The Ramsey Show - App - How to Handle a Defaulted Credit Card Lawsuit (Hour 1)

Episode Date: September 4, 2018

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Live from the headquarters of Ramsey Solutions, 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. I'm Dave Ramsey, your host. This is your show. Thank you for joining us. Open phones at 888-825-5225. That's 888-825-5225.

Starting this hour off, Jack is with us in St. Louis. Hey, Jack, how are you? Hey, Dave, how are you today? Better than I deserve. What's up? It's an honor to talk to you, and thank you to you and everybody at Rampey Solutions. I've got a quick question.

My wife and I will be traveling out of state this weekend, actually, to meet with an investment professional. She has a trust fund that she won't be able to access until in 12 or 13 years. But her grandpa set it up about 20 years ago, and since then he has passed away, and the company that runs it has been bought by another company, so it's kind of out of hand. And we're sitting down to meet with them and discuss what's actually going on with these investments, and I know it's bonds and mutual funds. I'm just curious, what questions should we ask to really get a grip of what's going on? They said that some things will be movable to better us whenever it becomes accessible to her.

But I'm just not sure. Whenever it becomes accessible to her, you can move it completely away from that company, and I would. You need to control it once it becomes accessible to her, but that's several years out, a decade plus. First thing, I want a copy of the trust. She's a beneficiary of the trust. She's due a copy of it, and I would want is a copy of the trust. She's a beneficiary of the trust. She's due a copy of it, and I would read it, and if I don't understand it, I'd get some legal counsel.

There's probably nothing fishy going on, but I'd want to at least know exactly what my rights are and how much control and how much say she has. Typically, what happens in a situation like this is the trust is set up to protect her from herself. Okay? To keep her from blowing all the money, you know, and being the proverbial trust fund baby. Now, in that case, it sounds like a trust company or a trust department of a bank is managing the trust, and that's probably per the terms of the trust. That's not unusual either.

What you'll find is I would never have the trust company of a bank or the trust department of a bank or a company design be the manager of a trust, in my case, because what they do is they are scared to death they're going to get sued for having lost the money. And so their investments are hyper, hyper, hyper conservative. And they are, yeah. And they see that as their role to just make sure that nothing gets lost. Consequently, almost nothing gets gained.

Correct. And so you probably are going to find a portfolio of very badly performing, super conservative investments. That's normally what you're finding. That's what we've seen so far. Yeah, that's a typical scenario. And you probably don't have any say-so over that. You're probably stuck with that. Right. They said there's a little wiggle room, so we're just curious.

I mean, I figure I'll ask. Here's the wiggle room I would say to them. If you guys want any hope of managing this once I gain control of it, you're going to have to do a better job of managing it. Well, I don't have control. I'm watching you. That's kind of what I was thinking, too. I mean, I know they're watching out for me also being the husband,

but I'm not trying to do anything fishy while she, you know, is the true beneficiary. Well, that doesn't matter. She's the beneficiary. She's got a say over it. You're connected to her. You can both sit there and go, hey, we're the sweet young couple. We don't, according to the trust, we can't tell you what to do, but we can make you wish you did what we said. Yeah.

All right. And that's the only thing you could hold over them. Usually that's not going to get you much because they've got policies and procedures and corporate crap wrapped around their throat, choking them to death, and they're going to just be conservative. But the good news is you're probably not going to lose the money. It's just not going to make anywhere near in the next decade what it should make. That's why I want you to read the trust, though, to see how much, say, you have or she has

as the beneficiary, because the trust documents can be written a lot of different ways. And so you can set it up to be whatever, but typically, if it's a standard boilerplate type thing, that's what you're going to find. Hey, thank you for calling in. So, folks, if you're doing a trust, you can say whatever you want to in the trust. For instance, when our kids were minors, we had a trust set up that upon our death, a trust was formed instantly. It never got formed because our kids grew up before we died. But it was there to manage them.

And the life insurance proceeds went into that trust. And I told the trustee exactly how I wanted the money managed. I wanted it in four types of mutual funds, growth, growth in income, aggressive growth, and uh international and i want you to buy mutual funds that have outperformed the s&p and i want you to use a good financial advisor to do that and the trustee was supposed to execute on all that i told them exactly how i wanted to invest it so that they weren't didn't have to fall back on cds and bonds and underperforming instruments of all kinds to where instead of making, you know, 10, 12% of your money, you're making four or three or one. And that's what you're trying to avoid.

