Transcript of When Life Hits Hard, Stay Focused on What You Can Control New

This is an ad for BetterHelp. If you've ever said, I'm not in crisis, so I don't need therapy, I want you to reconsider. The time to take care of your mental health is before things fall apart, and talking to someone can help. Get started at betterhelp.com/ramsey and save 10%.

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 your life. From the Ramsey Network and the Fairwinds Credit Union studio, this is the Ramsey Show. Jade Washaw, Ramsey personality, number one bestselling author, is my co-host today. The phone number is 888-825-5225. The call is free, and some say the advice is worth exactly what you pay for it. Brad is starting us off in Denver, Colorado. Hey Brad, how can we help?

Hey Dave, thanks for having me. I love your show.

Well, thank you, sir. How can we help?

So yeah, so I've been listening. I'm actually a new, uh, listener. I've been listening for about a month now. I got hooked on YouTube. You just have such good financial advice and personal advice. I'm like, it's hard not to listen to you. Um, but I started listening and I realized I thought I was being successful, but everything I'm doing is almost opposite of what you're saying. So I had to do a little self-reflection. Um, and I have some questions on like how I, you know, go forward in the future on this. But essentially what's going on is I make a decent amount of money, you know, W-2 in software. And my entire financial mantra is to be, to build rental real estate. And the reason for that has been, I want residual income. So I want, you know, to have an amount of money that where inflation doesn't matter. Everyone right now is worried about inflation. I could care less. I want it to last forever because I don't know how long I'm going to live. No one does. And so those two things to me are my safety net. But to do that, I've drained 401s.

I live paycheck to paycheck. I have credit card debt, car debt, you know, the whole nine yards. It's worked out now that I'm 47 and a little bit older now. But my whole thing is, can I just keep those properties and enjoy life? And if I can, that's finance success for me. But now as I move forward, I'm listening to you and coworkers, you know, they're all telling me some different things. So I'm just wondering, if you have some advice on how I might shift this to, to work with your program and my program.

That's interesting. Nice call. Thank you.

I love that.

And so you said W-2 software income. What's your income?

Uh, $500K a year about. I'm commissioned as well, but it's pretty consistent around $500K.

Good for you, man. You're killing it. That's amazing. And, um, do you still have the drained 401 and all the credit card debt and the car debt?

Uh, no.

So I got rid of the credit card debt, um, like a couple years ago. We lease a car that's expensive, but I paid off my other car. So my actual— and then we bought an RV. Um, but, but actual like debt as far as that goes, I would say overall pretty low.

So your debt consists of, uh, right now an RV and a leased car other than your home?

That's—

and your rental properties?

And rental— they're all not paid off, but they're all low balances. But that's right, I have $1.7 million in total liabilities.

How many are there between the over the $1.7 million? How many properties?

There's 7 including my primary.

Okay, it's not bad. All right, and you said the $1.7 million is the debt on them or the value of them?

The debt.

Oh, I see. And the value of the 7 properties would be what?

Is $5 million.

Okay, very good. Excellent, excellent. Okay, so the negative things that you mentioned you've almost done away with, and that's the drained 401 and the use of consumer debt while you were running up these rental properties, because those things are obviously destabilizing your original plan.

Right.

And you realized that without ever having heard of Ramsey, it sounds like. And it sounds like you were already moving away from that. And so that's wisdom. So I don't know why you couldn't work our Baby Steps from this point forward, clear up the RV and the car lease, quickly and make sure you have a good emergency fund, and then make sure you're starting to fund your 401 aggressively. And meanwhile, I'm going to start using $500,000 a year to pay down these rental properties. I'd probably work me a little rental property baby— or debt snowball up in Baby Step 6.

Yes, I love that idea.

Would you sell some to get rid of debt just to be debt-free, or are you okay with having some of that debt?

I would, but I wouldn't prescribe it for you as your first step.

Unless there's one that you know is not flowing well.

Yeah, you know, there's one you don't like that's got some equity in it. I'm not fond of this property. Like, I've got, I've probably got, I think I got 15 houses left, and I've been moving everything over into commercial, into commercial properties. And I've definitely, out of those 15, I got a couple of them that I don't care if I ever sell them, and I got a couple of them if I could sell them today, it wouldn't make me mad, right? And I'll roll those with a 1031 over into the other. They're paid for, of course, but if you kind of pick the out that way and you said, "Okay, out of the 7, there's 2 I don't even like," and it kind of accelerates this get out of debt plan to dump them and roll the equities into these paying down debt on the others, yeah, I'd probably do that. But if you love all 7 of them, they're solid, and you want to just systematically work through them, you could be debt-free in about 5 or 6 years.

Yeah, so to be— and I'm gonna ask this question on your behalf because I think a lot of people wonder about this, because I think the the response for most people is, oh, this is Dave Ramsey. He's going to say, sell, sell the properties to pay off the debts on the other properties and get debt-free tomorrow. What, Dave, explain your mentality on why this is, why this feels okay for you.

Okay. That's a good question. I like that. It feels okay for Brad because Brad came from the other side of the pendulum and he's swinging down towards the bottom now. And I'm not trying to, I don't want to take him and kick him up to the other side. If I were I woke up in his shoes, having lived debt-free and the wealth I've been able to build by being debt-free and had incredible cash flow because none of my properties have a single debt on them. I would sell enough of them to be debt-free in about 30 minutes.

Right, right.

But that's such a shock to Brad's system.

Yeah, he's been very intentional.

I'm okay, Brad, I'm okay if you do this a little bit slower. But mathematically and in congruence with what we teach, I do honestly believe, and I've proven it with my life and many others, that if you sold off enough of it to become debt-free, in other words, if you had 3 debt-free properties and you didn't have the total of $5 million, you had a total of $2.5 million or whatever, versus 5 leveraged, I think 10 years from now you're gonna be glad you did that, financially, mathematically. But I'm not gonna try to get you there today. You're 3 YouTube videos in, man. Right.

My wife's always wondering what I'm watching. I said, come over here and listen to me. It's good stuff. Oh, but she, she has a finance degree, so she agrees with you on a lot of this stuff. She, I kind of drive her nuts on a lot of things.

Well, and I also think that you've latched onto a really important part of what, what we teach, which is day-to-day dealing with debt and consumer debt. Cuz my guess is after this, when your lease is up, you're probably not gonna lease a car again. You're probably gonna go, ah, I could take some of my $500,000 income and I could buy something in cash. And that's something that's mine and I never have to do the payment thing again.

Yeah. Or, or, you know, and this is another question, but do I get aggressive and keep trying to buy like another property and keep leasing and doing that stuff?

But I would, again, the more I listen to your show, because maybe calm down a bit. It's a real simple thing. Debt equals risk. More debt equals more risk. Less debt equals less risk. It's a simple formula. And that's 100% true. There's no exception to that proven property. Now, And so if you got it down to where you had $500,000 worth of debt and you had $4 million worth of properties, you know, you've got virtually no risk, but you do have more risk than me 'cause I got no debt, you know? And the difference is there's still a tiny little knot in your stomach. They're still there. It's still, you still feel it. And you still look over your shoulder a little bit when somebody coughs and says, wear a mask.

You know, one of the first things I discovered working in the financial world is how absolutely devastating it is when the breadwinner of a family dies and there's too little life insurance or none at all. Grieving families are suddenly left behind scrambling to pay bills and trying to make ends meet. I also discovered that there are a lot of ripoffs in the life insurance world, like that whole life crap posing as an investment opportunity. What you need is level term life insurance, usually 10 to 12 times your income, which is the smartest, most affordable way to protect your family. The key is finding an independent broker who represents a ton of companies and works for you, not for the insurance company. This is exactly what my friend Jeff Zander and his team at Zander Insurance are all about. They shop the term life companies to find you the best options, and they've been around for over 95 years. So you know they'll be there when you need them. Zander is the real deal, and that's why they've handled all my personal insurance for over 25 years. I trust them, and you can too. Visit Zander.com for instant online quotes, or for a more personal touch, give them a call at 800-356-4282.

Stephen's in Atlanta. Hi Stephen, welcome to the Ramsey Show.

Hi, thank you for taking my call.

Sure, what's up?

Okay, so I just need some advice on how to approach my employer about something. I've been with my job almost 7 years, 6 and a half to be precise, and I've realized over the years 2 to 3 hours at times of volunteer work turned into over 1,000 hours of unpaid work and I'm an hourly employee. So I just don't know the right way to approach my employer because it's really taken a toll on me that I've worked all these years or all these hours unpaid, even though I technically chose to do it.

What did— what do you mean by that? When you said a few hours of volunteer work turned into unpaid work, explain that.

Okay. So I work in retail and I would clock out, but then I would see my coworkers get busy. Like let's say I would leave at 2, 3 o'clock and they'd get busy and I would maybe stay till 4:35, even 6 o'clock.

And they ask you to do that?

Customers, uh, a couple of times, but at times I just chose to.

Then they don't owe you a thing.

Yeah.

You chose to do that. It was your choice. You clocked out. If you clocked back in, if you wanted to be paid, you would have clocked back in.

Or you would have checked with management and said, do you need me to stay? And then we clocked back in.

"Ya, but you just stayed and didn't ask anybody, didn't get permission.

They're not obligated to you morally or legally." One time I tried to push back and then I got scolded.

Well, that's okay.

So then that's just go home. When your hours are over, go home.

Or get a different job. But I'm not, you know, if I get scolded for not getting paid for working, then we've got a different issue, okay? But the scolding—

Yeah, or if you get scolded for offering to help.

At that moment, I would have dealt with it and said, "Okay." "I'm not going to be here unless I'm clocked in." Hello, that's not mean. You can be gentle about how you say that, not be belligerent to your manager, but if your managers are expecting you to work off the clock for free, that's something you should have dealt with in the moment.

I agree with that. Now, it sounds like, and I wanna say this to you, Stephen, it sounds like you're a self-starter. You're looking at the situation going, Well, gosh, they need to be scheduling more people. This is my friend. I'm trying to be a team player. It sounds like that's probably your heart in the matter, but then you kind of looked up and went, man, this is a lot. I wonder if I can get them to pay me for this. But then the other part is you don't have a record of it even. Like, because there's no clock in, clock out, the only record you would have is a notepad, right?

That you drew.

And it's your word.

Well, some of it is provable, but that's a different thing, I guess.

What do you make an hour?

About $20, $21, something like that. Yeah.

All right. So, yeah, yeah, I don't think they owe you, man. Not morally or legally. Now, what I would do is change what I do going forward from today. And that is, if I expect to be paid for the work, then I need to work that out with leadership and clock back in. Otherwise, I'm doing this out of the goodness of my heart and I'm going to harbor no bitterness towards the employer.

Right, right.

And that's what you were doing. And but then it kind of, when it piled up, you went, "Oh, crap, I kind of let myself get taken advantage of here." And you did.

Yeah.

And but I would stop that. I wouldn't— I'm not suggesting you have to do this going forward.

But either that or, and I would have said this to him if he were still here, something financial popped up and he realized, "Man, I could really use some extra money." "Where can I get it from?" You know, that'll cause you to look back and go, "Ah." Yeah, but I mean, that's like, you can't go, "I was in a car wreck 3 years ago, and now I need some money, so I think I'm gonna sue them for the car wreck." You know, I mean, you can't do that.

I mean, that's not how this works. At the time, if you'd have dealt with it, you'd have dealt with it. But you can't just go, "Oh, I need some money, so I gotta look around to see—" No. "Where I've been taken advantage of." That's what I'm saying.

It might point to a deeper issue.

