The Ramsey Show - App - Should We Refinance Our House? (Hour 1)

Episode Date: February 15, 2021

Debt, Savings, Retirement, Business Sign Up for a FREE trial of Ramsey+ TODAY: https://bit.ly/31ricKt  Tools to get you started:  Debt Calculator: https://bit.ly/2QIoSPV Insurance Coverage Checkup: https://bit.ly/2BrqEuo Complete Guide to Budgeting: https://bit.ly/2QEyonc Check out more Ramsey Network podcasts: https://bit.ly/2JgzaQR

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. My co-host today on the air, number one best-selling author a couple of times over, Ramsey personality Chris Hogan is with me. We're here to answer your questions about your life and your money. Open phones at 888-825-5225. That's 888-825-5225.

Buddy's with us in Bloomington, Illinois, to start off this hour. Hey, Buddy, how are you? I'm good. Thanks for taking my call. Sure, man. What's up? Well, my wife and I, we are on baby step two. I've actually just really gotten going. We've paid off about eight grand since March. Good for you. And we're kind of looking around at our interest rates right now, and we've had our house for about five or six years, and we've got a 30-year fixed, about 4.375 i believe um i'm wondering if it's a good idea to pause for just a minute to

be able to cash flow a 15-year refinance for you know to pay for our closing costs what do you owe on the house about 96 000 you don't have enough equity to just roll your closing costs into the deal i'm sure that we could i said it would be a good idea to you know it'd be smarter it'd be smarter than stopping your debt snowball okay all right and you said it would be a good idea to... Yeah, it would be smarter than stopping your debt snowball. Okay. All right. And you think it would be a good idea to go ahead and refinance while we're on baby step two? Yeah.

The only thing it does is it decreases your monthly cash flow. I mean, your payment, even by going from a 30 to a 15, even though you're dropping 2%, is going to go up. Right, Chris? Mm-hmm. Oh, without a shadow of a doubt. So, in looking at that, you do want to make sure that you're never refinancing just to refinance. I mean, you've got to make sure that you're having some kind of savings and some kind of rate change there.

Have you gotten a quote, buddy, on what a payment would be on a 15? Yeah, we're about, we haven't got about $100 in payments. That's another part of the issue is, you know, it's only $100 in payments. That's another part of the issue. It's only $100 more, but we've also got about $120,000 in debt right now. Yeah. Well, the $100 is not going to kill you, and it's a good move to do while these rates are down. And so, yeah, go ahead and take it to a 15

and go ahead and get that 2% or whatever rate they're quoting you right now, which is you're saving 2% to 3% right now. It's definitely the time to do it and uh but i wouldn't i wouldn't hit the cash flow you get the the closing costs out of pocket you can throw at that 120 000 in debt and just roll it up into the mortgage you're still going to recoup either way it doesn't change your recoup your recoup is you know about two thousand dollars a year about two percent on a hundred thousand dollar loan approximately. So you're going to come out pretty quick. Is there a scenario where you would have someone pause Baby Step 2 just to refinance?

I'm sitting here trying to think, and I can't think of one. Most of the time when you're doing a refinance, you have room to roll your closing costs in. So it doesn't come up very often. If that were the case, that would mean they had almost no equity. Right. Which would give me pause on other things and cause me to go, have you got too much house? What's going on here? You took out a HELOC.

You know, what's happening? Where'd all your equity go? And I want to learn some more about it then because that would be a fairly unusual scenario. Yes, it would. So you're right. It's a good question to think through. But most of the time we roll it on in because either way, you're going to pay the money. You're either going to pay it when you pay off the mortgage or you're going to pay it when you're out of your pocket right now while you're trying to pay off the $120,000. So it's pays me now, pays me later.

You're going to get it either way. So that's the thing. It sounds like I'm telling you to borrow money, but I'm really not because it's rolled in there. And you're going to you're going to you know, your payment is going to go. You're getting rid of 15 years of payments. That's right. While you're at it. So it just makes a ton of sense. All of you out there doing house shopping.

Remember, number one, you want to make sure that you're out of debt. You've got a fully funded emergency fund and you've saved for a down payment. I know rates are low right now and and people are getting house fever, Dave. People are twitching. They're like, Hogan, you don't understand. The rates are so low. You're not ready. Kohl's Shower.

