The Ramsey Show - App - When You Bring Order to the Chaos, It Changes Everything (Hour 3)

Episode Date: January 31, 2020

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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.

Thanks for joining us. Open phones at 888-825-5225. That's 888-825-5225. Jeannie starts off this hour in Georgia. Hi, Jeannie. How are you? I'm well. How are you, Dave? Better than I deserve. What's up? Wonderful. I had a question for you. My boyfriend and I are starting to question whether or not we should be moving to buy a house. Um, currently no, no, you should not buy a house with someone you're not married to. Understood. Um, and if that, if not that, then if he should go ahead and just buy a house on his own and then i'm moving with him

well that's up to you but um yeah you do not buy a house with someone you're not married to because the legal entanglement the debt entanglement is uh it's almost impossible to get out of if there's a breakup if you're married and there's a, there's a process called divorce that takes you through that. But you are in a, from a business perspective, a legal perspective, you're in a general partnership with no agreement. And you're going to get fried. It's a horrible idea. I have seen so many disasters in the last 30 years of people that did this. It sounds like it's a good idea.

Well, if you're going to do all that just get married you know but uh no i would not buy a home before you are married with both of your names on the deed or the mortgage well we will be getting married relatively soon within the next six months so we were well just wait till then to buy the house pardon wait till then to buy the house understood okay that'd be another way to do it and that that would make more sense you know there's it's it's much easier anyway so yeah uh but do not put do not buy cars together do not buy um houses together because people get tangled up and all kinds of stuff happens, man. And it just every, I've seen so many horrible, horrible stories.

All right, Brad is in Texas. Hey, Brad, welcome to the Dave Ramsey Show. Thank you so much, Dave. Appreciate you taking my call. Sure. I've got a question for you. We just finished a class. I'm newly married, six months.

And we took your course right when we got married. Good. I came without any debt. She has about $70,000 in student loans. And what I'm trying to figure out right now is do I help her pay off the student loans? Or what we've done is I take care of everything. I paid off her car. I've paid off my car.

You flunked the class. I'm taking care of the mortgage. Stop, stop, stop. You flunked the class. Okay. Because in Financial Peace University, we told you you had to combine everything. The preacher said, for richer, for poorer, in sickness and health, unto thee all my worldly goods I pledge. This is the old Book of Common Prayer marriage vows.

This is what happens when you get married. You combine everything. So she doesn't have student loans now. We have student loans. You changed your, that she brought into the marriage. You change your pronouns. She doesn't have an income. You have an income.

We have a household income. We have assets. We have liabilities. We have a combined everything, and we're attacking everything. You're not doing her a favor. She's your wife. You see the difference? Absolutely. And let me tell you what that does it not only builds the quality of your marriage obviously it changes the efficiency of the math that couples that handle money together and are are both in couples both members are engaged in the process we're both on the budget we're both setting goals together. We're in agreement, have the highest probability in all of the data we have from 30 years of doing this of winning and becoming wealthy. When one of them drags the other one along or you're doing one of them a favor or something like that or one of them is a princess or whatever, that kind of thing, it's almost impossible to build wealth. So combine everything. Knit together. Knit everything. Knit together.

Knit together. Knit together. You are one. Change your pronouns. Sure. That make sense? Yeah. Yeah, no, it absolutely does.

You know, we were just thinking, you know, I'm trying to, or we, let me change that for you. We're trying to also max out our Roth IRA. No, not while you're in debt. I want to take advantage of that. Not while you're in debt. Just get rid of all the student loans and then do everything else. Baby step two is you put everything you have on debt until the debt is gone in baby step two. Do you remember that part?

Even though payments aren't due on that until October of 2021? Yes, if that's what it takes. You squeeze every dollar out of your budget until you're 100% debt-free except your home. That's baby step two. You do not do any investing. Do you remember that from the class? Yeah, no, of course, of course. Okay.

I mean, I just wondered, I mean, if we're doing something wrong in the class, because that's what we should be teaching, and that's what the material should have shown you what to do. So, yeah, you stop all investing, you take all savings that is non-retirement, and you throw it at our debt, and our income goes at our debt until we're debt-free, everything but the house and baby step two. That's the gazelle intensity, the complete focus, because your most powerful wealth-building tool is your income. And when you try to do three things at once, not any of them get done well.

The power of focus is what has given us, at Ramsey, the reputation of causing people to win with money. And that's what it comes down to. Don't try to fix this. It's not broken. Scott is with us in California. Hi, Scott. Welcome to the Dave Ramsey Show.

Hi, David. Pleasure to speak with you. How are you today? Better than I deserve, sir. How can I help? Of course you are. Listen, I have a Baby Step 7 question. I'm new to you and just about three-quarters of the way through your book. I'm 63 years old.

I retired three years ago and am in the seventh step. And I, when I retired, set up a donor-advised fund that's being managed by an investment bank. Okay. And my question is I'm thinking about converting it, setting up a private foundation and converting it to a foundation. And I'm curious as to what your thoughts were about DAF versus foundations. Foundations have more cost associated with running them and manage them. The donor advice fund is kind of an interim step. It's like a small foundation, so to speak. And so we run a family foundation of ours,

but we have a pretty substantial giving budget. And I don't know what your giving budget is, but you're going to have more costs because you've got some administrative things that the donor-advised people do for you. You do have some flexibility with the foundation that you don't have with donor-advised. Donor-advised all has to be given to nonprofits, as you know. A family foundation does not.

A family foundation can set money aside. So, for instance, my daughter runs our family foundation and has for almost a decade. She's our director. She can do things in the community direct to a person in need as the foundation without them having to have a 501c3. But donor advice has to go all to 501c3s. So if you're wanting to do some unique things like that and you don't mind taking on the administrative expense and you're doing a pretty large amount of giving,

the foundation starts to have some advantages. I can't believe 2020 is here. If you're paying attention, you're already planning your new budget. For most of you, your mortgage is your single biggest line item. Lowering that payment could have a dramatic effect. My friends at Churchill Mortgage want you to save big. So if you get a free Churchill checkup this month, and it makes sense to refinance, you'll get an extra $200 off your closing cost.

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Poor is a state of mind. Broke is I'm passing through. And you don't have to either. Millions and millions and millions of people have now worked these baby steps to pay off debt, get past the shame, the condemnation, the fear, change your family tree, live like no one else so that later you can live and give like no one else. They've gone from not knowing if they'd have enough to pay the light bill to being able to pay other people's light bill.

Now, maybe you're new to us and you're not quite ready for Financial Peace University. I get that. That's okay. We created a three-minute assessment for people who don't even know where to start. You're like brand new. You don't know how to plug into this stuff. In three minutes, you're going to get a free customized plan to show you how to get started from where you are right now. No more worrying about money. No more fear.

No more shame. No more lumps in the throat. It's time to get started taking control of your money. Text the word start to 33-789. START to 33-789, or go to DaveRamsey.com slash START. Al is with us in Texas. Welcome to the Dave Ramsey Show, Al. Hello, Dave.

How are you doing today? Better than I deserve. What's up? I have a question uh we we got into a new house about two years ago and our mortgage has increased a thousand dollars uh you know a month my escrow my escrow and my my escrow taxes and PMI and MIP and the actual homeowner's insurance is all wrapped up into my mortgage. Yeah, it normally would be. So your insurance and your taxes went up $1,000? Yeah.

$12,000 a year? Yeah. Well, I mean, that was a period of two years. No, no, no no no no if you're if it goes up a thousand dollars a month a thousand dollars a month is twelve thousand dollars a year your taxes and your homeowner's insurance went up twelve thousand dollars a year it did this year yeah and it turned no it didn't and that's what i'm trying to figure out what no it didn't lack of something's wrong i mean i have the statements to prove it and it appears i reached out to my mortgage company and they mentioned to me that um that when we bought the house and the house was built and we closed in March of two years ago,

in March, they evaluated the property taxes based on just the land, not the whole thing. Oh, okay. The structure. Okay, so it was originally calculated wrong. Exactly. Okay, so that makes sense. So in the beginning, I was paying like $1,800, and now it's like $2,800. Yeah, so what is your take-home pay?

My take-home pay, well, after taxes and all that, it's about $6,500 between my wife and I. Okay, you got 401K coming out of that? Not yet. We're on baby steps two, and that's what I was calling it, because since we're on baby steps two, this monkey wrench basically is going to slow us down. Yeah. baby steps two and that's what i was calling because i'm since we're on baby step two this monkey wrench basically is going to slow us down yeah it's not going to stop us but my question is that since do you recommend because what happened is that discrepancy is because i've been kind of rolling uh the taxes in the escrow.

I haven't been paying that taxes from the original. They mentioned to me, you know what, that you owe us $5,000, but because of that, you know, two years ago, and the whole taxes and all that, so I'm kind of, I guess, I guess I'm behind. Yeah. Behind, behind. Are they running an escrow shortage as part of that?

They're making up the escrow shortage? Yes, they are. They're making the escrow shortage. It is causing my mortgage to go up. Yeah. So my question would be, do you recommend for us to go ahead and make the escrow shortage part of the actual debt, you know, pay off the debt. If you want to. You got an escrow shortage of $5,000, and it'll bring your house payment back down to go ahead and pay that,

put that in your debt snowball. There's nothing wrong with doing that. And so once we do that and we're cut up, do you recommend us to take out the actual taxes and also the insurance out and just basically just pay the mortgage? No. No, it's okay to have an escrow account. The problem was your escrow account was calculated improperly because you weren't paying your taxes. Yeah, and you see, that's why I was at...

It's not the fault of the escrow account. It's the fault that it wasn't calculated right. And it's been an actual eye-opening experience that has definitely opened my eyes to a lot of things that I didn't pay attention to.

And also, the learning experience is that I have, I think it's PMI or MIP, and it's like almost $200 a month on that. And what turned out is that I hired a realtor, and the realtor really wasn't, I guess, not up front. Because when I actually had the money to put more money down so I don't have to have mip or pmi i was only five thousand dollars away from not having it ah putting down payment on it and so uh somebody told me that you know your real estate agent should have told you that yeah yeah your mortgage company should have told you that they told you somebody should have raised it yeah you should

have had a better mortgage company better real estate to stay on top of that because for five grand you could have got rid of that. Now here's the good news. Five grand gets rid of your escrow shortage. You go ahead and you blow through your baby step two. You may want to go in and reduce your principal on the mortgage by $5,000. So they'll drop the PMI, but I would do that last after you get all these other things done. First thing is you got to get rid of this escrow shortage and you get rid of your debts and baby step two, but you're right. You've learned a lot to watch very carefully that you put down enough to avoid MIP and PMI, which is a 20% down payment on a Fannie Mae loan.

And it's PMI on that. And that's the only kind of loan you ought to get. 15 year fixed rate. And then, you know, before you go to the closing table, you find out what your taxes are and you look at that and you go, oh, that feels like that's not right. That seems awfully low on a house this high to have that. Oh, wait a minute, they're just taxing the lot. They haven't raised the taxes on the house yet. Oh, okay. So, you know, you start to look at the details as you're going into the closing from now on, because no one's going to watch it like you, and after you've been through what you've been through, you'll watch it

from the rest of your life. So So I'm sorry you're facing this. That's a hard thing to go through. But like you said, it's a thorough lesson on the whole process. You can't just stand back and watch someone else do the deal. You've got to keep your fingers all down in the money because it is your money. And that's what will have to happen. So thanks for the call. Open phones at 888-825-5225.

You jump in. We'll talk about your life and your money. David is in the Ramsey Baby Steps community. A couple hundred thousand of you in there now, so almost 300,000. So check it out. A lot of people in that community. The Facebook, the Ramseysey baby steps community on facebook uh when you started the baby steps the one thousand dollar emergency fund was okay for 1992 but it's 2020 and

things are much different why do you not adjust the one thousand dollars to three thousand or four thousand or five thousand as a homeowner of an older home there are many potential larger expenses because david it was never intended to be enough. A thousand dollars wasn't enough in 1992, dude. It's a starter, a little bit of a gap. You're not supposed to live with a thousand dollar emergency fund. You're supposed to get your butt out of debt so that you go on to baby step three and build it up. So when you write the curriculum, you can change it.

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first job post. Visit linkedin.com slash Ramsey. That's linkedin.com slash Ramsey. Terms and conditions apply. In the lobby of Ramsey Solutions on the debt-free stage, Jonathan and Eric are with us. Hey, guys, how are us. Hey, guys. How are you? Hey, Dave. Doing good.

Where do you guys live? Birmingham. Just down the road. A couple hours down the road. Come up to Nashville to do a debt-free scream on a Friday afternoon. That's right. I love it. How much have you paid off?

We paid off $112,000. Wow. Good. In about four and a half years. Four and a half years. Very good. And your range of income during that time? We started off right around $60,000, and we ended up about $110,000.

Nice. Doubled your income. Wow. What do you all do for a living? I'm an audiologist. And I work in IT. Okay. So why did your income go from $60,000 to $110,000 in that period of time? I didn't really have a job when we got started. Oh, okay. So we added a career to the mix.

Yeah. Okay. We had just moved to Birmingham for her job. Okay. And so I left my job behind and just took a little while to find something. And get it rolling. Okay, that makes sense. All right.

And so $112,000 was what kind of debt? It was about 85% student loans, 10% medical, and about 5% credit card. Okay. No car loans? No. All right. So how long have you guys been married? We're about to celebrate 10 years.

Okay. So halfway through your marriage, you move and decide you're going to tear into this debt. Tell me the story. How did you decide to go after the debt? Well, I've been listening and a fan of your show since probably 2009, and I'd always wanted to get out of debt. I never believed I could. When we got married, I didn't believe we could,

and we didn't have any money. We were just poor students, and I was always putting it off, thinking when we get done with school, we'll start on it. When we get good jobs, we'll start on it. Just kept putting it off, putting it off, putting it off. And in 2014, my dad got diagnosed with lung cancer. And I spent that year helping my mom figure out what finances will look like. And right when he passed at the end of 2014, I actually stayed, uh, our family's in Virginia and I stayed with my mom for probably about a full month. Um, again, helping her get everything together.

Like, this is what you pay. This is what you owe. I found out some, uh, debt that they had to a small amount. I showed her how to pay it off. off and then when i got back home in 2015 it was like why i spent so much time helping my mom get everything straight and why haven't i gotten everything straight with ours ah and um okay so that's when i if i can be a consultant i might as well work at home yeah all right um and uh so i that's when i began the conversation with her about like i think we should do what dave ramsey teaches and i had those cds in the car. I listened to them all the time.

And so we took a trip back to Atlanta from Birmingham. So I had her for like four hours in the car. You trapped her. I trapped her. All right. And so we listened to them. She was like, I'm on board. I just need to know what to do.

And so she was ready to go. So we started working on our budget on the way back to Birmingham from Atlanta, that same trip. I love it. So cool. So four and a half years later, you've gotten rid of $112,000. That's a long time, four and a half years. It felt long, too. Yeah, I mean, that took a while.

I mean, that's pushing on through. So what allowed you to stick with it that long? Because most people can't stay with stuff four and a half minutes. One thing that helps me is I'm pretty stubborn, and I like to see something end. Even if I don't like a book, I want to finish it. I don't like a movie, I'm going to finish it. So I was going to stick with the pain and sorrow of not being able to buy anything just to get to the end and see it.

So my stubbornness and determination help. But just the fact that we were encouraged by your show and by all the debt-free screams we were encouraged to keep on going and just keep doing it yeah so what do you tell people the secret to getting out of debt is it's definitely a budget having a plan you talk about how you can wander into debt but you can't wander out so we easily got in debt but we had to have a plan to get out of it. And so when I talk to my coworkers and friends, you just got to just do it. You just got to make a budget, and you got to make a plan, and you got to get going.

And then being diligent and disciplined to just say no to stuff, to know that there's a reward at the end. There's a big picture and a goal. So Erica, he kind of knew all this stuff, but wasn't doing it until his mom helped her. And then he gets you in the car and you're listening to those CDs. What was it that you heard that said to you, we'll be able to pull this off? Really? I think we were at a place where we, we needed to make some decisions early in our marriage when we both got married or when we were married,

we were both in college still. So we didn't start out with a lot of income anyway. And so many of our early years were spent not having money. And that led into just a lot of frustrated, I'll say conversations. He says arguments about how are we spending our money? And I think it really had gotten to the point where if you're telling me you have a solution that can make this work, then I'm in. Because my kind of thought to myself through that was, for instance, when I would go to the grocery store and I would buy our groceries and I would come home and he would always say, what did you spend?

And it felt that no matter what I did spend, he was always disappointed in that amount because we just didn't have any money to spend. And so I, and you didn't have a certain amount categorized for it. Right. And so that was the freedom to spend. That's exactly right. And so that was my first big moment when we had a budget. It's the first time I bought groceries and I came home and he said, what did you spend? And I was waiting for that moment. And he said, okay, fine. As long as you're in the budget. And it was that freedom to finally be able to make choices, knowing what my guidelines were. But before we were working within that stress of not having money, but not knowing what was safe and not safe to be spending, which just really led to a lot of bad conversations. So it just really helped our marriage. And so I was at a point, so whatever you've got, I'll take it.

Let's try it. I love it. I love it. That's fun. Very cool. Good for you guys. Who were your biggest cheerleaders outside the two of you? Our families. Our families were on board. Her parents, my parents, they were all encouraging for us to get done.

And I'll even say the show that I'll often say in the beginning of our debt snowball, it's really exciting because we had some small things that you could pound down and you saw it happening. And then you're in that kind of meaty middle where we had big student loans that weren't going anywhere anytime soon. And it just felt like you were stuck. And so watching the show and seeing the debt-free screams and seeing where others were doing it and reminding ourselves we can do it too

and kind of getting that emotional response off of it was enough to carry through and maintain the excitement until the end where it really started to go. Yeah. Well done, you guys. Well done. I'm proud of you. Thank you. Very cool.

One other thing is during the four and a half years, we used a lot of your teaching and principles and cash flowed a lot of emergencies that came through because we had a budget and we were already in that mindset, we were able to cash flow the stress of moving twice in the middle of that, the stress of having to replace both of our vehicles during all that and the stress of having your first child. Oh yeah. So we were able to, those weren't emergencies that like derailed us.

They just slowed things down and your teachings helped us to just keep our heads on and keep going after it. And you brought the baby with you? Yeah, we did. We'll get her in the picture. What's her name? Veda. Veda.

All right, little Veda. All right, here we go. We got a copy of Chris Hogan's book for you. And that's Everyday Millionaires. That'll be the next chapter in your story. And you'll be ready to go. So it's Veda, Jonathan, and Erica, Birmingham, Alabama. $112,000 paid off in four and a half years, making $60,000 to $110,000.

Count it down. Let's hear a debt-free scream. Three, two, one. We're debt-free! Oh, cute. That's fabulous. I love it. That is how it's done right there.

That's the sound of a family tree being changed. Two people deciding they're going to take control of their destiny. They're going to take chaos and bring order to it. And when you take chaos in any area of your life and bring order to it, it changes everything. Then you start to have a sense of controlling your own destiny. You can do that with your marriage. You can do that with your kids, do that with your career. Ken Coleman helps people take chaos in their career and bring order to it. And that's what we do around here all the time. And then that causes you to win and get traction and be able to go in the directions you're supposed to go very well done jonathan and erica and veda very well done 112 000 paid off in four and a half years making starting out

at 60 he gets the job that takes it to 110 and they were able to attack this and push it through plus a bunch of other things they cash flowed without any more debt while they were doing this. Beautifully done. Beautifully done. This is The Dave Ramsey Show. One of my favorite parts of this show is hearing your debt-free screams. You guys are our heroes. You've kicked debt to the curb and you've saved for the future. Now we want to celebrate with you. If you have lived like no one else and are currently in baby steps four through seven,

well, it's time to enjoy some money. And the perfect place to do that is on board our first ever Live Like no one else cruise in march that's right just a couple of months away but get this it's not too late to book your cabin so don't miss your chance this caribbean cruise is going to be an incredible seven days at sea on a stunning new ship with amazing experiences i'm talking all of our Ramsey personalities and other world-class entertainers. We're stopping in the Bahamas, Puerto Rico, St. Thomas, and Turks and Caicos. It's going to be an amazing, debt-free celebration designed just for you. Don't miss the boat. Head over to ramseycruise.com today to reserve your room. Our scripture of the day, Lamentations 325, the Lord is good to those who wait for him,

to the soul who seeks him. Mark Twain said, continuous improvement is better than delayed perfection. Abby is with us. Abby is in Ohio. Hi, Abby. Welcome to the Dave Ramsey Show. Thank you so much for taking my call. It's an honor to speak with you. You too. What's up? Well, I am in a very unique position. I am going to be turning 40 this year and I lost my husband in an accident about a year ago. So this year has been a little challenging, but I do have, well, thank you, but I do have some positives, but my question for you today, and I've had many fun things. I put fun in quotes to have to deal with this last year. But I'm to a point where I do not have any debt.

And I have college paid for for my children. I have two little ones. And I'm very blessed with I have a great job. I'm a pediatrician. So I'm in a very good position. And I kind of was always the frugal person of the relationship before he passed away. But my question for you is, as I'm trying to plan for retirement and I'm in the process of converting a traditional IRA to a Roth, which will be happening over the course of the next few years,

I maxed out my retirement at work and they recently added a Roth below 1K to the amount of which to contribute to. So I Good. So I'm just curious. They only match 3%, and I'm a high earner, obviously. So I was curious, do I contribute, obviously, to the match, to the 401k, and then do I put money towards the Roth 401k, or do I do the 403b? I'm not exactly sure which direction to go. I would do the Roth 401k between those two, choosing between those two. Okay. The rule of thumb is match. It's kind of

like rock, paper, scissors. Match beats Roth beats traditional. So your pecking order is you take all the match, and in your case, your match happens to be in a Roth 401k and then you would take that Roth 401k and max it what is your income uh this year I'll probably do I hustle hard so it's probably going to be about 250 good for you okay you also can you cannot qualify through the front door on a Roth IRA but you can do what's called a backdoor Roth. Yeah, that's what I'm planning to do. That's what I've actually started the process of, but because it's a, they say don't touch it for three years as we're converting the amount over that you have currently. And so I'm leaving that be. And what I plan to do is whatever the total 15% of

my contribution towards retirement would be at this point, I'm just going to open a brokerage account and put some money in mutual funds of what the difference would be between what I'm contributing at work and what I would be contributing on top of whatever the 15% total would be. So I'm not sure if there's... Well, I mean, you can't get to 15% with just the 401k, but you can also do another $6,000 in addition to your 401k with a backdoor Roth. And if you've got some existing funds that you're converting to Roth,

you could use the taxes that that creates towards your 15% because it's effectively an investment. It's effectively investing. And then beyond that, I want you to get on the house and get it paid off. You it's effectively investing and then beyond that i want you to get on the house and get it paid off you have your emergency fund and you're debt free except the house right that's all all ever no everything's paid off i have everything paid was there life insurance or you just had it all together no no i had life insurance before my husband passed i had um a pretty good uh emergency fund that I was willing or I was about ready to put

all of that towards the last of my student loan debt that I had for medical school. And then he passed. So I'm glad I didn't do it because I cash flowed some expenses that he entered the marriage with that I assumed, obviously. So there was not life insurance on him or there was? Oh, no, there was. No, I had life insurance i that all is a separate but yeah i i just want to tell you i was you have been a godsend i've listened to you so much in the last year and i tell every medical student and resident and high school student and college student that rotates with me that they have got to listen to you to protect them from bad decisions like taking out tons of student loans because it's just a racket. Oh, yeah.

I'm so grateful for all of your advice. Well, thank you. I'm sorry you've had the year you've had, but I'm glad we were able to help you. And anytime you need help, you just give me a yell back. All right, Julie is with us in Idaho. Hi, Julie. Welcome to the Dave Ramsey Show. Hi, Dave.

How are you? Better than I deserve. What's up? Well, I live on 20 acres, and I want to, and we've split the 20 acres into two tens, and I want to sell the existing home and build another home because it's a seller's market and the market's at an all-time high. My husband wants to take a loan out with the equity, take through the equity and build the other home on the other 10. I'm sorry, the house that you're living in is not a good house? It's okay.

It's a cabin. Okay, so you're wanting to upgrade in-house is the idea. Yes, that's part part of it and i want to not i will 175 on it and i want to drop that down to maybe i don't know 75 50 75 grand i'm trying to pay it off because we're in our 50s so and we're self-employed we don't have a punch of empty pension or retirement okay well you need to be working towards getting your baby step four going and putting 15 of your income towards retirement you can do that self-employed as well um and not just try to create some kind of land deal to bail you out of having no retirement but aside from that right if you aside from that you have two

10 acre tracks and and you're wanting to sell one of them that has the cabin on it and use the money from that transaction to build the house on the other track and you're going to end up with less debt right that's the plan and and he won't and he doesn't want to do that. He wants to do what? He wants to keep that house and maybe a rental, but it's like 17 miles outside of town. It's not like a real rental in my opinion. Yeah, sell it. You're right. You're right. Oh, thank you.

You don't need to be keeping a rental with debt on it. You need to use this transaction to cause your house to be closer to being paid off and be a house that you want to live in longer than you wanted to live in the cabin. And you need to start putting 15% of your income into retirement to get things going. All right, Jason's with us in Texas. Hey, Jason, welcome to the Dave Ramsey Show. Dave, thank you. My father passed away recently.

I'm the executor of the estate. His credit card debt is over $100K. His personal bank loans are over $100K. His assets, when sold, will add up to twice the total debt. So we can cover the debt. My siblings are insisting we negotiate down the credit card debt to pay as little as possible even our attorney has said that the credit card companies will settle protected to 60 cents on the dollar is this true and is this right uh it's an estate it's uh yeah if they have full information and they choose to do it with full information, which I'd be shocked that they will negotiate, they might.

They might. But if they know that there's assets there to cover the debt, I don't know why they would. Well, I wouldn't. So it's really up to me as to whether or not they know. But, yeah, I mean, if you tell, well, I mean, you know, if they have half a brain, they're going to ask you. You know, you can just call up and say, I'm the executor of the estate.

I'll send you the paperwork to show that. And, you know, we have $10,000 with you. We're going to offer you $7,000. And if they say, well, are there any assets in the estate, then you would tell them. And then they would say, no, we want our $10,000. Or if they say, okay, we'll take $'ll take seven thousand and they don't even ask you didn't do anything wrong you didn't lie to them you didn't hide anything from them uh you just made them an offer and they took it if they do settle if any of them do settle will they they sell off the balance to the collector? No, you need a settlement in full.

And now the estate will be taxed on the debt forgiveness. There will be an income tax on the debt forgiveness. So if you settle a $10,000 debt for $7,500, that $2,500 difference, you'll get a $1099 on it, and it'll be taxable to the estate as income. It'll create some income tax for the estate, but that's not the end of the world. But yeah, as long as you're telling the truth and they choose to settle, that'd be fine. I don't have any issue with it at all. It's a lot of work to go through as much debt as you've got here, but whatever. That puts this hour of the day, Ramsey Show, in the books. We'll be back with

you before you know it. In the meantime, remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus. Hey, it's Kelly, associate producer and phone screener for the Dave Ramsey Show. This episode is over, but if you heard about a product or service and didn't have a chance to write it down, don't worry. We list everything that is mentioned during this episode in the podcast show notes section. Thanks for listening.