You Don't Win With Money By Accident

A Medicare plan that worked last year might cost you more next year. Let chapter check your options for free, ask chapter.org/ramzie. Brought to you by the EveryDollar app, start budgeting for free today. Normal is broken, common sense is weird, so we're here to help you transform your life. From the Ramsey Network and the Fairwinds Credit Union Studio, this is the Ramsey show. George Campbell, number one bestselling author, Ramsey Personality, co-host, smart money happy hour. He's my co-host today, open phones at AAA, 825-5225. Helen is in Miami, hi Helen, how are you? Hi, I'm good, thank you so much Dave, having me on today. Sure, what's up? So I have a full-time job, I have a side hustle, and I have a third business, which is a kids' play center, and it's currently losing me about $13,000 a month. I know, it's really painful, and had you spoken to me like five years ago, I would be on baby step five or six or seven, but unfortunately this business has drained all of my 401k, it's drained all of my kids' college savings, and it's also forced me to sell a rental property that I owned. So the question I'm asking myself is, do I sell my home, take some of the funds and try and rehabilitate this business, do I ditch the business and possibly even downsize the home, or do I borrow money against the house, which has got about $350,000 of equity in it, and try and figure things out that way. How long have you been losing money on this? Yeah, I mean since I've had it up. Which was how long ago? One year ago. And so in one year, that's $150,000 in losses, if it's a $13,000 burn rate, right? So that was your whole 401k's, $150,000 grand, and a rental property too? No, so about six years ago, one of my little girls had to have a bone marrow transplant, and I had a full-time job, fully funded 529, fully funded 401k, my main home, and a rental property, and I was working the whole time that she was in hospital and then subsequently recovering. And at the end of that, I kind of reassess my life and said, okay, do I want to be in the corporate grind, or do I want to do something in service to other moms that enable them to spend quality time with their children? So I took her payout or redundancy payout from my previous employer. I paid my mortgage six months in advance, and I said I would live off the proceeds of my side hustle, and unfortunately, my Ami property market completely exploded after the pandemic, and it became much more difficult to find a rental location. I then had some issues with the. But I'm sorry, but you started the thing one year ago, and you haven't had time to lose all the money you're talking about, you lost? No, I lost the money during the setup process, and in that time, I returned to a corporate role. I know, but that was one year ago. So how much did you put into the business initially before you started losing money? About 120,000 went into the business before I started. So what makes you think going to answer your original question then? My friend, Dr. Henry Cloud is a book called Necessary Endings, and we have a necessary ending to a relationship, a job, a business, when we see no hope that it's going to get better. So why do I think, if you're going to sell me as your new investor, why would I invest, if I'm your investor, I'm not, but if I were that, if you're on Shark Tank, why would I want to put money in this? Why what makes you think it's going to turn around? I think I haven't had the time myself to invest in it, so I'm also thinking maybe it won't turn around. So it might be time for me. I think your idea might be bad. It's a franchise. It's well-founded. It's a noble cause. What you were trying to do was a nice thing, a good thing, but the business aspects of it apparently suck. Yeah, it's a franchise business. So what can you get out of this? If you close this thing down, what can you get out of it? I think my best chance is for a resale to somebody else who's got the time to devote to it, because my time has been sucked up by this full time. Yeah, are you tied in a lease agreement for the space? Well, but a new franchise E come in by her out of the franchise and by her out of the space and take over the lease. That's how that transaction would normally work. So that does get, the fact that it's a franchise makes it really devastating that you still lost this much money, because that means they suck. But on top of that, the good news is that they probably can resell the franchise rather than let their new location close down. So the franchise over is probably going to be a big help in getting you out of the lease and getting you out of the business. So I'm out of there, kid. I don't hear any reason to stay in this. I understand from a heart perspective how you got into it, but I'm not staying in it. Nothing in this conversation says, who? Who five years from now? That's right. Thank you. Yeah, that's a necessary ending. I mean, it's like, you know, if you're married to an alcoholic and he keeps saying he's going to get better, he's going to get better, but every night he comes home drunk. At some point you go, this is not going to get better and this marriage is done. And that's a necessary ending because there's no hope of change. There's no hope of a shift. And honestly, inside of a business, we have miniature, all of us have miniature P and Ls or projects that we have to either sunset them, meaning we closed them because what we thought was going to work didn't work. Welcome to business. And I closed one not long ago and inside of Ramsey. And it's, you know, but we didn't close Ramsey. It was just a portion, you know, a thing here that used to work and doesn't work and we're not doing it anymore. So because we couldn't see a way to make it work in the current environment. So that's what you're doing. You're analyzing, is there hope for the future? Give me a reason for hope. Give me a logical, rational business reason for hope. And $13,000 a month burn rate, that takes away my energy real fast. Yeah. And sinking more money into it as you've already found is not the answer. So I don't want you to sell your home. The last asset you have after already draining the 401K, the 529s, all to try to make this business work. And then it doesn't. Now you've got nothing. And now that's insult to injury. It's kind of like a gambler who went, hey, I'm going to drain the 401K, drain the savings, and it's going to be different this time. I can come back if I just had one more. That's the scary part to this to me. Harvard Investment Letter calls it a sunk cost analysis. Meaning what you put into it doesn't matter. All that matters is what the future looks like. So if you bought a stock for $70 and it goes to $10, you know, do you sell it? Oh, I'm going to wait for it to come back up. Well, would you buy more of it? No. Well, that's the same reason you sell it today is because you wouldn't buy more of it because you think it sucks. But the fact that you paid $70 for it makes you refuse to turn loose of it at different $10. And there's too much pain associated with it. You know, what you put into it, your sunk cost is skewing your judgment, not her judgment. But I mean, the case of any of us when we're looking at this, I can't sell it for that. You don't know what I paid for it. What you paid for it's irrelevant. All this, all this relevant is what you can get for it. It's just the emotional pain of having done something stupid. That's what kills all of us. It makes us hold on to something too long. When you wouldn't buy it again for what you paid for it, it's time to sell it. And I can promise you, Helen would not set up a new playground today if she wasn't in the business. Hey, Helen, would you put in $152,000 and open up a playground today based on what you know today? No would be her answer. And so, yes, sell it. This episode is brought to you by BetterHelp. Every year, you tell yourself you're going to handle the holidays differently this time. You're going to stay calm or you're going to feel more peace, but then the same old pattern emerges, the same family tension, the inability to keep healthy boundaries and you find yourself cranky, tired and snapping at people that you love. This year can be different. You still have time to get ahead of all of the chaos, understand what's behind your reactions and come up with a new plan. Therapy can help you build a healthier plan before you actually need it. When you're ready to have that conversation, talk to my friends at BetterHelp. BetterHelp is an online therapy platform with more than 30,000 licensed therapists. You can message your therapist and schedule sessions right in the app. And if your first therapist isn't the right fit, you can switch at any time for no extra cost. You know what's coming coming. This year, you have time to keep calm ahead of all of the holiday chaos by preparing differently. Go to betterhelp.com/ramsy for 10% off your first month. That's better help. H-E-L-P.com/ramsy or click the link in the description. Jessica's in Tampa. Hi, Jessica. How are you? Let me try one more time. I must not push it hard. There's a button. Hi, Jessica. What's up? I'm good. How are you? Better than I deserve. How can we help? So my family recently moved from Maryland to Florida within the last month and we are staying with a very generous church member, but there is a deadline to how long we can stay with them and our home in Maryland has not sold. It's been on the market a hundred days and we've done everything we can think of and afford to do to make sure that it sells and it just has it. In order to get a run tool down here to move out, we need the house to sell. I was just looking for any advice on what to do. Either get it to sell or what to do otherwise. Tell me about your real estate agent. What are they telling you? He is a good friend of ours. He's a real estate attorney. He owns a brokerage too. He's helping us out. Not much. Well, he says our house is price well for the market. It's been showing really well because we've had showing very consistently. It's just not getting any bites on it. We dropped the price a couple times. We're looking into a pretty little assurance. Lots of different things. Why does he say it hasn't sold? He says the market is tough because the interest rates keep going up. Well, they're showing so people are interested. What is stopping them? Is it a dated kitchen? Is it the condition? What's the thing that's stopping people from making an offer? I really don't know. We updated the kitchen, new counters, new appliances, new roofs, new flooring in most of the house all within the last four years. The only thing that could really use an update is the HFAC. We're not going to dump money into an HFAC for a house that we're not living in. He's gotten zero feedback from the other agents, the buying agents, telling him why the clients aren't interested. They said that the house is showing really well. We've had people say, "Oh, the basement's too dark. There's no walk out. We really wanted two bedrooms on the top floor. It's a townhouse." Zero offers? Zero offers. Well, it wasn't an official offer, but we had somebody consider offering us about 20 grand lower than what we listed it for. What is it listed for? Three, 29, 8. Have you seen a comparative market analysis? Did the agent do for you before you listed it? What the other homes in the area have sold for? Yep. They're all about the same. We have a pretty good square footage compared to other homes in the area that are clumps. We're listed pretty well from what we've seen. What city is this in? It's in Bel Air, Maryland. Okay. We're just going to pull up the median days on market and median listing price and get a look at that. Have you looked at that with your agent? I have. What's the days on market currently for that neighborhood? About somewhere between 70 and 90. Okay. So you're not super far off at 100? No. Clearly, it's not the most desirable one in that neighborhood, but homes have moved in that neighborhood in the past couple of months. A couple. Yeah, but not a lot. We just saw one. It went off the market and then it came right back on the market to something so through there. Yeah. Okay. I don't know the answer to your question. I don't know what's wrong here. The only thing I would tell you is that I need better feedback from my agent. I'm not sure this agent is doing you any favors. You may want to switch agents. Sometimes that will wake up the market and get somebody in the area. Why don't you interview a couple of Ramsey trusted agents off of our website in your area and see what they tell you? I mean, I grew up in the real estate business. I got my license in 1978 when I turned 18. Okay. So I've been in the business my whole life one way or another. And one of the things I detest is when an agent says the reason the house hasn't sold is the market's tough and yet the average day is on the market or 70. So that's absolute bokeh or app in other words. Okay. The market's tough. The interest rates are high. Yeah, but other people are selling houses. So it's kind of weird. You know, something's wrong. I really don't need the Trump report. I need my household. So yeah, I'm going to shop some agents and talk to them and see if you can get somebody look at it and you want an agent who's willing to gently hurt your feelings that your price is cray cray or your living room carpet looks like it makes me itch or something. They need to tell you the truth about your baby being ugly, you know? And it's hard, but they need to be able to do that in a more in a non-dave way, more like a Georgia or Rachel and be gentle with you and kind, but give you, you still give you the message, right? And, but something's going on when you walk up to that house and you're walking up the sidewalk, the bushes are overgrown. There's cobwebs everywhere. It's dirty. Your first impression on the job interview is the clothing you