The Ramsey Show - Face Your Financial Challenges Head On (Don’t Let Them Sneak Up on You)

Episode Date: August 7, 2024

📱Finish today's episode for free in the Ramsey Network app. Dave Ramsey & Jade Warshaw answer your questions and discuss: "Paying off debt is slowing my business," "Should I sell my mom's house and kick my brother out?" "I have nothing in retirement, what can I do?" "We've lost a ton of money with no end in sight," "Should I let my kids' cars get repossessed?" Support Our Sponsors: Christian Healthcare Ministries: Find out more at https://info.chministries.org/dave-ramsey Zander Insurance: Go to zander.com or call 800-356-4282 for a fast and easy quote today. The Wellness Company: urgentcarekit.com/ramsey for 15% off medical emergency kit Health Trust Financial: Discover Top Health Insurance Plans, All in One Place. Next Steps 📞 Have a question for the show? Call 888-825-5225 Weekdays from 2-5pm ET or click here! 📄 Will an online will work for you? ❤️ Get $100 off tickets to Money & Marriage Getaway. 💸Enter The Ramsey Cash Giveaway for a chance to win $10,000! 📚 Shop the $12 Sale to get life-changing tools to help you make real progress! 💵 Start your free budget today. Download the EveryDollar app! Listen to more from Ramsey Network 🎙️ The Ramsey Show   🧠 The Dr. John Delony Show 🍸 Smart Money Happy Hour 💡 The Rachel Cruze Show 💸 The Ramsey Show Highlights 💰 George Kamel 💼 The Ken Coleman Show 📈 EntreLeadership Learn more about your ad choices. https://www.megaphone.fm/adchoices Ramsey Solutions Privacy Policy

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 Walsh, our number one best-selling author, Ramsey Personalities, my co-host today. Open phones at 888-825-5225. You jump in. We'll talk about your life and your money. Kurt starts us in New Jersey. Hey, Kurt.

What's up? Hi. How's it going, Dave? Better than I deserve, man. How can I help? I have a little bit of a business question. So I have 57K in personal debt. I started my business less than a year ago. I've been pulling out everything that I make from the business, all my profits,

in order to pay off my personal debt. I have no business debt. I was just kind of wondering, I feel like I'm not able to grow the business because I don't have retained earnings. I don't feel comfortable hiring somebody without retained earnings. And I was wondering, too, if I should keep some retained earnings just to maintain overhead. What would you suggest in terms of how I should go about that? Yeah, I would.

I would. How much have you pulled out of the business in a year? What are you making? So year-to-date, I made about $80K. Way to go. I would say my profit margin is about 80%. Good for you. I've been pulling out everything.

A little bit of a tidbit, too, is I have a four-week-old right now. Oh, wow. That's fun. Congratulations. What kind of business did you open? Physical therapy. I'm a physical therapist. Good for you. Yeah. Okay. What we teach in Entree Leadership is that you pay yourself a living wage or you pay yourself a salary, amount that you're comfortable with that you can make progress on the the goals at home which would include debt um you don't have any debt at the business so you could just say i'm going to take a percentage of profit 10 15 20 something like that and every month and hold that as retained earnings and take everything else home and that way your retained earnings grow as fast as your they grow as a percentage of profits so as your profits grow your retained earnings grow okay yeah that makes me feel a lot

more comfortable then yeah i mean if you had eight thousand bucks laying over there because you did ten percent or you had sixteen thousand laid over there because you did twenty percent you've been really really good shape yeah so but it's definitely more than the 1000 that would keep in for exactly security exactly this is the different formula because it's business that we're dealing with but yeah that's what we teach entree leaders it's what we do at ramsey and we laughingly call it the sharon fund because i was draining everything out of here and then griping about cash flow problems all the time. And Sharon's like, well, you're not even doing what you teach. You don't have an emergency fund. You goober, you're a hypocrite. And I'm like, oh, God, she's right again. So we call it the Sharon fund when we first started doing it. And so, you know, it's it's we've been

taking a percentage of profits from day from the day that I discovered that my wife was brilliant you know home so yeah well when Sam and I started our business it was a similar thing we had we still had about 240 some odd thousand dollars that we were paying off and I mean we drained all the profit to pay it off and the most painful part was you know you're taking this payroll and then you're turning around paying taxes on it and then you're using it to pay off all this debt and but for us it felt a little different because it was just the two of us at the time we had very low overhead there wasn't a lot of risk involved and so yeah and make sure whatever you're taking home that you're withholding on it so you can do your quarterly estimates you don't want to get behind with the KGB I mean thes yeah no yeah yeah definitely yeah okay so as long as you're doing that yeah i just take

pick a percentage i don't care my recommendation would be 10 to 20 somewhere in that range of net profits and each month when you close your books go boom gonna set that aside over here take everything else home and attack the 57 and get done with it and you know be able to buy diapers for the four-week-old everything works very cool good stuff man congratulations sound like you got it going i'm proud of you alan's in fort worth hey alan how are you oh i'm doing well sir thank you so much for taking my call sure how can we help well so uh here's the detail um so my wife and i were in baby step two and uh we're just trying to figure out, when does it make sense to pause baby step two in order to save for a beater car?

What are you talking about? You don't have a car, or what's the situation? So the situation is I have a car now. We've got a big, well, not a big loan on it. It's $24,000. a car now got a big well not a big loan on it's twenty four thousand dollars and you know we're i guess we're trying to do the whole gazelle intense thing and i'm just thinking well oh if you got a beater you'd sell the 24 yes sir okay what's your household uh so all said uh so about six thousand months for my primary job i have a secondary job i6,000 a month for my primary job. I have a secondary job.

I get maybe $500 a month in VA disability. So around $7,500 a month as my take-home. Okay. All right. And so you have that car, and it's worth, is it worth around the $24,000, or what's it worth? It is. So it's, I looked at Kelly Blue Book, and right now it looks like it's selling for about $22,500. Okay, what's the other car? That's it. That's all. I mean, that's my car.

You have one car? I'm sorry, we have another car. What's the other car? Honda Civic. Okay, what's it worth? Well, that one's probably worth $8,000. It's an older car. There's two rules of thumb we use when someone asks this question. Number one, don't have vehicles ever in your life that have motors and wheels,

anything with a motor or a wheel, added together that equal more than about half your annual income because you have too much tied up in things going down in value. Agreed? You're not violating that one. Okay. And the second one is, can we be debt-free everything with the house in around two years? So we know we got 24 in debt.

What other debt have you got? About 3,000 credit card debt. That's all the debt. You like the car. It is a good car. Then pay it off. Okay. You can be debt-free inside of two years.

Easy. Probably about 18 months or less. You're making 90. We need to pay off 25 grand, 26 grand. You can do that. Okay. Yeah, I agree. All right.

