The Ramsey Show - App - My Husband Doesn’t Qualify for Life Insurance (Hour 2)

Episode Date: August 15, 2022

Dave Ramsey & George Kamel discuss: What to do when you can't qualify for life insurance, Saving money in a money market, The pros and cons of self-employment. 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, it's the 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. This is the Ramsey Show. We help people build wealth, do work that they love, and create actual amazing relationships. George Campbell, Ramsey Personality, is my co-host today as we answer your questions about your life and your money. Open phones at 888-825-5225. Jessica is starting off this hour in Oklahoma City. Hi, Jessica. How are you? Hey, I'm doing okay. How about you? Thank you so much for taking my call. Sure. What's up? So I'm currently 31. My husband

is 44 and has recently been diagnosed with heart failure. And he has lost his job. He has been approved for Social Security, but we do not have any term life for him. And I have tried all throughout. No one says he's approvable for term life. And I know that you guys are against whole life, but I'm just kind of scared and need to know. If he's not approvable for term life, he's not approvable for whole life. So it's just I don't have any options except to just kind of... Whole life doesn't waive medical just because they're a ripoff.

Right. That doesn't work that way. Wow. So what type of heart failure? How old is he? He's 44. He has 10% heart function. Ooh.

So he's in line for what, a transplant maybe? He's right. Is he in line for a transplant? The cardiologists are thinking that he'll be on the list within the year. Yeah. Yes. My goodness. I'm so sorry.

You guys have got to be scared out of your minds. Yeah, with our two-year-old, yeah, we're very scared. Oh, baby girl. How is his health-wise as far as his ability to work? He's not. I mean, he can't do a lot of household chores. Yeah, a lot of household chores get him out of breath easily. I mean, it's just kind of been taking those guys to work.

Yeah, they do me too, but it's for a different reason. Yeah, I know. Oh know oh my gosh i'm so sorry kiddo uh so uh let me think here you got a two-year-old yes and what do you make i have i make uh 44 000 a year and he's applied for ssi when he He applied for SSI in April, and it was approved for in July, and he receives it this month for, I think, like $1,200 per month. Does he have any student loan debt? He does not. All the debt is on me. Okay. And how much debt do you have?

$71,000. Okay. And some of it's on student loans? $53,000 of it is, yes. Okay. And some of it's on student loans? $53,000 of it is, yes. Okay. What's the rest? The rest is medical bills and mostly just medical bills on my end, yeah. All right. Okay, no baby steps.

You're in survival mode right now financially speaking okay okay i want to pay minimum payments on everything and i want to pile up cash as high as i can pile it for a while now that may be a year but for right now you're in the middle of a crisis the tornado has hit or is coming at you or whatever we want to call it. The hurricane is offshore and they're saying it's coming to your town. Whatever metaphor we want to use here, okay? So I'm going to batten up the hatches, we're going to board up the windows, and we're going to just pile up cash. Because if you had, even if you had the $71,000 in debt, if you had $50,000 in cash in the bank right now, you'd feel different, wouldn't you?

Exactly, yeah. And you're not going to have $50,000 anytime soon, but I'm just saying that's the point of that suggestion is to get you guys some peace until we get to some resolution on his health. And the resolution is going to be a transplant, probably. Probably, yeah. I'm not medical, but I mean, 10 function it's kind of a common sense thing at that point so um i mean i'm just that that's the hope that's the good news wouldn't it be yeah it would be yeah and and so uh do you guys have any money right now in savings

no or 500 okay okay all right the only kind of insurance that he is eligible for to go back to your original question now that we know the source of it is what's called um no is where there's no medical requirement no medical exam okay this type of insurance is anywhere from five to 20 times more expensive. Do you have a mortgage? No. You're renting? Renting, correct. Okay.

All right. If you had a mortgage, going and getting a mortgage insurance policy is a non-medical. It's five, six times more expensive than regular term, but you could call your mortgage company today and that would pay off your mortgage. So that's not an option for you, but for other people listening facing the same thing let's bring that up okay the other types of automatic issue guaranteed issue policies are non-medical are usually low amounts and per thousand they're expensive but it would be like call your bank and see if they have a ten thousand dollar policy that's an auto issue okay and then find you know find five or six of those things and have them around and it's not enough and it's not proper financial planning but it's what's available to you today giving

given these limitations and you don't have a lot of money to spend on the insurance policy even if you could get one but uh but you've been you've been told correctly he's not insurable i don't have a lot of money to spend on the insurance policy, even if you could get one. But you've been told correctly he's not insurable. I don't think he's going to get a life insurance policy because life insurance policies are issued based on the statistical evidence of the situation, and they're not going to in this situation. It's very difficult, for instance, if you have a bad case of diabetes to get life insurance. If you just came off a chemo, you know, it's hard to get life insurance. Or if you're in chemo, it's impossible to get life insurance,

that kind of stuff. So that's the type of thing you're facing because they're just looking, they're just running statistical averages is their whole game. So I think you can get a few of these guaranteed issue policies. See if you have any kind of thing through your work that has a group plan that you can add a guaranteed issue on that. A lot of those are you can buy spouse, and if you can buy it on your spouse through your work

and you can get it might be 25 000 bucks it might be 50 000 bucks it's not going to be 500 right okay but again you can pick that up and so the word guaranteed issue or no medical is what you're looking for and that's code for expensive per thousand but generally a small number of thousands so it's not total so the real dollars are not a lot but the coverage isn't a lot either you follow me yes i do that's the type of thing you can kind of piece that together in a patchwork quilt and get you some coverage if you work really hard at this you might pull together a hundred thousand dollars worth or something which is still not enough if you got a two-year-old right but it's more than you got today and in the meantime i just want you guys to be in cash preservation mode no uh

no frivolous spending you've not been doing that you don't have the money to do that but no frivolous spending and i'm going to put you guys into financial peace university where you're learning to work together and handle money together because that's going to be critical with all the things you have facing you in the next three years so hang on uh we'll pick up austin will get you signed up for that as our gift and let us know how you're doing kiddo we're scared with you we We understand. This is The Ramsey Show. thanks for joining us america if you're listening to this show there's a good chance you finally had enough of where you are right now in life enough mediocre relationships enough being stuck in a meaningless nine to five job enough struggling to pay for gas well that's everybody enough paying for groceries the tough truth is there's nothing going to change until you decide to change it

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We'll get around to raising our prices one of these days. Open phones at 888-825-5225. Christina is in New York City. Hi, Christina. Welcome to the Ramsey Show. Hi. Thank you for taking my call. Sure, what's up? So my question is, I own property. I'm contributing to my retirement, and I have about $150,000 saved in like a growth money market account.

So I'm just not really sure, Like, should I just keep that money in that account and just keep, you know, putting into it? Should I invest it in some way? I just want to make sure like I'm doing like the responsible thing. How soon are you wanting to use that money? Maximizing. How soon are you wanting to use that money? Is this a one to two years? Is this five years or more? more say again how soon will you need the money uh well i i don't i don't like need it like for anything i'm just i'm just saving okay you just wanted to grow are you out of debt 100 yes no mortgage no i mean i don't want to say i'm out of debt i mean i own my house so no mortgages no I have a mortgage okay how much

is your mortgage um like 3,500 a month no baby the balance oh well I just sold my condo and just bought a house with your fiancé? Yes. And when is the marriage taking place? Next year. Okay. All right. You're in a very precarious and dangerous situation.

If you're not going to get married soon, you guys need to get some written documentation immediately on this house. Okay? If something goes sideways horrible in your all's lives, this house is going to be a major problem if it happens before marriage. Okay? Can you tell you're talking to a guy who's seen cancer before and I know what cancer looks like? Yeah. Okay. Can you tell you're talking to a guy who's seen cancer before, and I know what cancer looks like? Yeah.

Okay. So you didn't even think of all these bad things that could happen, but for 30 years I've been doing this with people that have had all the bad things happen. Okay? Mm-hmm. So something bad happens in the relationship. You're suddenly a partner with your former fiancé in a house. That needs some written partnership documentation and partnership documentation deals with the d's death disability drug use default divorce which can't happen here

but it could be called uh i saw him on facebook with another girl or something like i don't know i don't think it's gonna happen to you i doubt it's gonna happen to you but you need all this written down kiddo i don't want you being one of our customers for the wrong reasons okay because you just scared me to death when you said that now having said all of that does your fiance have any money um yeah he does cash uh in the bank yeah how much um probably 10 okay so you're the rich one okay you're the saver he's the spender okay and what does he make a year uh 130 000 great cool and what do you make a year the same good excellent so you make a year? The same. Good. Excellent. So you got a $260,000 combined income when you do get it combined by marriage.

Let's see here. Does he have debt other than this house? No. None. Not a student loan, not a car payment not nothing uh well he does have a car payment i think but i mean i think it's going to be paid what do you think debt is it's going to be paid off in a year okay i ask you if you have any debt no do you have a mortgage yes does your other family have any debt no does he have a car payment yes i have a car payment oh you have a mortgage? Yes. Does your other family have any debt? No. Does he have a car payment? Yes. I have a car payment.

Oh, you have a car payment. Goodness gracious. Now we're getting to something. Is there any other non-debt that you have that's debt? No, that's it. Just the mortgage and the car payment. The two car payments. No, it's something like that. Okay.

What's the car loan balance? I mean, I just signed a lease. Okay. I would call the lease company and ask what the early buyout is. Lease is basically financing a car. And I would write a check today. You're not going to do any of this, but I'm going to tell you what you should do. Okay.

And I would pay off your car today. He should start working to get his paid off as soon as he possibly can. You said he was on plan to do it inside of a year. Okay. That's number two. Number one, suggestions pay yourself. Number two, suggestions he needs to pay his off. Don't pay off his car until you're married.

The faster you guys can actually get married, the faster you're going to solve all the financial and legal mumbo jumbo that you're getting into. Because it's very difficult for you to work together and be protected against bad situations until you're married so the faster you're married i know it's not romantic and it wasn't your plan but the faster you're married the more you solve the issues under new york law with the house ownership um and with the uh you know because you could reach over today and i would suggest this and george would suggest this and throw the 150 at the house and start reducing the house because that's our next step is get your house paid off once your cars are

paid off but i don't want you paying off a house that you're in joint ownership with a broke person on okay and right now you're a partner with a broke person now that's a financial analysis it's not saying your your fiancee is a deadbeat or something like that but he has 10 grand you have 150 grand you both make 130 okay you know if so let me tell you what happened one time this is not going to happen to you but this is why i'm freaking out so you'll understand I'm not just a weirdo, okay? I had a lady in the exact same situation you're in. The fiancé gets killed in a car wreck. Now she owns the house with his parents. Yeah, that was what I was told actually happened.

Yeah, that's exactly what does happen, unless there's a will. So there needs to be a will in place today with the partnership agreement so that you get the entire freaking house if something happens he gets the entire freaking house or something happens okay and that's what that's why i'm freaking out here i don't think that's going to happen what are the percentage chances of that nothing probably but this is what you've opened yourself up to by engaging in what felt like the right thing to do because your relationship is strong okay and i'm not saying he's a bad guy or you're a bad girl i'm not saying any of that i'm just saying you're just open to that and it scares me for you

so i want you to protect yourself and the sooner you get married the less soon you have to do all that so if you run down and get married this weekend and then have the celebration in a year then legally you're fine you don't worry about it anymore if you did that then get married this weekend and then have the celebration in a year, then legally you're fine. You don't have to worry about it anymore. If you did that, then I'm going to pay off both cars immediately out of your $150,000 and throw the rest at the house, wouldn't you? Absolutely. But we've got to do some things in order here. And there's a lot of mortgage here and the car payments, and it makes me sick to my stomach.

Yeah, but you've got $260,000 income assuming you're married. That's cool. I mean, you're making a freaking quarter of a million dollars. Even in New York City, that's a lot of money. So, hey, hang on. We're going to put you guys through Financial Peace University as our wedding gift because I think the wedding is pending. Dave just sped up the process. You think I might have dialed it up?

I doubt it. I doubt I had any impact at all, but it's fun to try. This is The Ramsey personality is my co-host today in the lobby of Ramsey Solutions on the debt-free stage. Ray and Chris are with us. Hey guys, how are you? Hey, good. How are you doing? Better than I deserve, sir. Welcome. It's good to have you guys. Where do you live? Minneapolis, Minnesota. Awesome. Nice. Very cool. Good to have you visit. Thanks for being with us. It's great to be here. And all the way down into the deep south at Nashville to do a debt-free scream. How much did you pay off?

$143,616.69. I love it. And how long did that take? About 18 months. We were scheduled to do it in 24, and we did it in 18. You jacked it up. All right. And what was your range of income during that 18 months? We were about $170,000 to about $242,000.

Cool. What do you all do for a living? I'm a regional sales manager in the automation industry. And I'm a contract specialist for our electrical subcontractor. Cool. Cool. So how did your income jump $70,000 in 18 months? I'm a salesperson. I had a reason to make a sale. Yeah. We had really good income and then it went down a little bit, and then back up this year. Way to go. Killing it. Good for you guys.

So what kind of debt was the $144,000? It was a little bit of everything. I don't think there's a debt we didn't like. So we had lines of credit. We had bathtubs. We had HVAC. You had debt on your bathtub? Oh, yeah.

A soaker tub. Yep, yep. A soaker tub. Well, soaker tub yeah well that makes a difference very important yeah was that for you i'm guessing it was for me okay yeah we just we just love debt so that was yeah whatever we want we just go get it and we'll pay for it later cars you're full-on america yep previously we paid off student loans for our kids previously. Yeah. So what happened? What was the wake-up call, the change of heart? Part of it was COVID, but the big thing that happened, September 28th, I got let go of my job, first sales job I've ever been let go of.

And they decided they didn't need salespeople, and her security gland went off. And so we decided we better do something. Okay. So she freaked out because you're like we're going we're going broke here absolutely that's september 28th of 2020 2020 yeah right in the middle of covid stuff yep yep so got us a little scared and uh why did so really they were just covid scared the company was and they freaked out and dumped you in the street no they weren't covid scared they just didn't think they needed salespeople anymore. Oh, they were stupid.

Yeah. Well, incredible business model. I can't say that on the air. I just did. Yep. Yep. Wow. I regularly call companies like that stupid.

So I'm kind of used to it. So you went from loving debt to instantly hating it going, we got to get rid of this ASAP. Yeah. That's a big mindset shift. Yeah. And that's the biggest part of our story is the mindset, the mindset shift is the, is the, what we went through. So we, we did that within a few weeks, our daughter and son-in-law asked if they could move in to our house so they could get debt free. Wow. And so we started this journey and we, um, how'd you get connected the Ramsey way, man? That's a great, great question. I don't know, eight or 10 years ago, we, um, we had heard

about you in a, in a class at church. It wasn't an F years ago, we had heard about you in a class at church. It wasn't an FPU class, but we heard about you, looked you up, and we decided to gift FPU to our son and daughter-in-law when they got married. Having never read it, didn't know anything about it, we just thought, oh, this would be a great idea. And that's many years ago. Eight years ago. Eight years ago.

Yeah. And so then a friend of mine, Nathan, he said, during COVID, I started getting tired of listening to the news and was kind of going through that, you know, that kind of angry stage. He goes, oh, you should just listen to Dave Ramsey. He'll lift you up every day and just give you something, an alternative to listen to. So I started binge listening to every podcast when I traveled. And that's just kind of what started me on the journey so got us going kind of looking at you know that and the biggest thing for us was having to sit down and look back at our what we had been spending so that's a big wake-up call

too yep you're like what yeah yeah that's what I did when I looked at it I'm like you gotta be kidding me yeah unfortunately COVID had built some of that in for us so for the first six months before we even started this, we weren't going out to eat. And that was one of our biggest spending areas. There you go. So we had already kind of started taking all that out. And you didn't die. And we didn't die. Yeah.

We didn't die. That's amazing. So did you go back through FPU then? No. Did you ever go through it? Never went through FPU. Just the podcast. The podcast.

And I started buying every book I could buy. So I think I've read almost everything uh that you've put out and oh wow okay one of them one of them was good was rachel's book uh know yourself know your money yeah that's helpful yep yeah because you guys have been married a while yeah 36 years all right all right we just celebrated 40 so we're in the same club yeah very cool good for you guys have you guys ever been go ahead go ahead in your marriage have you been debt free in 36 years? I don't know. There might have been like three minutes or four minutes. Yeah.

Maybe credit card, but I don't know about car. Maybe briefly. Yeah. Yep. Just for a moment, then you got over it. Yeah, because what I said before is we were raised in homes that never talked about money, and we'd really never had anybody sit down with us and talk us through this like you do through your material. So we

started looking at it differently, and that's what kind of changed us because we had to get to a point about nine months into the journey, my daughter and son-in-law challenged us to a year long debt reduction contest. Uh-oh, contest oh game on family contest don't compete with the sales guy yeah that's right we did win yeah we did win and we had already paid off about 80,000 so this that was the rest of our debt we decided to be fair we should probably put our mortgage into the into the contest so we could be fair with our kids and uh both of our kids we all this is mortgage and everything this is mortgage and everything we are totally debt free you are

weird people yes i knew it all right where'd it go what's the house worth um i don't know what we think it's about 350 because what we're thinking how much do you have saved in retirement um well the last time i looked in december before started, we were probably about almost $800,000. Okay. So at that point, if it's still there, you'd be at over a million net worth. Yep. So you became Baby Steps Millionaires in the process. Absolutely.

Yeah. Or you will be again shortly, if not. Yeah. Well done, you guys. Very cool. And we had never looked at it that way. We had, you know, I'd never really sat down and looked at our 401k and kind of added those things up. But as we started looking at it, we're, you know, baby steps millionaires.

You're just way to go, man. You did everything right. Very well done. Well, know yourself, know your money is really important. Rachel's material on this collection. Like you said earlier, the family you come from, it tends to, the way your family of origin handled money influences the way you handle money. And your spouse doesn't always understand that. They're like, where did you get that, you weirdo?

Well, that's why we always did it at my house, you know. So you got to get through that stuff. And that really helps to get on the same page, doesn't it? Yep, absolutely. So what's the most important thing if somebody wants to get out of debt that they need to do? I would say quit spending. We just stopped. We bought food that we needed and paid heat and our house payment. But other than that, we just stopped spending.

And it felt like we had a raise at the end of the month. Yeah, big time. Yeah. I think for me, it was really the change of heart as far as debt goes. So we, like I said, when we started that contest, my son-in-law said, hey, are you turning off your 401k? Are you getting down to a thousand dollars in your savings account? And when those two things happened, the hardest things we did were those two things. But when we did them, it changed our mindset about money. It just totally changed. We got, you know, intense. We got scared. We got all those things you feel when you do those things. And that's kind of what spurred us the last, in fact, we thought it would take a year and it took the last part only

took nine months to to get done so your son-in-law gives you the hacks on how to win the contest and you beat him yeah that doesn't seem fair yeah yeah he's he's kind of a quiet guy but um when when he he got on all these ramsey facebook yeah um groups and he started you know there's almost 400 000 people in that group. Yeah. It's crazy. Yeah. And he was coming up with stuff.

He printed off our debt-free journey thing for us so we could do that and all that good stuff. That's awesome. We're proud of you guys. You guys are amazing. I've enjoyed talking to you. I'm so proud of you. You give a great picture on it can be done and it should be done and here's what you

got to do. Yep. Yeah. Very, very well done we got a copy of baby steps millionaires for you since you are one my latest number one bestseller and we'll give you a one-year uh subscript membership to financial peace university you've never been through it you ought to go through it yeah thank you don't technically need everything in there anymore but you'll probably learn something and then you'll want to give it away to somebody else probably so good stuff and we've got a copy of total money makeover for you to give away to somebody and get them moving

you've got these books a lot of them probably so you can give them away good stuff ray and chris from minneapolis 144 000 paid off in 18 months making 170 to 242 count it down let's hear a debt-free scream three two. We're debt free! Woo! House and everything. Baby Steps Millionaires. All in 18 months. That's how it works right there, baby. They're not messing around.

Woo! Woo! This is the Ramsey Show. George Campbell Ramsey personality is my co-host open phones at 888-825-5225. You jump in. We'll talk about your life and your money. Mackenzie is with us. Mackenzie is in Portland, Oregon. Hi Mackenzie, how are you? Hi, I'm good. Thank you. So my question is, my husband is a dentist and she gets paid through his PLLC that he was advised to set up. He recently started with a new company and has the opportunity to either continue keeping his PLLC or switching to W-2. And we've been advised that on both W-2 is a better option for him,

and then obviously the PLLC is a better option for him. So we were wondering what your thoughts were. Well, when you're self-employed on 1099, you have the opportunity to pay both sides of FICA um they call that self-employment tax because uh Washington DC is so friendly to small business people uh we're pro-business no you're not you crush small business people because uh when you're a small business person on 1099 or or just small business person you get to pay both sides of FICA so you got 15.3 there plus your tax rate if you're on w-2 you have seven half of that um you know 765 plus your tax rate um is the tax implications now as a w-2 there's no write-offs if you have business expenses associated with this action, you can deduct those.

Does he have business expenses? No. With this new company, he really has very minimal. They pay his malpractice and his continuing education, his PE courses. Either way. Yeah. Yeah. They would pay either way, even if he stays with the PLC. Okay, the only other thing I can think is the PLC might actually have value as a practice

if he has the income going through it. It's a dental practice. He has a dental practice. He's self-employed under the PLC, which is basically a corporation that's set up, folks, for listening for medical. Okay? It's a small business corporation for medical. Sometimes lawyers will use it as well.

It's the only time I ever see it, though, is law firms and medical practices. I don't see it anywhere else. So you see what I'm saying? If he has dollars going through that company, then that company starts to have value. It's not really got any value apart from him being attached to it because he's the only horse in the race, only horse creating the value. But you might begin to lay a track record of that.

I don't know that he can do 1099 here because a lot of companies uh try to put people on 1099 uh because it's less expensive for them on the fika then and they're really not 1099 eligible when a company furnishes you everything the clients the location they furnish they do all the marketing they cover all the overhead they're covering his insurance they're covering everything he's an employee at that point and i if it walks like a duck and talks like a duck it's a duck under tax law and so i i you know i don't i'm not i'm not positive because I'm not a tax expert, but there's some guidelines on what is and isn't a 1099. It's going to vary state by state as well, and so I would look at what the—

No, 1099 doesn't vary state to state. Well, the other rules there. So I'm wondering, for the W-2 side, is there any harm in just switching to the W-2? What are we gaining by going with the 1099 the only thing i can think of here is is that you're just building the value of the practice potentially but not much who recommended that mckenzie you said they recommended our tax accountant okay said w-2 yeah i guess some reason for the plLC is if anything comes back at him, then it protects.

I know, so I guess, yeah, I don't know. Yeah, the malpractice should cover that. And he's an employee at that point. Employees don't get sued. The employer gets sued if he screws up somebody's mouth. Okay, that's true. You know you know so the plc has just seemed to be so expensive too and like all these different well yeah you're going to have some associated things that we have to do i don't know what oregon's tax is on that in tennessee we don't

have one llc's you don't get taxes all passed through on the federal level there's no tax on it it's all passed through but uh i don't know whether Oregon has a separate thing if they're taxing you on it then that settles it for sure and you got to file a tax return on the stupid thing you know and you have to pay your corporate uh registration fees every year to keep it open and all of that would you dissolve it if he went to W-2? Yes. I probably would yeah I think I'm gonna i think i'm going with your tax accountant because number one your tax accountant i'm assuming your tax accountant knows oregon law as well yeah yeah i i i think mathematically i'm positive you're going to come out ahead with w2 and i'm having trouble

finding any good reason to keep the other thing in place so i'm going with your text one thing is that our kids are involved in doing things and so they say that they can be paid that way in that oh whoop-dee-doopies like little like oh that's just holes in that yeah that's so that's okay yeah just just put just go make some money don't worry about that i mean you you can take care of Oh, whoop-dee-doop-dee. Like little, like, loopholes and stuff. Yeah, that's okay. Yeah, just go make some money. Don't worry about that. I mean, you can take care of your kids later. That's the whole thing of you can pay your kids through your business and all that. But your kid actually has to be providing market value work.

I mean, so you can't have a three-year-old that's making $8,000 a year. You'll get audited and lose the audit. And people do that crap. I've seen the TikTok videos. It's not pretty, Dave. Yeah, it's just,8,000 a year, you'll get audited and lose the audit. And people do that crap. I've seen the TikTok videos. It's not pretty, Dave. Yeah, it's just, well, nothing on TikTok is pretty, George. Why are you even on there? Just to rile myself up, you know.

It riles me up that you're on there. Yeah, I'm with you. I'm with your tax account. Let's do it. Let's do it. That's simple. I'm going ahead. You can always come back later if something changes in your world and you want to form another one that kind of thing i give it a year and keep track of all the numbers and see how it shakes down with

the w-2 yeah now here's the thing sometimes and this is this i'm still not sure is the case here you're not eligible to be a 1099 people some people just declare you know it's like uh michael scott on uh i declare bankruptcy i declare bankruptcy i declare you a 1099 you can't do the irs is very specific and who can and can't there's like 12 guidelines that have to be met i can't remember that a couple of them are you can't get all your if you have one customer you have one set of lead and all all your marketing, your location, your supplies, your insurance, everything is supplied to you. You're not 1099 by definition. You don't qualify anymore because you're an employee.

1099 means you are self-employed. That's what it means. So like a real estate agent is an example of someone who is a 1099 but does work out of one office but they supply they create all their own leads they have all their own marketing or the vast majority of it and they do they buy their own office supplies they pay gas for their car they buy their own insurance they pay their own mls fees they're in business for themselves and they happen to be working with a broker if you're you know working for uber or one MLS fees, they're in business for themselves. And contractors are similar. If you're, you know, working for Uber or one of those, you know, side hustles. That's an independent contractor, for sure.

For sure. You're providing your own car. You're providing all this other crap involved. But this thing where, you know, you go to work at a place and everything is, you're acting and looking and walking and talking like an employee. By definition, you're an employee. But sometimes these particularly small businesses will violate this they will just say uh we don't want to pay that FICA stuff that extra half of that and so we're just going to make you a 1099 and you is on your own and you're

self-employed you don't get to do that that's you need to look up the IRS guidelines I'm not an expert on it but I have seen people audited in the small business world and get screwed over with this stuff well if you're self-employed you better be working with a great tax pro anyways. There's a lot of things that, you know, you're not thinking about when it comes to deductions and, you know, being strategic with making sure you're making the most of that money. And don't pay your kids more than you could hire another kid to do the job for. It won't survive an audit. And so, I mean, we had our kids were employed with us but we only paid them

you know a market rate for that job and they weren't doing much they didn't get paid much they were kids so that's how this works you know cinema salt mines yeah that that's that sounds like something you hear at some seminar somewhere or something that you get ripped off wealth hack a wealth hack. Oh, God, shoot me. This is The Ramsey Show. Dave here. You can find all of our shows with the Ramsey Network app on your smartphone. It's the only place to listen to the entire back catalog of episodes.

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