The Ramsey Show - App - Three Things That Cause Poverty (Hour 2)

Episode Date: September 12, 2018

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Live from the headquarters of Ramsey Solutions, it's the Dave Ramsey Show. Where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. I am Dave Ramsey, your host. Thank you for joining us. I often get questions and accusations thrown at me regarding my stance or my look on poverty or being poor or being broke. There's a difference between being poor and being broke. Poor is a state of mind. Broke is I'm passing through. I've been broke, but I've never been poor. I've been so broke I couldn't pay attention, but I've never been poor. I've been so broke I couldn't pay attention, but I've never been poor.

So poverty, or to be poor, is caused by three possible things, and really only three possible things. One is you have the unfortunate situation to be born in an area of the world where the political climate is corrupt, unstable, and economic activity is almost zilch. There is no economy for you to participate in because your government is so horrible, and, oh, or other reasons, we call these third-world countries. That's a valid reason for poverty, and obviously it's no fault of the person that's living in that situation that's in poverty. The second reason it's no fault of the person that is poor or in poverty is when other people

oppress the poor. That's a biblical term. You don't hear that much anymore, to be oppressed, to be put down, to be taken advantage of. And you see that in developing countries as well as, you know, as well as, you know, a thriving economy like the United States. There's plenty of, you go in the poor area of town, you will see the businesses that feed on the poor. Check cashing, title pawn, rent to own, payday lenders. You don't see these in the rich end of town

because rich people eat dirt before they do that stuff. They're not going to do that because they know how detrimental it is and how short-term thinking it is. But these businesses are parasites that take advantage of the poor and further poverty along. The third reason people are poor is stupid decisions. When I went broke, it wasn't because anybody oppressed me. It's because I was stupid.

It was stupid decisions. Had I continued to make those stupid decisions, I would continue to be broke. There's a cause and effect of sowing and reaping in our lives. If you live in North America, you are not in an economic climate that holds you down. Listen, snowflake, visit some places where they really hold you down. Okay. You're not held back. You're a whiner.

Okay. Stupid. All right. Now, are there things in America that will oppress the poor? Yes. Are there mindsets that keep you in the gutter? Yes. But actual economic activity is around here for you to participate in

and has cause and effect and get out of there. What you plant is what grows. If you plant nothing, the government's not going to come along and plant something. When it rains, you're going to have mud. And you can eat mud pies and make a mud hut. But if you plant corn, you'll have corn. Voila, when it rains. And don't be shocked that corn grows if you plant corn.

If you do rich people habits with money and have rich people mindsets with money, eventually you will be rich people. If you do poor people stuff with money and you're rich, eventually you will be poor people. Have you ever seen a trust fund baby do stupid stuff? Have you ever seen somebody win the lottery and lose everything? They do poor people stuff with their money, short-term thinking, and they get stupid and they lose their money. I've done both.

I know how it feels. Article in Bloomberg today, Americans spend tens of billions of dollars on government-run lotteries each year, but as income inequality widens, low-earning households spend a disproportionate amount of money on lottery tickets, according to a new study. Honey, it doesn't get anything to do with income inequality. It's always been that low-income households are supporting the lottery. The lowest-income households in the U.S. on average spend $412 annually on lotto tickets,

which is nearly four times the $105 spent by the highest-earning households on average. According to a study released on Wednesday, almost 3 in 10 Americans in the lowest-income bracket play the lottery once a week compared to 2 in 10 who earn more than that. Lotteries have become an alternative mechanism of social mobility, a way of achieving financial success in an economy that's increasingly befriend of those opportunities, said Jonathan Cohen, a Ph.D. candidate at the University of Virginia. I don't even want to know how much debt Jonathan has.

There's an understandable belief that the economy is rigged, and your best chance of making it out is getting rich through the lottery. No, Jonathan, they're not trapped, and the economy's not rigged. You're a Ph.D. student, honey. You haven't lived in the real world long. We'll get you out here and show you how this stuff really works. The way it really works is this. $412 annually is just under $35 a month.

