The Ramsey Show - App - I'm Ashamed of My Success During COVID (Hour 2)

Episode Date: November 12, 2020

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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. My co-host today on the Dave Ramsey Show, Christy Wright, Ramsey personality. We're here to talk about your life and your money. It is a free call, and some say it's worth what you pay for it. Phone number is 888-825-5225. That's 888-825-5225.

Max is with us in Canada. Hi, Max. Welcome to the Dave Ramsey Show. Hello, Lowe. Can you hear me all right? Absolutely. What's up? Not much. Thank you hear me all right? Absolutely. What's up? Not much.

Thank you so much for having me on. Just one thing I wanted to say that I've listened to your show for about a year now, and you always say when someone asks you how you are, better than you deserve, and that's something I say now, and I think that's a really good message you have. So I wanted to thank you for that first off. Thank you, sir. How can we help?

So I will try and keep it as short as possible, but it's a little bit of a complicated story. It's not so much about finance, but more of my relationship with my parents and some stuff that's been going on. So at the start of 2019, my parents told me that they were getting a divorce. And over the next year or so,

I guess they started seeing some other people. And then this summer, so I'm at like university throughout the year. So I wasn they started seeing some other people. And then this summer, so I'm at university throughout the year. So I wasn't really there for last year, during the school year. So anyways, my parents are now both seeing new people. And they're both moved. Well, my dad's moved in with his new stepmom. And I recently found out that my mom had an affair back in 2008.

And as well, she was cheating on the guy that she's currently seeing with my dad before the divorce. And that's kind of why the divorce ended up happening. And my dad told me this, but my mom doesn't know that I know this. And throughout the summer, I'm back from school throughout the summer months. And I was planning on splitting at about 50-50 between the two houses. We're only about a few blocks away we're in the same town um but whenever she has that guy over I can't really stand to kind of see him and my mom doesn't know that I know that she cheated on him I don't really know what to do because my dad has gone through like a lot through the whole like divorce

process and my mom kind of like didn't really treat him too well and I want to kind of approach my mom to kind of mend the relationship because now whenever I see her, I'm just, like, kind of hurting and broken. And just, like, whenever I see her, I just, like, think about all that, and I can't really look at her the same. And I love my mom, and I want to make the relationship better, and I was wondering if you had some advice about how I could do that. That's so sad. It's really hard.

I'm sorry. Yeah, thank you. Ideas? You know, it's interesting. There's a weird dynamic when, in anything, I think your parents make choices different than you. And this is obviously an extreme that's, you know, really disappointing. But I think we have this weird experience as adult children of parents making decisions you don't agree with because you feel almost a little

bit like well you you wouldn't have done that but also you're uh you know it's a reflection on you because it's your family it's your parents uh my mom and dad both have certainly made choices that i don't agree with um and i think the thing that has helped me and i'm not a counselor um max but i'll tell you the thing that has helped me is just separating myself from that. Just saying that doesn't reflect me. That's not what I would do. I certainly don't agree with it, but my mom is a grown woman. My dad is a grown man and they can live their life how they want to. You can talk to them. You know, I think you can definitely, there's a, there's room for open, honest conversation about your hurts or whatever you're comfortable sharing with your mom in order to mend the relationship. You definitely, I mean, that harboring that, I don't know that

that's going to be healthy for y'all to be able to move forward. But I do think there's something important about separating yourself from that and not feeling like it's a reflection on you or your identity because of their choices. I don't know, Dave. I mean, what would you say? Yeah, it's just, it's a hard time for you. I'm sorry. I would recommend you, if you're not in a good church in your area, that you find one and you get some pastors around you, some good strong men around you that are living life correctly that can help you walk through this and just walk beside you.

Because this is just a difficult thing. There's not a simple it's not a simple formula for a broken heart and in a sense this knowledge uh if it's true if your dad's telling the truth um if it's true um it breaks your heart you know it makes you it was your but you know part of truthfully part of all of us getting to to be grownups is we figure out that our parents ain't perfect. And we move on from that. It's hard, though. I mean, that's a hard realization.