wear and whether you took a bath and combed your hair. And that's called curb appeal in the real estate business. So what are they seeing in the pictures? What are they seeing when they walk up? What are they seeing when they're standing at the front door while the agents opening the MLS lock to get it open? They're spending some time there. Are they turned off before they get in the door? Because I mean, if you've ever hired people, sometimes you, they're before they ever open their mouth, you know that you weren't going to hire them because their curb appeal was really bad. And so they got confused that they were in a job interview and stuff. And so, you know, that stuff happens and that happens to houses too. And even re-listing it can give it some new life. Sometimes a new agent and a new MLS number that's fresh pops it back into the other agent's face again. One more open house with some fresh cookies. It might be all it takes. I mean, I bake some cookies in there when you go to the house. That gets Dave in the door at least. Well, that's, you know, the smell of it alone will get me in the door. But yeah, as if I need a home in Maryland. I'm sorry that you're having this hard time. I don't buy the market is not super hot, the market is not super cold. So I don't buy that this is the market. I can't tell from your story because everything you've given me is the things that we would, Georgian, I would have told you to do. You've already started looking at those and doing them. It's price, it's appeal. It's, um, our people looking for $330,000 town homes in that area. That's the question. So you might need to cut the price down if you're getting up and showings but no offers. You know, and you've obviously left. And so you're going to turn yourself into a motivated seller here, pretty quick, which means price cuts that are, that are painful. And I sure hope you can avoid that. Yeah, I would talk to some other agents and, um, everybody listen, I know the guy from church is not how you pick your real estate agent. This is the largest asset that most people own is their home. My wife plays bridge with her is not how you pick your real estate agent. And it's how most people do. My nephew just got his license and we wanted to give him a shot. This is not how you list your house with your most powerful, with your largest asset. And he's doing us a favor. Um, that phrase just runs chills down my back, uh, for, for her sake. So, um, you know, if he, if he's working for nothing but he can't sell the house. He's not doing you a favor. So I would rather pay somebody that sells 200 houses a year and they sell it in 25 days and they get a full dead gum commission. And there were no favors done except your house has gone. Then I would, um, you know, say, you saved me a half a percent on the commissioners on bull crap. So, um, you know, it's, it's, the carrying cost alone is going to be eaten, eat up any savings that the favor would do. And I got to tell you, in all my years, I don't remember ever hiring and real estate agent that was an attorney. I've never seen anything, or even sing it. That's very strange that they have both double dipping. They're not good at one or the other. Maybe he's a great attorney that because the house isn't selling, but I'm closing. He would crush it. What kind of successful attorney sells houses? I mean, what kind of successful real estate agent wants to be a lawyer? I mean, it's like, you don't find the combo. I don't know, man. That's just weird. I don't know. I truly don't know, huh? I'm not, I'm not making fun of you. I'm just the situation strange and I wish I could help you sell it. If I could wave my little magic wand right now, we would wave it and lose it. Someone out there listening is like, man, I've been looking for a town home in Bel Air. There it is. Call us. We'll get you guys connected. We'll hook you right up with Jessica. We'll do her favor. Dave gets a finders fee, though. (upbeat music) - Let me tell you what I get asked all the time. When should I get term life insurance? How much do I need? Is it affordable? Those are the right questions to be asking. So let's take a quick review. The fact is, term life isn't a baby step. So if anyone is dependent on your income, you need to have 10 to 12 times your income in life insurance. Now, and most people are surprised by how affordable term life really is. Even if you're not in perfect health, look, I understand the hesitation since most insurance companies make it more of a hassle than it needs to be. Not as Xander insurance. They're not an insurance company. They're a broker that works for you. That means they'll shop and compare the top term life companies to find the most competitive options on the coverage for your family. For almost 30 years, I've recommended Xander for straight answers, competitive rates, and coverage that actually protects your family. Call 800-356-4282 or go to Xander.com for a quick and easy quote. That's Xander.com. (upbeat music) So my team comes in at the break and taught me something about my business that I didn't know. We have a wonderful tool on our website. RamseySolutions.com/market. And you can type in the name of your city and it will give you all the particulars for your city. So we just typed in Bel Air, Maryland, regarding our last caller. The median house price in Bel Air is 430,000. Hersworth's 320, by the way. Total homes for sale right now, 169. median days on the market, 29. So if you're over 100, you have a problem of some kind with the property, the price, or the agent, or all three. That's what that tells you. 33% of the homes have listings with price cuts. One-third of them are cutting prices. Which does indicate that market may be lagging a little bit. It might be a little slow. Because that's a lot of people cutting their prices. But 29 days average on the market, that tells me that this house should get rid of this thing. Unless there's just some serious ugly thing that she doesn't know about or she hadn't faced up to or whatever, those kinds of things. So you can go pull that up on your area. So if you're looking, or if you're looking in an area, you go, okay, hey, this is this is a hot market, this slow market, 29 days on the market, it's pretty good market right now. That's pretty hot, that's pretty hot. But 33% with price cuts is not pretty hopping. So there's a couple of conflicting pieces of data there that, and if you're trying to sell up $800,000 house in a $430,000 median neighborhood, that's gonna be a problem. - And as you say location, location, location. If it's not in a great neighborhood, you're gonna have a harder time. - It's always that. Jamie's in Philadelphia. Hi, Jamie, how are you? - Hi, I'm doing good. How are you? - Better than I deserve. How can we help? I'm calling in today because I'm on baby step two. And I'm having trouble putting a significant amount of money towards my debt. And a big part of it is because my rent is half of my take home income. - Okay. What's the numbers on that? - So I bring home about $5,000 a month. And that, well, that's after health insurance costs and 401(k) contributions and taxes. And my rent is $2,300 a month. - How much are you contributing to the 401(k)? - 4%. - 4%. - And what's your gross income? Is it about 80 grand? - Yeah, it's a little over 80, it's like 85. - Okay, so if we take that 4% and stop investing, you'll have $3,400 back per year across your paychecks. That'll help a little bit. - 300, you need to stop your 401(k) but you can't afford to live in that house. You don't make enough. - I know, but that's, so here's my thing. I know you say. - No, I don't say math says. The guy that didn't fit in math, he said it. - Right, getting to the smallest possible place. I have two kids and where I'm living right now is like, it's a pretty, it's like 1,000 square foot to bedroom, one bathroom apartment. And so if I went any smaller, it would be one bedroom or a studio apartment. And where I live, I live outside of Philadelphia. I don't live in Philadelphia, but where I live is pretty, I mean, it's pretty cheap. - Are you living too? - Yeah, where I live, that's pretty cheap. - You're saying your single mom with two kids, right? - Yeah. - Yeah, that's a scary thing, and then you can't break even with your budget hardly. So what do you do for a living? - I'm a nurse. - Good, good, okay. Well, you can make 80 to $120,000 as a nurse, almost anywhere in America, that's cheaper than where you're living. And so, you do not want to be, the math that you gave me doesn't cause you to be wealthy, like I want you to be for the sake of you and those two kids. You've fought too hard just to keep your head above water for this rent to be eating your lunch. And so, something has to change. And that's why you called, because you said this is not deniable, this math doesn't work. And you don't need me to tell you that, you already knew that. So, then the answer is, can we double our income? Probably not as a nurse. No, not never see your children again, you know? You know, you could work like 24 hours a day, seven days a week in double your income, but 'cause nurses can always get extra work, all anything you want, always something to do. But, let's develop a sustainable life where we see our children, we get a reasonable amount of rest, and we can get out of debt and move towards a positive, prosperous future. And that rent number doesn't fit in the equation that we just talked about that we want for you and you want for you, right? Yeah. So, what do we do to fix it? I don't know. As much as I would love to move, that, you know, I can't, because their dad, you know, their dad had them every other weekend, and I know that it would become an issue if I did try to move. How much is child support? $50 a month. $50? $50. You don't get a lot of save for $50. Yes. I mean, you've got to do something different for you and the sake of the children, and $50 doesn't value a vote. So, that's kind of my next question is, I have some money to put away, and I'm trying to decide that do I use it for lawyers to try to take some power backs so that I can move to a more reasonable area, or do I just use it towards my dad? Yeah, and how much money do you have put back? I have about $40,000. Well, you know, I don't know what your relationship is. With your ex, but if it's me, I'm gonna sit down and say, I can't live here. I don't make enough money to live here. And so, I'm moving. Now, do you want to start paying me $2,000 a month instead of $50? And I won't move, or do you want me to spend the $40,000 I have saved on a lawyer to fight you because I'm moving. And you're not gonna stop me. You know, is the message. You can be gentle and kind. You don't have to be rude just to stir up a fight. We've already had those, but I mean, we can't just say I'm trapped, and so I'm gonna go down, we're gonna rearrange the chairs on the Titanic, right? We can't do that. So, the math is telling you something, some calls of action has to occur, and paying off your debt doesn't change the fact that your rent's too high as a percentage of your income. If you had zero debt, you'd still be pinched. - Yeah. - So, you've got to be in a different housing situation, and I don't know what that is. I'm not saying that Philadelphia is not that expensive, but I think Philadelphia is that expensive. I don't think you're being melodramatic. I think you're just dealing with facts, but, or even a suburb of Philadelphia, which is what you were saying, you were in. So, but I just, I think the math is screaming at you, and what I want to give you is the power to say, like you said, I'm gonna take some power back, but I'm just gonna have a conversation with him and go, look, Mr. $50, I can't do this. These kids cannot have a future this way. And so, as a result, here's the thing, I'm not. going to do this. And so I'm going to make plans to move and you either need to make plans to be good with that or get ready to fight because I'm going to really spend all of your $50 making sure that you're embarrassed before the judge that you give $50 for two kids. I mean this guy ought to have his butt kicked up around his neck and wear it like a collar for sending $50. Does he just not make anything? No, he makes, he probably makes like $120, $130,000 a year. So what is the $50 and is that a middle finger? Well, I guess. Well, his argument is if I don't have enough money, well, then he can just raise the kids with his mom. No, it's not his argument. His argument doesn't, he doesn't get to be the judge or write the laws. He's just Mr. $50. Now I'm really pissed at this guy. So what a lame-o father. What a horrible human being. You don't take care of your own children. Instead, you're using the child support to manipulate to try to get custody of them. Oh, take this guy down for sure, invest the $50, $40 grand and take him down. Just for the hobby of it. If you're being crushed under the way to phone calls from debt collectors at all hours or getting nasty letters threatening a lawsuit, it can feel like there's no way out. But it's not too late. There is real help out there with Guardian litigation group. Guardian is an actual law firm, not one of those debt relief programs that promises sunshine and unicorns. And that matters because if a creditor comes after you, you need someone who can do more than negotiate over the phone. Guardian assigns you a real attorney from day one. So if a creditor sues, you've already got someone standing beside you and Guardian doesn't charge you any extra to represent you in court. Guardian's attorneys have helped over 55,000 people settle more than $600 million in debt. And that is why I trust them and you can too. So look, there is a way out. But the longer the straggs on, the fewer options you have. You have to deal with it now while you still can. So go to guardianlit.com/ramsie. That's guardianlit.com/ramsie or click the link in the description. That's turning advertising results may vary in no specific outcomes guaranteed. Jennifer is in Columbus, Ohio. Hi, Jennifer. How are you? Hi, I'm doing great. How are you? What's up? So I am currently in baby step two/three. What I currently only owe other than my mortgage is a divorce settlement amount of $70,000 that's going to be due in four years. So my question is I'm trying to figure out as I'm saving monthly for this. What is my best way to kind of invest this or what would I put it into to get the most return rate safely so that I don't lose the money when it's due? Wow. So this was for you buying out 401k or buying out house equity or something like that. This was house equity and a business that I own. Okay. All right. But the terms, the mediation or the divorce attorney or whatever you guys came up with a four-year number. It was a five year so so far. What I have to do, I have to pay $1,000 a month to the ex, but then also at the end of this five years, pay $70,000 lump sum. But does $1,000 keep going after that? No. Okay. Everything ends at the end of the five years. How much can you put away on top of your $1,000 that you're already sending? How much can you set aside for the $70,000 lump sum? So I kind of did the numbers and figured out how much I would need each month to get $1,000,000. I want to know how fast you can pile up $70,000. Could you do it by Christmas? Do you have any money now? No. Well, so I've got $15,000 that I've put away into a CD for this. And then I've been putting $1,200 a month into a savings account. Okay. And what's your hand? I don't have like, I bring home about $9,000 a month. Okay. So from a financial calculation standpoint, what your husband has is he has a $1,000 a month stream for the next 48 months. That's $48,000. And then a $70,000 lump sum at the end of 48 months. But what we call the net present value or the present value of that $70,000 isn't $70,000. Because if you had $40,000, it would be worth $70,000 for years from now. You follow me? Right. And so if I were advising your husband and you offered him $40,000 or $50,000 for this whole thing cash today, I would tell him to take it. Because it'd be a good deal for him. It'd be a good deal for him. But my point is that's the, that's the mentality I'm going to work towards is I'm not going to wait for years. I want you to save it up really, really fast and get a discount. If you can talk about three or four grand a month, be free of him sooner for less money. Okay. Does that make sense? It does. So then you wouldn't recommend that I would just do it. I would just do a high-year savings account and how fast can I get 40 or 50 grand together and have your attorney call his attorney or you just call him and tell him to go to his financial advisor and then calculate what they will take for this $70,000 in today's dollars. Remember present value, remember that phrase and remember today's dollars, which are the same thing. Okay. So just to give you an example, if you had a seven-year window, that one I've got memorized. Okay. And the discount rate was 10% meaning I can invest the money and make 10% on my money. Then and I need 70,000, seven years from today. Then today's valuation of that is 35,000. Because 30,000 in seven years would become 70,000. If it were invested, that's what the concept is. It's called a present value versus future value. So if someone offers you 40,000 a day or 400,000, 18 million years from now, take the 40,000 a day because it's going to be worth more than 40,000, 400,000, 18 million years from today, right? So that's the point. The money grows over time and so that changes the actual present value of it. So I think a present value at a good discount rate is probably 30 or 40,000 bucks. Maybe maybe 45 today to get you out of this whole thing, but you don't have 45 today. But if you could get 45 together by next spring and make that offer, I bet you you can be done with this guy. And then you're clear. I'd rather you not have to plan your life around something four years from the day I'd rather you be free and go on. Right. And I'm not sure that his financial advisor or his attorney or he are sophisticated enough to grasp that concept that I discovered with you, but that's the real world. That's how it really works. And so that's like if you ever hear somebody in the lotto, the lottery is a million dollars, but not lump sum. It's a million dollars if you take it out over 15 years or something, right? That's the same concept. The present value of that series of payments is not, it's a total of a million dollars, but the current value is more like 600 or 500 or something. And that's why people take that. So that's what I would rather you do. So no, I would not use an investment account. I would just use a high yield savings because I'm trying to get rid of the X. That's why we call them X's. They need to leave. And get be cut bait. Be done. What do you think? And over that short of a time horizon, I think it's going to be too stressful to watch that number go up and down with the market. And then when you need it, you need to be up. So that for that reason alone, it's not worth it. When you know you need a certain amount within that short of a time frame, it's not worth it. Just high yield savings. Lutians and Tulsa Oklahoma. Hi, Lutian. What's up? Hi, Dave. How are you today? How can I help? Love to hear it. Well, Dave, I am 21 years old. I'm about to graduate college completely debt-free. So thank you for that. And I'm starting my career as a financial advisor. Now regarding my career, I want to go about it with the most amount of integrity. And like you say, with the heart of the teacher, however, my firm does talk a lot about annuities and variable life as tax-advantaged plans for retirement. And I just want to get your thoughts on both of those questions. Sounds like you went to work for an insurance company. Something like that, yes, sir. Not something like that. You did. You didn't go into the financial advising world. You're now an insurance agent. Right. Yes. You're not going to make it there. Unless you sell the products that they sell, you're not going to get to stay there. They won't let you stay. Gotcha. Okay. And you're not going to like those products if you've read Dave Ramsey and George Campbell. No, sir. I do not. And that's my thing is they talk a lot about those. And I'm like turn and invest the difference. And I've already started running into some headbutting. And I just wanted to get your thoughts on and you haven't even graduated yet. Yeah, I mean, you know, you talk about headbutting, you're going to get fired to what's going to happen. Yeah. I'd be looking at other firms. See if you can land a job. So jump online and pull up the Smart Vester pros in your area and call a couple of them and ask them who's hiring in that world. Because those are actual financial advisors, they're not insurance agents. Because people that sell cash value based products, IULs, whole life, indexed universal life, whatever it is, all the things, you know, whatever it is you're getting into. Those are insurance agents and they call themselves financial advisors, but they're not. Right. Yes. And that's what I've been running into. They got me in my Series 7 and 66. But the more that I've gone through the training aspect of things, they're not selling anything that requires that. Exactly. Exactly. There's no securities involved in anything you're selling. Everything you're selling is an insurance product. Right. I mean, we do offer securities and everything and that's where I've been trying to get people targeted into. But they thankfully don't have any sales coders. But like you said, I'm afraid that my job may be on the line eventually. You might be on the bottom of the leaderboard when everyone else is hawking those insurance products and you're not. Yeah. You get paid on the premiums in that world and the premiums are much higher on the stuff that hurts people. So I'm sorry. I wish I could give you good news, Lucien. But what do you think? Well, you can be a good guy out there in that financial advising space. So I would just look for another firm as soon as possible. I don't know if he's on the hook for anything, having them, they trained him. Does he have to stay there a certain amount of time? I would look at whatever contract you signed with them if you've already signed up to work with them. Yeah. Because if they paid for the training, they're probably going, hey, more than that, they pay for the licensing. And so they're going, you have to, you can't just leave now. Well, you have to pay them back for that probably. I don't know. I don't know what they signed up for. That's a downside. But I wouldn't say, you don't have to, it's weird that they forced to include 63 and 7 because he's not going to use it. They probably have to, but they push these other products instead. Yeah. Wow. Oh, man. Gross. [MUSIC] When was the last time you felt confident walking into an auto repair shop? I mean, in the first place, you're stressed because your car is acting jankety, and then you hand over your keys and hope you can trust the person who's fixing it. You deserve to feel confident that your car is going to get fixed right and at a fair price. That's why I'm a big fan of Christian brothers automotive. You never have to wonder if the repairs are legit. With their digital vehicle inspection, you see exactly what their technicians see. So you get the honest info you need to make smart decisions. And every repair they make is backed by their nice difference warranty. That's three years or 36,000 miles, whichever benefits you most. I take my card to Christian brothers because I don't feel stressed. I feel taken care of. And that gives me a lot of confidence when I get back on the road. So schedule your service today and get 10% off your visit at cbac.com/ramz. Or click the link in the description that cbac.com/ramz. 10% off up to a $250 value. See store for details. Welcome back to the Ramsey show in the fair winds credit union studio. George camel is my co-host today. Sarah is in Denver. Hi, Sarah. How are you? Hi, I'm good. Thank you guys so much for taking my call. Sure. What's up? So to process my question, I'm going to let you know that I got really lucky with a lottery ticket. And I got almost enough to pay off all my debt. I'm on step two soon to be moving on to step three. And my question is, how do I build intensity and good spending and saving habits when I never hit rock bottom? And I don't have the lived experience of fighting to pay off my debt. I don't know if you have to recover from a cocaine addiction to know to avoid cocaine. I guess that's fair. I do have a little bit of an impulsivity problem. Once I paid off my credit cards, I closed all of them, cut them up. Like you recommend, and that's definitely helped. But in the moment, I shall go with small impulse purchases like coffee in the morning or going out to lunch. So how would you avoid those? If I was your coach today and I said, hey, you're going to not go out to eat and you're not going to go get coffee. What would you do instead? You still got to eat. You still need caffeine. Yeah, I'm working on. It's a trick question. You make coffee at home and you bring lunch to work. That way you have something to eat, right? So that's how I would do it. You sort of force the discipline until it becomes a habit and that habit becomes so normal and ingrained that you go, I want to eat out. I know how to cook. I can make better coffee at home than I can get it from the coffee shop. So that'll take a minute. That's not going to be an overnight process. But the simplest way is not stopping the drive-through. If you're trying to avoid going to McDonald's. Yeah, all you're saying, Sarah, is that you're human and we all have that. We all want something and we all have that little four-year-old kid that lives inside of us that's throwing a fit on the cereal aisle. Yelling, I want fruit loops, right? We all have that kid. He lives inside of all of us. And the smaller that kid gets, the more adult-like we all become. Me included and I'm 66 and still working on it. And you're not that old. How old are you? I'm 22. Yeah, so I mean, I got you three acts here. But yeah, I still have to force myself to walk past the chocolate covered donut. It's a problem, you know? And I know they're not good for me, but I don't care. I like them. And that little child, that little four-year-old child wakes up and my mouth is watering right now talking about it. Isn't that ridiculous? You know what I mean? And so that's impulse control is what you're talking about. And I had a guy, a famous psychologist tell me one time, one definition of maturity. And he was talking about me, Sarah, who's making fun of me, he's a friend of mine. He said one definition of maturity is the ability to delay pleasure for a greater good. Which is impulse control, right? Yeah. And it's like growing up. A few years ago, you know, those old people call millennials, they called it adulting. You remember when they said that? Yeah. Yeah. And it's just hard, though. I'm with you. I get it. But here's the thing. That's why we use sayings around here, like live like no one else. So that later you can live and give like no one else. I'm going to avoid the chocolate donuts so I can go out and have a mobile, a Michelin two-star meal experience. Find dinings become one of my favorite sports. But yeah, right? And so I want to, but I'm going to, I'm going to trade off there and have the right, make a right, make a solid trade, an intentional trade, and that's impulse control. But it's hard for all of us. You're not, you're not a bad person or something. But the, but your point is that I think your point was that until I get this under control, I feel out of control. Yeah. Yeah. Pretty much. So once you free up these debt payments, how much was that every month that was going out to Lenders? Um, it was almost eight, nine hundred dollars a month. Amazing. What is going to happen with that nine hundred dollars when it hits your account now and it doesn't have to go right back out to Lenders? Um, well right now it's paying off the last, the last little bit. Yeah, I'm not quite done. But once you're there, I'm saying let's, let's fast forward because for most people who disappear, right? You're saying, left to my own devices, I just go spend nine hundred bucks accidentally. Yeah. How do I avoid that? Yeah, that would definitely happen. So one thing I've done because I'm like you is I automate the things that are good for me and I make the things that are difficult, that are bad for me way more difficult. So automating is making it easier, right? It's going to auto transfer to savings every month. When the paycheck hits, it automatically goes to savings to build my emergency fund. For example, that way you never see the money. That's why I love a 401k. That money's gone before it hits my bank account. I don't have to think about investing. It was done for me because George four years ago decided he's going to do the good thing. Eat the vegetables. Yeah. So first, let me give you permission to be human and impulse controls. It is all of us. Second, let me give you permission to overcome it by adulting and saying I want bigger things for me than a freaking sandwich or a cup of coffee. My life is bigger than that and I, the 32 year old version of Sarah is going to talk back to the 22 year old version and say thank you for growing up at such a young age because you've made us very wealthy. And now we can do whatever we want to do with our lives. We lived like no one else so that later we can live and give like no one else. And by the way, later is not for you 66 years old. Later is 32 years old. In 10 years, your world is going to be completely different because of what you're doing right now and the stuff you've learned and the impulse control that you're struggling with. Thank God. Most people don't even know it's there, they don't know it's a problem. You at least recognize it. Call it out. Yeah. Early on, too. Yeah, I'm proud of you. I think you're gonna go do big things folks If you're sick and tired of working so hard, but having nothing to show for it, well that's normal, normal's broke. You don't want to be normal, normal sucks. Normal is out of control, no money, right? And one way you can do impulse control is making every dollar behave with your every dollar budget. You can find extra money every month, and we build you a personalized plan that walks right along the Ramsey principles where you beat debt and build wealth and in just 15 minutes you're gonna find thousands of dollars in hidden margin you're gonna feel like you got a raise. You do not want to be normal, think about what normal is. I don't want to be normal, no. I want to be, you know, be not conformed to this world but be transformed by the renewing of your mind. I don't want to be normal. I want to be defiant, not compliant, right? What are we gonna, I don't want to be like those people. No, I can do that, I have that ability, but why? Why? No. No, start every dollar, you can start it for free in the App Store or Google Play, changes everything when you're intentional George. Yeah, conforming to this world means, well everyone has a car payment, might as well get a nice one. Well, no one can afford college, so might as well take out unlimited student loans 'cause I'm investing in my education. That's the kind of stuff that gets people into trouble later in life and they look up and go, well, I make good money, I got nothing though. It's all gone every month. Normalist, thank God it's friday, oh God, it's Monday. It's a sad way to live at some EOR energy right there. EOR, that's not what we need. It's like an oxymoron, EOR energy. Those things don't go together, like airline service. Delta is Greek for you ain't gonna get there. Yeah. (laughing) (upbeat music) (upbeat music) If you're waiting for rates to drop before you buy a home, here's what nobody tells you. When rates fall, every buyer who's been sitting on the sidelines makes their move at the same time you do. That means more competition, higher prices, bidding wars, all that. That's why I tell people to talk to Churchill mortgage before they do anything else. Churchill gives you a strategy so you're not at the mercy of the market. They can show you what you can afford, not just what the bank will approve and with their certified home buyer program, your financing is completely secured before you shop, which means when rates drop and everyone rushes in, you're already ahead of the crowd. You're not scrambling for pre-approval while the house goes to someone else. My husband and I bought both of our homes with Churchill and having a real strategy, not just a rate we were waiting for made us ready when it really mattered. So start your search with Churchill. Click the link in the description or go to ChurchillMorgge.com/RamseyOffer for an exclusive Ramsey audience offer. ChurchillMorgge.com/RamseyOffer. (upbeat music) - Speaking of live like no one else, so that later you can live like no one else. You know, we teach you. If you're in baby steps one through three, you're building your emergency fund and becoming debt-free everything but the house, that you don't need to see the inside of a restaurant unless you're working there and you don't need to go on vacations either. You need to get your butt out of debt. But once you get to baby steps four, five, and six, then you start being intentional rather than intense and that's when you buy a couch, upgrade your car, go on vacation, those kinds of things. Of course, with cash in every situation. So if you're in four, five, or six, or seven, we wanna invite you to celebrate that, live like no one else by cruising with us. We're doing a Ramsey cruise. The live like no one else cruise. Second time we've ever done it. The first one sold out instantaneously. This one's still got a couple of cabins left. You can still get in. This is your week to get away. I'm gonna be teaching. George is gonna be teaching Rachel Deloney. Jade, all of us will be there. Natalie Grant is our musical guest. We've got pastors on board doing church every morning. We're gonna have an absolute Ramsey blast. The world's largest debt-free scream. And I'm gonna be talking a lot about baby step seven type stuff. Legacy, estate planning. We're gonna get into all of that. We're gonna do some of the nerd stuff we did in the investing essential stuff and go back over some of that stuff. We got a lot of very good content planned. We're the entertainments. All the Ramsey personalities are on there. My wife Sharon's with us the whole week. We're gonna be doing a lot of very cool side events of all kinds, including y'all are gonna do a smart money happy hour. - That's right. - Taping I think on there. - Live on stage. - And Rachel and Deloney are doing a marriage and money thing on the cruise. That's gonna be fun. Lots of stuff. So come with us. We would love to have you. It is March 14th through the 21st this coming spring. Western Caribbean and this is not on a cheap cruise. This is a nice one. This is Holland America, not Walmart on the seas. We, Dave don't do Walmart on the seas, okay? Dave wants to go nice. So we're going Grand Cayman, Half Moon Cage, Jamaica, Cosermale, that end of the world. Western Caribbean. So make sure you, if you're baby step forward beyond, come celebrate with us guys. Let's do life, man. This is what we put this, while we did all this stuff, right? To be able to win. Michelle's in Denver. Hi, Michelle. How are you? - I'm good. How are you? What's up? - So I had a question about pre-NUPS and the state planning. 13 years ago, I was a single mom. With two kids at 41 years old and I had about 500,000 dollars. I met my husband, who was 26 years old, no kids. And he probably had like maybe a $1,000 net worth. We wanted a kid, so given my advanced maternal age, we got married within a year and he signed a pre-NUPS. We're 13 years later. My two kids from my previous marriage are adults. My husband and I have three kids together who are in elementary right now. And my investments now are about 1.7 million. So I'm looking at a state planning and I'm thinking, you know, it's been 13 years. I know who he is now. I didn't, you know, I had, I wanted to be cautious when we first got married. So I'm wondering, do I just, I'm really considering doing away with the pre-NUPS, getting a trust maybe. Do you have any thoughts around all this? And what during this, you've been married how long again? 13? - 13 years now. - And what is he added to the equation during the 13? You said my investments are 1.7. Does he have, we should have substantial investments in 13 years. In addition to the money you got. - My investments have grown. - Yeah, I got your part. I'm asking about the couple that started 13 years ago. Have they built wealth? - He has, we have kept, I know you're not saying of this, but we've kept our finances separate. We've started that at the beginning. And so he has probably like, he has a 401K, right? That he's been contributing to, so have I. And my investments have grown. And so. - So what's the size of this 401K? - I would be guessing. I think last time we talked, it was probably around 60, maybe like 65K is maybe a ballpark. - Oh, okay. I'm a little bit stomped, I don't know what to tell you, okay? There's the principles that are running through my mind. You've not handled money together. And yet we're doing away with the very document that keeps it separate. And so I know him, but no, you've not handled money together. So you do know him, I mean, I'm not saying he's a bad guy, he's not like a shyster, he's not some kind of gold digger or something like that, that's not, we know that part, but you guys have not made hard money decisions together where there was conflict over who wanted to do what? You just did what you want to do, he did what he wanted to do. And now we're about to turn that whole thing loose on him. That makes me a little nervous. - Okay. - I might say, what if we combined our finances and if it worked real good for two years, then take off the prenup or something like that? - No. - Yeah, a lot of people kind of have its sunset over time to where more and more of the portion becomes ours. - Yeah, but it doesn't, I wouldn't do that if you keep it separate. - Really? - Okay. - Because you don't have the relational tools, you don't know how to fight fair over money 'cause you've never done it. - That's very true, yes. - And as soon as you take this off and then there's a money fight, you're gonna get real freaking nervous. - That was my thinking, play it out. Let's say you guys undo the prenup and then you split. Would you be furious? - Sure. - Because you feel like you've built all this wealth and he hasn't done a good job. - Yeah. - Not even if you did a full split, but if you just had a good knockdown drag out, like a big marriage blow up, I mean, which actually, everybody that's been married has had. I had one lady tell me, we've never had a fight and I said, "This 'cause you lie." You know, I said, "What's up?" (laughing) But yeah, but yeah, I like the spirit in which you ask the question, that's what I'm struggling with. 'Cause I love your spirit, you're trusting and you feel solid in your marriage, that's all great. And it's all real, I don't think it's wrong. I think that's all correct. But yeah, and the three kids, two kids thing, that's very interesting, isn't it? - Yeah, two or self-sufficient adults on their own were good there, but they're in elementary. - Yeah, but I'm saying in terms of an estate plan, a will, you know? - Oh, you guys don't have that? - I know. - Yeah, you've got hours and mine and mine are self-sufficient. And the others are miners. So yeah, that gets real emotionally complicated and practically complicated as well. So yeah, I'm glad you're wrestling with this on the estate planning side and on the prenup side. Keep wrestling it, that's one piece of encouragement 'cause, and I really like who you are, the way you talk about it is so solid. So keep being that person. But let's start, if we're going to blend, let's practice it being blended maybe before we do it. That might be the way to do it. Ease into it a little bit. - Yeah, I totally didn't think about that. And I totally see the wisdom in that. - Are you guys both on the, on the deed of the house? - We are, that's, yeah, we are. - And it's still got a mortgage on it. - Yeah, I think a good start would be, as a part of the figuring all this stuff out, let's just do a rundown of exactly where we are today. - Exactly what is 401(k) is, what yours is, what your investments are, where they are, who has them, whose phone number do I call? If you get hit by the proverbial milk truck, right? Who, are you the beneficiary on his 401(k) is he the beneficiary on your 401(k), your non-premarriage investments, right? And, you know, and do we have a will for the house and the kids separate from that? Yeah, you need to get some estate plan, some basic estate planning done, but then you could start to get complicated. A trust might be your answer later as a staging thing because that might take your pre-marital assets and set them aside for a different distribution than the marital assets upon death of both parties. That might be a way to separate them and make sure that they are separated. - And a post-nut could just amend the pre-nut and take the place of that. Our marital assets could go to really the three littles and the trust assets could go five ways, you know, - Split amongst the five kids. - Yeah, that's one way you could do it. But, how, wow, that's a cool question. Wish I had an instant answer, but I don't. (upbeat music) (upbeat music) - If you've ever been really sick or been the caregiver to somebody who was, you know how broken the healthcare system can be. Man, nothing is easy, finding the right doctors, sitting on hold for hours or a gosh, trying to understand copays and treatment plans and weird medical terms that no one really explains and so much paperwork. But, what if you had someone to do all of that for you? Someone to take the burden off your shoulders. Solace Health pairs patients with a personal advocate whose entire job is to fight for you. And these advocates are covered by insurance nationwide. They handle the paperwork, fight denied claims and make sure you're not getting lost in the system. Solace advocates are experts to average 16 years of healthcare experience. And, they serve people who are going through a healthcare challenge. Now, if that's you or a loved one, please reach out to Solace so everyone can focus on what really matters. Getting better. So remember, the next time you or a loved one have a health issue, you need Solace in your corner. They'll fight the system so you don't have to. Go to solacehealth.com/ramzie or click the link in the description. Checking your eligibility only takes about two minutes. That's solacehealth.com/ramzie. You must be 18 or older, and remember, advocates do not provide medical or legal advice. (upbeat music) - Our question of the day is brought to you by Ask Ramzie. Our free AI money tool that provides personalized answers for free that I mentioned is free, only based on Ramzie principles. The only diet we have fed this AI tool is Ramzie. So it doesn't know anything else. And so the only possible way it can answer the question is Ramzie. Ask Ramzie. Visit RamzieSolutions.com/askramzie. - Today's question comes from Darren and Nebraska. If you're on baby steps four, five, and six that are actively doing all three, do you have to contribute 15% of your just-for-fund side hustle money to retirement? The side hustle is just for extra travel money, gifts, et cetera, and is not needed in the monthly budget. Oh, it's an interesting one. Trying to skirt the baby steps here, Dave. I mean, if it has a very specific goal and you're just doing this temporarily, it's fine if you don't want to invest a portion of that. If you're still on track for retirement, you're investing 15% of your normal household income. That's fine either way. - Yeah, absolutely. - I wouldn't see it as a sin. - Sue is in Columbus, Ohio. Hi, Sue, how are you? - Hello, how are you, sir? - Better than I deserve, what's up? - I need some advice about my homeowners insurance. I haven't tried to get them to reduce it for a couple years and I'm just getting the run around and I'm getting so aggravated about it. - Who's it with? - It's with Ohio Mutual, but I've called a couple different insurance companies here in Ohio and I keep getting the same reason why they won't take it down. - What's that? - That they tell me that because my house is 25 years old, I need to put a new roof on it. Well, my brother-in-law is a contractor. He builds houses. He's inspected my roof and it doesn't need a new roof. - That's weird. - Yeah, and I've talked to three different insurance companies and I keep getting the same reaction. - Well, standard asphalt shingle roof each to the Mississippi does not have a 25 year life. I've got a property that we just put a roof on and it was 15 years old and it needed a roof. It didn't look bad, but it needed a roof. It was starting to show a serious wear and the first storm that came along, we were gonna have a leak. And so asphalt shingle roofs generally don't have a 25 year life. And that's what they're going on. Now, is that what you've got? Is a standard asphalt shingle roof standard shingles? - Yes, sir. - Okay, but it's not leaking, but doesn't it show wear? - Yeah, he walked all along the roof of it and he said, you do not need a new roof. There's no leaks, there's no wear. It's fine. - Okay, I don't know, that's unusual. - Based on my experience with roofs and I own a bunch of property. But I'm not saying it's not so, it's just unusual. So that's what you're facing. - Okay. - Yeah. - I think it's fair to say that sometimes the next five years, you're probably going to need a roof. Was that fair? - Probably. I've always been told you should get them replaced every 20 years, but honestly, I don't really have an extra $20,000 at the moment to get it done. - You know what I mean? - That's fair. That's fair. - Yes, yes. - I think most insurance companies are going to look and require certain things because what's going to happen is there's going to be a hail storm and they're going to be responsible for replacing the roof that the hail damaged. And they don't think your roof, they don't think your roof will withstand that and that's why they're throwing this at you. - It's not always about the condition. It's just the age of it that just adds risk for them and so they're going, hey, we're not taking on this risk at this age. - They don't rewrite policies, but if you could get them to just not cover the roof at all, then they probably would take the policy. They don't do that, but that's why they're doing it is because they're worried about themselves. - But if you want to try to fight it, I would get an independent inspection 'cause I don't think my brother said is going to cut it and you can have them write up the condition and see if you can fight that. But I don't know that you're going to have much of a dog in the fight at this point. - Yeah, I mean, I know we just, we've got a brand new home that we just finished about 18 months ago and when the insurance company came out, you know, they actually had two requirements they wanted to do on a brand new home before they covered it. - Wow. - And one of them I had never done before was a water pressure sensor, a flow sensor. And so if it's like water's running and you're not home, like it's pipes are busted. - Oh, it will. - It's got a lot of shut off on it and an app on my phone that lets me know that they shut my water off, which is kind of nice if you're traveling. You don't have to worry about your, everything being ruined in the whole house or something. - And it limits the risk. - But I've never had one on a house and I'm 66 years old, but they made us put one on to come. and I'm like, oh, you people, oh well, put it on there. I probably need it anyway. And I put it on and I'm kind of glad I did, 'cause I feel a little-- - Gives you peace of mind. We just took a risk for that. - We just took a risk for that. - We were gone a couple weeks and we get back. While we're gone, we're not worried about the house being trashed, you know? So it's kind of a neat thing, but yeah, they do have requirements in order because they're responsible if the pipe bursts and screws up a million dollars worth of flooring or something, right? - You let that run for six hours. - That's what it's everything. - Same thing as with the roof. They're responsible and that's why they're doing that suit. So, yeah, it's aggravating though. It's like it's my freaking roof. Who cares, you know? So, yeah, oh man. All right, looks like Matt's turn in Philadelphia. Hey, Matt, what's up in your world? - Hey guys, thanks for having me on the call. Just real quick question for you. 49 years old, I'm free besides my house. And I found my dream car, my childhood dream car when I was a kid, and I'm curious to know if you think I'm in the spot where I should splurge and purchase the car. - Was it Hot Wheels? - It's a night ride replica. - I mean, when you were a kid. - When I was a kid, a night rider replica. - Oh man. Is it like a kid, the kid car or the real one? Well, they all get cars 'cause there was no such thing. Right, that's right. Kid, what's the car, yeah. - Yep, it's identical studio accurate replica. - Wow, how much is it? - 52,000. - What's your household income? - My base salary is 120 plus bonus. I don't count the bonus 'cause you never know if you're going to get it to 120. - Oh, you get it, what do you count? What's your bonus? - 25%. - Okay, all right. And are you married? - I'm not, I'm single, I had a long time girlfriend, but we're not married yet. - Okay. And what's your net worth? - Net worth right now is about a million, including home equity 401(k) liquid savings. - How much liquid savings? - About 110. - Okay. - That's a lot. - Yeah. - Based on your situation. 'Cause here's what I measure this against. I just use the money in the middle of the floor scenario. If you burn $52,000 in the middle of the floor, does your life change? - No, but you'd be down to half your liquidity. - Yes, and what really pains me, Dave, is, you guys actually financially saved my life seven years ago. When I bought another car, I should not have bought. But when I bought the car, I came across you guys and found my financial path. And now here we are seven years later, I found this other car, but because I worked so hard to build the savings, it pains me to even spend any of it little owned out of now. - Yeah. - But it's my dream car for when I was a kid. So I'm just so torn. - It's an unusual collectible. - Correct. - Because it's got a very, it's a unique product because it's like, I've got a buddy that collects cars and he's got one of the cars from Days of Thunder, the Tom Cruise movie, remember that? And he's got one, it's a Hollywood car, which is what you're talking about. Only he's got one of the actual ones they used in the movie, but this is a replica. So the resell market from a collectible standpoint would be very small. - Yeah. - So that's gonna be a problem in terms of the valuation of it in the future. - What are you gonna do with it if you get it? - I'm drool over it. - Would it just sit in the garage? Would it just be like mint condition in the garage? Or are you gonna drive around on a garage coin? You drive it on Saturday. I mean, it's what you do with a collectible. It's an antique-like type thing. - And what other vehicles do you have? You got any other toys? - No, I have a 99 Trans Am at the toy. It's also in the garage. - If you call the set, I wanna go on a cruise and I'm gonna spend 50 grand. I'd probably tell you to do that. So I can't tell you to not do this. I'm over-analysing it because of the car. - Yeah. - I thought you can afford it. It is, it's the only disturbing numbers. It's a high percentage of your $110,000 liquidity. - Yeah. - But it's not gonna cause you go bankrupt. It's not gonna cause you to be, your face is not gonna show up in the stupid column or something like that. Nothing like that. - I'm just, I'm a car guy and so I'm just kind of questioning the actual car itself and I shouldn't be doing that. You can afford $52,000 worth of wasted money. You've earned it. - Enjoy the car. It does look pretty sweet. Just found a photo. (upbeat music) (upbeat music) - Most people spend years changing their money habits but never think twice about how their bank probably works against their values with nuisance fees and endless debt products. If you're being weird by sticking to the baby steps, you deserve a bank that helps with that. That's why Ramsey partnered with Fair Wednesday Credit Union. They built the smart bundle specifically for Ramsey listeners, not for everybody else and it includes up to 10 high yield savings accounts so you can set up different funds for different needs and goals. And now they've introduced the live like no one else debit card. The original debt is normal. Be weird debit card is still available too. And every time you reach into your wallet, your card is a daily reminder that you follow a different path. Listen, if you're living like no one else, your bank should back you up. Check out the Fair Wednesday's smart bundle, including the all new live like no one else debit card at fairwinds.org/ramsey. That's fairwinds.org/ramsey. Ensured by the NCUA. (upbeat music) - Lynette is in Portland, Oregon. Hi, Lynette, how are you? - Hi, good, thanks for taking my call today. - Sure. - What's up? - Yeah, well, I have a question about my aging parents. They have been in great health up until this year and then they had a couple of health changes. And so I'm wondering at what point should we, as their kids, be kind of stepping in to help them and intervene or just kind of keep acknowledging that they are adults and they get to keep making their own decisions. So the health changes that happened this year are that within about a three month time span, my mom was diagnosed with brain cancer and then my dad who kind of works suspicious that he had some dementia brewing that diagnosed officially with Alzheimer's. - You're a little bit muffled. Can you speak directly into your phone, please? - Yeah, oh shoot, can you hear me okay now? - Yes, that's fine, thank you. - Okay, okay. So I don't know if you were able to hear-- - We heard it all, but it was just a little muffled. You're fine, go ahead. - Okay, okay. - So you got brain cancer and you got early onset signs and how old are they? - Well, he had an official diagnosis as well. There's 77 and he's turning 78 soon. And otherwise, it had been in great health. He's been the one who's been actively involved in their investments and he is currently trading. He's got single stocks. If you took a snapshot into their financial picture now, they're actually okay. And so I'm not sure if I need the perspective of, you know what, just in reassurance, like they're gonna be okay or, you know, I look at the picture like this is a high risk situation and this is a train wreck that we can prevent from happening down the road. My mom's been the one who's the day-to-day financial person. You know, taking care of the bills, I stepped in and added my name to their account so that I could help with that just to keep that offer plate. Currently, thank goodness, she's in remission, but it's a very aggressive form that has a high chance of coming back. - Sure. - So what is it, how can we best help you? - Yeah, so I guess how to tackle a situation where my dad is so resistant to letting go of anything. And so I don't know if, you know, like I tried, you know, like bringing them into their tax advisor for assistance or, hey, could we meet up with another financial advisor and he's completely resistant. And so do we just kind of step back and let that happen until he's cognitively declined to the point of intervention? My mom doesn't, you know, they have a living trust set up. She doesn't really want to, I guess make my dad any more angry in the situation. And so she's worried for them, but she's not really intervening herself. So I guess what's the role is there adult kids? - Well, I mean, the law says there's nothing you can do. There are adults and they're allowed to do what they want to do. So at the end of the day, that until someone, until the court, the medical profession provides evidence to the court that the person is financially or is mentally incompetent, at which point of guardian at light 'em would be appointed against their will. Until the end. people are allowed to do dumb things. And some of us are better at it than others, doing dumb things. But it's sad, but sometimes this is what you run into. So there's no one that you can think of that has influence with your dad that could sit down and say, the best thing for you is for someone to walk with you to make sure you get to do what you want to do. But as long as you're freezing everybody out, you're pretty much ensuring a disaster. I mean, something like his pastor, his best friend, his brother, his wife. I know he's even held his concerns about dementia so close because he, I think, very self-conscious or embarrassed about that. Sure. And even with their finances, you know, we can't have no idea where they were financially up until a year ago. And so- Well, they have some things, then. Yeah, how much do you know, and how did you figure that out? Yeah, now we have a pretty good sense because what happened with my mom's diagnosis is everything had to come to light really fast. And so we have a good idea of their numbers. So we know what's an investment. We know what they're getting for pension and social. We know what they have in savings. Their house is up for sale and should be closing this week. So we know how much is coming from that. Where are they going? We have a pretty good there. They're in a senior living place and they're not happy about that, but it's what we, we're making the best decisions that we credit the time. So we're- Well, you guys have had a lot of influence. Somebody's had a lot of influence. Your dad's not sitting over there in total denial. He's just stiff-arming you on a couple of issues. Right. I mean, you sold his house and there's been full disclosure. So he's opening up a lot, but not all the way. Yeah. So is there a healthcare power of attorney? We do have a durable power of attorney for like the spouses, you know, my mom and dad both have it for each other. And then two of us sisters have a durable power of attorney. They do have health advocates. They've done the best that they can, setting things in order. Yeah. They have- But when he's unable to- when he's unable to function at a hundred percent, the durable power of attorney gives you the ability to take over. Yeah, and even the neurology clinic also was giving kind of a clarification on what his diagnosis is and, you know, the recommendations for financial decisions being passed on. So we're kind of getting things in order. I think here's a thing. It's going too fast for him and not fast enough for you, but it is moving. Yeah. Okay. You're not in the dark. Right. Yeah. And I can only imagine how much fear is involved if you're in his shoes. I know. And this is a very capable man that has done a great- he's a very capable person. And it's the first time in his life he's ever had to face not being capable. Yes. Exactly. Exactly. So they don't have like a financial planner or fiduciary, but they do have a tax advisor. And he said, you know, like don't even call their- but they have an account with Charles Schwab. Don't even call them because it's going to flag him as having dementia. Do you know much about that as far as ramifications as freezing accounts? Because he's so active in there and it just seems like, yeah, that's like a little. Well, if you've got durable power of attorney, the account is not frozen. It's just flagged for his usage. Yeah. And are there negative ramifications that can come with that? No. The person that's got durable power of attorney can do whatever they want. They can close the freaking account. Move the money if they want. But they're going to have to- you're going to have to- at that point have dealt emotionally, relationally with dad that you're taking over. And that's- that sounds like that's a pretty high-hail to climb at this point. No, I think you just- You guys- this has been a- it sounds like it's a 12-month journey. Does that about right? We've been in this boat seven. Okay. Yeah. And I think you've made more progress than it feels like because you've not gotten all the way. But you've gone a lot further than a lot of people we talk to. A lot of people we talk to, it's been seven months and nothing has happened, except dad gave all the money to some catfish scam, you know? That's what we were- that's the stuff we get called on. And so there's no clue if there's a will of- there's a trust that you've named all of them. You've got everything in order. It's just a matter of when you're going to step hard enough on him to take over. And I'm going to do that as gently as I possibly can just as an act of love. Yeah, yeah, yeah. Some of this might just be a- we cross that bridge when we get there. Yeah. As much as you want to get ahead of it and plan for it, some of the stuff- How much money could he screw up if he really screwed up? How much has he got access to that he's screwing around with? Yeah. Well, they have right now about 1.5 that- But he didn't have access to all that with his screwing around day trading stuff. He does. Okay, I'm going to limit that access, yeah. Because I don't- I don't want to- because you can get in the room- you could- he could lose that in 24 hours screwing around day trading. So yeah, I'm going to limit that access. But I mean if he wants to screw up with a hundred grand or something and you got 1.5, I'll let him do that just as- just because to let him be himself. Give him a sandbox to play in. Yeah. Yeah. Welcome back to the Ramsey Show in the Ferrer Wins Credit Union studio. Michelle is in Nashville. Hi, Michelle. How are you? Hi, I'm a little embarrassed to be needing to call in, but glad I'm glad I'm here. Well, we're glad you're here too. How can we help? So I am on baby step two and I'm in a bit of a pickle. I managed to get myself about a year and a half ago a credit line with an APR of 275 percent. It's not a credit line. That's a payday lender. Yeah, they framed the- they framed it as a credit line. But yeah, yeah, it's not. So I've- the balance is $3,000. I pay $900 a month. And this year- Yeah, and as your credit is trashed, I assume. Oh, big time. Okay. All right. So what do you mind? I make $93,000 a year. How come you can't scrape together three grand then? Well, I'm paying $900 a month on this and I've got- this is not my current step on baby steps. I've got- I've got a couple more before this one. But it's kind of- I feel like I'm just throwing money into a pit on- Yeah, how many- yeah, you are. That's why I feel so way. God bless your heart. I'm sorry. So you have no money, obviously. Yeah, I need- everything you could sell and just give these people the money and go away. No. Okay. Is the balance growing every month at this rate? Even with your 900 getting thrown on it? It's growing every day. So it's about $20 a day and what they're calling a customary fee. So your next paycheck, how much is that? Um, no, let's stop. Yeah, yeah, how much is- that's a good idea. How much is your paycheck? Uh, $2,700. Every two weeks. Yeah. Are you hit 401k coming out? Yes, but I just paused it. Good. Okay. So your next paycheck might even be bigger. Okay. Are you getting a tax return? My next paycheck will be about $100 more with the 401k not in there. Last year, did you get a tax return? Uh, yes. How much? 500. 500. Okay. Not much. I do get a bonus every quarter, but it's based on how many hours over my contract I've worked in that kind of very- What do you do? Uh, behavior therapy. Okay. Kind of ironic. Um. Yeah. Yeah. Trust me. I know. Oh, man. I'm sorry. Wow. Ah, I've got something running through my head. And I'm just going to say it out loud. I don't know if it's good advice or not. So I'm hesitating. That's That's why I'm stammering around. I'm crunching this in my brain trying to keep it. keep it from coming out of my mouth, but I think Louis the loan shark has gotten enough. I would just call him up and tell him to screw themselves. I'm not giving him any more money. - Okay. - And then what they're gonna do eventually, eventually they're gonna get around to suing you, and then you just settle with them. - Okay, okay. - That's one way. I'm not sure that's good advice, but that one will stop the bleeding. - Yeah, it feels like robbery at this point. - Oh, it is. It's completely useless. It's completely immoral. They're scum. You did as an adult sign up for it, but they are scum. - I know. - Yeah, they are, I mean, this is just, it's highway robbery. It should be illegal. It is in most states, but not yours. The not ours, but the, yeah, I don't know what else to do other than try to do something super radical in your monthly budget, and come up with $3,000, and just go there and lay it on the counter, and say, either take this, or I'm gonna flip you the bird, and you're gonna get nothing until you sue me, and it's gonna be two years for you to get anything. - Yeah. - And just go in there and hardcore and negotiate with Louis the Loanshark, 'cause that's who you're dealing with. And. - Okay. - What are your other debts? - Credit card, a car, and medical. - What's the car worth? - The car is worth, well. Let me be very transparent. I started the baby steps a few months ago. So the car I got last year, but. - What do you owe on the loan? - $28,000. - Do you think it's worth at least $28? - Nope. - Okay, you're under water on that. Did you get hosed on that interest rate too? - That one, actually no. - That one's not as bad. That one's only 11%. - Okay, I was trying to think if you could come up with, you could sell that car and use the difference to get out of this thing temporarily, that would help, but it sounds like you're gonna have to come up with the difference. - I mean, if you could have a huge Craigslist or Facebook Marketplace sale and scraped together some money, and then not pay a couple of things for one paycheck and just stack some cash and go in there and lay it on the desk of Louis the Loanshark and go, "Here's three grand, take it or leave it." Because I'm done paying you. - Yes. - And whatever they agree, before they get to pick the money up off the table, they sign on a release. - Right. I mean, is it worth it to be putting my extra? 'Cause I've already paid off a couple credit cards. So I've been using those minimums towards my next one. - No, I wouldn't be working the debt snowball with this thing. This thing needs to go away. - Okay. - In a month. - It's like a tumor. - It needs to go away in one month or you need to stop paying it and go into fault. - Okay. - Okay. - I think. I mean, I hate to tell somebody to do that, but you're completely, I mean, you've been paying this for how long? - Well, the last time I dipped into it was in June. But since June, I've been paying $900 a month and my balance was still $3,000. - Yeah. - On a $3,000. - Yeah, I'm through with this. This guy, I mean, again, it's just weird conundrum between you and adult and you signed up for it and they're absolute crooks. You knew it, you knew it, you did it, but so you've got that responsibility, but they've also got an ethical responsibility to not exist and they do exist. So, I mean, and it's just they're oppressing you. - I'm doing the math here. You'd have to throw $1,500 a month for three months to knock it out. Just to get ahead of the interest. - Yeah. - So you're talking to $4,500 a month? - I'm not screwing around with it for three months. I mean, if you can find something in the garage that you can sell, I mean, you got the electric bike you bought before you started this and it's worth two grand or something, go sell the stupid thing. I don't know, whatever it is, I don't know what you've got in your $90,000 or your garage, but what extra work you can pick up? How many overtime hours you can pick up? And in one month, just go bananas just to get rid of Louis the Lone Shark. But that's what these people are out there. They're everywhere. And it's an unethical business to say the least. And yet, wow, houch. (upbeat music) (upbeat music) You've heard from me and the Ramsey personalities for years, but nothing beats actually getting together in person. That's why we created the live like no one else crews. For seven days, we're vacationing with you. And 2,500 Ramsey people in the Western Caribbean. With live shows, us, new content, us, and more. If you're on babystep four or beyond, come spend the week with us next March. Choose your cabinet at RamseySolutions.com/events or click the link in the show notes. (upbeat music) Eric is in Boston. Hi, Eric, how are you? - Hey, how's it going Dave? What's up? - All right, so I talked to you large today. I think you guys are just the right guys to answer this question. So I've got the opportunity to have a health safety, or a health savings account through my work. And looking at your Louis Ramsey tool, it looks like the best thing to do. It's to put 15% in a Roth retirement account. And then kind of put as much as you can in HSA on top of that. And sort of, but since it, you can invest the money, which I don't really recently learned, but seems like a great option. And because of the triple tax advantage, if I understand it, I'm kind of wondering, does it make sense? I've seen that you can request reimbursement later. So I'm wondering, does it make sense to pay for stuff out of pocket and like lose out on that potential investment advantage? And then request reimbursement later, or should I be-- - Equestrian reimbursement from HSA. - From who? - From the health safety account. - You're saying you would cashflow your medical expenses, hang on to the receipts, and you can reimburse it from the HSA back to your checking at any point in the future. That's the current law. - That's the correct, yeah. - And that way your investments continue to grow, when you're not actually using the HSA. - Yeah, exactly. And I'm just wondering, is that something you should be trying to do or is not worth it? - No, arbitraging your medical bills for investment purposes is not a plan. It's not enough to screw with. You can't buy a biscuit with the results. - Okay. - Are you trying to max out your HSA investments each year? Is that the goal? - Um, I think if we can make it work, yeah, that'd be the goal. - Now, what I have done here, because you have to reimburse yourself within a reasonable period of time. You can't drag this out for 10 years. And 10 years ago, I had a medical bill. Now, I'm gonna reimburse that won't work, okay? But if you, and so the amount of spread you could make on, you know, 10 or 12 months or something's not worth screwing with. That's my point. But what I have done is I fully funded my HSA since George W. put them in place, way back there. And I've never touched it. I just paid all my medical bills. But I'm a pocket. But I've not had many medical bills, either. Knock on wood, okay? So, and then I just moved all of that. You can, there's a company called Health Equity that we use that we moved to move the HSA investment out of a money market into a mutual fund. And so I've just got it sitting in like an S&P and I opened the statement oddly enough this weekend and it's over 300,000 now. But I'll never touch it. I'll never use it for metal. - Yeah, I'm trying to think like, okay. Yeah. - And then that's the thing that seems so advantageous is that you can use that as an investment. So like, hopefully the balance of it, but I don't have that many medical expenses over the course of my life. - Yeah, but the part of your equation, I would just take it. - I would just take out the reimbursement part of the equation. I would just say, as long as my medical bills are fairly low and I hit a deductible occasional and I'm making good money and I wanna just cover all that. So I don't touch the HSA. Then basically the HSA just becomes another investment account. And at 65, there's no more penalty to use it for non-qualified medical expenses. So it kind of becomes a bonus traditional IRA in that sense. - And I'm 66. - So there you go. - I can access that. - But again, Dave's not needing to use it. - I'll never touch it. It'll be in the estate plan. - It's just an extra little wealth tool. - Yeah, that's it. But no, I wouldn't try to arbitrage and play the spread back and forth. You know, like, I'm gonna delay paying this and so it's like saying, I'm gonna use my credit card and I'm gonna invest the money for 30 days rather than pay the bill and make the spread for 30 days and then pay the credit card. But never pay any interest. - Yeah, there's no real need to reimburse it. - You just leave it. - By the time you do all that stuff, it's like having an acreage account. You know, you put in two nickels and so now you got three nickels. you still don't have any money. The actual dollars involved are so small that it doesn't matter. That's not worth reimbursing. Yeah, it doesn't matter. That's the point. The general principle of utilizing the HSA if you have one is fantastic. Yeah, and if you use it for medical, it's still a wonderful thing. You don't have to do it as an investment. And a reminder, you can only access one of those if you have a high deductible health plan. So people are going like, where do I get an HSA? Well, you got to make sure you choose that one if you want the HSA component. But most employers are now offering that. Yeah, you guys we've had it here for years. It's here from the day we started. Yeah. Because time, but it was available before we started doing health plans. It's that long ago. And it's a good bargain. I mean, higher deductible, but lower premium. Yep. Ben's in Boston. Hey, Ben, how are you? Hey, Dave. Hey, George. This is the perfect duo for this question. I have been helping my brother with a business he just bought a couple of years ago. And he's finally getting to the point where he's hiring other technicians to help him out. And we want to know how to give them access to funds without making them like an account holder on the business bank account. So the question is how does George buy coffee for millionaires in his little car videos he makes? Do you just have a debit card that you give him access to the banks for? Yep. Yep. He's got a debit card. So all of all the Ramsey personalities, we have a business debit card. It's not tied to the gigantic company checking account. There's a separate business account. So you can open up multiple accounts. So the personalities have their own pool that we can all dip into for business needs. Yeah. So if we've got like 10 million in our operating account or something, he doesn't have access to that. There's like 100 grand in this other account. So you can fund it with as much as you want. Let's say $1,000 a month into this separate account, give them a debit card. It's in their name. It's in my name. And so they can use it for business expenses. And I submit every receipt. And if he misuses it, we see it. Not much that's going to go. And if you keep seeing haircare products on there, we got a problem. I tried that. They just doesn't understand every every personality has their own checking account. No, no, no, no, we have one checking account that we run all of the employees, all of the team members that have a debit cards. I think there's about 150 of them have debit cards. If they if people travel at Ramsey, we don't ask them to travel on their own money. They travel on my money. And we generally do petty cash for things like that for just. Well, if they don't carry a debit card, they can carry petty cash. But like if George is going on a speaking gig or he's going to New York to be on Fox or something, all of that. So he just runs it on his debit card, Ramsey debit card. He don't have to have any of George's money involved. But it's only we have one separate smaller business account for just the debit cards. Okay. So in this scenario, we would just have a technician expense checking account. Exactly. And so let's pretend that you need $10,000 a month worth of things they're buying. Then you just keep replenishing it and keep it at a balance of around 10 grand. But your other account might have a hundred grand in it or something and you're not they don't have access to that. I don't even have access to the account. I can just make purchases with the debit card. But I can't go in there and see how much is in the account. One of our assistance handles that. And so she's monitoring it and replenishes it once it gets to a point where we need to. But it's instant accountability because every one of their expenditures shows up instantly on our computer screen. And if I lose a receipt, I'm paying out of pocket to reimburse that. So that's a big thing is they got to make sure they keep good track of their receipts. Not on the debit cards, do you? If I don't have one, you know, if it was a coffee order, I go, all right. I'm going to cover that over the team just has to cover it. No, that's with petty cash. Your debit card just shows up. Exactly. Yeah. Debit cards are receipts built in. That's what's nice. Yeah. And that's what I mean by accountability. So if the technician can't go by a latte, they're buying a part to work on the item they're supposed to be working on, right? Indeed. Need that account to be at a separate establishment? No. No. Because they're separate account. Whatever you do, your business checking. That's the same. That's our same bank. No. Okay. So all we're doing is just limiting the amount of money that they have access to by having a separate account. That's the only reason for it. So you go down to your bank, you do business with for your business account and say, have like to open up a new checking account within that. And I got five technicians and I need five debit cards in their names. And we're going to put whatever amount that you think you're going to need in there for a couple months and put it in there and the that the technicians are actually going to spend. But real strict rules with the technicians that this money is not for you to buy breakfast, dude. It's for you to buy parts to work on the thing you're working on. And you don't use it for anything else. If you do, you really like fire you because it's called stealing. You know, that's kind of how that works. And so it's the same thing of a company that has credit cards in the company name and the and the team member carries a company card. If you misuse that, you know, you that's called stealing. So I hope you don't need your job. Yeah. Hey guys, Dave Ramsey here every day on the show, we help people work through real money problems and figure out what to do next. Now you can get that same kind of help anytime with ask Ramsey. Ask your money question and get answers built on Ramsey principles we use on the show, whether you're making a decision or just want something explained, ask Ramsey is here to help. It's fast, simple and free to use. Go to RamseySolutions.com and try Ask Ramsey today. That's RamseySolutions.com. Everyone needs insurance, but it can be hard trying to find a pro who isn't just looking to make a buck and find an agent that actually knows their stuff. Ramsey trusted insurance agent pros, insurance pros are vetted and coached to make sure their market experts who have your best interest at heart. Go to RamseySolutions.com/coverage to find the type of insurance you're looking for and connect with a Ramsey trusted independent agent. Got to love it. Jonathan's in Savannah, Georgia. Hey Jonathan, how are you? Good, how are you? What's up? I have purchased the car and I'm wondering if I made the right decision with it now. Wow. Okay. Why do you think you didn't? I just recently stumbled across your Facebook page and so now I'm starting to wonder if I made the right decision at least with the price of what I got. Did you finance the car? I did. Okay. How much was it? Total. I think my loan was total was 24,260. That was the sales price or the loan amount? That's the loan amount. Okay. What's your income per year? Around 2200 a month. Okay. So you make $30,000 a year or yeah? Yeah. Roughly. And you bought you bought the car. The loan is 24 but what was the price of the car? I want to say it was like 27. Yeah. Which is more than you take home in a year and you're 22 years old? I'm 18. 18 years old. Okay. Yeah. Honey, you got screwed. You bought a car that's completely out of your league. It's very, very difficult to prosper when you own a car that's worth that costs as much as you make in a year. Very difficult and that's even if you paid cash for it, which obviously would be very difficult to do. But yeah, you've got a car payment and the reason that you're the reason that that God dropped that Facebook page right in front of you was because you were scared. You were stumbling around and you were worried and then you went, I got to get some confirmation if I did the right thing or not. And I'm glad you found us. And when I was your age, I did a lot of dumber things than this. But the good news is this is the last time you're only 18. You have the whole rest of your life to never do this dumb thing again. Not bad. Is this your only debt? I'm sorry, I didn't catch you off far. Is the car loan? Yeah. Okay. How much is the payment? The minimums are 430, but I do about 550 a month. Okay. Are you living at home? I live with my great aunt who she's sick. So I moved down here to take care of her. And so I don't have, I do pay to live there. What were you driving before you did this? A 2007 Honda Pilot that the transmission was about to go out on. Okay. Yeah, so you went from a $1500 car to a $30,000 car. Yeah. And one fell short. Yeah. Yeah. What do you do for work? I work at a promotional car to a company. Okay. All right. I'm an embroidery technician. Yeah. What work going to ask you to do for your own sake is to get rid of the car. It's going to be very painful. It's going to be very costly. But the only thing more painful or more costly is keeping it. And then you're going to have to get your couple thousand dollars scraped together and get your little paid for car that the transmission's about to go out on, but hasn't yet. And drive that and save up 500 bucks a month. If you save 500 bucks a month for for 10 months, you got $5,000. That's a pretty decent car. It's a $5,000 car. And if you did it for 10 more months, you'd have a $10,000 car. And if you did it for 10 more months, you'd have a $15,000 car. And you pay cash. And that's the most car you want to own with your income. About half your annual income is the most you want to spend on cars. Okay. But you're going to have some pain and it's going to cost you some money to get rid of this. There's going to be some embarrassment, some emotional stuff. It's going to feel weird. And it's going to cost you some actual dollars to get rid of this thing. You've lost, you've probably lost five or six thousand bucks in this transaction. And you didn't have it to lose. You don't have any money. So it's going to be a process. I'm going to send you a copy of our book, The Total Money Makeover that shows you exactly how to do all the Ramsey