Dave Ramsey

Brought to you by the EveryDollar app. Start budgeting for free today. Normal is broken. Common sense is weird. So we're here to help you transform your life. From the Ramsey Network and the Fair Winds Credit Union studio, this is the Ramsey Show. Jade Washall Ramsey personality number one best selling author is my co host today. Michael is in Dallas. Hey Michael, how are you?

Caller

I'm so good. How are you sir?

Dave Ramsey

Better than I deserve. What's up?

Caller

So I am 120,000 in debt. I'm about to graduate college and I'm getting married in April. Currently have not a lot of money and I was just gonna ask how I should handle that debt and preparation for marriage. Wow.

Jade Washall

Got a lot going on.

Dave Ramsey

Congratulations on graduating. What's your degree in?

Caller

It's in aviation.

Dave Ramsey

Okay, so what are you gonna do? Fly?

Caller

Yeah, that's the plan. Currently I'm a flight instructor. I just got hired but I haven't gotten any students yet. So the income's not really coming in yet. And then I'm building those flight hours to eventually go to the airline. So that's the path currently.

Jade Washall

What does a flight instructor earn?

Caller

$20 an hour for the first 30 days and then 25 so. And then with room for growth but nothing crazy.

Dave Ramsey

Are you going to be getting a full time job out of this flight instruction that you've signed up for?

Caller

Oh yeah, for sure. That's, that's the plan. It just like it slows down at first and then after the 60 days then they'll start to give you more students and then it can become like a pretty heavy 40 hour we kind of workload.

Jade Washall

Where are you living right now until the marriage?

Caller

McKinney, Texas.

Jade Washall

No, no, no. How are you living? Are you renting with parents, roommates?

Caller

No, I'm with my. Yeah, I'm with my father.

Jade Washall

Okay, with your dad. So you're not paying any rent?

Caller

No, ma'.

Sponsor Representative

Am.

Jade Washall

Okay.

Dave Ramsey

What is your fiance going to be doing for a living?

Caller

She's going to be doing esthetician. She's currently about to go to esthetician school and she's going to be graduating in January and then hopefully finding a job. But that'll be pretty soon before marriage. So there's not going to be a lot of income coming from her at least before the marriage starts.

Jade Washall

What's, what's you all's plan as far as. Because both of you have a bit of a ramp up to income. What's, what's you all's plan? What have you said as far as living and paying.

Caller

Yeah. I mean, the plan currently is just kind of like you always say, just live below the means. But it's kind of hard. You know, we're young and we want to do this, that, and the other thing. So it's kind of this, that, and the other thing.

Dave Ramsey

Cost you 120 grand. You're done with this, that and the other thing. Yeah, this, that, and the other thing is that's. That's the name of your four new jobs. This, that, and the other thing.

Caller

Okay, I like it. I like it.

Jade Washall

Yeah. That's the biggest thing that I see as an issue here. Debt aside, just getting your income up enough to where you guys can come together and have a life together is what I'm looking at. And then once you can get on some solid footing with your income coming in, of course, yeah, we need to tackle the debt. Does she have that?

Dave Ramsey

You need six side hustles in the meantime because this, your path to aviation is a slow plan.

Jade Washall

Yes.

Caller

Yeah.

Dave Ramsey

It's going to be a while before you make money.

Caller

That is true. Yeah, that is true. It's going to be a while before I make some good money. I totally agree with that. But, yeah, I mean, I mean, to really answer the question, again, it's just live below the means, and we've kind of planned it out.

Dave Ramsey

Yeah, but you don't have any means. That's my point.

Jade Washall

The first thing we need to think about, and this is your homework, so let's make this easy to think about. Your homework tonight is brainstorming what you will do in between students. Because let's say you start out and you only have two or three students you have a whole work week to do with. So let's brainstorm some ideas that are going to bring in real money. And to Dave's point, it might be two or three different things or five or six different things that you can start applying for and doing immediately. Because as much of this debt, the first thing is let's have means to live. But then if we can start attacking this debt and making some true headway before, I think you said April, that's going to be a win win. And does she have debt that she's bringing to the equation?

Caller

No, she's got zero debt.

Dave Ramsey

Okay, so here's the thing. I don't want, and we love you and we want you to win. We don't want you working five hours a week at $20 an hour when you first get married. That's going to become very frustrating for all of you. And it's going to put stress on your brand new marriage that you don't need. I would rather the stress be that you're working all the time.

Caller

Yeah.

Dave Ramsey

Six things you need to get a bunch of income coming in on the short, short range. And then the other thing you can do is check other flight instruction things in the area. Your good news is you're in the Dallas area. So. And can I pick up more and more of that in my field? Is there anything I can do in my field and because the quicker you build your book of hours, as you know, the quicker you get to get in the air and be paid for it.

Jade Washall

And you both need to sit down and look at what it costs to live in your area, look at some apartments, look at some rents and, and get an idea of what it costs to live so you know what it looks like to actually live below your means. And there's a target that you're shooting at, income wise.

Dave Ramsey

Yeah. So if you graduate, folks with a four year degree in supply chain logistics, you come out and the first day you're going to be making 80 to $95,000 a year. If you graduate with a degree in aviation, the first day you have a part time job making $20 an hour for the next three years until you get your hours up. So when you choose these career fields, you've got to choose what you're gonna do in the interim because basically he's now left four years of education going into what we would all call an apprentice program. You have to get your hours and you get those hours oddly enough by being a flight instructor. That's kind of irony of ironies.

Jade Washall

Right? You're still learning, aren't you?

Dave Ramsey

We're gonna teach you while I get hours and that enables me to fly in a commercial airline.

Caller

So.

Dave Ramsey

But yeah, and then she chose the same thing.

Jade Washall

Right. It's going to take her time to get clients built up.

Dave Ramsey

You know, this is a client based business and it's not, you don't walk in that day making any money. And so when you're, when you're looking at, and considering careers, if you're going to go one of those types of routes, you have to have the side hustle mentality until you get things going. And, and then if you get things going, that's going to be great or

Jade Washall

it's almost flip flopped. It's almost like you need another full time job and that thing is a side hustle until it builds up to be the main job.

Dave Ramsey

Amen. There you go. I like that plan, I mean we always talk about it around here. We're in Nashville. And you know, how do you get the next country music star's attention? Waiter. You know, that's, that's how, you know, because everybody, it's just like if you're, how do you, if you're in la, how do you get the next movie star's attention? A waiter, you know, they'll all tell you they wait tables and they do anything they can and they write songs at night and they're trying to get, you know, a break to get to play, but they don't make enough money playing.

Jade Washall

Yes.

Dave Ramsey

In the early days to make it. And so you've got a ramp up period in those types of careers until you get, until you get into the money.

Jade Washall

You have to be very, you have to be. Almost everybody's got to be intentional. But if you are in that sort of career, you've got to be very intentional about what your plan is and what you're doing.

Dave Ramsey

Your B plan.

Jade Washall

Yeah.

Dave Ramsey

Or make that your B plan and have an A plan.

Jade Washall

Yes, yes.

Dave Ramsey

You know, and I mean the, the old, the, the legend that is actually the truth is that Kris Kristofferson was the janitor and, and he, the guys invited him to sit down and write some songs. Really the reason he was a janitor is because he wanted to be in the building where it was happening. Cuz he was writing songs at home.

Jade Washall

Smart guy.

Dave Ramsey

But he's going down the hall with a mop, not a guitar. And that's, you know, you got to have a B plan. Let me tell you what I get asked all the time, when should I get term life insurance? How much do I need? Is it affordable? Those are the right questions to be asking. So let's take a quick review. The fact is, term life isn't about baby step. So if anyone is dependent on your income, you need to have 10 to 12 times your income in life insurance now. And most people are surprised by how affordable term life really is, even if you're not in perfect health. Look, I understand the hesitation since most insurance companies make it more of a hassle than it needs to be. Not at Zander Insurance. They're not an insurance company. They're a broker that works for you. That means they'll shop and compare the top term life companies to find the most competitive options on the the coverage for your family. For almost 30 years, I've recommended Zander for straight answers, competitive rates and coverage that actually protects your family. Call 800-356-4-282 or go to zander.com for a quick and easy quote. That's zander.com. Jenna is in Milwaukee. Hi, Jenna. How are you?

Caller

I'm doing well. How are you?

Dave Ramsey

Better than I deserve. What's up?

Caller

I am wondering if you can help me with a 401k question. My financial advisor is advising me to switch from contributing to the company's Roth 401K to a traditional 401K due to basically my income level and the amount of tax savings that I would receive now.

Wow.

Dave Ramsey

Okay. Well, you need to get a new financial advisor that can actually do math.

Caller

That, that was kind of my. My guess, but I didn't know if there was any specific circumstance where. Where that would be beneficial.

Yeah.

Dave Ramsey

So what are you. What are you. How old are you?

Caller

I'm 40.

Dave Ramsey

Okay. And how much are you going to be putting into the 401k?

Caller

I'll basically be maxing it out.

Dave Ramsey

Okay, so you're gonna put in how much in dollars?

Caller

About 24,000.

Dave Ramsey

Okay. We'll call it $2,000 a month. Okay. If I put that in the retirement calculator that says that you're gonna have at 65, 3.1 million. Okay.

Caller

Okay.

Dave Ramsey

And for 25 years, you put in $24,000. And I'll have to add up what that is. You wanna do that for me? Say 25,000. Do years times 24,000. And so that's going to be 200 and something thousand, I believe. But. So the deal is this. Everything above your contribution is taxable. You're saying. What was the number?

Jade Washall

600,000.

Dave Ramsey

Okay, 600,000. So he's telling you to save taxes on 600,000 of the 3.1 million, but for doing that, you get to pay taxes on two and a half million.

Caller

Lovely.

Dave Ramsey

You see what I'm doing?

Caller

Yep, I know exactly what you're doing.

Dave Ramsey

The growth would be 3 point. The total amount would be 3.1 of that 600,000 you put in, which is tax, you're gonna pay taxes on the whole thing eventually if it's traditional. But you save on taxes today in present value dollars on the 600,000. So to save taxes on 600,000 for a period of 25 years that you do have to pay back later, you end up paying taxes on two and a half million. It's really bad math.

Caller

Okay.

Dave Ramsey

Yeah. Now, and here's the other problem. We'll go ahead and take it a step further. If you have a Roth IRA, there's no mandatory withdrawals. I'm 65. I've got millions of dollars in Roth IRAs and 401ks. Okay. And I'm not going to have to draw any of it at 72 and a half on required minimum distributions. RMDs.

Caller

Okay.

Dave Ramsey

And when I die, it passes to my heirs with no income tax. If you'd leave this 3.1 million to someone and it's all taxable under the new Biden laws that came in when President Biden was the secure act, they will have to pay taxes on the 3.1 million. You don't have to because you died, but you never got around to paying taxes on because you never drew it out. Out. And so an inherited IRA is all taxable if it's traditional and they have to do it within 10 years. So they're going to pay taxes on $300,000 a year for 10 years, which is crazy for your heirs. So it's, it's harder in retirement, it's harder in inherited and you pay light years more taxes. There's no case where this is not going to happen. Every one of these any scenario. And so I'm flabbergasted that somebody could be this dumb and call themselves a financial advisor.

Caller

Yeah, I thought the same thing.

Jade Washall

We're doing an investing event. We can give you a ticket to hang out at the investment event and learn a little bit more. And maybe we ought to give one to our financial advisor as well.

Dave Ramsey

No, I don't want them around. I'll just let. They need to stay away. I don't need to train that guy. He's already a poser. So. No, hang on, Jenna. We'll give you a ticket to the investing essentials that George Campbell and I are doing September 1st and 2nd. It's a two night event on much more sophisticated investing issues than that. Than that issue. So. But that is a great, a great example for you guys on why the Roth is so big. So in her case, the Roth saves on tax. She's paid taxes on the $600,000.

