Transcript of Short-Term Pain, Long-Term Peace

Brought to you by the EveryDollar app. Start budgeting for free today. Normal is broke and common sense is weird, so we're here to help you transform your life. From the Ramsey Network and the Fairwinds Credit Union studio, this is The Ramsey Show. I'm Dave Ramsey. Jade Washaw, Ramsey personality, number one bestselling author, is my co-host. Today, Daisy is in Austin, Texas. Hi Daisy, how are you?

Good, good, good.

What's up?

So kind of nervous. So I'm just calling, I'm gonna just read out the question that I have right here. So my husband and I are overwhelmed with financial— financially, with having a mortgage, vehicle payment, credit card debt, and the biggest part is a large SBA loan. They send it to Treasury. We're considering bankruptcy and have also talked to some attorneys. They suggested bankruptcy, do Chapter 7, but we just wanted to see what is our best option? What is our best choice we could do first? Hmm.

Well, asking a bankruptcy attorney if you're bankrupt is like asking a dog if it's hungry. 100% of the time, the answer is yes, okay? So we'll start with that presupposition. And so you have a business that failed?

Yes. So the business is under my name. Um, and then we like switched it to my husband's. And after that, like, um, it's just not going right with the business. So it's really hard for us to pay it off.

What did you borrow?

Has it been closed? Is it closed?

Um, the business that was under my name, yes, it's closed. Um, that was that.

That's what the SBA loan was for.

Yes.

That's for the SBA loan. And how much do you owe on the SBA loan?

$178,000.

And do they have a lien on your home? I assume.

Uh, no, no, because, um, I don't know, like the attorney that I talked to, they said that, um, it's pretty much, it's considered kind of like a personal loan because I was not an LLC or corporation.

Oh yeah. But they usually take a second mortgage position on your house. You sure they don't have a lien on your home?

No, no, because at that time we did not have a home. We were renting. Okay.

And you were able to get a mortgage after the fact? How much do you have to pay every month on this SBA loan?

Uh, we were paying, uh, $584 each month for 30 years, but like Kai said, we, we weren't able to pay it off, so we stopped and it's in Treasury now.

Yeah. What kind of, um, what kind of business was this?

It's like hauling sand, gravel, an end dump truck. We have 2 right now that are right now working. But like I said, the money fluctuates. Sometimes there's work, sometimes there's not.

Wait a minute, you said you had a dump truck and what?

Yeah, it's an end dump truck. So it's like 18-wheelers.

Okay.

Where is it?

You said it's still in operation?

Yes, my husband's the one that's doing it now, the operation.

And so what is owed against that other than the SBA loan? Nothing?

No, no, because we paid them off. We paid off the—

So what is the— what's the, uh, what's the 18-wheeler rig worth?

Um, so let me have it right here. Okay, so there's a Peterbilt. Um, it said— I looked it up and it said like $30 grand. It was worth, and then we have a Freightliner. It says it's $20,000, but that one is not working. And then we have a, let's see.

What's wrong with the one that's not working? How much would it take to repair it and sell it off? Maybe.

Maybe like $10,000 or more to repair it.

And then you've got, what other equipment have you got other than those 2 tractors?

We also have Well, the other ones are like just under his name. They're not under mine, but we have also a Freightliner, and that one, um, we got it for $550,000, but I guess the book says something else. I don't, I don't remember how much my husband said.

What does the book say you can get for it?

I don't, I don't know. I didn't— like, he told me, but it just didn't stick in my head. I was just thinking about the model.

I mean, did you say $550,000?

What? Yes. Yeah, because it, um, they— it was broken down, so he fixed it. My husband's very manual. He's—

I'm sorry, $550?

No, $5,500.

Oh, got it.

Now, if your husband is good at— if he's good at fixing, can he repair the, the one that needed the $10,000 repair? Can he do that with his hands?

Uh, no, because he'll have to get like— I don't know if it's an engine or— I don't know, none of that stuff. But, um, it'll be like $7,000.

What else do you own?

We also own a 2018 ArmaLite, and that's the end-up that's worth $31,000. And then we have another trailer that is worth like $60,000. That's how much we got it for.

Okay.

So there's a lot of equity here that if you sold these things off—

And got a job. You'd figure out this SBA loan.

Yeah, but like I've been trying to do the math and stuff, and we also, I have credit card debt.

How much credit card debt do you have?

My husband has $12,000. I have $6,000.

Okay.

Um, that's not very scary.

The credit card debt is not scary on your car.

Okay. So there's one car, it's a $50,000, and that one, he, he needs it for the semi-trucks, like to haul everything. And he also has another side gig that he's doing landscaping. So he needs that one. And then, uh, we have, I have it right here.

What kind of truck is it? Is it just like an F-150?

Like Okay, so Daisy, let me stop you. I, um, I've been where you guys are and I know how scary it is, okay? But, um, when you are calling about bankruptcy, you don't get to say, I have a side hustle with a $50,000 car.

Mm-hmm.

You sell the stupid car and you get a job. So what I would do if I woke up in your shoes is I would sell everything you own. And then you're not bankrupt. And get a job. He's got a CDL. Get a job driving a tractor-trailer. And you get a job. Have you got a job?

Yes, I also work and I have 2 jobs.

Okay, what do you make?

I'm a paraprofessional and I make $26,000 a year. And then I work in another job and that's like maybe like $3,000 to $5,000 on the side. 'Cause like I do sometimes weekends and then the summertime I work more too. All right.

And so if he's driving truck and you're doing those things, Whatever the sale of all of these items doesn't cover, you can work your way out of. And so I got $50,000, I got $80,000, I got $90,000, I got $150,000 worth of crap to sell. $150,000 worth of crap to sell. $150,000 worth of crap to sell, and sell the stupid car he's got. You guys just justify buying anything you want to buy on payments and call it, I'm in debt, but I can't sell it because I'm in business. No, your business is broke. You went broke. You lost everything. And so you get the opportunity to start fresh with nothing by selling everything. So when Treasury calls and you owe $178,000, if you offer them $150,000 as settlement in full, because I've got that in the bank because I've sold off all this crap, they'll take it.

Mm-hmm.

And you won't be bankrupt anymore. You're not bankrupt. You're just trying to hold on to everything.

Yeah, that's for me. Uh, like I have told my husband, I don't, I don't care. I could sell everything.

Like, I don't want to— Listen, honey, they're going to take everything from him if he doesn't sell it and give it to them. That's how this works, including bankruptcy. When you file Chapter 7 bankruptcy in Texas, you don't get to keep $180,000 worth of stuff. They don't. That's not how this works. And I'm going to blow off all the debt and keep all this tractor trailers. No, they're going to, Sell all that at a bankruptcy auction and apply it towards your debt. So you might as well do it and not file bankruptcy. Most people spend years changing their money habits but never think twice about how their bank probably works against their values with nuisance fees and endless debt products. If you're being weird by sticking to the Baby Steps, you deserve a bank that helps with that. That's why Ramsey partnered with Fairwinds Credit Union. They built the Smart Bundle specifically for Ramsey listeners, not for everybody else. And it includes up to 10 high-yield savings accounts, so you can set up different funds for different needs and goals. And now they've introduced the Live Like No One Else debit card. The original Debt Is Normal Be Weird debit card is still available too.

And every time you reach into your wallet, your card is a daily reminder that you follow A different path. Listen, if you're living like no one else, your bank should back you up. Check out the Fairwinds Smart Bundle, including the all-new Live Like No One Else debit card at fairwinds.org/ramsey. That's fairwinds.org/ramsey. Insured by the NCUA. Katie's in Savannah. Hi, Katie, how are you?

Hi, I'm good. How are you?

Better than I deserve. What's up?

So at the same time as my husband and I decided to take our financial health seriously, I also decided it was time to get physically healthy, and I have lost over £50.

Way to go, Katie!

Good for you.

Discipline begets discipline. When you do a You can also count calories, huh?

The thing is, when I was budgeting, I forgot to save up for clothes because I forgot that my body was going to change. Yeah.

Thank God.

And all of a sudden I tried to get dressed and, um, my pants fell off and I can't wear any of my clothes in public while being appropriate. Um, we are paying a large amount of money towards our debt every month.

Good. Realistically, Um, so what kind of a budget do you need to buy skinny clothes?

Yeah, I feel like it's reasonable to spend like $350. I mean, but the only thing I can wear is my socks. Like, $350 one time, probably, just to get me through until we're done with the Baby Step we're on.

I think that's very reasonable, Katie, that you can Do you? That you can replace a whole wardrobe with $350. I think you're being real frugal. I think that's excellent.

Super frugal.

I am very cheap. I do not buy anything brand new.

But here's the thing. Part of the celebration, just like when you pay off your debt, you get to celebrate by doing some of the things you want. Part of the celebration of losing weight is buying the new clothes. So, you should do that. And I think $350 is just right.

Yeah.

How much is your household income?

Um, we're in the mid-100s, probably about like 145.

How much debt to go?

Uh, about 15 left.

Oh wow, you're almost there!

We'll have it done in less than 6 months. Wow!

And then after that, you can spend another $350 and get the rest of your wardrobe.

We'll see. I'm real cheap. I'm probably not gonna do it again.

But I want you to spend more than that later. Do you have more weight to lose as well?

I have about £10 left and then I'll be at a healthy BMI. So I probably won't lose more sizes.

Okay, perfect.

But my long-term goal was to be and maintain a healthy BMI.

I like it.

I'm proud of you. That's excellent.

That's amazing.

I'll tell you what, the people who really, the people who really benefit the most from the Baby Steps are people like you, Katie, who understand that it's a way of thinking that benefits you beyond your finances. It's how you can approach everything in life. And so, I am not worried about you. You've got it.

Yeah, you're gonna be great. So, I want you to spend $350 now, and I want you to spend another $350 the day after you pay off your last debt. And then, I want you to budget another $350 when you finish the emergency fund.

Yes.

Because you got another £10, and you're gonna need some more clothes.

This is fun, Dave.

I like it.

I like this.

I know, I know.

No, listen, this is great.

I'm not spending money on myself because I'm a single mom, and I'm trying to manage the family budget. Hey, Katie.

Hey, Katie.

You have saved your family in extra medical bills and insurance costs, because your cost for your life insurance is gonna go down, your cost for everything's gonna go down. You have saved your family tens of thousands of dollars into the future. Buy yourself some clothes.

Thank you.

That's a payback, okay? It's a good ROI. It's a perfect thing. And I gotta tell y'all, what you said is absolutely true, Jade. The The idea that discipline begets discipline, that when we suddenly become powerful, empowered in one area of our lives, we say, I'm taking control of this area, then you go, wait a minute, and I can take control of that area. And by the way, you children that are acting up, beware, because I'm gonna take control of that area. For sure, for sure. Whatever it is that's acting up and chaotic, we're about to take control of it.

