The Ramsey Show - App - Nobody Accidentally Wanders Into Wealth (Hour 3)

Episode Date: August 18, 2020

Budgeting, Career, Education, Debt, Home Buying, Relationships 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. Thank you for joining us, America. It's a free call anywhere in North America, 888-825-5225. That's 888-825-5225. Chris Hogan, Ramsey Personality, number one bestselling author, is my co-host today here on the air. Morgan is in Minnesota to start off this hour.

Hi, Morgan, how are you? I'm doing well, Dave. Thank you very much, Dave. Chris, it's a total honor to be speaking with you right now. You too, sir. How can we help? So I have a question. I'm 29 years old.

My wife is 25. We have two kids. We are both full-time college students. She's studying nursing. I'm studying geology. And we have very unstable incomes. And we just just found out a couple months ago, so we're trying to cash flow all of our school. My school's paid for from the GI bill. But we're having trouble creating

a budget when this month we might bring in $3,500. Next month we might bring in $1,500. Okay. Good. And you got the stipend as well, right? Correct. And that's $1,200, isn't it? It's about $1,200, but it changes depending on the semester and whether classes are offered online or now mandated online. So you guys aren't working much? I'm staying home with my uh the two kids for child care and my wife is working as a cna okay and so you're not working at all

i do some online work for the va it's about a thousand dollars a month okay well you got 1200 coming from the government and a thousand is two is 2200 so i mean your minimum is probably higher than you outlined originally when you started talking about this am i wrong the the only portion that you're wrong is in between classes so when summer semester ends and fall begins there's an entire month that i don't get that housing stipend okay but you should be working picking it up for three weeks yeah you'd be working more yeah okay so uh anyway here's the thing you lay out your budget on the minimum that you can exist on and you've got to figure out a way to bring that in every month okay the minimum existence that's food shelter clothing transportation utilities baby formula right the minimum you can exist on and uh then above that when you make money you've got a prioritized spending list of things we'd like to do, things we need to do but are not absolutely necessary

for survival. And that list of what is the, once you make your basic budget, your four walls, then what's the next thing? And then I want you to do that. What's the next thing? And you make a list of as the money does that. And you can just keep that on a yellow pad if you want, and then you can roll it into your every dollar budget. Chris, what do you think? Yeah, you really can. And you can just keep that on a yellow pad if you want, and then you can roll it into your every dollar budget.

Chris, what do you think? Yeah, you really can. And, Morgan, here's the reality. Because of the inconsistency, it's going to require more structure than you've ever had before. And so in that mindset, whenever there is the opportunity to be able to earn extra or to work, that's the thing you're doing. But what Dave just showed you is you're setting your baseline

of knowing exactly what has to be taken care of. So anything that comes over and above, we're setting that off to the side because we know we're going to need it eventually, especially come that month where you have the gap. Sometimes when someone's having trouble budgeting because of an inconsistent income, what they really mean is they're not making enough money to eat on. And so you may need to adjust your ability to earn between the two of you for a period, just to get through these two degrees, because obviously you've got to have enough to eat on. But, I mean, if you had an irregular income that totaled $300,000 a year, you would have never called me. So it's not the irregular part that's killing you.

It's the lack of. Right. And you get down below the line of necessity on a couple of these months, and you're in a hole. And if you haven't planned for that hole and don't have somebody set back for that hole, then you've got a real mess. And that's the pinch that you're feeling. So lay it out and go, okay, here's our rent. Here's car gas. Here's lights and water. Right. here's our rent, here's car gas, here's lights and water, here's food.

Food, shelter, clothing, transportation, utilities. In the worst possible month, we can barely exist on X. And the numbers you gave me, that needs to be under $1,500 with the numbers you gave me a minute ago. Because you can pretty well scratch together $ on almost any month she's a cna you've got some online stuff right and you know don't get the stipend one month you should be able to scrape together enough to get by that horrible month but then on the bigger months where you've got more than enough then you work your prioritized spending list. And you can do it all with the EveryDollarBudget. It'll all work out right there in it. It's designed to help you do that.

And you just update it, and update it is all you do. Elise is with us in St. Paul. Hi, Elise, how are you? Hi, Dave. Hi, Chris. I'm doing well. How are you? Great.

