The Ramsey Show - App - How to Make a Lot of Money in MLM Companies (Hour 3)

Episode Date: September 7, 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. You jump in, we'll talk about your life and your money. It's a free call at 888-825-5225. Jamie is with us in Spokane, Washington. Hi, Jamie. How are you?

Hi, Dave. Thanks for taking my call. I'm doing well. Good. I hope it's an easy question for you. I started your program about two years ago. I'm debt-free minus my house. And I was curious about what you thought about I have an employee stock,

and it's a relatively safe employee stock. It's for a railroad, so it's pretty consistent. But I have about, I don't know, I'll say around just over $13,000 worth of stock right now. I was wondering if it would be in my best interest to cash that in and then pay it all towards principal. I still owe $138,000 on my house at 4.125 interest. And the last time I looked at the mortgage website, amortization is about just a little bit over 50-50 in my favor. So a little over half of it is actually going to principal right now.

So I was just kind of debating whether or not I should put that, cash that out and then pay my principal down. Well, any extra money you pay goes 100% to principal. Yeah, I have been paying an extra 500 bucks a month for the last few months. And that goes 100% to principal. Yes, it does. Okay. Now, the thing is this. In the baby steps, what we teach is use all money that's available to you that's not in a retirement account for whatever baby step you're on.

If you're on baby step two, working the debt snowball, you would cash this stock out and throw it at those debts. If you're on baby steps four, five, and six, you're putting 15% of your income away towards retirement. You're doing something in baby step five for kids' college if you have kids and so on. And then baby step six is paying off the house. So yeah, I'm going to cash that out and throw it at the

house in your situation. Easy enough. I just wanted to get a second opinion on that. I was kind of leaning that way. Yeah. I mean, I'm just trying to get the house paid off as fast as I can. So any money I can get my hands on that's not going to be penalized, you know, I'm not cashing out retirement and that kind of thing.

But if it's not going to be penalized, I'm going to cash it and throw it as fast as I can. So good question. Shadrach's with us in Boise, Idaho. Hi, Shadrach. How are you? How are you, Dave? Good. How are you doing?

Better than I deserve. What's up? I need some advice. My wife and I were approached by some friends who have their own business, and they claim they're going to be retiring in about four to five years. And I'm 26, and they're about our age. And they said that their mentor who taught them how to do this retired at 28 years old.

They own their own company through Worldwide Group. Have you ever heard of that? Nope. It's an offshoot of Amway, which I'm sure you've heard of. Sure. So I'm, uh, you know, going, we, there's a whole vetting process. We've been to two meetings so far. Um, I'm very skeptical and I want to be very careful because I don't want to get scammed. Doesn't, it's not a pyramid scheme. It's an MLM, I think. So I was wondering, for your advice, if this is possibly legitimate or not. Well, is it actually owned by Amway?

I'm not sure. I know there's a whole bunch of little companies underneath Amway. Or did somebody leave Amway and start this? That would be different. No. Okay. No, then it's under Amway. Okay.

If it's technically owned by the Amway people, it is not a scam in that you're not going to lose, you know, they're not going to steal your money or something like that. Amway's a legitimate, you know, full-on company, and they or something like that mway is a legitimate you know full-on company and they don't rip people off and that kind of a thing but then the question becomes how much of the story that you're being told about these early retirements due to making mountains of money is hype and how much of it's real and that's what you're trying to vet you're trying to cut through the cut through the bs here you know, one of the downsides of the MLM culture is exaggeration beyond belief to the point it's lying. You know? It seems that way.

And so, you know, they just hype, hype, hype, hype, hype, hype, hype. And that's the downside of it. And it causes them to lose credibility. When sometimes they have a legitimate opportunity. And if they would just present it that way instead of making it so pie in the sky, it just makes your shields go up, you know. So here's the deal. Here's the deal with MLMs. It's pretty simple.