Jade Washall

That's right.

Dave Ramsey

It's an after tax investment. But you don't pay taxes on all the growth. It's tax free. And taxes on two and a half million dollars would be 7,800,000 bucks.

Jade Washall

It's a no brainer.

Dave Ramsey

So it's almost a million dollar mistake. So you guys think I'm being dramatic and saying this guy needs to be fired. No. A guy that makes a million dollar mistake, you don't keep.

Jade Washall

That's right.

Dave Ramsey

And that's not dramatic. That's just dramatically wrong, you know, so.

Caller

Wow.

Dave Ramsey

Wow. You and I had one other or two of those in the. Yesterday.

Jade Washall

Yeah.

Dave Ramsey

The other day where the financial advisors. Off the radar.

Jade Washall

Not very good. Yeah. You have to, you have to vet these guys. And we have smartvestor pros that we vet that you can interview them for yourself. They're trained on Ramsey principles. And you can trust that what they're telling you is based on how we teach things.

Dave Ramsey

Yeah. Now if you want to get real technical a little bit in the guy's defense, but it won't still might be much.

Jade Washall

He was shortsighted. He was thinking about her taxes for the year. He wasn't thinking about long term.

Dave Ramsey

Well, even. He could even be a total financial nerd. And so, okay, the present value of taxes on 600,000 is going to grow to this. Okay. So if you don't pay taxes on 600,000, let's call that 200,000, what would that 200,000 grow to over 25 years?

Jade Washall

Okay.

Dave Ramsey

Not enough to offset the mistake he's making.

Jade Washall

The million dollar mistake.

Dave Ramsey

But the present value formula is you. It's part of. So my guess is the guy got so nerded out, he got twisted up in his own fish hooks.

Jade Washall

That's very possible.

Dave Ramsey

That's my guess. Maybe he's not as dumb as I thought, but he still ended up dumb. Because these guys that I grew up in that world, in the financial world, and they don't mean most of the time they don't. Most of the time they're not crooks and most time they're not really intellectually just dumb. But they get paralysis of the analysis as if this stuff all happens in a vacuum instead of happening out here with flesh and blood and bruises and cuts and divorces and deaths and disabilities and job changes. And they forget that this stuff is not just a simple linear formula because there's people involved and so you can't do that. So another fun example, while we're being nerds for a minute, when the Roth first passed, we had the Financial Peace University class taught. We had a retirement and insurance lesson. And then we had to go reshoot that because the Roth changed everything.

Jade Washall

That's right.

Dave Ramsey

Because everything was traditional before the Roth. That's how long I've been doing this. And what we kept doing was we got caught up in me and the guy that was doing it. We got caught up in the same stupid trap of being nerds. And here was the trap. In those days, you could put $2,000 into a Roth IRA back then, that was the limit. That was the max.

Jade Washall

Wow.

Dave Ramsey

Okay, so $2,000 into your Roth. And we kept saying, okay, but $2,000 after taxes is only 1600 or 1400 or whatever. Right? So we were trying to compare apples to apples, the 1400 growth with the 2000 growth, which is accurate if you're in a test tube, but you're not living in a vacuum, you're not living in a test tube because what happens is when you tell people to do traditional or you tell them to do Roth, in either case, they put in $2,000. And so effectively, when you put in Roth, it took you almost $2800 of income because you had to pay taxes on it to get to the 2000. So it's not apples to apples to compare 2000 Roth with 2000 non Roth. But nobody in the real world does that. They just max it out.

Jade Washall

They're not thinking like that.

Dave Ramsey

They just go, I'm putting, what did she say? She said, I'm putting, I'm fully funding everything. My 401k. Well, she didn't go, oh, I have to calculate the after tax implications. Now she just like, I'm going to put in the full 2000 or the full 8000 or whatever they say, whatever the number is. Right. And we don't calculate. But we were trying to nerd out and go, well, it's not really fair to compare 2000 after tax with 2000.

Jade Washall

But in the real world, no one's thinking like that.

Dave Ramsey

People don't do that. They just fully fund the stupid thing. So in a sense, when we tell you to do Roth, we're tricking you to put more money in.

Jade Washall

Yes, I can see that.

Dave Ramsey

Because it's an after tax investment,

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Dave Ramsey

Buying or selling real estate is expensive. And making a mistake in real estate, you make a mistake on a car, it's a couple thousand bucks. You make a mistake on a piece of real estate, it's 10 or 15, $20,000. We had one the other day. The lady sold her house for 350,000. The appraisal came back at 300, and I think it's 380,000. Yeah, she was like 30,000 bucks off.

Jade Washall

It's too late to fire him by then.

Dave Ramsey

Yeah. You got a real estate agent didn't know what they're doing. We listed the house too cheap and we sold it. It's under contract. Oh, my gosh. Yeah. So you want a pro. If you're doing a real estate transaction, and a pro is somebody who's done a lot of transactions lately, not someone who got their license three weeks ago. And you know them from church. Wrong answer. Only one good part of that, and that was church, but that was it. The rest of it is a no. Okay, so that's it. So Ramsey Trusted is where we vet real estate agents for high performance and following the Ramsey way and having the heart of a teacher. And they're going to have your best interest at heart. And you can find a Ramsey Trusted agent for free@ramseysolutions.com agent or click the link in the description. If you're on YouTube or podcast, Hope is in Brooklyn, New York. Hi, Hope. Welcome to the Ramsey Show.

Caller

Hi. How are you?

Dave Ramsey

Better than I deserve. What's up?

Caller

Yes, I am getting ready for retirement, hopefully in the next four years. In four years. And I want to find out if I'm ready for it. Being that I had just purchased a. I purchased a new home last year. I put down about 30% and I still owe about 220. But I want to find out if the 600,000 that I have in my 403B, I have my three months worth of expenses and I'm on baby step six now wanting to pay off that. What do you make next five years? I want to find out if.

Dave Ramsey

What do you make?

Caller

If I should retire what do you make? I. Right now I make about 150.

Dave Ramsey

Good for you.

Caller

And I know my pension will be about 90,000 a year.

Dave Ramsey

Wow.

Caller

And, yeah, you're in great shape. I just. I don't know if I feel like that.

Dave Ramsey

Okay, is your 220,000. That's the mortgage. And you have 600,000 invested. Is the 600,000 invested in good growth stock mutual funds? Is it growing?

Caller

Right now I have about. I. I have the option of putting what I invest now, which is 17% of my salary, in like a fixed.

Dave Ramsey

No.

Caller

And then like. So I do that right now. 7%.

Dave Ramsey

No, we don't do fixed.

Caller

I'm scared.

Dave Ramsey

7% sucks. No.

Caller

Okay.

Dave Ramsey

You should have some good mutual fund options of some kind in that 403B.

Caller

I do. I did for a long time. And then in 2022, I got a little scared because.

Dave Ramsey

2022 you got scared.

Caller

Yeah, because I lost so much during the COVID And then.

Dave Ramsey

I know you didn't.

Jade Washall

Did you pull it out?

Caller

I didn't. I didn't pull it out.

Dave Ramsey

Then you didn't lose.

Jade Washall

You've. You've regained it and more.

Dave Ramsey

Yeah, but you pulled it out in 2022.

Caller

Yeah, and then I put it into 6.

Dave Ramsey

Yeah.

Caller

7%.

Dave Ramsey

Major mistake.

Caller

What I do now is.

Dave Ramsey

Yeah, major mistake.

Caller

Okay.

Dave Ramsey

I want you to be in good growth stock mutual funds. Something like AN S&P 500 Type of A thing. Okay. Which I hope I can make you cry. You ready to cry? Okay. When you pulled that money out in 2022, if you had left it in there, it would now be 1.2 million. That's what that mistake cost you. Because in the last five years, the stock market has doubled.

Jade Washall

You don't lose money unless you take it out.

Dave Ramsey

Yeah. That's when you lose money. So you pulled it out. And then the best five years in the last 20 have happened. And so you just missed the biggest wave ever.

Jade Washall

But if you do, because you pulled

Dave Ramsey

it out at exactly the wrong time, your timing is preciously horrible.

Jade Washall

But if you do take that 600,000 and do what Dave is saying, and you've got four more years, you said you're looking at a four year horizon. If you invest your 1800 or your 1900amonth, that still gets you to a million 42.

Caller

Yeah.

Dave Ramsey

You're gonna be. And that's in four years. Okay. And meanwhile. And you're. And so you're gonna have a million bucks if you move it into good growth stock mutual funds, and you keep adding to Good growth stock mutual funds for the next five years.

Jade Washall

Don't take it out.

Dave Ramsey

And don't take it out. Alright? Just ride it. Because you're gonna be making $100,000 a year as a pension. And in that five years, get the mortgage paid off and then that house is gonna be worth a million dollars and you're gonna have a million dollars. And by the time you get to 70, you're gonna have $4 million. So you're gonna be fine. Live on your pension and let this all grow.

Caller

Yeah, just that, you know, I grew up very, you know, hand to mouth and my parents are not very good with financial. So I did the bankruptcy thing. I even did the debt consolidation. So to be where I'm getting like where I am now, I think you're,

Dave Ramsey

I think you're in pretty good shape. I just don't want you to be in fixed.

Caller

All right.

Dave Ramsey

And growing up hand to mouth doesn't mean be dumb.

Jade Washall

Yeah, you've, you've gone far beyond that at this point.

Dave Ramsey

Yeah, you're, you're way beyond hand to mouth. You got a hundred thousand dollar, your pension, a house that's going to be paid for by the time you retire and a million dollars will be in there for you to go do what we tell you to do. And if we're half wrong, you're still okay.

Caller

Take it out of fixed and put it back in the stock market.

Jade Washall

Put it back in the mutual funds.

Dave Ramsey

Mutual funds, not the stock. It is the stock market. But good growth stock mutual. Something like an s and P500. That's what I would do. And I'm older than you.

Jade Washall

Yeah. And start describing yourself based on who you are today, not who you were 50 years ago.

Dave Ramsey

Yeah, I had to learn a lot. And I have learned a lot because of where I came from. That's a proper narrative. Not I have to do fixed because I grew up on a dirt floor. No, you don't have to fix because you grew up on a dirt floor. Matter of fact, that's the reason to not do fixed.

Jade Washall

Scarcity.

Dave Ramsey

Yeah, exactly. And panic and fear and all those things. It's half glass, full thing. Yeah, half glass empty. So yeah, that's the thing. And so but it doesn't also doesn't mean you need to take rash risks. I'm not telling you put it in crypto or go to Vegas. And I'm not telling you to bet on DraftKings. None of these stupid things. That's the other side of the coin, right? Where you go crazy and so now this is steady and boring. It's just not as boring as fixed. So here's a good rule of thumb, folks. Give you a little math formula. Today's show has been a math show today so far. There's an old fashioned thing that was taught to us years ago, us math nerds called the rule of 72s. If you take an interest rate and you divide it into the number of 72s, it'll tell you how long it takes a lump sum to double. So an example would be 7.2 years divided in or 7.2 interest rate divided into 72 would give you 10 years for the lump sum to double. Reverse it. I'm gonna put, I'm gonna invest it at 10% instead of 7%, then it will double every 7.2 years. Right. And so that's basically what we're telling her. Okay, are you gonna wait 10 years for this to double or five years for this to double? That's kind of the formula difference between 7 and 12. That's what's going to end up. So, and that's the 600,000 we're not touching. And if you just said, okay, I'm going to run this thing out at 11 and a half, 11.8, which is the average that the S and P has done. Divide that into 72. Well, there you go. Now we've got about the time she retires, it's doubled, which is what you did.

Jade Washall

Yeah.

Dave Ramsey

And you can do that in your head. You don't need a calculator to do that. It's not bad at all. And so just divide the interest rate that you're going to invest in at end of 72, and it'll tell you how long it takes a lump sum to double. So you start with 100,000, then I'll be at 200, then I'll be at 400, then I'll be at 800, then I'll be at 1.6 and then I'll be at 3.2. And every time. Every time. And so if you divide 10 into that, it's just seven year rolls every seven years. So take your age and three times 21 years from today, it's going to double three times.

