Transcript of Wealth Is Built On Facts, Not Feelings

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, your host. Jade Walker, Rashaul Ramsey, personality, number one bestselling author, is my co-host today. Open phones at 888-825-5225. You jump in, we'll talk about your life and your money. Tyler is in Dallas, Texas. Hey Tyler, what's up?

Hey sir, how are you?

Better than I deserve, man. How can I help?

Yes sir. So, um, I have about $408,000 in debts on an S-block. Um, so I— the interest payment a month is just— it's, it's only like $1,600, just pure interest. Um, and so I just— I'm wondering why— how, how I should I have some cash in a T-bill and I'm just kind of wondering, like, should I take some of that cash and like knock this, knock some of it out or just kind of whittle away at it?

You know, what was the purpose of the loan? Why did you take it?

Um, I bought a rental house, so I did a few things with it actually. Um, I bought a rental house which is producing, uh, some income. I paid off my wife's car and my truck with the S-Block because the interest rates on, you know, on the loan that I got for the vehicles was crazy. And so this interest rate was much better.

So what's the stock worth?

I have about $550,000 in stock and I'm about—

Why don't you just sell a bunch of it and pay the loan off?

Well, I see, I got an inheritance this year of about $1.4 million in stocks. So, um.

So why are you sitting on a $400,000 loan paying some goober $1,600? Sell enough of it and get rid of the loan.

Well, see, I sold a lot of it. I bought my house, I moved. I paid my house off. Um, when I moved, I owned the house that I moved from. So that's a rental house. And then I got the S block. I— to buy another rental house. Yes, sir.

So you have two rental houses that are paid for and a house that you're living in that's paid for, and you got $550,000 in stock and you got a $400,000 loan. Do I have it right?

Yes, sir. And I got a T-bill. I got about $180,000 in a T-bill.

Okay. Well, sell the T-bill and sell enough stock to pay off the loan.

What's wrong with that?

Say that again?

Why not just sell enough stuff to pay off the loan? Why are you going to keep this?

Well, I've already sold a ton of stock already this year.

Why do you want to keep it? You made that decision when you paid off your car and you used all this money. You already made the decision to give up the stock. You just borrowed against it instead of actually doing the deal.

Right. So tell us what you're— what you think you ought to do since, since we gave you our opinion. What's your opinion?

Well, I want, I want to pay about— I want to pay about maybe half of it off and then get the, get the payment down to where my, my income can cover.

Why do you want to keep the loan?

Well, my financial advisor was telling me that He thinks it's dumb to sell stock to pay off the cars because, you know, stocks are appreciating.

I think your financial advisor is a moron.

Yeah, I mean, I've tried to talk to him and say, hey, I want to—

I don't need to talk him into anything. He works for me. I got two words for him: you're fired.

Yeah.

What's your income when you take in all the rents and what you earn from your job? What do you— what's your income? Every month and every year?

So, uh, I have an LLC that owns the rental properties, and that, that brings in about $8,800 a month. And then I pay myself about $5,000 a month. And that's all because I don't have— I don't have any personal debt. I paid off all my debts that I owed with when I got this money.

How old are you?

40.

And what's your career?

Right now I'm really just living off the rental income because it's, it's a lot and it's all right. There's my bills, you know.

Well, the bottom line is this, boss. I would not have done anything that you have done. And so if I did wake up in your shoes today, I would fire my financial advisor and get someone that has a brain and doesn't tell you to borrow money to pay off a debt. That's not paying off a debt, it's moving the debt. You moved the debt debt. And this idiot called that sophisticated. It's not sophisticated. You just moved it. That's all you did. You moved your car debt over onto your stock in an S-block. That's all you did. So what I'd do is sell the T-bills, and I'd sell enough of the stock to pay off the debt, and I'd fire my financial advisor and be 100% debt-free. No interest to anyone. And that's what I would do. I don't think you're gonna do that though. But, uh, so I'm not real sure why you called.

Yeah.

I think he's afraid. I think he likes seeing that chunk of money sitting there, and some part of him doesn't think he'd be able to invest his way back to what he had before, which he truly could over time.

Well, and you know, you're 40. Get a job.

Yeah, that's what I'm saying. If you get a job, you can do it.

Go earn $150,000 a year and chunk some money away and make a bigger pile of money than the one you inherited. And so you got 3 pieces of paid-for real estate. 2 of them are generating $60,000 a year, which is okay. And you got a little bit of stock left after my plan. And so that money can stay invested in good growth stock mutual funds. And I'm gonna liquidate the individual stocks. I'm not letting this stupid financial planner play with them. And I'm gonna put them in basic growth stock mutual funds and let it double about every 7 years. And it will if you freaking leave it alone. Then just let that ride and then go make a living for yourself. And you know, you do not have enough net worth to retire at 40. You didn't get that much money. And I don't think, but I don't think you're gonna do any of this. So yeah, it's crazy. So, all right, so here's the thing. Your financial advisor Your lawyer, your CPA, your doctor, your whatever professional works for you. They don't tell you what to do. You're a grown-up, boys and girls. And so I've occasionally had attorneys that got confused and thought they were gonna tell me what to do.

And they got fired. And so, my financial advisor tells me what to do. Tells me you have a wrong relationship with your financial advisor. Your real estate agent tells you what you're gonna do. No, it's my freakin' money. I tell you what to do. I ask you for advice and to teach me something I didn't know, present to me ideas I hadn't thought of for me to consider what I'm going to do with my money. And this is how you approach dealing with a financial advisor. When your financial advisor tells you what to do, all of a sudden you start worrying about their conflict of interest. Like, he doesn't want you to sell his stock because he wants to get paid to manage it.

Yeah.

Hello. Instead of you paying off your stupid car payment.

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Jonathan is in Shreveport. Hi, Jonathan, how are you?

Hi, Dave, how are you?

Better than I deserve, sir. How can we help?

Um, I need some help. Um, I'm about $3,000 in personal loan debt. I'm struggling to like sometimes pay all my bills, sometimes get groceries, food.

Mm-hmm.

And yeah, I just, I've been terrified on your show and I just need some help.

Okay. How old are you?

33.

Okay.

And what do you earn? What do you do for a living?

Um, a Chick-fil-A delivery driver.

Okay. And so what do you make a year? What are you making a month, a year, a month?

Um, say about $2,500 a month. Okay.

You're working for— yes, you're working 40 hours?

Close to 40. Yes, sir. About 36. Okay.

What, what caused me— what, what caused this situation? Because my guess is, just based off of what you, what you're saying, is you're 33, you're, you know, struggling to get groceries on the table, driving Chick-fil-A. That's probably not how you expected and where you expected to be at 33, am I right?

No, ma'am. And I did the personal loans to just to keep up.

And what, what caused that? Did you have a, a job that you love that you got fired from? Did you have a relationship implode? What, what got us here?

I don't know how to explain it. I'm sorry, I do apologize.

No, that's okay.

Um, I just got personal loans just to keep up with the bills and get groceries and all that. I love Chick-fil-A, don't get me wrong.

No, we're not trashing them, but I think you—

Oh, no, no.

One thing we can identify immediately in your story is we'd like to get your income up.

Okay.

Okay, immediately. I want to start— what else can I do? I mean, 36 hours a week, so that means I could work another 30 hours a week pretty easily. You're only 33, you can work more. And so I'd like for you to go earn another $2,000 or $3,000 a month with some kind of side hustle. And start thinking about what you want to be when you're 43 that pays $70,000 or $80,000 a year and what are the steps to get there.

Well, I'm about to start a new job in 2 weeks.

That's good information.

What's that? Hospital, hospital place here in Longview, Texas where I live. I'll be a valet driver. I'll be making $16 an hour. It's only part-time for now.

On top of the Chick-fil-A work?

No, ma'am, I'm gonna leave Chick-fil-A.

Okay. And it, and it pays more?

Yes, ma'am.

Because of tips?

Yeah.

Um, yes, ma'am.

Because just an hour, I can't see how it's gonna be more. But if you, I'm guessing tips.

I was making $16 an hour. I'm gonna make $11 at Chick-fil-A.

Got you. Okay.

Okay.

Good.

Okay. And you're gonna be doing that for how many hours a week? The new gig?

Um, I don't know my new schedule right now.

Um, the only way this is better—

stop. You took a job at $16 an hour. It's not a raise unless you're working at least 36 hours, and you don't know if you're going to get 36 hours.

Um, they shall be working from 12, 12 in the afternoon to 8 PM at night. Okay.

If you do that, how many days a week?

I think they say maybe 4 or 5.

So what I would do is keep Chick-fil-A, keep, keep your job at Chick-fil-A and say that you need to roll back your hours because this Chick-fil-A now becomes your side hustle to this, ideally. But I would not get rid of Chick-fil-A until you see what your hours are going to be as the valet. So that's thing one. Is the $3,000 of personal loan debt, is that the only debt you have or do you have a car payment? Is there anything else we need to know about?

Um, I do have car payment. I just got a new car.

What'd you pay for the new car?

Um, my monthly bill is $400.

Tell me the whole amount that you paid for the new car.

Um, $2,400.

$2,400 or $24,000?

I went $2,400 for down payment. The whole car payment is $17,000.

So you paid $17,000, you got a loan for $17,000 for the car? Okay.

If you don't get your income up really rapidly, okay, honey, you bought a car you can't afford. So you need to get your income up rapidly or we're gonna have to downgrade out of that car. Okay? You've got to pick up the 40 hours plus another 25 hours somewhere else. And I want you working all the time and get very specific about what you're going to do with your life and how you're going to grow your income. And then when it comes to food and bills, the way you do this is you prioritize. The first thing you buy with your money when you get money is food. Period. You have to eat before you do anything else. The second thing you pay for is lights and water and utilities at wherever you're living. The third thing you pay for is your rent. So food and shelter and transportation and you need to get rid of this car. You've got a car you can't afford. And also, that's why you're pinched.

That's why you're pinched. But the bigger thing here is I think you need a vision for your future. I think that you've just been kind of rolling along, and I tried to get to it earlier to ask you, what— how did we end up here? But I don't think, you know, you need to spend some time thinking about what got you here. And I think it was just lack of a plan, lack of a vision for yourself. So you need to create that because you're going to look up here in 5 years and you could very well be in the exact same position or worse.

I don't want you to be a 43-year-old— you're 33— I don't want you to be a 43-year-old valet. I want you to do something else with your life, honey. So what are you gonna do? You need to be thinking about that, that pays a lot more, because this is not gonna bode well into your future. Eventually something's gonna happen with your health, or you're gonna stub your toe, or something's gonna come along, and You know, you've got to be growing yourself and growing what you're going to be. That's where I would head.

Proactive.

