The Ramsey Show - App - How to Determine Small Business Profit and Taxes (Hour 1)

Episode Date: January 29, 2019

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Live from the headquarters of Ramsey Solutions, it's the Dave Ramsey Show, where debt is dumped, 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. Thank you for joining us. Open phones at 888-825-5225. That's 888-825-5225. Starting off this hour is going to be Dave in Phoenix. Hey, Dave, welcome to the Dave Ramsey Show. Hello, sir. How are you?

Better than I deserve. How are you? I'm doing great, sir. Thank you very much. Good. How can I help? Well, sir, I've got a question about paying off my mortgage. I'm 64 years old, currently working. My mortgage is $350,000. And my question is, should I pay that off? I've got money in mutual funds and cash.

How much? Go ahead. How much money in mutual funds and cash? Well, I have $305,000 in non-retirement mutual funds. I've got $130,000 in cash. And then I've got about $295,000 in solo 401k and IRA. Okay. So, you know, my question is, obviously, you know, taking half of my, you know, nest egg, so to speak,

and paying off the mortgage, or do I pay it down over time, or what's just the right approach? And what is your household income? I'm a real estate agent, and from the real estate business, after expenses, last year take-home was $135,000. And then I've got an additional $89,000 in military pensions. So you're making a couple hundred grand a year? Yes, sir. And if you didn't have a house payment, how quickly would you have $300,000? If I didn't have a house payment?

Two years. How many years? Two or three years. Probably so, yes, sir. Yeah, so that's all we're really talking about. Okay. And if I were in your shoes, I'd be debt-free by the close of business today. Okay.

Well, my wife certainly agrees with you. Yeah, and the point is this, okay? Number one, the shortest distance between you and millionaire or multimillionaire being wealthy status in net worth is using no debt because that clears up your most powerful wealth building tool, which is your income, which we just illustrated. Okay. Because we just said if you don't have a house payment. And all the millionaire data that we have on America's millionaires says the typical millionaire has a paid-for home within 10.2 years of the time they start working a financial plan. Now, you know, you've done very well saving money. You make really good money. You've got a good encore career. Your initial career in the military was obviously very successful, and now you're very

successful in the real estate business. Congratulations. You've done very, very well. And so I would, you know, I'd be debt-free by nightfall. I would use that old house payment and any other money I scraped together and rebuild that nest egg and then just keep building it. I mean, there's no reason. I don't know. I'm 58. I don't really intend to quit working.

I may not work as much or I may work differently, but I will always do something. I'm not going to just sit and fish it's not that's not how i'm wired and so if you want to do that that's okay but i mean real estate guy like you you could there's no reason you can't make uh the kind of money you're making for uh another decade or two if you wanted to if you you felt like doing it. And you talk about adding that up, that's going to add up. You're going to have easily $2 or $3 million nest egg if you did that, in addition to a paid-for house. Right, right. And so that's what I see as your future in these numbers.

And I think it's really easy to project that in your numbers because you have a history of doing exactly what I'm talking about. Right, right. You were already, that guy before you called me. Right, exactly. So you're in good shape, man. You've got the discipline and the self-control. You're watching your P's and Q's.

Everything's good. I'd rather check today, pay off the house, use the increased cash flow, and a little bit of fear, a tiny little bit in your belly that that does to push me to build that 300 back up really, really fast for that 350 back up really, really fast. And I just be loading up everything. Meanwhile, being outrageously generous and having some fun with this money. You've worked really, really hard. You've done a great job. And thank you for your service to the country.

Amy's with us in Lincoln, Nebraska. Hi, Amy. How are you? I'm good. How are you? Better than I deserve. What's up in your world? Well, my husband and I have been listening to you on podcasts and on the radio,

and we're looking to start the baby steps. I am lucky enough. I have a fairly decent income, but we haven't really been as smart with money. And we have $4,000 saved already. But we bought a house in April. And for the house that we thought we bought, we had to do a lot of fixing. And so we're concerned about spending down to $1,000 to get our snowball rolling. I mean, we're still in the process of fixing our basement downstairs that got water in it.

Well, yeah, you need to fix that. You fixing our basement downstairs that got water in it. Well, yeah, you need to fix that. You need a budget for that as a part of this. So what's that going to cost? To finish it from where it's at right now, I would say between $1,200 and $1,500. Okay. Well, I mean, that's some of this money. You just earmark that, set it aside.

