The Ramsey Show - App - Preparing a Will Says, "I Love You" to Your Family (Hour 1)

Episode Date: September 24, 2018

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Music Music Music Live from the headquarters of Ramsey Solutions, 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, America, because it's all about you. The phone number here is free at 888-825-5225.

That's 888-825-5225. Kurt is with us in Boulder, Colorado. Hi, Kurt. Welcome to the Dave Ramsey Show. Hi, Mr. Ramsey. Thank you for taking my call. Sure. What's up?

So I am a junior in college, 20 years old, and I have a full-ride scholarship. Two years ago, right before my freshman year, my father suddenly passed away of a heart attack and left me $50,000 from his will. Oh, my goodness. That money has been put in a bank account, and I've left that untouched for two years. And I've been a longtime follower and listener of yours, Mr. Ramsey. I read Total Money Makeover when I was in high school. And so I felt like the best plan of action would be to call you and ask for your advice on the steps going forward with this money.

Because as you say, you know, nothing's going to happen unless I do something with it. Yeah. I'm sorry. That's a tough thing to go through at your age. How's your mom doing? Oh, she's doing well. You know, it is a tough thing to go through. But financially, she follows your baby step program. She's on step number six.

Okay. Well, it sounds like he left everybody taken well care of. A good man. Okay. Well, the good news is it sounds like unless something fouls up, you don't need the money to get through school. Am I right? Yes, sir.

And I have no debt whatsoever. Okay. The way I would look at this is I would look at it as an insurance policy that ensures that Kurt is going to graduate debt free regardless of what happens. So if the scholarship blew up or something weird got sideways or something like that, then we know you've got the money to finish and not have to borrow money. That's its primary use, is to make sure you graduate 100% debt free.

Its secondary use would be after you graduate, you would do something with it. You might buy a car. You might move up in car or something. You might start some investing at that time, more serious investing. You might think about buying a home at that time. So you'll have some use for it after college if you don't use it up, and I'm thinking you're not going to use it up i'm not expecting anything bad to happen but it's we'll use it for now primary use is the insurance policy

then two after college we would use it for wherever you are in the baby steps and whatever purchases you need to make and investments you need to make at that point so all of that said i'd probably sit down with a smart investor pro, and I'd probably put 30 of it maybe in a very conservative type growth stock mutual fund, maybe like a growth and income fund. And I might put the other 20 of it in just a money market. That way, it's not going to earn much, but that's kind of your safety net. The other money's invested a little bit better, and it might go up. You know, you might make $3,000 or $4,000 a year on it for the next couple years. That would be kind of nice and add some money to it.

So when you graduate, it's more than $50,000. It ends up being, you know, $55,000 or $60,000 or something, something like that. And it's not going to do that if you leave it just in a simple savings account. But, yeah, so sit down with one of the SmartVestor pros in your area, the people we recommend that don't work for us in the investment business, and you know where they are. Just click SmartVestor at DaveRamsey.com. They can help you do some of each, you know, some in a money market,

some in an investment because, you know, you're in a pretty safe place. But I just really want to make sure that, you know, no matter what the storyline is of the next two years of your life, that you graduate completely debt-free, because I think that's honoring not only to good financial planning, but it's certainly honoring to your dad's memory. And he obviously did a great job taking care of his family in life and in death. So, wow, pretty incredible. Open phones at 888-825-5225.

You know, we don't ever like to talk about losing somebody like that. And I have, over the years, had friends that passed away, and then their kids are my kids' age, and, you know, they become secondary kids to us and since we're in their lives and um you know sometimes uh they pass away and you know they're their spouses in our life and we watch them go through the the struggle or not uh and don't you just see you you guys see this too it's not just me it's not just because i'm the you know this this money character but in it in one sense maddening and saddening,

and on the other side of the coin, I guess, really just honoring that when someone actually has a will, actually has life insurance, and has actually taken care of their family in the event that they die before they think they're going to, right? Because we all think we're going to live to be 100 and be in good mind and still be, you know, skiing Black Diamond down the mountain, right? I mean, we're still going to be doing everything at 100, right? But we're not, and we're not all going to make it. As a matter of fact, none of us are going to make it.

