The Ramsey Show - App - What Is Considered a Good Return on a Rental? (Hour 1)

Episode Date: October 6, 2021

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Live Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studios, it's The Ramsey Show, where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. I'm Dave Ramsey, your host. Thank you for joining us. Open phones at 888-825-5225.

That's 888-825-5225. Dr. John Deloney, Ramsey personality, is my co-host today. We invite you to be part of the program, and he and I will be answering your questions. He's author of the best-selling book, Redefining highly popular podcast the dr john deloney show where we talk about he talks about mental health boundaries relationships things that are going on so you can weave those questions into uh the show today if you want he's here to help and i've always got an opinion i'm an expert on my opinion the phone number 888-825-5225. Delaney's starting us off in Fort Wayne, Indiana.

Hi, Delaney. How are you? Hi, Dave. I'm good. How are you? Better than I deserve. What's up? Well, my husband and I own 10 acres of property that our current home is on,

and we are considering parceling some of it off and building a new property, a new home on that. And my husband and I are just having a hard time kind of swallowing the idea of spending that much on building a new home. So we were just kind of looking for some personal advice as far as is it appropriate for us to spend that much money. Okay. Well, one of two things is telling you this, either emotion from all the years of frugality to get to where you are, and so the facts are not that you cannot afford it, meaning you can afford it,

or you're getting ready to build too much house, and the arithmetic is telling you that, and you just need somebody to say it out loud for you, okay? So how much money are you going to spend on the house? Probably about $800,000. Okay. How much money do you have? Well, between equity and our home, we probably have around $250,000 in equity.

And how much in your nest egg? About, like, you mean our number of people? Like your 401Ks, your retirement, your investments? Oh, yeah, yeah, yeah. About, probably about another $250,000. Okay. And how old are you? I'm 32.

Oh, okay. And what's your household income? About $350,000. Okay. And what's your household income? About $350,000. Okay. Well, the guideline that we use is that can you afford to put the house on a 15-year fixed rate where the payment is no more than a fourth of your take-home pay? And so the answer to $800,000 is yes, you can do that. Mm-hmm. Yeah. Now, here's the trick 15 year fixed rate and a plan to go ahead and get it paid off with your

fabulous 350 000 income even faster than 15 years the average millionaire in the ramsey research that we did 10 000 of them we studied pays off their home in 11.2 years so i want you to knock this thing out you have a fabulously large shovel your income is amazing what do y'all do uh i'm a nurse practitioner and my husband is a cpa you're both going to keep working yes we will what's wrong with your current house uh well we have four small children so we don't have quite enough bedrooms and just like, they're mostly desires. We could, we could definitely make it work. But it's mostly just, you know, desires for a little bit extra. And that's where we're, like you said, we've been living frugally for so long. And now it's like,

okay, are we okay with, with taking this next step and spending this kind of money, or should we, you know, use it to benefit in other ways? Now, you said equity in your home. Is your current home paid for? No, we have about $250,000. Would you sell that property off when you do this? Yes, we would. Good.

Okay. Yeah. Then I would do this. Okay. Now, the trick would do this. Okay. Now, the trick is, for little kids, you can't call me up and go, oh, we decided to cut our income in half because I'm going to stay home. Yes. Yes. You gave that right up when you bought this house.

Yes. And we pay about $40,000 a year in child care. I know. So in about three or four years, that won't even be on our budget at all. So that's another area that we'll gain more cash flow to. Well, the key part of this equation is just your income to your payment, and you can make that work. And not just make it work. It shouldn't be any trouble at all

and uh then you just keep working your baby steps but as you as you find money in your budget you're going to keep working baby steps four five six four is 15 of your income into retirement five is kids college and six is all the other money we scrape together from something that any other money that comes up bonus money increases in income whatever's all going to throw it at the house this house is going to get paid off in sooner than 15 years. And that's the pattern that you want to be on. That's where all the data points lead us. And so specifically, you would take that $250,000, put it against this house.

Yes. So now we're at $550,000. Yes. And I'm looking at that against my $325,000 a year salary. That's easy. Yeah. That's simple math. Yeah, 15-year fixed rate.