You can't have a Lincoln, but you finished the Lincoln basement. What else is broken that's an emergency? We've already fixed those things. We had planned on using the money we got from selling our previous house to pay off things, and we've had to pour it in your driveway. We've had to fix an upstairs bathroom that was leaking into the downstairs. My husband had emergency surgery. So we've had some interesting things happen in the last like eight months okay so if you uh set aside two

thousand for the leaky basement and you threw it you threw a thousand at the debt and you left your thousand other thousand sitting there as your baby step one does that work yeah i'm still just nervous i murphy's law but you tried your book, it always keeps you from finding it. It's good. I mean, we don't say, and I don't believe that $1,000 is enough. It's not enough. Right. But it's just enough to hold on while you fight your way with gazelle intensity through this debt snowball.

So how much debt have you got, not counting your home? Not counting my home? I'm right around $87,000. And what is your household income um take home net is 86 okay and so you're debt free in about two years that's kind of what i'm picturing yeah i think that's that's a doable thing and so it's a you know it's a scary time but listen here's the truth okay the truth is when big emergencies hit there's not a lot of difference in 4,000 and 1,000.

That's true. So it's not like you've got it all covered now and we're about to uncover you. Right, right. You're already up a creek. I'm just taking you slightly further. Does that make sense? You're going to get this. You got this, kid.

You can do it. I love it. We're sitting around broke and we're going to figure out how not be broke anymore. This is the plan. That's what the baby steps do. So I'm proud of you. You're going to do it. You got it, Amy.

You can do this. Open phones at 888-825-5225. That's 888-825-5225. One more time, let me remind you. 20 seconds ago, half of the federal government employees, 800,000, more than half of them, I mean a bazillion federal employees were out of work, and a whole bunch of them were scared out of their minds because they didn't have any money saved for emergencies and they weren't getting a paycheck. That should not just be a reason for you to make fun of them.

It should be a reason for you to look in the mirror and go, it's time for me to get my act together. Don't be making fun of them. Help them. Help anybody that's hurting. But it's time for you to get your act together. This is the Dave Ramsey Show. One question I get asked all the time is, do I need life insurance? Listen, the whole point of life insurance is to replace your income for someone who counts on you.

So if you have a spouse or you have kids, yes, you need term life insurance. It's the only way to protect them until you're out of debt and have built up your wealth. You're only digging a deeper hole if you waste money on cash value plans since it robs you of the ability to make real progress. And that's why I send you to Zander Insurance, and I have for 20 years. That's where I get all my insurance, and they only offer the plans I recommend. It is not expensive. It's not complicated. And Zander will be there as your guide every step of the way.

Visit Zander.com or call 800-356-4282. You need to get this taken care of. I can give you the advice, and I can tell you where to go, but it's really up to you to take that important step to get your family protected. That's zander.com or 800-356-4282. Amanda is in Atlanta. Welcome to the Dave Ramsey Show, Amanda. Hi, Dave. Thanks. What's up?

My husband and I were recently thinking about buying my father a car. His car is recently completely broken down on him. It's not repairable anymore. And we just wanted to see your thoughts on it. He has no money? He doesn't have the money to just go out and buy another car. He was in a really bad car accident like about 10 years ago, and so he retired kind of early, so he lives in disabled kind of housing.

And a vehicle is kind of important to him. It gets him out and gets him going, gets him to family events, gets him fishing. How old is he? I'm worried about he's 64. Okay. And he's 64. Okay. And he's completely broke, obviously. Yeah, pretty much. And you guys have money?

We're, I mean, we're doing fairly well. We're on your baby steps four, five, and six. And we have a little bit of cash saved up just in our own personal fund to buy a new car. We've got about $1,200 in there. For you to upgrade your car. Right, yeah. We have both of our cars currently paid off. And instead you're thinking about buying him a car?

Yeah, which would set us back a little bit. You're talking about a $1,200 car? Yeah, something cheap. I mean, he'll only drive it within like a five-mile radius. It doesn't need to be anything fancy. And what's your household income? We're about $160 between my husband and I. Yeah, I'd buy him a car.

I sure would. Yeah. And, you know, obviously we're going to sell his broken down one, and it'll probably bring $500, so you can probably scrape together and get him about a $2,000 car between the two things, give or take.

Just watch what you're doing, and reminder that when you're buying a $2,000 car, you're not buying something that looks nice. You're buying something that runs nice. We don't care how it looks. Yeah. like crap but it runs beautiful it's a garage sale car okay it's a garage sale car the paint's peeling nobody cares but the mechanics are excellent that's what we're looking for when you're buying a hoopty and that's what we're doing here and um i mean there's nothing i heard in this story that tells me not to do this.

I mean, there's not some kind of habitual thing where he's, you know, misbehaving and you're somehow financing that or something like that. It just sounds like he's had a really rough time. Right. And this car was just, you know, it was just more than he could handle, and you're going to be able to help him out with a small purchase, right? Yes, that's what I'm hoping for. Kind of the drawback in me and my husband's relationship is we're about halfway getting our house paid off,

which is the only debt that we have. So, you know, right now to take $1,200 from the house is hard. Yeah, but you make $160. $1,200 is not. Yeah. If you told me you were buying a $30,000 car in this setting or something, I'd be going, what? But this is a very, very, it's a hoopty. I mean, we're getting him basic transportation with the sale of his

and that money, and, you know, no, I definitely would do this deal. And if that's the only drawback, I think that's a wonderful. It's one of the reasons you do that. You get yourself squared around. It's one of the reasons you work so hard to make that kind of money in the first place. But on top of that, you know, you've gotten yourself out of debt. You've got your emergency fund. And in addition to that, you've got a little bit of money laying here towards some other goals.

You're going to repurpose that and take care of him. I think it's wonderful. I would do that, yes. Our question of the day comes from Blinds.com. Find out for yourself why Blinds.com is the number one online retailer of custom window coverings. You get free samples, free shipping, and with the new promos they run every month, you'll save even more.

Use the promo code RAMSEY to get the best possible deal. Today's question is from Alice in Texas. Dave, we're on baby step two. We've got paid off two credit cards, and we're $30,000 in debt to the IRS. I want a payment plan with them. My husband and I both own businesses, not been paying the quarterly estimated taxes, but I've started this year to put back 20% of income. Where should I put this debt on my debt snowball?

At first, it should be first, and before you do anything else, you've got to start saving 25% of your profits out of the business. Before, you need to be running a separate checking account on your business, and whatever the only business expenses come out of that account and only business income goes into that account. And by definition, the balance in that account is called profit, uh, income minus expenses and business is called profit. And you take that profit.

And when you move it from that account to come home to eat and do anything else, you set aside 25% of it and you pay your dadgum quarterlies before you do anything else. This is the number one reason that small businesses fail. Stinking not taking care of your taxes. You screw around with your sales tax withholding if you're a retailer, or you screw around and not do your own quarterly estimates on your income tax, and it'll destroy you. It'll completely knock you out.

And it's the number one thing. Actually, the number one thing is cash flow problems, which is usually taxes and debt. People opening up a business on a stupid credit card, and then they don't pay their quarterlies. And then they can't figure out, oh, I'm really not making a profit yeah that's right you're not and so this whole thing is is holding up on you like a tent and so that the deal is you take care of business on the quarter lease before you even start having a discussion about your debt snowball before you start taking money home to pay food you take care of the quarter lease then as far as your debt snowball goes Before you start taking money home to pay food, you take care of the quarterlies. Then, as far as your debt snowball goes, yes, the IRS is the first thing in there.

You want the KGB, I mean the IRS, out of your life. They have unlimited power. The interest rates and the penalties are unbelievably high. You want rid of that problem. But first, we have to stop. We have to get to the root of it and stop it from reoccurring. And that's a big deal here. Kirk is with us in lansing michigan hey kirk welcome to the dave ramsey show hi dave thanks for all you do thank you how can i help well i have a situation where

i have two houses and one is paid for one is not and i know what i've done but wondering what you would do as far as keeping it or getting rid of it well if you what you mean what you've done you've kept that right yeah it's currently rented okay so i was i was married recently that's how we ended up with both houses and yep i married i married smart and her house is the one that's paid for okay cool and if you sold if you sold the other house what would be your equity what would be the proceeds uh 45 50 grand maybe what do you and and there's no debt on hers there's no debt on hers correct and what's your new household income now that you're married uh base salary is 160 okay is there any reason you can't how much other debt do you guys have

