The Ramsey Show - App - Rent Is Going Up and I Don't Think We Can Afford It (Hour 3)

Episode Date: October 27, 2021

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Welcome to the We'll be right back. Purposeful conversation about life, about money, about your work, about your relationships. I'm Ken Coleman, joined by my colleague George Campbell. The phone number is 888-825-5225. 888-825-5225. George, how are you feeling today? Feeling wonderful, Ken. Feeling good? Yeah, I like the sweater today. You like that?

It makes me think of fall and pumpkin spice lattes. Really? Yeah. Really? The light blue does that for you? Yeah. Now, see, the green, that to me feels a little bit pumpkin spice latte, which, by the way, I want to point out, I'm not a fan.

Really? I haven't jumped into the craze. I know this about you. We've traveled together. You're a peppermint mocha guy. Kelly is pointing at James. James, you like the pumpkin spice? I like it if you put a few less pumps of syrup in there so it's not so sweet.

The flavor, I'm a fan of, yes. Okay, so light pumpkin spice. Okay, Kelly and I are on the no-way train. Good for you. Let's see. Kelly and I, we see eye to eye. This is the content America's here for. Well, I think people are listening and they're going, you're either in one camp or the other. I don't think there's middle ground on pumpkin spice. Plus, any time we can get James to give us any personal information, it's a win in my book.

Is that right? Yeah, he's Fort Knox, man. Is he really? I don't even know if his real name is James. There's no proof. You know what? I'm going to tell you something, folks. James Childs, long-time producer of The Ramsey Show.

I find him to be delightful. I really do. He's quiet. I never said he wasn't delightful. But I don't think that he would. If I asked James, like, you know, tell me your favorite band, I think he opens up like, you know, like crazy.

I think he just turns into, you know, like one of us. gab and gab and gab the guy likes his music you know yeah yeah he's happy to talk about that and we're happy to talk about you so let's get to it andrea joins us in topeka kansas andrea you're on the ramsey show how can we help hi thanks for taking my call so i have a financial question of course but um I'm on baby step number three. I have a kitchen repair that needs to be done sooner than later because I have the new dishwasher sitting there. But the cost to fix it is going to be about $3,123, and I'm just a little nervous about spending that money,

even though it needs to be done eventually, because it's just a lot of money out the door when I have other expenses. How far away are you from fully funding the emergency fund? So I think I need about $9,300 for about three months, but for six months I was thinking about almost $19,000. I am a single mom, so there's only one income. So I'm just trying to plan accordingly. What's your take-home pay every month? Take-home pay, $4,395. And then I have about approximately $300 of child support. Okay. That's great. So how far are you into this emergency fund?

About $9,000. Oh, so you have three months currently? Yeah, just like just now. That's great. Good for you. Hey, just a quick question. You said the new dishwasher is in the kitchen. It just needs to be installed? Well, I have... The old dishwasher is about on its last leg. I purchased a new dishwasher over Labor Day when they were on sale. Yeah.

So they were sitting because I thought it was going to die sooner and it's still chugging along. Good. So it's sitting there packaged between my dining room and living room. Right. So my point is the $3,125, that's the cost to install it?

No, it's to replace all the countertops. So like my house is an older house, and so the floors were uneven. So when I moved in, we fixed the floors. And then now I have to either rip up the floors, which I don't want to do because they're new, or rip up the countertop, which I don't like anyway. I see. I got you. I got you. I'm tracking with what the cost is. Okay. I got you. Okay. So how long would it take for you to get to that six-month emergency fund? How many more months? Probably like another six to seven. I also pay for private school, and so that takes up a chunk of my budget. So not a lot of margin to continue on with the baby steps right now.

Yeah, I have about $1,300 between. I've had a lot of home repairs, so that's kind of slowed down the process, but comfortable like about $1,000 to $1,300 every month of extra margin. Yeah. Good for you. That's great. Well, you're crushing it as a single mom, you're doing some incredible work. If I'm you, I mean, I'm finishing out this emergency fund to get you in a good solid financial foundation. And I'm dealing with the old countertops. I'm dealing with the old dishwasher. And, uh, if the dishwasher goes out, I mean, hand wash them, you can hand wash them for a month. Could you do that?

I guess I hate washing dishes. I know. I'm with you. I get it, but it's just you and how many kiddos? Just one. Oh, my gosh. We're doing paper plates for a month. Can I just tell you?

