The Ramsey Show - App - Should We Pay Off Student Loans While in School? (Hour 1)

Episode Date: June 7, 2021

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Music Music Music Music Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studios, it's the Ramsey Show, where debt is dumb, cash is king, and the paid off home mortgage has taken the place of the BMW as the status symbol of choice. I'm Dave Ramsey, your host. This is The Ramsey Show.

Dr. John Deloney, Ramsey personality, best-selling author, host of The Dr. John Deloney Show, which is exploding as a podcast and a YouTube show, is with me today as my co-host. Open phones at 888-825-5225, 888-825-5225. Sarah's starting this hour off in Charlotte. Hi, Sarah. How are you? I'm great. How are you?

Better than I deserve. What's up in your world? So I just wanted to ask, so my husband and I are both full-time college students, and we're going to be seniors in the fall. And I was just wondering whether or not you would suggest we go ahead and pay off our student loans with extra scholarship money that we're expecting to be refunded to us. Usually, no. Your husband and you, changes the conversation a little bit, you're both going to be seniors

in the fall, so you've got one year left. And how's the last year for both of you being paid for? All scholarships? Yeah, so after we got married, we qualified for more financial aid. And so the scholarship money that we had was more than what it cost for tuition. Okay. How much more? For this upcoming school year, we're expecting about $13,000 per semester. On top of your expenses? And how are you eating?

Well, my husband works full-time as well. Oh, okay. Cool. Very good. And so what does he make? About $30,000. Okay. All right. and so what does he make um about 30 okay all right um out of an abundance of caution no i would just pile it up and wait just wait to start your baby steps until graduation because both of you will graduate next year at this time and both of you hopefully will embark on much better careers than either one of you have ever seen before. Agreed?

Mm-hmm. So your pay should go up way up this time next year. Is that right? Right. Okay. At that point, I want you to, more than anything, add in no more debt. If you have $26,000 laying around and have no more debt and have two big jobs, and you start your baby steps,

you're going to throw that $26,000 immediately at the student loans, and the only thing you will have lost was how much interest you would have saved between now and this time next year. And really, you may not even be accruing interest yet, are you? No, not yet. Well, all of our student be accruing interest yet, are you? No, not yet. Well, we did for all of our student loans are from our freshman year. Yeah. So we have interest all the way up until last year when they suspended that.

Yeah, and it should go back on in September. So I think that's when it comes back on, if I remember. So you're going to have a little interest with my idea. But that's okay. I would rather the big is for sarah and her husband to graduate with no more debt and i want this cash as an insurance policy to graduate with no more debt then when you quote unquote start your careers following graduation one year from now and you get the big jobs now we're going to really push play on the baby steps get going hard on it and we're going to clean out any cash we've got except a thousand dollars it's not retirement money we're going to really push play on the baby steps get going hard on it and we're going to clean out any cash we've got except a thousand dollars it's not retirement money we're going to

throw it at your debts which would obviously be your student loans and or any other debt you have don't take out any more debt use this 26 000 to ensure that that happens that's the first goal it's kind of a almost like the doctor's oath, the Hippocratic oath, do no harm, do no more harm, is what this is. Just don't allow yourself to go further into debt. And that's a cool position to find yourself in, that suddenly scholarship money falls from the sky.

Yeah. That's outstanding. Yeah, well, you went and got it. That's good, too, which a lot of people just kind of wander along, don't even bother. I mean, if you quit going through school like you take too much Xanax, then you probably could. People just wander through like they're in a haze.

In her case, to her credit, they got married and went, hey, maybe there's some, oh, let's go get some money. I don't know if I ever told you, Dave, the number of scholarship committees I've sat on that went unspent because we didn't have any applications for the money. This is internal scholarship money at the university where I was an administrator. So how would they have found that money? We would announce, please apply. No, no, but I mean, would they? So they should just know to go and apply?

Well, donors will donate a million dollars, and it rolls off the interest out of the endowment. So there's a $1,000 scholarship here, and we would make announcement after announcement. Please apply for the scholarship. Here's a list of them. Where would they apply? They would go online. At the individual committee?

No, you'd go online to a central place and write your essay. For any scholarships available. Correct. At the university. And there's not only the university, but your particular college within the university. Right. And they just sit there and say,

well, we can't, we don't even have an application for this one, or this one, or this one, or this one, or one savvy student would apply for all of them, and then we'd have to have the hard copy. Do we give them all to one student? Versus let it sit there. Let it sit there in a crew again, right.