I have friends in six or seven different MLMs over the years that have made north of a million dollars a year. Okay. seven different MLMs over the years that have made north of a million dollars a year. Okay? 100% of them were very good at hiring more and more people recruiting into their MLM. That is where the money is made. So if you want to be a full-time recruiter of people who are going to recruit other people, who are going to recruit other people who are going to recruit other people and you want to be a full-time manager of salespeople basically is what we're talking about and you want to deal with a high turnover and a continual hiring continual hiring continual training and you're in the business of recruiting and training and dealing with drama,

recruiting and training and dealing with drama, and making the presentation that's being made to you, maybe with a touch more credibility than it's being made to you, if you want to be in that business, MLMs can be, over a period of many years, can turn into a substantial income. If you get in something in an 18 months, you're supposed to be a millionaire starting from zero. I call BS.

Yeah. Okay. That's just not true. That's just, you know, but can you work and build a large sales organization called a hierarchy in MLM? If you become a professional recruiter and a professional trainer and a professional

manager of salespeople yes you can but it's not got to do with the you know whether you like the makeup or not or whether you like the knives that they sell or whether you all that that that you need to believe in that you need it needs to have integrity to it and that's what the difference in an MLM and a pyramid is, is there's an actual economic transaction, and there has to be that. But when someone says they're making $100,000 in an MLM a year,

it means they've built a hierarchy. It doesn't mean they sold a bunch of makeup. You follow me? Yeah, and that's how they present the few details they have given us so far. Yeah, so what you need to decide is not do I want to be wealthy. Most people that have a brain and would like to be wealthy, I mean, if you say I don't want to be wealthy, that's kind of weird. So, yeah, we know that about you.

That's what attracts you to this. You don't need to decide do you want to do that. What you need to decide is what your career is yeah and do you want to be in this business and if you want to be in this business great go do it and you know go go whole hog man go wide open and believe and you know and get to talk you know discuss it with other people and get them to do it and if you want to be a recruiter, nothing wrong with that. Hiring, recruiting, and training salespeople and high turnover. But just for God's sake, tell the truth while you're doing it.

If you want to do that, that's okay. Do that. But don't do this just because you want to be wealthy and you think this is a good way to get wealthy. It won't work. You'll die. You won't make it. This is the Dave Ramsey Show. Are high health care costs getting you down?

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over 35 years, and our members have shared over $2.5 billion in medical bills. To learn more, visit chministries.org. That's chministries.org. Christian Healthcare Ministries is a proud sponsor of Dave Ramsey Live Events. chministries.org. Thank you for joining us, America. Nick is in San Diego. Hi, Nick. How are you? Hey, Dave. I'm great. How are you, sir?

Better than I deserve. What are you? Hey, Dave. I'm great. How are you, sir? Better than I deserve. What's up? All right. Well, I found your program about two months ago, and when I found it, I mean, your books were sitting on my shelf for like three years, and I finally got in gear. I'm on Baby Step 2 right now. I'm going to be done by the end of the year with a $31,000 car. That's what I owe on it. And I'm going to have the baby steps four, five, and six in process. I do own a home and I owe about $420,000 on it. My question is, I can dump about $40,000 to the principal of my home a year while still doing 15% of retirement and saving for my kid's college fund? Do I do that, or do I put that $40,000 into a mutual fund?

No, you dump it on the house. Baby steps are 15% of your income going into retirement is $4,000, $5,000 is kid's college, and everything else goes on $6,000 until the house is paid for. When it's paid off, then you maximize all retirement and all investing options that are at your fingertips. Here's what we found in studying the 10,000 millionaires that we studied. All the data indicates they pay off their home in an average of 10.2 years. And when their home pays off, we see a huge acceleration in their net worth.

Because without a house payment and complete focus then on investing in generosity only, because you don't have any debt at that point, your wealth building goes into overdrive. Does that make sense? Yes, that does. So you hold off on the mutual funds once the house is paid off. Then you max out everything. Yeah, because it'll just go boom, man. I mean, you have a mushroom cloud effect in the math at that point.

And that's what we see. And so, you know, the data says that's the shortest path to millionaire. And here's what it does aside from that. I mean, when you don't have a payment in the world, it changes the way you think about money. It changes the way you think about your income, you know, because you're free. Right. Even just starting your program has changed the way I think about money. I mean, if I go spend $5 at a fast food now, I cringe.

