Bigger Financial Problems Leave Less Room for Bad Decisions

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“>> Normal is broke and common sense is weird.”

So we're here to help you transform your life. From the Ramsey Network in the Fairwins Credit Union Studio, this is the Ramsey Show. And I'm Rachel Cruz hosting this hour with my good friend, and co-hosts of so aren't many happy hour, George Campbell.

And we'll be answering your calls, so give us a call, a AAA-825-5225, and when we're talking about your life and your money.

First up, we have Jimmy in Los Angeles.

Hi, Jimmy, welcome to the show. >> Hey, Rachel, hey, George, big fan of y'all. Thank you so much for what you do. I really appreciate everything that you guys do. And I've gained a lot of knowledge these past few weeks.

I'm learning more about what you guys do and how to kind of like financially plan my future. But I've kind of gotten myself into a sticky situation. And I'm just trying to see if I can maybe get some guidance on trying to find a way out. >> Sure, so what's going on? >> So late 2024, you know, I retired from military for 22 years.

And earlier that year, I decided to open up like a shop and where we just do like detail services, paint protection film, raps and things like that. And it actually cost me a lot of money throughout that year. >> I'm sure, how much? >> And to the point, well, we're at a point now where we're like 580,000 dollars in debt.

That first year, we took like a $20,000 loss.

“Admittedly, I think I hired too many people full time.”

Kind of went in too fast and too hard on that and it kind of really hurt me. So I had to take like an SBA loan to kind of get caught up and use a bunch of credit cards. And then the year after we've met it, so just last year, we met it about 35% net loss. So we had another net loss, but it was a better net loss. And you're still throwing money at this thing?

>> I'm still throwing money at this thing. I mean, it seems like we're kind of like making a way out of that.

I mean, what's the stop loss here, a million dollars in debt, and then we'll call it quits?

I mean, at some point, you just got to go, this ain't it. I would rather pack it up now versus try to, it's like a gambler where they lost a bunch of money in Vegas and they go back to go, well, now I got to win even bigger to get out of this mess. >> Right, yeah, so it's afraid of, and you know, through this process, I kind of been, you know, a free labor. So I haven't been getting paid by my business.

>> On top of that, how are you paying your bills? >> Through more debt. >> Do you have retirement or military? >> I do. >> Okay.

>> What's that for months? >> My wife works too. >> Okay. >> I'm pulling about $5,500, take home for months for my military retirement. >> And then what do you make about, she makes about, like, take home $45, 100ish per month.

>> Okay. >> So, 10 grand a month is what we're taking home. And that's the hard truth, is that's the number we need to actually pay down this over $1,000 in debt. >> Right. >> What does the trajectory look like for revenue?

>> It's looking positive, because last year, I said, even though we had a net loss, it was a smaller net loss.

“And I think this year will be in the positive, but I'm struggling because I've been working”

for free for two years, eventually. >> Well, and digging deeper in debt, I mean, 35% loss. I mean, this is just a very expensive hobby at this point. This isn't a business. >> Even if it breaks, even, this isn't worth it.

>> No. >> Right. Yeah. >> Right. Yeah.

Jimmy, when you, when you project out, what do you, with all these loans, how much is the,

is it half a million now or how much debt, in general, I'm just trying to, I'm trying to project

out what, I don't know, in the next month or two, how much total debt are you guys in? >> So, I've written everything down, so as it stands, right now, on the business side, we're at $580,000 in debt, I know I have a PhD in being a BOSO.

>> So, 165,000 of that is credit, and the rest is split up between the SBA, working capital,

and a line of credit. >> Okay. Because I'm just thinking, the credit cards, you know, if you get behind, those will be easier to settle in some of these loans directly from the bank. >> What is your wife think about that?

What does she think you should do? >> She's not very happy with it, but she's been very supportive and very understanding throughout the process. So, an absolute blessing to me, definitely not an added stressor. She's been an anchor for me for sure.

>> Yeah, I mean, a little bit Jimmy, but a part of me also is like, you guys aren't living in reality. Like, she should be kind of flipping out. Do you know what I mean? I'm like, I understand that the anchor of feeling supportive, but you're feeling supported

and doing something that's continually getting you guys deeper and deeper into a problem versus saying stop, stop where we are, and we're done, because we can't just keep doing this. And the problem, too, is that the guess work for what you're possibly going to do this year. I mean, you know what I mean?

It's like you can't predict it, and so you guys either have to say, we're going to try to stick this out for a year with no more debt, no more debt. And if that means we have to close up parts of the business in order to do that, okay, to see if we can get some revenue in here, but you guys can't just keep digging yourselves in a hole and expect just to come out the other side.

>> Right, right. >> So I would sit down and you guys, I mean, you either need to make a decision. If you were to stop this completely, do you guys have things that you can sell off in the business? Like, is there any way that you could gain any of this money back if you were to close

“up today from like a real estate perspective or like, you know what I mean?”

>> Equipment, you have business. >> Yeah, I have about $50,000 worth of equipment, but I think that's tied up in the SBA loan. They would have to, you know, I'd have to get permission to sell that off to pay that loan down. >> Yeah.

>> And so I was like, worst case, you know, I, I really want to avoid bankruptcy, it's definitely

not my first choice and I didn't even thought about getting like a job, like, so I can just

get some sort of income and then using that job to pay down the debt. But since it's a business, I don't really want to like create murky waters with me paying off business debt with my own personal income. >> It's all tied to you anyways, Jimmy. >> Go back to the papers.

Look who signed it. >> It's you. Yeah, yeah. I mean, it's all, they're all going to come for you. It's not like car detail or LLC, well, they owe the money, not Jimmy, right?

“It's guaranteed by you, and so that's the, that's the hard news is you have to now picture”

this, like it's just consumer debt that you took on. And so you're going to begin the business of cleaning it up, and I hope that you can find a new job that can create a better income that will allow you to clean this up faster. But if you just even sell the 50 grand worth of equipment, that's 10% of your debt, you just knocked out.

And so you gotta start making progress, I would not sink more money into this thing just to be 600,000 in debt, 650, and I hope we have less of a net loss. Oh, I'm heartbroken for you, man. Thank you for your service to 22 years, that's incredible. I hope you guys can climb out of this.

Dave, we got a lot of calls on this show where life happens. One day someone's healthy, they're working, providing for their family, and then a curveball hits. We hear it all the time, a car accident, a cancer diagnosis, a heart attack, and suddenly everything changes.

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Thank you. Thank you. Sorry about that. Oh, absolutely. Yes.

What's going on? I'm going on, guys. Rockin' in Rowland.

First of all, you guys are awesome.

I've been working with you all for maybe like, going on two years, but to be back for you this year and everything like that, we're going to be out. Nice. Smart Bester Pro in their own. Oh, good.

That's amazing. I had a quick question for you. Hopefully this is your area expertise that not been hopefully got me in the right direction. I, before I was working with you all, I, you know, I was ignorant to a lot of stuff. So I had, um, that mixed up back in maybe 2016 with a guy from my gym.

My story short, uh, he was running the LLC, or supposedly, and, um, I was investing into a high interest savings account, um, so basically, I got scan on story short, uh, he got me for 38 grand. Oh, no. And then I hired lawyers and everything like that, um, so I, all in all, I was out

maybe like 40, about 45 grand. My gosh. George. So sorry, was it like a Ponzi scheme kind of thing or like a pit, like, or he would take your money and invest, you know, put it somewhere else, then he would make a difference

and then he ended up not and lost all your money. Exactly. Oh, yeah. I'm sorry. Um, you know, again, this is before I met you guys, I wish I would have met you guys sooner.

But, uh, that's done. So it's kind of with going to my side because I'm trying to figure out whether I should continue going after him because, um, I already, once the court, we already got the judgment. He didn't show up and everything like that, um, you know, he got served and everything. But the thing is, you know, I had to learn about the law because there's doesn't

exist, basically. He's a paper right now because he got rid of all the, yeah, exactly. If he doesn't have assets, he doesn't have income, you can garnish, there's not much they can do.

Basically, that's basically what I want to do.

When you say you've been chasing for 40 years, who, who has actually been the person trying to track him down and, and get him to pay? Uh, uh, I hired a, um, a debt collection company and then, um, at first it was, you know, it was free and everything like that because, uh, you know, they could, you know, a big, a paid, I could take kind of, kind of deal, but then after maybe like, a year

if you've been, they want to be asking if I wanted to like increase the, some, some kind

“of, excuse me, they gave me another like, another two grand or whatever, I think to push”

that stuff forward because this is doing the pandemic. Yeah. So it's supposed to like, people work for it and so that added to the money that I'm out. And I wanted to see if you guys think I should just count it as a loss or just, you know, because without assets, you know, now that I know that it's just, yeah, that's my fear.

As you spend 25 grand chasing this guy down and then it turns out you don't get a dime from him. Well, now you're just lost another 25 grand. So it may be time to emotionally write this off and call it a stupid tax and move on. Yeah.

If it's been four years, I mean, this is, this is weighing on you. It's living right free in your head and I think it's time to move on people do all kinds of dumb moves and lose 40 grand. You know, I went and 40 grand a consumer debt back in the day.

And so I'm going to chalk it up to a life lesson that was hard to learn and never let it happen

again. Got you. Okay. Okay. I'm so sorry.

I'm sorry, George. I'm like, like, when I, I'm like a dog who's like, I want to, I want to get this guy.

“I want to go full John Wickman, you know, but at some point it was 38,000 dollars, you know?”

It's not 3800. Like, that's a lot of money. It's a lot of money. A lot of money. But the crazy thing is is, I do think once you emotionally kind of just get over it, write

you to attach and you're like, okay, I am moving on. You start to really, really see what you can do and what you have the power to do as you're experiencing now on baby step two, George, like you're getting yourself out of debt. That money will come back, right? Like, you will be able to turn all this around, but it's just emotionally having just

to let it go, which sucks. Sorry, you're dealing with that, but maybe this will get you dead free faster. If you allocate all of your energy and focus and resources towards that, I think you'll feel a whole lot better and it'll be a fun story you share with your kids one day when

Okay. That's still bug my friend, that's brutal, right? So it reminds me when I got scam long ago, fraud happened. People opened up AT&T accounts for eyes and accounts under my name, social security number,

past the dress, racked up 1700 bucks on both accounts, never paid a dime.

And so I had to deal with that and luckily I had Xander ID theft and so they stepped in and helped clean this mess up, but I found who the people were because I was a sleuth. You found who it was, like the individuals? Yeah. And I really wanted to go full, you know, wishbone on the case and go, I'm going to investigate,

“I'm going to bring them to justice and then I just, I'm like, what am I doing?”

What am I doing? Just Nancy Drew. I don't know how dangerous these women are. Yeah, was it women? It was two women.

No way. Still have their names. Here, like in America. They were in Boston, in the Boston area. I live in Tennessee at the time, but they open these accounts up in Boston.

So yeah, there you go, I'm not going to, I'm going to, I'll leave that for future investigations, but goodness gracious. It's hard, it's a hard pill to swallow when it happens. All right, Dominic is in the south bend up next, Dominic, welcome to the show. Thank you.

What's going on? So I've heard you guys speak about zero credit score in buying houses with manual underwriting. I purchased a home years before hearing about you, so having zero credit score when buying my next one won't be an option. Sure, you haven't credit score now due to your mortgage payment.

Correct. Is that a loan and be enough to maintain a good enough score, or what's there? Have you made your mortgage payments on time? Yeah, that's great. You likely have a great score.

So there's no need to open up new credit accounts and credit cards to try to increase it. When you go to get another mortgage, they're just going to look at yours and go, okay, as you're dead to income ratio good, do you have a history of on-time payments and they'll grant you that. So unless you have you checked your credit score, is it in the tank or is it solid?

