The Ramsey Show - App - The Truth About Flood Insurance (Hour 1)

Episode Date: September 26, 2018

The show about you

Music Music 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.

You jump in, we'll talk about your life and your money. Have you noticed in our 24-hour-a-day news cycle how quickly something becomes a distant memory? Like 48 hours? You do know that there are people in North Carolina, Virginia, South Carolina, that are still devastated today, right? I know it's not on the front page of your news of USA Today because they're too busy covering other sordid stuff.

But the real people, I mean the real people, regular people are hurting over there still. 47 people were killed in the Carolinas and in Virginia with Hurricane Florence. Rainfall in North Carolina got to 36 inches and in South Carolina, 24 inches. In Tennessee, we call that a flood, regardless of if there's a hurricane attached to it or not. If you guys are over there, some of us that are real people are still thinking about you and praying for you. And a bunch of you have gotten in contact with us to say, thanks, Dave. We have our emergency fund in place, and it has made a world of difference to not be in debt

and to be able to walk through this with actual cash to be able to work out the situation we're in, and that's cool. And I'm getting a lot of odds and ends questions from folks in that area, and so I thought it'd be good for all of us just to remember them right now and answer a couple of their questions. Floods are not covered by homeowners insurance as an act of God. Floods are considered separate from hurricane damage, even though the floods are caused by the hurricane. And we figured that out with Katrina. State Farm was the first one to decide that floods are not caused by hurricanes

that caused the floods, and so they don't cover it. So flood insurance is the only thing that covers a flood, regardless of what caused the flood. I'm afraid we actually have court cases now that have verified that. It doesn't make logical sense to me that a hurricane caused the flood. That's a hurricane, whatever. It's insurance companies. That's the way that works.

So you need flood insurance, right? If you don't have flood insurance, what do you do? Well, you're going to apply for federal disaster relief. And be careful there. These are low-interest loans, but they will give you more than you need, and you will get yourself caught in another mess. You'll jump out of the frying pan under the fire, except nothing's burning over there.

It's too wet. But anyway, of course, if you're filing a claim, you get with your insurance company as soon as possible. And let me tell you, he with the most detailed inventory when you're dealing with an insurance company wins. Just sit down and become super nerds, extremely anal, and make lists and lists and lists and lists and lists, and never agree that the list you're sending them is the last one. It's just the latest one. You're going to update them pretty regularly, because they'll take that list and just declare

that the case is closed, and they're going to pay on that. And then you remember, oh, yeah, there were three TVs in there, too. No, you just keep making your lists, and it's just the latest. This is my latest version. And, of course, you have to provide a proof-of-loss statement within 60 days. You document the damage. The good news is with your cell phone, you can go through and video a whole lot of stuff and really capture a lot of things.

It'll also help your memory come back on things that were damaged if you can get to the property. Dave, banks are offering forbearance programs for mortgage holders that are flood victims. No, a couple of them are. Most of them aren't. Should they? Well, it's a trick bag. It's a problem because here's what happens. You don't pay three payments, and they're helping you,

but you get to make those three payments up, and they don't put them on the end. They want you to catch them up next year sometime. And so it's just delaying a problem, creating another problem with a delayed bomb. It's kind of a bomb you put off there in the future. So, I mean, really, don't. I would just, if there's any way you can, just keep paying your house payment. I would not skip a payment with them. They're not really going to help you.

There's rumors that the Red cross charges for their services oh that always comes up absolutely not red cross doesn't charge for anything red cross does a great job uh it's you know one of the few places there's two things i give to when i want to give to help people on a disaster relief. My primary is Samaritan's Purse because they're on the scene first, just like the Red Cross is. And we've got a lot of connection with Franklin Graham and the Samaritan's Purse folks and always have supported them in different ways. But certainly in this situation, I know their organization to be credible and very efficient in the use of the funds. It doesn't get eaten up in administration and everything else it actually goes to help the people that are hurting so we give a lot to

samaritan's purse and disaster relief situations and the red cross is fine but really anybody else other than a local church there that you have personal knowledge of what they are doing then other than that nah nah, just pass. You hear some off-brand charity you've never heard of that just shows up at the scene, scam alert, scam alert, be careful, okay? But the Red Cross is not charging for services. Oh, my gosh, that's ridiculous. So, I mean, it's real easy to find them, redcross.org, samaritanspurse.org.

