The Ramsey Show - App - Take Care of Necessities Before Starting a Business (Hour 1)

Episode Date: May 20, 2020

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Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studios, it's the Dave Ramsey Show, where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. My co-host today on the show, Ramsey personality, Christy Wright, number one best-selling author of the book Business Boutique. She frequently speaks all over America, helping people with their confidence, helping people get past fear, helping people bust into areas that they haven't busted into before. And that all started back in the Business Boutique days when she was helping ladies, and still helps ladies,

be able to step into and do work that they love. Open phones this hour if you want to talk to Christy about that, about your life, about getting a business, about just stepping in with confidence into whatever it is, and or questions about money and life. That's what we're here for. The phone number is 888-825-5225. Kadidra is with us in Arizona. Hi, Kadidra. How are you?

Hi, Mr. Dave. Hi, Christy. Hey. How can we help? Hi. So I have a question. Thank you for taking my call, first of all. So my question is this.

I'm a single mom of three. I'm 25 years old, and I am a new business owner. I've actually attempted to be an entrepreneur over the last four years, but I didn't have much success in the past. I was recently forced to quit my job to stay home with my kids. I took a leap of faith and I started my business, but I have no capital and I need it. I had a bankruptcy discharge a few months ago and I really don't want to get back into debt. what advice would you give to someone in my situation who is trying to change the trajectory of their future, who has a lot of faith, but a little bit of money? Yeah, Khadija, first of all,

I just want to say you're doing a good job. I feel like moms can't hear that enough. You're a mom, you've got three kids, you're in a tough time. I just want you to know that whatever big dreams you have, I think those are awesome. But right now today, you are strong and you are capable and you're doing a good job right now. So I just, I just want to encourage you. Now, I do have a question before I even get into the business stuff. And I know Dave will speak into this as well, but what specific business do you want to start or have you started that you're concerned about the capital and funds here so i have entered the hair industry i'm not a cosmetologist um it'll actually be selling hair but i um i'll take

some becoming can you hear me i said i'll take some he wants some hair oh i need it but i'm also trying to become um uh it's called a trichologist, I believe. I'm doing a little bit more research, but it's pretty much someone who specializes in hair loss. I've suffered from alopecia since I was five. It runs in my family. So I don't want to just have like a, you know, just a selling hair business. I want to be able to help people who have hair loss and work with insurances and stuff as well. Okay, so you said you're home with children. Are you married?

That's funny i knew you were going to ask me that i was divorced my divorce and discharge were the same day of this year well it was better sleep it was like a fresh beginning i don't know god was with me so it's okay okay so you're on your own and and you don't do not currently have an income except from whatever the startup business is providing. I have a very part-time job. Very part-time. Okay. Yeah.

Well, I think there's a real practical need that you have right now, Khadidra, of income. So whatever that looks like. I don't know. Have you already started your business? Do you have some revenue, some income coming in from that? Or are you just like you have an idea that you want to turn it into something? You actually helped me. I'm in the boutique academy and I took your course, the business idea bootcamp. Yeah. And I did that. I came into the academy with a different idea. And after I took your course, we kind of narrowed it down to something that

actually meant a lot to me. And I haven't launched this yet. I haven't said anything. I just want to make sure you know my foundation because I have tried in the past so many times. Okay, so now I'm confused. I get that you want to do this, and I get that Christy's helping you, and that's really good. How are you eating? Well, I, okay, so, oh, Lord, Mr. Dave.

So, in the situation I'm in, because I have kids, there is a lot of government assistance. Technically, I can live where I am. My housing is taken care of. You know, we have food, food stamps, those things. But I don't want to be here. Like, I don't want my kids to live in this forever. Why did you quit your job? Because my second child has special needs and he almost got kicked out of two schools so as i was working i had to leave work every day

to pick him up from school and i have a one-year-old and a seven-year-old okay yeah um so here's here's what i want to encourage you there's going to be some short-term things you need to do and some long-term things you need to do. Short-term things you need to do, just like Dave talked about, you've got to provide for your family and take care of your three children, your second one, which has special needs. So, whatever the parameters of that looks like, what is realistic in this season of life, the age of your children, which are hands-on, you're in the trenches right now. It won't always be like this. Right now, it's really, really hard. So whether that's your part-time job, you increase your hours, whether it's your budget and you're living on a budget, but you've got to be able to provide for your family

right now. If it's a different job, a full-time job, I don't know. But then you can continue to build this business dream. You can continue to work the plan that I've given you in the academy. We're working through some really cool stuff right now. So if you're an academy member, you know we've been every single week. I've been in there coaching you. And what you can do is you can start this business small, even if you don't have any

money, and you can grow it really slow. And so there's things you can do. I know you said you want to do some research to expand it into new spaces, specializing in those different hair loss, that type of thing. But even right now, when you're selling hair, when you're buying, selling hair, you can even take advance payment to pay for the orders without having to hold the inventory. So you can get creative to grow slow where it's not taking money out of your pocket. Dave, you started this business on a card table in your living room. You grew at the speed of cash and we're in a brand new building that you paid cash for we don't take out debt you don't take out debt and you can do this

at any level you just grow slow but there are real needs right now kadidra that i think you need to take care of as well so both of those can happen simultaneously but i don't want you to abandon one for the other i think both of those can happen dave what would you say that's a tough spot i started this business we had three little babies and it was a card table in my living room but the work on this business was done at night yeah um and i during the day i fed my family yeah doing things i didn't really want to do right then wasn't anything illegal or immoral it just wasn't my dream i was doing real estate deals again trying to eat and so i would work my tail off all day long or most of the day to feed my family. It's very difficult, nigh impossible to start and run a business from zero while your kids are

hungry. And, you know, so you've got to take care of your basic necessities with an income and then start your business as a, quote, side hustle on that. And even if you just have a baseline income, it doesn't have to be anything fancy. It doesn't have to be what you want to do the rest of your life. If it's got the flexibility allowing you to take care of your kids and you can go do it, go do it right now and make some money. And then let's work on the other stuff when the kids are asleep. And you can get up at 4. I did this week.

I had a project I was in the middle of that I needed to get finished, and I got up at 4, and I finished the project. You can get a lot of work done when other people are sleeping. And so on your side hustle. But you've got to get the wolf away from the door because it's very difficult to be creative, passionate, good at your new business while everybody's hungry back home, while things are falling apart back home.

So you've got to take care of your basic necessities. This is The Dave Ramsey Show. Business leaders now more than ever, we need people with the right skills to support our communities, especially the frontline workers who provide resources and care for those most in need. To help, LinkedIn is offering free job posts for healthcare and essential service organizations that need to quickly fill critical roles with the people who help us all. If you are hiring for one of these organizations, free job posts on LinkedIn can help you quickly find the right people for your frontline. LinkedIn jobs can help by screening candidates for skills and experience you're looking for and putting your job post in front of qualified people who have what you're looking for.

So you can find the right person to quickly fill critical roles. To post a health care or essential service job for free, or if you're in another industry and have hiring needs, visit LinkedIn.com slash Ramsey. LinkedIn.com slash Ramsey. Terms and conditions apply. My co-host on the Dave Ramsey Show today, Ramsey personality Christy Wright, helping you with confidence, helping you with empowerment to move forward in the areas that you need to, certainly in the business sector, without a doubt. Open phones at 888-825-5225.

So we're taking calls for Christy and, of course, all about money and life. John is with us. Hey, John, welcome to the Dave Ramsey Show. Well, thank you, Dave. I've got a question for you just to make sure that I'm making a wise choice in the route in which I'm about to go. Okay. I'm a 50% disabled vet. And with that, I know that our VA home loans have the waiver of the VA funding fees.

Yeah, which starts to make it viable. Without that, the VA loan is super expensive. So I was quoted at both a 30 and a 15-year fix. They're going at the same rates right about now. Earlier, I was able to... That's weird. 15 ought to be cheaper. I know. It baffles the heck out of me, but I was told that I could get a 2.99 on a VA loan, and I would have to pay a half a point for the origination fee for the loan.

And I just want to make sure that that that sounds right yeah and very much like unto if i went with a conventional loan i wouldn't be doing something foolish going that route now it's about the same um that's about what you get on a conventional right now uh the disabled part uh the 50 disability gives you the waiving of the funding fee otherwise the va loans are straight up no don't it, because the funding fee makes it just more expensive. And FHA and VA loans are both, without your situation, are both more expensive than conventional. So we tell folks to do just a Fannie Mae 15-year fix.

But you can do the VA. It's probably swap. I mean, it's not like the best deal on the planet, but it's not a bad deal. So you're not doing anything wrong. I think I'd go ahead and go forward with it if you want that's assuming of course you're out of debt you have your emergency fund right yeah we're we we made over 125 grand on the sale of our last house that we've got ready and we're already in baby steps four five and six it totally cracked me up when they said i pre-qualified for

my my va loan at over a million dollars and i'm like you got to be insane i'm not at that point yet you know and if i'm going to buy a million dollar home i'm paying cash for brother so there you go man i'm on your team on that so what was the nature of your disability um i used to fly hovercraft and and I ended up injuring my lower back. I bet. And it's a bilateral deal, so I've got a pretty rough go on the lower back and the legs that go with it. Yeah. A lot of pain. The good thing is I'm still sharp as a tack and able to think and work,

and I have a heart of a teacher, and I actually get to do that in my line of work, and I get to teach for a living in a business setting. So I'm making some good coin. Our family is doing—I'm very blessed, and the Lord has definitely done well for us. We were pretty stoked when we came by and saw you back in 2015, and my little ones and my wife and I were able to come into the plaza and did a debt-free screen with you. And ever since then, we have been on a trajectory that is,

as Chris Hogan likes to say, we're focused, not finished yet. Amen, brother. Well done. Very well done. Well, thank you for your service. I'm sorry for your injury, and I admire your overcoming spirit. You've been getting after it, brother. Thank you. Thanks for calling in. Colin is with us. Colin is in Michigan. Hey, Colin, your question for Christy and me. Hi. Hey, Dave. Hey, Christy. I guess I need to do some

quick backstory, just real quick for you before I hop into my question. But it's about business, so I think it's kind of convenient that I called today. Okay. So I was first put into one of your classes when I was in like sixth grade. And instead of going to college, I started up my own business when I was 17. And I continued just expanding that and took on partners. And that's where I didn't follow uh kind of your advice and i took on a ton of that partners and in 2016 it all imploded and i had to liquidate the whole thing just to get out of my partnership and the payoff the debt wow so now we're four

years later and i'm wiser wiser but not richer yes exactly okay so now we're now i'm 28 and uh the business is pretty sustainable so it's probably like the third time i tried to get it good uh and uh it's all debt free and i'm debt free except for the like our mortgage and i guess at what point after so much like it's been about a decade of me trying to get ahead and to be debt-free all the way. And I'm pretty exhausted. So at what point do you kind of relax a little bit and stop just looking at the numbers and kind of, like, not live outrageously, but just, like, kind of relax a little bit and, like, feel okay? Because I feel like I was just, like, with the business in a war for, like, so long, like a financial war. And it was like really difficult to get through. So that's kind of my question.

So I'm curious what you, I want you to unpack this for me a little bit, Colin, like when you talk about just being like exhausted, you're in a good place financially. If I heard you right, the business is stable and successful. What are you feeling?

Like what's going on in you that you're feeling stressed or you need less of, I guess is what I'm saying. I guess it's more so just since I still, like I guess where my mind goes is that I, since I have some level of debt, I'm like, okay, I have to pay that off. And I guess I just kind of don't take a step back and just take time off and kind of like relax a little bit. I'm still focused on purely the debt aspect, even though like my income and my finances are really in

a really good place. Yeah, well, one of the things that I tell people, and I'm interested for Dave's perspective, because he teaches on this all day, every day when it comes to debt. But what's interesting is that I've noticed when it comes to getting out of debt, you're going to get there. And especially, you know, we talk about we focus on the consumer debt, but the mortgages, I mean, this is going to be a long road for you. It's going to happen as fast as you're willing to sacrifice. But you have to ask yourself, like, do I want to enjoy these things along the way? Let me give you an example, Colin, when I was getting out of my consumer debt.

I didn't buy new shoes, buy new clothes, eat out at restaurants hardly ever, and I didn't go on vacation. But I kept my cable. I kept my cell phone. There are certain things I kept in my life because I had projected, okay, if I give up these things, I can get out of debt this fast. I knew people, even here in our organization, that they didn't have cable, they didn't have cell phones because they were that intense to get there faster. But it's more of a value decision at that point of how fast you want to get there if you want to enjoy some things along the way while you're working on your mortgage which could take a long time i would say that's okay but let's ask dave ramsley i don't disagree with you i don't disagree with

you the thing is you know what we sell tell people is when you're getting out of consumer debt and baby step two to be gazelle intense and that's just hog wild i mean people is when you're getting out of consumer debt in Baby Step 2 to be gazelle intense. And that's just hog wild. I mean, you're working like crazy. You're working all the hours you can work. And you're supposed to get exhausted there because you made a mess and you're cleaning up your mess, you know. And you're not going out to eat and you're not going on vacation and you're not buying new shoes. And you're not, not, not, not, not so that you can, can, can later.

Now, once you get out of debt, everything but the house, and you've got your baby step three of your emergency fund in place, and you start where you are, Colin, which is four, five, and six, then that's when we tell folks in Financial Peace University, we tell them this, and I've told them this for 30 years, is that's when you let your foot off the gas a little bit and get a little bit of a relax, which is what I think you're looking for here.

I think you go, okay, you've gotten over the hump. You got your emergency fund. All we're doing now is we're investing and we're paying on the house, and we're running our business, and that's all we're doing. And it's just the rhythm of that, and it's no longer a sprint. You settle into a marathon here. You settle into a jog. But that doesn't mean you don't intend a jog and uh but that doesn't mean

you don't intend to finish the race it doesn't mean you're not focused you're focused you're not finished but you're not gazelle intense at baby steps four five and six gazelle intense is you are running for your freaking life and that that's exhausting but you quit doing that when you get over that hump of three and you've got your emergency fund in place. So that's what you were doing. And what you did was your gazelle and tents just included a cell phone. You know, Christy, so there's nothing evil about that. That would be fairly normal.

But the point is that, you know, we've seen the savings rate go up in America to the last time it was this high was during the Reagan administration, during the last month. And there's all these articles out about how much Americans have saved because they've not been spending. Well, that's all we were telling you to do. All along. That's what we were telling you to do. Quit spending this dadgum much. You know?

Don't be going around. If you're broke people, don't be spending like you're rich people. I mean, that's – and people did that for a whole month now nationwide, and they had these amazing results. This is the Dave Ramsey Show. Folks, I love telling you about well-made, well-thought-out products. Today, I'm talking about Grip6 belts. I don't know about you, but I'm not a fan of traditional belts. They never fit right, and they're uncomfortable.

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Ramsey Personality number one best-selling author Christy Wright joins me as a co-host today on The Dave Ramsey Show. Open phones at 888-825-5225. This is a show about life and money. Andrew is in Texas. Hi, Andrew. Welcome to The Dave Ramsey Show. Hi, Dave. Thank you for taking my call today.

Sure, man. What's up? I just had a quick question for you. Me and my wife are in baby step two, and because of COVID-19 and the oil and gas industry, which I work in, has gone down. We went into store mode and just started saving everything back. But now we're in a position where we have basically everything that we need in order to pay off all the debt that we have. So would it be a wise idea to go ahead and pay all that debt off and be debt-free and then start saving our emergency fund, or should we still kind of hold off?

Well, has the storm passed? I'm not really sure. The last time that letoffs happened, no one knew it was coming, and it just kind of came. So we still don't know kind of where we're at at the moment. Yeah. Okay. Does your wife work outside the home?

Yes, sir. What does she earn? She makes about $40. What do you make? And I make, I'm on pace to make about $150. Okay. All right. So you could lose 75% of your income if you got laid off?

Yes, sir. How long have you been on that job? A little over a year, but I've been in the same industry for seven years now. You ever been laid off in that industry? No, sir. Okay. Are oil prices recovering? They're kind of on the way up, but there's a whole lot that's, you know, out of my control.

Oh, I didn't say it was in your control. Just an indicator of how stable your job is, right? Yes, sir. It's been going up the past few weeks. So what's the pile of cash and what's the debt? How much cash and how much debt? We have about $36,000 in cash, and our debt is about $32,000. So that would leave us about $4,000 left over. I mean, what you're measuring this against is, I mean, Christy, if he pays off everything,

you've got $4,000 to get laid off tomorrow, you're screwed. So what's the probability of that happening, I guess? Is that right? Yeah. And, you know, what I was thinking about was actually what you talked about in staff meeting on Monday with your gradually turning the faucet back on. That's what I'm thinking. I'm like, maybe you take a chunk and pay off half. And then next month, the job's still good. You take, you know, you just gradually pay it off for the next three months, and then you're turning on the faucet slowly. It's not just I'm going to wipe it out down to $4,000, but you are making massive progress because you're seeing things recover. Yeah, it might be that you say, okay, we've piled up cash so high for storm mode

that we could live without some of it, but we're going to stay in storm mode. And so, I don't know, pay off $20,000 of the 000 of the 32 or something like that that's a good idea christy what do you think what do you think about that andrew oh no i think that that was one of the options that me and mo i could talk about so okay uh no i think that's not i don't usually think that way i always usually think all the way on or all the way off but you said it but then but but she's right i mean we've been talking about preserving cash here at Ramsey, and we had stopped profit sharing. We had stopped hiring.

We had stopped this and stopped that. And we seem to have gotten the other side of our revenue scare that we had, and kind of like you're having, right, Andrew? And so we started turning the faucet back on. We kicked profit sharing back out, and we gradually started doing grad some gradually started redoing some hiring again and uh so you know we just but what i said from stage on the staff meeting money christy's right reminding me was just we're going to turn the faucet on slowly uh we're not going to turn the fire hose on so i like that

that's a good that's a good solution and it's better than one that i would have come up with i'd probably do that i'd probably do like 20000 right now and then a month or two. Whenever you sense the storm is done, you push play again. That's when you'd clean it out and be debt-free and build your emergency fund back up. But I mean, in a month or two, you could have the emergency fund on top of the remaining $12,000 and it'd be a no-brainer then. And then you'd be in baby steps four, five, six, and even if you got laid off, that's what you're there for. Yeah, it just feels less risky than doing it all at once in this environment but then you're still making massive progress over the next two to three months it also seems overkill yeah to just sit there on the cash register yeah so that's a good that's a good middle ground very good like

that open phones at 888-825-5225 minnie is in nev Hi, Minnie. Welcome to the Dave Ramsey show. Thanks. How are you doing? Better than I deserve. How can Christie and I help? So my question is mostly for Christie. I started a business. I took her advice and I used what I have.

And so I have a custom shirt business, but I'm just not passionate about it. And we're in the middle of baby step two. All right. So talk me through, how did this, how did you come up with this idea to start this business? Like, why did you start it to begin with? Um, I had more than what I needed to start it. I had all the supplies. And, um, when I looked into buying shirts for my family, it seemed like they make a decent profit on it, and I'm good at it. Okay. How much income does it bring in for your family? Not a ton, maybe a couple hundred a month.

Okay. So what are you wanting to do? I guess what's your question? Do you want to do a different business? Are you trying to ask about what to do with this business? So I would love to be a personal finance coach I've looked into it and I'd like to take um Dave's financial coach master training but we're it's a bit much for baby step two you don't need to do that you don't need to pay that bill that's a pretty big bill for Baby Step 2, yeah.

Yeah, so I'm just not sure if I should continue to build this business that I'm not passionate about until we're out of Baby Step 2 and then just totally shut it down and switch gears to a totally, you know, from crafts to finances. How much debt do you have? When should you be out of debt? We were going to be out of debt in two years, but with the coronavirus, no more overtime is allowed. So that's really thrown us off track.

Well, I mean, you've got a couple of choices here. A lot of people are doing things, we were just talking about this, Dave, a lot of people are doing things in this season that they don't want to do. And sometimes when you're a baby step two you have to do things you don't want to do that you're not passionate about i would say i've had jobs you know before that i wasn't passionate about but i needed that job i needed that experience in that season so there's a little bit of a message here of like grit and i'm going to get through it i'm going to do what i need to do because this extra income is helping pay off your debt now i think you can ramp up your t-shirt business to make it make more money for you faster

to get out of debt quicker where you're doing it for a shorter amount of time. There are some dials you can turn here. You have some control. But as far as just jumping ship, I mean, you're giving up that income. You could do something else, but you're going to lose those months of income

if you sunset that, if you try to start something new before you turn a profit. So I feel like where you are, you're going to enjoy your business more any business when you're out of debt and you don't have that financial strain but right now what would you have to do to triple that make 600 instead of 200 200 sucks um probably start marketing better and i am in the business boutique academy I just signed up so I'm I am working on getting it vamped up more I just didn't want to are you charging enough

I feel I am I'm charging um my what's a shirt cost uh an average adult shirt costs 20 to 25 $25. For a dress shirt? Not a dress shirt. It's like custom shirts. So like if you wanted to put like an Easter shirt, I could put like a bunny holding an Easter egg or something. Is every single shirt custom? Yes. Your prices are way too cheap.

You're not charging enough. $20 to $25 is like a shirt you buy off the store rack somewhere, like discount outlet. If you're doing custom, just by the nature of custom, you need to be charging more. Now, Minnie, did you join our coaching session last week? Because I did a whole rant on money and pricing. If you haven't watched that, be sure to go watch that. That's in our Academy group. But there's tons of resources in the Academy specifically for you to help you raise your prices.

But yeah, raising your prices. I think Dave's right. I think if you can get this business making more money, you'll not only get out of debt faster and be able to change your business, you might actually enjoy this business more if it starts bringing in more money for you. Your passion may recover. But in the meantime, let's say you built it up and you're making $1,000 a month. Five times what you're making now. You could still just shut that when you want to after this is over.

There's no rule that says you have to keep running it forever. So it's not a forever deal. You're just trying to make some money right now. This is The Dave Ramsey Show. Business leaders make your life easier with FreshBooks. Whether you're starting a business or you've been at it a long time, FreshBooks is one of the smartest decisions you'll make this year. FreshBooks is an accounting software designed for people like you that lets you do the things like automate your invoicing and your online payments

so you get more time to work on your business try fresh books for 30 days free at freshbooks.com slash dave ramsey My co-host today on the Dave Ramsey Show, Ramsey Personality, Christy Wright is with us. Open phones at 888-825-5225. Ann is with us in Michigan. Hi, Ann. Welcome to the Dave Ramsey Show. Hi, Dave. Hey, how can Christy not help?

Have a great day. Hi, Christy. Hi. I really am thankful that you're taking my call. My husband and I got married two years ago. I'm 71. He's 65. And he said to me, I don't need to read Dave Ramsey's book.

I'm living Dave Ramsey, which he is. He's got no debt. He's got, he does have a mortgage on a duplex, but the rental guy is paying the mortgage. He has $34,000 in the bank and $41,000 in the money market in an IRA. And the investment person wants us to go into an annuity, and I'm wanting him to look at other investments since we're both really healthy, and he isn't willing to do that, and I'm wondering if you have any ideas

on how to get him to change his mind. Mm-hmm. Okay. Doubt it. Hard to teach an old dog new tricks um it sounds like he's got the life figured out that he wants and it probably doesn't involve my opinion but um uh you know i mean obviously the way the the way people choose to invest is they start to realize what invent what not investing is costing them. In the investment world, we call that opportunity cost. He's not done a very good job building wealth.

He's done a good job avoiding debt. But he doesn't have much money for a 65-year-old. No. And so, but let's just say, for instance, you had $100,000 to invest, and you were to invest that in mutual funds, and between 65 and 80 that grew to $1 million in mutual funds. But if you didn't invest it and you left it in a savings account, that $100,000 grew to $150,000.

Well, that's when you start to realize what it's costing you to not invest. And so how much wealth have you built in? You told me all about his. I have not been good with money. I have a CPA license, an insurance license, a mutual fund license, and a teacher's license. And I have bounced from one thing to another my entire life. And I'm more stable now than I ever have been. I've got my $1,000 in my step one.

I only owe my sister 24 000 i went bankrupt for 475 000 i've got 1500 in the emergency fund so what so my sister's on a 200 a month payment for 10 years yeah but she agreed to okay well i i think you and your new husband have both got some life under your belt. I do, too. I'm right there with you. And what you need to do is to sit down and compare notes and just say, you know, tell them the truth, how you're feeling about, you know, I went through bankruptcy. I don't feel like I've been very successful.

But obviously, neither one of us have much money. And so we need to talk about how we're going to have some money for security because security is a big deal. Yeah. And it's interesting too, because one of the things I hear, and this has a massive effect on your ability to get to your goal or him to get to his goal in the timeframe is just being a team, combining your efforts, combining your goals, talking about your values, being on the same page. Because if not, y'all are both putting so much effort into different directions. And man, in marriage, that will come out in day-to-day interactions and your conversations. And hey, we're spending this money on this next week, next month, whether we're taking a vacation, what we're buying. I mean, it affects everything. It's not ever just about the

money. It's about the values and the priorities. And so I would just encourage you and your husband to have not just one conversation, many conversations as you work to align your goals, priority, and your money towards the same kind of endgame. Charlie is with us in Texas. Hi, Charlie. Welcome to the Dave Ramsey Show. Hello, Dave. How are you?

Better than I deserve. What's up? So my wife and I have a side business, a dumpster business, and we're doing this year probably $210,000 in sales, which is growing quite a bit in the seven years that we've owned it. Not a bad side hustle. No, no, it's not um we're looking to i'm going to retire from my regular job uh within a year or so and we're looking to sell and do some traveling um we've we've gone through all

the steps and we're debt free and uh we're believe it or not millionaires um and so we're we're, believe it or not, millionaires. And so we're trying to figure out how do you value the business when you're going to put it up for sale. Okay. There's two ways primarily. There's three ways, but the third one's hardly ever used, which is a gross sales multiplier, and you've got to have a real standardized thing in the industry. Dumpster side hustles don't have a standardized thing. Okay. So we're down to the two.

The cheapest the business should sell for is what's called book value, which is what you could sell off the parts for total. So we sold off the equipment. We sold off the dumpster. We sold off the, you know, we collect all the receivables that are due. You know, we pay all the bills. And what's the net worth of the business if we just sold off everything and that's called book value it's worth at least that this business is worth

more than that because this is a very uh cash intensive uh high margin business so you made 210 top line uh what was your net profit um last year, $62,000. Did you pay yourself anything for running the business before you got to $62,000? Not before, but the last two years we paid $30,000. Okay, so if I were going to buy the business, and I live in Nashville, and I was going to have to hire someone to run it, I would have to take their fee, their salary out of that $62,000, right? Well, yes.

This year we started, we now have an office manager. We have a full-time driver. We're doing W-2s. Okay. If you were going to be an absentee owner like you were on the road you were going to have somebody run it what would you net um that's i haven't looked into that okay let's i'm just going to make up a number it's not right based on what you're doing but it'll be easy for for example purposes. Okay? Let's say it was $50,000. If you were on the road in your RV and you made $50,000 profit after paying everybody to run this business,

you're not over there working. Okay? You follow me? Correct. Yeah. So that's what the business is worth, and it's a multiple of 50. Now, most people buying small businesses want a 20 to a 25 percent rate of return on their investment. And so that means that 50 is either 20 percent or it's 25 percent,

meaning that we would multiply that 50 times five or four. And so in that case, that business would be worth somewhere around a couple of hundred thousand dollars, which is probably the max that this business is worth based on what you're telling me yeah we're set at 150 i thought we were a little bit low but now you're probably about right because i mean it depends on what we pay someone to run the business out of that 62 you see right if we paid them 32 there's 30 left over and we're multiplying that by four or five and that puts you right there okay so a four or five multiple of your true net profit after everyone is paid to run the business and small businesses seldom calculate the everyone

to run the business because one of us is working in the business and we don't think about paying ourselves and what we have to replace that i'm not there anymore so i think you're about right at 150 i think you're right on it that makes sense to you christy yeah that's good it's funny that i'm like is this a side hustle two hundred thousand dollars like that's impressive ding ding this is an impressive side hustle well he's built it up he's got a good route he's worked it yeah it really, really good. He earned the right to be a millionaire, earned the right to be in an RV enjoying himself. That's right. Congratulations, brother. Proud of you. That puts us out of the Dave Ramsey show in the books. James Childs, our producer The Dave Ramsey Show.

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