The Ramsey Show - Debt Isn't The Problem - Your Mindset Is

Episode Date: March 24, 2025

📈 Are you on track with the Baby Steps? Get a Free Personalized Plan ✅ Help us make the show better by taking this short survey! While the show hosts are on the Ramsey Cruise for the week, we've compiled some of our favorite Dave and Jade calls from 2024. Enjoy your week and we'll be back with a live show soon! Dave Ramsey & Jade Warshaw answer your questions and discuss: ‘Son asked me to bail him out of $200K tax debt’ 'Is it dumb to take out a business loan?’ ‘We've lost a ton of money with no end in sight’ ‘Do cost-of-living raises cause more inflation?' ‘I owe the IRS $100K with my ex-husband’ 'Is it wrong to build wealth?' Support Our Sponsors: 🌱 Get 10% off your first month of BetterHelp 🏥 Learn more about Christian Healthcare Ministries 🏡 Get started today with Churchill Mortgage 🔒 Get 20% off when you join DeleteMe 🏦 Go to FAIRWINDS Credit Union for an exclusive account bundle! 🥗 Save 15% on your first Field of Greens order with code RAMSEY ⛨ Find top Health Insurance Plans at Health Trust Financial 💸 To find out more about student loan refinancing, check out Laurel Road 💻 Visit NetSuite today to learn more 🗂️ Use promo code RAMSEY for 18% off at The Nokbox 🎥 Get your tickets for The Chosen Season 5! 💵 Learn more about Timothy Plan 🏛 Get started with YRefy or call 844-2-RAMSEY 🔐 Visit Zander Insurance for your free instant quote today! Next Steps 📱 Watch the full episode for free in the Ramsey Network app. 📞 Have a question for the show? Call 888-825-5225 Weekdays from 2-5pm ET or click here! 💵 Start your free budget today. Download the EveryDollar app! 🎟️ See Dave Ramsey and Dr. John Delony LIVE in a city near you. 🛒 Preorder Build a Business You Love Now at Ramsey Solutions 🤓 File your taxes with 100% accurate software that’s 20% of the price. Listen to more from Ramsey Network 🎙️ The Ramsey Show   💸 The Ramsey Show Highlights 🧠 The Dr. John Delony Show 🍸 Smart Money Happy Hour 💡 The Rachel Cruze Show 💰 George Kamel 🪑 Front Row Seat with Ken Coleman 📈 EntreLeadership Learn more about your ad choices. https://www.megaphone.fm/adchoices Ramsey Solutions Privacy Policy

Hey guys, it's James Childs, producer of The Ramsey Show. This week Dave and the personalities are living it up on the Ramsey Cruise, so we've put together a compilation of some of our favorite calls and segments from the last year. Regular shows are back next week. Hope you enjoy! Live from the headquarters of Ramsey Solutions, it's the Ramsey Show where we help people build wealth, do work that they love and create actual amazing relationships. Jade Washa Ramsey personality is my co-host today. I'm Dave Ramsey, the phone number is 888-825-5225.

Jeff's in Indianapolis, hi jeff welcome to the ramsey show i gave pleasure to talk with you you too my wife and i are in our early seventies uh... my son lives about a mile from the season is early fouries relocated back here to indiana from california about eleven years ago from l a were working in the music business and uh... you don't take over my insurance agency a few years retired about nine years ago so he did take that over he got into tax problems when he was in California because he was

working for a music composer that actually treated him as an employee but paid him as an independent contractor so he didn't know anything about paying taxes. Got behind with the state and the IRS, end up owing them 30 or 40 grand, I think. We helped him work out a structured repayment plan as a condition to him coming back and getting into insurance. And that's been paid through wage garnishments since then. I discussed with him before he came back the need to stay on top of his taxes

and finances because he's never been good with money during that period of time. Many times I'd ask him if he was on this and he'd just blow up and wouldn't talk to me about it. Three months ago, he called us and told us that he was in tax debt to the IRS again and wanted his mom and I to bail him out basically using our share of our estate when we die. We thought he'd probably owe about 50 or 60 thousand dollars. Turns out he hasn't filed any state or federal tax returns for the past four years nor has he paid any estimated taxes for 2023. We're

meeting with our accountant next Thursday to go over all this to get specific numbers, but I'm guessing from what I've seen, it's going to be over $200,000 and about half of that is just interest and penalties. He also hasn't paid any 941 withholding or state unemployment tax. He has no business being self-employed obviously. So my question is, we have the assets to do that, but we would have to sell off property and mutual funds. I don't know if you need our income or what exactly. What's your net worth? Net worth's probably about 2.3 million.

And about 80, about roughly half of that is in two pieces of real estate our residents here in Indiana and another home we own in Florida. I'm sorry Jeff. Including the rent including the real estate the majority of our assets are in IRAs, Roths and 403Bs from what my wife taught. We've got about $140,000. What does he make? What's his income at the insurance company? Well he just resigned from that position because after he took it over he ran it into the ground. He couldn't make a go of it. Right now he's doing a sales job and it seems to be going pretty well but he's only been doing it a couple of months. He's making about $75,000 a year plus bonuses.

making about $75,000 a year plus bonuses. Is he married? He's not married. He has an eight-year-old granddaughter that we absolutely love and spends a lot of time with us. He was going to get married, but they did it kind of reverse. They got pregnant first and then they didn't get along, so they didn't get married. So both of them are here in town and both of them have jobs in our own businesses. And they get along fine, we all get along fine. The insurance agency was yours, and you sold it or gave it to him? It was, I actually worked for a captive company, so they actually owned it, and when I left, they paid me a percentage of my renewals, that's what one of the cornerstones of my retirement now so I didn't have a say in where so you had a book of business but what did he come into he didn't

take over your book did he he did okay not all of it because they gave something split it was a big agency so they split it up among other agents they gave him about half of it okay Jeff and he ran your book into the ground. Okay. Ran into the ground. Okay. Jeff, does he have any other debt besides the tax debt that you know of? Do you know what that number looks like? I don't think he owes, he rents, he doesn't own a home. I don't think he owes anything else. He doesn't have credit card debts. The tax debt's the only one I'm aware of. I hear your disgust for his behavior in your voice and also hear a dad that loves his son even though he's been stupid. You hear very well. So I guess there's two options one is you bail him out which

doesn't sound real appealing. If you don't bail him out, what happens? He just has to work with the IRS and for a lot of years and actually grow up. Yeah, we got the thing is, David, this has happened so many times I can't count them. But you've been there to bail him out every time. Yeah, and we had taken out of high school because of his behavior. We had to send him out to a survival camp in Idaho, then we put him in a private school in California and all that required a second mortgage on our house at the time. We bailed him out of a car loan that he didn't keep up with that I co-signed for. It's just been one thing after another. He just is very-

I'm okay with no being the answer. Yeah, if it were me, I wouldn't do it. Here's what I'm gonna suggest. He got a severance package from the insurance company that's gonna pay out about 30 grand over the next five years, about 6,000 a year. I told him that's going to pay out about 30 grand over the next five years, about 6,000 a year. I told him that we would help him out if he would sign that over to me to pay back what we're going to advance him, but I initially thought we could do the whole amount.

I don't think you should do any of that, Jeff. I really don't. That's the way I think. That's the way I think. I think that he's grown, and I think that he makes a living. He's not making, he's not poverty level, there's nothing wrong with him. I think he just needs to be a man and do man things. I totally agree with you. And I think you're a great dad. Thank you. There's one other question to kind of take this out a little further because I don't think my son realizes how bad a position he's in. If he pays this over the next 20 or 30 years, he still may not have it paid off when

we die. And that's all right. We may. Yeah, but we have all of our assets and our real estate is in trust. And my daughter is the trustee and the executor, and we currently put a clause in our will that allowed my son to take our house here as part of his settlement of the estate because he loves our home. But I'm concerned that if he doesn't have this paid off, I don't even know that I want to leave that share of the estate to him, because I think the IRS could put a lien

on that. They can. After he becomes the owner they can. Yeah and I want to make sure that I mean ultimately it was for him but it's ultimately also to go to our granddaughter and I don't want to eat up our share of that estate. I think you can I think these are two separate questions do you help him today? Yeah they are. Yeah do you help him today? Jade and I are both saying sadly I probably wouldn't. I probably wouldn't. That's the way I'm thinking. And then do I change the deed, change the will? In a few years I might. You can change it now, you can change it later. Can he put something in there that says if the debt's not paid off the home goes elsewhere until the debt is paid off. You could leave it in trust for the granddaughter and bypass it, bypass the

kid they can't seem to find his way. Yeah, that's so sad. This is The Ramsey Show. Rachel, do you ever get these sketchy text messages that are like, hey, you need to update your address and verify so we can get you the package you didn't order? Yes, I have. George, sketchy and never trust them. And that's why we recommend Delete Me. They help with that. Yeah, they do. Delete Me actually goes in and removes your information from data broker websites and

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That comes out to less than nine bucks a month. Super affordable. It's amazing. So again, that's joinedeleteme.com slash Ramsey. That comes out to less than nine bucks a month. Super affordable. It's amazing. So again, that's joindeleteme.com slash Ramsey. Make sure to check it out, you guys. Jadwajah Ramsey personality is my co-host today. Graham is with us in Knoxville. Hey, Graham, how are you? I'm doing well, Dave.

How are you? Better than I deserve. What's up? Me and my fiance are getting married next June, and we've been bouncing around the idea of buying a home versus renting, and I wanted to get your thoughts on that. Yeah.

Okay. I would not buy until you're married, for sure. Is that what you're talking about? Okay. Yeah, we were thinking, you know, right around when we're getting married next June. Yeah. Do you guys have any, will you have debt together? We will have very little debt. She has a student loan for about $7,000. We've saved up a pretty good bit going into our marriage and plan on combining our finances and following a lot of your instruction on that.

So you'd pay off the debt, you'd have an emergency fund, plus you'd have a down payment? Yes. Okay. Then according to the baby steps and what we teach, you would be in a position to buy a home. Let me tell you an idea to think about, okay? And it's not a hard and fast, I wouldn't call you stupid if you didn't do it or something like that, but here's an idea to think about. I think, because I'm old and I've seen a lot, that one year after you're married you will pick a different house than one month after you're married. Because I think you will learn a lot about each other during that year and I always joke and say it takes about a year of

marriage to know how close to your mother-in-law to buy. But that's the kind you know you get to know each other. I would rather relationally you spend the first year of your marriage, all of your energy on your relationship, not on hanging curtains and picking wallpaper. And for God's sake, doing a renovation. Okay? So I mean, I just, I love the idea of the house not being the purchase, the move, not being an emotional relational drain. Instead, you all just get really comfortable with each other and pile up a big old stack of cash. And the following spring buy a house. I like that. And it comes from the Old Testament biblical story in 2 Samuel that the young warriors in Israel in those days were not allowed to go to battle in the first

year of marriage. They had to stay home and take care of the family. They were not allowed to go to battle until they'd been married at least a year. And so, you know, it's a bit symbolic or metaphorical, if you will, and it's not something that you would be completely unwise and stupid and foolish and all that. No, it's none of that. I just think you're going to make a different decision a year later. I absolutely agree with that. And you've known each other, you get to know each other a little bit better by then. We've been dating six years, yeah.

You haven't been living together. It's different. I mean you're not been married together. You might have been living together. I don't know what you're doing. But yeah, I it's it's it's a different deal man and and it's not it's not that dramatic really but it's just it's subtle. Yeah. It's um and and the thing I also the thing that that makes you do is it makes you push back against the whole culture That's yelling at you buy a house buy a house buy a house Oh renting is throwing your money away buy a house buy a house buy a house Oh renters are going to hell buy a house buy a house. You know people are just go crazy

They're like a beagle chasing a rabbit man And it's just you know it's okay to have a little bit of patience. Home ownership is a great plan. Owning a home and getting it paid off is a great financial wealth building plan. But everybody doesn't have to buy a house right now. Just calm your butt down. You know, it's like, oh, and the longer you wait, the more you'll have more money to put down on it. So there's that. And who knows what the interest rates will do during that time might be be fun. Oh that's true. Or are you trying to make a

call here Dave? No. Are you calling something? Nope. Okay just checking. I'm just saying it'll be after an election at that point and we'll see what's happening. I didn't know if you were seeing your shadow or what. That happens around here a lot because yeah I've seen things. You get old things circle back around. If you keep the suit coat long enough, it comes back in style. You know? So, all right, here we go. JT is in Santa Fe, New Mexico.

Hi, JT, how are you? David and Jay, and how are we doing? Better than we deserve. What's up? So, I'm about to be at a point where I'm completely out of debt. I've been working on it for the last two years and I'm about to be at a point where I'm completely out of debt. I've been working on it for the last two years and I'm about to hit zero. Okay, way to go. My question is, is it foolish to go back into debt?

Yes. To start a business? Yes. You just called the Ramsey Show, JT. I know. You walked into the bear cave bear if it was hungry. You already know the answer. What's the business? My trade or work is a I'm a 401k consultant. I do a risk of compliance and I don't know it's kind of start my own firm and it's a lot to try to just bankroll why and why what

do you got a bankroll that's what I'm wondering well I got a cash flow you day one well I mean everything from you, software agreements, all sorts of stuff. Wait a minute, for what? You don't even, you gotta have customers first. Well, I mean, I'm not so much worried about that part of getting everything started. Yeah, but you're going too fast. What are you getting started? What do you mean? Well, I mean, you don't have any money?

Well, I mean, not enough to get this thing going. Well, what do you think it Well, I mean you don't have any money. Well, I mean not enough to get this thing going. Well, what do you think it takes to get this going? Why have you to say... What you're describing to me, you need a computer and some sweat. Okay, and a customer. Yeah, or six. Well, I was saying, you know, for what I'm doing, I'd be go... I'd be whale hunting in a canoe, and I need some stuff to be able to do such things. Okay, you are not ready to open a business and leave your job when you have absolutely no customers.

Whale hunting in a canoe means that you don't have a clue where your customers are coming from. You're not ready to open a business, and it has nothing to do with a loan. You need some customers on the hook. Well, the first thing I'd do, I would take my current job and ask that they 1099 me, and I would contract all the work that I'm doing right now and then go look for my own bigger client. So I have an idea for cash flow.