I'm not saying it's easy. I'm saying it's easy. The other thing is, let's pretend it is true. Okay? And let's pretend that you sat down with your mom and said, hey, dad told me this, and this just gags me. This just grosses me out. And I just got to say that out loud i don't know that you can you know no matter what her response it doesn't become less true it did happen yeah

and so there's not anything that you can say or she can say that's going to make it not have happened assuming it's true okay and um and i don't know if it is or not i think your dad's completely out of line and malicious if he had asked me should he tell you this i would have said no it's none of his business to tell you this it was her business to share what happened was my sister had found some information on her phone and then i'd look through it and i'm not kind of confirmed that and then i asked my dad about it afterwards oh okay now that's that's a little better on your dad that they told me yeah well why didn't you ask your mother uh because i just didn't really want to go directly to her i wanted to go to my dad i don't know why i did that but yeah at the

same time it's like i want to talk to her about it and i want to be you can tell her but and i think i think you probably don't need to be staying there. You need some physical distance. And then you just say, you know, there's parts of my mom that she's always going to be my mom, and I love her, and there's parts of the stuff that she's done that I don't love, and I love her anyway, you know? Yeah. And, you know, because the truth is it doesn't really affect you,

except to the extent that you want it to. It hurts your feelings. It makes you mad. It disappoints you. But in terms of does the situation actually affect you, no. You're now a grown man. You're in college, and you're out of your parents' house, and they're both running off in different directions. And so you're just going to love them where they are is what i would say but i i think you need to get a good a good pastor in your corner uh that'll walk with you and uh guide you on this i i'm christy and i are neither one counselors dr john deloney's not

here today so yeah you know we're filling in for him i guess but uh but you know those are just i guess life things from people we coach people on life all the time about all kinds of different things. So that's just some ideas. But I think John would probably say the first thing you need to do is just stop and grieve the fact that your illusionary picture of the perfection of your parents is now shattered. Both of them. Neither one of them are perfect, it turns out. And, you know, what was wrong in the marriage that that, you know, your dad didn't deal with that put your mom in a position she felt like she needed to do that, you know, is not saying

she's a victim. But obviously, the marriage is not healthy for a lot of reasons. I think two things can be true, too. You can grieve that that happened and your parents aren't perfect. And you can acknowledge that it doesn't affect you. I think both can be true. You know what I mean? And you can accept somebody for where they are. I filed bankruptcy when I was 28 years old.

I can't undo that, no matter how much it disappoints my kid. I can't stop that from having happened. It happened. I didn't do that, no matter how much it disappoints my kid. I can't stop that from having happened. It happened. I did do that. This is the Dave Ramsey Show. Life sure has a lot of twists and turns. Unlike a roller coaster, we never know what's around the bend. The same can be true with unanticipated medical bills. That's why Christian Healthcare Ministries, or CHM, is a great option for those who are faith-focused and budget-conscious. CHM is not insurance.

Rather, it's Christians helping other Christians carry one another's burdens with health care expenses. You know how important it is to be ready for whatever life throws your way. And unfortunately, medical expenses can be some of the biggest, most unexpected curveballs. With CHM, you'll have peace of mind knowing you and your family have a caring, faith-based community behind you. As a Better Business Bureau accredited charity, CHM has helped its members successfully share over $5 billion in each other's medical bills for nearly 40 years. To see if CHM is right for you, visit online at chministries.org slash budget. That's chministries.org slash budget. Ramsey Personality, Christy Wright is my co-host today here on the Dave Ramsey Show.

Matt is in Minnesota. Hi, Matt. How are you? Hey, Dave. Hey, Christy. How are you guys doing today? Hey, awesome. How can we help?

Yes. So I had just a quick question on um career choice i'm wanting to get a new um position in my workplace i work for a major uh known well-known hospital and i would like to uh branch out a little bit but i i got diagnosed years ago with ADD and I am very, um, I'm trying to think how to explain it. Um, uh, like,

uh, sorry about that. Um, on ways on how to get a new career, because I always am always nervous asking myself, can I handle this job because, um, of my limitations with my attention deficit disorder? What do you do now?

I work for Mayo Clinic. I transport linen in the hospitals. Okay. What is it you want to do? My career goal is to be a radiation therapist and help people with cancer. Wow. Good for you. And so what would you need to do to do that that you haven't done?