steps. And I'm going to send you a copy of Georgia's book, how to stop being broke. There's a whole chapter on car loans. If you read that, I promise you, you will never make this mistake again. And again, we're not beating on you for being 18 years old and making a dumb decision. I'm jealous he did it that early. Yeah. I waited till later to do some of the dumb decisions. But the good news is you got the rest of your life to not have that mistake again. And you know, you'll be my age and you'll look back and go back in all 26. I bought a car. Yeah. And because I got rid of that, now I'm a millionaire. That's what you'll be doing. You'll be that guy. And kids will be like, the car's only cost $26,000 back. And then yeah. Wow. What's a Honda pilot anyway? They don't make those anymore. That might not be a bad thing. Josh is in Columbus. Hey, Josh, how are you? Good. Are you doing better than I deserve? What's up? I'm wondering how I can calm my life's nerves with me running a business instead of having like a normal job. Be super successful. How have you done that yet? Sort of. I have a contract coming. It'll be a couple of months, but then we will be making a lot more than we've ever made before, but she's still worried. Yeah. Well, that's because you don't have the contract and you don't have any money yet. Yeah. It's logical to be worried. Sharon Ramsey used to be worried all the time. Sharon Ramsey had worried at all now, right? I mean, that's the deal. That's really what comes down to. Your wife is looking for proof, not a dream. Yes. And so when you provide her proof and you stack those Benjamin's on the table, she's going to go, I like being self-employed. You make more money. That's assuming you are, of course, right? Yeah. What kind of business are you going into, Josh? I build custom security software to defend against AI. Okay. And what do you have a day job? Not right now. I'm doing my business full-time. Is that why she's scared? Wait, wait, wait, wait. You're doing your business full-time, but you haven't made any money. No, I'm making about 70 a year now, but we'll be making a lot more in a couple of months. Why? You got a single vendor that's going to, you have a single customer who's getting ready to make you rich. I have a large licensing deal with Bank of America. Okay. Very dangerous to have your business standing on one leg. Yeah. Especially when Bank of America is the leg, but anyway, yeah. You want multiple customers because if one customer can put you out of business or take away 90% of your revenue, that's a problem. You now are an employee. You're no longer a customer. You're no longer a business. Yeah. An employee that has one customer is, I mean, a person has one customer who's called an employee. And so whether it's contract or otherwise. So you've been making 70 grand without Bank of America. Yeah. For how long? About three months now. So annualized 70 grand. Yeah. So you've been making. Before that, I was working and doing the business at night. Okay. So you're making $6,000 a month before this contract comes through. And the contract is, now that you told us who it is, I hate for you to tell me how much I don't want you to. So that's not fair to you or them. But. And are you this sole income provider? She works part-time. Okay. Okay. What were you making at the other place before the day job? I was making 70 before. Okay. So you were making 70 plus. You've made it start making $6,000 a month so you quit your job. Yeah. Right? Yes. Okay. All right. Her fear is going to go down the longer she sees a pattern of increased income, not decreased income. And she's also wise to be worried if your income is based on only one customer. And so I want you to build a lot of contracts, not just one with one big bank. Big banks don't have a good reputation. People ask me all the time. George, what's your number one money saving hack? I'm glad you asked. Nothing makes me happier than helping another frugal friend. So here's the hack. Get on a budget. Seriously, how are you supposed to save money if you don't know how much you're spending in the first place? And that's what makes the every dollar budgeting app a game changer. With every dollar, you'll get a clear picture of your spending. And from there, it's easy to see where you can get more intentional, cut back, and save more money. How much money are we talking? Well, the average every dollar budgeter frees up $395 in their very first budget. And if you ask me, I think your way above average. So why are you still listening to me? Go download every dollar for free and start saving more money right now. Our scripture of the day, Proverbs 22, "One, a good name is to be chosen rather than great riches, and favor is better than silver or gold." Jack Benny said, "A rich man is one who isn't afraid to ask the salesperson to show him something cheaper." I like that. This is true. Justin is in Canada. Hi, Justin. How are you? Very good Dave. How are you? How can I help? Perfect. So I try to have my wife and I are in a bit of debt. We make a decent income. I'm just struggling to have conversations with her about kind of just really buckling down and doing it. We both like to hang out with family and go places and spend money where we shouldn't, when we should just buckle down and I feel like I've kind of ruined the conversation by getting too frustrated and I just need help with how to fix this and I don't know what to do. So what's a decent income? So I make 98,000 year gross and then my net is about 74,000 here in Canada and then she makes around 54,000 which then goes to 44,000 estimated net yearly. Okay. She'll make 150 grand minus taxes. All right. And what's a bit of debt? How much debt do you have? So we have 10,000 on a line of credit, 9600 down a credit card and that's it. No card debt? No card debt would pay off my truck two years ago. No student loan debt? No sir. How long have you been married? A little boy. I should have answered that faster. Five years. Okay. All right. That's okay. Well, I mean, you guys have been going along for four years without paying attention and then suddenly you started paying attention and got a little bit frustrated, a little bit scared and that came through in the conversation and shut the conversation down. Is that a fair summary? Yes sir. So you're the one that's changed. Not her. Yeah. Yeah. And both of you do need to change. I don't disagree with your premise. But then the question is how do we begin to talk about this and so forth. So I think you talk about number one, you probably need to start with an apology. Hey, this stuff started scaring me and so I didn't approach you with it well and I'm sorry for that. I apologize because my frustration, my fear came out and it shut us down and and I'm still scared about it. I feel like we're out of control. And it's not your fault, it's not my fault, it's our fault. But we've got to sit down like two grownups and talk about this at some point. How can we best do that? That kind of an approach. If she starts yelling or something after you do that, then you don't have a money issue. You got a deep marriage issue. If you apologize and ask for help, and the way your spouse responds is they get angry, then you've got another issue. - Yeah, yeah, and I'll put most of the blame on me for something like that. - That's fair enough that it may be a little. - Oh, it's 100% your fault. - Yeah, it is your fault. You did a classic thing. 'Cause and it's a really, guys do it more often than gals. Guys want to do, they want to fix something. And so they start talking about what we're gonna do instead of why. And you need to go back to the why and the why is I'm scared. The why is we make too much money to be this broke. The why is I don't want to retire with no money and eat dog food. I want to be wealthy and be able to travel and be able to buy you nice things. And that's the why and the track where Ron's not taking us there and that's scaring me. And you don't have to talk about anything she did wrong. Just talk about what you did wrong. - Yeah. But if you lead with those things instead of the, and then the byproduct becomes all right, we gotta get on a plan. We're gonna throw a 4K at this thing for the next five months and we'll be done by March. So she needs to know this is not forever. This is not a huge lifestyle change. It's gonna dramatically affect your lives. This is a small season of sacrifice so that we can have freedom on the other side. - And we're gonna get in control for the rest of our lives. Tell our money what to do instead of wondering where it went. You know, that's the byproduct. That's where we end up. But instead of talking about the what, talk about the why. - Okay. Why? Why? Because I'm scared. Why? Because this is, this chaos is gonna lead us to be in broke. Why? I don't wanna return eat dog food. Why? I'd like to be able to travel and be able to be generous to others that are hurting. Why? I'd like to, whatever, okay? What is it you wanna do when you get all this straightened out? And why? Why? Why? And go, you know, if we had $2 million only, what would you wanna do? - Yeah. - Get her to start dreaming. - I don't know how to do that. - Yeah. I don't know how to reverse engineer it, though. - Yeah, I, so you didn't go on a honeymoon. - No, we got, so we got. - That's okay, so you, that's fine. That's cool. That's a perfect angle then. I owe you a honeymoon. - Yeah. - Okay. - Like that excite her? - I've shorted you. So where do we wanna go on this honeymoon? Well, you wanna go on a cruise? You wanna go to Paris? - Yeah. - But we got, you know, I got, we gotta, I wanna clean all this stuff up so we could do that kind of thing. - Right. - And instead of like, you're so stupid, you overspend, stop it. - Yeah. (laughing) I'm like, get hung if I say that. (laughing) - Yeah, I would, yeah. If I feel like breathing the next day, I'm like that. - The classic on this show, Justin, is that the guy gets all fired up about doing the Ramsey stuff. And the first thing he wants to do is sell his wife's car. And then he can't figure out why she's not excited. (laughing) - I did say my truck, but she doesn't want to sell my truck. - You don't need to sell a truck. You just need to quit spending to that guy much. You only owe 20 grand. - Yeah. - You can clean it all up. You can clean it all up in no time, like George said. But you've got to both be on board and you're living like no one else. So that, why? So that later we can live and give like no one else. But you start this whole conversation with the apologizing for having approached it wrong 'cause you did a classic husband mistake. - She's gonna be taking it back, just right there with the apology. - Well, I mean, it's, it's, I go straight to how we're gonna fix it. I don't really care about your feelings and that's not a good relational tool. (laughing) - I apologize every day just in case. (laughing) - I don't know. - It's preemptive, a politician. - It works. - Well, it's gonna happen. You did something wrong. You just don't know what it is yet. - Exactly, that's it. - It covers all the sins. (laughing) - It's just in case method. - It's worked out so far. - It's funny, I don't care who you are. All right, Lily's in Fort Lauderdale. Hi, Lily, what's up? - Hey, yes. So my question is, well, I'll be doing, is how much should I start investing in the way and currently an employee, I'll be employed soon. I am disabled, so that's why it's been so long to try and get a job. I am aching, so I'm still young in investing, I'm just wondering if you could give me some advice or not. - Do you have any debt? - No. - Okay, good. So the first step with investing is have the income to invest. So I love that you wanna do this. Once you do have income coming in, do you have savings in an emergency fund? - I have, yeah, I have about three grand in savings and about a grand in seconds. - Okay, that's a good start. You may want to build up that emergency fund to three to six months of expenses. And then 15% of each paycheck should be going towards retirement accounts. So if you have one through your employer, that's a great start. And if you see the word Roth, that's even better because you're gonna pay with after-tax money, but it's gonna grow tax-free. So think of it like net income later on in retirement. And if you do that with some good gross talk mutual funds inside of those accounts, you're gonna be just fine. And I'll send you our investing guide to help you as well. - We'll send out the investing guide to you Lily and make sure everyone else gets you started. And if you need some help sitting down with the Smart Vester Pro, just click on Ramsey Solutions. You can find some of the people we recommend. We're not in the investment business, but we recommend people that we've vetted and that we trust. They're called Smart Vester Pros. And we can definitely help you get that done. - RamseySolutions.com/guide for everyone out there listening. We'll drop a link to that as well in the description of this episode. But that's a great place to start. - What's in the guide? - It covers everything from what is a mutual fund? What are all these different types of accounts? How do I even go about picking them? How much do I invest from each paycheck? So it's a great start for those who are getting, kind of the beginner's guide who need just understand the basics of investing. What am I actually doing? What is the stock market? - Yeah, there's a certain number of people that when you just say the word investing frees. - I mean, there's so many options. And you don't want to screw it up. - There you go. - You think like a vending machine eating your money. You don't want that. - That puts us out of the Ramsey show in the books. We'll be back with you before you know it. In the meantime, remember, there's ultimately only one way to financial peace. And that's to walk daily with the Prince of Peace, Christ Jesus. (upbeat music)