The Ramsey Show - App - The More Your Business Borrows, the More Likely You Are to Fail (Hour 2)

Episode Date: February 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. I'm Dave Ramsey, your host. Thank you for joining us. We're glad you're here. Open phones at 888-825-5225. That's 888-825-5225.

TJ starts us off this hour in Iowa City, Iowa. Hi, TJ. How are you? Hey, Dave. Doing well. Thanks for taking my call. Sure, man. What's up?

Well, I got a question for you. I know where you stand on kind of personal debt and all of that, but I want to kind of ask about business loans, get ready for expansion. So my wife and I own a coffee shop, two coffee shops, and we're looking at starting a third. We've paid off the first one. The second one's about halfway paid off. So, you know, as we look at it, kind of what factors do you look at for, you know, expanding, what to take out, what's okay, what's not, and just looking for a little Ramsey guidance, please.

Okay. As on my personal, I stopped borrowing money because I went broke. And going broke, as a Christian, I read the Bible, and I found the borrower is slave to the lender. And every mention of debt in the Bible is negative. It's not a sin. It's not a salvation issue. But every single time, it's a curse. you're a slave, you're a fool. Every time debt is mentioned, it's got those kinds of things around it.

And so I just figured out I didn't want that in my life. So I just quit borrowing money. Okay. Now, that was kind of weird for a guy with a finance degree who is also real entrepreneurial like you, and I'm running a business, and I can see that if I borrow X number of dollars and open up another coffee shop, how much more money I can make. And, well, don't you make more on the expansion than the loan costs you? So doesn't it make sense to leverage and borrow money to grow your business?

That would be the thing that I would have said to me back then. In theory. Back then. And what I've discovered over these years now, it's been almost 30 years since I borrowed money, is that debt, you take away the spiritual aspect of it for a moment, but you really can't. But let's just say, let's just pretend that you know that wasn't the lens you wanted to analyze this through you want to analyze it through math and through academics um debt equals risk the more debt you take out the more risk you have

that's a fairly common sense thing in other words if you think you need you need $100,000 but you went and borrowed $1 million, you just create a stink pot for yourself, right? I mean, you got a mess. The more debt you borrow, the more mess you got, the more risk you have. And so someone on a personal level, the more debt they have, the bigger stress they got, the bigger problem they got. And so in business, the more you borrow, the more likely you are to fail. Okay. So in 2008, when the whole world turned upside down, were you open then?

We were not, no. Okay. No, we've been open about two and a half years. Let's pretend that something happened like the Twin Towers and nobody came to your coffee shop for four months because gathering in public was a place to get shot by a terrorist. Okay. So let's just pretend that your business just stopped like a deer in the headlights for four months. When you don't have any payments, you survive. Your competitors go out of business. You buy their equipment at pennies on the dollar and you expand into their market. I bought real estate for 20 cents on the dollar. Um, I probably bought $150 million worth of real estate for 20 cents on the dollar um i probably bought 150 million dollars worth of real estate for about 20 million bucks during that downturn but you know how i was able to do that i

had 20 million bucks right okay you know and so it went it went but and i had you know and you know what i had during that time i also expanded our business during that time because we had the cash to expand we were not afraid we were going to close when there was a business downturn. And so you make more money when times are good without debt because you're not giving some of your money to the bank, and you survive when times are bad without debt. And so I don't see an upside because the only way borrowing money works is if everything works, and you've been in business long enough to know

everything doesn't work. So I will tell you, I grew this business from a card table in my living room, just me by myself. It's a major national brand that we've never borrowed a dime. As we made money, we plowed it back into the business. Sometimes we didn't take much home. Sometimes we didn't go on vacation. We plowed it back into the business to grow the business. But steadily, one brick at a time, we built the wall.