That's exactly where I was going. First of all, I mean, you're a single mom. You're a superhero, okay? Andrea, you're amazing. So you can wash the dishes. But if it's that big of a deal, I'm with George. I'm going paper plates and paper cups. It's just you and the kiddo.

And I'd also get some extra quotes on the repairs. Yeah, I think that could be beat. It feels high to me, but depending on what you've got going on, I would at least get a few quotes from some contractors in the area and go, hey, what would you charge for this to see if you can speed up that process. Because if it's two grand, well, that's great. That might speed up the process by a month or two as well. Okay. You got us?

Andrea, one other question on this because I'm trying to help you save even more money and do all this faster. I want one more idea. Okay. Are you involved in the community? Do you have a good group of friends around you? Maybe go to church? Are you plugged in somewhere to a friend group or church in any way? Not quite yet. I moved here a year ago. My parents are relatively really involved and they're going to do some of the work with a friend.

But, yeah, I'm pretty relatively new. I have family and stuff, but I don't have a community. Okay, here's the deal. Even at my church. Andrea, I really love the fact that your parents are there, and they're involved, and they're going to help. I'm telling you right now, you can beat that $3,100. It's called that. I can't talk to you yet, George. But you can beat that $3,100. It's called that. I can't talk to you yet, George.

But you can beat that, Andrea. I'm telling you, you can beat that with help and people pulling in there, the demo on that. There's friends that could come in that have some construction background or whatever. Your dad's got to know somebody that can come in and do that demo, and we could probably do that for half of that cost, okay?

Yeah, and then maybe I need to change. Maybe it's because it's the cat because it's the counter in the sink um i get it that's going to cost about that i get it but i'm telling you i have my parents told me to do it well appreciate that but if parents can make some connections for you and you and you just kind of see who'd be willing to help you to come in and help a single mom out are you kidding me yeah you know parents told you to do it but they're not paying your bills so it changes the the situation appreciate the advice mom and dad but i'm over here doing my thing should really change out the countertops

yeah it'll be three grand well you should do it yeah yeah let's get some help let's see if we can we can cut costs here people want to help single moms they ought to if i knew somebody in topeka kansas i'd be on the phone on the commercial break. Yeah. Go on, let's help her out. Yeah. But I get her predicament, Ken. You know, I'm a millennial. Me and my wife, we don't live on Little House on the Prairie. I didn't sign up for dishwashing by hand. But you can do it for a season to get a

good financial foundation. Oh, these Gen Xers. Well... You walked uphill both ways. Let me guess. I did, but I also still wash my own pots and pans. We don't put them in the dishwasher. Well, then you can wash the rest of them. All right. But we even came up with the paper plate idea, which I thought was brilliant.

We were both there. That's a classic dude move. You can buy eight months' worth of cups at Costco for $12. Go today. All right. We've got to take a quick break, but we're coming back. This is The Ramsey Show. Hey, it's Christi Wright. Do you ever feel lost, maybe a little alone? We have all had that feeling.

And I'll tell you what has helped me in these moments is listening to worship music. That's why I'm so excited to tell you that we are partnering with the number one daily worship app called Glorify. This helps remind us that God is with us. And the best thing is Glorify is free to download. Just search for Glorify in your app store, or you can get 50% off their full library when you use the code RamSEY by October 31st. This is The Ramsey Show. I'm Ken Coleman, joined by George Camel, and we're taking your calls to help you move forward in your life. If you want to move forward in your work, do something you love, make a bigger paycheck, which will help you get through the baby steps faster.

I'm your guy. That's what we do on the Ken Coleman Show on the Ramsey Network. And then, of course, George is going to help you with your money questions as well. So we're here together, 888-825-5225, 888-825-5225. The last 18 months have been, well, I don't even know what you call them. Just a lot. Wow. You wanted to say unprecedented, but you held back.

Is that what you think? Yeah, we've put a kibosh on that word around here. No more. We've removed it from the lexicon. Pivot, unprecedented, it's all gone. It's all gone. We're done with it. Yeah, that sounds like something Dave would say. But either way, it is make you wondering what in the world is next, right?

Because you don't know. I mean, we felt like it was going to be slowing down. Thought it was going to be getting better. Now inflation. Now we're talking about are we going to even have Christmas presents in the stores? It's just – Always something new to worry about. It really is.

If you read the headlines. It really is. So anyway, maybe that's how you feel about your money, too. You're tired. You're stuck. You're stretched thin. You don't know how you're going to get out of it. You don't know what's next.

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33789. Los Angeles, California. The City of Angels. Taylor is there. Taylor, how can we help? Hey, guys. How are you doing today? Well, we are living the dream. Taylor, what's going on with you? Well, I'm out on a walk with my 18-month-old daughter, and it's sunny and 75, so I can't complain too much. It could be worse. It could be worse.

Happy Californian. I'll take it, Ken. Very nice. Yeah. You like that? I like that. I see what you're doing there, George. You don't have to take'll take it, Ken. Very nice. Yeah. You like that? I like that. I see what you're doing there, George. You don't have to take that from him, Taylor. That's all right.

It's okay. Well, it is what it is. Yes. Some Californian and some Iowan, so I'm a little mixed blood. All right. How can we help? All right. Oh, I got a question for you guys.

Basically, it is, what would you do with our money financially in the current situation that we're in? I'll give you kind of a background here as quick as I can. My wife and I got married about five years ago or so. And at that time, she took a position with Chapman University. She's a professor in accounting out here in in actually orange california is the exact town and i own a business it's a higher end bicycle shop like pedal bikes and road bikes back in iowa um we are split in terms of where we live about seven months in california five months in iowa my busy season is in iowa which is basically her off season because she's on an academic schedule.

So we spend most of our summers in Iowa and we spend the rest of the year out here in California. Now, we've gone through pretty much all the baby steps. We don't have debt. What we do have are two homes and a commercial building. Now, we have a home here in California. It's on a 30-year mortgage at 2.6%. We have about $550,000 left on that. It is valued at about $870,000. So our home back in Iowa, we have a home there on a 15-year at 1.9%. We have about 98 left on that, and that is valued at just over $300,000. And then we have a commercial building that we purchased last year that my business rents from.

So my business is a C-corp, and that then rents from us as landlords. Now, the reason we purchased that and have a mortgage on it and didn't pay cash is because we were very strapped with a time issue. So it was either close the business up or purchase the building and rent from it. It's kind of a weird thing. I got diagnosed with a toxic mold poisoning and that's a whole nother, that's a whole nother thing. Yeah, it's, it's a, it's a weird thing. So like, like I'm, like I said, it's a kind of a weird situation. I said, it's kind of a weird situation. I think, you know, nine times out of ten, we would say go this way, but we might be that one out of ten time that it just didn't make sense

and we weren't ready necessarily to completely uproot our life in Iowa. And the reason being is we don't know if we're going to be here in California because my wife, her job, we probably have two, maybe three years left here if she doesn't get tenure. So she's a tenure track professor, but if she doesn't get tenure after that two or three year mark, then we would most likely move back to Iowa. And so our biggest thing is like, we have extra kind of cash flow coming in. Would you throw that at homes or would you put that into like an investment, retirement account? Why we have that cash flow?

Because we don't think that that's going to stay there forever. And that amount of money can grow pretty quick. Most of our, like we have $270,000 in the retirement account. We've got about $75,000 in the retirement account. We've got about 75,000 in alternative investment accounts. Those are right now are anywhere from 12 to 17%. They've been pretty consistent. And then we've got, you know, a $30,000 emergency fund, and then it's about 20K in savings. What's the savings for for you guys have any goals with that um it's honestly it's just like a i i don't know if i like an oh shit fund like

if something happened big time where like you know business issue building expense that type of deal um we just kind of have it. My wife just kind of likes to have it. What's the alternative investment? What's that about? There's some real estate in there. There's some art. There's some supply chain financing. There's some...

So if you wanted to today, could you liquidate that and get $75,000 in cash? Within a year. Yeah, within a year, yeah. Within a year. Some of them still have about six to eight months left, yep. Well, looking at these numbers, I mean, I know you're asking, should I? They do cash flow. They do cash flow, yeah.

Yeah, so they have stuff. If you're following the baby steps, I want you to have a paid-for house before we continue building wealth, before we continue investing. So that means we're not going to continue this investing track. I know you're seeing the money grow. You're going, hey, it's getting 12% to 18%, and it's been a great bull market. But what I want you to do is get rid of that Iowa house. It's 98 left on that.

I mean you could with your savings and those alternate investment accounts, you could basically pay that off this year. Yeah. That would free up the Iowa mortgage payment to then attack the California payment if you wanted to do that. I know you guys may not be there a long time, but you're going to build that in your equity anyways when you go to sell it. So that's what I would do. That's the Ramsey plan before we go into... You're going to have the rest of your life to go wild with investing. But right now, you're sitting here with three mortgages, the commercial mortgage, and at some point, that could put you in a real bind financially.

So I want you to have options, and right now, you guys have a great income and things are great, but one day, things may not be great, and you're going to have these payments to make. So I would clean up the Iowa debt, get rid of that mortgage, attack the California one, and then work on that commercial one and liquidate anything you can that doesn't have any tax implications, retirement accounts, things like that. Georgia, stellar, stellar job. I have nothing to add other than it kind of amused me as we began to move from Iowa to California, California back to Iowa. It's a fascinating situation. You don't hear a lot about people splitting their time between Iowa and California, and I just got to imagine. That is like going from Mars to Venus, isn't it? Very different situation. I would think so. This is a young couple, and they're going from Mars to Venus, isn't it? Very different situation.

I would think so. This is a young couple, and they're going to have a California home and an Iowa home, and they've done very well. Very well. You guys clearly are crushing it. I would just simplify. I think you're right. Simplification right now.

You know, young baby. By the way, I thought he did a nice job of walking the streets of L.A. Very impressive. He wasn't winded. No. I was paying attention to that, too. He's in shape. Very in shape. Yeah, youed. No. I was paying attention to that, too. He was in shape. Yeah.

Very in shape. Awesome. Yeah, you did such a good job on answering that money question, George. There's a lot going on. I was locked in on his heart rate, what I thought it might be, you know? I appreciate that. Glad you're being observant in some way, shape, or form. Well, you did a good job.

There's nothing else I can add to that. There's a reason why you're a money personality. I'm a nerd. I like the numbers. What can I say? You like the numbers. You do good with the numbers. Thank you. Fantastic. Alright, folks.

Don't move. More of your phone calls coming up. This is The Ramsey Show. We'll be right back. welcome back to the ramsey show i'm kent coleman joined by my colleague george camel we are here for you america triple eight eight two five five two two five is the phone number it's a toll-free number phone lines are open triple eight88-825-5225. All right, George, let's go to Winston-Salem, North Carolina, and that's where Tyler joins us. Tyler, how can we help?

Hey, how are y'all doing? Well, we're having a blast. I've been scrambling on YouTube at every episode, but a lot of it does help, but it doesn't really match my predicament me and my fiance are in. on YouTube at every episode. But a lot of it does help, but it doesn't really match like my predicament me and my fiance are in. So I thought I'd call

and just share a little bit. Great. See what y'all thought. So we just both graduated from school. We have both just got jobs recently in the past two months. Our household income right now it's on track to be

about $112,000 a year. Sorry, try one more time. Speak directly to the phone. We're getting married in June. Okay. We have about $112,000 of household income. Okay. Myself has $49,000 of that.

We have $23,000 as of now in savings, both of our savings accounts. We have no debt, no car payments. We both live at home with our parents, so we're not really paying any bills besides going out to eat and doing leisure things. Did we lose you? Yeah, I think his phone's...

You're coming in and out. Are you in one place? You're moving around? What's going on? I don't. You're coming in and out. Are you in one place? You're moving around? What's going on? I don't know. I'm in one place. I'm in my office. Okay. So I heard $23,000 in savings.

There's no debt. You're both living at home. And then it went quiet. So what's your question? Hey, so with our current position, we don't know whether the way the market is, if we should use that $23,000 we have in savings to maybe look at land, maybe invest in some land and start making payments on our land, and then maybe potentially building a house on it, or possibly just starting to just keep saving

all the money that we're making month to month, and then debating on if we should rent or go straight into like a 15-year mortgage. That's a great question. What's the deal with the wedding? Are we cash-flowing that? Who's paying for that? We're both blessed. Our parents are paying for it.

So that's something we're both thankful for. And when is the wedding? In June. So we've got some time. So from now until then, I'm stacking up as much cash, both of you, saving up as much as you can, so that when you enter this marriage, maybe you get a big pile of money. And what I don't want you to, I actually don't want you to jump into a 15 year mortgage or some land. I want you guys to rent for a little while and get the hang of marriage. That should be your focus where you

invest your time. And while you do that, you can still be saving money while you're renting. And I know it feels like for you, because you guys have done so well, you're going, wait, we're not going to throw money away on rent. But here's what it's going to do. It's going to set you guys up, not only financially, but in your marriage. There's a whole lot of learning curve to marriage. And home ownership added onto that is a big pile of nightmares. So I want you guys to get some footing under yourself. Maybe you sign a six to 12 month lease and then start to dream together and go, what do we want to do? And land, while it's great to buy some dirt, is that her dream too? And does she want to be in a single family home and not wait three years for the hopes of building a house on this land? So if I'm you

guys, I'm renting for a little while with a big pile of cash that you're continually saving up. Make sure you've got that emergency fund in place, three to six months of expenses. You're both investing 15%. And then at that point, you're going to have a big down payment, and maybe you could even pay for it in cash. I mean, how old are you two? We're both 23 years old. Unbelievable. You guys are going to be set up.

If you do this stuff and you follow the baby steps, you'll be able to pay cash for a place before you're 30 at this rate with your income. Well, right now, with that $23,000 we have in savings, and now I'm kind of debating if we should just act like we don't have $10,000 of that. So that's our emergency fund. We don't need to just forget we have it, and if we need it, we have it, but just act like we have $13,000 and just keep adding to that. Well, here's the thing. You don't know what life looks like when you're married.

You don't know what your expenses are yet. And so once you do get married, whatever you need for three to six months of expenses, you're going to add up. Here's a month of what our life looks like. Let's multiply that by three or six. If you both have great stable incomes, you can lean towards three, and the rest of that money can go towards your next goal, which it sounds like you guys want to get into some real estate, buy something, and I'm all for

that. And with your position at 23 years old, making six figures in a good financial spot with no debt, you're going to be able to get there in no time. And if you do it, you mentioned 15-year, so I love that, 15-year fixed rate mortgage, where the mortgage payment is no more than a quarter of your collective take-home pay. That's going to give you guys margin to continue the baby steps, to save for the future, to pay off the house early, all of those great things. So you guys are doing great. Congratulations on the wedding. Yeah, fun, fun, fun. Let's go to Malachi next in Rogers, Arkansas. Malachi, how can we help? Hi. Yeah, thanks for taking my call, George and Ken. I really appreciate it.

You bet. So I really struggle with how to phrase this question, but I'm 22. I've got a beautiful wife and two adorable children. I'm only making $16 an hour. I don't have a degree. Thankfully, I don't have any debt. But our rent's going up. It's getting to the point to where,

um, we can't really do anything significant. I can't put away for retirement. Um, I can't put anything into a savings account. Um, and basically the most we could put into savings each month, each month is about a hundred dollars. Um, you know, just leaving, even just leaving a little bit of extra money for, you know, unexpected stuff or, you know, um, like if we need to get an extra thing of diapers or something. So I'm really just not sure what to do. Um, as far as options go, there's not really anything else in my area that's comparable. Um, what are you doing now? You know, um, as far as career goes, um, I, I worked at a t-shirt shop, um, which is, I mean, they're super nice people, and it's a great gig, and I was unemployed prior to that.

And so, not unemployed, but for a time I had been. And so, but, I mean, there's really not much room for advancement. If I stay there 20 years, I'll probably be doing the same thing I'm doing today. How big of an area is Rogers, Arkansas? I mean, it's in the northwest Arkansas area, so it's pretty big. I think it's one of the fastest growing areas in the country, but it doesn't really have any of the industry that I'm wanting to go into. What industry do you want to go into? Publishing, book

design, formatting, and typography and stuff. If that's the industry you want to be in where where are those jobs i'm i'm really not sure okay let me help you out okay so nashville's got a lot of publishing jobs okay you need to do your homework on this you know because you can't sit there you've got a family to take care of and 16 an hour is barely getting you by and it's also 2021 and you said you're in a really good area northwest arkansas my goodness walmart's out there bentonville all that area and and we're in a situation where uh companies are begging people to show up dude you can make way more than $16 an hour and you should be making way more than $16 an hour, and you should be making way more than $16 an hour

not at the t-shirt shop. It's time to get busy. This is an income issue. You've got the discipline. You've got the know-how. You're doing a good job. You just don't have enough income, and so we have two issues. We have short-term and long-term. The short-term, that's what I just addressed. I'm kind of kicking you in the seat of the pants and going, get out there. And if you've got to drive a delivery truck, you can make $20, $22 an hour. Okay? Get out there and get busy. You're not wanting to go into T-shirts anyway.