We're going to make it to, we might make it to 100, but you ain't going to make it much past that. You ain't going to make it. Do you know that? So, you know, what an honoring thing wouldn't it be cool if your son your daughter was that young man he calls up and said you know my dad took care of my mom she's in baby step six my dad took care of me and um by the way he handled his money by the way he handled his money, by the way he handled his life insurance, by the way he handled his will. See, you can do all that.

You can go get your will today, and you might be 32. You might be 26. I got bad news for you. 26-year-olds die every day too. So you need to get your will done. You need to get your life insurance in place. You need to have a plan for your life and a plan. Part of having a plan for your life is having a plan for your death.

I don't want to do a will. I might die. You're going to die. And doing a will does not increase the probability of your death, nor does it decrease it, by the way. So you better get ready. You better get ready. And it's the way you say I love you to your family. It's the way you look in the mirror at yourself and you say, I'm looking at an adult.

I'm looking at a grown-up who took their responsibilities to their family seriously. That's a big deal, you guys. That's a big deal. It's when you quit living for Friday night. Thank God it's Friday. Oh, God, it's Monday. You start actually havingiday night thank god it's friday oh god it's monday you start actually having some vision for your life it changes everything and then maybe hopefully not but maybe your son or daughter is curt calling me someday and my dad took good care of us

that's pretty cool statement you know that's a pretty cool statement a lot of worse things could be said about you and a whole lot of worse things could be said about me but that one i got taken care of i may not make it through this hour but that one is taken care of i can promise you that sharon the grandkids, oh, even those kids, they're all going to be okay. Financially, they're going to be just fine. Spiritually, they're going to be just fine. And because the part that I had to play in that, and I don't get to make all the decisions, but the part that I had to play in that, those decisions were made.

Because I decided a long time ago, I'm going to be a grown-up. Adults devise a plan and follow it. Children do what feels good. This is The Dave Ramsey Show. I get asked all the time, when in the baby steps is the right time to buy life insurance? My answer is typically now. Life insurance is not part of the baby steps because it's needed when your family has debt and not enough savings to provide for their financial needs. That's when they're at the highest risk. And no matter where you are in your baby steps, it's a necessity, not a choice. This includes working husbands and wives, as well as stay-at-home

parents. It's pretty expensive to replace those stay-at-home parent responsibilities. I only recommend term life insurance since it's the most affordable way to get the right amount of coverage and not break your budget. Go to Zander.com or call 800-356-4282. These are the guys I personally use. Term life insurance is inexpensive and your family needs this no matter where you are in your baby steps. That's Zander.com, or call 800-356-4282, Zander.com. A week from now, the 2nd of October, a Tuesday night, we will be doing our first ever Smart Money event in San Francisco. Just looking at the sign- signups it looks like there's

about 142 tickets left so it's not quite sold out there'll be about 3 000 folks there and we would love to have you if you're in the san francisco market we still got about a week uh which probably means you got like two days maybe three days before those tickets will be gone because be declaring a sellout here during this week sometime, I'm sure. And we don't hype up our sellout numbers. Some promoters, you know, we're within 10%. We call it a sellout. If there's a butt in the seat, in every single seat, ticket-wise, it's sold out.

Now, not everybody shows, but everybody that paid for a ticket when we've sold it out, that's when we sell it out. Until then, there's somebody that still needs the help, and so we'd like to have you. And I'm going to be there speaking, and Chris Hogan will be with me, Ramsey personality, millionaire expert, and we'll be doing the Smart Money event. And it's kind of like a pep rally, laughing, a little crying,

a lot of elbowing your spouse, saying, see, I told you, a lot of bringing your friends who thought you were crazy, and then they get more hardcore than you are after it's over, because people who believe in something that works, well, we kind of lean into it, don't we? And we're going to show you step-by-step exactly how to do the baby steps and exactly how to win with money and why. Why it's important.

And you will leave there motivated and informed, I promise you. Smart money coming up this coming week from tomorrow, actually, for most of you. San Francisco, October the 2nd. Then Minneapolis is sold out October the 29th. San Antonio, November the 15th, is not yet sold out, and it will be live streamed for everyone if you want to buy a live stream ticket. I think they're only like $9 or $10 or something. They're $19 maybe, I don't know, something like that.

Check it out. And Colorado Springs is January, and Irvine, California is January. And most of those are me and Chris or Hogan and Anthony O'Neill or back and forth. So we're going to be at all kinds of different places. Just check DaveRamsey.com for all of that. But San Francisco coming up next Tuesday, October the 2nd. Tim's in Idaho Falls. Hey, Tim, welcome to the Dave Ramsey Show. Hey, Dave, good to talk to you.

Sure, what's up? So I'm a full-time student and I work part-time, and my hours are kind of variable. So I was wondering what's the best way to budget so I can build up my emergency fund when I don't have a regular income. Well, you make a list of everything that you need to spend money or want to spend money on, and that would include building up the emergency fund on that list. And then you look at that list and you say, what's the most important thing if I have a bad month and I can only do one thing? What's the most important thing on the list?

And then once you've gotten that one accomplished, then you say, once I got that done, what's the next most important thing? And then what's the next most important thing? And then you rewrite the list in order of most important to least important. I'll help you with the first few. Number one is food. Not eating out. Food in the cabinet so that you don't go hungry.

Food. And eating out is entertainment. That's not food. And so I love eating out. Big fan of restaurants. Fine dining is one of my favorite sports, but that's entertainment. So then the second one is do you live on your own or do you live with Mom and Dad? I live on my own.

Okay. Then the second one is lights and water, utilities. And the third one is rent. Right. So food and shelter, transportation, transportation utilities so we're going to put transportation next you got a car payment uh no i don't good okay you gotta put gas in the car and pay pay for the insurance and that's the next one so once we've kind of gotten food shelter clothing transportation and utilities done then we can kind of start to work on other stuff and

that's when you start to build up that emergency fund pretty quick. But whatever you want or need to spend money on, but let's say that you got clothes in your closet, but there's a cool jacket you want to buy. Well, that's a want, not a need. There's nothing wrong with buying that jacket, but it would be below food, agreed? Right, yeah. And it would be below paying your light bill. You would never buy a jacket then get your lights cut off given that you already have a jacket so you know that's a want an upgrade in clothing is a want um and really getting your emergency phone in place would be

ahead of buying the cool jacket you see how this works you kind of just make your list down through there and you just look at it and say most important to least important is the way the list is rewritten then and then when money comes in you go as far way the list is rewritten then. And then when money comes in, you go as far down the list as you can. Then when money comes in, you go down the list more. And then when more money comes in, you keep going down the list. And every so often you have to rewrite the list because you've got to buy more food or more lights once a month anyway, at least, maybe food every two weeks or something, but that kind of stuff.

And, you know, you get down to on down in the list are some things where you're just spending money on something I enjoy. I just want to do this. After I've gotten past some of the things that are more important than fun, you can fritter all your money away on fun and then be kicked out of your apartment. Rudy is in Springfield, Illinois. Hey, Rudy, how are you? Hi, Dave. Thanks for taking my call.

Sure. What's up? Well, I'm trying to figure out if it's a good idea for me to buy part of my grandmother's farm. She passed away about a year ago, and there's 50 acres that none of her children are claiming, and it's going to sell. Well, they're claiming it. They just want the money from it. Well, there's 250 acres total and 200 of it the kids want. And they are going to sell their 50 acres. Correct. Okay, and what would you use the 50 acres for? Well, I farm, raise corn and soybeans and hay and cattle you already farm in that area

yes sir yeah we farm okay why do they not want it uh well some of there's five kids and some of them uh want their inheritance to be part land and part cash oh and so this is going to meet their cash need okay that's cool. All right. And how much is the sale price? It'd be about $500,000. Okay. And I'm guessing you don't have $500,000 laying around? No, sir. Okay. And you're not going to be living on this property? No. Okay. That's a lot of soybeans, brother. Yeah. If you'd like, I'd tell you a little bit more about my situation.

I've got, after harvest, I'll have about $120,000 in the bank, and I'll have about $40,000 worth of cattle to sell after the first of the year. And I've got 25 acres that's paid for that's worth about $200,000 that I would prefer not to sell. And my only debt is I owe about $60,000 on some pasture land. Another important part of the situation is that my wife and I live in a brand-new house that's in on a farm lease of another property that we rent, and so I don't anticipate needing to get a mortgage. And also, we raise our own meat and can live very frugally. I'm going to say maybe... So you're a full-time farmer. What's your annual income that you pay taxes on?

Profit. Between my wife and I, last year was $70,000, and I anticipate that to double in the next five years as my dad retires and I take on a more prominent role. Okay. So the $120,000 that you're getting ready to have in the bank has to be reinvested in seed corn or something? It'll take about $50,000 for me to put in next year's crop.

So that is a $70,000. Yeah. Okay. Well, and I also have the $40,000 worth of cattle that I'm going to sell. Okay. Well, I don't borrow money to buy businesses. You can do whatever you want. I don't recommend people borrowing money to buy businesses. There's a lot of reasons to do businesses. You can do whatever you want. I don't recommend people borrowing money to buy businesses.

There's a lot of reasons to do this. It would be very normal in the farming world. But the other thing that's very normal, as you're well aware, you see it happen all the time in the farming world, is bankruptcy. And it's due to huge amounts of debt. And so as much emotional pull as there is on this land, I couldn't do it because I don't borrow money. And I don't tell people to borrow money to start a business or buy a business or run a business.

And that's what we're talking about here. Farming is a business. So I can't tell you to do that. Hey, thanks here from Smile Love. At Smile Love, we'll straighten your teeth and help you love your smile. That's what we do, and we do it for less than you'll find anywhere else. I guarantee it. I'm serious.

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and remember to use promo code Dave to take an additional $100 off. smilelove.com, promo code Dave. In the lobby of Ramsey Solutions, Ben and Stephanie are with us. Hey, guys, how are you? We're doing great. How are you? Better than I deserve. Welcome. Where do you live?

Raleigh, North Carolina. Awesome. Well, welcome to Nashville. And all the way over here to do a debt-free scream. Yes, sir. Love it. And how much have you paid off? We've paid off $207,000.

All right. And how long did this take you? Just under three years. Good for you. And your range of income? When I started this journey on my own, I was making $60,000. And then we got married and combined our income, and now we're at $225,000. There we go. Wow.

What do you all do for a living? I write software. And I'm in marketing operations. Very cool. Good to have you guys. Very fun. So you start out ahead of time. What kind of debt was the 207?

The 207 was very normal. We had about $25,000 in credit cards, $45,000 in loans to family, and the rest, about $137,000 in student loans. Wow. So how much of that was yours? Because I take it you guys got married during this, right? Two years ago today. Okay. So three years you've been working on it.

So a year to you and then two years as a couple. So how much of the $207,000 was yours, Stephanie? All of the $207, yours, Stephanie? All of the 207 was mine. All of it! Ben married in! He did. He actually paid off all of his student loan debt long before we'd ever met. Okay.

He was smart. Wow. So what started you on this process a year before marriage? Ben really got me started. Oh, okay. Yeah. So when I graduated college, I was single. I bought a house. I didn't really know what to do with all this money. And I just started looking

around for mentors for someone to learn from. And I sort of read books and listened to podcasts, and I found yours, and it just resonated. And I started listening and realized I've got $27,000 in loans and $10,000 in stock. Why am I holding this when I should be paying off that? And got started. And so I paid off $27,000 in nine months. You make it sound so logical. Well, you make it sound so logical. It's just when you do the math and put everything in priority order, it just makes sense. Yeah, why wouldn't I?

And so in nine months, I had paid off my loans. And then I was going through the process of dating. And when the conversation of, oh, no credit cards, I don't pay cash for everything came up in the date. Usually it was a little bit awkward, but with Stephanie she was like, oh, this is interesting. Tell me more. Yeah, what do you mean you don't have credit cards? How do you buy stuff? And it was like, oh,

well. It's called money. So he got me hooked on it and I think we were dating for about two months and I signed up for FPU and I said, I'm going. You can come with me. Oh, wow. He joined me, and that's kind of where it started, two months into dating.

Wow. And it kind of stuck. So Stephanie, that first conversation, though, I'm intrigued. That's interesting. So you're on a date with Mr. Software developer, super nerd. He's paid off everything. You're like the other end of the spectrum, 200 grand in debt. And he's like, no credit cards.

You're going, not only are you intrigued, but you also must have kind of gone gulp. I've got to tell him I've got this much debt. Did you have a gulp? I did, mostly because I hadn't even calculated it at that point. It was so normal to have debt. I just expected to have it for forever that when I thought through that and I had to actually count what was there, it terrified me when I found out. But it was a huge relief to be able to tell somebody because we don't talk about money. So many people don't.

