Transcript of Debt Is Not A Problem Solving Tool - Financial Peace Is

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 studios, this is the Ramsey Show. I'm Dave Ramsey. Dr. John Delony, Ramsey personality, number one bestselling author, author and host of the very popular Dr. John Delony Show on Ramsey Networks. He's my co-host today. Open phones at 888-825-5225. Gabrielle, or Gabriel, is in Los Angeles. What's up?

Hello, Dave. Hello, John. Longtime listener. I'm 27 years old, gonna be 28 in November. I just got a job as a buyer/planner. I'm making $65,000 a year. Before, I was making minimum wage, like $17 an hour. I have 2 children. I always hear you say before, I have a— I got a PhD in stupid when I was younger. I'm definitely trying to change my life around. I have about $60,000 in debt. And yeah, I'm just trying to figure out how to navigate that. Both my children, I'm not with, you know, their mothers. So I'm having to pay, you know, about $1,100 a month in child support, which I have no problem with.

Mm-hmm.

I guess my issue right now is starting to make, going from $17 an hour to $65. I know it's not life-changing, but for me it is life-changing. It is life-changing.

That is a big deal. Congratulations.

Thank you so much. Thank you so much. And it opened my eyes to maybe I can have a future. For a long time, I guess I was in my head that life was over essentially. So I guess now I'm having a brighter outlook listening to you guys and hearing other people's stories. I feel like it's possible. I have an amazing wife. Amazing girlfriend. She's going to graduate in a couple years with her SLP degree. So I just want to plan our life. I want to get rid of all the debt that I have. Um, you know, I want to marry this woman. I want to provide a good future for my kids and for myself. Um, and I guess, yeah, my question is just how do I attack it? Is it possible, you know, to even get a home one day and, you know, uh, do all this? It just feels kind of suffocating right now because it's just me. Sure.

You're not suffocating. You're, you're, you're on a curve, man. You're excited. You got a thing called hope. It showed back up. Yeah. And so good for you.

I think that was—

Yeah, I'm proud of you.

At first it was the whole thing that I couldn't do.

Yeah, I see a really, really bright future for you. You're asking all the right questions with the right urgency and the right belief. So yeah, you're in good shape. Yeah, I mean, as far as the money piece, sir, I would just tell you to follow the Baby Steps and we'll help you. I'll send you a copy of the book, The Total Money Makeover, and make sure you read that. Go over that with your girlfriend. And, you know, first thing you do is get $1,000, and the second thing we're gonna do is list these debts smallest to largest. And here's the weird thing: when you start paying attention to the debt and you quit borrowing money, you can make that debt go away. It's just you weren't paying attention before.

Exactly. I think that's another thing is like, I'm blessed. My girlfriend is also— she's better at saving than I am. She works a part-time job and still manages to save more than me. So I'm blessed in the aspect of having— I'm more of the I like to budget and do the numbers and she likes to actually do it, you know? So I guess for me though, like, I got into it. So I think we balance each other out well. So I'm lucky in that end.

Well, you don't balance each other out because you're not married, but you can coach each other. You can be cheerleaders for each other and cheer each other on until you're married someday.

Let me give you a huge warning, okay?

Mm-hmm. Yes, sir.

When I graduated college, I don't remember the exact number. I think I had $20,000 or something by myself in student loan debt. I got my first big fancy job and I worked a bunch of extras. Like I was a coach and a teacher. And so I could coach extra sports and make even more money. And I ended that year double, if not 1.5x the amount of debt I started that year with.

Mm-hmm.

Because I finally got this job. I've been, I've been driving an old beat up car since high school all the way way through college. I didn't say no to myself ever. And the big trap you're gonna have to be careful of is you finally have a paycheck and you're going to want to catch up on all the spending you haven't done over the past few years. If you will hold tight for 24 months, you can change everything in your life.

Yeah, just tear into this debt.

I feel that way too. Um, that the only thing is, like, for example, I was of the same mindset before. I drove a 2005 Toyota Camry. Um, it had like maybe $100— I got it for like $1,000 $1,000 at an auction. It had maybe like 98,000 miles, so it was just preseason for the campaign.

Brand new, yeah.

Yeah, yeah, exactly. But I did get into an accident a month into my new job, so a couple months ago, my car got totaled. So I wasn't listening to you guys as heavily. This has been a couple weeks where I've been every day at work just listening to you guys all day. But I had to get a, well, I got a car, 'cause I work a bit far from where I live.

How much did you spend on this stupid car?

$17,000.

Okay, that's not as bad as I thought you were gonna say.

No, no, no, no, I don't have—

So that's in your list of $60,000. Now the first step of getting out of debt, honey, quit borrowing more money. So no more of that. You're done. If you keep that car, that's fine, but you're gonna have to now say beans and rice, rice and beans, and the next time a little problem comes up, we don't solve it with debt. You suck it up, buttercup, and you push through. You gotta lean into this now. Now's your time, and that's exactly what John's talking about. Totaling a $1,000 car does not constitute purchasing a $17,000 car. These things are not on the same page. This is, uh, your emotions got out of control. So when you total a $1,000 car, you buy another $1,000 car. That's what you normally do. But people don't. They do what you did, and that's a mistake. So, all right, hang on. We're gonna send you a copy of the Total Money Makeover book and get you going. Taj is in Baltimore. Hi, Taj. What's up? Hi, Dave.

Hey, thank you for taking my call.

Sure, how can we help?

I've kind of, I want advice on how I can continue going through the Baby Steps and kind of managing my money moving forward. So earlier this year, my parents got divorced and now I pretty much like gotta move out and I have like a lot of credit card debt and I have a leaky vehicle and between that and my vehicle and my car insurance. Um, I just want to know the best ways that I can kind of prepare to pay rent, you know, toward the end of this year and kind of move forward.

How old are you?

I'm 24.

What do you make?

I make, uh, $56,000 a year.

And how much car did you take on?

Well, uh, right now I'm in a lease.

I don't know, what's your stupid payment?

It's $500.

Good God. Okay. So let's talk about selling that lease car back and getting out of that lease and getting you a beater.

Right. So right now my current payoff amount is $19,000, um, and it's worth about, um, $16,500.

Yeah.

And, um, I was listening to your show recently and, um, I know that, you know, you could potentially go to a, you know, a credit, um, You know, like a creditor to get a loan to pay off, pay it off. I'm not sure how that would work being as though like I'm upside down right now.

Well, you'd have to borrow $4,000 to pay the difference and sell the car. You got, 'cause you're in the hole, you're upside down. And so you got a $4,000 personal loan. That's better than a $16,000 or $17,000 loan or whatever the thing is here. And we don't, $19,000. And then get you a beater and let's, you know, because you got to move out and stand on your own at 24 years old making $56,000 in Baltimore. You need to run those numbers. Go look at one-bedroom apartments or two-bedroom apartments with a roommate. How are we going to do this? And it's not going to be driving that car.

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Victoria is with us. She is in Seattle. Hi Victoria, how are you?

Hi Dave, thank you for taking my call.

Sure, what's up?

Yes, I'm just a little bit overwhelmed. I'm basically getting over a divorce, right, over, oh, over like $20,000 and $14,000 of it is, kind of pertinent. It was a personal loan. Uh, they took me to small claims, and their intention is to try to potentially garnish my wages. And I was wondering what your advice would be, if I should get a HELOC to kind of get out from under all this divorce debt.

How is the divorce related to the small claims court?

Well, the person loaned me Uh, so it was a friend, um, no longer a friend really, but they loaned me the money because I just didn't have it. And the divorce was just— we had to just keep going back to court. He kept just taking me, taking me back to court, and I had to get a lawyer. Uh, so they loaned me money.

So you borrowed money from a friend to pay for your divorce, and then you haven't paid back your friend, and now your friend is suing you?

Yeah, I haven't paid it all back. I tried to make payments, but now I'm—

So what do you make, Victoria?

So currently I make $52,000, but I'm gonna be starting to make $72,800 starting next month.

Okay, how long ago was this divorce?

The divorce finalized a year ago.

Okay, and how long have you been loaned this money?

About a year and a half.

Okay, so in the last year, how much have you paid towards the $14,000?

I paid like $1,000 because I lost my job and I just, you know, I haven't been really making it with my, and that's what, you know, my old job, I wasn't making it. It was just very sporadic income, my old job.

How long have you had the new job, this $56,000 job?

Uh, the $52,000 job, I started May 10th.

Oh, just the other day. Okay.

Yeah, and then—

Okay.

Yeah, so I've just been really struggling. I haven't—

Well, there's a couple things. Um, obviously a judgment is final in the state of Washington where you are, and then they execute on the judgment, which gives them the ability to, um, take a lien on any assets, including doing garnishment on your wages in your state. Okay, usually that takes a while. When was the judgment final in small claims?

The small claims, we had already previously mediated, and it was agreed that we were gonna be on a payment plan. But now, because I have—

Because you didn't keep the agreement, now they're gonna garnish you.

Now they were going back on the end of August Okay. To have a hearing, and then, but the person's intention wants to garnish my wages, but of course we're going to have a hearing about it.

Well, what they want is their money.

I understand.

And for different reasons, you've not paid them their money.

Yes, I understand.

Okay, and so it's not that their intent is to garnish you. Their intent is to try to get their money back. And you've never paid them in a year more than $1,000 because you lost job, you had a bad job, you finally got another job, and you made an agreement. On May 10th you made the agreement? No, May 10th is when you started the job. I'm sorry, when did you make the mediation agreement?

Uh, a year ago.

Oh, so they've been sitting around waiting a year for you to keep your word from the mediation, and now they've lost patience a year year later and they're going to come after you. That's fairly patient. Okay, if I was going after your throat, I would have come sooner.

Yeah, well, I mean, I said I— so that's why I'm thinking, should I just get the HELOC to just pay them? Yeah, I have no other—

yeah, that'd be a great idea. Or better than that, do you have an attorney, or you're working with this person's attorney, or what?

No, it's just pro se, just self.

Okay, but does he have or she have an attorney representing them?

No.

Okay, so both of you just walked up before Judge Judy and did this?

Yes.

Oh crap. Okay, and I'm guessing that it's real tense between the two of you.

I mean, I can try again.

No, I'm guessing— answer my question. Is it tense between the two of you?

Yes.

Yeah, I would think. I would think. Okay, because here's what I would normally do, and I don't know that it— I don't think it'll work here— is I would ask their attorney what they would accept if we just wrote them a check. If I go borrow the money on a HELOC and write them a check, what's the minimum amount they'll accept to settle this debt? If this was a bank, they'd take a quarter on the dollar. You could settle it for 3 or 4 grand. But this is a pissed-off individual, so you may not get any discount. Okay, but yeah, if you have the ability to go borrow the money on a HELOC and pay them, I would. They were there for you in your time of need. You owe them the money. You have the ability to pay them the money by doing the HELOC. I'd go get a HELOC.

Okay.

Because the other thing is, this is taking a lot of stress on you. And when this person and this lawsuit and this mediation and all this garnishment is out of your life, you're gonna sleep better. Would you agree?

Yeah. Is there a possibility to go— is your credit in such shambles that you couldn't go down to a local bank, local credit union, get a personal line of credit for $14,000?

I don't, I don't know. I can try doing that, but like, I have other, you know, the divorce just really put me in a big hole, so I still owe more than just the $14,000.

What else do you owe, Victoria?

I mean, I owe my credit card, I owe my old lawyer.

How much do you owe your old lawyer?

Uh, like $3,000.

Because here's my fear: you're gonna treat your, your HELOC just like you've treated this, um, past friend and your past attorney, and you're gonna end up losing your house.

No, I'm a single mom. I have, you know, I've been just trying to hold on, you know.

I got that, but if you take a HELOC out, what you're doing is you're putting your house on the block. That means you have to have to pay this off as fast as you can. What is your home worth?

My home is worth, uh, I'd say about $350,000.

And what do you owe?

Uh, about $275,000.

Okay, and how much debt do you have? $14,000 and $3,000 to your lawyer, and how much on the credit card?

About $3,000.

Okay, and what other debt?

Um, and then I have like a student loan.

How much?

Uh, and I have—

How much?

How much is the student loan?

Uh, my student loan, I'd say is about $15,000.

Okay. All right. Um, I want you to put the divorce in your rearview mirror. I want you to get your fight back. I want you to list these debts out. I want you to take 6 jobs and attack these debts and clean 'em up as fast as possible. So much has been happening to you, and now it's time for you to happen to things. No more victim. You're gonna have to be a victor now. You're not a victim of the divorce. You have to stand up and fight, girl, and fight your way through this, and you can do it.

Thank you.

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So if you have a pile of debt and no money, and life kicks you in the side of the head, now you got a real mess. And bouncing back is hard emotionally, psychologically, John, financially. And if you have an emergency fund of $20,000 and no debt except your home, and life kicks you in the side of the head, you're emotionally in a different place to bounce back because you don't feel unsafe. You don't feel vulnerable, like I'm about to be homeless. My check is getting ready to be garnished. This divorce set me back. "this illness in our family set us back, this job loss set us back, this—" Name your tragedy. Name your poison. But it's coming. That thing is coming.

Every time.

And there's, you know, being ready for it financially by being out of debt and having an emergency fund, you know, when there's an emergency, hello, it does help. It doesn't keep the problem from being there. It doesn't keep the— depending on the extent of the the extent of the event, how bad it was. But even then, people recover at different speeds from a nasty divorce, a job loss that was devastating, a—

A death in the family.

A death in the family, a whatever. I mean, those are the three things that come to mind. But, you know, so "My husband died. My wife died. We lost a child. My company, I was making serious money and they just walked in one day in corporate America and they just cut my head off, just fired me. I didn't see it coming." Or, "My husband of 23 years walked in and said he had a girlfriend and we're done. And I haven't worked in the workplace in 12 years, and so I don't know what I'm going to do now." People recover from those things at different speeds, different resilience almost. John, what is the— the reason I'm setting all that up is I wanted to ask you on the air, what are the principles if you're facing something like that? Where you want to be, I think, is within a certain number of months, you want to have that tragedy— it still hurts, it's still betrayal, it's still whatever it is, but you want to have it in the rearview mirror and be looking forward. Other than, you know— but sometimes when I take a call or we take a call here, they talk about that thing that happened in such fresh terms that you think it was 10 minutes ago and you find out later in the call it was 6 years ago.

Right.

And they're still living back there emotionally. What causes people to be able to move past the horrible thing that happens, because it, granted, it's horrible, it's trauma.

Yeah.

But how do you move past trauma and get it in your rearview mirror as fast as is healthy?

I like to think of it not in terms of getting past it as much as I'm just gonna start taking action. If you lose a child, that will be with you forever. If your spouse walks in after 25 years and says, "I got a girlfriend," that will embed itself in your nervous system. You'll be on guard for that for the rest of your life. My goal in that moment is, I don't wanna pass that on to my kids, but I get to decide. And this, this is honestly where a group of people, this is where a community, this is where, um, a, a good group of friends, a good group of family members, even a therapist, if you have to call somebody or, or a minister, this is where when you can't carry it on your own, people will walk alongside you and help carry the load. But I have to start taking the next right action. And What I'll find is after 2 months, after 4 months, after 6 months, this thing may still be on me, but I'm gonna be stronger and I'm gonna have moved down the road a little bit. It's when you just stop and it surrounds you like a fog and there's no one to help lift that fog.

There's no one to shine a light in there and there's no action taken moving forward that, um, you wake up 2 years, 3 years, 7 years, 20 years, and it's as though it just happened to you because you haven't taken that step to start moving towards a new thing.

And I don't know where this process happens in the brain, and I'll be interested in your take on this, but the Bible says, "Out of the abundance of the heart, the mouth speaks." And so what I have noticed is, is the language that we use is an indicator as to whether we're taking action and moving forward or whether we're sitting in the acid.

That's right. Yeah, yeah, yeah.

Like, because the language acts like I'm still there and it was 6 years ago. Right. The language sounds fresh.

Yeah.

And the words you use. So do you consciously say, "I'm gonna choose different words," or do you just choose a different stance, a different posture, and the words then change?

Probably a little bit of both. I think it's a cocktail of genetics and life experience, et cetera. I think that's the beauty of a show like this is what you've been doing for so long is some people don't have people in their life to speak those words. Some people don't have wise counsel. Some people don't have a hand that can reach out and pick 'em up. And some people don't, um, I have a close friend of mine when she was pregnant with her third kid, her husband just up and said, I'm out, left. And I remember saying a few years later, I don't know how you did that. How, you know, she had to get on, she was on welfare for a while. Now she's this many years later, she's got a great career. She's crushing it. She's remarried. Her new husband's awesome. But I said, I don't know how you did that. And she said something that stuck with me. She said, I had to.

Mm-hmm.

And I think there is a gap between, I have to, I got 3 mouths to feed, I've gotta do something. And there's this gap, and culturally that gap has gotten wider and wider. I don't have to, have to, have to, right? I can continue to stay complacent. I'm just not gonna pay. I'm just not gonna do this. I'm gonna let these things go to collections and I'll get this judgment against me. You'll pay the piper at some point. Someday you're gonna have to. But our culture's allowed that there to be a bigger and bigger space and what happens is you just end up basting in it.

Literal survival.

I have to.

We don't have literal survival anymore that we're struggling with. I mean, that's how I felt when we went bankrupt. That was a life-changing tragedy experience. I lost everything. I've got a brand new baby, Rachel, a toddler, Denise, a marriage hanging on by a thread. And people are like, "So how did you get up and go to work?" I had to.

I have to. Especially back 30 or 40 years ago, there wasn't programs, there wasn't, like, I have to right this second.

There had to be money. There was a baby that wanted milk.

Right.

You know, there was a— I'm wanting formula. There was diapers. There was an electricity that had been cut off and didn't need to be cut off again. I had to go to work. Had to, yeah, yeah, yeah. That day. I didn't file bankruptcy and then take a week off and mourn the tragedy that I'd been through for the last 2 and a half years prior to that. I didn't— PTSD, I didn't have time for. I couldn't spell it.

Well, and I think the bigger thing is wherever you find yourself, Most of us believe, and again, it's another cultural lie, it's the air we breathe, that in the right time or when things feel right, then I'm gonna go. I need to get my confidence back and then I'll go do X, Y, or Z. And the fallacy there is your body gains confidence through action. You begin to go look for—

You don't think your way into confidence.

You can't. You don't think your way into being well.

Confidence comes from competence.

From doing. You begin acting well and your body starts to stand up taller and you start to be able to breathe a little deeper. You don't sit in your house and say, I just want to, I, when I can, when I can breathe better, then I'll go, I'm gonna start, I'm gonna download an app and start doing breathing exercises in my living room. Cause that's what I gotta do right now. Right. And you begin taking tiny, tiny, tiny actions. And, um, man, you look up 6 months, 7 months later, some of those things will never be in your rearview mirror, but they're not gonna be so suffocating. They'll be with you. Uh, but you'll be taking action and moving through it.

Now there's always gonna be a tender spot where that scar is. Oh yeah. Oh yeah. Yeah. I was 28 years old, so that's almost 40 years ago. And I can hear someone's voice here on the air and it takes me, my body back to there. I can feel it. My throat starts tightening up. Oh yeah. Oh yeah. I mean, I remember that.

And I talk to any number of parents who lost a child 10 years ago, 20 years ago, within 30 seconds they'll be in tears again. That will be with you. But I'm going to take the next right action. I actually like what our buddy Jaco says when talking about service members that were under his care that he lost. I got two lives to live now. I got three lives worth of laughter, three lives worth of adventure, three lives worth of giving and generosity to live now. But it's taking that responsibility and saying, I'm gonna head this way.

So the answer to the overall thing is action.

Is action, man.

Instead of paralysis.

Take action. And if you can't take action, get someone to reach out and pull your, like, take somebody's hand and let them pull you into action.

And let them pull you into action.

That's right.

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Very good, how are you?

Better than I deserve. What's up?

Yes, sir. So I wanted to call and ask you guys about opinions on refinancing, um, some medical school loans in order to pay them off quicker. Just recently graduated medical school and I'll be starting a 5-year residency here next month. I have about $100,000 in loans and I would love to be able to pay them off within the next 5 years.

What is your residency in? I didn't know, I didn't think residencies were 5 years.

Did I miss it? Yeah, it'll be in orthopedic surgery.

I was gonna say, you're gonna be a fancy pants, huh? Good for you.

Yes. There you go.

Thank you. So what do you, what do you make during residency?

Sorry, what was that?

How much will you be making as a resident?

Oh, um, in residency I'll be making about $68,000 to start. Um, and I also have an additional, um, about $15,000 from, uh, military, uh, disability compensation each year as well.

Thank you for your service. Are you married?

Thank you. Uh, no sir.

Okay. Okay, so we're dealing with $85,000 income with $100,000 in debt, and so $20,000 a year does that in 5 years, right?

Yes, correct.

That should be doable. A single guy who can't do anything but work all the time, you haven't got time to spend money.

Correct. Now the trade-off to that is being able to contribute to my retirement as well.

No, hold off on that. No retirement until you get student loan cleared.

Okay.

Put 100% of any free money you can get your hands on on the $100,000. If you can get done in 3 years, that'd be great. That's $33,000 a year. You probably could do that.

Right.

If you could get done in 2 years, that'd be 50 a year, and you lived on beans and rice and lived like a college student.

Right.

Hmm, that's a thought.

Yeah.

The more intense you are, the deeper you sacrifice, the faster you get out. That's how the math works. And by the way, 100% of your doctor friends are gonna think you've lost your dadgum mind.

Okay.

Because they're all stupid with money.

Yes, sir.

Musicians, doctors, and sports figures— bad with money by and large. Okay, stereotypically, not all, but stereotypically. So, um, yeah, anyway, so don't listen to other people in the medical professional what to do with money. It's a bad place to get advice. Get advice from them on orthopedics, but not on money.

How old are you?

Uh, 28, almost 29.

All right, uh, can I paint you a picture real quick? You at 34, you don't owe anybody any money, you're a board-certified orthopedic surgeon heading out into the world.

Making $600,000.

Making, yeah, half a million dollars, and you get to keep 100% of it because you've got, you've got attendings that You've got supervisors who are still paying off their student loans, don't you?

Yeah.

Yes. Don't be one of them. Be 34 years old making half a million dollars to start before you end up buying your own practice a few years later and keep 100% of your money based off decisions you decided to make at 29.

Yeah, so I would say sit down and map it out in detail, but 24 to 36 months, I'd be clear of this, and then we can talk about saving towards retirement and/or saving towards anything else. And your military service is what's done this for you, where you're getting out with only $100,000. And, and now you're in a position to clear that because, because you've got some income from the military service and you've got a great residency, and obviously you're bright. So just apply a system to this, like, like you were prescribing this to a patient. You say, okay, either you do the, the physical therapy or you'll walk with a limp. You get your choice. So do the physical therapy, right? And that's what John and I are saying. Do the hard stuff now so that you can walk properly later. Trying to find a metaphor that fits.

No pun intended for the orthopedic surgeon.

No, it was pun totally intended.

But hey, I think that's the third call this hour, Dave. Whenever you get that first big paycheck, you cross that first big finish line, if you can hold tight. You set yourself up forever. And I, man, I've lived it. I get it. You cross that finish line and it's like crossing mile 1 of a marathon and you just want to be so happy that you ran a good 1-mile time. You gotta keep running. And man, if I could tell anybody, whether you're just graduating from med school, head into residency, just like that caller in the very first call we took, that young man who is, man, been down on his luck. He got a job making $65,000, which for him is a million dollars. If you can just hang hang tight and consider future you at 5 years down the road, 10 years down the road, man, you could set yourself up forever.

Yeah. So the deeper you can cut, Kenneth, and the less you can live on— make a game out of it, you know, and say, all right, I'm gonna set this up for 24 months, and it'll be like holding your breath for 24 months. And then you can exhale after that. You can start retirement. You can start a lot of stuff. Build your emergency fund up. You can do, you know, do a lot of stuff once you're clear of that. But if you tinker around with these student loans people, you end up keeping them like you think they're a pet, and you look up 15 years later and your student loan needs a shave. I mean, it's ridiculous, you know. So it's— there's a problem. Alvaro is with us in Kansas City. Hey, Alvaro, what's up?

Hey, what's going on, Dave? Hey, John. I'm grateful for this call and just want to say thank you for answering.

Well, thank you. How can we help?

Yeah. So this is where I'm at. I make $160,000. My wife makes $90,000. We— so $250,000 gross. Wow. We live on about half our take-home after taxes, tithes, and 401(k). 401(k).

Wow.

So we save about $6,000 a month.

Wow.

Our house is worth $350,000 with $119,000 left on the mortgage at a 3.5% APY. And my current— my previous plan was let's just throw all the cash, be completely paid off by October next year and then save up, uh, about $120,000 in 2 years to move into a new house. What's happened since then is that one street over, um, someone got shot and killed. And about a year and a half prior to this, there's been other shootings. So it's any—

$400,000 neighborhood, they're shooting up and down the street in Kansas City.

Yeah, it's a busy road, and so it's not the neighbors, thankfully, but it's just people randomly walking at night.

That's strange. Okay, 'cause this doesn't sound like it's in the hood or something.

No, no.

All right.

Yeah, so—

So you don't wanna live in a shooting gallery, so you're gonna move, okay.

Yep, but the plan was first, you know, pay it off completely, save up again, but now what I'm doing is I'm just saving for that next down payment, we wanted to keep this home as a rental long-term.

Oh, not now. If you don't want to live there, why do you want to own it?

Right.

That's not an investment. I mean, you don't buy investments where you don't worry, oh, the neighborhood's going down, they're shooting up and down the street, that's a great place to invest.

No.

Yeah, I would, I would— the only thing holding you back, brother, is you have this fantasy that this was going to be a rental house.

Yeah.

Sell it.

If you can let that story go, you're free.

Sell it. Go buy you a house, pay that house off, and then save up some money and go buy you a rental in a neighborhood that they don't shoot down the street.

Okay, so do you still think I should wait and pay it off, pay down my mortgage?

I thought you were gonna, I thought you were unsafe and you were gonna leave.

Yeah, I put a sale sign in the yard this weekend.

Okay.

If that's what you wanna do. I mean, is it unsafe or not?

Yeah, so that's, that's a weird thing. I feel like there's been these pockets of unsafety, but it generally feels safe.

Are you married?

Yep. Does your wife want to move? I have a 1-year-old daughter. Eventually, yeah.

No, does she want to move because of this?

Yes.

Then move. Move.

Okay.

Yeah, yeah.

I'm just telling you what I would do if I was in your situation. Absolutely.

Absolutely. I'd be out of there. But for the same reasons that you're not going to live there, you don't keep it as an investment. I don't buy investments where they shoot down the street. It's not like, no, that's not gonna go up in value. You're not gonna get great return and great quality renters. What kind of renter are you gonna get where they shoot down the street? The cokehead, man. I mean, that's no, thank you.

Yeah.

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Welcome back to the Ramsey Show in the Fairwinds Credit Union studio. Dr. John Delony, Ramsey personality, number one bestselling author, is my co-host today. Jessica is in Austin, Texas. Hi, Jessica.

Hello, how are you?

Better than I deserve. What's up in your world?

Yeah, so I have been married to my husband 16 years now. We have 4 kids. I'm contemplating if we should divorce or not. We are completely drowning in debt. Our mortgage is in forbearance. He hasn't filed taxes in 3 years. It's just like snowball one thing after the next, right? Like $48,000 in debt. I don't know what to do.

What do you make?

Um, I make about $30,000 a year. I work at a school.

What does he make?

Well, he's been out of work since December, um, and he told me he was leaving in March to go out of state to work with some friends, and he really hasn't sent me anything.

Is he still gone?

Yes, he's still gone.

So if behavior is a language, has he told you through his actions, "I'm leaving you"?

Um, yeah, I mean, in March we went to our marriage counseling session. We'd been going for 6 years, and after about 5 minutes of me talking, he ended up leaving and told me he was done.

And it sounds like he's followed through on that. He left you. He's left the house.

I agree, I agree. But then he flew home last week to see our kids for their birthdays and basically was like, I still love you, I don't want to get a divorce. But then he left again, and he's been gone for a week and a half now, and I've only heard from him once.

Yeah, I, I hate this for you. I, I think it's just It sounds to me just as a neutral third party guy, I'm just a dude on the radio. It seems really clear to me what's happened.

Right.

And being home for a couple of days or one day, seeing the kids, them being excited he got home, you seeing him kind of surprised, I can even go that with him that he liked the idea of that.

Right.

But his actions are not of a man who wants to be married and build a life with somebody. His actions are not of somebody who wants to be a present father.

Is he sending checks?

No, he didn't send any money.

No, he hasn't sent me.

Yes, I think, I think it's metabolizing this awful, heartbreaking truth. He left you.

You have any idea what he makes?

Nothing, I don't think.

Well, right now he's not really making anything. He told me that he and some friends out of state wanted to start up their own company, and basically all the money that they've been making has been put back into the company. He said that he paid off a few bills in March. I'm sorry, not March, in May. But in reality, I paid like 90% of the bills in May and I've paid at least a quarter of them for June, but I can't really afford to continue to pay anything else. Our mortgage is put into forbearance.

We owe $15,000. What is your— what's your home worth?

Well, it looks like we still owe $403,000. We bought it for $421,000.

But— What's it worth today?

We owe $15,000. The realtor came by and pretty much said because there's a ton of unfinished projects, he could probably sell it for $430,000. But he said if we get all the projects done—

So you would basically get out of it even.

Yeah, but I, with having that realtor over, discovered that only his name is on the house.

I don't think that matters in Texas.

Yeah, I'm not sure.

I think you're gonna be okay on that.

Yeah. And you've been married 16 years. I think you have marital rights to that house.

Yeah. And let's back up a little bit. This is not a person of integrity, your husband. He hadn't paid taxes in 3 years. I promise you he hasn't told you the truth about everything over the course of 16 years. Is that true?

Yes.

Okay. So I wouldn't believe him.

I've been in therapy for 6 years.

Yeah. I, I, I wouldn't believe him if he suddenly started telling you he's gotta reinvest all this money. Here's the truth. You'd have no idea where he is and what he's doing.

Exactly.

And so all you can deal with is you. The only person you can control right now is you. And I feel like you're, you're attached to a weight that's pulling you underwater and it, the weight occasionally says, I wanna swim, but you're the one paying the price for that right now.

Yeah, I mean, we're completely trauma bonded. He got shot in 2022 and it completely shook our family.

I got that, I got that. Listen, listen, be very careful. Be careful of what I would call therapy speak, internet speak, all that kind of stuff right now.

The bottom line is your husband's not been home and he's not sent any money home for a long time after he walked outta the marriage counselor's office and said, I'm done.

And you got 4 kids who are hungry.

That's real.

Yes.

Right. That's not on TikTok, that's real.

That's real.

Right, exactly. Right.

Yeah.

And so the question before you is, forget the diagnostics, forget the trauma, but all that stuff, the question you gotta ask yourself, and this is a hard one, what are you gonna do now?

Well, that's what I'm calling you for. I can't afford to leave. I can barely afford to take care of me or the kids right now. I can barely afford gas to get myself to go to work right now. You could live in a much cheaper place cheaper place than that house? Oh, I mean, I'm gonna have to. We owe $15,000 on it.

I know, yeah. And you're— somebody making the payments now, aren't they?

No, it's in forbearance.

No, forbearance is you make a payment and a half.

No, we haven't made any payment. We owe $15,000.

That's not forbearance, that's default. Are you in foreclosure?

Well, no, the paperwork that I have, it says forbearance.

Okay, forbearance is when you're making your payment plus some to catch up on your back payments. You are not doing that. You're not in forbearance. Okay? You are in default. How many— how long has it been since y'all paid a payment?

March.

Okay, you're in default. You need to get this house on the market today. You're gonna lose it.

Right.

And then you're gonna get—

How do I do that when it's in his name? Because I had two realtors come over and they both told me that all the projects need to be done.

You're not gonna do the projects. You don't have any money and you don't have anybody to do the projects. So you need to put the house on the market and you need to sell it now. And you need to call him and tell him we're selling the house and that I'm having a divorce— I'm having divorce papers filed on you.

That may be the only way you can get your name on there is through divorce settlement.

I'm not sure there's any money. I don't care. I don't know if you want your money and name on it.

Right.

It's not going to bring enough to cover the bills. And if it does, you know, we'll argue about it then.

But if she puts on the market and he says, "I don't want to sell it," from afar, can he do that if he's just only name on there?

That'll be up to her divorce attorney.

Right, okay.

To convince him.

Yeah, you may have to get a decree.

He has 4 children. And by the way, there's child support due and probably alimony. I don't know if they do alimony in Texas or not, but I know they do child support. And so child support doesn't care if you want to reinvest back into your company. The law doesn't care. It says you have 4 children that need to be fed. That's what it says. And since March, that ain't cool.

That ain't cool. And Jessica, can we say, "I hate this for you, man. I hate this for you." Yeah.

Golly. Daddy needs to be feeding the babies. Time to do it, bud. So you don't get to go off and play with your friends in another land. It's not how this works. That's how it works. You made babies, you get to feed them. That's how a functioning society works, and we that are functioning will make you do that. And we should. So, yeah. Jeez.

I'm sorry, Jessica.

I'm sorry you're going through this. I think you're done, hon.

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Hello.

The rich get rich and the poor get poorer. Most of the time when you hear someone say that, they're trying to make the point that they are stuck and that all the opportunity is gone and capitalism has ruined their life. But if you actually think about that saying, You could ask yourself, okay, if that's true, why is it true? The rich get richer because the rich keep doing the stuff that got them rich. Rich people stuff, like live on less than you make, stay out of debt, be generous, be in agreement with your spouse. This is what rich people do, that's how they got rich, and they keep doing rich people stuff. And it makes them richer. Poor people— there's two reasons people are poor. One is, I mean, in America anyway, in the United States of America, where poor people are some of the richest people in the world, but in America there's two reasons people are poor. One is they're being oppressed and some jerk, some predator, is taking advantage of them and holding them them down. That is real. That happens all the time. And in other words, if you drive down the poor end of town, you'll see payday lenders, tote-the-note car lots, rent-to-own, pawn shops.

You don't see those in the rich end of town, 'cause they wouldn't stay in business, 'cause rich people don't do that stuff. That's poor people stuff. That's people taking advantage of poor people. Right. Right? The other reason poor people are poor is when I was poor— actually, I was not poor, I was just broke. Mike Todd said that there's a difference between being poor and being broke. Poor is a state of mind. Broke is I'm just passing through. I ain't gonna stay here. I'm gonna do something to get out. I've been broke a couple times in my life. It's when I started and then when I went broke. So if you do broke people stuff, you'll continue to be you'll continue to be rich. Let me tell you what— if you're gonna win at anything, what you have to do, you have to have a plan to win and execute on the plan. In money, that's called doing a budget. You lay out and you tell your money what to do because you want it to do something good instead of just pissing it away. Thank God it's Friday. Oh God, it's Monday. "Just take it easy." Said all the broke people.

They just take it easy and they mean it. Don't take it easy. Get up off your butt and kill something and drag it home. Have a plan. This is where the EveryDollar budgeting app came from. It is the detailed plan that will help you execute the stuff we teach here if you want to do things on purpose. If you want to do rich people stuff. Stuff. You can download it for free in the App Store or in Google Play. Mike is with us in Austin, Texas. Hey Mike, what's up?

Hey Dave, how are you?

Better than I deserve. How can I help?

Yeah, my, um, Dave, I'm, I'm, uh, considering retiring, uh, sometime in the next 6 months to a year.

Fun.

And I've spent some time, you know, learning to invest a way that worked for me. I made some mistakes early on. And this will be the first time that I've, instead of contributing and having that monthly income for my monthly cost of living expenses, that I'll actually, instead of contributing to retirement or to an investment account, that I'm actually going to be withdrawing from my cost of living.

Mm-hmm.

And I'm wanting to see if there's things that I can avoid up front that I, lessons learned that I had to learn the hard way early on when I was younger. When I was investing.

How much do you have in your nest egg?

Without the house, about $7.8 million.

Way to go, stud. I'm so proud of you. Oh man.

Mike, I thought you were, after you set that up, I thought you were going to say you had about $30,000.

So, what is that $7.8M in? Is that all in retirement accounts?

It's in 401(k), 401(k), it's in index funds, and then some stocks, and then a couple years of cash.

Okay. All right. Very cool.

When's the last time you did a cartwheel? Because if you haven't done one recently, you should start.

Way to go, man. How much of this did you inherit?

None.

Yeah, look at you. I'm so proud of you. Well done, sir. Well, you need to sit down with your financial advisor, I'm sure you have one, and ask them what the tax-efficient withdrawals are. The least efficient—

That's my big question.

Yeah, the least efficient. How old are you?

55.

55. Okay. You're not going to be able to touch your 401(k)s, 401(k)s, as you know, until after 59½, but you don't want to touch them anyway because everything you're withdrawing there is going to be ordinary income, as you know. And if you've got some index funds that have appreciated, your withdrawals on that will be at capital gains rate. So that's pretty tax efficient. You probably have some stocks that you could begin to liquidate that the gains would be at capital gains rate because you've held them more than a year. And so capital gains rate— what's your income?

About $350,000. Yeah.

If you break that I believe it used to be $400,000. I think it may be $450,000 now. Then you get into a 20% capital gain instead of a 15%. But talk to your tax advisor, your financial advisor. But I think you're going to liquidate the non-401(k) non-401(k) stuff first. And you're not going to liquidate anything. You're probably just going to take the income off of it, the growth.

Yeah, I just want what I need to live on monthly.

Now, how much have you got, say, in index funds?

I would say about $4 million.

Okay, and so, you know, the market is already up just under 10% for the year on index funds, okay?

Right.

Which would be $400,000 so far this year, which is more than you need.

Right.

Okay, so you could live off of a portion of the income created from the index funds easily and have very minimal taxes on that. Now, having said that, I want you to also sit with your tax advisor and your financial advisor and begin a strategy to start moving some of the 401(k) 401(k) money on a steady stream into Roth and pay taxes on it now. Because— how much is in 401(k) 401(k) again?

About $3 million.

Okay, so that's gonna roughly, if it's in good mutual funds, it's gonna double about every 7 years. —so when you're 62, that's $6 million. When you're 69, that's $12 million. And all of that is taxable at ordinary income and taxable to your kids at ordinary income. It sucks. And you've got required minimum distributions at 73, 72 and a half.

That's right.

Okay, RMDs. So because of that, I'm 66, or getting ready to be. I have years ago moved everything into Roth and went paid taxes on it before it doubled. So all the doubling has zero taxes. And the inheritance has zero taxes.

That's great.

Because Roth is inherited tax as well. So, and I don't have RMDs.

Right.

Because it's in Roth. So I want you to begin to move that $3 million at a steady pace and pay some taxes to do it, to raise Roth, because before it doubles and triples and quadruples, I want it to be in tax-free growth, and all that doubling and quadrupling and so forth will be— Dadgum, son!

Okay, so if I'm Mike—

7.8!

I think I would cash out stocks today and pay it all in one lump sum now if I could. Is that— would that be dumb?

No, it would not be dumb. Depending on—

I guess the capital gains might kill me on the tax—

He's already making $400,000, So yeah, probably not be dumb, because you're probably maxed out on taxes either way. Your RMDs are going to max you out on taxes. So yeah.

That'd be one painful check to write.

These numbers are so big that it does, it changes the equations. Yeah, very cool. Yeah, I think you might be right, John. But I just, I change everything to Roth instantaneously every time I get anything that's not Roth. And so I just go ahead and pay the taxes right then. And so there's a case to be made to move the whole $3 million this year to Roth.

And just bite that bullet. It's one ugly tax payment and you'll never make one again.

On that.

On that money.

Yeah, if you keep putting money in 401(k), 401(k), you got to change that to Roth as well and go with that. Your match is never in Roth, and so you got to convert it to Roth at the end of the year every year. That's what I do. But yeah, whew.

Wow. Well done, brother.

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Ramsey.

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Today's question comes from Sierra in Mississippi. Sierra writes, I've been engaged for 3 years, but after finding out last weekend that my fiancé cheated on me, I called off the wedding. He had talked me into financing our $8,000 wedding rings and now refuses to help pay them off. The debt is in my name. Would it be smart to get another loan to pay off these rings if the current interest is really high? I have 4 kids to support, so every cent that comes into my account matters. I just want to move forward. How do I do it? Yeesh. Um, I honestly, Sierra, here's what I would do. You did a big, hard, scary thing by saying, I'm worth more getting married, um, to somebody, um, who's not gonna cheat on me. So I'm not doing this.

Good for you.

Good. Yeah, exactly.

Good for you. Smart girl.

The next sentence, he talked me into financing our $8,000 wedding rings. I would stop right there and I'd reframe this as I chose to finance our $8,000 wedding rings. Take full ownership of every action you took. And then that reframes this whole thing. I made a big decision that I'm worth more than this. And that big decision also came with a financial cost because I chose to finance expensive, expensive wedding rings. And I'm gonna be in charge of dealing with what comes next. And I get, man, you got 4 kids. It's, ah, it's just brutal. It's brutal. But getting another loan, loan to cover up another— it's just, you're just going to compound this issue. I would—

Number one, we're going to sell the rings.

Sell, yeah, sell the rings and then pay the difference. That's what I would do.

Yeah, sell the rings and pay the difference as fast as you can. Now, there's two other things I'd add to it. Number one, I don't know how long you've had the rings. We don't know that in this particular email. I'd swing back by that jewelry store, ask for the manager, the owner, if it's a local store, and tell them your story and say, "I have 4 children. The guy's a bum. He cheated on me. And you don't owe me anything, but would you help me?" Mercy. Would you give me some credit, buy them back? Will you help me get out of this mess? Can I put them in here on consignment and get the most for them at a retail setting versus pawning them? You know, help me. And don't come in there acting like the jewelry store did something wrong. They didn't. They did what jewelry stores do. They sold you rings and you financed them, and that's them. That's on you. But just ask the owner or the manager for some mercy, some help. I think you'll find yourself a listening ear, because they sell wedding rings, and they might sell you another one someday.

And if they take care of you guess who's gonna hear about it? Everyone you know. You're gonna say nice things about those people, and you would, and you should. That's thing number 1. Thing number 2 is I don't know what all is going on here, but I'm pretty pissed at this guy right this second.

Mm-hmm.

And so I would— let's just pretend. I'm gonna make something up, okay? She has 4 kids. Because these aren't a couple of 18-year-olds, okay? So, I'm gonna pretend he has some money.

Mm-hmm.

And he's a jerk and won't pay his part of the rings. I'm gonna pretend that for a second. And so, then I'm gonna ask a family friend that's an attorney to contact him and let him know that we're gonna sue him for breach of contract, because he breached our marriage contract when he cheated on me. Me, and the settlement is $8,000. I'm just gonna mess with him, just for the fun of it. I'm not really gonna do it, but I'm actually gonna make him think I'm gonna do it, just to have some fun here. But now, if he's a broke jerk and he's just out digging ditches or whatever, leave him alone. It's not worth the trouble. But I'm just gonna pretend that he has a big old pile of money, he's driving a fancy car, and he don't want the house hassle of Sierra being all up in his business. So between those two things, maybe we can add a little edge to this and get you out of these rings. Wow. One I go for mercy, the other one I go for the throat.

Go for blood.

Please give me mercy. I'm going to kill you, by the way.

I want to harp on this line. I just want to move forward, but how do I do it?

That's good.

Take action.

That's good.

Take action. Take action. Take action.

Don't sit and look at the rings. Don't keep them in your house. Get rid of them. Don't use his name in your house anymore. —lay out a game plan. And if you do this attorney thing, I'm half joking, I'm half not, but if you did something like that, make it real quick and it's over and it's in the rearview mirror. Just see if we can get him to write a check, just for the fun of it, because he actually morally, ethically does owe this back, because he's the one that breached the contract, actually, if you really want to be technical about it. So I'm not talking about the law, I'm talking about ethics.

Well, do you have a contract if you shake hands on a— That's a contract. On a—

It's not worth a paper trade note. Engagement.

Yeah.

It's not worth a lot. It is a contract. You made a promise. And based on that promise, there was a financial transaction.

Yeah.

And so there's damages. And I'm not an attorney. I'm just gonna have some fun with it.

You just happen to be $8,000 in debt.

I'm gonna make a legal case out of it, even if there's not one.

I would say move forward and—

Leave it alone.

Don't say his name again in your house. That means I'm gonna own that I signed my name to Yeah, quick as you can. This financing deal.

Quick as you can move on past this. Your heart's broken.

I do love the idea of going back and looking the jeweler in the eye. They may tell you to leave. What's the worst-case scenario? You're gonna get back in your car in the same situation. You're not out anything. But man, that's— it's worth asking for mercy. That's cool.

Kirsten is in Orlando. Hi, Kirsten, how are you?

Hi, Dave, I'm good. How are you guys?

Better than we deserve.

What's up?

Okay, so I just have some little questions. Me and my husband opened up a company about 3 years ago now. It has flourished into something we never expected it to, kind of just dreamed of it to. I just want to know if I'm doing the right thing by paying him what we need because we do have credit card debt and stuff, car loans, excavator loan, that kind of thing, house loan. So I'm just trying to figure out if I can—

Yeah, 'cause everybody has an excavator loan. [LAUGHTER] What in the world?

I know.

I'm guessing you got in the dirt moving business, right?

We own a natural gas and propane company. So we install the gas lines for generators, cookstoves, water heaters.

So you bought a backhoe? Yeah. An excavator. Yeah. Okay. What'd you pay for the excavator to dig a $400 ditch?

Um, we paid about $37,000 for it. Um, we financed it.

That's a lot of ditches.

Yes. Um, we did it when we first opened up the company. Um, cause to put some of these tanks in the ground, you, you can't hand dig them.

No, but you could rent one.

Yes, but it was, we were spending about $10,000 a month renting one.

No, you weren't. $10,000?

It was, yeah, it was about $600 a day.

If you were spending $10,000 a month, why didn't you just pay cash in 3 months?

Because we didn't know what to do with the money.

But you still didn't know what to do. Okay, so what's the profits on your propane tank business?

So profit was close to $100,000 last year.

Okay. And that's what you paid taxes on, that was the profit?

Yes.

And that was before or after you paid your husband a salary for running the business?

After.

What does he get paid?

I pay, we pay him about $1,500 a week.

Okay, so another $72,000. So include your household income from this business would be $172,000.

Yes.

And, and how much debt do you have?

We have quite a bit. We were young and dumb. We had credit cards. This week alone we paid about $6,500 $100,000 just in credit card debt. Mm-hmm. Um, just from the cash savings we've had over the years, just stuffing it away. Um, we still have a remaining amount.

I'll tell you what, hang on. I'm gonna have to get the rest of this story cuz I got right down in the middle of it and I can't get to the end of it in the next 20 seconds. When I started, I had great ideas and I knew how to serve people, but I didn't have systems in place yet. At that time, I sold books outta the trunk of my car. It was a lot harder to start a business back then. Shopify makes it easier. Shopify is the business platform powering millions of businesses and about 10% of all e-commerce in the United States. If you've got a product or even just an idea, Shopify makes it simple to get moving. You can build a storefront, write product descriptions, and even improve your product photos all in one place. You don't need 10 different systems duct-taped together. Shopify handles everything you need to make sales, from payments to marketing and analytics. Plus, that purple Shop Pay button is one of the best converting checkouts on the planet. Mm-hmm. On the planet for fewer abandoned carts. And if you get stuck, Shopify offers 24/7 support. So if you've been sitting on the sidelines, it's time to turn those ideas into— Sign up for your $1 per month trial at shopify.com/ramsey. That's shopify.com/ramsey. shopify.com/ramsey.

All right, we're talking with Kirsten in Orlando.

They started a propane tank business, um, and last year they made $100,000 profit plus paid him $72,000, so it make $172,000 $100,000 on the business to the household. And they've begun paying off debt, paid off some credit card debt the other day. Now total, not counting your home, Kirsten, what kind of debt do you have and how much is it?

Um, so we owe $57,000 on my car. We owe $26,932 on the excavator and about $7,000 left in credit cards.

Okay. And what kind of— why do we have a $60,000 car?

Um, so my car's transmission was going out and I've always dreamed of having like a bigger SUV because I'm a sports mom. So my husband bought me a 2024 Ford Expedition Max.

Okay. Okay. You need to, you need to, you need to say that sentence a different way. All right? We bought a car that was super expensive. Not my husband bought me— you guys made this decision together.

No, we did not.

And I dreamed of putting myself into nightmarish car debt. Okay? No, there's nothing in this that makes it okay. But no one forced you to do this. So anyway, hey! And you paid off $6,500 out of savings. But if you've got $172,000 coming in, uh, what did you guys used to make before you started this business?

He worked full-time. I've always been a stay-at-home mom. Our kids are 5 and 8.

What did you used to make before you started this business?

He made around about the same, between $60,000 to $70,000.

Well, no, now you make $172,000. So it's not the same.

Yes, if you pull from the business.

That's one thing we're not doing. Of course we pull from the business. We're broke and we bought a car we can't afford. And we're in debt. Of course we're pulling from the business. So what you do— does the business have any debt that you failed to mention?

No.

Okay, so just the excavator, that's it? That was the only thing you bought for the business on debt?

Yes.

Okay, good, good. Okay, so what I would do if I was in your situation is, you have no— the business is able to run off of cash flow and run the budget and able to buy the things it needs to buy, and it still nets you guys $172,000. So you're gonna pay taxes on $172,000 because you got $72,000 set up as your income and then you got $100,000 in profit. Both of those are taxable events in any given calendar year that that occurs. So I'm gonna bring most, if not all, of that home and I'm gonna pay off this debt this year. Live on the $72,000 and be debt-free. If you're unwilling to do that for some reason, then you need to sell this stupid car.

Okay.

The car is not stupid. The debt on it was stupid. You bought a car that was completely outside the picture. And the next time the business needs a piece of equipment, it needs to save up out of profits and pay cash for the equipment.

Yes.

Okay, so the number of times I have seen people in your— in the construction world buy equipment that they can't afford because they act like the rental fees are killing them, and if the rental fees were literally $10,000 a month, that's $120,000 a year in rental fees. I don't believe you. I think your numbers are wrong. I'm positive your numbers are wrong, but it doesn't cost $10,000 a month to rent a backhoe from the rental place, 'cause you don't need it every day, all day long. You need it for a few hours to dig the ditch, dig the hole, and then you drop it back off at Sunbelt or whoever you're renting it from. And that's what people in the construction business do all the time instead of buying $60,000 backhoes.

And even if it did, Dave, what is the hesitancy hesitancy of a, of a small business owner. Like let's say for instance, it, it was $10,000 a month and they, she bought a, or they bought a $37,000 backhoe. Why wouldn't you as a small business, we, we've, we went into debt, bought this depreciating asset, we're gonna hold off for 4 months and just with the money we would've spent anyway and just pay the sucker off.

In 4 months.

In 4 months. Yeah. I, I, I talk to small business owners all the time. What is that hesitancy to pull the money out of the Yeah, I don't know.

I don't know, the idea that some— well, you have to pull it out because it's taxable. So it's technically out of the business. If it's an LLC or a Sub S, which it should be, it's 100% taxable. And so it's out even if it's sitting in the business account. Ramsey, my money here, if I make a profit here, just because I leave it in the Ramsey account doesn't help me. I still got to pay taxes on it. Right. I mean, the federal government still comes and takes a chunk of my butt. And so, you know, I didn't really leave it in the business. It's just after taxes, there's some money still sitting here, but it could be sitting at home, it can be sitting here. It doesn't matter. The only reason I would leave it sitting here is if I'm getting ready to spend it on something inside the business.

Or if you have a retained earnings account or something.

Exactly.

But even there, like, if my business has that kind of debt on it, It seems like I just paid off.

You cleared it, you would clear it in 4 months at least, because if the rental fees were really $10,000, you should have been able to put $10,000 increased cash flow right on that thing and been done within 4 months.

Instantly, yeah.

Yeah, and you gotta have that kind of discipline on these equipment purchase decisions because they'll catch up with you. There's 2 things that kill small business startups like this, and they're doing great. Congratulations, Kirsten, I'm glad. I'm happy y'all are doing so good, and that's exactly what I'd do. I'd live on $72,000, I'd pull $100,000 out of there, and I'd be a debt-free man.

Every year.

Simple as that. And the next time you get ready to buy a car, you pay for it or you don't buy it. Next time you get ready to buy equipment, you pay for it or you don't buy it. Just live your life that way.

But—

And you'll have a lot simpler, a lot cleaner life. Now, then back to the other thing. The things that kill small businesses is, the one thing that kills 'em is cash flow, 'cause they don't keep up with their taxes, they don't keep their books, they don't do their quarterly estimates, and then they get in debt. It's the second thing. And both of those cause cash flow problems. Number one reason for small business failure is cash flow. Cash flow problems, translation, tax problem not paid, and debt problem. So they, 76% of the small businesses in America are carrying credit card debt on the business.

Wow.

They used a stupid MasterCard to do a business finance. I mean, this is insane.

At 30-something percent.

Yeah, yeah. So, and then wonder why I have cash flow problems, okay? Now she didn't do that, or they may have, but they just paid off the $6,000 the other day. But I don't know if that's business or personal, but, so you gotta stay out of debt. Then the second thing that kills small businesses is what's killing her. It grows so fast that you don't keep your accounting systems in place and your other processes and systems in place. They don't keep up. You're still running it in the mentality of out of my back pocket. And that's what causes people to leave $100,000 laying there, 'cause they don't know what to do.

But the federal government —doesn't care. They've taxed that $100,000 and that $72,000 the same.

Exactly.

They've got their piece of it. So if you want to keep a piece of it in that account or this and this account, they don't care.

Exactly.

It's y'all just choosing to carry debt at your house and leave that money there.

Exactly. Might as well take it home, pay it off.

Might as well clear your debt.

Pay your taxes and clear it off. But so success is the second thing. Rapid success, hockey stick growth up into the right, that crashes businesses because they dump they don't get quality people on their team and they don't put systems and accounting systems and overall systems and processes in place that keep you from doing this. You know, something like retained earnings, something like keeping up with your taxes and all those kinds of things. You gotta keep up with that because you're just making money so fast and you've never seen that kind of money. Your eyes are kind of wide, you're in the street going, "Whoa, don't hit me with a car," you know? Mm-hmm. And it's like, wow, I can't, how can I mess this up? We're just, we got a warehouse full of cash back here. We're just stacking Benjamins, right? And, but you can't outearn bad processes and bad accounting. It'll catch up with you.

Well, and I've known some guys who got into construction who scratched and clawed for so long. And then when it hits, they can't say no to anything.

Yep.

'Cause they still live 5 years ago when they had to say yes to every job. And then they get way overextended.

Get over your skis.

Yeah.

Get over your skis big time. That's what happens. And so, yeah, you guys gotta catch up with that. It sounds like you got a good business. It sounds like you're hard workers. Sounds like you're doing a good thing. But that's a couple things. Don't be buying anything else unless you pay for it. Get this stuff paid off and then get your systems caught up and really understand where you are with your taxes so that you don't get burnt. Welcome back to the Ramsey Show in the Fairwinds Credit Union studio. Elizabeth is in Grand Rapids, Rapids. Hi Elizabeth, how are you?

Oh, I'm good. How are you?

Better than I deserve. What's up?

Um, I have a question of quandary. Um, my, my husband and I, um, have been in our house for 5 years and I'm on Social Security and we have 2 separate bank accounts and I'm afraid to put my Social Security in the bank because he won't pay the mortgage. Should I put my Social Security in with our joint account.

How old are you guys?

Um, he's 56 and I'm 55.

How long have y'all been living like this?

Did you say 66 and 65?

55, 56.

How are you getting Social Security at 55?

I'm disabled. I'm on disability.

So you have SSI coming in. What's the nature of your disability?

Um, seizures and epilepsy.

Wow. How long you been facing that condition?

How old is your kiddo?

Um, I found out back in '95 I was diagnosed, but 2020, 2015.

Okay. And he is 57 and he makes what? How much money does he make?

He's 56 and he makes $23 an hour. And he's also on DoorDash during the day. And he's, he, I mean, I'm saddled with the mortgage and he's not giving any.

Why?

He doesn't. He's said he's trying to figure it out. That's all he gives me. That's all. That's all he is.

He needs time to figure it out.

He's been saying that since he bought the house and it's almost been 5 years.

Okay. Well, while you're figuring it out, go get another place to live because I'm not gonna let you stay here anymore.

It sounds like you've made peace with this arrangement. It doesn't sound healthy, but if that's the world that you choose to inhabit, no, I would not put money in an account where he's gonna spend it and I'm gonna get kicked out of the house.

Okay, I mean, I'm hearing from my family that I shouldn't be paying the mortgage and he should be because he's the husband.

How about both of you should be putting all of your money in the account and both of you should be deciding what is happening to our money, which includes paying the mortgage on our house. That's what normal, healthy people do.

Y'all are whack. No, he is. I mean, he's—

No, you put up with it, which makes you whack.

Well, yeah, yeah, I've been told that. And I've, we almost lost the house, like not even, in fact, the year of COVID we were on forbearance and it was like, I, I left him.

Why, why would you be on forbearance? You had Social Security coming in whether COVID came in or not. I know. And you were the one paying the bill.

Yeah.

Why did the bill not get paid?

Because he's the primary signer. No.

And you're the one who's paid the bill for 5 years. Right? Right. So during COVID why were you not the one paying the the bill?

Because I was with my family and he was unemployed at the time. And after I pay the mortgage, I'm left with almost nothing.

I know, but y'all, you're talking about your home. Like me and my two college roommates talked about our little townhome that we shared in college.

Right, right.

Like, hey man, I bought pizza, so you gotta pay the light bill. And no, the water bill.

It's— I know.

How long y'all been married?

Uh, 16 long years in September.

I mean, so this is the world y'all have co-created together, and it sounds like it's annoying to you, but not annoying enough to leave it, right?

People told me to leave him.

I know.

I just—

We're not telling you to leave him. This is just— but So no, listen, there's not a good way for you to manage the situation that you told us about, because the situation you told us about is a bad situation. There's not a good way to manage a bad situation. So the proper thing to do, and I don't think y'all are going to do it, but if I wanted to say, "All right, Elizabeth and her husband of 16 long years are going to learn to work together," for the good of Elizabeth and her husband, and we're gonna put our money together, and we're gonna put our spending together, and that includes paying all of our bills. Who's gonna buy the mustard is not any— we're both buying the mustard, we're both paying the house, everything goes in one pile, and we work that together, and we have good communication, and we talk about things. Y'all aren't anywhere near that. You're not even on that planet. So, and I don't know if I— I don't think I can get you there, but if I could talk you guys into it, that's what I would talk you into.

Into, because that's the only thing that there is going to work here. Otherwise, you know, if you put your money into an account that he has access to, he's going to blow it, and then the house doesn't get paid, because you get to pay the house. But I don't know why you're tolerating this level of misbehavior, that you use up your entire Social Security check to pay the house payment, and your husband is contributing nothing to that. That is just not right. That's not right.

It lacks fidelity.

I would have a duck fit. You ever seen a duck have a fit?

What's a duck fit?

Quack, quack, quack, quack, quack, quack, quack, quack, quack. I mean, it's just, I'd have a duck fit. There'd be a problem, right?

Next time you get mad in a meeting, Dave, I'm just gonna do something like that.

That's what it sounds like sometimes. Yeah, that's what it sounds like sometimes when I'm mad in a meeting. But yeah, I mean, I'm not— some things need to change here, Elizabeth, and you are gonna be the cause of the change or you're gonna tolerate the lack of change.

Right.

One of the two. So far, you've tolerated the lack of change. And then you've gotta decide if that's gonna continue to be the script in y'all's life. Matthew is in Pittsburgh. Hey Matthew, what's up?

Hi Dave, thank you for all the wonderful work you do for everybody. Thank you and your staff, I really appreciate it. Thank you for taking my call. Sure. So I have a question. I have a question regarding just remaining healthy in my financial goals and how much is too much. So right now, collectively, we have about $280,000 $210,000 of that is the house. We're on Baby Step 2. I plan on having all the debt except for the house paid off by August of 2029. Hopefully when extra comes in, I can get more thrown toward that. And then the house paid off within 8 more years after that and be completely debt-free by the time I'm 52.

What's your household income?

About $145,000 a year.

Okay, and you're talking about paying $22,000 a year?

Yes.

For 3 years?

We all, yeah.

Why? Why not more?

Well, we also started a small business because my wife's goal is to work from home, no longer work outside of the home, I'm sorry.

That's great, does it make money?

Yes. We, we started back in January and it's currently making about $1,000 a month.

Is that the $100,000 part of the $145,000?

Yes.

Okay. So if you make $145,000, why can you not put more than $22,000 towards debt?

Well, some of that is going back into the business.

So I had to Then you're not making $145,000. Yeah, I'm sorry. Is the business making a profit of $1,000 after reinvestment or not?

No, no.

Okay. We don't open a business that's sucking money when we're in debt. This business needs to make money now. She quit her job to spend money. No, we're not doing that. You should not feel uncertain about investing. Investing, and you don't have to. That's why we created Investing Essentials, a 2-night virtual event where George Campbell and I walk you through my playbook for investing and wealth planning. We'll simplify everything from 401(k)s 401(k)s and mutual funds to passing on wealth so you can invest with confidence. Tickets start at $199. Get yours today at ramsaysolutions.com/events. or click the link in the show notes.

Okay. One sec.

Emily is in Oklahoma City. Hi Emily, how are you?

I'm good, how are you?

Better than I deserve. What's up?

Good. So my dad left, passed away recently, and he left me quite a bit of money. Thank you. And my fiancé and I agree that it's my inheritance, but he's concerned about the financial imbalance between between us. And he came from divorce, and that woman took advantage of him. And so I feel like he's kind of like operating out of fear. So I'm trying to figure out what fairness looks like in our marriage and what we—

what your advice would be.

A prenup.

Yeah. So we have, we have that. Okay.

We have that going.

And then what does the prenup say about the, about the future growth of wealth, not the current state?

So I'm not, I'm not sure. I've met with the lawyers. They're going to— we're saying that the trust that my dad has left is mine. I'm going to be creating a trust where all of this is going into. And I guess from his side, he wants to create his own trust and he feels like he needs to catch up. Like, like he's not—

No, he doesn't. He can't catch up. Unless he's going to do something stupid trying to catch up.

How much money did your dad leave you?

Over $5 million.

Yeah, he doesn't catch up. So the trust just sits over here as a third thing. There's you making money and y'all build money together. There's your husband, future husband, making money, building money together. He doesn't need a trust. He doesn't need money.

He does a little bit.

He does anesthesia, so we have pretty good income together.

Our incomes is our incomes, and we share those, and we share what we do with those going forward. He does not need a trust, and he does not need to catch up. The trust is sitting over here to the side. The two of you build a life together with your incomes. I wouldn't fool with that in the thing, and I would let the trust— you know, he has no access to that in the event of divorce, but anytime you get ready to use money, you're gonna use it for us.

Yes.

You know, and so if we decide to buy a lake house later for, you know, for $1 million, and this trust has grown to $10 million, and I pull $1 million out and buy us a lake house, that's fine. The lake house is in the name of the trust, but we are going to use it for our family, our kids, and our grandkids, and whatever. I'm making up something, okay? But you can use some of the trust money for the benefit of the family and still and the stuff still leaves, still stays in the name of the trust. And so the money, the $5 million, and any growth it turns into stays yours. But keep it over to the side, and then y'all just combine everything else and quit trying to be, you know, like he has to catch up.

Yeah, that's ego talking.

Yeah. I think it's more so like if we were to get divorced, he—

Exactly.

He wants to have enough money for himself.

I don't know.

No.

I guess it's—

He does not need a prenup. Up. You do. Yeah, he doesn't have any money. Yeah, and he's an anesthesiologist.

If y'all get divorced, y'all—

you'll be fine. He's gonna make a lot of money. We're gonna make a lot of money together. You're marrying an anesthesiologist. He's making $400,000 a year, right?

Around $300,000.

He should be making $400,000. Okay, but here—

He's a CRNA, so it's a little bit different, but they do the same job.

Yeah. Oh, he's okay.

Hear what Dave said that's really important. There's this thing over here, but y'all are building a life together, right?

The fact that that $5 million landed in your lap has changed the way you all were talking about your future.

Yeah.

And it shouldn't have. Don't let it. Yeah, it sits over there by itself, and then you guys still have the future you would have had together.

One checking account. We have an income. Right.

Okay, I made all of the income in the Ramsey household for the last 40 years. My wife has not earned a dime, but we have a great income. And there is no prenup on that income. We don't have a prenup anyway, we started with nothing. But the point is, and we went back a couple times, but anyway, but all that to I'm trying to say. So, he has an income that's bigger than yours, but that doesn't matter. That's not in the discussion. That would not even have been a discussion had the $5 million not dropped in your lap.

Yeah.

And so, it doesn't need to be a discussion now.

Y'all aren't competing with each other financially.

No, we're combining everything except the $5 million. And the $5 million sits over here as a separate entity, and it grows, and we handle the investments on that. And we may use some of the money to buy something that the family, you and your husband and future kids if you have any, all that kind of stuff, are all going to do together. That's all great. There's nothing wrong with that. And, but, but just, yeah, you need a prenup. That's all. That's all.

Okay.

Very simple. Don't, don't get—

Yeah.

Everybody has a trust because we don't trust. No, that's not good. No, I don't. He doesn't need a trust just because he's an anesthesiologist, and he's not even a real one. He's just a RNA. I'm kidding.

But, um, ooh, that was a diss.

Well, I mean, I, he, he got a $100,000 pay cut while I was talking to him.

So, um, but yeah, the, uh, so in many ways that, that prenup just, it builds a wall around that money and we know it's there. Great. And we're gonna move forward. If, if she's presenting this as I'm gonna have this money that I can spend however I want, whenever I want to.

No.

He has a right to feel like, hey, there's an inequity here. I feel like you're building the secret life over here and then you come home to this life that we're building.

Any money you take across the wall to use for personal use becomes ours. Is ours.

That's right, is ours.

Yeah, with the exception of if you bought something like a piece of real estate, like if you bought a lake house in the name of the trust, pay cash for it, and then we enjoy the lake house together, that could still stay in the name of the trust. But if you're gonna pull money out of this to buy a car, we're not putting the car a car in the name of the trust. We're just gonna buy a car.

Right.

And that it's part of the marital property at that point. But I, I just keep this real clean and simple.

Tell me, tell me if this is bad thinking.

Very confined.

So if Sheila, my wife, got $5 million and we signed a prenup to protect that money and we started talking about, hey, it would be awesome if we had a lake house. And she said, well, let's pull from this thing. I would want that lake house in our name. Why would we keep that lake house in that trust?

Because it was the trust money that bought it. Okay. And you know, if you're gonna say the trust is hers upon divorce, then if you use some of the trust money for something, it's gone.

Okay, so it stays in the—

If it's not in the trust name, it's gone. She would lose that lake house in the divorce if you pulled it out and put it in both names, or at least half of it, you know, that kind of thing. So, and again, that's probably not the issue.

Right.

The issue is the— and too, sometimes we're dealing with people that are in later stages and it's a second marriage. They got 3 kids each and maybe a couple grandkids each. I talked to a 60-something-year-old the other day and they both had a couple million bucks. Not big, not $20 million, but a couple million. And I'm like, okay, just you guys, if you can leave the marriage with what you came in with, and then you could just say all the growth is gonna be combined.

Sure.

But they're both coming in with similar piles of money.

And what I would be careful in that case is I don't want one of your second cousins suing for my money from my kids if I die.

Exactly.

This one, I can feel, it would be a little bit messier, but he's gonna have to exhale through the ego that he's gonna have He's not trying to compete with her. It's not— Catch up. I gotta get mine now 'cause you got yours. I gotta get mine.

Catch up is a bad phrase.

We are building this thing together and we have this awesome stack over here.

Yeah, what if Sharon thought she had to catch up?

Yeah.

After not earning an income for 40 years.

She'd have to kill you. That'd be the quickest way to catch up.

Don't tell her that.

That'd be the quickest way.

Don't say that out loud.

She doesn't listen to this.

Don't say, she doesn't listen to the show, that's true.

That'd be the quickest way for her to catch up.

Yeah. Well, she is convinced, accurately so, that it is all half hers.

Yeah.

And so I told her if she leaves, I'm going with her. It's that simple.

Hey guys, Dave Ramsey here. Every day on this show, we help people work through real money problems and figure out what to do next. Now, you can get that same kind of help anytime with Ask Ramsey. Ask your money question and get answers built on Ramsey principles we use on the show. Whether you're making a decision,— or just want something explained, Ask Ramsey is here to help. It's fast, simple, and free to use. Go to RamseySolutions.com and try Ask Ramsey today. That's RamseySolutions.com. Buying or selling a home is a high-stakes proposition because it's usually the largest thing you own. One bad deal, ooh, cost you tens of thousands of dollars. Make you think that car deal was a good deal. You don't want to overpay for your next house, and you don't want to sell your current home for tens of thousands less than it's worth. Instead, you need a Ramsey Trusted Real Estate agent who has the experience and the volume. They do a lot of deals. They can guide you step by step. They're not a beginner. They're high octane, high protein. No expensive mistakes. Connecting is really easy. Just compare agent profiles, interview your top choices, and then pick the right agent.

A high octane, high protein Ramsey Trusted Agent who has your best interest at heart for free. Go to ramseysolutions.com/agent or click the link in the description. It'll put you right there. George is in Jacksonville, Florida. Hi, George, how are you?

Better than I deserve, and things could always be worse.

I hear you. What's up?

Well, I've had a couple bad real estate deals back to back, and it's put me in a bind on using business lines of credit and business credit cards. Cards. Not sure if I should just do bankruptcy to reset or if there's a way I can dig my way out of almost half a million dollars worth of debt.

Okay, wow, what a mess. What do you do for a living?

Well, I work on cars, so I've got an automotive business and it's pretty taxing physically, so I've been trying to get more real estate going so I can get out of the car business.

Yeah, what do you make on your automotive repair business?

—business?

Between my wife and I, our W-2 is about $105,000 a year.

Okay, cool. All right, and you got $500,000. Now, you said real estate, so some of that mortgages or what?

No, business lines of credit. So I had one bank gave me a large line of credit to do deals with, so I use that to buy the land and improve it. And then 0% interest credit cards which many of them are about to be out of their 0% interest term. And the first deal, everything just went wrong. And then the second deal got held up because the first deal didn't close because everything went wrong. So just got crushed by holding costs.

So do you still own the land?

I own one of the two. Um, it's for sale, but the market here is taking a big dip. So, the— it's dropped about $30,000 in value and still doesn't have a buyer.

What is it worth?

Um, before the market dropped, it was worth about $140,000.

No, what's it worth today? What do you got on the market for?

Uh, it's on the market right now for $115,000.

How did you spend a half million dollars getting a $115,000 piece of land?

Well, the first deal lost about $60,000 because of delays and market drop, and then using business lines of credit to support just getting by while trying to get that deal going. The automotive business fell behind, so that business has debt. I had another business that the manager scammed us, so we're— that lost about $30,000 getting scammed on that one. So—

That's still nowhere near $500,000.

Yeah, well, the—

You lost $60,000 on one, you got scammed for $30,000. That's $90,000. $219,000.

Yep.

And you have a $130,000 piece of property that I assume you paid for out of this half million, right?

Correct.

So that gets me to $220,000. I'm still $300,000 off. I can't find it.

Yep, well, one of it's a car. That's my wife's car. It's about $58,000 for that. But that's obviously something that if we needed to, we could dump that and get another car. But I had to take a personal loan just because I had credit credit cards from before that had piled up. And then, uh, there was a high-interest, um, line of credit that I had that when some bad stock market trades—

What did you buy with all of this stuff? Where did this— what did you buy?

Well, there's about $50,000 loss in the stock market. Um, there was the money loss on the home.

There was—

How did you lose $50,000 in the stock market?

Bad advice, borrowing money to trade with, and, uh, yeah.

Day trading?

It's gone. Correct.

Of course you lost money. Okay. Yep.

All right.

Um, wow. So if you sold the land for $130,000, you sold your wife's car for $60,000, that's, um, $190,000, and that leaves you $320,000 in debt, and there's nothing else left except your business and your home, right?

Well, we don't even own the home, so we rent where we live.

Mm-hmm. Do you own the land that the business is sitting on?

No, we rent there as well.

Okay. Okay.

All right.

And then the balance, if we paid off the land and sold it and we sold the car, the balance of the debt is credit cards and personal loans, right?

Credit cards, $78,000 on a personal loan, and then business—

But like a bank, a personal loan at the bank? Right?

Correct.

Okay. All right. Well, I think what can happen here is that you clear off what you can clear off by selling things, and then you negotiate the rest of it in default at pennies on the dollar. You probably could get out of this whole thing for, you know, after you sold off everything, for another $100K out of pocket. So you probably can make it out without bankrupting if you wanna fight all the way through it. However, I do want to establish that day trading sucks and you suck at it.

Yep, yep.

And that buying real estate you're not very good at.

Well, they were mobile homes, so that's, I know what your take is on mobile homes.

Pretty much sure now that you're not good at it, yeah.

Well, these are the first two that had really gone wrong, so everything else was going well. And mobile homes were hot items in the area and barely spending any time on marketing.

So you're the guy that hit at the slot machine and you thought that made slot machines a good idea. Yeah. So one of the things I did when I went broke, George, was I had to sit down and go, what was broken inside of me that allowed me to make bad decisions? Because I want to come out of this at least with wisdom wisdom. If you're gonna get the crap kicked out of you, you ought to know why so you don't go in that bar again. I don't go in there again. I don't want to get kicked again. And doesn't sound like you've learned that.

No, you're still defending.

Yeah, mobile homes were hot, said no one ever. You know, I mean, really? And day trading, and it just— I just caught a bad No, day trading, 97% of the day traders lose money. That's all of them.

And while you're—

It's fool's gold.

While you're hemorrhaging money, you go buy—

Otherwise.

Buy a car.

For 60 grand.

Yeah.

That you can't afford. Yeah, so you need to do an autopsy on the behaviors and the beliefs that got you here so you don't repeat this. And then claw your way through it if you can, in. If not, you might be bankrupt. I don't know. In Florida, it is one of two states that you keep your home— you don't have one— regardless of how much equity there is. I don't know what they'll do to your business in a Chapter 7 bankruptcy if you file bankruptcy. I'm not sure how they'll— what they'll do with evaluation on something like that. You might lose that in a bankruptcy. bankruptcy. It's possible. Or a bunch of your equipment or tools or whatever. They actually could liquidate that place on you. So you need to be very, very careful about thinking bankruptcy is just going to be an easy way to walk out of this. I don't think it's going to be easy. I think it'll be really, really messy, so I would avoid it. So I would sell the land. I would do a detailed autopsy on who I am and why I make the decisions I I made so that I don't repeat it.

That's what I had to do when I made all those mistakes. You do too, George. And then I would see if I can start settling these other deals in default for 25 cents on the dollar and scratch up the cash by fixing a whole lot of cars, car repair business, and work my way through this if I can.

Yeah.

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Our Scripture of the Day, Galatians 5:1, "It is for freedom that Christ has set us free. Stand firm, then, And do not let yourselves be burdened again by a yoke of slavery. Lou Holtz said, "It is not the load that breaks you down, it's the way you carry it." Ooh, that'll go. Wow. So John, in the '70s, there was a book that came out and I was a teenager. My dad was in the real estate business. He asked me to read it 'cause he was always having me read these motivational books.

The 1870s, right?

Yeah. Yeah. Absolutely. And there were dinosaurs in the backyard. But the book was called Con Man or Saint, written by a guy who was in jail, so apparently he was a con man. But he was trying to make the case that he was a saint. He had run a multi-level, I mean a pyramid scheme, not a multi-level scheme, an actual pyramid scheme, an illegal, that's why he was in jail. There's a difference between multi-level and pyramid. People use them interchangeably, but they're not the same. And so he ran an actual con, like a Madoff-type thing, Bernie Madoff deal, and went to jail. In the book, about the only thing I remember out of it was this bizarre case he was rationalizing all this— that he had stolen all this money from these people, but he'd made a few people fortunes in the process, so that made it all okay in his mind. But the thing that stuck with me, the reason I bring it all up he said that you can con anyone if they are one of two things: afraid or greedy. Hmm. That it doesn't matter how smart they are, doesn't matter how dumb they are, if they're one of those two things, you can con them.

And the more of one of those two things they are, the easier they are to con.

Mm-hmm.

And so when I go back and usually when I look at someone having a financial catastrophe, including me, losing everything in my 20s, having the opportunity to start over in the real estate business, I had to go, okay, what was I? Why did I get— 'cause get rich quick is a con.

Right.

Get rich easy, Easy is a con. It's a house of cards always. So playing the roulette wheel, sports gambling—

Losing weight quick is a con.

However you're gonna do it quick— It's a con. It's a con. If it's a life change, a permanent process, because all the data that we now have at Ramsey says that the people that build wealth do it gradually, slowly, and they're not doing it based on fear agreed. And so when you're trying to get rich quick with nothing down real estate, you know, some of these guys on TikTok or whatever, or you're trying— and that's what I was doing. I got a bunch of real estate. I had a $4 million net worth. I was making $200,000 a year, but I was deeply in debt. I had $4 million worth of real estate, $1 million net worth, and I was 26 years old starting from nothing. And but it was still a house of cards that I had built. And I was trying to do it quick, do it quick, do it quick, do it quick, do it quick, catch it while 'cause it's hot. Crypto is another one. People are chasing that.

I'm ashamed to say this, but I had this thought during this big IPO that just went out.

Yeah.

I thought, I wonder if I should, I wonder if I'm gonna kick myself 20 years from now for not doing this.

Yeah.

And I actually had the thought, my son's out of town right now. And I thought, I might have to tell him I didn't put money in on this. And I, could have hit. And I thought, and again, I talked myself out of it. I was like, that's foolish, right? But that even somebody who does this for a living, I had the thought of, ah, I'm scared to miss out.

That's quick money.

It's fear. I'm scared to miss out on this.

Yeah, it's FOMO. Fear of missing out, which is fear and greed. And so if you catch yourself saying, I've got this situation, I have to get away away from. I'm desperate. You're setting yourself up to be conned.

Yeah.

By one of these get-rich-quick things that's out there.

Or I've gotta get that. I've gotta get it. I've gotta get it.

You know, in George's case, he's like, okay, I don't— my body is not gonna last working on these cars. And so I've got this desperation in my soul to get away from the automotive thing and I've gotta go. So I went day trade, went and did this, went and did that, and he's just whack-a-mowing everywhere with debt. This pops up, he pops it down. This pops up, he pops it down. And that's exactly what I did. So I'm no better than him. I'm the same guy as him. And that's why I can, you know, I've got a PhD in DUMB. I've got experience from my own stupidity. But the point is, folks, just the lesson that you take away from today's show, we'll summarize it, is, okay, if you feel yourself getting greedy, and everyone does, if you feel yourself getting fearful, and everyone does, you're getting ready to make a bad financial decision.

Yeah. And—

Slow your butt down.

And underneath all of that, one of the things we tell people, hey, don't ever borrow money. I can guarantee you that that last, you know, George, that last caller didn't take out this huge business loan, this huge personal loan with the intent of, I'm gonna buy this over here. I'm gonna do this. Oh, we need, we need a new car over here. If you go take out a HELOC, I'll just get a little bit extra just in case. And when you have it, it's so impossible to not spend it and you end up making the problem so much bigger. Yep. So if you just say, hey, you know what?

I don't— Magnifies.

I don't, I don't mess with, I don't borrow money just as a rule. Um, unless I'm buying a house, right? It keeps you from, it's like a barrier, it's a break, it's a hurdle. It keeps you from making even a bigger mess than the one you're already in.

But the reason people have lost so much money on crypto is FOMO.

Yeah.

And that's a form of greed, a form of fear. Fear of missing out, it's greed. It's like, oh, they're gonna get theirs and I'm not gonna get mine.

Right.

And instead of, instead I got really, after I went broke, I got really comfortable with being boring.

Yeah.

Slow and steady wins the race. Boring wins. Tortoise beats the hare every time. Every time I get desperate and fearful, right after that I get stupid and I do something stupid. Every time I get greedy and I think, oh, this is going to— this is going to be a hot knife through butter, this is going to go. And it's just like— and it's just 100% of those things bite me in the butt. And it's just like— and the things that we have made, everything that we've made on were death by a thousand cuts. Incremental, little tiny, little tiny, little tiny, little tiny, little tiny. And then when you add it all up, it's a lot.

Right.

But none of it was sexy or impressive. And everybody wants sexy, impressive, the greed side. Everybody wants the quick thing. I've got to get out of this. I'm desperate. And so that— as soon as you say you're set up. So all of you out there, that's the lesson you can take from Dave's stupidity and my story, and even from some of the other stories that call in here, is you have to be really, really careful to avoid fear and greed, or greed driving your decisions around money. Because it— very few times do you go slow in those situations. Both those things cause you to go too fast. Both of those things cause you to rationalize and look past all the warning signs. Bridge out, bridge out, bridge out, bridge out. Not me, I can Bo Duke jump that sucker, right? Bo and Luke, here we go with the General Jackson.

Da da da da da da da da.

That's it. But yeah, you think you're the one, and no, you just end up in the edge of the bridge embankment, stuck on there like a fly on a wall.

I'm sitting here thinking of the last 20 bad decisions I made, every one of them came back to, I had talked myself into a fear of something.

Yeah.

Or all media today is selling you, it's all coming down. So you gotta do this or you gotta do that or you gotta do this, right? And the more I consume of that, the more I'm, my eyes are open looking for things that are coming to get me.

Yeah.

Which means I'm gonna look for things to buy to—

All the signals, the people involved are bad people, but I'm gonna keep going because it's probably gonna be okay.

Yeah, yeah.

No, they're not. They're going to keep being bad people. So why am I continuing? Proverbs 22: The wise see danger and hide. The fool sees danger and moves forward and suffers for it. And when I see those warning signs, I'm half— the only way I look past them is when I'm greedy or I'm fearful and I overlook the warning signs. I go, well, that guy, he didn't mean that. And yeah, I did. He's a freaking crook. And you're gonna go on a deal with him anyway because you just have to. No, you don't.

Can I tell you what helps me in these moments? Wise counsel, a good group of friends that now I know I could pick up a phone and call and say, hey, I'm about to do this, or I'm scared of this. And they'll say, that's dumb, John, don't do that.

That's called a good friend.

That's a good friend.

That's dumb, John friend. Yeah.

I like a friend like this.

I've got many good friends.

That's dumb, Dave. Dave, you have had some dumb ideas and this is at the top of the list. Yeah, I get those too. Mm. Ah, George, we'll pray for you, my friend. Oh, it's a hard thing you're going through. That puts this hour of the Ramsey Show in the books. We'll be back with you before you know it. In the meantime, remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus.