, probably.

Yes, our family. We're definitely big cheerleaders. My mom is our biggest cheerleader, I think. She came with you? Yep, she did. All right. And we got her on the plan, too, and she was able to get out of debt with us. Wow.

Yeah, that was fun. That's cool. Yeah. Very cool. Became a family affair. Yeah. So what do you tell people the key to getting out of debt is? You did it.

You've got the ability to look at this objectively. What was it that worked? Well, I think the biggest thing is getting on a budget. And I know that's so cliche, but I think the budget is the biggest thing because you're telling where your money, where to go. And I know a lot of people we talked about to get on a budget, they're like, well, I can't afford to get on a budget. That just is not the kind of mindset.

So, yeah, the budget was a big thing for us and then i think also what helped us a lot was just talking about our dreams together and what we wanted to do um after we got out of a debt and i think that really helped keep our fire going yeah you have a good why yeah also i mean with the excuses thing i mean a lot of people can pretty easily fault to that. And if you can get past the, you know, always having something to blame your situation on and always looking for someone else to help, it kind of puts you in a little bit of a better situation of getting out of your debt.

Well, I get to meet rock star millennials every day doing this that are like you guys, that are incredible achievers, high achievers. But I also know that you have some friends who aren't rock stars. They've got their lips stuck out, and they're like, 27 years old, and I'm a victim of the student loan debacle, and I can't do anything. You paid off $137,000 in three years while they were whining. Yeah. That's exactly true.

Yeah, and that's true of every generation. There's always a group of whiners and there's always a group of achievers of course so well done you guys so you can do this you can do anything yeah you'd hope that's what i feel like you know how to lock arms you know how to be unified in your approach to things yeah and you'll be able to face challenges and opportunities both uh as a married couple the spiritual aspects of this are incredible. And what God is going to do with you guys is absolutely amazing. We're proud of you. Thank you. I know your mom is.

She came all the way down here with you. Yep. Where did mom travel from? Same place. Same place, St. Louis. St. Louis, okay. All right, cool. Well, so good to have you guys.

We've got a copy of Chris Hogan's book for you. Awesome. Every Day Millionaires. You're going to be one before you know it. We hope so. Well, I can see the numbers. I mean, you're making $120 doing what you love. Your income's going to go up.

You're only, what, 27? Yeah, 25. 25! Oh, my gosh! I know. We're doing it. Yeah, 120 is our base. I mean, that's what...

It ain't going anywhere but there. So I'm looking at you easily before you're 35. You're millionaires. Easily. We hope so. Yeah. Planning on it. As long as I don't buy a bunch of cars or stuff like that.

I won't let them. Yeah, she already said that. That's right. Well, I'll tell you, you've now lived like no one else, and now you'll be able to live and give like no one else. You'll be able to have that outrageous generosity experience. Well, congratulations. Very well done. Daniel and Melissa from St. Louis, listen to this.

25 years old, paid off $137,000 in three years, making $66,000 to $180,000 to $120,000. Count it down. Let's hear a debt-free scream. Three, two, one. We're debt-free! We're debt free! This is how it's done. Wow.

Absolutely amazing. Very well done. I just can't say enough. It seems like every debt-free scream these days is somebody in their 20s. I mean, I don't mind you old people coming and doing your debt-free screams, too. Y'all can come, too. It is harder to teach an old dog new tricks, though. I mean, what a way to start your marriage to sit down and go, game on, baby!

Game on! Touchdown! Oh, wow. I love it. I didn't start my marriage that way. I started my marriage going deeply in debt and filing bankruptcy. Then we had to crawl out of that mess. Oh, man, if I'd only been that smart.

This is the Dave Ramsey Show. Thank you. Our scripture today, 1 Corinthians 3.9, for we are co-workers in God's service. You are God's field, God's building. Queen Elizabeth II said, I know of no single formula for success, but over the years, I have observed that some attributes of leadership are universal and are often about finding ways of encouraging people to combine their efforts, their talents, their insights, their enthusiasm, and their inspiration. John is in Winston-Salem. Hey, John, how are you?

Good, Dave. How are you doing? Better than I deserve. What's happening in your world? Not much. I just got married to my wife in September and I never had any student loan debt when I graduated from college and she graduated and she has quite a bit, about 150.

Your phone is breaking up really bad. Do you have a loose cable or something? How am I sounding right now? Still the same. So your wife has a lot of student loan debt, and your question's what? It's $150 combined split up into a private loan and a federal loan. Two of the private loans, I just wanted to run by my process and how I'm thinking about paying them all. What's your household income?

We're about $180,000. Okay, that's good. So you're going to clean it up in a couple of years then, right? Yeah. Okay. So I would just work the debt snowball regardless of the background or the private or the subsidized or whatever. It doesn't matter because you're going to be done so fast that none of the other extremities really matter.

