The Ramsey Show - App - Financial Peace Turns Emergencies Into Inconveniences (Hour 1)

Episode Date: March 16, 2023

Dave Ramsey & Jade Warshaw answer your questions and discuss: "Your plan kept us safe from the SVB collapse", What to do with an old 529, "I owe $3 million on my rental properties..." Have a question for the show? Call 888-825-5225 Weekdays from 2-5pm ET Want a plan for your money? Take our FREE 3 minute assessment: https://bit.ly/3nInETX Listen to all The Ramsey Network podcasts: https://bit.ly/3GxiXm6 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. Jade Warshaw, Ramsey personality, is my co-host today. We're going to answer your questions. The call is free, 888-825-5225, and some say the advice is worth exactly what you pay for it.

Lydia starts this hour in Orlando. Hi, Lydia. Welcome to The Ramsey Show. Hi, Dave. Hi, Jade. Thank you for taking my call. Sure. What's up in your world? Well, I just wanted to share kind of a success story and maybe a little bit of hope surrounding the SBB bank failure. My husband actually works for a tech company, a small tech company in California. He works remotely. But about one

year ago, took a job at one of these small tech companies and come to find out last week, his company was one of those that had their deposit at SVB Bank. We found out Monday that the deposits are going to be backed by the FDIC and the other insurances that the other banks, I guess, participate in. So his business is going to be okay. But there was a little bit of time there where we weren't sure. But to give a little bit of backstory as well, my husband and I started following the Baby Steps about nine years ago, and we completely got out of debt. We're in Baby Steps four through six, and we even are going through our first FPU class as coordinators. So we've never done it before, and we're going through as coordinators. Well, thank you. Yeah, thank you so much. So we were able to kind of walk through some of the principles with our FPU class,

and we actually just went through the emergency fund week, and we decided to beef up our emergency fund from three months to five months because my husband's job is a little bit risky as far as, you know, Little did we know. It's not a tried and true company. Yes. So we being in baby steps four, five and six and just one year ago, we started really trying to tackle our mortgage more aggressively than just, you know, maybe we had been before we just kind of gotten through debt and then we were doing some other stuff in our life. Now we're to the point where everything's settled down. We've gone through that stuff and now we're trying to pay

off four, five and six and pay off our mortgage. But because we took this risky job, we took what we were paying for our mortgage and we started putting it in like a side account, you know, like this is the mortgage payment, but just in case something happens with this job, we still have, you know, this, this fund that we can reach into. So, uh, last month, so that's, that was one year ago, last month we saved up for a whole year and we were able to save $60,000 for our mortgage. And we were last month, I kid you not, this was February 23rd. So probably only three weeks ago, we got news from his company that they did a second round of funding and their venture capitalist investors funded them enough to secure operations for at least three years. So in addition to the sales that they make, this additional capital investment would guarantee operating income for the next three years. And that would make payroll and all of that. So all of that money that they had just gotten in February was put into SDP Bank 100%.

So and we get the news. We're sitting here in February going, this is great news. We have at least three more years with this job. It's time to reach and pay off that mortgage or, you know, write that check to the mortgage company. So we did. February 23rd, we wrote a check, $60,000 to the mortgage company. And then last week we get the news that SBB Bank is failing. Then SBB says, hold my beer. Yes, the company may not be able to make payroll. And we have no idea where this is going to that SVP Bank is failing. Then SVP says, hold my beer. Oh, my gosh.

The company may not be able to make payroll, and we have no idea where this is going to end up. Now, you know, we're about one more week into it. We have a little bit more information and a little bit more security, but I really just want to thank you for the advice that we got on board with, you know, almost 10 years ago, because now we were set up to be in a place where even if he lost his job, we were secure. We have no debt except our mortgage. We only have, or we had beefed up our emergency fund to that

five-month mark. How much is left on the mortgage uh we have about 400 left way to go kiddo very good very good way to go i'm proud of y'all well that's what happens when you're when you're smart and you and you follow the steps you have financial peace that's right that's right yeah i i was told we're going to tell our fpu class here this week you know we just went through the lesson about the emergency fund, that we're really happy and dry under our large umbrella. I love it. That's what we do to the principals that you teach.

