The Ramsey Show - App - Debts in Collections? There Is a Way Out! (Hour 1)

Episode Date: February 18, 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. I'm Dave Ramsey, your host.

Thank you for joining us. Open phones at 888-825-5225. That's 888-825-5225. Jared is with us in Allentown, Pennsylvania. Hi, Jared. Welcome to the Dave Ramsey Show. Hello, sir. I appreciate this opportunity. Absolutely. How can I help? So I've got a kind of loaded question here, I guess, but I'll try to get to the point. My father-in-law owns a paving business. It's recently been estimated to be worth about $1.6 million.

He's looking to retire within the next year. I've worked for him for about 12 years, and during that time, for about eight years, I've had a side hustle at the seal coating and line striping. And so he's kind of set this business up to paving for me to take over when he retires as far as the equipment, nothing needs to be replaced. It's all ready to go. But my wife and I have no debt but our house, but we also do not have $1.6 to outright buy the paving company from him. And so he has talked about possibly taking a salary,

maybe doing estimates for me or something, until I could pay him back through the salary, that $1.6. Just kind of wanted your input on what the best way to do this transfer possibly without taking on that debt, even though my wife and I would feel like we would still be in debt to my father-in-law, even if he was only taking a salary, if you know what I mean. Yeah, well, you would be. That's why you'd feel that way. What is the net profit of the business a year?

So it's anywhere, net profit between $250,000 to, it's been all the way up to $500,000, depending on the year. What's it been lately? So this last year, it was really rainy in pennsylvania it was around um 250 okay so 250 is a bad year is it is a typical is a typical year more like 350 yes or say we'll just use round numbers we might even say 400 okay um so four times the net profit now that's net net profit after he has paid himself a salary. Is that right? Yes, that would be, I would say that would be his salary included in that.

That would be after all materials, employees. I got all that. I'm going to ask a stop sign. Here's the thing if i bought this business in tennessee i would have to hire someone to run it he has been running it is he being paid to run it and then still has profit of three or four hundred or is he being paid zero when we get to three or four hundred paid zero okay so if we're running a 1.6 million dollar business that has what do you got 30 or 40 team members

there's only about six of us six people working there all right so if you're running that if you're running a 1.6 million dollar business if I hired a manager to manage that, would you guess I'd probably pay them $100,000? Yeah, I would say I'm not making that work. No, I didn't ask that. I just said if I bought this business from him and I didn't want to run it, I was an absentee owner, I might pay $100 thousand dollars for somebody to manage a business that's netting 300 after that and grossing 1.6 does that sound about right yeah yeah okay so instead of

netting 400 he's probably netting 300 or 300 he's netting 200 because he'd have to you have to take a salary out of that so this business is not worth 1.6 okay it might be maybe but that's a full retail blow on the thing okay roughly four times maybe five times what the net profit after management has been paid not owners but after management has been paid and owners not taking a salary doesn't count an owner takes a salary as a manager after that what your net profit are times four times five, somewhere in that range, is the value of a small business. That gives an investor a 20% to a 25% rate of return on an ultra-high-risk investment like a small business, which is what you'd want. It's the only way I would look at it if I were a venture capitalist buying small businesses. So, anyway, so let's establish, let's pretend that we settled on 1.6,

and you said, what do you get paid now? Well, I make around $60,000. Okay, and you said, I'm going to continue to draw $60,000, and I'm going to give you 100% of the profits until we reach 1.6. Right. And I'm going to run it. And he's not doing estimates. He's not doing anything.

He's just going home. And by the way, if it profits zero, you will get nothing. Right. So if I run it in the ground, you get zero. You're not going to do that, but you're not in debt that way. You're paying him out of the profits until you reach the agreed-on price. I think his price is a little high, but aside from that, if we said, okay, it takes four years of $400,000.

