Transcript of Finance Hacks Won’t Save You, Habits Will

Brought to you by the Every Dollar app. Start budgeting for free today. Normal is broken, common sense is weird. So we're here to help you transform your life. From the Ramsey Network and the Fairwinds Credit Union studios, this is The Ramsey Show. George Campbell Ramsey, personality co-host of Smart Money Happy Hour, and number one best-selling author is my co-host today. I'm Dave Ramsey. Open phones at 888-825-5225. Sarah is in Green Bay, Wisconsin. Hi, Sarah. How are you?

Hi. Thanks for taking my call. Sure.

What's up?

I'm considering leaving my husband, but I feel like I'm financially trapped with the amount of debt that we have. I just feel like I'm not able to leave with my daughter.

Okay. What happened to your marriage, Hon?

We've been married for about 13 years, and it's just been a lot of verbal abuse. Over the last five years since we've had our daughter, I just started realizing that it's not something I want her to be in. And seeing that type of treatment. So I just am at this point where I'm trying to look at my options right now. We've done couple therapy, and it just doesn't seem like clicking with him. I just feel like I'm at my wits end with it.

I'm sorry. And how many kids you got?

We have one.

What age?

She has four. Wow.

Well, obviously, we're going to be a proponent for anybody to do anything they can to try to stay together, but not in an abusive situation without some traction on that, so I certainly understand where you are. A friend of mine that does divorce recovery counseling has always told me for the last 30 years that divorce turns a marriage into a business transaction. This is now about income and assets and liabilities. What is your income?

My income is approximately 56,000 a year. Okay.

Can you live on that as a single person?

Yes. In our area.

Yes, you can. Okay. You said there's debt that makes you feel like you're trapped. How much debt do you guys have?

Besides our house, my husband has a camper loan, his truck loan, and a four-year loan. Then we have about, I think, 12,000 in credit card debt, and I have 27,000 in student loan debt.

Okay. All right. What's the home worth?

In our area, homes that are equivalent to ours are going about $35,000.

$35,000?

I'm sorry, $235,000.

Okay. I feel better now. Okay. I thought you were in the camper for a minute. Okay. $235,000. What do you owe on it?

We owe about $179,000.

Okay. So there's a little bit of equity there. Okay. I don't know how divorce works in Wisconsin necessarily, but obviously, your next step is just gather information. Information always relieves anxiety. The unknown, it creates more anxiety than a known bad thing. If we got bad news and it's clear, that's less anxiety than unknown, than this just a boogie man in the closet thing. You need to sit down with an attorney and find out exactly how this is probably going to go down. I mean, a good divorce This attorney can tell you in 30 minutes, this is probably how this is going to go down. It could sound like he gets all of the debt with his camper truck and four-wheeler, and they sell the house, and the house equity cleaners up the debt that is on the credit cards and maybe on the student loan, and maybe some of his debt as well, because you'll probably get half the equity each in most cases. So either one of you have a big retirement plan?

I have one through my employer It's a state pension fund.

But nobody has a 401(k).

I believe my husband has a 401k, but he doesn't have much in there right now.

Okay. What does he make?

He makes about the same as I do, about 50,000 a year.

Okay. Then there's child support, and then there's alimony. Those are the things. Those are the variables that if I were you, I would want to learn about those things so that you know what you're facing, and you're probably not as trapped as you think you are. I mean, you go get a one bedroom apartment or a two bedroom apartment, sell the house, pay off all the debts, and start over as a single lady making 56. Yeah. That's not really trapped.

Yeah. I felt like I was trapped, though, just Because I still care about him, and I don't want him to be stuck. But at the same time, I'm looking at it as financially, we got into the situation, and I feel like I'm responsible to pay off the debts and everything.

I don't know why all of those are his toys. Like I said, a divorce turns a marriage into a business transaction. If you want to get all romantic and start paying stuff you don't owe, that's a different discussion. If you're going to do all that, you probably need to go back to the marriage counselor and try to save the marriage. But once the decision is made and the switch is flipped, it's every man for himself. It's not mean. I'm not trying to destroy him in this situation, but he could sell the four-wheeler, the camper, and the truck and be out of debt, too. Hello?

Yes.

Okay.

You both are going to be okay on the other side.

Nobody's trapped here except by decisions to hold on to a bunch of crap you can't afford. That's the only trapping there is.

And staying in an abusive relationship.

Yeah.

That's a worst trap to me. And so I think those next steps will help you get some clarity on this.

Yeah. I also might change the tone of the therapy sessions. If you go sit down with an attorney and you know exactly how good a position you're actually in, then you're coming at this from a little bit more strength and you're going, Look, I really want this to work, but all of a sudden, your body language changes, your voice tone changes because of confidence and because you know you're going to be okay instead of trapped. Because, Sarah, what you've told me, you're not trapped unless you choose to be trapped. But you can choose that if you want, but you're not. But a much better outcome is for him to grow up and stop the negative behavior. You has to sell off all the garbage and get you a dead gum life back with no debt and just quit buying everything in sight. But campers and four wheelers and toys and trucks, this just sounds like boy out of control, little boy out of control buying crap. I don't run into a lot of ladies that have bought a camper and a four wheeler. That's a dude thing. Occasionally I do, but generally, that will be the guy.

They went along with it. Yeah, and the pickup to pull the truck. You got to have that. The Truck to pull the camper with. That's the other thing. Occasionally, I run into some lady, and the whole thing was her idea, but usually she's going to make her mistakes in other places. But like she said, she was participating in the decisions, so she's willing to take responsibility for her part.

She owned up for that. She was an accomplice to some of these bad decisions. But I like what you said there that you need to know the facts because those unknowns can be scarier. You're overwhelmed by everything around you. Then you get the facts and you go, Okay, yeah, we could sell that. Yeah, you know what? That will be split, or that won't be in my name. Then you know how to move forward.

Yeah, it's interesting. Cortisol release, stress drug release is way lower on bad news that's clear than on ambiviant Ambivalent not knowing the unknown.

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Well, we wish we could get to every call and every question here on the show. If you have a money question and you want an answer for your situation, head over to our website and use our Ask Ramsey feature. Ask Ramsey is our free AI tool that's built and trained on proven Ramsey principles. If you don't know how AI works, AI is only as good as the data that is entered into it to cause it to think. And so what we did is we took thousands and thousands and thousands of hours of this show, all of my books, all of our books, the personalities books, all of the Financial Peace University lessons, and emptied them into a database.

In every article that our teams have written.

In every article that we've written, and it's all in there. Ai forms an answer based on all of that, which means that the answer that this Ask Ramsey will give you is better than you will get here on the show.

We'll have a brain fart or two, but that thing can't It can't.

It doesn't know how. It's really, really popular. It doesn't have a brain. It's working. The only thing I want them to add a little bit more sass in there.

Yeah, the snark factor could be increased.

The sarcasm and sassiness.

Maybe we can add that as a dial. You can dial up how much snark you want it. Oh, yeah.

More or less snark.

How direct. How Dave do you want this to be versus Rachel?

Now, that got personal. That's a spectrum. Sorry. That just got personal fast.

She's more friendly. I think America can agree on that. Hey.

See what I mean? We're going to prove it right now. All right. Check it out for yourself. Ask Ramsey at ramseysolutions. Com. Go to the website, ramseysolutions. Com. Ask Ramsey is completely free. You'll get your question answered in some version of George or Rachel or Dave or whatever. It's way nicer than me. I will say that. That's true. For now, until I get through with it. I'm not done with it. Mike's in Baltimore, Maryland. Hey, Mike, what's up?

Hi, I'm calling. I'm wondering if you have Or if you would recommend cashing out principal in a Roth IRA to pay off debt.

Not unless you're bankrupt.

Not unless you're bankrupt. Okay.

Because we're paying down- Because it's going to cost you millions and millions of millions of dollars in tax free growth later because you didn't address the real issue. So how much debt have you got? What's the problem?

We have about... Well, we bought a new house last summer and we used... We have a heat lock from that at about 50K, and we have a retirement loan at about 28K to the 401k. I'm trying to take out the 401K retirement loan first, but we've been paying that down probably like 4K a month.

I'd say- Wait a minute. So you got a 50,000 and a 24,000. What other debt have you got?

We've got a car loan of about 13K. We've got some credit card debt of maybe, I don't know, 15,000. And then we've got savings.

How much savings do you have?

We have... Well, we don't have full emergency savings, but we have about 11K in emergency savings currently.

Good.

And then our Our Roth principal, though, is... The question is really about the Roth principal.

I understand the question, and I'm still telling you no. I completely understand the question. It's a stupid butt idea. Don't do it. What's your household income?

We make about 8,300 about every two weeks.

Okay. Are you all 27?

No, we're both about 40.

Forty? Okay. Missed that one. All right. Mike, in doing what we do here, helping people walk out of debt and become wealthy, what is the shortest distance between where you are now and wealth? It is to become debt-free, not by destroying your nest egg that's going to make you wealthy. A day later. That's why I keep coming back to, No, I'm not doing that. In listening to you, you're fairly new to our information. What we teach is a process that's very detailed, and and very intense and dialed in, like eyes wide open. You start with $1,000 in savings only, not counting your retirement. You temporarily stop all retirement, and then you go to what we call Baby Step 2, and you list your debt, smallest to largest, and you pay off everything but the house in that order with great focused intensity. Anything you can do to increase income and reduce debt as fast as possible, because the sooner you've gotten rid of this 110,000, the sooner Now you now have flex called, you now have your income to create, which is your largest wealth building tool. Right now, you've given it all away to all these stupid things you bought that you couldn't afford.

So one other question I have is, we have pre-tax retirement, and that's, I would say, close to $900,000 at this point. But that's where I'm feeling like the Roth. I mean, I appreciate It's a tax-free growth for sure.

Hey, Mike. It's tempting to just pay off debt with it. Hey, Mike, the guy in your mirror is freaking lazy and disorganized with his money. That's you. That's not going to be fixed when you take that money out of that Roth. All of this freaking debt is going to grow back in five years because you've never addressed the fact that you all have overspent. You're looking for a quick fix. You're looking for a shortcut, and that is not a good plan. I would stop You're adding to your retirement, and you've got to address the misbehavior. You don't even know your numbers. Oh, maybe, I think, is all the language around your numbers. You don't even know where you are. You're just wandering along buying crap. You guys are going to have to stop that, whether you cash out your 401(k) or not.

If you can't afford to live off of what you told us $200,000 in take home pay, I don't think we can help. I thought it was 80. He said 8,300 every two weeks. Oh, I'm missing. That's what I I'm going, Dude, you guys make too much to be fooling around with all this debt.

Okay, that's even worse.

If those numbers are true, you're right. The behavior is not going to change. You're going to keep robbing that 401k every chance you can get because you guys are living a lifestyle you can't afford.

My hope is to offend you enough to make you look at this. I love you enough. I want you to get mad at me. That's fine. I'm good with that. I want to piss you off just a little bit and make you grow up and sit down and go, I'm running this thing, this company called MeIncorporated, very poorly. If one of my VPs sat down and used the language about their budget in one of our profit centers, the way you've discussed your home, I would fire his butt for being incompetent. You don't know. I think I That bull crap. You need to know exactly, and you guys need to get focused. You make too much money to be this broke, which all have been intellectually lazy in how you've addressed your personal finances. If you'll roll up your sleeves and attack track this and get some muscle tone to what you're doing, get some intensity to what you're doing, you can clean up this mess in about a year and a half and not have to mess up everything. But if you don't, you're going to make a bigger mess later because there's no in between in this discussion.

There's not a mediocre landscape because you guys have consistently added to the problem. And until you stop adding to the problem and being people that do that, you're going to create more messes. That's what it comes to. Folks out there in the listening land, this is why debt consolidation doesn't work, too. This is why when you get an inheritance from your grandmother and you clean up everything, and four years later, you're right back in the same mess because your habits haven't changed. Your household processes haven't changed. You've got to address what is wrong with our systems and our hearts and our relationship that's caused us to get to that we can run up these debts with this money.

But we feel better because the junk drawer, we cleaned it up by putting it all in one bucket. Hey, look at that. It looks better and feels better, except now you still got the same mountain to face and you can't debt snowball it. Debt consolidation is scary because it makes you think you solved the problem.

Yeah, and you didn't change the habits. And so 88% of the time someone takes out a debt consolidation loan, they're back in debt within five years, 9 out of 10 times. Because the debt is not the problem. It's the symptom of intellectual laziness, immaturity, no good systems, bad discussions with or no discussions with my spouse where we're on the same page. Dead is the symptom. It's not the problem. And so when you just address the symptom, expect the problem to stay there and the symptom will grow back. It's that simple. If you're going to get dandelions out of your yard, you can't just cut them with a lawn mower. You have to dig them out by freaking root, or they will grow back.

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Oscar is in Ottawa. Hi, Oscar. How are you?

Hi. How are you? Thank you for Sure.

What's up?

Well, long story short, I've been dating a Polish girl for the past five months-ish, and everything has been going well except for a few small details that are mostly related to finances. Since day one, I've been paying for restaurants, going out activities, snacks, and everything. And she directly mentioned during our conversations that this is a part of her culture, even though she was born in Canada. And me, I'm Iranian. I was born in Iran, raised there, and I've been here for a couple of years. And I know how Western culture functions. And I would like to make sense of it. I'm also traditional, but at the same time, I don't see the point of man paying for everything, especially in this economy. And my question is, what is your suggestion? What should I do? Is it like a big red flag or is it just something that we can try to figure it out together? I know.

It's an interesting question. The marriages that I'm aware of that are high quality When we're dating, we're courting, to use an old term, an old word, and we're thinking about that leading toward marriage. That's why you would ask if this is a red flag or not. Do I want to get involved this person, right? And so the marriages that I know that are super, that I consider some of the best marriages on the planet that I've been personal witness to are where each of the people involved make the relationship about how much they can serve the other person. Okay. How good can I be to you? So you, how good can I be to her? Her, how good can she be to you? Instead Instead of what am I getting out of this? In other words, I'm adding value to the relationship instead of taking value. If you're a taker rather than a giver, a thing. I might look at this through that lens and say, yes, the cultural implication is very real. The economic in this economy, you're always going to be able to say in this economy through the rest of your entire life.

You're going to be able to say that from now on. There's always this economy. There's never going to be one that they're just raining money on you and makes stupidity okay. There's no economy that does that. There's no this economy. How much do I love this person to the point that I want to serve them and give my life away for them would lead you to not ask this question even?

Okay.

Does that make sense?

I mean, that makes sense.

But at the end of the day- You're worried about if this is all- You feel like you're being taken advantage of right now. If I'm getting my part of this, yeah.

Are you sensing that from her, that there's a lot of entitlement and expectation?

I wouldn't say it's about expectations. She wouldn't necessarily force me, Okay, let's go outside, or let's just- Okay, is she a money hungry gold digger? I would say the first one.

She's money hungry?

Yeah. Okay. Let me put it in a cultural setting that I can understand and explain and see if it extrapolates to your situation. I grew up in the old south. I'm an old Southern red neck. In our world, 100%, the guy pays for everything. Period.

Southern gentleman we call.

That's called chivalry in our world. Honor. But that That is a cultural thing. I'll admit that. That's not necessarily true in every part around the world, from Iran to Polish to Poland to Canada, and some mix of in between. But that's the world I grew up in. Now, in my world, what I looked for is I don't want to, because I'm willing to pay for everything, and that's an act of chivalry, the last thing I want is a high-maintenance princess that's entitled. That's Cray-Cray, and I'm going to avoid that woman like the plague. Okay. One guy said, If you marry a woman that likes spending money, you better enjoy working a lot. No, I'm not doing that. Just because I'm going to an action out of my cultural upbringing, I'm going to pay for everything, doesn't mean I'm going to be taken advantage of.

Is she ordering the fanciest wine on the menu on the first date? Filet Mignon?

No, that's not what's happening. But let's say in a couple of months, I was planning to go on a trip with her to Europe, and I was just like, we're talking about everything. We set the destination, like which cities and blah, blah, blah. At the end, in the end, I was like, okay, so let's talk finance. I see who pays what? And she was like, in my culture, usually man pays the ticket at the hotel, and me, I can be taking care of food, which when I look at it, like ticket at the hotel, it's going to be 85 to 90% of the whole expense. The food is like maybe.

I might go ahead and take this a step further then and say, Okay, what if we were married? How does this work?

Listen, I I'd love to pay for everything.

No, I'm saying I would ask her that. If she still expects to be coddled, then you've got a princess on your hand, regardless of the cultural issue, a high-maintenance princess. But that's not what it It sounds like. It sounds like that you just got to decide how much of this you're going to pay for. I don't know whether that's an old guy thing, a Southern thing. I don't know. George, you're a Boston guy. Yeah. Did you pay for all your dates?

I think it was a little different in the north.

A little less chivalry. Did you split dates? You split dates, you went Dutch?

I didn't get a lot of dates back in my day, Dave. But when I did, I happily paid. I will say that.

I'm just so happy to be here.

Exactly. It's just so exciting. I don't want to mess this up. But to his point, he's going, Well, I'm planning a trip to Europe. Well, maybe let's not plan a trip to Europe if you're worried about the finances, and then bring it up like your idea. And then she's like, Wow, he's taking me to Europe. And now you're going, Well, it's going to cost you two grand. So I think let's set up the boundaries earlier on and go on less fancy dates and say, Hey, you want to just take a walk in the park? And she goes, No, I'd rather go out. Well, that's a sign to Dave's point that there is some entitlement there and that she is just wanting to just spend, spend, spend. And I don't know if she's taking advantage of you or not, but I do think it's a flag to bring up in the relationship before you go further.

The red flag is not as much about her character or your character. It's certainly occurring to me as it is that you guys might not be a match.

The values are different.

Yeah. If you can't get aligned on the handling of money and the value of money in this relationship, that is a red flag for any relationship. If you can't be in agreement on how we're going to handle money in the future together, we can't be in agreement about how we're going to handle crazy in-laws, we can't be in agreement about religion, and we can't be in agreement about kids, how many to have and whether they're going to run the house or whether we're going to run the house, then these are the things that tear a marriage apart. The high-quality marriages get aligned on those four things. You're not aligned on that. The fact that you're not aligned as the red flag, that's a big red flag. It just took me a minute to get there. I'm trying to wander around in the culture of bull crap and figure out what's going on here. It's beyond culture. Or whether or not we got a princess on the line, but I don't know that. I don't hear that in his description of her. I don't hear that about her, but could be.

He might need to find a penny-pinching gal who loves going to the thrift store. That might be your type.

How many hours a day they spend on Instagram?

That would be an interesting study. Spending habits versus screen time.

We do know that. The number of hours on Instagram is directly attributed to amount of spending, 100%. Did Rachel Cruz tell you that? There's data. Personal experience? No, there's data on that. That's actually real. But I'm just talking about if you're trying to find happiness in image and happiness in where we go, what we do, what we eat, then You're going to be hungry your whole life.

If you can't just be happy being at home and bored, then you got a problem. It always has to include spending money.

Exactly. But if you guys cannot work through this and you get comfortable and she gets comfortable, the fact that you're not aligned, Oscar, is the red flag.

Dave, we got a lot of calls on this show where life happens. One day someone's healthy, they're working, providing for their family, and then a curveball hits.

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Yeah, it's important to understand the difference between them. Life insurance steps in when you die. Disability insurance steps in while you're alive but can't work. So it replaces This is a large part of your income, so the bills still get paid while you get back on your feet.

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Protect yourself, protect your income, protect your family. Paul is in San Francisco. Hey, Paul, how are you?

Hey, thanks for taking my call.

Sure. What's up?

So my question is about retirement planning and specifically retirement accounts on 401k. I have a bit of a unique situation, and I get a different opinion from everyone I ask about this. So I thought I might call The Ramsey Show.

Well, you'll definitely get an opinion.

Yeah, I thought so. It's an interesting one. So I've done decently well for myself so far, but this is my first time having a 401k, and I'm wondering if it makes sense for me to really use the 401k because I found out recently someone in my family had I've been very, very successful. And I knew that eventually, I was expecting to probably inherit some of that. But I was able to see, actually read through the trust recently. And it's a lot, a lot more than I expected. And I'm wondering if I can find security in retirement from that, potentially, does it make sense for me to not use that 401(k) and maybe have that money be more valuable to me now, or use a Roth IRA instead?

