The Ramsey Show - App - Small Business Accounting for New Entrepreneurs (Hour 2)

Episode Date: June 18, 2019

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Starting point is 00:00:00 Music Music Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studios, it's the Dave Ramsey Show, where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. I am Dave Ramsey, your host. Thanks for joining us. Open phones at 888-825-5225. That's 888-825-5225.
Starting point is 00:00:56 You jump in. We'll talk about your life and your money. Corey is with us. Corey is in San Antonio. Hi, Corey. Welcome to the Dave Ramsey Show. Hi, thanks for having me, Dave. How are you?
Starting point is 00:01:07 Better than I deserve. What's up? All right. I've been listening to you for a couple of months now, and I'm quickly realizing that I might have bit off a little bit more than I can chew. My main concern right now is my car. I owe about probably somewhere between $18 to $20 on it. Well, actually, I owe about $22,
Starting point is 00:01:29 but it'll probably appraise it somewhere between $18 20 on it. Actually, I owe about 22, but it'll probably appraise it somewhere between 18 to 20. And I'm trying to figure out whether or not it's worth getting rid of or if I'm past the point of no return and I need to just ride it out. Well, there's no such thing as past the point of no return. Well, I guess it could be, but you're not there. So what's your household income? It's about $55,000. I work in law enforcement, so there's plenty of opportunities to work extra side work. Are you married?
Starting point is 00:01:54 No, sir. Okay. And is this your only vehicle? It is. Okay, good. All right. How much other debt that's not your mortgage do you have? Nothing. I paid off my credit cards recently. I pay for as much school as I can take,
Starting point is 00:02:11 and that's about it. Just all I have is a mortgage and a car. And what kind of car is it? It's a 15 Dodge Challenger Shaker. Sweet. You like it? I love it. Okay. I would keep it. Okay. And here's why.
Starting point is 00:02:26 The two guidelines I use when someone asks me the question, should I sell my car? Number one, you don't want to own things with motors and wheels total in your life that equals more than half your annual income. Because things with motors and wheels goes down in value. And if you have too much tied up and things going the wrong way down in value it's hard to get rich okay you want things going up in value up going up in value is how you build wealth right and so but this car this car is less than half your annual income barely but it is the second rule of thumb i use is can you be debt free not counting your house in two years if you keep the car and the answer again is yes eleven thousand dollars a year for two years and you're debt
Starting point is 00:03:08 free so a thousand bucks a month and you pay off this car in two years and you can do that making 55 000 easy you ought to do it faster than that you probably ought to do it in about 18 months so let's get on a super tight budget work our overtime and let's get this car paid off as quickly as we can preferably 18 months or less um but absolutely has to be done in under two years if you're unwilling to do that you need to sell the car very good i appreciate your time sir thank you thank you chip's with us in columbia south carolina hey chip how are you dave i'm great sir Thanks for taking my call. Sure, man. What's up? I'm a late bloomer here, man.
Starting point is 00:03:49 I'm 60 years old. Had to do a forced retirement in 2016 due to wife's help. Really don't have anything in retirement. Credit cards are paid off. I got my PhD at stupid also in 2016. Bought an RV, sold our house when the wife got diagnosed.
Starting point is 00:04:08 Decided we were going to hit the road and make new memories. Ended up, that became a bust last year. Had to come off the road due to being able to care for her. Had to buy another house. This year, I mentally revisited the financial piece. I thought, I've got to do something different here. Started hammering down. Got a little windfall, believe it or not, from the IRS. Not a real tax return from this year, but put that on all my credit card debt.
Starting point is 00:04:42 The only thing I'm working on right now is the RV. Still owe about $30 on it, about $110 on the house that we bought last year. What do I do about retirement? Do I just continue to bank money, or do I put something? Do I go into mutuals? I'm not a real smart investing guy either, I'll be honest with you. Okay. How's she doing?
Starting point is 00:05:05 Not good. I'm sorry. What smart investing guy either, I'll be honest with you. Okay. How's she doing? Not good. I'm sorry. What's the prognosis? With dementia, there is none. It's not good. Okay. All right. So life's an adventure right now, huh?
