The Ramsey Show - App - Fix the Car or Sell It?

Episode Date: April 11, 2022

Dave Ramsey & Ken Coleman discuss: Does it always make sense to pay for car repairs? Leaving your job for a better paying job, The value of I-Bonds, Roth vs. Traditional retirement plans, Is now a good time to flip houses? Support Our Sponsor: Zander Insurance: https://bit.ly/2Xbn7hD  Splash Financial: https://bit.ly/2XAdOIf  Want a plan for your money? Find out where to start: https://bit.ly/3nInETX Listen to all The Ramsey Network podcasts: https://bit.ly/3GxiXm6

Live from the headquarters of Ramsey Solutions, it's the 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. Ken Coleman, Ramsey personality, is my co-host today as we answer your questions about your money, your relationships, your mental wellness, your job, your career, all of its game. It's all about your life, and that's what we do here on the Ramsey Show every day. Open phones at 888-825-5225. The call is free, and some say the advice is worth exactly what you pay for it. 888-825-5225.

Odell is with us in Fairfax, Virginia. Hey, Odell, welcome to the Ramsey Show. Hey, good afternoon, gentlemen. I appreciate you guys taking my call. I've actually been a pretty long- time follower, so I do appreciate this. Well, thank you. We're honored to have you. How can we help? I was recently offered a new position as a software developer with a new company that's willing to pay me $25,000 more than my current position with the company I'm with. I'm conflicted

whether or not I should stay with my company since my experience in software development is relatively new. And I was also in the Marine Corps, so I have this weird sense of loyalty as this being the first job that I got out once I got out of the service. And I'm just feeling really conflicted. Well, let's just say this. Loyalty is not weird, and thank you for your service. You're a great American. It's rare, and it's a good thing.

We're glad you have it. Yeah, thank you for your service as well. The issue is if you weren't loyal, let's just, loyalty is great, but let's just look at the path forward for you. This company has clearly offered you a job because they think you can do it whether or not you think you have the experience or not. And so you have to ask yourself, what's the best path for me? If I stay at my current company and continue to do a good job, are they talking about a path? Are they showing me a path?

Do I see a path forward? You have to look at all of those things. But it doesn't make you disloyal by taking another great opportunity. It's all in how you handle yourself. And I think you're a high-character individual, and that's why you're wrestling with this. Am I a bad guy if I leave to take another opportunity? But you have to first say, is it the right opportunity?

It may not be the right opportunity. It might be a $25,000 raise, but a horrible culture. Because if you take the $25,000 raise and it's a horrible culture and they don't treat people the way that maybe your current company is treating you, let me tell you something. The $25,000 pay bump is going to wear off pretty quickly about 20 seconds that's right so you're gonna have to look at this holistically first of all what's right is it right beyond the 25 000 pay bump yeah odell i'm from the proud noble hillbilly culture and we

value loyalty that's right like no other culture no not really but i mean we do value loyalty like no other culture. No, not really. But, I mean, we do value loyalty. It's a big deal. And many years ago, 100 years ago, when the Internet was first invented, I had a young man working for me that came to me and said, we need a website. And I said, what is that? And he said, if you'll send me to a class for $2,500 so I can learn Cold Fusion, which no one uses anymore, I can build you a website,

and you can actually, people will buy stuff on it. And I went, yeah, right. How much is the training? $2,500. And I was paying the guy $35,000 a year. He was an assistant inside the organization. There was just a few of us. There was probably 40 of us, 30 of us.

And his daughter had cystic fibrosis. And so he's constantly dealing with challenges at home, medical bills, constantly fighting through this stuff and he went and got um cold fusion training i paid twenty five hundred dollars for him to go to oklahoma city paid for the airfare paid six weeks later of course the internet is starting to become a thing dave was the last to be told this but um uh i mean it was blowing up a guy walks in i was paying him thirty $35,000 and offered him $135,000 because he knew Cold Fusion. Sure.

