The Ramsey Show - App - You Can’t Make Enough To Outrun Your Stupidity (Hour 2)

Episode Date: November 17, 2021

Career, Home Buying, Education, Retirement, Debt, Home Selling As heard on this episode: Sign Up for a FREE trial of Ramsey+ TODAY: https://bit.ly/3rZTUAx Tools to get you started:  Debt Calculator: https://bit.ly/2Q64HME Insurance Coverage Checkup: https://bit.ly/3sXwUn5 Complete Guide to Budgeting: https://bit.ly/3utmVXi Check out more Ramsey Network podcasts: https://bit.ly/3fHhbVE

Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studios, it's the Ramsey Show, where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. I'm Dave Ramsey, your host, Ken Coleman, Ramsey personality, number one bestselling author and author of the brand new book, From Paycheck to Purpose, The Clear Path to Doing Work You Love, is my co-host today. Open phones at 888-825-5225, that's 888-825-5225. Kelsey is with us in Connecticut.

Hi, Kelsey. How are you? Hi, Dave. Hi, Ken. This is exciting. I wasn't expecting this today. Well, we're honored to have you. How can we help?

I have a career question. So my boss has just asked me if I wanted to take over her small business. It's a gym. I'm a personal trainer, but I was actually planning to join the Air Force in the next year, and now I just feel lost. I don't know what opportunity to do. Oh, well, this is a fun place to be in, but I think we've got to simplify this. So your head and heart were totally focused on going into the Air Force for a future there, And when your

boss hits you with this, it felt really good, didn't it? It felt nice that she would trust you enough and it felt very nice, correct? Yeah. Yeah. Yeah. Good. But after that wore off and you begin to really wrestle with, well, wait a second, I think I was heading over here. What was your heart telling you right before you made this phone call? Which way were you leaning? Because I know you were leaning one way. Yeah, so I've really been leaning towards the Air Force. I've actually been thinking about that since last March.

I've just been like head and heart in there. I just couldn't do it sooner because of medical reasons. Good. So here's the deal. So here's the deal. So here's the deal. Are you worried about letting your boss down, or are you worried maybe what others might say about turning this on paper really amazing opportunity to run a business?

What's really making you question what you know you want to do? That's what you have to answer right now. What is causing the doubt about the military decision? It's a woman's gym, and I'm afraid that if I don't take it over, it's going to close, and I just care about the members a lot. Got it. Okay, that's amazing. Now, Kelsey, you got to be careful here to not misinterpret what is a really beautiful heart. You're a good person, and you have built relationships with those women. You care about them.

You've invested in them. And if you're not careful, that false guilt is going to turn into resentment. do this and take this all for the right heart reasons you will be delaying and maybe completely moving on from the thing that you know you're supposed to do and i'm telling you that will eventually turn into resentment and you have no reason to feel guilt about not taking this business those women will find other places to work out you didn't open it you didn't open it and it's not your responsibility to take care of their physical life. Do you understand what I'm saying? Yeah, it makes a lot of sense.

I think, like, I talk to my family about it. And, of course, my family is just going to tell me to do what, you know, what I should do. But I just needed, like, an honest, not family-oriented opinion to kind of steer me in the right direction. Let's refocus for just a moment. Tell me in 30 seconds or less from your heart what the future is because you're moving into the Air Force. What's that look like? And why are you doing it? The opportunity to travel, meet a lot of new people, go different places, and just serve our country, which

is something I've been thinking about for a while. That's all you need to focus on. There's no guilt here. You do what you believe you're supposed to do. There's no guilt. Those ladies are going to be fine. One of them can take it and run it. Yeah.

You're free, Kelsey. Do it. Yeah, thank you. Yeah. thanks for the call very thank you for being willing to serve our country you're a great american absolutely absolutely incredible well done all right open phones at 888-825-5225 tyler's in fayetteville arkansas hi tyler how are Arkansas. Hi, Tyler. How are you? Good. How are you, Dave? Better than I deserve. What's up? So my main question is, so I'm in the military right now, and what I'm kind of struggling with is whether or not I should purchase a home while I'm on active duty or wait until I transition to the reserves. Right now, that looks like a six-year timeline. Just to give you some stats, I have no debt.

I have about $300,000 invested with a TSP, two Roth IRAs, and a taxable brokerage account. Good for you. Yeah, thank you. How much is in the brokerage account? I have about $190, 000 in there i believe way to go all right and how often will they move you in during the next six years while you're still active duty so i'm in yeah i'm in fort bragg right now in fayetteville and i will move in about three years and i eventually uh after my sixth year want to transition to the reserves

and go to where my parents yep yeah so you don't need to buy and it's not because you have the money you have the money but the problem is you're going to be moving and you're in an area that the uh the properties are largely military properties and so you've got a lot of properties coming on the market because they're always moving people and uh it's a little tougher to move a property in one of these military towns agreed oh i agree oh i absolutely agree that that's what i was thinking too because my parents actually just recently moved to nashville and um knowing how the housing market is there me and my wife were trying to decide

whether or not to just keep investing and piling cash and then have a ginormous down payment. Yes. And then buy once you've settled into a place. Once you settle into wherever it is you're settling into, and it's probably after your military career when you move into the reserves, after your active duty career. And thanks for your service. Because you're moving so that you the house is not going to go up enough in value and it's hard to sell them sometimes and you can get stuck with properties everywhere you've been stationed and so when you're moving every two to three years almost always it's better

off to rent and just pile up some cash over here for when you settle in now some branches of the military some jobs in the military, some jobs in the military, after a while in the career, you will settle in and be in one location, even while active duty, for a long time. If you're going to be there a while, like five years plus, then, yeah, you start talking about buying. But most of you guys and gals are moved every two to three years, and most of these markets do not support enough turnover

and do not support enough price increase to justify buying when you're only holding two to three years. You'll lose money on the transaction if you can sell it, or you'll get stuck with the thing and end up with rental properties dotted all over the nation, and you don't want to do that. But again, thank you for your service as well. His theme is one of my favorite scenes from Braveheart, where the English are thundering down the cavalry on Wallace and his men, and he says, hold, hold, hold.

And that's going to be a great position when you get out. Exactly right. Exactly right. I love it. This is The Ramsey Show. Most people know me as the guy who did stupid with a lot of zeros on the end. I made my first million dollars in my 20s the wrong way and then went bankrupt. That's when I set out to learn God's ways of handling money and I developed the Ramsey Baby Steps. By following these steps, I became a millionaire again and this time the right way.

After three decades of guiding millions of others through the plan, the evidence is undeniable. If you follow the Baby Steps, you will become a millionaire and get to live and give like no one else. And now I'm excited to share with you that I've written a new book called Baby Steps Millionaires, and it's available for pre-order right now. You'll learn how ordinary people built extraordinary wealth and how you can too. I'll walk you through how to invest, build wealth, and bust through the barriers preventing you from becoming a millionaire. For those who are ready, it's game on. You can baby step your way to becoming a millionaire. Pre-order your copy today at RamseySolutions.com. Well, we're coming into that time of year when some people get all stressed out about money.

It's called Christmas. The gifts, the travel expenses, the extra food, the bills oh and life still has to go on but what if money was something that you never had to fret about stress about worry about again what if christmas was actually like enjoyable and stuff well you'd need a plan to cause that to happen and we can show you how to do it it's called financial peace university this is the place where we show you how to do it. It's called Financial Peace University. This is the place where we teach you how to handle money, how to get out of debt, how to build wealth, how to be outrageously generous, how to live on a budget, how to live on a plan. It's the class

you should have been made to take back when you were in high school, but back then nobody made you take it. Financial Peace University and our premium version of EveryDollar, the world's best budgeting app, goes with Financial Peace University when you become a Ramsey Plus member. It gives you access to all of this stuff and much more. If you want a free trial of Ramsey Plus to try all this out, go to RamseySolutions.com slash Ramsey Plus. Our question of the day comes from blinds.com.

