The Ramsey Show - App - Surround Yourself With People to Keep You on Track (Hour 2)

Episode Date: December 25, 2018

The show about you

🎵 Live from the headquarters of Ramsey Solutions, it's the Dave Ramsey Show, where debt is dumb, cash is king, and a paid-off home mortgage has taken the place of the BMW as the status symbol of choice. I'm Dave Ramsey, your host. This is your show, America. Thank you for joining us. Open phones this hour. It's 888-825-5225. That's 888-825-5225. Chris is with us in Bellingham, Washington.

Hi, Chris. How are you? Hi, Dave. Thanks so much for taking my call. Sure. How can I help? Well, I'm fairly new to listening to you, just about a month now. I've already read Total Money Makeover. I'm learning a lot. Wow. My one question is about IRA conversions. I have two traditional IRAs. One's a rollover from previous funds, previous jobs,

and then one's a BDA IRA, an inheritance. And I'm wondering if at my age it makes sense to convert those to Roth and what kind of taxes I could expect. Is there a way to estimate what the taxes might be? How old are you? 54. And what's your household income? Take-home pay, about $83,000.

Okay. Roughly a fourth will be in taxes. What's the balance on these two IRAs? The rollover is about $61,000, and the 113 okay so yeah so we've got 175 000 give or take okay and uh what will that grow to in the next 20 years the growth from this point forward would be tax freefree, okay? And that's what you're looking at then. So I'm going to put in $175,000 for the fun of it here and just put that in.

We're going to add nothing to this because we're just talking about this. We'll put it in a decent mutual fund. We're going to do it for 20 years, and that would be – I must have done that. Oh, I didn't. I did that right, yeah. $1.9 million. Wow. Here's what that will grow to and all of the difference in 175 which you will have paid taxes on when you roll it now so 200 of the million nine so let's say i'm half wrong let's say it's

800 000 okay let's say it's a million dollars okay 200? $200,000 of it, $175,000 of it, you put in that you've already paid taxes on. The rest of that is tax-free growth. And I was using 74 years old. I'm assuming you're not going to pull it out and use it right away, okay, as you head into retirement. You'll probably have some other things you would use as you head into retirement. This isn't your only retirement, okay? And so if you're going to leave it alone for 20 years you'd have eight hundred thousand dollars or more probably more in growth that you pay no taxes on if it's

a Roth if you leave it alone you do not have to pay the taxes now on the 175 but you will pay taxes on the whole thing as you pull it out if you never pull it out and you die and hand it to somebody else they're going to pay taxes on it so i think i think based on all of that the roth is a great deal so do i want to pay taxes on 800 or a million dollars 800 000 or a million dollars or not don't want to trade that for taxes now on $175,000. Oh, I won't pay taxes on $175,000 now. Now, do you have any cash, and are you debt-free? I am debt-free except for my house.

Okay. What do you owe on your home? $27,000. Good. Do you have any cash? I have a fully funded emergency, about $12,000. Good. Do you have any cash? I have a fully funded emergency, about $12,000. That's all? Do you have any investments that are not retirement?

I do not. I'm a teacher, and so I have a lot of money wrapped up also in a pension. Yeah, yeah. But here's the thing, okay? I would want your house to be paid off, and I'd want you to have the $40,000 in taxes that this is going to cost you to be able to do this. Right.

And you need to do those. So let's pay off the house first and then scrape up the money to pay the taxes that this rollover would create. And if you do that in the next few years and you leave it alone up into your 70s, the Roth conversion will make sense based on what I just told you. Okay. It does not. I can figure that tax out at about 25%.

Yeah. It's going to be pretty close. Okay. And if you don't pay the taxes separately and you use the money, you reduce the size of the account to pay the taxes, you don't gain anything by converting it to a Roth then. It's a mathematical wash. So the only way this makes sense is to pay the taxes out of extra monies. And I wouldn't even do that until you got your house paid off. So let's get the house paid off.

Only $27,000 owed. Way to go. You're killing it. way to go teacher and then um then let's save up 40 grand and if you can do that in the next couple of years i still would at that point would roll it to a roth ira and uh convert it to a roth that's how i would play it so hey good questions open phones at 888-825-5225. You jump in. We'll talk about your life and your money. It is a free call.