And I wanted the kids to eat better than that if I died. So I wanted the money invested in the calculations I had done were not based on four. They were based on 10 or 12. And so that's what you want to do. You can state, if you're forming a trust, anything you want. And probably her grandfather didn't know that, you know, didn't know what they could do. Open phones at 888-825-5225. Scott is on Twitter.

Says, Dave, do you need credit protection if you have a zero credit score? Well, technically, you don't need credit protection, period. Identity theft is what I think you're talking about. Identity theft protection. The answer is yes, everyone needs identity theft protection because the problem is not that you end up having to pay the money when someone steals your identity. It's that you have to fight with all the stupid people that gave the crook credit in your name,

and you have to prove to them that it wasn't you, and you have to file police reports and affidavits and notarized documents and all this crap you have to go through to get your own identity cleaned up when you didn't do anything wrong and you didn't borrow any money. So everyone needs identity theft protection. If you're talking about a type of credit protection that protects your credit score that's different than identity theft protection, then no, you would not need that. And I don't recommend that.

But I do have identity theft protection on me, my kids, all of my team members that work here, and it's through Zander Insurance, and it is top rate because they assign a caseworker to you to do all the work of dealing with Discover Card or whoever opened an account for the crook in your name. And, you know, with the Target breach and the Equifax breach, 300 million or something people, I mean, that's like everybody. Somebody's probably got your data unless you live off the grid. Some crook somewhere has your data unless you live off the grid. The only question is whether they're actually going to use it or not or when they're going to use it and how they're going to use it. And that's the only thing you face.

So it's pretty simple. My credit bureau has been at a zero for years. My credit bureau, my FICO score has been a zero. My credit bureau has nothing on it zero for years my credit bureau my fico score has been a zero my credit bureau has nothing on it it's been frozen ever since they started allowing you to freeze your credit but all of that doesn't keep someone from fraudulently opening something in my name and so i still need identity theft protection to take care of all that work so i don't have to go clean up the mess that's what it amounts to. It's worth every penny, believe me. That's why we endorse Zander Insurance for just that.

This is the Dave Ramsey Show. Listen up, my friends at Churchill Mortgage. You want to put some cash back into your pocket. Go to ChurchillMortgage.com today and enter the $3,000 end-of-summer giveaway. Whether you're buying a new home or evaluating your current mortgage, you know I'm going to recommend talking to Churchill first. I trust these folks to save you money. I'm talking thousands. And the team at Churchill will take great care of you.

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Alex is with us in Raleigh, North Carolina. Alex, welcome to the Dave Ramsey Show. Hey, Mr. Ramsey. Very good to speak with you. It's an honor. Thank you. You too. How can I help? Well, I have a question. My wife and I just have recently started listening to your program, and she became a stay-at-home mom about two years ago. So we went from two incomes to one income. So she wanted to be a stay-at-home mom. So during that time, unfortunately, we started putting stuff on credit.

But within the past two years, well, last month, we started using the every dollar budget and realized that I need to make more money. I make $48,000 a year, and to break even with just our bills, I have to make about $60,000. So I picked up a part-time job, and I make about $60,000 now. I make about an additional $1,200 a month. And our question was, our home has about $80,000 in equity and we have about $68,000 worth of debt that we're wondering if we should sell our home to pay that off. That way we can kind of expedite our financial success. What is the debt on?

So we have $40,000 in student loans, $20,000 in credit cars, and $8,000 left on a car loan. What are your cars worth? Well, it's one car. It's a minivan. It's probably worth about $12,000. You only have one car? No, we have two cars. Our other car is paid off. We paid that one off, I think, in 2016. We had that for about six years, and we just have this one to pay off now. Yeah, what's the one that's paid off worth?

Probably $6,000. Okay. And how much is your house payment? It's $1,088 a month. Okay. Well, I think you've identified the problem, and you've figured out how to keep the boat from sinking, but you're not sure you want to paddle this hard as a long-term goal. Right. not sure you want to paddle this hard as a long-term goal right so basically what you're telling me is um you're trading your house for a part-time job correct and um i wouldn't do that

if i thought i could get your day job income up within say two years okay i'd work a part-time job for a little while to keep my house but i wouldn't want it i wouldn't want to work it for a decade to keep my house right so i've got to have your day job income on a trajectory that gets you to 60 000 or changing jobs or changing careers even that gets you to 60 000,000 in two years. If that's not going to happen, you probably did make the decision to sell the house when she made the decision to come home. Okay. Because you probably aren't going to be able to afford it given the debt that you had. Right.