Matter of fact, Christian, will you send her a copy of What No One Tells You About Money? I talk about this a lot in that book, because that's what happened with Sam and I. You start with your money, then you start working on your marriage, then you start working on your personal relationship with Jesus, then you start working on your health, then you start working on your career. I mean, if you let it, it'll just unravel a whole thread in your life in a major, powerful way. Yep.

You know, I really can't probably legally— legally is not the right word. I can't, in good— I ethically tell people that when you get on a get-out-of-debt plan that you're going to lose weight. But an amazing number of people do. Not because they're starving themselves, but because they learn that they can control themselves.

It's very intertwined. The methodology is so similar. It's all about, you know, that short-term sacrifice, long-term gain, delayed gratification, you know, all of those things. Once you activate that part in your mind that's like, oh, I can do that, then yeah, you can do it.

One definition of emotional maturity is the ability to delay pleasure for a greater good. Ding, ding. There it is. All right, here we go. Denise is in Winston-Salem. Hi, Denise. What's up?

Hi. Well, I just have either— it's going to be a public service announcement or I'm going to get some advice. I have I started a side hustle about 3 years ago. Dave, I'm pretty sure that the seed was planted by something that you said about just looking around to see what you have available that you could turn to make money. And I have been— my husband and I have been tremendously blessed by the property that we bought about 4 years ago, and it had a swimming pool in the back. My kids don't live nearby, and I was just the only one out there. And I thought, well, I've got this great asset. I should rent this out. So I did. And there is an app. There was a— there's a business that runs an app that provides the platform. It was very easy to do, to set up. I started making money and making people happy.

Renting your pool out?

You can literally rent your pool through an app. So on a hot summer day, if somebody is looking for a pool but they want a private pool, pool, they can use your pool.

How much liability insurance do you have?

Well, probably a lot. That's— that was what I was blissfully ignorant of for about 3 years. So they provided, um, a million-dollar, um, liability insurance. Who's they? Well, the platform, the app does. The platform.

Oh, wow. Okay, so $1 million of liability. So a kid is back there and gets hurt in the pool and you get sued for $1 million?

Yeah, yeah.

You get sued for $1 million, then this app is going to pay out $1 million?

Well, yeah.

Okay, so what happened?

I—

Facebook's what happened, and the group, and I saw where somebody had mentioned that They only pay after your homeowner's insurance. And I thought, oh, I didn't know that. So all this time I've been liable because I thought, well, they'll just cancel me if I have a claim. Because also in my homeowner's insurance, it says that I do not run a business out of my home.

That's true.

And now you do.

I don't, but for like 3 months out of the year. So I justified it that I really didn't that much. But then I thought, you know, my husband and I were like, this is too risky. This is really dumb. This is not worth it.

I would say so. Yeah, I think you learned a good lesson.

The only way you could continue to do it is if you could just buy your own standalone liability insurance policy that paid from day one, from dollar one, and buy that from your local insurance broker, and it would not be attached to your homeowner's.

Like a separate business policy.

Exactly, exactly. And if that's not, if that's not so expensive, and I don't know if it is or not.

It is. Listen, I called Zander, don't worry. I called Zander and talked to them.

And what did they say?

Yeah, no, nobody's doing that, not for a pool.

Do you not? You probably don't make enough on it.

Yeah, it's like 4 times more than what your homeowners would be.

Yeah, and it's more than you're making back on the app.

Exactly.

Yeah, that first thing that popped into my head was somebody's gonna sue your butt. As soon as you told me this, that's the first thing that ran into my head. It scared me. It scared me.

Dave, here's the thing. Up until this realization, I was so just feeling proud of myself because I was supplying this. Everybody, they're just family. It wasn't like they're wild parties. Like, I do see some of that going on through this.

That's true, but you never know what's gonna happen, Denise. And I think that you caught this early. You caught this early.

You dodged a bullet. You dodged a bullet. Yeah, I'm not renting my pool.

Even with Airbnb, you have to be careful.

I'm gonna rent someone my parachute. No, no, I don't think so. Scares me to death. As your business grows, everything becomes more complex. There was a time when Ramsey Solutions had too many disconnected systems and not enough visibility across the business. We wasted too much time chasing information instead of making decisions. That's why we got NetSuite. NetSuite brings your financials, inventory, CRM, and more together in one place. More than 44,000 businesses run on NetSuite, including Ramsey. And now they're taking the next step with NetSuite Next, making it easier to put AI to work across your entire business. NetSuite Next helps you make the most of your time, automating routine work like forecasting demand and following up on overdue accounts. With NetSuite Next, AI is built into everything So you can ask it questions just like when you're talking to a member of your team. And right now you can try NetSuite Next for free. If your revenue is at least 7 figures, go to netsuite.ai/ramsey. That's netsuite.ai/ramsey. So, Jade, we're going on a cruise!

Mm-mm.

Woohoo! Oh man, this is so fun. The Live Like No One Else cruise is March 14th through the 21st for 7 nights in the Western Caribbean. Now let me tell you who should go. People that are on Baby Step 4 and beyond. If you're in debt and you're trying to— in Baby Step 2, not your house, but if you're in debt on Baby Step 2, you don't need to be going on vacation. And if you haven't got your emergency fund, you don't need to be going on vacation. But we teach people to live like no one else so that you can later live and give like no one else. And so this is the so that crew.

That's right.

This is you reward yourself. And I know you've been holding your breath when you were getting out of debt, but now it's time, if you're at Baby Step 4 and beyond, to let loose and enjoy some of this money.

Yes.

We tell you to do that. We tell you to enjoy your money and move from intense to intentional at Baby Steps 4 and beyond, meaning that all your debts except your home are paid off and you have your emergency fund. That puts you at Baby Step 4. Now you're investing. Now you're enjoying. You're going on cruises with Jade and Rachel Cruz and George Camel and even Dr. John Delony and Dave and Sharon Ramsey. We're all there. We'll be hanging out with you on the cruise. We're going to do presentations. There won't be any dancing unless George does it on the— —on the stages. But we will be in there with great information. We're going to go through some detailed things to do as you're becoming wealthy, really get into wealth planning on this. The world's largest debt-free scream will be there, and we're gonna do live tapings of Smart Money Happy Hour, of some of the other podcasts as well. It is gonna be fun.

I'm excited.

I'm pumped. And there's just a handful of— there's some— there is some good staterooms left, and there's some that aren't so good left. Well, there's always the ones, you know, the ones you don't want. But hey, you can still get a good place to sleep and hang out with us and come on this cruise, guys. Celebrate!

So fun.

Celebrate! Some of you have been waiting to hear Dave Ramsey say, go enjoy your money.

This is it.

This is it. I'm giving you permission. I'm giving you a directive. Come with us to Grand Cayman and Cozumel and Jamaica and the Bahamas, March 14th through 21st. New wealth-building techniques. We're gonna take some of the stuff from Investing Essentials that Jordan and I did. I think I'm gonna take some of that. That stuff was real popular the other night. I'm gonna do some of that on the cruise, I think. Go into some of the estate planning things. And how do I keep from— some people, when they start making money, they worry about how do you keep from ruining your kids? You know, how do you make them grow up and be functional? Well, we're gonna talk about that. Rachel Cruze probably got something to say about that. The nurturing of her mother, the harshness of her father, and all that, right?

A perfect blend. A perfect blend.

Hey, Baby Step 4 and beyond, you are officially directed to go to the website and get the Live Like No One Else cruise. ramseysolutions.com/events. Book your cabin before they're gone. They will be gone. Now listen, it's after Labor Day. All you people that had the summer and vacation— now March is going to be here in about 20 seconds.

Yeah, and it's only $600 to put your deposit down.

And hold your cabin. Yeah. That's a deal. You can do that.

And Baby Step 4, you can do that.

And now you can afford it because you're not broke anymore. I love it. Looking forward to having you guys. It's gonna be fun. Lee's in Salt Lake. Hi, Lee. How are you?

Hi, I'm good, thanks. How are you?

Better than I deserve. How can we help?

Good. Um, I am a single mom. I'm 29 years old and I have a 4-year-old son. Um, I left an abusive relationship about 4 to 5 years ago and it's just been me and my son. Um, I homeschool. I've been working I've been working remotely for the past 3 years and my job just announced that our company is shutting down and that I have about 3 weeks left. I have no debt. I'm on Baby Step 3, trying to be on Baby Step 3. I only have about $2,000 in savings. I've been applying like crazy. I've probably put in 100 applications this past week just trying to find a remote job. But yeah, I was just calling to get financial advice, like what I should do. I'm just afraid because I don't have a lot of savings that, you know, we'll go homeless if I don't get a job. What were you making? I was only getting $2,400 a month. Okay.

Okay. And you've just been applying for jobs that are just out there. Have you reached out to people in your community, in your network, and said, hey, I'm looking, do you know of anyone?

Yeah, I try to ask all my friends. Um, I'm looking for a remote job.

Why are you looking for a remote job?

I was going to say, when you say only remote, you're narrowing your pool so small.

Like 90% of the jobs just came off the table.

Yeah. Yeah. It's, it's because my son is still home with me.

Yeah. Do you have family in the area?

Uh, I don't.

Where's your family?

Uh, they're in Arizona.

Okay, you may be soon.

If you had an in-person job where you made double, could you do daycare?

I possibly— yeah, I'm— I, I just prefer, like, if I can, I prefer to homeschool.

I prefer you not starve.

Yeah, I know. Yeah.

And get thrown out of your rental house.

Experience with daycare.

Yeah, I prefer you not get thrown out of your rental house and not have food. That's the first thing. We have to survive first, then we can work on preferences. And you've got the fuse burning on a stick of dynamite. You got 3 weeks is how long the fuse is, and then your world's gonna blow up. So yeah, you don't— I prefer no longer is available.

I think you've got to put in for whatever's out there, including in-person. And I think I heard you say you had a bad experience with daycare. There's good— there's really great daycares out there. And my guess is that if you were making $24, you might have scrimped on the daycare that you were going to. But if you have a little bit of a higher paying job, you might be able to look at some nicer facilities. Is that fair?

Yeah, I was making about $17 at my current job right now. So I'm just not sure how much more I'd be able to afford.

Yeah, you're starving. You're starving to death.

It's good. I think it's because you've narrowed your pool so far. I think that if you go out and you're looking at in-person jobs, Full-time. What's, what's your area? What's your area of expertise? What are you in, your field?

Um, I, I have a bachelor's in hospitality and tourism management.

You have a 4-year degree in hospitality and you're making $17 an hour?

Yeah, you ought to be able to get out.