Caller

Yep.

Dave Ramsey

And that gives you some confidence that you're on the right track with some of this stuff. You can also use the Ramsey calculator, which is what we're using when we're on the air. It's on our computer. It's on you go to our website, the Ramsey retirement calculator. And all it is is a basic financial calculator. It's nothing super fancy, but it's just an easy way to do it. And you plug in and go, what if I put a hundred dollars a month at 12% from age 25 to age 65? It's 11. It's $1,172,000. And the calculator will show you that. Okay, say I can be a millionaire If I invest $100 a month from age 25 to age 65 at an average of 12%. Where get 12% s. And P has averaged 11.8 since it began 80 years ago. Okay.

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Jade Washall

to remain active on Boost Mobile unlimited plan.

Dave Ramsey

Jake's in New York City. Hi, Jake. How are you?

Caller

I'm very well. How are you?

Dave Ramsey

Better than I deserve. What's up?

Caller

I drive an older car, a little bit higher mileage, and I was wondering if it would be smart or irresponsible to buy a $45,000 car around there.

Dave Ramsey

Okay, well, the way we determine if something's irresponsible around here is ratios and percentages. So let's play with some numbers for a minute. Number one, you pay in cash,

Caller

probably

putting down and then financing.

Dave Ramsey

Okay, I can answer your question then. No, it's irresponsible. You should never have a car payment. You should ride a bicycle before you have a car payment.

Jade Washall

How long have you been listening to the Ramsey show, Jake?

Caller

A couple years now. Okay.

Dave Ramsey

Yeah. Cars are the largest purchase that Americans make. That goes down in value and they handcuff you financially. So you'd never need to finance one under any circumstances. There's not a Circumstance ever. In 35 years of doing the show, we told somebody to buy a car and finance. And if you're going to buy a car, you should measure all the things that you own that have wheels and. Or motors. And if the value of the total of those things and all of those things go down in value. If it's wheels, motors, batteries, I don't care. Add it all up and it goes down in value. If. If the total is more than half your annual income, you have too much tied up in things going down in value. So that's boats and campers and RVs and sea doos and tractors and. And lawnmowers that are now $12,000 and all this crap. Right? And cars and cars and Teslas and cars and trucks and anything you want to add up, anything you want to have. And I've got a bunch of stuff with motors in it. I'm an old redneck. I like things with loud mufflers and I like cars, I like trucks. I love all of it. But they all suck as an investment. And so they need to be a small part of your financial picture. Otherwise you've got too much invested in things going down in value. And then you're scratching your head and wondering why you're broke, why you're doomed to be middle class.

Jade Washall

Think about this, and this is something I spend a lot of time thinking about. If you synthesize the data, you're going to end up with about 60% of working Americans having car payments. Then you look over and say, well, that's suspiciously close to the amount of people who are living paycheck to paycheck, which is also suspiciously close to the amount of Americans. Around 60% would say they are concerned about retirement because they don't have enough saved. That is a very interesting correlation. It's the car payment that's.

Dave Ramsey

And they're concerned about their student loans for their kids because they still have theirs.

Jade Washall

Yes, because you have a car payment. That's what's keeping you middle class. It's what's keeping you paycheck to paycheck. That's the money that you should have been investing for your future. It's tied up in your car payment. And many of us have two.

Dave Ramsey

And the car industry, the cars that they're building today are just fabulous. They're engineering works of art. I mean, most of the cars, there's a Few of them, piece of crap. But the vast majority of cars today are phenomenal. And boats, for that matter, phenomenal vehicles. And compared to, you know, whatever back in the day, okay. They don't make them like they used to, thank God. They're a lot better now, you know? But the car industry has also done a excellent job of making people associate their personal worth with what they drive, instead of looking at maybe your net worth.

Jade Washall

Yeah, absolutely.

Dave Ramsey

But I am what I drive. Have you seen those lengths of jokes about if you drive this, you're this?

Jade Washall

Yes, I have.

Dave Ramsey

And some of them are funny, and some of them you can't repeat. And so. But, yeah, they're funny as crud. And so.

Jade Washall

But it's. I mean, if you really look at it further, it's in direct opposition to what people say their intentions are. Yeah. Because when you talk to most people, I say, well, what. What do you want for your life? What do you want for your family? Well, I want. For my kids. I don't want my kids to live the life I lived. I want to be able to send my kids to college. I want to be able to retire. I want to be able to play golf. Right. You say all these things about what you want, but you're not showing it with your dollars if you're carrying around

Dave Ramsey

things and your behaviors. You're exactly right. You're exactly right. So, Jake, you got us off on a tangent. Yes, we're preaching to everybody else, not just you now. But, no, you don't get to buy the car if you're going to do what we say. Not that one, anyway. So, you know, that's the angle. And, you know, talking about that. That's a funny thing. When we started talking about this years ago, I was doing a seminar with a guy in the financial world, and he said that their company had done surveys and asked people, you know, do you think it's important to save for your children's college? 97% said yes.

Sponsor Representative

Yes.

Dave Ramsey

How many of you are saving for your children's college? 3%.

Jade Washall

Really? Wow.

Dave Ramsey

97% aren't doing what they say is important. Yeah, it's very interesting. Very interesting number. I don't know if it's that today, but that was a long time ago.

Jade Washall

They say they're not doing it because. Because they can't, and they leave it there. And that's not the reason exactly. Choosing not to.

Dave Ramsey

Declan is with us in Atlanta. Hi, Declan. What's up?

Caller

Hey, how's it going? My question is, I was a third employee at My company, I own about 1.5% of it. I was offered to buy back my shares at a $50 million valuation, which in my opinion, is low for the company, which is fine just because we're trying to get clean up the cash fleet a little bit.

Dave Ramsey

I misunderstood you. Did you say you own 1.5? The company is worth 50 million?

Caller

Yes.

Dave Ramsey

Your one and a half is worth 50 million?

Caller

No, no, the company's worth 50 million.

Dave Ramsey

Oh, okay, so it's capitalized at 50 million. Can. Can you sell your one and a half for 750,000?

Caller

I could in theory.

Dave Ramsey

Well, no, it's not a theory. This question.

Caller

Yes, I could.

Dave Ramsey

Okay. All right. And so. All right, now your questions. What?

Caller

I mean, I think the company is worth about 250 million, so it's quite low. So that's why I thought you said

Dave Ramsey

it was worth 50 million.

Caller

It's the share. The shares are being offered to be purchased back at 50 million by the company at a $50 million valuation.

Dave Ramsey

Huh. Okay. All right. You're how old?

Caller

29.

Dave Ramsey

And what do you make for what do you make a year?

Caller

155.

Dave Ramsey

Okay, cool. All right. And your question one more time. You think it's worth a lot more than the valuation that they're offering to buy back at?

Caller

Yes. And so your question is what my question is. So I bought, or I exercised my options to purchase my shares this year, which cost me about 90% of my savings between the actual purchase of the shares and the AMT tax. So on the surface, I would never have sold the shares at the $50 million valuation because I think the company's worth about five times as much. But I'm wondering if you think it's a bad idea to distill my savings by so much.

Dave Ramsey

You already did it.

Caller

Well, I can still sell the shares that I purchased at the $59 valuation.

Dave Ramsey

And you bought them for what?

Caller

I mean, it varies in range from, like $15 per share to up to.

Dave Ramsey

I mean, you said you cleaned out your savings. What was the number you put to buy the whole thing? Thing?

Caller

Oh, well, I haven't paid all because the AMT tax I don't have to pay until I actually pay taxes in 2027 for the 2026.

Honey, how.

Dave Ramsey

How much? What's the check you wrote to buy the shares?

Caller

I paid 17,000, but I'm expecting to pay another 80,000 in AMT tax.

Dave Ramsey

Okay. All right, so you got 100,000 thousand dollars, including tax invested, and it's worth 750,000

Caller

yes.

Dave Ramsey

Okay, so let me ask you this. If you had $750,000 in the middle of the table in cash, sitting in your kitchen table, would you go buy these shares? You would because you think they're worth 5x that correct? Yeah, I wouldn't. It's too big a gamble for me. Scares crap out of me. It's a startup company, brand new, and it's not even publicly traded, I don't think, is it? No, it's just private stock. Yeah. And so their valuation is up to them on how they run their accounting. Yeah. Which is why it's all over the place.

Caller

And when they choose to, are they

Dave Ramsey

planning to take it to an IPO at some point?

Caller

I think it's more likely that we sell, which is another reason I chose to buy the shares when I did, because of the QSBS laws and the tax protections that are provided upon a QSBS liquidation.

Dave Ramsey

Okay, so let me tell you, this is a. You're playing the roulette wheel in Vegas and you've got it distilled down to where you don't think there's risk here, but basically you put $100,000 on the table and so far they stacked chips in front of you that we think we can get 750 for. And you're going to push the 750 back on to another bet, hoping to get 5x that or 10x that. And sometimes you don't hit red, sometimes you hit black and you get zippo. So you're sliding all your chips in the middle of the table. James Bond. This is a high risk play.

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Dave Ramsey

Welcome back to the Ramsey show in the fair winds credit union studio. Jade Washall Ramsey personality number one best selling author is my co host Michelle's in Pensacola. Hi Michelle. What's up?

Caller

Hi. So we're trying to figure out how we can get out of this constant spiral of going into the red every month. My husband has been teaching for 10 years and he only makes 50,000. And so he has a second job working at a grocery store that they can only schedule him part time so at Most he makes $80 a week. And then he's also trying to do lawn care on the side, trying to see if he can't find somebody to sell woodworking stuff to. We've both been doordashing, overeating, sparking, all the side gigs that we can and it feels like we're just spinning our wheels and we have no clue where to go to get income up. He's applied online and I've been listening to you for a few days. I know that you have to know somebody. And so that's been hard for him to find something else with a teaching degree. He's tried going into the military and one branch said no, you know, your GPA isn't high enough actually for that route. And so I don't know if I've heard about where you can make digital marketing stuff and sell it on Amazon and it's passive income but I don't know how legit that is and it's not.

Dave Ramsey

So how much debt are you guys carrying?

Caller

So I have student loans from years

ago

that are actually in deferment right now.

Dave Ramsey

So that's not, that's not causing.

Jade Washall

Okay, what was your degree in?

Caller

So I actually wasn't able to finish. I was dumb. My first year of college they told my high school said go to a private school, it's great. And then I made stupid choices.

Jade Washall

Well, what'd you study? What'd you study? What were you interested in?

Caller

At first it was chemistry, then I changed to teaching. And right now we've got three kids, seven and under and so to finish I'm one semester away. But to finish I would have to work a full time teaching, you know, student teaching job while paying for the college classes and have to pay for child care while I'm doing that. And so I can't finish until my kids are old enough to go into

school or we can Rank them up.

Dave Ramsey

So wait a minute. What. How much debt. How much is on the student loans

Caller

that you're not paying on about 60,000.

Okay.

Dave Ramsey

And what. What debts do you have that you're paying on car payment?

Caller

The current.

Yeah, we have a truck that he uses for his landscaping.

Dave Ramsey

And I don't care. What's it got?

Caller

A family car.

Dave Ramsey

How much do you owe on the truck?

Caller

We looked at the other day. We owe 24 and we could sell for 21.

Dave Ramsey

Good. And what? Sell it. And what's the next one?

Caller

It's a van and it's about the same. We can get it. We can get 19 on it. Out of it, but we owe 24 on it, too. I just don't know what we would do because we can't get a loan or anything to get another car, and we wouldn't clear anything to have any vehicles after that.

Jade Washall

What other debt?

Caller

That's it.

Dave Ramsey

No credit cards?