Now, you just can't. I mean, my wife came home with our first child and was home the entire time. She's been a full-time mom now for 34 years, now a full-time grandmom and all that, right? But Mimi, right? But you have to do the math. You have to say, you know, we've got to live on this income if we do this. You can't just wave a wand and go, I'm coming home, you know? Right.

And that's kind of what you all did. You didn't really do the math, and so you kept living like you were, and you ran up a bunch of debt. Plus, you didn't have the other debt paid off, and you didn't have a plan to do it. So you didn't have the wiggle room for her to come home as quickly as she did. But she did it, and you're there now, so I'm not going to send her back to work. That's not the point.

But you went back to work. Good for you. Extra job to be able to keep this stuff going. But, yeah, if you can lay out a career plan, and you don't have to decide in the next 20 minutes, but you've got to decide before you lose the emotional energy to keep working a part-time job. If you can lay out a career path that gets you where you think you can pay your bills on your regular job within a couple of years, it's not perfect, but the point is I don't

want you working a part-time job your whole life. Yes, sir. So if you can get that going, then I would keep the house. Otherwise, I would sell it. And then you've got to just decide, okay, what are my career goals? What am I going to be doing in 5 years, 10 years, and 20 years? Andrea is with us in Detroit, Michigan. Hi, Andrea.

Welcome to the Dave Ramsey Show. Hi, Dave. Thanks so much for taking my call. Sure. What's up? Okay, so I just graduated college in May, and I'm in baby step number two. And my question is about a student loan that I have. So currently I owe about a little over $9,000 on it, and it has an 11% interest rate.

Yeah, I know, right? And so it's the last loan of my baby and my debt snowball. And my family is trying to give me advice about taking out a personal loan with a lower interest rate from my bank to pay off that loan. And then I would put the personal loan into my debt snowball. And I just don't really know what to do. And I wanted to get your advice on it. How much other debt do you have? I have about $60,000, and it's all student loans. Okay.

And what's your degree in? In history. Okay. Well, congratulations on graduating. What are you doing for a living? So I actually just got a full-time job, and I will be working on restoring a historic home. Oh, wonderful. I just found out yesterday.

Very cool. What are you going to be making? I anticipate anywhere between 25 to 35 just since I'm starting out, but I don't have an exact number yet. Okay. And you said you graduated in May. What have you been doing between now and May? What have you been making? I've been working a series of part-time jobs, about three part-time jobs.

And so I've been able to pay off about a little over $5,000 of my loan. Good for you. Well done. Thank you. Well, you're probably going to keep a couple of those in addition to your full-time. Oh, definitely. To accelerate your get-out-of-debt plan. That makes a lot of sense.

And, yeah, if you can refinance an 11% student loan, that's not a Sallie Mae or Navient loan, is it? Oh, yeah, it's Navient. That high? I'm shocked. I didn't know there were any out there that high. Okay, yeah, if you can refinance that at a cheaper interest rate, I would. Okay.

It doesn't hurt anything. Here's the thing. Let's do the math, and that always helps us, because it's all theory until you do the math. And so 11% on how much balance again? It's a little over $9,000. Okay. And let's say you could drop that dramatically, okay, by 5%. Wow, that would be unbelievable. All the way down to 6%. That would be, but that just makes the math easy, okay, by 5%. Wow, that would be unbelievable. All the way down to six.

Yeah. That would be, but that just makes the math easy, okay? So five times nine is $540 a year. That's what you made. Mm-hmm. So a huge drop in interest rate is only $540 a year. Yeah. So it's helpful.

You're probably going to save a couple hundred bucks a year 300 bucks a year or something like that not 540 so it's helpful to do that i would never i mean if you lay 540 bucks on my table i'll pick it up right but yeah but but it's not it doesn't solve a 60 000 problem exactly and what solves that is what you've already figured out working your butt off and paying off debt so you can't consolidate your way out of debt. You can't get interest reductions and get out of debt. You have to pay the debt. But does it help a little?