And I had just paid for his Cold Fusion. So, Odell, let me tell you what I did. I helped him pack his desk. His daughter has cystic fibrosis. I'm not paying the guy $135,000 in those days to do that. And so I said, my friend, I love you. Take this job. And he was grateful to me. He was conflicted like you were conflicted, but I cared about him as a person and as a dad, and I told

him to go take the job. I did not consider him disloyal for bringing me that situation. And you're not disloyal, son. You're a good man. Yeah. Yeah. You just got to look at the big picture. Is this the right move now here's what happens there's we got to remember our humanness when somebody number one offers us a position from outside there's two things that happen number one we all feel wanted and that feels nice oh you want me it's like being picked on the playground nobody ever wanted to be the last person picked something about the value that the second thing that happened to me all the time but the second thing i was never any good at dodgeball well but dave you've done and it was

proven that all those people had a bunch apparently well maybe it helped you become who you are careful yeah watch out too close too soon and then the other thing that happens is the money piece so i feel good when somebody wants me but the second thing that happens is it seems like the smart thing to do why wouldn't't I take a pay bump? But am I a sellout? And then you start to go, wait a second. You're a person of honor. Yeah, you start to feel like a jerk.

But am I a sellout? Am I a sellout? Am I that guy that it's all about the money? And you're not that. Here's the interesting thing. That guy never asked that question. That's exactly right. And so this is a good man, number one.

Number two, realize this, that it's all the way you handle yourself. Leave with class. Yeah, lots of gratitude. Thank you for the opportunity you've been amazing just like you said to the ring or when you walked out of there you said thank you you helped me get to be where i am you guys thank you you helped me to get to be where i am i'm moving on to the next season in my life clark is in salt lake city hey clark what's up in your world hey how are you guys better than we deserve what's up yeah quick question um Hey, how are you guys? Better than we deserve. What's up? Yeah, quick question.

So my wife and I are in a little bit of a car bind. Kelley Blue Book suggested the value of the car is around $5,600. But the issue is that it's at the shop, and you learn that it's going to require around $4,000 in repairs to get it. Good Lord. Working again. Did you take repairs to get it working again. Did you take it to the dealer? Yeah.

That is at the dealer, yeah, because the check engine light was on. Yeah, and you know that dealer, that's not a good place to get your car fixed, right? You know it's double what everybody else is, right? Honestly, I've always been someone that just takes it to the dealer. Don't. Well, I'm getting ready to help you with that. Now you're not. Because now you're someone that wants a it to the dealer. Don't. Well, I'm getting ready to help you with that. Now you're not. Because now you're someone that wants a better deal than they'll give you.

So I want you to get a second opinion on this from someone else. What's wrong with the car? I mean, it's a 2012 with 102,000 miles. The turbo, I guess, is out. The oil cooler is out. The axle seal on the drive side is leaking. Well, on a $5,000 car, we don't worry about the axle seal. You're not going to be driving it that much longer.

We certainly don't care about the turbo. Well, yeah, if you can fix it. But, I mean, so I want you to get a second opinion. If the net result is that you can get it fixed for $3,000, would I fix a $5,600 car for $3,000? No, I would not. I'd sell it. Okay. So you have the $4,000 to fix the car?

Yes. Put that with the money you get from selling the car as is and buy you another car. Because you're probably going to get $1,600 for it, as is, or better. So you think it's better to just list it as is with the issues and see what I can get for it? I think you'll get a couple thousand bucks for it. And you put that with $4,000, you've got a $6,000 car that's not broken. I would do that before I'd spend $4,000 on a $6,000 car. Now, I would get a second opinion, and I would quit going to the dealer for major repairs until you're rich, because you really can't afford it until then.

What must be done for this car to operate? That would be the question I'd ask with a second and third opinion, too. Yeah, this is a hoopty, so let's just hoop. We don't need to race. That's right. This is the Ramsey Show. Did you ever get to the end of the month and have no idea where your money went? It feels like as soon as the money comes in, it goes right back out. Listen, if you want to take control of your money, you have to be the one to tell it where to go. And that means getting on a budget. Give every dollar a job every

single month. And the best way to do that is with our budgeting app, EveryDollar. That's where you'll make your monthly budget, plan for your expenses track your spending and clearly see where all your money is going guys when you live on a budget it puts you back in control of your money you can start budgeting right now for free and never wonder where your money is going again go to ramsey solutions.com slash every dollar and set up your free account today a budget is your tool to beat debt and it should feel like you've given yourself a raise. We've made the process easy for you to get started with EveryDollar. Go to RamseySolutions.com slash EveryDollar.

That's RamseySolutions.com slash EveryDollar. ken coleman ramsey personality is my co-host 888-825-5225 we're having a lengthy uh good old boy discussion at the break about car repairs. So let's just bleed that on over to the microphones for a second because it's a good principle. We tell folks drive a cheap car, drive like no one else so later you can drive like no one else, live like no one else so later you can live and give like no one else, pay a price. I drove a piece of crap. Now I don't drive a piece of crap because I don't have to because I don't have car payments. I never had car payments in the last 30 years, and that means I have money. Whoa, it's a neat formula. And so did I drive a hoopty forever?

No, I drove it for a year, and I got a little better hoopty that really was just a quasi-hoopty, and then I moved up a year later into a non-hoopty, and from then on I never looked back and bought used cars until I had a net worth of a million dollars and i paid cash for my cars and anything with a motor or wheels in it because they go down in value i know not lately but it's the one time in the history of the vehicle that it has not gone out down in value and it will return people and that's not just a boomer it's an economic prediction called supply demand curve okay anyway now what do you do if you're driving a hoopty and it breaks? A lot of our people are driving $1,000 cars, $500 cars, garage sale car, right? $2,000 car.

Okay, these are throwaway cars. They will bring almost as much at the junkyard not running as they will running on Craigslist. Okay, because it's a garage sale car. And anything $5,000 or under is in this category. Most of those cars you do not do major repairs to. running on craigslist okay because it's a garage sale car and anything five thousand dollars or under is in this category most of those cars you do not do major repairs to no because it's not worth it so here's here's the way the formula works if you can sell the car in his case for sixteen hundred dollars and you put four thousand dollars in it and the car is worth fifty six hundred you broke even if you could sell the car for $2,000 and you put $4,000 in it and you sell it for $5,600,

you lost $400. So if the value of the car as is plus the repair, the actual repair, not from a dealer, plus the repair is more than the finished fixed value don't fix it yep and usually if it's a major multi-thousand dollar repair that's what you're going to find because you're not increasing the value of the car now if you got a car it's worth 500 bucks and you put 500 bucks in it and it's worth four thousand dollars hey you'd probably do that one right yeah even if you turn around sell it yeah i'll give you that I'll give you a real-life situation as Dave is breaking this down. Not too long ago, we just did this.

I was driving an older Lexus, a 2006, had 185,000 miles on it, running great. Folks, I don't do a lot of driving. So I was coming back and forth here, and I've got a kid who's going to be 16, and so we're looking at, well, do we keep it for him? Transmission starts to go. All right? So I go, all right, now I do little repairs. By the way, now this is the Ken Coleman rule.

If you like a little risk and you got an emergency fund, every time the check engine light came on, I was like, how bad could it be? So eventually I take it in. And just like that caller, they give me a list of 17 things. And I was really good at going, all right, if this were your car, what do I need to fix that gets me a to b this is several years ago and they reset the computer and turn the check engine light off yeah you'd be surprised all right so the story goes the transmission starts to go dave so here's the deal

it's going to be 3800 which i have to fix that transmission but my kid's 15 he's huge and i was like ty do you want this? He's like, I can barely get in it. So we now realized what I would have had he wanted that car, had he fit in the car, I probably would have because the car is probably worth about $7,000. I would have done it for his first car because if he wrecks it, I'm not worried about it.

But he didn't want it, so I flipped it. Bad transmission, full disclosure, $2,500 cash. It's exactly what we did not too long ago. You take that cash and what you would have spent on the transmission Flipped it. Bad transmission. Full disclosure. $2,500. Cash. Yeah. It's exactly what we did not too long ago. Take that cash and what you would have spent on the transmission and buy him something he can fit in because he's a big football player. That's it. Yeah. All right.

There you go. Ta-da. This is the formula. Robert is in Utah. Hi, Robert. Welcome to the Ramsey Show. Hey. Thanks for taking my call, guys.

Good. How can we help? Well, I'm curious about I-bonds. I see the new savings rate on the I-bond is 7%, which is pretty rock solid from what I've been getting recently. But I was curious on your thoughts on that, and then secondary to that, kind of where to fund that. Fund it out of Roth IRA or take a little bit out of the 12-month savings that I have. So just curious on your thoughts.

Okay. Well, we tell folks to have an emergency fund of three to six months of expenses. And is it available? Is it liquid? And I keep mine in a money market account, not 12 months, three to six months. Seven percent is a great rate of return on something like a bond uh you're right um and uh it's certainly safe as an investment because it's the united states government as much as we make fun of them it's safe i mean we make fun of how dumb they are and how much money they spend and

all that stuff but and it's all true the things we could say about them we make fun of them but they're not going broke okay and so we the people are going to pay your stupid eye bond so um you know you're safe with it if you want some money parked at seven percent uh that's an okay medium play it's not a good long-term play so you would not use it for your retirement plans because your retirement plans have to outpace taxes and inflation if the retirement plan is taxable. If it's not taxable, if it's a Roth, it has to outpace inflation. Lately, 7% won't do that. Over the scope of 70 years, inflation has averaged about 4.2% according to the consumer price index which is the measure of inflation that's what everyone's using in the past 12 months when everybody's screaming about inflation's out of control we're all going to die and um all the drama that you're hearing on news

channels all all day long and it's real i mean it is real the you know stuff's gone up but if you if you have an inflation if you don't make% or 7% on your money with taxes and inflation overall, in a normal economy, you don't break even. And so you want to invest north of 10% to make what's called a real rate of return. An economist calls it a real rate of return, which is a rate of return above inflation, above taxes. And so what did you really make after the loaf of bread went up double and you had to pay uncle on the money you took out? And so it's okay if you want to park some money there because 7% is pretty sexy in a liquid investment right now. It's not a good long-term play and it's not the

play for your emergency fund. So if you've got some money for a medium play, like the money in excess of six months between 6 and 12, you said 12, you might play it there. Jessica is in Fort Worth, Texas. Hi, Jessica. How are you? Hi, Dave and Ken. It's an honor to speak with you. You too.

I'm a big fan. And my question for you is I will try to keep it brief and let you ask questions. So my husband and I are in Baby Steps 4, 5, and 6. Good. We are high income earners we um we gross about five hundred thousand dollars a year i love you what do you make what do you do for a living what do you guys do um i i work a couple of jobs but i'm a physician and my husband works in graphic design oh good okay not well i. Well, I'm glad you're doing so well. Congratulations.

Well, thank you. That wasn't true a couple years ago, and then we followed your plan and paid off all of our debt May of last year. Wow. And we paid off over half a million dollars. Wow. We did all the typical mistakes that physicians make, and now we've dug ourselves out of the hole. So we are very grateful for you teaching us that.

Well, thank you. Well, thank you. Well, thank you. So my question for you is about investing. I know that you usually recommend match before Roth, before traditional. I do not think we will be making as much money in retirement as we do now. So my husband and I are wondering if we should do traditional before Roth. No, because you will be making as much money as you make now. The reason is the size of your investment account is going to create an income that's in excess of what you make now.

Okay. You're going to have so stinking much money. You make a lot of money. How old are you? I'm 36. Okay. I mean, you systematically invest $100,000 a year for the next 30 years. I mean, we're talking about $50 million.

My numbers don't come out that high. I'm making that up, but I'm not. I mean, it's between 20 and 50. Yeah. Yeah. It's high. Yeah, it's a lot. And so the investment returns on that are going to approach your current income.

And we have no way to predict what the freaking tax rates are going to be when the Island of Misfit Toys gets through playing up there. Yeah, no, I'm still doing Roth. I'm still doing match to Roth. I make good money, too. I make more than you do. And I'm still doing Roth first before traditional. Matter of fact, I don't have anything in traditional. I want it all to be tax free. Tax free growth. Tax free growth. Tax free growth. You really want it to be tax free when you have a lot of money. That's a good thing because you don't want the taxes because it

pisses you off. This is The Ramsey Show. Guys, I've got to tell you, I'm so excited. We're on the road again to, quote, the famous song, right? Oh, man. Ramsey Solutions is hitting the road. You already know our Building Wealth live event is coming to Las Vegas and Orlando this May. We're excited to share a few more cities that we're headed to this fall. Get ready. Sacramento, Minneapolis, San Antonio, and more.

We're coming for you. At Building Wealth, we'll tackle the latest get-rich-quick trends, dive deep into investing, saving, planning for retirement. What might sound like a lot of complicated stuff, truth is it's way easier than you think. Me, Rachel Cruz, George Campbell will be there along with Ken Coleman, Dr. John Deloney. We'll be signing books, taking photos, answering questions, doing the event, and all of us will have something to say to you on this subject, so be ready. So Las Vegas, Orlando, Sacramento, Minneapolis, San Antonio, All of us will have something to say to you on this subject, so be ready.

So Las Vegas, Orlando, Sacramento, Minneapolis, San Antonio, we'd love to see you. Vegas is May 9, Orlando is May 19, Sacramento just announcing this week, November 1, November 10 is Minneapolis, and San Antonio is November 15. So it's going to be a busy spring, a busy fall. Tickets are only $25. You can get a four-pack for $60. Bring a couple of your friends. It's only $15 a head. Come on. You spend more than that on pizza. Go to RamseySolutions.com slash events.

Get your tickets before they're gone. These first two spring events are very close to selling out. They're not yet. You still get your tickets, but if you screw around in a couple more weeks, you're going to miss it. So jump in there. RamseySolutions.com slash events. Oakland, California, with a debt-free scream.

Jeffrey and Michelle are with us. Hey, guys, how are you? Hi. Hi. How much have you guys paid off? $120,000. Yo, how long did that take? Four years and two months.

All right, good for you. Yay. Very cool. And what was your range of income during that take? Four years and two months. All right. Good for you. Very cool. And what was your range of income during that time? We started at about $103,000 a year, and now we're at $176,000. Way to go, guys. Wow. What do you all do for a living? I'm a teacher.

And I work for a Bay Area Transit Authority. Okay, very cool. What grade do you teach, Michelle? I teach first grade, those little guys. I love it. Good for you. Wow, very cool. I think I'm a superstar today because I'm going to be on the radio. Well, you are a superstar.

You paid off $120,000. That qualifies. Yeah. All right, tell us the story. What happened four years and two months ago put you on this journey well we had dabbled a little bit in some envelopes because we had heard cds a friend lenda lended us several years ago um but we didn't get real serious until our church had a financial peace university, and we sat down and really started,

one of the first things you do is tally up how much you're in debt. And it was kind of shocking. Scared the crud out of you, huh? Yeah, it did, because we're older, and I couldn't see myself at 80 years old with student loans still. So we were in an all-fired hurry to get it done at that point. Right. Yeah.

So you went through the class, and that got you going hardcore. Right. Yes. Way to go. Got real serious. We kept the envelopes religiously. We named every penny. I mean, we sold stuff. We rolled change.

And we took lots of walks and hikes, ate sandwiches in the parks. Sounded like you were healthier. Yes. That too. Wow. Good for you. Well done, you guys. Thanks.

So, Jeffrey, Michelle, so it sounds like you guys went all in pretty quickly on this. Were there some hiccups or were there some things that were really, really hard as you began this process of gazelle intensity? Yes. Tell me about it. Well, like I said, we just really worked hard at making sure that we,

you know, followed the steps and make sure that, and really what was interesting was the fact that we, some of the challenges were, you know, I had our time sticking to the changes and some of us wanted to do, you know, she had our time with, you know, paying the smallest interest first in the baby steps and stuff. But I found in the last year or two, especially it was fun. Once we paid off a debt, it was like, hi, okay, we're going to get to the next one. And so that seemed to be the big kicker is, you know, what's the next one and how fast can we get it paid off?

That seemed to be the fun. That became our entertainment. It was, okay, let's knock out the first one as fast as possible. Right. That worked, Dave, I'll tell you. Dave and Ken, for me, it was really hard because I was used to being taught you pay the high interest things first. And it was a total change. Ken, I consider it a personal championship moment that I convinced a first grade teacher to do something.

Because first grade teachers are hardcore, man. I mean, you guys have a system. You stick to it. If I got you to do it i can get anybody to do it that's awesome you got it you got it but then getting me to pay those small ones first not the high interest it was a change of thinking and it took a while for me to wrap my head around it but i did it yeah and then and then when they start going away you start going oh yeah yeah that snowball gets really exciting. I love it.

Yes. I'm so proud of you guys. What do you tell people the key to getting out of debt is? Just being patient. Being patient and kind to yourself. Forgiving yourself and jumping back on. That sounds like you fell off um not really we'd have a month or two we're gonna look at a little slippery but okay it's tight enough we're

getting a little sloppy here you know um instead of letting it carry us away we kind of had to yeah because you do when you slip like that you you either finish falling off or you grab a hold and pull back up, right? Right, and that's more of what we did. We were like, okay, we're pulling out of this. We're doing this thing wrong here. Let's get back on the horse and get back to where we are supposed to be. And we said a lot of this. What would Dave say?

My shaming voice in your head. I love her laugh. I wish everybody responded to what would dave say with that laugh it doesn't usually have that much harmony and melody and happiness usually people curse his name you're just like hilarious i love that you guys are amazing we're so proud of you hey we got a copy of the uh maybe steps millionaires for you because that's the next chapter in your story for sure you're on your way to doing that very well done everybody at ramsey congratulate you we will send you a high five from nashville we'll also send you a copy of total money makeover you can give it to someone and get their journey started like you

have uh like it has for eight million plus people now in in these days. So way to go, you guys. Very, very, very proud of you. Thank you so much. Thank you so much. All right, Jeffrey and Michelle, Oakland, California. A first-grade teacher did it. $120,000 paid off in four years and two months, making $103,000 to $176,000. Count it down.

Let's hear a debt-free scream. One, two, three. We're debt-free scream. One, two, three. We're debt-free! Yeah! I love it. So, Coleman, the Babylon Bee has gotten in a lot of trouble in a couple of instances with their satire. Oh, yes.

People, cancel culture has been jumping on them. We've been following the Babylon Bee since before it was a thing. It was just a thing making fun of a bunch of Christians making fun of a bunch of Christians. It was hilarious stuff. And it has now expanded a little bit. So since they began, I mean, like their first, I don't know, five or six satirical articles, one of them was aimed at me. Oh, yeah.

And they are funny. Very funny. They rip Dave Ramsey to shreds, and it is funny. They're not mean, mean about it. They're mean about some people, but they're not really mean to me. Well, they're not. Yeah, they don't rip you to shreds. They're playing.

Everything is satire. But they're just making fun of them. It's so funny, though. Yeah. So they posted one last week, and my guys brought it to me a while ago. Dave Ramsey stars in a new show, To Catch a Borrower. Oh, it's called To Catch a Borrower, where he catches Christians trying to buy things on a credit card. It's got a picture of me peeking up from behind the couch while a guy's on his computer buying stuff.

Oh, too funny. Play off of To Catch a Predator, I guess. Yeah, and it says, I call the guy a freaking idiot. Have I done that guy a freaking idiot. Have I done that? That sounds familiar. That would be funny to see you pop up in people's living rooms. That could cause some blood pressure issues, for sure. That could cause you to get shot.

Just popping up randomly in someone's living room? Sounds like a good way to die. That's the concept. Yeah. So, way to go, Babylon Bee. We salute you. That's funny. We love you guys.

Keep it up. Keep making fun of everybody, including Bee. We salute you. That's funny. We love you guys. Keep it up. Keep making fun of everybody, including yourself. It's awesome. Everybody needs to lighten up a notch. This is The Ramsey Show. We'll be right back. Ken Coleman Ramsey personality is my co-host today. Open phones at 888-825-5225. That's 888-825-5225. Cody is with us in Indiana.

Hi, Cody. Welcome to the Ramsey Show. Hi, Dave. Kind of nervous, not going to lie. No trouble. We've never lost a patient. You're going to make it. So I'm a general contractor, debt-free. Me and my wife got about $104,000 of capital, and I hate people, so I work for myself rather than a client. And so my long-term goal has been to get into flipping houses. That way I can just flip them, sell them, be done.

I ain't got to mess with anybody. But I've not gotten into it yet, and with everything going on the way it is, I'm kind of worried about starting at the moment. Uh-huh. Okay. and all the way it is, I'm kind of worried about starting at the moment. Okay. I got to ask, Dave, how are you going to be a general contractor? My father-in-law is very successful at it and not deal with some people. I get your general idea. You mean you don't want to deal with clients nitpicking your work?

No. Well, that always happens regardless uh you can work for 100 different people 90 of them great 10 of them are not so great right that's about average yeah it's just uh being the owner i'm constantly running to the running to the stores all the time and i just want to be able to work you're going to do all the work yourself are you going to sub it out uh i'd say about what i could i mean i don't want to cut in my cost of course but i don't do everything i don't do hvac i'm not licensed for that of course okay so what about i'm with ken i don't mind answering your question but i'm just curious because there's times i agree with you i love people but they also about two percent of them should be

institutionalized so um you know they just they're nutty and they're on twitter and so um what what what is it what people are you cutting out by doing this process well uh client i don't have to go uh do bids for people and then do their work i can just 100 work for myself. Okay. Until you sell the house, and they're, of course, going to want you to finish up or to fix whatever is broken after they move in, right? You know that.

Unfortunately. Yeah, that's going to go. So you're not cutting them out completely, but you're getting rid of a lot of the back and forth while you're doing the job. That's what you're after. Okay, I'm with you on that. Now, let's go back to your question, flipping houses. Well, we're in a white-hot real estate market.

Everybody knows that, right? So very tough to buy deals, and part of flipping a house and making money is you have to buy it at a deal. Agreed? Oh, yeah, absolutely. And so what you've got to be very, very careful of is, A, no debt, B, be so patient that you pass on 50 deals to get one that works. Okay? I used to buy, before I went broke, I made a really good living buying and and selling foreclosures i was doing flips before chip and joanna were born okay and so um but i looked at in those days i looked at 200 deals

to buy one that was my average because i was gonna because all the money in real estate on flips is made at the buy if you buy a property and the weird crazy white hot market where people are paying too much is the only way you get out of it and make money you didn't buy the property right yes you need to buy it at 70 72 73 percent of appraisal today minus repairs yes and then you can actually make a profit because you're going to lose 12% on the resale in commissions, closing costs, and negotiation off of appraisal. Unless you catch the edge of a white-hot market, which we're in right now. Okay?

But if you depend on a white-hot market to bail out your bad deal, you're going to get your butt burned. Yeah, that's what I don't want to happen. Yeah, so buy cheap or don't buy, and buy with debt, and have a formula minus repairs. So, you know, let's use a round number. You got a $100,000 house. You're going to buy it for $72,000, $73,000.

It makes $10,000 worth of repairs. It means you're going to buy it for $62,000. How are you going to find that in this world today? You might find it because it might be so messed up. Nobody else wants it because it's so freaking ugly that even a white hot market won't sell this white elephant. Okay? But they're very hard. Deals are hard to find right now.

