Transcript of You Don't Win With Money By Accident

A Medicare plan that worked last year might cost you more next year. Let Chapter check your options for free. AskChapter.org/Ramsey. Brought to you by the EveryDollar app. Start budgeting for free today. Normal is broke and common sense is weird, so we're here to help you transform your life. From the Ramsey Network and the Fairwinds Credit Union studio, this This is The Ramsey Show. George Campbell, number one bestselling author, Ramsey personality, co-host of Smart Money Happy Hour. He's my co-host today. Open phones at 888-825-5225. Helen is in Miami. Hi, Helen, how are you?

Hi, I'm good. Thank you so much, Dave, for having me on today.

Sure, what's up?

So I have a full-time job, I have a side hustle, and I have a third business, which is a kids' play center, and it's currently losing me about $30,000 $15,000 a month.

Ouch.

And I know it's, I know it's really painful. And had you spoken to me like 5 years ago, I would be on Baby Step 5 or 6 or 7. But unfortunately, this business has drained all of my 401. It's drained all of my kids' college savings. And it's also forced me to sell a rental property that I owned. So the question I'm asking myself is, Do I sell my home, take some of the funds, and try and rehabilitate this business? Do I ditch the business and possibly even downsize the home? Or do I borrow money against the house, which has got about $350,000 of equity in it, and try and figure things out that way?

How long have you been losing money on this?

Yeah, I mean, since I set it up.

Which was how long ago?

One year ago.

And so in one year, you, you've— that's $130,000, $150,000 in losses if it's a $13,000 burn rate, right? So, uh, that, that was your whole 401 is $150,000 and a rental property too?

No. So about 6 years ago, one of my little girls had to have a bone marrow transplant. And I had a full-time job, fully funded 529, fully funded, uh, 401, my main home and a rental property. And I was working the whole time that she was in hospital and then subsequently recovering. And at the end of that, I kind of reassessed my life and said, okay, do I want to be in the corporate grind, um, or do I want to do something in service to other moms that enables them to spend quality time with their children? So I took a payout, a redundancy payout from my previous employer. I paid my mortgage 6 months in advance, and I said I would live off the proceeds of my side hustle. And unfortunately, Miami property market completely exploded after the pandemic, and it became much more difficult to find a rental location. I then had some issues with, um, the—

But I'm sorry, but you started the thing 1 year ago. And you haven't had time to lose all the money you're talking about you lost?

No, I lost the money during the setup process, and in that time I returned to a corporate role.

I know, but that was 1 year ago.

So how much did you put into the business initially before you started losing money?

Uh, about £120,000 went into the business before I started losing money.

Okay, so what makes you think, going for— to answer your original question then, My friend Dr. Henry Cloud has a book called Necessary Endings.

Okay.

And we have a necessary ending to a relationship, a job, a business when we see no hope that it's going to get better. So why do I think, if you're going to sell me as your new investor, why would I invest if I'm your investor? I'm not. But if I were that, if you're on Shark Tank, why would I want to put money in this? Why? What makes you think it's going to turn around?

I mean, I think, I think I haven't had the time myself to invest in it. So you know what, I'm also thinking maybe it won't turn around.

Yeah.

So it might be time to—

I think your idea might be bad.

It's a franchise.

It's well-founded. It's a noble cause. What you were trying to do was a nice thing, a good thing, but the business aspects of it apparently suck.

Yeah, it's a franchise business.

So what can you get out of this? If you close this thing down, what can you get out of it?

I think, I think my best chance is for a resale to somebody else who's got the time to devote to it, because my time has been sucked up by this full-time Yeah.

Are you tied in a lease agreement for the space?

Well, a new franchisee come in, buy her out of the franchise and buy her out of the space and take over the lease. That's how that transaction would normally work. So that does get— the fact that it's a franchise makes it really devastating that you've still lost this much money because that means they suck. But on top of that, the good news is that they probably can resell the franchise rather than let their new location close down. And so the franchisor is probably going to be a big help in getting you out of the lease and getting you out of the business. So I'm out of there, kid. I don't hear any reason to stay in this. I understand from a heart perspective how you got into it, but I'm not staying in it. Nothing in this conversation says woohoo 5 years from now.

That's great. Thank you.

Yeah, that's a necessary ending. I mean, it's like, you know, if you're married to an alcoholic and he keeps saying he's going to get better, he keeps saying he's going to get better, but every night he comes home drunk, at some point you go, this is not going to get better. and this marriage is done. And that's a necessary ending because there's no hope of change. There's no hope of a shift. And honestly, inside of a business, we have miniature— all of us have miniature P&Ls or projects that we have to either sunset them, meaning we close them because what we thought was going to work didn't work. Welcome to business. And I closed one not long ago inside of Ramsey. And it's, uh, you know, but we didn't close Ramsey. It was just a portion, you know, a thing here that used to work and doesn't work and we're not doing it anymore. So, uh, and 'cause we couldn't see a way to make it work in the current environment. So that, that's what you're doing. You're analyzing, is there hope for the future? Give me a reason for hope. Give me a logical, rational business reason for hope.

And $13,000 a month burn rate, that takes away my energy real fast.

Yeah.

And sinking more money into it, as you've already found, is not the answer. So I don't want you to sell your home, the last asset you have, After already draining the 401, the 529s, all to try to make this business work, and then it doesn't. Now you've got nothing, and now that's insult to injury. It's kind of like a gambler who went, hey, I'm going to drain the 401, drain the savings.

You're chasing losses.

And it's going to be different this time. I can come back if I just had one more. Yeah, that's the scary part to this to me.

Harvard Investment Letter calls it a sunk cost analysis, meaning what you put into it doesn't matter. All that matters is what the future looks like. So if you bought a stock for $70 and it goes to $10, do you sell it? Oh, I'm gonna wait for it to come back up. Well, would you buy more of it? No. Well, that's the same reason you sell it today. It's because you wouldn't buy more of it because you think it sucks. But the fact that you paid $70 for it makes you refuse to turn loose of it for $10.

And there's too much pain associated with it.

What you put into it, your sunk cost, is skewing your judgment. Not her judgment, but I mean the case of any of us when we're looking at this. I can't sell it for that. You don't know what I paid for it. What you paid for it's irrelevant. All that's relevant is what you can get for it. It's just the emotional pain of having done something stupid. That's what kills all of us, makes us hold on to something too long. When you wouldn't buy it again for what you paid for it, it's time to sell it. And I can promise you, Helen would not set up a new playground today. If she wasn't in the business. Hey, Helen, would you put in $150,000, $200,000 and open up a playground today based on what you know today? No, would be her answer. And so yes, sell it.

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Jessica's in Tampa. Hi, Jessica. How are you? Let me try one more time. I must have not pushed it hard enough. There's the button. Hi, Jessica. What's up?

I'm good. How are you?

Better than I deserve. How can we help?

Um, so my family recently moved from Maryland to Florida within the last month, and we are staying with a very generous church member, but there is a deadline to how long we can stay with them, and our home in Maryland has not sold. It's been on the market 100 days and we've done everything we can think of and afford to do to make sure that it sells and it just hasn't. Um, and in order to get a rental down here, um, to move out, we need the house to sell. And so I was just looking for any advice on what to do to either get it to sell or what to do otherwise.

Hmm.

Okay. Um, Tell me about your real estate agent. What are they telling you?

Um, so he is a good friend of ours. He's an attorney, a real estate attorney. Um, he has—

He's a real estate attorney?

Yeah, he owns a brokerage too. He's helping us out.

Not much.

Um, well, he says our house is priced well for the market. Um, it's been showing really well. We just haven't— we've had showings Very consistently. It's just not getting any bites on it. We've dropped the price a couple times. We're looking into appraisal assurance, lots of different things.

So why does he say it hasn't sold?

Um, he just says the market's tough because the interest rates keep going up.

Well, there's showings, so people are interested. What is stopping them? Is it a dated kitchen? Is it The condition? What's the thing that's stopping people from making an offer?

I really don't know. Um, we updated the kitchen, new counters, new appliances, new roof, new flooring in most of the house, all within the last 4 years. Um, the only thing that could really use an update is the HVAC, but we're not going to dump money into an HVAC for a house that we're not living in.

But he's gotten zero feedback from the other agents, the buying agents, telling him why the clients aren't interested.

No, they said that the house is showing really well. We've had people say, oh, the basement's too dark, there's no walkout, we really wanted 2 bedrooms on the top floor, it's a townhouse.

And zero offers?

Um, zero. We had— well, it wasn't a— it wasn't an official offer, but we had somebody consider offering us about $20 grand lower than what we listed it for.

And what is it listed for?

$329,800.

Have you seen a comparative market analysis? Did the agent do for you before you listed it what the other homes in the area have sold for?

Yep.

And that they're all about the same. We have a pretty good square footage compared to other homes in the area that are comps, and we're listed pretty well from what we've seen.

What city is this in?

Um, it's in Bel Air, Maryland.

Okay. We're just going to pull up, uh, the median days on market, median listing price, and get a look at that. Have you looked at that with your agent?

I have.

What's the days on market currently for that neighborhood?

About, um, somewhere between 70 and 90.

Okay. So you're not super far off at 100.

No.

But clearly it's not the most desirable one in that neighborhood, but homes have moved in that neighborhood in the past couple months.

Um, a couple, yeah, but not a lot. We just saw one. Um, it went off the market and then it came right back on the market. So something fell through there. Yeah.

Okay. I don't know the answer to your question. I don't know what's wrong here. The only thing I would tell you is that I need better feedback from my agent. I'm not sure this agent is doing you any favors. You may want to switch agents. Sometimes that'll wake up the market and get somebody in the area. Why don't you interview a couple of Ramsey Trusted Agents off of our website in your area and see what they tell you? I mean, I grew up in the real estate business. I got my license in 1978 when I turned 18. Okay. So I've been in the business my whole life one way or another. And one of the things I detest is when an agent says the reason the house hasn't sold is the market's tough, and yet the average days on the market are 70. So that's absolute bullcrap, in other words. Okay, the market's tough, interest rates are high. Yeah, but other people are selling houses, so it's kind of weird. You know, something's wrong. I really don't need the Trump report. I need my house sold. Um, so, um, yeah, I'm gonna shop some agents and talk to them and see if we can get somebody to look at it.

And you, you want an agent who's willing to gently hurt your feelings that your price is cray-cray. Or your living room carpet looks like it makes me itch, or something. They need to tell you the truth about your baby being ugly. And it's hard, but they need to be able to do that in a non-Dave way, more like a George or a Rachel, and be gentle with you and kind, but still give you the message. But something's going on when you walk up to that house, And you're walking up the sidewalk, the bushes are overgrown, there's cobwebs everywhere, it's dirty. Your first impression on a job interview is the clothing you wear and whether you took a bath and combed your hair. And that's called curb appeal in the real estate business. So what, what are they seeing in the pictures? What are they seeing when they walk up? Uh, what are they seeing when they're standing at the front door while the agent's opening the MLS lock to get it open? They're spending some time there. Are they turned off before they get in the door? Because, I mean, if you've ever hired people, sometimes before they ever opened their mouth, you know that you weren't going to hire them because their curb appeal was really bad.

