The Ramsey Show - App - If You Want To Get Rich Do What Rich People Do! (Hour 2)

Episode Date: August 28, 2023

Live from the headquarters of Ramsey Solutions, broadcasting from the Pods Moving and Storage Studios, it's the Ramsey Show, where we help people build wealth, do work that they love, and create actual amazing relationships. Jade Walsh, our Ramsey personality, is my co-host today. Open phones at 888-825-5225. Stuart is in Richmond, Virginia. Hi, Stuart. Welcome to The Ramsey Show.

Hey, Dave. How are you? Better than I deserve. What's up? Great. So my wife and I have some extra money and we're trying to figure out the best way to prioritize spending it. To give you a little bit of background, we're currently on Baby Steps 4, 5, and 6. We're actually on Baby Steps 5 and 6 for this year. We've finished funding for retirement. This money that we have was initially going to be earmarked for our kids' college because we just got to Baby Steps 5, 4, 5, and 6 this year. So their funding is low. We've been trying to step that up monthly, and we're putting away a pretty decent amount each month.

But we want to- How old are they? So I have five kids, and they range in age from the eldest being 13, the youngest being two. We're currently putting away about $4,000 a month in their college savings. I had two wrinkles come up financially here this month, one of which was I got into a car accident. Car's probably totaled. I'm going to need to get a new car. At the same time, the company that I work for has offered me the opportunity to purchase some equity. I already have a decent amount. I work for a privately held company, so it's illiquid. But the money that I put in there previously has performed very very well uh so i wanted at to to purchase this if i

if it made sense it's about forty five thousand dollars uh that we're we're working with here and really just trying to figure out the best way to allocate that spending your car had insurance on it didn't it it did yeah what's that car worth yeah it wasn't all that much uh probably eight or nine000 or $9,000. So you're driving an $8,000 or $9,000 car. The totaling of the car is not the problem because you could just go buy an $8,000 or $9,000 car. Yeah, I can buy a new car, correct. Okay, the same car.

I mean, that's what the insurance is for. The question is, do you want to move up in car or buy equity? Yeah, most likely correct and the my thought process there is that we have uh like i said five kids i was just driving a sedan i'm most likely going to get need to get something a little bit bigger and um you know softly used four or five year old suvs are still going for twenty five thousand dollars or so in our area. So the question is, do you want to move up in car or buy equity in the thing? Because your other car was fine until you had a wreck. Right. Yeah, so most likely we'll move up in car.

Okay. That's fine. What's your household income? So I make about $280,000. My wife, she stays home with our kids, but she does some bookkeeping on the side and makes about 35. If you pay cash for a car that's worth 25 and you make 250, there's nothing wrong with that.

Would you prioritize putting some of that into our kids' college fund? Because like I said, we just started doing that this year, so it's pretty dramatic. I'd rather have a college fund than I would a minority interest in a privately held illiquid company, yeah. Okay, okay.

For sure. All right, well, yeah, that makes sense. The reason I was thinking that is because, I mean, I've got close to $200,000 in equity in the company, and it's, like I said, it's performed pretty well. Yeah, what's your percentage of ownership? Very, very small. Yeah, so it's a big company, yeah. You've got absolutely no control over the situation.

Correct. Bozo's running it, could do cocaine, run the thing into a sink, right? Yeah. And that's a minority interest in a privately held company. Illiquid, you're screwed, yeah. I'd rather put the extra money to the kids' college fund or paying off your own house. Yep.

That's what I would do. You got enough invested in this. Okay, okay. Yeah, you got plenty invested. Are they going to take it public or are you just going to sit here and ride it out for the ROI? I don't know the answer to that question. What's the exit strategy if you quit?

I would be able to pull that out at the next equity event which is either a recapitalization or a sale of company yeah okay which is again at their whim at their whim so you're stuck with it okay yeah yeah this is yeah this what scares me about minority interest in small, you know, it's not that small, but privately held situation where you basically have zero control over this. That's what scares me. And so, yeah, I think you've got more than enough in there.

I wouldn't put any more in it. I'd ride what you got and let's pay cash for the kids' college, get you a car, and i'm throwing the rest in you know towards the house like jade said yeah going back to what he said because i'm interested if he if he did that what's the what's the hope is that this company becomes publicly traded no i mean is there they haven't they've given him no indication based on our conversation just now they're going to do that yeah but that would be the only basically his hope is is that they make a profit and his percentage he gets paid out in profits and so he's the 200 000 he's got invested today has made him good money he's made a good ready to return on that so say he's getting

an extra 50 000 a year i mean that's 25 percent ready to return that'd probably be about what he's getting he's probably getting some something north of 20 anyway uh today but again you know there's human beings running the thing yeah and um and there's variables in the economy you don't know when the next fauci is going to come along and so you just can't you just can't control everything you know you can't control everything outside of yourself fauci really messed you up dave no no fauci really messed up America. And so that means that for the rest of my life, I have the pleasure of messing with Fauci.

I love it. When you screw everybody and your name gets turned into a verb, you got Fauci'd. You got Fauci'd. That's when you know you have been labeled permanently. So, yeah. That's a psychological scar on all of us and that's but it's okay we'll be okay so can Fauci get ramsayed I doubt he cares probably probably not a big probably not a big on his threat radar it's probably not a big thing so I think he's probably

a lot more worried about Rand Paul all right open phones at 888-825-5225 you guys jump in we'll talk about your life and your money it's what we're here for and we'll try to help you we're an expert on our opinion that's right and uh hey we've helped a lot of folk and some people agree with it some don't you don't have to do it you're grown-ups you get to do what you want to do but we'll teach you what we know and what we've led uh tens of millions of people out of debt and millions of people into million dollar net worth and more than anybody else and so we got a pretty good track record but there's a lot of reason to disagree with us and i sometimes argue with myself so i was doing that a while ago in a board meeting we had our operating board meeting this morning

and i got an argument with myself. It's ridiculous. As long as you do it in front of people. I do, but it's a little bit like I've got multiple personalities. Oh, wait. I do. I have Jade and Rachel and George. Hey!

That's good. And Deloney and Coleman, and there you go. There you go. Lots of Ramsey personalities. This is The Ramsey Show. Jade Warshaw, Ramsey Personalities, my co-host. The Ramsey Show question of the day, sponsored by Neighborly, your hub for home services. Most American homes have dozens of appliances, and chances are, at any given time, there's something wrong with at least one of them. Mr. Appliance, a neighborly brand, offers expert appliance service on your schedule. Visit

neighborly.com to find out home service experts near you including a Mr. Appliance in your area. Today's question comes from Cindy in Kansas. She says we have about $185,000 of equity in our house. With rates being what they are right now, is there anything we can do with our equity? Or should we wait till rates drop to possibly take out money to finish the basement and redo the deck? We have great credit and owe 115,000 on the house.

We just don't understand if there's any benefit to having all this equity. We do plan to move in the next two years due to better schools. We're pulling from the equity of our house to finish the basement to increase our square footage to 3,000 square feet. Be smart. I got an offer from the bank saying I could take out an interest only payment for 10 years, but I never heard of that before and I didn't know if it's a good thing. We're from the bank and we're here to help. Yeah, those words don't go together. And if they do, they're lies. They're not here to help.

I want to make sure we're speaking the same language here because words like debt and loans and interest rates, I don't care a whole lot about that. What I do care about is this equity in your home. And the great thing about that equity, Cindy, is that's of value to you. That's wealth that you're building in your home. And no, I would not take that out to do repairs. You're stealing and robbing from your future when you do that. What I would do is start putting aside money to do those repairs on your home yourself and pay cash for those. And you might be thinking, yeah, Jade, but I'm going to move in two years. And won't I get the money back? Maybe, maybe not. But I'd rather have that money in equity so that when I go to move, you're getting all that money back to put on your next home. If you take all that money now,

you're not going to have much of a down payment to roll over into the next home. Does that make sense? So no, I would not pull out all of that equity. As a matter of fact, depending on what your situation is, if you don't have any debt,

I'd actually double down and start paying more to pay off the home. Or like you said, you could put some of that money aside to save for the renovations. I would not deal with the bank on this. I would not go into debt for this. Not doing it. That's all I can say. So, Cindy, for you and those like you that say,

I never heard of that before, an interest-only loan payment for 10 years. Interest-only means you paid only the interest, which means you paid nothing on the debt, which means this goes on forever and ever, amen. Not only 10 years. Forever and ever, amen. It just keeps going and going and going and going.

There's no end to it, none whatsoever. It just goes on. You're going to be in debt forever. And the big problem with that is that you write checks every month for the privilege of going nowhere, just running like a rat in a wheel. That's what interest only is. No traction, no progress. And we know from having studied wealthy people that one of the primary things people do, there's two things that really cause people to get their first $1 million to $5 million in net worth.

The two primary things are they invest steadily in their retirement plans and good growth stock mutual funds, like 401ks and Roth IRAs, and they pay off their home, not pay only the interest and stay in debt forever and ever and ever and ever. So the product that the bank is offering you here is to screw you, which is what banks do. And they're there to mess you over. That's their job. And they're good at it. And they're just to take interest from you and keep you in debt perpetually.

So people that do this type of loan are what we call middle class. Perpetually. There's nothing evil about being middle class, but when you do middle class stupid things that cause you to stay middle class, when you had the ability to be much higher in the socioeconomic strata, meaning you had millions of dollars in net worth and you had a great, solid,

wonderful golden rocking chair at your retirement instead of i hope the government will take care of me which is well known for its ability to handle money this is a stupid plan okay so no we don't do that so the the deal is uh you know there's here's some things that you know, we could just take a second and talk about this. It's a good idea because I grew up in a slightly lower middle-class family, okay? And so I watched people do middle-class stuff, okay? Here's what middle-class, by the way, there's poor people stuff that they do too. Sure. And then there's rich people stuff that you do. Yes, yes. And it's not that one's, a person is better by character than another by doing these things these are just the financial moves that cause you to stay in one of these areas

okay poor people would be payday lender yes pawn shop title loans uh pay at the pay uh uh payday what are you called a payday loan pay at the car lot whatever it is what do you call it no tote the note um rent to own your freaking washer and dryer yes pay about 5x for it when you do that uh these are poor people's lottery lottery is going to make me rich by the way almost all lottery tickets 78 lottery tickets just holding poor zip codes yeah and in tennessee the lottery money is used to send uh middle class and upper class people's kids to school they pay for your they give you three thousand four thousand dollars for tuition so in tennessee poor people are sending rich and middle class people's kids to college so isn't that a wonderful program i just love it it's awesome and so this is what so that's poor

people's stuff okay middle class people's stuff is car payments car payment i'm gonna get rich on airline miles with my credit card he locks he locks i'm gonna i'm gonna take a second mortgage out interest only and fix up my basement and build a deck uh because i deserve it i believe all the sofa commercials the pretty people student loans student loans middle class but some lower class but mainly middle class keep your middle class forever um whole life life insurance that's a good one uh leasing a car yes very middle class very middle class so rich people don't ask how much down and how much a month they ask how much they avoid payments they pay for it they don't buy it and that's what got them

to be rich and it's what keeps them rich and so the rich get richer and the poor get poorer yep because you keep doing the same crap that causes it in both cases and so you keep doing rich people stuff you get to be rich people i'm telling you you make 30 40 000 50 000 a year in america today and you do rich people stuff for the next decade you will not be you will not be poor anymore no you'll be all right you just do the stuff they do you pay cash for things you buy used cars uh you don't lease stuff you don't finance your freaking vacations yes you stay out of the timeshare office you run the whole life agent out with a stick out of your living room get out get out get you know you do this is what you do right

you do you start doing this stuff you i mean it's not a it's again it's not a character thing yeah because if it's a character thing i would not have anything absolutely because i mean i i'm so dumb i had to become a millionaire twice i lost it all the first time because I did stupid butt stuff so it's not it's not that but here's figure out and you know there's even stuff that people do by age group okay number one mistake people do when they graduate from college student loans no they already had those oh they buy a new car that ding ding ding ding ding they got their big boy big girl job that's right and i have to get a big girl car payment to go with my big girl job because i'm embarrassed to drive the college car god help you what a one percent problem is that you had a college car these are things that most people never even dream of having in one sentence and you had that regardless of if it was a hoopty

but i had to go get a 35 000 car because the one i had didn't have an airbag oh you're killing me here yeah yeah so this is ding ding ding ding there's age group mistakes there's social strata mistakes and or behaviors that cause you to be in that social strata so if you want to level up you change your behaviors that's right you change So if you want to level up, you change your behavior. That's right. You change your habits. You change your views. Where there is no vision,

the people perish. That's like die. Vision is key. And that is, I want to level up. I'm going to do stuff I've never done before so I have things I never had before.

I'm going to pay a price to win. I'm not going to follow all the freaking, all my broke friends that got an opinion about money. Go do what your broke friends do and see if you don't look like one of your broke friends. That's pretty dumb. This is The Ramsey Show.

Jade Walsh, all Ramsey personality, is my co-host today. Stacey is with us in Los Angeles. Hi, Stacey. Welcome to the Ramsey Show. Hey, Dave. Hey. So let me get right to the point. My wife and I were both 44.

We're on baby step seven. Got a paid-off million-dollar house. Have $1.2 million in 401ks. Ding, ding. Well done. Thank you. Oh, Dave, I have to tell you, when we paid off the house this year, I took a picture of myself barefoot on the lawn,

and I posted it on the Baby Step Millionaire's Facebook page, and I was overwhelmed with hundreds and hundreds of people liking it and commenting it. You are absolutely right. It just feels so different. That's great. I love it. So here I am, between my wife and I, we're making 200 grand a year and we're just piling up cash because we're savers. And I've got 13 grandkids. The youngest is four weeks old. The oldest is 13. And I'm thinking, how can I, how can I be intentional and give and help change their lives? And I'm thinking,

what's the best way to save for their college or to help pay for some of their college? I Googled five 29s and I was, I got a little confused and do I set up 13, five 29s? Do I set up one five 29 and then just allocate as I see fit or what, you know, or do I just say the heck with it and just keep, just pull out of my investment accounts when they turn 19 and go to college?

I must have misunderstood you. I thought you said you were 44. That's what I thought. I am. You're 44 with 13 grandkids. I'm sorry. I'm sorry. 54.

54. I'm sorry, not 44. I'm feeling so much better now. Me too, for everybody's sake. I mean, you're from California, not from Tennessee, so I couldn't figure that out. My wife always rounds up and calls me 55, and in my mind it was 54. Make sure you say 54. That's okay.

I wasn't trying to make you older. I just thought you were a child bride or something. I didn't know what your deal was. No. All right. All right. So here's what I would do if i were in your shoes okay if you put a 520 if you put it into a 529 they need to be individual and uh they're then in the kid's name and you can set yourself as the custodian you're in total control of it as the custodian okay you don't even have to distribute it to

them you can just take the money but the problem is you don't have to distribute it to them until they do what you say uh the problem is that uh that money then has to be used for education i probably i mean i we we've uh thrown money in kids, our grandbabies, 529s, on their first birthday to get them started. It's like a tradition. Their parents don't need the money, but we do it just to help them start the very first one, right, and to get it going.

And I've only got seven. But anyway, you've got the money. So we don't know the path the kid is going to take. And when you're a grandparent, you have absolutely no control over the path the kid is going to take. And the money is now in the kid's name when you put it in a 529. So I'm probably going to be more of a control freak than that. Well, that's my nature. And so my thought was to just do one big like separate fund yeah and then

and then be the you know the grandma grandpa scholarship fund and there you go go to school and here's how you qualify okay here's the qualifications for the scholarship fund yeah we're not doing drugs we're walking with jesus you know we're not uh you know uh we're not a porn star you know whatever it is right i porn star, you know, whatever it is, right? I mean, you know, you're going to be living a clean life, right? And so, because otherwise you don't qualify for the Grandma and Grandpa Scholarship Fund, and that gives them an incentive to stand tall and to be somebody. So would you still do the 529?

No, no. I think I'd just have a big fund, and I'd go ahead and announce it to the parents and the grandparents, and I'd kind of start talking about it, like at Christmas. You know, there's a grandpa scholarship fund, and, you know, here's how you qualify. And, you know, Mike Rowe would be proud if you put a work ethic thing in there, right? Well, they'll tell you that serving Jesus is number one on the list. That's for sure. Well, here's the thing what they're serving. Jesus is number one on the list. That's for sure.

Yeah. And, um, well, here's the thing. I mean, you're doing cocaine. I'm not going to fund your life cause I love you. I don't want to kill you. And given a cocaine addict money ensures they're going to die. So that's not an act of love. That's just an act of irresponsibility.

So yeah, that's, uh, you know, so you're going to, that's why I'm controlling because I love you. I'm going to control these funds because money makes these kids and every one of us more of what we already are. If you're a jerk and you get money, you're a colossal jerk. If you're misbehaving and you get money, you misbehave in style. Would you tell them how much is at stake? Thank you. That was my question. How old are they? So the youngest is three weeks and the oldest is 13. And so my goal is to work backwards with a goal of 25 grand per grandkid. And then just what do I need to invest

monthly, yearly, so that... Okay, that's cool. Obviously, the oldest, because I have zero in the fund today, so obviously the oldest is going to take the lion's share in five years. Yeah. But then... I might pay tuition for four years to a state school. Maximum of X.

I like that. Today, that'd be 40 grand but yeah well i mean i'm not opposed to 40 yet time and i get time and resources yeah yeah i'm just you do whatever you want to or i'll pay for the first two years of tuition maximum of x but yeah i think you're right but but let's you know let's put a limit on it otherwise the you know we don't know what the stupid colleges are going to do it could be 80 grand a year by the time one of them gets there or something and i don't want to be on the hook for that so uh you know maximum of x whatever x is and um i'll pay up to four years of tuition uh to a state school maximum of x and here's the five things you do to qualify for the grandpa and Grandma Scholarship. I love this. I love this, too. Good job, Grandpa.

I love this. And here's the thing. You know, here's the thing about this. You're a control freak. No. I just told you what you could do. You get to choose. I know.

That's right. That's good. You get to choose. I know how you're going to answer this next question, but I'm going to ask it anyway. So what happens when grandkid one gets, you know, 35 grand and then grandkid two gets zero because of the poor life choices and they're, you know, and they go crying to their other siblings or they go crying to their parents. Tough turkey toenails. That's what we used to say. Tough turkey toenails. That's what we used to say. your it's what they've said you i think that's why you lay it out there ahead of time it's not a surprise

boundary this is the qualifications for the scholarship fund okay like i had a friend who was cherokee he's half cherokee and he got his entire college paid for because he qualified for a Native American, whatever, da-da-da-da-da, right? Right. I don't qualify for that. So, I don't get to whine about it because I'm not half Cherokee. Yeah. So, shut your butt up, you know?

Call the whambulance, you know? And so, here's the deal. In your behavior, you do get to choose. I was going to say, this is the difference. I don't get to choose and so you here's the deal and your behavior you do get to quote you get to choose i was gonna say this is my dna that's but i can choose my behaviors and my character those are choices integrity is a choice yeah and they'll never be able to say they didn't know sexual promiscuity is a choice these things are choices and they affect your life long term and old people like me and wonderfully wonderful stacy grandpa there know these things so we're more actually more concerned boys and girls about

your habit patterns and your life because they're greater indicator of your success than your education yeah ding ding ding ding ding ding ding do you know how to tell the truth do you know how to smile do you know how to shake a man or woman's hand, look them in the eye? Do you have a little bit of moxie? Can you swagger just a little bit but not too much? I mean, can you work a whole day, like a whole day? Can you get a callus on your hand? Do you know how to do that? These are the things that will cause you to become successful more than your degrees.

I know people with more degrees than a thermometer that can't find their way out of a wet bag. You know? So, I i mean that's the thing so you this is what stacy's talking about this is important stuff y'all building character is more important meg maker will talk about this in strong fathers strong daughters one of the best parenting experts on the planet right now and boy is she catching some hell because she's telling the truth. Man, talk to people about parenting in this crazy world. Man, oh man. Guys, teach your kids character and then get them an education. That's what Stacy's lining up here. I don't have a grandpa and grandma scholarship fund.

I might want one now. I know, that's a good idea. I might like the control that that would give me. You would like that. You would like that, Dave. The influence. The influence that that would give me. This is The Ramsey Show.

Jade Walsh, our Ramsey personality, is my co-host. Richie is with us in Phoenix, Arizona. Hi, Richie. How are you? Hey, Dave. How are you doing? Better than I deserve. What's up? Hey, so real quick, I've got a mortgage. It is the only debt I have. It is about $260,000 left I owe on the house.

I bought the house at an interest rate of 2.7%. I have $250,000 in the bank. So my question is, do I pay off the mortgage? Everyone's telling me that I could use that money and invest it and get a better return on it because I have such a low interest rate on the mortgage. Everyone is broke. Yeah, right. So you don't want to go with the they said and I heard financial planning firm. Okay. You follow broke people's advice.

What would you expect to be other than broke? Yeah, yeah. So let me ask you this. Let's turn it around. Sometimes a good way to figure things out is to reverse engineer them and see how they feel what's your home worth um it's probably in the 450s 500 and what do you what do you make a year uh me and my wife together bring home about 120 000 a year how old are you uh 30 way to go you've done very well, Richie. Congratulations. Thanks, Dave. Appreciate it.

Okay. Let's pretend you're living in a $450,000 paid-for house, and you have no money in your checking except just an emergency fund of three to six months of expenses set aside over in savings, okay? Okay. And your house is paid for. Uh-huh. Mortgage rates come down.

And you can borrow whatever you want to borrow on this paid for house at 275 you're sitting there in a paid for house can you breathe that in for a second would you go get a mortgage and you're saying i can borrow again yeah let's just say you the interest rates were 275 he's saying would you borrow against your house is paid for you're sitting I can borrow again? Yeah, let's just say the interest rates were $275,000. He's saying, would you borrow against your home? If your house is paid for, you're sitting in a paid-for house at 30 years old, it's $450,000, you make $120,000 a year, you got $30,000 in your checking account, would you go borrow $250,000, $300,000 on this house, on this paid-for house at $275,000?

Right, no, probably not. What's the difference? Yeah, exactly. Okay. The difference difference is this let me help you when you ask the question in reverse what we're doing here is we're activating your heart because for once you kind of got your head around what i was saying for just a second even though it was a hypothetical situation, we discussed taking a paid-for house and putting it in debt. For just a second, your stomach jumped into your throat and your heart started beating faster.

Yeah, yeah, exactly. Okay? Because the way that question asks is it activates the risk because your heart and your stomach measure risk. Your brain does math and that's a metaphor of sorts but my point is what your friends are not recognizing is risk and every we've done detailed research and 100 of the foreclosures occur on a home with a mortgage right there's always risk even if it's 275 even if you have a steady job making a great income,

there's always a level of risk. Now, in your case, it's not a horrendous level of risk. That's why it kind of becomes a theoretical discussion, like a, hmm, I wonder if I should really do that. Hmm, I wonder if my broke friends are right, because you're not feeling the risk. But let me tell you, if that thing was up to your eyeballs and you could barely breathe, you would feel the risk but let me tell you if that thing was up to your eyeballs you could barely breathe you would feel the risk yeah yeah because mortgages all debt equals risk more debt equals more risk less debt equals less risk and that is not calculated in the math that your broke

friends are using and that's what our reverse scenario does for you it makes your body feel the risk because you really do feel it well yeah you're weighing you're weighing both sides of the equation accurately before it was easy to just say oh you don't need to pay off your house without even taking a moment to think what that would feel like and weigh that side of it and then when you do that it puts it into perspective which is now dr john deloney talks about and i've never heard anybody talk about it quite like he has, but the research that's there, the way our body carries stress, we physically, physiologically store up trauma, store up stress.

And so when someone says, this debt is weighing me down. Yeah. That's an actual true statement. Yeah, your body knows. If you are carrying a backpack full of bricks. Yeah, your body keeps the score is what he says. That's what he says. And he's quoting a famous piece of research. But we store trauma, we store risk, we store pain physically in our bodies and when you don't have that there's a release 100 and that's what god's meant when he said the borrower is slave to the lender yeah

slaves don't have choices you know it changes things and you can't uh you can't fool your body into thinking it's not there your body does know yeah we were talking about this with the student loans you know people are saying uh you know but i can get a lower payment and kick the can down the road as if your body doesn't feel it as if you don't really know somewhere deep down in your knower yeah that this is stupid. Yes, and that it's still there. Yeah, it didn't go away. You know, we just swept it under the rug, and all we got is a lumpy rug.

You know what I mean? That's it. Harry is with us in Michigan. Hi, Harry. Welcome to the Ramsey Show. Hi, Dave. Thanks for taking the call. Sure.

What's up? My question is, this is like a general education call. I don't have a home yet, but I've been looking at different kinds of insurance just to read about insurance. And one of them is home warranty insurance. I guess it's supposed to pay for any major home repairs. Right. Extended warranty on your home. Yeah.

Okay. Like it or not like it. Don't like it. If somebody gives it to you free i'll take it but um but i don't buy warranties here's why extended warranties on anything cars especially but appliances and electronics and homes here's the general numbers on them okay 12 of what you pay so out of of $1,000, $120, covers the actual probability, the statistical probability of the occurrences on average. You know, take 1,000 people to take out this home warranty.

On average, across 1,000 people, $120 per person is what's going to be spent on the things that it covers. So the actual coverage is about $120 per person is what's going to be spent on the things that it covers. So the actual coverage is about $120. So that leaves another $880 that goes to profit, to marketing, and to commissions. So the reason the car dealers are so big on selling you a $3,000, $4,000 extended warranty on your $20,000 car is it's 88% profit in marketing and commissions. It's only 12% of the actual warranty coverage is that. Same thing's true on your home.

What you pay for it on average versus what it covers is about $120 per thousand. That's something. It's almost like they knew they were going to make a profit. That's why they offered it. Best Buy. Okay. Best Buy actually has great buys on flat screen televisions. They don't make

hardly any money on their flat screen televisions. Not a lot of margin. I bet I know why. Two things. What do you think? I think they know they're going to recoup it on the warranties if they push the warranties hard enough and 90 days same as cash turns it into finance turns it into credit card debt they make all their money on the financing and on the warranties the tvs are just there to get you in the trap wow step up on the noose i promise i won't pull the rope and hang your butt upside down you'll be having blood rush to your head wondering what happened you just stepped in the noose that's graphic dave sorry that's what it is

what is you'll be hanging upside down waiting on whatever death is coming to you but there it is you know i could cause all kinds of problems things things running through my mind i don't need to say but yeah the um anyway yeah i mean that's best buy you can't buy a freaking number two pencil in best buy but what they don't offer to finance it for you and put an extended warranty on it you can't get out the cash register the cash people the cash register people can barely make change but they know how to fill out the warranty stuff those warranties are everywhere i bought a coffee maker on Amazon and asked me, did I want a warranty? I bought a t-shirt on Amazon for $8 and they asked me if I wanted to take it on three payments. Wow. You can't make that crap up. Wow. If you can't afford your t-shirt,

you might be a redneck. I'm just saying, oh my God, three payments, three easy payments on a t-shirt. And it wasn't even that funny a saying. After that, I was just totally disillusioned. This is The Ramsey Show. Dave here. You can find all of our shows with the Ramsey Network app on your smartphone. It's the only place to listen to the entire back catalog of episodes. Download the Ramsey Network app in your favorite app store today.