The Ramsey Show - App - The Home We're About To Close on Got Flooded! (Hour 1)

Episode Date: May 4, 2021

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it's the Ramsey Show, where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. I'm Dave Ramsey, your host, Anthony O'Neill, Ramsey personality, number one best-selling author of the book Debt-Free Degree, is my co-host today. We'll be taking your questions about your life and your money. The call is free, and some say the advice is worth what you pay for it. The phone number, 888-825-5225. That's 888-825-5225.

Stephan is with us in Hudson, Wisconsin. Hi, Stephan. How are you? Hey, Dave Ramsey. How are you guys? Great, man. What's up? Not much.

I just started listening to you guys, both of you, actually, back in early March. Me and my fiance are both working on baby steps. We're in baby step two. So our question is, we get married next May, and we're trying to figure out how to save that money for that or if we should start finding our expenses and using that as part of the snowball because we want to basically cash for our wedding. That's smart.

Very smart. Congratulations. Next May, so a year from now. That's correct. Yep. Okay, cool. How much debt do you all have in Baby Step 2? Or how much debt do you have and how much debt does she have?

Yeah, I'm about $45,000 and she's just under $40,000. We've already paid off $10,000 total between the two of us so far since March. Good. Okay. You're making some progress then. And on that schedule, you'll be debt-free almost by the time you get there, right? Yeah, that's what we're really trying to do. We just know that we have that coming up, and we want to make sure we're not adding more debt.

Yeah, absolutely. So what's your income and her income? I'm about $60,000, and she's about $50,000. Okay. So what are your income and her income? I'm about 60, and she's about 50. Okay. So what are you two thinking you should spend? Well, we've already got most of the area started. We're getting married in Montana. We were able to save some money by getting married at a friend's house,

and we've already got a few of the more expensive items already paid for. Now it's just the finalizing food, the catering side of things. So I'm figuring between five and ten remaining to pay. Remaining? How much have you spent already? About $3,000. And so what is she thinking? We're pretty much on the same page of that it's

our our more of our concern is food because catering can get ridiculously expensive really really quick well yeah i mean we've done some done some big ramsey weddings and we like a big party and i can tell you from experience the reception is the big ticket item it's the most expensive part of the whole puppy like all like all of it's there and so um uh just about i mean compared percentage wise so um correct so you're you know i think the thing is you set your budget and then the food conforms to your budget you don't set your food and then make up your budget yeah okay yeah okay that's fair that sounds good like you do with anything else you don't say i'm I'm going to go car shopping and then figure out what I'm going to spend. You go, I'm going to figure out what I spend, and then based on that, I'm going to know which car lot to be on. Yeah.

And then also, too, I mean, I don't want to kill the wedding dreams, and Dave may disagree with this one, but, you know, I think you and your wife need to sit down and figure out what's your priorities. Is it going into this marriage debt-free? Is that a priority? Or is it like, Hey, let's eliminate some of the debt and have a real good wedding and then attack the debt.

When we get out of it. I think you two sit down and have that conversation. But in my personal opinion, I love the concept of paying off as much debt and having a good wedding. My sister got married with no debt and they had about a $5,000 wedding and was beautiful at a mansion outside but the majority of the money was for the food but it was a reception and wedding all in one so have the conversation uh but i would definitely figure out what are the priorities and stick to the priorities going into the wedding yeah i think based on that i i don't disagree with him i I would just say 10 is your limit.

Yeah, I like it. I like that. 10 doesn't feel completely out of control making 110. Right. You're going to get to, between the two of you, you're going to get to the debt pretty quickly. If you said 20, I probably would be dialing you back down. Yeah. You know, if I were in, you know, the way we're talking this through, Stephan, is what we would do if we woke up in your shoes.

It's not a, there's not like one's smart and one's dumb. But, you know, so the main thing I'm wanting is to make sure that the two of you really are in agreement on this because I can tell you this. As soon as you start shopping the items, and you've already discovered this with some of the things, and that's why you've made some of the choices you've already made, the sky's the limit on what you can spend. Correct.

