The Ramsey Show - App - How Dave Bounced Back After Bankruptcy (Hour 1)

Episode Date: July 21, 2022

Dave Ramsey & George Kamel discuss: How much money you save when you use cash, Figuring out your financial priorities, How Dave bounced back after bankruptcy.   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. We help people build wealth, do work that they love, and create actual amazing relationships. George Campbell, Ramsey Personality, host of the Fine Print podcast on Ramsey Networks, is my co-host today. As we answer your questions about your life and your money, open phones at 888-825-5225. The call is free, and some say the advice is worth exactly what you pay for it. Ann's going to start off this hour in austin moo i better put that right jumping around here and there she is ann is in austin texas

to start off this hour hey ann how are you i'm doing fine thank you cool so i see on my screen that george challenged you to do something what have we gotten ourselves into here well i had a credit card question and i knew he was going to chew me out for using them but i didn't it was a question that did he did he really did he really show you i'm not capable no okay well he gave me he gave me a good lecture gave you stern warning to do that okay but it was but it was like something that had bugged me. I don't remember even what it was now, but he was kind enough to take some extra time with me and give me a challenge to try to live a month without them. And you did it.

Well, I did it because he asked me to. I didn't do it because I was convinced it would work. Ah, but you're willing to play along. Okay, so you went a month with no credit card use. I take it you used a debit card. No, I used cash, and I ordered a debit card. Oh, cool. So no plastic transactions for a month.

Yes. Wow, I'm impressed. That's hardcore. So tell us about it. What happened? Well, what happened was I was a little bit scared, actually, because I realized I was going to have to pay for my credit cards that I'd used last month and take care of my expenses for this month all at one time.

And I go, hmm, this may be interesting. And you know what happened? I got this little feeling or something. I don't know what it was, but I just felt this wind between under my wings and I went, I can do this. I could do it. So I decided I was going to do it and I was going to do it right. Okay. Oh, yeah.

So I took the, I just, I just, I just jumped into it right away. And you know what? The strangest things happened. First of all, when I went to the grocery store, I didn't look left or right because I know these are professional people that are trying to distract me. And I'm not a professional in this area, so I need to not be tempted. And I also gave myself 10 minutes to be in the grocery store and out. Wow. Because you were using your own money.

You got it. And you have to peel it off like you're bleeding or something to give it to them. Or you can just flash them a card. When you handed over that cash, it hurt. Because you left with less cash. It not only hurt, but it surprised me. It was even better than that. When I gave her the money,

she gave me change. And you were like, I forgot that you can get change. I had it in my hand. I go, what do I do with this? Wow. So you spent less money. You're telling us that you spent less money because you used cash.

If you don't put anything in your buggy, you don't have much to pay for. What a concept. So you're saying when you used a credit card, it was like supermarket sweep. You were just filling up that card as fast as you could, and it felt like you were getting it all for free. And I was doing a good job, too. Oh, and you're hilarious. Well, thank you for humoring us and doing this experiment. So is it changed? Are you going to go back to credit cards?

Well, my dog had to go to the vet this month and I hadn't expected that, that bill. And I, I was, I was a little bit concerned, but I paid for it out of the change that was in my purse now. I'd gotten a focus that I hadn't had for a long time. So did you keep track, Ann, of how much you saved by using cash, using your own money? I didn't have time. I was putting money in my purse so often, I didn't have time to keep the records, but I can now. Oh, that's an awesome experiment. So it sounds like you've realized the

power of using your own money, of using cash. You make decisions differently. That was my whole point with you doing this experiment. Exactly. I understood it, and I appreciate the fact that I know you can't give a challenge to everyone, not individually, but I appreciate that you did it for me. You did exactly what I needed, exactly what I needed it. I love that, Ann. Thank you for the call. That is so cool. I hope all of America takes the challenge, one month without credit cards, and see how it changes the way that you spend. But she actually went further than you asked her to. You said get a debit card, and she hadn't even gotten it yet. So she does a pure cash month plastic at all which is the best i mean that'll really make you feel yeah i mean you

want to get pissed off about filling up your car try walking all the way into the market and laying down uncle benjamin franklin a couple of times after you paid it off now you're really getting that'll get you political right there that'll get you angry. Calling your senators after that. Angry. Oh, my goodness. Dave, you've been dealing with this for 30 years now. This whole argument of you spend more on a credit card, you make are activated when you spend cash it literally hurts and when you spend with a card even a debit card it's just like no brain activity no brain but no brain activity right so uh but the you know no that's all kidding aside there there's you know total day and rachel brought us something many many years ago and i hadn't ever thought about it even though i've been teaching by then this whole idea for decades when when you're a kid and you have a toy and your friend wants a toy and you trade you give him your toy and there's a there's a visual transaction i I end you one, you end it back. End me yours, right?

With a purchase, you're taking something, and you give them your money. And they keep your money, and you keep their thing. Just like a trade. It's greenbacks for stuff. You see a trade. When you are purchasing something with plastic, you take their stuff, hand them your your plastic and they hand it back to you you leave with both things now that seems that seems a little bit childish when you think about it but you know what there's no trade there's no transaction here because i'm getting both things the thing i came for and the thing i came in with

i leave with the plastic and the thing. When I use money, I don't leave with the money. I just leave with the thing. And there's something visually that happens inside of our brains there that affects our emotions, affects our spirit, and it lowers the fact that we realize we just spent money. I think that's what's happening in Congress. Oh, my goodness, yes.

And it's really hard to go into debt when you don't have the option to because your bank account's empty. But it's easy when you've got the lenders going, we'll happily give you as much money as you'd like. Card denied when you have a debit card typically means you don't have the money. It's a whole idea. This is the Ramsey Show. You've got a lot on your plate. A job, your home, your marriage, and your growing family. While you're enjoying the

present, you can't help but think about your future and your finances. As you explore your options, consider Christian Healthcare Ministries, or CHM, for your health care. Their generous maternity program and budget-friendly monthly programs have been a blessing to members welcoming children into their families. Visit chministries.org slash budget to see if it's right for you. Christian Healthcare Ministries is a Ramsey personality is my co-host today. Open phones at 888-825-5225. We get it, folks. When you're worried about money, it's overwhelming.

It's all consuming. Money worries are some of the worst forms of anxiety that Dr. John Deloney deals with. If you don't have enough to pay your bills, you get that little sweat in your palms and right above your lip and right above your eyes and always in your checkbook, it's always on your mind, but you shouldn't have to live with that kind of stress. You work too hard to live like that, and good news is you don't have to. you follow a proven plan you'll discover peace with your money that's why we call it financial peace university and we'll show you the same plan that's helped almost 10 million people learn how to get on a budget save get out of debt spend wisely build wealth be outrageously generous in short how to handle

money right and it's a great time to take the course we just updated a ton of the content it's rachel cruz me and new stuff with george camel and dr john deloney yeah the course is the best it's ever been right now so decide decide today that you are done letting money stress rule your life listen i can't make inflation go away and i can't fix recessions but i can show you how to weather the storm i can show you how to prosper in good times and in bad times go to ramsey solutions.com slash fpu ramsey solutions.com fpu financial peace university bridget's in midland texas hi bridget? Hi, guys. Thank you so much for taking my call. Sure. What's up? So I was wondering if I should take out a mortgage and buy a house or continue

working and save up and just pay cash for a house. My ultimate goal is to go to CRNA school, which is a three-year program, and I'm not able to work during that time because it's a very rigid program. And so here are my numbers. I'm single with no kids. I'm 27 years old. I'm an RN, and I travel for work. I have an income of, so far, because my income varies depending on the contract that I have. So right now, so far, I have $137,000 so far. My emergency fund is already done. I have it there. I'm debt-free. I have no student loans, no car loans. I just have my rent plus my bills.

