The Ramsey Show - App - Don't Be So Smart That You're Unwise (Hour 3)

Episode Date: November 8, 2019

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Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studios, it's the Dave Ramsey Show, where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. I'm Dave Ramsey, your host. This is your show, America. Thank you for joining us. Open phones at 888-825-5225. That's 888-825-5225. James starts us off this hour, and James is in Missouri.

Hey, James, welcome to the Dave Ramsey Show. Thank you, sir. Thanks for taking my call, and thanks for helping everybody. Sure, thank you. How can I help? Well, sir, I have started a small business this year, heating and air conditioning, and I'm pretty much drowning in the business and personally. We have done about $110,000 worth of cycles in roughly six months, five months.

Uh, but our expenses have been like $70,000 and we are, we're not quite rice and beans, but we're, we're a cheesy rice and beans. And I just, I don't know where we're going wrong or I don't know what to do. Okay. What did you do before you opened the business? You were obviously in the heating and air business, right? I've done this 20 years. What was your last position? Were you?

I was lead installation technician technician okay all right and um and so obviously the installation part of it you understand you're doing a great job selling because you sold quite a bit of it um you're not doing a great job managing your expenses or estimating your jobs well a lot of it has been i've bought all of the equipment um you know i've bought lots of equipment more than you more than you should have tools and yeah more than you should have and i've bought it out of savings i've bought it with you know what profit i've made off jobs and a little bit on credit cards yeah but you bought stuff that you couldn't afford to buy. That's correct, yes.

Yeah. And so you've got to stop buying equipment. It's killing your margin. Right. The thing is, if I don't have the tools, I can't do the job. Yeah. Well, there's some jobs you can't do then. Right.

Because you won't have the tools. But you're not going to go broke that way. Let me just tell you, man, you're in a business where there's no end to the amount of tools you can buy. Right. You can tool yourself out of business, and you're well on your way. I got them around here, man. I got these computer guys in this building, and they'll fill this whole stinking building full up with dadgum Rolls Royce computers. And my answer is no.

Use the old one. When we can't get her done with that, then go slow. But we're not going to buy toys and broadcast equipment and computers and cameras, and we're not going to just buy and buy and buy and buy and buy microphones and everything else around here. We have the same thing. We've got a bunch of gadget gurus around this place, and they will spin me into oblivion if I allow them to.

Right, right, and I totally understand that. You're doing it to yourself. I've bought as much of it used as i could possibly buy um there were a few things that had to be brand new somehow i mean i got one $3,000 yeah so so here's the thing you can't buy any more tools right you're done now go make some profit with the ones you have. Right. Or go back to work for somebody else. I got you. That's the thing, because we've analyzed this. You're good at getting the business.

And are you charging too cheap for the jobs? I'm average with everyone else. Okay. So there's three sides of the equation. There's the total, which means you can sell. You've brought in $110,000 equation. There's the total, which means you can sell. You've brought in 110,000 gross. That's good news. Because a lot of technicians can't close the sale.

So you're way ahead of the average cat doing that. You obviously are an expert at heat and air. I mean, that's not in question. You know how to do that. You've been doing it 20 years. So the install part and managing that's not a problem. What's killing you is expenses, and it's labor and tools or something that's eating all your margin because other people are making a living

and making a profit with the price structure that you have. Right. Now, one other issue got me fuel. The main thing that's eating me up, like 40% of our profit is going to fuel. And it's just our fuel bill is killing me on top of that. I'm sorry. Gasoline for the trucks? Yes, one truck, one vehicle.

Forty percent of your profit? Yep. Where are you doing these jobs? In North Dakota? No. Some of them are as much as 50, 60, 70 miles away. You're not bidding them properly then. You have to bid a trip charge in addition to the actual job because of how far you're driving to do the work.

I got you. So I'll give you an example. Okay, I got a lake house. I built a lake house a couple years ago. We tore down the old one, built a new one. The local guy there decided that Dave Ramsey, since Dave Ramsey was building the house, that he was going to get rich. And so he bids my heating and air at like $56,000 for this house. And I had just built a house, and I knew that was double what it should be.