So I appreciate you for that. Well, that's just up through baby steps two and three. Once you get those two down, then you can let your foot off the intensity accelerator just a little bit and enjoy the ride a little more. But, I mean, the bottom line is you would pay off your house because if your house was paid for, would you turn in and borrow on it to invest? No. I wouldn't borrow on a paid-for house to invest.

And if that's the answer, then the same answer, it's the same thing in reverse to say, oh, I'm going to invest instead of paying off my house. Well, it has the same exact effect. You know, it's as if you were borrowing on your house to invest. And so it actually slows down the process when you try to say, well, I'm borrowing, you know, I'm borrowing that money at 4%, but I'm making 12 and you're leaving risk out and you're leaving the power of cash flow out and you're leaving the power of choices that you make differently out when people make that statement. And so, um, the data says the real millionaires, not people with theories pay off

their house in 10.2 years. And you can do that pretty easy in your situation. You're probably going to do it in about seven from today, based on the numbers you gave me anyway. Hey, thanks for being a new listener. Congratulations on your progress. Christian's with us in Los Angeles. Hi, Christian, how are you? Excellent, Dave.

Thank you very much. Long-time listener, first-time caller. Just a quick question. I was recently approached by a solar company. Usually I send them quickly away because I'm not going to lease the panels. I don't have the money to buy them outright. But there's a program that they're offering called the Power Purchase Agreement. I don't know if you're familiar with it.

It's just financing the solar panels. Oh, so it's the same thing, even though I'm just buying the power. They say that they only go up 2.9% annually, and SCE, who I currently buy, is 10%. But I didn't feel comfortable with it, because I would never own the equipment anyway, and it seemed like they would pay off the panels, you know, or their cost, you know, a lot sooner than the 20-year contract that I would be in. So I was just wondering if it was really different or not. No, it's not any different. Solar panels are great if you can pay cash for them and you can run an analysis that says I get my cash back in five years or less, meaning the cost of the electricity and the amount of sun that you have in the area is what creates the analysis.

I actually endorse solar panel companies in several cities around America with our local radio stations that I'm on. But I don't endorse them to be financed in any possible scenario. So write a check, and if you spend $10,000 on them or $12,000 or whatever it is, you've got the money, you're just investing in it, and then are we going to save that much in electricity given our power rate, or the rate of what we charge for electricity in our area, and given the amount of sunshine that's going to go into these panels. The good news is, man, solar panels, of course, have been around for decades.

And the good news is the technology is, the quality of them and the efficiency of them, the technology is getting a lot, lot better, which makes the break-even to happen faster. You get your money back faster because they're that much more efficient than they used to be. They kind of used to be clunky technology, and they're just doing a lot better job with them now. Some areas of the country, with the amount of days of sunshine that you get and the ability to store the power and some of the processes they've got with some of the power companies makes it really, really attractive. But I would never do it if I didn't pay cash for them. So, hey, man, thanks for the call.

Jamie's with us in Rapid City, South Dakota. Hi, Jamie. How are you? Hi, Dave. Thank you so, thanks for the call. Jamie's with us in Rapid City, South Dakota. Hi, Jamie. How are you? Hi, Dave. Thank you so much for taking my call. I sure appreciate your ministry to our family. Thank you. How can I help?

All right. I have a question. My husband and I, we have a house on 18 acres. The house is worth about $350,000, and we owe $185,000 on it. We're just starting Baby Step 3, but, we're just starting Baby Step 3. But after we're done with Baby Step 3, we're wondering if it would be better. We just want to get out of debt and don't absolutely love where we live. So I'm wondering if it would be better to subdivide our property into nine-acre plots,

build a house, sell both of them eventually, or just keep it, keep building up equity, which it's done really well with equity, and pay it off, and then, you know, decide from there after we pay it off what to do. Or you could subdivide it and sell the nine acres and throw that at your balance. Yeah, that's true, too. We could make more money if we built a house. Yeah, assuming the house sells. Assuming the house sells and you don't have the money to build the house.

True. So you'd be going in debt to do a spec house. No, thank you. You wouldn't do it? No, I don't borrow money and go in spec houses. I would never tell you to do that. Well, even if we lived in the house for a couple years. You live in the house you're in?