And foreclosures are not happening at the level that they were happening because there's been a whole bunch of people still sitting on the foreclosures due to the moratoriums. They're just starting to reenter the market. So a little harder to find the foreclosure deals, too, right now. Maybe by the end of summer they will have opened back up. So if you're patient and you just say, you know, don't get all hot and bothered about buying something, and you buy it at

a deal minus repairs and you get paid to do the repairs and then you get paid on the transaction as a profit both things then and you do it with no debt then you're going to be okay so but that's going to involve a lot of work of finding a deal and it's very difficult to do right now and there's people out there flipping houses right now and they're depending on white hot market to bail them out and that market's going to turn off on them and they're going to get caught holding that so cody dave just gave you the formula so now you have to ask the question how much money must i have so what needs to be true do i need 200 000 in cash 250 to be able to get that kind of a deal with that ratio and then make money on it?

Because remember, you're making really good money in your business right now, I suspect. And so if you're going to switch over to full-time flipper, then you've got to play that equation out. How many houses would I have to flip to pay myself what I make? You've given him a wonderful formula. Now he's going to have to be patient. That's what's going to be hard. $104,000 to invest in flipping that three times a year maybe. You're probably building some houses still.

Yeah. That's right. It's going to take some time. While you're running these flips. You could run both at the same time. But until you build your capital up and you could get two or three flips going at a time. That's correct. With actual dollars, then when you get there, you could probably step aside from doing the contracting.

But you're probably still going to do a little contracting and that'll also calm you down and you don't get desperate oh i gotta get a house because i gotta get income and then that's going to cause you to pay too much the name of the game in this is patience you know i had a guy a mortgage company used to buy a property from after they took it back one of these little finance companies and he goes ram, you're a vulture. You're the nicest vulture I know, but you're a vulture. And I said, well, you're right. I'm kind of circling, waiting on something to die.

You know, that's what I'm doing, you know, because I'm looking for a deal. I'm not mad at anybody. I'm not causing anybody any harm. I'm just going to help out when they're there, and I write a check and buy the property. But that was a long time ago. It was kind of a nice compliment in a way. It was in there. there it's in there somewhere dave ramsey looking for that real estate roadkill that's the name of the new book real estate real estate roadkill there it is who knew

i was looking for a title ken now i gotta write a book this is what i do but you know it's funny you know you you gave you gave cody some advice. I love that formula. And then you said it's all about patience. In Cody's world, he needs some patience with all those people he hates. Just for a three- to five-year program. I get what he's saying, though. He's working with clients that are just nitpicking and driving him bananas. Yeah, I was in the custom home building business as a sales guy for a while. And he's right. You know, about nine out of ten of them are just the greatest people in the world. But business as a sales guy for a while, and he's right.

You know, about nine out of ten of them are just the greatest people in the world. But let me tell you who drives you absolutely nuts. Ones that are too broke to buy it. Ah, right. So now they're trying to flex up, you know, and they go through the house and they nitpick stuff that doesn't even exist. Like Scrippin's going to fix their problem. You know, you're still going to be broke after you flex over this drywall,

piece of drywall right here, you know. you know you're still gonna be broke after you flex over this drywall piece of drywall right here you know it's classic yeah one guy went through with a magic marker and he had the plan wrong in his hand he had it backward and he drew on the wall where the plugs were supposed to be instead of where they were oh boy yeah we charged him like ten thousand dollars to go through we had to sand and seal and then repaint every one of those walls and cover that stupid magic marker that this person so i get it i get it i get it i understand i mean it's that guy the magic marker guy that'll drive you out of the business right there i would and so um yeah you've got to manage those people and manage their expectations in the process and it's um it's a challenge in that world. It really is. Because people start building their dream home, and by the time it's done, their dream changed. Yeah, who knew?

It's my forever home, until it's not forever. Because nothing's forever. Goofball. This is The Ramsey Show. Hey folks, Ken Coleman here. Did you know The Ramsey Show is one of the most popular podcasts in the world? Get your daily dose of advice on life and money. Check out all of our shows from the Ramsey Network wherever you listen to podcasts.