You know, somebody that you know, like Salvation Army is another one, salvationarmyusa.org, you can count on them. But, you know, again, we know several churches in the area. For instance, down in Charleston, we've done a lot of work with Seacoast Church, the Surratt Brothers down there, and wonderful, wonderful organization. And anything Seacoast is doing, you can count on. But, again, that's a local church there. If you're in Charleston, you know who they are.

You're comfortable with their credibility. This is not somebody that just showed up at your front door soliciting funds to help the poor disaster people. And no, I don't think so. You can do this online. You don't need to have somebody come to your door to help these folks. But it is kind of a ridiculous commentary on the state of our media that this is already not only not front page, you can't find it. There's not a single article on Fox's website right now. There's not a single article on CNN.com right now.

There's not a single article on USA Today right now. Not one. It's a week ago, people. It's a week. You think this is over? It's not over. It's just beginning for those families. But now they move on.

They have the attention span of a gnat in these new organizations News organizations News I use in quotes But You know they really Would rather come up with some sex scandal To cover It's much more fun for them Than dealing with actual human Real regular human people

Not the nut burgers that are out there But instead find regular people That are actually hurting. You know, it's, but anyway. So we took a segment here with our 15 million listeners and we talked about it for 15 minutes now. But we thought we should

answer a few of your questions, those of you that are out there. We love you, we're praying for you and remind some of the rest of you to do the same. And if you want to give, again, Samaritan's Purse, Red Cross, they'll help these folks out. They do a good job with it.

This is the Dave Ramsey Show. I get asked all the time about what people need to do to improve their family's money situation. Two of the most overlooked things are term life insurance and disability insurance. Both plans make sure that you have income to pay bills and take care of yourself and your family if something were to happen. For term life, you need to carry 10 to 12 times your income, and I recommend 15 or 20-year plans for most families. Stay away from cash value or return of premium plans. They're just a rip-off. Disability insurance is just as critical.

How are you going to pay your bills if you're unable to work? Disability is the leading cause of bankruptcies and foreclosures. That's why I send you to Zander Insurance. They've been helping my listeners find the right plans at the lowest cost for almost 20 years. Call 800-356-1780 or visit zander.com and compare online. That's 800-356-1780 or zander.com. james is with us in canada hi j James. Welcome to the Dave Ramsey Show. Hi, Dave. Thank you for taking my call.

Sure. What's up? Well, I found out I'm inheriting about $100,000 in cash, and I'm wondering if I should invest it or should I buy a house? You should use it wherever you are on what we call the baby steps, which is our plan for laying out your financial plan. Do you currently have any debt? No, I don't.

Good. Okay. That brings you to what we call baby step three. Do you have any money set aside for emergencies for a rainy day fund? I have about $5,000 for emergencies. And what is your monthly expenses? It's about $200 a month because I'm living at home with my parents. I'm 18 years old. Oh, okay. What's your income?

About $12,000 a year, but right now I'm studying to be a financial planner at a college and I was paid for in cash. And once I graduate and I become a financial planner, I'll be making about $50,000 a year. And how long will it take you to graduate? It'll only take me about two and a half years. Okay, that's pretty cool. All right, and who's paying for college? My grandma. My grandma, she paid for it.

That's pretty nice. Good place to be. Yeah. Okay. You know, I would set that money in something like a mutual fund because of your young age and because you're going to go through a lot of changes in the next three years. And we don't know exactly what that's going to prescribe for you on a house. With a low income like you have today, you't want to buy a house uh based on that

you want to buy a house based on your new income after you become a financial planner and then put the hundred thousand dollars down on that house and so you know i'd probably sit on this until i was about 23 and let's get out there get that financial planning thing going get your own place rent a little while and then start talking about buying. Let's get out there a step or two further down the road than you are right now, and then you'll make a better decision. There's no rush. I mean, if you buy a home at 23, you're still highly blessed and unusual in a good way.

