The Ramsey Show - App - How Do I Pay Off Old Debt? (Hour 1)

Episode Date: November 2, 2020

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Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studios, it's the Dave Ramsey Show, where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. My co-host today on the air, number one best-selling author a couple of times over, Ramsey personality Chris Hogan is with me. We're here to answer your questions about your life and your money. Open phones at 888-825-5225. That's 888-825-5225.

Buddy's with us in Bloomington, Illinois, to start off this hour. Hey, Buddy, how are you? I'm good. Thanks for taking my call. Sure, man. What's up? Oh, well, my wife and I, we are on baby step two. I've actually just really gotten going. We paid off about eight grand since March. Good for you.

And we're kind of looking around at our interest rates right now, and we've had our house for about five or six years, and we've got a 30-year fixed, about 4.375, I believe. I'm wondering if it's a good idea to pause for just a minute to be able to cash flow a 15-year refinance to pay for our closing costs. What do you owe on the house? Oh, about $96,000. You don't have enough equity to just roll your closing costs into the deal? I'm sure that we could.

I said it would be a good idea to... Yeah, it would be smarter than stopping your debt snowball. Okay. All right. And you think it would be a good idea to go ahead and refinance while we're on baby step two? Yeah. The only thing it does is it decreases your monthly cash flow. I mean, your payment, even by going from a 30 to a 15, even though you're dropping 2%, is going to go up.

Right, Chris? Oh, without a shadow of a doubt. So in looking at that, you do want to make sure that you're never refinancing just to refinance. I mean, you've got to make sure that you're having some kind of savings and some kind of rate change there. Have you gotten a quote, buddy, on what a payment would be on a 15? Yeah, we're about we haven't got another hundred dollars in payments um um that's you know another part of the issues yeah it's only a hundred more

dollars but we've also got about a hundred twenty thousand dollars in debt right now yeah well the hundred dollars is not going to kill you and it's a good move to do while these rates are down um and so yeah go ahead and take it to a 15 and go ahead and get that two percent or whatever rate they're quoting you right now which is a you know you're saving two to three percent right now uh it's definitely the time to do it and uh but i wouldn't i wouldn't hit the cash flow you get the the closing costs out of pocket you can throw at that 120 000 in debt and just roll it up into the mortgage you're're still going to recoup either way. It doesn't change your recoup. Your recoup is, you know, about $2,000 a year, about 2% on a $100,000 loan approximately.

So you're going to come out pretty quick. Is there a scenario where you would have someone pause Baby Step 2 just to refinance? I'm sitting here trying to think and I can't think of one. Most of the time when you're doing a refinance, you have room to roll your closing costs in. So it doesn't come up very often. If that were the case, that would mean they had almost no equity. Right. Which would give me pause on other things and cause me to go,

have you got too much house? What's going on here? You took out a HELOC. You know, what's happening? Where did all your equity go? And I want to learn some more about it then, because that would be a fairly unusual scenario. Yes, it would. So you're right, it's a good question to think through, but most of the time we roll it on in, because either way, you're going to pay the money.

You're either going to pay it when you pay off the mortgage, or you're going to pay it when you're out of your pocket right now while you're trying to pay off the $120,000. So it's pays me now, pays me later. You know, you're going to pay off the 120 000 so it's pays me now pays me later you know you're gonna get it either way so that's the thing i i um it sounds like i'm telling you to borrow money but i'm really not because it's rolled in there and you're gonna you're gonna you know your payment is gonna go you're getting rid of 15 years of payments that's right while you're at it so it just makes a ton of sense. All of you out there doing house shopping, remember, number one, you want to make sure that you're out of debt, you've got a fully funded emergency fund, and you've saved for a down payment.

I know rates are low right now, and people are getting house fever, Dave. People are twitching. They're like, Hogan, you don't understand the rates are so low. You're not red. Kohl's Shower helps. Yeah. It doesn't matter what the rates are doing. Don't let the rates determine your plan.

You walk the process and look at it and be clear on that. And also, one more tip. Hogan's tips today. A HELOC is a mortgage, people. Okay? A home equity line of credit. It's a big credit card attached to your house that's using your equity. Okay?