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Today's question comes from Daniel in Maine. I got a job at a major law firm after my first year of law school. I am now a third-year law student, and the firm I work for wants to hire me after graduation. I would like to own my own law firm someday and feel like gaining experience in a smaller firm would be better to prepare me to achieve that goal? Would I be crazy to reject a higher-paying job at a respected law firm to pursue my dreams? You wouldn't be crazy, but I want to challenge this thought that you saying no to this bigger firm and going to work for a smaller firm is going to somehow prepare you to run your own firm

better because you picture it being a smaller firm. I actually think that I would consider what you could learn from working for a bigger firm and understanding the complexities of the business. And I think that's just as relevant as you would scale down in eventually running your own firm. So I don't know that this is the actual right narrative that, well, if I work for a smaller firm, that's going to better prepare me to run my own small firm one day. I think leadership is leadership.

Organization is organization. And I think you'd learn in some ways more from a larger firm and getting to know their leaders and those partners and learning from them, taking the higher pay. And then if you feel like that you can get something unique from a smaller firm, let's move to that eventually. So I wouldn't assume this is the right choice. Either way, you've got to learn how to run a business. That's correct.

And so the more time you spend being a lawyer and the less time you spend on actually building business acumen, regardless of which location you're in, that's going to take away from your dream. So your dream is you need to become a great lawyer, but also learn how to run a law firm, the business practices of that. So I think you could get the business acumenumen like ken is saying either place you've just got to be very intentional about it you're going to run into the dichotomy that anyone that has a a specific discipline or skill runs into uh if you paint houses and you do a really good job and you want to be a painter uh and you want to own your own painting contracting firm

running a painting contracting firm is different than painting that's a running a business that's a different set of skills and so the more you paint houses the less you will learn about running a business and the more chances of you failing running that business becomes so anybody that's a maker anyone that's a doer like a lawyer even a doctor the more time you spend actually being a doctor and not actually running the practice there are two different things and you can't make enough to out earn your stupidity so you've got to learn these business skills that's correct regardless of which place you are and the law the smaller firm could eat you up as a lawyer and take up all your

time lawyering as much as the larger firm does. So you've just got to be intentional about wherever you are learning the business skills. And so I'm with Ken. I think you take the higher-paying job. I do, too. I just think that's better because there's some complexities at the larger firm that you're going to learn about. Amanda's in Nashville. Hi, Amanda.

Welcome to the Ramsey Show. Hi. How are you? Better than I deserve. What's up in your world? Not a lot. I just had a quick question. I wanted to preface by saying that I do follow your plan,

but I've been trying to diagnose the medical conditions for the past year, so I do have a larger savings than you would approve of. My question is, should I refinance my house to pay off my student loans, or should I sell it, pay off the mortgage, pay off the student loans, and then rent until I can buy again with my husband and I? Okay, there's a lot going on here. How much is your student loan debt? $137.

What's your degree in? My husband is a chiropractor. I'm a medical assistant. Okay, and what does he make? He makes around $110, I think. My husband is a chiropractor. I'm a medical assistant. Okay. And what does he make? He makes around $110, I think. Is it your student loan or his? It's his.

Oh, okay. He makes $110. Mm-hmm. All right. And interesting. And you make how much? i make somewhere around 30 but household last year i think we brought home 122 not mistaken and you have 130 000 in student loan debt yeah 137 137 okay and 63 and saving so you not being able to work is not going to because the your

income is a the smaller portion of your household income right yes and i am you're met you that have a medical condition or him it's him oh it's him oh so you guys are able Yeah, we're both able to work. So you're piling the money up, waiting on what this diagnosis for him might be? Yeah, just a series of different... What's going on with him? I'd rather not say. It's just something that we've had to do a couple of diagnostics on in the past year. Okay, well, depending on how debilitating it is and how sure the diagnosis is correct is, the more debilitating and the more sure you are, the more I'm just selling the house.

I'm not refinancing and borrowing your way out of the debt either way. Yeah, our thought process there was that we'd be able to lower the interest rate. No, it's not an interest rate problem. It's a debt problem. Okay. And you have a debt problem. Okay. And you have a huge pile of debt. So if you sold your home, would it pay off the student loan and the home?

Oh, yeah, everything. And you'd be free? Yes. Okay. So if he's not going to be able to earn that kind of income to be able to pay off the student loan by being a chiropractor that he took out to become a chiropractor because of this medical diagnosis, yeah, you need to sell the house

to reset and to get yourself positioned to weather this health storm. Okay. Now, the other question is this, or the other thing to bring up, because you intentionally are, I've got an incomplete picture because you're concerned about privacy, and that's okay, all right? But let me give you two other pieces of information that might enter into this. Are these federal student loans? Yes, they are right now. Okay.

Well, they need to stay federal student loans. Because if he were to pass away, they are right now okay well they need to stay federal student loans because if he were to pass away they are forgiven okay well it's not anything that serious okay yeah if he were to be declared permanently disabled that's not going to happen either okay so it's not that extreme okay that's good nothing extreme. Good, okay. So you're going to pay them. So the only question is, how long is he going to be with you? And you guys have to assess this.

The longer he's going to be out of work or have hugely diminished income, the more I'm going to lean towards selling the house. But if it's a one-year thing and you want to hold on, that's fine. Hold on. Put the student loans on hardship deferral. Come back from the mess and get the income back up and attack the student loans and get rid of them. I'd be okay with that. Yeah, I think the other factor here is how expensive could the treatment be?

I felt like there was a little hint towards that, and that's why I'd still sell the house. It sets you free. You've got plenty of cash, plenty of freedom and income to be able to pay for the treatment. Well, and you come back and you're making $100,000 again after the other side of this and just buy another house. I agree. That'd be an okay thing to do, too. This is The Ramsey Solutions on the debt-free stage,

Marsha and Cameron are with us. Hey, guys, how are you? Great, how are you doing? Thank you. Welcome. Where do you guys live? Fort Branch, Indiana, just outside of Evansville. All right. Well, we've got to get started with, I love the t-shirts.

Be the third pig. The back is even even better what's it say on the back we're debt free that's right brick house be the big in the brick house the third pig i love it way to go you guys you're prepared for the big bad wolf excellent all right how much debt have you paid off uh we've paid off $120,000. Very good. How long did that take? About three years once we really got working together. Okay.

And what was your range of income during that three years? 90 up to 130. Cool. What do you all do for a living? I manage a home improvement center. And I'm the founder and executive director of a nonprofit benefiting kids in foster care. care oh good very good great good job you guys okay what kind of debt was the 120,000 dollars well we were very normal we had uh student loans credit cards medical debt and most recently our house wow paid off the house yes we did super weird i'm looking at weird people

looking at weird third pigs i like it so uh what's this house worth uh 225 ish that's so fun your house is paid for dude it feels weird yeah it's just strange i love it the grass feels better under your feet yeah ken and i have a good friend down atlanta just sent us a video this morning he paid off his house showed us hitting the hit and submit on the computer and then you see their feet out in the grass like you're all's youtube picture just a second ago here yeah the grass feels different under your feet when you pay for it way to go guys thank you so very cool all right there's a story here. How long have you been married? 13 years. Okay.

So three years ago, you got serious. Yes. And you said you did qualify. You said when we finally got together and both of us were doing it, we got serious. It went zoom, zoom. Tell us what happened, and tell us how you got plugged into Ramsey. Well, our story goes back probably 10 years. I'm probably the textbook example of how not to do things. I stumbled

upon your radio show just driving one day and kind of dabbled in it. Didn't really, you know, go full force into the baby steps or anything, but I started listening to you and your principles made a lot of sense. So I started doing some of the steps and doing some of the things. And my mistake was I did not bring her in on it. So although I was making a little bit of progress, it was really creating a pinch point and a stress in our marriage because we weren't operating off of the same page. And I'm over here trying to do one thing and she's doing another thing and it just it wasn't working out so well and a little bit of backstory to that is when we um we lived in Kokomo Indiana it was a 2008 during the the housing crash or flip or

whatever it was and um we he's going to tell you a little bit more about that but but I guess what I was trying to say was um Dave Ramsey was not a good word. It was, what would you say, a cuss word in our family. Yeah, very much. And I was the free spirit that wanted to do whatever I wanted to do, and I was, even though we talked about what you were, the plan, I was not happy with it.

No, not at all. So what happened that caused you to get together and decide to do it together? Well, going back near to the beginning of our story, near there anyway, we were upside down on a house by a lot. And we moved. My job moved us. So we were in a position where we were way underwater on our house. And, um, fortunately my, my parents have always been a big help to us.

And, uh, my dad loaned me some money, about $20,000 just to be able to sell our house and, you know, write the check to get out of it. Um, and then, you know, fast forward, we were going to pay him back. It was a loan. And, uh, that very next Christmas after Christmas after Christmas dinner, my dad sat us down and said that his present to us was we didn't owe him that money back anymore. That really did it for me. That was kind of my why because it really got me thinking. If I ever want to be in a position to be able to bless my kids and my family like that, then I really need to do something different than I've been

doing. So I don't know really what was it that three years ago really put us on it together. So another important fact in 10 years ago, we actually owed $216,000. So we came a long way as we as we marched forward to three years ago. But three years ago he he was just so excited about your principles and he he started teaching fbu classes and uh and and sitting in that class he invited me to really be hands-on and part of it and and i had started listening to him and your principles and and i got excited myself and i became the i don't want to sit at

this table and talk about this. I don't like that name in my house. I want to buy whatever I want to like, come on, guys, you can do this. And really, where we got gazelle intense was during the pandemic. Just a little over, I guess it's been like 15 months now. But my dad was, he was dying. And he did not leave a good family tree as far as finances. And we were really left with a huge mess. And then I have my own medical issues that I was told that I was at

big high risk complications from COVID. And it just really was an eye opener that I have two amazing kids. And what if something happened to one of us in this time how would i what would that mean for my family and um and that was it like i was sold i didn't care from then on else if we were eating rice and beans being the rice we were getting everything paid off and so i called him at work one day and i said let's do this we can do this and we're here we did this and we're grateful and he's like who are you and what have you done with my wife? Yeah, that's what it was. Way to go, you guys. Yeah, I just want to know, I mean, obviously we heard the whole back story.

I want to know, you get really fired up, right? And so now we've got big motivators. Yeah. What was the hardest part once you actually got into it? Because there's that initial high. This must be done, right? Conviction. And at what point did you start to struggle, or did you struggle, and what'd you do to get out of that? Yeah, we did.

I think the biggest thing was it was so different. You know, we'd never, it was the first time in our marriage that, you know, we had really been on the same page and focusing on the same common goal. And there's unbelievable power in that, you know, we did it for so long. You know, I, we were talking on the way down here, I felt like I was, you know, repairing holes in the boat while she's on the other end, drilling bigger ones. And, and, you know, so just once we really grasped the concept and started working together, it was so different than anything we'd ever done that it took us a while to kind of adjust to that and getting accustomed to using a budget and following the every dollar budget. But, you know, really once we started on that same page together,

it was game on. Very cool. I used to be the kind of person that I'd get a couple hundred dollars from a bonus or something. I'd be like, oh, he didn't know. And I'm shoving that in the drawer because I'm going to go shopping. And he'd see it when it showed up on Amazon, right, on my front door or wherever that was from. And it just became, you know what? We have extra money. Let's do something intentional with it. Let's be intense. And it was. It was really just getting on the same page. And actually, I was sharing this story with somebody a couple weeks ago about being able to be on this stage and share such a big win for our family and changing the family tree and um and i said you know what i think another big motivator was knowing this is not like something that somebody else can do

we can do this every day people can do it if you if you do it on purpose and um and i have to give a plug to my son here let's get the the kids in. What are their names and ages? Jackson and Harmony. Okay. Cool. 12 and 7. 12 and 7. All right.

So Jackson is, I think he was born a nerd like his dad. Uh-huh. And we gave him the give, save, spend pigs many years ago. And he was really diligent about giving and saving, giving and saving. And he is going to be 13 in February. And by his 13th birthday, he is going to have a Toyota Camry paid for with less miles than my vehicle. And a $3,000 savings account. Well done, man.

Very impressive. All right. Marsha, Cameron, Jackson, and Harmony from Evansville, Indiana. $120,000 paid off in three years, making $90,000 to $130,000. Be the third pig. House and everything. Count it down. Let's hear a debt-free scream.

Three, two, one. We're debt-free! Wow, what a complete transformation. And the reluctant spouse goes in to help with Financial Peace University. Whoop, whoop. There it is. Catches it. Catches the disease.

Catches the disease. This is The Ramsey personality is my co-host today. This is The Ramsey Show. He's the number one best-selling author, and his brand-new book is out, From Paycheck to Purpose, The Clear Path to Doing Work You Love. Patty is with us in Boise, Idaho. Hi, Patty. Welcome to The Ramsey Show.

Hi. Thank you for taking my call. Sure. You had a call a few minutes ago that piqued my interest, and I'm trying to understand. My husband is losing his job on Friday because he won't take the COVID shot, and his company is firing everybody. That will not do it. They're not doing exemptions or anything. He is almost 62. He'll be 62 in just a couple of months. And we're trying, I'm 51, so I'm a little bit younger than he is. How long has he been with that company? Seven years. Wow. Okay. And it's been a lot of going back and forth. They kept coming back and forth and saying, you're going, you're not, you're going, you're not. And finally today,

they just said, no, you're going. Like everybody that refuses is just gone. So what we're trying to figure out is somebody asked you about early retirement with Social Security. And one of the things that he and I wondered is, would it be better for him to take early retirement? Because we understand that investing, that would be better, but he's not ready to quit work. And I was under the impression that if you took early Social Security, that they ding you if you are working. Correct. Okay, so you don't get a lump sum.

No, it's not a lump sum. It's monthly income. Okay. If you start your Social Security at 62, you get a smaller monthly income than if you started at 65. But then if he continues to work, don't they gain that Social Security? Exactly. They will.

Yeah. Okay. So probably in our case. If he's going to go back to work, don't take Social Security. Okay. Okay. He would not be happy not working. He's still got years where he's going to want to be productive.

He's not going to want to just. Well, I would hope so. He's just a spring chicken. We're the same age, so there you go. Yeah, and he loves what he does. I mean, most people go to work, and they come home and leave their work at work. He's an inventor and an engineer, and that's what he loves, and so he does it all the time.

So he's not really ready to just give that up, and so we weren't sure if taking early retirement. From the call, it sounded like the guy was going to take a one lump sum with Social Security. No, no, it's not a lump sum. They don't offer a lump sum. If they did, I would have already taken it. Okay, well, that helps. Thank you.

Early and often as I can get money from the government that is mine that I've given them, and I'm not even going to get it all back, I would take all I could get as fast as I could get it because they've been screwing me for years, and so I'd be happy to take some of it back. And that sentence you just uttered is a total fantasy. Oh, I know. I didn't say it would happen. I just said it'd be nice. No, I know.

That's what I'm saying. We'd all be doing that. Oh, boy. I know. We'll turn into scrumpy old men here quickly. Move on. Move on. Molly's in St. Louis.

Hey, Molly, how are you? Good. Thank you for taking my call. Sure. Molly's in St. Louis. Hey, Molly, how are you? Good. Thank you for taking my call. Sure. What's up? We, well, I just feel busy. So we have a farm. We have a rental property, and my husband has a generator business.

And our money, I feel like our money's in a good place. But the farm operation is a little tricky to wrap our brains around, like how to get it to where it's debt-free, but also like the motivation behind it. Because if you, so we use an operating loan while the crops are being put out and all that. So it gets paid back, gets paid down to zero. But if we save to buy land, you can't deduct that purchase.

So you have to pay tax on anything. What's your question? How do we get rid of our operating loan? What's the motive behind that when we would have to pay so much in tax to build up enough money to have the cash to do that? Okay. You understand a tax deduction is not a tax credit. So the operating loan does not benefit you for taxes except for 25% of the interest that you pay.

There's almost zero tax benefit for an operating loan did you know that um i thought our i thought what we paid on that was part of our farm expense no not for not not the principal only the interest okay only the interest. Okay. Only the interest. Okay. And so how big is the operating loan typically? Our limit is $225,000. The max we've ever done is like $160,000. Okay. So let's just use some crazy numbers, okay? Let's say you did $160,000 and it cost you 8% of that,

and so it cost you 10% of that. It wouldn't be that much. What's your interest rate? 4%. Okay, 4%. All right, and so it costs you what, $16,000? It costs you about $4,000 in interest. Yeah.

No, it costs you about $6,000, $7,000 in interest, okay? Well, it's number of the whole time. The $7,000 in interest is all that's deductible. Nothing else is deductible. Correct. Okay. Now, the $7,000 tax deduction, if you're in a 30% tax bracket, saves you $2,100 in taxes. Okay. you $2,100 in taxes. Okay, so you're screwing around with $160,000 for a $2,000 benefit and calling that sophisticated.

That's not sophisticated. No, I think the issue is more, it's not really that to get the deduction. It's what you said. It's like, okay, so then i misspoke okay um so if i in order for us to build up like you have to pay taxes on 160 000 worth of income to have 160 000 yes that's how life works yeah yeah yeah but that's what you need to do to get out of the operating loan business because all you've got to have is one bad crop and you're bankrupt. Hello?

Is that wrong? No, I'm trying to just wrap my brain around because you're making me think differently about it. So here's what you need to do. What kind of profit do you make in a year on the farm, do you think? This last year, after we bid everything, we'll have like $100,000 income. Okay, and so let's pretend and let's say, okay, you need $160,000. So let's say over four years we're going to take $40,000 a year and we're going to borrow $40,000 less each year.

Because the $100,000 in profit you pay taxes on, you don't have a choice. Okay? So after you pay taxes on your $100,000, I want you to put $40,000 aside each year for four years. That will equal $160,000. Now you are your own line of credit because you actually have some freaking money. And I'm curious, really quick, Molly, I'd love Dave to hear this. I want to hear this.

How much is the rental property worth? What do you owe on it? We don't owe anything on the rental property. What's it worth? It's probably worth $450,000. What kind of profit does the generator business make? So generally we take home $5,000 a month from the generator business. $60,000 on that.

So you're making $160,000 a year. You've got a $450,000 rental property. If I were in your shoes, I'd sell the rental property and fund my operating loan. That's what I'm thinking. You're 100% debt-free. You're operating the business debt-free. You're going to decrease your hassle because you're dealing with a renter, a generator business, and a farm. Okay?

So you're going to decrease the craziness where you're chasing your tail. When you started the call, you talked about how confused you were. And you're getting rid of the debt, which lowers the stress of the situation. And you're paying cash for everything on the farm from this day forward. And you're paying cash for everything in the generator business from this day forward. And you never fall for the tax deduction myth again. Because when you fall for the tax deduction myth and you call that smart, really what you're saying out loud is, I love trading dollars for quarters.

Because that's what a tax deduction does. It trades a dollar for a quarter. And you don't want to trade dollars for quarters. So don't stay in debt for the tax deduction and don't stay in debt because you think you have to you don't have to effectively you are borrowing against your rental property once a year for an operating loan that's what the balance sheet says it's technically not a loan on the rental property i got that but effectively that's what you're doing yeah so you can clean up your whole life pretty quickly. If I were in your shoes and I wanted to be a farmer, I'd sell

the rental property. If I didn't want, if I want to be a rental landlord and not be a farmer, I'd sell the farm.er for The Ramsey Show. If you would like to do your debt-free scream live on the show, make sure you visit theramseyshow.com and register. We would love for you to come to Nashville and tell Dave your story.