And that's what I would tell you to do. Because you grow slower, but you grow smarter, and you don't have to go do it over again because some bank comes and takes everything you work for away from you. The borrower is slave to the lender. So you're going to do what you're going to do, but that's my story. And that's the story I tell people, and i beg people not to borrow money even in business and there are lots of businesses that run completely debt-free by the way it's not that big an anomaly it's not that big a weirdo travis is in phoenix hey travis welcome to the dave ramsey show

hi dave thanks for taking my call and thanks for everything you do. Thank you. How can I help? I have a question, just a small one. I'm looking at getting married next year, and I'm curious if I should pay off my debt before getting into the marriage or just stock up cash for the wedding and focus on the debt afterwards. I don't worry about folks getting married with debt. I do worry about people getting married with debt. I do worry about people getting married when one of them wants to keep the debt. So I'm more concerned that you're both on the same page on how to handle money because that's the precursor. That's the data point that's

going to cause your marriage to be successful. Not the fact you married a guy or gal while you had some debt or she had some debt. If both of you are game on for getting out of debt, get married as quick as you can. And if you want to put your debt snowball on hold a little bit to save up 10,000 bucks, have a little wedding and then get married and then the two of you get after it, let's get after it. That happens all the time in here on Debt Free Screams. We hear them all the time. They say, you know, we both had some debt and then we combined, we got married and then we both attacked both our debt. And I hear that all the time. The problem comes when you've got some debt, you want to get rid of it,

and you get married to her, and she doesn't give a rip, or vice versa. And then you've got a problem. Now you've got what's known as a long life ahead of you. And it's going to be, you know, that kind of issue. So, you know, I know I do not tell people to, you need to be out of debt before you get married. I have never said that, nor have I ever, you need to be out of debt before you get married. I have never said that, nor have I ever said you should be out of debt before you have children. I've never said that either.

I've been quoted as saying both of those things, but both of those quotes are lies. I have never said that. So I would tell you, get married as soon as you're ready to get married, as long as both of you are on the same page on the four big things, religion, in-laws, kids, and money. If you can get on the same page on those four things and sit down with a good marriage counselor, you have a very high statistical probability of your marriage being successful. If you're in agreement on money, kids, how to deal with in-laws, and religion, if you're on the same page on those things, you have a very high probability of winning in your marriage.

If you're missing any one of those four, if you're missing two of them, don't get married. No, it won't work. I mean, your statistical probability of failure is very high. Very high. Hope that helps you, man. Thanks for being a listener in Phoenix. This is The Dave Ramsey Show. Business leaders, I'm not going to lie. Finding the right people to make an impact at your company for years to come is hard work.

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Visit LinkedIn.com slash Ramsey. That's LinkedIn.com slash Ramsey. Terms and conditions apply. joy is with us in mexico hi joy welcome to the dave ramsey show hi how are you it's such an honor to talk to you. You too, Matt. How can I help? My dad started a tree nursery several years ago, and so about six years ago, we started borrowing money to grow it bigger, and so now we have an income of around $250,000. $30,000 of that would be profit, and we're in debt $130,000. Wow. Yeah, and my dad got diagnosed with cancer about one and a half years ago, and he didn't have medical insurance, and so last year we spent around $150,000 in medicals, and so we owe about $25,000 of that debt. Okay. Wow. Okay.

And so I'm just wondering, what can we do to get out of this? We're going to need some future medicals for him. But then, of course, I'm hoping we can turn the business into more income and less expenses to somehow pay off the debt. There you go. That's exactly where I would have headed. I would have trimmed expenses because you're only running about a 12% margin on this, which is not great. In something like that, your margin ought to be steeper as far as I'm concerned.

And, you know, obviously, instead of making on $250,000, instead of making $30,000, if you made $60,000, suddenly we've got some money to throw towards the debt. Now, out of the expenses, how much of that is salary to family? It would be around $20,000 maybe. So $250,000 in revenue, and you only spent $20,000 in family salaries. Yes. We import lots of the trees from the states, and so the tree expenses are very high. And then, of course, because we grew it bigger, we have lots of the worker expenses.

That's very high, too. And then about two, three years ago, my dad wanted to start a side business with plastic, making plastic pots and selling those. But it didn't make much profit. So far we spent around $40,000 maybe trying to get that, but it didn't obviously not work. So we do have one option. We could buy another $5,000 machine didn't obviously not work. So we do have one option. We could buy another $5,000 machine and then we could sell, we have a pile of plastic laying there. We could sell

that for around $50,000. We're wondering if we should do that maybe. Why don't you have someone else just make the pots and save the $5,000. Yeah. Yeah. We've been looking into that too. This machine that we need, it needs to come from the States, so it would be expensive. But, yeah, we are looking into that. I will try to find someone in Mexico that has the machine that you can sub the manufacturing out to and go ahead and get rid of the plastic

and get out of that business. Okay. It's even more bothersome now that I have the numbers on the nursery. How long has this nursery been in the family? About 15 years. Okay. 15 years that my dad started it. How many family members are working there for free?

It's me and my one brother. Okay. And so what could you earn if you weren't working there? About the same. Well, maybe a little more. What are you being paid? We're being paid like, well, I'm being paid like $5,000 per year, and my brother about $15,000.

Okay. He's married. He's married. That's like $5,000 per year, and my brother about $15,000. Okay. He's married. He's married. That's the $20,000, and your dad's taking nothing out. Yeah. Well, that's the thing. You couldn't find a job making more than $5,000 right now? Not very.

The pay here for workers in Mexico or in this area where we're at is very low. Okay. All right. Okay. All right. Okay. Okay. So you're being paid a fair wage, and he's being paid a fair wage. Yes. And then my parents just take out of whatever they can.

The $30,000 profit. Yeah. Yeah. Okay. The $30,000. And, of course, the $150,000 medicals, that screwed it all up. Yeah. No, what screwed it all up is when he borrowed the money to start with.

Yes, absolutely. Because that drains you down. So we've got to just systematically start taking the large portions of his profit and any money you can make off the plastic pots once you get them, you know, subbed out, the manufacturing subbed out. But I don't think I'm going to buy a $5,000 machine for one transaction because you're not going to stay in that business. It's not worked is what you described to me.

So what I'm going to do is just try to continue to grow the revenues on the nursery and shrink the expenses on the nursery, increase the profits, take all the profits that we can squeeze out of your dad's portion and throw that at the um throw that at the debt and begin to work your way out um but 30 000 on 150 000 is a fairly long walk like a five or six or seven year walk that we're talking about here so but if you could double that then it cuts that in half obviously meaning double your profits by cutting your expenses and increasing your revenues. So it's all about that. It's all about, you know, working that. And all of us that are in business work on that all the time, you know, increasing our revenues, decreasing our expenses, increasing our revenues, decreasing our expenses. I mean,

it's just it's a constant rhythm of operations in a business, no matter what the size of the business is. That, that's the only two parts of the equation. It's just like your personal budget at home, folks. Hey, thank you for the call, Joy. It's an honor to talk to you. I hope you guys are able to turn this around. If I can help again, you call me back anytime. Jonathan's with me in West Palm Beach, Florida. Hi, Jonathan. Welcome to the Dave Ramsey Show. Hi, Dave. It's a pleasure to talk to you today, sir. You too. What's up? All right. So we've got quite the uphill battle to climb with our debt. My wife's a nurse and I'm a pharmacist, and we owe like $370,000. We've been on a budget for the past year.

We've been able to pay like $30,000. We found out that we've got our second baby on the way, so we're just piling up cash. And the baby's due in October. We're going to get back to paying things off. And really the question is... What do you guys make? We make about $180,000 a year. Why have you only paid off $30,000?

That's lame. Well, I mean, I know we need to dig deeper into the budget. Oh, that would be an understatement. You have $300,000 in debt and $180,000 income, okay? I think you should put $110,000 a year for three years on your debt and be done and have absolutely no freaking life. Oh, and cry me a river, you're living on 70 grand. Yeah, I think it's just too much extra activity here and there.

Yeah, I think. Take away from it. Yeah. But the main question is how do you... I don't think I can help you until you're ready to get out of debt. I don't think I can help you. You're going to have to get really angry about this situation because, dude, you are freaking broke and you're doing have to get really angry about this situation because dude you are freaking broke and you're doing almost nothing about it yeah all right so the question was

um how long i should wait until i start to reset my 401K. That will be approximately three years after you have no life for three years and get out of debt. Okay. That will be my prescription. I'm serious, man. You're going to have to get with it. You are playing with this, and it is not moving. Your attempt is a joke so far. And you've got babies coming, and she's going to reach a point that this $180,000 income,

which is about half of it's hers, she's going to reach a point she don't want to do that anymore, and you're going to still be sitting there with Sally Mae all loaded up in your spare bedroom. And you have got to address this monster, this elephant sitting in the middle of your living room. And it's making a mess, and you've got to get her out of there, man. It's a big, big, big deal. I mean, you're a young dad, two babies, a young wife. I mean, you should be so scared you can't breathe, and you're not yet. I'm going to try to get you there, and I'll walk with you when you want some help.

But you're going to have to get, like, way more serious and pissed off about this than you are right now. Hope that helps you, sir. You used to keep listening. I'll keep messing with you. It's my job. I love you. And I want you to win. But right now, what you're doing sucks.

This is the Dave Ramsey Show. Thank you for joining us, America. This is the Dave Ramsey Show. We're glad you're here. Susan's with us in Wisconsin. Hi, Susan. How are you? Hanging in there. The question that I had was my husband passed away a few weeks ago.

Oh, my goodness. And he did have life insurance. It's about maybe about $160,000, I'm guessing. And I'm wondering if I should pay off, besides the other bills I need to pay off, if I should pay off the house. I've had some people tell me not to invest it instead or whatever, and that's kind of what I'm wondering what I should do. Gotcha. How many other bills do you have, hon?

I have a credit card that's about $8,000. I wanted to pay that off, and I think I have anywhere from $10,000 to $11,000 in medical bills. Okay. And do you have any other nest egg? I have my IRA. It's probably about $60 i think um and then i have of course a small 401k and um a pension i'm not sure how much that is from them um i'm 60 be 61 in uh do. And what do you owe on your home? Probably right now about $81,900 $81,900 give or take. Are you retired?

No, I'm still working. What do you make? After taxes I'll probably be making about every two weeks I'm guessing about $1,200. Okay. All right. And she'll make about $30,000 a year, give or take. All right.

And how long were you guys married? 42 years and much. My goodness. What happened to her? Liver cancer. I'm sorry. Well, what I have figured out is this. Sharon and I have been married 37 years.

So we're just right behind y'all. And I can't even imagine what you're going through right this second. But I know that if I were facing the same thing, I wouldn't be able to breathe two weeks later for a little while. And it probably comes and goes. You're doing a good job on the air holding it together. But it probably comes and goes in waves. And it's not the best time to make big decisions.

And so what I generally recommend is if big decisions you don't't have to make let's not make them today and paying off your home is a big decision i think it might be what that you end up paying off the home but i'd rather you not do it for six months okay and get just get where you can breathe again and um you're a strong lady and you're going to be okay and you know that but right now you're a strong lady and you're going to be okay and you know that. But right now you're just hurting. And if I were in your shoes, my brain would be foggy. And so I agree with you. I'd pay off those credit cards and cut them up. I'd pay off those medical bills and be real careful to live on a written budget

so you live on the income that you have and you don't you know run up any more debt by any stretch while you're while you're kind of getting where you can breathe again going through some of the grief process and so forth and then about six months from now maybe even a little bit longer sit down and revisit this discussion i think you'll probably pay off the house then. Okay. But I probably would not do it today. Does that make sense to you? Does that feel right? Yeah.

Yeah, it does. Yeah. You don't have to become an instant investor. You don't have to learn all about investing. You don't have to make big-time financial decisions between investing versus paying off the house or all these other discussions. You don't suddenly have to have a master's degree in finance this week. You're okay. You're okay, you know.

And, I mean, if you get up and have breakfast and go to work and come home and put your feet up, you had a pretty good day right now, you know. Yeah. Yeah. So just give yourself a little margin. Give yourself a little room and let's let some healing occur. And I do think then, and so I would not invest the money and I would not pay the house off. I would put it in a CD for six months.

Go down to the bank and buy you a six-month CD and just what's left after you pay off these two little bills. And then get yourself on a budget and don't touch that money for any reason. And then six months from now when that CD comes due, you just look at it and go, now, do I want to pay off the house? I think you probably will then. Is that okay? Is that a process that works for you? I think so, yes.

Thank you. Okay. If you need anything, Susan, while you're doing this, you just call us. We're here to help you, okay? Okay. Thank you very much. Thank you. God bless you. Okay. If you need anything, Susan, while you're doing this, you just call us. We're here to help you, okay? Okay. Thank you very much. Thank you. God bless you, darling.

Open phones at 888-825-5225. This is the Dave Ramsey Show. Kim is on Facebook. Dave, would you add child support owed into the debt snowball? Monthly child support would be part of the budget Monthly child support would be part of the budget. Back child support would be part of the debt snowball. And, yes, it's a debt that needs to be cleared up as soon as possible. And so, yes, I would do that.

Renee is with us in Canada. Hi, Renee. How are you? Hi, good, Dave. Thanks for your help. Sure. My husband and I have a two-fold question. One of our young children has the potential to earn a large amount of money over the next couple of years.

So how can we as parents ensure that this will be a blessing to her and not a curse in her future? Because I know when it's up, you know, you have the money that you're going to give your kids, you can kind of control it a bit. But when it becomes their own at a certain age, it has a lot more potential to be damaging, I would think, as opposed to being a blessing. And also the second part is should we allow her to do it, seeing as we have another child who will not have the same opportunities

and we will never be able to save enough to equal the amount that she will make. What's she talking about doing? Acting. Okay, cool. Yeah. Cool, and there's an actual opportunity or just a desire? Oh, no. No, there isn't.

Okay. All right, good. Well, good for her. That's good. Yeah. If it were my kid, I would let her do it, as long as you can control the environment and not let her get sucked know, get, get sucked

into a, a world of evil garbage, you know, but, um, you know, I'm going to be pretty protective of her environment and the people that are speaking into her life and, you know, and, and her work, you know, the amount of work there, you know, uh, that they put her through and that kind of stuff. But as long as we can keep it fun and, and it's and it's a good environment, I would let her do it. I wouldn't hold her off just because the other kid's not doing it. And I don't know how laws work in Canada. In the U.S., you're not allowed to own things until you're an adult.

That's right, yes. And so until you're 18 or 21 you're not allowed to own things or contract for things and so your parents do it on your behalf that's true um and so assuming you're not some weird hollywood mom who's going to suck their daughter's money away from them definitely not if you're more of a normal person that's going to say i'm just managing this money for the good of the kid. It's not my money. I'm not going to go buy me a car with it.

I'm managing it for her until she's old enough to be ready to manage it. Then I think that's all positive. So you just figure out a way to invest the money and have it ready for her. Technically, I don't think there's a lot you can do to keep it away from her when she turns 18 or 21. No, and that's our issue. That's our fear. How old is she today? She's nine today. So what's her attitude like as a person today? Is she respectful and minds you and has good manners, or is she a little jerk? No, no, she's pretty great. Our fear, I guess, is just that she won't learn the value.

I mean, the work itself is hard work. Don't get me wrong. It's very tiring, and it is hard work. But the value of just working at McDonald's to earn a few bucks and working hard. I don't think you have to necessarily do manual labor to appreciate hard work. True. you have to necessarily do manual labor to appreciate hard work true um and uh and so i think what you do is you just take that concern and you create situations where you're teaching her that this is work this is work work is where money comes from i'm going to send you a copy of

the book smart money smart kids it's how we raised our kids uh in an environment where their parents were wealthy but they didn't know it. Thank you. And then later, they discovered it, and by then their character was prepared to where it didn't ruin their lives. And when they inherit the money, they inherit the opportunity to manage it for God, not the opportunity to hit the lottery. And so that's their job. It's a responsibility to manage it, And that's the way you teach her.

Hold on. I'll send you a copy of that book. It'll help you with this. Thank you for joining us, America. This is the Dave Ramsey Show. We're glad you're here. Natalie is in Dallas. Natalie, welcome to the Dave Ramsey Show. How are you?

I'm well. Thank you for taking my call. Sure. How can I help? My husband and I are $365,000 in debt. Oh, my Lord. Yes. And the smartest thing we've done is with our home purchase. So we are now sitting on about $200,000 in equity.

And we are thinking about selling our house to jumpstart our debt snowball. And we have a good income, so we can, you know, we will still have our good income for years. We have stable income. We do have two kids who, one is a junior in college. One is going to be a freshman next year. So we're also trying to fund college. Okay. And so what is the $365,000 in debt? Mostly student loans.

When I went back to grad school, and we also owe a family member about $84,000 from a failed business from when we were younger. So you have like $200,000 worth of grad school? Well, some of it was my grad school, and some of it was we've been getting the Parent PLUS loans. Oh, okay. So for the kids? Yes.

We have three daughters. One is all the way through college already. Okay. The bulk of it was my grad school. So what is your degree in? Nurse practitioner. Okay. So what is your degree in? Nurse practitioner. Okay. So what's your household income?

Our base is $184,000, and I have a side job at $46,000 or so, and I've recently picked up another side job. So you're single? No, my husband and I. Oh, the base between the two of you is $184,000? Yes, sir. Okay, so you're making like two and a quarter. Yep.

Okay, all right, good deal. Here's how I would weigh it out, okay? What gets you to where you want to be 10 years from now, the fastest? And so you got this great income, and you're going to use it up on kids' college and on cleaning up $365,000 and stay in the house, and you should be able to do that in, like, four years, or you can sell the house and do it in, like, two years. Does that make sense?

I mean, if you put $100, if you if you make two and a quarter and you live on a hundred and you put a hundred towards this it's done in three and a half four years right that's what i'm doing um but if you sell the house and throw 200 out of equity out of it so how much do you like your house not enough to feel distressed by the money okay all right so at the end of this then three years from today you're starting to save to buy your next home are you going to buy anywhere near where you live now well that's kind of the variable i mean we have one daughter who is married living in philadelphia now and um you know, the other two, who knows where they land. So you might follow the kids.

Maybe. Okay. All right. So you sell the house, you rent for two years, three years, and you save up your down payment for your next house, and then we see where you land and you buy something at that point again, and that's an okay move, right? So you're moving twice in three years.

And would you advise if we do that and we take our lump sum and apply it to our debt, do we follow the debt snowball principle with the smallest to the largest? Oh, definitely, definitely. Okay. Definitely. And I want you on beans and rice. I mean, no vacations, no eating out.

I mean, you've got to clean up this ridiculous mess. Yep, yep. But I think I heard you say stress, and I think I hear stress in your voice. So I think you guys are probably over it in that you don't really care what other people think. You're ready to get this mess cleaned up and get this behind you and move on. Because I'd love to see you sitting there making 250 000 three years from now and have no payments in the world yes we would too and by then all the kids are just about out and you're so everybody's off the payroll yeah everybody's off the payroll in the house

you know all we gotta do now is buy a house and get rich you know yeah and that's really where you would be so if you're gonna take this step back, make sure you follow through and win, you know? Don't take a step back out of house and go rent something and then not win. But, yeah, I think it's not a bad plan at all. The stress is getting to you. But, again, don't. The selling of the house doesn't do it. You've got to play all the way through.

You're going to have to beans and rice it. Scorched earth on the lifestyle. And don't be spending a stinking dime anywhere. Let's get this stuff killed as fast as you can. Good question. Wow, I think you're going to do it. If my debt snowball is projected to take four to five years, is it smart to have more than $1,000 in my emergency fund?

Matt on Twitter. Matt, I got to tell you, I've been doing this 25 years, and the number of debt snowballs that last five years is almost zero. There's a few of them, but there's not many. Most of the time, you need to do other stuff like get your income up, like six jobs. You need to sell some crap. You've got a stupid car or something's going on. That's a long time.

Or you got the world's worst degree, and so you got $200,000 in student loan debt to be a German polka history teacher or something i don't know i don't know what you did but um the number of times that it actually ends up being four to five years is very low and that's why i'm comfortable with the one thousand dollars i would attack other issues in this rather than get used to the idea that it's going to take five years and i'm going to adjust the plan because it's going to take me five years don't take five years don't take five years do it faster than that again i talked to a few people here or there that actually works out that way and sometimes when you lay it out initially the very first time you lay out your

dead snowball yeah the actual math is five years. But then you start going, okay, what can we sell and what extra work can we do? And during that five years, your income comes up and you keep your lifestyle down. And the further you get along in traction, the more you cut your lifestyle and the faster you accelerate. Mindy is in Chicago. Hi, Mindy. Welcome to the Dave Ramsey Show. Hi, Dave. Thanks for taking my call.

Sure. How can I help? Well, my husband and I found you at the end of December, and so we're currently on babysit, too. Yay! Yeah, I know. It's good. We currently have about $190,000 in debt. We have decent incomes.

My husband makes about $110,000 a year. I'm a small business owner. I bring in about about 110,000 a year I'm a small business owner I bring in about $50,000 here right now we can currently live mostly on his income and what I'm making we're throwing towards that as much as we can okay so my question for you is currently we will actually we're writing photographers so we rent some equipment to do our job we don't have much overhead in the business it's mostly just these rentals i want to see if it's worth it for me to go ahead and purchase the equipment i need what's the break even on it how quick you get your money back um quickly i mean right now um it's costing us about thirty eight hundred dollars a year to rent

this equipment and it would cost me about thirty3,400 to purchase it. So it takes you a year to get your money back on a $50,000 business. Yes. Yeah. I don't think I'd buy all of that. Okay. I might buy some of it. I'd like for you to have a break even faster than that. Okay.

Like six months. I want it to pay back in six months. Or you've got a way you can pick up some jobs that you couldn't pick up otherwise because this equipment's sitting there and you didn't have to fool with a rental that we can increase your income as a result of this. Okay. But a year is a long time to get your money back on stuff in a business that size. Okay, great.

So let's see if we can do something to change the equation. It's close to buying it, but I don't think I would. No, I would rent it. If we stand firm and go, this is the numbers, and it's a year, no, I'm just going to rent it. Because the problem with stupid photography equipment is like stupid computers. The market moves so fast in the equipment. Ten months later, you wish you had something else because the dadgum digital world changed it, you know. And I own a bunch of it around here.

And one of our guys was showing me what we paid for a really nice video camera the other day. Couldn't believe how cheap it was compared to what they were years ago. So things are changing fast. This is the Dave Ramsey Show. Hey, guys, this is James Childs, producer of The Dave Ramsey Show. I'm excited to announce that we're now carried on 600 radio stations across the country. To find one near you, head to DaveRamsey.com slash show.