Anytime. I mean, no. No, I'm not, you know. I mean, I guess the top house, the house we're on now, we would sell and use that money to build our house down low. Oh, okay. I misunderstood. I thought you were just going to subdivide it and go borrow the money and build a house and hope it's sold. Okay.

No, we would sell as we go. So we'd sell, build, sell, and then use the money from both of those to move forward. Yeah. Okay. If you want to do that, that's fine because you're not going further into debt in your scenario. And you're just saying, but I don't know. I mean, do you really want to be in the building business? That's really what you're saying. And I'm do you really want to be in the building business that's really

what you're saying and i'm not sure i want to fool with all that i'd probably just sell it you know if you can break get more for the property by splitting it we'll get more for it by splitting it and sell it um let somebody else screw with all that i really if you really want to get in the building business that's fine but um uh you know you can you can if you unless you really want to get in the building business, that's fine. But, you know, you can, unless you really know what you're doing, you can lose some money going that route. So you're going in the building business. And if you don't plan that out well and you don't know how to estimate construction properly and, you know, you get tied down, you get stuck in a hole here, you end up with a money pit, you can have all kinds of problems there if you're a brand new home builder. But again, I don't know what your experience level is and that kind of thing and what your desire thing is.

It's fraught with danger if you're not experienced and knowledgeable, what your plan is. So I hope that helps you. Thanks for the call. This is The Dave Ramsey Show. Okay, things are getting pretty weird out there. I thought the Equifax breach was bad enough. It exposed the personal financial info of half of all Americans. Now we have breaches affecting almost every U.S. citizen, and the data stolen is more personal and equally dangerous.

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in the lobby of ramsey solutions james and hayley are with us hey guys how are you we're wonderful we're doing pretty good welcome where you guys live you guys live? Morgantown, West Virginia. West Virginia. Awesome. Well, welcome to Nashville. Good to have you guys. And all the way down here to do a debt-free scream. Yes, we are. Love it. How much have you paid off? We paid off $105,000. Good. And how long did it take? About 21 months. Wow. And your range of income during that time? We started out around $45,000, and we ended around $170,000. That's a bit of a jump in two years. That's a big jump.

What do you guys do for a living, and why did that income go up like that? Well, I graduated college. I'm a petroleum engineer. Oh, there we go. Ding, ding. Okay, so you went from making zero to making petroleum engineer. Oh, there we go. Ding, ding. Okay. So you went from making zero to making petroleum engineer money. Yeah. Gotcha. Okay. And that explains a big jump. Okay. What do you do, James? I am a physical therapy assistant. Ah, very good. Okay. So we're making bank. I'm going to guess some student loans in that $105,000. How much? The student loans total were like $40,000, $45,000. What was the rest of it?

We had a car. We had some cell phones that we financed. We had a settlement from a lawsuit. Tax bill. And we had an unexpected tax bill. Okay. We had to add in. Kind of normal.

A little bit of everything. Yeah. How long have you guys been married? tax bill. Okay. We had to add in. Kind of normal. A little bit of everything. Yeah. Right. How long have you guys been married? Four years. Okay. So four years, so like two years into the marriage, something happened and you said, we're going to get out of debt.

What happened? Well, our process of getting in debt started right around our time of our marriage. We both come from hardworking families, but we don't come from a background where there's just money everywhere. Okay. So we got married in May of 2016. And I'm going to try and make it through all this. Okay. So three months after our wedding, we were in the process of a job change for me. Haley was still in school and we packed up everything we owned and we moved into a new apartment.

And before the end of the day, we had not stayed the night there. The apartment burnt down. Oh my gosh. Yeah. So we lost everything that we owned. We didn't have any money and we didn't have anywhere to live. When you didn't have insurance. Yeah.

We didn't have any renter's insurance either. Oh my gosh. So if it wasn't for our family and our church, we wouldn't have been able to make it at all. So we just started to live on credit and people would give us some money, but we weren't very smart about it. And I've always been a big fan of talk radio. I listened to a lot of podcasts and I found your name. I had known from my youth, but I didn't know anything about your plan.