And where the payment's no more than a fourth of your take-home pay, you're easily going to do that. And so they can reach over and knock that thing out pretty quick. Real quick. It is a little bit emotional, but also, really, they're taking on a big chunk of debt. Because I couldn't tell early in the call whether she had $2 million set aside or something. I couldn't feel it. So, again, the facts will lead you to say this is okay but the facts also say you know you have to you have to continue the the trick that you're on you

can't change direction on and you also have the emotion of selling part of your 10 acre plot and that that's your dirt right and yeah i mean you know they're willing to do that i think that's your dirt, right? Yeah. They're willing to do that, I think. That's pretty well decided. Now, when John Deloney gets ready to sell a piece of dirt, that's a problem. This is like the counselor will need counseling. It will be hard for me to sell dirt. Yeah, yeah. You are a dirt maniac.

I do like land. I am, too. I am, too. One of my favorite places on the planet is my big old farm. And there ain't nothing on it but some grass and rabbits. I remember going out to it the first time. Bunch of spent shell casings. I went out there and where's the – oh, no, this is – and I thought, oh, this is a happy place, man. There's nothing else here, dude.

It's incredible. Nothing else here. Just a big old piece of dirt. And somebody needs to hold the rest of the earth together, and that piece of dirt does it. So that's why I'm here. That's my calling. I'd have a hard time parceling. But, again, everybody does their thing.

But you taught me this. When you start playing with bigger shovels and you start playing with bigger zeros, really leaning into those ratios is important. Yeah, it is a little bit like your trauma formula. Facts are your friends. What's really going on, not what's the emotion. What's really going on is you do the math, and you look at a projection on that, and you look at the facts, and then you say, okay, why am I scared?

Why am I ashamed? Why then do I have these negative feelings when all the math indicates I shouldn't? If I go look at a new truck, I still have a number from the first time I looked at a truck back in 97. And I look at new trucks now, and I sound like a grandfather. Like, what are they doing? You know what I mean? Because in my head, it should be 17 grand.

Can you believe they charge that for a pickup? That's exactly right. Yeah, you can. It just stays in there. You hear your grandfather coming out of your own mouth. I love it. Your great-grandfather. My great-granddad, yeah.

With these prices. My tire. One wheel. That's all I can afford. One wheel. Uphill both ways in the snow. This is the Ramsey Show. Hey, I'm Christi Wright. Let's be honest.

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Just search for Glorify in your app store. It's free to download. If you've ever made a dumb decision with zeros on the end, you know you didn't do your research. Me too. Most people make choices based on feelings or opinions, especially when buying a house. But when it comes to the real estate market, feelings aren't your friend. Facts are. John says that about a lot of things. So check your facts.

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Welcome to The Ramsey Show. Hello. Thank you so much for having me. Sure. How can I help? All right. Well, my husband and I are in Baby Step 2, and since December of 2019, we've paid off $58,000. All right.

And we only have about $3,000 here. We're very proud of that. But we are on to the second half of our debt now, and that's $37,000 left in student loans. But due to increased costs of having a second child over the last year and taking a job with a decreased salary, our shovel is substantially smaller compared to what it used to be. So I'm trying to think of ways, brainstorm ways to be gazelle intent in a new situation. And I had this crazy idea, and my husband was not super thrilled with it, and actually asked me if I could call you to talk about it.

What if we paid off our paid, or what if we sold our paid off cars? If we did that, it would be a big step, but it would wipe out this $37,000 immediately, and we could then focus on all of the other things that we need to do. So you have a $40,000 car. We have two $23,000 cars. Oh, you'd sell both your cars? Yes, that's why it's a big step. And then you'd get your two beaters, huh?

Yes, maybe not beaters. And what is your household income? $140,000 a year. And why can you not pay off $37,000 and make $140,000? So we bring home $8,800 a month, which is a lot, and we're very fortunate. $5,000 of it goes between daycare and our mortgage they're about the same that's over five thousand dollars uh we spend a thousand on groceries diapers household things your daycare is sixty thousand a year uh yeah but well between

the two kids uh we pay twenty two hundred dollars a month so not fifty thousand a year that's that's not five thousand no five mortgage plus i'm sorry it's between daycare and mortgage oh yeah okay 140 i don't know why mortgage and daycare are on the same list but anyway we'll put them there so 140 minus 60 isn't that isn't that 80 140 minus 60 is 80 and why can you not pay off 37 000 again so i can pay off 37 000 i have a thousand based on our no our debt snowball i have a thousand dollars a month going towards that i don't think your budget is very sacrificial and that's true there are other things that we could we could yeah like you're still doing a whole bunch of crap that you don't need to be doing. Okay.

