Transcript of Nobody Else Gets A Vote On Your Finances New

Brought to you by the EveryDollar app. Start budgeting for free today. Normal is broken, common sense is weird, so we're here to help you transform your life. From the Ramsey Network in the Fairwinds Credit Union studio, this is the Ramsey Show. George Campbell, Ramsey personality, number one bestselling author and co-host. Host of the Smart Money Happy Hour. He's my co-host today. Open phones at 888-825-5225. Gracie is with us in Indianapolis. Hi, Gracie, how are you?

Doing good.

Good. How can we help?

Well, I'm a pre-veterinary student. I just graduated undergrad with no debt. Um, I'm taking a gap year and will be starting veterinary school theoretically next fall. And that's depending on where I end up going will be around $200,000 in student debt. Could be a little more, could be a little less. So I just wanted to know best way to prepare myself for that kind of thing.

Well, first I'll tell you that your field of study I think is excellent as a career choice. I think you're— I honestly would coach someone to be a veterinarian before I would be a medical doctor. I think you can make more money and you have less regulations and less morons telling you what to do every day. So the medical profession has just gotten out of— it's weird. And so you guys, we work with a lot of vets nationwide in our EntreLeadership program and coach them on the business side of things. We don't know anything about the medicine side of things. So I'm a fan. I'll start with that. But Gracie, you've probably been listening for more than 10 minutes and you know we're not ever gonna tell anybody to go $200,000 in debt for anything, right?

Yes, sir.

I mean, you knew, you knew Dave Ramsey and George Campbell were going to tell you that, right?

Well, I kind of expected, but I'm not sure how to get around it with the cost of tuition.

Yeah. How did you get through undergrad with no debt?

Um, I've been very blessed. My parents are missionaries, so they started me working at a very young age, um, because I was homeschooled and flexibility, um, through them. So I actually started college at 16. I went to a private university for my first 2 years, realized that the cost was not worth it there, moved back home. I got paid to go to school for 2 years, and then I ended up taking a fifth year just the way my classes fell. So I paid, I think, maybe about—

I'm sorry, back up. You're breaking up a little bit. How did you get paid to go to school? Your phone's breaking up. Try again.

Uh, okay.

I'm gonna put you on hold and Christian's gonna try to get your phone straightened up. We'll come back to you. All right. Christine is in Boston, Massachusetts. Hi Christine, how are you?

Hi, good. How are you?

Better than I deserve. What's up?

So I'm 74 years old. I'm on Social Security and I want to retire. Um, I had a home investment property that I sold a couple of months ago and, um, after the taxes, I cleared about $900,000.

Wow. Good for you. Way to go.

Oh, thank you. Thank you. I have a home I'm living in now that has a mortgage. There's about $300,000, but it's got significant equity, probably at least $500,000 or $600,000 equity. So, you know, I do have that. That's my only debt is the home that I'm in now. So I just need to know what— I don't know what to do. I keep looking, you know, reading, and I just don't know what to do with that $1,000.

Other debt? I mean, other investments other than this $900,000?

The only other investment I have is a SEP IRA, and it's only got about $90,000 in it.

Okay. So what have you been living on?

I, I've been working. I work.

Okay.

What do you do at 74?

Yeah, I'm a lawyer.

Oh, good for you.

Okay.

How much longer do you intend to— how much longer do you intend to practice law?

Well, probably like Within the next year, I'd like to retire.

Okay. And what does it take you a month to operate when you retire?

Uh, but I'm thinking probably about, um, $7,000. Mm-hmm.

Okay. All right. Um, well, you'll have Social Security coming in obviously at that point, if you don't, haven't already signed up for it.

I have it. I have $3,000. I have the $3,000 coming in on that.

Okay.

So that's 3 of your 7. So, um, I, Christine, I try to build a base that is just very stable and very sustainable when I'm in these kinds of situations. I'm 65, getting ready to turn 66, so I'm not far behind you. And what we want people to be is debt-free with a nest egg, 100% debt-free with a nest egg when they hit retirement, because that gives them stability. And so George and I will tell you to take $300 of your $900 and pay off your house.

Which reduces your expenses per month, right?

Yeah, that means you don't have to have as much as $7,000 now because now you don't have a house payment.

Okay.

All right, and then I'm gonna sit down with a SmartVestor Pro and invest the other $600. If it were to make, let's say it made average market returns of 11 or 12%, and just for round numbers, if you pulled off 10%, which you probably wouldn't pull off that much, but if you did, Uh, that'd be, uh, $60,000 a year, $5,000 a month. So you're okay.

That covers the gap. Remember, you got $3,000 Social Security, you need $4,000 over that. So that would actually cover it if you just invested that $600,000.

I'd invest that $600,000 carefully and well in good growth stock type mutual funds and let it generate you about the other $3,000 or $4,000 a month that you need and let— leave the rest of it in there for growth. Don't take all the growth out.

Do you mean stock type mutual funds?

Is that what you're saying? Growth stock type mutual funds. And what I want you to do is to learn about that so that you get very comfortable with it. Don't do it because I said do it or George said do it. Sit down with a SmartVestor Pro. You can find them at RamseySolutions.com. And George, they're gonna have the heart of a teacher.

Yeah, once you're actually understanding what's going on, you see that money sitting there, you're not gonna be fearful and jump out, which is what happens to a lot of people who are DIYing at this stage. They either— their money's not growing fast enough to keep up with inflation, or even worse, they pull it out of the market completely out of fear.

You freak out by some news headline. And so what you do, what you do is you understand the investment. And so there are mutual funds that are more stable and have a steadier growth track record over the last 50 years than that house you sold. Neither one had a guarantee, but both things you would feel comfortable with a house because homes in that neighborhood are gonna go up in value and you probably owned it a lot of years, you made $1 million on it. So you probably owned it a bunch of years and you were probably never really nervous about, ooh, ooh, I'm gonna lose all my money in real estate. No, you got a single-family home, it's going up in value, it's kind of boring almost. And that's what you want with mutual funds is something that's got that. When you look at the chart, it charts out in volatility and up and down, up and down, up and down, about like a house does. And you say, "Gah, I never thought about the risk I was taking when I bought a house." But when you say mutual funds or you say growth stocks, people who haven't done it before freak out.

They go, "Oh God, the stock market! I always heard you lose all your money in the stock market!" It's weird, you don't hear that about real estate, but it's the exact same risk. And you're betting on the exact same thing, which is the track record.

Well, and houses are tangible. You can see them. That makes you feel better about it. The mutual funds are this invisible boogey monster.

Yeah, it's the mist in the wind.

Yeah.

Yeah.

This math is hopeful for her. Pay off that mortgage, reduce your expenses down to 5. Now you need 2 to pull off of that investment account. This is going to be a fun retirement. Congrats.

Yeah, you've done a really, really good job, Christine. Well done.

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David is in Los Angeles. Hi, David.

How are you? Feel better than I deserve, Dave. How about yourself?

Just the same. How can we help?

I have concerns about a potential money gift for a down payment from my father-in-law, and I feel that there are strange strings attached.

Okay. How long y'all been married?

Uh, we've been married about 3 years.

And how much is the gift?

$200,000.

And what are the strings?

Well, it's for a house. And we are— initially I heard through secondary conversations that the father, my father-in-law, wanted to have only his name on the title. And my wife and I would be paying the mortgage, and he would put the home in a trust. That was the initial plan. Now the plan is to, after the purchase, work out adding his name to the title so he can again put this in a trust.

I'll pass. Thank you for your offer. We love you. No, absolutely not. I don't have concerns. I have warning flags and pyrotechnics going off.

Is he using you guys as tenants to pay his mortgage on a new property?

No, this guy's a control freak and he's wanting to be in the investment real estate business. That's not a gift. He's wanting to partner with you.

Yeah, I'll, I'll, here's some more details to it. So my wife and I, we have one child from my previous relationship. We have a 2-year-old son together and we have another one coming by the end of this year. My wife is very eager to get into a place with more space for the family cuz we are in a condo that she owns.

Don't be eager enough to be stupid. This is stupid. Don't do it. I'm dead serious. You're gonna regret this.

You know, I hear you, and I, I try to have talks with this family, and a lot of the conversations happen without my presence.

Well, I'm not signing. Okay, you guys don't get to do a deal without me. I'm the daddy. This is my kid. My wife. Y'all got confused about boundaries here. You enter and sit at my kitchen table. You talk to me. This guy's dangerous, man. He doesn't mean to be. Probably. He's probably actually fairly calm person, but he's manipulative as hell.

Does your wife find this strange too?

No, she— it's her daddy. She's used to it.

She's like, this is great.

She grew up with this crap.

She just sees the shiny house, so she's going, "Hey, gets us a new house, who cares?" Daddy's gonna get me a house.

That's all she heard, right?

Basically.

Yeah, yeah. I'm sorry, honey. You got it. The first thing I'm gonna do if I'm in your shoes is that you guys need to get the wheels back on your marriage to where the two of you are planning your life, not her daddy's planning your life.

I agree.

And so I think that may be the— I'm going to start the conversation with my wife and say, all right, the first thing is, is we have to be in agreement about who we're going to be as a couple and how we're going to handle discussions about things that matter in our lives. And that isn't you go over and have these discussions with your dad and then you come back and tell me what I'm going to do. That's not going to work. I'm not going to do that. I'm not gonna operate my marriage that way, and I'm not signing up for this deal. So we're just gonna have to tell your dad no, and you and I probably need to sit down after 3 years and a new baby on the way and have a reset with a good marriage counselor. And it doesn't mean our marriage is in trouble, but when you go to a marriage counselor, it's like going to a coach teaching you how to do marriage. It's a teacher. You're hiring an outside personal trainer for your marriage, and you guys got a little work to do on that because Your bound— her boundaries are screwed up.

Okay, so let me back up and tell you how I got there, because this is— I'm being pretty in your face, but, um, I'm scared for you. That's why I'm doing that. It's bothering me.

I appreciate it.

So, um, the first thing that bothers me more than anything else is these side discussions that don't involve you. And then these things are decided and they have— she wants something. She wants a new home and she's seeing a way to get it. So what's going to end up happening is if we don't get back on the same page, you're going to be the evil person that kept her from getting a home while her daddy tried to help her. And this is a wedge that I do not want driven into your marriage. That's what's coming.

I'm afraid we're there.

Yeah, as soon as you say no. Yeah. And then the second thing that's bad is everything this guy's describing, they called it a gift, and this is no more a gift than fly to the moon. He wants to own some real estate that his kid lives in and his grandkid lives in so he can control the situation. That's not a gift. It's like if he had a rental house and y'all moved into it. That's what he's proposing. You've got no control in this scenario, and no, your name is not gonna be on the title of my home, period. Even if he's the sweetest guy in the world, and he's not, and even if he promises, well, one day it'll be yours, mm-mm. I'm sorry, go ahead, David.

Yeah, I was just asking about the legalities because he's already written a letter that says this is a gift.