Dave, what company do you recommend for life insurance? Well, for almost 20 years, we've recommended Zander Insurance. I buy my personal insurance there. They're a life insurance broker, which means that when you go to ZanderInsurance.com, it'll shop a gazillion different companies, different insurance broker, which means that when you go to Zanderinsurance.com, it'll shop a gazillion different companies, different insurance companies, and get you the best price on term life insurance. They only sell term life insurance because that's the only kind you should buy. The rest of it's a ripoff. And you're much better off to just do that, to just simply work your way through and get 15 to 20-year level term insurance, 10 to 12 times your income.

Pedro is with us in Oklahoma. Merry Christmas, Pedro. How are you? Merry Christmas, Dave. I'm doing well. Good. Or like you say, better than I deserve. There you go.

How can I help, man? Yeah. My question is the following. We have about $30,000, $31,000 left on our baby step two. And then my wife and I, we got married about two and a half years ago, so most of the debt I brought it in, shamefully. But now what she was asking me the other day was, we have about $170,000 in mutual funds.

And she was asking me, well, last day, should we use part of that mutual fund money to pay off a debt and get out of it? Is it in a retirement account? No, no, it's just mutual funds. Yeah, I'd rather check, but I'd be debt-free by the end of the day. Okay, so go ahead and do it. Yeah, definitely, definitely. What's the $30,000 owed on?

It was student loans, and actually it started way more than that. It was like $16,000. I know, but I mean, if you didn't have any debt, would you borrow $30,000 on a student loan to put it in a mutual fund? No. No. Same difference. Same thing. So pull it out of the mutual fund, pay off the student loan.

Just do it in reverse. Absolutely go that direction. So, hey, good question, man. Again, thanks for calling in, and Merry Christmas to you. This is the Dave Ramsey Show. Thank you. Let me tell you a story about two families that are very much alike in a lot of ways. Both families have two working parents and a couple of young kids. Each has debt and has struggle to make ends meet, but they're starting to make headway with their budgets and smarter decisions with money. They have dreams and plans, and the only real difference is that

one family has the right amount of term life insurance and the other doesn't. Big difference. If one of the parents die, and that does happen. Their well-being would be destroyed. Paying for the mortgage, utilities, food, and other bills would be impossible, let alone saving for education or retirement. That's why every day I talk relentlessly about getting term life insurance. Just go to ZanderInsurance.com or call 800-356-4282 and see how inexpensive it really is. Be the family that takes those deliberate steps to be different and responsible.

It really does make you the hero of your story, and it puts you on course for better things ahead. Thank you for joining us, America. We're glad you're with us. Open phones at 888-825-5225. Lauren is in Lexington, Kentucky. Hi, Lauren. How are you? I'm good. How are you?

Better than I deserve. What's up? Well, Dave, I'm about to come into some money. I'm a third-year college student. I'm 18 years old, and I'm going to take a co-op, meaning for the next eight months, instead of going to class, I'm going to work. And since I have scholarships, those scholarships are just going to be given to me as a residual check. So I'm going to be given $10,000 and one lump sum, and then over the course of the next eight months, I'll come into about $20,000. I don't have any bills, and I don't know anything about money, and I don't want to blow this money.

What can I do to save it or secure it, or what can I do to better myself financially? Good for you. Well done. Well, we want to use the money to make sure that you graduate, finish school completely debt-free. That's the use of it. And so to hold it back as a safety net to ensure that that happens is your best possible investment.

You are your best possible investment, in other words. And so, you know, just what I'm going to do is just, if I'm you, I'm going to move it into a separate account that I just never touch. I guess a basic savings account is fine. And so just deposit the $10,000 over there. You're not going to touch that account for anything. Don't have that account attached to an ATM. Don't have that account attached to your overdraft on your checking account.

So you're not tempted to, you know, plow through the checking account over into the savings. It's a standalone account that the only way that the money gets moved from that account into your account is you physically have to do it. And that'll keep you from, that'll make you stop and think and go, wait a minute, I don't need to do this. I don't need this couch that bad. I don't need to go on this trip that bad.

I don't need to, whatever it is you're getting ready to blow it on, right? But if it's just sitting in your checking account, you can just boop on the debit card. You don't think anything about it. It's gone before you know it. So get it out of your normal day-to-day operating and set it over in a separate savings account. And then the money that's coming in monthly, just pretend like you have a bill that's equal

to that amount of money and write a check and put it in savings. That extra money that's coming in. You said you had another $20,000 coming in. Is that the co-op payment? Yeah, that's what they're going to pay me. Okay. And you don't need any of that to live on? Not hardly any.

No, I've got a full ride, and I live with my sister, so I don't have to pay any bills hardly. Okay. Well, you keep saying hardly, but not much. So it sounds like some of that you are going to actually spend on living expenses. So $20,000 over what period of months? Eight. Eight months? Eight. Eight months. Okay.

And so we're talking about, what, $2,300 a month, something like that coming in. So if you set aside, okay, I'm going to have $300 a month that's going to go in my checking account, and that gives me some spending money, and the rest of it, the other $2,000 a month, is going into the savings account. And how often will you be paid in a given month? Biweekly. Okay. So I guess twice a month.

Right, roughly, yeah. So, you know, you just divide that by two then and say, okay, $150 out of this check goes into my checking account for spending on whatever I want, living expenses, fun, whatever, and $1,000 out of that account goes into savings. $1,000 out of every check goes into savings. And if you do that for every two weeks for eight months, you're going to have a good pile of money in there to go with the $10,000 that's already going to be in there, and that's going to ensure that you get through school then completely debt-free,

which is the purpose of co-opping, is to be able to pay cash for. What are you studying? What are you co-opping? Electrical engineering. Oh, very good. And I already have a full ride to my university. Very good. Well, it doesn't hurt to have this money set aside, though,

in case the full ride went away for some reason or another. Our main goal is get you out of school completely debt-free. And if you had $50,000 in the bank and you graduate completely debt-free, nobody's mad about that, including you, right? Yes. And so you'd go out, you'd start your first job, you could buy a car, buy a house, you could have your emergency fund and everything else. It would be a great way to get started. But between now and the time you graduate, pretend like the whole world's going to fall apart and we're just going to pile up cash and be sure we get through school debt-free. Because if you can come out with an electrical engineering degree, Lauren, you're going to be very employable, You're going to make good money. It's a wonderful career track.

It's a good field of study. And if you come out with that degree and 50 grand in the bank because you co-opted your way through, ding, ding, you are on fire, kid. Okay, awesome. Go get them. You got this. Merry Christmas to you. Dana is in Sacramento.

Merry Christmas, Dana. Merry Christmas. What's up? Thank you for taking my call. Sure. Well, I'm not sure how to handle a situation. We have in-laws living in a home that we have a mortgage on, and my husband and I live in a home that's paid off.

And my question to you is I feel like I need them to pay more than what they're paying. Why? Well, they're paying $500 a month. The mortgage is about $1,800 a month. What's the rent? What's the market value of rent? About $1,800, about what our mortgage is. Okay, so you're undercharging them by $1,300 a month.

Right. You're giving them a $15,000 a year gift. Yes. Okay. So the situation was when my husband and I met, he told me they might want to move in with him. This was in 2012. And because they're broke and they're short selling their house out of state. So I thought that was really nice.

And then they moved in, but he was in a rental. He had to be out of the rental a month after they got back because they were selling it. We bought a home that we, that was, he was making good money there. He was making about $100,000 a year. He bought a home. How long have they been living in this house paying $500? We've had this house for two years, but now I'm kind of responsible for it because we bought it after we got married or before the other house that we bought. They've been living there for two years?

Yeah, it's over two years now. When they moved in, what was your husband's agreement with his parents and what was your understanding of your agreement with your husband regarding his parents well we had that conversation before they moved and i asked him what was the amount they would pay him and he said i think about a thousand and i said is that what they said he goes well no i go why don't you call them this is when we first were dating call them and ask them what they're going to pay. And they said $500. Yeah, and that's not what I asked.

That's not what I asked. I asked what the deal you made is. What's the promise he made his parents? Forever? $500 total. No. Just while they just asked if they could live there for $500 a month. But he no longer lives there.

Who no longer lives there? My husband. Because when we got married... Well But he no longer lives there. Who no longer lives there? My husband, because when we got married. Well, he doesn't live there. They live there for $500. Right. I understand that. My question is, there was no reasonable expectation that this was ever going to end? Yeah, that's what I don't know.

That's what I'm struggling with. Yeah, you do. You were in the deal. You were the one that accepted the $500 on his behalf. Okay. He sent you to the slaughter. He set you up to lose in this scenario because he didn't want to deal with his own parents. Right. So the deal is there's no limit on this,

and these people are supposed to be able to live there forever and ever at $500 with no apparent recourse or expectation. That's absurd. Yeah, that's what I think. Okay, so you and your husband need to sit down together, and he needs to man up, and you all need to decide what the best course of action to be a blessing to his parents are, because right now you're not a blessing. You are accepting a parasite. You're an enabler.

And I don't even want to go over and visit because I feel like they're just taking advantage. Yeah, and they don't give a rip. They feel entitled. Right. So this is going to be a painful reset because you all did this so poorly. So when you do painfully reset it, he's going to have to be the one to do it, not you. Because it's his freaking parents. So he needs to, once you all decide, here's what it needs to sound like.

Mom and Dad, this has gone on long enough. We love you and we want good things for you. You're going to have to get a long-term game plan together for your life. We're going to pay for you to go to Financial Peace University. If you attend that class for nine weeks, we will allow you to go to Financial Peace University. If you attend that class for nine weeks, we will allow you to live in this house for one more year at $500. At the close of business next year after Christmas, you will be moving. Ha! There we go. So you need to give them a good long runway and help them get taken off.

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Merry Christmas, guys. How are you? Merry Christmas, Dave. Thanks for having us. Absolutely. Where are you guys from? We're from Gloucester, Virginia. It's right outside of Williamsburg. Oh, nice area. Beautiful area. Well, welcome to Nashville. Good to have you. And all the way down here at Christmastime to do a debt-free scream. Absolutely.

Love it. How much have you paid off? We paid off $73,000. Good. And how long did that take? 22 months. Good for you. And your range of income during that time? We started out making $120,000, and we'll finish the year at probably close to $140,000.

Nice. What do you all do for a living? I work in healthcare sales. And I'm in higher ed at admin. Oh, very cool. Good for you. Fun. What kind of debt was the $73,000?

Well, Dave, we had credit card debt. We had two car loans. And, of course, we had student loans. Okay. Did you sell anything or just cash flow through it? Well, we got started and we realized that in order to do it very quickly, we needed to sell one of our cars. So we sold off one of our cars and got into a cheaper van, which helped speed roll the process for us.

Okay. And what was the deal on the car? Tell me about it. How much was it? The car started out about $24,000, and we decided to sell that car, and we picked up a car probably about $12,000. So we cut it in half at that point. Yeah. We ended up trading in our 2013 Odyssey that had all the bells and whistles to a no-frills 08 LX Odyssey. The kids, the one door actually like sticks during the summertime.

Perfect. So they've had to grow some arm muscles through it. But it was, we knew that we wouldn't be able to pay off our debt in the two-year window. So that's why we did that. So you made the decision to push through it. Yeah, absolutely. Well done, you guys. Thank you.

Very well done. That's a harsh thing to sell Mom's car now. Yeah. Well, it wasn't my choice. It was actually her that came up with the idea. So once I knew that, we were all in. Okay. So what happened 22 months ago that started this process? that, we were all in. Okay. So what happened 22 months ago that

started this process? Well, we were just like anybody else. We were living paycheck to paycheck and Scott started reading financial books from the library. We came across the Total Money Makeover. He read it and was like, hey, I think you need to read this. And it took like a couple weeks before I picked it up. But once I picked it up, I read it in four days. I was so inspired by all the stories and all these people that could do it. And I was like, if they can do it, we can do it. There we go. So we were game on.

And now people are watching you and listening to you going, if they can do it, maybe I can do it. Absolutely. See, now the chain continues. So well done, you guys. So $73,000. We sold a car, moved down $12,000 in car from the big van to the not-so-big van, and did all of this in 22 months. We also cash flowed another $11,500 with Scott's citizenship,

and Caitlin needed braces, and there were some home repairs and AC car repairs. So we also did that as well. Scott's citizenship. I'm not driving by that. What happened there? Yeah, so I'm originally from Canada and born and raised in Canada and met my wife in college and just stuck around. So I decided it was this country has given me a lot. So I need me a lot, so it was a great opportunity for me to become a citizen. Okay.

And so to go through that process requires some legal work and some other things, and that was $11,000. Yeah. Well, there were some kids' braces and home repairs and things like that. Oh, a bit mixed in there, too. Oh, okay. Yeah. Okay. So, okay.

Good. Hey, that's well done, y'all. So what do you tell people the key to getting out of debt is? You paid off $73,000 in 22 months. You know. Definitely the budget. We also love your EveryDollar app. That was key when you came out with the Android version.

We were both able to use it at that point. And just being intentional with our money, it was totally key. We also plugged in to all of your resources. We watch the YouTube channel when we're getting ready for work in the morning. We've been to two Smart Money events. We listen to your podcast regularly every day when we're in the car. So you surround yourself with the encouragement and the knowledge to keep you on track. Because it's like if you just read it and then you wander off into the dark by yourself, you can get lost out there.

Absolutely. So we've actually taken FPU three times since we started the program. So we just felt like we needed to surround ourselves with like-minded people and all have the same belief system. And we got something out of every time that we took the class. And we're really looking forward to actually hosting our first class starting in February. Oh, thank you. At our church, Water's Edge Church in Yorktown. Well done.

Good deal. So any of you in the Yorktown area, there's your class. You can go to these people. They're famous. Go to their class. This is good. Very cool. Good.

Well, well done, you guys. Thank you. Very well done. There is something powerful in a culture that has gone crazy with spending and irresponsibility about surrounding yourself with information and community both to keep you on track. And you did that. You immersed yourself in that. You know, it's kind of like if you're going to learn a foreign language,

you have to immerse yourself. The best way is immersion. Absolutely. You just go to that country and stay there until you figure out how to speak. You'll learn the language faster that way than any series of tapes. And that's kind of what you did. You had to learn to speak a new language. Yeah, and we worked together so well.

We've been married for 13 years, and we just had a belief that we knew we could do this with your steps that you have. And they're easy to follow, but you have to do it. And we felt a strong commitment. And once we got started, there was no stopping us. Got it. So the kids are how old in names and ages? It's Caitlin is 10 and Jackson is 5.

Okay. And they've both been building up their muscles, jerking open that van door, right? You've got to get the stuck van door loose. Absolutely. That's good stuff right there. Well, congratulations, you guys. We're very proud of you. Did you have people cheering you on?

I'm sure in that group you did, right? Yeah, we did. And we also, all of our family was real supportive. Not too many people were actually doing the plan, but they were really supportive of us. We couldn't have asked for better family and friends. Good. Yeah, they were all in, and they thought we were a little crazy. I actually picked up two extra jobs.

So I started delivering pizzas on the side at nighttime, and they really thought we had gone crazy at that point. But our goal was to get out of debt, and this was how we did it. Yeah. Everything. Whatever it takes, we're going to get there. That's right. And now you never have to go back. Never again.

You never have to do it again. Never again. What was the other job other than pizza? I worked for an online company just doing some of their website design and things like that. So just some side work. Good. Good. Excellent.

Well, great. We got a copy of Chris Hogan's Retire Inspired book for you. We want that to be the next chapter in your story. Be millionaires and outrageously generous along the way. Very well done.

If I can just take a second. Sure. Today's my dad's birthday. Oh, cool. So I want to wish him a happy birthday. And he's actually right now as we speak doing surgery. And so we're really hoping for a positive outcome.

Oh, yeah. And, you know, thanks for all of your ministry and everything that you've done. It's been incredible. My goodness, absolutely. What's his name? Ray Keenan. All right. Happy birthday, Ray.

Got your shout out, man. You can watch it on YouTube later after the surgery's over. That's right. Very cool. All right. Very cool. All right, it's Scott and Jen, Caitlin and Jackson, Williamsburg, Virginia. $73,000 paid off,

plus $11,500 cash flowed. In 22 months, making $120,000 to $140,000. Count it down. Let's hear a debt-free scream. Three, two, one. We're debt-free! We're debt-free! We're debt-free! We're debt-free! We're debt-free! We're debt-free! We're debt-free! We're debt-free! We're debt-free! We're debt-free! We're debt-free! We're debt-free! We're debt-free! We're debt-free! We're debt-free! We're debt-free! We're debt-free! We're debt-free! We're debt-free! We're debt-free! We're debt-free! We're debt-free! We're debt-free! We're debt-free! We're debt-free! We're debt-free! We're debt-free! We're debt dead free! We're dead free!

Well done! Love it, love it, love it! That's how it works right there, guys. You don't do it any other way. Man, fabulous stuff. Open phones at 888-825-5225 you jump in we'll talk about your life and your money if you didn't know the stuff we teach here is really it's common sense it's biblical finance meaning that you will find the principles that we teach here in scripture

and i'm convinced that's why it works. But common sense is, you know, it's a good thing to have. A lot of people don't have it. Live on less than you make. That's common sense. Get out of debt and stay out of debt. Ought to be common sense. Be outrageously generous.

Ought to be common sense. Something to think about. Living on a written plan. That ought to be common sense. But it's not that common. That's why we're here. This is called The Dave Ramsey Show. Thank you for joining us, America. This is the Dave Ramsey Show.

We're glad you're here. Patrick is with us in Tampa, Florida. Merry Christmas, Patrick. How can we help? Merry Christmas, Dave. Thank you for taking my call. It's an honor to speak to you. You too.

Thank you. So we find ourselves in a pretty tough decision whether or not to sell our home and also a rental property that we have. The home has $100,000 worth of equity. The income property has a negative equity if we were to sell it. The reason for making this decision is because we have $249,000 worth of debt, and we find ourselves living paycheck to paycheck,

and we don't want to continue living that way anymore. The $249,000 is all mortgages or what? No, $200,000 student loans. Oh, my gosh. Yes. Second mortgage, $19,000. Secured loan, $12,000. Credit card, $10,000.

And a car loan of $8,000. We paid off one car. The remaining car is $8,000. What's your household income? $8,000. What's your household income? $120,000. Okay. Whoa. Who's the doctor or lawyer?

Neither of us. What is the degrees? $200,000. What'd you do? Each of us have a master's degree, MBAs. MBAs? Yes. That's good.

How long have you been out? It's been probably, I think, average maybe six to ten years, I think, since we've collectively been out of school. And you're making $60,000 a piece? Well, one of us is making $100,000, and the other is working part-time. Oh. Yep. Mom's staying home with kids? Yes. Yes.

Okay. All right. Well, that makes more sense. Okay. Yep. Mom staying home with kids? Yes. Yes. Okay. All right. Well, that makes more sense. Okay. Because MBA is worth more than that. I mean, you should be making more than that. So that's good. Glad to hear that.

Okay. How much upside down are you on the rental? On the rental, if we were to sell the property, we'd have to bring, depending on the market of the fluctuating area, we could probably probably bring 5,000 to the table. Okay, let's do that. Yep. Let's do that. Let's get rid of it.

Because you're feeding that thing, and it's sucking the blood out of your veins while you're trying to beat this other stuff back. How many kids you got? We have five. And how old are they? We have ranging from 18 to 5. Okay. So when the 5-year-old enters school this year, mom's going to be doing more. Yes.

Because mom has to earn some money to clean this mess up. Yes. Yeah. Well, you don't go spend $200,000 to get an MBA and then go home. No. I want her to be at home. That's what she wants to be, obviously. Five kids she needs to be, probably.

But we need her to create. She has capacity. Now, she may do it as a part-time side hustle, where she can control her time and not do the standard 40-hour grind, right? Yeah. But she's got the ability. She's got the knowledge base to earn, to create some kind of a side hustle that makes more than $20,000.

And so let's do that. Let's get rid of the rental, and then let's just get on a really tight budget. I'm not selling your house because it doesn't fix the problem, number one. How much is your house payment? It's about $2,000 a month. That's a little steep, but not too bad. Okay. Now, I'm keeping the house for now.

Let's sell the rental and get mom's income up, and you figure out what you can do to get income up. Do you have any assets other than that we can sell? Anything? The only asset really would be to sell the $8,000 car, and that would really just bring a couple thousand dollars to the equation. That doesn't solve our problem. No, it doesn't. If it was $80,000 out of this mess, I'd do it in about 30 seconds. But it's a small ratio.

You're an MBA, so you get what I'm doing. I'm just looking at ratios here. Yes. What big rocks can I throw through the window first, right? Yes, definitely. And that's how I'm getting at this. And that 200,000 monsters looming in the background with his teeth dripping with blood, right? Yes.

But we can clean up. Then let's just work through that snowball and clean up all the little mess, get those things gone, the second mortgage even. And that will create cash flow to be able to really tear into that 200. So if we get rid of the drain of the rental, you make 120 with five kids in Tampa, $2,000 payment. Hey, get rid of the drain of the rental, you make $120 with five kids in Tampa, $2,000 payment. Hey, get rid of the drain of the rental. Mom's income goes from $20 to $50. And you do some things and get yours up a little. You've still probably got a four-year beans and rice, rice and beans, no vacations.

