The Ramsey Show - App - The Baby Steps Are the Proven KEY to Building Wealth (Hour 2)

Episode Date: January 3, 2022

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🎵 Live from the headquarters of Ramsey Solutions, it's the Ramsey Show, where dad is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. I'm Dave Ramsey, your host. Thank you for joining us. George Campbell, Ramsey personality, host of the podcast, The Fine Print, is my co-host today. As we answer your questions about your life, your money, your work, your relationships, it's The Ramsey Show.

Thanks for being here. Open phones at 888-825-5225. George, I hadn't planned to do this, phones at 888-825-5225. George, I hadn't planned to do this, but it just occurred to me that I probably should say, because I think our fans, our super fans that are dialed in, may have noticed that we didn't say we're broadcasting live from the Dollar Car Rental studios. We were missing a little piece of the sentence there. It felt weird. A little piece.

It felt weird saying it. I don't know if anybody's ears caught it or not. So Dollar Car Rental had sponsored our studio for two years. And a wonderful relationship, wonderful people. And we appreciated their sponsorship. We still appreciate their sponsorship. When COVID hit, a lot of the rental car companies went through bankruptcy. Hertz owns Dollar, and they were no exception

and the entire marketing team that we were working with when we did the original sponsorship deal um exited during the bankruptcy and so in the second year of working with dollar working with a whole different group of people which is not bad they weren't bad people they were fine no issues at all but the uh the reason we did the dollar car sponsorship was not to get money for the studio, although we took the money. That's part of the deal. But the reason was that we were really, really excited to have a rental car company that would accept debit cards and not treat debit card holders like second-class citizens when you go to a rental car counter, because most of them do treat you that way and the new leadership team

at dollar reverted back to the old uh way that most most the old policies the old policies that most rental car companies use so no hard feelings there but uh is inappropriate for us to continue to send you guys to dollar uh because we tell you i only have a debit card not have a credit card and then they uh you know they've got standard debit card processes, which are unwieldy, as far as I'm concerned. And so we had a great run with them for a couple of years there, and for a little while we got you guys a really good situation with Dollar to be able to use your debit card, and they've gone back to normal Hertz and whatever other brand you want to throw out their users they all pretty much treat debit card holders like second class citizens kind of a normal thing for them and it's there and you know so no hard feelings they were not mad at dollar they're

not mad at us that just the sponsorship came to a close because they felt like that we didn't feel like they should renew because it's not going to give them value for us to endorse them when we're sending people over there who get pissed off then when they go over there because you go in there and go, Ramsey sent me over here and you treat me like this. So we just can't do that. But it was a good run for a while, and so we're actively seeking. You may hear another studio sponsor at some point. It might be a rental car company. It might be someone else.

You never know. The team is working on that now. But that's what happened. And not all relationships on things like that end well, but this one did. It was good people and it's just you know, they get to run their

company. We get to run our company and that's how that works and it's all good. So that's why it's not there in case you're wondering. I won't cover it again. I'm not going to cover it every day. It's just something there. But they gave us a lot of money for two years, and we appreciated them. And they took care of our people for a portion of that two years beautifully and then reverted back to the old systems.

And so there we are. Now, sidebar, nothing to do with dollar, but partially to a dollar. It's just interesting. We need to do this in the fine print. So you know why these companies, as we've've dug into it because we've talked to several different rental car companies about this because trying to get them to care not treat debit card users like second-class citizens apparently people there's a uh like a mafia ring or a cartel ring of thieves that rent cars and steal them no kidding that's not shocking to me but somewhere they figured out that like 0.005 percent more of them are with a minuscule amount

are with debit cards so somewhere someone in the corporate jungle decided that that this debit card usage was associated with these massive thefts that they really are enduring. They really have massive thefts on these things. And so they just said, we'd rather not have debit cards users. And that's why they treat them that way, treat us that way. But it's all associated with a misnomer. I'll tell you another one. Here's another one. all associated with a misnomer. I'll tell you another one. Here's another one.

