The Ramsey Show - App - How Should We Allocate a $20,000 Early Inheritance Gift? (Hour 1)

Episode Date: March 5, 2021

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Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studios, 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. I'm Dave Ramsey, your host. Chris Hogan, Ramsey personality, number one best-selling author, is my co-host today. Open phones at 888-825-5225 that's 888-825-5225 mitch in rockford illinois starts off this hour hi mitch welcome to the dave ramsey show hey dave and chris great to be here thanks man good to have you how can we help

well um my wife and I are really excited. We just hit baby steps four, five, and six this month. So we're really happy about that, really thankful for your wisdom. We actually have kind of a personal goal. We want to pay off our mortgage in a couple of years. So by 2023, we want to be fully debt-free. Cool. The interesting thing is this month, actually last

week, we actually got a surprise gift. It's kind of an early inheritance money from our grandparents. And we're kind of just wondering, it's $20,000. We have $63,000 left on our mortgage. And we're kind of wondering, what do you think we should use it for? Should we put the whole lump sum towards the house and pay off our debt sooner? Or we have kind of an older car. It's got about 205,000 miles on it. It's in the shop a lot more than we would like, but I think we can make it last another year or two. Also, my wife really wants to remodel our kitchen on the cheap. It would be about $2,000 or $3,000. So I kind of see we either put it towards the house fully or maybe put it towards a cheaper car and a kitchen remodel and then use whatever's left over on the house as two options or maybe a third option I'm not thinking about.

So just figured I'd give you a call. Love the show. Long-time listener, and see if you had any. Yeah. All of those fit within the baby steps. You know, you can, in baby steps four, five, and six is when you would upgrade a car if you want, when you could do a little small remodel if you want. And obviously anything you can find extra you throw on the house.

And sometimes people are more hardcore than others about getting the house paid off. So how expensive a car are you talking about sure um it would it would just be a used car maybe spend eight thousand on it something like that our car is worth about two what's your household income just um we're about net. So $10,000 to the kitchen and the car and $10,000 on the house? Is that one plan, right? Well, it would probably only take about $3,000 for the kitchen. We wouldn't do a four-way model. Well, you said two, and you said eight on the car.

That's $10,000. Oh, yeah, yeah, yeah. You're right. Yep. Yeah. You know, and looking at this, Mitch, I'm going to tell you something that Dave taught me many years ago, and it's kind of the pie graph approach, which is what he was just kind of walking you through. Whenever you have money coming in that wasn't expected or it's a bonus, you want to look at it and say, what can I use, right?

And then what do I put toward my future? So in looking at this, if you did eight on the car and you did three on the kitchen remodel, that's still going to leave you, right, $9,000 that you could throw at the mortgage. Now, you look at that and you think you've hit three areas and made progress instead of just picking one. Right. Yeah, that makes sense. That's really helpful. Here's the danger. You've got to set a serious dollar amount on the car, right?

So if you're looking to spend eight, you're buying a car for five to six grand because you've got tax tags and title. That's first. Number two, this kitchen remodel. You and your wife need to pinky swear that we're only spending three. Because that'll roll. We don't need any uh bracket creep here yeah you may need to talk to her more than me but scope creep yeah well what i might do is um uh well you know you just need to budget out all three of them and you need to have a real adult

conversation about we're not doing this um or we can do nothing now and put it all on the mortgage, and, you know, and then we'll just, as soon as this mortgage gets done, then we'll do the remodel. There's nothing wrong with that idea either, by the way. There's, so. Sure. You know, the $10,000 throws your mortgage repayment off by about a year, probably. You're debt-free on the mortgage a year later if you do the car in the kitchen right right that's kind of what we were projecting yeah that's what i would guess with your income so you know none of these are dumb but i think chris has hit the achilles heel of the discussion and it is a scope creep on the car and on the

kitchen and because a three thousand dollar kitchen remodel can be six and about an eye blink oh yes and a car purchase uh oh it's just a little bit more and then all of a sudden you got nothing going towards the mortgage now that i would not recommend right i'm going to put you in the hot seat you're in mitch's position this twenty thousand came in what does dave ramsey do when we were at that stage it would have been 100 on the mortgage i know it that's exactly me too because because we were just that stage, it would have been 100% on the mortgage. I know it. That's exactly it. Me too. Because we were just more hardcore. We so desperately wanted to be rid of any debt.

We didn't want to be slave to anyone anymore but Jesus. We were so over these freaking banks. I hated them. I still hate them. I mean, to this day, I'm still pissed. So it was that level of ferociousness that would have driven that on through. But again, that's an honest answer, an authentic answer of what I would have done and probably what I would do today. Because I know the joy of being debt-free more than I know the joy of remodeling a kitchen or buying a car.

And I'm a car guy. You know, I love my cars. But the – and again, but that's – but I'm not going to impugn that upon her or him. Right. They're fitting within the guidelines that we use, and our guidelines are, hey, this is the shortest distance between where you are and wealthy. Right. And sometimes folks need that, a little relief in the car front. They need a little relief in the kitchen.

Yeah, they do. In order to get the energy to plow on through the finish line. Right. Now, let me ask you this. Do you give more weight to the person whose side of the family had the loss? Meaning, if it was their wife, you never do. No. Okay.

I always wondered that. Do you give a little bit more credence to where the inheritance came from no okay no if it's going to come into our house it's our hours it's our money and so if i get an inheritance it's me and sharon make the decision together sharon gets an inheritance we make the decision together and get a gift from a family member we make the decision together uh if we get a found money which you know honestly sharon has not worked outside the home and earned any income personally for 35 years so you know we have had an income for 35 years that i earned that's right so but so we've had to be real careful about oh i make all dadgum money so i'll do what i want you know i could go there real easy yeah uh and be a little bit justified except that that's the wrong way to live a marriage it's the wrong way to live a life it's the wrong way to build wealth

it's the wrong way to view it once it comes into my house it's ours it's ours that's good and that's and again i think that's important for people out there to really begin to think and go, yeah, it's us. Don't have that pronoun problem. It's dangerous. Yeah. I and your. Nah, speak French. Oui.

Oui, oui. Oui, oui. That's it. Oh, I love it. Chris Hogan, Ramsey personality, number one bestselling author of the book Everyday Millionaires. If you don't have a copy of it, you probably ought to pick one up. It'll change your life. This is The Ramsey Show. If current times have shown us anything, it's that the least expected events can and will happen,

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Mar is in Cleveland, Ohio. Hey, Mar, how are you? Hi, Dave. Hi, Chris. How is she doing? Great, man. What's up? Hey, so my wife and I are on Baby Step 2.

We have 15,000 left on our car. So my question is, after we get our emergency fund done, our car should be paid off this year. After we get our emergency fund done, should we continue to follow up on our baby steps and not start my son's college fund and just get off our house? We owe $110,000. Last year, I made over $90,000 gross income.

$68,000 was bought home. So I was thinking if we were to pay $2,000 a month extra to our principal, which would be $24,000 a year, our house can be paid off in three and a half years. What do you guys think about that? Well, when you finish baby step three and you've got your emergency fund in place and you're debt free, then you move on to four, five, and six. That's right. And they're simultaneous.

That's exactly right. And so, Mar, you will have up to then done things one at a time. But getting to that fully funded emergency fund, doing four, five, and six, you're going to be investing 15%, saving some for college, and paying extra to the house. Now, if that means instead of $2,000, if that means it's $1,700, then that's fine. Yeah. But here's what you're not counting, Mar. Your income should be increasing.

So that in itself should give you the opportunity to pay off that house faster, buddy. How old are you? I'm 31, and my wife is 29. And how old are your kids? My son, we only have one, and he's three years old. Okay. You sound focused, man. And I'm going to tell you this.

You will find the extra money to pay off that house. I have no doubt in my mind. But at the same time, you're making progress in these other areas. So don't avoid doing one thing so you can focus all in another. Make progress in it all. So I'm okay. Baby step five, save for kids college. We're okay if you're doing anything there.

I just want you to start building that muscle. If you just set up an account to do $100 a month, $50 a month, whatever, it doesn't have to be a lot, but let's get started on it to kind of get the rhythm in your brain and in your household and in your spirit that we're saving for college, we're saving for college, we're saving for college, and then everything else we're going to start dumping on six. We're going to get the house paid off as quickly as we can. Now, you said you brought home $58 out of $90.

Where's all that money going? You're not having taxes. 68. I brought home 68. Oh, 68. Yeah. Okay. That's much better.

That's much closer. All right. Good. I agree with Chris. I think you're doing great. I do, too. I really do. And I think, you know, being laser focused on that.

But, Dave, people oftentimes don't account for either income increasing or finding other ways to bring in extra money. You can still make progress. Well, what ends up happening, for real, is you do get raises periodically. You get bonuses. And then other money is just found money comes across our lives. It always does in our lives. I mean, you might get a little small inheritance, a little $5,000 inheritance or something.

You might get a $20,000 or something. A bonus. You may find something. You may find a gold rock in your backyard and sell it. I don't know. I mean, little stuff happens. And as long as all the little stuff above 15% going to retirement, above whatever you're doing for college is all going on six, then you accelerate the process. And I would rather you do four and five and paying off your home tech four years or four and a half years instead of three and a half years and not be doing any four and five.

Gotcha. Yeah. Yeah. And that's the clarification he's looking for. Good job, man. Well done. Stella is in Dallas. Hey, Stella, how are you?

Just fine. Thank you. Thanks for taking my call today. Sure, what's up? I'm on baby step number seven. I'm single, 45 years old. I maximize my 401k and Roth IRA contributions annually. Great.

When should I make a conversion from my 401k at work to Roth 401k? How old are you again? I'm trying to release a focus on my saving 45 i'm 45 now yes sir now when you when you uh when you flip how much is in your 401k today uh about 840 000 oh way to go st Stella. Millionaire Stella. Stella's on the ball. All right. Now, wait a minute.

I got to back up then because you're going to create taxes on whatever you roll, right? Do you have other cash? I'm going to do step seven. Do you have other? I know, but do you have other cash? I do. How much? I have about $100,000 on my savings account. Okay.

So I don't want to flip it all, and you have to use some of that money, cashing it out early to pay taxes, and that's what would happen. Correct. Because you're going to have a couple hundred thousand in taxes. So I'm going to move as much as I can pay the taxes without touching it. So let's call that $400,000, and and use the $100,000 to pay your taxes or whatever it works out, right? Something like that.

My tax record is about 32% this last year. Okay. Then you can back into it and say, based on that, I've got – and you've got $100,000, but you have an emergency fund in addition to that $100,000? No. Okay. Well, I have a non-retirement investment account that I could liquidate. Oh, how much is that?

About $800,000. Okay, then let's do it all now. And let's use some of your cash and some of your non-retirement investments to pay the taxes. Because effectively what that does, mathematically, is that is as if you have just invested another $250,000 into your Roth IRA. Yep. Because the Roth's going to grow 100% tax-free from here on out. See, so you freed all of that up. Now, I'm assuming, since you're such a freaking rock star here,

that this money is invested in good mutual funds and you're getting good rates of return, right? Yes, sir. You are killing it. Yes, sir. Stella, you're on the ball. What do you make? Thank you. How much do you make? Thank you.

How much do you make? Oh, I'm sorry. About $200,000. How did you learn how to do all this? You are really good. I am focused but not finished, sir. Stella, you're just making me feel good today. I'm telling you.

He just turned into one big goose bump over here. Seriously, I really did. No, but seriously, where did you learn? Did your parents teach you, or are you self-taught? Pretty much self-taught, yes. Are you really? Well, you have done a wonderful, wonderful job. You really have.

45 years old, $2 million. Yeah, and this $100,000 you have in your savings, Stella, leave $30,000 in there as your emergency fund. Yeah. Just so you keep that cushion. But, girl, I'm proud of you. I'm going to tell you. And you know what? That high-definition dream you've been chasing, I hope you're living.

I hope you're having fun, knowing that you're on the path to be a blessing to people and giving, but also living and enjoying some stuff. Way to go. Yes. Well done. Wow. Well done. Wow. Rockstar. Trevor's in Cleveland, Ohio. Hey, Trevor, how are you?

Good, Dave. Chris, thank you guys for taking my call. Sure. How can we help? Yeah, Dave, I've got a business started here, and my lease payment's coming up on my truck for my landscaping business, and I was really honestly not sure where I want to go this summer when the leasing payment comes up, whether I want to just buy the truck outright and keep it with my business, or maybe try and find something else.

I'm kind of in a predicament there, so I was going to see if you can kind of help me out with that. Well, just pretend like you didn't own it. Would you buy it? Yes. Okay. And would you buy it for that price um not knowing what the price is kind of there's a stated price on a closed-end lease at the end

of the lease that you can buy it for right yeah i would i would probably end up buying it but i also have the alternative of maybe going and getting something cheaper. I know. And I'm really not sure. I'm on about baby step number three. So what is the truck? The trick is, what's the buyout number? And then look the truck up and see what the truck is worth. Don't pay more for it than it's worth just because you're leasing it. But if you can buy it $2,000 under what it's worth and you can pay cash for it, then let's go ahead and buy it if it fits in your plan.

And if you want to move cheaper, then just turn it back in. Give them the keys. Go. Bye-bye. Just don't go higher. Yeah. There's no reason to go up. And don't do another lease.

For God's sake. Yeah. You've earned your way out of this thing, so quit it. Stop that. Fleeces are a bad idea. This is the Ramsey Personality, is my co-host today. Open phones at 888-825-5225. Julia is in Gaithersburg, Maryland.

Hi, Julia. How are you? Hi, how are you? Thank you so much for taking my call. Sure. What's up? So I'm an 18-year-old. I'm a first-year college student.

I have a $14,000 car loan. I only got it because I needed it for school. I got it right before the pandemic hit and for work as well. I'm able to pay for it. So the loan is, me and my mom co-signed it. But I pay for it. But my question is, I just finished baby step number one, which is, you know, save up that $1,000. I'm trying to get out of baby step number two, which is pay off all my debt, which as of right now is just my car loan.

But my main question is, my mom is in a lot of debt as well. How can I help her get out of her debt? But not only help her get out of debt, but how can I help her listen to your steps so that we can become financially free together, you know, work together. Well, I love your heart.

I tell you, I love your heart. I really do. And, you know, unfortunately, what she's done is she shared her taste of debt with you. And, you know, I'm going to tell you, you know, one of the strongest things you could do, Julia, would be to get intentional and look at getting this car sold and get it out of your life and then you saving up and paying cash for a car and talking to your mom about how you know that debt's not helping and i think you living it is one of going to be one of the best ways um but you know i mean you can talk with her and you can plant try to plant the seed but you can't you can't make her and dave and i have found this out after many many years of until someone decides

they're ready they're not ready yeah and so yeah you're living it in front of her and you've got the powdered butt syndrome once someone's powdered your butt they don't care about what your opinion is about about money sex stuff like that so mom doesn't you know she's not going to listen to you that much i mean you can just the only thing you can always do with anybody is not to wag your finger at them and say you know you need to listen this podcast because you're stupid with money because you're you could do better mom you could do and don't wag your finger that way instead just talk about yourself because your story is not debatable. You know, I feel so much better now that I'm on a plan.

I got a budget. I feel so much better now that I'm getting this car paid off or getting rid of this car. I feel so much better now that, and man, if I could ever help you, I mean, you just, if you want me to share with you what I'm doing, that's fine.

And so, you ever had a friend, Julia, that lost a bunch of weight? Yeah. Yes, I have. Yeah. They inspire Yes, they have. They inspire you, don't they? Right. Without coming over to you and saying, you know, you need to take better care of yourself.

They just take better care of themselves right in front of you. Yeah. And then you go, well, how'd you do that? That's right. What'd you do? You know, I've had a lot of those discussions. I've lost 37 pounds since the pandemic. And so I needed to because i was just straight up fat and so uh but everybody's all my buddies are like what you do you know it's the same thing and i didn't go around and say you know you need to be

doing this and didn't look at my buddy and go hey you got one of those things hanging on the front of you like i do so i didn't do that i didn't shame anybody else right i just said you know that belly there's you know i didn't i didn't talk about his belly i didn't i didn't shame anybody else, right? I just said, you know, that belly there, you know, I didn't talk about his belly. I didn't pick on him, you know. But I just, you know, my stuff, my clothes just fit again, you know, that kind of stuff. Well, and you're right, Dave. Her doing it herself, and I'm going to tell you, at 18 years old. That's impressive.

For her to have the presence of mind to reach out to call in is a big deal. I wouldn't think him like that at 18 years old. And so, you know, Julia, live the principles, young lady. Live them. And be intentional for yourself. And please, please, please, don't take on student loan debt. You said you've got that car loan. I want you to sell that, get that out of your life. Go to school part-time if you have to while you work. But avoid student loan debt. Don't add it to your plate. Yeah. Well done. Michael is with us. Michael's in Alexandria, Virginia.

Hey, Michael, how are you? Good. How are you doing, guys? So my wife and I are planning on paying off our house in about a year. Great. Yeah, I'm looking ahead, and I'm wondering, after we do that, and we put the 15% into retirement, what I'm looking to do is what should we do with the additional money we'll have to invest? Would you suggest maxing out all retirement avenues possible prior to like a regular brokerage?

What would you use a brokerage account for? I'm thinking more of just like low-cost index funds that, you know, have a little more accessibility. Okay. I mean, you can do that. But if you get with a SmartVestor Pro, they can help you lay that out. But, yeah, you max out all the retirement. All of it. All of it. And then if you want to just open some – I do that.

I've got some S&P 500 funds that are no-loads. And I store up money in that until I get ready to buy something else with it. Usually a piece of real estate is what I'll use it for because it's the two things I invest in. But that's the beauty of it. The other thing you'll find is if you've got that sitting there and you said it's accessible, that's a good word, liquid, then if something comes along and you feel prompted by God to be really generous to something, and you may write some sizable checks out of that investment account just to be a blessing at some point, too. That's the other thing we have used ours for.

Absolutely. And, Michael, I tell you, I'm going to ask to get your info. I'm going to send you my book, Everyday Millionaires. Kelly will get your information and send that to you because also in that book I talk about the bridge account. And so this is where you would start to use in gross stock mutual funds outside of retirement to allow you to kind of continue to save as well yeah and you got what you're doing is building up money that you can utilize before 59 and a half that's exactly right you're bridging from where you are now until 59 and a half because you can't touch the retirement stuff without

penalties prior to that so that's a that's a good suggestion k Kent is with us in Kansas City. Hey, Kent, welcome to the Dave Ramsey Show. Hi, Dave. If I could provide you with some dollar figures, could you help me estimate the value of my small business I'm about ready to sell? I'll give it a shot. It's a small service business. I'm the boss. I'm the only employee. I drive around and distribute printed materials like magazines, brochures, and I put on about $23,000 to $24,000 a year. So gas expenses are my main expense. The average, I started it in 2013, and so the average total amount of income for the past seven years is about $41,000.

So it's a low of about $38,500 to a high of about $49,500. Now, that's the gross revenue. That's not before expenses. That is before expenses, not after. Yeah, that's the gross total revenue, not with it. Now, when I figure it with the tax stuff, it's different from what all the deductions, and they have depreciation, and they take off for my home office use, and for using my garage as a business purpose and stuff like that.