A Roth IRA instead of a 401(k)?

Not necessarily instead. I have a Roth right now. It's pretty small.

But I'm just saying instead of trying to get retired.

Okay, how old are you? I'm 21.

Oh, okay. And what do you make a year, sir?

About $330,000.

Wow. What do you do? Good for you. Well done. Okay. And how much is in this trust that's supposed to come to you?

So there are a lot of different people. Not a lot, a handful. I think it's six different beneficiaries in the trust, but it's low to mid eight figures. So I would think that that's plenty to retire on, especially if that's going to grow over time.

I'm sorry. So you're going to receive $100 million, your part?

If you're accounting for how it's going to grow, that might be what it's worth total. Divide that by five, maybe.

Oh, divide it by five. Well, that's a lot different. Yeah. So you're going to get somewhere between, do you think $10 and $20 million?

I would think so.

About how many years out do we think this might be?

Well, like we said, I'm pretty young.

That's a fair way of the way. How many years before this person dies and you get your $20 million, dude? Roughly. Maybe 20. Okay. 20 to 30. Okay. She'll be like 40 years old. Okay. All right. No, I would not put my life on hold and quit investing and quit building wealth on my own because I might get an inheritance 20 years from now. Absolutely not. I would pretend like that's not coming and live my life properly and with discipline and with dignity when When you save money, it says something about your character and your maturity. It's not a math thing. It's good for you to develop a life that's good for Paul. If in addition to that, you get an extra $20 million, well, that puts you in a position to be outrageously generous someday and change your whole family tree in addition to the money that you make, because you could easily making $330,000 starting at '21, you should be a multimillionaire the time this money comes. And if you don't, then you just pissed it away and you're an immature child.

Yeah, no, I live quite frugely, actually. I have no dad.

Well, I mean, there's a lot of options here. There's Three things we can do with money. We can spend it and enjoy it, and you should. You can give it and be generous with it, and you should. And you can save and invest it, and you should. All three are good for your character. They're good for your psyche. They're good for your spiritual walk. All three are good for the math. All three cause you to have a high-quality person and be a person that someone listening would want their daughter to date. A trust fund baby who put life on hold waiting on an inheritance 20 years from now is not someone I want my daughter to date. This is not a man with big, broad shoulders.

You got to not let that muscle atrophy. If you start flexing this now and you have that delayed gratification the muscle going, the wealth building muscle, then you're going to treat the money differently. If I was handed $20 million that I didn't actually put away and earned, I'm going to treat it differently than money that I sogged away for 20 years. I think that delayed gratification lesson is worth learning.

One definition of maturity is learning is the emotional ability to delay pleasure. That's one of the definitions. I want that for you, not because of the money or the math or not because you're going to need money. You may or may not need money. If this comes through, you're not going to need money. But I want it for who you become as a person, as a man, as a woman, if you're out there listening, who you become while you get out of debt, who you become while you sacrifice and work extra to clean up a mess, who you become in your marriage and in your relationship, what your relationship looks like, because we struggled together and we both put our shoulder to the wheel and pushed together. Who we become is more important than what we get end up with mathematically. I don't want you to be atrophied from lack of use of lack of maturity that you grow into. No, I would pretend like that money is not coming instead of using it as a demotivator.

If you're so frugal, you're going to have plenty of money left over to max out all retirement accounts and still have an incredible life.

Yeah. You're a sharp. I'm not saying don't spend and enjoy money. We always say, do that. In your God, you're 21, you make 300 grand. Gee, you're even cricket. I mean, that's amazing. Enjoy some of it. But you need to be giving some of it and saving some of it and enjoying some of it. Always be doing all three. Melissa is in Greenville, South Carolina. Hi, Melissa. How are you?

Hi, I'm good. Thanks. Thank you guys so much for what you do. I listen every day and just feel like I learn so much.

Thanks. How can we help?

My husband is in regional sales, and he drives about 350 50 to 400 miles for work on his personal vehicle every week. Unfortunately, a company car- Good. Yeah. Unfortunately, a company car isn't available to him. And up to this point, we've just chosen to manage that by budgeting for a car payment on a new car in order to keep him in something reliable with minimal maintenance with that mileage. But I'm curious. I know that that's not what you would suggest, but I'm curious, just with our situation, how you might suggest we avoid that without draining our savings every few years to buy car in cash that isn't really going to last the mileage that he puts on it.

Can we agree that the amount of mileage he's putting on the car is absolutely destroying the car's value?

Yeah. I mean, it's worth nothing when he's through with it.

Okay, so we're taking something and making it worth nothing as a function of his job. If you're running a business, what you would do is you buy the least expensive car that would, in quotes, get the job done. Now, what gets the job done? What does that mean? Well, it means two For me, if I'm in his shoes, number one, it means reliability. I have to be able to get to the job and get the sale made, right? Number two, it has to be reasonably comfortable because I live in a stupid thing. Right. Okay, so we're not going to put him in a smart car or a Dodge Neon.

He's also 6'3, so that might not be a great idea.

I rest my case. Yeah, it needs to be reasonably comfortable. But what people do in your all situation is instead of buying a $20,000 car that would do all of that and destroying $20,000, they buy a $60,000 car and destroy $60,000. That's not necessary to get the job done. I would buy a $20,000 car with an every two-year replacement I would pay cash for it. Period.

You should recommend... I guess my question- You're breaking up, you got to walk back to wherever you were.

Just know that the average new car loses 60% of its value in the first five years.

And hers just loses 60% in the first year.

Exactly. You're better off buying a six-year-old car for 20 grand and driving that into the ground because someone else already prepaid the depreciation. That's the lesson here.

Whatever it is, What is? You're destroying that amount of money. So destroy the least amount of money possible to get the job done. For me, that's a $20,000 car in this situation, and every two years, I need $20,000. So I need to be setting aside that much every month to replace the stupid car all the time. But no, I would not be driving something fancy. You don't need eye candy when you're a road warrior. I love entrepreneurs. Don't forget, guys, I started my company on a card table myself. So I know what it's like to have people counting on you, your team, your family, not to mention your customers. And when you're the one signing the paycheck, you can't afford to fly blind. But I'll be honest, early on, one thing that nearly sunk us was wasting time with spreadsheets that didn't add up because business and it didn't talk to each other. I finally told my team, Just fix it. And they did. We got NetSuite. That was years ago, and we've never looked back. See, NetSuite isn't just for tech giants. It's built for growing businesses like yours. Over 43,000 businesses already run on NetSuite, including a lot that started just like you.

Now, with built-in AI, NetSuite is helping them even more. It's one system connected to every part of your business for real full-time insights, not guesswork. Netsuite AI flags inventory issues, cash flow risks, even supplier delays before they become problems. So you can trust the data. Stop wasting time and make the right decisions fast Esther. Take a free product tour today at netsuite. Com/ramsey. That's netsuite. Com/ramsey. Welcome back to The Ramsey Show in the Fairwinds Credit Union Studio. George Campbell, Ramsey personality, number one best-selling author, is my co-host. Jacob is in Dallas. Hey, Jacob, how are you?

Hey, brother.

Thank you for taking me on call. Sure, man. What's up?

Yeah. I think I'm in a bit of a unique situation. I had a networth north of the seven-figure mark around, I want to say, probably a month ago. Yeah, a month and a half ago. Made some poor decisions led to a significant downturn in my networth, a downturn in everything, trying to just reframe my mind and decide the next steps to go from here.

That was pretty vague. So you had like a million dollars?

Yeah, I'd probably around 1.

9 million. 1. 9 million. Okay. And what did you do that screwed it up?

Gambling, lifestyle inflation.

Lifestyle inflation?

Yeah, I mean, partying, doing the whole nine yards.

Okay. So what did you buy?

I mean, it was more so just going out, traveling, clubbing, bottles, cars, Airbnbs. It was poor decisions. And then a lot of gambling. I think. What gambling?

What drugs were you doing?

I mean, it was more so just like cocaine, the whole nine yards.

Just like, yeah. Okay. Yeah. So have you been to rehab yet, hon?

I've not. No. I didn't have a necessarily drug problem.

It was more so just- Oh, no, you have a drug problem. There's no question. It was all in your story. I heard it. You definitely have a drug problem, and you definitely have a gambling problem, and you definitely have a lot of problems. So what are we doing to fix the problems?

Well, I did start going to gambling, or going to therapy for gambling, specifically. That was the main step. And then downside while my life, cut back on the majority of my expenses, just reframing everything, going from there.

Okay, so what What did you or do you do for a living?

I did a lot of marketing in crypto.

Okay. Are you still doing that?

Yeah, I just recently stopped after this last hit. I've lost all motivation.

So do you have a full-time job or are you just playing with crypto as another form of gambling? And you've made some money doing that.

I was making around five to six figures every month, but a lot consistently for the last XYZ or XX months. But I'm also in college, so this is all just a side time thing that was working out really well, I guess.

How old are you, honey?

I'm 20.

20? Yeah. Okay. All right. You chased the rainbow and it didn't bring you happiness. Is that the moral of the story?

Yeah, I would say that. I mean, the money was nice, but it wasn't Not necessarily my fulfillment.

Well, it led you to a life that was just out of control and not fun. It was supposed to be fun, but at the end of the day, it just looked like a stupid kid losing all his money in snorting cocaine. When you look back on it, that's got to be what you see.

Yeah, 100%. I don't condone any of the actions, nor do I think that it was the smartest decision at the time.

Where I'm going is that I don't know what drove you to get to that point. But... Yeah. Okay, so what would I tell my son if he was 20 years old and called me and was in the exact situation? It sounds like you need a complete reset of what you think life is about. Someone told you that it was about getting a lot of money quickly and easily, and that you're smart, and that you could do that, and then you could go do anything you wanted to do. The good news is you got hedonism out of your system really early in your life. The bad news is it cost you a couple of million dollars to do it. I would take you from Wolf of Wall Street to a monk. I'd go the other end of the spectrum and just go, I'm just going to be a boring, calm, steady guy, which is the opposite of everything you have been. In order to reset your brain and reset your spirit, I'd plug into a good local church and One of the things I had to assess, and I smell it here, I'm not sure if I do, and you can correct me if you want to, I don't care.

