The Ramsey Show - App - THIS Is What Keeps People Middle Class (Hour 1)

Episode Date: January 17, 2024

Live from the headquarters of Ramsey Solutions, it's the Ramsey Show, where we help people build wealth, do work that they love, and create actual amazing relationships. George Campbell, Ramsey personality, YouTube star of the george camel show is my co-host today it is book launch week for george his new book breaking free from broke is on the shelves it came out officially yesterday the ultimate guide to more money and less stress and george goes through with great research showing the villains that are out there and the people that are trying to keep you down.

They're the man with the thumb on your neck. And you got the thumb off their neck. Absolutely. And it's been encouraging to see the feedback, Dave. One lady, this was a great message I got yesterday. I've been reading the e-book. We've been paying off the credit card in full monthly for years. But your chapter on how predatory the credit card companies are has changed that.

We've switched to debit cards only. I felt like I needed a shower after reading the stats on who's paying interest and who's getting rewards. I don't want to be a part of that system anymore. That's what I was hoping for. A little social movement there. We are starting a movement where people are going, these companies are not my friend, and their marketing is so slick. I mean, how many people brag about their credit card rewards and how much they love their sentimental security blankie? And so that's just one of the many traps they uncover, and it's been great to see that kind of feedback. Yeah, you're getting people to get rid of their little plastic blankie.

Yeah, and you've been doing it for years, Dave, getting them riled up with anger. I just do it with snark. We have different methodologies there. Snark is just passive-aggressive anger. That's right. Open phones at 888-825-5225 as we talk to you micah is in washington dc hey hi michael what's up hey dave hey george thanks for taking my call sure what's up hey so a little bit about me i'm uh 24

i'm currently debt free um i make I make $80,000 a year. I am currently maxing out my 401k and IRA. I want to buy a car that costs $30,000. Um, however, I'm, I don't want to get rid of my current car. It would just be a, you know, a play cards. It's a sports car. My question is, is I have 30,000 in cash that I'm prepared to pay for this car. I'm not sure if it's better to put this in a different sort of investment portfolio or if it would be okay to splurge and buy this car. Oh, I see. I thought you were calling the car an investment.

My face was turning inside out. Okay. So what's the car? I'm a car guy. I love gears. So it's a Nissan 3an 370z oh sweet nice car okay and what your model uh 2019 okay all right cool and what's the car you're currently driving worth um it's thirteen thousand dollars okay all right um what's your income trajectory uh when would you be making 90 uh potentially maybe five years from now whoa so i mean you're

gonna get a ten thousand dollar raise over five years uh well i'm i'm i'm projecting a promotion and then um how the military works when i move oh you're in the military okay correct okay now i understand okay yeah that would be more reasonable in the military most people are going to make a lot more in five years than a ten thousand dollar raise i'm just that's why i went right right yeah okay well i mean here's the thing i love cars okay i drove here today in my raptor i i love big engines i like things that make noise i'm redneck i want a loud muffler um all that right uh but the stupid things go down in value like a rock that's where chevy got that like a rock okay they go down in value and that includes that sweet nissan you're talking about and that includes my sweet raptor they go down in value so if you're going to build wealth you have to keep as small an amount and as possible

going into things that go down in value. So consequently, we find millionaires driving very conservative used cars until they've got substantial money. And one of the guidelines that, George, that we've developed here is to not have more than half your annual income tied up in things that have motors and wheels. So adding up all of your little toys with motors and wheels, does it add up to more than half your annual income? Because if it does, you've probably got too much in things going down in value

while you're trying to build wealth. Does that make sense to you mathematically? Yeah, yes. Like, I mean, it would be like $45,000 total. Yeah, and you make 80, and so you're over half. Yeah, okay. So sweet car,. Yeah, and you make 80, and so you're over half. Yeah, okay. So sweet car, sweet car, and you got the cash. If you do it, you can do it.

I mean, you're going to afford it, obviously, but the warning is that you're putting money in the wrong places if you want to be wealthy. Got it. I mean, the way you know someone's going to stay middle class is when they have two very nice cars that are obvious five six seven hundred dollar payments sitting in front of a middle class house exactly a hundred percent those people are going to stay middle class until they break that

habit it's just a it's a huge indicator yeah and the other thing to think about micah is you got another set of insurance premiums to pay more maintenance repair and so right now as you're in the military i don't know how much driving you're doing on these vehicles but i would consider those because it is a toy and so this is not going to crush you if you do it but we're just saying it may not be the time yeah i as much as i completely grasp what you're doing and I, and, you know, that's a great car. As the guy on the radio that tells you to do things to become wealthy, I'm going to tell you, don't do it.

I'm going to tell you way later when you've got more money and you're in a better financial position to do it. You've got the money to pay cash. If you do, it's not going to bankrupt you. That is not what we're saying. We're not being melodramatic. I just wanted, when I went broke when I was younger, slightly older than you, I made the decision I'm going to do things

that cause me not to be broke anymore, and I'm going to identify what broke people do. I'm not going to do that. I'm going to identify what rich people do, and I am going to do that. And, you know, what we discover, Tom Stanley found it first in 1992 when he did a book called Millionaire Next Door. We discovered it again when we did the largest study of millionaires ever done in North America, 10,167 of them we interviewed.

We did not find fancy cars. It was Honda, Toyota, four-year-old used cars, nothing that's going to turn heads at the stoplight. If they're millionaires. Now, if you're a billionaire, it's different. You can drive whatever you want to drive, right? But a billion is a thousand million. It's a different thing.

Scales. Millionaires don't have that. They don't have jets. Millionaires don't have seven cars. Millionaires don't, you know, that millionaires just have some money is all. And they have, generally speaking, conservative but reasonable lifestyles. And so we tell folks not to buy a brand new car until you have a net worth of a million dollars. If you do have a car, you should sell it if it violates those things.

And or if you can't get it and all your consumer debt paid off within two years because of the stupid car and so if you got like a fifty thousand dollar car you make sixty thousand dollars a year you need to sell it and you need to you know get rid of this eleven hundred dollar payment and just choking you to death it loses sixty percent of the value in five years these new cars it's brutal we went through a period of time on this show about a decade ago where the answer to every question was sell the car. Sell the car. It was the sell the car show.

People would call up and we'd go, hey, how you doing? Sell the car. That was it. Amputate the Tahoe. Next caller. Amputate the Tahoe. Just don't tell people to sell their horse, Dave. I learned that the hard way.

Oh, yeah. You got it. You got it. Really, you got it. The horse people don't like George. They got on George. The equestrian community. They're no got on George. The equestrian community. They're no fans of mine.

The equestrian community. There we go. No, it was the horse people. This is the Ramsey Show. George Gamble Ramsey personality is my co-host today. Thank you for joining us. Open phones at 888-825-5225. Will is in Atlanta.

Hi, Will. How are you? Good. How are you, Dave? Better than I deserve. What's up? About two months ago, my grandmother passed away, and I received about a $1.1 million inheritance.

Wow. I'm sorry for your loss and thrilled for your blessing what a wonderful what a wonderful thing she did that's amazing you're the only grandkid no i'm one of two grandkids each of you got 1.1 yes way to go, Granny. Wow. But my question today was, how do I make, I'm 23 years old. I was just calling to find out how do I make the absolute most of this. So this is a little bit intimidating to you. Yes.

Good. Good. That's a good you. Yes, extremely. Good. Good. That's a good sign. That means you're wise. If you were having a woo-hoo, I hit the lottery moment, it would mean you're a child. And so I'm glad you're a little bit. That's a great. It should take your breath away a little bit.

Yeah, this kind of fear is the beginning of wisdom. So way to go. It's a good fear. I don't want you to be panicked or anxiety-ridden or anything like that, but I do want you to be aware I just got behind the wheel of a car that is way more powerful than anything I've ever driven, and I need some driving lessons. That's what you're aware of.

Good for you. So proud of you. Good, good, good, good, good. Okay. First thing is keep that mindset. Second thing is never put money in something you don't understand no matter who says to including me anywhere you read or hear to put money in something and you can't tell somebody else how it works in detail do not put money in it okay okay which means you

might be going a little bit slow at first because this money might just be sitting in a bank account because that's what you grasp right now. Okay? Mm-hmm. Okay. The third thing is, the Bible says, in the multitude of counsel, there is safety. Money people, too many of them, have a little bit of arrogance in them, and they want to tell you what to do. If you have a money person, a financial advisor, an insurance person,

a real estate person, an estate planner that is telling you what to do instead of teaching you, fire them and get another one you want someone with the heart of a teacher because it is not their job to manage the money it's yours your grandmother didn't leave it to them she left it to you so it is your job to sit with a mutual fund broker with an advisor and learn and learn and learn and learn and learn. And you're doing that today. You called us because I want to learn what to do, right? That's very good.

But always look for someone with the heart of a teacher. You cannot offload the nervousness of this responsibility by letting someone else make your decisions. Okay. That make sense? Yes. If you have to understand it and you have to have people helping you that have the heart of a teacher, that helps you understand that those two things work together.

And then you're going to move slow. You just move at the speed of your comfort, at the speed of peace. When in doubt, don't. Easy enough, right? comfort at the speed of peace when in doubt don't easy enough right that is very easy yeah in other words when it were your stomachs moving up towards your throat you wonder if this would make your grandmother angry with you don't do it which is your fourth thing each time you make a decision with this money, ask yourself, would this cause her sitting in heaven to smile and be proud of her grandson? Okay?

And if the answer is no, don't do it. Because this lady had some sense. She left $2 million to her two grandkids. So I think we can use her as a filter for our decision making honoring her legacy honoring her memory causing her to smile in heaven as our filter and that's going to help you also does that make sense to you yes it does okay so there's no magic formula on what to do with the money i put mine in growth stock mutual funds, and I pay cash for real estate. And I live 100% debt-free, and you probably already knew that.

Yes, I do. And George does the exact same thing. Absolutely. And when you look at this money as a steward or a manager of it, it changes the filter. And an easy way to do this is filter it through the baby steps, number one, but also filter it through three buckets, giving, saving, and spending. So you should give some of this and be generous just like your grandma was you should spend some of it and enjoy it and you should invest probably the biggest portion of this for the future what do you make um i currently make about 110 000 a year okay so you don't need any

of this no yeah and so here's an interesting thing. If you put it in something like a mutual fund and it makes 10%, it'll double every seven years. So you said you're 23? Yes, 23 years old. So it'll be 2.2 at 30. At 37, it'll be 4.4. At 44, it'll be 8.8. It'll be 16 million when you're 50 if you just don't touch it and invest it and it makes 10 yeah mind-blowing i i didn't get it like wired to my bank account it just got

transferred into one of the financial institutions that she was associated with. But currently it's split up about $350,000 is in personal stock choices and CDs, and then $750,000 is in a managed stock account. Okay. Well, I don't play single stocks, so I probably wouldn't do that because there's more risk. But I want you to get in there and start figuring it out. And again, there's nothing to panic about but feeling the weight of this as a responsibility to manage is a proper philosophical spiritual stance for you if you do that it'll cause your decision making to be different than just uh some little kid who got some money and

blows it all by the time he's 26 yeah okay because you're not you're already more manly than that i can tell very wise yeah i'm very well done so i i i don't know if he said it but no debt emergency fund in place that's a good spot to be investing and to buy a property with cash a reasonable property enjoy some of it and then the rest i'd be investing either in more real estate if he's comfortable or just putting it in some good mutual funds. Just take your time. Just take your time. No rush. Yeah. Very, very calm. Well, good question, man. So put good people in your corner that have the heart of a teacher. They'll help you. If you want to know about the investing the way we do it and the way I personally do it and get someone with the heart of a teacher,

click smartvestor at rsey solutions.com you'll find a smart vestor pro or two or three in your area there that are people that have the heart of a teacher and know the way ramsey does it and they can walk you through that and teach you what you're doing and and they're going to move you out of those single stocks i can tell you that if once you understand you're going to move you out of those single stocks paul is in cleveland ohio hey paul welcome to the ramsey show hi thanks for having me on how are you better than i deserve what's up um i'm trying to uh i recently graduated from college we've got about twenty thousand dollars student loan debt um and about forty thousand already invested um in my

retirement account split between a Roth IRA and my company's 401k. What do you make? I'm trying to balance. What's that? What do you make? I make about $60,000 a year. Okay. You're trying to balance what? Trying to balance continuing to save for retirement and getting ahead on that. I'm 24 years old and I'm just making sure that I also pay off the student loans. So I have a, got about $10,000 set aside as an emergency fund. And I'm just trying to figure out what to do next, whether I should lump some pay down my student loans or just keep saving for retirement since the interest rates are a little bit lower than what you expect to get out of the

stock market. Well, Paul, I will talk to you like to you as if I went back in time, because I had more student loan debt than you and I made less than you. And so at 23, I was $40,000 in student loan debt. I wasn't making any progress. I was trying to play the same game you are, balancing this all. Here's what you got to do. Paradigm shift. Let's try a proven plan. That means we're going to take 9,000 from this emergency fund, pay down the debt. That's going to leave you with 11 left. Making 60, we're going to take $9,000 from this emergency fund, pay down the debt. That's going to leave you with $11,000 left. Making $60,000, you're going to knock that out quick. Pause investing. You'll be back to investing probably in six months if you do it this way. Investing 15%. Don't balance debt and investing. Get the debt cleared and then go whole log on the investing. That's what George is saying, and he's right. This is The Ramsey Show.

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So learn more today and join at chministries.org slash budget. That's chministries.org slash budget. George Campbell, Ramsey personality, is my co-host today matthew is in fort worth hey matthew welcome to the ramsey show hey guys thanks for taking my call sure what's up so my wife and i we are currently on baby step two and uh you know being from texas our biggest debt is my truck besides our house but i'm kind of in a unique situation where my company pays me mileage, IRS mileage rate, and I do about 30,000 miles a year on the truck, which comes out to about $20,000 a year in income. And so it makes a truck payment, covers gas,

insurance, and all that. I was just wondering, would it be possible to keep the truck or would you recommend getting something downsizing and maybe pocketing some of that mileage money towards our other debt? Whatever you drive with those miles, you're destroying its value. Right? Yep, correct. So from a business perspective, if you were running a fleet you would buy the least expensive vehicle that would get the job done

which would be less than you're driving um get the job done is reasonable comfort because you spend a lot of time in it and uh reasonable reliability because you have to get there but that's that's the definition to get the job done, and certainly can do that for half of what you're driving. Because whatever you're driving, you're turning it into nothing in three years. Four years, you put 120,000 miles in this thing. Yeah, correct. And so now we've got a highly depreciated vehicle.

What did your truck cost when you bought it? Right at $40,000. It was a 2023 Toyota Tacoma. Okay. Nice truck. Plus interest. I owe about $35,000 on it currently. Yeah.

And it'll be worth about $5,000 by the time you're done with it. Okay. After putting on 200,000 miles on there. Yeah. I mean, you're a road warrior you're whatever you drive if you want to keep the tacoma and you've got the money and you make enough money to pay this off and all that kind of stuff i'd put it in the driveway and i'd buy something else to drive okay but because whatever you're driving you need to just say out loud i'm destroying it

so we don't want to destroy a nice car yeah Yeah, just kind of like my thought was by 120,000 miles, you know, the truck should be paid off using the expense money. And then, you know, it's a Toyota, so I'm hoping to get, you know, 300,000 miles. You get the expense money whether you lose your butt on the truck or not. Okay. Right? Yeah.

You don't have to destroy a $40,000 truck to get the expense money. All right. Yeah. Yeah. Yeah. So, I mean, I don't mind if you keep the thing,

assuming the other numbers add up and you can pay it off. You owe 35,000. What's your household income? About one 75. Okay. How quickly can you pay it off if you just lean into it? No. Well, we're, we got about13,000 credit card debt right now and about $9,000 on the wife's car and then $35,000 on this.

So you could be debt-free in like a year, a little over a year? Yes, that's the plan with the baby steps. If I'm you, I mean, that's a great truck. That's what Rachel's husband drives. He's got one. They're great. They're really good trucks. the baby steps if i'm you i mean that's a great truck that's what rachel's husband drives he's got one they're great they're really good trucks and and you like it obviously you're because you're fighting to keep it in the conversation so but i don't mind i really you make 175 000 a year you can drive you can own a 35 000 tundra it's okay but i would own it and put it in the driveway i personally wouldn't destroy it i mean i've got the raptor r which is a super expensive truck the 700 horsepower i'm not putting those miles on that truck

okay i live eight miles from the office i drive it to the office that's the only place i drive it into the farm that's it i'm not putting a bunch of miles on this thing it's too expensive a vehicle to destroy it with high mileage and um and it gets crummy gas mileage with the 700 horsepower but but yeah but it ain't made for economy fuel it is it is not an economy car you can't fit it in the space and it doesn't qualify but yeah the same thing though i mean i can afford the ridiculousness of that and you can this. So I would say keep it and get something else that you destroy the value of. Yeah. You make $175,000, pay off this $57,000 in no time, and get you a little commuter car.

And then get you a $10,000, $15,000 truck and destroy it or whatever. And that'll all happen. Whatever it is you want to drive. In 12 months, you can do all of this. Yeah. You're doing great. So I just want you to look at the whole car thing different because you're systematically destroying the vehicle in value anyway i mean you're not the stupid tundra will

probably run 300 000 miles if you take care of it so you're not destroying it in that sense because they're again great truck but uh but i i just wouldn't do that to that car you know it doesn't make any sense. And you guys that are road warriors out there and your company gives you a car allowance, the car allowance is not dependent upon you having a car payment. And in his case, the expense, you know, they're giving him mileage and stuff. You get that if you drive a $5,000 paid-for truck or $85,000 truck. You get the same exact mileage.

People like to justify the car they want with the allowance. It's okay because I get this. You get it anyway. You're going to get the money anyway. So pocket that $500 instead of sending it to a lender. Exactly. Why don't you keep it? That would be a great idea.

So good way to think about this stuff. Good question, sir. We appreciate you joining us. Open phones at 888-825-5225. Adrienne is in Detroit. Hi, Adrienne. Welcome to the Ramsey Show. Hi.

Thanks for having me. Sure. What's up? So I am 33, and my husband is 35, and we are still working on baby step two so we have zero dollars in retirement and it like keeps me up at night um i don't know if we're too far behind you're 33 i know but we still have 14 000 in student loans i was bankrupt at 28 You're not too far behind. Okay. Okay.

I'm glad you're a little worried because it's going to motivate you to not be a stupid American consumer, and you're going to get out of debt and save money. That's a good motivation for the fear, but I don't want you anxiety-ridden that this is not possible, hopeless that this is not possible. You should retire with several million dollars. What do you all make? Okay. We make $97,000 with our salary full-time jobs, but then we also do side hustles.

And you have how much is student loan debt? Well, we've paid off $158,000 in debt so far. We have $14,000 left. Amazing. How long did that take? Well, we've been on the Ramsey plan for a little less than two years. Way to go! You cut off $158,000 in two years. Yeah, we sold our Tesla. Yes, sell the horse, sell the Tesla, whatever you got to do.

That's impressive. So you'll be out of this debt in a few months, it sounds like. Maybe six months? Yeah, that's our goal. Yeah, our goal you'll be out of this debt in a few months it sounds like maybe six months yeah that's our goal yeah our goal is to be out of the debt and well hopefully the next three months we're really going to push it and then we've got to save that three to six months but if you're 34 years old and you save 15 000 a year 15 of 100 000 from 34 to 65 i'm doing this in my head but i think that's probably going to be close to $10 million. Okay. You're not too late. You can go use our investment template. If I'm half wrong, I think you'll be okay.

Okay. Thank you. I do want you to continue to follow the Ramsey plan, get your emergency fund in place, and start saving Baby step four 15%, right? Yeah. And jump on the website at Ramsey Solutions and run the investment calculator, and it'll show you what 15,000 will be. I did that in my head. I don't remember what it is, but it's well in excess of a million. It's probably between five and 10. Yeah, 30 years of working, 15,000, plus your income's going to go up over time. So think about that.

You're going to be doing more than $15,000 a year over the course of time with compound growth over 30 years at 10%. I mean, it's going to be mind-boggling. You're not too late. You're in good shape if you play through, if you keep on the track that you're on, okay, which is to work the baby steps. You're going to be a multimillionaire, okay? Okay. Thank you. Yeah.

