The Ramsey Show - App - How to Save Money When Buying or Selling Your Home (Hour 2)

Episode Date: October 3, 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 am Dave Ramsey, your host, and this is your show. Open phones at 888-825-5225. You jump in, we'll talk about your life and your money. It's a free call. Shea is with us in Reno. Hi, Shea.

Welcome to the Dave Ramsey Show. Hi, Dave. Thanks for taking my call today. Sure. What's up? Well, I have a health insurance question for you, and I'm hoping you could give me some insight on it. We adopted our two children about three years ago, and they came from the foster care system. So we don't get a lot of services, but one thing we do get is health insurance until they're 18, and it's

provided through our state Medicaid system. And every year, my husband and I kind of go back and forth on whether or not to keep it or to put them on his plan through his employer, and we're getting close to that time of year to make that decision. Okay. What would his employer's plan cover that Medicaid is not covering? Well, they've both been healthy, thankfully. I guess the thing we always come back to is unknowns of any kind of health issues that they may have or any services, because even though the Medicaid coverage is crummy in a lot of ways, a lot of doctors don't take it, and it's basically welfare insurance, it has covered their needs up to this point because both kids are healthy,

and they've had, you know, minimal health incidents. So you're afraid if they had some kind of a major event that Medicaid would not do a good job of covering and that his insurance might? Actually, it's more the opposite. I'm not worried about the major stuff because, like, we've had to go to the ER for, you know, a scrape and a bump. And they pick up the tab for everything. It's more the ongoing care. There is, you know, it's very hard to find providers who take it.

There's a bit of a stigma. And we feel a little strange having that kind of coverage given our own financial position, you know, that our kids are on a – there's a bit of a stigma that we feel having it. So it's just kind of a dilemma we face every year. I mean, if you were getting – if they offered you, you know, free food stamps because you adopted a foster child, you know, that would feel the same way, is what you're saying. It would, yeah.

I mean, I don't know. They'd look at you funny at the register, I guess. It takes care of their, you know, their, their financial needs. And so I don't know, this is not an easy question. What does it cost to add them to your husband's policy? I think it would be nothing given the policy we're on. He has a high deductible HSA plan that we have, and there's no cost for that one for our family. Then why is it a question if it doesn't cost anything and it's better coverage? That's a good answer.

There probably isn't a question. I guess the only question would be just changing jobs in the future if he were to leave and go somewhere else. Yeah, I mean, you just have to cover your kids from then on you're done yeah you're done because you opted out you know i don't know you might be able to hop back in if something got crazy but um but for now you could opt out okay for that matter i guess for that matter i don't know that you have to opt out do you that's a little unclear we were told you know kind of upon our adoptions um you adoptions finalization that it's kind of an all-or-nothing thing. If you add a secondary insurance, then Medicaid gets a little squirrely, but Medicaid seems to be squirrely regardless. Oh, well, so what if they're squirrely?

Yeah, everyone's squirrely. No, my point is if you're not using them and they're squirrely, there's no squirrel. Yeah, good point. So I just wouldn't tell them i would add it and then you can choose which one you want to use from time to time and if they get squirrelly you got the big coverage and you can drop the squirrel okay yeah i wouldn't bring it up if as long as you're not as long as you're not doing anything to interface with the medicaid system then they're not even gonna know and you're not doing anything wrong because you're not taking money.

I mean, you're just not activating the squirrel. Yeah, yeah. And I mean, I guess as long as we're not using it, they're not even going to notice. Yeah, they won't notice. And then if you step back in and start using it, they might notice, and then they might ask something. And if they do and it causes a problem, just lean back over on your husband's policy at that point.

Yeah, or pay the bill like we would have to anyways. Yeah, I think I would just put them on there. It doesn't cost anything. Let's put them on that plan and start using that plan. And then if you ever want to reach back over and tap Medicaid on the shoulder for something, you've got that as an option. Okay, yeah. And I mean, again, it's great for these emergencies, but the ongoing care you know, the thing we need once or twice a year, it's just miserable. Mm-hmm.

Mm-hmm. Oh, absolutely. That makes a lot of sense. Yeah, and it feels weird to even have it. I mean, it's just, frankly, just bizarre to present that as an option to a doctor when we go into a doctor's office. Yeah, I hear you. What's your household income? It's variable, but it's north of $250,000.

Oh, yeah. I wouldn't screw with it. I'm with you. Okay. Put them on the husband's plan, and I just leave it sitting over there, and 99.9% of the time you're not going to tap them on the shoulder anyway, and don't worry about it. Okay.

Well, that sounds good. That's good advice, and it gives us a plan for November when we have to make this decision. Good news, it doesn't cost anything. Exactly, and it's there if we ever need it or if our kids need it exactly hey thanks for the call open phones at 888-825-5225 you jump in we'll talk about your life your money katrina is in new york hi katrina how are you hi mr ramsey good afternoon thank you for taking my call. Sure. How can I help?

I have a question today about a recent problem that we were going through. I'm currently doing Baby Step number two. I want to thank you briefly about writing your book, The Total Money Makeover. It's making me see things in a different light, And I listen to your show every day. Thank you. Learning a lot. You're very welcome, sir. Recently, we received a letter from the IRS that we owe them about $42,000.

Why? Yes. On the letter, it said that they said, your preparer has incorrectly reported these tax payments as withholdings, causing the IRS to issue grossly elevated refunds since the filing of your 2011 tax return. So basically, we've been receiving excessive refunds. Are you sure they're correct? Have you gone to your preparer? We went to our preparer, and he said that he thought that my husband actually works for the United Nations. And basically, the preparer reported that on the tax return,

those payments as estimated tax payments and not, it should have been reported as estimated tax payments and not federal withholding. So that's why the IRS said that's where the mistake came from. I'm sorry, did you pay the estimated tax payments in the same amount that they thought were withheld? Well, they said that it should have been reported on the tax return as estimated tax payments. I know. Did you pay the estimated tax payments? I believe so, sir. If you paid the estimated tax payments and they're the same amount as withholding should have been,

there's not a penalty associated with that. It's just a classification issue, and you don't owe $42,000 in tax. You need to get some more tax advice. This sounds squirrely. It sounds bad. Yeah, go to DaveRamsey..com click on ELP for taxes and get you some help and have somebody else comb through this that doesn't sound right this is the Dave Ramsey Show Hey, Spencer here from Smile Love. At Smile Love, we'll straighten your teeth and help you love your smile. That's what we do, and we do it for less than you'll find anywhere else.

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of smile? That's what we're all about and we think everyone deserves to have it. So if you ever find yourself holding back your smile, get started today at smilelove.com and remember to use promo code Dave to take an additional $100 off. Smilelove.com, promo code Dave. Thank you for joining us, America. We're so glad you're with us. This is the Dave Ramsey Show. Jackie's with us in Columbia, South Carolina. Hi, Jackie. How are you?

I'm fine, Dave. Thank you for taking my call. Sure. What's up? Well, I want to know if I could signsigned a loan for my son six years ago. He's now 28. It's a student loan. And he asked, should I make that a part of my baby steps too

since he's not paying it like he's supposed to? Well, when you co-sign a loan and they don't pay it, you get to pay it. That's why they wanted to co-sign her. Yeah. So how much do you owe on the student loan? Almost $20,000. Woo! What's your household income?

About $70,000. $70,000, okay. And what does your son make? He just got a job about $20 per hour, making about 20 to 25 hours per week. He's working 20 hours a week? Yes. Okay. What's he doing with the rest of his time? Well, he doesn't want to have a job that will conflict with this job

because he's been trying to get into this job forever. Why would it conflict with this job? He's only working 20 hours a week. Right. Because he's on call for this job. 20 hours a week or the whole week? 20 hours per week, maybe 25 hours. It's a TV station, and he just goes in when they have a football game and does the games,

the switchboard at the games. And why would you be on call for football? There's no emergency football. He's been trying to get into the TV station for years. I got that part, but he's working 20 hours a week, and his mother's calling me because he can't pay his dadgum $20,000 bill. I'd like for him to work another 40 hours a week on top of the 20. He's playing football.

Yes, sir. So he can pay his freaking bill so you're not calling me. How would that sound? That would sound awesome. I tried to tell him that. I'm just going to come to the realization I just might have to pay it myself because he pays it 30 days late, at least 30 days late every month. Because he don't work much. Yes.

Yeah. There's a great place to go when you're broke to work so uh what i would tell him to do is uh get into financial peace university and get his young bud in gear and start paying the bill i mean if i'm you i'm gonna be all up on this kid because he's 28 years old and he's a slacker and his mama is calling me are you single yes sir his mom's a single lady out here and you're 50 what i'm 50 50 years old and you're having to pay this kid's bills yeah i'm mad at him right now and i want you to be too in a good loving mama kind of way i'm not trying to disown him i just want to knock a nod on his little head okay yes yeah and then yeah you better plan on paying it if that little knot doesn't get moving okay right so yeah put it in your death snowball and knock it out and

then you just chalk it up to that and but dude i'm telling you uh we're to have some discussions. Is he married? He lives with a girlfriend. Okay. I'll bet she works 40 hours. Yes, sir. Yeah. There you go. All right. Open phones at 888-825-5225.

Catherine is with us in Portland, Maine. Hi, Catherine. How are you? Hi, Dave. Thank you. I'm confused about my budget. I do the every dollar budget. I'm on baby step two.

Great. I project my expenses for the month. Project what I'm going to be paying for debt. And then sometimes something happens, like last month when my car broke down, I had to have it towed and repaired, and it cost almost $500. That doesn't happen that often. No. That doesn't happen that often. That would be an emergency. Do you have your Baby Step 1 with $1,000, right? I do. Now, that would be an emergency that you would use that for.

Okay, but that's what I was confused about, because the way I handled it was I simply added a new line item to my budget for that item and then reduced the amount that I paid toward debt for that month. So I did it wrong, right? No, that would be okay. You cash flowed it. If you can cash flow it that month, that's fine. It didn't have to come out of the emergency fund. So you were paying more than $500 extra on debt each month. Yes.

Good. And so you reduced it by $500 for one month because you got kicked in the kneecap with this thing. But usually you're not going to have that month in and month out. Now, some things, if there's a recurring unexpected event, it no longer is unexpected. For instance, you know, you don't have anything budgeted for car repairs. Well, that would not work because most cars are going to need some repairing over a period of six months. I don't have anything budgeted for car repairs. Yeah, I probably would put something in there for that because your budget needs to reflect the real world.

And the real world is you're going to spend something on that car in a given six-month period of time. It might be tires. It might be maintenance. It might be oil change. It might be a $500 tow, you know, but you're going to spend something on a car, unless you're driving a really nice brand-new car, is you're going to spend something on the car during that time.

So your budget should reflect reality in that regards. So probably going to add a little bit of a, it doesn't have to be a lot, $50 or $100 or something, and let that build up as a sinking fund. They call it in the every dollar software or an envelope. I don't care where you would build it up, but somewhere you build it up and you have the money in cash then for your car repair as it comes up. And that's an example of something that is recurring, so it's no longer unexpected. Emergencies should be unexpected things.

Things that occur often enough that we can expect them aren't emergencies anymore. But you did good. Yeah, you did fine. Just a cash flow through that emergency slowed down your debt snowball for that month, and then you pick back up next month. Hopefully, you won't have another one of those, and you can really build it up and go from there. So, good question, and you're doing good. Keep after it.

Tom is with us in San Francisco. Hey, Tom, welcome to the Dave Ramsey Show. All right, Dave. I appreciate what you're doing. It's a great thing. I've been an avid fan for three days now. Well, thank you. I'm honored. We've been together a long time, you're doing. It's a great thing. I've been an avid fan for three days now. Well, thank you. I'm honored.

We've been together a long time, you and I. So a question for you. So my wife and I, we have about $300K in student debt, another $115K in automobiles and line of credit, that type of thing. So that's about $415 total. And we make a pretty good income. She's at about $120 annually. I'm at $180, so about $300 combined.

My question for you is, I was going to go back to school and get my master's. The program is only $25K, so I feel like there would be a very real ROI on it. But over the last three days, I'm starting to think maybe I shouldn't. I just want to get your take on that. Master's in what? Oh, it would be in software engineering.

Okay. And it would increase your income by more than 25K? It'd probably be... it's hard to say. There would be a $20,000 annual raise because of the category I would jump into. Okay, so you would make it back in a touch over a year then from that point. So that's a really nice return. I think you can put that in the budget.

And the reason you can put it in the budget is you make so stinking much money. Now, you live in a very expensive area, granted. It's crazy expensive. I mean, I also want to live in a really rough neighborhood. Yeah, but you guys are really, you're really spending money. Mm-hmm. And so, I mean, how quick can we pay off $400? Well, we can pay off $400 in two years.

If we do it in $200 a year, that means you'll be living on $100. I'm not sure you can do that after taxes in your area. So you probably got a three-year get-out-of-debt plan. But you need to be like no vacations. You don't need to see the inside of a restaurant. And don't you dare talk to me about buying anything else. You've bought enough crap for a while. You need to live like people that make $100,000, not people that make $300,000 and get this debt cleaned up.

And in the process of doing that, can you weave $20,000 or $25,000 into the budget? Sure. Sure. It delays you by, what, two months or something, getting out of debt? Yeah, I would do that. But don't cut your income back. And do cut your lifestyle way back. It's time to address this mess.

You're not in Congress. This is the Dave Ramsey Show. I get asked all the time, when in the baby steps is the right time to buy life insurance? My answer is typically now. Life insurance is not part of the baby steps because it's needed when your family has debt and not enough savings to provide for their financial needs. That's when they're at the highest risk.

And no matter where you are in your baby steps, it's a necessity, not a choice. This includes working husbands and wives, as well as stay-at-home parents. It's pretty expensive to replace those stay-at-home parent responsibilities. I only recommend term life insurance, since it's the most affordable way to get the right amount of coverage and not break your budget. Go to Zander.com or call 800-356-4282. These are the guys I personally use.

Term life insurance is inexpensive, and your family needs this no matter where you are in your baby steps. That's Zander.com or call 800-356-4282's Zander.com. Or call 800-356-4282. Zander.com. Thank you for joining us, America. We're so glad you're with us. This is the Dave Ramsey Show. Brandon is on Twitter. I have an equity line of credit on a rental property. Where would paying this off fall into the baby steps?

Well, Brandon, if it's relatively small, you easily could stick it into baby step two. Most of the time, we let real estate debt of all kinds lay at baby step six. If you have a very large equity line of credit on a rental property, you might want to refinance it into a traditional mortgage and get rid of the risk associated with the pop in interest rates or a possible call provision for that line of credit. And you don't want to get yourself in a pinch with a bank calling notes that they're allowed to call based on the way that's written.

That lack of liquidity, as we say, could put you in a problem. You don't have the cash to pay them. So, you know, you make $100,000 a year, you got a $100,000 line of credit, that's probably a refinance. You make $100,000 a year and you got a $10,000 line of credit, it's probably a baby step two item. The point is, we want to work through the debt, but we want to get on with retirement and emergency fund in a reasonable pace as well and figure out where we're going from

there. So, good question. Matthew is in Daytona. Hi, Matthew. How are you? I'm good. And you? Better than I deserve.

What's up? How do I save for college and not go into debt? Okay. How old are you? 18. 18. Very cool. What are you going to study?

Possibly pretty much anything that I can get into or let's say IT. IT? Yes. Is that what you said? Okay. So you like technology? Yes. All right.

Well, I think the first goal before you go start your education process is you need to have an idea of what you're going to study because that will change the answer to your question that you asked okay so let's say for instance that you wanted to be a web programmer and um i've got folk guys on my team that make um in excess of a hundred thousand dollars well in excess of that, that write Ruby on Rails code. Okay? Not a bad career. And that's an example of an IT type of a thing, okay, and a web programmer writing code.

Now, if you're going to do that, you would not need, and it would not be preferable for you to get a four-year degree in information technology. That's not necessary to do that. You would need to take some classes on how to code, and you'd want to learn, you know, some of the basic IT things. And so I would probably direct you towards a VoTech-type school, which is probably a two-year degree while you're studying and doing that.

And I would tell you to work your tail off in the technology field. And if you can bring coffee for people who are doing code and just watch over their shoulder and learn from them and hang out from them and your new hobby is hanging out with people who are world-class coders, and you're taking some classes, that'll get you in there more than a four-year degree will get you in there it's a lot cheaper but it depends on what you mean when you say it but you could change your mind by tomorrow and say i'm not going to do it i want to go into business well then you might want to do a four-year degree with a degree you know a specialization in

marketing or finance or something like that and in that case the answer would be different on how to pay for it here's the thing you want to do number one carefully select what it is you want to study and that it makes your eyes light up when you talk about it you kind of smile down inside when you talk about doing this thing whatever the thing is okay now once you've selected that then you decide how to study it if it's a four-year, if it's a two-year Vo-Tech degree, or am I going to go to community college for two years and then go, and those credits all transfer, and then go to a regular school, I mean a four-year school for two years to finish up, or that kind of a thing. Community college is a lot less expensive, and you can get your basics out of the way for the first two years for a four-year degree if you want to.

So the second thing, once you've determined what you want to do and how you're going to do it, then the second thing you do is college cost is the number one cause of student loan debt. What I mean is that you can buy a Bentley or you can buy a used pickup truck. Both are transportation, but one is several hundred thousand dollars and one is just a few hundred dollars. But both will drive you to the mall. And so if you don't have any money and you're saving up, you can't afford a Bentley. You can't afford to go to a super expensive college. And there's nothing wrong with that, by. You can't afford to go to a super expensive college. And there's nothing wrong with that, by the way.

I didn't go to a super expensive college. So you go to an in-state school there in Florida. You go to the University of Florida at Gainesville, or you go to the University of Central Florida right there in Orlando. Wonderful schools. Wonderful, both of them. They're in-state tuition, not that expensive. And that's thing one.

Your college selection as the least expensive college that will help you get the degree that you need to get is what you need to aim at, with rare exceptions. And you're not going out of state, and you're not going super expensive private. The second thing is then you start looking for scholarships and you make scholarship hunting your full time job after school job. That kind of a thing. And you start applying for and filling out the scholarship

forms and writing the essays. And you probably ask for a thousand scholarships and you'll probably get turned down for nine hundred and fifty of them. But if you get fifty one thousand dollar scholarships you just went to school free dude that'd be pretty cool not a bad part-time job the third thing is plan on working a lot while you are in school don't borrow money so that you don't have to work work and get good jobs jobs

that pay a lot dog walking cutting grass jobs people don't want to do jobs that pay a lot, dog walking, cutting grass, jobs people don't want to do but they pay a lot to do. We're not talking about minimum wage crap. And if you're going to live on campus, go ahead and be an RA, be a residential advisor. That's not what they call it. What is an RA? It is a resident advisor. Okay, so they're, you know, the babysitter in the dorm, okay?

And you get free dorm for doing that, and sometimes free tuition for doing that, and sometimes free tuition, free dorm, and pay for doing that. So be an RA if you're going to live on campus. Work in the cafeteria, you get free food if you're going to live on campus. If you can get a job working for the university, the tuition might be completely free. That might be different, too, something to look at. So that's the kind of stuff you look at. But figure out where you're going, what the steps are to get there,

figure out the cheapest way to get there, figure out scholarships so somebody pays you to get there, and then plan on working your butt off. And those things will get you through school completely debt-free in this day and time, and it can be done. Alex is with us in Baltimore. Hey, Alex, welcome to the Dave Ramsey Show. Hey, Mr. Ramsey, how are you?

Thank you for everything that you do. Thank you. Just wanted to give you a call and let you know that, one, I am debt-free. I'm on Baby Step 3. I got five months saved up, two months to go until I hit my sixth month. But here's my question. I work full-time in a retail establishment, and I have a small job that I run myself on the side. I'm at that point in the retail establishment

where I think it's time for me to say adios and start my focus towards my own personal business. One of those, would you advise me to use my emergency fund to help me through those growing pains of being full-time with my small office side job? No, it's not an emergency. You're creating an emergency by leaving the job too soon. I don't blame you for wanting to leave and wanting to do your own thing. I want you to do that too.

But I want you to get your side business making more money. You're going to have to work it more. And you may have to just take fewer hours at the retail thing and back your hours down. That may mean you move to a different retail job. I don't know. But today you're not making enough money on the side job or you wouldn't have asked that question. That's true. How much money are you making on the side job or you wouldn't have asked that question. That's true. How much money are you making on the side?

Yearly, I'm probably pulling out about $20,000. What was your best month ever? About $4,000. When was that? Probably about seven months ago. Can you do that again? I wish. Yeah, you've got to get there.

Now, what are you making on the retail gig? About $3,000 a month. Yeah. So you need to have a steady $3,000 a month, and I think you can get there. You're real close. Let's tune up and dial in the side gig and get it where it's steady so that you're not taking such a big risk. Then you wouldn't have to. I mean, you can live on the $3,000 a month. You can live on $3,000 a month. You can live on three a month.

You can do that. Adjust your budget to do that and then make your jump. You're there, America. We're glad you are here. Open phones at 888-825-5225. Ryan follows me on Twitter, at Dave Ramsey. 830,000 or so of you do. Thanks for hanging out with us.

What are your thoughts on the return of premium term life insurance versus whole life? I wouldn't ever do whole life life insurance. It's a complete ripoff. I would always do term life insurance, and I would never do return of premium on anything. Do not buy return of premium. And the reason is very, very simple.

The return of premium feature says that if you don't die during the term of the policy, they will give you all your premiums back. Well, that's nice. And do you think that's free? No. It costs more to buy a return of premium policy than a non-return of premium policy. Why? They have to make enough money to return the premiums occasionally when that actually occurs.

Ta-da. So, if you're going to pay more for a return of premium policy to get the return of premium, why not just invest the extra money that you would have paid for the return of premium, and you will get your return of premium 100% of the time, whether you die or whether you don't, because it's in an investment. Listen, the insurance world is full of gimmicks, particularly the life insurance world. And any time you hear a gimmick, it's almost always a good idea to run.

Here's another one. You should have long-term disability insurance. You should have long-term disability insurance. Everyone should have long-term disability insurance. Unless you are in an industry where it's such high risk and you just, it's nutty, it costs you $10,000 a month to have it, you can't because you're a high-rise window washer or something like that, right? You can't get long-term disability insurance. But other than that, everybody ought to have long-term disability insurance. And most of the time you can get it through your work and it's not that expensive. If you have long-term disability insurance,

don't buy Wavier of premium on your life insurance. All that does is pay your life insurance premium for you if you become disabled. So what is that? It's a little, tiny, baby, miniature long-term disability insurance policy. That's all it is. And it's a very expensive one. Very expensive. You'd be better off to use that same amount of money to increase the coverage of your existing long-term disability or help you

buy it if you haven't bought it yet and you heard me today and you went i need to get long-term disability there you go just like that again gimmicks they're everywhere particularly around the life insurance world and just buy insurance that's all you gotta do no i don't want fries with that no i don't fries with that i just want. No, I don't want fries with that. No, I don't want fries with that. I just want a hamburger. No, I don't want fries with that. You want fries with that.

There's always an upgrade. There's always an upsell. Stay away from it. Benjamin's with us in Wichita, Kansas. Hi, Benjamin. How are you? Hey, doing great. How are you today? Better than I deserve.

What's up? Hey, I have a question for you. My wife and I are currently working on Baby Step 2. We have one more quote-unquote non-mortgage debt left to pay off, which should be paid off by the end of the year. Cool. Then we'll have – it's technically a mortgage because we bought a house to use as a rental. Well, that would be a mortgage, right?

Right. So I didn't know if, since it's for a rental, if that's still considered a debt and should be paid off as part of Baby Step 2. Six. Or if we should move that. No, it's six. Mortgages are in six. Okay. Even if it's not my home.

Even if it's not your home. For the rental. Even if it's not your home. Because it's typically, you know, and most people listening, if they have a rental property, it's a large debt. And we're doing what the baby step two is. We're getting rid of all the small debts and or consumer debts. Sometimes they're large, but we're trying to get rid of all of that. And that really gives you a huge amount of cash flow to do baby step three, finish your emergency fund,

four, 15% of your income going into retirement. And five, kids, college. And six, we'll go ahead and pay the mortgage off on the rentals and our personal residence. Emily is with us in Cincinnati. Hi, Emily. How are you? Doing well. How about yourself? Better than I deserve.

What's up? My husband and I, we sold our house and purchased a rental slash home. We bought a horse farm. And so we are renting out the horse farm facility, but living in the house. And what we're renting out is paying our mortgage because our mortgage is very large now. And I'm kind of panicking about that because I don't like that at all but my husband is looking at it as a business and investment um and i want to pay it off really fast but we've heard that we don't want to pay that off very fast because it's a business so i don't know like if we should use my husband's income to start paying down so businesses should be in debt?

Yeah, people have told me that, and I don't like that idea. Yeah, people are stupid. Yeah. People are broke. Don't listen to stupid broke people. Right. No, the best businesses in the world are debt-free ones. Right. And so what if this whole thing was paid off?

You know how much cash you'd be making oh my goodness gracious so how much do you owe on this on this horse farm we owe 438,000 goodness gracious and right it's worth over 700 it was appraised like 750 yeah and what's your household income um 109 and then we get5,000 a month for the rental of the horse farm. Yeah, and what if they don't pay the rent? Then we have to use my husband's income. Yeah, you're screwed. You're in a mess if they don't pay the rent is what happens. You're right to be scared.

You have a lot of risk here, a lot of risk. You have one tenant, and if that one tenant doesn't pay, it messes up your whole world. That's called ultra-high risk. Should you pay this off? Yes, as soon as possible. That or sell it, one of the two. This is an accident looking for a place to happen. I hope you get out of this intact,

but I would do everything I can to reduce this debt as fast as I possibly could. And as quickly as you can get it paid off, then it's not a big deal if they don't pay the rent because you don't fall over debt. But financially, I mean, you take $5,000 a month out of your life, you've got nothing left. It's a bad, bad situation. bad situation so yeah you need to be scared

you're smart to be scared and all these people who say you ought to keep debt in this situation they're what's known as stupid people uh man james is with us in new york hi james how are you hey dave i'm doing well how are you better than i deserve what up? I have a quick question. I'm debt free. I make about $130,000 before taxes. I'm sorry. My question is this. I live in an apartment and I want to move up an apartment and eventually save for a home. But everyone is telling me that I'm stupid for moving up an apartment.

I should just stay where I'm at and save for a home. But I feel like I've gone through a lot and I want a nicer apartment. What would you recommend? I've gone through a lot, so I want to waste my money. How's that a reward? See, here's the thing. Whatever you spend on rent is lost right yes rent is rent is patience while you get the money together to buy something and so i want to pay as little patience money as i have to pay so that i can buy something as soon as i can buy i mean you could go rent something really super nice and super expensive but it would mean you never buy something if you bought that super nice thing, right? Because you spent all your money on rent. And, you know, that's a dumb idea, obviously.

So I would be with whoever told you that you stay where you are and pay as little as possible because it's patience and it's gone. It's down the toilet. Whatever you spend on rent is gone. So I want to minimize whatever you spend on rent's gone so i want i want to minimize what i spend on that so that i can get into a home as quickly as possible it's living like no one else so that later i can live and give like no one else and and you know that's the best way to go about it as far as i'm concerned jeff follows us on facebook.com slash dave ramsey should i make

my budget based on my gross or net pay it's easier to make it on your net because that's what you've got you don't have your gross to spend if you put if you'd make it out on your gross you have to take the taxes in your budget and that's silly you're not coming home with the taxes anyway so just do your do your take-home pay It's a lot easier to put together. And jump on EveryDollar.com. You can download that free, it's completely free, that I mentioned it's free, app for your iPhone or your Android, and you're ready to go.

But, yeah, just give EveryDollar an assignment before the month begins that you have to work with. And really all you've got to work with is your take-home pay. Thanks for following us, Jeff. We appreciate you hanging out with us. This is The Dave Ramsey Show. Hey, guys, it's Blake Thompson, Chief Production Officer for The Dave Ramsey Show. This hour's up, but you'll find more on our YouTube channel,

where we have over 6 million YouTube views each month. You can find debt-free screens, millionaire hour clips, Dave rants, and so much more. find more on our YouTube channel, where we have over 6 million YouTube views each month. You can find debt-free screens, millionaire hour clips, Dave Brant, and so much more. Go check it out.