And so they got confused that they were in a job interview and stuff. And so, you know, that stuff happens, and that happens to houses too.

And even relisting it can give it some new life.

Sometimes a new agent and a new MLS number that's fresh Pops it back into the other agent's face again.

One more open house with some fresh cookies might be all it takes.

Yeah, bake some cookies in there when you're—

That gets Dave in the door at least.

Well, that's— yeah, the smell of it alone will get me in the door. But yeah, as if I need a home in Maryland. I'm sorry that you're having this hard time. I don't buy— the market is not super hot, but the market's not super cold. So I don't buy that this is the market. I can't tell from your story Because everything you've given me is the things that we would— George and I would've told you to do. You've already started looking at those and doing them. It's price, it's appeal, it's—

Are people looking for $330,000 townhomes in that area? That's the question. So you might need to cut the price down if you're getting showings but no offers.

Yeah. And you've obviously left. And so you're going to turn yourself into a motivated seller here pretty quick, which means price cuts that are painful. And I sure hope you can avoid that. Yeah, I would talk to some other agents. And, um, everybody listen, I know the guy from church is not how you pick your real estate agent. This is the largest asset that most people own, is their home. My wife plays bridge with her is not how you pick your real estate agent. And it's how most people do. My nephew just got his license and we wanted to give him a shot. This is not how you list your house with your most powerful— with your largest asset. And he's doing us a favor. That phrase just runs chills down my back.

Yeah.

For her sake. So, you know, if he's working for nothing but he can't sell the house, He's not doing you a favor. So I would rather pay somebody that sells 200 houses a year and they sell it in 25 days and they get a full dadgum commission and there were no favors done except your house is gone than I would, you know, say you saved me half a percent on the commission or some bullcrap. So, you know, it's the carrying cost alone is going to eat up any savings that the favor would do. And I gotta tell you, in all my years, I don't remember ever hiring a real estate agent that was an attorney.

I've never seen that either.

Or even seen it. That's very strange.

That they have both. Double dipping.

They're not good at one or the other.

Maybe he's a great attorney then, because the house isn't selling. But at closing, he would crush it.

What kind of successful attorney sells houses? I mean, what kind of successful real estate agent wants to be a lawyer?

I mean, it's like You don't find the combo very often.

I don't know, man.

That just—

that's weird. I don't know. I truly don't know, hon. I'm not, I'm not making fun of you. I'm just— the situation's strange and I wish I could help you sell it. If I could wave my little magic wand right now, we would wave it and poof, there you go.

Someone out there listening is like, man, I've been looking for a townhome in Bel Air.

There it is.

Call us. We'll get you guys connected.

Yeah, we'll hook you right up with Jessica. We'll do her a favor.

Dave gets a finder's fee though.

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So my team comes in at the break and taught me something about my business that I didn't know. We have a wonderful tool on our website.

RamseySolutions.com/market.

And you can type in the name of your city and it will give you all the particulars for your city. So we just typed in Bel Air. Maryland regarding our last caller. Median house price in Bel Air is $430,000. Hers was $320,000, by the way. Total homes for sale right now, 169. Median days on the market, 29. So if you're over 100, you have a problem of some kind with the property, the price, or the agent, or all 3. That's what that tells you. 33% of the homes have listings with price cuts. 1/3 of them are cutting prices, which does indicate that market may be lagging a little bit. It might be a little slow because that's a lot of people cutting their prices. But 29 days average on the market, that tells me that this house, she can get rid of this thing unless there's just some serious ugly thing that she doesn't know about or she hadn't faced up to or whatever, those kinds of things. So you can go pull that up on your area. So if you're looking, or if you're looking in an area, you go, okay, hey, This is a hot market, this slow market.

29 days on the market's pretty good market right now. That's pretty hopping. But 33% with price cuts is not pretty hopping. So there's a couple of conflicting pieces of data there that— and, you know, if you're trying to sell an $800,000 house in a $430,000 median neighborhood, that's going to be a problem.

And as you say, location, location, location. If it's not in a great neighborhood, You're gonna have a harder time.

It's always that. Yeah. Jamie's in Philadelphia. Hi, Jamie, how are you?

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

Better than I deserve. How can we help?

Um, I'm calling in today because I'm on Baby Step 2 and I'm, I'm having trouble putting a significant amount of money towards my debt. And I, and a big part of it is because my, my rent is half of my take-home income.

Okay.

What's the numbers on that?

Um, so I bring home about $5,000 a month, and that— well, that's after health insurance costs and, um, 401 contributions and taxes. And my rent is, um, $2,300 a month.

How much are you contributing to the 401?

Uh, 4%.

And what's your gross income? Is it about $80 grand?

Yeah, it's a little over $80,000. It's like $85,000.

Okay, so if we take that 4% and stop investing, you'll have $3,400 back per year across your paychecks. That'll help a little bit.

$3,300. You need to stop your 401, but you can't afford to live in that house. You don't make enough.

I, I know, but that's— so here's my, here's my thing. I know, I know you say—

No, I don't say, math says. The guy that invented math, he said it.

Right. Get into the smallest possible place. Um, I have 2 kids and where I'm living right now is like, it's a pretty small, it's like a 1,000 square foot, 2 bedroom, 1 bathroom apartment. And so if I went any smaller, it would be 1 bedroom or a studio apartment and Where I live, um, I live outside of Philadelphia. I don't live in Philadelphia, but where I live is, is pretty— I mean, it's pretty cheap. Where you live is cheap?

Yeah, where I live. You're a single mom with 2 kids, right?

Yeah.

Yeah, that's a scary thing. And, and then you can't, you know, you can't break even with your budget hardly. Um, so what do you do for a living?

I'm a nurse.

Good, good.

Okay.

All right. Um, well, you can make $80,000 to $120,000 as a nurse almost anywhere in America that's cheaper than where you're living. And so, you know, you do not want to be— this— the math that you gave me doesn't cause you to be wealthy like I want you to be for the sake of you and those 2 kids. You fought too hard just to keep your head above water for this rent to be eating your lunch. And so something has to change. And that's why you called, because you said this is not tenable. It doesn't— this math doesn't work. And you don't need me to tell you that. You already knew that. So, you know, then the answer is, can we double our income? Probably not as a nurse.

No.

Not never see your children again. You could work 24 hours a day, 7 days a week, and double your income, because nurses can always get extra work, anything you want, always something to do. But let's develop a sustainable life where we see our children, we get a reasonable amount of rest, and we can get out of debt and move towards a positive, prosperous future. And that rent number doesn't fit in the equation that we just talked about that we want for you and you want for you, right?

Yeah.

So what do we do to fix it? I don't know.

So as much as I would love to move, that, you know, it— I can't because their dad, um, you know, their dad has them every other weekend, and I know that it would become an issue if I did try to move.

How much is child support?

$50 a month.

5-0?

5-0.

You don't get a lot of say for $50.

Yeah.

I mean, you've got to do something different for you and the sake of the children, and $50 doesn't buy you a vote.

Um, so that, that's kind of my next question is I have, I have some money put away and I'm trying to decide, do I use it for lawyers to try to take, take some power back so that I can move to a more reasonable area? Or do I just use it towards my debt?

Yeah. And how much money do you have put back?

I have about $40,000. Okay.

All right.

Well, um, you know, I, I don't know what your relationship is with your ex, but if it's me, I'm going to sit down and say, I can't live here. I don't make enough money to live here. And so I'm moving. Now, do you, do you want to, um, Start paying me $2,000 a month instead of $50, and I won't move, or do you want me to spend the $40,000 I have saved on a lawyer to fight you? Because I'm moving, and you're not going to stop me, is the message. You can be gentle and kind. You don't have to be rude just to stir up a fight. We've already had those. But I mean, we can't just say, I'm trapped. And so I'm going to go down, we're going to rearrange the chairs on the Titanic, right? We can't do that. So the math is telling you something, some cause of action has to occur. And paying off your debt doesn't change the fact that your rent's too high as a percentage of your income. If you had zero debt, you'd still be pinched.

Yeah.

Yeah. So you've got to be in a different housing situation. And I don't know what that is. I'm not saying that Philadelphia is not that expensive. I think Philadelphia is that expensive. I don't think you're being melodramatic. I think you're just dealing with facts. Or even a suburb of Philadelphia, which is what you were saying you were in.

Yeah.

But I think the math is screaming at you. And what I want to give you is the power to say, like you said, I'm going to take some power back, but I'm just going to have a conversation with him and go, look, Mr. $50, I can't do this. These kids cannot have a future this way. And so as a result, here's the thing, I'm not going to do this. And so I'm going to make plans to move, and you either need to make plans to be good with that or get ready to fight, because I'm getting ready to spend all of your $50 making sure that you're embarrassed before the judge that you give $50 for 2 kids. I mean, this guy ought to have his butt kicked up around his neck and wear it like a collar for sending $50.

Does he just not make anything?

No, he makes a— he probably makes like $120,000, $130,000 a year.

So what is the $50? And is that a middle finger?

Well, I guess so. No, well, his argument is if I don't have enough money, well, then he can just raise the kids with his mom.

No, that's not his argument. His argument doesn't— he doesn't get to be the judge or to write the laws. He's just Mr. $50. Now I'm really pissed at this guy. So what a lame-o father. What a horrible human being. You don't take care of your own children. Instead, you're using the child support to manipulate to try to get custody of them. Oh, take this guy down for sure. Invest the $50,000, $40,000 and take him down just for the hobby of it.

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Jennifer is in Columbus, Ohio. Hi, Jennifer. How are you?

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

Better than I deserve. What's up?

Um, so I am currently in Baby Step 2/3. Um, what I currently only owe other than my mortgage is a divorce settlement amount of $70,000. That's going to be due in 4 years. So my question is, I'm trying to figure out, as I'm saving monthly for this, what is my best way to kind of invest this, or what would I put it into to get the most return rate safely so that I don't lose the money when it's due?

Wow. So this was for you buying out 401 or buying out house equity or something like that?

This was, um, house equity and a business that I own.

Okay. All right. And, but the, uh, the terms, the, the, the mediation or the divorce attorney or whatever, you guys came up with a 4-year number.

It was a 5-year. So, so far what I have to do, I have to pay $1,000 a month to the ex, but then also at the end of this 5 years, pay a $70,000 lump sum.

But the thought, does $1,000 keep going after that? No.

Okay.

Everything ends at the end of the 5 years.

How much can you put away on top of your $1,000 that you're already sending? How much can you set aside for the $70,000 lump sum?

So I kind of did the numbers and figured out how much I would need each month to, um— No, that wasn't what we asked.

I want to know how fast you can pile up $70,000. Could you do it by Christmas? Do you have any money now?

No. Well, so I've got $15,000 that I've put away into a CD for this. And then I've been putting $1,200 a month into a savings account. Okay.

