The Ramsey Show - App - I Still Have Credit Card Accounts With My Ex-Husband (Hour 2)

Episode Date: July 15, 2020

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Thank you very much. Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studios, 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. Thank you for joining us. Open phones at 888-825-5225. That's 888-825-5225. Chris is with us in Atlanta, Georgia.

Hi, Chris. Welcome to the Dave Ramsey Show. Hi, Dave. How are you doing? Better than I deserve. What's up? Yeah, I just had a question. My wife and I are out of debt and have always invested every month in mutual funds,

similar to what you talk about. And I'd like to get into real estate and just want to know better how to get comfortable, right? I understand mutual funds. I'm comfortable with them. You know, putting $150,000 or $200,000 down in, you know, one buy for a house just seems a little overwhelming to me. Well, it is. It's a lot of money, especially if it's a large percentage of your world. You know, I mean, if it's a high percentage of your net worth going into that that is nerve-wracking um which makes you you know it makes you just slow down and be very very wise

about it um and so the the typically there's i mean there's two kinds of fear there's the kind of fear that says i'm scared of driving a car because i've never driven one before or riding a bike because i've never ridden ridden one before and um that's a kind of fear that says oh the more knowledge I have the less fear I'm gonna have the other kind of fear is don't touch a hot stove or walk out in front of a bus which keeps you alive yeah you're not gonna get over that kind of fear because you shouldn't it's keeping you from harm but not understanding a mutual fund so you don't put money into it is um is a knowledge-based or lack of knowledge-based fear and the same thing with you with the real estate um so the way to

overcome it is just spend time studying and spend time looking at deals. And don't be in a hurry. And don't let anybody pressure you. And don't let anybody roll their eyes that you don't know what you're doing. You're the guy standing there with the freaking money. So you just take your time. The money in real estate investing, when you get ready to buy a house as your first rental at real estate investment, money in real estate is made primarily at the buy.

Okay. So you want to. So would you work with an agent to teach you how to do that? That'd be fine, but I wouldn't rely exclusively on them. It's a matter of, you know, it won't hurt my feelings. It might hurt the agent's feelings. They might not want to screw with you. But it wouldn't hurt my feelings if you walked through 50 houses before you bought one.

But if you did that and... Just make sure you get a good deal. What area of Atlanta are you in? We're kind of in the north suburbs. Like what, Alpharetta? Yeah, kind of the Alpharetta-Roswell area. Yeah, okay. All right, cool.

So, I mean, if you looked at 50 houses over the next three years, that's an exaggeration. But versus what you know today, if you looked at the numbers, looked at the comparable sales, looked at the price per square foot, looked at what they're renting for, looked at what types of rentals people are looking for, one-bedroom, two-bedroom, three-bedroom, five-bedroom in your area. You know, you look at all these different things, then you, in a sense, are making a non-purchase decision on a whole bunch of properties, but you get very, very familiar with the numbers, and they just start to leak out of your eyes and your ears at that point.

Versus right now, you know, part of the fear comes you just don't know the numbers. But if you can walk up to a house and go, you know, houses in this area are going for $235 a foot. This idiot's asking $400. I'm wasting my time. But you've looked at 40 of them, and you know that. You don't even have to look it up on the computer. I mean, you don't have to have them pull know that. You don't even have to look it up on the computer. I mean, you don't have to have them pull comps.

You don't have to do anything because you've internalized the information by doing due diligence. And so what you've got to do is look at a bunch of different things. Now, I'm saying 50, and I'm saying two years. It doesn't take that many, but I'm saying all of that to make my point that the more knowledge you have of that house over there i've looked at six just like it they all rented for 1200 bucks and uh the only way this deal works is if it rents for 1400 so this deal doesn't work and you can just say that in your head because you have the the base knowledge from having kicked the tires a bunch does that make sense yeah that does make sense and is tires a bunch. Does that make sense? Yeah, that does make sense.

