The Ramsey Show - Your Goals Need Numbers, Not Wishes

Starting point is 00:00:04 Brought to you by the Every Dollar app. Start budgeting for free today. Normal is broke and common sense is weird, so we're here to help you transform your life from the Ramsey Network. Send the credit. Payor Wins Credit Union Studio. This is The Ramsey Show. I'm Dave Ramsey, Rachel Cruz, Ramsey Personality,

Starting point is 00:00:31 number one best-selling author, co-host a smart money happy hour on the Ramsey Network, and my daughter is my co-host today. Ryan is with us in Chicago. So my question is, can I save more than $1,000 before baby step two? What's the purpose? Is something happening? Is there going to be a job change?

Starting point is 00:00:55 Are you guys expecting a baby? What's the reason? So no problem. So I'm 34 years old. No mortgage, no kids, no personal loans. I did just transfer to another location, same job, to move towards my family. family. So I have about, I'm just thinking about do I pay off debt before, you know, saving or try to do. I'm misunderstood. You said you had no personal loans. No, I meant, I'm sorry, like actually from a lender,

Starting point is 00:01:30 but I do have two personal loans, a student and car. My apologies. Okay. How much in student loans? Those are personal loans. Okay. How much in student loan debt is it? Uh, 23,000. Okay. How much on the car? 23,000. Both. Yes, each. 23,000 each, okay. And what do you make? Take home is 2,800 a month. Okay. And you already made the move, so you're settled, or you're about to? I'm about to in about two weeks.

Starting point is 00:02:03 Okay, gotcha. And how much do you have in savings? I have 90,000 and 401K and 3,000 in investments. Nothing in savings. What's the investments? What's the $3,000? Is that retirement, like a Roth or is it just a brokerage account? No, just a brokerage account. Okay.

Starting point is 00:02:22 How are you planning on cash flowing the move with? Well, fortunately, it actually won't cost me any money to move. My family's going to help me. So the moving is actually not going to be difficult, and I'm actually going to get paid the same. and I'm going to start there just like kind of the lateral move. Okay. So they're jumping in, helping with the physical move. Yeah.

Starting point is 00:02:49 And you're moving from where to where? Northern Wisconsin to Illinois. Okay. Gotcha. I mean, if I were you, Ryan, I'm okay if you don't do anything for two weeks when it comes to the baby steps. Get moved. Start the new job settle in. And then once everything is there, then, yeah, I would start with taking 2000.

Starting point is 00:03:10 out of that investment account and throwing it at this debt. And you're making $2,800 a month. Is that what you said? Yes. Yeah. So it'll be, your income is going to be a major factor in you getting out of this debt. I mean, it's, yeah, I mean, $46,000. And so you finding any margin, because you probably are not, you're not going to have a ton of margin. I'm assuming after rents and food and everything. Is the trajectory on this job going to take this income up pretty quickly? Because you're You're not making much. I understand. The trajectory is actually a lateral move.

Starting point is 00:03:47 No, I mean, after you make the move, are you going to be making double this in two years or something? That is my goal. I am planning to kind of do some studying internally with my company and hopefully move up into another position. What kind of job is that, Ryan? Ironically, low-level finance position. Okay. Okay. Yeah. Well, there's another thing coming into play too here is you have a car you can't afford.

Starting point is 00:04:17 I mean, you make $40,000 a year. You have a $23,000 car. That's just ridiculous. So unless your income is going to come up pretty dramatically, pretty quickly over the next two or three years, this car is going to really hold you back. And if I'm you, I'm going to look at selling that car. Not this week and not anything like that. But, I mean, six months from now, you're settling in. You're going to see that what Rachel is. said is true. There's not a lot of wiggle room in this math to be able to aggressively attack this debt. And I don't want you hanging out in this debt for like three years or five years or something. So I'm going to take extra jobs. I'm going to move up through the company. We're going to get this income up to double pretty quick with side hustles or whatever and start really chunking on this

Starting point is 00:05:02 because then the $1,000 doesn't become a thing because we're not suggesting people keep $1,000 as a permanent plan. This is just while you're getting rid of your debt and totally focusing on your debt. And honestly, the difference in $3,000 and $1,000 is nothing. So it's not even symbolic. It's so, I mean, if you have a problem, and it's $8,000 problem of some kind, some kind of an $8,000 emergency, you're just as screwed with three as you are with one. So the purpose of the one is not to, because it's enough. It's just, we're going to take it down and we're going to completely focus on getting out of debt. And that would include getting your income way up and very possibly selling this car to get this stuff cleaned up. Yeah, because you are not making any money. Because if you sell the car,

Starting point is 00:05:50 Ryan, and get a beater, $2,000 extra a month just going to this debt. You're out in a year. So, I mean, if you can do this quickly, that, I mean, that's, that's the point of the intensity. It's going to cost you another year living on the edge if you keep the car. Yep. At least. And I don't know. And that's, and that living on the edge, meaning you're not doing anything but working all the time with your extra jobs and everything else. And that's what it's going to take. So I personally wouldn't do that for a car. Melissa's in San Antonio. Hey, Melissa, how are you? Hi, Dave and Rachel. How are you all? Better than we deserve. What's up? Go ahead. I just have a question. Is there ever a time on baby four, five, and six that you, baby steps four, five and six that you would be okay with? not investing the full 15% into retirement. Why do we not want to be wealthy?

Starting point is 00:06:43 We do want to be wealthy. My husband and I have been listening for about a year. We paid off $100,000 in debt, and we are, we've built our emergency fund. And I have a kid, we have four children. One is in college. And we did not plan well for college. And so we're trying to get him through. without student loan debts, and it's just a little tight.

Starting point is 00:07:11 So I didn't know if there was, like, for a short time, if you would ever suggest. I don't suggest it. Instead, I'm probably going to think about where he's going to school and how much that costs. Yeah. He's going to an in-state school, small school. It is commercial aviation, and so, unfortunately, that's a little expensive. He has a college farm, but it's just not going to cover. it. And so we were going to try to...

Starting point is 00:07:38 Yeah, and what's your household income? $300,000. Okay. And this kid's looking for $100,000, right? Yeah. Yeah, and he's already... So he's used his college fund. He's on year two, but the college fund is about gone. How many years is that? He needs another $50,000?

Starting point is 00:07:58 Yeah, yes, sure. Mm-hmm. I think you can cash flow of the $50,000 and put 15% in. And you just got to decide that him going to school is a priority over your lifestyle. Yeah, cutting lifestyle before cutting retirement. I would. I mean, you can do it if you want. It's your life.

Starting point is 00:08:15 But the math on it is not good. And they make $300. Yeah. I'm just saying the math on cutting it. Oh, yeah, yeah, yeah, yeah. It's not appealing. Yeah. If you're already enrolled in a Medicare plan, you might think there's nothing else to do.

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Starting point is 00:10:26 And it's more than just a budgeting app. The plan, the Ramsey plan is built into it. Helps you track your progress against the baby steps. Plus get personalized recommendations and coaching for your situation. It's like having a new plan. one of us walking with you every day. Start every dollar for free by downloading it in the app store or Google Play. Michelle is in Toronto. Hi Michelle. How are you? Hi, good. Can you hear me? Absolutely. How can we help? Thanks to taking my call. I'm currently working in a job that I don't

Starting point is 00:10:58 like, but I need good money, and I'm looking into switching into like the trades. I have an opportunity for an apprenticeship, but it would be free, but I wouldn't be working for three months. I'm in baby step two, and I just don't know if I should take the opportunity and invest in my future that way. No. Okay. You don't quit your job and make no money when you're deep in debt. You keep working and you get the debt cleared so that you can quit your job.

Starting point is 00:11:26 So what is, what are you doing now? I'm a city bus driver. Okay. And what would you be doing when you take the new position? So it's an apprenticeship program. I would be working part-time. It would be free. It would be for construction and then an apprenticeship

Starting point is 00:11:44 with paid apprenticeship after the three months. I'm sorry. What in construction requires an apprenticeship? So in Canada, you do construction for like, like, carpentry, electrician, all of that. So you learn a little bit of everything. And then they place you with the union for an apprenticeship with them in an area that you accelerate.

Starting point is 00:12:05 Okay. And how much would you be making after the three months? They usually start at 33 an hour, but it goes up because you would continue. What are you making now? What are you making now an hour as a bus driver? With overtime last year I made $80,000. I take $1,000 biweekly. Byweekly, okay. So this is after the apprenticeship is a break-even, right? Yeah, but I don't like what I'm doing right now. So that's what's really pushing me to try to...

Starting point is 00:12:41 How much debt do you have? I maneuver that way. I'm $15,000 right now. I have a car and a credit card. Okay. How much is the car debt? I have $6,000 on it. Okay, and $9,000 on a credit card.

Starting point is 00:12:56 Okay. Yeah, I'm just going to roll up my sleeves and knock those two things out and then save up a good down payment. How were you planning on living while you made no money? I would work part-time where I will currently work as a casual, and I currently live with my parents, like my parents. So I would just... Yeah. How old are you?

Starting point is 00:13:16 In 33. Okay. All right. The other thing I want you to think about while you're doing this, but yes, I would clear off the debt before I went into an apprenticeship and cut my pay dramatically. You need the money to clear the debt, but you should be able to clear it really fast. you got no overhead. You're making $80,000 and you only need $15. So you should do this in just a matter of months, not a matter of years, okay? Mathematically you should. And then the other thing I want you to investigate is the only thing you've looked at is the union track. And I am sure that

Starting point is 00:13:55 they're not positive, but I feel relatively sure that it's somewhat like the states and that you can go the union route or you can go the non-union route, which by the way, will put you to work a lot faster. And so I would investigate, you know, going to work on a construction site and start making $30 an hour and just like that. And then start to learn while you're there. Yeah, do some investigation. Yeah, investigating in that field, Michelle, before you make that decision. But honestly, yeah, if you're bringing around probably 6,000 home a month-ish, if you can if you can throw 4,000 at this, you're done. And, I mean, four months.

Starting point is 00:14:34 So then we can pick up the internship and look to see, you know, in the future. Because I would want you to change jobs. I understand if you just, if you hate it. And that's not a way to do life. But for four months, I would do that in overtime, like what you're doing, and just get this debt knocked out. Yeah. Because if you don't have the debt hanging over your way,

Starting point is 00:14:50 you're trying to make the transition, you're more likely to pull it off. And I want you to pull it off. I agree with the move. I just, I'm not going to hop, you know, immediately on. that. So, well, let's clear the debt and then move in that direction. Ashley's in Peoria. Hey, Ashley, what's up? Hi, good to talk to you guys. You too. How can we help? So we were lucky enough during COVID to refinance for a 15-year loan at a 1.75 percent. So we have eight years left, and we owe $86,000 on our house. We used to homeschooling. We used to homeschooling. We used to homeschooling.

Starting point is 00:15:30 but now my girls are going to private school, like 15 to 20 miles away. And because of that, I am going into town two to three times a day. The last two days, it was 80 miles per day. You just never know no miles per day or whatnot. So my question would be, for both of you, would it make sense for us to just get rid of our 1.75, that we only have eight more years left and move into town where we would be closer to the girls' school. We would not be able to, you know, be in the car so much.

Starting point is 00:16:12 My youngest is not even in kindergarten yet. My oldest is a freshman. So I do have a, I shouldn't say, a lot more years to do this. But 12, you know, if you stay at that school and stay in that house, it's 12 years. years from kindergarten to senior year. Yeah, exactly. Do you work, Ashley, or your husband? Yeah, so I currently stay home.

Starting point is 00:16:37 Obviously, and next year when she's in kindergarten might be a little different. But yes, my husband does work full time. And he brings in like $2,300 by monthly. Why are you making five trips a day? Well, I'm not making five trips. I'm making at least three. Why? To driving there and then picking them up.

Starting point is 00:17:06 And then in the evening I might be having piano or one of the girls might have golf or we might have something at church. So we're... Yeah, back and forth. I agree with you where you're like... Wait a minute. Piano is at the school? Is that a local college.

Starting point is 00:17:26 Oh, so there's nothing to do with the school. decision. Golf is at the school? Well, golf is that through school, but at a golf course. Yeah, but I mean, it's through the school. And church obviously is separate. So the piano and the church was already there. Yes. You were already. Your life is 20 miles from where you guys live. Yeah, yeah. Especially we want to be more involved in the school. We want to be more involved in church. There's just things that we want there. Sure. So have you guys looked at houses? Are you able to afford the move? Well, that was the question.

Starting point is 00:18:07 Our mortgage would go up $1,000. Okay. Why? Not based on interest rate. $80,000 at 4% change in interest rate is not $1,000. Well, you have... You're moving up in price. You're moving up in price.

Starting point is 00:18:26 Well, yeah, because we bought this house for $150,000. You're moving up in price. Yeah, because they bought their house at the, at the. No, no, no, no. They sell this house and they have an $80,000 mortgage. If they go get an $80,000 mortgage in downtown at 6%, it is not a $1,000 swing. You're trying to move up in house while you're doing all these other things. You can't afford to do that.

Starting point is 00:18:47 Well, we don't know yet. What's, you guys, what hits your bank account every month, $4,600? Yes, and then he does have the A disability. of $760. Okay, okay. So, and then the new mortgage would be what? Well, they're, you know, and I submit of $2,100, but that's with insurance and property taxes. Yeah.

Starting point is 00:19:14 And at a rate of... Not on $80,000, it's not. No, but what the... They're moving up in price. Yes, probably because it's a nicer area. Is that right, Ashley? And you can't afford to do that and the private schools. You cannot take a mortgage at $50.

Starting point is 00:19:28 percent of your income because you chose to move your children into a school that you can't afford in a place where you can't afford to live. No, you can't just keep doing, I can't afford, I can't afford, but I want to. No, I would not do that. Because of the... I'm not going to double, I'm not going to have a mortgage as 50% of your take on pay. Yeah, I agree. That's what I was trying to get to the bottom of. So actually, no, you can't, yeah, you can afford it. I'm sorry. No, if you can find another house that you can move into and have an $80,000 mortgage at 6%, yes, I would do that. If you're behind on your bills, doing more of the same isn't going to fix it. You need a different plan.

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Starting point is 00:21:09 That's Guardian-L-I-T-com slash Ramsey. Attorney advertising, results may vary and no specific outcomes guaranteed. Caroline is in Dallas, Texas. Hi, Caroline. How are you? Hey, I'm well. Thank you so much for answering my question today. We'll try. Thanks. I want to buy a horse, and my financial advisor told me I need to grow my investment portfolio a little bit more before I can afford it.

Starting point is 00:21:52 And I feel like I can afford it. So I wanted to just get a second opinion from you all. Okay. What's the size of your investment portfolio? The size of the horse. I don't know why. Yeah. Okay.

Starting point is 00:22:06 Big horse, small horse, Caroline. It's a quarter horse. It's going to be a show horse, a raining show horse. That's big here in Texas. And so raining is a thing here, is a type of horseback riding. But anyway, it'll be a show horse. And my investment portfolio, to answer your question, is $7 million. My net worth is $8 million.

Starting point is 00:22:28 And your screener asked me how much I've been earning on that. And I actually went, I told them about 14%. I was like, oh, that's about 4%. But I went and looked it up. And it's 16.47% that I've earned year over year. That would be right. And so. Okay.

Starting point is 00:22:43 And how much is this reigning quarter horse? Yeah. So it's going to be somewhere around $75,000. It might be more. It might be less. Okay. I don't know why your financial advisor even gets a vote. You're a lady that has $7,8 million, and she wants to spend $75,000.

Starting point is 00:23:05 Well, thank you for that. And I, but here's the thing, the ongoing upkeep. And the reason he gets a vote is I trust him, and I ask him the question. So, I mean, I rang his bell and ask him. How much is the upkeep yearly? The answer is he wouldn't do it if it was him, but the answer is not. you can't afford it. You can afford it. Now, if you're not a horse person, you might not view this as wise, but you're a horse person and it's where you want to burn some money. You're getting

Starting point is 00:23:38 ready to put $150,000 in the middle of the floor and burn it. That's right. That's exactly right. But if you've got $7 million, you can do that. It doesn't matter. Yeah. How much is it a year, Caroline, with everything, boarding, grooming? Like, when you... Yeah, it's at least $45,000 a year. everything goes right, which wind does ever anything go right. Yeah, no. It's $45,000 a year. What are you, are you working? Are you retired?

Starting point is 00:24:02 No, I'm not working. I am a young retiree. I'm 54 years old, and so I need my investment portfolio to last for the rest of my life. Don't have kids, don't have a husband. If your investment portfolio makes 10% a year, you make $700,000 a year. Okay. Right? So I should be able to afford a horse, right?

Starting point is 00:24:24 Yeah. Yeah. But just remember. Just remember, though, when it comes to horses, it's like a lot of things. It's like my cars and my guns and some other things. The first one is the Gateway Drug. Oh, yes. I've had a show horse.

Starting point is 00:24:38 This is going to be a problem. It's going to get worse. Yes. So before one. Yeah, they're like potato. I'm a recent widow, and so my husband always worked and had a big job, and so we were able to afford horses, and it was fine because he had an income. But now I don't have...

Starting point is 00:24:54 You have a $700,000 annual income. Right, other than that. Other than that, I don't have a job. What's your house situation, Caroline? Do you own your house? Are you still paying on the mortgage? I still have a $140,000 mortgage. Why?

Starting point is 00:25:11 And I need, it takes me about, because that's what my husband did. My recently departed husband, we had a very low at less than 2% interest rate. So he was just like, let's just pay it off, you know, over 15 years, that kind of thing. So I might pay off my house. I know you'd be strong. I would pay off your house and because you want the horse, you should buy the horse. You can afford it. I just want you to, I buy some things that are absolutely everyone by some things that are absolutely ridiculous,

Starting point is 00:25:45 meaning that we just take the money and burn it in the middle of the floor. It's just a, it's ridiculous consumption, right? We all do. And the only question is, does it harm your life when you do that? Okay. That's the question. And this does not harm your life, $150,000. $75,000 for the horse and the next two years of upkeep gets you to $150,000 real quick, right? Burning $150,000 in your fireplace tonight, your life would not change one ounce. Okay.

Starting point is 00:26:15 And $45,000 a year for the upkeep ongoing doesn't change. $700,000 a year coming in. I think in the future I would want my financial. advisor to phrase differently so I don't fire him. He should say you can afford to do this, but you need to understand that you are completely burning this money in the middle of the floor. If you understand that and you feel like you're going to be okay, mathematically you're going to be okay. But you can't do this 10 times. You can do it once. We don't go to a million five. We're not going to a million five on this. Yeah, I want to keep it going a year over.

Starting point is 00:26:58 You know what I mean? I want to keep a... No, I'm saying... Probably four to six years, I'm going to buy another horse and retire the other one. And the retire... Well, if you live on considerably less than $700,000 and you end up with $14 million, and you want to buy another horse then, I think you'll be fine. Okay. Yeah, but just... Some of my portfolio is in, you know, IRAs, like about half of it's in an IRA that I can't really touch without getting a...

Starting point is 00:27:24 Yeah, but it's growing at that rate, is my point. You are not going backwards. you're going forward. Yeah, and that's seven years so you can get to it. Yeah, and seven years from now, it will have doubled if it's continuing at 10% or greater. And so your seven will be 14, seven years from now, if you're earning 10 or greater.

Starting point is 00:27:45 And you have been. So you've got a good portfolio. And so the, you know, the question is, if you booked a $200,000 four seasons, or Ritz private jet around the world, which is actually available for about that, it would be the same thing. I'm going to travel around the world for the next six months by private jet, and I'm going to book it through four seasons or Ritz.

Starting point is 00:28:13 They both have it, okay? And it'd be the same exact thing. You're just burning the money. Yeah, but that's triple what she's paying for the. No, she's 200,000, I said, and she's paying 150. But that's over, yeah. I mean, she's going to pay 75, and then she's got two years. years of upkeep. She's going to have $15,200 in the horse and a heartbeat. Yeah. And ongoing, the upkeep is

Starting point is 00:28:33 45, yeah, yeah, yeah. And so. If you have $7 million and you want to go on a $200,000 trip, you can do that. Yes, yes. That's my point. Yep. Now, would your financial advisor agree with that? Obviously, he wouldn't. You know, but he doesn't get a-HERS, you mean. Her financial advisor. He doesn't get a vote on that stuff. You know, he just is there to help me understand the math and, you know, You know, let's couch this decision looking at what it does to the arithmetic. Does this harm my life? I wonder why he would tell her. Well, I'll give you, let's give him the benefit of the doubt for a second.

Starting point is 00:29:12 Yeah. Okay, I'll be nice. He might be, her husband just passed away. He's been coaching both of them for years. He might be afraid she's buying this out of grief and he might be trying to protect her as a widow. For a large purchase. From making a large purchase while, you know, and because maybe she, if her husband was here, maybe they wouldn't have done this purchase or whatever.

Starting point is 00:29:37 He may be kind of standing in there trying to love her well. Right. That may be what it is. Yeah. But that's a different thing than is to say you can't afford it and you need your portfolio to grow. That sounds parental. And you're not my parent. You're my financial advisor.

Starting point is 00:29:53 Yeah. Yep. And so you don't, folks, the relationship. The relationship you always want with your financial advisor is not parental. It's teacher. So it's like, I worry about you if you're going to spend $2 million and you've got seven. I think that's unwise. I think you're going to make some, I think you're going to regret that.

Starting point is 00:30:13 And here's why. Here's how that destroys your nest egg and messes with it. But you also could say to her, instead of saying you can't afford it, you know, hey, you just lost so-and-so, you know, a year and a half two years ago. and make sure you're not doing this from a place of grief. You're not medicating the grief somehow. Yep, yep. And I'm worried about you and I care about you. That would be an okay position.

Starting point is 00:30:36 Right. That's a brotherly position rather than a parental position. Well, glad Caroline called when George Camel wasn't on because he'd be like, sell that horse. He has, he's on all the. I think he would even tell Caroline she can buy the horse. He would, but he would be, because he's on all the, he'd be under the desk. He's under the, he's under the, he's on the, he's on the, he's on. He's on the hate list of all the horse people websites.

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Starting point is 00:32:14 Heather's in Chicago. Hi, Heather. How are you? I'm doing okay. How are you guys doing? Better than we deserve. What's up? Okay. So my question is, I don't even know where to start. I've just recently learned about you and started watching a few of your videos, and I saw the baby steps video. And I know that step one is save $1,000. My problem is I have absolutely nothing. And when I say I have nothing, I mean like when it was due Tuesday, I get paid tomorrow and I'm still going to be $300 short.

Starting point is 00:33:23 And I don't know where to start. How did you get here, Heather? How did you get to this place? Divorce. The majority of my life, I was an at-home mom taking care of my kids. And so when I got divorced, I was working a part-time job, had no benefits. And I have a decent job now.

Starting point is 00:33:47 What do you make now? I bring home about $2,100 a month after taxes, which isn't great, but it does offer benefits. And you had nothing in the divorce, Heather? I did, and what I got I used to pay off one of my student loans, which was about $30,000, but I still have probably about $20,000 in student loan debt, which also scares me because I heard you say on one of your videos, do not take out a student loan because you can't get rid of them. You can't get rid of them with bankruptcy. I get rid of them by paying it off.

Starting point is 00:34:34 How long have you been divorced? A little over three years now. Okay. And do you have kids? I do, but they're both adults. Are you getting any alimony? No, I don't get any alimony. Where I'm at, that's not a thing.

Starting point is 00:34:49 The screen says you're in Chicago. Are you in Chicago proper or in a suburb? I'm actually in Indiana, but they asked what the closest major city was. Thank you. That's why I ask, because that's what I know. Yeah. So Indiana, you don't, Well, I mean, she's not got Illinois taxes and probably a little different economy, microeconomy that you're sitting in versus in Chicago itself.

Starting point is 00:35:12 More likely you can make it on 2100 there than you could downtown Chicago. That's my point. Right. Barely. What are you doing? What are you doing? What's your job? So I work for a major health care company and I work in a call center for them.

Starting point is 00:35:31 Good. Okay. Good for you. Is there, how long have you, how long have you been with them? It'll be two years in March. Two years, okay. And do you see forward progress at that company to get, to get your income up to move up? Yeah, so like in October, so I started, you know, almost two years ago, March.

Starting point is 00:35:51 Okay. And then six months later, I got a, like a promotion within the department. Good. and got a pay raise. And now it's yearly. So now in October, next month, I'll get a review again and get a pay increase, but I don't know what that'll be. And you're working 40 hours? Yes, at least.

Starting point is 00:36:14 We're offered overtime the first of every month. And I always try and get at least eight hours of overtime in, depending on what day of the week the first falls on. Okay. So you're bringing home 2,100 a month. How much is your rent? My rent is 1320 a month. So half a very... I'm in an apartment.

Starting point is 00:36:40 And that's typically what the rent is going for in any safe neighborhood. Okay. The bad news in your overall situation is, you described it accurately, this is a really, really tough spot that you're in. The good news is this is the worst it's ever going to be. And I hope so. Oh, I promise you. I promise you. So you've got two hurdles that I hear, and we'll see what Rachel wants to add or subtract from that.

Starting point is 00:37:11 Hurtle number one that I hear is you guys were married a long time. Your heart is broken. You're grieving. You're angry. And you're still healing from, you know, getting muddy boots trampling on your heart. And with that, part of that healing is getting your personal confidence up to say, I'm going to win again.

Starting point is 00:37:37 Chapter 2 of my life, the encore, after the curtain comes down and the curtain comes back up, the encore is going to be amazing. I just haven't figured it out yet. And your heart hasn't gotten to that yet, that level of belief. But I will tell you this. I've been doing this about 35 years, and I've seen ladies at exactly your age have the best decade of their entire life overall, but certainly including income from 53 to 63. I see it all the time because of the stuff, the gravel that is in your belly, you got the right stuff inside of you. You just don't believe it again yet.

Starting point is 00:38:19 and as that starts to wake up, you're going to go be somebody you never even dreamed you would be over the next 10 years. I've seen it happen over and over again. Okay. So I see that in your future more than you do at this moment. So that's one hurdle you've got to overcome. The second hurdle is we've got to work on this income because you're starving to death. You've got to pick up overtime, side jobs, everything else.

Starting point is 00:38:47 You got no margin in this math. this math is hard, hard, hard, hard, hard, hard, hard. So, and so, you know, and the, if you had another $2,000 a month coming in, your whole life would change right now. Because the difference in 2100 and 4100 in your world is so huge. It would just, so, I mean, working all the time at something that's moral and legal and makes good money, starting with all the overtime you can get not just eight hours i want eight hours a day how much will you work me i need money okay and this is not a way of life for the next 10 years this is for the next

Starting point is 00:39:33 six months so you can pile up a little money in the corner and and know you get to eat next month because you live from fear to fear hand to hand mouth to mouth right now agreed yeah and and if you had $10,000 in the bank, your whole attitude, the way you walk down the street would shift. Yeah. And it'd be part of your healing as well, which I really desire for you after talking to you. I think you're special. Yeah. I mean, it's from the financial standpoint, how they're fighting for that piece and having some safety.

Starting point is 00:40:11 That's your next goal. At this point, yes. I'm not worried about the $20,000 student loan. I'm worried about Heather having a little margin, a little warm. a little wiggle room or a lot of wiggle room. I'd like for you to just kind of slosh around in the cache for a few minutes, like you've just got a little pile of it for the first time in a while. Instead of worrying about whether we're going to get, you know,

Starting point is 00:40:35 canned tuna fish or canned dinty more or whatever it is you're having to choose between. I mean, yuck, right? I mean, this is tough right now. These numbers are hard. So I'll tell you the other thing I would do is I would make sure I'm, If I'm you, I would make sure I'm plugged into a good church and get some people around me that begin to love me and believe in me. And that don't mind if you scream and cuss a little bit, don't mind if you cry a little bit. And they might take you to dinner occasionally and just tell you what I've been telling you for the last few minutes that you're a child of God and I see a good future for you.

Starting point is 00:41:13 And I'd like for you to have that in your life too. Yeah, and I do. I do have a wonderful, a wonderful church family. Okay, good. Yeah. Well, lean on them. Lean on them. They, you know, it's an opportunity for them to love someone well.

Starting point is 00:41:29 And I'm not saying become a permanent charity case, but girl, you're in a hurt right now. Yep. Let people love you. And it's okay to be loved while you're in a hurt, you know. And then later on, you're going to be, you're going to have $10 million in the bank, and you're going to find a Heather somewhere and you'll help her. That's right. Amen. But yeah, you're in an exhausting place, Heather.

Starting point is 00:41:51 Emotionally, financially, the hours you're going to be working. It's going to be tiring. But even if you can put $100 a week away, I mean, you look up in two months, you're like, there's $800. Like that even in and of itself is like, okay, we need some moving progress. I need the math to get me back from the edge of terror. Yeah. If you're shopping online and these days, everybody does, data brokers are out there right now, buying and selling your personal information. information, your phone number, your home address, your email, without your knowledge or consent. And that puts you at risk for spam calls, scam texts, and fraud. Combined with AI, those scams

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Starting point is 00:43:18 or click the link in the description. Welcome back to the Ramsey show in the Fairwinds Credit Union Studio. James is in New York City. Hi, James. How are you? I'm better than I deserve. Dave, how are you doing? Just the same, sir. How can I help? I'm glad to hear that. I'll go right into it. It's great to talk to you. I've been listening to you for about a year now watching your show every day while I run. Thank you. About eight years ago, I started trying to buy a real estate, you know, with, you know, saving 20 or 30% down payments and borrowing money from friends to be able to buy.

Starting point is 00:43:59 I know it's a huge mistake now and it's not what TikTok says that it is. In the same time, my cousin asked for money to do the same, and I borrowed about $300,000 on her behalf from my network so that she can also grow her portfolio. Fast forward to now, real estate is the opposite of what TikTok says. I am also married, and we are planning a wedding next year. I paid off over $600,000 of real estate debt that I borrowed from my friend after listening to you guys for the last two years. Wow. And I also have about, I also have five of my rental properties have been paid off. Wow. That's amazing.

Starting point is 00:44:34 And I am working, thank you, and I am trying actively working towards becoming debt-free with all of my real estate and all of my debts. Amazing. I do have some debt outstanding. And I still have, so I paid off all the debt that I borrowed from friends, and I only have mortgages on about 15 on my rental properties. But the balance that my cousin borrowed is still outstanding, and she hasn't made any interest payments in over 18 months.

Starting point is 00:45:02 And she also got foreclosed on all of her houses. And with a wedding to pay for next year, newly married, I'm thinking, should I sell some of my real estate to pay off her debt and start over from scratch, or should I wait it out and pay it off little by little? Did you borrow the money on her behalf or she borrowed money? You had $300,000 cash that you lent her. So the same people that I borrowed from to start my own portfolio, I borrow from them so that I can give to her.

Starting point is 00:45:30 So, to. And I think it's fairly easy to figure out she's not going to pay this. So, no. So you're going to have to. Her house is broke closer. So I am on the hook for that. Yeah, so how are you going to pay the $300,000? Now, the numbers you're throwing around are amazing.

Starting point is 00:45:48 Congratulations on your change in direction. So you paid off $600,000 already. How did you do that? Little by little, I've just been saving up cash from the, But if the income that can come in, my record W-2 job, and I also sold a couple houses. In what period of time did you pay off $600,000 doing that? Two years? In the last 30 months.

Starting point is 00:46:14 Okay. So why could you not just continue on that track and clear this 300? I still have 15 houses with mortgages on them. But you paid off 600,000. In your current situation, you paid off 600,000 in 30 months. Right? Yeah. And you sold a couple properties and you cash flowed the rest of it out of the rentals, right?

Starting point is 00:46:39 Yeah. And so you've still got that cash flow and you can sell one other rental or two other rentals and do that. How much are you making a month, James? They vary. It's usually anywhere between 20 to about 28,000 after mortgage, utilities and, you know, taxes is paid out. And then your personal W2 is. income is what? 180,000.

Starting point is 00:47:07 Yeah, good job. Okay. Well, so overall, let's just say this. Okay, you got 15 still mortgaged. You make 108. You've got cash flow because you got a bunch of them paid off. And you have a $300,000 unsecured loan hanging over your head like a knife. And so that I need to clear.

Starting point is 00:47:25 That's the overall picture. And so what would I do in that overall picture, not just the 300, but everything else? I would lay out a game plan and say in X number of years, I want to be 100% debt free with my real estate portfolio. Now, what I would suggest you do is play with the math because you're good at it. I've been listening to you. You've got this dialed in. You know where you are and you know how you got there. So this is a gift you've got.

Starting point is 00:47:54 You like math riddles almost, right? So lay out this math riddle and say, how many properties do I have to sell? and which ones would I sell of the ones that are mortgaged in order to be 100% debt-free in three years? Because the 15 that have mortgages also have equity. So you don't have to sell them all to clear the mortgages. You would sell the ones you hate the most or that have the most equity because you want to get the most traction in this scenario. Okay. So let's just use an example.

Starting point is 00:48:30 I've got to sell seven of the 15 that are mortgaged to clear the money. the 300 grand and clear the other eight. And I can do that in three years. Well, that's one thing to consider. What if I waited and went a little slower and I took five years? Oh, then I've only got to sell five of them, or whatever the number is. I'm making that number up. It's probably not that far off. But, you know, lay you out a three-year plan. What would have to be true? What would I have to sell and what I have to do with the cash flows to clear the 300 grand and to clear all mortgages? in three years. What would I have to sell? What would I have to do? What would have to be true? To do all mortgages in five years. And then you decide which one of those programs you want to work.

Starting point is 00:49:13 I'm okay with either one of those two. I'm going to stay in death the rest of my life. That's the only time I would yell at you. But you're not, you're not urgent right now. No, no. Because it's real estate. He could clear the 300. Because it's real estate. But if it was credit card debt, we'd be having a different discussion or student loan debt. Yeah, but he's got the ability to retain some of this portfolio. He doesn't have to destroy it. You don't have to burn it down to clear it because you've already made progress on my idea. When it wasn't my idea, right? Yeah, so I've been trying to pay it off. And I've been mainly focused on my own debt, but now I'm just thinking there's just no way that she's ever going to pay it back.

Starting point is 00:49:52 Honey, let's just change the name on that. That is not her debt. You borrowed it. What you did with it was really stupid. You borrowed it. It's your debt. You gave it to an incompetent real estate investor who happens to be kin to you, and you lost your money that you borrowed. So it's not her debt. She's not going to pay it. How's the, how's the, does she talk to you, James? Does she feel bad about it? Not at all. I think they really should be stream beer. So at no point there's no, no text messages aren't returned, calls aren't returned. Oh, wow. Okay.

Starting point is 00:50:33 She went dark. I'm sorry. Truthfully, even if she wanted to pay it, she doesn't have anything left. They took all the property. Yep. She's working in a coffee shop. I mean, you're not getting $300,000 out of this check. Not at all.

Starting point is 00:50:50 That's why I want to carry up and just get it out of the way and pay it off. So you need to pay your debt. You're $300,000. You've already paid $600 of your $900, and now you've got $300 left to go. Another example of co-signing. Don't put your name. Well, our worst, loaning money to relatives. The only thing worse than loaning money to relatives is loaning money to relatives is that you borrowed to loan.

Starting point is 00:51:10 I know. But it's that same idea that I'm having to step in the middle of your debt situation, a co-signer, taking out a loan on behalf of someone else. Yeah. Not great. Yeah. So I'm sorry, James. Yeah, it's awful. And then it destroys the relationship.

Starting point is 00:51:26 I think you're going to be, I think you're going to end up with the property that you have now that's debt-free. plus some portion of those 15 properties debt-free. And he's got five properties paid off. I think you're going to clear it all. I don't know what the equities are in them. But you start running the math out on that. It's a neat math riddle to run. Hey, this is Dr. John Deloney.

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Starting point is 00:53:06 Go to helixleap.com slash Ramsey and save up to 30% off mattresses with their Helix Labor Day offer. That's 30% off exclusively at helixleck sleep.com slash Ramsey. With Helix, Better Sleep starts right now. Lauren is in Houston, Texas. Hi, Lauren. How are you? I feel fine. How are you?

Starting point is 00:53:37 Better than I deserve. What's up? So I was wondering if it's worth living almost paycheck to paycheck and staying where we are to work for getting to like owning our family's business or should my husband change his job into something that we can live a little bit more comfortably. Okay. The business cannot afford to pay him what he is worth? Not at this moment due to how his father and his mother are spending the profit. Okay, that's not the answer. The answer is the business can afford to pay him a proper amount because it would just simply make less profit. So, for instance, what does your husband do at this company?

Starting point is 00:54:31 It's a telecommunication company. He's a lead technician. Okay. What does a lead technician make in the marketplace in Houston? I think, honestly, it's around 32 an hour. Yeah, that sounds about right to me. What's he making now? Pass that, 16.

Starting point is 00:54:49 Okay. Oh, my. And so here's the rule, okay? Then if he leaves and they want a technician, they're going to have to pay 32 an hour because they're not going to be able to hire someone to do this job, for 16. Right.

Starting point is 00:55:08 Yeah. And so what we teach people in Entree leadership with family business is you pay the family member market rate for the position and we discuss future ownership, not instead of future ownership so I can go on a cruise and you guys are starving. All the employees, the most one employee is making is 19 an hour. Okay. So they're underpaying everybody. Well, no, no, they're not, or everybody would have left.

Starting point is 00:55:41 So something's wrong with your numbers. It's because they've got people with, I guess, history behind them that makes it very hard for them to find other jobs, as in, like, a criminal background. Oh, okay. Okay. So they're kind of grandfathered. If you leave, you won't find anything else, so you're staying situation. Okay. So more out of desperation these people are saying.

Starting point is 00:56:11 Yes. That's kind of what you're saying. And I'm there helping in the office. I mean, I'm basically taking over the office. I'm getting 15 an hour, so that's almost what he's making. Plus, I've got child care. I've got an infant on my hand. What does your husband say about all this?

Starting point is 00:56:29 Is he dissatisfied like you are? Yes, but we like where we're getting it to be, I guess, getting the business to be for it to be in our hands. So he's willing to put up with it in order to own the business? He is. And when are you supposed to own the business to offset the pack that you're being paid half of what you're worth? By the end of next year. Oh, okay.

Starting point is 00:56:55 So not five years. So what kind of profit does the business make? We can take home anywhere between 40 to 60,000 a month. Okay. And you won't trade that for $16 an hour for a year? I guess my issue is we're kind of slowly getting behind on our bill situation. And my in-laws are, we're refinancing everything, so they have better cash flow because they are racking up a bunch of credit cards and things like that so that they don't have to

Starting point is 00:57:26 take it out of their own banks because COVID hit them all. And they've got so many loans they're trying to catch up, and they're just not, I guess, doing it right? How are they going to give you this business? It sounds like it's all pieces. that's why I'm in the office putting like putting everything together re I guess getting the business up to date it's a data telecommunication company so I mean it it is a very needed I guess in this and they have retirement Lauren they're making 40 or 50,000 or $50,000 a month yes 600,000 a year and why are they having to refinance anything aren't they just paying it all? off? Because they've got $6,500, I guess, a month going towards a line of credit that is at 75% interest that I keep telling them to pay off, but they're like, well, what if this happens,

Starting point is 00:58:24 and then they rack up another credit card? Or I guess they're very stubborn, and I'm slowly getting to them to be like, okay, do they have retirement, Lauren? I'm scared in a year from now. They're not going to have the ability to walk away from $40,000 to $60,000 a month. No, but within the end of the year, how I'm getting things kind of refinanced into every, like lower interest rates, we are getting the point. You're all over the place, all right? These numbers aren't adding up anymore, okay? So here's the thing.

Starting point is 00:59:00 If you could, too, you and your husband can sit down and see a path to becoming the owner of a business that makes $40,000 a month net profit, And if we believe that the parents are going to be in a condition to hand us that in 18 months, yes, I would sacrifice to get that. But everything you go back to sounds like you're bitter and mad towards them and you think they're stupid. And I really don't care about that in this conversation. The conversation is, is your husband underpaid?

Starting point is 00:59:33 Yes, he's underpaid. But that's a great deal to trade $16 an hour for $40,000 a month profit a year from now or 18 months from now. That's a bargain. But I'm not sure that you believe that that's going to happen because I think you think they've got so much debt and other things going on that they're never going to honor their word and walk off. That's what I think's really going on. You don't think this is going to happen. Is that true, Lauren? Yeah, that is pretty. It sounds true to me.

Starting point is 01:00:02 Yeah. You're throwing so many darts in these balloons that there's not anything here for the clown. I mean, it's just there's nothing left. So, you know, you've got to sit down with them and figure out where we're going next and how we're going to get there. And you've got, so if I'm going to stay, I've got to see a path that is logical on how we're going to get there in 12 to 18 months. And these people sound just wild. And if they can't help you with that path, you should leave them and let them have this circus. Yes. And it needs to be written out, an agreement of what you all for.

Starting point is 01:00:40 are agreeing to, like on paper. This is very vague. Like I jumped in and helped for a little while. Now I'm running the whole stinking thing. And they said they're going to give it to us, but they've got a 75% interest line of credit. What are they dealing with? The mafia?

Starting point is 01:00:54 Oh my God. And so, you know, and who wants to keep that around like it's a pet? So this is so illogical. There's so much crap going on in this conversation. So, yeah, you've got to comb through all this stuff and go, when we get the business, here's what we're going to have to pay.

Starting point is 01:01:10 pay off because you won't have paid it off. And here's how we're going to operate it. But if you can trade $16 an hour for $40,000 a month in 18 months, you should make that trade. But you've got to come to the place you believe that's going to happen. And like Rachel said, it's written down. Yeah. And that they have the ability to hand you a business and they can go off in retirement. I don't think they have money. I think they're broke. I think the whole place is a lot more broke than everybody is. I'm like, I don't think I'm not sure I believe the $40,000 a month thing. anymore. Well, she said she's running. I don't think you keep 75% interest around. I mean, you'd have to, your parents would have to be cousins to want to keep 75% interest around if you're

Starting point is 01:01:51 making $40,000 a month. Let's just keep that. We might need it. You know, that's just, that's just ridiculously stupid. So, no, I don't believe there's something wrong in this. And I think Lauren has figured out that there's something wrong with this story. And it's not all adding up. And it doesn't that up. That's what she's figured out and that this is a trap. And so you don't want to be in the business of rearranging the deck chairs on the Titanic. Yes. And if you have to be at a place in your life where you make $40,000 a month in order to keep payments afloat, you're broke. You're broke. That's not a profit. Yeah. That's not a profit. That's just you're, you're, you don't have money at that point. You don't have $40,000 a month. The bank does. Yes. We don't need that. No, no, no, no, no.

Starting point is 01:02:40 to think that's what's going on. I think these people have leveraged this thing to its eyeballs. So I can't tell because Lauren doesn't really know, but she smells a skunk and it's usually because there's one in the area. So that's what you're looking for. We got a lot of metaphors in that one call. I was going to say circuses, clowns, balloons, skunks. Good luck, Lauren. This show is sponsored by BetterHelp. I know a lot of you out there are trying to keep it together all the time. You show up to work, you pay the bills, you smile at the right times, but then no one sees you snap at your spouse or lie awake all night running through everything you'd wish you'd done differently during the day. Just because you're functioning doesn't mean you're okay. Talking to

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Starting point is 01:04:24 trust a BetterHelp therapist to help you carry the load. Go to betterhelp.com slash Ramsey for 10% off. That's BetterHelp. H-E-L-P.com slash Ramsey. We coach about 10,000 small businesses nationwide through our Entree Leadership brand. We have executive coaches. We have an online app that coaches them. The Entree Leadership podcast is built on helping small businesses navigate. A lot of them are family-owned businesses. I just spent the weekend with 34 businesses that were averaging about $20, $25 million each annually

Starting point is 01:05:15 and in coaching them over the long weekend. And last weekend, that's where I was. And so, and we talked to them a lot last weekend, and every time we're with them about succession planning, about handing to the next generation or selling or whatever it is you're going to do. So a couple of rules, a couple of principles you can go by in family business. Your family business is going to be no more functional than you, your family. If your family is cray-cray, expect the business to be cray-cray. If your mother-in-law

Starting point is 01:05:55 is operating in the business and she's nutty, expect her to be nutty when she's at the office. People don't suddenly become smart, well-regulated, relationally brilliant when they walk through the doors of a business. When at home, they're absolutely can't find their way through a kindergarten. Okay. And so you're not going to have crazy people that operate a business will together. And that is where family business gets a bad name. Don't ever go to work for family.

Starting point is 01:06:26 It's because your family was crazy. That's why you say that. And so, no, but we work with family every day and we love it. And we have some fun. We argue about things, all that kind of stuff. We have conflict like anybody else. But we have conflict resolution skills too. Hello.

Starting point is 01:06:40 And we know how to lay out a plan and execute the plan and be. in alignment and everybody be in agreement. This is what this looks like and we're going to do it. So if you're going to enter into a situation like our last caller Lauren, the thing that she and her husband did wrong, they were just like the convicts that mother-in-law hired. They didn't have any place else to go. So they took a $16 an hour position that should be paid 32 and agreed to it and then later whined about it.

Starting point is 01:07:10 So you need to enter into that whole thing. say, okay, the only reason I would take this is because I'm going to take the business over. Now, what does that look like and comb through the exact details? You can't vaguely promise off in the distance something that no one believes because they leave. And that includes your own children. And especially in that situation, expecting to take over the company in 18 months. Like, that's a fast period of time for all this stuff. fascinating that the daughter-in-law who's running operations calling here is like, how do you get

Starting point is 01:07:50 the other people to work for 19? Oh, they hire convicts who can't get a job anywhere else. I mean, she just dropped that and kept driving. I mean, that's a mic drop and just kept driving. It's a very nice thing to do to get people back on their feet. Yeah, it's really sweet, but I'm like, and now your husband's in the same category. Yes. Only he's not a convict, at least as far as we know. Well, taking advantage of people is what it feels like. That's what it sounded like. That's how way she counts. That's what she believes.

Starting point is 01:08:17 Yeah. And so this is who you want to work for? I don't think so. So you need real clarity. You need to have exactly what the plan is and so forth. And a good rule of thumb, folks, if you own a business and you want people in the family involved, is to pay them what the marketplace demands. And so if you have a son going to work for you and he's going to be a software engineer,

Starting point is 01:08:39 you pay what software engineers make. Not more. less. And then you say, as you grow in your leadership skills, we can talk about you taking over this business someday, but today you're a software engineer. Today you're a, what would you, a tech? He was a tech. And so that guy, you know, her husband. So today you're a tech and you make $32. Because that's what, that's what the marketplace demands if we weren't hiring convicts. And so that, that's, you know, that's fair. And if you're going to go in and take the operations, position, it's not a $15 an hour job. The C-O of a company that makes $500,000 a year profit

Starting point is 01:09:19 does not make $15. That's assonine. So no, we're not going to do that. We're going to figure out what this position is worth, and you're going to pay me that amount. And the only reason we're taking these two positions instead of working somewhere else is because we have a two-year plan for this to be handed off to us. And these six debts that are laying here will be paid off by that time out of the profits so that you don't hand us a pig and a poke. And so you have to lay this out and have a dadgum clarity, but it's this vague throwing grenades over the fence and wondering what blows up stuff has got to stop. Which is like, and to me, it's your fault too for taking the deal.

Starting point is 01:10:04 And this is a big deal from 16 an hour to 40 to 60,000 a month. I'm like, this is the biggest jump ever. And the fact that you're not, it's not so buttoned up. Yeah. Worries me, right? Like that's, it's pretty well. She's pretty sure it's not going to happen because she thinks they're, that they've got so many other things going on that nobody knows about.

Starting point is 01:10:26 And 75% interest. I mean, all these things. So back to that. But anyway, so the point being for Lauren and for anyone else entering these things is, I would say market value is fair to be paid. and it's what we pay at Ramsey for our for everyone and that includes Rachel and that includes her brother and that includes you know these people get paid Rachel gets paid on the same schedule that Deloney and George gets paid on same schedule same percentage of speaking fees and books and

Starting point is 01:10:57 everything okay all that so um no change there at all then as you become an owner you can participate in the profits in addition to you being paid for your position. And that's a proper way to do this. And then lots of communication and lots of clarity. Where there's not lots of clarity and lots of communication and people aren't relationally functional, you're not going to have a completed succession plan. It's not going to work.

Starting point is 01:11:26 And so I don't think that one's going to complete because of all the things, all the stink that Lauren smelled, but also Lauren and her husband entered into this improperly. It's on them, too. Yeah, that they took the positions. They shouldn't have taken these positions. Mm-hmm. You should have said you should have demanded up front. The way we come in here is where we see a clear path to ownership in 18 months

Starting point is 01:11:49 and an ownership of something we actually want to own. Okay, so we're going to clean up whatever mess is doing here during the 18 months. You're going to pay me accurately for being the C-O. You're going to pay him accurately for being a tech during that time. And if you can't do all of those things, including a clear path, then we're not going to come over here. And that's the thing that should have been decided up front. But now you're in, and now the thing's going down the toilet, and you get to go on the ride.

Starting point is 01:12:18 Jonathan is with us. Jonathan is in Harrisburg, Pennsylvania. Hi, Jonathan. How are you? Hi, I'm good. Thanks for taking my call. Sure. What's up?

Starting point is 01:12:27 So we made our last mortgage payment yesterday instead of in 2015 as the bank thought we were going to. Wow, Jonathan. Congratulations. Way to go. That's amazing. So, yeah, your content really motivated us to, you know, put some pep in our step there. So I like things with engine and wheels, and I've had nine motorcycles and 60 cars throughout my life and plenty more to come, Lord Willing. So my question naturally is about the 50% rule.

Starting point is 01:13:01 We have a fund separate from everything else that's just for toys. Right now it's got about $45,000 in it. But my wife and I are not especially high earners. So if I upgrade my net worth right now is 715. Okay. All right. So I'm not working up buying a new thing. Go ahead.

Starting point is 01:13:21 Just, just, you know, a random toy, they come, they go. There's like a lot of different experiences. But if I upgraded my daily, I could barely touch the 45. And if I used the whole 45, we'd be already above 50%. So does that rule apply in baby step seven or what advice would you give for me? The rule is based on the principle that the more you have tied up in things going down in value, the harder it is to build wealth. Yeah.

Starting point is 01:13:52 So fix that. Don't put so much in things going down in value that you go backward. You've gone forward beautifully. Don't stop going forward, right? So there's no magic to the 50% in your situation. I don't care. But just don't put so much stuff and money and stuff with wheels and motors that you go the other way because you got confused about where this wealth came from.

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Starting point is 01:15:20 of guessing. I've recommended health trust financial for more than 20 years because they work work for you, not the insurance companies, so they offer unbiased advice. Visit health trustfinancial.com to connect with an advisor today. That's health trust financial.com. Today's question of the day is brought to you by YREFI. If you've fallen behind on your private student loans, you don't need more shame. You need a plan. Why Refi helps borrowers explore refinancing options with low fixed rate and payments based on what you can afford.

Starting point is 01:16:13 go to why refi.com slash Ramsey might not be in all states. Today's question comes from Matthew in Michigan. I have a car worth $20,000 that's in need of a $5,000 repair to replace the head gasket. Is there a rule of thumb to determine if a repair expense is too much to pay percentage-wise for a given car's value? Yeah, it usually doesn't come with a car this. expensive though. Yeah.

Starting point is 01:16:45 So the thing that we've always taught here on the air is let's say, so you've got a $5,000 car and you blow a head casket and you need to spend $3,000, not five to put a head gasket on. And so I'm going to spend, am I going to spend $3,000 on a $5,000 car? Here's the formula. What can you sell the car for as is with the blown head gasket? In the case of the $5,000 car with blown head gasket, you might get two, you might get three, Let's say you could get $3,000 for it.

Starting point is 01:17:16 If the value that you can sell it for plus the repair is more than the value after the repair, you don't do the repair. So let me recap. If it's a $5,000 car after it's repaired and you can sell it for three and the repair is three, that would be $6,000. You would not repair that car. You would take the three from selling it, put the three you were getting ready to spend on it, and buy a $6,000 car instead of a $5,000 car that you have after you're finished with this. That's how you do the formula. Now, Matthew, I do not know what your car is.

Starting point is 01:17:57 And I'm an old redneck that used to put my own headgaskets on and replace my own motors in cars. Back when I knew what the car was, when I open a hood now, it might as well be a spaceship. I have no idea what's in there now. So I don't know what I'm talking about, but $5,000 sounds awfully high for a head gasket on a $20,000 car. I am going to shop that. Good rule of thumb, folks, is car dealers are the most expensive shop by, in most cases, as much as double. So finding a local independently owned shop, like Christian Brothers is one that we endorse. So know a bunch of those guys.

Starting point is 01:18:41 It's a franchise and they're independently owned shops in your market. And someone like that, and they're honest, they do a good job. You go in there and find an honest, good local mechanic and let them give you a bid for a head gasket. But I'm a little, I don't know what the engine is. I don't know what the car is. There may be a complication with that. Sure. But for $20,000, I probably am fixing it.

Starting point is 01:19:06 I'm fixing it. Yeah. You're fixing it and I'm probably fixing it for three. and I'm going to fix it. Yep, that's what I'd say. That's where I would go to. All right, Jen is in Detroit. Hi, Jen, how are you?

Starting point is 01:19:17 Hi, I'm good. Thanks for taking my call today. Certainly. How can we help? So I'm calling because I'm 46 years old. I'm single. I've never been married. All my life, I've always wanted to get married,

Starting point is 01:19:30 but I haven't found anyone yet. And I've been holding off on buying a home because I've always had this dream of buying my first home with my future spouse. and as I've gotten a little bit older, I'm starting to wonder if I need to rethink that plan. I did want to mention also that this is something I'm thinking about for the future because I can't really do anything at this moment because I am currently laid off. But I'm hopeful that I'm going to get a new job very soon and I'll be back to normal, making money again and back in my, and I can move forward with some of my goals that I've got here.

Starting point is 01:20:04 So I've had a lot of time to think in the last eight months that I haven't been working. Has it been eight months since you haven't had? had a job? Wow. Yeah, I was laid off in December of 25. How are you living? How are you paying bills? So I was able to live off of unemployment for the first six or seven months. And then I was also given a pretty generous severance package. So once my unemployment ran out in July, I've been starting to chip away from my severance package. So I've been very thrifty. You need to land something, don't you? Do you have any debt, Jen? I do not. No, not anymore. Yes, good for you. Any savings? Yes, yes, I have savings. I have a total of

Starting point is 01:20:47 394K in retirement between a traditional and Roth IRA. Good for you. And I have, thank you, and I have 31k in a non-retirement mutual funds. And then I have in my high yield savings, I have 32K, which is basically my severance money. That's what I've been looking for. And then my, My last job, my income was $114K, and I'm hoping that my next job is going to be something similar to put me in a good position again. Yeah, for sure. It's great. She wait to get married to buy a house.

Starting point is 01:21:15 No. No, I was going to answer her question. Yeah, no, Jen. I think, because I just checked off the boxes, you're debt-free. You have savings in the bank. And as long as you have a good down payment, I would move forward for sure, because owning your home is going to give you a level of stability. and it's going to continue to add to your net worth and your wealth building process. And here's the thing, too, it's just a house, that if you meet a guy and in two or three years,

Starting point is 01:21:45 you're like, okay, things are moving and, you know, we got to sell a move. That's great. It's just a house. Like, you can do that. But no, I would, no, I would not wait. You don't have to keep a house forever. Yeah. So if you meet somebody to Rachel's point and this house doesn't fit into the new plan, sell it,

Starting point is 01:22:02 and then live the part of your dream where we'd be. buy something together. Okay. Yeah, you're too successful, Jen. You got it. Like getting in the market now. And seriously, and being a homeowner, women are now outpacing, single women are now outpacing single men in homeownership.

Starting point is 01:22:19 Oh, really? Yes. Almost double. Yep. You're kidding. Oh, I did not know that. Yes. So single women are buying homes, making a life for themselves.

Starting point is 01:22:28 And again, I pray that your prayer, you know, comes true and that you do find someone. someone and that's the case, then great. You can sell, he can move into your place, you know, whatever it looks like for you guys, but it's not a, it's not like you have to be married to this, to this house. No pun intended. Carisma is in Sacramento. Hi, charisma. How are you? Hi, I'm good. How are you? Better than I deserve. What's up? I was calling, I'm working the baby steps. I'm on almost the end of Baby Step 2. I do know that I have to save, you know, my emergency fund still. But I know that a house, like saving for a house is baby step 3B.

Starting point is 01:23:12 And I have been, I guess, planning ahead trying to figure out how I would do that. I'm a single mom of two on a $50,000 income. And houses in my area, like run down houses that have been gutted out or at the minimum, like $300,000. They are. You're right. They're extremely expensive. I'm on a low income. I mean, I know that I could change my income,

Starting point is 01:23:41 but as of right now, I'm working for my dad at a family-owned business. So I'm hoping to possibly stay, but I know that that's probably not the best financially for me. Could you make more somewhere else? I don't really have any degrees or anything in my name. But what are you doing now for? for work.

Starting point is 01:24:05 Works for a day. I'm the office manager. What kind of work is it, though? I do everything in the office. I'm the only office person, so I do payroll, I answer the phones, I schedule appointment. It's a plumbing company. If you went to work somewhere else, what could you make? Being an admin, being in that kind of role.

Starting point is 01:24:22 Honestly, probably the same without a degree. Okay. All right. So you're not really taking a pay cut working for your dad, which is kind of what you indicated at first. Okay. I could make more if I didn't work here, you say. and that's not true?

Starting point is 01:24:37 I mean, I do have 12 years of experience. Is it true or not? Probably not. Okay. I don't care. It doesn't matter to me. Either one's fine. So we're dealing with a $50,000 income in Sacramento.

Starting point is 01:24:52 You're probably not buying a home soon. It's a very difficult, very expensive real estate market. Yep. So between that Baby Step 3B charisma and Baby Step 4, we say there's not a a hard and fast rule, but it's kind of that feeling if you know it's going to take longer than probably three-ish years to save up that down payment, you need to start doing both. So be putting some money in retirement while you're saving for that down payment. So in order to be a homeowner, you have two choices. Do something to get your income up permanently

Starting point is 01:25:22 or go to an area that you can afford to live on what you make. You cannot buy a home in that area can be very difficult with the numbers you gave me. I don't disagree with you. Welcome back to the Ramsey show in the Fair Wins Credit Union studio. Taylor is in Reno, Nevada. Hey, Taylor. What's up in your world? Well, better than I deserve. How can I help?

Starting point is 01:26:02 Well, I got a question for you. But I have a feeling I know the answer to. But like a regular one, I think I need to hear it from an authoritative figure. We'll see if we can find one for you. My wife has been wanting to do more traveling, more fun things. I run a mobile sound system, so I work a lot on the weekends. So the weekends we do have off, we tend to not go anywhere. Outside of that, I just have a problem spending money unless it's on something that I can use to make money.

Starting point is 01:26:39 That makes sense? Yeah. So no fun for you, Taylor. I'm just kidding. Basically, basically, basically. My work is fun, so that's good. But outside of that, I mean, we spent $300 on food at a festival this weekend, and that hurt. Yeah, you're still recovering.

Starting point is 01:27:00 Emotionally, yeah. So what is your household income, Taylor? It's going to fluctuate about 70 to 100, depending on how good. How much debt do you guys have? Do you have money? I mean. the house is the only thing we owe money on her car and my two trucks are paid for my sound system's paid for so that's the the tear i have is we want to go do things but i want to take that money and put it on

Starting point is 01:27:29 the mortgage from what it is i'm on track to be at least double the mortgage by the end of the year that's good so on what timeline will you have it paid off by that that i haven't calculated because it hasn't been consistent enough. I started this household venture this year. Okay. Prior to was all the trucks and the trailers. Yeah. What do you guys have in investments and savings?

Starting point is 01:27:57 Savings can they have a fully funded 10K emergency fund. It's just the two of us. There's no kids. My 401Ks are split since I separated from the Navy. I have about 80 grand in the government TSP. And then I started my own, personal Roth 401k after I separated. This got about 20 in it.

Starting point is 01:28:18 It's about 700 a month. Okay. And then we've done her 401k up with her work to probably more than it should be. But she's doing about 900 a month plus the company match. Okay. So she's sitting about 40 in that one. Okay. Gotcha.

Starting point is 01:28:39 And I squirrower another 500 into mutual funds. and that sits at about 72. Okay. Yeah, well, you guys are doing a great job. My question would be, are you on a pretty detailed budget month to month looking at your income and where it's going? For the most part, I got a pretty good grasp on it. That's not what you're not doing what she said. You're not doing what she said.

Starting point is 01:29:10 She said a detailed budget, not I got a grasp on it. No, I mean, every dollar has an assignment in the every dollar app, and you and your wife are looking at that where every dollar is going together and you're agreeing on it. You are not doing that. No. Okay. So I think that's going to be your relief, Taylor, honestly, because I think when you guys see where your money's going and what you have to spend, then when you actually give it permission to say, yeah, at the beginning of the month, we're going to have a category for fun, and there's going to be $800 or whatever you. you are able to put in there and want to put in there and agree to put in there, that you guys then have that number, and then you can freely go and spend it as you want, or a vacation, right?

Starting point is 01:29:55 We want to save for this vacation, so we're going to put X amount away. And so I think the lack of detail could be stressing you out, just thinking, is this okay to do? Is it not okay to do? I would rather it be here for something that makes money, right? But when you force yourself to spend, And as you should, you should be giving, saving, and spending where you guys are. So that spending element needs to be in the budget, and you guys need to agree on the amount. It doesn't have to be ridiculous. Here's what you'll experience, okay? When the two of you write it down and you say, okay, this month we're going to agree that the fund category has, I'll just make up a number.

Starting point is 01:30:33 $700 bucks in it, okay? And you put $700 bucks in that category. what you're going to experience is that it's as if for you that it already got spent right then. So when you turn around and actually do spend it, you're probably going to actually enjoy it. But the angst over spending money or wasting money on fun when I could be buying more equipment happens when you write it down even though it hasn't left. And so you're going to have that emotion out of the way and you're actually going to be more fun. It's going to be more fun for you, more fun for her, and you do need to budget something. But if you both agree to the number, and this month it's a little low because I need to buy this piece of equipment.

Starting point is 01:31:17 This month I'm good. So it's a little higher because we're not buying anything this month. And so, you know, and you go back and forth like that. You need to have that in there. And that way she will agree to you continuing to grow this business without resenting your business. but if all of her fun is involved in you buying a piece of equipment, she's not going to enjoy this for very much longer. And right after she quits enjoying it, you're going to quit enjoying it.

Starting point is 01:31:46 That's the way that's going to work. So we need to get a plan that we can both ride this together and both stick to it. Emma is in Spokane. Hi, Emma. How are you? Hi, Dave. I'm good. How are you?

Starting point is 01:32:00 Better than I deserve. How can we help? I had a quick question about some debt that I owe that doesn't accrue any interest. So right now I owe about $9,000 on a car. And I owe, I believe, the totals around $52,000 on student loans that I had taken out. And I was having a difficult time because I was using, you know, a really intense debt payoff method. And I had paid $36,000 off in a year and a half on my student loan.

Starting point is 01:32:32 loans and I was working really hard on it but I went and visited a family member who is kind of well off and they they saw how hard I was working on it and they saw how much it was kind of taken out of me and taken out of my life so they decided to to buy all that debt for me that way I can pay it back to them without worrying about all the interest that I'm accruing. The problem is that it's a pretty large monthly pay. Is that deal already been done? Is that deal already been done? Yes.

Starting point is 01:33:07 Oh, crap. Okay. So how much do you owe your family member that was trying to be a blessing? I think if I, I don't have the exact total, like, on hand right now, but I think it's $62,000 is the rough estimate. And what do you make? Last year, I'm a nurse. So I make a good amount. I made like, I think, brought home $76,000 last year.

Starting point is 01:33:36 And you have the opportunity for all kinds of overtime, and you paid off $36,000 earlier in what period of time? A year and a half. Okay. So if you use that formula, it's going to take you three years to clean out the family member. Mm-hmm. Okay. I wish you hadn't done that.

Starting point is 01:33:53 But I'm going to lean into it just as hard because you want this out of your life as soon as possible. Interest was not your problem. And I wish you hadn't done this. Dave Ramsey here. For more than 30 years, I've been talking to folks on the air, and I can tell you that most people are broke, not because they don't make enough money, but because they don't have a plan.

Starting point is 01:34:46 You need to give every dollar you earn a job, because when you do that, something changes. You stop guessing. You stop worrying. You stop stressing. Our every dollar budgeting app will show you how to find extra cash, pay off debt, and finally start winning with money.

Starting point is 01:35:04 but most people won't do it. They'll keep living paycheck to paycheck. Keep hoping things will change without making a change. It's time to say enough is enough. It's time to take control of your money. It's time to start your every dollar budget for free today. Go download it in the app store or Google Play. Ramsey is taking over an entire cruise ship.

Starting point is 01:35:37 Our second Ramsey cruise, 2,500 people, all Ramsey people will be on there. We're going to talk about having celebrating, or we're going to celebrate with them, them having beat debt and change their family tree. We're going to do the world's largest debt-free scream all together on the ship, seven days with me,

Starting point is 01:35:58 all the Ramsey personalities, plus others. Natalie Grant is joining us. We've got pastors on board to do devotionals with us. We've got all kinds of fun things happening. It's going to be a blast. Western Caribbean, building teachings. We're going to do all the entertainment will be us. So when you go into the

Starting point is 01:36:16 theater on the cruise ship, it's going to be Rachel Cruz speaking. Pretty cool stuff, y'all. We had a blast the last time we did this. And it comes up in March. There's a few cabins left. If you want to go, you don't go on a vacation unless you're Baby Step 4 or beyond. And you don't go on this one if you're not Baby Step 4 and beyond. You're not invited. But if you are out there and you're kicking it beyond baby step four and you want to celebrate the milestone with us. We want to do it. I mean, we've had a absolute blast. I mean, I walked around. We did a pop-up Q&As. We just jump up on a stage and start doing question and answers. People would stop. We did pictures with them. There's all kinds of fun stuff happening all over the ship the whole time. You don't want to miss this. It's this

Starting point is 01:36:59 coming March. You can reserve a cabin with only a $600 deposit. Go to ramsysysolutions.com slash events and book your cabin now. Caleb is in Raleigh, North Carolina. Hi, Caleb. How are you? Good. I think we're taking my call. Sure. How can we help? So, I'm 23. Me and my wife, we have zero debt. We actually just paid off our last car. Congratulations. We're looking to get our first house. Good. And I guess my question is, is it better to get a house now? Is it better to wait and keep renting? Like, giving the state of market. I'm not exactly sure with the best option. Are you guys at a point that you're debt-free and you have a fully- Oh, yeah, you said you just paid off your car. Do you guys have money for a down payment or you're

Starting point is 01:37:45 just looking ahead in the future for the next couple of years? No, we have about 40,000 saved right now. We make about, we bring home about $153,000 a year. Okay. So you would rent. You said, I want to keep renting. Why? No, I don't want to. I just want to know. is it's better to rent or to buy now. Yeah. So the time to buy, honestly, Caleb, it's, yeah, when you are financially ready to go ahead and get in because they're, I mean, home prices, they're not obviously skyrocketing like they did years ago.

Starting point is 01:38:20 But they're not going down. No, they're up 2%. Is that what it was that we heard? Yeah, nationally they're up 2%. But Raleigh, they're up more than that. Yeah, they're not going down. You don't want to wait on them to go up. I'm just dead.

Starting point is 01:38:33 Yeah. So, yeah, if you're ready, when you're ready, buy. If you want to wait a little while because you want to save some money or something, that's fine. But I wouldn't wait a little while because I think prices are going to come down. Whoever told you that's full of crap. No, there's no prices. There's no price adjustment coming in the real estate market. We have 1.1 million homes on the market in America right now.

Starting point is 01:38:55 And we've brought 2 million people trying to bomb. There's been a shortage of inventory, more buyers chasing two few houses, which drives prices up for $25,000. five consecutive years. So you just don't want to get in that game. Now, we were seeing 10% or more increases in value a year, and we're seeing two or three percent increases in value a year in most markets now. Yeah, so it has slowed down in that sense. So actually being a buyer right now is more for your advantage, because it's now average days on the market is 57 days. And so you actually may have the ability to negotiate and all that versus, you know, four years ago people were offering above asking price and like in these bidding wars. So, yeah, if you're if you're a buyer right now,

Starting point is 01:39:44 you actually have a little bit more leverage, I think, to get in there and negotiate. Yeah, it's a great time to buy. And don't wait on the rates to go down either. You date the rate, you marry the house. So you can take the mortgage out today and a 15 year fixed at about 5.5%, 5 and 3 quarters percent right now. 0.98. Okay. And if it, let's see here. Anyway.

Starting point is 01:40:06 6%. Yeah. The, if the rates go down, you can refinance. Daniel is in Washington, D.C. Hey, Daniel, how are you? I'm doing well. How are you, Dave? Better than I deserve.

Starting point is 01:40:18 What's up? All right. I got a bit of a family will issue that I want to get your advice on. So my mother's parents have passed away. My grandfather was lost to go. happened earlier this year. The will they left behind took their inheritance and one third went to my aunt, one third went to my uncle.

Starting point is 01:40:43 And for my mom's third, they cut it in half and distributed it between me and my two siblings. Now, the reason for this is my mom and my grandmother never had a good relationship. For whatever reason, my grandmother just never thought my mom stacked up, and she let her know it, every chance that she could. And so it's very sad. And what's unfortunate is after my grandfather had passed away, you could tell that she had started to mend some of those feelings with looking back with kind of a positive outlook. And then all of a sudden, this will shows up, and it's one final slap in the face that, you know, the things were just not good. When I learned about this, and for the record, I don't know the exact amount,

Starting point is 01:41:41 but I would assume that my third of her half, if we're tracking here. It's actually your third of your third, yeah. Well, it's probably around $30,000 to $50,000, something in there if I had a guess. Now, as soon as I heard about this, my instant reaction, was very firm and it hasn't changed in the month's following, which is I don't want anything to do with this. I will accept the money because I have to legally, but morally I do not want to be a part of whatever my grandmother was trying to accomplish when they wrote this will. And I just, I don't want anything to do it. I consider it to be my mother's inheritance and that's who it should

Starting point is 01:42:29 have went to and I don't want to be part of it. Now, I have not discussed this with my other two siblings. So I'm not sure how this is going to play out, but I just kind of wanted to hear your perspective on this situation as far as how you would handle it, how, and just generally how you see things. Wow. You feel pretty resolute, Daniel. So I would, my knee jerk is to say follow your gut. It feels like dirty money to you. You don't like it. You don't like the spirit around it. You don't anything to do with it.

Starting point is 01:43:03 I think that you, I think you trust your instinct for you. And then to know that your siblings may not have that same conviction either, right? So, and if you're free of that, which you should be, right, that they can do what they want. They get to do what they want to do. And you get to do what you want to do. But I probably if- Your grandmother gets to do what she wants to do. Yeah.

Starting point is 01:43:22 It's her money. She left it where she wanted it to go. But you're looking at it. at it going, I don't want it. I don't want it. That's your decision. Yep. And I would probably, and I think I would let my siblings know, just an FYI. It's like a no pressure thing. Yeah, I'm not asking you to do this. And I'm not judging you if you don't, but I don't

Starting point is 01:43:40 want anything to do with this. It smells. Yep. Gotcha. Do you think your mom will accept it, Daniel? Will she take it? Obviously, her initial reaction was, you know, absolutely not. No, you know, that, you know. Oh, you've talked to her about it. Of course, that, well, I mean, I was staring her right in the eyes when she told me. And I could see the heartbreak in her eyes. It was gut-wrenching to see. And I just, and of course, you know, she said, no, absolutely not. Absolutely not. And I just put my phone down. I said, no. God has, you know, me and my siblings were all firmly middle class. We're all around, you know, each other in the same regard as far as like financial. I don't know all their details,

Starting point is 01:44:20 but we're kind of in the same bucket. And well, the thing is, let me let me let me let's wrap. And I I just don't feel they need to take it. Yeah, that's fine. You need to seek a tax consultant because you can only give $19,000 to another individual in a calendar year. Are you married? Yeah. I am. Okay, your wife can give your mom the other back.

Starting point is 01:44:41 You give her 19, and your wife can give her the other two checks. Okay, that's how you're going to execute this. What I don't want you to think is going to happen is this is going to make your mom's heart not be broken. Your mom's heart was broken by your grandmother, not by you. And you can't fix that. Money will not fix that. And this money will not fix that. It's your decision, though.

Starting point is 01:45:03 I don't want, this is weird. I don't like it. I don't want to be part of it. That's your call. But don't ask this transaction to do something it doesn't have the power to do, which is heal your mom. 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 absolutely.

Starting point is 01:45:40 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. It's insurance, but it can be hard trying to find pros who aren't just looking to make a buck and agents who really know their stuff.

Starting point is 01:46:26 Ramsey trusted 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 agent. Josh and Aaron are with us on the debt-free stage right here in the lobby of Ramsey Solutions. Hey, guys, how are you? Good. Welcome, welcome.

Starting point is 01:46:54 Where do you guys live? North Vancouver, Canada. Oh, wow. Nice trip to Nashville, huh? Yes, it is. Wow. Well, welcome. Good to have you.

Starting point is 01:47:02 And how much debt of you two paid off? 93,451 and $6. Way to go. How long did that take? 25 months. Good. Good for you. And your range of income during that two years?

Starting point is 01:47:15 You started at 73,000, and we're at about 120,000. Excellent. What are you guys do for a living? I am a Baptist pastor. Awesome. Very nice. So great, you guys. What was the 93,000? It was three personal loans, two credit cards, and a family loan. Wow. All of it. Just the normal stuff. Normal stuff. So what happened two years ago that made you go enough already and do all this Ramsey stuff thing?

Starting point is 01:47:46 So our daughter took Rachel's high school class, actually, in her school. And she kept coming home and going, Rachel says we need to do this. Rachel says to do that. I'm such an influencer. Not Dave says. So he started looking into the Ramsey and then he got hooked. I was, I liked Dave's direct approach. I guess that's the pastor in me.

Starting point is 01:48:11 And I started listening to the podcast and read the book in one sitting. And I did what you're not supposed to do. I went to my wife and I said, we're doing this. I don't care. and, you know, we're going to start tomorrow. And she was not as on board with that right away. But we started listening to the podcast, and the reason she got on board was actually the debt-free screams.

Starting point is 01:48:36 Oh, so you heard it and something. What happened inside you that made you think, like, oh, that is inspiring. I guess it gave me hope that if others could do it, then. Sure, we could do it too. Yeah, because you felt like $93,000 was just too much. You didn't think it was possible. It was the one area in our marriage that we struggled having conversations about because I wanted to talk about it. She just didn't want to have that.

Starting point is 01:48:59 I wanted to pretend it wasn't there. It wasn't there. And it just, you know, I just got sick of living paycheck to paycheck being stressed out. And she was feeling it as well. And so that's why we started the journey. Amazing, you guys. Okay, so marriage before, a little chaotic around the subject, some avoidance, you know, some fighting probably. What is it like now after you walk through?

Starting point is 01:49:21 two years of this journey together. It's probably one of our favorite topics. Yeah. Yeah, we love our meeting. We love our monthly meetings. We look forward to it and yeah. Finances is totally different. Doing the every dollar budget.

Starting point is 01:49:37 That app just helped us so much. And once we started doing that, you know, it wasn't like, it set us free. We were able to do what we needed to do. She was able to buy what she needed to buy and keep everything, you know, going in the right directions. That's amazing, you guys. Well done. You still moved the needle at $45,000 a year. It's a lot. Yes. Yeah. $4,000 a month for two years. That's you with your average. That's pretty crazy. She has a video game collection. So we sold a lot of that. Oh, yeah. And then he used to have. Yeah, that's true. Used to have. And also, he started selling it on eBay. And I was like, hey, that's pretty easy. So

Starting point is 01:50:21 I started to take over that. I know absolutely nothing about video games, but I like selling them. So I'll go thrifting. I like selling him. It's a video game. Yes. So we do a lot of thrifting,

Starting point is 01:50:33 and he's very good at fixing things, so he'll clean them up, fix them, and then I'll sell them. Good for you guys. You had kind of a side thing happening to bring in some extra income too. Good for you guys. Okay, what was the hardest part, though?

Starting point is 01:50:46 For two years, that's a lot of work, a lot of cutting out things in the, budget, all of it. What was the, what was the hardest part? Just saying no to things that we used to say yes to. Yes. Especially with the kids. Yes. We didn't eat out. We didn't go on any vacations. We just, you know, we lived on as little as we could possibly live and we sold everything we could possibly sell. And yeah, so that was hard. Was it worth it? A hundred percent. Yes. Yes. Yes. Yeah. 100%. Yeah, talk to somebody who's out there listening or watching that is going, you know,

Starting point is 01:51:24 I don't know, I don't know if I want to miss out on eating out for two years. I don't know if I want to miss out on dot, dot, dot. I would just say it's worth the sacrifice. The freedom, the piece that we have now compared to before we started, it doesn't even compare. And we just have so much more financial freedom. and you should just do start now one day at a time and it'll change your life and this has changed our lives so how many years you all been married almost 20 oh wow so you guys changed a whole a whole 20 years of marriage you know what I mean a shift of 18 yes yes probably the biggest change in

Starting point is 01:52:04 our lives wow yeah does the freedom feel as great as you expected or even better much better I think better yeah yeah yeah once we once we made that last pain it was like, okay, you know, what do we do now? Totally, yes, yes. And so we're looking forward to the future. We want to pay off our home and keep moving forward in that direction. And we just know it's possible now, so we know we're going to keep going on it. We're different people than we were before we started.

Starting point is 01:52:33 So good. You know, I think that's such a good point, though, the sense that I think so many people live with debt. And it's so normal, but they don't even realize the weight that they carry. Yes. And even though you all recognize it because you're like, we don't. want it anymore. Still even after that final step, after that final payment, you're like, that was even, it's even better than what I expected. It's like you don't even realize how much stress you're carrying when you're carrying that debt until it's gone. You're like, wow.

Starting point is 01:52:59 So good. In your 20 years of marriage, have you ever been dead free? I guess when we first got married, the first couple of years, but then I made some dumb decisions. I was actually investing and doing good things, and I took out our money and bought a car. you know, all the wrong things. Yeah, you started out debt-free and then you became normal. Yeah. And you have four beautiful kids over there. I can see them.

Starting point is 01:53:25 What was that like for them on the examiner? You said you had to cut out some things because of them, but what was it like having four kids in the house and doing this? They were actually on board. They were very gracious with us whenever we would explain. Sorry, it's not in the budget this month. They were really good about it. Yes.

Starting point is 01:53:44 Yeah, they jumped on board and just did it with us. I would say that they don't want to see a box of craft dinner for a long time, which is our American mac and cheese. They're like, no more, please. Like, we're done. We're so sick of it. Yes. Oh, that's amazing.

Starting point is 01:54:02 Incredible, you guys. I mean, that's a feat of what you all just did. Yeah, you changed your family tree because they watch their mom and dad become heroes. Thank you. And they'll never be the same because they, you know, more is caught than taught. They're going to do what you do, not what you say. And so they watched you change your whole family tree using these spiritual principles from the Bible you preach from every Sunday. Yes.

Starting point is 01:54:23 And congratulations. We're very proud of you guys. Thank you. Very, very, very well done. All right, bring the kiddos up and introduce them and give us their ages. All right, we have Callie. She's our oldest. She's 17.

Starting point is 01:54:36 Elena's 14. And then we have Raylene's 12. And then my youngest son, Lance, is 10. Lance, you're holding up all of them. the girls. And Callie, you're the one that brought Rachel home and started the whole thing, right? Hey, girl. Okay, there we go. There we go. I love it. Rachel says, Rachel says, Rachel says, I know. You're probably five months into that mac and cheese. You're like, Dad, comment. Why did I do this? Why did I do? Why did I tell Mom and Dad about Rachel? Oh my gosh.

Starting point is 01:55:05 Well, done you guys. Way to go, you guys. You're a model. You're absolutely beautiful. Congratulations. You transform your life. All right. Josh and Eric. and the team 93,000 paid off in 25 months making 73 to 120 count it down let's hear a debt-free scream all ready three two one we're dead that's how you do it ladies and gentlemen love it let's cut to the chase it's easy to get discouraged about crazy house prices and interest rates but when you have the right real estate agent to help you buy and sell the right way you'll have confidence to make smart decisions ramsie trusted agents aren't just experts who guide you through buying or selling.

Starting point is 01:56:27 They're people you can trust to have your back from the first call to closing day. Find a Ramsey trusted agent near you at Ramsey Solutions.com slash agent. That's Ramsey Solutions.com slash a... Our scripture of the day, Galatians 610, so then as we have opportunity, let us do good to everyone, and especially to those who are of the household of faith. Warren Buffett says opportunities come in frequently when it rains gold. Put out the bucket, not the thimble. Emily is in Akron, Ohio.

Starting point is 01:57:19 Hi, Emily. How are you? Hi, I'm doing all right. Cool. What's up? So about three years ago, my husband left his stable job to start his own vending machine business. And since then, he's racked up about a million dollars in debt. He's run out of money to run the business. Personally, I don't feel like he's worked very hard to make it work. He recently just went back to work to try and give us an income because mine's the only one.

Starting point is 01:57:44 I just started a job also. So, wait a minute, wait a minute. The vending machine business that he spent a million dollars on is not making money? Correct. Why? Correct. Well, I think he tried to buy too many too fast, and he followed the Robert Kiyosaki Way and kept telling me he got to get into debt to make money, which I strongly disagreed with. but he kind of just kept going anyway.

Starting point is 01:58:10 So I guess at this point, I just don't know if I should, we should be pursuing bankruptcy. That's what he wants to do. Personally, I feel like the Bible's very clear on paying back our debt. But at the same time, the business is probably only worth $450,000. So that would leave us with about $500,000 of debt. Who is the million dollars owed to? Some of its business.

Starting point is 01:58:34 A lot of it is personal credit cards, HELOCs. He took out a couple of mortgages on our house. We don't have any equity in our home anymore. A house? There's a rental house? We did have a rental house. We just sold one. We have another one, but it's not selling.

Starting point is 01:58:55 That one's only worth about $60,000. And how long has this been going on, Emily? Three years? A few years, yeah. Okay. And you're done. I hear it in your voice. You're pretty pissed.

Starting point is 01:59:06 I'm very done. Yeah. Yeah. And you've had to go back to work. Do you guys have kids? We have four. Mm-hmm. How old are they? 13, 12, 10, and 6. Man. All right. I'm sorry. So there's nothing left to sell against the million that's still outstanding? He could try and sell some he has some micro-markets and he has money machines, but what he would sell it? for would be a huge loss. I mean, selling the business as a whole, the most would be like $450,000 or $500,000 is what he's being told.

Starting point is 01:59:49 So then you'd have half a million still. And there's how much, is there still a million owed? Right now, altogether with all the debt, yeah, we owe just under a million dollars right now. He hasn't sold it yet. He has two people running it, but it's not making money. He doesn't have enough money to, like, sell inventory. Okay.

Starting point is 02:00:10 So if he sold it for. 450, who would that pay off? I guess it would depend on who we want to pay off. Okay, so the vending machines don't have a lien against them. The business doesn't have a lien against it. Well, he leases some of the micro markets, and he rents to own some of the vending machines. Some of the vending machines he does own outright, but most of it is in debt. Okay.

Starting point is 02:00:39 I'm trying to figure out what the $450,000 would be used to pay off. Would it go to HELOCs or credit cards? What would that clear? How much would that? Would that clear all of those rent-to-own machines and all that, or does that actually get to clean up some of your house debt? He wants to put any of it towards the business. I didn't ask what he wanted.

Starting point is 02:00:58 I mean, is the money going to be half to be used to clean up these machines in order for the thing to be marketable? Yes, yes. Yeah. So you're going to have to put it towards the machines. Yeah. So you've got $450,000 worth of debt on the machines. that you would just use that money to clear that debt.

Starting point is 02:01:17 So selling it doesn't really net you any cash to pay off like your credit cards or your house. It just clears some of the debt that's on the machines. Correct. And get you out of this business. There's more than $450,000 on the machines, right? Yes. Okay. And then you have your house and you have credit cards and you have a he lock, right?

Starting point is 02:01:38 And a $60,000 rental. Yes. Okay. It's not being rented. I didn't know it's vacant. We were trying to sell it, and it's just sitting there right now. Okay. So, wow, there's so much going on here.

Starting point is 02:01:55 And you guys have no money, Emily, right? None in retirement or... There's no cash. He drained our 401K to do it, and our personal credit credit. Did you know? There's no money. Did you know this was going on, or would he make decisions and tell you later? We would agree on things, and then we would go to.

Starting point is 02:02:14 do whatever he wanted. Eventually, I kind of released it over to him, and I found out because our credit card got declined, and then I checked our bank account. There's no money. So how much do you make it your day job? Right now, I'm at 25 an hour, working 30 hours. And what does he make at his day job? He just started last week, and it's 21 an hour base, and he's trying to sell insurance with all state. Okay. All right. Well, if you were to file Chapter 7 bankruptcy, you would have to re-sign on all the debt that is on your home, including any helocks or anything else.

Starting point is 02:02:55 That doesn't go away, or you lose the home, one of the two. Yeah, how much is all that, Emily, the helock on the home? It's like $450,000, and I think our home's probably worth a little under. that. So the bulk of that second part of the debt is the home. Wait, wait a minute. Let me back up. So if you sold your home and sold the business, you would clear up 900,000 of the million? Well, our house, no, because we wouldn't, we wouldn't, I'm sorry, so we owe about 450,000 on our house right now. I know. We bought it for one. Is that part of the million? Um, no. The He lock is, which is like another 200,000.

Starting point is 02:03:37 the personal like mortgage is probably 250 right now. Okay. So it would clean up 200,000 of the million. 450 would be cleaned up when he sells the business, so that's 650 is cleared, which would leave you about 350,000 in other debt if you sold your house and sold the business. Yeah, credit card and business debt.

Starting point is 02:04:00 And the business debt, when you say business debt, what is that? Like business loans, he's taken out. Okay. they're signed personally, so they're not business loans. They're just personal loans he used to buy vending machines with. Now, if you sold the business for $450, are there any machines that are not included in that package? No, he would sell them all of them.

Starting point is 02:04:23 That would be done. Okay. Okay. So what I'm trying to do is work through if we cleaned house, because in a Chapter 7, you're going to clean house anyway. And then if the other 300,000 or whatever gets wiped out, if he files bankruptcy. So usually when I'm getting into these things, bankruptcy doesn't do as much for you as you think it does. Because if you sold the business to sold the house, we've not got a lot

Starting point is 02:04:51 left to do. And that can be negotiated. That debt can be negotiated down for pennies on the dollar versus filing bankruptcy. So it's possible mathematically, legally, you could probably work your way through this. I don't know, but I think you could, okay, just based on what I've heard. I'm trying to get figured all out. There's a lot of moving parts. I got to tell you, I'm about having been through this, only I was 28 years old, and I was the stupid husband. Okay. I was him. I didn't lie, but I just did stupid stuff. I just went deeply in debt and lost everything on real estate. It wasn't vending machines, but same thing. And I'm more concerned about him being depressed or suicidal, and I'm more concerned about your marriage than I am about.

Starting point is 02:05:38 any of this money. And you're rightfully so very disgusted right now. But if I were going to coach you guys, I would coach him on throwing his shoulders back and building out chapter two of your old's life. And I would coach you guys on sitting down with your pastor, with a good marriage counselor, and try to work your way through this

Starting point is 02:06:00 where he repents of the stupidity. And he begins a process to rebuild trust with his wife and relationship with his wife, because you are very disgusted right. now. And you should be. Yeah. You should be. But money fights, money problems, take marriages. Number one reason for male suicide is financial issues. So there's some, there's big, big, in this day. So I want to take care of you to, 90% of this discussion, and 10% bankruptcy or not, who cares. I try to sell everything and work my way through it. Sorry, Emily.

Starting point is 02:06:28 That puts this hour of the Ramsey Show in the books, we'll be back with you before you know it. In the meantime, remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus.

The Ramsey Show - Your Goals Need Numbers, Not Wishes

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