The Ramsey Show - App - They Paid Off Their $700,000 House at 29! (Hour 1)

Episode Date: December 9, 2019

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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. Open phones at 888-825-5225. That's 888-825-5225. Starting off this hour is Shelby in Tennessee. Merry Christmas, Shelby. How can we help today?

Merry Christmas, Dave. Thank you so much for taking my call. Sure. So my husband and I are in the middle of our debt snowball on our active debt. He also has a handful of credit collections from about 2014 to 2015. And about a month ago, we received in the mail three separate letters from some bankruptcy lawyers stating there was a court case against him. So I did a little digging to see if it was valid. I called the county clerk and she said that the court case was valid, but there's been no activity on it and nothing has been served yet. So my predicament and question is, should we pause our debt snowball, so to speak, on our active debt to pay this collection, or should we take action only if and when something is actually served

uh who was it by and how much was it for um i don't even know the original creditor it's been passed around so long but it's in the hands of a law firm right now um was it a was it a credit card or medical bill? What was it? Do you know? I believe it was some sort of personal loan from the, I think they were called the Lending Club at first, and it's for about $3,000, which is what kind of makes me nervous, because that's going to take us at least three months to pay that full amount and kind of pause everything else we've been doing. Mm-hmm. Okay. I'm really conflicted about what to do, because I don't know whether we should wait until... out and kind of pause everything else we've been doing.

I'm really conflicted about what to do because I don't know whether we should wait until... Well, if Lending Club has a $3,000 unsecured loan that is five years old, they don't own it anymore. They sold it. And they sold it for probably around six or seven cents on the dollar. So they probably paid under $200 for this. Okay? And so if you were to contact the law firm and offer them $1,000, they'll probably settle it.

You'll probably have to argue with them and listen to some whining and throughing around and all that kind of stuff. That's part of a negotiation with any collections. And by the way, this law firm is no more of a law firm than Fly to the Moon, except that they technically have a law office. What they are is a widget, a factory that prints off lawsuits on small collections in mass. And they probably are not going to do much with this um if they ever did actually sue you even when they win then the only way they would get anything is to execute on the judgment and that would take months more on top of it the chances of them spending a thousand dollars in addition to the 800 in addition to the 200200 they paid for the debt to try to collect

a $3,000 debt that's five years old is about zero. Okay. So what they do is they throw paper around to try to intimidate people to get them to pay the bill, and you need to pay the bill. But you have $1,000 in your emergency fund, maybe step one, right? Yes. Okay. If this comes up, if it comes to a head, call them and offer them the $1,000 and tell them

that's all you have, because that would, by the way, be the truth. And settlement in full. I can't give you any more than that. I don't have any more than that. You'll just have to sue us. Okay. And then they will sue you, and then they would win because you owe the money. And then you go back and you settle the judgment later.

Because all of this takes way too long. And generally what they do is they play the odds. They buy bad debt, and they play the odds. And so they go in down there where they, like, if you can imagine going in with two wheelers full of cases of lawsuits, and they file them all at once. It's like a factory doing a shipment. And then they just hope a few of them hit, and all they got to do is hit about one in ten, and their money comes back. And so that's how, it's a game. It's an odds.

They're playing the odds and uh debt buyers are real slimy and the law firms that they work with are real slimy um by and large there's a few exceptions but 90 of them are slimy so just deal with it like you're dealing with slimy people and i get everything in writing and don't give them any access to your checking account do not give them any employment information do not give them anything except a cash offer in return for an in-writing settlement offer. Okay. And I'll send you a cashier's check, or I'll wire some money, or I'll do a prepaid debit card that you turn on long enough to put that money in there,

and then you turn it back off. So something like that where they do not have access to your job they don't have access to your current address we need to verify your information before we can have this conversation well do you want the conversation to end or do you want to get some money because you're not verifying spit with me because all the information they get on you is going to help them file a garnishment against your wages or something and don't give them anything. Yeah. So you've got to play hardball. Hardball, be real cagey, wise as serpents, harmless as doves, and try to get this settled when it comes up.

But right now, it really hasn't come up yet. Okay. Is that helpful? Perfect. Yes, that was exactly what I needed to know. Thank you. Be very careful and very wise, okay? Don't trust anything you hear.