Dwayne is with us in Dallas. Hi, Dwayne, how are you?

I'm doing good. How are you and Jade doing?

Better than we deserve. What's up?

There you go. Well, I've got possibly one of the silliest car questions you've ever had.

Number one, I doubt it, but we'll give it a shot.

Okay.

Okay. Well, I've got 3 vehicles.

Okay.

They're all paid for. Uh, I'm just like Dr. John. I have an allergy to payments. I don't have them. Uh, the only thing I do have left is a house. It's got $34,600 left on it. So that's all I've got. All right. Enough of that. What I'm calling you about is I have an infatuation with a really silly car.

Okay.

It's very cheap. It's very easy. It's as simple as I am. Uh, I want to keep putting money into it. You know, if it, if it dies, I want to keep putting money into it because I don't want to buy a new car.

Is it a classic car or is it just—

No, no, no, it's a car that nobody even wants.

Well, why do you want it?

It's a Toyota Corolla.

I know, why do you want it if it's a piece of crap? Why are you so proud of it?

No, no, no, it's not a piece of crap. That's what I'm saying.

I buy—

I will buy these Toyota Corollas. Most people think they're a piece of crap.

How many is it? Are you single?

Yes.

Yes, I am.

Why do you have 3 cars?

Well, one's a farm truck, F-150, and then one's a C5 Corvette that I drive once every— once a month, something like that.

Do you fix the cars? Are you doing— are you just buying the part and you do the labor? Is that what it is? Or you're taking it somewhere to be fixed?

Uh, the Corolla, I drive 2 hours to work. I drive a truck.

No, no, no, I'm asking, do you do the work on the cars?

No, I do not.

Okay, so what's the Corolla worth?

Probably about $3,500.

Okay, and what are the repairs costing you?

Uh, $55 an hour plus the parts.

That's not an answer. What are the repairs costing you in total, honey, compared to the $3,500 car?

I haven't had to do anything but change tires.

Okay, then you don't have a repair problem. You don't really have a question. It's not a silly question. You don't even have one.

If you get to the point where you're putting more than $3,500 into these, It's time to get a different car.

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Andrew is in Salt Lake City. Hi, Andrew, how are you?

I'm doing great, Dave. Thanks for taking my call. I've been a long-time listener and I really appreciate it.

Sure, what's up?

Well, I've got a question. Um, my wife and I were wondering, uh, we— so we had actually a negative net worth just 10 years ago and we have completely changed our life. Um, and good— a good amount of that's due to your teaching and we really appreciate that.

Well, thank you.

The problem, which is not a bad problem that we have now, but we're just trying to figure out like, are we putting too much into our 401 accounts now. Um, so we're currently putting about 25% of our gross income into our 401. Um, that would also— that includes, uh, our Roth as well. Uh, we just thought we were so far behind for so many years that we've really stepped it up to just the maximum that we're able to do. And we're just trying to figure out if we have just too much in there right now.

Is your mortgage paid off?

Uh, we're on 4, 5, and 6, and we have about $90,000 left.

No, you're not.

Well, you're right, because we're doing more than 15%.

Exactly.

Yeah.

And the reason, the reason that we don't, the reason we don't do more than 15% is we put the difference on 6, pay off the house early.

Okay. How old are you currently?

Paying off the house early is as important to building your net worth as pouring money into your 401. Both of them are important. That's why we have 15% in Baby Step 4, 5 is kids' college, and 6 is pay off the house early.

How old are you?

We are 44 and 45.

Okay.

How much is in your nest egg so far?

Uh, just shy of $1 million.

Oh, shut up.

How much do you think you need?

Uh, We don't know. We're just— we were still—

way to go, man. Way to go. Stinking millionaire at 44. Look at you. And then you're saying you're saving and you're saving like you're scared to death that you're broke. That's funny.

Well, we both came— we both came from—

I know where you came from. I'm talking about where you are.

Yes, I appreciate that.

Way to go. You need to actually look at these numbers and let them settle in on your heart as well as your brain.

Yeah, because you're just speeding past it like, like it's no big deal.

You were so desperate to never be back there again that you went all the way over to the other side now. Way to go, man.

Very true.

Yeah.

Well, no, stop, stop. You need to back down to 15% and you need to get your stinking house paid off. What do you owe on your house?

We owe about $290,000.

Perfect. And what's your household income?

Uh, it's about $320,000.

Okay. So here's— good lord, you're doing so good, man. Way to go. Oh man. All right, so it's so much easier to just take a horse that runs this fast and direct it in the right direction than it is to beat one and get it running. You're just incredible, man. Way to go. So, man, you're incredible. So, all right, so just slow down a little bit. Think about it this way, okay? If you start chunking on the house with the same Not the same fervor. You need to lighten up in general and enjoy some of this, but you also need a chunk on the house. Okay, how quick we get the house paid off? Probably 4 years, something like that. That sound right?

Yeah, we've been paying, uh, just starting this year, we've been paying an extra $5,000 a month, and we have about a 48-month plan to get that paid off.

Yeah, well, I think I just upped it because I lowered your Baby Step 4 back down to where it should be.

Yeah, if you, if you put $4,000 a month into retirement, how much could you put on the house to go aggressively.

How much more could I put on that?

I mean, you're putting 10%, so you're putting $30,000 too much into retirement right now. I'm gonna throw that over on the house, so you're done in 36 months. Are you actually doing anything fun at all?

Well, actually, we just got back from a month-long cross-country road trip with our kids, and, um, that was our first— fun!

We said fun!

Yeah, I think you need to take your wife to Rome, man.

There you go.

Um, uh, wow. Yeah, you do. And what are you driving? What kind of car are you driving?

Um, I've got a nice paid-off, uh, 2021 Ford F-150. She has a paid-off 2016 Ford Fusion that she just uses to go back and forth to work.

You need to get your wife a better car.

Are you both nerds? Are you both nerds, or is she a spender?

Uh, we're both nerds. Yeah, uh, I'm the financial nerd and she is a great saver.

Yeah, I, I really don't want a millionaire's wife driving a used Ford Fusion. There's just— I don't want anybody driving a used Ford Fusion, but I really don't want a millionaire's wife driving that. And while meanwhile you're driving an F-150, but yeah, which is a great car, but yeah. So anyway, the, uh, good Lord. Okay, so what would I do in your shoes? This is so fun, you're doing so good. These are minor adjustments and we can have some fun. All right, number 1, I'm gonna book a trip to Paris or Rome. Number 2, I'm gonna upgrade my wife's car. Number 3, I'm gonna lower your, your contributions down to 15%. And number 4, I'm gonna get the house paid off. When the house is paid off, you're gonna have so stinking much money. Okay, so you're at the point the house is paid off, you're 48 years old, okay? And your million dollars will have become $2 million by then. Okay, and it— and then by the time you are 55 years old, it will be $5 million, and the house will be worth a million. So you're going to be 65 with a $20 million net worth if you do simply what I'm telling you to do.

Okay, I can do that.

You are kicking butt, and I want you to enjoy some of this money. "Oh, we are enjoying." Please, don't tell me anybody driving a Ford Fusion has a good life, okay? Just please, go buy your wife a car. Seriously. Way to go, man! You're so cool. I love talking to him.

Such a nerd. He was a nerd. Both of them are nerds. Let's talk about this, because it's important, and I feel like if we don't, it can give the Ramsey plan a bad name, which is learning how to spend. So, the first, 3 baby steps are very intense, right? You're getting $1,000 saved, you're paying off your consumer debt, you're stacking up 3 to 6 months of expenses. And that is gazelle intensity.

And you don't—

you drive a Ford Fusion, then you drive a Ford Fusion and everything inside of you is telling you, don't spend extra, don't spend more, hold your money, right?

Scorched earth, no lifestyle, no enjoyment, no trips, no eating out. We're cleaning up the freaking mess. Like you said, he started with a negative net worth, right?

And it has to be that way. And the way that you do that, the way you get to the gazelle intensity that we talk about, and one day Dave will explain that on here. The way you do that is you practice it. Like John Delony would say, you practice what it means to say no. You practice what it means to stick to the budget. You practice that behavior and you become very, very good at it to the point that you have accomplished Baby Steps 1 through 3. Then there's a shift that occurs when you get to 4, 5, and 6 where you can pull your pedal, you know, you pull your foot off the gas a little bit. You can start to enjoy life. And I want to point out that that also You have to practice that behavior. Otherwise you will not be good at that behavior. You have to trust yourself to know, okay, I know what it feels like to let myself spend a little. I know what it feels like if I'm going off the rails. I know what it feels like if this is out of— you have to practice that same behavior so you become good at spending and actually enjoying and living your life.

And sometimes people just get afraid of it and so they don't do it.

Ah, that feels weird. Well, you stay, you stay, you keep your emotions back when you were broke.

Yeah.

And you have to retrain your body, your mind, your emotions, your spirit, that things are different now.

Yes.

And it's not that we're gonna get sloppy and immature and impulsive that got us in the mess in the first place. But now, we're not in a mess.

We're not in a mess.

We have a million freaking dollars.

Yes.

And we're 44 years old, plus the net worth and the house. So, a million and a half, probably, in net worth, right? And we're making $300,000 a year. Those facts are— you need to tell yourself what are the facts, not what are the feelings. 'Cause your feelings can still be stuck back there when we were broke. You know, "Well, I remember—" Yeah, I know. I don't care what you remember. I remember being broke too. I remember on my third date with my wife, I had a 280,000-mile Monte Carlo on the third engine and fourth transmission. I changed them 'cause I'm a redneck. I turned the wrench. And I was taking my wife out on the third date explaining to her somehow— I had $1.12 in my checking account. Someday I'm gonna be a millionaire. We crossed a railroad track and the muffler fell off my car. I remember that conversation because it was so ironic. And I rolled up under it, put the muffler back on, we went on the date. But the, you know, and then it came true. I was a millionaire by the time I was 24. And I was so stupid I had to do it 2 times 'cause I lost everything, got the opportunity to start over.

So this is the feelings. Don't get stuck in the feelings. What are your facts? Live in the facts.

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Well, people are always asking me, Dave, what'd you do to build your real estate portfolio since you don't borrow money? How'd you do that? And how do you do your investing? What do you really do? They always want to know what mutual funds and all that. We don't tell you which mutual funds because we want you to think for yourself. We don't want you to do a particular mutual fund just because Dave did it. We want you to actually use your brain and learn how to do your investing. But I am going to open for the third time ever our investing playbook. I'm not going to get into the details on which mutual funds, but I'm going to give you some real-world examples of stuff I do. George Campbell and I started doing this 3 years ago. This will be the third time we've ever done it. It's called Investing Essentials. It's a 2-night virtual event. It will be September 1st and 2nd. It's the only place you're gonna get my personal playbook, and it— and we're gonna nerd out. George and I are both super nerds, and we're gonna nerd out on all the little nitsy nuanced crap.

If you don't want to know 9 million details about investing, don't come to this because this is gonna be 9 million details about investing. And, you know, honestly, I think it's a little boring. But it's really, really a lot of meat. A lot of meat. Not even any potatoes, just meat. So we're gonna go into the basics of investing for just a minute, just to make sure you've got that foundation, and then we're gonna tear into the stuff that we do that's pretty high-level stuff. And so tickets start at $199. You can get it at RamseySolutions.com/events, or you can click the link in the show notes, and it'll take you right there, either one. November— or September 1st and 2nd. September 1st and 2nd. Event, 2-night virtual event, Investing Essentials. Daniel's in Fort Smith, Arkansas. Hey Daniel, what's up?

Hey, how's it going?

Better than I deserve. How can I help?

Well, uh, so I got presented an opportunity, uh, within the last 2 weeks. Uh, just to start off with, I work in construction and, uh, build relationships here and there and do what I can for my customers. Uh, About 2 years ago, I got involved with the customer. He's an 80-year-old man, older man, had the healthcare not too long ago. And well, I thought we were going to talk some numbers on a, on a job he was letting me do. And, uh, I get to his office and he basically, he gives me— he told me he's going to give me a commercial property. He's going to deed it over to me completely for free. And, uh, it's a, it's a big commercial property and it's, it's a life-changing event for me.

Does he have any sons or daughters or a wife?

Yes, uh, he has 3 sons— he has 3 kids, 2 sons and a daughter, and a wife. Yes, uh, I, I asked him the same thing. I asked him multiple times the same thing just to make sure we're all clear. Uh, all of his kids, from what I can tell, are okay and they're doing good, and basically doesn't want to mess with it.

Is that his only piece of wealth? Does he have lots?

Lots, lots and lots. Okay, so he's a multimillionaire and he's giving you a property that's worth what?

Well, he said he bought it for $1 million 20 years ago, and I would— it's 43— it's got 3.23 acres as far as the lot goes, and then there's a 42,000 to 43,000 square foot building on it. Uh, it's a strip mall and it's full of, uh, businesses that, you know, uh, pay him rent.

What does he estimate the worth of it is today?

Well, I haven't got that for you. Um, I'm actually going this week sometime to talk to him and his attorney to, uh, I guess figure out more details.

Well, that's wild. Okay. Yeah. So what can I, how can we help you?

I have no idea what to do. I'm terrified.

Uh, how long have you been working with him? How long has your relationship gone back?

Last 2 years. Uh, last 2 years. And we've gotten pretty close over the last 2 years.

And apparently, uh, yeah, sounds like he's giving you a $10 million property or so.

Right. Okay. Wow. Uh, he did have a health scare not too long ago, and I think that's why he's kind of, he's wanting to get stuff out of his hair, less stress in his life.

Uh, yeah, there's a lot of ways to do that, but this is an interesting one. Okay. Um, Yeah, I just, I want you to learn as fast as you can learn because you're getting ready to become the landlord of a commercial property. And so you need a good real estate agent that is a commercial broker in your corner to teach you how to manage that property and how to manage that type of tenant and how to refill when one of them, you know, when one of the leases expires and they move out or when they quit paying and you have to throw them out and you put a new tenant in, how do you do that? You don't have any idea. This is your first ride on this truck, right? So you're getting ready to be a big-time commercial landlord, and you're gonna have to have some people in your corner to teach you how to do it. Not do it for you, but do it with you. And so you want somebody that's got— in the commercial world, there's a designation in the commercial real estate world called the CCIM, and that's a commercial— that's a real estate agent who has studied how to value and how to manage commercial real estate.

And it's like a— it's like getting your CPA but in commercial real estate. That makes sense. So if you find somebody— I have a lady that works for me that has a CCIM, and she works for me and manages our real estate. We've got a bunch of commercial real estate, and I've got a degree in real estate, which is the equivalent of that too. So, but you've got to learn the nuances of stuff like the CAM, common area maintenance fees is what that's called, the CAM. You've got to learn the per square foot, who's paying what, are these triple net leases, and you just, you, there's some things to learn here. And you're going to be taking a crash course on it. And ask him if he has a recommendation for someone to mentor you on handling all of this. Does he want to do it? While he has his health.

Yeah. He said, uh, he said I could come to him for any help he needs. And I do have some help in my corner too, uh, with some other friends of mine. Uh, one other little detail I forgot to mention, I guess it's a big detail. There's, uh, one of the tenants had a business there and it burned down. Uh, and so that would be my responsibility. And one of my biggest concerns right now is like, I don't, I don't, I don't have a lot of money to my name. I don't necessarily make a lot of money. And, uh, my concern is getting a loan to fix this place. Am I going to be able to afford it with the income that the strip mall is bringing, or do I— am I going to have to dip into my own finances?

Is it part of the strip mall that caught on fire?

Yes, but it's the only business that is out of business right now due to the fire. Everyone else is still up and running. So it just—

it didn't— it didn't burn the structure, it just gutted the interior?

A little bit structural damage inside that part of the area, but not unsafe for everyone else to be.

And I take it the property has no debt? Yes, correct. Then it ought to be cash flowing like a bandit. You ought to be able to stack the cash out of the rents fast enough to do these repairs. You don't take anything out of it. You just use all the cash to pour back into the property.

Okay. That's, that's kind of a lot. Cause I didn't know if I needed to go to a bank. I would see if I would cash flow the repairs. Okay, I don't know.

I mean, if this thing's— it should be generating— she be— yeah, you should be generating some pretty serious money per month.

And it sounds like you'll find out that information when you have that first meeting.

Yeah, I have a good idea right now, and it's around $6,000 a month.

That's not it. That's not right.

That's from what I— how many businesses are in there? 1, 2, 3, 4, 5, probably 7 or 8, and there's probably 3 or 4 vacant spots in the— within the strip mall.

Hmm.

That's wrong.

I think he's very, very cheap on a lot of his rent.

That's beyond cheap. That should be one tenant. I was gonna guess $50,000 a month. Yeah. And you're telling me $6,000 a month. Something's wrong. Something's really, really wrong. So you need to get in there and find out what's going on. $6,000 a month? Yeah. So good news is you know people in the construction business, and I think— but cash flow the work, honey. Don't take out a loan. And otherwise, just let that tenant go on his way, and then you cash flow it when you can cash flow it. But yeah, you've got tenant improvements you're gonna be doing on those empty spots. I don't know. I don't know if you're gonna be able to handle this or not.

What do you think causes an 80-year-old guy to just hand over $10 million?

It's very strange. It's very strange. I thought the property was worth more than it is. Maybe. I can't tell what's going on. Yeah, me neither. Once I got that last piece of information, my head went on tilt.

Why don't you get more information and call us back? That'd be fun. If you want to.

Yeah. But you need to get some independent people outside of his circle, a CCIM, to look at this with you. And, uh, they're gonna talk to you about borrowing money. I'm not. But other than that, they'll know what's going on. Let me tell you something I see happen way too often. People fall behind on their bills. And they wait. They hope it will work itself out. It won't. That's why I recommend Guardian Litigation Group. Here's the deal. If you've missed payments, collectors are calling, or if you're getting letters threatening legal action, that's not something to ignore. That's the moment to deal with it, because when you do nothing, it escalates. They can take you to court, and if you don't respond, they can win by default, and that gets expensive fast. Guardian Litigation isn't a call center. They're an actual law firm. From day one, you're assigned an attorney to represent you. So if things do escalate, you're not scrambling and you're not hit with surprise legal fees. Guardian Litigation only gets paid when the debt is negotiated and you accept the settlement offer. This isn't about shortcuts. It's about dealing with the problem before it gets worse.

Go to guardianlit.com/ramsey today. That's guardianlit.com/ramsey today. Attorney advertising. Results may vary and no specific outcome is guaranteed. Welcome back to the Ramsey Show in the Fairwinds Credit Union studio. Jade Washaw, Ramsey personality, number one bestselling author, is my co-host today. Jason is in Philadelphia. Hi, Jason. What's up?

Hello, how you doing, Dave? Um, so, uh, long story short, I'm, uh, 38 years old. I'm a heavy equipment operator for a union in New Jersey. Um, and unfortunately I've made very, not even bad, but horrible financial decisions throughout my life. Um, I am ready to make a complete change, um, because of my financial situation. It has caused me to lose a fiancée recently. Whoa. I am a father to a 5-year-old and, um, Yeah, I'm just, I just need a battle plan. I do have something that presented itself recently. I also do plumbing on the side and, you know, I have an opportunity, but it might be a big risk.

What are you, what are you making as a heavy equipment operator? You ought to be making bank.

Yeah, I make pretty good. It depends if you work overtime or not. But like, for example, last year I think I made $115,000.

Yeah. Okay. Is keeping a job the problem? What's the, what's been the problem?

Um, so the problem is, is, um, you know, I went through a divorce. I have child support, I have daycare payments. I have, you know, a car payment that is astronomical, um, that I can't even get out of because I'm under, you know, $10,000 to $11,000 underwater on it. We'll help with that. Um, yeah, I'm totally like probably $65,000 to $70,000 in debt. Okay.

So let me ask you this. I love the way you opened the conversation. It's like, "Help me, I'm ready to change." That's my favorite kind of person, because I've been there myself. The person that's sick and tired of being sick and tired, they're ready to do something. I don't have to talk them into it. They're going to do something, because things have to change. And that means your mind is in a perfect place on this. Congratulations. I'm sorry you had to go through all this crap to get there, but that's normal human stuff, right? I had to go broke to get there, so I understand. What do I— and so really, it sounds like though that, yeah, you made a couple bonehead moves, but more than anything, you just hadn't paid attention. You made decent to great money and you just hadn't paid attention, and it just all kind of frittered away and you don't even know where all of it went. Is that right? Yes. Yes. Yeah, I thought so, because that's fairly normal. Yeah. Okay. In your situation. So thank you for saying that. So here's what's weird. 90% of solving where you are and turning you into a millionaire is to start paying attention.

And you're ready to do that. And because here, if you have a game plan, anything that interrupts that game plan is off-limits. And but when you don't have a game plan, everything that's stupid looks smart. So when you say, "I have got to go from where I am to a millionaire status. I need a million-dollar net worth. I'm 33, or I'm 38. I want to be there by the time I'm 48 or by the time I'm 50." And I think you can do that, probably. All right? But you're gonna have to actually pay freaking attention to every single financial transaction and make every one of those dollars you worked so hard for behave. Okay, because they've not been behaving. No. Money is a great slave. It is a horrible master. It will do what you tell it to do, and if you tell it to do nothing, it runs wild. And so that's what's been going on. All right, now, so you got a stupid car. Tell me about the car.