Kohl's Shower helps us. Yeah. It doesn't matter what the rates are doing. Don't let the rates determine your plan. You walk the process and look at it and be clear on that. And also, one more tip. Hogan's tips today. HELOC is a mortgage, people.

Okay, a home equity line of credit. It's a big credit card attached to your house that's using your equity. Okay, it's the most creative thing the banking industry has done in the last 30 years. But it is a mortgage because there's a deed recorded on your property. So if you have a HELOC, you have a second mortgage. Yeah, it is. Any mortgage that's after the first mortgage is a second one. And the one after that's called a third one.

And that's where the name comes from. So it's just, yeah, you still got your butt a mortgage. You really did. And they'll still take your house if you don't pay it. It's called a foreclosure in either case. So you will learn these things the hard way, like I did, or you will learn them the right way and not do them like Mr. Hogan is suggesting here. Lily is with us.

Lily's in Salt Lake City, Utah. Hi, Lily. How are you? Hi, I'm doing great. Good. How can we help? I'm just trying to get up to a 15% for retirement savings, and my husband and I run a business, and so we're just self-employed.

I'm not sure. We've got Roth IRAs for both of us, but we're not quite to that 15%. What else can I do? You know, do I just invest in the stock market, but then there's no tax benefit, you know, in a program like a Roth IRA? So how many team members do you have in your business? How many people, employees? Oh, we've got about 20. Okay.

How many have been there more than three of the last five years? Oh, like three. Okay. Most of them are part-time. Okay. Check in with our, oh, oh, oh, is there anybody full-time that's been there more than three of the last five? Maybe one, one or two. Okay.

They kind of fluctuate, but maybe bump up to full-time. Yeah. I got you. All right. Well, the thing is this, you can do a SEP, a Simplified Employee Pension Plan, where you can put up to 13.6% of your net profit into your own retirement plan. However, with that, you have to, whatever percentage of your income you have to put in, you have to put in the same percentage of any employees that have been with you more

than three of the last five. Permanent employees, not part-timers. Okay? So you probably have enough people that qualify for that that that makes that a little bit unappealing. Second option, probably the better option, is called the simple IRA. You can do this in addition to your 401K, and you can do it as a Roth. Now, the simple is you are opening up a 401K for your little company, but it's called a simple IRA.

It's very inexpensive it's like 15 a year administrative fees where i've got like a big company with a thousand people i spend 15 20 thousand dollars a year in employee in administrative fees on our employees 401k so this is a simple one now the only downside the only is, is that you have to match what they put in up to 3%. And you can set the guideline on who can join your little miniature 401k. And I would recommend you set it if they haven't been with you at least a year, that you don't match them in a company that size. But that'll cost you a little bit out of pocket, but you can also then double fund and really get going.

Check SmartVestor Pros. They can help you do that. It's a game changer to get that going in a small business. That's what we did here for a long time until we no longer met the guidelines for the simple because we got too big. Yeah, so even if you're self-employed, remember, you've got to save for your future. If you don't save, you won't get to spend. Yeah, we run into that with the Entrez leadership team all the time.

All the time. Where they can't transfer, they can't get out of the thing because the only asset they've got is their small business. Yep. So it's very important to keep investing. This is The Ramsey Show. This time last year, we didn't know how our lives were going to change. We didn't have a clue that COVID, job loss, and homeschooling were about to take over our daily existence. And you may be feeling like last year got away from you. Maybe you lost complete control of your money.

Or maybe you had to find a new job quickly to make ends meet. The bad news is a lot can happen in a year. But the good news is a lot can happen in a year. Which is why now is the time to think about where you want to be this time next year. We'll be right back. wealth and becoming outrageously generous. Get your copy of the Total Money Makeover today at the online store at DaveRamsey.com or call our Ramsey concierge team at 888-22-PIECE. That's 888-227-3223. Chris Hogan, Ramsey personality, is my co-host today. Open phones at 888-825-5225.

David is in Washington, D.C. Hi, David. Welcome to the Dave Ramsey Show. Hi, gentlemen. Thank you very much for taking my call. Sure. What's up? I have a question. My wife and I have a 529 plan for our son in the state of Virginia, and he's got one and a half years left until leaving for college. We think it's pretty much fully funded, so we're only putting small amounts into it now, but we're concerned that maybe our distributions are a little

too aggressive now. So we've got like 78% in stocks 18 percent in bonds four percent in cash and we wanted to just kind of know should we back off of that a little either now or next year or as we head into college how much is in there um we have in there right now $165,000. Okay. Well done. Congratulations. That's fabulous.

