The Ramsey Show - Ordinary Habits Will Build Extraordinary Wealth

Episode Date: July 16, 2026

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Brought to you by the Every Dollar app. Start budgeting for free today. Normal is broken. Common Sense is weird. So we're here to help you transform your life. From the Ramsey Network and the Fairwinds Credit Union Studio, this is the Ramsey Show. Jade Washall, Ramsey Personality, number one, best-selling author, is my co-host today. Michael is in Dallas.

Hey, Michael, how are you? I'm so good. How are you, sir? Better than I deserve. What's up? So I am 120,000 in debt. I'm about to graduate college, and I'm getting married in April. Currently have not a lot of money, and I was just going to ask how I should handle that debt and preparation for marriage.

Wow. Got a lot going on graduating. What's your degree in? It's in aviation. Wow. So what are you going to do? Fly? Yeah, that's the plan.

Currently, I'm a flight instructor. I just got hired, but I haven't gotten any students yet. The income is not really coming in yet, and then I'm building those flight hours to eventually go to the airline. So that's the path currently. What does a flight instructor earn? $20 an hour for the first 30 days and then 25, so. And then with room for growth, but nothing crazy. Are you going to be getting a full-time job out of this flight instruction that you've signed up for?

Oh, yeah, for sure. That's the plan. It just, like, it slows down at first, and then after the, 60 days, then they'll start to give you more students, and then it can become like a pretty heavy 40-hour week kind of workload. Where are you living right now until the marriage? McKinney, Texas. No, no, no.

How are you living? Are you renting with parents, roommates? Yeah, I'm with my father. Okay, with your dad. So you're not paying any rent? No, man. Okay. And what is your fiancé going to be doing for a living?

She's going to be doing esthetician. She's currently about to go to esthetician school, and she's going to be graduating in January. and then hopefully finding a job. But that will be pretty soon before marriage, so there's not going to be a lot of income coming from her, at least before the marriage starts. What's you all's plan as far as, because both of you have a bit of a ramp up to income?

What's you all's plan? What have you said as far as living and paying? Yeah, I mean, the plan currently is just kind of like you always say, just live below the means. But it's kind of hard. You know, we're young and we want to do this, that, and the other thing. So it's kind of a different thing. This, that, and the other thing costs you 120 grand. You're done with this, that and the other thing. That's the name of your four new jobs.

This, that and the other thing. Okay. I like it. I like it. Yeah, that's the biggest thing that I see as an issue here. Debt aside, just getting your income up enough to where you guys can come together and have a life together is what I'm looking at. And then once you can get on some solid footing with your income coming in. Of course, yeah, we need to tackle the debt. Does she have debt? You need six side hustles in the meantime because this, your, your, your path to aviation is a slow plan. Yes. Yeah. It's going to be a while for you, make money. Mm-hmm. That is true. Yeah, that is true. It's going to be a while before I make, make some good money. I totally agree with that. But yeah, I mean, to really answer the question,

again, it's just live below the means. And we've kind of planned it out. But you don't have any means. That's my point. The first thing we need to think about, and this is your homework, so let's make this easy to think about. Your homework tonight is brainstorming what you will do in between students. Because let's say you start out and you only have two or three students. You have a whole work week to do with.

So let's brainstorm some ideas that are going to bring in real money. And to Dave's point, it might be two or three different things or five or six different things that you can start applying for in doing immediately because as much of this debt, The first thing is let's have means to live. But then if we can start attacking this debt and making some true headway before, I think you said, April, that's going to be a win-win. And does she have debt that she's bringing to the equation? No, she's got zero debt. Okay, good.

Here's the thing. I don't want, and we love you and we want you to win, we don't want you working five hours a week at $20 an hour when you first get married. That's going to become very frustrating for all of you. and it's going to put stress on your brand new marriage that you don't need. I would rather the stress be that you're working all the time. Yeah, yeah. I totally agree with that. You need to get a bunch of income coming in on the short range.

And then the other thing you can do is check other flight instruction things in the area. Good news is you're in the Dallas area. And can I pick up more and more of that in my field? is there anything I can do in my field? Yeah. And because the quicker you build your book of hours, as you know, the quicker you get to get in the air and be paid for it. And you both need to sit down and look at what it costs to live in your area.

Look at some apartments, look at some rents, and get an idea of what it costs to live. So you know what it looks like to actually live below your means. And there's a target that you're shooting at income-wise. Yeah. So if you graduate folks with a four-year degree in supply chain, logistics, You come out and the first day you're going to be making $80,000 to $95,000 a year. If you graduate with a degree in aviation, the first day, you have a part-time job making $20 an hour for the next three years until you get your hours up.

So when you choose these career fields, you've got to choose what you're going to do in the interim while, because basically he's now left four. years of education going into what we would all call an apprentice program. You have to get your hours and you get those hours, oddly enough, by being a flight instructor. That's kind of irony of ironies. Right. You're still learning, aren't you? We're going to teach you while I get hours, and that enables me to fly, you know, in a commercial airliner. And so, but yeah, and then she chose the same thing. Right. It's going to take her time to get clients built up. You know, this is a client-based, business and it's not you don't walk in that day making any money and so um when you're when you're looking at and considering careers if you're going to go one of those types of routes you have to

have the side hustle mentality until you get things going and uh and then if you get things going that's going to be great or it's almost flip-flopped it's almost like you need another full-time job and that thing is the side hustle until it builds up to be the main Amen. There you go. I like that plan. I mean, we always talk about it around here. We're in Nashville and, you know, how do you get the next country music stars attention? A waiter, you know, that's how, that's how you know, because everybody, it's just like if you're, if you're in LA, how do you get the next movie stars attention? A waiter, you know, they'll all tell you, they wait tables and they do anything they can and they write songs at night and they're

trying to get, you know, a break, get to play, but they don't make enough money playing in the early days to make it. And so you've got a ramp up period in those types of careers until you get, until you get into the money. And you have to be very, you have to be almost, everybody's got to be intentional. But if you are in that sort of career, you've got to be very intentional about what your plan is and what you're doing. Your B plan. Yeah. Or make that your B plan and have an A plan. Yes. Yes. And I mean, the, the old, the legend that is actually you the truth is that Chris Christofferson was the janitor. And the guys invited him to sit down and write some songs with him. The reason he was a janitor, because he wanted to be in the building

where it was happening because he was writing songs at home. Smart guy. But he's going down the hall with a mop, not a guitar. And that's, you know, you've got to have a B plan. Let me tell you what I get asked all the time. When should I get term life insurance? How much do I need? Is it affordable? Those are the right questions to be asking. So let's take a quick review. The fact is, term life isn't a baby step. So if anyone is dependent on your income, you need to have 10 to 12 times your income in life insurance. Now, and most people are surprised by how affordable term life really is.

Even if you're not in perfect health. Look, I understand the hesitation, since most insurance companies make it more of a hassle than it needs to be. Not at Zander Insurance. They're not an insurance company. They're a broker that works for you. That means they'll shop and compare the top term life companies to find the most competitive options on the coverage for your family. For almost 30 years, I've recommended Zander, for straight answers,

competitive rates, and coverage that actually protects your family. Call 800-356-42-82 or go to Xander.com for a quick and easy quote. That's Zander. Jenna is in Milwaukee. Hi, Jenna. How are you? I'm doing well. How are you? Better than I deserve. What's up? I am wondering if you can help me with a 401k question. My financial advisor is advising me to switch from contributing to the company's Roth 401k to a traditional 401k due to basically my income level and the amount of tax savings that I would receive now. Wow. Okay. Well, you need to get a new financial advisor that can actually do math.

That was kind of my guess, but I didn't know if there was any specific circumstance where that would be beneficial. Yeah. So what are you, what are you, how old are you? I'm 40. Okay. And how much are you going to be putting in to the 401k? I'll basically be maxing it out. Okay. So you're going to put in how much, in dollars? Um, about 24,000. Okay, we'll call it $2,000 a month. Okay. If I put that in the retirement calculator, that says that, um, you're going to have at 65, 3.1 million, okay? Okay. And for 25 years, you put in $24,000 and I'll have to add up what that is. You want to do that for me?

Say, uh, um, 25 years times 24,000. And so that's going to be, 200 and something, I believe. But so the deal is this, everything above your contribution is taxable. So you're saying, what was the number? 600,000. Okay, 600,000. So he's telling you to save taxes on 600,000 of the 3.1 million. But for doing that, you get to pay taxes on 2.5 million.

Lovely. You see what I'm doing? Yep, I know. So the growth would be three point. The total amount will be 3.1 of that $600,000 you put in, which is tax, you're going to pay taxes on the whole thing eventually, if it's traditional. But you save on taxes today in present value dollars on the $600,000. So to save taxes on $600,000 for a period of 25 years that you do have to pay back later, you end up paying taxes on. on two and a half million. It's really bad math. Okay. Yeah. Now, and here's the other problem. We'll go

and take it a step further. If you have a Roth IRA, there's no mandatory withdrawals. I'm 65. I've got millions of dollars in Roth IRAs and 401ks, okay? And I'm not going to have to draw any of it at 72 and a half on required minimum distributions, RMDs. Okay. And when I die, it passes to my heirs with no income tax. If you'd leave this $3.1 million to someone and it's all taxable under the new Biden laws that came in when President Biden was the Secure Act, they will have to pay taxes on the $3.1 million. You don't have to because you died, but you never got around to paying taxes on because you never drew it out. And so an inherited IRA is all taxable. if it's traditional, and they have to do it within 10 years.

So they're going to pay taxes on $300,000 a year for 10 years, which is crazy for your heirs. So it's harder in retirement. It's harder in inherited. And you pay light years more taxes. There's no case where this is not going to happen. Every one of these, any scenario. And so I'm flabbergasted that somebody. could be this dumb and call themselves a financial advisor.

Yeah. I think we're doing an investing event. We can give you a ticket to hang out at the investment event and learn a little bit more. And maybe we ought to give one to her financial advisor as well. No, no, no, no, no, no. I don't want them around. I'll just let them need to stay away. I don't need to train that guy.

He's already a poser. So, no, hang on, Jenna. We'll give you a ticket to the investing essentials that George Camel and I are doing. September 1st and 2nd. a two-night event on much more sophisticated investing issues than that, than that issue. So, but that is a great, a great example for you guys on why the Roth is so big. So in her case, the Roth saves on tax, she's paid taxes on the $600,000. That's right. It's an after-tax investment. But you don't pay taxes on all the growth. It's tax-free. And taxes on two and a half million.

dollars would be seven, eight hundred thousand bucks. It's a no-brainer. So it's almost a million dollar mistake. So you guys think I'm being dramatic and saying this guy needs to be fired. No, a guy that makes a million dollar mistake, you don't keep. That's right. And that's, that's not dramatic. That's just dramatically wrong. Yeah. You know, so, wow, wow. You and I had one other or two of those in the yesterday show. Yeah, the other day. Were the financial advisors off the raiders? Not very good. Yeah, you have to vet these guys.

