The Ramsey Show - App - You CAN Teach an Old Dog New Money Tricks (Hour 1)

Episode Date: December 13, 2018

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Music Music Live from the headquarters of Ramsey Solutions, it's the Dave Ramsey Show. Where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. I'm Dave Ramsey, your host. You jump in, we'll talk about your life and your money. It's a free call at 888-825-5225. That's 888-825-5225.

Cara starts off this hour in Columbus, Ohio. Hi, Cara. How are you? Hi, good. How are you? Better than I deserve. What's up? Thank you for taking my call.

Sure. I've been on this Thank you for taking my call. Sure. I've been on this debt journey for about 22 months. A lot of ups and downs. It's been really difficult. But recently, I actually have four kids. And recently, in November, a tax levy passed, and the taxes went up in my kids' school. So I kind of had it, and my goal was to be debt-free in 2019. Well, I changed that, and I wanted to be debt-free by 2019.

So we sold our house, or at least put it on the market, and it must have been meant to be because it sold in two days. So as of Monday, I'll have a whole bunch of equity. We'll be completely debt-free. And my question to you is, with that lump sum of equity, we are going to rent moving forward because I want to make good decisions. I want to get a house that we can afford to get into, hopefully using all cash. So my question to you is, in that short time that we're renting, is there anything I can do to sort

of maximize that equity? No, you just protect it. Just put it in a money market account at your local bank that's very safe. How much equity will you be putting into the bank? I'll have $200,000. Good. Okay, you're fine on that. You're not above the FDIC guidelines. And just get with your local bank.

I mean, you might get 1% or 1.5% on it. You're not going to make any money. I would not put that money at risk. You're not going to make any money. I would not put that money at risk because it's not going to be that long before you turn around and buy a house. So I'm not willing for you to take the risk. If I were in your shoes, I wouldn't take the risk of it going down in order for it to go up possibly a little more. The only time I take that kind of risk is when I have a long window to invest,

and a long window is five years or more, and you're not going to be waiting five years. Anna's with us in Phoenix, Arizona. Hi, Anna. Welcome to the Dave Ramsey Show. Hi. Thank you for taking my call. Sure. What's up?

I am calling because I have a kind of a huge problem with my car. So I was young and I didn't do my research before going to a car dealer and signing for my car. With my first car, I got upside down. So I went and jumped into another car and obviously I got more upside down on it. So now I'm in a situation where I owe $18,000 on my current car as of 2015, and the value of it is about $67,000. Now, I drive a lot to and from work, so the maintenance on the car and the quality of the car would not stay uptight. So right now I'm at 100,000 miles on the car and it's three years old.

Now my question is if I wanted to get out of this car, I would have to give about $6,000 down payments to not be so upside down and bring my monthly payments down. Now I have that in savings, and I don't know if I should just stick with it. How much do you have in savings? I have about $5,000 in savings and I don't know if I should just stick with it. How much do you have in savings? I have about $5,000 in savings. So it would go all down to down payment. What is your household income? Between my husband and I, we are like $95,000.

Okay. Why don't we just pay the car off? I'm sorry? Why don't you just pay the car off? I'm sorry? Why don't you just pay it off? So, if I keep the car to completely finish paying it off, the car, the amount of mileage I put into it... Why don't you just pay it off now, put $5,000 on it, put $4,000 on it. Keep your $1,000. Get yourself on a really tight budget and start paying a couple grand a month and be done with this thing in a few months. You make $95,000 a year. Yes. Well, my concern on it, though, is what if the card dies on me before I'm done paying it off?

So I will be okay. If it dies before you're done paying it off, don't worry about that then. But it's not going to die before you finish paying it off. You're going to pay it off in nine months. So I should put the $4,000 forward. $2,000 a month times nine. Okay. You make $95 a year. where's all your money going um not entirely sure i'm trying

now we're having the conversation there we go okay we need to get you on a budget kiddo let's go to every dollar.com and you and your husband sit down tonight in front of the computer and lay out your first budget, and let's figure out where all your money's going. You need to temporarily stop your 401Ks, and make sure you're not getting tax refunds, and you need to get this car paid off. And then you need to save up and buy a car with cash only. Never again do you need to be on the car lot doing a deal with a down payment. You need 100% down for the rest of your life.

Now, we'll fast forward out there two years. Okay? You're still driving this car two years from now. It's paid for. And now you're handling money better. You're saving money. You're going to have an emergency fund. You're going to have cleared up your other debts and so forth.

That's the journey I'm putting you on, okay? Now, when you get there, what I need you to buy, you put a lot of miles on a car, so whatever you drive, you destroy its value. Agreed? Yes. Yeah, and so you need to buy the minimum car that gets the job done going forward after this one. Now, let me define minimum car that gets the job done. It's two things.

One is it's reliable, and two is it's reasonably comfortable because you spend a lot of time in the car. But you do not need to be destroying a $25,000 car. You destroy a $10,000 Honda Civic used, and you drive it, a Toyota Camry used, and you drive it into the dirt, because whatever you drive is useless as far as value goes. Yeah, it doesn't hold the value of the car at all. Yeah, and so you cannot afford to destroy valuable vehicles, destroy the value in expensive vehicles with your, not because you're being irresponsible, but you just put a lot of miles on a car,

and that just tears them up, man. I mean, it just tears up the value big time. So what we're going to do is put $4,000 down on this. We're going to get on a tight budget. We're going to pay this car off in six to nine months. You're going to be 100% debt-free car-wise, and you're going to be driving that car during that time. And you don't like this car, I can tell.

And then if you want to save up after you have your emergency fund in place and move into a $10,000, $12,000 car, that's the most you need to spend on a car. I don't care if you make $200,000, $12,000 car, that's the most you need to spend on a car. I don't care if you make $200,000 a year. That's the most you need to spend on a car that you drive and put this kind of miles on because you're destroying it. And about once a year, once every 18 months or so, you're going to trade again probably because you're going to just run the wheels off these things. That's okay.

It's just the situation you're in. But you have to manage the money in that situation because what's happened to you so far is car dealers have owned your butt. They own you. $18,000 owed on a car worth seven because you keep rolling negative equity in and making bad decisions. Time to break that cycle. You can do this. This is the Dave Ramsey Show. I just love it when the companies we work with make it a point to give money away,

especially during the holiday season. Once again this year, Zander Insurance will donate 25% of all sales from their ID Theft Protection Plan in December to Operation Homefront. Operation Homefront is a very special organization that provides emergency financial assistance and housing to our wounded veterans and their families. To date, Zander has raised and donated over $300,000 with your help. That's amazing. And if you don't have ID theft protection, there's no better time to get it. Not only will you receive the smartest, most affordable plan available,

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Better than I deserve. What's up? So, I'm an idiot who managed to total my car this week. Oh, I'm sorry. Well, the good news is I paid it off beforehand. Okay, cool. So what did you owe on the car? I owed zero.

I'm getting approximately about four grand. Okay, cool. All right, good. So my family wants me to pretty much buy a brand. Much outright. Buy a what? buy a brand new 2019 car. Well, I don't care what your family wants you to do. How old are you? 26.

Do you make your own decisions? Pretty much. Okay. I mean, it's nice that they have an opinion about what you should do, but... Yeah. Um, no. I wouldn't do that. I'd buy a $4,000 car.

Unless you've got some other cash. Do you have a bunch of other cash? Um, without uncomfortably dipping into what I've been saving for grad school, I could probably splot another six. Okay. Then you can buy up to a ten. You know, if you want to buy a $10,000 car, and that's not a bad car.

As a matter of fact, a $10,000 car is a lot more than double of a $4,000 car. So if you want to move up a little bit, how much have you got saved for grad school? Um, about $20,000. I'm trying to move careers into a company, though, that will pay for it so I can switch it over for other funds. There you go. I like that. And what are you going to study in grad school? I'm a data analyst, so I'll probably get my master's in science slash MBA.

Okay. And is that necessary to move forward as a data analyst? Data scientist? It somewhat depends. I'm trying to move more into the technical market. Oh, okay. Because we've got data folk on our team. And to my knowledge, none of them have masters.

A lot of them are brilliant. They're scary smart, like whip smart. But I don't have any masters that I know of, and I wouldn't have even thought it was necessary. But if you're moving into a particular niche that you're wanting to go to, then maybe the masters would be necessary. Okay, interesting. Very cool.

Anyway, all that to say, yeah, you know, you buy something you can pay for, and you never buy a brand-new car unless you've got a net worth of a million dollars or more because they go down in value so fast. Oh, yeah. No, when I saw how much my car's worth now, I pretty much blew up. Yeah, yeah. And so, you know, and if you go buy, you know, a $20,000 2019 or a $30,000 2019, it'll be worth half of that in two years. And you don't make enough money to take that kind of a hit yet.

You may someday. So you pay cash for whatever you do. You buy used or slightly used. And in your case, we never would take a car purchase and trade that for your education. So like you said, don't do anything that you said this. It'll put your grad work in jeopardy. And if you can do that with six grand in addition to what you've got now, then I think that'll be fine.

And it doesn't put your grad work in jeopardy. That's the main thing we're looking for there. So, yeah, do that for sure. Definitely. But, no, I mean, your family's sweet. They're just stupid. It's just the wrong thing to do. I mean, they just want you to have something shiny and new

and they're broke. I'll make sure that you're broke. That's how that'll work. No, no. You don't buy a new car. Hey, thanks for the call. Open phones at 888-825- 5225. Frank is with us in Los Angeles. Hey, Frank. How are you?

Hi, Dave. Good. Thanks for taking my call. Sure, man. What's up? Okay, so my sister says that I'm a marketer's dream, and she's right. I can't be mad. But this year I've gotten a lot better since I started listening to you. And in six months, I went from $40,000 in debt to $7,000. Way to go. Thank you.

Thanks. Yeah, I've been talking about you to everybody. I actually just texted my friend who's a reporter at Fox, and I was like, I'm got it. Thank you. Thanks. Yeah. I've been talking about it. Everybody actually just texted my friend who's a reporter at Fox and I was like, I'm calling Dave. Uh, so my question is that, uh, I heard you mentioned before that it's okay to sell stock, uh, single stock to pay off your debt. Um, but I don't know if that's what I have. So I've never bought shares in a company myself, but I was looking at my retirement and I noticed that aside from the 401k, I had this other folder called SIP, right? S-I-P. And I asked my colleague, Marilyn, who listens to you as well. She said that is single

stock, but she said, don't you dare touch it because you'll get penalized and it's not the kind of stock that Dave Ramsey is talking about. Okay. I don't really know what that is. Well, then you need to find out. I don't know what it is either. I can't tell. But you don't want to own something and not know what it is. That's how people lose their butts on money stuff.

So just for the educational hobby of it, go find out from HR what the flip it is you've got. But I think that sounds like, and your colleague is probably saying, that this is inside of a retirement planning system of some kind. Correct. What she said was that it's not shares in the company. It's just another form of retirement that takes the place of a pension. Okay.

If that's the case, then it would probably be penalized and taxed and we would not tell you to cash that out we do not tell you to cash out retirement okay that gets penalized and taxed uh in order to get out of debt but if you just had a brokerage account at edward jones and had some single stocks in it or even had just some company single stock off to the side that you've been collecting just because, then, yeah, I would tell you to cash that kind of stuff, but not when it's inside of a retirement plan of some kind where you're going to be penalized or taxed. So, hey, man, keep it up.

Congratulations. You've got the ball rolling here. Genevieve is with us in Grand Rapids, Michigan. Hi, Genevieve. How are you? Hi, Dave. I'm good. How are you? Hi, Dave. I'm good. How are you?

Better than I deserve. What's up? Thank you for taking my phone call. I had a question about the difference with Roth IRA and 401K. Nobody in my family or friends or family, I mean friends or family, they are investing in a Roth IRA. And so I don't really have a lot of knowledge about it. And I wanted to know if you can explain that. I'm currently investing with my employer, the 6% for 401k, and they match up to 6%.

That's good. But I wanted to know the difference. Do they have a Roth 401k and they match up to six percent that's good i wanted to know the difference do they have a do they have a roth 401k available i don't know okay all right and um i would go ahead and ask okay because i'm doing how old are you 28 okay $28,000. Okay. And so if we did a traditional, a regular IRA, you can do up to $5,500 in that, okay, from now until age 68, 40 years, okay? And you put that in good growth stock mutual funds, and you put it in an IRA or a Roth IRA, either one. Or you put that same exact amount or a Roth IRA, either one. Or you put that same exact amount, $5,500 a year, which is $458 a month. You put that exact amount in your 401k without a match, whether it was a Roth or not,

or you put it into a traditional IRA or a Roth IRA, same amount, in the same exact mutual funds, and it performed about the average of the market, that would be worth about $5,400,000. Okay? No way. All right. So that's $5,500 a year from 28 to 68. Now, here's where the math comes in okay let me put this in the calculator 5,500 is what you put in a year you got that part yep okay 40 years on that is 220,000 so 5,400,000 is in there but220,000 of that you put in.

The rest of it is all growth. Does that make sense? Okay. Yep. So I add a traditional. Now, here's the thing. If it's a regular 401k, not counting the match, or it is a regular IRA, you're going to pay taxes on all of that money as you pull it out.

If it's a Roth IRA, you already paid taxes on the money you put in, which is the 220, and you pay zero taxes on $5,200,000 in growth. So the Roth beats the traditional $5 million in taxes in this scenario. So here's what you do. You do your 401k up to the match. If you have Roth 401k, you do Roth 401k, and then you do Roth regular, all in good growth stock mutual funds. There's nothing smart about smartphones if your wireless plan is blowing your budget each month. Pure Talk USA offers smarter wireless with unlimited plans starting as low as $20 per month.

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That's puretalkusa.com, promo code SAVEDAVE, no spaces, and receive 50% off your first month. That's puretalkusa.com, promo code SAVEDAVE. If you didn't know, there's a private Facebook group you can join. We'll let you in. It's called The Ramsey Baby Steps Facebook group. It's the official one. Yeah. Joanna says, I've reached Baby Step 4. I think I'm reading to start investing in a Roth IRA and get ready for retirement, does anyone even know where to start?

Sure. The best thing you can do when you're getting ready to do an investment and you've never done one is get some help with investing. If you've never worked on a car, you get a car mechanic. If you've never done a will, you get a lawyer to do your will. If you've never pulled your own teeth, you get a dentist to pull your teeth. And've never pulled your own teeth you get a dentist to pull your teeth and investing is no different you don't have to diy it you learn about it from an expert who teaches you and then can help you actually fill out the paperwork and get the thing done and that's what i personally do i know a lot about investing i can actually do it

but i don't even want to fool with it i don don't have time to study 8,000 mutual funds and decide which ones are the best. We suggest you invest in your Roth IRA, Roth 401k, 401k, whatever you're doing, across four types of mutual funds, growth, growth and income, aggressive growth, and international. When I'm in the open market, meaning I have a lot of options, I always buy 10- and 20-year-old or older funds. I do not buy 3-year-old funds. They don't have a long enough track record for me to trust that they know what the flip they're doing.

But I put a fourth in each, growth, growth and income, aggressive growth and international, and I use a SmartVestor Pro. What is that? Well, you're getting ready to be, Joanna,, and international. And I use a SmartVestor Pro. What is that? Well, you're getting ready to be, Joanna, a smart investor. So we call you a SmartVestor. And a pro is someone that's an advisor in that world that can help you and that sells the mutual funds. So click at DaveRamsey.com.

You just click SmartVestor, and you fill out a little bit of your information. It drops down a whole list of the SmartVestor pros in your area. You choose which one you want, but these are all people that have been vetted by our team. We've gone through and talked to them. They have the heart of a teacher. They're not going to slime you trying to sell you stuff and just go along that way. So that's how we do it. Just DaveRamsey.com.

Click SmartVestor. Dee is in Cape Girardeau. Hi, Dee. Welcome to the Dave Ramsey Show. Hi. Thanks for taking my call. Sure. What's up?

I'm going to try and make this brief. Murphy has basically lived on my couch the last three years. And I have a mobile home that I previously bought with my ex, and I owe about $43,000 on it. I think it's probably worth about $35,000 or less. My income has dropped drastically, had some ups and downs. I was diagnosed with leukemia, went through remission, got a job, a good job, and then lost that job. So I'm at a job right now that I'm not planning on staying at. So I make about $15,000 to $16,000 right now.

I plan on making about $30,000 to $40,000 next year, just determined to get me a good job. I know I don't need this mobile home. Right. And I know that you recommend selling them. Right. My father has offered to buy it. Why?

For what I owe on it. Why? Just to help you? Because it's on his property. Oh. Yes. Yeah. Because it's on his property. Oh. Yes. Yeah, sell it to him. Yes, and he's offered to rent it back to me for less than I'm making payments for.

Okay. And so I just kind of needed your approval, I guess. Sure, in a heartbeat. You're out of the debt. Yeah, I'd be out of the debt. And you're out of the mobile home ownership issue. He now has a mobile home on property he already owns. He's going to rent it to someone,

and right now he's willing to rent it to you at a deal to help out his daughter. Right. I think that's awesome. Okay. Okay, well, I think it was kind of hard for me to take the help, and so I just kind of needed some approval. You make $15,000 a year. You've been through a divorce and leukemia.

These are times you need help. Thank you. That doesn't make you a wuss. That just makes you a human being, and you've got a good dad. Yes. Amazing. You're not a parasite living on his couch because you're too lazy to work. That's not what happened to you.

Okay? You've had bad crap in your life, and he's just walking with you, and he's hurting with you, and he's able to help you, and he wants to help you. And I don't think that's bad on your part at all. You're not someone who's, you know, unwilling to carry their own weight or something like that. You've just had some bad stuff come at you, kiddo. How old are you? I'm 28.

Wow. Okay. Yes, take your dad's help. You're doing nothing wrong from a character standpoint. And someday you'll be able to help your kids because you're going to get your financial act together, okay? Yes, sir. Thank you so much.

God bless you. Open phones at 888-825-5225. Teresa is in Minnesota. Hi, Teresa. Welcome to the Dave Ramsey Show. Thank you, Dave. I really appreciate being able to speak with you. You too. How can I help? Well, as I was telling your screener, I'll be honest with you, somewhat embarrassed. I'm 56 years old. And I honestly, until I started listening to you, I thought everybody was in debt. And I thought that's

how it had to be. I didn't know. A lot of people think that. A lot of people think that. I did not know there was another option. And so in April, my husband and I sat down and really started looking at what you were saying and how to do things. And I think my basic question is, at 56 years old, you know, with $81,000 in debt, am I too old to be able to be out of debt and actually have retirement? Oh, yeah. Yeah, you're way too old. You'll never make it.

Of course not. Don't call in here and call a 58-year-old man and tell me you're 56 and you're too old that's not what i wanted you're not too old you're not too old 81 000 in debt so what's your household income okay so this is where it gets a little embarrassing. We actually have a very good income. I make a good income. I make about $185,000 a year. So why don't we be debt-free in a year? And you're wondering, where is it all going? Yeah, I am.

Well, we're working on it. Like I said. No, I mean, really. If you make $185,000, you have $81,000 in debt. Why can't you be debt-free in a year? Well, our goal is to sell the house and when we sell our house we should be able to be entirely debt free you have to sell your house to be debt free if you want to sell your house you can but we make 180 000 a year stop stop stop

if you make 180 000 a year and you paid off 80 000 that mean you had to rough it on 100 grand for that year right you're killing me here i know i know yeah you you just gotta decide what's important and it's you've been you've made enough money let me tell you what you did because i've done it i can recognize it see if this is right you tell me if i'm wrong okay you've been trying to out earn your stupidity oh yeah oh. And you just about were able to because you make a lot of money. I know, and I'm really tired. Yeah, you work your butt off. What do you do for a living?

I'm a nurse practitioner. A doctor. I work in psychiatry. Okay. All right, cool. So here's the thing. The neat thing, then, is that what we're discussing here is not a math problem. It's a behavior problem and you

know how to solve behavior problems yeah and this is uh this is a someone that's coming in your office with an extreme situation and the answer is an extreme change in behavior patterns okay and you know how to coach them through that. Right. And so physician, heal thyself. Okay. Yeah, you're going to have to get on a written budget, and you're going to have to look around and go, where the freak is all this money going? You've got to ask yourself that.

You and your husband have to say, we work too hard, we make too much money to be this broke, we're heading towards retirement here, and we have a few years to straighten this up and make our, you know, straighten up and fly right, as my mama used to say, right? And you can do this. You can do this. You make plenty of money.

The math on this is easy. It's all between your ears then. Okay. So it is possible if we paid this off in a year or two at the very maximum that we could still save enough to be able to have retirement. Sure. Okay. Sure, absolutely.

But you're going to have to pay attention for the first time in your life. And it is an old dog, new tricks thing. Not that old a dog, though. This is the Dave for Hampton Chef. We'll be right back. Danielle is in Raleigh, North Carolina. Merry Christmas, Danielle. How are you? Merry Christmas, Dave. Thank you for taking my call.

Sure, what's up? I have a quick question for you. Just trying to understand how to prepare for anticipated financial changes coming up in the summer and if I should treat them as 3B or if we could just continue with our baby steps four and five. My husband is transitioning from the military in the summer. So with that, we anticipate a move and a new job with an unknown salary at this point, since we don't have a job offer this far out. And then a home purchase shortly after moving. We rent for six months or a year. But a

couple of things that we know that are coming up, and we have savings to include an emergency fund and a down payment for a house. But just with all the changes, in addition to having two older cars that could need to be replaced at any point, if we should treat this as baby step 3B and just stop retirement entirely and just build up cash, or if we should continue with baby steps 4 and 5. What's your household income now? Well, it's $72. What does he make now? He makes $72 a year right now.

Oh, okay, so you're a full-time mom. Yes, I am. And how much is in your emergency fund? $120. $120? That's our total savings. We just kind of have like $25 to $30 earmarked as our emergency fund. And what's the rest of that?

Down payment on our house. For whatever we need. Yeah, we're both the natural savers that you described. Yeah, I think. And it terrifies us to stop saving. You have two years of income. Okay, so no, no, you don't need to save anymore you know you have two years of income saved you have twenty five thousand dollars you got an extra hundred grand laying around for a down payment a

couple of cars and a transition if worst case scenario happens and you do all three at one time and you got a hundred grand to do all that so, you're in good shape. You don't need to worry about that. Your natural state is to worry, and when you worry, save more. Exactly. Yeah. And, no, I think you're fine. The cars are going to make it longer than you think. You're going to make your transition easier than you think because he's already working on it.

This guy is not going to leave the military with no plan. He's going to have a plan, probably have a job lined up. Absolutely. It's his nature. Yeah. And not knowing what 25% of our future income will be, I think that just that concerned us in thinking, like, what we need that down payment to be and stuff, kind of knowing what our future is.

Okay, let's put things in order, okay? I would not buy a house until the transition is complete. No, absolutely. So if he lands a job making $80,000 and you want to spend this money as a down payment on a house, throw it at the down payment on the house above the $25,000 emergency fund, and then start saving up and pay cash for car replacement. But that's your order. Your transition is number one, house is number two, car replacement is number three.

Okay, perfect. I'm just anticipating Murphy coming and it all happening at once and just trying to favor anyone's ass. It's not all going to happen at once because you're not going to buy a house. Right. Unless you've gotten settled on the transition. Very true. So it can't happen all at once. And if a car breaks, fix it and drive it if you're in the middle of the transition and you don't have any money coming in.

You don't run out and buy a new car in the middle of the transition either. You get the transition settled. You get the new job. You make the move to the other city. And you settle in. You get the new job. You make the move to the other city. And you settle in. You get that income going. You get comfortable with that, whether it's more or less or whatever it is. Then if you want to talk about buying a house, fine.

Or if one of those cars is, like, about to roll over or something, fine. Pick up a car and then talk about getting a house. But, you know, we're not going to do the house or a car purchase until this transition is done. And you have $100,000 to make the transition, you're fine. You've done a wonderful job. Very well done. And thank you for your service.

And thank you to your husband for his service. Lily's with us in Buffalo, New York. Hi, Lily. How are you? Good. How are you? Better than I deserve. How can I help?

So I have a question regarding our next house purchase. Our current home, we plan on being here for probably another five years. We're going to be debt-free the next couple months, so we're going to have an extra money at the end of the month. I'm wondering if we should save up for our next home and put it in just like a regular money market, or if we should be putting it on our current mortgage? You should be putting it on your current mortgage above your 15% going into retirement. Okay. 15% going into retirement, kids' colleges, Baby Step 5, and paying extra on the mortgages,

Baby Step 6. You do those simultaneously once you're debt-free and have your emergency fund in place. Spencer's in Myrtle Beach. Hey, Spencer, welcome to the Dave Ramsey Show. Hey, Mr. Ramsey, thanks for taking my call. Sure, man, what's up? Hey, so I have a business. I build tiny homes on wheels for a living.

This is my first, well, I'm 22 years old, first off, but I own this business. I've only done it for a year now. I have zero debt. I live with my parents. I've got wrapped up in the business right now. For this year, I've put in about $100,000. I drive, my question is, I drive an old truck that I've had since high school. It needs a lot of work.

I'm just wondering, I don't know if it's worth it to fix it or if I should go out and buy a vehicle. I don't know if I should be buying a new vehicle. My gut instinct says definitely not. Definitely not. From what I hear you talk about. Yeah, definitely not. You don't buy a new vehicle for this. So you said you've got how much tied up in the business?

$100,000 is what I'm looking at making this year. I sold a little over 300,000 in homes this year. So your profit will be $100,000? Correct. Yes, sir. Profit. Okay. Cool. And way to go. Wow. That's impressive. And so when you say tied up in the business,

so what equipment do you have that you have bought and paid for already? Actually, everything that I have is already paid for, all my tools. How much have you got invested in all of that? I'd probably say about $10,000 to $15,000, probably $10,000. Well done. So you own the trailer that you haul them on? That's correct, yes, sir. And what is the truck that you're driving worth?

So I drive just an F-150. It's a 2004 F-150. I actually don't transport the tiny homes on wheels myself. I hire out a company. Oh, okay. Yeah, I hire out a company. Oh, okay. Yeah, I hire out a company to do it. That way it's insured. I got you.

So how much out of your $100,000, how much have you saved? Well, besides buying new shoes and gas and food and paying insurance and stuff, I've saved everything. So how much is in your savings account? Well, I have it all in my business account. How much is in there? There's $121,000. Okay.

Wow, very impressive. Cool, cool. Thanks. So if you wanted to buy a $20,000 truck, you could just write a check and you'd still have $100,000. Yeah. And that'd be okay. I've always been really scared, honestly, scared to spend my money.

Good. I think like $20,000 should be my cap. I just made that up. But, you know, you got $120,000 in there, so $121,000 in there, so you'd still have $100,000 left over. And here's the deal. You do not want to own things with motors and wheels total in your life more than half your annual income because they go down in value and so the car the truck you're driving i'm gonna guess and say it's about a six or seven thousand dollar truck is that about right it has actually less the transmission

is shot okay i just haven't, yeah. Yeah, I think you have done a great job making a ton of money at 21 years old. Well done. We're not going to go crazy. We're not going to buy a new truck. We're not going to put a truck on payments. But, yeah, I would move in the $15,000 to $20,000 range and write a check and buy yourself a truck for Christmas.

Merry Christmas. Okay. I think you're in great shape. You can do all that, and you don't even a truck for Christmas. Merry Christmas. Okay. I think you're in great shape. You can do all that and it's you don't even need it for work. You just want it personally and you've got the money. It's a small percentage of your income, your

net taxable profit a year and you've done an incredible job making money and saving it. Well done, sir. Very well done. Next thing I want you to do is save up and pay cash for a house. Oh, wow. That puts this hour of the Dave Ramsey Show in the books.

Hey, guys. This is James Childs, producer of the Dave Ramsey Show. I'm excited to announce that we're now carried on 600 radio stations across the country. To find one near you, head to DaveRamsey.com slash show.