Starting point is 00:05:20 Absolutely. Absolutely. So the RV up for sale? We had a great time traveling for two years. I'm glad. I'm glad you did that. I'm sorry you made a mess doing it, but I'm glad you did it. Absolutely. So the RV up for sale? We had a great time traveling for two years. I'm glad. I'm glad you did that. I'm sorry you made a mess doing it, but I'm glad you did it. Yeah.
Starting point is 00:05:30 So is the RV for sale? I would love to sell it. I know I'm way upside down on it. Let's get some. I'm probably 15 upside down on it at least. You've got to get it out of the driveway. You're paying insurance and tags and interest and everything else. Exactly.
Starting point is 00:05:48 Tags I'm not paying, fortunately. I do have it all unregistered. That part of your story is over. Get rid of it. Right. And then let's clean up the mess that you made so that we can start investing. The first step to investing is to build, is to be debt-free. Because when you've
Starting point is 00:06:05 got no payments but you're a little house payment, you don't have a big house payment, then you can really attack the debt. In your situation, you've got a forced retirement coming, so I'm looking for my second career. What's my encore? After you take your bow, when you come back out for your encore, what song are you going to play? And that's so you need something you're going to be doing because you need to go make some money. And we clean up the debt, we build the emergency fund, then we start investing. And that's so you need something you're going to be doing because you need to go make some money and we clean up the debt we build the emergency fund then we start investing and that's the shortest way to get there whether you're 30 or whether you're 63 it's the shortest way to get there so start selling everything in sight get this mess cleaned up as fast as you can so that
Starting point is 00:06:41 you can really start investing aggressively because you you're right, you're late to the party. You need to do it. I'm not panicked as long as you keep working. You don't keep working, we're going to have a real problem here. You've got a mess. So after you take your bow, what are we going to do next? That's your next thing. So I'm going to send you a copy of the book, The Total Money Makeover, so you can revisit the baby steps and what you need to be doing.
Starting point is 00:07:04 And I'm also going to send you Ken Coleman's new number one bestseller on career called The Proximity Principle. It's the proven strategy to help you find the career you love. And hey, that's what you're doing, right? That's your next thing after the forced retirement. What's your next thing? Take a bow. Back at it, baby.
Starting point is 00:07:22 63's young. That's it. Hey, thanks for the call open phones at 888-825-5225 isn't it funny how the older you get the younger 63 sounds um a friend of mine sent me an email this morning he said what's that i looked in my mirror and i said to my mirror young man what are you doing in that old man body because you know your spirit does not get old uh you you know you you don't feel different until you stand up and try to walk but um you know you're then your joints creak a little bit
Starting point is 00:08:00 but it's it's so interesting that you really don't feel old even when you're 90 you don't because your spirit doesn't age it's just your body that does so yeah you still got a lot of work to do at 63 my man and you can do it uh send him retire inspired too just stack books on there together you send him. Let's see if we can help him get going here. This is the news, guys. You need to stop and listen. The Fed decided not to raise interest rates. That means you've got a small window of time before rates
Starting point is 00:09:06 rise again. Here's the deal. Most people are paying too much interest on their largest expense, their home. So you're freaking crazy if you don't take 10 minutes to call Churchill Mortgage right now and see if they can save you money before rates rise again. A mortgage through Churchill could save you thousands, or better yet, reduce the time until you're debt-free. Can you imagine how it would feel to no longer have that payment looming over your head every month? Just go to ChurchillMortgage.com or call 888-LOAN-200. Their team of experts will give you more clarity about your options and more peace knowing you're saving significant money in the long run.
Starting point is 00:09:46 Call 888-LOAN-200. That's 888-562-6200 or churchillmortgage.com. Thanks for being with us, America. We're glad you're here. Michael is with us in Hartford, Connecticut. Welcome to The Dave Ramsey Show, Michael. Hello, Dave. Thank you for taking my call. Sure.