And is there a certain percentage or that's something you just learned, like, hey, a percentage of price value that you want to build a rent for? I try to buy a house on residential, and I try to buy all our property this way. It's very difficult in a market that's this hot. I'll go ahead and tell you up front. And I haven't bought a property in a while because we're building a large uh a large office building and that's that concrete hole's taking all my money but but uh uh uh when we were buying property the last time we bought property which was a few years back our formula is we try to buy it for 70 of what we think the actual retail value is, which also means you're going to make a lot of people mad with low offers,

and it's like a specialty of mine. I'm not trying to make you mad. I've got money, but I could close by Friday. But if you can buy a $200,000 house for $140,000, you can make this work. You can make it work every time. Okay, now that makes sense when you have cash on hand and you're not we're not in a rush because we're not trying to move into the house exactly and i don't care if it needs i mean if it's got heavy repairs i might deduct repairs from that as well but if it's just

if i gotta run a coat of paint through it some carpet and tear the bushes out that's okay i mean it's been five or ten grand on it whatever but if you got 150 when everything's done in a property that's worth 200, most properties, I mean, you just poke around. It changes from market to market. But you're generally going to find about 1% a month of value. So a $200,000 house typically around two grand a month in rent. And that's a rough and dirty and that will change from market to market. So you need to learn that for your market. Sometimes they'll run at a factor higher than that. But if you pay cash, $150,000 for something, and you can roll $24,000 off in top line minus expenses to get to your net profit on that property in cash on cash returns in a year, you will make good money.

You'd be at an 8% to a 10% rate of return on your money before we got to appreciation, which also adds to the fact that $150,000 house is now worth $200,000. You've already made $50,000 before we started. And so the appreciation starts to kick into your overall rate of return. But I look at a cash-on-cash rate of return after monthly expenses, after annual expenses. I want to be in that 8 to 10 range, and that under 80 percent of value, 70 percent is what I aim for on a residential property. A single family will typically get me there. Is that logical? Yeah, that makes sense. I think it's just about the knowledge, like you

said, to get comfortable. Yeah, it's just like, okay, you know, I've driven six different kinds of sports cars that cost around $50,000, and I know that the Lexus has this, I know that the Beamer has that, and you can start to make a comparison. But until you went and got in them and drove them and looked at the, you know, the horsepower and the chassis, the suspensions, the technology available on them, until you've done some shopping, you don't know if you're getting a good deal on the one you're looking at. And comparison and knowledge of the marketplace is what gives you that. And I do that in anything I'm buying. I just become an expert on it, and I wear people out for a while until I get my knowledge base up. This is the Dave Ramsey Show. In today's world, technology and innovation are crucial for any company's success,

but the primary focus should always be on you and meeting your needs. That's why you get the best of both with Zander Insurance and their term life plans. Zander uses time-saving technology like over-the-phone applications, voice or electronic signature, text message updates, electronic policy delivery, and even plans with no medical exams to speed up the process of getting you the protection your family needs. One of the reasons I've endorsed Zander for 20 years is they never skimp on service. They are committed to serving you, whether you want to do business online or need that personal touch. You pick your path. Go to Zander.com or call 800-356-4282. Zander will guide you through the whole thing, keep it simple, and find you the best rates. That's zander.com or 800-356-4282. Louise is in Philadelphia. Welcome to the Dave Ramsey Show, Louise.

Hi, Dave. How are you today? Better than I deserve. What's up? Me too. Well, I'm 67. I'm a school teacher here in the Philadelphia suburbs, and I'm planning on retiring. And I'm meeting with the retirement people to make a decision whether to withdraw my input into my pension.

So each paycheck, they've been taking out about 7.5%, and investing it in the pension fund. So I have this one-time decision to make. Should I withdraw it and lower my monthly premium, but then I'd have that money to invest on my own. Okay, you would withdraw it. Withdraw it? Yeah, and more importantly than what I think, let me tell you why, and then you'll understand, okay? Okay. It's basically a lump sum distribution of your pension, and by doing this, you will not get a pension.

Is that correct? I will get less of a pension and by doing this you won't will not get a pension is that correct i will get a less of a pension okay by about thirteen hundred dollars a month okay and do you know the lump sum yet yes two hundred and seven thousand dollars okay so thirteen hundred um i figured it would need to make about six and.5% interest each year to be equal to what I'm losing. So you're a good math teacher. Very well done. I teach writing, but let me give you a real quick history thing. In 2001, we had a financial planner that took all our liquid assets and invested them in tech, and we went busted.

And at the same time, my husband got laid off. So our tax accountant is saying, no, no, no, don't take the one-time withdrawal out because you won't sleep at night. But yet I think there's probably ways to invest the money I take out that I won't lose my shirt. Right. So we do have that little history lesson that we got burnt once really bad. Yeah. I was in a car wreck one time, too, but I didn't quit driving. I know.

I know. And I think that's why I'm calling you. Let's walk through the numbers, okay? Okay. The $200,000, if you leave it in there, is going to pay you. You accurately figured it out, 6.5% rate of return. All pensions are set up to grow and to pay out at between 6% and 7%. It's regulation.

They're required to do it that way. Okay? Okay. And so, and when you die, your pension is worth to your estate zero unless you have a survivorship for your spouse. And when they die, it's still worth zero. So at some point, that $200,000 turns into zero. Yes. Okay.

So problem number one, if you roll it to an IRA and you die, your estate has $200,000. Yes. Okay, so that's advantage number one is when you die, you're better off by $200,000. You're not. They are. Right. I'm okay with that. That means that I didn't need all my money, which is a good thing.

Yeah. The second thing is then if I invest it and make a greater rate of return than six and a half on average, I have come out ahead while I'm alive. I like that. And so the Standard & Poor's 500 is the 500 largest stocks as measured by the company Standard & Poor's, which is used as the bellwether, as used as the average of what the stock market, the New York Stock Exchange, has done.

It has averaged between 11% and 12% since the New York Stock Exchange was formed. Wow. I did not know that. And so if you go back in history, and if you go back 10 years or 20 years, and so if you were to pick a mutual fund that at least did what or a series of mutual funds with some help that at least had averaged and did average in the future equal to or greater to the average of the market you would have beaten the pension by double wow right well i mean you had to get to 13 to double it but you see what i'm saying 11 over six and a half and so if you did poorly you got eight instead and the market did 11

because you really didn't you know you screwed up your picks you didn't know what you were doing you did a horrible the guy you're working with didn't know what he was doing you know you still are going to beat six and a half my my mutual funds and i didn't pick them by myself i picked them with one of our smart investor pros my mutual funds have averaged closer to 14 percent so even though we're at the age we are it's still okay to take a risk yeah i'm 58 that's how i'm invested because here's the thing you're not going to touch the money you're only wanting the income off of the money and so if the 200 000 went down because the stock market went down as long as it comes back up someday you're going to be okay because you don't really jump off a roller the only time you get hurt on roller coasters if you jump off and so when you're when you get hurt on a roller coaster is if you jump off.

And so when you're 60 years old, unless you're ill, you have a very high statistical likelihood of making it to 90. Right. My mother was 92. Average death age in America is 76, but that includes infant mortality and teenage death. So statistically, once you're 60, you have 30 years. You've still got to live. So picking mutual funds with the help of someone is better than doing like a structured annuity. Absolutely. Absolutely.

Okay. And the help of someone is known as a teacher, like you are the heart of a teacher. You will know they have the heart of it sales are people in the investment world 85 of them are sales people and when you meet with them you'll feel sold don't work with them the other 15 have the heart of a teacher and when you meet with them you will feel better than when you walked in because the fear of the unknown will go away as you have this wonderful thing called knowledge. Okay. So what I would do is sit down, click DaveRamsey.com.

I'm not in the investment business, but we have a series of people that we endorse, and you can click on SmartVestor at DaveRamsey.com. It will drop down a list of the people in your area that we recommend. In order for me to recommend them, we vet them. One of the things we vet them for is do they have the heart of a teacher? Okay. And so when you sit down with them, you should have an experience like you've had in the last few minutes.

Thank you. That's great. That's what we're looking for. And by the way, even though we had those hardships, we're debt-free. Good for you. And I just wish that I was listening to your new review back in 2001. That would have made a huge difference. Yeah, well, you just would have done something a little bit different.

But it's okay. It's okay. Hey, we all do stuff that we wish we hadn't done. It's called being human. You're going to be all right. Because here's the thing. You're only 58, right? No, no, no. I'm 67. It's called being human. You're going to be all right. Because here's the thing. You're only 58, right? No, no, no.

I'm 67. Oh, 67. Okay. I don't know where I got 58. I don't know. I'm 58. Well, thank you. Maybe I sound 58.

There you go. You do. So, you know, but if you invest just the $200,000, and I'm sure you've got other monies, and you've got the pension in addition to the $200,000 that they won't let you get to. You know, you just invest that. You know, when you're 74, that's going to be worth $400 if you don't use any of the money off of it.

Now, if you need the monthly income off of it, it won't grow to that level. But it'll double about every seven years, roughly. The lump sums will and so you know you're going to be in really really good shape because i'll bet you guys can live off of your other incomes and not have to touch this money so it's called a direct transfer rollover from your pension lump sum distribution to an ira and i invest in four types of mutual funds, growth, growth and income, aggressive growth, and international. Sometimes when folks are in their late 60s and beyond, they don't want to do the aggressive of those four, and they'll do a growth and income, or they'll do a balanced in there.

So it would be balanced, growth and income, international, and growth would be the four categories if you did that. That's a more conservative portfolio. You can still find that group of mutual funds that, as a group, outperformed the S&P and certainly outperformed 6.5. So you have more money when you're alive and more money when you're dead with that answer, and that's how this works. That's why we do this. So good question and very well done, and thank you for teaching all those years.

That's wonderful. What a wonderful career you've had. Very cool stuff. Smartvestor at DaveRamsey.com. It drops down a list of the people in your area. We recommend you choose what you want to choose or among them, you decide and get comfortable with somebody. Learn, learn, learn, learn. This is the Dave Ramsey Show. We'll be right back. Amy is in Portland, Oregon. Hi, Amy. Welcome to the Dave Ramsey Show. Hi, Dave. Thanks for having me. Sure.

What's up? Well, I'm calling to do my debt-free stream. I love it. Good for you. How much have you paid off? I have paid off $97,885 in 35 months. Woo-hoo! And your range of income during that three years? Well, around $98,000 up to about $114,000.

Very good. But I want to kind of backtrack. This is my fifth year of nursing. I went back to school and became a nurse. And, you know, five years ago, basically started at nothing, zero. Wow. On food stamps and HUD housing and have just worked my way up to where I am now. Amazing. So you're an RN?

Correct. And you made $114,000 in the last year? Yes. And you went all the way to subsidized housing and food stamps all the way to the bottom and then came all the way to the top. Yes, yes. How did you end up in that mess? Well, so I got divorced. I went through, it was a pretty rough time for myself and my two girls, abusive relationship.

But throughout, I started working in banking at an early age. I was about 21 years old and worked my way up to a loan officer and had been in the banking industry for about 20 years. And so when I got divorced, it really it was a wake up call for me to really decide, you know, if I want to make a change, now's a really good time to do it. And so, um, I quit my job and, um, kind of, I got into nursing school and I just, um, just put my, put my whole, whole heart into, um, basically, you know, going for a different, new, better dream. Wow. And so you've been out three years? Five years. Five years. Okay. What happened three years ago that made you decide to attack the debt?

Well, my last year of nursing school, I was commuting about two and a half hours to clinicals. And during that time, I was able to listen to you on the radio. And I knew once I was done with school that the next right thing to do was to tackle this debt and get it paid off. I wasn't smart going into school. I was kind of indifferent to borrowing money, just coming out of the banking industry for so long. It just was what you did. And I knew, like I said, that it wasn't the smart way. And if I wanted to really build that legacy and be what I wanted to be, not only.

So what flipped the switch three years ago? I said, we're going to attack this. I mean, you've been out of school two years at that point. And it was two years of transition and um and there's i i sent some photos but i have two girls rachel and lauren and my youngest daughter lauren is um she was born with um many special needs, you know, medically fragile. And so the transitions that I had to make to get to where I was now included a lot of hurdles to get her into a place where she was, you know, safe and comfortable, you know, because we had to change schools. We had, I mean, there's just a lot that goes into planning.

But you knew there was going to be a point where you would be able to say on the debt, ready, set, go, and that was 35 months ago. It was. It was. I got to a place where everybody was stable, so to speak. What a journey you've been on i mean you've been on a serious journey so what do you tell people now that you did this in 35 months i think the getting out of debt is the small part of your story probably but 35 months what do you tell people that the secret to getting out of debt is well i coming from you know, I heard the call of the woman, kind of similar in my circumstances.

She was a single mom of four, found herself homeless, you know, put herself through nursing school. And I heard you talk about you're not defined by your past or those labels that kind of came with it. And, and that was, um, that was a huge transition or transformation for me to get to the point where, um, I decided that I was not going to just merely survive and just accept the bare minimum and get me to a place where i i am winning and and so now my motto is i'm either winning or i'm learning so and i'm not and i'm tired of learning so much and i'm tired of learning so much that is great i love it it. Well, congratulations. Thank you.

What a deal you've been on. How old are you? Thank you. I am 48 years old. Oh, man. And so this is awesome. And now you're an RN and everything's paid off and you can make serious bank and you're going to be able to put together a very, very serious level of wealth by the time you get to retirement.

Very good. I'm proud of you. I have a proximity principle story if you have time to hear it. I don't. I'm out of time. I don't want to mess up your debt-free scream is what I don't want to do. That's too important with everything you've been through. But we'll make sure Madison collects it, and we'll get you on the you on the ken coleman show and do that okay i would love that yeah but anyway the um

uh so we've got a copy of chris hogan's book for you uh everyday millionaires how ordinary people built extraordinary wealth and how you can too very cool stuff and uh if you don't have a copy of ken's book we'll send you one of those since you gave him a shout out anyway okay so we'll send you both of them all right very cool way to go kiddo amy in portland oregon all the way from a divorce into subsidized housing and food stamps all the way out now she's a nurse paid off,000 in debt in 35 months, made $114,000 in the last year. Count it down. Let's hear a debt-free scream. Three, two, one.

I'm debt-free! I love it. I love it. I love it. Well, that right there tells you the truth, doesn't it? And the truth is windshields in cars are bigger than rearview mirrors for a reason. Rearview mirrors for looking at the past. Windshields for looking at the future. Yeah, you get to decide.

You get to dial it in. Are you going to turn left? Are you going to turn right? Are you going to go up that hill? Where are you going? You get to decide. You need to make those choices, the dignity of choice. Did you see the number of choices that lady has made in the last decade? Oh my gosh, what a hero. See, you get the dignity of choice. You put yourself in a proximity of something like Ken Coleman says, and you say, I'm not defined by this. This is I am passing through. You know, Mike Todd used to say, I have never been poor.

I've only been broke. Poor is a state of mind. Broke is I'm passing through. I've never been poor. I've only been broke. She was broke. I was broke. Some of you are broke. Some of you are poor, but that was a decision. Broke is I'm just passing through. It doesn't define me. It was just that bad thing that happened to me once in the past. This is the Dave Ramsey Show. Tony is with us in Atlanta, Georgia.

Hi, Tony. Welcome to the Dave Ramsey Show. Hi, Dave. How are you? Better than I deserve. What's up? I have a question. I have been divorced for like two and a half years. My ex-husband and I still have a credit card debt to pay that's in my name.

It is in my divorce paperwork that he has to pay it. But I don't know what to do if I have the money to pay off the bill. And, like, should I sit and hold on to it, or should I make him continue to pay me, like, pay it side by side? I don't know what to do once I have the money to pay the whole entire bill off. How much is owed on it? Right now it's about $8,700. What does he make a year? I don't know.

He likes to be in and out of jobs all the time. So do you think he's going to pay this bill? I think he will continue to pay it if it's owed and we're side by side doing it. You're supposed to be paying half of it? Yes. Hmm. doing it i don't know you're supposed to be paying half of it yes and the court ruling was that he can take 20 years to pay it off there was no time limit on paying it off we had originally agreed by our math at the time that it would be paid off in october of this year but he's lost the job gotten new job, had to take a break.

Like, I know there will always be a crisis coming for him. Yeah. And what do you make? Last year, about $68,000, and I'll probably make maybe $78,000 this year. Have you got any other debt? Nope, this is the last one. Okay. Okay.

How many kids have you got? Nine. Hmm. Okay. Well, the way I answer questions is, what would I do if I woke up in your shoes? Okay? questions is what would i do if i woke up in your shoes okay um the benefit of waiting on him to maybe someday be responsible which is something he's never done in his life to date

uh which would surprise all of us at this point if that were to actually happen the only benefit to you is four thousand three hundred and fifty dollars am i right correct i wouldn't screw with it for four grand i just pay it off and then what should i do after or what should i tell him i would call the i would ask your attorney if um you can set it up as a note for him to pay you, and then when he doesn't pay you, I wouldn't be shocked. Okay. I would just move on. Sitting around waiting on someone to do something that you know they're not going to do is a long bunch of drama. And I wouldn't deal with that for $4,000 if I were you. You can do whatever you want to do.

But I would, in other words, I would try to get him to pay it i would try to hold him to his feet to the fire but you've given me a real low opinion of him and you have in terms of his ability to stay responsible and follow through on obligations and so if he does you and i are both going to be surprised we are okay i mean he's held it up for this long so i'm like like, good run, dude, but, like, I can't run this for another, at this rate, we'd be. I mean, you're going to be tied to this goober for another three years screwing around for $4,000, you know? I'd get it out of my life. Now, before you do, let's try to get him to tie, you know, call your attorney and ask your attorney if you can get him to sign a note for it, because you're just to pay it off it's in your name anyway if he doesn't pay it you got to pay it right so you might as well just be done with it done with him and then if he happens to send you a check

we'll all just act shocked and so let's go with that hey thanks for the call carol is in topeka kansas hey carol welcome to the Dave Ramsey Show. Thanks, Dave. How are you? Better than I deserve. What's up? Well, I am in baby step two. Just finished the FPU course about two weeks ago, and I'm running at a gazelle pace, and I've got a very tight budget. So my question for you is I have two nieces who are getting married and

one lives in Little Rock, Arkansas, and the other one lives in Georgetown, Texas, and they're getting married like a month apart from each other. And this is happening like next month and the following month. And I guess my question to you is if I'm trying to get out of debt, like, is it wise for me to be taking, like, trips? Well, I mean, you got a car, right? Yes. And I assume you could stay with your sister or your brother, right? Well, at one of the weddings, we have to actually get lodging. So I have to get a hotel for that.

The other one, I get to stay with my sister. Okay. All right. I mean, all you're talking about is a tank of gas, aren't you? Yeah, I mean, I'm looking at it as with both weddings being about $300 to travel down there to each one for about $, I don't know, maybe 150 each. I guess I'm thinking kind of maybe high. What do you make? Just under $50,000. Okay.

All right. Well, that doesn't kill me if my niece is getting married. I mean, you're not flying to Brazil. You're driving to Kentucky. Right. You know? It's probably not even going to be as much as you're driving to kentucky right you know it's probably not going to be it's probably not even going to be as much as you're talking about i would just tell everybody you got to have some help doing it on the jeep and um you know my presence is going to be your gift uh that

a nice card um well you know what i want to give them i want to give them fpu like i think that's such a good gift like i think that you can like wait year. You know what I mean? So I don't have to get them the gift right away, but that's what I want to get them is your class. That's nice. I'll tell you what. I'll give you two. You give each one of them one as a gift. I'll give it to you and then you give it to them.

Are you serious? I'm dead serious. Oh my gosh. I would buy a tank of gas. I don't think a tank of gas kicks you off your baby step. The other gas i don't think a tank of gas keeps you out kicks you off your baby step too and the other reason i don't think it kicks you off your baby step too is you bothered to ask about it yeah you just thought you didn't just go oh i gotta do this you know which tells me you are really focused you're really gazelle intense you're really pinching every little dollar and um and then you just scrape together some money and buy a couple tanks of gas and, you know, stay at the cheapest possible hotel and whatever.

Or find out maybe there's a cousin that's got a house they're renting for the week. And, you know, at the other place, they'll let you bank up in the hallway with your sleeping bag or something. I don't know. But, I mean, whatever. Just go on the cheap like you're a college kid or something and try to try to work it out but let's you don't need to spend a ton of money to do this but uh that's the good news and so for that reason i would do it but just keep it on the cheap and you don't need to be you're not the rich aunt you're you're just not yet you will be you're on your way hang on i'll have Madison pick up, and we'll sign both of them up as our wedding gift from you for Financial Peace University.

Open phones at 888-825-5225. Christina is on Twitter. Dave, I'm about to buy a new car. Should I get the extended warranty? You shouldn't buy the new car. New cars go down in value 60% to 70% of their value. They lose 60%, 70% of their value in the first four years you own them. You're turning $30,000 into $11,000 in three to four years.

You should not buy a brand new car unless you have at least a one million dollar net worth if you're an everyday millionaire or beyond then if you want to buy a new car that's fine if you simply mean you're going to get a different car but it is a used car and you're asking about an extended warranty never buy an extended warranty ever i do not buy extended warranties on anything. The reason is, is they're about 87% profit. Only 10 or 12% of what you spend on them is actually statistically taking care of the probability of the breakdown. They're a high profit,marketing item for the car dealer for Best Buy for whoever it is that's selling the extended warranty. They make all their money on that crap.

Stay away from them. And make sure you have an emergency fund to cover your repairs on a car. And if you will self-insure through repairs on items instead of buying extended warranties, you will end up with a lot more money at the end of your life because it doesn't cost anywhere near to repair or throw the thing away that it does to cover it with an extended warranty so no new cars unless you're a millionaire you're a millionaire that's fine you can afford to take the hit but even when i buy a brand new car i take a hit i can afford it but i take a hit. I can afford it, but I take a hit.

That puts this hour of the Dave Ramsey Show in the books. Hey, it's Kelly, associate producer and phone screener for the Dave Ramsey Show. This episode is over, but if you heard about an event, product, or service and didn't have a chance to write it down, don't worry. We list everything you've heard about during this episode.