The Ramsey Show - App - It's Simple & Easy to Get Your Taxes Done Right (Hour 1)

Episode Date: February 21, 2019

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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. I am Dave Ramsey, your host. Thanks for joining us. Open phones at 888-825-5225. That's 888-825-5225. Well, thank you to the over 30,000 of you that joined us by streaming for our Entree Leadership One Day or our Smart Money event last night.

Both were done live in Grand Rapids, Michigan. And thank you for hanging out with us. And a lot of you joined us from all around the nation, and we appreciate that. And the events were absolutely stellar, absolutely fun. We were having a blast. And we appreciate all of you coming out. Open phones at 888-825-5225 here. Jeremy is with us in Memphis.

Hi, Jeremy. How are you? I'm all right dave how you doing better than i deserve what's up um so my wife she's from ecuador and um her grandmother who lives in ecuador she was just told that she doesn't have much longer to live and so um we need to fly down there pretty much immediately and um that will cost us about $2,500 because we're able to stay with family members and stuff, so we won't have to pay for hotels and stuff. And so I have a $10,000 emergency fund right now, and I just found out that I have a $10,000 student loan that my wife took out a while ago before we had gotten married that I didn't know existed until now.

How long have you been married? Six months. It took six months to find that out? Well, apparently that she thought that I already knew about it is what she told me. It was just a misunderstanding, I guess. She might have told me and it may have was just a misunderstanding i guess and so which she might have told me and i may just went completely over my head and i didn't realize that she told me but um you know either way that's that was the reality and so my question is do i after i pay for this trip with my emergency fund um do i need to throw the rest of my emergency fund at the

student alone or then or that's what I need to do? Yeah, you're back on baby step two, which means you take all money except $1,000. Obviously, this trip is not counted in the equation, but as you said, you're going to do the trip. But every dollar you have that's not in a retirement account and goes at your debt until you're debt-free, so it sounds like you're going to have $6,500 to throw at this if you leave $1,000 in there

for Baby Step 1, and you spend $2,500 on the trip, right? Yes, sir. And so $3,500 to go, and what's your household income? $75,000. Okay. So how quick are you going to put the $3,500 back? I want to say I can do it in about a month and a half okay cool you'll be done with that then unless there's something else we don't know about yes that's my only dad i don't

i'm renting right now okay i mean as long as she's told you everything that's the trick right yes sir yes sir yes sir that's that's yeah we i made sure that that was the only thing okay all right yeah that's exactly what i do you know you've got two new pieces of information that you didn't have when you had $10,000 in the account. Information number one is I got $10,000 worth of student loan I've got to clean up, so that puts me back into baby step two. Information piece number two is I'm spending $2,500 on a trip that's an emergency to see an ailing grandmother for the last time probably. And so, yeah, those are all things that you should do,

and that's the order you should do them. So good, you've got it lined up, brother. Get after it. Heather is with us. Heather's in Atlanta, Georgia. Hi, Heather. How are you? Hi, Dave.

Thank you for taking my call. Sure. What's up? Well, I've got two questions. My husband and I are on Baby Step 3, and we should be done with that by the end of the year. And we are looking to start our family at the end of the year as well. And I just wanted to get your thoughts first on saving money for the pregnancy and labor and delivery fees.

Is that best through supplemental insurance or an HSA. And then my second question is, I read on your website where you recommend negotiating with hospitals in your third trimester and wanted to get more of your thought on that. Well, or have it negotiated by the third trimester, yeah. I mean, once you're into the pregnancy, second trimester anyway, you can start making phone calls and sitting down with some of the administrators. Hospitals do like to do labor and delivery. It's one of the few times that people are in the hospital and happy to be there. And so it's a PR thing for them almost, and people that are going to pay cash for the labor and delivery. Now, you don't have medical insurance?

You don't have health insurance no i do and we have like a high deductible plan and the deductible is three thousand dollars and once you meet that they'll pay for eighty percent of everything and the max out of pocket is nine thousand okay yeah so i i think you just save up a little bit of money extra above your emergency fund to get ready for that, but it's not a big deal. Those are all doable numbers. And I don't know, in your case, that you necessarily have to negotiate because basically most of yours is going to be covered.

Right. So, I mean, normal labor and delivery right now is probably between $8,000 and $10,000, something like that. And so, you know, you're going to have a couple grand out of pocket is what it sounds like, plus you're up front. You know, so you're three, so about $5,000 extra or something like that is going to cover you, it sounds like to me. But I, you know, above your emergency fund, because this is a known thing that's coming, let's go ahead and get ready for what you're going to have out of pocket and lay that out. So, hey, good question. Open phones at 888-825-5225. Thanks for joining us. Open phones here. Thanks for being here. Laura is in Fort Wayne. Hi, Laura. Welcome to the Dave Ramsey Show. Hi, Dave. So I just got my first real-time job, and I'm getting ready to move to a new city and start renting on my own.

And I'm wondering what percentage of my income you would recommend spending on rent. Like, I know your policy for a mortgage, but I didn't know if that was any different for renting, and also if utilities should be included in that percentage or if that's an additional expense. Well, the whole idea is if you spend your whole check on rent you've got no money right the less you spend on rent the more you can save and invest towards buying a home someday or towards other things and so um you

know it's not how much can i spend it's how little can I spend? Because obviously until you buy something, rent is just you're buying patience. You can save up and pay for stuff. So I want to spend as little as possible and be able to have a reasonably good life and a safe situation for sure. But never more, not counting utilities, never more than a fourth of your take-home pay, just like with your house payment. Same rule of thumb. And the reason is simple. You just don't want to become poor because of your take-home pay, just like with your house payment. Same rule of thumb. And the reason is simple. You just don't want to become poor because of your rent payment. You don't want to use up all your money.

That's what it comes down to. So somewhere around a fourth of your take-home pay. But on rent, I'd like for it to be a whole lot less so that you don't keep renting forever. That would be my idea. That would be the game plan. So, hey, thanks for the call. Open phones here, as we said, 888-825-5225. Thank you for joining us, America. We are glad you are here. This is the Dave Ramsey

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from Zander Insurance. They monitor all personal info for the entire family, and they take over all the work if you become a victim. Best of all, your kids are covered for free on their family plan. Call them at 800-356-4282 or visit zander.com. It's just the smarter, more affordable way to protect your entire family. And it's the only plan I provide to my team. Zander.com or 800-356-4282. Leslie is on the line in Rochester, New York. Hi, Leslie. Welcome to the Dave Ramsey Show. Hi, Dave.

Thanks for taking my call. Sure. What's up? I just started listening to you when you were on the Ben Shapiro Show, and I thought I was doing really well with my finances until I listened to you, and now I'm a little scared. Okay. We don't have any credit card debt.

Our cars are paid off. My husband's a doctor, and he's going to be an attending here in June. So our salary will go from $80 to $250. Awesomeness. We are looking at possibly no income, though, for two months in between. And we do have $250,000 in student loan debt and a 30-year mortgage at $169,000. So I'm wondering, do we build our savings higher to cover those possible two months of no income? Yes.

Okay. And then we refinance the student loan and pay it down because we were doing income-based repayment. You don't have to refinance it. You can just start chunking on it. I mean, you're used to living on $50,000 to $80,000 a year. Right. So just keep doing that. Okay. And throw everything at this student loan, and you should be debt-free in, what, two years?

Yeah, that's what I'm thinking. So, I mean, then you just walk right up what we call our baby steps at that point. Right. And so when should I look into possibly refinancing the 30-year down to a 15? You know, if you only owe $169,000 on it and you make $250,000, I wouldn't. Unless you've got a high interest rate, I would just reach over there. No, we're at 385. That's a great rate. Yeah, I'm just going to pay it off as fast as I can and not worry about it.

You're going to pay it off faster than 15 years anyway. You don't have to have a loan. A home loan does not have to be a traditional home loan like you've got. It does not have to be stated to be a 30, meaning if you calculated out what it would take to pay it off in 10 years and you just paid that payment, it'd pay it off in 10 years. You wouldn't have to refinance to a 10-year. You just pay a 30 like a 10, it's gone in 10.

You pay it like a 12, it's gone in 12, and so on. And that's probably, I mean, I'm going to guess and say you're probably going to have that house paid off in five or six years. Okay. So I just wasn't sure with the interest schedule if it would be better. No, it doesn't change that. That's what I'm saying. If you pay it like a 10, it pays off in 10. So once you get past your student loans and past your emergency fund, you start putting 15% of your income away towards retirement, maybe step four.

Anything else you can find laying around, which you've got a good income, so you're going to find some money laying around, start chunking that at that mortgage. That's a tiny little mortgage in relation to the rest of your life, right? Yeah, we didn't want a big house. We like our little house. I like it. I like it.

Well, you've got a big student loan, so it's good to have a little house. I like it. Yeah. Yeah, you're heading in the right. Thank you, Dave. You're doing good stuff. I appreciate you being a new listener. Thanks for hanging out with us.

All right, Rodney is with us in Ann Arbor, Michigan. Hey, Rodney, how are you? I'm good, Dave. Thanks for taking my call today. Certainly. How can I help, sir? We make about $110,000. My bride just started getting some nice bonuses.

My pension in three years is going to be $24,000. I'm 54 years old, and so in three years, that will make me 57. My bride will be 61. And we have $70,000 on the house. Actually, $65,000 on the house. or actually $65,000 on the house. I want to pay the house off before I get to 57. My bride wants to put the money in Roth and then pay it off at 59 1⁄2. We only have about 70 invested, and we do have our emergency fund and about $7,000.

And you're debt-free other than the house? Other than the house, we only owe $65,000. And you're debt-free other than the house? Other than the house? We're only on $65,900. On the house? On the house. Okay. So what we teach folks to do is put 15% of your household income into retirement. You're on what we call Baby Step 4.

So your household income is $110 134 which is it 110 that counts your 24 that is my my pension will be at 57 what it'll be later okay so your household income is 110 right now all right then that would mean you would need to be putting away about sixteen thousand dollars a year give or take fifteen percent right? Okay. And so you need to be putting that aside in something. And Roth 401Ks, if you've got a match on a 401K, Roth IRAs, whatever it is, we need to get to $16,000 total. Gotcha. So have you got 401Ks available to the two of you?

Yes, we do. True word, but nothing matching. No matching. Are they Roth? We have one eligible for the Roth through my bride. Okay. All right. So what I would do is do two traditional or two individual Roth IRAs.

You can do $7,000 each. That gets us to $14,000, and then I'd throw $2,000 into her Roth at 401K at work, and that gets us to $16,000. Above that, any money you can find chunk it on this mortgage i suspect this mortgage will be gone before you get to 57 or 59 awesome okay while putting a good healthy amount into retirement and then once that mortgage is gone then let's just keep cranking on it let's just dump as much as we can into these roths and into 401ks and because you got some catching up to do on your nest egg at that point, right?

Yes. You know, she's right again. I hate it when that happens. Oh, that's fun. Idaho is calling. Aubrey is with us. Hey, Aubrey, how are you? Did I push the wrong button?

I pushed the wrong button, I think. Let me try again. One, two, three. There's Aubrey. Hey, Aubrey, how are you? Good, how are you? Better than I deserve. How can I help?

I am trying to figure out if I should be continuing school or possibly changing schools. I just started last semester, and I logged my student loan account and kind of panicked looking at how much I already owe. I'm just kind of rethinking things. Not sure what else to be doing. So you're borrowing money to go to school currently? Yes. And how go to school currently? Yes.

And how much does school cost? What was that? How much does school cost? It is, I think, a little over $400 for each credit hour, and I'm taking nine credit hours a semester. Okay, so you're a part-time student? Yes. Okay, are you working?

I'm not, my husband is. Okay, and why are you part-time? Well, I'm doing online school, so I do three classes in one semester. We do five-week blocks, and I'm home with my youngest son. Okay. And so it was $3,600 for the semester. Did I do that right? I don't know. I know that I have a little over $8,000 in student loans right now. Well, nine times 400 is $3,600. $3,600. Right, I think so, because it's a little over $1,000 per class,

and I have three in the semester. And I'm in the second semester right now. Okay. All right. So what does your husband make a year? Right now we're bringing home about $47,000. Did you say $47,000? Yes.

Okay. All right. Well, number one, I'm not going to tell you to borrow money to get a degree of any kind. Right. Okay. So we need to find a way to pay for this the dollars you're giving me the total dollars that you're spending on education uh 3600 a semester is not out of reach that's something you could make as a good part-time job and cover that um or he could work

a part-time job and cover that in addition to the money that's coming in if you all want to do this what are you studying psychology Psychology. For what? I haven't decided yet if I want to do six years and hopefully become a therapist or stick with the four years and get a degree in clinical counseling. Okay. And just kind of work with that. I'm still kind of up in the air about it. Okay, cool. Well, I think I'd make some decisions on that, and then let's set about very decisively, very intentionally,

what the process is going to be to get to the degree that you want, to be able to do what it is you want to do, but let's figure out a way then to pay cash for it as we go. It sounds like you've kind of gone what the culture does automatically. Oh, I'm going to school. I have to have a loan. That's just the way it is. No, it's not the way it is, especially in a situation like this.

You're an adult student doing part-time training online. There's no rush. You pay for it as you go from this point forward. No more loans. This is the Dave Ramsey Show. Are high health care costs getting you down? Are you confused trying to navigate your options? Do you wish you could find an affordable, biblical solution to your health care costs? New Testament Principles, Christian Healthcare Ministries, or CHM, helps Christian families, churches, and ministries join together as the body of Christ to share their major healthcare costs. Christian Healthcare Ministries is the original health cost-sharing ministry,

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Very well. How are you? Thank you so much. Better than I deserve. Welcome. Where do you guys live? Provo, Utah. Fine.

Welcome to Nashville. Appreciate it. Thank you. All the way over here to do a debt-free scream. Yes, and a thank you personally. Wow, I love it. How much have you guys paid off? $222,500 in eight years.

Wow, I love it. And your range of income during that time? We had a set of ranges. First range was $60,000 to $167,000, went down to $55,000 to $210,000. Okay, fun. What do you guys do for a living? So I am a coaching floor manager, a data analyst, and a seminar marketer. And I'm a stay-at-home mom.

We've got four kids, and I also run an online retail store. Fun. Good for you guys. What kind of debt was the 223? So it was mostly my student loans. We had a house, and we also had a car you paid off your house yeah we're done i'm looking at weird people yeah i love it way to go you guys thank you so fun how old are you two i'm 37 32 and you have paid for house yes what's this house worth uh about

250 000 and you don't have a payment. Not a single one. I love you guys. This is awesome. So this has been a journey, eight years. Tell me the story. So I graduated from college with a degree in aviation science with a professional pilot emphasis. I wanted to be a pilot ever since I was a little kid. And just before my birthday in 2005, I watched the Airbus A380 take off on its inaugural flight, and that was my airplane. I knew it. Then, of course,

it was not cheap to study aviation. So I graduated. Three months later, I had a seizure, and the FAA took away my medical. And so I miss it every day, but I can't fly anymore. So my wife and I sitting here with a ton of debt, no way to pay it back, just tried to figure it out. So we decided to start a company, bootstrapped it, no debt with the company. And luckily, with that range of income, the first one, we were able to pay off, uh, all

of our, um, uh, student loans and car on the one year anniversary of the seizure. We were done. Then what happened is we saved up, um, using the steps in the plan and our income just took a drastic dive cause we lost our business. Um, and we lost it all. We lost it all. And so it was about that time that I was listening to your show and there's a guy on the radio that you talked to and he said that he made a whole lot of money and then he didn't. It was all gone. And you told him, yeah, but you know what it feels like to make that much money. You can make that much again. And so I really took that as a motivation to start up another company. It took a while, but we did. We also were able to pay cash for four kids.

We have two surgeries, one major. My entire back is metal. We also had to pay for three cars, all with cash. Wow. And we still paid off the house. Wow. you've been after it yeah yeah very cool and so where on this journey did you run into us um actually i worked a uh i worked two jobs and the other one uh ended at about 8 p.m and in utah your show is a little

later and so i was able to listen to it on the way home, and that's where I really got into it. Okay. And how far back was that? Near the beginning. Oh, wow. Eight years. Yeah. Wow.

Very cool. Very cool. Congratulations, you guys. Thank you. Thank you. You've been on quite a trip. Yes. It's been fun.

Yes, it has. But you're here, and you arrived at the destination. I mean, you are debt-free, housing, everything, and you're not even 40. No. Wow. And four kids. I mean, this is pretty incredible. Well done.

Thank you. Very well done. What do you tell people the key to getting out of debt is? I think the key to getting out of debt is to pay a tithe. And I would say budgeting as well as paying a tithe. But budgeting will really amp it up if you do that oh absolutely yeah making your money behave yeah so why um not i'm not disputing you because i agree with you but from your perspective why do you think the tithing tithing

is so important i think when you pay tithe the lord is bound to bless you and you will be okay if you pay a tithe anything you give above and beyond that as an offering he will give you prosperity is what i believe okay and you've seen that in your life you've seen the fruit 100 absolutely yeah well done good for you guys proud of you thank you good job who are your biggest cheerleaders other than the two of you we our families yeah we didn't have a big circle of people that we told, but our families knew and they were a great support. Yeah. You grew up with common sense people.

And so when they saw you doing it, they thought you were doing good. Yeah. Yeah, absolutely. Yeah. Very good. Well done. Well, we've got a copy of Chris Hogan's book for you. Everyday Millionaires.

You're on your way. You're going to be one soon. Yes, we are. And that's the next chapter in your story. You are moving right along. You're doing really, really well. Yes, we are. And that's the next chapter in your story. You are moving right along. You're doing really, really well these days. So, excellent job. Benjamin and Erica, Provo, Utah, $223,000 paid off in eight years, making $60,000 to $210,000.

Count it down. Let's hear a debt-free scream. Three, two, one. We're debt-free! Yeah! scream three two one we're dead free this is how it's done i love it love it love it love it excellent job 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. Always use the promo code RAMSEY. Andre is in Indiana.

Can online-only banks be trusted? Sure. Some of them have better interest rates on savings and checking accounts, which is appealing. Sure. I'm old school. It scares me to use a bank with no physical branches. How and checking accounts, which is appealing. Sure. I'm old school. It scares me to use a bank with no physical branches. How does it work and is it safe?

Well, if they're an FDIC bank, it's safe. I don't worry about it. FDIC bank. And, you know, most people these days do the vast majority of their banking online anyway. And so the number of times that you do a physical deposit or a physical withdrawal at the actual bank is fairly low in this world today. So it's not unusual at all to do that. It might be that it's not your only bank. Some people are more comfortable with that than others, and since you're not that comfortable with it right now, Andre,

it'd be a way for you to dip your toe in the water to move some of your transactions there or some portion of your banking there and just get comfortable with the process and how that particular bank transacts. But, yeah, there's some better interest rates for things like um uh you know your emergency funds and those kinds of things in those situations allies got i think 2.2 right now as an online and um a friend of mine this week was telling me that he just said okay allies got 2.2 he walked into his bank and said you want me to move it to ally or you want to give me 2.2 and they matched it at

his bank just you know they're trying to keep the deposits in place um because his particular bank was 1.9 he said so um not that that 0.3 is going to change your life it's really not but um you get some competitive things like that with online that you might that some of the brick and mortar or click and mortar even don't have so you can try it it's not a big deal uh i am not worried about it i would do want to see fdic on it and i do want to see something that i have some sense of recognition that this is a a trustworthy organization there's got to be some reason that i'm willing to put my money there. So good question. Thank you for joining us. Open phones at 888-825-5225. My wife and I, Jordan says on Instagram, are 29 with two kids.

Should we be investing the 15%? Sure. If you have a mortgage? Sure. And should I count my work retirement into the 15%? Since we're doing a Roth IRA aside from work retirements. 15% of your're doing a Roth IRA aside from work retirements. 15% of your household income you invest.

If your work retirement's putting money in and you're not putting the money in, we don't count that at all. If there is a required mandatory deposit on your part into your work retirement, like let's say they make you put 10% of your income away into their plan, then you can count that or count part of it. I try not to count it all because you don't have much control of it towards the 15. I want you to have 15% of your money going into retirement at baby step four. And then beyond that, baby step five is kids college. And then six is you start paying off the house mortgage early with any other monies you can find Man, it's tax time around here, have you noticed?

I was saying it makes me kind of ill. Well, some people put off filing their taxes because they're scared of what's going to happen and they think they might owe money and they haven't planned and they don't have cash and this is a terrible reason to procrastinate folks you need to get your taxes done on time even if you're going to owe money and at least that way you know what the target is and the sooner you do it the more time you've got to save and make the bill, you know, save up the money to pay the bill by April 15. So don't mess around with this. Putting it off, it just makes it more stressful. So besides that, you might, if you get a good tax professional, not owe what your, like, darkest fears are, right?

So go to DaveRamsey.com slash taxadvisor for one of our tax ELPs today. And these are good people. They know what they're doing. They're professionals. They're tax professionals. A lot of them are CPAs. A lot of them are enrolled agents. And they know what they're doing.

As a matter of fact, I was in Grand Rapids this week, and I was having dinner with some of our real estate ELPs, some of our smart investor pros, and one of the guys sitting at the table was one of our tax ELPs up there. He'd been with us, I think it was 17 years, he said, so forever. And we've been sending him business that long, and our customers, our listeners have been happy, you know, because you get good service, and you get somebody who knows what they're doing, taking care of your taxes. You know, you use somebody like that, the stats tell us, the research tells us that you save an average of $800 over somebody who uses some kind of software and tries to do it themselves. So pros just make a difference. It's like you're trying to work on your own car.

I mean, it's the same thing. And I can work on a car car but it takes me twice as long and i break stuff so why you know why what's the point i'm not that good at it i don't get great joy out of it and that's true doing my own taxes so uh check it out davramsey.com click elp for taxes courtney is with us in evansville ind. Hi, Courtney, how are you? I'm great, how are you? Better than I deserve. What's up? All right, well, we have started a baby step to and really knocked out a lot, quite a bit of debt since November, and we own a food truck, and in order to operate, we have to have a commissary for the health department permit,

and we found a building that would serve as a commissary and also create another business opportunity that we've been thinking about doing that building also should we pause baby step two to cash flow the commissary and the new business how are you doing commissary now well we're shut we shut down during winter time how did you do it in the summer? Right. How did you do it last summer? Through a local brewery, but we're not going to use them.

The health department needed us to find a new one because of their grease trap walls. Because of what? Grease trap walls. Oh, okay. All right. So you're forced to find a new place to get your license through anyway. Right. Okay, so what does it take to set this commissary up?

We're looking at probably around $10,000. And what's your household income? About $70,000. And that's not including the food truck business. Well, what's your household income? About $140,000. Okay. Net profit that you pay taxes on, right?

Yes. Okay, good. All right. And how much debt do you have, not counting your home? We actually own our home, but we uh about 37 000 left in the debt okay all right and so we're dealing with a 47 000 number including 10 for the commissary and you make 140 how fast do you plan to do all of that uh we plan on doing it pretty quickly we've we've already knocked out we started in, and we've knocked out a little over $14,000 now.

So of $140,000 in 12 months, looking out 12 months from today, from today to 12 months from today, I make $140,000. I need $47,000 to be debt-free and do the commissary. How much of that is going to be done in one year? It will all be done in one year. Okay. Then it doesn't matter, right? Well, but also I'm looking at starting a new business

in that same building. You said you needed $10,000 for this. Well, that was for the commissary part. For the new business, it would be another about $25,000. I wouldn't do that until I was out of debt. Okay. I'd get the commissary and get set up and keep making money, clear through. One year from now, save up and do your second business idea.

Okay. Because here's the thing. You're not going to have anywhere near the financial stress. Think about it if you're making 140 a year from now and you have zero debt no debt on your house no debt on anything the commissary's paid for and set up and you get ready to launch this business no stress at all right but right now if you pile another 25000 in the middle of this mess, stress city. Right. Am I wrong? No, you're right.

We're going to try to just cash flow it. No, you're not cash flowing it. You're not cash flowing it. You're borrowing it because you're not paying off debt, which effectively means you're borrowing it. So, no, I wouldn't do that. I think just tap the brakes a little bit. Let's get the commissary for the $10,000. Let's knock out the other $37,000.

Then we're debt-free, and then let's save up in cash flow the launch of the next business in the commissary. And that's a separate issue. There's three separate issues. There's the launch of the business, the actual commissary, and the paying paying off of the debt and let's just put those in that order so hey good question and it sounds like you guys hustle and grind i'm proud of you keep doing it keep it up out there open phones at 888-825-5225 sarah is with us in milwaukee hi sarah how are you hi dave i'm doing well thank you How are you? Hi, Dave. I'm doing well. Thank you. How are you? Better than I deserve. What's up? So my question is, I'm considering relocating to Texas.

I currently work as a data analyst for IT for our company, so I can work remotely. And I asked them if I could work remotely from Texas. But the only condition for me to do that would be to become an independent contractor. So I wouldn't be under their umbrella, I guess, anymore. You'd be self-employed. Correct. And I have no knowledge of that or anything. And I guess I just wanted your insight, if you could provide any, on should that be a deal breaker

and what things should I consider if I do want to relocate? Typically, a contractor will be paid more than an employee because an employee has all the benefits and you don't get any benefits when you're a contractor. Okay, so that's something that I should be able to negotiate with them? Yeah, I mean, do they like provide health insurance now? They do, yep, I do have their have their health insurance they have 401k matching um i don't know if i believe so i know i have them i don't know if it's all of that and then the last piece is when you're self-employed you pay self-employment tax which is 15.3 percent on payroll now as an employee you only pay half of that 7.65 your employer pays the other 7.65 i see so your tax bill just went up by 7.65 percent

so i want an eight percent raise just to break even on the taxes plus whatever benefits I'm losing. And generally, contractors make a lot more than 10%, 12%, 14% more. It's usually more like 20% more. And I think if you shop around, do a little Googling on what a data analyst makes on a contract per hour remotely, you'll see that take that compared to what you're being paid now. I think you'll see a 20%, 25% bump you're being paid now i think you'll see a 20 25 bump on a contract because contract also doesn't have any stability they can just cut you loose right right so you always want to have somebody else in your back pocket that you you know could do work for as well you might have more than one company that you can do work for

unless you're taking up an entire 40 hours with one company so um we do a lot of tech things here if we're building a special project rather than hiring into it we'll bring in contractors they're more expensive but they're not permanent and so we'll bring in a developer or bring in a data analyst or bring in a platform or a javascript writer or something just to get the project out the door you know get it done but we're not planning, we don't have an ongoing need for that, and so we're willing to pay a little bit more for a contractor than we would for the same position as an employee, but they're not going to be here five years from now. I'm still going to be paying them later.

So that's another reason sometimes people do contracting, especially in your world, it's not that unusual at all. So I'm not worried about it. I just want you to know you've got some extra costs here. Not a bunch, but a little bit that you wouldn't have as an employee. This is the Dave Ramsey Show. Hey, it's Blake Thompson, Senior Executive Producer for the show. You know, you can listen or watch anywhere with the Dave Ramsey Show app on your smartphone.

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