there's none there's no other debt is there any reason you can't how much other debt do you guys have there's none there's no other debt is there any reason you can't just pay this off um we had talked about that most most of the money we have is tied up in retirement okay well i wouldn't use that but i mean you make 160 000 how fast can you pay 45 yeah we've looked at we could pay it off in about five years maybe less you make 160 it's 45 000 why would it take five years all right how about you have months Maybe less. You make $160,000. It's $45,000. Why would it take five years? How about five months? No.

So the mortgage is $188,000. Oh, you said proceeds. I asked you proceeds. That's my fault. And then I'm fussing at you. I'm so sorry. Okay. No problem.

Okay. You're on baby steps four, five, six. You're on Baby Steps 456. You're putting 15% of your income into retirement. You're saving for kids' college, if that's appropriate, meaning if there's kids that need to go to college or there's kids and so forth, and then we're going to pay off our house or any other real estate, which is where this is. That is correct.

Yeah. If you like rental property and you wanted to be in the real estate business, and this is, if you didn't own this, would you start thinking about saving towards buying a rental house? Yes. Okay, then let's get this thing paid off. Okay. And I might do it faster. I forgot.

I screwed up on the thing. I'm sorry on the debt amount. That's all right. But the, yeah, it might be five years. It might be four. But I'm going to go ahead and lean into it and say, okay, this is like I'm trying to pay off my house. It's maybe step six, right? Right.

Everything above 15% of your income going into retirement and living your life reasonably, because we're not gazelle intense at this point, we're just going to chunk on this puppy and get her paid off. If you can get it paid off in five years or less and you like real estate, I would keep it in this case. So you've got a really good income. You've got a good start on this. Well done. This is The Dave budget each month. Pure Talk USA offers smarter wireless with unlimited plans starting as low as $20 per month.

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Visit puretalkusa.com or call 844-862-3677. Enter promo code SAVEDAVE and receive 50% off your first month. That's puretalkusa.com. Thanks for joining us, America. We're glad you're here. Open phones at 888-825-5225. Sonia's with us in Jacksonville, Florida. Hi, Sonia.

How are you? Hi, Dave. Thank you. I'm good. And yourself? Sure. How can I help? So my question is, I'm 47 years old, and I just started looking at your baby steps, and I realized that I haven't gone in order. I completed baby step number one when I was working a year and a half ago. I was working on baby step number four and I've completed baby

step number six. So looking at going in order, I'm currently on step number two. And my question is, should I use some of the cash value in my insurance slash annuity to pay off my credit card and card debt? Or should I just use the snowball method to pay it off? Okay. And so do you have an annuity, or do you have cash value insurance, or both? Both. Okay. Are you healthy?

Yes, sir. Okay. Do you have children? I do, but they're adults. They're adults only. Are you single? Yes, sir. Okay.

And so if you passed away, who is counting on your income that would be left out in the cold if you didn't have insurance? No one is. Okay. Then your need for life insurance is zero, isn't it? I guess. Well, I did it so I can leave something to my children, but they're not dependent upon me. Yeah, life insurance is not a method to leave an inheritance. It's a horrible investment.

And so if you need some life insurance, and I'm not sure you do, I kind of think you don't, then I would buy an inexpensive term life insurance policy on you from Zander Insurance, and I would close down the cash value policy completely. What cash value do you have? How much cash value?

In one, I have about $38,000, and in the other one, about $11,000. Okay. In two policies? Yes. Okay. So there's $49,000. And how much debt do you have? I have $16,000 in credit card and $29,000 in my vehicle.

Okay. And so cashing out the two whole life policies makes you debt-free? Yes. Yay. Really? Yes, they would. Okay. Cash them in.

But only if you're never going to borrow money again. Okay? Correct. Well, you need to catch them anyway. And if you want some life insurance, buy some life insurance before you do that. If you want to buy a $100,000 term policy on you or something just to leave, you know, to clean up whatever burial and whatever else is around, you can. But your need for life insurance is really, really close to zero.