No, it's solid. I just, I wasn't sure if just a mortgage alone would be enough in the future. Yes, or if they needed more history. No, you'll be good.

And if you have a lot of questions about it, you can always contact, you know, Churchill

mortgage, and they can walk you through what they actually look for. But the score is the score. That's what they're looking for. And so they're not going to say, well, you don't have enough types of debt. That's all factored into your score.

And so if your score is solid, you're going to be fine. And once you pay off the mortgage, then six or 12 months after that, your credit score will disappear again to go back through that process. But you're on the path, man. Good for you.

How long until you pay off the house? I don't think I'll pay it off. Not with that attitude, Dominic. What's left of the mortgage? First home.

I still owe 160 on it. OK. Because you're saying you'll probably move homes. Move houses. Yeah.

We paid off consumption. That's right. OK. But it's a good question because we do talk about people not having to worship at the altar of the credit, the fight goes score, the credit score.

Because you can actually get a house, we're not through manual underwriting. But if you have a bad credit score and you go and apply for a mortgage, they're going to pull your credit score regardless. That will hurt you. Yes.

If you have one that's undetermined, then you can do manual underwriting. But if you have a bad credit score, when you go get a mortgage, and as you're getting at a debt charge for a lot of people, consumer debt, your score will lower.

“As you, you know what I mean, like, as you're starting to get out, that's how stupid the”

credit score game is. You're like, wait, I'm doing good things. I'm knocking out debt. And yeah. But we don't like that.

And yeah. We'd rather you keep it around. Perfectly. Yeah. So I'm babysept to you guys.

If you're paying off your debt, and then you try to go and get a mortgage, which is not part of the, you know, that's babysept 3B. But if you try to do it earlier, and they pull your credit score, it may not be great, because you're paying off your debt. You're consumer debt.

Very few people.

And then here's what they always go, what about once I'm out of debt?

Well, then you still need to save up your emergency fund, and that's still save up your debt down payment, and so you're talking potentially years of not having a score, which is fine. So your credit score will not be in the tank, as long as you actually close all accounts. Yes. If you still have any accounts open, or you still have a credit card open, that will show

up on your credit report and keep your credit score alive. And so make sure when you pull that credit report, nothing is active.

“And then six to 12 months later, there's no real exact timeline, but that's what I've”

experienced in many that I've talked to. Your credit score just becomes indeterminateable. It doesn't actually go to zero. Yeah, it's not actually technically a zero credit score. We just like to say that because it sounds cool.

It's fun. What's your credit score? Zero. Zero. I don't have one.

That's the real flex. And that's honestly how they operated back in the day, like in our parents' day. The credit score has only existed since the '90s. So before then, you're like, well, how do people get homes? Well, they look to your actual tax return, you got a relationship with the bank, and

I look to your income and savings, and I'm like, okay. Your other bills, you need to pay on time, you have your trustworthy barwar that they can lend money, too. They look to you, the person, which is what manual underwriting does anyway. Instead of the computer's going, good credit score, give them a loan, and so it's really

not that difficult. I've done it myself. I'm alive to tell the tale.

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Open your Fairwins smart bundle today at Fairwins.org/Ramsey and get the Ramsey Be Weird debit card that's Fairwins.org/Ramsey. Traina is in Florida up next. Traina, welcome to the Ramsey show. How can we help today?

Hi. Hi. I'm so excited again. We're excited as well. I'm glad you called Traina, we're excited to talk to you.

Okay, guys, I'm having this issue.

I always said I wanted to retire about as I'm almost 40.

I am almost 40. Wow. Can we dress and play? My dad did a twice before he started 40, and I'm just like, wait, I can't wait. He retired twice, what do you mean?

So he retired from the state and then he retired from boxing, so he got to retire twice before he retired. Was he from boxing? He said boxing? Yes.

If he was a professional boxer. Yes, he was like semi-prose. That's pretty cool.

“But he actually did he have to do it to earn money?”

Yes. Okay, so he didn't really get to retire. He was semi-retired while semi-prose. And then fully retired. Yeah.

Okay. I'm just trying to release and pressure for you. Is that where this idea came from then? I want to be like dad. I want to retire by 40.

Well, I guess it inspired me. Yes. Okay.

I've always been like over a cheer or call it.

Oh, yeah, an aggressive goal. You know, if something big that you want to work for that, I get that. Okay. Okay. Perfect.

So yeah, how can we help? So I ran into a financial situation. It's not a lot of debt. It's like 44,000 dollars worth of debt. And I make about 60.

So I want to pay this debt off. And what kind of debt is it? It's like 20,000 in a car. Like 4,000 about in personal loans. And like 2,000 in my son's private school that I still owe.

And oh, credit card. It's like 16,000 in credit card. 16,000. Doesn't feel like a recipe to early retirement. If I was trying to retire early, I'd probably go, hey, I'm going to make sure I don't owe

people money and have money saved on top of that. And so how long does this been floating around? How long have you had this debt for? Um, so I thought you'd been going to see about two years ago. Oh, this is one all of this started.

“So all of this debt was post bankruptcy or did it get what you want to pay me and plan?”

What happened? Um, so actually the only debt that I don't take, like I don't have to pay back. Um, one of the personal loans. One of the credit cards. And yeah.

Because of the bankruptcy. Because of the bankruptcy. A issue is that I want to keep the relationship that thing. And I want to pay them there money back.

Because I never wanted to put the items in bankruptcy.

I was still paying it. But they said that because I found a chapter seven that they had to put it in. What caused you to file bankruptcy two years ago? What was the, what were your numbers then?

I was making about 48. Then I went back to 60.

“Um, then I think before that, I mean, 80.”

Um, so what happened was I was working for this company. I had moved. I was working for this company. Um, basically I decided I wanted to open up my own company. Because we're under government contracts.