How much is your rent? $1,100. And CRNA schools, how long? Two years? Three years. Three years. And what's it cost a year? I was looking it up, and it said a total of $100,000. A total? At one particular school? Yeah, this is in houston yeah yeah okay so 100 000 in

tuition and books or does that include living expenses uh with living expenses as well really you only need a hundred thousand dollars you make 137 and you're single yeah and my savings is um eighty four thousand dollars i mean eighty four yeah thousand dollars and you have eighty four thousand dollars already saved yes wow okay so what's the deal go to school i mean you work six more months and then go to school where does the house have to do with this um uh because i don't want to go to school yet. I'm still, cause I'm raising my little brother and he's still in school. So I have to wait for him to get, um, to go to college, which should be in about seven years. So in the meantime, I'm taking care of him and, um, I just want to buy a house and, you know, build equity. And with the money that I have, I don't have to take out loans.

Because my ultimate goal is to sell this house, live in Houston, and not having to pay rent, just the bills. And with whatever money left I have, just pay, you know, bills and tuition and all of that. So this is a 10-year journey? You said seven more years plus three? Stop, stop a second. Your little brother is seven years old? No, he's 12.

He's 12. So seven more years, he'll be gone, you're saying, okay. Right, yeah. Man, you're amazing. You took on the raising of your little brother. What happened to your parents? My dad is just not in the picture, our mom passed away, um, about five years ago.

You're amazing. Okay. So who takes care of your little brother now? He goes to school during the day and you have like after school care? Uh, no, my sister has been helping me out with him when I travel, um, and go on my contracts. And then when I come back, I... How long are you on a contract? It depends.

So when COVID was at its peak, I was doing like eight-week contracts, 13-week contracts. Is your sister in Midland as well? Yes. We live together. So that's why my rent is a little high because I rent a three-bedroom and two-bath house. What does your sister do for a living? Right now, she just got separated from her baby daddy, and so she's just helping with raising the kids because she's got three kids on her own.

She's about to go to school full-time this upcoming fall, and that's where we're at right now. How old is she? She's 23. So you're the mama of this whole bunch, aren't you? Yeah. You know what would work? Since you're committed to this plan, load up the whole bunch and go to Houston now. Take everybody?

Yeah. And, you know, well, within within six months you don't do it right now uh your sister's not working so she can land where you tell her to if you're taking care of her too and she's going to start school well she can start school in houston as easy as she can in midland if houston's where you can get your crna but um if you can save up enough to take care of you're saying that the hundred thousand will cover your living expenses including your rent right well my rent will be paid off i was thinking you know with no you're not gonna pay off the house and go to crna you don't have the money you only got a hundred thousand you need a hundred thousand for school that leaves zip for a house do you own the house you're in no i rent yeah i thought so yeah i'm trying to keep you from having to put your life on hold for the responsibility that you took on for your

brother and your sister and that's kind of why I'm thinking I'm taking them all to Houston. Sister can take care of her kids and little brother while you go to school. In return, you help support them and take care of them, which is what you've done. And you could execute that next spring. Next spring? Yeah. I mean, because you can probably save another $50,000 by spring, can't you? Oh, yeah.

Yeah. That's what I would do. And then the house gets... And that way it's not a seven-year plan. Mm-hmm. Okay, so if you were this boy's mama, you would not put your life on hold as his mama. And you're playing mama now. You've taken over the care of him.

You would go ahead and figure out a way to go to school, and you'd take him with you and go to school. And the only thing is, who's taking care of him now? Sister. Well, you're taking care of her. So that's a fair trade. She can just load up and go with you. I'm going to save another $50,000 or more by next spring,

and then I'm going to school and take them all with you. They don't really have a say in the matter. You're the one taking care of everybody. They're going to go where you tell them to they're under your roof and i would put the house on pause at that point and yeah you don't need to buy a house you need to go to school because that's going to increase your income as well which is only going to help later on with the house purchase and then when you finish school in three years and your sister has finished school in three years and she can get out on her own become sustainable your little brother will almost be there and then we can start talking about buying a house at that point and i don't know