Caller

No. We have a secured one, but it stays at zero. We only got it because of renting a car a few years ago. And so it just.

Jade Washall

So you're just. You're just making the payments on the two vehicles, and so it's just a struggle keeping groceries then in the lights on?

Caller

Yes.

Jade Washall

Okay.

Sponsor Representative

What.

Jade Washall

How much are you. How much are you bringing in as income every month combined, the two of you?

Caller

So I bring home probably at most on good months, about a thousand to $2,000 a month. But that's only during the summer while he's able to stay home with the kids or he does something.

Jade Washall

And what's he bring home?

Caller

So he brings home the 50,000 from teaching, 80 a week from his grocery

job, and he's working four hours a

Dave Ramsey

week at the grocery store.

Caller

On he. He makes 16 an hour. And they only schedule him from like four hours. Three, 30 to $80. All those. Schedule him schedule? Why?

Dave Ramsey

It's not even worth doing. It's a joke.

Jade Washall

3500 from the teaching and I don't know, another less than a thousand from the grocery store.

Dave Ramsey

From everything?

Caller

Yeah, yeah, yeah. He brings home after insurance and everything, we actually get home $3,000 from teaching.

Jade Washall

Okay. Plus your 4,000. Do you guys.

Dave Ramsey

How much is your house?

Caller

The rent is $2,000.

Jade Washall

Okay. Do you have a budget?

Caller

I just signed up the other day with a free trial with every dollar. And so we've been trying to figure that out.

Jade Washall

Good. So we'll start there. And what you're going to find is what you've just discovered, which is Obviously your rent's 50%. The rent's not the problem so much as the income is the problem. But in the meantime, on that budget, the way you need to line it up is by your four walls and keep those things first and foremost right now, obviously you got to pay rent, right? You got it. You got to do that. You got to make sure lights and water and utilities are on. You've got to make sure you've got groceries and you've got to make sure you've got transportation. Now, aside from that, all of my focus would be geared towards we've got to work, work, work, work, work, and find 3, 4, $5,000, not four hours

Dave Ramsey

a week though, and call that a job. Now, okay, the grocery thing, you know, we've spent more time talking about it than he does working. I mean, he doesn't even go over there hardly. Four hours. It's not even worth doing. Yeah, I mean, that's a joke.

Caller

He's actually talked about stopping that.

Dave Ramsey

What he needs to do is. What he needs to do is start tutoring. What does he teach?

Caller

And so he. So he teaches PE and that's actually something he's in the middle of trying to do is start like a homeschool co op.

Dave Ramsey

I don't want to start a homeschool co op. I want to teach a kid to play basketball. 50 to $40 an hour.

Jade Washall

Give him. Why can't he be a skills coach?

Dave Ramsey

Yeah.

Jade Washall

Offer everybody's in private sports. Why can't he do private teaching?

Dave Ramsey

A buddy of mine that played, he played D1 basketball. And he makes $50 an hour teaching 13 year olds how to play basketball.

Caller

Yeah, yeah. Like that's the homeschool thing he's trying to do.

Jade Washall

Like that. Can he work with the school and do a camp and put on a camp? There's so many. The point is there's so many ideas. I'm worried that he's lost his spark.

Dave Ramsey

There's a whole bunch of things he's doing. Not at all. And you're listing them an hour a week at landscaping, four hours a week at the grocery. None of this is anything. That's why you don't have any money. So we need something that we're working 40 hours a week at in addition to those teachers.

Jade Washall

Yeah, because the.

Dave Ramsey

And then, by the way, if you've had. If you've got all but one semester in chemistry and teaching, you can tutor chemistry. So go over at the high school and tell people that you. That you tutor kids on chemistry and they'll come to your house in the afternoons. And you charge $40 an hour.

Caller

Okay, yeah, I didn't think about that.

Dave Ramsey

I'm a chemistry major. It's a whole lot better than freaking DoorDash or $16 an hour bagging groceries. Yeah, yeah. And these car cars have to go. They're insanity. You guys have bought cars like you make six times as much income as you make. I mean, what the crud? A $25,000 truck?

Sponsor Representative

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Dave Ramsey

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Jade Washall

All right, today's question comes from Grant in Montana. He says you teach your listeners not to panic during a stock market downturn and to just hold on for the ride. Is there ever a scenario where one would consider changing their investment portfolio? For instance, if someone is getting close to retirement? That's an interesting question, Dave. I'll let you take that. What do you think? I mean, I could tell you what I. I would tend to.

Dave Ramsey

Well, the people say when you get close to retirement to move it that that is a theory in financial planning called asset allocation. This says, the theory says when you're young, take more risk and as you get old, move the assets away from risk because you need to be able to count on them target date funds. I disagree with the theory and I certainly disagree with the implementation of the theory and let me walk you through why. Okay? So the typical financial planner that follows that theory will tell you, okay, I'm 65. At 65, you should move your money towards bonds and growth and income mutual funds, which is largely bonds and dividend paying stock companies and get away from aggressive growth mutual funds. Get away from growth stock mutual funds. Get away from something that's an S and P and move even into high yield savings. Okay? So when you do that, you lower your returns from 10 to 12% down to 6% to or even 5 to 8% would be your portfolio change, but you take less risk. The reason that is dumb is that when you retire, if you have saved substantial money like we teach, and you get there and you've got $2 million, you've got a million dollars which people call here all the time that have or have the potential to, we talk to them all the time, we show people how to do this, that. So if you have $2 million when you retire, you don't need the whole $2 million right then. So if it goes down a little bit the next year after you retire, it's not the big deal because all you're going to be doing is living off of a portion of the returns. You're not even going to be taking off all the returns. So if you've got $2 million and it's invested, it's making 10%, that's $200,000 a year. You probably don't need $200,000 a year. You're probably taking off 150. So you leave 50 in there, it's growing and you never are touching the nest egg. So the nest egg can go up and down without really affecting your life. You don't need the safety. When you would need safety is if you have no money. Now if you got $100,000, maybe, but if you've got a million, it changes the whole scenario or 500 to a million or 2 million or 5 million or whatever it is, okay? And so I'm, you know, I've got substantial assets, millions and millions. So I've moved zero to safety. And here's the other reason that's dumb, okay? I'm 65, I'm in good health. All right, I'm not overweight, I don't smoke, all that kind of stuff. Right. So all the statistics say I once you make it to 65, average death age of a male now is 74. Females is 76, but that includes infant mortality. Okay, so when you make it to 65, the average death age is more like 90.

Jade Washall

You got a long ways to go is what you're saying.

Dave Ramsey

Yeah, So I got 25 freaking years for that to make 6% or make 12%, and I'm not doing that. So that's just dumb. So that's why I think the asset allocation theory is just bogus. Because it assumes everybody's gonna need all the money right now, which you don't, and that you're gonna die right now, which you're not.

Jade Washall

I think you're right. I think this question is probably someone who doesn' lot there and when it downturns, it probably makes them feel the significance of whatever they're pulling off of it.

Dave Ramsey

Now, what I would do to his question, and it's a good question, is there ever a scenario, consider changing the investment portfolio? Yes, I would change my investment portfolio when I have a mutual fund that is not keeping up with other mutual funds of its category.

Jade Washall

Yep, I agree with that.

Dave Ramsey

And so if I've got a, you know, the s and P500 is the baseline of the stock market market. And so if my growth stock mutual fund is not outperforming that regularly on average over a long period of time, not in one day, not in one month, not even in one year, but if I look at mine about once a year and I go, okay, is this thing trendlining? It should be competing with the S and P and beating it above it?

Jade Washall

Yeah.

Dave Ramsey

If it's coming in less than the S and P, I should just be in the S and P. Be dumber. Okay. Be easier. I could just dumb it down. And I've got aggressive growth stock mutual funds. I don't compare those to the S and P. I compare those to the other indexes that are measuring that market. So I want to know other aggressive growth stock, is mine underperforming them? Then I would change my portfolio.

Jade Washall

But you're not changing your strategy, you're just changing your funds at that point.

Dave Ramsey

I'd change the funds, I would even change the strategy, but only over a long time. Viewpoint. When you ask this kind of question, when you change your investment portfolio, it's often people that are looking at it every day. And that'll drive you nuts.

Jade Washall

Yeah.

Dave Ramsey

So you need to think on this. Think in blocks of time of a year and five years and 10 years. And when you think of blocks of time like that, then is there something indicating you need to change your mix? Yeah, that'd be okay. That'd be fine. Or if something has happened and your view of the world is different. Okay, that's fine. So I'll give you an example. If I died and Sharon looked at what we were doing and said, okay, I understood it when Dave and I were doing it, but I don't like it. I don't like that I'm going to go all safe just because I want to sleep better. Well, she could do that. That would be okay. And so if I talk to someone that's 78 on the air here and I'm talking to them, they just. Any amount of variance is going to cause them to stay awake at night. I'll just put them in high yield savings. That's fine. Just, I'd rather you sleep at night than, you know, do this. But there's all kinds of evidence that says you'll be fine doing it the other way. But if your emotions can't handle it, then that's your risk tolerance. Then we wouldn't do that. We wouldn't tell you to do that.

Caller

But

Dave Ramsey

no, the funny thing about the financial world, and it seems like today's been the day on this, it really has last two days. But is that the stuff we're taught in that world? And George is studying the CFP materials right now, certified financial planning materials. And he and I are having this great discussions over some of the crap they're shoveling out. And he's learning some good stuff academically. But it's also, is that they present this stuff like it came from the Bible or something, like it's absolute truth because it came from this group of nerds. And this asset allocation model that you have to move to safety as you get towards 65 years old is taught with such fervor that it says if you don't believe it, you don't believe in the law of gravity or something. And so me being on the air for 30 years saying, I don't believe it, I think it's a bad plan. All those guys, they go bananas on Dave Ramsey. Dave Ramsey doesn't know, oh, he's going to cause all these people to lose everything they own. They're all going to be poor because of Dave Ramsey. No, they're not. They're gonna have a lot more money. So.

Jade Washall

But do you have the same philosophy for things like 529s. As the child gets closer to same one, keep the same.

Dave Ramsey

Yeah, because here's the thing. You're not taking the risk. The day they go to college, some of that money's not gonna be touched for four years.

Jade Washall

That's right. It still has time.

Dave Ramsey

And so if the market. If Trump bombs Iran and the market

Jade Washall

drops, it has time to recover.

Dave Ramsey

Don't panic and take it all out and lock your losses in. You know, in 2008, when the market went in half, people talked to Warren Buffett and said, Mr. Buffett, you lost a trillion dollars today or you lost a billion dollars today. He goes, I didn't lose anything. I sold it. You lock your losses in when you sell it. As long as you're holding it, you're riding the roller coaster. And no one gets hurt on a roller coaster except those that jump off in the middle of the ride. And so, same thing's true there. Now, what you could do if you're coming into college and let's say you got $200,000, I might pull the first year out and put it in high yield savings. Put 50 over there and then that other 150, and then maybe the next year, you know, I start talking about that. But the chances of that statistically being down over four years, very slow. Almost zero.

Caller

Yeah, Sam,

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Dave Ramsey

vary, and no specific outcome is guaranteed. Well, we wish we could get to every call and question here on the show. If you've got a money question and you want an answer for your situation, head over and use Ask Ramsey. You go to ramseysolutions.com and Ask Ramsey is our free AI tool that's built and trained only on proven Ramsey principles and answers. So we didn't put anything else in the data set. So you're not going to get anything except a Ramsey answer. If you want an answer from the Internet, go the Internet. But if you want an answer from Ramsey, go Ask Ramsey. Your question today is easy@ramseysolutions.com Ask Ramsey. It's a great AI tool. We're trying to train it to be smart alec like me. It hadn't quite got there yet, but we'll get there. Ask your question today ramseysolutions.com or click the link in the description. If you're on podcast or YouTube. John is in San Francisco. Hey, John, what's up in your world?

Caller

Hey, thanks for taking my call.

