The Ramsey Show - Wealth Is Built On Facts, Not Feelings

Starting point is 00:00:04 Brought to you by the Every Dollar app. Start budgeting for free today. Normal is broke and 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. I'm Dave Ramsey, your host, Jade Washaw, Ramsey Personality, number one, best-selling author, is my co-host today. Open phones at AAA 825-5-225. You jump in. We'll talk about your life. and your money. Tyler is in Dallas, Texas. Hey, Tyler, what's up? Hey, sir, how are you? Better than I deserve, man. How can I help? Yes, sir. So, um, I have about 400 and 8,000 in debts on an S block. Um, so I, the interest payment a month is just, it's, it's only like 16

Starting point is 00:01:13 just pure interest. And so I just, I'm wondering like how, how I should, I have some cash in a T bill. And I'm just kind of wondering, like, should I take some of that cash and like knock this, knock some of it out or just kind of whittle away at it, you know? What was the purpose of the loan? Why did you take it? I bought a rental house. So I did a few things with it, actually.

Starting point is 00:01:49 I bought a rental house, which is producing some income. I paid off my wife's car and my truck with the S-block because the interest rates on the loan that I got for the vehicles was crazy. And so this interest rate was much better. So what's the stock worth? I have about $5.50 in stock. You want you to sell a bunch of it and pay the loan off? Well, see, I got an inheritance this year of about $1.4 million in stocks. So why are you sitting on a $400,000 loan paying some goober $1,600 bucks?

Starting point is 00:02:37 Sell enough of it and get rid of the loan? Well, see, I sold a lot of it. I bought my house. I moved. I paid my house off. When I moved, I owned the house that I moved from. So that's a rental house. And then I got the S block.

Starting point is 00:02:57 To buy another rental house. Yes, sir. So you have two rental houses that are paid for and a house that you're living in that's paid for. And you got $550,000 in stock and you got a $400,000 loan. Do I have it right? Yes, sir. And I got a T bill. I got about $180 and a T bill.

Starting point is 00:03:14 Okay. Sell the T bill and sell enough stock to pay off the loan. What's wrong with that? Say that again? Why not just sell enough stuff to pay off the loan? Why are you going to keep this? Well, I've already sold a stock already this year. But why you want to keep it?

Starting point is 00:03:30 You made that decision when you paid off your car and you used all this money. You already made the decision to give up the stock. You just borrowed against it instead of actually doing their deal. Right. So tell us what you think you ought to do since we gave you our opinion. What's your opinion? Well, I want to pay about, I want to pay about maybe half of it off and then get the payment down to where my income can cover. Why do you want to keep the loan? Well, my financial advisor was telling me that he thinks it's done to sell stock to pay off the cars. because, you know, stocks are appreciating.

Starting point is 00:04:16 I think your financial advisor's a moron. Yeah, I mean, I've tried to talk to him and say, hey, I want to take. I don't need to talk him into anything. It works for me. I've got two words for him. You're fired. Yeah, what's your income? When you take in all the rents and what you earn from your job, what do you, what's

Starting point is 00:04:36 your income every month and every year? So I have an LLC that owns the rental properties, and that brings in. in about 8,800 a month, and then I paid myself about $5,000 a month. And that's all... Because I don't have any personal debt. I paid off all my debts that I owed with when I got this money. Okay. And 40.

Starting point is 00:04:59 And what's your career? Right now, I'm really just living off the rental income because it's a lot. And it covers my bills, you know? Well, the bottom line is this, boss, I would... would not have done anything that you have done. And so if I did wake up in your shoes today, I would fire my financial advisor and get someone that has a brain and doesn't tell you to borrow money to pay off a debt. That's not paying off a debt.

Starting point is 00:05:31 It's moving the debt. You moved the debt. And this idiot called that sophisticated. It's not sophisticated. You just moved it. It's all you did. You moved your car debt over onto your stock in an S block. It's all you did.

Starting point is 00:05:45 So what I do, sell the T-bills, and I'd sell enough of the stock to pay off the debt, and I'd fire my financial advisor and be 100% debt-free. No interest to anyone. And that's what I would do. I don't think you're going to do that, though. So I'm not real sure why you called. Yeah, I think he's afraid. I think he's like seeing that chunk of money sitting there, and some part of him doesn't think he'd be able to invest his way back to what he had before, which he truly could over time. Well, and you know, you're 40, get a job. Yeah, that's what I'm saying. If you get a job, you can do it. Go on $150,000 a year and chunk some money away and make a bigger pile of money than the one you inherited. And so you got three pieces of paid for real estate. Two of them are generating $60,000 a year, which is okay.

Starting point is 00:06:31 And you got a little bit of stock left after my plan. And so that money can stay invested in good growth stock mutual funds. And I'm going to liquidate the individual stocks. I'm not letting this stupid financial planner play with them. And I'm going to put them in basic growth stock mutual funds and let it double about every seven years. And it will if you freaking leave it alone. And then just let that ride and then go make a living for yourself. And, you know, you do not have enough net worth to retire at 40.

Starting point is 00:07:03 You didn't get that much money. And I don't think, but I don't think you're going to do any of this. So, you know. I agree. Yeah. crazy. So, all right, so here's the thing. Your financial advisor, your lawyer, your CPA, your doctor, your whatever professional works for you. They don't tell you what to do. You're a grown-up, boys and girls. And so I've occasionally had a term.

Starting point is 00:07:44 that got confused and thought they were going to tell me what to do, and they got fired. And so my financial advisor tells me what to do, tells me you have a wrong relationship with your financial advisor. Your real estate agent tells you what you're going to do. No, it's my freaking money. I tell you what to do. I ask you for advice and to teach me something I didn't know, present to me ideas I hadn't thought of for me to consider what I'm going to do with my money. And this is how you approach dealing with a financial advisor. When your financial advisor tells you what to do, all of a sudden you start worrying about their conflict of interest. Like, he doesn't want you to sell his stock because he wants to get paid to manage it.

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Starting point is 00:10:06 Jonathan is in Shreveport. Hi, Jonathan. How are you? Hi, Dave. How are you? Better than I deserve, sir. How can we help? I need some help. I'm about $3,000 in personal loan debt. I'm struggling to, like, sometimes pay on my bills, sometimes get groceries, food. And I just, I've been to share for every day on your show, and I just need you help.

Starting point is 00:10:37 Okay. How old are you? 33. Okay. And what do you earn? What do you do for a living? I'm a Qigelaide delivery driver Okay

Starting point is 00:10:48 And so what do you make a year What are you making a month a year? A month I'm saying about 2,500 a month Okay You work in 40 hours? Close the 40, yes sir

Starting point is 00:11:05 About 36 Okay What caused this situation Because my guess is just based off of what you're saying is you're 33, you're, you know, struggling to get groceries on the table, driving chick-fil-late. That's probably not how you expected and where you expected to be at 33. Am I right? No, ma'am. And I did the personal loans just to keep up. And what caused that? Did you have a job that you love that you got fired from? Did you have a relationship implode?

Starting point is 00:11:41 What got us here? I don't know really how it explained it. I'm sorry. I do apologize. No, that's okay. I just got personal ones just to keep it with the bills and get groceries and all that. Okay. I love Chick-fil-Aid. They're going to be wrong. No, we're not trashing them, but I think you –

Starting point is 00:12:03 I don't know. One thing we can identify immediately in your story is we'd like to get your income up. Okay. Okay. Immediately. I want to start – what else can I do? I mean, 36 hours a week. So that means I could work another 30 hours a week pretty easily.

Starting point is 00:12:20 You're only 33. You can work more. And so I'd like for you to go earn another $2,000 or $3,000 a month with some kind of side hustle. And start thinking about what you want to be when you're 43 that pays $70 or $80,000 a year. And what are the steps to get there? Well, I'm about to start a new job in two weeks. That's good information. What's that?

Starting point is 00:12:42 Hospital, hospital place here in Long Beach, Texas, where I was. I'll be a valet driver. I'll be making 16 an hour. It's only part time for now. On top of the Chick-fil-A work? No, ma'am, I'm going to leave Chick-fil-A. Okay, and it pays more? Two-hour job.

Starting point is 00:13:03 Yes, ma'am. Because of tips. Yeah. Because just an hour, I can't see how it's going to be more. But if you, I'm guessing tips. I'm making 16 an hour. I'm at $11 at Chippole. Got you.

Starting point is 00:13:20 Okay. Okay. Okay. Okay. And you're going to be doing that for how many hours a week? The new gig. I don't know my new schedule right now. The only way this is a better.

Starting point is 00:13:34 Wait, wait, wait a minute. Stop. You took a job at $16 an hour. It's not a raise unless you're working at least 36 hours, and you don't know if you're going to get 36 hours? They should have been working from $12. 12 or afternoons are 18 at night. Okay.

Starting point is 00:13:50 If you do, how many days a week? I think they say maybe four or five. So what I would do is keep Chick-fil-A, keep your job at Chick-fil-A and say that you need to roll back your hours because this Chick-fil-A now becomes your side hustle to this, ideally. But I would not get rid of Chick-fil-A

Starting point is 00:14:10 until you see what your hours are going to be as the valet. So that's thing one. is the $3,000 of personal loan debt, is that the only debt you have or do you have a car payment? Is there anything else we need to know about? I do have car payment. I just got a new car. What did you pay for the new car? My monthly bill is $400.

Starting point is 00:14:33 Tell me the whole amount that you paid for the new car. $2,400? $2,400 or $24,000? $2,400 for down payment. The whole car payment is $17,000. So you paid $17,000, you got a loan for $17,000 for the car. Okay. If you don't get your income up really rapidly, you bought a car you can't afford.

Starting point is 00:14:58 So you need to get your income up rapidly or we're going to have to downgrade out of that car. Okay. You've got to pick up the 40 hours plus another 25 hours somewhere else. And I want you working all the time and get very specific about what you're going to do with your life and how you're going to grow your income. And then when it comes to food and bills, the way you do this is you prioritize. The first thing you buy with your money when you get money is food, period. You have to eat before you do anything else. The second thing you pay for is lights and water and utilities at wherever you're living.

Starting point is 00:15:38 The third thing you pay for is your rent. So food and shelter and transportation. And you need to get rid of this car. You've got a car you can't afford. And also... That's why you're pinched. That's why you're pinched. But the bigger thing here is I think you need a vision for your future.

Starting point is 00:15:56 I think that you've just been kind of rolling along. And I tried to get to it earlier to ask you, how did we end up here? But I don't think you know. You need to spend some time thinking about what got you here. And I think it was just lack of a plan, lack of a vision for yourself. So you need to create that because you're going to look up here in five years and you could very well be in the exact same position or worse. I don't want you to be a 43-year-old.

Starting point is 00:16:19 You're 33. I don't want you to be a 43-year-old valet. I want you to do something else with your life, honey. So what are you going to do? And you need to be thinking about that. That pays a lot more because this is not going to bode well into your future. Eventually something's going to happen with your health or you're going to stub your toe or something's going to come along.

Starting point is 00:16:39 And, you know, you've got to be growing yourself. and growing what you're going to be. That's where I would head. Proactive. Duane is with us in Dallas. Hi, Duane. How are you? I'm doing good.