Well, but it's not. Yeah, because the way he's structuring it— I want my name on the title, and I want it into a trust, and I want it transferred to my name after so time. And no, but the mortgage— your name is not going to be on anything. A gift is you give us $200,000 and we buy a house. That's a gift. This is— that is not what he's proposing. So he is confused about the definition of the word. And I'm telling you, man, the fact that he went to your daughter and left you out of the discussion is bad chemistry. That tells me that if you get in this deal, it's gonna be bad. It's gonna be really bad. That's what this tells me. It's not just a little bad. The fact that he's doing this end run thing And man, so some of the best advice we ever got as parents of grown children was that, especially with two daughters, the first two going out the door— Daniel was fairly low drama.

He still is.

Yeah, yeah. And Rachel and Denise, I mean, when they left home, Daniel was still home. We thought we were empty nesters. We didn't even know he was there because the drama dropped like 98% when the two girls left, right? So the best advice I ever got as a dad of a daughter, which is where this guy is, this father trying to give this money is that when you walk her down the aisle, you're done. You got to step back because you have been the man in her life her whole life, and you have got to step back, or her husband can never take the position of being the primary man in her life as long as she can run to Daddy. And so, like, when Rachel got married, I told Winston, I said, this one's your problem. Oh man, I literally said that to him, and his dad was sitting there, his dad busted out laughing.

He said, that is incredible.

This one's— this problem is now yours, my man. You get all the problems. I'll be cheering for you. I'll be— I'll throw food over the fence. I'll be cheering for you, but this one's your problem. Oh, that's quite the opposite of I'm going to stay involved and I'm going to coach my daughter again without my son-in-law's involvement on how I want to end up owning the house that they live in. Oh, bad juju.

It's a lack of respect. It's undermining the husband. This triangulation of making him the bad guy. "Hey babe, I wanted to get you that home you wanted, but you know your husband David, he just wouldn't do it." So I don't like any— it's like if you bought me a car, but it's in your name and I have to make the payment, and I go, "Thanks, Dave." That's crazy.

You don't feel gifted?

I do not feel gifted at all. I'm just driving Dave's car while I'm paying his payment.

I don't love the good news is it'll be a real car.

Yeah, no batteries involved. I gotta go to a gas station. That's a whole thing. No thank you.

You don't have to plug this one in, George.

Oh, I wanted like an Easy-Bake Oven situation. I don't want to be out here trying to make my own.

See, that's what happens when you violate boundaries. You don't get to make choices anymore. That's how it works.

See, well, forget it. I was gonna get you a nice Christmas gift.

You lost your power.

It's gonna be a nice plug-in.

No pun intended.

Barbie Jeep for Christmas for you. You can charge it up.

David, please, honey, sit down with a good marriage coach and you guys work on how to deal with things in your marriage. And that coach can teach you how to gently set your father-in-law to the side. And he's not gonna like it 'cause he's not used to not, he's not used to being told he's not important.

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Be sure and check it out. EveryDollar. See, the good news about this material that we teach here and have taught here for almost 40 years now is it doesn't change. We don't change it. People call every day trying to get us to change it for them, but we don't change it. And so our answers are devastatingly predictable, and that's why it's easy to put it into an app, because the answer is devastatingly predictable. It's going to tell you, don't do that, that's stupid, or do that, that's smart, and do that right now because it's really smart. And the app's going to walk you right through the process. Every dollar downloaded on the App Store or Google Play. Janet is in Detroit. Hi Janet, how are you?

Oh, I'm well. How are you, Dave?

Better than we deserve. What's up?

Hi. So my husband started up a side hustle in addition to his regular job, and he did fairly well, and he bought himself an $80,000 commercial building for cash on a canal, and he loves it, and he's been working really hard. Fixing it up, but he ended up with $90,000 in business debt in the process. And he also would like to retire within 5 years. And I'm concerned we're not on the track for retirement and that the expenses of the building and the debt associated could prevent us from being able to retire when we would like to.

And when you say that to him, what did he say?

He said he'd be willing to try and rent the building out to help with the expenses. However, commercial— there's many vacant commercial buildings in the area. I don't know if his would be nice enough to rent out. I don't know if he'd run into problems with people not paying rent. So I have concerns. I have concerns even with that solution. I mean, obviously that would help. And he has some inventory from the business that he started that he was wishing would have sold by now, but it has not yet. And so I'm concerned, like, when will it sell? We're still paying all these expenses meanwhile. And even when the inventory sold, we'd have a little debt left and we would have property tax and utilities and many things associated with keeping up the building.

So how long have y'all been married?

We've been married like close to 35 years.

So how often does he go off and buy a building and doesn't talk to you about it before he does it?

Well, not usually whole buildings. In this one he did mention, but I was like, well, let's keep it all to cash. But things kind of there was a lot of expenses associated and he felt his inventory would sell.

And so he—

Well, let's, let's keep it all to cash. He didn't buy, but he did buy the building.

Yes. Yes. And so I was okay that he was buying the building for cash, but I'm more concerned with the fact we ended up with some debt associated.

So the debt was used to cover expenses for the building?

Because he's working on it. It was in really bad shape and he's working on it like every night.

He's putting a lot of cash into it. Let me, let me try it. Let me try this again. Okay. Honey, I'm okay with you buying the building for cash. And then he didn't. He bought a building and renovated it and went into debt. So how often does that happen in 35 years?

Smaller things, like we got a pickup for $3,500 once, which we still are using. It's a great pickup. So there are a little bit of things like that.

Yeah, sounds like he's always got a scheme and a plan.

So So what, um, what do you want to do with the building?

Well, personally, I just want to get our retirement savings under control, but I realize how much of himself he's invested into the building and how—

What do you want to do with the building?

Well, I, if it was just me in the marriage, I would sell the building.

Okay.

Then why would you suggest that the two of you keep it?

He is hoping to use it. It's on a canal. He loves it. He's hoping to use it both for recreation for our family in retirement, and he'd like to try and run a business out of it in retirement.

But you don't believe that's going to happen?

I believe that he would try and run a business out of it in retirement. My only concern is, um, that there's a lot of expenses with the commercial building. Property tax is high, everything's high, and I feel like it would be hard in retirement constantly working to keep up with those expenses. But some people do it, so I'm trying to make sure, making this call, that—

okay, so you're dealing with a bunch of unknowns and your emotions are saying sell the building. He's dealing with absolutely zero business acumen. He sucks at this because all he's doing is dreaming. I hope someday that we'll use it for the family. Oh, bullcrap. Okay, this guy's not written anything down. He doesn't have good business pro forma. If he worked for me and he did this, I'd fire him for incompetence. And, and, and you're worrying about something you don't even understand because he's never written anything down. This is all jumbled up between some business and some dream and some family use of a building on Canal that none of this is— it's all mixed together. It's not— it's jumbled up. It's not a good plan. There's no plan. It's just vague. I like the building. I wanted to buy the building. Now I'm gonna renovate the building. Oh crap, I don't have the $90,000, so now I'm in debt. Oh, now I've got inventory I can't sell. And I don't know about the expenses, and you don't either. You've got this vague sense that there's gonna be a bunch of insurance and taxes, which is probably true, but we need to actually look at real numbers.

Okay, this is what the building costs to operate. Here's what we can rent it for. Here's the business that we can run out of it. And And if there's any space left over, the family can enjoy it. Or the family can, you have the money to eat this, so it becomes a family recreational stop. It becomes a lake house for the summer, the building on the canal. But we've got it all jumbled up with we can't decide if we're a landlord or we're running a business or we've got a lake house. And it's all pushed together so that he can live this dream that's very fuzzy and in the fog. He needs to write all of this down in a business plan and submit it to you, and the two of you need to look at this with wisdom, and then based on that, if you can see how you actually make money and wanna keep it, fine. But just his little heart's desire is not enough to make it work. I've had a lot of heart's desire at stuff I sucked at, and it cost me money. And it's called dreaming, and it turns into a nightmare.

So you have to do a business plan, a pro forma, and go, okay, if we rent out this, here's what the rental rates are. Oh wait, everything on this whole canal's empty. It's gonna be very tough to rent.

Doesn't bode well.

So we're probably eating this. Oh, we've got this inventory we bought that we financed, but we can't sell it. So we obviously chose the wrong inventory to purchase because we didn't have our business head together on that either. I've got some of that myself in the warehouse today, over-purchase of stuff that I wish we hadn't bought at Ramsey, but it's inventory and, you know, it was a dumb butt thing. So you do, you do some of that in business, but you've got to see your way to this is how we're gonna turn this situation into money. And if we're not gonna turn it into money, here's the amount of money we have to pay for it anyway and be okay. She's worried that this has taken the rug out from under their whole lives.

Well, there's a sunk cost fallacy. She's going, well, he's invested a lot into it and he really loves it, and it's gonna cause you guys to not be able to retire. So you gotta— you can't have the cake and eat it too here.

I'm guessing they don't have millions of dollars or he wouldn't be $90,000 in debt. I'm guessing.

I just hope the building is worth $170,000. His $80,000 put in plus the $90,000 renovations. I don't know that they can even sell it for that much. So I'm worried he overbuilt.

Yeah, over-renovated. Yeah, he got to the party too soon. Nobody's there yet.

How many people are trying to buy $200,000 office buildings in that area if he bought it for $80,000?

Exactly.

Oh, this is gonna be tough conversation because it sounds like he's, he's stubborn and dreamy.

So A, you need to get more involved and be involved in the decisions. Your life is involved because it affects you. And B, he needs to approach this with more of a business mind than the mind of a dreamer. Dreaming is good as long as you put work clothes on it and turn it into goals and numbers. Otherwise, dreaming is not what you want to marry your daughter. Oh, Daddy, he's a dreamer. Oh God, they're gonna live in my basement.

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Jacob is in Nashville. Hi Jacob, how are you?

I'm doing well, honored to speak with you both.

You too, what's up?

Yeah, my specific question for you is about the rule that vehicles shouldn't make up more than 50% of your annual salary. Wife and I, we're 24 and 25, we were recently gifted a vehicle that's worth about 3/4 of our annual income. Um, and it's about half our net worth right now. So just wondering, you know, it's hard to not think about selling the car and investing that or saving for a down payment or, you know, something else.

What, what, uh, what do you guys make?

Uh, we currently take home about $70,000 a year. Um, my wife's in grad school right now though, and we're anticipating once she graduates, that'll go up quite a bit.

What's she studying?

Physical therapy.

Cool. When she graduate?

Um, August of next year.

So a year plus and passes her boards, and then she'll make what, $70,000?

Uh, $70,000 or $80,000, right around there.

Yeah. Okay. And you make $70,000 or $80,000 now? That's your income?

Uh, $70,000.

Yes, sir. Okay. And so this is a $50,000 car?

Um, it's about $55,000. I'm looking at comps online.

Where'd it come from?

From? Um, my dad and stepmom gifted it to us. Um, she got a new vehicle, um, and they just kind of passed it on to us.

So it was a used car that they had and they just gave it to you?

Um, for the, the price that we could sell our other car for. Um, so for $8,500, um, we sold ours and, uh, we wrote them a check and, and they gave us this Okay, uh, well, there's a good argument both ways.