Dave Ramsey

Sure. How can we help?

Caller

So I'm dealing with three pending debt collection lawsuits right now. And I have another account that's still in collections that's probably going to turn into a fourth lawsuit if I don't get it resolved soon. I'm trying to negotiate settlements and it's been pretty overwhelming. Does it make sense to hire an attorney to fight them or even look into like chapter seven as a last resort? I don't think I'm there yet, but wanted to know all my options.

Jade Washall

What's the amount?

Dave Ramsey

How much do you owe these guys?

Caller

So the four in total is 20, $21,000. 21.6. The two I'm trying to negotiate, you know, the, the lowest will come down to 6,000. You know, I try to offer them 3,000, but you know, they won't budge. I do have around $8,000 in savings just to try to deal with this. But.

Dave Ramsey

Okay, so you've got, you've got two in court, is that right?

Caller

So three, three in court.

Dave Ramsey

Okay. And the three in quarter, how much? Give me the amounts on those each.

Caller

Okay. So yeah, so one 3.1 or $3,100.

Dave Ramsey

Okay. Okay.

Caller

The other is $4,300. Everyone is $5,500.

Dave Ramsey

Okay. And these are credit cards or what?

Caller

They were personal loans that I took out in my early 20s.

Jade Washall

So you can't take the 8,000 and clear the top two?

Dave Ramsey

Yeah, you could. Have they offered you settlements on any of these?

Caller

They offered 6,000 to take out of the first two that I mentioned.

Jade Washall

Love that.

Dave Ramsey

Okay, that's 7,400 discounted to 6,000. Okay, so you could do that. I mean, you'd be down to two, and then you got 5,500. Now, personal loans. Are you talking about with a bank or a ripoff finance company or what?

Caller

Yeah, it was just like through to the bank or through. Just to.

Dave Ramsey

What do you. What do you make?

Caller

95 a year?

Dave Ramsey

Why are you behind on these little bitty loans if you make 95 a year?

Caller

So I only started making 95 for, I think about a year before that I was making maybe 65.

Dave Ramsey

Yeah, but if you make 95, you could have cleared 21 in one year. Why haven't you?

Caller

Well, I also have some. Some more debt on top of that.

Dave Ramsey

How much?

Caller

$12,000 credit, so about $7,000 in credit cards and the rest in the student loans.

Jade Washall

Okay, what about.

Dave Ramsey

How much do you owe on your car.

Caller

No car payments.

Dave Ramsey

Are you married?

Caller

Yes. And. Well, not married. I have a girlfriend and, and one kid.

Dave Ramsey

Okay, but how old are you?

Caller

31. Okay.

Jade Washall

Okay.

Caller

And you're.

Jade Washall

Is this family? Is this. I'm putting family in air quotes. Is everybody together? Like you all live together?

Caller

Yes.

Jade Washall

And you're all contributing? Okay.

Sponsor Representative

Yeah.

Caller

I mean, I. Yeah, I do want to get married. Just, you know, it's. I just want to deal with the debts first before. I don't want her to be liable for any of this.

Dave Ramsey

She's not going to be liable for it.

Jade Washall

Yeah, that's neither here nor there. I think part of cleaning up the situation. All of this is a mess, not just the financial side side. So part of cleaning up this situation is going to involve the relational side, too. And I think you'll be shocked at how much peace you get from putting a nice little bow on your family situation and making it legal. And then now you can actually have real support as you go and start cleaning up this mess. And to Dave's point, you make 95, 000 a year. I would.

Dave Ramsey

You are not bankrupt. That's one of your answers. Okay.

Jade Washall

Yeah.

Dave Ramsey

You're not even chance.

Jade Washall

Take the money that you have. Clear off the first two. Now you got the 50 500$1. And you never said what the fourth one was.

Dave Ramsey

Well, it's the first.

Caller

The fourth one was 9292.

Jade Washall

Okay.

Dave Ramsey

Okay.

Jade Washall

And that one's not even in court yet, so you kind of have to focus on what you need to focus on. The first two that are in court, you can clear those and then you're not going to be far away from getting the money that you need to clear the third one.

Dave Ramsey

You make enough money to just pay these things.

Caller

Yeah.

Dave Ramsey

Especially if you get settlement offers. So pile up. You know, you got 8,000. Now we're going to spend six of it and get rid of these two. Get it in writing before you give them any money. Don't give them money unless you get the settlement in writing. Did the offer, the $6,000 offer, come in writing on email?

Caller

Yeah, I can ask for it. The only thing that concerned me was that they wanted like, my bank account number.

Dave Ramsey

No. I'll wire you the money or I'll give you a prepaid debit card number. Go get a prepaid debit card for 6,000. Do not give them access to your checking under any circumstances. They'll clean you out. They lie. Okay. And so. But you know, you can clear every bit of this and there's nothing to panic about.

Jade Washall

I think.

Dave Ramsey

But here's the deal. You're going to have to get proactive and get after this.

Jade Washall

Yeah. You're in a state of.

Dave Ramsey

You've been screwing around for a year.

Jade Washall

Your. Your life is just in chaos and you need to. You need to clean it up. Like I said, Mary, go ahead and marry the girl. You need a budget and see where this $9,500 is going or $95,000 is going. Every. Every year. You need to put some formation to your life. And I think that that's going to help you out a lot. And I think that this is just the kick in the pants you need to.

Dave Ramsey

No more eating out, no more partying, no more happy hour, no more nothing. All you're going to do is work and pay bills and get your life back. Your life is screwed up upside down because you're not addressing these things and they're coming after your throat. And so, you know, you gotta address them. The good news is we can get rid of two of the four that are pending going towards this. Cut up the credit cards, get on a budget. You can clean every bit of your debt, all of it, everything you've told us about in a year. Everything. And what we'll do is we'll set you up on the EveryDollar account. And yeah, so our suggestion is clear. Those two get married this weekend. Doesn't cost any money. She's not liable just because you got married. And then the two of you sit down as a husband and wife and start building a life together, which. Which involves cleaning this mess up. But y' all are just running around acting like you're freaking 16 years old and you're getting your head taken off doing it. So this is no longer a game. We're down into adult land now, and that's what we've got to play. You got to play serious. And no, you're not bankrupt. And no, you know there's no. You don't need an attorney. Because if you go to court with or without an attorney, and the question the lawyer, the judge asks is, is this a valid debt? Yes. Have you paid it? No. Guilty. That simple. You lose the case because it's not a question of your character. It's not a question of what happened. It's not a question of you didn't have a job. It's not a question of your mama. It's not a question of nothing. Just simple. Did you pay the debt that you owe? No. Boom. Judgment. Okay? That simple. The lawyer can't keep that from happening. The only thing a lawyer could do, maybe, maybe could be negotiating better than you've been negotiating because your offer here of $6,000 is not a great offer. But given that you've got eight I'd get rid of, I'd do it in a heartbeat.

Jade Washall

Plus, it's been around forever. So it's time to just. Case closed.

Dave Ramsey

So these things, when we ignore them and sweep them under the rug, we not only get a lumpy rug, they have a high rate of resurrection. And now you have zombies walking all through your. They come up out of the grave and you have zombies walking through your house. And because we didn't deal with them. And so what you've got to do is take the zombies out fast. Hardcore.

Caller

Sam.

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Dave Ramsey

Patrick's in Madison, Wisconsin. Hi, Patrick, how are you?

Caller

Hey, how's it going, Dave?

Dave Ramsey

Better than I deserve. What's up?

Caller

So I'm 23 years old old. I recently graduated college, been working for a little bit here, and I anticipate my salary over the next year being about 85,000.

Dave Ramsey

Good. What you get your degree in?

Caller

I'm working in software. That wasn't exact. I studied business, but life brought me right now.

Dave Ramsey

Yeah, well done. Good for you. 23 and 85k is no chump change. Good job.

Jade Washall

Good job.

Caller

Thank you. And so I have, I guess my question here. I have about $25,000 in student loan debt and that's about. I think it's 4.25% right now. Whereas I could. Initially, I was trying to pay that off as aggressively as possible, but now I'm kind of doing some of the math here and my Roth 401K, I could hit the 24 or 500 limit there. And that seems to be a lot more money in the long time. So I did the math. I calculated the difference between what I would otherwise. I'd probably otherwise do about 10k towards that per year. So it's really looking at $15,000 per year compound up until I retire. And it almost seems more. The math checks out to where. Maxing out the.

Dave Ramsey

You're leaving things out of your math formula, though. The things you left out of your math formula are probability of completion and also risk. And neither one of those are mathematically factored in. And you've added risk by leaving the student loan in place. And here's what we found. We did the largest research project on millionaires in North America ever done. We studied 10,167 of them. The number of them that said, Dave, we became a millionaire by not paying off my student loan and instead investing was precisely zero. No millionaires did your plan.

Sponsor Representative

None.

Dave Ramsey

They all said, I'm going to get completely clear of debt, have a Clean Life, be 23 years old making $85,000 and be investing aggressively. You should pay off that $24,000 in one year or less. If you're making 85,000 and you're 23 years old and then start your 401k and don't put a Dime in investments until you get that stupid student loan cleared up. This is not a freaking pet. It's not a leverage project. You left risk out of your equation.

Caller

I guess I'm just worried about, like,

Dave Ramsey

okay, you do what you want to do. I told you what to do. Now you go do what you want to do. Aaron is in Cincinnati. Hey, Aaron. Welcome to the Ramsey Show.

Caller

Hey, thanks for having me. Yeah. So my question is, we're basically baby step five. I would say somewhat. My. My wife's family, they have 30 acres. They gifted the kids all an acre. And we sold our house last December and we moved in with them. And her uncle is going to be the one building the house at a much better price than what we could ever buy. And so my question is. So we have the numbers of basically $130,000 down for the house. And I'm wondering if I should, depending on how the build goes, to cash in my wife's 401k of 37,000 in case things go over at the end. I have 127,000 in my 401k and she's a stay at home mom with our two kids.

Dave Ramsey

No, you should not cash in a 401k to do a build. And no, you should not be $37,000 over on your build. You need to do a budget in detail and then pick the appliances and the tile and the flooring and the brick and the roof that fits the budget.

Caller

Right.

Dave Ramsey

And if your uncle does know what he's doing, the budget should be accurate.

Caller

Right? I guess the concern was her sister and brother both build houses by the same guy. And I guess the. What gets thrown around is always it's gonna cost what's gonna cost. And they try to stay within budget,

Dave Ramsey

but with, oh, so he doesn't know what he's doing.

Caller

I guess one could assume that, right? Yeah.

Dave Ramsey

I mean, because I just built a house and it was millions of dollars and it was within 1% of budget because the builder put the budget together. We went over the budget before we broke ground, and I told the decorator, my wife and the builder, this is the freaking budget. We're not spending more than this, so make it work. And guess what? We did.

Caller

Okay. All right.

Dave Ramsey

Don't plan to fail.

Caller

No, I don't want to plan to fail.

Dave Ramsey

Well, I mean, you're hiring a guy that fails the last two times he

Jade Washall

failed, and you're already thinking about how

Dave Ramsey

to solve 401k, how am I going to cover the failure? No, we're not going to do that. That's not an okay way of doing this. This is what happens when your uncle builds your house. You know, they draw the plan on a paper bag on the hood of a pickup.

Jade Washall

I sure hope not.

Dave Ramsey

God, no, no, no, no, no, no, no, no, no, no. Don't do that. No. Guys, when you're building a home, the reason people screw up building homes is you need a detailed blueprint that produces a detailed budget that produces a detailed schedule line by line by line. So before you break ground in June, you should know in March, we're putting in. The cabinets are going in in February. We know exactly when they're happening to the day. February freaking 12th. And the cabinets are going to cost this because we bid them out. The plumbing fixtures are going to cost this because we bid them out. There's this many bathrooms, this many toilets, and this many sinks. And we're not buying the engraved sink. We don't have a budget for it. Or we are buying the engraved sink because we have a budget for.