And we have smart vester pros that we vet, that you can interview them for yourself. They're trained on Ramsey principles. And you can trust that what they're telling you is based on how we teach things. Yeah. Now, if you want to get real technical, a little bit in the guy's defense, but it won't still be much. He was short-sighted. He was thinking about her taxes for the year. He wasn't thinking about long-term.

Well, even he could even be a total financial nerd. And it's okay, the present value of taxes on 600,000 is going to grow to this. Okay. So if you don't pay taxes on 600,000, let's call that 200,000. What would that 200,000 grow to over 25 years? Okay. Not enough to offset the mistake he's making. A million dollar mistake.

But the present value formula is, you know, it's part of probably. So my guess is the guy got so nerded out, he got twisted up in his own fish hooks. That's very possible. That's my guess. Maybe he's not as dumb as I thought, but he still ended up dumb. Because these guys that, I grew up in that world, in the financial world, and they don't mean, most of the time they don't, most of the time, they're not crooks. And most of them, they're not really intellectually just dumb.

That's not it. But they get paralysis of the analysis, as if this stuff all happens in a vacuum, instead of happening out here with flesh and blood and bruises and cuts and divorces and deaths and disabilities and job changes. And they forget that this stuff is not just a, it's not a simple linear formula because there's people involved. Right. And so you can't do that. So another fun example, this is while we're being nerds for a minute. When the Roth first passed, we had the Financial Peace University class taught. We had a retirement and insurance lesson. And then we had to go reshoot that. because the Roth changed everything.

That's right. Because everything was traditional before the Roth. That's how long I've been doing this. And what we kept doing was we got caught up in, me and the guy that was doing it, we got caught up in the same stupid trap of being nerds. And here was the trap. In those days, you could put $2,000 into a Roth IRA back then. That was the limit?

That was the max. Wow. Okay. So $2,000 into your Roth. And we kept saying, okay, but $2,000 after taxes is, only 1600 or 1400 or whatever, right? And so we were trying to compare apples to apples the 1400 growth with the 2000 growth, which is accurate if you're in a test tube. But you're not living in a vacuum. You're not living in a test tube because what happens is when you tell people

to do traditional or you tell them to do Roth, in either case they put in $2,000. And so effectively, when you put in Roth, it took you almost $2,800 of income because you had to pay taxes on it, to get to the 2000. So it's not apples to apples to compare 2000 Roth with 2000 non-Roth. But nobody in the real world does that. They just max it out. They're not thinking like that. They just go, I'm putting, what did she say?

She said, I'm fully funding everything my 401K will. She didn't go, oh, I have to calculate the after-tax implications. Now, she's just like, I'm going to put in the full 2000. the full 8,000 or the full, whatever the number is, right? And we don't calculate. But we were trying to nerd out and go, well, it's not really fair to compare 2,000 after tax with 2,000, but in the real world? No one's thinking like that. People don't do that. They just fully fund the stupid thing. So in a sense, when we tell you to do Roth, we're tricking you to put more money in. Yes, I can see that. Because it's an aftertax investment.

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We had one the other day. The lady sold her house for $350,000. The appraisal came back at $380,000. Yeah, she was like $30,000 bucks off. It's too late to fire them by then. Yeah, you got a real estate agent and didn't know what they're doing. We listed the house too cheap and we sold it. It's under contract.

Oh, my God. Yeah, so you want a pro if you're doing a real estate transaction. And a pro is somebody who's done a lot of transactions lately, not someone who got their license three weeks ago and you know them from church. Ah, eh, wrong answer. Only one good part of that, and that was church. But that was it. The rest of it is a no, okay?

So that's it. So Ramsey trusted is where we vet real estate agents for high performance and following the Ramsey way and have a, the heart of a teacher. And they're going to have your best interest at heart. And you can find a Ramsey trusted agent for free at Ramsey Solutions.com slash agent or click the link in the description if you're on YouTube or podcast. Hope is in Brooklyn, New York. Hi, Hope. Welcome to the Ramsey show. Hi. How are you? Better than I deserve. What's up? Yes. I am getting ready for retirement, hopefully in the next four years, four years. And I want to

find out if I'm ready for it. Being that I had just purchased a, I purchased new home last year. I put down about 30% and I still owe about 220. But I want to find out if the 600,000 that I have in my 403B, my, I have my three months worth of expenses and I'm on baby step six now wanting to pay off that mortgage. What do you make? What do you make? I want to find out if I'm running for it.

If I should retire. What do you make? Right now I make about 150. Good for you. And I know my pension will be about $98,000 a year. Wow. You're in great shape. I just, I don't know if I feel like that.

Okay. Is your $220,000, that's the mortgage, and you have $600,000 invested. Is the $600,000 invested in good, growth stock mutual funds? Is it growing? Right now I have about, I have the option of putting what I invest now, which is 17% of my salary, in like a fixed. No. And then like, so I do that right now? No.

7%? No, we don't do fixed. I'm scared. 7% sucks. No. Okay. You should have some good mutual fund options of some kind in that 403B. I do. I did for a long time. And then in, you know, 2022, I got a little scared because I was so close to the climate.

Yeah, because I lost so much during the COVID. And then I waited to get most of it back. And did you pull it out? I didn't pull it out. Then you didn't lose it. You've regained it and more. Yeah. But you pulled it out in 2022. Yeah, and then I put it into six for seven percent. Major mistakes.

What I do now is six. Yeah, major mistake. Okay. Okay. I want you to be in good growth stock mutual funds, something like an S&P 500 type of a thing, okay? Which I hope I can make you cry. Are you ready to cry?

Okay. When you pulled that money out in 2022, if you had left it in there, it would now be 1.2 million. That's what that mistake cost you. Because in the last five years, the stock market is doubled. You don't lose money unless you take it out. Yeah, that's when you lose money. So you pulled it out, and then the best five years in the last 20 have happened.

And so you just missed the biggest wave ever. But if you do... Because you pulled it out at exactly the wrong time. Your timing is preciously horrible. But if you do... take that $600,000 and do what Dave is saying, and you've got four more years. You said you're looking at a four-year horizon. If you invest your 1800 or your $1,900 a month, that still gets you to $1,0.42. Yeah, you're going to be, and that's in four years. Okay. And meanwhile,

and so you're going to have a million bucks if you move it into good growth stock mutual funds, and you keep adding to good growth stock mutual funds for the next five years. Don't take it out. Don't take it out. And don't take it out. All right. Just ride it. Because you're going to be making $100,000 a year's a pension. And in that five years, get the mortgage paid off. And then that house is going to be worth a million dollars, and you're going to have a million dollars.

And by the time you get to $70, you're going to have $4 million. So you're going to be fine. Live on your pension and let this all grow. Yeah. You know, I grew up very, you know, hands and mouth. And my parents are not very good with financials. So I did the bankruptcy thing. I even did the debt consolidation.

So to be where I'm getting, like where I am now, I feel like... I think you're in pretty good shape. I just don't want you to be fixed. All right. And growing up hand-to-mouth doesn't mean be dumb. Yeah, you've gone far beyond that at this point. Yeah, you're way beyond hand-to-mouth. You've got a $100,000 of your pension, a house that's not going to be paid for by the time you retire,

and a million dollars will be in there if you go do what we tell you to do. And if we're half wrong, you're still... okay. Take it out of fixed and put it back in the stock market. Put it back in the mutual funds. Not the stock, it is the stock market, but good growth stock mutual funds, something like an S&P 500. That's what I would do. And I'm older than you. Yeah. And start describing yourself based on who you are today, not who you were 50 years ago. Yeah. I had to learn a lot and I have learned a lot because of where I came from. That's a proper narrative. Not I have to do 50s. fixed because I grew up on a dirt floor. No, you don't have to do fixed because you grew up on a dirt floor.

Matter of fact, that's the reason to not do fixed. Scarcity. Yeah, exactly. And panic and fear and all those things. It's half glass full thing. Yeah, half glass empty. So, yeah, that's the thing. And so, but it also doesn't mean you need to take rash risks. I'm not telling you to put it in crypto or go to Vegas. And I'm not telling you to bet on draft king. None of these stupid things. That's the other side of the coin, right? Where you go crazy. And so, no, this is steady and boring. It's just not as boring as fixed.

So here's a good rule of thumb, folks. Give you a little math formula. Today's show has been a math show today so far. There's an old-fashioned thing that was taught to us years ago as math nerds called the rule of 72s. If you take an interest rate and you divide it into the number of 72s, it'll tell you how long it takes a lump sum to double. So an example would be 7.2 years divided in, or 7.2 interest rate divided into 72 would give you 10 years for the lump sum to double. Reverse it. I'm going to put, I'm going to invest it at 10% instead of 7%.

Then it will double every 7.2 years, right? And so that's basically what we're telling her. Yeah. Okay. Are you going to wait 10 years for this to double or five years for this to double? that's kind of the formula difference between 7 and 12 that's what's going to end up so and that's the 600,000 we're not touching and if you just said okay I'm going to run this thing out at 11 and a half 11.8 which is the average that the S&P has done divide that into 72 well there you go now we've got to

about the time she retires it's doubled which is what you did yeah and you can do that in your head you don't need a calculator to do that it's not bad at all And so just divide the interest rate that you're going to invest in into 72. And it'll tell you how long it takes a lump sum to double. So you start with 100,000, then I'll be at 200, then I'll be at 400, then I'll be at 800, then I'll be at 1.6, and then I'll be at 3.2. And every time, every time. And so if you divide 10 into that, it's just seven-year rolls, every seven years.

So take your age and three times, 21 years from today. It's going to double three times. Yep. and that gives you some confidence that you're on the right track with some of this stuff. You can also use the Ramsey calculator, which is what we're using when we're on the air. It's on our computer. You go to our website, the Ramsey retirement calculator. And all it is is a basic financial calculator.

It's nothing super fancy, but it's just an easy way to do it. And you can plug in and go, what if I put $100 a month at 12% from age 25 to age 65, it's $1,172,000? And the calculator will show you that. Okay. I can be a millionaire if I invest $100 a month from age 25 to age 65 at an average of 12%. Hmm. Where you get 12%? S&P is averaged 11.8 since it began 80 years ago.

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That's boostmobile.com slash Ramsey. $25 forever requires customers to remain active on Boost Mobile Unlimited Plan. Jake's in New York City. Hi, Jake. How are you? I'm very well. How are you? Better than I deserve. What's up? I drive an older car, a little bit higher mileage. and I was wondering if it would be smart or irresponsible to buy a $45,000 car around there.

Okay. Well, the way we determine if something's irresponsible around here is ratios and percentages. So let's play with some numbers for a minute. Number one, you're paying cash? Probably putting down and then financing. Okay. I can answer your question then. No, it's irresponsible.

You should never have a car payment. You should ride a bicycle for you have a car payment. How long have you been listening to The Ramsey Show, Jake? A couple years now. Okay. Yeah. Cars are the largest purchase that Americans make that goes down in value. And they handcuff you financially.

So you'd never need to finance one under any circumstances. There's not a circumstance ever in 35 years of doing the show. We told somebody to buy a car and finance it. And if you're going to buy a car, You should measure all the things that you own that have wheels and or motors. And if the value of the total of those things and all of those things go down in value, if it's wheels, motors, batteries, I don't care. You add it all up and it goes down in value.

If the total is more than half your annual income, you have too much tied up in things going down in value. So that's boats and campers and RVs and C-dos and tractors and lawnmowers that are now $12,000. dollars and all this crap right and cars and cars and Teslas and cars and um trucks and anything you want to add up anything you want to have and I've got a bunch of stuff with motors in it I'm a old redneck I like things with loud mufflers and I like I like cars I like trucks I love I love all of it but they all suck as an investment and so they need to be a small part of your financial picture otherwise you've got two much invested in things going down in value and then you're scratching your head and wondering

why you're broke, why you're doomed to be middle class. Think about this, and this is something I've spent a lot of time thinking about. If you synthesize the data, you're going to end up with about 60% of working Americans having car payments. Then you look over and say, well, that's suspiciously close to the amount of people who are living paycheck to paycheck, which is also suspiciously close to the amount of Americans around 60% would say they are concerned about retirement because they don't have enough saved. That is a very interesting correlation. It's the car payment. And they're concerned about

their student loans for their kids. Yes. Because they still have theirs. Yes. Because you have a car payment. That's what's keeping you middle class. It's what's keeping you paycheck to paycheck. That's the money that you should have been investing for your future. It's tied up in your car payment. And many of us have two. So. And the car industry, the cars that they're building today are just fabulous. They're engineering works of art. I mean, they're the most of the cars. There's a few them piece of crap, but the vast majority of cars today are phenomenal. And boats, for that matter, phenomenal vehicles. And compared to, you know, whatever, the back in the day, okay, they don't make them like they used to. Thank God. They're a lot better now, you know. But the car industry

has also done a excellent job of making. making people associate their personal worth with what they drive instead of looking at maybe your net worth. Yeah, absolutely. I am what I drive. Have you seen those things that jokes about if you drive this, you're this? Yes, I have. And some of them are funny and some of them you can't repeat.

And so, but yeah, they're funny as crud. And so. But I mean, if you really look at it further, it's in direct opposition to what people say their intentions are. Yeah. Because will you talk to most people to say, well, what do you want for your life? What do you want for my kids? I don't want my kids to live the life I lived. I want to be able to send my kids to college. I want to be able to retire. I want to be able to play golf, right. You say all these things about what you want. But you say, you're not showing it with your dollars if you're carrying around the car page. You're not with your actions and your behaviors. You're exactly right. You're exactly right. So, Jake, you got us off on a tangent. Yes, you did. We're preaching that everybody else, not just you now. But no, you don't get to buy the car if you're doing to do what we say. Not that one anyway. So, you know, that's the angle. And, you know, you're talking about that. That's a funny thing.

When we started talking about this years ago, I was doing a seminar with the guy in the financial world. And he said that their company had done surveys and asked people, you know, do you think it's important to save for your children's college? 97% said yes. Yes. How many of you are saving for your children's college? Three percent. Really? Wow.

97% aren't doing what they say is important. Yeah. It's very interesting, very interesting number. I don't know if it's that today, but that was a long time ago. But people will say they're not doing it because they can't and they leave it there. And that's not the reason. Exactly. Choosing not to.

Declan is with us in Atlanta. Hi, Declan. What's up? Hey, how's going on? My question is I was a third employee at my company. I own about 1.5% of it. I was offered to buy back my shares at a $50 million. evaluation, which in my opinion, is low for the company, which is fine, just because we're trying

to get, you know, clean up the casings a little bit. I misunderstood you. Did you say you own one and a half percent of the company it's worth 50 million? Yes. Your one and a half is worth 50 million? No, no, no. The company is worth 59. Oh.

Okay, so it's capitalized at 50 million. Can you sell your one and a half for 750,000? I could. theory. Well, no, it's not a theory. It's a question. Yes, I could. Okay. All right. And so, all right, now your question's what? I mean, I think the company's worth about $250 million, so it's quite low. So that's why I thought you said it was worth $50 million. The shares are being offered to be purchased back at $50 million by the company, at a $50 million valuation. Uh-huh. Okay. All right. And you're how old?

Um, 29. And what do you make a year? 155. Okay, cool. All right. And your question one more time. You think it's worth a lot more than the valuation that they're offering to buy back at? Yes.

And so your question is what? My question is, so I bought, or I exercised my options to purchase my shares this year, which cost me about 90% of my savings between the actual purchase of the shares and the AMT tax. So on the surface, I would never have sold the shares at the $50 million valuation because I think the company's worth about five times as much. Yeah. But I'm wondering if you think it's a bad idea to distill my savings by so much. It's already, you already did it. Well, I can still sell the shares that I purchased at the $59 valuation.

And you bought them for what? I mean, it varies in range from like. $15 per share to up to... I mean, you said you cleaned out your savings. What was the number you put to buy the whole thing? Oh, well, I haven't paid all this. Because the AMT tax, I don't have to pay until I actually pay taxes in 2027 for the 2020-pack year.

Honey, how much... What's the check you wrote to buy the shares? I paid $17,000, but I'm expecting to pay another $80,000 in AMT tax. Okay. All right. So you got $100,000-something thousand dollars including tax invested and it's worth $750,000? Yes. Okay.

So let me ask you this. If you had $750,000 in the middle of the table in cash, sitting in your kitchen table, would you go buy these shares? You would because you think they're worth $5X that. Correct. Yeah. I wouldn't. It's too big a gamble for me. It scares crap out of me.

It's a startup company brand new. And it's not even publicly traded, I don't think, is it? No. This is private stock. Yeah. And so their valuation is. It's up to them on how they run their accounting. Yeah, which is why it's all over the place.

And when they choose to- Are they planning to take it to an IPO at some point? I think it's more likely that we sell, which is another reason I chose to buy the shares when I did because of the QSBS laws and the tax protections that are provided upon a QSBS liquidation. Okay, so let me tell you, this is a... You're playing the roulette wheel in Vegas,

and you've got it distilled down to where you don't think there's risk here. But basically you put $100,000 on the table, and so far they stacked chips in front of you that we think we can get $750 for. And you're going to push the $750 back on to another bet, open to get $5x that or $10,000 that. And sometimes you don't hit red. Sometimes you hit black. And you get Zippo. So you're sliding all your chips in the middle of the table, James Bond. This is a high-risk play.

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is my co-host. Michelle's in Pensacola. Hi, Michelle, what's up? So we're trying to figure out how we can get out of this constant spiral of going into the red every month. My husband has been teaching for 10 years, and he only makes $50,000. And so he has a second job working at a grocery store that they can only schedule in part-time, so it mostly makes $80 a week. And then he's also trying to do lawn care on the side, trying to see if he can't. find somebody to sell woodworking stuff too. We've both been door dashing, over-eating, sparking, all the side gigs that we can.

And it feels like we're just spinning our wheels. And we have no clue where to go to get income up. He's applied online. And I've been listening to you for a few days. I know that you have to know somebody. And so that's been hard for him to find something else with a teaching degree. He's tried going into the military, and one branch said, no, your GPA isn't high enough, actually, for that route. And so I don't know if I've heard about where you can make digital marketing stuff and sell it on Amazon and its passive income, but I don't know how legit that is.

It's not. Yeah. So how much debt are you guys carrying? So I have student loans from years ago that are actually in department right now. That's not causing your job, okay. What was your degree in? So I actually wasn't able to finish. I was dumb my first year of college.

They told my high school, said, go to a private school, it's great. And then I made stupid choices. Well, what did you study? What did you study? What were you interested in? At first it was chemistry. Then I changed to teaching. And right now we've got three kids, seven and under. And so to finish, I'm one semester away, but to finish, I would have to work a full-time teaching, you know, student teaching job while paying for the college classes and have to pay for child care while I'm doing that. And so I can't finish until my kids are old enough to go into school. Or are we going to rank them up?

So, wait a minute. How much is on the student loans that you're not paying on? It's about $60,000. Okay. And what debts do you have that you're paying on? Car payment? The current, yeah, we have a truck that he uses for his landscaping. I don't care.

How much do you owe on the truck? How much do you owe on the truck? We looked at the other day, we owe 24, and we could sell for 21. Good. And what, shall it? And what's the next one? It's a van. And it's about the same. We can get it. We can get 19 out of it. But we owe 24 on it, too. I just don't know what we would do because we can't get a loan or anything to get another car. And we wouldn't clear anything to have any vehicles after that. What other debt? That's it. No credit cards? No, we have a secured one, but it stays at zero. We only got it because of renting a car a few years ago, and so it just, it's only got $500.

You're just making the payments on the two vehicles, and so it's just a struggle keeping groceries then and the lights on. Yes. Okay. How much are you guys? How much are you bringing in as income every month combined, the two of you? So I bring home. probably at most on good months about a thousand to $2,000 a month. But that's only during the summer while he's able to stay home with the kids or he does something else.

And what's he bring home? So he brings home the $50,000 from teaching 80 a week from his grocery job. And he's working four hours a week at the grocery store? He makes $16 an hour and they only schedule him. from like three 30 to $80. $3.30 to $4.10. That's all those schedule him. It's not worth doing.

It's not even worth doing it. It's a joke. 3,500 from the teaching and I don't know, another less than $1,000 from the grocery store? Yeah, from everything. Yeah, yeah. He brings home after insurance and everything. We actually get home $3,000 from teaching. Okay, plus your $4,000.

Do you guys have a budget? The rent is $2,000. Okay. Do you have a budget? I just signed up the other day for the free child with every dollar. And so we've been trying to figure that out. Good. So we'll start there. And what you're going to find is what you've just discovered, which is obviously your rent's 50%. The rent's not the problem so much as the income is the problem. But in the meantime, on that budget, the way you need to line it up is by your four walls

and keep those things first and foremost right now. Obviously, you got to pay rent, right? You got to do that. You got to make sure lights and water and utilities are on. You've got to make sure you've got groceries and you've got to make sure you've got transportation. Now, aside from that, all of my focus would be geared towards we've got to work, work, work, work, work, and find $3,000, $5,000.

Not four hours a week, though, and call that a job. Yeah. Okay. The grocery thing, you know, we've seen. spent more time talking about it than he does working. I mean, he doesn't even go over there hardly, four hours. It's not even worth doing. Yeah.

I mean, that's a joke. And when he's actually talked about stopping that. What he needs to do is what he needs to do start tutoring. What does he teach? And so he teaches PE and that's actually something he's in the middle of trying to do is start like a homeschool co-op. I don't want to start a homeschool co-op. I want to teach a kid to play basketball, $50 to $40 an hour.

Give him, why can't he be a skills coach? Yeah. Offer. Everybody's in private sports. Why can't he do private teaching? A buddy man that played D1 basketball and he makes $50 an hour teaching 13-year-olds how to play basketball. Yeah. Yeah, like that's the home school thing he's trying to see.

Can he work with the school? Can he work with the school and do a camp and put on a camp? That's, I mean, there's so many, the point is there's so many ideas. I'm worried that he's lost his spark. There's a whole bunch of things he's doing not at all. Yeah. And you're listing them. An hour a week at landscaping, four hours a week at the grocery.

None of this is anything. That's why you don't have any money. So we need something that we're working 40 hours a weekend in addition to us teaching. Yeah, because the purpose. And then by the way, if you've got all but one semester in chemistry and teaching, you can tutor chemistry. So go over at the high school and tell people that you're tutor kids on chemistry. And they'll come to your house in the afternoons and you charge $40 an hour. Okay.

Yeah. I didn't think about that. I'm a chemistry major. It's a whole lot better than freaking DoorDash or $16 an hour bagging groceries. Yeah. Yeah. And these cars have to go. They're insanity.

You guys have bought cars like you make six times as much income as you make. I mean, what the crows. A $25,000 truck? Are you crazy? That has got to go. So keep the van, get rid of the truck, and then quickly pile up enough money to get you a dumb but $4,000 van and sell this dumb butt van. Your car payments are ridiculous. As your business grows, everything becomes more complex.

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that's the letter Y-R-E-F-Y.com slash Ramsey might not be in all states. All right. Today's question comes from Grant in Montana. He says, you teach your listeners not to panic during a stock market downturn and to just hold on for the ride. Is there ever a scenario where one would consider changing their investment portfolio? For instance, if someone is getting close to retirement. That's an interesting question. Dave, I'll let you take that. What do you think? I mean, I could tell you what I would tend to... Well, the people say when you get close to retirement to move it, that. That is a theory in financial planning called asset allocation. The theory says when you're young, take more risk. And as you get old, move the assets away from risk because you need to be able to count on them. Target date funds. I disagree with the theory and I certainly disagree with the implementation of the theory. And let me walk you through.

Why? Okay. So the typical financial planner that follows that theory will tell you, okay, I'm 65. At 65, you should move your money towards bonds and growth and income mutual funds, which is largely bonds and dividend-paying stock companies, and get away from aggressive growth mutual funds, get away from growth-stock mutual funds,

get away from something that's an S&P, and move even into high-yield savings. Okay, so when you do that, you lower your returns from 10 to 12% down to six, to, or even five to eight percent would be your portfolio change. But you take less risk. The reason that is dumb is that when you retire, if you have saved substantial money, like we teach, and you get there and you've got $2 million, you've got a million which people call here all the time that have or have the potential to.

We talk to them all the time. We show people how to do that. So if you have $2 million, when you retire, you don't need the whole two million. million dollars right then. So if it goes down a little bit the next year after you retire, it's not the big deal. Because all you're going to be doing is living off a portion of the returns. You're not even going to be taking off all the returns. So if you've got $2 million and it's invested and it's making 10%, that's $200,000 a year. You probably don't need $200,000 a year. You're probably taking off $150. So you leave $50 in there. It's growing and you never are touching the nest egg.

So the nest egg can go up and down without really affecting your life. You don't need the safety. When you would need safety is if you have no money. Now, if you got $100,000, maybe. But if you've got a million, it changes the whole scenario, or $500 to a million or $2 million or $5 million or whatever it is. Okay. And so I'm, you know, I've got substantial assets, millions and millions.

So I've moved zero to safety. And here's the other reason that's dumb. Okay. I'm 65. I'm in good health. All right. I'm not overweight. I don't smoke.

All that kind of stuff, right? So all the statistics say, once you make it to 65, average death age of a male now is 74 females is 76. But that includes infant mortality. Okay. So when you make it to 65, the average death age is more like 90s. You got a long ways to go is what you're saying. Yeah.

So I got 25 freaking years for that to make 6% or make 12%. And I'm not doing that. So that's just dumb. So that's why I think the asset allocation theory is just bogus. Because it assumes everybody's going to need all the money right now, which you don't, and that you're going to die right now, which you're not. I think you're right. I think this question is probably someone who doesn't have a lot there.

and when it downturns, it probably makes them feel the significance of whatever they're pulling off of it. Now, what I would do to his question, and it's a good question, is there ever a scenario consider changing the investment portfolio? Yes, I would change my investment portfolio. When I have a mutual fund that is not keeping up with other mutual funds of its category. Yeah, I agree with that. And so if I've got a, you know, the S&P 500 is the baseline of the stock market.

And so if my growth stock mutual fund is not outperforming that regularly on average over a long period of time, not in one day, not in one month, not even in one year. But if I look at mine about once a year and I go, okay, is this thing trendlining? It should be competing with the S&P and beating it. Above it. If it's coming in less than the S&P, I should just be in the S&P, it'd be dumber, okay? Be easier. I could just dumb it down. And so, and I've got aggressive growth stock mutual funds.

I don't compare those to the S&P. I compare those to the other indexes that are measuring that market. Right. So I want to know other aggressive growth stock are, is mine underperforming them? Then I would change my portfolio. But you're not changing your strategy. You're just changing your funds at that point. I would change the funds.

I would even change the strategy, but only over a long viewpoint. When you ask this kind of question, when you change your investment portfolio, it's often people that are looking at it every day. And that will drive you nuts. Yeah. So you need to think on this, think in blocks of time of a year and five years and ten years. And when you think of blocks of time like that, then is there something indicating you need to change your mix? Yeah, that'd be okay. That'd be fine.

And or if something has happened and, you know, your view of the world is different. Okay? That's fine. So I'll give you an example. If I died and Sharon looked at what we were doing and said, okay, I understood it when Dave and I were doing it, but I don't like it. I don't like that. I'm going to go all safe just because I want to sleep better. Well, she could do that.

That would be okay. And so if I talk to someone that's 78 on the air here and I'm talking to them, any amount of variance is going to cause them to stay awake at night, I'll just put them in high-yield savings. That's fine. Just I'd rather you sleep at night than, then, you know, do this. But there's all kinds of evidence that says you'd be fine doing it the other way. But if your emotions can't handle it, then that's your risk tolerance. Then we wouldn't do that.

We wouldn't tell you to do that. But no, I, the funny thing about the financial world, and it seems like today's been the day on this. It really has. It's last two days. But is that the stuff we're taught in that world in Georgia's, studying the CFP materials right now, certified financial planning materials, and he and I are having this great discussions over some of the crap they're shoveling out. And he's learning some good stuff academically, but it's also, is that they present this stuff like it came from the Bible or something.

Like it's absolute truth because it came from this group of nerds. And this asset allocation model that you have to move to safety as you get towards 65 years old is taught with such fervor that it's as if you don't believe it, you don't believe in the law of gravity. or something. And so me being on the air for 30 years saying, I don't believe it, I think it's a bad plan. All those guys, they go bananas on Dave Ramsey. The Dave Ramsey doesn't know. He's going to, all he's going to cause all these people to lose everything they own. They're all going to be poor because of Dave Ramsey. No, they're not. They're going to have a lot more money. So, but do you have the same philosophy for things like 529s as the child gets closer to

keep the same? Yeah, because here's the thing. You're not taking the risk. The day they go to college, some of that money is not going to be touched for four years. That's right. It still has time. And so if the market, if Trump bombs Iran and the market drops, it has time to recover. Don't panic and take it all out and lock your losses in. You know, in 2008, when the market went in half, people talked to Warren Buffett and said, Mr. Buffett, you lost a trillion dollars today or you lost a billion dollars today.

He goes, I didn't lose anything. I didn't sold it. You lock your losses in when you sell it. As long as you're holding it, you're riding the roller. coaster and no one gets hurt on a roller coaster except those that jump off in the middle of the ride. And so the same thing's true there. Now, what you could do if you're coming into college and let's say you got $200,000, I might pull the first year out and put it in high yield savings. You know you got it. And then that other 150 and then maybe the next year I, you know, I start talking about that. But the chances of that statistically being down over four years,

very slow. Almost zero. Yeah. Here's what nobody warns you about. You're behind on payments, you signed up with some debt settlement company, you're making your monthly payments to them, and then one morning a process server knocks on your door. Surprise, you just got sued by a creditor. And that company you trusted? Not a law firm. They're not built to represent you if things escalate. And now you're scrambling to figure out what to do next. And that's why I tell people about Guardian litigation group. Guardian litigation is not a call center. They're actual attorneys at a law firm. And from day one, you're assigned a real attorney who can represent you if a creditor takes you to court. No scrambling when things go sideways, just real legal protection built in from the start. And look, the best way out of debt is still the budget, the plan, the baby steps. But if you're already in default and legal threats are coming your way, Guardian has your back. Their attorneys have helped over 55,000 people settle more than $600 million in debt. So get real legal help at guardianlit.com slash Ramsey. That's guardian l-it.com slash Ramsey. Attorney advertising, results may vary and no specific outcome is guaranteed.

Well, we wish we could get to every call and question here on the show. If you've got a money question and you want an answer for your situation, head over and use Ask Ramsey. You go to Ramsey Solutions.com, and Ask Ramsey is our free AI tool that's built and trained only on proven Ramsey principles and answers. So we didn't put anything else in the data set, so you're not going to get anything except a Ramsey answer. If you want an answer from the internet, go the internet. But if you want an answer from Ramsey, go ask Ramsey. Your question today is easy at Ramsey Solutions.com. Ask Ramsey.

It's a great AI tool. We're trying to train it to be smart aleck like me. It didn't quite got there yet. But we'll get there. Ask your question today. Ramsey Solutions.com or click the link in the description if you're on podcast or YouTube. John is in San Francisco. Hey, John, what's up in your world?

Hey, thanks for taking my call. Sure. How can we help? So I'm dealing with three pending debt collection lawsuits right now, and I have another account that's still in collections that's probably going to turn into a fourth lawsuit if I don't get it resolved soon. I'm trying to negotiate settlements,

and it's been pretty overwhelming. Doesn't make sense to hire an attorney to fight them or even look into, like, Chapter 7 as a last resort. I don't think I'm there yet, but wanted to know all my options. What's the amount? How much do you owe these guys? So the four in total is $21,000.

Uh-huh. $2.6. The two I'm trying to negotiate, you know, the lowest will come down to $6,000. You know, I'll try to offer them $3,000, but, you know, they won't budge. I do have around $8,000 in savings just to try to deal with this. But, okay, so you've got two in court, is that right? So three in court. Okay, and the three in quarter or how much?

Give me the amounts on those each. Okay, so one's $3.1,000 are $3,100. Okay. The other is $4,300. Mm-hmm. Every one is $5,500. Okay, and these are credit cards or $3,300? what? They were personal loans that I took out in my early 20s. So you can't take the 8,000 and

clear the top two? Yeah, you could. Have they offered you settlements on any of these? They offered 6,000 to take out of the first two that I mentioned. Love that. Okay, that's 7,400 discounted to 6,000. Okay. So you could do that and you'd be down to 2, and then you've got 5,500. Now, personal loans, are you talking about with a bank or a rip-off finance company or what? Yeah, it was just like through the bank or through, you know, just through, what do you make? 95 a year. Why are you behind on these little bitty loans if you make 95 a year?

So I only started making 95 for, I think, about a year. Before that, I was making maybe 65. Yeah, but if you make 95, you could have cleared 21 in one year. Why haven't you? I also have some more debt on top of that. How much? $12,000. On what? So about $7,000 in credit cards and the rest in the student loan.

Okay. What about... How much do you all in your car? No car payment. are you married? Yes, and not married. I have a girlfriend and one kid. Okay, but you're...

How old are you? 31. Okay, and you're, is this family, is this, I'm putting family in air quotes, is everybody together, like you all live together? Yes. And you're all contributing? Okay.

Okay. I mean, yeah, I do want to get married and just, you know, I just want to do. with the debts first before. I don't want her to be liable for any of this. She's not going to be liable for it. Yeah, that's neither here nor there. I think part of cleaning up this situation,

all of this is a mess, not just the financial side. So part of cleaning up this situation is going to involve the relational side too. And I think you'll be shocked at how much peace you get from putting a nice little bow on your family situation and making it legal. And then now you can actually have real support as you go and start cleaning up this mess. And to Dave's point, you make $95,000. a year. I would. You are not bankrupt. That's one of your answers. Okay. Yeah, you're not bankrupt. Take the money that you have, clear off the first two. Now you've got the $5,500 one and you never said what the

fourth one was. Well, it's, um... The fourth one was 9200. 92. Okay. And that one's not even in court yet. So you kind of have to focus on what you need to focus on. The first two that are in court, you can clear those. And then you're not going to be far away from getting the money that you need to clear the third one. You make enough money to just pay these things. Especially if you get settlement offers. So pile up, you know, you've got $8,000 now. We're going to spend six of it and get rid of these two.

Get it in writing before you give them any money. Don't give them money unless you get the settlement in writing. Did the offer, the $6,000 offer come in writing on email? Yeah, I can answer it. The only thing that concerned me was that they wanted like my bank account number. I'll wire you the money or I'll give you a prepaid debit card number. Don't give a prepaid debit card for $6,000. Do not give them access to your checking account under any circumstances.

They'll clean you out. They lie. Okay. But, you know, you can clear every bit of this and there's nothing to panic about. I think you're... But here's the deal. You're going to have to get proactive and get after this. Yeah, you're in a state...

You've been screwing around for a year. Your life is just in chaos. and you need to clean it up. Like I said, go ahead and marry the girl. You need a budget and see where this $9,500 is going or $95,000 is going every year. You need to put some formation to your life. And I think that that's going to help you out a lot. And I think that this is just the kick in the pants you need to get there.

No more eating out. No more partying. No more happy hour. No more nothing. All you're going to do is work and pay bills and get your life back. Your life is screwy. up upside down because you're not addressing these things and they're coming after your throat. And so, you know, you got to address them. The good news is we can get rid of two of the four

that are pending going towards this, cut up the credit cards, get on a budget. You can clean every bit of your debt, all of it, everything you've told us about in a year, everything. And what we'll do is we'll set you up on the every dollar account. And yeah, so our suggestion is clear those two, get married this weekend, doesn't cost any money. she's not liable just because you got married. And then the two of you sit down as a husband and wife and start building a life together, which involves cleaning this mess up. But y'all are just running around, act like you're freaking 16 years old.

And you're getting your head taken off doing it. So this is no longer a game. We're down into adult land now. And that's what we've got to play. You've got to play serious. And no, you're not bankrupt. And no, you know, there's no, you don't need an attorney. Because if you go to court with or without an attorney and the question the judge asks is,

is this a valid debt? Yes. Have you paid it? No. Guilty. That's simple. You lose the case. Because it's not a question of your character.

It's not a question of what happened. It's not a question you didn't have a job. It's not a question of your mama. It's not a question of nothing. Just simple. Did you pay the debt that you owe? No. Boom.

Judgment. Okay? That's simple. The lawyer can't keep that from happening. The only thing a lawyer could do is maybe, maybe could be negotiating better than you've been negotiating. Because your offer here of $6,000 is not a great offer. But given that you've got eight, I'd get rid of. I'd do it in a heartbeat.

Plus, it's been around forever. So it's time to just case closed. Yeah. So these things when we ignore them and sweep them under the rug, we not only get a lumpy rug, they have a high rate of resurrection. And now you have zombies walking all through your... They come up out of the grave and you have zombies walking through your house. And because we didn't deal with them.

And so what you've got to do is take the zombies out. Fast. Hardcore. A lot of banks are happy to hold your money. But Fairwin's credit union helps you make progress. Most people spend years focusing on their financial goals and never stop to ask whether their bank is helping them get there or just holding onto their money. The real goal is building an emergency fund,

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which is linked to your free Fairwind spend, smart checking account to tell the world you think differently about money. So look, if you're working the baby steps, your bank should be helping you move toward financial freedom, not just park your cash. Go to fairwinds.org slash Ramsey to open your smart bundle and start making progress today. That's fairwinds.org slash Ramsey, insured by the NCUA. Patrickson, Madison, Wisconsin. Hi, Patrick. How are you? Hey, how's it going, Dave? Better than I deserve. What's up? So I'm 23 years old. I recently graduated college, been working for a little bit here, and I anticipate my salary over the next year being about $85,000.

Good. What did you get your degree in? I'm working in software. That wasn't exactly, I studied business. Okay. Good. Great. I'm where life brought me right now. Yeah, well done. Good for you. 23 and 85K is no chump change. Good job. Good job. Thank you. And so I have, I guess my question here, I have about $25,000 in student loan debts. And that's about, I think it's 4.25% right now.

Whereas I could, initially I was trying to pay that off as aggressively as possible. But now I'm kind of doing some of the math here. And my Roth 401K, I could hit the 24-500 limit there. And that seems to be a lot more money. and eat in the long time. So I did the math. I like calculated the difference between what I would otherwise. I'd probably otherwise be about 10k toward that per year. So it's really looking at $15,000 per year compound up until I retire. And it almost seems more the math checks out to where maxing out there are all. You're leaving things out of your math formula though. The

things you left out of your math formula are probability of completion and also risk. And neither one of those are mathematically factored in. And you've added risk by leaving the student loan in place. And here's what we found. We studied, we did the largest research project on millionaires in North America ever done. We studied 10,167 of them. The number of them that said, Dave, we became a millionaire by not paying off my student loan. And instead, investing was precisely zero. No millionaires did your plan. None. They all said, I'm going to get completely clear of debt, have a clean life, have a, be 23 years old, making $85,000 and be investing aggressively. You should pay off that $24,000 in one year or less if you're making $85,000

and you're 23 years old and then start your 401K. And don't put a dime in investments until you get that stupid student loan cleared up. This is not a freaking pet. It's not a leverage project. You left risk out of your equation. I guess I'm just worried about like. Okay, you do what you want to do. I told you what to do. Now, you go do what you want to do. Aaron is in Cincinnati. Hey, Aaron. Welcome to the Ramsey Show. Hey, thanks for having me. Yeah, so my question is we're basically a baby stuff five, I would say, somewhat. My wife's family, they have 30 acres. They gifted the kids all an acre.

and we sold our house last December and we moved in with them and her uncle is going to be the one building the house at a much better price than what we could ever buy. And so my question is, so we have the numbers of basically $130,000 down for the house. And I'm wondering if I should, depending on how the build goes, to cash in my life's 401K, of 37,000 in case things go over at the end. I have 127,000 in my 401K, and she's a stay-at-home mom with our two kids.

No, you should not cash in a 401k to do a build. And no, you should not be $37,000 over on your build. You need to do a budget in detail and then pick the appliances and the tile and the flooring and the brick and the roof that fits the budget in detail. Right. And if your uncle does know what he's doing, the budget should be accurate. Right. I guess the concern was her sister and brother both built houses by the same guy, and I guess what gets thrown around is always it's going to cost, what's going to cost, and they try to stay within budget, but with... Oh, so he doesn't know what he's doing?

I guess one could assume that, right? Yeah. I mean, because I just built a house, and it was millions of dollars, and it was within one percent of budget. Because the builder put the budget together. We went over the budget before we broke ground, and I told the decorator, my wife, and the builder, this is the freaking budget. We're not spending more than this. So make it work. And guess what?

We did. Okay. All right. Don't plan to fail. No, I don't want to plan to fail. Well, I mean, you're hiring a guy that fails. The last two times he failed. And you're already thinking about cash in a 401K.

How am I going to cover the failure? No, we're not going to do that. That's not an okay way of doing this. This is what happens when your uncle builds your house. You know, they draw the plan on a paper bag on the hood of a pickup. I sure hope not. God. No.

No, no, no, no, no, no, no, no, no, no, no, no, no, no, no, don't do that. No. Guys, when you're building a home, the reason people screw up building homes is you need a detailed blueprint that produces a detailed budget that produces a detailed schedule, line by line by line. So before you break ground in June, you should know in March we're putting in the trim. The cabinets are going in in February. We know exactly when they're happening to the day.

February the freaking 12th. And the cabinets are going to cost this because we bid them out. the plumbing fixtures are going to cost this because we bid them out. There's this many bathrooms, this many toilets, and this many sinks. And we're not buying the engraved sink. We don't have a budget for it. Or we are buying the engraved sink because we have a budget for it. Whatever.

I've done both. But yeah, the gold inlay crap or whatever that goes in the formal powder bath, shoot me. But I did buy it. I was going to say, I know you got it, though. Yeah, you know I got it. You know, it's SWI. Sharon wants it. But we didn't make it up after.

we started. You didn't go over budget. That was in the deal when we started. The powder bath gets extra upgrade. But when you when you set your budget surely a portion of it is that contingency that one percent or whatever that it will go over like to use round numbers. You can have in your mind contingency. Yeah but whatever if you say you just have the money to cover it. Yeah. But don't plan on well we just don't know we're making this crap up as we go. Yeah, you can't You know, no, because I mean, I built a house one time and a country music star built a house across the street. And it took them two years longer. And they spent literally twice as much money.

It's unbelievable. To build the exact same square footage. And both of them massive houses, both of them massive. But because the country music star and her decorator used the, I'm going to build by change order method. I'm going to make it up as I go. I'm going to look at it and then decide I don't want it and change it. Yeah. And they would put stuff in, tear stuff out, put stuff in, tear stuff out, reorder stuff.

The builder was ready to shoot them both. It was like a career house. He couldn't get away from it. It was like the worst nightmare next door to the best possible scenario. So you don't have to do that. And if your relative is incompetent, don't use your relative. Yeah, because he knew that going in. Yeah.

And, you know, well, he's giving us a good deal. He's not giving you a good deal if he's going to be $37,000 over. That's not a good deal. That's not, that's, you have to have a predictable environment in these things and control the controllables. It's project management. And when you do that, then you're going to be fine. And be careful about building on family land where we're all in a compound.

What happens when you want to sell it? Yeah, that's a good point. Who's going to be pissed? All of them. Because you broke up the commune. You're locked in. Yeah. But daddy gave me a free acre.

Yeah, but it comes with. You're stuck there forever. And the number of times you want to live there forever is pretty close to zero. So be careful with that part too. Wow. Nope. We don't cash out 401Ks to go cover overages that shouldn't have occurred because we should have had a good budget. Moral of the story.

And that's how you do it. So my builder and I were laughing about this. He's become a good friend. The last three guys that built houses for me are all good friends. because we simply developed a plan and executed the plan. You didn't give them a headache. And I'm the easiest guy. I wrote checks exactly when I was supposed to because I had the money.

And nobody, there's no bank involved. There's no appraiser involved. Yeah, that's great for them. There's no bull crap involved. And so we just write a check, build the house. And write a check, you know, take a monthly draw. They get their money. They stay on track.

They don't have any issue with me as long as they're on track. And if something's wrong, we come over here, we look at it, we fix it, and we keep going. We stay on track. So he said you need to write a book on how to build a house. But it really wouldn't be that long. I just covered it in that segment. Welcome back to the Ramsey Show in the Fair Winds Credit Union Studio. Jade Washaal, Ramsey Personality, number one bestselling author, is my co-host today.

Katrina is with us in Minneapolis. Hi, Katrina. How are you? Hi, great. Thanks for taking my call. So my husband and I are a new to your show. I recently just finished your book. and we have an entirely different view of our situation than we did a little while ago.

Thank you. You're going to cringe really bad when I read this, by the way. So I'm sorry in advance. Okay. All right. So we have $620,000 in debt outside of our mortgage. Whoa. Yep.

My house is worth $800,000. My husband makes $880,000. I make about $70,000. bulk of this is medical school debt. I guess what I'm interested to hear your opinion on is just how fast or what level of gazelle-like intensity that you say, do we need to go over or do we need to shovel ourselves out of this at? I'm wondering, after finishing your book, you know, I'm like, we need to eat beans and nice, we need to sell our house, we need to sell our vehicle, and I've just kind of got this

overwhelming, you know, weight. I don't think you need to sell your house, but I am going to recommend you get really, really serious about this. Now, let me make sure I got my numbers right here, okay, because these are wild numbers. He makes 880, and you make 70. Correct, yes. For a total of $950,000 a year income. Yes.

That is so cool. Congratulations. He works really hard. He's a hospitalist. Okay. He's a what? He's a hospitalist. Hospitalist.

Yeah. Wow. Way to go. Okay. And you have $610,000 in non-mortgage debt. That's all your debt except your house. Yep. Okay.

Let me just ask a simple question then. So 610 from 950 still leaves $300,000. Okay. Why could you not just pay this off in one year and have a still have a pretty decent life? Yeah, I think we can do it at a pretty intense rate. Our expenses, we have four kids. We, his student loans are astronomical. The student loans are what we're talking about.

Yeah. 950 minus 610 is 340. Yeah. the expenses that you need that would stop you from doing what Dave is saying? I mean, I'm thinking about your mortgage. How much is your mortgage? I think we pay easily over 7,500 a month. Okay. We have a suburban payment. No, the suburban payment is part of the six-ten. That'll be gone. Yes. Yeah. Yeah. So, you know, as of right now, my husband kind of told me he thinks we could get the car and some of these additional things taking care of immediately.

Yeah. No, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no. This is the guy that borrowed $610,000. Yep. Okay, his vote of doing this gradually is not a good vote. Okay? Mm-hmm. I want you to hear me.

I want you guys to pay your house payment, eat, live on $150, or $200,000 a year, and put $60,000 a month on this debt, and you will be done in one year. Tell us about the list of smallest to largest. Tell us what's included in the 620. Obviously, you said medical. Obviously, you said student loan, but give us some real numbers, and we're going to show you just how quickly this is going to go. Okay, so we have $70,000 in car, $30,000.

Again, you're going to cringe in a jet ski, $20,000 in an RV. So, um. Okay. Yeah. And then the other ones are medical? And then everything else is your student loans? Yes. Okay.

So if you're paying 60 a month, you would pay off the RV and the C-DU and a portion of the car the next month. And the next month you'd pay off the car. And then we would be down to just $60,000 a month going on the student loans. Yeah. And you'd have all those payments back, by the way. Yeah. Yeah. Because what's the total of payments between the car, jet ski, and RV?

Yeah. That's several thousand dollars. $120, I think. No, no, no, no, no, no. That's the balance. That's not the payment. Yeah. Yeah. So I go back, I go back to the simple math and I want to just stay there, okay? Because you guys are, you guys, you guys have ridiculous numbers. So 950 minus taxes, minus 610. And that means you have zero debt at the end of the year. And that also pays all the payments on all that debt because all of that's going towards the debt. Okay. So the only thing that has to come out of, of the balance is your house payment and food. And that's not too beans and ricey. You still got 150. That's what I'm saying. Or so income to live on after I did all that. And beans and right, by the way, let me just say this, because I know there's somebody out there. You said cringing, but let me just remind you, beans and rice while living in a, you know, a million dollar house

and driving a new suburban, that doesn't feel too bad. And keeping the RV. You know what I'm saying? And keeping the R. Right. So your life is not changing that much. You're just, reallocating, you're redirecting the money. That's it. Yeah. And think about at the end of that year where you'll be standing. 950,000 more income and no debt at all except a house. Wow. Wow. That's fabulous. Wow. Your biggest battle here is the husband. Don't do this. You don't have to convince me right now. Yeah. Don't do this gradually. Do it in one year. Mathematically, with the numbers you gave me, there's no excuse for this taking longer than a year. Okay. And you guys, you're going to have to, you probably have a ridiculous lifestyle. And, you know, it's probably okay

once you get all this debt paid off because you make a million dollars a year. Jeez, pretty incredible. So I'm thrilled with your income, but I will tell you what normally happens in these situations. Doctors, people in the medical field, they have spent their whole lives in school. And they finally get out of school. And they finally get out of school. school and they finally get some income and then they just go buy crap like this everywhere yeah and then they kick the can down the road and they keep their student loan around because they're comfortable like it's comfortable you can make when you're making a million dollars a year you can do a whole lot of stupid and get away with it you really you can be stupid for a long time and get away with it's right

it's different million dollars a year covers a lot of sins but but but but it doesn't mean it's a smart thing to do so I call it doc idas is what I call it because docs come out of school with a unique thing. They've been holding their breath. You know, other people went to school for, you know, 12 years of undergrad or 12 years. And then they went to four years of undergrad. But add another five or six or seven or eight or ten years for a doc, depending on their specialty, right? And they've been holding their breath all that time.

They've been delaying pleasure. Delaying pleasure. And then along comes Dave and says delay pleasure one more year. And they're like, n'n't, no. Yeah. That's Docitis. Uh-uh. That's what it sounds like.

If you hear, uh-uh, that's Docitis. That's it. I don't want to. I've held my breath long enough. I've delayed pleasure long enough. I'm going to reward myself. And I'm going to, I'll put my hands over my ears and go la, la, la, la, la, and act like there's not $600,000 worth of debt. But he went and bought toy, toy, toy, and didn't pay off the student loans.

He had docitis. It's straight up. Straight up case. You can see the symptoms are all right there, Doc. So I got your prognosis for you. and I got your prescription for you. One year, no life. Clear up your mess.

Then go have an awesome life. Hey guys, Rachel Cruz here, and I love summer. There is more fun on the calendar, more time with your people, and way more chances to make memories. But you know what else there's more of? Spending. Oh, between the extra groceries and gas and camp fees and family trips, it all starts to add up so fast.

And before you know it, money stress starts to steal the full. fun out of everything. And that is why I love the Every Dollar budget app, because it helps you plan your money, track your spending, and find more margin in your budget so that you can put extra cash towards the goals that matter most. Enjoy your summer without the money stress. Download the Every Dollar app in the App Store or Google Play and start for free today. Isabella is in Houston. Hi, Isabella. How are you? I'm doing well days. How are you? deserve. What's up? So my question is what order I should tackle my debt. I have 170,000 in

student loans. It's broken up into 12 smaller loans. There's 27,000 that's in a debt relief program, 4,000 on my engagement ring, and then 10,000 in a home water system. And so the issue is that the the 27,000 in the debt relief program is not accruing. interest. We came to an agreement with the creditors, and there's like a final deadline. So the end of my payments would be June 7th of 2028. I paid $1,200 a month on that. Okay. Well, then we're still going to work what we call the debt snowball, where you list all of your debts, individual debts, not categories, smallest to largest, pay minimum payments on everything but the little one, and attack the little one.

Are any of the 12 student loans smaller than the engagement ring? Yes. Okay. Then that's your smallest debt. Okay. And then your next smallest debt, and then the engagement ring. And when you get to the debt relief, I don't care what the plan is. just pay it off.

Okay. Pay it off early. Is it? Is it just you? No. So my husband and I both combined. So we pulled together. Our annual income is between 230 to 270.

Correct. And so we are really just, we kind of woke up, saw where our finances were, and we were like, okay, we need to figure out how to get rid of this. So we're on the same page. We just really wanted to know. like order of operation. Yeah. I do have baby number two on the way right now.

I'm doing December. And so we were trying to figure out what can we knock out now. We do have, we were doing the every dollar, like trying to sign everything. And we do see that we have an excess of like around $4,500 a month. So what we were thinking about was applying all of that to the debt relief program. Because once we're done with that one, I could probably pay it off and maybe like, five months. And that's $1,200 back that I was thinking that we could reapply somewhere else.

No, let's just pay out smallest to largest. Do you have any money in savings? We have about $7,000 in savings. What's your deductible? Deluctible for the delivery. Yeah. For the delivery, it's like $2,000. Okay.

I might feather that $7,000 nest a little bit until baby comes, put three or four thousand more in there and uh four thousand dollars a month you haven't cut your budget yet you're just getting started right no eating out no vacations you're broke no no 20,000 dollar nurseries for new babies you're broke got it you're a hundred and I mean you're 200 and something thousand dollars in debt but um no we don't we have learned that people have a higher probability of finishing when they have a positive feedback loop. And we've been doing this for 30 years. And the positive feedback loop is pay off the smallest to largest. And the 27 is a single payment now that it is all

combined in the debt consolidation thing. And so when you get to that, your water softener will be gone. Several of your student loans will be gone. Your other stuff will be gone. But you're going to get to it pretty quick. You are. And this is coming from somebody who's had the types of student loans that you have more. And let me tell you, it does feel good. When you have a list of 17 or 22 debts and you go through smallest to largest and because you did it that way, you're able to check off five or six of them off the list in a short period of time. You leave them on the refrigerator with big red lines drawn through them. Ooh, that feels good. You done. You done. You done. And you just keep attacking it. Yeah. That, that, there is a positive thing to that. And what it does is

it actually, we figured out that personal finances 80% behavior. It's only about 20% math. And so feedback loops are more important for behavior modification than the actual math is. And the math that you're using is not interest rate math. In your case, you're using cash flow math, which is not an bad. I understand that. It's not an unintelligent way of looking at it. It's just doing math didn't get you into this mess. If you'd have done math, you wouldn't have done any of this.

And when you start looking, we're looking at the probability of you completing it, And if you start looking at it, well, if I could just get $500 back in my pocket, for a lot of people, that's enough to make them go, well, that was all I needed. Yep. Renee's in San Diego. Hi, Renee. Hi, how are you? Better than I deserve. What's up?

Well, the reason I'm calling today is because a couple of years ago, my husband and I went into a partnership with my brother and sister-in-law. We bought a storage unit with some warehouses and some other commercial uses, office primarily. Um, long story short, um, my brother-in-law wanted to scale and buy additional ones, found out it's a lot more difficult to find those because they don't generally sell them. And, um, and he, and my sister-in-law decided they really didn't want to participate in nothing yet anymore, which left that to my husband and I were also retired. And we had just wanted a place to park some additional money we had so that we could spread out our... Is it for sale? Not officially. Well, officially put it up for sale.

Well, we started down that road and contacted, my brother-in-law contacted a reet that had been interested in it when we purchased it. I contacted another group that owns property and those kind of properties in the same city. And we contacted someone who buys storage units kind of as a collective. So you talked to four people? And, of course, three. Okay. And those three were interested. But they were trying to purchase it like fire sale.

List it with a real estate agent by the end of the week. Local, because we also looked at, you know what there was a fourth one, and that was a large commercial brokerage that specializes in that. And they used a formula that didn't work because they were using a big metro area. Instead of the area, they were stored units in, which is scarcity of land, surrounded by Indian reservations, so no opportunity to expand central local. location. So their algorithm did not provide for that kind of new law. They obviously don't need to list it. So how. Get a real estate agent that's a commercial real estate agent that knows out of crunch numbers on storage units.

Is the thing full? Is it rented? Well, we up the rents because it was is it rented. Is it rented? Some of it is. All the industrial. What's your vacancy? Right now it's 75 because we up the rent. 75% vacant? 75 units or 75%? 75% occupancy. Oh, occupancy. Okay.

All right. So yeah, yeah, you've got a pretty heavy vacancy then at 25%. And that is going to devalue it because the valuation is not based on scarcity of land. The valuation is based on cash flow. How much money does this create? And then you use a cap rate on it. That's how commercial brokerage is done. And so it doesn't matter where it is.

What matters is not an algorithm. It's a simple thing. If I'm going to put a million dollars in it, I want to return on my million dollars. If I'm going to put $10 million in it, I want to return on my $10 million. And I don't care about the Indian reservation, except to the extent it creates money for the bottom line of this project. And so you guys need to get your occupancy up, probably, because it's pretty devalued right now. See if you can get it filled back up and then raise your rents a little bit, not so much. And you're going to spend some effort on it, and then you're going to get it up for sale.

And what you're looking for is a commercial real estate agent that knows this. They don't have to be a large national firm, but they probably need a CCIM, which is the designation in that or something like that, so that they actually know how to run the cash flow analysis on it and put it up for sale and get it sold. But you call four people. You've talked to four people. That doesn't solve your problem. You know, you've got to get a thing on the market and get it gone. This thing's run its course. You're out of here. You're done. And don't play around with it and call me five years from now. I'm going, we're still stuck. Well, list it and sell it. If you have to sell it at a pretty good deal, that's fine. Get rid of it. Put some money in your pocket and wave by to the brother-in-law. Our summer Black Friday sales starts now. For five days only, a new deal drops each day. Listen, you were too hard to be broke. Car payments, surprise bills, another overdraft note.

notice, it's stressful, but you don't have to stay stuck. Get the books, assessments, and more that have helped millions take control of their money, get out of debt, and finally breathe again. Deals change daily, and once they're gone, they're gone. Visit ramsysolutions.com slash store before these deals disappear. If you're ever in the Nashville area, drop by, we do this show from one to four every day, central time, one to four p.m. Monday, Friday. We're on the glass and the lobby of Ramsey Solutions. So folks come by.

We have free homemade chocolate chip cookies and coffee and wonderful bookstore and museum, all kinds of stuff for you to see when you're here. And we usually have 52, 200 folks sitting out here watching the show. People dropping in from every state in the Union and even a couple

from Canada today. So there you go. So check it out. Come out and do that. Also in the lobby there is the debt-free stage. where people come to do their debt-free scream. And that's where Toby and Jamie are standing. Welcome, guys. Hi, Dave.

Hi, Jade. Where do you guys live? We're from Casper, Wyoming. Awesomeness. Well, welcome to Nashville. Thank you. Thank you. And how much debt have you two paid?

We've paid off $176,000. I love it. How long did that take? Five years and nine months. Wow. And your range of income during that time? We started about 120 and currently up to 160,000. Good job.

What do y'all do for a living? We are both teachers. Awesome. I teach middle school band. And I'm a fifth grade teacher. Awesome. What kind of debt was the 176? It was our house.

Wow. Looking at a couple of weirdos. That's right. Way to go, you guys. Excellent job. So what's this house worth? About 400,000 at this point. Yeah, I love it.

And your nest egg is up to what these days? Retirement accounts are just north of 700,000 right now. Look at you. Couple of million. A couple of baby steps millionaires standing here that are teachers. And you look young. How old are you? We are both 43.

Come on now. Wow. Excellent. Excellent. Excellent. You know, when we did our study of baby steps millionaires and millionaires, we found that the third most likely to become a millionaire is a teacher. In the career field. It's an engineer accountant teacher. That's the order.

And people always question us on that. And yet here stands two of them. Yes, in the flesh. Well done. Thank you. Thank you. I love it. I love it.

Congratulations. Okay, so five years and nine months ago, you decided to concentrate on paying off your house. Why? So we first found Ramsey Solutions in 2008 after reading the total money makeover. Immediately paid off all of our consumer debt. Since then, we've cash flowed two basement remodels, two master's degrees, three car upgrades, and a boat. In 2012, we took Financial Peace University, and I've since taught the class three times to the staff at my school. Wow, thank you. My pleasure. It's so much fun. And then in 2020, we decided to finally just start aggressively pounding on the mortgage using all the margin in our monthly budget. It would have been paid off even faster had I not had a car accident, which caused us to dip into our emergency fund and find a different used vehicle. Yeah. Okay. Wow. Wow. Do you do voiceover work or something? We practice this a lot to make sure that we were ready. You got this on lock. Good job. He speaks in front of audiences all the time. I can tell. He's not.

natural. I can tell. Good job. Wow. Way to go, guys. It's incredible. So you've taught the class. How much consumer debt did you knock out back in the old days? Oh, we had a little $3,000 loan on the car. Not big. No, it was very, very small. We just realized after reading the book,

oh, this makes sense. Let's do that. And just lived a cash lifestyle after that. That's right. Wow. And I'm staying on a budget, living on a plan. Absolutely. A couple of teachers' salaries and doing great. Way to go, you guys. Thank you. Thank you.

You're 43 years old and you're millionaires. Casper, Wyoming. Wow. Very nice. Very nice. How does it feel to not have a payment in the world? It's freeing. We can just do what we want.

And we're very goal-oriented people. So we set goals and then we work towards that. And we're also very visual. And so a funny story is that Toby came to me in 2020 and he wanted to build a paper chain to represent our mortgage. And so each link on that paper, chain was $1,000. And then so the kids got involved during a budget time.

And each budget month, they would get to tear off a paper chain. And then that chain hung in our kitchen all across through my dining room. For five years? For five years. Well, until it didn't. Until it didn't. And so it's just, it's very freeing. Yeah.

So at which point you look at him and said, I thought I taught fifth grade. Exactly. Yes. Unbelievable. So, you know, this is interesting because. Very few people that I know that are teachers went into the teaching profession saying, oh, I'm going to be a millionaire. That's usually not like how that that's not the way the wiring works, right?

But once you start seeing this, you said, we're goal oriented and you can see how if you followed a system, like if you follow a lesson plan or, you know, if you follow whatever, any kind of a process that's proven that we could get there, then I hope kicks in, doesn't it? Absolutely. We could see the eventual progress. And at that point, it's not even a question of whether. or not we're going to accumulate wealth. It's how soon can we get there?

This process works. Just follow it. So when you teach folks this strategy, what's the number one piece of advice? Like, what do you tell folks who are maybe not in the same situation as you, but they're teachers and they're thinking, man, how am I supposed to do this? I think for us, the biggest thing was communication with each other. As I said before, we're very goal-oriented. So we would discuss what is our next goal, what is our next big achievement that we want to reach and then how are we going to get there?

But for us, it was that communication between each other and agreeing on where we wanted to go. Wow. Well, we appreciate you coming all the way to Nashville to testify that this works. That's pretty cool. Wouldn't have missed it for the world. What's the first big thing you're going to do to enjoy some money now that you did this? Well, the kids don't know this yet, but we are going to take an upcoming vacation to Disney World. Yay!

Just announced it to them right now. That's pretty cool. We should have had some Mickey ears here for them or something. Wow, that'll be fun. Wow, very excited. That's cool. Very cool. And how old are the kids and what are their names?

Bring them up. Come on up, guys. We have Riley, and she's 12. Riley's 12. And Mr. Kellan is 8. All right. 12 and 8. And this has happened over the last six years.

So, Kellyn doesn't, I mean, when it all started, he didn't know much. But Riley's been there for the whole ride. Yes. All the way to Disney. Yep. Yeah, all the way from paper chains all over Mama's dining room to Disney. Yes. And the day that I heard Mom and Dad were millionaires.

Wow. Very, very cool. You know, when your kids are growing up while you're doing this and they see what Mom and Dad are doing, they see goal-oriented, they see communication between the two of you, they see a budget, they see we're sticking to this, we're sacrificing to win, and then they hear that you win. Those guys, you really did change your family tree because Morris caught them. taught, as Rachel says, and you can teach them all day long, but when they watch you and see this example and they live, their body takes this in. Yeah. And they can't, they can't unlearn it.

Yeah. It even changes who they'll date in the future. Thank God. Yeah. Yeah. They truly do understand when it's when it's budget time and they understand what that means to make a budget and how to spend your money appropriately. Yeah. And more money comes from. Then you get to go to Disney. Yeah. I like it. Well done. Excellent. No. No. notes. Very cool. Excellent. Very cool. Life is good. Life is good. Well, way to go, y'all. I'm very proud of you. You did everything the right way. You've executed, executed, executed, and now you've reminded some 30 million people with this debt-free scream right now that this can be done. And teachers can do it too, for those of you that are doubters out there and Debbie Downers,

you're looking at two of them that at 43 became baby steps millionaires. Seven hundred thousand in investments a $400,000 paid for a house. The last step was baby step six, paying off the house five years and nine months, making 120 up to 160. All right, Toby, Jamie, Riley, and Kellyn, Disney bound, count it down. Let's hear a debt-free scream. Three, two, one, we're dead free. That's how it's done. Wow, that's impressive. It is impressive. It is impressive. It never gets old. I mean, you can't, you can't argue two teachers. All the things he said they cash flowed. They just locked in. Locked in. See, when I've got guys like that that I'm talking to, that's why I'm not going to talk to you if you want to argue. This works. It works.

Don't argue. Just do it. Just do it. When are you going to start? When are you going to start? Now. Yeah, I'm talking to you. Just do it. Hey, George Camel here. So you're thinking about buying or selling your home. It's exciting, but there's a lot to think about. And all those decisions can feel overwhelming. Well, here's the good news. You don't have to tackle the process alone.

Ramsey's Real Estate Home Base is the place to find all of your free tools and resources for help to get prepared to buy or sell your home with confidence. You'll find calculators, start to finish guides, a podcast, and even an in-depth video course hosted by yours truly. What's not to love? So if you're ready to take the next steps toward your home goals, go to ramsysolutions.com slash real estate. That's ramesysolutions.com slash real estate.

Our scripture of the day, Ecclesiastes, 7,8, the end of something is better than its beginning. Patience is better than arrogance. Bill Bradley said ambition is the path to success. Persistence is the vehicle you arrive in. Okay. There we go. Amy is in Louisville, Kentucky.

Hi, Amy. How are you? I'm doing good, Dave. I've got a couple questions for you. My income is $2,100 a month. I'm on disability. My savings is $6,000. And on my debt side, I have credit cards for $650.

My monthly bills are $688. My yearly property taxes and insurance are $1,700. Now, here's where the twist comes in. I got a construction loan to build. a tiny home on my property for $112,000. As a reconstruction got 30,000 of that. Fees are 4,700, which is a total of 34,000. So I have around 78,000 left.

This is a 6.75 interest, but he has bailed on me. And I can't find any assets under his name, so I'm not even sure if I'm going to be able to recoup that. I'm sorry, who bailed on you? The contractor that was supposed to build my tiny home. For $120,000? Well, it was $112,000, $12,000. Have they done any work?

Nothing. They have applied for permits incorrectly. Why did you give them money before they did work? The bank did. I have a mortgage for this. I know, but you have to approve it. Yeah. And the bank said this was standard practice.

So now I'm on the hook for $34,000 with nothing to show for it. Did the permits not get approved? No. Why? Incomplete or inconsistent. They keep getting rejected, rejected, rejected, and now all communications has stopped. So the permits were denied because they were filed incorrectly, not because you can't build the tiny house? Yes, yes, correct.

Why does a tiny house cost $112,000? That's what I've been wondering. Well, I mean, why didn't you wonder that before you signed up for it? Because of like pouring concrete, putting it on a foundation. Where I live, it has to be done a certain way. It has to be like stick built. I thought tiny houses were more like 60. They are.

And when you put them inside a city limit, they have to be up on a foundation, and then the plumbing and the electric and the sewer and all that good stuff. Which is not another 60. Okay. I don't know exactly what to tell you. Obviously, you've informed the bank not to let any more draws happen, right? Absolutely, yes. Okay.

And, but you have a $31,000 loan with a possibility going to $112, and you're hunting for a new contractor that can execute this deal. Yes. But what you're saying isn't, it is not standard practice to issue checks to a builder, draws to a builder on a construction loan, except as work is completed. That's not standard practice. And so, no, we don't issue $31,000 to pull a permit on a tiny home. That's asinine.

And so, you know, I don't know who's over there at the bank that doesn't know what they're doing, but I probably am going to just shut the whole thing down, and I'm not going to deal with that bank anymore. Because I think they're incompetent. And I think you've been, you've bought into some kind of an idea here with this tiny home construction that this is somehow going to be the best thing for you. And the numbers you're giving us are, they don't pass a smell test. Okay, because the purpose of a tiny home is this is a small square footage thing.

They're typically not stick built. They're typically rolled in on a trailer and sat there, and you're pouring a slab the size of a deck. This is not an expensive process. And yeah, you've got to hook into sewer, and you've probably got some tap fees, and you've got to run a waterline to it. But none of this is rocket science, and none of this should cost, you know, $50,000, not even close. So I don't know, this whole thing sounds like it just smells. And so when I run into something that I get into like you've gotten into here where the whole thing stinks,

I just start pulling back and pulling back and resetting what I'm going to do and how I'm going to do it. And that may be that you do a tiny house, but you do it the proper way rather than the way you were trying to do it. And just because it's in a city limit doesn't mean it costs $50,000 to build a slab. That's just not true. in Louisville, Kentucky. It's not that, it's not that onerous. You're not in California where they've got regulations out there, but this is Louisville. And so they've got regulations, but not like that.

So, now, I think you've going to have to gather a whole lot more information to decide what your next steps are. And, you know, if you have a contract with someone that has taken third, 31,000 from you, and they've done that fraudulently, then I guess you need to see an attorney for that. But if you've discovered the person has no assets, then you're probably going to have a hard time getting any of that money back. Because you can sue somebody and win that has no assets, and you get nothing. It's not worth the trouble. But I would look into the legal side of it as well. Christina is in San Jose, California.

Hi, Christina. How are you? Hi, Christina. Hi, hi, thank you for you in my phone. Sure. You're a little bit muffled. Can you speak directly into your phone, please? I'm speaking directly into my phone.

Okay. Thank you. How can we help? Well, my husband, I'm 62 years old, and my husband wants to get a C-Lock loan. For what? So we've been home since 2004. I mean, you know, I say,

Say that again. So we have owned our home since 2004, and he wants to upgrade the bathroom, the master back, and the hallway back. What's it going to cost? Roughly around $60,000 to $80,000. To do, oh, wow. Okay. That feels steep? Yes.

Because he wants to enlarge the shower, put new tile. And you obviously don't have the money to do that? No, we don't have the money. Okay. What's the size of your, do you have any money in savings? We do have money in savings. We have probably around $300,000 in savings. Is that retirement savings?

No, it's not retirement savings. Well, why don't you just use some of your 300,000 to build your bathrooms? That's what I told them. Otherwise, what's the point of it? I know. He wants to get healed off now alone. So, I mean, that's why I'm calling because I don't, I don't want to create more debt. No.

You already have debt? You already have some? You said you don't want to create more. You have some already? No, we don't have any debt. Okay. The house is paid for. And you said you're how old?

No, I'm 62 years old. The house is not paid for. Oh. It's worth a million dollars. Mm-hmm. And we still owe about $300,000 on this time. Well, I mean, you, in California, you'll have to sign for the HELOC. And if you refuse to sign for it, it won't happen.

Yeah. Oh, yes. Thank you so much. Yeah. So just tell him no. Wow. Just tell him I'm not going to sign for the HELOC. You gave her the ultimate legal loophole.

Good job, Dave. She, I've never heard someone cheer like that after a, but by the way, you know, you also have 300,000 sitting and savings. You also have a husband that you got to deal with. I mean, this is not, I don't know if I'm cheering about anything here. I know. I'm just looking at the fact that what you have in savings is what you owe on the house, but good luck convincing him to pay the house off.

Yeah. I don't know what your household income is. I'd consider paying off the house and building your nests. and building your bathrooms with cash. And by the way, when you end up building them with cash, they probably won't be 60 to 80. You'll probably do it differently. That puts this hour of the Ramsey show in the books.

We'll be back with you before you know it. In the meantime, remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace. Christ Jesus.