So go wherever you can go right now and get more income. Now, then once you get stable and you can breathe a little bit, then you can allow yourself to say, okay, if I wanted to move to the Nashville area to get into publishing or New York or wherever, wherever, wherever, you've got to do your homework, that type of work you want to do. Where are the best places to do it? It's not just an area. Where are the companies at that are looking for talent?

Are you qualified? If you're not, Malachi, what is it going to take for you to get qualified? How much is that going to cost based on your budget? How long is that going to take? Well, these are questions you need to answer after you start making more money and get some margin. Do you understand what I'm saying? Yeah. Yeah, absolutely. Come on, man. I appreciate you hitting me in the butt a little bit. Listen, you've got a lot to offer. I need to hear that more. Yeah. You know what you need? You need a picture of that family. You need a picture of that future

in your head all the time. Get out there, man. If you've got to do two jobs right now, there's plenty of money to be made. You have an income issue. That's it. Get the income up. Walk the baby steps out. Get qualified

for the future that you want and step into it. You've got this. This is the Ramsey Show. I'm Ken Coleman, joined by my colleague, George Camel. Our scripture of today comes from Isaiah 58, 11. The Lord will guide you always. He will satisfy your needs in a sun-scorched land and will strengthen your frame. You will be like a well-watered garden, like a spring whose waters never fail. Today's quote from Zig Ziglar, you are the only person on earth who can use your ability.

Love Zig, love the simplicity, but always a lot of depth behind Zig. Amazing man. Yeah, great dude. I never got to meet him. Dave talks about him, he's one of Dave's heroes, but never got to meet Zig, unfortunately. All right, let's get back to the phone lines. Let's go to Luke in Phoenix, Arizona. Luke, how can we help?

I'm good. How are you? We are having a blast. What's happening today, Luke? I just have a quick question. At the beginning of the year, I am receiving, and it should be a yearly thing as long as I'm in the job I am, but it's a profit share check that I'm getting for somewhere between $40,000 and $50,000 next year. And I'm just wondering, like, how do I budget that with the rest of my income? What's your household income?

So my regular salary is $72,000. And then my wife is in real estate and somewhere between 80 and 100 she makes depending on the year so total household income is somewhere in 150 to 170 range maybe yeah okay and then the bonus is going to move it the bonus will move it up to closer to two that's fantastic way to go man that's awesome so where are you guys at give me a financial picture of where you're at have Have you been following our baby steps? Yeah, we're working through them now. We're selling our rental properties. We have those out of state, thank God, and that should eliminate almost all of our debt, plus give us our emergency fund. Fantastic. So that'll put you at baby step four, where you guys are investing 15% of your household income in retirement? Yeah. Okay. And do you have a primary residence? Yeah, we already own a house. And it's paid for?

No, it's not. Okay. It's on a mortgage. What's the mortgage on that? $450. $450. And what's the house worth? Uh, six, six, six and a half. Okay. So if I'm you guys, I mean, we, I'm applying this money to your goals and treating it kind of like an irregular income thing. And so if I'm you, if I got $40,000 today, I'm slapping that thing on the house and paying that mortgage down. I mean, you've got a, it's a sizable mortgage there. And so if you keep putting that bonus towards that on top of any extra margin you have past baby step four, do you guys have kids? Yeah, we have two. Okay. So once you start investing that 15% into maybe your 401k, Roth IRAs, things like that,

then you're going to start socking away some money for the kid's college fund. I'm guessing they're a little younger? Yeah, five and one. Perfect. So we've got a lot of time. Put that money into some ESAs, 529s, things like that to let that money grow tax-free so that when they go to college, if and when they do, you'll have money to pay for that. And then on top of that, you're at baby step six, which is where we're paying off the house early. So once you've got these plates spinning, you've got your investments for retirement, you've got the

investments for kids college, any extra margin and any extra bonus I want going towards that house. And if you do that, I mean, it sounds like in a few years, you guys could have a paid for house that's worth 650 or more. Okay. Should I set any of the money aside for tax purposes wise? I'm going to worry because it's going to be W-2 income, but I don't know like how that. They don't take taxes out of that bonus? Yeah, no, it will be taxed, but like just it doesn't get taxed at the right rate because they just, when the W-2 is just accounting for my income, it doesn't, because my wife is all 1099, so none of hers is.

So basically, there's extra taxes that are needed. Sure, if you guys calculate those taxes, set those aside in a separate fund so that when it comes to tax time, you're ready to pay for that. And of course, I'd be working with a tax pro with your situation. You can connect with one over at RamseySolutions.com.

They're Ramsey trusted. They're going to help you do things the Ramsey way. They've been vetted by our team and they can help you navigate what those tax implications might be for your scenario. But you guys are crushing it, man. Way to go. Awesome. Yeah, this is good. I like this $40,000 bonus. How do I manage it? We like those calls. So incredible. That puts you in a great financial spot. Yeah, I love that. All right, let's go to Chad in Indianapolis, Indiana next. Chad, how can we help? Hey, George. Hey, Ken. Honored to be on the show here. I have a quick question for you with regards to a potential business purchase. So my wife and I are in baby steps four, five, and six. Uh, we're putting back 15% for retirement, um, following the baby steps.

And, uh, uh, my employer owns an insurance agency and has given me the opportunity to become a potential owner in the future here. There are two other partners involved, really good friends of mine and coworkers. Um, obviously there's a lot that goes into any kind of a partnership. Two other partners involved, really good friends of mine and coworkers. Obviously, there's a lot that goes into any kind of a partnership. I know Dave's not a big fan of that. But my question is, so the option is to go forward with a structured buyout that would be, so essentially we would be gradually buying out the agency until we reach 10% ownership, at which time we would become the full owners.

Right now, my opportunity is 33% partner, but the other two partners are open to giving me majority, at which time I would have the opportunity to be a majority owner. A couple of quick questions. We only got about three minutes or so, so we got to get to the facts here. So how much is that payment? Is it monthly, quarterly for you to get to the 33%? So the payment for me would be about $1,500 a month based on the valuation we're at right now. And that would be $1,500 a month from each partner in order to reach that 10%. It takes about five years to get there. All right. That was my next question. So it would take you five years to get to where you would own 33%.

Now explain to me quickly, how do you then move from 33% to the other partners are going to give you the majority? What does that look like? Well, so the other partners would always be part of the buyout, but I would have 34%. So my payment would just be a little bit higher than theirs. And that's when the actual buyout occurs. I'd have 34% and they would both have 33. So what does that give you over having 33? It just gives me more control over the business. I know that's... So you have kind of the majority voting share. You can get to make some more. Okay. That's what I wanted to know. Do you have a little more power and control in that spot?

So I'm doing the math here. $1,500 a month for five years. You're looking at $90,000 to buy into this thing. Yeah, it's actually $100,000, so it's just a little bit more than that. Okay. So I may have given you some. So $100,000 to buy in, and what's the upside of this? Well, so the upside is the business pulls in about 250 net profit at the end of the year.

Once I formally purchase the business, then we'd be looking at all that upside coming in, which I can then use to pay off the remaining amount on the business to the prior owners. So 250 net profit, is that split between the three? It would be split between the three, yes. And that's on top of income? We all have a very aggressive mindset. Yeah, and then you're planning to pay them off? This is going to take way too long.

It's not, there's no value in this. It doesn't sound like it's going to be easy. And it sounds like it could get messy along the way. Chad, we let you probably go a lot longer than Dave would. This is not a good idea. This has got all kinds of problems with it. It's not spelled out very clearly. You've got three people in the pot.

This is not a very big business either, 250,000 net. These numbers just don't add up to where this would be even worth taking on all the headaches and the risk that we are very clearly against with partnerships. Yeah. If you want to do this, I'd go out on your own. A hundred percent. If you can do it now, you could do it on your own and have a lot more control and not have to wait and hope and deal with messy friendships.

I mean, that's the thing. You might hurt some of these friendships along the way as we all fight for power and control over the next few years. Yeah. I mean, the very word control, I mean, it has to happen in these conversations, and that creates a weird deal. I think you do it on your own. Either you buy it on your own, if you believe in it that much, or you start something on your own. But this is a bad move.

This isn't good financially either. Well, good stuff. Hey, fun times, George Campbell. Always. Pleasure. Yeah. I want to thank our senior associate producer, Kelly Daniel, and our erstwhile legendary producer, James Childs. And you, America, thank you for listening. This is your show.

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