How can we help? Well, here's my question. My husband is the breadwinner in our home, and I'm home with our young son. And he's such a hard worker. He's very dedicated, and he has all of these gifts and instincts that I just believe. He's working sort of an entry-level position right now, but I just believe he's meant to be in a manager or coach or training role. And he's insecure about the idea of stepping into something like that.

So I'm just wondering how can I be a cheerleader and really encourage him to step in that direction? Hmm. Okay. So he has insecurity, but you strongly believe he's capable. Is that what you're saying? Yes. Yes, I do. I do believe it.

Okay. As you look at it, what do you think he's insecure about? Is it the lack of experience or the lack of skill? It's more a lack of experience. His college degree and experience is in a different field. And so his common response is that they would likely overlook him and hire someone else with more experience in managerial training. Okay. And so what I do is, you know, as you sit down and you talk with him, begin to talk about the career path. Talk about the trajectory, the goals and dreams you guys have for yourselves,

but also your family. Do you all have any kids yet? We do. We have a son who's about a year and a half. Okay. So you got a year and a half. And so, you know, it's a matter of looking at this and if it's helping him with his confidence, that's one thing. If it's helping him grow his skillset, that's going to be another where he's got to be a little bit more intentional to go after whatever that is that's missing in his life. He might need to connect with a mentor. That might at least be an encouraging thing for you to do. If there's a successful business person or leader in your church or in your friend group, for him just to go to coffee with and begin to talk about his path.

Yeah. One of the things is this. Anytime you've never done something, no matter what it is, if you're not a little bit scared doing it, insecure doing it, then that makes you a fool. So the first time you drove a car, first time you rode a bike, the first time you do anything that's brand new to you, it should be a little scary. Oh, yeah. That's normal. And so I just talk that through with him and say you know i do believe in you uh but you know you got to get some reps you got to jump in there and give it a shot and that's how you start to get a feel for it that and getting some people some men in his corner

one-off says mentors or maybe even a little bible study group of guys that are that are doing things and that'll encourage him to step out i push some of my buddies out of the nest. I know that. This is The Dave Ramsey Show. Families all over the country are discovering a faith-based and budget-friendly way of meeting health care costs, whether they're anticipated or completely unexpected. For example, take the Olcheski family from LaGrange, Texas. meeting health care costs, whether they're anticipated or completely unexpected. For

example, take the Olcheski family from LaGrange, Texas. Jeff and Carice had just celebrated the birth of a new baby boy. Shortly after, they had another expensive medical issue come up. They could have faced a huge financial setback, but thanks to Christian Health Care Ministries, the Olcheskis were spared from a ton of medical bills. As members of CHM, they're part of a group of believers who financially and spiritually support each other. CHM is the longest serving health cost sharing ministry and is a Better Business Bureau accredited charity. It's Christians helping other Christians, and it shared nearly $97,000 to help the Olcheskis. To be a part of Christian Healthcare Ministries,

visit chministries.org. That's chministries.org. CHM is a proud sponsor air, Ramsey personality, Chris Hogan, number one best-selling author. So, Chris, 25 years ago, it was February the 19th. That's what it feels like. It feels like it was a decade or two ago. It really does, Dave. Like a couple of decades have happened since February. Yes. And the stock market on February 19th with the S&P 500 closed at a record high on February the 19th.

The economy was booming. The sun was shining. 2020 had started off to be, by and large, an incredibly good year. Enter COVID. Enter porn fear. Fear pornography. People so afraid that it's like they're addicted to porn. They're in their homes huddled and sheltering.

Forty million people lost their jobs. The stock market dives. The Dow was at almost 30,000. It goes down below 20,000. Lost a third of its position. People are calling us like they always do in the middle of a crisis, screaming and carrying on that they're about to lose all their money. I'm scared.

I'm pulling all my money out of the market. I can't believe. Oh, my God. Oh, my God. Oh, my God. You remember that? I do remember, Dave. We spent the entire month of March and April, months of March and April,

trying to convince people to not cash in their money. Ramsey Personalities did 458 media hits in those two months. That's right. And the primary message was stay calm. Yep. Don't pull your investments out. That's exactly right. Did a ton of them.

Things were bad, Dave. They were scary. It was tough. And we tell them to stay true. Follow the process. We've been here before. This too shall pass. This too shall pass.

We've been here before. You don't get hurt on a roller coaster if you don't jump off in the middle of the ride. That's right. We went back and talked about 9-11, talked about the SARS epidemic, those 7-09 depression, recession. Y2K. Y2K. We gave them history. Black Monday in 1987.

The days that the stock market fell and the people were screaming and carrying on that's right and we tried not to shame them or make fun of them during the times that they were the most scared but just calm them down and say don't take your money out because if you sell at the bottom you're going to feel stupid when this recovers and it's going to recover and it's going to recover this fall we did that's what i know. You can go back and pull the podcast. Dave Ramsey said it. I will be back in the fall. That's right.

And you're going to feel stupid if you took your money out. I remember you saying it. What if you found out? You seem to know something. Well, we're sitting here both looking at the same article. Of course I know something. Come on. The S&P closes at a record, erasing all of the last pandemic losses. The S&P 500 caps a furious 51.5% rally that began in late March

and set a new record today, recovering over 100% of any losses that it lost during the pandemic since February 19th. So from February 19th down into March, into late March, it dove and dove and dove and dove and dove and dove. And by today, and it's not even fall. Nope. 100% recovered. Wow.

So far. Will it go down again? Yes. Yeah, sure will. Sure will. Will it go up again? Yes. It changes.

The only thing you can count on. And this is where investing comes in. It requires being a grown-up and not a crying little, sucking your thumb little kindergartner in the corner. That's okay if you're a kindergartner. It's not okay if you're an adult. That's right. It doesn't work. No, you're right.

And this thing, you have got to have a vision. Where there is no vision, the people perish. You've got to look out into the future, and you've got to say, is the pandemic or Y2K or 911. 911 recovered in 57 days. I haven't counted up the number of days yet, but from the bottom of this, probably not far off. Probably about 50-something days, maybe 60-something days.

And I'll have to go back and look at when the bottom was, but that's about what it was. But the fear, I want you folks listening to remember how tight your throat was, how your stomach was halfway up into your chest, how your heart was beating, how you were checking your 401K balances every morning like you were checking COVID cases and like you were looking for a tornado to come at your house. You're looking on the weather channel at the number of COVID cases in your state, the number of COVID cases in your county, and you're looking at your stock market go down, and you were addicted to fear because that's what you were sold for lack of vision. The people perish.

And I'm not making fun of you. I'm just saying I told you so. And so you've got to learn these lessons. Part of maturity is being able to look past what's going on and take what looks like a disaster and say it is temporary. Yes. It is temporary. Yeah. It is temporary.

It is temporary. It could take two years to come back. It could take two months to come back. But will the pandemic completely destroy the U.S. economy? Is the logical, critical thinking skill you have to develop no well it didn't it's a hundred percent back as of Tuesday the S&P 500 closes at a record erasing last of pandemic losses Wall Street clawed back the last of the historic frenzied losses unleashed by the coronavirus as the S&P 500 closed at an all-time high Tuesday.

The benchmark index notched up a modest 0.2% gain to beat its previous record high set on February the 19th before the pandemic shut down businesses around the world and knocked economies into their worst recessions in decades. Well, that's an overstatement. It's not the worst recession in decades. It might be one of the shortest recessions in decades, but's an overstatement it's not the worst recession in decades it might be one of the shortest recessions in decades but it's not the worst a worse one is one that goes on and on and on and on and on and on and on and on we lost 40 million jobs 20 million of them are already back to work and some of the ones that aren't back to work don't want to be for different reasons right now because they're collecting so dadgum much money by not working right yeah yeah and so you know we got the government interference in our economy and you see what happened with that so guys there are lessons to be learned in these

kinds of things they're spiritual lessons they're emotional lessons they're financial lessons they're wealth building lessons and you've got to start looking at this stuff and go really where are we today yeah and we kept saying what we say we dr john alone he said facts are your friends you do not you do not make good decisions when you're drunk and when you're afraid well it's really important to remind yourself as you look at this and see this article um and to hear this and to know it and i think you know you the lessons that we go through, we get a chance to learn from them. And when you apply wisdom, it becomes knowledge, right? And wisdom for yourself. But just hear this and understand it and then start to grow

and understanding this process of investing of what's going on. But for goodness sakes, don't rely on the media to give you your reality you've got to keep your hand on the pulse and know what's going on well the reality was the stock market was going down but the the what the media was telling you was that the world was coming to an end right chicken little is here the pandemic is going to ravage the planet it is ebola everyone's going to die two million people are going to die uh they don't teach math in med school apparently no so there we go and you know you just it's just the whole thing is you know well i'm so happy that these companies have recovered because that means the

jobs are coming back and that means the folks that need a job and want a job and are willing to work are going to have a place to work. They have a place to go. Yeah, I agree. Once they get out of their home. Right. And once their economy starts to open up and so forth. I'm still in such a bubble because we've been back to work here with 1,000 of us in this building for months. We were off. We were working were off for about we were off we

were working from home for about five weeks and since then we've all been back uh we've not had a positive case in the building uh since july the 19th and uh so about a month uh and now without a single positive case out of a thousand people we had 17 so 1.7 percent got the covid flu but at one time or another zero deaths and we're all at work um and we're you know we're with each other every day our cafe is open um you know and uh you know we're not being completely reckless unless you do it by some of your standards, who are people, and some of you haven't left your home yet. So, and yes, I am making fun of you.

So it's time to come out of your cave. It's time to come out of your cave, America. This is the Dave Ramsey Show. Most people's money problems come from not paying attention. That's why before I spend a dime of my money on something, I do the research and make sure it's going to live up to what it claims. Recently, I got a great pair of sunglasses from a company called Shady Rays. When you're looking for sunglasses, it feels like your options are limited. Name brand sunglasses cost too much, and the cheap knockoffs are ugly

and really don't protect your eyes. Discovering Shady Rays is a game changer. With Shady Rays, you can count on premium sunglasses that protect your eyes and are affordable. They give people the best overall value in sunglasses. They also replace your shades with a brand new pair if you lose or break them from day one of your purchase and they guarantee your sunglasses for life plus they offer an exclusive for ramsey show listeners go to shadyrays.com and use the code ramsey for 50

off two or more pairs that's shadyrays.com code ramsey well folks let's get real some of you are getting close to baby step four where you start investing and you're freaking out because you know you're going to save 15 of your income for retirement retirement, but you don't know how to do it. You don't know about investing. No shame in that at all. Learning about something new is always a process, and that's why you need to have someone that has the heart of a teacher in your corner teaching you. We do not recommend financial people who tell you what to do, and you do it blindly without learning. You're supposed to learn what to do. The trick is to work with an investing professional like a SmartVestor Pro.

They can answer your questions in English. Don't sound like Charlie Brown's teacher. Wah, wah, wah, wah, wah, wah. Because when it comes to investing, you've got to know what you're doing. And then, like we were just talking about in that last segment, something like a pandemic or a downturn in the economy for whatever reason happens, then you're not freaking out because you actually know a little bit about the history of the stock market and you know it comes up and you know it goes down and you really expect it. You don't expect a direct trajectory through the roof. Nothing does that, and the stock market certainly doesn't. So don't freak out about

Baby Step 4. Just begin the process of learning and find someone with the heart of a teacher. Go to DaveRamsey.com slash SmartVestor. Find a SmartVestor pro in your area. Nolan is with us in Riverside, California. Hi, Nolan. Welcome to the Dave Ramsey Show. How can Chris Hogan and I help? Hi, Dave, and hi, Chris. Thank you for taking my call. I just had a typical question and advice if you guys can help me out. Try. Okay, so I'm going to finish up with college next year,

so I have one year left within my program. And once I'm done, I'm probably going to be about $48,000 in debt with everything, all of my student loans. And that'll be the only debt I'll have. I was just curious, what's the best way I can do once I graduate to quickly and effectively pay it all off? Well, Nolan, I would tell you this, buddy. The best way is to go ahead and start to really look at it, identify it, and then as you graduate and you start working, you want to keep expenses down very low

and throw all extra money at attacking these debts using what we call the debt snowball. So you're going to attack them smallest to biggest, keeping lifestyle down, making minimum payments on everything but the small one, and throwing extra money at it. That's how you're going to do that. Not scrolling with it. This is attacking and getting very serious and intentional.