I mean, you did not put money in it. You know, you put $8,500 in it. Okay, so if you put $55,000 in it, I'd tell you sell it today and get your $55,000 back out and start your life smarter. Okay, but, um, you put $8,500 in it, um, and your income is getting ready to double. In the next 12 months, which actually makes this thing almost fit. Well, it does fit depending on what the other car is. Yeah, so, you know, given the trajectory of your income and that you didn't put money in it, if you like the car, it's fine. It's also some wisdom what you said. I mean, you're tempted to go— of course, you— what happens with your parents if you sell it? Did they get pissed?

Well, part of it— I wouldn't say pissed. I think part of the reason, you know, the motivation for them giving us this is we had, you know, a 15-year-old car with 200,000 miles on it, and my dad never keeps a car past an oil change. Um, he likes new vehicles. So, um, you know, I think part of the motivation was, hey, let's get my son in a good reliable car, um, and something they can keep a little while.

So yeah, they were blessing and his version of blessing is a nice car.

Yeah, but good, reliable— that could have been a $20,000 car and you could have used $35,000 as a down payment.

Yes, that's correct, and that's kind of what we're thinking about. You know, we're able to cash flow my wife's grad school, so student loans aren't a concern there. Um, but what is the car? Um, it's a, it's a 2023 Toyota 4Runner.

Okay, if, um, yeah, if you would, you buy a $20,000 4Runner if you sold it?

You know, it's funny, the one we sold was a 2015 4Runner with 200,000 miles on it and same trim level and everything. So we'll definitely find one.

Yeah, you definitely like the Toyota product. Okay, it's a good car.

We're happy with it.

It's a good car. It'll last forever.

And you guys are debt-free otherwise? And you got savings in the bank?

Yeah, we're on, um, Baby Step 4, except we're not doing a 15% because we're cash flowing grad school right now.

Okay, what I— as long as that you and your wife, and for that matter your parents, are aware that from this point forward that you will not be owning vehicles using the same pattern as your dad, changing every time the oil's changed, um, because that will keep you broke. It will steal your wealth. As long as you say, "I'm not going to intentionally go buy a car with cash or otherwise ever in my life. It's not my plan. This just is something that happened to me. It wasn't something I sat and dreamed about and did something stupid." Okay, it was more like, in other words, this is a one-time good time thing. You're never doing this kind of thing again because next time it'll probably be up to you to do it, right? And you would never do it again. If you, if the two of you, and even for that matter you explain this to your Dad someday. I'm never doing this again. I took this only because it was a gift. So because it was a gift and didn't cost you anything, hardly, $8,500, and because your income is going to double in the next 14 or 15 months, I'd probably keep it.

What do you think?

Yeah, I mean, if your income was like $50 grand a year household and never going up, this is way— yeah, this is just too much car for your life, and you could be doing way better with it. But with your income, this is not a ridiculous car that that you would never own. It's not a Lamborghini that you're paying crazy insurance on.

Yeah, that's a good point.

It's a reasonable vehicle.

If they hand you a $250,000 Lambo, I'd be telling you to sell it.

Sure.

Just the maintenance repairs on it. But a Toyota, you're like, "All right, that's gonna last a long time." Well, it'll cost you $55,000 to keep the Lambo running.

Exactly.

So I would take this as a nice one-time blessing, and it might take you longer than you wanted to to get that house now.

Yeah, don't use this as a way to adjust the way you look at money and vehicles.

Though.

This is an aberration. It's a one-time event, okay? As long as it doesn't shift the way you're thinking. In other words, you called me because it doesn't line up with what you believe, right? And it doesn't line up with what we believe, and you wanted to ask about that because you somewhat believed it. If you weren't worried about it, you wouldn't have called. So as long as you stay on that side of the fence, I'm good. I just don't want this to go, well, you know, I did it that one time and it works, I'm going to keep doing I'm doing this thing for the— No, no, no, no, no, no, no. You don't use this as the rationalization to go into the next deal.

Well, the good news is if they sold it, next oil change Dad's got, they're getting a different car. Hey, just keep doing this. You'll be wealthy in no time.

We never buy tires. We just trade the car.

I mean, you gotta be wealthy enough to absorb that kind of hit if you're just flying through cars like that.

Man, it's just— And the problem is I just love cars.

I know, I'm just— I knew you were gonna be—

it would—

they hit your soft spot.

Here's the interesting thing, you know, when we talk to Baby Steps Millionaires and say, okay, you know, what's your net worth? $1.7 million. What do you drive? Toyota. What's your wife drive? A 15-year-old piece of crap. Would you get your wife a good car? You know, that kind of thing, right? But I— we hear that every time The wife drives an old piece of crap and the guy's got a Toyota.

Why punish yourself?

Or vice versa. Yeah, the Toyota always comes up though. I think it is the most driven car by Baby Steps millionaires, you know. And, you know, a nice Toyota, a good one, but, but not— I mean, not, not some worn-out piece of crap.

But, and then Honda was up there. Lexus is up there too with millionaires.

Yeah, yeah, we hear them. We don't hear Lambos, man. Kelly is in Los Angeles. Hi Kelly, what's up?

Hi, hi, thank you for taking my call.

Sure, how can we help?

Okay, so I just inherited some savings bonds, Series I. They were both issued in 2003 and 2006, so I can pull them out if I want to and disburse them. I would. Originally, yeah, just cash them out, pay off my debt. Yep.

How much is it?

Um, $33,000 now.

And how much is your debt?

Um, $25,000.

And what do you owe the debt on?

Uh, credit cards.

Okay, so let's pretend that you didn't have any debt. Would you go borrow money on a credit card to buy an I-bond? No.

No.

Okay, I didn't know because I've been listening to you since February, so thank you. You have turned my brain around. Yeah, but I've been listening trying to see how you feel about those savings bonds.

I'm not mad at them. My granny used to give them to us and we would cash them in and put them in mutual funds for our kids' college. And she would say, how those bonds doing? I said, great.

That's true.

Technically true. Because like, I would love to pay off the debt. Like, since I've started doing the Baby Steps, like, I'm just so excited.

Good.

I'm so excited. And you're gonna cut up the cards, right?

That's the big—

chopping the cards up.

What do you mean?

You have to cut them up.

They're done.

They're long gone.

Oh, good for you. Oh, you're rocking it, Kelly.

I love you. They're done. They're so done.

Not even so cool. So where do the I bonds come from?

Uh, my parents. I inherited them.

They passed away?

Yeah, I had to go through probate and everything. It was, it was miserable.

I'm sorry.

Yeah, so anyone out there that's listening, like, do a living trust or at least a will.

Definitely have a will. You can go through probate, you can go through probate like a hot knife through butter if you just got a will. It's not a big deal. But if you have to go in there and the judge has to think about everything, it's not good. Don't let judges think I bet they're smiling. They're smiling.

Seeing you become debt-free too, that's pretty cool. It's a nice legacy.

Very good. Good for you, Kelly. Debt-free. Never use a credit card again the rest of your whole life. When I started, I had great ideas and I knew how to serve people, but I didn't have systems in place yet. At that time, I sold books out of the trunk of my car. It was a lot harder to start a business back then. Shopify makes it easier. Shopify is the business platform powering millions of businesses and about 10% of all e-commerce in the United States. If you've got a product or even just an idea, Shopify makes it simple to get moving. You can build a storefront, write product descriptions, and even improve your product photos all in one place. You don't need 10 different systems duct-taped together. Shopify handles everything you need to make sales, from payments to marketing and analytics. Plus, that purple Shop Pay button is one of the best converting checkouts on the planet for fewer abandoned carts. And if you get stuck, Shopify offers 24/7 support. So So if you've been sitting on the sidelines, it's time to turn those ideas into— sign up for your $1 per month trial at shopify.com/ramsey. That's shopify.com/ramsey. Shopify.com/ramsey. Welcome back to the Ramsey Show.

In the fair Men's Credit Union studio. Jessica's in Phoenix. Hi, Jessica, how are you?

I'm doing well, how are you guys? Thanks for taking my call.

Sure, what's up?

Yeah, so, um, my husband and I have been in our home about 14 years. We have a manufactured home, um, on an acre and a quarter of land, um, and we've just came into the situation thinking that we would always build a home there one day. Um, I ended up staying home with kids and we haven't done that. Um, it's been a blessing to us. Um, We are trying to just plan ahead for what our next steps are, as the home is definitely in need of maybe a second overhaul of repairs, but we're not sure we want to dump that kind of money into it with knowing that we're not going to see that return. One more detail about the home is that it is on its second location, which at 24-year-old— 24 years old, we didn't realize how much of an issue that was for financing. So to list the home would be difficult to find a buyer. Of course, it just takes one, but it would be a private financing situation. So just a little unsure what to do there. Do we stay? Do we go? I have quite a bit of equity.

There's so many things we can be when you describe it as a manufactured home. So does— is this sitting on a foundation?

Yes, it is. It is above ground, but yes, it is secured and all of that.

Yeah, with her— when I drive up to it, I think double-wide.

Yes, you would. Okay.

All right. Um, and so when the buyer drives up to it, they think double wide. And so it's gone down in value while the acre has gone up in value.

That's correct. Yes. And we also would need probably a cash buyer, which would also bring our—

what do you owe on all of this?

We owe about $70,000.

And what is the 1 acre worth?

So in our surrounding area, the same acre and a quarter is anywhere between $250,000 and $350,000.

Okay.

All right. And, um, have you had any suggestions on what you would list the property for?

Yeah, we've heard some, some pretty low, um, like just list it for $350,000. Um, but then we've also heard start at $500,000.

I've heard a lot of stuff, but I'm asking what the actual value is. What I'm trying to figure out is it sounds to me like the trailer is probably not worth much, right?

Um, and we have—

if you picked the trailer up and sold it, what would it go for?

So we— this was maybe 5 years ago before I resigned. We had, um, we were going to go like trade it in or sell it to a private trailer park, and they were offering us about $40,000 then.

Okay, so if you could get $20,000 for it and get $350,000 for the land and separate the two, you're probably going to end up more that way than trying to get someone to finance a trailer on a $300,000 piece of dirt.

Right, and we have had homes on our street similar in size, also manufactured homes, sell between 5 and 6.

Okay, within that range, similar age and condition.

Similar age. Ours is—

How did they sell theirs?

1,400 square feet. So they— so the manufactured homes can be financed conventionally and FHA. However, ours has been— we did not know at the time, but it's on its second location, which takes away the option of conventional and FHA financing.

Okay, so you've lost that ability. So you can't really compare your situation to the $600,000 situation. You've got more of a $400,000 situation.

True. Yeah.

Okay, so you're experiencing what people that buy mobile homes experience, that they go down in value dramatically, and they have— and it has. And you basically have consumed the living quarters while the land went up, right?

And we did close at $105,000 when we bought it, so, you know, we're not—

no, listen, I don't want you to believe that narrative because you still got screwed. You saw— you closed at $105,000, but the land is the only thing that's saving this and making it feel okay. If you closed at $105,000 and the trailer was worth $10,000, then you would really be experiencing what has happened.

Right.

So no, the manufacturing housing was not a good investment. If you were— if you had bought a home for $105,000 or $150,000, you'd be sitting at $700,000 right now. So no, it still was not a good idea. And we're not gonna— we don't want to repeat this, nor do we want to endorse this, but we're still here. So I think, you know, I would get in touch with one of our SmartVestor— I'm sorry, one of our Ramsey Trusted Real Estate Agents— to see if they know some financing in the Phoenix area for this that can get the value up. Otherwise, I'm gonna separate the two, dump the trailer, and sell the land.

I think it's gonna be tough to find that buyer in that sweet spot who wants—

I was not aware of what she was saying, that FHA would not— second location, the moving the trailer once makes it not work anymore.

Is it just too much risk for the—

I don't know, I don't know, I don't understand. I did not know that. I knew FHA would finance them in some cases if you put them on a permanent foundation. That's why I was asking about that. Yeah, and, and the piece of ground goes with it. Obviously they don't finance them in a trailer park. But yeah, the good news is the land will sell. Yeah, the good news is your— the land is gonna be your financial salvation in this.

But the dirt would have went up in value with or without a trailer on it.

Yeah, if you just bought the dirt, it would have gone from, you know, probably whatever you paid. But, but you probably didn't pay anything for it. Sounds like you got a great deal on the dirt. But yeah, that, that's the thing. And but you need to keep those things very separate in your mind as you do the analysis and tell yourself the story of what has happened. And it sounds like you need to separate them in order to sell it. But get in touch with one of the Ramsey Trusted Real Estate Agents. Call a couple of them and ask them if they know anything about mobile homes or manufactured housing in your area and so on. So guys, there's a real spectrum of things when you say manufactured housing. If someone's saying that to you, let me walk you through that. There's a trailer, single-wide, double-wide, with a couple of axles, and they roll it down with a wide load sticker across the back down the highway, and they set it on a piece of dirt. You put a septic tank, or you hook it to sewer, and you build a concrete foundation under it, and you're living in a trailer.

Okay, that's gonna go down in value faster than a car that you sleep in, because that's what it is, a car you sleep in. Okay, it's a horrible investment. Well, it's all we can afford. It's a horrible investment. You'd have been better off renting and saving your money to buy something that goes up in value. Don't buy those. Okay. And my buddy that owns a manufacturing company, one of those, gets mad at me. He's like, don't tell people that. And I'm like, hey, when they go quit going down, I'll quit telling them. Okay. They go down. Then there's manufactured housing that looks like a trailer, but it's not quite. It's like big sections and they bring it in, bolt it all together. And it's modular and that kind of thing.

It's a step up.

And it still is going to go down in value. If, when you walk, reason I asked her the question is from a real estate agent's perspective. And I've been a real estate agent since 1978.

'78.

When you walk up in the front yard and you look at it, if you think trailer or if you think a builder built this, that's the two different things. If you think a builder built it when you look at it, you're probably going up in value. The last end of the spectrum on manufactured housing is there's actual factories that build wall sections. They put them on an 18-wheeler, they deliver the wall sections, the floor sections, the pre-engineered trusses, the pre-engineered floor systems with the heat and air built into it, the whole thing, and they put it all together, and when you're done, it's basically a stick-built house, and it has nothing to do with the trailer world. Those are perfectly fine. Let me tell you what I get asked all the time. When should I get term life insurance? How much do I need? Is it affordable? Those are the right questions to be asking. So let's take a quick review. The fact is, term life isn't a baby step. So if anyone is dependent on your income, you need to have 10 to 12 times your income in life insurance now. And most people are surprised by how affordable term life really is.

Even if you're not in perfect health, health. Look, I understand the hesitation since most insurance companies make it more of a hassle than it needs to be. Not at Zander Insurance. They're not an insurance company. They're a broker that works for you. That means they'll shop and compare the top term life companies to find the most competitive options on the coverage for your family. For almost 30 years, I've recommended Zander for straight answers, competitive rates, rates and coverage that actually protects your family. Call 800-356-4282 or go to zander.com for a quick and easy quote. That's zander.com. Stacy's in Chicago. Hi Stacy, how are you?

Hey, I'm good. Hey, how are you doing?

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

Hey, so, um, we have a situation where we've got our oldest daughter heading to college. She's gonna be a college freshman this year, and we have done a pretty good job saving for retirement, but we have done a horrible job saving for our kids' college education. And I, we just kind of thought we had more time than we did, and now we're being smacked in the face with it. So, um, we really don't have anything saved for her for college. So with her coming up right now, and we have 2 more coming up after her, I'm just wondering what the best way to approach this is. I just was listening to some of your previous calls on people who are tens of hundreds of thousands of dollars in student loan debt, and I'm really just trying to approach this in the smartest way that we can.

Good for you.

Good for her.

What's your, uh, what's your household income?

Um, we're just a little over $200,000.

Good.

Okay, I'm gonna ask you a real practical question, and it is a leading question. I'll warn you ahead of time. Okay?

Okay.

Why is she going to college? What does she want from college?

Um, she is going to be majoring in mechanical engineering. She has a lot of motivation, a lot of drive, a lot of ambition.

Excellent.

Excellent. When we did the study of— the largest study of millionaires ever done, we studied 10,167 of them. The number one career of people that become millionaires is engineer.

Wow. Well, my husband, my husband's an engineer too.

Okay, and you guys have experienced that because you have a wonderful household income.

Yeah. All right, so it's just him.

I don't— I applaud the, the career choice. Okay, now the next thing is this: no one except her sorority sisters care where she graduated from college.

Absolutely.

No mechanical engineer has— well, no, less than, less than 0.5% of engineering jobs are awarded based on where the engineer went to school.

Absolutely, I agree with that.

Okay, so what we want to do is we want to get the engineering degree by spending the least money possible?

Yes.

Okay, so that— that there's a series of leading questions because we're taking you somewhere. Georgia and I do this all the time. So what that means is we may go to community college for the first 2 years and just get the basics out of the way because there's no engineering in the first 2 years anyway.

Well, so the really great thing is she actually— our high school actually offers a lot of dual enrollment credits.

Great.

Going into college with a lot of credit already.

So she can blow off a lot of her freshman year?

Yes.

Good.

Well, yeah, she just leapfrogged some of that.

Good, good.

So what does she already— she already heading into college? Is she already chosen?

She is, yes. She's going to Iowa State University. So there's a state school. It's not our state, but, um, but she's paying out-of-state tuition.

Yes.

Why? That's where she chose to go.

She doesn't get to choose. She doesn't have any money.

Well, that's true.

If I'm paying for dinner, I'm gonna choose where we go to eat, and I'm not gonna—

I'm not gonna endorse paying something because we drove across the state line. There's no value in having driven across the state line added to the quality of her education.

Did she tell you why she wanted to go to that school?

Well, there's lots of reasons. It's a, it's a very good engineering school.

Her—

a lot of friends are going there. She felt comfortable there. She didn't get into our state school. They have a very competitive engineering program and she did not get in there, so we were kind of forced to look out.

Okay, so as we have studied the student loan debacle over the years— actually did a— major award-winning documentary on it called Borrowed Future. We find the number one cause of student loan debt is college choice. That's why we're coming down hard on this.

Okay. In other words, I don't think she's— I don't think we're in an excessive amount.

Okay, so what is the tuition out of state for Iowa State?

Per year, we're looking about $30,000.

Okay, because average tuition in America right now is $12,000 for in-state.

State.

Oh my gosh.

Okay, so we need to do some research and we need to do some thinking because otherwise this kid's going to end up $150,000 in student loan debt, right? Because her friends went there. Because her friends weren't there. And nobody gives a crap where her friends went. They won't even be her friends in a decade.

They may not be friends in a year.

Yeah, but so yeah, college choice, college choice, college choice, college voice, and then do as much free stuff as you can do. They've— she's done a good job as a high schooler taking some dual stuff where she got a lot of credits. That's great. She can jump through a lot of her freshman year. That'll save you a lot on cost. But if I'm paying for it, we're going to go the least possible expensive place to get you this degree. And really, your little feelings don't enter into it with me. I'm sorry.

And I'd have her working part-time.

You can tell your therapist about your feelings. I'm paying for I love this stat, Dave.

Studies show students who work 15 to 20 hours a week while taking classes have a higher GPA than those who don't. That's what the research shows. So if you're scared your kid's gonna flunk out of class because they have a part-time job, the opposite is true.

They're working and they just don't have time to play beer pong.

They're more focused. They actually learn discipline and schedules. So I'd have her working, applying for scholarships.

I know several people who got a degree in fraternity and one that got a degree in sorority Meaning they never graduated. They were laying under a keg of beer. And so, you know, this is— we all know these people. I mean, people that were—

had a part of the college promise.

And I don't think that's gonna happen to Stacy's daughter.

No, not for mechanical engineering.

This kid's actually a smart kid, but we need to add to her smart wisdom. And wisdom is we go, "Well, mom and dad can pay for it. They make $200,000. You're gonna be working. You're gonna get scholarships and college choice." And that's That's the formula when you're broke for your kid to go to school. And so—

and then if you can and you want, cash flow what's left.

Stacy, what that means is, I don't think you're gonna do it because the way this— the sentences were formed in this conversation, but if I could talk you guys into doing something, I would disappoint her and withdraw from Iowa State at $30,000 a year, and I would find a school you can afford because you can't afford $30,000 plus room and board. So we're at $60,000, $50,000 or $60,000 now out of your $200,000. Oh, and you got 2 more coming on. What are we gonna do with that? Yeah, so we got to have a plan here, and the plan is college choice, college choice, college choice, which includes 2 years of community college and get the basics out of the way for free or close to free. And also add to it scholarships, scholarships, scholarships, scholarships. Buy Christina Ellis's book How I Got $500,000 to Go to College and Free Scholarships. Yeah, she did it, and, and she's out there talking about it right now. And of course, also work while you're in school. You put those things together, people can go to school with no student loan debt. And if you come out with a degree in mechanical engineering with no student loan debt, you're gonna own the world in about 4 years.

It's pretty crazy the advantage that this disappointment could give this kid. Otherwise, she's gonna spend the first 4 years after she gets out of school paying because she went to school where her friends went.

And that's gonna stunt her adult growth where she wants to buy a house and have a family and do all these things, and she's gonna feel trapped because she's got 150 grand to pay off.

Exactly.

So that's tough. It's a good reminder though that parents are not always—

I'm all about disappointing people for their own good. It's like what I do for a living. So because I love you and I want the 10-year-old, 10-year-from-now version of you to think that we were mean to you because we love you. We disappointed you because we love you and because we want good things for you. And I really don't care about your childish little emotions. You know, it just doesn't— I'm just oblivious to it. I'm old and grouchy. And so I just, I just want you to win. I just want you to win. I want this kid, man, the number one career of millionaires. And she's good at it. She's smart. And she's the oldest child and she's going to set the pattern for the next two. And you got the decisions you all make right now in the middle of all this and all the emotions that you all are all going to go through are going to be worth every bit of the arguments and the fights and the tears and the problems. It's just not fair. Well, fair is where the tilt-a-whirl and the cotton candy is. There's not a fair. Sorry.

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Well, we wish we could get to every call and every question here on the show, but there's only so many phone lines and so many minutes on the air. Air. If you got a question, head over to our website, use Ask Ramsey. Ask Ramsey is our free AI tool that's built and trained only on Ramsey content. So there's no TikTok or Reddit bullcrap in there. You're not going to get any advice except what you would get here. It's 3 years of this show dumped in there. All the books we've written are dumped in there and the thousands of articles that we have written that align with what we teach are dumped in there. And consequently, the thing answers the questions. It's almost as smart-aleck as I am. And so that's the way AI works, if you didn't know. It can only regurgitate the data set that it has. That's the only ability AI has. And so if you limit the data set, you limit the answers it gives. And these are only Ramsey answers, so you're safe. You don't have to worry about all the other stuff. Ask your question today at RamseySolutions.com or click the link in the description if you're listening on podcast or YouTube.

Ask Ramsey. Grand Rapids, Michigan. Christopher is calling. Hi Christopher, what's up in your world?

Not much, I just appreciate taking my call. So my question today is, I'm starting a brand new career, trying to rebuild my life pretty much from the bottom I'm down up. I just discovered your show and your information and started going through some of your books, but I'm in a significant amount of debt and a very low income at this point, starting a brand new career. I want to dig myself out of debt with a very limited income.

Okay. Why, if you have a new career, did you choose one that has a limited income?

Um, so I went into truck driving. Um, and I got my CDL and when I, um, was looking into the careers in my area, I was looking at, you know, bringing home $65,000 a year, but with my weekly pay and child support coming out, I'm bringing home significantly less than what I expected.

Um, you single?

My dad's been— I am single, yes.

Why don't you drive over the road and make 3 times that?

I— that's what I do right now. It's— I'm an over-the-road truck driver.

Well, you're not making $65,000.

Then?

No, no, I'm like, I'm at like 39 right now.

Now you make more driving over the road, not less.

Yeah. So, um, I'm an over-the-road truck driver. Um, just like first month into truck driving.

Yeah.

And I get raises every 3 months.

How much are they paying you a month?

Um, so right now, like, I bring home after child support is taken out, um, I make about $300 to $500 a week.

How much child support is coming out?

Um, $883 a month. I just got that lowered from $1,200 a month.

Okay, you, you, you need to go shopping on your career because you're not being paid enough to drive over the road. Over the road shouldn't be making a lot more than you make.

Yeah, and like, that's kind of like what I'm seeing right now.

Um, yeah, like, that's the lowest over-the-road price I've heard in I don't know when.

Yeah, and like, I went with a mega carrier because I didn't have the experience, um, necessary to get the like local jobs that are paying like $65,000 to $85,000 to $100,000.

Christopher, I'm sorry, I'm having trouble communicating with you. Over-the-road makes more than low local. Most over-the-road truck drivers we talk to make north of $100,000.

Yeah.

And you're making like $30,000.

Yeah.

Why? Entry level, you should be making more than that.

Not entry level. I mean, this is just— doesn't— I mean, it doesn't even add up. How old are you?

I'm 36.

Okay. All right. And how much debt do you have, honey?

Uh, $75K.

On what?

Um, so, um, I owe my mom $20,000. I have $25,000 in student I have a car that's way too expensive. It was a horrible decision at $34,000 and then $8,000 in credit card debt.

Great. So when will the car be sold?

I'm looking into how to sell it right now because I can't afford the car. Obviously, the car was a horrible decision. Yes.

How far underwater are you? What's it worth?

It's worth $22,000. $25,000. Who said?

Uh, just, um, looking it up on Kelley Blue Book for private sale or trade-in.

Um, private sales like $22,000 and then, um, trade-ins $22,000 and then private sale was $25,000. That sounds according to—

okay, all right, so you're $9,000 in the hole. Who do you owe this $34,000 to that you got screwed by?

Uh, Ally Financial. Till—

oh God, so you're paying 15, 16%, huh?

Yeah, it's a— it was a really bad situation. I really regret it. I wish I would have started listening to you much sooner in life.

What's the car?

It's a 2023, uh, GMC Terrain Denali.

Yeah, that dealer, they completely— they completely set you up and knocked you down, man. Oh God. Uh, uh, uh, uh. All right, so what do you owe your mom $20 grand for?

Um, because when I, um, I was working at a nursing home and then, um, like, I'll be honest, I have some mental health issues like bipolar, um, PTSD and something like that. And I was starting a new career at a new nursing home and I got behind on my child support and, um, I was in enforcement So, um, she helped me out with that and then I got caught up with, um, my child support and I'm currently—

so you didn't pay for like 2 years?

No, it was more like 6 months.

I thought it was $800 a month.

It was $1,200 a month.

Okay, well, 6 months times 12 is $7,200.

And I think I had like 1,200—

Did you serve in the military?

Uh, law enforcement.

Law enforcement. And that's what your PTSD is from?

Yes.

Are you on any kind of a disability from that?

Uh, no. Um, I, I've been really just working on trying to like really just get on my feet by working and like—

Okay.

All right, here's what, here's what I'm gonna do. You got a lot going on. Honey, and I'm gonna hook you up with one of our Ramsey Coaches that we have trained as a gift. We're not gonna charge you a dime for it, all right? And what I need you to do is I need you to get this car sold as soon as you possibly can. You're going to find the $9,000 to cover the hole you're in because Allied has completely screwed you, honey. And you got to get rid of this. The faster you get rid of this, the lower your pain is gonna be. So let's get rid of it really, really fast. And then the second thing I want you to do is I really want you to study study over-the-road truck driving out there. Go online and start seeing what people are paying for it, because you're— I think you're being dramatically underpaid there, unless there's something I'm missing in this equation. So I need you to get your income up and get rid of that car, and then develop a game plan on each one of these elements that we're talking about, and you'll be able to walk that through.

But I need somebody to hold your hand and do that more than we can do on a phone call, okay?

And cut up those credit cards if you still Got them. Yeah, for sure, because that's just gonna allow you to go further into debt, which is gonna make this—

when you're on the road and, you know, you get, you know, something isn't matching up just right, and you go in, then you get by, buy whatever you want to buy to feel better that day on a credit card. It's not a good idea either. So you got to clean those up. George is exactly right. So you hang on and Christian will pick up. We'll hook you up with one of our coaches as a gift because it sounds like somebody needs to hold your hand a little bit and help you get up, get, get straightened around on a couple of these things. But the two big things you've got to do, you got to get rid of this car. Three things. You got to cut up the credit cards, you got to get rid of the car, and we've got to get your income up. And the first place I'm going to look is I don't understand why you're so dramatically underpaid for what the typical over-the-road driver is making right now. So I want you to understand what's going on there. I, there's something that I'm missing in this puzzle piece here. In this phone call, but it's out there somewhere.

You'll be a new man. If you can get rid of that car and get your income up, you're gonna be able to breathe. Now we can knock out the rest of this debt in a reasonable amount of time and get our life back.

And in the process, as you're with your therapist working on PTSD and bipolar, work on decision-making frameworks with them, how they help put you putting new pathways in your brain in place to help you make quality decisions because you've been bumping around between some bad ones lately.

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The Ramsey Show question of the day is brought to you by Yrefy. Missed private student loan payments put you in default, and they can keep your budget stuck in neutral. Yrefy helps borrowers explore low fixed-rate refinancing and payments based on what you can afford, so you can start moving forward. Visit yrefy.com/ramsey. That's the letter Y, R-E-F-Y, dot com slash Ramsey might not be in all states.

Today's question comes from Stella in Kentucky. I entered a sweepstakes for a cruise to Paris and the French countryside, and to my surprise, I was the winner. The only cost to us is airfare and hotel stays before or after the cruise. My husband and I didn't have a honeymoon, and this feels like a once-in-a-lifetime opportunity. The holdup is we are in Baby Step 2 and don't have any extra savings for travel. Friends have suggested getting a credit card just for this trip trip, but we both feel uncomfortable with that. Part of me knows that I should just take the win as a cool thing that happened but not financially smart to partake in, but the free-spirited side of me is devastated thinking about losing this opportunity. What should we do?" I don't love being a dream killer, but I'm about to kill the dream, Stella. I would not go on this cruise, because it ain't free if it costs you $10,000 in airfare and hotel stays while you guys are in in debt. That's one man's take.

Yeah. So the great news is France will still be there.

I hope so.

And you can go later. They're not gonna move it. It's still gonna be there. There'll still be cruises, and better ones than this one. This one sounds like a setup. Ben is in Nashville. Hi Ben, how are you?

Hello. Hey Dave, I'm doing well and I'm really excited to talk to you. You're the man.

You too, sir. How can we help?

Well, I'm 28 years old. I just got engaged. Yay!

When you getting married?

Well, that's kind of the big question, right? We really want to get married and I'd love to do it as soon as possible.

Good.

But I don't know if I should get debt-free first. No. To start our marriage off on the right foot.

We never tell people to get out of debt before they get married, ever, or have babies.

Right. Even if the, you know, the wedding could cost, you know, even on our budget wedding, we're kind of looking at like maybe like $10,000 or $15,000.

Yeah, so what?

That's reasonable. Are you guys being frugal?

You ain't getting any help paying for it? You got to pay for it?

I got to pay for it, and that's what's making me a little nervous.

Okay, what do you mean?

How much do you make?

Uh, so this year I'm in sales and I'm going to be making, I'm on track to make about $100,000.

Cool. What's she make?

Uh, she makes just about like $30,000 right now. She's serving, she's a waitress.

Mm-hmm. And how old are you guys?

Um, I'm 28, she's 25.

Okay. And how much debt do you have?

Well, it's consumer debt. Um, so I've got about $18,000, um, on the, uh, the automobile. Automobile loan, and then I've got about $7,500 in credit card debt, which I am fixing to pay off actually next week. I've got my bonus check coming in. $7,500 in debt, and the bonus check will be around $9,000.

Awesomeness. Fantastic.

Very cool.

And then you've got a car payment left, and what debt does she have?

Her debt's a lot smaller than mine. I mean, she just owes a little bit more on her car, so hers is about, I think, like $1,500. $1,500 that she owes on her car, and we wanted to tackle this credit card debt first and then take care of her car loan and then, you know, start chipping away at the principal on mine.

Okay.

Well, what I would do if I woke up in your shoes is I would pay off the credit card debt and her car debt with your bonus check. I don't usually have you pay somebody's debt that you're not married to, but it's $1,500, it's not the end of the world, so we're done.

Okay, right. And I love her, man.

I'm excited to marry her. I still wouldn't pay her debt. No, if it was $15,000, the answer would still be no. Okay, so, but, and then I would just pay your car payment, and both of you get on as tight a budget as you can get on and stack cash for the wedding and set your wedding budget at $10,000. And when you got $10,000, make it work. And you should do that by like September Okay, yeah.

Do you think, do you think that just like setting aside like bonus checks and stuff?

I think you should. I think you make $100,000 a year. Shut up, quit going to restaurants.

What are your expenses as a single 28-year-old guy?

Well, rent right now— yeah, how much is rent right now? Is about $1,600. Okay.

Oh, she's making $30,000. She living with her mom and Dad?

She—

no, she does live with me, which I know is against the Ramsey rules.

You're definitely— yeah, okay. But stack cash. Each of you stack cash as high as you can stack it, as fast as you can. With $130,000 coming into the two of you, you should come up with $10,000 very quickly and have a budget wedding, and it's gonna be awesome.

Yeah, what do you— I mean, what do you recommend? Because, you know, I think with the—

call it a minute, I'm gonna change my mind. I'm gonna change my mind. I'm I'm sorry, I got new information and I didn't process it fast enough.

That they're already living together? Yeah, get married this weekend.

That's the one.

I knew it.

Dave loves a little courthouse wedding on a weekend.

And then, uh, and then I want you to have a celebration that costs 10 grand in September.

Okay.

Um, you know, that's combined your lives because you already have—

wait a minute, what are you saying, Ben?

Well, that's something that we've talked about, and, uh, I gotta say, she looked really upset when I kind of said maybe we could elope. I think she just she has that dream of like—

She moved in with you.

Yeah.

This is not exactly a white dress we're walking down the aisle in, okay? We gave up the little Barbie and Ken wedding a while back when we decided to shack up. Y'all do what you want to do, but I— there's no way. I'm getting married this weekend. If you're going to get married, you're going to do this, and I think you are. That's what I would do if I woke up in your choose. Because you're playing house, and the longer you play house, the more trouble you're gonna get in. And you're gonna call— you're gonna get yourself in all kinds of messes.

So, and anecdotally, I found that people that are living together before they're married, it takes them so long to actually end up getting married.

They can't seem to get off the ladder. They just keep painting.

Just an 8-year engagement.

Just get off the ladder. Better. God, yeah, it's just— yeah, when are we getting married? I don't know, someday. We're not gonna have the perfect wedding. Meanwhile, we're just acting like we're married.

Yeah.

No, I'm sorry, Ben, I have very little patience for that. I'm sorry her little girl dreams disappeared, but she gave them up a while back. She signed up for a different trip than the one she had when she was 8 years old in her head. So, um, yeah, I— you know, now we're down to making adult decisions with adult money in adult situations. So that's what I would do. You guys do what you want to do, but I think you can have your celebration with $10,000 and not have your car paid off. And no, we don't make people get out of debt before they get married. We want them to be in agreement that we're not going into debt going forward and in agreement on how we're going to handle our money after we're married before you get married. But, you know, we've had people call up and the girl says, "Well, he says he won't marry me until I pay off the debt." And I'm like, "Yeah, get you a different boyfriend." marry him. Yeah, and so, you know, you don't get to give me a task. It's not how this works, buddy. So, you know, that's me.

That's not Ben's situation, but we get those all the time. So we don't do that. And the other one is the babies. You know, babies don't cost as much as everybody talks about. They do cost money, and you do need to be responsible. And if you're broke and on welfare, you don't need to have 16 of them, okay? But deciding to have a baby and you got a $27,000 student loan, have the baby for goodness sakes. You can get out of the student loan debt. Don't wait around on babies. Have babies. Babies are the best things you can do. And do that after you're married, by the way. Hello, there's a success sequence that we talk about here on the show all the time. It causes you to win financially as well as in a whole bunch of other areas of your life, relationally and everything else. So, whew. So Ben, the bad news is The bad news is we're not gonna be real popular with your fiancée. The good news is we did tell you to get married now, so maybe she'll like us a little bit anyway. And we didn't tell you to wait to get out of debt to get married.

And we didn't even tell you to sell your car.

That was very nice of you, Dave. I was waiting for it.

I thought George was gonna jump in.

I actually was kind of like, "If you really love her, sell the car. If you really want to be debt-free so badly before you get married, go ahead and sell this car." But we're also saying you don't have to be debt-free.

You just have to be in agreement on it. And then as soon as September's done, and the celebration is done of the wedding that actually happened back in July, then we lean in on the car and we pay for it very, very quickly. And that's the plan.

No, he's in Nashville, so you come, you get married this weekend, come by next week, I'll give you a wedding gift. How about that? Sure. Come by the studio.

What are you gonna do, give him a copy of your book?

Yeah, I'll give him all your stuff, whatever he wants out here.

All my stuff?

Yeah, it's on your tab.

Well, we'll give him some of yours too.

Fine.

All right. Welcome back to the Ramsey Show and the farewell Wins Credit Union studio. I'm Dave Ramsey, your host. George Campbell, Ramsey Personality, is my co-host today. Jessica is in Raleigh, North Carolina. Hi Jessica, how are you?

I'm doing well, and you?

Better than I deserve. What's up?

So I am a single mom of 3, ages 13, 11, and 8. Um, I have my children 100% of the time. Um, and their dad passed away last year. So I started receiving, um, like Social Security funds for them, death funds for them from their dad's Social Security. And so I changed jobs and careers last year as well. So I doubled my income, making around $40,000-$45,000 a year to bringing home close to $90,000 a year.

How old are you?

How old are you? I'm 38.

What happened to him?

Um, and I was divorced and, um, single for the last 6 years. I've recently started dating the last 2 years. Um, but I've always been responsible.

How did he pass away?

Um, unexpected. I did not know he was using drugs. Um, and ended up giving him a heart attack and he died in his sleep.

Hmm.

So how are the kiddos doing? Do they have much connection with him?

They did, but they didn't. They saw him every other weekend, um, but towards the last few months of their visits over there— we live like 15 minutes apart— um, they were kind of getting a little bit separated from there. They just saw activity there. They just knew wasn't right.

Um, and so, wow, you guys, you guys have been through it.

Yeah, he, um, I just, I I've been the bigger part and the most responsible out of our relationship. We were married for almost 10 years. Sure. He walked out from an affair and, um, he stopped paying child support roughly in '21. And I was—

so how much do you receive in Social Security benefits?

There, that's where I'd like to get to. So I received close to $4,000 a month in Social Security benefits for them. And I don't know exactly what I should do with this money, if it's to help pay off my debt. Ratchet. That's who I was thinking. Between my home, because of my income that I make myself, and then there's— I almost look at it as like child support in a way.

It's exactly—

I didn't receive through the time they were there.

Replacing his income, and his income was being used for child support, and Social Security replaced his income. That's what it's supposed to do. It's not supposed to go into trust for the children in their future. Meanwhile, they starve to death. So it costs more than $4,000 a month to raise 3 kids, including food, electricity, shelter, gasoline to take them to school, clothing, and so on. And so it's going to take that and more to raise them. Agreed?

Agreed. Yes, sir.

Yeah, that's it. So it's your money to use for your children, and you're a good mom, and you're going to use it for your kids.

That's really helpful. I sat down with my FPU leader last summer to help budget this out when I started receiving this stuff, and I just kind of been letting that money pile up and use it here and there. And I've got about almost $30,000 sitting there. So I was like, do I use this to pay off my debt? Because I have, I'm now as of today paid $56,000 in debt since last summer, and I've got $125,000 left.

Wow, my heart's going wild.

Ready. Um, I only have, uh, $30,000 in student loans left. Um, I actually tried to start a food truck business about a year and a half, 2 years ago, and it— I ran it for about a year running 3 other jobs trying to just make ends meet for me and my kids, and I couldn't keep running myself ragged until I got this position last year with, um, a friend.

$30,000 in student loans, $125,000 in debt. So what is the other $90,000?

$35,000? Um, I got a HELOC loan for the business that I tried to do. That's at $40,000 right now. And then I purchased an SUV last fall because of having 3 older children. A small car was just kind of getting a little bit too tight fit for me. And having 3 kids—

And how much do you owe on the SUV?

$53,000.

Okay. You can't afford that SUV.

Fee, honey.

Okay, you don't make enough to pay that. Okay, you make $44,000 a year, you don't need a $55,000.

No, no, no, no, no, no, no. I switched from making $44,000 a year and I bring home close to $90,000 now.

Oh, okay.

I'm making— I'm bringing home at least, uh, $8,000 a month now.

Okay, plus the, the Social Security.

Plus the Social Security. Yes, sir.

Well, let's recoup. I mean, if you want to keep that car and fight your way through it, you can. I personally would sell it and move down. I think it's too much car. It's not way too much anymore now that we changed the numbers, but it's too much. And I don't want you to ever emotionally justify going into debt again.

Right. Yeah, I don't want to. My goal is to get out of debt.

No, you took FPU and then you went and bought a $53,000 SUV. You're not getting out of that one alive, okay? I'm coming after you.

Understood.

No more. No more. You gotta stop that. Okay, because you're gonna kill yourself. This is not good. You gotta stop it.

Think about it this way, Jessica. If you did sell that car, unless you downgrade it to a $20,000 SUV, it gives you $33,000 in profit if the car is actually worth $53,000, right?

No, she owes.

You owe $53,000, so you sell it and get a car.

I owe $53,000.

How much is it worth?

Um, I think on the market right now they all run right around $60,000.

Okay, so you got $7,000 in profit plus you have $30,000 in savings.

Savings.

So now you can get you a nice SUV still and have money left over. You freed up the car payment, which is how much?

It's right at— it's $983, so $1,000.

It's got a raise right there.

Yeah.

And now you can actually knock out this student loan debt.

And I would do that. I'd be in a $20,000 SUV that was paid for within 2 weeks. I really would do that. But overall, that— back to your original answer— is it takes makes— the Social Security is there for the good of the children, and it's not the good of the children's future, it's the good of the children. And so as long as you are spending your— the equivalent of your child support or the equivalent of your Social Security payments from your ex-husband's death on your children, then you are morally and ethically just fine. And I would just put the $4,000 in your budget, and I would get out of debt as fast as I can and don't make any more of these emotional purchases, um, that, that you emotionally justify with debt.

And walking through the Baby Steps, there's a time and place to invest for those kids, especially for their education, and that's in Baby Step 5. So Baby Step 1, $1,000, you have that. Baby Step 2, let's knock out all this consumer debt. Baby Step 3, let's stack up that emergency fund to 3 to 6 months of expenses. Baby Step 4, we begin investing 15%. So if you're investing now, let's pause that until you clean this mess up, then we can start using this money to put away for college in a 529 plan, and that will really set them up. That's some of the best way you can use this money, because you're now— you're really prepping for their future if you can clean this debt up.

I am very proud of you the way you went and got more income to make sure your kids are taken care of. You're a warrior princess.

You tell people, Dave, just go double your income, and people go, you can't do that. She did it as a single mom of 3.

She said, I've got to have more money to do this, and she went and got it. So good Good for you. Good for you. And you've stacked the cash, you haven't blown it, so you got $30K laying there. That gives you some options. If you don't do what George said to do on the SUV, at least throw the $30K at the debt and let's get it cleaned up. Let's get this debt paid off, okay? But I would do what George said to do. I think he's exactly right. Thank you, Jessica.

Hey guys, George Campbell here. You ever feel like you make good money and still have nothing to show for it? You run into Target for one thing and somehow walk out $87 later with toothpaste and emotional support candles. Just me? Okay, well, that's the problem. Most people don't pay attention to how they spend their money, so it does whatever it wants. And that's why we created EveryDollar. It's a budgeting app that helps you create a simple plan for your money. EveryDollar's simple, it's clear, and it helps track where your money's actually going. Plus, you get daily lessons, to-dos, and reminders along the way. It's like having a money coach in your pocket. Your money's been freelancing long enough. It's time to give EveryDollar a full-time job. Go download EveryDollar for free on the App Store or Google Play.

Buying or selling a home is a big deal, so you want a professional in your corner. A professional is someone who sells a lot of real estate, not someone who sold 2 houses last year. So if your Aunt Gertie sold 2 houses and she has her license, she does not get to be your real estate agent. She's your Aunt Gertie. No thank you. You need to get a pro, somebody that sells a bunch of houses, like 30, 50, or 150, 200 houses a year. If you want one that has that kind of chops, high octane, high protein, you want a Ramsey Trusted Agent that we have vetted. And if you want to know who we vetted, you can find out for free at RamseySolutions.com/agent or click the link in the description or YouTube. All right, here we go. Chris is in Minneapolis. Hi Chris, how are you?

Better than I deserve, sir. How are you guys?

Just the same, sir. How can we help?

Um, well, first off, I want to thank you guys. Um, Ramsey has, uh, changed the future of myself and my family.

Awesome. Um, thank you.

And we are— yes. Yeah. Um, my wife and I and our 3 kids, um, we're on Baby Steps 4, 5, and 6 right now. And my sister referred some financial advisors to us. We've been using EveryDollar for a few years. We've been following the roadmap on the EveryDollar app. And I was just kind of curious to see how it measured up to what the financial advisors would come up with. And surprisingly, they were within about $100 of each other. Wow. Yeah. For our retirement. Anyway, so they were talking about something that they would recommend moving around. And one of the things they brought up was whole life insurance policies. We already have term life. And I know whole life is a bad word in the Ramsey world. When I asked them what their reasoning was, they glued themselves to the savings account with it. The scenario that they painted for us is we reach our retirement age and we're in an economic depression at that time, and to have an extra savings account that we could draw our monthly expenses from instead of touching our retirement account.

So their premises is that the life insurance company will be open and prospering, but the stock market will have disappeared. Disappeared?

That's dumb butt! Yeah, yeah.

Um, you understand the life insurance company holds the savings, right? And if the life insurance company goes kaput, you get zippy. So there— their set of assumptions is absolutely as asinine as their product. Okay, you knew you were going to call here and get this, right?

You didn't give them a dime of your money, right?

Tell me you didn't do it.

No, no, no, I did not. No, no, but my actual question is: Is there something similar? Should we be planning some kind of savings account on the side if that were to happen— you know, something that's tax-exempt, something that's just sitting there to draw from or...

Whole life is not tax-exempt. Whole life is only tax-exempt if it works; if the product works properly, you lose money money, and that makes it tax-exempt because it doesn't grow as much as it should. Your basis in a whole life policy for tax purposes is what you put into it. A lot of people don't even get out of it what they put into it, and there's no taxes. But if you get out of it more than you put into it, you pay taxes on whole life. So they lied to you. Okay, please get away from these people.

Yes, sir.

Now, now, back to your original question: how do we prepare for the Great Depression that could be coming? We don't. I don't have an atomic bomb financial plan. What happens if the Russians drop an atomic bomb on us? I don't have a financial plan for that. There's not a financial instrument that will survive that, because everything— in the event of a Great Depression, as many life insurance companies closed as other companies closed during the Great Depression. As many banks closed as anything else during the Great Depression. The FDIC was formed as a governmental body to insure the savings that's in a bank. The Federal Deposit Insurance Corporation. It's a quasi-government agency, and it's there to protect up to, I think it's $200,000, $250,000 per depositor now, per bank. Okay, but even that could collapse. Collapse. It's an insurance group run by the government. Hypothetically, it could collapse. Social Security could collapse. All of these things are math things that somebody's got to put the money up. Contrary to what the socialist believes, the money has to come from somewhere. It doesn't just magically freaking appear. So there's not— I don't— I do not have a plan for my wealth in the event that the American economy collapses?

Because I don't have a plan if it collapses. I buy bullets and water if it collapses. And by the way, I have bullets and I'll just need to get sure water, I guess. But, you know, that's the thing. So, you know, you fall into that situation, but you can't plan for that. And when someone starts selling you a product based on the collapse of the economy, you should look at what happens to their business in the event of the about economy collapsing. That's how dumb-butt this whole thing is. You should buy whole life because life insurance companies will be just fine if the economy— bullcrap!

Every business will go down except them.

Somehow they'll be the only ones standing. Pacific Life, the whale, will make it. You're killing me here. You're killing me. That's so dumb.

Fearmongering to make their commission is what's happening. So the chances of that—

I mean, please, do not take any more advice from What's the worst we've had, Dave?

You know, -38% during the 2008 crisis. That's in the last 50 years. That's been the worst. And the market was—

almost 100.

It was up 23% the next year.

Yeah.

So the chances of this being a real issue for a young guy like this who's investing for the long term is zero. Get out of debt.

It's not zero, but have an emergency fund. If you can't bet on the American economy, there's not a lot of other bets. There's not a lot of other things. I mean, you know, if you don't think real estate's gonna go up in the next 50 years, where were you in the last 50 years? You know, what'd you miss out on? How'd you miss that? You know, of course it's gonna go up. And if you don't think the stock market's gonna go up, just look at what it's done. Look at what it's done. And the stock market actually is companies that you buy from every day. It's Home Depot and McDonald's and Coca-Cola and Dell and Apple. And you buy their stuff every day. You give them your money and that makes their company more valuable. Valuable and their stock goes up. It's called the American economy. It's how it works. And so that's what we're doing. Oh God, this is so—

I'm just angry.

I'm not angry. I don't get angry with Chris, but those people just lie.

I don't know how it's still legal that they position themselves as financial advisors when they're really just insurance salespeople.

It's crazy. Whole life agents, but that's not financial advisors.

For anyone listening, if they're going, hey, whole life is a great product, if your financial advisor says that, need to run.

Please, how quickly can I get out of the building?

That's wild.

It's just like you go into the car lot and they go, hey, we got these payments for you, it's only 24% interest. How quick do you run off the lot? You're getting screwed. How fast do you run out of there like your hair's on fire? You get out of the building. You mean when a company, an organization, is trying to screw you, the last thing you do is you take, okay, so that portion of what they said might not be right, but we can trust the other portion of what they said. Well, that's illogical.

They are now untrustable.

Once I have established that you are a crook, you is a crook. And so you is a crook, is a crook, is a crook. We are done with you. That's it. We don't do crook.

And the reason they push it is very simple. They make the most money by pushing whole life on you. They're gonna make close to nothing giving you a term life policy compared—

or when they— when a sander tells you— sells you a term life insurance policy for $1 million, they make about 5% of what these whole life guys do selling you a $400,000 policy. I mean, the, the premiums, the commissions on these things are just astronomical.

Hundreds and hundreds of dollars a month.

They're just over here licking their chops and your poor sister Chris, she got screwed and then she sent you over there.

Sounds like she needs to cancel a whole life policy.

Thank you. Like a goat. Oh my God.

You spend hours researching before making a major purchase like a home or car, but it's also a good idea to put in the work searching for the right insurance coverage. To protect your biggest assets, I recommend using Ramsey Trusted Pros. Whether you're looking for car, home, or any other type of insurance, Ramsey Trusted Providers have been coached and vetted to serve you like we would. Find what you need at ramseysolutions.com/insurance. Britt is in Santa Fe, New Mexico. Hi Britt, how are you?

Oh, what an honor it is to speak with you, Mr. Ramsey and Mr. Campbell. This is unreal.

We're honored to speak with you. How can we help?

I have to thank you first that I've been a stay-at-home homeschooling mom to 3 kiddos. And when I left the workforce to be home with my babies, oh, it was beautiful. But part of me really missed adding to our family financially. So listening to your show and reading your books really gave me financial purpose, even though I wasn't making that money anymore. And I purposely, purposely steward it and manage it well. And I'm just so grateful for the gift that you've given us.

Thank you.

After 8 years of doing that, we're officially weird. We paid off our house and we're almost, uh, baby step millionaires.

So we're just way to go.

And you did it all while homeschooling the kids by you. Look at you. Well done.

Yeah, the hard work of my husband.

Absolutely. Well, you did some hard work too, sounds like. Good, good for y'all. Well done.

Well, my question today has to do with receiving a monetary gift. My parents are absolutely amazing people, and they've worked ridiculously hard their whole lives, and they've built an incredible life for themselves. They've since retired a couple of years ago, and they're traveling the world, and they're spending their time with family, living their best lives because they've earned it. But they want to give my husband and I a sizable amount of money And I sure would like your advice about what mindset we should have about this. It's kind of overwhelming, but they're certainly undeserving of such a gift. And while I appreciate their generosity, I'm not sure how to receive such a gift or even if we should. So what do you think, or what advice could you give?

What does your husband make?

He makes about $170,000.

Way to go.

And how you guys are, how old?

Uh, almost 40, we're 39.

Okay, and how much is the gift?

It's about— made me fall out of my chair— $200,000.

Okay, all right. And I assume they're getting tax advice and will use the unified estate tax credit so that this is not subject to gift tax. Make sure of that.

Yeah, absolutely.

You've mentioned that before. Very wise.

Because otherwise you'll get— they will get hammered on gift tax, but I'm guessing they've got a large enough estate and they're wanting to move some of it out while they're alive and they use up some of their exemption. And that's probably not a bad thing at all. I don't mind that at all. So you're millionaires already. You make $170,000. You're in your 40s. You're mature. You're not some trust fund baby that's gonna be irresponsible. This just adds progress to what you were already doing, which was good stewardship and mature. So what would you do with the $200,000?

$200,000.

Okay.

Well, we would possibly move up in house. We've been saving to do that anyway, and we of course don't want to do that with debt, so we'd probably maybe—

What's your house worth?

Oh, we just paid it off. It's worth about $400,000.

Cool. So you move to a $600,000, make it $170,000. I like that. That's a good move.

Okay. So is it something that would be a wise thing to accept? Of course, there's no strings attached. I know that's always a question that you ask.

Yeah, that was the next question. But as long as there's no strings attached, yeah, they're not forcing you to do something specific with it, right? This is— mom and dad have millions and they want to drop a couple hundred on you while they're alive and watch you enjoy a better house. I like it. Okay, I think there's nothing toxic in anything you described, nothing weird, nothing strange. If you call me up and you were immature and you were overspending spending, then this gift is probably not going to change you to the positive. You already have proven yourself to be good stewards and handlers of money, so this just adds to your progress. And so this is what parents hope for is children like you all.

Wow, that's also hard to take in, but we are very grateful. Blessed indeed.

Yeah, go get them.

I'm proud of you. Such a rare call. Healthy people on all sides, no function, doing well financially.

Yeah, if you guys all start doing that, we'll probably be out of business, man.

That was the easiest call we've taken today.

It's not very entertaining. Oh man, no, the ratings will go down on our Jerry Springer podcast.

There was negative amounts of drama with that call. Too peaceful.

Way to go. Good job, Brit. Good job, Brit's parents. Good job, Brit's husband.

Everyone involved, A+.

Madison is in Huntsville. How are How are you?

I'm doing great. How are y'all?

Better than we deserve. What's up?

The question is, my husband and I have a business, um, we started in 2017, and our personal life, we're ready for Baby Step number 4. However, there's still a very large debt on a piece of equipment, um, in our business. And so my question is, where should I be really putting my money? Because that's a 6% percent interest on a very high-dollar piece of equipment.

How much do you owe on this piece of equipment?

It started at $750,000. Now it's at $330,000.

Okay. What is it?

It's a crane. It's a grapple saw crane truck. So we have a tree service.

And that's what he does for a living now. And what is he making on the business?

Um, usually we, I mean, as self-employed, I'm paying ourselves, but we usually— No, I mean the profit that you paid you pay taxes on?

What's your taxable profit on the business?

Oh, profit on the business? Um, about half of our gross. So our gross is $1 million, so we profit about half of that, $500,000.

And, and where does that $500,000 go? You pay taxes, and then where's the rest of it go?

Um, pay taxes, and the rest of it goes in the account. Um, and then like when we need to upgrade equipment, well, the business checking account.

Oh, I see. Okay.

Um, yeah, so where—

why has it not gone to— what— where is— if that's been happening for a couple years, why have you not just paid off the crane?

Well, we've only grossed that much the past 2 years.

Oh, okay.

Yes, yes. And we've—

so yeah, you should have— and you, and you shoveled a bunch of it home and took care of home debt.

We took care of home debt.

So what I want you to do now is shovel the minimal amount home to live on and get this crane paid off.

Okay. All right. Right now I'm doing the monthly payment, which is $6,400, and I'm doing—

I want you to put $300,000 on it and pay off.

Okay.

I don't want to hear about monthly payments. I want to pay it off now.

What's in that—

making half a million dollars a year profit, taxable income minus taxes, minus living expenses. You should pay that crane off this year.

Okay.

In a year.

Okay.

And then you're gonna make money like you've never seen before. You're gonna make money like you've never seen before.

Okay. And then start Baby Step 4 and investing for us, because we, we are not, and I just feel so behind. We just— you're okay.

You're making a half million dollars a year, you're gonna be okay.

I'm just worried about us and the kids and the retirement.

And I think you're gonna be okay. You're making a half million dollars a year. But listen, the crane is a destabilizer to the business, and so it's a destabilizer to the family as well. Okay, so the sooner we get that stinking thing paid off— and then in your business P&L, once it's paid off, I want you to be setting aside a percentage of your net profits every month for retained earnings, and that's business savings. Retained earnings are used in your all's case for 2 or 3 things. One, it's used for next equipment purchases in cash only. Never finance again, ever. Hear me? Never do this again, okay? You pay cash. You make enough money to pay cash for your upgrades and replacement equipment from the rest of your your life, okay? And just allocate 20% of your profits or whatever you want to set aside. Some percentage automatically goes aside for emergencies and for equipment replacement, and that's what your retained earnings are going to be used for, because that's the lifeblood of your business and it's going to keep it moving. And then take everything else home and get your home paid off and get your 15% going into retirement, and you're going to be multimillionaires in a matter of a decade if you follow all that.

But you're gonna stay right on top of it. You've done a good job managing the cash, I can tell, based on the numbers you gave me.

Yeah, you're on a great track. And I want to send them your book, Dave, Build a Business You Love, if you don't mind.

I don't mind.

Can I do that? All right, that's my gift to you on behalf of Dave. I want to see this business flourish. I want to see it scale and grow completely debt-free. And it's what we teach in EntreLeadership, and it's inspiring It's inspiring to see the business owners do it. People go, "You can't run a business with cash." And Dave goes, "Hold my beer." He did it. He still does it. It's pretty impressive. Good way to run a business.

Hey guys, Dave Ramsey here. Every day on this show, we help people work through real money problems and figure out what to do next. Now you can get that same kind of help anytime with Ask Ramsey. Ask your money question and get answers built on Ramsey principles we use on the show. Whether you're making a decision or just want something explained, Ask Ramsey is here to help. It's fast, simple, and free to use. Go to ramseysolutions.com and try Ask Ramsey today. That's RamseySolutions.com. Our Scripture of the Day, Luke 12:15, "And he went on to say to them, 'Watch out and guard yourselves from every kind of greed, because your true life is not made up of the things you own, no matter how rich you may be. Ronald Reagan said, the government's first duty is to protect the people, not run their lives. Oh, so refreshing. Where did he go? Come back, Ronald. Come back, Ronald. Mark is in Atlanta. Hey, Mark, what's up?

Dave, what's good?

All things, man. How can we help?

Hey, so a little situation. Um, I'm 26 years old, married, and, uh, my parents live in Arizona. They're in their 60s. Uh, recently my parents got scammed out of a lot of money. Um, a couple hundred thousand dollars of their savings, uh, lost.

Wow.

Um, no way to get it back.

And what was the scam?

All of them putting a lot— go ahead.

What was the scam?

Uh, my dad is a business owner. Um, the scam, he was looking on Indeed for side hustles, and it was some sort of side hustle where you put X amount of money in and they quote unquote— you saw a return on investment of— you put $1,000 in, and in his account, uh, or so it looked, there was $2,000 there after he put $1,000 $1,000 in. So he ended up putting a lot, uh, a lot in. And, uh, the only reason we found it out was because he called me and, and said, hey, this is my goal, I need a little bit more, would you be willing to help out? And, uh, it just went down this rabbit hole of us finding out what was going on and how deep they really were.

So he had never made a withdrawal?

Correct.

He only made deposits and saw a number of coming out. He saw a number on a report but he never made a withdrawal.

Yep, exactly.

That's a Ponzi scheme, old-fashioned. That's like Madoff. Yeah.

Wow. Yeah.

And so FBI is involved, I assume?

FBI is involved, uh, local, uh, yeah, the whole thing.

Yeah, money's gone.

Money's gone.

And what does your dad and mom make for a living? How much do they make a year?

They may—

they've made about $120,000 a year. That has slowed down. My— they are not in the best health, and so I would expect closer to $100,000 or less this year.

Wow. How can we help?

So here, here's the— here's the question. There might be a couple questions along with it. But my wife and I, we've been extremely blessed. We, we make about $55,000 a month. We have a home in Arizona that we owe $180,000 on. We've been paying it off quickly. We don't have any other debt, and we have offered to let my my parents stay at that home in Arizona. We're gonna be paying it off in the next few months, and they can stay there rent-free, and we're not worried about it. It's a home that we bought, and then company moved us out to Atlanta.

So, and so what's your question?

We didn't— the question is, my parents are currently living in a home that they own. They owe about $400,000 $121,000 on it. It's worth about $731,000. Should they sell their home and pay off the about $131,000 of debt that they have and stay at our place rent-free? Or should they stay at our place rent-free, rent out the home that they own, and chip away at debt?

They should sell their home and move into yours. And you're gonna keep the home in your name? Name, but you're going to allow them to live there the rest of their lives debt-free and no payments, no rent, rent-free for the rest of their lives. They're 60 years old, so for 25 years you're going to be okay with this?

Yep.

And your wife's going to be okay with this?

Yeah, we've, uh, we, we've talked about it, and, uh, of all the solutions that we could come up with, uh, this, this sounded like the best option. I didn't watch her.

It's conditional. It's conditional. For me. My gift is conditional. I want you guys to continue to work, and I want you to pay $2,000 a month into a good mutual fund to build your nest egg instead of paying rent. And if you're not gonna do that, you can't move in.

Okay.

I don't need the money. I want you to do it for you. But you need to pay money for where you're living, and I just want you to pay it into an account for your nest egg and you sit down with a SmartVestor Pro and have them help pick out some good mutual funds and set up an account. And I'm going to help you, but with my gift, I'm going to require something that you do, something that's good for you, not for me.

For sure.

And are you going to cover all of their bills? Utilities, taxes, insurance, maintenance, lifestyle, groceries?

No. They can stay at the house. They will cover the bills. They'll cover the electric, the water, water, everything that comes with the house, they will be covering.

They'll cover the insurance and the taxes?

Insurance and taxes, uh, good question.

I'm saying this to make sure that you're very clear with them.

Yeah, who's got what is important. And if they're going to be paying the taxes and insurance and you're the owner, you need to get verification once a year that that bill is paid.

Got it.

Because otherwise you're going to get foreclosed on for back property taxes one day 5 years from now and not see it coming. It could happen. Yeah, I mean, lots of things in this story happened that we never thought would happen. But for sure, what do you do for a living?

I, I sell, uh, I'm a door-to-door salesman. I sell window replacements.

And you're making $600K?

Yes.

Very well done, sir. Proud of you. Wow, it's amazing.

I didn't know there was that.

You're really taking care of your parents fabulously. Congratulations. Congratulations. I'm happy for you. I'm happy for them. Yeah, but I would put that condition on there and that they do something for themselves. And they can make $100K and they're in their 60s. Just keep working. You got scammed, keep working. Put the money back. $2,000 a month, how fast would they have the $300K back? I mean, $24,000 a year for 3 years at 75, they'll probably be pretty close in probably 3 or 4 years out of their money back.

And it'll double every 7 years.

Mm-hmm.

Yeah, so that's, that's not bad. I'll create a little bit of a nest egg because there's gonna be a day where they can't work if they're in poor health, and you got to be ready for that. What happens then?

A free house doesn't cause you to be able to eat.

Yeah, so you need to be ready to—

yeah, they're on poor health now, he said. But, um, wow, Mark, that's, uh, that's scary. It's a, it's a scary lesson for everybody out there to learn on the scamming that goes on. Adam is in Knoxville. Hi, Adam, what's up?

How you doing, brother?

Better than I deserve. How can we help?

Uh, I've got a question for you. Um, so as, as I'm growing in my life, uh, and I've got 3 small children, and I'm wondering whether to invest in good memories today with, with the money I have invested in today, or do I invest in me and my wife's future.

Yeah.

When you were a kid, what's the fanciest vacation you went on?

Uh, I went to Myrtle Beach in North Carolina.

Do you, do you, do you see a therapist for the child abuse that you received?

No.

So your parents, your parents didn't spend a lot of money on experiences? Myrtle Beach ain't way up there.

It's not way up there. If you look at my—

and you turned out okay, and you're not mad at mad at your dad?

I never knew my dad.

Well, you're not mad at whoever took you to Myrtle Beach. Okay, so, you know, you turned out okay. So I do want you to spend some experiences, but let's not live in the land of this is what makes children into wonderful adults because Daddy took— Daddy took them to Disney World and spent $500 million every summer.

That's bullcrap. Retirement— now he's broke in retirement and we have to pay his bills.

What turns children into wonderful adults is a good dad that loves them and is there for them, a good mom that loves them and is there for them. And yes, we do do some things with experiences with the money, but we also save for our future so you don't have to take care of me when I'm old. You should be taking care of your own kids instead of me. And so you got to do both. That's called being a grownup. But don't get over on that camp where experiences are more important, where we're going to be irresponsible about our future.

Nah.

Mike My first money experiences were a tent at a lake. That's what I remember. That's why I remember it fondly.

And now you're glamping.

And now I don't do that anymore. That puts this hour of the Ramsey Show in the books. We'll be back with you before you know it. In the meantime, remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus.