The Ramsey Show - App - Do You Think the American Economy Is Going To Collapse? (Hour 2)

Episode Date: June 15, 2023

Dave Ramsey & George Kamel answer your questions and discuss:  "Should I pay off my home before my student loans?" Habits of successful millionaires, How debt is pushed on immigrants when they come to the US, "Should I pay off my debt before buying a rental?" Have a question for the show? Call 888-825-5225 Weekdays from 2-5pm ET Join a Personality-led FPU class. Click here! Want a plan for your money? Find out where to start: https://bit.ly/3cEP4n6 Listen to all The Ramsey Network podcasts: https://bit.ly/3GxiXm6 Interested in advertising on The Ramsey Show? https://ter.li/s64ye3 Learn more about your ad choices. https://www.megaphone.fm/adchoices Ramsey Solutions Privacy Policy

Live from the headquarters of Ramsey Solutions, broadcasting from the Pods Moving and Storage Studios, it's the Ramsey Show, where we help people build wealth, do work that they love, and create actual amazing relationships. George Campbell, Ramsey Personality, co-host of the really, really popular Smart Money Happy Hour. He and Rachel Cruz do that together, Ramsey Personalities. It comes out a couple times a week now, George? Every Thursday, we're here.

Once a week. If we could do more, we would. The people are clamoring. There is a lot of clamoring going on. So much clamoring. I have heard clamoring. I've heard it out there about Smart Money Happy Hour. But Sharon Ramsey is a fan, and that's the only one I care about.

Well, I mean, that's good job security. Yes. Because she probably carries more weight around here than I do. Dave's not going to shut down a podcast that his wife loves. Can't do that. You just have to have a real good explanation. One of y'all is going to have to screw it up bad. But it's working real good.

Ramsey Networks is exploding, and Smart Money Happy Hour is part of that. The Dr. John Deloney Show is part of that. The Ken Coleman Show is part of that. Check it all out. We're glad you're here. Thank you for being with us. Open phones at 888-825-5225. Chris is with us.

Chris is in Dallas. Hi, Chris. How are you? Hey, Dave. I'm doing well. How are you doing today? Better than. Hi, Chris. How are you? Hey, Dave. I'm doing well. How are you doing today? Better than I deserve, sir. How can I help?

So I had a question regarding the decision to pay off student loans versus paying off the home early. And I know the Baby Step program, I'm a big fan of it. I was on Step 7. I was a younger guy, you know, in in my 20s and I was living at home, so I had no mortgage to pay, no kids. And I was saving every dime that I had to hopefully put a down payment on a house. Last year, I got married in 2022. I had $60,000 saved up. I was debt free, no assets other than my car, and my car was paid off, and my personal belongings.

Now that we're married, our income is about $110,000. Now, when we got married, I moved to an $86,000 townhome, and as of last year, when we first got married, 80K was remaining on the mortgage. This is a 3.25% mortgage rate. She also has $45,000 in student loan debt that I knew about before we got married, and she was aggressively paying it off. So I'm hoping that this question might resonate with some of your younger viewers struggling with excessives in the loan debt. We know that the Supreme Court is still waiting to do their $10,000 loan forgiveness.

But if I'm being completely honest, I don't think it's going to happen. The pause is ending in a couple of months, and I believe the loans will start accruing interest in, I think, September. I think the payments will go in October, but the loans will actually accrue interest in September. So we're looking to make a big decision here of either paying off the remaining balance of the mortgage or paying off those student loan debts. And part of that is the fear of uncertainty with the economy and with inflation. Germany declared a recession. I think it was last week. It's the fourth largest economy. Um, and that's one of the things that we're kind of worried about here in the U S is how long are we going to continue to, you know, say we're not in a

recession. Um, I know it's, you don't declare a recession and you don't say i'm in a recession recession is a mathematical thing it's objective it's not subjective it's two consecutive quarters of the gross domestic product shrinking rather than growing that is the definition of a recession no one gets to re-decide that that is what it is if it's if it's raining outside you will be wet if it's not raining you will not be wet regardless of how you feel right okay so your feelings don't matter and germany didn't declare a recession they admitted statistically that they were in one i assume i didn't see that article but don't really give a crap uh germany's economy is not really relevant it's you know what matters here is what matters here so i do you believe that the american

economy is going to collapse chris i don't think it's going to collapse okay then stop this what is all the real question is cloud over your head justifying hanging on to all this debt because i really don't think it's you're not really that worried about the recession. I think that we have an administration. We've been in the recession. But politics aside, let's just imagine politics doesn't exist. No, we're not in a recession. But we were last year.

And did you realize it was a half of a percent one quarter and a quarter of a percent another quarter. It's the lightest recession ever that you could call a recession. I'm not defending Biden, and I certainly don't think it's a wonderful thing. But, dude, we're far from the Great Depression and you being in a bread line and unable to pay your bills. Right. Quit watching the news and get off the Internet, man. Go out in the sun yeah you're dying you're killing me you're saying that yeah i i pay off your student loans first then pay off

your house chris how much money do you have we have so we we've been paying the house down we have the problem with paying off student loans during the freeze right if there's a zero percent interest on there's not a problem they will take your money write them a check and be done with it but allied savings account is giving us four percent oh my goodness hey chris no one ever got rich borrowing on their student loans and putting in an allied for god's sakes i don't think we're trying to get rich. I think we're trying to just make an extra $300. Have you ever... The balance on the student loan is what? The balance on the student loan is $45,000

with the interest rate. And Allied's paying you how much? Allied's paying us 4% on $70,000. It's about $250,000. Okay, not... On the 45 is what we're discussing. Okay. Chris, what's four percent of 45 um 800 bucks less than four 800 bucks yeah yeah you know you know what two percent of 45 is because that's your your uh big leverage deal you're doing here 400 bucks crap man You spend more than that on pizza. You're not getting rid of it.

This is intellectual mumbo jumbo. Quit trying to beat the system. Get your butt out of debt. Get your house paid off. You believed it before, and now you've been down the black hole. You're spending too much time on TikTok, man. Really. You really do need to get your head out of the internet.

I could have got a side job and paid off your debts for you in the time you spent researching all of this i could have paid you got 70 000 in the bank you should pay it off today and then you ought to reach over there and y'all be done with the house by christmas you know you want to be you want to be not worried about a recession here's an idea get get everything paid off really fast if that's that's talking to me about allied high yield account no one ever got rich on a four percent high yield account in a nine percent inflationary market dude you've lost five percent of your purchasing power while you're screwing around discussing this rookies absolute rookies i'm turning off the headlines you've been on you've been on i can i can smell it All you're doing is respouting social media crap.

You have been reading too. Do not. If Twitter is your financial planner, if Tic Tac is helping you with your leverage discussions, you're screwed, Chris. This is The Ramsey Show. Hey, you guys. Health insurance costs are only moving one way, and that way isn't down. And if higher costs aren't enough, the wait times to see your doctor are longer,

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care of health care costs. CHM programs start as low as $98 a month. So learn more today and join at chministries.org slash budget. That's chministries.org slash budget. Okay, guys, when you are making your financial decisions and your analysis around your financial decisions. Here's a couple of rules for you that the wealthy people do. Okay? They make their decisions based on the principles that are going to take them to their goal. Now, we are sure, after 30 years of doing this, that one principle is your most powerful wealth building tool is your income.

And when you get rid of debt, your probability and speed by which you become wealthy is increased. The more debt you carry, the slower you run towards being a millionaire. It's a math thing. And all the data is there with all the people who have done it. The second thing you need to do is you got to be really careful. And this is a trap I fell into when I was young and stupid because I'm really, really good with math. And I'm really a math nerd way bad like pocket protector calculator on my belt math nerd and if that is you you will get paralysis of the analysis if you're not careful what i learned that wealthy people do is they don't get caught up in the nuances of the math. They do what we call big math, meaning they're looking at the big chunks and where that's

taking them. And when I'm doing things here on the air with you, I don't use a calculator. I don't need one because I'm typically not doing nuanced mathematics. I am looking at the big chunks now what i mean by that is if the big the the uh if you do nuanced math you say oh i have forty seven thousand dollars in an allied account that pays me four percent why would i pay the off a student loan that is two percent or a mortgage that is two percent I'm making four. I'm sorry, I'm making four and the student loan is seven.

Why would I do that? Because I'm losing that money. But then you actually do the math. What is 4% of $47,000? It's 800 bucks. What is the spread? 2% spread. And this is your leverage factor.

And the whole thing, all of this mathematical theory that you spend all of your brain power on if you're a super nerd like me ends up being the cost of a pizza which proves that you are concentrating on the wrong things the right things to concentrate on are the big things the things that are going to take you where you want to go. And it's not, am I getting rich on, I get, because here's an example, okay? I use a Discover card and I get 2% back. Okay, so let's help, let me help you with this. So you spend $100, because it sounds like I got 2%, 2%, free 2%, 2%, 2%. Oh, God, I'm so smart.

I got 2%. This is the super nerd inside your brain, right? But let's do it. Okay, $100 spent is how much? $2. Where was the wealth building when you spent a hundred and you got two dollars back you can can you imagine millionaires sitting around and thinking and going i think that's great let's do that no broke people think that's great and they get all hung up on the two percent

two percent two percent two percent it's two dollars but dave that's just one of the cards and they get all hung up on the 2%, 2%, 2%, 2%. It's $2. But Dave, that's just one of the cards. The other one has a 5% rotating cash back on restaurants this month. I know. So if I eat out enough, I can become a millionaire for my 5% cash back. Again, let's just take your whole eating out budget times 5%. And by the way, you gave away 100%. You got back 5%. And by the way, you gave away 100%. You got back 5.

This is a wealth reduction plan, not a wealth increasing plan, because you're consuming 95% of the money. You got 5% back. But 5% ends up being $5 or $15. I mean, guys, you're majoring in minors because you're super nerding on the math instead of actually looking at the nominal dollars that the math creates if you actually run the math formula out and look at the number of dollars you go i'm this is i'm so screwed that i can't breathe i'm this is dumber than a rock and i had to learn

to do that because that's what millionaires do. It's called common sense. There's a. It's not a math formula. There's a concept. It's when you give away 100. If little Johnny gives away 100 and he gets back two, how long does it take little Johnny to become bankrupt? Not wealthy, but bankrupt.

This is a math problem. Is that a common core math problem right there? I'm just telling you. Wow. And then you get this thing. This thing from NPR. This thing right here Yeah, I resonated with this because this is part of this discussion we're having. Here's the headline. A lack of credit history creates financial obstacles for immigrants.

And as a first generation American whose parents were immigrants, I resonated this because I went, oh my gosh, this is my parents' story. Here's what it says. What may seem like an immigrant cliche actually happens every day. Foreigners arrive in the U.S. with big dreams and a few dollar bills in their wallet. That was true for both of us reporting this story. And it goes on to say the U.S. economy counts on you to borrow money and stay into debt. And the epitome of all this is the credit score, which often snares newcomers into a

financial catch-22, penalizing a lack of debt history and pushing many to take confusing, sometimes costly measures. Besides that, we need to support the U.S. economy because that's our first goal. My first goal is not to support the U.S. economy. My first goal is to make sure the Ramsey family is taken care of. The U.S. economy will have to deal with itself. They'll figure it out. It counts on you.

It counts on you to borrow money and stay in debt. You need a credit score to live here. That's pretty much what they tell you. And so how do you get a credit score, Dave? Well, you got to go into debt to get the score so you can go into more debt. To get the score so you can go into debt to get the score. Oh, my gosh. So the great American dream, when you add this method to it,

turns into the great American nightmare for a lot of first-generation immigrants. Oh, yeah. And they play this game because they were told they had to play the game, and then they realize, wait, where's the American dream? We're broke up to our eyeballs in car loans, credit cards, personal loans, student loans, medical debt, mortgages. Now, your family was Middle Eastern. Yes.

So we've done a lot of work in the spanish community uh people coming from various countries uh in the latin world and a lot of them don't have a trust of banks and so they haven't fallen for this if they're particularly their uh entry-level socioeconomic okay now they come in higher brow heavier cash users yeah heavier complete it's under the bed it's literally in a box under the bed i mean i'm not kidding it's not a metaphor it's a shoe box with hundred dollar bills under the bed because they don't trust banks to not go broke from because they came from a banana republican some kind that all the bank seat banking system was not reliable and so they don't fall for this because they're not going to

go into debt now what they do fall for is because they're not going to go into debt. Now, what they do fall for is other things, title pawn and other crap, you know. But what happens is people like your mom and dad, they often get Americanized in the worst ways. They adapt to the culture. And part of that is this toxic money culture that says you got to go into debt. And where does that lead us? Well, U.S. household debt now surpasses $17 trillion. Now, here's what's interesting, Dave, comparing that to the European Union,

which has more households and yet less than half of that amount in debt, which tells me that debt is the most aggressively marketed product in American history. And we are so good. America is number one in a lot of things, and debt is one of them. Marketing is one of them. And here's a great quote from a Stanford economic sociologist. Being financially responsible in the US has come to mean borrow and repay. That pretty much sums up how you've been doing this for 30 years, Dave. Everyone was told, if you want to be financially responsible, borrow money and repay it back and do that over and over again until you die. And then maybe one day you'll hopefully be able to retire.

It's insane. So I think it's time for a cultural shift here. Well, yeah, you just want to say, hey, you got here for the Statue of Liberty. Don't give up your liberty. Don't sign up for slavery. Come here for freedom and you lose it. Yeah, the first day, sign up for MasterCard. That's your first thing to do.

You're looking for liberty, but you go get a master first thing. Yeah. That's not our American distress. We can sign up for that. Our discovering bondage. Yeah. All for 2% back. Don't forget.

$2! Land of the free, home of the broke. $2. $2. $2, Bob. $2. This is The Ramsey Show. George Campbell, Ramsey personality, is my co-host today in the lobby of Ramsey Solutions

on the debt-free stage. Sean is with us. Hey, Sean, how are you? Hello, hello. How are you guys doing today? Better than we deserve, sir. Where do you live? Houston, Sean, how are you? Hello, hello. How are you guys doing today? Better than we deserve, sir. Where do you live? Houston, Texas, sir.

Cool. Welcome to Nashville. And how much debt have you paid off, sir? Well, Dave, $63,002 pesky dollars. Oddly enough. Excellent, dude. How long did this take? About 13 months.

Good for you. And your range of income during that time? Started at $52,500 and ended at $80,000. Okay. Good for you, man. Thanks, sir. And your range of income during that time? Started at $52,500 and ended at $80,000. Okay. Good for you, man. Thanks, sir. Very, very cool. What kind of debt was the $63,000?

Well, it was $58,000 in student loans, had about $2,400 in personal loans, and then the rest was credit card debt, sir. So you just knocked the student loans out. Just knock old Sally Mae out. Had to slay the dragon. Had to slay the dragon. Get that ugly woman out of my house. Absolutelyor yes sir i like it i like it i like it well done so what happened 13 months ago where you went all right i'm gonna stop being

normal and just collecting debt like monopoly chips here well i uh i got my first big boy job and i was like okay making some good money now it's time to be a better steward with my money and then i started buying trips to this flight to denver this flight to phoenix and then i realized oh man it's not working out so i decided to look up how to handle my personal finance on youtube and i fell asleep watching videos and then two o'clock in the morning i see a video of a guy with a chain around his neck and talking about the borrower is slave to the lender. It's funny because as soon as that happened, my TV just turned off and I fell asleep. But when I woke up, the very first thought in my head was the borrower is slave to the lender. So I said, you know what?

I need to learn more about Dave. So I started watching more videos, watching more videos. And Dave, you gave me the best Christmas gift I could ever ask for. what i need to learn more about dave so i started watching more videos watching more videos and dave you gave me the best christmas gift i could ever ask for it was uh 2021 and you had given a 14 day free trial at fpu and three days into that free trial i already saw all the videos and then two days after that i bought a year membership i was like i gotta get on this i gotta hold myself accountable wow yes sir went through an fPU class, coordinated an FPU class, and currently doing another one trying to help other people

and inspire them as well. Thank you. It's impossible to lead a class and not do better at your own money because you can't be a hypocrite, right? Absolutely. Correct. Absolutely. Well done, man.

What a transformation. Thank you. Thank you. Boom, boom. Thank you. In 13 months, just barely over a year. I mean, it was my full-time job. It was a part-time job.

It was a DoorDash and Uber. It was getting at it, getting at it, getting at it, just nonstop, budgeted. And it was a journey. People make fun of you because you were pretty intense. Well, I mean, the people that made fun of me, then it made me realize maybe I shouldn't be hanging out with those people. Whoa. You know, maybe I should be surrounding myself with people that want to be with me for me and circle got smaller but you know what else got smaller that debt that's good well you become who you hang around with

wow very cool man what was the most lucrative side hustle for you that you went this one's worth it if someone's listening out there well, can I give a little side story? Sure. So my full-time is as an accountant for a custom home building company. My part-time was with a fast food company, Taco Bell. And then I was doing DoorDash. And so I did 15 hours of my full-time, part-time. And then I ended up doing some DoorDash and Uber at the end of it. I said, let me do it.

Tell me how funny. This is how I know the big man upstairs is watching. Because I ended up having a DoorDash order to pick up Taco Bell and then I ended up dropping it off to a house

that my full-time job actually built. Full circle. It was a full circle with all three of us. The circle of life. When I saw that, then that's when I realized,

okay, this is meant to happen. This is going to happen. I'm going to be okay. Yes, sir. I'm going to be okay. Yes, sir. Wow. Very cool. cool you're doing

accounting part-time as well no so i actually owe you guys a lot because um i was i wanted to continue to pursue it's not only youtube but it's also the rest of your team as well you know ken john deloney all of them made a big impact in my life personally um and i'm actually going for my cpa now um wow it was and the is, I went to the YouTube community as well because I was going to go through a long journey of that, but then somebody was like, dude, you could do it this way, do it that way. And all of a sudden, it made things so much easier for me. The YouTube crazies, they're a big help.

They were a big part of cheerleaders for me. Yeah, they're good cheerleaders. They are. They're hardcore, too. Oh, yeah. They'll call you out. Oh, yes. Oh, yes.

Well done, man. I'm proud of you. Thank you. Thank you. Who was your biggest in-person cheerleader? they are they're hardcore too oh yeah they'll call you out oh yes oh yes well done man i'm proud of you thank you thank you who was your biggest in-person cheerleader oh my family my friends i mean we all they they thought i was worried at first because i was barely around but i was working but then you know once i told them i was debt free they were like what say what i had to double check and then it was like okay all. All right. But I definitely, you know, my mom, my dad, my little brothers, my little sister, my accountability partner, Cynthia. Definitely a great, great, great moment. Love it.

You're like the poster child for all of this stuff, man. You're incredible. You're a hero. Thank you, sir. How old are you? I'm 30 years older. Oh, my goodness. Extra jobs, living on nothing, just leaned in 13 months, $63,000.

Yes, sir. Just figured if I could climb out of that hole, throw some dirt into that hole, and thanks to FPU, it gave me a path to move forward. And now my mission is to try to spread that word to everyone else. Amen. I want to be in your class. Yeah, really. Thank you.

Really, he's motivating, man. That's very cool. Congratulations. Thank you, sir. Very, very well done. Man, motivating, man. That's very cool. Congratulations. Thank you, sir. Very, very well done. Man, excellent, excellent. Now that you're done, all that hard work, that was a wild year you had. Oh, yeah.

How does it feel? Yeah. There it is. That's all I have to say. Yeah. Was it worth it? Oh, yeah, most definitely. If I could tell 20-year- that you know the key to success is really

delayed gratification you know um and you know just be faithful to what you really want to aim for amen and you know knowing your why is what really gets you going yeah for real proud of you good work good work we got the uh we got the live and give box for you it's got the total money makeover book in it you'll give that away because you know all that stuff baby steps millionaires book you're getting ready to be one of those soon and you're on your way for sure and getting ready to be a cpa as well man what a great story you are and financial peace university membership you can give that to one of your buddies and maybe one of those people that thought you weren't going to do it and get them going that'd be a cool uh cool payback right there so good good stuff. Sean from Houston, Texas.

Wow! $63,000 paid off in 13 months, making $52,000 to $80,000. Count it down. Let's hear a debt-free scream! Love you, Jerry. 3, 2, 1. A debt-free

scream! Yeah! Yeah! Woo-hoo-hoo-hoo! wow i want to be him when i grow up so i think it's really important what we talk about around here is one of the things that you know we're really good at information provide ramsey giving you the content giving you the information the what to do next the the steps the uh the detail the the nuanced answer to your weird question all that stuff right but but what we're even better at the the reason that ramsey's where it is not me but this whole place of over a thousand of us in the building is because we actually inspire you to go do it and humans inspire the humans not

information so what here here's what i think is really important about his story took a 14-day free trial completely binged through the nine lessons some people go got it turned it off back to their same old habits good to know and they just move on with their life. Good to know. Good point. And what did he do? Instead, he said, I need, what was the phrase he said? I need the accountability. I need to get all in.

And so he said, I'm going to go ahead and even, he's already got all the information. He got the nine videos for free in the 14-day free trial, right? But instead, they're going, now I know it all. No, he realized the secret sauce is not the information it's the application of the doing it and he said i gotta get signed up for the whole year and he had the humility to go i need the accountability i know me i'm self-aware enough to know i need to go a step further help you if you're human you you need accountability. There's no one. The Lone Ranger had Tonto.

I mean, come on. Everybody. We all need somebody. Everybody. Humans, it's not good that man be alone. Bible is real clear about that. And if you didn't think you knew that, you discovered it again back during when we had that little thing that Fauci did, that quarantine thing.

Yeah, when he made everybody sit at home and get fat. Oh, yeah, I remember that. You remember that? Everybody sat at home and got fat and had no humans around them. Yeah, remember that? Yeah, when he made everybody sit at home and get fat. Oh, yeah, I remember that. You remember that? Everybody sat at home and got fat and had no humans around them. Yeah, remember that? Yeah, I remember. And, yeah, we figured out we need humans. Humans need people, need people.

It's a song, yeah. That's a great song. Well, hey, I'm leading an FPU class starting next week virtually. And so if you are listening to Sean's story, you go, I need that, it's not too late to join. You can go to FPU.com and sign up for my class that I'm leading. I don't know that I'm going to be as good as Sean, but I aspire to be as good of a coordinator as Sean. I think you guys might be surprised how mean George is. I'm going to come at you,

and we're going to have a good time. Come at you. Yeah, like he's all hopped up on Mountain Dew. Well, it's the cold brew, Dave. Doesn't take much caffeine to go through my little veins. Come at you like a spider monkey. This is The Ramsey Show. Thank you for joining us, America. George Campbell, Ramsey Personalities, my co-host today. John's in Atlantic City. Hi, John.

Welcome to The Ramsey Show. Hey, Dave. How are you? Good to talk to you guys. Good to talk to you. How can we help? All right. So I've been listening to you for the past month or so.

And before that, I was buying real estate. But I think you would disagree. I'm just going to lay out what I have. I have 52K in the money market, 8,000 in checking. And I have a credit card debt of 9,000 and a car loan of 21,000. My wife, her only debt is her car. And we have a house that we owe 426 on. And my three rental properties I have, I owe $125,000 on, $126,000, and $110,000.

But they're all rented out. So I was going to buy another piece of real estate, but what do you think? I think you should take all that money in that money market and knock out all of your debt and leave you with a nice emergency fund and slow down on all this real estate investing until you can get some of it paid off what's her car debt yeah her car debt um she's going to be paid off in four months i'm not sure exactly the number you don't know what the balance is now now i just know she's going to be done in four months. Her payment is... So it's a couple thousand bucks then?

Yeah. Yeah. Okay. So you can write a check today and be debt-free. Am I understanding you right? Yeah, but then, I mean, you know, I just... I know you're dead against it, but I love having the rental properties and having the money come in, but I also understand the Ramsey way.

Well, here, let me, how old are you, John? 34. Okay. All right. When I was 24, I started buying real estate, and by the time I was 26, I had $4 million worth. I was aggressively buying it. And I was buying really, really good deals. I was buying stuff at 70, 80 cents on the dollar. And so I had good equity positions. Some of the property I put mortgages on and I was renting. Some of it I had short-term notes on and I was fixing it and flipping it. During that time, now that was a long time ago.

That was back in the 80s, okay? During that time was another, that moment in time, there was a real estate craze. Real estate was the answer to everything like it is right now. Everybody's talking about real estate right now. Everybody in your age group, the 20s and 30s, think it's all over the social media. It's all over everything.

It's like the thing to talk about, like you're cool if you're doing real estate right now. You know what I'm talking about. It's everywhere, right? 100%. It was that way then. And in those days, we didn't have social media. We didn't have the Internet. But we had these things called infomercials that would run at night,

and a guy would sit by the side of the sea with the waves crashing in and talk about how wealthy he was and how he had bought all this real estate, nothing down, and you could buy his tape set for $3,000 on how to do it and that kind of stuff. There was a bunch of those characters out there. One of them has got a really nice winery now in Napa, Del Dotto, and he was one of the biggest ones and makes a great bottle of wine called the Beast. Side note. But anyway, so I was in this group.

There was a group of people that started in each city. There was a guy that went around and got a group of people doing nothing down or low amount down real estate, real estate investors club of Nashville. And I was in this club with about 60 people that were doing exactly what you're doing and that we're doing what I was doing back then. Okay. And, um, they were all buying with as little money as they could put into it and

making the rent, you know, collecting the rents and hoping that was going to pay the bills and so forth. Now, here's the reason I tell you that long, long drawn out story. No one from that club 30 years later is rich

none of them except two guys what so you think the best because we're not in both of those guys worked diligently to reverse the process and get out of debt. I went bankrupt while I was in that club. I lost everything at 28 years old. Yeah. And so did a whole bunch of those guys. As a matter of fact, the guy that wrote the book called Nothing Down, named Robert Allen, went bankrupt.

Filed Chapter 11. Okay? matter of fact the guy that wrote the book called nothing down named robert allen went bankrupt filed chapter 11 okay and so the the proof is in the pudding when you visit it 10 15 20 30 40 years later you can see okay did this work didn't work the ones the only ones that work for were the ones that reversed the process and cleared the debt, like George just told you to do. So I love how aggressive you are. I love that you love real estate. I love real estate. I've got a bunch of it. I mean, after I went broke, I made a bunch of money later, and I own several hundred million dollars of real estate now.

