The Ramsey Show - App - Fix the Car or Sell It? (Hour 1)

Episode Date: October 17, 2022

Ken Coleman & George Kamel discuss: Affording a house (in Finland), Selling vs. fixing and keeping a broken vehicle, Building a house with a contractor. Have a question for the show? Call 888-825-5225 Weekdays from 2-5pm ET 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 Learn more about your ad choices. https://www.megaphone.fm/adchoices Ramsey Solutions Privacy Policy

МУЗЫКАЛЬНАЯ ЗАСТАВКА Live from the headquarters of Ramsey Solutions, broadcasting from the Pods Moving and Storage Studio, this is The Ramsey Show, where we talk about your life, specifically your money, your work, your relationships. It is a free phone call to jump in. 888-825-5225. I'm Ken Coleman, joined by George Camel. And as I said, this is where we unpack your big forward, whether that be, again, in your debt and financial life.

Or I'm here today to help you through some work issues. Maybe you're dealing with a toxic leader or toxic environment, or you've got some opportunities you're not sure, should I take it? Can I actually change jobs and change careers in the baby steps the answer is yes and so george and i are here for you george you doing well today you look i'm doing particularly uh fall theme today i like it peak fall aesthetic just for you ken you look like you could blend right into the uh lovely warm brown tones of the studio wow i noticed earlier today that the audience can't see it but your boots match your shirt and your glasses and they say men don't notice so i well i tell you you just look like fall thank you and we're glad

that falls here by the way i want to just mention this very quickly we'll get to your phone call shortly uh we are headed to dallas texas i looked up at the calendar this morning and we will head out on Friday. The whole crew, the entire Ramsey personality crew, we're going to be coming to Dallas for a smart conference. I'm sure I'll be talking about that later in the program, but I got very excited about that and that's going to be a one-of-a-kind day. We're very, very excited. All of us there speaking and I'm excited for your talk and which a very different talk for you, but very inspiring nonetheless inspiring nonetheless well i'm going to be addressing the issue of waiting on your world to change you know and you think about people's financial issues

you know i think very succinctly of the person who is just sitting there right now in baby step one going i don't even know how i'm going to get to a thousand dollars or they're in baby step two and they're going, okay, I believe this works. Uh, I want it to work, but it feels like it's going to take me forever. And five, seven, eight years is what it looks like. It feels like, and they're exhausted. They're exhausted emotionally. They're exhausted they're exhausted emotionally they're exhausted physically some exhausted spiritually you know i think of people in marriages that are fighting for everything they got we took a call the other day when we were on together and i said to the i said to the man i said i'd fight with everything you got i've got

friends that have gone through divorce and that's what they've told me they wish they would have fought with everything they have for that marriage. What's that old quote when you're at the end of the rope, tie a knot and hang on? Tie a knot and hang on. I love that. That's from Franklin Delano Roosevelt. FDR quote. All FDR.

And so we're going to be talking about that at Smart Conference. You're waiting on a kid, a prodigal son, to come home. And so what does it take to wait? How do you summon the willpower to wait? So that's just one thing we're talking about. You're going to be talking about? I'm talking about how to find that margin because so many calls we take, people are going, I don't have enough money at the end of the month

to cover my bills to do the baby steps, and so I'm going to show them very tactically how to do that and do a live every dollar budgeting demo, which I know sounds as thrilling as can be. You might want to wear a steve jobs kind of outfit little turtleneck yeah to do a product demo on the 6 000 people you doing a little in an arena it's a risky move it is it is uh well george and i are always glad to be by the way i don't read the comments but george does he has deep neurotic problems and

and uh he reads the comments on youtube and all other places but apparently some people like our our combo so we're going to try to serve you well. One listener said. Root beer float. We are like a root beer float. Great ingredients on their own. A little vanilla ice cream and root beer, but when put together, just pure magic. And that's ruined me because now that I know that, I feel the pressure to be as good as a root beer float.

Every day you wake up, you've got to go, can I be a root beer float? And I'm afraid we've already failed. But let's get to the phones. We're going to go, wow, globally. Am I reading that right? We're going to Finland where Atesh is joining us. Atesh, how can we help? Hey, guys.

Hey, thanks for taking my call. It's crazy. I'm a little bit excited, but I really appreciate it. What time is it there, Atesh? What time is it? It's 9 p.m., like just over 9 p.m. Wow, there you go. Caught you right before bedtime.

Thanks for calling in. Well, I must tell you, this is the first time I've ever talked to anybody in Finland, so I'm equally excited. What's your question? Well, hey, okay, so I'm planning to get into a mortgage. So basically, I try to stick to your plan and I try to find like a mortgage deal that would fit to like, uh,

take 25% on my income. You know, I think that's what you guys suggested. Um, so, but I think, I feel like I can go a little bit more than that. And because in Finland,

we don't necessarily need to put any money into, um, 401k or college funds for kids. You know, things are pretty stable in terms of here. Like, I pay, like, 25% tax based on my income. So taxes are pretty high. Would you still suggest me to go up to, like, 30%, 35%? Like, I have, like, a car loan and no other debts.

Well, Atesh, I'll tell you this. Before you become a homeowner, becoming completely debt-free is going to free you up in a big way. And so I would not jump into this mortgage until that car loan is paid off. I see. So I have like 7,000 euros left in my car loan. And that's going to take three and a half years. And I have like 9,000 euros in savings right now. Okay, hold on. You got the money. Why not just pay it off today?

Well, I can pay it off, but then for the mortgage down payment, I can actually like... Well, that means that you're just actually starting from, you know, ground zero here. This is a financial foundation.

Right now on paper, it looks like you have money, but you don't because you owe that car lender. And if you don't believe me, stop paying the payments. See if they don't take the car away. Well, that's true, but like, I don't know, like... How old are you? I feel like I might be like kind of 26. 26. Okay. So let's say

it's going to take you a little while longer to save up the down payment. So what? Yeah, I would need like 5,000, like say it's going to take you a little while longer to save up the down payment so what yeah i would need like five thousand like five like six thousand euros for a down payment it sounds like you're putting very little down what's this house going to cost like i'm thinking of something like 120 000 at max okay because the euro is about the same as the dollar right now it is but the amount of money we make here is completely different than the U.S. when I listen to the show, you know?

What do you make? I make like 2,700 cash in a month, you know? Okay. Which is okay in Finnish standards, you know? Yeah, but you need to pay... That's making 32,000 euros a year, right? Yeah, that's right. Which is essentially 32,000 American.

And here I'd say you need more income if you're going to be a homeowner. Okay, maybe. I mean, I see my friends doing this thing, you know. Well, are your friends broke? Not a lot. It sounds like they're broke then. Well, like, I don't know, maybe. They may not look like it on Instagram.

All right, so George is being very nice. Atesh, here's the deal. You need to pay the car off today. That's going to leave you 2,000 euros left over. Still need an emergency fund. You still need the emergency fund, but you need to walk this thing out because you're going to have less expenses once that car's paid off, which means you can save more and you need to relax.

You're still a young man. Don't rush into the house until you can afford it. This is just math. I don't care if it's pesos, euros, whatever you want to call it. You don't get a pass on math. And so I want you to do things the wise way. You're 26. You get the rest of your life ahead of you.

Just be patient. Slow down. And if your friends are doing dumb things, doesn't mean you should do them. It means find better friends. Yeah, I like that advice, George. There you go. Hey, don't move.

We're just getting warmed up. This is The Ramsey Show. welcome back to the ramsey show so excited you joined us america i'm ken colman joined by george camel and we always enjoy being together because we love to help people. That's you. The phone number to jump in is 888-825-5225. That's 888-825-5225. We'll talk about your money questions. And I'm in today. I host the Ken Coleman Show as part of the Ramsey Network, specifically helping people win in their work. You spend more time at work than you do anything else in your life. And I think you should make plenty of money, but I also think you should experience tremendous meaning. And I'm also about helping you make more income. So if you've been with us

for a while, we kind of refer to your income as a shovel. So the more income, the bigger the shovel, getting out of debt, getting through the baby steps. So I'm here to help out on that particular area of focus as well. So give us a call. I'm willing to help, and George is always in control, looking very festive today in his fall getup. Atominal, if you will. Atominal, right. I see what you did there.

Autumn, and then you changed it up. So for those of you who like to watch us on YouTube, you can see George is looking particularly – That's the reason they're tuning in ken well it might be uh if you want to see a little man in very nice fall attire uh with a finely trimmed beard it's a perk no one see now they got to see what you look like if they never see what you look like now they want to know all these guys listening on radio are like i gotta watch youtube they do yeah so it's on demand check out the ramsey show all right grant is going to join us now in Atlanta, Georgia. Grant, how can we help?

Hey, so I bought a truck back in December, and I financed it, and the engine blew up last month. Oh. I'm trying to decide if I want to get rid of it or if I need to fix it. Well, tell us more about the truck. I'm assuming it was a used truck? It was a used truck it was a used truck um it had not too many miles on it but um there was an issue with the engine and now it's sitting in my driveway dead did you throw a rod um close uh the main bearings on the

crankshaft spun oh have you talked to anybody about what that would cost to fix is that a total uh like pulling the engine out can it be repaired is it a whole new engine um from the people that i've talked to it's it sounded like it's a whole new engine because it's actually damaged the block that's what i was worried about george i know you don't know anything that we just have no idea what we just said. Beyond the clutch pack piston, I'm useless. The only thing George knows about a car is there's a catalytic converter. He doesn't even know what that

does. I always ask if there's a Hemi. That's it. But I do know this, Grant. I know math, and so that's something we can dive into to see if this is worth preparing. So what's the engine going to cost? A new engine? So just doing a little bit of research, a new engine is about $8,000. Okay.

What did you pay for the truck? I paid, well, I financed $36,000. Ooh. Well. So what is this thing worth in the condition it's in, you think? On a good day, maybe $20,000. With the engine as is? I think so.

I'm not – see, that's where I'm kind of in the middle of. I don't know if it's going to – Well, George and I, we're not experts on that, so you're going to have to do multiple cross-referencing on that and get an idea of what that truck is worth with an engine that needs to be repaired. If you put the new engine in it, would you recoup the cost on that? I'm not sure, because I think with labor and all, I think it's probably going to be about $12,000 to repair it. Easy.

Easy. Which would bring its value to, what do you think, back to where it. Easy. Easy. Which would bring its value to, what do you think, back to where it was? Realistically, if I was to try and sell it privately, I could probably get maybe $32, $33 out of it. Okay, so you'd still be underwater

on top of paying for the repair. Yeah. Man. That stinks. Where'd you buy it from? I bought it from one of my local GMC dealerships. Okay. And is it at a warranty on the engine?

Well, so they offered an extended warranty for $6,000, so I declined that because I didn't want to be upside down, you know, $42,000. But is there a manufacturer warranty on the engine beyond the dealerships? Possibly. I haven't fully looked into that. $42,000. But is there a manufacturer warranty on the engine beyond the dealerships? Possibly. I haven't fully looked into that. I've more been just kind of figuring out what engines are going to cost. I would double check that. I don't have high hopes for that, but certainly worth the amount of time spent. Yeah. How old is the truck? It's a 2016, so it's only six years old. Okay.

Yeah, I mean, you might have some luck there, because some of these warranties from the actual manufacturer will cover some of the differences. I'd call the dealer. They're going to tell you pretty quickly. I'd call the dealer and say, hey, here's what happened. Do I have any hope at all with help from the manufacturer? We're just saying do all the research and homework you can before you sink any money into this thing.

Yeah, and that's the good news is that I pretty much got it back to my house, and it's sitting. The other unfortunate thing is I'm still making payments on it while it just sits. Of course. Do you have the cash to pay for the repairs if it's about $12,000? I don't have the full amount for it, but my dad said he'd help me out a little bit, so we might be able to fork out the full pay.

What are you doing for the other vehicle? How are you getting around? I'm just borrowing one of my parents' vehicles. Okay. What's your income um i believe it's about 44 000 a year and you're driving a truck that was worth that yeah it's not the not the ramsey method i don't think that's any method that's just a recipe for disaster man and now we're sitting in this mess and, and I'm not here to beat you up,

but just on the side of even if you fix this car, it's still way too much truck for you with your income. What do you do for a living? Yeah. I work at Hertz Rent-A-Car. Okay. What other skills do you have where you could pick up a part-time job nights and weekends making some pretty decent money,

even if you've got to go stock shelves at Walmartmart for 18 bucks an hour what can you do um well i've been looking at getting a welding job nice at you know manufacturing place do you have the current qualifications for that i do okay so that's why i asked if you can if you're qualified you want to spend any money on getting qualified you can go make much better money whether it's side hustle, part-time job, that kind of stuff where you have no outlay at all, no money outlay. You're just going to go make more money. George, I'm curious to know what your opinion is, but I'm going to go bust it and go get the $12,000, fix the truck, and unload it.

So I'm going to cash flow the repairs, unload the truck, and if I still got $4,000 difference, you can go borrow that from a, with a personal loan at your credit union. It's the only time we would ever say it's okay to go into debt is to clean up a mess like this on something you're underwater on. And so if you can get a small, if you can get a $4,000 loan instead of a 36, well now we're a lot closer to climbing out of the hole and then we can aggressively attack that smaller one. So that's what I want you to do your homework on is how can I get this repair done for as little money as possible? How can I sell it for as much money as possible? Private party

is probably going to be your best bet. And then how do we get out of this mess of debt and find us a reasonable used car that we can pay for in cash? So those are the steps to take. It's an easier said than done. You've got some work ahead of you, but you can climb out of this and it can be a lesson learned where we go never again am I going to be in that kind of position. Yeah, and that's what I want you to hear, Grant. There's no way around this. This sucks. I mean, it sucks all the way around pretty badly. However, you can get out of this relatively unscathed. You really can't. I mean, it stinks, but you can really do it. You know what

I mean? You're going to have to bust it and hustle and work hard. But if you get into a welding job that pays you well, you'll be able to do this. And then it's a lesson learned. And so it's not the end of the world is what I want you to hear. Yeah. And then for your next vehicle, I'll tell you our parameters around buying a used car in cash that's not going to sink you. Don't let everything that has motors in it be more than 50% of your income. So if you make 40, I don't want you to have more than 20 tied up in these depreciating assets, you know, things like boats and cars and all that. And so you might be looking at buying a $10,000 used truck. And maybe later on, as your income increases, we go, all right, it's time to upgrade to the $15,000 truck. And one day, I want you to have a real nice truck that

you love. Right now, this truck has you, man. This thing owns you. And one day, I want you to have a real nice truck that you love. But right now, this truck has you, man. This thing owns you. And that's what happens when we put ourselves in these precarious situations. Yeah. But, you know, it's doable. You know? We call it a stupid tax.

We've all been there. We've all made mistakes with zeros on the end. And it stings, man. But if you allow it to kind of, okay, I learned a valuable lesson here. It was, what, I learned a valuable lesson here. It was fun. When you're debt-free with an emergency fund and the car is paid for, you go, well, that stinks. I've got to buy a new engine. But then you yawn and move on with your life.

Man, that's tough stuff. Thanks, Grant. You will get on the other side of this, man. Appreciate the call. All right, folks. Don't move. We've got more of the Ramsey Show. I'm Ken Coleman, joined by George Campbell.

See, I did the joined and George together. It happens to the best of us, Ken. Jo joined by George Campbell. See, I did the joined and George together. It happens to the best of us, Ken. Joined by George Campbell. It does happen to the best of us. It's a Monday. Excited that you all are with us. The number to jump in on the call is 888-825-5225. But it's one of our favorite parts of the show.

When we look out into the lobby of Ramsey Solutions on the debt-free stage, and we see people who are here to do a debt-free scream. It's Chris and Lauren. Hello. Hello. How are you guys doing? We're doing great. Good. Where are you guys in from? Oklahoma City.

Oklahoma City. All right. And neither one of you are wearing cowboy boots, I want to point out. No, I'm from Montana. She's hardly Oklahoman. Oh, I like that. I've never heard that. Hardly Oklahoman. I like that phrase. You could use the same thing for George and I.

That's true. As well. So this is exciting. So let's get the numbers. How much debt have you paid off? A little over $124,000 in 16 months. In 16 months. And what was the range of income?

We started about $120,000 and got up to $165,000. Wow. What do you guys do for a living? I'm an accountant. And I work technology for a school district. Oh, great. So what happened with the increase in pay? Some promotions or new gigs or what?

A little bit was raises, but a lot was just hustling. A lot of over, I think, around a thousand hours of DoorDash and Uber Eats. Oh my goodness. Really? Yeah. We sold plasma pretty much any way you can make money. We did. We sold everything we own. She thought I was going to sell our dogs and that kind of got her scared. That's incredible. Okay. So two things. What was the most lucrative side hustle you would encourage people to go out and do if they're trying to pay off some debt? Overall, if you get really good at it, DoorDash and Uber Eats, you can make a lot of money doing that.

If you're strategic. Give us an idea because I think people want to know what that means. Hourly rate after expenses and fees and all that. There was nights where we were making $40, $50 an hour. Wow. Yeah. We found the right locations, the right restaurants, knew what offers to turn down, knew what delivery places to not go to.

So we were very selective with it. But once we got into it, we started making off, like we were happy to make 12 bucks an hour. And then it got to where near the end of it, I mean, there were days where I was making over $1,000 based on the weather. Is that right? Yeah. I think, by the way, this is just a little quick side note, but I want your opinion. This is why a lot of restaurants are having a hard time hiring waiters and waitresses, because they can do DoorDash instead. wow that's incredible there you go just a little economic well and he was saying you sold all this

stuff where where are you selling it where was the most the best place to sell your stuff uh marketplace was a really good one facebook facebook marketplace we got lucky because it was kind of when they first started doing shipping so we got a lot of free shipping out of it um the time we did have to pay for it, we just added it there. People will buy anything on Marketplace. It is shocking. Yeah. If you think, who's going to buy that?

Someone will buy it. We had some games that we weren't even sure if they worked or not, put that on the description, and people were paying $20 for them. Yeah, our Nintendo 64 games. Oh, wow. Good for you guys. You said nothing is going to stop us from paying off $124,000 in 16 months. So what kind of debt was the $124,000?

A lot of student loans, two car loans, credit cards. Personal loan. Pretty just normal, typical stuff. Wow. You were trying to collect them all. We were going for it, yeah. So what happened 16 months ago, and you said, all right, no more. We're about ready to get gazelle intense and pay this off. Well, we got engaged in 2020 and we went to premarital counseling. They gave us the

total money makeover book. Shout out to Crossings Community Church, by the way, they gave us the information. Yeah. Nice. Which we didn't read it, but my, uh, my friend Cassidy, she was a big Dave Ramsey fan. And, you know, I always thought she was kind of weird for doing it. But it kind of planted a seed when we got the book. We ended up revisiting it later on. Yeah, for me it was, we were best friends who married best friends. They're here with us right now. So I saw him reading a book, The Total Money Makeover, during work, during breaks.

And for me that was weird because he was reading at all. Like he doesn't read. You don't see that so yeah and it turns out that was like one of the almost stipulations of their engagement was like hey if we're going to get married you need to read this book we need to be on board with this all that stuff so i saw him doing that and then it was during the pandemic all this stuff is 2020 when we got married lots of things are getting canceled lots of things are getting pushed back on people we decided we're just going to move our wedding forward. Like, we're not going to wait for all this stuff to get canceled. We don't know what it's going to look like in five months.

Let's just get it over with. That sounds terrible. But, yeah, let's just do it. We decided to do it in our backyard. And because of that, we saved a lot of money in the long run, but we spent a lot of money in the short run to make it happen. Our motto basically became, ch-ch-charge it. We were just putting it on credit cards.

Wow. So by the end of it, after we had come back from our honeymoon, we sat down to look at it, and we had spent well over $5,000 just in that last month. And with all the payments we already had from student loans and cars, we weren't sure how much money are we going to have left after we make all these payments. I mean, $124,000 in 16 months. Yeah.

What were you selling, cars? Well, I work in technology, so I was able to buy some broken devices, resell those online. That's a good side hustle. Yeah, it was a really great side hustle. Do you happen to have any idea how much money you generated from selling things

to go into the $124,000? I think it was about $6,000 from broken devices that Chris sold. And then maybe $1,000 from stuff around the house. Yeah. Plasma was about another $2,000. DoorDash was like $20,000 to $30,000 almost. Wow. From new deliveries.

Yeah. Wow. That's amazing. So you guys just didn't sleep not really i mean there were weeks there was a week where she went to london and uh i just decided hey i'm home alone i got nothing to do so i was putting in like you know 18 19 hour days just going to work and then coming home and doing door dash and things like that so so obviously we're hearing a story of extreme gazelle intensity, and you guys did it.

That's a lot of money. Instead of beans and rice, we just did beans, kind of the fourth of rice. Yeah, fourth of rice. So besides the intensity, what would you all say is the key to getting through this journey? We were a little bit different on this, but for me it was making goals within the goal. And so breaking out $124,000 000 that's a big number to look at so

it was creating smaller goals and then pushing to reach those and then once we accomplished that smaller goal it was celebrating that little win and then that kind of kept us going for the next one yeah yeah that was really good for us here breaking it down um we didn't do any big celebration it'd be like hey we just paid off our last credit card. Let's go to Qdoba. Let's really splurge on that. And it got to a point where our goal was three years. We looked at our income. We're like, here's how much we make. Here's how fast we can pay it off. And then five months into it, we realized we'd already paid off over $50,000. And we're like, this is a time. We're going to go a little bit bigger on this celebration. Then we're getting right back into it. Within that first year, we paid off $100,000.

So we were over a year and a half ahead of schedule. That's amazing. At the end of the first year. I got to assume a lot of that was the cheerleaders. I mean, you have 17 people here to support you. Yeah. They were asking us questions all the time. The Hedricks right there, they were kind of our coaches almost.

We'd listen to the podcast while we're doing deliveries, but at the same time, if we had questions,'d go to them uh for me though i think the biggest one is um when we first started doing this we were looking at our expenses and we saw tithing in there and we're like that's our biggest expense and it's like you know for a brief second there it was like if we don't do this we can pay it off like a lot faster and luckily she slapped me in the face and was like no we're paying her tithe like that's literally yeah she said that's not optional there's a spiritual slap in the face yeah so we, no, we're paying for tithe. Not literally. She said that's not optional. It was a spiritual slap in the face.

Yeah. So we paid our tithe and that's why we think things just really started getting rolling because we were faithful with it. And then a couple months into it, we started feeling guilty because we realized we weren't tithing on the extra income we were bringing in. It's like, you know, we don't have just our salaries anymore. We're bringing all this stuff in and that's God's money too. So we need to do something with that.

Wow. So we made a back payment on her tithe like to catch up to it oh my goodness and all of a sudden she got a bonus that she'd never gotten in her life like at her work so bonus came in paid for it we're like well this is awesome like god's taking care of us you guys have an awesome story i gotta tell you i'm exhausted uh in a good way just listening to you guys uh and how hard that was but in in a word, was it worth it? Absolutely. We're going to see with you guys right now. Well, yeah, you got much more out of it than that deal. All right, you guys ready? We're about ready

to do this. We want you to know we're going to give you a copy of the Total Money Makeover to give to somebody else, and then Dave's latest book, Baby Step Millionaires, and FPU for you guys to gift to somebody else if you'd like, or take it, or train somebody through it. We're going to give you all that to show you our appreciation. All right, here we go.

Chris and Lauren from Oklahoma City, Oklahoma. They paid off $124,000 in 16 months, making $120,000 to $165,000. Take it away, you two. It's time to hear your debt-free scream. Three, two, one. We're debt-free! There it is. Very nice, George.

I've got to tell you, I need to go give them a box of rice. My face hurts from smiling. It's time. They've earned some rice. They just did beans. That's the first time I've ever heard that. No rice. Just beans.

Well, that is what it is all about. They have forever changed their future. What an inspiring couple. Oh, that's why we do this show. Don't move. More Ramsey Show. I'm Ken Coleman, joined by George Campbell. We're here for you this hour.

Thrilled to have you. The phone number is 888-825-5225. We're talking about your money, your work, your relationships. George and I combining today. He's the money expert and I'm the work guy. I don't people. Thrilled as always, though, George, to be here on the show with you. So you can jump in. We'll take your questions. Every time you hear someone do their debt-free scream, like we just had in our last segment, it's because at some point they say, I've had it. I'm not going to live this way anymore. And when you can get mad like that and do what they did, your life is going to change. Right now, inflation and your

credit cards are killing you, but you've been led to believe that you're not in control of your money. That's wrong. You have to decide to control what you can control, and that's you, your behavior. You have the power to change, and Financial Peace University is going to show you what to change. This course will teach you the proven step-by-step plan that's helped nearly 10 million people beat debt, master budgeting, and build wealth. And you can do it too. Stop letting debt and money stress control your life. Say, I've had it, and take back your control. Start Financial Peace University at ramsaysolutions.com slash FPU.

That's ramsaysolutions.com slash FPU. 888-825-5225 is the phone number let's go to boston massachusetts george's neck of the woods joe is on the line joe how can we help hey guys uh thanks for taking the call you've um so my wife and i bought a house uh and we're going to knock it down and rebuild it. And so we got some quotes from general contractors for the work, and as you can probably imagine, they were pretty high. So we decided to kind of take on the job ourselves and GC it ourselves. Wow. But what we didn't – so this is all new learning for us, right?

We're not contractors. We're not in the trade. So it's kind of a learning experience. One of the things we learned is that banks won't finance construction jobs unless you're using a GC. And so we found kind of an untraditional loan through private business, which, you know, is a little unique. But now we're kind of, do we go back and work with the GC and take out kind of more debt to build this, or should we continue down this path of financing this untraditional route and then kind of working through it on our own? I know it's kind of an unique question, but just wondering if you've seen this before.

Well, not this one in particular. This is scary stuff. Did you finance the purchase of the home as well? No, we paid in cash. Okay. But now we're financing the work that needs to be done. How much are we talking? Well, so we sold our house prior to this, and we cleared a lot of equity in it. So we were able to buy the house, you know, with cash, and we still have a couple hundred thousand in cash on hand for the build. So we're thinking about, you know, somewhere in the, like, $200,000 to $300,000 financing range. So on top of the cash, you still need another 300 grand in financing?

I mean, well, that's all new to us, George, right? So we're kind of like budgeting it out ourselves. It's probably in that, I mean, that would be the high end, all in kind of everything. Well, I'm wondering, is it too late to back out of the financing or are you already in this thing?

No, no, no, we're not. Okay. I'm wondering if we just move at the speed of cash because it's going to take are you already in this thing? No, no, no, we're not. Okay. I'm wondering if we just move at the speed of cash because it's going to take a while to build this thing. So could you start with what you got for the next six months, nine months, and then start cash flowing the rest later on? Yeah, I guess that's something we haven't considered. I mean, it was always thinking the finance route. But, yeah, I mean, I guess.

That would be my plan because it takes a little bit of the risk and liability away, too, when you don't have to cover the loan on top of making sure that you're – I mean, this is a part-time job you signed up for to just do all of this subcontracting yourself versus having a general contractor who's basically the middleman handling this whole project for you. And so that's why it's more expensive is they're taking on the headache instead of you having to, you know, hassle all these guys, make sure they show up, make sure the work is being done correctly. And so that's kind of on you and that's the scarier part. And there's less liabilities that way because the general contractor has their own insurance and you don't. Yeah. Joe, what kind of income do you and your wife make?

We do pretty well. I'm north of $300,000. Okay, so let me just run through this really quick. So you make north of $300,000. You've got $200,000 cash in the bank. Is that right? Yep. And you're thinking about building a $500,000 house roughly yeah yep okay um i mean i'm not anti what george is saying because you guys

have the income to be able to cash flow this build i mean you guys could go rent a small apartment or whatever i don't know if you got kids i guess i shouldn't say a small apartment i don't know what your family situation is but the point is yeah, so I mean, you can cash flow this build. That's absolutely right, with $200,000 down to get that started and get a quality GC. I appreciate your efforts to save money and seeing the sticker shock of a GC, but I'm going to tell you something. My father-in-law is a general contractor, custom home builder, and I'm just going to tell you, there's one thing between getting ripped off and another

thing to pay a premium for something that should be a premium product. And your home is a premium product. I told George one time, don't buy cheap shoes, buy nice leather shoes, George. Take care of them. He listened to me. All right. You got to put the money into the house and a good general contractor. It's not worth the headache and the potential risk and all kinds of nightmarish, and I mean nightmarish, possibilities. Yeah, unless you come from that world and you know it inside and out and you feel comfortable handling it, then I wouldn't personally become the general contractor in this scenario. And with your income, it is worth the premium you're going to pay to have that headache off of your shoulders.

And this is the long-term play, right, Joe? This is the house, like, you bought this. So, I mean, dude, I'd be patient. So you've got $200 to put down. That's almost 50%. So I'm with George on his option, or just go ahead and let's see what the financing looks like if we actually had a GC. And Dave would tell you, he built this building

and this campus at the speed of cash. And if we didn't have the cash on hand, well, it's going to take longer to build. And so part of it is just understanding it's going to be a process. It's going to take a lot of patience. We have to have a game plan for how this is going to be sustainable for the next year or two as we complete this build. But man, you're going to get on the other side of it with no headaches and no payments. I love that part of it. Yeah. Yeah. You're not kidding. Yeah. Well, thank you, Joe. Appreciate the call, man.

Yeah, thank you. Yeah, no GC in for you, Joe, right? Let's go get somebody that's a pro. You know, there's something to be said there. You start thinking about, you know, okay, but boy, I've never even heard of the private loan from the business. Yeah, the non-traditional financing side.

Yikes. That worried me. What's in that fine print? I don't want to uncover that. Do you cover that in the fine print podcast? That might be a future episode, Ken. You know, like the, what would you even call that? You don't even call that non-traditional financing.

I don't know. He threw out a name. I didn't hear it clearly, but. Yeah, that makes me really, really nervous. If a bank is like, this is too much risk for us, I go, who's covering that? Who's willing to take on that kind of risk? That's a very good point. When a banker won't touch it, you should probably walk slowly away.

And they got plenty of money, and they say, no thanks, Tom Hanks. Yeah, and what are you? You turned into an 80-year-old guy. You can't say that ever again. I'm a curmudgeon, Ken. No, you're not. We're just two old guys, like the guys on Sesame Street up in the balcony. That could be us, but you're not there yet. Now, George, here's why the contractor matters,

right? You got to make sure that you talk to several contractors. This is like, you know, we tell people, look for our SmartVestor pros, men and women that we've already vetted. We still say, go sit with them and interview them and make sure that you feel good about them. And I'm on a general contract. I just want to point this out. There is no reason to rush into building a home. It is just too, too important. It's a wild time right now too, just trying to find people who are willing to do the work. I talked to many people in my area, you know, that knew good general contractors, who's building homes. We want to do a custom build. Sounds like it's a custom build. You know, who do you work with? And you got to interview them just like you would someone who's building homes we want to do a custom build sounds like it's a custom build you know who do you work with and uh and you got to interview just like you would someone

who's going to be an in-home nanny like this is a high trust relationship we don't want to rush we did a build on our first townhome it was a new construction build through a builder and it was a part-time to full-time job just keeping track going up they the towel bar is in the wrong spot why'd they mess that up we got to fight them on this. It's a lot of work when you step into something like that. You've got to be ready. I feel like Stacey said that once when I probably put up the towel bar. It's in the wrong

spot, Ken. I should never do any household things like that. You're in the wrong line of business. I'll tell you what, folks. It's been a fun hour. That went fast. I want to thank George Campbell. I want to thank the crew behind the glass to keep us on the air. I want to thank you, America. You are the reason we do the show. 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.