Transcript of Don't Wait For Motivation - Take Action

Doing nothing with your Medicare plan could cost you hundreds or even thousands next year. Chapter can help you avoid that. Go to askchapter.org/ramsey. Brought to you by the EveryDollar app. Start budgeting for free today. Normal is broke and common sense is weird, so we're here to help you transform your life. From the Ramsey Network and the Fairway From the BetterWinds Credit Union studio, this is The Ramsey Show. I'm Dave Ramsey, your host. Dr. John Delony, Ramsey personality, number one bestselling author, and host of The Dr. John Delony Show. Dr. John is my co-host today. Open phones at 888-825-5225. Christine is in Kansas City. Hi, Christine, how are you?

Hi, Dave. First of all, I just wanted to say it's been 11 years since I went through FPU. And I would not be in this position asking you this question had it not been for that. So thank you.

Oh, thank you.

I'm glad you worked it. Good for you. Proud of you.

Yeah. Thanks. Uh, yeah. So, um, my husband and I are in our early and mid-30s. We just had a baby and we are on Baby Step 7. And based on our situation, I'm wanting to know if it's okay for me to be able to stay home and raise our son because, um, speaking to our financial advisor, he originally said we had a 2% chance of success.

Okay. Um, sounds very dire for someone who has no mortgage and, um, you know, like, so what do you make and what does your husband make?

Um, well, combined total, we're at $227K. 60% of that is from me and 40% of that is from him, but half of his is taxable, um, or is taxable and the other half is a medical retirement pension. So that's tax-free. Um, So yeah, if I can—

So he makes like, he like makes almost $100,000 and you make $125,000?

Uh, he's a little bit less, I'm a little bit more, but yes.

Okay. All right.

What does success mean? What did your advisor say you were going to fail at?

Well, originally he said that we were going to run out of money by the age of 69. And by the time I turned 69, and I'm an engineer, and I was looking at that and I was like, That doesn't even make any sense from a money standpoint, but I just wanted to make sure that like, if I do take a step back from this, that it's not going to, um, be something that I'm going to regret long-term.

Okay. What do you do for a living?

So I'm an engineer.

Oh, you said that. I'm sorry. Okay. All right. Um, well, I don't like your financial advisor very much. I don't like your relationship with them.

You need a new one of those.

Um, because those guys get confused sometimes and you have to explain to them, you work for me, dude. Um, not the other way around. It's like some of these lawyers, they think I work for them. They're confused.

I wonder if he's doing the math on you're not going to contribute as much to his wealth.

I mean, honestly, we kind of questioned that at one point.

Yeah. So, okay, let's, let's set him aside. We'll come back to him in a minute. So the bottom line is, is that, um, can you raise a child if you're 100% debt-free on $100,000 a year in Kansas City? Most likely.

Mm-hmm.

And that's what your husband— and by the way, you're probably not going to go to zero. You have all kinds of opportunity for side gigs and very minimal side hustles. You could probably make $50 grand, right? But I mean, if you want to practice it, here's a way to practice it, to test the emotions of it. 100% run your household on his income for 3 months. And put all of yours in the bank and act like you didn't make any money. And then you can say, oh yeah, we can do this. Lay out your EveryDollar budget with only his income.

Yeah. And I did run that and—

No, I didn't run it. Did you live it?

Oh, um, well, I mean, not— I'm trying to technically because, um, I had the baby, but I've been on disability leave and so it's kind of, Then, you know, a little bit different situation.

So you had income coming in.

Do you want to, do you want to quit your job?

Yeah.

She doesn't.

Um, I mean, I've been an engineer for over a decade.

Now what I'm asking, now what I'm asking, do you want to quit your job?

Uh, if I'm being honest, yes. Okay.

So don't, don't, don't blame the kid.

Yeah.

And so when you ask the question, how do I make a decision now that I won't regret later? No one can inoculate you from what happens in the future, but the path forward for you is to say out loud, I would rather stay at home with this baby than go back and build someone else a building. And then you're taking ownership of what you do next. And then you and your husband will figure out the money and the spending and all that kind of stuff. But that starts from a place of ownership, not from a place of, the guilt factory that every new mother in the United States goes through, which is I have to do X, Y, or Z because they say, or because she says, or because he said. You get to decide, I want to stay at home with this baby, and then you and your husband will figure out the rest of that stuff. Y'all, y'all have set yourself up. Baby step 7 is so you can do whatever you want.

Exactly. Now, how old are you guys again?

Uh, early and mid-30s.

And what does your husband do?

He works as a civilian for a police department.

Okay. All right. So here would be what I would tell you to do if you can do it. How old is the baby right now?

4 months old.

Okay. So you're back to work now?

No, I've been on disability leave.

Okay. Why are you on disability for pregnancy?

No, I had a difficult delivery.

Okay. How much longer will you be out?

Um, well, technically I just got cleared yesterday on disability, but I haven't even used my maternity leave yet.

So how much longer will you be out?

I mean, I technically have a month more of maternity leave.

So you could take a month, you could take a month and not count your disability and only count his income and live on it for one month and do it with every dollar and get comfortable with this idea.

Right. Yes.

Okay.

Well, and another question I was going to ask on top of that was because when I did run the budget and everything, I'm a very Excel, Microsoft Excel crazy, but I ran the budget and like, we don't quite, I know, I know all the Baby Steps backwards and forwards and we don't quite hit the 15% mark with that. But the thought was because of what we currently have in retirement.

No, I don't have that thought. I'm going to put 15% in retirement and I'm going to live on his, of his income. And I'm going to live on his income.

Okay.

That makes it work. That makes it work. I'm not going to cut back on that. But the other thing we can add to that is, again, I— you can do— you need to keep your certifications up anyway. So I want you doing some, a little bit of side hustles over a year, and you'll make $30,000 or $40,000 doing that and loosen this thing up. But if you want to run a test and say, on every dollar, we're going to live on this, not counting my disability, and we're going to take 15% of his income out, approximately $15,000 out of the equation per year, and we're going to live on that. I think you can do that. And how much have you already got in your nest egg?

Um, $485K.

Okay. And so in 7 years, that'll be $1 million. And you will be putting money, 15% of your husband's income away. And if you get a side hustle, some of that away as well. And maybe someday when the kid goes back to work, you may want to— goes to school, you may want to go back to work because engineers make a lot of money and it's You know, it's wonderful if you can, but you don't have to, to have a 2% chance of succeeding. If you add nothing to retirement, you're going to be millionaires before you're 40.

Well, and we, with our house paid off, we're—

Oh, you already are. You already are. Okay. So you're going to, but you're going to have another, another half million dollars in your retirement. If it'll double, if you don't add anything to it, but if you're steadily adding to it and you're living on your husband's income, you're supplementing with a little bit of side You guys are going to be multimillionaires and you need to change financial advisors because I don't like anybody that gives me a 2% chance of success when I've got my house paid off and I'm a millionaire and I'm 30 years old and you're not and you're giving me advice. So yeah, you need, even if it's a SmartVestor Pro, one of ours, go get a different one. That, that the arrogance of that pisses me off.

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Dr. John Delony's brand new book is on presale. It will hit the streets in January. John's written some number one bestselling books, John, but this is the best book you've written. This is the best book you've written by far. I mean, I like the anxiety books, but Building the Marriage You Want, really practical from if your marriage is in the ditch to if you've got a great marriage, it's practical. I mean, I've been married since dinosaurs roamed the earth and I love this book. And I mean, it's like 45 years now, and it is absolutely incredible, guys. So the idea that I don't want to get married because marriage is hard. Let me just tell you, not being married is harder. Marriage is hard, but I have to make my own sandwiches if I'm not married. Hello? So no, not being married is harder.

I have to make my own sandwiches and I am married, but such a—

I'm kidding. She pointed towards the kitchen the other day and I'm like, what's in there? It's an odd place you have over there. Yeah. Yeah. So I mean—

We address that in the book, everybody.

Listen, in 45 years, Dave and Sharon have had some serious arguments. And some serious rough patches, no question. But the idea that it's broken because it's hard is false, right?

Absolutely.

And that's what you address in here so beautifully.

Yeah. And it's everything from new ways to communicate, new ways to do conflict, sex, money, being married with kids. Just everything I know about marriage is in that book.

There we go. And a bunch of research went into this.

Yeah.

You said something important. And Dave, I have to say this. You brought this to me as a former nerd, as an academic. The goal of that world was to, here's a bunch of ideas. And you've pushed me over the years to say, okay, but what do I do with those ideas? And so this book is me sitting at your kitchen table with you, hopefully with you and your spouse saying, here's the next right move for y'all. And yeah, I'm proud of it, man.

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Next weekend. Yeah.

Yeah.

All right. So, Building the Marriage You Want, check it out, boys and girls. You're gonna love it. Sam's in South Bend, Indiana. Hey, Sam, what's up?

Hi, uh, thanks for having me, Dave. I really appreciate it.

Sure, how can we help?

Um, so I'm trying to get out of debt right now. Um, I have paid off, uh, about $20,000 in the past 6 months.

Good.

Since I called and you guys gave me some advice. Um, thank you. Um, and I kind of, I'm, I have an interesting prospect right now. Um, I have a family member that, uh, is trying to sell a house, uh, that his, his brother passed away unfortunately. And, uh, he's got a place. Uh, it's only worth, uh, one, not worth, but they're only selling it for $50,000. And, um, I'm, I'm kind of almost interested and tempted to try to see if I could sell my house and downgrade to move into it.

Oh.

Um, and I just want to know how much sense that makes.

For what reason?

Um, just realistically, I think that my wife and I just got a little bit too giddy at the beginning of our relationship and just jumped into a house that was a little bit more than we could afford.

How much is the house that you're living in worth?

Uh, right now about $240,000, $245,000.

Okay. What's your household income?

Uh, about $60,000 a year.

Okay. And the house that we're talking about buying would be— the price would be what?

The price is $50,000. It needs just a teeny bit of work. I mean, it's livable as is, but it would need just a few grand to really bring it up to just, uh, where I would like it to be, I guess.

And what's it worth?

Um, You know, it's, it's a little bit hard to say necessarily what all it's worth. Uh, somebody appraised it at worth $90,000. Um, but there's a few nuances to that that, uh, I mean, uh, the family member can help.

How long have you been married?

Uh, 4 years.

And how much other debt do you have left after you paid off $20,000?

Uh, $45,000.

Uh, how much equity do you have in your home? How much do you owe on that $240,000 house?

Uh, so I owe about $189,000 right now.

Okay. So you can almost pay cash for this, right? And, uh, or you could be debt-free and get a small mortgage and a little bit of money to fix it up with, right? That's what you should do. Yeah, you pay all— you pay off all your debts and you keep a little cash and you use the cash to fix it up and you get a little mortgage at the credit union. It's all you're gonna get. It's not even a real mortgage, it's just a little bank loan.

Has she been in this house?

Yeah, I'm just thinking your wife is not on board with this. This is like— because guys will live in a tent and, and women actually want like a house. This sounds like a tent.