And so if you don't have boundaries before you start shopping, you're going to really end up going, yeah, well, we could do a little more. Yeah. Right. Yeah. Well, I appreciate it. Yeah. And here's what I love, Dave.

When you set boundaries, you'll find what you want inside of those boundaries. Yeah, yeah. But you won't if you don't. Exactly. Yeah, you'll get scope creep. Yeah. You know, on this thing, the scope of it will creep up, and all of a sudden you're going, that $20,000 car drives better than that $10,000 car.

I'm just saying. And if you don't, this is how people impulse. And he's not. Yeah. Because what he's doing is, you can tell by the way he's asking the questions. It's very thoughtful. Right. Very intentional.

There wasn't a flightiness about it. There wasn't a, you know, an immaturity about it. Love it. So I think he's going to be real good. But yeah. So I'm in agreement with, and Anthony's grudgingly in agreement with your dollar amount. Yeah. Ten thousand.

He's trying to cut you back to $5,000. I am. But somewhere in that range is going to be about right. And don't let it creep up to $12,000. But see, here's why I said $5,000, though, Dave, because it's going to creep up to $10,000. And your $10,000 is going to creep up to $13,000. No, it's not if it's me. There's a lot of stuff I do, but when I set the budget, that's, that's the deal.

Trust me, that's the deal. I know, man. Yeah, it's, it's a problem. You know, because, you know, and I think that's a great question because it does help us jump off into even a bigger subject. Anything having to do with the subject of money, 90% of the people lose with their finances because they don't tell it what to do. It happens to them instead of them being intentional and happening to it. Right.

So when you get a guy like Stephan asking the question, and he's already put thought into the process, he is happening proactively to the situation he's not a victim of my wife my my fiancee and her mother are driving us off a cliff with what they're spending yeah and we're in a reality show he's not a victim yeah you know everybody's being a grown-up and is on the same page and this is when boundaries actually you know our budgets with amounts actually work and they cause you to become wealthy over time. Absolutely. And, David, we just did a study and released it here yesterday.

We found that nearly 6 out of 10 people in America do not even budget right now. And so they're frustrated. And another 10% of them lie. So it's probably 7 or 8 out of 10. Probably so. You know. Probably so. That's, I mean, it's just, you know, people, because, listen, here's the thing.

If you don't do things on purpose to win, you almost never win. Yes, sir. Winning is not an accidental act. Yes. It's an act of intentionality. Yes, sir. And that's true of every part of our lives. And it's the biggest thing, if we can get you to do this with money, is just be going,

I'm going to make it behave. It's not going to tell me what to do. and I'm not going to wander into chaos and then wonder how I got there. So good. This is the Ramsey Show. In today's world, technology and innovation are crucial for any company's success. But the primary focus should always be on you and meeting your needs. That's why you get the best of both with Zander Insurance and their term life plans. Zander uses time-saving technology like over-the-phone applications, voice or electronic signature, text message updates, electronic policy delivery, and even plans with no medical exams to speed up the process of getting you the protection your family needs.

One of the reasons I've endorsed Zander for 20 years is they never skimp on service. They are committed to serving you, whether you want to do business online or need that personal touch. You pick your path. Go to Zander.com or call 800-356-4282. Zander will guide you through the whole thing, keep it simple, and find you the best rates. That's Zander.com or 800-356-4282. Anthony O'Neill, Ramsey personality, number one best-selling author and host of The Table on YouTube. And as a podcast, be sure and check out The Table. There are lots of interesting people coming to The Table to have a conversation with Anthony. And be sure you tune into that.

Check it out. Our phone number here is 888-825-5225. If you're tired of feeling stuck with your money like you'll never get out of debt or you'll never be able to save, it doesn't have to be that way. You can make progress with money and faster than you think. But the only way to make it happen is with a budget. And that's why you need a Ramsey Plus membership. You'll get access to the premium version of our Every Dollar Budgeting app, where you plan out every dollar you'll ever spend before the month begins.

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To start your free trial at Ramsey Plus, text TRIAL to 33-789. Text TRIAL to 33-789. Alex is in Los Angeles. Hi, Alex. Welcome to the Ramsey Show. Hi, dave it's an honor to talk to you i appreciate you taking my call sure what's up so i'm just looking for some general advice here on starting an e-commerce business specifically white labeling products on amazon and i'll just give you a little background on my situation so So I currently run an auto detailing business, but I broke my foot.

And I luckily just finished Baby Step 3. And this month, I'm able to get by without dipping into my emergency fund and still having a little bit of money to invest in Amazon. And I'm allocating exactly $1,000 to get this business going. And I do have good guidance around me I have some mentors therapists Facebook group you know I definitely have good guidance around me but really I'm just wondering if there's any general advice you can lend me to you know so I can have my best chance at succeeding so what is it where did you discover the idea of doing this about a year ago i actually stumbled across a youtube video that uh it was marketing a software

and uh the guy that makes the software was you know just talking about the amazon experience and what it really entails and it really interested me so i've actually it wasn't just because i broke my foot i wanted to get it started i've been wanting to do this for a while with that guy's software yes so he sold you a business idea um well it's this so the software is something you, you do the product research and you do accounting and it helps you run the business. Um, but really what sold me was, you know, him talking culture of this, you know, his company and the software and, you know, the Facebook group that I'm involved in also is a group of people that are, you know, they also use that software too. But there's just, you know, different Amazon sellers on there. And so, but yeah, I mean, i can't really pinpoint exactly you know anything

that sold me on it it just sounded like uh it was just an opportunity i got excited about once he started explaining it in the you know in the youtube video okay well um is white labeling on amazon real is Is dropshipping on eBay real? Yes, they're real. There are real ways to do that. But more people make money doing what he's doing than what you're talking about doing. Right. Right, yeah.

And so I worry about how you got into this and what it's really led you to uh it's not to say the whole concept is invalid uh but uh you know i i would not end up i would not want to end up paying him more than you are making and you're really going to be close to that if you're not careful so uh and here's what's happening is you found a concept and now you're backing into it. And really, the only passion you have for this is making money. Yeah. You've already paid him more, Alex? I'm sorry. What did you say, Anthony?

You already paid him more. So basically, what I paid for was the subscription for the software. And he sells a curriculum that I had bought a year ago and you have lifetime access to the curriculum that teaches you the ins and outs, like A to Z, what it takes to do it. And so I already paid a year ago for the curriculum and then it's a yearly subscription for the software.

Yeah. Well, here's the thing. I am not an expert on white labeling on Amazon. I mean, we sell a ton of product on all kinds of web-based things, and Amazon's one of them. So our marketing team does a lot of products so we don't need to but the uh um but their products we're passionate about and so forth and uh so so what i would tell the only thing i can counsel you to do is is this smells like a get rich quick business in a box thing that somebody has promised you a bunch of stuff and it just scares me the way it feels i'm not 100 hundred percent set to where i'm ready to just slam my fist down the table and go you've been had uh but but i'm worried about

you uh and so if i'm in your shoes based on that if i get that feeling and i'm in a situation what do i do i get some more information yes about this and i'm not anthony i don't know enough about the actual subject to advise you. But what I can advise you is the life and business acumen part of this is you need some input from someone outside of people dealing with this guy. Yeah. You need to find someone outside of this guy. I was hopeful when you said the Facebook group that it wasn't his Facebook group. But it's his Facebook group.

It's his stuff, yeah. So you're not got anybody outside of this guy and his influence that's telling you that this can be done and telling you where the holes are and the upside is and the downside is the pros and cons of what you're looking at doing. So you need to get with some e-commerce people that know more than I know, but also are are not in his camp and that's before you give him another dime yeah absolutely uh um yeah we need to go make some money now so uh yeah so i'll tell you what alex let me tell you what this lines up with the reason i'm when i was your age, I went to a weekend or to a one-night seminar on how to get rich in real estate. And this guy, it was $25. It wasn't free. And their main pitch at that seminar was not how to do real estate.

Their main pitch was that everybody's doing it. It can be done. And for $3,000 this weekend at our boot camp, we will show you how to do it. And then when you went to the boot camp, I didn't go, but I know the guy that was running it. Years later, I got to know him. And basically what he sold was, when you went to the boot camp, the next thing they sold you was, well, get in, subscribe to our thing, and when you find a property, we will buy it. And we'll get in our subscribe to our thing and when you find a property we will buy it and we'll go in partners with you and uh and but you have to cut us in and so it just kept going

on going and going and going in layers instead of ever really just saying hey i'm gonna learn how to buy foreclosure real estate and i'm gonna go do it right which is actually what i ended up doing right uh aside from this but and the guy got me started, to his credit. Like, this guy could get you started, Alex, in e-commerce or white label with Amazon. That are very real things. Buying foreclosure real estate is a very real thing. And running it through that system where I pay $25 to get to pay $3,000 to get to bring him in on all my deals. Yeah.

That I find for him. Yeah. And he puts up the money, ha-ha, which never really happened. It never did? I never found anybody who ever did a deal. Wow. I know lots of people went to the boot camp, and lots of people signed up, but I never found anybody who actually got the guy to put money into it. Wow.

And, you know, and then later on, and nothing down real estate, he went broke, like I did. I went broke, too. Both of us went broke. So the thing is, you need to get something other than this guy's system, because this feels kind of like that. I don't know if that makes sense or not. I'm not saying the guy's bad, but it just feels like that. Anthony O'Neill, Ramsey Personality, is my co-host today here on The Ramsey Show. Open phones at 888-825-5225.

Andrew is in Fort Collins, Colorado. Hi, Andrew. How are you? Doing well. Thanks for taking my call, guys. Really appreciate it. Sure. What's up? So, my new family and I are looking to close on our very first home at the end of may in nebraska we're relocating to a more affordable area and to be closer to in-laws however we got a call from our realtor yesterday saying that the home now has three feet of flood water in the basement so what we're trying to do is just get some perspective.

Like we're trying to figure out, is this a blessing to say, hey, you know what? This wasn't meant to be. Like we should back out of it. We may have to negotiate with some costs that we talked about with the seller prior to moving in. You know, if we exit, but there may be some homes in the area. It's not as hot of a market as some of the other areas that we were looking at. Or B, is this something that, you know, it's a chance to renegotiate the cost with the seller and, or is this just going to be this a mountain of work ahead of us with three feet of flood water?

I just, I don't know. You know, we're You know, it kind of just threw us for a loop because we had a crazy 2020, and we were like, you know what, we're going to be settled. We know we're going to be. It's our first home. Got this nine-month-old, and we're out of the state, but now we get this thrown at us. We're like, okay, we just really want to think with objective opinions and just what's the best decision to go forth on this.

So is the property in a floodplain? You know, it's in a low-risk area, and it's never really had anything happen to it before. It really surprised everyone, and our realtor is getting more information. There is a federal floodplain. Right. Is it in a floodplain it's technically not it's a three out of ten score on the fema risk that's the best information that i could find um and our realtor said no it's not and she seems to think that they've been doing some paving and like redoing of the roads in that neighborhood

and it may have changed the flow of water and it could have just been this freak thing that happened to this home and like one or two others but we just don't know whether it's a freak thing or not you know now it's on the history of this has been flooded and you know we wonder if it's even worth staying in or maybe it's just a free thing and it's an opportunity. We just don't know. You are brand new married. You have a nine-month-old, and it's your very first home purchase. You don't need this.

Absolutely not. Right. I'm getting out of it, man. Right. Right. Now you said – I think it's just that – It's just a house deal. Yeah, it is. It's just a house deal, and the house flooded, and they lost their buyer. That you said. I think it's just that. It's just a house deal.

Yeah, it is. It's just a house deal and the house flooded and they lost their buyer. That's it. Now you said you may lose some money. What money will you lose? Well, it's not much. So, you know, they didn't have a radon system installed and we talked with the seller and said, hey, you know, if we, you know, end up going with this home, we'd love to have a radon system installed. They said, sure. You know, we decided to pay that up. They were going to give us a credit at closing, which is about $2,200, and the radon system's

only $1,600, and we said, yeah, we'd pay for that, you know, now, and then we'd get that money back at closing. We're just, you know, wondering, will we have to eat that cost? Yeah, you'll have to eat that cost. You lost that money. And the lesson you learned is you don't put systems in other people's houses. Right. You shouldn't have done it that way. They should have done it, period, if they wanted to do the deal. Got it.

Okay, good to know. If you wanted it that bad. But, yeah, that's your lesson learned here. But, you know, they've got a flooded house with a new radon system in it. Bless their hearts. Yeah. It's just a crazy market. It doesn't matter.

Yeah. It doesn't matter. Your life is already crazy. You're moving. You have a nine-month-old and a new marriage. The last thing you need is a flooded basement, man. Absolutely, man. Yeah, that's a reach. That was kind of my instinct is a flooded basement, man. Absolutely, man. Yeah, absolutely.

That was kind of my instinct. I just kind of needed to hear that objective. Five years from today, you'll be glad you did not insert this hassle and mess and cleanup and potential future problems into your life while you have all these other things on your plate that are much more important. Right. Even if you rent for a year. Whoop-de-doop-dee.

Right. Right. Yeah. Because they were saying, you know, maybe we'll lower the cost significantly. It's not about the cost. It's about you're about to give up a huge chunk of your life in an already chaotic life. It's about peace, man. Yeah.

You want peace, right? You need peace. Yeah. Right now. If you call me up and said, I want to build, man. Yeah. You want peace, right? You need peace. Yeah. Right now. If you call me up and said, I want to build a house. Yeah. I would tell you, don't build a house for your first home. Don't build a house in your first year of marriage.

And don't build a house with a nine-month-old. This is a good way to get a divorce. You know? But why? It's peace. It doesn't mean building a house is a bad idea. It means in your situation, you are asking for crap you're asking for trouble man and just don't do that i wouldn't do it yeah andrew i would just call you real to say let's

get out of the deal asap yeah just end it man i'm sorry and start fresh and go look for something that's not in a floodplain yeah or not a three out of ten on the FEMA risk, even. All right. Alyssa is with us in Oklahoma City. Hi, Alyssa. How are you? I'm good. Hi, guys. I have a quick question. My husband and I just finished Baby Step 2 March 20th, and we are on Baby Step 3, but

we are having a military move coming up in July, so we're kind of putting that on pause for now. But my question recently came to me with an idea of his is to sell his truck that we just paid off and downgrade, quote unquote, to about a $10,000 less vehicle. And I want to make the right decision. Why? That's where i'm one he says gas mileage and it just it's not a truck because you have a truck and so he wanted to downgrade to an suv um what kind of truck is it why uh

this is where i'm kind of worried suv is SUV from a truck is not a gas mileage move. Yeah. Yeah. Yeah, so it's a 2018 Silverado, and he was looking at a RAV4 Toyota. So I don't know. No, that probably would change gas mileage. Yeah, I was about to say that. How much does he drive?

Right now we live, he's a drill serge sergeant so we're very close to where he works um but when we move it'll be maybe a 30 minute drive um one way um i was not sure is he trying to use this extra money to put inside of baby step three is that what he's trying to do yeah if we pocketed the 10 000,000 difference, from my understanding, it would go to our fully funded market. We'd be done with baby sensory. So you're like Dave. You must really like the truck, huh?

It's my husband. It's not me. But I think he really liked the truck, and now I'm kind of thinking it's a monkey wrench because we just paid it off and kept with it and now he's talking about downgrading i don't know if he says it's because he's seeing the big picture and i just i don't want to just make a decision very quickly and i don't know if it's silly to downgrade or just keep it i don't know if it's silly to keep a truck as well when he says

he's seeing the big picture what is he gaining by selling the truck? $10,000 in the baby step three? That's the big picture move? That's what he's wanting to accomplish? Pretty much. And he values that more than he does this truck over a RAV4? I'm not sure. Well, that must be why he's wanting to do this, unless there's some other reason he wants to do it.

Yeah, I think he just wants a downgrade is what I'm saying. I know, but there's nobody vaguely wants to downgrade. I mean, there's a reason. Absolutely. Especially once y'all just paid it off. How much do y'all make a year? I vaguely want to upgrade. I don't vaguely want to downgrade.

Aliza, how much do y'all make a year? Yeah, how much do y'all make a year? Take home is around $47 a year. Yeah, you need a downgrade. He's been actually listening to what we teach. You have a truck that's too expensive. Yeah. Yeah, that's what he's seeing.

Yeah, you've got too much tied up and things going down in value. Okay. I'm assuming that that's what's happening, is that he's a little more plugged into what we're talking about and teaching than maybe you are. Because we tell people not to have more than half of their income tied up in vehicles, and you probably do. Absolutely. So, yeah, I think that's probably smart.

He's right. Anthony O'Neill, Ramsey personality, is my co-host today. Open phone is 888-825-5225. Nancy's with us in Birmingham. Hi, Nancy. Welcome to the Ramsey Show. Hi, Dave. Thank you for helping us be better stewards of God's money. Well, thank you.

I'm calling. No, thanks. I'm calling today with a question about what you would recommend for the amount of an umbrella policy to protect your nest egg. We do have two kids on our auto policy. We are everyday millionaires, and we just want to make sure that we're making a wise decision as far as total coverage. I'd pick up another million as an umbrella policy. You can do that for usually $250, $300 a year. Okay.

And just check with your property and casualty insurance provider, whoever's got your homeowners and car would be probably the least expensive way to get it. And what that does is it attaches to the top of, adds to the liability limits on your homeowners or your car. So those things stay in place plus a million is what the million-dollar umbrella does. Because as soon as someone discovers, if you're in a car wreck and someone discovers that you have some money, you have a target on your butt. Yeah.

Yeah, well, that's what I'm worried about. So it's not based on how much your nest egg is? No. I mean, you know, I have had a million dollar. I had a five million and I got a ten million now, which nowhere near is sufficient, you know, if you want to go the size of my net worth. It's not even close. But basically what I'm buying there is lawyers because the insurance company is not going to pay out 10 million. And so they're going to fight to the death with someone that unless there's a true liability, unless their client me has truly posed a liability.

But if there's just somebody that's trying to be in some ambulance chasing lawyer, so to speak, that's just they're trying to get money quick and easy out of somebody then they're not getting it out of me okay so we have two million currently do you think that's enough then as an umbrella one yeah oh good yeah that's fine well what's your net worth uh about four million yeah you're fine you're fine because here's the thing that you're not going to lose a lawsuit uh the law the light the likelihood of you losing a five million dollar lawsuit and not losing a two million dollar lawsuit is zero okay so if you lose the two million you know the insurance company is going to fight it and if but if you do something that's completely negligent and you know you're completely out of control or something uh and you cause a wrongful death due to head-on DUI or something like that, then, you know, you're going to lose your stuff and no amount of insurance in the world is going to take care of that.

Okay. But if you're just – the main thing I'm after here is somebody bumps into you or you bump into somebody and they try to act like it's something that it's not not not a legit or even a small claim that was uh you know say a half million dollar claim or something like that you wouldn't want to absorb that for no more than you paid for the two million but a 50 million dollar claim this is not going to help you with that. Right. That's my point. Well, okay. I mean, if your kid gets drunk and hits a car full of people and kills eight people and there's a $50 million claim on you for wrongful death on your kid or whatever,

then you've got other issues that an umbrella is not going to solve. Right. Okay. So this is for the smaller or the medium-sized ones, the uber-small. $10,000, you probably got that as a deductible, you know, so you're going to take care of that anyway. So what did you pay for the $2 million umbrella? We pay, I think, $600 a year.

That's about right. Okay, good. I hadn't priced a $2 million in a long time, so that's good. Who's it with, you want to say? State Farm. Okay. Good. That's a very good price. You're not getting ripped off

and you're not overpaying by double or something like that. That's not a bad price at all on a $2 million umbrella. So, good. Hey, thanks for the call. Open phones at 888-825-5225. So, Anthony, one of the things we teach around here is that once you start to build wealth, you hit that baby steps millionaire, everyday millionaire status,

you've got your million-dollar net worth, you start having to do things to get rid of the risk. Yeah. You've got to play defense and offense. Yeah. And defense includes extra insurance. Offense includes high deductibles, which keeps the extra insurance cheaper. Yes.

Yeah. Yeah. Yeah. Yeah. And if you start buying other things, like you start buying some real estate or something, maybe you put that in other names. Other names. Meaning open LLCs, which is you start buying some real estate or something, maybe you put that in other names. Other names. Meaning LLCs, which is what I have my real estate in, and those sorts of things.

And, you know, it's called just risk management at that point. You're managing risk, spreading it around so that the target on any one of these things is small enough that it's less attractive for some attorney to spend all their life trying to get your money. Trying to get your money. Yeah, absolutely. Now, let's say, Dave, why would you say, because this is some of the questions that I get from younger people, well, why not an LLC? Why not go get an S-Corp? Well, holding real estate in an S-Corp, you can't do. It won't work from a tax standpoint.

They're about the same thing if you're running a business. They're very similar. The LLC in some states is easier to operate. But for holding real estate, you can't hold passive income like real estate income. You can't hold rental in an S-corp. It has to be active income like you're running a business. And rental properties, different classification of business. So you put your real estate into an LLC.

This company, Ramsey, is the Lampo Group is the formal name, was an S-Corp originally. Technically still is an S-Corp, but we rolled it into an LLC because of Tennessee's tax status. Oh. They tax LLCs differently than S-Corps, and it keeps us from being taxed. Wow. Because Tennessee does not have an income tax. Exactly. Yeah, but on the S-Corp, we were getting into all these other side-angle taxes and stuff,

and we had to move away from that. But on the federal level, it's exactly the same. Wow. It's passed through to your personal on a federal level. I just learned something. But from state to state, you do that. And so I've had this company started as a sole proprietorship, just my name, my social security number, moved it to an S-Corp, and then later have wrapped that into an LLC because of local taxation. Okay.

Okay. Local tax law. So you've just got to constantly be looking at that stuff as you're building wealth risk management tax management all those kinds of things start to take up more and more of your time um to keep the government's hands off of what you've off of money you've already paid taxes on now dave they'll go after it again so what do you say to people who are debt-free have a half a million dollars in savings and investments should they still start to start like start covering themselves a little bit early or wait until you hit that seven figure i i think you're fine to go because it's 200 bucks to get you a million dollar right umbrella i'd probably

do it okay once you start to worry about but i mean up until half million i wouldn't i would just not because most people it's they're not coming after a hundred thousand dollars in a situation like that they're coming after millions millions is what they want or they see a half a million and to them that's like hitting the lottery yes uh and so it's um i mean i literally one time i caused a wreck okay i was going across a bridge it was raining like crazy like it has been today here in tennessee and was half watching what I was doing, and I slid, and I hit, and I bumped a car from behind. Now, the car I hit in front of me, I hit them pretty hard. Not like super hard, but hard enough they were sitting still at a stoplight that it pushed them into the next car.

The next car had a dent in it the size of a softball. I mean, they barely got bumped. And they came for you. And that woman comes out holding her back like she was dying, and she wasn't even hurt to fly the moon. She just thought, ding, ding, this is my ticket. And, you know, the stinking insurance company, my insurance company, decided to pay her against my – you don't have any rights.

They're going to do what they're going to do because they didn't want to be sued by her and so they paid her to get rid of her they gave her five thousand dollars and she was not any more hurt than fly the moon but that taught me people out there you know because if i get hit like that and i'm not hurt i'm not gonna try to i'm not i'm not i'm not gonna commit insurance fraud no you know but i'm telling you when it's the size of a softball you did do not get a back injury, okay? It's just common sense. But people are out there, and so you've got to be thinking like she's thinking. So it's very, very wise.

That puts this hour of the Ramsey Show in the books. Our thanks to James Childs, our producer, Kelly Daniel, our associate producer and phone screener. Anthony O'Neill is my co-host today. I am Dave Ramsey, your host, and we will be back. Hey, guys, this is James, senior producer for The Ramsey Show. Did you know over 18 million people listen to The Ramsey Show every week? And a lot of those people listen on one of our 600 plus radio stations across the country. To find a station near you, head to theramseyshow.com.