That is great. Very fortunate. All right. And when you say stocks, bonds, and cash, you're talking about it's a mutual fund selection. You're not in individual stocks or bonds. That's correct. We have mutual funds through American funds. Yeah.

Okay. Yes. Okay. Yes. Well, here's the thing. Bonds have an inverse relationship, as you probably know, David, to the interest rate market. So as interest rates go down, bonds prices go up. Interest rates have been unbelievably low for an unbelievably long period of time. There's not a lot of places they're going to go but up in terms of major moves in interest rates in the next five years, okay, while your kid's in school. And so while bonds are typically pitched,

if you read the standard financial planning writing, people pitch bonds as a stabilizer in a portfolio. In an extended low interest rate environment, my personal conviction is that they are a destabilizer because I think as interest rates tick up, those bond prices are going to go down. You're going to lose your butt on that part of the portfolio. And so while it's supposed to be more safe than the stocks, I don't think it is in this current world, personally. So you can do what you want to do, but you called us,

so that's an opinion. It's probably worth what you paid for it. Consequently, I don't own any bonds right now. Matter of fact, I've never really used bonds much in my investing at all, unless they're in a balanced fund or something like that but so then the question just becomes do you want to be in cash or do you want to be in uh growth stock type mutual funds uh for the next three and a half four and a half years because the bulk a piece of that money is not going to come out for five for four years right that's right correct so i'm probably going to come out for four years, right? That's right. Correct.

So I'm probably going to stay, depending on how worried you are about the stock market, the less worried you are, I'm going to stay heavy, heavy, heavy in the growth stock mutual funds and a little bit of cash. And the more worried you are, the more I would be about cash. But I don't think it's unsophisticated. As a matter of fact, it's just a different way of thinking. It's a different critical thinking set to avoid bonds, number one, and to number two, to say the risk represented by the market is not so substantial on stocks

that it's going to drive me crazy. Well, and the mindset, Dave, I think this year has, or this past year, I keep going backwards here, the past year has shown us, as we looked at what happened to the stock market in March, and then how it rebounded and came back in October, you know, for us to make sure that we remember, it's the long-range view, right? And I think that is, I'm going to keep beating that drum of riding the roller coaster, long-range view, look at what's going on, don't listen to what people are saying, watch what's happening. Yeah.

I mean, on the short term, the only thing that disturbs me for the stock market's sake more than anything else is just the level of political unrest. Oh, I agree. That's the short term. I mean, if you believe that the political unrest is going to lead to the nation unraveling, then you'd get out of the stock market completely. I don't believe that. But the stock market does not like an unpredictable world. It likes a predictable world.

Even if it's a liberal world or a conservative world, a Democrat or a Republican, just let me know what it is, and I can predict it. And when things aren't predictable, so if a war springs up across the world, a geopolitical, it doesn't like that. This crap going on in Washington on both sides of the aisle is astronomically crazy. When the cities were burning last summer, without getting into reasons or agreement or anything like that, the stock market doesn't like it. Right.

Well, it's a living, breathing thing, as you've told people for years. And because it's living and breathing, it's got feelings. And so the stock market has feelings. And so imagine, if too much unrest or too much this or that happens, there is going to be a reflection at some point. Yeah. When people are worried, it shows up. Right.

That's really what it comes down to because it depends on what they're worried about. So anyway, all that to say, David, I personally, if it was my kid, I would be heavy in stocks. I'd be light to none in bonds. And to the extent you're worried, I would crank up my percentage in cash. To the extent you're worried about the next two years of volatility. But if the thing goes down 10%, that would be almost, that would be one of the biggest drops in 12 months in the history of the stock market. If it went down 10%, and that would be $16,000. Doesn't keep your kid from going to school.

No. So you're not really playing with huge, huge risk. You're not going to have a situation where you lose 50% of your money. That has occurred only two times in the entire history of the stock market, and I do not see that item on the horizon. It could be there, but I don't see it. Well, and let's talk real quick here about, obviously, with student education and going to college. You've got $165,000 that you've put away.

