The Ramsey Show - You Don't Win With Money By Accident

Starting point is 00:00:00 A Medicare plan that worked last year might cost you more next year. Let chapter check your options for free. Askchapter.org slash Ramsey. 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. George Camel, number one bestselling author, Ramsey Personality, co-host to Smart Money Happy Hour.

Starting point is 00:00:38 He's my co-host today. Open phones at AAA 825-5-225. Helen is in Miami. Hi, Helen. How are you? Hi, I'm good. Thank you so much, Dave, for having me on today. Sure.

Starting point is 00:00:52 What's up? So I have a full-time job. I have a side hustle, and I have a third business, which is a kids play center. and it's currently losing me about $13,000 a month. And I know, I know, it's really painful. And had you spoken to me like five years ago, I would be on Baby Step 5 or 6 or 7. But unfortunately, this business has drained all of my 401K.

Starting point is 00:01:23 It's drained all of my kids' college savings. And it's also forced me to sell a rental property that I owned. So the question I'm asking myself is, do I sell my home, take some of the funds and try and rehabilitate this business? Do I ditch the business and possibly even downsize the home? Or do I borrow money against the house, which has got about $350,000 of equity in it, and try and figure things out that way? How long have you been losing money on this? Yeah, I mean, since I set it up. Which was how long ago?

Starting point is 00:02:07 One year ago. And so in one year, that's 150,000 bucks in losses if it's a 13,000 burn rate, right? So that was your whole 401Ks, 150 grand and a rental property, too? No. So about six years ago, one of my little girls had to have a bone marrow transplant. and I had a full-time job fully funded 529, fully funded 401k, my main home and a rental property. And I was working the whole time that she was in hospital and then subsequently recovering. And at the end of that, I kind of reassess my life and said, okay, do I want to be in the corporate grind?

Starting point is 00:02:52 Or do I want to do something in service to other moms that enables them to spend quality time with their children? So I took a payout, a redundancy payout from my previous employer. I paid my mortgage six months in advance, and I said I would live off the proceeds of my side hustle. And unfortunately, Miami property market completely exploded after the pandemic, and it became much more difficult to find a rental location. I've then had some issues with the... But I'm sorry, but you started the thing one year ago.

Starting point is 00:03:27 and you haven't had a time to lose all the money you're talking about you lost. No, I lost the money during the setup process, and in that time I returned to a corporate role. I know, but that was one year ago. So how much did you put into the business initially before you started losing money? About 120,000 went into the business before I started losing money. So what makes you think, going to answer your original question then, my friend Dr. Henry Cloud has a book called Necessary Endings. And we have a necessary ending to a relationship, a job, a business,

Starting point is 00:04:07 when we see no hope that it's going to get better. So why do I think, if you're going to sell me as your new investor, why would I invest if I'm your investor? I'm not. But if I were that, if you're on Shark Tank, why would I want to put money in this? What makes you think it's going to turn around? I mean, I think I haven't had the time myself to invest in it.

Starting point is 00:04:34 So, you know what? I'm also thinking maybe it won't turn around. Yeah. So it might be time to think. I think your idea might be bad. It's a franchise. It's well-founded. It's a noble cause.

Starting point is 00:04:47 What you were trying to do was a nice thing, a good thing, but the business aspects of it apparently suck. Yeah, it's a franchise business. So what can you get out of this? If you close this thing down, what can you get out of it? I think my best chance is for a resale to somebody else who's got the time to devote to it because my time has been sucked up by this full time. Are you tied in a lease agreement for the space?

Starting point is 00:05:18 Well, a new franchisee come in, buy her out of the franchise and buy her out of the space and take over the lease. That's how that transaction would normally work. So that does get, the fact that it's a franchise is makes it really devastating that you've still lost this much money because that means they suck. But the, but on top of that, the good news is, is that they probably can resell the franchise rather than let their new location close down. And so the franchise over is probably going to be a big help in getting you out of the lease and getting you out of the business. So I'm out of there, kid. I don't hear any reason to stay in this. I understand. from a heart perspective how you got into it, but I'm not staying in it. Nothing in this conversation

Starting point is 00:05:58 says, who-hoo, five years from now. That's great. Thank you. Yeah, that's a necessary ending. I mean, it's like, you know, if you're married to an alcoholic and he keeps saying he's going to get better, he's going to get better, but every night he comes home drunk, at some point, you go, this is not going to get better, and this marriage is done. And that's a necessary ending because there's no hope of change. There's no hope of a shift. And honestly, inside of a business, we have miniature, all of us have miniature P&Ls or projects that we have to either sunset them, meaning we closed them, because what we thought was going to work, didn't work, welcome to business. And I closed one not long ago, and inside of Ramsey. And it's, you know, but we didn't close

Starting point is 00:06:45 Ramsey. It was just a portion, you know, a thing here that used to work and doesn't work and we're not doing it anymore. So, because we couldn't see a way to make it work in the current environment. So that, that's what you're doing. You're analyzing, is there hope for the future? Give me a reason for hope. Give me a logical, rational business reason for hope. And $13,000 a month burn rate, that takes away my energy real fast. Yeah. And sinking more money into it, as you've already found, is not the answer. So I don't want you to sell your home, the last asset you have, after already draining the 401K, the 529s, all to try to make this business work, and then it doesn't, now you've got nothing. And now that's insult to injury. It's kind of like a gambler who went,

Starting point is 00:07:25 hey, I'm going to drain the 401K, drain the savings. You're chasing losses. And it's going to be different this time. I can come back if I just had one more. That's the scary part to this to me. Harvard Investment Letter calls it a sunk cost analysis, meaning what you put into it doesn't matter. All that matters is what the future looks like. So if you bought a stock for $70 and it goes to $10, you know, do you sell it? Oh, I'm going to wait for it to come back up. Well, would you buy more of it? No. Well, that's the same reason you sell it today. It's because you wouldn't buy more of it because you think it sucks. But the fact that you paid $70 for it makes you refuse to turn loose of it for $10. And there's too much pain associated with it.

Starting point is 00:08:04 You know, what you put into it, your sunk cost is skewing your judgment, not her judgment. But I mean, the case of any of us when we're looking at this, I can't sell it for that. You don't know why I paid for it. What you paid for it's irrelevant. All this relevant is what you can get for it. It's just the emotional pain of having done something stupid. That's what kills all of us. It makes us hold on to something too long.

Starting point is 00:08:25 When you wouldn't buy it again for what you paid for it, it's time to sell it. And I can promise you, Helen would not set up a new playground today if she wasn't in the business. Hey, Helen, would you put in $150,000 and open up a playground today based on what you know today? No would be her answer. And so yes, sell it. This episode is brought to you by BetterHelp. Every year you tell yourself you're going to handle the holidays differently this time. You're going to stay calmer. You're going to feel more peace. But then the same old pattern emerges, the same family tension, the inability to keep healthy boundaries, and you find yourself cranky and tired and snapping at people that you love. This year can be different. You still have time to get ahead of all of the chaos, understand what's behind your reactions and come up with a new plan. Therapy can help you build a healthier plan before you actually need it. When you're ready to have that conversation, talk to my friends at BetterHelp.

Starting point is 00:09:46 BetterHelp is an online therapy platform with more than 30,000 licensed therapists. You can message your therapist in schedule sessions right in the app. And if your first therapist isn't the right fit, you can switch at any time for no extra cost. You know what's coming. This year, you have time to keep calm ahead of all. the holiday chaos by preparing differently. Go to betterhelp.com slash Ramsey for 10% off your first month. That's BetterHelp, H-E-L-P.com slash Ramsey, or click the link in the description. Jessica's in Tampa. Hi, Jessica. How are you? Let me try one more time. I must not push it harder.

Starting point is 00:10:43 There's the button. Hi, Jessica. What's up? I'm good. How are you? Better than I deserve. How can we help? So my family recently moved from Maryland. to Florida within the last month, and we are staying with a very generous church member, but there is a deadline to how long we can stay with them. And our home in Maryland has not sold. It's been on the market 100 days, and we've done everything we can think of and afford to do to make sure that it sells, and it just hasn't. And in order to get a rental down here to move out, we need the house to sell.

Starting point is 00:11:20 And so I was just looking for any advice on what to do to either get it to sell or what to do otherwise. Okay. Tell me about your real estate agent. What are they telling you? So he is a good friend of ours. He's a attorney, a real estate attorney. He's a real estate attorney? Yeah, and he owns a brokerage, too.

Starting point is 00:11:48 He's helping us out. Not much. Well, he says our house is priced well for the market. It's been showing really well. We've had showings very consistently. It's just not getting any bites on it. We've dropped the price a couple times. We're looking into appraisal assurance, lots of different things.

Starting point is 00:12:11 Why does he say it hasn't sold? He just says the market's tough because the interest rates keep going up. Well, they're showing, so people are interested. What is stopping them? Is it a dated kitchen? Is it the condition? What's the thing that's stopping people from making an offer? I really don't know. We updated the kitchen, new counters, new appliances, new roof, new flooring in most of the house all within the last four years. The only thing that could really use an update is the HVAC, but we're not going to dump money into an HVAC for a house that we're not living in. But he's gotten zero feedback from the other agents, the buying agents, telling him why they're going to. clients aren't interested. No, they said that the house is showing really well. We've had people say,

Starting point is 00:12:59 oh, the basement's too dark. There's no walkout. We really wanted two bedrooms on the top floor. It's a townhouse. And zero offers? Zero. Well, it wasn't an official offer, but we had somebody consider offering us about 20 grand lower than what we listed it for. And what is it listed for? 3.29. Have you seen a comparative market analysis? Did the agent do for you before you listed it what the other homes in the area have sold for. Yep, and that they're all about the same. We have a pretty good square footage compared to other homes in the area that are comps, and we're listed pretty well from what we've seen.

Starting point is 00:13:37 What city is this in? It's in Bel Air, Maryland. Okay. We're just going to pull up the median days on market, median listing price, and get a look at that. Have you looked at that with your agent? I have. What's the days on market currently for that? neighborhood?

Starting point is 00:13:54 About somewhere between 70 and 90. Okay, so you're not super far off at 100. No. But clearly it's not the most desirable one in that neighborhood. But homes have moved in that neighborhood in the past couple months. A couple, yeah, but not a lot. We just saw one. It went off the market, and then it came right back on the market, so something fell through there.

Starting point is 00:14:16 Yeah. Okay. I don't know the answer to your question. I don't know what's wrong here. The only thing I would tell you is that I need better feedback from my agent. I'm not sure this agent is doing you any favors. You may want to switch agents. Sometimes that'll wake up the market and get somebody in the area.

Starting point is 00:14:42 Why don't you interview a couple of Ramsey trusted agents off of our website in your area and see what they tell you? I grew up in the real estate business. my license in 1978 when I turned 18. Okay, so I've been in the business my whole life one way or another. And I, one of the things I detest is when an agent says, the reason the house hasn't sold is the market's tough, and yet the average days on the market are 70. So that's absolute bull crap, in other words. Okay, the market's tough. Interest rates are high. Yeah, but other people are selling houses, so it's kind of weird, you know, something's wrong. I really don't need the Trump report.

Starting point is 00:15:17 I need my house sold. So, um, Yeah. I'm going to shop some agents and talk to them and see if you can get somebody to look at it. You want an agent who's willing to gently hurt your feelings that your price is cray-cray, or your living room carpet looks like it makes me itch or something. They need to tell you the truth about your baby being ugly, you know, and it's hard, but they need to be able to do that in a more in a non-day of way, more like a George or a Rachel. be gentle with you and kind, but still give you the message, right? And, uh, but something's going on when you walk up to that house and you're walking up

Starting point is 00:16:03 the sidewalk, the bushes are overgrown. There's cobwebs everywhere. It's dirty. Your first impression on a job interview is the clothing you wear and whether you took a bath and combed your hair. And that's called curb appeal in the real estate business. So what, what are they seeing in the pictures? What are they seeing when they walk up? Uh, what are they seeing when they're standing at the front door while the agents opening the MLS lock to get it open. They're spending some time there. Are they turned off before they get in the door? Because, I mean, if you've ever hired people, sometimes you, before they ever opened their mouth,

Starting point is 00:16:36 you know that you weren't going to hire them because their curb appeal was really bad. And so they got confused that they were in a job interview and stuff. And so, you know, that stuff happens. And that happens to houses, too. And even relisting it can give it some new life. Sometimes a new agent and a new NMLS number that's fresh pops it back into the other agent's face again. It's one more open house with some fresh cookies. It might be all it takes.

Starting point is 00:17:02 Yeah, bake some cookies in there. That gets Dave in the door at least. Well, that's, you know, the smell of it alone will get me in the door. But, yeah, as if I need a home in Maryland. I'm sorry that you're having this hard time. I don't buy, the market is not super hot, but the market's not super cold. So I don't buy that this is the market. I can't tell from your story because everything you've given me is the things that we would,

Starting point is 00:17:25 George and I would have told you to do. You've already started looking at those and doing them. It's price. It's appeal. It's, um, are people looking for $330,000 townhomes in that area? That's the question. So you might need to cut the price down if you're getting showings, but no offers. Yeah. And you've obviously left. And so you're going to turn yourself into a motivated seller here pretty quick, which means price cuts that are, that are painful. And I sure hope you can avoid that. Yeah, I would talk to some other agents and everybody, listen, I know the guy from church is not how you pick your real estate agent. This is the largest asset that most people own is their home. My wife plays bridge with her is not how you pick your real estate agent.

Starting point is 00:18:15 And it's how most people do. My nephew just got his license and we wanted to give him a shot. This is not how you list your house with your most powerful, with your largest asset. And he's doing us a favor. That phrase just runs chills down my back for her sake. So, you know, if he's working for nothing but he can't sell the house, he's not doing you a favor. So I would rather pay somebody that sells 200 houses a year and they sell it in 25 days and they get a full dead gum commission. and there were no favors done except your house is gone,

Starting point is 00:18:51 then I would, you know, you saved me a half a percent on the commission or some bull crap. So, you know, it's the carrying cost alone is going to be eaten, eat up any savings that the favor would do. And I've got to tell you, in all my years, I don't remember ever hiring a real estate agent that was an attorney. I've never seen that either. Or even seen it. That's very strange. But they have both. They're not good at one or the other.

Starting point is 00:19:23 Maybe he's a great attorney then, because the house isn't selling. But at closing, he would crush it. What kind of successful attorney sells houses? I mean, what kind of successful real estate agent wants to be a lawyer? I mean, it's like... You don't find the combo very old. I don't know, man. That just is weird.

Starting point is 00:19:38 I don't know. I truly don't know, hon. I'm not making fun of you. I'm just the situation's strange, and I wish I could help you sell it. If I could wave my little magic wand right now, we would wave it and poop it would be gone. Someone out there listening is. like, man, I've been looking for a town home in Bel Air. There it is.

Starting point is 00:19:52 Call us. We'll get you guys connected. We'll hook you right up with Jessica. We'll do her favor. Dave gets a finder's fee, though. Let me tell you what I get asked all the time. When should I get term life insurance? How much do I need?

Starting point is 00:20:25 Is it affordable? Those are the right questions to be asking. So let's take a quick review. The fact is, term life isn't a baby step. So if anyone is dependent on your income, you need to have 10 to 12 times your income in life insurance. And most people are surprised by how affordable term life really is. Even if you're not in perfect health.

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Starting point is 00:21:10 great answers, competitive rates, and coverage that actually protects your family. Call 800-356-4282 or go to zander.com for a quick and easy quote. That's zander.com. So my team comes in at the break and taught me something about my business that I didn't know. We have a wonderful tool on our website. Ramsey Solutions.com slash market. And you can type in the name of your city and it will give you all the particulars for your city. So we just typed in Bel Air, Maryland, regarding our last caller.

Starting point is 00:21:57 Median house price in Bel Air is $430,000. Hers was $320, by the way. Total homes for sale right now, $169. Median days on the market, 29. So if you're over 100, you have a problem of some kind with the property, the price, or the agent, or all three. That's what that tells you. 33% of the homes have listings with price cuts. One third of them are cutting prices.

Starting point is 00:22:22 which it does indicate that market may be lagging a little bit. It might be a little slow because that's a lot of people cutting their prices. But 29 days average on the market, that tells me that this house, she can get rid of this thing, unless there's just some serious ugly thing that she doesn't know about or she hadn't faced up to or whatever, those kinds of things. So you can go pull that up on your area. So if you're looking or if you're looking in an area, you go, okay, hey, this is a hot market, the slow market. 29 days on the market, it's a pretty good market right now. That's pretty hopping.

Starting point is 00:22:56 But 33% with price cuts is not pretty hopping. So there's a couple of conflicting pieces of data there. And, you know, if you're trying to sell up $800,000 house and a $430,000 median neighborhood, that's going to be a problem. And as you say, location, location, location. If it's not in a great neighborhood, you're going to have a harder time. It's always that, yeah. Jamie's in Philadelphia. Hi, Jamie.

Starting point is 00:23:19 How are you? Hi, I'm doing good. How are you? Better than I deserve. How can we help? I'm calling in today because I'm on baby step two, and I'm having trouble putting a significant amount of money towards my debt, and a big part of it is because my rent is half of my take-home income. Okay. What's the numbers on that? So I bring home about $5,000 a month, and that's after health insurance costs and 401K contributions and taxes. And my rent is $2,300 a month. How much are you contributing to the 401K?

Starting point is 00:24:09 4%. And what's your gross income? Is it about 80 grand? Yeah, it's a little over 80. It's like 85. Okay. So if we take that 4% and stop investing, you'll have $3,400 back per year across your paychecks. That'll help a little bit. 300. You need to stop your 401k. But you can't afford to live in that house. You don't make enough. I know, but that's, so here's my thing. I know, I know you say.

Starting point is 00:24:39 No, I don't say, math says. The guy that invented math, he said it. Right. Get into the smallest possible place. I have two kids. And where I'm living right now is like, it's a pretty, it's like a thousand square foot, two bedroom, one bathroom, one bathroom apartment. And so if I went any smaller, it would be one bedroom or a studio apartment. And where I live, I live outside of Philadelphia. I don't live in Philadelphia. But where I live is pretty, I mean, it's pretty cheap. where you live is cheap yeah where I live you're a single mom with two kids right yeah yeah that's a scary thing and then you can't you know you can't break even with your budget hardly

Starting point is 00:25:26 so what do you do for a living I'm a nurse good good okay all right well you can make 80 to $120,000 as a nurse almost anywhere in America that's cheaper than where you're living.

Starting point is 00:25:47 And so, you know, you do not want to be, the math that you gave me doesn't cause you to be, and to be wealthy like I want you to be for the sake of you and those two kids. You fought too hard just to keep your head above water for this rent to be eating your lunch. And so something has to change. And that's why you called because you said this is not tenable. This math doesn't work. and you don't need me to tell you that.

Starting point is 00:26:14 You already knew that. So then the answer is, can we double our income? Probably not as a nurse. No. Not never see your children again, you know. You could work like 24 hours a day, seven days a week, and double your income. Because nurses can always get extra work, anything you want, you know, always something to do. But, you know, let's develop a sustainable life where we see our children.

Starting point is 00:26:40 We get a reasonable amount of rest. And we can get out of debt and move towards a positive, prosperous future. And that rent number doesn't fit in the equation that we just talked about that we want for you and you want for you, right? Yeah. So what do we do to fix it? I don't know. So as much as I would love to move that, you know, I can't because their dad, you know, their dad has them every other weekend. And I know that it would become an issue if I did try to move.

Starting point is 00:27:12 How much is child support? $50 a month. $5.0? 5.0. You don't get a lot of save for $50. Yes. I mean, you've got to do something different for you and the sake of the children, and $50 doesn't buy you a vote.

Starting point is 00:27:41 So that's kind of my next question is I have some money put away, and I'm trying to decide, do I use it for lawyers to try to take some power back so that I can move to a more reasonable area? Or do I just use it towards my debt? Yeah. And how much money is do you have put back? I have about $40,000. Okay. Well, you know, I don't know what your relationship is with your ex, but if it's me, I'm going to sit down and sit down and say.

Starting point is 00:28:21 say, I can't live here. I don't make enough money to live here. And so I'm moving. Now, do you want to start paying me $2,000 a month instead of $50 and I won't move? Or do you want me to spend the $40,000 I have saved on a lawyer to fight you because I'm moving? And you're not going to stop me, you know, is the message. You can be gentle and kind. you don't have to be rude just to stir up a fight. We've already had those. But I mean, we can't just say I'm trapped, and so I'm going to go down. We're going to rearrange the chairs on the Titanic, right? We can't do that. So the math is telling you something, some cause of action has to occur. And paying off your debt doesn't change the fact that your rent's too high as a

Starting point is 00:29:12 percentage of your income. If you had zero debt, you'd still be pinched. Yeah. So you've got to be in a different housing situation. And I don't know what that is. I'm not saying that Philadelphia is that expensive. I think Philadelphia is that expensive. I don't think you're being melodramatic. I think you're just dealing with facts, or even a suburb of Philadelphia, which is what you were saying. You were in. So, but I just, I think the math is screaming at you. And what I want to give you is the power to say, like you said, I'm going to take some power back. But I'm just going to have a conversation with him and go, look, Mr. $50, I can't do this. These kids cannot have a future this way.

Starting point is 00:29:57 And so as a result, here's the thing, I'm not going to do this. And so I'm going to make plans to move, and you either need to make plans to be good with that or get ready to fight because I'm going to ready to spend all of your $50 making sure that you're embarrassed before the judge that you give $50 for two kids. I mean, this guy ought to have his butt kicked up around his neck and wear it like a collar for sending $50. Does he just not make anything? No, he probably makes like $120, $130,000 a year. So what is the $50?

Starting point is 00:30:33 Is that a middle finger? Well, I guess so. Well, his argument is if I don't have enough money, well, then he can just raise the kids with his mom. No, that's not his argument. His argument doesn't, he doesn't get to be the judge or write the laws. He's just Mr. $50. Now I'm really pissed at this guy. So what a lameo father.

Starting point is 00:30:58 What a horrible human being. You don't take care of your own children. Instead, you're using the child support to manipulate to try to get custody of them. Oh, take this guy down. For sure, invest the $50,000 at $40,000 and take him down. Just for the hobby of it. If you're being crushed under the weight of phone calls from debt collectors at all hours or getting nasty letters threatening a lawsuit, it can feel like there's no way out.

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Starting point is 00:32:08 and you can too. So look, there is a way out. But the longer this drags on, the fewer options you have. You have to deal with it now while you still can. So go to guardianlit.com slash Ramsey. That's guardian, l-it.com slash Ramsey, or click the link in the description. Jennifer is in Columbus, Ohio. Hi, Jennifer. How are you? Hi, I'm doing great. How are you? Better than I deserve. What's up? So I am currently in Baby Step 2 slash 3. What I currently only owe other than my mortgage is a divorce settlement amount of $70,000 that's going to be due in four years. So my question is I'm trying to figure out as I'm saving, monthly for this, what is my best way to kind of invest this or what I put it into to get the

Starting point is 00:33:28 most return rate safely so that I don't lose the money when it's due? Wow. So this was for you buying out 401k or buying out house equity or something like that? This was house equity and a business that I own. Okay. All right. And but the terms that, the mediation or the divorce attorney or whatever you guys came up with a four-year number. It was a five-year. So, so far, what I have to do, I have to pay $1,000 a month to the X, but then also at the end of this five years, pay a $70,000 lump sum. But does $1,000 keep going after that?

Starting point is 00:34:10 No. Okay. Everything ends at the end of the five years. How much can you put away on top of your thousand that you're already sending? How much can you set aside for the 70 grand loss on? So I kind of did the numbers and figured out how much I would need each month to be able to pay that 70,000. I want to know how fast you can pile up 70 grand. Could you do it by Christmas?

Starting point is 00:34:31 Do you have any money now? No. Well, so I've got 15,000 that I've put away into a CD for this. And then I've been putting $1,200 a month into a savings account. Okay. And what's your income? I don't have like, I bring home about $9,000 a month. Okay, so from a financial calculation standpoint, what your husband has is he has a $1,000 a month stream for the next 48 months, that's $48,000, and then a $70,000 lump sum at the end of 48 months.

Starting point is 00:35:06 But what we call the net present value or the present value of that 70,000 isn't 70,000. because if you had 40,000, it would be worth 70, four years from now. You follow me? Right. And so if I were advising your husband and you offered him 40,000 or 50,000 for this whole thing, cash today, I would tell him to take it. Because it would be a good deal for him. It would be a good deal for him. But my point is that's the mentality I'm going to work towards is I'm not going to wait four years.

Starting point is 00:35:40 I want you to save it up really, really fast and get a discount. So if you can sock away three or four grand a month, be free of him sooner, for less money. Okay. Does that make sense? It does. So then you wouldn't recommend that I'm trying to do. I would just do a high-yield savings account,

Starting point is 00:36:02 and how fast can I get 40 or 50 grand together and have your attorney call his attorney, or you just call him and tell him to go to his financial advisor and them calculate what they will take for this $70,000 in today's dollars. Remember present value. Remember that phrase and remember today's dollars, which are the same thing. Okay. So just to give you an example, if you had a seven-year window, that one I've got memorized, okay, and the discount rate was 10%, meaning I can invest the money and make 10% on my money,

Starting point is 00:36:36 then, and I need 70,000, seven years from today, then today's valuation of that is 35,000. Because 30,000 in seven years would become 70,000 if it were invested. That's what the concept is. It's called a present value versus future value. So if someone offers you 40,000 a day or 400,000, 18 million years from now, take the 40,000 today because it's going to be worth more than 400,000, 18 million years from today, right? So that's the point. The money grows over time, and so that changes the actual present value of it. So I think a present value at a good discount rate is probably 30 or 40,000

Starting point is 00:37:18 bucks, maybe 45 today to get you out of this whole thing, but you don't have 45 today. But if you could get 45 together by next spring and make that offer, I bet you could be done with this guy. And then you're clear. I'd rather you not have to plan your life around something. four years from the day, I'd rather you be free and go on. Right. And I'm not sure that his financial advisor or his attorney or he are sophisticated enough to grasp that concept that I just covered with you, but that's the real world. That's how it really works.

Starting point is 00:37:51 And so that's like if you ever hear somebody in the lotto, the lottery is a million dollars, but not lump sum. It's a million dollars if you take it out over 15 years or something, right? that's the same concept. The present value of that series of payments is not, it's a total of a million dollars, but the current value is more like 600 or 500 or something. And that's why people take that. So that's what I would rather you do. So no, I would not use an investment account. I would just use a high-yield savings because I'm trying to get rid of the X. That's why we call them X's. They need to leave and be cut bait, be done. What do you think? And over that short of a time

Starting point is 00:38:32 horizon, I think it's going to be too stressful to watch that number go up and down with the market. And then when you need it, you need to be up. So for that reason alone, it's not worth it. When you know you need a certain amount within that short of a time frame, it's not worth it. Just high-ield savings. Lucian's in Tulsa, Oklahoma. Hi, Lucian. What's up? Hi, Dave. How are you today? Better than I deserve. How can I help? Love to hear it. Well, Dave, I'm 21 years old. I'm about to graduate college completely debt-free, so thank you for that. And I'm starting my career as a financial advisor. Now, regarding my career, I want to go about it with the most amount of integrity and, like you say, with the heart of a teacher.

Starting point is 00:39:09 However, my firm does talk a lot about annuities and variable life as tax-advantaged plans for retirement. And I just wanted to get your thoughts on both of those questions. Sounds like you went to work for an insurance company. Something like that, yes, sir. Not something like that. You did. You didn't go into the financial advising world. You're now an insurance agent.

Starting point is 00:39:30 right yes you're not you're not going to make it there okay unless you unless you sell the products that they sell you're not going to get to stay there they won't let you stay gotcha okay and you're not going to like those products if you've read dave ramsay and george camel no sir i do not and that's my thing is they talk a lot about those and i'm like turn and invest the difference and i've already started running into uh some ped budding and i just wanted to get your thoughts on And you haven't even graduated yet. Yeah, I mean, you know, you talk about headbutting. You're going to get fired to what's going to happen.

Starting point is 00:40:06 I'd be looking at other firms, see if you can land a job. So, want to jump online and pull up the SmartVestor pros in your area and call a couple of them and ask them who's hiring in that world because those are actual financial advisors. They're not insurance agents. Yes, sir. Because people that sell cash value-based products, IUL's, Whole Life, Indexed Universal Life, whatever it is, all the things, you know, whatever it is you're getting into, those are insurance agents, and they call themselves financial advisors, but they're not.

Starting point is 00:40:41 Right, yes, and that's what I've been running into. They got me in my Series 7 and 66, but the more that I've gone through the training aspect of things, they're not selling anything that requires that. Exactly, exactly. There's no securities involved in anything you're selling. Everything you're selling is an insurance product. Right. I mean, we do offer securities and everything, and that's where I've been trying to get people targeted into. But they thankfully don't have any sales photos, but like you said, I'm afraid that my job may be on the line eventually. You might be on the bottom of the leaderboard when everyone else is hawking those insurance products and you're not. Yeah, you get paid on the premiums in that world, and the premiums are much higher on the stuff that hurts people. So I'm sorry. I wish I could give you good news, Lucian, but what do you think?

Starting point is 00:41:23 Well, you can be a good guy out there in that financial advising space. So I would just look for another, firm as soon as possible. I don't know if he's on the hook for anything, having them, they trained him. Does he have to stay there a certain amount of time? I would look at whatever contract you signed with them if you've already signed up to work with them. Yeah. Because if they paid for the training, they're probably going, hey, more than that, they pay for the licensing. And so they're going, you have to, you can't just leave now. Well, you're going to pay him back for that probably. I don't know. I don't know what they signed up for. That's the downside. But I wouldn't say, you don't have to, you know, jump ship to

Starting point is 00:41:52 that they forced him through 63 and 7 because he's not even going to use it. They probably have to, but they push these other products instead. Yeah. Wow. Oh, man. Gross. When was the last time you felt confident walking into an auto repair shop? I mean, in the first place, you're stressed because your car is acting jankety, and then you hand over your keys and hope you can trust the person who's fixing it. You deserve to feel confident that your car is going to get fixed right and at a fair price. That's why I'm a big fan of Christian Brothers automotive.

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Starting point is 00:43:18 So schedule your service today and get 10% off your visit at CBA. com slash Ramsey or click the link in the description. That's CBAC.com slash Ramsey. 10% off, up to a $250 value. See store for details. Welcome back to the Ramsey show in the Fair Winds Credit Union Studio. George Camel is my co-host today. Sarah is in Denver.

Starting point is 00:43:48 Hi, Sarah. How are you? Hi, I'm good. Thank you guys so much for taking my call. Sure. What's up? So to preface my question, I'm going to let you know that I got really lucky with a lottery ticket and I got almost enough to pay off all my debt. I'm on step two,

Starting point is 00:44:06 soon to be moving on to step three. And my question is, how do I build intensity and good spending and saving habits when I never hit rock bottom? And I don't have the lived experience of fighting to pay off my debt. I don't know if you have to recover from a cocaine addiction to know to avoid cocaine. I guess that's fair. I do have a little bit of an impulsivity problem. Once I paid off my credit cards, I closed all of them, cut them up like you recommend. And that's definitely helped. But in the moment, I struggle with small impulse purchases like coffee in the morning or going out to lunch. So how would you avoid those if I was your coach today? And I said, hey, you're going to not go out to eat. and you're not going to go get coffee. What would you do instead?

Starting point is 00:45:05 You still got to eat. You still need caffeine. Yeah. I'm working on... It's a trick question. You make coffee at home and you bring lunch to work. That way you have something to eat, right? So that's how I would do it.

Starting point is 00:45:21 Yeah. You sort of force the discipline until it becomes a habit and that habit becomes so normal and ingrained that you go, I want to eat out. I know how to cook. I can make better coffee at home than I can get it from the coffee shop. So that'll take a minute. That's not going to be an overnight process, but the simplest way is not stopping the drive-thru

Starting point is 00:45:39 if you're trying to avoid going to McDonald's. Yeah. All you're saying, Sarah, is that you're human, and we all have that. We all want something, and we all have that little four-year-old kid that lives inside of us that's throwing a fit on the cereal aisle yelling, I want fruit loops, right? We all have that kid. Yeah. He lives inside of all of us.

Starting point is 00:45:58 And the smaller that kid gets, the more. the more adult-like we all become, me included, and I'm 66 and still working on it, and you're not that old. How old are you? I'm 22. Yeah, so, I mean, you know, I got your 3x here. So, and, but yeah, I mean, I still have to force myself to walk past a chocolate-covered donut. It's a problem, you know? And I know they're not good for me, but I don't care.

Starting point is 00:46:27 I like them. And that little child, that little four-year-old child wakes up. and my mouth is watering right now talking about it. Isn't that ridiculous? You know, I mean, really? And so that's impulse control is what you're talking about. And I had a guy, a famous psychologist, tell me one time, one definition of maturity. And he was talking about me, Sarah, who's making fun of me.

Starting point is 00:46:48 He's a friend of mine. He said, one definition of maturity is the ability to delay pleasure for a greater good, which is impulse control, right? Yeah. And it's like growing up. A few years ago, you know, those old. people call millennials. They called it adulting. You remember when they said that? Yeah. Yeah. And it's just hard, though. I'm with you. I get it. But here's the thing. That's why we use sayings around here,

Starting point is 00:47:13 like live like no one else, so that later you can live and give like no one else. I'm going to avoid the chocolate donuts so I can go out and have a mobile, a Michelin two-star meal experience. Fine dining's become one of my favorite sports. But yeah, right? And so I'm going to, but I'm going to, I'm going to trade off there and have the right make a right make a solid trade and intentional trade and that's impulse control but it's hard for all of us you're not you're not a bad person or something but the but your point is that i think your point was that until i get this under control i feel out of control right yeah pretty much so once you free up these debt payments how much was that every month that was going out to lenders?

Starting point is 00:47:59 It was almost $800 a month. Amazing. What is going to happen with that $900 when it hits your account now, and it doesn't have to go right back out to lenders? Well, right now it's paying off the last little bit. Yeah, I'm not quite done. But once you're there, I'm saying let's fast forward. Because for most people who disappear, right?

Starting point is 00:48:21 You're saying, left to my own devices, I just go spend $900 bucks accidentally. Yeah. How do I void that? Yeah, that would definitely happen. So one thing I've done, because I'm like you, is I automate the things that are good for me, and I make the things that are bad for me way more difficult. So automating is making it easier, right?

Starting point is 00:48:39 It's going to auto transfer to savings every month when the paycheck hits, it automatically goes to savings to build my emergency fund, for example. Okay. That way you never see the money. That's why I love a 401K. That money's gone before it hits my bank account. I don't have to think about investing. It was done for me because George four years ago decided he's going to do the good thing,

Starting point is 00:48:58 eat the vegetables. Yeah. So first, let me give you permission to be human and impulse control is all of us. Second, let me give you permission to overcome it by adulting and saying, I want bigger things for me than a freaking sandwich or a cup of coffee. My life is bigger than that. And the 32-year-old version of Sarah is going to talk back to the 22-year-old version and say, thank you for growing up at such a young age because you've made us very wealthy. and now we can do whatever we want to do with our lives. We lived like no one else so that later we can live and give like no one else. And by the way, later is not for you 66 years old. Later is 32 years old.

Starting point is 00:49:39 In 10 years, your world is going to be completely different because of what you're doing right now and the stuff you've learned and the impulse control that you're struggling with. Thank God. Most people don't even know it's there. They don't know it's a problem. You at least recognize it. Called it out. Yeah.

Starting point is 00:49:54 Early on, too. Imagine at 22 getting this stuff. Yeah, I'm proud of you. I think you're going to go do big things. Folks, if you're sick and tired of working so hard but having nothing to show for it, well, that's normal. Normal's broke. You don't want to be normal. Normal sucks. Normal is out of control, no money, right? And one way you can do impulse control is making every dollar behave with your every dollar budget. You can find extra money every month, and we build you a personalized plan that walks right along the Ramsey principles where you beat

Starting point is 00:50:24 debt and build wealth and in just 15 minutes you're going to find thousands of dollars in hidden margin you're going to feel like you got to raise you do not want to be normal think about what normal is i don't want to be normal no uh i want to be you know be not conformed to this world but be transformed by the renewing of your mind i don't want to be normal i want to be defiant not compliant right what are we I don't want to be like those people. No, I can do that. I have that ability, but why, why? No. No, start every dollar. You can start it for free in the app store or Google Play. Changes everything when you're intentional, George. Yeah, conforming to this world means, well, everyone has a car payment. Might as well get a nice one. Well, no one can afford college,

Starting point is 00:51:15 so might as well take out unlimited student loans because I'm investing in my education. That's the kind of stuff that gets people into trouble later in life and they look up and go, Well, I make good money. I got nothing, though. It's all gone every month. Normal is, thank God, it's Friday. Oh, God, it's Monday. That's a sad way to live. That's some E-Or energy right there. That's not what we need. That's like an oxymoron. E-Or energy. Those things don't go together, like airline service. Delta is Greek for you ain't going to get there. Yeah.

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Starting point is 00:53:27 Speaking of live like no one else so that later you can live like no one else. You know, we teach you if you're in Baby Steps 1 through 3, you're building your emergency funding and becoming debt-free, everything but the house that you don't need to see the inside of a restaurant unless you're working there and you don't need to go on vacations either. You need to get your butt out of debt. But once you get to Baby Steps 4, 5, and 6, then you start being intentional rather than intense and that's when you buy a couch, upgrade your car, go on vacation, those kinds of things. Of course, with cash in every situation.

Starting point is 00:54:14 So if you're in four, five, or six or seven, we want to invite you to celebrate that, Live Like No One Else, by cruising with us. We're doing a Ramsey cruise, the Live Like No One Else cruise. Second time we've ever done it, the first one sold out instantaneously. This one's still got a couple of cabins left. You can still get in. This is your week to get away. I'm going to be teaching.

Starting point is 00:54:36 George is going to be teaching. Rachel Deloney, Jade, all of us will be there. Natalie Grant is our musical guest. We've got pastors on board doing church every morning. We're going to have an absolute Ramsey blast, the world's largest debt-free scream. And I'm going to be talking a lot about baby step seven type stuff, legacy, estate planning. We're going to get into all of that. We're going to do some of the nerd stuff we did in the investing essential stuff and go back over some of that stuff.

Starting point is 00:55:02 We've got a lot of very good content plan. We're the entertainment. So all the Ramsey personalities are on there. My wife Sharon's with us the whole week. We're going to be doing a lot of very cool side events. of all kinds, including y'all are going to do a smart money happy hour taping, I think, on there.

Starting point is 00:55:19 Live on stage. Rachel and Deloney are doing a marriage and money thing on the cruise. That's going to be fun. Lots of stuff. So come with us. We would love to have you. It is March 14th, March 14th through the 21st,

Starting point is 00:55:33 this coming spring, Western Caribbean. And this is not on a cheap cruise. This is a nice one. This is Holland America, not Walmart on the seas. Dave don't do Walmart on the seas, okay? Dave wants to go nice. So we're going Grand Cayman, Half Moon K, Jamaica, Cozumel, that end of the world, Western Caribbean. So make sure you, if your baby step forward beyond, come celebrate with us, guys.

Starting point is 00:55:54 Let's do life, man. This is what we put this. It's why we did all this stuff, right, to be able to win. Michelle's in Denver. Hi, Michelle. How are you? I'm good. How are you?

Starting point is 00:56:04 Better than I deserve. What's up? So I had a question about pre-nups and estate planning. 13 years ago, I was a single mom with two kids at 41 years old, and I had about $500,000. I met my husband, who was 26 years old, no kids, and he probably had like maybe a $1,000 net worth. We wanted a kid, so given my advanced maternal age, we got married within a year, and he signed a pre-nup. We're 13 years later, my two kids, from my previous marriage are adults. My husband and I have three kids together who are in elementary right now.

Starting point is 00:56:45 And my investments now are about $1.7 million. So I'm looking at estate planning and I'm thinking, you know, it's been 13 years. I know who he is now. I didn't, you know, I had, I wanted to be cautious when we first got married. So I'm wondering, do I just, I'm really considering doing away with the pre-up, getting a trust maybe. Do you have any thoughts around all this? And what during this, you've been married, how long again? 13?

Starting point is 00:57:17 13 years now. And what has he added to the equation during the 13? You said my investments are 1.7, does he have, we should have substantial investments in 13 years. In addition to the money you brought in. Yeah, my investments have grown. Yeah, I got your part. I'm asking about the couple. The couple that started 13 years ago, have they built wealth?

Starting point is 00:57:38 He has, we have kept, I know you're not a fan of this, but we've kept our finances is separately. We started that at the beginning. And so he has probably like, he has a 401K, right, that he's been contributing to. So have I. And my investments have grown. And so what's the size of his 401K? I would be guessing. I think last time we talked, it was probably around 60 to maybe like 65K. It was maybe a ballpark. Oh, okay.

Starting point is 00:58:14 I'm a little bit stumped. I don't know what to tell you, okay? Here's the principles that are running through my mind. You've not handled money together. Yeah. And yet we're doing away with the very document that keeps it separate. And so I know him, but no, you've not handled money together. So you do know him.

Starting point is 00:58:40 I mean, I'm not saying he's a bad guy. He's not like he's a shyster. He's not some kind of goal. or something like that. That's not, we know that part, but, but you guys have not made hard money decisions together where there was conflict over who wanted to do what. You just did what you want to do. He did what he wanted to do. And now we're about to turn that whole thing loose on him. That makes me a little nervous. Okay. I might say, what if we combined our finances and if it worked real good for two years, then take off the pre-nup or something like that.

Starting point is 00:59:10 Yeah, a lot of people kind of have it sunset over time to where more and more. or the portion becomes ours. Yeah, but it doesn't, I wouldn't do that if you keep it separate. Really? Because you don't, because you don't have the, the relational tools, you don't know how to fight fair over money because you've never done it. That's very true, yes. And as soon as you take this off and then there's a money fight,

Starting point is 00:59:41 you're going to get real freaking nervous. That was my thinking. Play it out. Let's say you guys undo the pre-up and then you split. Would you be furious? Sure. Because you feel like you've built all this wealth and he hasn't done a good job? Yeah.

Starting point is 00:59:54 Not even if you did a full split, but if you just had a good knockdown dragout, like a big marriage blow up, I mean, which everybody that's been married has had. I had one lady tell me, we've never had a fight. And I said, it's because you lie. You know, so it's. But yeah. But yeah, I, I, I, uh, I, uh, I, um, yeah. I like the spirit in which you ask the question. That's what I'm struggling with because I love your spirit.

Starting point is 01:00:19 You're trusting and you feel solid in your marriage. That's all great. And it's all real. I don't think it's wrong. I think that's all correct. Yeah. But yeah. And the three kids,

Starting point is 01:00:34 two kids thing, that's very interesting, isn't it? Yeah, two are self-sufficient adults on their own. We're good there, but three in elementary. Yeah.

Starting point is 01:00:44 Yeah. But I'm saying in terms of, of an estate plan, a will. You know. Oh. Have you guys done that? I know. Yeah, you've got hours and mine and mine are self-sufficient.

Starting point is 01:00:56 And the others are minors. So, yeah, that gets real emotionally complicated and practically complicated as well. So, yeah, I'm glad you're wrestling with this. On the estate planning side and on the pre-nup side, keep wrestling it. That's one piece of encouragement. because, and I really like who you are. The way you talk about it is so solid. So keep being that person.

Starting point is 01:01:21 But let's start, if we're going to blend, let's practice it being blended maybe before we do it. That might be the way to do it. Ease into it a little bit. Yeah, I totally didn't think about that. And I totally see the wisdom in that. Are you guys both on the deed of the house? We are. That's, yeah, we are.

Starting point is 01:01:43 And it's still got a mortgage on it. Yeah. And I think a good start would be, as a part of figuring all this stuff out, let's just do a rundown of exactly where we are today, exactly what his 401k is, what yours is, what your investments are, where they are, who has them? Whose phone number do I call if you get hit by the proverbial milk truck, right? Are you the beneficiary on his 401k? Is he the beneficiary on your 401k? Your non-premarriage investments, right? and do we have a will for the house and the kids separate from that.

Starting point is 01:02:17 Yeah, you need to get some estate planning done, but then you could start to get complicated. A trust might be your answer later as a staging thing because that might take your premarital assets and set them aside for a different distribution than the marital assets upon death of both parties. That might be a way to separate them and make sure that there are separate. And a postnup could just amend the pre-nup and take the place of that. Our marital assets could go to really the three littles. And the trust assets could go five ways. Split amongst all the kids.

Starting point is 01:02:58 Yeah. That's one way you could do it. But, oh, wow, that's a cool question. I wish I had an instant answer, but I don't. If you've ever been really sick or been the caregiver to somebody who was, you know how broken the health care system can be. Man, nothing is easy. Finding the right doctor, sitting on hold for hours, or, gosh, trying to understand co-pays and treatment plans and weird medical terms that no one really explains and so much paperwork. But what if you had someone to do all of that for you? Someone to take the burden off your shoulders. Solace Health

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Starting point is 01:04:40 eligibility only takes about two minutes. That's S-O-L-A-C-E-Health.com slash Ramsey. You must be 18 or older and remember advocates do not provide medical or legal advice. Our question of the day is brought to you by Ask Ramsey, our free AI money tool that provides personalized answers for free. Did I mention it's free. Only based on Ramsey principles. The only diet we have fed this AI tool is Ramsey. So it doesn't know anything else. And so the only possible way it can answer the question is Ramsey. Ask Ramsey. Visit Ramsey Solutions.com slash Ask Ramsey. Today's question comes from Darren in Nebraska. If you're on Baby Steps 4, 5, and 6 and are actively doing all three, do you have to contribute 15% of your Just for Fund side hustle money to retirement? The side hustle is

Starting point is 01:05:48 for extra travel money, gifts, etc. And it's not needed in the monthly budget. Oh, it's an interesting one. Trying to skirt the baby steps here, Dave. I mean, if it has a very specific goal and you're just doing this temporarily, it's fine if you don't want to invest a portion of that. If you're still on track for retirement,

Starting point is 01:06:07 you're investing 15% of your normal household income. That's fine either way. Yeah, absolutely. I wouldn't see it as a sin. Sue is in Columbus, Ohio. Hi, Sue. How are you? Hello, how are you, sir? Better than I deserve. What's up?

Starting point is 01:06:24 I need some advice about my homeowner's insurance. I have been trying to get them to reduce it for a couple years, and I'm just getting the run around, and I'm getting so aggravated about it. Who's it with? It's with Ohio Mutual, but I've called a couple different insurance companies here in Ohio, and I keep getting the same reason why they won't take it down. What's that? That they tell me that because my house is 25 years old, I need to put a new roof on it.

Starting point is 01:06:59 Well, my brother-in-law is a contractor. He builds houses. He's inspected my roof, and it doesn't need a new roof. That's weird. But I've talked. Yeah, and I've talked to three different insurance companies, and I keep getting the same reaction. Well, standard asphalt shingle roof east of the Mississippi does not have a 25-year life. I've got a property that we just put a roof on, and it was 15 years old, and it needed a roof.

Starting point is 01:07:27 It didn't look bad, but it needed a roof. It was starting to show serious wear, and, you know, the first storm that came along, we were going to have a leak. And so the asphalt shingle roofs generally don't have a 25-year life. Okay. And that's what they're going on. Now, is that what you've got? Is it a standard asphalt shingle roof, standard shingles? Yes, sir.

Starting point is 01:07:48 Okay. And, but it's not leaking, but doesn't it show where? Yeah. He walked all along the roof of it, and he said, you do not need a new route. There's no leaks. There's nowhere. It's fine. Okay.

Starting point is 01:08:05 I don't know. I don't know. That's unusual. Yes. Based on my experience with roofs and I own a bunch of purposes. property, but I'm not saying it's not so. It's just unusual. So that's what you're facing. Okay. Yeah. I think it's fair to say that sometime in the next five years, you're probably going to need a roof. Was that fair? Probably. I've always been told you should get them replaced every 20 years,

Starting point is 01:08:29 but honestly, I don't really have an extra $20,000 at the moment to get it done, you know? That's fair. That's fair. Yes. Yeah. I think most insurance companies are going to look and require certain things because what's going to happen is there's going to be a hail storm and they're going to be responsible for replacing the roof that the hail damaged and they don't think you're they don't think your roof will withstand that and that's why they're throwing this action it's not always about the condition it's just the age of it that just adds risk for them and so they're going hey we're not taking on this risk at this age they don't rewrite policies but if you could get them to just not cover the roof at all then they probably would take the policy they don't do that but that's why

Starting point is 01:09:07 they're doing it is because they're worried about themselves but if you want to try to fight it I would get an independent inspection because I don't think my brother said is going to cut it, and you can have them right up the condition and see if you can fight that. But I don't know that you're going to have much of a dog in the fight at this point. Yeah, I mean, I know we got a brand new home that we just finished about 18 months ago. And when the insurance company came out, you know, they actually had two requirements. They wanted us to do on a brand new home before they covered it. Wow.

Starting point is 01:09:34 And one of them I had never done before was a water pressure sensor, a water flow sensor. and so if like water's running and you're not home like its pipes are busted, it's got an automatic shut off on it and an app on my phone that lets me know that they shut my water off, which is kind of nice if you're traveling. You don't have to worry about your water, all your everything being ruined in the whole house or something. And it limits the risk. But I've never had one on a house, and I'm 66 years old, but they made us put one on to cover it.

Starting point is 01:10:00 And I'm like, oh, you people, oh, well, put it on there. I probably need it anyway. And I put it on, and I'm kind of glad I did because I feel a little. Gives you peace of mind. We just took a trip, and we were gone a couple weeks, and we got it. get back while we're gone we're not worried about the house being trashed you know so it's kind of a neat thing but yeah they do have requirements in order because they're responsible if the if a pipe burst and screws up you know a million dollars worth of flooring or something right you'll let that run for six

Starting point is 01:10:26 hours that's it's everything same thing as with the roof they're responsible and that's why they're doing that so so um yeah it's aggravating though it's like it's my freaking roof who cares you know so oh man all right uh It looks like Matt's turn in Philadelphia. Hey, Matt, what's up in your world? Hey, guys, thank you on me on the call. Just real quick question for you. I'm 49 years old.

Starting point is 01:10:52 I'm debt-free besides my house. And I found my dream car, my childhood dream car from when I was a kid. And I'm curious to know if you think I'm in the spot where I should splurge and purchase the car. Was it a hot wheels? It's a night ride or replica. When I was a kid, a night ride. A Knight Rider replica. Oh, man.

Starting point is 01:11:13 I know. The kit car or the real one? Well, they all kit cars because there was no such thing. Right. That's right. Kit was the car. Yeah. Yep.

Starting point is 01:11:20 It's identical. Studio accurate replica. Wow. How much is it? $52,000. What's your household income? My base salary is $120 plus bonus. I don't count the bonus because you never know if you're going to get it to $120.

Starting point is 01:11:36 Oh, you get it. What do you count? What's your bonus? 25% Okay, all right And are you married? I'm not, I'm single, I have a long-time girlfriend, but we're not married yet Okay

Starting point is 01:11:48 And what's your net worth? Net worth right now is about a million, including home equity 401K Liquid savings How much liquid savings? About 1 in 10 Okay It's a lot

Starting point is 01:12:03 Based on your situation Because here's what I measure this against. I just use the burn the money in the middle of the floor scenario If you burn $52,000 in the middle of the floor, does your life change? No, but you'd be down to half your liquidity. Yes. And what really pains me, Dave, is, like, you guys actually financially saved my life seven years ago. When I bought another car, I should not have bought.

Starting point is 01:12:29 But when I bought the car, I came across few guys and found my financial path. And now here we are seven years later. I found this other car. But because I worked so hard to build a savings, it pains me to either. even spend any of it, let alone that amount. Yeah. But it's my dream car for I was a kid, so I'm just so torn. You know, it's part of it.

Starting point is 01:12:49 It's an unusual collectible because it's got a very, it's a unique product because it's, like I've got a buddy that collects cars and he's got one of the cars from Days of Thunder, the Tom Cruise movie, remember that? And he's got one of it's a Hollywood car, which is what you're talking about. Only he's got one of the actual ones they used in the movie, but this is a, you're as a replica. So the resale market from a collectible standpoint would be very small. Yeah. So that's going to be a problem in terms of the valuation of it in the future. What are you going to do with it if you get it? Droll over it.

Starting point is 01:13:27 Would it just sit in the garage? Would it just be like mint condition in the garage or are you going to drive it around on Sunday? This is a garage coin. He drive it on Saturday. I mean, it's what you do with a collectible. It's an antique like type thing. And what other vehicles do you have? You got any other toys? No, I have a 99 trans am. It's a toy. It's also in the garage. If you called and said, I want to go on a cruise and I'm going to spend 50 grand, I'd probably tell you to do that, so I can't tell you to not do this.

Starting point is 01:13:53 I'm over-analyzing it because of the car. Yeah. I thought you can afford it. It is, it's a, the only disturbing number is, it's a high percentage of your $110,000 dollar liquidity. Yeah. But it's not going to, it's not going to cause you go bankrupt. It's not going to cause you to be,

Starting point is 01:14:09 your face is not going to show up in the stupid column or something like that. Nothing like that. I'm just, I'm a car guy, and so I'm just kind of questioning the actual car itself, and I shouldn't be doing that. You can afford $52,000 worth of wasted money. You've earned it. Enjoy the car. It does look pretty sweet.

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Starting point is 01:16:22 Lynette is in Portland, Oregon. Hi, Lynette. How are you? Hi, good. Thanks for taking my call today. Sure. What's up? Yeah. Well, I have a question about my aging parents. They have been in great help up until this year, and then they had a couple of health changes. And so I'm wondering, at what point should we, as their kids, be kind of stepping in to help them and intervening? or, you know, just kind of keep acknowledging that they are adults and they get to keep making their own decisions.

Starting point is 01:16:54 So the health changes that happen this year are that within about a three-month time span. My mom was diagnosed with brain cancer, and then my dad, who was kind of suspicious that he had some dementia brewing that diagnosed officially with Alzheimer's. You're a little bit muffled. Can you speak directly into your phone, please? Yeah. Oh, shoot. Can you hear me okay now? Yes, that's fine.

Starting point is 01:17:18 Thank you. Okay, okay. So I don't know if you were able to hear. We heard it all, but it was just a little muffled. You're fine. Go ahead. Okay, okay. So you got brain cancer and you got early onset signs, and how old are they?

Starting point is 01:17:33 Well, he had an official diagnosis as well. They're 77, and he's turning 78 soon. And other rights have been in great health. He's been the one who's been actively involved in their investments, and he is currently, you know, trading. He's got single stocks. If you took a snapshot into their financial picture now, they're actually okay. And so I'm not sure if I need the perspective of, you know what, just some reassurance,

Starting point is 01:18:00 like they're going to be okay. Or, you know, I look at the picture, like, oh, this is a high-risk situation. And it's just a train wreck that we can prevent from happening down the road. my mom's been the one who's the day-to-day financial person, you know, taking care of the bills. I've stepped in and added my name to their account so that I could help with that just to take that off her plate. Currently, thank goodness, she's in remission, but it's a very aggressive form that has a high chance of coming back. Sure. So what is it?

Starting point is 01:18:36 How can we best help you? Yeah, so I guess how to tackle a situation where my dad is so resistant to letting go of anything. And so I don't know if, you know, like I tried, you know, like bringing them into their tax advisor for assistance or, hey, could we meet up with another financial advisor and he's completely resistant. And so do we just kind of step back and let that happen until he's cognitively declined to the point of intervention? My mom doesn't, you know, they have a living trust set up. She doesn't really want to, I guess, make my dad any more angry in the situation. And so she's worried for them, but she's not really intervening herself. So I guess what's the rule is their adult kids?

Starting point is 01:19:36 Well, I mean, the law says there's nothing you can do. They're adults and they're allowed to do what they want to do. So at the end of the day, until the court, the medical profession provides evidence to the court that the person is financially or is mentally incompetent, at which point a guardian at Lytum would be appointed against their will, until then people are allowed to do dumb things. and it's um and some of us are better at it than others doing dumb things but um but it's um yeah it's sad but sometimes this is what you run into so there's no one that you can think of

Starting point is 01:20:19 that has influence with your dad that could sit down and say you know the best thing for you is for someone to walk with you to make sure you get to do what you want to do what you want to do. But as long as you're freezing everybody out, you're pretty much ensuring a disaster. I mean, like his pastor, his best friend, his brother, his wife. I know he's even held his concerns about dementia so close because he's, I think, very self-conscious or embarrassed about that. Sure. And even with their finances, you know, we kids had no idea of where.

Starting point is 01:21:02 they were financially up until a year ago. And so. Well, they have turned loose to some things then. Yeah. How much do you know? And how did you figure that out? Yeah. Now we have a pretty good sense because what happened with my mom's diagnosis is everything

Starting point is 01:21:17 had to come to light really fast. And so we have a good idea of their numbers. So we know what's an investment. We know what they're getting for pension and social. We know what they have in savings. Their house is up for sale and should be closing this week. So we know how much is. coming from that.

Starting point is 01:21:33 Where are they going? We have a pretty good, they're in a senior living place, and they're not happy about that, but we're making the best decisions that we could at the time. So we're, you guys have had a lot of influence. Somebody's had a lot of influence. Your dad's not sitting over there in total denial. He's just stiff-arming you on a couple of issues. Right.

Starting point is 01:21:57 I mean, you sold his house, and there's been full disclosure, so he's opening up a lot. but not all the way. Yeah. So is there a health care power of attorney? We do have durable power of attorneys for, like the spouses, you know, my mom and dad both have it for each other, and then two of us sisters have durable power of attorney. They do have health advocates. They've been the best that they can, setting things in order. Yeah.

Starting point is 01:22:25 They have living. Well, when he's unable to, when he's unable to function at 100%, the durable power of attorney gives you the ability to take over. Yeah, and even the neurology clinic also was giving kind of a clarification on what his diagnosis is and, you know, the recommendation for financial decisions being passed on. So we're kind of getting things in order. Yeah, I think here's the thing. It's going too fast for him and not fast enough for you, but it is moving. Yeah.

Starting point is 01:22:58 Okay. You're not in the dark. Right. Yeah. and I can only imagine how much fear is involved if you're in his shoes. I know. This is a very capable man that has done a great. He's a very capable person, and it's the first time in his life he's ever had to face not being capable.

Starting point is 01:23:21 Yes, exactly, exactly. So they don't have like a financial planner or fiduciary, but they do have a tax. advisor and he said you know what don't even call their um they have an account with charles swab don't even call them because it's going to flag him as having dementia do you know much about that as far as ramifications of freezing accounts because he's so active in there and it just seems like yeah that's like a little well if you've got durable power of attorney the account is not frozen it's just flagged for his usage yeah and Now there are negative ramifications that can come with that.

Starting point is 01:24:04 No. The person that's got durable power of attorney can do whatever they want. They can close the freaking account. Move the money if they want. But you're going to have to, you're going to have at that point have dealt emotionally, relationally with dad that you're taking over. And that sounds like that's a pretty high-hilled climb at this point. Now, I think you just, you guys, this has been a, it sounds like it's a 12-month journey.

Starting point is 01:24:29 Does that about right? we've been in this about seven okay yeah and i think you've made more progress than it feels like because you've not gotten all the way but you've you've gone a lot further than a lot of people we talk to a lot of people we talk to it's been seven months and nothing has happened except dad gave all the money to some catfish uh scam you know that's what we were that's the stuff we get called on and so they've no clue if there's a will or if there's a trust that you've named all of it. You've got everything in order. It's just a matter of when you're going to step hard enough on him to take over. And I'm going to do that as gently as I

Starting point is 01:25:09 possibly can just as an act of love. Yeah, yeah, yeah. Some of this might just be, we cross that bridge when we get there. Yeah. As much as you want to get ahead of it and plan for it, some of the stuff just might have done. How much money could he screw up if he really screwed up? How much has he got access to that he's screwing around with? Yeah, well, they have right now, about 1.5 that's in... But he didn't have access to all that with his screwing around day trading stuff. He does. Okay.

Starting point is 01:25:38 I'm going to limit that access, yeah. Because I don't want him, because you can get in the real... He could lose that in 24 hours, screwing around day trading. So, yeah, I'm going to limit that access. But, I mean, if he wants to screw up with $100 grand or something and you got $1.5, I'll let him do that just as just because to let him be himself. Give him a sandbox to play in. Yeah.

Starting point is 01:25:58 Welcome back to the Ramsey Show in the Fair Winds Credit Union Studio. Michelle is in Nashville. Hi, Michelle. How are you? Hi, I'm a little embarrassed to be needing to call in, but glad I'm glad I'm here. Well, we're glad you're here too. How can we help? So I am on Baby Step 2 and I'm in a bit of a pickle.

Starting point is 01:26:44 I managed to get myself about a year and a half ago. a credit line with an APR of 275%. And it's not a credit line. That's a payday lender. Yeah, they frame it as a credit line. But yeah, yeah, it's not. So I've, the balance is $3,000. I pay $900 a month.

Starting point is 01:27:19 And this year. Yeah, and as your credit. Credit is trashed, I assume. Oh, big time. Okay, all right. So what do you make? I make $93,000 a year. Okay.

Starting point is 01:27:36 How come you can't scrape together $3,000 then? Well, I'm paying $900 a month on this, and I've got, this is not my current step on baby steps. I've got a couple more before this one. But it's kind of, I feel like I'm just throwing money into a pit on it. How many? Yeah, you are. That's why I feels that way.

Starting point is 01:28:05 Oh, God, bless your heart. I'm sorry. So you have no money, obviously. You have anything you could sell and just give these people the money and go away? No. Okay. Is the balance growing every month at this rate, even with your 900 getting thrown at it? It's growing every day.

Starting point is 01:28:26 It's growing every day. So it's about $20 a day in what they're calling a customary fee. So your next paycheck, how much is that? Now let's stop a second. Yeah, how much is, that's a good idea. How much is your paycheck? $2,700. Every two weeks.

Starting point is 01:28:46 Yes. Are you hit 401K coming out? Yes, but I just paused it. Good. Okay. So your next paycheck might even be bigger. Okay. Are you getting a tax return?

Starting point is 01:28:59 My next paycheck will be about $100 more with the 401K not in there. Last year did you get a tax return? Yes. $500. $500. $500. I do get a bonus every quarter, but it's based on how many hours over my contract I've worked, and that kind of varied. What do you do?

Starting point is 01:29:31 Behavior therapy. Kind of ironic. Yeah, yeah. Trust me. I know. Oh, man. I'm sorry. Wow.

Starting point is 01:29:49 I've got something running through my head, and I'm just going to say it out loud. I don't know if it's good advice or not, so I'm hesitating. That's why I'm stammering around. I'm crunching this in my brain, trying to keep it from coming out of my mouth. But I think Louis, the lone shark, has gotten enough. I would just call them up and tell them to screw themselves. I'm not giving them any more money. okay and then what they're going to do eventually is eventually they're going to get around to suing you

Starting point is 01:30:15 and then you just settle with them okay okay uh that's one way i'm not sure that's good advice but that one will stop the bleeding yeah it feels it feels like robbery at this point oh it is it's it's completely us it's completely immoral they're scum you did as an adult sign up for it but they are scum. I know. Yeah, they are at, I mean, this is just, it's highway robbery. It should be illegal. It is in most states, but not yours. Um, the, not ours. Um, yeah, um, yeah, I don't know what else to do other than try to do something super radical in your monthly budget and come up with $3,000 and just go there and lay it on the counter and say, either take this or I'm going to flip you the bird and you're going to get nothing until you sue me and it's going to be two years for you get anything. Yeah. And just going there and hardcore negotiate with Louis the Lone Shark, because that's who you're dealing with. And what are your other debts? Credit card, a car, and medical.

Starting point is 01:31:23 What's the car worth? The car is worth, well, let me be very transparent. I started the baby steps a few months ago. So the car I bought last year. Okay. But... What do you owe on the loan? 28,000.

Starting point is 01:31:43 Do you think it's worth at least 28? Nope. Okay. You're underwater on that? Did you get hosed on that interest rate, too? That one... Actually, no. That one's not as bad.

Starting point is 01:31:56 That one's only 11%. Okay. I was trying to think if you could come up with... You could sell that car and use the difference to get out of this thing temporarily. That would help. But it sounds like you're...

Starting point is 01:32:06 have to come up with the difference. I mean, if you've got, if you could have a huge Craigslist or Facebook marketplace sale and scrape together some money and then not pay a couple of things for, for one paycheck and just stack some cash and go in there and lay it on the desk of Louis, the loan shark and go, here's three grand, take it or leave it, because I'm done paying you. Yes. And whatever they agree, before they get to pick the money up off the table, they sign a release. Right.

Starting point is 01:32:34 I mean, is it worth it to be putting my extra? Because I've already paid off a couple credit cards. So I've been using those minimums towards my next one. No, I wouldn't be working the debt snowball with this thing. This thing needs to go away. Okay. In a month. It's like a tumor.

Starting point is 01:32:53 It needs to go away in one month or you need to stop paying it and go in default. Okay. Okay. I think. I mean, I hate to tell somebody to do that, but you're completely, I mean, you've been paying this for how long? Well, the last time I dipped into it was in June. But since June, I've been paying $900 a month,

Starting point is 01:33:20 and my balance is still $3,000. Yeah, I'm through with this. Yeah, this got, I mean, again, it's this weird conundrum between you're an adult and you signed up for it, and they're absolute crooks. Right. You knew it. You knew it. You did it. But so you've got that responsibility. But they've also got an ethical responsibility to not exist. And they do exist. So, I mean, and it's just they're oppressing you. I'm doing the math here. You'd have to throw 1,500 bucks a month for three months to knock it out just to get ahead of the interest. Yeah. So you're talking 4,500 bucks. I'm not screwing around with it for three months. I mean, if you can find something in the garage that you can sell, I mean, you got the electric bike you bought before you started this. And it's,

Starting point is 01:34:03 worth two grand or something, go sell the stupid thing. I don't know, whatever it is. I don't know what you've got in your $90,000 a year garage, but what extra work you can pick up, how many overtime hours you can pick up, and in one month just go bananas just to get rid of Louis the loan shark. But that's what these people are out there. They're everywhere. And it's an unethical business to say the least.

Starting point is 01:34:31 And yet, oh. Wow. Ouch. You've heard from me and the Ramsey personalities for years, but nothing beats actually getting together in person. That's why we created the Live Like No One Else Cruise. For seven days, we're vacationing with you and 2,500 Ramsey people in the Western Caribbean with live shows, us, new content, us, and more. If you're on Baby Step 4 or beyond, come spend the week with us next March. choose your cabinet ramsysolutions.com slash events or click the link in the show notes

Starting point is 01:35:36 Eric is in Boston. Hi Eric, how are you? Hey, how's it going, Dave? Better than I deserve. What's up? All right. I'm sorry to talk to you, George, today. I think you guys are just the right guys to answer this question.

Starting point is 01:36:06 So I've got the opportunity to have a health safety or health savings account through my work. and looking at your little as Gramsie tool, it looks like the best thing to do is to put 15% in a Roth retirement account and then kind of put as much as you can in HSA on top of that.

Starting point is 01:36:28 And sort of, but since you can invest the money, which I recently learned, but seems like a great option and because of the triple tax advantage as I understand it, I'm kind of wondering, does it make sense, I've seen that you can request reimbursement later. So I'm wondering, does it make sense to pay for stuff out of pocket and, like, lose out on that potential investment advantage and then request reimbursement later?

Starting point is 01:36:57 Or should I be... Request reimbursement from who? Paying directly out of the H.S. Yeah. From who? From who? From the health safety account. You're saying you would cash flow your medical expenses, hang on to the receipts, and you can reimburse it from the HSA back to your checking at any point in the future.

Starting point is 01:37:12 That's the current law. That's exactly right, yeah. And that way your investments continue to grow and you're not actually using the HSA. Yeah, exactly. And I'm just wondering, is that something you should be trying to do or is not worth it? No. Arbitraging your medical bills for investment purposes is not a plan. It's not enough to screw with.

Starting point is 01:37:33 You can't buy a biscuit with the results. Okay. Are you trying to max out your HSA investments each year? Is that the goal? I think if we can make it work, yeah, that'd be the goal. Now, what I have done, Eric, rather than... Because you've got, you have to reimburse yourself within a reasonable period of time. You can't drag this out for 10 years.

Starting point is 01:37:55 And 10 years ago, I had a medical bill. Now I'm going to reimburse. That won't work, okay? But if you... And so the amount of spread you could make on, you know, 10 or 12 months or something is not worth screwing with. That's my point. But what I have done is I fully funded my HSA since George W.

Starting point is 01:38:10 you put them in place way back there. And I've never touched it. I just paid all my medical bills out of my pocket. But I've not had many medical bills either, knock on wood. Okay. So, and then I just moved all of that. There's a company called Health Equity that we used, that we moved it, moved the HSA investment out of a money market into a mutual fund. And so I've just got it sitting in like an S&P. And I opened the statement, oddly enough, this weekend, and it's over 300,000 now. but I'll never touch it. I'll never use it for medical. Okay.

Starting point is 01:38:45 Yeah. And that's the thing that seems so advantageous is that you can use that as an investment. So, like, hopefully, balance, but I don't have that many medical expenses over the course of my life. Yeah, but the part of your equation, I would just take it. I would just take out the reimbursement part of the equation. I would just say, as long as my medical bills are fairly low and I hit a deductible occasional, and I'm making good money, and I want to just cover all that. I don't touch the HSA, then basically the HSA just becomes another investment account.

Starting point is 01:39:14 And at 65, there's no more penalty to use it for non-qualified medical expenses. So it kind of becomes a bonus traditional IRA in that sense. And I'm 66. So there you go. I can access that money. But again, Dave's not needing to use it. I'll never touch it. It'll be in the estate plan.

Starting point is 01:39:27 It's just an extra little wealth tool. Yeah, that's it. But no, I wouldn't try to arbitrage and, you know, play the spread back and forth. You know, like I'm going to delay paying this. And so it's like saying I'm going to, you know, use my credit card and I'm going to invest the money for 30 days rather than pay the bill and make the spread for 30 days and then pay the credit card. But never pay any interest.

Starting point is 01:39:50 There's no real need to reimburse it. By the time you do all that stuff, it's like having an Akron's account. You know, you put in two nickels and so now you've got three nickels. You still don't have any money. It's just the actual dollars involved are so small that it doesn't matter. It's not worth reimbursing. Yeah, it doesn't matter. The general principle of utilize the HSA if you have one is fantastic.

Starting point is 01:40:12 Yeah, and if you use it for medical, it's still a wonderful thing. You don't have to do it as an investment. And a reminder, you can only access one of those if you have a high deductible health plan. So people are going, well, where do I get an HSA? Well, you got to make sure you choose that one if you want the HSA component. But most employers are now offering that. Yeah, you guys, we've had it here for years. We had it here from the day we started.

Starting point is 01:40:31 Yeah. Because it was available before we started doing health plans. It's that long ago. And it's a good bargain. I mean, higher deductible, but lower premium. Yep. Ben's in Boston. Hey, Ben, how are you?

Starting point is 01:40:44 Hey, Dave. Hey, George. This is the perfect duo for this question. I have been helping my brother with a business he just bought a couple years ago, and he's finally getting to the point where he's hiring other technicians to help them out. And we want to know how to give them access to funds without making them like an account holder on the business bank account. So the question is, how does George buy copy for millionaires in his little car videos he makes? Do you just have a debit card that you give them access to the banks for it?

Starting point is 01:41:18 Yep, he's got a debit card. So all the Ramsey personalities, we have a business debit card. It's not tied to the gigantic company checking account. There's a separate business account. So you can open up multiple accounts so the personalities have their own pool that we can all dip into for business needs. Yeah, so if we've got like $10 million in our operating account or something, he doesn't have access to that. There's like $100 grand in this other account. So you can fund it with as much as you want.

Starting point is 01:41:43 Let's say $1,000 a month into this separate account, give them a debit card. It's in their name. It's in my name. And so they can use it for business expenses, and I submit every receipt. And if he misuses it, we see it. Not much that's going to go. And if you keep the limit. If I see hair care products on there, we've got a problem.

Starting point is 01:41:59 I tried that. Dave just doesn't understand. Every personality has their own checking account. No, no, no, no, no. We have one checking account that we run all of the employees, all of the team members that have debit cards. I think there's about 150 of them have debit cards. If people travel at Ramsey, we don't ask them to travel on their own money. They travel on my money.

Starting point is 01:42:21 And we generally do petty cash for things like that. Well, if they don't carry a debit card, they can carry petty cash. Exactly. Like if George is going on a speaking gig or he's going to New York to be on Fox or something, all of that. He just runs it on his debit card, Ramsey debit card. He doesn't have to have any of Georgia's money involved. But we have one separate, smaller business account for just the debit cards. Okay. So in this scenario, we would just have a technician expense checking account. Exactly. And, you know, and so let's pretend that that, you know, you need $10,000 a month worth of things they're buying.

Starting point is 01:42:56 Then you just keep replenishing it and keep it at a balance of around $10,000. But your other their account might have a hundred grand in it or something and you're not, they don't have access to that. Yeah, I don't even have access to the account. I can just make purchases with the debit card, but I can't go in there and see how much is in the account. One of our assistants handles that, and so she's monitoring it and replenishes it once it gets, you know, to a point where we need to. But it's instant accountability because every one of their expenditures shows up instantly on our computer screen. And if I lose a receipt, I'm paying out of pocket to reimburse that. So that's a big thing is they got to make sure they keep good track of their receipt. Not on the debit cards, do you?

Starting point is 01:43:32 If I don't have one, you know, if it was a coffee order, I go, all right, I'm going to cover that or the team just has to cover it, you know. No, no, that's with petty cash. Sure. Your debit card just shows up. Exactly. Yeah, debit cards are the receipts built in. That's what's nice. Yeah, and that's what I mean by accountability.

Starting point is 01:43:47 So if the technician can't go buy a latte, they're buying a part to work on the item they're supposed to be working on, right? And do you need that account to be at a separate establishment? No, no. Because of their separate account. No. Whatever you do your business checking. That's the same. That's our same bank. No. Okay. All we're doing is just limiting the amount of money that they have access to by having a separate account. That's the only reason for it. So you go down to your bank you do business with for your business account and say, hey, I'd like to open up a new checking account within that. And I got five technicians and I need five debit cards in their names. And we're going to put whatever amount that you think you're going to need in there for a couple months and put it in there that the technicians are actually going to spend. But real strict rules with the technicians that this money is. is not for you to buy breakfast, dude,

Starting point is 01:44:32 it's for you to buy parts to work on the thing you're working on. And you don't use it for anything else. If you do, you really like fire you because it's called stealing. You know, that's kind of how that works. And so it's the same thing of a company that has credit cards in the company name and the team member carries a company card.

Starting point is 01:44:52 If you misuse that, you know, that's called stealing. Hope you don't need your job. Yeah. Hey guys, Dave Ramsey here. Every day on this show, we help people work through real money problems and figure out what to do next. Now, you can get that same kind of help anytime with Ask Ramsey. Ask your money question and get answers built on Ramsey principles we use on the show. Whether you're making a decision or just want something explained, Ask Ramsey is here to help. It's fast, simple, and free to use. Go to Ramsey Solutions.com and try Ask Ramsey today. That's Ramsey Solutions.com.

Starting point is 01:46:32 Everyone needs insurance, but it can be hard trying to find a pro who isn't just looking to make a buck and find an agent that actually knows their stuff. Ramsey trusted insurance agents, pros, insurance pros, are vetted and coached to make sure they're market experts who have your best interests at heart. Go to Ramsey Solutions.com slash coverage to find the type of insurance you're looking for, and connect with a Ramsey trusted independent agent. Got to love it. Jonathan's in Savannah, Georgia.

Starting point is 01:47:04 Hey, Jonathan, how are you? Good. How are you? Better than I deserve. What's up? I have purchased a car, and I'm wondering if I made the right decision with that now. Wow. Okay.

Starting point is 01:47:19 Why do you think you didn't? I just recently stumbled across your Facebook page and so now I'm starting no wonder if I made the right decision at least with like the price of what I got. Did you finance the car? I did. Okay. How much was it?

Starting point is 01:47:42 Total. I think my loan was total was 24,260. That was the sales price or the loan amount? That's the loan amount. Okay. What's your income per year? Around $2,200 a month. Okay.

Starting point is 01:48:06 So you make $30,000 a year? Yeah, they're about. Yeah, roughly. And you bought a, the car, the loan is $24, but what was the price of the car? I want to say it was like $27. Yeah. Which is more than you take home in a year. And you're 22 years old?

Starting point is 01:48:26 I'm 18. 18 years old. Okay. Yeah, honey, you got screwed. You bought a car that's completely out of your league. It's very, very difficult to prosper when you own a car that's worth, that costs as much as you make in a year. Very difficult. And that's even if you paid cash for it, which obviously would be very difficult to do.

Starting point is 01:48:49 But yeah, you've got a car payment. And the reason that God dropped that Facebook page right in front of you was because you were scared. You were stumbling around and you were worried. And then you went, gosh, I've got to get some confirmation if I did the right thing or not. And I'm glad you found us. And, you know, when I was your age, I did a lot dumber things than this. But the good news is this is the last time.

Starting point is 01:49:17 You're only 18. You have the whole rest of your life to never do. do this dumb thing again. Not bad. Is this your only debt? I'm sorry, I didn't catch out of us part. Is this your only debt? Is the car loan? Yes. Okay. How much is the payment? The minimums are 430, but I do about $5.50 a month. Okay. You're living at home. I live with my great aunt who, she's sick, so I moved down here to take care of her. and so I don't have I do pay to live there what what were you what were you driving before you did this um a 2007 Honda pilot that the transmission was about to go out on okay yeah so you went from a

Starting point is 01:50:11 $1,500 car to a $30,000 car yeah and one fell swoop yeah what do you do for work um I work at a personal product company. Okay. All right. I'm an embroidery technician. Yeah. What we're going to ask you to do for your own sake is to get rid of the car. It's going to be very painful and it's going to be very costly, but the only thing more

Starting point is 01:50:36 painful or more costly is keeping it. And then you're going to have to get you a couple thousand dollars scrape together and get you a little paid for car that the transmission's about to go out on but hasn't yet. And drive that and save up 500 bucks a month. if you say 500 bucks a month for for 10 months you got $5,000 that's a pretty decent car is a $5,000 car and if you did it for 10 more months you'd have a $10,000 car if you did it for 10 more months you'd have a $15,000 car and you pay cash and that's the most car you ought to own with your income about half your annual income is the most you want to spend on cars okay but you're

Starting point is 01:51:15 going to have some pain and it's going to cost you some money to get rid of this there's going to be some embarrassment, some emotional stuff. It's going to feel weird. And it's going to cost you some actual dollars to get rid of this thing. You've probably lost five or six thousand bucks in this transaction. And you didn't have it to lose. You don't have any money. So it's going to be a process. I'm going to send you a copy of our book, The Total Money Makeover, that shows you exactly how to do all the Ramsey steps. And I'm going to send you a copy of Georgia's book, how to stop being broke. There's a whole chapter on car loans. If you read that, I promise you, you will. will never make this mistake again.

Starting point is 01:51:50 Yeah. And again, I, you know, we're not beating on you for being 18 years old and making a dumb decision. I'm jealous he did it that early. Yeah. I waited until later to do some of the dumb decisions. So, but the good news is you got the rest of your life to not have that mistake again. And, you know, you'll be my age and you'll look back and go back in all 26, I bought a car.

Starting point is 01:52:13 Yeah. And you'll, because I got rid of that now, I'm a millionaire. That's what you'll be doing. You'll be that guy. And kids will be like, the cars only cost $26,000 back then? Yeah. Wow. What's a Honda pilot anyway?

Starting point is 01:52:26 They don't make those anymore. That might not be a bad thing. Josh is in Columbus. Hey, Josh, how are you? Good. How are you doing? Better than I deserve. What's up?

Starting point is 01:52:38 I'm wondering how I can calm my wife's nerves with me running a business instead of having like a normal job. Be super successful. Have you done that yet? Sort of. I have a contract coming. It'll be a couple months, but then we will be making a lot more than we've ever made before, but she's still worried.

Starting point is 01:53:00 Yeah. Well, because you don't have the contract, and you don't have any money yet. Yeah. It's logical to be worried. Sharon Ramsey used to be worried all the time. Sharon Ramsey hadn't worried at all now.

Starting point is 01:53:11 Right? Yeah. I mean, that's the deal. That's really what comes down to. Your wife is looking for proof, not a dream. Yeah. And so when you provide her proof and you stack those Benjamin's on the table, she's going to go, I like being self-employed.

Starting point is 01:53:27 You make more money. That's assuming you are, of course, right? Yeah. What kind of business you're going into, Josh? I build custom security software to defend against AI. Okay. And what, do you have a day job? Not right now.

Starting point is 01:53:43 I'm doing my business full time. Is that why she's scared? Wait, wait, wait, wait. You're doing your business full-time, but you haven't made any money? No, I'm making about 70 a year now, but we'll be making a lot more in a couple of months. Wow, you've got a single vendor that's going to, you have a single customers getting ready to make you rich. I have a large licensing deal with Bank of America. Okay, very dangerous to have your business standing on one leg.

Starting point is 01:54:08 Yeah. Especially when Bank of America is the leg. But anyway, yeah, you want multiple customers. because if one customer can put you out of business or take away 90% of your revenue, that's a problem. You now are an employee. You're no longer a customer. You're no longer in business. Yeah.

Starting point is 01:54:26 An employee that has one customer is, I mean, a person has one customer is called an employee. And so, whether it's a contract or otherwise. So, so you've been making 70 grand without Bank of America. Yeah. For how long? About three months now. So annualized $70,000. Yeah.

Starting point is 01:54:48 So you've been making... Before that, I was working and doing the business at night. Okay. So you're making $6,000 a month before this contract comes through. And the contract is, now that you told us who it is, I hate for you to tell me how much, I don't want you to. So that's not fair to you or them. And are you the sole income provider?

Starting point is 01:55:09 She works part-time. Okay. Okay. What were you making at the other place before? the day job. I was making 70 before. Okay, so you were making 70 plus you've made it start making $6,000 a month so you quit your job. Yeah.

Starting point is 01:55:25 Right? Yes. Okay. All right. Her fear is going to go down the longer she sees a pattern of increased income, not decreased income. And she's also wise to be worried if your income is based on only one customer. And so I want you to build a lot of contracts, not just one. with one big bank. Big banks don't have a good reputation.

Starting point is 01:55:52 People ask me all the time, George, what's your number one money saving hack? I'm glad you asked. Nothing makes me happier than helping another frugal friend. So here's the hack. Get on a budget. Seriously, how are you supposed to save money if you don't know how much you're spending in the first place? And that's what makes the every dollar budgeting app a game changer. With every dollar, you'll get a clear picture of your spending. And from there, it's easy to see where you can get more intentional cut back and save more money. How much money are we talking? Well, the average every dollar budgeter

Starting point is 01:56:46 frees up $395 in their very first budget. And if you ask me, I think you're way above average. So why are you still listening to me? Go download every dollar for free and start saving more money right now. Our scripture of the day, Proverbs 22, 1. A good name is to be chosen rather than great riches. And favor is better than silver or gold.

Starting point is 01:57:26 Jack Benny said a rich man is one who isn't afraid to ask Ask the salesperson to show him something cheaper. I like that. This is true. Justin is in Canada. Hi, Justin. How are you? Very good, Dave.

Starting point is 01:57:41 How are you? Better than I deserve. How can I help? Perfect. So I try to have my wife and I are in a bit of debt. We make a decent income. And I'm just struggling to have conversations with her about kind of just really buckling down and like doing it. We both like to hang out with family and go places and spend money where we shouldn't

Starting point is 01:58:04 when we should just buckle down. And I feel like I've kind of ruined a conversation by getting too frustrated, and I just need help with how to fix this, and I don't know what to do. So what's a decent income? So I make 98,000 year gross, and then my net is about 74,000 here in Canada, and then she makes around 54,000, which then goes to 44,000 estimated net yearly. Okay, she makes 150 grand minus taxes. All right.

Starting point is 01:58:35 And what's a bit of debt? How much debt do you have? So we have $10,000 on a line of credit, $9,600 on a credit card, and that's it. No car debt? No car debt. We paid off my truck two years ago. No student loan debt. No, sir.

Starting point is 01:58:57 How long you've been married? Oh, boy. I should have answered that faster. Five years. Okay. All right. That's okay. Well, I mean, you guys have been going along for four years without paying attention,

Starting point is 01:59:16 and then suddenly you started paying attention and got a little bit frustrated, a little bit scared, and that came through in the conversation and shut the conversation down. Is that a fair summary? Yes, sir. So you're the one that's changed, not her? Yeah. Yeah. And both of you do need to change.

Starting point is 01:59:35 I don't disagree with your premise. But then the question is, how do we begin to talk about this and so forth? So I think you talk about, number one, you probably need to start with an apology. Hey, this stuff started scaring me. And so I didn't approach you with it well. And I'm sorry for that. I apologize. Because my frustration, my fear came out and it shut us down.

Starting point is 01:59:58 and I'm still scared about it. I feel like we're out of control. And it's not your fault. It's not my fault. It's our fault. But we've got to sit down like two grownups and talk about this at some point. How can we best do that? That kind of an approach.

Starting point is 02:00:16 If you can't, if she starts yelling or something after you do that, then you don't have a money issue. You've got a deep marriage issue. If you apologize and ask for help and the way your spouse responds is as they get angry, then you've got another issue. Yeah. Yeah, and I'll put most of the blame on me for coming out of maybe a little.

Starting point is 02:00:37 Oh, it's 100% your fault. Yeah. It is your fault. You did a classic thing. And it's really, guys do it more often than gals. Guys want to do, they want to fix something. And so they start talking about what we're going to do instead of why. And you need to go back to the why.

Starting point is 02:00:54 And the why is, I'm scared. The why is we make too much money. to be this broke. The why is I don't want to retire with no money and any dog food. I want to be wealthy and be able to travel and be able to buy you nice things. And that's the why. And the track we're on is not taking us there. And that's, that's scaring me. And you don't have to talk about anything she did wrong. Just talk about what you did wrong. Yeah. But if you lead with those things instead of the, and then the byproduct becomes, all right, we've got to get on a plan. We're going to throw 4K at this thing for the next five months and we'll be done. Yeah.

Starting point is 02:01:28 by March. So she needs to know this is not forever. This is not a huge lifestyle change that's going to dramatically affect your lives. This is a small season of sacrifice so that we can have freedom on the other side. And we're going to get in control for the rest of our lives, tell our money what to do instead of wondering where it went. You know, that's the byproduct. That's where we end up. But instead of talking about the what, talk about the why. Okay. Why? Why? Because I'm scared. Why? Because this is, this chaos is going to lead us to being broke. Why? I don't want to retire and eat dog food. Why? I'd like to be able to travel and be night and be able to be generous to others that are hurting. Why? I'd like to whatever, okay?

Starting point is 02:02:06 What, what is it you want to do when you get all this straightened out and why, why, why? And go, you know, if we had two million dollars honey, honey, honey, what would you want to do? Yeah. Get her to start dreaming. Yeah. Absolutely. I mean, so you didn't go on a honeymoon. No, we got, so we got. That's okay. So, No, that's fine. That's cool. That's a perfect angle then. I owe you a honeymoon.

Starting point is 02:02:33 Yeah. Okay. Would that excite her? I shorted you. So where do we want to go on this honeymoon? You want to go on a cruise? You want to go to Paris? Yeah.

Starting point is 02:02:45 But we got, you know, I got, we got, we got, I want to clean all this stuff up so we can do that kind of thing. Right. And instead of like, you're so stupid, you overspin, stop it. Yeah. Yeah. I might get hung if I say that. She's, uh, yeah, yeah, I wouldn't. If I feel like breathing the next day, I'm not saying that. The classic on this show, Justin, is that the guy gets all fired up about doing the Ramsey stuff,

Starting point is 02:03:16 and the first thing he wants to do sell his wife's car. And then he can't figure out why she's not excited. I did, yeah, I did say my truck, but she doesn't want to sell my truck. You don't need to sell a truck. You just need to quit spending today. gun much. You only owe 20 grand. Yeah. You can clean it all up. You can clean it all up in no time, like George said. But you've got to both be on board and you're living like no one else. So that, why? So that later we can live and give like no one else. But you start this whole conversation with apologizing for having approached it wrong because you did a classic husband mistake. She's going to be taken aback just right there with the apology.

Starting point is 02:03:55 Well, I mean, it's, I go straight. to how we're going to fix it, I don't really care about your feelings, and that's not a good relational tool. So I apologize every day, just in case. I don't know. That's a preemptive apology. It works. Well, it's going to happen. You did something wrong. You just don't know what it is yet. Exactly. That's it. Covers all the sins. It's just in case method. It's worked out so far. That's funny. I don't care who you are. All right. Lily's in Fort Lauderdale. Hey, Lily, what's up? Hey, yes. So my question is, is how much should I start investing in the wear? And I'm currently unemployed. I'll be employed soon. I am disabled, so that's why it's been so long to try and get a job. I am 18, so I'm still young in investing. I was just wondering because he can give me some advice on that. Do you have any debt?

Starting point is 02:04:53 No. Okay, good. So the first step with investing is have the income to invest. So I love that you want to do this. Once you do have income coming in, do you have savings in an emergency fund? I have, yeah, I have about three grand in savings and about a grand in checking. Okay, that's a good start. You may want to build up that emergency fund at three to six months of expenses.

Starting point is 02:05:15 And then 15% of each paycheck should be going towards retirement accounts. So if you have one through your employer, that's a great start. And if you see the word Roth, that's even better because you're going to pay with after-tax money, but it's going to grow tax-free. So think of it like net income later on in retirement. And if you do that with some good gross-stock mutual funds inside of those accounts, you're going to be just fine. And I'll send you our investing guide to help you as well. We'll send out the investing guide to you, Lily, and make sure that gets you started. And if you need some help sitting down with the Smart Investor Pro, just click on Ramsey Solutions.

Starting point is 02:05:48 You can find some of the people we recommend. We're not in the investment business, but we recommend. people that we vetted and that we trust. They're called SmartVestor Pros, and we can definitely help you get that done. Ramsey Solutions.com slash guide for everyone out there listening. We'll drop a link to that as well in the description of this episode. That's a great place to start. What's in the guide? It covers everything from what is a mutual fund? What are all these different types of accounts? How do I even go about picking them? How much do I invest from each paycheck? So it's a great

Starting point is 02:06:17 start for those who are getting kind of the beginner's guide who need just understand the basics of investing. What am I actually doing? What is the stock market? Yeah, there's a certain number of people that when you just say the word investing freeze. It's scary. I mean, there's so many options. And you don't want to screw it up. There you go. You think like a vending machine eating your money. You don't want that. That puts us out of the Ramsey show in the books. We'll be back with you before you know it. In the meantime, remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus.

The Ramsey Show - You Don't Win With Money By Accident

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