Right. It takes five years of $300,000, and you'll have him paid out. And you're how old? I'm 31. Okay, and he will have been paid out, and he needs to put that money in mutual funds and live off of it, and that's have been paid out, and he needs to put that money in mutual funds and live off of it. And that's his retirement. Okay, so you give him 100% of the profits, or I don't care, give him 75% of the profits or 80% of the profits,

and you take a little bit more. Okay, but you give him that amount until it reaches the agreed amount. And so if you have a bad year, you're not paying your payments because you're still giving him a percentage of profits if you have a good year you're not you're not paying extra payments because you're still giving percentage of profits and it all counts towards the total and that way if the whole economy turns upside down and we have a 2008 and nobody buys paving for two years, you're not bankrupt because you're in debt to your father-in-law. Right. Or worse yet, to a bank because you bought your father-in-law out with a bank loan.

Yeah. I would not do either one of those. I would not do payments to him. I would not do a payment schedule to him. I would do a percentage of profits, and you ascertain a formula like I was talking about. The two of you agree on that formula up to a set price. Now, do you think all the equipment, if you sold it off, is worth $1.6, or you just think the business is worth that?

No, I would say the equipment's probably worth around $300, and then the land another $200 that the shop is on. Okay. So you're getting real estate with this? Yes. Okay, cool. All right, you're getting real estate with this? Yeah. Okay, cool. All right, good. Well, so that's a plus.

That's a plus. That's a good thing. By the way, the land is not necessary to make money, and so I probably would pay $1.6 for that package. But I would do it on a basis like I'm talking about, and that's a great deal for him. He gets to go home and make just as much as he used to make. That's pretty cool for the next four years or so.

And he banks 100% of that into mutual funds or a large portion of it. And he'll have a million dollars or so easily in mutual funds to live off of the rate of return. Have him sit with a smart investor pro, and he can retire with dignity. He's not going to get $400,000 a year for the rest of his life. He's getting $400,000 a year until we get to, or whatever the profit is, until we get to the 1.6. That's how you work it out. This is The Dave Ramsey Show. Are high health care costs getting you down? Are you confused trying to navigate your options?

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Christian Healthcare Ministries is a proud sponsor of Dave Ramsey Live Events. chministries.org. Stopping in for a segment, Ramsey Personality, my daughter Rachel Cruz, number one best-selling author of a couple of books and host of the vastly popular video on, what do you call this, a YouTube show? YouTube video show, what do you call it? I don't know, what do you call that? Yeah, it's a show. YouTube show.

On YouTube and Facebook, and now it's a podcast. And now it's a podcast. Yes, absolutely. Don't forget the podcast. The podcast has taken off. The Rachel Cruz Show. You can get it on YouTube. It is amazingly popular. We've got a new episode dropping this week, right? That's right. Yep. So today we launched the episode, How to Love Your Home

and Afford It To. And it's a really fun episode. I mean, our home is a place that we raise our kids, we eat dinner, we go to sleep, we have fights with our spouses. I mean, everything happens there. Or spouse, I should say. Spouses?

Singular. Different ones of us have different spouses. So that's good. There you go. Is this a little too recent? Are we trying to disclose something? No, no, no. I'm just saying, the home is a very – and it's an important place in our life.

But for too many Americans, their homes own them, not only financially because they can't afford them, maybe even just the monthly payment is too much, but also our contentment and our happiness with where we are in that, because the comparison battle is real in our homes. And some people like me try to get a deal and they buy something that's a fixer-upper and they get into a money pit and it ends up emotionally owning them because it's a project. Yes, that too. There's a lot of stuff. Your house will mess with you. Yep.

So in the episode, we walk through how to pay off your mortgage early. So depending on what baby step you're on, you can do different things to set yourself up well. So when you get to baby step six, when you throw all that cash up paying off the home early, that you're set up well for that. We talk about when you know you're ready to buy a home and purchase a home because a lot of people even in baby step two, they're paying off debt, but they're discontent and they feel like they're busting out the seams and they want to buy a new home. So we walk them through a proper process of when is best, a.k.a. not when you're trying to get out of debt. And then also we brought on a real estate ELP, one of our ELPs, to talk through,

you know, when you are buying a home, what are things you need to look for? What are red flags to avoid? What do you need to look into for a real estate agent and that person to help you with the process? So we talk about the home buying process as well. That's really, really good. Now, home is a, it is the largest thing we buy, most people. Yep. And it is the largest thing we buy that goes up in value for most people.

