The Ramsey Show - App - It's Time To Stop Giving 70% (Hour 3)

Episode Date: February 2, 2023

Dave Ramsey & Jade Warshaw answer your questions and discuss:   When you should look for a new job because your boss won't give you a raise, How to have a buffer in your checking account when creating a zero-based budget, from the blog: How to Create a Zero-Based Budget "I have the money, but I'm scared to pay off my car early. What should I do?" from the blog: Should I Pay Off My Car Early? "My boss wants to sell me the company I work for but I don't have the money." from the blog: How to Buy a Business: 4 Questions You Need to Ask Have a question for the show? Call 888-825-5225 Weekdays from 2-5pm ET Want a plan for your money? Find out where to start: https://bit.ly/3nInETX Listen to all The Ramsey Network podcasts: https://bit.ly/3GxiXm6 Learn more about your ad choices. https://www.megaphone.fm/adchoices Ramsey Solutions Privacy Policy

Live from the headquarters of Ramsey Solutions, broadcasting from the pods, moving, and storage studios, it's The Ramsey Show, where we help people build wealth, do work that they love, and create actual, amazing relationships. Jade Walsh, our Ramsey personality, is my co-host today. It's a free call at 888-825-5225. Thank you for joining us, America. We're so glad you're here.

Rachel is with us. Rachel is in Detroit. Hi, Rachel. Welcome to The Ramsey Show. Hi, Dave. Thanks for having me today. Sure. What's up?

Okay, so I have a question. Me and my husband are completely debt-free except for a house. And it's actually a career question. I've been working at this medical office for probably almost a decade. And I love my boss. I love the job. I love everybody I work with. And I love the hours. However, I have never got a raise since I've my boss. I love the job. I love everybody I work with, and I love the hours.

However, I have never got a raise since I've been there, and there is no benefit as far as like 401K, medical, anything like that. Ten years without a raise? Yes. I've been there almost ten years without a raise, yes. Have you asked them about that? Well, this is the thing. One of my co-workers just left the office after being there for a long time.

And he called me up and he said that he was going to give me a raise if I stayed with him until retirement. And I said, oh, okay. So know, so I, when I went to work, I gave it about two weeks and I went into his office and I said, um, oh, I was just wondering what happened to that raise that, um, you said something to me about, and he said, oh, I'm not going to do that until I actually tell you I'm retiring. And I'm like, oh, okay. Like, I don't know why you would say it, right. If you're not going to give me the raise, I guess. And so I don't know what to do in this situation because a part of me, my husband's telling me that I should go look for another job. And then a part of me is like, well, maybe I should stay here.

But he is going to be retiring. I don't have a retirement date. I don't have anything. Another job just is going to be offering me a job. What do you make? An hour or a year. What do you make a year? I make about $30,000.

Okay. And what do you do? I'm a receptionist. It's something I don't have to work, but I want to work because I want to pay our house off faster. Okay. Where do you want to be doing in 10 years? Good question. I guess I want, I do like, I'm good at customer service,

so I do like receptionist type of work. So you want to keep working for the next 10 years doing something? I do, yeah, I do. I do want to work. The other place that offered you less money, why did they offer you less money than $30,000? The other place offered offered you less money, why did they offer you less money than $30,000? The other place offered me a dollar less, but they have benefits. But then I'd be working more hours.

And I don't know what to do. Do you want to work more hours? No, I don't. But I want to make. So it sounds like neither one of these are good jobs. I don't know what to do. I think I'll look for another one. I want to work. So it sounds like neither one of these are good jobs. I don't know what to do. And I don't have to work, but I want to work. Look for a different one.

You kind of boxed yourself into a corner and told yourself it's either this or that and that there's no other options out there. But there are other options out there if you keep casting your net out there. You might poke around and make $50,000 doing customer service somewhere. Might not be as a receptionist, but you might just. There's such a labor shortage right now. It's a great time to be looking for a position. And, you know, so I think I would slip into your doc's office first.

That's who you're dealing with, the doc, right? Yes. And they're notoriously horrible at running businesses um so i in leadership and those kinds of things because what he what he just did like violated like 73 leadership rules okay so yeah i would just slip in there and say you know i um i anticipated that you were going to go ahead and give me a raise based on the way you said that, and if you're not going to, I'm going to let you know that I'm going to be leaving soon. Okay.

All right. He's such a nice man, and that's the other thing. No, he's not. No, he's not. Nice men do what they say they're gonna do bingo yeah that's true that is true he's passive aggressive is what he is right and my husband has been telling me that i need to go and look for something different because yeah you know what i'll change my mind i wouldn't even i wouldn't even tell him i would just go look for a job yeah you can you're not gonna you're not gonna fix this guy you need

to leave you can find another job that you enjoy that you love the people that the person that you work for is a is a nice man or a good person that exists in other scenarios besides the one it this is just the one you're most familiar with and the one that you're used to so don't let that make you think oh I'll never be able to find something like this. Again, you might find something better and you probably will. You'll probably find a better situation. Go ahead and lay out what you want. I want hours. I want this kind of money and I'd like to have benefits and then start looking for that. And I think you're going to find it in two weeks. Okay, and I want to say thank you to your plan

because honestly, right now, I'm in a great situation that I can pick and choose what I'm going to do. We have no debt. We have a house to pay off, and that's why I want to work. I want to work. I want to pay off the house faster if I work, and I want benefits. I want to have a 401k through an employer.

Even though I have my own opened up already, I would still like to have those benefits. Well, it kind of has come down to you have served for 10 years without them giving you the items that give you dignity. Okay? For you, 401K and the occasional tip of the hat, even if it's a dime an hour, at least it's a raise. Right. Just someone saying you're doing a good job. Mm-hmm. Physically saying that, not just giving the words to it. Right.

And so, yeah, it's, yeah um yeah i mean i could talk about how to ask for a raise and how to negotiate and all those kinds of things but i don't think i would here i'm with your husband i think it's time to leave i think i'm gonna go look for something else and uh because i mean you've got this breakdown if i'm you i've got a breakdown of trust now in addition to the other things and so um and you're just so sweet and every there's just no there's no conflict or drama in the air or uh actively out there in front of you so you feel like it's all safe but there is conflict and drama under the surface here and it's it's just not bubbled up yeah and it and i don't think this is the case

with her i think that she's probably done a great job at work but if for some reason she was doing a crap job at work and they didn't think she was worth giving a raise then that's still a leadership problem they should have had a conversation they should have said so on either side of this pendulum which again i don't i think that you probably did an exceptional job at work. It's just not good. It's bad business. 10 years. 10 years. That's a long time. Not even 10 cents. Not even a nickel. Not even a nickel. Get out. Get out while you can. Yeah. Let's go find something else, hon. I think you'll be happier in the long haul. Yeah.

You just need someone. Work should have dignity to it. Yes. And you have to give dignity to it in the organization that you're in. It's not hard. You just have to do it. This is The Ramsey Show. We'll see you next time. jade warshaw ramsey personality is my co-host today hey we kicked off our building wealth live event tour in january here in nashville and meeting you guys in person was a lot of fun hey we're hitting the road again in two weeks, and we want to see you there.

Don't miss your chance to see our team of Ramsey personalities and me live in person for Building Wealth 2023. February 16th, two weeks, I'll be in Indianapolis with Rachel Cruz, George Camel, and Jade Warshaw. And then we're heading to Austin, Texas, February 23rd, the next week, with Ken Coleman, Dr. John Deloney, and Jade Warshaw. April 24th, I'll be in Salt Lake City with Rachel Cruz, George Campbell, and Christina Ellis. And our final stop of the tour is Anaheim on May 2nd with me, Ken Coleman, Dr. John Deloney, and Christina Ellis. Tickets are only $49.

You can get a four-pack for $175. These typically sell out completely. They did all last fall. And, well, Indianapolis still got a couple seats left and not normal for two weeks out. But if you want to come, get in there. Same thing for Austin, Texas. You can still get tickets, but not for long. There's just a few left.

So, ramsaysolutions.com slash events is where you get your tickets. ramsaysolutions.com slash events is where you get your tickets, ramsaysolutions.com slash events. Our question of the day comes from Teresa in the Ramsey Baby Steps community, which is a community of, it's approaching a million people now on Facebook, a private Facebook community, the Ramsey Baby Steps community. You can join it. Jade? Yeah, question of the day. She says, can you explain the zero-based budget versus having margin in my checking account? How do I budget to zero yet still have money left over as a cushion in my account? I probably shouldn't

actually have zero in the account, should I? I love this question. No, you should not have zero in your account. So when it comes to zero-based budgeting, the whole idea there is that you're giving every dollar an assignment. All right, you're not going to just, you know, let it fly and just say, well, I've got, you know, $4,000 to budget and I'm just going to budget is make sure that you have a line item that is some sort of a cushion or a you know a category so that you're not totally at zero because what if something happens what if you know grandma's birthday pops up you know you don't want to just have zero right so i keep a line item that's like you know a little cushion so that you're not at zero but that money does have a purpose zero based appliesbased applies not to the balance of your account. It applies to your income. So when you get your paycheck, it should be spent on paper 100% before you get your paycheck.

Every dollar have an assignment. Now, if you leave $100 or 200 bucks in your checking account then the you add your income to it and you spend all your income they'll still be 200 in the checking account so you've still got a baseline in there right you can do it that way or you can enter the line item in the budget either one if you want but you're right do you you are right, Teresa. Do not take your bank account to zero. Yeah, that's dangerous. But do give every one of your dollars a name. See, the thing is this.

Most people wonder where their money went instead of telling you what to do. And my friend John Maxwell says a budget is people telling their money what to do instead of wondering where it went. It's that simple. Guseppe is with us in New York City. Hi, Guseppe. What's up? Hi, Dave.

How are you today? Better than I deserve. How can I help? I'm good. I have a question. I have a Toyota Corolla SE Edition, I guess you can say. I bought the car in 2020. It hasn't been a financial burden for me.

I've been making my payments on time, if early. My normal payment is $325. I pay $500. But the funny thing is, is I have all the money to pay off this car right now. And I don't know what has been stopping me to just write a check and pay it off. Today, I just paid off a credit card for something that was a stupid debt, as you like to call it. And my goal really in the future is to buy myself a condo. It's always been one of my dreams. And I know I'm not going to get there if I have this car payment in front of me.

I live with my parents. I'm 32. And I just don't know what's stopping me from paying this debt. What is stopping you from paying the debt? If you want to pay it and you have the cash to pay it, pay it. I mean, here's the thing. I feel like you've got a lot of things in front of you that you want to do. So let's just take it in order and get ourselves together. So if you've got money set aside, how much money do you have set aside? Well, the car is about $11,500 I owe,

and I have about close to maybe $18,500 saved already. All right. So we'll walk through the baby steps. So the way we teach here is a series of baby steps that we walk through in order. So the first one would be having $1,000 saved as a starter emergency fund. So for this purpose, I would set $1,000 aside. That leaves you with $17,000. And now we get into your debt, which is baby step two. We're paying off all of our debt except a mortgage. So how much debt do you have total? Not just the Corolla. Well, I just paid off a credit card that was about $1,400. All right. That one's gone. That's gone. And I think I owe like $127 right now on one of my credit cards. And I actually recently just paid it off yesterday.

So that one's gone. Okay. Yeah. So I think I'm, for right now, I'm credit card debt free. All your debt, not just your credit cards. I want to know how much total debt you have. Car, everything. The car is about $11,500. Right. And then no more credit

cards. So just the car. Okay. No student loans, nothing like that, right? No. Okay. So we've got the $1,000 set aside and then out of the $17,000 remaining, we're going to take $11,500 and pay off the Corolla, right? Okay. And then from then we're going to go to baby step three which is to have three to six months saved now for you what does that look like three to six months of expenses i know you said you're living with your parents so what does that look like uh well i the thing is i work i work whenever i possibly can i work for amazon delivery um and that has been an up and down battle because right but what would it take for you to have three to six months of expenses saved based off of your lifestyle it wouldn't take that long because i'm a very good almost have it yeah i mean you've already got six thousand

six or seven thousand dollars laying around and you don't really have any expenses at this point and then i really don't so if your goal is to get a house and your goal is to get a more stable career than amazon delivery uh the credit cards are in your way the car payments are in your way you need to get scissors out and have plastic surgery this afternoon my man chop those cards up and you need to get on a cash basis for operating your life and with no no car payments anymore because you're going to pay them off when you get off the phone right now. Then you're going to pile up as much cash as you can pile up beyond your emergency fund to get your down payment moving towards your house and help you make the transition into the career.

So the problem is there's a lot of things in your life that you're doing at 70%, and I want you to turn it up to a hundred you 70 percent want to get out of debt you 70 percent are working towards buying a house you 70 percent are working on your career and it's time for you to light a fire under your butt and start taking these things to a 10 so write a check today pay off the car cut up the credit cards, get a debit card. Don't spend money you don't have. You're not in Congress. And then get your butt in gear on your career.

Get your butt in gear and go get you a place to live and go have a life. Yeah, and the place to live doesn't, you don't have to, we're not talking about spending years more in your parents' house. No. Saving up money to get a place. A very short period of time. Yes. It's saving up money to get a very short period of time it's time for you to get in gear yes on a bunch of things here really get in gear i mean go hard yeah it's time to go hard because you're you're getting mediocre results in every area of your life because you're playing at seven instead of playing at 10 and i want you to play

for the freaking super bowl man i want you to play for the freaking super bowl man i want you to go for it because you got that inside of you thank you for calling in sir hey if you like this show the best thing you can do for us is leave a five-star review mama said if you ain't got nothing nice to say don't say nothing at all share the show share it on uh spotify on apple share it on youtube and subscribe if you're in if you're listening as a podcaster on youtube subscribe it helps the algorithm it helps lead people to the show you are our number one way of spreading the word. And as of today, we've had 1 billion YouTube views and 1 billion podcast downloads. Thank you, America. jade warshaw ramsey personality is my co-host today. Thank you for joining us, America. In the lobby of Ramsey Solutions on the debt-free stage, Peter and Maria are with us. Hey, guys.

How are you? Hey, Dave. We're doing great. Welcome. Where do you guys live? Kennesaw, Georgia. Oh, yes. Just outside of Atlanta.

Just down the road here. Not far. Good. Good to have you guys. Welcome. Glad to be here. Appreciate you being here. How much debt did you pay off?

It was just under $100,000, around $98,000. Okay. And how long did this take? Just under three just under $100,000, around $98,000. Okay. And how long did this take? Just under three years. Okay. And your range of income during that time? We were around the $150,000 to $160,000. Cool.

What do you all do for a living? I'm in sales. And I'm a flight attendant for a major U.S. airline. Awesome. Very cool. Good for you guys. What kind of debt was the $100,000? There was a lot of normal.

It was two cars. We had student loans, loans some credit card and then some home repairs ah normal indeed you were normal yeah normal sucks and you had it down that's good so how long you guys been married three years november was three years ah so you got married and went on the game plan yes tell me about tell me the story how this happens go ahead Pete so we were in marriage prep and Deacon Gary giving you a shout out here he was doing our marriage prep and I was in a transition of jobs I wasn't really making as what I thought I should be and so transitioning into a new job into sales and I was just stressed I was anxious about money I was nervous and worried and and I asked him one day after our session I I was like, I'm just worried about this.

And he just said a couple of words. He said, check out Dave Ramsey. So I found your podcast and just started listening on Spotify and that's it. And then just started to keep listening. This was before we got married. So it wasn't until probably a couple of months after we got married that I found out about Dave Ramsey.

Uh-oh, he kept it a secret. I was a Dave doubter. He sprung it on you after it was too late i was a dave doubter for a long time we were not uh on the same page at first well no wonder he sprung it on you but i always told pete i don't i don't always trust but i trust you oh wow mic drop i like it so we had a lot of really um really like tough conversations we learned a lot about each other like what our um childhoods were like like surrounding money you know different ways our family handled money growing up and um you read rachel's book on that not yet no she's got a book called know yourself know your money and she goes into all the family history on it's very good okay so that's interesting

we finally i i got on the same page as pete and i think that's when we just really started steamrolling and um it was about two months after marriage we got back from our honeymoon and and really just hit the ball running we knew bought a new car and then we realized that we really got to get serious. So it was creating a budget and getting on the same page. Wow. So you did that one silly thing right after getting married and then it was like, okay, now, now we go, now we go. Exactly. So who's the spender? Is that you, Maria? Yeah, it was me. Yeah. I had to, I always felt like my sacrifice was bigger because I had to cut back on spending. But in the end, we realized that we were both really contributing. You know, we each had strengths.

And when it was hard for me, he would encourage me. And when it was, you know, something he wanted to spend had to we had to redirect each other a lot we kind of had some tough things outside of paying off debt that kind of coincided with what we were going through my mom moved in with us she lived with us for about a year and a half after like right probably within the first six months that we got married. Brand new marriage and your mother-in-law moved in with you. That's a lot. We suffered five miscarriages during this time. And yeah, I mean, anytime you're going through grief, sometimes spending money,

it would have felt really good to add something to the house or buy new furniture or whatever. But paying off debt was great, but everything else that kind of spilled out into all the different parts of our life and then um the way our relationship grew through this process is really kind of like we could have never imagined it yeah did i did i did i accidentally hear you say it's valuable to learn to process grief without and do it properly without improperly doing it yeah it kind of forced us to come together and communicate instead of go to target yeah exactly our first three years of marriage definitely were not normal by any means and it was definitely difficult it was very easy to

just say oh we don't want to do this anymore let's just go back to the way we were doing things but we had to work together it really brought us us closer. What was your, what was your why? What kept you going forward? Cause like you said, I mean, to your point, many people may have quit. Many people, many people may have said, you know, well, we'll come back to this later, but what made you continue through? Pete, you can say yours and then I'll give mine. We started to, I started to feel the peace and freedom that came every, when we're doing the baby steps and knocking off those lowest debts. And once they were gone, I started to feel the peace and freedom that came every, when we're doing the baby steps and knocking off those lowest debts. And once they were gone, I started to feel that freedom. And so it just kept getting bigger and bigger. And that's what I loved. And, and to have a household where

our future children will not understand what debt is or even know what it is. That's, that was my why. Amen. Amen. For me, it was actually more more um i i have volunteered in places and i've been blessed with people who have been able to give and you always say live like no one else and give like no one else and i want to be able to walk into our church one day or into a pregnancy resource center and say look here's a check we want to help so amen amen yeah that's beautiful yeah well those are both great wives and they both coexist. I mean, that's fabulous. Well done, you guys.

Thank you. Who was cheering you on outside the two of you? It was really just... Dick and Gary. Yes. Dick and Gary. Dick and Gary. Our families were supportive.

We didn't have many naysayers. Maybe not the biggest cheerleaders, but they're always like, oh, cool. Great. Yeah. Good for you. That sounds sounds fun but we really had to motivate each other it was it was us two and and really once we finally got on page together and maria we came together that's it just was the big snowball from there what do you tell people the key to getting out of debt is you paid off a hundred thousand dollars in the first 36 months of your marriage and endured hardship. Yes. You have to work together.

That was it. We had to know where our money was going, but we had to work together. And the first couple months or maybe even the first year when Maria didn't fully believe in the baby steps, we weren't making that much progress. But once we came together officially, there was nothing stopping it. I think setting a deadline is really helpful too Pete wanted to be debt free by 30 and we hit it right on the mark so that was big very good very cool good for you guys so what what convinced you Maria to jump on board after that that first year of struggle um so there was a moment Pete actually picked up a

side gig during this whole time. He got his real estate license and sold a couple houses and eventually tried commercial real estate. It didn't work out. It wasn't a good fit, but he had signed a contract. And in order to break that contract, he had to pay back some money and the idea of going to work and coming home and handing over this person about you know it was two thousand dollars um kind of made me sick like i was like we've been working so hard to pay off this money we paid out like we had the we had our um fund. We cash flowed the rest. And I said, I'm never having debt again in my life. I think she was able to really see we finally had margin in our budget.

All the money wasn't going to a bank or some type of debt. And then it got mad. Yeah, that's it. That did it. I like it. I like it. Anger will do it every time. That'll do it.

Hey, we got the live and give bundle for you guys to say thank you for making the trip to do your debt-free scream here in the lobby. That's the Total Money Makeover book and the Baby Steps Millionaires book, both number one bestsellers, and a membership to Financial Peace University. If you've been through it or haven't been through it, all of those are for you to use or to give away or both. So thank you. Thank you guys for being here.

Very well done. Very proud of y'all well done thanks peter and maria marietta kinesaw georgia 100 000 paid off in three years making 150 to 160 count it down let's hear a debt-free scream three two one we're dead free Yeah! That's how it's done. If you start your marriage that way, boy, do you set yourself up to win. Powerful, powerful guys.

Rock stars, heroes. Well done. This is The Ramsey Show. ДИНАМИЧНАЯ МУЗЫКА Our Scripture of the Day, Ephesians 3, 20 and 21. Now to Him who is able to do far more abundantly than all that we ask or think, according to the power at work within us, to him be the glory in the church and in Christ Jesus throughout all generations forever and ever. Amen. Dr. Mae Jemison, I don't know if I'm pronouncing that right,

the first African-American female astronaut said, never be limited by other people's limited imaginations oh that's a good one like that open phones at 888-825-5225 nick is in kansas city hey nick welcome to the ramsey show hello hey what's up um uh well i had kind of a weird question okay so uh i've been work i've been working for my company for a pretty long time i I don't want to get real specific, but it's a construction company and the owner of my company, I'm pretty high up on the chain. I'm basically running the place now, but, um, he's offered to sell the company to me and I've talked to a few different people and nobody really wants to talk to me about it.

And I don't really understand why. I'm sorry, talk to you about what? It seems like they only want, they want to talk, like I've talked to my banker and he's like, I really can't help you unless I talk to him. I want to know what he wants.

And I'm like, well, I don't really know how to facilitate my situation further because I want to know more about the process. Your banker doesn't have to talk to him. That's absolute bull crap. Yeah. Your banker's blowing you off. Yeah. So I don't know. I mean mean where do i need to go who i need to who do i need to talk to to get more information well we can talk about it a minute here um

there there may be some uh uh some small business mentors in the area you may find someone in a construction company of similar size in another city that you could call up and ask and just say hey i'm we're similar size over here this guy's talking about selling to me would you give me five minutes on the phone and talk to the owner of it and go what would you do and asks other people in the same industry what's he how much does he want for it well i would think that the company is probably worth as a whole probably around six six million dollars why do you think that uh i've been working there a pretty long time and i know how much it's worse no that no you don't you just know what it makes where did you where did you get that

valuation i would say that there's probably about two million dollars worth of work on the books um i'd say within the assets of the company i'd say there's probably four million okay that's not that's not how you value a company okay okay there's three ways you can value a company one of them is the multiplier of your gross revenues and that won't work in this situation the second way you can value a company is a multiple, a cap rate on the actual net profit after all bills are paid. The actual net profit as a multiple, okay? Three, it would either be four or five times that number, which would be a 20 or a 25% rate of return for the investor buying it. And you would not pay any more than a three or a five multiple of net profit in this case.

The third way you can value it is book value, which is what happens if you close it and you sell off the assets. But you don't add the assets to the income to create the value. Okay. You're doubling up the value then. So all the assets totaled up, the equipment, the inventory, that kind of stuff, what are the actual assets, the hard assets worth, do you think, roughly? You said $4 million, didn't you?

I'd say the hard assets, all the equipment and everything, $2 million. Okay. So that's what it's worth if you close it. He can get that just selling off the stuff. So usually book value is the bottom line cheapest price a business is worth. It's worth at least that, okay, because we can close it and do that. So it's probably really worth about four or five times the net profit not the gross not two million dollars on the books or four

million dollars on the books of work because the work doesn't make profit all of it's not 100 profit right so and you probably don't know what the hardcore bottom line profit is, do you? No, that's pretty tight. Yeah, that's on his tax return. Okay. Yeah, he's going to tell me that. Yeah, he's going to tell you that or he's not going to sell you the company. Well, at some point, he's going to have to get a little deeper in conversation. You're going to have to get that number or he's not going to buy it.

No one's going to buy this company unless they get that number. Nobody. Right. He can't sell it. Nobody. i wouldn't touch it with a 10-foot pole and if he tells me it's not all on his tax returns that means he's a liar now i really don't trust him okay pretty nice guy so i don't care if he's a nice guy or not that's like lots of nice guys lie on their taxes either so the the thing is this, then, you guys are doing gross revenue, how much construction work a year? Oh, man. You said you had $4 million on the books, right? Yeah.

So are you doing $12 million a year? At least. Yeah. All right. And so if you're on a 10% margin, you're making $1 million a year? At least. Yeah. All right. And so if you're on a 10% margin, you're making $1 million a year profit. I'm going to guess. Yeah.

Okay. And if we did four times that, the thing's worth $4 million, which if you've got assets of two, that's probably about right. Right. So if it's a million-dollar profit and we said 25% rate of return, that's four times, so it would be worth about four million you don't even you can't get close to four million dollars yourself can you no okay so here's how you here's how you're going to structure that if you find all of this out and if you get down to the bottom of it and if it were four million dollars here's how you structure it

without going to the stupid banker because apparently he's not going to be any help um no what i what i would do is tell the owner let's say we find all of that out and my example turns out to be true it to so you and i can talk through it it may not be exactly that okay but if you find out it's a million dollar profit so the thing's probably worth about four million and you agree on four million as a price if $6 million, he's overpriced. Okay? But if he wants $4 million on a $1 million profit, that's probably about right. Then you would say, all right, here's what I will do. I will give you 100% of the profits after I pay myself my old salary.

And you keep paying yourself the old salary after you become the owner, and you give him 100% of the profits until he gets his $4 million. Then if profits are down, you're not bankrupt. But if you go finance the stupid $4 million, and, oh, wait a minute, real estate slows down, oh, wait a minute, the Fed raises interest rates, oh, wait a minute, Biden drives the economy in a ditch. You're bankrupt because you've got to pay payments. They don't care if you're making a profit at the bank.

They want their money. So if you structure a deal based on profit goes to him, he's going to get all his money in four years or less because if you get more profitable after he leaves you're going to still give him all the profit after you pay your thing until till you got him paid out at four million dollars the price doesn't change just the speed at which you give him his money's changes right that structure will get you through this deal brother without you getting your throat cut but be careful so that's a great, that's great for Nick, right? Because he's not going into debt for it.

Can you explain, Dave, is there a benefit for the current business owner to take a deal structured like that, as opposed to some guy who may have just gone to the bank? Well, number one, the likelihood of someone being able to go to the bank to buy that business without substantial assets is almost zero. Okay. Nick cannot bank that. Nick is an employee with no asset base. True that.

They're not going to give him 100% financing on a construction company when he's never owned a construction company. And he has nothing to put down. That's not a bankable deal. Bank's going to look at that and go, no. If they would do it, they're stupid and they're getting ready to go down with him. That's right. But they're not going to do it. Okay.

So the only person that's going to be a buyer for this is somebody like me. If I wanted to buy a construction company, I've got the money to buy that. Right. Then I'm not giving him $4 million. Ah, because you're a cashbacker. I'm going to write a check and it's going to be $2 million. Ah, I love this conversation. That's how this works, okay?

Hey, if you've got business questions, I'm also hosting now the Entree Leadership Podcast. You can send them to entreeleadership.com slash ask and be a part of that podcast with your small business questions. That puts this hour of the Ramsey Show in the books. We'll be back with you before you know it. In the meantime, remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus. Hey, what's up, guys? It's Jade. Look, if you like what you heard in this episode and want to know

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