We're very grateful. Well, we're grateful to you. Thanks for telling your story. And wow, I mean, that's pretty incredible. That's something. I love it. It will rain, Dave. I mean, that's pretty incredible. That's something. I love it. It will rain, Dave. Like, it's going to rain.

You don't know what form it's going to take. But doing those steps and having everything in order, she was able to, you know, even if he had lost his job for a while, they would have been just fine. Yeah. And it may take them a little while to make payroll. That's right. The venture capital firm funds it for three years, dumps all of that funding into this bank.

See, it's a venture capital bank. Yes. That's what it was. Mainly startup, tech startups. Right. And VC money and even some hedge fund money. But there wasn't much grandma CDs in there. It wasn't like regular people in this bank.

Right. This is not your local credit union bank. This is not your regional bank that you should be doing business with but um yeah wow that's something so yeah they Lydia didn't have any money in there but her husband's company right funding was in there and boom yeah may keep them maybe a little while before they get that money that's true uh to be able to make payroll but doesn't matter she's in good shape yeah that's great i love that story thanks for sharing that lydia very very well done so here's the thing we talk about this all the time and uh jade and i have experienced it a lot of you have too that

when you have a fully funded emergency fund let's call it 10 $40,000, whatever that is, whatever your rainy day fund is of three to six months of expenses, it turns an emergency, a drama filled, and this one was really drama. Oh, yeah. Emergency into an inconvenience. That's right. Because, you know, you're ready for it. No one likes, let's be honest, no one likes to spend their emergency fund, right? It's there and you're hoping you never have to touch it.

But when that moment comes and it starts raining and your job is at risk or you know the car breaks down water heater goes out roof blows off that's when that money comes in handy strange i remember one of the um first times we actually had a fully funded emergency fund was the heating and air yeah and you know what's weird is when you're um when it has a big impact on you emotionally the numbers stick in your memory they do yes it was 3842 dollars well that ain't bad because mine was 5002 this was a long time ago okay okay okay okay okay a long time agoosaurs installed the new one. Oh, wow.

That's true, though. Yeah, you remember what you spent. That's for sure. It locks in. And yet, it was only an inconvenience. That's right. Because every other time we had an emergency, there was a lot of drama! Takes the drama out when you got financial peace. Amen.

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At least get us to 15, for God's sake. 16 is lonely, but yeah. Almost 15. There we go. And hey, listen, every time you hear somebody do a debt-free scream, it's because at some point they finally said, I've had it. I'm not living like this anymore. And a lot of people out there today in this current environment

are scared overwhelmed been there myself i know how it feels and if that's where you are listen it's time to do something different you have to try something new what you're doing isn't working been there myself not picking on you just time for something new if you don't like the cake change the recipe baby hey you got to rethink it. And we'll show you how in Financial Peace University, our nine-week, nine-lesson course that's helped nearly 10 million people how to get out of debt, build wealth, become outrageously generous. And we're going to do something right now that we haven't done before in a while. It's been a long time.

Right now, go check out a sample of Financial Peace University for free. You can sample it. Kind of like those cool snacks at Costco. That's what I was just thinking, Dave. See, it's lunchtime, but there's that. So don't go another day with being out of control or scared. Take back control and get a free sample. Go to RamseySolutions.com slash peace.

P-E-A-C-E. RamseySolutions.com slash. Wouldn P-E-A-C-E. RamseySolutions.com slash. Wouldn't you like to have some peace? Everybody could use some more peace. Financial peace. Two words that don't go together like airline service. There we go. Jade Warshaw, Ramsey Personalities, my co-host today.