So just like you said it's easy to put all your eggs in that scholarship basket as a freshman and then you take your foot off the gas man if you look every year man it never sees well and anytime something changes like now we're like old married people and we're college students now that's a whole bunch of scholarships which is what happened with her somebody donated money for married students and which is architecture program who fill in the blank. Phenomenal. Phenomenal.

Zach is with us. Zach is in Phoenix. Hi, Zach. How are you? Hey, I'm good. Thanks, guys, for taking my call. Sure. What's up?

Really appreciate it. Hey, so I just need some big picture wisdom from you guys. I really want to pay off our house. I want to be completely debt-free. I have a rental property that produces really, really well. I've had this thought of selling that rental property, taking the proceeds, putting it on the house, which would still leave a little less than probably $100,000 on the house to pay off. I guess my big picture vision with the rental property was to pay it off

on a 15-year fixed and then utilize that to help cash flow my kids' college and other things. But, man, I've got this desire to just be, you know, completely debt-free with the house and everything, but would love some input and some perspective on what you would do. What's your household income? About $130,000. Cool. How old are your babies? Oldest is nine. We've got a nine, seven, five, three, and one. What do you owe on the rental? $150,000, $155,000. What's it worth? It would probably sell now for probably around $280,000. Okay.

If you owed $100,000 on your house, would you go borrow another $150,000 on your house in order to buy this rental if you didn't own it? I would not. Then it's time to sell it. Okay. A good rule of thumb on stuff is if I wouldn't buy it again, it's time to get rid of it. That includes a boat. That includes, you know, just about any material item, certainly investments. And that keeps you from thinking about too many other things.

So for whatever reason, and I think in your case I can read your mail because you told me what it says, your reason is, I'd rather be out of debt than I would own this rental. But owning the rental is a good thing. But I'd rather be out of debt than owning this rental. So how do I solve this dilemma? When I reverse engineered it on you,

you instantly went, oh, the debt thing's more important. Way more important. To me. Because you instantly answered it. And so that, you know, for the same reasons, you wouldn't do this. One of the questions I get all the time is, which life insurance company should I use for my term life policy?

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This is an absolute necessity, and Zander has made the process easy and convenient. Call them at 800-356-4282 or visit zander.com for instant online quotes. Welcome to the Ramsey Show. Dr. John Deloney, Ramsey Personality, is my co-host today. Open phones as we talk about your life and your money. The Dr. John Deloney Show with new episodes every Monday, Wednesday, and Friday on YouTube. It covers everything from anxiety to boundary issues to crazy in-laws to just wild mental health things. It's a really, really helpful and entertaining show. It's a lot of fun. I listen to it all the time.

Not only because I'm the CEO and it's my job to make sure stuff going out of here is good, but I just enjoy it. I appreciate that. It's very good. So be sure you can tune in there. If you'd like to be on that show, you can call him at 844-693-3291. You can email, and Kelly and the team will get back to you at askjohn at ramsaysolutions.com. Askjohn at ramsaysolutions.com. Or you can talk to him right now, 888-825-5225.

Diane is in California. Hi, Diane. How are you? Oh, I'm fantastic, Dave. What a great time to be able to talk to you. Thank you for helping me. My pleasure. How can we help?

Well, we've owned our boutique real estate and property management business for over 40 years. I'm 68. My wife is 72. We're getting ready to sell it to a wonderful young man that I've trained for the last six years. We've talked to a business broker, and he shared with us, you take the average net profit for the last four years, which is $96,000 a year for us. You multiply it two times five, two and a half times, that gives us $240,000. And then we add back in our discretionary income of $84,000 a year. That gives us a value of $325,000. My question, Dave, is we're pulling out $7,000

a month from this business. We're retired pretty much. We live four hours away from the business, and I can't take that $325,000 and create $7,000 a month if I sell it to this wonderful young man. So my question is, am I missing something? No, you're not missing it. You know, I don't disagree with your business broker much. The formula I use is a little bit more simplistic. Now, the 96, is that after both of you, you're not operating it today. Someone else is operating it.

Yeah, we have a broker manager. You're abs operating it today. Someone else is operating it. Yeah, we have a broker manager. You're absentee owners. You do no work in the business. Yes. Right. The only thing we do is do a P&L statement every month on it. Yeah. Okay.