And just a few days of listening to it and I brought it to Haley and I said, hey, this stuff, like, I think it could really change us. So do you want to stop spending all the money we have and just pay off our debt? I thought he was crazy. Of course, of course. Yeah. Very cool. And you were in school at the time, right? Yeah, I was. Yeah. But I got on board shortly after and I stopped shopping so much and going out to eat all the time. And since then, we've just been working hard trying to pay off our debts. And JR for the longest time had two jobs. Yeah. So whenever I started the

plan, um, I was working one job making about 45 grand and I immediately went to my boss and I said, Hey, can I restructure my schedule? You know, I'll work like six days a week so I can just work early in the day. And then I went and applied for another job and I worked that job those same six days all afternoon into the evening. And on the seventh day I applied for a job in a hospital and got that job. So there was a three month period where I didn't take a day off. Wow. Uh, just working every day and we'd see each other like six in the morning. We'd kiss and pray and Haley would go to school and I would go to work and I get home like eight or nine at night and everybody thought we were crazy i bet but we had concerned for us yeah we had vision and we had purpose and uh i hope now people will understand why

we gave up so much of our time so that going forward you were living like no one else so later you could live and give like no one else absolutely and a price to win way to go yeah very good so uh who was your biggest cheerleader me it was my wife i was gonna say outside other than each other anybody outside cheering you on or everybody saying you're crazy yeah i you know some of the people i worked with they would they would see like hey you're working all the time like what's going on and i would explain to them and introduce this plan to them and uh i think in a couple years maybe some of them will make it down here. And we talk about it and we support each other.

Yeah, that's good. Okay. Very cool. But other people thought you'd lost your mind. Yes, sir. Most of them. Yeah. I mean, our family, too.

Our family knew what was going on. I think maybe we've had a positive influence on them, too. Very good. Very good. Very good. Well, when you win, people always want to know how you did it, you know? So how did you do it? What do you tell people the key to getting out of debt is? I would just say that you just have to believe it's possible.

I think it's easy just to kind of get all the numbers together and look at your budget and think that it's impossible to pay off a certain amount, and you don't want to you don't want to give up everything that you're doing but um it's well worth it in the end about a month after we got out of debt and we haven't told many people this but um we found out that we were pregnant and uh unfortunately we ended up losing the baby but um we were able to pay off all of my medical bills without even thinking anything about it and it just it just gave us more peace of mind that although we were struggling in that time and we were of course

devastated we didn't have to put a medical bill on a credit card and just wrote a check and forgot about it and just healed yeah and we didn't have that nagging bill yeah following us around reminding us of what had happened so i would just say that if you work hard and believe it's possible it it's worth it in the end yeah Yeah. Cool. Well, you obviously worked hard. No question about it. And, you know, James has put in a lot of hours, and now you've kicked in with this new great career of yours, and that makes everything go into overdrive now. And so hard work is part of your all's big part of your story here to turn this around. So very well done.

Well, I'm very proud of you. Congratulations. How old are you two? I'm 25. I'm 27. Wow. I love very proud of you. Congratulations. How old are you two? I'm 25. I'm 27. Wow. I love it. Killer millennials. Get them. Love it. The best they are, man. That's awesome. On your way to being millionaires. Yes, sir. So we've got a copy of Chris Hogan's retire inspired book for you because we want that to be the next chapter that you become millionaires. One of those everyday millionaires Chris talks about, and then, of course, being outrageously generous as you go along.

Very well done, you guys. Very well done. Thank you. James and Haley, Morgantown, West Virginia, $105,000 paid off in 21 months. Meanwhile, their income goes from $45,000 all the way to $170,000. Count it down. Let's hear a debt-free scream. Three, two, one.

Thank God we're debt-free. Love that. Way to go, you guys. Man, that's amazing. That's as good as it gets right there. The people that start winning with money do it on purpose. They're intentional.

And what you focus on is what you win at. You very seldom win at something accidentally. No one wins a Super Bowl and goes, what happened? How'd that happen? No, they know exactly how it happened.