And so at 18, you can almost be called unwise because you could really get yourself into something today that you, you know, can't get out of later. Or, you know, because the thing about real estate is, you know, you have to sell it. And, you know, you might very well be in a different place, a different locale, certainly a different place financially and everything else. So I'm going to tell you to tap the brakes. Let's wait. Park that in a mutual fund or something like that until you get to about 23. Selena, is it Selena? Is that right?

Is it Selena? Is that right? Yes, it's Selena. Selena. Selena. Okay. And Baton Rouge, how are you? I'm doing good.

Good. How can I help? My question is, is I've just recently been unemployed for a month now. And I have debts, I have mortgages, I have everything with no income coming in at the moment. I am looking for a job, and hopefully I'll find one soon. But I also have an amount in my 401k plan, and I was wondering, I mean, can I take it out, pay my bills off? I mean, what do I do? How old are you?

I'll turn 55 this year. Okay, and how much is in your 401k? $123,000. Okay, and you're single? I'm single, yes. Okay, that's a pretty scary place to be in right now. Yes, it is. Yeah, I'm sorry.

Okay. Well, here's the thing. Any money you take out of your 401K will be hit with a 10% penalty plus your tax rate. And so we don't know what your tax rate is until you're working, but let's say it's a 20% tax rate. That would mean you'd be hit for 30%. So it's kind of like saying, Dave, I'm so scared that I'm going to borrow money at 30% interest to pay my bills. I don't think I'm going to get that scared.

So I'd be cleaning somebody's house, walking somebody's dog. I'd be taking a job. Oh, trust me, I'm babysitting at the moment. There you go. I'd be doing almost anything to keep the wolf away from the door until you land the next job. What were you making before? I was making $27 an hour. Okay.

And doing what? Right now, the interviews I went to, they're starting right at maybe $15 an hour is what I'm probably making now. What were you doing? I was a timekeeper out at a chemical plant in Baton Rouge. Okay. And they just did a layoff? Yes, they did a layoff. Okay.

But you'd been there a while and worked your way up on that hourly because that was a sweet hourly rate. Correct. You're very correct. Hard to replace that. Okay. Alright, cool. Well, that's one thing you can do. Of course, the other thing you can do is start your own business doing something. You might make $25 an hour cleaning houses if you're willing

to do that. I don't know what you want to do, but I mean, you can run a lot of those small business ideas that are service things and doesn't require that you have a PhD to do that. I don't know what you want to do, but I mean, you can run a lot of little small business ideas that are service things, and it doesn't require that you have a PhD to do them, and you can make a lot of money if you watch what you're doing and think about it. So, I'm going to

send you a copy of Christy Wright's book, Business Boutique, which is all about women running and starting businesses, equipping women to make money doing what they love. And she works with ladies that have no education all the way to have ladies that have extreme levels of education, no sophistication in business, all the way to very sophisticated in business. And so this will help you consider that as a possible way.

But you can cash out the 401K, but it's 30%. And so it would be the last thing I did to avoid foreclosure or bankruptcy or homelessness. I'm going to do everything else to keep from borrowing money effectively, just like borrowing money at 30%. Christina is in San Francisco. Hi, Christina. How are you? Hi. Hi, Dave. Thank you for taking my call. Sure. What's up?

All right. So I am 31, and I'm also a single parent who is terrified of investing. And I would like some tips on what to do. As you know, I live in California, so everything is high. Rentals are high, and buying a house is high. So I'm trying to figure out what to do with my money. Okay. Well, we're going to walk you up what we call our baby steps to begin to build yourself a foundation before you do start investing,

and that would get you out of debt and get you an emergency fund in place of three to six months of expenses and then start putting 15 percent aside when you say you're terrified of investing you mean like having a roth ira with mutual funds that terrifies you yes i really don't have much education about the stock market and roth ra and 401k i have a 401k at my job now uh that gives me a free 6% without me contributing anything. What are you putting that in? What's that invested in? It's invested in a target fund. Okay. What's that?

It's at Fidelity. I think it's at 2050 target fund. Yeah. What's that? What do you mean what's that? Well, what is it? What is the fidelity target? Oh, I'm sorry. I don't know. That's what I thought the answer was. Okay, I set you up. Sorry.

Okay. This is how you lose money. You put money in stuff you don't know what it is. By the way, you're in a thing that's a perfectly okay. You're safe. There's nothing wrong with what you did. The only thing wrong with what you did is you have no idea what you did. Right. You can't do that. That's how people lose all their money. Okay? So you should be terrified

of investing because you don't know anything about it. But the good news is it's not terrified of investing because investing is to be terrified of. It's just because you don't know. So you said you're what, 30 years old? I'm 31. Now do you drive a car? I do drive a car. Does that terrify you? No. Good.

I shouldn't. I hope not. But yet, people die in car wrecks every year, right? Right. And so there's reason to be terrified, but we have reasonable knowledge on how to operate the vehicle, and we limit the risk by the way we operate the vehicle, and we're comfortable with what little risk there is, and we go ahead and go forward because we know what we're doing. The first time you drove a car, though, your stomach was in your throat

and your heart was beating. Do you remember? I do. Yeah, same thing with investing. Investing is going to get, once you get some knowledge and you get some rhythm to it, it'll be just like driving a car. You won't think about it anymore because you'll know what you're doing. I'm going to help you with that. I'm going to be in San Francisco with Chris Hogan doing an event October the 2nd next week called Smart Money. I'm going to give you

two tickets. I want you to come with a friend and we're going to get you started on this. You can do this, but I'll show you how. You got to know what you're doing. 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 Healthcare Ministries, or CHM, helps Christian families, churches, and ministries join together as the body of Christ to share their major healthcare costs. Christian Healthcare Ministries is the original health cost-sharing ministry. A Better Business Bureau-accredited organization, CHM members share to pay each other's medical bills.

It's not insurance. It's Christians financially and spiritually supporting each other. It's what Christian Healthcare Ministries has done for over 35 years. And our members have shared over $2.5 billion in medical bills. To learn more, visit chministries.org. That's chministries.org. Christian Healthcare Ministries is a proud sponsor of Dave Ramsey Live Events. chministries.org. Elaine is in Harrisburg, Pennsylvania.

Welcome to the Dave Ramsey Show, Elaine. Hi, thank you for taking my call. Sure, what's up? We have a rental property, and our last tenant trashed it. So with the legal fees and everything that we had to get them evicted, and the unpaid rent, it put us down about $10,000. To get it ready for another tenant to move in is going to cost about $9,000 to $10,000 on top of that that we've lost. Now, what we'd like to do down the road that we've talked about for years is VRBO. It would take instead of the $9,000 to $10,000 to fix it up for a new tenant, it would take about $12,000 to $15,000.

And either way, anything that we do, we're going to have to dip into our emergency fund because all of the illegal fees and everything were taken, the money that we had in the rental account were used up with those items. So I wanted your advice. Do you think we should go with the lower amount and have someone move in and use the money from the rent to save up to get it ready for VRBO, or now should we take our time getting it ready and take the extra money out of our emergency fund and do that now? Okay, so to get it ready for the market at $10,000,

you have the $10,000 without touching your emergency fund? No. No. That would still be out of the emergency fund. How much is in your emergency fund? No. No. That would still be out of the emergency fund. How much is in your emergency fund? About $30,000. And what's your household income? About $85,000 gross.

Okay. So the difference in $10,000 out of your emergency fund or $12,000 out of your emergency fund doesn't really matter, does it? It's a $2,000 question. I mean, you're going to do one or the other, right? Right. So it's just a matter of which way you want to run this property. So have you figured out how you screwed up as a landlord?

Yes. You know what it was? We were desperate. We wanted to get somebody in and had a bad feeling but thought I was helping someone out, and I should have gone with the bad feeling. But, yeah. Right after I get desperate, I usually get stupid. And right after I get stupid, I usually get broke.

And, yeah, every time. I mean, it's just this pattern in my life. I've had to stop doing it. So when I start feeling myself desperate, I just tap the brakes and take a chill pill and go, wait a minute, God's in charge, I'm not doing this. Because, yeah, you knew this was bad, folk. And then you didn't follow up and you didn't lean on them.

I mean, you let them stay in there. You never inspected the property. You never followed up. You didn't push. You let them stay in there like two, three months too long. Well, I was in the property regularly, yes. Then how'd they trash it? Dogs.

Well, I mean, if you're in the property and it's going down, why aren't you a victim? And I started that process, and they had to be, like, I think it was a full month behind in rent before my attorney said that I would have any. Oh, so you need a new lease. And you need a new lease that says if they're not taking care of the property, they can be evicted regardless of the rent. Okay. Yeah, so this is what I mean. This is landlord experience you're having here so what every time i do something like this and i lose money because somebody takes my freaking head off which is what happened here i want to know where that shot came from and i want to duck it next time i want to learn what

happened so like you know you change your lease you change your process on how you handle people uh and by the way vrbo is no magic pill uh There's crazy people rent VRBO houses all the time. So it's not like it's got an exclusive to non-crazy tenants or something. They'll trash, you know, you'll get some, you know, bachelorette weekend in there, and they'll rip the paint off the walls, man. I mean, you have to watch what you're doing, whoever you're letting in your property. And so you need to have very strict VRBO rules. Are you in a resort setting?

Why VRBO? Why would anybody bother? It's in the country. It's for people who want to get away. You think there's a market? I did check on VRBO, and there are other properties in the area, I'm going to say within a 20-mile radius, that are doing it. Contact one of those owners and see if they ever rent them.

There are reviews on, and I've read the reviews, but, yeah, I can do that as well. Are the reviews two years old and they rent it once every two years? I mean, you know, because. Because here's the thing. If you don't rent VRBO at least 50% of the time, you're not even breaking even on a traditional rental. Right. Because it's double. But, you know, so you've got to keep it full 50% to break even on a traditional rental. And it's a lot more hassle, a lot more trouble on your part.

I mean, you can do it. I don't care. But make sure that there's enough market to keep it full 50 and then you got a ride heard on this all the time and i don't care which one you do 10 000 12 000 doesn't matter to me you got to put your emergency fund back as soon as you get this thing fixed back up but what whichever one you do go back and say yeah these people were scum yes they were you, they let their dogs do stuff to houses people shouldn't because they were trashy people and so on. They've got a lot of blame on their side of this,

but their side of the equation I can't control. My side of the equation I can control so it never happens again. I'll put in my lease conditions have to be met, and I'm going to do at least once a quarter walkthrough and no pets. That's why I have no pets. I have pets at my house, but not any of my properties. You don't like dogs. No, I love dogs.

I hate dogs as a landlord. I really hate cats as a landlord. You can't get cat smell out of nothing. No way. I mean, you have to burn the freaking house down to get cat smell out of it. So, you know, no, no kitties period no monkeys no pet roaches nothing you know so whatever you know and so and you're you know and if i we walk through we find an animal you leave or the animal leaves because your lease said that

you know so you learn your lesson and you know you become a little bit uh you know you start to realize you know owning property and being a landlord is not uh uh it's not a charitable donation and so it doesn't work to do charity that way you have to do your ministry work otherwise now if you want to have a house that's ministry and you just let people live there, that's wonderful. That's a whole different scenario, though. But when you're landlording, you have to have a set of guidelines and go. Last time I did this, it hurt. I'm not doing this again.

Last time I let somebody stay in there three months, not paying. No, no. Thinking they were going to be OK. They're not going to be OK. You know, you're 10 seconds late. We're all over you, period. And, you know, we're going to inspect the property and we're not mean we're the best landlord you'll ever have all you do is just not tear my freaking house down and pay your rent why is that hard for some people well it is because

some people's parents didn't raise them well and so you just got to put your plot blocks in place regardless of which of these directions you go because you can control a lot of these variables and not allow this to happen to you again. Or you need to sell a piece of real estate. And if you're not going to be an active, hands-on, up-in-the-grill landlord, that's what you're going to face. Thanks for the call. Open phones at 888-825-5225. I'm 58 i started doing rental property when i was 20 so i got stories to tell believe me i could write a nice little book just on stupid butt

stuff i let tenants get away with that cost me 10 grand like chapters and so and you just get over it you know well dave you're just you're just a hard butt no i'm just not gonna have you tear up something that god told me to manage well because you can't behave that's all it is and um and if you can't pay the rent then we'll you know we'll help you find another place to live but you can't stay here is This is not how this works. And so I am not under any illusion. That's the beauty of having debt-free rental property, too, is you don't get desperate. You don't go, oh, I have to have a tenant. I got one property right now that's been sitting empty three months, and we'd like to rent it, but not to the wrong people.

Better empty than those people that she had. Agreed, everybody? You wouldn't want dogs not paying rent and $10,000 plus $10,000 worth of damage, and she'll never see any of it from these people because, of course, they're broke as a rock. So she just lost that money. Got to control those variables when you're renting. This is the Dave Ramsey Show. Our question of the day comes from Blinds.com. Find out for yourself why Blinds.com is the number one online retailer of custom window covering.

Site-wide savings are happening right now. Plus, you take an additional 5% off if you use the site Blinds.com slash Ramsey. Oh, that's where the deals are. Blinds.com slash Ramsey. Chad's in Mississippi. My wife and I are expecting our baby to be born in eight months. Yay! We're on baby step two. We have two car notes.

Should we keep on doing baby step two or start saving in our emergency fund until baby is born and then start back on baby step two? That's what you should do. You always push pause on your total money makeover baby steps when you have a baby on the way

or a potential emergency that you think is likely to happen. Like you think there's an 80%, 90% chance you're about to get laid off. Not a 10% chance, an 80% to 90% chance. Then you would push pause, pile up a big pile of money. When you get the other side of the issue and things calm down baby comes mommy comes home everybody's healthy baby comes home healthy then we take all the money out of that emergency fund that you've saved back down to a thousand dollars and you throw it at baby step two your smallest dad on baby step two and you really will lose absolutely no assuming everybody's

healthy and there's no issue and you don't need the money for an emergency of some kind, then you would lose zero ground. Well, you'd lose eight months of interest on whatever amount that was. That's all you would lose. But it's a very minor change. You're basically going to be on the same path. The only thing is we're just piling up money and we drain it back down and throw it at the debt

instead of just throwing it directly at the debt. That's the only difference, and you just do that until baby comes. Congratulations on the baby on the way. Very cool stuff. Very cool stuff. If you're great at marketing and you're on board with our mission, you like what we do around here, we help people, we give people hope, we work with somebody that's hurting, we do all kinds of stuff, work with people that are wealthy, the whole millionaire stuff that's going on, you can check out some of our

opportunities. We're hiring like crazy. Right now we're looking for an email specialist to join our email marketing team. We're looking for a digital marketer to join our stewardship team. We're looking for a couple of SEO gurus, not to mention a lot of developers, a lot of sales positions, a lot of admin positions. This place is exploding around here. And we want you to apply right now. Go to DaveRamsey.com.

Click on the right side of the website. There's a little button that says Dave's Hiring. Click on the right side of the website, Dave's Hiring. Particularly if you are a senior level Ruby developer. That's another thing we're looking at. We really need several of those right now and some leadership people in those same areas. So jump in, jump in. Ian is with us in Rochester, Minnesota.

Hi, Ian. How are you? Good, sir. How are you? Better than I deserve. What's up? Hey, first off, my girlfriend and I are coming to your event in Minneapolis next month, so we're super excited about that.

Cool. Thank you. It's sold out. I'm glad you got tickets. Yeah, it's good. Okay, so I met with one of your Smart Roster pros last month here in Rochester, and I was trying to decide what my next step should be. I'm 22. I just finished Baby Step 3, so I've got my emergency fund ready. Obviously, I'm a single right now, even though with my girlfriend, I would hope to be married to her, you know, in the next 18 months or so. Um, but I know that I can't make the financial decisions off that right now. Um,

so my question is, do I, um, start to contribute to my company's 401k that matches me, um me up to 6%, or do I start saving for a down payment, planning to be a we somewhat soon? How old are you again? 22. I'd save my down payment. Okay. So you've got your emergency fund in place, and you've got your debt free.

You said that, right? Yes, sir. Okay, so you're what we would call baby step 3b which is where you would just before you really start your saving for retirement uh you would stop maybe but in between baby step three and four four is 15 of your income going into retirement in between those two you'd stop and that's why we call it baby step 3b and save up your down payment for your house and uh that And that's a really good place to do that. Does she have debt?

She does not, no. Okay, cool. So you're not going to have to clean up anything after the marriage on that then? No. Okay, that's good. Good. Very cool. Yeah, I'd pile up as much money as you can and go ahead and tell her to do the same thing.

Okay. Above her emergency fund. And then when we get married, we combine those two house savings accounts. You'll have a nice big down payment, and you'll be in a good position. And then both of you would start with the new household income after marriage. You would start putting 15% of that number away in retirement, and you'll be very, very wealthy. Because you're going to be doing this from 24 years old on. I mean, you're going to be in great shape this is very cool good job man i love that you're asking this question at your age man you're just light years ahead oh wow open phones at 888-825-5225

scott is in salt lake city hi scott how are you i'm great, Scott. How are you? I'm great, Mr. Ramsey. How are you doing? Better than I deserve. What's up? Hey, so I just wanted to give you a little bit of background. I was in a very similar situation to the gentleman you spoke with yesterday who had the back injury. And I filed Chapter 7 bankruptcy. That finalized about a year and a half ago. And I'm just wondering, like, how soon I can buy a house. Okay. So you went through an injury, and it put you into a bankruptcy.

Yeah, I had about $120,000 worth of medical debt. I didn't have any insurance at the time. Are you permanently disabled? No, I'm back to work. I'm actually, um, I just opened up my own finished carpentry business, just barely got licensed as a subcontractor. And I'm projected to make, uh, anywhere from a hundred thousand to 130,000 gross over the next year. And what would you net on that? I'm not entirely sure. Just whatever 20% of that is, I'm guessing. That's what my CPA told me yesterday.

I'm sorry. Your CPA does your job estimating? No. If you have $120,000 gross, what is your net profit? I'm not talking about taxes. I'm talking about your business. Yeah, with my business. So I would probably make about $80,000 net.

Okay, so you're on great margins then. You don't have much expense. Yeah. Okay, so $80,000, then you pay taxes on that. Cool. Very good. How old are you? I'm 25. Well, I would want you to have your emergency fund built as soon as possible of three to six months. I'm currently in baby step two. Okay, good. You need to finish all that up and clean up your debt, get your emergency fund in place, and start saving for a down payment.

You will need two years of tax returns if you're self-employed to qualify for a home. And it will probably be, depending on what price range home and whether you go with an FHA or whether you go with a Fannie Mae, it's either going to be three or four years from the date of discharge on your bankruptcy before you're going to qualify. Okay. It's going to take you almost that long to finish maybe step two, three, and get your big down payment saved, right?

Yeah. When was the final discharge? It was in, like, April of last year. Okay. So here's the thing. In Baby Step 2, go crazy to make sure you're paying on time or early on every single item so that everything and your rent and everything early not not like not like two years early or but but five ten days early on everything yeah which i'm i'm pretty diligent about that as

we stand because from what we want is we want no bad news since april uh last bad news was the discharge right and that's the last bad thing showing on your bureau. From that point forward, then you've got clean, clean, clean, clean, clean, no debt, big emergency fund, big down payment. We got good, strong tax returns because that's what they're going to look at is your actual tax returns, what you actually made profit on and paid taxes on. And so don't get paid under the table. All the money goes into your checking account. You pay taxes on all of taxes on. And so don't get paid under the table. All the money goes into your checking account. You pay taxes on all of your profits and count all of it on your taxes. And that's how you're going to qualify.

But you can sit down with Churchill Mortgage. They'll help you and help you put together a plan and show you whether it's going to be three years or four years, depending on your situation from that April. It's probably going to take you about that long anyway. That puts this hour of The Dave Ramsey Show in the books. 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.