And yet, because of the size of it, there's an opportunity there to make lots of mistakes. A small mistake on a home is known as a large mistake. That's right. Yeah. It's a lot of money. Yeah. I mean, if you mess up something 5% on $200,000, that's a $10,000 error. Right.

You don't make a $10,000 error buying a car very often. Yeah. Everything's magnified, it feels like, and even your emotions in it, right? I mean, we talk about how when you're in the home buying process and maybe you're looking for a home, you can suddenly get fixated on that one home. And you start to believe, like, this is it, this is it. And then you don't see options. And when there's not options, you usually make a really bad financial decision.

So all the things. And if you're not looking to buy a home, we talk about learning how to be content and love your home and not everyone else's. Yeah, I was talking with a broker this morning on some, not a piece of real estate, but on something else negotiating, and I kept explaining to him, there's another one. If this one doesn't work, there's another one. But that's a wise thought process. There's another one. There's another one.

Because if you don't have that, you don't have walk-away power in the negotiation, and you will force yourself to overlook red flags. The basement is falling in, but you overlook it because it's cute from the curb. And you've got house fever. It'll be okay. It'll be okay. You've got house fever, you know? And sometimes you just need to take a cold shower and get over that house fever and back off.

There's a dadgum house on every corner. That's right. They're everywhere. Exactly. Exactly. And so this is a good episode, a really good episode. So you guys need to be sure you tune in to The Rachel Cruze Show on YouTube and on Facebook. It is broadcast on both. And if you subscribe to The Rachel Cruze YouTube channel, every time a new video is placed, including The Rachel Cruze Show videos, you'll be notified by email if you click that box.

And I'm on that list, so I know when one's coming out, as if I were a consumer. Thank you. I'm a proud dad. I'm also the consumer, but I'm also the CEO, making sure y'all ain't putting out crap. I think it runs through enough filters, America. You'll enjoy it. Lots of filters before it gets to me. Lots of filters.

So, yeah, new video episodes air on Facebook, YouTube every other week. So subscribe to the Rachel Cruz YouTube channel. And be sure and jump over on iTunes or on Spotify or on Google Podcasts. And you can pick up the podcast of it. And the podcast is a little different than the actual YouTube show. Yeah, so we take the content from the show, the video version, the best content, put it over on the podcast,

but then I come in, I do new content within it. I talk even throughout the segments. I'll chime in and interrupt and have some more backlog thoughts that I've had on this. And it's really cool. It's so interesting. I say this a lot, but it's just so true. You take in information so differently when you're watching it, and then it's like, I've been in every part of the content from the creation of

the content to the outlining of the scripts to being on set and actually delivering the content. But when I go back to record the podcast and I hear those segments again, I hear things that I totally missed while on the show, or I'll say something and I think, oh, but then what about this? And I have things to add. So the podcast has some extra content around that. Like a little bubble over the top of the cartoon. Yes.

That's what you were really thinking. But when you hear things, you know, when you listen in an audio sense, you just digest it differently, so it's fun. But the podcast is great. And that one, I sprinkle in other content on some off weeks as well. So make sure to subscribe to that. Oh, yeah, there's just some surprise podcast upstarts that pop in there occasionally as well. Very cool stuff.

And now you were in L.A. last week and you were on the Minimalist podcast again, right? You all recorded another one? Yes. I'm not sure when theirs launches, but we'll let you guys know. So did that help with this how to make the most of the space and the furniture you have segment on this show? Well, they've influenced me a lot. When I first saw their documentary a few years ago, I was like, these guys are brilliant. But just, you know, they have the message, which is what we talk about a lot in here, is that stuff is not going to fulfill you. And especially as Americans, we fill our houses with so much crap that we don't need in our lives because we think it's going to make us happy.