Here's another statistical misnomer. Okay, the University of Pennsylvania in conjunction with the University of Texas did a study, oh man, 25 years ago, where they found people with low credit scores have a higher likelihood of turning in an automobile claim in a wreck. And people with high credit scores have a higher likelihood of just paying the automobile claim. And consequently, they said anybody without a high credit score, we're going to raise your, a bunch of the auto insurance companies adopted it. State Farm was the first one. Nationwide was the second one.

Adopted this idea that if you don't have a high credit score, we're going to charge you more. Surcharge. when I was a second one, adopted this idea that if you don't have a high credit score, we're going to charge you more, surcharge. Of course, the study did not accurately reveal reality, which is the people that have no credit score, like multimillionaires like me, never turn in an auto claim unless it's extreme. We just pay them. We don't think about it. I don't turn in a two thousand dollar claim the building i'm sitting in is worth four hundred million dollars i don't turn in a two thousand dollar claim okay i'm not being snotty or anything but these are just your

realities so people that are wealthy and have a zero credit score are not taken into account in this remote study from 25 years ago. And then as a result, everyone is thrown out, just like with the debit card user at the renter car company. Everyone's thrown out because corporate America doesn't bother to actually understand the details of a study. Well, I think it's laziness. They're just wanting to lump everyone into one camp. High credit score and then low and no score.

Debit card, credit cards. Yeah, cartels all use debit cards. Apparently. Give me a break. Hey, they're moving at the speed of cash, at least. That's one good thing. That's so strange. But I'll tell you this, Dave.

I just rented a car a few weeks ago. Went to Arizona, and we went through Enterprise. I booked it through Costco Travel, and I had no issue using a debit card. And here's what they said at the counter. Hey, we're going to charge an extra 20% hold. It'll come back to you when you return the car because of the debit card i said okay that was it that's no different than a hotel exactly they'll put a hold on your room but the idea that people go dave oh my my life's going to be so difficult if i have to use a debit card it's impossible you can't rent a car you can't do i didn't realize i didn't realize enterprise

was that lenient that's good i've had Maybe we need to get them to do a sponsorship. Only good experiences with Enterprise. And, you know, I don't know about the other ones. That's just the one that happened to be the best price when I went to look. But it can be done. You just got to look at the policies beforehand. Make sure you budget for those kinds of things. So why did you not use our sponsor?

Well, this was just a few weeks ago. Oh, you knew everything was coming to an end. Well, everything, honestly, it was booked up, all the rental cars. Oh. This is back when the rental cars were a little up in the air. They're not a little up in the air. They're a lot up in the air. And so I just went with one that was available that had the best price.

All right. I'll put you on the spot here. Thank you. But we need to make sure we take care of our sponsors. Absolutely. There you go. Thanks for clearing the air on that one. Well, you cleared Enterprise, so they got a free ad out of this.

It's good for them. So everybody's running over to Enterprise now because of George Campbell. Yeah, you're welcome. George, you need to work with the guys and help them be the sponsorship now. You've got to own up to this. Tell them George from Ramsey sent you. That's it. They know you well.

This is The Ramsey Show. show. You've got a lot on your plate, a job, your home, your marriage, and your growing family. While you're enjoying the present, you can't help but think about your future and your finances. As you explore your options, consider Christian Healthcare Ministries, or CHM, for your health care. Their generous maternity program and budget friendly monthly programs have been a blessing to members welcoming children into their families. Visit chministries.org slash budget to see if it's right for you. Christian Healthcare Ministries is a Ramsey Trusted Provider. every january we get hundreds if not thousands of calls from people who are ready to start fresh ready to finally take control of their money but without a plan most of them never make progress they give up maybe you've been there too 2022 can be different

this year you can win with money by following the plan that has worked for millions of people it's called financial peace university that's where we'll teach you every detail about the plan yep you'll learn step by step how to save money pay off debt fast build wealth and give generously you can go through the class with other people or watch it online at home. Either way, Financial Peace University is available when you get your Ramsey Plus membership, and you can watch it as many times as you want at your convenience. You can join a class.

You can do it all online, however you want. Get control of your money, and you can actually start with a free trial at RamseySolutions.com. Start Financial Peace University with a free trial at RamseySolutions.com slash FPU. Start Financial Peace University with a free trial. RamseySolutions.com slash FPU. Heather is with us. Heather is in Winston-Salem, North Carolina.

Hi, Heather. Welcome to the Ramsey Show. Hi, Dave. I'm so excited to talk to you. Thank you for taking my call. Sure. What's up? Yes. So my husband and I are currently in Baby Step 6, and we need to do some home renovations.

And I'm just not really sure if we need to pause the Baby Steps to pile up cash or if we can continue with our Baby step journey while we're piling up cash. So I've tried to kind of find this answer on your website and just through other clips and things like that on YouTube. And the only thing I can seem to find is baby step 3B where people are saving up for a down payment on their home. So I just, I kind of just wanted some advice from you because I don't want to mess anything up. Sure. So how much are these home renovations going to cost? So we are anticipating, we had some quotes come in pre-COVID and we didn't feel good kind of moving forward pre-COVID because it was literally when the world was shutting down. So we got a little scared. And then of course, hindsight being what it is, had we known that, you know, building costs and things of that nature being what it is had we known that you know building costs and things of that nature were going to go up like they have we would have totally pulled the trigger

back in you know may of 2020 but needless to say we're figuring around right now quotes and things are coming in at around forty40,000. And what it is... What's your household income? Yeah, it's around $145,000 a year. Okay, so while you're doing baby steps four, five, and six, you're doing them simultaneously. Do you have kids you're saving for college? We do.

We have a set of twins who are four. Okay. How much are you putting away for their college? So not a lot right now okay and so are you putting your 15 away and maybe step four for retirement yes absolutely okay so when you save up the 40 000 it will effectively just lower how much you're paying down your mortgage for a little while right that is correct yes sir that's where you would do it. Okay, so just continue with the baby steps like we currently are, and just when we're doing the monthly budget.

It just slows baby step six because we're going to steal $40,000 from that what would have gone to paying off the mortgage, which is fine. I mean, if you're going to save up and buy a car, same thing. If you're going to save up and buy a couch or a vacation, same thing. Anything you consume beyond 15% of your income going into retirement, beyond your kids' college savings, is going to slow down your baby step six mathematically. Does that make sense?

Yeah, it does. It's just my nerd brain is really struggling with how long that's going to take. And I don't know why it feels like it's taking a long time. Well, how much are you paying extra on your mortgage? We typically have about an extra $1, two thousand dollars a month that we can save let's call that twenty four thousand dollars a year how long does it take to get forty thousand eighteen months yeah like a year and a half yeah i helped your nerd brain yeah it does it just you know i just need to hear you say it, I guess.

So let me ask you this. Can you break the – what I would do if I'm in your shoes is I would break the renovations into about two or three phases. So let me tell you what the renovations are. So we live in a small home. It's roughly 1,100 square feet. We bought it as a starter home back in 2010. We planned on having a baby in 2017 and ended up with two babies. So the twins are currently sharing a bedroom. So we're adding just some square footage so that the twins can actually have

their own bedroom. So it's not anything extravagant. What's your home worth? About $165,000. What do the homes in your neighborhood sell for? It depends. Do they sell for over $200,000? For homes similar to yours? Not this size, no. No, I mean, is there homes in, if I drive down your street, am I looking for a two hundred thousand dollar house no no move don't renovate you're about to overbuild the neighborhood i don't know well

no no no so even even if we only owe on it. I don't care what you owe. That's not part of the equation. The equation is you're going to spend $40,000, and you're going to have effectively $205,000 in a home. Nobody looks for $200,000 homes within three to five streets of you ever. No one thinks of that neighborhood as a $200,000 to $250,000 neighborhood. They think of it as a $150,000 to $200,000 neighborhood, and you're about to lose this money.

You need to just move. You've got a dinky house. Time to move up. You make plenty of money. You're in good shape. Okay. All right. That's what I needed to hear.

Does that make sense to you? Yeah, it makes total sense. Okay. Maybe that's why I've been wallowing with the idea, and maybe that's why we've been having a hard time with feeling like we're getting the money saved. Yeah, and so you don't even have to do the money save then all we're going to do is just put you on a 15-year fix where the payments are no more than a quarter of your take-home pay and you guys will have a great down payment with your equity so find something that

will fit your your family's needs uh but don't put 40 grand this renovation that's not going to roi for you that's just a bad idea. Good catch, George. Good catch. Okay. Yeah. All right. Thank you so much. I appreciate you both.

Thank you, darling. We appreciate you calling. Appreciate you letting me tell you directly how it works. Open phones at 888-825-5255. Ramsey, you're just more brutal than you used to be. Yeah, I was just short to the answer. Hey, life's short. We've got to be direct. Yeah, I've got to get the end. Hey, life's short. We got to be direct.

Yeah, I got to get there fast. Jimmy's in New York City. Hey, Jimmy, what is up in your world? Hey, Dave, how you doing? I'm going to be precise. I have $17,000 in savings to my name. I make $50,000 a year. Hold on to your seat.

My rent is $ hundred dollars a month my debt is zero you have five hundred dollar a month rent in new york city you live in a cardboard box i live in the bronx but um it's been in my family my father's been renting it that's it oh rent control yeah oh my gosh there. There you go. All right. So you make $50,000 and you have $17,000 saved and you're 49 years old. Yes. And your question is what? My question is what can I do to retire at least maybe not wealthy but comfortable?

Well, here's the thing. You've got no money in investments right now? You just have the $17,000 to your name in savings? Yes. Do you have a 401k at your job? Yes, but very little money is going in there. Well, you have no debt. It looks like an emergency fund with that $17,000, maybe more than you need.

And so you've got to start investing at least 15% of your income into that $4,100. Maybe you open up a Roth IRA and you max that out. But 15% of your income, which out of $50,000 is going to be, what, $7,500? Exactly. And obviously I want you to do more than that at 49 if you're hoping to retire in the next 15, 20 years. But are you looking to have a paid-for house house one day or are you going to keep renting uh my goal is to have a house one day but that's that's that's my real goal to have a house yeah yeah do you have a roth 401k available at work yeah i believe so yeah okay start talking to them about the options there if you've got good

mutual fund options to start that i'm with george let's put 15 of your income 7500 let's call it 9 000 even we can round up a little here into that uh per year and if you do that especially if they match you're going to be okay when you get to retirement in 10 years or so or 10 or 15 or 20 years rather this. This is The Ramsey Show. George Campbell Ramsey Personality is my co-host. In the lobby of Ramsey Solutions, on the debt-free stage, Mike and Sierra are with us. Hey, guys, how are you? Doing great, Dave. How are you? I am better than I deserve. Happy New Year.

How much debt did you guys pay off? Over $137,000. Woo! Where do you guys live? Pottstown, Pennsylvania. Which is near? An hour from Philadelphia. Ah, okay, cool. How long did it take you to pay off the $137,000? 30 months. Good. And your range of income during that time? $125,000 to $148,000. Cool. What do you guys do for a living? I do digital media marketing. And I'm an ESL teacher. Oh, very good. Very good. Good stuff.

All right. Fun. So what kind of debt was your $137,000? Well, the big one was student loan debt. We had a couple of cars in there. We had some electronics. We had a personal loan. But the big one was really the student loans.

How much did you owe on student loans? At one point, it was well over $100,000. Okay, wow. Yep. He still looks kind of heavy. At one point, it was so heavy. He still feels it. It was really heavy.

Sally May wore him out. It was gone, but it's gone now. I love it. It is gone. Yeah, so very, very cool. Very cool. So what are you guys 28 uh i'm 30 31 almost like i've done this before good okay yeah that's about where you should be

except now you're debt free what happened two and a half years ago you rocked this um so i know for me um having our first daughter um that sort of spearheaded it. And then in the beginning, we were sort of ish. And then it really like I wanted to eventually be able to stay home on a maternity leave with the girls at some point. Yeah, I mean, you know, we just weren't really working as a unit. So it was kind of like, oh, well, you know, you take care of all the house stuff, Mike, and I'll take care of all these bills over here, and we weren't really working as one.

So that was like— What sparked the conversation? What was it? We got to do something, and then the Ramsey name pops up. Well, we were in between churches at the time, and one of the churches that we attended was hosting the— An angel piece. Oh, okay.

And so then we decided to join that and we had had our first daughter and we were really paycheck to paycheck because we were just covering everything at the house and just covering the basic debt payments. And we were like, this is going to go on forever if we continue this way. Oh my gosh.

So you have the daughter and you go, these student loans are killing us. That debt is killing us. There's got to continue this way. So you have the daughter and you go, these student loans are killing us. The debt is killing us. There's got to be another way. Let's try this Ramsey thing and see how it works. And it worked. Yes, it did. So Financial Peace University, you're in the class. You were really ready. So you go in the class the first night.

How long did it take before you thought, I think I might be able to do this? Well, I mean, for a while, because we were first digging out, it seemed like it was going to take a while. I think for us, what happened was we ended up having our second, and so we kind of had to push pause on everything for a little bit, and it was kind of after Sierra came home, everybody was healthy, and we kind of took a look at the numbers, and we said, okay, you know, let's push play.

Let's do this. Now we got to go. Game on. Ready, set, boom. Yep. Come out of the blocks hard then. Yep. We said we got to get it done before we have another one, and we actually have another one coming.

All right. You made it. We made it. All right. Party on. Very cool. So what made you guys go, you know what, We're not going to wait on student loan forgiveness? Because most people are your age.

They're thinking that. They're going, well, I don't want to pay it off. I mean, they paused and student loan forgiveness might happen. What made you guys go, no, we're going to take control? So I know most of the student loans were from mine. And just hearing other stories about how student loan forgiveness didn't always work the way that it was said to work. We didn't want to chance anything. So we were like, we want to get this done.

We want to get this over with. We don't want to have to continue with payments as the girls get older. We want to be able to be free, spend time with them, take them on vacations, do things with them, saving for their college so that they didn't have to go through having quite so much debt like I did. That really spirited. We wanted to get it done fast, as fast as we could. Very good. While they were little. What do you tell people the key to getting out of debt is?

Well, I think the big thing is working together, focusing in on your budget, really honing in, and just remembering that the budget isn't your enemy, even though you might think it is. It's the permission to spend your money where it needs to be spent. And I think also doing the work. I know both of us, like I worked two jobs while I was pregnant. He worked multiple jobs, so we both took on extra jobs to increase our finances.

But we had to find a way that fit for us. So when I was working too, that didn't really quite work because then I, you know, we had our second and I sort of needed to be with the girls more then. So then that's when he took on the second. So we sort of balanced it out by working together. Yeah. And I think just, you know, working with your side hustles, you just got to find the right formula. And, you know, we ended up finding the right formula for us. And it also helped that they put pause on the interest on this. Yeah, that helped. That accelerated it for you. So what was your most lucrative side hustle? Probably the Domino's. I was delivering Domino's about four

nights a week. What were you making a night or a four-night week? What would you make? Four-night week, at least like $400, sometimes $500 in the beginning. So it started, you know, during the pandemic. We had Ensley. She came three weeks early. And then on her due date, literally everything shut down. Of course. And then, you know, kind of when we were sitting and then we decided to get pizza.

And I'd been listening to the podcast a lot. And for some reason, I just kept hearing, deliver the pizzas, deliver the pizzas. And I said, okay, let's do this. And I started delivering pizzas four nights a week. Wow. So, yeah yeah that's a lot of sacrifice with babies at home littles at home and a pregnant wife at home and that kind of stuff yeah you feel like now when you look back it was worth it oh absolutely absolutely

so if you had to do it again to be free it's worth it for sure because the freedom feeling is everything yes yeah and while they're little they you know they got to spend extra time with their grandparents and that and now we really get they got to spend extra time with their grandparents and that. And now we really get to spend all that extra time with them as they grow up and they enter school and that. And the big thing for us too was we actually finished two weeks shy of our five year wedding anniversary. So it was really cool.

You know, we were looking at the numbers and it was like, I think we might be able to do this before our our anniversary yeah and sure enough two weeks before we made that final payment and they were gone i love that's incredible well congratulations guys we're proud of you thank you heroes you took control of your life it's empowering isn't it oh absolutely yes you feel powerful you feel like you can do stuff yes you did stuff that's where that comes from i like it very very well done well we've got a copy of the new book baby steps millionaires for you that'll be your next chapter for sure to go on and be millionaires let's bring the kiddos in what are their names and ages czar is four and ensley is about 22 months all right very cool with the matching dresses. Cute kiddos.

I love it. Very well done. Good stuff. All right, guys. Way to go. Excellent, excellent work. Mike and Sierra, Zara and Inslee from the Philadelphia, Pennsylvania area, $137,000 paid off in 30 months, making $125,000 to $148,000. Count it down.

Let's hear a debt-free scream three two one man love it it's amazing what happens when you have a big enough why and you're not afraid to do the work. And, you know, when we had this presentation at Staff Meeting this morning, the team is really checking the data points on people that win. The number of people that get out of debt that are working extra jobs temporarily, that have temporarily stopped their retirement investing, and that used any savings that they had that was non-retirement, any wealth that they had that was non-retirement,

any wealth that they had that was non-retirement to get out of debt, down to that $1,000. In other words, they're working our plan. Those are three key components of working our plan while you're in baby steps one through three. It increases their probability of actually getting out of debt and the speed at which they get out of debt dramatically. We're starting to collect data that is showing this on all the hundreds of thousands of people we work with on an ongoing basis. This is The Ramsey Show. Thank you. George Campbell Ramsey Personality is my co-host today. This is The Ramsey Show. my co-host today. This is the Ramsey Show.

Thank you for joining us. We talk about your life, your work, your relationships, your money, you. It's all about you. The phone number is 888-825-5225. Matt is in Kansas City. Hi, Matt. Welcome to the Ramsey Show. Hey, Dave.

Thanks for taking my call. Hi, George, as well. Hey, sure sure what's up so i've been a public school teacher for 28 years and over the last few years i've really felt unsettled in my current job and really feel that our kids especially uh teams including my own son need to be better equipped in their spiritual walk with god and so i feel feel like God is calling me to start a Christian private school in our area to better equip our kids in their faith. And so a couple questions that I have for you is,

if this is something that truly God wants me to do, what advice do you have in getting something set up? And two, is this feasible to get something like this started, like, say, in the coming fall? Well, I mean, basically this is a how do I start a business question. Kind of, yeah. Your motivation is not business and profit, but this is how do I start an endeavor and I'm a school teacher. Right. Because it's not about teaching right now in terms of the question you're asking me.

This is about starting and running a school, which is a business operation. The teaching is the thing that occurs after you get everything else done. Agreed? Yes, absolutely. So if you were going to come to Entrez Leadership and ask me this question, which you can do and you can ask here on the air, Yes, absolutely. we would be starting at the same place and the first thing i'm going to do is find as many people doing a similar thing successfully that i want to do and i'm going to try to go spend a day with them if they'll let me okay take a vacation day and um you know if there's one in st louis drive over there if there's one in tacoma uh or not tacoma i'm sorry if there's one in St. Louis, drive over there. If there's one in Tacoma, or not Tacoma, I'm sorry.

If there's one in Oklahoma City, drive down there. I'm trying to think of stuff in your area, okay? Or whatever, I don't care. Jeff City, right? I don't care. Whatever you can find in your immediate area. Who's somebody doing something like you want to do and go observe, listen, take a yellow pad, ask 5, 5 000 questions how would you do it what

were the things you didn't see coming uh what are the greatest rewards uh how you know if you had it to do over what would you do different uh uh how did you do your pricing? How did you get the clients? I mean, how did you get the first students, the parents that paid you? I'm aware vaguely of some small micro schools that are a handful of kids, you know, 50 kids and that kind of thing, that are taught classically and they're taught uh with a christian perspective and with a similar motivation to what's driving you to do this uh and so you're you know you're it's not like you have to open something with 500 kids the first year are you going to do that by fall the answer is no you're not right yeah we were kind of kind of thinking

that if we could start with you know 20 or 30 kids and maybe do, like, a few grades, like middle school and high school. Yeah. How you going to get your curriculum? What curriculum are you going to offer? How you get your certifications that are necessary with the state? What benchmarks are necessary with the state to make you continue to make you legal? What guidelines have they got to meet? Have they got testing at your state level to to to you know maintain your certs uh and i'm making every bit

of this up right sitting right here i have no idea what i'm doing but i've got to go figure all that out um because it's not about what you teach in the classroom and it's not about your spiritual calling those two things are given well You're an expert on those things. You won't have a deficit on those. Where you will have deficit is in how to run and start this business because you don't know squat about it, and I don't either. George, have you ever done this? Not quite, but I just keep going back to two things. Start small and do it with cash, and that may not be this fall.

But you've got to start dreaming about what do I want this to be? Am I okay with this being 20 kids for now? And if so, I need to start gathering interest. Are there people in my neighborhood and local Facebook group who would be interested in sending their kid to this and how much are they willing to pay? And so find out what the going rate would be. Can you sustain an income off of that? I would write down all of these questions and do all of the research, meet with all the people and start to get some answers on this and move forward you got to build a business model from facts and what we're doing when we study these other existing schools is studying what we call best practices okay in business if i want to learn how to do uh a um a digital offering of whatever i uh do a podcast.

I go talk to people that are doing successful podcasts. I visit them. I ask how they're doing their podcast. I ask them how they're doing their marketing, what length they're doing, what they're charging for their ads, how much viewership or listenership they've got. You know, I'm going to learn everything I can about it from some people that are successful already doing it, and then I come back and start my podcast. I don't just wake up one morning and say now i are a podcaster there are people that do that but that's not

the proper way to start and run a new idea right do you do you think you you would have to set up like as a 501c3 as a non-profit once you kind of got your ducks in a row do you think that would be the route to go i have done that and that takes about six months, maybe longer in the COVID environment. Because the IRS, not like they ever worked a lot anyway, but now they really don't work. So everything's running slow. And so if you're going to have outside donations other than tuition paid for services given, if you've got tuition paid for services given, you don't have to have 501c3 for that. Gotcha. Okay.

But outside donations that are tax-deductible, the tuition is not tax-deductible at a Christian school because you're buying tuition. It's not a donation. It's not a charitable donation. you're buying tuition it's not a it's not a donation it's not a charitable donation you're buying something there's goods and services offered for money and that's so the parents you don't need it for a tax deduction that's the only thing 501 c3 gives you is the ability for the a donor to have a tax deduction so but yeah you need to get started on that yesterday and that takes a while and that's not that hard hard. You can get in touch with one of our tax ELPs. They can work you through the paperwork and get that application made.

I'd probably go and get that done. Just make up your name that you want it to be. You don't even have to have the name of the school be in that, but just take your best guess at it, get that rolling. But then you've got to decide where your money is coming from. Are you going to charge enough tuition to operate the thing? Yeah, it would be pretty self-sufficient i mean we would there's a couple other families that we've kind of talked about doing this with as well but yeah we would be able to put in some but it would be pretty much you know the tuition that we would bring in you're not going to look

for outside donors to support the dream well that's something we're going to talk with the people in our congregation at church maybe about and just have them pray over it and see if maybe god's moving them to kind of help it as well okay that would be cool for seed money to get started that's not cool as your long-term business model if your long-term business model is going to be raising funds from the outside, it cannot be based on one congregation's prayers. Right. You need a bigger bowl that you're fishing in than that. So you need to have a model in your mind that we're going to go to other congregations

and show them the dream in the area, show them what we're doing, and ask other people to pray about it as well, and you're in the fundraising business then as well as the school operation business and there's nothing wrong with that but if the if the only way you stay open 10 years from now is your current congregation is is propping you up still you're probably going to struggle may not make it yeah no that makes that makes sense absolutely so it's okay for seed money if a couple of your big guys in that congregation want to get you out of the boat and get you swimming, that's good. I'm okay with that. But you'll drown out there if you just lean on one.

So you decide, okay, 80% of our money is going to be from operational tuition, and 20% is going to be from donations, and that means we need to raise X per year, and that means we need to talk to however many fundraisers, how many things that we're going to do to raise that money. You can get all those numbers. I'm making all that up on the spot. I don't know. But you're just developing a business model here because a nonprofit is a business. It is a business.

Nonprofits that don't make a profit go out of business. They all make a profit. It's just a tax and accounting issue. That's all it is. And it's no more holy or less holy than a for-profit business either. This is The Ramsey Show. Hey, it's Kelly, associate producer and phone screener for The Ramsey Show. If you would like to do your debt-free scream live on the show,

make sure you visit theramseyshow.com and register. We would love for you to come to Nashville and tell Dave your story.