But go ahead and do that math for yourself, and it helps you. So a good one to remember that's easy is age 25 to age 65. Now, she's going to be 35 where she starts, but age 25 to age 65, $100 a month. $1,200 a year. That's nothing. $100 a month from 25 to 65 in a good gross stock mutual funds 1,176,000 wow so you're making it at return and that's some weak savings right and so you think about the average income 15 oh my goodness yeah it's unbelievably weak yeah our exponential you know

if you follow our stuff we're saving 15,000 not 1,200 that changes the numbers. See how I did that? That's how I did that. This is The Ramsey Show. George Campbell Ramsey personality is my co-host today. If you didn't know, we broadcast in Franklin, Tennessee, just a little bit south of Nashville, Tennessee. It's a wonderful Civil War era town, historic and beautiful and quaint and all that kind of stuff. We're a little bit south about an exit down, and folks come over to the Ramsey campus all the time.

We've got a big lobby to welcome guests. It includes a whole timeline, the history of everything we've done here, places to take pictures. And remember, the debt-free stage is out there. a whole timeline the history of everything we've done here places to take pictures and remember the debt-free stage is out there there's free coffee free chocolate chip cookies and if it snows a quarter of an inch in nashville people think that it's 92 inches deep and we're ready for a ski slope or a blizzard and And they go in freak out mode. So everything just shuts down like a hard frost shuts the town down. Okay. And so we usually have 50 to 200 folks sitting out here watching the show.

We do it live from 1 to 4 Central every day, Monday through Friday. And we always have folks dropping by for the free coffee cookies and to watch the show. And in the afternoons we love having you thank you for doing that uh because of the snow we've got just a few folks out here about 30 or 40 or so and a cat that runs the lobby just announced uh to george that we're going to give all of you guys visiting george's brand new book breaking free from broke just as a gift just to say thanks for coming out in the snow the the frost, whatever this was. That's our gift to you.

I said, can we do that? She said, yeah, we can do whatever we want. I was like, oh, that's amazing. Let's do this. We can do whatever we want. We're cat. She's in charge. That's right.

That's so fun. Also, we had the Navy recruiting team drop by. What an honor to meet them. They're big sponsors of our high school curriculum And a bunch of high schools around America Thank you to the Navy And thank you to you guys We appreciate you Appreciate everything you do

It's absolutely incredible And a lot of students in America Get the high school curriculum because of you guys And we appreciate you And of course we appreciate your service And if you visit Good note Dave That we actually go out in the lobby twice an hour

and we'll greet people and sign books and say hey. That's how we found out about all this a minute ago. Yeah, you and I were out there at the break getting people signed books. Meeting people, taking pics. So it's a real fun way to make a part of your Nashville trip. It's not as cool as Disney when the Mickey characters come out, but it's similar. Well, some people are so excited that I'm like, you need to get out more. Like, this is too fun for you.

Pluto and Goofy just went out. I'm not saying who's who. Okay. But, all right. The Ramsey Show Question of the Day is brought to you by Neighborly, your hub for home services from repairs and maintenance to home improvement projects. Winter brings some challenges for homeowners. You need to check out Neighborly's helpful winter checklist, which you can download for free. Check it out at neighborly.com slash

Ramsey. Today's question comes from Connor in Oklahoma. We have approximately $200,000 in business debt, the majority being $150,000 small business SBA loan that we personally guaranteed. The business failed about five months ago, and we have left the business to get regular jobs now. The debt still lingers, and we're considering filing Chapter 13 bankruptcy soon, but wondered if there was a better way since this debt is not from frivolous spending. My wife and I don't overspend on our personal lives, but this business debt is in our name and destroying our credit, our mental state, and our blood pressure. Oof. To start with, Chapter 13 is a payment plan. Dude, you're already on a payment plan.

You know, SBA loan gets paid in full in Chapter 13. So you've got 60 months, and you're going to pay it off over five years in Chapter 13. So filing Chapter 13 is useless. You know, if you're already paying payments and you can work to pay it off over five years in Chapter 13. So filing Chapter 13 is useless. You know, if you're already paying payments and you can work your way through payments, then Chapter 13, Chapter 7 would clear the loan, except for the fact they probably took a lien on your house and they're probably going to take your house if you do that.

And so I think you continue to work it outside of bankruptcy. Chapter 13 is of no benefit to you except maybe getting the payment lower, but you're not going to get out of the debt in a Chapter 13. And you're not going to get out of the debt if they have a lien on your house. And most of the time the SBA will take a lien on your house in these situations. So if they've got a second on your house and there's big equity in your house, they're going to take the house. You're either going to pay them or they're going to take the house a hundred cents on the dollar you know unless unless you negotiate with them but

but bankruptcy does not make the sba lean on your house go away they if you have if it's there he didn't say but that's a typical process for the small business administration. That's why I hate SBA loans. I hate them because of this exact situation right here. So I instead would pretend like you have a $200,000 student loan, which is also not bankruptable, by the way. And I would just roll up my sleeves and go bananas and take six jobs and get your income up you know spending down get it get it paid down as fast as you can throw 50k out of the year basic math says we can pay this off in four years yeah if you can pay

100 a year you're done with this in two years and so we don't have your income from this email but um it's not it's not overspending but it was a really dumb idea to open a business with a loan that's why we tell people don't do that um ouch i'm so sorry man it takes your breath away when this happens number one you got the failure of the business hanging around your neck and then you've got this reminder every month that we failed when we may have to make these huge payments so um a couple of things number one i would consider rolling up your sleeves and uh working six jobs and just paying it down like anybody else with it great gazelle intensity that's going to be the best way number two if

you have enough equity in your home to clear the loan you may want to sell the house and be out of it be done with it and go go rent and start fresh from there um because you may want to sell the house and be out of it be done with it and go go rent and start fresh from there because you're going to lose the house if you file a chapter 7 bankruptcy and if you file a 13 you're paying payments again it's of no benefit you can pay payments pay payments so oh man it's awful sorry you're facing that yeah the success of businesses largely relies on you know this cash flow and when you have two hundred thousand dollars in debt to start and with the high failure rate of some of these small businesses it just makes the problem worse yeah we're huge proponents of small business entree leadership we work with about ten thousand of them and i do the

entree leadership podcast once a week, talking to small business people every week. And we love doing our Entree Leadership events. And every single time we tell you to stay away from loans, particularly, it's an oxymoron that you say, the Small Business Administration screws more small businesses than anybody else. I mean, isn't that weird? I mean, it's just weird. It sets you up for failure. Number one cause of small business failure, cash flow problems. What it causes cash flow problems.

Don't pay your taxes on time and have a big SBA loan. This causes cash flow problems every time. All right, Jared is with us in Jacksonville, Florida. Hi, Jared. How are you? I'm doing good. How are y'all? Better than I deserve.

What's up? So I've been living paycheck to paycheck lately and just want to know if you guys have any advice for me. I'm starting on baby step number one right now and just trying to work my way up to being debt free. Do we ever, my friend? Well, one thing you can check out, it's totally free. We just did a live stream called Break the Cycle where we help people break that paycheck to paycheck cycle at ramsysolutions.com slash break the cycle. But the key here is to get on a budget and start looking at what is going on with my money. Because you make money, right? How much do you make? Right now, I'm making $65,000 a year, but as of the 1st of February, I'll be making $72,000. Wonderful. And how much debt do you have?

Around $80,000 in debt. Okay. So now this becomes a math problem. We have $80,000 in debt. We make $75,000. How do we pay this off aggressively? We recommend budgeting plus the debt snowball, and that's going to help you aggressively pay down this debt,

smallest to largest balance. And we start with $1,000 in the bank. Do you have $1,000 in the bank? I do not. I'm working on getting that right now that right now but just with my bills and rent and everything and i'm a very frivolous spender to be honest with you guys yeah yeah that's what's so your first step is to get organized and get on a written budget a detailed plan pretend like you were managing this money for someone else you had 70 coming in and you need to clean up an 80 mess right okay and if you if i hired you to do that for someone else you had 70 coming in and you need to clean up an 80 mess right okay and if you if i hired you to do that for someone else you could do it but the problem is the party in on the weekends

the problem is the impulse spending uh the problem is you're just you know you're out of control and showing up in your money and you're you said that i? Yes. Okay. So we know what the solution is. It's the guy in your mirror. He's the solution to this issue. So jump online and watch that break the cycle. Get the EveryDollar app and start using it. It's free to start. And jump in there and start using it and start to put together your budget

and make the money that you have behave instead of wondering where it went this is the ramsey show We'll see you next time.