A lot of people go into debt for that stuff. And so their message is all about taking things in your life and you're keeping the things that bring you value. And yeah, it's just an important message. I love their documentary. So they've become fans of ours. We've become fans of theirs and getting to do some cross promotional stuff. But all that to say, yeah, I guess they kind of inspired it.

This was actually this line on our notes is what we're talking about is how to make the most of your space and the furniture you have was from a couple. I actually interviewed on the show. It's on the episode. And they're in baby step two. But he really wants to buy a new house. She doesn't as much. And so we kind of talk through them processing that because there's a lot of couples like that. They're like, oh, we still have $60,000 of debt.

And like, man, that's going to take us another year to two years. And we really want to move now because we're running out of space and all that. So, hey, it's a problem people have. And I'm in that season of life. A lot of my friends, we've had kids and they're still in their first home. And they're like, oh, gosh, we just need one extra room. You bought your starter home, but now you have three kids. And it's like, we just got to get out.

But your house ends up being a curse rather than a blessing if you're not in a great place financially. So that's what we talk about. So make the decisions very carefully. And they're being wise about it, the couple. I'll say that. They're being wise. But you can hear our interview and talking through that.

Well, you feel the stress points. We all feel that tug. Yeah. But at some point, I look in the mirror at myself, and I go, oh, get over yourself. You can wait a minute. It's a year. I love that you can wait a minute. It's a year. I love it. You're like, wah.

It's a year. Wah. Do you remember having three kids, though? It's a lot. Yeah, I know. But I don't have children littered all over the house. Now it's grandchildren. You and I had the privilege of speaking yesterday at our home church.

Oh, yeah. Two services. And so I guess that was probably a little over 3,000, 4,000 folks, something like that, including overflow rooms and the whole bit. Good to be back on stage with you. You did a great job. Oh, thank you. I know. We haven't done the speaking gig before.

The tag team speaking gig in a while. Yeah. It's been a couple years. It's been since the Smart Money Smart Kids tour. Yeah, so four years. Yeah. That is crazy. I guess I didn't think about that.

Yep. See how fast that year goes if they need a house. No, seriously, right. Guys like that, guys. Just is crazy. I guess I didn't think about that. Yep. See how fast that year goes if they need a house. No, seriously, right? Goes like that, guys. Just like that. Goes like that. But it was a good talk. Rachel covered some interesting stuff, some content you've really been diving deep on,

on humility and gratitude. And contentment. And contentment. There might be something coming out in a few weeks on contentment that I'm really excited about. So, yeah. You've been testing the content, and it's great. I love it.

You've been spending some time studying Scripture on that and really getting to the spirit, because contentment is just a problem of the age. Yep, that's right. It's a problem of the age. And me and Anthony will be in Cincinnati. I'll throw that out there on Thursday. That's right. So we'll be doing the smart money.

He and I will be there in Grand Rapids on Wednesday. And then he comes to Cincinnati. And he comes to Cincinnati with you. So good stuff. Fun times. All right. Rachel Cruz'll be doing the smart money. He and I will be there in Grand Rapids on Wednesday. And then he comes to Cincinnati. And he comes to Cincinnati with you. So good stuff. Fun times. All right. Rachel Cruz Show. Pick it up everywhere that great shows are sold.

This is The Dave Ramsey Show. With more frequency than you know, I get calls and emails from people dealing with the recent loss of a spouse or a parent. You can hear the struggle and the heartache that they've been experiencing. And at a time they should be grieving, what breaks my heart the most is the strain and tension that they're going through because of money. Especially when it's a situation that could have been experiencing. And at a time they should be grieving, what breaks my heart the most is the strain and tension that they're going through because of money, especially when it's a situation that could have been avoided. If you have a family, it is your responsibility to have term life insurance. It's one of the things you do to say I love you. And yes, this is an ad for Zander Insurance.

But since this is one of the most effective ways I have to get my point across, so be it. For over 20 years, I've been telling you about the importance of term life insurance and protecting your family. Listen, you need to check out Zander.com or call 800-356-4282. I can't say it enough. Protect your family. It's what you're supposed to do go to zander.com or call 800-356-4282 so In the lobby of Ramsey Solutions, Ben and Michelle are with us.

Hey, guys, how are you? Hey, Dave, we're doing great. Welcome. Where do you guys live? Colorado Springs. Wow. Welcome to Nashville. Thank you. All the way over here to do a debt-free scream. Well, that and seeing your daughter with Money in Marriage.

Oh, you made a weekend of it. Yes. Very it. Yes. Very nice. Cool. So how much have you paid off? $83,470.46. Love it. And how long did this take?

22 months. Whoa. And your range of income during that time? Well, we have two versions of it. We have the official and the unofficial. The official is $60,000 to $92,000 back to $66,000. Okay. Why would you have an unofficial?

Well, we actually settled debt to pay off debt. Oh, okay. And that's called income. Yeah, that's called income. Yeah, I'm not talking about that. I'm talking about your earned income. Okay, good. Very good.

Okay, what kind of debt was the $83,000? I don't think we missed anything. From medical payments to personal loans to credit cards and a car. Just about everything. Student loans? Student loans. We had those, too. Of course, yeah.

Everybody. Everybody lined up at your house. That's right. I love it. And we invited them in. I love it. How long have you guys been married 22 years wow have you ever been debt free while you were married briefly yeah briefly when

was that briefly to purchase a house okay and then and then right back in yes 83 000 dollars were yeah so the student loans were after you bought the house. Yeah, exactly. Okay. Oh, my goodness. So tell me your story. What happened 22 months ago? It actually goes just a little bit before that. It was when we first met you, we were already four years into collections. And one of Michelle's friends, Kat Campbell, who knew of you, she told us about your book, Total Money Makeover. Said, get it, read it, listen to it, do whatever you can. And we started to do Dave-ish.

And we learned how to live in our four walls. But then we started to be complacent in the four walls. And then we got the Smart Dollar program through work where we work at compassion international and they were kind enough to bring that to our attention wow and then shortly after that we actually had uh the opportunity to meet you at new life church in colorado springs yeah okay very cool and that's when we actually got serious okay so then that's where we do what was the difference what made the difference? Because you're bouncing all around the edges of this, and all of a sudden, some kind of

lightning struck. What was it? I got on board. Oh, there's the secret formula. Okay. I mean, when you came to Life.Church, we were doing an event there, obviously. Yes, that's right. Not many.

Okay. Yeah, and that's when we decided to actually be coordinators. So we'd never taken FPU. We decided to go ahead and bring it to our church and do it all at the same time to learn and be accountable all at the same time. And you're in collections. We were at collections at that point. How did it feel being a coordinator while you're in collections? Weird?

Real. Real. Authentic. Yes. Yes. Very real. Yeah. I mean, for us, it was a matter of learning how to get $2,500.

And we were in a lot of fear at that time. So we would get $2,500, call up one of these guys and say, you're the first in line. We're going to offer it to you. And then the next one, if you're not going to be here, I think one of your shows, you actually said, offer it to him for 30 seconds. You've got 30 seconds to answer. And if not, we'll go to the next guy, and there's a lot of people after you. And that was the case for us. How often did that work?

Twice. The first time. Then you had to circle back. Then we had to come back. Yeah, okay. So when you circled back, did they believe you the second time when you said you got 30 seconds this time? I think it was the last one.

And what's in your wallet was not in our wallet anymore. Goodbye, Citibank. I love it. Yeah, you've got to laugh at credit card commercials the rest of your life after you've been through that crap. That's right. Yeah, for sure. So, Michelle, you guys have been bouncing around the edges of this thing,

and you come to the live event. What clicked? Seeing you live, and I had already started listening to you on iHeartRadio kind of prior to that. What in what we were saying or in the material or the content, what was it that got you that you said, okay? The simplicity. We can do this. You made it a hope. You made it believe you could do it. Yes. Okay. Because it was a

simple clear path and made you believe yeah cookies are on a shelf where i can reach them yeah i got you okay good i like that answer i appreciate it that's what we strive to do and sometimes we do it with some of our stuff better than with other stuff and we always are kicking ourselves around here when we're presenting you guys something and it doesn't do that you know so that's very cool. Good. Congratulations. Who were your biggest cheerleaders besides each other? Our church and the radio program, our FPU advisor here, Dale.

