The Ramsey Show - App - You Can’t Change Other People (Hour 2)

Episode Date: August 11, 2023

🎵 Live from the headquarters of Ramsey Solutions, broadcasting from the Pods Moving and Storage Studio, it's The Ramsey Show. A show about your money, your work, your emotional and mental health, your life. I'm John Deloney, joined with my good friend George Camel and we are taking your calls on just about anything 888-825-5225 888-825-5225

888-825-5225 you got stuff going on in your marriage you got stuff going on in your budget you got financial questions you got questions about raising kids whatever you got we're here to help 888-825-5225. Let's go out to Selena in Dover. What's up, Selena? How are we doing? Hey guys. Can you hear me? We can. How in the world are you? I'm 27 years old. No, I said,

how in the world are you? Oh, how in the world am I? I'm all right. I'm all right. I can't complain. You know, I'm grateful. So basically, my backstory is, you know, I had everything together. And a few years ago, a friend and I, I call her a friend. We're not friends anymore. We got the bright idea to try drugs. And I pretty much lost everything. I lost my home. I was evicted from my home. I crashed my car.

I have so many collections. I have about $27,000 in collections. I have $16,000 in student loans. And I have a $28,000 repossession as the car that's now charged off that I crashed. I was on a run. And I have three boys. One of them has autism. He's actually sitting here with me. Four years ago, we lost his father on his third birthday. His father passed away from an overdose. My husband and I, our marriage recently has been kind of hanging

on by thread and it's mainly got finances the main thing because my husband's wages are now being garnished for things that I caused so it's it's been rough his family doesn't really talk to me anymore so we're just trying to rebuild our financial health and our marriage and just kind of figure out where to where to go right now the only income I get is um the money I get from my son's father passing away and I stay in sober living right now with my two children and I have three boys total which the unfortunate part about sober living is you can only have two children with you so my three-year-old stays with his father so that's's been hard. What I want is to be able to obtain a home somehow, whether I rent, get a mortgage, and just have my family back together and pay off

this debt and be free financially and never look back again. I want you to write those goals down. And more importantly, I want you to draw a picture of those goals um the the hipster cool thing to do is to write down goals I think it has value to it um but for somebody who's traveled the path you've traveled you're probably very good with words with getting in and out of situations you're good at talking. What is challenging is to A, trust and believe things and B, actually picture them, something different. And so what you just said about a home that is yours, I want you to draw it out, even if it's just you and crayons and construction paper, and I want you to put it somewhere where you can see it. Because right now, your number one goal is stay sober. There is being a connected mom, being a homeowner, having a great marriage, all of that

comes after stay clean, because you can't do any of those things if you're using. Absolutely. And so the goal here is I'm going to stay in sober living as long as I need to. I'm going to work as best, as much as I can. And I will care and love my kids. And I will also reach out and get help for these boys. I would, this is going to sound counterintuitive. I would rather your boys be with somebody for six months. That's not you.

And you spend those six months being completely clean completely well completely whole then go in and go out and go in and go out and go in and go out over the next three or four years okay and i also don't want you using those boys as a teddy bear yeah you know what i mean it's not their job to prop up mom in this season yeah absolutely you're right. And so are you clean now? Yes. How long? It'll be six months and a couple days. How long? Six months and a few days. Yeah, dude.

Way to go, man. Did you have a big celebration, a big six month? Yeah, I'm done. I can't do it anymore. It came to a head back in November. I tried to take myself out of this world. I was pregnant, and I went to rehab, and I decided I was done, that my children deserved better. But more importantly, I had to learn to love myself because you can't pour from an empty cup.

I have to show my children that mom loves herself enough to show that I can do this. So that is beautiful, um, inpatient language. Do you believe that? I do. I do. And it's, it's, it's, I have to remind myself some days and, and, you know, some days are hard because everything just seems to be kind of hitting me because, um, I've got some of my wages. They're trying to garnish some of my wages too. And, you know, it just seems some days it just seems like it's too much. But at the end of the day, I have to remember to be grateful that I have my wife. Can I tell you, Selena, I don't know that there is going to be a too much for you.