Years, years of practice and developing skill. Intentionality, being intentional. attention to in your life, your health, your marriage, your kids, your career, your income, your spiritual walk, your intellect, your wealth building, what you pay attention to, you win at. That's why something as simple as a budget makes you pay attention to money. And when every dollar of your income has an assignment every month, that's intentionality with money. And that's why we named the world's best software and app for budgeting that we developed that's free.

We named it EveryDollar because you're being intentional and you're giving every dollar an assignment. It's helped millions. We've got almost 5 million people using EveryDollar because you're being intentional and you're giving EveryDollar an assignment. It's helping millions. We've got almost 5 million people using EveryDollar now. What do they know that you don't? Well, go to EveryDollar.com and find out. It's free to use this stuff. You can put it on your iPhone, put it on your Android, whatever.

It's all free. Check out EveryDollar. It's really, really helpful. It takes about 10 minutes to put your budget together is all. This is the Dave Ramsey Show. Our scripture of the day is Psalm 73, 26. My flesh and my heart may fail, but God is the strength of my heart and my portion forever. My friend Seth Godin said, if failure is not an option, then neither is success. Pam is with us in Fort Lauderdale.

Hi, Pam. Welcome to the Dave Ramsey Show. Hi, Dave. It's great to talk to you today. You too. What's up? I have a question about uninsured motorists. Should I or shouldn't I?

I do. I just want to make sure everybody's taken care of and cars are fixed and people are fixed. That's the purpose of carrying insurance is to transfer the risk of that. And it's not that expensive. it's not that big a deal and i would include it if you're going to cut there's other places you can cut like raising your deductible and getting your premiums down that way taking on some of the risk yourself which i do carry a very very high deductible on my vehicles so that my cost goes way down on all the portions of insurance but yeah i yeah, I carry it on me.

Ryan is with us in Lansing, Michigan. Hi, Ryan. How are you? I'm doing well, Dave. How are you? Better than I deserve. What's up? So I recently got married,

and we're planning to make a move from Lansing to Grand Rapids in January. Cool. And we're trying to figure out if we should rent or buy a house. Well, congratulations. You should rent. I thought that's probably what you were going to say. Yeah. All right. Do you have any debt? We have about $10,000 in debt. Okay. And so I would want you to get clear of debt. I would want you to be married a year. And I'd want you to have an emergency fund of three to six months of expenses, plus your down payment. And that's going to take you a little time. Sorry.

We have about $40,000 in the bank right now. Okay. And how much debt do you have? $10,000. Well, write a check and pay it off. Yeah, we're planning on doing that. Okay. Like I said, I just got married on Sunday.

Oh, you said just recently. I didn't know Sunday. Oh, my gosh. Okay. Well, I'll give you a week to get it done. That's fine. Okay. Yeah, I appreciate that.

But, I mean, when you get over there to Grand Rapids, you need to learn that city. It's a wonderful city, by the way. You need to learn the city, and you figure out where, you know, after you live there for six months or a year, you're going to finish up your emergency fund. You probably got that, it sounds like. And then you start saving for your down payment on your house. But get to know each other.

Be married a little while before you rush out and start looking at houses. You'll make a different decision with a wife that you know better. Does that make any sense? Yeah, it makes sense. We met in Grand Rapids, so we know the city pretty well. Okay. We're comfortable there, so at least there's that. Well, let's take six months then and get a little place for six months

and make sure the emergency fund's finished up, it sounds like it is, and then really see how big a pile of money we can pile up for our down payment. And maybe it doesn't take a year. Maybe it takes six months, because if you know the city and that's where you met anyway and that kind of stuff, that's helpful. And maybe you've got family around there, and we always just say it takes a year of being married to know how close to your mother-in-law to buy.

You know, you don't want to be too close. And you want to be close enough. Amen. Thanks for the call. Congratulations on the marriage. Betty is in Idaho. Hi, Betty. Welcome to the Dave Ramsey Show.

Thank you for taking my call. Sure. What's up? I'm an 87-year-old widow. I have, in addition to my own home, I have two houses that I rent, one of which I have been renting to my granddaughter for about four years. She and her husband want to buy the house, and I'm thinking that they are hoping that I will finance it for them. They haven't specifically addressed that. I have suggested that they look into mortgage and financing options, and then we can discuss it.