So he's trying to gig me, all right? And so I called my guy 67 miles away that did my house here in town and said, look, bid this, and I can pay you a major trip charge, and you'll still get the job because this other guy is trying to take me to school. And so he comes in $28,000 with the trip charge, half with driving 67 miles and charging me for the drive. Right. So charge him for the drive, dude, or don't take those jobs those jobs aren't profitable

if they're too far away right right the way i've kind of looked at it was five dollars is better than no dollars no it's not either not either because what we're doing is we're going through your pnl you and i right now and we're doing a business analysis of why it's not working, and it's tools and fuel. Well, do you have a recommendation of some business classes or a book? Sure, sure. I'll send you a copy of our book, Entree Leadership, and it'll walk you through a whole bunch of things. And you can probably jump into our all-access community and learn a bunch there. There's a bunch of heat and air guys all over the country in that all-access community. But I'll start you with the book, and then you look at that.

But the thing is, you know, just listening to you, I think you've got the chops to do this, but I think you're going to have to put some guardrails and learn to say no. And that means no, I can't drive halfway over there to do this thing unless i charge extra for that long drive and no we can't buy tools with all our money because our kids want to eat right and that's the nose that's been a little bit of my issue i understand everything about the business you do except the business side yeah but i mean you you actually know more about the business side than you thought think you do actually know more about the business side than you thought think you do because you were able to describe it to me in one five minute phone call

and we were able to very quickly to drill down and find the problem and it's not because i'm a genius it's because you know your business so your pricing is right you're a you didn't call up me up and go i can't seem to get anybody to buy heating and air you're selling the crap out of it at reasonable average pricing not not too high, not too low. So we're not going to question about that. You know enough about the business to know that. You know how to do the install. You know how to actually perform the service.

You know a lot about that. You know you're spending too much on tools, but you've just rationalized it and said, I had to have one, and you've got to stop that. And you've taken these other jobs knowing there wasn't profit in them, and you've got to stop that or kick the price up for a trip charge so that they're profitable and then you're glad you're driving 50 miles make yourself make you make it a happy job i'm glad i'm going over there because i'm making some extra money going over there to do that or you get outbid on that one oh well it wasn't it's you know all money's not good money hey you got this man hold on i'll have kelly give you a copy

of the book you're're going to make it. This is the Dave Ramsey Show. Business leaders, if you're not using LinkedIn jobs, you are missing out. Our Ramsey Solutions Company page on LinkedIn has over 100,000 followers. That's over 100,000 potential like-minded people our team communicates our current openings to. We also post on LinkedIn Jobs because we know the right person will have an impact on our company for years to come. And LinkedIn Jobs matches the right person with the right job. It's no wonder a hire is made every eight seconds on LinkedIn and over 600 million members visit LinkedIn to make connections, learn and grow as

professionals and discover new job opportunities. In fact, LinkedIn members add 15 new skills to their profiles and apply to 35 job posts every two seconds. Get started today with LinkedIn Jobs and get $50 off your first job post. Visit LinkedIn.com slash Ramsey. Terms and conditions apply. Thomas is with us in New York City. Hi, Thomas. Welcome to the Dave Ramsey Show. Hi. Can you hear me?

Absolutely. How can I help? Great. Thanks. It's great to be speaking with you. So I'm going to be entering into an MD-PhD program in the fall or summer, I guess. Way to go. Thank you.

I very much appreciate that. So my question is, with the stipend being around like $30,000 to $35,000 a year, and with living expenses being, you know, what I've calculated, around like $18,000 to $20,000 a year, I was wondering if it was appropriate to take out a little bit of debt to pay, to compensate a little bit for my living expenses that are going to be left over, with the assumption that I'll be able to pay it off when I'm done. I'm sorry. I'm confused. I thought you said your stipend was $35,000. Yeah, it is $35,000.

But, I mean, to eat and, you know, live at all whatsoever in New York City, it's expensive. I mean, I'll only have what I calculate, maybe like $15,000 to $13,000 a year to live off of. Okay, so the stipend covers the tuition and living expenses? No, no, no. The tuition is paid for. I thought so.

I thought that's how that worked. It's for your living We're stipended. It's for your living expenses, right? Yeah. Yeah. And I... You can't make it on $35,000 a year while you're a med school student? I mean, it's in New York City. I know.

I mean, it's about, you know, $20,000 a year for, you know, rent alone pretty much. So I figured, I don't know i it's it's kind of tough to live on maybe like a thousand dollars with all you know included expenses uh i i just didn't know if it was appropriate for me to start thinking about taking out some debt or to just get in the mindset dude listen you you have hit the lottery i mean the, the MD-PhD program is the dream come true where you go to med school and have zero debt. And they give you money to live. For God's sakes, man, figure out a way to make that work and don't go into debt. You did it.

You did it. Now, don't, you know, if anybody doesn't need to go into debt, it's you. Now, I understand New York City is expensive. I'm there all the time. I understand. So get six roommates, man. I mean, live on nothing. Figure this out.

But you can make it on $35,000 a year. That's $3,000 a month to make it on. Now, you're not going to live by yourself in a rental property doing that. I get that. So get some roommates. Get some other guys and gals that are in the program. Find a way to get in some super cheap housing associated with the university in some way. You know, shop around.

Find out what you can do to clean out some old lady's gutters and live in her basement garage or something. You know, I mean, there's something to do here. But you got what everybody going to med school wished they had. And don't, no, no, no, I'm not going to tell you to go into debt. No, I'm not going to tell you to go into debt. No, you get to go to med school and be a story you get to come out of med school 100 debt free and it's because of your academic acumen and don't be so smart that you're unwise you ever meet smart people that are unwise i meet them all

the time don't be that guy you've you've pulled this off, man. No, no, no. Do it. Do it, do it, do it. And between now and the time you start med school, go work six jobs and put another $30,000 in the bank. And then let that supplement you as you go through. You did it. This is a killer program. Hey, thanks for calling in.

Open phones at 888-825-5225 we'll try to help and we appreciate you calling open phones again jump in here now what the md phd a md phd program is for those of you don't know why i'm so excited for him is you become a an employee of the university, and so your tuition is free, and so there's a stipend. And to qualify for that, you have to have academic prowess beyond belief. So that guy's a very, very smart guy, academically speaking. And there's not a lot of those available. If you can get one of them, it is your ticket to med school for free.

Yes, you do that. Oh, my gosh, that's wonderful. Jeremy is in Raleigh, North Carolina. Hi, Jeremy. Welcome to the Dave Ramsey Show. Dave, thank you for the time. I appreciate it. Sure.

How can I help? Well, I have $100,000 in student loans, not something I'm proud of, but no whining. I appreciate it. Sure. How can I help? Well, I have $100,000 in student loans, not something I'm proud of, but no whining. I want to pay. I've made some bad decisions since I graduated in 2011, and I've since paid off credit card debt. I actually finished it this week. Good. Finished paying it off with wedding money, with my wife's approval, of course. Good. You're heading the right way now. Yes. My wife finished this school in May. She's not working at this time, but we expect that she'll have a job in May.

The plan is to live off of the lower of our two incomes and to use the higher sources of income to pay the debt. So we want it paid in three to four years. She has no debt. She'll graduate debt-free. She definitely does not bring back into the relationship like I did. So I'm so proud of her. So what do you make? I make just at $48,000 gross per year. What do you think she'll be making when she graduates in May? It looks like her average salary will be right at the mid $50,000 range. I'm going to say $55,000. Okay.

All right. So I'm going to correct you. You do not separate these two incomes and use one for debt. You put them together, and you live on the minimum amount that you can live on, and everything above that minimum living, that beans and rice living, scorched earth on the lifestyle living, goes towards debt. And so you ought to be able to live on less than $50,000. Yeah, okay, good. And so you're going to put more than one of these incomes towards it,

and you'll be debt-free two years from May. Great. Well, and I got one added, I guess you could say a gift in the last week. Someone that passed away left me 400 shares of stock. It's all in one company. Okay. What's it worth? It's valued right as of five minutes ago at just over $28,000, $28,168 to be exact.

Great. You just reduced your debt by $28,168. Sell it. You read my mind. Perfect. I don't know what the intricacies of the tax penalties and whatnot. There will be none. You'll have no taxes.