Well, that would be as if I bought it. I would have someone run it for me, right? I live in Tennessee. I'm not going to day-to-day be involved in that. So an investor would buy it after all. See, sometimes when someone's selling their own business, they work in the business, and we have to take their salary out of the net profit too,

what it would take to replace the manager. But in your case, you've already got a manager, so we don't have to take that out. So basically you're making $100,000 a a year profit and i would say if the buyer wants to make 25 on their money it is worth four times that much if the buyer wants to make 20 on their money it's worth five times that much so generally a small business goes in a four to five cap of net profits and so i'm a little bit higher than your broker but not much he's got you at a high of about 400 with his ad back and um and my four times puts you at about 400 so that that is a fairly reasonable valuation process that the business broker used there.

He used $325,000. But he added back the $85,000. No, the $325,000. The $325,000 includes the $85,000. Oh, I think that's low. Yeah, and the young business broker, we're paying him $60,000 a year as a salary to run it. But you're still, after that, you're netting $96,000 after you paid him, right? Correct.

Okay. So that business is generating an absentee investor $96,000. So let's call it $100,000. So if I bought it for $400,000 and I got $100,000 back, I would be making 25% on my money. You see how that works? Yes. And if I bought it for $500,000, I'd be making 20% on my money. And you want to make over 20% buying a small business because it's a higher risk investment

than, say, a mutual fund that might pay you 10 or 12 percent. Absolutely. So, you know, so usually a small business is going to go in the 25, 20 range. So I think it's worth north of 400. But now, how can he pay you? Let's go back to that, solving that. Have you hired the business broker yet? Are you obligated to that person yet?

We're not obligated per legality, but but he's the one who's been running it. I trained him. Oh, no, no, no, no. Who gave you the valuation process? Oh, the business broker. We have not signed a contract, nothing. Okay, so he just said this is how you do it. Okay, good.

Because you're going to sell it to your guy is the goal. And you don't need a broker to do that. You already got your buyer. Right. But we don't. He doesn't have any money, though. We don't sell businesses. Yeah, but no, no, no, no, no.

He doesn't have any money. Your guy that's running it is who you want to sell it to, right? Right. Okay. So you don't need a broker to do that because you've already got your buyer. That's true, but we've never sold a business before. Well, you just need an attorney to help you do the asset transaction is all by California law. And that's nowhere near as much as paying a business broker a commission for making a sale that he didn't make.

Right. He already agreed to do it for 5%. That's a little stiff. Yeah. Because he didn't do anything except the transaction. Okay, so you pay an attorney to do the transaction. Get your business attorney, talk to him about that. Now, here's a way we can structure it.

What if the young man that is running it, you're paying him $60,000 now? Correct. it you're paying him 60 now correct what if he agreed to say i'm going to continue to once i'm the owner i'm going to continue to live on 60 and all profits in excess of that go to uh the you guys the sellers until we reach 400 then it would take him four it'd take him four years to pay you out that's an idea some kind of an installment sale like that however we thought i think you can come up with the cash okay but then the question comes back to you i can't make on 400 even i can't make 100 on my 400 yeah but you've got less risk and you're out of the business.

Why are you selling it if it's so great? Because we were old. No, you're not. No, you're not. 20 years from now, you'll be old. Okay. You know, Dave, we had a good run. We've owned it for over 40 years.

Yeah. Here's the thing. You want a little less risk and a little less hassle in the golden years. And so you're going to make less return for that. Exactly. Exactly. So what can you make if you invest $400? You can make about $40 a year.

Yeah, yeah, yeah. And you're going to about $40 a year. Yeah, yeah, yeah. And you're going to get $40 a year, but it's a lock. You got almost zero. Compared to what you have now, you got almost zero hassle and zero risk. And no more responsibility. Yeah, exactly. Hassle factor. Yeah.

Yes, you got it. You have to keep your finger on the pulse of that, and that requires muscle tension in your hand. And the guy on the right is already. You guys are a hoot. Y'all are fun. But, Dave, because of you, we're debt-free. I didn't pay it off.

You did, honey. Y'all are awesome. Free. Yeah, I didn't pay it off. You did, honey. Y'all are awesome. Hey, yeah, I think you accept $400 and work out a deal with the kid, let him buy you out, and you're just going to make less on your money. And the reason is that you have less risk and less hassle. Yeah. And you clarified it jay thanks a million thanks for calling in that's how it's done i love it i don't know when you were going to

enter that conversation but i i was that's my favorite spectator sport right there what a duo oh my gosh my gosh. This is The Ramsey Show. We'll be right back. In the lobby of Ramsey Solutions, Dan and Julie are with us from Cleveland, Ohio. Hey, guys, how are you? Good. Good. Welcome, welcome. Good to have you. How much debt have you guys paid off?

$49,804. Did you say $29,000 or $49,000? $49,000. $49,000. $49, 49 49 804 i'm gonna call that 50 okay and uh how long did it take you to pay off this 50 000 18 months good for you and your range of income during that time 96 000 to 98 000 okay cool what do y'all do for a living i'm a mechanical engineer i'm a veterinary assistant oh good very cool what kind of debt was the 50k uh we had two car loans um some uh room found the house and some credit card debt no student loans no student loans paid those off already okay all right so you're kind

of bopping along about normal how long you guys been married 13 years 13 years so after 13 after 11 years all of a sudden this wasn't okay what happened we were tired of living paycheck to paycheck and we were struggling to make ends meet we actually got to a point where we actually had to ask family for money to pay the mortgage and that's depressing. It was terrible. So we actually, our friend Angie had told us about FPU and the Total Money Makeover book. And on one of our side gigs, we actually listened to the book and we realized that our church was offering the class. Oh, so you went to Financial Peace University at your church.

Yeah. Okay, cool. So we took the class and we just ran with it wow okay so that was the whole uh you know obviously um when the student is ready the teacher will appear right yeah and so you walk into the class and boom it's game on yeah so how far into the floor and both of you were open to this we were tired of it both of you just look at each other going we gotta do something absolutely okay and so you walk into the class ready to go and was it first class game on or it took a little while first class was game on because we actually had started a little bit

before you had a teat total told me makeover before that yes we had listened to the book so we we had kind of started but not really fully into it the way that... Yeah, you knew how countercultural I was going to be. It didn't shock you. Yeah, exactly. Okay. You got over the being weird part before you got there. Yeah. Very cool.

So I'm always interested in... My favorite part of these is that first conversation. Who came to who? How'd that go? I think you came to me, right? I think I came to you because our friend Angie was talking to me about it. Okay. And then I had to talk to her.

So you got the courage. I had to talk to him. So you got the courage, and she brought it up, and you said, I'm all in. Let's just do something. Yeah, I just never really had a game plan, I don't think. I just kind of kept going and doing my own thing and never had any real, this is what we should do. So it wasn't so much as, it's just a lot of bad decisions, not knowing what to do. Who was doing the bills?

Both of us. At the time? Yeah. Okay. So you're talking about it already, but just talk about how bad it sucked. Right. Exactly. For sure.

What was the dark night of the soul when one of you had to call the relative? Ugh. It was my grandpa. Ugh and i it really stunk yeah but he was more than gracious and gave us the loan and we actually paid it back and it was very nice and said never again never again that feeling oh just the peace we have now is just wonderful and even if he wasn't you know it doesn't matter how gracious he is because it still happens That feeling. Just the peace we have now is just wonderful. Even if he wasn't, it doesn't matter how gracious he is because it still happens in your stomach. Right.

Yeah. A dark night of the soul. That's a good way to say it. It's just when you have nowhere else to go. Yeah, exactly. When Visa won't even talk to you and you got to go to granddad. Wow. Yep. Yeah.

Yeah. Wow. And you got to pay that off during this time. Yes. Yeah, that's good. That's very cool. So what do you tell people the key to getting out of debt is? You're professionals.

You have done it. Say sticking to a budget, having a plan and really sticking to it and being intentional about where your money goes and just making that important and making it an important part of your life. I think talking about it, communication, we really, I think we talk almost every day about our budget, about money, just how happy we are, where we are. It's nice that the conversations are good now, rather than, you know, where's the money coming from? It's like, all right, now, you know, what can we do?

It's a little less freak out now. Exactly. Yeah, I hear you. Yep. I hear you. So how has this improved your marriage? Just the communication, I would say, and not being stressed out about money and being able to enjoy it rather than worry about it. You know, I've never contextualized it that way, but there's a difference between having a conversation about what do we want to do versus here's what we have to do. That's two totally different heart rates when you're having that conversation.

That's fantastic. Yeah, one of them is dreaming and the other one's freaking out. It's treading water. Yeah. Oh, yeah. That's cool. That is a different process. Well, who were your biggest cheerleaders outside the two of you? Our friend Angie. Oh, yeah. I'm loving Angie at this point. Angie's my head recruiter over there. I like her. And then our FPU coordinators, Mike and Tim.

They were really... They kind of kept with us throughout the process, and we were always emailing them saying, hey, we did this, and they were all very excited for us. So it helped us stay motivated. Wow. Very cool. Good job. You don't get that from

your electrical engineer buddies who are asking, why do you keep bringing your lunch, man? Let's all do it right. Definitely. Wow. You brought the kiddos with you. What are their names and ages? Let's get them in the shot. We have Emily, who's nine, and James, who is

seven. All right. So have they been practicing? Are they involved in this whole. All right. So have they been practicing? Are they involved in this whole thing? Yes. So they know about a debt-free scream. They know what happened. Their lives have been changed because their mom and dad took control. Yes.

Yes. I'm proud of y'all. Thank you. Very, very well done. We've got a copy of the Legacy Journey, which is the next step in your journey as you move on from baby steps two and three and really start to build some wealth and increase your generosity i'm so proud of you very very well done and thank you to your church for teaching financial peace university it's a big deal it's a very big deal very cool stuff also a copy of the total money makeover for you to give away because the uh audio book got you

started so now you can get somebody started with a hard copy. So pay it forward a little bit. Good job, guys. Very well done. Yeah, and don't ever lose perspective that you've set them up to not experience what you guys did. And that's legacy. That's reclaiming those bad decisions from the past and turning it into a road that they can walk on. That's incredible. Yeah. Good for you.

Complete family tree change. Yeah. All right. It's Dan and Julie, Emily and and james ready to go all right fifty thousand dollars paid off in 18 months making 96 to 98 count it down let's hear a debt-free scream three two one we're dead free Get free! Yeah! This is how it's done. Oh, man, I love that.

That is so, so cool. That's the coolest, man. You know, Financial Peace University is a part of Ramsey Plus. You hear us talk about it all the time. Your income is your greatest wealth-building tool. When you get out of being held hostage like that, it changes everything. You can get out of debt. You can take back your income.

You can get your marriage in a whole different place, different kinds of conversations. Where do you start? Financial Peace University is now part of what's called Ramsey Plus. It's a membership. And you get access to all the tools, including that class, to change your life forever with our best-selling online courses, including Financial Peace University. Listen, this stuff actually works. The average debt paid off in the first 90 days is $5,300. The average person saves $2,700.

That is an $8,000 change in position on average in 90 days. You can get out of debt you can save you can free up your income you can do it faster than ever start with a free trial you can have access to the class they took at ramsey plus today text trial to 33 789 that's trial to 33789. You know, when I started teaching at Financial Peace University almost 25 years ago in a bad suit with an overhead projector in a hotel meeting room, I had no idea that it was going to end up on video someday and that someday it would be on the internets. And someday a family from Ohio would get in their car and drive to Nashville to stand on this stage in front of me with their two kids and scream they were debt free. What a legacy you built, man. But pretty cool for them.

I'm so proud of them. They're heroes. They are. Millions of families have decided to take control of their own destinies. I'm so proud of all of them. That's awesome. This is very, very cool. This is The Ramsey Personality, is my co-host today.

Open phones at 888-825-5225. Kevin is in Philadelphia. Hi, Kevin. How are you? Hey, Dave. Good afternoon. How are you? Better than I deserve. What's up? Yeah, I had a quick question. Me and my wife, we're newly married. We got married earlier this year.

Congratulations. Thank you so much. We just paid off about $30,000 in student debt. So, you know, that is so good. Good. But right now, we're in steps four, five, and six. We also have the emergency fund. And we're wondering how much to allocate to retirement,

because we also plan to get a house soon in a couple years. Good for yep 24 she's 25 excellent way to go man you got a you got a game plan you're rolling it out i'm proud of you so some people we call that baby step 3b you probably heard that haven't you yeah so once you've got your emergency fund in place, that's when people start saving for their first home. Sometimes people also start saving for retirement for simultaneously. And sometimes they put off baby step four a little while and put 100% of their savings into the house fund until they get there a little quicker and delay starting their retirement fund a little bit. Either one is fine. I don't want you to delay starting it for 10 years, but delay starting it for one year or two years is okay if you put nothing in there.

So anywhere from 0% to 15% going into your retirement savings right now while you're on 3B is just fine. Does that make sense? Yes, it makes sense. What's your household income? About $92,000. Way to go. Wow. Man.

So how much do you think you're going to save? So right now we have $27,000 saved, and then we have $10,000 in a separate account for the emergency fund. And we're not sure exactly. That was my next question, how much can I actually afford for a home? So based on the income, it's probably going to increase maybe on average a little bit every year. But we're wondering, because we're looking at homes now, and maybe if you have some guidance

as to how much we should be spending on a home. Well, run some numbers with your real estate agent or with an online calculator on a 15-year fixed-rate loan, and you'll be at 275, 3%, somewhere in there right now on your interest rate, and where your payment is no more than one-fourth of your take-home pay. Now, take-home pay is after taxes, not after health insurance, not after other deductions from your paycheck. But just take taxes out of your paycheck and call that your take-home pay.