Only trust what you see. Okay. Okay. Thanks for the call. Open phones at 888-825-5225. Let me help you guys with this because occasionally I get a question about this. There are basically three or four types of collectors out there. There's a collector that calls you on your home mortgage. If you have a traditional home mortgage and you're

behind, they will call you from the mortgage company and say, we want our money. They can be believed. They don't have a lot of power, but they have a precise system that they have to go through in order for the FHA insurance to kick in, the VA insurance to kick in, or the Fannie Mae PMI to kick in. Okay? And so for them to get the coverages in the event of foreclosure that they need, they have to go through a very precise procedure, and they generally are not going to bluster and create a bunch of emotion and all that kind of stuff.

So your mortgage collector is probably the top of the heap, best collectors out there in terms of telling the truth. They're going to be tough on you. You owe them money. They're trying to get their money, but in terms of telling the truth. The bottom of the barrel is a debt buyer that buys it for a nickel on the dollar, and they're working the odds, and they're really, really, really slimy. Right above them are the credit card collectors with the national companies

like Discover and Chase and Wells Fargo and so on. If you get a collections call from a credit card collector in one of those companies, be aware you are dealing with some of the worst human beings on the planet. They are trash. They're slimy. And if you don't like me calling you that and you're one of those collectors, then go get a job you can be proud of because you're slimy. Okay?

And Navient is just right there, just above them. They will lie to you and they're incompetent when it comes to your student loans. So you have to be careful. Your local collection agency in your local town, usually pretty good folks, but not always. So you can't be sure, but some of those are pretty good folks too. So there's a gradient in the quality of human you're dealing with in these collections processes. And just be aware of that if you're getting behind on your bills because you've got to work through this mess. This is The Dave Ramsey Show.

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Hey, I'm on baby step three. I'm on baby step four. I'm on baby step whatever. Some of you don't know what the baby steps are. Well, it's our plan to help you not only get out of debt, but become wealthy and incredibly generous. And we want you to live the generous life with your family tree changed. And the way you do that, you get out of debt so you can build wealth. And we walk you through exactly what to do, when and how. It's called

the baby steps. If you have a specific question about the particular baby step that you are on, people call the show every day with that, but we're actually going to do a baby steps theme hour in a few weeks or in a week or so. And if you want to be part of that theme hour, we might use your baby step question and let you call in during that particular hour on your particular baby step. So email me at DaveOnAir at DaveRamsay.com. Put your question and the baby step you're on in the subject line.

Put the baby step in the subject line, baby steps, questions, whatever, something like this. We know what it is. Kelly will pick it up, go through them, and figure out who we're going to talk to that particular hour. We never tell you what to say, but sometimes we schedule the call so that we can stay on subject within a particular hour if we're doing a theme hour. And if we told you what to say there'd

be no entertainment value at all in having you on because some of you people say some of the darndest things so remember that old there was an old movie our old tv show a thousand years ago kids say the darndest things yeah callers say the darndest things it's kind of the same thing so anyway jump in And Dave on air at DaveRamsey.com You don't have to have something bizarre You can just simply have a question It's okay, I don't mind helping you either way

You don't have to be entertaining You just gotta want somebody to help you And that's what we're here for Amy is with us in Florida Hi Amy, welcome to the Dave Ramsey Show Hey, thank you Dave I have a question We're having a hard time getting a home loan as small business owners.

Really? How long have you owned your own business? Just under two years. Okay, you don't need two years of tax returns showing an actual profit. Okay. And the profit of the business on your tax return is what will be used to calculate your home loan. And so you can't say, oh, no, I get to write a bunch of stuff off. Write-offs are called expenses, and they reduce profit.

So you're not making any money if you make no money that you pay taxes on and say, well, I write it all off. No, you're not making any money. So are you making a profit? Yes, sir. How much? No, you're not making any money. So are you making a profit? Yes, sir. How much? Around $75,000.

A year? Yes, sir. Okay, great. And you're showing that on your P&L and you're paying taxes on $75,000? Yes, sir. Okay. When you file your second tax return, you'll be eligible for a typical loan as long as everything else is in line. Do you have a credit score?