And when you inherit stock, your basis for tax purposes to calculate your gain is market value at the time you inherited it. And if you sell it within six months of inheriting it, it is assumed that you sold it for what you inherited it at, so you have no gain. Okay, perfect. You're reading my mind. I appreciate that. Zero taxes on this at all. You'll do need to report the sale and report the inheritance as a part of your next tax return, so have your tax provider do that.

But you'll have no taxes on this. You don't need to hold anything back. And I suspect that whoever did well enough to leave you an inheritance would be in heaven smiling looking at you being responsible what do you think i certainly hope so uh and i know that uh i appreciate your help with that as well thank you so much hey jeremy thank you for calling you're on the right track dude keep it up well done ding ding this is how it's done ben is on twitter dave i hear you say credit scores go to zero within a year of no accounts Keep it up. Well done. Ding, ding. This is how it's done. Ben is on Twitter.

Dave, I hear you say credit scores go to zero within a year of no accounts open. It's been three years. My score is still there. Any idea why? There's some kind of activity on your account. That's the only thing I can tell you. I don't know. I mean, there's no perfect formula because FICO will not reveal what it takes to do this.

But our experience has been that when people have no accounts with no activity, no outstanding bad debt, nothing going on. But if you still own a house with a mortgage, you've got activity every month. If you've got an account open anywhere, double-check the bureau. Make sure the credit bureau is not. One of these accounts that said they closed it. Maybe they didn't close it. I don't know. If you've got an old bad debt hanging out there, pull a copy of it and see what's showing up. There's an item entering that's showing up that's creating activity. And I'm guessing anyway.

Again, I don't own FICO. I can't be sure. But this is what our experience has been with people, that if you quit borrowing money and close all the accounts and pay all your old bad debts and there's zero anything showing up on your credit bureau report, that you have a zero credit score within about five to six months. This is the Dave Ramsey Show. Folks, let's cut through the bull.

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are low. This is a paid advertisement. NMLS ID 1591. NMLSconsumeraccess.org. Equal housing lender. 761 Old Hickory Boulevard, Brentwood, Tennessee 37027. Cody and Sarah are with us in the lobby of Ramsey Solutions. How are you guys? Good. How are you? Welcome, welcome.

Where do you guys live? Lexington, Kentucky. Cool. Well, welcome to Nashville. Thank you. Thanks for visiting us. And all the way here to do a debt-free scream. Yes, sir.

And how much have you two paid off? About $85,000. Cool. And how long did this take? About four years. Good for you. And your range of income during that time? Between 50 to000. Cool. And how long did this take? About four years. Good for you. And your range of income during that time? Between $50,000 to $60,000.

Okay, cool. And what do you guys do for a living? I'm an electrical engineer at Kentucky Utilities in Lexington. It's a state utility. Right. I've done a couple different things. I used to be a teacher, and then I managed a day program for adults with special needs, and now I'm a stay-at-home mom.

Oh, cool. Very good. So what kind of debt was this $85,000? It was a couple credit cards, medical bills, and our house. You paid off your house? Our house. It's ours. I'm looking at weird people.

Woo-hoo-hoo. Way to go, you guys. Thank you. How old are you two? I'm 35, and she's younger. I just turned guys. Thank you. How old are you two? I'm 35 and she's younger. I just turned 33. Very good. And you have a paid for house.

Yes, sir. Wow. How weird are you? Very weird. Very weird. I love it. Congratulations, you guys. Thank you.

Very, very. What's the house worth? I think it's in the 150s now. Yeah. Excellent. I think it's risen about 150s now. Yeah. Excellent. I think it's risen about 20 grand in a few years because of the market. Yeah. Very good.

Good for you guys. That is fun. Very fun. So what made you go on this journey four years ago? Tell me about it. This is impressive. This summer, we had taken your class as a pre-engagement, and then we led the class last year. And the more we thought about just legacy stuff, we just had a baby, Madeline, in June.

And then just to set her up in the future, decided to pay the mortgage off. Okay. So how much was left when Madeline was born? How much was left on the mortgage then? I'd say about 40. Okay. So how much was left when Madeline was born? How much was left on the mortgage then? I'd say about 40. Okay. So you guys just rolled up your sleeves and leaned into it, huh? Yeah.

Two weeks after she was born, we paid it off. Wow. Yeah. I loaded her up in the car and met Cody at the bank and paid it off. Yeah. We had some savings and some gift money we had saved up. Okay. And then just chipped and added over the few years.

Okay. So you were just working your normal Baby Steps four, five, six from taking the class. And then when baby step six looked up and was in reach and baby comes, that's your motivation. Just reach over and knock it out. Yep. That and we've had a little extra motivation. Cody's actually waiting on a liver transplant. So knowing that that's ahead of us, we just wanted to go ahead and knock it out as soon as possible. And just having that out of the way, it's such a blessing knowing that with knowing medically what's ahead of us,

that we're going to go into that completely debt free and not have any worries, can just really focus on recovery and healing. It's such a blessing. Oh, yeah. It takes all the financial pressure off of working on the right stuff. Yes. Yeah. Not to brag on her a little bit. She was actually unemployed while we were dating and got herself out of debt.

And then right when her unemployment quit, she was out of debt and then got a job. It's like, huh, maybe the Lord knows what he's doing. Just like that. That's so fun. Well, what advice do you get? You've gone through the class. You've paid off your home. You're 35 and 33.

What advice do you have to people listening that want to get out of that? What do you tell them they have to do? Just like you said, just roll up your sleeves and do it. You know, and I've walked them through the steps of what we went through with your class. And so I've had a lot of people ask me when we tell them we paid the house off. They're like, wait, what? And we just tell them what we did with the class and tell them they just stick to it they gotta stick to it you can do it i mean

during our four years of getting at it they were some times that it just seemed more challenging and overwhelming like we're never going to get it paid off and next thing we knew we could do it so we just tell them to just keep at it you can do it and it's more just staying encouraged than it is than it is um the math because like you said before if we're doing math we wouldn't be in debt so yeah yeah and i would say too to really just set your goals and know what you're working towards because when we first started i have to be honest i wasn't really that on board with it just because i knew it was good, but it kind of just seemed like the thing to do because everyone else was, well, not everybody, but a lot of people were just on this get out of debt kick. And I was like, yeah, that's great.

But you know, what's really the point if we can just keep making payments? And then once we really sat down and talked about our goals and talked about the things we wanted to do in the future, and I realized that, hey, once we're out of debt, we can really attack those and really have the kind of life and the legacy that we want to leave for our children. And then it made it so much more real and seemed like it was so much more important at that point. Very good. Good job, you guys. Thank you.

Very, very well done. Love it, love it, love it. Congratulations. Thank you. And you brought Miss Madeline with you. Yes, she is here. And how old is sweet Madeline? Four months. Four whole months you. Yes, she is here. And how old is sweet Madeline? Four months.

Four whole months old. Oh, my goodness. Well, we got a copy of Chris Hogan's book for you, Retire Inspired. And that is the next chapter in your story to be not only debt-free but now millionaires. Thank you. And outrageously generous as you go along. Very proud of you guys. Well done.

Thank you. Who was your biggest cheerleader? I'd say our family. Each other. And our close friends at church. Yeah, each along. Very proud of you guys. Well done. Who was your biggest cheerleader? I'd say our family and our close friends at church. And each other. It's a good point. Yeah. Well done, you guys. All right.

It's Cody and Sarah and little Madeline from Lexington, Kentucky. $85,000 paid off in four years. That's their house and everything. Count it down. Let's hear a debt-free scream. Three, two, one. Praise the Lord. We're debt-free.

All right. I love it. Congratulations, you two. Very well done. Absolutely love it. Absolutely fabulous. Open phones at 888-825-5225. Our question of the day comes from blinds.com.