Cecilia is our, Cecilie? How do you say it? Cecily. Cecily. Cecily is in Philadelphia. Hi, Cecily. How do you say it? Cecily. Cecily is in Philadelphia. Hi, Cecily. How can we help? Hi. So it turns out my grandparents are kind of weird people. And I just discovered that they left me, or they're still alive, but they helped me pay for school, and I'm currently a student.

But they have, like, a lot of money in the 529 account. And I have $10,000 in student loans just because I didn't know how much was in it. And now I'm wondering what to do, how to pay it off. How much is in the 529? I think after I finish school in a year, it'll still be like $130,000. Wow. So my parents helped pay for college except for that. I had $20,000 in student loans, and I rolled $10,000 from my $529,000 over onto that student loan, so I still have $10,000 left.

How did you roll $529,000 money into a student loan there's a new policy where you can take out 10 grand to pay for student loan debt for the 529 one time or per year one time it's a new biden policy then you're going to also get a penalty on the rest of it that you removed to pay off the other student loan. The only other thing you can do is if you're under the new SECURE Act, which is probably where that fell, but I didn't see that provision in it. Under the new SECURE Act, if you leave it alone for 15 years, you can roll it to a Roth IRA and just let it sit there. It's going to grow, put it in good mutual funds, and let it grow for 15 years and then roll it to a Roth IRA, which is exactly what I would do with it, other than I would take enough out to pay off the student loan once you're out of school.

So it's 15 years from when the Secure Act passed? Yep. No, no, from... 2024. I guess it's from your graduation is okay i don't know i don't know what the start date is on that i don't know whether it's when the uh 529 was formed or from when you graduate but it's uh basically if you keep an old 529 around long time it can be rolled to a roth ira and it effectively is a roth ira anyway because it grows tax-free so you could put

it in good mutual funds just like it was a roth let it grow and just pretend like it's roth money and then roll it to a roth whenever the appropriate date is and you'd have to get a little more research on it would i be able to put it in like kids names you can you can use it for kids you can use it for siblings you can use it for spouses use it for kids. You can use it for siblings. You can use it for spouses. You can use it for anybody, anything you want to do. And it's 15 years from the date it was opened. James just looked it up and said that in my head, in my ears. It is 29 years old. Well, I think you can roll it to a Roth now then.

So what I would do with it is, what's your degree going to be in? Social work, master's of social work. Okay. What are you planning to do? Medical social work. Okay. What does that pay? Upwards 85 to 100 if I'm doing well.

Okay. So medical social work is obviously a different field then. Okay. Good. Yeah, I mean, it's the same degree, but if you work in specialty, it's easier. That's what I meant. Yeah, the specialty's where the money's going to be. Okay, good.

So if you can roll out making 85, I wouldn't touch the thing at all. I would just pay off your student loans with your income. Okay. When you get out. Don't take out any more obviously use the use the 529 to graduate with no additional debt pay off your debt out of your income and then this becomes a roth ira when you graduate wow okay that's yeah that's exactly what i would do if uh if james's information he just pulled up from the trustworthy Internet is accurate, then this is already eligible because it's 15 years from the time it was opened.

That sounds right. That sounds like what I read. It doesn't make sense, though, because if you have a four-year-old 15 years later, they're 19, and then they can roll it to a Roth. That sounds weird. But listen, it's the Biden administration. It's the IRS. It could be very weird, yes. There is nothing here that's predictable. All things are possible.

Be sure you check all that out and make sure you've got that right, because it's all brand new, number one. Number two, we don't have the details, and we're Googling it as fast as we're talking here, and that's about it. But the concept is there. Fifteen years after some date, you'll be able to move it to Roth. If that information is correct, then the way I parlayed that will work for you. But since you only got $10,000, if you had $60,000 in student loans,

I'd probably use some of the $529,000, wouldn't you? I would. There'll be a penalty on it yeah but i think it might be worth getting rid of getting rid of it as a as opposed to the time it would take to pay it off yeah yeah because that's what that money is for for school you know i would not cash out your roth ir a penalty. No way. No, I wouldn't do that. Similar mathematics is the problem. But the Roth IRA, it's got a brand on it as far as I'm concerned. Do not touch.