what will happen in your personal life during that period of time either uh hopefully your entire personal life won't be on hold you're an amazing young woman you have taken on a tremendous responsibility with a big heart thank you for doing that yeah uh thank you for being that kind of person that little boy has a hero in his life and it's his older sister and so uh however i think there's a way you can manipulate these facts tactically to not have to put your life on hold for seven years i think i think we just you know we do what we all do with our kids we drag them through the adventure they go along for the adventure that's how the kiddo thing works and um yeah i think i would how what an interesting situation and what a beautiful woman

yeah i mean it's impressive making bank she's working her tail off taking care of the family everybody can depend on her because she's that kind of gal way to go bridget this is the ramsey show Come by and visit Ramsey Solutions if you're in the Nashville area. We've got a huge lobby and visitor center, free coffee, free homemade chocolate chip cookies that are from the devil. And their temptation is unbelievable. Keep blaming the devil, Dave. Well, you've got to blame somebody. You can't blame myself because I must be a victim of something, like my own sweet tooth or something. George Camel, Ramsey Personalities, my co-host.

In the lobby of Ramsey Solutions, we do the show every day from 1 to 4 Central, and you can come and watch us do the show. I'm not sure exactly why that's exciting, but people do it all the time, and it's free, so you can't really argue about the price. And in that lobby is a debt-free stage that Michael and Julie are on. Hey, guys, how are you? We're good, Dave. How are you?

Welcome. Where do you all live? We live in Estacada, Oregon. It's outside of Portland, Oregon. Oh, wow. That's a bit of a haul to Nashville. How much debt have you paid off? We paid off $136,397.

Way to go. How long did this take? Two years, eight months. All right. And what was your range of income during that two years and eight months? We started out at $172, went up to $264, and then down to $257. Cool. What do y'all do for a living? So I retired out of the Department of Homeland Security in Portland a year ago. I was at the rioting. Wow. And since we own a medical clinic together, I was at the writing. Wow. Since we own a medical clinic together, I'm now the medical administrator

and Julie is the medical director. Oh, very cool. Yeah, I'm a family nurse practitioner, medical director of an integrative primary care clinic. Oh my goodness. Okay. Short couple. Good, good, good. Well, welcome. What kind of debt was the $136,000? Oh, Dave, we had a little bit

of everything. We started out with a retirement loan. We had an addition loan. We bought a home. It was probably way over what we should have done. We had two lines of credit to keep our business open. We had a parent plus loan. We had a second mortgage, and we had two credit cards for Alaska. My Lord, y'all were normal. Wow. It was a lot. You were completely normal.

Oh, my gosh. And you paid every bit of that off? Yes. Including your house? No. Oh, everything but the house. Everything but the house. Good, good.

Two years and eight months. That's pretty intense. It was a lot, Dave. When we started two years, eight months ago, we had a met with a lawyer, whether we should close down the business and go bankrupt. Wow. And you turned it completely around. Yeah around yeah now the business is worth 300,000 i hate it when that happens how way to go you guys okay so we're trying to figure out if this thing's belly up you retire jump in with both feet and of course julie's already got the thing

running you kick it in the tail make it go go. Yes. And you made some serious money. Yes. During that time, which is great. You turned the business around. But in the midst of that, you also say we're getting out of debt because we don't want to be here again. No, never. So what initiated that part of this journey? Dave, we were David-ish.

We'd done it months before, 2009. And then we've addicted to debt. So we've started bad habits again. So Julie, it really is his fault. Yes. Not so much. I had the belief that I always paid my bills, but I never really knew how to save.

And so when we hit an issue with the business, a contract pulled out with the state, and I lost about 50% of our income. So I had a lot of hard conversations with the medical providers and with our family too. So a lot of humility and surrender. Yeah, that's tough. That's a hard corner to turn. And the fact that you did it, there's a lot of stress in the last two years. Yeah.