They have a 100% satisfaction guarantee. That means even if you mismeasure, you pick the wrong color, they will remake your window blinds for free. Site-wide savings is happening right now, plus take an additional 5% off at blinds.com slash Ramsey. That's blinds.com slash Ramsey. Questions from Shelly in Wisconsin. Instead of buying a bunch of Christmas toys that the grandchildren won't play with,

we want to invest money into their future. What do you suggest? I suggest you do some of both toys and christmas and grandchildren all go together in papa dave's mind um investing for their future all goes together in papa dave's mind that's my grandpa name so um yeah i would do both if you want to do some investing um there's a couple of things you could do you can do an e if the parents are not doing any investing at all you can do an esa an educational savings account and you're allowed to put up to two thousand dollars per year per child into that, and I would put that in a good growth stock mutual fund,

and it will grow for their education. It grows tax-free for their education. Now, you have to name an adult as the custodian watching over this money until the child gets ready to go to college. You can name yourself the custodian, or you could name their parents the custodian. Either one is fine. Either way, you should just be in communication with the parents, because all of you together cannot put but $2,000 a year in. So if they're already doing a $2,000 ESA, you can't do another one. And so you would do a 529,

or you would do something else so be in communication with mom and dad and you don't have to put the whole 2000 you could do 500 in that if you want to but i also would buy them some toys shelly christmas and toys go together it's just part of the plan okay and uh so i agree that they're not going to use them. But I'll tell you something interesting. I was doing a talk in Phoenix to business leaders. And an illustration that I used in that talk is not relevant to this question, but it was a Hot Wheels car from my Hot Wheels collection from 1968.

Now, I don't remember if my grandparents bought the Hot Wheels or my parents did, but I was eight years old. It's kind of cool to have an antique Hot Wheels car in your collection. I've got a bunch of them just because I kept all my toys, that kind of stuff, not all of them, but a lot of them. So there you go. Toys are good. They're not a bad thing. But I agree with you.

All toys makes Jack a dull boy. But let's do some investing. Check SmartVestor at DaveRamsey.com, and you can sit down with SmartVestor Pro, and they can help you plan that out for your giving to your grandkids for Christmas. What a cool thing to do. This is the Dave Ramsey Show. Our scripture of the day, Psalm 90, 17. May the favor of the Lord our God rest on us

and establish the work of our hands for us. Manoah Aurora said, To achieve what 1% of the world's population has, you must be willing to do what only 1% dares to do. This is true. How much is left inside of us when we die. How many stories are left inside of us? How much music is left inside of us? How much potential is left inside of us?

And too often because we just don't believe we can do it. If we try this, it might not work. Have you ever said that? My friend Seth Godin says that anxiety and worry is, you know, accepting failure that hasn't even occurred yet. Isn't that crazy? We do that. We go ahead and just let something die before it was even born inside of our brain. Our potential is a bazillion times what any of us get out of this life. There's so much more that every one of us could do.

I love that quote. That's good. Reese is in New York City. Hi, Reese. How are you? Hi, Dave. Quick question for you from my FPU community in Hoboken, New Jersey. So would you consider somebody house poor or still house poor if their transportation costs are negligible?

Like, for instance, less than 2 percent of your take home pay and they were to subsidize the I guess subsidize would be the word over 25% housing cost from what would have gone to a quote-unquote normal person's transportation cost. Well, I mean, you live in a very high real estate, expensive real estate market, obviously. And you live in an area with mass transit. And so you can get to work with very little cost or walk down the block in some cases, depending on what you're doing. But it's kind of – I mean, you can do whatever you want to do. Exactly. But what's happening here in terms of the flow of your logic is you're reaching, trying to just justify high rent. That's all you're doing.

And so, meaning, you know, would it be okay if I work for a shirt factory and I get my shirts for free, and so I don't have any clothing budget much, would it be okay if I spent that extra money on my rent? Well, yeah, you can. But there's nothing tying these two things together, really. I mean, it's just you saved money on one front, you spent it on another. And so, I mean, you can do that, but what's our long-term goal here? Well, our long-term goal is get out of debt, build wealth, buy a property, you know, in that process. And so which of these things takes you towards the long-term goal?

The problem you guys are facing in your group is the realistic problem is that real estate is just stinking expensive. Exactly. And the rents are just outrageous. And what you've realized is just because you live in the New York City market or the L.A. market or the whatever, Denver, Chicago, Miami, name me an expensive real estate market, but yours is one of the most expensive, you don't get a pass on math. That dadgum one plus one still equals two thing all the time. You know, so I would attempt to keep my rent down and save on the transportation costs because the less I spend on rent, the more I've got to move towards never being a renter again. And so you can do that if you want, but I don't want to just put that out there as a principle that says, okay, because you're in an expensive real estate market and you can save on this, then go ahead and do it. You can go ahead and do it, but I'm always wanting to push back against the whole thing and just go, my goodness, how do we get to our goal the fastest? And it is by cut, cut, cut, cut, cut, cut, cut. I mean, we want to rent as cheap as we can rent. Renting is camping.