Just encouragement all around. And our church is awesome, and they actually helped us and blessed us to make this trip here this week. Oh, wow. Yeah, they gave a financial gift to us to be here. So our guy Dale Keyes here, is that who you're talking about? Yeah. Yeah, all right. Dale's a stud. That's awesome.

Very cool. Very proud of you guys. Very well done. So what do you tell people the secret to getting out of debt is? A budget and the envelope system. Ah, just like that okay it's pretty simple for her and and for me just put it into practice and and you actually have told us several times pay attention know where the money's going and that was our our biggest thing yeah when you

do that it's amazing how hard it works yeah but it just runs off if you don't pay attention it's like spoiled brat man it just has It just has no manners at all. So well done, you guys. We've got a copy of Chris Hogan's Everyday Millionaires for you. You're going to be one all the way from collections to everyday millionaires. That's going to be a great story. I hope so. It's right there in your future.

I can see it. I know it's coming. And it's as clear and as simple as the other part. So you can do it. Very well done. Excellent. And thank you guys for coming all the way down here from Colorado Springs. And thanks to your church for providing that trip for you.

That's neat. Yes. I love it. Very cool. And thanks for teaching the class, too, by the way. It's our pleasure. All right. Ben and Michelle, Colorado Springs, $83,000 paid off in 22 months,

making $60,000 to $92,000 to $66,000. Count it down. Let's hear a debt-free scream. Ready? Three, two, one. We're debt-free! Ha, ha, ha, ha! Woo-hoo!

Love it! Boom! Yes! Very well done. Good job, you guys. Really guys really really good job that's fun very fun stuff so here's the thing are you in collections i've been in collections where i couldn't pay my bill and the bill went bad and i'm in default and puts a black mark on your credit bureau report and people are calling you and not being nice to you.

I mean, there's some of the nastiest humans on the planet on the other end of some of those phone calls, isn't there? And you feel like a dog because you can't pay your bill or didn't pay your bill or don't pay your bill or whatever it is. And then you get wore out by these people. So you feel even worse. And they have no shame about using every possible psychological warfare tactic on you to build on your condemnation and shame. Where are you out?

Are you there? I've been there. They were there. Here's the good news. You don't have to be there. You start being intentional you start making every dollar behave you lay this stuff out in a very positive very proactive manner meaning every dollar has a name you give the every dollar app going every dollar has a mission every dollar has an assignment we're going to make every dollar do what it's supposed to do and then when you build up that twenty five hundred dollars and you call

that collector that you owe seven thousand dollars to and you say i've got twenty five hundred dollars if you want that as settlement in full you are at you're next in line and it's a long line do you want this you have 30 seconds two of them took And then you have to circle back and do the others because sometimes they think you're bluffing and you have to make a believer out of them because you're not bluffing. You've got a long line and have a limited amount of money. So we'll come back to you when we get some more money, but right now

this is what I've got. If you want it, it's yours. Settlement in full. In writing. No electronic access to my checking account. In full. In writing. Settlement in full. In writing. Settlement in full. In writing. By email.

Send it to me right now. And no electronic access to my checking account. I'll be wiring it to you as a separate item. You will not have my numbers. And we'll settle this puppy. You got 30 seconds. Ready, set, go. See, you can do this.

You can do this and You can do this. And I'll help you. That's what we're here for. This is the Dave Ramsey Show. Thank you for joining us, America. We're glad you're here. Matthew is in Philadelphia. Welcome to the Dave Ramsey Show, Matthew. Hi, Dave.