We have a certain criteria that we have to meet. When I said that I wanted to open up my company. The government's agency said that they had to take away all my clients. So basically I went from having, you know, a decent income to like having nothing the next day. Okay.

And it was all because of this new business. Yeah.

So the new business I've never took off, but you took out loans to float the business for a bit.

And that's what called the bankruptcy. No. So when they took my clients, um, it took a while. It took about a year and a half for me to open up and to get clients. So I started having a client in the timber.

I had like maybe 16. Um, now I have like 25. Oh, and I thought I need. Okay. Yes.

But Trina, I'm what caused the bankruptcy two years ago that was a consumer debt. Was it business loans? What was it? So I had these, um, student loans. And I put them in an advocacy and proceedings where I found

about bankruptcy to get rid of the student loan while I was waiting for my agency to open. When the agency, um, when the agency didn't take off right away, I started using my kid's college funds, my retired man. I started pulling everything out. Okay.

And so I started listing, um, and I started working as with another company.

That company just didn't pay that much.

I've got you. Okay. So Trina, I have a new goal for you.

“I think instead of retiring at 40, we are going to learn to live debt free.”

What I usually do. Mmm. Trina. Trina, you're so clever. It's been everyone else's fault.

And the government took your clients away. No, no. I'm not saying she's pushing on everyone's public. No, Trina, you kind of be able to say like, I, I, yes, I'm used to living with debt though from student loans to where you are now.

There's a pattern of you using debt. Can we say yes to that? Oh, that makes it. Yeah. I was looking at like that.

Sorry. Nope. You're great. No. I just want to make sure we're tracking.

So I think in order to have a completely new mindset with money from where you've been, of saying, I'm living completely debt free. It debts on an option. That is not an option. I'm going to save up and pay for things.

I'm not going to be making unwise decisions about purchases and pulling money out of retirement or kids college or investments because that's not wise, right? Where that stuff is all for the future. And I'm going to learn to live within my income and my means. And that means making hard decisions about lifestyle and about, you know,

yeah, I mean, life choices and everything. And so, I mean, genuinely, I would make that the goal. I would make it a aggressive goal to get out of debt. And I don't know what, two years. Like, make a, make a goal to aggressive goal to get out of debt to save up a fully funded emergency fund.

Yeah. That way it stops. Two and a half years. Oh, perfect. Okay.

That's so great.

We never even got to your question, right?

I'm sorry. There's so much details to jump into. What is your actual question we can help you with? Well, I wanted to basically flip this piece of property. They have a piece of land that's for sale.

It happens. In fact, it is. I wanted to do like a creative finance to see. No. No, we're off the path.

Remember 10 seconds ago. We're the new goal. Were you goal? Remember. Create a financing.

Just means hey, I'm going to do stupid. That's right. That was her question. That's fair. We made a new goal 10 seconds ago.

Yeah, okay. So, how would you answer, how would you answer this now? Trina answer your own question with your new goals in mind. So, I am going to fix my two and a half years. I just said, "But are we just going to fix this month?"

That's what we're talking about, Trina. See? Be set free after that. And then maybe save the money instead of. Yes.

What is it? You. And how old are you, Trina? I'm 13. 38.

Okay. Can I tell you if you don't retire by 40, you're not a failure? I just promise you that. If you don't retire by 60, you're not a failure. How about this?

You're not a failure, period. Ah. There you go. That's the most encouraging thing I've said today. Right.

You're going to test it.

“But the truth is, we have these aggressive goals.”

And we need to create actions to get there.

And so, it's okay to pivot the dream.

“But one thing we can't do is pivot and going backwards.”

And grab our future. Grab our children's future. You are worth more than that. And so, from today forward, you're a person who doesn't go into that. Who doesn't owe people money.

And all your decisions can be based off of that value system. Because that brings you freedom, Trina. There's no shortcut. There's no like, okay, I can do this. Create a financing here and do this.

And I'll make 20 grand just like that. And look at that.

Like, that's that doesn't work.

That's not the real world. It is. It is hard work. It is the long game. It is a marathon.

It's not a sprint. And it's just a different mindset.

“You have to be in to get true financial freedom and true control over your money.”

And so, you do have to shift the way you've been doing it, Trina. If you keep doing what you've been doing, you're going to keep getting what you've been getting. And so, yeah, I'm glad that Trina answered her own question. We got there. We're not going to finance a piece of land to build a home to flip it.

We are going to work on getting out of debt. De-risk your life debt equals risk more debt equals more risk. And so, this create a financing is just adding more risk to the puzzle. And so, be free. That's your best path to an early retirement.

You're awesome, Trina. Thanks for calling. If you run a business, you already know this. Bad information leads to bad decisions. And right now, AI is everywhere.

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and start filing. Matt is in Colorado Springs. What's going on, Matt? First thing I just want to say is Y'all are such a blessing with so many people. Thank you.

I've listened for quite some time and I'm just thankful for what Y'all do. And now I find myself in a situation where I could use some advice. Thank you, Matt. Yeah. So I guess the vast tax of the situation is of got pretty considerable amount of IRS debt. I own two businesses and I've just kind of gotten myself in a little bit of a hole.

And so the question is, if there's any credibility to tax relief programs and things of that nature.

Well, they're often marketed to people who are desperate and vulnerable, which is never a good sign.

You know, when that usually means a predatory and they're promising way over promising and underdelivering. So what they tell you to do is basically, hey, don't pay a dime, you pay us instead. And what's going to happen is, tanks your credit, which with the IRS, not the people you want to not pay. And so they then try to settle for you and save you money. Which, by the way, you can do all of this yourself. And with the IRS, they can already set up a payment plan.

So there's really no use for a tax relief program in this situation. Okay. They're just pay middlemen between you and the IRS. Right. And the other office that I contacted was more of like a tax attorney that talks more about the future plan for the taxes for the business to avoid this issue in the future.