As you start to look in-state at $10,000 a year, you've covered. Out-of-state tuition is $22,000 a year, and private tuition is around $36,000. So you look at the dollar amount that you all have set aside, David, you all have done a fantastic job of being prepared. Now, finish the job, I guess is what I'd say. Help your young person make a smart decision, and don't pick a school based on a sports team and don't pick something based on a mascot. Let's pick something

that is fiscally responsible that you can pay cash for. There you go. Danielle is with us in Indianapolis. Hi, Danielle. How are you? Hi, Mr. Ramsey and Mr. Hogan. How are you guys? Great. How can we help? Good. So my fiance and I have been listening to your show for a month or two now,

and we'd like your advice on a student loan repayment decision. So we're getting married this May after I graduate from college. Congratulations. I'll be graduating debt-free. Way to go. So I'll be graduating debt-free. I've already paid off around $8,000 in federal student loans from fellowship funds that I've been awarded during the past two years. And my fiancé will graduate college later in December of this year and has around $9,000 of federal unsubsidized student loan debt and about $10,000 of private debt owed to his parents. I would like to pay off his federal student loan debt now so that it

wouldn't accrue any more interest before he graduates and to just get it off of our shoulders as we prepare for marriage. But he wants to wait until after he graduates in December to pay the loan. So what do you guys think that we should do? Danielle, Dave is twitching over here. I felt that I've been around him for 15 years. I love that you have been intentional and that you're going to graduate debt-free. This is just impressive. Did you pay for it or did your parents pay for it? I paid for it. I've received a fellowship.

That's fantastic. I've been a $5,000 for the past two years, so that has helped me to pay for it. Well, I'm proud of you. And I would say this, and Dave's going to dive all over this. Love that you've joined and you're listening to this. Love that you guys at a young age are talking about this.

But I'm going to tell you something. First and foremost, I wouldn't be doing anything for his debt until you guys are actually married. Until he says I do and you do and we do, then you can start to have a plan together. But prior to that, you need to stay focused on what it is you're doing. He needs to come up with a plan to try to attack that before you get married.

Yeah, after marriage, we can do a lot of stuff. Okay, so, I mean, say that we wait until we get married in May. Yeah, well, you do that either way. But you said in May, then do you pay it off or do you wait until December? It doesn't matter. If you've got the money, that's fine. After marriage, knock it out. The primary concern of God is that he finishes with no additional debt.

It would be a shame to pay it off and then not have the cash for him to finish that last semester in the fall. Yep. So if you've got that set up and you guys want to go ahead and start attacking it, there's not a wrong answer. Both of these are smart choices. It's A, smart, or B, smart. But all of it comes after May. This is The Ramsey Show. Listen, this is important. Are debt collectors calling you at work?

Are they reporting errors on your credit report? Folks, that's not just wrong. It's illegal. If you think you're being harassed, take a quick survey at CollectionBully.com to determine whether you're a victim of illegal debt collection harassment. If you are, Collection Bully will help connect you to a consumer law attorney in your state to make the harassment stop. Learn more and get the help you need at CollectionBully.com. And the lobby of Ramsey Solutions on the debt-free stage. Lee and Roslund are with us. Hey, guys, how are you?

Hey, great. Welcome, welcome. And you're here to do a debt-free scream. Where do you live? Richmond, Powhatan, Virginia. I'm sorry. Okay, outside Richmond then. Yep.

All right, cool. And your debt you paid off was how much Powhatan, Virginia. I'm sorry. Okay. Outside Richmond then. Yep. All right. Cool. And your debt you paid off was how much? $92,000. Cool. How long did this take? 13 months. And your range of income during that time?

About $125,000 to $130,000. Okay. Cool. And what kind of debt was the $92,000? Our house. Your house? Oh. You paid off your house.

We're weird people. You are weird people. I love it. What's this house worth? About $300,000 maybe. A bit about $300,000. I love it. Very cool.

How long you two been married? 19 years tomorrow. Is this the first time you've ever been 100% debt free? It is. Wow. So tell me about this. What in the world happened to you people 13 months ago that made you decide to be weird? We took my son and his fiancee back through Financial Peace University,

and we had a conversation with my sister, who initially introduced us to you guys. And then we knew about it,, we want to change our legacy. We know our why, and we just got on the same page and got on fire. But our journey really started about 10 years ago, when neither one of our parents really had financial conversations with us. So we went into it, every car it, car debt, student loans. Our kids did travel, everything, even though we could afford nothing. And we got smart, and so we refinanced everything into a HELOC, even the car.