You've seen too much. You're too strong. You've been through too much. You've stared hell down in the face and you accepted help and you walked back. And so those people calling you saying, we're gonna, you can just smile at them and say, all right, that's cute. Kind of like a, like a middle schooler talking trash to a UFC fighter. Like, oh, that's, that's cute. Uh, I'm tougher than you, right? You've been there. That's an understatement. It's just, I mean, my, my story goes all the way back to my childhood. I had abusive childhood. My parents were addicts. just, I mean, my story goes all the way back to my childhood. Of course it does. I had a abusive childhood.

My parents were addicts. I went home to home every several months. So, you know, I'd never had stability in my life. And so what are you going to do, Selena? My heart has been, had its hands on my life all my life. So, I mean, I've come a very long way. Absolutely. And here's what you're going to do.

You're going to create the home. You're going to create the home that you didn't have. Yes. You're going to be the mom that you didn't have. Yes. You're going to be the mom that you didn't have. Your kids are going to have a different legacy. This is called changing your family tree. How can I help you right now? What's the thing that George and I can do to help you right now?

I just want to make the right step for my financial health. I want to be able to save money. I want to be able to start working on my debt the right way and still have money put back. I want to work on the baby step one to have a thousand dollars without tapping into it because that seems to be a problem. We're downsizing our storage unit to a cheaper one. It's going to cut the cost in half. What's in the storage unit that you need? Our home, pretty much. Everything. When are you going to be able

to get full-time income? I'm hoping in the next couple weeks because I'm trying to relocate downstate where I'm at so I can have more help with childcare from my family and stuff. So, Selena,

I want you, all these plans, these plans, these plans, I want you to write them on a piece of paper. Get them out of your head, okay? Because they come at you like fireworks, right? Yes, they do.

All right. So I want you to write these things down. Here's plan one, plan two, plan three. I want you to get somebody in your sober living community that will be accountability for you, probably a sponsor of some sort and somebody walking alongside you. And I want you to hang on the line, I'm going to send you Own Your Past and Change Your Future and my brand new book, Building a Non-Anxious Life,

and I'm going to send you Financial Peace University, and I'm going to send you a year of every dollar. All of it. I'm going to give you all the tools to get you launched out, but you have to go make it happen. We love you. You call us anytime, and we're here to help you. I'm so, so, so proud of you. So proud of you. We'll be right back.

Welcome back to The Ramsey Show. I'm John Deloney, joined by George Campbell, 888-825-5225. We're taking your calls on money, marriage, life, mental health, emotional health, all of it. The Ramsey Show question of the day is sponsored by Neighborly, your hub for home services. From repairs and maintenance to remodeling and upgrades, Neighborly's trusted home service providers have trained local experts who can handle almost any job. So go to Neighborly.com to find and schedule service today. Today's question comes from Cindy in New Mexico. Within the last week, I found out that not one but two close friends who make over $100,000, which is very good for our part of the country, are so deep in debt they are considering

filing for bankruptcy. I'm honestly floored. I would love to talk to them about the Ramsey way, but not entirely sure how to gently broach the topic. I know they will ultimately make their own decision, but I also want to show them there's another way. Oh, this is a lot less financial and a lot more relational and gently broach the topic. If my buddy's on the brink of bankruptcy, I don't think there's anything gentle about what's going on here. I think i'm going to shake them and go dude please do not do this there's another way and i don't know they're going to listen to you at that point yeah i i'm a big believer in staying out of people's business unless they're about to get hit by a truck and so for instance if if i'm with my friends and they're like yeah we've decided to stop going to doctors we just um we got a special

herb out in our yard and we rub it on our face we watched a youtube video yeah it helps with our diarrhea then you know what if you don't if you ask me like do you think that's a good idea oh i'm gonna tell you but they don't they don't ask me that and so i smile and say i can't wait to hear how that works out but if they said hey uh we have a toddler and we've been growing this three uh leaved plant that some call poison ivy. We're going to rub it all over their face to help with their eczema. I would yell and kick and scream, right? So in this case, if your friends are throwing credit cards down on the table at dinner all the time, and they're always talking about what a great deal they got on their