Yeah, it helps a little. What you're giving up is this. If you become disabled or die before a Navient loan, a federally insured loan, is paid off, it goes away. If you have a bank loan loan it doesn't go away student loans are waived in disability and death regular loans are not okay that's the only thing you're giving up but you're young you're getting after it i'm not worried about those two things as a high probability i'll take a lower interest rate if I'm in your shoes, if I can get it, and a fixed rate only, okay, not a variable rate. Okay.

And I think you're probably going to pay this all off in about two years because you're a worker. Yeah, that's the plan. You can do this. I think you can do it. I'm proud of you. Good job. Open phones at 888-825- 5225.

You jump in. We'll talk about your life and your money. Blinds.com has a 100% satisfaction guarantee. They give us our question of the day. Their 100% satisfaction guarantee means if you mess up, if you mismeasure, you pick the wrong color, they will remake your window blinds for free. And you get

free samples, free shipping. And with the new promos they run every month, you'll save even more. Promo code is Ramsey. Questions from Steven in Idaho. I'm in a money management class. We're learning about from your foundations and personal finance class. You talk about mutual funds. I get excited to start investing. Where can I go to find good mutual funds? I search online, but there's so much out there. You can check with one of our SmartVestor pros. Click SmartVestor at DaveRamsey.com. Put in your info. It'll drop down a list. I search online, but there's so much out there. You can check with one of our SmartVestor pros. Click SmartVestor at DaveRamsey.com.

Put in your info. It'll drop down a list. I would recommend you don't do investing, though, until you graduate from school. I want you to invest in you, paying cash for school. That's your first and best investment. 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. In the lobby of Ramsey Solutions, Shannon is with us. Hi, Shannon. How are you? How are you? Better than I deserve.

Where do you live? I am from Moberly, Missouri, about 30 miles north of Columbia. I know the area well. Absolutely. Very cool. Well, welcome. Thank you. Good to have you to Nashville.

And all the way here to do your debt-free scream. All the way here for this debt-free scream. How much have you paid off? $35,700. And how long did that take? 17 months. Good. And your range of income during that time?

Started at $35,000, I'm sorry, $38,000 and ended at $45,000. Good for you. What do you do for a living? I'm the director of marketing for a foundation repair and basement waterproofing company. Oh, cool. Good for you. And what kind of debt was the $36,000? Same as everyone else, a little bit of everything.

I had a medical debt, student loans, car loan, personal debt. I had a credit card, just a little bit of everything just kind of hanging out there you were normal I was so normal just just trucking along just nobody's bothering you all the money comes in all the money goes out no big problem right nothing here then something disturbed you 17 months ago what It did. So actually about two years ago this month, I was going through a divorce and that was a huge disturbance. And I found myself living at home with my parents. So while I was living there, I had no bills and I had all the money that I thought I needed. But then it went away. And I would say my turning point was when I got a call from

a credit union saying that if you don't pay your car, your car payment, we're going to repo it. And that was a huge wake up call for me. That was absolutely the bottom for me. And at that time, I had a one-year-old little girl and I decided that's not going to happen. So full gazelle intensity kicked in and I started selling everything. So like I said, I lived at home and I didn't have any bills. So I sold clothes, toys, diapers, furniture, things I was even using that I thought I needed. It was gone and it was just no looking back and no turning back at that point. Wow. Yeah.

You sell anything huge? Any big things? I did sell my car. Oh, wow. Yes. So my car had been giving me some trouble and fortunately my parents had an extra vehicle. So I sold that immediately and I drove it all the way through my entire debt-free journey. Their extra vehicle?

Yes. Okay. All right. And what are you doing for a car now? I bought a car with cash. Ah, there you go. Yeah. Look at you.

What did you buy? I bought a Ford Edge, a nice mom rod, as everyone calls it at work. Yeah. I love it. Well, you're a nice mom. It's a paid Ford. You're a nice mom, so you need a ride. There you go.

Oh, thank you. Good for you. Very cool. Yeah. How's that feel? I mean, you come through this, because one thing about going through a divorce especially as young as you are is it kind of says you're no good and then you get to say yes i am i just bought this car and i paid for it there's kind of a kind of throw your shoulders back and strut away don't you oh my gosh so the feeling i've been

thinking about i knew you're going to ask this question um to me to me the feeling is empowerment yeah it's more so i put my mind to something and i told myself that i was going to accomplish it i didn't care what it took so now it's um you know if i did this with my finances what else can i do anything the world is literally at my fingertips anything you want to do yeah i got a feeling i got a feeling next time i talk to you your income will have doubled i'll tell my boss that i think that's coming well he won't be your boss if he doesn't so somebody else will steal you good job thank you very well done so you had to have good cheerleaders at home mom and dad because they're hoping that you you bounce back from this thing and you turn your whole life and you did.

So they had to be going, yes. Have other cheerleaders around? Absolutely. I would say not everyone fully understood what I was doing and why, but they backed me 100%. And I read a great book by Henry Cloud, Power of the Other. And I had multiple others. And sometimes you just needed someone to kind of slap reality back into you. The process is simple, but it's not easy to follow.

And sometimes you just need someone to shake you and say, what are you thinking? You said you were going to do this. Do it. And that's what I had. Absolutely. Good accountability. Yes. Good for you. Fun that's what I had. Absolutely. Good accountability. Yes.

Yeah. Good for you. Fun. So what do you tell people the key? What are the main things you did? You sold a car. That's one big thing. Yes.

And what else did you do? What are the keys to getting out of debt? Obviously, budget is extremely important. But to me, it's never allowing yourself to think that you cannot do it. I read a book where we talked a lot about future pacing. So you also say, you know, you become what you think about. And this moment right here is what I thought about the whole time. And it's easy to get off track and it's easy to think, you know,

I want this, I want that, but what do you want more? And what are you willing to sacrifice? So just focusing on this moment right here to be able to share this and hopefully inspire other people is really what kept me going the whole time. Love it. Love it. Well, we're honored to have that moment with you. Wow.

Very, very, very cool. So how old are you? 29. And how long were you married? Two years. Okay, so quick, short marriage. Yes. And a baby comes and you've got baby with you. And baby is how old? Three. marriage. Yes. And a baby comes, and you've got a baby with you.

And the baby is how old? Three. Three years old. And what's her name? Landon Rose. Landon Rose. All right. And so it looks like you had some friends or mom and dad or something come with you.

Yes, mom and dad. Yep. Okay, so the support group is here. Yes. All right. And I often tell people I have no problem at all with somebody moving back home, like in a situation like you're in. I think it was very wise what you did because that's a safety net. That's not a hammock.

Yes. And you're obviously not a hammock person. You're a safety net person. You use that safety net very wisely. You got the car, use of the car. You got help and expenses going down. That enabled you with this income to pay off $36,000 in just 17 months. That's very impressive. Yes, thank you. I mean,000 in just 17 months. That's very impressive.

Yes, thank you. I mean, you weren't out running around spending money on anything. You were game on, girl. Yes. That's what those numbers tell me, anyway. So, proud of you. Thank you very much. Well done.

Thank you. Very well done. Excellent. You're a hero. Thank you. So don't tell me single moms you can't do it. This program's for rich people. I'm not talking to a rich lady right now.

I'm talking to ladies who are going to be rich, though. Absolutely. That's the next step in your journey. We're going to give you a copy of Chris Hogan's book, Retire Inspired, and millionaire status is coming next. That's where you're going. You keep going. Thank you. You keep going.

You've got a bright, bright future, and so does Landon Rose. Very cool. Now, is she old enough? Has she practiced her debt-free scream? We've been screaming it the whole way here. Oh. Yes. So you think she'll join us?

We'll see. We'll see. You never know. Sometimes get a camera shot. Yes. So she's three. Yes. Yeah.

I got two three-year-olds at our place that are grandbabies. So, yeah. It's hit or miss. Yeah. But I think she's ready. Landon, are you going to do the debt-free scream with us? Are you ready? Yeah.

Okay. Okay. There we go. All right. Good. All right. It's Shannon and Landon. This you going to do the debt-free scream with us? Are you ready? Yeah. Okay. Okay, there we go. Alright, good. Alright, it's Shannon and Landon. This lady's changed her life, changed the life of her daughter. $36,000 paid off in 17 months, making $38,000 to $45,000.

Count it down. Let's hear a debt-free scream. Ready? Three, two, one. We're debt-free scream ready three two one we're debt-free this is how it works cute cute little girl oh my gosh that's how it works isn't it interesting the number of people who have that exact same experience, and it takes them a decade to recover. Isn't it? I mean, Shannon, though, I mean, she's a victor.