But I appreciate your good heart and your team play. I'm with Jade on that. I think she observed you correctly on that. I jumped straight to, "You get no money." But you get no money, but I do appreciate your heart. And I would say it is more than fair. And by the way, what you're describing is not that unusual, particularly in a retail setting. Absolutely. It could be— I'll tell you places, in other places— Restaurants. Not unusual. Restaurants, yeah, they'll work you till midnight and not think nothing about it. "Hey, stick around, help me clean up." "Off the clock." No. I don't think so. I don't think so. Happy to stick around. Or I'll do it once because you got, you know, we had, "Okay, 4 people were sick, didn't come in on shift. I'll help you." But I'm not gonna do this for 6 and a half years and then look back and go, "I don't think I like this anymore." No, I would not like it after the third time. Absolutely, absolutely. And then decide, or decide it's part of my life and it's my gift to "to my friends and to my teamwork and to my organization." And you can do that if you want to.

I don't recommend that, 'cause I don't think— I think that's gonna end up in a little bit of bitterness. It would in me. Over time, I would be like him. Over time, I'd be going, "I don't think this works." Yeah, I agree with that. I agree with that. Good, interesting question. I think so. Very interesting question. Leslie's in Phoenix. Hi, Leslie, how are you?

Good, how are you?

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

I have an interesting question that I really am not educated in, so I thought I'd come to the pros. So, um, it has to do with whether to just do a 1031 or to pay taxes. So we bought, um, some farm ground that we had planned to build our house back in 2021. We bought it for $90,000 and we are planning on selling it. Um, we're just going to escrow to sell it for $240,000. And so my question is, you bought it for what again? Sorry, we bought it for $90,000 and we're selling it for $240,000. Okay. And it's paid for, and so we know that we'd be making about $150,000 capital gains. Um, and we are planning on purchasing some more vacant property. That property would cost us $375,000. And so my question to you is, is it best to put it in a 1031 and put all of it towards the land Or do we just pay the taxes so that we have, uh, the cash on hand to potentially build a house with that cash later on?

No, if I was going to build a house with the cash, I'd just sell the land. If you're— if you need the cash, it does— no, it— you're going to end up selling the other property, the second property, if you need the cash.

We were— we're building our our home on the property that we're purchasing.

Okay, you can't do a 1031 on it then because it's not, it's not, it's not like-kind. You can't do a 1031 on personal residence. You can only do it on like-kind properties. So if you went vacant lot to vacant lot or rental property to rental property, income-producing to income-producing, you can do that, but you can't do it on personal residence. You can't roll your rental property into a personal residence on a 1031.

So, so they're both vacant lands, they're both in cotton, and so they're both—

Yeah, but when you build a house on this piece of vacant land, you screw up the deal. The 1031 is going to be invalidated.

Okay, so you couldn't do it anyways then, right?

The second piece of property, the 375, is what you want to build on, is that what you're telling me? Correct. That's what I thought. Okay. Yeah, no, you can't do that. Double-check with your tax advisor. I'm not a tax professional, but I'm right. Great advice. Okay, thanks. Thanks for calling. I did this one time because I had a— I was buying a piece. I bought my next-door neighbor's house on the lake. Wow, my lake house. Yeah, and I was— I wanted him, because I was giving him a great deal on it, and he was gonna go buy another piece of property on the lake. Because prices were down, and back in '08, okay, prices were way down. It was a good deal for him, 'cause I paid him like full retail, 'cause I wanted the land to build a house on, right? And it wasn't for me on the 1031, but I suggested to him, he 1031 his lake house into another lake house, but he had no income he produced on it. It was a vacation property only, and you couldn't do it. So that's when I got into the nuances of the— It really has to be the same.

Of the law, you can't do Well, he'd had to have rented his lake house 181 days. If he did that, then he had to, it would be rental property. Resort rental property, right? And he could buy another piece of resort rental property that he rented. But you can't do it on vacation property to vacation property. Can't, if it's not rented. So it has to be income producing, or if it's a piece of raw ground, raw ground to raw ground. Can't be personal residence involved, and can't be non-rented vacation property either. That's the only reason I knew that, is 'cause I almost screwed it up for this guy. And we actually got the tax advice because Dave was wrong. And that's how that happened. You remembered forever.

Buying a home is one of the biggest financial decisions you'll ever make, but too many people base the decision on opinions or what the market is doing that week.

Churchill Mortgage has been our trusted partner for over 30 years because they do things the Ramsey way. A lot of people think buying a home starts with going to a bunch of open houses, but if you're buying a home the right way, you start with a budget and a trusted guide like Churchill before you even think about house shopping. Churchill will show you the real numbers, not what a bank will approve. Buying before being ready is how people end up house poor and stressed out.

Churchill will tell you the truth and they won't push you into more house than you need. And once you understand what you can actually afford, you can move forward with clarity and confidence.

So if you're ready to buy a home, choose the right guide and stick to a plan. Go to churchillmortgage.com and get started. That's churchillmortgage.com. This is a paid advertisement. NMLS ID 1591. NMLSConsumerAccess.org. Equal Housing Lender. Well, it's May and the Ramsey Cash Giveaway has begun. You can enter every day from May 1st to May 31st for one grand prize winner. We'll get 10 $100,000, and there'll be a $500 winner every week. No purchase necessary. No salesman will call. You can enter daily to increase your chances of winning. Be sure to check out the sales that are going on, and that includes books and assessments, all for just $12 right now. Ooh, goodies at RamseySolutions.com/giveaway. Right now you can enter once a day. No big deal. No purchase necessary. I think I said that. Daniel's in Houston. Hey Daniel, what's up?

Hello, sir.

How you doing? Better than I deserve. How can we help?

Oh man. Um, I don't even know where to start. Um, I just feel I don't have control of any of my finances and to make it worse, um, my wife and I were financially divided. You know, it's her money, her money, my money's my money. Kind of thing. And my car just got repo'd. Um, my employer, they're, uh, they, they vet, you know, their employees every now and then. And that's another thing.

Um, they do what to the employees every now and then?

They— my employer, what they do is they, they make sure that we're financially good, you know. They, they, they look at our— if we want to keep the employment our credit score, our credit, it needs to be, you know, at least good. You know, I mean, I need to make payments, arrange— what do you do? I work for the government. Oh, okay. Yeah. So you're concerned about that? That's one. I'm concerned about my marriage, uh, you know. So what do you mind—

I'm sorry, how much do you make?

Uh, right now I'm making about $75,000 And what does she make? About the same, maybe a little bit more.

So you have $150,000 coming in, and the crisis is where? How does your car get repo'd when you have $150,000 coming in?

So, it goes back to years ago. Everything just started snowballing, you know, on debt. You know, one thing led to another, another, and then there was a series of events. A family member passed away, two family members passed away, and then the government shutdown hit, and that was the most recent one. Um, not only that, also, um, you know, just bad decisions that I made, you know, I got a loan to cover the loan and everything just—

so how much other debt do you have, honey?

I have, uh, I have stuff in collections. Um, I have, um, like personal loans. Uh, tell us the amount.

How much personal loans?

Uh, uh, just personal loans, I want to say about $8,000, $9,000. Okay.

And what about the collections? How much in collections?

Uh, in collections, so we're talking about maybe, uh, I don't know, I think about 15 to 20. So, I'll tell you this.

I'll tell you something briefly, and then we'll move on, that's really gonna help. Tonight, pull it all out and look at it and calculate it up and list them smallest to largest. And that way, it's not just this thing floating in your head. You really know what the numbers are. You can see it. You can name it. Do that tonight. So, 15 to 20 is your lectures.

And have your spouse sit at the kitchen table with you doing that, and the kids are in bed.

Yeah, well, that's, you know, that's the thing. I mean, I, I've tried, you know, I've tried to get my spouse.

I didn't ask you to try, ask you to do it.

Yeah. What would cause her to say no, I won't sit at the table with you? Because that's very deep if she says no, I refuse to sit at the table with you.

No, no, like she'll sit, she'll sit with me. Okay, then do it. But whenever we talk about finances, everything just spirals.

I don't want her to talk about it. I just want her to sit there and watch you add up what you owe. That's all I want her to do.

Don't talk to her about it. One thing I want to mention, I just recently joined the Guardian Litigation Group. Okay, good. Yeah, and so they're the ones now handling my accounts that my employer are questioning.

Okay, so the ones in collections?

Yeah, I was in collections because I've been getting calls from different law firms and, and because they're trying to sue you.

Yeah. Okay. So for the sake of time, you've got the $20,000 in collections, you've got the personal loans. Tell us, list out all of it. Tell us what else is there. Do you have cars? Do you have an RV? Tell us what else there is.

No, I have, um, another repo that I had last year, which about, which is about $12,000. I also have under my name the solar panels, um, which was actually— actually, you know what, it's actually more than, more than $20,000 because just the solar panels itself was about $45,000. But we have an attorney for that, uh, which are handling that case because apparently that, that company, the solar panel company, they, they went bankruptcy. Okay. And so we have an attorney Okay. Because we have a lease on the roof, whatever. Solar panel.

So solar panels on paper today, you owe $45,000.

Yes. Okay. Anything else? That's— other than that, it's just credit cards, personal loans. Yeah. How much? How much credit cards? Credit cards, maybe like $600. Okay. Daniel? Yeah.

Daniel, you have $150,000 coming in. You're not paying any of these bills anyway. So, um, mathematically, the question starts to pose, where's this money all going? Because you've not been paying any of these bills. You're not paying the solar panels. That's in the lawsuit. The rest of these things are in collection. You're not paying anything. The cars are being repoed, have been repoed, and so you're not paying those month to month. So where is all of your money going? What's your house payment?

So, the house payment, it's about $1,600. Yeah, that's— something's— Dave is right.

Something's not right.

You have $150,000 coming into the household. You have $75,000 of it. You are in control. You're in division. You're at odds with your spouse, which is normal when you've got this much stress. But the way you eat an elephant is a bite at a time. And so Jade is right. If you list these things out and you say, okay, there's the solar panels, the attorney's got that. There's the collections, Guardian Litigation's got that. The car repo, I'm going to turn that over to Guardian Litigation, let them handle it. And if they can't, then I'm going to start, but I'm not paying anything on it, so it's sitting over there. So the first thing we're going to buy with the money coming in is food. Yes. The second thing we're gonna buy is lights and water. And the third thing we're gonna do is pay the house payment. And the fourth thing we're gonna do is pay the car payment, put gas in the car, and go to work. Now we can breathe. The rest of this is a Monopoly game. The rest of it's a game and you're behind. You hadn't passed go. Oh, wait a minute, you did pass go.

You got more than $200, you got $150,000. Yes, that's right. 'Cause you keep passing go every month. And so, but what's happened is, is you've got, you walked into a nest of bees and they're flying around your head and you can't think. That's right. And so what I wanna do is get those bees to line up and fly in formation so I can knock them off one at a time. And, uh, but you know, the numbers you're giving me don't match your attitude.

Yeah, I, I have a sense that what he's listing is his side of the equation, and there's probably a whole other, uh, quote, her side of the equation. It's possible. I actually think that's the biggest part of this right now. It's very, very hard to move forward together when you're not on the same page.

But if you make $75,000 to $150,000, you should not have a car repo'd. And you should not have a house— you should not be behind on your house. You could be behind on a whole bunch of other things, but you don't pay stupid whatever and not pay your car payment. You don't pay stupid whatever and not pay your house payment. And so, we take care of food, shelter, clothing, transportation, and utilities. Then we live to fight another day. Right. And part of what is causing your lack of energy, your lack of hope in your voice is, is that you have no semblance of any kind of an attack plan. And we're giving you an attack plan. And the brain can handle bad news. It can't handle not knowing. So give it the bad news. Yeah. Load it up tonight. Give her brain the bad news. Let her sit there and look at the mess tonight with you. And then you guys begin to attack this one thing at a time.

Hey guys, healthcare is one of the biggest stress points in your budget. It's confusing, and most of the time it feels completely out of your control. But there is a better way to handle it. Christian Healthcare Ministries isn't health insurance. It's a health cost-sharing ministry where Christians share each other's medical bills. And it's not a new idea. CHM has been around since 1981. It's predictable and proven, and they've shared over $13 billion in medical bills for their members. Plus, Plus you get more flexibility. There are no network restrictions and you don't have to wait for open enrollments. Now let's talk about how CHM helps your budget because programs start at just $115 a month and many families save hundreds of dollars a month compared to traditional options. So if you are tired of feeling stuck, check out Christian Healthcare Ministries. Right now, CHM is offering new members a 50% credit towards their first month of membership. Go to chministries.org/budget and use promo code Ramsey. That's chministries.org/budget and use promo code Ramsey.

Chad is in Oklahoma City. Hey, Chad, what's up?

Hey, Dave, it's a pleasure to be on this show. Certainly. How can we help? All right, so I have a very dangerous career that I'm rapidly approaching the end of, which is freestyle motocross. And it's, uh, uh, you know, I've broken over 80 bones and been through all of it, right? I'm in my 25th year of it. I love doing it, you know, performing in front of crowds. All of that is absolutely amazing. But, uh, in the middle of baby step 2 with the wife, uh, everything's going smoothly. I've kind of got a side gig in the trades, trying to, you know, look at career options as far as the next path because I'm only 44. Uh, but, you know, with our debts and everything, I'm trying to figure out how long I should hang on to this dangerous career while, you know, trying to still set the family up as far as, you know, freedom for later.

Okay. I don't know that I've ever coached a professional motocross guy. What kind of money do you make?

Um, so in the freestyle motocross world, it's all about how many shows or events you can do per year, right? Uh, it's not contingent on winnings and stuff like racing.

Um, it's more, it's more exhibition stuff.

Okay. Yeah. Yes, yes sir. We're doing all kinds of stuff like all over the, all over the world really. And I really try to do a lot of ministry stuff.

Cool. How much do you make?

I, I average on a, on a healthy year, I'm about $125,000, $130,000 on a good healthy year, you know, if you don't break any bones, obviously. Um, on the side trade still, I'm, I'm pulling in about an extra $50,000.

Okay. Okay. And the side trade is what?

Uh, electric work. Okay, good, good.

And so your plan long term, it sounds like, is to become an electrician?

Yes, uh, the area that we live in is more rural, you know.

And what do you want to be when you're 55? That's what I'm asking, right?

Yeah, that's, that's, that's what I'm trying to ask myself. What? You can't do motocross.

No, I'm saying, what is your plan to transition to?

That's, that's the ultimate question right there. I mean, right now I'm leaning towards the electrician thing.

Okay, okay, that's cool. The other thing that popped into my head immediately would be that you obviously are the top 1% of the people in your world, and it would seem to me that without ever getting on a bike again, you could lend tremendous value to the motocross world based on your experience and your name for that matter. Because if you've been making this kind of money and breaking these kind of bones for this number of years, I would think you know everybody and you know the inner workings of the whole stinking deal and how it runs, no pun intended. And I would think you could get into that. Like, I've got a friend that was an Olympic athlete in the skating world, and he doesn't skate for a living anymore, but he knows everyone in the business. Everyone knows his name in the business, and he's able to add value to the skating world, tremendous value, and makes probably more money than he's ever made in his life doing that. So that's a possible angle on your life that just popped into my head. But if you don't want to do that, if you want to just turn your back on motocross, I don't blame you.

If you got 44 broken bones, I can imagine not wanting to see it ever again. Wouldn't be bad. And if you want to be an electrician, that's fine too. Then begin to— what I would suggest you do is get the boat closer to the dock. Don't jump towards the boat and hope you hit it. Um, you know, no, no, that's, that's definitely the plan. Yeah, get your electrician income up and, and gradually take fewer and fewer motocross gigs because it sounds like you could probably trim this back a little. And, and rather than just all or nothing, because there's electricians that make $120,000 a year, for sure. There's electricians that make $120,000 a year.

There is, there is, just not in my area. I'm kind of— I'm pretty much almost capped out on that.

Okay, then, then you can't be in your area.

You either have to be in a different area or you need to maybe think about another path or combining paths. Is there something where you do electrician work and you do something in motocross world that's not riding?

Yeah, right.

Yeah, that's, that's kind of what I'm hopeful for. The question is, what's your, what's your timeline?

In an ideal state, are you trying to make this transition in 2 years? Are you trying to make it in 3? What's your timeline?

Um, with our Baby Steps, I really think we can be debt-free by the end of '27. Okay. Um, no problem. And then, uh, that's house and everything. And then I was just honestly leaning on putting, you know, 2 years kind of after that, kind of really putting what we are already currently doing, but all, you know, hyper doing the investments.

Yeah, but I think you could do that without being in motocross if your electrician income came up.

Yes. Uh, well, we're— I mean, where we're at, I mean, we have our— we live in the country very close to a very, very small town. We have our dream home, dream life. So again, I go back to next door.

I go back to what I said before, which is is if you're saying the market simply is not large enough in your area, then you do have two choices. You can either combine, combine, uh, trades and say, I'm gonna be an electrician, electrician, and then I'm gonna do something else to generate the income I need. Or you would have to relocate, which it sounds like relocation's off the table for you. So that now it's okay, what other things can I do? And I'm also wondering, does your wife work or is it really just, is it just your income?

No, no, she does. Yes, we both work two jobs.

Okay, so here's the thing. You do what Henry Cloud talks about. He just got a new book out this week. He was on here yesterday. What is your desired future? Okay, and you put a timeline on it and you say, okay, my desired future is I don't want to ride a motorbike more than two more years, or whatever you decide. And then you ask yourself, what must be true for me to be able to do that. That's not true today. And what we've been sitting here banging on is your income has to be up in the other stuff. And I don't know how you do that or what you have to give up to do that, but you're either going to be riding motocross or you're not going to be living there. You're either going to be riding motocross or you're going to get your dadgum electrician income up. I mean, if you want to stop one and start another, you've got to You gotta figure out what it is you're gonna do, and then you gotta say, "What must be true? How have I gotta do that? Well, I can't do it with electrician.

Okay, how can I do it? Well, I can't do it with electrician and live here. Then I gotta move." Or whatever it is.

Something's gotta shake.

Whatever it is. But you can't just go, "I'm suddenly gonna live on half of what I've been making." I'm glad you didn't call me and say, "I'm making $600,000 a year doing this, and I've gotta take a pay cut to 50." That's right, that's tough. And I thought, I thought for a minute, the way you're talking, like, my life is in jeopardy, I'm breaking bones. And I thought you were making some unbelievable money, but $130,000 is replaceable.

It is. And honestly, I'd be working to do that really quick because I don't think it's worth tearing your body up for $130,000.

Your brain is already checked out, which makes you dangerous. Uh-huh. Uh-huh. So I want you to get off that bike. Well, we can— within 24 months.

We can definitely send you Find the Work You're Wired to Do. And inside of that, there's a career assessment inside. You can take the assessment because I'll tell you what.

And the wiring has nothing to do with electricity, by the way.

That's right. That's just an unintended pun. But I will say the, when you go from a career that feels very driven by excitement and spotlight. Yes. I, when he said, I'm just gonna go be an electrician, I thought, are you gonna be okay like that? I really think if he can find something connected to that world, like you said, that's gonna give him the spark he wants to keep going.

But what do I know? I got a feeling you could make $200,000 a year promoting those events.

Promoting, yeah.

And hiring the other talent to run the events and analyzing the talent. Yeah, sure. From the perspective of someone who's actually done it. I think you can make more than you used to make riding a bike, but I don't know anything about it. I'm making that up. Yeah, that's true. I've just made that up. But I'm so freaking entrepreneurial that I always figure there's a business in there somewhere.

There's gotta be.

There's a business in there somewhere.

Because he's already an expert in that area.

Well, you and Sam did it. You were performers on cruise ships, and now you and Sam own one of the largest agencies in the world putting talent on stages on cruise ships. That's right. And you've not been talent on a stage on a cruise ship in a long time, except when you went on the Ramsey cruise. That's correct. But other than that, I mean, you know, so you took the talent gig and the knowledge from it, and you turned it into a business. That's exactly what I'm talking about. That's right, that's right. If you run a business, you already know this: bad information leads to bad decisions. And right now, AI is everywhere. But AI is only as good as the data behind it. The best AI is built on the best data. That's why I recommend NetSuite. NetSuite is the number one AI cloud ERP, and more than 43,000 businesses run on it, including us here at Ramsey Solutions. Their AI isn't bolted on, it's built in, and it connects everything that runs your business— accounting, inventory, customer data— all in one place. Because when your numbers are connected, AI actually works like it's supposed to.

NetSuite's AI helps flag cash flow problems, spot inventory issues, close your books faster, and cut down on manual reporting. If your revenue is at least 7 figures, go to netsuite.com/ramsey for a free product tour. That's netsuite.com/ramsey. Welcome back to the Ramsey Show in the Fairwinds Credit Union studio. I'm Dave Ramsey. Jade Vashal, Ramsey personality, number one bestselling author, is my co-host today. Carla is in Pensacola. Hi, Carla, how are you?

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

Better than I deserve. What's up?

So my husband and I, we had a catastrophic, uh, life-changing event, uh, November of last year. Um, I was diagnosed with stage 4 bladder cancer. Whoa. And yeah, been a humbling experience, to say the least. Um, we own our own business. I thank the Lord that we had savings, uh, personally and business-wise, but we have since lost everything. Everything has— well, I say lost everything, all of our money is gone. So we're starting from ground zero again. How are you doing? Um, I'm doing better also with the blessing from God. I just got my latest PET scan and the cancer is diminishing. Oh, so we are on the right track.

Amen. Oh, that's what's important. Money, money comes and goes, but you gotta, you gotta protect that. Wow. So you didn't have, you didn't have health insurance?

No, unfortunately I did not. Why? Neither one of us had health insurance because we were young in our minds and naive and just pretty healthy. Neither one of us ever get sick. Um, how old are you? And then I'm 53.

So what did the— what do these bills amount to?

Oh, they amount to— were Well, for $100,000, but—

And how much did you have in savings?

We had, um, about $100,000 combined, personal and business.

And that's what the bills were about. So you cleaned out your cash, but you haven't lost the business?

No, that is correct. How are you—

how are you continuing to pay for your medical care at this point?

Right now I have, because I cannot work, I have been approved for disability. Okay. Um, I will get my first paycheck from disability June 3rd. And how much is that? $1,900 is what I've been approved for a month.

And in the meantime, I mean, I go back to my first question, which is how are you paying for your care?

I'm on Medicaid now as well. Okay. Okay. Good. Good. We did have, we purchased in January, healthcare policy, but that was costing us over almost $1,000 a month. Then in the midst of that, in February I got approved, but then of course the system, it didn't kick in until March. And so yeah, here we are.

Okay. So with you fighting, with you fighting cancer and you have a $1,900 a month income, you've cleaned out your savings. And your husband's running the business, I assume. What is he making? He just—

he is just now returning back to work.

What is the business? The business is truck driving. Okay. All right.

And so his income is going to come back now, partially, because he still has to come back to me every week for my chemo treatment.

Sure. What will he be making part-time?

He will be making approximately $1,000 a week is what we're hoping for him to be able to bring home.

Okay. So we got— so now we got $6,000 a month to work with. And, um, so, um, this is devastating. I'm so sorry you've been through this. Um, so what I want to give you permission to do is to live on $6,000 a month. Making sure that your health treatments continue. Okay. Until, until you get this beat. Yeah. When you get this beat, then you go back to work. He goes back to work and we get income. We get our income back up and then we rebuild with that.

Can I throw another wrench in the pile? My father just passed away also, so I just inherited $60,000 worth of debt.

Yeah, honey, you don't inherit debt. Well, it's a house. Or sell it.

Okay, sell it. Yeah, yeah.

What's it worth if you sold it?

Uh, I have no idea. Um, more than $60,000.

It might end up being a blessing for you.

Okay, right now I'm dealing with squatters in the house, trying to get them out.

Well, evict them and get a good real estate agent. Get the squatters evicted. Get the house sold. You're fighting chemo. You don't need to fight squatters and chemo. Let's just pick one. I'll pick, I'll pick the cancer. Let's beat that one. And get a good real estate agent. Go to RamseySolutions.com and find one of our Ramsey Trusted Real Estate Pros and tell them you're struggling with cancer, your husband's on the road trying to make a living, and you got this house you need to get flipped, and you got to get these people flipped out of it and have them run it down for you. And they can pay the attorney out of the proceeds of the house to do the eviction on the squatters. Okay, how did this— if he just passed away, how come there's already squatters in it?

That's weird. I— well, he passed away March 25th.

Yeah, but I mean, what they have—

were they lined up in the street ready to jump in the house?

I mean, was he just not in the house? Was he in the hospital for a long time?

He was in the hospital and he stayed with my aunt. Okay. Um, so it was empty a lot and it looks like nobody lived there. Um, it— the house has been in our family for 4 decades. Is it in good condition?

It's not gonna be anymore.

No, I, I know.

You can't have it. You have enough on your plate. You don't need to evict squatters, renovate a 4-decade-old property, and, um, be screwing around with all that. You need to fight cancer and win. Concentrate on what's important. This is a distraction. Okay, cut it loose. Make your life simple. I'm gonna laser focus. Chemo and beat cancer. Chemo, beat cancer. When that's done, we'll rebuild our savings, and part of what will help us do that is the sale of this house. And that's what you got to do. Yeah, the problem is when all this stuff starts coming at you, folks, from 14 different directions, you got to choose your battles. And you know, you got to pick out which thing you're gonna take on first and take on the most important thing, and that's called living. That's That's right. That's right.

She's been— when it rains, it pours. And I mean, she's been through it. But for anybody listening right now, the takeaway from this is, oh my goodness, you need insurance. You gotta have it. You gotta have health insurance. You gotta have life insurance, term life insurance. You gotta have a will. All of these things are there because it's a— you're moving the risk off you onto somebody else. Because they're all there. Everybody wants to be healthy forever. Everybody wants to live forever. But that's not the case.

It's just not the case. There we go. That's it. Oh boy. So yeah, you have to play defense. And here's the thing, the number one cause of bankruptcy is not credit card debt, it's medical bills. And it's not medical bills from people that had health insurance. If you got health insurance, you got a deductible you meet, and then you got 80/20 or whatever, right? And you can work your way through that if you got an income. Yeah. But if you're sitting there with no health insurance and you take a $100,000 popping, you're a truck driver. Yeah, you got— that's getting your face knocked in.

And if you're looking, check out Health Trust Financial. They can help you find the right policy for you. If you're looking for term life, we're always going to recommend Zander Insurance. If you're looking to make a will, we're always going to recommend Mama Bear Legal Forms. They're there.

We've got all of these advertisers we put in place to do the stuff we teach you to do.

Okay guys, let me ask you something. What would it take for you to switch your bank? Because if you're still earning next to nothing on your savings, you need to check out Fairwinds Credit Union. And I know what you're thinking, it might sound like a hassle moving your changing your direct deposit, updating bills, getting a new debit card. Feels like a lot. But here's what most people don't realize. Staying where you are could be costing you hundreds of dollars every year. Y'all, the average savings account pays less than half a percent. So let's say, for example, you got $20,000 saved. You might earn around $70 a year. But with a Fairwinds High Yield Savings Account earning 3% APY or more, that same money could earn you over $600. And that's real money that you can use towards the Baby Steps. So, don't let temporary comfort keep you stuck. Check out the Smart Bundle from Fairwinds Credit Union. You get a high-yield savings account, a no-fee checking account, and the Ramsey Be Weird debit card. Go to fairwinds.org/ramsey to learn more and make the switch today. That's fairwinds.org/ramsey. Insured by the NCUA.

Annabelle is with us in Anchorage. Hi Annabelle, how are you?

Hi, I'm doing great.

How about you? Better than I deserve.

What's up? Well, first It's an honor to talk to you both. Jade, I'm in the middle of your book right now. And Dave, I'm in the middle of Total Money Makeover as well. Wow, very good.

Caught in the middle.

Yeah, with that said, you guys have been working on me for about the last 6 months. I've been diving into the podcast. And about the last week, I committed to the program. I increased my income, I got a second full-time job. And this morning, I set up my EveryDollar budget.

Wow, look at you.

So what do you think?

I'm ready to go. So I was, I was like relieved to the point of crying.

Good, because you have a plan and you're back in control.

So Jade, and that was because of you. So in your book, I think you said that it's scary when you don't have eyes and you actually be surprised at how much fear goes away when you just actually add up all the numbers and see what it is.

That's right, that's right. You can actually get a handle on it.

Mm-hmm. Yeah.

Oh gosh, sorry. It's okay. What you're experiencing is, is, is, it's exactly right.

It's called relief. Yeah. Yeah. Yeah.

Um, all right. So, all right, let's collect ourselves. So I'm a local dog trainer. I've been self-employed here in Alaska for the last 7 years, and I've been afraid to do this because my income is so volatile. It's hit or miss with the economy. So, I didn't want to make any more dumb butt decisions, so I went out like Dave said to do and I increased my income. Good. I became a correctional officer, so now my base income is not zero. Great. Which is fantastic. But I had a question about the sinking funds. I am going to need winter tires in October, and while I am budgeting for that, is that considered a sinking fund or a budget item? And what's the difference?

For where you are, I would consider that a sinking fund because generally a sinking fund is something that you cannot pay for in one month's cash flow, right? It's something that's like, hey, I kind of have to save up a little bit for this. And my guess is that that's what this is for you. How much are the 4 tires going to cost you? Uh, $1,200. $1,200. Exactly. And my guess is you can't cash flow that in a single month in October when you need them. Or can you? Maybe you can.

So I would have to take from my margin, which is currently all being poured into my debt. Uh-huh. And so I could cash flow it.

How much margin do you have?

About $2,600 a month.

I mean, honestly, that's totally up to you if you wanted to do it that way. If you feel like, you know what, I make—

You're taking from the margin either way. Yeah. You're either going to take from it a little bit for 3 months or 4 months, or you're going to take from it a lot in 1 month.

Month. And the, the thing that would be really rich— but, but what we're talking about is your motivation, right? Because you're in the middle of paying off debt. So if you say, you know, I'm really— I feel like I'm making progress, I love seeing the number go down every single month— if that's where you are right now, then I would say hold it off until October and then just do it in one shot. And that keeps you feeling motivated.

And October is not a good debt reduction month, and it's the snow tires' fault. And that's okay. Yeah.

Okay. Okay, I can do that. Yeah, I like that for you. In October, there is a little buffer here in Alaska because we get the Alaska PFD. So that's an extra $1,000 or more that we get from the state, every state resident.

So now we got $3,600 that month in margin minus $1,200.

So then you really won't feel it.

You won't hardly notice it. Okay. Yeah, that's perfect. I didn't even think about that.

Alaska's gonna buy your tires.

Yes. Finally, the taxes. I love that for me.

All right, well, that was my question. Can I ask one more? How would I do that? Another thing that I went ahead and did was I signed up with Zander for life insurance. Good. That's a budget item. Okay, that's a budget item. Monthly. All right.

That's a cost of being alive is having life insurance.

All right. Hey, we're proud of you, by the way. You're doing so good.

Yeah, you are. Thank you so much.

You're actually coachable. You're amazing.

Yeah, well, I waited 6 months to call, so I made sure I was.

Yes. Oh, well, I wanted to—

I wanted to—

You're our prize student of the day. You get an apple. Yes.

Oh, well, thank you so much. You guys have a wonderful day.

Yeah, you too. That was fun. It's a great call. Yeah. Well, the thing is, here's what's interesting, and what I want people that are out there on the edge and they haven't decided whether they're going to do this or not The tears and the emotion comes from not being out of debt, 'cause her life mathematically has not changed a dime yet. That's right. Yet. But it's actually seeing a light at the end of the tunnel that is, for the first time in your life, is not an oncoming train. You know, we actually are going— this is freaking— when you put the numbers down, the numbers look at you and say, "This is gonna work." Mm-hmm. And you go, go, "Oh my gosh, the numbers just told me this is gonna work." And this is called hope. And hope in personal finance is the sauce, baby. Hope is the secret sauce. It'll make you work hard. Hope will make you sacrifice. It'll make you sell off your prized possession because you want to get to somewhere you're not there yet. Hope will make you do all kinds of mature, grown-up stuff. Yes.

That's why we tell you, that's why we're always giving people EveryDollar. Because the moment that you start plugging those numbers into EveryDollar, and it happens just the way Dave said, you start to see, oh my gosh, number one, you see your income in one place for the first time and you realize, oh, I, I do make money.

I make too much money. And I really have been wasting a lot of it. Yes.

And then you see the margin, or if some of us, a lack of margin. And for the first time we see it for what it is in facts. Okay, I'm $400 over. I'm $700 over. And then, when you see— the first step in solving a problem, Dave, is identifying that there is actually a problem. So, when you actually see it, okay, I'm over budget, I'm in the red, even though that doesn't feel nice, at least you can recognize the problem, and now you get about the business of actually solving the problem.

And if you have felt like a rat in a wheel for so long, and you suddenly have hope, it will make you cry. Yeah, it will. Wow. It makes me cry thinking about it because I've been there where you're under a rock and somebody's standing on a stinking rock. Hello. And when you realize, "I don't have to stand— get off my rock." Yes. You know, "I'm not gonna live like this." And you go, "There's a way to do this," and it changes everything. It's so powerful. See, the brain science tells us that bad news is not as bad as no news. Ambivalence is way more dangerous to your brain. Not knowing is way more dangerous to your brain than knowing exactly what I gotta do and what I gotta fight.

Right, 'cause when you don't know, your brain fills in gaps with all sorts of stories and ideas and fears and all sorts of things.

Yeah, we have a friend who's in the process right now beating cancer. Just knocked one of 'em out. He had two, he's collecting 'em. And he's got one of 'em knocked down, he's working on the other one. A good one. And he will tell you that when the doc says, "You got cancer, but it's gonna be a week before we can tell you how bad it is," that week is more hell than actually fighting the stinkin' thing once you know what it is. It's stage 2, this is what we're gonna do, here's the treatment plan, here's the prognosis, you've got a year of hell ahead of you, and no hair ahead of you, and you're going to live. But it's gonna be awful. Your brain can handle that news, better than, "I've got cancer, but I don't know if I'm gonna die tomorrow from it," or, "I don't know if it's stage 4, 1. I don't know if I drove by it. I don't know what it is." The not knowing crap, that ambivalence, is way harder from a brain science perspective for human beings to deal with than the actually knowing this is what we're dealing with.

And if you look down and you go, "God, that's a lot of debt," that's not nearly as bad as, "I've got a lot of debt, and I have no idea, and I'm stuck, and it's—" But when you write it down, like you said, you get that— you'll have Annabelle's reaction. And you may not call us crying, but you will stand in the mirror and cry. Yeah, you will go, "Oh my gosh, I'm gonna be okay. It's gonna be tough. I might sell some stuff. I'm gonna take a job as a correction officer while I train dogs. But I can do this. And what must be true that's not true today?" And all of a sudden, your brain starts adjusting for what must be true that's not true today to get this freaking mess cleaned. Up. You automatically do it. It's a human function. You can't keep yourself from doing it. You problem solve once you realize what the stinking problem is.

George Campbell here. Let me give you 3 signs it's time to stop hoping your debt problem goes away and actually take action to fix it. If you've defaulted on a debt, if collectors are calling nonstop, or if you're facing a lawsuit or think one's coming, you don't just have a debt problem anymore. You've got a legal problem. And that's why I tell people about Guardian Litigation Group. Because here's the thing. If you're behind on your bills, doing more of the same is not going to fix it. You need a different plan. And Guardian Litigation isn't just another debt relief company making promises they can't keep. They're an actual law firm. And from day one, you get an attorney who represents you. So when collectors start pushing, you're not guessing. You've got someone in your corner who knows how to respond when your debt problems escalate into legal problems. So don't wait for it to get worse. Go to guardianlit.com/ramsey right away. That's guardianlit.com/ramsey. Attorney advertising.

Results may vary and no specific outcome is guaranteed. Are you worried Worried about being able to afford a home? A lot of people are. A lot of people have believed everything they read on the internet, which is a really bad idea, um, because it can steal your hope and falsely steal your hope. So why don't you sit down with a good real estate agent and find out what you can actually afford, or figure out what your home is actually worth and talk about putting it on the market if you're going to sell. When you actually deal with facts instead of internet mythology, your life will change, I promise you. The Ramsey Trusted Program is the only way to find a top agent you can trust that we trust, and they'll make your home a blessing, or buying a home not a burden, and be a blessing because you'll be dealing with reality, not internet mythology. See, if there is a reason for you to be worried about something, I will tell you. I believe in it. I'll tell you bad news. I don't mind. But I'm also not going to allow the hope stealers out there to steal your hope falsely.

I mean, if you live— if you make $40,000 a year and you live in Los Angeles, you're not going to buy a home. That's the truth. You can't afford it. That's right. Okay, that's the truth. You have an affordability problem. But most people aren't in that situation. Most people actually have just believed all the stuff that their bullcrap friends are telling them. So find a local Ramsey Trusted Real Estate Pro for free at RamseySolutions.com/agent or click the link in the description. Our question of the day is brought to you by Yrefi. When you fall behind on paying your private student loans, it can feel like your life is being held hostage. But Yrefi helps borrowers explore a fresh start with a low fixed-rate refinancing and a payment plan designed for your ability to pay. Wow. Don't you wish you had that for the other kind of student loans? Visit yrefy.com/ramsey. That's the letter Y-R-E-F-Y.com/ramsey. Might not be in all states. All righty.

Today's question comes from Paul in Ohio. He says, I'm debt-free and almost have my emergency fund in place. Once that's done, I want to upgrade my vehicle and I'll pay cash. How do I handle a dealer that I know will be pushing financing even just for a short time so they can get a better profit margin? I'm determined to walk in with cash and take it home the same day? I love this question and I think it's great. You're going in there, you're paying with cash. And I think the first thing is you've already decided that you're paying with cash, so there's no way you're getting into financing. So you've already drawn that line in the sand. And I'll tell you, for me, I think the best way to handle it is I don't— and I've done it the wrong way before, but I don't tell them that I'm paying in cash until we've negotiated the price. Because once— if you walk in and say, well, I've got cash and this is all I've got, I got $30,000 and nothing more, they kind of lose interest in the deal in many ways, especially if you've made it very clear that you're not financing because they don't— you're right, they're not making as much because financing, there's a kickback, there's add-ons that they get.

They earn more off people who buy, who finance the car. So I wait and I say, let's just talk price and let's get the price to where we both agree and where I agree. And then I can let loose. And by the way, I'm paying cash. And they usually don't like that very much. And they're going to try to push. For you. You know, even if you just finance this much, you could pay it off next month. They're going to do all those things and you're going to say, no, thank you. And then they're going to act like they need 10 people to approve your check and they don't. And it's just a lot of rigmarole that you just have to say, this is, this is the way they're going to act, but this is the way I'm going to act. And like I said, before you even tell them that you're, you know, paying cash, that's the time where I'm trying to negotiate. Okay, can you take the document fee off? Hey, can you— I don't want the extended warranty. I'm telling them everything upfront. Upfront, we're locked down on the fee, and then I slide the cash over and it's done and done.

Dave, what do you think?

That will work. There's nothing wrong with that plan at all. The more expensive the used car, the closer I would stick to that strategy. If you're buying a $5,000 or a $10,000 used car, they're not making a lot on the financing. And I would just say, you know, I have $9,000 and you have, you know, you're asking $12,000, "Here's $12,000, and here's $9,000, and if you want to take that, I'm leaving with the car. If you don't, I'm leaving with my cash. Do you want the car, or do you want these Benjamins?" I mean, it's that simple, right?

Put it close enough for them to smell them. Smell it, right?

It's right there. Open the briefcase and go, "Do you want this?" You know, I'm kidding, but not much. And so that's a cheaper car, right? Now, if you're buying a brand new car, that's not a specialty vehicle, it's a standard model, if you'll work it carefully, you can buy those for usually $500 over invoice. And just go in and say, "I'm looking at that car, will you sell it to me at $500 over invoice?" Just leave it at that. And they will show you the invoice. Now, after that, the reason they will do that is, or sometimes they'll sell it to you at invoice, because they get manufacturer rebates that they put in their pocket. Make it, okay, in that process. And then I just go, I'm going to wire you the money. And that's that on that. Yeah. Now if you're buying, you know, something that is an— there's a shortage on that vehicle, it's more of a specialty high-end vehicle of some kind, they may be marking up above MSRP on that. Like the Raptor that I drive, that Raptor R, you know, that thing, they only get a handful of those and they often sell for more than sticker.

Right, because there's more demand. Because they can easily— they get 2 per dealership or something, they You can easily get that. But that's an expensive specialty rare vehicle, very unusual deal. So there's a lot of different ways to approach this. But yeah, if you just say, if you nail it down on invoice, you get the exact same treatment you're doing. And you go, and no, I don't need them. I don't need the ceramic coating bullcrap. I don't need all the bullcrap, man. They can shovel, a car dealership can shovel more bull than anybody I've ever seen in my life. And I got a lot of good friends that are car dealers. And they laugh at me and we joke when we're hanging out together, "Ramsey, you're the bane of my existence." But, you know, 'cause I can't, nobody will lease a car because of you. And I'm like, that's 'cause I'm doing my job better than you're doing yours. So there you go. Shots fired. Jay is with me, with us in Los Angeles.

Hi Jay, how are you? Good, how's it going?

Better than we deserve. How can we help?

So the reason for my call is, I'm self-employed. I'm a contractor and, uh, I make decent money. I've only been doing this for going on 2 years now, but, um, I've been in this line of work for a long time. So we've picked up work pretty quickly. Um, but I'm having trouble getting my wife on the same page. I would like to eventually buy a house and pay off debt. But we're, we've been arguing a lot lately.

Um, what are you arguing about? As money?

Well, as money comes in, um, she has all these ideas of what she wants to spend on. Um, and sometimes for the sake of not fighting, um, I'll kind of let it go.

Ideas like what?

You mean, you mean she wants to buy food?

Well, she'll buy her food, like, well, she eats out for every meal, and then, um, like, she's— we have, uh, our house looks like an Amazon warehouse. Oh, um, it's like just overspending on stuff, things, stuff. Yeah. And then, I mean, it's like friends' birthday parties, friends' kids' birthday parties. Let's get them this. Let's get them that. It's my mom's friend's graduation. How long have you been married? I don't know. It's like anything. Uh, 2 years as of last week.

About the time you went in business and started making money.

Yeah. Mm-hmm.

What does she do?

She's a stay-at-home mom. We have 2 kids together. Yeah, okay. All right.

And what are you bringing in from the contractor deal?

What's your, what's your net profit that you pay taxes on in a year?

So last year net profit was about $187,000. This year gross, I'm on track to make about $450,000. Um, but We don't have anything. I made $30,000 gross in the last 2 weeks. I took home about $16,000, and we're down to about $2,000. Okay.

Well, I mean, obviously you have a marriage problem. You don't have a financial problem. And so the 2 of you need to sit down together and say, honey, I can't live like this. You're killing me. We're gonna have to get on the same page. We're not in Congress. We can't spend like we are. And we're gonna have to get on the same page. And yes, you need to buy some things, but I am unwilling to make $400,000 a year and be broke. I'm not gonna live like this. And so if we can't sit down here at the kitchen table and work that out like two adults, then we're gonna have to sit down with a good marriage counselor. When you've worked hard to buy a car the right way, you paid cash with no payments hanging over your head, the last thing you want is to worry about it every time you drive it. That's why we trust Christian Brothers Automotive as the official auto repair partner of The Ramsey Show. See, most people don't stress about their car because it's older. They stress about it because they don't know what's happening under the hood or trust the people that are working on it.

But Christian Brothers Automotive uses digital vehicle inspections. You can actually see what your technician sees and know what's urgent and what can wait. Plus, Christian Brothers stands behind their work with their nice difference warranty, 3 years or 36,000 miles, whichever benefits you more. So if you want real peace of mind with the car you worked hard to own, go to cbac.com/ramsey. Use the promo code Ramsey and you'll save 10% off your visit up to $250. cbac.com/ramsey. See store for details. So as we survey our audience, one of the things you guys always bring back to us is, "Hey, you remember that call, that weird thing that happened on the air? Whatever happened to that guy?" And we always answer, "We don't know," 'cause we have no idea what happened to him. But lately we've decided we're gonna fix that, and a time or two in the last few months we've taken one of those calls that when we posted it like on Instagram, it had like 10 million people view and went, whoa, that's wild. And we go back to the person and go, okay, what happened? What did you do? So Jade and I took a call in November from a guy and, well, I'll just let the clip explain it.

We're going to play the thing we ended up posting on, on, on Instagram.

My fiancée does not quite know what my net worth is. Is how do I tell her fully? And my lawyer said I pretty much have to have a prenup.

Well, your lawyer's not in charge of your life. It's number one. Lawyers give advice. They don't tell me what to do. And then I decide if A, that I want them to be my lawyer anymore, and B, if I'm going to take their advice. They don't get to tell me I have to do something. You're not the boss of me. Now, so how in the world do you get engaged and have never told her? You should have told her before you got engaged.

I agree. She knows I'm worth a decent amount. She just doesn't know the full amount.

What is the full amount? Close to $20 million. Wow. And you're telling me there's no signs that you're a $20 millionaire? There's signs when you're a $20 millionaire, Dave. Come on.

Well, there can be. I don't know. There's so many people, they look like they— yeah, no, there's not always a sign, but, uh, yeah. And then other times there's a sign. So there we go. So we said, okay, the lawyer "Even though he was a bit bossy about it, you probably do need a prenup." And we said, "You probably need to sit down with your— like, as soon as you hang up the phone with your fiancée and have the conversation." And we wondered, how'd that conversation go? I mean, if you're the fiancée and you get here suddenly, do you go, "Wow"? Do you go, "You liar"? I mean, do you go, "I mean, wow, that's crazy." So, we got Brian on the phone. And Brian's in Minneapolis, and this is the guy we talked to just a little while ago, and the clip we just played. Brian, how are you?

Better than I deserve, as the saying goes. I've heard the rumor.

So that's the first thing I do want to know. I'm very, very curious. So when— how quickly after that call did you sit down with her and tell her exactly that you had $20 million? And then what was her reaction?

Probably a couple weeks when I saw her in person, since we're not always together. And her reaction was was what I honestly fully expected it to be. Oh, so okay. But there was no— nothing more honestly to the conversation.

And when you say got back together, because she's, she's out of, out of the country, right?

Yeah, we're— yep, we, uh, are in two different countries, but I go back and forth a lot.

Yeah, you're in the United States, she's in Canada, correct?

No, I mean, she just looked at you and went, oh, okay.

Literally, that's what she said. 20 million bucks. Literally. She, she mentioned coffee Like I told you guys when I got to meet you, uh, after this, it was, uh, I was the guy down there met you too.

Well, did she suspect it? I mean, cause you're making $700,000 a year. Did she suspect that?

She knew. I said, did you have any idea? And she said, oh, I thought maybe a million or two was her honest response. Okay. And I said, okay, cool.

So things are good.

And she just said, no, nothing changed. Not a single thing.

So I'm actually— definitely did not accidentally stumble into a gold digger. Huh? No, I— opposite, opposite. She's bored with your $20 million. She—

it's not going to change her life. Live now in any way.

It was a big old yawn, like, oh, okay.

Yeah, because remember you were worried about it because you said that in a previous relationship somebody kind of took advantage of you for your money, and I remember that being a pain point for you.

Yeah, it was for sure. And with her, it's, it's not, not that at all. Not— she, she's one of the hardest workers I've ever met. So, and so did you talk about a prenup Yep, we did on it, and she again said, yep, no problem whatsoever. Wow. So she's, she's, she's one in a million. She really is.

So did you guys set a date?

Uh, we were hoping for August, September, sometime in there. Uh, we're not going to throw a big old shindig. It's going to be this family and stuff like that. So hopefully sooner than later.

Okay, so you kind of thought that this was going to be a big yawn for her and she was just going to go, yeah, whatever. Whatever.

You kind of thought that, didn't you? Yeah, my gut told me.

But some percentage of you when you sat down was a wee bit worried. What percentage?

Uh, I wouldn't say more than 5%. Okay. All right. Honestly.

So you know, you know her pretty good then? I do.

I was a little worried because I don't want to say I hid it, but I never was forthcoming about it. Yeah, that was the part. Yeah, on it. But she She reacted how I would have put a lot of money on she would react. She just said, you did not make a deal. It doesn't change.

And you didn't tell us, but what was her financials? She takes good care of her money, right?

Yeah, she, she, uh, there's things I just, I didn't say. She has a son, um, on it. I didn't think people really needed to know that, but I'll say it now. And he has autism, so she, he's going to be with us his whole life. Um, but she that she is the best mother, the most caring person, and she made sure that he is always provided for. I love that. On it. And so she had some things that maybe weren't the smartest financial decisions ever, but she, you know, being a single mom's not the easiest thing in the world.

No, no, not at all.

Especially, especially plug a little autism into the equation. Yeah. Wow. So I gotta tell you, this is the most normal reaction to a really bizarre set of numbers.

Yeah. Dave, honestly, how I feel, I would sign her. She could have it and I wouldn't be worried she would take an RV.

Well, my guess is you guys' life is not going to change.

No, it's not. A little strain will come off of her. Yeah, sure. Yeah. People, I might have looked over the Instagram and seen people saying cheap this and that. I value my money to be spent on experiences. Yeah. Yes, that's right. Over materialistic things. So for us, it's not going to change how we live one bit.

Oh dude, we should have told you not to read the Instagram comments. Well, you know, reading Instagram comments, you understand why some species eat their young.

Yes, I do.

Well, you did see folks saying this is a good problem to have, and they are absolutely right. This is a good—

there was a lot of funny comments like that, like, I wish I had this problem with my fiancée. But yeah, those were funny comments. But yeah, I don't read the Instagram comments.

Yeah, it's never going to bother me, Dave. Not good.

You got thick skin. And honestly, yeah.

Wow. Well, you guys are— you're devastatingly normal for some really weird numbers and some fabulously weird numbers in a good way. And congratulations. I'm glad it all worked out. Thanks for giving us the update.

I appreciate you coming back on. Yeah. And we will actually see if she wants to come next time I come to Tennessee. So we're going to stop in. Oh, hey, great.

I'd love that. Great. Come on in. We'll buy you a chocolate chip cookie and a cup of coffee.

Yes. Oh, I love the follow-up. That's so cool. And by the way, if you are watching and you've called in and shared something and you want to follow up, give us a call. Tell us.

We want to know. If you're interesting, we'll put you back on. But I mean, if it was just boring, we don't want to follow up with your boring call.

That's true. It needs to have 10 million views.

20 million views. Did have 10 million on your Instagram. Yeah, I don't even know what mine was. Oh my gosh. Wow. Crazy.

So, it just goes to show, we give, you know, we give advice and sometimes it can make you feel a little out of your comfort zone. It can make you feel a little bit like, "Oh, I don't know if I want to do that." But there's a rainbow on the other side of this. Like, if you follow the advice, it might feel a little uncomfortable for a moment, but it usually, it's a happy ending here.

Wow. Well, when it comes to finances with the person you're gonna spend your whole life with, your spouse, your future spouse, 1,000% transparency is the only possible equation. There's no other possible answer. Well, I don't tell 'em about that. That's lying, okay? The Target bags under the bed are not cute, Oprah, okay? It's not cute. And so, if you have to hide your Target purchases, gentlemen, if you have to hide your latest firearm purchase in your business P&L because you didn't want your wife to know what you spent on that gun, that's lying. That is lying. Okay? Can you tell I have discovered that at Time of True Coaching? I was gonna say, you sounded a little too detailed. I didn't do that. I didn't do that. Oh, okay, okay. But I have witnessed guys, particularly guys that own their own businesses, they manage to— Sneak it on through under the keyhole. Yeah, that's a good one.

Slide it under the bed.

Slide the Target bags under the bed, and there you go. So yeah, just, it's the cleanliness of honesty, the cleanliness of integrity, is, it's essential to wealth building, and it's essential to high-quality relationships. And Brian sitting down with her and she, her going, "Ah, okay, I kind of figured, but I didn't think that much, but cool, whatever." Just, you gotta love the lady, man. What a cool lady. Wow. Welcome back to the Ramsey Show in the Fairwinds Credit Union studios. I'm Dave Ramsey. I'm Dave Ramsey, your host. Jade Washaw, Ramsey Personality, number one bestselling author, is my co-host today. Joe is with us in Orlando. Hi, Joe. How are you? Hey, Dave, I'm doing good.

How are you? Better than I deserve. What's up? Thank you for taking my call. I appreciate you and Jade. Sure.

Thank you. How can we help?

Thank you. So, um, I have a financial dilemma and I have I hope you can provide some direction on it. So my wife and I are both 38 years old. Um, we're blessed. We make, um, in the last 4 years, every year we made around $1.1 million, um, with our W-2 and investment income. Now, since last 4 to 5 years, we are paying approximately $300,000 to IRS in taxes. So this year I decided to consult with one of those tax advisory firms and they recommended, hey, we can add you in some kind of a business program where you can take a debt of $550,000 and call it $85,000 as an initial investment. And then rest of that, you can put that in tax write-offs. And then you can claim, you can deduct that from your overall tax payment from it. So I wasn't sure it's a good idea to take a debt to save taxes, so thought I should ask you.

Okay, the only write-off is the interest on the debt, correct?

Well, yeah, that's pretty much what they were saying. Well, they were saying that if I'm taking a $550,000 worth of debt enough debt to invest in a business, I can use the $450,000 worth of money as a deduction, as an investment in the company, as per new Trump bill.

Okay. Do you own a business?

No, I don't, but they're saying they can add me as an investor. I have no idea what that business is as well, so. Okay. That's why I was like, you know, I have no idea about the business gonna be, is it gonna be profitable or not, but they're claiming that, hey, hundreds of thousands of high-paying taxpayers do that. So I'm like, I don't know, I'm not sure about it. Okay.

I'm sure run away from these people as fast as you possibly can, but let me, I'm gonna guess at what they're trying to do because I can't tell. Normally, if you own a business, you have a write-off. If you have a debt, you can write off the interest as tax deductible, as an expense of doing business, okay? But the interest would not be $450,000 on a $500,000 loan. So all I can figure is they're doing some kind of Section 179 write-off, which you can do in business. And I take that in our business here, But the problem is, is if the business fails, you still have the loan. Yeah. And you got the write-off, but you've got the loan, which means that— and so, you know, another way of looking at this is, if you had $550,000, would you invest $550,000 cash in this in order to get a $450,000 write-off Well, obviously then you have a net of $100,000 invested in a business that you don't know anything about. Well, we wouldn't even do that, right? Much less have debt around it. And so their explanation and their process— so here's a— here's an— let me backtrack just a minute.

You're making incredible money. What are you doing for a living that's making this kind of money?

Yeah, so I'm an AI architect.

Okay, good for you. Awesome. I'm so happy. All right, so what I learned, and I learned this as a young guy that was making the kind of money that you're making, and I ran into these people in the real estate world who were doing the similar things, and they all got burned and ended up bankrupt, and so did I. I didn't end up bankrupt for the same reason that these people are gonna cause you to have problems, but here's the principle that I learned at the time. This was around real estate, it wasn't Section 179, which I think is what these guys are doing. I'm not positive where they're getting this kind of a write-off on only a $550,000 investment. It shouldn't be that big. But all I'm guessing is, is they've syndicated out the 179s. And so that's a complicated way of saying there's a write-off you can take in business and they're giving you a portion of it. So they're probably putting, you know, you and 2 other people or something in this. It's a limited placement thing. Now, in the real estate business, what they did was the Reagan, Ronald Reagan, that's how long ago it was, changed the tax laws to where we could take a, what used to be depreciate a piece of property over 30 years, and instead we could depreciate it over 15, and then we could use what's called double declining balance and depreciate, you take the first year's depreciation and double write it off.

And so you could put $5,000 down on a $35,000 condominium, okay, and you could end up writing off $15,000 that year, is the way the numbers worked. And so people were doing this en masse, but guess what? The stupid condominiums wouldn't rent for enough then to support the debt. They ended up getting foreclosed on, and all all of the tax savings got recalled back on the people. And so the lesson that I learned from that, which it's a little different deal than your deal, but the lesson I learned from that is never do a deal that doesn't make economic sense and only makes tax savings sense, because it's always gonna bite you in the butt. It has to make economic sense, meaning if you're gonna invest in the business, it's a good business investment, and I get a tax write-off. Not, it's a stupid, crazy business idea, I'm gonna lose all my money in it, but I get a tax write-off, and I'm doing this just for the tax write-off. And that's what these guys are proposing to you, like my old real estate buddies did, and they got their heads taken off. All of them.

And it was a massive bloodbath in real estate in the '80s over this. All the limited partnerships and syndications fell apart. I knew one guy had $110 million net worth, he's bankrupt, gone. Took him out. And it's this very principle they violated, is they were doing deals just for the tax write-off that were bad deals. And what I smell here, and I'm 99% sure this is a really bad deal and a really good tax write-off, run. And run because these morons are morons, and they're gonna give you other stuff like this to do. Yeah. And you might not be able to smell smell it. So, uh, you smelled this one. You could tell something was wrong, couldn't you?

Yeah, absolutely. So even I offered, hey, what if the business is going well, I can pay that debt off? No, no, no, no, you don't want to pay off the debt. Yeah, you want to stay in debt.

Yeah, here's the basic thing on that. If you have $100,000 in debt in interest payments, you can write $100,000 writing it off means that you deduct it from your income. It doesn't mean you save $100,000 on taxes. It means you save 37% of $100,000 on taxes. So you put out $100,000 to the bank in interest and it saves you $37,000 on taxes. Well, that's trading a dollar for a quarter. That's stupid on a 6th grade level. Okay, and so you never do that. If you're gonna do that, just give a charity $100,000. And you get a $37,000 write-off. $37,000 tax savings, $100,000 write-off. And you don't have to be in debt to do it. Run from these guys. They're dangerous.

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

Carl is in New York City. Hey Carl, how are you?

Hey y'all, how's it going? I hope you're doing well. Thanks for taking my call. Sure. I'm 29. Hey, I'm 29. I live in New York City. Um, just signed today, uh, making double what I was making, um, at my previous job. And congratulations!

What are you making? Thank you.

Uh, starting off at $85, um, salary, and, and hopefully $95 after 6 months. Good, good for you. Appreciate that. Uh, yeah, uh, so, uh, the car question, it's kind of a— it's a car question. I've had a bit of car trouble and I've been driving a car solely to get through the winter over here. Doesn't have AC, all these different things. Needs a whole bunch of changes, needs a whole bunch of fixes, but it's not worth it because the car is about 220,000 miles on it. I'm running it into the ground, basically. It was a free hand-me-down. Now, being that I have a— I'm a father as well, I wanted to know best fixes. Now, in going into looking for a car, I've looked for the past 6 months. And in short, I— oh, I'm forgetting one thing. Sorry about that, y'all. My father gave me about, um, $10,000 to go toward this car, um, as of the beginning of this month. And so while originally I was just looking for something, uh, that keep on the road, that's reliable, etc., the added cash was, um, added to what?

Yeah, what's it added to? You already got money saved for Yeah, I was saving for a car. How much do you have in savings?

I've got now, I've been continually saving, I've got about $8,000, $8,000 to $10,000.

Okay, so with your dad's gift, you have $20,000 to buy a car. Correct. What's your question?

Um, well, the car that I suppose that answers all the questions is about— because I'm looking at Carvana, I guess it's shipping to New York.

Just say it, what are you trying to spend on this car?

I have a feeling about $25,000. Okay, don't.

You can't buy that car, you don't have $25,000. Buy a $20,000 car, you have $20,000.

Yeah, or can you wait until you save up the $5,000 more? Because when I— when you tell me that the, the other car was a free— it was a free hand-me-down You have no money in it. So if you wanted to continue to repair it for a while, you could.

It's because you didn't buy the car. Junker probably bring a couple of grand, won't it?

Uh, I'm not sure. It's, it's '07 Honda Fit.

Yeah, I don't either, but go find out. I mean, whatever you can sell it for plus $20,000 is your budget.

Carl, do you have any other debt?

Do you have any debt? Um, just a balance transfer in June. That's about $2,000. Which, yeah, that's, that's the risk. Okay. Otherwise, again, I'm looking at, well, new job, new position. Um, how do I—

hey, listen, don't celebrate your new job with a car payment.

That's kind of dumb. Sure. No, and that's not the intent. Well, it's what you're doing.

You thought— you say, oh, I hit the lottery, I doubled my income, I signed up for $85,000. Yeah, so I'm gonna run down the car dealer and give them my freaking No thank you! No no no no no no no time to be a grown-up. You did not hit the lottery. You have $20 grand an $85,000 job and you live in New York City? You did not hit the lottery okay? You can go buy a $20,000 car— not a dime freaking more because you don't have a dime more. You do what you want to do dude but you called here I gotta tell ya there's zero chance you should have a car payment. You have plenty of money. You are upgrading so far from the hoopty you've been driving. You ought to be dancing in the streets with that $20,000, acting like you got a dadgum new Porsche.

Or save up the $5,000 and pay $25,000. Just do it in cash.

Absolutely, dude. Please don't do this.

Okay, please don't do this. So, Dave, let's talk about this because I know people, people are like, what are you saying? This man is buying a $25,000 car in cash. That's so countercultural, it's so abnormal. The majority of Americans have car payments and they will have car payments their entire working career.

Right. Majority of Americans are broke.

Exactly. So the correlation there is very, very clear. You look at the percentage of Americans that have car payments and then you look at the percentage of Americans who are living paycheck to paycheck and suddenly the whole equation makes sense.

So you interview— we interviewed 10,167 millionaires when we did the Ramsey research piece on millionaires. You know what the data tells us? Tell us. The actual science, science, science, right? You know what's it tell you? Okay, well the science, the data says that when we interview millionaires, they say, "What's the dumbest thing you ever did with a car, with money?" "I bought a car with payments." "What's the dumbest thing you ever did?" "I bought a new car with payments." "And when did you stop doing that?" "About the time I got on track to be a millionaire, which was 16 years ago, was the last time I did that stupid butt idea." And then I I became a millionaire. They look back on their lives and say, the turning point of me becoming wealthy, the vast majority of them, it's like 84% of them answer the question this way, it's crazy. You know, they look back and they say, the dumbest thing I ever did and the turning point that when I changed my life and started habit patterns that caused me to become wealthy was getting away from car payments. If you want to be middle class, stay in car debt.

You will stay in the middle class. You will never build wealth because it will suck the bone marrow out of your money.

Well, when you're paying $800, $900, $1,000 a month for cars, and for some people that's just for one car, many households have two car payments. Yeah, how the heck are you supposed to have money to invest for the future? How can you pay for your kids' college?

And there's an affordability crisis. I can't buy a house. It's because you have $1,400 in car payments. Because Ford Motor Company screwed you. Lexus Motor Company, Toyota Motor Company screwed you, and they got you so far in debt because you had to have something shiny with toxic plastic smell.

So then the big question then comes is, okay, how do we do it? And that's the number one question that I get when I start talking like this.

Quit caring what other people think.

Yeah, that's the— that is the first thing. Mindset.

That is simple as a car.

And then let's talk about it practically, because most people, you can go about this in two ways. Ways. For most people, what this looks like, getting away from car payments, looks like whatever your current vehicle is, you're either going to pay it off and from that point off say, never again. I know, no, never again. And now that I've paid my car off, I'm putting a portion of money aside all the time so that when the time comes, I can trade this one in, add a little money to it, and upgrade little by little. It's a stair-step motion that we're doing. So that's one way it can look. The other way it can look is you're looking at, you're facing down a $950 car payment right now. You still owe $40,000. Go, this is for the birds, I'm just gonna sell the car. And from the beginning, you're making a giant step downward because you're going from driving a $40,000 car down to maybe an $8,000 or $9,000 beater, Dave.

Yeah, decide who you want to impress— people at a stoplight you're never going to meet, or your grandchildren? Because you could change your family tree if you don't impress the people at the stoplight.

Absolutely. And, and, and let me take it back even further the people at the stoplight. But a lot of you are worried about the people in your life, how it's going to feel when you pull up to the cookout and you were driving a Suburban, brand new, and now you're driving, you know, a Honda Fit, right? And it's like, what happened to him, right?

And you're thinking about it. It's not going well for old Dave. He's driving a car he can afford. Oh, poor Dave. Bless Dave's heart. Yeah, you're right. And you know what? It's worse. I think men are the worst. Guys are the worst on cars because we We get too much self-esteem out of what we drive. Now ladies, some of them are that way, but most ladies just think a car is a really large purse. And guys, but we're real concerned about the motor and the 0 to 60 and, you know, how fast is my little battery George Camel and the size of the rim.

I don't know.

Yeah, there you go. Whatever that was. Yeah, how much I know. No, I'm telling you, guys and pickups pickups are the worst on car payments. They're the worst. So sorry, Carl, but you just set us off on a tangent. All of that wasn't aimed at you personally, but if we could please talk you into loving yourself enough to not going into car debt. Love yourself that much, Carl, in New York City. Don't go into car debt.

Listen, your home is your most expensive asset, and now you're ready to sell fast and for a lot of money. But in this wackadoodle real estate market, one mistake could cost you tens of thousands of dollars. Here's the deal: this ain't amateur hour. You need a pro in your corner, someone who knows how to price your home right, market it well, and negotiate negotiate the best deal. That's where a Ramsey Trusted Real Estate Agent comes in. To find one near you, go to RamseySolutions.com/agent. That's RamseySolutions.com/agent. In the lobby of Ramsey Solutions on the debt-free stage. They're here. Arnie and Randy are here.

Hey, guys, how are you? Hey, James. Hi. Welcome, welcome.

Where do y'all live?

Thief River Falls, Minnesota. What's that near? We're about 5.5 hours north of Minneapolis.

Okay, no, that's not near it, but okay. Close to Canada. Okay, good deal. Well, welcome to Nashville. Thank you. It's warm and sunny. Much warmer. Life is good. And here it is. I'm gonna do a debt-free scream. How much have you paid off?

$193,000. Yo! Nice. How long did that take? 4 years and 9 months. Wow, good for you.

And your range of income during that time?

We went from $98,000 to $161,000.

Very good.

What do y'all do for a living? I'm a public works employee for the city.

And I am a credit and collections manager.

Wow, well, great incomes. Way to go, guys. Congratulations. Congratulations. So, goodness, approaching 5 years here you've been pushing on this, pushing the rock up the hill. Way to go. And $193,000, was that your house and everything?

Yep, we did it, Dave. I paid off our house.

I love that! Debt-free out here, weirdos! Oh, wow. Paid-for house, look at you. How old are you, paid-for-house people?

I am 39. Hey! I'm 47.

Wow, way to go, you guys. Excellent. So, what's this paid-off house What's your net worth?

About $325,000.

Excellent, excellent. How much you got saved in your nest egg so far, your retirement? $430,000. $430,000, okay. We're creeping up on it. Not far from being Baby Steps millionaires. We're really close. Way to go, guys. So proud of y'all. Congratulations. Okay, so how much of the $193,000 was the house?

That was all the house. That's the house. Wow. We had about $40,000 of Baby Step 2 debt. Debt.

Okay, and then you tore into it. Okay, so 5 years ago you must have run into Ramsey stuff.

How did that happen? Yeah, so I actually saw a Facebook post. Um, a high school friend was giving away 5 copies of Total Money Makeover. Just, wow, hey, this book changed my life, no strings attached. Um, the books were gone by the time I saw the post, but I downloaded it, read it in 48 hours. Uh-oh. And then I text him and was like, like, "Do you know Dave Ramsey?" And— Yeah, I was actually ice fishing.

It was middle of winter. And I had heard of Dave Ramsey. So, I said, "Yeah, let's go for it." And I never had, I had never heard your name.

Oh, and you said, "Yeah, I've heard of this and whatever you wanna do, honey, I'm ice fishing." Yeah, pretty much, yep.

Mind you, in our financed fish house.

Got it, got it. Wow. Right?

Oh, I love it.

So what does a fish house cost? So that one, I bought it for $14 grand. Okay. And then full circle, at the end we had about $17,000 left on our house, and I jokingly had said, I'll sell the fish house. House, and if I can get what I want for it, we'll pay off the house and I'll just buy another fish house. So I, I actually listed it on Marketplace, and, uh-oh, she, she didn't believe me at first, but, you know, she saw the post and we sold it. It did sell? Oh yeah, I sold it.

You really did do it?

A month later, we drove to the, the mortgage office and paid off our— that was that—

the fish house paid off the house? Yes. Completed it.

So you did it in person. You did the payoff in person. Oh yeah, yeah.

So now you're going to save up and buy another fish house in cash. Yes. Yeah, of course. Sure. Yeah. So how's this work? You slide it out on the ice?

It's like a— it's like a camper. Okay. It's just a— it's a winter camper. Okay. You drive on the lake and you park and you drill holes in the ice and we— you sit in the warmth of the house so that you're not freezing while you're ice fishing.

3, 4 days. I mean, you're talking to a Southern guy who has no idea what you're talking about.

Come on up there.

Come to Minnesota. So interesting. Sounds cold to me, but yeah.

Well, no, he's in the fish house. He's so warm.

Yeah. Congratulations, you guys. Thank you. So you're— so bottom line is, uh, Arnie figures this out, calls Randy. Which one's Randy? Yeah, I'm Randy. Randy. So Randy figures this out and calls Arnie, and he's easy to get along with, and he says go for it, all the way to the point that sells his fish house and pays off your house at the end of the story. At the end of the story. But it's a long 5 years.

Yeah, it was the end of 2020 and we're at that $98,000 and it's like, man, we make a lot of money for Northern Minnesota and like, where is it all, right? And then I read the book and I dug in and I'm the nerd and spreadsheets and where did all of our money go? And just figuring out, man, we spent $700 during COVID on eating out in March of 2020. I'm like, we couldn't even go inside a restaurant. How are we spending that much money?

And had you avoided debt up to that point, or were you just kind of dabbling in it a little bit?

We had regular consumer debt. We had our vehicles and the fish house and, you know, a four-wheeler.

It was about $40,000. Okay. Yeah.

You cleaned up the $40 grand right quick, and then you just keep— let's just get the house knocked out and everything.

Yeah, so we really— As like, I took on a new role at work and then Arnie has switched employers as well in that 5-year span, we just lived on what that minimum was in Baby Step 2 and just everything else to the house.

Wow. Wow. Way to go.

Wow. I mean, we did take our kids on vacation. Yeah.

How does it feel to be completely free?

It feels really good.

Weird. It does. You mention weird people all the time and it does feel weird.

Yeah. Yeah. It's so abnormal, right? Debt is everywhere.

Do you know anybody else that's gotten out of debt completely?

I have one coworker. Yeah. That's a single mom and she's a rockstar. Wow. So, yep. We actually revisited here before together, Dave. So that was cool.

It's weird to look at the checking account And the money just keeps going up.

Yeah, it's yours. Mm-hmm.

Yeah, you start stacking cash automatically now. Oh yeah, you do. So what's the first big thing you're gonna do to celebrate not having a single bit of debt?

Well, our trip here was a good one. But so what we put off in those 5 years was new vehicles.

So both of us will— You need to upgrade.

We'll need an upgrade.

Get out of the hoop-dees in time to get in some good stuff.

Yeah, and there's the fish house too.

And then the fish house, yeah.

That'll come eventually. Yeah, good. Wow, congratulations. All right, what do you tell people the secret to paying off $193,000 in 4 years and 9 months?

I would say the budget. We had never done a zero-based budget, right? We were the, can we afford this payment people, right? The normal people. And discipline. Discipline. To me is discipline. You gotta keep your eye on the prize. It's a long time. It's a grind.

It is a long time, 5 years.

We got kids, they want everything and yeah, it's a grind.

It doesn't seem possible at first, but it just keeps going and eventually it's, you're there.

If we had told you, Arnie, at the start of the process that you were gonna end up selling the fish house to get to pay off the last bit, you would've told us we were crazy, wouldn't you?

Absolutely. No, but I, but I wanted to tell her she was crazy.

Yeah, the idea, the idea of being free grew on you. It did. By the end of the story, so far away.

Yeah. And, you know, it's here now.

So yeah, and now it's believable. Yeah, it is. Yeah, way to go, way to go. Proud of you guys. You're amazing. You've changed your whole family tree. Yes, way to go. I mean, you make close to $200,000 a year. You don't have a payment in the You know, stack cash and build wealth, and you'll be able to do anything you need to do and be generous. You'll be able to do all kinds of stuff. Congratulations. Very, very well done. Very nice, yep. Good stuff. All right, Arnie and Randy from Minnesota. $193,000 paid off, house and everything, plus or minus a fish house. 4 years and 9 months, $98,000 to $161,000 was the income. Come spread. Count it down. Let's hear a debt-free scream!

3, 2, 1. We're debt-free!

Yeah! Yeah, baby! I love it!

I love that.

That is so fun. So cool. Isn't it interesting that, um, There was some— watching his reaction when she calls, he's ice fishing. Yeah. They already had a strong relationship. Yep. And he's like, okay babe. Fine. Let's do it. And I don't know if I— I think you're a little crazy, but let's do it. Yeah, I'm on board. That's where the whole thing started though, was that they had this strong basis to start with. Wow, cool people. I love it. Very cool.

¡Hey, guys!

Dave Ramsey here. Every day on this show, we help people work through real money problems and figure out what to do next. Now, you can get that same kind of help anytime, with Ask Ramsey. Ask your money question and get answers built on Ramsey principles we use on the show. Whether you're making a decision or just want something explained, Ask Ramsey is here to help. It's fast, simple, and free to use. Go to RamseySolutions.com and try Ask Ramsey today. That's RamseySolutions.com. Our Scripture of the Day, Proverbs 12:3. No one can be established through wickedness, but the righteous cannot be uprooted. Warren Buffett said the best investment The best investment you can make is in yourself. Jeff is in Detroit. Hey Jeff, how are you? I'm good, sir.

How about yourself? Better than I deserve.

What's up?

Well, so I'm 56 years old, make about $56,000 a year. Back in December, I had filed for a Chapter 13 bankruptcy. I was one of the 390,000 in Michigan that the state came after for back unemployment that they stated that I owed. I fought it, I won the case. That was one of the reasons why I was looking into bankruptcy, just in case they came back and said, "Yes, you owe this." I was already ridiculously upside down in a vehicle purchase that I had made about 4 years ago. Oh, a ridiculous amount on that still. I ended up dismissing the bankruptcy because when it was filed, the information was not filed appropriately or properly. And, uh, they came back and changed my payment from— initially it was supposed to be $439 a month, uh, for 3 years. And then they said, hey, wait, your numbers don't add up. Um, now it's going to be $700 a month for 5 years. I only have 3 years left on the car loan. I ended up dismissing the bankruptcy. Before it was officially filed. No, it was filed.

It was filed, but you dismissed it voluntarily. Yes.

Yeah, yeah, dismissed it before it actually was finalized at the end of the court.

Exactly. But just to, just to be clear for your future, you have filed a bankruptcy. I've learned that. Okay. All right. Anyway, but go ahead. That doesn't bring it— that didn't help anything. That brings us to where we are. So now you got a big buck car payment still, right? right?

I do, uh, $625 a month on a 2014 Jeep. Um, and, uh, I'm in the process right now of trying to get it, uh, negotiated with Capital One, um, my finance company, um, uh, with whether I'm going to be able to get the vehicle caught up, um, and continue paying on it, or should I turn the vehicle over? I mean, my credit scores are in the low 5s as it is right now.

What do you owe on that Jeep and how many payments behind are you?

I'm about 3 payments behind now, I believe, because of the bankruptcy. Um, and I believe the last thing that I seen on there, cause I can't access the account online because of the bankruptcy right now. Um, I believe it was right around the $16,000 to $17,000 mark still. Um, and I've already paid like $23,000 on it. What do you think it's worth? Uh, 4 or 5. Oh boy. Um, yeah, I— okay, this is all of my own doing. I understand that.

Okay, I want you to go check— I want you to go check that number. That number sounds like an emotional number, not a proper number. So go, go to Kelly—

as far as the—

go to Kelly Blue Book, kbb.com, and put in the information on the 2014 Jeep. What kind of Jeep is it?

Uh, it's a 2014 Jeep Cherokee. It's this kind of a baseline model.

Just have a bunch of miles.

The last one that I looked at was $4,200. Yeah. Uh, um, I'll buy that for Kelly Blue Book.

Um, what else, what else is, is outstanding? So you're $18,075 in the hole on that.

Yeah, I've got about, uh, $7,000 in credit card debt, um, that I'm working with a debt consolidation company right now because after I canceled or dismissed the bankruptcy, I needed to try and make a quick move to get all— to not have them all come at me and trying garnish and everything else. So I've got those tied up with a debt counselor company right now. Um, yeah.

Uh, is it just you or are you married with kids? Is there, is there anybody else in the situation?

No. I mean, I, I live in the same home as my brother and sister-in-law. It was a home that we acquired after my mother and stepfather passed. Um, we have a mortgage on that, that I am a, on the mortgage, I am a survivor in interest. And on the deed, we did an enhanced life estate deed, thankfully, um, uh, prior to her passing. And all three of myself and my two brothers are on the deed as partners in interest.

But is there debt on the house or it was paid for?

Oh, it's got a mortgage.

There is.

No. Oh, that's right.

You said it's got a mortgage. Uh, we still owe $91,000 on it. Um, I had an opportunity about 2 years ago to get a mortgage to have it put in my name because technically the mortgage is still in my mother's name, my late mother's name.

Okay.

Um, but it was at 7.75% interest and the current mortgage on the home is at 3.25%. Um, I wasn't about to refinance it just to get it put into my name and increase our payment by $300 or $400.

Okay, so to recap, you've got the credit cards under control because you threw them with a debt consolidation, and I assume I assume you've paid that company already or signed with that company already.

Yeah, I have signed with them, yes, and they are negotiating for them all.

Okay, so that's under control. The only thing that's out of control is we're $1,800 behind on a $16,000 debt on a $4,000 Jeep. Have I got that right?

Right. Okay, absolutely.

Yes, sir. So how's your income looking? Are you— I mean, it sounds like you're $27 an hour.

I make $56,000 a year roughly, um, probably more than that because I've time.

But, uh, okay, so I— what I want going forward on this, I want you to know your exact numbers, because knowing the exact numbers is the only way that we can create an exact plan and, and decide how long is it going to take. How quickly can I get the $1,875 to get this car loan current? How quickly can I pay off the $17,000? Or am I going to try to—

what's the interest rate on the Jeep?

Huh, that's a good question. And I know that's a very stupid answer, and it was stupid of me to sign that without even looking at it.

My cousin— I thought, you think it's a high rate, don't you? I do too.

Oh, it's ridiculous. It's gotta be ridiculously high after paying $23,000 over 3 to 4 years that I've already paid on it, and I still owe $16,000? Yeah. It had to have been an absolute—

Okay, so here's your options, okay? Okay, there's 3 options and none of them are pretty. One is you scrape together the $1,800 and you catch up and you just finish paying the Jeep off. You just work it off, put it in the debt snowball and get rid of it. Okay, 2 is you get Citibank— I think you said had this, right? Capital One. Capital One. Okay, you get them to recast the loan, reset the loan, and they roll the $1,800 in and you start fresh with no payments behind. And while you're at it, get them to give you a decent interest rate. Rate. Okay, 3 possibility is you toss them the keys, tell them come get it, right? And then they sell it for $2,000 on the repo lot, and then you have a $14,000 debt with them that you'll have to settle later, right? And you can settle a repo debt for pennies on the dollar. Of course, that, you know, that puts a monster in the closet that's going to come out someday. And so you need to be saving like crazy about a year after they repo it, they're gonna start bothering you and want some money.

And they can sue you for up to the deficit, but they will settle that for about a quarter on the dollar. So you probably settle this for $5,000 in cash. And so you build that war chest over a year, and you offer them $5,000 and they'll go away— $4,000 and they'll go away— and you'll have a repo but you have a bankruptcy and you already have a 500 credit score. I don't know that a repo does much to your credit. Yeah, it's not like you got any credit. Yeah, that's what—

at my age, that's what I was curious about. Yeah, that's what I've considered. That was what I was considering, was just turning the vehicle back in.

Yeah, if they don't cut you some kind of a deal that makes you want to keep it, then that tells me that I'm gonna toss them the keys and, you know, go get you a $2,000-$3,000 car to drive and start stacking cash. Clear those credit cards and get out of the mess, and then stack cash and be ready for the phone call that's going to come on the deficit. Because it's going to come. This is going to come bite you later, okay? But again, they'll settle that deficit for usually 25 cents on the dollar is pretty standard. And always when you're doing a settlement, you get it in writing or you don't give them money. Right, because you can tell, you can tell that, um, the bank is— a bank like that, you can tell they're lying if their mouth is moving. Okay, they're crooks, right? And, um, and that's the business that they're in. That's why they set you up in this deal the way they did. They screwed you going in. So the car company and the bank screwed you going in. You allowed it. You said that. You signed up for it.

You said that. But that's, that's the reality. So, you can fight through it any one of those 3 ways, but get yourself a plan so that you don't, you know, so then you get all of this stuff in the rearview mirror and you start to rebuild. That's what we're trying to do. That puts this hour of The Ramsey Show in the books. We'll be back with you before you know it. In the meantime, remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus.