The Ramsey Show - App - How to Talk About Budget Money the Right Way (Hour 2)

Episode Date: June 12, 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. This is your show, America. Thank you for joining us. Open phones at 888-825-5225. That's 888-825-5225. Gary is with us in Baltimore to start off this hour.

Hey, Gary, how are you? I'm good, Dave. First, I'd like to thank you for teaching me and my wife. We are now debt-free due to your teaching. Cool. Good for you. My question is, what would Dave do? I inherited a condo, and my real estate agent had come to us

with an offer from the buyer, and they're willing to pay our asking price. But they're asking us as a seller to do the financing. And I want to find out from you, is this a good thing or a bad thing? Why would they not get a regular mortgage? Well, I think the fact that they've had problems in the past with credit. They're looking at paying about 5.5% with a three-year balloon payment. So if a bank wouldn't give them a loan, why would you?

Well, that's a good question. That's where the fact that having... How much down payment are they proposing? They're proposing $18,000 down payment. On what size sale price? On a $89,500 price. Okay. Well, here's the thing.

Now... Three years from now, you're going to get the condo back do you want it back um no okay um what do you want it back if you have eighteen thousand dollars in your pocket yes okay because that's what's happening they're going to give you eighteen thousand dollars they're not going to be able to get their financing in three and a half years or three years and you're going to have to foreclose or they're going to have to deed it back to you or they're going to be on your doorstep begging you to extend because they're not going to get the loan well i guess my other question too is the longer that it's on on on the market as far as, you know, the cost of the condo fees and taxes.

I'm not worried about that. I'm worried about three years from now or sooner when they don't pay as agreed, are you willing to foreclose and take this back after they paid $18,000 down? Bud, I would have to take it back. I know. You're have to take it back. I know. You're going to take it back. I'm giving you a 90-something percent probability you're getting this condo back. Because the very reason that they have not been able to get a mortgage so far is their habits and the way they handle money.

They're likely to not change those, and they're likely to continue in the exact same life pattern and so they're very likely to not be able to get a mortgage even though they fully intended to and wanted to and eighteen thousand dollars thought they were going to but they can't they don't and then you're going to have to take the condo back or you're going to be talked into an extension because you don't want it back which if you don't want it back, which if you don't want it back, you should have never done this deal in the first place. So all of that to say I wouldn't do the deal because I don't think you want this back. No. I think you've got a hope in the back of your mind that it's actually going to play through

and they're going to come up with the money and they're going to get a little mortgage. And I've got to tell you, I've done this a bazillionillion times and the chances of that happening are very very very low i would say well less than 10 probably less than five percent of the time that they're going to play through so i wouldn't do it you're going to take their money and you're going to take the condo back and you don't want it back i would rather sell it at a discount than i would carry the note on it okay it's not worth the interest or the hassle down the road based upon of me you know letting it you know stay on the market and all of those things weighed against each other just ask yourself do you want the condo back is all of those things enough for you to say i really believe i'm going to get this condo back is all of those things enough for you to say i really believe i'm going to get this

condo back and within three years and i'm gonna put eighteen thousand dollars in my pocket but i'm gonna have the legal costs and the hassle and the heartache of a foreclosure probably gonna have to go back in and paint it and carpet it after they leave and put it back on the market um and you know i i really think that's what's going to happen and if you assume that's what's going to happen then you probably don't take this deal regardless of how bad you're worried about the hoa fees and all that cut the price get the thing sold drop the price five thousand dollars sell it you know yeah i've already yeah i've dropped the the price five grand already when it. But, yeah, I think where they're trying to entice of paying the full price for the consideration.

They didn't pay you the full price until they pay you. Yeah. It's paper. Until you have the money in your bank account, you didn't get paid. And so you didn't get full price until they go get the mortgage and pay off your mortgage. So that's an illusion. And you'll find out it's an illusion when you get the condo back. Diana is with us in Des Moines, Iowa.

Hi, Diana. How are you? Oh, God is great. Thank you so much for taking my call. Amen. How can I help today? Well, when my son turned 14, which was about a year ago, he wanted a job. He was very adamant. We kept going around. Nobody would hire him because he wasn't 16 yet. And I asked him what was his rush of getting a job. And he hears my husband and I talking about debt. And he says, you guys are in debt and I want to start helping. I want to pay my fair share. And I was just in shock. And I,

um, that was a week ago and I opened up day Ramsey.com and I went online cause I just put auto pay the minimum payment for my credit cards and all my debt. And I couldn't believe how much debt I was in. And I mean, I, um, the question is for him, what do I do for him? I don't want him to make the same mistakes I did and am doing. Well, I shredded my credit cards immediately and started Baby Step One. And I want him to get a job, but I want to know should he save it all. I don't want him to get a job because he thinks you all are in trouble and he has to help you. No, I don't want him to get the job to help me. I want him to get a job because he thinks you all are in trouble and he has to help you. No, I don't want him to get the job to help me.

I want him to get the job for him. Well, the first thing you need to do is correct that, this idea that the 16-year-old is going to save the house. Well, no, we don't owe anything on the house. I know, I know, but my point is if there's been enough yakking around your house that this kid's worried. Yes, yes, there is. And so you need to take that worry off of him. The only reason he needs to get a job is for him. And that's what I tell him.

I go, it's for you. Yeah. But then he wants to know, okay, what do I do? Should I save it all? Should I pay for everything? You should always do four things with money, whether you're three or whether you're 53. You should work to earn it. You should give some of it.

You should save some of it. You should give some of it. You should save some of it. You should enjoy spending some of it. Give, save, work, and spend. Give, save, work, and spend. Give, save, work, and spend. I've got a wonderful book that I wrote with my daughter, Rachel Cruz. It's called Smart Money, Smart Kids, how to teach your kids how to handle money. From a parent's perspective, how to teach your kids how to handle money. From a parent's perspective, how to teach your kids how to handle money.

I'll send you a copy as my gift. You will enjoy it. Just make sure this young man is not worried that he has to carry the weight of the household. That's unfair for a 16-year-old, and it's not accurate either. This is The Dave Ramsey Show. One-third of American households have no life insurance, and half of the remaining households don't have enough. The main reason people don't have coverage is they think they can't afford it, they don't know what kind or how much to buy, Homes with a family that's depending on you, you must have term life insurance. Rates are at an all-time low, so price should not be an excuse.

Stay away from cash value whole life plans. I recommend 15 or 20 year level term insurance plans and you need between 10 and 12 times your income. I've been sending you to Zander Insurance for almost 20 years. They shop the top companies to get you the best rates and keep the entire process simple. Call 800-356-4282 or go to zanderinsurance.com. Take the time to take care of your family. Call 800-356-4282 or go to zanderinsurance.com. Thank you for joining us, America. This is the Dave Ramsey Show.

Open phones at 888-825-5225. We're glad you're here. Melanie's with us in Wichita, Kansas. Hi, Melanie. How are you? I'm good. Thanks for taking my call. here. Melanie's with us in Wichita, Kansas. Hi, Melanie. How are you? I'm good. Thanks for taking my call. Sure.

What's up? Well, my husband and I are in week three of the FPU. And last night we sat down and we did the allocated spending plan. We had everything set up for the month to where every one of our dollars was assigned to something well he had made a bet with some buddies at work and he lost the bet and this morning without saying anything to me um he got paid today he took a hundred dollars out of our account okay i don't even know how to address this with him or even where to get the money

to get us back onto track. So what are your suggestions? So why did he not tell you about this when you were putting the budget together last night? Well, we've known about it and I told him You what about it?

I knew about the bet, and I told him. You what about it? I knew about the bet. Okay. But I told him that if he wanted to pay the guy back, he needed to take it out of his blow money, not out of the rest of the budget. Right. And so how much is in his blow money? We do $18 a week. Okay. Well, he owes the guy $100.

That was a dumb idea. Yes, it was. Because you can't give a guy $100 when you only have $18, so you didn't have a solution. Right. The guy doesn't want $18 a month. Your husband's word is on the line. He owes him $100. So $100 should have been in your budget last night.

Okay. So he did address it. He didn't lie lie to you you just didn't have a reasonable solution and so he he honored up and paid his bill when it was due this morning so um 18 blow money's gone for sure that's where that's 18 of it now we got to find the other 82. And you guys have got to wander through the budget and do that tonight. So, number one, when you know something's in front of you, don't pretend like it's not there. And that will be helpful for the future. Number two, he has to understand that you felt like you guys had a contract. And just like he felt like he gave that

guy his word he also gave you his word last night and so now you feel like you he kept his word to that guy but lied to you and he needs to feel that you had a contract last night he broke the contract this morning right right and he didn't feel that he and you and that pissed you off and i don't blame you okay so you guys that's the point when we agree on something on this paper it's a pinky swear and a spit shake and we do not change it without both of us coming back and agreeing to change it and so what he should have done when he left the table last night he should have already had the hundred dollars worked out and you should have too in the budget so that this so that the guy was paid what he was owed the next day and don't make any more

stupid bets at work you're trying to get out of debt now then that's what y'all should have done but if that didn't happen then when he got there this morning and felt the pressure to pay the bill that he owed to keep his word he should have picked up the phone and called you and said hey we got a contract but i also got a contract over here we got to work this out i'm i'm not okay with us doing this 18 ever paycheck or something i need to pay this guy and we need to work it out and y'all talk it through on the phone and adjust the contract does that make sense kind of like if you get to the grocery store and or you get to the gas station and there's no gas and there's no gas in the envelope you got to get home because y'all screwed up your budget right then you got to call him and go i got to get home so i'm taking a little bit out

of our food money because i got to get some gas money in the car and we got to adjust the budget tonight and i wanted to tell you ahead of time so you don't so you don't feel like i broke my word to you when we get home tonight because that budget becomes a contract where you all trust each other that we're joining hands and walking out of, and that's why you're calling me, because that made you mad when he broke his word, right? Yeah, it did. Yeah. I don't blame you. But y'all set it up to where you put him in a box,

and he's going to break his word to somebody this morning. It was just a matter of who. And I don't like what he did, but I also don't like what y'all did last night that put him in a box where he didn't have choices. So if y'all had handled it last night, it wouldn't have been there because he knew he was going to face this this morning when he got to work. He knew he had to look at that guy and go, oh, the guy 100 bucks. Now, am I going to welch on the bet? No, you're not going to do that.

You're going to pay your bill because that's what guys do when we do stuff like this. And it may be, too, Melanie, that's what I'm describing may be a kind of a guy thing. I don't know if ladies act that way or not. But when two guys make a deal like that, it's like a blood oath, you know. And his honor was on the line this morning is where y'all put him. You follow me? Yeah. I'm not taking up for him because he dissed you in the process,

but you've got to understand, he was under extreme guy pressure, honor. His integrity was on the line, and that's why he did that. He might not have done it if it was something else. He might not have done it if he was just buying himself a candy bar or buying himself something for $100. He might not have done it. But the good news is you guys get to learn this real early in your budgeting together process, which this is your first day doing it, your first week doing it.

And you get to have a really good, healthy discussion without you yelling at him or something like that. But, honey, you've got to understand, this is like you lied to me. That's how it feels. And you're not a liar. And that's why I'm so upset. This is like a contract here. We both initial it. Hey, I'll tell you, Melanie, Sharon and I had so many of those fights, we about killed each other.

We got to where we had to initial the corner of the budget like it was a contract. Because we wanted to make emotional, have emotional surety that we both understood how serious sticking to our word was. And I have been on the phone standing in Sam's Club going, Honey, there's something on sale here I'd like to get. It's not like I'm a wuss and I have to ask my wife permission to go to the bathroom or something. That's not the case. But I had made a promise to my wife called a budget. And I wasn't going to break my promise to my wife.

And so I call her and I go, Hey, I'm going to be $10 over. I'd like to take that out of this other category. Is that cool? She says yes. Boom, we have an amendment to the contract. The contract has now been amended. And now we buy the thing at Sam's Club and we come home smiling and everybody's okay. But I did not just come home and go, look what I did, which I used to do.

And that's just disastrous right there. So, yeah, this is is really tense day for you it's been hard on him emotionally too because he had to decide who he was going to break his word to if he understood that he gave his word last night um but you he after tonight he'll understand if you explain it to to him clearly, that this budget is a contract between the two of you. And when you start treating it that way, man, you guys are going to do so good. You're going to call me back going, this changed my marriage. This changed our communication level. It changed how we look at the future.

It changed our view on everything. I mean, it's amazing. Marriage counselors use this very budget technique to cause couples to work together on life when they're struggling at getting along because it creates unity. Because when you agree on your spending and you keep your word to each other and you communicate heavily, you're agreeing on your life. And so I completely understand why you're upset. And I would be upset if I were in your shoes, too. But understand you put him the two of you. His his not dealing with it last night. Wimpy on his part.

But the two of you boxed him into a corner last night. And this morning he walked right through the paint. He painted in the corner. He walked his walk, just took his wet shoes right through the middle of it. And that's what's happened here. So I'm really glad it's only $100, and I'm really glad you knew about it ahead of time, sort of. And I'm really glad that you're ticked about it, and you guys are going to have a good discussion about it, because it's really, this is going to be a thing you point back to 10 years later,

and you go, that was the day, that was the week we changed our life right there so this is going to be great as long as y'all talk it through and come to solid agreement on this is a contract from this point forward very cool stuff good call good call that's normal stuff happening there and this is how you work through it this is the Dave ramsey show so For years, I refused to endorse any company that claimed to get people out of timeshares. I told my listeners it's a horrible product and that, unfortunately, they didn't have a lot of options. Then a few years ago, I sat down with Brandon Reed, the owner of Timeshare Exit Team. Brandon walked me through the timeshare industry, and I learned that you can't sell them, and you can't even give them away. And then we talked about Timeshare Exit Team's process.

Every ownership situation is different, which is why they have more solutions than any other company. And that's when they earned my respect. Don't call any of the imposters out there, and there's a lot. The only timeshare exit company I stand behind is Timeshare Exit Team. They have exited thousands from their timeshare burden this year alone. Yes, you will write them a check, but they stand behind their guarantee. They will get you out, or they'll give you a full refund. Call 844-999-EXIT. Online at timeshareexitteam.com.

Up next is San Antonio. Brett and Amanda are with us. Hey, guys. How are you two? Hi, Dave. Doing good. Welcome, welcome. We're calling to do our debt-free screening.

I love it. How much have you paid off? $80,000 in just over five years. Way to go. Good job. And your range of income during that five years? Between $20,000 and $50,000. Good for you.

Very cool. What kind of debt was the 80 grand? It was a mix of auto loans, student loans, the glorious wedding loans, consolidation, a little bit of everything. Okay. Very cool. Very cool. So tell me the story. What happened five years ago that caused you guys to go on this get-out-of-debt journey?

So it's kind of ironic. We were using student loans to go to college, and Brett took a financial class. And that class, they taught nothing like what you teach, but for one of the assignments, he had to read Total Money Makeover as a book report. And so we were able to read, or he brought that book home, and I read it first, and I said, babe, we have to do this. And then about a week after that, we found out we were pregnant with our first, and I want to say about six months after that, we started our financial peace classes.

Wow. Wow, very cool. So fast forward, you got out of school and just kept attacking the debt until you got it knocked off. Yeah, we chose to stop going to school, actually. We never got our degrees. We just chose to stop going to school until we could pay for it because we were using our student loans to do that. Oh, my goodness. What do you guys do for a living now?

I'm a firefighter with the U.S. Air Force. And I'm kind of a stay-at-home mom, but I'm also a full-time college student. I have scholarships and grants that are paying for that. Very good. Well, thank you for your service. That's awesome, guys. Very cool. Very cool.

So when people find out that you're completely debt-free, making $20,000 to $50,000 a year, and they say, how did you do that, what do you tell them? I mean, it's just a lot of persistence. At first, it's almost easy to jump on the bandwagon, but it doesn't stay easy. It gets harder and harder as things come along, as you want to go on vacations, as you want to buy things. Yeah, when life comes in and knocks on your door, it is harder.

You're right, especially over a five-year period of time. And you had how many children during that time? We have two, but we're pregnant with our third now. Oh, congratulations. Thank you. That is wonderful. Well, very cool, you guys. How does it feel now that you're debt-free?

Oh, it feels wonderful. There isn't any feeling like this. What was the one debt that when you paid it off, you went, I hate you people. I'm so glad you're gone. Student loans for me. Yeah, I was just ready to get rid of Amanda's student loans. Those things felt like they'd never end.

It was brutal. Yeah. Sally May will stick around if you let her. Yeah. Very cool. I'm glad you guys kicked her out. That's awesome. Well done.

We have a copy of Chris Hogan's Retire Inspired, number one bestselling book for you, because that's your next chapter in your story to become millionaires and outrageously generous along the way, okay? All right. Well done, you two. Very well done. Brent and Amanda, San Antonio, Texas, $80,000 paid off in five years, making $20,000 to $50,000 a year. Count it down. Let's hear a debt-free scream.

Ready? Three, two, one. We're debt-free! Yeah! That's how you do it, right there. Well done, well done, well done. Life doesn't get much better. All right, Christopher is with us in Raleigh, North Carolina.

Hi, Christopher, how are you? Doing great, Dave. Thanks for taking my call. Sure, what's up? I am currently 34, and I have been investing since I was 16. Wow. And I wanted to know if you thought I should start investing in Roth IRAs as opposed to what I have been doing, which is kind of a mixture of stock mutual funds. Yes, because your growth from this point forward will be the bulk of what's in your account when you're 70.

Okay. And all that growth will be completely tax-free well going through financial peace currently and that's i i that's kind of what i assumed you would say but just wanted to hear it from the horse's mouth yeah yeah the uh um see as young especially as young as you are i mean how much have you got already saved uh well my wife also contributed when she was working so total together we've got around 210 212 wow way to go well done good good run at 34 yeah very well done so you know if if from this point forward your investing became say a million dollars uh of that million dollars

you will have actually put in only about 10% of that. The rest of it would have been growth by the time you reach your 70s. And so, you know, you have $900,000 of taxable income or not, and not is better. Absolutely. Absolutely. That's where the quick answer comes from. You know, just do the Roth any chance you get. The only time you wouldn't do a Roth is if you're up in your late 60s and you're going to be using the money in five, six years or something,

then you're probably better off to do a traditional mathematically at that point. So, hey, good question. Braden's Weathers in Kansas City. Hi, Braden. How are you? I'm doing well. Thanks for taking my call. Sure.

What's up? So my wife and I, we're debt-free, and we're working on getting our emergency fund saved up. I just recently started listening to the show and really enjoying it. So my question is, my wife is kind of of the mindset that if we have to take on debt in the future, she's okay with that, and I'm really, I don't like debt, and obviously I don't want to go in debt at all in the future. So what would be your advice as to getting her on the same page as me and resolving to never go into debt, you know, other than like a house mortgage, if it's possible?

Oh, it's possible. Lots of people do it. The question is, what is the best path, the shortest path to wealth? Is it through the debt, use of debt, or not? And it's a pretty simple equation then isn't it um and so what what she's saying is oh well we might have to if we want a nice car we might have to because that's what everybody does and that's how these people sound right and uh but what she's really saying is is that she thinks she's never going to have anything nice if she doesn't do that or she's never going to win if she doesn't do that or we're never going to financially succeed if we don't go into debt.

And that's just not the truth. The truth is the if you live like no one else later, if they're willing to listen and talk about it, is just to go, okay, what is the shortest path to wealth? And if borrowing money is the shortest path to wealth and the most effective and the highest probability of retaining the wealth, then you borrow money. But the truth is we know otherwise, and that's what has led you away from it because you don't want the risk of the payments. You don't want the risk of the foreclosure, the reposition on you. You don't want to deal with all of that. And, you know, and you don't believe it's the shortest path to wealth.

Absolutely. You know, it's the shortest path to looking wealthy when you're broke. A lot of people look like they've got money, but they're broke. They have no net worth or a negative net worth, and they're stressed out and freaked out because they thought, well, the only way I'm ever going to have something, the only way I'm ever going to enjoy my life, the only way I'm ever going to dot, dot, dot, is to borrow into it. And really what that's saying is you're surrendering the best in order to get the okay

the enemy of the best is not the bad the enemy of the best is the okay okay okay when you just settle for okay that's the biggest time people miss out on the best so i'm not positive how to convince her of that in her situation but i think at the core of her thinking we might borrow money someday is that's kind of like saying either A, we might give up in our track to win, or B, I don't believe that being debt-free is the best way to build wealth. But if you believe that, then you stay away from debt. If it's the best way to have a quality life financially, I'd stay away from it. You know, if bears bite, I don't put my hand in a bear cage.

You know, but you have to believe that. You're acting on your belief. And so you've got to talk it back through that way and see if you can land on the same page with her. I sure hope you can because there's a high correlation between people that are on the same page and those that win financially. Hey, this is Dave Ramsey. You know, most of us have gotten behind on our bills at one time or another. That's nothing to be ashamed of.

It happens. And many of us know the embarrassment that comes with those harassing calls from collectors. Some of these guys are just scum. But then there are the collectors that are just plain crooks. These are the guys that take it a step further and they violate the Federal Fair Debt Collection Practices Act on a daily basis. They're breaking the law and they need to be stopped. The truth is, debt collection is the most abusive, out-of-control industry in America today. But you don't have to put up with it.

If you have collectors calling you multiple times a day, calling you at work after you've asked them not to, cursing or threatening you in any way, then you need to visit CollectionBully.com. These folks will connect you with an attorney who I know can help you. These attorneys know how to stop collection agencies from bullying and threatening you anymore. CollectionBully.com. Go to CollectionBully.com today.

That's CollectionBully.com. thank you for being with us america we're so glad you are here this is the dave ramsey show tina is with us in Nashville. Hi, Tina. How are you? I am good, sir. How are you? Better than I deserve. What's up? Okay.

So I am wanting to get started on getting out of debt. And I guess I just kind of need to know where to start. I just opened a boutique about a year ago. So that's what my income is. And I just need to kind of know where a starting place is, would be. Okay. How much debt do you have? Not counting your house.

Okay. Well, I live in a rental, but probably about $30,000 maybe. What does that consist of? $17,000 for a car that I believe I've got screwed on, but like just old, like an old cell phone bill, a little bit of a student loan. That still hasn't got us to $30,000 from $17,000. Okay, yeah.

Well, okay, so there's like the car is 17 there's a student loan um i think my student loan is about seven eight thousand oh okay okay yeah and then um you know so the first thing first thing you need to do is when you hang up you need to find out exactly how much debt you have okay right now you're just kind of fishing in the dark you've got these general vague ideas and so you need to find out it's kind of like when you get lost in the mall or you get lost somewhere you get to find the map that says you are here right you've got to find out where you are to figure out how to get out right so let's figure out exactly where you are now what is your what is your income going to be taxable income this year? Probably right around

$24,000 or $26,000. Okay. And what is the $17,000 car worth? Well, now that I've just started looking up, probably about $9,000 or $10,000.

Where did you get that information? On like the Kelly Blue Book. Okay. Was that ten. Where did you get that information? On, like, the Kelly Blue Book. Okay. Was that private sale or trade-in? That was private sale. Okay. So if it's worth ten, then you're seven in the hole, seven upside down. What kind of car is it?

A Jeep Patriot. Okay. A 2009. Okay. And who's it financed with? Credit acceptance. Jeep Patriot in 2009. Okay. And who's it financed with? Credit Acceptance. So you have a high interest rate. Yes.

Okay. Yeah, because I really didn't have any credit. And you got messed over. Yeah. Yes. Okay. So what does the trajectory of your income look like? Is it shooting up?

Because 24 is pretty low yeah um because i just started the business and that's kind of like i've been in there about a year so yeah but is it shooting up i mean the following year you think you think you're gonna make 40 the next year or whatever um i think yeah it's most definitely going out but i've just kind of been putting pretty much everything back into it to make it grow. Okay. But I do well. Here's a good rule of thumb. You should not own things with a motor in them, including cars,

all the total of everything with a motor in it that is more than half your annual income. So 17 as a percentage of 24 would be insanity okay okay um of course you already knew that you kind of brought that up early in the conversation uh the second thing but but but your situation is 17 is half of 34 and so if you're making 34 the following year then it's not insanity anymore it's just really high and if you make 44 the following year it doesn't even matter it's it but we do need to get it paid off so the next question is apart from the fact you feel like you got screwed on it do you like the car um no it's given me problems ever since i had it like um the first day that i had it i mean

they kept it this dealership kept it for like two months fixing it so it's giving me nothing but problems okay well it would be good to sell it it's going to be difficult to sell it because you have to come up with that seven thousand dollars right you have any money saved no i don't i didn't think so. And so the $7,000 and your credit's shot, so you're going to have trouble borrowing it. Yeah. Okay. If you could find a credit union that would loan you the $7,000 plus $1,000 to get you a beater car, right, then you'd have a $7,000 loan instead of a $17,000 loan.

That's a lot quicker to pay off, and you get rid of a car you don't like anyway. When you get things turned around and get the income coming up, then you save up and move up into a better car at that point. Well, I have a 1998 Camry that I could fix. It just needs a little bit of working that's paid for that I could fix. Yeah, that would be the thing, and drive that. Okay, should I? If you can get this thing sold.

But the problem is you've got to come up with that seven, and that's going to be hard. Okay. So maybe you save the seven. It may be you pay down the debt, down closer to the thing. But you've got to be able to give acceptance a 17 000 check to get the title to give to the buyer right and the buyer is only going to hand you 10 right so you've got to have that other seven lined up so let's go to work on that and that's either you know uh scratch and see

if you can pull a little out more out of the business than you've been pulling out get your income up work a side job sell some other stuff whatever you got to do but that gets you out of a car you hate anyway and gets rid of almost all your debt right and then you can plow through the rest of that fairly quickly but that's kind of the roadblock for you the blocker for you and so the faster you can do that it might take you several months right and that's okay you anything else to do. Yes. You were just wandering along three months ago, so now at least you've got something to aim at, right?

Yeah. And so hold on. I'm going to give you a copy of the book, The Total Money Makeover, which will give you the details of the step-by-step plan, exactly what to do, when to do it, how to do it, why to do it, all that kind of stuff. And hold on. I'll give you a copy of that.

And then you call me back as you're working through this if you need some help. That's what we're here for. Bill's with us in Tampa. Hi, Bill. How are you? I'm doing well. How are you, Dave? Better than I deserve.

What's up? So, quick question, wondering what you would do in my situation. I took a job in Florida, moved from Illinois. My house in Illinois didn't sell because the market wasn't going to give me what I owed on it. So I ended up renting it. So I'm a far, far away landlord. I have a management company that's taking care of it. But every month I basically lose $1,000 because the rent just isn't covering the mortgage and the property tax. So what is the house worth today?

So the real estate agent appraised it at $324. When? Just recently. We just actually put it on the market. Oh, you put it on the market. Okay. Yeah, we put it on the market. So I was just going to get to that. We put it on the market because I'm basically tired it on the market. Okay. Yeah, we put it on the market. So I was just going to get to that.

We put it on the market because I'm basically tired of losing $1,000 a month. Gotcha. And what do you owe on it? What do I owe on it? There's a first at $317, and there's a second at $40. So I'm pretty much way underwater. Who's the second with? Chase.

Have you talked to Chase about letting you sign a note for whatever it doesn't bring? I haven't. I've heard that they won't talk to you unless you're current on it, which I am. I wasn't asking them to forgive the debt. I was asking them to just let you sign a note for the difference. It's a second mortgage that they knew was not collateralized. collateralized so is the market is the market not recovering this is an expensive neighborhood is it not recovering it is it's just near a really really busy road and people don't don't really like it and here's the other thing we just dropped the price down to 314 on the house at the

recommendation of the real estate agent so right there on the first, I'm already below what the first mortgage. Yeah, so you got the money to write these checks for the difference? Oh, heck no. How are you going to do this? What was the plan? Short sale. What was the plan? What if a buyer comes along at 314?

How are you going to do it? Short sale. We're going to try to do that. Okay. Do you think that's a good move? It's not going to work because Chase is not going to try to do that. Okay. Do you think that's a good move? It's not going to work because Chase is not going to take zero. Okay. I'm guessing.

I mean, what's your household income? $140,000. Yeah. They're not going to take zero. They're going to think you're going to pay them, and they're right. You are going to take zero they're going to think you're going to pay them and uh and and they're right you are going to pay them so um i think you're probably going to end up financing some of these differences and getting out of this and you might negotiate with chase they might take a lower offer and you might not even have to be behind so i'd take a run at them on that second and go get you a bank loan and get out of this thing but i don't think short sale is going to work with your income.

Short sale is like a foreclosure. It's like, I don't have any money, I'm broke, and so they take less. But if they don't think you're broke, they don't do that. 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 DaveRanvey.com slash show. Okay, I need you to listen to this. Because one normal routine that everyone does can cause total chaos in your life.

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