Well, then we'll take a look at that and make it a little bit higher. Help me with this because I'm not just making this up. I mean, I just took $140,000 and I took out the mortgage and I took out the daycare, which were your two primary things you're worried about. You don't have any payments except a student loan payment. And we took care of daycare and we took care of the mortgage now we got to buy lights water and food and you can't find thirty seven thousand dollars that's just weird um okay well looking looking at our budget and the growth that we come home with like i said it's eighty eight hundred dollars yeah that's

a hundred point thousand dollars a year that's 120 a year absolutely minus well and that's our growth right that's what we take home after taxes. Our net, I'm sorry, not gross. Yeah, I know. And then we take, and then it's about $1,000 on food, diapers, other household items. That's 12. We're going $1,000 on student loans, about $700 in bills. And at the end of the month, we may have an extra $500 left, which will go towards our student loan. You did not get down to $500.

Your budget, you're still not doing it. I'm sorry. The only thing I'm good at is math. And you still did not spend all that money. So you've got some work to do, kiddo. Sharpen the pencil. Sharpen the pencil. So one car maybe, but I don't think so.

You're putting $1,000 a month towards 37. That's 12 of the pencil. So one car maybe, but I don't think so. You're putting $1,000 a month towards 37. That's 12 of the 37. So all you need is $24,000. All you've got to do is find $24,000 out of $140,000, $120,000 take-home pay. For one year. And to do it in one year. If you want to do it in two years, all you need is $12,000. No, do it in one year.

Just get it done with it. I really think you can do it. I really think that there's some whining in this budget. I really do. Yeah, it sounds like I want to be comfortable and get there. Let me tell you, I'll go further. I don't think you're doing the whole budget. Because you're doing this from your head. That's why you've got daycare and diapers broken out of separate line items. Diapers don't go in a separate line item they're not that big a line item you're you're trying to crack crank this

through in your brain you need to sit down do a written detailed line by line budget with every dollar every dot get on the every dollar app with your husband the two of you give every dollar a name and you're going to see where why i'm why i'm raising, and then you're going to see why I'm raising up on you. You're going to see there's money left here, and you can knock this out. No, you don't need to sell your cars. You need to tighten your budget and lower your stinking lifestyle. And I actually think that when she first called, Dave, I was going to say, yeah, sell your cars and be done with this thing. But I think the exercise.

Oh, it's much better than selling the cars. I hate to use this word. It's going to be a spiritual exercise for this crew to get down and see what you're made of. Yeah, yeah. This is going to force you to do the last 10% of truth. Yes. Which is the detailed budget. Because you can, I mean, you can do big piece budgets in your head.

And when you make 140 grand, you just feel like you've got so much wiggle room, right? Or you should have. And it's frustrating when you get to the end of the month and there's no money money left but you haven't detailed it out i'm i might be wrong but i'm not i might be wrong but i'm not been doing this too long so that's my opinion you keep digging on it kiddo if we can help you we're here to help you but part of the time we help you by um by raising up on you because we love you we want you to win all right up next is going to be arman arman's in los angeles hey arman how are you good how are you good better than i deserve what's up all right so before i get into my

question i just want to give some context on my situation right now so i'm 17 years old. I'm on my last semester at a community college, and I'm about to transfer to a UC school, UC Irvine Housing. And on the other hand, if I go to UCLA, I'll need to get a car. But it's that question of should I lease or should I buy? Because my surroundings of family and friends, they're both raising pretty good arguments for leasing and buying. So I don't know. Leasing and buying what? A car. Oh, okay. buying so i don't know leasing and buying what a car oh okay well the only people that promote leasing a car are broke people okay i mean the wealthy people don't lease cars i mean a few of

them do but but by and large let me tell you we did a study of 10,000 millionaires, the largest study of millionaires ever done. None of them, not a single one of the 10,000 said, you know, I became a millionaire because I really leveraged the use of that car by borrowing on it. Not one. I mean, it wasn't a small percentage. It was freaking zero, Armin. Now, this is not your broke friend or family member who can make an intellectual argument. This are real millionaires. They don't borrow money on cars, dude.

And when you ask them what the largest mistake they ever made in their working lifetime, they usually say, I borrowed to buy brand new cars. I bought a new car. I bought a brand new car when I was 26, and I was so stupid when I was 26, and now I'm 46, and I would have been a millionaire four years sooner if I hadn't have bought that stupid butt car on payments that I couldn't afford to buy. So to answer your question, Orman, I drove a 1988 Toyota Tercel EZ hatchback. It cost $1,000. I bought it from some lady at my church whose husband had passed away, and that got me through my undergraduate.

It got me through my first year of my professional job. And I'm still driving somewhere, right? Buy the cheapest beater car you can get to get to and from. You're a 18-year-old kid. And don't take financial advice from broke people, son. This is The Ramsey Show. In today's world, technology and innovation are crucial for any company's success, but the primary focus should always be on you and meeting your needs. That's why you get the best of both with Zander Insurance and their term life plans.

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Barry and Amber are with us. Hey, guys, how are you? Good. How are you? Better than I deserve. Welcome. Where do you live? We live right here in Nashville. Oh, Nashville. My gosh, we have a Nashville debt-free screen. We haven't had that in I don't know when. That's awesome. So you just like drove like from your neighborhood.

Yep. Wow. Very cool. So how much have you paid off? It is just over $78,000. Very cool. And your range of income during that? How long did that take?

That's okay. We took 30 months. All right. And your range of income during that two and a half years? Started at 95 and ended at 115. Yep. Very good. What do you guys do for a living?

I am an ERP director. And I am a substitute teacher at our local elementary school. Cool. Which school? Harpeth Valley Elementary. Oh, yeah. Go Hound Dogs. Go Hound Dogs.

That's famous. Famous. Yes. The Harpeth Valley PTA. I've never heard of a school with that cool of a mascot. Go Hound Dogs. Go Hound Dogs. That's famous. Famous. Yes. The Harpeth Valley PTA. I've never heard of a school with that cool of a mascot. Go Hound Dogs. I love it. Well, Ginny C. Reilly, there's a song, if you were old enough.

Old time country. But yeah, that's it. That's cool. Very cool, y'all. Yeah. I love it. So how much debt? The $78,000, what kind of debt was that?

So it was a mix, like most. We had medical that we started with, and then auto, and credit cards. The $78,000, what kind of debt was that? So it was a mix, like most. We had medical that we started with, and then auto and credit cards, and lastly, my student loan. So you were kind of normal. Very normal, yep. How long have you guys been married? 15 years. 15 years.

They're looking at each other to confirm. Just had this conversation. Nobody's in trouble, but we're both checking. You guys pulled that first consonant to make sure. Yeah. Nobody's in trouble, but we're both checking. You guys pulled that first consonant to make sure. Yeah. Same number. So what happened two and a half years ago? We had a bit of a breakdown.

Yep. Yep. There was no more bank transfers on our credit cards that were available, and the money wasn't increasing like we, you know, had hoped, and we had to make a change. So you sat down, and there wasn't too much month left at the end of the money. Yeah, yeah, it was pretty devastating. That's an emotional night.

It was, it really was. It was a very uncomfortable conversation that was ready to be had. It's the ultimate oh, crap crap moment so it's been building and building and building and building and then you just kind of hit the wall and you go oh yeah we went from a double income um to one oh and so um that didn't help either and we continue to live in our same pace and you know you can only go so far so Amber, when Dave just asked you that, you still remember that night like it was five minutes ago. It's still all over you.

Yeah, he was sitting on the bed. Tell us what happened. We had this conversation, and basically what you said, there wasn't enough money at the end of the month, and we had the, are you going to go back to work, like double our income. But daycare or childcare here here in nashville is exorbitant and i said financially that wouldn't make sense and so luckily they were at the age

where they were both getting ready to be in school and i said well i can start subbing and i hit the ground running and that you know with a budget the budget helped a lot yeah so but you changed your ways that night. Yes, we did. You did more than just pick up a job. You said, okay. So you suddenly remember Dave Ramsey lived in Nashville? What happened?

I have been telling my husband about you for years. Uh-oh. And I was doing the money. And I was like, well, if you don't want to do this, then you do the money. And he's like, I can do this like then you do the money oh and he's like i can do this oh yeah until he couldn't and i was like see like it's tough so it was tough yeah so then so then we continued for a couple years just i'm saying it that that night sitting on bed okay i'm gonna start subbing and you said all right i'm gonna figure out how to do this because the

way we've been doing it's not working enrolled working. Yeah, we enrolled in Financial Peace University. Oh, there. Okay. That's what I was trying to figure out. Where you got new information that changed. Yeah. So you jumped into a Financial Peace class. We did.

Okay. We did. And then when that was finished, there she is, our lady, Lily. I ended up teaching one myself. Oh, wow. Okay. I wanted to stay accountable. Yeah.

And so he watched the kids and I went and taught the class. And 30 months later, we were done. Wow. 30 long months. Wow. Yeah. That so he watched the kids and I went and taught the class. And 30 months later, we were done. 30 long months. Wow. Yeah. That's pretty cool. Because you were popping like a couple grand a month on this. We were.

Over $2,500 a month. Every little bit we could get our hands on. Yeah. You were hitting it hard. Yep. And we cut out a lot of stuff. We made lifestyle changes to not go out to eat. We did only just the basic travel.

We told our friends, we'll see you when you come to our house and we can cook you dinner and we can spend time together. But Nashville for us, I think, was a blessing because we wouldn't have been able to do that back home. There's so much to do here that you don't need money for.

And so we just started doing all that and then COVID hit and we literally couldn't go anywhere and spend money so yeah that accelerates everything it really did yes as long as you're able to work yes and you were so yeah that's good news wow yeah so you go from your throat is tight your stomach's in your throat, that moment, like you said, sitting on the bed, and sometimes it's sitting at the kitchen table and there's bills laying all over the table, and you just kind of have a miniature breakdown there.

And you go from that to having a game plan and having hope. How long did that transition take from freaked out to hopeful? I would say it was in the first probably three months. When we finished our FPU course, we had paid off one of our biggest credit cards that the intro rate was about to expire. And it was like just a few months into it seeing like we can do this.

We don't have to live miserably thinking we're okay anymore. And so, yeah, it took a few took a few months, but, you know, seeing that debt paid off and that payment rolled to the next one, we had an Excel sheet. And so seeing that snowball just get bigger and bigger and bigger was really motivating for us. Yeah, absolutely. Yeah. So what does it, what does it feel like now? We can breathe. A lot less stress. Yeah. We dropped our car off this morning on our way here for some work.

We don't know what's going on with it. And it's okay. It's annoying, right? It's annoying. Yeah, it's just annoying. But we're going to pay for it out of our bank account and not have to worry about not being – Yeah, where is it coming from? It's not a thing anymore. So, Barry, what was it like?

You're a successful guy. You've got a beautiful family. Thank you. What was it like having to look in the mirror with both hands on that armoire and say, I'm not making it? It was scary because it was one of those things where I wanted to be – I didn't want to have any issues. I didn't want to have any issues, you know, I didn't want to have to deal with them. And I just thought that we could make it, you know, for so long. And then after a while, it just came to a point where we hit a wall. And once that wall hit, it hit hard. And

I knew we had to do something different. And I just remember her bringing up Dave a few years ago. And I said, you know what, let's try something different. Let's inject something new into our lifestyle and go 110 on it. Yeah. Yeah. Cool. Well, the beautiful thing about being sick and tired of being sick and tired, you're ready to change your life. Absolutely.

And you reach that point where you said, that's it. I've had it. Yeah. Whatever we got to do. And you kind of have to surrender. It's like, what have we got to do? What do we got to do? And I've had it. Whatever we got to do. And you kind of have to surrender. It's like, what have we got to do? What do we got to do? And I've been there.

Most people have been there in different areas of our lives, but certainly money is a big one. And the debt thing. Okay, I quit. I'm going to quit trying to figure this out by myself. What have I got to do? Because what I've been doing sucks. And, man, you just reach that point. And it's not a matter of name calling or something.

It's not a shaming thing. It's just a reality. And you're going. It's not a shaming thing. It's just a reality and you're going this something just got freaking changed here. Yeah. I think for us too real quickly was we actually went on your daughter's show. Roughly the first few months that we had started. There she is.

I remember listening to the podcast some months later and you had asked, someone had called in and they're like, I wonder what that couple from the Christmas show, if they stuck with that budget and how they're doing. And we were telling some people here, too, I was like, if they call us, we've got to be doing this. We can't have them call and say, so, Jovers, what's the status? And we're like, yeah, we kind of fell off. We quit halfway through.

We're failures. No, that wouldn't work. Yeah, yeah. That's a different kind of accountability, being on the Rachel Cruz show. We'll put you on the spot. Way to go, you guys. You brought the kiddos. What are their names and ages? We have

Joslyn, who just turned 8 recently, and Jeffrey, who's about to turn 12. They're very nervous. Very cool. They're going to do great. We've got a copy of Legacy Journey for you. That's your next stage and one of the Total Money Makeover for you to give away. So $78,000 paid off in 30 months, making $95,000 to $115,000. Barry Amber, Jeff, and Jocelyn, count it down.

Let's hear a debt-free scream. Ready? Three, two, one. We're debt-free! Yeah! Woo! That's why I come down here every day. Awesome!

So cool. This is the Ramsey Personality, is my co-host today. Julie is in Denver. Hey, Julie, welcome to the Ramsey Show. How can we help? Hi, thank you for taking my call. Sure, what's up? I have kind of a funny situation.

I have a brother-in-law who just offered to take us on a trip. We're on Baby Step 2, and this year already we've had some extra bills come up with some medical stuff. We think it's strange that they've offered to pay for a trip for us, and we don't know how to say no, we don't want to go, because we don't ever want to pay them back, even though it's a gift. Why is it strange? Well, they have not talked to us for about six years, and then in the back, excuse me,

about a year ago, they've had a change of heart and want to reconnect. That's nice. Yeah. It's nice. It's nice. It's your husband's brother? Brother, yes. So is there something about this gift you feel like is going to have strings attached to it?

Yes. My husband and his brother had a fight over a four-wheeler about six years ago, and it's just now being repaired. Whoa. Don't worry about it. The fight is being repaired the relationship like we're being invited back to family gatherings and stuff oh so you got ruled out of mom and dads and everybody's yes you know that was bigger than a four-wheeler right i think so yeah i'm an in-law a thousand percent bigger than a four-wheeler.

Yeah. That's probably some 30-year-old stuff that was proxy-worn with the four-wheeler. I think so. It was a joint-owned father and son's four-wheeler, and it got ugly for years. You don't excommunicate family members over a toy, right? There's usually other stuff there. Yeah, there's big stuff. But it's strange.

You know, just the other day they offered to bring us on this trip. And we're on Baby Step 2, and we are just not there to go on vacation. But it's strange. We don't know how to answer because if we say no, it's a money thing, and then they say we're paying for it. How much of this is your pride? I don't know. Well, it would be kind of hard to be like,

thanks for the airfare and hotel and... Why is that hard? I just don't want it to blow up down the line and be like, well, we took you here. I don't know. I didn't think about that, Dr. John, actually. I'm going to defend her a minute. I don't think it's pride.

I think she's gun shy. It feels like you're projecting a future. You're predicting a future maybe. If these people will blow you up over a four-wheeler, why wouldn't they blow you up over, come back later, and circle around and hit you in the back of the head over a paid-for trip? That's right. Yeah. But I also, if somebody says, man, what an idiot brother I was for losing out on six years of relationship.

Hey, I want to start spending some intentional time together. And then all of a sudden I walk up and y'all are in baby step two of this weird cult that's happening off in Nashville and it's like hey cool come with us we're gonna so I the only reason I'm asking I'm trying to be provocative with you how much of this is you saying I'm too fancy I'm too I've got too much pride to take someone else's money versus no man if we do this is going to end poorly for us because I think to answer your question I think it's relatively easy you say hey you know what we're not going to do vacations this, this is going to end poorly for us. Because I think, to answer your question, I think it's relatively easy. You say, hey, you know what? We're not going to do vacations this year. We're going to stay in.

If y'all want to come visit us, that'd be awesome. But we're not going to do vacations this year. Next year, the year after, we can't wait. And then your boundaries are your boundaries. And if they want to throw a temper tantrum over that, then you've got your question answered for you, right? Okay. You knew they were using this as something else.

Otherwise, if they say great we can't wait so we can do this again just so you know money's never a thing with us but we're coming we want you with us and we're going to make up for lost time then you know hey there's something bigger at play here right but trust your gut right i don't know what you think i guess i don't have a i don't have a problem either way with it. John's point that are hovering around in his point, I think, is if this is truly an olive branch, don't saw it off. That's what I'm feeling, and that's why I don't know how to respond. Well, no, I'm saying there's a way to push it to the side gently, but you don't have to saw it off and so number one you don't need to respond your husband does this is about him and he responds and says hey bro

man i really do want to reconnect and this is this means a lot to me that you would offer to pay for this and it's so kind and generous of you we are committed to this plan and i know that might not be something you understand but um we're going to stay home, but it's not because of anything except we're working this stuff. And I know you're paying for everything, but it doesn't work for us this year. If you all want to come down, hang out, get your hotel in the area, we'll go to dinner. We'll all go out and throw frisbees in the backyard. We'll do some stuff like that. And then maybe another year we'll go on vacation together.

But I just can't do it this year, and thank you so much for reaching out. And if he then bows up and goes, well, you won't take my gift, and rah, rah, rah, rah, then you go, well, see, there it was. Okay, like John said. But it's a way to test the waters without smacking the possible reconciliation in the face. Or without ending up four days into a seven-day cruise, really like, oh, no. Oh, no, we. Oh, no. We can't get away.

We're stuck on a boat now. I'm stuck in here with Cousin Eddie. Yes. Yeah. Okay. That's fair. That's fair. Yeah.

And my husband will talk to him. I won't respond for him. We talked about it the other day, and we're like, we don't know how to say this. Yeah. It's like a vacation sounds great. Well, it's, you know, it is way over there on the edge of awkward. Yeah.

But, hey, Julie, I also want to put this out in the water. It is easy from you and your husband's perspective to look at your brother-in-law and say, man, I can't believe he burned us for six years over a four-wheeler. But your husband's got to own some of that, too. It wasn't a four-wheeler. There's something else going on. And he may not have the tools to have this conversation well, so he's going to know, I've got to be gentle. I've got to be appreciative.

I want to always go into this thing assuming it's an olive branch. I love that analogy, Dave. I'm not going to cut it. I'm not going to saw it off. I'm just going to move it aside and say, not this year, but soon. Gently. And then that's you having strength Dave, I'm not going to cut it. I'm not going to saw it off. I'm just going to move it aside and say not this year, but soon. But soon. Yeah. Gently.

Yeah. Yeah. And then that's having you having strength. And boundaries. And it also gives you a little bit of a little test here, because I'd rather do Frisbees in the backyard than in Cancun for a week. Yep. You know, in this weirdness. So let's just have a little where there's a little better escape hatch and everybody's not heavily it's heavily committed and you know you you that kind of stuff so uh

yeah i would want we want you to rebuild the relationship if it's possible absolutely and it doesn't have to start on a paid for vacation spite of your hurt and in spite of your scars yep yeah john is in tampa florida John, welcome to the Ramsey Show. How can we help? Thank you, Dave and John, for taking my call. My wife and I are in Baby Step 7. We have paid for rental property, but I'm trying to figure out what our ROI is on that to determine whether they are a good investment to keep long-term.

We've owned it for about 10 years. Is it a residential house? It's short-term rental, actually. Okay. So they're vacation rentals. Okay. Usually those have much higher management fees. Management company takes a bigger chunk, right?

Yeah, we actually manage it ourselves. Oh, okay. So you're like running a vrbo type thing correct okay yeah the benefit is is that you get high rents when you get them but then there's the off season correct and we've had a significant increase in property values over the time too which has been beneficial but a significant increase in turnover of the tenants i mean you're it's week by week it It's not – yeah, okay. Correct.

It's a pain in the butt. Yeah, I'm just trying to figure out. Okay, on residential, traditional residential, I own a bunch of houses, and our portfolio averages a little north of 8% cash on cash. Okay? Meaning that the value of the property, we generate 8% of the value after expenses. Without depreciation. Not counting depreciation, not counting increase in value.

Cash on cash. No, so the actual cash you paid for it. No. The actual cash of value of the property. It would be cash on cash if it's cash. You're correct. But we do it on value. We want to see our rents coming up to match the values to keep us around that 8% mark after expenses.

Now, that's a traditional rental house that rents for a year, not by the week. By the week, you should be making more because you've got a lot more labor. And you've got to account for the gap of no rent. And you've got these gaping holes of off-season and all that kind of stuff. So, yeah, if you're not getting north of that, you should probably rent it straight up instead of vacation rent. Because you're dealing this a pain in the butt. This is The Ramsey Show. Hey, it's Kelly, associate producer for The Ramsey Show.

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