Okay. Because you don't use life insurance to leave an inheritance. You leave money because you're going to have money if you're giving it all to insurance companies. Now, what about the annuity? How much is in the annuity? I have $327,000. In an annuity?

Yes, it's an individual retirement annuity. Oh, it's in an IRA. Okay. Yes, sir. Now, is that a fixed annuity or a variable annuity in mutual funds? It's variable. Okay. All right.

And how long have you been in that? A little over a year. Okay. Why did you select an annuity inside of a life insurer, inside of a retirement account? Because a retirement account is already protected from taxes. You did not need an annuity to be protected from taxes. So the reason why I did it was I left my job about a year and a half ago, and I had to make a decision what I wanted to do with my 401K.

My goal was to not go back into corporate America. Good. Just to open my own business. So because I wasn't no longer contributing, I wanted my money to grow, and I wanted a safer option. That's what made me choose the IRA. Well, the annuity does have a principal protection option, and it is a little safer. It does have a lot of extra fees to it. So we don't generally recommend annuities inside of a retirement account because it's redundant.

The tax protection is redundant. And so, you know, that's not an emergency. That might be okay to stay in because you like the product, you understand the product, if that's what you want to do. It's not the end of the world. It's not what I you want to do. It's not the end of the world. It's not what I would have recommended, but it's not the end of the world. But I would cash out the two whole life policies immediately and be debt-free and then continue to live on a written budget so that you never go in debt again ever. Yes, sir.

Because your house is paid for. Yes, sir. You got $300,000. You got no debt at all. And you're 47 years old. You're a rock star. You got $300,000. You got no debt at all. And you're 47 years old. You're a rock star. You're incredible. I mean, you really are doing great.

I mean, look around. You're going to be a millionaire before you know it. I mean, you are on track here, kiddo. So good stuff. Very well done. Open phones at 888-825-5225. Kartik is with us in Dallas. Hi, Kartik.

How are you? Hey, Dave. Thanks for taking the call. I'm doing good. Thanks. How about you? Good. Better than I deserve.

How can I help? So my wife and I have been plugged into your system from 10 years ago. I guess we were in our mid-20s when we started on your program, and now we are in our mid-30s. We have no debt. We got into a rental market, and right now, today morning, when we are looking at our finances, it kind of dawned on us that if we sell all our rental properties, which have equity in them, we'll be able to pay off our mortgage.

So I was wanting to consider what would you think, and is that a good idea to do so? Okay. And how many rental properties do you have? Three. Three. Okay. And how much do you owe on your home?

$394,000. And what's your household income? $190,000. Okay. Cool. Well, you could do that. That's not a bad plan. I wouldn't mind doing that.

I love real estate, and obviously could do that. That's not a bad plan. I wouldn't mind doing that. I love real estate, and obviously you do too. And so a middle ground plan might be pick one or two of the three, sell them, and throw that at the house, and then use your great income to beat up the rest of the house, and then turn around and pay off the other rental, and at least clear one of them and clear your house. But it might take you a year or two to do that rather than being instantly debt-free. So I definitely would move some of the property, one, two, or three, and you just decide how far you want to go into that.

Because obviously if you sell them all and you pay off the house, the first thing you're going to do is start saving up money to pay cash for your first rental again, right? Yeah, exactly. Yeah, that's what i would do if i were in your shoes so that's not a bad thing and i like that idea but if instead you said okay one of these properties is a golden nugget we love this property we're going to keep it and sell the other two and we're going to throw all that equity at the house and then we're going to pay off whatever a little bit of the house that we ain't got left we're going to knock that out out of income then we're going to pay off whatever little bit of the house that we ain't got left. We're going to knock that out out of income. Then we're going to reach over and pay off the golden nugget property. Now we've got the house and the nugget property clear. And how long is that going to take?

And you just run the math out on that. That might be only one or two, three years. And you just kind of break that down that way. And, you know, in that case, you may want to keep one of them or even two of them, depending on how that equity is situated across the three of them. I mean, if you can move the vast majority of the debt on your home, get rid of the vast majority of it by selling one of the rentals, I'm probably selling that one. And then try to scratch my way through the other two and knock out the house real quick, that kind of a thing. But if it's pretty evenly spread, you're probably selling two of them.

So something like that. It's however you want to play it, but that's kind of a nuanced way of saying, okay, it can be all or it can be middle. Doing nothing I wouldn't do. I wouldn't just sit where you are. I'd sell one of them or two of them or all three of them. And then you two just decide as you talk about it which way you want to go with that so good question thank you for joining us they're wondering when i should get life insurance we're

on baby step two now uh married with two kids two years old too much yeah right now you get life insurance you got two babies is not even on a baby step it's like you it's health insurance it's car insurance you You get it immediately. It's a basic element of financial planning. You take care of your kids and your wife, and it doesn't cost that much. This is the second time we've been talking about life insurance in the last few minutes. But just go to ZanderInsurance.com. It takes just a minute to enter your information.

It'll drop down a full list of quotes. You'll be blown away. You ought to buy about 10 to 12 times your income on you on 15 or 20-year level term insurance, and you will see the prices are ridiculously low. I mean, life insurance is just not that expensive. It's ludicrous to be without it. Right now, today, do that. Zander, Z-A-N-D-E-R, insurance.com.

Thanks for the call. Eugene is with us in Canada. Hi, Eugene. Welcome to the Dave Ramsey Show. Hi, Mr. Ramsey. Good day. Thanks for taking my call. Sure. How can I help? We've got a little bit of a unique situation. I live in the northern area of the border in Alberta. And the reason for my call is we've had a pretty significant recession since 2014. In fact, so bad that it's probably the worst in about the last 25 years since the crash

of oil. Our household income has dropped quite dramatically, and I was just looking for advice, aside from just cutting expenses, if you have any other best practices for trying to wave the storm, basically. No, I mean, obviously, any preparation you could have done ahead of time where you had wealth built and an emergency fund built and those kinds of things. So you're in the oil business? No, myself, I work in finance, but the area I live in greatly relies on oil and natural

gas. And so your income has done what? Well, before the crash, our household income was at about $230,000. And now we're closer to about $110,000 throughout the time when we were doing really well. And, you know, I still think we're doing okay. But in the meantime, we were able to save up about $160,000 in cash. Myself, I'm 33. The wife is 30.

And, you know, just because it's been quite a while, we're looking at five years now. We're in this sort of a recession now. Okay. I'm confused as to why. I mean, I get that the whole area is in the doldrums. I don't have a problem with that, understanding that. But you're in finance. Do you work for an oil company? No, no. I work in the automotive sector, so as a finance manager for a dealership. Oh, auto sales are way down. I got you. Okay, and so your income dropped, and what does she do?

She works in the oil and gas sector, and she works part-time since we just had a little one. Okay, and so that's part of it as well. Correct. And what was she earning before? Before she was at about $100. Okay, and now she's at? About $40. Because of being part-time, though?

Correct. Not really because of the recession? Well, no. My income has dropped. Yeah, I get that. I got that. So basically we're saying we lost $100 and some change of income, but $60 of it's due to her being part-time with the baby.

It has nothing to do with the recession. Correct. So you really have a $40,000 problem. The other part was your choice. Correct. Okay. And so, you know, $40,000 out of two-something is not – that's bad. I'd rather be $40,000 up than $40,000 down. two something is not, that's bad. I'd rather be 40 up than 40 down.

But that's not life-changing. What's happened is you've gotten hit by two different things, one of which was a choice of her to be part-time because of the baby. Well, she's going to be going back full-time in about the next three months. Oh, okay, cool. Then you're going to have a $40,000 problem at that point. Correct. Okay, all right.

That's more like, you know, I just don't feel good rather than I've got cancer, you know. So I'm not as worried about losing $40,000 out of $200,000 as I would be losing, you know, half your income roughly. So anyway, but overall, the other thing you've got to decide is because you're the one that's taken the biggest hit here by far, the thing you guys have got to decide is, is this area, given that it's tied to oil and gas, and given, therefore, the volatility of it, you know, you're kind of at the mercy of that. The whole thing seems to revolve around that is what you're explaining to me in your particular locale. Is that where you want to conduct life?

Okay. And then you can decide that. If you do, then you just say, you know, we're going to set up our life on this lower income and build wealth on that, which is not a bad income by any stretch. It's like $160,000 plus, you know, even with the downtime and when she's back to work anyway. And so we're going to set up our life based on that. And then in the good years, we're just going to call that gravy on the biscuit and build

serious wealth with that money. You need to set your life up that way. But just going, you know, this recession is killing me. It's not really killing you. It's hurt you, but it's not killing you. But if there's a sense that you could prosper much better in an economy that was more diverse and less dependent on one industry and therefore less volatile, then you make a move to that. There's no reason you have to stay there.

Nothing that says that. So if you're doing it all based on the numbers and all based on your career choices, that's what you just decide. So, hey, thanks for the call. Open phone is at 888-825-5225. When I saw that, if you don't know know i've got the name of the person the city and about four words as to what they're going to talk about on my screen before i bring them up so you know buy my dad a car that's what it says or something like that on the screen it doesn't you know it's not i don't have a lot of information more than you guys have

as listeners, and so you and I explore this information together, really, when I bring a caller up. But when I saw that, how to survive or what to do to prepare for a recession, I kind of got in my mind, and that isn't where he wanted to go, so I was helping him, but philosophical for a second. I'm thinking, okay, because the last time we had like a big crash in the U.S., I made so much money. It was ridiculous.

I was actually going over the P&Ls this morning with my son-in-law who runs our real estate, and we were just looking at that stuff going, we bought this stuff at 15 or 20 cents on the dollar. Millions and millions of dollars worth of stuff for 15 or 20 cents on the dollar. So when I see how to prepare for a recession, I think be debt-free, be in a strong cash possession. And then when there's a recession, it's time to make hay because it's a great time to make money. It's a great time to make money when things are down. And it's when you buy.

You buy everything. Buy low and sell high, right? I mean, this is the plan. And so, yeah, and that experience that we went through in the States anyway in 08 when the world was coming to an end and people were too big to fail and all of this stuff. And household names were closing down permanently in the banking world, and none of us really cried much about that except people that worked there.

But other than that, we're all just like, too big to fail my butt, you failed. But then some of them were too big to fail, and theed them out and all that stuff was going on right there's this huge problem everybody's freaking out i lost all my retirement no you really didn't because the dow was at 14 000 and it it went to 6,500. You lost half your retirement. If you cashed it out at the lowest possible point, which would make you the world's biggest loser in terms of picking times to cash stuff out. So if you cash it out at the very bottom, the absolute valley, the apex of the valley,

I mean the convex of the valley, the very bottom of the thing, you cashed out at 6,500. I didn't cash out at $6,500. You know what I did? I bought a lot. Oh, by the way, what's the Dow right now? $24,000. What's that? Forex.

Forex. Put in the million dollars at $6,500. Right now it's worth $4,000. You put in $10,000,500. Right now it's worth four. You put in 10 million, right now it's worth 40. That's what you do to prepare for a recession. You get ready, and when it dips like that, you're not sitting around wringing your hands going, I lost everything!

You didn't lose everything. It's down half, and no one gets hurt on a roller coaster except those that jump off. That's when you buy. And I bought like crazy. I bought real estate more than I did even stocks. I didn't really change my stock investing. I just kept investing steadily. But, boy, what if you put in $10 million at the bottom?

Right now, today, that $10 million would be worth $40. Or whatever zero or decimal you want to put on that game, it's a 4X, right? So you didn't lose all your money unless you jumped out at the exact wrong time you didn't lose all your money you didn't lose any money somebody asked warren buffett he said you know you you lost you lost a billion dollars today and he's like no i didn't i didn't sell anything you know you know there's no losses until you sell something so the way you get ready for recession is you get out of that you have something. So the way you get ready for recession is you get out of debt. You have an emergency fund.

The way you get ready for government shutdown is you get out of debt. You have an emergency fund. And then you have other money to buy stuff when times are troubled because more millionaires are made during the Great Depression than any other time. Hmm. Something to think about. Puts us out of the Dave Ramsey Show in the books. Our thanks to James Childs, our producer, Kelly Daniel,

our associate producer and phone screener. I am Dave Ramsey, your host. We'll be back. This is James Childs, producer of the Dave Ramsey Show. Did you know you can now listen to the Dave Ramsey Show on Pandora and Spotify? For all the ways to watch and listen, check out our show page at

DaveRamsey.com slash show.