Starting point is 00:10:30 So I'm a coordinator, and I was asked by one of our students today. His situation is they're technically in baby step two, but before they started FPU, they already had a baby on the way. So in normal guidance, I actually told them to pause their baby steps and just start piling up cash. Agreed. Okay. So they've been piling up cash. They actually got a gift of $5,000 from somebody, so they just added that to the pile, which was amazing for them.
Starting point is 00:10:59 Perfect. Um, but they also, um, knew and finally got the, uh, amount of an IRS debt, um, that they knew was coming because of some stock that they, he had from back in the day that he cashed out and never paid taxes on. Um, so he has this IRS debt that's approximately 21 or $27,000 that he has to pay back. Um, and his question is, is they have a bunch of small debts that they could wipe out with a good chunk of the $5,000 and free up about $500 per month to be throwing towards their debt snowball, or should they just throw that towards the IRS debt and not really make any movement on chopping off a few, but obviously they'll start taking a chunk out of the IRS debt,
Starting point is 00:11:44 where I know you recommend also starting to get them out of your life because they could destroy your life. Yeah, I usually put them at the top of the list. I usually put them at the top of the list, but we're talking about after baby comes, right? Correct. Yeah, this is definitely an after the baby comes. You know, everything's hunky-dory.
Starting point is 00:12:02 They don't have any unexpected expenses that they can foresee. Cool. Yeah, then I agree. I mean you know, hunky-dory. They don't have any unexpected expenses that they can foresee. Cool. Yeah, then I agree. I mean, put the IRS on an installment plan. They need to do that or they'll sneak up on them. But if you've got them on an installment plan, they're pretty tame. You don't want to leave them there, but that kind of puts them on hold and put the $500 a month or whatever on that.
Starting point is 00:12:20 And then, yeah, when May becomes, we'll take the money and clean up some ankle biters and then get to the IRS as soon as possible. But let's say once you get past ankle biters, let me give you just an example. Let's say you had a $15,000 car note and a $21,000 IRS. I'm still going to flip the IRS ahead of that $15,000 car note. Okay. But if you got some $500, $1,000, $2,000 odds and ends that you can clean up and you want to do that before you get to the IRS, that's fine.
Starting point is 00:12:50 But this is unusually large IRS debt. Has he fixed the problem that caused the debt? He did. It was a one-time stock payout that he got. And he didn't hold any money back. Yeah. Okay. Right.
Starting point is 00:13:03 He didn't hold any money back. He didn't get any money back. Yeah, okay. Right, he didn't hold any money back. He didn't get any proper tax guidance. Right. And then he obviously found out many years later that, oops. Household income is what? Their household income is what? So it's about a little over
Starting point is 00:13:19 $100,000 right now. Their total is around $300,000 debt. They have a lot of student loan between the two of them. um so they're they're going to be definitely chunking away at that their trajectory is to go up he's in a management program at a company so as he goes up it's his income's going to go up um so they're definitely they're in the the right course for for getting out of debt as soon as possible so i definitely see the motivation there um thank you thank you. Thank you so much for coordinating the class and for taking good care of them where you are.
Starting point is 00:13:48 I appreciate it. Yeah, I agree. I mean, especially they've got a long slog here. Let's get to the IRS sooner rather than later. But if you put them off a little bit to knock out some ankle biters after the baby comes, I would. And then let's tear it into them and get rid of them as soon as possible meantime make sure they're on an installment plan hey thank you for leading again financial peace university you're changing lives doing that we appreciate you
Starting point is 00:14:12 jamie is on the line in indiana hi jamie welcome to the dave ramsey show hi dave how are you better than i deserve what's up good I am calling. My husband and I, we paid off about $55,000 in debt last year, both of our cars, student loans. Great. Yeah, it was super exciting, but we have a $19,000 student loan left. Good. Finish it up. Well, we have been renting for three years. Oh, keep renting.
Starting point is 00:14:41 Well, we're getting ready to move, and so we feel move and keep renting yes no we don't buy a house we got nineteen thousand dollars student loan debt oh you know that i do know that i just we just want to be settled so much that i understand it feels like we need to buy and we have an eight-year-old and it just feels like we've been in limbo for this you paid off fifty five thousand dollars in debt. How quick? Last year. Well, we sold our house three years ago, and we were saving, saving, saving for a down payment, and we never found a home, so we paid off the debt.
Starting point is 00:15:12 Oh, okay. Oh, so you didn't cash flow that much. No. So what's your household income? $135,000. So how quick are you going to pay off $19,000? Six months? It won't take that long. Okay.
Starting point is 00:15:24 So your eight-year-old is going to be eight and a half. Wham. You've got a great point. No, you get out of debt before you buy a house. You want the house to be a blessing and not a curse. Follow through. Follow through. You just got a little house fever because you had to move.
Starting point is 00:15:43 I don't blame you for not wanting to move twice.'d rather have a root canal than move we're packing this morning to get ready to move this office and i'm in my office looking through stuff man i've been in this office for 17 years 18 years or whatever and i swear to god you need to move every 20 years just to throw out stuff so it's just the junk i have accumulated. But anyway, I don't want to move twice. I don't want to move once. I don't blame you on that. I get it. That's a root canal.
Starting point is 00:16:09 But let's do this right. Be wise. Here's the thing. This is a good example of this, Jamie. We have found, I read a study many, many, many years ago, probably 15 years ago. And I've seen this study come true time and time and time again. The people who become the wealthiest when faced with a financial decision ask themselves not what feels good today,
Starting point is 00:16:35 but what's the best decision in a decade from now? And that's the answer I gave you. It was not what feels good today. It's very inconvenient to do what I'm suggesting. I understand. I'm poking at you and being sarcastic with you, but you know I love you and I want you to win. But what the answer comes from is what is going to give you the best life 10 years from today, not 10 months from today. And the people that are the brokest and stay broke are the ones that say they have a short-term way of looking at life.
Starting point is 00:17:08 They have no ability to delay pleasure. They have no ability to embrace pain for a greater win, and they say stuff like, thank God it's Friday. Oh, God, it's Monday. They live for the weekend. Hump day! You know, all that stuff, right? These are all short-term thinking.
Starting point is 00:17:34 And I have forced myself to emotionally grow up and think long-term. It's not a natural human act. Most of, I mean, it's normal to just embrace pleasure. That would be embrace the easiest path. That's a, you know, you'd be kind of weird if you didn't do that, right? Just embrace pleasure. That would be embrace the easiest path. You'd be kind of weird if you didn't do that, right? But all of us that win, you know, I mean, why would you ever brush your teeth if you weren't thinking long term? I mean, it's kind of a weird thing we do when we brush our teeth. Think about it.
Starting point is 00:18:06 But if you don't brush them, what happens? They fall out of your head. You're not attractive. It's hard to get a spouse. It's hard to chew your food, you know. So you go through this temporary frustration to get a greater gain on the long term. Why do you make your kids do homework? Because it's fun?
Starting point is 00:18:24 Well, no. If your child thinks homework's fun they're strange you know so that's not it why do you make them study for a test because grades are important why are grades important because you're training your mind to train your mind you're training your mind on the process of studying and learning because you're going to embrace a lifelong track of learning. Why? Because that, not because it's fun, but because it gives you a better life. And so we're always thinking long-term, thinking long-term, thinking long-term. What's, you know, anytime we make our kids behave,
Starting point is 00:18:59 it's not because it's convenient. It's easier just to turn on an iPad and let them watch a movie and they'll shut up, right? But that doesn't really get there it's easier just to do something go play in the traffic that's what my parents used to say right when i was a kid some of y'all aren't old enough that was from a generation didn't wear bike helmets so y'all don't know how to relate to that but you know it's that's short-term thinking long-termterm thinking is you sit down and explain why, not just what. Long-term thinking is I'm going to embrace pain today to get a greater good later. And that's not preaching at you, Jamie.
Starting point is 00:19:31 That's preaching at all of us. And that's really where that answer comes from for your situation. This is The Dave Ramsey Show. We'll be right back. In the lobby of Ramsey Solutions, Joe and Amber are with us. Hey, guys, how are you? Hi, Gary. Better than we deserve. Welcome, welcome. Where do you guys live?