Um, I—

and I know, I know that it does. I, I was so surprised. I mean, it's been sitting for probably about a year, and, uh, it's her great uncle. Uh, it was his cousin that was in it, and he was trying to help him fix it up. Unfortunately, he ran into some health problems, and, uh, like I said, he passed away.

Is it in the middle of nowhere, like out in the middle of a field somewhere?

Um, it, it is a little bit out of town, kind of in a little bit of an your area, uh, but it's not, um—

Okay. Is your wife on— is your wife on board with this, or is she rolling her eyes when she walks away from you?

Um, you know what, actually, she was the one that brought up the idea in the first place because she's been kind of, you know, on me about the fact that, uh, you know, we're kind of house poor and we've been really having to cut into the budget so much just to even try to pay off this debt. So she was the one that approached me with the idea once she was the one that saw the house.

She brought me to see it and Okay, if you do it, if you do it, you have to promise that 18 months later the house is in spectacular condition.

Oh yeah, that's, that's really, that's truly the goal.

Yeah, not just livable, spectacular. Yeah, I want to come up in front of it and I want to go, oh, I wish it was an Airbnb so I could rent this cute little house.

Yeah, that would definitely—

And then you're probably going to sell it, so go ahead and make sure it's spectacular. Because I don't think you're going to live there for very long.

Yeah, no, my plan would be to try to move away from the area that I'm in within the next 6 or 7 years. I want to try to do it before the kids get a little too old and into their school system and everything. I'd like to try to just, you know, change things up.

How many kids do you have?

I have one, and, uh, I have one that's on the way within the next probably 8 months.

How many square foot is this tent?

Uh, it's 1,100 square feet, which is about the same size as my house now.

Okay.

All right.

The thing I don't want you to do is I don't want you to do it and get stuck in the rehab, and the rehab is in perpetuation. It goes on forever, and everybody lives with sawdust in their pants forever. Okay? And that's what happens to people on these things. The second thing I don't want you to do is I don't want you to treat this like you have to keep it for 10 years. This might be a step back for a 5-year move to allow you to leap forward later. And that's what your wife is saying by house poor. But if you make this a permanent decision, it's probably a bad decision. If you can say it's a temporary move, we can go in there, fix it up, clean it up, we're going to live there about 4 or 5 years, and we're going to dump this thing and move back up in property after we get our feet on the ground financially and get rid of this debt, that's okay. But this sounds— it sounds like a dramatic move down. And I don't think you guys have processed emotionally how much of a move down it is.

So just be careful with that one.

Yeah. And when me and my wife did something very similar and we sold our house and moved into a campus dorm apartment, it just took a lot of us making sure we were on the same page regularly. We had to increase the amount of time we were talking and making sure we're on the same page.

And it generally means the same page means this is a It's a process we're moving through.

It's for a purpose. It's not forever.

Yeah. We can camp for a little while, but we got to get rid of the tent.

Yes.

And by doing that, these other things have to be true. The money we save's got to go towards the debt. The money we save has to go towards savings goals or whatever. But it was all very intentional. We're going to make this sacrifice so that, right?

Yeah, exactly. Exactly. Yeah, this idea that we're going to be there 10 years emotionally changes the decision for me.

Yeah.

I wouldn't do it if I was a case.

Okay, George, we hear from so many people that are trying to live out the Ramsey Plan, right? They're getting out of debt and everything, but the hard thing is there's not many banks out there that actually support the way We teach people to handle money.

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That's fairwinds.org/ramsey, insured by the NCUA. Sarah is in Syracuse, New York. Hey Sarah, what's up in your world?

Hey, how are you? Thank you so much for taking my call. I really love you two, you are my favorites.

Well, thank you.

We're our favorites too.

We'll tell the rest of them you said that. What's up?

Um, so I have a couple questions. So we are in Baby Step 3 and we have just kind of lost motivation. Like, we've been We paid off a car and a truck, and we paid off a personal loan and a couple credit cards, and now we're like maybe a third of the way through Baby Step 3, and we just can't figure out where all our money is going. My husband is a medically retired Army veteran. He now works for the state of New York Corrections, and I'm a part-time remote therapist.

But you were all of that when you paid off all these debts, right?

Yes. And I just don't know what's happening.

So tell me about getting fired up to get out of debt.

Um, well, we have a special needs daughter. Um, we just wanted a better life for her and we wanted a better life for ourselves and we wanted a better future for our kids.

And how does that not translate to finishing the emergency fund and then starting to build wealth?

I don't know. That's, that's kind of why I called. I just, we, we like go over our budget. Like I write down everything, Dave. I've been—

How long did you, how long did it take you to get out of debt?

I think we started maybe with Baby Step 2, I don't know, 2 and a half years ago. And then we were, you know, gung-ho. And like I said, we had, um, you know, an Altima that we paid off. I paid off our Tundra. I just—

So what was the total debt you paid off in 2 and a half years?

Um, probably like around $60,000.

Okay, so you're paying off about $30,000 a year, about, um, $2,000 a month, give or take, $2,500 a month, right?

Yeah, absolutely.

And what's the, uh, what, how much is in your emergency fund now? Your Baby Step 3 so far?

Uh, about $5,000.

And how much is the target?

Uh, like $15,000.

Okay. All right. So you need $10,000 and you've averaged $2,000 a month. So you should be there in 5 months or 4 months, right?

Yep.

And we've been at it for like that.

So, so why, if you lay out your budget and you have $2,500, you've paid all your bills and you have $2,500 going into savings, you don't really have an option once you lay it out and you say, that's our goal. You don't lose steam. You're telling yourself what you're going to do. Because most people, I mean, like, if you, if you lose a bunch of weight from going to the gym, they don't suddenly start liking going to the gym. They just keep going because it's working. Yeah.

What would you tell a client that calls you and says, I'm looking for motivation somewhere? Where would you tell them to find it?

I mean, I would probably ask them, you know, what's behind that? But I don't know. And like, that's That's why I appreciate, Jon, you being on. Like, I don't— so I just feel so stuck.

So here's what I'll tell you. Uh, I, I think you're turning an action problem into a cognitive problem.

Okay.

And that's, that's me talking nerd speak to a fellow nerd. Okay.

Right. Yeah.

I, I, I think the motivation you're looking for— you're probably exhausted, you're probably tired, y'all are both working, your husband's got a stressful job, you've got a stressful job, and you got a toddler.

And you're special needs.

Yeah. Special needs. Like you got a lot going on. You're tired. What I'm not going to do is negotiate with myself. And so many mornings I wake up and in no way am I motivated to go lift weights. I know though that that helps me feel better. And so motivation is something that happens after I start making commitment to keep promises to myself. And I go do that thing over and over and over. Quite honestly, regardless of how I feel. And then I start feeling great, and then the motivation is there.

Okay. So when you finish Baby Step 3, you will move from intense to intentional. You will relax a little bit on your budget and start putting 15% of your income away into retirement at that point, right?

Right.

And you'll be able to, quote, go out to eat, maybe start saving for a vacation, doing some things you haven't been able to do while you were getting out of debt. Is that correct?

Yeah.

Okay, so the finish line is 4 to 5 months away to be able to take your foot off the gas. So you have run 9 miles of a 13-mile half marathon. Finish.

You're so close.

Shut up and finish.

Quit thinking.

Suck it up, buttercup.

Quit thinking and do it.

Finish.

You got this.

You can do this. And knock it out. Just put it on the refrigerator, 5 months, put a little thermometer up there or whatever the flip you need to do where you can walk in there and look at it, or little links of paper that you can tear apart.

That's what I did.

If you're— yeah, I mean, whatever version of first grade you want to channel, but get it out there and lean into it and go, we're busting this, we're busting this. We're stepping up on the scales, the weight is coming off. We're stepping up on the scales, we're going to Finish this because this is what adults do. And so it's not a feeling and it's not a motivation.

It's an action.

It's an action. And you just say, it's a discipline. And you just say, the two of us, okay, second breath, we're turning the corner. We got 3 miles left in this 13-mile run. Finish the race. You'll see that you'll turn the corner in 2 months and you'll see the yellow tape. You'll be almost there. And if you just write it down like that and go, this is how we're going to get there, and then lay it out and force yourself to do it. It's not a feeling. And To John's point, you have done so good, but you are running probably largely on a little bit of a high knocking off those debts and a little bit of fear that I've got to get ready. I got to be ready because I got a special needs kid and I got to be ready to take care of them. You said that was your motivation. It's a noble motivation. And that stuff's probably— your tank's gotten low and now you're going to have to, as an act of your intellect, force your will. To say, regardless of my emotional frustrations, my emotional tank being empty, I'm so close.

I'm not going to quit this race. I'm going to push through. And it's just suck it up, buttercup. That's what it is. We all have to do it to each other, to ourselves. And you can do that. But you're right. It's not a— it's not been— it's quit being fun. It's quit being exciting because the debt's all gone.

It's not exciting. It's not novel anymore.

And now we're just trying to save money and it's not as But you're just that close. So you need to lay it out in a very incremental, very concrete way. This is how close I am. And then next month I'm going to be that much closer. And then the next month. And then what are we at? Christmas, June, or I'm sorry, January, February, you're done.

You're done. Then you see the guys, the men and women across the finish line, and they're rolling around on the floor and people are pouring ice down. That's you. But you're so close, but it's not time to roll around yet. Run through the finish line here. You're so So close.

Yeah.

So close.

Yeah. You're now running on not excitement.

It's the grind.

You're running on an intellectual decision. It's now an act of your will.

It's a grind. Yeah.

And I—

man, that's a big deal because people that can finish things in a culture that has the attention span of a gnat, people that can finish things are— they create a life that is so much head and shoulders above The average person's life.

Can I tell you what I, what I've done? I haven't talked about this very, very publicly. Um, I found myself exhausted. I've had, I've been running hard the last year or two and I found myself starting to get into a pity party.

Oh yeah.

So, uh, 104 days ago I decided I'm going to run 1 mile every day, no matter what, period. And for me, that's not a lot. That's not hard. It's not a hard physical challenge. But I'm gonna do it.

It is when you do it every stinking day.

The number of 1:00 AM runs I had to do because I drove 17 hours. I didn't realize I planned a hunting trip with my son. The last 3 nights were in the middle of a field in nowhere West Texas, getting these last couple miles in to not break the streak. But it's not break the streak, but it became all about, will you finish this thing? Like the, the actual jogging a mile is not hard. Running a mile is not hard. Can you do a hard thing? Can you keep a promise to yourself? And I, I, I'm telling you, it sounds crazy. I, I feel like I'm 6 inches taller. Like, oh, I can do, I can do something for, for a long time.

Yeah.

The pity party stopped.

The—

Yeah.

Woe is me stopped. Like, oh, I can do it. Let's go get it done then.

Right.

And I made this promise. I'm gonna go do it. So something as silly as run a mile every month, I mean, every day for, for 100 days, 3 months. And what I, what I bet is if they sit down with zero payments in the world, And say, I'm not doing this for 4 months, let's do it in 3. I'm gonna take a few more clients, I'm gonna be a little bit more tired.

Yep.

And then come January 1st, we're just gonna make snow angels out in the middle of the yard.

We're gonna be done. I want to get done faster because I want to get to the finish line.

That's it. That's it, man.

That's a good question, Sarah.

I love it.

That's a human problem when you're facing this, because personal finance, ladies and gentlemen, is 80% behavior. It's only 20% head knowledge. So what she's doing there is a Addressing the person in her mirror, which is necessary for you to do if you don't want to be broke your whole freaking life.

Don't wait for motivation. Just take action.

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You must be 18 or older, and remember, advocates do not provide medical or legal advice. Lisa's in Birmingham. Hi Lisa, how are you?

I'm good. How are you? Thank y'all so much for taking my call. Sure.

What's up?

Well, uh, my question is about converting a traditional IRA to Roth and how aggressive my husband and I should be about doing that. And I'm just curious what you would recommend. Okay.

How old are you?

I'm 54 and my husband is 61. Okay.

And how much is in the traditional?

2.8.

Way to go! You guys are awesome. So proud of you. And by 2.8, you mean $2.8 million, right?

Yes.

And I know you put it there because that's the only way it could have been put there. That's not inherited money. You are amazing.

No, it's not inherited.

Can't be. Couldn't be in— it couldn't be in an IRA. Okay. So, um, wow. Um, how much money do you have that's non-retirement?

We do not have any, uh, non-retirement. Okay.

All right.

Um, okay.

Here's the advantages of getting it into Roth. Okay. You're 54, he's 61. Is that right?

Yes.

Okay. So when you are 61, this $2.8 million will be about $6 million. Today you have—

He is retired.

I'm sorry?

He is retired. He retired almost 3 years ago.

Good.

Okay.

But when you, if it's invested in good mutual funds, it will double about every 7 years or so. If you don't add anything to it, this $2.8 million will be $6 million. Today, you have taxes due on $2.8 million. 7 years from now, you will have taxes due on $6 million. 7 years after that, you will have taxes due on $12 million. So the advantage is it will grow from the point you convert it to grow— that growth will be tax-free. And so instead of taxes on $12 million someday, you will have paid taxes now and next year and the next year by converting some of this. So your tax bill is going to be substantially lower than it would be 15 years from now. Do you see what I'm saying?

Yes.

Okay. That's advantage number 1. Advantage number 2 is when you're 75, you have required minimum distributions, RMDs. You are required, even if you don't want the money or need the money, to start pulling it out because if it's traditional, because the government wants their freaking tax money. And so that's 15 years for your husband, 14 years, not very far. Okay.

Yeah.

And, um, then when you both die, if you leave a traditional IRA and the beneficiary is one of— is your kids, they will have to pay income tax on that when they take it out. And they're required to take it out under the Biden Secure Act of 2.0. They're required to take it out within 10 years of receiving it. And by the way, that they then will be taxed if you don't move it to Roth on that $15 or $20 million that this money has become. And they're going to have to cash that out and pay taxes on it as they go along. So there's a lot— that's 3 really good reasons to move it to Roth as soon as we can reasonably. All right, what's your household income?

They will also have to, have to count that as earned income, correct?

Yes.

No, no, it's not earned income, but it will be taxable. It'll be taxable. Your kids, if it's IRA, if it's a Roth, RMDs don't apply and there's zero taxes on inheritance.

Okay.

Okay. There's, because you've already paid the taxes. Roth grows tax-free. All right. Now, so what's your household income?

Um, $150,000.

Okay.

Where did this money come from? Oh, your husband's retired. What was he making back then?

Um, uh, he, I think he was around, well, he worked a lot of overtime too. So he was around $120,000 to $130,000.

Okay. So you cut your income in half when he retired, give or take.

Okay.

All right. Um, And you don't have any money except this, right?

Right. Okay.

Because here's the thing. If we take some of the $2.8 million out and pay taxes with it, we've reduced the balance.

Yes.

And it loses some of the advantages I was just talking about in terms of the growth, but you don't have anywhere else to get the money. So what I'm going to do is I'm going to, as much as you guys can cashflow the taxes, I'm going to go ahead and start pulling that out every year and rolling portions of this to Roth. Sit down with your financial advisor and calc— your tax advisor more than anything. But out of $150,000, how much can you guys spare to pay taxes? Let's just make up a number. Let's say I want to pay $50,000 in taxes. That means I can pull $200,000 a year. I can do that for the next 6 years. That's $1 million I can get moved out of your cash flow without touching this nest egg. Then after that, you're gonna have to touch the nest egg to pay taxes on it in order to move it. But I would, I would reduce the size of the nest egg by the tax bill in order to get it moved. The net effect isn't as fun because we've reduced the size of the nest egg. But, um, so I, if you had told me you had $600,000 in a separate brokerage account in addition to this, I'd have been so excited because I would have spent that on taxes in a heartbeat.

Yeah, that's—

well, unfortunately we don't.

That's okay.

I, I—

you got— these are good problems. I got $3 million is a good problem. I'm so proud of you. What was your— what was your career?

Um, my husband worked in maintenance.

Okay. And you do what?

Administration.

You did what?

I only work part-time.

Okay. Yeah.

So where's the $150,000 coming from? Is it from a pension of some sort?

No, she's making $150,000.

Yes, ma'am.

She's still working.

Yeah.

Oh, so that $150,000 is what you're earning?

Yeah.

No, no, we're drawing off of the retirement.

What, you're drawing some off of this $2.8 million?

Yes. Oh, okay. All right. All right.

Yeah, I'm going to run some numbers with your tax guy. Um, I can't do it in my head here on the air, but I want to systematically move this to where in the next 10 years, 5 years, something like that, 7 years, that this is all Roth. And even if I have to reduce the size of the nest egg to get it to pay the taxes to get it there, because I don't want you guys rolling into RMDs. And if we can get it there, the faster we can get it there, the faster it's going to double every 7 years tax-free, whatever's left after paying the taxes. So, I mean, if you just did it all at once, it probably costs you $700 grand, which makes me want to puke.

Wow.

But, um, yeah. And so instead of $2.8, we have $2.1, but it's 100% tax-free from then on. So it's hard to stomach that. Um, but it's one way to do it. Um, I, I don't, I don't like that. I'm not suggesting that, but You know, what can I do to get this moved and sit down and talk to somebody? I'm not going to lose my mind about it. It's not the end of the world. You've got $3 million. Shut up. Life's good. Okay. But it just, it becomes a math riddle for me. And this is my version of nerd coming out. I like to nerd out on the math and how fast I can get it moved over. I accidentally stumbled into this, folks. I didn't know. I wish I could tell you I was that smart. All I wanted was tax-free growth. The RMD stuff and the stuff on the kids don't have to pay income tax on Roth when you get it in inherited IRAs that are Roths. I actually just looked up and realized that after I had moved all mine years ago.

Hmm.

But I just love the Roth. I love the math on the Roth tax-free. So I moved everything years and years and years ago, and I've never done anything except Roth since then. Even to the point that Ramsey that I own matches my 401 in the company that I own, and our match is required by law to be traditional. The underlying can be Roth, but the match has to be. And every year at the end of the year, I get to pay taxes on it because I roll my match where I matched myself out of traditional into Roth at the end of the year, because I, I'm not going to have anything except Roth every 12 months.

That's nice of you.

Yeah, it's good of me to do that for myself. I'm patting myself on the back. Thank you.

That's pretty nice.

I matched myself. Yes, it's quite, quite an employer benefit. One pocket to the other.

I'm just saying, if you really loved yourself, you could make a match.

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Welcome back to the Ramsey Show in the Fairwinds Credit Union studio. Dr. John Delony, Ramsey Personality, is my co-host today. Stephen is in Richmond, Virginia. Hi, Stephen, how are you?

Good, how are you?

Better than I deserve. What's up?

Yes, sir, I need some advice. So Currently I'm living in an apartment, um, but I have 3 rental properties and I'm trying to see if I should just, uh, get rid of them and take the equity out and invest all that money or keep the rental properties.

Okay. Well, it's a little strange that you live in an apartment and you own rental properties. Would you agree?

Uh, yeah, I've heard that. Yeah.

And how old are you?

I'm going to move back out. Uh, 37.

Okay. Are you single?

Yes, sir.

Okay. That, I mean, that it makes a little more sense then. So is there equity in these properties?

Yeah, probably around total around $250,000 or so.

Okay. Is one of them worthy of living in?

Yes. I'm actually going to be moving back there shortly, probably the next couple weeks or so.

Oh, okay.

I think I will stay there and maybe—

Okay.

So now I have a house and 2 rental properties.

Yes, sir.

Okay. All right. That's cool. What do you make a year?

Uh, about $150,000. Okay.

And the 2 rental properties that are remaining after you move into the house are, uh, property number 1 is worth what?

Uh, around $400,000.

And what is owed on it?

Uh, $240,000.

Well, good.

Okay.

And property number 2 is worth what?

About $215,000.

Okay. And, um, what do you owe on it?

Uh, like $175,000.

Okay. And again, you told me, but I'm sorry, I, I, it dislodged from my brain. What do you make a year?

About $150,000.

Okay. All right, cool. So, um, are you disillusioned with being a landlord or what?

Uh, well, I'm paying, so I'm probably paying at least $300 a month in HOA fees alone. So that's kind of, I'm like, I could put that money elsewhere because it seems like just throwing it down the drain. So when then maintenance comes up and it's like whether it's worth it or not. I'd just put it in the market and leave it alone and not have to worry about anything else.

Okay. All right.

I'm just trying to see if it's worth it to just keep them. I mean, I have low interest rates on them, so it's whether is it worth keeping or just Put that money in the market.

Well, in general, if you have a single-family home that you owe $240,000 on and it's worth $400,000, in general, that thing should be cash flowing even net of expenses and HOA fees. Um, you should be making cash on that. Um, and so you get 3 places on real estate you make a rate of return. One is your cash on cash, meaning the cash flow monthly. 2 is the growth in Value. So that $400,000 property, you know, in 7 or 8 years will be $800,000, right? And, um, then the third thing is, of course, you're able, as you currently are doing, I'm sure you're depreciating the capital asset portion of this on straight-line depreciation. And so some of your cash flow, probably all of your cash flow, is being sheltered. You're probably not paying any taxes on it, right?

Right. Well, I, I'm gonna be honest, I have an accountant. They— I don't really know what they do.

Well, you need to learn what they do. Okay, so if we said $400,000 has a $100,000, um, lot under it, there's a $300,000 capital asset that can be depreciated over 30 years. That's $10,000 a year. So up to $10,000 a year that you make on that rental property is tax-free because it's sheltered by the depreciation. And that makes you an extra $2,500 a month— a year, $3,500 a year in your pocket because you would have paid that in taxes otherwise. So if you made $10,000 that wasn't sheltered, you pay taxes on the whole $10,000. In this case, you pay taxes on none of it. See?

Okay.

So that's— so you do get a rate of return on the tax shelter, you get a rate of return on the increase in value, and you get a rate of return— those 3 things combined You get a rate of return on your cash on cash. And those 3 things combined are what's called the internal rate of return. And that is much greater than what you will make in a good growth stock mutual fund. Good growth stock mutual fund, you can expect to make 10 to 12 on. That house, your internal rate of return, you're probably making 20 or 25% over time. But you're not making much cash in your pocket every month because you don't have a ton of equity. You got enough equity That you're not upside down. I probably would sell the little one because it's probably a pain in the butt.

Yeah, that's the one with the higher HOA. It's like $200 a month HOA fee.

Yeah. And so I'd probably sell it, keep the other one for now. And then if you decide, I don't want to screw with real estate, that's not horrible. It's not the end of the world. Uh, but if you can put up with the hassle of real estate, and I've been doing it my whole life, so I actually enjoy it. I'm kind of sick. But if you can put up with the hassle of real estate, you make more money on real estate than you doing the stock market.

Okay.

But then the idea becomes we gotta get that $240,000 paid off. Okay. And we gotta get your house paid off that you're living in. You get those 2 things paid off, that's a solid foundation for wealth and some of your other cash flows. You can start loading up your Roth IRAs and dumping money in the market and so on.

Dave, teach me about this. How on an appreciating asset like a home, how are you able to depreciate it? year by year?

It's just the tax regulations allow it.

Okay.

And so the concept is that the actual bricks and mortar structure, the structure is going down in value, but we all know that's not true.

Because it's aging?

Yeah, that's the idea. Functional obsolescence is the phrase they throw around, but actually, you know, it's not going down in value, it's going up in value. So it really is a misnomer. But like, for instance, around the office, We're allowed to write off some of the capital assets that we purchased to operate Ramsey.

Sure.

But they become worth nothing.

In 3 years, that copier's not going to be worth much.

It's not worth anything.

Yeah.

It's not worth— by the time we get out of the box, it's useless.

Or if you're a plumber, your truck's going to go down in value.

Exactly. Because a stupid truck is going down in value.

Depreciation makes sense there. I just have never understood it.

It doesn't make sense on real estate. Not along that logic. Sure. Yeah. But it was tied to the same concept that that roof is deteriorating. Those windows are getting old.

Okay.

So you will have to replace windows. You will have to replace a roof over time.

But the weird thing is you get to add that to your basis.

Exactly.

And start depreciating it again. So yeah, yeah. So the logic doesn't flow, but it's still the tax law. So still there. That's a great question. It's an interesting nerd question. I like it. So it is good to look back though, folks. It doesn't give you an excuse to go into debt. And if he called me up and said, I'm going to go $240,000 in debt to buy a $400,000 rental property, I would say, don't do that. But you're there now. And if you want to ease out of this, dump the little one and then start paying off your mortgage and then pay this rental off at making your $150,000 as a single guy, it's not a bad portfolio while you're building up your retirement plan in good mutual funds. So you'll end up with millions of dollars in mutual funds, millions of dollars in real estate 20 years from now if you keep on that track. And that's not a bad plan.

Yeah.

It's not the end of the world. It doesn't justify going in debt to do it because the debt That kills him. So let's go back. His $215,000 property he owes $175,000 on, he's losing money on that one.

Tell me about that.

Well, by the time he pays the payment on the $175,000 and he pays the HOA fee and he has vacancy and he has maintenance— heat and air goes out, roof leaks— by the time you do all that, he's not got enough spread there. He's got a negative cash flow, even though he has good, decent equity in it. I'd dump that one just to get rid of the— it's a liability at this point. Mm-hmm.

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All right, today's question comes from Deloney in Nashville— I mean, Mark in Arizona. Many of the financial experts, in quotes, are saying that 2026 is the beginning of a massive market crash, even comparing it to the Great Depression. They say, they say that people over 40 with 401s or IRAs are in real trouble. Is this a claim that has weight behind it or just unnecessary grandstanding for clicks and views?

As long as there have been humans, there have been negative humans, and there will always be negative humans.

Somebody standing on the street corner saying the end is near.

The end is near! Chicken Little, get your helmet!

Bring out your dad! Here it comes!

The sky is falling! There's a wolf. There's a wolf. The boy that cried wolf.

Yeah.

And in the Christian world, it's when Jesus is coming back. In 1988, a book came out, 88 Reasons Why Jesus Is Coming Back in '88. We're still waiting. Yeah, it's just— it's the same stupid stuff. Same stupid people tricks. Yeah, it is clicks. And it is because sometimes people just are negative people and they have to figure out a way that the world's coming to an end. Uh, the only thing I can look at is data and history, not feelings. Okay? And data and history say that these experts aren't experts, that they're morons. That's what data and history says. And some of them are motivated by something other than they actually believe this, in that, yeah, they get clicks and views, and the price of gold goes up if you believe this. Oh, and the midterms are here, so if we can trash the future, And make enough people believe it, we vote for the other party that's not in power.

Or I'm paid like an influencer from a hedge fund and everyone benefits if this thing actually goes on. There's so many—

Yeah.

Man.

There was a—

there was nothing. I mean, so here's the thing. The stock market is based on this. Let's talk about it.

All right.

If a share of Home Depot, a share of stock in Home Depot has value, Based on the profit that Home Depot makes and based on what the plans are, the strategies are for Home Depot to continue to grow, and based on what Home Depot owns in terms of assets. And that there's analysis that goes into those numbers that says that this portion of ownership— that's what a share of stock is— in Home Depot, this 1/1,000,000,000th of a percent of ownership, is worth whatever Home Depot is selling for today, $58. A share of Apple is not based on your negative ninny expert's opinion. The share is based on the profit that Apple makes, the plans that they have to continue to raise the price on iPhones and have a new version come out every 26 minutes. And they have more money in retained earnings than Egypt does, literally. So they've got a big old pile of cash. They've got one of the most successful companies in history, and a share of stock is a share of ownership in that. And that— there's a calculation that people that buy stock and know what the flip they're doing are doing to determine that that share of stock is worth this.

To predict that randomly in 2026, all these people with their 401s that have Apple and Home Depot and Microsoft and Coca-Cola and McDonald's and Chevrolet and General Motors and Ford and whatever, that all have shares of stock that are based on the profitability and the assets owned of that individual company, the price of that stock is based on that. To predict that the price of that stock is suddenly going to go in half and all those profits and assets remain exactly the same is freaking asinine. It's ridiculous that just randomly everybody's going to get up and go, oh, it's worth half of what all we all thought it was worth 4 months ago. That's just mathematically asinine. And that's what— but that, that— but these people have been able to float this bullcrap ever since I've been doing this show for 40 years. So, you know, this stuff is not based on A feeling. It's not based on, well, I mean, it's been up a long time, so it's got to come down. What the flip are you talking about? This is not an Aesop's fable. It's a math equation. This is not that hard.

And so it's based on what's known as reality, not known— not your freaking feelings. And so it's like, I just, I just knew that real estate would just—

Really?

Okay. I got my real estate license in 1978. The first house I sold was for $42,500. That house sells today for $600,000, and the house is really freaking old now.

Okay, so I want to ask, I want to ask, uh, anxious questions. Is that cool?

Yeah.

How does—

You want to step into the— step into the den way? Yeah, exactly.

Okay, so what is the difference between Like when an IPO comes out and that business has like its speculation transfers over to a stock price.

Exactly.

I don't know what that means.

Well, that's a projection of what the profits are going to be.

So when a company's going public, like they're saying this—

Well, we've made this much profit so far. We have this EBITDA right now. We have this earnings before taxes. Or like SpaceX has made no money.

They've lost billions, but we think we're going to earn it this one day.

Well, that was the tech bubble. Okay. I mean, if you take something public that has not made a profit, that's called a wild scientific guess.

Right.

Okay, that's just a freaking wet finger in the air, but the stock market is not based on that.

But an IPO price could be.

The IPO could be, but I mean, Facebook, when it went public several years ago, everybody's like, are you not buying Facebook? No, I'm not buying Facebook. I don't buy IPOs. I don't buy single stocks. But Facebook was very profitable before it went public. But now we did have a whole series of dot-coms in the year 2000, You're in 1998, right? That dot-com, dot-com, dot-com, and they had never made a profit and they took them public. Amazon was one. It survived, obviously, but most of them are bye-bye. Most of them are history. But that's the exception. The stock market, when you're looking at— okay, Nike has lost $200 billion of its value. Okay?

It's crazy.

The stock, due to their political stances, have they've shot themselves in the face. It's all over the financial news. And so Nike stock has gone down in value. Why? Because their sales have gone down, and their profits have gone down, and they were just delisted. They were in the top 100 companies.

Nike got delisted?

Well, they're not completely delisted from the stock exchange, but they were in the top 100, and they're no longer in the top 100. They got thrown out of the top 100 because— But the reality is the company's not making a profit.

Okay, but that—

unless they were making—

that's important. There's sentiment, there's anger, there's politics.

When it comes down to it, only when it affected—

are you selling shoes? That's the, that's the stock price.

Yeah. Can you sell me a Colin Kaepernick t-shirt or not?

Or, or a new pair of Jordans or whatever. But yeah, it's, it's selling.

That's it.

It all comes down to this thing. So where does the sentiment come in? Like the tech stocks are down or Yeah, that sentiment is not—

the sentiment is not going to drive it too far down if the rea— if let's say a company's making a bazillion freaking dollars and everybody gets mad at that company, right? Well, a couple people will bail, but as that price goes down to a certain level, I'm getting in because it's called a bargain, right? The thing's making money and I put money in it, I get money out. Hello, it's a machine.

So the stock price doesn't go down because everyone gets mad at a company. Stock prices goes down because everyone gets mad at a company and quits doing business with them. And people quit buying their thing.

Yeah. When their value— when their profits go down and their gross revenues go down and they lose consumer confidence and it shows up in their pocketbook, that's when the price goes down.

Gotcha.

So you can have a drop on bad press, but it doesn't stay down.

If your product is quality.

If the revenues don't follow it. The reason you'd have a drop on bad press is people think the revenues are going to go down.

Right, okay.

But if they don't go down, it'll come back up.

Gotcha.

The value will come back up. The valuation will come back up.

It's so confusing to me, man.

So that's why this is absolute bullcrap, y'all. People are gonna buy when there's profit and the values hold, not when your grandmother thinks the world's coming to an end, because—

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Jade is in Utah. Hi Jade, how are you?

I'm great, how are you?

Better than I deserve. What's up?

So here's my question. My husband and I loaned about $200,000 to my sister and her boyfriend to start a countertop business about 4 years ago. The business failed and they broke up. Should we seek legal action and risk damaging family relationships?

Wow.

Where did you get the $200,000?

Well, my husband has worked really hard. Um, we've invested in some property in Washington State and sold it, and that was our, our $200,000.

So what is your total net worth today?

Oh, well, our net worth, um, um, as far as like take-home and—

No, no, no. Do you have any money saved or anything that you own of value?

Yeah, we have. Our home is, um, it's worth about 2, over $2 million.

Is it paid for?

No, we owe, we owe about $1 million. Okay.

And do you have money in investments like retirement and so forth?

Yes, we do. We have about $800,000.

Okay. All right.

So you're worth a couple million dollars, give or take?

Yeah. Yeah. A couple million.

And what's your, um, what's your household income today?

Um, at the time we lent this money out, it was a little higher. Now we're about $200K a year.