Okay, so now we're eating. Now why are we whale hunting in a canoe? Well, we gotta go after big fish to eat big right? Well I think you're... No I mean rabbits are more plentiful let's kill some of those neat. I think you're missing the beauty of the type of business that you're starting which is this is a business you can start with little to no overhead. And a little to no cash. Yeah. You need enough to eat on but I don't want you floating in a canoe looking for a whale starving to death

Yeah, because you didn't have any plan or any background But if you got a plan to for cash flow day one on the 1099 side then and you think they'll do that What's the probability of them doing that? I? Think so because I'd be taking on a lot of my uh, you know, I'd get my own insurance and stuff like that You know, this is so vague and you have not proforma'd this out. The business you're in demands that you do a better job of proforming than you have done so far. This is a vague generalities and I'm gonna go borrow money. No, you don't need to borrow money. You need to

organically cash flow this little service oriented business and you're gonna be just fine. And you need to put together a business plan and process that has the probability of you being able to eat and cover the cost of basic software services but there's no big five hundred thousand or fifty thousand or twenty thousand dollar outlay for you to come out of the ground being a consultant yeah that's I think Dave people think if you build it they'll come and I think it's the opposite. You've got to go get them and then build it while you're like you've got to build it while

they're coming. If you build it they will come in the movie world is called the field of dreams. Yeah, the business world is called a field of nightmares. So no, yeah, you don't you don't want to do that. You need to have you need to have the some you know, I tell our guys all the time, yeah, you don't want to do that. You need to have the... I tell our guys all the time, hey, elephant hunting is great, but they're a lot more rare than rabbits. You need really good on rabbits.

There's lots of rabbits. Go get the rabbits, and occasionally you stumble into an elephant, then that's extra. But let's go get the rabbits. Let's get a business model that churns cash here. Stack some cash. You're fine, JT.

Do not borrow into the vagueness that you are describing us. You're really gonna make a mess. This is the Ramsey Show. I hate to admit this, but I don't always eat right. I know, I need to eat more fruits and veggies, but sometimes I just have to pound some chips because they taste so good. That's why I love my field of greens. It helps me eat healthy when I

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Jay Washaw, Ramsey Personality is my co-host today. Today's question of the day is brought to you by WhyRefi. If private student loan debt is taking away your peace of mind and you don't see any way out you need why refi why refi refinances defaulted private student loans that other places won't touch and they give you a low fixed rate loan that's custom built for you so go to why refi dot com slash Ramsey that's the letter Y r e f y dot com slash Ramsey might not

be in all states. Today's question comes from Patty in Illinois. My husband and I purchased a very modest home for his parents due to the rising cost of rent in our area. My father-in-law is disabled, my mother-in-law works full-time at a very modest job, and they pay us a small amount of rent each month. It's been five years now, and the home has required a lot of repairs, such as water, intrusion of mold. We've been able to cash flow the problems,

but it has cost over 15,000, not to mention our sanity. It has also changed our relationship because they frequently contact us for issues or requests in spite of many conversations about what is quote nice to have versus what is quote needed. We're trying to honor our word but it has been very taxing emotionally and financially. We're in baby step six and we need to plan for our own retirement. I keep telling myself to suck it up but we are losing tons of money with no end in sight. I've listened to the show long enough to know

we probably shouldn't have done this, but at the time it felt like the right thing to do. What would you do if you were in our shoes? Well, first off, I wish I had more information, Dave. I wanna know how old these parents are. I wanna know, I wanna know more. I wanna know the value of the house because I'm thinking if you bought a house in 2019

Like the value's probably gone up a good deal. Mm-hmm. So there She they might not be losing money in the way that she thinks now the actual idea of doing this I think was a really bad idea. Um, I think there was just a lack of foresight here And I don't know what the promise was. Did they say hey, we're doing this house You're gonna live here and you know until you die and we're covering it. I don't know what the promise was, but I think that they may have, you know, promised more than what they could deliver on. And I think that's probably what she's feeling some type of way about. So she's got a lot of drama in her words. She does. And it's her in-laws. words. Uh huh. She does. And it's her in-laws. Uh huh. I, I, the piece of information I would like is I'd like to talk to her husband and see if he feels the same way. Uh huh. And

if it was everybody's idea. If it's bothering him to the same degree or if this is in-law drama that you are now molding or laying over on this house. Yes. Uh huh. I think it's a little bit of both. She does use the word we a lot, which makes me think that there is some unity. No, I don't think it was a hidden thing, but I think he went into it and went, I bought mom and dad a house and dad's disabled. Mom got a, you know, not much of a job and they pay us what they can pay us and we fix the stuff that breaks. Yeah.

And she's going, Oh God, I'm dying. You know, it's like, um, so I don't, I, you know, $15,000 is not, uh, we are losing tons of money over five years. If you own a house, you're going to spend more than $15,000 over five years on a house. And they're getting some rent, which is good. And it's going up in value. Uh-huh. Going up in value. Mom and dad are gonna pass someday and you're gonna have a nice asset that's going up in value that you can sell. And probably pay off your house and more if you haven't already. So I think I would, first thing I would want to get to the bottom and say what is, where is all this resentment really coming from? Is it really coming from the house? I kind of don't think it is.

I don't think so. Now there is part of it where they may have bitten off more than they realized they were gonna be chewing. Do you know what I'm saying? Like in theory it sounded good and then when you start walking it out you're like oh my goodness. But to your point if she's writing into our show there's something that they're not talking about. If your mother-in-law is calling you and asking you to fix something at a house that you gave her at a deal, and you already had you know, mother-in-law, IDIS, then that would just make it worse.

Right? I mean, that's like, well, you know, the difference in what is needed and what's nice to have. Yeah. But you know, it's a modest home. They're modest people. She makes a modest income. There wasn't anything in here lavish. There's also though I didn't hear a Jacuzzi being installed. I think to, to, to quote myself, I think there's also a vocab rehab that needs to happen. Amen. Because here she's saying my husband, I purchased a very modest home for his parents. They don't own the home. They're renters. You guys bought a house for yourself.

It's your asset, it's your home. And I think if you start viewing it as an asset that we have, it's gonna change your thoughts. I have a rental house and it had a water leak and I had to fix them all. That's right. As opposed to it's, well it's there. Guess what, I've had to do that a bunch of times.

Right. So that'll help. And I had zero fix them all. That's right. As opposed to it's, well it's there. Guess what, I've had to do that a bunch of times. Right. So that'll help. And I had zero drama about it. That's right. I just fixed it. And it's going up in value. Tree fell on the back porch. I just fixed it.

It's just, you know, it's just, you own a house and crap happens, right? I mean, it's like, the other question that I don't, I'm with you, I don't think we have enough information because it's a very interesting question. It is. And I'm impugning a lot with you, I don't think we have enough information because it's a very interesting question. It is. And I'm impugning a lot on you, Patty, I apologize for that, but I'm trying to figure out

what's really happening here, and therefore to what to do with this. Because also their age might play into it. If she's in her- If they're 87, suck it up. If they're 57. Kick them out. You know, sell it and give them the money that it brings, whatever it brings.

Give them the money from it. Because you didn't buy it for money, you bought it to help them. You know, if you want to give them whatever proceeds are, because you're going to have made some money to your point from 2019. So yeah, that's part of it. And yeah, and I think then I would wanna just really ask, I don't know. Well, walk that out.

So let's say she's listening, she goes, yeah, you know what, they are in their 50s, they need to get out of this house. They've been paying us a smaller amount of rent. What would you suggest in that situation to fairly? I mean, I don't care if you give them the money. I mean, you sell the house and whatever, I don't know if you give them the money really I mean you sell the house and whatever whatever I don't know if there's a mortgage here or not

but pay off all the expenses and then whatever money you've made on the house give it to them I don't care oh I'll tell you the other piece I don't know right here is I don't know Patty's income yeah that's right Patty makes three hundred thousand dollars a year stop whining and deal with it that's another good point if Patty makes fifty300,000 a year, stop whining and deal with it. That's another good point. If Patty makes $55,000 a year, then you did something you couldn't afford to do here. That's true.

And that's where some of this drama is coming from, is the pinch. Because it's like, but it's been very taxing emotionally and financially. Yeah. Okay, I don't understand. It's 15 grand been very taxing emotionally and financially. Yeah Okay, I don't understand. It's um 15 grand is not taxing emotion I mean, it's not but so that that's Yeah, it's a lot of details. Maybe call in sometime Patty. Yeah. Yeah, we'd do that So you can contact them back off the email if you want to James

We take the call because I don't know what to do But if yeah, I think we could give a couple of scenarios if then, okay, kind of flow charted. If they're super old and you make a lot of money, then this drama is in your head, calm down and suck it up. If they're super young and you don't make a lot of money, maybe you need to move them out and sell the house. I think those are the two variables that could be there.

I don't hear a lot of mother-in-law drama, but I just think it's, it was curious to me how much drama she had, and I wondered if her husband would feel exactly the same way. I bet he doesn't. Now, if they're only paying, you know, the mortgage is 2,000, and she said they're paying a small amount of rent, so they're paying 1,000,

the proceeds, I'd split. Okay, I don't care um the thing is I don't there you're not selling it because you need money that's true she did not bring that up she you're right she did so you know to get rid of an un an emotionally and financially draining situation to quote her yeah that's true but she just she did say we're in baby step six and need to plan for our own retirement. So that made me think they might want some money.

Could be, and it could just be that. The drama. I'm tired of giving them anything. And I'd rather put it in my account. In lost situations, they get salty really quick. Not going there. Not gonna do that. You're right to, you started the whole thing right

when you said you shouldn't have done it. Foresight, you gotta, you have to play these things out You're right to that you started the whole thing right when you said you shouldn't have done it. Mm-hmm foresight You got it. You have to play these things out in your mind Years and years to see where it will land and all of the different Variations of the plan when you're trying to help your parents. You're trying to help your own kids You do not enter into a process That does not bring them to sustainability on their own And so you get them up where they're standing on their own feet and you let them go.

So whatever you're doing, create a situation that gets them up on their own feet instead of a continuous drain. And so that's... So you people pay in your 28 year olds private schools for their kids, that's not sustainable. You shouldn't have entered into that. This is The Ramsey Show. All right, Dave, you have some strong opinions. Possibly. Yeah, I think so.

Okay, because you really prefer credit unions over big banks. So why is that? Well, credit unions, for one thing, are non-profit, which means that the members, the customers own the credit union. So any profits that the credit union makes goes back into customer pricing. So you get better interest rate on savings, cheaper checking, and so on, that kind of thing. And what's more important than that though is the fact that the customer is the owner changes the spirit on the credit union. So I find very few

credit unions that aren't very customer centric. Yes, well and I think we have found one that is incredible and that's Fairwinds. They are an incredible credit union that is really out with the heart to help the customer. You know, that's why we're partnering with them, because they've got a scope to be able to handle the Ramsey audience, and they're the right kind of people with the right kind of values, and they've done a really,

really good job with customer service and the deals that they're offering, the Ramsey Tribe is incredible. Yeah, absolutely. And you're right, their customer service is unbelievable. Winston and I just signed up and we got an account. And I'm not kidding, it took less than five minutes. It was so user friendly, like the step-by-step approach was unbelievable. And then the next day my phone rings and it says, fair winds on my phone. So I answered it and talked to someone there and they

said yeah they give calls to every new customer. And so again they just really care about your experience and I so so appreciate that. So again you guys I know it can be a pain to switch banks or to open up new accounts but Fairwinds again they make it so easy. Plus anything that you can do at a traditional branch you can do with them at fairwinds.org or on their app. And you'll have free access to over 33,000 ATMs. You guys know how much I hate banks in general.

And so for me to do this is a big deal. Talk to our friends at Fairwinds and check out the combined checking and savings bundle that they created just for the Ramsey Tribe. You guys, it's incredible. Yeah, you guys, it's so easy to join Fair Winds no matter where you live. So go to fairwinds.org slash Ramsey to learn more. That's F-A-I-R-W-I-N-D-S dot org slash Ramsey. Jade Wachow, Ramsey personality is my co-host today. Open phones at triple 8 8 2 5 5 2 2 5. Sam's with us in Lansing, Michigan. Hey Sam, welcome to the Ramsey Show.

Hi, how are you guys today? Great, how can we help? So my wife informed me a couple weeks ago that she was 23-24 thousand dollars in credit card debt without me knowing over the course of the last year. And I was wondering what would be the best way to pay it off. We have a couple options. Um, I got lucky rather be lucky than good. I won $36,000 at the casino. Um, but that money I already, um, about a month ago and I already had that money tied up in money market because I'm using that for the down payment on my next home.

Um, we could cash in her 401k, which has $25,000 and pay it off. Or do we just, um, kind of suck it up and just make the payments and just pay it down month by month. Um, I just wondered what the best option would be to avoid the interest payments and everything like that. You realize the interest payments aren't the real problem in your house, right? How long have you been married? How long have you been married? We have been married for a year and a half now.

And how long has she had this debt? A year. It started basically when my son was born, a little bit over a year ago. And it was just online ordering, stuff like that. Three different credit cards, going shopping, kind of thing. And I never really noticed that we have separate finances. And I never really noticed it because we don't have any debt and all that our house, we don't, we don't owe anything. So how's that working for you? Oh, it was working fantastic up until a couple of weeks ago.

Don't think it is. Do you know not been working? It's not been working for some time like ever in your married life. It just was revealed. It was just revealed a couple of weeks ago. Correct. Yeah. You all are not on the same page. Not at all. Also, she's spending as a coping mechanism. She's, there's something that she's trying to cope with and she's not doing it in a healthy way. And so she's looking to spending. And so she revenge spending because you're gambling. And so she's looking to spending and so she revenge spending cause you're gambling.

I don't gamble with that. I, that was the second time I had been with the casino in five years. What'd you spend and did you budget for it or did you just go and do it on a whim? Oh, we just, we just did it. We just did it on a whim basically. We just did it out of whim basically. Alright, so I think the thing that number one when we're meeting, when we're researching millionaires, one of the things we find typically among, and we've done the largest study of millionaires ever done, Sam, is that the husband and wife are working together, and there aren't secrets, and there is not impulsive spending. And the number of millionaires in our study that became millionaires in a casino is precisely zero. The number of millionaires in our study whose wife or husband hides their finances from them

because they don't have good communication is precisely zero. So those are the things that concern me more than the actual credit card debt. Do you see what I'm saying? Yes you do. So if you guys want to prosper and do extremely well, which is our goal to help you because we love you, we want you to win, it would entail combining your finances, only one checking account, and a budget meeting every month that the two of you sit down together. Both of you have a vote. Some reason she doesn't think she's got a vote she had to hide it from shame or guilt or something and we've got to rebuild trust which has been violated here and the two of you together she has a vote you have

a vote we are in agreement about what our future goals are and where we're going from there and so you don't agree with this but I'm gonna tell you what I think okay because you called here I think you both did something stupid and the only good news is it cancels out I think you got lucky instead of losing a pile of money you came home with a pile of money that's the worst thing that can happen at a casino because you're so dumb then you go back again thinking you're that guy and so I'm cashing this money out paying off these credit cards we're going to

combine our finances and we're going to set a goal or very diligent very steady not flashy to save up a down payment for a home together in meantime whatever spending we're going to do that is reasonable spending the two of us are going to be in agreement every single month before the month begins and not following through on that you or her is lying to your spouse and so what she did here is not cute it's not funny and what you did here is not cute and it's not funny it can be devastating if it's extended out and forward. Both of them can be. And so I, you know,

I'm fussing at you cause I love you and I want you to win. But if you were my kid and you're 30 years old, this is exactly how I would talk to you and what I would tell you as your friend. Um, not because I'm your dad, but because I love you and because I want you to win. And so, uh, Sam, if you haven't had in our world, we call what she did financial infidelity because it activates the same place in you that sexual infidelity does because it's a violation of trust to run up $24,000 and destroy or

rather delay your dream of buying a home because of financial misbehavior yeah and a lie yeah and to be honest if I'm in their situation I'm probably gonna seek out some counseling some marriage counseling yeah because they're they're early on and and this is not they're still forming that foundation and this is not the sort of thing that you want in the foundation. You want to get to the bottom of this, find out why you guys are keeping secrets, find out why she's feeling it's necessary to medicate by spending and possibly same for you. Sam, and I think if I were in your shoes and I was 24 and some guy said to me what I just

said to you, I would have a tendency to blow it off I was 24 and some guy said to me what I just said to you, I would have a tendency to blow it off like you're overreacting, Dave. You're overstating this. And what I'm saying is, is these two things, these three things, not working together, hiding and lying about money, and gambling, are three things that will cause you to not become a millionaire. So this is like a million dollar discussion. That's why this is important. So I'm not overreacting because even though it's only 24,000 and 36,000, it's small in the scope of life. The behaviors are going to prohibit you or delay you at minimum from becoming wealthy to the tune of millions and millions of dollars

so this is a I'm not overreacting because this is millions of dollars we're talking about absolutely over time yeah Dave you're being kind because this this this is a big deal to me I mean if Sam Warshaw if I found out Sam Warshaw went behind my back and spent $25,000, there'd be an atom bomb that went off. You would see the explosion, I'm just saying. There'd be a little fire.

There'd be birds, little birds chirping around his head because I would have knocked him out. I'm just saying. But I kind of think it might been more likely you that would do that than him though. You know what? That's probably true because I am the spender. He is the saber. He's Mr. Deliberate.

Yeah, he is. Which is even more reason if he did that I would have gone off on him. But it's what you said. These little things, it makes me think of that scripture that says a little leaven. The only time that we've even come close to that at our house, and we did come in the early days, we had lots of arguments about money money and fights was when I was so overbearing I know you can't imagine that happening that Sharon didn't feel like she had a vote Yeah, and she will tell you at about year seven of our marriage. She felt like she got her voice

Yeah, is the way she says it and she never lost it since I'll just tell you but her voice but I got my voice and um and yeah but it was she got her vote yeah and uh and and from then on she's kind of had two but um to make up for the last years but that's a thing if you don't feel like you're you have a uh a voice in the thing or you can't make a lot you can't you can't get there in a discussion, then one spouse tends to go off and hide stuff and do things and that's not an indication, it's not a money problem, that's a relationship problem. That's right.

That's right. A relationship problem. And it was at my house too, Sam. I'm just admitting, just like you, but I'm just old and it was a long time ago. That's the only difference, Sam. Don't be mad at us, we love you, that's why we're picking on you, but I would pick those things in my house because they're costing you over the scope of the rest of your life millions of dollars if you don't fix them.

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That's better help. H-E-L-P.com slash deloney. live from the headquarters of Ramsey Solutions, it's the Ramsey Show where we help people build wealth, do work that they love, and create actual amazing relationships. Jade Washaw, Ramsey Personality is my co-host today. Thank you for joining us America. We're glad you're here. Open phones at triple 8, 825-5225. That's triple 8, 825-5225.

Travis starts us off this hour in Toledo. Hi Travis, welcome to the Ramsey Show. Hi, thank you for taking my call. Sure, what's up? I have a negative balance every month and I'm kind of trying to figure out how to get positive again. Starting off kind of a little rough every single month after bills and everything. So your bank account is negative every month? Like you're overdrawn? Yep, I'm overdrawn. I actually almost on a weekly basis.

I'm overdrawn. I actually almost on a weekly basis. Hmm. Um, you know, it's funny that you talk about this. I literally just got off a webinar about this, this very thing. And at the end of the day, it's probably boiling down to budgeting issues. Do you have a budget? Um, I've been working on trying to do one. I recently got the Every Dollar App premium because it was able to track my stuff better, but I'm struggling like weekly with groceries. It's just with a family of five,

it's hard to keep it under a certain amount. Okay, so I want you to not try to do the budget. I want you to actually do it. I want you to go in there, put the numbers in there. That's step one. You and your wife. Yeah, have you actually filled out a budget for the month? No. No, I have not.

I haven't been able to figure it out. Okay, so that's step one. Matter of fact, I want you to go to everydollar.com slash budgeting when this call is over and I want you to sign up for the next webinar because if the issue is I've got it, is it I don't have time to know is it I'm not I don't have time to do it or I'm not prioritizing the time to do it I really

want you to prioritize the time sit down with your wife tonight start looking at it what's your take home pay take home is about 3,600 a month how much is your rent the mortgage is 560 a month. What's your car payment? Uh, car payment is a little high. It's four 41 a month. And five kids. Uh, three kids, wife that is unable to work due to, yes, five people. The three kids, the wife that is unable to work due to medical issues. What kind of medical issues?

Uh, it's actually like a hereditary degenerative disease where it takes like just getting worse as time goes on to so how old are your kiddos I got triplets four and a half years old okay so consumer debts kind of got me, you know. How much debt do you have? Not including the cars, about $26,000. Okay, here's the thing. We got to start at the other end. Groceries don't catch the slack. Groceries are the thing. So we're going to start with this. $3,600 at the top of the page you follow me yes minus the important things first the most important thing in your entire budget food

you have the money to buy food you may not have the money to do some other stuff but you have the money to buy food period end of story okay so 3600 minus food what are you spending on food I try to keep it around 180 bucks a week but Okay, so 3600 minus food. What are you all spending on food? I Try to keep it around 180 bucks a week, but I mean it's usually 180 bucks at 220 How often do you know how often do you eat out? Maybe once a week, but it's just me for lunch when I'm unable to pack I am going to a trade school at night either lunch or dinner. I go three nights a week

Okay, so if we take 800 bucks 700 bucks for your budget for food right for a month for a month that leaves us $2,900 so you can buy food foods first you got me yes I don't care if you pay anybody else until you feed your family. You follow me? Yes. Alright. Second thing is we pay $550 for shelter. Done. Right? Yep. And then we pay the light bill and the water bill. So we're warm, we're fed, and we're dry. Yes. This is survival first, you following me? Yes. We may not keep

this stupid car because it's freaking out of control. If we can't come up with a way to get it paid off soon, it's got to go. But for now we're going to pay the car payment too. Food, shelter, clothing, transportation and utilities are basic necessities of life. We call those the four walls. You do the four walls before you do anything else. Everyone else, let me tell you who's at the bottom of the freaking list. Student loan. How big is the student loan? I don't have one. Good. You know who's right at the bottom next to them? Stupid credit card companies. Because you know what they can do if you don't pay them? Nothing except destroy your credit and

sue you eventually eight years from now. But we're going to take care of them before we get there. Okay? They're at the bottom of the page. So let me just tell you, your emotional state and your sense of control over your destiny changes when your family is fed, the lights and water are paid, and the mortgage is is paid and you are in a different place emotionally and spiritually the rest of it's just a stupid game I'm behind on okay but right now it feels like life or death because you've got groceries as the last thing not the first thing yes by the time I pay groceries I'm overdraft no by the time you pay Masterard, oh wait we're not gonna go into overdraft so we're not paying MasterCard screw them.

Okay. For this month and then we've got to adjust our income. Now you've got to get your income up dude. What are you gonna do to get your income up? It goes up progressively every every six months as long as I keep up my my apprenticeship and everything. So you got six months ahead of you. What are we gonna do in the short term to get it up? You're going to trade school three nights a week. What are we doing on those other nights? Cause you're about to do some more work, dude.

Your family's hungry. Homework and doing whatever I can. Yeah. Around the house, housework and everything. Yeah, you're gonna probably not be doing as much of that. The laundry may pile up a little bit cause you gotta go make some money because 3600 bucks is tough So the way you the way you get this

Straight side up is you first take care of necessities and then two you get over the top of it and we're gonna cut expenses and add income and that creates margin and That will get you under control Travis so you you do have a very tight tight tough situation so something's got to go out of the expense lines and something's got to come up quickly in the income side because you know it's not easy you got a really nice low house payment it's the best thing in this whole story right now so you got it you got a fixable situation but the faster you get the income up and

the out go down the faster the pain is gonna leave okay does that make sense to you yeah absolutely I was just nervous about missing credit card payment I want to give you permission to feed your children before you pay MasterCard yeah I understand okay when you get that straight in your head, all of a sudden it changes everything. Because if everybody's fed and the lights are done and the water's paid and the house payment's paid, I mean, we live to fight another day. But if we pay MasterCard and then we don't have enough money to feed the triplets, dad gum, that's not fun.

Been there, done that. That terrorizes your butt, doesn't it? Yes it fun. Been there, done that. That terrorizes your butt, doesn't it? Yes it does. Been there, done that. Everydollar.com slash budgeting sign up for one of Jade's webinars. She'll walk you through what we just did. This is the Ramsey Show. There's a time in your life and in the baby steps for renting, but you don't want to do it forever because when you rent, you're still paying for a mortgage,

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5 you jump in we'll talk about your life and your money Jared is with us in Coeur d'Alene Idaho Idaho. Hi Jared, welcome to the Ramsey Show. Hi guys. I have a question regarding cost of living raises compared to inflation. I personally enjoy giving my customers the cheapest service available yet to keep up with inflation we have to give raises. How do those two things mesh together and is there anything we can do to battle the inflation as a business owner? No, not, you know, your job is not the macro economy. Your job is to run your business and that means take care of your family and the families that you pay. That's your job. The macro economy discussion is that when things go up, when the cost of a loaf of bread, the cost of a service, the cost

of a pack of hot dogs, whatever it is you want to call it, a gallon of gas, when the cost of that goes up, one of the reasons the cost of the item has gone up to the consumer when you raise your prices in business is because their cost of goods has gone up. If their cost of goods are, you know, for instance, if I make a, if we print a book, a total money makeover, a baby steps millionaires book, well the cost of paper has gone up 30% in the last 24 months. Alright? And so that's going to be built into my pricing on the next book that we put out. Agreed? Agreed.

If the cost of that book includes a dock worker to do the shipping and a truck driver to deliver it and both of those people get paid more by me to bring me that book, then now the cost of that book has gone up again. The paper cost went up and the labor cost associated with delivering that went up. And so anytime you pay people more inside your business, you have to absorb that in price changes. And so price increases are always, not always, but they have to do a price increase to stay open otherwise you're not profitable to cover your actual cost of goods and cost of labor. You don't have any margin, you're in a business.

And when the cost of labor goes up due to cost of living raises or any other raises, just a shortage of workers. An example of that is, you know, we told, when America got Faucied, we told all of the service industry, all the waiters and the people that make your beds at the hotel and the people in the service world that they weren't essential. And we sent them home, told them they couldn't work. If you're a restaurant worker, you're not allowed to work. And in some places we did that for a month, other places we did it for a year. When you tell people they're not essential and then you want them to come back, they remember how you pissed on them last time. And so guess

what? You want to hire somebody in the service world today? Pre-COVID, you might have done that for $10. Now you might be looking at $25 because there's a shortage of workers in those industries still to this day post-COVID. And so you know the economic implications of COVID are still shaking out. It created a labor disruption and a labor price change. And we've seen it in other areas of labor as well. Our cost of what we pay someone to work here at Ramsey has changed in some of the areas pretty dramatically. And some of the we do comp studies to see where they're charging so yeah, then that means that if I'm gonna Be profitable I have to raise a price somewhere

Yeah, so that person that buys that pays more and that's called inflation Yeah, you don't and you don't have to feel guilty about it. It's just part of no part of it, but I mean What what he's pointing out and I think it's good for people to hear out there, is when you're walking around with a little picket in your hand and you're saying, I demand $15, I demand $22, where I was making $10 to work at McDonald's, then the cost of McDonald's goes up to cover your idea of you being worth more Then you don't get to bitch about paying more for stuff Because you caused it

That's what I'm talking that's what he's talking about and so you can't go I don't like the fact your fast food prices all went up and yet you're walking around Demanding that the cost of labor at a fast food place go almost freaking double. Yeah. And then and then can't fit you know of course you know it's all cosmic. I mean that's why I tell that's what works because these businesses are not evil and greedy but they also are not not for profit. That's right. They have to make a profit to stay open and oh by the way even nonprofits are profitable. A nonprofit that isn't profitable closes.

Out of business. It's out of business. It's gone. Nonprofit is not an not an actual dollar amount of they didn't make more than they spent. It's just an accounting entry and an IRS designation. But they actually, you know, your church has to take in more than it puts out, otherwise it closes. So nonprofits are profitable. Hello. And you know, and so if the cost of electricity at your church goes up, then there you go. I mean, you're gonna, you're gonna, if the cost of staffing at your church goes up because then there you go. I mean, you're gonna, if the cost of staffing

at your church goes up, because you're competing in the marketplace for that creative position at the church, that music director at the church, you're competing with the marketplace, then it costs more to operate that organization. And some organizations haven't survived that. That's right. So yeah, inflation includes cost of labor. And when you've had a labor disruption like the quarantines created,

we haven't seen, we've seen most of the end of it, but we haven't seen the complete end of it yet. It will calm down and smooth out eventually. But even a little 3%, 5% cost living raise then gets built into the thing. And you can't really, in business, you can't really in business I can't stand against that and go I just refuse to raise my prices well you refuse to stay in business you know that's just kind of dumb so so the next book you buy from us get ready the price is gonna be more hello you know those ten dollar sales we run 1250 they're to be $12.50. They're about done, I'm just saying. We're about done with a $10 sale

because it's $10 sales about backward. It's about upside down now and I'm about done with it. So that was helpful for a while, but been doing them for 10 years and, you know, cost of paper kicked my butt and so I'm gonna pass on the butt kicking. That's how this works. That's how it works, y'all.

I mean, it's just, this is how it is. So if you think it's otherwise, then you're being naive. But it's interesting to me that we teach so little civics and so little economics today that people can't make a basic connection between. They don't know it's connected, Dave. I demand to be paid more, but then on the other hand, I'm gonna bitch about inflation.

Yeah, no, I don't think people realize. When you freaking caused it. That you're the essence of it. I mean, I can't believe the cost of bread. Well it cost about twice the labor to put the bread on the shelf now. That's right. That it did.

So look, I mean almost double. It's crazy and you can't even get the help. Can't get people to show up. Cause they're sitting at home in their other's basement playing Nintendo. It's nuts. So now we don't have that problem at Ramsey because we're not dealing with that level of labor. We're dealing with a high class you know generally here. So we got a whole different whole different set of things that we deal with that are wonderful by and large. But yeah it's a

great discussion Jared and you know the problem was you pulled the string on the monkey so you got you got the soapbox? You got the soapbox response because I can go on up for days about this, but it is interesting how ignorant Yeah, you know some of this wealthy quality stuff is and all this stuff They just they're ignorant of the connection the unintended consequences of their little shallow ideas. Yeah, absolutely and where they're going I'm glad that he pulled the string. Yeah, well, you just, ever so often, I have to get out of my system.

Yeah. We will look back in time and say, Fauci, wow, just wow. This is the Ramsey Show. Hey, listen up. Everyone is at risk of identity theft. I don't care if you're a hermit living off the grid listening to the show on a battery powered radio. All of your data collected by every company you've ever done business with lives online.

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Sam is in Daytona Beach. Hi Sam, welcome to the Ramsey Show. Hi Dave, hi Jade. Thanks so much for taking my call today. I appreciate it. Sure. What's up? Okay.

So I've got, it's a complicated situation, but I'm going to try and simplify it as easy as best as possible for you guys so I can just on your time. So basically I have, I'm completely debt free. I've never had any debt. Very thankful to you for that. When I was 18 years old, I took FPU before I went to college. Wow. And actually graduated fully debt free.

And so it was the best decision I ever made. So never known any debt. I have a fully funded emergency fund, but about a year ago I was given a sum of money from a family member. Now the sum of money that it was, that I was given, it was kind of given with the pretext of the reason why they had this money was for a wedding or maybe to invest into, to give me to give for like my first property that I would own.

But since kind of none of those things had happened, they decided, I'm just going to give it to you now. Um, and I want you to do something with it. So in regards to like investing or et cetera, et cetera, my problem is, so it was $20,000. Okay. Cool. That's awesome. Yeah.

So, um, so I guess my next issue was more, um, I kind of don't know what to do in the sense of, I don't know much in regards to investments. Um, and since it was kind of sprung on me, uh, especially I think with the attachment of going, it was going to be for maybe a wedding or maybe a house deposit, but that kind of hasn't happened. So do you not own a home? I'm a bit, are you renting? I don't know You're renting

Are you opposed to saving this money? I mean you said that initially it was maybe for a wedding maybe for a down payment Why wouldn't you set it aside and add to it as a down payment? Well, I guess that's I guess that's part of my question of just going, is that the best thing to do? Because I actually have no problem with it. I think what I've been struggling with is because from this family member, it was kind of given that I'm giving you this money because I want you to do something

with it in regards to investing it rather than it just sitting in my bank account doing nothing. Well, it wouldn't be doing nothing. I mean you can put it in a mutual fund and add to that mutual fund and make that your down payment fund two years from now, three years from now. Yeah, yeah, okay. Just go to RamseySolutions.com and click on Smart Vestor and you'll find a group of Smart Vestor pros in the Daytona Beach area.

You can choose from among them which one you would like to work with. Yeah. And you want someone with the heart of a teacher because it sounds like you're new to investing and they'll sit down and teach you about investing only after you have learned and feel competent and comfortable do you invest. And don't ever invest in something you don't understand. But if I woke up in your shoes, and if I had given you that gift with that guideline, I would be happy with you using some basic mutual funds

to let that be parked in until, and add some to it as you go along for a future down payment. Yeah, plan on having it in there five years or so. That's what I'd say. So it has some time to go in the right direction. Yeah, you should be able to do great with it and that should be excellent. Easy. Jill is with us in Phoenix. If I push the right button, Jill's there. Hi, Jill's with us in Phoenix. Hi, Jill, how are you? I I'm well thank you so much. Thanks for taking my call. Sure, what's up? So I'm calling, I've listened to the

show off and on for years but I got really serious about six months ago and I so I I'm gonna admit at the out start that I I know I've messed up, but, um, I have about a hundred thousand dollars of debt with my ex husband. I'm currently married. Um, my current husband and I make good money. Um, because this debt felt so overwhelming, I kind of shoved it to the side. We paid off all of our other debts. Um, and I started saving for a house. I went to basically, I skipped partial step two and went to step three and we started saying we paid us So all your you and your current husband paid off all your other

Pre-measured debts from the other marriage except this debt and what is this debt? How big is it? It's a hundred thousand dollars and who's it oh to and the IRS Okay, and how did you end up a hundred thousand dollars and who should owe to and the IRS. Oh okay and how did you end up a hundred thousand dollars in debt to the IRS? So my former husband owned a company, tax issues got complicated, life was really overwhelming, he didn't want to deal with it, I didn't know how to deal with it so we just didn't file seven years of taxes yeah so when we got divorced did you have an income during that time you personally I did I did and you didn't file taxes on that income so did you file taxes on your income during the seven years no

no okay so his business was complicated you didn't file on on your income during the seven years? No. No. Okay. So his business was complicated. You didn't file on it. And how did the hundred thousand dollars come about? Who decided what that was? So when we were getting divorced we actually hired a CPA, which is what we should have done in the first place. And they went through, filed all of our taxes and let us know, you know, what we owed as well as, uh, initially interest and penalties. And of course, why in the world did you file filing jointly and while you're going through a divorce, why didn't you file separately?

You would have only been responsible for the taxes on your income. The judge required it, unfortunately. I know. I don't believe you I think your attorney mailed it in judges that's not it's not logical the judge required you file your freaking taxes I don't I don't argue that but he didn't file you he didn't require you you were as liable that you had to pay taxes on his business that he didn't file on.

So because the judge basically said, well, you benefited from the income while you were married, so you are both jointly and separately liable and you have to file together. It was very, very frustrating. So the ex, I have a question about your ex husband. Is he going to, if you both said, all right, it's a hundred thousand dollars, I pay 50, you pay 50. Is he gonna, is he gonna do it?

No, it's joint and several. She's liable for all of it until it's all paid. Through the divorce, um, he is obligated to pay 60% and I'm obligated to pay 40. And that's kind of part of the question is, no, he's not trying to pay the 40,000. No, he's not. The divorce decree says that, but the IRS says you owe a hundred. Correct. The IRS will not acknowledge that. Exactly. They don't have to pay the a hundred and I can take him back to court and sue him for that portion.

Yeah. Good luck with that. I know and honestly, I It wasn't until I called a smart investor pro because I started saving for a house and I had my emergency funders saving for a house And your smart investor pro was like no no girl. You got to go back to step two You have to deal with this. Yes, you got to deal with it. How much money do you have laying around? So I have $55,000. Part of that was money that I got from my son passing away and part of that is money we've saved. Okay I got to tell you there's a couple courses you can go through here. One course you can go through is you can

pay the hundred thousand and hope you get his 40 back out of him. And I wouldn't give you much hope for that. And you move on with your life. That's a fairly easy course to take. That's the clean course. That's the easy one. Okay. Here's the one I would do though. And it's the hard one. Okay. Um, I would hire a another CPA or rather a tax attorney and I would go and go back before the probate courts where the divorce was done and challenge that judge's ruling and refile under the innocent spouse provision because I don't think you're liable for his taxes and you're innocent of

his. It's a good deal. Ask your tax attorney about the innocent spouse provision. This is where a spouse just signs off on everything and the other spouse is running the business and they just sign off on it. They don't get half the thing. They get out scot-free. And you'd be liable for your income,

the taxes on your income during that seven years, but not on the business's income. And I'm challenging that judge's ruling if I'm you. It's gonna cost you 10 grand to do this. I was gonna say, how much would you spend to do that? Yeah, but I would do it. This is the Ramsey Show. ["Ramsey Show Theme Song"]

Listen, I know a lot of you would rather watch paint dry in slow motion than file your taxes. But thankfully, you don't have to dread filing when you've got Ramsey SmartTax. It comes packed with everything you need to file online before the big deadline. That means all major federal forms and deductions are covered with no hidden fees. Plus, with Ramsey SmartTax, you can save up to 70% compared to other tax software out there. It's a no brainer. Just go to ramseysolutions.com slash smart tax and see how simple tax filing can be.

That's ramseysolutions.com slash smart tax. ["Ramsey's Smart Tax Theme"] Jade Walshaw, Ramsey personality, is my co-host today. Hey guys, if you didn't know, I love talking to you about money. We also help small businesses, about 10,000 of them across America. And we have a podcast called On Trade Leadership. It was actually the very first podcast we ever did at Ramsey. And it was run by other Ramsey personalities and interview style and stuff over the years.

I took it over about two years ago and started taking calls from small business people about leadership and small business questions. It's called Entrez Leadership Podcast. It's very popular in that world. And if you want to be part of that and you run a small business, you got a question about it, you can call and leave us a voicemail there at 844-944-1070, 844-944-1070, or you can go to Entrezleadership.com slash ask, leave your question and our team will get you set up to be a caller on there. Also a reminder that this is the last portion of the show that is broadcast over YouTube and podcast there's another portion coming up that is on the Ramsey Network app and

on some talk radio stations around America and so if you want the Ramsey Network app is completely free so you can finish this version of the show video or audio or both and just jump over the Ramsey Network app it's completely free there's all kinds of stuff you can do there like search calls by subject find out what we got to say about any certain thing type it in you can type in an email and send it to us we'll answer it here on the air we do a lot of stuff that's really fun over on the Ramsey Network app so be sure you check all that out Ryan is with us in Hartford, Connecticut. Hey Ryan, welcome to the Ramsey Show. Hey, how are you guys? Sure, what's up? Hey, so I have a bit of a problem.

I never thought this was going to happen. So in 2018, my father passed away and he left me and my brother a 401k plan. That's for five years. I got a check in the mail this morning for about $245,000. The original account balance was about $300,000 and what's happening is they gave me the check and I have to pay the IRS that $55,000 difference from the $300,000 to $245,000. I called them and asked them if they could roll it over and they said once they issued the check There's nothing that can be done who told them to issue the check Not me

apparently the company my father for I didn't either didn't read. I'm sorry. I didn't I didn't hear you you cut out apparently the company your father works for what? Yeah, they, um, they have a five year plan, I guess, uh, for the best benefit that if it's not rolled over to something else within five years, they must close the account and just issue a checkout. It was super confusing. The way they explained it to me,

I was on the phone with them for an hour and a half this morning with my 401k company and they pretty much said, once we issue the check, there's nothing that can be done. There was no work around. Yeah, there is. They had until this, that's what I'm saying. Yeah, there is. Because I'm sure you don't have an extra 55

grand laying around. No. So the way it worked is my account balance is 300,000. It started like 215 and over the years I added up to 300. They issued me a check for $245,000. They already took the money out and sent it to the IRS and issued me the difference.

Yeah, they have to withhold 20%, that's the rule. If you take a withdrawal. But this is an involuntary withdrawal without any contact to you or anything, which is completely at a minimum unprofessional. What caused you to wait the five years as opposed to rolling it over? Because the 401k plan my father was invested in had really good options. All of those same options exist in the open market. Yeah and

I have my own personal investment accounts and I do it with that as well The you know, it's you know, don't rock the boat if the boat shouldn't be rocked So the way I figured is the 401k plan was perfectly fine I kept it in there just because the investment options were fine. It was just it's a retirement account I was treating it like a retirement account. I wasn't gonna touch it till I was 65. I'm 30 now. Yeah, what do you like? there was I make about 110,000 a year. And I also own a small business that I make about the same. Okay. Under the Secure Act that Biden passed, you have 10 years to liquidate the 401k completely.

You should have been liquidating it at one tenth a year from the time the Secure Act passed two years ago and you've not been doing that. So I didn't know about that. I know. So I'm trying to figure out how that plays into this and how hardcore. All right let's pretend that we figure out a way to lean on them and they cancel the check and put the money back into the 401k so that you can roll it over within 30 days, which is what they should do if they're people of integrity. This is a problem. It's not technically unethical, it's just so nasty that it ought to be unethical What they're gonna cost you it's gonna cost you You know twenty thirty thousand bucks and that you don't have it cost me two years

it cost me two whole years of of Gains because of this no way on that is like I never thought I would be upset to get a huge check in the mail But I did and well, I'm upset because I should have had it rolled over it should have been you sure yeah all right so here's what I'm gonna suggest you do and I don't think it'll work but it's the only thing I can think of all right okay go to RamseySolutions.com and click on SmartVestor and find a SmartVestor Pro in your area that you like after talking to them on the phone. They may be able to call on your behalf

and talk them into undoing this and immediately rolling it and they'll help you with the rollover. Okay. They may be able to cite something that a regulation or something that I'm not aware of because this is when you started talking I thought you were going to tell me this was a tiny little 401k like a ten thousand dollar and they were just cleaning out all the little ones sometimes they do that when a company sells or in the event of an inherited 401k like you've got. But this is huge. This is a lot of money and so this is, with no notification at all, this is particularly nasty. And so if they had simply notified you, you could have quickly rolled it over and avoided this. and they said they notified me but I you didn't want they didn't notify you

my account they said they did but I never got enough of a good so you never seen evidence of that is really this one yeah ask ask them to prove that they did. Okay. So I don't think you've got a basis for suing them, but I'd be tempted to. I really would. I mean, because you're talking about $25,000 or $30,000 cost here that is unnecessary. $55,000 they took out. No, it's the taxes on $55,000. The $55,000 is going to be taxed, not penalized. No, when I got my experiment, like the summary of what my original account balance was $300,000, they cut me a check for $245,000. I understand.

They took $55,000, they sent it to the federal government as tax withholding and it's not all taxable. So because the entire, because you're going to roll the rest of this. If you take the check in your hand and you roll it to a 401k, the only harm that's going to come to you is the taxes on the $55,000, which is going to be $15,000 or $20,000. Oh, so I'm going to have to pay another fifteen grand. Honey you haven't paid anything yet. Okay they withheld your money fifty five thousand and sent it to the federal government. Then what you do is you file a tax return of what is actually due and what will be actually due is not fifty five thousand it'll only be the

taxes on fifty five thousand if you take them check in your hand and put it into an IRA traditional within sixty days of rent right now so you need to get on the phone with smart Vestor Pro right now because at least we need to do that okay I will but so the worst case scenario if you follow through on what I just told you is taxes on $55,000 because the government has 55,000 of your money as if you're gonna get taxed on the whole thing and you're not Okay, because you're gonna roll the portion in your hand Which is 80% of it into a traditional to keep you from getting taxed

You got 60 days to do that from the time withdrawal. So folks, you can pull your money out of 401k. They have to withhold 20%, but you have to put 100% into an account within 60 days to avoid taxation. That's what the problem is. He can't do that because they have already sent it. But he can't do that because they got 55 of his money over at the IRS now. And so if you just take the, take the 55, then you're're gonna pay some taxes, but not 55. So there we go. Woo. This is the Ramsey Show.

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