The Ramsey Show - App - What Do I Do With My Failing Business? (Hour 1)

Episode Date: October 2, 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, America. Open phones at 888-825-5225. Thank you for joining us, 888-825-5225. We're going to start this hour off with Adam. Adam is in Ohio. Hi, Adam. How are you? I'm doing well. Thanks for asking, Dave. Absolutely. How can I help, sir? Yes, I had a quick question about my mortgage. I currently have a 30-year mortgage with a 5.375 interest rate with a $151,000 balance.

And I called recently and asked to get a 15-year mortgage, as you suggest, and they told me I can get it with a 3.5 interest rate. And in talking with them, they said that I'd only save about $7,000 as I've been making extra additional principal payments. Does that seem right to you? Well, I mean, basically we're talking about roughly 2% a year, which would be $3,000 a year on $150,000. Now, if you're going to pay the loan off in three years, then it's not going to make any sense.

But if you can save $3,000 a year, what were the closing costs you were quoted? Closing costs would be about $3,000. Okay. So if you save $3,000 a year in interest, because 2% of $150,000 is $3,000, right? Yes, sir. Okay. So if you save $3,000 a year in interest and you have closing costs of $3,000 a year, it takes a year to break even.

No gravy on the biscuit until year two. Okay? Right. And everything after year two, you're making money on. So if you're going to pay the loan off in three years, then they would be about right. You'd save about $6,000 or $7,000 if you're going to pay it off in four years, $6,000 or $7,000, something like that. Because, you know, basically in year two, you're going to save $3,000.

Year three, you're going to save $3,000. And year four, you'd save $3,000. But your balance is going down, so you're not going to save a whole $3,000. But if you're going to pay it off in four years, about $7,000 is about right. If you're going to pay it off in 15 years, though, it's going to save you a lot of money. Right. I was planning on about seven years or so. Okay.

Well, I mean, obviously your balance is going down, so it's not quite $3,000 every year for seven years. You follow me? Okay. But if we round up and said $3,000 times 7 is $21,000 in savings, oh, wait, we have $3,000 in cost, then that means we're going to make about $18,000 over seven years, minus the fact that it's going down, the balance is going down. So you might save $15,000.

Yeah, I'm doing this. Okay. If you're staying in the house, I'm doing this. Get you a fixed rate. Talk to Churchill Mortgage. And, you know, it makes sense then. okay if you're staying in the house i'm doing this get you a fixed rate talk to churchill mortgage and you know it makes sense then and again folks you do refinance for the savings and interest rate you do not refinance to gravitate from a 30 to a 15 you can pay a 30 like a 15 and it'll pay off in 15 just pay the extra and it'll pay right off. So if you've got a 3.5% current 30-year mortgage, just pay it like it's a 15.

You don't have to go to the refinance cost to convert it to a 15. But anytime you're doing a refinance, go ahead and make it a 15. Anytime you're buying, go ahead and make it a 15. Never sign up for more than 15, ever, under any circumstances. And I'd love for you to just not sign up at all and just put 100 down but you know that's that's another story britney's with us in florida hi britney how are you better than i deserve how are you better than i deserve what's up okay i have a question about income this friday they're going to be garnishing my wages due to unpaid student loan

debt. And I am $157,000 in debt. And at my job part-time, I only take home $450. What can I do to increase my income? And how do I go about paying off the medical bills and student loan debt? How old are you? 25. And what's your degree in? I work retail right now, but my degree was in cosmetology. You spent $157,000 for cosmetology? No, the $150,000 is from medical bills.

I only owe $6,700 in student loans. But the student loans are garnishing you or the medical is garnishing you? The student loans. Okay. All right. And so why are you only working part-time if you have a cosmetology degree why aren't you cutting hair um for that it took some time to build up my parents got really sick so for the past couple years i've been helping them run the business and it's only just now that i start working on my own and with the hours i work at work i'm not able to help them anymore so what's the uh the medical expenses? Are theirs or yours?

