The Ramsey Show - App - Leasing a Car Is STUPID! (Hour 1)

Episode Date: January 1, 2020

Debt, Home Selling, Retirement, Savings Tools to get you started:  Debt Calculator: http://bit.ly/2QIoSPV Insurance Coverage Checkup: http://bit.ly/2BrqEuo Complete Guide to Budgeting: http://bit.ly/2QEyonc Interview Guide: http://bit.ly/2BuGnZE Check out other podcasts in the Ramsey Network: http://bit.ly/2JgzaQR 

🎵 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'm Dave Ramsey, your host. This is your show. Thank you for joining us. Open phones at 888-825-5225.

That's 888-825-5225. Cameron is with us in Charleston, South Carolina. Hi, Cameron. How are you? Good. So my question is, I currently own a home that I bought back in 2016, and it's got some equity in it now, and I was wondering if I should sell it so I can use the money to pay off some debts and then move closer to my work. Okay.

Are you single? Yes, sir. Okay. And what's the house worth? From who the realtors I've spoke to said I can get about $185 for it. And what do you owe on it? $125. Okay. How far from work is it? A little over an hour. Oh, wow. Why'd you do that? Well, when I bought the house, I had a job

that was 10 minutes down the road. Oh, I. Why'd you do that? Well, when I bought the house, I had a job that was 10 minutes down the road. Oh, I see. Okay. So now it doesn't work. Well, I might move just because of that. Okay. You know, I mean, I have a seven-minute commute. And in Charleston, South Carolina, an hour away is kind of crazy.

I mean, that might be true in L.A. or something, but it's not true in Charleston. I mean, you can drive from one side of the. or something, but it's not true in Charleston. I mean, you can drive from one side of the dadgum place to the other in an hour. So, yeah, I'm probably just selling it just because I want to live closer to work, for one thing. If in the middle of doing that, it gets me out of debt, too, that's just gravy on the biscuit. How much debt have you got? Not counting the house. Probably around $6,000.

Oh, no debt at all. Okay. And what do you make? Around $40,000. Okay. Well, you don't need to sell it to get out of debt, but you might want to sell it to move closer to work. And while you're at it, pay off all the debt, you know,

and have an emergency fund, and then put the rest of your down payment on a new place or rent for a little while and make sure this job works. Is the job pretty stable? Yes, sir. Okay. How old are you? 25. Okay.

All right. I mean, it's up to you. You do what you want to do, but you're spending two hours a day of your life driving. I hear that all the time. I mean, well, I mean, if you enjoy it or something that's cool you're wearing a car i get to listen to your podcast well i appreciate that but uh you're wearing a car out and and you're spending a lot of time in the with your butt in the seat behind the wheel but it's up to you i mean you do what you want to do i i personally because i'm not big

on big long commutes personally i i mean if anybody wants to do it out there, you're welcome to do it. But I just, I'm not going to let that use up the quality of my life. That's not where I'm going. So you do what you want. But if I woke up in your shoes, I was 25 years old, I was single, making 40K, I would move closer to work. That'd be my plan. Thanks for the call. Jessica is on the line in Fort Wayne, Indiana.

Hi, Jessica. How are you? Good. How are you? Better than I deserve. What's up? So my husband and I have been living in our current home for five years, and we're buying it on contract from my in-laws.

Now they would like us to get a mortgage. Good. And the issue is we've been, we did Financial Peace University like a year and a half ago and we're working on Baby Step 2. And I'm just feeling kind of like unsure if it's a good idea for us to get a mortgage on this house because I kind of feel like it might be more than what we can afford. Okay. Well, uh, what do you, what do you owe on the house? Um, we owe, so it's kind of complicated. Um, they're asking us to get a mortgage for 150,000. Why? Although, um, the house is worth like $325,000. Okay.

So they want us to get, they have the house paid off. Okay. So they want us to get $150,000 to kind of give them some cash. And then down the road when we're like hopefully doing better financially, we can try to finance the other portion of the house. No. No. Yeah. Not doing that. No. No. Yeah.