When I went broke in my 20s, one of the things I figured out was I wasn't as hot as I thought I was. It pretty much took my little ego and grounded under a boot. Because I'm pretty smart, and I was doing some pretty smart, high leverage, fun things, nothing like you've done. But I had it going. And then when I hit the wall and the car just disintegrated in the NASCAR wreck, the engine's up in the stands, right? I mean, this thing's just gone. One of the things I had to come to grips with is I wasn't as hot as I thought I was. And that helped me reset, and I settled way down into a more psychologically and spiritually healthy rhythm to reset my life. I think that's what I want for you because I like you.

Yeah. No, I think I wholeheartedly agree. I mean, yeah, during this whole span, especially this last hit, I think I became insanely depressed. I was definitely going through an episode. It was terrible. I I was flying, I was spending $100,000 at the club, I'd fly back. Then I'd go gamble $500,000 at a point. I was buying multiple six-figure hands. What I see is 1. 9. That was floating, obviously. I'd have wins, I'd have losses. And that this was including my cash flow, but I was very cash flow heavy.

Why do you even need money right now as a college kid?

Are you in college?

Yeah, I'm in college. I don't think it was that silly about- What are you studying?

Marketing?

Marketing. Well, I was, yeah, marketing. Okay.

You've been going to classes and completing all the assignments?

I did until this last year. I think I went off the rails this last year. Yeah.

Okay. Well, The behaviors got you into the mess. I would go to the opposite end of the behaviors to create healing. Look at every one of the behaviors and what are the roots of each of the behaviors and how can I avoid those. One of the things I fell for that you did as well is get rich quick. And I thought, I'm smart enough. I can do this. I can build wealth quickly and easily. Other people don't know how to do it. I'm quick enough with numbers. I can do this. I can pull this off. And that's what I did, not at the scale you... Well, actually, at the scale you did, I had a better net worth than you had at 23. But I lost it all because I built a house of cards. And I wasn't playing long ball. Everything was short ball. Everything was just get on base, just get on base. And there was no infinite game. There was no eternity thought. There was no thought of heaven. There was no thought of other people matter. It was simply get the thing done, get the thing done, turn the deal, turn the deal.

I had to go to the other end of the spectrum when I went broke, and I had the benefit of losing everything and going bankrupt. I got the opportunity opportunity to start over. I met God on the way up, Jacob. I got to know him on the way down, and you desperately need to get to know him right now. It's your only shot out of this. So I'd check into a great church in the area, start talking to some of the businessmen in that church that love Jesus, and let them talk to you about how to reform what a man really is inside of you.

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Meredith is in Greenville, South Carolina. Hi, Meredith. How are you?

Hi, Mr. Reilly. How are you?

Better than I deserve. What's up?

Yeah. My husband and I have two young kids under the age of four. We currently rent a small duplex for about $7. 85 a month, and we have about $4,000 in savings. And the only debt we have is a credit card, but we pay that off every month, completely We're about to receive a $2. 6 million lawsuit for a medical malpractice, and we didn't grow up with money. So honestly, we're scared, and we just want to make sure we're doing the right thing for our family. For me, so my question to you would be, what would be the wisest thing for us to do? How should we handle this?

It's a fabulous question. I really, really like your your spirit and your attitude. Thank you so much. You are very wise to be scared. Okay? Because you're smart enough to know that you don't know how to handle 2. 6 million. Now, a couple of principles are this. Number one, keep doing what you just did. The Bible says, In the multitude of counsel, there is safety. And so you start bringing people into your life to advise you not to do it for you, but to teach you. And there's a couple of three people. If you want to write this down, you can, or you can go back and watch it or listen to it later when it comes out and hits the podcast. But the first person you guys need is a financial advisor, someone to help you with your investing. And you can go to ramseyolutions. Com com, click on SmartVestor Pro, and sit down with a couple of those and interview them. Now, what you're doing is you're interviewing someone that you are comfortable with, you feel good about, they're not intimidating. Instead, they have the heart of a teacher. Anyone in the financial world that does not have the heart of a teacher and instead starts dropping their glasses on the end of their nose and wagging their finger and saying, You need to do this because I If you did do it, you should run from them.

Yes, sir.

So your job is to manage this money, not that person. That person's job is to teach you to be a little bit better at managing money. So Principle number one is we're going to put a group of those people in our lives. We're going to have a financial advisor, like a mutual fund broker. We're going to get an insurance person that knows insurance. We're going to get a real estate person because I got a feeling you're going to buy a house. You can get that at Ramsey Trusted at the website if you want people. Because we do not put a Ramsey Trusted label on these people unless they have the heart of a teacher. You need a tax advisor.

Okay.

So insurance, real estate, investing, and tax. Those four people become your little board of directors. Again, their job is not tell you what to do. Their job is to teach you some of the things you could choose to do. Okay. Principle number one, heart of a teacher, not babysitter. Okay. Principle number two, do not put money in something unless you understand it. Okay. If it feels good or that he seems to know what he's doing, honey, we're going to go with him. Those are the words people say right before they get scammed. I don't know. You say, I don't understand this yet, so we're not doing it yet. Because it's your job before God to manage this money, not theirs. We don't do stuff until we understand it. If it's brand new and you're brand new to it, that's okay. You don't know how to ride a bicycle yet. You just got your first bicycle. It may take a minute to balance, right? That's okay. That's okay. But you don't go buy a $30,000 Harley and you can't ride a bicycle.

Yes.

Okay? Yes. We get our skills up and our competence and confidence up, and that will give you great peace about this. Principle number three, go slower than you think you should. For some reason, we feel like we have to become competent and sophisticated overnight. It takes a little while. The first time you buy a house, you've never seen that much paperwork. The first time you open a mutual fund, you have never seen that much paperwork. The first time when you're eight years old When you open a bank account, it's intimidating. But once you've opened 30 of them, it's not a big deal. So give yourself the grace to go slow and to learn and not put money in something until you're ready. So it's okay to park this money in something super boring that is not sophisticated while you spend some time learning. Does that feel right to your spirit?

Most definitely. I got it written down. Okay.

How old are you guys?

I am 29, and my husband is 38. Wow.

A good framework, if you want to figure out how to apply this money and start working your way through as you understand it and as you increase your speed just a little bit on some of these things, and as some of these people with the heart of a teacher advise you, is I would walk right up the baby steps that we walk everybody up. That's become debt-free. Pay off all your debts, get on a written budget and you live on your income. You don't touch this money. You don't need this money to live. You just live on the income that's coming in of the house. You're living on it now, so keep living on it. Don't increase your lifestyle where you're having to drain this money to support your lifestyle. Keep living on your income. If you do that and you use this money to step through the baby steps, the 2. 6 million could literally be 20 million in about 20 years.

Yes, we don't have it. We just use our credit card for gas.

You would get rid of the credit card because you don't need it anymore. Use a debit card. Okay. And you get on a budget, and the two of you know where exactly where every dollar is going. Now, the duplex, do you own it or you're renting it?

No, sir. We're renting it.

Okay, so you're probably going to go buy your house and pay cash for it.

Yes, sir. We were thinking about somebody had told us about getting a duplex.

No, I just go buy a house. Okay. You don't need to get fancy. Just go buy a house. Go buy you a nice house. I don't know, $200, $300, $1,000 in Greenville, South Carolina is a pretty dead gum good house. Yes, sir. It's nicer than the duplex you're living in.

Yeah, definitely.

Yeah. And top off your emergency fund.

So if you If you spend $400,000 out of 2. 6 million and you pay cash for a house and you don't have any payments anymore on a house, and you have no payments anywhere else, no other debt, and you're living on a budget, then the rest of that money can go to completely change your all's future. If you'll live in the present like grownups and avoid, and I know you're going to do this because I could tell by the way you asked the question coming out of the gate, avoid the need or avoid the thing of, Oh, I hit the lottery and I'm rich. You're really not This money will be gone in about 20 minutes if you start screwing around with it.

Exactly.

We just took that call. You can be very wise with this. I just crunched some numbers for you. You said you're 29 years old. If you just pretended this money did not exist, and at 62, you looked up and said, Hey, If you can retire, it'd be $81 million in there if you just didn't touch it and forgot it existed and it was invested wisely. That's what we're talking about here.

Now, you're going to use some of it, though. It's not going to be quite that much. It's probably only going to be 60 million.

You'll enjoy some and you'll give some. You'll cover your kids' college funds and then help them get started in their adult life. But that's the stuff you can do if you handle this wisely, and I think you will.

But number one, do not take advice from someone unless they have the heart of a teacher. Number two, don't put money in stuff unless you understand it. Number three, go slower than you think you should. It's okay. Give yourself time to catch up. You're not an expert on this. You didn't grow up with money. You didn't grow up with people talking about money. This is a new thing, and it's okay to learn something new and take a little time to do that. But that's how this stuff, that's how money gets away from people, is they violate those three things. Hang on, we're going to send you a copy of the Total Money makeover over as our gift. We don't need anything from you. We're also going to set you up in the Every Dollar Budgeting System, and that will guide you through the process, and then you guys make your decisions and be smart. Meredith, we're here if you need some more help, you call us anytime.

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Today's question comes from Mackenzie in Washington. My husband and I are in a considerable amount of debt, including two car loans, two student loans, credit cards, taxes, and our mortgage. We barely make it through each month and rely on credit cards to bridge the gap. We have $100,000 in a high-yield savings account. Do we pull out all of our savings and pay off everything except the house and have no emergency fund? We are in our early 50s and contribute to retirement, but don't have much in there yet. We are scared to deplete our savings account. What should we do? You got a life raft sitting there, and you're going further into debt on these credit cards. Absolutely. Drain that high-yield savings down to just your starter emergency fund right now and knock out the debt if you I don't know if it will knock out all the debt, but the mortgage, it sounds like it will.

Yeah, the way you're describing it will. So, McKenzie, here's the thing. You got to cut up the credit cards and never use them again, ever. You have to get on a written, detailed budget, get the every dollar app, and get yourself going, you and your husband working together. Absolutely the only way you're going to survive this, you probably need to sell one or both cars. Because we don't know the numbers. They're not here. But I'm going to guess and say a large portion of this might be car debt. It usually is. That's how we guess that. It's not a hard guess. Then I would drain my savings and be 100% debt-free. Let's pretend that of your debt, that one of the cars is a $50,000 car debt and you owe 50 on it and it's worth 40. Use some of your hundred to pay the difference and sell the car. Cover the upside down amount. Then use another $10,000 and buy you a $10,000 car for cash. That uses 20 of your hundred in that example simple, instead of simply paying off the $50,000 car.

I'd get rid of it. Especially because you're behind on retirement. You said you're scared to deplet your savings. I'm scared you're not going to be able to retire. That's a much bigger problem. You can build back up the savings, but you guys got to get on this.

You can go back up the savings You can build back up your retirement when you don't have any stinking payments.

Free up all those. That's probably a few thousand dollars in payments.

But here's what's happened. You guys are normal, and normal in America sucks. You've got two car loans, two student loans, credit cards, and you don't make enough to cover your bills because you've put yourself so far in debt buying crap you couldn't afford with money you didn't have to impress people you don't even really like. You're a normal American.

I guarantee there are six-figure earners.

Yeah. What you've got to do is you have to stop being normal. That means get highly organized, highly intense, and I'm going to make every dollar of our income behave, and we aren't buying anything unless we pay cash for it for the rest of our lives. If you can't pay cash for it, you can't buy it for the rest of your life. Then you'll have your income freed up to put your retirement in place, build some wealth, and put your emergency fund back in place if you've used it all with this $100,000. But you should use the $100,000 today, and you probably should sell one or two cars and get some less expensive cars. You can move back up in car later after you become wealthy. But right now, you're just broke people. So you need to be acting like broke people instead of rich people. Andrew's in Atlanta. Hi, Andrew. How are you? I'm well, Mr. Dave. How about yourself? Better than I deserve. How can I help?

Hey, so I'm just giving you a call today because I am in a pickle. I am supposed to be getting married in Italy, and my family or at least my side of the family, has basically let me know that they don't really have the savings or the money anymore to go. So I'm on baby step two. I only have about 2,000 in my car alone.

I have about 3,000 saved, and I have- Why the heck are you getting married in Italy if you're broke? Well, it's her family's doing. Her side is well off, and they They asked us, What do we want? We always dreamed of getting married in Italy. I don't think there's any we. I think it's what she wanted, and you got hooked into it.

It's something that we always spoke about when we first got together.

It was like a joke, We can get married in Italy one day.

Then it actually became a real thing.

Yeah, they're willing to pay for it. Andrew, wait a minute. I'm sorry. Let me stop you for a second. There's a 100% chance when you were planning all this that you knew your family couldn't afford it? Well, I told them a year ahead. No, you know your family. You grew up with them. You knew they didn't have any money.

Yeah. I told them to save, and they told me that they were safe and they were good, and then now we're here, and they're like, Hey, we didn't save. So I'm just in a pickle.

You're not in a pickle. They are.

They won't be able to attend your wedding.

That's the thing.

I never thought I would be getting married without I have my family there to support me. And I feel like now I'm just going to get married, and it's just going to be a whole gang of- Of her family.

Yeah, and I'm just there.

That's a bummer.

You have a right to be disappointed with your family.

Yeah. Not really. No, I mean, I disagree, Andrew. For you to think they were going to do this was dumb. You knew your family, you grew up with them, you knew they didn't have money, you knew they weren't going to be able to save this money, and you wanted to go to Italy anyway. And so this didn't sneak up on you. I don't agree. It's not due to them being irresponsible. They just is who they is. You plan a wedding, a place your people can't afford to go to. Man, that's awful. I'm sorry. I guess you Let's have a big celebration of some kind, cook, get some barbecue when you get back, put in the backyard and on the picnic table, and let's have a little throw down when you get home, right? Yeah, that's the plan.

Maybe I can do that.

What was your plan if you didn't call us?

There was no plan, really. Don't get me wrong. I thought about maybe doing something locally, but honestly, with me being on Baby Step, too, I don't really have enough funds to do something that would be big or that would be nice for my family, at least.

So her family's paying your plane ticket?

They're paying for everything.

We already got our plane tickets probably about a year ago. On your own?

Yeah. No, I mean, their family paying for everything. They bought the plane. Her dad bought the plane tickets.

So you're not paying a dime for anything involved?

He doesn't have any money. He's got $2,000.

No.

How old are you two?

We're both 20, 25. Okay.

You're both working full-time?

No, I pretty much pay everything and do everything. She stay at home. But it's our money. I'm real big on the Ramsey, we, not I.

You guys have kids?

No, you're not big on the Ramsey wee because you're not married. Yeah. Ramsey wee doesn't apply to you're married. We tell you not to combine money until you're married. Remember? Our Did you know that? Yes, definitely did. Okay. All right. How long have you two been living together? We've been together about living together, probably about two, three years now. Okay. When is the Italy wedding?

Roughly about 30 days from now.

Okay. It's probably not going to go over well. No, your parents don't get to go to Italy. You don't have the money, and you're not going to go borrow money to send them to Italy. You're broke. There's another alternative. I don't think it's going to work because I don't think the people involved in this story are going to do it. But what you could do is go get married next weekend and have your family and their family there. I have a friend that did that because the kids wanted to move in together and they were Christians and didn't want to live before they were married. And so they went and got married like 60 days before the destination wedding and married, moved in together. And the family was all present for the little wedding at a little chapel. And then they went to Paris, is where they got married and did a destination in Paris. You could do that. Hey, if you're working the baby steps, the best and fastest way to get out of debt and into wealth is by using every dollar. Now, this is more than just a budgeting app. It's a plan built right in.

It's our plan. You walk the Ramsey plan. We're going to help you track your progress. You get a personalized recommendation all the time, continuously from us. We're going to push you, pull you, wink at you, yell at you, smile at you to get you to do this stuff. It'll help you free up more money and work the plan even faster. It's like having one of us walking with you every day. Start every dollar for free by downloading it in the App Store or Google Play. Wyatt is in Fargo, North Dakota. Hi, Wyatt. How are you?

I'm good. How are you today?

Better than I deserve. What's up?

I am calling today to ask if I should repair my credit score.

No. Just no. Just no. Yeah. Because I've never had- Let me back up then and tell you why and where that came from. All right. Okay. There's only one way to repair your credit score, and that is to go to borrowing money and the paying on time of the borrowed money begins to flush out and push the old late payments to the back of the file, and the further to the back of the the while they get, the better the credit score gets. In other words, if you have three things on your credit report and they're all negative because you were late on them, and you put 10 things on your credit report that are all positive in your own time on them, it will shift your... That's how you repair your credit. But you can't make the actual late payments history go away. You can just push it to the back and overwhelm it with new debt. That's how people repair credit. The other way you can repair credit is if there's something inaccurate on your credit bureau, you can have that removed. But that's probably not what we're talking about. Then let's go past that and then rise up above the whole thing and say that a credit score is not an indication that you're winning with money.

The credit score is 100% derived from an algorithm. Fair Isaac wrote the score. That's where it came from. And the algorithm is 100% how you interact with debt. So what debt you have, how you pay the debt, how much debt you have, those are the things that create your credit score. So your credit score is actually not a credit score or an I'm winning with money score. It's actually an I love debt score. Mathematically.

Mathetically.

Yeah. I don't want an I love debt score. I want a high net worth.

So think about it this way, Wyatt. A good score just means you're good at managing debt. A bad score means you are bad at managing debt. None of that has to do with actual wealth building. So let's get you to build some wealth instead, and that involves paying off your debt, and at that point, you won't have a score.

So what I would do is... How many bad things have you got on your report?

Quite a bit. Not for me, though.

Okay, wait a minute. That doesn't make sense. How can you have stuff on your report that's not from you?

Because back when I was a child, my mother took out credit cards in my name.

That's identity theft, honey.

That's fraud.

That's fraud.

I'm aware. She took out money in my name. She's paid it all back at this point, but my credit score has suffered severely because of it.

How old are you?

I'm 22 now.

Okay. All right. I would submit identity theft on every one of those accounts and have them removed. Okay.

Yeah. Did you use the money she paid you to pay the debts off?

What happened? You didn't get any of this money. She just stole your identity. Your mother's a thief.

Yeah.

Yeah.

Sorry.

It's heartbreaking to say that out loud.

Yeah. We have a complicated relationship. I bet. At least.

Unless you're insane, you would have a complicated relationship because you'd have to be insane to go along with this.

Yeah. I mean, I'm doing great now, but it's following me and it's affecting interest rates and stuff.

Well, it affects interest rates only if you're borrowing money.

Which I'm not doing much of anymore.

Okay, then you don't have to worry about it.

Just don't do any. What do you need a debt for right now?

So Okay, there's two answers to the question. One, the first answer I gave you is the correct answer. Don't worry about repairing your credit in the sense of, don't worship at the altar of the FICO score, because it doesn't affect interest rates. For me, I don't have a credit score, and I have zero credit, and I have zero debt, so I don't have a problem with interest rates. That's where I want you to get to, okay? Now, then let's go to the other part of this, that you were abused as a child. You're mother's a financial abuser. She stole your identity and messed up your electronic reputation. You should file identity theft on every one of those accounts that you did not open and have them removed. They're probably going to require that you do a police report and identify the thief. They will do nothing to her. They should. They should put her in jail, but they won't. But the good news is they actually didn't lose anything because she actually went and paid them, but she just paid them late. Is that what you told us?

Yeah, really late.

They won't do anything to her because they got their money. But you're going to have to go through some steps, and you can have every bit of that completely removed, and you should, from your credit bureau report. I would if I were you. Do you want to work on that? If you want to work on that, I've got somebody that will help you do it. No, you're not going to do it.

That was a long pause. That was a big um.

You're not going to address your mother ever again. Anyway, you're going to live with this then, and you're just going to live with it. Over time, after it's been on there, after the account has no activity for seven years, it will completely fall off. But if you want to address it, folks, Xander Insurance's Identity Theft will take care of it. If you have their identity theft in place before this happens, which he couldn't have known, he was four years old. But I was going to offer him Xander, but I'm not now because I don't think he's going to do it, so I'm not going to waste my time. All right, Ben is in Jacksonville, Florida. Hey, Ben, what's up?