What were those sacrifices like you guys made where you decided we're not going to be in this position again? Well, we met with a Ramsey certified coach. Really encouraged me, Igorov, to talk to you. Yeah. We had joined FPO, but we started uh our diff returnee we got a thousand dollars and immediately the transmission went on our vw of course and then at the very end of it uh the transmission went out on my 88 chevy your 88 chevy still driving it i guess it was about time yeah it's still going that car right there is a classic man yeah i love it a two-tone 88 pickup yep man that's a

beast i love it well i'm sorry it didn't live it's back up and running it's got a new engine new transmission oh you fixed it all up kept it alive it will not die wow this is awesome a second life the zombie truck lives wow it's cheaper than buying oh truck now. Oh, yeah, for sure. Well, yeah, anything's cheaper than buying it. Because we're still working on our, what is it, the three months of savings. Yeah. So we're almost there. And we're aiming to pay off the house in the next five to six years. Wow.

And you'll have $100,000 in retained earnings sitting over in the business one of these days. So if you ever hit another little bump, it won't be a bump. It won't tank you. Yeah, liquid cash there too of course way to go you guys thank you how's it feel um i still feel like an avalanche is behind me but um i have a lot more tools now and um i said humility and just keeping our sights on our goals and leaning into our relationships with God. Yeah.

Amen. Thank you, Dave. Amen. And you went through a lot with your career change as well, because like you said, you were in the middle of all the protests and the violence and everything else, and you step aside from that and walk into a whole different kind of violence. Yep. And then 15,000 clinics like ours closed during the pandemic. So we kept it open open and i credit julie

for that yeah so i feel stronger about leading the clinic than i ever have before uh and so we went from bankruptcy card given to us to um is it three hundred thousand net worth millionaires yeah and wow i mean that occurred to us in febru February as we're coming into paying this off. It's like we looked at our assets and we went, oh, my gosh. Look at that. Who knew? Yeah. We thought we were just surviving.

And here we ended up. That's what happens when you do something like this. So well done. Very well played. What a turnaround. All right. What do you tell people the key to getting out of debt is? Yeah.

Keep your sights on the goal and work hard. Change your mindset. You can do it. We're proof. I'm 53. Julie's 52. If we can do it at our stage, do it earlier. I'd really recommend that. We could have done this a lot sooner.

I hear you. But we have hope for the future now in our retirement. Good. Good. That's why we're here. I'm glad we helped. Good for the future now in our retirement. Good. Good. That's why we're here. I'm glad we helped. Good for y'all. Well done. You're heroes.

Excellent, excellent job. Got a copy of Baby Steps Millionaires for you because you've just become one. There you go. Thank you. And a copy of Total Money Makeover for you to give away to somebody who's scared and struggling like you were. You can show them a light at the end of the tunnel. And a one-year membership to Financial Peace University with the new videos with George and Dr. John Deloney and Rachel Cruz and me.

Best FPU we've ever done right now out there. So get you signed up for every bit of that. Congratulations, you two. Very, very proud of you. You're amazing. Thank you. That's quite a journey you've been on. Wow.

Quite a lot of life transition. I mean, just one thing after another, like, boom, boom, boom. Marriage another like their business everything got turned around amazing very well done michael and julie portland oregon 136 000 paid off in two years eight months making 172 264 to 257 count it down let's hear a debt-free scream. Three, two, one. We're debt-free! Yeah! I love it. That is fabulous. Man, that's very well done. Very, very well done.

If you were Dave Ish, it's not too late to go all in. Well, Ramsey-ish on a program that works. very very well done if you were dave ish it's not too late to go all in well a ramsey ish ish on a program that works it's not going to do with me but the um i kind of resist that dave ish thing but ramsey ish i'll go with because that's our what we all teach here right and uh the point is is that um the nuances the detail of the stuff we teach you if you'll submit to every one of those and do them the reason those items are there in the baby steps and and the little things around it like work with your spouse like combine your finances don't try to do like roommate thing and all that stuff when you do all those things together you get rid of your whole life policy it's not a baby

step but you get your term insurance in place get rid of that ripoff stuff you know you keep doing all the different little things it changes everything and these guys right here man what what is hard to listen to in three or four minutes here is with what he went through with his career facing all the violence and everything else and then they finance they face this financial violence with the state pulling a contract out almost losing their business and then the two of them come together, and he's driving this 88 car. I mean, these are people that have walked through stress so deep you could smell it. I mean, it's unbelievable, and they still killed it. Very, very.

They're warriors, man. Absolutely. Very strong. Very strong. This is the Ramsey Show. Thank you. George Campbell Ramsey personality is my co-host today our question of the day comes from blinds.com they have a 100 satisfaction guarantee that means even if you mismeasure or you pick the wrong color they'll remake your blinds for free free Free samples, free shipping, new promos all the time. It's a great American company. Check them out.

Blinds.com. Today's question comes from James in California. He says, Dave, out of curiosity, specifically, how did you make your first million after your bankruptcy? Hmm. That's a good question. I don't even know this story. I'm not sure I do. Take us back there, Dave.

I'll have to think about it. So this was back in 88? So I filed bankruptcy in September of 88, and what I did after that was I went back to doing real estate deals, only I couldn't buy real estate anymore because I had no credit and no money. So no one would lend you money. So what I would do is tie up a deal and then sell the contract to another investor that used to be a competitor of

mine but we're friends and so i did you know what you might call a dry flip in other words i sell the contract positions so i go contract for a house that's worth 200 000 i would contract for it for 110 and sell it to a buddy of mine for 10 000 bucks and he could close on you have 120 in it right it's still 200 000,000 house so I'm still doing foreclosure deals I got back to doing six figures in 89 again I was back making over 100,000 a year doing that but I had a bunch of IRS debt to clean up because that doesn't bankrupt and a few other things to clean up and it took about a year and a half two years to clean that up so I'm trying to think that it'd be I kept doing that um i'm trying to think

if i got my net worth to a million again before we started doing financial peace i might not have so had you started this actually actually starting this business slowed that down because i made less the first year i did the i did financial peace it was called life after debt and i was doing the radio show the radio show i was losing money um so you're paying to do the radio my taxable income was in half the first i made 120 000 a year before i made 60 000 a year after wow first year open this business and my income went in half so that slowed it down so it would have been a couple of years after i got this going uh you know we're starting to get a little bit of income out of this income came on back up over time of

course because you started selling the original financial peace book and you're doing seminars and you know the 13 15 week however long it was yeah but sharon and i lived on nothing even though we were out of debt by then i mean mean, we'd paid off the bankruptcy, we'd paid off the, uh, everything, we were completely clear, but we were just done. And so we just lived on nothing and just piled up money. And, uh, because we wanted both one of the security of that margin. And so what, how did I make my first million? So, uh, income and thrift is how I did did it so it was not in the stock market at that point no no i mean i well i had some i had uh i mean we had our 401k not 401k we had roth iras not they weren't even roth iras in those days just ir i had iras in those days going kids college funds going um and i'm just chunking money and stuff like that in that, didn't even have any real estate except our own, got the house paid off.

So, yeah, I was probably three or four years into this business before I hit another net worth. But it was mostly earned income from just tussling around. It was mostly earned income and not spending any of it. Yeah. None of it. I mean, we didn't do anything. We were still driving junk cars.

We were still way past what we teach people to do we teach you once you get to baby steps three four five six or four five six that you can lighten up and save up and buy a car and lighten up save up and go on vacation we didn't we didn't we just piled up at what point were the baby steps developed to where you were you were following them uh post-bankruptcy oh i didn't follow them uh post-bankruptcy because they did i hadn't invented them i mean i hadn't laid all that out when i started teaching when i started learning after the bankruptcy god's ways of handling money what the bible says and grandma's ways these basic principles live on lesson you make always be generous live on a written plan.