They're mine. Okay. So you obviously have gone through some illness as well, right? Yes, I have. Are you doing better now? God willing, yes, I will be. I'm handling the situation that I have. I don't exactly know how much in medical. I just know it's from $100,000 to $150,000 at most. Okay. So did you have a prolonged hospital stay?

Yes, I did. So a large portion of that is due to one hospital. Yes, it is. Okay. All right. Well, the first thing we've got, there's two sides to any equation here, and one side, and you addressed both of them in your question is uh income side and the outgo side so obviously we've got to get you making more than 450 bucks a month you're starving to death right yes i am okay so is there not a cosmetology position you can get in full-time that pays adult wages?

I could. It just takes a few months because you need to have a certain amount of clients to come with you, and that's the part that deterred me the first time is I didn't have that time taking care of my parents. Okay. But I'm asking now, what are we going to do to get you into a career out of $450 a month? Yes, I've been applying to some local boutiques here. But where I live, it's a small town, so there's not many opportunities. So the school that I went to originally, I had to drive two hours to get to.

And right now, my car can't go over 40 miles an hour without um shutting down so that kind of limits me on where i can apply to do you need to move yes i do okay because we've got to do something kiddo to get your income up you can't just sit there in the soup and get anything but boiled okay so we've got to make some kind of moves i don't know what they are you got a lot of things pulling at you i can hear it a messed up car mom and dad are sick you've been sick um you got this big pile of debt um but we've got to do something to get your income up all right so um that's a big deal here now once we've done that let's just establish that you're going to go figure that part out okay and i'm going to send you a copy of ken coleman's book proximity principle to help you

once we've done that let's say you start making 40 50 60 000 a year over the next couple years you can go sit down with that hospital in person and um hospitals are a business they are an industry however i generally find compassionate people working even in the administrative office. And I'll bet you've got an $80,000 loan sitting there or medical debt sitting there with them that you can probably settle with them if you walked in with $10,000 or $15,000 because they'll probably have mercy on you. Plus, they can look at your situation and know they're not going to get paid anytime soon. So they'll settle with you, but you're going to get some income together to do that with. Are high health care costs getting you down? Are you confused trying to navigate your options? Do you wish you could find an affordable biblical solution to your health

care costs? Based on New Testament principles, Christian Healthcare Ministries, or CHM, helps Christian families, churches, and ministries join together as the body of Christ to share their major healthcare costs. Christian Healthcare Ministries is the original health cost-sharing ministry. A Better Business Bureau-accredited organization, CHM members share to pay each other's medical bills. It's not insurance. It's Christians financially and spiritually supporting each other. It's what Christian Healthcare Ministries has done for over 35 years, and our members have shared over $2.5 billion in medical bills. To learn more, visit chministries.org. That's chministries.org.

Christian Healthcare Ministries is a proud sponsor of Dave Ramsey Live Events. chministries.org. you guys are aware we have declared war on the student loan world sick of it it's time it stopped it's time some things changed anthony o'neill's book comes out monday debt-free degree it's selling like hot cakes in presale. Thank you. We appreciate that. Some of you don't even know what selling like hotcakes means, but that means it's selling a lot, so shut up.

It's good. We've launched the tools on anthonyoneal.com for scholarship searching and college calculator to help you make better decisions and actually be intentional about your college degree choices and look for value when you're purchasing and where you're going to school. And we have launched an eight-episode podcast. The first one launched on Monday, and it is already number 12 in the world on iTunes.

Big time. It's called borrowed future it's eight episodes another one will drop on monday another one will drop the monday after that for eight weeks in a row of course they all sit there after they drop but it's a series and this is a different venture for the ramsey network most of our podcasts are one of us Ramsey personalities yakking. This is more of a traditional podcast in the sense that we're interviewing experts. It's all over the place. George Campbell is hosting. Yes, some of the Ramsey personalities are in it.

Certainly I'm in it. But it is pretty cool. So here's the thing. Borrowed future, it is something that everyone in America needs to hear this. Whether you've got a kid in school, whether you've currently got student loans, or whether you just pay taxes. Because your taxes are being wasted at an alarming rate by a failed system. And you need to know what's going on.

You need to know how many shysters are involved in this deal it's pretty amazing it's not a conspiracy theory this is just i mean we just get the whistleblowers out we get the experts in the field it's going to blow your mind borrowed future addressing the student loan debacle in the first episode you'll hear from a bunch of us, Mark Cuban, Seth Godin, some of the experts from different universities, and again, some of the whistleblowers that used to be in the business. It'll tell you what's really going on behind the scenes. Here's the deal. We're number 12 on Apple. We think if we can get this to number one on Apple, that it's going to get a lot of free promotion as a result, and the message will spread faster.

They don't pay us more if we're number one. We don't make money based on it being number one, but that means it's going to help a whole bunch of other people. So if a bunch of you will jump on there at one time immediately and subscribe and download this podcast, we, you and I, the Ramsey Tribe, can drive this thing to number one and that'll help us get the word out of the scam of this predatory student loan industry it's got to stop and the only way we do it is we jerk we band together and we create a movement here so go to itunes download go to google play download borrowed future today subscribe to the eight episodes and that'll help us drive it to number one you're going to enjoy listening to it i've enjoyed listening to it as i've gone through listening and covering the edits it's pretty cool stuff

matthew is with us in vermont hi matthew welcome to the dave ramsey show hi thank you so much for taking my call. How are you doing? Better than I deserve, sir. How can I help? Okay, so I'll try to make this not complicated. My wife's family owns a seasonal camp up in the northern part of Vermont, and so it's only able to be used about May through September. And it was put into a trust about five years ago,

and right now there's three people that are part of that trust. It's my mother-in-law and her two siblings. Um, because of some health reasons from one of the other siblings that are part of the trust, they've started the process of transferring their portion to their kids. Um, and because of some bigger expenses that are needing to be coming down the road, I think it's time to have a conversation with my mother-in-law and figure out where we stand in this whole mess. I don't know if we should take part in this and let us. They don't want to sell it.

They want to pass it on to the next generation, basically. Yeah, but that's passing on a load of expenses to the next generation is what i'm hearing oh i totally know so the problem is is like my mother-in-law i don't think they're able financially to one of the big things that's coming up the roof needs to be replaced and so depending on whether we do it ourselves or we pay someone to do it or whether we go super cheap or high end or whatever we do i don't think whatever we come up with my mother-in-law is going to be able to fit the bill. And so if we want to keep it in the family, I've already had a conversation with my, my brother-in-law and he's interested in getting it passed down to us and him if we want to deal with it. But I don't know

if it's something we should just completely keep our hands off or if it could be a blessing because, obviously, we don't have to pay for it. It's just something that's going to get passed down if we want to deal with the headaches of getting our names put into a trust. Well, the upside of owning it is that the value of it may go up some and that you will get use of it and will retain the memories of everybody going to this camp in the summer and whatever. Those are your upsides. The downside is that you have a whole bunch of cousins to deal with every time you cut

the grass. Every stinking little thing is going to require a committee vote, and it's going to start to be a pain in the butt, and you're going to take on the expenses of this thing, your portion of the expenses. And so the only way I want to be in this is if the expenses are reasonable for the actual usage that I'm going to get out of it, and if the cousins are going to be reasonable to work with. But if the cousins are crazy and the expenses are high, dust your hands, man.

Forget it. Does that make sense? No no it makes total sense um and also dealing trying to deal with my my mother-in-law well i mean she's just gonna be disappointed oh well um yeah i mean i'm I mean, the thing is, listen, any good parent wants to pass things to their kids that is a blessing, not a curse. And so you don't leave a curse on your children. And if a dogfight with crazy cousins and high expenses makes this thing a curse, then she should be happy that you're smart enough to not want it. But you've got to analyze those things. The hassle of dealing with other people to get stuff done and the expense, and you put that on one side of the scales,

on the other side of the scales is your actual usage of it and enjoyment of it and the slight potential that it will go up in value. I suspect it's so rural and out in the middle of no freaking where that it's probably not going up in value. Well, can I – so I do carpentry for a living, so that's why I'm kind of in the mix of this because they're asking my opinion on what to do for the roof. So it's kind of how I got kind of thrown into the deep end and trying to figure this all out. Um, and I think like right now, I think it's like 3,600 bucks a year for the taxes

and routine maintenance that it takes. So between the three people that are in the trust now, it's like $100 a month. So it's not like a huge expense, and I think that I'm worth more financially well off than the people that are in the trust. But we're in baby step 3B. We're really trying to sock away a lot of money right now to build our own place.

By the time this is divided out all the way down to you guys it comes out to be what 25 a month it's like 300 a year yeah let's say i don't think it's a horrible expense i just don't know if i want to deal with all the that's the other question and that's what you've got to figure out and it's just like you know what i would rather just buy my own camp somewhere later after we get ourselves out of debt to get our house purchased and all that kind of stuff and i don't have to deal with all these other people and you know it i mean it doesn't sound fun to me but if all the cousins love each other and everybody's happy and wants to go up there and to the camp together it's a thing. You can do that for $300 a year. That's not a bad deal, but it just sounds like a lot of going on for nothing. But you decide what you guys want to do.

There's not enough money here that matters. I think it's the hassle that matters more than anything else. Ethan is with us. Ethan's in California. Hi, Ethan. How are you? I'm good, Dave. Thanks for taking my call.

Sure. What's up? So I am 21. I'm currently enrolled in college, and I have a wife and a six-month-old baby. I want to be in the construction industry. I'm working towards a construction management degree. I'm just wondering, as we're trying to pay off debt and, you know, Are you working in the construction industry? I have experience in the construction industry.

Are you working in the construction industry? Not currently. Okay, I'll tell you what. Hold on. I'll talk to you when we come back from this break. This is The Dave Ramsey Show. We'll be right back. Talking to Ethan, he's in California, 21 years old, married with a baby, working and going to school to get his degree in construction management. That's about how far we got in the discussion.

Not working currently in construction. So, what makes you want to get into construction management? What are you going to do? Well, when I was working construction, I really loved the industry and I've always really been interested in architecture, but I like a more hands-on approach and I just really love building things. And so that's why I want to get into the industry. What are you going to do? Build houses? Build houses? I want to build custom homes. What? I want to build custom homes.

Custom homes. Okay. Yes. What makes you think you need a construction degree, a four-year degree to build custom homes? I've talked to a few local contractors who say they wish they had the business experience in order to run their business better. Okay. Don't disagree with getting some accounting and business classes under your belt, but a four-year degree to build houses is probably an overkill.

Right. I don't know many home builders that have four-year degrees. There's a few that do in construction management. Some of them have four-year degrees, but the ones that have it in construction management is not that. Now, if you're going to build $50 million commercial buildings, yeah, yeah you'll probably find that more often a four-year degree person in that field so uh but so what i would tell you to do is uh what are you doing now what do you make now i make about 18 an hour um it's pretty variable because i have i'm in the national guard so i

get drill pay and my wife's income is somewhat changing throughout the year. So what's your household income today? It's about $35,000 to $40,000 a year. Where in California do you live? Grass Valley, Northern California. Okay. All right. I would rather you be in the construction business making some money, some grown-up money, feeding your family and taking some night classes to work towards your construction degree or to pick up the business tools that you need in your belt to run the business. But I'd go to work for a home builder as a super. Go ahead. My dilemma with going to night classes is I am eligible through the National Guard for the post-9-11,

and I have to have a minimum amount of classes to get the benefits from that. What's the minimum? Twelve units. A year? No, a semester. So twelve hours?'s um yes yeah 12 credits okay a semester yeah so that's basically a full-time stud a lightweight full-time student. Twelve is pretty lame-o. Okay. Wow.

That is not going to make sense mathematically. I'm getting free college, but my family is starving to death because I'm not working a big-boy job. Great. So you're going to make more than that's going to cost you by going and getting a job and you're going to further your career faster because you're going to get in the business and learn the construction business hands-on while you're taking some classes uh and then what i would do is look at some distance learning stuff where you can go ahead and load up the 12 units, but you take them at your own speed, and you can sit there on Saturdays or whatever,

Sunday afternoons, and crank them instead of watching football. Yeah. And you can get your units done that way rather than actually having to attend at 10 o'clock on Thursday morning, you know, some class to get your 12 units going. But I think you can, I mean, I really think you can get a much better income for your little family with a little baby and everything going and still get to live your dream and actually live your dream better because you're going to be learning the business and meeting people in the business and all that kind of stuff so that's what i would do hang on i'm going to send you a copy of ken coleman's book the proximity principle which is

kind of what i'm using there. It's like get in the proximity of the stuff you want to do. Get around the people and the places where it's being done so that you can further your career and move into the place to where you get to do the thing you want to do. But I suspect by 30, you're going to be building houses. It's only nine years away. Meantime, we got to, you know, get you some business tools in your belt, whether that be the formal four-year degree or not.

That could be the way I don't care. And get you some experience on building houses under your belt. All right, let's go to Katie in Tennessee. Hi, Katie, how are you? Hi, thank you for taking my call. Sure, what's up? So I was introduced to your program recently by my dad. I have been in debt since I was 18 years old.

How old are you? I've never been. I'm 32. Okay. So the problem is I want to start going through these steps, try to get debt-free for me and my family. Good. I just need to know where to start.

And by that, I mean I have some payday loans which were terrible but i had was in one of those situations where i had no choice and uh i need i don't have any savings whatsoever i mean i'm paycheck to paycheck yeah you're starving so what do you make are you single no me and my husband i'm married okay. Okay, so what's your household income? Our take-home is $55,000 a year. Okay, and how much do you have in payday loans? I have about $5,000 to get them paid off. That's a lot. It is a lot.

Okay, and what other debts do you have? I have $3,000 in credit card debt, and then what else do I have? I have $3,000 in credit card debt. And then what else do I have? I have a house. We bought a house. The house is baby step six. What other debts do you have not counting your house? I have a pickup payment.

In the pickup, I owe $17,000 on it. What else? And I think that's it. Oh, and $500 in student loans. So those are almost paid off. Good. Okay. Okay. What we're going to do is put you on a written budget on the EveryDollar app for your phone or your computer.

You and your husband are going to sit down together. We're going to raise our right hand and swear we will never see the inside of a restaurant again until we get this stupid debt paid off. You guys make too much money to be this broke you're disorganized and you're wasting the crap out of money and therefore you create emergencies and then you live emergency to emergency and it makes you broker i've been there myself that's how i can smell it yeah yeah i mean that's basically that is basically what it is is just we kind of just bounce along until something bad happens. Yeah, it's like when you're really, really, really broke,

your life starts looking like a country song. Everything that can go wrong will. Keep the dog down the street, he's going to get hit. I mean, it's bad. And that's the kind of stuff you have to work on here. So what we're going to do is get on this tight budget. Every dollar has an assignment on paper before the month begins in the every dollar budget. The budget is free, okay?

Jump online, download the every dollar app. It's free, all right? Okay. Once you're doing that, then baby step one is you need to get $1,000 to keep little emergencies from causing you to go into a tailspin and drama queen mode again okay that little bitty thousand dollar it's not a full emergency fund but it's a little starter emergency fund and some stupid little thing happens like a tire blows out on the car or something uh then you don't have to go into panic mode and go down to stupid land again, which is what you call payday lenders.

Yeah, and that's exactly what happened. Yeah, it's 840% interest. Oh, that's insane. This is rape, pillage, and plunder. No one is left alive in the village when you finish with these people. Okay? They burn everything to the ground. They're horrible. It's the worst, scummiest industry on the planet.

So what we're going to do then is we're going to work the debt snowball where you list your debts, smallest to largest. You pay minimum payments on everything but the little one, and you attack the little one. Only I'm going to flip one item out of your debt snowball, and that's these stupid payday loans. We're going to put them at the top. Okay. And here's what I want you to do i'm talking you have no life you are having a garage sale you're putting the cat on craigslist and the dog on ebay we're selling everything okay and you're going to get 2,500 a month for two months out of your budget, and you're going to go pay these morons off.

And don't you ever go back on that property again. Ever. They're killing you, kid. They're skinning you alive. Don't go back over there again. These are nasty humans. Stay away from them. Nothing good happens at their place.

Get them paid off, and then you work your debts off smallest to largest. Hold on. I'm going to send you a copy of the book, The Total Money Makeover, to show you how to do every bit of this. You can do it, and you call me back if you need some help. Corey is with us. Corey's in Arizona. Hi, Corey. How are you? Good, Dave. How are you? It's an honor to talk to you. You too, sir. Corey's in Arizona. Hi, Corey. How are you? Good, Dave.

How are you? It's an honor to talk to you. You too, sir. What's up? I am just calling. My wife and I are currently on baby step two. We have about $45,000 in debt. And my wife wants to get her master's degree.

In what? She currently wants to get it in organizational psychology why um well she got her undergrad in psychology um at first she wanted to do counseling um and she knew that she would need a master's for that um and now she's kind of wanted to move a little bit away from the counseling side she works in human resources right now um so she really likes that and kind of wants to work her way up in that um and so a master's degree would just be helpful for her to do that okay all right um generally generally speaking in hr to pick up the extra pieces of knowledge that she would pick up in that particular master's program would be helpful, yes. Would it be a requirement for that career? No.

Would it be if her particular company has a system by which they would immediately financially reward her for having that master's? I'd be interested to hear that. They wouldn't. So she wouldn't get a pay increase um right away however she does work for a university so the master would be paid for oh it's free uh yeah so what's the question um yeah well it's free it's just uh the taxes that she would have to pay for so um like i said we're

in baby step two and paying off debt so oh the taxes on the on taxes on the benefit of it? Yes. The value of it? So what's it valued at? Well, it would be like a couple hundred dollars a month for the taxes. So for a couple years for her master's, it would be maybe $3,000 or $4,000. What's your household income? What's your household income? It's about $87,000 right now.

I'll do it. It's a non-issue okay that doesn't keep you that doesn't keep you from getting out of debt but i thought we were sitting here discussing you know investing 30 000 bucks into a masters while you got 45 000 dollars in debt and i was getting rid of it yeah it's freaking free fortunately we're in a we're in a good place right now where she gets that for free and like i said it's a couple hundred dollars a month but yeah you know that's that's a couple hundred less that we'd be putting on the debt. But, okay. Yeah, but, I mean, you just tighten your budget in some other areas.

Sure. You make 87, you should still be debt-free in, what, 14 months, 11 months, something like that, right? Yeah, yeah, yeah, right around there. And $200 doesn't move that needle much, you know. So, yeah, do this for sure. I'm sorry. I didn't have enough information before my brain already leapt to the end. But, yeah, do this for sure. I'm sorry. I didn't have enough information before my brain already leapt to the end. But, yeah, free changes the conversation.

Michael is with us. Michael's in Indiana. There he is. Hey, Michael, how are you? I'm doing well. How are you doing, Dave? Better than I deserve. How can I help?

Well, here recently, about a year ago, I bought into a franchise, and things aren't going so well now. And I still have a full-time job. My wife works, and I'm looking at what the best resolve, if I want to get out of this, is. Obviously, I personally guaranteed everything. So is it a Chapter 13 or a debt relief, you know, going with an attorney with, like, an OIC and offering compromise? Or what is the best route to do this? OIC, you got back taxes?

Well, I actually owe on the SBA loan. I've ran up some credit card debt. OICs only apply to IRS taxes. Oh, really? Yeah. Okay, I thought it was the SBA loans also. No, I mean, you can try to compromise with anybody on any loan, but the OIC is a process for back taxes.

Okay, so how much did you borrow to buy this, and what did you buy? I bought a service franchise, and I owe $138 on the SBA. I roughly about $30,000 on a credit card, $20,000 on a HELOC, and I owe about $25,000 on a credit card, $20,000 on a HELOC, and I owe about $25,000 on payroll taxes. And what's wrong with the business? It's just not cash flow in itself. So, like I said, I work full-time at another job. What is the nature of the business?

What kind of service business? It's junk removal. Okay. And why is there not enough junk being removed? of the business what kind of service business like this junk removal okay and why are you why is there not enough junk being removed i don't know there is just just a lot of overhead uh compared to what i'm bringing in so we're okay let me go when you were looking at this you didn't buy it to do what it's doing you You thought it was going to do more. What did you miss? I'm not sure.

Were the expenses higher or was the income lower? The expenses got higher. Than what you thought? Yes. Than what they told you? Correct. Okay. So you paid $130,000 for a franchise to do junk removal?

That's correct. Okay. Okay. How much equity is in your home? Roughly $65,000, $70,000. Above the SBA loan or to cover the sba loan oh i thought you just made equity in the house is that what you said i'm sorry i thought the sba loan took a second on your house didn't they yeah i had to personally guarantee these loans

and you have a second on your house with the sba do you not i have a second, just where I pull cash for cash flow. Oh, you don't have, the SBA didn't take a lien on your house? They did, and I had to personally guarantee it, so they do have a lien on it. That's called a mortgage, okay, that's called a second mortgage. Yeah. So, okay, you have three mortgages counting the SBA on your home, right? Yes. Is the selling your home, right? Yes. Does selling your home clear all of them?

No. Ouch. Yeah. What would it clear? What would be left standing? I would still see. What's your first mortgage? First mortgage, $190.

Okay, and $130 on the SBA, and the second mortgage or the other mortgage that you've got that you took out for cash flows, what? $21,000. Okay. What's the house worth? $270,000. So you're $80,000 in the hole. Okay. Yeah.

So you're doing a top line as much as you thought you would do. Your gross sales are as much as you thought they were going to be. Yeah, they were actually up for a while, and we slowed down here. I mean, your projections when you bought this stupid thing, you're making projections on your sales. Yes. It's the expenses that are killing you. Correct.

By double? I mean, they must be double. Yeah, some of them are, yes. Have you made a profit at all? No, no. I haven't taken any money out of the business and basically just trying to pay for the business. Yeah, okay. So your revenues aren't even covering your expenses is what you're saying? I'm breaking even, basically, is what I'm doing.

So going into the slow periods when I know I'm not going to break even, so trying to figure out what my best route is. Do I head it off, or do I just actually pull from my regular income? Have you talked to the franchisor and looked for a buyer? I'm in the process of trying to sell it now, obviously. Is the franchisor any help? Yeah, somewhat, yep. Okay.

Yeah, because if you can get 100 out of this thing and sell your house, you could walk away. Mm-hmm. And I don't know what the homestead exemption is in Indiana, but in most states, you're not going to get to keep as much. You know, your home is going to be going for all this equity. You're not going to get to. If you want to get rid of these loans that have a lien on your house, the only way to do it is get rid of your house, in bankruptcy or out. And so you've lost your house if you don't keep this business running

and make it profitable. And the only question is how much debt's left over after you've lost your house. And if you can sell the house and sell the business, you probably can come out of this pretty close. And that's going to be our number one target is doing all of that. But it's not, it's, yeah, it might be a chapter 13, might be a chapter 11. You'll have to talk to your attorney about that if that's what you're facing. But I would use bankruptcy as my absolute last resort.

Instead, I would try to get some cash on the table from some buyers and make deals with some of these lenders and see if I can't clear it and get a fresh start at zero. This is The Dave Ramsey Show. This is James Childs, producer of The Dave Ramsey Show. Did you know you can now listen to The Dave Ramsey Show on Pandora and Spotify? For all the ways to watch and listen, check out our show page at DaveRamsey.com slash show.