How much do you owe on it? So I owe about, uh, right around $30,000 on it. I pay like $900 a month, not including—

you owe $30,000 and it's worth You think it's worth, uh, around $20,000?

Yeah, it's a 21 GMC Sierra.

Why do you think it's worth $20,000?

Uh, I just did like, you know, looked it up and I went to dealerships before to see what they would give me and it was around $20,000 to $21,000.

Okay, dealerships give you wholesale. They resell the car and make a profit over that, which means you could put it on Craigslist and probably sell it for $25,000.

Correct. I just don't have the access to.

Yeah, we're gonna figure that out. Who do you owe the $30,000 to?

I guess the TD Bank or whatever it is, the auto.

No, I mean, what's the name of the organization that you send payments to, honey? Oh yeah, the TD Auto Finance.

Okay, all right.

So, so it's a high interest rate?

Yeah, 11.9%. Yeah, you got screwed twice.

Okay. And, um, wow. And so your credit's probably ripped up, isn't it?

Uh, my credit is pretty bad. Like I said, I have about $70,000 in debt, $30,000 from the truck. I have $6,000 in credit cards. I have $20,000 in student loans that I got 10 to 15 years ago and never paid for them. Um, you know, I actually just got done about a year or two ago paying back taxes that I owed, so I just been in a whirlwind.

Okay, so what we're going to do now is we're going to take all the overtime we can take and we're gonna get on an EveryDollar budget. We're gonna sign you up, we're gonna give you the premium version, and we're gonna be on beans and rice, rice and beans. You now have no life. You're not gonna be inside seeing the inside of a restaurant unless it's your extra job, and you're not going on vacation. I want you to work like a maniac, and I want you to stack 5 or 6 grand as fast as you can stack it and get this car sold.

Yeah, so right now I do have about $5,000 in the bank. I have a set I do have a second job that I'm—

sell the car—

I might have a big, big opportunity on, but it would be a huge risk.

I don't need any risks right now. I need money.

Well, it would be money and it'd be potential for me to make a lot more money. Really?

More than you're making as $150 a year, or $115 a year as a heavy equipment operator?

So yeah, it would give me an opportunity to learn more about the plumbing and then Honestly, open my own plumbing business. What's the—

how long does it take for this to unfold?

Uh, well, I do the plumbing now. I am, like I said, I am in the union, so I could shelf my book and go to work for this company full-time. I could work either 6 or 7 days, whatever, but I would have to work 6 days to make the same amount of money that I would make working just the 40 hours.

I don't need to start a business right now. Right now I need to stack money. So I want you to get the car. I want you to get a little bit more money, maybe $6,000 or $7,000. I want you to get this car sold. I want you to work all the overtime you can work at something. I don't care what, but you need a $150,000 income in the next 12 months. And no, we don't need to go into business, and no, we don't need to do all this opportunity bullcrap. You need to get your mess cleaned up, and then we'll talk about doing that. Okay, but you got about 12 months of just, just Tearing, tearing the head off this thing, man. Because here's the thing, you sell the car, then $26,000 and get you a junker car to drive back and forth to work to run the heavy equipment. And you don't need a car to date because you're not going on any dates. You're broke, okay? And you're not gonna do nothing. You're just gonna work all the time for one year and you'll be 100% debt-free. How would it feel to have no payments and be in control of your money?

It would feel incredible.

As soon as you do that, you're ready to talk about doing the plumbing gig. Okay, but you got to get— you can't be doing two things at once. You, you need to focus on the cleanup here, and learning to tell your money what to do is the key to that. It cleans it up for you. So hang on, Christian will pick up. We're gonna get you signed up for Financial Peace. But don't, don't be chasing something that's going to get out. The secret sauce for your success is not plumbing. The secret sauce for your success is the guy in your mirror. He's the stud, whether he's doing equipment operating or whether he's doing plumbing. But you go make some money and make your money behave and clean this mess up.

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Lisa is in Fort Collins, Colorado. Hi, Lisa, how are you? Hi, Dave. Hi, Dave. Hey, what's up?

So, this is a situation I never thought I would be calling you guys on. My husband and I have been a long-time follower, and we're on Baby Step 4, 5, and 6. This morning, my husband got a phone call from somebody representing a, life insurance policy, and our 3 sons inherited $400,000 this morning. And since it's not my— if it was our money, my husband and I would have a plan and we'd be paying off our mortgage, and, you know, we kind of know what to do with it. But we're not sure what to do with it when it's given to your children.

So they were named the beneficiary on someone's policy that passed away, obviously.

Yes. Who? It was— it's a crazy, crazy blessing. It was— my husband and I rented our first home when we were married. We rented from a lady, and we just became friends, but we were kind of friends at arm's length. And she originally said that she wanted to bless our boys with the house that we had rented, um, for 3 years, and that she wanted them to have it. And so we, you know, we talked to her and we promised to be good stewards of it, um, and gave, you know, the boys information for her to be able to do that. But the call that my husband got this morning wasn't about the ownership of that house that we had rented. It was about life insurance cash payouts.

Wow. How old are your boys?

Um, they're, yeah, they're 10, 7, and 4. Wow.

And it's equally split amongst them?

Well, there's actually one account that is, um, all three of them, and then there's one account that is just two of them because the third one wasn't born yet.

Wow. Okay, I would just sit down.

I would sit down with a SmartVestor Pro and I would just open some mutual funds in their name.

That's simple. Okay, um, and my husband wanted me to ask about a UTMA account.

Yeah, that's it. That's going to be a Uniform Transfer to Minors Act, um, only there's no transfer here. It's just, she's transferred the money to them, but these are minor accounts and you're the custodian, meaning you're in charge of the money until they turn 18. And just invest it in good mutual funds like you would for yourself, and then that's going to set them up beautifully. They're going to have a lot of money by the time they're in their 20s. And then the thing that goes with that is The problem that this sets up is that this is their money at 18 years old. And so if they're doing drugs, they're going to be well-financed drug users. Right. That's a problem. Is there any way to move it into a trust? Nope. Not yours. You don't have a choice. I mean, you could get sued if you do by the kid later. Because your job is to manage it for them as their parent. And if you use it personally or you somehow trap the money, that could really come back on you. I wouldn't do that. But what it does do is it kind of highlights what happened with me and Sharon as well with our three, was it highlighted that we didn't get an inheritance like this, but we were making a lot of money.

As the kids were growing in this business. And so it highlighted that this money's gonna screw up their lives. Oh wait, no it's not. It's gonna reveal that we were horrible parents, or it's gonna reveal that we did a good job parenting. One of the two. And so we started raising our children not to be good children, but to be good adults. And so I'm gonna teach the little Turk characters how to work. I'm gonna teach them how to save. I'm gonna teach them how to spend. I'm gonna teach them how to live on less than they make. And then I'm gonna gently start revealing the fact that there's some money there for them as they move into their teen years. I would not just surprise them on their 18th birthday. They might lose their minds. And so I would gradually unfold how investing works, how investing works, and then go, "And you've got some investments that have been done for you." and you can talk about it vaguely and then later on talk about it in more specifics to where it becomes just a part of the rhythm of their life. But don't— do not allow them to be entitled brats that don't work.

This is not that much money.

Okay.

What about, like, through their childhood? Is there any time that you would use that money for expenses before they turn 18?

Yeah, I mean, I might buy them a car with it. Or what we did was we matched what they saved because we wanted them to have some skin in the game on the car. We had 401 Dave. So, yeah, whatever they save, we'll match it. And I'll just match it out of this account. I wouldn't match it out of your pocket. What about college? You could use it for college. You know, you can use it for college. Say college is taken care of. But the sticky thing is, it's technically their money at 18. And so they could choose not to spend it on college. They can choose to do something stupid like go into student loan debt and keep the money in the account because some bonehead financial advisor told them to do that or something like that, right? So instead of just paying for things. And so, but if you can make it through to where these become good adults that know how to work, save, spend wisely, be generous, that are grown up, become good young adults, then this money is going to be a massive blessing. If it's— if you don't, then it's going to be— it's going to reveal whatever shortage, whatever shortfall is in their young character.

So it just— it made me and Sharon get very, very serious about growing kids with character, not kids that are characters. And so, you know, and we just went at it. And so the book that Rachel and I did together was her first bestseller, was called Smart Money Smart Kids. I'll send you a copy of it on how to raise smart money kids because you need to now. And that's a little bit scary.

That sounds a little scary.

I could— yeah, you know, and it's kind of like we had this money coming into the Ramseys because we had bestselling books and we had all this stuff going on, you know, 25 years ago when Rachel was little. And Denise and Daniel. And, you know, and on top of that, we had even worse, 'cause we had some notoriety, some, in air quotes, "fame," right? And so, we had to also teach the kids, you know, "No, you can't use your dad's popularity with your teacher to get a grade." You know, Rachel might have done that once, but just once, yeah. "Do you know who I am?" "Yes, do you not know who my father is?" I mean, what kind of grotesque human being says something like that? That's the most gross thing that could ever come out of somebody's mouth. And so, we had to— "You're not allowed to play the Dave card. Your life will come to an end. We will take you out. You know, you're not gonna do that, 'cause you've got to learn to do stuff on your own." Absolutely. You know? And besides that, everybody that knows something about Dave Ramsey, not all of them like Dave Ramsey, so you've got that other problem, right?

Yeah, I mean, so it might work against you. You're gonna have to run into that, too. So, anyway, all of that to the side, you know, we faced all of this head-on, but the good news was that it just made us more cognizant that, you know, we had to be very intentional about installing character.

Yeah, 'cause the fear isn't in the money or the dollar amount, it's in the person who has it. 'Cause you run into people all the time who are almost afraid, afraid of success, afraid of having a lot of money. I mean, the way I grew up, it was like, "Oh no, you don't want millions, that'll wreck you." you, you know.

Well, people— I'm one— when I'm with wealthy people and we're talking generosity or we're talking about other things, one of the number one questions they ask me is, how do I not ruin my kids with money? And I'm like, money's not gonna ruin your kids. It just exposes that you did. Yeah, yeah, yep. You know, money doesn't do anything. Money just magnifies. Money does not make people evil. It just magnifies— it just reveals who you are. It doesn't make people generous. It just reveals that someone is a generous person. So whatever, if you get a big old pile of money, it just magnifies who you are. And so that goes into this discussion, because this isn't a lot of money today. It's $100-something thousand apiece. But by the time those kids get there, it's gonna be several hundred thousand.

And it really doesn't even have to be a large sum of money, whatever you're thinking of as a large sum, to magnify. I mean, if you start out broke, but if you learn to manage your money when you're broke, when you get a little bit of money, even if you just start making $100,000 a year, $1,000 a year, you'll learn— you'll know how to manage your money. Exactly. If you were a good manager when you were broke, you'll be an even better manager when you got something. Exactly. Good stuff.

Good stuff.

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If you want to work the Ramsey Plan and you want to work the Baby Steps and go from debt to millionaire, Become a Baby Steps millionaire. The fastest, most efficient way to do it is following the Baby Steps with a detailed monthly game plan called a budget. EveryDollar does that, and it gives you personalized coaching and a personalized plan to fit your situation, and it's going to help you turn up the heat on this. You can download the EveryDollar budgeting app and do the whole Ramsey plan for free in the App Store or Google Play. Every dollar. Shelly is in Tampa. Hi, Shelly, how are you?

Hi, fine, thank you so much for the call. I'm super excited to talk to you, both of you.

Well, we're honored to talk to you.

How can we help?

Thank you, thank you very much. I'll try to get you all the info. So I'm wanting to move, but we bought a house around 2020. We got a great deal on it. So we have about $300,000 left on that mortgage. We have a HELOC plus credit card debt. Basically, we could get it all paid for if we sell our house and list it for about $585,000 right now, which is where the market is in our neighborhood. And then that would obviously, like I said, clear our HELOC, all of our credit card debt. So the next home we'd be buying would be— we'd go in with 20% down. But the problem is my husband's not on board because our mortgage right now is 2. I think 2.5, and the new mortgage would obviously be higher, like I think 6.5, and he is not on board. But of course, I see it as being debt-free, which I feel like I'm gonna sleep better at night with. What's your household income? About $145,000 total.

Mm-hmm. And how much credit card debt do you have?

I'm giving you ish numbers, but I think about $40,000-ish.

All right. And how much do you owe on the home equity loan?

I think about the same.

Okay. And how much do you owe on your car? How much do you owe on your cars?

Free and clear. Paid. Two cars are paid for. What are they worth? Um, I have no idea, but I would probably hand mine down to my 16-year-old daughter. She's getting ready to get her license, so I'd probably hand it down to her. I've had it for 8, 7, 8 years.

If you didn't have $80,000 in debt, would you be talking about selling your house right now?

And if so, why? Okay, that is a great question because right now we live in a really young family neighborhood. It's really fun and social, which was great when my daughters were younger, but now they're older, I kind of want to pull my backyard. I kind of want more, um, I don't know, you know, they're getting older, they can drive to their friend's house, and it's not as important to be in such a, you know, young neighborhood. So I do feel like I'm wanting something smaller, like ranch with a basement, and that right now it's a two-story, so I So you're wanting to downsize? I would say downsize, but upsize in quality. Yes. Like more custom home, but at the same time it would, um, we have to do a little bit of work in it, but not a ton. The house I'm particularly looking at, we just need new paint and maybe buff the floors.

Okay. So one more time, one more time. Let's be very clear. If you did not have $40,000 or $80,000 in debt, that, would you be talking about selling this house today?

Um, I would, I would say yes.

Yes, you would want to sell it anyway?

I would. Okay, let me tell you my other concern, and I'm not saying this is true, it's just a concern I have. Okay. Uh, what you're talking about doing with this other house, uh, maybe doing some work on the other house, I would be afraid I'm not sure you know how you ended up in $80,000 of debt, and I would be concerned that you could sell this house, move to another house, and before you know it, you're taking out another HELOC and doing some projects on some credit cards and doing the like all over again. Why will it be different?

Well, I do know how we kind of got in credit card debt about 3 years ago. My husband's in between jobs, and it happened to be right at Christmas time. Both of my girls are involved in travel sports, and it was just—

you spent $40,000 on Christmas and travel sports? No, you didn't.

No, no, no. I'm just saying I feel like it's, it's gone nowhere though, because the interest rate is— I feel like we're getting nowhere fast.

Here's where I'm gonna stop.

I'm gonna stop you right there because here's what I wanted to hear, and I'm going to tell you the difference. What I wanted you to say is, Jade, the reason it'll be different is because now we have savings. Now we understand that when things come We know how to pay cash for them. We've drawn a line in the sand. We just don't do debt anymore. That's what I was hoping for you to say. But instead you said, well, the reason it happened was, and you gave me a long list of excuses. Mm-hmm. I hear me. I love the idea of paying off debt. I love the idea of getting the house that you want. But from based off of what I've heard, and I know this is a short call, I'm not convinced that you wouldn't turn around and do the same behaviors again.

Yeah, so if I woke up in your shoes, based on that— I agree with her, by the way— if I woke up in her shoes, I would side with your husband and say, let's get on a tight budget. We make $145,000 a year, and let's not blame travel, sports, or anything else. Let's get this debt paid off. And if you pay off the credit cards and cut them up and learn to live on a budget and learn to save money, then we'll talk about selling the house after the credit cards are gone. But right now, you're just moving from one thing to another thing to another thing. And the problem is, we know that when people pay off debt in one fell swoop and they don't change their habits, the debt grows back. Yeah. And there's nothing in this conversation that indicates any change in habits. Nothing. Nothing. Nothing in your verbiage, nothing in your sentence structure, Nothing in the words you're using, all of it, it all says you're gonna do it again. So I want you guys to prove to yourselves that you're gonna live on way less than $145,000 and get these credit cards paid off, and you're gonna cut them up and never use a credit card again no matter what happens.

And you don't talk to me about travel sports when your husband's laid off from work and financing that with a credit card. That's like I was like, "Dumb. Don't do that.

That's a dumb move right there." And that's the type of stuff you learn when you take the time to pay off your debt, is you learn how to say no. Yeah, no way.

No possible way we're doing that. So, that's the process. Abby is in Atlanta. Hi Abby, how are you? I'm good, how are you? Better than I deserve.

What's up? So, me and my husband, we just completed $55,000 of student loan debt. Wow! Yes, we're very thankful for that. Um, and we're expecting baby number 2 in October. I am wanting— he's wanting to go on to Baby Step number 3. I am wanting to put that money towards a car, um, a more reliable family car, because we currently have one.

Okay, so you're pregnant right now?

Yes, with baby number 2. That will be 2 under 2.

Okay, and so you have one— you're a one-car family?

Well, kinda. His car, you cannot fit a car seat in at all.

It was in his car for 3 years now.

That's different than what you said earlier. Okay. Okay, I'm in one family car. So you have— he has a car. What is his car worth?

Uh, what we have looked up, anywhere like $1,000 to $3,000. Not very much.

Gotcha. And what is the car you're driving? It doesn't hold two car seats?

Uh, no, sir. We travel a lot for his work, um, a lot as a family. Uh, I'm a stay-at-home mom, so we travel a lot with him. And this isn't like right now, it's—

he's gonna take a newborn on the road to work?

Uh, I mean, next summer we travel during the summer with him.

What type of work is it? Is he a pastor? What does he do?

He, uh, coaches. Oh, okay.

Okay, so a year from now?

Yes, sir.

Okay, so we got a year to talk about this.

Yes, but my concern is I'm a very cautious person, so I like to have— okay, what are you driving right now? Um, a paid-off Ford Escape. Both our cars are paid off.

And how old is the Ford Escape?

Um, I— is either 2018, we bought it, um, from a family member, or 2019.

What's it worth?

—Uh, not very, uh, probably like 5. It's very high mileage. —And you only have $1,000 saved?

You haven't started saving towards the 3 to 6 months yet?

—Um, so we have. So let me pull out the list of what we have. So right now we have roughly saved about like $12,000, $12,000 to $15,000. Um—

—Well, set your emergency fund at 3 months' worth, and above of that, save for a car and move up in car with cash. Yeah, but that's what you would do after Baby Step 3, but set your emergency fund at 3 months. Yeah, you probably do need to move up in car and pay cash for the move up above your 3 months of emergency fund.

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Today's question of the day is brought to you by Yrefy. One financial mistake doesn't have to define the rest of your life. If you've fallen behind and gone into default on your private student loans, Yrefy can help you explore low fixed-rate refinancing options and affordable payment plans. Go to yrefy.com/ramsey. That's the letter Y-R-E-F-Y. Kofi.com/ramsey. Might not be in all states.

All right, today's question comes from Abigail in Washington, D.C. She says, I'm debt-free thanks to your principles, but I get a lot of flack from family and friends about not having a credit card for emergencies. Would you recommend having two different debit accounts so that one can serve as an emergency fund? I really don't want to get a credit card, but at the same time I get nervous about only having "Is there only one avenue to access my funds?" So I hear two questions here. The second one I'll save for later. First off, yeah, if you have an emergency fund, I would keep that in a separate account. I would put it in a high-yield savings account, not just a regular checking account. I'd have a regular checking account for your day-to-day, and then I would have a high-yield savings account for your emergency fund. And I'll just go a step further. I like to keep mine at a separate institution. I like an online one. I just like that. I like the degrees of separation. It helps for my personality type.

A lot of people are using Fairwinds Credit Union's bundle right now. There you go. That high-yield savings, and you can put a debit card there.

Yeah, I like that.

It doesn't hurt to have 2 checking accounts with 2 debit cards, even with 2 banks. It doesn't hurt. Or both with 1 bank is fine. Because if you walk up and there's something wrong with your debit card, just like if there's something wrong with your credit card. Let me give you an example. With either card, they will shut them down. True. If something triggers the algorithm and they think there's theft going on, they think there's fraud, like your number's gotten stolen, right? They'll shut either one of them down. And you can get in a pinch if you only have one thing. Yes. So I have a debit card on my personal account and a debit card on my business account in my pocket. Pocket. So, if I get to a hotel to check in, and there's something screwed up with one of the cards or something, I just use the other one.

I've got that too, yeah.

And I've actually got, then, a third one with a different bank on another personal account. So, I've got 3 in my wallet. That's the only thing that's in my wallet other than my driver's license and my handgun carry permit. That's the only plastic there is.

Yeah, okay, that's a good point. When I think about it, I have the same.

I have the same, but —because my experience has been that the algorithm will screw you up. I mean, like, if we're traveling, sometimes the thing activates because it thinks that, you know, Dave's not really in Mexico. Yeah. And somebody in Mexico stole his number, right? Yeah. So it shuts it down. So we've even gotten where we now contact our banker and say, "We're going to such-and-such country," so it doesn't activate it. We put a travel warning on the account so the algorithm doesn't kick. But But in case it does, having another one. And it's not really for emergencies, though. It's really for the stupid card not working.

Yeah, that's— and I'm trying to understand, is she talking about— it sounds like she's—

it sounds like she's trying to please her family and friends, which you need to stop doing.

Well, it's an emergency fund conversation, and they're thinking, well, the only way you can be prepared for an emergency is if you have a credit card.

That's just— that's bull— that's the line of somebody that's going to be middle class their whole life. You're not lying.

Yeah, because what happens if you have, I mean, if you have $15,000 or $30,000 saved, what can really pop up that you can't pay cash for? Not much. I mean, even if your roof springs a leak, if you have $30,000, you're in there.

Now, you don't need a credit card for emergencies, but you might need a second debit card to be able to access your money in case one of your debit cards doesn't work. Yeah, and I think that's safe. And then the second thing you need to do is you probably need to purchase some earplugs to wear while you're around these idiot friends and family. That's right. Yeah, if you, if you listen to broke people for your financial advice, you're gonna be broke. I mean, it's like asking fat people about physical fitness. It's just done. Don't do it. I mean, don't, you know. No, no, thank you. All right, up comes Frank in Baltimore. Hey Frank, what's up?

Hi Dave, I know there's very short time for salutations, but I love and appreciate what you've been doing for people for all these years. Thank you. And, uh, you provided an incredible service to people, and that's so cool. You, you single-handedly encouraged, inspired me, and showed me the path to buy my first house. Wow, good for you. And for that, I'll, I'll be grateful, uh, until the day I die. Well, thank you. I just wanted to make sure I said that. Thank you. Uh, and, and I'm embarrassed, I'm almost embarrassed to ask you this question, but, uh, I, I'm gonna be retiring hopefully within 3 to 6 years from the police department. I'll keep my second job, which is port security. But the question is, uh, this house, I, I have no one to leave it to. I, I lost my brother recently. Uh, I have no other family, no, no wife, no kids. So, somebody said to me the other day, "Well, what are you doing? Just do a reverse mortgage on your home. Take those funds that you would pay for your house and put that in a high-yield savings and let that grow until, you know, you retire, and then you'll have that income for your retirement." Yeah, whoever that is that's telling you that doesn't know what they're talking about.

Okay, because the interest rate on your reverse mortgage is higher than high-yield savings account, you'll lose money on this transaction. Oh, it does. It won't work. So what they're talking about, interest rates on reverse mortgages are ridiculously high, the fees are ridiculously high, and the foreclosure rate on homes with reverse mortgages is fivefold a regular mortgage, 5 times more often. Wow. So no, we never recommend a reverse mortgage. Um, but you, it sounds like you've got enough money.

Don't you have a pile of money? Well, uh, I, I, I didn't take, uh, savings seriously until I was—

How much do you have? What's your nest egg?

So I, I have, you're gonna, uh, be very saddened by this. I, I, I have a deferred comp with about $40,000 in it.

I have a, um, Are you getting pension from Port Authority? You're getting a pension from Port Authority or the police department?

Yeah. Police department. The pension, uh, will be about, uh, $1,600, $1,800 a month. Um, I won't be getting a full pension. And, uh, and then, um, uh, Social Security, if I were to take it, uh, today would be somewhere around $2,500. If I wait for the full 60, when I'm 67, it'd be about $3,200. And, um, I have some jewelry and watches that are worth probably $40,000. My debt is the house, $130,000 on the house. And, um, I, I owe $23,500 on my truck and, uh, credit card debt is around $3,700.

Well, you said you've got 6 years before you retire, right? So you've got some time to get this mess cleaned up.

Yeah, you need to get the truck paid off, get the credit cards all paid off, and so that you can live on the pension and the Social Security. And that's going to make a lot more sense. And you owe enough on the house, you can only take out a reverse mortgage up to 65% of the value. And so you already owe $130,000 on it, so you're not going to get much out of it if you did do it. So I think someone's trying to talk about something in a vague sense that they heard on the internet, and and it doesn't really work. And so, I think you need to go back to the Baby Steps and just work those straight through like Jade was suggesting.

Yeah, I agree. You've got time. You've got 6 years. If you put pedal to the metal— we didn't get how much you earn, but if you put pedal to the metal, you get out of this truck and get it paid off, you pay off the $30,000 in credit card, and all the while, once you're done, if you can do that quickly, say in the next year, 18 months, then you're investing for the next 5 years.

Yeah, and investing in 5 years and being serious about it, following the steps, you can build up a nice nest egg. And then as far as who to leave the house to, we've actually had 2 calls today with semi-distant strangers leaving people substantial money. Yeah, the lady that left the money to the life insurance to the little boys, and the guy, the 80-year-old's giving him a strip mall. Yeah. Yeah. You know, and so it may be that you just look around for some young couple that you want to be a blessing to when you pass. That's sweet. Or something like that. And give yourself some meaning for having done all of this. You sound like a great person. So I'd probably try to be trying to figure out a generosity play in this.

Welcome back to the Ramsey Show. In the fair winds Union Studio. Rachel is in Cleveland, Ohio. Hi, Rachel. How are you? Good. How are you? Better than I deserve. What's up?

So, I am 33 years old. I've been married for a year, and we just actually had our first son almost 3 months ago. He'll be 3 months on Thursday. But I've always had a dream, pretty much since I was like in my early 20s. I've always been like super obsessed with like houses and home decor and design. And I've always had a dream of like like flipping a house, but it's always felt like, I know it's bigger than just like going out and buying a house and flipping it and then selling it and it being super easy. So, um, just kind of been trying to figure out like, how do I go about doing this? And whether or not it's like one of those crazy dreams you just need to kind of forget about, or if it's something to go after. My husband's kind of like, if this is something you want to do, then like, let's see a plan, like get something on paper of how like financially we're going to do this. And like, let's go from there. So I'm kind of like, curious just from your perspective, like, any tips? Because I feel like if I don't do it now, I probably will just like never do it because we want more kids and whatnot.

That's a dumb reason to do it. Like, where I'll never do it if I don't do it now, that tells me you're getting ready to do something dumb. Don't do something dumb, okay? I want you to flip a house, but I don't want you to do it in some crazy manner because you feel like some clock is ticking that doesn't exist.

Yeah, your life is not over just because you have kids. You have less time, but your life is not over.

Yeah, and it's not like that. I mean, I said that I want to do it before I'm 40. Like, well, I don't care.

I had to pick a time.

I want to do it when it's smart to do it. I love the idea of flipping houses, okay? I used to do it for a living, and I made really good money doing it, and I went completely bankrupt doing it because I borrowed too much money. So I've done about 2,000 real estate transactions in my life, so I actually do know how to do it. And I would suggest you that you do save up your money and do a flip, and I can give you some guidance on how to do that, okay? But don't use any of the things that you just outlined as reasons for doing it. It just sounds like a fun idea. I want to save up some money, and I want to do it when I can do it with wisdom. Now, number 1, you have to pay cash.

And that's the thing, we have a lot, we have really good savings. We both do really well. What is really good savings? Well, I think it's, I guess I should say, I think it's good. But we have $160,000 in savings.

You have how much?

$160,000. $160,000.

Okay, all right. And so if you picked out a house to buy for $100,000 to flip and you pay cash for it, that's step 1.. Okay, and you leave the rest of your savings alone. That— so set yourself a budget with that. The second thing then is, is the money on a flip is— nothing is done like it's done on television. The stuff you see on television, the fix this house up crap, and this little couple's doing a house and they do a renovation, and they— that's a bunch of crap. Okay, that's not— there is no reality in reality TV. All right, so the way you really make money on a deal is you're gonna buy the house at 70, maybe 75% of value minus repairs. If you don't, you're going to lose money on it. Yeah, because when you put a house for sale at 100% of value, someone will make you an offer at 95% of value that you're gonna want to take. And you're gonna pay a real estate commission, you're gonna pay some closing costs, and you're gonna walk out of there with about 88% of fair market value at the closing.

And if you have 86% of value in it, you didn't make any money on the flip. So you need to be down in the 70s, probably around 70%, minus repairs. So let's just use a $100,000 house as an example. That's hard to find, but makes the math. I know. So that means if you bought a $100,000 house in value, you're gonna buy it for $70,000. If it needs $10,000 in repairs, you're gonna buy it for $60,000, or you're not gonna buy it.

I know, that almost seems like—

Welcome to reality.

I know, we bought our first house last year, and so we actually have been able to save up this $160,000 a year, 'cause we did use like a big chunk of our savings at that time to buy our house.

Okay, if you wanna do a flip as a romance move, I can't help you. If you wanna do a flip as a business, I just gave you the formula. What about the work?

Are you thinking that you're doing the work, or are you thinking about hiring someone to do the work?

See, I would wanna hire someone, and I'm actually meeting with a gal who, she actually flipped our house. Our house was a flip., a remodel. And so I'm meeting with her tomorrow to kind of also pick her brain because yeah, I, it's, it's almost like, it feels like we would need more like money too, because especially like you said, like finding a house with $100,000 is very—

I think you, I think you buy a nice little $150,000 house and you buy it for $100,000 and you put $100,000 cash and you do a little bit of work to it and you flip it and you make $10,000 or $15,000, $20,000 off on it, and, and that means you did a good deal.

You make it sound so easy, and I think what I get so nervous— and my husband is like, that's like our savings for like our kids and like—

good, I want you to be nervous.

Nervous is good. A lot of money.

The first time you drive a $10,000 car, it's good to be nervous if you don't know how to drive a car because you'll wreck it otherwise. It's good.

And that's why I haven't done it forever. Yeah.

The hardest part of the whole thing, Rachel, is buying the deal. Yeah, you're gonna look at 50 to 100 deals before you actually buy one. Okay, you're gonna get sick of looking at houses. But if you pay too much, you're gonna take your money and turn it into less money, not more money.

Yeah, I think I need to also make sure I'm looking at the— like you were saying, like the cost of what I should be be looking at. I definitely— I mean, I stalk Realtor.com for fun every day, but I definitely don't look at $150,000 houses. So I think I need to— it's all you got.

You don't have that much money. I know.

And probably need to be looking at them in person.

No.

Yeah, yeah, you could stalk them and then you go look, and then if you see one that's a possibility, you go look at it in person. And what you want to buy is not something that has structural damage or some kind of historic rehab.. You want something that needs just carpet and paint, right?

Yeah, you need some new bushes, contractors, so you don't get screwed.

It's just, yeah, the less work, the more, the less work you do, the higher the probability you're gonna make money.

So what you're saying is it's like taking the first step.

Yep, you gotta go find a deal. And because I, I want to help her out because the money is not made on making tons and tons of changes to the, the house. The money's made on buying it, at a deal. At a deal. And then the rest of it—

All money in real estate is made at the buy.

Yeah. So she's not making structural changes. She's not gutting stuff. She's doing the bare minimum to get in and get out.

Anybody that does any kind of thing on a television show, whatever they did, do the opposite. Yes. Because that's bullcrap.

It's like, I'm going to paint it, I'm going to change out the carpet and—

I want to be so— I want this to be so freaking boring. Yeah. Yeah, it's— there's no like, woohoo, I got to be a decorator. No, don't, don't be doing that crap, okay? Run a coat of paint through it, clean it up, change out the dishwasher, mow the grass, tear out the bushes, you know, put thing on the— seal the driveway, put the thing on the market, make some money.

Flipping a house is different than being an interior designer. It's—

and it's different than being on a reality TV show. 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 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. Speaking of real estate, if you put your house on the market with a real estate agent that doesn't know what they're doing, or you buy a home with a real estate agent that doesn't know what they're doing because they're brand new and— or they don't sell but 2 houses a year you could lose tens of thousands of dollars. We had a call like last week, week before last. A guy called in, his mother-in-law sold her house for $330,000 and the appraisal came back at $375,000. And I'm like, he's like, "What do we do?" And I'm like, "I think you sold your house too cheap.

I signed a contract. I mean, you have a contract. You get sued if you violate a contract." And so So why is that? Well, the real estate agent priced it wrong. Wow. Didn't know what they were doing. Brand new real estate. So you want a real estate agent that's high octane, high protein, that is an actual professional, that moves a lot of houses. They've done a lot of transactions. They know what they're doing. They're not going to make a tens of thousands of dollars mistake. We vet the real estate agents that we endorse very carefully to be high octane, high protein, that follow the Ramsey way of doing things. And they're called Ramsey Trusted Agents. If you want to find a Ramsey Trusted Agent, you can do that for free at ramsesolutions.com/agent or click the link in the description if you're listening on the podcast or on YouTube. Roy is in San Antonio. Hi, Roy, how are you?

Hey, Dave. What's up? I am good. Um, I just had a quick question. So I've known about you for a while. I got out of debt myself. Um, a lot of my friends know me. I talk about getting out of debt, not doing credit cards, not taking loans a lot. Um, I started dating a woman about 6 months ago. She's seen my lifestyle, and, um, slowly I've gotten her on board. Um, she shared with me how much debt she has, and When she looks at my life, I am able to live a little bit better, and she wants to live that same kind of life. So my question is, how do I approach the gazelle intensity to her without scaring her off? I think that's the only thing that— she never saw that part of me. A lot of people didn't, where I wasn't eating out and I was working my butt off and everything that you teach in that sense.

So you want to explain to her that the only way for her to get what you have is for her to be gazelle intense, but you think that if you tell her that— well, let's, let's start by explaining gazelle intensity because I feel like that's a deep cut if you're listening for the first time.

Dave, that's, that's your— yeah, it just, um It comes from Proverbs, and it says, "To deliver— if you found yourself in debt, to deliver yourself like the gazelle from the hand of the hunter." And the primary predator of the gazelle is the cheetah, which is the fastest mammal on dry land, 0 to 68 miles an hour in 4 leaps. And yet the cheetah does not kill the gazelle but 1 in 19 chases. Because the gazelle's trying to stay alive and the cheetah's just trying to have lunch. And so even though the gazelle is not faster, it has a desire to stay alive and running for its life. And that's gazelle intensity. That's what we use that phrase. And so, you know, if you're going to run, if you're going to get out of debt, you have to run for your life. And that's what Roy did. And that's what he's trying to get her to do. Now, the reason Roy did it, the reason I did it, the reason you and Sam did it, the reason we ran with great intensity, an intensity that the culture does not understand— they think you've lost your mind.

No, they don't understand it.

It is because we believed it would work, and we believed nothing else would work.

Yeah, we knew what was at stake.

Yeah, and so we didn't want to be lunch. We wanted to avoid death. And so, you know, we've been screwed by the banks, we've been screwed by the car companies, we've been screwed by the credit cards, we've been screwed by the student loans, and we're like, "We don't want to be screwed anymore. We're going to get away from this system that is broken and that is set out to take down the consumer." And so we ran like our hair was on fire to get away from it and sacrificed deeply because we wanted to be out of debt so badly so that we could live the good life that Roy is living. So I guess the way you describe it to her is you say, "If you really want out, if you really want to go from where you are to the good life, I can show you how, but the sad news is it's going to be painful." And you can't manufacture the intensity for her, by the way.

I'm just letting you know. There's something that has to be inside of her. You can tell her all about it, but there's— for everybody, there's a catalyst. There's a moment that happens. You can call it an "I've had it" moment. There's that moment that you say, and I'm sure you said it too, Roy, "Never again." And my guess is she's probably gonna have to have that moment for herself, and that's when it's gonna click in.

But it can be manufactured. You can just look at your situation and go, "I don't want this. I want that." I'm going to be willing to pay the price. That's an I've had it moment. It doesn't have to be bankruptcy. It doesn't have to be huge amounts of debt. It just has to be I'm sick and tired of being sick and tired. So I mean, you can hire a personal trainer and the only thing they're going to show you is how to be in pain.

You know?

They're not going to show you anything else because there's no other methodology that works. Works. 100% of muscle growth is happened by fibers being torn down, called pain, lactic acid and fiber tear. That's where muscle growth comes from. And so you just don't get muscle without lactic acid and fiber, and that's painful and sweaty. And guess what? Getting out of debt is painful and sweaty, but it builds muscles. It builds financial muscles. And so, you know, I just talked to her about that, and if she's not mature enough to have a conversation about You know, a personal trainer is not a pleasant thing, but the result is pleasant. If the process is unpleasant to get to the pleasant result, then this is not a woman, this is a little girl.

Well, she's had her, her moment. Probably about 2 months ago, she lost her job for 4 days, and she ended up getting it back, but that 4 days was brutal for her. And I told her that, um, you know, normally you're supposed to have a 3- to 6-month emergency fund, And I was like, girl, like it was 4 days and you thought that you were going to be homeless. And, um, I think that that was her point where she realized that she needed a change. And I've always told her like, imagine your life without a car payment and credit cards. Yeah.

Well, what does she say then?

She says that she thinks about it nearly every night. And I was like, I used to be like that too. I remember those days. And, um, now I live those days and it's great, you know, I can show you how $1,500 a month, show you how, but it's going to be unpleasant.

I mean, because it is unpleasant, isn't it?

Yeah, yeah, I know it was.

Yeah, you know, but the only thing is it's worth it. It is worth it. That's the only thing. It's worth it to be able to get down on the stage and scream, I'm debt-free. It's an unpleasant process to get there, but no one has ever told me they wish they didn't do it once they win.

Yeah. And by the way, we, a lot of people can learn from what your girlfriend is going through. If you're listening, all you have to do is stop. And I remember in the Total Money Makeover, I had the workbook edition. It had you go through, there's pages and pages of questions and workbook you filled in. But one of the questions that I remember was a catalyst for Sam and I is what basically, what would happen if you didn't get your next check? And that's the question that if you ask yourself, what happens if I don't get my check on the 15th? What happens if I don't get my check on the 30th? That right there will reveal a lot. Would you have to use a credit card? Would you have to borrow money from friends or family? Would you be late on rent or your mortgage?

He said homeless. He said she was worried about being homeless for 4 days.

And that's the truth for so many Americans.

You're walking along the edge of the cliff, get back from the edge. And the way you get back from the edge is unpleasant. It doesn't, but it's worth it. So I think that's how you talk to her about it, is like a grown-up. It's like if I sit down with a personal trainer and they go, this is going to be easy, there's no pain involved, I have a personal trainer that's a liar.

Yeah, give me my money back.

Yeah, not because I know it's not going to work, you know. You know, you're going to PT and they go, you're going to feel no pain in physical therapy after this operation. All I'm going to have scar tissue then because you're not going stretch where we need to stretch. Right.

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Cora is in Atlanta. Hi, Cora. Welcome to The Ramsey Show. Hi, Mr. Dave.

Thank you so much.

Sure, thank you. How can we help?

Okay, so me and my husband are 23 years old and we make about $70,000 a year, and we're currently on Baby Step number Um, we've paid off $12,000 in debt and we have about 10 more to go and we're supposed to pay it off by like January, I think, according to our EveryDollar app, like January, not this year, but next year. $10,000? Yes, $10,000. Yes.

Why would it take 18 months to pay off $10,000?

I guess because we're not hitting it hard enough.

I guess. I mean, how much have you paid off so far? $10,000 so far, right? We paid $12,000. And how long did that take you?

That took us about 13 months, but we just also had a baby, so we kind of went stork mode.

So y'all don't make a lot of money?

No, we do not.

What do you make? We make about $70,000 a year.

Oh, you told me that. That's right.

We're comfortable. Yeah. You told me that.

I'm sorry. Huh.

I would have thought you'd have paid off $10,000 in like 6 months making $70,000.

Yeah, especially if you pick up extra work, especially your husband.

Well, we originally were not in debt when we got married, um, but we had some medical debt hit. So we like had that happen and then we got pregnant. So it's just kind of been like a little bit of one thing after or the other, but we're trying to hit it as hard as we can. Yeah, okay. What's your question? I was just wondering, since this past year, you know, with paying off debt and everything, but I think I know the answer now, but we, I do have some inheritance money that has just been like left alone for some years now. And I just wanted to know, is it smart to maybe pay off the rest of our debt so we can move to Baby Step number 3 How much do you have in inheritance money? $50,000.

Write a check today and be debt-free.

Oh, I just didn't want to rush through it and like not learn the learning lessons.

Oh, I'm not worried about that. Write a check today and be debt-free and then learn your lesson. Oh, okay. But don't ever go back in debt again. Oh no. So who left you this? Who left you the $50,000?

Well, my grandma left me $15,000 and then I put it in investments. Yes.

Okay, so here's the way I would think about it if I were you. Okay. If you ever borrow money again, you are dishonoring your grandmother.

I know. Mm-hmm.

Yeah. So you have to be on a budget. You have to build your emergency fund, and no whining and no excuses and no reasons for going into debt. Yes, sir. "We needed a car." Wah! You save up and pay for it. "We wanted to go on vacation." Wah! "I've always dreamed of doing—" Wah! No! No! Okay? That's dishonoring to your grandmother. You're gonna pay cash for it like a grown-up person that has a baby, like a huge adult, okay? If you can't commit to that emotionally, both you and your husband, look at each other in the eye and pinky swear and spit shake, we We cut up all the credit cards. We never— We don't have any credit cards. Borrow money again for anything. If you're willing to say that, then I would write a check today out of the inheritance and be debt-free.

Oh my goodness. Wow, this is so exciting. Yeah, we don't— all of our debt is medical debt. So we do not do that. We did not want to go into debt.

So now you have an emergency fund for medical debt.

Let's start saving that up because if it was from the baby, we want to make sure that we don't get ourselves in that situation again coming up. Ever.

We have an emergency fund for medical. We have a budget. We live on less than we make. We save up and pay for Christmas and cars. Yes, we save up for trips. We don't go into debt. We don't go into debt. We have money for surprises called emergencies. We don't go into debt. If you can't— if you get this drilled into your head, then you can be very wealthy someday because you're starting young at 23. That's the wisdom of this. Roman's in San Diego. Hi Roman, how are you? Hey Dave, how are you? Better than I deserve. What's up?

First of all, it's really nice to be talking to you. I've been listening to you for maybe since I was 16. I'm 22 years old right now. Wow. My question is less about myself and it's more about how I can help my parents and give back to them. They put me through college, they bought me my first car, all that good stuff. Same with, with the rest of my siblings. And I was recently made aware that we actually have about, or I guess they actually have about $40,000 worth of deferred payments on the mortgage for the house that I grew up in. Why? And I guess I think they had some sort of modification back in the— I honestly don't know the details about it, but it was decades ago and I just want to help them with that.

That. How? You're 22.

I think I want to play, like, I want to act maybe as like a financial coach, maybe like walk them through how they can take care of it. What I don't want them to do is to have to refinance because it's due in 10 years. So my initial thought process was to open a high-yield savings account, but then I'm thinking, you know, it's 10 years.

Why are they going to listen to a 22-year-old son?

Did they ask you?

No, but I, I just want to take the initiative to be able to help them with something since—

how do you find out about it?

Uh, I don't remember the exact details, but it came across maybe last year.

Okay, well, number one, Roman, I appreciate your heart, and thank you for being a young man who cares about his parents. It's very unusual for parents to be willing to take the advice of their 22-year-old son on financial matters. It's called the Powdered Butt Syndrome. Once someone has powdered your butt, they don't want your advice on money or sex. Mm-hmm. And that's generally it. So, uh, until they get very old and you become very rich and you're 55 and they're 80 and they're broke and you're a multimillionaire, then they might take your advice, but probably not today. If they would take your advice, what I would tell them to do is the opposite of what you were thinking, and that is I would go refinance that mortgage right now.

Immediately.

If their credit is good today and they're able to refinance today, even if it's a higher interest rate, I would refinance now instead of waiting on this balloon to come bearing down on them like a train through a tunnel. Those things come and they come at you fast. And then all of a sudden, it's the day that your dad loses his job is the day he thought he was going to refinance or do whatever on his payments. So if I have a bunch of deferred payments on some kind of a modification thing from 2008 or whatever it was, and that stuff's laying around hovering like a monster in the closet, I'm going to put him out of his misery and go get a 15-year fixed-rate loan and, you know, about 5.5% right now, 5.75%, and I'm going to get rid of the balloon, period. That's simple. And then if you want to work the baby steps, you can work towards getting your house paid off. And that's what they should do. But I don't know, it'll be a very unusual day that they're going to do what you tell them to do.

Yeah, especially if you're not a homeowner, then it's just everything that you say to them is just going to sound like a theory that you heard somewhere versus something you really know what you're talking about.

I do appreciate your caring for them, but I don't think you're gonna be able to coach them. I'll be shocked if you can. You know, it's, you know, not many people in our families come to us for financial advice. Right.

Right. Yeah. And the hard part is when you know you can help, you just have to kind of be quiet and just let it play out. Yep.

They're not gonna, they're not gonna do it. So, but if they're smart, if they call me on the radio, what I would, I mean, on the podcast, I would put the radio, either one, I would tell them refinance it right now. Oh, the interest rate's higher. I don't care. Get rid of this. Represents extreme risk and stress.

Oh my Goodness, to know that that's going to be there.

So, monster in the closet. Yes. And I'm afraid to open the closet.

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Our scripture of the day, Proverbs 15:22: Plans fail for lack of counsel, but with many advisers they succeed. Henry Ford said, most people get ahead during the time that others waste. Wow, that's a good one. Used to work with a guy, he said, work while other people sleep. Yeah, pray while other people sleep. It's a good word. Read while other people sleep.

Yeah, or while other people watch TV.

Oh, oh, throw a brick through your TV. What was it Ziglar said? He said Rich people have big libraries, poor people have big TVs.

That's good. I have both. What does that say?

I actually do too. So there you go. All right, Mary is in San Antonio, Texas. Hi Mary, how are you? Hi, I'm doing well.

Thank you for taking my call. Sure, what's up? Hey, I just have a question. I think I just wanted a second and third opinion about the possibility of me taking a different job with a different company. Uh, I do— my line of work is something that I've heard you on the, on the show say negative things about, but I am— underwater manager? No, no, no, not that bad. Okay. I'm a property manager for homeowners associations and I currently work for a company and I have a total of 9 communities in my portfolio. And a few months ago I put my, you know, updated resume up on, you know, a website and an acquisitions team member from a different company contacted me late last week, and I've had a total of 2 interviews with them, and I'm going to have a 3rd tomorrow. And they are really excited about my experience and what I've done to educate myself and get certain designations in my line of work. But I just, you know, it's going to be a significant increase for myself. I am on Baby Step 2. I have stopped investing in my Roth IRA in order to to pay off debt.

I had a total of $58,000 of consumer debt.

And so what do you, what do you make today?

I make a little, uh, about $67,000.

What would you be making at the new gig?

The new gig would be between $80,000 to $85,000. That's what the team has acquisitions to offer.

And you'd be doing the same type of work?

Yes, it'd be, I think it'd be easier. I don't know.

So why would you not take it?

What's the downside? The downside is, um, I currently work from home and there's a lot more flexibility, but again, I am a, uh, you know, divorced now for about 4 years. That's why I have the debt. Um, and I'm an empty nester. My 2 children are grown and I would have the time and the ability to do that. I don't have to take care of anyone anymore besides myself.

So what's the problem with going to the office?

Where's the issue?

No problem with going to the office.

Nervousness? No, no, not at all. Actually, I'm kind of looking forward to the possibility of talking to other adult humans again.

You know, this is just a change. You're just, you're just processing a change.

Yeah, I'm processing the change, the flexibility. I get to help my mom out by taking her to doctor's appointments here and there, you know, just that. But I, I, I've worked hard to educate myself and be better at what I do, um, and I just think that most places, uh, most places companies like you're talking about going to work for have a certain amount of flexibility for executives.

The leadership team at Ramsey, if they want to take an hour and go take their mom to a doctor, we don't have a big deal about that.

Yeah, I agree. I think that tomorrow with my last interview that I'm going to talk to them about those types of things. I'm going to be completely open and honest since they're the ones who contacted me, right? I wasn't out there looking for a job, but since this opportunity came up, I thought, gosh, the difference in the income would help me. My goal— my— I'm I'm on track to pay off all my debt by this year in December.

Let's pretend you were debt-free and had a million dollars in the bank. You still should look at this deal. Oh, I would.

Yeah, I definitely would.

So it's the only downside, you have to take your mom to the doctor here and there? Is that the only thing that you can—

just the flexibility of, of that they— that the current employer currently offers me. That not— that doesn't mean that the next employer wouldn't do that. Um, but another thing that I about what they've spoken to me about is that they have— they like to promote from within, and I'm ready for that. The current company that I'm with doesn't feel— I've been with them for 4 years.

I think you've made your choice. You haven't made any case for staying.

There's no reason to stay. You're right. Yeah, you think if they offer you a good job, unless you sense some kind of a toxic environment or something like that, would be the only reason you wouldn't take it. You don't want to, you know, go from this. But honestly, people that work in an office with other people produce a lot more and have more opportunities for promotion than someone that's working from home. Yeah, it's one of the huge downsides, the unintended consequences of working from home. The people that work from home don't get promoted nearly as often. And so yeah, I think you ought to look at it. It sounds like it. And by the way, I'm not against property managers and 'HOA professional managers.' I'm against Barney Fife, who lives in the neighborhood and hasn't got a life, and he runs around with his one bullet trying to bother everybody in the neighborhood. Have you been to my neighborhood? About every bush that he doesn't like or something. That's the guy that drives me nuts, who needs to get a life and has no power anywhere else in his life, including in his own home.

And so he has to go out and exert himself through the neighborhood. Neighborhood. These are the people I don't care for. All right, uh, Chris is in Charlotte, North Carolina. Hi Chris, what's up? Hey Dave, big fan of the show.

Just want to call in. My scenario is probably a little different than most, but, uh, I'm 52 years old and grew up very poor, had tremendous success. Uh, I'm just had my best friend at 55 passed away of a heart attack. Oh no, I'm sorry. And I'm in that position where I'm like, with what I have, do I retire now or do I make a play for something else? Because I'm OCD, I can't sit around the house. I have to be doing something nonstop. And it's like, how much money do I need to live the life that I want to live when I'm done? You know, I want to take X amount of vacations with my wife because she stayed at home for 30 years while I worked 75 hours a week. And so just want to kind of see what the next play is for me and get your thoughts about timing for me, I guess.

Uh, what's the size of your current nest egg net worth?

Uh, I would say my company and my house and my land, probably around $10 million. Okay.

And did you say you're 54 or 52?

52. Yeah. And so you don't, I mean, can you begin to move away from the company? You want an exit strategy on that? Is that what you want?

I mean, I'm obviously still making good money with the company and I have people that have been with me for 20 years, but it's like I spent a lot of, you know, both my daughters obviously graduated college. What's the end game with your company when you're 80?

Where's this company?

I mean, I mean, it still will be going. I mean, I'm a partner in a car dealership.

Okay, so other partners will be running it, or their kids, or your kids, or own it, or whatever?

No, it'll just— it's just me and one other partner. Correct.

Okay, so what happens to your share when you're 80? What's your exit strategy? Does it go to heirs, or, uh, does it sell out to the partner?

I have a living trust. I have it all set up, and I have it, uh, it's an S corp, and it's set up for my in the trust.

Okay, all right. So the only thing I could do other than that is to say, as a partner, sit down, talk to your partners and say, we've both done very well, can we restructure the operations of this to give us both more freedom? But you're not— you don't sound like you're asking for an exit, a complete exit. You just want some more flexibility. Back to our last caller, but yeah, I mean, I want to take 6 weeks off and travel with my my wife. You've earned it. And I want to build a leadership team to do that. And that's kind of the stage I'm at. I'm 65. Sharon and I take 3-week trips and 4-week trips and that kind of thing, or just leave for that period of time, whatever. But Ramsey is set up to run where I don't have to be in every part of the day-to-day anymore, and the operations are set up. And certainly the on-air portion, Jade and Rachel, and they do a better job than I do. So that's where you are. I think you just reset your ops on that. I don't hear anything here that's painful that you have to exit from.

I like it. Good plan. Well done, sir. Very well done. 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. In Christ Jesus.