Hey, sir. Thanks for taking my call.

Sure. How can we help?

So I think I'm on Baby Step 6, but there are two asterisks. One, I don't know if I've saved enough for my daughter's college. And two, I still have a rental house that's not paid off.

Rental house would be in Baby Step 6, and four, five, and six run simultaneously. Okay. Not progressively. If you're on Baby Step 4, you're on Baby Step 6. Four, five, and six run at the same time. We're saving for 15% for retirement. We're saving towards kids college. If you think you got that done, you could stop that and then you continue on. That would put more on Baby Step 6, which would be to clear off mortgages in Baby Step 6.

Okay.

Is that logical?

It does. Yes, it does.

Okay. How much you got saved for the kiddo?

About 40,000 in the 529.

How old is she?

She's in kindergarten. She's about to turn six.

You got enough.

I also have a GI bill.

You definitely got enough. You did a great job. Thank you for your service to the country, and thank you for being a great dad. Way to go, dude. You're crushing it. Yeah, both of those. You got an A plus on both categories. Well done. Also, make sure that 529 now is invested in Good Growth Stock Mutual If it is, it will double every seven years, which means it's going to be $80,000, $150,000 by the time she gets there.

I think that should be enough.

Yeah, that's what I said. I think it's enough. I think you're done. Box is checked. You did great, man.

That's 40 grand a year. They don't get scholarships, and you got the GI Bill on top of that. You could stop funding it at this rate.

Yeah, and now just start going over that mortgage and knock it out. Trust those mortgages. Knock out that rental mortgage and the home mortgage before you do that.

By the time she's in college, you could cash flow any other expenses that come your way. There we go. It's going to be a good life, man.

Life is great. Well done, Ben. See what happens when you pay attention, boys and girls?

Welcome back to the Ramsey Show in the Fairwinds Credit Union Studio. I'm Dave Ramsey, your host. George Campbell. Ramsey personality is my co-host today. Jordan is in Minneapolis, Minnesota. Hi, Jordan, how are you?

Hi, I'm doing good.

Thanks for taking my call. Sure. What's up?

Well, I am currently 42 years old, have my house paid off, no debt, own all of my cars. I really haven't I ordered a retirement fund other than my pension I have from the government that I work at. I have a lot of collectibles, and I'm trying to determine if I should sell them and put that into a retirement account or let them continue to increase in value and sell them later.

Okay. I would make sure you got a retirement account started. If it requires selling the collectibles to do that, I would. But if it doesn't, then you might keep them. The rule on collectibles is this. As a category, collectibles, which would be like coins, art, antiques, guns, It means anything that falls in that category. As a category, collectibles do not keep up with a good mutual fund investment. However, people who are into a particular hobby generally will make a good enough purchase on the collectible and know the particular nuances of it. For instance, a car collection, a person that's really into cars, you can make more on that because you have knowledge in it than you would make on a mutual fund. But in general, if you just said, I'm going to collect cars, no, you wouldn't keep up with it. But if you just really are into Corvettes and you've got five different types of Corvettes or whatever, you probably are going to make some good money on that. That's probably your case. You're probably into a couple of these things. Stamps is another one, that thing, or baseball cards even. I know one guy's got $200,000 in baseball cards, but he's way into it.

He's probably actually making decent money on it. I would never use that as a substitute for retirement, though. Are you there? Okay.

What collectibles do you have?

For the most part, a lot of card collectibles, vintage board games, vintage antique books, stuff like that.

Yeah. Well, as you know, I don't know anything about the board game part, but the book side, a wide spectrum of completely useless all the way to extremely valuable. It's like there's a lot of stuff in between. What cards, Pokémon or baseball or what?

I have a lot of Magic the Gathering alpha cards, like Black Lotus and different vintage ones like that from the original printings that I collect.

Are there ones you could part with and have no sentimental value to you? There you go. I could sell this and make 20 grand and be fine.

I could probably sell it all and be fine. I just don't want my wife or my kids, if I kick the bucket, to send it to goodwill.

That's a good point. That's some estate planning and some good instruction. My wife actually brought that up the other day. She said, Okay, what am I going to do? We've got all this detailed estate plan, but she's made me write out a thing about a year and a half ago. Okay, I am not going to deal with your guns. You have way too many of them, and I have nothing to do with this. The boys will want four or five each, and after that, what am I going to do with them? I'm like, Okay, I need to give you a plan for that. Write it out. I've got a detail just because I'm into it. It's a copy, and so it's all written out. That's all you need to do there is write it all out so they don't send it to Goodwill and that we don't give away something that's worth $20,000 or use it as a bookmark or something in one those vintage books. That stuff- I'm sure they'd much rather have an inheritance in the inherited IRA.

That's going to be a lot simpler for them to handle. I would sell it. If it doesn't mean much to you and it was a fun hobby, I would sell it and park that in your retirement account or an IRA and start on that because you're 42. You got 20 years, at least, of a working career to build some wealth, and it sounds like you can do that with your income and a paid-for house. You're in a good spot.

Yeah, let's build wealth and have a retirement plan. If we want to have a hobby also, that's okay. Because I have these collectible hobbies, but they have nothing to do with my real network.

You're not doing it for an ROI.

I am not doing it for an ROI. You just enjoy it. Because I... Yeah, that's it. It's David's vice. It's a hobby.

It's the healthiest form of addiction you can have.

No, it's just a hobby. That's it. There's nothing wrong with that. Anna is in New York City. Hi, Anna. How are you?

I am good. How are you?

Better than I deserve. What's up?

Okay, so I have a question. My husband and I are retired. We don't have any debt. We have a daughter, an only child, and we'd like to buy her an apartment. We'd like to do that now while we're still alive rather than let her get everything.

How much networth do you guys have? What's the size of your Nistig?

Probably, I'd say about 2 million with our house Our house is paid off. So some of that would be not cash, but in cash, about 1. 7.

Okay, good for you. Well done. Well done. How much will this apartment What does that cost?

Somewhere between maybe around 250 or 300,000, somewhere around there.

All right. I would do that. We can do that. You're going to pay cash for the apartment. There's no debt, right?

No, we don't want to. That's another question, though, I had. Would there be any advantage to get enough?

No, we don't want that. That's a disadvantage. Because then you're not giving her a blessing, you're giving her a curse.

Right. Yeah, no, we don't want to do that. Right.

Now, what I would do, I had a friend of mine that did something like this, and he said he asked her to sign a one-page letter promising to never borrow money.

Right.

So that she doesn't get a boyfriend and refinance this to buy him a pizza store.

Oh, no.

Oh, yeah. That happens every day, right?

I never thought of that, but I did think that maybe borrowing money just because maybe she mismanaged Sure.

That would work, too. So no, you have to promise us. It's not a legal contract, it's just a moral contract. You have to raise your right-hand, sign a letter stating, I will never borrow money again, mom. I'm going to use the fact that I have a free apartment to create wealth since I don't have a house payment.

How can we help her do that? Also because she lives at home right now. She had lost her job. She came and she lived back home. She now has a good job What's a good job.

What's a good job?

She's been living here for several months. She's been living here several months. It pays a decent wage.

What's a decent wage? How much does she make?

About 73,000 a year.

Can she live in the city making 73?

You can in Brooklyn.

Oh, okay. Yeah, you can in Brooklyn.

Yeah, just make sure she can afford the ongoing insurance, taxes, all of that plays a part. Maintenance.

But I mean, help her get on an every dollar budget and we'll send her a copy of the total... I'll send her a copy of George's book on how to avoid all the traps and get with the every dollar budget, and we'll help you guys get this started, and then let her get back out there on her own two feet. But yeah, I want her to promise that she's not going to make a mess out of this blessing. That's all I want. I bet the HOA over there is as much as a mortgage payment in the city. Could be.

Hey, guys. I've got big news. The Ramsey Show is going on tour, and this is your chance to be more than just a listener. You get to be part of the show. So hear questions asked live and experience the momentum that only comes from being in the room. We'll be in Charlotte, Denver, Phoenix, and Anaheim with a limited number of seats in each city. So last fall, we completely sold out in 72 hours. So do not wait. Get your tickets at ramsey solutions. Com/events or by clicking the link in the show notes.

You ever wanted to see the person who's calling in and watch them ask the question or be in the room when we answer Well, now's your chance. The Ramsey Show is going back on tour. Live recordings with live studio audiences, and you can be in the audience and watch the Q&A happen because all the questions will come from the microphone on the floor. Experience live Q&A, raw Raw Confessions, crowd debates, local debt-free screams. The team will be in Charlotte, Denver, Phoenix, and Anaheim in April. We're limiting this for production reasons to only about 300 seats a night. Last year, we sold this out, and we put it out there in 72 hours. It's just been out there a couple of days. It's almost gone. If you want to come, grab your tickets at ramseysolutions. Com/events, or click the link in the show notes if you're listening on the podcast or on YouTube. Rhonda is with us in Virginia Beach. Hi, Rhonda, how are you?

Hello. How are you?

Better than I deserve. What's up?

I recently just found out my husband is in debt. In my separate account, my name is not on it. The main thing I wanted to know is judges are normally favorable on the other spouse's side if his debt was created secretly in his own account. I'm not in debt on my side. I was just wondering, have you heard any stories of judges making the other spouse help pay the debt that another spouse has created secretly?

Well, yeah, we've I've heard all these stories. I mean, for sure. There's a lot of this goes on, sadly. Okay, so how long have you been married?

A long time. Well over 15.

Okay.

We've always had separate accounts. We do have one thing- Why did he deceive you and hide it from you? Because it's online gambling. It's his own account, and I had to ask about it.

Because he has a gambling Gambling problem. Okay. How much has his gambling problem caused? How much debt has it caused?

Forty-thousand.

What does he make?

A bit, about Yeah, and what do you make? Right now, 42.

Okay. All right. Well, I mean, at the core of this is not really the money issue. At the core of this is two things. One is you're married to a person who has an addictive problem.

Right.