It's the most creative thing the banking industry has done in the last 30 years. But it is a mortgage because there's a deed recorded on your property. So if you have a HELOC, you have a second mortgage. Yeah, it is. Any mortgage that's after the first mortgage is a second one. And the one after that's called a third one. And that's where the name comes from. So it's just, yeah, you still got your butt a mortgage.

You really did. And they'll still take your house if you don't pay it. It's called a foreclosure in either case. So you will learn these things the hard way, like I did, or you will learn them the right way and not do them, like Mr. Hogan is suggesting here. Lily is with us. Lily is in Salt Lake City, Utah. Hi, Lily.

How are you? Hi, I'm doing great. Good. How can we help? I'm just trying to get up to a 15% for retirement savings. And my husband and I run a business, and so, you know, we're just self-employed. I'm not sure. We've got Roth IRAs for both of us, but we're not quite to that 15%. What else can I do? Do I just invest in the stock market,

but then there's no tax benefit in a program like a Roth IRA? So how many team members do you have in your business? How many people, employees? Oh, we've got about 20. Okay. How many have been there more than three of the last five years? Oh, like three. Okay.

Most of them are part-time. Okay. Check in with our, oh, oh, oh, is there anybody full-time that's been there more than three of the last five? Maybe one, one or two. Okay. They kind of fluctuate, but maybe bump up to full-time. I got you.

All right. Well, the thing is this. You can do a SEP, a Simplified Employee Pension Plan, where you can put up to 13.6% of your net profit into your own retirement plan. However, with that, you have to, whatever percentage of your income you have to put in, you have to put in the same percentage of any employees that have been with you more than three of the last five,ent employees, not part-timers. Okay?

So you probably have enough people that qualify for that that that makes that a little bit unappealing. Second option, probably the better option, is called the simple IRA. You can do this in addition to your 401K, and you can do it as a Roth. Now, the simple is you are opening up a 401k for your little company, but it's called a simple IRA. It's very inexpensive. It's like $15 a year administrative fees where I've got like a big company with a thousand people.

I spend $15,000, $20,000 a year in administrative fees on our employees 401k. So this is a simple one. Now, the only downside, the only requirement is that you have to match what they put in up to 3%. And you can set the guideline on who can join your little miniature 401k. And I would recommend you set it if they haven't been with you at least a year, The guideline on who can join your little miniature 401k. And I would recommend you set it if they haven't been with you at least a year, that you don't match them in a company that size. But that'll cost you a little bit out of pocket, but you can also then double fund and really get going.

Check SmartVestor Pros. They can help you do that. It's a game changer to get that going in a small business. That's what we did here for a long time until we no longer met the guidelines for the simple because we got too big. Yeah, so even if you're self-employed, remember, you've got to save for your future. If you don't save, you won't get to spend. Yeah, we run into that with the Entrez leadership team all the time. All the time.

Where they can't transfer, they can't get out of the thing because the only asset they've got is their small business. So it's very important to keep investing. This is the Dave Ramsey Show. Folks, I love telling you about well-made, well-thought-out products. Today, I'm talking about Grip6 belts. I don't know about you, but I'm not a fan of traditional belts. They never fit right, and they're uncomfortable. Grip6 belts are unique. Owner BJ designed a truly modern minimalist belt made of high quality materials with no holes, no flap, and no bulk. And the buckles come in really cool designs and are interchangeable. I personally own these belts in different styles.

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How are you? Doing great, Dave. How are you today? Better than I deserve. What's up? Hey, so I'm coming today to figure out where I need to go in the baby steps. I've already finished baby step one, and I've saved $1,000 in my savings account. But I have $60,000 in debt.

One is my car. One is a motorcycle that's now posted on Craigslist for sale. And then the rest is collections, which is about $30,000 to $40,000. I'm sorry, it's $20,000. Some of the accounts and collections are between five and six years old. Where do those fall in line with the baby steps and what gets paid off first? Gotcha. Jerry, as you talk about this, how much of the $60,000 is the car?

It's about $19,000. Okay. And the motorcycle is how much of the 60 is the car uh it's about 19 000 okay and the motorcycle is how much 18 000 okay and you've already got that listed for sale any other active debts outside of of the stuff that's in collections no nothing else is and i'm a veteran so i've gone to college for free okay on the GI Bill. So I don't have any student loan debts. I don't have any credit card debt because that's gone to collections years ago. And I just finally got a new job working in high-risk security where it's actually finally paying me more than I've ever made in my life. What do you make?

I make $60,000 a year. Good for you. Good for you. And so have you verified these debts that are in collections? Do you have letters from the companies? Are they calling you? They're calling me, yes. Okay. All right. So with this, you know, and dealing with these collectors, I'm sure you've dealt with all different types. You'll have those that try to be your friend, others that will try to strong arm you. You know, the main thing is, is first and foremost is to ask for debt verification. That means they're going back and double checking and understanding exactly and verifying what you know for sure that you owe. And then once you get those in writing, just in looking at those,

it's really a matter of following the debt snowball. You're going to attack it. But here's a little difference in the nuance. They will come to you and they'll start trying to offer you what's called a settlement offer as you speak with them. And they'll start to ask you questions about the money you have. So be very guarded in your answer. Just find out what they're willing to accept. And Dave, we found they're willing to sometimes take pennies on the dollar. Yeah, generally, especially on that old stuff. So to answer your front-end question, Jerry, yeah, sell the motorcycle. Get the car paid off before you worry about it. The stuff that's in collections, don't worry about it.

Once the car is paid off, the motorcycle is gone, then the only thing you've got left are old, bad debts, correct? Correct. Then we're going to list those smallest to largest, and you're going to settle each one of those in a lump sum, no payments. Okay. And so give me an example of one of your debts that is old. I've got an old electricity bill from whenever I lived in, actually,

Wartsville, Tennessee. Okay. And how old is that? It is five years old, and it's about $139. Okay, that one isn't worth screwing with. You'll just get them on the phone, verify the amount, and pay them. Okay, that's probably one of your smallest ones. Then you've got the one that's $5,000.

It's a credit card from 10 years ago or five years ago, right? Yes. Something like that. Now that one, when you get in touch with them, you owed them $4,000. Now years later, they're going to have added collections fees and interest and late charges and a bunch of other things. You can settle that for probably below what the original debt was in a lump sum. So let's use a pretend number. Let's say it was originally $5,000.

You get a hold of them. Now it's $12,000. So I would offer them three or four cash. Yes, sir. And they'll take it. Not immediately. There'll be some wrangling and some wrestling and some so forth, but eventually they will take it.

And get it in writing once you get an acceptance. And do not allow them to remove it directly from your checking account because they lie. They will clean out your checking account and take the improper amount out. It's a really dirty business. Okay. Yeah, Jerry. And I would tell you to get a cashier's check when you get ready to pay it. Make a copy of that check along with the letter of settlement that they've offered you.

Keep that in your file. Or a prepaid debit card that you only use for one transaction and throw it away. And you use that transaction, but you keep a hard copy of the settlement offer of $3,000 and then proof that you sent them the $3,000. Because they lie, they'll come back after you two years from now and say you still owe money. Right, right. And if you don't keep documentation on this like it's a dadgum court case, you're going to regret it.

Thank you for your service, brother. We appreciate it. And, Dave, you know another thing I found with this, people in the military really have to be careful because having collections, it can mess with their security clearance. Yeah. Well, he's no longer in it. Right.

But he's in high-risk security. In the same situation, they may come back on him in that. That's right. Yeah, we see the third largest reason for dishonorable discharge in the military is debt. Third? Money problems. Money problems. Because you lose your security clearance and you lose the

really the confidence of command is what it amounts to. It's a real problem. And we've all heard of the for instance the guys and gals that are in the high risk in the battlefield scenarios how high the suicide rate is.

But the suicide rate is also tied to relational problems back home and money problems back home. Right. And mix that with battle, and you have a really dangerous psychological mix. That's terrible. So we work with these guys all over the world, and the guys in command, gals in command, know that if they can get their team, whether it's military or otherwise, any team, thinking about the mission rather than their money problems, it's less dangerous for everyone

involved. It changes. You're driving a forklift thinking about your problems with your money. It's dangerous. It really is. And so if you're a company out there and you go, boy, you're just kind of looking and realizing your team is struggling, SmartDollar is the program that we have that will walk your team through the process. Just go to smartdollar.com.

It's lessons on there that are taught by Dave, myself, and Rachel. Your team will be able to focus and be more productive on their job by you giving them this kind of help. Again, that's smartdollar.com. Our question of the day comes from blinds.com. They have a 100% satisfaction guarantee. It means even if you mismeasure or you pick the wrong color, they'll remake your window blinds for free. Free samples, free shipping, new promos all the time. Always use the magic word, Ramsey.

Get you a better deal. All right, today's question comes from Daryl in Texas. He says, I'm a federal employee with about $140,000 in a traditional IRA through TSP, the Thrift Savings Plan. I hear you say start up a Roth account instead of investing in deferred taxes down the road. Estimating 10 years to retirement, do I start a new Roth and risk the compound interest lost with future contributions in my existing account? Will that now be a separate account for me? That's a mathematical myth. That's right.

It is. Listen, when you hear Roth, I want you to get tingly, buddy. The bottom line is this. It's after-tax dollars. So the government's not going to touch it anymore. You're not going to mess with it. It's going to grow for you and no more taxes. What you have down in the traditional, you're going to pay taxes on that later.

So opening up another account, absolutely I would for the Roth opportunity. Darrell, where you're missing on the math is you thought that you're missing out on compound interest. You're not. Okay? If you add $6,000 to your existing TSP, that $6,000 is going to compound at whatever rate that, let's say it's doing 10%, okay? That $6,000 is going to compound at 10%, regardless of whether it's in the TSP

or whether you put the $6,000 in a Roth at 10% in a good mutual fund. Both of them are going to be 10%, 12%, whatever it is. Both of them are going to compound. Both of those $6,000 are going to compound at exactly the same rate. Attaching your new $6,000 to your old account does not make it compound faster. It's still just $6,000, and it's still just making 10%. In either case, that $6,000 made $600 in both cases. So having a separate account does not start compound interest over.

The existing account is going to compound and the new account is going to compound based on how they're invested. So Roth, Roth, Roth, Roth, Roth, Roth, Roth, Roth, Roth, Roth, Roth, Roth, Roth, tingly. Remember, Chris Hogan's voice saying to tingle. If you hear Chris Hogan saying tingly, you got the right idea.

This is the Dave Ramsey personality is my co-host today here on the air Open phones at 888-825-5225. I am always happy the other side of Halloween, although it starts pretty quick every year that Christmas kicks in. But I'm just a Christmas junkie. I like giving away money. We like giving away money around here. Oh, yeah, yeah. I'm good at giving your money away, Dave.

It's like a spiritual gift for some of you people. So our Ramsey Christmas giveaway daily, you can enter to win it daily to increase your chances of winning. We're giving away $500 each week between now and Christmas and a grand prize, if you were in the drawing, of $5,000. Go to DaveRamsey.com slash giveaway. And we're celebrating. We like to celebrate Christmas. We always tell people live like no one else. So later you can live and give like no one else.

We do it around here. While you're there, doing your daily sign up for the $500 a week being given away. The $5,000 grand prize. Check out the famous $10 gift sale. That means that the books, almost all of our books are $10 this year, bestsellers, and that includes Chris Hogan's Everyday Millionaires for $10 or Retire Inspired for $10. You could get a lot of Chris for $20. Just like that.

I'm cheap. Total Money Makeover is in there of course and it's it continues to be a bestseller almost every week uh pretty much stays on the bestseller list and that's because of you folks thank you for that and um you can so enter to win some cash and save some serious money do a little shopping while you're there never leave your recliner at davramsey.com slash giveaway now remember five hundred dollars a, every week between now and Christmas, and $5,000 grand prize will be in the drawing for it by going to DaveRamsey.com slash giveaway and register once a day.

Registering three times a day will not increase your chances, so just lighting up our servers will not help you. We've got a little algorithm that catches you, and once a day is all that goes in a hat. It's that simple. Lucille is with us in Cincinnati. Hi, Lucille. How are you?

Hi, Dave. I'm well. Thanks for taking my call. Sure, what's up? Well, my husband and I were so financially set, um, to the point where my husband retired a couple of years ago and I was following in his footsteps and I left my corporate job about, um, a year ago and then COVID hit, uh, everybody's, the job that I was in, um, which was full time, it went down to part time and I'm still currently in that job and it doesn't look like things are going to change much from there. So what I'm looking for is some guidance and advice is to, health insurance. Um, and we're killing our budget, um, by doing the, uh, um, the financial planning with, um, my old employer where I had great health insurance, dental and vision coverage.

Um, but I'm doing Cobra, which of course is killing our budget so i'm looking for any recommendations you may have um that would hopefully not be as bad um and may help to uh save our budget at this point most anything's better than cobra um if you can find it and if you're insurable uh cobra is a uberexpensive way to handle the issue. Have you guys got money saved? Are you in debt? How's your financial situation, not counting this problem? Well, we're doing very good.

We're still in our bubble, able to budget properly. How much is in your emergency fund? We've got about $15,000 in our emergency fund. Okay. Go to DaveRamsey.com and click on Health Insurance ELP and find a broker that represents all the different health companies in your area and have them shop among all the different companies and get you a deal. The reason I was asking about your stuff is if you have that much of an emergency fund, it would be wise to look at a very high-deductible HSA plan.

And, of course, high-deductible means low premium, right? Right. And so I don't mind if you take a $5,000 or even a $10,000 risk with your deductible. Those aren't the things that kill you with health insurance. It's the $750,000 quadruple bypass and they find cancer thing you know i mean those big ones are the ones that kill you so i'm not worried about the ten thousand dollar when you've got the money so cover the take the first dollar risk they call it and increase your deductible do that with an HSA if you want to, and let your emergency fund cover that, and that'll

help you get the lower premiums. And shopping among different companies with a broker is the way to go. It really is, because they have knowledge about things that are out there that you don't. Even if you've been declined coverage, or even with life insurance, if you've been declined before, a broker knows where you can go. And it's a great opportunity because it's not something you can go without. It's just as Dave was talking to, there's too much risk involved with health insurance and definitely with life insurance. So definitely go to DaveRamsey.com, connect with a broker, talk it through. And you know, another thing, Dave, for her is she could

look for getting another job. Yeah, of course. I mean, the one she's got is not working. It ain't working. I mean, they went or took her from full-time to part-time. Well, guess what? Your needs haven't changed, so you may have to change location. Yeah, and when you do, there might be an insurance program there. That's right. So almost always, but not always these days, through your employer, even if you're paying for it, it's cheaper.

But always, and almost always, COBRA is the most expensive. Oh, ridiculous. But if you don't have a pre-existing health condition and you leave your job, go shop the Blue Cross Blue Shields of the world. Go shop with a broker and, you know, get out there and try to find a different policy, an individual policy, because almost always you can beat Cobra. Yeah. But one of the reasons is the company plans are jacked up.

They've got, it's like a fully loaded bentley and you just took over the payments you know and uh most of those policy most if it was a big company a lot of the health offerings are just not realistic for those of us out in the real world no and this is around the time that open enrollment is going to happen yeah and people don't put your head in the sand if you have a spouse that's working at another location you all need to compare and understand what you're dealing with. And oftentimes you can have a lot of questions. What might appear cheaper on this end might have a gotcha on the other side if you're having a baby or a major health crisis. So walk through, understand the benefits, and go to DaveRamsey.com.

You can connect with a health insurance ELP that can help you start to understand the differences. I was just covering our options in a staff meeting this morning because our open enrollment started today for our team. And so it's just the HSA, about 70%, 80% of our team is on HSA because they have their emergency fund. They take the higher deductible and the lower premium and put less money in the insurance company's pocket, and you're taking a little bit of the upfront risk on stuff so you get nickel and dimed out of your pocket but you also saved uh save dollars and and ten dollar bills off the dadgum premium that's right you do that phil is with us phil's in chicago hi phil how are you i'm doing all right mr ramsay mr hogan how are you guys doing great man how can we help so ironically the first part of my question was answered i've got a

403b and that like was kind of meant to me as the only option i had however though then i looked in and there's a raw 403b so i've got a lump sum of money in my 403b and now i'm wondering uh should i just stop 403b and just start contributing a brand-new account, Roth 403B? And I think, like you just had with the blinds.com question, I just stop it and do nothing but the Roth 403B, correct? Correct. And if you roll the traditional into a Roth at some point, it's going to activate taxes on that entire amount. Yeah, that was the next question.

Do I just leave that original 403B, just grow by itself as it is? Yes, until you've got the money to pay the taxes, until you've got some extra money laying around. How much is that balance? About $62,000. Okay, so it's going to cost you $15,000, $20,000 when you do it, so you've got to have that extra money laying around. All right, so leave that and then just start a brand new Roth 403B.

That's what I would do. Absolutely, Phil. Listen, Phil was listening, Dave. I love that. And so hear us. Just because you start a Roth, number one, Phil went to do some research of his benefits and discovered, lo and behold, there's a Roth option. When you open a Roth, you don't lose the other account.

It's going to continue to grow. So now you just got two. That's a good thing. Yeah, most people use the guy in the cube next to them to pick their 401k options. I did that years ago. By the way, he ain't qualified. This is the Dave Ramsey Show. Thank you. Chris Hogan Ramsey, personality, is my co-host today. Open phones at 888-825-5225. Jackie's with us in Richmond, Virginia. Hi, Jackie. How are you?

I'm good, thank you. Thanks, gentlemen, for taking my call. Sure. What's up? My husband and I have a rental property that we're interested in selling, and we had a real estate agent come over and sit down and go over a few numbers with us. And, you know know one of our concerns was capital gains and he said a way to avoid paying the most in capital gains would be to

take out a home equity line of credit before we sold the rental property do not use this real estate agent he does not know what he's talking about that is incorrect the amount of the amount of money loaned on a property has absolutely nothing to do with calculating the capital gain. Zero. Well, he told us if we had to pay off more in a home equity loan, that the more we had to pay off, that would offset the capital gains. He's an idiot. Okay? It absolutely is not true.

It is not true. It is not true. Your gain is your adjusted basis after depreciation subtracted from what the house sells for, regardless of the mortgage. You could have a $200,000 mortgage or a $2 mortgage or no mortgage, and your gain is exactly the same. Taking out a home equity loan does not affect the calculation of capital gains whatsoever. Absolutely wrong. I'm not any good at taxes, and I know that one. Jackie, how long have you all owned this property? Since 2004.

So what did you buy it for? We bought it for $85, and we took out a second to make some improvements. So what is the adjusted basis? Have you been depreciating it? Do you know? We have been depreciating it, but I wouldn't know those numbers off the top of my head. You pull out your last tax return or call your tax person, and they can tell you what your adjusted basis is.

I'll give you a guess that it's probably about half that. It's probably about $40, and what would it sell for? $180,000. Okay. And so you're going to have $140,000 capital gain, well, minus the expenses of selling it. And the other thing that would be added on is if you did capital improvements that you did not expense. If you did a large expensive capital improvement that you don't expense, it's added to your adjusted basis and thereby would lower it but those are all things that are done anyway and nothing to do with the home equity loan zero zero zero zero zero zero so hey we weeded one out we got rid of a bad one before you used him there you go i hope it's not jackie it's not a family member is it no okay good just checking because you're about to have an awkward conversation.

Well, just, no, you don't have to have an awkward conversation. Well, you know what I mean, straight up. I mean, just get somebody that's telling you something that's incorrect. Yeah, go to DaveRamsey.com, click on ELP for real estate, and you can find somebody that's a high-producing real estate agent. And real estate agents really are not tax specialists by any stretch of the imagination, but most of them know that calculation. That's a pretty simple calculation.

So, yeah, you're – all right, Andrew's with us. Andrew's in Kansas City. Hi, Andrew. How are you? I'm doing fine. How about yourself, gentlemen? Great, man. How can we help?

I have a question on buying a family home. I wrote some things down, so if I sound a little bit robotic, I'm sorry about that. I'm just reading from my papers. But I'm 36 years old, married, a combined income of a little over 80k, debt-free as of a year ago, and we are in baby step 3B. And um i'm interested in buying a family home for my mom from your mom yes sir okay sir um she's asking 85 000 for it uh we've yet to get an appraisal but we plan on doing that soon uh we're about a mile from downtown kcmo and the market has grown tremendously over the years uh what we can afford is 150 000 hoping the house will appraise for around that so we can get enough to put some work into it. We had an inspection done and some foundation