It's an honor to speak with you, even though you're a Tennessee volunteer fan, but that's okay. Cool. How can I help? Well, I'm really excited. I just discovered you last month, And I'm super excited with the baby steps. I already paid off, you know, a small credit card, a small stupid furniture balance I had. But I just graduated from grad school in May, and I have really significant student loan debt, and I have nothing in retirement so far. And I'm eligible to start contributing in July. And I'm just,

I'm just worried that my baby step two might take me too long, um, you know, to forego like maybe four or five years of even just making minimum contributions. Um, and I'm just wondering what, what your advice would be on that. How much student loan debt do you have? About $131 and change. And what was your degree in? It's a law degree, sir. So you're an attorney? Yes, sir. You passed your bar?

Yes, sir. You got a job? Yes, sir. What are you making? $82,500 right now. And a year ago you were a broke law student. Yes, sir. Okay.

And so why does it take five years to pay off 130? You make 80 and you used to be broke. I mean, I'm just like, I'm just crunching the numbers. I'm thinking three years. Okay. Are you married? No, sir. I'm still single.

Um, that's easier than my, uh, my my also my rent is kind of high right now so like i'm planning on probably moving just to good you know cut expenses yeah you need to be on beans and rice rice and beans because you're broke you're deeply in debt and you're sitting here trying to figure out a way that you can have one foot on the boat and one on the dock while the boat's leaving. In other words, I want to invest and I want to get out of debt. But you can't do both, it turns out. And your most powerful wealth building tool is your income. You're going to be very wealthy if you will follow through on exactly the steps that we teach you to do. Here's what we found.

Your most powerful wealth building tool is your income. To get that cleaned up means you have to get rid of debt. When you are debt-free and don't have any payments and you're making $100,000 a year, you can become wealthy investing fairly quickly, as a matter of fact. And it should not take you five years. But you're going to have no life. But you've been a broke law student.

You didn't have a life before. Unless you were using these student loans to to have no life. But you've been a broke law student. You didn't have a life before. Unless you were using these student loans to live the high life. No, not really. I mean, I also have a little bit of a car. Okay. Here's the thing. 130 divided by 40,000. And you're done in three years.

Okay. And you're done in three years. Okay. And you make 80, which means you're on beans and rice, rice and beans. You pay your taxes. You have nothing going to anything. No life, no vacation, no nothing. Three years. You are a broke lawyer, and you don't want to be a broke lawyer. How old are you?

29, sir. Perfect. Perfect. So in three years, you will be 32 years old, debt-free, and you'll be making over $100,000 a year. Am I wrong? No, I guess I was just worried because... Why are you worried? You're 30 years old.

Yeah, I don't know. I guess I heard you should probably start retirement at least by 30. Like, I guess I was just worried that I would start it any later than that. Yeah. Well, let's just try to run some math for a second. Okay. I'll just play with it. Let's say you, let's say I'm wrong and it takes you six years, which is absolutely ludicrous.

That means you're lame-o. Okay. But it takes you six years. 35 to 65 is 30 years, right? Yes. Okay? And you never get a raise. You make $100,000 a year at that point, and you never get a raise in 30 years,

which by definition makes you a loser, okay? So this is our assumptions. You never get a raise. You're a loser. And it takes you six years to get out of debt instead of three, so you're a loser. So we've established that even a loser can do this, okay? I'm picking on you, but I'm having fun with it. Y'all stay with me here, okay?

All right, we're starting with nothing, and we're going to put in $15,000. Come here, come here, calculator. $15,000 a year, 15% of your household income, $15,000, dummy. Okay, I'm going to get this. I've got to do it because I started it. Okay, change dummy. Okay. I'm going to get this. I got to do it because I started it. Okay. Change it. Okay. And let's see here.

360 and 1 and let's do it. I'm going to keep putting it in the calculator until I get it because I got to prove my point. All right. All right. All right. All right. All right. All right.

All right. All right. All right. All right. All right. All right. All right. All right.

All right. All right. All right. All right. All right. All right. All right. All right.