new lease, I don't get involved in those conversations because they didn't ask my opinion. But if I have a friend who's about to file bankruptcy, they make a whole bunch of money and they just don't understand because you and I both talk to people who have filed for bankruptcy and it is a traumatic event. I'm going to get involved because I love my friends and say, I have to speak now because I can't forever hold my peace. Don't do this. If there's another way, let's figure this thing out. I would go and I'd say, hey, drinks on me. I'm going to buy you dinner. Here's what I'm asking. Before you file for bankruptcy, just read this book. Hand them the total money makeover and say, just read it and let's have a conversation. I'm going to send you four YouTube clips. That's going to be a total of like 40 minutes. Watch those and then that's it.

That's all I'm asking you to do. If you have any questions, let's talk. And if you decide after that, you're going to do what you want, that's fine. But at least read this book. Take six hours and do this one thing before you implode your financial life. And not only implode your financial life, you're going to strain your marriage. The chances of you hanging on to your marriage go away.

The chances of you hanging on to your physical health go away. Your emotional health go away. So let's do whatever we can. And this is just me loving you like I know how to do. And if you tell me to shut my mouth and mind my own business, that's fair. But I needed to tell you, I think a truck's coming right at you. And that tone matters. It's not from a high horse of like, wow, you're so financially unsophisticated. It's, dude, I love you. I don't want to see you go through this. I know what happens when people go through this. I know you know what happens, but this is not the only option.

You're showing them option C and doing it in a way that is not gentle and, hey, what if? No, this is do not drive off the cliff, please. Yeah, if a car is coming towards a little kid in the road, you don't go, we don't want to scare him. So, hey, Billy, Billy, there's a car coming. No, you scream at the top of your lungs, right? And you go running and screaming. You might even shove a kid out of the way to keep him from getting run over, right? Yeah you scream at the top of your lungs, right? And you go running and screaming. You might even shove a kid out of the way to keep him from getting run over, right?

Yeah. That's this kind of situation here, right? That's tough though. Not an easy situation to deal with. Not trying to minimize it. But I'll say this, Sidney. Thanks for being a friend that cares. Thanks for being a friend that cares.

Most friends just go, oh my gosh, YOLO. The theme of today's episode is you can't change other people. Yeah. Every single call has been like, I really want to. You can't. Yeah. You can't make them do anything they don't want to can't change other people. Yeah. Every single call has been like, hey, I really want to. You can't. You can't make them do anything they don't want to do.

They're adults. Yeah. And that's a really hard thing to grieve, just to go like, I knew there was a better answer, a better way, and they did the dumb thing. And they didn't ask me. Or they did, and they did something completely different in that people have the right to make decisions that are different. That's America.

Freedom goes both ways. Let's go out to Minneapolis and talk to the great and wonderful Matt. Hey, Matt, what's up? Hey, how are you guys doing today? We're doing great, man. Hey, so real quick, I've been following the Ramsey baby steps. I just graduated college a few months ago, got a full-time job, and I'm wondering about how I go about saving for a house while investing.

I don't have any debt. I went through college, paid off all my school, so I'm debt-free now. I'm living at home, hopefully only for a year or so before I get in an apartment or something. Yeah, I'm just kind of wondering what your guys' thoughts were on money management while I save up. That's awesome. Okay, so what are you making? Yeah, I was just kind of wondering what your guys' thoughts were on money management while I save up. That's awesome. Okay, so what are you making? I started at $26 an hour, and there's quite a bit of overtime left, so I've been eating quite a bit of that up, and then I work part-time at a restaurant.

Sweet. So we're talking $60K plus? Yeah, hopefully. Awesome. Okay, and do you have an emergency fund saved up? I know you don't have a ton of expenses right now living at home, but what do you have in savings? Yeah. So I've got it all written down here. I have a Roth IRA with about $1,200 in it. The emergency fund is in a high yield savings with about $2,000. Then I have another separate

savings account with about $7,000. And then I have a normal taxable brokerage account with about $3,000 in it. Okay, so you're already on this path of investing, and you've got about $9,000 liquid. Does that sound right? Correct. Okay. So that would put you in baby step 3B, which is where you save up for the down payment for a home. And while you live at home, I mean, take advantage of that. Live on nothing.

And there's a few paths for this. It's a choose your own adventure when it comes to investing and down payment in this phase. Some people do 0% and they go hard on that down payment. Some people choose to do 15% and then whatever's left, throw it at the down payment. Some people do the match and then beyond that, throw money at the down payment. My favorite version is let's invest 15. Clearly, you love investing. And so if you're able to make up the gap and still hit your down payment. My favorite version is let's invest 15. Clearly you love investing. And so if you're able to make up the gap and still hit your down payment goal while investing 15%, all the better. But if you told me, hey, I want to pause because this is a huge

goal for me. And in one year I want to buy this house, then I would say, all right, well, let's pause investing. And so you just kind of pull the lever in whatever direction you're feeling. And at your age, you have tons of time to invest. So it does not worry me for you to go to 0% for a period of time. How does that hit you? What are you feeling? Yeah, I was just, for this first year of living at home, I was thinking about renting after moving out before, you know, getting a house.

Because, you know, come to think of it, there's a lot more expenses than just the house payment. Oh, 100%. And not only that, but you've got the earnest money, you've got the closing costs, you have the down payment, you have if there's any fixes the house needs, you have ongoing maintenance and repairs, property taxes, homeowners insurance. It's not all gumdrops and rainbows once you're a homeowner. And love home ownership but i think it's a good warning to those who feel like renting is a sin and it's a waste of money and i'm going dude renting is the most you're going to pay right now the mortgage is is the the bottom of the barrel

before we start adding on the other expenses so i think it's wise at your age just go rent for a year whether you do that now or a year from now yeah and that's the highest the highest form of advice i could give you is if you were my little brother, if you were my, my best friend's son, I would tell you the exact same thing. I think a year of practicing, living on your own, renting, paying bills, figuring out how that works. When the, when the cable company says they're going to be there, that's probably the oldest thing I've ever said. When the internet company says they're going to be there and they don't show up, like dealing with all that stuff and that's

a good bridge to what comes next. And you and your analytical investing mind are going to think you're wasting money. It's going to feel like I could be making so much more if I wasn't paying rent. That's part of growing up is dealing with some of those feelings and knowing no I'm doing the right thing. I feel this but I'm going to go ahead and do the next right thing anyway.

But you're crushing it man. Just stay on this path. Don't touch debt. Do you like living at home, by the way? What's that? Do you like living at home, by the way? Is that working for you? Yeah, I do.

I've been blessed with having some parents that take good care of me and they allow me to live there rent-free. So I'm taking advantage of that while I can, but I'm trying to stay thankful. That's awesome. How old are you? I just turned 21.

Oh, my gosh. So can you imagine, John, if we were 21 thinking like him? Oh, yeah, no. I definitely was not doing that. I'm going to say, give you some, just my opinion on, that's going to sound a little bit counterintuitive than what we normally would say on this show. It sounds like you have a good head on your shoulders,

which makes me think your folks had a good head on their shoulders as well. Y'all have a great relationship. I might not sprint out of this house. If it's working for y'all in this season, you do need to get out and get your own place. But, man, if you can leave with a pile of cash and your relationship with your parents is still intact, man, you may want to hang on to this for another six months or another year

if it's working for everybody. Just a thought. This is The Ramsey Show. We'll be right back. This is The Ramsey Show, 888-825-5225. It is hard to believe. George, I was just telling my wife the other day, it feels criminal that the kids are already going back to school. It confuses me. I grew up in the north. You didn't go to school until after Labor Day. I moved to the south. I'm like, it's July, time to get ready for school.

May 25th, you were out, and you went back after Christmas. I don't know, it just felt like... What happened to kids enjoying their youth, enjoying the summer? We don't have time for that, George. These other countries are coming for us. Well, poor teachers didn't get to enjoy their summer because they're back teaching. enjoying the summer. We don't have time for that, George. These other countries are coming for us. Well, poor teachers didn't get to enjoy their summer because they're back teaching. That's exactly right. Teachers and students across the country are headed back to the classroom

and to honor the heroes that we call teachers, we have one of our great foundations and personal finance teachers on the show with us. It is the great and wonderful Greg from Green Bay, Wisconsin. What's up, Greg? Hey, guys. How are you doing today? I'm excited to be with you.

Thanks for having me on the show. We are rocking on to the break of dawn, man. We are honored to talk to you, my friend. So where do you teach and how many students go there? I teach at Ashwaubenon High School, which is a suburb of Green Bay, and we have right around between 1,000 and 1,100 students. That's a party. How long have you been teaching? a suburb of Green Bay, and we have right around between 1,000 and 1,100 students. That's a party.

How long have you been teaching? For 15 years. Wow. So that's 1,000 years old in human years. Yeah, that's about how it ages you as well. Have you aged like Obama in office? Did you start and you were just bright-eyed, bushy-tails, all your hair? Yeah, I'm a little gray and thinning on top. You're doing good work. You're doing good work. So we understand that you do a lot of

work with your students on how they can go to college without taking student loans. What does that look like? And do you have any stories that come to mind as you've been kind of coaching these kids? Yeah, absolutely. I use the foundations and personal finance in my class and now the five foundations are awesome we go through all of them but when i get to the cash for college and talking about college i'm amazed at how many kids are setting off to college and i pose one question to them and i ask them i say uh how are you going to pay for college and almost every one of the students say i'm going going to take out a loan. So I repeat the question. I say, no, how are you going to pay for college? And their response again is with

confusion because, you know, just the standard is this is how the system works. We're going to go to college. We're going to take out loans and we'll pay for them later. So I really break it down and dive into what they're actually paying for because when they become 18 or these responsible adults, the debt they take on becomes theirs. So I really try to show them the impact and break down how that debt will actually impact them over the next 10, 15, 20, or possibly their entire lifetime. Wow. When did you get inspired to take this on? Because I've been a public school teacher and there's pretty tight perimeters about what we talk about and when we talk about it and all that. What inspired you to say, I'm going to stop the presses because these kids got to know this? Yeah, because I think a lot of people look at, you know, their financial situation and they're

doomed by their past, by what their parents' mistakes have done and things like that. And it's like, wait a minute, you write your own financial future. We're going to start turning this around and showing kids who are, you know, a lot of kids don't see their value or their worth because when your financial outlook from the past has been so doom and gloom, they don't see how they can get out of the hole. So this is something that I teach business and marketing and I came from a business background. So it was like, we need to get this in the hands of the kids. You know, and everybody should have this financial understanding and financial literacy

because we can make all the money we want, but if we can't handle it, it doesn't make any sense. So I took it on about nine years ago. I really started hammering the personal finance really hard. And five years ago, through my son and daughter-in-law, I discovered the Ramsey practices. And then right away, I said, my kids need this. Wow. That's amazing.

That's incredible. I can't wait to hear the stories as kids go to college, graduate, and they reach back out like, Mr. Greg, dude, I'm working now. I got no debt. Like, oh my gosh. Like the ripple effect you're having and how instrumental you are in these kids' financial future, even more than their parents who are just don't have a plan and going, yeah, I guess we'll take out debt. I'll co-sign. And you're out here coaching these kids one-on-one, showing them a different path. And for that, we are so grateful for you, Greg. Yeah, thank you. I appreciate it. There's so many opportunities to do this when you break it down. You know, I pose a real quick question to the kids. I say, how many of you would take out a loan for your food, then pay interest on it over the next 10 to 15 years? And of course, every student goes, well, that's stupid. Why would we do that? And I said, then why will 80% of you are going to a four-year college do that? Because half of your money goes to housing and food.

So that's, you know, on average about nine grand a year here in our state. So it's like, you're going to pay for that until you're in your thirties. That's an interesting way to think about it. You're room and board for that cafeteria. You're paying 6% interest on for the next 20 years. Correct. Oh, my goodness. Greg, let me say this. On behalf of myself, I've got a middle schooler and a 7-year-old little girl,

and George is a soon father-to-be. It's real easy to get down at how the world looks, you know, when you spend too much time in the media and when you're watching the news. And it's guys like you. It's men and women like you who are out there saying, not on my watch. And I know I've got a curriculum to cover, but I'm going to make sure that these young men and women, before they leave our school, you are the guys who are going to change our culture. You're the guys who are going to give hope and light new fires with these youngsters,

and it's amazing. To learn more about the Foundations in Personal Finance course and how you can bring it to your high school, if you're one of those teachers, or you know a teacher who's constantly coming home saying, oh my gosh, I've got to teach these kids something else, or if you're a teacher saying, I just can't sleep anymore knowing that these kids are just jumping off the cliff and jumping

off the cliff and jumping off the cliff without the right information. Go to ramsaysolutions.com slash education. And if you think I'm just a homeschool parent, we have a program for you too. Go to ramsSolutions.com slash education. And if you don't have an incredible teacher like Greg to help you find a way to go to college debt-free and you're stuck with student loans, be sure to go to RamseySolutions.com slash student loans to get that stuff out of your life forever. Forever. George, did you have a teacher that was super inspirational to you? 100%.

Senior year, Dr. Laflamme, my English teacher. I was in English AP. I'm not smart. I had not even great reading. Agreed. But I was in it because he was like, you have a gift of creative writing. You're a musician writing lyrics. I want you in my class, and I want you to develop this skill.

And to this day, I mean, I'm finishing edits on my first book, and I'm like, he's in the back of my mind going, this is the guy who said, you can do this. You have what it takes. And so teachers are so instrumental in your future, more than they even know. And the ripple effect they have is inspiring, and Greg is doing that right now. That's incredible, man. All right, let's run out real quick to Detroit and talk to Michael. Hey, Michael, what's up?

Hey, guys, it is a pleasure to talk to you. Thanks for taking my call. I really appreciate it. You bet. Hey, I'm up against the clock, so hop right to your question, all right? Hey, I'm an everyday millionaire. I just made it last month. Congratulations.

Yeah, thank you. And I've got like $200,000 in cash, and I'm just wondering, what should I do with that? Whatever you want. You're welcome to mail it to us up here, man. I'm happy to. Now, congratulations, man. So do you have a paid for house thank you are you a homeowner i have a paid for house and i just sold a lake house that was a mistake um but we got the money out of that lake house and that's what pushed me over the edge wow okay so you're sitting on 200 000 you have the emergency fund you have afor house. Now is the time to inflate the

tires here when it comes to giving, saving, and spending. And that's a really nice way to balance it so you don't get out of control. So you don't need to go invest all $200,000. Let's give some. Let's increase our lifestyle to a certain degree if you want to do that, if it's time to upgrade the car. I mean, some of these baby steps millionaires out there, they haven't been on a vacation in 10 years. I'm like, go on a freaking vacation. Have some nice stuff. You can do this now. You've lived like no one else.

And the other side, continue to build wealth and invest and find things you're passionate about, get plugged in. I mean, you probably have more time now too, right? Yeah, because I don't have to take care of the place up north. Yeah, I do have more time, but I still work full time. I work a lot of overtime. Very cool. I'm actually retired from one company, drawing a pension, and working at a second company and still investing in another 401.

Wow. Atta boy, Michael. So you've got options here. So that's what I'm trying to tell you is now's the time to dream a little bit and go, what could we do? George, I would love, before you start spending and giving, I'd love, Michael, if you and a buddy or two went out and y'all dreamed about, okay, we've been running our whole lives, and now we're here. We get to decide what the back half of this thing looks like.

What do we want this thing to look like? Who do we want to give to? Where do we want to live? What do we want to drive? Where do we want to visit? And let's dream a little bit, and then you can reverse engineer that with those three steps George just gave you, and you are off to the races congratulations good man congrats hey welcome back everybody this is the ramsey show i'm john deloney joined by george camel

listen um if you are like me and you are concerned about the financial direction of the country, all these student loan numbers and credit card debt just past a trillion dollars and mortgage debt, just this and that, and you just want to go to your neighbor's house and say, what are you doing? But you can't do that because your neighbor's kind of weird and you don't know them. Listen, if you will go subscribe, like the show, it is a way for no money for you to help spread the message that we're trying to to communicate here, which is to empower people to take control of their money, take control of their life. And if everybody will take care of their house and their finances and stop owing people money and stop living so unintentionally and so recklessly with no margin. If people will take this on, then the problems in Washington, the whole conversation changes.

And I know it's hard to go knock on your neighbor's door and say, hey, I see those two cars that you're leasing out there. You should read this book because they'll tell you to leave. But if you will like or subscribe this show, if you will leave a five-star review, if you hear a great, great episode or a great call, you just text it to your friend. It kicks the show up in the algorithm and it helps get the show to more people, right? You are our voice out in the marketplace we don't spend a jillion dollars advertising we don't buy stadiums we don't put up um i don't know but we just don't do a lot of that stuff uh because we have you and people who are walking these baby steps and their lives are changing they're sleeping better their marriages are improving their relationships with their kids

are changing um they're able to breathe again and you just can't help, but tell everybody when suddenly you find yourself free. So please leave a review, share it with your friends, subscribe, do all the things on whatever little gadget you're listening to this, this show on. It really makes a difference for everybody.

Thank you so, so much. All right, let's run out to, let's just walk down the street to Nashville, Tennessee and talk to our great friend, Rebecca. run out to, let's just walk down the street to Nashville, Tennessee and talk to our great friend, Rebecca. What's up, Rebecca? Hi. What's up? Well, I have a question. I just applied for a loan to get a third rental property and the loan agent said that I don't have enough debt for them to take a chance to give me a rental property.

My credit, yeah. I love America. I am worth 1.5 million dollars collectively with my husband. My credit score is like 780. They said that's not true. If you don't have debt, you don't have a credit score. And she wants me to go get some credit cards and some debt before I reapply to purchase our third home that the other two are outright paid for. I'm very confused. Okay. So let me get this straight. You've got two paid for properties. You don't have debt, but you still have a credit score due to some sort of open line of credit, or you have credit cards that you pay off every month. What's going on um so our our home in nashville is worth 1.2 mil and we owe like 200 000 on it so um so i'm confused you said you're debt free and she's saying you can't she's saying the 200 000 mortgage isn't enough debt to warrant more debt well it's in the 200 the the house is in both of our names, this one,

but that loan is in my husband's name, so I'm not on that debt. So technically, that $200,000 is on him, and I have no debt. So he could take out the debt in his name? But I'm on all of the property. Yes, he he can take it out he's already got it approved for him but i'm worried what happens if he dies and i'm now trying to i mean i know i have 1.5 in basically real estate that i can buy a house for cash but i'm still just nervous about me not being able to get a loan like that doesn't make't make sense to me. Why do I have to get a credit card? So your fear is not his death. It's I won't be able to get a loan if he does die.

Okay, let's rewind here because here's my thing. We wouldn't even recommend you do this rental property thing with debt. I would say you guys make plenty of money. You have an amazing net worth. You've built wealth. Let's just purchase this when we have the cash. Okay. So that's my caveat is that I don't even agree with this decision before we get to why you can't get a loan with that credit score. I'm not a loan agent. I can't tell you why they won't

give someone with a 780 credit score a loan. I thought you were saying you don't have a credit score and therefore they wouldn't give you a loan. You have a 780 and they're saying we won't do it. And that's because rental property is not treated the same way as a primary residence. Rental property is investment and investment equals more risk to the lender. And so they see someone out here, you know, floating a few properties, a few mortgages, and they can just decide to not give you the money if they don't want to. Okay. So if he wants to take out the debt and that's y'all's business, I don't condone it, but if he wanted to do it under his name, do you not have life insurance, either of you? Yes.

Yeah, we both have. Well, the hospital gives us like two and a half times our annual pay, so we have quite a bit of... You need 10X each. Yeah. Call our friends at Zander Insurance and get 10X each on a term life, level term life policy is what you're wanting. How old are you two? 52. Okay.

Look into it. It may be a little pricier, but you guys have the money to do it, and clearly this is a fear of yours. If he dies, what am I going to do financially, even though we have all these assets? I'm going to have to liquidate it all. It could be a mess. And two and a half times his income isn't going to get you that far.

It will get you nowhere, yeah. So you're going to need like millions in order to survive this thing and grieve his loss and go get more debt if that's what you want to do. The other thing is this. Again, with the caveat,

I absolutely think George is right. Don't borrow money for a third rental property. Y'all make way too much money. Save it up and buy it. It sounds like you want to do it because you want one that's yours. No, no, just to build wealth

because we're almost done paying this one off. We put about $18,000 a month on the current home that just has the $200,000 left. So the other one's paid off. This one will be paid off relatively fast with $18,000 a month. So we're trying to look towards this future of once this one's paid off, just buying a house every five years or even less. Couldn't you do that with cash? Buy one every two years.

Buy a $400,000 or $500,000 house every two years. Just keep that same $20,000 that you're paying on your place and rolling it in. Okay. 20 grand times 12, you're talking 240 times two years, you have 480 every two years to go buy more property. And when you do it that way, it's going to cashflow like hotcakes because you don't have a mortgage. In year 5 to 10, the houses start paying for themselves. So then you take all the income from your houses and you buy another one and then you buy another one. And then. Yes. And that's how we did our first one.

Yep. Let's keep that going. So let's just focus on this mortgage you have right now. Pay your house off. Pay it off. Then let's do cash for the rest of them. And that's not a pie in the sky. That is how Dave Ramsey has purchased many, many, many properties over the last 30 years now.

Okay. Yeah. After he got burned doing it the risky way of like well we're just going to keep collecting more debt and the tenants will pay for it so it's basically free money it's a money-making scheme until it's not yeah and you said it best i want to build wealth hang on the line i'm going to send you dave's book his most recent bestseller baby steps millionaires and it releases a map it's a roadmap that says like hey the the world and Instagram and TikTok are going to tell you to get rich this way. Here's the way to do it.

All the other speculative nonsense. Yes, people have gotten wealthy because they happen to be doing something risky in a sliver of history where it worked out. There's also people who go to Vegas and you hear about them. A friend's cousin's grandma's brother who made a whole bunch of money. Vegas wouldn't exist if that happened every time. That's why you know about that one guy. Similarly, speculative real estate rolls over and rolls over and rolls over. But if you have four houses, five houses, six houses that you own in cash, and then you get one of these real estate rollovers, then you just go knock on your neighbor's door and say, hey, I'll buy that for half its value in cash right now.

And that's how people pick up a lot of houses when things get sideways. They don't owe anybody any money and they got cash from that cashflow. It's a different game. That's building wealth. It's chestnut checkers. Getting a whole bunch of mortgages,

that's not wealth building. Having a whole bunch of houses that nobody can take away from you because they're all yours, that's wealth. See the difference? Yes, yes, definitely. Love yes definitely love it well hey come visit us hang out have some cookies and uh some uh coffee here at the at the ramsey cafe if you can pull uh george away from the cookie bar can't stop me but that's a good point john a lot of people that call the show like we got rental properties i'm like how much you making they're like four thousand dollars a year i'm like, how much are you making? They're like, $4,000 a year.

I'm like, bro, I could do Uber and make that instead of having all this risk in my life. I know, but we're wealth building. Nope. Not when you're making slim profit margins. You're making a mortgage lender very, very wealthy is what you're doing. Yeah. Hey, that's another hour of the books here on The Ramsey Show. Stay tuned.

We'll be right back. Hey, it's Dr. John Deloney. If you love the show and want a deeper dive on your money journey, we have a weekly newsletter that gives you trending and helpful articles and tips on following the Ramsey way. Just go to RamseySolutions.com today to sign up for our newsletter. Again, that's RamseySolutions.com to sign up for our weekly newsletter.