She's not a victim. Bad stuff happened? Yeah. Bad stuff happened. Horrible things happened. Things you never thought about when you were a little girl playing dress up that you would ever go through that but you did now what well shannon says i'm going to take control i'm not going to let things happen to me i'm going to happen to things

i'm going to lean in i'm going to clean up this mess and take control of my future. This divorce does not define me. It was just a change in direction. You see, folks, you cannot have no one can steal your hope. You have to surrender it. No one can take it from you. You have to surrender it. No one can take it from you. You have to give it up voluntarily. So don't give it up. Grab a hold of hope. Listen to these debt-free screams. Watch these debt-free screams on YouTube. Listen to the calls on the show. Grab a hold of hope and hold on

with every ounce of energy you've got. Oh, you can do this. I know you can. I've watched everyone just like you do it. So now it's your turn. This is the debt-free screen place. It's called The Dave Ramsey Show. We'll be right back. Thanks for being with us, America. This is the Dave Ramsey Show. We're so glad you're here. If you feel like you're always trying to stay competitive as a leader in today's constantly changing world. Well, I got some help for you.

Me too. Man, when I started this company on a card table in my living room, I didn't know nothing. I didn't know nothing. I didn't know beans. I thought I was so dumb. I thought when you hired people, they would work. I was so dumb. I thought when you hired people, they would work was so dumb i thought when you hired people

they would work while they were at work i was so dumb that i had a lot of lessons to learn over the next several decades so we've been running this company now for almost 30 years we've grown it from a card table in our living room to about 800 folks on the team a couple hundred million dollars in revenue a year on a major nationally known brand. How did we do that? Well, it got better because I didn't know nothing. I had to get better.

There wasn't anywhere to go but up. So I learned about hiring and firing. I thought I knew something about leadership. Boy, I have learned a lot about leadership. We're going to share a bunch of it with our Entree Leadership One Day event, November the 9th. We're going to be breaking down the mindset and the practices that today's top leaders use to thrive in this crazy business world we have out here. The best part is you and your team can stream the entire full day event live from anywhere in the country. Now, that's pretty cool.

Entree Leadership One Day is going to be absolutely incredible this year. Looking forward to it. Some new lessons I haven't taught before in this setting. So, for more information, go to EntreeLeadership.com slash E1D. It stands for Entrez Leadership One Day. Or you can text E1D2018, E1D2018, and text it to 44222. That's E1D2018 to 44222. You know, leading, particularly a small business, maybe you've got 10 team members or 20 or 40. Leading can be lonely and scary and some days unsatisfying, but it's how you run a business.

And I'll tell you what, the best stories I have are people stories. The worst stories I have are people stories. The worst stories I have are people stories. Yeah. Come join us. Entrez Leadership One Day. Text E1D2018 to 44222. Ryan is with us. Ryan's in Bakersfield, California.

Hey, Ryan, how are you? Good, sir. How are you? Better than I deserve. What's up? It's an honor to talk to you, and thank you for taking my call. Sure. How can I help? My wife had some debt for a credit card that she signed for her parents

because they didn't have enough credit at the time before we got married. So when we went into the marriage, we took the debt on together. A few years ago, we decided that she didn't have a job at the time, and I wasn't making enough, so we decided to default on the credit cards and kind of just put them out of sight, out of mind, forgot about them until we got served with papers from one of the credit card companies that they filed a lawsuit against us to get their money back. So kind of at a stuck point of what we should do with that, we have to respond in 30 days. And she's six months pregnant with our second child, and I really don't want her showing up in court. And I tried to call and settle with them, and they won't take anything less than what's owed on the balance. Okay. And so how much is owed on that card? That card was $1,900.

Okay. And who's it owed to? It was originally a Best Buy. Okay. And how long has it been since you paid on it? It's been probably about two and a half years. Okay. All right.

And so it was a Best Buy credit card that she signed for her parents? Yeah. That's weird. They didn't have a TV? They didn't have the credit for them. They asked her to get a credit card. So is their name on the account, too? No, they didn't put their name on it because they wanted her to.

They promised her that they would pay it off. Oh, so they weren't trying to build their credit. They were just wanted her to they promised her that they would pay it off oh so they weren't trying to build their credit they were just trying to borrow money using her name yeah exactly okay so they got the stuff and you got the bill yeah okay and now we're stuck with the lawsuit yeah so how much uh well that's because you didn't pay it but how much of the other debt is there um she's got about forty thousand dollars worth of school loans and how much of the stupid parent routine debt is there uh there's 19 from that and about um eleven hundred from another credit card she signed for them okay and what do you make uh about thirty six thousand and what

does she make about thirteen thousand okay And she's how many months pregnant? She's six. Okay. All right. Well, I'm guessing you don't have any money. No. Okay. Well, here's what's going to happen if you don't give them money.

You offered to settle them. How are you going to settle with them? I was just hoping to. I really hadn't gone that far. I was just hoping to. Yeah, you probably ought to have where you're going to get the money figured out for you and make somebody an offer to settle. Yeah.

Okay. So, you're not going to pay them in 30 days. You don't have the money. Right. So, they have sued her, and they're going to win the lawsuit. By the way, unless you pay them off, they're going to win the lawsuit anyway because they simply sued her for not paying, and the truth is she hadn't paid, and they're going to win the lawsuit. By the way, unless you pay them off, they're going to win the lawsuit anyway, because they simply sued her for not paying, and the truth is she hadn't paid, and they're going to win the lawsuit. The good answer is, you're in Bakersfield, California, so

whoop-dee-doop-dee, they're not going to do nothing. California's got so many consumer laws, they're so tied up, they're in such a barrel of fishhooks, they're going to get nothing. Eventually, they may try to find a way through the courts, but I doubt it. I'd give you about a 5% chance that they go all the way to trying to garnish your wages, and I'm not even sure they'll be able to do it in California, depending on how this is structured. Okay? So, really, it's no big deal.

But you need to get this mess cleaned up. That is a big deal, because it's not going away, dude. Right. You guys, you got because it's not going away, dude. Right. You guys, you had your head stuck in the sand, and every time you stick your head in the sand, it exposes your butt. You notice that? Yeah. Yeah, you stick your butt up in there when you stick your head in the sand,

so don't do that anymore. Let's get this going and get into addressing it. Okay. And we've got to clean up these two bad debts, and then we've got to start working on the student loans. You've got other debts? We've got car loans. How much do you owe on your cars?

Together, they're $25,000. Okay. And you hardly make that. Which one of those two is the expensive one? Hers is the more expensive one out of the two. Yeah, what do you owe on hers? Hers is, I think there's $15,000 left on hers. And you make $36,000 and she makes $13,000.

And she's got $40,000 in student loan debt and credit cards you couldn't pay and you bought a $15,000 car. See, this is what's going on. You've just been buying everything in sight like you were in Congress or something. So that car is gone, man. It's got to be sold. Okay. It's not you. You can't keep it.

It's not going to fit in it it's not gonna fit in your turn and you turning your life around plan and i want a you turning your life around plan you got a baby to feed because you're scared you got to be scared i yeah i'm not sleeping well at night i hear you well and and it's stress on the marriage i mean you start fighting about nothing because because this stuff's piled up on you i I mean, Sharon and I were 28 years old. We went broke with a brand-new baby and a toddler. Dude, we about killed each other. It is not good for a marriage, I'll just tell you.

So here's what we're going to do. I'm going to help you. I want you two to go through our class, Financial Peace University. It's a one-year membership, and you go to nine lessons. I'm going to pay for it. Okay. All right. If I give it to you, will you go?

Absolutely. All right. And then you plug into the EveryDollar app in the class, and it'll show you how to run the app and how to do your budget and connect to your bank and do all that. You get all that for a year. You've got online access to everything for a year to watch the videos, and you go to nine lessons in a local church in your area,

and we'll get you set up for that for free. How old are you guys? I'm 33. She's 32. Yeah, that's what I was thinking. I figured you were early 30s. Yeah. That's about what you fit.

And so it's just time for you to change, don't you think? I agree. Yeah, so here's what we're going to do. When you get everything moving, then you're going to call these idiots back that had the best buy. They bought that debt for probably about a nickel on the dollar. So they probably got about $150, $200 max in this thing. Maximum. And so they eventually, if you keep wearing on them, will take a settlement of $1,000 or so or less.

But you're going to save up $1,000 to be able to do that. But you're going to lose the lawsuit before that happens, and I wouldn't worry about it. But hold on. We're going to have Kelly get you signed up, and we're going to get you some help here. We're going to walk with you. If you need some more help, you call me back any time. I know what it feels like to be that scared. Hey, guys.

This is James Childs, producer of The Dave Ramsey Show. I'm excited to announce that we're now carried on 600 radio stations across the country. To find one near you, head to DaveRamsey.com slash show.