Are you still in debt? No, sir. This is my husband's business. We have no debt. He's got about, other than his company vehicle, he has about $30,000 left on him. Well, that's in his personal name, and so he has debt. Yes, sir. The business did not borrow the money. He borrowed the money.

Okay. You need to clear that up before you get a house okay you don't need a car payment before you get it while you got a house so when you're debt free so he does have a credit score yes sir is it good yes sir okay so what i would do is get everything saved up, build my emergency fund up, and the day you pay the car off, go ahead and apply for the mortgage. Okay. And get pre-approved based on your credit score before it drops, because when you pay off all your debt and have zero accounts open, your credit score is going to drop. Right. Okay. And while it's up there, you can go ahead and take advantage of it.

Not while you've got the car debt, but while the score is still up there, as soon as you get the car paid off, apply for and then save up your down payment and save up your emergency fund. And when you're debt free 100% and you have your emergency fund of three to six months plus a down payment, you're ready to purchase. And you can probably put most of that together in a very short period of time once you get rid of a $30,000 car on a $75,000 profit. That is ridiculous. You shouldn't have a $30,000 car in a business not making $75,000.

By the way, it doesn't make sense. So it's rationalization, and no, he doesn't need the truck to do that. There's other ways to do that business. So y'all got to quit buying crap like that, or you're never going to be profitable. All right, Kevin is with us in California. Hey, Kevin, welcome to the Dave Ramsey show. Hey, Dave, how are you? Better than I deserve. What's up? So my question is, so I was recently laid off just about a month ago and I received the most of my severance with my last check coming this week. I have my unemployment benefits set up for $1,800 a month. How's the new job?

Sorry? How's the new job? New job? Yeah. The unemployment job? No, you've been off a month. Why aren't you reemployed? I've actually been actively applying as well as i haven't been you know getting any

bites um recently that's not so you're the way you're applying is not working you should have gotten a job in 20 minutes where do you live in california uh in los angeles what you used to make remotely uh i used to make about 60 000 a Doing what? I was kind of like a technical support slash customer rep for a startup. Okay. So you could do tech support for somebody and make $50,000. And in L.A. right now, that's a highly sought-after position. You should not have been unemployed for 30 days. Yeah.

It was a little bit of a process because I was working remotely, so kind of getting everything all settled out of my current office here at home was kind of a bit of a hassle. I'm sorry, you were working remotely and you had to settle out of your office? Yeah, I have a home office that I was working out of and I still had to return my company laptop and some of the stuff that I had before from the company. Why did that take more than one day? Just because, you know, they laid off about a third of the company, so I had to get some of the equipment driven over to San Diego where my company is

and taking care of all of that. Wait a minute, they laid you off? They didn't come pick it? You had to drive the equipment to them? Yeah, correct. Why didn't come pick it. You had to drive the equipment to them? Yeah, correct. And they reimbursed me, I believe. It didn't make sense to ship those. It was about $800 to ship.

So expensing IRS mileage and some time was more effective. Were you contractually obligated to return their equipment at your expense? You know, well, I mean, I was reimbursed for it, so they took care of all the expenses and everything, the labor and mileage. Okay, so it takes one day to load the crap into the car and drive to San Diego and back. What have you been doing for the other 29 days? Applying for jobs nonstop, contemplating on going back to school and figuring out, you know, how do I allocate my funds?

You know, I have a severance package. I still have a car loan, as well as I was signing up for UI benefits, just as a worst-case scenario. If I can't get a job relatively soon, I can go back to school full-time and live off that $1,800 a month. You don't need to go back to school. You need to get a job. You have no plan at all to reason to go back to school except you can't find a job. That was your only reason for going back to school. It wasn't because you wanted to pursue something.

Well, technically, my degree is a little bit irrelevant. It's kind of hard for me to pick a position that I've been applying for, and I kid you not, I've been applying probably about 50 to 100 jobs. How long have you been doing that? You know what? I was actually applying for jobs prior to my layoff. No, no. How long have you been a technical person? Oh, for maybe about a year or so. So you're 24? I don't have three. I don't have... Sorry?

Are you 24? I am not. I am older. How old are you? I am 28 years old. older. How old are you? I am 28 years old. Okay. What did you do before that? Prior to that, no, I graduated about three years ago, so I've been in this role for what would have been three years this coming February.

Oh, I thought you said one year. Okay. I misunderstood. Okay. Well, here's the thing. What it sounds to me like is you are you've fallen victim to the idea that applying for jobs is actually going to get you a job it doesn't you've noticed that right how many jobs have you applied for 100 um yeah since october just about yeah and

you've had zero responses right correct yeah so obviously what you're doing is not working what i need you to do is i need you to go to ken coleman.com and download his free stuff on how to put your resume together and i'm going to send you a copy of his book number one bestseller called the proximity principle which is how to get the career that you love. Dude, you need to be working tomorrow. It's ridiculous that you're not working. I don't care what you're doing, driving, pizzas, whatever. You need a job tomorrow doing something immediately. It doesn't take 30 days in Los Angeles to get employed.

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To learn more, visit chministries.org. That's chministries.org. Christian Healthcare Ministries is a proud sponsor of Dave Ramsey Live Events on the debt-free stage, Samir and Janelle are with us. Hey, guys, how are you? Better than we deserve. How are you doing, Dave? Hello. Better than I deserve.

Merry Christmas to you. Good to have you guys. Where are you from? Seattle, Washington. Oh, fun. Very cool. And Christmas to you. Good to have you guys. Where are you from? Seattle, Washington. Oh, fun. Very cool. And all the way over here to do a debt-free scream. Exactly.

Look at you. How much have you paid off? $360,000. Good for you. And how long did this take? Took about four and a half years, Dave. Wow. And your range of income during that time?

We started out about $130,000 up to $230,000. Wow. What do you guys do for a living? I'm an internal auditor at a bank. And I'm a CPA for a large public accounting firm. Ah, a couple of accountants. Awesome.

Very cool. So what kind of debt was the $360,000? It was our house. You paid off your house! We did. In Seattle! Yeah, we did.

A couple of weirdos. Yeah, big weirdos over here. I love it. Well, congratulations. What's this house worth? Low ball estimate about $650 to $700, just to be conservative. Not too bad. Yeah.

I like this. How old are you two? 29. Both of us, yeah. And your billionaires are almost. Oh, my gosh. Look at you. It feels good.

Touchdown, baby. So how long have you been married? Almost five years. Yeah, almost five. So you got married, bought a house, and said, let's pay it off. We did. So tell me the story. What happened?

Well, starting at that point when we bought our house, we were big HGTV fanatics. We love watching people buy their house, design their dream home, and then at the end of an hour, they're crying tears of joy. But in our case, you know, we were like, we want to do this ourselves. We got the ground running. We looked into it, and we got big quotes way higher than we expected. We weren't ready for it. We were debt-free prior to getting a house, and, you know, this added stress on top of it. It was making me sweat.

So luckily I had a former coworker, Eric, who's listening right now. Hey, Eric, how are you doing? He teaches Financial Peace University and he kind of taught me the principles. And I started listening to the podcast and a week later I was sold. I don't want to go into the renovation. I want to go the complete opposite. I want to have no debt. And listening to your show, I knew I couldn't just to go into the renovation. I want to go the complete opposite. I want to have no debt. And listening to your show, I knew I couldn't just come home and say,

Hey, babe, there's a crazy guy on the radio who tells us to live our life a different way. I knew that I had to slowly break her down and talk about our goals, setting goals together. And the rest is history. We read... Love Your Life, Not Theirs. Yeah, by Rachel, which really got her to flip the page and get us on and start working as a team, a cohesive unit. And, you know, it's been a long journey. We've been working hard.

We've been sacrificing a lot. And, you know, through the middle of the path, you know, it didn't feel like we'd ever get there, you know. But each month we just keep paying off the mortgage, keep paying off the mortgage. And now we're living out our dream of being here, doing our debt-free scream. Okay. So where was the – did you buy a being here, doing our debt-free scream. Okay. So where was the – did you buy a house that needed renovation? Yes. Or you decided you did?

Yeah. Has the renovation occurred? No. So you're living with all the stuff that you want to fix still. Yes, correct. But now you're going to go fix it with cash. It's livable, too. It was more just cosmetic stuff that we wanted to do, new kitchen, all that stuff.

And you can do that easy now. Yeah, we can. You're making a quarter million dollars and no payments no payments in the world exactly yeah wow so you flipped it on its head and just did it in reverse we did so you had to sit down and say this is going to take four or five years before you get your new kitchen was that hard to do very hard yeah but i don't it was on a work trip and i the book, and I remember still typing up the text message saying, I think we should do it because getting a home equity line of $200,000, $300,000 plus our mortgage was kind of scary. Yeah, overwhelming. All for just cosmetic looks of something we didn't really need.

Yeah. So HGTV goes into the trash. Exactly. Out comes financial peace exactly i love it i like it good trade yeah we're definitely much happier now than a kitchen uh so when does the renovation start uh we just had a baby so we're we're kind of focusing on other things yeah baby first for a little baby first okay so. So we've got to redo the nursery first. Yeah. Exactly.

But yeah, you'll lay out a schedule now and just with your cash flows and watch it go. We're going to do this room, then that room, or this work, and then that work. And you'll be able to drop another $200,000 in there pretty quick at this route. Way to go, y'all. How does it feel to have no payments at 29 years old? Amazing. Yeah. Didn't ever expect it.

Yeah. That's for sure. So what do you tell people the key to getting out of debt is? I think the key is, you know, working as a team, especially as a couple, working as a team, setting the same goals, setting goals that, you know, are reachable. And, you know, our goal was to, you know, have children and have the potential for her to work less or even stay at home. And I feel like we're way more comfortable now to be in that position.

And if the ground comes and we want her to stay home, she can easily do it. Just short-term and long-term goals. I had to have something to see. And each month we would click the button of submit 8,000, submit 10,000. And that's kind of what kept me going. It was like, if you push that button without me, I'm not going to be happy. Well, it's big chunks. I mean, you were hitting big old chunks on it.

But you've got $360,000 in four and a half years, and you have a paid for $650,000 house at 29 years old in Seattle. That's impressive. Thank you. Thank you. Very, very impressive. So who are your biggest cheerleaders outside the two of you? Both of our parents. My parents are here.

They came with you? They did. My parents did, yeah. And both of them live debt-free. They both, when I was raised, I know when he was raised too, it was don't buy anything you can't buy in cash. And they put us both through college, which we were really lucky for too. And cars, don't buy anything you can't pay for in cash.

So you already had that mindset. You just had to apply it to the house. Exactly. Because you were already debt-free when you started this, except the house. We were. Wow. Way to go.

Thank you. Way to go. We're so proud of y'all. Thank you. Very, very cool. So this is, what was the hardest part? Four and a half years, and you're newly married. I think the hardest part was probably, you know, sacrificing.

You see a lot of people going out to dinner, getting newer cars. Going on vacations. Yeah, it's really tempting to be like, hey, we're making good money. We can go do those things too. But our goals were a little different. And now we can live like no one else, you know, coming here, Atlanta. We just came back from Maui. You know, life is different now.

Life is good. Yeah, just cut Maui right in there as you head to Nashville. That makes sense, yeah. Yeah, a little bit of a detour. That's awesome. Well done. Very well done. Well, we've got a copy of Chris Hogan's book for you, Everyday Millionaires, number one bestseller.

You're going to be one if you're not already. You're very, very close, and congratulations. Thank you. We're very proud of you. I know your mom and dad are proud. So your baby is how old? He's three months. Three months old, and what's his name? close and uh congratulations we're very proud of you i know your mom and dad are proud so uh your baby is how old he's three months three months old and what's his name jayden and here comes mom and dad all right mom's handing him off with the got the headset so the scream doesn't scare the

three month hopefully not yeah that's a good thing we'll try i like it all right it is Samir and Janelle from Seattle along with Big Jaden. $360,000 paid off in four and a half years, making $130,000 to $230,000. They're 29 years old. Their house and everything's paid for. Count it down. Let's hear a debt-free scream. Three, two, one. We're debt-free! Woo!

Woo-hoo-hoo-hoo-hoo! Love it! Way to go, you guys! Well, Dave, your stuff doesn't work in an expensive real estate market like Seattle. Well, you'd have to tell them that because they didn't believe it. And they just decided that they didn't have to put once ahead of being debt free because all of the cosmetic fix-ups were once there's a couple hundred thousand of cosmetic fix-ups yet to come on that house and they'll cash flow it and make a

ton of money they're in great shape and so they just you know most of us we say we lie you ever hear people say i need let me just help you you don't need anything there's almost nothing that you need and there's nothing in the mall that you need for sure all of those things are called wants and there's nothing wrong with buying some once but don't lie about it just say i have the money and i want that i do that sometimes i like stuff there's some stuff i want to buy i want that and i have the money but i can't say i need a new car i've already got several i don't need another one i might want one because i'm a pretty serious car guy but just because i want it doesn't make it a need just because you want that purse you probably have 16 shut up just because you

want that trip that's you know that you can't call i need a vacation no you don't you're just whining call the wambulance you want a vacation save up and pay cash this is the dave ramsey show Thank you. Thanks for joining us, America. This is the Dave Ramsey Show. Open phones at 888-825-5225. Denise is in Maryland. Hi, Denise. Welcome to the Dave Ramsey Show. Hey, Dave.

How are you? Better than I deserve. What's up? I've been married 41 years to the same man. I am 61, and he is 65. We've done a lot of dumb things, and we've also had a lot of blessings. I found you in January of 2018. I personally went through financial peace.

He did not. He has slowly gotten on board. We're on every dollar. I canceled, stopped our, not canceled them, stopped our IRA contributions, like you said and um we're that are three to six months worth of emergency money put aside um he gets a pension from railroad retirement i had planned on starting um back up with our iras but he recently had heart surgery. So I'm one, and the bills are going to start coming in. So should I start that?

Should I change the baby steps? Do you have any idea what the bills will be? At least 20% of. Yeah, of whatever it was. So it's probably. We don't know yet. Probably $20,000 or $30,000. $20,000 or $30,000 anyway coming your way, right? That's what I'm guessing.

Yeah, okay. And what's your household income total? About $35,000 a year. Yeah, you need to stop everything and pile up cash to get ready for these medical bills if you're going to have a $30,000 hit making $35,000. Okay. You don't have any other money saved other than your emergency fund? Uh, we have like $11,000 in both our IRAs.

Yeah. Yeah. Yeah, we got to get ready for this. I mean, we know the storm's coming. We just don't know exactly what the arrival date is right right this is not it's not a theory it's happened and the bills are going to come correct he's on uh he turned 65 so he went on medicare okay all right well you've just got to ascertain what the actual out-of-pocket is going to be and try to save that as fast as you can. And as soon as you save that, then you restart your other stuff because it's going to kill your ability to save, right?

Oh, yeah. Save, spend. Yeah, everything. Yeah, you're just going to really watch what you're doing. So you're not working anymore. You're all just living off of his retirement? No, I work. I make about $20,000 a year. of his retirement? No. I work. I make about $20,000 a year.

And his retirement's $15,000? His retirement's $15,000 a month. And he works side jobs. Okay. So you're not $35,000. You're more like $40,000-something. If you're making $20,000 and he's making $18,000, that's $38,000.

Okay. You're right. I'm sorry. That's okay. And then your side jobs on top of that is up over $40,000. But either way, you still don't have $250,000 coming in or something like that, and you don't have a big pile of money, and you've got a $20,000 bill coming at least. At least.

Yeah. So we've got to, you know, what you might do is talk with the docs and maybe even the hospital and try to figure out what you're going to get billed for. Even talk to your insurance company and try to figure out what you're going to get billed for. But in the meantime, we know it's going to be a bunch and you need to just stop everything and pile up some cash to get ready for it as fast as you can. As soon as you can get that behind you, then you get back to saving towards your nest egg

because you're debt free. And, you know, you're building your, you're beyond the emergency fund. So you're building your nest egg and getting your house paid off for your next two goals. So, hey, thanks for the call. Open phones at 888-825-5225. John's in Virginia. Hey, John, welcome to The Dave Ramsey Show. Thank you very much.

Merry Christmas. Merry Christmas to you. How can I help? I am 61 years old, and my wife is 60. She's retired on disability. I'm still working. Our household income is my salary of $100,000 plus her social security, which is about $25,000 per year. And I've just got a small credit card bill I'm working on paying off. It's only $2,000.

I haven't paid off in about a month or two. We own two homes. They're worth about $900,000 combined. Our mortgage is $200,000. We owe about $200,000 mortgage on one. The other one's paid off. Right. How can I help you today? The problem I have is I've got too many toys. I've got three cars, and I've got a jet ski, and I've got... I'm wondering if I should just go ahead and pay off sell a couple of cars just accept the fact that i lost money on them you know i'm not going to get back what i put into them and just move on since i can't get psychologically past the thought that i you know i bought this car for ten thousand two and a half years ago and i can only sell it for five well that's what all

my cars are paid off too that's what they all do right it cars are paid off, too. That's what they all do, right? It is. The problem I have is I like cars. Every couple of years, I buy an old one or I buy one, and I pour money into the repairs, and I end up having to pay the credit card off. And then I'll spend like $10,000 for one, and I'll end up doing some repair work, getting it up to $13,000. And then three years later, I was like was like god i don't need this car but i can't get past the

psychological aspect of well if i sell it seven i've lost six thousand dollars you know i just well i think i think the thing is you've got to decide what you're buying a car for in the future in the past is over okay the decision's already been made you bought a car it went down in value selling it selling it just means you admit it uh-huh it's already you've already lost the money but selling it just means you admit that you've lost the money right yes so but then the next time you get ready to do this you buy it sounds like you like tinkering with them well i don't do as much tinkering as i do i love driving them but i usually end up having to have someone else do all the work on

them okay then you need to buy the car in such a way that the work that you're going to do actually enhances the value not just gets turns into lost money because the lost money part of the fix up has not been bringing you real joy, right? It hasn't been adding any value to my life. No, no, but the bottom line is you feel like you've got this regret on the back of your tongue, this bad taste in your mouth. Yeah, I'm sitting outside. I'm looking at the window right now. I'm looking at one of the cars again.

I just thought I should get rid of it, but I just put new tires on it and had new brakes from the past year. I had that psychological thought where I can't get rid of it because I just put all that money into it. Well, again, you've lost the money. Selling it just means you've admitted it. So that's all that is. And the question is, what do you want to drive? And let's do that at the least expensive way possible.

And sometimes that means buying a fixer-upper. Sometimes it means you just buy a car and drive it. But they all go down in value pretty much. A rare exception would be if you had classic cars that you were doing as a hobby and you really know what you're doing and you're buying a bargain on a classic car. Like, you know, I've got a 1960 Corvette that's a frame-up restoration. That one actually goes up in value. But the Corvette sitting next to it that's new goes down in value more.

So it's pretty much offsets. But, yeah, you just kind of got to know what you're getting into and go, I can accept this loss financially and emotionally as part of what I'm doing. And that's pretty much true with all cars, that we have to do that. And that's why you want your cars to be a smaller percentage of your overall income. That's why we tell you not to own things with motors and wheels added together equaling more than about half your annual income, which you've not violated that. So there's nothing in this discussion that goes, what are you, crazy?

There's none of that going on here. You just bought a $13,000 car and went down in value to five over a few years. That's kind of like normal stuff. It's going to do that. The thing you just want to ask yourself when you're doing the repairs are, are these repairs I'm going to keep it long enough to justify, or do I need to just sell the car like it is before I do the repairs and that kind of stuff? But tires and brakes, it's just part of operating the car, man.

Hey, thanks for the call. Appreciate you being part of the show today. That about puts this particular hour in the books. Our thanks to James Childs, our producer, Kelly Daniel, our associate producer, and phone screener. This is Common Sense for your dollars and cents. It's where we teach you to live on less than you make, a concept Congress can't grasp. It's The Dave Ramsey Show.

Hey, it's Kelly, associate producer and phone screener for The Dave Ramsey Show. If you would like to do your debt-free scream live on the show, make sure you visit DaveRamsey.com slash show and register. We would love for you to come to Nashville and tell Dave your story.