You ought to be able to go manage a hotel, girl, or manage a restaurant. Yeah, or get in line, or get in line to do that and make a lot more than that.

I think you've just narrowed your pool. I know I've said that, but I think that you're so tunnel-visioned on taking care of the 4-year-old that The truth is he's going to be in kindergarten in a year anyway.

Yeah. Well, she's— I think part of my problem too is that like I've just always wanted to be a stay-at-home mom. And so that dream of homeschooling I have, but yeah, financially it's just hard.

That's the hard part. So here's the thing. You've, you've got competing priorities because you've got this value of wanting to be a homeschool. Then you've got a priority that really is a responsibility of bringing in enough money for your family. You're the sole provider. And so, when that happens, sometimes you have to reorder your priorities. Even if it's temporary, in this season, you're gonna have to prioritize earning money for your family first. And the hard thing with priorities is everything wants to be number one, but that's just not reality. Math says that earning money at a career has got to be number one. And just remember, it's for a season, Leah. You might pop back and be doing so well that your season changes and you're able to shift in some ways. We don't know what that looks like, but just think everything is in seasons for life. It doesn't necessarily have to be like that forever.

You've come through an extremely emotionally damaging process leaving an abusive relationship and clinging to this child and just trying to make sure the child is okay and surviving. And you're being a good mama bear, and you're putting your arms around your baby, and that's noble, and that's exactly what you should do. We're not in the middle of all the emotion of your former abuse, and so we don't have that. All we see is, is that our friend Leah that we love needs to get a job so she can feed herself and her baby, and that's first. All the other stuff is secondary. is second, and that includes remote work, is second.

This show is sponsored by BetterHelp. I know a lot of you out there are trying to keep it together all the time. You show up to work, you pay the bills, you smile at the right times, but then no one sees you snap at your spouse or lie awake all night running through everything you'd wish you'd done differently during the day. Just because you're functioning doesn't mean you're okay. Talking to someone else is a great way to process what's happening in your life and get to the root of your challenges. That's where BetterHelp comes in. BetterHelp matches you with one of their 30,000 licensed therapists, someone you can be real with and finally put down some of the weight you've been carrying and come up with a plan for getting well. They can help you get perspective and see the other side of your situation and help you with a plan for moving forward. BetterHelp therapists all follow a strict code of ethics, and if the first therapist isn't the right fit, you can switch for no extra cost. Asking for help before you hit a wall isn't weakness, it's wisdom and strength. If you're exhausted from always having to hold everything together, trust a BetterHelp therapist to help you carry the load.

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Amanda is in Jacksonville. Hi, Amanda, how are you?

Hi, I'm so excited to talk to you.

You too, what's up?

I need help convincing my husband that the mortgage tax benefit doesn't outweigh paying off our home tomorrow.

Do you guys, do you guys actually itemize?

No, it's just whatever TurboTax—

No, there is no mortgage tax benefit unless you itemize, and only about 4% of Americans itemize.

Then we do not.

You do not have a mortgage tax benefit. He doesn't listen to you. No, it doesn't matter whether you listen to me. You do not have a mortgage tax benefit if you do not itemize, nor do you have a charitable deduction. If you don't itemize, because you're taking the standard deduction, and the standard deduction does not allow you to list off other things that you want to deduct on your taxes. Instead, you take one deduction, the standard one, and you waive the others, which are smaller anyway than the standard deduction. So you're probably not itemizing. So your mortgage tax deductions mythology, it doesn't occur. You don't get one.

Okay. So you have the money in the account to pay off the mortgage?

Yeah, we have $235,000 and our house is $94,000.

And why does he like being in debt?

Well, we met with a financial advisor, like an intro meeting, and she was trying to convince him that we should invest that instead of paying off the house.

You need a different financial advisor. Yeah, you need to go to smartvesterpro@ramseysolutions.com and find someone that has a brain.

There is money. I mean, it almost feels like you could do both, and maybe that's the way you approach him. There's $234,000 sitting there in savings. You take the $94,000 and pay off the mortgage. You take another chunk and invest it and then keep your 3 to 6 months. Is that Is your 3 to 6 months included in that $234,000?

Yeah.

Yeah. That way everybody's happy. He gets to invest a little, you get to pay off the mortgage, and you've still got your stack of cash there for an emergency.

Okay. That sounds good.

If he listens.

If he listens. That's the, you know, we've done all the other things. We invest in our 401s. Our kids have their Florida prepaid. plans set up. They have their own checking accounts.

What's the mortgage payment? What do you guys pay every month on the mortgage?

Um, it's about $1,200, but that includes taxes.

I mean, and that's the other thing. I mean, have you— I would sit down with him tonight. This is— if you were— if I were in your shoes, I would sit down tonight and say, here's the money we have. I would like to do this, pay off the mortgage. And then once the mortgage is clear, Whatever is left, let's say, I don't know what your taxes and insurance are, let's just cut it in half.

How old are you guys?

I'm 39, he's 43.

Okay.

Let's say, let's take $600 and let's start investing that every single month along with the extra cash that's sitting in that account. And over time, Dave, do you have it in there?

Well, I just put $1,500 a month for the next 25 years. Okay. Which puts you guys into your 60s. You'll be 65, you'll be 67. Okay, so $1,500, your house payment plus a little bit, is $2,364,000. That's what that house payment's costing you. Yeah. So anyone that tells you to keep that house payment is a mathematical moron.

For a tax benefit that you're not That's what you have for not listening to us.

Yeah.

Hey, let him listen to this call.

Yeah.

Play this for him because he's wrong and we're right.

Well, and, and your financial advisor is not giving you good advice. They make— they don't make commission on the amount you use to pay off your mortgage. They only make commission based on what you buy with them. Ding, ding, ding, ding, ding, ding, ding. So there's a little conflict of interest in that advice. I will actually defend the financial advisor and say it's probably not his motivation. He probably just believes the lie that a lot of people believe. But what we know from having done the largest study of millionaires ever done in North America, 10,167 of them, the typical millionaire in their first $1 to $5 million of net worth that we found, 80 to 90% of them fall in this category, have a paid-off home that's worth $600,000, $700,000, $800,000, and they have money that's gone into their 401 that's worth $600,000, $700,000, $800,000. Those 2 numbers added together are $1 million to $2 million. And that's, that's the typical person that does this. The number of millionaires, not broke financial advisors with an opinion, The number of millionaires who said, Dave, the reason we became a millionaire was we didn't pay off our house and we invested the money instead, and that caused us to be a millionaire.

The number of 10,000 millionaires that said that was zero.

Can I ask another stat? How many people in all your years on radio who you have guided to pay their mortgage off, how many have called back and said, Dave Ramsey, you fool. I paid off my mortgage. You ruined my life.

I can tell you that there are entire websites devoted to hating me. Entire segments of Reddit devoted to hating Dave Ramsey. I mean, type in Dave Ramsey sucks, it goes on for days. Never will you find a single person that said, Dave told me to pay off my house and I hate Dave for that reason.

Exactly.

Not one. Not one. No one regrets it. If, Amanda, you all pay off your house and you hate being debt-free, you can go get a new mortgage and get back in debt. But I've never heard anyone do that.

I've never seen it.

I just woke up and I just felt all clammy and anxiety and I was having a panic attack and it was 4 o'clock in the morning because I don't have a mortgage. No one has ever said that. And so I had to rush down and get me a new mortgage because I just couldn't have peace when I was completely debt-free. No one has ever said that.

No one.

You know, this is, if you think about it, it's kind of freaking common sense until some goober tries to put a half-butt math formula to something that left out all the other aspects of this. The number of people that said, you know, I got a divorce because we just couldn't get along after we paid off our mortgage. The paid-off mortgage was the end of our marriage. Zero. Nope. Zero. Nobody. Nada. None. Wow.

I mean, that's a big stat. You've been sitting in this chair for a long time.

Almost 40 years. I mean, it's just like— and Everyone hates me for some reason or another, except that one. That is not one of them. That's a good point. It's just very interesting. Now, the people that live in a test tube and they want to argue about concepts, but I'm talking about the— they all hate me on this because they are the financial planner that this guy went to, right? But the people who actually did it, never a problem. Cut up your credit cards and pay off all your debt. I've never even had anybody get mad at me that actually did it for that.

I haven't either. I heard it, yeah.

For that. Dave, I hate it that I paid off my car.

I hate you, Dave.

I've never had that one. These are not things we get. We get a lot of hate, but a lot of it is from people that have been drinking haterade, and they're just stuck on, They don't want to do something, or they don't agree with it, but they've never done it.

That's right. So they really don't have the experience.

If you've ever actually been 100% debt-free, if you've had the unbelievable thrill of placing scissors across a credit card and saying, take that, Citibank. Discover this. I'm done with American distress. And if you've ever had the pleasure of a plasectomy, I promise you, you will never go, oh, I so miss my credit card. You know, those airline miles, I can't fly anywhere because I don't have any airline miles. No, you can go anywhere you want to go because you got money.

And no blackout dates.

Money. You know, all those airlines, they take money.

I know, that's right.

That's the thing. And so this is how this whole thing works. That's so fun. That's a great question, Jade. Thank you. Yeah, it's just interesting. It's so, it's so It is. When I run into somebody— I was at a restaurant this weekend, we stopped in, lady came over to the table and she said, thank you. And, you know, she's someone who actually did it. She's not someone who talked about the theory of it.

Yeah, that's the difference.

That's the big difference.

That's the difference.

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Welcome back to The Ramsey Show in the Fairwinds Credit Union studio. I'm Dave Ramsey. Jade Washaw, Ramsey Personality, is my co-host today. Hazel is with us in Salt Lake City. Hi, Hazel. How are you?

Good. How are you?

Better than I deserve. What's up?

I am just wondering what kind of advice you have for blended families. I have 3 teenagers from a first marriage, and I have 2 toddlers with my current husband. And my older boy's dad does not like to pay his portion of the bills, and it makes my husband really upset. So much so that he then has a hard time wanting to pay anything for my older boys. And I am totally supportive of having joint accounts like you guys teach, and— but My husband just hasn't wanted to do that since we've been married. We've been married for almost 7 years. And now I'm wondering if that's even a good idea because I find myself like paying for things out of my account and not telling him, which I know I shouldn't be doing. But also like I have to pay for things, certain things when it comes to my older kids. And I'm just looking for some advice.

The 3 teenagers, they're in the house. They're not like 18 and 19, right? They're in the house?

Yeah, I have a 19-year-old that is leaving soon, but, um, yeah, yeah, all the— they're all in the house right now.

And so when you say he doesn't want to combine money, it's not just—

He didn't want to pay for those.

He doesn't want to pay for the fact that you have kids.

Um, how did y'all not discuss this before you got married?