And then say, all right, this is what we're going to bring home, and about a fourth of that on a 15-year fixed will keep you in a really, really affordable situation. A safe situation. A safe, yeah. You'll have margin to be able to do other things like getting 15% going into your retirement, like when you have kids, you can add your emergency fund to that, and so on. Joel is in Portland, Oregon.

Hey, Joel, welcome to the Ramsey Show. Hi, Dave. How are you? Better than I deserve. How can I help? I knew you were going to say that. I am very predictable. Yeah, well, that's a good thing. So I co-own a business with my brother-in-law, and I bought into it a little over a year and a half ago.

And we doubled the business in the first year, and we're doubling it in the second year as well. But he wants to sell his half of the company and I'm just trying to figure out what's the best way to go about that and if you think it's a good deal or what I should look out for Is there a personality

Is there a personality issue? Do you all not get along anymore? Is he setting you up or does he just want to get out? No, we work together, uh, fantastically. Um, and, uh, both he and I agree that we were the only people that we, uh, have ever wanted to do business together. And, uh, it's been fantastic so far. He just does not enjoy the industry that we're in and so he wants to do something different he's also entrepreneur and he just wants to try new things and do something different try something new challenge himself and

so as an entrepreneur I totally get get that. I support it. So we're just trying to figure out the best way to go about it on our end. That's about a healthy way to come at it. I like it. So why do you want to stay in it? Well, I have almost four kids and my wife and I. It's really important for her to stay home with our kids and for us to raise them. And so there's that. It's a good business.

We make a good amount of money. We're near our family, and we love our church, and it definitely has huge growth potential. Okay, what was the net profit in, or what will it be in 21, let's say um well before taxes and expenses we're looking to get probably close to 350 to 400 no i'm sorry expenses are come out before you make a profit expenses would probably less than $40,000, maybe $50,000 in expenses. Okay, taxes I'm not worried about. I'm just saying, I mean, if the business has business taxes, that's fine. We can take those out.

But what is the net profit that the two of you will pay taxes on, you'll pay income tax on in 21? Probably about $350,000. Okay. So $175,000 is your half, $175,000 is his half? Is it split 50-50? Yeah. Okay.

And how is he proposing to be bought out, and what does he want? He wants $144,000 over a four-year period. So basically $9,000 a quarter over four years. That's awful. For him or me? For him. I was going to say, man. It's worth like ten times that.

Yeah. That's not enough. Are you sure you're making what you think you're making? Yes. Why does he want such a small percentage of this company? That's a good question. I mean, I think part of it is where our family so he doesn't i'll give you another proposal i'll give you another let me give you

another proposal okay wait a minute did you guys take salaries out of that before you got to 350 uh no you made no money so you you money. So you're both working there and doing what? What do you do there? So we, the way we have it broken down is like we have a very small salary check. How much? That goes into our accounts every month and then we do. How much? Give it in checks once a month.

I know. How much? Like $2,700. Okay, so if I bought this business from you guys and both of you were gone, what would I have to pay managers to replace the two of you to do what you do? Well, we're both out in the field as well. Quick answer, quick answer. You're running out of time.

Okay. How much? We probably, to be worth it for someone, probably about $4,000 to $5,000 a month. Okay, let's call it $60,000. Let's call it $100,000. All right, let's take $100,000 to replace each. $60,000 each? Yeah, $60,000 each.

Okay, so let's call it $150,000 off of $350,000. That's a $200,000. Okay, so let's call it $150,000 off of $350,000. That's a $200,000 profit. Now his $144,000 doesn't sound so bad because his half is $100,000. I suggest you pay him $200,000 over two years, $100,000 a year for two years, and buy him out in cash. You've got plenty of profit to do that with, and you still make a great living. You preserve your relationship with your brother. Yeah. I'd pay him $100,000 a year for two years and be done. That'd be a good deal for you. This is The Ramsey Show. Hey, it's Kelly, associate producer for The Ramsey Show. This episode is over,

but if you heard about an event, product, or service and didn't have a chance to write it down, don't worry. We list everything you've heard about during this episode in the podcast show notes section or head to theramseyshow.com. Thanks for listening.