Yep. And I think it may be more than four years. I mean, it's going to be hard. Yeah. Because that 200 is just a beast. Yeah, it is. And that's where we're – and I'm glad you answered it the way you did because we're deciding, okay, should we take the equity and buy a smaller home,

but we wouldn't get something to go – It doesn't move the needle. Again, it doesn't help your ratios. Yeah. If it was – if it cleaned up the whole mess, but that's fine. I've still got to have a place for five kids to live. Yeah, exactly. And when I finish, I mean, here's the thing.

If you get stuck, you can always go back to that choice. Okay. So let's take a run at it. What kind of trajectory is your income on? I think probably long term maybe another 10 20 000 so not steep okay no not too much no okay um but but anything you can do and she can do see again we add 15 20 000 30 000 bucks every time we do that to the equation annually it changes this by year. Yes.

And how long it takes. So what I'm going to do is take a hard run at it by selling the rental, tightening up, trying everybody to try to get their income up, and then revisit this question after a year. Okay. And say, how are we doing? What's our project timeline look like here? As if you were laying out like a Gantt chart on it or something. You know what I'm talking about? Yes, I do, sir. Okay. So you lay you lay out your you know it's like a project management system is what we're doing here and that's all i ever do with people when they call in um they just

don't know i'm doing it usually so uh but but uh you know let's revisit and go okay are we making enough progress or do we need to sell the house? If we sell the house, does it change the equation? You ask yourself that question not every morning and not every month, but about once a year, once every eight or nine months or whatever. Sit down, revisit, and go, okay, what have I got to do to do that? But you can make it. You're going to make it. It's just a matter of how long it's going to take

and how much pain is going to be involved. The deeper you cut the faster you get out and you do need to get out because you've got a you got a lot of stuff on your plate here wow hey thanks for the call man i hope that's helpful i know you can make it you got this it's just gonna be a while and it's gonna be a grind and the more man maybe she can hit a home run maybe she could hit a home run that'd be cool. What if she just did some side hustle and went crazy and made $100? Oh, boom, there we go. See, now that changes everything.

So, hey, thanks for the call. Open phones at 888-825-5225. Chris is in Decatur, Illinois. Hey, Chris, how are you? I'm doing just fine, Dave. How about yourself? Better than I deserve. Merry Christmas.

How can I help? Hey, yes, Dave, I had a question. Recently, unfortunately, I lost my daughter about three months ago, and she had a home. It was valued at about $30,000, and she's only paid down, and she currently owns about $18,000 on the home. The bank offered me a chance to buy it if I'd like to buy it before they let it go into foreclosure. I do have my home paid off. I make about $55,000 a year. I do have another rental that I rent out,

and I was just thinking that I can go to the bank and get a loan, and they'll give it to me and possibly rent this home out. I don't know if that's really a good move at this time in my life. I don't really like going out and taking a loan out. You don't have the cash? No, I don't have the cash, Dave. I only have like $3,000 in the bank

maybe at the most. How old was she? I'm also still trying to bury her, of course. I'm paying for a burial, of course. I'm $2,000 in the hole with that, still trying to pay for that. I'm sorry. What a mess.

How old was she? She was just 25. What happened? She just lost control in the interstate, and I really don't know all the details. She was going at a high rate of speed, and not only was she going at a high rate of speed, and she wasn't going at a high rate of speed. Oh, my gosh.

Who were the heirs? Does she have any heirs other than you? Well, she had three children left, unfortunately. I mean, I've got one. I've got the oldest grandchildren myself, and the other two are with her other boyfriend at the time. So I'm raising him, too. No, you don't need to buy this house sir you got enough on your plate you got enough on your plate without adding something else to do

you got plenty to do yeah i was just trying to get you know i thought maybe just for sentimental reasons then again it's just a it's just a house it's not sentimental. Very few houses are sentimental. I'm so sorry. Oh, my gosh. No, I would take all the money and take care of those final expenses and those babies. I wouldn't get in the rental business. Hey, guys, this is James Childs, producer of The Dave Ramsey Show. I'm excited to announce that we're now carried on 600 radio stations across the country. To find one near you, head to to Dave Ramsey.com slash show.