The ancillary issues don't matter. Just list the debts, smallest to largest, the individual loans. You probably have a bunch of different loans. There are probably 10 or more at least here. And I would just list them out, smallest to largest, regardless of private or subsidized, and then just work them off in that order again keep in mind two years from today you should be debt free so any of the other

side issues or philosophical things you're looking at they really just go away very quickly it's not going to be an issue suzanne or suzanna suzanna maybe suzanna okay suzanna is with us in phoenix hi suzanna how are you i'm doing well thank you how are you better than i deserve what's up hi thank you so much for taking my call um so we are on baby step number two and i keep like a spreadsheet of our cash flow. But my question is, what do we consider cash flow? I mean, I have things as minimal as $25 copay for the doctor's visit. Is that something you would consider cash flow? Okay, I'm not sure the term cash flow, how you're using it. But basically, a properly done household personal budget

is just your income is at the top, your take-home pay, and then every dollar is giving an assignment. How much of a fine-tooth comb you want to run through those categories is up to you. Most people start with a much more detailed budget and then lump it together, and it becomes bigger rocks later. The sharings of my budget is one page today. There's nothing to it. There's not a lot to do because most of our categories are together. But anything that you're going to spend money on has to be somewhere in there,

whether it's lumped under a category or whether it's uh it's got its own standalone category uh doesn't matter because but the point is every dollar has an assignment and you know we have the world's best budgeting app that's completely free called every dollar you can get it at everydollar.com or itunes or google play or whatever and you know put it on your phone put put it on your desktop. It's free to use. And all it's going to do is just tell you to do that. It's going to walk you through in about 10 minutes

giving every dollar an assignment. But I'll give you an example as to lumping them together. We have a food category at our house. When we started, we had groceries and restaurants. We had to separate them because we would go to the restaurant and eat up all the grocery store food, right? And so, you know, we had to do that. But nowadays, it's, you know, we got a lot more room in the budget today, of course, and we've been doing it for 30 years. And so we kind of got a rhythm on it, sharing those, you know, we're empty nesters.

So the grocery, you know, I don't any teenage boys at home eating and stuff like that. So it's a different world, right? But, you know, but when you start, it's really helpful to really have it broken down, you know, very, very carefully. So you have a $25 copay every single month? No, not every month, just whenever we decide to go to the doctors. Like, oh, you know what, I've got a doctor's appointment next week, $25, and I'm categorizing it. I have a spreadsheet called cash flow in 2019,

and so I'm putting it there as opposed to the budget because we didn't budget for it ahead of time. So your cash flow sheet is separate from your budget? Yes and no it's what's left over after you took care of necessities right so for example we you know we get paid every other friday so on friday when we get paid we pay all the bills right Any bills that are within that time frame. So light bill, whatever, food and all that good stuff. We do our budget on a two-week pay period because we get paid every other Friday. Okay. So when we get paid on that Friday, we already have our budget set for the entire month, right?

So we pay all these bills and all of a sudden my husband will say something like, oh, hey, next week on Wednesday I schedule the doctor's appointment. It's going to be $25 for that. So I throw it in my cash flow category. Okay, your cash flow category is what economists would call disposable income. It's extra income left over. It's your slush fund after you've taken care of the necessities and planned items of life. Agreed?

Exactly. Exactly. All I'm telling you to do is combine these things. Okay. And you would have a, I would break your cash flow sheet up into a couple of handfuls of categories uh you know miscellaneous his and her uh blow category you got a little blow money for your pocket um and you probably sounds like you need medical in there you know and that kind of stuff so yeah just jump on every dollar and play with that it sounds like you're working awfully hard at this to me like you're doubling up the

work um you ought to be able to do this in 10 20 minutes the first time and then it's going to take It sounds like you're working awfully hard at this to me. Like you're doubling up the work. You ought to be able to do this in 10, 20 minutes the first time, and then it's going to take you, you know, 30 minutes to an hour a week to manage it when you first start. And after that, it'll take you 15 minutes a week to manage it. And it's just not that big a deal. You just, again, all we're doing is saying we're going to tell the money what to do before it leaves. That's the big thing.

When you do that, instead of wondering, you know, a budget is people telling their money what to do instead of wondering where it went. That's the big change. And you're already doing that. So you've got this dialed in. And you are, you know, you're like me. You're like a super nerd. You're a detailed math person. You love spreadsheets.

You're having way too much fun with this, which is a little sick me too i'm the same way that's how i can tell i'm kidding with you but uh you're gonna do fine i would simplify your life if i were you i'd put the every dollar app on both your things and on both your phones and put it on your laptop and then keep up with it tell your husband you know by the way if you book a doctor's appointment usually it's more than a month out unless you're sick so a random you know eye check physical check up whatever those kinds of things sometimes you can book those inside of 30 days but most of the time you know in advance so we just have to do a better job of communicating and planning together instead of you trying to come up with a system but you leave yourself a little slush money in there, a little room in your budget, and give that a name.

That's blow money. You've got a certain amount of blow money, honey. You've got a certain amount of blow money, man, husband, and wife, right? And then that gives you the wiggle room to do a few things out of pocket, so to speak, and then you've just got a general miscellaneous. But you'll have a car repair category, even though you don't know if you're gonna have a car repair um you'll have a clothing category even though we don't know that we necessarily will spend all that money this month on clothing and those categories that don't spend out in a month the balances carry forward and you

build up a little bit of a car repair fund that way. A little bit of a clothing fund that way. And that'll help you put all that together. So, excellent job. Hey, thanks for calling in. That puts this hour of the Dave Ramsey Show in the books. Our thanks to James Childs, our producer. Kelly Daniel, our associate producer and phone

screener. I am Dave Ramsey, your host. We'll be back with you before you know it. In the meantime, remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus. Hey, it's Kelly, associate producer and phone screener for The Dave Ramsey Show. If you would like to do your debt-free scream live on the show, make sure you visit DaveRamsey.com slash show and register. We would love for you to come to Nashville and tell Dave your story.