Um, how offended would you be if I said that loaning her $200,000 to do this with her boyfriend was extremely stupid?

I'm not offended at all. I— it was so dumb. It was, it was one of the worst mistakes my husband and I have ever made.

Okay, fair enough. All right, because no bank would have lent these 2 bozos $200 grand.

Well, yeah, that's why they came to us.

Yeah, exactly. And that because they didn't know nothing about nothing and they proved it.

Okay. Right.

So they used this to set up a company that failed.

Right.

Is there anything left of the company that is yours or that they offered to you or anything? I mean, is there like equipment that can be sold or anything?

Yeah, there, um, there's some equipment that is estimated. We think it's around $150,000.

Oh, really?

Around $150,000?

You think you could get that for it?

Well, possibly. There's a saw and some other expensive equipment. Um, however, the boyfriend filed bankruptcy, and right before he filed bankruptcy, he put the equipment in my sister's name.

Well, that won't work. There's a callback in bankruptcy. You can't just move assets out and then file bankruptcy and everybody ignore it. Um, So the equipment's in your sister's name. Has she offered to deed the equipment to you?

No.

Why?

No, she— well, she would like to get the equipment back herself and start a new company, and she's made it clear that she doesn't want us to be part of that. In fact, when we approached her about it, um, she accused us of taking advantage of the situation.

Well, hello kettle. Here's Black calling.

Um, it sounds like, it sounds like the relationship you are trying to preserve doesn't exist in real life.

That's true. Um, it's true.

So do you, do you have, is anything in writing on this loan?

This is, this is, it's, it's worse. It gets worse. Um, my husband wrote up a contract and her con artist ex-boyfriend talked him into sending him the money before the contract was signed. Um, and, and after the money was sent, he said, actually, I don't agree to the terms, so I'm not signing the contract. There was never a contract.

So there is no contract?

There's no contract, but there's been plenty of text messages and emails. He just sent us an email a couple months ago saying that he's planning on paying us back.

Doesn't matter. He filed bankruptcy. All I want is the equipment.

Mm-hmm. Okay.

Um, so when I do something stupid, and I have done dumber things than this, believe it or not, and this one's really dumb, but I've done dumber things than this, okay? Giving them the money before the contract signed, not having a, not having a good business plan, and doing this deal with your sister, all of these, and her unmarried boyfriend. Yeah, all of these things. There's like multiple red flags here. here. Now that we see them— and, you know, the beauty about hindsight is it's 20/20, right? So it's easy to look back on this and see all the stupidity. I've done dumber. When I do something dumb and I lose money, I call it stupid tax. You are going to pay some stupid tax here. It's just a question of how much stupid tax.

Okay.

Now let's take all of the emotions and the relationships out of it for a minute. Sit down with an attorney with the text messages, And with the verbal agreements that you can prove, which is probably not much, I don't think you got much of a case. And if you've got a good attorney, I think he's gonna tell you to just bite it and walk on. But if there's any chance that you could sue her and get possession of the equipment and recoup $100 of your $200 by selling it at auction, I probably would do that.

Okay.

And it's not a matter of whether I'm trying to sue my sister or something. She's already made all those decisions. She's just reaping what what she sowed. And so if your sister was a person of— had one moniker, one little tiny percentage of integrity or honor, she would immediately call you and say, we screwed this whole thing up, and you're my sister, and I'm so sorry, and here's a deed to the equipment. Let's sell it and get as much as we can. And I don't know how I'm going to pay you the rest of it, but at least we can limit the damage. That's what your sister should do if she was a normal freaking human being.

Right.

But she's not. She's a con artist. who runs around and sleeps with other con artists, right? And so that's the problem you've got. So now, uh, but that's what should happen. I don't— in business, I don't hardly ever sue someone because usually the person that you're trying to get money from is broke.

Mm-hmm.

And getting a judgment, spending $50,000 getting a judgment against somebody that's broke means you have a judgment against somebody that's broke. You can't get any money out of somebody that doesn't have any money. In this case, she's got $100,000, $150,000 worth of equipment that you could get. So that makes it worth doing from a math standpoint. It's not a, it's not a revenge thing. And so I would talk to an attorney about at least sending her a letter and saying, if you don't turn the equipment over to us within 10 days, we're going to file suit. And bluff her, if nothing else, into doing the right thing.

I, I think I'm okay with the relationship— with the loss of the relationship with my sister.

It's already gone.

Right, I agree. However, my mom is involved.

Your mom is not involved.

And the rest of my siblings.

No, no, no, they're not. Nope, they don't get a vote.

They don't get a vote.

They will never talk to me again.

Well, then they are dysfunctional morons.

Yeah, how are they taking your sister's side in this deal?

I mean, what kind of idiot takes her side in this?

I don't know. I'm so confused.

Yeah, I am too.

Yeah.

I really don't know.

To the point that I don't care.

So if you don't hear anything else on this call, you're not crazy.

You're not crazy. Yeah, your family's crazy, but you're not. You come from a long line of crazy, but you're not.

I don't know how it happened.

I don't either. You came out perfectly sane, except for that part where you loaned your sister $200 grand. That part. But other than that, yeah, I think you're a normal person. that got screwed by your own, by your own lack of judgment and your bad character sister.

And hey, few things in the world hurt worse than when your family turns on you and you didn't do anything wrong.

Yep.

When they expect you to be the peacekeeper while somebody else in the family is actively hurting you. Few things hurt worse than that.

If you don't want me to sue her, send me $200K. Otherwise, shut up and go to your corner.

Yeah, yeah.

That's answer mom. I'll help you with this. You can play this back for your mom. Play— send her a copy of this podcast. Mom, none of your business. Go to the corner. You raised a dysfunctional moron that stole from your other daughter. You should not be taking her side. It's pretty simple. So yeah, good Lord. Yeah, I'm gonna threaten her with a suit just to see if I can get some of the money, or just bite it and walk away. But don't bite didn't walk away because of your crazy family. But I didn't walk away because you decided you just wanted peace. If your business is making 7 figures or more, you should be proud of that. But that growth probably brought a mess with it— systems that don't talk to each other. It's impossible to track down your numbers because they're scattered everywhere. That's a visibility problem, and NetSuite has solved that problem for more than 44,000 businesses like yours. NetSuite brings financials, inventory, CRM, and more into one place. And their AI tool, NetSuite Next, builds AI into everything, automating busywork like forecasting demand and chasing down overdue accounts. It's not complicated to use.

You just ask it questions like you're talking to a person. And you're not starting from scratch because NetSuite is built on leading practices from thousands of businesses, preloaded and ready to go. Ramsey Solutions switched to NetSuite years ago. It helped us know our numbers, and we've never looked back. If your revenue is at least 7 figures, try NetSuite Next for free at netsuite.com/ramsey. That's netsuite.com/ramsey, or click the link in the description. John, what happens to us, the human race? Um, because all of us do this stuff and I don't really understand it. from a— because it defies common sense or logic that we, you know, we're doing really good, we're prosperous, and along comes someone that's incompetent that we care about, and somehow we get to the point we hand them a check for $200,000. Because I mean, I've not done that exact thing, but I've done stuff just as stupid that when I look back on it, I'm like, what were you thinking you idiot. I'm talking to myself, and it's like, what in the world? What happens? We trip over. It's like we're driving along and there's a sign that says bridge out, and then there's another sign that says bridge out, and we speed up.

And there's another sign that says bridge out, and we speed up even faster. And then there's a barricade that says bridge out, so we floor it.

Right.

There's all these signs that are there that any normal human being can read, but yet we go into the drink. We drive straight into the freaking river.

There's a ton of psychology research about exactly what she was experiencing, and it could be any number of things, but there's a survivor's guilt to that. And there's a, why me when my rest of my family, including my parents, are struggling, aren't doing as well? Maybe if I go make it, then I can help. That was the problem. And I can almost guarantee that that last caller has spent her whole life making sure Everybody was cool. Everybody's okay. That's been her job. She got out, she got married, they built something pretty amazing. And there's that, that nagging voice that's— that is, oh, I can take care of them. I can heal them. I can solve this thing. And you end up getting yourself in deeper and deeper and deeper trouble. And I think it comes from a good place. It's, it's hard to— it's hard to, to hold the principles when family's looking at you. It's just It's tough. But all of us, whether you get out of the neighborhood, you get out—

Yeah.

There's nothing— the siren song of family that just draws you into the reef.

Or even your neighborhood. You grew up in a neighborhood and you're the one that gets out. There's that sense of you owe us now and we helped make you. And so you're always in our debts. And that's a tough thing.

So you have to give back as if you've taken something.

Yeah. You owe.

Rabbi Lambin always says, don't tell people you give back. Because you didn't take anything. So you're not giving back, you're just giving.

I'm giving.

If you want to give to the old neighborhood, that's fine, but you don't have to give back because you didn't take anything. Yeah, it's like that, that's a wrong— because it implies somehow that you've done something wrong by escaping the crazy.

And the way we wallpaper over that exchange is we call it a loan, or we, we try to businessify the language to make our helping out folks seem more palatable. If you just want to give your sister $200 grand, you wouldn't do that. And so you say, okay, well, we'll loan it to you. Actually compounding the problem makes it worse. Yeah, it's tough, man. And I get it, dude. I get it. I deal with it. It's tough. And at the same time—

So that advice that I've always given fits into your scenario there exactly. perfectly, makes it sound like my advice was right, is like, never loan family money under any circumstance. Never loan friends money under any circumstance. If you have the money and you think they need it and you want to give it to them, give it to them.

Give it away.

But if you won't give it to them, then you shouldn't be doing this.

Because you're taking a relationship—

Because you're about to give it to them.

Well, and you're— but you're adding the extra layer of business betrayal. And that's why I always say the lender is the one that should be holding the bag here. Because I mean, there's moral obligation to pay back your debts, all that stuff. But there's the lender here. At the end of the day, I'm choosing to turn our family relationship, our friend relationship, our brother-sister relationship into a business relationship.

Into a master-slave.

Into a—

Because the borrower is slave. to the lender. And it's hard to eat dinner, Thanksgiving dinner, with your master.

Yeah, it's tough.

No fun. The turkey tastes funny. Yeah. So don't loan your kids money.

Never loan your kids money.

Give them money. You're not helping them. Yeah. You codependent enabling parents, stop it.

Well, and here's the thing.

Some people think, I'm gonna loan it to them, I'm gonna teach them a lesson.

I'm gonna teach them a lesson.

Right, right.

That's the dumbest thing I ever heard. Yeah. Here, have some cocaine. I'm gonna teach you a lesson. God, that's just dumber than crud. Yeah, well, teach you a lesson. Yeah, get you addicted to drugs. Yeah. Oh man. So that, that— you're exactly right. That's— some of it is— I run into this when we used to do— I used to do all those things for the, uh, those— I would do these, uh, rookie camps for the NFL.

Mm-hmm.

And I would go in and explain to these young guys They're making millions of dollars now for the first time in their life. This is before NIL. Now they make millions of dollars before they even get to the NFL. In middle school. Yeah, in middle school. But I go and explain to these guys, NFL stands for Not For Long. Average NFL career is 3.8 years. 78% of you are going to leave the league permanently physically disabled. Your divorce rate is 10 times the national average, and your bankruptcy rate by the time you're 30 is 4 times the national average.

Wow.

You guys suck at money as a group. Y'all are awful. And this is how I would do the seminar. And so I sat down on the edge of the stage after we're done, and this little guy sits there and he's a big star. He just gotten a $10 million thing. And he goes, so how do I tell my mama no? I'm like, you're 22 years old.

Yeah.

You just got $10 million. How much are you giving your mama? So I give her $50,000 a month and she calls me by the 7th or the 8th every month wanting more. How do you tell your mama no? I said, well, someday you're not gonna have any money and it's coming pretty fast.

That's a big hole in the boat.

And then you're gonna have to tell your mama no because you ain't got no money. What are you gonna do then?

And that conversation's coming.

Yeah.

And so you might as well go ahead and do it now. And because, but she's the reason I'm here. That's what she tells me.

me.

And no, honey, she ain't the reason you're here. You're here because you want— you, you absolutely don't know how to do anything in this world except play with football. You're really good at football, but you suck at every other part of life.

Or let me— maybe he is there because she drove him to practice and she worked 4 jobs. All that's true and good, but you can't turn around and say, now you owe me back, like you— as though it was an investment, like a 401k. Now you owe me a return.

Like, you're not a sports agent, you're his mother.

There you go. That's a good way to put that.

Yeah.

You didn't pay for my pads when I was in high school, so you expect me to be an endorser when I'm out? That's a business deal. But this is your mother. So how do you tell your mother no? I said, well, you press your tongue towards the roof of your lip, make a kissing motion, release air. It sounds like this.

No.

That's how it sounds when you do it. Release the air, push the tongue forward. No.

And the weird thing is, I'm going to tell you no to $50,000 a month. I'd be better off, I'll buy you a house now and then we're going to call it.

But— She ain't going to call it because there's no end to her.

That's the greatest gift I could give all of us is to say no so that I've got money in 10 years or in 15 or in 20 years.

Yeah.

It's tough, tough, tough, tough.

And you have to decide really early if you're going to build a quality marriage, a quality situation where you build wealth, who has a vote?

Absolutely.

Yeah.

And if you don't take the people that think they have a vote out of the voting business, you're going to be broke.

Yeah.

Whether it's mama needing $50K, whether it's sister wanting $200K and mother guilt-tripping because she's a travel agent for guilt trips, this mom. And so, um, you know, what is— who is it gets a vote? And, you know, as for me and my house, We serve the Lord. So Jesus gets a vote and Sharon gets a vote. Rest of y'all are screwed. You don't get a vote. You're screwed unless Sharon and Jesus and I decide that you get a vote. I mean, that we're going to do something in your situation, but we're not obligated.

And let's— I'll flip this around and make it even more dark here. Most people, I don't even think her first thought might've been, I want to help my sister. The, the thing underneath that is I want to stop hurting. And when you are hurting and the way you try to alleviate that hurt is by going around and trying to solve other people's issues, it sounds awful, but you're actually using them so that you feel better. And if you set somebody up to fail, like I'm going to give you a $200,000 loan on a speculative business that you don't know how to do. then you're actually putting them in a position to fail. You know what I'm saying? Like, so in order, in order for you to feel better, if you are going to do good so that you'll stop hurting, so you'll stop feeling guilty, go talk to somebody because that's not the reason. The reason to give is because, like, out of a joyful spirit, because you're like so excited to be a part of this thing, not so that you can stop hurting.

Not as a response to guilt.

Yeah.

Yeah.

Welcome back to the Ramsey Show in the Fairwinds Credit Union studio. Kim is with us in Charlotte, North Carolina. Hi, Kim. How are you?

Hi, I'm good.

Good.

What's up?

So my husband and I filed a Chapter 13 bankruptcy 6 months ago, and it's for 5 years. And so I'm wondering if we should stay in the bankruptcy for the entire time or try to come out the bankruptcy and snowball the debt.

Wow.

5 years seems like a long time. We have 2 rental properties.

You have, you have 2 rental properties in this?

Yes.

Okay.

All right.

Let's kind of walk through it and see if there's a way out. I love the idea of getting out early and being through with this, which is your goal. I don't want to be in this for 5 years. Now that's your goal. Who were you behind with that raised the level of emergency that caused you to run and file?

Um, it was a lot of credit cards, a lot of loans. For like after COVID. So I have a small business that I run as an education business. Um, I shut down the commercial building and brought the business to my home. We added an addition to the home that we live in. And so, um, because COVID and everything was shutting down, like it was just a big deal. We were constantly borrowing money. Things wasn't working. Everything was closed.

So the business wasn't profitable. And you propped it up with debt. And is it profitable now?

It is.

What are you making now, profit?

Um, I'm making $80K.

A year?

Yes. Okay.

But when you filed this 18 months ago, you said?

Um, it's only been 6 months.

You were not profitable 6 months ago and now you're making $80,000 a year?

Right. Yeah. So it's childcare versus education. So in the summertime, I'm just like teachers, so we just really didn't have any money. And so it was mainly childcare. Childcare, we've seen a decline in childcare. So I only had a couple kids. I couldn't get kids. We were doing everything trying to get children. And so then I switched over to teaching school-aged children. And so when school started in August, The money went up.

What happens next?

Um, well, I have a year-round, so I still have it where I do have the children, the small children as well. So I still have that income on top of the school-age income.

Are you sure that we're talking about profit and not gross revenue?

I was gonna say, what's your draw from this?

Um, so it's, it's over $100,000. So I had to do all of my profit and loss statements and all that. So at the end it came out, but that's not including the rental income.

Yeah.

My husband, and I have a husband and he makes like $30,000.

Okay. So you looked at your profit and loss statement, you brought in $100,000 and you netted $80,000 on $100,000. Is that right?

Yeah, a little over $100,000. So it's like it varied, but yes, $80,000.

Because you've alleviated all of your expenses by getting rid of the commercial building.

Yes.

Okay, now a Chapter 13 has 2 possible things in it, at least. Uh, one of them are assets that are secured, like a rental property, and you have to pay the minimum payment on it plus something on the back payments in the bankruptcy. Were you behind on the rentals?

No, everything was up to Okay.

Then the other thing you have is, do you have like a car payment that's in this?

Yes. So my husband has a car note. I don't.

But is it in the Chapter 13?

It is.

Okay.

So you were behind on it and you're now making the regular payment plus something on the amount that you were behind in the Chapter 13.

Yeah, we wasn't behind. Everything was kind of up, but it was just weird.

What about your personal home?

And his credit card. We're— everything is up to date.

So I live—

we live in the home.

No, I know it's not up to date necessarily. Did you— I mean, the, the regular payment has to be paid plus something on the arrearage, the back— the amount you were behind. You shouldn't be up to date if you've been in a bank in a Chapter 13 for only 6 months. You should still be behind on it. Does that make sense?

When we first filed, yes.

When we first filed, we was, we was paying the payments on time.

And then—

so the house was not behind?

No.

Okay, the house wasn't behind, the car wasn't behind. What was the— what was the bankruptcy for?

The credit card debt.

The debt.

Okay, well, and getting out of the lease on the commercial building?

No, I had already left the building. So the only thing— the debt is the loans and all the credit cards. So those are what we were getting behind on.

And how much credit card debt is that?

Um, the credit card and the loans together was averaged like $120K.

Okay.

And the rental property, rental property number 1 is worth what?

$275,000.

And what do you owe on it?

$186,000. Okay.

And rental property number 2 has what owed on, or what's it worth?

$320,000.

Okay. And what do you owe on it? $212,000.

Okay.

So if you sold both of those, you could probably just pay off your credit card debt.

Right.

And then how much SBA loans do you owe?

The SBA?

The, the total, the total of the COVID loans.

Yep. So I wasn't actually like taking COVID loans. I was taking loans, like personal loans to kind of pay for the business to keep going.

Okay.

So if you, if I understand you right, you're current on your car, you're current on your home, you're current on the rental properties. If you sold the rental properties, you could pay off the credit card debt and dismiss the bankruptcy.

Yes.

Today.

Why would you not do that today?

Um, because the one rental property is a 2.5% interest rate and the rent is not— they pay $1,950 a month and the mortgage—

You're in bankruptcy. I don't care what your interest rate is or your cash flow is. You're in bankruptcy because you didn't pay credit cards, because you didn't sell rental houses to pay off the debt that you owed. Yeah, that's what you need to do.

So pay— so sell both of them.

So let me hear— let's talk about this for a second. What if you had no payments but your house payment?

That'd be great.

You could almost be there by doing this. You'd probably pay off his car too, right? If you had zero— think about that. Think about the hassle in your life With all those credit cards flying around like a bunch of bumblebees and you poke the nest, right? That's what it feels like. And, and all these renters and all the stuff breaking at the rental house and all these people, all these lawyers and lawyer fees, the crap you— that is spinning around in your brain all day long would be shoveled out. We're cleaning out the stable. It's going to be clean. You're going to be able to breathe again. You've been carrying around some— you're juggling knives that are on fire, and you've been juggling them for so long you don't even realize how wild that is.

All for a 2.8% return.

Lay the knives down and put the fire out and get your life back. Be out of this in about 20—

get—

call a real estate agent today. Sell these 2 properties. Then call the bankruptcy trustee, the Chapter 13 trustee, and say, I got good news. I'm sending you a check. We're gonna voluntarily dismiss this because I don't owe nobody nothing except my house. And now we make $110,000, $120,000 a year between me and my husband. We're gonna get that house paid off so we're never back here again, ever, under any circumstances. Sounds like freedom and peace to me. You've heard from me and the Ramsey personalities for years, but nothing beats actually getting together in person. That's why we created the Live Like No One Else Cruise. For 7 days, we're vacationing with you and 2,500 Ramsey people In the Western Caribbean with live shows, us, new content, us, and more. If you're on Baby Step 4 or beyond, come spend the week with us next March. Choose your cabin at ramseysolutions.com/events or click the link in the show notes. The fastest way to get out of debt and build wealth is proven. It's called the Baby Steps. It's a process for applying the biblically based common sense that we've been teaching here for 30 or 40 years.

And we show you not only how to get out of debt, but how to build wealth. And if you're working the Baby Steps, the fastest way to do that is by using EveryDollar. It's more than just a budgeting app. It now has the whole Ramsey plan, including the Baby Steps, built right in. You track your progress. You get suggestions automatically from the app for your personalized situation. You get coaching and personalized recommendations that fit the Baby Steps, that fit right where you are and tell you the next thing to do. And it speeds you up big time. It's like having one of us walk with you every day and holding you accountable, but also teaching you and lifting you. Start EveryDollar for free by downloading it in the App Store or Google Play. Brandon is in Springfield, Missouri. Hey Brandon, what's up? Hey.

Hey, thanks for taking my call, Dave. Appreciate you.

Sure, how can we help?

Um, well, my wife has incurred a lot of credit card debt, um, and I just found out about it. Um, and it's bad enough that she doesn't know the extent of it. She also got some personal loans. Um, there's a lot of Pay-as-you-go stuff, like a firm that I found out in our banking account. And this is like the second time this has happened. The first time, it had been us. We got a HELOC on our home to get things squared away. The plan with that was to get the HELOC, make some home improvements, pay that off, and then sell the house. I found out a couple of weeks ago that it happened again. Um, my question—

Let me stop a second. So she's handling her money by herself. You're not involved?

No, she's kind of been in charge of the finances. Um, a few years ago I had—

Okay. So she ran up debt and hid it and you got a HELOC loan to pay it off and you said, hey, let's keep doing that.

She—

Why don't you keep handling the finances? Because you suck at it.

I'm sorry?

You said to her, why don't you keep handling the finances since it's not working when you handle it? Why did you not jump in and help with this?

I, I was trying to, um, but she was very hesitant to let me see it. And I—

Oh, I get it. She's hiding it.

Yeah.

What is she— what is she buying, brother?

I, I just found out about the firm stuff yesterday.

What is she buying?

I think it's just— I think it's just things off of Amazon, honestly.

What's the— and you don't know— she doesn't know the, the total debt here?

That's what she keeps telling me.

So I—

she's— she estimated it like between $14,000 and Uh, $16,000.

Okay. What do you make a year?

I make $1,672 twice a month. Okay.

What does she make?

Uh, $1,706 a month. Okay.

All right.

About $5,200.

Yeah. So you're making about $80,000 a year minus taxes. Okay. Y'all got money going into 401?

Yeah, that— the numbers I gave you was after taxes.

Yeah, how much is going into 401?

Um, I just did an adjustment of that.

Like, what do you do for a living?

Um, I actually work for the state of Missouri.

Doing what?

Uh, I'm a supervisor for, um, DPTs, Benefit Program Technicians. Okay. All right.

So let's establish something very gently, but very firmly. The program you guys have been using to handle money in your house is horrible.

Yeah.

And it's given you horrible results. And I think what has happened, I might be wrong, but I've been doing this a long time. I think your wife is attempting to meet your expectations of how this household should run. with not enough money to do it. And when she goes into debt to keep the house running the way she thinks it should run, and she thinks you want it run, she's ashamed of that and hides it. I don't think this woman has a boyfriend on the side, and I don't think this woman has malice at all. I think she's out of control, incompetent, and doesn't know what to do with the money. And so it makes a big mess, and then shame keeps her from telling you about it. What do you think of that? Do you think that's right?

I think that's wrong. I do.

Okay, so here's how we fix that. This is fairly easy. You need to go to her when you get off the phone and sit down with her and take her 2 hands in your hands and look her in the eye and say, I am so sorry, because you are. You dumped this on her and she didn't know how to do it and you didn't help. And so the two of you starting today are gonna unpack every single expense in this house, and the two of you starting today are gonna make every decision together for the rest of your lives. She is no longer in charge of the money and you are no longer in charge of the money. We are gonna have full disclosure, full transparency on every single transaction, and we are going to do these transactions together in the budgeting app EveryDollar every month before they happen. And you're gonna help instead of just dumping this on her and then being upset that she made a mess. You are— you should apologize to your wife for doing that to her.

I, I did, but we ended up in HELOC, and I'm— I've been trying to get her to—

You didn't hear a thing I said. You start talking about HELOCs.

Well, no, is she, is she freezing you out? She won't let you— she, she won't work with you?

She starts to. And then she clams up.

This is no longer an option. This marriage is not going to last if you two don't start working together in full transparency. Because you have— her incompetence has caused you to completely lose trust in her. And you're starting to lose trust in her integrity. And so she's got to overcome the shame and say, I'm going to accept help, and the two of us are going to do this together, and that's going to give us strength. But if she can't do that, then you guys need to go see a marriage counselor tomorrow, because you're going to end up in divorce court if you don't. It's not going to work. And the stress and the sadness that is in your voice is killing me listening to you. I want to cry with you. And yet I'm telling you, you've still got to go in there, man up, and help, and say, honey, I'm sorry I asked you to do this by yourself. Starting today, I can't do it this way anymore. I'm terrified. We are going to have to do this together. do this together, and I'm gonna— we're gonna unpack this, and then we may or may not go get a HELOC.

You probably won't. It's only $14,000. Shut up and go pay it, you know. But you got to get on the same plan to do that. If it's $140,000, we might have to sell the house, but it's $14,000, maybe.

And you can go to freecreditreport.com and you'll find out exactly what you both owe, except for the Affirm crap, which doesn't show up there.

Yeah, but so disconnect stupid Amazon and disconnect Affirm. Affirm affirms Let me tell you what Affirm means. It affirms that you're stupid when you use it. That's what Affirm means. Because you just put a t-shirt on that was on 3 $19 payments and paid $60 for a freaking t-shirt because Affirm gave you easy payments. It's a disease on the internet is what Affirm is.

I don't know what Affirm is.

It's one of these pay-as-you-go things. Anytime you get ready to buy a t-shirt or anything else stupid on the internet, a pair of shoes You can do 3 easy payments. It's Klarna, Affirm. It's all these crappy companies. They're payday lenders of t-shirts. And so it's just stupid. And so, dude, you've got to take this over with her and the 2 of you together handle this. She cannot do it by herself. She doesn't have the capability.

And if you lay it out like Dave said, he had a more generous read on it than I did. If you lay it out and she looks at you and says, no, I'm not doing this with you. I'm not telling you what I spent this money on. I'm not showing you this stuff. Then like Dave said, y'all have way bigger issues than just—

Than HELOC.

Than her spending problem.

Yeah. The HELOC will pay for your divorce lawyer.

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If you didn't know, you can stop by and watch the show. We do it from 1 to 4 Central Time every day, Monday through Friday, and it's on the glass. So you can sit and watch the show, listen to the show. Uh, we're like a couple of monkeys in a cage in here. And, um, yeah, you can watch it happen. And we've got free wonderful coffee. And, uh, the ladies over at Baker Street, um, which is our coffee place and our all the stuff for sale over there and all that is, uh, they make homemade chocolate chip cookies for you. And it's just, you're in mama's kitchen. You come hang out with us and watch the show. Stop by and see us. Also in the lobby where all of that's happening, we have a thing called the Debt-Free Stage. And on the Debt-Free Stage are Ty and Blythe, which means only one thing, that they are debt-free. Welcome guys. How are you?

Great, Dave. How are you? Doing well.

Thank you.

Better than we deserve over here. Where do y'all live?

Panama City, Florida.

Oh, a little hurricane action, huh?

Yes, sir.

Y'all do okay?

Yes, sir. We came through.

Very little hurricane action.

Yeah, we're grateful.

Good.

That's a good thing. I like it. So, how much debt have you two paid off?

So, together, $110,000.

I love it. And how long did this take?

2 days.

There's a story here. Okay. And you've got a good—

you've got a generous overtime program at your job.

I'm a public school principal, John.

That's not true at all. Oh, there's no overtime there?

Your range of income during those 2 days?

Together combined, $190,000 a year.

Okay, and what do you— and you're a public high school principal?

Yes, sir.

Okay, and what do you do, Ty? I have my own handyman business and also work for the cabinet company. Okay, excellent. Okay, so what the flip are you talking about 2 days? I don't understand.

So, Dave, the story started several years ago as a single mom, and I started the program at the beginning of 2020. And I was at Baby Steps 4, 5, and 6 when I met Ty.

I see.

And so, on our honeymoon in Destin, Florida, 2 days after we got married, we went to the bank and paid off my mortgage.

Wow.

Okay, that works for me. All right. So, Ty, you did good.

I far outkicked my coverage by all, you know, by all measures.

So you didn't have any debt and you had some money. And when we get married, we paid off the last debt that you had, Blythe, which was the mortgage.

Yes, sir.

And y'all obviously live in that property.

We do.

Okay. Phenomenal. Phenomenal. So in 2020 or sometime after that, you got introduced to Ramsey. How did that happen?

Well, I was introduced to you actually well before that, in 2010. I was married to my first husband, and I got him on board to do the plan with me, and we went as far as Baby Step 2, and then he didn't want to take it any further. So, I just kind of settled for the good enough. We weren't in consumer debt anymore. I was grateful for that. But at the end of 2017, he suddenly left our family. And so, it took me a couple of years to kind of get my bearings, get my feet back under me. A friend of mine at work loaned me the book, The Legacy Journey. Mm-hmm. And I read it, It was at the end of 2019, and I was reacquainted with everything that I love about the program. And I looked around and said, I don't have to convince anybody anymore. And I had 2 girls that were looking at me, and I had to step up, and I had to make things right for them. So, I got on the plan. It really wasn't hard. I had about $8,000 in debt. $6,000 was my daughter's car, $2,000 in some furniture.

I had enough in savings to clear that.

Mm-hmm.

March, I started Baby Step 3. 3 months later, I topped it off, got with my financial advisor, and settled into a rhythm of Baby Steps 4, 5, and 6, and threw money at the mortgage as I could, cash flowed everything else— vacations, home projects.

You're like a poster child. Way to go.

Was in that mode when Ty came along and didn't know you, and I indoctrinated him pretty quickly.

Okay. All right.

Now, my notes said that you took You took your school, some of the teachers or whatever, through Smart Dollar, right?

That is correct.

Which is our program for HR to walk the employees through, like U-Haul and Costco do it, and you took your school through it.

I did. I did it at the middle school, and I am currently still doing it at the high school.

Thank you.

Absolutely.

Wow, that's pretty incredible.

What kind of success are you seeing there?

Well, we've cleared over $200,000 in debt, John, so I'm pretty pleased with the results. But it's changing lives, and I've had a chance to lead FPU through my church and through my school. So, um, I've seen it firsthand what it does for our folks, and it's been remarkable.

Yeah.

What's interesting is the, um, when we did the study of millionaires, teachers are the 3rd most likely career to become millionaires. So, and then you gave them some tools to do that. So that's awesome. Way to go, Principal.

So, Ty, you meet this beautiful, amazing, brilliant, strong woman, and then she says, I got to tell you about this balding old man. And, uh, Yeah. I was talking about George. So what was that conversation like that you were like, yeah, absolutely. Let's pay off all this debt and let's run into the debt-free life?

Yeah.

I already had common sense before Dave is what Ty said. Yeah.

It was already pretty quick in the process.

We were just dating. We hadn't even started doing the maybe marriage talk at that point.

And she's showing me books and passing Smart Dollar along to me. And for all intents and purposes, I've gotten by on—

I don't like to spend money. And so, I work hard and put money away where I can.

And I've never liked debt.

So, this was easy principles to get behind.

Love God, love my wife. I just want to honor God with everything I do.

Well done, sir. Well done.

That's incredible, man.

Okay. So, um, yeah, the, the fact that you all struggled for 2 days to pay off this mortgage.

Well, I got, I got a couple of buddies like you, Ty, that are like, okay, wait, wait, what now? You tell people to not borrow money? And I'm like, yeah. And that's the whole business. Pretty, pretty much. Well, how did you make a business doing that?

Because everybody borrows money.

Because everybody borrows money.

Yeah.

So yeah, until Ty comes along. I love it. This is great. Way to go, guys. I'm so proud of you.

Thank you.

So you've been married how long?

Um, just over a year. March was a year.

Okay. And you don't have a single payment in the entire world?

Not one.

What's the house worth?

About $430,000. Okay.

And what do you guys got in nest eggs?

Um, we just calculated before we came, including the house, $1.365 million right now. We're literally Baby Steps millionaires.

I love it. And if you didn't hear, you can do it in 2 days.

If you marry right. If you marry right. Absolutely.

Talk about get rich quick. Oh, that's fun.

Well, they put 1 year on the application. I said, that's probably best. I didn't want you to have me investigated before we got here.

The story, the actual story is better than the fake one.

Yeah.

What is—

what's the impact been on your daughters watching their mom get way knocked down, rise up from the ashes literally by herself? And because that meant— I talked to a lot of newly single parents who want to give their kids the world and will put themselves into financial ruin to do that because there's that inner guilt, that sadness of, I don't want to hurt them anymore. And yet you said, the greatest gift I can give my kids is to watch them watch their mom do hard things. What's been the fruit of that?

Fruit of that has been exactly what you guys teach, more is caught than taught. I've got a 23-year-old that is killing it right now, living in Atlanta. She is handling her money like a champ. And I've got a daughter still at home as a sophomore in high school, and she has literally watched me live through this and, you know, saw me go through the struggle, but, you know, rise out of the ashes. And these resources, they were the tools to my success. They were the hope in the storm, because it literally took me a good 2 years to kind of shake the cobwebs off.

Yeah.

I was just absolutely floored, you know, when life turned unexpectedly. And so, I was just committed that we can do this. My kids can see me do this, and we're gonna be okay. So, yes, I said no to travel sports and yes to saving money. And, you know, I cash flowed my— helped put my daughter, my oldest daughter through college. She graduated debt-free. And I already have a nest egg in a 529 to assist the youngest one when she gets there in a couple years.

That's great.

just— I didn't have time to do the 529 for the oldest one. She was a freshman in high school when, um, the marriage, you know, ended.

So—

Well, and you didn't stop there. You, you looked at buildings full of teachers and said, I'm gonna give everybody Smart Dollar, and I'm gonna give you all these same tools because I want y'all to have the same kind of peace. It's amazing.

Yeah, you became an evangelist. Thank you.

You're awesome. Both of y'all are awesome.

Incredible story, y'all. So proud of you.

Thank you.

You're amazing.

Let's count it down. Let's do it.

All right, Ty and Blanca. I love it. You gotta love it. $110,000 paid off in 2 days, making $190,000. Baby steps millionaires. Count it down. Let's hear a debt-free scream!

3, 2, 1.

We're debt-free!

Yeah!

And the whole Smart Dollar team's out there yelling. Yeah, I love it!

People ask me all the time, George, what's your number one money-saving hack? I'm glad you asked. Nothing makes me happier than helping another frugal friend So here's the hack. Get on a budget. Seriously, how are you supposed to save money if you don't know how much you're spending in the first place? And that's what makes the EveryDollar budgeting app a game changer. With EveryDollar, you'll get a clear picture of your spending, and from there, it's easy to see where you can get more intentional, cut back, and save more money. How much money are we talking? Well, the average EveryDollar budgeter frees up $395 in their very first budget. And if you ask me, I think you're way above average. So why are you still listening to me? Go download EveryDollar for free and start saving more money right now.

Our scripture of the day, Proverbs 29:25. It is dangerous to be concerned with what others think of you, but if you trust in the Lord, you're safe. Hmm, that's a different version than I've read. I like that version, whatever it is. Benjamin Franklin says, it takes many good deeds to build a good reputation and only one bad one to lose it. Yeah, we've heard that one. Hey folks, if you've worked hard to get out of debt, you're on Baby Step 4, which means you're debt-free everything but the house and you have your emergency fund. That's when you move from intense to intentional. And Baby Steps 4, 5, and 6 work together. And that's when you lighten up and you can go on a vacation and you can upgrade your car with cash and you can upgrade the couch with cash or whatever, right? And you build in, you start putting 15% of your money away for retirement. And that's when you live like no one else so that later you can live and give like no one else. That's the point of working your way through this. And that's why we call the cruise, the Ramsey Cruise, the Live Like No One Else Cruise.

You should not come on the cruise with us unless you're on Baby Step 4 and beyond. If you're in Baby Step 2, getting out of debt, you should not come on the cruise with us. But once you do, we want you to come on this cruise. It's amazing. We will be sailing March 14th through the 21st. All the Ramsey Personalities, including Dr. John, me, Rachel, George and Jade, and Sharon, my wife, everybody will be on the cruise. The whole family. It's gonna be great. We're going to Grand Cayman. We're going to Cozumel. We're going to Jamaica. It's pretty stinking incredible. And we're gonna be doing teachings the whole time. So the, the shows on a cruise are us. So we'll be up there. John will be— John and Rachel will be doing a marriage and money thing. George and Rachel will be doing a live taping of Smart Money Happy Hour on the cruise. I'll be teaching about what to do, how to teach your kids so that they're not ruined by the fact that you became successful, and so on. And all the stuff that happens when you're at Baby Step 7 and beyond, all the questions people have about estates and everything else, we get into all of that.

Yeah, this is next-level stuff. Setting new goals after beating your debt, ways to continue building wealth, creating a legacy that lasts beyond you, live tapings. We do pop-ups. We'll just be walking along and jump up on a stage and start doing Q&A. We have a blast on this. And the world's largest debt-free scream. So Baby Step 4 and Beyond, March 14th through 21st. There are a few cabins left. We would love to have you. You can do it with only a $600 deposit to hold the cabin. ramseysolutions.com/events, or click the link in the show notes and we'll get you going. Logan is with us in Phoenix. Hi, Logan, what's up?

Hey, how you guys doing?

Better than we deserve. How can we help?

So my situation is, uh, my, my wife and I, we got married about a month ago, actually a month ago yesterday, and we moved to Phoenix from San Diego. I currently, uh, own a condo in San Diego. I bought it in 2023 or so. And, um, my question is, it, it's currently sitting vacant and it's been sitting vacant since about March. And I'm wondering whether we we sell it still or if I should rent it or— we're kind of like, it's been sitting so long, we just don't really know what to do. Okay.

Why is it sitting?

Well, that's a good question. I've been told that the condo market is tough right now and it's, you know, we've been lowering the price pretty consistently. It's currently listed at about $269,000.

It started at what, 6 months ago?

6 months ago, started at $350,000. Okay.

Wow. That's a substantial drop. And, um, the— have you seen a comparative market analysis, a CMA, on what the condo is supposed to be worth from your real estate agent?

I have, yeah.

What's it say?

It says that we should probably be listing it at about $270,000 right now, and right now it's at $269,000 or something.

Hey, the market didn't drop that far in that period of time. You dropped the price that far But the condo market didn't drop that far in San Diego in that period of time. That's a lot of drop. So you had it overpriced at the start.

We probably had it overpriced. And I guess the caveat is it's a 360-square-foot studio. So it's one of the smaller units that you can get in that market. And so, yeah, I think it's just a small unit.

You thought it was more desirable than it is?

At the time that I bought it, yes, definitely thought it was more desirable than it was. Okay. All right.

That's fair.

All right.

How do you feel about your real estate agent?

Um, he's, he's okay. I mean, he communicates well. I think that he— I've actually contacted a couple different Ramsey real estate agents and, and they, they've looked at the listing and they think that it's marketed well. Um, but they, they think that, yeah, it was probably overpriced at the time. So, okay.

All right.

Right.

Um, sometimes in the business— is there anything that needs to be done to the condo? Is it in good shape?

It's in pretty good shape. It was remodeled when I got it. And so, um, yeah, we're currently out in Phoenix, so it's— we haven't been back there in a couple months, so haven't checked on it in a while, but it's in pretty good condition.

So you think it's actually worth $275,000 and you have it on the market for $269,000?

We believe so, yeah.

Okay, all right, that's— yeah, so you finally have it priced right, so you blew 6 months.

Okay.

Hey, um, the only other thing I know of is in the business, sometimes if you take a property off the market and put it back on, it gets a new MLS number and it pops back on the new listings. And so it pops back up in front of other real estate agents' eyes. that wouldn't have seen it otherwise. So sometimes we have a property that we call shop-worn, which means it's been on the market and it's only not selling just because it's not selling. Because everybody goes, well, it hasn't sold, there must be something wrong with it. And so they quit looking at it just because it hasn't sold, and there's actually nothing wrong with it. It's just a psychological thing called shop-worn. Does that make sense?

That does, yeah.

It's like a sweater that's been on the rack too long and it's got a few handprints on You know, and a few people like, you need to send it to the cleaners, take it off the rack for a month, put it back on the rack and put a brand new, brand new offering. And all of a sudden the sweater sells. It's not worn. It's just, you know, it just didn't sell because it didn't sell. So, um, yeah, if you stay with this agent, I would take the property off the market for 2 weeks and then put it right back on the market and give it a new real— give it a new number.

Okay.

If you, if you, if you want to, you can use this opportunity to change agents. Does your agent— how many houses did your agent sell last year?

That's actually a really good question. I don't, I don't know the answer to it.

Okay, yeah, you need to find out if your agent's a high producer, because 80% of the people in the real estate business only sell about 5% of the houses. 20% of the people in the business sell about 85 or 90% of the houses. Most real estate agents suck.

Gotcha.

They don't produce. So you need a high-octane, high-protein real estate agent that actually sells 30 to 300 houses a year, not 2. Okay?

Gotcha.

And a lot of agents sell 2, and you don't need somebody marketing something where you're like, this sells 2.

Let me, let me speak to that. I, I honestly thought that was like, all right, it's the house is a house is a house. They all put the same MLS. I had a house on the market for various reasons, multiple offers that fell through over a series of months. It was on the, on the market for 9 months. I shook hands with the realtor and said, I gotta go a different direction. And I asked around and said, I want the number one salesman in this city.

Yep.

Guy came and met with me. He walked through the house with me. He showed up in a, in an Escalade, had rings on every finger. And I was like, all right, guy. He said, this house will be sold in 30 days. And I was like, it's been on the market for 9 months. And he goes, it'll be sold in 30 days. days. I closed in 30 days. And I, and I remember shaking his hand, and it was a, it was a, it was a $120,000— it wouldn't— it was nothing of a house for him. And I remember telling him, I didn't believe in you, and I know you've got bigger properties to sell. Thank you. And he looked at me and said, like, don't ever say that again. Like, you needed to sell this house, and you're— the sale mattered to me, it mattered to you, and we got it done. And it was like, the right agent matters.

Yeah.

I could not believe my experience there.

Yeah. Don't, don't put low octane a race car.

I mean, that dude showed up and sold that house in 30 days. Yeah, it was wild.

It's—

it—

I'm telling you, there's the guy— the guys and gals that are like that, they're the ones that move the property. It's— the data is there. Most people don't make it in the real estate business. It's, you know, they're starving to death. So anyway, check all that out, and this is a good time to change agents. Restart it in 2 weeks and see if you can find John's agent. 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.