Starting point is 00:20:20 King George, Virginia. Love it. Good to have you guys. So welcome. How much debt have you paid off? Well, right around $300, Virginia. Love it. Good to have you guys. So welcome. How much debt have you paid off? Well, right around $300,000. Whoa! How long did that take?
Starting point is 00:20:31 About five years. Okay. And your range of income during that time? I was making $120,000 now. I think I was making about $100,000 before. Okay, cool. What do you all do for a living? I'm an engineer.
Starting point is 00:20:44 I work for the Navy. Cool. And I was a medical coder before. Okay, cool. What do you all do for a living? I'm an engineer. I work for the Navy. Cool. And I was a medical coder and a hospitalist coordinator until I got to stay home with my babies. I love it. Fun. So you're a civilian working for the Navy or you're in the military? Civilian. Okay, cool.
Starting point is 00:20:58 Very cool. So I'm guessing, looking at this numbers, that you might have paid off your house. You are correct. I love it! Looking at this numbers, that you might have paid off your house. You are correct. I love it. Looking at weird people. So weird. You have a paid-for house. How old are you guys?
Starting point is 00:21:12 I am 33, and today... I'm 43 today. Happy birthday. I do. Mr. Debt-Free House Guy, I like it. Yeah. That's so cool, man. What's this house worth?
Starting point is 00:21:24 Right around $300,000. Oh, man. I love it. Yeah. That's so cool, man. What's this house worth? Right around $300,000. Oh, man. I love it. Yeah. Did you ever think that before you're 45 years old, you're going to have your house paid for? I never even thought that I needed to. Yeah. It wasn't until I met her that I even thought I need to pay this off any faster than what I was.
Starting point is 00:21:44 Yeah. You know, just making regular payments. Gotcha. So how long have you guys been married? Six and a half years. Okay. So you guys get married, and Amber says, oh, by the way, Joe, we're paying off the house. Well, I looked at him one day, and I said, why do you still have a mortgage?
Starting point is 00:21:59 He's been in this house for several years before we were married. And I said, you make really decent money. And I had been through your program when I had a failed relationship that left me with 30 grand in debt as a single person that I had to work my way through working in the hospital during the day, slept in pizzas at night to the same people I was in a board meeting with in the morning. They didn't even know it was me. Wow.
Starting point is 00:22:22 You know, so I came through that journey and then I met him and I said, why you still have a mortgage he goes well you'll always have a mortgage and i said no you don't have to and then i introduced him to you and we got on the on the journey once you did what i started doing the spreadsheets i'm an engineer and spreadsheets made sense yeah so uh i looked at the amortization schedule i I could find that online, and I found one that I could download, and I could change the numbers I could add if I want to pay more principal, and I could see what the difference was. So I looked at the numbers, and I looked at what she wanted to throw as additional to the principal, and I said, we can save $75,000 by paying this
Starting point is 00:23:07 off on that schedule. Yeah, I bet. So I was on board. You probably ended up doing it even faster, didn't you? Yeah, we were on an eight-year schedule, and we paid it off in five. Yeah, I love it. So we saved even more than that. I love it.
Starting point is 00:23:21 Way to go! All right, so somebody's out there listening that, Joe, you, before you met Amber, you're out there riding around in your car right now listening, and it never occurred to you that you could or that you should pay off your mortgage, and the guy's going, well, maybe I can do that. What do you tell them the key is? What would they have to do if they wanted to be like you? I would say marry the right woman.
Starting point is 00:23:46 This is a good start. This is a very good start. I definitely waited to find the right woman before settling down. And she had it all together. When I was getting ready to go to Afghanistan, I went with a deployment for six months. And when I was getting ready to go, I met her at a going away party. Oh, wow. She actually spoke Dari.
Starting point is 00:24:14 So she spoke the language to the country that I was going to go to. And I didn't know anything about what I was getting into. Wow. And we started talking about finance, think on the second date oh yeah yeah he took me to a fancy japanese restaurant and i said do you want to go halfsies or you know can you can you cover this is that in your budget and and he said yeah i've got it and so we started talking about finances then that's fun okay so what's the key to paying off a mortgage in five years? Consistency and contentment.
Starting point is 00:24:53 And contentment does not mean just settling. It just means settling with what you have and being happy where you are to get to where you ultimately are going to go. There you go. And Christ. Those are the three biggest ones. The more we've trusted God through this process, the more He has just been so good to us. I remember we were able to help send our friend on a mission trip
Starting point is 00:25:13 to an American Indian reservation. We asked how much money they needed and they didn't really tell us. I came home from church and I said, Honey, we should help. He said, Okay, well how about this number? I came home from church and I said, honey, we should help. And he said, okay, well, how about this number? And it was a big number. And I said, that's the exact same number
Starting point is 00:25:30 that I had on my heart. So we were able to hand that money over to them that day. And she looked at the check and she cried and she said, this is the exact number that I needed for me and my daughter to go on this missions trip. So, and then two weeks later, we got some refund checks in the mail that we were not expecting that were twice as big. Of course.
Starting point is 00:25:51 So we got to send that to the mortgage, you know, because I had just heard you like the week before saying, well, when you're in baby step six, you can kind of slow down a little bit on paying off the mortgage and live a little. And that's right when her missions trip came up and it was put on our heart to do that and it was just god proving you know i give you a little and you do well with it i will give you much more amen so you are trustworthy worthy of the trust a faithful steward well done you guys so proud of you who were your biggest cheerleaders well our cheerleaders kind of came as naysayers and cheerleaders you
Starting point is 00:26:26 know we had people say oh we've paid off our house it's great but we also had people say oh you can't no one can do that not everyone can do that right and i look at them and say not everyone can everyone can but not everyone will right you know it's a sacrifice and so now my mom has become the biggest cheerleader because she we went to visit family and she even said to her sister oh uh her sister said she had like six thousand left on her mortgage and she goes do you know what it's like to have a paid for mortgage and my mom says no but my daughter does talk to her about it she's living in heaven right now it can be done i love it very good very good well you convert them by proving it right yeah and our kids have gotten in on it too or our kids were one in three when we
Starting point is 00:27:12 paid off the mortgage and our three-year-old at the time he was learning to cut with scissors by cutting the links off the chain above our chandelier so every time we go to the store and he wanted to buy something we'd say oh do you really want that or do you want to cut another link? Because every link was $500 that we paid off. And I said, if we buy these toys now, we can't cut a link tonight. So he was like, oh, I want to cut a link because that was instant gratification. So he got to cut all the last links off the chain and I was okay with him. Amen.
Starting point is 00:27:41 That's awesome, guys. Well done. Very proud of you so you got a paid for house for on your birthday of 43 years old celebrating today very very good stuff well we got a copy of chris hogan's book for you everyday millionaires that's the next step that is what you'll be that's the next chapter in your story you do what it sure is the next step dude yeah you're right you're right on track to do it without a doubt very well done joe and amber fredericksburg virginia three hundred thousand dollars paid off in five years making 100 to 120 count it down let's hear a debt-free scream one two three three we're dead free I love it
Starting point is 00:28:30 love it love it love it man what would it feel like for you if you had no payments
Starting point is 00:28:44 no master card, who named that anyway, no discovered bondage, no American distress, no Sally Mae with a wart on the end of her nose in her own bedroom in your house, no car payment, no fleece payment, no house payment. What would that feel like? I'll tell you. You will discover that what the Bible says is true once you're free. The borrower is slave to the lender. This is The Dave Ramsey Show. Well, if you're a business owner, listen up. If you feel like sometimes your business runs you rather than you running it, I get that.
Starting point is 00:30:02 Business is not for sissies. It's hard, especially when people get involved. If you're ready to get some real-world answers from people who actually run businesses, don't have theory, that would be us. Our Entree Leadership material does that. And if you want to get down into the root of the problems that are holding your business back and are giving you frustration, been there, done that, man. We'll help you.
Starting point is 00:30:25 You can look at attending our Entree Leadership Master Series. It's November 3rd through the 7th, and this is a must if you're ready to turn things around or ready to go to the next level. Troy says, Entree Leadership Master Series has been the best business education I have ever received in my 30-plus year career. Wow. You want to learn more about Entree Master Series, just text EMS2019 to 44222.
Starting point is 00:30:58 Text EMS2019 to 44222. Or just go to DaveRamsey.com slash events and look at the Entree Master Series for November 3rd through the 7th. We've got a few slots left for the fall. Krista is with us in Orlando. Hi, Krista. Welcome to the Dave Ramsey Show. Hey, thanks for taking my call. Sure.
Starting point is 00:31:20 What's up? So I'm in uncharted territory. I've never made over $20,000 in a year um and i'm 35 um i recently just started my own business and now i have eighteen thousand dollars in the bank um and that's that's in my business account um and i roughly bring in about four to five thousand000 a month. Woo-hoo! Good for you. What are you doing?
Starting point is 00:31:48 What kind of business did you open? I do lawn care. Good for you. Wow, you're killing it. Well done. Blessed, blessed, blessed is what I've been. Yeah, you're working, working, working is what you've been, too. Yeah, in Florida, it's, you know, you're not skinny, that's for sure.
Starting point is 00:32:09 I love it. Good for you. Okay, cool. So here's a couple things. How many team members do you have? How many people mowing with you? Just you, or how many? Right now, I currently have two guys that I have mowing about 20 hours each a week.
Starting point is 00:32:24 Okay, are you doing them on 1099, or are you doing payroll. Okay. Are you doing them on 1099 or are you doing payroll withhold? I'm doing them on 1099. Okay. All right. As you work them more, you're going to have to convert them by law to payroll. Okay. If you get to doing much more than this, you're going to get yourself in a pinch. You can probably get away with it where you are.
Starting point is 00:32:43 Okay. Okay. But they're not technically 1099 right now, but a pinch you can probably get away with it where you are okay okay but they're not technically 1099 right now but you again you can probably get away with it um okay because the 1099 is is a vendor that has their own business and these guys don't have their own business they just mow for you that's it they're just part time and because you're small and you're not working on 40 hours, you can probably get away with it. But so that's thing one. Thing two is do you have a separate checking account for your lawn care business separate from your personal? Yes.
Starting point is 00:33:13 Good. Okay. Do not violate that account. And what I mean is pretend like you're managing this for someone else so that 100%, no stealing, 100% cash anything that comes in as income on the lawn care business is deposited into that account. The only thing you can pay for out of that lawn care account is lawn care business expenses. No personal expenses ever. Okay.
Starting point is 00:33:44 Okay. Okay. That'll help you keep a clean set of books to know how your business is doing. But that's called cash basis accounting. And cash basis accounting is you count the money when it comes in and you count the money when it goes out. And the difference is called profit. Right. Okay. And so your revenues minus your expenses is your profit.
Starting point is 00:34:05 And so your checkbook register is your profit and loss statement. Because any money that's left in that checking account, by definition, is profit. You understand? Right. And that's where your $18,000 came from, didn't it? Yes. Good for you. Okay.
Starting point is 00:34:21 Now, once you pull money from that account to take money home and put it in your personal account to pay bills with, you need to set aside one-fourth of every dollar you pull out. So if you're going to pull out $1,000, write two checks, one for $250, put it in savings to cover your taxes, one for $750 to put in your personal account and pay your bills. Okay. Otherwise, you're going personal account and pay your bills. Okay. Otherwise, you're going to get behind on your taxes. And the first year you're open, it is legal to not pay quarterlies, but it's not smart. I want you to go ahead and learn how to do your quarterly estimates,
Starting point is 00:34:59 and your quarterly estimates are your quarterly estimate of taxes. You're withholding on yourself. That's what I just taught you to do. You got the money of that $250. Those $250 checks or whatever it is sitting in that account just for taxes. And you're going to take that money. And once a quarter, you're supposed to file a one-page form with the IRS that shows your income minus your expenses equals your profit times your tax rate. And so you have a tax bill and you send them a check.
Starting point is 00:35:24 Okay. Okay. Now, you can easily learn how to tax bill, and you send them a check. Okay. Okay, now you can easily learn how to do that by going to DaveRamsey.com, click on ELP, Endorsed Local Provider for Taxes, and they'll help you do that, and they'll probably help you set up a little basic bookkeeping system too because you need to do that. Okay, it doesn't have to be anywhere. Right now I'm using QuickBooks.
Starting point is 00:35:43 Okay, that's good. That's perfect. You're ahead of me. Good. Okay? It doesn't have to be in there. Right now, I'm using QuickBooks. Okay, that's good. That's perfect. You're ahead of me. Good. Okay, all of that then. Then, extra money that is in this account. Like, if you get $18,000 built up, there's two things you want to do. One is you have an emergency fund in business.
Starting point is 00:35:58 It's called retained earnings in business. But it just means an emergency fund. It's just a business rainy day fund. Okay? Okay. And so, you've got equipment breakdowns and equipment replacement because you wear equipment out in your world. Mm-hmm. And you have to buy new weed eaters once a year or whatever it is you're going to do.
Starting point is 00:36:15 I don't know. But whatever it is. A new mower, whatever it is. So you've got to set money aside to get ready for that and for unexpected emergencies in the business. So you need to have some money set aside in the business just for that. Not a big amount, but a few thousand dollars anyway in your situation. Everything else you can bring home, and once you bring it home and pay your taxes, set your taxes aside on it, then boom, you get in gear and work your baby steps.
Starting point is 00:36:44 This is fun. That was my big thing. I feel like I'm making enough money. When do I start investing? Because I'm 30, 35. Are you out of debt? I don't really want to do this the rest of my life. Are you out of debt?
Starting point is 00:36:59 Yeah, I'm a completely debt-free business. Okay, and your personal business, you're personally out of debt. I have zero debt to my name. Perfect, good. Okay, then the next step is to have an emergency fund at home of three to six months of household expenses. I want you to be able to operate, and you're single and you're self-employed, and so I want you to have six months of expenses. Okay.
Starting point is 00:37:22 And figure out what it takes for you to operate times six and put that in the savings account. Don't touch it for anything ever above that. Then we'll start investing 15% of your household income. And so you'd project out what you think you're going to make in a year and you need to start investing 15% of that. If you want some help setting that up, you can set up a simple IRA, I mean, a Roth IRA, a basic Roth IRA will be your first $6,000 a year. And it sounds like that's not going to be far off of where you're going to be doing. So, you know, we'll start with that. And you can get that done by clicking on smartVestor at DaveRamsey.com.
Starting point is 00:38:07 I'm not in the investment business, but these are the people that I send people to that do stuff the way I teach. And they'll help you understand how a good mutual fund works, pick some good mutual funds to put into your Roth IRA. And then you can have that automatically drafted from your checking account. And then the only other thing that pops into my head as I hear your story is be aware that even in Orlando, there is winter. And so you're in a seasonal business, and business is at least going to slow down if not come to a screeching halt at in the peak of winter and so you really want to you want to have a game plan for that as far as cash goes as well
Starting point is 00:38:52 how are you going to survive the downturn of seasonality in the landscaping business and so just be aware and thinking through that and you know what's the plan, you know, be right on top of that. But you are, congratulations, I'm so proud of you. You're doing so good. All right, we've got a copy of Entree Leadership, How to Run a Business. I'm sending it to you. It's how we've grown our business. It'll help you run yours.
Starting point is 00:39:20 Fun discussion. This is the Dave Ramsey Show. Hey guys, it's Blake Thompson, senior executive producer for The Dave Ramsey Show. This hour's over, but you can find more great content on our YouTube channel. Catch the most watched Dave Ramsey, death-free screams in the very popular Everyday Millionaire segment. Go to the Dave Ramsey Show YouTube channel and click subscribe.

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