But then his office was saying, you know, we don't recommend these tax relief programs because they're they're over promising underdelivering.

So perfect. I'm in line with an attorney. That's a good day for me. I guess the question is, if you were in this situation, what steps you might take. Yeah, how much do you make at your map? It's kind of relative. Probably somewhere around the 100 or so.

Okay. And do you have anything in savings? Yeah. I took it. We try not to get below 15 or 20 in savings. So you have 20? Yeah, about about right there right now. Yeah.

But the issue with my particular business is extremely seasonal with construction. So, you know, I kind of hunkered down in the wintertime and, you know, rice and beans and just about nothing.

So, but then in the busy or season, it's easier to tackle some of these things.

What kind of construction? Outdoor, leaner, transcendent deck and a lot of carpentry kind of stuff. Cool. Well, the good news is you can still work during that time and make money. And you can definitely pay this money back in a reasonable amount of time. Do you have any other debts that are holding you back from creating the margin to knock this out quick?

Yeah. There's still about $20,000 remaining on a heat lock. Okay. And I already know that's a cheap grinding words. Probably.

“That, you know, it's one of those situations where you sure I could pay that off, but then, you know, you have to worry about the bills right now.”

So, if I were to pay it off, I would wait until the money is coming in more. I'm a full million. Okay.

So you got 40 to the IRS 20 on the heat lock, anything else?

That's about it. I've paid off $20,000 in credit cards. Great. Good for you. No car loan. Yeah. Well, I would, this changes the debt snowball a little bit because IRS debt gets moved to the front. So even before the heat lock, I would be tackling this 40.

And I would just make it an aggressive goal. And again, I don't know if it's a payment plan that you can't take the IRS with me. I would try to have this all paid off in less than a year. Yeah. So I guess the other pieces of the equation are I've got to file the last two years of taxes and behind on that.

So there would be probably another 10 to 15 of all the expenses in the month. So let's call it 60. Is that fair? Sure. So if we call it 60, you know, you owe 60 set up a payment plan with them. And maybe it's hey, you're going to pay a thousand a month or two thousand a month.

And then once you get down to that, you know, you got 15 grand left, I would use your savings to just knock it out. And then you can replenish the savings really what you do is then attack the heat lock, then replenish the savings. So I guess the question is then become, you know, I pay a considerable amount of additional principle on my home.

“Who does it make more sense to factor that into this?”

Yes. Yeah. The minimum mortgage payment. Why are you paying extra on the principle of your home right now? Yeah, generally just, you know, you look at those amateurization schedule and all of that and it, you know, over a course of time it just makes sense. Yeah.

And it does in the right order, but you want to get the stuff cleaned up. So if you, if you went down to just your mortgage payment, how much is that free up a month? Uh, probably about another thousand or so. Oh, great. So how much could you reasonably put towards this IRS at every month? You got aggressive?

Well, this is where it gets tricky because I listen to your show constantly and people are like, Well, I make this exact amount every month or every two weeks. And for me, I have months where it's 15, 20,000 and I have months where it's sure. But you've been doing this a while. So you probably could look at a calendar and send my guests like this probably will be good months here, low months here.

So yeah, so you may be putting, you know, maybe, you know, 13, 1400 towards this on a low month. But a good month, you could be throwing 3,000 at it, right? Sure. So I would kind of just snap it all the way. And I'm already set up on like their minimal amounts, 400 something a month.

So I've been actively attacking it for a couple of years. Uh, but it seems like every dollar that goes into, it's just playing off the occurring interest.

“Right. So you need to get way more aggressive on this, which means all focuses on this IRS set.”

No extra on the mortgage, your budget is bare bones. You are discovered in four walls, food, utility, shelter transportation insurance. Anything else is going towards this. And try to make it to where there's no gap in income. Now, I understand you're going to have to get really good months in some rough months.

But I don't want you to sit and around gone well. There's no work to be done right now. Sure. But I guess in general, you wouldn't, you know, I mean, I could run the helock up more and pay that.

We are not adding a send to the helock. We're not going to keep going with this line of credit. We are done with that. So just keep it where it is. Keep up with them in an impainment.

And then all of your guns are pointed toward this IRS set for the time being.

“You think it would make sense to sell off additional assets to try to do this?”

What do you have? Well, I've got a considerable number of vehicles in machinery that are mostly associated with the business. I mean, they're, for all and then the purpose is mine, but the business owns them. Yeah, would it, would it decimate the business income if you sold these on? I don't need it though to run your business.

Well, I, it's probably like a half and half kind of number.

I mean, you know, six years and tractors and things that are relatively essential.

I do have one piece of machinery you're thinking of that. Like, okay, I could sell that and be okay. Doesn't get a lot of use doesn't create a lot of revenue right now. Yeah. Yeah.

What could you give for that? Oh, I mean, probably somewhere between 15 and 20. Wow. Thousand. Yeah.

That period of their savings gets out of the IRS. Yes, man. Yes. Yeah. I kind of figured that would be on that boat.

And you can always buy used later if you need it, right, with cash. Sure.

Yeah, and that, and again, that's all saying that that's not affecting your business.

I don't want you to have to. I don't want you to lose half your income because you sold this thing. Right, right. I'm going to be smart about it. But if it's something that you're really not using a really neat and you get 20 grand off of it.

Yeah. I'm doing that for sure. Sure. Yeah, I'm a huge advocate of not having car lines and I fix them all myself. I'm not saying that.

That's great. Yeah. Yeah. Anything you have Matt, I would. I would.

“Because I think if you had no IRS debt and no heloc, how would you feel?”

I don't know. Like, I could screen. Like, amazing. Hi. I can see my debris.

Exactly.

Yeah, whatever you could do to get to that level of peace and control is what we're after.

And then later when the business is doing great and you have all this freed up money because you don't have debt, you're able to save. And if you need to go buy some of the equipment. I'm changing the Dave quote. Now it's sell so much stuff.

The skid steer thinks it's next. Because it is my friend. Good luck selling it. Hope you get a great buyer who's happy to pay you what it's worth. Getting married changes something in you.

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When the fair wins credit union studio, I'm George Campbell joined by bestselling author and my co-host of Smart Money Happy Hour Rachel Cruz. We're taking your calls at triple eight eight two five five two two five. Up next we head to Charlotte who is in Columbia, South Carolina.

Charlotte, welcome to the Ramsey show. Hi, how are you? We are doing great. How can we help today? My question is, well my husband and I are.

We have a hundred thousand dollars of student loan debt. So, we just started paying off and my dad had promises, but he would help pay this net off. And I'll share with my two pet times. Sorry, you're breaking up with a Charlotte.

Can you speak directly in your phone or try to get to a better spot? I heard you are under thousands of loans. Dad said he would help pay them off and you recently had to cut him off. Yes, we did. We had to cut ties with him.

And so we're now like the relationship is over. Okay. Yes, got it. Correct. Yes, so we are now just looking into this debt.

And my question is, what tips would you have to pay this off quickly? I don't want this today. We are moving over our head for longer than it needs to. We agree. Uh, what did you get your degrees in?

It. My husband got a lot of degree. So that. Oh, got it. Okay.

Perfect. So is he practicing law right now? Yes. Okay. And how much is he making a year?

He is making a little over a hundred k. Okay. And what are you making a year? I'm just making a little over twenty k. I'm working part time.

We just had our first child back in October.

Okay. Congratulations. Thank you. Um, okay. Great.

So, um. Yeah. I mean, the. The most efficient way to do this Charlotte is, um.

“Is if you have multiple student loans, do yours at all one loan?”

It's just one loan. Okay. Yeah. So it's just going to be. You're making a lot of money.

You're making a lot of money. You're making a lot of money. You're making a lot of money. You're making a lot of money. You're making a lot of money.

You're making a lot of money. You're making a lot of money. You're making a lot of money. You're making a lot of money.

You're making a lot of money.

You're making a lot of money. You're making a lot of money. You're making a lot of money. You're making a lot of money. You're making a lot of money.

You're making a lot of money. You're making a lot of money. You're making a lot of money. You're making a lot of money. You're making a lot of money.

You're making a lot of money. You're making a lot of money. You're making a lot of money. You're making a lot of money. You're making a lot of money.

You're making a lot of money. You're making a lot of money. You're making a lot of money. You're making a lot of money. You're making a lot of money.

You're making a lot of money. You're making a lot of money. You're making a lot of money. You're making a lot of money. You're making a lot of money.

You're making a lot of money. You're making a lot of money. You're making a lot of money. You're making a lot of money. You're making a lot of money.

You're making a lot of money. You're making a lot of money. You're making a lot of money. Yeah. You're done in less than two years.

I mean, that's the math of it. There's no like life hacks short cut.

“Now, if you're doing the debts no ball and you had multiple debts, we'd say attack”

the little one first minimums on the rest and create some progress.

This is a little bit harder because it's just your state. It's like paying off a mortgage. You're just staring down this mountain going. All right. I would celebrate the wins.

Every $10,000 you pay off. You guys have a little fun. Whatever you decide to do. And that'll keep you motivated along the way. Make it visual.

Maybe you have like, you know, rings and chains across the house and or on the fridge. Whatever you guys decide to do. Making it visual. Having a deep why. Maybe this child is your deep why of I want this kid to grow up in a house that

doesn't know that. That has financial stability. Yeah. And it probably is just probably a painful element to write that it came. You guys are doing this because of a relationship that was fractured.

So every. You know what I mean? You know, you know, you're just going to be a little bit more of a relationship. You know, you're just going to be a little bit more of a relationship. You know, you're just going to be a little bit more of a relationship.

You know, you're just going to be a little bit more of a relationship. You know, you're just going to be a little bit more of a relationship. You know, you're just going to be a little bit more of a relationship. You know, you're just going to be a little bit more of a relationship. You know, you're just going to be a little bit more of a relationship.

You know, you're just going to be a little bit more of a relationship. You know, you're just going to be a little bit more of a relationship. You know, you're just going to be a little bit more of a relationship. You know, you're just going to be a little bit more of a relationship. You know, you're just going to be a little bit more of a relationship.

You know, you're just going to be a little bit more of a relationship. You know, you're just going to be a little bit more of a relationship. You know, you're just going to be a little bit more of a relationship. You know, you're just going to be a little bit more of a relationship. You know, you're just going to be a little bit more of a relationship.

You know, you're just going to be a little bit more of a relationship. You know, you're just going to be a little bit more of a relationship. You know, you're just going to be a little bit more of a relationship. You know, you're just going to be a little bit more of a relationship. You know, you're just going to be a little bit more of a relationship.

You know, you're just going to be a little bit more of a relationship. You know, you're just going to be a little bit more of a relationship. You know, you're just going to be a little bit more of a relationship. You know, you're just going to be a little bit more of a relationship. You know, you're just going to be a little bit more of a relationship.

You know, you're just going to be a little bit more of a relationship. You know, you're just going to be a little bit more of a relationship. You know, you're just going to be a little bit more of a relationship. You're going to ask why you didn't attract, but he's, but it was set out loud that it would even. So this wasn't on your radar and all of a sudden relationships broken.

And now you've got a hundred thousand sitting in your lap to pay off on top of the grief. And so this is a lot. Yeah, it is sad. And it's going to be, it's going to be tight. But, you know, less than two years, the baby won't remember it.

It'll be a memory for you guys.

“Remember that time we worked our tails off for two years to get to a place of financial stability.”

And you will not regret the sacrifice you're making right now. I'll tell you that much. Yeah. Would you take out? We have a high, a high-ish amount of money and a CD account.

A two-year CD account. So I don't think we can't touch it for like another year.

How much is in there? Yes, we're not.

I think a little over 20,000.

Fantastic.