Starting point is 00:16:53 How are you and doing? Better than we deserve. What's up? There you go. Well, I've got possibly one of the silliest car questions you've ever had. Number one, I doubt it, but we'll give it a shot. Okay. Okay.

Starting point is 00:17:07 Well, I've got three vehicles, okay? They're all paid for. I just like Dr. John, I have an allergy to payments. I don't have them. The other thing I do have lived is a house. It's got $34,600 left on it, so that's all I've got. All right. Enough of that.

Starting point is 00:17:29 What I'm calling you about is I have an infatuation with a really silly car. It's very cheap. It's very easy. It's as simple as I am. I want to keep putting money into it. If it dies, I want to keep putting money into it because I don't want to buy a new car. Is it a classic car? Or is it just?

Starting point is 00:17:51 No, no, no. It's a car that nobody even wants. Well, why do you want it? It's a Toyota Corolla. I don't know. Why do you want it? If it's a piece of crap, why are you so proud of it? No, no, no.

Starting point is 00:18:05 It's not a piece of crap. That's what I'm saying. I will buy these Toyota Crows. Most people think they're a piece of crap. Wait a minute. Are you single? Yes. Yes, I am.

Starting point is 00:18:16 Why do you have three cars? Well, one's a farm truck, F-150. And then one's a C-5-4 vats that I drive once every once a month, something like that. Do you fix the cars? Are you just buying the part and you do the labor? Is that what it is? or you're taking it somewhere to be fixed. The corolla, I drive two hours to work.

Starting point is 00:18:42 I drive a truck. No, no, no. I'm asking, do you do the work on the cars? No, I do not. Okay, so what's the corolla worth? Probably about $3,500. Okay, and what are the repairs costing you? $55 an hour, plus the parts.

Starting point is 00:19:02 That's not an answer. What are the repairs costing you? in total, honey, compared to the $3,500 car? I haven't had to do anything but change tires. Okay. Then you don't have a repair problem. You don't really have a question. It's not a silly question.

Starting point is 00:19:20 You don't even have one. If you get to the point where you're putting more than $3,500 into these, it's time to get a different car. I'm all about practical ways to save time and mental energy, especially during the summer when life gets busy. Between vacations, camps, deliveries, travel places. online shopping and trying to keep everyone organized, my mental load can get pretty full. That's one of the reasons why I love Delete Me.

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Starting point is 00:20:59 good knowing that someone is in the background, helping me, and I don't even have to think about it. So this summer, give yourself a vacation with one less thing to manage. Get 20, 20% off annual plans at joinselitme.com slash Ramsey. That's joinselete me.com slash Ramsey. Andrew is in Salt Lake City. Hi, Andrew. How are you? I'm doing great, dude. Thanks for taking my call. I've been a long-time listener, and I really appreciate it. Sure. What's up? Well, I've got a question. My wife and I were wondering, so we had actually a negative

Starting point is 00:21:45 net worth just 10 years ago, and we have completely changed our life in a good amount that's due to your teaching, and we really appreciate that. Well, thank you. The problem, which is not a bad problem that we have now, but we're just trying to figure out, like, are we putting too much into our 401K accounts now? So we're currently putting about 25% of our gross income into our 401K. That includes our Roth as well.

Starting point is 00:22:11 We just thought we were so far behind for so many years that we've really stepped it up to just the maximum that we're able to do, and we're just trying to figure out if we have just too much in there. Right now. Is your mortgage paid off? We're on four or five and six, and we have about $190,000 left. No, you're not. Well, you're right, because we're doing more than 15%.

Starting point is 00:22:34 Yeah, exactly. Yeah. And the reason we don't do more than 15% is we put the difference on six, pay off the house early. Okay. How old are you? Paying off the house early is as important to building your net worth as pouring money into your 401K. Both of them are important. That's why we have 15% in baby step four,

Starting point is 00:22:57 five is kids college, and six is pay off the house early. How old are you? We are 44 and 45. How much is in your nest egg so far? Just shy of a million dollars. Oh, shut up. How much do you think you need? We don't know. We're just, we were still scared. Way to go, man. Way to go. A stinking millionaire in 44. Look at you. And then you're saving like you're scared to death that you're broke. That's funny.

Starting point is 00:23:32 Well, we both came from. I know where you came from. I'm talking about where you are. Yes, I appreciate that. Way to go. You need to actually look at these numbers and let them settle in on your heart as well as your brain. Yeah, because you're just speeding past it like it's no big deal. You were so desperate to never be back there again.

Starting point is 00:23:51 that you went all the way over to the other side now. Way to go, man. Very true. Yeah. No, stop. You need to back down to 15% and you need to get your stinking house paid off. What do you owe on your house? We have about $290,000.

Starting point is 00:24:05 Perfect. And what's your household income? It's about $320,000. Okay. So here's, good Lord, you're doing so good, man. Way to go. Oh, man. All right.

Starting point is 00:24:17 So it's so much easier to just take a horse. that runs this fast and direct it in the right direction that it is to beat one and get it running. You're just incredible, man. Way to go. So, man, you're incredible. All right, so just slow down a little bit. Think about it this way, okay? If you start chunking on the house with the same, not the same fervor, you need to lighten up in general and enjoy some of this, but you also need to chunk on the house.

Starting point is 00:24:45 Okay. How quick we get the house paid off? Probably four years, something like that. That sounds right? Yeah, we've been paying, just starting this year, we've been paying an extra $5,000 a month, and we have about a 48-month plan to get that paid off. Yeah, well, I think I just upped it because I lowered your baby step four back down to where it should be. Yeah, if you put $4,000 a month into retirement, how much could you put on the house to go aggressively?

Starting point is 00:25:14 How much more could I put on that? I mean, you're putting 10%, so you're putting $30,000 bucks too much into retirement right now. I'm going to throw that over on the house. So you're done in 36 months. Are you actually doing anything fun at all? Well, actually, we just got back from a month-long cross-country road trip with our kids. And that was our first. Fun.

Starting point is 00:25:33 We said fun. Yeah. You need to take your wife to Rome, man. There you go. Wow. She would love that. Yeah, you do. And what are you driving?

Starting point is 00:25:46 What kind of car are you driving? I've got a nice paid-off, 24. 21 Ford F-150. My wife has a, she has a paid off 2016 Ford Fusion that she just uses to go back and forth to work. You need to get your wife a better car. Are you both nerds? Are you both nerds or is she a spender? We're both nerds. Yeah.

Starting point is 00:26:11 Financial nerd and she is a great saver. Yeah, I really don't want a millionaire's wife driving a used Ford Fusion. There's just, I don't want anybody. driving to use Ford Fusion, but I really don't want a millionaire's wife driving that. And meanwhile, you're driving an F-150, but yeah, which is a great car. But yeah, so anyway, the, good Lord. Okay, so what would I do in your shoes? This is so fun. You're doing so good. These are minor adjustments and we can have some fun. All right. Number one, I'm going to book a trip to Paris or Rome. Number two, I'm going to upgrade my wife's car. Number three, I'm going to lower your contributions

Starting point is 00:26:51 down to 15% and number four and will get the house paid off when the house is paid off you're going to have so stinking much money okay so you're at the point the house is paid off you're 48 years old okay and your million dollars will have become two million by then okay and and then by the time you are 55 years old it will be 5 million and the house will be worth a million So you're going to be 65 with a $20 million net worth if you do simply what I'm telling you to do. Okay, I can do that. You are kicking butt. And I want you to enjoy some of this money.

Starting point is 00:27:34 Well, we are enjoying. No, please, don't tell me anybody driving a Ford Fusion has a good life, okay? Just please go buy your wife a car. Seriously. Way to go, man. You're so cool. I love talking to him. So let's talk about...

Starting point is 00:27:48 Such a nerd. He was a nerd. Both of them are nerds. Let's talk about this because it's important. And I feel like if we don't, it can give the Ramsey plan a bad name, which is learning how to spend. So the first three baby steps are very intense, right? You're getting $1,000 saved. You're paying off your consumer debt.

Starting point is 00:28:05 You're stacking up three to six months of expenses. And that is gazelle intensity. And you drive a Ford Fusion then. You drive a Ford Fusion. And everything inside of you is telling you, don't spend extra, don't spend more. Hold your money, right? Scorched earth. No lifestyle.

Starting point is 00:28:21 No enjoyment. No trips. No eating out. We're cleaning up the freaking mess. Like he said, he started with a negative net worth, right? And it has to be that way. And the way that you do that, the way you get to the gazelle intensity that we talk about. And one day, Dave will explain that on here.

Starting point is 00:28:35 The way you do that is you practice it, like John Deloney would say. You practice what it means to say no. You practice what it means to stick to the budget. You practice that behavior and you become very, very good at it to the point that you have accomplished baby steps one through three. Then there's a shift that occurs when you get to four, five, and six where you can pull your pedal, you know, you pull your foot off the gas a little bit. You can start to enjoy life. And I want to point out that that also, you have to practice that behavior. Otherwise, you will not be good at that behavior. You have to trust yourself to know,

Starting point is 00:29:06 okay, I know what it feels like to let myself spend a little. I know what it feels like if I'm going off the rails. I know what it feels like if this is out of, you have to practice that same behavior so you become good at spending and actually enjoying and living your life. And sometimes people just get afraid of it and so they don't do it. Ah, that feels weird. You stay, you keep your emotions back when you were broke. Yeah. And you have to retrain your body, your mind, your emotions, your spirit, that things are different now. Yes. And it's not that we're going to get sloppy and immature and impulsive that got us in the mess in the first place. But now we're not in a mess. We're not in. We have a million freaking dollars. We're 44 years old plus the net worth in the house. So a million

Starting point is 00:29:50 and a half probably in net worth, right? And we're making $300,000 a year. Those facts are, you need to tell yourself what are the facts, not what are the feelings. That's right. Because your feelings can still be stuck back there when we were broke. You know, well, I remember, yeah, I know, I don't care what you remember. I remember being broke too. I remember on my third date with my wife. I had a 280,000 mile Monte-a-law. Monte-a-law. Carlo on the third engine and fourth transmission, I changed them because I'm a redneck. I turned the wrench. And I was taking my wife out on the third date explaining to her somehow.

Starting point is 00:30:24 I had $1.12 in my checking account how someday I'm going to be a millionaire. We crossed a railroad track and the muffler fell off my car. I remember that conversation because it was so ironic. And I rolled up under it, put the muffler back on. We went on the date. But the, you know, and then it came true. I was a millionaire by the time I was 24. So stupid I had to do it two times because I lost everything.

Starting point is 00:30:48 Got the opportunity to start over. So this is the feelings. Don't get stuck in the feelings. What are your facts? Live in the facts. 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

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Starting point is 00:32:03 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 fairwins.org slash Ramsey to open your smart bundle and start making progress today. That's fairwins.org slash Ramsey, insured by the NCUA. Well, people are always asking me, Dave, what do you do to build your real estate portfolio since you don't borrow money? How'd you do that? And how do you do your investing? What do you really do?

Starting point is 00:32:42 They always want to know what mutual funds and all that. We don't tell you which mutual funds because we want you to think for yourself. We don't want you to do a particular mutual fund just because Dave did it. We want you to actually use your brain and learn how to do your investing. But I am going to open, for the third time ever, our investing playbook. I'm not going to get into the details on which mutual funds, but I'm going to give you some real-world examples of stuff I do. George Camel and I started doing this three years ago.

Starting point is 00:33:10 This will be the third time we've ever done it. It's called Investing Essentials. It's a two-night virtual event. It will be September 1st, And second, it's the only place you're going to get my personal playbook. And we're going to nerd out. George and I are both super nerds. And we're going to nerd out on all the little nitsy, nuanced crap.

Starting point is 00:33:31 If you don't want to know 9 million details about investing, don't come to this. Because this is going to be 9 million details about investing. And, you know, honestly, I think it's a little boring. But it's really, really a lot of meat, a lot of meat. Not even any potatoes, just meat. So we're going to go into the basics of investing for just a minute, just to make sure you've got that foundation, and then we're going to tear into the stuff that we do that's a pretty high-level stuff. And so tickets start at 199. You can get it at Ramsey Solutions.com slash events, or you can click the link in the show notes, and it'll take you right there, either one, November or September 1st and 2nd, 2nd, 2nd, 2nd, 2 night virtual event, investing essentials.

Starting point is 00:34:15 Daniels in Fort Smith, Arkansas. Hey, Daniel, what's up? Hey, how are going? Better than I deserve. How can I help? Well, so I got presented an opportunity within the last two weeks. Just to start off with, I worked in construction and build relationships here and there and do what I can for my customers. About two years ago, I got involved with the customer.

Starting point is 00:34:40 He's an 80-year-old man, older man, had a health care not too long ago. and, well, I thought he was going to talk some numbers on a job. He was letting me do, and I get to his office, and he basically, he tells me he's going to give me a commercial property. He's going to deed it over to me completely for free. And it's a big commercial property, and it's a life-changing event for me. Does he have any sons or daughters or a wife? Yes. He has three sons.

Starting point is 00:35:12 He has three kids, two sons and a daughter and a wife, yes. I asked him the same thing. I asked him multiple times the same thing, just to make sure we're all clear. All of his kids, from what I can tell are okay, and they're doing good, and basically doesn't want to mess with it. Is that his only piece of wealth, or does he have lots?

Starting point is 00:35:37 Lots, lots, and lots. Okay, so he's a multimillionaire, and he's giving you a property that's worth what? Well, he said he bought it for a million 20 years ago. And I would say it's 43, it's got 3.23 acres as far as the lot goes. And then there's a 42 to 43,000 square foot building on it. It's a strip mall. And it's full of businesses that, you know, pay him rent.

Starting point is 00:36:07 What does he estimate the worth of it is today? Well, I haven't got that for you. I'm actually going this week some time to talk to him and his attorney to, I guess, figure out more details. Well, that's wild. Okay. Yeah. So what can I, how can we help you? I have no idea what to do. I'm terrified. How long have you been working with him? How long is your relationship going back? The last two years, and we've gotten pretty close over the last two years.

Starting point is 00:36:37 Apparently. Yeah. Sounds like he's giving you a $10 million. property or so. Right. Okay. He did have a health story not too long ago, and I think that's why he's kind of, he's wanting to get stuff out of his hair, less stress in his life.

Starting point is 00:36:53 Yeah, there's a lot of ways to do that, but this is an interesting one. Okay. Yeah, I just, I want you to learn as fast as you can learn because you're getting ready to become the landlord of a commercial property, and so you need a good, real estate agent that is a commercial broker in your corner to teach you how to manage that property and how to manage that type of tenant and how to refill when one of them, you know, when one of the leases expires and they move out or when they quit paying and you have to throw them out and you put a new tenant in, how do you do that? You don't have any idea. This is your

Starting point is 00:37:30 first ride on this truck, right? So you're getting ready to be a big time commercial landlord and you're going to have to have some people in your corner to teach you how to do it, not do it for you, but do it with you. And so you want to get somebody that's got in the commercial world, there's a designation in the commercial real estate world called the CCIM. And that's a commercial, that's a real estate agent who has studied how to value and how to manage commercial real estate. And it's like a, it's like getting your CPA, but in commercial real estate. Does that make sense? So if you find somebody, I have a lady that. works for me that has a CCIM and she works for me and manages our real estate. We've got a bunch of

Starting point is 00:38:15 commercial real estate. And I've got a degree in real estate, which is the equivalent of that too. So, but you've got to learn the nuances of stuff like the CAM, common area maintenance fees is what that's called the CAM. You've got to learn the per square foot. Who's paying what are these triple net leases? And you just, there's some things to learn here. And you're going to be taking a crash course on it and ask him if he has a recommendation for someone to mentor you on handling all of this. Does he want to do it while he has his health? Yeah, he said I could come to him for any help he needs. I do have some help in my corner too with some other friends of mine. One other little detail, I forgot to mention, I guess it's a big detail.

Starting point is 00:39:03 So one of the tenants had a business there and it burned down. And so that would be my responsibility. And one of my biggest concerns right now is I don't have a lot of money to my name. I don't necessarily make a lot of money. And my concern is getting a loan to fix this place. Am I going to be able to afford it with the income that the strip mall is bringing? Or am I going to have to dip into my own fine? Is it part of the strip mall that caught on fire?

Starting point is 00:39:37 Yes, but it's the only business that is out of business right now due to the fire. Everyone else is still up and running. So it just didn't burn the structure. It just gutted the interior? A little bit structural damage inside that part of the area, but not unsafe for everyone else to be concerned. And I take it the property has no debt. Yes, correct. Then it ought to be cash flowing like a bandit.

Starting point is 00:40:01 You ought to be able to stack the cash out of the rents. fast enough to do these repairs. You don't take anything out of it. You just use all the cash to board back into the property. Okay, that's kind of a lot. Because I didn't know if I needed to go to a bank. I would. I would see if I would cash flow the repairs.

Starting point is 00:40:18 Okay. I don't know. I mean, if this thing, it should be generating, shoot, yeah, you should be generating some pretty serious money per month. And it sounds like you'll find out that information when you have that first meeting. Yeah. I have a good idea right now, and it's around $6,000 a month. That's not right.

Starting point is 00:40:38 That's not right. How many businesses are in there? One, two, three, four, five, probably seven or eight, and there's probably three or four vacant spots within the strip mall. Hmm. That's wrong. I think he's very, very cheap on a lot of his rent. That's beyond cheap.

Starting point is 00:41:02 That should be. one tenant. I was going to guess 50,000 a month. Yeah. And you're telling me 6,000 a month. Something's wrong. Something's really, really wrong. So you need to get in there and find out what's going on.

Starting point is 00:41:14 6,000 a month? Yeah. So good news is you know people in the construction business and I think, but cash flow the work, honey, don't take out a loan. And otherwise, just let that tenant go on his way and then you cash flow it when you can cash flow it. But yeah, you've got tenant. improvements you're going to be doing on those empty spots. I don't know. I don't know if you're

Starting point is 00:41:36 going to be able to handle this or not. What do you think causes an 80-year-old guy to just end over $10 million? It's very strange. It's very strange. I thought the property was worth more than it is, maybe. I can't tell what's going on. Yeah, me neither. Once I got that last piece of information, my head went on tilled. Why don't you get more information and call us back? That'd be fun. If you want to. Yeah. But you need to get some independent people outside of his circle. a CCIM to look at this with you and they're going to talk to you about borrowing money, I'm not, but other

Starting point is 00:42:09 than that, they'll know what's going on. Let me tell you something I see happen way too often. People fall behind on their bills and they wait. They hope it will work itself out. It won't. That's why I recommend Guardian litigation group. Here's the deal. If you've missed payments, collectors are calling

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Starting point is 00:43:17 It's about dealing with the problem before it gets worse. Go to Guardianlit.com slash Ramsey today. That's Guardian-L-I-T dot com slash Ramsey today. Attorney advertising. Results may vary and no specific outcomes guaranteed. Welcome back to the Ramsey show in the Fair Winds Credit Union Studio. Jade Washall. Ramsey personality, number one best-selling author, is my co-host today.

Starting point is 00:43:52 Jason is in Philadelphia. Hi, Jason. What's up? Hello, how you doing, Dave? So, long story short, I'm 38 years old. I'm a heavy equipment operator for a union in New Jersey. And unfortunately, I've made very, not even bad, but horrible financial decisions throughout my life. I am ready to make a complete change because of my financial situation.

Starting point is 00:44:18 It has caused me to lose a fiancé recently. Whoa. I am a father to a five-year-old. And, yeah, I'm just, I just. just need a battle plan. I do have something presented itself recently. I also do plumbing on the side. And, you know, I have an opportunity, but it might be a big risk. What are you making as a heavy equipment operator? You ought to be making bank. Yeah, I make pretty good. It depends if you order overtime or not. But like, for example, last year, I think I made $1.15. Yeah, okay.

Starting point is 00:44:52 Is keeping a job the problem? What's been the problem? So the problem is, is, you know, I went through a divorce. I have child support. I have daycare payments. I have, you know, a car payment that is astronomical that I can't even get out of because I'm under, you know, $10 to $11,000 under water on it. We'll help with that. Yeah, I'm totally like probably $65,000 to $70,000 in debt. Okay, so let me ask you this. I love the way you opened the conversation. it's like help me I'm ready to change that's my favorite kind of person because I've been there myself the person that's sick and tired of being sick and tired they're ready to do something I don't have to talk them into it they're going to do they're going to do something because things have to

Starting point is 00:45:36 change and that's you that put that means your mind is in a perfect place on this congratulations I'm sorry you had to go through all this crap to get there but that's normal human stuff right we all I had to go broke to get there so I understand so um what do I And so really, it sounds like, though, that, yeah, you made a couple bonehead moves, but more than anything, you just hadn't paid attention. You made decent to great money, and you just hadn't paid attention, and it just all kind of frittered away, and you don't even know where all of it went. Is that right? Yes. Yes.

Starting point is 00:46:12 Yeah. I thought so, because that's fairly normal, okay, in your situation. So thank you for saying that. So here's what's weird. 90% of solving where you are and turning you into a millionaire is to start paying attention. And you're ready to do that. Because if you have a game plan, anything that interrupts that game plan is off limits. But when you don't have a game plan, everything that's stupid looks smart.

Starting point is 00:46:46 So when you say, I have got to go from where I am to a millionaire. status. I need a million dollar net worth. I'm 33 or I'm 38. I want to be there by the time I'm 48 or by the time I'm 50. And I think you can do that probably. All right. But you're going to have to actually pay freaking attention to every single financial transaction and make every one of those dollars you work so hard for behave. Okay? Because they've not been behaving. No. Money is a great slave. It is a horrible master. it will do what you tell it to do. And if you tell it to do nothing, it runs wild.

Starting point is 00:47:27 And so that's what's been going on. All right, now, so you got a stupid car. Tell me about the car. How much do you owe on it? So I owe about right around $30,000 on it. I pay like $900 a month, not including the insurance. You owe $30 and you think it's worth around 20? Yeah, it's a 21 GMCC.

Starting point is 00:47:47 Why do you think it's worth $20? I just did, like, you know, looked it up, and I went to dealerships before to see what they would give me, and it was around 20 to 21,000. Okay, dealerships give you wholesale. They resell the car and make a profit over that, which means you could put it on Craigslist and probably sell it for 25. Correct. I just don't have the access to pay the right. Yeah, we're going to figure that out. How do you owe the 32? I guess the TD bank or whatever it is, the auto. No, I mean, what's the name of the organization that you send payments to, honey? Oh, yeah, the TD Auto Finance.

Starting point is 00:48:29 Okay, all right. So it's a high interest rate? Yeah, 11.9%. Yeah, you got screwed twice. Okay. And, wow. And so your credit's probably ripped up, isn't it? My credit is pretty bad.

Starting point is 00:48:46 Like I said, I have about 70,000 in debt 30 from the truck. I have 6,000 in credit cards. I have 20,000 in student loans that I got 10 to 15 years ago. I never paid for them. You know, I actually just got done about a year or two ago paying back taxes that I owed. Good. I've just been in a whirlwind. Okay.

Starting point is 00:49:06 So what we're going to do now is we're going to take all the overtime we can take, and we're going to get on an every dollar budget. We're going to sign you up. We're going to give you the premium version, and we're going to be on beans and rice, rice and beans. You now have no life. You're not going to be seeing the inside of a restaurant unless it's your extra job and you're not going on vacation.

Starting point is 00:49:23 I want you to work like a maniac, and I want you to stack five or six grand as fast as you can stack it and get this car sold. Yeah, so right now I do have about $5,000 in the bank. I do have a second job that, I might have a big opportunity on, but it would be a huge risk. I don't need any risks right now. I need money. Well, it would be money, and it would be potential for me to make a lot more money.

Starting point is 00:49:53 Really? More than you're making 150 a year or 115 a years a heavy equipment operator. So, yeah, it would give me an opportunity to learn more about the plumbing and then honestly open my own plumbing business. What's the long? How long does it take for this to unfold? Well, I do the plumbing now. I am, like I said, I am in the union. So I could shelf my book and go to work for this company full time. I could work either six or seven days, whatever. But I would have to work six days and make the same amount of money that I would make work in just the 40 hours. No, I don't need to start a business right now. Right now I need to stack money. So I want you to get the car. I want you to get a little bit of more money, maybe $6 or $7,000. I want you get this car sold. I want you to work all the overtime you can work at something. I don't care what. But you need a $150,000 income in the next 12 months.

Starting point is 00:50:44 And no, we don't need to go into business and no, we don't need to do all this opportunity bullcrap. You need to get your mess cleaned up and then we'll talk about doing that. Okay. But you got about 12 months of just tearing the head off this thing, man. Because here's the thing. You sell the car, then $26,000 and get you a junker car to drive back and forth to work to run the heavy equipment. and you don't need a car to date because you're not going on any dates. You're broke.

Starting point is 00:51:10 Okay? And you're not going to do nothing. You're just going to work all the time for one year. And you'll be 100% debt-free. How would it feel to have no payments and be in control of your money? It would feel incredible. As soon as you do that, you're ready to talk about doing the plumbing gig. Okay.

Starting point is 00:51:29 But you can't be doing two things at once. You need to focus on the cleanup here and learning to tell your money. what to do is the key to that. It cleans it up for you. So hang on, Christian will pick up, and we're going to get you signed up for a financial peace. But don't be chasing something that's going to get you out. The secret sauce for your success is not plumbing. The secret sauce for your success is the guy in your mirror. He's the stud, whether he's doing equipment operating or whether he's doing plumbing. But you go make some money and make your money behave and clean this mess up. If you're waiting for the perfect interest rate before you buy a home or refinance, that moment may never come.

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Starting point is 00:53:26 49, Mallory Lane, Suite 100. Brent went into C. 37227. Lisa is in Fort Collins, Colorado. Hi, Lisa. How are you? Hi, Dave. Hi, Dave. Hey, what's up? So, this is a situation I never thought I would be calling you guys on. My husband and I have been a long-time follower, and we're on Baby Step 4, 5, and 6. This morning, my husband got a phone call from somebody representing, um, a life insurance policy and our three sons inherited $400,000 this morning. And since it's not my, if it was our money, my husband and I would have a plan and we'd be paying off our mortgage. And, you know, we kind of know what to do with it, but we're not sure what to do with it when it's given to your children.

Starting point is 00:54:28 So they were named the beneficiary on someone's policy that passed away, obviously? Yes. Who? It was a crazy, crazy blessing. It was my husband and I rented our first home when we were married. We rented from a lady and we just became friends, but we were kind of friends at arm's length. And she originally said that she wanted to bless our boys with the house that we had rented

Starting point is 00:54:55 for three years and that she wanted them to have it. And so we, you know, we talked to her and we promised to be good. stewards of it and gave, you know, the boys' information for her to be able to do that. But the call that my husband got this morning wasn't about the ownership of that house that we had rented. It was about life insurance cash payouts. Wow. How old are your boys? How old are your boys? Yeah, they're 10, 7, and 4. Wow. And it's equally split amongst them? Well, there's actually one account that is all three of them, and then there's one account that is just two of them because the third one wasn't born yet.

Starting point is 00:55:41 Wow. Okay. I would just sit down with a smart investor pro, and I would just open some mutual funds in their name. That's simple. Okay. And my husband wanted me to ask about a UTMA account. Yeah, that's it.

Starting point is 00:55:56 That's going to be a uniform transfer to minors act. only there's no transfer here. It's just she's transferred the money to them, but these are minor accounts, and you're the custodian, meaning you're in charge of the money until they turn 18. And just invested in good mutual funds like you would for yourself. And then that's going to set them up beautifully. They're going to have a lot of money, you know, by the time they're in their 20s. And then the thing that goes with that is, The problem that this sets up is that this is their money at 18 years old. And so if they're doing drugs, they're going to be well-financed drug users. Right. That's a problem. Is there any way to move it into a trust? Nope.

Starting point is 00:56:50 Not yours. You don't have a choice. I mean, you could get sued if you do by the kid later because your job is to manage it for them as they're parent and if you use it personally or you somehow trap the money, you could really come back on you. I wouldn't do that. But what it does do is it kind of highlights what happened with me and Sharon as well with our three was it highlighted that we didn't get an inheritance like this, but we were making a lot of money as the kids were growing in this business. And so it highlighted that this money is going to screw up their lives.

Starting point is 00:57:30 Oh, wait, no, it's not. It's going to reveal that we were horrible parents, or it's going to reveal that we did a good job parenting, one of the two. And so we started raising our children not to be good children, but to be good adults. And so I'm going to teach the little Turk characters how to work. I'm going to teach them how to save.

Starting point is 00:57:49 I'm going to teach them how to spend. I'm going to teach them how to live on less than they make. And then I'm going to gently start revealing the fact that there's some money there for them as they move into their teen years. I would not just surprise them on their 18th birthday. They might lose their minds. And so I would gradually unfold how investing works, how investing works, and then go, and you've got some investments that have been done for you,

Starting point is 00:58:16 and you can talk about it vaguely, and then later on talk about it in more specifics to where it becomes just a part of the rhythm of their life. but do not allow them to be entitled brats that don't work. This is not that much money. Okay. What about like through their childhood, is there any time that you would use that money for expenses before they turn 18? Yeah, I mean, I might buy them a car with it.

Starting point is 00:58:47 What we did was we matched what they saved because we wanted them to have some skin in the game on the car. We had 401 Dave. So whatever they. They say, well, match it, and I would just match it out of this account. I wouldn't match it out of your pocket. What about college? You could use it for college. You know, you can use it for college.

Starting point is 00:59:04 So college is taking care of. But the sticky thing is it's technically their money at 18. And so they could choose not to spend it on college. Right. They can choose to do something stupid like going to student loan debt and keep the money in the account because some bonehead financial advisor told them to do that or something like that, right? So instead of just. paying for things. And so, but if you can make it through to where these become good adults that

Starting point is 00:59:33 know how to work, save, spend wisely, be generous, that are grown up, become good young adults, then this money is going to be a massive blessing. If it's, if you don't, then it's going to be a, it's going to reveal whatever short, whatever shortfall is in their young character. So it just, It made me and Sharon get very, very serious about growing kids with character, not kids that are characters. And so, you know, and we just went at it. And so the book that Rachel and I did together was her first bestseller was called Smart Money, Smart Kids. I'll send you a copy of it on how to raise smart money kids because you need to now. And that's a little bit scary.

Starting point is 01:00:18 That sounds a little scary. I could, yeah. You know, and it's kind of like we had this money. coming into the Ramses because we had best-selling books and we had all this stuff going on, you know, 25 years ago when Rachel was little and Denise and Daniel. And, you know, and on top of that, we had even worse because we had some notoriety, some in air quotes, fame, right? And so we had to also teach the kids, you know, no, you can't use your dad's popularity with your teacher to get a grade. You know, Rachel might have done that once.

Starting point is 01:00:54 Right. But just once, yeah. Do you know who I am? Yes. Do you not know who my father is? I mean, what kind of grotesque human being says, something like that? That's the most gross things you could ever come out of somebody's mouth. And so we had to, you're not allowed to play the Dave card.

Starting point is 01:01:10 Your life will come to an end. We will take you out. You know, you're not going to do that because you got, you got to learn to do stuff on your own. Absolutely. You know? And besides that, everybody that knows that they, you know, something about Dave Ramsey, not all of them like Dave Ramsey. So you got that other problem, right? Yeah, yeah. Yeah, I mean, so you might work against you. You're going to have to

Starting point is 01:01:32 run into that, too. Yeah. So anyway, all of that to the side, you know, we just, we faced all of this head on, but the good news was that it just made us more cognizant that, you know, we had to be very intentional about installing character. Yeah, because the fear isn't in the money or the dollar amount. It's in the person who has it. Because you run into people all the time who are almost afraid, afraid of success, afraid of having a lot of money. I mean, the way I grew up, it was like, oh, no, you don't want millions. That'll, that'll wreck you. Well, people, when I'm with wealthy people and we're talking generosity or we're talking about other things, one of the number one question they ask me is, how do I not ruin my kids with money? And I'm like, money's not going to ruin your

Starting point is 01:02:14 kids. It just exposes that you did. Yeah. Yeah. Yep. You know, money doesn't do anything. money just magnifies. Money does not make people evil. It just reveals evil people. It doesn't make people generous. It just reveals someone as a generous person. So whatever, if you get a big old pile of money, it just magnifies who you are. And so that goes into this discussion because this isn't a lot of money today.

Starting point is 01:02:38 It's a hundred-something thousand piece. But by the time those kids get there, it's going to be several hundred thousand. And it really doesn't even have to be a large sum of money, whatever you're thinking of as a large sum to magnify. I mean, if you start out broke, but if you learn to manage your money when you're broke, when you get a little bit of money, even if you just start making $100,000 a year, you'll know how to manage your money. Exactly. If you were a good manager when you were broke, you'll be an even better manager when you got something. Exactly. Good stuff.

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Starting point is 01:04:50 If you want to work the Ramsey plan and you want to work the baby steps and go from debt to millionaire, become a baby steps millionaire, the fastest, most efficient way to do it is following the baby steps with a detailed monthly game plan called a budget. Every dollar does that, and it gives you personalized coaching and a personalized plan to fit your situation, and it's going to help you turn up the heat on this. You can download the every dollar budget. app and do the whole Ramsey plan for free in the app store or google play every dollar shelley is in Tampa hi shelley how are you hi fine thank you so much for calm super excited to talk

Starting point is 01:05:46 to you both of you well we're honored to talk to you how can we help thank you thank you very much um i'll try to get you all the info so i'm wanting to move but we bought a house around 2020 we got a great deal on it. So we have about 300,000 left on that mortgage. We have a HELOC plus credit card debt. Basically, we could get it all paid for if we sell our house and list it for

Starting point is 01:06:12 about 585 right now, which is where the market is in our neighborhood. And then that would, obviously, like I said, clear our helock, all of our credit card debt. So the next home we'd be buying would be we'd go with 20% down. But the problem is my

Starting point is 01:06:28 husband's not on board because our mortgage right now is 2. I think 2 and a half and the new mortgage would obviously be higher like I think six and a half and he's not on board but of course I see it as being debt free which I feel like I'm going to sleep better at night with what's your household income about 145 total and how much credit card debt do you have I'm giving you ish numbers but I think about 40ish thousand Right. And how much do you owe on the home equity loan? I think about the same. Okay. And how much do you owe on your car? How much do you owe on your cars?

Starting point is 01:07:08 Free and clear, two cars are paid for. What are they worth? I have no idea. But I would probably hand mine down to my 16-year-old daughter. She's getting ready to get her license. So I probably handed down to her. I've had it for eight, seven, eight years. If you didn't have 80,000 in debt, would you be talking about selling your house right? now? And if so, why? Okay, that is a great question because right now we live in a really young family neighborhood. It's really fun and social, which was great when my daughter are younger.

Starting point is 01:07:39 But now they're older. I kind of want to pull my back here. I kind of want more, you know, they're getting older. They can drive to their friend's house. And it's not as important to be in such a, you know, young neighborhood. So I do feel like I'm wanting something smaller, like ranch with the basement. And not right now it's a two-story. So you're wanting to downsize? I would say downsize, but upsize and quality, yes, like more custom home, but at the same time it would have to do a little bit of work in it, but not a ton, the house I'm particularly looking at.

Starting point is 01:08:13 We just need new paint and maybe buff the floor. Okay, so one more time. One more time. Let's be very clear. If you did not have $40,000 or $80,000 in debt, would you be talking about selling this house? today? I would say yes. Yes. You would want to sell it anyway? I would. Okay. Let me tell you my other concern. And I'm not saying this is true. It's just a concern I have. Okay. What you're talking about

Starting point is 01:08:45 doing with this other house, maybe doing some work on the other house, I would be afraid. I'm not sure you know how you ended up in 80,000 of debt. And I would be concerned that you could sell this house, move to another house. And before you know, you're taking out another he. lock and doing some projects on some credit cards and doing the like all over again. Why will it be different? Well, I do know how we kind of got in credit card debt about three years ago. My husband's been between jobs and it happened to be right. At Christmas time, both of my girls are involved in travel sports and it was just...

Starting point is 01:09:19 You spent $40,000 on Christmas and travel sports? No, but... No, no, no. I feel like it's gone nowhere, though, because the interest rate is, I feel like we're getting nowhere fast. Here's where I'm going to stop. I'm going to stop you right there because here's what I wanted to hear. And I'm going to tell you the difference.

Starting point is 01:09:38 What I wanted you to say is, Jade, the reason it'll be different is because now we have savings, now we understand that when things come up, we know how to pay cash for them, we've drawn a line in the sand, we just don't do debt anymore. That's what I was hoping for you to say. But instead you said, well, the reason that happened was and you gave me a long list of excuses. I hear me. I love the idea of paying off debt. I love the idea of getting the house that you want.

Starting point is 01:10:04 But based off of what I've heard, and I know this is a short call, I'm not convinced that you wouldn't turn around and do the same behaviors again. So if I woke up in your shoes based on that, I agree with her, by the way. If I woke up in her shoes, I would side with your husband and say, let's get on a tight budget. We make $145,000 a year. and let's not blame travel sports or anything else. Let's get this debt paid off. And if you pay off the credit cards and cut them up and learn to live on a budget

Starting point is 01:10:37 and learn to save money, then we'll talk about selling the house after the credit cards are gone. But right now, you're just moving from one thing to another thing to another thing. And the problem is we know that when people pay off debt in one fell swoop and they don't change their habits, the debt grows back. Yeah. And there's nothing in this conversation that indicates any change. changing habits. Nothing. Nothing. Nothing in your verbiage, nothing in your sentence structure, nothing in the words you're using, all of it. It all says you're going to do it again.

Starting point is 01:11:07 So I want you guys to prove to yourselves that you're going to live on way less than $145,000 and get these credit cards paid off and you're going to cut them up and never use a credit card again no matter what happens. And don't talk to me about travel sports when your husband's laid off from work and financing that with that. credit card. That's like dumb. Don't do that. That's a dumb move right there. And that's the type of stuff you learn when you take the time to pay off your debt is you learn how to say no. Yeah, no way. No possible way we're doing that. So that's the process. Abby is in Atlanta. Hi, Abby. How are you? I'm good. How are you? Better than I deserve. What's up?

Starting point is 01:11:52 So me and my husband, we just completed $55,000 of student loan debt. Wow. Wow. Yes, we're very thankful for that. And we're expecting baby number two in October. I am wanting, he's wanting to go on to baby stout number three. I am wanting to put that money towards a car, a more reliable family car. We currently have one. Okay.

Starting point is 01:12:18 So you're pregnant right now? Yes, but baby number two. There will be 2002. Okay. And so you have one car family. Well, kind of. His car, you cannot fit a car seat in at all. It was in his car for a few years now. That's different than what you said earlier.

Starting point is 01:12:36 Okay. Okay. I'm in one family car. So you have, he has a car. What is his car worth? Well, we have looked up that anywhere like one to three thousand, not very much. Gotcha. And what is the car you're driving? It doesn't hold two car seats? No, we travel a lot for his work, a lot as a family. I'm a stay-at-home mom, so we travel out with him. And right now it's...

Starting point is 01:13:04 He's going to take a newborn on the road to work? I mean, next summer. We travel during the summer with him. What type of work is it? Is he a pastor? What does he do? He coaches. Oh, okay.

Starting point is 01:13:19 Okay. So a year from now? Yes, sir. Okay, so we got a year to talk about this? Yes, but my concern is, I'm not. I'm a very cautious person, so I like to have, okay. What are you driving right now? A paid off Ford Escape.

Starting point is 01:13:37 Both of our cars are paid off. And how old is the Ford Escape? It's either 2018. We bought it from a family member or 2019. What's it worth? Not very, probably like five. It's very high mileage. And you only have $1,000 saved.

Starting point is 01:13:57 You haven't started saving towards a three to six months yet? So we have, so let me put out the list of what we have. So right now we have roughly saved about like 12,000, 12 to 15,000. Well, set your emergency fund at three months' worth, and above that, save for a car and move up in car with cash. Yeah, but that's what you would do after baby step three. But set your emergency fund at three months. Yeah, you probably do need to move up in car and pay cash for the move up above your three. three months of emergency fund.

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Starting point is 01:16:36 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 Abigail in Washington, D.C. She says, I'm debt-free, thanks to your principals, but I get a lot of flack from family and friends about not having a credit card for emergencies. Would you recommend having two different debit accounts so that one can serve as an emergency fund. I really don't want to get a credit card, but at the same time, I get nervous about only having one avenue to access my funds. So I hear two questions here.

Starting point is 01:17:09 The second one I'll say for later. First off, yeah, if you have an emergency fund, I would keep that in a separate account. I would put it in a high yield savings account, not just a regular checking account. I'd have a regular checking account for your day to day. And then I would have a high yield savings account for your emergency fund. And I'll just go a step further. I like to keep mine at a separate institution. I like an online one. I just like that. I like the degrees of separation. It helps for my personality type. A lot of people are using Fairwind's credit unions bundle right now. There you go. That high yield savings. And you can put a debit card there. Yeah, I like that. It doesn't hurt to have two checking accounts with two debit cards, even with two banks. That doesn't hurt

Starting point is 01:17:49 or both with one bank is fine. Because if you walk up and there's something wrong with your debit card, just like if there's something wrong with your credit card. Let me give you an example. With either card, they will shut them down. True. If something triggers the algorithm and they think there's theft going on. They think there's fraud.

Starting point is 01:18:10 Like your number's gotten stolen, right? They'll shut either one of them down. And you can get in a pinch if you only have one thing. Yes. So I have a debit card on my personal account and a debit card on my business account in my pocket. So if I get to a hotel to check in and there's something screwed up with one of the cards or something, I just use the other one. I've got that too.

Starting point is 01:18:33 And I've actually got then a third one with a different bank on another personal account. So I've got three in my wallet. That's the only thing's in my wallet other than my driver's license and my handgun carry permit. It's the only plastic there is. Yeah, okay. That's a good point. when I think about it, I have the same. I have the same, but.

Starting point is 01:18:52 Because my experience has been that the algorithm will screw you up. I mean, like if we're traveling, sometimes the thing activates because it thinks that, you know, Dave's not really in Mexico. Yeah. And somebody in Mexico stole his number, right? Yeah. And so it shuts it down. So not on, we've even gotten where we now contact the local, our banker and say we're going to such and such country.

Starting point is 01:19:12 So it doesn't activate it. We put a travel warning on the account so the algorithm doesn't kick. But in case it does, having another one. And it's not really for emergencies, though. It's really for the stupid card not working. Yeah. And I'm trying to understand is she talking about it sounds like she's... It sounds like she's trying to please her family and friends, which you need to stop doing.

Starting point is 01:19:34 Well, it's an emergency fund conversation. And they're thinking, well, the only way you can be prepared for an emergency is if you have a credit card. That's just, that's bulk. That's the line of somebody that's going to be middle class their whole life. You're not lying. Yeah. Because what happens if you have, I mean, if you have 15 or $30,000 saved, what can really pop up that you can't pay cash for? Not much. I mean, even if your roof springs a leak, if you have $30,000, you're in there. Yeah, you don't need a credit card for emergencies, but you might need a second debit card to be able to access your money in case one of your debit cards

Starting point is 01:20:10 doesn't work. Yeah, and I think that's fair. And the second thing you need to do, you probably need to purchase some earplugs to wear while you're around the, you. idiot friends and family. That's right. Yeah. If you listen to broke people for your financial advice, you're going to be broke. I mean, it's like asking fat people about physical fitness. It's just don't, don't do it. I mean, don't, you know, no, no thank you.

Starting point is 01:20:34 All right. Up comes Frank in Baltimore. Hey, Frank, what's up? Hi, Dave. I know there's a very short time for citations, but I love and appreciate what you've been doing for people for all these years. years. Thank you. And you provided an incredible service to people, and that's so cool. You, you single-handedly encouraged, inspired me, and showed me the path to buy my first house.

Starting point is 01:21:01 Wow, good for you. So that I'll be grateful until the day I die. Well, thank you. So I just wanted to make sure I said that. Thank you. And I'm embarrassed, I'm almost embarrassed to ask you this question. But I'm going to be retiring, hopefully, within three to six years from the police department. I'll keep my second job, which is port security. But the question is, this house, I have no one to leave it to. I lost my brother recently. I have no other family, no wife, no kids. So somebody said to me the other day, well, what are you doing?

Starting point is 01:21:46 Just do a reverse mortgage on your home. Take those funds that you would pay for your house and put that in a high yield savings and let that grow until, you know, you retire and then you'll have that income for your retirement. Yeah, whoever that is is telling you that. doesn't know what they're talking about. Okay.

Starting point is 01:22:12 Because the interest rate on your reverse mortgage is higher than high-yield savings account. You'll lose money on this transaction. Oh. It won't work. So what they're talking. Interest rates on reverse mortgages are ridiculously high. The fees are ridiculously high. And the foreclosure rate on homes with reverse mortgages is five-fold a regular mortgage, five times more often.

Starting point is 01:22:38 Wow. So, no, we never recommend a reverse mortgage. Okay. But it sounds like you've got enough money. Don't you have a pile of money? Well, I didn't take savings seriously until I was... Well, how much do you have? What's your nesting?

Starting point is 01:22:57 So I have... You're going to be very saddened by this. I have a deferred comp with about $40,000 in it. I have a pension. What's your pension? You getting a pension from Port Authority or the police department? Yeah, police department. The pension will be about $1,800 a month.

Starting point is 01:23:21 I won't be getting a full pension. And then Social Security, if I were to take it today, would be somewhere around $2,500 if I wait for the full. When I'm 67, it would be about $3,200. and I have some jewelry and watches that are worth probably 40,000. My debt is the house, 130 on the house. And I owe 23 and a half on my truck. And credit card debt is around 3,700.

Starting point is 01:23:58 Well, you said you've got six years before you retire, right? So you've got some time to get this mess cleaned up. Yeah, you need to get the truck paid off, get the credit card's all paid off, and so that you can live on the pension and the Social Security. And that's going to make a lot more sense. And you owe enough on the house. You can only take out a reverse mortgage up to 65% of value. And so you already owe 130 on it.

Starting point is 01:24:22 So you're not going to get much out of it if you did do it. So I think someone's trying to talk about something in a vague sense that they heard on the Internet, and it doesn't really work. And so I think you need to go back to the baby steps. just work those straight through like Jade was suggesting. Yeah, I agree. You've got time. You've got six years. If you put pedal to the metal, we didn't get how much you earned. But if you put pedal to the metal, you get out of this truck and get it paid off, you pay off the $30,000 in credit card. And all the while, once you're done, if you can do that quickly, say in the next year, 18 months,

Starting point is 01:24:55 then you're investing for the next five years. Yeah. And investing in five years and being serious about it, following the steps, you can build up a nice nest egg. And then as far as who to leave the house too. We've actually had two calls today with semi-distant strangers leaving people's substantial money. Yeah. The lady that left the money to the life insurance to the little boys and the guy, the 80-year-old's giving him a strip mall. Yeah. You know, and so it may be that you just look around for some young couple that you want to be a blessing to when you pass. That's sweet. Or something like that and give yourself some meaning for having done all of this you sound like a great person so i'd probably try to be trying to figure out a generosity play in this welcome back

Starting point is 01:26:14 to the ramsie show in the fair wins credit union studio rachel is in cleveland ohio hi rachel how are you good how are you better than i deserve what's up um so i am 33 years old I've married for a year, and we just actually had our first son almost three months ago. He'll be three months on Thursday. But I've always had a dream pretty much since I was, like, in my early 20s. I've always been, like, super obsessed with, like, houses and home decor and design. And I've always had a dream of, like, flipping a house, but it's always felt like I know it's bigger than just, like, going out and buying a house and flipping it and then selling it

Starting point is 01:26:55 and it being super easy. So just kind of been trying to figure out, like, how do I go about doing this and whether or not it's like one of those crazy dreams use me to kind of forget about or if it's something to go after. My husband's kind of like if this is something you want to do, then like let's see a plan, like get something on paper of how like financially we're going to do this and like let's go from there. So I'm kind of like curious just from your perspective, like any tips because I feel like

Starting point is 01:27:20 if I don't do it now and probably will just like never do it because we want more kids and whatnot. That's a dumb reason to do it. Like I'll never do it if I don't do it now. That tells me you're getting ready to do something dumb. Don't do something dumb, okay? I want you to flip a house, but I don't want you to do it in some crazy manner because you feel like some clock is ticking that doesn't exist.

Starting point is 01:27:45 Yeah, your life is not over just because you have kids. You have less time, but your life is not over. Yeah, and it's not like that. I mean, I said that I want to do it before I'm 40. Well, I don't care. I had to pick a time to do it. I want to do it when it's smart to do it. I love the idea of flipping houses, okay?

Starting point is 01:28:04 I used to do it for a living, and I made really good money doing it, and I went completely bankrupt doing it because I borrowed too much money. So I've done about 2,000 real estate transactions in my life, so I actually do know how to do it. And I would suggest that you do save up your money and do a flip, and I can give you some guidance on how to do that, okay? But don't use any of the things that you just outlined as reasons for doing it. It just sounds like a fun idea. I want to save up some money, and I want to do it when I can do it with wisdom. Now, number one, you have to pay cash. And that's the thing. We have a lot. We have

Starting point is 01:28:46 really good savings. We both do really well. What is really good savings? Well, I think it's, I guess I should say, I think it's good. But we have $160,000 in savings. You have how much? And then we both, 160,000. Okay, all right. And so if you picked out a house to buy for $100,000 to flip and you pay cash for it, that's step one, okay? And you leave the rest of your savings alone. So set yourself a budget with that. The second thing then is, is the money on a flip is nothing is done like it's done on television. The stuff you see on television, the fix this house up crap and this little couple's doing a house and they do a renovation. And they, That's a bunch of crap, okay? That's not, there is no reality and reality TV. All right. So the way you really make money on a deal is you're going to buy the house at 70, maybe 75% of value minus repairs. If you don't, you're going to lose money on it.

Starting point is 01:29:55 Yeah. Because when you put a house for sale at 100% of value, someone will make you an offer at 95% of value that you're going to want to take and you're going to pay a real estate commission you're going to pay some closing costs and you're going to walk out of there with about 88% of fair market value at the closing and if you have 86% of value in it you didn't make any money on the flip so you need to be down in the 70s probably around 70% minus repairs. So let's just use $100,000 house as an example.

Starting point is 01:30:34 That's hard to find, but makes the math easy. I know. So that means if you bought $100,000 house in value, you're going to buy it for $70,000. If it needs $10,000 in repairs, you're going to buy it for $60,000. Or you're not going to buy it. I know. That almost seems like, so we. Welcome to reality.

Starting point is 01:30:57 I know. bought our first house last year, and so we actually have been able to save up this $160,000 a year because we did use, like, a big chunk of our savings at that time to buy our house. Okay, if you want to do a flip as a romance move, I can't help you. If you want to do a flip as a business, I just gave you the formula. What about the work? Are you thinking that you're doing the work, or are you thinking about hiring someone to do the work? See, I would want to hire someone, and I'm actually meeting with a gal who, she actually

Starting point is 01:31:25 flipped our house. or our house was a flip, a remodel. And so I'm meeting with her tomorrow to kind of also pick her brain because, yeah, it's almost like it feels like we would need more like money to because especially like you said, like finding house with $100,000 is very. I think you buy a nice little $150,000 house and you buy it for $100,000 and you put $100,000 and you do a little bit of work to it and you flip it and you make 10 or 15, $20,000 on it. And that means you did a good deal.

Starting point is 01:31:56 You make it sound so easy, and I think what I get so nervous, and my husband is, like, that's, like, our savings for, like, our kids. And, like, it's so scary to, like, do that. Nervous is good. That's a lot of money. The first time you drive a $10,000 car, it's good to be nervous if you don't know how to drive a car because you'll wreck it otherwise. It's good. I know. And that's why I haven't done it forever is it's always felt scary.

Starting point is 01:32:21 The hardest part of the whole thing, Rachel, is buying the day. deal. Yeah. You're going to look at 50 to 100 deals before you actually buy one. Okay. You're going to get sick of looking at houses. But if you pay too much, you're going to take your money and turn it into less money, not more money. Yeah. I think I need to also make sure I'm looking at the, like you were saying, like the cost of what I should be looking at. I I mean, I stock Realtor.com for fun every day, but I definitely don't look at $150,000 houses. So I think I need to. It's all you got.

Starting point is 01:33:01 You don't have that much money. I know. And probably need to be looking at them in person, no? Yeah. Yeah. You can stalk them and then you go look. And then if you see one that's a possibility, you go look at it in person. And what you want to buy is not something that has structural damage or some kind of historic rehab.

Starting point is 01:33:18 You want something that needs just carpet and paint. Right. You need some new bushes. So you don't get screwed. It's just, yeah. The less work, the more of the less work you do, the higher the probability you're going to make money. So what you're saying, Dave. It's like taking the first step.

Starting point is 01:33:35 You've got to go find a deal. And because I want to help her out because the money is not made on making tons and tons of changes to the house. The money is made on buying it. At a deal. At a deal. And then the rest of it. All money in real estate is made at the buy. Yeah.

Starting point is 01:33:50 So she's not making structural changes. She's not gutting stuff. She's doing the bare minimum to get in and get out. Anybody that does any kind of thing on a television show, whatever they did, do the opposite. Yes. Because that's bull crap. It's like I'm going to paint it. I'm going to change out the carpet and buff up the floors.

Starting point is 01:34:10 I want this to be so freaking boring. Yeah. There's no like, I got to be a decorator. No, don't be doing that crap. Okay. Run a coat of paint through it. Clean it up. change out the dishwasher, mow the grass, tear out the bushes, you know, put the thing on the, seal

Starting point is 01:34:28 the driveway, put the thing on the market, make some money. Flipping a house is different than being an interior designer. And it's different than being on a reality TV show. All right, let's cut to the chase. It's easy to get discouraged about crazy house prices and interest rates. But when you have the right real estate agent to help you buy and sell the right way, you'll have confidence to make smart decisions. Ramsey trusted agents aren't just experts who guide you through buying or selling.

Starting point is 01:35:19 They're people you can trust to have your back from the first call to closing day. Find a Ramsey trusted agent near you at Ramsey Solutions.com slash agent. That's Ramsey Solutions.com slash agent. Speaking of real estate, if you put your house on the market with a real estate agent that doesn't know what they're doing or you buy a home with a real estate agent that doesn't know what they're doing because they're brand new, or they don't sell but two houses a year, you could lose tens of thousands of dollars. We had a call like last week, week before last,

Starting point is 01:36:05 a guy called in his mother-in-law sold her house for $330,000, and the appraisal came back at $375. And I'm like, he's like, what do we do? And I'm like, I think you sold your house too cheap. I signed a contract. I mean, you have a contract. You get sued if you violate a contract. And so why is that? Well, the real estate agent priced it wrong.

Starting point is 01:36:29 Wow. Didn't know what they were doing. Brand new. So you want a real estate agent that's high-octane, high-protein that is an actual professional that moves a lot of houses. They've done a lot of transactions. They know what they're doing. They're not going to make a tens of thousands of dollars mistake.

Starting point is 01:36:46 We vet the real estate agents that we endorse very carefully to be high-octane, high-protein that follow the Ramsey way of doing things. And they're called Ramsey trusted agents. If you want to find a Ramsey trusted agent, you can do that for free at Ramsey Solutions.com slash agent or click the link in the description or if you're listening on the podcast or on YouTube. Roy is in San Antonio.

Starting point is 01:37:13 Hi, Roy. How are you? Hey, Dave. What's up? I am. I just had a quick question. So I've known about you for a while. I got out of debt myself. A lot of my friends know me.

Starting point is 01:37:29 I talk about getting out of debt, not doing credit cards, not taking loans a lot. I started dating a woman about six months ago. She's seen my lifestyle, and slowly I've gotten her on board. She shared with me how much debt she has. And when she looks at my life, I am. able to live a little bit better and she wants to live that same kind of life. So my question is, how do I approach be gazelle intensity to her without scaring her off? I think that's the only thing that she never saw that part of me. A lot of people didn't where, you know, I wasn't eating

Starting point is 01:38:10 out and I was working my butt off and, you know, everything that you teach in that sense. So you want to explain to her that the only way for her to get what you have is for her to be gazelle intense. But you think that if you tell her that. Well, let's start by explaining gazelle intensity, because I feel like that's a deep cut if you're listening for the first time. Dave, that's your... Yeah, it just, it comes from Proverbs, and it says to deliver, if you found yourself

Starting point is 01:38:46 in debt, to deliver yourself like the gazelle from the hand of the hunter. and the primary predator of the gazelle is the cheetah, which is the fastest mammal on dry land, zero to 68 miles an hour in four leaps. And yet the cheetah does not kill the gazelle but one in 19 chases because the gazelle's trying to stay alive and the cheetah's just trying to have lunch. And so even though the gazelle is not faster, it has a desire to stay alive.

Starting point is 01:39:19 and running for its life. And that's gazelle intensity. That's what we use that phrase. And so, you know, if you're going to run, if you're going to get out of debt, you have to run for your life. And that's what Roy did. And that's what he's trying to get her to do. Now, the reason Roy did it, the reason I did it, the reason you and Sam did it, the reason we ran with great intensity, an intensity that the culture,

Starting point is 01:39:49 culture does not understand. They think you've lost your mind. No, they don't understand it. It is because we believed it would work and we believed nothing else would work. Yeah, we knew what was at stake. Yeah. And so we didn't want to be lunch. We wanted to avoid death. And so, you know, we've been screwed by the banks. We've been screwed by the car companies. We've been screwed by the credit cards. We've been screwed by the student loans. And we're like, we don't want to be screwed anymore. We're going to get away from this system that is broken and that is set out to take down the consumer. And so we ran like our hair was on fire to get away from it and sacrificed deeply because we wanted to be out of debt so badly so that we could live the good life that

Starting point is 01:40:37 Roy is living. So I guess the way you describe it to her is you say if you really want out, if you really want to go from where you are to the good life, I can show you how, but the sad news is it's going to be painful. And you can't manufacture the intensity for her, by the way. I'm just letting you know. Yeah. There's something that has to be inside of her. You can tell her all about it. But for everybody, there's a catalyst. There's a moment that happens. You can call it an I've had it moment. There's that moment that you say, and I'm sure you, said it too, Roy, never again. And my guess is she's probably going to have to have that moment for herself, and that's when it's going to click in. But it can be manufactured. You can just look at

Starting point is 01:41:26 your situation and go, I don't want this, I want that. And so I'm going to be willing to pay the price. That's an I've had at moment. Yeah. It doesn't have to be bankruptcy. It doesn't have to be huge amounts of debt. It just has to be, I'm sick and tired of being sick and tired. So, I mean, you can hire a personal trainer and the only thing they're going to show you is how to be in pain. You know, they're not going to show you anything else because there's no other methodology that works. 100% of muscle growth is happened by fibers being torn down called pain, lactic acid and fiber tear. That's where muscle growth comes from. And so you just don't get muscle without lactic acid and fiber.

Starting point is 01:42:10 and that's painful and sweaty. And guess what? Getting out of debt is painful and sweaty, but it builds muscles. It builds financial muscles. And so, you know, I just talk to her about that. And if she's not mature enough to have a conversation about, you know, a personal trainer is not a pleasant thing, but the result is pleasant. The process is unpleasant to get to the pleasant result, then this is not a woman. This is a little girl.

Starting point is 01:42:38 Well, she's had her, um, her low-end. probably about two months ago, she lost her job for four days, and she ended up getting it back, but that four days was brutal for her. And I told her that, you know, normally, if you were supposed to have a three-and-six-month emergency client, and I was like, girl, like, you know, it was four days, and he thought that you were going to be homeless. And I think that that was her point where she realized that she needed a change, and I've always told her, like, imagine your life without a car payment and credit cards.

Starting point is 01:43:09 Yeah, well, what does she say then? And she says that she thinks about it nearly every night. And I was like, I used to be like that, too. I remember those days. And now I live those days, and it's great. So I can show you how. $1,500. I can show you how, but it's going to be unpleasant.

Starting point is 01:43:23 Uh-huh. I mean, because it is unpleasant, isn't it? Yeah, yeah, no, it was. Yeah. You know, when we do our little... But the only thing is, it's worth it. It is worth it. That's the only thing.

Starting point is 01:43:36 It's worth it. To be able to shrink down on the stage and scream, I'm dead free, it's an unpleasant process to get there, but no one has ever told me they wish they didn't do it once they win. Yeah. And by the way, a lot of people can learn from what your girlfriend is going through. If you're listening, all you have to do is stop. And I remember in the Total Money Makeover, I had the workbook edition.

Starting point is 01:44:01 It had you go through. There's pages and pages of questions and workbook you filled in. But one of the questions that I remember was a catalyst for Sam and I, is, what basically what would happen if you didn't get your next check. And that's the question that if you ask yourself, what happens if I don't get my check on the 15th? What happens if I don't get my check on the 30th? That right there will reveal a lot. Would you have to use a credit card?

Starting point is 01:44:24 Would you have to borrow money from friends or family? Would you be late on rent or your mortgage? He said homeless. He said she was worried about being homeless for four days. And that's the truth for so many Americans. You're walking along the edge of the cliff. Get back from the edge. And the way you get back from the edge is unpleasant.

Starting point is 01:44:39 doesn't, but it's worth it. So I think that's how you talk to her about it, is like a grownup. It's like if I sit down with a personal trainer and they go, this is going to be easy, there's no pain involved. I have a personal trainer that's a liar. Yeah, give me my money back. Yeah, not because I know it's not going to work. You know, you go into PT and they go, you're going to feel no pain in physical therapy after this operation. All I'm going to have scar tissue then, because you're not going to stretch where we need to stretch. Right. Hey guys, George Camel here.

Starting point is 01:45:36 You ever feel like you make good money and still have nothing to show for it? You run into Target for one thing and somehow walk out $87 later with toothpaste and emotional support candles. Just me? Okay. Well, that's the problem. Most people don't pay attention to how they spend their money. So it does whatever it wants. And that's why we created every dollar.

Starting point is 01:45:53 It's a budgeting app that helps you create a simple plan for your money. Every dollar is simple, it's clear, and it helps track where your money's actually going. Plus, you get daily lessons, to-dos, and reminders along the way. It's like having a money coach in your pocket. Your money's been freelancing long enough. It's time to give every dollar a full-time job. Go download every dollar for free on the app store or Google Play. Cora is in Atlanta.

Starting point is 01:46:33 Hi, Cora. Welcome to the Ramsey Show. Sure, thank you. How can we help? Has been our 23 years, about $70,000 a year. And we're currently on babysat number two. We've paid off $12,000 in debt, and we have about 10 more to go, and we're supposed to pay it off by like January, I think according to our every dollar app, like January, not this year, but next year. 10,000?

Starting point is 01:47:11 Yes, 10,000, yes. Why would it take 18 months to pay off $10,000? I guess because we're not hitting it hard enough. I guess. I mean, how much have you paid off so far? 10,000 so far, right? We paid 12. And how long did that take you?

Starting point is 01:47:30 That took us about 13 months, but we just also had a baby. So we kind of went stork road. So y'all don't make a lot of money? No, we do not. What do you make? We make about $70,000 in a year. Oh, you told me that, that's right. We're comfortable.

Starting point is 01:47:45 You told me that, I'm sorry. Huh. I would have thought you'd have paid off $10,000 and like $6,000. six months making 70. Yeah, especially if you pick up extra work, especially your husband. Well, we originally were not in debt when we got married, but we had some medical debt hit. So we, like, had that happen, and then we got pregnant, so it's just kind of been, like,

Starting point is 01:48:11 a little bit of one thing after the other, but we're trying to hit it as far as we can. Yeah, okay. What's your question? I was just wondering, since this past year, you know, it was paying off debt and every but I think I know the answer now, but we, I do have some inheritance money that has just been like left alone for some years now. And I just wanted to know, is it smart to maybe pay off the rest of our debt so we can move to baby step number three? How much do you have an inheritance money? 50,000. Write a check today and be dead free. I just didn't want to rush through it and like

Starting point is 01:48:50 not learn the learning lesson. Oh, I'm not worried about that. Write a check today and be dead free, and then learn your lesson. Okay. But don't ever go back in debt again. Oh, no. So who left you the $50,000? Well, my grandma left me $15,000, and then I put it in investments.

Starting point is 01:49:09 Okay. So here's the way I would think about it if I were you. Okay. If you ever borrow money again, you are dishonoring your grandmother. I know. Yeah. So you have to be on a budget. You have to build your emergency fund and no whining and no excuses and no reasons for going into debt.

Starting point is 01:49:34 Yes, sir. We needed a car. We save up and pay for it. We wanted to go on vacation. I've always dreamed of doing. No, no. Okay? That's dishonoring to your grandmother.

Starting point is 01:49:49 You're going to pay cash for it like a grown-up person that has a baby, like a huge adult, okay? If you can't commit to that emotionally, both you and your husband, look at each other in the eye and pinky swear and spit shake. We cut up all the credit cards. We never borrow money again for anything. If you're willing to say that, then I would write a check today out of the inheritance and be dead free. Oh my goodness. Well, this is so exciting. Yeah, we don't, all of our debt is medical debt. So we do not do that. We did not want to go into debt. So now you have an emergency fund for medical debt. Yeah, let's start saving that up because if it was from the baby, we want to make sure that we don't get ourselves in that situation again coming up. Ever. We have an emergency fund for medical. We have a budget. We live on less than we make. We save up and pay for.

Starting point is 01:50:47 for Christmas and cars. Yes. We save up our trips. We don't go into debt. We don't go into debt. We have money for surprises called emergencies. We don't go into debt. If you get this drilled into your head, then you can be very wealthy someday because you're

Starting point is 01:51:05 starting young at 23. That's the wisdom of this. Romans in San Diego. Hi, Roman. How are you? Hey, Dave. How are you? Better than I deserve.

Starting point is 01:51:14 What's up? First of all, it's really nice to be talking. of you. I've been listening to you for maybe since I was 16. I'm 22 years old right now. Wow. My question is less about myself and it's more about how I can help my parents and I give back to them. They put me through college. They got me in my first car, all that good stuff. Same with with the rest of my siblings. And I was recently made aware that we actually have about, or I guess they actually have about $40,000 worth of deferred payments on the mortgage for the

Starting point is 01:51:47 house that I grew up in. Why? And I guess I think they had some sort of modification back in. I honestly don't know the details about it, but it was decades ago. And I just want to help them with that. How? You're 22. I think I want to play, like, I want to act maybe as like a financial coach, maybe like

Starting point is 01:52:10 walk them through how they can take care of it. What I don't want them to do is to have to re-finance because it's due in 10 years. So my initial thought process was to open a high-old savings account, but then I'm thinking, you know, it's 10 years. Why are they going to listen to a 22-year-old son? Did they ask? No, but I just want to take the initiative to be able to help them with something. How do you find out about it?

Starting point is 01:52:39 I don't remember the exact details, but it came across maybe last year. Okay. Well, number one. Roman, I appreciate your heart and thank you for being a young man who cares about his parents. It's very unusual for parents to be willing to take the advice of their 22-year-old son on financial matters. It's called the powdered butt syndrome. Once someone has powdered your butt, they don't want your advice on money or sex. And that's generally it. So until they get very old and you become very rich and you're 55 and they're 80 and they're broke and you're you're. And you're broke. And

Starting point is 01:53:17 you're a multimillionaire, then they might take your advice, but probably not today. If they would take your advice, what I would tell them to do is the opposite of what you were thinking, and that is I would go refinance that mortgage right now. If their credit is good today and they're able to refinance today, even if it's a higher interest rate, I would refinance now instead of waiting on this balloon to come bearing down on them like a train through a tunnel. And those things come, and they come at you fast. And then all of a sudden, it's the day that your dad loses his job, is the day he thought he was going to refinance or do whatever on his payments.

Starting point is 01:53:57 So if I have a bunch of deferred payments on some kind of a modification thing from 2008 or whatever it was, and that stuff's laying around hovering like a monster in the closet, I'm going to put him out of his misery and go get a 15-year fixed rate loan. and about 5.5% right now, 5 and 3⁄4% and I'm going to get rid of the balloon, period. That's simple. And then if you want to work the baby steps, you can work towards getting your house paid off. And that's what they should do. But I don't know, it'll be a very unusual day that they're going to do what you tell them to do.

Starting point is 01:54:37 Yeah, especially if you're not a homeowner, then it's just everything that you say to them is just going to sound like a theory that you heard somewhere. versus something you really know what you're talking about. I do appreciate your caring for them, but I don't think you're going to be able to coach them. I'll be shocked if you can. You know, it's, you know, not many people in our families come to us for financial advice. Right, yeah.

Starting point is 01:55:09 And the hard part is when you know you can help, you just have to kind of be quiet. and just let it play out. Yep. They're not going to do it. But if they're smart, if they call me on the radio, what I would, I mean, on the podcast, I would, the radio, either one, I would tell them, refinance it right now. Oh, the interest rates higher.

Starting point is 01:55:28 I don't care. I get rid of this represents extreme risk. And stress. Oh, my goodness. To know that that's going to be due. So monster in the closet. Yes. And I'm afraid to open the closet.

Starting point is 01:56:19 Hey, guys, George Camel here. Do you ever feel like insurance companies only care about your money and not what you actually need? Well, there's a better way. When you go to Ramsey's Insurance Resource Hub, you'll start feeling confident that you're getting the right coverage that's truly best for you. You'll find helpful info on everything from life insurance, health insurance, identity theft protection, and more. And when you're ready to get the coverage you need, you can connect with a Ramsey trusted insurance pro who will only get you what you need at the best price. Go to ramsysysolutions.com slash insurance. Ramsey's Solutions.com slash insurance. Our scripture of the day, Proverbs 1522, plans

Starting point is 01:57:18 fail for lack of counsel, but with many advisors, they succeed. Henry Ford said, most people get ahead during the time that others waste. Wow. Used to work with a guy. He said, work while other people sleep. Yeah. Pray while other people sleep. That's a good word.

Starting point is 01:57:38 Read while other people sleep. Yeah. Or while other people watch TV. Oh, oh. Throw a brick through your TV. What was the Ziegler said? He said, rich people have big library. Poor people have big TVs.

Starting point is 01:57:52 That's good. I have both. What does that say? I actually do too, so there you go. All right. Mary is in San Antonio, Texas. Hi, Mary, how are you? Hi, I'm doing well.

Starting point is 01:58:07 Thank you for taking my call. Sure. What's up? Hey, I just had a question. I think I just wanted a second and third opinion about the possibility of me taking a different job with a different company. I do, my line of work is something that I've heard you on the, on the show,

Starting point is 01:58:26 say negative things about, but I am a property manager. No, no, no, not that, okay? I'm a property manager for homeowners associations, and I currently work for a company, and I have a total of nine communities in my portfolio. And a few months ago, I put my, you know, updated resume up on, you know, a website and an acquisitions team member from a different company contacted me late last week. And I've had a total of two interviews with them, and I'm going to have a third tomorrow. And they are really excited about my experience and what I've done to educate myself and get certain designations in my line of work.

Starting point is 01:59:10 But I just, you know, it's going to be a significant increase for myself. I am on baby step number two. I have stopped investing in my Roth IRA in order to pay off debt. I had a total of $58,000 of consumer debt. So what do you make today? I make a little about $67,000. What would you be making at the new gig? The new gig would be between $80,000 to $85,000.

Starting point is 01:59:38 That's what the team has acquisitions. And you'd be doing the same type of work? Yes, but I think it'd be easier. So why would you not take it? What's the downside? The downside is I currently work from home and there's a lot more flexibility. But again, I am a, you know, divorced now for about four years. That's why I have the debt.

Starting point is 02:00:03 And I'm an empty nester. My two children are grown and I would have the time and the ability to do that. I don't have to take care of anyone anymore besides myself. So what's the problem with going to the office? issue. No problem with going to office. nervousness? No, no, not at all. Actually, I'm kind of looking forward to the possibility talking to other adult humans again. So this is just a change. You're just, you're just processing a change. Yeah. I'm processing the change, the flexibility. I get to help my mom out

Starting point is 02:00:33 by taking her to doctor's appointments here and there. You know, just that. But I, I've worked hard to educate myself and be better at what I do. And I just think that. Most places, most places like you're talking about going to work for have a certain amount of flexibility for executives. The leadership team at Ramsey, if they want to take an hour and go take their mom to a doctor, we don't have a big deal about that. Yeah, I agree. I think that tomorrow with my last interview that I'm going to talk to them about those types of things. I'm going to be completely open and honest since they're the ones who contacted me, right? I wasn't out there looking for a job.

Starting point is 02:01:11 but since this opportunity came up, I thought, gosh, the difference in the income would help me. I'm on track to pay off all my debt by this year in December. Let's pretend you were debt-free and had a million dollars in the bank. You still should look at this deal. Oh, I would. Yeah, I definitely would. So is the only downside you have to take your mom to the doctor here and there? Is that the only thing that you can?

Starting point is 02:01:37 Just the flexibility that the current employer. currently offers me. That doesn't mean that the next employer wouldn't do that. But another thing that I like about what they've spoken to me about is that they have, they like to promote from within, and I'm ready for that. The current company that I'm with doesn't see, I've been with them for four years. I think you've made your choice. You haven't made any case for staying. You haven't made any case for staying. There's no reason to stay there. You're right. Yeah, if they offer you a good job, unless you sense some kind of a toxic environment or something like that will be the only reason you wouldn't take it.

Starting point is 02:02:17 You don't want to, you know, go from this. But honestly, people that work in an office with other people produce a lot more and have more opportunities for promotion than someone that's working from home. Yeah. It's one of the huge downsides, the unintended consequences of working from home. The people that work from home don't get promoted nearly as often. And so, yeah, I think you ought to look at it. It sounds like it. And by the way, I'm not against property managers and HOA professional managers. I'm against Barney Fife who lives in the neighborhood and hasn't got a life. And he runs around with his one bullet trying to bother everybody in the neighborhood. Have you been to my neighborhood?

Starting point is 02:02:58 About every bush that he doesn't like or something. That's the guy that drives me nuts who needs to get a life and has no power anywhere else in his life, including in his home home. and so he has to go out and exert himself through the neighborhood. These are the people I don't care for. All right. Chris is in Charlotte, North Carolina. Hi, Chris. What's up? Hey, Dave, big fan of the show.

Starting point is 02:03:21 I just want to call it. My scenario is probably a little different than most, but I'm 52 years old and grew up very poor. Had a tremendous success. I just had my best friend at 55 passed away of a heart attack. I don't know. I'm sorry. And I'm in that position where I'm like, with what I have, do I retire now or do I make a play for something else?

Starting point is 02:03:46 Because I'm OCD. I can't sit around the house. I have to be doing something nonstop. And it's like, how much money do I need to live the life that I want to live when I'm done? You know, I want to take X amount of vacations with my wife because she stayed at home for 30 years when I work 75 hours a week. And so just want to kind of see what the next play is for me and with your thoughts about timing for me, I guess. What's the size of your current nest egg net worth? I would say my company and my house and my land, probably around 10 million.

Starting point is 02:04:26 Okay. And did you say you're 54? 52. 52. Yeah. And so you don't, I mean, can you begin? to move away from the company? Do you want an extra strategy on that?

Starting point is 02:04:38 Is that what you want? I mean, I'm obviously still making good money with the company, and I have people that have been with me for 20 years. But it's like I spent a lot of, you know, both my daughters, obviously are graduated college now. What's the end game with your company? When you're 80, where's this company? I mean, it still will be going.

Starting point is 02:05:00 I mean, I'm a partner in a car dealership. Okay. So other partners will be. running it or their kids or your kids or own it or whatever? No, it's just me and one other partner, correct? Okay, so what happens to your share when you're 80? What's your exit strategy? Does it go to Ayers or does it sell out to the partner?

Starting point is 02:05:20 Yeah, I have a living trust. I have it all set up and I have it, it's an S-Corps and it's set up for my percentage in the trust. Okay. All right. So the only thing I could do other than that is to say as a partner, sit down and talk to your partners to say we've both done very well. Can we restructure the operations of this to give us both more freedom? But you don't sound like you're asking for an exit, a complete exit. You just want some

Starting point is 02:05:45 more flexibility back to our last caller. But yeah, I mean, I want to take six weeks off and travel with my wife. You've earned it. And I want to build a leadership team to do that. And that's kind of the stage I'm at. I'm 65. Sharon and I take three week trips and four week trips and that kind of thing. or just leave for that period of time, whatever. But Ramsey is set up to run where I don't have to be in every part of the day to day anymore. And the operations are set up. And certainly the on-air portion, Jade and Rachel, and they do a better job than I do. So that's where you are.

Starting point is 02:06:22 I think you just reset your ops on that. I don't hear anything here that's painful that you have to exit from. I like it. Good plan. Well done, sir. Very well done. That puts this hour of The Ramsey Show in the books. We'll be back with you before you know it.

Starting point is 02:06:35 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.

The Ramsey Show - Wealth Is Built On Facts, Not Feelings

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