And so that allowed more monthly income to just be more in debt, and we got stuck in that cycle. Yeah. Then two house payments behind, two kids don't know what we're going to do. And my sister, who's, I'm sorry. It's okay. She's taught financial peace for, I think, 15 years now, her and her husband. Wow.

And they stepped up, helped us out through a hard time, and were just really encouraging. And then you go through the first time as a student and get the mess cleaned up. Right. And we did Dave-ish. Yeah, we joked that we did Dave-ish. But, yeah, it was really hard. It was hard, but we're so glad. And then this time, you're paying it forward.

So you're taking your son through like your sister took you through. Right. And this time you go, hey, hey, wait a minute. Right. I'm knocking out the house. Yep. Man, your sister's had a whole lot of students in 15 years, but she's not had one she's as proud of as you. Yeah. Roslyn, I see you get choked up talking about your sister.

What has she meant to you? You'll never get an answer out of her. She's just going to start crying. Everything? Everything. She has just been always my rock and my encourager. Yeah. So you said you had a big why.

Why did you do this? I have two children. I love more than life, and being a mom is absolutely the most important thing. How old are they? 31 and 26. And I want to be a good example. I want to teach them what I didn't know. I want them to have a chance that we now have through the help of others, through you guys, through the knowledge, having the knowledge to do the right thing.

Lee, what did you find out about your wife through this journey over the last 13 months? She can be very, very determined. That was a very kind way that sounds like a fight that was she's an amazing woman she um it it's very very humbling to watch her sometimes she's she's uh the gaz-like focus was amazing. I wasn't 100% on board at first when we did the Davis. I was the wheel chuck, if you will. You were the ish part.

I was the ish part. But once we got on the same page, it changed everything. You have literally changed our family tree. You did. You're heroes, man. We're proud of you. True, but you taught us. I'm proud of your sister.

Yeah. I mean, look at the ripple effect of this. Yes. I mean, not only are you here with a paid-for house and 19 years of marriage and everything's paid off, house and everything, never been debt-free before now, but now you're changing the next generation, which is like your heartbeat. It's why you do everything. I'm a mom. That's what I do. And so now they don't have a choice.

Now that determination is aimed at next generation. Which is amazing because you all's example for the people that are around you, that go to church with you, that work with you, they're now going to believe that it's possible. Right. You see, so many people hear this information and they think maybe other people can, but I can't because I didn't come from money like you. Right. I didn't come from that, but you all have proven it is possible.

All right. You brought your sister. Yes. And her husband? And her husband. Okay. And what are their names? Heather and Rich Lee.

Okay. I'm looking at the supporting cast over here. And that beautiful girl is my daughter. Okay. All right. Cool. So the 26-year-old's with you then? No, 31.

31. I got it backwards. The son's 26. 26. Okay. All right. Cool beans. All right.

So we don't usually do this, but I think it's appropriate that they're all up there with you. I would love that. Okay. Come on. Yeah, let's get them all up there because i think this is a generational family affair right here this is why you do this stuff this is why you do this stuff and this is why you're a financial peace coordinator for 15 years so that you get to see people like this but what better than your own you know it's really touching when it's somebody else with your own baby sister

own older sister whatever whatever it was. I don't know, but either one. And pretty, pretty stinking cool. Pretty amazing. So proud of you guys. You're heroes. You did it. You are.

You're why? You're stepping into it. It's very, very powerful. Very well done. We've got a copy of Chris's book for you, Everyday Millionaires, because that is definitely the next chapter in your story. All right. So you're seasoned now. You went through the hard part. You got all the debt cleared off.

Then you go back through, start changing the next family tree, and you look down, you go, I'm knocking out the mortgage. Thirteen months later, boom, it's gone. Did I get that story right? Okay. So now you're professionals now. This is not, you're not, you are walking, talking proof it can be done. You're not a theory.

You're real people. What's the secret to getting out of debt? I'll go off of this one. It was 100% to be on the same page. When I was issuing it, it was a struggle. And as soon as we, once I got on the same page with her and agreed, then it just, it's not easy by any stretch, but it was easier. And that was, that would be my thing. Yeah.

100% being on the same page. And the why. The why keeps you motivated. Yeah. Very cool. Why's a big deal, and you got a big one. I like it. You got to know where you're going and why you're going there.

All right. big deal and you got a big one i like it you got to know where you're going and why you're going there all right it's lee and rosalind their daughter and sister and brother-in-law all here 92 000 paid off in 13 months house and everything these are weird people making 125 to 130 they're 100 done baby count it down let's hear a debt-free scream. Three, two, one. We're debt-free! Love it! That's it, baby. That's it.

You know, if you read a good book, if you go to a good movie you tell your friends and your relatives you got to read this book yep you got to go this movie when you go through a class that completely changes your life and you teach it for 15 years it don't get any better than getting your sister through that's right i mean to get a family member to hear and listen and do uh is a is a magnificent feat um i've got family that's heard me talk about it um and they're not all the way in and so you know it doesn't stop me from talking doesn't stop me from talking i don't even want to bring this up oh well that's how it works right it is oh is. Oh, my gosh. It's so funny.

Wow. That's so rewarding, though. Yes, it is. Everybody in that picture is winning. Yeah. What a great picture. As you said, the ripple effect, it's real. It is.

It is. Wow. This is the Ramsey Show. Thank you. Chris Hogan, Ramsey Personalities, my co-host today. I'm Dave Ramsey. This is Common Sense for your dollars and cents. It's called The Dave Ramsey Show. Al is with us in Dallas, Texas. Hi, Al.

What's up? Hello. Thanks for taking my call. Sure. What's up? How can we help? So I actually got a letter saying that we learned that the county clerk's office, office that this capital recovery company has filed a lawsuit against me for unpaid debt.

And I do recall the debt. And it's actually a debt when we used to be a single income family and getting my wife through college and all that. We did accumulate that debt and we didn't pay it. It was a credit card. And so now it's coming back to hunt us after, you know, six, seven years. And so there's several law firms have reached out to us and, you know, we can help you with this. And I'm going to decide to see if we just go ahead and go directly with them and make an arrangement. They told me, you know what? You could pay this whole thing off.

It's going to cost you 4,500, or you could go ahead and just set a lump sum of 3000, but then the lawyers, the lawyers are reaching out to us and you know what? Um, you have nothing. You know, if you hire us, we could go ahead and settle it for less. Sometimes we can be able to go ahead and eliminate it completely, and it's going to cost you $1,200. Yeah.

Probably bankruptcy lawyers calling you. The $1,200 is probably for you to file bankruptcy. No, the actual $1,200 is for them to go ahead and take care of the case. And they're going to go ahead. Yeah, but you said they called you, right, Al? Yeah. No, I'm so sorry. So they sent me a letter.

Okay. Yeah, the attorneys did. Reached out, right. Okay, so what's the balance on the credit card? The credit card is $4,500. Okay, and the company that is suing has already offered to settle that for $3,000. He says you could pay us $4,500 in monthly payments for the next 30 months. Not doing that.

Or we could settle it for about $3,000. Do you have any money? What was that? Do you have any money? What was that? Do you have any money? Do I have any money? I could, no. Where would you get any of this money we're talking about? Well, I was thinking more of the installment program to be part of the baby steps

because we're on baby step two, paying things off. What's your household income? When we take home every month, it's about six grand after taxes are in line between me and my wife now. I would not hire an attorney to do a settlement of this type. It's overkill. And some of the attorneys that are sending you letters are not trying to work a settlement for you. They're going to file bankruptcy for you, and you've got to be real careful.

There's a bunch of shysters in this space. So I don't think you need to. What I would do is call the company back and say, I can't do three, but I can do two, and I can do that 45 days from today. Because you can do that if you stop your debt snowballing, you scrape up two during that 45 days. So I can do two by January the 1st. Okay. And if I let them know, then how would I, I would have to let them know,

we'll come into that agreement as long as you send me a letter saying, you know, we're upon those two grand, and then you have to take the lawsuit against the county because that's what they did. But they mentioned to me that they're going to be serving me papers. That's fine. That's fine. And so based on serving them the papers, I have to reply to the county. And based on what I let them know.

It's not a big deal. You can enter into an agreed order they can do that themselves if they agree to accept the 2000 uh just tell me you need that to be an agreed order and they'll do it that's a great order see here's the thing let me stop you a second okay the company that's doing this this lawsuit it feels to you like this is some kind of drama lawsuit like you see on television or something, or like a court case that involves criminal stuff. This is not like a lawsuit at that level.

This is more like going to traffic court for a speeding ticket. In other words, these guys, when they filed this, they didn't file a single lawsuit against you that day. They took boxes of lawsuits down there and did them at one time because they are a widget factory and you are one widget out of thousands of widgets that they're going after so this is much more it's very transactional for them it's much more like traffic court than it is perry mason or matlock or whoever right csi or anything else right so you know that it feels you've never been sued and it feels very uh scary and the unknown of it feels very dramatic and very legal and i need a lawyer and all of that if somebody was

suing you for five hundred thousand dollars because of a car wreck and an injury, yeah, get a lawyer, okay? And there's times you need legal representation. I would not spend it on this if I were you. I would call them and see if you can settle it for $2,000 payment by the end of the year, and they need to enter an agreed order with the county. Can you remember that phrase, agreed order? Agreed order. I'm writing it down.

Agreed order with the county. Yeah, and then they need to send that to you in writing and know they cannot have electronic access to your checking account and know you are not going to disclose a bunch of financial information to them, including where you work or anything else. Yep. And, Al, you're going to need to take a deep breath because you're going to need to be on the ball with this, meaning writing it down. I love that you're taking notes, but you're going to write down who you spoke with, the date, the time, the gist of the conversation. Like you want to keep a full conversation log on this.

If you cannot get it to come to an agreement, then you may want to spend $1,200 and hire an attorney to get them to come to agreement for you. But make very, very sure this is not filing a bankruptcy. The reason this comes up, Al, is I was in Texas the other day, and I'm driving down the road, and there's this big old yellow billboard with these two guys in suits on it. And it says, the billboard is, Be Debt Free. And I thought, oh, that's some local guys doing a talk radio show teaching people how to get out of debt, like Inspired by Us or something. I thought, that's pretty cool.

And then I get to look at the billboard as we're driving, and it's bankruptcy attorneys. But the ad doesn't say bankruptcy. It's a little bit at the bottom, bankruptcy attorneys. But the big thing is just two guys in a suit saying, be debt-free. And I thought, man, somebody else has joined the crusade. That's awesome. But no, they didn't. No.

They were just lawyers. Yeah, those money grabs. And so. That's exactly what that is. I is about the people do this stuff so yeah i'll just be very careful if you do retain an attorney the fact that they are soliciting you and they're going through the entire box of lawsuits and sending them all letters and you're just one of them right and our fear is is that you end up with a $10,000 legal bill over a $3,000 credit card. Yeah, exactly. So just be aware, Al.

Thank you for reaching out, buddy. It took courage because you could hear the fear in your voice. But you've got steps now to be able to take to be able to protect yourself. So three things you're going to do. Get on the phone with them. Come to an amount around $2,000, whatever you can come up with by the end of the year. $2,000 by year year end by 1231 okay if that's if you then second thing is get that in writing and when you do that agreement tell them that that needs to be an agreed order so they stop the lawsuit until 1231 after 1231 they can come after you if you don't pay it

but then um because you didn't follow through on the agreed order. Then the second step is, all this has to be in writing to you, and you keep that piece of paper the rest of your life. And then the third thing is, they do not have electronic access to your checking account, and you do not give them any financial information. When you pay them, it'll be with cashier's check or prepaid debit card. But no access to any of your other accounts. We don't want them to know where they are or that they exist.

So you're putting up the shields. You really are, because they're good. They will ask you questions in a way that you don't feel interrogated. Now, where is it you work? You feel like you're having a conversation. That's not germane to this conversation. This conversation is about $2,000 makes us go away i like all other questions that don't have to do with that are not going to be answered not dealing with it this is two thousand dollars and i am out of your life and you're out of my life and it's in writing and no electronic access to

my checking account it'll be debit card or cashier's check those are the three steps greed order we're doing this boom and i've done tens of thousands of those, and I am not a lawyer. Okay? And I wasn't practicing law when I did it. I just simply negotiated on behalf of a client of ours a settlement. And you're allowed to do that for yourself or literally for someone else. So get her done, dude. I wouldn't pay the money unless you get yourself painted into a corner and then get a lawyer that's a real lawyer not a bankruptcy attorney

protect yourself this is the ramsey show This is James Child, producer of The Ramsey Show. Did you know The Ramsey Show is one of the most popular podcasts in the world? Subscribe or follow today wherever you listen to podcasts. We'll see you next time.