If they can't qualify for a standard mortgage, would I be risking a lot if I financed it myself at my age? I don't know that it's due to your age, but it just sets up a problem with relationships. It's tough enough to rent to family, but then the borrower is slave to the lender, and you just changed her from your granddaughter to your slave when you do that. So I would never, ever take my grandkid and put them in debt to me. I wouldn't do that. I would rather them just rent until they can get their self in order to buy. If they can't get a mortgage, it's the same reason you don't want them owing you a mortgage.

True, true. So I think you're risking relationship issues there that I wouldn't want. True, true. and help them get in it that way. But, you know, you've just got to decide how much of that you're going to do and so forth. But if you're going to sell it, I would just sell it and take my money out of it and do some investing with that money to make sure that your income is taken care of. But we don't want them in there and then them not having to be able to pay because they lost their job and then you're the bank. And, oh, that just really makes me want to cry. James is in Minneapolis.

Hi, James. Welcome to the Dave Ramsey Show. Hi, Dave. Thanks for taking my call today. Sure. How can I help you? I'm at the end of a car lease, and I'm not sure if I should buy it out or if I should sell the car. Do you have the money to buy it?

Well, I have a $59,000 income, and besides the car, I have $67,000 in debt, and the bio price is $15,100 plus taxes and fees. And you don't have $15,000? And I do not have $15,000. I'd have to take out a loan for it, and

I thought that was kind of contrary, and they kind of want answers, and I'm just like... No, I think I'll just turn it in, and I think I'll get me a little beater to drive while I get the other stuff paid off. And once it's all paid off, then I'll save up and move on to a better car with cash. But no, I'm not going to finance a $15,000 car purchase while we're trying to get out of debt. Well, the problem I have is right now I leased it for $45,000, and I have got 70,000 miles in this car with a 15-cent-mile penalty.

So if I turn it in, I got a $75,000 penalty. You're 70,000 over? I am 35,000 miles over. Which equates to how much of a penalty? About $4,000. Jeez. Man, I hate leases. Oh, you are so stuck.

Well, what's the car actually worth, if you look it up on Kelley Blue Book? So, Kelley Blue Book gave me two answers. One was $14,200, and one was $12,800. I believe the $12,800 was traded, and the $ 14-2 was if I were to try and sell it myself. Yeah. And so they want you to buy it for 15. That's what my contract says I have to buy it for, 15-100 at the end of the lease. I should clarify the lease ends in January, January 23rd.

But here's the thing. If you buy it for 15 and it it's worth $13, you've lost $2 if you turn around and sell it the next day. And if you write them a check for $4, you've lost $4. So, you know, you might buy it and finance it and turn around and sell it. But you've got to find the $4,000 to cover the miles or find the $2,000 that you're in the hole, right? Right. So you can negate the $4,000 by buying it and turn around and resell it immediately. And if it's worth, again, if you pay $15,000 for it and you sell it for $13,000,

then that's losing two, do you understand? That makes sense. Or you hand them the keys and you lose four. So I might buy it and flip it, but I wouldn't buy it to keep. I'm not going to finance the car to buy it to keep. You currently have the car financed. If you finance it again for 10 minutes while you turn around and resell it, that's fine. And I would try to negotiate with them and get them to sell it to you cheaper than 15 since the stupid car is not worth 15.

And you might mention that to them you know like if i hand this back to you you guys are gonna lose money on this car so why don't you go ahead and sell it to me cheaper and see if you can get them down on it and and go ahead and get it financed but and then flip it over as fast as you possibly can get out of it, though. Don't keep it. That puts us out of the Dave Ramsey Show in the books. Our thanks to James Childs, our producer. Kelly Daniels, our associate producer and phone screener.

I am Dave Ramsey, your host. We'll be back with you before you know it. In the meantime, remember, there's ultimately only one way to financial peace. And that's to walk daily with the Prince of Peace, Christ Jesus. Hey, it's Kelly, Dave's phone screener. We finished 2017 with a bang as the fourth most downloaded podcast of the year. Thanks to all of you for listening and helping us spread the word.