Caller

For it.

Dave Ramsey

Whatever. I've done both. But, yeah, the gold inlay crap or whatever that goes in the formal powder bath, shoot me. But I did buy it.

Jade Washall

I was going to say, I know you got it, though.

Dave Ramsey

Yeah, you know I got it. You know, it's swi. Sharon wants it. But we didn't make it up after we started.

Jade Washall

You didn't go over budget.

Dave Ramsey

That was in the deal when we started. The powder bath gets extra upgrade.

Caller

Right.

Jade Washall

But when you. When you set your budget, surely a portion of it is that contingency, that 1% or whatever, that it'll go over like.

Dave Ramsey

Well, I mean, you can have in your mind a contingency. Yeah, but whatever. If you say you just have the money to cover it, but don't plan on. Well, we just don't know. We're making this crap up as we go. Yeah, you can't do it, you know. No, because, I mean, I built a house one time, and a country music star built a house across the street, and it took them two years longer and they spent literally twice as much money.

Jade Washall

Unbelievable.

Dave Ramsey

To build the exact same square footage. And both of them massive houses. Both are massive because the country music star and her decorator used the I'm gonna build by change order method. I'm gonna make it up as I go.

Jade Washall

I'm gonna look at it and then decide I don't want it and change it.

Dave Ramsey

Yeah. And they would put stuff in, tear stuff out, Put stuff in, tear stuff out, reorder stuff. The builder was Ready to shoot them all both. It was like a career house. He couldn't get away from it. It was like the worst nightmare of next door to the best possible scenario. So you don't have to do that. And if your relative is incompetent, don't use your relative.

Jade Washall

Yeah, because he knew that going in.

Dave Ramsey

Yeah. And you know, well, he's giving us a good deal. He's not giving you a good deal. If he's going to be $37,000 over. That's not a good deal. That's not. That's not. That's. You have to have a predictable environment in these things and control the controllables. It's project management. Management. And when you do that, then you're going to be fine. And be careful about building on family land where we're all in a compound. What happens when you want to sell it?

Jade Washall

Yeah, that's a good point.

Dave Ramsey

Who's going to be pissed? All of them. Because you broke up the common. Yeah, but daddy gave me a free acre. Yeah, but it comes with. You're stuck there forever. And the number of times you want to live there forever is pretty close to zero. So be careful with that part too. Nope. We don't cash out 401ks to go cover overages that shouldn't have occurred because we should have had a good budget. Moral of the story. And that's how you do it. So my builder and I were laughing about this. He's become a good friend. The last three guys that built houses for me are all good friends. Friends because we simply developed a plan and executed the plan.

Jade Washall

Give them a headache.

Dave Ramsey

And I'm the easiest guy. I wrote checks exactly when I was supposed to because I had the money and nobody. There's no bank involved, there's no appraiser involved.

Jade Washall

That's great for that.

Dave Ramsey

There's no bull crap involved. And so we just write a check, build the house and write a check, you know, take a monthly draw. They get their money, they stay on track. They don't have any issue with me as long as they're on track. And if something's wrong, we it call over here, we look at it, we fix it and we keep going. We stay on track. So he said you need to write a book on how to build a house. But it really wouldn't be that long. I just covered it in that segment. Welcome back to the Ramsey Show. In the Fair Winds Credit Union studio, Jade Washall, Ramsey personality number one best selling author is my co host. Today. Katrina is with Us in Minneapolis. Hi, Katrina. How are you?

Caller

Hi. Great. Thanks for taking my call. So my husband and I are new to your show. I recently just finished your book, and we have an entirely different view of our situation than we did did a little while ago.

Dave Ramsey

Thank you.

Caller

I'm gonna cringe really bad when I read these, by the way, so I'm sorry in advance. Okay. All right. So we have $620,000 in debt outside of our mortgage.

Dave Ramsey

Whoa.

Caller

Yep.

My house is worth $800,000. My husband makes $880,000. I make about 70k. Bulk of this is medical school debt. I guess what I'm interested to hear your opinion on is just how fast or what level of gazelle, like, intensity that you say, do we need to go over or do we need to shovel ourselves out of this? At. I'm wondering, after finishing your book, you know, I. I'm like, we need to eat beans and rice. We need to sell our house. We need to sell our vehicle. And I've just kind of got this overwhelming weight.

Dave Ramsey

I don't think you need to sell your house. But I am gonna recommend you get really, really serious about this. Now, let me make sure I got my numbers right here. Okay. Cause these are wild numbers. He makes 880, and you make 70, correct?

Caller

Yes.

Dave Ramsey

For a total of $950,000 a year income.

Caller

Yes.

Dave Ramsey

That is so cool. Congratulations.

Caller

Really hard. He's a hospitalist.

Jade Washall

Okay.

Dave Ramsey

He's a.

Caller

He's working. He's a hospitalist. Yeah.

Dave Ramsey

Wow.

Jade Washall

Way to go.

Dave Ramsey

Okay. And you have $610,000 in non mortgage debt. That's all your debt except your house.

Caller

Yep. And.

Dave Ramsey

Okay, let me just ask a simple question then. So 610from950 still leaves 300,000.

Caller

Okay.

Dave Ramsey

Why could you not just pay this off in one year and have a. Still have a pretty decent life?

Caller

Yeah. I think we can do it at a pretty intense rate. Our expenses. We have four kids. We. His student loans are astronomical.

Dave Ramsey

The student loans are what we're talking about.

Caller

Yeah.

Dave Ramsey

950 minus 610 is 340.

Jade Washall

Yeah. What are the expenses that you got

Dave Ramsey

taxes out of that.

Jade Washall

That would stop you from doing what Dave is saying. I mean, I'm thinking about your mortgage.

Sponsor Representative

That's.

Dave Ramsey

How much is your mortgage?

Caller

I think we pay easily over 7,500amonth.

Jade Washall

Okay.

Caller

We have a suburban payment.

Dave Ramsey

No, the suburban payment is part of

Jade Washall

the 16 that'll be gone.

Caller

Yeah, yeah, yeah. So, you know, as of right now, my husband kind of told me he thinks we could get the car and some of these additional things taken care of immediately.

Jade Washall

Yeah. What's the.

Dave Ramsey

No, no, no, no, no, no, no, no, no, no, no, no. This is the guy that borrowed 610,000. Okay. His vote of doing this gradually is not a good vote. Okay? I want you to hear me. I want you guys to pay your house payment e live on 150 or $200,000 a year and put $60,000 a month on this debt. And you will be done in one year.

Jade Washall

Tell us about the list of smallest to largest. Tell us what's included in this. 620. Obviously you said medical. Obviously you said student loan. But give us some real numbers and we're going to show you just how quickly this is going to go.

Caller

Okay, so we have $70,000 in car, $30,000. Again, you're gonna cringe. And a jet ski, $20,000 in an RV. So.

Okay.

Yeah.

Jade Washall

And then the other ones are medical.

Dave Ramsey

And then everything else is your student loans.

Caller

Yes.

Dave Ramsey

Okay, so if you're paying 60amonth, you would pay off the RV and the sea do and a portion of the car the first month and the next month you'd pay off the car and then we would be down to just $60,000 a month going on. Yeah.

Jade Washall

And you'd have all those payments back, by the way.

Caller

Yeah, yeah.

Jade Washall

Because what's the total of payments between the car, jet ski and rv?

Caller

Yeah, that's several thousand one hundred twenty, I think.

Dave Ramsey

No, no, no, no, no, no. That's the balance. That's not the payment. Yeah, yeah. So.

Caller

Oh, the payment.

Dave Ramsey

I go back, I go back to the simple math and I want to just stay there. Okay. Because you guys are. You guys, you guys have ridiculous numbers. So 9, 50 minus taxes, minus 610. And that means you have zero debt at the end of the year. And that also pays all the payments on all that debt because all of that's going towards the debt. Okay? So the only thing that has to come out of the balance is your house payment and food. And that's not two beans and rice. You still got 150.

Jade Washall

That's what I'm saying.

Dave Ramsey

Or so income to live on after I did all that.

Jade Washall

And beans. And by the way, let me just say this because I know there's somebody out there, you said cringing, but let me just remind you, beans and rice while living in a, you know, million dollar house and driving a new Suburban that doesn't feel too bad.

Dave Ramsey

And keeping the rv.

Jade Washall

You know what I'm Saying keeping the art. Right. So your life is not changing that much. You're just reallocating. You're redirecting the money. That's it.

Caller

Yeah.

Dave Ramsey

And think about at the end of that year, where you'll be standing $950,000 income and no debt at all, except a house.

Caller

Yeah. Wow.

Dave Ramsey

Wow.

Jade Washall

You're gonna. Your biggest battle here is the husband.

Dave Ramsey

Don't.

Caller

Yeah. You don't have to convince me right now.

Dave Ramsey

Yeah. Don't do this gradually. Do it in one year. Mathematically, with the numbers you gave me, there's no excuse for this taking longer than a year.

Caller

Okay.

Dave Ramsey

You're gonna have to. You probably have a ridiculous lifestyle. And, you know, it's probably okay once you get all this debt paid off because you make a million dollars a year. Geez. It's pretty incredible. So I'm thrilled with your income. But I will tell you what normally happens in these situations. Doctors, people in the medical field, they have spent their whole lives in school, and they finally get out of school, and they finally get some income, and then they just go bike rap like this everywhere.

Jade Washall

Yeah.

Dave Ramsey

And then they kick the can down the road and they keep their student loan around because they're comfortable.

Jade Washall

They're comfortable.

Dave Ramsey

You're comfortable in your life when you're making a million dollars a year. You can do a whole lot of stupid and get away with it. You can be stupid for a long time and get away with it.

Jade Washall

That's right. It's different.

Dave Ramsey

A million dollars a year covers a lot of sins. It really does, but it doesn't mean it's a smart thing to do. So I call it doc. Itis is what I call. Because docs come out of school with a unique thing. They've been holding their breath. You know, other people went to school for, you know, 12 years of undergrad or 12 years, and then they went to four years of undergrad, but add another five or six or seven or eight or 10 years for a doc, depending on their specialty. Right. And they've been holding their breath all that time. They've been delaying pleasure. They're ready to live. Delaying pleasure. And then along comes Dave and says, delay pleasure one more year.

Jade Washall

And they're like.

Dave Ramsey

Like, nuh.

Caller

No. Yeah.

Dave Ramsey

Nuh. That's docitis. Nuh. That's what it sounds like. If you hear nuh. That's docitis. That's it. It's. I don't want to. I've held my breath long enough. I've delayed pleasure long enough. I'm gonna reward Myself. And I'm gonna. I'll put my hands over my ears and act and go, la, la, la, la, la, and act like there's not $600,000 worth of debt. But he went and bought toy, toy, toy, toy, and. And didn't pay off the student loans he had. Doc, itis. It's straight up. Straight up case you can see. The symptoms are all right there, Doc. So I got your prognosis for you and I got your prescription for you. One year, no life. Clear up your mess, then go have an awesome life.

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Dave Ramsey

Isabella is in Houston. Hi, Isabella. How are you doing?

Caller

Well, Dave, how are you?

Dave Ramsey

Better than I deserve. What's up?

Caller

So my question is, what order I should tackle my debt? I have 170,000 in student loans. It's broken up into 12 smaller loans. There's 27,000 that's in a debt relief program, 4,000 on my engagement ring, and then 10,000 in a home water system. And so the issue is that the 27,000 in the debt relief program is not accruing interest. We came to an agreement with the creditors, and I have. There's, like, a final deadline. So the end of my payments would be June 7th of 2028. I paid $1200 a month on that.

Okay,

Dave Ramsey

well, then we're still going to work what we call the debt snowball, where you list all of your debts. Individual debts, not categories. Smallest to largest, pay minimum payments on everything but the little one. And attack the little one. Are any of the 12 student loans smaller than the engagement ring?

Caller

Yes.

Dave Ramsey

Okay, then that's your smallest debt.

Caller

Okay.

Dave Ramsey

And then your next smallest debt. And then the engagement ring. And when you get to the debt relief, I don't care what the plan is. Just pay it off.

Caller

Okay.

Dave Ramsey

Pay it off early.

Jade Washall

Is it just you?

Caller

No. So my Husband and I both combined. So we pulled together. Our annual income is between 230 to. To 270.

Dave Ramsey

Correct.

Caller

And so we are really just. We kind of woke up, saw where our finances were, and we were like, okay, we need to figure out how to get rid of this. So we're on the same page. We just really wanted to know, like, order of operation. I do have baby number two on the way right now. I'm due in December. And so we were trying to figure out what can we knock out. Now we do have. We were doing the every dollar, like trying to assign everything. And we do see that we have an excess of like around 4,500amonth. So what we were thinking about was applying all of that to the debt relief program because once we're done with that one, I could probably pay it off in maybe like five months. And that's $1,200 back that. I was thinking that we could reapply somewhere else.

Dave Ramsey

No, let's just pay off. Let's just pay off. Smallest to largest. Do you have any money in savings?

Caller

We have about 7,000 in savings.

Jade Washall

What's your deductible? Deductible?

Caller

Deductible for insurance? Yeah, for the delivery. It's like, like 2000.

Jade Washall

Okay.

Caller

Okay.

Dave Ramsey

I might feather that 7,000 nest a little bit until baby comes. Put three or four thousand more in there. And $4,000 a month. You haven't cut your budget yet. You're just getting started, right? No eating out, no vacation, you're broke. No, no $20,000 nurseries for new babies. You're broke, you're 100 and I mean, you're 200 and something thousand dollars in debt. But no, we don't. We have learned that people have a higher probability of finishing when they have a positive feedback loop. And we've been doing this for 30 years. And the positive feedback loop is pay off the smallest to largest. And the 27 is a single payment now that it is all combined in the debt consolidation thing. And so when you get to that, your water softener will be gone, several of your student loans will be gone, your other stuff will be gone. But you're going to get to it pretty quick.

Jade Washall

You are. And this is coming from somebody who's had the types of student loans that you have more. And let me tell you, it does feel good when you have a list of 17 or 22 debts and you go through smallest to largest, and because you did it that way, you're able to check off five or six of them. Off the list.

Caller

Yeah.

Dave Ramsey

You leave them on the refrigerator with big red lines drawn through them.

Jade Washall

You done?

Dave Ramsey

You done? You done? You done? And you just keep attacking it. Yeah. There is a positive thing to that. And what it does is it actually we figured out that personal finance is 80% behavior. It's only about 20% math. And so feedback loops are more important for behavior modification than the actual math is. And the math that you're using is not interest rate math. In your case, you're using cash flow math, which is not a bad. I understand it's not an unintelligent way of looking at it. It's just.

Jade Washall

It's about completing.

Dave Ramsey

Doing math didn't get you into this mess. If you'd have done math, you wouldn't have done any of this.

Jade Washall

And when you start looking, we're looking at the probability of you completing it. And if you start looking at it, well, if I could just get $500 back in my pocket for a lot of people, that's enough to make them go. Well, that was all I needed.

Dave Ramsey

Yep. Renee's in San Diego. Hi, Renee.

Caller

Hi, how are you?

Dave Ramsey

Better than I deserve. What's up?

Caller

Well, the reason I'm calling today is because a couple of years ago my husband and I went into a partnership with my brother and sister in law and we bought a storage unit with some warehousings and some other other commercial uses. Office primarily. Long story short, my brother in law wanted to scale and buy additional ones. Found out it's a lot more difficult to find those because don't generally sell them. And then he and my sister in law decided they really didn't want to participate in renting it anymore, which left that to. My husband and I were also retired and we had just wanted a place to park some additional money we had so that we could spread out.

Dave Ramsey

Is it for sites?

Caller

Not officially.

Dave Ramsey

Officially put it up for sale.

Caller

Well, we started down that road and contacted my brother in law. Contacted a REIT that had been interested in it when we purchased it, contacted another group that owns property and those kind of properties in the same city. And we contacted someone who buys storage units kind of as a collective.

Dave Ramsey

So you talked to four people?

Caller

Of course, three. And those three were interested, but they, they were trying to purchase it like fire sale.

Dave Ramsey

List it with a real estate agent by the end of the week local.

Caller

Because we also looked at, you know what, there was a fourth one and that was a large commercial brokerage that specializes in that and they use a formula that didn't work because they were using a big metro area instead of the area that was storage units in, which is scarcity of land surrounded by Indian reservations and no opportunity to expand central location. So their algorithm did not provide for that kind of.

Dave Ramsey

They obviously don't need to list it. So how get a real estate agent, that's a commercial real estate agent that knows how to crunch numbers on storage units. Is the thing pulled? Is it full? Is it rented?

Caller

Well, we up the rents because it was.

Dave Ramsey

Is it rented?

Caller

Some of it. Is that all the industrials?

Dave Ramsey

What's your vacancy right now?

Caller

It's 75 because we upped the rent and 75% vacant.

Jade Washall

75 units or 75%.

Caller

75% occupancy.

Dave Ramsey

Oh, occupancy. Okay. All right. So yeah, yeah, you've got a pretty heavy vacancy then at 25%. And that is going to devalue it because the valuation is not based on scarcity of land. The valuation is based on cash flow. How much money does this create? And then you use a cap rate on it. That's how commercial brokerage is done. And so it doesn't matter where it is. What matters is not an algorithm. It's a simple thing. If I'm going to put a million dollars in it, I want to return on my million dollars. If I'm going to put $10 million in it, I want to return on my $10 million. And I don't care about the Indian reservation except to the extent it creates money for the bottom line of this project. And so you guys need to get your occupancy up, probably because it's pretty devalued right now. See if you can get it filled back up and then raise your rents a little bit, not so much. And you're going to have to spend some effort on it and then you're going to get it up for sale. And what you're looking for is a commercial real estate agent that knows this. They don't have to be a large national firm, but they probably need a ccim, which is the designation in that or something like that, that so that they actually know how to run the cash flow analysis on it and put it up for sale and get it sold. But you call four people, you've talked to four people. That doesn't solve your problem. You know, you gotta, you gotta get thing on the market and get it gone. This thing's run its course. You're out of here, you're done. And don't, don't play around with it and talk big Call me five years from now and go, we're still stuck. Well, list it and sell it. Sell it. If you have to sell it at a pretty good deal, that's fine. Get rid of it, put some money in your pocket and wave bye to the brother in law. Our summer Black Friday sale starts now for five days only. A new deal drops each day. Listen, you work too hard to be broke. Car payments, surprise bills, another overdraft notice. It's stressful, but you don't have to stay stuck. Get the book assessments and more that have helped millions take control of their money, get out of debt and finally breathe again. Deals change daily and once they're gone, they're gone. Visit ramseysolutions.com store before these deals disappear. If you're ever in the the Nashville area, drop by. We do this show from 1 to 4 every day, Central Time, 1 to 4pm Monday through Friday. We're on the glass in the lobby of Ramsey Solutions. So folks come by. We have free homemade chocolate chip cookies and coffee and wonderful bookstore museum, all kinds of stuff for you to see when you're here. And we usually have 50 to 200 folks sitting out here watching the show. People dropping in from every state in the union and even a couple from Canada today. So there you go. So check it out. Come out and do that. Also in the lobby there is the debt free stage where people come to do their debt free scream. And that's where Toby and Jamie are standing. Welcome guys. Hi, Dave.

Caller

Hi, Jade.

Hi, Jade.

Dave Ramsey

Where do you guys live?

Caller

We're from Casper, Wyoming.

Dave Ramsey

Awesomeness. Well, welcome to Nashville. Thank you.

Caller

Thank you.

Dave Ramsey

And how much debt have you to paid?

Caller

We've paid off $176,000.

Dave Ramsey

I love it. How long did that take?

Caller

Five years and nine months.

Dave Ramsey

Wow. And your range of income during that time?

Caller

We started about 120 and currently up to 160,000.

Dave Ramsey

Good job. What do y' all do for a living?

Caller

We are both teachers.

Dave Ramsey

Awesome.

Caller

I teach middle school band and I'm

a fifth grade teacher.

Dave Ramsey

Awesome.

Jade Washall

What kind of debt was the 176.

Caller

It was our house.

Dave Ramsey

Looking at a couple of weirdos.

Caller

That's right.

Dave Ramsey

Way to go you guys. Excellent job. So what's this house worth?

Caller

About 400,000 at this point.

Dave Ramsey

Yeah, I love it. And your, your nest egg is up to what these days.

Caller

Retirement accounts are just north of 700,000 right now.

Dave Ramsey

Couple of millionaires. Couple of baby steps millionaires standing here that are teachers.

Jade Washall

You look young. How old are you?

Caller

We are both 43.

Jade Washall

Come on now.

Caller

Wow.

Dave Ramsey

Excellent. Excellent. You know, when we did our study of baby steps, millionaires and millionaires, we found that the third most likely to become a millionaire is a teacher in the career field. It's engineer, accountant, teacher. That's the order. And people always question us on that. And yet here stands two of them.

Caller

Yes.

In the flesh.

Dave Ramsey

Well done.

Caller

Thank you.

Thank you.

Dave Ramsey

I love it. I love it. Congratulations. Okay, so five years and nine months ago, you decided to concentrate on paying off your house. Why?

Caller

So?

We first found Ramsey Solutions in 2008 after reading the total money makeover immediately paid off all of our consumer debt. Since then, we've cash flowed. Two basement remodels, two master's degrees, three car upgrades, and a boat. In 2012, we took financial Peace University. And I've since taught the class three times to the staff at my school.

Dave Ramsey

Wow. Thank you.

Caller

My pleasure. It's so much fun. And then in 2020, we decided to finally just start aggressively pounding on the mortgage using all the margin in our monthly budget. It would have been paid off even faster had I not had a car accident, which caused us to dip into our emergency fund and find a different used vehicle.

Dave Ramsey

Yeah. Okay. Wow, wow, wow.

Jade Washall

Did you do voiceover work or something?

Caller

You.

Jade Washall

You.

Caller

We.

We practiced this a lot to make sure that we were ready.

Jade Washall

You got this on lock. Good job.

Caller

He speaks in front of audiences all the time. He's a natural.

Jade Washall

I can tell. Good job.

Dave Ramsey

Well, way to go, guys. Guys, it's incredible. So you've taught the class. How much consumer debt did you knock out back in the old days?

Caller

Oh, we had a little $3,000 loan on the car, and then, no, it

Jade Washall

was very, very small.

Caller

We just realized after reading the book, oh, this makes sense. Let's do that.

Jade Washall

And just lived a cash lifestyle after that.

Caller

Yes.

Dave Ramsey

Wow. And staying on a budget, living on a plan.

Caller

Absolutely.

Dave Ramsey

A couple of teachers salaries and doing great. Way to go, you guys.

Caller

Thank you.

Thank you.

Dave Ramsey

You're 43 years old and you're millionaires. Ashley Casper, Wyoming. Wow. Very nice. Very nice. How does it feel to not have a payment in the world?

Caller

It's freeing. We can just do what we want. And we're very goal oriented people. So we set goals and then we work towards that. And we're also very visual. And so a funny story is that Toby came to me in 2020, and he wanted to build a paper chain to represent our mortgage. And so each link on that paper chain was $1,000. And then so the kids got involved during budget time. And each. Each budget month, they would get to tear off a paper chain. And then that chain hung in our kitchen all across through my dining room.

Jade Washall

For five years.

Caller

For five years.

Dave Ramsey

Well, until it didn't.

Caller

Until it didn't. And so it's just. It's very freeing.

Dave Ramsey

Yeah. So at which point you look at him and say, I thought I taught fifth grade.

Caller

Exactly.

Yes.

Dave Ramsey

Unbelievable. So, you know, this is interesting because very few people that I know that are teachers went into the teaching profession saying, oh, I'm going to be a millionaire. That's usually not like how. That's not the way the wiring works. Right. But once you start seeing this, you said we're goal oriented. And you can see how if you follow the system, like if you follow a lesson plan or, you know, if you follow whatever, any kind of a process that's proven that we could, then the hope kicks in, doesn't it?

Caller

Yes, absolutely.

We could see the eventual progress. And at that point, it's not even a question of whether or not we're going to accumulate wealth. It's how soon can we get there. This process works. Just follow it.

Jade Washall

So when you teach folks this strategy, what's the number one piece of advice? Like, what do you tell folks who are maybe not in the same situation as you, but they're teachers and they're thinking, man, how am I supposed to do this?

Caller

I think for us, the biggest thing was communication with each other. As I said before, we're very goal oriented. So we would discuss what is our next goal, what is our next big achievement that we want to reach, and then how are we going to get there? But for us, it was that communication between each other and agreeing on where we wanted to go.

Dave Ramsey

We appreciate you coming all the way to Nashville to testify that this works. That's pretty cool.

Caller

Wouldn't have missed it for the world.

Dave Ramsey

What's the first big thing you're going to do to enjoy some money now that. That you did this?

Caller

Well, the kids don't know this yet, but we are going to take an upcoming vacation to Disney World.

Dave Ramsey

Just announced it to them right now. That's pretty cool. We should have had some Mickey hairs here for them or something.

Caller

Wow.

Dave Ramsey

That'll be fun.

Caller

Wow.

Jade Washall

They're excited.

Dave Ramsey

That's cool. Very cool. Very cool. And how old are the kids and what are their names? Bring them up.

Caller

Come on up, guys.

We have riley, and she's 12. Riley's 12, and Mr. Kellen is eight.

Dave Ramsey

All right. Right. 12 and eight. And this has happened over the last six years. So Kellen doesn't. I mean, when it all started, he didn't know much. But Riley's been there for the whole ride.

Jade Washall

Yes. All the way to Disney.

Dave Ramsey

All the way from paper chains all over mama's dining room to Disney.

Jade Washall

Yes.

Dave Ramsey

And the day that I heard mom and dad were millionaires. Wow. Very, very cool. You know when your kids are growing up while you're doing this and they see what mom and dad are doing, they see goal oriented, they see communication between the two of you, they see a budget, they see we're sticking to this, we're sacrificing to win. And then they hear that you win. Those guys, you really did change your family tree because more is caught than taught, as Rachel says. And you can teach them all day long. But when they watch you and see this example and they live, their body takes this in and they can't unlearn it. It even changes who they'll date in the future.

Caller

Thank God they truly do understand when it's. When it's budget time and they understand what that means to make a budget and how to spend your money appropriately

and where money comes from.

Dave Ramsey

Then you get to go to Disney. I like it. Well done.

Jade Washall

Excellent. No notes.

Dave Ramsey

Very cool.

Jade Washall

Excellent.

Dave Ramsey

Very cool. Life is good. Life is good. Well, way to go, y'.

Caller

All.

Dave Ramsey

I'm very proud of you. You did everything the right way. You've executed, executed, executed. And now you've remained some 30 million people with this debt free scream right now that this can be done and teachers can do it too. For those of you that are doubters out there and Debbie Downers, you're looking at two of them that at 43 became baby steps millionaires. 700,000 in investments. A $400,000 paid for house. The last step was baby step six, paying off the house. Five years and nine months. Making 120 up to one. All right, Toby, Jamie Riley and Kellen Disney bound. Count it down. Let's hear a debt free scream.

Caller

Three, two, one.

Dave Ramsey

We're debt free.

Caller

Wow.

Wow.

Dave Ramsey

That's how it's done. Wow.

Jade Washall

That's impressive.

Dave Ramsey

It is impressive. It never gets old.

Jade Washall

I mean you can't, you can't argue. Two teachers. All the things he said, they cash flowed. They just locked in. Locked in.

Dave Ramsey

See, when I've got guys like that that I'm talking to, that's why I'm not going to talk to you. If you want to argue. This works.

Jade Washall

It works.

Dave Ramsey

Don't argue. Just do it.

Jade Washall

Just do it.

Dave Ramsey

Just do it. When are you going to start. When are you going to start? Start now. Yeah, I'm talking to you. Just do it.

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Dave Ramsey

Our Scripture of the Day, Ecclesiastes 7, 8. The end of something is better than its beginning. Patience is better than arrogance. Bill Bradley said, ambition is the path to success. Persistence is the vehicle you arrive in. Okay, there we go. Amy is in Louisville, Kentucky. Hi, Amy, how are you?

Caller

I'm doing good, Dave.

I've got a couple questions for you.

My income is 2,100amonth. I'm on disability. My savings is $6,000. And on my debt side, I have credit cards for $650. My monthly bills are 688. My yearly property taxes and insurance are 1,700. Now here's where the twist comes in.

I got a construction loan to build

a tiny home on my property for $112,000. Esri Construction got 30,000 of that. Fees are 4,700, which is a total of 34,000. So I have around 78,000 left. This is a 6.75 interest. But he has bailed on me and I can't find any assets under his name, so I'm not even sure if

I'm gonna be able to recoup that.

Dave Ramsey

I'm sorry, who bailed on you?

Caller

The contractor that was supposed to build

Dave Ramsey

my tiny home for $120,000.

Caller

Well, it was 112, but they've only gotten 29,165 so far.

Dave Ramsey

Have they done any work?

Caller

Nothing. They have applied for permits incorrectly.

Dave Ramsey

Why did you give them money before they did work?

Caller

The bank did.

I have a mortgage for this.

Dave Ramsey

I know, but you have to approve it.

Caller

Yeah, and the bank said this was standard practice. So now I'm on the hook for 34,000 with nothing to show for it.

Jade Washall

Did the Permits not get approved?

Caller

No.

Dave Ramsey

Why?

Caller

Incomplete or inconsistent, they keep getting rejected, rejected, rejected. And now all communications has stopped.

Jade Washall

So the permits were denied because they were filed incorrectly, not because you can't build the tiny house?

Caller

Yes, yes, correct.

Dave Ramsey

Why does a tiny house cost 112,000?

Caller

That's what I've been wondering.

Dave Ramsey

Well, I mean, why didn't you wonder that before you signed up for it?

Caller

Because of, like, pouring concrete, putting it on a foundation. Where I live, it has to be done a certain way.

It has to be like stick built.

Built.

Jade Washall

I thought tiny houses were more like 60.

Caller

They are. Then when you put them inside a city limit, they have to be up on a foundation. And then the plumbing and the electric and the sewer and all that good

Dave Ramsey

stuff, which is not another 60. Okay, I don't know exactly what to tell you. Obviously the. You've informed the bank not to let any more draws happen, right?

Caller

Absolutely, yes.

Okay.

Dave Ramsey

And. But you have a $31,000 loan with a possibility of going to 112, and you're hunting for a new contractor that can execute this deal. But what you're, what you're saying isn't, it is not standard practice to issue checks to a builder draws to a builder on a construction loan, except as work is complete. That's not standard practice. And so, no, we don't issue $31,000 to pull a permit on a tiny home. That's asinine. And so, you know, I don't know who's over there at the bank that doesn't know what they're doing, but I probably am going to just shut the whole thing down and I'm not going to deal with that bank anymore because I think they're incompetent. And, and I think you've been, you've bought into some kind of a idea here with this tiny home construction that this is somehow going to be the best thing for you. And the numbers you're giving us are they don't, they don't pass the smell test. Okay. Because the purpose of a tiny home is this is a small square footage thing. They're typically not stick built. They're typically rolled in on a trailer and sat there and you're pouring a slab the size of a deck. This is not an expensive process. And yeah, you got to hook into sewer and you probably got some tap fees and you got to run a water line to it, but none of this is rocket science, and none of this should cost, you know, $50,000. Not even close. So I don't know this whole thing sounds like it just smells. And so when I run into something that I get into like you've gotten into here, where the whole thing stinks, I just start pulling back and pulling back and resetting what I'm going to do and how I'm going to do it. And. And that may be that you do a tiny house, but you do it the proper way rather than the way you were trying to do it. And just because it's in a city limit doesn't mean it costs $50,000 to build a slab. That's just not true in Louisville, Kentucky. It's not that. It's not that onerous. You're not in California where they've got regulations out there, but this is Louisville, and so they've got regulations, but not like that. So now I think you've gonna have to gather a whole lot more information to decide what your next steps are. And, you know, if you have a contract with someone that has taken 31,000 from you and they've done that fraudulently, then I guess you need to see an attorney for that. But if you've discovered the person has no assets, then you're probably going to have a hard time getting any of that money back because you can sue somebody and win. That has no assets and you get nothing. It's not worth the trouble. But I would look in to the legal side of it as well. Christina is in San Jose, California. Hi, Christina, how are you?

Caller

Hi, Christina. Thank you for taking my call.

Dave Ramsey

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

Caller

I'm speaking directly into my phone.

Dave Ramsey

Okay, thank you. How can we help?

Caller

Well, my husband. I'm 62 years old and my husband wants to get a HELOC loan.

Dave Ramsey

For what?

Caller

So we bone our home since 2004 and.

Dave Ramsey

Say that again.

Caller

So we have owned our home since 2004. And he wants to upgrade the bathroom, the mask and back and the hallway that. What's it going to cost roughly? Around maybe 60 to $80,000 to do?

Jade Washall

Oh, wow. Okay. That feels steep.

Caller

Yes. Because he wants to enlarge the shower, pull out, put new tile.

Dave Ramsey

And you obviously don't have the money to do that.

Caller

No, we don't have the money.

Dave Ramsey

Okay, what's the size of your. Do you have any money in savings?

Caller

We do have money in savings. We have probably around $300,000 in savings.

Dave Ramsey

Is that retirement savings?

Caller

No, it's not retirement savings.

Dave Ramsey

Well, why don't you just use some of your 300,000 to build your bathrooms.

Caller

I. That's what I told him.

Jade Washall

Otherwise, what's the point of it?

Caller

I know he wants to get on. That's why I'm calling. Because I. I don't. I don't want to create more debt.

Dave Ramsey

No, no, you already have debt.

Jade Washall

You already have some. You said you don't want to create more. You have. You have some already.

Caller

No, we don't have any debt.

Jade Washall

Okay.

Dave Ramsey

The house is paid for. And you said you're how old?

Caller

No, I'm 62 years old. The house is now paid for.

Dave Ramsey

Oh.

Caller

It's worth a million dollars. And we still owe about $300,000 on this home.

Dave Ramsey

Well, I mean, I. You in California, you'll have to sign for the heloc. And if you refuse to sign for it, it won't happen.

Jade Washall

Yeah.

Caller

Oh, yes. Thank you so much.

Dave Ramsey

Yeah, so just tell him. No, He.

Sponsor Representative

Wow.

Dave Ramsey

Just tell him I'm not gonna sign for the heloc.

Jade Washall

You gave her the ultimate legal loophole. Good job, Dave.

Dave Ramsey

She.

Jade Washall

I've never heard someone cheer like that after. But by the way, you know, you also have 300,000 savings.

Dave Ramsey

You also have a husband that you gotta deal with. I mean, this is not. I don't know if I'm cheering about anything here.

Jade Washall

No, I'm just looking at the fact that what you have in savings is what you owe on the house. But good luck convincing him to pay the.

Caller

A house off.

Dave Ramsey

Yeah, I don't know what your household income is. I'd consider paying off the house and building your nest egg and building your bathrooms with cash. And by the way, when you end up building them with cash, they probably won't be 60 to 80. You'll probably do it differently. That puts us out 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. She Jesus.