Not doing that. That's a bad deal. You need to get out from under owing them money. You don't need to owe them money anymore. So that leaves you a couple of options. One is borrow enough on this house to buy the house from them, turnkey, no side deals. Okay. Or walk, sell the house house you own the house what is your balance owed

on your contract um we owe well we signed a contract for 200 000 and we owe 150 on it okay so why is it that they think they're due more than 150? Because 150 ought to pay them off. Yeah, it's because the house, like when we bought or when we came into the contract five years ago, they had the house in the market for $325,000. I don't care. And we weren't able to have a house that cost that much. So they said, we'll just kind of co-own it. Like, you'll pay us $200,000, and then down the road, like, if you sell the house, you're

going to owe us $125,000 out of whatever you get from the proceeds of the house. Okay. This is a bad deal. This is a bad deal okay and um i was wondering yeah i just thought like a check like yeah you went you went into a bad deal to start with and i'm not going to extend it anymore this idea that that they're gonna so what you need from them is a price that you buy the house for today, because you now have a contract that says $150,000 plus you owe them $125,000 later. Yeah. Okay, which equates to $275,000.

Okay, now if that's the price and you want to buy a $325,000 house for $275,000 and you want to live there, that's fine. Then the question becomes, can you afford a $275,000 mortgage? If you can't, it's time to sell this house and leave. Okay. Yeah, we can't. I know we can't. What's your household income?

Take home is like $4,600. Yeah, you don't need this house. You can't pay this bill. So, yeah, you just are in a house you can't afford. That's what it amounts to. And they're trying to do like a shared appreciation mortgage or something where you either get their money later and all that, and then they want their money, and then they don't,

and then they want their money, and then, no, this is going to go on. It's bad. Because it's ambivalent. It's a moving target. See, they have the ability emotionally to just call your loan, which is what they've done. We want you to go get a $150,000 mortgage, but still owe us later. No. You know?

So I think it's time to admit that this was a bad deal and sell it and move to another property that's um that that's the deal you know and um i i think that's what i would do so up to you guys but i i i think these people need their money and i think you're in a house you can't afford and the writing's on the wall and it's just time to admit it so go get your little rental something So go get you a little rental, something inexpensive, and get yourself the rest of the way out of debt and then save up a good down payment and buy you a house without your in-laws. Please, without your in-laws.

This is the Dave Ramsey Show. For over 20 years, I've recommended Zander Insurance and their term life programs. I'm still amazed at how many families have no life insurance or not enough and would be financially devastated if a spouse or parent died. It's inexcusable since the cost of term life is just plain cheap. And Zander really has figured out a way to make it simple and straightforward. They only sell the plans I recommend and their system is built to your needs. You pick your path. If you want to work online, you can compare all the companies and handle everything over the web, even signing up and getting your policy electronically.

If you have questions or you need that personal touch, well, they're there to help. It's all about serving you like no one else so you get the protection you need there really is no excuse not to get this done call 800-356-4282 or go to zander.com you pick the path to getting your family protected happy new year america jacob is with us in los Angeles. Welcome to the Dave Ramsey Show, Jacob. Hey, Dave. How are you? Better than I deserve, man. What's up?

Dave, I have a question about a leased car and what I should do. Okay. At the end of this month, I'll be making the last payment, and I'm looking at some of the options. When I first got the car, I was thinking about just buying it, and so I didn't get very many miles a year. Needless to say, I'm grossly over on miles right now, about 18,000. Whoa! At 25 cents a mile, you know, that's going to be $4,000 or $5,000 out of pocket. We were thinking about buying it, so we have about $26,000 in cash right now. The car contract

says the buyout price is about $24,000. It's after tax and fees, about $25,000. The Kelly Blue Book for private sale is somewhere between $19,000 and $20,000. So I feel like I'm going to be overpaying for a car. Now, I really like the car.

My wife loves the car too, but I don't know if I necessarily want to. I feel like I'm going to be making a bad decision. If I do buy the car, I'm thinking about selling it, but I haven't got very many bites on, like, AutoTrader and some of these marketplaces. So, I don't know. I feel like either way, I'm going to be taking a loss. Yeah. Well, I mean, the value plus $4,500 is your threshold, right? $4,500 is your mileage penalty. And so if the value is 19, then 24 is a deal by 500 bucks.

If the value is 20, then you're in the hole 500 bucks. You're not getting a deal on this car at 24. Yeah. You're not overpaying $5,000 for it, though. I mean, you might be overpay hole $500. You're not getting a deal on this car at $24,000. Yeah. You're not overpaying $5,000 for it, though. I mean, you might be overpaying $500 for it. Okay. Well, you're overpaying for it, but you're going to give them $4,500 if you turn it in. Correct.

So that's on the table, right? So I guess what I would do is contact the dealership. Who holds the lease? It's GM Financial. Yeah. Contact them and see if there's sometimes on these things. Now, not always, but sometimes you can make them an offer at, you know, Blue Book, and they'll take that because they're going to take the car and do what with it?

Sell it. Auction. They're going to run it down the auction line, and it's not going to bring 19 at the auction line. And so let's say it brings, you know, it's wholesale at that point. Trade-in value is what it's going to bring if they wholesale it. And they run their lease cars down the auction lines, what they do with them usually. So, you know, if they're going to do that, then they're going to get the equivalent of a trade-in value for this, which might be 17.

And 17 plus your $4,500 is less than the $24,000 they're trying to get out of you. So if you kind of make that case to them, look up trade-in value and call them and go, you know, I would be willing to pay you more than trade-in value because that's all you're going to get for it when I turn it into you because I've got to give you $4,500 anyway. As a matter of fact, I'll probably give you $4,500 on top of trade-in value, which is less than $24,000. What would you take for it? And see if you can negotiate the price to that, and then if you buy that car, are you

going to keep that car and drive it? That was the thought, yeah. Okay. Then you've got the cash to do it, then that's what I would do. I'd try to get the price down under $24,000. Okay, yeah. I called them, and it didn't look like they wanted to play ball, and then I called the dealership to see if they would buy and sell for me less

to try to keep a customer kind of thing. It doesn't seem like any of them really want to do anything, but I don't know. I have until the end of the month, I guess, or end of next month to figure out if someone's going to want to deal. Yeah, okay, well, you've already done what I told you to do then. Okay, you're ahead of me. Yeah. Yeah, I mean, just take another run or two at it but here's the thing if you turn the car in and you bought a car

identical to it you're going to pay twenty thousand dollars for that car yes and you will have given them four thousand five hundred dollars that's 24.5 so if you like this car, I'd pay them $24,000 for it, worst case. Yeah. And keep it. Because you've got the cash to do that. I don't want to. I don't want them to write it down.

Every dime they write it down under $24,000 makes this much more palatable. If the buyout on the thing was $27,000, I'd hand them the keys if they were hardcore. Because that's a three thousand dollar swing then but you're right at a break even which means they calculate this lease perfectly that's what it means ouch so they don't usually do that by the way they're pretty good at it they don't usually lose money but they're this one there yeah so anyway just keep messing with them see if you can get them to cut it down. You know, if you'll knock it off $1,000, I'll take it.

Somebody help me here. I'm just trying to save you the trouble of taking the car and running it, you know. Of course, for them, it's just a job for you at your car. So who knows? Good luck with that. But that's worst case. In your situation, I'm buying a car for $24,000. Worst case.

I hate it, but I would do that hey thanks for the call open phones at 888-825-5225 see the car fleece we call it a fleece because you're being fleeced is the most expensive way to operate an automobile every possible way that general motors on that deal is going to lose money, they have covered. If the mileage goes up, they make you eat it. If there's wear and tear on the car that's excessive, they make you eat it. If you want to buy the car, you're going to pay freaking retail for this car,

more than retail for this car. And it's as is condition. And that's locked in on the contract contract it's a closed-in lease you pay the lease payments up to the last payment and then you buy the car or you write a check and cover the mileage hole that you're in when you put all of those factors in there and you figure what the msrp on the car is you can calculate out and figure out that their rate of return on the money they have used while they let you rent their car their rate of return on average on a car fleece is about 14.2 percent it's like financing a car at 14 this is what's known as freaking stupid okay not that guy but just everybody out there.

Just for those of you, you know, I think leasing a car is stupid. It's the most expensive way to operate an automobile. And that guy's numbers were a classic case study of it right there. Again, I'm not picking on him. I'm not yelling at him. I'm yelling at those of you that still think this is smart because it's not smart. You're renting a car and any possibility of any loss by the manufacturer that's carrying the car fleece paper has been covered. They got it dialed in.

They did 10,000 just like you last year, 25,000 just like you last year, and they've got this dialed in. They know what10,000 just like you last year, $25,000 just like you last year, and they've got this dialed in. They know what this stinking car is going to be worth. They know how much it's going to go down in value. You are covering all the loss of value in your fleece payments. That's how this works. They're not in this business to lose money. They're not doing anything illegal.

They're not scamming you. It's just the most expensive way to operate a car the least expensive way to operate a car is write a check and buy it and if you don't have a net worth of at least a million dollars don't be buying a new car let someone else take the butt kicking on the depreciation. When you drive a car off the car lot, that sound when you go over the curb, blump, blump, was $5,000. Blump, blump, that's what it sounds like. That's what $5,000 sounds like. Blump, blump, when your tires go over the curb.

If you don't believe me, turn around a block later and take it back over there and see if they'll take it back. That's where you'll find out what you just lost. A new car loses 60 to 70% of its value in the next four years. That's turning $30,000 into $10,000 on a regular basis and scratching your head and wondering why you're broke. If I tried to sell you a mutual fund that you put $30,000 in that turned into $10,000 every three years, and that was its track record over the last 30 years, you would call me the biggest scam artist, snake oil salesman on the planet.

And yet you'd line up to buy these dadgum brand new cars and scratch your head and wonder why your kid's college fund isn't funded. Now, I'm not against a brand new car. I bought one at Christmas. But I got the dadgum money. That's the difference. And I'm not merely a millionaire anymore, even. It's a multi-multi thing now.

Because this stuff works. Oh, and by the way, I sold a whole bunch of books because I'm smart. So there you go. I don't like you, Dave Ramsey. I don't really care. I'm not running a poll here. I'm trying to help you people win. That's why we got Chris Hogan out there

selling you everyday millionaire books right now so you can be an everyday millionaire. And one of the things they don't do is buy new cars before they're millionaires. This is the Dave Ramsey Show. I love talking about companies that know how to do business right. You've heard of Grip6 belts, right? Well, if you haven't, it's the only belt you can get online with no holes, no flap, and no bulk. I'm talking weightless.

And the buckles come in really cool designs and are interchangeable. I personally own a number of these belts, and they're so comfortable, you forget you're wearing it. Plus, these guys have a great story. BJ Minson started Grip6 on Kickstarter from his garage in 2014 and now sells hundreds of thousands of these American-made belts to customers all over the world. As a mechanical engineer and a minimalist, BJ took his dislike for heavy, bulky leather belts that never fit right and created the perfect belt a high quality minimalist belt that gives the strength and support of a belt without even knowing you're

wearing one i'm really proud of these guys check out this month's special offers for my listeners at grip6.com Thank you. Shelley is in Orange County, California. Hi, Shelley. Welcome to the Dave Ramsey Show. I see on my screen you're debt-free. Congratulations. Hi, Dave. Thank you so much.

Sure. How much have you paid off? Oh, gosh. I paid off $55,641.62. Love it. How long did this take? 30 months. Good for you.

Well done. And your range of income during that time? It was right about $100. Okay. All right. Good for you. What do you do for a living? I work in the escrow industry okay so close the whole you know closing houses yeah yes i don't do that so much

anymore i'm more on the corporate um admin side now but yes i have closed my fair share of houses gotcha cool what kind of debt was the $56,000? Well, it was kind of a mix of a bunch of things. Uh-oh, you cut out. You cut out. You cut out. All I heard was it was a mix of a bunch of things, and then you cut out. What did you say?

Oh, I'm sorry. It was a student plus loan, or I'm sorry, parent plus loans that were for my daughter's college, and those were about $22,000. I had a care credit card. I call it, Dave, my dead dog card. I don't think you've heard that one before. I had a dog that had cancer, and I put a lot of money on this card to try to keep him around as long as I could. And so here I am, you know, still paying on this card after he was long gone. So how much was that?

That was about $4,500 when I started the program. So what happened 30 months ago? It was probably closer to about $6,000. What happened 30 months ago? You know, it was mostly, it was just at church. We saw the FPU come up, and I thought, oh, that's, you know, that sounds kind of cool. But I don't really want to spend $100 on, I don't think I need it. I don't have very much, you know, I don't really have any debt. And something just, probably Jesus just put on my heart that, no, I don't really have any debt and something just, um, probably Jesus just put on my heart that now I needed to do this class. So even in the first, I think it's the first class

of the second class where you have to write down all your, your debt. I was completely blown away at the fact that I had, you know, $55,000 in debt because I, you know, student loans and a car lease. I mean, we all have that right for, you know, so I was really, that really kind of blew me away. And I was like, okay, it's, it's time to, to get on this and get rid of this so that I can get, you know, I want to be able to retire and I want to be able to, you know, retire with dignity and, and with money and, you know, be able to have a nice life once I'm done working. I hear you. How old are you? 47.

Okay. And you're single? I am. Good. Single mom. Very cool. Well, congratulations. You did it.

Thanks, Dave. We've all got car loans, but not you. It's so awesome. Yeah, we've all got car loans, but not you. No, not anymore. Nope, not anymore. Thanks to you. Never, not anymore. Nope, not anymore. Thanks to you. Never, never again. And one thing I wanted to share, Dave, is, you know, you always talk about changing your family tree.

And I really feel like I did that with my daughter. She's 22 now. But she's, you know, for a long time there, I was making really good money. And I always lived, like, at or beyond my means. I never lived below my means. So when my income would go up, we would spend a lot more and do things. And when my income would go down and I lost a job. And so she kind of watched me go through a bankruptcy. And she went from being pretty much spoiled to, you know,

we really had to cut back on things. And so she's watched me go through this program. And Dave, she just paid cash for her very first car that she paid for 6,500 bucks. She paid cash, Dave. I mean, I never pay cash for a car. She's cash flowing her master's and her credential program. Um, she's listening right now. So hi Kai. Um, so I just, I couldn't be prouder to you know to to have her witness your program and and to really to to change that so i i'm i'm really happiest about that absolutely amazing very well done well we're proud of you over here girl you did it we got a copy of chris hogan's

book for you retire we got a copy of chris Hogan's book for you on everyday millionaires. That's the next chapter in your story. Shelly in Orange County, $56,000 paid off in 30 months, making $100 a year. Count it down. Let's hear a debt-free scream. All right. Thank you, Jesus. Three, two, one.

I'm debt free! Well done, well done, well done. Wow, that was an amazing job. Well done. $56,000 paid off in 30 months as a single mom. But her college-age daughter does it, man. She does it. That's amazing.

She saves up money. The family tree has changed. She pays cash for her car. She's paying for her education as she goes. This is awesome. Very, very well done, Shelly. Congratulations. Very proud of you.

Amy is with us in Los Angeles. Hi, Amy. How are you? Hi, I'm well. How are you? Better than I deserve. What's up? All right.

I recently went through a divorce, and I am in the process of rolling over the 401k to a traditional IRA. I called the company, and they asked me, they surprised me and told me that about half of that is coded as after-tax contributions, in which case I have the option to either roll that portion over to a Roth IRA or I can pull it with no taxes and no penalties. I double-checked that with a tax professional, and they confirmed that I can pull that portion without taxes and penalties. So given that, I'm wondering if this still counts as cashing out retirement only to avoid bankruptcy or foreclosure, or if because there's no taxes and penalties, should I treat this like a non-retirement asset and use it to pay off a lot of my debt?

B, it's a non-retirement asset, not pay off your debt. You're coming through a divorce, everything's changing. How long were you married? 13 years. And what is your income? Well, I am a homeschool mom, but I'm in the reserves, and I'm also a disabled vet. So I have a lot of different sources. So putting it all together, it's actually pretty good, about $95,000. I've upped my time that I serve. And that includes child support? That does.

That includes my child support, self-support, everything. Okay. How much debt are you getting out of this deal? I got. So I actually divorced this final almost exactly one year ago. Okay. I came out with almost $57,000, and in the last year I paid off almost $24,000. And so I've got another $33,000 and in the last year I've paid off almost 24,000. And so I've got another 33,000

to go. And how much can you... How much is that you can pull out as that we're going to treat like a non-retirement asset? 22,500. Just about enough to finish it up. 22,500.

I'm sorry, I didn't hear your question. That's okay. I'm just thinking. Well, here's the tradeoff, okay? There's nothing wrong with cashing that out and using it to pay off this debt, and I probably would, okay? The possible tradeoff is that you're only about 14 months from being debt-free. Right.

At your current pace. I mean, you paid off 24. Last year, you only have 33, right? Mm-hmm. Right. And so I'm kind of tempted to let this money lay there and make you a millionaire even faster since it's already in a retirement program. Because once we pull it out of this retirement program, you can't put it back in there other than normal contributions, right?

Right. It's an opportunity cost of about four years' worth of contributions. Yeah, exactly. You've got it figured out, and you even know the lingo. So it's kind of on the bubble. Yeah, I'm probably going to pull it and pay the debt. And then I'm just going to use the increased cash flow to load up, get my emergency fund done, make sure you're stabilized after this divorce. And, yeah, I'm going to go ahead and be debt-free.

But there's a real good argument to go both ways here. This is The Dave Ramsey Show. Connor is in Fresno, California. Hey, Connor, welcome to the Dave Ramsey Show. Thank you, Dave. Hey, how can I help? Yes, I just had a quick question. New listener here, so I'm just kind of new to this. I am currently 20 years old.

I have about $26,000 in a savings account. I plan to graduate Fresno State University in two years and have that completely paid for because of scholarships and money saved. Do you think it's best to start saving up for a house now with that $26,000, or should I invest it in like a Roth IRA, or what do you recommend that I do? Way to go. You're way ahead, man. Congratulations. Thank you, sir. And no student loans, huh?

No. I got about $10,000 in scholarship money. And since I've been young, instead of birthday gifts and Christmas gifts, my parents contributed to my college savings account. Okay. And that's the $26,000? No. I have a separate savings account from when I've worked. Oh.

And saved up about $26,000. How much is in your college savings? About $19,000. Okay, very good. And the three things combined, the scholarships and the two different savings accounts, gets you through school? Yes, sir. Plus or minus?

Because I went to community college first. Good for you. What are you studying? Apparently not the best degree, but crimin criminology because i want to work for the sheriff's department here well that would be the correct thing to study if you want to work for the sheriff's department right yes but it's not a really applicable degree because they don't really look at what degree you have it's basically if you have a bachelor's degree it helps but that's what i'm interested in so that's what i. Well, a lot of law enforcement does look at a criminology degree,

so you're on the right path if that's the direction you want to go, plus or minus that particular sheriff's department. Okay, great job, man. Well done. Okay, here's the thing. Connor is the best investment mathematically that Connor can make. Let me explain what I mean. Okay? The rates of return on a mutual fund will be 10% or 12%.

The rate of return on you graduating from school 100% debt-free and finishing a degree that is applicable in the marketplace, which you are doing, is much higher. And so, by far, the most important thing in this discussion, if there's three things on the table, graduating from college, debt-free, in a good field of study, number one. Number two, buying a house. Number three, a Roth IRA. House and Roth IRA are nowhere near as good an investment as you are.

Okay? So I'm going to tell you, if you're my kid, I would say just keep piling up cash. And that's your insurance policy that you get through school on time and 100% debt free. Now, when you graduate and get the job, now we'll talk about what we're going to do with it. Because you may have still a pile of money laying there. You should have still a pile of money laying there based on what you're telling me. But just in case, I'll take a $26,000 insurance policy that you're going to graduate debt-free and just let it sit there in savings. Boring is what I'm saying, because I want to make sure you invest in you first and foremost till you get out. Now, when you graduate in two years, you get a degree, you get a job. now we start working the baby steps you set some of

your money aside for your emergency fund and at that point if you want to buy a home anything above your emergency fund would be your down payment and you can start your roth iras 401ks 403bs whatever is available to you for retirement at that time and if you do that beginning at you said you're 20 years old if you do that beginning at, you said you're 20 years old, if you do that beginning at 22, you're going to be very wealthy. Yes, sir. Because you're a guy who knows how to work. You're a guy who knows how to not spend everything he makes and save money.

And that's the kind of people who become wealthy. It really is. And so, you know, you learn about that and you just keep pushing that forward. So well done, man. Well done. Gabrielle is with us in Sacramento, California. Hi, Gabrielle. How are you?

Hi. I'm doing wonderful. Thank you so much for talking to me. I'm really excited. My pleasure. How can I help? Yes. So I just had a question about making a budget on kind of a fluid income.

So my husband works for a church. We also own two small businesses, and I am a server as well. But we get paid kind of as we go. Sure. So as we do a job or as I serve, that's how we make our income. And so I was just wondering, what is your advice for that kind of a lifestyle, you know, for that kind of an income? So we have our plans for the month, like, set out. But I'm just finding it a little bit difficult to figure out, like, how do we make all of our...

Here's what you do. Jump on EveryDollar and get the EveryDollar app. Have you done that yet? Okay. No, I haven't done that yet. That's the world's best budgeting app, and it's completely free from us. Okay. EveryDollar. Put it on your phone.

Put it on your desktop. And all it does is... The purpose of a budget is you want to spend every dollar of your income on paper, on purpose, before the month begins. Your challenge is we don't know what the income is going to be exactly. Right. And so what I want you to do is I want you to run your budget at the first of the month based on the lower estimate of what you really think this month is going to be.

If you only look out from January 1 to the end of January, you can be pretty accurate at the beginning of the month. But if you adjust it two or three times through the month, you'll be perfectly accurate. But if you do your budget based on low, and then as you make more than you thought it was going to be. So what would be a typical month? What do you think you're going to make this month, total income? Yes, so this month we're projected to make $4,381. Okay, perfect.

What would you think a typical month is? That's probably typical. Okay, so what if we did a $4,000 budget? Okay. And then as the money comes in and you realize you're going to go over $4,000, then you adjust your budget okay but you just adjust it as you go along with every dollar you can do it that way another way to do it that i used to do before we had the app was i just make a list i do a regular

budget on four thousand dollars and that's give every dollar a name before the month begins and then i would make a list of things i want to do if I get more than $4,000. Okay, great. And put that list in order of priority. What would I do if I got $4,001? What would that $1 go towards? If I got $4,600, how many different things could I cover? And you list those out, and then you say,

what's the number one thing I want to do if I get above four? And you put that as number one. What's the number two thing I want to do if I get number one done? Put a two, and so on. And so you've got a prioritized spending plan for the money that comes in above 4K. You can do it that way if you want, and then actually enter that into your every dollar budget as you go through the month and begin to really figure out where you are. And that's a way to do it.

That'll work. So, hey, good question. You're on it, kiddo. You got this. Woo! It is the first of the year. You guys are doing this stuff, man. You're doing it.

Hey, this is your year. This is your year. This is your year. The people that decide to take control of areas of their life, and they decide way deep down in their decider, not a drive-by, not a passing fancy, but way down in your decider, you decide. Way down there where nobody can change your mind, you decide. Way down there where no amount of adversity is going to keep you from winning, that's where you decide. Way down in your decider, you decide.

When you decide to do that, you can get out of debt. You can get on a budget. You can get your baby step forward going into your 401K and be on a track to be an everyday millionaire. But there's no skipping any steps you lay the plan out you work the plan and you're no different you're not the exception of the rule you do not get to break the rules a couple getting out of debt a while ago were divers i've been a scuba diver since i had hair. 1984. Some of you weren't even thought of yet.

It was the first time I dove. And she said, you work the plan, you dive the plan. You lay the plan out. If you don't dive the plan, when you're diving, you take a dive plan because every 33 feet is an atmosphere. And you start busting through those atmospheres, and you don't do your safety stops. This is how people die underwater.

It's just stupid land. And so you don't get don't get i'm not the exception 33 feet's my atmosphere it's your atmosphere 66 is another one there's no exceptions your body's going to work the same way and your body's going to explode if you don't do it right this is really pretty simple and so you don't you're not the exception. You work the plan. You don't get to change it because it's you. You're not that special. You work the plan.

This is The Dave Ramsey Show. Hey, guys, it's Blake Thompson, senior executive producer for The Dave Ramsey Show. This hour's over, but you can find more great content on our YouTube channel. Catch the most watched Dave Rants, debt-free screams, and the very popular Everyday Millionaire segment. Go to The Dave Ramsey Show YouTube channel and click subscribe.