I think it's an excellent investment. I like real estate, but 100% of my real estate is paid for. So, George, I mean, I think you're right i would stop buying i would clear the personal debt and i clear my my mortgages all of them including my house and you've got the ability to do this because dude you're a go-getter you're a guy that gets crap done but if you don't watch you're gonna out you know you're gonna outrun your coverage and um that's what scares me with john i'm looking at a guy he's he's seeing his cash flow from three properties i see a guy who has 820 000 in debt and one misstep could tank him oh yeah one life situation is all it takes and so i understand being kind of starry-eyed with a pile of money

going well that means more real estate i see it as a we could get out of debt and reduce our risk and start to you end up with all of these properties paid for in three to five years, including your residence. You can buy another property a year for cash with the cash flow you'll create by doing that. That's what I did the second time. The second time I got – the first one's really hard. You get these three paid off, that's really hard. But you get those three.

You get pure cash flow from those, no debt at all. You can buy another $100,000, $200,000 property pretty quick because you'll have enough cash. It just piles up. It snowballs in the right direction, you know, and that cash will snowball for you if you're not giving it all to the bank. But 100% of the time, debt equals risk. More debt equals more risk. Less debt equals less risk. 100 percent of the time. And that's why all those guys went broke in that collapse. Well, it's amazing how if you move a little bit slower right now, you can go much faster later on. Oh, yeah.

That's what happens. When you get rid of the debt and you have more cash flow, you're going to be able to save up and pay cash for those properties. Well, what others perceive as faster. But yeah, the percentages shift on you. Because, you know, once I got, you know, a couple hundred, you know, I don't know, $500,000 worth of paid for real estate, I got serious debt. I mean, a serious cash hit in the bottom line every month.

And then I added some income money to that. And I can reach over and buy another one, reach over and buy another one, reach over and buy another one. And that thing gets to moving. And it does. It feels like it accelerates. Well, then one emergency the hvac goes out a tenant some tenant vacancy you're not freaking out yeah you have a great position yeah

i mean like i don't know something could happen like covid where people don't pay their bills nothing whatever oh wait that actually happened yeah oh yeah that's it and then you can't evict them legally oh yeah that uh moratorium moratorium on evictions yeah and i'm not gonna pay because there's a moratorium on evictions so good luck with that landlord i know but you know house is paid for and when this is lifted you'll be homeless and i'll have a house so that's what happened a couple of them they tried to play shyster and were like yeah it didn't work out i had one other come to me that was in a business that was you know you know i had a strip center and they came to us and said you know we're like, eh, it didn't work out. I had one other come to me that was in a business that was in a, I had a strip center.

And they came to us and said, you know, we're in trouble. Can you help us? Please give us some mercy. And we went, yeah, we can do that. And will you forgive the rent? And I'm like, no, but I'll stop collecting it for now. And you can pay it back later. So, I mean, we can just pay no payments for four months.

And then we'll pay double payments for four months or something like that we'll work it out with you because we're i mean i get where you are and i don't want you to go broke i don't want to be the guy because you go broke i'd rather you be alive and and pay me the rent you know so let's let's work it out i'll let's go no rent for this month and we'll look at next month no rent next month okay because we still got you know we still got you're still getting fouchied so um as long as you're getting fouchied i'll i'll try to help you here. And you had the margin to do that because you had paid cash. You weren't desperate.

I don't have any payments. You're not desperate. You know, and we did have one tenant one time, the old lady's single mom got terminal cancer. And, you know, I have the margin to be compassionate and not charge her and just turn that house into a ministry for a period of time it's a horrible thing horrible process she went through and she didn't make it sad into the story you know but you know but she didn't have a landlord problem because her landlord didn't have a mortgage problem hello see how this works this is The Ramsey Show.

Dave here. You can find all of our shows with the Ramsey Network app on your smartphone. It's the only place to listen to the entire back catalog of episodes. Download the Ramsey Network app in your favorite app store today.