And so being able to tell him and have him not run away afraid was… And you put a number on it. Instead of having this big unknown blob, having a number that you can start chipping away at. Well, Ben's not like an overreactionary kind of guy. He's kind of an easy guy to talk to. So I'm thinking it wasn't too intimidating to tell him. But it had to be kind of like, I've got to tell this guy I've got $200,000. There had to be a little bit of that in there.

I was prepared for him to turn and run away. Absolutely. He stayed. And so that was proof enough for me he stayed and and wasn't afraid but you know helped keep me uh on a path and was an amazing accountability partner all throughout dating you know he stayed there he helped cash flow he not helped he did the cash flowing of the engagement ring the entire wedding the honeymoon and let me focus on debt until we combined our finances after marriage. And then you knocked it out fast.

Really fast. So I get a lot of questions around this. This is why I'm bringing it up, okay? Because people are always asking me these things, and I don't know because I've never been there. But Ben, I'm also curious on the other side of that equation, why did you not run out the door with your hair in the fire? I mean, I know she's a catch.

I got all that. But don't give me all that. But I'm talking about there had to be some kind of a lot, because you're a logical guy. I mean, what was it that went through your mind that went, well, okay, I can do this? Because it's not where you are. It's the direction you're going. And you felt like she was going that direction? Dude, as soon as we started talking about this stuff, I hadn't even talked about going to FPU.

And she's like, oh, I signed up come too oh okay so it's it wasn't the debt it wasn't the debt would have freaked you out if she wasn't freaked out exactly but yeah okay i got you the fact that she was with very little prompting just turning and facing into it and starting to dig into it i said okay like we can work with this it doesn't matter how far down you start as long as you're moving upward and getting faster as you go up but if she had wanted to just say i'm going to be in this debt the rest of my life it's no big deal you're just crazy that would have been a deal breaker have a nice life yeah okay all right okay well that's what i tell people to do i agree it's not where you're coming from it's where you're

going and i don't tell people they need to be. I agree. It's not where you're coming from. It's where you're going. And I don't tell people they need to be debt-free to be married. I don't, you know, we'd love to get out of debt so we get married. Why? Go ahead and get married. As long as you're both heading in the right direction. That's the thing. And so you guys are a perfect answer to this ongoing FAQ I get around here, frequently asked question I get around here. So congratulations.

207,000, man. How does that feel? Amazing. We have choices now that we didn't have, and it's priceless. Now, when you were sitting in Financial Peace University, did you believe it then that you were going to be able to do it? No. It seemed huge at the very start. But the thing is, I'd already been through it, and I just had a little sticky note, and I started doing a little math on the back of it, and I said, okay, at this rate, probably two, three years, if you have this much income, and you put about half of it towards the debt, and just doing the math,

and I wrote it out on a little sticky note, and she kind of looked at me like I was crazy, like, no, no way it's that easy. And it wasn't easy, but month by month, you just follow the process, and here we are at the end. It's how you eat an elephant a bite at a time. Exactly. Well done, you guys. Did you have cheerleaders?

Yeah. We've had a lot, and we've had just so many friends. They haven't gotten out of debt themselves, but being so public about our story has really helped people to reach out to us and ask us how we did it. And so many people are just... Would you do like a social media blog or something? We did a few things.

We have our charts we color in, and we would post our progress along the way. When we hit our first debt snowball milestone where we paid off all the credit cards, we actually took them to the shooting range and made a whole video shooting them up with a shotgun. Love it. Yeah. Put the buckshot on them. Exactly.

We did a little bit of everything, and we were very open about it, which just brought so many people forward. We've been through FPU a few times. Anytime we hear about friends getting married, our gift to them is always an FPU kit just to introduce them because it's the best marriage or premarital counseling we could ever think to have. I just glanced down at the video they posted on YouTube, the picture of it. Those were not shotgun clips in your belt.

Those were handgun clips and mags in your belt. We did a bit of everything, one of everything. We started with the rifle and the holes were a little too small. The pistol made a bigger dent, but the shotgun was really satisfying. Yeah, that's satisfying is a good word. I love it. Yeah, the rifle's drills a pencil hole. Exactly.

Clearly showed up on the video. Yeah. That's fun, you guys. Well done. So the whole Financial Peace University going through that, having the cheerleaders around you, that did it, huh? Absolutely. I think that there's more power in going to those nine lessons in the group while you're in your membership, that

accountability and that encouragement changes everything. Well, well done you guys. I'm very proud of you. Congratulations. Thank you. Very well done. What's the secret to getting out of debt right quick? I'd say just learning to live without having everything you want when you want it.

It's hard at first, but you realize how much you really don't need in your life and how much of a burden stuff is. And what's really important is the experiences and the people that you surround yourself with. Amen. Good job, you guys. We've got a copy of Chris Hogan's book for you, Retire Inspired. That is the next chapter for you to be millionaires. You're well on your way with this income and no debt.

You're in great shape. Good job, you guys. Very proud of you to be millionaires. You're well on your way with this income and no debt. You're in great shape. Good job, you guys. Very proud of you. Count it down. $207,000 paid off in three years, making $60,000 to $225,000 and got married. Count it down. Let's hear a debt-free scream. Three, two, one.

We're debt-free! Woo! Love it! Love it, love it, love it it this is how it's done man Victor's in Philadelphia. Hey, Victor. Welcome to the Dave Ramsey Show. Hi, Dave. Good to speak to you. How are you? Better than I deserve. What's up?

Well, my dad and I run a small food retailer that we bought around this time last year for $500,000. We didn't have $500,000 last year, but we thought it was a good idea to buy it because we're really familiar with the industry because we also own a food distributor. So fast forward past all the discussions, here's how we ended up paying for the $500,000. We had $100,000 in an account receivable from the owner of the retailer that was put towards the purchase of the business, which left us with $400,000 left to pay. $150,000 was arranged for us to pay the owner over a time period of 18 months.

We have $50,000 left to pay on that, and it should be gone in about six months. And the remaining $250,000 was from a business contact of ours. We called him up. We told him about our situation, and the next day he wrote us a $250,000 check and we were on our way. Although that money came with just a phone call, he gave us $250,000 and

a 36% interest rate. And currently we're only paying interest on the money because we have to pay back $50,000. I'm sorry. I think my headphones are messed up. Did you say a 36% interest rate? 36%. I can't breathe.

Okay. You made it sound like it was so easy. Well, no wonder it was so easy. No, no, no. What's that? What in the world made you think 36% was a good idea? Because of the revenue that the business pulls in. We're pulling in about $110,000 a month in revenue,

and we'll be able to keep up with the loan. We're able to pay back the $150,000. We're current with everything, but it's just that money and interest could be better used for investing in the business elsewhere. Okay, so when are you going to pay it off? There's no term on that. No, I didn't ask that. I asked when you're going to pay it off.

I'm sure he doesn't want you to pay it off, but when are you going to get rid of this mess? We were planning on either paying the $50 that we're paying now and it should be going to 6 000 that we'll start paying that aggressively so you haven't got much margin in this business because you told me you're making a million two gross uh that's about right yeah and so what's your what's your net uh about. Okay. And so why is it taking six months to pay $50,000? We just set it up to be paid over 18 months. So we started paying $150,000. Okay.

Let me stop for a second. If I had $500,000 income and I had a $250,000 loan at 36% interest, it would be paid off in less than a year. I would not have that crap. You make a ton of money. Why are you sitting with this debt at ridiculous interest rates? Because we also have very high expenses to run the store. I asked you what your net was.

You said your net was 20. You meant your gross profit, not your real profit? Net profit. Net taxable income is what a year? Oh, we're just about breaking even. We're just about breaking even on that. Which means you have a 10% margin. Oh, Lord. Okay, so how can i help so we have about 50 000 left to pay on the first one

yeah on the first one the original owner and then we'll be able to apply we'll be able to apply 8333 every month yeah according to our current payments and we'll start paying back the $250,000. But we've been looking into getting a loan from a formal loan from a bank but not very much is available for us

now since we've only been in business for a year. I just wanted to call to see what you would suggest to be the best way to get us out of this mess. Yeah. Well, I mean, if you have the ability to refinance it at a lower rate, anything's better than 36%, because we're talking about, what, $100,000 a year in interest.

About $90,000. Yeah, that's kind of ridiculously close to $100,000. Okay. And so, you know, if you could cut that down by half, if you had an 18% interest rate, that would be another $50,000, $45,000 to apply towards principal in a year. So any refinance you could do, crap, if you could put it on credit cards, you'd be better off than where you are. Right.

And so anything you can do. But for sure, I'm going to have this business living and your personal lives living hand-to-mouth until you get this payday loan you have paid off. Unbelievable. Wow. Yeah, I mean, you've really got three options. One, sell the business and get out of the mess. Two is cash flow the debt reduction.

And three is to refinance the first debt or the $250,000 debt if at all possible. Even if you could refinance portions of it and reduce the principal, that would help. I mean, if you could get a $50,000 loan here and a $50,000 loan there, you'd be better off. You've already got the debt. If we can restructure it and then make the reduction of the debt happen that much faster as a result of the restructure, then that's going to be okay. But I think you guys need to – I would be scared to be around you guys if you're not willing to sit down and the two of you look at each other and go,

this sounded like a good idea at the time we did it, but this was one of the dumbest things we've ever done in our lives. Because if you make it out of this without bankrupting, you beat the odds. Because you look to me like a bankruptcy looking for a place to happen. You've got no margin. You've got a huge gross and some slip. You have a 10% movement in sales. You've got a real to happen. You've got no margin. You've got a huge gross and some slip. You know, you have a 10% movement in sales. You've got a real problem here, a real problem.

If something happens, the economy slows down, I mean, you are set up for failure. And so if you guys don't, A, say this was a mistake, and the fact that that was a mistake now tells us we will never, ever, ever, ever do anything like this again. Then, you know, I think you're going to get it one of these days. You know, you're just playing with fire. You're going to get burned. Man, you are standing around in the middle of a bonfire. Unbelievable.

Kat is with us in Springfield, Illinois. Hi, Kat. How are you? Hi, how are you? Better than I deserve. What's up? Okay, so i'm in baby step two and i've taken a few and i know that you say when you buy a home you should have a 15-year mortgage with 20 down i have a 30-year mortgage because obviously i bought my home before i took this class i'm wondering if i should refinance my home now or do i need to wait

till i complete baby step two to do that you do not need to refinance your home now, or do I need to wait until I complete Baby Step 2 to do that? You do not need to refinance your home ever just to go from a 30 to a 15. All you have to do is just pay your 30 like a 15, meaning calculate your 15 payment amount and pay that much extra above the 30, and you will pay off a 30 in exactly 15. The only reason you would refinance a home is to get rid of a higher interest rate mortgage. If you could reduce your interest rate or if you've got an adjustable rate or a balloon and you want to get rid of those. You know, either thing like that. But you do not need to refinance to move from a 30 to a 15.

Just pay it off. Pay your 30 like a 15 and it will pay off in that period of time. Our question of the day comes from Blinds.com. They're the number one online retailer of custom window coverings. They have site-wide savings right now. Plus, they'll take an additional 5% off if you go to Ramsey. Blinds.com slash Ramsey. Blinds.com slash Ramsey.

Will's in South Carolina. Dave, we're debt-free, including the house. We've led Financial Peace University at our church. Thanks for all you do. I'd like to have part of my emergency fund in cash. I have a home safe to store the cash. How much cash on hand is good?

And what should I do to document how much cash there is in case of fire or theft? Would my homeowner's policy cover cash? Well, you'd have to check with your homeowners to see how much cash they cover. They typically do have a limit. The only way to document is to video it and keep a copy of the video, just like you do all your other valuables.

It's not a bad idea to have a video of things that are valuable, a photo directory of things that are valuable in case of fire or theft. That's not a bad thing. But, yeah, you know, if you've got a $10,000 emergency fund, you have $5,000 at home in a safe, that's not the end of the world. I would not be sitting there with $200,000 in cash in my safe either. So I don't know what you call your emergency fund. But as long as it's something like a fairly normal person would have,

then, yeah, that's okay. That's okay. But, again, make sure your homeowner's policy covers it so you know what it is and make sure you've got a good safe. That puts this hour of the Dave Ramsey Show in the books. Hey, it's Kelly, Dave's phone screener. We finished 2017 with a bang as the fourth most downloaded podcast to be here. Thanks to all of you for listening and helping us spread the word.

We'll see you next time.