“Well, I would also look at what the penalties are for taking it out before it matures.”

Because if you're going to pay more interest in student loans, then the penalty is, then it's worth caching out. Okay. And that gets you out of debt so much faster. Yeah.

Yeah. What was that money you're marked for? We didn't really have any sort of plan for others and just to kind of keep it in there. And then maybe once it was done, give it up more.

We were quite going to buy another house or like sell the house right now by a little bit bigger house as our family grew. We got money actually was given to us from big up of my grandfather. So it was kind of unexpected. So we really didn't have much of a plan. And then it was like, I got that.

I had been started paying, bits, you know, loan debt.

“And then everything happened with my laptop.”

And I haven't gone about that much. Okay. The other part of the grave is, hey, this was going to be like house upgrade money. And now it's paying off debt money, which is less exciting. But I would do that in a heartbeat.

100%. I would look into that tonight to see what the penalties are. And then depending on how aggressive you guys want to move up in house. Still look at cutting back some lifestyle and saving up some margin and say, okay, if we were to replenish this. You know, you could do that in a year and a half.

I'll get that money back. But I would go ahead and guess. This new plan is we're at a debt six months by the summer. We're debt free. Yes.

I would do that in a heartbeat. And then you guys save your income and decide how quickly you want to save, how slow. But no one else is determining that for you. Or you guys could say, no, we're good. And for the next year, we're going to just enjoy our life.

And yeah. Maybe you can quit the part-time job. But no, no one's making you do it. We're a student loan. You have to make this payment.

Yeah.

“Life is going to be on your terms soon enough.”

And so far, life has just been happening to you and everything's been unexpected. And I hope soon you can start to get intentional and happen to your life, Charlotte. We're rooting for you. Thanks for calling. This show is sponsored by Better Health.

Financial stress is not just damage or bank accounts. It can also take a toll on our mental and emotional health and our relationships. Money worries causing anxiety and they're one of the leading sources of conflict for all types of couples. I know this. My wife and I have struggled with money conflicts for years.

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When life feels overwhelming, therapy can help. Visit betterhelp.com/Rams you to get 10% off your first month. That's [email protected]/Ramsy. Shane is in Vegas up next. What's going on, Shane? Hey y'all, thanks for having me on. It's an honor to be speaking to you today.

Thank you. How can we help today? Yeah, so it's a favorite topic for you guys, money and family. Long time ago, when I was 18, took out student loans with the agreement with my father. That they would pay until the balance is zero. 35 now, balance is still in the mid 70s to mid 70s.

What was it originally, yeah? I was over 120, so they've been paying it down, they've been making them on payments. That's a problem. I agree with you. The issue I'm really having is that my dad is, he's totally fine paying it. He still makes the payments, but my mother constantly brings up the fact that they are paying for my student loans.

Still think they're stringed attached at the very beginning, they're never going to pay.

We don't have the money to cover it, but take out the loan and we'll cover it. Is it in your name or their name or both? They're in my name. They have the money. Right now, they could snap their fingers and pay it off, but the way my father sees it is he can make more money in the stock market.

Are your parents still together? Yeah, they're still together. Are you married? I am married, yes. Okay.

So when you guys are around your parents, how often is that? How often you'll see them? We live on separate sides of the country, so once twice a year, but even in some phone calls. Should they still come close? What does she say? What are her comments?

A lot of the times it's revolved around like, oh, you just bought a truck like that could have gone to the student loans or you took a nice vacation.

And why is that my, but you know, going back to why I said it's that was never part of the agreement, but I never feel obligated.

But then, you know, my father is like, yeah, I don't dare. I'm still paying them, it's whatever. So have you, do you push frustrating? Yeah, do you push back on her at all? I do. I try to keep it, you know, common and light, but my wife is really the one that gets frustrated about it.

“That's why I was asked if you were married, because I feel like I would be like, oh my gosh.”

See, this is the issue with the student loan stuff, is these parents are like, sure, go take out whatever you want to go take out in your 18 chain, right, and sure you sign it. I mean, yeah, you're 18, you're an adult. So yes, you have some responsibility in the sense of like you chose my decision, but you also had fully functioning adults in your life that said, yes, and we would pay for this. So I almost would have a very kind, but a very clear conversation with her around the boundaries of these comments,

because it starts to erode the relationship. I'm guessing it already has. Yeah, it doesn't sound like the holidays are fine. I mean, that's what you're calling, right? This is your, this is a lot of tension. Yes, okay. So yeah, I mean, I would tell her, and I would be very kind, but I'd be very, very clear.

And, and just, and to be honest with her and say, you know, mom, there have been multiple comments made. I mean, you could give her some examples.

And the truth is, when I was 18, you all told me that you would take them out and you would pay for this.

And I'm holding you all to that word. I mean, that's what was said. If something is changed and you and dad agree on a different plan, you're, I'm happy to have a discussion with you if that's the case. But that's not been the discussion. And so I need you to stop, stop making these comments. They're passive aggressive, and, and it's eroding our relationship. Can you do that, mom? And at that point, that's up to her.

She's the adult that gets to make the decision if she wants to continue and you can tell her. Listen, I don't control y'all's money. That's your decision. So this is now a marital problem. They have of mom disagrees with how dad is handling a debt they agreed to pay. That's a good point too. Yeah. So legally, yes, it's yours. They could stop paying today, and it's going to come to you.

Now, they haven't done that yet, and I'm glad that they're not intentionally trying to tank her life. But this might be another conversation with dad of saying, hey, listen, you have the money. I don't care how much you can make in the freaking stock market. This is a rotting our relationship, which is way more important than some spread you could make. And so you can try to also influence him to, you know, sort of this would solve everything.

Wouldn't it if dad just wrote the check, pay them off and I want to do it.

It's been 17 years. Mom, I don't know, do you want me to have that? Yeah. Ah, who knows. So she just doesn't want to even use any of their money, any more to pay for these loans.