Like if you don't get it done, something bad's going to happen. Right. Like you've got to do it real fast. Yeah. Like with great intensity. Focus and intensity and then working them off smallest to largest is the secret of how we've led literally tens of millions of people through out of that. And, Dave, I'll never forget, we were just on together just a couple, a week ago, and

we talked to two medical, okay, two doctors that they paid for it, paid cash for medical school. So, you know, and attack the student loan debt over 200,000 and got it out of their lives. So I don't want to hear people tell me you can't do it. Tell me you won't, but don't tell me you can't because you can. So Nolan, the trick is don't go buy a bunch of stuff. Don't raise your lifestyle. Keep, keep living like a college student. And let's say you get a job making $60,000, and you put $24,000 of that $60,000 a year. That's $2,000 a month on your $48,000. You're done in two years. Bam.

Just like that. Just punch it in the nose and knock it as fast as you possibly can. Jean's in Portland, Oregon. Hi, Jean. Welcome to the Dave Ramsey Show. Hi. Hey, Dave. So I'm mostly calling because me and my boyfriend have been together for two years.

And my boyfriend went to school for eight years. But unfortunately, with no degree, he couldn't really make up his mind what he wanted to do. And now he's $47,000 in student loan debt. His dad also took out another $50,000 in a Parent PLUS loan. So right now, me and my boyfriend would love to buy a condo, but I'm not sure if or whenever we're going to be able to do that. He now works at a bank and he makes $33,000 a year. I've gone from job to job, and I'm trying to figure out what I want to do still.

And if I go back to school, though, you know, I'm going to have to probably take out loans as well. But I just don't want to do that you know i have saved up seventeen thousand dollars in my bank account right now right but okay let's let's stop a second okay are you guys are you guys planning to get married soon um i mean okay no you're not okay so i mean i could just tell by the way you started answering the question. So, if you're not planning to get married soon, you do not buy a house together. Okay.

It's very, very dangerous for you to own a house with your roommate. True. Because your roommate might up and leave. I agree. If your husband up and leaves, the court will make him pay for the house not your roommate and so very unwise relationally uh very unwise financially very unwise legally to buy a house with a guy you're shacking up with it puts you in a very vulnerable position and so until you're married quit looking at your lives through the lens of we, because

you're not a we yet. You're just a dating couple, okay? And you legally do not own anything together. You legally have not combined anything. And so you have to work on your career path and your debts, and he needs to work on his career path and your debts, and he needs to work on his career path and his debts. If you're getting married, once you're married, then we'll talk about combining these goals and combining the ownership in the house. But, Gene, let me tell you, here's what I've run into for 30 years of doing what I do. The number of times stuff like

this has happened, a shacked up couple buys a house together they're partners from a legal standpoint there is no partnership agreement because they were playing house acting like they were married but they didn't have the legal benefits of having been married he gets killed in a car wreck now you own a house with his mother because you're not the heir you have no legal standing in this situation whatsoever unless there's a will uh and but if there's not then his heir would be his parents and so now you and his mommy are partners in a house this is a recipe for a life that sucks yeah i agree and this is the kind of thing that happens or he gets disabled or something happens This is a recipe for a life that sucks. Yeah, I agree. And this is the kind of thing that happens, or he gets disabled,

or something happens to you and he has to deal with your mother. I don't know what it is, or maybe it's the father. I don't know. Or maybe it's the crazy brother, which is the only heir. I don't know. But there's crazy and screwed up stuff in every family, and you get to play with all of that as a partner. No, thank you. Instead of as a thing.

So you need to take your $17,000 and decide what you're going to do with your life and get about your business of living your life. That's right. And listen, don't just fall to school as the next thing to do. Oh, that's good. I mean, you can't. And too many people have done that. And we've got young people that have signed documents they don't understand for payments

they can't afford. So you start to think about what it is you're going to do, what it is you want to do as you work. And I'm proud of you for having some money set aside. Be intentional and don't let that slide through your fingers. You do not need student loans. No. You need to pick out a field of study and a place to study that is consistent with what you want to do. It's not a fallback.

It's not the next thing to do. That's right. It's an intentional series of actions that are going to take you to successful living. No one wanders accidentally into wealth. No one wanders accidentally into high-quality relationships. No one wanders accidentally into success. That's right. They never interview the guy at the end of the Super Bowl and go, how'd that happen?

And he goes, I don't know. I just got off the bus. That's not what happens. It's a series of intentional acts that cause people to win at things. And so, Gene, what's missing out of all the different parts of this with your boyfriend and the Parent PLUS loans and the $47,000 and eight years in school, there's no intentionality. He's wandering around, chasing his tail. You said, I don't know what i'm going to do you guys really need to sit down and start to think about individually and or

together right we're going to get married this is going to be the life we live we're going to pursue these careers we're going to pursue some things we're going to set stand some things up and knock some things down and uh but you're you're not going to wander into happiness. It's not going to work. You're not going to wander into a level of success, a level of fulfillment. And for God's sakes, don't buy a house with somebody you're not married to. This is the Dave Ramsey Show. Thank you. our scripture today proverbs 19 21 many are the plans in the mind of a man but it is the purpose of the lord that will stand. Robert Waterman said, Organizations exist only for one purpose,

to help people reach ends together that they couldn't achieve individually. Ooh, that's strong. Ashley's with us in Binghamton, New York. Hi, Ashley, how are you? Good day, Dave. Good day, Chris. How are you? Great. How can we help? I've got a question for you. I'm maxing out my 401 and my catch-up contribution and my HSA, but I earn too much to go into a Roth.

Is backdoor Roth my next step of saving for retirement, or is there a better plan you could give me? Backdoor Roth's awesome. I do them every year. And all it is is you open up an after-tax IRA and then instantaneously roll it into a Roth. There's no tax consequences whatsoever because you're not tax-sheltering the money to start with. And so I max that out every year with my wife and I both. It's not a ton of money, obviously. I mean, you can just do the $6,000, $7,000 if you're 50 years old or older.

And so we put $14,000 a year in, Sharon and I do, doing that. And that's, you know, it's nice to do. The other thing you can do is, do you have any self-employed income? No, I don't, but I do own a business or part-owner business along with my primary income. Now, that's not paying me yet. It actually owes me money as a loan, but that might probably start paying me for. It actually owes me money, the loan. But that might probably start paying me for about four years is the projection right now. Okay. Is it paying the loan back first? Yeah. Well, it's paying back a bank loan first, and then it'll pay me back, and then we'll

have a three-way partnership, which will split profits after that point. I would take a portion. Let's say, I'll just make up a number. Let's say your portion, once the bank loan's done, is $40,000 or $50,000. Take some of it as repayment of your loan and some of it as income, and then you can take that income as self-employed income and do a SEP on it. It'd be $1099 income. And so you could do a self-employed pension plan. That gets some more sheltered if you want to do some more sheltered you'll get your loan repaid slower but you'll be able to invest more over a longer

period of time by by twisting that around and doing it so i'm charging the business i mean i pulled this money out of my uh um i uh sorry yeah he like account so i'm charging the business back what it's charging me. So it's going to be like a, will we backdoor that or will we put on the books and work it out when the time comes? But is that still the best path forward based on that? Yeah. I mean, you can repay the loan and then take income off the business. That was your original plan.

Either one's fine. I didn't realize you had an actual debt. I thought you had loaned that business money. Yeah, I had a two. But now you've got debt outstanding. I want to clear up actual debt. I thought you had loaned that business money. Yeah, I had it too. But now you've got debt outstanding. I want to clear up that debt before I do anything. Absolutely, Ashley, because it's using your home, right? You use your largest monetary asset for this.

And so don't shut down that HELOC. Get you a fixed rate loan. Get it on a 15-year fix. Get that thing out of your life. Or get it paid off. Or pay it off. And then let the business pay you back. That's right.

But you don't have to have the outstanding corresponding debt right that would be my first goal before i tried to do additional sheltered income so kyle is in billings montana hi kyle how are you good how are you better than i deserve what's up hey i've been working for a lumber yard for about 15 years now they've been around about 30 years. And just recently, they have offered to sell it to me and the bookkeeper who works there currently. We're not too worried about being able to make the business run and be profitable from it. But the down payment for it is where we're really struggling with. It's a $3 million to $4 million company, and we're

working through an SBA. I mean, we're going to want 10% down. I guess where I'm struggling is I have a profit sharing through the company that once it sells, it'll dissolve, and I'll be able to get some of the money out of there. Then also, I could take a key lock out of my house, but I guess I don't know if those are the best options for me to get a down payment. Okay, when you say $3 million to $4 million company, you mean that's their top line gross? Well, that's what it's going to cost us to buy the company. Oh, to buy it. So what's the net profits on this business annually?

It can be anywhere from $700,000 to $800,000. Okay, all right that's pretty hefty price um but and you know they're willing to work with us they're actually the lease the property is half the cost of the whole thing and they're going to lease us to that lease us that property for as long as we need to until we get the other loan paid off. Okay. But we're looking at a hefty down payment that we don't necessarily have the funds to rebuild it for. How much is in your profit sharing?

I have about $85,000 in there. Okay. All right. I would structure this deal differently or I would walk away. I know this has been a dream of yours, but I don't want your dream to become a nightmare. I do not run into people who have enjoyable experiences with SBA loans. I run into people who have horror stories with SBA loans. You're leveraging into this. Number one, I would break this apart into a piece of real estate that you are leasing with an option to buy at a set price.

A 10-year lease with the right to buy it for X, million, million two, whatever it is, million five, any time during that 10 years. So that gets that off the books. Now we've got a million and a half purchase price on something that's netting 700K. Now we've got a good deal. This is a good buy on this business. Okay? Yeah.

And what I would do is say, what do you make now? What's your salary? About $53,000. Okay. I would tell the owners that I will run this business for $60,000 a year and give you 100% of the profits above that until we reach a million and a half. And they'll get all their money, 100% of their money in two or so years, if you told me correctly,

right? Right. And you don't need to get a raise. You've been living on 53. You put zero down. You have zero debt if there's zero profit did you understand right they get 100 of the profits let's just pretend a pandemic hit and they quit selling lumber like something like that could ever happen yeah and then you've got

an sba loan and you got payments in your houses in foreclosure and your businesses in foreclosure. And the land that the business sits on is in foreclosure because you've got the SBA, which is the DMV of small business, running down your back. Right. Believe me. Can you tell in 30 years I've worked with people in that situation? Can you feel it in my voice? Yeah. You don't want that.

You don't want that, my brother. So now here's what we do. Okay. my voice yeah you don't want that you don't want that my brother so now here's what we do in two two and a half years you own the business free and clear in my scenario if it does what it's supposed to do if it makes the kind of money you think it's making okay and then guess what two two and a half years later five years into the plan you now own the real estate free and clear because you optioned it at a million and a half. Yeah. And you write a check and pay cash for it because you saved up because you continue

to live on $60,000 to $100,000 a year and put in the bank and get this done. Now, eight years from today, six years from today, you own a piece of real estate worth a million and a half and you own a business cash flowing $700,000, and you have no debt at all. Dude, you think you're going to be wealthy now? I think you're going to be wealthy now. Yeah. Or you get to drag butt this crap out for the next 20 years screwing around with the SBA. Go with option A, Kyle.

You know, and here's the thing, buddy. You sitting down with the owners and really having a real-life conversation. You guys going to dinner, sitting down, talking about this thing. I'm going to give you all the money. I'm going to give you everything. You know, that is not the scenario I was thinking. But that's brilliant. Of course it is.

Kyle, let me go back to talking to you let me talk to you but but having a real conversation and also a real negotiation uh as it gets serious you need to see the books uh you need to see the numbers and uh this is all things that would be drawn up in a legal process but this is a beautiful scenario for you my friend let me tell you what when they start getting 100 of the profits above x all of a sudden they start telling you the truth about the profits. Yeah. Yeah. There is no exaggeration.

There is no, oh, well, you know, we pay taxes on this, but the real numbers are this. Yeah. Which always comes up in a small business sale, which means you're just full of crap. That's what that means. And so you've got to get to what the real numbers are. And you'll get there real fast if they're getting their portion out of that. Yeah. And don't get paid otherwise. Very good real numbers are. And you'll get there real fast if they're getting their portion out of that. Yeah. And don't get paid otherwise.

Very good. Hey, man, you go get that business. It's a great business, but don't do it in a way that costs you your whole life. It ain't worth it. That puts this hour of the Dave Ramsey Show in the books. Thanks, Chris Hogan. Thank you, sir. Thanks, James Childs and Kelly Daniels.

Good job. This is the Dave Ramsey Show. 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. This is James Childs,

producer of The Dave Ramsey Show. You can listen to Dave, Rachel Cruz, Chris Hogan, or the rest of the Ramsey Network anywhere with the Ramsey Network app on your smartphone. Catch all of our full shows, browse by topic, or send clips to your friends. Head to the App Store and download

the Ramsey Network app today.