The Ramsey Show - App - Why You Should Never Get a Big Tax Refund (Hour 1)

Episode Date: January 22, 2020

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Music Music 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. We're so glad you're here. Open phones at 888-825-5225.

That's 888-825-5225. Well, the IRS has changed some things. You know, we have had so much fun over the last 30 years making fun of them, although it's really not their fault because it's your stupid Congress's fault that puts these laws in place, and then the poor people at the IRS have to actually try to abide by these nutburger laws that we put in place. But yet they get the brunt of the comedy routine, and so we call them the KGB, and we make fun of their lack of competence and all that kind of stuff. But they actually, I have to give them credit, they did something right.

They did something right. And they're actually helping you. So we have to be fair and tell the truth and say they did something right. Here's what they did. A lot of you continue to get tax refunds. You should never get a big tax refund, never over $100, because our tax refund is you have had too much taken out of your check all year long. You stored that money at a savings account called the federal government at zero interest and when you file your taxes at the first of the year they send you your money back now i know santa claus he's a good friend of mine and he does not live in was, D.C. It's your money. You had too much taken out of your check,

stored it at zero percent interest, and got it back, and acted like you did something smart because you got a tax refund. You didn't do something smart. You miscalculated your withholdings and you over-withheld. So you need need to adjust that the problem has always been that the tax tables that the irs put out based on dependence or allowances were so freaking inaccurate that people try to say well i have four dependents and so they would do the withholding based on four dependents and it has nothing to do with it. They were just completely incompetent. For instance, my oldest daughter, when she got out of school, took her first job. We ran the calculation on her taxes to help her figure out what she should do on withholding.

She was a single girl living in an apartment with a roommate. She has negative dependents at this point. Not even a real dependent. We claimed six dependents' allowances in order to get her taxes in the right place. And you can do that. There was nothing wrong with that in the law. You just, you're properly withheld is all we were doing. And so we've always told you,

calculate what your real taxes are and then back into the amount that should be withheld. And you should have the proper amount withheld so you don't end up owing more at tax time, but you don't get a big refund because you stored money with them. So the IRS has put a new thing on their site, and they've changed the W-4 forms. The W-4 forms are no longer based on allowances or dependents. You don't have to go in and change yours, but the good news is you can go to the IRS site, irs.gov, and click the Pay tab, and they have a tax withholding estimator there,

which is what I've been telling you to do. Estimate your taxes and have that much withheld. And that's the proper way to calculate your withholding. And that way you don't get a big refund. And they actually have an actual little calculator there that actually works. And they changed the form to represent common sense. And I'm just impressed, guys. Hats off to the IRS today.

Things you don't think you'll ever hear Dave Ramsey say at the start of the show, right? Way to go, guys. Salute, right? So go to irs.gov. check out the tax withholding estimator. Now, there's a lot of changes in the tax law. One of the biggest changes in the tax law has been that your standard deduction has gone way up, meaning that most of you are going to file the simplest return with a standard deduction. You're not going to do itemized returns.

You're not running a side business. You don't have depreciation. You don't have substantial charitable giving or substantial interest costs that you're writing off, and so you're filing the simplest of returns. A lot of you don't need to use one of our tax ELPs and pay hundreds and hundreds of dollars to file a basic simple return. But if you've got the complicated stuff, you do need to get with one of our tax ELPs. So we're going to help you with that part too. Okay?

We put together an awesome quick little tax quiz that will tell you the best way to file your taxes this year. Do you need a pro, or should you use some good software to help you do it? That's simple. Just go to DaveRamsey.com slash tax quiz, or if you just type Dave Ramsey tax quiz in the Google line, it'll bring it right up for you. Take the little tax quiz, and it'll help you decide if it's worth the money for you to spend. And if you've got substantial deductions, you're going to make more than it costs you

to have a professional preparer. You do need to do that. But, I mean, if you've got a very, very simple little return, don't pay somebody $500 to do your return. That's crazy. You don't need to do that. There's lots of good software out there that'll help you do it and do it properly, and we'll direct you on that and help you with that, okay?

So DaveRamsey.com slash tax quiz, or just type in Dave Ramsey tax quiz in the Google bar, Chrome bar, and it'll pop right up, right? And you can find it there. Take the little tax quiz and then go over to IRS.gov and hit the tax withholding estimator there and calculate what your actual taxes should be and it's pretty simple here's another thing you can look at another way you can do it if you want to back into it and we've said this on the air here for years so let's say you got a five thousand dollar tax return okay well that's a little over $400 a month, $400 a month, 4,800. Okay. So you have,

you know, $410 a month, too much coming out of your check. Now, if nothing big changed from last year to this year, meaning you didn't get married, you didn't have a kid, you didn't buy a house, there's not a big change in your tax calculation, everything's pretty much the same, then you just simply need to reduce your withholding by $410 a month. That's simple. And you'll be very close to $5,000 there in your reducing the amount of withholding, because your $5,000 tax refund comes under the column of stupid things you have done because you made no interest on $5,000 for a year.

You parked it with the freaking government and then acted like you were sophisticated and scored a touchdown when you filed your tax return. It wasn't smart. It wasn't sophisticated. It was stupid. Stop doing it. A lot of people do this.

Billions and billions of dollars are parked with the federal government every year only to be returned back to people who are pleasantly surprised that their 0% interest savings account with the federal government sent them a check back. Do not over-withhold. Change your withholding. And take our tax quiz at DaveRamsey.com slash tax quiz. We'll help you with every bit of this.

This is the Dave Ramsey Show. I get asked all the time about what people need to do to improve their family's money situation. Two of the most overlooked things are term life insurance and disability insurance. Both plans make sure that you have income to pay bills and take care of yourself and your family if something were to happen. For term life, you need to carry 10 to 12 times your income, and I recommend 15 or 20-year plans for most families. Stay away from cash value or return of premium plans. They're just a rip-off.

Disability insurance is just as critical. How are you going to pay your bills if you're unable to work? Disability is the leading cause of bankruptcies and foreclosures. That's why I send you to Zander Insurance. They've been helping my listeners find the right plans at the lowest cost for almost 20 years. Call 800-356-1780 or visit zander.com and compare online. That's 800-356-1780 or zander.com. suzy is in florida hey suzy welcome to the dave ramsey show hi dave thank you for taking my call. Sure. How can I help? My question is actually about Roth IRAs.

My husband and I are in baby step two, so we aren't actively investing in retirement, but I do have a 401A through my current employer, and I also have an old FICA plan that basically has done nothing in eight years. So I called the company that the FICA plan is with and asked about rolling it into a Roth IRA. They told me I could do that, but I would need to roll it into a traditional IRA first, then roll it again into a Roth IRA. They also said that once I roll it into a Roth IRA, I couldn't do two separate Roth IRAs for my husband and I, but I could do a joint Roth IRA. My two questions are, why would I need to roll it to a traditional first?

And also, is a joint Roth IRA a thing because I've never heard of it and I have not been able to find out any information online? I don't think you can do a joint Roth IRA, so I think that piece of information was wrong. The rest of what they're telling you is correct, though. You would roll it to a traditional first and then to a Roth. As a matter of fact, you may put off rolling it to the Roth. You may just roll it to a traditional, later on convert that to a Roth, because you create taxes when you move it to a Roth, and you don't need a tax bill, you're in baby step two. Okay. And so let's just leave it in a traditional with no taxes right now and get it in some good mutual funds so it's performing.

But yeah, you cannot take your retirement account and put it in your husband's name. That's not possible. So it would just all be a Roth in your name. But never fear. Everybody is safe. So if both of you live and you stay married all your life, you're going to combine your monies anyway. You're not going to make a distinction between, oh, that's yours and that's mine, right? Right. You both have millions of dollars. We're

going to be just fine. Life's good. If one of you were to pass away, you would inherit the IRA as a spouse. Hopefully you've set that up in your will. If you were to get divorced and one of you has all the money in their name, the other one will get half of it anyway. Okay. So for instance, a husband that has $500,000 in a 401k and the wife has nothing and was a stay-at-home mom and they get a divorce, she ends up with half that 401k in the negotiation in almost every state. Okay. So you're in no risk. There's no downside for it all being and staying in your name, in other words. But I wouldn't go ahead and take it to a Roth yet because you don't need a tax bill yet. And that's where I would start. So, hey, thanks for the call. Good, good question. Gary is with us. Gary's in New York.

Hi, Gary. Welcome to the Dave Ramsey Show. Hey, thank you very much. Appreciate you taking my call. Sure. So I have a question on gifting. I'm at a stage in my life where I've got plenty of money, and I want to spread the love, if you know what I mean.

So I have a daughter and son-in-law who live in Raleigh. He's got a small business repairing and building musical instruments. He's doing well. He's actually had to move once to expand his business, which is good. And he's looking at another move. He wants to move farther out of Raleigh because it's expensive there with the rent. And he wants to basically either buy or build something around 5,000, 6,000 square feet of commercial space so he can expand his business. I would rent.

That's all good? I would rent. You would all good? I would rent. You would rent? Okay. Okay. So my wife and I have been gifting them 60,000 K per year. That's the max you can do without hitting the 10% gift tax. And so I was looking at maybe accelerating his business by gifting him, or I was thinking

of him, if he would be building or buying rather than renting, that I would gift him the money to do that and do it in a way that would avoid the taxes, which is, let's say, hypothetically, it's $300,000. I don't know what it would be, but something like that, that I would basically give him a note or a mortgage and then use the gifting that I give him each year for him to pay that back, you know, pay the loan back to me. You can do that.

I was wondering, what do you think of that? There's nothing wrong with that at all. That's done all the time. Is your net worth under $25 million? It's between $10 and $20. Okay. It's in that range. How old are you?

62. Okay. How old are you? 62. Okay. You can do the plan you're talking about, and given how high your net worth is, I probably would do the plan you're talking about. Or you can use up part of your federal estate tax exemption, which I believe this year is about $23 million, and you could use up, say, $300,000 of that. In other words, that much is exempt from federal estate tax. So if you ended up with, when you died, a $30 million estate and you didn't do any tax planning or any estate planning at all you would be taxed on the difference in the exemption or your estate

would be taxed on the exemption difference in the exemption in the estate size so 30 million minus 23 million 7 million be taxable and so if you use up some of your exemption like 300,000 of it and your estate continues to grow your net worth continues to grow and you live a while it will uh you could get up you could create taxes for your estate later okay okay but there's another possibility is you can do what's called a unified estate tax credit which you use up some of your estate tax credit while you're alive but it reduces the amount that's covered when you die when you die yeah yeah so you okay you know you can go you can go that way i because your net worth is so high and you're 62 you're still young um your estate size is so high you obviously need

professional estate tax planning if you haven't gotten that yeah but. I do. Okay. But I wouldn't use up your exemption because you are actually probably going to break it unless tax law changes, and I don't know what tax law is going to do. Who knows? I mean, it's gone way up under Trump, meaning that you can have a larger estate that is not taxable than in a long, long time. So anyway, that's just two possible ways. But your way, you're actually not using up any of your exemption. You're just backing off your annuals.

And every year, the annuals tend to go up. So you're doing 15 each from you and your wife to your son, and 15 each from you and your wife to your son, and 15 each from you and your wife to your daughter, and then that gets you to 60. But when that's 20, you can even do more. So you raise it every year, and you do a forgiveness of the loan, and the loan is never recorded, and you have in your will that that loan is forgiven at death.

And so it's never going to be collected on. It's just sidestepping gift tax is all you're doing yep yep yep i would do it and what do you think about it just a note not go through a full mortgage with a lawyer but just do a note yeah i would do a little one-page note just something cheesy and cheap off the internet um i mean you can go to mama bear legal forms.com if you want to download one they'll sell you one for $5 or something probably. And then just keep it in the file and flip over on the back of it each year and reduce it with handwriting and initial it. Yep.

And that's one of your January activities every year. Sounds perfect. Thank you very much. Thank you, sir. Well done. Good question. Very interesting. Open phones at 888-825-5225.

Carlos is on Instagram. Is it wise to refinance a mortgage after five years of a 30-year term? Absolutely, if you can save on the interest. It's wise to finance it after 15 years of a 30-year term, 25 years of a 30-year term, if you can save on interest, because you are not paying all the interest at the front end. That is a misnomer. People say, well, I've already paid all the interest. No, you didn't. The interest is calculated on the outstanding balance. It's simple interest calculation. Technically is how the arithmetic is done. So you did not pay all

the interest on the front end. You paid more interest on the front end because you had a higher balance on the front end. That's all it on the front end because you had a higher balance on the front end. That's all it means. So, no, you would always refinance when you can lower your interest rate enough to justify the refinance cost. Go to churchillmortgage.com. They can help you figure that out for sure. But basically, let's say you've got a $5,000 refinance cost. How quickly can you recoup the $5,000 with the interest you would save? If you're going to save 2% on $200,000 because your rate is going down 2%, that'd be $4,000 a year.

So a little over a year, you've recouped your cost. You definitely would do that refinance. That's how you calculate it what's your break-even analysis on it this is the dave ramsey show I love talking about companies that know how to do business right. You've heard of Grip6 belts, right? Well, if you haven't, it's the only belt you can get online with no holes, no flap, and no bulk. I'm talking weightless, and the buckles come in really cool designs and are interchangeable. I personally own a number of these belts, and they're so

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Hey, Dave, I'm doing great. How are you? Better than I deserve. How much have you paid off? I have paid off $78,000 in the last three years, but $60,000 of it in the last 12 months. Whoa. Wow. All right. And your range of income during this three years and during the 12 months? I started at $60,000, and at the end of paying off the loan, I was up to $150,000. That's why the acceleration mainly? yeah yeah exactly well part partly that and partly i promised myself it was a student loan

to get through to get through school and i promised myself it would get paid off by the time i was 30 and i woke up last year uh in january and thought i'm going to be 30 next year and i haven't really made much headway. So I had, you know, about 90% of it left still to pay off, and I thought, well, I better get on this. So I divided it by 12, figured out what I had to pay, worked backwards, and got it done that way. Good for you. What do you do for a living? I'm one of those broke lawyers that you talk about so often on your call.

So how much of the 678 was student loans all of it oh it was all student loans okay wow look at you well you kicked your practice into gear you're making good money and you paid off your debt way to go thanks dave how's it It feels fantastic, I have to say. I used to listen to your calling all the time, your phone calls all the time, and I kind of listened more for active entertainment as I was hearing what other people were going through. Then having to hear you say over and over again about broke lawyers, all those broke lawyers out there, I thought, I think that's me. I think I'm one of those people because I'm making good money, but I'm not making any headway. And, you know, I'm not living a high life or anything like that. So what's the point of it and having a decent income if you're not making any headway and

you're always behind the eight ball. So it really was because of that, that I kind of turned into, instead of being a, instead of being a listener on your show, I was more of a listener and a follower and adopted your plan, and it really worked for me. Good for you. Very good. Proud of you. Well done. Well done.

What do you tell people the key to getting out of debt is? I realize that it really stems from listening to you, but I realize that it's not enough to, you know, say you're making sacrifices or even to make those sacrifices because you feel like you don't have enough money, you know, so you drive up to your car or you don't take that vacation or you don't do this, you don't buy those clothes. That's not enough. The key to getting the money is putting some intention behind it to make sure that those dollars aren't lost somewhere else. So I realized I was driving around in a beater car

and I was living in a little studio apartment and I still wasn't getting out of debt. And I realized it's because if you don't have a budget, which says those savings for driving that beater car are going to get you, you know, out of debt faster because you're going to pummel out that money and redirect it towards a certain savings goal, then it'll just get lost. Yeah, that's an interesting way of saying sacrifice without intentionality does nothing. That's right.

Yeah. I really learned that the hard way, and I feel like when I figured that key out, you know, basically of January of last year I realized it's not enough to just say you know I'm not going to go get a brand new car it's not enough to just say I won't buy those clothes today you also have to say I won't buy that car and I'm going to take the money that I will save by not buying that car and put it towards something else and in my case it was the student loan. The other thing that happened with you is you put an exact timeline on your goal,

and it made you back into what you had to do, and you said to yourself, what has to be true to be done by the time I'm 30? I've got to work more, and I've got to make every one of these sacrifices count towards this loan. And so it changed everything when you put that deadline on it. Yeah, that's right. I took $60,000. I divided it by 12, and I thought, okay, well, that's right i took 60 000 i divided it by four by 12 story and i i thought okay well that's a pretty big number but i made it a commitment you know as important to me as a

priority on the on the budget line as much as rent you know so what did you do to get your income up so dramatically uh well i made a move to a really big law firm in toronto so i was working in a small law firm, and that is also what happens. You know, when you get out of law school, you don't make six pictures right away. My first year of law school, I made 30. But what we're saying is you were worth more than you were being paid, and you proved that by moving. Well, yeah, I guess so.

I was looking for bigger opportunities and for better opportunities, and I didn't make the move for money, but it certainly was a definite help for sure. And you know, I think that's pretty common with, with lawyers is you, you start kind of lower and you build up quite a bit. Even since then I've, my salary has gone up since, you know, paying off the loan. It, it does go up really quickly in the first couple of years. And you know, the goal now is to try to not lose the momentum, save still aggressively, continue to live on the same, you know, lifestyle that I was and, you know, don't allow for lifestyle creeps and hope I can kind of catch up quickly in terms of wealth building now.

Very well done. Good job. Good job. Who were your biggest cheerleaders? It was a difficult one probably for me because I definitely don't come from a family that approves of debt. You know, debt is a bad word in my family. And so I was pretty secretive of the fact of how much I had, that I had it, you know, that I was paying it off. I didn't share my journey really with friends and family, mostly because I was so embarrassed that I had it, you know, that I was paying it off. I didn't share my journey really with friends and family, mostly because I was so embarrassed that I had allowed it to get so high in the first place. So really, I kind of did it on my own. I would say that the biggest cheerleaders was people who call into your show. I mean, I listen to your show every day now just to hear other people walking the same journey

and to hear all the different stories and the successes and the failures really makes you feel like you're part of the community. Well, thank you for listening. We appreciate it. We're very proud of you here at Ramsey. We are your cheerleaders. You are a hero, Nora. Very, very well done. We've got a copy of Chris Hogan's book, Everyday Millionaires, because that is the next chapter in your story.

That's where you're headed. Not a broke lawyer for you anymore. You're going to be one of them rich lawyers. I like it. Well done. Nora in Toronto, Canada, $78,000 paid off in three years, but 60 of it in the last 12 months, making 60 up to 150. Count it down. Let's hear a debt-free scream three two one

i'm debt-free yeah congratulations miss nora very very proud of you very Very, very well done. Open phones at 888-825-5225. You jump in. We'll talk about your life and your money. Valentine is on Facebook and says, I'm debating between a 20- and a 30-year term life insurance policy. I have two kids, ages 3 and 5. I'm not planning on having any more.

I'm still renting. 30 years old. My wife takes care of the youngest. So two kids, 3 and 5. Well, I don't recommend a 30-year policy. I recommend a 15 or a 20. Not going to get mad at you over a 30, but what you pay extra for it is usually wasted because your life usually does not work exactly the way you have planned it right now. There's

a couple of things going on. As your children get older, your need for life insurance goes down every year. For instance, right now with a two- and a five-year-old, you're probably at your highest need for life insurance that you will ever have. If you had a 15- and a 17-year-old, you can see the window, you can see the light at the end of the tunnel when they're going to leave home. And so it doesn't take nearly as much to raise them to maturity as it does to raise a three-year-old to maturity. And so, you know, you have your highest point now.

Thirty years from now, you're going to be nowhere near that. You're going to have a 33-year-old? You're not going to have any more kids? Why would you do that? Second thing that happens is, as your life changes, your income goes up, different situations happen in your life, you may add a policy or drop a policy. I've had a bunch of different policies over the years, and as long as you don't lose your insurability, it's not an issue. But you're not going to have a need for it for more than 20 years anyway if you'll follow the stuff we teach. Never more than

a 15-year mortgage, kids are grown and gone, and you build up wealth. If you do those three things, your need for life insurance dissipates increasingly over time. Your need for life insurance is going down every day. 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.

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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. Cardell is with us in Maryland. Hi, Cardell. How are you? Hey, Dave. How are you doing today? Better than I deserve. What's up?

Me and my wife are kind of at a financial crossroad, and we've been stressing out over this decision. We followed Japan for the past three years, and we were able to pay off over $300,000 in debt. Wow. Thank you. And now we're at a point where we just have one rental property left that we owe about $96,000 on, and we also have our primary home that we live in that we owe about $250,000 off on. But we do have five other properties that are paid off and have renters in them. We're wondering, and one of the properties I'm talking about is in Atlanta, it's paid off. Should we sell that property in Atlanta to pay off our last property here in D.C.

so that we can start paying off our primary mortgage and get closer to being debt-free, or should we stick our head in the sand and just keep mushing along and just paying things off? So you owe 96 on one rental, and how much on your personal? 250. And what is your household income? Right now, we're probably about $200. Okay. And so how quick, if we don't sell the house in Atlanta, how quickly do you pay off the $350?

Because you've got $100 plus your house, right? Right. Okay. We can pay off the $96 96 by my wife did the spreadsheet oh uh we pay that off by january 2021 and then we would pay off with all the rental income combined plus uh my job because we only we try to live off with just one income. All that money flowing toward our mortgage, we could probably have our primary mortgage at $250,000 paid off within another two years after that.

So probably about three years, everything paid off. Okay, and if you sell the house in Atlanta, how quick are you out? Sell the house in Atlanta, then that'll cover the D.C., then we just have the mortgage here. Two years instead of one year. Knocks a year off. Yeah, knocks a year off. So a year off so about two years where i'll be debt free house in atlanta is one you used to live in and you just kept it because

when you moved right yeah my wife used to live there it became a hassle we just got finished dealing with a squatter so we got a property management company and they're basically waiting they say are you going to sell or you want to continue living this out we need to know what you want to do i'd sell it oh really okay here what you want to do. I'd sell it. Oh, really? Okay. Here's why. I don't do long-distance landlording because of stuff like squatters. I want my properties near me with very rare exceptions.

This is not a property. You weren't sitting in D.C. and one day said, hey, let's buy a rental house in Atlanta. No. It's not something you would ever do. It's by default. It was not by plan or strategy right and so let's break it loose break the money loose and accelerate your get out of debt plan oh and by the way you're going to buy another rental property for cash three years from now in atlanta or in dc or four years from now because your house is going to be paid off

and you're going to have so much cash flow you're not going to know what to do with it. That's the plan. There you go, man. That's what I would do. Yeah, I definitely would do that. Again, let's talk through why, okay? Number one is it was a rental property by default. It was not by strategy.

It's not something you would do over again, and so I would undo it. Number two, long-distance landlording is a pain in the butt and generally inefficient at best a nightmare at worst number three it accelerates your get out of that plan by a year all right i feel like i hit the lottery your advice is priceless to us bless your heart appreciate you calling in appreciate you listening yens is with us yens is in florida hi yens, Jens. How are you? Good. How are you doing, sir?

Better than I deserve. What's up? I have a sister-in-law that is serving in the military, and she actually may be stationed down near us. And my wife and I were considering offering our place for her, just that she's in quite a bit of debt, and we wanted to try to help her get out of debt, and she gets quite a bit for her housing allowance. So we were thinking of maybe offering our place for $400 or $500 a month and just wanted to hear your opinion on that. Your place? You don't live in it?

No, just a room out of our home. Oh, let her room in your place, in your place you don't live in it oh no no just a room out of our home oh let her let her room in your place in your house i see that yes sir okay um how old is she 40 okay and is she working to get out of that um no not currently we have got her the fpu class right um but she's had some she's been somewhat reluctant to go so we're hoping we can be encouraging it when she moves here yeah okay and um how long do you think she'll be stationed in your area about three years i don't know if it'd be the game plan to actually have her stay with us for three years. Okay.

Where people get in trouble with relatives renting from them, doing business with them, or working with them is they're unclear about the exact parameters of the deal. Okay. And that's where people end up getting mad and so i would put exact clear parameters on the deal from a relationship standpoint i would write out a one-page agreement not as a legal agreement but just this is what we are agreeing to you can stay here up to two years at zero rent as long as you are putting over X number of dollars onto your debt as a result of that. And that needs to be way more than 500. It ought to be like big, like 2,000 or whatever number, big number.

And you're looking at her budget, and you're saying, in other words, you're working a plan to get out of debt, and so we're going to let you live here for free as our gift to encourage you and be your cheerleader on that up to two years. That's what I would do. I would do that as a gift to my sister-in-law. Okay. Would you suggest having any charging her for rent at all? No, that's what I'm saying. I wouldn't charge her.

You can if you want, but I would just give it to her as a gift it doesn't cost that much to have her there maybe she chips in something for food but her being there she's never there she's at work and her being there is not going to really add to your expenses substantially i mean again you got to work out something on the food issue but she's probably eating on base most of the time or on the job or whatever she's doing out there and so um you know you work out some kind of a detail on food but i i really i would just do that to encourage her unless you just desperately need money do you need money um no no we're okay okay i mean uh but i would not let her live there and pursue nothing. Yeah. Under any circumstances, for any price.

I wouldn't let her rent from you for $1,000 a month. If the whole time she's there, she's going to be frustrating you all because she's being stupid with money. And you have to sit up. You get an up-close-and-personal. You get a front-row seat to her stupidity. It'll just make you mad. Yes. You don't want to do that. You get a front row seat to her stupidity. It'll just make you mad. Yes.

You don't want to do that. And so if she wants to work this plan, we'll help you and participate with you, and you're going to show us that you're doing that, and that's the only thing your rent costs you is you have to open up your life a little bit and show us, and we're going to be your accountability partners and your cheerleader. But if you want to continue down the path of stupidity, live somewhere somewhere else and we will love you from a little bit more of a distance we still love you as much we got a lot of everybody's got stupid people in their family i mean you just have to love them at more of a distance than in your spare bedroom

you know that's all you want to do and it's not just money stupid there's all kinds of stupid things people do you know so you just got to think that through. But lots of clarity. Write it out. And it's all about encouragement. It's not about you being a micromanager or something. And by the way, you don't have to live here. It's okay. We're still going to be friends.

We're still going to love you. You may not want to live here. You may not want to do this. And that's okay. But if you're going to live here, we're going to let you do it for free. And in return, you're going to pay off $2,300 a month in debt or whatever the number in the budget tells you it should be because she's got zero rent.

And she ought to be racking it up, man. She ought to be, you know, hitting the hammer on the nail every dadgum month and just kicking this thing. Kick it, kick it, kick it, make it happen. That's what I would do. Very cool question and a cool opportunity to help somebody that you care about. And, you know, kind of force yourself into their life in a wonderful, positive way. That puts this hour of the Dave Ramsey Show in the books.

Our thanks to James Childs, our producer, Kelly Daniel, our associate producer, and phone screener. I am Dave Ramsey, your host, and we will be back. Hey, guys, it's Blake Thompson, senior executive producer for The Dave Ramsey Show. This hour's over, but you can find more great content on our YouTube channel. Catch the most watched Dave Ramsey, deathly screams, and the very popular Everyday Millionaire segment. Go to The Dave Ramsey Show YouTube channel and click subscribe.