The Ramsey Show - App - I'm Looking for a Fresh Start After a Breakup (Hour 2)

Episode Date: August 19, 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. Christy Wright, Ramsey personality, number one best-selling author, is my co-host this hour here on the Dave Ramsey Show,

today on the Dave Ramsey Show. Open phones at 888-825-5225. That's 888-825-5225. Lindsay's going to start us off this hour from Wilmington, North Carolina. Hi, Lindsay. How are you? Hi, Dave. It's such an honor to talk to you and Christy.

Well, you too. How can we help? Thanks. And I just want to say that I always thought that I'd be living paycheck to paycheck until I found you, and now I'm in the middle of baby step two and have so much hope for my financial future, so I just want to say thank you very much. Good for you. Well done.

Proud of you. Thank you. My question is not related to my debt. Unfortunately, my... You're cutting out here. Wait a minute. You're cutting in and out. Try one more time.

Okay. Unfortunately, my boyfriend passed away about three months ago oh my goodness it was it was unexpected of course so one of my friends was pretty amazing and started a gofundme account to cover the cremation the memorial services and and people were so generous that there is quite a bit of money left over. And I would like to set up a fund for his three-year-old daughter. There's about $3,800 in there. And I'm just trying to figure out where is the best place that I can put this money that it will grow and be able to provide her with something when she turns 18 and and maybe that she's the only one that can access it when she's 18. Okay uh why is there uh questionable uh relatives in the offing like her mother or something? Um I just uh i don't know her mother that well i mean um you know is that

her caretaker who's her guard who's the guardian the mother the mother is the guardian all right so she's raising the child uh well there's 15 years somebody's got to stay plugged in here. Right. This is all real fresh. And so if I'm in your shoes, I'm going to, or if I'm advising you, I'm not going to advise you to stay plugged into this situation for 15 years. If you want to set it up and run it for a few years with the goal of developing a level of trust with someone in the child's family to turn over the management of this. But I wouldn't suggest to you that 15 years from today that you're still plugged into this. That would be pretty unusual. Okay. I mean, you will have moved on with other sections of your

life and so forth. But anyway, you can open up a mutual fund in a kid's name. Okay. And you can do that easy with $3,800. It's called a custodial account. Anytime anything is opened up in a kid's name, it has to be actually done by someone over 21 because you're not allowed to do contracts in the United States unless you're 18

years old or older. So a custodial account is in the kid's name, but you are the custodian or someone is the custodian until they reach 21, actually. And so wouldn't have access to it until then. The only thing that can keep it safe after that is if it were in some kind of a trust and i wouldn't fool with it for 3 800 bucks you could end up spending half of that developing the trust right so i would just open a mutual fund in the kid's name name yourself as the custodian and then have a game plan that in the during sometime during the next five years you hand that custodianship over to someone else okay if she went to i mean i was thinking about a 529 but that's strictly for college like if she decides

not to go to college would that 529 would not help her she wouldn't be able to get the money correct well she could get the money but she'd be highly penalized i've got a question maybe this is maybe this is not the right question, Lindsay, but you said you don't know the little girl's mother, or you do? I mean, I do. I know her. You know, we've spoken a few times over the 18 months that my boyfriend and I were together, and I've met her a few times.

Not great terms or, like, cordial terms? Just cordial, you know know very surface and cordial um and I've I've done a lot of stuff to try to reach out to her and and let her know that I'm here to help and um I just haven't gotten a lot back so I don't feel like she wants me to to push it's pretty awkward it's awkward and it's just it's so painful like it's this whole this whole situation is so painful for you for the for the little girl for all of it but the only reason i was just gonna the only reason i bring that up is to say is if if you if you want to do something kind for her daughter for your late boyfriend's daughter it seems like she would be a potential good partner to say hey we've got

this money in a go fund me i want it to benefit your daughter you know do you have any uh you know input i guess to partner with her in that way of like you're trying to do something good i'm planning on opening a mutual fund being the custodian and i want you to know the money's here yeah yeah in a very loving in a very loving i to, I want to do this for her kind of way, because I think the flip side of that is if I was in those shoes in any way, if someone was creating some type of fund for my daughter, I would just want to know about it. I would want to, I would want to be involved in some way. And so all that says, I just feel like you can reach out to her from the perspective of, um, you know, here's where I'm trying to come from. Here's this money left over. I want to do what's best for your daughter. Here are my ideas. Do you have any, what would you, you know, just,

just bring her into the conversation is what I would say. I don't know the financial aspect, like Dave is saying with the trust, but I would say relationally, that's what I would speak into is just to put that out there and involve her. Yeah. If over the five years that that, this initial olive branch coming out, so to speak, it develops into a little bit of a relationship where you got some input, then you could hand over the custodianship to her. Yeah. If you become, but today you don't know enough about her to trust that and you feel a responsibility because this money was raised more in your name, in your boyfriend's name, than it was in this mother's name or even in the kid's name for that matter. And so you're just passing it on. You're not trying to take the money.

You're trying to pass it on to his child. Absolutely. And that's a noble gesture as well. But ideal situation, if everything worked out, if you could draw out the play and the play worked out, the play would be that you're the custodian for a few years. You develop enough trust that the mom is functional that you can turn over the custodianship to her.

The money grows. The mom teaches the child that the money's there. Don't surprise them when they're 21 and go, you have $30,000. You know, you always want children to know, you know, age appropriately that there's some money there for their college. There's some money there for their car, whatever it is. And so we didn't surprise our children.

We didn't get into details with a four-year-old about what kind of money was involved. But, you know, by the time they were a certain age, they were looking at the mutual fund statement with us. They didn't have any control over it. But, you know, a 12-year-old can do a, can multiply a number of shares times share price and come up with the value of the account. And that's a good little exercise. So that would be ideal if mom could step in and train the child to be ready to accept this gift

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So whether you're trying to get out of debt, whether you're trying to teach the kids, whatever you're doing, never again be at the mercy of the economic crisis that's out there next. Take control of your money. Go to DaveRamsey.com, and we'll help you do just that. Art Elaine is with us, and Art Elaine is in Winston-Salem. Hi Artelaine, how are you? Hi, I'm doing well. I hope you are. I am. How can we help? So I'll try to be brief but I've gone through a pretty big life change recently and I would absolutely love your advice. For the past year to just some background, I've been wanting to

change jobs and up my income. I feel undervalued and not like I'm not being paid as much as I should be at work in order to knock out debt because I'm on baby step two right now. And then two weeks ago, my fiance and I actually broke up. So obviously, yeah, obviously, I'm trying to kind of reevaluate some things. I've been doing Davis and I kind of want to make a fresh start and make a change and kind of get out of my debt and really just be financially successful for the future. So I've kind of got like two options that I've been going back and forth on, on what to do now that my life has changed quite rapidly in such a short amount of time. And I would love your opinions on them.

Okay. So first option is I could stay in Winston-Salem where I am now with my friends and family. I've actually got really low rent because I live in a house that my mom purchased. And so we're essentially just covering the mortgage. Um, and I could increase my salary and a local job, or maybe even get a remote job, but I just am not finding high, high paying opportunities in my area. Um, so because I'm single now and have just myself to kind of look after, I guess I could also move to Houston where my sister is and her fiance.

Um, I think I would definitely be able to up my salary. I would obviously be paying more for rent, but I would have some family there, but also have a fresh start and probably a much more, I guess, a higher salary and probably a better career opportunity and career path moving forward. Have you looked at jobs in Houston to like,

I know that's a hunch that you think you could make more money, but have you actually looked for postings to find something you're qualified for? Or is this just something you're hoping is there? Yeah, I've honestly, I've been looking for jobs for the past, I would say year maybe. And the places I've been looking has obviously changed as time goes on. But I have looked in Houston and I definitely think that I could be making, so right now I'm making $46 a year, and I think I could be making at least like $75 or $85. I think I could definitely be qualified for a manager position. I'm in marketing, and I'm an associate level right now,

and I just think that that doesn't really match up with my qualifications. So I think a promotion would definitely be something that I could be considered for, which I think would also definitely up it. But I really do think that being somewhere other than where I am now, especially with COVID and job opportunities, that being in a city might be better for my financial goals. It sounds like to me you just want to move, Ardelaine. Like am I missing something?

Because even when you pinch me your two examples, there's one that's like, oh, this is such a bad example or bad option to stay. And this great option in Houston is so good. I mean, it sounds like you just want to go to Houston. Is that right or am I misreading you here? I think you're right. I think I have a feeling that I know what Dave would say, which is that something really big has just happened. And I probably don't need to jump the gun on making any more big life changes I think I like the idea of moving to um maybe distract myself and I don't

know that that's the right way to handle it but I was gonna say when you get to Houston you're gonna find your broken heart went with you yeah yeah the the clean slate the fresh the fresh that that's what I hear in your voice you want to you want a fresh start you know that's a little bit of uh if i were in your shoes i'm not saying this is you but it might be if i were in your shoes i might be uh figuring out a way intellectually that this all makes sense because i just want to get out of dodge. I want to run. Yeah. I want to run away. Yeah. Stop answering the question, the grocery store, how are you and so-and-so?

When's the wedding? Yes. That is the truth. Yes. Yes. How long were you engaged? We were engaged for actually a year on Monday, but we had been dating for five years. And I don't know that it's probably not

pertinent uh anyway i i was gonna ask no shoot you know what you know what i might do um how old are you i'm 26 okay what if we uh quit trying to make it okay because it's a brilliant career move and just said, I'm going through a rough patch and I want to get out of Dodge, so I'm going to take a new job and a year from two years later, I'm going to reevaluate. Nobody says you have to live in Houston the rest of your life. Nobody says you can't come back to Winston-Salem at some point. Nobody says any of that. Nobody says the job has to justify it. You can go because you just want to go, aren't you?

Yeah, it's just time for an adventure. I mean, if you call me up and said, I've got the money and I want to go backpacking in Europe for six months to get over this, if you've got the money, that's fine. I really wouldn't blame you for that. Well, I wish I did, but I don't. Yeah, I think the, yeah, if you have it in your head that this is why you're doing it, that you're doing it just to get a fresh start and to get away from the grocery store conversation, as Christy put it, therefore it's not permanent. It's not like you have to move to Houston and never come back.

I mean, you could go back. And you're just owning your reasons. There's something very powerful about like, I'm choosing this because of this reason. I don't have to try to convince anyone or myself that I'm going for a job because there's only one good job in Houston. You're just going because you want to go and you can. There's probably some good marketing jobs in Winston-Salem

that you could get a better income. But it sounds like you want to get out. It's up to you. I'm probably going to Houston for a little while, but I'm also going to get a raise while I'm at it. Yeah, might as well. Might as well. And you're going to need it for that increase.

You're going to need it because you're going to have increased expenses. Right. Because Houston is going to be more expensive than Winston-Salem on rents and on other things, too. So you're just going to sit in traffic a lot more. But there's something so fun. I mean, she's 26. Like, you have this moment in time when you don't have roots keeping you there where I would have that itch anyway. Like, oh, I can just go to another.

I mean, that's fun. Like, five-year burn on this relationship. It's been burning out. It's been fizzling for a long time. We tried to push it all the way to the altar, and it stopped. And, yeah, it's nothing wrong with just saying, I need to go away. I'm going to go heal a little bit. And if that's two years or five years, meanwhile, have a great life.

Don't sit over and suck your thumb in Houston. That's not the point. But go make more money. Go smile a lot and dance a lot and have a lot of fun. And, you know, and then but the point being that it's OK to I don't think I don't want you to go to Houston and say it's going to make this not hurt. It's going to fix my problems. Yeah. It's still going to hurt.

Yep. It's good. Broken heart is going to make this not hurt. It's going to fix my problems. Yeah. It's still going to hurt. Yep. It's good. And the broken heart is going to go with you. It's, you know, when you get to Houston, you'll still be there. So I don't want, that's what I, that's what I heard that I didn't like. But if you can kind of get that squared around in your head, make sure you're in a good church, make sure you're growing spiritually, you know, go run a half marathon.

Go, I don't know, whatever, right? Let's do something. Let's just get out there and engage the process a little bit and let the healing come. And then, you know, always be open to, I could come back. It's an interesting question. Thank you for calling in. I hope that helps you. This is the Dave Ramsey Personality.

Number one bestselling author is my co-host today here on the Dave Ramsey Personality, number one bestselling author, is my co-host today here on The Dave Ramsey Show. Open phones as we talk about your life and your money, 888-825-5225. That's 888-825-5225. Tommy is with us, and Tommy's in Charlotte, North Carolina. Hi, Tommy. Welcome to the show. Hey, guys. Appreciate you taking my call.

My question is around pricing strategies. So my full-time position is as a UX product designer, designing websites, apps, that sort of thing. I do a lot of freelance for pro athletes, influencers, startups, building out primarily their e-commerce brands and websites and strategies. So typically I use two different models. The sort of here's what it costs, here's your design handoff, and that's sort of it.

The issue that I run into with that is if the website goes on to do a million, three million, five million, and you paid me five or 10 grand for the site, it's a great ROI for the client, which is awesome, but maybe I sold myself short. And then the flip side is I typically will take less up front, do the website, then stay on for a six-month or 12-month retainer, making X or even a percentage of sales or profits. The risk there is if products don't sell, somebody goes rogue, for whatever reason, I'm stuck with all of this work being done and, you know, 5% of zero profits.

So is there a different strategy that I should consider a mixed model account that you guys know in the past has worked that minimizes my risk, but also is fair for all parties involved? You know, I've got a question, Tommy. You know, first of all, both of the scenarios that you talked about, there's a risk on either side. And that's just business. There's going to be a risk. You know what I mean? I mean, you can try to structure a deal, structure a contract, you know, where there's very little risk.

But there's going – if you're doing it from one side or the other, there's a chance if you're a flat fee that you're going to miss out on commission or a cut. And then there's the chance if you – that's how commission works. That's just the risk of it. One of the things I'm curious about, though, in your industry specifically, how are contracts typically set up? In terms of the competition, what is standard for a freelancer that does what you do regardless of who the client is? How is that normally set up i don't know if there is a standardization for that so i mean they you know as a yeah it's a flat fee or an hourly it's either contract hourly uh taking a cut of someone else's business is

highly unusual yeah and um there's nothing wrong with it right and it would just be the profits based upon the ongoing site if you don't have that much money up front to invest you know a smaller smaller startup or whatnot i grow with the business as the business becomes more profitable so either a rev share or percentage of of those profits as we scale i understand there's nothing immoral about it it just assumes that you were the reason that the sales happened. Sure, too sure. Yeah, I can see that. I mean, let's say I was doing a total money makeover book,

and the book just was hot, and it's going to sell 9 million copies. And, you know, the UX experience, the user experience on the website, helps it sell, but it's going to sell. And so you're accentuating the process. So either way is okay with me. It's just you've got to decide really what you're looking at is the product or service that you're marketing with your skills. Do you believe in it enough to take a piece of it? And that puts you in the B plan.

Otherwise, you're going to take a flat fee because I don't know if these guys are going to make it. I don't know if there's – I don't think anybody needs fried pickles. I'm probably not going to do it, you know. And so you look at the product and you go, that's dumb. I'm taking a flat fee for my services and getting out of Dodge, right? I got a question, Tommy. Who manages the e-commerce once you get it set up they do typically that's me so um i'll you know hook

into product inventory management i'll do the month-to-month analytics reporting as well as tweaking based on customer journey and sort of what i'm seeing as users interact with the website the conversion rates all that sort of thing so So the maintenance part is a larger picture play in the partnership. So here's what I would do. And I'm just throwing this out there. I would do a both end and I help people in all types of businesses. If they have a product based business to add services, to diversify and grow, they have a service based business to add products so they can diversify and grow. It doesn't always make sense for every business, but in your case, you would have the initial contract set up of here's your flat fee for you to set the whole thing up. You've got a guarantee then, regardless of if they

sell, what'd you say, jarred pickles, fried pickles, regardless of whether their business does well or not, you're covering your basis of your work because your work has been done and you fulfilled that promise. The other opportunity though is like, and I think you mentioned this, is to add on additional services or packages as a consultant or as an e-commerce manager for a period of time, six months, a year on retainer ongoing. Then you're continually able to increase your income, continue the relationship with the client, show how valuable you are to that client. But at the same time, you've covered your basis for the initial work. So I think you can still integrate products and services into what you're doing. It could be the way to lower the risk and still get the reward is to take a, on plan B, where you take a commission, take a smaller commission or a smaller percentage, but in a

higher hourly, which is a hybrid, what you're talking about between the two plans. The only place I can think of that I've seen that it's fairly normal is retail piece of real estate, where there's a retail shop going in and a mall, as an example. The lease terms are a substantial lease payment plus a gross sales kicker. And whatever the gross sales are, the landlord gets, you know, the books are audited on the clothing store, and the clothing store based a percentage of gross sales on top of regular rent to be in this mall. Yeah. And so that's kind of what you're talking about is a hybrid between the two.

Yes. One of the things I would say, Tommy, from a marketing slash customer relations perspective, client relations, who you're dealing with here, if you are doing things, if you are providing value through this relationship, through your UX knowledge and experience that you are making, you're not just setting up a store, you're making it a very easy, effortless, beautiful experience for the people purchasing on this e-commerce site, I would make sure that you keep those metrics and you regularly check in with your clients. Hey, you know, the conversion was this and now it's this or the sales were this and now it's this. And you're able to actually, to Dave's point, it's not all going to be attributed to you, but if you can show something you directly move the needle on, that's going to be good for the

relationship and good for justifying what you're charging them. Yeah. So the answer is, I don't think we have a really good third option. The only idea that we've come up with is kind of a hybrid between the two and explore that, which you probably honestly had already thought of. So I don't know if we're any help or not, Tommy. It was sure fun to talk about. It's a great discussion. It's a great discussion. It's a very interesting world you're in. So you've done a great job carving out a niche for yourself open phones at 888-825-5225 when you get ready to sell a house the main difference between a house that sells and a house that sits on the market is a real estate agent. A real estate agent that knows what the flip they're

doing is worth their weight in gold. And truthfully, there's not that many of them. It is truly the 80-20 principle. 80% of the people do 20% of the business. 20% of the people do 80% of the business. And if you take the 20% they're doing 80% and did it again, you'd find it again. 20% of that 20%, meaning 4%, are doing 80% of that business there. And so there's just a, in every business that's true, in the real estate business, it is very true. And you've got to know the value of a good real estate agent so you don't hire some guy that's a friend of your mother's who got his license three weeks ago to sell your largest asset. And you get, I mean, a monkey can get a real estate license. So it's like, you know, they put a sign in the yard and go, hoo, hoo, hoo, right? I mean, there's not much to this business when it's just to enter the business. But if you're going to sell $200,000, $500,000, $700,000 asset,

you ought to have somebody that's professional doing it that's got a proven track record and did it more than three times last year. Maybe they sold 30 or 40, 50 houses. Maybe they sold 200 houses. These are the types of people we endorse. The high-end ones that get it done. High-protein, high-octane. Don't settle for a subpar agent.

Go to DaveRamsey.com slash agent. Click on our ELP program for real estate agents. Find who we endorse locally in your area to provide you with help. 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. Okay. I got it right. Thank you, Dave. Thank you for taking my call. Sure. How can we help? So I've been, 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 fiance graduate? She's graduating next May. She's doing 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 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 finning up 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 hill hair 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 like i've noticed that pattern and if you can get a quick win it's really good not only only mathematically, but emotionally. I mean, if you had $10,000 in

a mutual fund, just cash that in and 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 the 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. The tradeoff 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, is just, yeah. I'm going to sell my $6,000 car and get a $3,000 car. You didn't move the needle. Right. 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 Daveave ramsey show thank you um my question is we're now 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 when 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 um just myself what assets what assets you know my 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 gonna 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 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 tax and legal profession that are saying you have to incorporate. You have to set your business up as an LLC to, you know, protect against risk and yada, yada, yada.

And so, so many people, that's a barrier for them because 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, et cetera. And you don't have to. Go paint some houses. 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, like 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 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 in the podcast show notes or

head to DaveRamsey.com. Thanks for listening.