He's got a gambling problem. Okay. By definition, he is following all of the behaviors of an addict, the actual definition. Okay. One of those being that he's deceived. Two is that he's out of control. Okay? When you have to lie to your spouse and you're out of control, bottom line, we're going to define you as an addict. Anybody in our world does that. Okay? So number one problem is you are married to a person who has an addiction. Number two problem is that he has, as a part of that addiction, has lied to you and broken your trust and your heart with it.

Right.

Okay. So the only way that this goes forward in a positive way, the only way you have a wonderful marriage at 20 years, you're at 15 now, is that he addresses the addiction openly with you, gets help, stops gambling, gets a therapist, goes to Gamblers Anonymous. You got to sit down with your pastor, and he's held accountable to never gamble again the rest of his life. Then when he does that, over time, the first 10 minutes he did that, he's been dry for one day, two days, one week. Well, he's not trustworthy yet, but when he's been dry for a year, you can start to trust him, and that would be logical. He can't do anything that looks like violation of trust ever again the rest of his life because he has deceived his wife at a very deep level. You're pretty pissed and pretty hurt about that unless you're weird.

Right? No, I'm not happy about that at all. To the point that I'm about to look into the divorce, I was just worried about the judge making me- The judge will not make you pay this.

The judge will not make you pay this. Very unusual. I mean, I'm not a judge, I'm not a lawyer, but very unusual. The deception has nothing to do with it. It's just simply, Hey, your honor, the reason I'm divorcing him is he's a gambling addict, and he ran up a bunch of debt gambling that I don't even know about. The judge is going to go, Oh, he gets to pay that. I mean, that 99% of the time, that's the way that's going to go down. If you divorce him, that's you'll end up. But his path to staying married is complete transparency from this point forward, no hiding anything ever again, getting help, which involves admitting that I have a problem, and getting in a 12-step program like a GA, Gamblers Anonymous, and getting a one-on-one therapy to never do this again. This is gambling addiction and lying to my wife as a part of it. He has to act like that you discovered cocaine in his bedroom.

Trust me, yes, that's exactly where I felt. I've dealt with other, not addiction myself, but I've lived with people with addiction, and that's exactly what I saw it as. I'm like, Oh, it's just like a drug addict. One thing playing around with it here and there, but yes, definitely. I took it right in there.

What caused him to tell you now?

He didn't. She found it.

Oh, no, I had to. I asked.

Oh, you asked. He He told you when you asked.

He came out. He came out, just asked, How was your credit going? Because of keeping things separate, I don't get to see that. He don't get to see mine too much. But just every once in a while checking in, How's things going? How are your credits? How are you doing on your savings? And come to find out he depleted the savings and- On top of going to Forty Cane debt.

If healing It occurs and we stay married, there'll be a period of time which he handles no money and you handle all of it, his and yours. Then over time, you'll start to handle it together. Never again will you act like roommates. Because the fact that you're running this separate, it added to this. It made it worse.

The lack of unity caused a lack of transparency.

Yeah. But if you're both looking at all our money is in a pile and all our bills are in a pile, and we We are both looking at all of them, then it's much harder for something like this to occur.

Yeah, definitely. Even being separate, I still look at it as a major setback.

No excuse, Rhonda. It's not the same. When it's all in one pile, everybody sees everything, it's almost impossible for this crap to happen.

I'm scared now. That was my whole thing with me having the savings and paid off my car. Then now it makes me think that- Well, the only reason The only reason you would allow it to be in one pile is if you're in control and/or over time, he becomes worthy of trust again because the last time he gambled was five years ago, and he's dry.

We've had these healthy, good marital discussions about our budget every month, and we both know where every dime of our money is going. If you did that for five years, you could start to not be scared. Well, That's a healthy place to aim at. If you guys are going to stay together, that's how you should do it. I hope that's what works out. I hope it works out that way. But this is how people come back from the deception around people hiding debt and/or come back from being married to an addict is you rebuild trust. Dr. Henry Cloud was with us here this morning. I had lunch with him today, and he has a book out called Trust. It's how to lose it and how to rebuild it. These are the types of things, but lots of transparency, lots of extra layers of communication, overcommunicating, never assume the other person knows something you should have known. No, that's not that. That's bull. Everybody knows everything because it was said out loud. The more of that you have, the more trust is built in any relationship, employer-employee, husband-wife, parent-child. All of this works. From the pulpit in your church, transparency, extra levels of communication, reality is dealt with.

Hey, guys. Dave Ramsey here. Every day on this show, we help people work through real money problems and figure out what to do next. Now, you can get that same help anytime with Ask Ramsey. Ask your money question and get answers built on Ramsey principles tools we use on the show. Whether you're making a decision or just want something explained, Ask Ramsey is here to help. It's fast, simple, and free to use. Go to ramseysolutions. Com and try Ask Ramsey today Today. That's ramsey solutions. Com. Tim and Shannon are on the debt free stage right here in the lobby of Ramsey Solutions. Hey, guys. How are you? Hi, Dave.

We're good.

Great. Welcome, welcome. Where do you guys live?

Chicagoland suburb of Illinois.

Love it. Very cool. How much debt have you two paid off? We've paid off just over $103,000. Very cool. How long did that take?

About 57 months.

Good for you. And your How much of income during that time?

We fluctuated between 175 and about 200, ending.

Cool. What do you all do for a living?

I am a police officer. And I work in HR.

Oh, very cool. Excellent. Good job for both of you. What debt was the $103?

That was the house?

That was the house. You paid for your house?

You have a paid-for house? We do. And you're a police officer and HR director, and you're not 150 years old. That's correct. How old are you two?

I'll be celebrating my 40th in May.

Love it.

I'm 32. I love it. You have a paid-for stinking house. What's this house worth?

Just over 300. 300? Yeah.

Way to go, you two. Awesomeness. How much in your retirement nest eggs?

We were calculating that.

We're 300, 400, 1,000.

All right, cool. You're heading towards Baby Millionaire in just a year or two. Yes, sir. Way to go, you all. I'm so proud of you. Thank you. What caused you to be weird?

It started during COVID when I rolled out with some help Smart Dollar to our police Department, and we we we we we we we we I was the training manager at the time, and Shannon and I binged that. Baby Step Two, we were here, joined you in May of 2021. But Baby Step Seven, we've been working on that the last 57 months following the blueprint of Smart Dollar.

For those of you that don't know, Smart Dollar is our financial piece university for companies and for organizations. Hr directors use it and people... We have several police departments of first responders using it around the nation to put all their employees through. Yes. That's a wellness benefit. You all put all their employees through. Costco put all their employees through. Our Financial Peace University, in essence, it's a class. You led the class at your police department?

Yes, I've been in charge of that since COVID.

Well, thank you. Wow. That's cool. You not only got to see yourself get out of that, you've got a lot of your guys that are out there and gals that are out there on the highways and byways putting their life at risk. They're getting their lives cleaned up.

Yeah, we saw a really strong benefit with it where we started with it just as the police department, and then we got the whole village on board. Now we have our wastewater. Employees have access to it. Our admin, clerks, everybody, the entire city now has adopted smart dollars. That's a movement over there.

Look at you. You're the guy running the whole thing, man. Way to go. Well, that's so stink and cool. With the police department, I always love hearing you guys do it in particular because it's also like we've had it with the military for years. One of the things in a high stress environment like that is, is in military world, they say combat readiness, being ready to go into combat with your head clear, ready to do one thing is much better when there's no debt stress at home. I'm not worried about my car being repowed. I'm not worried about my lights being cut off. Police officers is the exact same thing.

Yeah. The idea behind that is exactly that. I want the officers on a daily basis to be able to go out and serve the community but not have to worry about their finances or at least have a plan that the idea is service first to the community and not to be sitting in their squad cars worrying about the debt, worrying about how they're going to deal with the next overtime or whatever the case may be.

Yeah, trying to book some side gig. Exactly. Yeah, the whole thing. Wow. That's so cool. And so freedom. I see the blue Striped shirt now. I'm getting the blue flag. Okay. All right. What's it saying there? Debt-free family Baby Step 7. You did custom-made T-shirts just for today.

So did Leading Smart Dollar, did that put an notice on you guys to really get this house paid off faster? Was that part of the story? We hit the deadline ahead of time, but But there wasn't without bumps along the way.

Yeah. We were actually here in May of 2021 and did our Baby Step 2 debt-free scream.

And after that, we tried to start a family, and we're really struggling through that.

During that period, we actually sought infertility treatment. And because we were able to complete Baby Step 2, we were able to cash flow all of the infertility treatment, and we're able to welcome our baby girl back in March of last year. Yeah, it worked.

Yeah.

I think that really-That's more important than anything else in the whole story.

Absolutely.

So she's our Y. And I think after having her really put things into perspective for us to really just knock out the rest of the debt that we had and wanted to set her up for a future that we weren't really familiar with ourselves growing up.

I love it. Change your family tree. And while you're at it, be an example to all your compadres.

It was, and I saw that there was such a void in the financial wellness aspect along this journey that I went ahead and took part in your financial coaching and have since started coaching first responders across the country. Oh, in workshops and one on one to where a lot of employers yet have not really adopted a true financial wellness program, and this is giving them some hope.

Yeah. Well, thank you. It's incredible. All right. Now that you've done all of that, I mean, you're You not only got out of debt, you also cash flowed fertility. Then on top of that, we paid off the house, and now you're coach helping other people, and you've led the whole village, not just the police Department through smart dollar, the whole thing. Now, what do you tell people the key to getting out of debt is?

Sticking to the budget is the biggest thing, hands down.

Easier said than done, isn't it?

Absolutely.

It is, and especially in our world of first responders, we thrive control. That's what we have to have. It amazes me when I hear a first responder that take control of their money with a budget. A lot of times that's where we start in these trainings. If you can just start telling your money where to go, you're going to want to put it in a lot of different places once you start seeing where it's going. The budget is the most crucial part. Yeah, being proactive with it.

It's interesting. I hadn't thought about it. So much of your training is about controlling all the variables from a safety perspective so that no one gets hurt.

And policies and procedures and law. Everything guides are doing... You start your squad car, you start the fire truck. Everything is a policy procedure and everything.

The checklist, yeah.

Just put a policy and procedure in place for your Wow.

Just apply what you're used every day. That's very interesting.

Wow. Very cool. Have you been seeing stories from the people in your village that are following the plan, also becoming debt-free? Because it's weird to talk about money with your coworkers. It is. They're just out there with you. That is the difficulty in trying to get a chief of police or a fire chief to even say, Hey, you know what? Come on in and talk about this, because for so long, it is that taboo topic. But it's the quiet conversations afterwards. It's after you meet in a workshop, then see that person sticks around in the back of the class and then comes up and it says, Tim, can I ask you a couple of questions? We're still working on it, but the fact that we're all trying is what really helps because these first responders need that.

Yeah. Well, thank you for being such a service to your village. I'm so proud of you all. Thank you. I mean, you're not even thinking 40 years old, you're almost millionaires, got babies coming, everything's happening. What better life can we have?

This is the life we always dreamed of, and it wouldn't be possible without following the baby steps.

I'm just so proud of you. Thanks for embracing Smart Dollar. I'm I'm thrilled it worked. I know it worked, but I'm always... I'm never surprised that it worked, but I'm always thrilled that it worked.

It's hard, but it works, and it's worth it.

It is hard. It's just easier than being broke and stressed and freaking out for 25 years. Instead, I got these 20 months of really having to lean in on this, and now you got your stinking house paid off, man. How does that feel? It's unreal.

Yeah, it was December was our last payment, which again was ahead of schedule. We've had a couple of months here, and even standing here and getting to meet with the Smart Dollar team and spend some time, it's just you're still taking that deep breath because like you said, before four years-Not real yet.

No. Still surreal.

We have so many options and choices we get to make now.

What's the big thing you're going to do to celebrate?

This is the year of traveling. Where are we going?

What's the big trip? This was a big one?

This was a big one. We're spending my 40th in Florida, so we're taking the whole family down there. We've got a couple of other things, but at the end of the day, that's where we remind It was money was never the goal. Money is the tool to get to the goal.

Got you. All right. Are we going to put the baby into the debt free scream? We'd like to. All right. Fun. And name and age?

This is Keely, and she will be one next week.

I love it. So proud of you all. Tim and Shannon and Keely from the Chicago, Illinois area took their whole village through, all the first responders, all the police Department, and then everybody else paid off their own home. Debt-free house and everything. Count it down. Let's hear a debt-free scream.

Three. 3, 2, 1. We're dead free.

That is one cute baby.

Talk about paying it forward, baby.

That's worth getting out of there.

A lot of paying it forward there.

That's a triple hero.

When people hear my story of paying off debt, they say things like, Dang, that must have been so hard.

I could never do that.

And I tell them, Sure you can. It's a short-term sacrifice for a long-term gain.

But do you know what's really hard?

Working your whole life and never having anything to show for it.

Never having the long-term gain. Just feeling broke and stressed and maxed all the time.

And sadly, that's the hard that most people choose.

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Our scripture of the day, Ecclesiastes, Ease 5: 5. It is better that you should not vow than that you should vow and not pay. John Adams said, There are two ways to conquer and enslave a country. One is by the sword, the other is by debt. Sally is in Philadelphia. Hi, Sally, how are you?

Hi, Dave. I'm doing great. Thank you. I first wanted to thank you so much. With your guidance and the grace of God, I was able to pay off all my personal debt many years ago. Wow. Now my question is, how do I view business debt? Because I was able to get out of my personal debt, and my brother is in a farming industry, so he was not able to have a lot of money. So he and I decided about five years ago to buy a farm together. The farm is such that it's an orchard so that it at least takes five to seven years before return can occur. So for these last five years, I've been basically bankrolling it myself with my cash and getting a mortgage through from credit, and we did get a line of credit. And now that line of credit is due, and either I can choose to pay, get a full loan for that, or I can get a pledge line from my fund money that I was able to also save on the side, which is different than my retirement.

Okay, so you have personal investments equal to what?

Does that include the mortgage on the farm?

No, personal investments. You said fund money and retirement. Yes. So you have a retirement account and then you have non-retirement investments. That are how much?

Yes. My non-retirement investments are about $440,000.

And what is your line of credit?

My line of credit is only 120,000.

Pay it off today.

Okay. The question, sir, is do I pay it off by selling all my investments and taking the capital gains? Yes. Or use the... Okay, French line of credit.

Yeah, I'm not borrowing money. Okay. We stopped borrowing money until we got to Apple Orchard, and then we started again.

Yes. Stop it.

So what's the other mortgage on the Apple Orchard?

I think it's like 360.

But the thing is- And it hasn't made a profit yet.

No, sir, because it takes five to seven years.

How long have you been screwing with this thing?

Five years.

So it should be starting now?

Yes, sir. Next year is hopefully when we're going to start having money coming in to be able to pay off all this debt and not incur more debt at all.

And please tell me the projections are ridiculously good next year after you put five years of Alligator in this.

Yes, sir. It's actually quite great.

So how much do you think you're going to make profit next year?

Well, the following year, it's going to be another 550,000 coming in. Out of that, it's going to be about 120 in cost.

Okay, so you can pay off the mortgage out of the profits next year?

Yes, sir. That's Our goal is to get out of debt as quickly as possible once the money comes in.

You don't need the money off of the orchard. Both of you did it as a side gig, and you have funded it. I assume with your brother, you have clear documentation that you're getting all the money you put into it back before he starts putting money in his pocket.

Well, yeah, actually, we're in a 50/50 because he's doing all the work on the vineyard, right? I mean, on the orchard. He's the one that's doing all the on the ground work.

So the only way the debt gets paid is 50/50? Your 50% pays off the debt?

No, we first pay off the debt, but then after that, everything's 50/50.

Oh, okay. So he doesn't get any money until the debt is paid?

That's a great question. The way that I view it is that he's putting in the money now by working on it. So it would be- So the mortgage payments you've made are equal to his labor, essentially?

Oh, yeah. See, this is what I'm worried about. You guys don't have a clear plan for when this thing does start becoming profitable, how quickly you are made whole.

I'm okay with that because I'm thinking of this as a long-term investment.

Well, yeah, you're already five years in and made nothing.

Yes, sir.

But you guys really need to think about and have it detailed out exactly how you clear up this debt. But we don't just start raking chips off the table here while there's still problems. I mean, you have a $3600 problem, and you're getting ready to pay off this line of credit, and you need to recoup that. The debt now is owed to you.

Yes, sir.

That has to be paid back to you because you just use your personal money to do that. Otherwise, we're starting to value his labor at about $300,000 a minute if we're not careful.

Yeah. That's basically what a consultant would be charging in this situation.

$300,000 a minute?

No, not a minute, sir. No, not a minute.

I was like, Why? I'm in the wrong business.

My point is that you guys have to have a real forced ranking of what happens to the cash when it starts coming in. First, we recoup, you put the money back in your pocket for this line of credit that you pay off today. Do you ever recoup the money you put in earlier? Then we pay off the 360 before he starts making $100,000 a year out of apples. We need to get all that cleared up, and then we can split 50/50 after that. If your 50% is due to the money you put in earlier, that's okay. If you don't recoup that, that's your investment, and your return is on the cash flow after that. That's all fine. But the way people end up getting sideways in these things is they don't have real good, clear, detailed explanations that they're both aligned to on where the cash goes as it goes down the list of priorities. You're very generous and open-handed with this. He works hard, so I want him to get some out of it. That's fine. Just build that generosity or that open-handedness into the clarity and into the decision that you guys make.

Interesting. Lisa is in Auburn, Alabama. Hi, Lisa. How are you?

Hi, I'm doing well. How are you?

Better than I deserve.

What's up? Okay, so I'm a single parent, and I have a six-year-old boy, and I'm in step two of the baby steps. I'm just wondering, I'm worried that it's going to take me about 10 years to pay off my debt, and I'm wondering if I should go ahead and basically buy some play gym equipment for our backyard so he has this thing to do. He's an only child, and he just gets too much screen time right now, but I know that will delay me paying off my debt.

How much Which debt do you have, honey?

A hundred and ten. On what? Other than my mortgage. It's 75K student loans, and then 9,000 in a personal loan, and the rest is credit card, Alabama taxes, and medical.

What do you do for a living?

I'm actually a tax accountant.

Okay, so what do you make?

Right now, 86.

Why would it take you 10 years to pay this off?

Well, I guess with my The minimum payments, I just wasn't sure if I could pay off more than $10,000 a year unless my income goes drastically up.

Yeah, you're going to have to get your income up and you're going to have to get your lifestyle down and scorched earth. You're not doing a detailed sacrificial budget it, or you'd have more room than you've got.

Okay. I do have every dollar. It's just my debt payments right now are about 40% of my take home pay. Okay.

All And what are you talking about spending on playground equipment?

Really just getting a fence for our backyard and getting just a swing set or just something back there so that he can actually enjoy our backyard.

How old is he?

He's six.

I'll tell you what we just did, Lisa. My wife on our Facebook marketplace, and in these Facebook groups, they are giving this stuff away, just hoping someone will pick it up. You don't need to go buy him a new playset for $1,000 to make him happy. Just go get something real cheap off Facebook, and he'll be happy with a cardboard box.

We're not getting him a cardboard box. We're getting him a nice thing off a Facebook marketplace for just a few pennies here and there. Literally, People wanted out of their backyard. You might not need a fence if he's sick and knows to stay in the backyard. I don't know. I guess I'm old school, but I'm just like, Don't leave the yard.

There's an idea. Dave had an electric fence growing up. He knew not to go past it.

I didn't have it. That puts us 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.

This is The Ramsey Show.

The Ramsey Show Live is your chance to actually be part of the show. Ask your burning live. Finally win that money argument in your house. My mom occasionally asked us to borrow money. That's to know all the way around.

I'm a spender.

He's a safer. I'm a tight wad at heart. How many tight wads are out there? Thank you for making yourselves known. We do a brief What's a pre-pre-up?

What's a pre-pre-up? I don't know. I thought that'd be something. The Ramsey Show Live is your chance to be in the room with other people that are on the same journey as you. There's always something you can do to better your situation.

We don't sell magic wands. And so that person, the mirror, they are really the secret sauce. They are the solution. I'm really, really proud of you. That's awesome. That's pretty fun. You guys are great.

The Ramsey Show Live, one night only, coming to a city near you.