$35 a month invested in a growth stock mutual fund, a good one with a long track record, 99 times out of 100. If you do that from age 25 to age 65, you would have about $411,000 in your nest egg. Thirty-five dollars a month instead of spending it on lottery. If you put it in the lottery, you know what you will have at retirement? Nothing. It does not cause upward mobility, fool. It causes the theft of money from poor people in the name of the government. Fool. It has nothing to do with wealth inequality.

It has to do with stupid decisions and a government preying on the poor and using the lottery to do it, knowing that the high percentage of the lottery tickets are sold in lower-income households. This crap continues. Oh, but we use it to fund education tuition. Oh, here's a great idea. Let's have a whole bunch of poor people send middle-income people and rich people's kids to school for free. Think that increases wealth inequality? This is stupid.

It's oppressing the poor, and poor people that are playing the lottery are stupid. You're stupid. Well, that's the poor and poor people that are playing the lottery are stupid. You're stupid. Well, that's the only way I'm getting out. Listen, if you walk from your house one mile to the market to buy a lottery ticket, you are 12 times more likely to be struck by lightning twice than to buy the ticket. That's the probability of you winning. That's

a statistical fact that is not going to occur in your life. But if you invest $35 instead of wasting it in a decent growth stock mutual fund over at your work, they got a thing called a 401k plan. You'll have $411,000 when you turn 65. Oh, let me help you with that. At 8%, that's $33,000 a year with never touching the nest egg. That's $2,500, $2,700 a month for a $35 return. And it happens every time you do this.

If you plant corn, you grow corn. If you plant nothing, you will have nothing. And this foolish idea that the way the poor are not going to be poor anymore is to be taken advantage of by the lottery is absolutely asinine. Folks, this is cause and effect. This is your government preying on the poor. And if you're poor or if you're not and you're playing the lottery, let me tell you what the lottery is.

It's a tax on stupid people that can't do math. That's what the lottery is. 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 ripoff. 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. And 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. Thanks for joining us, America. Roshan is with us in Detroit, Michigan. Hi, Roshan.

What's up? Hey, Dave. How you doing? Better than I deserve. How can I help? All right. Can you hear me fine? I'm sorry?

Yeah. So I talked to you about seven months ago, and I just lost my job. I was getting a severance package and moving to a new city. And you kind of told me, all right, once you get settled, you know, use the rest of the money to pay down some debt, all of the baby steps. And since then, I've been doing that. But I do plan on getting engaged in the next four months. And I was wondering, do I use that money because I still have money from that severance package to get a ring and put something to her wedding, or do I just write a check and become debt-free? What is your income?

$90,000. Okay. And how much debt is there? A total of $15,000. $15,000? Yes. Okay. And how much is in your severance package?

I have $12,000 left, but then I can have $3 have three by next month just from saving. Yeah, okay. So when would you get married? I wouldn't get married right until 2020. Okay, so you have plenty of time saved for the wedding if you have no debt, right? Correct. Okay, so we need $15,000 plus a ring, and you have 12. Exactly.

Okay, so if you want to do the ring out of that money and then throw the rest of it at the debt and then pay the rest of that off the next few months that sounds cool okay that was that was my plan yeah your ring should be no more than one month's pay okay and don't let someone tell you a diamond is an investment. My wife has a whole bunch of diamonds. I bought them over the years just to say thank you for hanging out with me. And none of them have gone up in value. Okay.

The only thing they did was just make her smile. And that was worth the investment. But this idea that, oh, a diamond is an investment. Bull. They don't go up in value. Investments I have go up in value. So what you're buying is something just as a statement of love, commitment, and so forth. And so don't get too strung out, is my point,

on what you're spending or why you're spending it. Just it is what it is, and don't let someone tell you it's an investment. The second thing is there's more markup in diamonds and jewelry than just about any other category. Furniture would be another one. It's double, okay? So find a good diamond broker that can actually teach you a little bit about diamonds and help you find a deal um because again they they don't you know well this is a really clean stone it'll go up in

value i've got a i got several of them that have hardly any blemishes in them on sharon's hand but i haven't noticed that changing anything um it's just is it pretty, does it do the job, and so forth. And so, you know, don't overpay and don't pay when you're all said and done. Don't have more than a month of your income in it. And the jewelry store will tell you three months, and that's because they sell jewelry. Hope that helps, dude. Congratulations. Sounds like things are going well.