I know. Well, we did. That's the thing that I have a hard time with is he He was— had a different attitude before we had our own children together. And since having his own children in the house, like, the attitude has just been so different towards my older teenagers.

So he even treats the boys differently?

To me, he does. When, when he is with them face to face, he does. He's, he's kind to them. But when it comes to like paying for sports, paying for School, just things that like parents pay for. It just causes an argument every time.

You don't have a combining money problem, and you don't have a who pays for what problem. You have a marriage problem.

Yeah, I had a feeling that's what you were going to tell me. What's the best way to talk about this with him?

With a mediator and counseling.

Okay.

Yeah. And, and I would talk to him about it tonight. I would say, the more I've thinking— been thinking about this, we've got some issues in our family, and I think you and I need to talk about them. And I would love to do that with a counselor because I think they can give us an unbiased look at what's going on and offer some unbiased advice to us.

And give us some tools to work through this, because otherwise, this is not going to go well. Because if you make me choose between my boys and you, you— we don't want to have that choice to have to be made. And you're start— you're forcing me to do that, and I'm not going to do that.

Yeah.

It's not what I signed up for. It's not what we agreed to before we got married. And now it's come up again and again and again. And now I feel like I'm having to sneak to take care of my own children. And that ends today.

Right. Okay. Yeah. Okay. I appreciate that.

How long have you been married?

Next month it'll be 7 years.

So you want a prediction?

Yeah.

It's gonna be okay.

Okay.

Because I think as soon as you call him out and he sees what he's doing in the mirror, he's gonna stop because he's a good man.

Yeah, he is a good man.

And that's my prediction. I just don't— I don't think he's seen himself in the mirror lately, and this This discussion, and this discussion with a good counselor puts a mirror up in front of this behavior, and I think he'll stop.

I also want to add this, and, and I may be wrong, but you've been married 7 years and you've got 2 little ones. If this just started when the other 2 were born, my guess is it may not have much to do with your boys, and it may have to do with him feeling like he can't provide for this family.

Okay.

And so are y'all coming up short on money?

No, no, he makes good money. We have decent savings. Um, I, I actually don't know really what he's got in his like 401k and, and Roth. Um, because he just, he's always just kept that separately. He's always said like, yeah, we should combine it, but we never did. Hasn't ever. Yeah.

But that, this little bit of secrecy on your side and on his side, both is starting to really cause— it's gonna grow into a problem unless you nip it.

Yeah.

So you guys need to come clean and say, we have 5 children in this house we are going to care for. As long as they are in this house, we're going to care for them equally and totally, both of us. And we are going to disclose 100% of the financial transactions in this house and all the passwords to everything, starting now. That's a real marriage when there's that level of trust and that level of alignment on our goals and our visions. It's gonna increase the quality of your relationship to no end, but you guys got some sandpaper to get there.

Absolutely.

It's gonna get some rough edges knocked off to get there. And so that's, you know, that's the direction. So yeah. And Hazel's like— I knew you were gonna say that. We're fairly predictable around here.

Yeah. And honestly, and I know people are afraid of that, but that's one— I feel like that's one of the great benefits of marriage is you've got this other person that you can be your 100% self, that you don't have to hide a bunch of things, and you don't have to hide who you are and the things that you're struggling with. You have a person. That's the whole point. Yeah.

Crazy. Yeah, but I— this guy doesn't sound— I think he's just— I think you're right. Maybe there's a sense of scarcity.

I think something's going on there.

And he slid off, and he's pissed at the ex for not doing his part.

Yeah.

That's a valid— that's a valid reaction.

And he's like, come on, man, take care of your kids.

Come on, man, man up. But in the process, he's not manning up.

Yeah, he's just taking out his feelings in the wrong way. And I really do think that— I think he's a good guy.

I got a feeling this is a good guy. I really do. And I call you out if you're not, believe me. I'm pretty quick to Especially somebody being a wuss. But this guy, I think he's a good dude. I think you just gotta have some clarity here and some exposure therapy. Expose yourself to yourself kind of thing. Like, oh, look at who I am. I don't like that. I don't think I am that anymore. Ready, set, go.

And therapy is a good thing. I think all couples need to visit the office of a counselor here and there. I think it's a good practice just to make sure that everything's going good.

You know, it always has to go in a bad time. We've been married 44, 45 years almost. And at 10 years, we went bankrupt at 7 years, and we didn't kill each other then, but we didn't have the money to leave. So, we just kinda stuffed everything. And about 3 years later, when I started making money, all that stuff kinda resurrected. It all started coming out. It all started coming out. And so, we end up in the marriage counselor's office. And I thought it was so that, you know, a murder didn't occur or something like that, 'cause I was afraid she was gonna kill me. And— but what it ended up being was, it was like going to a personal trainer. They teach you the right way to do the exercise.

That's right.

They teach you the right nutrition, the right tools to win in that area. And so, I looked at it as I was just going to class. I had a personal trainer for relationships. And man, I got a lot out of it.

It's so helpful.

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Well, we wish we could get to every call and a question here on the show. We can't because you can't get through on all these phones. Sorry about If you have a money question and you want an answer for your situation, head on over to our website and use Ask Ramsey. Ask Ramsey is our free AI tool that's built and trained on proven Ramsey principles. You'll get an answer the same way we'd answer it right here on the show. Ask your question today at ramseysolutions.com or click the link in the description if you're listening on podcast or YouTube. Evelyn is in Knoxville. Hi, Evelyn, how are you? Hi, Dave.

Hi, I'm doing great. How are you guys?

Better than we deserve. What's up?

Um, so I'm in a little bit of an impasse right now. I'm trying to figure out if I should go back to work full-time right now or just wait it off.

Wait what off?

Um, to go back to the full-time force. Right now I'm doing a part-time job. In the evenings while I stay home with my daughter during the day.

Okay. So you're considering going back to work because you need more money or because your daughter is getting older? Like, what's causing you to hit this crossroads?

Yeah, good question. I got a call from a former coworker saying there was a position available soon, and my husband and I are in Baby Step 4, so we are trying to Right now, do the best that we can with our income. We don't have a very high income, and he's trying to find a job right now that pays more. And yes, in the meantime, I just wondered, yeah.

If you're, if you're telling me we don't have a high income and he's not working much and you're working part-time, I am looking for— I would be looking for a full-time job. What, how much are you guys bringing in every month?

Oh no, he is working much. He's working a full-time job. He's just not making as much as he What's he make? He makes $50K.

Okay, and what can you make at the new full-time gig?

Uh, $50K.

And the trade-off is that you currently make how much at your part-time?

Uh, right now, because it's a server position, it's tip-based, so it would be about $20,000, $25,000.

Okay, so you can increase, you can double your income, and you have one child, and the child is how old?

2.

And so the child would be in daycare?

She's 2. Did you hear that?

She would, she would be in daycare then, correct, if you took the job?

Correct, yeah.

Okay, so the trade-off is, do I want to put a child into daycare, my child into daycare, so that I can make $25,000 a year more?

Correct, yeah. And that's where I'm at a bit of an impasse.

That's not an impasse, it's just a decision. Neither one, neither one is the wrong answer. You're in Baby Step 4.

Is there a reason that you need the money? Does your mortgage fit within what he earns and what you earn part-time?

No, the mortgage does— before, before when we made, uh, we both had an income, the mortgage does not fit into his income. So right now the mortgage went up, so we're at $1,456 a month.

Okay. Um, so do you, if you don't take this job, can you stay in that house?

Yes. The way that we're making it work, so basically we started, I started aggressively putting money towards the, not me, sorry, listening to you guys aggressively. And then because of that, started putting lots of money into the mortgage. So this is the first month that we're kind of taking a step back just to invest because we were not investing the 15%. We were just wanting to be done with the mortgage, but that'll take a while. So we are trying to figure out, you know.

I still think this is high for you because if you're telling me he's bringing in after tax around $34,000, is that true?

No. So he would be $2,800.

Okay. Even less.

He does have a pension.

No, no, no. Just after tax dollars. After tax. After tax, he should have around $3,300, $3,400 a month. Yeah. And then you with the, um, with the $2,500, I mean, what are you bringing in? $1,500, if that?

Uh, it's about $2,200 is the average or the median.

Okay. Okay. I mean, it's—

Combined, it's about $5,000 to $5,500 every month.

It's tight, but you can make it work. I see what you're doing.

So, it does come down— okay, we can make the housework. We can make the housework. So, the only question is, do, at this stage, do we want— do you want to work full-time and not have the server job? And your child will be in daycare. There's— neither one is a sin. Neither one's horrible. It's a personal choice. Okay? If you told me you were gonna make $10,000 more, you're gonna spend that on daycare. So I wouldn't do it.

Right.

But you're gonna make $25,000 or $30,000 more, and his income's gonna go up. So if you want to go back to your career, back to your old company, that's fine. But just because they have a position available doesn't mean they won't have one later. You could say, third option is, is I'm gonna continue like we are temporarily, and maybe in 2 years or 3 years when Junior goes to kindergarten, maybe then I'll go to full-time.

Yeah.

Because daycare won't be quite as expensive when I've got a day— when I've got school. So anyway, all of that. And so you just got to work it through that way and decide. I don't think there's a wrong answer.

I don't either. And I like what you said, Dave. You can go on a path and then look up and go, does this still feel right? If it does, keep going. If it doesn't, you make changes. Now, that doesn't have to be forever.

That job is not the only job, and it might not even be the only time that job is there.

That's right.

So didn't even ask what the field was, and that might have even added to that. April is in Atlanta. Hi, April, how are you? April? April, how are you? One more time. April, April, April. 3, 2, 1. All right, we'll go back. Karen is in Oregon. Hi, Karen, how are you?

Good, thank you. My question today is, I'm 61 and I have retirement money and I put it— I'm no longer working out of the house. I'm taking care of my mom. But I went to a fiduciary at our credit union and he put it in stocks and bonds. And I feel like they're too risky for my age. Just, I started last year and I've been losing ever since.

I know it's a long-term thing. You've been losing in the last year?

Yeah.

Oh, well, it's not too risky. It's just the wrong ones. It's awful.

How much did you start with and how much do you have now?

Well, um, I started with about $84,000 and the first quarterly thing I looked at, I'd lost $5,000.

And which quarter? The first quarter of this year?

No, it would have been— I put it in like July of last year and then December when I got my first statement, I had lost $5,000.

How much do you have today? Do you know?

I would say I'm down $8,000 from the $84,000.

This guy is the world's worst picker of funds. I'm looking at the— He's the world's worst— no, stop. He's the world's worst picker of funds. While you've done that, I've been in a 100% growth stock mutual fund, and I've almost doubled my money while you lost $8,000.

Okay.

And I'm 66.

My husband also went to him and lost money in the first thing. He just said it's a long-term thing.

No, it's not a long-term thing. You don't do long-term when the market is going up and your investments are going down. You don't do that long-term. That's just immediately over. Do not pass go, you're fired. So, yeah, go to ramseysolutions.com, click on SmartVester Pro, and pick out a SmartVester Pro that you can sit down with that has the heart of a teacher. And never again put money in something because someone else says to do it. Do it because you understand it and you select it.

Yeah, if you pull up— Dave, you always have that S&P 500 thing. If you pull up that and look at it, you can see the fact that you've lost apparently quarter over quarter and $8,000 year to date is, is crazy work compared to what the stock market is actually doing.

Yeah, let's see, it's, uh, 12.24%. It's up today since the first of the Year to date, it's up 12% since the first of the year. That's not an $8,000 loss on $84,000. That's a $12,000— that's an $8,000 gain on $84,000.

That's right.

That you should have had. And that's just if you only did what the S&P did.

Which means he's got—

That's all.

Yeah, it's not doing well.

Horrible.

Scary.

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Jade, I talked about this a little bit the other night on the Investing Essentials. And after our last call, I'm gonna talk about it again for just a second.

All right.

Conventional wisdom isn't. It's not wise. If you follow conventional wisdom on the average diet in America, you will be obese. If you follow conventional wisdom on the proper way to be married, you won't be long. If you follow conventional wisdom, you would get a credit card when you turn 17 or 18 so that you can build your FICO score. Why? So that you can borrow money to buy a car. Why? To build your FICO score so that you can borrow money to buy a house. Why? So that you can build your FICO score. to make the banks rich, because your FICO score is not a measure of winning with money. But conventional wisdom says to build your FICO score. Conventional wisdom also in the financial planning world says that as you get older, you're supposed to move your investments to less risky. And if you read anywhere on the internet, among the stupid thousands of articles that are out there, They teach a thing that the financial planning industry has called conventional wisdom, called the asset allocation theory or asset allocation model, which means that you allocate more of your assets to bonds and money markets as you get older so that you are safer.

That is conventional wisdom, and conventional wisdom isn't. Here's why. As you move your money from good growth stock mutual funds into bonds, they underperform dramatically. As we told the last caller, year-to-date on the S&P 500, my stock growth stock mutual fund in an S&P has averaged 12.2%. You know what the bond market has averaged since the beginning of the year? Less than 1%.

Oh gosh, I was gonna guess higher. That's bad.

And so she calls up and says, I have followed conventional wisdom and my fiduciary, which is a funny term for someone that's supposed to have your best interest at heart, but used conventional wisdom and screwed up everything. So this bozo at the credit union put her into bonds, some equities, and some cash. which is what conventional wisdom says to do when you're 61. Okay? And so she's lost $8,000 when she should have made $8,000, which is a $16,000 swing, which is somewhere around 25% on $84,000 that she's off because she followed the advice of someone who was giving conventional wisdom. Conventional wisdom is what normal people, everyone believes without question, and they just follow each other around until they walk off a cliff together.

Yeah, because he didn't notice that she was losing.

Yeah. And she was told that she should be in something safer. And yet she lost money. And so her response was, I'm not in something safe enough, instead of, I'm in the wrong thing. She believed the lie about part of it, but didn't understand the situation. So, the idea that you need to move all of your investments to a safer a safe haven of bonds and cash where you make no money as you get older is absolute bullcrap. It's mathematically stupid because there's 2 kinds of risk with money, boys and girls. There's a risk of actually losing it because it goes down in value. There's another kind of risk. If you don't make 4.2% on your money, which is the inflation rate, then you are going backward in real purchasing power. Oh, as a matter of fact, if you're going to have to pay taxes on it, you need to make a little over 6%. in order to net 4.2% after taxes to break even with inflation and taxes. If you're using the asset allocation model and you're in bonds and cash as a part of your portfolio, 40%, 50% of your portfolio, you're not even keeping up with inflation.

You've gotten tackled from behind.

And God willing, she lives from 61 until, I don't know, 80 or 81.

So what usually happens to a Ramsey follower, if they follow the stuff, is they're in the 4 types of growth stock mutual funds, no bonds, no cash. And we don't tell you to change that as you get older, and here's why. Because if you follow the stuff we're talking about, the guy a while ago, we said, if you just put your house payment away, it was gonna be $3 million, right? $2.2 million a while ago, right?

Yeah.

So you're gonna have millions of dollars in these mutual funds. I'm 66. I have millions of dollars in my mutual funds. Now, if I have millions of dollars in my mutual funds and they go down, this year. Am I okay?

You'll be just fine.

I think I'll be okay. But they went up 12.2% year-to-date, and last year they were up 18%, and the other years they're averaging over 12%. In the last 5 years, that $2 million would have become $4 million in 5 years just by leaving it alone. Meanwhile, someone following conventional wisdom that's my age has lost millions of dollars in opportunity. Millions. Oh, and guess what? I'm 66. You think I'm ever gonna touch that money? Probably no. I might live off of the income because it'll generate— if you had $2 million, it'll generate $150,000 to $200,000 a year in income and not ever touch it. So am I ever even gonna touch it? No, I'm not gonna touch it. So it doesn't really matter what it's in as long as it's producing income. And so, who am I actually investing it for? Oh, me when I'm 96. Because if I'm 66 and I'm healthy, statistically, I make it into my 90s. Now, if I'm not healthy at 66, we can change that. But I'm healthy.

Yeah.

So, knock on wood, I make it into my 90s. So, I have 30 years to outpace inflation. And if I go with conventional wisdom, my $2 million will be worth less than it is now. In actual real purchasing power because of adjusted for taxes and inflation. So that's just asinine. Use your own brain to think about these things. Don't use somebody who follows everybody else around.

Yeah.

Don't be normal. Use your own brain. So that pisses off half of the financial planning world, which really keeps me very happy. It's one of my goals in life. April is in Atlanta, Georgia. Hi, April, what's up?

So I have like the dumbest dumb question, like honestly, you know. So I am married. I have, um, we have a mutual income of a lot of money. I mean, we make about half a million dollars a year, um, between the two of us. Um, you know, so we, we are in a good financial place, but the thing is, is is I also know that we've been married for about 15 years.

Mm-hmm.

Um, I also know that he has always put money away in investments that he has controlled. And so I have never really looked at that. I know it's about maybe $2 million at this point, like the last time I ever, you know, looked at it. Um, so my thing is, is now we're, we're thinking about divorce and we, and this is a real situation for us is that It's not that we don't love each other anymore. It's just, it's just not working anymore. And it's, it's, it's a mutual decision. Um, but my thing is, is at this point, do I just walk away from this money? Or, you know, because he's kept that separate from me, um, for this long. I have money too. I make $260,000 a year.

How much money do you have invested?

So I have about $1.1 million, like, I'm looking at my investment account right now. I have about $1.1 million in investments on my own, in my own money.

So he's got $2 million, you've got $1.1 million.

The law in Georgia does not say you have your own money.

So the law in Georgia is 50%.

I know.

Right?

All of it goes in a pile. All of the money goes in a pile and we split it down the middle.

Yes.

Yours and his are not yours and his. It's ours until we split it.

Right, we have 2 children. They're 9 and 7, you know, like, so, and he has done very— let's just, let's, let's be very honest. Let you know, he's lived a really good dad life.

So the question is, do you, do you— if you're— all we can do is tell you how great this guy is and I'm divorcing him. Yeah, it's just so strange.

You may have kept your money separate, but it's yours together.

Goes in a pile and you split it down the middle. It's what the law says. And if he doesn't abide by the law, it's not gonna be good for him. This good dad is not gonna go well with the judge. When you take your car to the shop, you're probably thinking 2 things: how much is this going to cost me, and is it going to get done right? What you need is a mechanic who will give you transparent information so you can make the best decision for your car and your wallet. Christian Brothers Automotive is the official auto repair shop of The Ramsey Show because you can trust them to take care of your vehicle the right way. Their digital vehicle inspections let you see exactly what their technicians see, giving you confidence on which repairs are urgent and which ones can wait. Plus, every repair is backed by their Nice Difference Warranty, 3 years or 36,000 miles. With a guarantee like that, you can walk away knowing that your car and your wallet are taken care of. Schedule your service today and get 10% off your visit at CBAC.com. CBAC, cbac.com/ramsey or click the link in the description.

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Okay, today's question comes from Steve in Vermont. He says, you often say investing in mutual funds and real estate are your 2 go-to options. Would you ever suggest REITs as an alternative to purchasing real estate in order to get in at a lower price point? I've never heard you do that. I've always heard you say, if you're going to have 5% to just play around with and do things like crypto, single stocks, REITs would kind of fall into that category.

You know, REITs used to fall into that category. I think you're right. REIT stands for R-E-I-T, real estate investment trust. And it's basically a mutual fund that buys real estate.

But there's a lot of different types.

There's a lot of different types. And when they first came out, I don't know, 25 or 30 years ago, I first started seeing them, I just told people stay away from them. Because in those days, the fees being charged to manage the property was so high that the yield to the actual rate of return on buying the mutual fund was low.

Right.

And these days, though, I've seen a lot of the current REITs that are yielding, you know, up around what you might make on a regular growth stock mutual fund. And so you're getting up around 10%, 12%, 15%, somewhere in there. I've seen REITs that are doing that. And so if you wanted to do a REIT as a way to get to real estate, I would. That'd be okay. Pick out one with a good track record. Get with a SmartVestor Pro. They could help you pick one.

We have a really great article also on Ramsey Solutions, and it goes through the different types: the equity, the mortgage, the hybrids, and it'll kind of explain all of those to you.

Equity is basically buying real estate with equity, which is what I would do.

That's what you want.

That's the one I would do, because this is a way to put in $10,000 and be in the real estate market without having to buy a house.

Right. But you do want to stay away from the mortgage ones because those actually take on debt. in many cases.

Exactly right. So, and that article is on our website, can give you more detail. But overall, I would not do this until you are ready to buy real estate, which would be Baby Step 7. Your home is paid off, your home is paid off, and you've got, you know, 15% or more going into the 4 types of growth stock mutual funds that we talked about: growth, growth and income, aggressive growth. This is not You're not using part of your 15% on this. Yeah, it's not a substitute for your normal investing plan with the Baby Steps. It's in addition to. So, let's say your house is paid off and you're putting 15-20% away for retirement and you got some extra money and you're thinking about buying real estate with it. But you don't quite have enough to do that yet and you want to buy a REIT instead.

I love that.

That's an okay place, but that's the only time, and that's a very small percentage of our listeners that are there.

True that. Yeah, that's true. That's very true.

So you've got to get there first before we talk about it. And no, I would not do a REIT instead of growth stock mutual funds.

And I think that's what Steve is asking.

It would be in addition to. Yeah. He's got the real estate bug and he's wanting to get in there quick and get in there easy. And that's not what we want to do. So you're going to buy it like you do any long-term investment. You're planning to hold it 5, 10, 20 years, that kind of thing. And then you're going to be all right. John's in Columbus, Ohio. Hi, John. How are you?

Good. How about you?

Better than I deserve. What's up?

Hey, so I had a question for you. Um, I wanted to really weigh the pros and cons. So I know you're not really for bankruptcy, but I wanted to see what you thought in my situation. Okay. Um, it'd be a Chapter 13, so I'm about $200,000 in unsecured debt.

Okay.

That includes anything from payday loans to high-interest credit cards. I think I'm spending around $9,000 a month, and I think I bring home around $11,800 after tax. So not much left. I've tried to do the debt snowball. And it's just not really getting anywhere.

What is all the debt? $200,000 unsecured?

Yes.

What do you owe on your cars?

So I got one car, I think I owe right around $27,000.

Is that in addition to the $200,000?

Yes. Okay. But that, um, so I mean, it's, it's a Tesla, so I don't have to pay for gas. So I mean, I I don't know if that really makes up for it, but I would be paying—

No, it doesn't make up for it. You got $27,000 worth of debt while you have $200,000. How'd you get $200,000 in unsecured debt?

That's a good question. So I was a realtor, and right around the time COVID happened, I wasn't making much, maybe like $12,000 a year. And I just started having to take out loans and debt to cover basic living expenses. And then it just kind of grew from there.

So you went a long time without working? Uh, so no, $200,000 worth of time without working.

Because you're putting your life on credit cards instead of picking up a different job.

Wow.

So is it just you, I mean, John, or do you have a family, a wife?

No, I have a wife. Um, but, um, so I mean, I'm the one bringing in the income. But I didn't really have any gaps in employment or anything. But yeah, it was like making $12,000 and then I slowly progressed. I mean, over the last 5 years I went from $12,000 to $40,000.

Well, that is a gap in income. If you told me you're making $12,000 a year and that's all you're spending—

And if you told me you lived on $200,000 worth of borrowed money, that's a gap in income. Or you were spending more than you, you know, one of the two.

Yeah. I think it was just the, like the payday loans, like the, the amount. So, like, because my salary is right around $200,000 now, but with the payday loans and stuff, it's like I had to get— I had to—

How much of the $200,000 is payday loans?

It's probably $35,000 to $40,000.

It's not the payday loans then. You've still got $265,000 or $165,000 worth of other stuff.

Does your wife know about this?

She does.

Okay. All of it?

Yeah.

Okay.

All right. How long y'all been married?

Um, for about 2, 3 years, but we've been together for 10 years. Okay. All right.

Well, this is a very, very scary thing that you're in and to go through, sir. I've been there and I know how it feels to stand in the shower and scream and cry because I was so scared I didn't know what to do next. So, um, That's a mess. It's a real mess. You're really not bankrupt, and bankruptcy is really not going to solve your problem because a Chapter 13 is 60 months of paying payments on these, and there's a formula that's going to dictate that you pay a large sum of it, not all of it, but a large sum of it back. And if you're going to pay a large sum of it back in a Chapter 13 over 60 months, then you can also pay A deal, work a deal with these people and work it through. We have an advertiser named Guardian Litigation that helps people in these exact situations, and it's much easier and quicker than bankruptcy. Your credit is destroyed, and it's going to continue to be destroyed. Good, because John doesn't need to be borrowing money again. So that's a good thing. But so just continue that idea. Your credit's destroyed.

And then how— what is the, you know, the most efficient way to clean this mess up? Chapter 13 is not. When you run the actual formulas that are required by law against this debt, you're going to pay back a lot of this, not all of it, but a lot of it, because you make a lot. And so if you made $14,000 a year, well, then you wouldn't be paying back much of it, but the formula is based on your income. And so you're— and the law wants you to pay as much as you can pay in bankruptcy or not, in Chapter 13 that is, and it's called a wage earner's plan. So I'm gonna put you on hold and we're gonna connect you with the folks at Guardian Litigation and see if they can help you. I think they can. And basically what we're gonna— what they're gonna do is they're gonna go through with each one of these and make a deal with them and stop the interest and lower the balance and then pay it And the good news is, if you keep paying, you know, $5,000, $7,000 a month, you're gonna be out of this in a period of time that's shorter than 5 years, and you won't have filed bankruptcy.

Hang on to your marriage, brother. Sit down with your wife, tell her you love her. You're important. You make a lot of money now. You can clean this mess up and learn from it and never be back here again. I did. If you want to free up margin in your budget, one of the first things you should do is take a hard look at your monthly bills, because every dollar you overpay is another dollar you don't have for reaching your financial goals. And overpaying for your phone bill, well, that makes zero sense. And it's why I recommend Boost Mobile. Their unlimited plan is just $25 a month forever. No contracts, no hidden fees, no surprise price hikes. If you already have a phone you love, you can keep it and keep your number when you switch. And if you're skeptical, Boost Mobile offers a 30-day money-back guarantee so you can try it risk-free. Listen, your phone bill should fit your budget, not the other way around. Reaching your financial goals is easier When you can pay less for the same service? Switching to Boost Mobile now is just a smart money move. Go to boostmobile.com/ramsey and make the switch today.

That's boostmobile.com/ramsey. $25 forever requires customers to remain active on Boost Mobile Unlimited Plan. Welcome back to The Ramsey Show in the Fairwinds Credit Union studio. Jade Washaw, Ramsey personality, is my co-host today. Noah's in Charleston, South Carolina. Hi Noah, how are you?

Hey Dave, I'm good.

What's up?

Hey, uh, so me and my wife both work full-time and are in ministry full-time. We just had our first kid a year ago, and we bought a new house whenever we had him just to fit our family better. And now we're in way over our heads, and I'm kind of stuck at what to do next.

You're in way over your head with your mortgage?

Yeah. It's our only debt. We don't have car payments. We don't have student loans.

Did something change that caused you to be in over your head, or it was kind of like that from the beginning?

No, it wasn't always like that. We had a home that we purchased for a good price, and we were able to sell it and make a good bit of money on. And the next barrier to entry cost-wise for the housing market that we're in was pretty substantial, and we thought we could make it work. And it is just not working. Okay.

Okay, so from the day you signed up for this current home, you've been over your head?

Um, yeah, pretty much.

Yeah, you bought a house you can't afford, so what are you gonna do?

Yeah, how much is it?

You're either gonna make more money or you're gonna sell the house. Which is it?

Uh, we're, we're both like in top kind of pay for the jobs that we're in for the ministries that we work for. What do you make a month? Uh, our monthly income is $6,630.

And how much is the mortgage?

Uh, our mortgage is $2,962.

Yeah. Okay.

50%.

Yep.

Yeah. Noah, but we— I mean, we luckily put—

Noah.

Yeah.

The, the education you got to go in the ministry didn't include math.

Most of the time it doesn't, unfortunately.

I'm messing with you, man, because you already knew the answer before you called. You bought a house you can't afford. You don't— you can't keep it. It's killing you.

We're trying to figure out—

It's taking all, all of your fun. The psalmist says the blessings of the Lord have no sorrow added to them. This is not from God. Has sorrow.

Yeah. Would the— Charleston just has such a high housing market. Like, we're in like the lower entry-level housing market.

You don't get a pass on math.

Yeah.

With that phrase.

Where I was going with it was, would it be smart to relocate and find Be smart to go back to the neighborhood and the house you sold.

Yeah, what was wrong with the one you sold?

So it was built in the 1940s. Um, it had— we had put $30,000 into it before we moved in, and then it needed about another $115,000, um, if we were going to live there because it had really bad mold and, um, the main plumbing line needed to be redone.

At that price point of home, that square footage, couldn't that fit a family of 3?

Yes. Yes.

Yeah, but in the market here, that is like $400,000.

Noah, that is absolute hogwash. Okay? Charleston, South Carolina is not the most expensive market in the United States to where you cannot live on $6,000 a month. month and buy a home that you can afford. You simply have justified and rationalized buying a house you cannot afford. And honey, you're gonna have to sell it. It's killing you. You do what you want to do, but you called us.

Yeah.

And I think you move out a little bit further and have a little bit more of a commute and get out in the country, so to speak, the suburbs, one county over, and you find a home that you can afford that doesn't have mold. And you put that— and you put yourself into that home. Good news is the market in Charleston is strong, and so you'll probably be able to sell this and get out of it whole. You're probably not going to lose money, and you can probably hang on a little while. You don't have to panic, so you don't have to— you don't have to fire sale the thing, but you need to get a sign in the yard this week.

Yep.

And it needs to be gone by Thanksgiving. Bye. We bought something we couldn't afford. Everybody listening to this just about has done that one time or another.

Absolutely. It's just harder to go backwards when it's a house. You feel— it's easier to take something back to the store, but when it's a house, you feel a type of way about it.

Yeah, well, it's, it's harder. It's even hard to go and look at houses in the neighborhood that you can afford after you looked at a house in the neighborhood. You set the bar higher, and now you If you go drive a Lamborghini, it's hard to settle on an Audi.

Oh man.

It's just hard. And if you actually owned a Lamborghini that you couldn't afford, and you have to sell it to get a used Audi— I don't know why I'm picking on Audis today, but a Volkswagen, a used Jetta. How's that? Go get you a Jetta. No, don't.

The secret to happiness, lowered expectations.

Exactly. And so, yeah, well, the thing is, in an effort to create a good situation for your family, the two of you made a bad math decision that is— that the irony is it has caused your family to be in a bad situation. And so, while the actual environment is nicer, everything about it reminds you that you've made a mistake when you drive up in front every day.

It was an emotional thing, 'cause they knew going in—

They couldn't do it.

That they couldn't do it, but they told themselves, oh, we'll just eat peanut butter and jelly.

God'll work it out. No, he won't. God can do math. He doesn't work it out. He says, you have to sell your house.

That's brutal.

He brings miserable— he brings misery to you until you sell it. Yeah, it's hard. I'm sorry, Noah. But yeah, there's no question, honey. You just did something and you gotta undo it. You gotta go back to the last time you had a good life. And it was before you bought this house. That's the last time. And then, yeah, you're gonna move out. But no, don't believe this line that Charleston, South freaking Carolina, is so expensive you can't afford to live there. It is expensive.

They have expensive houses, 100%.

Well, they do in every town.

Yeah, I'm just saying you don't have to pick on us.

Freaking Amarillo has expensive houses, but you know, that you can't afford to live in. But every town has a house that you can't afford to live in, or $7,000, or $16,000, or $17,000. I don't know. And some counties you can't even afford to live in. The county we live in is the 11th wealthiest county in the United States, Williamson County, Tennessee, just south of Nashville. And it's full of big old stinking houses. It sure is. It's hard to buy a house in this county. And you don't You probably don't live in this county if you make $5,000 a month. You probably don't unless your grandmother gave you a house. You know, I mean, that's it. So, but that's okay. You can live one county over and there's lots of houses.

That's right.

As a matter of fact, my wife and I were kind of doing our drive around yesterday and we drove down into one of the counties. We went, look, nice affordable homes and they're not that far out of town. You can actually do it. You just have to drive in that direction instead of the other direction.

Listen guys, I've heard just about every excuse for why folks think they can't get ahead with money. So let's go ahead and settle this right now. You get the final say. on what happens with your money. That's why you have to start telling your money where to go so you can stop wondering where it went. So if you're gonna start winning with money, you have to get on a budget. And the easiest way to get started and stick to it is with the EveryDollar budget app. It'll help you make a plan for every single dollar coming in and every single dollar going out every single month. And guess what?

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Hi, I'm good. How are you?

Better than I deserve. What's up?

Um, so I just wanted to call in and, um, See what your opinion is on this. So I have an opportunity to buy my cousin's company. He has been running it for a very long time, like about 36 years. And he's, you know, he's getting a little older, so he's wanting to sell his company but keep it in the family. And he, he's wanting to sell it for $4.2 million. It is like quoted at like 6.6. So I guess my question—

Who quoted it at 6.6?

Well, he said it was estimated because he was going to sell it. So I'm not sure what revenues he went down to get, like how much it's— how he came up with that number.

What does the company do?

Um, so it is a blind company. It's a wooden blind company, um, and shade.

Do you work there?

No, with window coverings. No, it's a, um, it's my mom's cousin.

So, I know. Okay. So have you ever run a business or a window blind company or anything like that?

Um, so I run a program where I work now, but it's not like a company or a business. You run a— what kind of program?

When you said you run a program.

Um, I run an emergency housing program out of Vermont. For the state of Vermont.

Okay, so you've never run a business, you don't know anything about business, you work for the government, and, um, what makes you want to do this?

Um, so he has, um, made himself like it— I mean, he makes really good money doing it. He, like, he's very successful. It's something that, you know, I've always had like a desire to, and I've always told him like, hey, you know, I really want to take over that company when you're ready.

So how many employees does he have?

He has 12.

Okay. And do you have any idea what the gross revenues or profits are on this business?

He said He said, I think, like, after, like, taxes and everything, the gross was $800,000 a year.

Okay. If that is— you think that's the net profit?

Yes. Well, he said it was $4 million, but, like, after everything, it's $800,000.

Okay.

All right. I love the idea of you making a lot of money and winning. I love the idea of you owning a business and having a desire to run a business. I'm really scared that you've got a gap that you've got to close in your knowledge level of what a business is, how it runs, and how to run one, because you're going from 0 to 100 in 20 seconds here. and you've never done anything like this, and there's a lot more to it than it looks like from the outside, and I don't want your dream to turn into a nightmare. And I'll give you one indicator, okay? When I asked you what the gross revenues or the net profit was, you didn't even know what I meant. And that's, that's Accounting 101. which you have to understand to be able to run a business. Okay? And I'm not picking on you. I'm just saying you've got a gap of knowledge that you've got to fill, or you're going to get your head taken off in this deal.

I also think you have to be bought into— maybe you're not in love with wooden blinds, but at least the mission of what they're doing, to be the owner of this company. I feel like you're very interested in the money you might make, And maybe less interested in what it is that the company does.

Running a business is very hard, to Jade's point. She and Sam own one, I own one, and it's a lot of work. And it's gonna be— when you work for yourself, you got the meanest boss in the world. That way, you know, you'll drive yourself harder than anybody. So, so goal number one for Brandy before you go forward is you're gonna have to go on a crash course on basic business and basic business terms. And if you could get your uncle to— your cousin, I mean— to hire you for a year and mentor you in how to operate the business, that would increase your probability of success light-years.

Yeah, he had mentioned doing like a business class with him. They have 3 a year here in Indiana. And then also working with him, like mentoring.

Yeah, I want him to mentor you on how business works and what the problems are that he's facing and be truthful in everything. Now, I'll take you the first step in, okay, to help you with this, because I think— well, I can't tell from the numbers you've given me because of the definition of terms, but I'm afraid this business might be overpriced even at $4.2 And I assume he's going to finance it for you and you're going to pay him out of the profits, correct?

Um, yes. Okay, it would be like a 10-year, like, payback.

That's how—

No, it needs to be— it needs to be— what do you make today? What's your income today?

Like $120,000.

Okay, I'm gonna pay— I want you to pay yourself $120,000 and I want you to give him all the other profits until you reach the agreed number. If the agreed number is $4.2 And you can do that in 3 or 4 years, that's the thing to do and get it done. Get it over with. Don't stretch it out 10 years and don't make it fixed payments. Make it a percentage of profits. Profits. Percentage of profit. After all expenses are paid, that's profit.

Yeah, that's gonna save your butt too.

Okay. Now, gross revenue is the total dollars that come in. That's at the top line, they call it, of the profit and loss statement, the P&L. Every other expense that comes out down the page, what's left at the bottom before you pay income tax— not before you pay other tax, but before you pay income tax— is your taxable profit on the business. This business is worth a maximum of 4 times that number. I'm a little bit afraid that number's $800,000. Which means that this business is worth $3.2 million, not $4.2 million or $6.6 million.

Mm-hmm.

Okay, so you need to get a good valuation on it, and I recommend an outside party give you an evaluation, like an accounting firm. And you're gonna pay them $1,000 or more out of your pocket to give you an evaluation, place a value on the company.

Okay.

And obviously we're not going to pay more than that, but your success is going to be based on 2 things. One is that you pay a reasonable price, and 2 is, is that you get a crash course in running a business from your cousin and from everything you can read between now and the time he walks out the door for the last time. You become a maniac in personal growth on running a business. Because it is a different pace. Whatever pace you're used to working for, for the state of Vermont, the pace of running your own business is 2 or 3x. You're about to go from wandering along to full-on freaking sprint, and you're gonna stay in sprint until you collapse. That's what it takes to run a business. It's not for everybody, and you need to do some soul-searching and go, do I want to bust it at that level? Because 60-hour weeks are normal for the self-employed. And guess what? You own the business. You don't get sick time. You take a Tylenol and you go to work when you own the business. You don't get time off for anxiety. You go to work and increase your anxiety.

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Cheryl is in Hartford, Connecticut. Hi Cheryl, how are you?

Hi Dave, I'm well, thank you. How are you?

Better than I deserve. What's up?

I found you guys about 5 years ago, but that was like 2 months after I opened a Robinhood account, which I've basically done nothing with because I don't know anything about the stock market. And it has a small balance in it of roughly $3,000. And I'm just trying to figure out, should I close this account and apply it to one of the other steps that I'm following, or do I just leave it alone?

How's it invested?

In random stocks that I know nothing about. I basically just picked some stocks that I knew— Apple, Amazon.

Are you on Baby Step 2?

I'm on Baby Step 4.

Baby Step 4. Are you investing with your 401 at work?

Yes, I do 15% at work.

I would take the money out of Robinhood and I would just invest it in a Roth IRA And I would do it through, I'm gonna call a more reputable brokerage, is what I would choose.

Yeah, like a SmartVestor Pro, sit down with them. Or take it out and go on a cruise, I don't care. But everything you said about it says you've already made up your mind, okay? Since you opened the account, you've spent some time with us and others somewhere that made you realize, I should not be putting money in things I don't understand. You phrased your sentence that way, correct?

Yes, that's true.

Okay. And so that you've got money in things you don't understand, so we should do away with that. Okay. We got money in single stocks, which I don't own a single, single stock, not one. So I'd do away with that. And lastly, I'm engaged in paying monthly for a service that I'm not using.

I have a Roth IRA that I had from an old 401 from another job that I just rolled into a Roth. Should I just roll it into that one?

You technically can't because it's not a Roth. You just have to open a Roth, a separate. It could all be in the same mutual fund. It could all be with a SmartVestor Pro. It could all end up on one statement, but it'll be 2 lines and 2 account numbers.

Okay.

Because you can't technically combine separate accounts like that. You just— so like if you had a Roth 401 with a SmartVestor already and you rolled over If you roll over a 401 from an old job and you put it over there with the SmartVestor, it'll still be there and it could still be in the same mutual funds, but it'll be a separate account number because each account rollover is a separate account number. They technically don't combine. But other than that, yeah, you could roll— put it all in a way that you are comfortable with the way it works, you understand it, and you're not paying a monthly fee for a service you're not using.

Okay.

Now, the purpose of Robinhood, the app, um, that they, um, their stated purpose is to democratize, meaning make available to everyone, the ability to buy and sell single stocks. Okay, and they do that. They do that very well. They most famously got in the news during the GameStop debacle when there was some people playing margin and just about broke them screwing around with it.

GameStop stock. Yes.

But they— but if you want to buy and sell single stocks as a hobby, or, you know, gradually, not day trading, you know, it's not a day trading platform, but you want to screw around with buying and selling single stocks and owning single stocks, that's what Robinhood is for. That's what it does. And we don't teach people to do that, so obviously we We're not mad at Robinhood, but I just don't— the people that buy and sell single stocks on average make about 7%, and the market makes about 12%. So you can throw it in an S&P 500 or better mutual fund, either one, and end up with almost double what you would end up buying and selling single stocks on your own account anywhere, including Robinhood. Take from the rich and give to the poor.

right? Mm-hmm.

Yeah, that's democratize. Now that's the idea. However, you're not. You're taking from the poor because that's who's playing single stocks on Robinhood. Rich people aren't on there doing that. This is people that they read that they wanted to buy stocks and this was a way to do it. That's— and like her, she's got $3,000, okay? It's not rich. So there you go. It's interesting, very interesting. The only other time I've heard a corporate entity say democratize, they did it, was at the formation of Southwest Air.

Oh, interesting.

The founder of Southwest Air said, I want to democratize air travel. I want to make it available to the regular people, common man. That's democratize. And they did. They changed up the no seating, and they lowered prices, and they They limited their destinations. They didn't have— just 1 or 2 destinations at the start, and they were very efficient. They run 1 type of airplane, so the parts are all interchangeable. They did a lot of things to keep prices down, prices down, to make air travel available to the regular guy. That's the only other time I remember hearing democratize in a corporate statement, but— and they— It worked. In both cases, they did do it. You know, Robinhood, we don't teach to do what they do, but they did make the trading of stocks with an app very easy for someone that wants to screw around with it. We don't recommend it, but they did, they did follow through on their mission.