Right. Where 529 really is earmarked for paying for school. It was just in the wrong order. Even if you took a penalty because your weird grandparents didn't even bother to tell you, you had $150,000 sitting there. Oops. even bother to tell you you had 150 000 bucks sitting there oops i forgot to tell you tell you 20 000 she said they were weird so she did she meant it she did they're definitely asleep at the wheel we learn stuff on this show as hosts is we screw stuff up so during the break we dig into this uh roth ira conversion from 529 stuff and you found a site what's the name of the site this is just us news money okay money.us news we hope that's right it's a good site i use it quite a bit

okay well it's talking about the the new provisions from the secure act 2.0 and the last caller was talking about what can she do with 130 000 rothi 130 000 529 i told her she could roll it to a roth after if it was 15 years old. Yeah, which she can. The Roth IRA, the 529 has to be more than 15 years old, but you can only roll $35,000 limited lifetime. So she can't roll the whole amount. And not only that, she can only roll up to the annual contribution limits for the Roth

IRA. So $6,000. $6,000. So it takes six years to put $35,000 in there. Yeah. And you're not doing your Roth while you're doing that. That's right, because you're maxing it out. Yeah, so that would change my advice then.

I would tell her instead to use this for her kid. Yeah. Because you can use it for your children unlimited and spouses unlimited. And since the whole roll it to the roth ira thing is so pinched down and bottlenecked in other words this is the washington dc and going look we did something oh wait when you get into the details it's not worth a crap okay and that's kind of what that is so they choked it down so far it's useless it was a great idea yeah it is to do this encourage people save money but by god the irs

wants their cut so yeah you're not going to get to do much of whatever it is and then then you know the politicians strut around act like they did something well it's making the assumption that you wouldn't contribute to a roth ira on your own so you have to use this to move it over i mean but why not just let the whole thing roll over it's just if you're going to do it that's what we thought it was yeah that was a good idea but oh no oh no oh no all right in the lobby of ramsey solutions on the debt-free stage christian and christine are with us hey guys how are you hey where do you guys live near lynchburg virginia all right welcome good to have you been up there a couple of times speaking at liberty and so uh good to have you guys with us how much debt have you paid off 156 936 yeah and how long did this take about four and a half

years good for you and your range of income during that time 83 000 to 138 000 excellent what do y'all do for a living so i'm the director of operations for a christian non-profit and i'm a professor of nursing at a local university ah cool which one liberty liberty oddly enough strangely enough okay cool well good good well we're big fans of liberty around here and uh so 157 000 director of nursing was that a student loan yes okay yes yeah okay not such a big fan of liberty now not okay all right so uh the whole thing student loans so three of it was cars that was about 20 000 the rest was our student loans mostly mine but how long you guys been married it'll be 10 years in january what happened after five years that gave you the wake-up call and said

we're getting out of debt yeah so i was on maternity leave with our oldest, and Murphy hit the house, and everything started breaking, like our car, our HVAC, and our fridge. The fridge was the last one, and I remember sitting there with her on my chest, and they had just called and said it would be $250 to fix the fridge. And I pulled up my bank account to see if I had enough money because we had no emergency fund. Like we were both working full time, but still like had nothing. And, but we literally had nothing. We had $30 in our bank account. And it was that moment.