Norma's in Tampa, Florida. Hi, Norma. How are you? Good. How are you? Good. How are you doing? Better than I deserve. What's up? Thank you for taking my call.

I've been listening to you for the past month, watching videos and listening to your program. And my question is, I got in a budget this month, thanks to you and to the things that you teach. My question is, my partner and I have decided to get married on November. We don't have any savings, only the baby step one, and we have, or I have, previous to a $5,000 on a Roth IRA that I was considering to take off to pay for some of the wedding expenses. We have a very small wedding planning, just a family, but still, you know, it's going to cost something that we do not have. Should I take it? I know that will be a penalty, but I'd rather pay for cash for all the expenses and not you know have a debt well i mean they're going to hit you with a penalty that's pretty substantial

and you would have it's like borrowing money at 30 interest i mean um it's not wise so um you know i i would just say we're going to do nothing we're going to live on beans and rice for a month month and a half and whatever we can save up to what we're going to spend on the wedding i wouldn't cash out my roth um and i certainly wouldn't borrow money under any circumstances for the wedding um that's pretty limiting but um you know maybe you got some stuff around you can sell what's your car worth maybe you can sell. What's your car worth? Maybe you sell your car, get your cheaper car, use that for the wedding. Oh, I don't know if I want to do that. Well, that's, there you go. I mean, that's the thing. So, you know, that's what you're looking

at. And I have a big garage sale. What can you sell on Craigslist? What else can we do? And, you know, push around that way. I'm going to scrape and scratch and claw the money together, and we'll spend that money. No debt, and no, I wouldn't cash out my Roth IRA. I never tell someone to cash out retirement except to avoid bankruptcy or foreclosure, and this is neither. Dave is in Austin, Texas. Hi, Dave. Welcome to the Dave Ramsey Show. Hi, Dave.

Nice to talk to you. Thanks in part to your Dave Ramsey Show. Hi, Dave. Nice to talk to you. Thanks in part to your book and your teachings. We're in financial step number six. Way to go, dude. Thank you. So we are in Austin right now, and we're contemplating to move to Charlotte, North Carolina. And part of the reason is just to do away with our mortgage. Our house presently is

$400,000. So if we sell the house and we buy a house in Charlotte area for about $250,000. Excuse me, let me just rewind back. We owe $150,000 on the house. So basically the equity in the house is $250,000. So my thinking was if we move from Austin to Charlotte and basically buy the house cash in Charlotte, we basically would have no mortgage because we've paid off our student loans, cars. We don't have any credit cards. Is there some other reason to be in Charlotte? We have a family nearby. I'm starting a new business.

And right now, so I'm basically in the baby steps of starting the business. So we can have assistance from the family. And we also have some family who lives in Northeast and Florida and Georgia. So we would be sort of near to everybody. Well, that's a good reason to move. But it doesn't, I mean, the real estate prices between Austin and Charlotte are not that much different. And it certainly doesn't cause you to be able to buy cash because you moved to Charlotte. What happens is you're moving down in-house when you move to Charlotte or into a different kind of an area than you're currently in or something

because real estate prices are not twice as expensive in Austin as they are in Charlotte. As a matter of fact, they're probably hardly different at all. Very similar towns, very similar economies. Yeah, I mean, just to, I mean, because my numbers are present mortgage payment is $1,700 a month, and our tax on the property is $600. Okay. But if you sell your house and stayed in Austin, you could buy a $250,000 house for cash in Austin, or you can move to buy a very similar house in Charlotte for $250,000.

But, I mean, the reason you're able to pay cash with your equity is not because Charlotte is that much cheaper. It's because you're moving down in-house while you make the move to start a business and be near family. I think you make the move. I think every bit of the decision is right. There's just that one data point that you're using for analysis that's broken. I just want to point that out.

But other than that, I think you're fine. You're going to end up moving down in-house, have a debt-free house. You're going to be in a town near your family, and you're starting your business with a debt-free house and near your family. That's all very smart. I like every bit of that. Hey, thanks for the call. Appreciate you joining us.

Open phones at 888-825-5225. Mitchell is on YouTube. Dave, I know Financial Peace University is Christian-based. I'm agnostic. Will it still work for me? Sure. Sure. Common sense is still common sense.

Law of gravity is still law of gravity, even if you don't believe in it. Jump off a building, you'll discover it. But even if you don't believe in it, it's there. And so, yeah, come on, man. We'd love to have you. And it's not too Bible-thumping. I don't think you'll be too offended unless you're just looking to be offended. If you're looking for it to be offended, I can help you with that.

But I don't think this one will do it. It's pretty lightweight as far as the Bible study parts of it go. But it's based on Scripture. We need to talk about something you've been hiding. It's your smile. Your teeth aren't straight and you think you don't have the money or the time to get them fixed. You think your only option is to go on covering your teeth every time you laugh. Well, here's some good news. With Smile Love, you can have a completely confident smile,

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Promo code Dave. In the lobby of Ramsey Solutions, Matt and Hannah are with us. Hey, guys, how are you? Great. How are you? Welcome. Where do you guys live? We are from Birmingham, Alabama. Oh, a couple hours down the road. Not too bad.

Welcome to Nashville. And here to do a debt-free screen. Yes, sir. That's awesomeness. How much have you paid off? We paid off $26,729. Good deal. How long did this take?

Ten months. Good for you. Your range of income during that time? We started about $40,000, and we doubled and went just slightly over $80,000. Wow. How did you double your income in ten months? I got a job. Oh, there's that.

Okay. What do you do? I am a registered nurse. Oh, there we go. She came out of nursing school. Yes, sir. Got the first job. Oh, there's that. Okay. What do you do? I am a registered nurse. Oh, there we go. So you came out of nursing school. Yes, sir. Got the first job. Very good.

And what about you, Matt? What do you do? I'm a respiratory therapist. Okay. Very cool. So both of you in the medical field. Yes, sir. Very neat.

Good. Good. So how long have you guys been married? How long have we been married? Seven years. There you go. All right. After seven years, you come out of nursing school.

Yes, sir. But ten months ago, something happened, and you said, okay, we've got to get out of debt. What happened after seven years of marriage that woke you guys up? Well, we actually started, we got to know you about five years ago before we had our son. And then life kind of happened. We had gotten on a budget, started paying a few things off, and then life happened, and we had to kind of pause. So we wound up with two cars that were totaled, and so we had to replace those. But we did cash flow nursing school, and so I actually graduated from nursing school about a year ago.

And then I got the job last August, and we got started. Boom. Okay. So what made you, because you kind of fell off the wagon, but now then you get serious. What happened? What got you serious all of a sudden? I guess just tired of paying extra money on stuff we pulled out. Yes.

Student loans. Got tired of being broke? Yes. Just all of a sudden there was a wake up, huh? And we had kids then, and we were like, we wanted to do Disney World and vacations and stuff, and I couldn't justify doing that with all these payments. Gotcha. What kind of debt was the $27,000? We had one credit card, and then his student loans, and then we had two cars.

Okay. So student loans have been hanging around seven years. Actually, a little bit longer. They were his. Wow. That's like a pet. Yeah. Time to get rid of Sally Mae.

Yes. And you gave her her eviction papers. Very cool. So what did you do to get out of debt? When people say, how'd you do that, what do you tell them? Stay disciplined to the budget, you know, the budget. We did. We stuck with the budget and picked up extra hours.

He picked up extra hours. We just did what we had to do. Beans and rice. Okay. So you just cut your lifestyle down, wrote it out, and stuck to it. Yes, sir. We lived off of his income, just like we had been. So we didn't change anything after I got a job.

Well, yeah, so your income went way up. That helps. Because you didn't have to really cut lifestyle substantially, but you cut it some and watch what you're doing and threw all of your check at it. Yes, sir. Okay. That makes sense because $40,000 up and then $27,000 down. That makes sense. Good.

Okay. Way to go, guys. Thank you. Well done. Did you have people cheering you on? We did. We took Financial Peace University with our Sunday school class, so they were big cheerleaders. Oh, during this time?

Yes, sir. Oh, that's perfect. Okay. Yeah, you got lots of encouragement that way. Yes, sir. That's good. Okay. And that also kind of gave you a lot of the details to how to turn the knobs and make the thing work, right?

Yes, sir. It was perfect. Yeah. Very good. Very cool. We got a copy of Chris Hogan's book for you, Retire Inspired. We want that to be the next chapter in your story that you guys become everyday millionaires and outrageously generous as you go along. And you brought the kiddos with you, right?

We did, yes, sir. Okay, all the way up from Birmingham. And what ages and names are they? This is Daniel, and he is five. And we have Addie, and she is about a year and a half. Okay, all right, perfect. Good stuff. All right, Daniel and Addie, Matt and Hannah, Birmingham, Alabama,

$27,000 paid off in 10 months, making $40,000 up to $80,000. Count it down. Let's hear a debt-free scream. Three, two, one. We're debt-free! Love it! Well done. Oh, my goodness.

Man, that's fabulous. Very, very well done. Oh, my goodness. Man, that's fabulous. Very, very well done. Open phones at 888-825-5225. Ben is with us in Cincinnati. Hi, Ben. How are you? I'm pretty good, Dave. How's it going?

Better than I deserve. How can I help? So I've got a question for you. My wife and I are currently in baby step two, and we have really been pounding out a lot of the smaller consumer debts. And we're coming along to some of our larger debts with our car, as well as my school loan. So I guess the question is, well, as I'm assessing our home, it's an older home and I'm just seeing some larger maintenance costs that are probably going to be coming in the next few years.

So my question is, do we kind of cut our ties now and sell our home and use that money to pay our debt down or just kind of keep chugging along as we're going right now. If you were out of debt, would you sell your home because of these upcoming maintenance things because you want a different home? The maintenance issues go into it as well as the size of the home. If you were out of debt, would you sell your home? Yes. Okay. We would get a larger home for our growing family okay all right good okay so you can sell this one and rent for a little bit you get out of debt and then save up to move into the larger one right my point is you're moving anyway. Yep.

As opposed to if you call me up and say, I love my home, I never wanted to move, but I would if it would get me out of debt. That isn't what you said, okay? And in that case, I might say keep the house and, you know, work your way through the debt. But in your case, you're a move anyway, and it accelerates you getting out of debt. And, you know, you get out of debt, then you build your emergency fund, then you build up your down payment and move into the house that works better for your family. Okay?

Okay. Yep. But that makes you a renter for a little while. Are you okay with that? That does make it tough. Like I said, you know, that's just adding another move, more cost associated with that. Now we're moving twice instead of just once. How much debt do you have?

So consumer debt, we only have about $5,000. Everything other than your house is consumer debt to you? No, I'm sorry. How much debt do you have, not counting your house? $105,000. And how much is the equity in your home? I'd say $50,000 to $60,000. Okay. And what's your household income? $120,000. Okay. So you're debt-free in a year if you sell the house? That's kind of what I'm saying now then you build your emergency fund and then you build a down payment so you're renting only for two years and that's not that expensive to move but rent something inexpensive it's an adventure you're on you're cleaning up

this mess um would i sell the current home and buy a more expensive home while i'm trying to clean up a hundred thousand000 worth of debt. Well, no, of course I wouldn't. You know, it's oxymoronic. No, I wouldn't do that. So either go rent for two years and be debt free during that time while you're building up your emergency fund, then your down payment or stay where you are. Those are your only two options that make any sense.

Stay where you are. You're out of debt and then move up and home from there. In two years, three years, four years, you're not going to have substantial problems with the things you're worried about. But over 10 years, you might. Christine is with us in New York. Hi, Christine. Welcome to the Dave Ramsey Show. Hi, how are you?

Better than I deserve. What's up? Thank you for taking my call. So I currently work in a toxic work environment that is causing some issues with my health. Should I just suck it up so there's no... Wait, I'm sorry. What do you mean by toxic? Medically toxic or jerks?

Jerks. How's that causing issues with your health? Just stress? Yeah, a lot of emotional distress that's causing me some issues. What kind of issues? I don't want to reveal too much, but I was recently diagnosed with depression. Okay. Well, you've stayed way too long. If the work environment is causing depression, you've got to get out of there.

I suspect there's probably multiple things going on here, but, I mean, life's too short to work with a bunch of jerks. Yeah, I'd start hunting a job. I think you probably should have a year ago. Yeah, I'd get out of there if I were you. This is the Dave Ramsey Show. Are you thinking about buying a house? Well, first you need to be out of debt and have your three to six months of expenses like we were just talking about. And you need to have a good, strong down payment. Preferable for you to have 20% down because you avoid PMI, you've worked so hard to get these steps,

and you don't want to trust just anybody to help you buy a house. The market is so competitive out there right now. Most of these listings that are good quality listings are getting multiple offers. And if you want to know how to get that house, you need to be working with a professional real estate agent. You know, what happens when the problem is when the market gets hot like this, everybody and his brother goes and gets a license. Your Uncle Sally, your Uncle Sally, your Aunt Sally, might be Uncle Sally, I don't know. Your Aunt Sally, your Uncle Henry, everybody you ever knew in grade school gets a real estate license, right?

And they don't know what they're doing. But you're going to give them your largest asset to help you make that purchase. I don't think so. I don't think I want my friends and relatives handling this unless they are absolute top real estate agents in the area. No. No. No. No, I mean, and when you get ready to sell a house in a market like this, you need a top high octane.

A monkey can sell a house right now, but they might mess up the deal. And there's some monkeys in the business. Don't let a monkey sell your house. Don't let a monkey sell you a house. Even if they're a monkey that's in your family. You know what I'm talking about. somebody don't know what they're doing get some of the people that are the top in the business to help you with one of your top purchases or selling one of your top assets check out DaveRamsey.com click ELP for endorsed local provider and that's someone that we that i

endorse locally in your area that will provide you help with real estate. Click ELP for real estate. And you're going to find some serious top-shelf producers. Chris is in Irvine, California. Hi, Chris. How are you? Hey, Dave.

I'm doing well. How are you? Better than I deserve. What's up? I can't believe I'm on the phone with you right now. Well, I just found you recently at my old job when I was struggling. I'm about $17,000 in debt right now. $10,000 on my card.

Sorry, $10,000 in credit cards, $7,000 on my card. And I just got a new job as a software developer from 45k to 70 000 a year like two weeks ago good for you and yeah thank you i know i can't believe it either now i just thought though this was crazy my youtube channel just blew up and so now i'm making about 30 000 a year on youtube on top of that and so like my question is like i don't know what to do because um i just went through a tax guy with you on your website but he's asking me to pay $25,000 to use him and $1,500 to start an LLC. That's $4,000, and I'm not sure if I should put the $4,000 paying off my debt first or go through a tax guy. You said $25,000.

You meant $2,500. Oh, I'm so sorry. Yeah, $2,500. Okay. And he's the guy off our website, our ELP Tax Pro? Yeah, yeah, 4-inch county, yeah. Okay, and he's wanting you to do what for $2,500? Is the guy off our website, our ELP tax pro? Yeah, yeah, Fulham County, yeah. Okay, and he's wanting you to do what for $2,500?

To do the taxes with him, with his company. Right, and what else? And $1,500 to form an LLC so I can write off. Why is it $2,500 to do your taxes? That's what I don't know. I'm not too sure. Have you got very, very complicated taxes, or you've got back taxes you haven't paid, or you haven't filed in several years? No,

I pay all my taxes. Last year, I paid $9,000 in taxes. I didn't realize my mutual income was bringing me up that high in the tax bracket. All right, I'll tell you what, I'm going to put you on hold. I'm going to have Kelly put you with our ELP team because a simple tax return should not be $2,500 in any part of the country. Oh, wow. Okay. And I want to make sure that we get to the bottom and understand exactly what's going on here because there's something wrong with that. So I want to have our team learn the details of this story to understand how that figure came about or whatever. But yeah, having someone prepare your taxes or having someone, maybe he's talking about doing your books for the whole year for $2,500. If he's going to do that for your small business, your YouTube business, that would be a reasonable fee.

But just to simply do a tax return for $2,500, unless you've got an unbelievably complicated return, would be high, be ridiculously high. So I suspect there's more that he's offering in these services than you understood, but we'll get to the bottom of it and we'll help you. Kelly will hook you up with our ELP team and we'll get in the middle of it and make sure that you're getting what you need. If you have a small business that's making $30,000 a year, you do need to keep proper books on it, file quarterly estimates, and

do a tax return on it. Now that, over the course of a whole year, might run as much as $2,500. That's possible. But to simply file once a year a tax return should not cost that much. Joe is with us in Atlanta, Georgia. Hi, Joe. Welcome to the Dave Ramsey Show. Hey, Dave.

How are you doing? Better than I deserve. What's up? Hey, so I've got a question. About a year ago, I got a good pay raise with my work, and my wife and I decided to go out and get a couple cars because we'd had kind of beaters for our whole marriage for 21 years. So we got more cars than we should have gotten. We got a truck and a car. Right now we have $56,000 worth of cars, and we want to know. We're thinking about trying to get rid of both of those

and getting a lot cheaper cars that we either have no payments on that we can pay off or that we'll have very minimal payments on. And I'm pretty sure we would take a loss on both of the cars. Of course you will. You always take a loss on a car. Yep, a couple thousand dollars at least on both of them, but I'm wondering to make up the difference if it would be foolish to use a home equity loan

to make up the difference but to get into a better financial situation long term with either. No, it would not be foolish. You're reducing your debt from $56,000 down to $5,000 or $6,000 or whatever it turns out, and then you've got to get you a couple little cars, so maybe $ 56,000 down to 5,000 or 6,000 or whatever it turns out, then you've got to get you a couple of little cars, so maybe 10,000, but you're still reducing your debt from, you know, 50-something thousand to 10,000 when you're done. I would prefer it not be a home equity loan. I'd prefer it just to be an unsecured loan over at the bank, but even if it's a home equity loan, that's fine. Then turn around and get that paid off as fast as you can. So good news is you recognized your mistake and you said, we're going to undo the mistake

instead of camping out on your stupidity and defending it. Good job, man. Well done. I've done dumber stuff. Just paying some stupid tax. When you do something stupid, it costs you money. We call that stupid tax. Michael's in Fort Worth, Texas. Hey, Michael. Welcome to Dave Ramsey Show. Hi, Dave. It's an honor to speak with you today. You too, sir. How can I help? Well, we want to put in a pool and a swimming pool, and I'm having these huge swings from Yes, Let's Do It to No, Put It on the House Dummy, and I'm not sure if it's God talking to me.

And I'd like your opinion, not just from a real estate standpoint, but what would David and Sharon do? What will the pool cost? $50,000. Okay. And what's your home worth? Home is worth $375,000. Okay.

How many pools are in your neighborhood? I think there's one other one. Okay. So they're not normal in your neighborhood? Nope. And how many homes in your neighborhood sell for over $400,000? Are most of them under $400,000 or over $400,000? Right at about $400,000.

Okay. So you're going to be top of the neighborhood. If you took $375,000 and put $50,000 on top of it, that would be $425,000, right? Yes, sir. So the translation is you're not going to get your money out of this pool. You're going to have to swim some of it. Agreed. Okay.

So you might increase the value half of the cost of the pool, it sounds like. Okay. But there's not a lot of pools in your area, so they're not normative. So it's not going to add a ton of value. It's not holding you back um but um my guess is and you can have a real estate agent come out and actually tell you and say if i put a pool on this how much will it increase the value and uh they'll tell you and they can look at it and i'll give you a guess about half it sounds like to me okay i don't think that the i think you reach a point of diminishing returns in your neighborhood when you get to 400 grand you see what i'm saying

yes so um what do you say your household income is uh about 120 okay i assume you're paying cash for the pool well we have 14 000 in the pool fund right now but another year of saving and we'll have 50 okay if you pay cash for it and you understand we just spent $25,000 on a toy and we're going to have to play with that toy a lot because it's worth zero. The other $25,000 we'll probably get back out when we sell the house. And as long as you have that understanding of it emotionally, I don't think what you're doing is stupid. You're paying cash for it.

Would we do that? Well, we might. We might. We have a pool at our house. We put it in. We built it. We don't use it a lot. But it's kind of one of those infinity edge things where I'm on a mountain.

But, you know, if it's what you want, it doesn't sound like it's ridiculous in your situation. But that's how I would do the analysis, the way I described it to you, the critical thinking on it. This is The Dave Ramsey Show. Hey, it's Blake, Chief Production Officer for the show, and here's a little tip for 2018. Go download our revamped Dave Ramsey Show app from the App Store. We're always listening to your feedback and adding new features to make it even better. Check it out.