And what's your income?

I don't have like, um, I bring home about $9,000 a month.

Okay. So from a financial calculation standpoint, what your husband has is he has a $1,000 a month stream for the next 48 months. That's $48,000. And then a $70,000 lump sum at the end of 48 months. But what we call the net present value or the present value of that $70,000 isn't $70,000. Because if you had $40,000, it would be worth $70,000 4 years from now. You follow me?

Right.

And so if I were advising your husband and you offered him $40,000 or $50,000 for this whole thing cash today, I would tell him to take it because it'd be a good deal for him. It'd be a good deal for him. But my point is, that's the mentality I'm going to work towards, is I'm not going to wait 4 years. I want you to save it up really, really fast and get a discount.

So if you can sock away $3,000 or $4,000 a month—

Be free of him sooner for less money.

Okay.

Does that make sense?

It does. So then you wouldn't recommend that I'm—

I would just do it. I would just do a high-yield savings account. And how fast can I get $40,000 or $50,000? together and have your attorney call his attorney, or you just call him and tell him to go to his financial advisor and them calculate what they will take for this $70,000 in today's dollars. Remember present value, remember that phrase, and remember today's dollars, which are the same thing.

Okay.

So just to give you an example, if you had a 7-year window— that one I've got memorized, okay— and the discount rate was 10%, meaning I can invest the money and make 10% on my money, then, and I need $70,000 7 years from today, then today's valuation of that is $35,000.

Mm-hmm.

Because $30,000 in 7 years would become $70,000 if it were invested. That's what the concept is. It's called a present value versus future value. So if someone offers you $40,000 today, or $400,000 18 million years from now, take the $40,000 today because it's going to be worth more than $400,000 18 million years from today. Right? So that's the point. The money grows over time. And so that changes the actual present value of it. So I think a present value at a good discount rate's probably $30,000 or $40,000, maybe $45,000 today to get you out of this whole thing. But you don't have $45,000 today. But if you could get $45,000 together by next spring and make that offer, I bet you, you could be done with this guy.

Okay.

And then you're clear. I'd rather you not have to plan your life around something 4 years from today. I'd rather you be free and go on.

Right.

And I'm not sure that his financial advisor or his attorney or he are sophisticated enough to grasp that concept that I just covered with you, but that's the real world. That's how it really works. And so, um, that's like if you ever hear somebody in the lotto The lottery is $1 million, but not lump sum. It's $1 million if you take it out over 15 years or something, right? That's the same concept. The present value of that series of payments is not— it's a total of $1 million, but the current value is more like $600,000 or $500,000 or something. And that's why people take that. So that's what I would rather you do. So no, I would not use an investment account. I would just use a high-yield savings. And because I'm trying to get rid of the X, that's why we call them X's. They need to leave and get, get, be cut bait, be done. What do you think?

And over that short of a time horizon, I think it's going to be too stressful to watch that number go up and down with the market. And then when you need it, you need to be up. So that, for that reason alone, it's not worth it. When you know you need a certain amount within that short of a time frame, it's not worth it. Just high-yield savings.

Lucian's in Tulsa, Oklahoma. Hi, Lucian, what's up?

Hi, Dave.

How are you today?

Better than I deserve. How can I help?

Love to hear it. Well, Dave, I'm 21 years old. I'm about to graduate college completely debt-free, so thank you for that. And I'm starting my career as a financial advisor. Now, regarding my career, I want to go about it with the most amount of integrity and, like you say, with the heart of a teacher. However, my firm does talk a lot about annuities and variable life as tax Advantage plans for retirement. And I just wanted to get your thoughts on both of those questions.

Sounds like you went to work for an insurance company.

Something like that. Yes, sir.

Not something like that. You did. You didn't go into the financial advising world. You're now an insurance agent, right?

Yes.

You're not, you're not going to make it there.

Okay.

Unless you, unless you sell the products that they sell, you're not going to get to stay there. They won't let you stay.

Gotcha.

Okay.

And you're not going to like those products if you've read Dave Ramsey and George Campbell.

No, sir, I do not. And that's my thing is they talk a lot about those and I'm like, term and invest the difference. And I've already started running into, uh, some headbutting and I just wanted to get your thoughts on, you know, what—

And you haven't even graduated yet. Yeah. I mean, you know, yeah, you talk about headbutting, you're going to get fired. What's going to happen? Yeah.

I'd be looking at other firms. See if you can land a job.

So jump online and pull up the SmartVestor Pros in your area and call a couple of them and ask them who's hiring in that world, because those are actual financial advisors. They're not insurance agents. Because people that sell cash value-based products— IULs, whole life, indexed universal life, whatever it is, all the things, you know, Whatever it is you're getting into, those are insurance agents and they call themselves financial advisors, but they're not.

Right. Yes. And that's what I've been running into. They, they got me my Series 7 and 66, but the more that I've gone through the training aspect of things, they're not selling anything that requires that. Exactly. Exactly.

There's no securities involved in anything you're selling. Everything you're selling is an insurance product, right?

I mean, we do offer securities and everything, and that's where I've been trying to get people targeted into, but They thankfully don't have any sales quotas, but like you said, I'm afraid that my job may be on the line eventually.

You might be on the bottom of the leaderboard when everyone else is hawking those insurance products and you're not.

Yeah, you get paid on the premiums in that world, and the premiums are much higher on the stuff that hurts people. So I'm sorry, I wish I could give you good news, Lucian, but what do you think?

Well, you can be a good guy out there in that financial advising space, so I would just look for another firm as soon as possible. I don't know if he's on the hook for anything having them They trained him. Does he have to stay there a certain amount of time? I would look at whatever contract you signed with them if you've already signed up to work with them. Yeah, because if they paid for the training, they're probably going, hey—

More than that, they pay for the licensing.

And so they're going, you have to— you can't just leave now.

Well, you're going to pay them back for that, probably. Yeah, I don't know. I don't know what they signed up for.

That's a downside, but I wouldn't say you don't have to—

It's weird that they forced him through 63 and 7 because he's not even going to use it.

They probably have to, but they Push these other products instead.

Yeah.

Wow.

Oh man.

Gross.

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Welcome back to The Ramsey Show in the Fairwinds Credit Union studio. George Campbell is my co-host today. Sarah is in Denver. Hi Sarah, how are you?

Hi, I'm good. Thank you guys so much for taking my call.

Sure. What's up?

Um, so to preface my question, I'm going to let you know that, um, I got really lucky with a lottery ticket. Um, and I got almost enough to pay off all my debt. I'm on step 2, soon to be moving on to step 3. And my question is, how do I build intensity and good spending and saving habits when I never hit rock bottom? And I don't have the lived experience of fighting to pay off my debt. Hmm.

I don't know if you have to recover from a cocaine addiction to know to avoid cocaine.

I guess that's fair. Um, I, I do have a little bit of an impulsivity problem. Um, once I paid off my credit cards, I closed all of them, cut them out like you recommend. Um, And that's definitely helped. But in the moment, I struggle with small impulse purchases like coffee in the morning or going out to lunch.

Mm-hmm.

Okay.

So how would you avoid those if I was your coach today and I said, hey, you're gonna not go out to eat and you're not gonna go get coffee. What would you do instead? You still gotta eat. You still need caffeine.

Uh, yeah. Um, I am working on—

It's a trick question. You make coffee at home and you bring lunch to work. That way you have something to eat, right? So that's how I would do it.

Yeah.

You sort of force the discipline until it becomes a habit and that habit becomes so normal and ingrained that you go, why would I eat out? I know how to cook. I can make better coffee at home than I can get it from the coffee shop. So that'll take a minute. That's not going to be an overnight process, but the simplest way is not stopping the drive-through if you're trying to avoid going to McDonald's.

Yeah. All you're saying, Sarah, is that you're human and we all have that. We all want something and we all have that little 4-year-old kid that lives inside of us that's throwing a fit on the cereal aisle yelling, I want Froot Loops, right? We all have that kid.

Yeah.

He lives inside of all of us. The smaller that kid gets, the more adult-like we all become, me included. I'm 66 and still working on it. You're not that old. How old are you?

I'm 22.

Yeah, so I mean, you know, I got you 3x here. So, um, and, uh, but yeah, I mean, I still have to force myself to walk past a chocolate-covered donut. It's a problem, you know? And I know they're not good for me, but I don't care. I like them. And that little child, that little 4-year-old child wakes up and my mouth is watering right now talking about it. Isn't that ridiculous? You know, I mean, really. And so that's impulse control is what you're talking about. And I had a guy, a famous psychologist, tell me one time, one definition of maturity, and he was talking about me, Sarah, he was making fun of me. He's a friend of mine. He said, one definition of maturity is the ability to delay pleasure for a greater good, which is impulse control, right?

Yeah.

It's like growing up. A few years ago, you know those old people called millennials? They called it adulting. You remember when they said that?

Yeah.

Yeah. And it's just hard though. I'm with you. I get it. But here's the thing. That's why we use sayings around here, like live like no one else so that later you can live and give like no one else. I'm going to avoid the chocolate donuts so I can go out and have a mobile, a Michelin 2-star meal experience. Fine dining has become one of my favorite sports, but yeah. Right. And so I want to, but I'm going to, I'm going to trade off there and have the right, make a right, make a solid trade. an intentional trade, and that's impulse control. But it's hard for all of us. You're not, you're not a bad person or something. But your point is that— I think your point was that until I get this under control, I feel out of control. Is that right?

Yeah, pretty much.

So once you free up these debt payments, how much was that every month that was going out to lenders?

Um, it was almost $800, $900 a month.

Amazing. What is going to happen with that $900 when it hits your account now and it doesn't have to go right back out to lenders?

Um, well, right now it's paying off the last, the last little bit.

Yeah, you're not quite done, but once you're there, I'm saying let's fast forward because for most people it would disappear, right? You're saying left to my own devices, I just go spend $900 accidentally.

Yeah.

How do I avoid that?

Definitely happens.

So one thing I've done, because I'm like you, is I automate the things that are good for me and I make the things that are difficult, that are bad for me, way more difficult. So automating is making it easier, right? It's going to auto-transfer to savings every month. When the paycheck hits, it automatically goes to savings to build my emergency fund, for example.

Okay.

That way you never see the money. That's why I love a 401. That money's gone before it hits my bank account. I don't have to think about investing. It was done for me. Because George, 4 years ago, decided he's going to do the good thing, eat the vegetables.

Yeah. So first, let me give you permission to be human, and impulse control is good. It is all of us. Second, let me give you permission to overcome it by adulting and saying, I want bigger things for me than a freaking sandwich or a cup of coffee. My life is bigger than that. And I— the 32-year-old version of Sarah is going to talk back to the 22-year-old version and say, thank you for growing up such a young age because you've made us very wealthy, and now we can do whatever we want to do with our lives. We lived like no one else so that later we can live and give like no one else. And by the way, later is not for you 66 years old. Later is 32 years old. In 10 years, your world is gonna be completely different because of what you're doing right now and the stuff you've learned and the impulse control that you're struggling with. Thank God. Most people don't even know it's there. They don't know it's a problem. You at least recognized it.

Called it out. Yeah, early on too. Imagine at 22 getting this stuff.

Yeah, I'm proud of you. I think you're gonna go do big things, folks. If you're sick and tired of working so hard but having nothing to show for it, well, that's normal. Normal's broke. You don't want to be normal. Normal sucks. Normal is out of control, no money, right? And one way you can do, uh, impulse control is making every dollar behave with your EveryDollar budget. You can find extra money every month And we build you a personalized plan that walks right along the Ramsey principles where you beat debt and build wealth. And in just 15 minutes, you're going to find thousands of dollars in hidden margin. You're going to feel like you got a raise. You do not want to be normal. Think about what normal is. I don't want to be normal. No, I want to be, you know, be not conformed to this world, but be transformed. By the renewing of your mind. I don't want to be normal. I want to be defiant, not compliant. Right? What are we going to— I don't want to be like those people. No, I can do that. I have that ability. But why? Why?

No, no. Start EveryDollar. You can start it for free in the App Store or Google Play. Changes everything when you're intentional, George.

Yeah.

Conforming to this world means, well, everyone has a car payment. Might as well get a nice one. Well, no one can afford college, so might as well take out unlimited student loans because I'm investing in my education. That's the kind of stuff that gets people into trouble later in life, and they look up and go, well, I make good money, I got nothing though. It's all gone every month.

Normal is, thank God it's Friday, oh God, it's Monday.

That's a sad way to live. That's some Eeyore energy right there. That's, that's not what we need.

It's like an oxymoron, Eeyore energy. Those things don't go together, like airline service.

Oh.

Delta is Greek for you ain't gonna get there. Yeah.

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Speaking of live like no one else so that later you can live like no one else, you know, we teach you, if you're in Baby Steps 1 through 3, you're building your emergency fund and Becoming debt-free everything but the house, that you don't need to see the inside of a restaurant unless you're working there, and you don't need to go on vacations either. You need to get your butt out of debt. But once you get to Baby Steps 4, 5, and 6, then you start being intentional rather than intense. And that's when you buy a couch, upgrade your car, go on vacation, those kinds of things. Of course, with cash in every situation. So if you're in 4, 5, or 6 or 7, we want to invite you to celebrate that. Live Like No One Else by cruising with us. We're doing a Ramsey cruise, the Live Like No One Else cruise. Second time we've ever done it. The first one sold out instantaneously. This one's still got a couple of cabins left. You can still get in. This is your week to get away. I'm going to be teaching. George is going to be teaching.

Rachel Deloney, Jade, all of us will be there. Natalie Grant is our musical guest. We've got pastors on board doing church every morning. We're going to have an absolute Ramsey blast, the world's largest debt-free scream. And I'm going to be talking a lot about Baby Step 7 type stuff, legacy, estate planning. We're gonna get into all of that. We're gonna do some of the nerd stuff we did in the Investing Essentials stuff and go back over some of that stuff. We've got a lot of very good content planned, worthy entertainment. So all the Ramsey personalities are on there. My wife Sharon's with us the whole week. We're gonna be doing a lot of very cool side events of all kinds, including y'all are gonna do a Smart Money Happy Hour taping, I think, on there.

That's right, live on stage.

And Rachel and Deloney are doing a marriage and money thing on the cruise. That's going to be fun. Lots of stuff. So come with us. We would love to have you. It is March 14th, March 14th through the 21st this coming spring, Western Caribbean. And this is not on a cheap cruise. This is a nice one. This is Holland America, not Walmart on the Seas. We— Dave don't do Walmart on the Seas, okay? Dave wants to go nice. So we're going Grand Cayman, Half Moon Cay, Jamaica, Cozumel, that end of the world, Western Caribbean. So make sure you— if you're Baby Step 4 or beyond, Come celebrate with us, guys. Let's, let's do life, man. This is what we put this— why we did all this stuff, right? To be able to win. Michelle's in Denver. Hi, Michelle. How are you?

I'm good. How are you?

Better than I deserve. What's up?

So I had a question about prenups and estate planning. Um, 13 years ago, I was a single mom with 2 kids at 41 years old, and I had about $500,000. I met my husband who was 26 years old, no kids. And he probably had like maybe a $1,000 net worth.

We wanted a kid.

So, given my advanced maternal age, we got married within a year and he signed a prenup. We're 13 years later. My 2 kids from my previous marriage are adults. My husband and I have 3 kids together who are in elementary right now. And my investments now are about $1.7 million. So, I'm looking at estate planning. And I'm thinking, you know, it's been 13 years. I know who he is now. I didn't, you know, I had, um, I wanted to be cautious when we first got married. So I'm wondering, do I just, I'm really considering doing away with the prenup, getting a trust maybe. Do you have any thoughts around all this?

Hmm.

And what during this, you've been married how long again? 13?

13 years now.

And what has he added to the equation during the 13? You said my investments are $1.7 million. We should have substantial investments in 13 years in addition to the money you've earned.

Yeah, my investments have grown.

Yeah, I got your part. I'm asking about the couple. The couple that started 13 years ago, have they built wealth?

Um, he has. We have kept—

I know you're not a fan of this, but we've kept our finances separate.

We started that at the beginning. Um, and so he, he has probably like, he has a 401, right, that he's been contributing to. So have I. And my investments, um, have grown.

And so, so what's the size of his 401?

I would be guessing.

I think last time we talked, it was probably around $60,000 to maybe like $65,000 is maybe a ballpark.

Oh, okay.

I, I, I, I'm a little bit stumped. I don't know what to tell you.

Okay.

Here's the principles that are running through my mind.

Sure.

You've not handled money together.

Yeah.

And yet we're doing away with the very document that keeps it separate. And so I know him, but no, you've not handled money together. So you do know him. I mean, I'm not saying he's a bad guy. It's not like he's a shyster. He's not some kind of gold digger or something like that. That's not— we know that part, but But you guys have not made hard money decisions together where there was conflict over who wanted to do what. You just did what you want to do. He did what he wanted to do. And now we're about to turn that whole thing loose on him. That makes me a little nervous.

Okay.

I might say, what if we combined our finances and if it worked real good for 2 years, then take off the prenup or something like that?

Oh yeah.

A lot of people kind of have it sunset over time. To where more and more of the portion becomes ours.

Yeah, but it doesn't— I wouldn't do that if you keep it separate.

Really?

Okay. Because you don't have the relational tools. You don't know how to fight fair over money because you've never done it.

That's very true.

Yes. And as soon as you take this off and then there's a money fight, You're gonna get real freaking nervous.

That was my thinking. Play it out. Let's say you guys undo the prenup and then you split. Would you be furious?

Sure.

Because you feel like you've built all this wealth and he hasn't done a good job?

Yeah. Not even that. Not even if you did a full split, but if you just had a good knockdown drag-out, like a big marriage blowup, I mean, which everybody that's been married has had. I had one lady tell me, we've never had a fight. And I said, it's because you lie.

You know?

But yeah, but yeah, I, I like the spirit in which you asked the question. That's what I'm struggling with, because I love your spirit. You're trusting and you feel solid in your marriage. That's all great. And it's all real. I don't think it's wrong. I think that's all correct.

Yeah.

But yeah. And the 3 kids, 2 kids thing, that's very interesting, isn't it?

Yeah, 2 are self-sufficient adults on their own.

We're good there. But 3 in elementary.

Yeah. But I'm saying in terms of an estate plan, a will, you know.

Oh, yes.

Have you guys done that?

I know.

Yeah, you've got ours and mine, and mine are self-sufficient, and the others are minors. So yeah, that gets real emotionally complicated and practically complicated as well. Yeah, I'm glad you're wrestling with this on the estate planning side and on the prenup side. Keep wrestling it. That's one piece of encouragement. And I really like who you are. The way you talk about it is so solid.

Thank you.

So keep being that person. But let's start, if we're going to blend, let's practice it being blended maybe before we do it. That might be the way to do it. Ease into it a little bit.

Yeah, I totally didn't think about that, and I totally see the wisdom in that.

Um, are you guys both on the, on the deed of the house?

We are. That's— yeah, we are.

Yeah, and it's still got a mortgage on it.

Yeah, I, I think a good start would be, as a part of the figuring all this stuff out, let's just do a, a rundown of exactly where we are today. Exactly what his 401 is, what yours is, what your investments are, where they are, who has them. Whose phone number do I call if you get hit by the proverbial milk truck, right? Who are you, the beneficiary on his 401? Is he the beneficiary on your 401, your non-pre-marriage investments, right?

Yeah.

And, um, yeah, you know, and do we have a will for the house and the kids separate from that? Yeah, you need to get some estate plan, some basic estate planning done, but then you could start to get complicated. A trust might be your answer. later as a staging thing, because that might take your premarital assets and set them aside for a different distribution than the marital assets upon death of both parties. That might be a way to separate them and make sure that they are separated.

And a postnup could just amend the prenup and take the place of that.

Our marital assets could go to Really the 3 littles and the trust assets could go 5 ways. You know, split among the 5 kids. Yeah, that, that's one way you could do it. But oh wow, that's a cool question. I wish I had an instant answer, but I don't.

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Today's question comes from Darren in Nebraska. If you're on Baby Steps 4, 5, and 6 and are actively doing all 3, do you have to contribute 15% of your just-for-fun side hustle money to retirement? The side hustle is just for extra travel money, gifts, etc., and is not needed in the monthly budget. Oh, it's an interesting one. Trying to skirt the Baby Steps here, Dave. I mean, if it has a very specific goal and you're just doing this temporarily, it's fine if you don't want to invest a portion of that. If you're still on track for retirement, you're investing 15% of your normal household income, that's fine either way.

Yeah, absolutely.

I don't— I wouldn't see it as a sin.

Sue is in Columbus, Ohio. Hi Sue, how are you?

Hello, how are you, sir?

Better than I deserve. What's up?

I need some advice about my homeowner's insurance. I have been trying to get them to reduce it for a couple years, and I'm just getting the runaround, and I'm getting so aggravated about it.

Who's it with?

It's with Ohio Mutual, but I've called a couple different insurance companies here in Ohio, and I keep getting the same reason why they won't take it down.

What's that?

That they tell me that because my house is 25 years old, I need to put a new roof on it. Well, my brother-in-law is a contractor. He builds houses. He's inspected my roof and it doesn't need a new roof.

That's weird.

But I've talked— yeah, and I've talked to 3 different insurance companies and I keep getting the same reaction.

Well, a standard asphalt shingle roof East of the Mississippi does not have a 25-year life. I've got a property that we just put a roof on and it was 15 years old and it needed a roof. It didn't look bad, but it needed a roof. It was starting to show serious wear and, you know, the first storm that came along we were going to have a leak. And so the asphalt shingle roofs generally don't have a 25-year life.

Okay.

But, and that's what they're going on. Now, is that what you've got is a standard asphalt shingle roof? Standard shingles?

Yes, sir.

Okay. And but it's not, it's not leaking, but doesn't it, doesn't it show wear?

Yeah, he, he walked all along the roof of it and he said, you do not need a new roof. There's no leaks, there's no wear, it's fine.

Okay. I, I don't know. I don't know. That's unusual. Uh, yes, based on my experience with roofs, and I own a bunch of property, but I'm not saying it's not so, it's just unusual. So that's what you're facing.

Yeah.

I think it's fair to say that sometime in the next 5 years, you're probably going to need a roof. Is that fair?

Probably. I've always been told you should get them replaced every 20 years, but honestly, I don't really have an extra $20,000 at the moment to get it done. You know what I mean?

That's fair. That's fair.

Yes.

Yeah, I think most insurance companies are going to look and require certain things because what's going to happen is there's going to be a hailstorm, And they're going to be responsible for replacing the roof that the hail damaged. And they don't think your roof— they don't think your roof will withstand that. And that's why they're throwing this at you.

It's not always about the condition. It's just the age of it that just adds risk for them. And so they're going, hey, we're not taking on this risk at this age.

They don't rewrite policies. But if you could get them to just not cover the roof at all, then they probably would take the policy. They don't do that. But that's why they're doing it, is because they're worried about themselves.

But if you want to try to fight it, I would get an independent inspection because I don't think my brother said is going to cut it. And you can have them write up the condition and see if you can fight that. But I don't know that you're gonna have much of a dog in the fight at this point.

Yeah, I mean, I know we just, we bought a brand new home that we just finished about 18 months ago. And when the insurance company came out, you know, they actually had 2 requirements they wanted us to do on a brand new home before they covered it.

Wow.

And one of them I had never done before was a water pressure sensor, a water flow sensor. And so if water's running and you're not home, like if pipes are busted, it's got an automatic shutoff on it and an app on my phone that lets me know that they shut my water off, which is kind of nice if you're traveling. You don't have to worry about everything being ruined in the whole house or something.

And it limits the risk.

But I've never had one on a house, and I'm 66 years old, but they made us put one on to cover it. And I'm like, oh, you people. Oh well, put it on there. I probably need it anyway. And I put it on, and I'm kind of glad I did because I Gives you peace of mind. We just took a trip and we were gone a couple weeks, and when we get back, while we're gone, we're not worried about the house being trashed. So it's kind of a neat thing. But yeah, they do have requirements in order because they're responsible if a pipe bursts and screws up a million dollars worth of flooring or something, right?

You let that run for 6 hours, it floods everything.

Same thing as with the roof. They're responsible, and that's why they're doing that, Sue. Yeah, it's aggravating though. It's like, it's my freaking roof. Who cares? Oh man. All right. Looks like Matt's turn in Philadelphia. Hey Matt, what's up in your world?

Hey guys, thanks for having me on the call. Just real quick question for you. I'm 49 years old. I'm debt-free besides my house, and I found my dream car, my childhood dream car from when I was a kid. And I'm curious to know if you think I'm in the spot where I should splurge and purchase the car.

Was it Hot Wheels?

It's a— You mean when you were a kid? When I was a kid, a Knight Rider replica.

Oh man, is it like the kit car or the real one? Well, they all get cars because there was no such thing, right? That's right, kit was the car.

Yeah, yep, it's identical, um, studio-accurate replica.

Wow.

How much is it?

$52,000.

What's your household income?

My base salary is $120,000 plus bonus, but I don't count the bonus because you never know if you're going to get it. So $120,000.

Oh, you get it. What do you count? What's your bonus?

25%.

Okay. All right. And are you married?

I'm not. I'm single. I have a longtime girlfriend, but we're not married yet.

Okay. And what's your net worth?

Uh, net worth right now is about $1 million, um, including home equity, 401, liquid savings.

How much liquid savings?

About $110,000.

Okay.

That's a lot based on your situation. Because here, here's what I measure this against. I just use the burn the money in the middle of the floor scenario. If you burn $52,000 in the middle of the floor, does your life change? No, but you'd be down to half your liquidity.

Yes. And what really pains me, Dave, is like you guys actually financially saved my life 7 years ago when I bought another car I should not have bought. But when I bought the car, I came across you guys and found my financial path. And now here we are 7 years later. I found this other car, but because I worked so hard to build the savings, it pains me to even spend any of it, let alone that amount. But it's my dream car from when I was a kid. So I'm just so torn.

It's an unusual collectible because it's got a very— it's a unique product because it's like, I've got a buddy that collects cars and he's got one of the cars from Days of Thunder, the Tom Cruise movie. Remember that?

Yeah.

And he's got one. It's a Hollywood car, which is what you're talking about. Only he's got one of the actual ones they used in the movie. But this is a— yours is a replica. So the resale market from a collectible standpoint would be very small.

Yep.

Uh, so that, that's going to be a problem in terms of the valuation of it in the future.

What are you going to do with it if you get it?

Drool over it.

Would it just sit in the garage? Would it just be like mint condition in the garage, or are you gonna drive it around on Saturday?

Oh yeah, I'd just be a garage queen. Drive it on Saturday. I mean, it's what you do with a collectible. It's an antique-like type thing.

And what other vehicles do you have? You got any other toys?

No, I have a '99 Trans Am. It's a toy. It's also in the garage.

If you, uh, if you called and said, I want to go on a cruise and I'm going to spend $50 grand, I'd probably tell you to do that. So I can't tell you to not do this. I'm overanalyzing it because of the car.

Yeah.

I thought you can afford it. It is, it is, it's a— the only disturbing number is it's a high percentage of your $110,000 liquidity.

Yeah.

But it's not gonna, it's not gonna cause you to go bankrupt. It's not gonna cause you to be— your face is not gonna show up in the stupid column or something like that. Nothing like that. Um, I'm just, I, I'm a car guy and so I'm just kind of questioning the actual car itself and I shouldn't be doing that. You can afford $52,000 worth of wasted money. You've earned it.

Enjoy the car. It does look pretty sweet. Just found a photo.

Most people spend years changing their money habits, but never think twice about how their bank probably works against their values. With nuisance fees and endless debt products. If you're being weird by sticking to the Baby Steps, you deserve a bank that helps with that. That's why Ramsey partnered with Fairwinds Credit Union. They built the Smart Bundle specifically for Ramsey listeners, not for everybody else. And it includes up to 10 high-yield savings accounts, so you can set up different funds for different needs and goals. And now they've introduced the Live Like No One Else debit card. The original Debt Is Normal Be Weird debit card is still available too. And every time you reach into your wallet, your card is a daily reminder that you follow a different path. Listen, if you're living like no one else, your bank should back you up. Check out the Fairwinds Smart Bundle, including the all-new Live Like No One Else debit card at fairwinds.org/ramsey. That's fairwinds.org/ramsey, insured by the NCUA. Lynette is in Portland, Oregon. Hi, Lynette, how are you?

Hi, good. Thanks for taking my call today.

Sure.

What's up? Um, I have, yeah, well, I have a question about my aging parents. Um, they have been in great health up until this year and then they had a couple of health changes. And so I'm wondering, um, at what point, um, should we as their kids be kind of stepping in to help them and intervening or, you know, just kind of keep acknowledging that they are adults and they get to keep making their own decisions? Um, so the health changes that happened this year are that, um, within about a 3-month time span, my mom was diagnosed with brain cancer. And then my dad, who was kind of, you know, suspicious that he had some dementia brewing, got diagnosed officially with Alzheimer's.

You're a little bit muffled. Can you speak directly into your phone, please?

Yeah. Oh shoot. Can you hear me okay now?

Yes, that's fine. Thank you.

Okay. Okay. Um, so I don't know if you were able to hear everything.

We heard it all, but it was just a little muffled. You're fine. Go ahead.

Okay. Okay.

So you got brain cancer and you got early onset signs and how old are they?

Well, he had an official diagnosis as well. They're 77 and he's turning 78 soon. Um, and otherwise have been in great health. He's been the one who's been actively involved in their investments and he is currently, um, you know, trading, He's got single stocks. If you took a snapshot into their financial picture now, they're actually okay. And so, I'm not sure if I need the perspective of, you know what, just some reassurance, like they're going to be okay. Or, you know, I look at the picture like, ooh, this is a high-risk situation. And is this a train wreck that we can prevent from happening down the road? My mom's been the one who's been day-to-day financial person, you know, taking care of the bills. I've stepped in and added my name to their account so that I could help with that just to take that off her plate. Um, currently, thank goodness she's in remission, but it's a very aggressive form that has a high chance of coming back. Thanks. Um, and so—

So what, what is it? How can we best help you?

Yeah. So, I guess how to tackle a situation where my dad is so resistant to letting go of anything.

Mm-hmm.

And so, I don't know if, you know, like I've tried, you know, like bringing them into their tax advisor for assistance or, hey, could we meet up with another financial advisor? And he's completely resistant. And so, do we just kind of step back and let that happen until He's cognitively declined to the point of intervention. My mom doesn't— you know, they have a living trust set up. She doesn't really want to, I guess, make my dad any more angry in the situation. And so, she's worried for them, but she's not really intervening herself. So, I guess what's the rule? Is there adult kids?

Well, I mean, the law says there's nothing you can do. They're adults and they're allowed to do what they want to do. So at the end of the day, until someone, until the court, the medical profession provides evidence to the court that the person is financially or is mentally incompetent, at which point a guardian ad litem would be appointed against their will, until then, people are allowed to do dumb things.

Okay.

And, um, it's, um, and some of us are better at it than others, doing dumb things. But, um, but it's, um, yeah, it's sad, but sometimes this is what you run into. So there's no one that you can think of that has influence with your dad that could sit down and say, you know, the best thing for you is for someone to walk with you to make sure you get to do what you want to do. But as long as you're freezing everybody out, you're pretty much ensuring a disaster. I mean, some, like his pastor, his best friend, his brother, his wife.

Yeah, I know. He's even held his concerns about dementia so close because he's, I think, very Um, self-conscious or embarrassed about that.

Sure.

And even with their finances, you know, we kids had no idea where they were financially up until a year ago. And so—

Well, they have turned loose on some things then.

Yeah. How much do you know and how did you figure that out?

Yeah, now, now we have a pretty good sense because what happened with my mom's diagnosis is everything had to come to light really fast. And so we have a good idea of their numbers. So we know what's an investment. We know what they're getting for pension and social. We know what they have in savings. Um, their house is up for sale and should be closing this week. So we know how much is coming from that.

Where are they going?

We have a pretty good— they're, they're in a senior living place and they're not happy about that, but it's what we, we're making the best decisions that we could at the time.

Um, so we're navigating all of that.

You guys have had a lot of influence. Somebody's had a lot of influence. Your dad's not sitting over there in total denial. He's just stiff-arming you on a couple of issues.

Right.

I mean, you sold his house and there's been full disclosure, so he's opening up a lot, but not all the way. Yeah.

Yeah.

So is there, is there a healthcare power of attorney?

We do have, um, durable power of attorneys for like the spouses. You know, my mom and dad both have it for each other, and then 2 of us sisters have durable power of attorney. They do have health advocacy. They've, they've done the best that they can setting things in order. Yeah.

But when he's unable to function at 100%, the durable power of attorney gives you the ability to take over.

Yeah.

And even the neurology clinic also was giving kind of a clarification on what his diagnosis is and, you know, the recommendation for financial decisions being passed on. So we're kind of getting things in order. Yeah.

I think here's the thing. It's going too fast for him and not fast enough for you, but it is moving.

Yeah. Okay.

You're not in the dark.

Right.

Yeah. And I can only imagine how much fear is involved if you're in his shoes.

I know.

And this is a very capable man that has done a great— he's a very capable person, and it's the first time in his life he's ever had to face not being capable.

Yes, exactly. Exactly. So, they don't have like a financial planner or fiduciary, but they do have a tax advisor. And he said, you know what, don't even call their— like they have an account with Charles Schwab. Don't even call them because it's going to flag him as having dementia. Do you know much about that as far as ramifications of freezing accounts? Because he's so active in there and it just seems Like, yeah, that's like a little—

Well, if you've got durable power of attorney, the account is not frozen. It's just flagged for his usage.

Yeah. And are there negative ramifications that can come with that?

No. I mean, the person that's got durable power of attorney can do whatever they want. They can close the freaking account, move the money if they want. Um, but they're going to have to, you're going to have to at that point have dealt emotionally, relationally with dad that you're taking over. And that sounds like that's a pretty high hill to climb at this point. Now, I think you just— you guys, this has been a— it sounds like it's a 12-month journey. Is that about right?

We've been in this about 7.

Okay. Yeah. And I think you've made more progress than it feels like because you've not gotten all the way, but you've gone a lot further than a lot of people we talk to. A lot of people we talk to, it's been 7 months and nothing has happened except dad gave all the money to some catfish scam. You know, that's what we were— that's the stuff we get called on.

And so they have no clue if there's a will or if there's a trust. You've named all of them.

You've got everything in order. It's just a matter of when you're going to step hard enough on him to take over. And I'm going to do that as gently as I possibly can, just as an act of love.

Yeah, yeah, yeah.

Some of this might just be, uh, we cross that bridge when we get there.

Yeah.

As much as you want to get ahead of it and plan for it, some of this stuff—

How much money could he screw up if he really screwed up? How much has he got access to that he's screwing around with?

Yeah, well, they have right now about $1.5 debt, but he didn't have access to all that with his screwing around day trading stuff. He does.

Okay, I'm gonna limit that access. Yeah, because I don't, I don't want him— because you can get in the real— you could— he could lose that in 24 hours screwing around day trading. So, um, yeah, I'm gonna limit that access. But I mean, if he wants to screw up with $100 grand or something and you got $1.5, I'll let him do that just as— just because to let him be himself.

Give him a sandbox to play in.

Yeah. Welcome back to the Ramsey Show in the Fairwinds Credit Union studio. Michelle is in Nashville. Hi, Michelle. How are you?

Hi, I'm a little embarrassed to be needing to call in, but glad I'm— glad I'm here.

Well, we're glad you're here too. How can we help?

So I am on Baby Step 2 and I'm in a bit of a pickle. I managed to get myself about a year and a half ago a credit line with an APR of 275%.

And it's not a credit line, that's a payday lender.

Yeah, they frame it as a credit line, but yeah.

Yeah, it's not.

So I've— the balance is $3,000. I pay $900 a month.

And this year, Yeah, and your credit is trashed, I assume?

Oh, big time. Okay.

All right. Um, so what do you make?

I make $93,000 a year.

Okay. How come you can't scrape together $3,000 then?

Well, I'm paying $900 a month on this, and I've got— this is not my This is my current step on Baby Steps. I've got, I've got a couple more before this one, but it's kind of— I feel like I'm just throwing money into a pit.

Yeah, how many? Yeah, you are. That's why it feels that way. Um, God bless your heart. I'm sorry. So you have no money, obviously. Do you have anything you could sell and just give these people the money and go away?

No.

Okay.

Is the balance growing every month at this rate, even with your $900 getting thrown in?

It's growing every day. So it's about $20 a day in what they're calling a customary fee.

So your next paycheck, how much is that?

Um, no, let's stop a second. Yeah, yeah, how much is— that's a good idea. How much is your paycheck?

Uh, $2,700.

Every 2 weeks?

Yeah.

Are you—

have 401 coming out?

Uh, yes, but I just paused it. Good.

Okay, so your next paycheck might even be bigger.

Okay.

Are you getting a tax return?

Uh, my next paycheck will be about $100 more with the 401 not in there.

Last year, did you get a tax return?

Uh, yes.

How much?

$500.

$500. Okay, not much.

All right.

I do get a bonus every quarter, but it's based on, uh, how many hours over my contract I've worked, and that kind of varies.

What do you do?

Um, uh, behavior therapy.

Okay.

Kind of ironic.

Yeah. Yeah. Oh, trust me. I know.

Oh man. I'm sorry. Wow. I've got something running through my head and I'm just going to say it out loud. I don't know if it's good advice or not, so I'm hesitating. That's why I'm stammering around. I'm crunching this in my brain, trying to keep it from coming out of my mouth. I think Louie the loan shark has gotten enough. I would just call them up and tell them to screw themselves. I'm not giving them any more money.

Okay.

And then, and then what they're going to do eventually is eventually they're going to get around to suing you, and then you just settle with them.

Okay.

Okay.

That's one way. I'm not sure that's good advice, but that one will stop the bleeding.

Yeah, it feels It feels like robbery at this point.

Oh, it is. It's completely usurious. It's completely immoral. They're scum. You did, as an adult, sign up for it, but they are scum.

I know.

Yeah, they are. I mean, this is just— it's highway robbery. It should be illegal. It is in most states, but not yours. Um, the— not ours. Um, but the, uh, um, yeah, I don't know what else to do other than try to do something super radical in your monthly budget and come up with $3,000 and just go over there and lay it on the counter and say, Either take this or I'm gonna flip you the bird and you're gonna get nothing until you sue me, and it's gonna be 2 years before you get anything.

Yeah.

And just go in there and hardcore negotiate with Louie the loan shark, because that's who you're dealing with. And what are your other debts?

Um, a credit card, a car, and medical.

What's the car worth?

Uh, the car is worth, uh, well, let me be very transparent. I started the Baby Steps a few months ago, so the car I bought last year.

Okay.

Um, but what do you owe on the loan?

Uh, $28,000.

Do you think it's worth at least $28,000?

Nope.

Okay, you're underwater on that. Did you get hosed on that interest rate too?

Uh, that one actually, no, that one's not as bad. That one's only 11%.

Okay. I was trying to think if you could come up with, you could sell that car and use the difference to get out of this thing temporarily, that would help. But it sounds like you're gonna have to come up with the difference.

I mean, if you've got, if you could have a huge Craigslist or Facebook Marketplace sale and scrape together some money and then not pay a couple of things for, for one paycheck and just stack some cash and go in there and lay it on the, desk of Louie the Loan Shark and go, here's $3,000, take it or leave it, because I'm done paying you.

Yes.

And whatever they agree— before they get to pick the money up off the table, they sign a release.

Right. I mean, is it worth it to be putting my extra— because I've already paid off a couple credit cards, so I've been using those minimums towards my next one.

No, I wouldn't be working the debt snowball with this thing. This thing needs to go away.

Okay.

In a month.

It's like a tumor.

It needs to go away in one month, or you need to stop paying it and go in default.

Okay.

Okay. I think— I mean, I hate to tell somebody to do that, but, but you're completely— I mean, you've been paying this for how long?

Uh, well, the last time I dipped into it was in June, but since June I have been paying $900 $1,500 a month and my balance is still $3,000.

Yeah, yeah, I'm through with this. Yeah, this guy— I mean, again, it's a— it's this weird conundrum between you're an adult and you signed up for it and they're absolute crooks, right? You knew it, you knew it, you did it. But— and so you've got that responsibility, but they've also got an ethical responsibility to not exist, and they do exist. So, uh, I mean, and it's just— they're oppressing you.

I'm doing the math here. You'd have to throw $1,500 a month for 3 months to knock it out just to get ahead of the interest. Yeah. So you're talking $4,500.

I'm not screwing around with it for 3 months. I mean, if you can find something in the garage that you can sell— I mean, you got the electric bike you bought before you started this and it's worth $2,000 or something, go sell the stupid thing. I don't know, whatever it is. I don't know what you've got in your $90,000 a year garage, but the key is what extra work you can pick up, how many overtime hours you can pick up, and in 1 month just go bananas just to get rid of Louie the Loan Shark. But that's, that's what these people are out there. They're everywhere. And, um, it's a, it's an unethical business, to say the least. Um, and yet, oh wow.

Ouch.

You've heard from me and the Ramsey Personalities for years, but nothing beats actually getting together in person. That's why we created the Live Like No One Else Cruise. For 7 days, We're vacationing with you and 2,500 Ramsey people in the Western Caribbean with live shows, us, new content, us, and more. If you're on Baby Step 4 or beyond, come spend the week with us next March. Choose your cabin at ramseysolutions.com/events or click the link in the show notes. Eric is in Boston. Hi, Eric, how are you?

Hey, how's it going, Dave?

Better than I deserve. What's up?

All right, excited to talk to you, George, today. I think you guys are just the right guys to answer this question. Um, so I've got the opportunity to have a health safety or, you know, health savings account through my work. And looking at your little Ask Ramsey tool, it looks like the best thing to do is to put 15% in a Roth retirement account and then kind of put as much as you can in HSA on top of that. And sort of, but since you can invest the money, which I only recently learned, but seems like a great option. And because of the triple tax credit, Tax advantage, as I understand it. I'm kind of wondering, does it make sense? I've seen that you can request reimbursement later. So I'm wondering, does it make sense to pay for stuff out of pocket and like lose out on that potential investment advantage and then request reimbursement later? Or should I be—

Request reimbursement from who?

Paying directly for the patients, yeah.

From who?

You're saying you would cash flow your medical expenses, hang on to the receipts, and you can reimburse it from the HSA back to your checking at any point in the future. That's the current law.

That's exactly right. Yeah.

And that way your investments continue to grow when you're not actually using the HSA.

Yeah, exactly. And I'm just wondering, is that something you should be trying to do?

No.

Or is it not worth it?

No, arbitraging your medical bills for investment purposes is not a plan. It's not enough to screw with. You can't buy a biscuit with the results.

Okay.

Are you gonna— are you trying to max out your HSA investments each year? Is that the goal?

Um, I think if we can make it work, yeah, that'd be the goal.

Yeah. Now what I have done, because you've got it, you have to reimburse yourself within a reasonable period of time. You can't drag this out for 10 years and 10 years ago I had a medical bill, now I'm gonna reimburse. That won't work.

Okay?

But if you— but, and so the amount of spread you could make on, you know, 10 or 12 months or something is not worth screwing with. That's my point. But what I have done is I fully funded my HSA since George W. put them in place way back there.

Mm-hmm.

And I've never touched it. I just paid all my medical bills out of my pocket. But I've not had many medical bills either, knock on wood. Okay? So, and, and then I just moved all of that. You can— there's a company called HealthEquity that we use that we moved it, moved the HSA investment out of a money market into a mutual fund. And so I've just got it sitting in like an S&P and I opened the statement, oddly enough, this weekend and it's over $300,000 now, but I'll never touch it. I'll never use it for medical.

Okay.

Yeah.

I mean, that's the thing that seems so advantageous is that you can use that as an investment. So like, hopefully the balance of it, but I don't have that many medical expenses over the course of my life.

Yeah. But the part of, part of your equation, I would just take it. I would just take out the reimbursement part of the equation. I would just say, as long as my medical bills are fairly low and I hit a deductible occasional and I'm making good money and I want to just cover all that so I don't touch the HSA, then basically the HSA just becomes another investment account.

And at 65, there's no more penalty to use it for non-qualified medical expenses, so it kind of becomes a bonus traditional IRA in that sense.

And I'm 66, so there you go. I can access that again.

Dave's not needing to use it.

I'll never touch it.

It'll be in It's just an extra little wealth tool.

Yeah, that's it. But no, I wouldn't try to arbitrage and, you know, play the spread back and forth, you know, like I'm gonna delay paying this. And so it's like saying I'm gonna use my credit card and I'm gonna invest the money for 30 days rather than pay the bill and make the spread for 30 days and then pay the credit card but never pay any interest.

Yeah, there's no real need to reimburse it.

But by the time you do all that stuff, it's like having an Acorns account You know, you put in 2 nickels and so now you got 3 nickels. You still don't have any money. It's just the actual dollars involved are so small that it doesn't matter.

It's not worth reimbursing.

Yeah, it doesn't matter. That's the point.

The general principle of utilize the HSA if you have one is fantastic.

Yeah, if you— and if you use it for medical, it's still a wonderful thing. You don't have to do it as an investment.

And a reminder, you can only access one of those if you have a high deductible health plan. So people are going, well, where do I get an HSA? Well, you got to make sure you choose that one if you want the HSA component.

But most employers are now offering that.

Yeah, you guys, we've had it here for years.

We've had it here from the day we started. Yeah, because it was available before we started doing health plans. It's that long ago.

And it's a good bargain. I mean, higher deductible but lower premium.

Yep. Ben's in Boston. Hey Ben, how are you?

Hey Dave.

Hey George. This is the perfect duo for this question. Um, I have been helping my brother with a business he just bought a couple years ago. And he's finally getting to the point where he's hiring other technicians to help him out. And we want to know how to give them access to funds, uh, without making them like an account holder on the business bank account. So the question is, how does George buy coffee for millionaires in his little, uh, car videos he makes? Um, do you just have a debit card that you give him access to the banks for?

Yep, yep, he's got a debit card.

So all of, all the Ramsey Personalities, we have a business debit card. It's not tied to the gigantic company checking account. There's a separate business account. So you can open up multiple accounts. So the Personalities have their own pool that we can all dip into for business needs.

Yeah. So if we've got like $10 million in our operating account or something, he doesn't have access to that. There's like $100 grand in this other account.

So you can fund it with as much as you want. Let's say $1,000 a month into this separate account. Give them a debit card. It's in their name. I have— it's in my name, and so they can use it for business expenses, and I submit every receipt.

And if he misuses it, we see it.

Not much that's gonna go wrong. And if you keep—

If I see hair care products on there, we got a problem.

I tried that. Dave just doesn't understand.

Every, every personality has their own checking account?

No, no, no, no, no, no, no. We have one checking account that we run all of the employees, all of the team members that have debit cards. I think there's about 100 and 150 of them have debit cards. If people travel at Ramsey, we don't ask them to travel on their own money. They travel on my money.

And we generally do petty cash for things like that.

Well, if they don't carry a debit card, they can carry petty cash. But exactly, like if George is going on a speaking gig or he's going to New York to be on Fox or something, all of that, he just runs it on his debit card, Ramsey debit card. He doesn't have to have any of George's money involved, but it's on a— we have one separate smaller business account for just the debit cards.

Okay, so in this scenario we would just have a technician expense checking account.

Exactly. And, you know, and so let's pretend that, that, that, you know, you need $10,000 a month worth of things they're buying, then you just keep replenishing it and keep it at a balance of around 10 grand. But your other account might have 100 grand in it or something, and you're not— they don't have access to that.

I don't even have access to the account. I can just make purchases with the debit card, but I can't go in there and see how much is in the account. One of our assistants handles that, and so she's monitoring it and replenishes it once it gets, you know, to a point where we need to.

But it's instant accountability because every one of their expenditures shows up instantly on our computer screen.

And if I lose a receipt, I'm paying out of pocket to reimburse that. So that's a big thing is they got to make sure they keep good track of their receipts.

Not on the debit cards, do you?

If I don't have one, you know, if it was a coffee order, I go, all right, I'm gonna cover that, or the team just has to cover it, you know.

But no, no, that's with petty cash. Your debit card just shows up.

Exactly.

Yeah, debit cards, the receipt's built in.

That's what's nice.

Yeah, and that's what I mean by accountability. So if the technician can't go buy a latte, they're buying a part to work on the item they're supposed to be working on, right?

And do you need that account to be at a separate establishment?

No, no.

Because they're separate accounts?

No, wherever you do your business checking.

That's the same, that's our same bank.

No.

Okay.

All we're doing is just limiting the amount of money that they have access to by having a separate account.

That's the only reason for So you go down to your bank you do business with for your business account and say, hey, I'd like to open up a new checking account within that.

And I need— and I got 5 technicians and I need 5 debit cards in their names. And we're gonna put whatever amount that you think you're gonna need in there for a couple months and put it in there and then that the technicians are actually gonna spend. But real strict rules with the technicians that this money is not for you to buy breakfast, dude. It's for you to buy parts to work on the thing you're working on. And you don't use it for anything else. If you do, we fire you because it's called stealing. That's kind of how that works. And so it's the same thing of a company that has credit cards in the company name and the team member carries a company card. If you misuse that, that's called stealing. It's embezzlement.

Hope you don't need your job.

Yeah.

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. Everyone needs insurance, but it can be hard trying to find a pro who isn't just looking to make a buck and find an agent that actually knows their stuff. Ramsey Trusted Insurance Agent, Pros— insurance pros are vetted and coached to make sure they're market experts who have your best interests at heart. Go to ramseysolutions.com/coverage to find the type of insurance you're looking for and connect with a Ramsey Trusted Independent Agent. Gotta love it. Jonathan's in Savannah, Georgia. Hey Jonathan, how are you?

Good, how are you?

Better than I deserve. What's up?

Um, I have purchased a car and I'm wondering if I made the right decision with it now.

Wow. Okay. Why do you think you didn't?

Um, I just, I just recently, um, stumbled across your Facebook page. And, um, so now I'm starting to wonder if I, um, made the right decision At least with like the price of what I got.

Did you finance the car?

I did.

Okay. How much was it total?

Um, I think my loan was total was, um, $24,260.

That was the sales price or the loan amount?

That's the loan amount. Okay.

What's your income per year?

Um, around $2,200 a month.

Okay, so you make $30,000 a year, or yeah, thereabouts.

Yeah, roughly.

And, uh, you bought— you bought a— the car, the loan is $24,000, but what was the price of the car?

Um, I want to say it was like $27,000.

Yeah, which is more than you take home in a year, and you're 22 years old?

Um, I'm 18.

18 years old.

Okay.

Yeah, honey, you got screwed. You bought a car that's completely out of your league. It's very, very difficult to prosper when you own a car that's worth— that costs as much as you make in a year. Very difficult. And that's even if you paid cash for it, which obviously would be very difficult to do. But yeah, you've got a car payment.

Exactly.

And the reason that you're— the reason that That God dropped that Facebook page right in front of you was because you were scared. You were stumbling around in it, and you were worried. And then you went, gosh, I got to get some confirmation of if I did the right thing or not. And I'm glad you found us. And when I was your age, I did a lot dumber things than this. But the good news is, is this is the last time. You're only 18. You have the whole rest of your life to never do this dumb thing again. Not bad.

Is this your only debt?

I'm sorry, I didn't catch that last part.

Is this your only debt? Is the car loan?

Yes.

Okay. How much is the payment?

Um, the minimums are $430, but I do about $550 a month.

Okay.

Are you living at home?

Um, I live with my great aunt who, um, she's sick, so I moved down here to take care of her. Um, and so I don't have— I do pay to live there.

What were you— what were you driving before you did this?

Um, a 2007 Honda Pilot that the transmission was about to go out on.

Man. Okay. Yeah. So you went from a $1,500 car to a $30,000 car.

Yeah.

And one fell swoop.

Yeah.

Yeah.

What do you do for work?

Um, I work at a promotional product company.

Okay.

All right. I'm an embroidery technician.

Yeah. What we're going to ask you to do for your own sake is to get rid of the car. It's going to be very painful. It's going to be very costly. But the only thing more painful or more costly is keeping it. And then you're gonna have to get you a couple thousand dollars scraped together and get you a little paid-for car. That the transmission's about to go out on but hasn't yet, and drive that and save up $500 a month. If you save $500 a month for, for 10 months, you got $5,000. That's a pretty decent car, is a $5,000 car. And if you did it for 10 more months, you'd have a $10,000 car. And if you did it for 10 more months, you'd have a $15,000 car, and you paid cash. And that's the most car you ought to own with your income. About half your annual income is the most you want to spend on cars.

Okay.

Okay, but you're gonna have some pain and it's gonna cost you some money to get rid of this. There's gonna be some embarrassment, some emotional stuff. It's gonna feel weird and it's gonna cost you some actual dollars to get rid of this thing. You've lost— you probably lost $5,000 or $6,000 in this transaction and you didn't have it to lose. You don't have any money. So it's gonna be a process. I'm gonna send you a copy of our book, The Total Money Makeover, that shows you exactly how to do all the Ramsey steps. And I'm gonna send you a copy of George's book, How to Stop Being Broke.

There's a whole chapter on car loans. If you read that, I promise you, you will never make this mistake again.

Yeah, and again, I, you know, we're not beating on you for being 18 years old and making a dumb decision.

I'm jealous he did it that early.

Yeah, I waited till later to do some of the dumb decisions. So, but the good news is you got the rest of your life to not have that mistake again. And, you know, you'll be my age and you'll look back and go, back in '26, I bought a car. Yeah. And you'll— because I got rid of that, now I'm a millionaire. That's what you'll be doing. You'll be that guy.

And kids will be like, the cars only cost $26,000 back then?

Yeah. Wow. What's a Honda Pilot anyway?

They don't make those anymore.

That might not be a bad thing. Josh is in Columbus. Hey, Josh, how are you?

Good. How are you doing?

Better than I deserve. What's up?

Uh, I'm wondering how I can, uh, calm my wife's nerves with me running a business instead of having like a normal job.

Be uber successful.

Have you done that yet?

Uh, sort of. I have a contract coming. It'll be a couple months, but then we will be making a lot more than we've ever made before. But she's still worried.

Yeah, well, that's because you don't have the contract and you don't have any money yet. Yeah, it's logical to be worried. Sharon Ramsey used to be worried all the time. Sharon Ramsey isn't worried at all now, right? Yeah, I mean, that's the deal. That, that's really what it comes down to. Your wife is looking for proof, not a dream.

Yeah.

And so when you provide her proof and you stack those Benjamins on the table, she's gonna go, I like being self-employed. You make more money. That's assuming you are, of course, right?

Yeah.

What kind of business you going into, Josh?

Uh, I build custom security software to defend against AI.

Okay. And what, do you have a day job?

Uh, not right now. I'm doing my business full-time.

Is that why she's scared?

Wait, wait, wait, wait, wait, wait. You're doing your business full-time, but you haven't made any money?

No, I'm making about $70,000 a year now. Um, but we'll be making a lot more in a couple months.

Why? You got a single vendor that's gonna— you have a single customer's getting ready to make you rich?

I have a large licensing deal with Bank of America.

Okay, very dangerous to have your business standing on one leg.

Yeah.

Especially when Bank of America is the leg. But anyway, um, yeah, you want, you want multiple customers because if one customer can put you out of business or take away 90% of your revenue That's a problem. You now are an employee. You're no longer a customer. You're no longer in business.

Yeah.

An employee that has one customer is— I mean, a person has one customer is called an employee. And so whether it's contract or otherwise. So, so you've been making $70 grand without Bank of America?

Yeah.

For how long?

Uh, about 3 months now.

So annualized $70 grand.

Yeah.

So you've been making—

Before that, I was working and doing the business at night.

Okay. So you're making $6,000 a month before this contract comes through. And the contract is— now that you told us who it is, I hate for you to tell me how much. I don't want you to. So that's not fair to you or them.

But, um, and are you the sole income provider?

Uh, she works part-time.

Okay.

Okay. What were you making at the other place before? The day job?

I was making $70,000 before.

Okay, so you were making $70,000 plus you made it— started making $6,000 a month, so you quit your job.

Yeah.

Right?

Yes.

Okay.

All right.

Her fear is going to go down the longer she sees a pattern of increased income, not decreased income. And she's also wise to be worried if your income is based on only one And so I want you to build a lot of contracts, not just one with one big bank. Big banks don't have a good reputation.

People ask me all the time, George, what's your number one money-saving hack? I'm glad you asked. Nothing makes me happier than helping another frugal friend. So here's the hack. Get on a budget. Seriously, how are you supposed to save money if you don't know how much you're spending in the first place? And that's what makes the EveryDollar budgeting app a game changer. With EveryDollar, you'll get a clear picture of your spending, and from there, it's easy to see where you can get more intentional, cut back, and save more money. How much money are we talking? Well, the average EveryDollar budgeter frees up $395 in their very first budget. And if you ask me, I think you're way above average. So why are you still listening to me? Go download EveryDollar for free and start saving more money right now.

Our scripture of the day, Proverbs 22:1, a good name is to be chosen rather than great riches, and favor is better than silver or gold. Jack Benny said, a rich man is one who isn't afraid to ask the salesperson to show him something cheaper.

I like that.

This is true. Justin is in Canada. Hi, Justin, how are you?

Uh, very good, Dave. How are you?

Better than I deserve. How can I help?

Perfect. Um, so I, uh, I try to have— my wife and I are in a bit of debt. We make a decent income, And, uh, I'm just struggling to have conversations with her about kind of just really buckling down and like doing it. Um, we both like to hang out with family and go places and spend money where we shouldn't when we should just buckle down. And I feel like I've kind of ruined the conversation by getting too frustrated and I just need help with how to fix this and I don't know what to do.

So what's a decent income?

Uh, so I make, um, $98,000 a year gross and then my net is about $74,000. Here in Canada, and then she makes around $54,000, which then goes to $44,000 estimated net yearly.

Okay.

So you make $150,000 minus taxes. All right. And what's a bit of debt? How much debt do you have?

So we have $10,000 on a line of credit, $9,600 on a credit card, and that's it.

No car debt?

Uh, no car debt. We paid off my truck 2 years ago.

No student loan debt?

Uh, no, sir.

How long you been married?

Oh boy, I should have answered that faster. Um, 5 years. Okay.

All right, that's okay. Uh, well, I mean, you guys have been going along for 4 years. Without paying attention, and then suddenly you started paying attention and got a little bit frustrated, a little bit scared, and that came through in the conversation and shut the conversation down. Is that a fair summary?

Yes, sir.

So you're the one that's changed, not her?

Yeah. Yeah.

And both of you do need to change. I don't disagree with your premise, but then the question is, how do we begin to talk about this and so forth? I think you talk about, number one, you probably need to start with an apology. Hey, this stuff started scaring me, and so I didn't approach you with it well, and I'm sorry for that. I apologize because my frustration, my fear came out and it shut us down. And I'm still scared about it. I feel like we're out of control, and it's not your fault. It's not my fault. It's our fault. But we've got to sit down like 2 grownups and talk about this at some point. How can we best do that? That kind of an approach. If you can't, if she starts yelling or something after you do that, then you don't have a money issue. You've got a deep marriage issue. If you apologize and ask for help, and the way your spouse responds is they get angry, then you've got another issue.

Yeah. Yeah, and I'll put most of the blame on me for—

That's fair.

Coming at it maybe a little hard.

Oh, it's 100% your fault. Yeah, it is your fault. You did a classic thing because— and it's really, guys do it more often than gals. Guys want to do— they, they want to fix something, and so they, they start talking about what we're going to do instead of why. And you need to go back to the why. And the why is, I'm scared. The why is, we make too much money to be this broke. broke. The why is I don't want to retire with no money and eat dog food. I want to be wealthy and be able to travel and be able to buy you nice things. And, and that's the why. And, and the track we're on is not taking us there, and that's, that's scaring me. And you don't have to talk about anything she did wrong, just talk about what you did wrong.

Yeah, but if you lead with those things instead of the— and then the byproduct becomes, all right, we got to get on a plan, we're going to throw $4K at this thing for the next 5 months and we'll be Yeah. By March. So she needs to know this is not forever. This is not a huge lifestyle change that's going to dramatically affect your lives. This is a small season of sacrifice so that we can have freedom on the other side.

And we're going to get in control for the rest of our lives, tell our money what to do instead of wondering where it went. That's the byproduct. That's where we end up. But instead of talking about the what, talk about the why.

Okay.

Why? Why? Because I'm scared. Why? Because this chaos is going to lead us to being broke. Why? I don't want to retire and eat dog food. Why? I'd like to be able to travel and be nice and be able to be generous to others that are hurting.

Why?

I'd like to whatever. Okay, what, what, what is it you want to do when you get all this straightened out? And why, why, why? And go, you know, if we had $2 million, honey, what would you want to do?

Yeah, get her to start dreaming.

Yeah, absolutely.

Reverse engineer it.

Yeah. I, I— so you didn't go on a honeymoon?

No, we got So we got—

That's okay. So that's fine. That's cool. That's a perfect angle then. I owe you a honeymoon.

Yeah. Okay.

Would that excite her?

I shorted you, so where do we want to go on this honeymoon? Well, you want to go on a cruise? You want to go to Paris?

Yeah.

But we got, you know, I got— we got— I want to clean all this stuff up so we can do that kind of thing.

Right.

And instead of like, you're so stupid, you overspend, stop it.

Yeah. Yeah. I might get hung if I say that. She's, uh, yeah, yeah, I wouldn't. If I feel like breathing the next day, I'm not saying that. Yeah.

The classic on this show, Justin, is, is that the guy gets all fired up about doing the Ramsey stuff and the first thing he wants to do is sell his wife's car. And then he can't figure out why she's not excited.

Yeah, I did say my truck, but she doesn't want to sell my truck.

You don't need to sell a truck. You just need to quit spending so dadgum much. You only owe $20 grand.

Yeah.

You can clean it all up. You can clean it all up in no time, like George said. But you've got to both be on board, and you're living like no one else so that—

why?

So that later we can live and give like no one else. But you start this whole conversation with apologizing for having approached it wrong because you did a classic husband mistake.

She's going to be taken aback just right there with the apology.

Well, I mean, I go straight to how we're going to fix it. I don't really care about your feelings, and that's not a good relational tool.

I apologize every day just in case. I don't know.

That's a preemptive apology.

It works.

Well, it's going to happen. You did something wrong. You just don't know what it is yet.

Exactly.

That's it.

Covers all the sins. It's just-in-case method. It's worked out so far.

That's funny. I don't care who you are.

All right.

Uh, Lily's in Fort Lauderdale. Hey Lily, what's up?

Hey. Yes. So my question is, is, well, I'll give you a little— is how much should I start investing and where? And I'm currently unemployed. I'll be employed soon. I am disabled.

So that's why it's been so long to try and get a job.

Uh, I am 18, so I'm still young in investing. I was just wondering to see if you could give me some advice on that.

Do you have any debt?

No.

Okay, good. So the first step with investing is have the income to invest. So I love that you want to do this. Once you do have income coming in, do you have savings and an emergency fund?

I have, yeah, I have about $3,000 in savings and about $1,000 in checking Okay, that's a good start.

You might want to build up that emergency fund of 3 to 6 months of expenses, and then 15% of each paycheck should be going towards retirement accounts. So if you have one through your employer, that's a great start. And if you see the word Roth, that's even better because you're going to pay with after-tax money, but it's going to grow tax-free. So think of it like net income later on in retirement. And if you do that with some good growth stock mutual funds inside of those accounts, you're going to be just fine. And I'll send you our investing guide to help you as well.

We'll send out the investing guide to you, Lily, and make sure—

For everyone else.

Get you started. And if you need some help sitting down with a SmartVester Pro, just click on Ramsey Solutions. You can find some of the people we recommend. We're not in the investment business, but we recommend people that we've vetted and that we trust. They're called SmartVester Pros, and we can definitely help you get that done.

ramseysolutions.com/guide for everyone out there listening. We'll drop a link to that as well in the description of this episode. That's a great place to start.

What's in the guide?

It covers everything from what is a mutual fund, what are all these different types of accounts, how do I even go about picking them, how much do I invest from each paycheck. So it's a great start for those who are getting, you know, kind of the beginner's guide, who need to just understand the basics of investing. What am I actually doing? What is the stock market?

Yeah, there's a certain number of people that when you just say the word investing freeze.

It's scary. I mean, there's so many options and you don't want to screw it up.

There you go.

You think like a vending machine eating your money. You don't want that.

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.