So you can do it inside of two years, and the total is less than a half your annual income. That's the two tests that we use, means test if you will to do that and folks let me i tell you that's not a um biblical thing in terms of it's not in the bible because yeah um i mean the only thing that's in the bible is the honda accord because jesus said they were all in one accord but um but other none of the rest of them are in the bible so you just add it all up and uh the problem is that we all in america love cars uh some people love cars because they're redneck like me and they want a muffler some people like a battery called a tesla some people like like rachel and george

they want to catch fire to themselves and um and then some people like my wife likes a nice car because she thinks it's a large purse. And so but that, you know, we like cars in America and the stupid things go down in value. And when you take 60 or 70 thousand dollars and you turn it into ten thousand dollars, this is not a wealth building methodology and and it's the largest thing americans buy that goes down in value because you are what you drive in america it's such an identity piece and man it's um i never thought about that george is a battery you are what you drive yeah i'm a loud muffler so who knew that's funny yeah but the uh um neighbor said to me, I know when you go to work. So how do you know when I go to work? He goes, I can hear it.

So that's who I'm hearing driving? Driving down the road? Oh, my gosh. Good to know. Once a redneck, always a redneck. This is The Ramsey Show. Hey, when you go against what society thinks is, quote, normal, like avoiding debt, for example, it might seem weird at first, and that is totally okay. We want you to be weird if that means doing things intentionally, including how you spend your health care dollars.

And one way to be intentional is with Christian Healthcare Ministries. CHM isn't health insurance. They're a health cost-sharing ministry that's helped hundreds of thousands of families like yours take care of healthcare costs without sacrificing their freedom. Find out more and join at chministries.org slash budget. That's chministries.org slash budget. That's chministries.org slash budget. Jade Walshaw, Ramsey Personality, is my co-host today. Thank you for joining us, guys.

We appreciate you being with us. Hey, the best way to get a sense of power, a sense of dignity, a sense of sustainability with your money is by telling it what to do instead of wondering where it went. It's called a budget. When you write down or you use every dollar of the budgeting app and have a plan for your money every month, you will feel like you got a raise because you've been wasting so much with this organization and chaos. Me too. I used to do that too. I know exactly how it feels. And I've done financial coaching and counseling for 35 years and almost, and Jade has too, not for 35 years, but she's done a bunch of it.

And almost every time we sit down with someone, Jade, and they do their budget, they have this aha moment like, wow, I've got some money. It's a big deal. So out the every dollar app for your budgeting it's the world's best budgeting app for sure it's free in the app store or google play and you can go to every dollar.com and get it there as well so check it out we've got tens of millions of people tens of millions of people using this every day. It's pretty cool. So thank you guys that are using it.

We're glad it's helpful to you. That's what we want to be is helpful. And just, man, pretty incredible. Andrew is with us in Lexington, Kentucky. Hi, Andrew. How are you? Hi, Dave. How are you?

Better than I deserve. What's up? Hey. Hi, Dave. How are you? Better than I deserve. What's up? Hey, so how do I pay off my debt if a good portion, over half of my income, goes to child support and taxes? How many kids do you have? I have three total. Two are on child support. Well, if you have kids, you do have to pay for them and so that's just part of i think that's part of normal life if you have kids in a family

same thing with the taxes and so in this case it's really just about the math right if you want to go faster usually the solution is you got to bring in more income and more money. So what are you bringing in right now? Uh, I, I average about gross, um, probably about over three, but I only bring in probably about, um, maybe 12 to 15 a month. Yes. 1500 a month. Okay. Something's wrong with that because in Kentucky, two children, child support is 25%. Well, I have two from two separate moms.

Okay. Oh, so you got 20% each? My daughter, when we went to court and stuff, they did not properly send me paperwork. And the lawyer I had at the time before I found a different lawyer was not in contact with the child support office. So I ended up support that I have. Okay. Well, I mean, there's two things we can do here to work on this. Understanding that what Jade said is proper,

and I assume you agree with that that you need to pay for your kids there's no question about that but how am i how can i mathematically make this work so there is a legal amount in every state i do not know if it's two children from two different people if it changes it but the max in kentucky is 25 for, okay? And if you're being charged more than that, you can go back before child services, back before the judge and have it set up properly. And so make sure you're getting charged the right amount and that you're doing that willingly and gladly

because you're a good man and you want to take care of your kids, okay? But if you're being overcharged because of a screw-up, well, go back and have the screw-up fixed. It's not chiseled in stone. You just got to get back before the judge and go, Your Honor, here's what I've got. Here's my budget. Help me with this.

Tell me what I'm supposed to do. I'm not trying to dodge here, but I also can't breathe. And so I want to sit down and look at that. And so you've got to get back and, and reset this to what it should legally. And for that matter, morally be then the other side of the equation is what Jade said. And let's start talking about how we can increase your income. What can you do instead of making 3000 a month to make 6,000 a month? And that may be side hustles. It may be career change, it may be something different, but one of the things we see, Andrew, often, it's almost every single debt-free scream that comes

in here and is on the stage had an increase in income during the time they're getting out of debt. It's vital, because the two things that you can do is you can cut expenses, or, and you can increase your income. So there comes a point where you can do is you can cut expenses or or and you can increase your income so there comes a point where you can only cut expenses so much and then you say okay what else can i do and then it's okay i'm increasing my income i'm picking up a side hustle i'm taking overtime anything that will pay me that is legal and moral i'm gonna do that to get money serious money yeah i mean we had a young lady uh in her 20s that paid off doing a debt-free screen just the other day.

Yeah. Were you on with me? Yes. I will never forget. She attended bar. $9,000 a month. Single mom. Yep.

Bartending. Beating alcohol-ism. Yeah. And doing 75 hard at the same time. Yeah. Rockstar. And $9,000 a month. But she's working 12-hour days the same time. Yeah. Rockstar. And, you know, $9,000 a month. But she's working 12-hour days at the bar.

You know. Yeah. And that's hard work, by the way, if you didn't know. So, wow. So I'm not, I don't know, Andrea, but Jade's right. There's only two ends of the equation. I'd work both of them. And that's be paying the proper amount of child support by law.

And if you need to do an appearance before the judge in order to get that fixed that's there's nothing wrong with that um and then uh and then increase your income you know lower your expenses increase your income and uh that's what we're doing so good question sir we appreciate you joining us open phones at 888-825-5225. You jump in. We'll talk about your life and your money. I will tell you this. Something he brought up, we hear a lot.

And not necessarily exactly the way that he said it, and I don't know his exact situation. But here's the thing. If you know there is a thing out there coming at you, you have a former landlord that says you owe them money. That's a thing that's laying out there. You have a repossessed car. It's a thing that's laying out there. They're going to come at you. You've got an old credit card from

five years ago. You've not paid it. They've not called you, but you've done nothing about it. It's coming at you. You're going through a divorce, and you know when you go through a divorce and you have children, 100% of the time there's a child support meeting. That's coming at you. When you know these things are coming at you one of the things i've observed is that if you don't go headlong into it and face it and handle it before it comes to you it costs you twice as much if you wait till the former landlord sues you if you wait till the old credit card pops up it's going to pop up right about the time you're trying to buy a house or something

or about the time you're getting engaged or some other kind of crap these things have a high rate of resurrection they come back to life these are debt zombies yeah you gotta be proactive and you you know if you don't go find the debt zombie and handle it. So don't tell me, well, they didn't tell me about child support. Dude, you knew about child support. You'd go down there and fix it. 100%. Instead, they jacked you up because you weren't there.

Yeah, you can't wait for somebody else to tell you. Because you just didn't wander down the court and make sure it was taken care of. Yeah. You've got to wander down there and take care of this stuff, boys and girls. You know, and it's like, well, I didn't know. I didn know i didn't know i had a yes you knew you had a credit card debt you did know that you know you weren't that drunk for that long eventually you sobered up and go yeah i ran the balance up on that thing you know i mean you've got you do know it happened and so this stuff it it you know it comes back to life and it's 10x worse than if you had gone and found it and taken care of it yourself don't let these

things lay out there in the in the muck because when they come back to life they're the swamp monster monster and they're they're three times more powerful. You've got to face these things head on. So when you don't take care of business, business will take care of your butt. That's what I'm saying. This is The Ramsey Show. Okay, here's the hard truth. Your investment dollars could be winding up in the pockets of companies that hold positions you don't agree with. People are unknowingly putting money into tech giants and household brands that don't match up with their core values. But here's good news. Timothy Plan is at the forefront of biblically responsible

investing. That means Timothy Plan uses a strategy that lets investors chase competitive returns while staying rock solid in their beliefs. So if you're ready to invest with a clean conscience, it's time to check out Timothy Plan. Request information at timothyplan.com to learn more or contact your financial advisor today to see if Timothy Plan is right for you. timothyplan.com. Investing includes risk, including possible loss of principal. Before investing, carefully consider a fund's investment objective, risk, charges, and expenses contained in the prospectus or summary prospectus available at timothyplan.com. Read carefully before investing. Mutual funds distributed by Timothy Partners LTD and ETFs distributed by Forsyth Fund Services LLC. Jade Walshaw, Ramsey Personality, is my co-host today in the lobby of Ramsey Solutions. On the debt free stage, Kevin and Siobhan are with us.

Hey, guys, how are you? Hi, Dave. Hi, Dave. Great. Welcome, welcome. Where do you guys live? Cincinnati, Ohio. Wow.

Welcome to Nashville. And how much debt have you two paid off? $84,000. Wow. How long did this take? 28 months. Good for you. And your range of income during that time? $158,000 to $200,000. Cool. What do y'all do for a living? I'm in engineering operations. And I am a stay-at-home mom. I homeschool my kids and I've done some side jobs

with just like our homeschooling group teaching. Good you well done what kind of debt was this 84k david was our house you paid off your house looking at weird people and we were saying that before the political people were saying it i'm just saying all right hey guys way to go congratulations thank you i love it how what's the house worth 475475,000. I love it. How old are you two? 43. We're both 43. 43-year-old weirdos. Wow. A paid-for house.

How much in your nest egg in your retirement accounts and so forth? $625,000. Uh-oh. Baby Steps Millionaires, too. Nice. At 43. Boom, boom. Look at you.

How's that feel? I never thought I would be here. It's amazing. Wow. Life-changing. Congratulations. Pr proud of y'all excellent so tell us your story what was your I've had it moment what turned this whole thing around how'd you get connected to us I've been connected to you for about a decade I think our story starts back in 2007 we were just married I was living we were living up in Detroit area and I was working the automotive industry and. And if you remember 2007, 2008, wasn't a real great time. Um, up in Detroit, uh, the

company that I worked for was actually sold, uh, to a leveraged buyout company. Uh, Mallon had just been born and May 3rd. And that was the same day we decided we need to get out of here. And we actually put our house on the market the day she was born, the day she was born. And, uh, we are out of here. Yes. And the real estate market was awful. It day she was born. Oh, yeah. That's not, yeah. We are out of here. Yes. And the real estate market was awful. It took us five months to sell the house. And I still remember to this day, we had to write a $20,000 check and ring it to close it just to get rid of the house.

And it wiped out our life savings. And we looked at each other. And it wasn't anything we had done wrong, but we just said, we never want to feel like this again. And it was at that point I was able to get a job in Ohio with, and my parents lived down there and we actually moved in with my parents and lived with our daughter Madeline for the first year just to, just to climb back out. Cause we, everything we'd saved for was, was gone. Everything we'd saved for was gone. And then you end up buying a house and said said but we're going to get it paid off fast

yep okay cool and and you were connected to us way back in detroit uh i think i may have started listening to just a little bit but then really got connected once we moved to move down to i probably listened to you for over a decade so for a long time for a long time yes well it worked your baby steps million thank you from from having from being broken living in your daddy's basement yeah oh my god it was actually upstairs it wasn't the basement you put him in the basement okay all right either way i got you the attic okay yeah wow congratulations thank you so tell us what does it look like for a lot of people don't believe that you could pay off your mortgage one day right that's not something people talk about every day unless you're here on the ramsey network right so so tell, so tell people, what does that look like? What, what, what do you do in

order to be able to pay off your mortgage? So it was about a couple of years ago, Siobhan, I mean, Madeline is 17 now and she was about, you know, she'll be starting college next year. And I think I was just looking at the, the principal, like the amount, I just started kind of doing the numbers in my math. And I was like, if I really, if we, if we really focus on this, we can get this thing paid off. And it just, just, you had this clarity of thought, like, if we really focus on this, we can get it done. And then you start making the payments and the bonuses and just put it down. It's like, holy cow. It's just unbelievable detraction that you can achieve when you really focus. Yeah, you averaged three or four grand a month for 28 months

and you were done. Yes. But there's still that intentionality of taking the numbers out of the air, right. And putting them on paper, putting them in your every dollar budget. Yes. Wow. Yeah. So, uh, I got a feeling, I don't know who the nerd is in the family. And, um, so you came out of your cave with your spreadsheet and what did your wife say? I think fortunately I listened to you long enough that we dreamed together. We had the, why we have had the why conversation for a long time. We talked about what we want our lives to be like when we're older. And so we had that discussion, the why discussion.

We dreamed in high definition, as you said. Early on, we talked about traveling and helping our kids pay for school. And the biggest thing for Siobhan was we had a really challenging time with Madeline. When she was little, she had some health issues. And she said, I want to be able to go when I have my grandchildren and just stay with them, whether it's a week or it's a month or whatever it is that they need. I want to have that freedom to be able to go help with my grandchildren.

That was one of her dreams. And that's called financial independence, so to speak. You're not independent. You're actually interdependent. But, yeah, yeah wow way to go guys thank you very cool you guys are heroes you go for you go from broke to millionaire in 10 years i mean that's pretty incredible it's just one day i would say it's also one day at a time too and just staying focused on that um and the small things add up too and being content and realizing that

stuff doesn't make you happy you know the other gift that's hidden inside this story is you've got these beautiful kids over here that are living in your home being homeschooled and they're breathing this air of contentment they're breathing this air of living on less than we make and uh they're breathing air that's not in other homes and so they can't help but be formed by that and so if they're ever in their own home and they're not it doesn't the air doesn't feel like that then they know something's wrong and so it's you've set a pattern for them more is caught than taught rachel says and she's right so i that's a pretty cool thing it's a pretty cool parenting they're gonna they're gonna do what you do they're not gonna do what you say so uh

pretty impressive how do you celebrate what happens next yeah what's the big celebration big celebration is actually uh malin's graduating from high school so we're actually taking a nine-day caribbean cruise yeah baby i like it yes we should do that absolutely yeah yeah the year she's born we sell our house at a loss move into the attic and the year she graduates by god we're going on a cruise i like it this is a book ending right here man it's perfect it's the way it should be well done you guys. Very well done. All right. Bring up the kiddos.

Let's meet them all and their names and ages, please. Malin here is 17. Right. Nicholas is 12. And Samuel is 14. All right. Very good. Good job, you guys.

Proud of y'all. And I assume they've been practicing their debt-free scream because their mom and dad are heroes. Yes. Yes. They live with weirdos in a debt-free house yep debt-free millionaires at 42 freaking years old amazing shut up this is great i'm so proud of y'all you're just amazing just amazing all right kevin and shabban madeline samuel and nicholas Cincinnati, Ohio, $84,000 paid off. That's their house and everything, making them Baby Steps Millionaires. In 28 months, they paid off the house, making $158,000 to $200,000.

Count it down. Let's hear a debt-free scream. Three, two, one. We're debt-free scream three two one we're dead free this uh 10 to 15 year time span it was 2007 so i quoted that wrong it wasn't 10 years so it would be 15 yeah years or so 16 years that took them to turn that it when you say i'm gonna become a millionaire most people think it takes 50 years your whole life yeah and i you know it's gonna take forever and i'm not gonna have a life and be 80 by the time I... I'm going to live in a cave and collect lint until I'm 92

and old paper clips and whatever else. It's just like, oh God. No, that's not how it works. They're 42. They're going on a nine-day cruise to celebrate this. So if you're 27 and you're whining about a little bit of sacrifice, shut up and do the work. I know. Wow.

Step up. Seriously. Because 40 is the new 30. I thought 60 was. We could do that, too. Apparently, green is a new fashion trend. That's right. You're on trend, Dave.

Good job. I had no idea you and I were both dressed to join the Army today. And glasses, too. Hey, we're a real team around here. We're more in sync than we realize. Way to go, you guys. We're very proud of you. I've got to give you some of my hair.

No. Oh, man, I'm proud of those people. What a neat family. This is The Ramsey Show. Are you working the baby steps? One of the smartest and most impactful changes you can make is to ditch your cash value life insurance plan, if you have one, and replace it with a term life policy. Listen, the only thing a cash value policy is good for is overcharging you for the life insurance

and then paying you a crappy rate of return on your overpayment. Stop wasting your money and really focus on getting out of debt and growing your savings. For over 25 years, I've trusted and used Zander Insurance to find the best rates on term life insurance from the top-rated companies. They keep the whole thing simple. You can apply online or over the phone, and they even have low-cost plans that don't require an exam. Go to Zander.com or call 800-356-4282. Even if you don't have a cash value policy, if you're one of the 70% of people who have no life insurance or not enough, it's even more important to get this done. 800-356-4282 or zander.com. Thanks for joining us, America.

Jade Walshaw, Ramsey Personality, is my co-host today. Tony's in Chicago. Hi, Tony. Welcome to The Ramsey Show. Hi, Dave. Thanks for having me on the show. Sure. What's up?

Well, my mother passed away about 18 months ago. She left me and my brother a paid-off home, currently valued at $450,000. I'm an executor on the house, and I'm trying to make a decision as to whether to sell the house and have to throw my brother out on the street or let him continue living there. Okay. Well, I assume he doesn't have the money to buy out your half? He does not. Okay.

I think it's a little dramatic to say throw him out on the street. He's going to have $200,000 in his pocket when he lands on the street. I feel the same way. Yeah. Yeah. On what planet does he think he gets to live there for free indefinitely? Well, he's been living there for free for about 15 years now. He has an anxiety disorder, which led him to be dependent on Xanax.

He does not work. His girlfriend pays all his bills. She's been living there for about nine years. She's a disabled vet who works part-time as a nurse. My mother couldn't have the heart to put him out on the street. And as a Christian, I'm struggling too. What's the right decision? I'm not sure that supporting or enabling people's inability

or unwillingness to deal with their stuff is non-christian as a matter of fact it's non-christian to enable them to sit in the sewage that we call their life right now loving them well would require them to deal with their stuff and build a sustainable life and dignity right that would be an act of love. Does that sound right? I agree. A Christian, the definition of Christian is not wimp. It's not doormat.

It's kind, but it's also strong, and it's acting in others' best interest. So what is best for your brother is for him to heal to seek counsel and deal with the anxiety and get off the drugs and you know you know because the way you stated this you don't believe that um you believe he's escaping reality rather than dealing with and getting better. That's what I heard you saying. Did I miss something? No, I think you're saying it correctly. Yeah, and that's your viewpoint on it.

And so if this is my friend or my brother, loving them well would be helping them do better in their life, not giving them a cocoon to continue to retreat down into a hole right so that see that's what enabling your mom was an enabler and sweet all enablers are nice people they're all they're the nicest people on the planet because they don't want to do anything that causes conflict or raises an eyebrow. So gosh, I, you know, I guess you've got two options. One is you do have to deal with this lovingly and help him get better and, um, sit down with him and the parasite that moved in with him. And, um, the, uh, because he attracted that with his life. That's what his life attracted. And, um, uh, uh, you know,

help them deal with it and help them see a path of what they could do with the money from the house. Um, or just deed it to him and walk away. Right. Which is honestly cowardice. Yeah. Do you need the money? It's a lot cowardice yeah do you need the money it's a lot of money i definitely need the money yes i do yes yeah i mean there is a practical nature to this as well which is just because he lived in the house for 15 years doesn't make it wasn't his it wasn't his house and now you have ownership of it and there's nothing wrong with you saying, hey, can you please, this is $200,000 that you're holding hostage and I really need access to that.

And there's nothing wrong with saying that. And to Dave's point, you're not putting him on the street. He's coming away with a couple hundred thousand dollars, which is a nice chunk of change. Where is the house? Where's the house? In N niles just outside of chicago oh in chicago area okay yeah chicago area are you in that area as well right yes okay well um are you married no i am divorced okay um okay um i'm just looking for the what the dynamics are so okay um is there anyone in you and your brother's life that could sit with the two of you while you

work on this that could help uh kind of navigate through all the emotion well i haven't talked to my brother in probably five months. Okay. This makes it even more difficult. He's basically just cut everybody off in his life. Okay. I would call him, and I would go over there, and it's half your house, okay, and say, we need to have a cup of coffee, and I love you, and I want to be kind to you, and we've got to talk about what we're going to do here because I can tell you this.

One of the options is not, this is you talking to your brother, if it's me, you've got to love him well enough to be strong and kind. And just, honey, one of the options is not you stay here free the rest of your life. That's not an option. I'm the executor of the estate and legally that gives me the power to evict you. And so you and I can do this together nicely and we can figure out a way to get the house sold. Or if you've got money that I don't know about, you can buy me out. I don't care, but I'm not going to sit here and do nothing, and you aren't either, because I'm going to force you to do these other things.

I really want to do this in a way that you and I work together, and we can be friends the rest of our life. But that's going to be up to you. That's what I'm telling him. It's up to him how he reacts to this situation because his set of assumptions are completely immoral unethical and unreasonable correct and and so he he can choose to react and act like you're doing something wrong but you're not and you have to go in knowing that and in it so let me just tell you so you go over there the whole thing blows up he has a fit acts like a four-year-old says get out of here i'm going to shoot you

then you say all right here's what we're going to do you're going to be getting a letter from the attorney and the attorney is going to be telling you that you have 30 days to move and after that we're going to evict you and after that i'm going to sell the house and i will still send you your half of the house once it's sold, but you are leaving, and you chose poorly on how to react to this. It's still going down, honey. And then just walk off and go get a lawyer. Okay.

Because that's probably what's going to happen, am I right? I'm really taking this to heart. The other thing in the, in the interim, my father has gone ahead and he's taken $1,400 a month from his future inheritance. And he's given that to me as rent. And he says, well, as long as your brother's in there, he says, you're going to keep getting $1,400 a month and that'll go over to your inheritance. But you know, Dave, as well as I know, we don't have the crystal ball. That money could easily disappear down the road. We don't know.

I don't like that. So your father also is an enabler. He's covering for him, too. Am I understanding that right? I think he was just feeling bad for me. Oh, you. Feeling bad for you. Okay.

Well, it's both because he's saying i'm essentially paying your brother's rent and if you let me pay rent to you then you can let him stay in the house it's it's very twisted all of it i mean i don't have to tell you that it's unhealthy you know an unhealthy dynamic i would rather him give your brother 1400 to help him get counseling and go to a rehab center and get our go inpatient treatment and get some help with the anxiety disorder so he can become sustainable and healed i'd rather him use the money for that and um and let the lady who lives there's family take care of her and you your dad to help take care of your brother and if you want to use some of the money from the house

to take care of him if he's moving in positive, I'd be willing to do that if I were you. But I am not willing to sit here and cause this dysfunction to happen to me. It is not good for anyone in the story. No one in the story is winning. Correct. No one in the story is going to have a better life because of this. So it just requires proactivity on your part, and I'm sorry, but it's going to be— you've got a year of emotional hell ahead of you.

You're going to get called everything in the book before this is over. I'm sorry. Pick up Dr. Henry Cloud's book, Boundaries. You'll read it, and you'll go, oh, there's my family. This is The Ramsey Show. Do you ever feel like you're finally making progress towards your goals only to get quickly distracted by something else in your feed? Well, that's why we created the Ramsey Network app,

your single source for content that keeps you motivated. The Ramsey Network app is designed to keep you laser focused on reaching your goals. Loaded with over 7,000 hours of Ramsey shows, this free app is the best place for uninterrupted content and no distractions. Plus, you can search specific questions to get more personalized content in seconds. So for the days you need some extra motivation, you'll have proven advice at your fingertips. It's time to get serious about your goals and shut out the distractions for good. Simply search Ramsey Network in the App Store or Google Play. If you're listening on a podcast, just click the link in the show notes to download our free Ramsey Network app today. 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. I'm Dave Ramsey, your host, Jade Boshaw, Ramsey Personality. Number one best-selling author is my co-host today. Thank you for joining us, America. Open phones here at 888-825-5225. The call is free and some say the advice is worth

exactly what you pay for it. Scott is in Baltimore. Hi, Scott. Welcome to the Ramsey Show. Good afternoon, Dave and Jade. How are you doing today? Better than we deserve. What's up? So, I'm a

58-year-old single guy getting tired of working. I'm trying to get to retirement, but I don't have really anything saved. I need to know what I should do to get there. Okay. What do you make? 75. What do you do? I'm a trim carpenter. I trim high-end houses and build some custom cabinets as well. Okay. Do you have any debt? I've got about $ five thousand dollars worth of a mortgage and uh twenty thousand

auto loan okay good okay all right um why have you saved no money uh i was i was married to a spender and at the age of 50 um got divorced and i walked away with zero dollars that was eight years ago why have you saved no money in the last eight years um well getting back on my feet i ended up buying a house um that's where the mortgage comes in i got twenty five thousand dollars left on that so is that where your extra money was going, paying down that mortgage? What did it start as? Yeah, paying down the mortgage, and it was a bank-owned property. I got it for a song in a great neighborhood.

I put a fair amount of money into it, and that's where most of my money went. So, and you bought a truck? No. I have a truck that's paid for. Oh, what's the $20,000 vehicle? I know you're into cars, Dave. It's not a car. It's a motorcycle. It's a motorcycle. It's a Harley Davidson.

Oh, okay. Well, we've got to get rid of that. I knew that was the first thing you were going to tell me to get rid of. Yeah, it's gone. If you want to save money, I mean, we can't keep doing what we've been doing. Okay, you have a $20,000. You almost owe as much on your motorcycle as you do on your house. That's weird.

Yeah. You know, I mean, really. So, you know, you did so good on the house and so poorly on the motorcycle. So that was a weak moment. I'm sure it's a great bike. I'm sure it's a great bike. But it's gone. It's gone.

It's somebody else's great bike now. And because we need you to. And then, you know, what I would say is let's get on an every dollar budget and build an emergency fund first of three to six months of expenses and then pick up every extra job you can get and let's pretend that you saved ten thousand dollars uh thousand dollars a month twenty four thousand per year for uh ten years that'd be 240 000 plus growth it'd be a half a million dollars okay okay you're 67 and you'd have a half million dollars in a paid for house okay i do have about 23 000 in cash okay well then you got your emergency fund in place that's great i do have the $23,000 in cash. Okay. Well, then you've got your emergency fund in place.

I do have that. That's great. I do have the emergency fund. Right. Also, I've got a term life insurance policy that's $100 a month for half a million dollars. Should I keep that, or is there a way to convert that to something else? It doesn't convert. It's just like I have homeowner's insurance

and i don't have a home anymore do i need it you know no you don't because there's no one counting on you it sounds like for your income no okay and the house is the house is worth more than you owe on it do you have children i've got three okay so if you die they sell the house and pay the funeral right correct okay let it lapse yeah so you i would close that out because you need that extra I've got three. Okay. So if you die, they sell the house and pay the funeral, right? Correct. Okay. Let it lapse. Yeah. So I would close that out because you need that extra $100 a month toward our $2,000 a month goal.

So what I'm going to do is sit down and do a budget, and I'm going to come up with $2,000 a month. I'm going to sit down with a SmartVestor Pro, and I'm going to fill up Roth IRAs and simple IRAs and whatever else you can do as a self-employed person. The great news is, as a trim carpenter in high-end properties, you are in great demand. You've always had more work than you could take on. Right. And so if you want to jack it up and make some extra money for a little while, you can do that.

I'm always less tired when I don't feel like a hamster in a wheel, when I'm actually getting traction. Part of what's making you tired is you feel stuck. I don't know if I necessarily feel stuck. I know what stuck feels like because once I got out of my divorce and got rid of the spender and started actually saving or being able to have money and didn't have to live paycheck to paycheck and play the beat the bank game.

I sat down one day and thought, wow, this feels really good. Yeah, I'm tired of working is what you told me. And so if my work is going toward a goal that I'm excited about, I'm not as tired. That's all I'm saying. Okay, yeah. excited about i'm not as tired that's all i'm saying okay yeah well my goal is is to to get as much money save as much money as i can for retirement and retirement for me is probably working three and four days a week instead of you know five six and seven days that's true but there

always comes a time where you won't be working anymore and so making sure you get to the point that you're okay when that phase of life hits is also very important if you had a half a million dollars in the bank at 67 or in a mutual fund at 67 and a paid for house that 500,000 will throw you 50,000 a year right without forever and so you you couldn can travel you could do whatever you want to do with 50,000 a year you work one day a week you can do whatever that what i do know having grown up in the bit and been in the building business real estate business my whole life is trim carpenters are artists they're the artist on the site they're very precise very very detailed. He makes furniture. You've got an artist's eye. And I need you to use your business side, the science,

not the art side of this discussion that we're having. Okay? You can't art your way out of this one. You've got to science your way out of this one. And so it's a math thing. And then it will build you a situation where you have enough of a nest egg that it causes you to have a good life. That's what I'm wanting to move you towards.

So you've got 10 years, $2,000 a month, and you can get there. It's very doable. And you might fool yourself. You might get there sooner because the more you pile it up, the faster, the more you're willing to work, all that kind of stuff. So, you know, you can back down at whatever point. more you pile it up the faster the more you're willing to work all that kind of stuff so um you know you can back down at whatever point but uh i would sit down with smart vestor pro go to ramsey solutions.com pick somebody with the heart of a teacher and say this is my situation

i've got to do this dave told me to get on an every dollar budget he told me jack my income up get rid of my motorcycle jade told me get rid of my motorcycle. Jade told me to get rid of my motorcycle, but Dave agreed. And just slide that in there. Just through that, through the under, you see the bus tracks? I see the bus tracks right across her. Yeah, there we go. And yeah, get you a game plan, man. And then execute the game plan.

Just like you were doing a job on a house. You lay out the game plan. You lay out what is needed. You get the supplies on hand and you execute. Same thing here. Same exact deal. This is the Ramsey Show. You know my philosophy on planning and preparing. Being proactive is always better than being reactive.

We have a provider we recommend that can help you stay prepared for unexpected medical situations. I have a medical emergency kit from the doctors at the wellness company. And guys, let me tell you, you really should check this out. This is not a simple first aid kit. The medical emergency kit contains doctorcribed medicines to treat over 30 common and serious medical conditions. Ivermectin, the life-saving medicine. Generic Z-Pak to shorten the duration of colds and flu you feel coming on. Amoxicillin for infections, earaches, strep throat, and pneumonia. A medical emergency kit from The Wellness Company.

It's like having an urgent care in your home. Order 100% online in minutes, then fill out the brief questionnaire in your email, and your kit ships to your door. Visit UrgentCareKit.com slash Ramsey and use the promo code Ramsey for 15% off. That's promo code Ramsey at UrgentCareKit.com slash Ramsey for 15% off. That's promo code Ramsey at urgentcarekit.com slash Ramsey. Hey folks, Dave here. If you haven't booked your cabin on the Live Like No One Else cruise,

now's the time because it's 90 something percent sold out. You do not want to miss joining me, the Ramsey personalities, and amazing guest entertainers for the ultimate debt-free celebration. We'll be sailing the Caribbean March 22nd through the 29th, 2025, stopping at the incredible Turks and Caicos, Puerto Rico, St. Thomas, and the Bahamas. Hurry to secure your spot with a $600 deposit today at ramseysolutions.com slash cruise. Jade Walsh, our 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 WhyRefi. WhyRefi 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 Y-Refi.com slash Ramsey. That's the letter Y-R-E-F-Y.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 want to know how old these parents are. I want to know, I want to know more. I want to 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. So 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 brought 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 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 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 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, 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. Yeah. and she's going oh god i'm dying yeah you know it's like um so i don't i you know fifteen thousand

dollars is not uh we are losing tons of money for five years no it's nothing if you own a house you're going to spend more than fifteen thousand dollars 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 going to pass someday and you're going to have a nice asset that's gone 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 um 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 going to 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-itis, then that would just make it worse, right? I mean, it'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 there lavish. There's also, though, Dave. I didn't hear a jacuzzi being installed. I think, to quote myself, I think there's also a vocab rehab that needs to happen. Amen. Because here she's saying, my husband and 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 going to change your thoughts i have a rental house and it had a water leak and i had to fix them that's right as opposed to it guess what i've had to do that a bunch of times right so that'll 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 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 um because you didn't you didn't buy it for money you bought it to help them and you know if you want to give them the whatever proceeds are because you're going to have made some money to your point from 2019 so uh yeah that's that's that's part of it and um, and, and I think then I would want to just really ask, I don't know. Um, well walk that out. What would you do?

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

I don't, 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. If Patty makes $300,000 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. Mm-hmm. Mm-hmm. Because it's like, oh, it's, we're, but we're, it's been very taxing emotionally and financially. Yeah. Okay. I don't understand.

It's 15 grand is not taxing emotion i mean it's not but so uh 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 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 yeah 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 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.

The thing is, you're not selling it because you need money. That's true. She did not bring that up. You're right. She did not bring it up. She did not bring it up to get rid of an emotionally and financially draining situation, to quote her. That's true, but 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 tired of giving them anything. And I'd rather put it in my account in lost situations. They get, they get salty really quick. Not going there. Yeah. Not,

not going to do that. You're right to the, you started the whole thing, right? When you said you shouldn't have done it. 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. 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. You've worked, saved, sacrificed, and been gazelle intense with your financial game plan. But do you have the right defense in place, like the right health insurance? Look, you can't walk past a doctor's office these days without getting a massive bill. And if you don't have health insurance, a major medical situation can undo all of your hard work. That's where my friends at Health Trust Financial can help. They work for you, not the insurance company. So they find you the right health insurance and they save you money. Ramsey has recommended Health Trust Financial for two decades because they're the experts. And whether you're 19 years

old or 90, you can trust them to do two very important things. Listen to you, then find you health insurance coverage with everything you need and nothing you don't. Health Trust Financial is your one-stop shop for unbiased advice about affordable health insurance options. They could save you hundreds of dollars a month, so make sure you're not overpaying. Go to healthtrustfinancial.com today. healthtrustfinancial.com Motivating your team to work and lead with the same passion you have is one of the toughest things in leadership, but it's crucial if you want to scale your business.

Fortunately, Entree Leadership Summit is the leadership event that will equip you to build a team that fights shoulder to shoulder with you so you can grow like never before. Join us in Denver, Colorado, May 18th through the 21st by going to ramsaysolutions.com slash summit, or click the link in the show notes. The $12 sale is here through August 31st. We've got $12 books to help you raise money smart kids. The book Smart Money Smart Kids, number one bestseller by Rachel Cruz and me. $12 books to help you get out of debt and build wealth, including our number one bestseller, Baby Steps Millionaires, including Jade's book.

$12 books to help you build a peaceful and joyful life. Dr. John Deloney walks you through the six daily choices in building a non-anxious life. Ken Coleman's From Paycheck to Purpose will help you do work that really matters. All $12. Check them out, ramsaysolutions.com. Barbara is in Santa Barbara. Hi, Barbara. How are you?

Oh, good. Thank you so much for taking my call. It's a pleasure to talk to you both. You too. I've been listening to you for quite a while. I know how you love a whole life insurance policy. Yeah, my husband took one out literally in college in the 60s because a friend of his, got their first job and sold everybody in the fraters because a friend of his you know got their first job and sold everybody in the fraternity house a whole life policy so it is now 2024 we still have this policy but i've never heard you address this issue if we terminate this policy because i feel we can self-insure at this point i have a loan on this policy for 63 000 and the agent is telling me if

i surrender the policy that will be taxed at my income or income level is that true no no it's not because i thought my understanding was the way you talk about it when you borrow against the policy you're actually borrowing, when you borrow against the policy, you're actually borrowing your own money and paying interest to borrow it. Exactly. And so your cash value amount is how much? $3,030. Above the $63,000?

Yes. Okay, so you'll get a check for $3,000. Okay. yes okay so you'll get a check for three grand okay okay and you'll have a net income as a result of that of sixty six thousand dollars which includes the loan okay um that amount is compared to the total amount you have paid into the policy since the beginning which is way more than sixty three thousand dollars okay your basis in a whole Your basis in a cash value policy for tax purposes is the total of your premiums paid in. Right. And as long as your cash value does not exceed that number, you have zero taxes.

Okay. So I would think that since it's been paid on since really the 60s, 70s. Yeah. How much have you paid on it, do you know? No, I have no idea. The death benefit's $24,000. But I mean, if you add it up, you're going to add up and see the total premiums that you have put in

is going to be more than the cash value that you get out. Okay, how am I going to find, where do you find that? Can they tell me that they can tell you that now the company could tell you that or you could just say you know how much is the monthly or the annual amount and multiply it out since you got it oh okay okay okay i got you so as long as and and i would think that we've paid in enough over all these years so and it's more than $63,000. Exactly. I mean, it's been 60 years. 60 years. Oh, my gosh.

So if it's $1,000 a year, if you only paid $1,000 a year, you're still okay. Yeah, I wish I'd found you a long time ago. I would have never bought this policy, but I just never knew about this loan thing because I know you say surrender them if you can self-insure, but I've never heard you address it if you have a loan on it. They keep telling me I'm paying income tax on it. Well, that's what they like to tell you because they scare you to keep the thing in. But the problem is most of the people in the whole life business don't even know what they're doing. Their level of expertise is so low because 80 percent of them are gone in a year people that

sell whole life life insurance 80 percent that start selling a whole life life insurance are gone in a year so the number of seasoned experienced expert agents that have been doing it for 30 years it's close to zero because they look up and realize how bad they're ripping people off and they get out of the business. The numbers on this are bananas. She's been paying into it since the 60s. It only had $63,000 of cash value and only a $24,000 death benefit. Yeah.

Yep. I'm shooketh. Yes. I mean, what if there was $63,000 and she hadn't borrowed on it? I know. And she died or he died. They'd lose it. They there was $63,000 and she hadn't borrowed on it? I know. And she died or he died. They'd lose it. They'd get $24,000. The $63,000 would be gone. The only way you ensure you get it is to keep

a loan on it. And then when you try to get out of this complete screw job, they lie to you or they're ignorant, one of the two two about how the tax calculation actually works that is crazy yeah this is how bad it's a payday lender of the middle class remember on sanford and son when red fox i'm coming to join you what was what was his wife's name lily yeah i think so i can't remember i'm coming i'm coming oh gosh that grab his chest and fall back yeah oh lord sheesh that's it that's how it works spencer is in austin texas hi spencer how are you dave jade thanks so much for taking my call sure what's up uh yeah so um my situation right now so i live in a house that my parents own and um they want to sell it to me, and I want to buy it from them.

And I have the cash to pay it off. Good. But they want to, yeah, which you're definitely following your plan on that for sure. Paying off cash. I don't like that either. But anyway, I guess the reason I'm calling, though, is because they've owned this house for just under a decade. And so they bought it back in 2016 for just under $100,000. And now, as you know, the housing market is crazy. So I think this house is worth somewhere

between, you know, $200,000 to $225,000. So, you know, they want to sell it to us. We haven't negotiated a price yet, but they want to sell it to me, you know, somewhat close to what they paid for it. So I guess my question is, I know it's a good deal for sure, but I guess my question is, you know, I guess I'm calling on their behalf too because, you know, we're wondering about like are there going to be capital gains taxes? How does it work with me buying it at much less than what it's worth? Like how does all that kind of work and what's some ways around if there are any capital gains and things like that? Okay, well capital gains tax is calculated on the gain over basis. Let me kind of walk you through that. That. Well, capital gains tax is calculated on the gain over basis.

Let me kind of walk you through that. That's a technical thing. All right. What you pay for a house is your basis. Okay. So let's say they paid a hundred for it and let's be simple for a second and say they sold it to you for one 50, then they would pay capital gains tax on the 50 gain. See what I'm saying? Yes. Okay. And that's a 15%, and so that would only be, what, $7,500 will be their taxes. Okay. Okay.

That's a simplified look at the thing. Now, we'll add a couple of complications in there. If they have been renting the property and have been filling out a tax return on that and depreciating the property against their taxes, taking depreciation, then they have an adjusted basis. So the $100,000 they paid for it minus any depreciation that they have taken becomes their basis. So let's say they had taken $20,000 worth of depreciation on their taxes over the years. Then their basis is no longer $100,000. Now it's $80,000.

You following me? Yes, sir. It's called an adjusted basis. And then your taxes are going to be on the difference between the $150,000 and the $80,000. So they're going to pay taxes on $70,000 in that case. So that's how you calculate it out. If they sell it to you weirdly below market, like let's say this thing is worth $300,000 and they sell it to you for $100,000, you probably ought to get some tax advice as to whether or not that's going to qualify as just a good deal

or whether the IRS would look at that as giving you a gift and try to tax them on a gift tax. I wouldn't want them to get hit with that. So there's kind of a gray area on the difference in a gift and a good deal. Okay, and that was my other question too because i they're going to sell it to me for less than what it's currently valued at and so i guess they were kind of worried about that as well how far how absurd it you know if they sell it to you for a dollar and it's worth a million then they're going to get hit with a gift tax okay because that's a gift

that's not just a good deal let's's over the top okay it's going to be it's going to kind of shake everybody up that looks at it but if you sell you a three hundred thousand dollar house for 200 that's probably just a good deal so you need to talk to a tax advisor on that part of it to make sure that you're not violating anything on gift tax what at what point does the irs look at something being a good deal or being a gift. And then they also can help you with calculation on the basis. So good deal and pay cash for it. And it's a free clear transaction. It sounds like a wonderful deal. This is the Ramsey Show. I know you work hard for your money and the key to keeping more of it in your pocket is by making a plan for your spending with a

budget. And EveryDollar is the budgeting app that I use personally because it's perfect for looking every dollar you make in its little president face and telling it exactly where you want it to go. Just like you told that guy in traffic exactly where you wanted him to go. And even better, EveryDollar walks you through the entire budgeting journey so you always know your next right step. Download EveryDollar for free in the App Store or Google Play today. Jade Walsh, our Ramsey personality, is my co-host today. Thank you for joining us, America. We're glad you're here.

Val is in Minneapolis. Hey, Val, welcome to The Ramsey Show. Oh, family, family. I listened to you years, five years, and I said it's time to stop listening and start doing. Okay, good. How can we help today? Right now, I've finally started with the first and second step, but now I'm at the point where I have three kids that I know I shouldn't have,

and I did it. I co-signed for a car loan because you know if you want you do one you got to do the other one so I'm stuck with these three car loans one of them is about to be paid off in two months the other one uh she's paying half on it because she said she don't have all of it to pay the whole car loan I I'm paying the other one. And the third one is just saying they don't have the money right now. So my question was, I was thinking about just letting the other two cars just go. Cause I can't,

cause I, you know, I can't afford to pay for either one of them. And so would it be a good idea if I just let them read for it and just let it go on my credit? Well, you're going to have a repossession on your credit you co-signed and then when they sell the car and it doesn't bring what's

owed they're going to come after you for the difference I know that's why I hit them at the point yes yeah you're going to get sued and you're going to have your credit screwed up so um let's talk about the one car is almost paid off, so it's not a problem, right? Right. Okay, so the second car, the one you pay part of the payment, what is owed on that second car? One car is owed $1,000 of $16,000 on one, and the other one is like $14,000. Okay, and what are they worth?

The one for $16,000 is only worth $8,000. Yikes. That was a shock. And the one that's worth $14,000, what's it worth? The one that's worth $14,000 is about, I think it's almost sold that one for $10,000. So I'm thinking this guy's gonna buy it for ten thousand but he never did come through so i guess it's only worth like nine thousand or something well just because one guy didn't buy it that doesn't establish value but um yeah so um if you can sell

the ten the ten thousand dollar car for ten thousand and get the loan you have to get a loan somewhere for four thousand to cover the difference. Who are these loans with? They're with my credit union. Good. Go down to your credit union and tell them you want to sign a note for the difference before these cars get repoed, and you're going to have $12,000 in debt. You sell an $8,000 car that you owe $16,000 on. You sell a $10,000 car that you owe $14,000 on.

You're going to have a debt with that credit union because otherwise they take these cars, and they're not going to sell them for $10,000 and for $8,000 car that you owe $14,000 on, you're going to have a debt with that credit union. Because otherwise, they take these cars, and they're not going to sell them for $10,000 and for $8,000. They're going to sell them for $5,000 and for $4,000 at the repo law. So I can sell this car back to the bank? No. Oh, you said I can sell it back to the bank. No, I said you go down to the bank and tell them you want to sign a note for the difference

of what the car won't bring. They have a $16,000 loan on a car that's worth eight. You're going to end up with an $8,000 loan at the credit union instead of a $16,000 loan. And you sell a car that's worth 10 that you owe 14 on. You're going to end up with a $4,000 loan instead of a $14,000 loan. And your kids are going to get about the business of getting their own cars. Right. But you get to pay the $8,000 and the $4,000 difference,

which is going to be $12,000, because they're not going to come through on that. You and I know that. Yeah. This is what you pay this is called a it's called a co-signing fee is that what you're calling it i thought there was an actual no no it's a stupid tax is what it is when when i do something stupid and it costs me money i call it stupid tax and And the cosigning is stupid.

Yeah, I learned that. You learned it three times over. You thought you were doing something nice and you did the right thing the wrong way. You were being kind and sweet and unwise. And you knew you were unwise when you were doing it, but you were too kind and sweet to stop doing it. So next time, be more wise and less sweet. I know, that's right.

Wow. Well, the truth is she didn't do the kids any favors either because they've been strapped to this. That's right, that's right. You think you're doing somebody a favor, and you strap them to something they can't afford, and that's why the bank wouldn't loan them money in the first place. And everybody feels the strain.

Yeah, Thanksgiving dinner tastes different so i co-signing is so universally stupid the banks are the most aggressive lenders on the planet they love to loan money and if they won't loan somebody money it really means it really means something that they can't but that they can't pay it and instead we step in and we go oh it's little junior we'll help junior and you know we step up and we cosign and proverbs 17 18 says one lacking in sense cosigns for another the contemporary english version the cev of the bible in 17 18 proverbs says, if you co-sign for someone else, it's stupid. That's what that version of the Bible says. The Bible called it stupid.

So I didn't get mad at God. But yeah, and I co-signed for a guy one time and I ended up having to pay it. And a guy co-signed for me one time and he ended up having to pay it because I went bankrupt that time and I had to go back and pay him back later. It's an awful, awful mess. Don't get into those things. It's an awful, awful mess. Don't get into those things. It's a horrible, horrible situation. So poor Val.

I feel so sorry for her. It's awful. Hey, guys, things are changing around the Ramsey show here. This week, back on Monday, we made a move. We have a network app called the Ramsey Network app that you can download for free. You can listen to the whole show on the Ramsey Network app or watch the whole show on the Ramsey Network app, whichever you prefer to do. The last 40 minutes coming up is only on the Ramsey Network app or on talk radio as of this week. And so if you're used to getting the entire show on podcast, you can still get the entire show.

It's still completely free, but you can only get the last 40 minutes on the network app. You can watch the whole thing, but you can get the last 40 minutes only on the network app. So you YouTube folks, podcast folks out there, you're expecting another 40 minutes. It's there, but it's only over on the ramsey network app you can get it for free we're not charging for this it's all free and it's searchable you can search it by subject and you can even send an email ask questions we might answer some ramsey app questions at some point so the ramsey network app in the App Store or Google Play, completely free, not going to cost you a thing.

And, Jade, this is exciting. It is. The things that we're putting in this app to help you guys and help you access the information that you're listening for. You could listen for three days and not get the answer to your question. Yeah, but if you want to know about car repossessions, you can just Google it in. And you'll hear Val's call. Yeah, but if you want to know about car repossessions, you can just Google it in. And you'll hear Val's call. Yeah, exactly. That's what's going to happen because they do come after you for the deficit,

like we were telling her in that case. Two ways to get the free app. You can click the link in the show notes, or you can search Ramsey Network in the App Store or Google Play. And again, we're going to be adding lots and lots of tools to this thing in the future. Right now, we have the searchable feature. We have some audio books and some other things dropping in there. We've got all kinds of processes because we're building stuff out where we can deliver to

you on this app. It's very inexpensive for us to do, so it's going to be free or inexpensive for you to do. So the last 40 minutes of the show, as of this week, again, on the Ramsey Network app only, or if your talk radio station carries, and on talk radio it comes out as over three hours. That's what we do. We do a three-hour talk radio show.

But in podcast world, it's going to look like something different. So that's the thing. So you can get the full episodes to the Ramsey show, only the Ramsey Network app. It's very convenient, very easy, and very free. Don't miss it. And again, Jade, the features we're putting in this thing, we're excited about. I'm really excited.

I heard a little birdie talking about a show that one of us is doing that might land in there. So that's really cool. Oh, okay. That's all I'm going to say. I'm just going to. I don't know which little birdie this was. So I'll have to find out about this birdie.

Okay, cool. But that might be fun. We could do a show just on that. Yeah. Like a specialty show. Yeah, that you can only watch on the network app. That'd be cool. On a certain subject or something.

That would be neat. Be special. Ah, okay. Exclusive, if you will. Yeah, and completely free. You can't argue with the free part. We have no plans to make it a subscription. It's just a free deal.

So go to Ramsey Network and get the app in the App Store or Google Play, and that way you don't miss a thing. And did I mention that it's free? This is The Ramsey Show. Hey, you're still here? What are you doing? You do know that the rest of today's show is playing right now over on the Ramsey Network app, right? All you got to do to finish the episode is search Ramsey Network in the App Store, Google Play Store, or just click the link in the show notes to download the app for free.

Yep, you heard me right, for free. Then right there on the home screen, you can watch the rest of today's show. Bada bing, bada boom. All right, I'm getting out of here. Enjoy. We'll see you on the app.