The Ramsey Show - App - The Tax Implications of Getting a Large Gift from Family (Hour 3)

Episode Date: December 19, 2018

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🎵 Live from the headquarters of Ramsey Solutions, 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. Open phones at 888-825-5225. Merry Christmas to you, America. We're so glad you're here. Nathan is with us in Salt Lake City.

Hi, Nathan. How are you? I'm doing fine. How are you? Better than I deserve. What's up? Awesome. I had a question about refinancing. I'm currently on a 38-year loan to the USDA,

and I'm not exactly sure what the percentages are as far as interest and all that. How long have you been in it? Four years. Okay. So I guess the question is I'd like to refinance to get the interest rates down, if they're up anyway. And from what I hear, 15-year fixed is the way to go. Right. That's what I would do, and I would go with a Fannie Mae loan.

The USDA loans are very problematic, and the longer you stay in it, the bigger mess you're going to have if it's a typical structured loan now there may be another type or two out there but i want you to dig into this and find out what you have uh but most of them are subsidized loans and the amount that's true this one is yeah and the problem is then when you refinance or sell the property, all the money that they have paid on your behalf is recouped. You've got to pay them back. Yeah. And so I don't want you to get any deeper in this hole if you can afford to not be going into the hole further.

Well, that's a second part of the question is currently with our mortgage payments, we are right on track for being zero balance every month, and occasionally we're spending too much money. So the mortgage payment, where it's at now, we'd like it to not go up very much, if we could help that, but it's going to regardless of what we do. Yeah, I would suspect it is going to, even with the USDA loan. But if you refinance on a 15-year fixed, I suspect it's going to go up a bunch. Yeah. Have you priced it out yet?

I mean, have you talked to a mortgage company, talked to Churchill Mortgage? I have not. I wanted to double-check and see if that's what you would do. Well, I mean, number one, when you end up with a refinance, you have to be able to pay the payments. So you've got to look at that. So what is your take-home pay? $60,000 to $70,000.

Okay, so $5,000 a month, $6,000 a month is your take-home pay? Yeah. After everything, okay. And then, so how much is your current house payment? Current house payment is $1,080, something like that. Okay, so where's all the rest of your money going? Because that ought to be very affordable on a $5,000 or $6,000 income. I apologize.

I think I misunderstood your question. Yearly, between my wife and I, it's $60,000 to $70,000. Gross? Gross, yes. Oh, okay. All right. Well, if it's gross at $72,000, that's $6,000 a month gross. After taxes, that would be about $5,000.

$4,800 should be your take-home pay. Does that sound right? Not exactly. What's your take-home pay? Right where I'm at, I'm showing about $3,000 to $4,000. Okay, $4,000 would be $48,000 a year, which could be close to $60,000, but it's not between $60,000 and $70,000. Do you have a bunch of crap coming out of your check? I do.

I have some investments through one company, and I've got a 401k payment that I'm making as well. On the debt on the 401k? Correct. Okay and what kind of investments? Honestly I'm not sure I didn't do my research on those they're just what the company provides. Gotcha okay and are you getting a tax refund? I should be. Okay we want to adjust your take-home pay to where there's not a tax refund, because that means they have too much coming out of your check. And that would increase your take-home pay as well, because this affects whether you can pay your payment or not. I'm trying to adjust your income here to where it fits. So I would stop any investments I don't understand.

Never do investments you don't know what they are. And I would adjust your take-home pay to be where you do not get a refund, but you don't owe any. And so if you got a $3,000 refund every year, then you need to adjust it by $250 a month. If you got a $6,000 refund, then you need $500 a month and so on. So whatever it is, let's adjust that. But if you're making between $60,000 and $70,000, you should be getting home with a little more than you're getting home with. That's my point. So when you do that, then even then, $1,000 is doable.

Do you have a big car payment? Car payment's just under $300. I'm trying to get rid of it, but I haven't had any luck. It's appraised for about half of what I owe. Okay. Is there an interest rate stated on the USDA loan? I looked for that paperwork while I was on hold and was unable to find it. Okay.

All right. We'll call them. So let's talk about a couple things. One is the USDA subsidy is digging a hole deeper every month. So I do want to reverse that with a refinance long term. We don't have to do it right now, but someday when you sell, they're going to recoup all that money and it's getting worse every month. Or someday when you refinance, they're going to recoup all that money and it's getting worse every month or someday when you refinance they're going to recoup all that money and it's getting worse every month right so you need to find out what the recoup rules are with the

particular loan that you're in and i don't want you to stay in there to the point that you get a whole doug sadeep you don't like your own house anymore so refinance to avoid that. But call USDA, get one of their senior supervisors on the phone, let them explain through in your particular loan what your interest rate is and what the subsidy is doing to you and what the recoup on it is. And then once you understand all that, then it will help you understand how much zest you put into refinancing. Now, in a standard refinance question, we only refinance to save on interest rate. And, you know, a current 15-year fix is about 4.5%.

And so if this is 5% or 6%, then you would be saving on an interest rate. But if this is 3%, you're actually going up in interest rate, and the only reason you refinance then is because the subsidy is so unpalatable when you learn the terms of it. It's just yucky. Once you learn the terms of it, you're like, I can't do this. It's going to screw up my life, and it can be that bad. I've seen some really difficult situations because of those loans. I am not a fan.

I would never tell someone to do a USDA loan. But now that you're there, we need to make very deliberate decisions in understanding all the information about doing a refinance to get out. If you break even and you just get rid of the problematic subsidy, it's probably worth it. If you're going in the hole on the interest rate, you've got to look at it. You have to think about it. If you're going way in the hole, you've really got to look at it and think about it.

And then look at your payment versus your new take-home pay after we make these adjustments, like getting rid of the car payment, like getting the proper amount coming home and not having a refund, like getting rid of the investment we don't understand. And so there's some things there to do in your life to get your income ready to absorb or deal with a proper house payment. And then you'll be in a good shape there. So good question. The great news is, Nathan, you're paying attention now. When you start paying attention to money, it's amazing what happens with it.

It's amazing how much success you're going to see. Proud of you, sir. Thanks for calling in. This is the Dave Ramsey Show. Let me tell you a story about two families that are very much alike in a lot of ways. Both families have two working parents and a couple of young kids. Each has debt and a struggled to make ends meet. But they're starting to make headway with their budgets and smarter decisions with money. They have dreams and plans, and the only real difference is that one family has the right amount of term life insurance,

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

It really does make you the hero of your story, and it puts you on course for better things ahead. Thank you for being here, America. We're glad you're with us. Isabel is in Palm Beach, Florida. Merry Christmas, Isabel. How are you? Good, and you, Dave? Better than I deserve.

What's up? Well, it's a pleasure to speak with you, Dave. My husband and I, we've been listening to you since October of this year, and we were able to complete Baby Step 1. And we're moving now on to Baby Step 2. But my parents, they gifted us a townhouse, which is a rental, and that was in November. We already have a primary home, which we owe a mortgage of $286,000. That rental property is paid in full.

There's no mortgage on that property. And right now we are renewing the lease with the tenant that's there for $1,200. But we have $70,000 in student loan debt. And I wanted to know your thoughts as to potentially maybe selling the property to clear off that student loan debt or if we should just continue cash flowing on that property. What's it worth? Right now it's appraised at $150,000. Okay.

Very cool. And $70,000 in student loan debt. And what did you say your household income is? Household income is $74,000 right now. Okay. And what did you say your household income is? Household income is $74,000 right now. Okay. And that's not counting the rental. Okay. All right.

What a wonderful gift. Wow. Yeah, I'm really happy that my parents, they got tired of the rental, and now they're getting older, and they just wanted to set us up for success. Yeah. Let's make sure of two things on the technical side, and then I'll get around to your question. One is your mom and dad really need to be very, very careful to file properly with the IRS on this gift or they're going to get hammered.

Okay? When you give a gift of over $15,000, an individual to an individual, without doing the paperwork properly, you can be taxed at 55% of the value of the gift. gift of over $15,000 an individual to an individual without doing the paperwork properly you can be taxed at 55% of the value of the gift. This could be a $60,000 or $70,000 tax problem if they don't do their paperwork properly.

You can't just give someone the keys to something. Okay? Are they sophisticated enough to know that? Not really. They're kind of old school. Yeah. Let me help you with this.

Old school is going to cost them $60,000 then. So get on the phone with them and tell them to go see a tax advisor immediately. Okay. There's a way that they can do this and not pay any taxes, but they have to file the paperwork. So you got a pencil handy? Yes. Write this down. Unified estate tax credit.

Unified estate tax credit. Okay? Each individual this year, in the current calendar year or in next year, they've already done it this year, is allowed to have $11 million estate without any federal estate taxes when you die. You can use some of that exemption while you're alive to give a gift away without paying any gift tax. But you have to file the paperwork, and that's called a unified estate tax credit.

Okay, so they're using up some of their estate tax exemption, which is not a big deal probably, but it is a big deal if they don't do the paperwork because, again, it could be a $60,000 or $70,000 tax bill. Okay. So they need to see a tax advisor. Then click on DaveRamsey.com, click ELP for taxes, and one of our tax advisor folks can help them easily.

There's really not that much to it, but not doing it is obviously really, really scary. The second piece of information you need is you need to know what they paid for the condo, and have they depreciated it while they owned it? They paid $50,000. Have they depreciated it on their taxes as a write-off i'm going to be honest i'm not sure okay that's the second thing because here's the thing they pay 50 for it and if they've deducted if they've written off some of it it's that 50 has gone down as their basis it's called your adjusted basis And whatever their basis was is now your basis.

So let's pretend for a second, okay? Let's say they paid 50 for it and they've depreciated it $12,000. Then their basis is $38,000. That's your basis. Anything over that that you sell it for is going to be taxed at capital gains rate so you're going to have a tax bill if you sell this thing and you got to be able to calculate that tax bill

and someday you're going to have to calculate that tax bill so you better get this information now while this deal is kind of fresh so mom go see a tax advisor to did you depreciate this on your taxes? If you didn't, please send me a copy of your old closing statement, if you have it, showing the purchase price.

And you put that in your file, Isabel, because you're going to need to know what they paid for it, because a gift passes their basis to you as your basis, and then you're taxed on everything above that when you sell it. Whether you sell it now or whether you sell it later, you're going to need that information. Okay, now back to your question then. That's two technical little things, okay, but they're pretty important things for later on, and they'll keep you out of hot water. Now, then the second thing is this. Your question is, do I keep a $150,000 paid-for item when I have $70,000 in debt and a $74,000 income?

One way of asking yourself that question is, if I had $150,000 piled in the middle of the table, would I buy a paid-for rental property with it, or would I pay off my student loans and do some other things with it? Well, I'm just kind of uneasy with the $70,000. And since we have the primary home on a mortgage, I was thinking of if we did sell it, we would be able to take off the PMI on our current mortgage. There you go. And you'd get rid of your $70,000. Mm-hmm. And you'd have your emergency fund in place.

And have you got children? No. Okay. And so we're skipping baby step five. There's no kids college. We're putting 15% of your income away as retirement. You're up to baby step four, and then we start working on paying down the mortgage. So $70,000 worth of debt, make sure your emergency fund's in place,

everything else goes on the mortgage, and let's begin to pay off your home mortgage. That's what I would do. What's that do relationally with your mom and dad? Are they going to feel like you were not appreciative of the gift? To some extent, because I kind of mentioned it to them in a different scenario, and they were like, oh, no, if you were to go ahead and sell that, we wouldn't appreciate that. But I'm just thinking of the debt that's sitting on top of our heads.

Because, I mean, we don't have any credit cards and we don't have car payments. The only thing we have is student loans and a mortgage. If you made a lot more money, like twice as much, and you could plow through that student loan real quick and you wanted to hold your breath and keep this rental, that's one thing. But $70,000 with a $74,000 income, that's going to take a while, especially with a mortgage as big as you've got. So anyway, let's get – there's no rush. Well, I wouldn't sign a one-year lease.

I'd sign a six-month lease at the most and you can take six months and work on this with your mom you don't have to do it today but i i if if it didn't make them upset if you could sit and talk to them over the holidays and have a good conversation with them and say listen if i could get this debt off of me and show them your plan and you know they might they might get more excited about it but they just don't want you to be irresponsible with the money and they want you to live your dreams they want you to be irresponsible with the money. And they want you to live your dreams. They want you to have a good life.

That's why they gave you a gift. And they think this gift is going to help you have a good life. And it is. It is going to help you. I mean, whether you keep it or whether you sell it, it's a wonderful gift. So I don't want to be, you know, I don't want to be ungrateful. I don't want to feel, I don't want them to feel like we're ungrateful if it's at all possible. But it was a gift, and now it's yours.

So you technically can do anything you want to with it for sure. Make sure they do their gift tax return, or they do the unified estate tax credit, rather, and do that properly, and make sure that you get the basis either way. And then just start having a conversation with them and go, maybe your husband, maybe the four of you sit there and talk about it. And just go here's what's up here's what we're facing and here's the you know here's the um you know what's this debt mom it's just weighing me down i could get rid of this and i could get rid of the pmi on the house and you know we want to work towards getting our home paid off and then we want to buy some rentals and you know we that's what we'd like you know and just i think you could probably get them there rather than just, I'm selling

it. You know, I mean, that's a little different, right? And just have, I think you can get her there. This is the Dave Ramsey Show. Are high health care costs getting you down? Are you confused trying to navigate your options? Do you wish you could find an affordable, biblical solution to your health care costs? Based on New Testament principles, Christian Health Care Ministries, or CHM, helps Christian families, churches, and ministries join together as the body

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Christian Healthcare Ministries is a proud sponsor of Dave Ramsey Live Events. CH Ministries dot org. Thank you for being here, America. We're glad you're with us. Open phones at 888-825-5225. Melanie is in Reno. Hi, Melanie. Welcome to the Dave Ramsey Show.

Hi, Dave. Thanks for taking my call. Sure. What's up? Well, I need some direction, I think. My husband and I are on baby step two, and I'm in a job right now that the only reason why I'm in it is because I made a formal complaint and was removed from the career that I was in.

So I'm in litigation. This all started three years ago, litigation a year and a half. Basically, this position that I'm in is sucking the life out of me. And I know that we need to pay off this debt. But at the same time, I have absolutely no passion for my field anymore. And I just want to get out as fast as possible. Are you still working in the same place you filed a complaint against? I'm still working in the same place you filed a complaint against? I'm still working for the same county.

It's just they created a position because I couldn't work in the position where I was at because of my supervisor. Right. Okay. And so the complaint is ongoing, or the settlement for the complaint is ongoing? Yeah, it's in litigation right now because the county said there was nothing they could do. It's against an elected official. Okay. So 19 years I've been in this field. What do you do?

I have law enforcement. Okay. And what do you make? Right now I grow 84 a year. Okay. And so if you left, what would you do? Well, my passion is numbers. I like grants. I like budgets. I like doing that sort of thing. I've thought about going back to school, but then I just listened to one of your podcasts that said,

if you're in debt, then you don't need any more debt, obviously, with school. Right. And at this point, in order to do another field, beginner level, I'd be looking at taking a good $25 an hour pay cut. What do you make a year now? You said 84. Okay. And are you an officer? I was an administrator, a chief deputy. Okay.

All right. Why could, and you just don't want to do that even in another place? It's not the place and the crap you're dealing with in that particular area. I mean, what if you went to a different county? That's the thing. Going to a different county, based on those on those positions i mean you can get them but at the same time i'm in the middle of litigation and the reason for the litigation in this field you kind of get a big black mark on you and nobody wants to touch you because of number one you're in the middle litigation with your employer, and number two, because of the type of complaint that was made.

Yeah, they're afraid that you might be a complainer. Correct. Okay. Well, that's logical, I guess. Sad that the victim becomes the victim. Okay. the victim becomes the victim um hey okay i i i um i hear that you're not going to be doing this how old are you i'm 42 okay yeah i hear that you're not going to be doing this when you're 52 i just don't know what it is you're going to be doing yet. You make 84 right now, and you're emotionally exhausted with this whole stinking mess. I got that.

I got that without a doubt. I'm wondering, number one, is there application for your skills and your experience in business that there may be application for that, that is not as big a pay cut as what you're talking about. Then number two, is there a career, I mean, is there an education path that you cash flow that gets you to where you make the change more smoothly than what you're talking about? In other words, you're running really hard from something. You're not running to something very hard.

Yeah. Now, if I do go to school, I could cash flow in associates and accounting. Let's say I could do that and still continue to be slamming as much cash as they can. That feels desperate to somebody that's 42 years old that's been in an executive position that's already making 85. An associate's in accounting sounds dumbed down. I think you're running really hard from something. You are really disgusted and over this place.

Yes. I mean, it hurts your bones to walk in there. I hear it. Oh, I don't blame you. And I drive two hours a day to get to and from this place. Lord, why? How long have you been doing that? I live in a rural area, so it's an hour commute each way for me.

But it's just, it's an hour commute each way for me um but it's just it's what is your husband what's your husband make a year uh my husband he started a new job in may so combined income this year will probably be sitting at about uh gross 140 14. So he's making 60, 65. I think. I'm not quite sure exactly. He was making 68. He took a bit of a pay cut to come back local. How much debt have you guys got? We have right about 90,000 debt and then add the house, which is another 240,000. What's the 90,000? The 90 is a personal loan, a credit card, a truck, a student loan. How much is the truck?

The truck is $33,000. Yeah, I would sell that. I want to get you where you don't have the pressure and you can make these steps, and I want you to think a little clearer about what your steps are. So, in other words, I see no reason to go get a degree to make half of what you're making now. That just feels wrong. And so if we're going to get a degree, let's go get a degree that at least, you know, maybe we take a small step back because we're shifting, we're changing boats,

so that we can take a step up. Now, are you in the rural county, or is the place you're working the rural county? Both, actually. Okay. All right. So your economic opportunity is limited where you are. Yeah, basically to make what I'm making, I would find myself commuting still. Again, yeah.

Yeah. So you may be looking at a move anyway, which might be better for the economics of all of you all the way around. I don't know. You've got to decide how you want to live your life and what you want to do. You have a ridiculously long commute. You have an untenable job. I mean, your husband just took a slight pay cut, and you're talking about cutting your pay in half because you're that miserable.

So let's keep working on this plan. This hasn't turned into a plan yet. I want a plan where there's no debt, no commute, and I make more money. At the end of the story, anyway, I don't mind if it takes me two years of work to get there or three years of work to get there, but I want a better story. There's no end to this story yet that sounds fun. Five years from now, you're 42. When you're 52, what is it you're going to be doing that doesn't make you 84, but makes you 140, and it doesn't have a two-hour commute, and you're out of debt.

So what do we do to get there? And there are some things you can do that will get you there. We've just got to think it through a little bit more. But right now, you're just grabbing at straws because you just want to quit. And I really don't blame you. I understand. But this is the – yeah, you're going to have to tough it out a little while longer until you have a better landing spot because your landing spot right now sucks.

Hey, thanks for the call. Open phones at 888-825-5225. What would you do if you never had a credit card bill? What if you never had another one? What if you never had another car payment? What if you gave Sally Mae her eviction notice and said, you're out of here? What if you were on track and you could see that in X number of years, I'm going to be an everyday millionaire? We can show you how to do that.

It's called Financial Peace University. You go to the nine-week class, and we throw in a one-year membership. That's pretty cool. Now, you go to the one-week class, Financial Peace University, the nine-week class, and we give you a Financial Peace membership, which gives you all the online stuff for the continuing classes, plus the online community, plus EveryDollarPlus, hundreds of dollars worth of stuff we throw in nowadays. The deal is the best it's ever been, and it's a great gift to somebody, too. It helps them change their life.

Out of debt, on the track, the everyday millionaire. Financial Peace University and the Financial Peace Membership at DaveRamsey.com. Our scripture of the day, Romans 13, 8, Let no debt remain outstanding except the continuing debt to love one another. For whoever loves others has fulfilled the law. Charles Spurgeon said, a good character is the best tombstone. Those who loved you and were helped by you will remember you when forget-me-nots have withered. Carve your name on hearts, not on marble.

Well done. Our question of the day is from Blinds.com, the number one online retailer of custom window coverings, free samples, free shipping, new promos all the time, and you'll find out why at Blinds.com. Use the promo code RAMSY to get the best deal. Kevin's in Georgia.ia dave i contribute seven percent to my pension at work do i count that towards my 15 since it's a set payment in

retirement and not an investment account uh you can i since you don't have control of it and like you said you don't get to decide how it's invested you can it doesn't survive you when you die and all that kind of stuff i probably wouldn't count it fully so if you wanted to say i'm going to do 15 in baby step four you are putting seven percent in so you could say that's seven and i'm doing eight percent more and i'm going to move on with the other baby steps if you really really have some other things you're desperate to do there and that you want to plow on through. But realistically, I probably would discount that 7 some. So it might be something like I'm going to count 5 of the 7, so I'm still going to put

in 10 more into 401ks and or Roth IRAs, something like that. Just because, again, it dies with you when it's a pension and you have no control over it. Juan is with us in Miami. Hey, Juan, welcome to the Dave Ramsey Show. Hey, Dave, how are you? Better than I deserve. What's up? Hey, so I wanted to get your advice on a decision I'm leaning towards taking for the holidays. So instead of buying my mom a typical Christmas gift,

what I want to do is help pay off the rest of her car loan, which holds about $9,000. And the only thing holding me back is her main source, or her only source of income is she runs her own business that's kind of been up and down these past few years and really down this last year. And she not doing much bringing new customers so i've gone ahead and helped with the time that i can assist and help bring her business online giving her a website you know google maps to help um and i wanted to ask you is me helping to pay off her

card loan um going to create some sort of trend towards codependency? Well, it doesn't if you don't allow it to. I mean, I didn't hear a trend so far of codependency. All I heard was you were just trying to help your mom get her business going, and she doesn't work it as diligently as you think she should um in different ways but i uh paying off a car you know i take some of the pressure off of her doing business her working her business but uh it also kind of gives you an entree a stepping stone to conversationally to go hey now that the car's paid off let's get busy on this business and let's get this thing going, Mom.

You know, that could be a motivator rather than a demotivator, the car being paid off. Plus, it also gives you, you know, hey, Mom, I paid off the car so that you could get the business going. Let's not stand here and watch it die. You know, and you kind of got the right to say that. Do you see what I'm saying? Right. And so it doesn't have to be codependency.

It's only codependency is if she becomes addicted to your money you know and that's what you want to prevent and uh but i think you can decide that at any point uh you didn't mention a pattern up to this point uh of you supporting her or taking care of her. Is there one? Not necessarily. I guess it's more so that if I were to pay this loan off, I've been helping her pay off some of her other debt. Yeah, I guess this is a major debt payoff for her, I guess. You have helped her pay off other debts?

I'm sorry? You have helped her pay off other debts? I'm sorry? You have helped her pay off other debts? Yeah. Oh, okay. Well, then is there... All debts, maybe like a credit card or two, that's like $200. Okay. Well, I think, you know, you've just got to gauge that.

And if you're asking the question, then, you know, keep asking the question. Am I really helping her? Because that's what codependents do. that and if you're asking the question then you know keep asking the question am i am i really helping her because that's what codependents do they act like they're helping someone and they do something nice but it's not helpful because the person stays in they're crazy and that's not you know that that's a codependent codependents are the nicest people on the planet and so um you know you just want to you're just trying to help your mom i mean it's not a bad thing but we want to really help her and what really helps her is not her debt being paid off what really helps her is her getting her act together with her income and her outgo both

and if you can help her do that with this sure it's a wonderful thing to do so it sounds like you know you've got a little bit of a history here but i still don't hear anything that says no don't do that i mean i i probably would pay it off you've got the money it sounds like now again i but but the way to keep it from being codependent is to attach some expectations to the gift mom i'm going to do this but i'm expecting you to get your business going. In return, the way you pay me back is you get your business going. Let's get this thing going. Let's get a fire in your butt here.

Let's go. Let's go. And just, you know, start to, however it is you talk to your mom, but, I mean, you know, you just, you tie into, you tie the two things together. Not a conditional gift like that, but it just gives you the right to speak into it. Marvin is in Sacramento. Marvin, welcome to the Dave Ramsey Show. Merry Christmas to you. Merry Christmas, Dave.

Thanks for taking the call. Sure. What's up? What's up is I was married for 10 years. I recently got divorced. Part of the divorce settlement was I take all the bills in lieu of her getting any of my retirement or alimony. Okay, good. I didn't realize how much she had done with personal loans, title loans, things like this.

So you did not have a list of loans that you agreed to? It was... No. I mean, we did this on our own, and she never, ever shared what was going on with her money. We had a joint account, but then she had her own account. You did your own divorce? Yeah, it was supposed to be an amicable divorce so there was no property involved there were really no assets

involved it was all debt but there's a divorce there's a divorce settlement filed at the courthouse that you all drew up that says she gets no alimony no no retirement and you got all her debt and i got all the debt correct that's what it says at the courthouse right and her income is just limited to in-home support services and she gets a lot of help from her children yeah well i'm not worried about her income because that's not part of the deal yeah the deal is you took on the debt so what's the list of debt look like it's eighty thousand dollars good lord yeah and what is your income 85 i make 85 how much is in your retirement uh it's whatever's in the teamsters benefit well what's in there

i really don't know i have to make an appointment with them because I want to retire. I've been in there for 15 years. What do you think is in there? They told me that if I retired, I'd be able to get almost $3,200 a month retirement. But there's not a lump sum? No. So she would just get a piece of that $3,200 if you hadn't done this deal? Correct.

And she would get alimony. Right. Yeah. Yeah, you traded off $80,000 for that. Okay, so $80,000, you're making $80,000. You're not returning anytime soon. You've got a lot of work to do, right? No, and that's right.

And that's right. I've talked to her twice while we were married and ordered the home study program, which she threw away. She's not involved in this anymore. This is just you. No. Now it's just me. That's right.

Now it's just me. You have an $80,000 debt. You make $84,000. Let's get after it. And that's what I have to do. Exactly. List your debts smallest to largest. Used to be her debts.

They're now yours. You took them. So list them smallest to largest. Cut up all the credit cards They're now yours. You took them. So list them smallest to largest. Cut up all the credit cards. Make sure there's no additional charging going on from her. And, you know, stop all the future bleeding. And then we know what the target is. And, you know, we live on nothing.

And in two years, you're debt free. Maybe three. Something like that. You're going to have to just clean up the mess here. Ouch. That puts this hour of the Dave Ramsey Show in the books. We'll be back with you before you know it. In the meantime, remember, there's ultimately only one way to financial peace,

and that's to walk daily with the Prince of Peace, Christ Jesus. Hey, it's Kelly Daniel, associate producer and phone screener for The Dave Ramsey Show. Did you know that in 2017, Dave Ramsey Show listeners paid off $50 million of debt? That's pretty impressive. And it could be you this year. Keep listening for more inspiration.