All right. All right. All right. All right. All right. All right. All right. All right.

All right. All right. All right. All right. All right. All right. All right. All right.

All right. All right. All right. All right. All right. All right. All right. All right.

All right. All right. All right. All right. All right. All right. Oh, my gosh. All right. I swear to God I can't make this thing work. Okay, I can't do it. Heck with it. All right. So let's see here. $15,000 a year for 30 years.

So for 10 years, that's $150,000. So it's $450,000 you would have put in. You will have, my estimation is that would be about $8 million in mutual funds. And so if I'm half wrong, you've still got $4 million just because you started at age 35. You can put it on a calculator when you can find one that you can work because I can't work mine, apparently. I'm too stupid. But anyway, yeah, you are going to have millions and millions and millions and millions of dollars if you save 15% of your household income

and you never get a raise. And you get out of debt before you start. So all this theory of I've got to put money aside, listen, it's all about getting started and it's all about putting substantial amounts in. And you can't put substantial amounts in when you're substantially in debt and so what we have learned matthew and um is um if you will steadily invest steadily invest you can pull this off and um so i mean the steadiness of it is what does it, okay? And that's what's important here.

Ah, got it. 4.3 million. Finally got it out of the calculator. There you go. All right, so 4.3 million is what you'd have. So if I'm half wrong, you got $2 million, and you started at age 35. So you're not done. You got plenty of time.

You're going to be an everyday millionaire times four or times two or times six. And that's if you never got a raise and you never put more than 15 percent of your income aside, which, by the way, when you're completely debt free house and everything and you're 45 and you're sitting there just rocking. And by the way, you're making two hundred thousand dollars a year then and you start putting 20 percent of your income away. That's thirty thousand dollars a year. And it's it becomes forty thousand dollars a year then, and you start putting 20% of your income away, that's $30,000 a year. And it becomes $40,000 a year, and you start putting that kind of money away, it becomes so much money. So if you make, folks, if you're listening to this, you run those numbers out, you don't

make $100,000, you make $50,000. If you make $50,000 a year and you save 15% of your income from age 30 to age 60, you will become a millionaire, multimillionaire. But you've got to get out of debt. You can't do that with a stupid $600 car payment. You can't do that with $140,000 worth of student loan debt hanging around your neck. So you've got to clean up the mess so that you can do that. You've got to have the wiggle room and the math. And you've got to be able to run a calculator, apparently.

By the way, if you want to calculate what you need and what you'll have, just go to ChrisHogan360.com, to his website, to Chris's website, and there's the RIQ on there, the Retire Inspired Quotient. You need to know what your retirement IQ is. And this will give you the number. It'll tell you how much you need to live your dream, and it's a completely free tool. It doesn't cost you a thing, and it's pretty comprehensive. It doesn't take you two hours or something, but I mean, it's going to take you 10 minutes or something to walk through it. You enter the information. It's going to spit out not only what you need to be investing, but also what the nest egg size would need to be.

And if you don't like our assumptions on rates of return, you can change them. The tool is very flexible. The RIQ tool, the Retire Inspired Quotient tool, it's when Chris came out with his first number one bestseller, Retire Inspired. And you can get on there and learn every bit of that, walk through every step of it. It changes everything. So do that. And, folks, if you want to know how these people became millionaires,

the Everyday Millionaires book is the book that outlines the 10 or 12, 20, 80 most prominent. There's 80 statistics, actually, we put in that book. It's not a white paper. It's not stars and bars and graphs. If you want a nerd paper, white paper, academic paper, go somewhere else. But the Everyday Millionaire, also number one, shows you exactly what I'm talking about here. And it's how 10,000 millionaires did it. It's the largest study a millionaire has ever done.

And it proves the point that you can do it. We're Americans, not Americans. This is The Dave Ramsey Show. This is James Childs, producer of The Dave Ramsey Show. Did you know you can now listen to The Dave Ramsey Show on Pandora and Spotify? For all the ways to watch and listen, check out our show page at DaveRamsey.com slash show.