Food's gonna spoil. Yeah, yeah. And so that was kind of the moment I was like, how do we have full-time jobs and good careers and not have anything to our name? I love it. And do we have full-time jobs and good careers and not have anything to our name I love it and so um we were Dave-ish for a while because we had a newborn and then we got pregnant again with our second and then it wasn't until after our second was born that we finally hit it strong and did it what made you turn up the heat to hit it strong um

a lot of things like having the kids just like knowing that we wanted to be able to provide for them and just also just debt just weighed us down. Like we couldn't do anything. We felt like we felt like we couldn't do anything without getting more debt. And so we, but we didn't want to do that. So, well, and she, as she said, we, you know, we both had full-time jobs. We were working hard and it felt like you had nothing. You go, you work your 40 hours a week, you come home, and all the money is going to someone else. So how did you actually find out about Baby Steps, Dave Ramsey, Financial Peace?

Which one was it? It was the church we were attending at the time, and now the church we're coordinating at the church we go to now. Cool. Very good. Lots of fun. Very, very cool. The Thomas Road or?

No. No. Okay. Because they did a church-wide Financial Peace University. Pastor Johnson is a friend of mine. And I went up there and spoke when they did that. And so a lot of the major churches have done church-wide FPUs. And so anyway, cool. Very good, guys.

So the church comes along with FPU at just the time you guys needed it. Yes, exactly. And now you're the coordinator to do that for somebody else yes wow having a great time with it um and our our fpu class is really excited that we're here and we we let them know we'd be coming over to to do our screen love it that's fun so what was the big catalyst did you start was it that you started? Did you have to do any side work? Like how did you? What broke it loose? Yeah.

So thankfully we didn't, I mean, we considered side work, but we didn't have to. We just figured ways to one, grow our career. But before that, it was definitely a budget. Like we sat down, that first budget meeting probably was like three hours long and we were not happy with each other at the end of it. That's so sweet the way you said that. We about killed each other at the end of it. That's so sweet the way you said that. We about killed each other. But I mean, it's true.

It was not fun to like figure out, you know, but after doing it just several months, we had more money than we realized when we finally told it where to go. And so just keeping that budget like every single month. And now it's like, I'm the nerd of it. So I do the budget and it's a couple of times he's like, can you add this in the budget?

But it's like a five minute thing now. I love that. That's how it goes. The budget reveals all. So very, very cool. Yeah, it's not actually doing the budget that's hard. It's all the stuff it reveals when you first start. It's like, God, I'm stupid.

God, you're stupid. We are stupid. It just wears you out, man. It's like a horrible'm stupid god you're stupid we are stupid it just where it wears you out man it just it's like a horrible very clear mirror it is a mirror yep yeah and then you feel like you got a race yeah yeah you really do yeah way to go guys way to go very proud of you how's it feel to be free weird yeah it's awesome we were talking to someone earlier and uh and we were saying how the month after we paid off our debt you know we looked and we were just like oh we don't have to give this money to anyone like it's our money just to now start putting into baby step three and start saving

we do it's no one else's money so it's weird yeah very cool it does it's a little bit surreal yeah almost it's like you come to the side of it and you're like uh i feel like there's something i'm missing yeah yeah feel lighter and i will say because it was four and a half years it felt like such a long time like you hear people getting out of debt in like 18 months in two years and like just with our incomes at the time our income didn't grow to what they are now till about a year and a half to two years ago which really was kind of the driving force to finish it accelerated yeah exactly but like in the middle is when it was the hardest so at the beginning you're like excited in the middle you're like should i keep going this is so hard and then at the end it's exciting again because you're almost there so like for people that are in that middle like just keep going because it's

so worth it and you will get there it is possible that's a good point because you got enthusiasm when you first start i'm gonna get this and then you get in the middle it's a slog and then when you get to where you can see the light at the end of the tunnel that's not an oncoming train now we can sprint to it exactly exactly exactly that's a good that's a good analogy but i think we did a we did a good job of you know some months it was harder for her and i would be there to encourage and know you know it's worth it let's just let's get this done. And vice versa. There were times where I'd want to, you're in that slog and you're like, you know, what if we don't do it for a couple of months and we go do this instead?

And we, you know, we're able to keep one another in check and work together on it. Well, we had like a chain countdown he made, you know, like the chains that connect. He put that in our kitchen. Perfect. And I like kitchen is like my place. And I was like, it's so ugly. He was like, well, the debt is terrible. I picked the worst colors.

I picked the worst colors. Let's bring the kids up and introduce them right quick before we run out of time. I want to make sure. What are their names and ages? Rita is seven and Luke is five. Very cool. Hey, we're real proud of you guys. We got the live and give box for you with the Baby Steps Millionaires book, Total Money

Makeover book, another Financial Peace University membership for you to give away. Congratulations, heroes. Well done. Thank you. Very well done. Christian and Christine from Lynchburg, Virginia, $157,000 paid off in four and a half years, making $83,000 to $138,000. Count it down.

Let's hear a debt-free scream. Here it goes. Three, two, one. We're debt-free! Yay! Woo! debt-free! Yay! Woo-hoo! That's how it's done. Yeah!

This is The Ramsey Show. Jade Warshaw, Ramsey personality, is my co-host today thank you for joining us america this is the ramsey show hey if you're new to us and a bunch of you are because our ratings and our listenership numbers are going way up quickly thank you for that if you're new to us uh and you're just trying to figure out what all this baby step stuff means and where do you fit in and it's all this debt snowball stuff, go to RamseySolutions.com, click on the Get Started button. It's completely free. We're not going to charge you anything. And you can figure out where you are now and what your next step is. And we'll start explaining it all to you and customize it for you. So again, RamseySolutions.com.

Click on Get Started. Christian is with us in Greensboro, North Carolina. Hi, Christian. Welcome to the Ramsey Show. Hey, Dave. Yes. So I was calling because I had a question. I have $6 million worth of property here in the area,

and I owe almost $3 million, about $2.8 million in loans. My question was, do you think it's wise to sell some of my portfolio to pay off the loans and be debt-free, or should I utilize the monthly cash flow to pay off the loans fast? What do you think? Well, congratulations. You've done a good job. You've got a good equity position. And you've obviously got a going concern.

And there's a lot of different ways to attack the situation where you are. You can keep doing more of what you've been doing. Here's what I learned when I was, when I was 25 years old, 24 years old, I had $4 million worth of real estate and I owed 3 million on it. So I did not have as good an equity position as you do. Okay. I was about, about 75% loan to value. You're about 50%.

All right. But I ended up losing everything because the bank got sold to another bank, called our notes. We had a lot of flip notes out of 90-day notes, and it caught me and took me out. And what I learned from that going broke process in my 20s, 30 years ago, was that those of us that love real estate, people like you and me, Christian, sometimes we forget to measure risk. Common sense tells you, and actual business analysis tells you, that the more debt you have, the more risk you have. Would you agree with that? Yes, indeed.

Okay. And what I've discovered now over 30 years, not only of teaching these things, but of living a completely debt-free life, and I today own several hundred million dollars worth of real estate. And what I've discovered in that process, building that portfolio a different way over this 30 years, is that the lack of risk with having no debt has accelerated over the long haul the amount of real estate I can own because i don't make as many mistakes i don't have setbacks i don't have cash flow problems i've always got cash can you imagine how much cash my real estate throws off with no debt it's obscene okay and uh so but and that

i can buy another piece of real estate with just cashflow fairly often it, uh, because we've got tremendous rents coming in on these things now. So all that to say what I have learned from my personal walk and from walking with others is that where, where I know you will be the best off in 10 years and have the most wealth because of the lowered risk and the increased peace in your life is if you were debt free. Now, do we have to burn everything down and do this suddenly because you just you and I had a conversation? No, I think you have a gradual process and you say, OK, over a year, two years, three years three years whatever it is i'm going to move in that direction because if i were in your shoes i would rather have four million dollars of paid for real estate than six million dollars of real estate with three million dollars worth of debt

very true and that's about where you will be because your real estate will go up in value while we're doing this all right how long have you been doing this? Apparently you've been doing it a while and you're good at it. Well, I've been doing it since 2012. I actually used my W-2 to help me purchase property, and I was also flipping at the time. And in 2019, I decided to leave my job because I was able to sustain myself and all the deals. Yeah, and so you're doing flips in addition to this.

Yeah, well, flips are more so like for fun. I do flips maybe two, three times a year. Okay. Yeah, but – Just good pocket money. Okay. Yeah, you can probably live off your flips, and then your other stuff just generates income. That's awesome.

Well done. Good for you. Well, here's what I figured out. When I'm doing a flip, I buy something differently if I'm paying cash, and when it is paid for, I am in no rush to sell it. So I never become a motivated seller or a motivated buyer. And I get better deals on the buy, and I sell for higher on the sell because I've got all kinds of patients with no payments.

But when the payment's eating your back pocket out, it makes you want to jump and get rid of that thing. You know what I'm saying? Exactly. And I've been following you for quite a while, and I would like to be debt-free at some point. That's why – Have you got any properties that are higher LTV, that are 80%, 90% LTV? No.

Like, usually when I borrow, it's really, really low. I mean, you're at about 50% on the portfolio. You don't have any that are higher than that? They're all about 50%? No, not at all. Okay, because that would be the first ones I divest. But since you don't have those, what I would do is just look at the portfolio and go, okay, 10 years from now, which one of these suckers do I want to own?

And start going, okay, I'm going to use some cash flow and knock out a few, and I'm going to liquidate, I don't know, a couple million dollars worth or a million and a half worth or whatever it comes out to be. And between those two things, have a two- or a three-year plan to be free. Because, again, you're going to be wealthier, and you're going gonna have a better life if you start with four million dollars of paid for real estate three years from today i'm not arguing with that i think i think he got a i think he got the nice dave version of that

that was great well he's he the reason is is because he's actually pulling it off yeah he's not he he could probably survive and not and do and you know 10 years now you start doing this nothing down real estate crap on tic tac you're not going to survive 10 years yeah because all the guys that i knew doing that in any generation have gone broke including me so uh but he's sitting in a 50 equity position so he's going to cash flow uh and if he manages the property well, and he's been doing it a decade already. Yeah. So that tells me he's really got his crap together.

But now we're down to the simple of philosophy is you start asking yourself, is this debt free thing really better? And the actual end result of the data is yeah you end up better not just a better feeling right you end up with more money well yeah you laid that out really clearly i think that he has a a good strategy for him and something that he can start walking towards which is really cool yeah those of you that are playing with real estate or want to play with real estate let me just tell you something you will never put in you will be less likely never you can always do something stupid you will be less likely to put a bum tenant in a property when you don't have any payments

but when you got payments you're looking for somebody to pay those payments with the rent and you're you're more desperate as a landlord to fill your vacancies, and you're more likely to go, well, I know. I kind of had a bad feeling. Turns out she was doing drugs. Who knew? Wow. But, you know, I mean, whatever it is, right?

And you put a tenant in there that's a bum, and then you've got a mess. They tear up the place. You go through. You still go through six months with no income. You go through an eviction. You go through all this stuff, bankruptcies on everything else it's a mess but you won't overlook that if you're going i don't think unless you really make me feel good that i'm going to let you have the privilege of living in my property because i don't have any problems now and i don't need you to bring your problems to me

that's such a good point yeah So you just desperate landlords make stupid decisions like desperate people of any kind. And it ends up costing them more. Yeah. And yeah, you do get bit. You get really bit. And I've done both. I've been both. It's been a long, long time since I've put in a weak tenant because I had to.

Because I haven't been there in decades now. And so I'm just really encouraging folks. There's a way to do this real estate thing where it turns out really nice, and there's a way to do it where you go broke. And Christian's in the middle. This is a good question. This is The Ramsey Show. Hey, what's up, guys? It's Jade.

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