So then what I figure for my gas expenses and stuff like that, it's a little bit different, but do you need to have what the total average... Yeah, what was your taxable income? That averaged past six, seven years, about $18,000. Yeah, I was going to say $20,000. That was going to be my guess okay cool well here's the thing some of those categories are what we call ghost categories for purposes of valuation and some of our real expenses that the tax uh thing is just allowing you to admit now

your home office is a ghost expense because you're you know you you're not really uh you don't own that as an office it's just you're taking the depreciation on that which is going to cause a problem when you sell the house by the way but um anyway the uh so some of those things are real expenses and some of them aren't all of them are not ghost. So it sounds like you have an income of around $30,000. And so there's two ways to look at this. Number one, most of the time on a service business, we say, all right, do you have a series of clients? Is it a client list? Yeah, the customer base, that's what generates.

That's the value. That's where the value is. Yeah. Okay. That's what I thought. So I think you could probably sell that for about one time, roughly one time. If you could sell it for $50,000, I'd take it. Because generally speaking, someone else can just go generate their own customers, and that's what you're competing with.

But generally speaking, you take the net profit of a business times four, but that would be after you paid all the employees, and we've not paid you out of this yet to do the work. By the time we pay you, there's not going to be money left. So I'm probably just going to try to sell the list as a value rather than the business as a value. 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, 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 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. 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 $85,000, 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.

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 $40,000. 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 not. You don't have to have an awkward conversation. Well, you know what I mean? Straight up.

I mean, just get somebody that's that's telling you something that's incorrect yeah go to davramsey.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 um that's a pretty simple calculation so um 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 um i have a question i'm buying a family home um 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 so I'm interested in buying a family home for my mom. From your mom? Yes, sir. Okay. Yes, sir. She's asking $85,000 for it. We've yet to get an appraisal, but we plan on doing that soon. We're about a mile from downtown KCMO, and the market has grown tremendously over the years. 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. We want to make sure it's structurally sound your grandma have this before your mama yes sir how long has it been in 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.

Well, yeah. So my mom had some work done to it a while ago, and it was basically he did some stuff on the inside. Yeah, 120-year-old house with foundation problems, definition, torn-up house. Okay. I mean, it's not saying don't buy it, but 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 spent

a lot of time up there, and I love Kansas City. I think you're doing the right thing to get it all lined out. Is this your first house? This is going to be our first house, and Dave, I know you said 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. The lease at our apartment was, you know. How long have you been married? We are going, we are 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 when it was originally built. So we love the area. We grew up on the west side, so that's where it's located. I think you go forward. You're just going to 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 going to put a bunch of money in this puppy. Yeah, for sure. And 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.

And then you can roll it into a permanent, and that'll be fine. That's a fine way to do it. 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. I used to

renovate properties and buy properties that were turn-of-the the century in the historic areas of Nashville when I was doing real estate for a living. And I got to tell you, man, wiring and plumbing and twisted floors and bad, leaky roofs and the foundation, 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. 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 the stinking plumbing, man, it's stopped up and it's all, you know, it's not even copper, much less plastic. Yeah. You know, it's galvanizing. 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 corrosion over the years.

The septic system, I mean, or actually in this case it would probably be sewer going the streets. Sewer, 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 crap to go wrong. And some of it has.

Can you tell I like historic properties? I do. I do. But here's my other question, Dave. Is Andrew locking himself in on this deal? No, I think he's, you know, he has valid emotional and spiritual reasons for looking at it. And 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 and that's that's what you're signing up for the movie The Money Pit. Oh. And, you know, and that's what you're signing up for if you don't watch. So 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 Ramsey Show. Hey guys, this is Kelly, associate producer for The Ramsey Show. Did you know that over 16 million people listen to The Ramsey Show every week? And a lot of those people listen on one of our 600 plus radio stations across the country. To find a station near you, head to DaveRamsey.com slash show.