Do you need certifications? What would you need to do to get qualified for that? I would have to go through the schooling, which is two years. It's like a two plus two so I'd get my associates and then I would get my bachelor's in radiation therapy. Okay. Does the hospital, is the hospital willing to help with tuition? Yes they give $3,000 a year for undergrad and $5,000 a year for undergrad and five thousand a year for masters what's the uh what's the downside of starting that um just my own inner personal self of just having the confidence knowing i could do it and just believing myself because i've had add for uh since i was diagnosed in first grade and just knowing what I am capable of.

And so the long story short, I've always had just a confidence level that is lower. That's logical. And that's what's pushing me back. Yeah, that's logical. It's just pushing me back. Yeah, that's logical. It's pushing me back. Yeah. So, but here's the thing. You know, confidence is built by doing something, doing it well, and then you know you can do it, right? So, what if you started taking the classes, and by going through the process of getting the certification, I think your confidence would be built, don't you? Yeah, it's so interesting because I think sometimes we wait, Matt, for permission or

for affirmation from another person to give us that confidence, but that'll never be enough. It has to be from you proving to yourself that you can do it. And what's so great is you're not jumping in the deep end where you're going to leave this job and try to do a job that you're not sure you're able to do. The classes would not only prepare you from an education standpoint, but it gives you those reps, that experience, that practice where you go after a course is completed, after several different things that you have to do, you'll look and go, oh, my gosh, I'm doing it. I can do it. And I think a lot. I know that what you're facing, Matt, is real. It's medical.

I understand that. I think there's also a piece of it that we tend to put labels and limitations on ourselves or other people do. And then we live within them as if that is an actual barrier that keeps us from doing these things. I don't think that you have proof that that's a barrier that's keeping you from this job. I think in your mind it might be. And like Dave said, there's a part of it that's logical because you're being wise with like, what are my limitations? But you have an opportunity to try this class, try some of these courses, try to just, you know, see if you can even shadow or meet some people in that department, have an informational interview, ask some questions. What are their days like? And then the more you do that one tiny baby step at a time, you're building confidence.

You're like, oh, I did do it. Oh, that wasn't that hard. Oh, that was really interesting. Or I was able to maintain focus here because this really engages me in this way. And so I think you're going to surprise yourself. And I think you're going to break out of the box that you've been living in or think you're living in and building confidence with you. But it doesn have to be this terrifying leap it's just tiny baby steps in the direction of where you want to go yeah the reps exactly and once you as you take those steps your confidence is going to build that's true of any of us i mean first time you're on a bicycle first time you drive a car

first time you go on a date the first time you do anything you know we're all, A, incompetent, and B, scared, and C, not really confident and good at it. Yeah, because you've never done it before. First time I turned on the microphone, I was scared out of my mind. I didn't know what I was doing. I knew how to answer the questions, but I sounded like a hick on the air, and it was awful. I gave the right answers, and so I got to come back the next day. But that was it you know and so here i am 30 almost 30 years later doing this every day and so obviously i'm better at it now

and more confident than i was back then but because of reps yeah you know first time you you know we do both of us are public speakers and writers first time you write a book you know first time you do anything you know you're everyone builds confidence by building their competence and competence comes from increased learning and reps yeah i tell people i tell people all the time the antidote to fear is action nothing will silence your fear of doing the thing like doing the thing so go do the thing it's in doing the thing that that fear lessons and your confidence grows and you go oh my gosh i can do it i did it once i can do it again that's even true like when you're doing i got on man i was skiing in telluride with the boys and i got at the top it was the end of the day and i got at the top of this dad gum black diamond and it was so i thought

i was good i thought if i fall i'm gonna land all the way in the village yeah it was so steep i couldn't even see off it was like a cliff yeah and i i mean i'm 60 years old i got up there my heart started racing i felt like a four-year-old boy i told i told my son-in-law bill i said man we got a ski because if i don't get going i'm just gonna freeze up and walk down i'm gonna because if i don't get moving the antidote to fear is action i knew if i did not start moving those skis down that hill that i was gonna freeze up at the top of that but what happened what happened when you what happened when you made it i climbed i mean i crawled we i was not skiing fast but when i got down the bottom what happened was i'm not ever going up there again that's what happened but it's just amazing when you survive through it and you know and i still but i still remember

because it's been a long long time for me where i was physically scared and i thought i have gotten myself into a mess here and i've got it and i knew if i stood there and thought about it too long yeah i was i was gonna end up taking the skis off and walking down and that would be a two and a half hour rude deal so i just went no we're going i gotta go because if i sit here and think about it yeah screw this up you just gotta go for it you'll appreciate this story so last weekend my husband and i went down the lake i've only water skied like maybe 15 times in my whole life i didn't grow up on a boat or anything like that and so this last weekend we didn't have the kids we had child care it was just a weekend matt and i and i decided to try to drop a ski to slalom good for

you and i was like okay you know you're scared like you're nervous i'm like i'm not a professional skier i'm barely you know and you're gonna fall i did and i felt like maybe three or four times i finally got the hang of it but man when i stayed up and i rode that slalom ski afterwards was like i mean my chest was popped out my shoulders like i can't believe i did that i can't believe i did that to be at any age doing anything new where you surprise yourself and go I can't believe I did that that's a cool feeling that's a really cool feeling those are two physical examples but there's career examples there's relational examples or spiritual examples of when yeah the best antidote to fear is action I really like that that's good that'll go that'll preach that'll preach that's good stuff it's good stuff because we

all you know we talk about right here even our our one of our core values at ramsey that we've got 14 core values on the wall that we really are they're not brochure fillers and one of them is fear not right and it's not that we are never afraid so we don't make decisions based on fear and so you can bully us you can put us in a corner and you might scare us yeah you might say this is gonna cost you 10 million dollars you might scare me yeah but that doesn't mean i'm gonna make the decision based on that fear right i'm gonna figure out a way to whip your butt yeah if you put me in that corner and i've just got to figure out how yeah and i just you know the first step is is to not freeze up and and surrender people think it's a sign you're doing something

bad often it's just a sign you're doing something new. The black diamond, the slalom ski, whatever it is. I love how Joyce Meyer says, new levels, new devils. The moment you push yourself outside your comfort zone, of course you're scared. You've never done it before, but it's in the doing that you lessen that fear. So go do it. Go do it. Start your classes right now.

Go sign up today and get started on those classes. You've got four years of work before you ever get to do the job anyway. So you've got some time. You're going to work through this. Go do it. Go do it. This is the Dave Ramsey Show. Calling from Pennsylvania for a debt-free scream. Travis and Barbara are with us. Hey, guys, how are you? We're doing great.

Mr. Ramsey, how are you, sir? Better than I deserve. Congratulations. How much have you paid off? $48,857. Love it. Awesome. How long did this take?

22 months. Good. And your. How long did this take? 22 months. Good. And your range of income during that time? We started out making $104,000. And we ended up making $132,000. Love it. Awesome. Very good.

What do you guys do for a living? We're both school teachers. So how did your income go up $20,000 in two years? Travis fried some fish in the summertime, and I served the fish to people as a waitress. And I also went from working part-time as a teacher to working full-time. Ah, there it is. Okay. Well, well done, guys. Congratulations. Congratulations. What kind of debt was this? Um, we had a little bit of everything. We w we were normal. As you would say,

we had a pension loan of 24,000, two car loans, just over 10,000, two student loans at $8,800, a utility loan at $4,500, and a personal loan at $800 to get a real estate license, actually. You guys were just, as you said, completely normal. You borrowed on everything. Absolutely. What snapped? What lit the fuse 22 months ago? Tell us your story.

Thank you. Yeah. It actually started in March 2017. It was March 9th. Barbara and I hit a pretty low point when we had to go declare bankruptcy. And that was on almost $20,000 in credit card debt. And as you know, and I know a lot of your listeners know, we've really never experienced anything like it. It was really gut-wrenching. And we were sort of lost and floundered around for just trying to buy groceries. And, you know, it was like, we're, we are those people who are literally making too much money to be this broke, you know, and then over that next year, I found your podcasts and found your program and Barbara and I, you know, we managed to get on

on board and that just changed everything for us wow so this much of the debt survived the bankruptcy then yes okay wow yeah that that'll get that'll get your attention so you had you kind of said i can't keep doing what i've been doing or i'll keep getting what i've been getting something's got to change right never again oh absolutely 100 yeah good for you well done okay and so you start paying off the debts um and 22 months later they're gone how's that feel i can oh it's the most wonderful feeling because we go all the stress we have for not being able to pay our bills compounds into so many other things, like one little hiccup and it bleeds into everything else in our life. And now we get to make our choices. We say, how are we going to spend this money? And that

is freedom. And that is love. Like we get to generous, and it's not just our bank accounts, and it's not just our budget meetings, but it's a part of everything we do in life. It's freedom like I've never known, like we've never known. It's amazing. You get paid, you get to keep your money. Definitely.

It's a good feeling. Yeah, not having the debt is wonderful, but having control is even more wonderful. Yeah, not having the debt is wonderful, but having control is even more wonderful. Oh, and just having, you know, having, I mean, we're just so grateful, your plan, your wisdom, you know, I mean, Barbara did all the hard work, you know, I just read the books and listened to some podcasts, you know, but it really changed the foundation of how we live our lives we're just we're just in deep gratitude to you sir and your program very cool we're proud of you man that's amazing well done very well done who were your biggest cheerleaders um we did we had a lot of people

in our corners you know um you know i have an uncle who was very supportive, and, you know, we have to thank my mother for sure. My mom, anytime I could pick up an extra shift or Barbara could pick up an extra shift, we had my mom right around the corner to babysit the two kids. And my mom was always a cheerleader, giving us all kinds of hints about how to budget and save money. Yeah. Always. Cool. So what is the number one thing you tell people when they say, how did you do this?

You pay off $49,000 in 22 months and make more money than you've ever made in your life in the process. What do you tell people the key to getting out of debt is? For Travis and I, I believe the key is communication and sitting down to have budget meetings, because in the beginning it was hard. It wasn't always an easy thing to do. But the more we were committed to making it work, the better the communication got. And just like I said earlier, like it bleeds into everything else in our life. And our communication just is better all across the board.

That's cool. And I think, you know, the discipline and integrity, you know, I mean, that, you know, I have a touch of the free spirit in me and anytime I, you know, was ready to buy a new sofa, you know, Barbara was right there with me to remind me, hey, you know, that's way far out in our budget future. And, you know, we're still waiting on that new sofa,

but when we get it, it'll be on our terms and it'll be in cash for sure. Amen. Well done. You guys, we got a copy of Chris Hogan's book for you. Every day millionaires, because that's the next chapter in your story.

I want you to keep going now, baby steps, four, five, six. Let's build some wealth now and finish changing your family tree. Okay. Amen. Well done. Travis and barbara in pennsylvania 49 000 paid off in 22 months making 104 up to 132

count it down let's hear a debt-free scream three two one Three, two, one. Why Blinds. That's what it sounds like when you finally get free. That's awesome. I love it. Congratulations, you guys. We're proud of you. Very well done. Our question of the day comes from Blinds.com. Find out for yourself why blinds.com is the number one online retailer of custom window coverings.

You get free samples, free shipping, and new promos every month. Always use the promo code Ramsey to get the best deal. Our question, Christy. Yes, this comes from Alyssa in Tennessee. She visits DaveRamsey.com and says, with everything going on in the world right now, I find myself ashamed to celebrate my business successes because other small businesses and small business people are hurting right now. I've always shared my success with my customers to show them how amazing they are and how they show up for support. How can I navigate this time that we're in with grace and without making others feel bad? You know, what's interesting, Dave, is the people

that ask this type of question usually aren't the ones that have to worry about it. If she's self-aware enough to know I want to be considerate of other people, she's probably celebrating her business success in a way that already is filled with grace and social awareness. And she didn't say, how do I brag? She said, how do I celebrate what's going on in my business, what's going on with my customers? There's nothing negative about that. If you have a lens on it that is with humility and gratitude, it's going to come across the right way. You don't have to completely diminish what's going on in your business or with your customers. Uh, if you do it with the right heart, I think it's how you go about it. And you're not aiming bullets at other people. No. And so you're

not saying you're a doofus and look how good i am you're just saying this is working thank you lord it might inspire them it might encourage them yeah people need to hear stories of winning at any time when times are great when times are bad they all need to see examples and hear examples um i know we've got a friend named Mignon Francois here in town that started a cupcake thing with five dollars and it's a 10 million dollar business now and she started it in her house making cupcakes and I can't think of any reason I would want her to not celebrate that. Right, right. I think anybody in any business, at any stage, whether it's good or bad, should go, I love hearing Mignon's story.

Right. It's good news. It's good news. Sarah, good news. For goodness sakes. This is the Dave Ramsey Show. Thank you. This is the Dave Ramsey Show. Chrissy Wright, Ramsey Personality, is my co-host today here on the air. Spencer is with us in Lima, Ohio.

Hi, Spencer. How are you? Or is it Lima? Good. Lima, Lima? It's Lima. How are you? Or is it Lima? Good. Lima, Lima? It's Lima. Okay. I got it right.

Thank you, Dave, for taking my call. Sure. How can we help? So I've recently found your program and been going over my finances and trying to get down our debts and really writing them down

and where they're at. So my question is, we have about 60K debt total. $8,600 is coming from my car, which I pay $238 a month. My question is, if I private sold it, I would get around $10,000 to $11,000 for it. Would that be worth it to sell it and just pay off that loan, get a sixth of the overall debt out of the way, or should I keep the car because it's a Honda Civic, so I've been told those are pretty reliable,

and maybe do like Uber Eats or something to supplement my income. What is your household income? Right now it's around $60,000. My fiance is currently going to school, so I'm the only one bringing in income right now. When are you getting married? The end of this month, actually, on the 30th. Oh, congratulations. That's wonderful.

Thank you. Okay. When will your fiancee graduate uh she's graduating next may she's doing uh cosmetology okay if this was a huge chunk of your debt i would sell it in a heartbeat but it's a small portion of your debt and you need a car you know what i mean it's not some extravagant car yeah it's not a thirty thousand dollar car so i'm probably going to hold on to it i'm probably going to hold on to it and pick up the extra jobs and uh by the way she can too true okay that that makes sense i just thought because right now i'm working from home uh seven days a week so i didn't or five

days a week i guess so i didn't know if maybe it made sense to sell it now get a cheaper car well it's it's not a bad idea but here's what's going to happen you should be debt free in two years anyway and you're going to be moving back to a reasonable car soon during then anyway so the car is not really what's killing you here it's your income and the focus on the debt and so forth. And so as you get married and she works an extra job while she's finishing up cosmetology school, you work an extra job. You guys are going crazy working.

I think you're going to clear all this debt pretty quick. And, again, it's not a big portion of your debt. So you can do it. You can do it if you want to sell it. It's okay. But it's not a dave ramsey christy wright slapping her hand on the table going you gotta get rid of the stupid car it's not it's not that situation it's just you know it's interesting dave in the last few weeks when

i've been on co-hosting with you on the show i hear this type of call pretty often someone says something very similar to this call where they say hey i'm new to you i'm starting the plan and they want to make this big decision and what I'm sensing is when you first start and you're kind of overwhelmed by your debt, 60,000, whatever it is, 80,000, you want to not just have a quick win. You want to have a big quick win. It's almost like we want to feel like I've made a huge amount of progress. I'm really on the plan. But to your point, you can take an extra job, do Uber Eats, do something like that, where it's just consistency over time. You talk about this all the time with the tortoise of the hare.

That leads to winning. You can do that without – like you said, you can sell the car. It's not a bad idea. But that's not going to be the thing that's going to get you debt-free super fast. You just probably want to feel like you've made a big difference. Do you hear that? I've noticed that pattern. And if you can get a quick win, it's really good, not only mathematically, but emotionally.

I mean, if you had $10,000 in a mutual fund, just cash that in, pay it on the debt. Yeah, that's a good thing. Yes. And we're going to do that. I'm not cashing out your retirement, but to cash out the retirement to pay off my debt is a quick win. It's scratching that exact same itch that you're talking about. Yes.

It's the exact same place in people's brains or in our emotions that we want to do that. So, you know, and again, if you had a $30,000 car or a $30,000 car, period, whether you had the debt on it or not, I'd be getting rid of it in this situation because it would be a big, quick win. This is a small win, and it's a fairly large sacrifice yes yeah the trade-off is not there for me the headache of selling the car and buying a new car to downgrade a little bit you know what i mean it's just yeah no you know we'll sell my six thousand dollar car and get three thousand you didn't move the needle right you know that's not that wasn't his numbers but i mean that's the same category that this falls into grace is in tampa hi grace welcome to the dave ramsey show

thank you um my question is we're in my husband and i were in baby step two and we're uh we have a monday through friday job so we want to open a residential painting business but only for the weekend as our side hustle. And I'm thinking it's going to make no more profit, maybe $30,000 a year. So to protect my assets and protect, you know, just myself. What assets? What assets? Like, you know, just whatever homes I have, you know, retirement. How many homes do you have?

Well, just two. But, I mean, like my, you know, should I do an LLC, or do I just ask the IRS, you know, for 1099 type of thing, like with the federal ID number? Well, federal ID number does not limit liability so really what you need is really what you need is insurance on your business right okay i do have it i'm going to get insurance yeah that's all you need that's all you need you don't you don't you do not have a net worth of over a million dollars do you no okay and you're talking about a thirty thousand dollar business so the business

is not large enough it has a target on it. And your personal assets are not big enough that they've got a target on them. So just get some good insurance and don't waste your money in screwing around with an LLC. The only reason you would need an LLC is if you're trying to protect from liability. And now if this business starts doing $300,000 or you look up and you've got a paid-for property in your name that's worth $500,000 or something, and you want to get an LLC at that point, then that's fine. But the business that is Ramsey Solutions started as a sole proprietorship, and we were well beyond $30,000 a year income before we incorporated, which we later converted to an LLC.

I get this question all the time, Dave. And I think it's two part. One, people are asking, do I need to incorporate for my side business that's making $10,000 a year because they feel like that that's what a real business is. This was what makes it a legitimate business. There's one side. The other side of the equation is they're getting advice from people, you know, attorneys, people in the the tax and legal profession that are saying you have to incorporate you have to set your business up as an llc to you know uh protect against risk and yada yada yada and so so many people that's a barrier

for them because they they feel like well i'm not ready to do that or i don't know how to do that or that's too much money etc and you don't have to paint that or I don't know how to do that or that's too much money, et cetera. And you don't have to. Go paint some houses. You don't have to. Go paint some houses and get some money. And if you paint a bunch of houses and get a bunch of money, then we'll worry about an LLC. But this idea that it's a, you don't have to, you know, it does not legitimize your business. And it does not mean that you're official.

You're official when you pick up a paintbrush and somebody pays you for it. That's right. At that moment, you is official. You're official when you pick up a paintbrush and somebody pays you for it. That's right. At that moment, you is official. You is a painter at that point. This is what's happened. Until somebody pays you for it, you're not. And that's the measure of the legitimacy of the idea.

And the LLC does not legitimize the idea or the business or you. And it wasn't what she asked. But that is down in that question all the time. You're right. Yes. Well, and even like you said, when they're at the setup stage, if you Google it, if you talk to someone who hasn't a friend who is an attorney, a lot of times they'll get that advice that they have to, so they're not sure what to do from there. So I just love reminding people, hey, you don't have to do that out of the gate. This is a small business. It's a side business. Let's validate the idea. Let's get some cash flow in.

And then we can talk about that if and when the business justifies it. Yeah, absolutely. That's exactly how it works, folks. So yeah, you can get an EIN, an employee identification number from the IRS that does absolutely nothing. It just identifies the business for purposes of payroll taxes or for purposes if you want to run the, you know, when you get ready to file your sole proprietorship as a Schedule C on your income tax return, you just list the EIN. But it doesn't limit liability at all.

It doesn't change the fact on that whatsoever. So, good question. Thank you for joining us, Grace. That puts us out of the Dave Ramsey Show in the books. Our thanks to James Childs, our producer, Kelly Daniel, our associate producer and phone screener. I'm Dave Ramsey advice in their life? Let them know about the Ramsey Call of the Day podcast. It's a quick hit of advice about life and money

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