You're camping until you get to buy the real house. And so the more you spend on rent, the longer before you buy a house. And so I don't know. I'm always going to try to find a way to a different paradigm, a different door to try to get in this barn, a different way to get out the problem than just accept and go, well, we're just going to have to pay that. As soon as somebody says, I have to do something, that's when I start trying to figure out a way that we can beat their game because I'm a contrarian by nature.

So all of that to say, what you're laying out there is not a bad premise as a one-off if one of you decide to do that. But I'm not going to put that out as a principle that says, Dave Ramsey says, if you're in New York, do that. No, I'm not going to tell you to do that. Hey, thanks for the call. Yesenia is with us in Dallas. Is it Yesenia?

Is that correct? It's Yesenia. Thank you so much, Dave, for taking my call. Sure. How are you? How can I help? Hi. So my husband has over $75,000 in debt from a trade school, which was closed down last year,

and we have been deferring payments for the last two years. It's currently in a lawsuit. We don't know if to start paying or not. It's accumulating interest. We're not even 100% sure. There are several laws on the books. Is this a Sally Mae student loan or a private student loan? It's a private school loan.

Ode to them? Yeah. Oh, no, no, no. I take that back. No, no, no. It's not private. No. Okay.

All right. So it's a Sally Mae loan or it's just a bank loan? Okay. If the trade school has been closed down or has gone broke, the debt goes away. That's the law. Now, okay. Now, he actually received his degree, but he's not using his degree at the moment. So what does it matter that his old school closed down if he got his degree?

Say that one more time, I'm sorry. What does it matter to you that they closed down if he got his degree? Well... He got his degree. What's his degree in? I know, but he didn't receive the education that he needed. He's not working in the field that he studied for. What did he learn? He's not working in the field that he, you know, that he studied for. What did he learn? He's not competent in that field?

Well, it's, he got his degree for cybersecurity. Currently, he's in help desk. Yeah. My question is, does he know what he's doing on cybersecurity or not? No. No, he does not. Oh, okay. So his degree is worthless.

It's worthless. Because's worthless, yes. Because he got no knowledge. Correct. And you owe $73,000. $75,000, yes. I would contact an attorney. Okay. And there are some provisions that when a school goes broke while you're there,

that the debt is forgiven. There's some federal laws on the books regarding that it has some it has some uh caveats to it and so forth and you need to learn about those that doesn't apply here because he's graduated but i think you've got you make a case that they were incompetent and um that the loans were taken out on a fraudulent basis for that reason because i'm sure this the people making these loans were tied into the school. Yes.

I mean, they're sitting there at the desk in the school, right? Yes. So I would contact an attorney and see if there's any legal outs that you have here because basically what you're telling me is you got ripped off, that you were told he was going to be taught something and he really wasn't learning anything and the you know now you know it's hard to believe why did he keep going if he wasn't learning anything you know i mean at some point you got to go i'm really don't know what the crap i'm doing and i'll keep paying for this you should have pulled the plug on it long ago that's the other thing that's going on here so hey good question thank you for joining

us tommy is on Facebook and says, I'm contemplating signing up for State Farm's return of premium policy that allows you to receive your money back after 30 years, assuming you live that long. It costs more per month, obviously, but it seems too good to be true. It's not too good to be true, Tommy. It's a ripoff. Never do return of premium policies that you pay more for,

and you always pay more for them. If you take the amount more that you're paying and put that on a mutual fund, you would get all the cost of your policy back at the end of the 30 years 100% of the time. That's how they're doing it. Whether you die or not, by the way, the money is there. And with the return of premium, you only get it back if you don't die. It's a complete insurance gimmick.

It's crap. So don't do that. Now, go to Zander Insurance, zanderinsurance.com, buy good term life insurance, 15 to 20-year level term, and always avoid return of premium. That's the deal. This is The Dave Ramsey Show. We'll be back 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. 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.