Always be saving and investing and no debt at all. And those basic five principles, when I started living those out and then start trying to get other people to live them out, they would start to say, okay, yeah, but where do I start? They needed a clear path. I started a little counseling ministry at our church. I started teaching a Sunday school class on those materials and people would say, okay, so what do first man i mean do you do you do you do you do you get out of debt first or do you put money in your in your retirement first and um you know but by then i was sure that the bigger blocker because i'd experienced it personally was debt that if you could get out of debt then you don't have any payments now you got money to build net worth which is what happened to me yeah okay you know i got out of debt and with a bankruptcy and then paying off the irs and the other stuff um and then once all that was cleared

as long as i made money and didn't spend it i could build net worth i could build i could build a pile of money and that's what i did and so I thought okay we got to get people out of debt first but the paying off the house was too big a thing to put in the early stages because first thing's a thousand dollars right and then pay off the house is the second thing so we separated the house debt from the other debt and put it at the end yeah over in baby step six and we knew that you didn't need to start investing in your 401k until you had an emergency fund because i was running into people all the time that had no money except in their retirement and then they'd get in a pinch and cash out their retirement and let me tell you a 401k is a lousy emergency fund because when you cash it out you get your taxes plus a 10 percent hit

you know it's a 30 or 40 percent hit cashing out your 401k to fix your transmission or to pay the house payment because you got laid off and uh you know whatever the emergency is a 401k is a lousy rainy day fund so funding up the 401k i get a match i know but you're broke i don't care if you get a match you're freaking broke and you're going to use the 401k when something bad happens because you got no money so we bet baby step three is invented actually baby step one wasn't there you were just going get out of debt get out of debt it was get out of debt do the emergency fund and and what would happen is as people were working that baby step two something would come along that was little like a tire would blow out or something or

a kid would get sick and it's a $600 $700 thing or something and that little six or seven hundred dollar thing would take all the wind out of their cells and they quit they would stop their debt snowball so we figured out that we gave them a little bit of breathing room a starter emergency fund and baby step one was born but the original baby steps when I first started teaching them there wasn't a thousand this evolved over your experience coaching people being on the radio not in 25 or years but i mean but but it evolved over a period of time in the early days of massaging this material and learning how to do it it evolved but no i didn't follow the baby steps they weren't there all i knew was i'd read the bible and it said don't borrow money and i've

been bankrupt so i figured out that was the truth right so i don't borrow money anymore bomb i'm done you know and i'll always have an emergency fund why because sharon will leave if i don't have one you know it's that simple she's not going to be without money again she's had enough of that she was terrorized by that yeah she's not going back so you get you know you get the whole security gland issue around the emergency fund that all pops up that's such an interesting question james thank you in california thank you because i hadn't even thought about it i never thought about where the first million came from um and then uh and then you know fast forward several years i had a lot of money by then and 2008 hit and we bought oh man we bought probably a hundred million dollars worth of real estate for 15 million dollars wow and so and you know and it all

came back of course and then some so that real estate has been a big part of the wealth building equation well like the way beyond the first million or even 10 million you know by then I had net worth 10 20 million dollars probably but uh I dumped every you know we we cleaned the table off we took the chips off the table when the real estate dove in 2008 and you could buy it for 15 cents on the dollar. And I still got all of that. I never sold any of it. So that was a home run.

But the first million is the hardest. Yeah, by far. Wow. By far. And these principles, once you got these baby steps dialed in and over time you went, oh, it works.

But you know what? From baby steps, I did not even follow the baby steps millionaires thing. Path. Because we were more intense than the baby steps in terms of we didn't do nothing until we got back up there. And the other thing I didn't do is I did get the house paid off because I don't borrow money. But the 401k hadn't had time to germinate. The Roth IRAs didn't have time to germinate and grow and compound.

And so they weren't that big a part of it. It was just literally make income, spend nothing. Make income, spend nothing until you get the pain far enough in the rearview mirror. And then we can move forward. But that was a whole lot more intense and raw than I asked other people to do to get there. Baby Steps Millionaire is more the formula to get there. Well, thanks for taking us back.

Very interesting. Thank you, James. That's good stuff. This is The Ramsey Show. Do you love a good day, Brandt? Want to see the latest Ramsey Show videos going viral? Check out your favorite moments from the Ramsey Show on YouTube. Go watch and subscribe to the Ramsey Show channel on YouTube.