issues. One of the structural beams need to be replaced, but we've received a quote of $8,000 to get that replaced. And some of the sister joists. We'd also like to get an opinion from somebody who specializes in just the mortar foundation because the house is 120 years old um we you know we want to make sure it's structurally sound your grandma have this before your mama yes sir how long has it been the family uh well i would be third generation okay so it's your grandparents and then your moms and then you okay yeah all right

yes because you're working awfully hard to buy a torn up house uh well yeah so my mom had some some work done to it a while ago and it was basically he did some stuff on inside so 120 year old house with foundation problems definition torn up house okay i mean it's not it's not saying don't buy it but you're just you just emotionally head over heels in love with this thing and i was trying to figure out why i get it it's probably got a lot of character there's some cool properties that age in the kcmo area i've been spent a lot of time up there and i love kansas city so uh i think you're doing the right thing to get it all lined out um is this your first house

this is going to be our first house. And Dave, I know you said, you know, trying to throw out the emotional attachment to it, but, you know, we felt like God was calling us back to the neighborhood for ministry. And so everything lined up perfectly. My cousin was living there. She moved out. Yeah. At least that our apartment was was you know how long have you been married uh we are going we're four years going on five next year okay that's good okay because the first year of marriage you don't want to renovate 120 000 120 year old house that's a good way to get divorced yes yeah i hear that does your wife like this house as much as well not as much as you but does she like it oh yeah yeah i mean she definitely does and she sees the potential uh we still have the porch attached to the house from you know when

it was originally built so uh we love the area we live we live we grew up on the west side so that's where i think you go forward you're just gonna have to continue to do what you're doing and just take it a step further and lots and lots and lots of detail on inspections and knowing exactly what you're getting into i don't think you're stealing this house at 85 i mean i don't think it's like the best buy ever that kind of a thing because you're probably gonna put a bunch of money in this puppy yeah for sure and i i don't think they'll do like a regular loan on it but they will do a constructional loan and that will help us get some of that stuff paid for but and then

you can roll it into a permanent and that'll be fine that's a fine way to do it you know get all of that set up and get all your inspections done and go through this with a fine tooth comb you know the saying they don't make them like they used to the rest of that sentence is thank god okay i used to renovate properties and buy properties that were turn of the century in the historic areas of nashville when i was doing real estate as for a living and i gotta tell you man wiring and plumbing and twisted floors and bad leaky roofs and and the foundation uh the engineering that was used to build those foundations. A lot of them were built during a building boom. They just slapped them together.

And, man, it's more crap than it is really romantic when you get really down into it. Some really nice woodwork, some cool effects when you're done, but, good Lord, it's a lot of work. Would you recommend a second home inspection on this from an independent? I would recommend a lot of inspections by a lot of different people okay um you know like i don't know how the wiring is in this thing i've crawled around the attics of those things that old knob and tube wiring getting shocked and uh and the stinking plumbing man it's stopped up and it's all uh you know it's it's not even copper much less plastic yeah you know it's galvanizing it's all even copper, much less plastic. Yeah. You know, it's galvanized. It's all, you know, pipe an inch around, and then you open it up, and the hole in it's an eighth of an inch because it's filled up with, you know, corrosion over the years.

And you just, the septic system, I mean, or the, actually, in this case, it would probably be sewer going in the streets. Yeah. Tree roots in it. I mean, you get everything, anything you can freaking dream up. There's been 120 years where the opportunity is for to go wrong and some of it has can you tell i like historic property i do but here's my other question today is andrew locking himself in on this deal no i think he's he's you know he he has valid emotional and spiritual reasons right for looking at it and he's he's not been married 20

minutes they're going in this together but just lay it out and have the expectation that you are buying a freaking project right because you are yeah this is not going to be fixed in one year one year from now you're still going to be working on it and that's what that's the reality and that's okay as long as you know what you're getting into. Otherwise, you're signing up for the movie The Money Pit. Oh. And, you know, that's what you're signing up for if you don't watch. I bought one for $13,000, put $78,000 in it. You know, that gives you an idea.

And that was back in 83. Wasn't a deal anymore. Add a zero to each of those and you'd have current day economics. This is the Dave Ramsey Show. Have a friend or family member that needs a daily dose of Ramsey advice in their life? Let them know about the Ramsey Call of the Day podcast. It's a quick hit of advice about life and money in under 10 minutes. Check out the Ramsey Call of the Day podcast wherever you listen to podcasts.