Yeah.

All right, Mason is in Nashville. Mason, how are you?

Doing pretty good, Dave. How are you?

Better than I deserve. What's up?

I had a feeling you'd say that. Um, uh, so Long story short, I've been at my current job for about 8, 9 months now, and frankly, I am miserable. I left what was kind of a dream job for me to do what I'm doing now, better stability for the family. I'm married. I got 2 kids, 3 and 1-month-old. And I'm just, it's mind-numbing if I'm being completely honest. And for the last 5 or 6 years, I've been flipping four-wheelers and motorcycles and that kind of stuff. And hour for hour, that is starting to surpass by no small margin what I'm making at my current job. And it's kind of got me thinking, when does the side job become the main thing?

I don't care what you're making per hour. I care what you're making.

Yeah. How often do you make more doing the flips than you do at your real job?

Almost every single property I flip, it's You know, in a month, what are you making on flips?

On flips? Profit? Probably about $2,000 profit.

And what do you make at your job?

Uh, $27 an hour there. I just don't have the time to put into the, the four-wheelers and side-by-sides and that kind of stuff.

How many hours are you working?

40-plus, and it's an hour commute each way.

40-plus? Just one?

Yeah, yeah, 42, 43, something like that. Whoopie.

You got plenty of time to do flips. Well, you got a phone in your car for your hour commute. You're doing flips.

Yes, sir. It's, it's a lot of time and labor and stuff. I'm, I'm, I'm doing restorations more or less, not just picking up stuff that's already running and driving and stuff. I'm—

So you're not doing flips, you're buying and doing restros?

Correct. Yes, sir.

Yeah, that, that's different.

And so hour by hour, you're not making anything when you're doing $2,000 Uh, my record is $61, almost $62 an hour, all the way down to, you know, there's some I've made $25, but that's on the low side. I'm making $27 at my job currently.

You're gonna run your own business, you're gonna quit working by the hour. You need to start working by the month.

Correct, yes.

And you're making $2,000 a month. You're not making spit. So, uh, you're not making enough at the flips to get away from your miserable day job.

And you're bringing home $4,000 a month from your day job?

Uh, me and my wife, I mean, we're at $110,000 a year, call it $7,000.

I'm sorry, you, you broke up.

Say it again. My wife and I, we're making $110,000 a year combined, so call it $7,000 a month between the two of us.

What do you make?

Me? Yeah, probably $3,500 to $4,000.

$3,500 to $4,000. Okay, so when you make $4,000 a month, 3 months in a row from your flips, you can quit your day job.

Okay, okay.

3 profit— profit.

Yes, absolutely.

Not $61 an hour for 1 hour, right? No, no, monthly profit. So in other words, when you make the leap from the day job to the business, don't make it a leap, make it a step. The boat should be right beside the dock, just step in it. Don't jump and hope you get there. Otherwise, you'll be in the lake, wet. So, hoping I— if I could just work more, I could make more. No, you got plenty of time. You're only working 40 hours. You go in business for yourself, you're gonna find out 80's pretty standard. All right, let's cut to the chase. It's easy to get discouraged about crazy house prices and interest rates, but when you have the right real estate agent to help you buy and sell the right way, you'll have confidence to make smart decisions. Ramsey Trusted Agents aren't just experts who guide you through buying or selling. They're people you can can trust to have your back from the first call to closing day. Find a Ramsey Trusted Agent near you at ramseysolutions.com/agent. That's ramseysolutions.com/agent. Our scripture of the day, Proverbs 25:4, remove the dross from silver and a silversmith can produce a vessel.

Thomas Sowell Those who complain that the government is not supporting the creative arts have just never looked at federal bookkeeping. That's pretty good. I have not heard that one. Joe's in Anchorage. Hi, Joe, how are you?

Sir, I'm good. Thank you for taking my call.

My pleasure. How can we help?

It's my, uh, my question is, should I sell a rental property that I bought back in 2023? And I'm happy to give you details in the backstory, or you can go ahead and ask any questions that you think are relevant.

Why would you sell it?

Um, so I don't, I don't live in it. And, um, it's, uh, ultimately it's costing me about $800 a month with a property manager, um, that I'm bleeding between an HOA payment and a mortgage.

Um, so you have a rental property that's losing $800 a month? That's correct. I would sell that.

Okay. Um, what would keep you—

what's keeping you from wanting to sell it? You sounded hesitant.

So I bought it for $365,000. Um, there's about $358,000 left on the mortgage, and CMAs are telling me right now that it costs about $300,000, or the value is about $330,000. So I think it would cost me about $30,000.

So it went down in value?

Correct.

Why?

I'm not sure, but, um, it's, it's not unique to the house. It's a, it's a townhouse. So there's a lot of similar properties in the neighborhood and they're all just, just going down. So, um, there's been sales as low as $300,000.

So it's going down in value and you're paying every month to own it?

That's correct.

Wow. So how are you going to get out of it if you're upside down?

Well, I can just continue to pay the, uh—

No, I mean, if you sold it, do you have the $30,000 that you're in the hole on?

Yes, I do. So I've got a— my wife and I, so we're in the Army. We bought this house because we thought we were gonna get out down in Colorado Springs where I bought it. But ultimately I did not end up getting out of the Army. I'm now up in Alaska and we're planning on getting out again here in about 2 years.

I'm sorry, so it's not in Anchorage, it's in Colorado Springs?

Yeah, sure. Yeah.

Colorado Springs.

Correct.

Which is not— that market is not struggling. It's going up.

Is there something wrong with the property? Anything?

No, there's, there's not. I think I just overpaid for it, if I'm gonna be completely honest.

Okay, well, there's 3 strikes. It's gone down in value, it's out of town, and you're losing money on it month over month.

There's no reason— this sounds like a nightmare. There's nothing here that's positive. So yeah, I'm definitely getting out if you can get out. Um, but get on— get online at ramseysolutions.com. And find one of our Ramsey Trusted Real Estate Pros and make sure that the CMAs that you got are correct. I, because I mean, I, you've owned it since '23. This is '26. It should have gone up in value, not down in Colorado Springs, unless you got some kind of a unique problem to that neighborhood. And maybe that neighborhood's got a micro problem, but macro-wise, Colorado Springs is a healthy market.

Unless he really overbought, which I don't know.

He may have overpaid. You may— they— and, you know, huge Army base in Colorado Springs. I've spoken there. It's a wonderful, wonderful place. And, um, there's a lot of military there, so it's possible that a young military guy got taken advantage of. It's possible. Hope not. I hope somebody wouldn't do that to our military, but somebody does every day. So, uh, I'm sorry. Wow. Chris is in Detroit. Chris, how are you?

I'm doing great, and I hope you both are doing great too today.

Better than I deserve. How can we help?

Right, right. Okay, here it is. Um, last week I lost my cousin. Um, I was in charge of— loss meaning she died. I was in charge of money that she left behind and also funeral expenses. So after funeral expenses, I'm left with about $23,000. Um, she was raising her 8-year-old granddaughter due to mom and dad both being addicts. Mm-hmm. Um, the little girl now, she's going to a good living situation, but now I have the $23,000. I would like to invest that money. However, I hesitate to put it into her name, um, because what happens at age 25 or 30 if for, you know, some reason she was to fall into that?

Was there, was there a will?

There was no will. And I was, um—

Whose name is on the account with the $23,000?

Mine.

It's in your name? It's not in your cousin's name?

It's in, it's in my name, right? My cousin who passed away, if I was a joint holder on that account With her.

We were the only 2 names on that account.

Well, I, I appreciate what you're trying to do. What I would do is get with a SmartVestor Pro, and you can just open an account on behalf of the child and manage it and just keep up with the whereabouts of the child so that at some point you'll be able to turn it over to her. As it makes money, you're going to be taxed if it's in your name.

Ah, okay. Gotcha.

And I'm not positive that you're operating on— I'm not positive you're operating on correct assumptions. So I want you, I want you to have the SmartVestor Pro look at the way the account was titled. Did she have on the account a POD, paid on death, to you?

Yes.

Okay, then it is, it is your money now, and you can do with your money what you want to do with your money. I would not put it in the name of this child. I agree with you. And if you want to use it on the, you know, the memory of your cousin, if you want to use it for the good of the child, just open a mutual fund and just watch that mutual fund and just keep a label on the file in the file drawer that I've earmarked this for this kid, and let your family know that this is actually not your money, but you're managing it in your name.

Right.

Yeah, yep, I've already done that. So mutual funds, in other words, is that the same as a high-yield savings account?

No, it's much more. It'll do a lot better than high-yield savings. Yeah, because you got a long term. I mean, you got 10, 15, 20 years before this child's gonna need this money.

She's only 8. Yeah, she's 8 years old. And so, yeah, all right, well, I, I appreciate that. Appreciate what you guys do, and thank you so much for taking my call today.

Thank you for being there for that baby.

Yeah, yeah. High-yield savings account is very different from a mutual fund in that way. If you have it in a high-yield savings account, it's sitting at a bank and making 3.5%. If you invested in mutual funds, hopefully you're upwards between 10 to 12%, and it's invested money, which is what you're looking for, which is why we suggested a SmartVestor Pro to help teach you about that.

You learn about it and you do a good job investing. It's a great Exactly right. And so guys, the situation that Kris found herself in there, that one went well. That can go sideways in a heartbeat if you don't properly do the documentation. And so her cousin who was ill needed to have left a will with Mama Bear Legal Forms or somebody to dictate how all this was to go down.

Yeah.

And to clarify that the money was left not to her daughter, but to Chris. If that had not had a paid-on-death on that account, probably half of the $23,000 had to go to the 8-year-old today.

Oh, and that's scary.

Because there's no will, and that money was her mom's money, and it goes to her blood relative in most states. And so, but if it had paid-on-death to Chris, which is what Chris said, said, then none of it went to the child. It all went to Chris. Chris's half and her cousin's half now goes to her on death. Then there's no nothing. But I mean, that's that one little change on that account, and that 8-year-old will be sitting on, uh, $11,500 and in this better situation. Whoever knows how that money will go.

Well, gosh, yeah, because without a will, the state is now even deciding where the 8-year-old guardianship-wise, which is tough.

Well, it sounds like they've gotten something lined up and that was approved by the state. Yeah, the same exact thing. Your child is left at the behest of the state, and the last thing you want is the same people that run the DMV deciding anything for your kid. So no, no. So this is why you need detailed power of attorney prior to death, healthcare power of attorney. You need a will. And it's really not that expensive or that hard to do at Mama Bear, and that's why we have endorsed them. Chris pulled this one off. They pulled this off. They got out. But truthfully, one little stroke of the pen and this could have been a nightmare.

That's right.

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.