The Ramsey Show - App - Stop Whining and Change Your Life!

Episode Date: September 24, 2024

Live from the headquarters of Ramsey Solutions, it's The Ramsey Show, where we help people build wealth, do work that they love, and create actual amazing relationships. I'm Dave Ramsey, your host, George Campbell, Ramsey personality, number one best selling author of the book Breaking Free From Broke, and co-host of the Smart Money Happy Hour, Ramsey Network Production. He's my co-host here. Open phones at 888-825-5225 Kristen's in Austin Texas hey Kristen how are you I'm doing great thank you good how can we help well I have a very close son of mine who has done a lot of good work as an electrician doesn doesn't have a lot of debt, but he is asking about tax lien investing. I guess his goal is obviously to make some more money, but also to get into

real estate, I guess, a little easier in a way, but I just kind of wanted to know your take on tax lien investment. Okay. He's asking you about it? Well, okay, so he's telling me what he's thinking about doing. Okay. How old is he? He's 24. Okay. All right. This falls in, I can explain to you what it is and how it works, and I'm happy to do that, especially for the benefit of our audience. But let me tell you where he found it. He found it on TikTok with the get rich, quick, easy, nothing down real estate people. Probably. That's where he found it. Because that's the only place anybody talks about this subject

and they do it to get clicks and views because it sounds amazing and it sounds too good to be true course for three thousand dollars on how to get rich buying foreclosure real estate and doing tax liens okay right and by the way this is the same exact line they used. Wait a minute. Kristen, how old are you? I am 43. Okay. You're barely old enough to remember infomercials. You remember those?

I do. Okay. It's the same line they were using back then. The only difference now is it's cool because it's on TikTok. Okay. And it's on Instagram because it's on TikTok. Okay. And it's on Instagram and it's on whatever, but it's still the same genre of stuff. Can you buy a piece of real estate at foreclosure at a bargain? Yes. I used to do it for a living in my twenties and I bought a lot of

real estate since then that was distressed in one way or another at a deal. It is however, one property out of 200, we consider 200 properties to buy one. Okay. It's not like I walked out my back door and the sun came out and I looked over there and there was a foreclosure and I bought it. It is actual hard work, expertise, needle in a haystack. Okay. Can you buy tax liens and turn them into real estate and into profit? Yes. The likelihood of your 24 year old doing it is really close to zero. It's's really complicated it only works in a couple of states here's the way it works some states will sell if someone's behind on their property taxes the state or the municipality the local village or city takes a lien on the property for back

property taxes they sell that to someone in some states. My state, they do not do that. You can't buy tax liens in Tennessee, okay? So if I lived in Tennessee, I'd have to be buying them somewhere other than where I live, problem number one. Problem number two is you're buying a tax lien, okay? Now, let's say that you foreclosed on the tax lien and the people that owe the that own the property do not pay off the tax lien and you end up with the property the property is worth 250 000 got you got a 250 000 property with a 270 000 lien on it you don't want that it has no value okay so you would have to find a property tax lien that is delinquent on a property that actually has equity. Oh, now we've really made this difficult.

Oh, and wait a minute. Almost all of these states with property tax liens have a two-year or a one-year right of redemption. Now let's take this a step further. You find a piece of property, needle in a haystack, that actually doesn't have a lien on it, probably not in your state of Texas. I'm pretty sure Texas does not sell them. And so then you actually buy this $250,000 property. Maybe it's only got a $100,000 mortgage on it. Now, you've got $150,000 in equity,

but you've got to pay the $100,000 mortgage to keep the property that you just became the owner of or they'll foreclose on you. Follow me? Oh, wow. Okay. This is a problem. And then on top of that you become the owner of it but the the old guy that didn't pay his taxes has one year or two years to come back and

redeem it for by paying the taxes plus 10 or 15 interest so you can do absolutely nothing with that property except pay this mortgage payment for the next year and a half to two years, and you're 24 years old. This is suicide. Oh, yeah. Absolutely. Okay. Can it be done? Yeah, you need a real pile of money, a lot of patience, a lot of expertise, and the ability to do a lot of work to actually find this needle in a haystack.

And so can you do it? I've actually bought two of these in my life i've owned about 2 000 pieces of real estate in my life and i have actually bought two of these and as you can tell i've done it i know how it works it's a freaking nightmare i'm not buying one ever again haven't done it since no thank you too much trouble i did look it up dave too much time frame. I hope I explained it well enough that it didn't sound like a barrel and a fishhook, George. So Texas has redeemable tax deeds.

So it's different than, you're right, you can't buy tax liens. You can get these redeemable tax deeds. And you're right, there's a redemption period. They can come back. Okay, so I was wrong. They do sell them. They do sell the deed then. So it's a little different. But it does not clean the title, people.

Meaning if there's a mortgage on it, it stays there. Property tax foreclosures in zero states clean the title. If a first mortgage forecloses, the second and third mortgage are now wiped out. It cleans the title. You get a clean title. If you buy a foreclosure in a second mortgage position, you inherit the first mortgage. If you buy a property at a tax lien sale or create a tax lien sale, you inherit all the mortgages, including the IRS liens from the goober who also didn't pay his IRS taxes because he didn't pay his property taxes.

You think these things might walk hand in hand? You can bet they do. I'm guessing the house could be in disrepair as well. Yeah, I think. We haven't paid any of our taxes or our mortgages, and we're so far behind that. And then I'm going to sit there and maintain the house, pay all these bills for two years, and then he can come back and redeem the thing for 10 cents over what I paid for it. No, thank you.

And if this was a money-making scheme, there's going to be banks, hedge fund managers, real estate investors with deep pockets going after these. That's competition. It's been going on for years. And people, I will say again, it is possible to go down this rabbit hole and get out with a handful of money. But it's just, it's... Juice ain't worth the squeeze. It's a 24-year-old guy on TikTok who thought he found a way a handful of money. But it's just, it's... Juice ain't worth the squeeze.

It's a 24-year-old guy on TikTok and thought he found a way to make easy money. And I'm just here to say, no. You'd be better off delivering pizza. You'd end up with more. This is The Ramsey Show. This show is sponsored by BetterHelp. All right, so I was born and raised in Texas, and I love the myth of the lone cowboy. You know, the guy who the myth of the lone cowboy.

You know, the guy who doesn't need anyone or anything. It's a fun story, and it's a lie. In our self-obsessed society, we're obsessed about our own diets, our own workout routines, our own jobs, our own social media feeds, everything. It's easy to forget that no one can do life alone. And I don't care if you're an introvert, an extrovert, or whatever you want to call yourself, we all have to have a community and a support system to do life with. It's time to shift the focus from doing it all by ourselves to knowing that we can only be well and whole when we ask for help. Therapy can be a great source of help and support for any area of your life. And if you're thinking about starting therapy, try BetterHelp. BetterHelp is 100% online therapy, so it can fit with your schedule. To get started, just fill out a short

online survey to get matched with a licensed therapist. And if it's not the right fit, you can switch therapists at any time for no extra cost. This month, start to build your support system with BetterHelp. Visit betterhelp.com slash Ramsey Radio to get 10% off your first month. That's betterhelp, H-E-L-P, dot com slash Ramsey Radio. George Campbell, Ramsey Personalities, my co-host today. Ryan is in Grand Rapids.

Hi, Ryan, how are you? Good, how are you guys better than we deserve what's up so I'm about to graduate my with my bachelor's in computer networking and I'm just looking to figure out how if I'm good enough to get married or get engaged I have about 3k and savings I'm about $25,000 in debt on so is on she and I just i make about 800 bucks a week for right now but i do have a job lined up after i don't know the exact pay but i know it'll be above 60 000 a job lined up after what after i graduate when are you graduating again

december okay when are you thinking about getting married? This winter, hopefully. After December? After December, I plan maybe early either January or February for the engagement, and then August for the actual ceremony. So by then you will have been working eight months at a $60,000 job, and you have a $25,000 debt. Correct. And I just didn't know if I should start attacking the debt first before I like buy a ring or do I wait until I

have the ring and then start working through all of the debt? Well, how long have you guys been dating? A year and a half. A year and a half was yesterday. Have you guys talked about marriage at all? A lot, yeah. What's her financial situation? She is a CNA and she works there and she has an apartment. She also has about 20K in debt and then she plans on going to community college in the winter to go for nursing. Okay. So what is your all's plan and view of debt and budgeting going forward if you're married? We're both, we both listen a lot to you. And I, my parents are also like use your way to get out of debt with their small business and stuff. So we know the right way to do it. It's just about when do we start going through those steps.

Do we get married first or do we do it individually and then get married? And we know the whole thing. We also have the same philosophy of combine everything. It's us, it's us, it's us, not you and me. Well, each of you would be doing the baby steps on your own, and then as soon as you're married, we combine finances and we attack it together, and it usually goes faster at that point. So if you wanted to say, I'm not going to pay off the debt, I'm going to save up, get a ring,

we're going to save up and cash flow the wedding, and then we're going to attack this debt together, you could do that. As long as you're aligned on the belief and where you're going, that's all that matters. I don't care how broke you are when you get married. Okay. What I care about is where you're headed not where you are okay okay if you're broken planning and she's planning to get broker or you're planning to get broker like you know i think i'm gonna make eight hundred dollars for the rest of my life um you know i'm gonna be her dad

and tell her not to marry you yeah until you get up off your butt and earn some money but you got a good job lined up you're graduating but you got a good job lined up you're graduating she's got a career move lined up we're going to knock out this uh combined twenty thousand dollars worth of debt with a combined hundred thousand dollar household income next year uh when you're married yeah i think that's a wonderful thing so um obviously the ring doesn't need to be anything super fancy but um you can always upgrade later yeah well i did yeah sharon sharon married me with a spec it was so small it was unmeasurable now it was actually a 0.23 carat which means you needed a magnifying glass to find the freaking thing

um we set it in the safe the other day and thought we lost it it just disappeared it's that small well the one she has now i've seen it it's blinging it's a headlight now yeah but that's 40 years later and one bankruptcy later so she gets whatever she wants now but yeah you can get married by the way there is zero research on the size of the ring as a correlation to the quality and uh constancy of the marriage the success of the marriage as a correlation to the quality and constancy of the marriage, the success of the marriage. As a matter of fact, there might be an inverse correlation. I thought I saw that with how much you spend on the wedding.

Same thing. Like an inordinate amount on the wedding could hurt the chances. Same thing. Inordinate amount on the ring, same thing. But there's no actual data on it. It's just lots of people got married with very inexpensive weddings and very inexpensive rings and have a long, wonderful life together. Barbara's in Atlantic City. Hey, Barbara, how are you?

I'm good, Dave. How are you? Better than I deserve. What's up? Thanks for taking the call. Sure. Okay. I recently got engaged. We're an older couple

and my fiance has a home in a shore town. He's had it for about 30 years, but he has a reverse mortgage on it. I saw the paperwork and he, oh, I guess it said that the total for the reverse mortgage right now is about $386,000. That was in July. Good Lord. Well, I'm not done. I know he was in a lot of credit card debt, but someone's helping him get out of that. I saw him right in front of me cut up one of his credit cards. He worked four days a week. He just got taken down to two days a week, and he's upset and anxious and nervous. And I think in New Jersey, when we were to get married, it's half. I'm a little nervous.

Excuse me. Everything's half. Credit cards, I guess, is home. See, the thing is that being in a short town, if he was to sell the house, he would get over a million dollars for it so he could get out of the reverse mortgage. But he'd have to move, and he doesn't want to do that. So he's trying to reverse the

reverse mortgage now. So my question is, should I walk ahead into this thing? I'm a Christian, he's a Christian, and I'm just not sure if we should hold off on the wedding, or I would like to sit down with someone, the two of us, some realtor mortgage person that I know, rather than go with, he had already gone with somebody who I never heard of, and I think they're not even accessible, you know, you get them through the phone or something, you know, something like that. You're so quiet. Well, what is it you're wanting to accomplish here? I'm confused. Well, I want, I love this man, and I would like to see us spend the rest of our lives together.

It sounds like to me that he has a pattern of financial irresponsibility and not working much. How old is he? 75. Okay. Well, that's understandable then that he's not working much. How old is he? 75. Okay. Well, that's understandable then that he's not working a lot. He's past retirement age, so to speak. And if he took out a $300,000 traditional mortgage to pay off the reverse mortgage on this property,

how is he going to pay the payment? Well, I think that's what he's upset about now is because he just lost two days out of the four days that he's worked. And of course he has social security. If he's working those four days, how would he pay that payment? Through that and social security. So he's making plenty of money in the four days. I don't think so. Do you know what he makes? What does he do for work? He works at a furniture store, a seashore furniture store.

So you're talking about a $4,000 a month house payment here. He's going to lose the house. So I think he, there's no, well, he wants to keep it and he doesn't want to sell it. He has to sell it. He's broke and 75. So you're going to be signing up for some of this money stress and you can choose to do that. I don't think he's going to be able to pay this thing off with his income and his lifetime. I don't want to do that. I don't want to, you know, I just don't. When you get married, you're signing up for all of his problems, and he's signing up for your problems.

Not legally, but morally. Your name's not on the mortgage. 20 years I've been walking with you and following you, and I own my own home, and I have an IRA, and I don't have any credit card debt. I mean, I'm not married. So if you got married and you moved into your house and sold his house what's wrong with that he doesn't want to do that i know he doesn't want to do that but he can't pay the payment he doesn't have the money to pay from the from the

shore i don't care if he's in the corner of the empire state building he can't pay the payment he doesn't know nothing being on the shore magically creates money into your hand to pay the monthly payment you have to pay the monthly payment or you have to get rid of the property and so yeah this is reverse mortgages bit him in the butt now that's what it amounts you don't get to reverse the reverse mortgage it doesn't work like the only way you reverse it is you pay payments go get a new mortgage and pay that one off with the old one, refinance it, and then you've got a $3,000 or $4,000 a month house payment that he can't pay. That has to be solved for both of your sake. This is The Ramsey Show.

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So glad you're with us. George Camel, Ramsey personality, is my co-host today. We're so glad you're here. Hey, we're going on the Live Like No One Else cruise, setting sail March 22nd through the 29th. Over 90-something percent of our cabins are full, but we have a couple left. If you want to come, you can still get a suite on the, get a stateroom on the Holland Americas,

one of their newest ships, and it is a premium Caribbean cruise. Only going to be Ramsey people on the entire ship. Turks and Caicos, Puerto Rico, St. Thomas, the Bahamas, all of our Ramsey personalities, all seven of us will be on there all week long. And my wife, Sharon, will be with us the whole week. And Stephen Curtis Chapman, comedian Trey Kennedy. Now, this is a big deal. Trey Kennedy's like world big deal, world-class chef from the Food Channel, Manit Chauhan.

She's also a big deal. And by the way, Stephen Curtis Chapman's a big deal. And so is Dina Carter. And they're all going to be there and others all week long so it's our friends are coming to hang out with our friends it's a good thing ramsey solutions.com slash cruise check it out josh is in greensville greenville south carolina hi josh how are you doing good how are you, Mr. Ramsey? Better than we deserve, man. What's up? Well, I'll keep it brief. So me and my wife are actually in about $20K worth of debt,

and we weren't in this shape last year, but circumstances kind of changed for us, and we've got three credit cards. Two have pretty high interest on them and we have a car that we bought when we actually had a little bit of money we paid cash for and my question was do we sell the car to pay off those two high interest rates cards and then turn around and then throw everything extra at that other card it has no interest on it and it's a low payment okay so i meant you were debt free and then you ran up twenty thousand dollars on credit cards yes sir and now you want to sell the car that's paid for that has no payment in order to knock out some of the cards yes sir okay why Okay. Why do you believe the stupid has left your house? Well, I'll put it this way.

I'm a Christian, born again, and I had to repent of my money mismanagement, along with some other things, loving my wife like Christ loved the dirt, being one of the others. I've kind of got a hold on that one, or at least I'm putting forth the effort, not just saying I'm trying now. And I truly in my heart do not want to go back to where we were last year. What did you spend this money on, man? Well, we sold our house.

We had got it under a previous administration for a very low price. Obviously, administration changed, and we were able to make profit after the mortgage and everything about $90,000 and debt-free with $90,000 in our savings account. And through pretty much taking that, well, it wasn't $90,000. Josh, what did you spend $20,000 on with credit cards? Oh, so we live in a rental, and we pay rent by pretty much working on it. What do you spend on the credit cards? Well, about $8,000 of it was home redecoration.

There we go. On a house you don't own exactly and then the rest of it was dumb decisions what happened to the 90k in profit there ain't anything here that's been a smart decision what was the dumb decision well pretty much everything uh that we spent that money on was dumb and the bad thing is i've been a listener for okay here's here's why we're asking let me stop here's what we're asking this hon if you don't stop what puts you into the credit card debt and you sell the car you'll repeat the pattern so right yeah so i need the two of you as a couple to go through financial peace university we're going to pay for it so that you guys really get a handle on doing a budget together

and not spending any money that you don't have. And please don't ever spend money to fix up someone else's house ever again. I agree. Ever again. There's no situation that that makes sense, none whatsoever. I agree. And anything we're going to buy from this point forward, we're going to pay for it. Now, what's your household income?

Currently, we make about $3,500. A month? Yes, sir. Okay. And so only one of you is working. My wife works part-time. She works mornings. Do you have children?

Yes, sir. We have an 18-month-old and have another on the way. Good for you. That's exciting. Sounds like you need to work on your income side of the equation too, don't you? Yes, sir. I'm actually trying to get two part-time jobs as well, one for the morning before my wife's work and before mine,

and then one in the evening as well. Good for you. Those applications are pending. That's a good start. And then we need to say, okay, what are we going to do that makes me $60,000, $70,000, $80,000 a year? How are we going to move into that in the next year and a half to two years so we don't work part-times the rest of our life to survive?

Right. And I think you take your side hustles right now and you pay off the $20,000 and you keep the car. Yeah, getting rid of the car, it's not freeing up a payment, and so all you're doing is leaving yourself without a car, without changing behavior. Exactly, exactly. So you hang on.

We'll have the team pick up and get you signed up for financial peace university and the every dollar premium, both as our gift. Now the two of you as a couple sit down and work on that. And that's going to tell you, I got to work on my income and I've got to work on my outgo. We don't buy anything else. We can't afford. Cause here's the sad story. I think I just heard, We sold a house, made a bunch of profit, and now we have pissed it all away. That's what I just heard. And so now with a brand-new baby, we get to start again. When we had $100,000 in our pocket earlier, 90, anyway.

So, yeah, the car is not your problem, honey. Your income is your problem. Your lack of management is your problem. And you're like a dog I used to have have you don't have an off button for spending this dog would eat itself into oblivion i mean you just if you put food out it would get so fat it was just it did not have an off button for food it just eat and eat and eat some people some people that way with spending you just spend it. Oh, now we can't do it anymore. Look at that.

And now we got to sell the card. The credit card looks like unlimited food to the dog. Exactly. Exactly. Well, just keep racking it up. It doesn't have an off button. It will run your butt up into debt. I mean, it'll act like you're in Congress or something.

That's what's going on there. Madison's in Boise. Hi, Madison. Welcome to the Ramsey Show. Hi. Thanks for having me. Sure. How can we help?

Okay. Hi, thanks for having me. Sure. How can we help? Um, okay. So I'm recently divorced after 14 and a half years. Um, thank you. Um, long time coming, but it sucks. Obviously. Um, three boys, 10, eight and six and I have 50, 50 capacity. Um, so basically we're trying, we've been trying to sell the home, um, and both moved in, I moved into a rental home and he moved into an apartment and, um, it's been for sale for almost two months and it may end up in foreclosure. Um, we both don't want a foreclosure on our record and technically I guess foreclosure, we could end up having to file for bankruptcy or

something like that and my ex doesn't want to do that because it'll ruin his business and i mean i don't want to deal with that either what do you owe on the house um 512 000 for the first loan and 27 000 on the second loan what's it on the market for at 540 just enough just enough to get huh? Yeah, we would probably have to put 5,000 to 10,000. What do you make? Right now, okay, so when we got the home, I was making over $110,000, and now I don't know. I've been dealing with a lot of mental and emotional stuff,

and I don't have a stable. I went from a full-time job to working from home, doing my own bookkeeping. What were you doing at the full-time job? I was controller, then I was financial accountant and it was just way overworked and burnt out and couldn't handle it anymore. So I wanted to go back to working from home. And I, if I was to guess, if I was caught up on everything and not behind, I'm probably making $4,000 to $5,000 right now, but I have multiple clients that I could start in October. What does your husband make? I have no idea what he makes.

How far behind are you on the house? Two months. The second mortgage won't foreclose. The first will. The second mortgage will then come after you as an unsecured note. You're going to be bankrupt, but you're going to have more problems on top of this if you guys don't get the house sold.

That is where you are. So I suggest both of you make all you can make and make these payments so you can get this thing sold. It's going to be a bigger mess if you don't handle it. Sorry. What does the future hold for business? Ask nine experts and you'll get ten different answers. Economic growth or a recession.

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Go to Y Refi dot com slash Ramsey. That's the letter Y, R-E-F-Y.com slash Ramsey. Might not be in all states. Today's question comes from Ian in Maryland. The Federal Reserve cut interest rates recently. How long will it take for people to see any real impact from that decision? Also, my high yield savings account is paying me over 5%. Should I expect to see that rate to start coming down? In your opinion, which rate is more important to the economy, the rate we pay to borrow money or the rate we get paid for saving money? A few layers in this question. Let's start with the

first one. How long will it take for people to see any real impact from the Fed rate cuts? Well, it depends on the type of debt. Mortgages are going to take longer to be affected. It's not a direct relationship, whereas things with variable rates, credit cards, student loans, car loans will be impacted sooner rather than later. Well, my experience is credit cards don't move at all. They charge a bazillion dollars in interest, and they will continue to charge exactly a bazillion dollars in interest 18 22 24 28 percent whatever it is and they don't move that up or down based on the fed rate the fed rate is what banks borrow money from other banks at it's the wholesale banking rate okay so if your bank is paying less to borrow money from another bank then they don't have to charge you as much interest on the debt that they are issuing. So local bank or bank debt, credit cards are not affected at all.

Maybe home equity loans might see a little movement. Maybe car loans might see a little movement. As George said, mortgage interest rates are not determined by the fed at all they're determined by the bond market now they generally follow the fed but they're not they're not directly connected in any way it's just trending prevailing interest rates is all that drives that and so a half a point drop by the fed 45 days before a national presidential election which basically does nothing is what i'm saying it's not going to affect your high yield savings account probably at all i think we're seeing half a point yeah i mean it goes from five if it goes from five to two yeah your high yield savings account is going to go back down where it was when things were two

right but right now you're not going to see. All it was is it's just great and interesting political timing. When the economy is like probably the number one political issue, whether the candidates realize it or not, it's not some of the other stuff they're talking about. It's the economy. We know because we're talking to you you and you tell us all the time the things i'm concerned about they're not talking about up there i'm concerned about five dollar gas five dollar eggs and seven percent mortgage

rates that's what i'm concerned about and so this one thing this move right here is is actually touching on the number one item in the political landscape today very difficult to find in history a troubled economy re-electing a party to the white house they usually get booted from the white house they get their little eviction notice by a bad economy either side republicans are in bad economy democrats come in vice versa Vice versa, right? We see it happen all the time. Is that the old saying, people vote with their wallet? They do. What affects them and their house?

They do. So that's what this move is about. And so the actual truth is, Ian, it's not going to make a lot of difference in anything you're seeing. Number one, it's only a half point uh your high yield savings account will follow it because that when your bank is paying you to save money with them they are borrowing money from you at five percent if they can borrow money from another bank at two percent they're not going to pay you five percent anymore so when the prevailing fed rate goes down lower than your high-yield savings account substantially, they're not going to borrow money from you anymore because they can

borrow it from somebody else wholesale cheaper. But right now, the Fed rate is fairly close to your high-yield savings account, even with the half a point drop. So they're probably not going to monkey with it much. But when you're saving money in a bank remember what you're doing is you're loaning money to the bank at that interest rate and that helps you tell why they're willing to pay that interest rate and uh because they're borrowing money and they can then loan back out approximately 12x whatever their deposits are according to fdic. And so if you put $1,000 in there, if you loan them $1,000 at 5%, that allows them to loan other people $12,000. At higher interest. At 7% on the car loan.

They're making profit. On the car loan. And they make the spread on that. And that's exactly how banking works. It's really not much more complicated than that. Vernon is with us in Lexington. Hi, Vernon. How are you? Not too bad. How are you, us in Lexington. Hi, Vernon. How are you?

Not too bad. How are you, Dave? Better than we deserve, sir. How can we help? So I'm a single dad struggling to put food on the table for my kids. I don't have any credit card debt. I do have an auto loan that I'm majorly upside down on. I've got about $4,000 in medical debt.

And probably the most embarrassing one is I haven't filed any taxes in the past. This coming season will be three years. I just have not had the money to file them. And I'm tired of living paycheck to paycheck. Ends are not meeting. I make about $80,000 a year. I should not be this broke. I just, I need some help. Okay. When were you divorced? Um, about six years ago. Okay. And you've never really taken control of your whole life since then. It's all kind of just happened to you. Yeah.

I've never been taught how to manage finances. I don't know anything about it. Yeah, but what you described to me was you've been coasting. Yes. Today you took a step to try to figure out how to fix it, but you've been coasting. Yes, $0 in the bank before every paycheck. Yeah, and $80,000, you ought to have some money, shouldn't you? Yeah, you should.

Yes. Are you self-employed? I don't know. I work as a 1099 contractor. Yeah, okay. That's what I meant. Yeah. Okay. I work as a 1099 contractor. Yeah, okay. That's what I meant. Yeah. Okay, so, well, the first thing we do is we get on a written game plan called a budget. And we make every dollar that comes in behave.

And starting this month, you're going to set aside 25% of every dollar that comes in to pay your taxes. So if you get a $1,000 check, you're going to take $250 and put it in a savings account to pay your quarterly estimates on your taxes. And then you're going to do a budget with the remaining $750 per thousand. Follow me? Okay. You're going to make every dollar behave, and you're going to withhold on yourself because you have no money in the bank to pay three years' worth of taxes.

This is a problem. Right. And I'm guessing you're going to have somewhere around $60,000, $80,000 in taxes on these three years. You've been making $80,000 a year over those three years? Pretty much, yeah okay so you probably got you know 60 grand going to be o plus penalties right okay so now here let me you have a tremendous responsibility as a single dad that people do not get put in jail in america for not paying their taxes they do get put in jail for not filing them so you have 24 hours my friend to get it ramsey solutions.com and click on tax elp, endorse local provider, for someone in your area to sit down

and you get those taxes filed. I don't want you led away in bracelets at Connect. I hope I'm scaring you. 2,571 people went to jail last year for failure to file. It is a law. It's a criminal law not paying is different you can get away with not paying you can't get away with not filing get your freaking taxes filed now and then get on a budget and we'll walk you through the rest of this hang on we'll also

send you a copy of total money makeover and help you with the money part of this. You've got to get on this, buddy. Live from the headquarters of Ramsey Solutions, it's the Ramsey Show, where we help people build wealth, do work that they love, and create actual, amazing relationships. George Camel, Ramsey personality, number one best-selling author of the book Breaking Free from Broke. He's my co-host today and also the host of The George Camel Show on the Ramsey Network. You'll see him on YouTube. Be sure and check it out. Open phones here at 888-825-5225. Nancy's in Mobile, Alabama. Hi, Nancy. How are you? I'm good. How are you guys? Better than I deserve. What's up?

Okay. So long story short, I'm gonna make it quick. My husband and I are in our early forties. We did things a little bit backwards, but we're debt-free now. We have about a total of 220 or so in 401ks. However, about 125 or so is in old 401ks from old jobs. What is it or when is it good to roll those into Roth so that we don't end up paying taxes on growth and requirement on distributions when we get to that point. Oh, you're asking a really good question. A million dollars. This is a great question.

Really smart. You're on top of it, kiddo. Way to go. So when you said debt-free, you mean your house? No, no, no, no. I wish. Household income's what? About $130,000.

Okay. All right. So the original question, when do I roll an IRA or a 401k, an old 401k, you can't touch a current 401k, into a Roth and create the tax bill? So we move $100,000 over there. We create a tax bill, $25,000. Okay. Now, if you take the $25,000 out of the IRA and therefore only end up with $75,000 in the $100,000, $25,000 goes out for taxes and out of $100,000, right?

And you leave $75,000 in there. The $75,000 will only grow. It's a break even the hundred would have grown to enough to pay your taxes although you'd had the rmds so you shouldn't have done that one so you don't take it out of the actual account to pay the taxes number one you would move it only when you have the cash extra to pay it out of your pocket pay the taxes out of your pocket, pay the taxes out of your pocket. That has the mathematical effect of actually investing an additional $25,000 per hundred. You follow me? Okay. So if I move the hundred over and don't reduce it, now it's growing tax-free,

but I've got to pay $25,000 in taxes out of my own pocket over here to the side. You follow me? Correct. So you've got to have that cash, number one. Number two, you need to have been debt-free on your house before you do that because it's more important that your house is debt free than that everything's in ross but you'll get there pretty soon okay i think that was the question my husband is a mathematician so like he runs the numbers good and so he was but we neither one of us grew up with any financial literacy so we are kind of new to real financial literacy. Okay. And so we're trying to like, that's where I think the thing was,

what priority does that make it? Do we just let it sit for now? Well, this is not a completely a math problem. It's more of a data response. Okay. When we study millionaires, we find that the first $1 to $5 million of net worth that they have comes from their retirement savings and a paid-for house.

So we typically run into somebody with like 49 years old. They got a million eight net worth, and $600,000 or $700,000 of that's their house, and $700,000 or $800,000 of it is a retirement account. You follow me? Which is kind of where you'll be at 50. Okay. That's about where you'll'll be what's left on the mortgage which is just about 170. Yeah so you're going to be out of that it'll be gone a few years you'll have it

knocked out so the element that that's what a the profile of the typical person that gets the first one to five million dollars in net worth looks like is that. So I want to take you there first, and then, yes, you get all the benefits of having all of your accounts. Then when you got no debt and nothing to do left but to invest, well, paying the taxes on a rollover has the same mathematical effect of having invested. So we'll do the rollovers. So like, for instance, today I've been in baby step seven for 30 something years and so i i don't have anything but roths now so now you're just trying to optimize the wealth exactly exactly

you know when you get to my age at 65 or something i'm 64 uh% of my retirement is in Roths. So that does a couple of things. One is not only is it growing completely tax-free, and say I live to be 84, that money is going to be, it's going to double like four more times if I don't touch it all tax-free. That's pretty cool. I have no required minimum distributions at 72.5 now. Because the government already got their taxes.

Roths don't have required minimum distributions only traditional so i don't have to start pulling money out of my account unless i want to oh and here's the cool part that i didn't even think about when i did all of it and but now i'm getting into it a little bit uh when you have an inherited ira you have to pay all the taxes on the inherited i IRA or 401k in 10 years under the new SECURE Act. So grandma leaves you a million. Then you've got to pay all the taxes on that, the income tax, not inheritance tax, but the income tax on it within 10 years. So you've got to start pulling it out and paying taxes on it.

Guess what my heirs have to pay on the Roth? Zero. Ding, ding ding ding so they're going to inherit roth iras tax-free that are going to continue to grow infinitely tax-free hypothetically if the laws don't change at all my grandkids could inherit my roth iras wow can you imagine what they would be worth by then they might be the first trillionaires can you imagine what they'd be what those iras would be worth by then all growing without the stinking government's hands on it i mean i didn't even think about how awesome that was i just thought i don't have to pay any taxes. But now I'm going to leave tens of millions of dollars completely tax-free

that they are not required to withdraw. And by the way, they don't need any money. They're in all good shape. So they can just sit there and watch the stinking thing compound tax-free, maybe even a whole other generation. That would be super cool. That's a cool ripple effect. Because inherited IRAs, regardless of whether they come from your mommy, your daddy, your

grandpa, doesn't matter where it came from. Inherited IRAs that are Roth have zero taxes. This is stinking cool mathematically. You math people, you're going to love that one. Yeah, your grandkids will love the inheritance. They'll love you even more when it's tax-free. I'm just saying. Yeah, it's one thing to get a million dollars from grandpa. It's another one to get when it's tax-free i'm just saying yeah it's one thing to get a

million dollars from grandpa is another one to get a million dollars tax-free from grandpa that's just different right there i'm just saying that's generational wealth a godly man leaves an inheritance to his children's children while we're doing this we want to change our family tree somebody had to be old man vanderbilt somebody had to be old man rockefeller somebody had to do it it might as well be you you can do it so when she asks your question like that that's why i think she's awesome well you're thinking so she's a hero man and i guess that means you're old man ramsay based on your own logic hey not my words hey you just you you had to twist this to something ugly

didn't you the history books reveal he'll be up there. It'll be Vanderbilt, then Ramsey. You need to get me a Commodore hat. I could see you with a monocle later in life. A Commodore. You should consider a monocle. Commodore, Ramsey. A monocle. I need a ship.

You'll be so rich. You only need one. If I'm going to be a Commodore, I'll need a ship. This is The Ramsey Show. Hey, you guys. Health insurance costs are only moving one way, and that way isn't down. This is The Ramsey Show. Hey, you guys. Health insurance costs are only moving one way, and that way isn't down. And if higher costs aren't enough, the wait times to see your doctor are longer,

and it's harder than ever to get anything approved through the bureaucracy. So, if you feel like the system is working against you, try a biblically-based alternative to health insurance, Christian Healthcare Ministries. CHM is a health cost-sharing ministry that's helped hundreds of thousands of families like yours take care of over $11 billion in medical bills since 1981. And CHM has also helped them stay true to their values and avoid miles of red tape. And CHM support goes far beyond meeting financial needs. They'll also help meet spiritual needs. Members become part of a family who will pray with them and for them when they experience a medical event.

So listen, y'all, there's no better way to take care of health care costs. CHM programs start as low as $98 a month. So learn more today and join at chministries.org slash budget at chministries.org slash budget. George Campbell Ramsey Personalities, my co-host Liam is with us in Salt Lake City. Hi Liam, how are you? I'm doing well, how are you guys? Better than I deserve. What's up? So my wife started her business earlier this year, and I wanted to ask if there was some things that we should be trying to help get the business off the ground. So far, we've only done two online orders and about 10 in-person orders. We've been doing everything from social media to in-person

interactions. And we were just wondering how we can help get that business going. What is she selling? So we're doing a lot of her artwork that she does and also some customized

vacation t-shirts or family reunion stuff. Is this an Etsy shop? Shopify. Shopify, okay. Has she tried Etsy? She did look at Etsy, but I think Shopify looked a little bit better to her based on what they offered price per month and assistance in helping getting the website set up.

Okay. I say that only because you want to sell your products where your audience is at. And I've only heard people going to Etsy for these vacation-type T-shirts, and artwork might be a different story depending on what kind of art she's making. There might be a local community where she gets her start. But it's not a business where it's instantaneous money starts to rain down from the heavens. Yes, I was aware of that. I was just wondering what we should be trying to help get to that point.

What kind of artwork? It's just mostly stuff that she does on a whim. It's a lot of artwork based off of books and movies. And then she does commission artwork as well. So is this more in the kind of pop culture world? If she went to, let's say, forums where people love this movie or this book, I imagine that would be a better audience than a random Shopify store. Hoping people see it. Yes. I imagine that would be a good place to start. Yeah. Let's find some Reddit pages.

Let's find some Facebook pages where people are gathering as groups around those types of things. Okay. Yeah, I think you've got to find – this is not something you can throw a broad net on and get a good return on investment with your marketing dollar. It's going to have to be very targeted. And so we're always asking ourselves, where are the people? Where's the customer?

Where do they live? What are they on? How can we reach them? Where are they? and um you know the uh uh you know what what's the demographic and and uh like george said if there's a a group of people discussing that movie somewhere and you drop an offering about that movie in the middle of those people well that that's pretty much like piranha that's perfect right but if you drop it into the general public, 98% of which never heard of that movie, you just lost all your money, your marketing dollars. And so very targeted, very specific communities that you're diving into.

I don't know other than that because the problem with podcasts or social media is that it's now infinitely large. There's somewhere around 2 million podcasts and what is there something like 26 million Instagram accounts or something? I mean, it's just in terms of people trying to do business that way. It's not so, you know, and I, you're, you know, you're lost in a sea of nothingness out there in those worlds. Has she found people who are crushing it in this exact space? I believe she has, yes. I would study them, follow them, befriend them, figure out what they're doing, and try to replicate it.

Yeah, look at best practices there. That's a really good suggestion. If there's an Etsy shop that's doing 1,000 sales a month, doing the same thing. Yeah, but there's a lot of T-shirts. I mean, how many millions of people got a T-shirt on Etsy shop that's doing a thousand sales a month, doing the same thing. Yeah, but there's a lot of t-shirts. I mean, how many millions of people got a t-shirt on Etsy? My God. If you're going to Disney and you want, you know, the Camel family Disney vacation, well, I got a lot of options when it comes to who makes that shirt. A whole lot. Including myself. I can go to Canva and make one and get the Walmart, you know,

iron on and do it myself. So you've got to have some unique value proposition to go, here's why mine is better. My artwork is that much better better i personalize it in this way so it's going to take time to stand out and she's going to have to do a lot of research and get involved in a lot of different groups to try to kind of infiltrate and say i have a great product you ordered family vacation t-shirts i have not i'm not the type let me just say that i'm not the target demo for vacation well i'm not because i didn't even know it was a thing. So there you go. Oh, yeah. Well, you've seen our debt-free screamers. They get the matching t-shirts. A lot of them get them from these Etsy places. They make it themselves.

That's where that came from. And so I think it's the crafty mom target demographic. That's who you need to find. Okay. I guess I'm not going to give Dave the matching T-shirt I made him. This is awkward now. Yeah, that's good, George. I'm glad we got that settled. Open phones at 888-825-5225. Joe is with us in Louisville.

Hey, Joe, what's up? How about you guys? Better than we deserve, man. How can I help? So I got asked a uh yesterday about taking over ownership or um taking over the payments on the family farm um however in my current financial state right now um i don't know it'd be a good idea or if it'd even be plausible and i'm not sure where to go with it. Okay. The family farm.

Your parents have it? Yeah, it's in my mom's name. And her health has been going downhill for the last several years. What do you do for a living? And so I actually, I was in logistics. And I found out that I was back in an application process for the police force. So I jumped out of the logistics probably a little too soon. So I'm actually in between jobs right now because I didn't want to be out on the road

if law enforcement decided that they wanted to pursue or go on with the application process. Logistics had you on the road. You were driving a truck? Yes, sir. Okay. You call that logistics. Okay. All right.

So you quit your truck driving job because you're hoping the police department comes through. Yes, sir. I have several different applications with different police departments. What are you doing for income right now? How are you eating? I was relying on my savings. Now I'm working on doing applications around town and trying to be home for when they go on with the process.

Okay. And your mom owes how much on the family farm? It's right around $40,000. Okay. Are you going to move there? No, I'm not going to move there. I already own part of the property there, free and clear. And all I was going to do was take over where the house is and some of the other properties.

Do you rent your home or have a mortgage on your home? I rent, yes, sir. Okay, all right. And so you're going to start paying her payments? Either start paying her payments or she's going to make the payments through me. She wants it over in my name in case she has to get a long-term care, and I'm not sure that's a good idea, to be honest,

but I don't know for sure. I need outside information. How much debt do you have personally? Right close to $100,000. What kind of debt is that if you don't have a mortgage? So I was looking to start my own trucking business and I bought a truck and a trailer that are up for sale now um along with some other stuff that i'm working on selling and so the truck that you quit driving was yours yes yes can you not just start driving it again until you get the police

job i could uh i'm looking for some local stuff yeah yeah, but everything I'm seeing is all either going to be out for three or four nights. I mean, they don't give you like three days' notice on a police application. They give you like 30 days' notice. Right. But one of these is for the state police, and they do random home visits. They randomly show up. And you're supposed to be sitting at home 24-7? No, not necessarily sitting at home,

but be relatively close where they can have essentially an in-person interview right close. They can come to you real quick. I don't buy this whole process. No, I don't either. Something's fishy. I think you need to get back on the road and get to making some money. Okay, no, you do not need to take over your mom's debt

because, no, it will not help her with long-term care. Okay? If you move property to hide it so that you appear poor to get welfare nursing home care called Medicaid, they have a five-year look back, and they will undo anything that happened five years before. And if they think you did it even before that fraudulently for the sole purpose of getting free care from the government, when you actually had the money with your property to pay

for it, they'll undo it whenever they want to undo it under the heading of fraud. So don't do it. There's a time in your life and at the baby steps for renting, but you don't want to do it forever because when you rent, you're still paying for a mortgage, just somebody else's. Plus, rent means instability in your budget because it always goes up, never down. So when you're ready to buy, make sure you work with a mortgage partner you can rely on, Churchill Mortgage. Churchill is Ramsey-trusted to help you make the move from renting to home ownership wisely. Churchill understands that when you buy a home the Ramsey way, your mortgage payment will be a consistent, manageable part of your monthly budget. Plus, when your home is paid off,

that was your largest expense. Now it's extra money in your pocket and an asset towards turning you into a baby steps millionaire. So get started on the American dream of home ownership today at churchillmortgage.com. That's churchillmAccess.org. Equal housing lender. 1749 Mallory Lane, Suite 100. Brentwood, Tennessee 37027. George Campbell Ramsey Personality is my co-host today. In the lobby of Ramsey Solutions on the debt-free stage. Matthias and Sierra are with us.

Hey guys, how are ya? Better than we deserve, Dave. Love it, man. Where do y'all live? Wild Lakes, Minnesota, just north of the Twin Cities. Very cool. Good for you guys. So how much debt have you paid off? We paid off $308,000. How long did that take? Four years and 11 months. Four years and 11 months. And your range of income during that time um 155 000 to 190 000 wow what do y'all do for a living we're both physical therapists oh okay wow pt excellent so was the whole 308 your student loans basically with a sprinkle of medical debt in there wow

ouch yes it was terrible how long have y'all been married? Six years. How long you been out of school? Six years. There we go. And almost five years of that has been spent cleaning up the student loans. Yes. So you had one fun year of marriage so far.

That's right. And a great vacation to Nashville to do a death retreat. So you had the honeymoon phase of a year, and then you woke up one day, four years, 11 months ago, and said, we've got to clean this up. What happened? Tell us what happened. Oh, we're just looking at this debt. We had the minimum payment of $3,200

a month. For 10 years. Yeah, for 10 years, and it was freaking us out, and one of my friends who was like, hey, we're taking this financial peace course and i'm like oh my gosh this is heavily on my mind and so we yeah we took the course and i was dead set and i had to snowball my wife into it a little bit did you not go to the course with him i did did, but I was kind of against budgeting at first.

It felt very restrictive to be on a budget. So it was $308,000. Exactly. It was, well, which one do I want? Yeah, which of these painful things do I want? Yes. So how far into financial peace were you before you said, I'm on board? Sierra?

Oh, well, it took, honestly, it took about a year before I was like, okay, I get what we're doing and why we're doing this. Okay. And so then I was like, okay, we'll do, we're just going to go hard. Game on. Okay. All right. Good for you.

So you made more than that $3,200 minimum payment. You put extra at this. Yes. Yes. Because it would have taken 10 years, you said. Yes. You put six to $7,000 a month. Yeah, you must have doubled the payment. Yeah. You do it in five, under five years years, you said. Yes. You were stuck to the plan. Six to $7,000 a month. Yeah, you must have doubled the payment.

Yeah. You do it in under five years. That's amazing. Yeah. Way to go. So you guys were living on very little. Even though you were making great money, you were still living like you were broke college kids.

Well, we lived in his parents' basement. There it is. That whole time. So shout out to them for allowing that. And are you gone now? Yes. We are out. Yes.

It's beautiful. That's got to feel good. That's got to feel as good as being debt free. Yes. It kind of feels like this is the honeymoon now. Yes, exactly. It was just a late. Wow, that's incredible.

And how old are you two now? I'm 32. And 31. All right. Tell people what you think the secret to getting out of debt is. Well, one of the big secrets, I don't know, for me, is just like, so we're Christians, and just like the Bible says,

to be renewing your mind with Scripture every day, to remind yourself of the purpose of your life and day-to-day actions. I think that same principle can be applied to this, getting out of debt as well, and just kind of renewing renewing your mind i think through the show or reading your books or things like that so you're kind of you're constantly reminding yourself why are we doing this instead of inputting other things like from tiktok or wherever i like that make sure your inputs are coming from good sources that are actually improving your life. Right.

What was the why? What was your why, your big motivator that drove you so hard? We couldn't do anything with that. With that minimum payment, we just couldn't do anything. So we were like. Freedom. Yeah, freedom. Yeah.

I want out. Yes. Yeah. Wow. them yeah i want out yes yes yeah wow well um if there's a 25 year old that's got three hundred thousand dollars in student loan debt out there talk to them what should they can they do it and what should they do oh they can do it it's just going to take a lot of dedication a lot of ignoring what your friends are doing and ignoring the things you want to do as well but knowing that there's better things in you know in the future we always said sad now happy later live like no one else so later you can live and give like no one else i love it delayed

gratification yeah you guys did that you lived on way less than you made because i mean if you're making 10 grand and you're throwing seven at the000 and you're throwing $7,000 at the debt and you're trying to pay all your bills with the rest, you guys really sacrificed. But it's gone now. Yes. The rest of your friends, they're on the 10, 20-year plan, and you guys are free in your early 30s.

It feels amazing. Now we're thinking, what should we be doing with our mortgage payment, with the money? Should we be rolling it into that? What should we be doing now? You're still living on nothing. You take that same seven grand and chuck it at the mortgage, you'll be completely debt-free, housing everything in no time.

Yeah, that's a little intense. We might lighten up a little off of that. These two seem like the intense type. If I lived in my parents' basement for more than a month, I might just go crazy. So that's impressive. That is. It's impressive for everybody involved.

Well done, y'all. Very well done.'all very well done proud of you excellent excellent work very very good stuff all right matthias and sierra from minneapolis man this is incredible what a great story 308 000 paid off in four years and 11 months making 155 to 190 count it down let's hear a debt-free scream three two one we're debt-free wow you know i that's an incredible very, very wise beyond their years, young couple. I wonder these days with there's so much in our face about how bad student loan debt has gotten.

We're up to about $1.8 trillion now, as you know. And when we did Borrowed Future, I think it was $1.4 trillion or something like that when we did that documentary a couple of years ago on student loan debt. But I wonder, I mean, because I'm convinced that 98% of the people that sign up for student loan debt have no idea what the flip they're doing. And they look up, get married, and they go, I got $150,000 in student loan debt. Oh, wait, so do you. We've got $300,000 in student loan debt. Oh, wait, so do you. We've got $300,000 in student loan debt.

Oh, my God. And it's more than a mortgage payment just to make that minimum student loan payment. You're talking $3,200. If you told an 18-year-old that, they'd go, never mind, I don't want to sign. Yeah. Wow. Well, because they don't, you know, number one, we think about us. We don't think about getting married.

And when you get married, you double it. Rachel was talking about, she at a christian college speaking and a little couple came up and said they wanted to be missionaries and they've got 180 000 in student loan debt and she said you're kidding oh wait each of them oh my goodness had 180 000 she's like you're not going to africa i mean you're gonna be working you can't make that payment on missionary money well you should not know oh my goodness so it holds back your dreams we're seeing the stats that people are delaying home ownership they're delaying marriage they're delaying having kids all because of student loans you know parents

teach your kids to choose a school you can afford teach your kids to go into a field at least the good news about these two heroes is they went into a field where they could earn some money because they're earning you know almost 100 a piece here which that helped the story considerably um and and there they they woke up saw it and to their credit said okay instead of reacting like a victim to this we're going to react like a victor and we're going to get in attack mode and we're going to knock this out. That's powerful. And we've got a parting gift for them we didn't mention, but we got two every dollar premium subscriptions for you guys. Good for a year apiece. You can use those, you can gift them to someone else because that budget really is the key. It's amazing when you

go, we make 200 grand, where is it going? Well, the budget shows you the reality of those numbers. And then you go, hey, you know, our bills are actually like three grand. We could throw the other seven at these debts. And what would that do? That could get us debt free in half the time. And that creates some hope and momentum. That's exactly what it did. Four years and 11 months. Wow. Way to go, guys. Excellent, excellent work. So that's the, you know, the moral of the story is know what you're signing up for. And if you find yourself and you wake up and you have that oh, crap moment, which is kind of where they found themselves after graduation,

then you go, what are we going to do? We're getting in attack mode. And gazelle intensity. They were willing to do anything. Living in the parents' basement. That's the equivalent of run in this case. That's hardcore. That's hardcore. That's hardcore.

For five years. Woo! This is The Ramsey Show. George Campbell Ramsey personality is my co-host today. Open phones at 888-825-5225. Effie is with us in Houston, Texas. Hi, Effie. How are you?

I'm great. How are you? Better than we deserve. What's up? I was calling. So the last two years I've been coming out of postpartum depression. I had a couple credit cards that I let go because I, well, I was also not working and I couldn't pay them. Um, my husband and me,

we do not, we do finances separately. Um, I know a lot of your, um, listeners, they, you know, they might be doing things together, but me and my husband have always done things separately. Um, so his dad is his dad. have always done things separately. Um, so his debt is his debt. My dad is my dad. Um, and I don't disagree with you, but, um, getting my husband on board for anything is always very difficult. So it's, but I have two credit cards that I could not pay while I wasn't working. And one of them in particular has been sent to a lawyer, and they're knocking on my door. They're serving you with lawsuit papers.

Exactly. So I have, I mean, our debt is considerable considering we have, you know, we have a rental house. We have our primary residence. How much credit card debt do you have that we're talking about? The credit cards that I'm most concerned about, it's about $20,000. Okay. What does your husband make and what do you make? So I just started working again um i'll probably be making anywhere from

70 to 100 um just but it's not 100 isn't guaranteed it's a bonus gotcha and then same about the same how much other debt do you all have in the house um how much other debt other than the house do you ever no no yeah other than debt do you all have in the house? How much other debt other than the house? Do you have more car debt or does he have other debt that he has in his name or what? Yeah, well, his, yeah, it's his name. Like he has his credit cards, I have my credit cards. I know, I heard that. We have cars.

So cars together with his credit card. Well, if I was to combine both of them, it's 1,213 cars or $1,300 a month. I know. That's bad. What's the total loan amount? Total loan amount for the— Your car and his car. My car and his car is $11,000, $11,300 a month.

No, I'm saying the total loan amount. Is it $50,000 left on this loan? Oh, no, no, no, no, no. We both have about $20,000 left on the cars. Okay, so you're around $100,000 in debt as a couple, not counting your house, and you make somewhere around $200,000 a year as a couple. That's about right. And you have rental with a mortgage on it.

Yes. Okay. And you're how old, hon? 38. And you have a baby. And do you have other children? Uh-huh. A seven-year-old.

Okay. All right. And you've just come through two years of really tough postpartum. Yes, sir. Yes. Okay. All right. You're the same age as my daughter, who has three kids.

Okay? the same age as my daughter, who has three kids, okay? And I think what your husband is doing to you is abusive. That's our deal. As your dad, I don't appreciate it, the way he's treating my daughter. I'm pretty pissed at him right now. He makes a baby. His wife is in postpartum. And his answer to it is go figure it out, chick. You're on your own.

We have our finances separate i heard in the that they said for better for worse in sickness and in health i bet by god when he has the flu he wants you to make him soup so this is the core of it you don don't have a $20,000 credit card problem. You have a very serious issue in your relationship. And you guys have walked along. You've walked through the forest with your hands over your ears going la, la, la, la, la, la, acting like nothing happened until something happened. And now the situation that you're in is revealing how terrible your theory on handling money is. So the two of you need to sit down together and rethink your marriage. And say, we're going to love each other in sickness and in health. We're going to love each other.

For richer, for poorer. We are mommy and daddy. We are mommy and daddy. We are husband and wife. We take care of each other. It's us against everybody else. You're not on your own. This is not a joint venture. It's not a partnership.

And so you really, guys, you've really got to rethink your theories on relationships because they're broken and they're wrong. And it's caused you to be in this situation where your soul is unraveling. I can hear the fear and even almost a sense of shame in your voice. And you didn't do anything wrong other than as a couple, you've run up the stat. So if someone had abandoned my daughter while she's in postpartum to her own devices, who was supposed to be her husband, who was supposed to love her and care for her, he and I would probably be having a discussion about that, and it wouldn't be pleasant. Because it's not fair, and it's not right. The way you're being treated is wrong.

And I'm begging you to no longer accept that as okay. Because instantly when I take a $200,000 income, I can clean up $100,000 worth of car debt and credit card debt when we're working together in a unified front. How fast can we pay off a hundred thousand dollars george making 200 12 to 18 months max yeah this thing's gonna be a hundred percent debt free and yet we have service people serving warrants at your door and you have a baby and there's no excuse there's no reason you're not broke y'all are just broken it's just to see my wife

drowning emotionally with postpartum financially with lawyers at the door and i go well it's her dad it's her problem i'm not a man honey they're here to see you what kind of man does that i i don't know if i can call him a man. That feels generous. There we go. There we go. There we go. So it's a crisis, folks. It's a problem. I'm sorry, hon. We love him, but we're ready to box his ears right now.

That's an old Southern term. But anyway, I'm not even sure what it means, but somebody's getting ready to get hit in the ear, I guess. But anyway, I'm going to box your ears. What the crap does that even mean? I don't even sure what it means, but somebody's getting ready to get hit in the ear, I guess. But anyway, I'm going to box your ears. What the crap does that even mean? I don't even know what that means. Adding that to my day. I had my ears threatened to be boxed several times.

I'm still trying to figure out what trying to find my couldn't find his butt with both hands. You never explained that one to me. Well, that's like Southern riddles. I got to figure out. It means you're pretty limited on your abilities. That explains it. It explains itself. Effie, I'm sorry, hon.

But you guys really, if you guys, you understand the math in your situation is easy. It's a hot knife through butter. You can fix this very quickly when you fix the reason that it's caused. What caused it? The problem, the people showing up at your door are not the problem, they're the symptom. And I would even go so far as to be so bold as to say it has contributed to your postpartum, your depression.

And so it certainly didn't make it easier at a minimum. No question about it. This sense of abandonment, and you're on your own. No, that's not how this works. So if you guys want our help, we would be honored for you to go through our classes. I'll put you on hold, and if you want to sign up, I kind of don't think your husband wants to sign up

with anything with me right now after I just finished with him but i'm okay with that too pissing people off like one of my spiritual gifts because folks i love you and we're gonna do one thing around here we're gonna love you enough to tell you the truth this is the ramsey show live from the headquarters of ramsey solutions, it's the Ramsey Show, where we help people build wealth, do work that they love, and create actual amazing relationships. George Camel Ramsey personality is my co-host today. Open phones at 888-825-5225.

That's 888-825-5225. Caleb is with us in Milwaukee, Wisconsin. Hi, Caleb. How are you? Better than a sinner like myself deserves, Dave. How about yourself? About the same, brother. What's up?

Well, my wife and I are 25 years old. We've been married for three years now, owned a home for the last year, and we are $581,000 in debt. Including the house? Including the house. How much of that's house? $360,000. Okay, and so you've got $170,000 in personal. $220,000, $581,000 total, $360,000 on the house, $160,000 in federal student loans, $34,000 on two cars, and $27,000 in a personal loan from our plastic surgery that we did with our credit cards. Okay. What do you guys make?

What's your household income? This year we're at $176,000 in salary before a bonus for me. So she makes $83,000. I make about $93,000. What are your careers? She's a physical therapist and I'm a regulatory compliance person in clinical research. Gotcha. Okay. You're 25 years old and you got almost a $200,000 household income. Yeah. I've been pushing hard to get us Roth and eligible before we turned 30. That's a goal of mine. Yeah. I don't know that you need to worry about that considering the dadgum mess you've made, but yeah. Yeah. I've definitely made a big one. Yeah. So how can we help? Well, I have an offer right now to buy my truck out for $4,000 over what I owe on it. Should I apply that $4,000 to a couple of the small federal student loans that we have at 0%

interest or throw it at the $27,000 personal loan at 13%? What are you going to drive after your truck's gone? We have a little $3,000 beater car. One car? We have two cars. I'm sorry, three cars we owe on to. So we have a third little beater car that I can get around time with. Okay. That works. So what's the apply of the surplus to, George? Well, it would go to your next smallest debt.

So when you look at the balances of everything, if you split everything out, individual cards, individual student loans, what is the next smallest balance? We have a couple of federal student loans that are worth $1, dollars. Knock them out. There's a couple of those. Okay. Okay. Interest rate is not your problem. Lack of systems and processes and efficient use of your money is your problem. Okay. Okay. So we're going to get on a budget. We're going to live on beans and rice, rice and beans. You're going to act like you're a college student again and live on nothing. We're not going out to eat. We're not going on vacation. We're going to take this fabulous income you have and clean up this fabulous mess you've made. Are you guys investing right now at all? Well, that's another question

that I have. I would like to take advantage of the match that my new company has. No, you're broke. Don't take advantage of a match? You're broke. Okay. You're deeply in debt. You need to clean up this mess. You can't serve two masters. You can't house divide it against itself will fall.

When you're trying to invest out of the one hand and pay off debt out of the other hand neither one are done well okay you'll be in debt for 20 years while you invested three percent neither are going to get you very far you need to get really really really angry and scared about this debt and then the two of you looking at it going, yelling at it, you're going down, right? I mean, you've got to get that kind of thing going, and we're going to slice and dice to nothing. And the bad news is you've got a lot of debt and a big mess. The good news is you're both very bright people, and both of you have studied and learned processes and systems in your academic life and I've applied them in your career life. So systems that are predict, create predictable outcomes are your life. So if you will apply the system that we put in place to get you out of debt so that you become very, very

wealthy within a decade, you will be able to use this fabulous income you have and clean up this mess in a lightning speed. You'll be amazed at how fast you clean it up. With that being said, Dave, who can I look to to find a financial mentor? Because both of our sets of parents are not- You don't need a mentor. You need a budget. Okay. We got the plan. We're the mentors. You got all the resources. You're not dumb. You're just trying to fit. You just need a system. Okay. Apply the system. We're going to show you the baby steps you're new to all this ramsey stuff apparently right yeah i got the thousand dollar done but yeah that's the end then we're going to work off the debt snowball listing our debts smallest to largest pay minimum

payments on everything stop all investing take lifestyle down to scorched earth and and squeeze every stinking dime out of your life and throw it at that smallest debt until it's gone when that things, stop all investing, take lifestyle down to scorched earth, and squeeze every stinking dime out of your life and throw it at that smallest debt until it's gone. When that one's gone, get the next one. When that one's gone, get the next one. And what happens is your behavior gets more and more intense because hope is increased each time you have these traction points. And you're going to get just so fired up and singularly focused that you won't even feel like you're sacrificing,

but your friends are going to think you've joined a cult. Understood. That's how this works. It's a behavior mechanism. We're managing behavior because you've got the mathematics in front of you. I can see $200,000 income, including bonuses, and I can see $200 thousand dollars in debt with the car gone okay not counting the house how fast am i going to do that well i'm going to do that in about 14 to 18 months and we're not even 27 yet and debt free and if you're debt free making 200

you know how much you can invest then dude dad gum a lot i mean debt free but the house you know i mean the math on that you're gonna be so stinking wealthy it's unbelievable but i gotta get the impediment out of the way i gotta get the blockage cleared before we can call get the patient healthy so that he can run the dad gum triathlon okay that's what we're after here i'm gonna send you a copy of my book breaking free from broke caleb i wrote it with you in mind. A 25-year-old who's going, I feel like the system's rigged against me. I make all this money.

I don't know where it's going. And I feel like it's everyone else's problem. And if the next president could fix it and inflation could calm down, and then I go, hold on, let's hold up the mirror and let's look at Caleb. What can Caleb do with his $200,000 income

that he's giving away to lenders every month? There we go. George is going to be your mentor. There we go. There we go. I will do it. And in fact, Caleb, get in touch with our team. Because you're old, George. There we go. George is going to be your mentor. There we go. There we go. I will do it. And in fact, Caleb, get in touch with our team. Because you're old, George.

Yes. Well, I'm going to put Caleb on my YouTube channel and show everyone that it can be done. Okay. Follow up with him. Follow up with him. So we'll get your email, Caleb, and I'll send you a copy of my book, Breaking Free from Broke. And if you're willing to let me be your mentor in front of a few hundred thousand folks,

we can help a lot of people and show them by doing an actual budget what it's going to take for Caleb to get out of this mess. you're going to be like the before and after on the biggest loser you might lose a george camel in the process that's not much really i mean that's just like that's like not eating donuts for not even impressive dave could lose that tomorrow hey you could that's all i'm saying he's got the discipline golly wow all right hang on caleb i think george is your mentor i'm not sure he's not so sure but yeah i'm just wondering what i've signed you up for here buddy well the caleb's out there they fell for all the money traps they went down the path everyone told them to go down take out all the student loans you can get get a nice car payment you work too hard

you deserve it get a big mortgage i mean he's the poster child for what's happened with the american dream it's turned into the American nightmare. It's land of the free, home of the broke out there. And then what do I do? Who do I turn to? Neither one of my parents knew anything about it. My best, my high school counselor told me to go $160,000 in debt. My friends are all broke.

They don't know. There we go. We'll show you the way, man. Hang on the line. We'll help you out. George, the youngest mentor. I like that. The youngest mentor. It's your new book. This is The Ramsey Show. George Campbell, Ramsey Personalities, my co-host today. Thank you for joining us. Joel is with us

in Reno. Hi, Joel. How are you? Hi, Dave. Thanks for taking my call. Sure. What's up? So a little background before I ask my question. I run a small custom carpentry business. My yearly income is about $60,000. My wife also works. She makes $150,000, and that's where we get our health benefits from. God's blessed us with a ton of stock from her company, and we've paid off our house, zero debt, and a good chunk in savings. Way to go.

Yeah. What does a good chunk in savings mean? We have about $317,000 in savings. In savings or in investments? $90,000 is in a high-yield bank savings account, and then the rest is in an investment account. Good. Excellent. Wow, you guys are killing it, Joe.

Yeah, we, we're very grateful. Um, uh, so we are, uh, in November getting ready to adopt our second daughter. And when,

after that happens, my wife is planning to quit her job after 10 years and stay home for a couple of years at least. And that means our income will be reduced. I'll start paying for health insurance out of pocket. And the question is, what can or should I do to kind of step things up in my business to grow the income? And or should we consider purchasing an investment property to bring in some income?

Well, I mean, the money you have invested is bringing in income. Investment property is not going to bring in that much more. Certainly not going to bring in $150,000 worth of income. That's what you're losing. Right. How much do you actually need to cover your expenses and have some margin every month? I mean, it'll definitely be kind of a lifestyle change. Well, yeah, from 210 to 60.

We currently, you know, enjoy traveling and good food. What does it take to live in your house? I would say it would take $100,000 a year. Okay. Where are you going to get the other $40,000? That's the question of what. Yeah, I mean, you run your high-end woodworking business. How long have you run it?

I've been in business for six, seven years, and I've been doing the current scope of work for the last three to four. Are you not working much and you could just dial it up, or you don't have enough clients and you need to dial it up? What are we going to do to dial it up? Because it sounds like you need to be making $110,000, $120,000. You need to double your income. I think the latter two suggestions, because honestly with my wife working and making much more and the last couple

of years we have, I've put a lot of work into our home, upgrading it. So that's taken some income, some time away from the business and, and not being the sole provider, I think, has, you know, there's not as much motivation. It allowed you to coast a little bit. Yeah. Okay. So what if you started doing 40, 50 hours in the business, raised your hourly, got in tents, maybe hired someone to help out?

What would that do to your business and income? It would grow it. I think everything except for hiring, that's the hardest factor in my business. It's always hard, yeah. It's hard in any business. And I've tried it in the past and those were my worst years. Are you turning away clients right now or do you need more? I'm not turning away clients. No, I'm not turning away clients. If anything, clients, uh, turn away from me because of cost. Um, but I think I could pursue better, better clients, more high end clients. Yeah. I think you need to sit down and develop a, a bit of a pro forma cause you know your margins and you know what you need to create in gross revenues.

And you probably could do just a little bit of math work and figure out your average order value what your average client is worth to you in gross revenue and in net profit each time you sign one up my average client spends twenty eight thousand dollars with me and i net seventeen thousand on that or whatever the number is i just made that up i have no idea and then, okay, in order to get to 110, 120 net, I've got to double that. Yeah. And then you start asking yourself what my friend Henry Cloud asks all the time about a desired future. He says, okay, that's not true today.

So what must be true one year from today that is not true today in order to be at that number? And you can start answering that, and I think you know then the answers are going to start popping up in front of you. You have a little bit of suspicion about what it's going to take, better than we do after talking to you, but I think you develop a business plan as if you were going to have to sit down and present this to someone that cared you know like a banker or something i'm not saying go to a banker but uh but i mean if you're trying to show somebody proof to someone that you're going to do this it's got to be double what you're doing now because you're picking up health care and you need 100k to live and your taxes are going to increase when your income increases one thing i would do

joel is look into handyman work because clearly you're a handy guy these people are charging 50 75 90 bucks an hour which would double your income so i would start it on the side and eventually you might go i enjoy this this might be the full-time business and i do carpentry on the side we're running into handyman guys that are making 300K profit. Taxable. I mean, they're killing it out there right now because we've raised two or three generations that don't know what a Phillips head screwdriver is. If you are just honest and dependable and you show up and do good work,

people will be telling their friends for miles and for days. That's if you can't get your thing. But if you want to just do what you're doing and do more of it lay out a game plan to do it that's all we're saying but i i think you've been given i think you've been given notice by your wife that she's not gonna do this so you're gonna have to that's what it sounds like that's not a bad thing i mean y'all were talking about it baby coming another another adoption coming in so she wants to be home. That's not bad at all. And we've got a little headroom.

We've got a little headway. We've got some on-ramp time. So we've got a year. So let's lean into this and go, what does it take to get the net profit on this business to double, go from 60 to 120? And then it sounds like you all have a great life at that. Sounds like it'll work beautifully. And if you need to compromise some of your lifestyle, that's okay. You'll do it.

Diane's in Albuquerque. Hi, Diane. What's up? Hi. Oh, thank you for taking my call. Sure. Okay. I am 65.

I would like to retire when I'm 70. The only thing I have in my Roth is $60,000, but I am contributing 15%, which is like $8,000 a year. And my question is, is right now I am looking at my Social Security statement, and when I'm 70, it says that I should get $3,000. Now, I hear that you all say that you shouldn't rely on the government. Does that include Social Security? Because I can do this. You can't do what? I can do this.

I can live off $3,000 for my Social Security statement. Okay, if you can live off $3,000, then that's fine. But you were saying that... Well, I just would love for you to have to live off of $8,000. You're not going to have a great life living off $3,000. You might be able to pay the bills and not much more. All I have is my mortgage. And food and insurance and utilities.

Car repairs. Yes, I'm figuring all that. Yeah. And food and insurance and utilities. Yeah. Car repairs. Yes. Yes. Yes. Yeah. I'm figuring all that. But that was my question.

I mean, yeah. Yeah. Yeah. It's not, you know, you're going to be on a fairly Spartan situation. But if you can do that, I'm not mad at you. I'm not saying you're morally doing something wrong um i just want a better life for you than a three thousand dollar a month life after working your whole life and that's why i think social security sucks but but if if you want to have that to be your plan i'm not mad at you we we want good things for you darling but uh anything you

can do between now and 70 to have more than that as income because you've done some great investing, well, we would encourage that. If you can go into retirement with no mortgage, even better. Lower your expenses. There's a good idea. Knock that mortgage out. Make it a lot easier to do a whole thing. This is The Ramsey Show.

Thanks for joining us, America. We're so glad you're here. Real estate market out there is weird. Interest rates are down substantially from, I mean, we're down in the 5% range now on a 15 year fixed. It's the lowest in almost two years right now. And people aren't lining up on the sidewalk to buy a house. I do not. Oh, I know they're waiting on the new president to help them. They're going to wait and see who gets elected before they buy. That's dumb. Okay, let's move on from that. But hey, if you're getting ready to buy a house or sell a house, this is an excellent time. Rates are moving downward. That's a good thing. House prices, man, they're going up all the time. So it's a good time to sell, good time to buy.

And you need a good real estate agent in your corner, someone that's high octane, high protein, get her done. We've been recommending high quality real estate agents for many, many years at Ramsey. And we have dialed in how to coach them, how to teach them the Ramsey stuff so that you get advice when you call them. That sounds a lot like you're talking with us on the radio. Wow. And they're Ramsey trusted because of this. We trust them and we'll send them to our friends, including you. So if you want to find out for free who the Ramsey trusted real estate agent for the next buy or sell you're going to do, all you do is go to RamseySolutions.com or click the link in the description if you're on a podcast or YouTube. RamseySolutions.com slash agent, and you'll find the trusted real estate agent in your area.

Angela's in Springfield, Missouri. Hey, Angela, what's up? Hi, Dave. Thank you so much for taking my call. Sure. How can I help? Yes, sir. So my husband and I, we have a son and a daughter.

He's just two and four. We're both 36 years old uh we just combined our finances almost a year ago um and we've quickly outgrowing our two-bedroom one bath home um my husband is a police sergeant he makes roughly to $55,000 a year. I really struggled with postpartum depression since having my son a couple years back. I just lost my job on Friday. Oh, no. And, yeah, I really struggled.

I can no longer, after having children, bring in the type of income I was used to prior to having children. I previously worked retail management, making almost the same as my husband, if not a little more sometimes, depending on bonuses. So I'm just really struggling to find a job that works for the kids' schedule. And we're in about $80,000 to $90,000 of debt. And I'm just overwhelmed. I've been listening to your show for almost a year now. My sister, Rachel, got out of debt using your plan, and I just was wowed by it.

And so I'm just trying to do the same. After listening to you, I realized my husband and I are both spenders, unfortunately. So I didn't, you know, I wasn't taught any of this growing up, so I'm just trying to learn, and, you know, I want better for my children than I had growing up. Good for you. You're a good mom. Thank you. Thank you.

Well, math says you've got to work. Doesn't it? Yes. Doesn't it? It does. It does. And if you need to sit down with someone and get some help walking through the postpartum, there's no shame in that.

Right. It's not going to magically lift off of you. Right, right. Well, I actually have another bit to that. So though things seem really dire right now in the situation that we're in with having just lost my job on Friday, I have a grandfather who was not in my life a lot growing up. He was in Florida. He was actually a millionaire, and he passed away of dementia in April. We lost him slowly over the years.

I lost my mom when I was pregnant with my son. So we, my sister and I, and uncle, are going to get an inheritance from my grandfather it is projected to come around december or january of next december of this year or january of next year um estimating in the amount of maybe 200 and up to 250 000 um my sister and i are essentially, my sister and I, yes, we are, so my mother passed away when I was pregnant. So you're getting $250,000 in December. You have $80,000 in debt and you lost your job Friday. Yes, that's correct. You understand the $250,000 is going to evaporate if you continue to handle money the way you have for the last five years. Yes. It'll go really well. It sounds like a lot of money, but it'll be gone so fast.

I understand. It's enough. It's going to be such a long time. It's enough to aggravate you. I'm very aggravated and stressed and overwhelmed. So here's what you need to do. You need to have a written game plan on exactly what that money is going to do before it gets here. I'll tell you what to do with it.

Are you ready? I'm ready. Pay off 100% of your $80,000 in debt. How much is your mortgage? $90,000. Pay it off, too. Quickly, we're coming to a situation where we need money. Listen, breathe, breathe.

Pay it off also. Before it gets here in December, you and your husband are going to go through Financial Peace University. We're going to pay for it for you, okay? Because you have to have the confidence that you will use none of this money to clean up any future messes because you're not going to make any more right you're going to live on what you make or less the rest of your life which ought to be easy to do with no payments right and we're going to start to build wealth instead of consuming everything

and while you're getting control of your money and you and your husband are communicating deeply about every penny and where it is going, then when that 250 comes in, it's clean for these two debts. Then when you pay off the house, we can start talking about moving up in house later because we'll have the money to, because both of you will be working. You won't be stressed out. You'll have $100,000, $120,000 household income with no payments.

I feel depression lifting off of me already. I mean, can you breathe? No payments and $120,000 income. Can you breathe that in? Can you possibly quickly in your head see how that can move you up into a better house? Yes. Okay. But you're going to live in that house a little while longer.

You're going to get a job, and you're going to learn how to live on your income so that you don't fritter this money away, pay off all these debts, and then go back in debt because you continue to screw up with money. You can't do that. You don't want that shame. You don't fritter this money away, pay off all these debts, and then go back in debt because you continue to screw up with money. You can't do that. You don't want that shame. You don't want that regret. Correct. It's not going to be good for you. You won't like it.

It tastes bad. This has to be a fresh, clean start on the way to becoming a multimillionaire so that you leave your children's children money you can do this can't you i can't what if you had no payments honey can you even think about that it would be amazing that's the gift your grandpa gave you, and we can't, for the sake of his memory, mess this up. We have to do this right. You can do it. Go add this up tonight, what your mortgage payment is,

what all your debt payments are. That's going to be freed up in January for you to get a new lease on life, but you've got to manage it wisely. From this point forward, because otherwise, because you're not going to get another one of these. This is your shot to lay a new foundation of behaviors, of income on top of grandpa's gift that gives you no debt. And then you can talk about moving up in-house. But right now, you need to get another job.

You need to live on less than you make. You need to learn to get on a plan. And we'll help you. Hold on. Kelly will pick up. This is the Ramsey Show. Our scripture of the day, Proverbs 21, 20. Precious treasure and oil are in a wise man's dwelling, but a foolish man devours it all.

Interesting side note on that um oil is a sign of wealth in the old testament and so because it was used to keep the whole of holy of holies the lamps burning in the temple and it was used for a lot of different things. It was used for anointing a king, a boy King David, a man King Saul. You would see oil used as a sign of the Holy Spirit through the Old Testament. So if you're sitting in an Old Testament scripture in Proverbs, and it says precious treasure and oil are in a wise man's dwelling, what that means is a wise man saves money. That's what that means. And a foolish man devours it all if you spend everything you make you're a fool that's what that says okay earl wilson says money

in the bank is like toothpaste in the tube easy to take out hard to put back i like that i've never heard that one that's pretty good i like it like it. All right, Jay's in Boston. Hey, Jay, welcome to the Ramsey Show. Hey, thanks, Dave, for taking the call. Sure, what's up? I have a question today. A couple years ago in 2022, I had everything going for me. Great job.

I mentally lost my marbles on a bipolar manic trip and managed to rack up $50,000 in credit card debt. Took a credit score from 800 down to about sub 600 at this point. But the debt is over two years old. I haven't made payments. It's five different cards. Discover cards sued me, so I settled with them. On the remaining debt, it's all in collections,

and they're offering to settle, let's say a card is $10,000. They're offering to settle for $2,000. Should I settle? And the other part of the story is, just like the last caller, I received a $250,000 inheritance just recently. So should I pay the debt? Okay, the card, let me go back to the example that you've got that you still owe. You owe how much? Let's say I owe at this point about $45,000 on four different cards.

Okay. Give me one of them. Chase card. And you owe how much to it? $10,000. They're offering to settle out for $2,200. And how much of the $10,000 is added fees and gotchas, and how much of it did you actually borrow back in the day?

I would say probably borrowed about $9,000-ish on each. So they've not added a lot of gotchas? No, no. They closed the cards down. I went through identity theft in 2022 as well. So I don't know if that helped or hurt. And you got an inheritance of how much? $250,000. Okay.

So I'm debating, you know, I don't know where this is with collections companies. Do I settle? What I would tell you is this. I think it'll be good for your journey, your mental health journey. Yes. To do the ethically correct thing more than the mathematically correct thing. That's where I'm at. My opinion of the ethically correct thing, and you can form your own, I don't care,

is that I'm okay not paying all the gotcha charges and a bunch of crap because sometimes they'll take these things double them and triple them while they're sitting too fortunately i haven't had that happen okay so you know if you bought if you bought a nine thousand dollar something or somethings yes on their card then you owe them nine thousand dollars okay ethically now if you're broke and you're penniless and you're trying to figure out how to keep from getting in bankruptcy and foreclosure and you call me and they'll take two thousand dollars as settlement then i'm okay with you settling with them because you're broke. But you've got $250,000. That's what I'm saying.

And this is a $45,000 problem. Exactly. I am living on the beans and rice, Uncle Ben's and tuna. Yeah, and that's good for you, too, to get control of your life because control is something you yearn for in a healthy way, right? Indeed. I've blown it so many times, so this is my chance to get it right. I think you're going to.

The words you're using, the pacing of your sentences, you smell, you feel healthy. I am trying very hard to get there. It took a long time. We talk to people on here sometimes and we know they're crazy. I don't get that off of you. How have you managed this? Have you been getting help and medication? What's helped you get over this bipolar? I think a lot of it.

I quit drinking four years ago. The meltdown in 2022 was I started smoking marijuana thinking, this is great, never been a smoker. So I quit everything at the end of 2022 after I regained my sense. So you've been sober two years? Oh, yes. Congratulations. I thought I smelled something good here.

That's sobriety. That's sobriety I smell. Good for you. It is. It is. But it's trying to get my life on track. You know, 53 years old, I've made terrible financial decisions. So I'm kind of going almost, now that I know a little bit more,

I'm kind of going with a little 12-step thing here. That's what I was leaning into. Yeah. Making amends. Sound familiar? So paying the debt. Yeah, very familiar. Paying what you actually borrowed.

I'm not asking you to get ripped off. If they took a $2,000 bill and turned it into a $14,000 bill, you're telling me they didn't? And I'm going with your information. Sometimes they do. Sometimes these banks are absolute buttholes. But in their case, it sounds like they're treating you more than fair, and I think it'll be good for your mental health to pay the whole bill.

Not the whole $10,000, but the whole $9,000. And so, you know, so call them back. Now, here's what you do. Anytime you're settling for one penny less than the current account balance, two things need to occur that are very precise. Number one, you do not give them any money unless you have in writing that they're accepting, in this case, in our example case, $9,000 as settlement in full for a $10,000 debt, which should make them smile considering they were offering $2,200. They're going to think you're crazy, okay, which is good. All right. Now, then the second thing is you do not give them electronic access to your personal checking

account because even though they've been nice so far, they are credit card collectors and credit card collectors. You can tell they're lying if their mouth is moving. They're scum and they will clean out your checking account like they'll take $10,000 out after they told you they were going to take $9,000 out or they'll take $12,000 out after they told you they're going to take $2,000 out. And so'll take $12,000 out after they told you they're going to take $2,000 out. And so, and there's nothing you can do about it. What are you going to do?

Call the police and go, they took the money out that I owed them. That'd be a, that'd be tough one to work on. So a little different than identity theft. So what you do is you wire the money or you have a prepaid debit card off of a different account that only has that amount on it so that they can only get what you agreed to. So in writing, no electronic access to your personal checking account, and the in writing is settled in full. You need to see something, some language that sounds like that, that this account is zero balance after you pay me this much money.

There's a cool tool online, Dave. Privacy.com creates these virtual debit cards. And so you can go on there and do exactly what you're saying. Create a debit card with parameters and say, no more than 10,000 can be charged to this card or it's dead after the first transaction. And that way they're not just, you know, have direct access. So it's a cool tool. Yeah. How expensive is it to use? It's free to use for consumers. Who's paying for it? I could not tell you. I don't know the back end, how that works.

They do a lot more business stuff, but they have a consumer front side that I've found that's pretty interesting. Well, I would check privacy.com. Yes. I guess we need to be endorsing them. I know. We need to get in touch with them. Since we just did.

There we go. It's just a good tool for these situations where you're like, Oh, my God. Sounds great. Yeah. I mean, something like that is what you're looking for, because we've had really bad experiences over the 30 years I've been doing this with credit card companies cleaning people out.

And lots of bad experiences of them promising verbally over the phone that this account will be settled. And then, well, Henry doesn't work here anymore. I don't know who you talked to. Henry never worked there in the first place. That wasn't even his real name. That's not the policy. That's not how we do it.

I record everything now. I got trust issues. Yeah, you get it in writing, and you keep the hard copy, you know, forever, because this will come back and come back and come back. Hey, I'm proud of you, Ryan. It sounds like you're on a good journey. We're glad to be part of it. We're honored. Anyway, we can help you. You call us anytime. That puts us our, the Ramsey show in the books. We'll be back with you before you know it. In the meantime, remember is there, there is ultimately only one way to financial peace

and that's to walk daily with the Prince of Peace, Christ Jesus. I'll see you next time.