I'm sorry, keep that again. She doesn't want any of their money to be used to pay for any more of your student loans. She's just done with this whole thing.

“I think it's hard to say, I know they're financially well off.”

Like, my mom is retired, my dad. He makes fairly decent living, and I know what their nest egg is, and liquid and retirement. So I know like, it's not a big part of their world. It's not a big part of their world. You know, my wife and I, we make decent money.

So like, the payment could, it would be totally fine for us to take on. It's just like, I need to know if I need to start paying. Yeah. That's right. You guys have the money to write a check and pay this off today.

Um, not in like liquid assets. I mean, I could save a couple more months and it would be fine. But then it would just wipe out all of our liquid investments. No. No.

My wife doesn't want to do that one. So they would probably just be. What I'm hearing is either way, someone's going to be angry.

“And so that's the thing we have to make peace with is who do we want to upset and the truth is you can't control how they react or respond.”

All you can do is be a person of integrity and have a conversation. That's there. So I, I would just say if you wanted to, this is the other option. Is you write a check and say, Mom, I don't want this to come between us in destroy our relationship. Here's the freaking check to pay off the loans.

Yeah. That's the other one. I don't want to do it. Because yeah, because they've been, they freaking have had this for almost 20 years. Yes.

The immaturity is on mom's side at this point. And dad's for. And I'm sure they didn't pay. But yes, it's been two decades, man. When you're, when you're 18 year old, once to go to get $120,000,

you say no, but no, they didn't. They said, yes, we will, we will do this and take this on. And so they're the ones that've been dragging their feet. It's not his, it's not your fault. I mean, you don't even mean to that degree because there was a deal.

Um, yeah. So I'm sorry. That's so frustrating. But I would.

“For the, for your, your wife's sake for your sake to like be in her presence,”

and that passive aggressive comments constantly.

Um, yeah. I would, yeah, I would be clear and draw a boundary there. But again, kind, but clear. And there might be a between the help guys. Yeah, there might be a compromise where you go.

Hey, listen, here's how much I'm willing to chip in to just. And you're really, you're trying to bail the parents out. But they're fine. If they were on food stamps, they can't get that. No, they have the ability to.

Yeah. And so that's where I go. This is really between mom and dad because they have a disagreement. Yeah. Mom should be mad at dad, not the son.

Because dad's been dragging us feed for 17 years. Can I remind you? No, they both have both. Good. And that's.

And clearly mom doesn't have a vote when it comes to finance. I'm like, we're getting more and more of these. I don't know why. I feel like we hear more and more parents. Resentment, guilt.

To adult children with the student loan debacle in the mix of someone's that they're going to pay. They're not paying or they're paying in their map. There's original money for money again. This is a original deal.

Yeah. I mean, it's just it's so much. So can we talk about our parameters around family and money. I think it's a good reminder for everyone listening here, which is this.

Never loan money to family or friends.

“If you want to give money, make it a gift.”

And please don't go into debt for said gift. That's not really a gift. We've heard that were like, well, mom got me a car has a loan on it. And so I, you know, I got to pay it. But she got me the car.

Right. Yes. And so it's because if you want to give it. And if the giving ends up becoming a pattern of enabling bad behavior or irresponsibility, that's another stop, right?

We're not doing that. But they get because I mean, part of the show is about changing your family tree, right? Getting yourself in a position where you can change your life. You change your family's life.

You change others lives. Like the ripple effect is beautiful and wonderful. And we want that to be, but we also want the people on the other side that are receiving it to be in a healthy, good spot themselves to have their own dignity as adults.

So that and then the other thing, George, no co-signing. Ever. Please. Please. No co-signing.

We got a grandma who co-signed. That was last week. I was like, right. I know.

“She's like 92 in this guy's like, yeah, my grandma co-signed.”

I was like, you poor grandma. You're, he's broke. He's probably not going to be able to make the payment. Yeah, they require a co-signer because nobody trusts you to pay it off. Yes.

And so what happens is you end up not paying it off and they go after poor grandma. Yep. Who thought you were going to make the payments perfectly. And she was just more of a, you know, more of just like a nice thing. I'll sign up, but I won't ever have to deal with it.

Right, right. Never think that. It will destroy relationship and cause resentment. And so it's so much easier to just either put the boundary up in the same or give a one-time gift if it's going to be a blessing.

And you're not enabling terrible things. So you think just once for the rest of their, Well, not like an ongoing. Hey, I'm going to give you a thousand bucks every month forever. The pattern.

Yes. You know what I mean? If you were a war bat behavior, that's when it turns into entitlement. Agreed. I'm going to come back to Bank of Dad.

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We're doing great.

How can Rachel and I help?

“So I just, I was going to get some advice.”

My wife and I are looking at taking a $100,000 loan from my father to buy an 18-minute rental property. And I just kind of wanted to see what you guys thought based on the details of the property and everything else. Yeah, let's hear it. Because not, not super excited about this. No, to make you alone.

From your father-in-law, but yeah, give me your number. What are you thinking? Okay, so I got a $900,000 property at 3% interest on the finance. And so it's going to be $100,000 of my money. $100,000 loan from my dad.

And then the owner is willing to do $100,000 of in-kind money is what she calls it. And that includes repairs and improvements on the property for a period of 10 years.

And then she's also willing to mentor my wife and I for two years, the first two years that we own the home.

And then at the end of the 10 years it's going to be a balloon payment. And I know this kind of goes against a lot of the day grand the, I guess, principles. But I want to see what you guys thought.

“Because I think it might be a good opportunity for us to kind of get a business and start moving that way.”

Do you guys own a home currently, a primary home? Yes, we do own a home currently. And we have no debts or payments at all. That house. Oh, besides the house, what's left on that mortgage? 190,000.

Okay. And what's your household income? We make around 135,000 and there's a lot of room for gross there. Cool. How did this idea come up of the eight unit and then your dad loaning you the money? Who brought it up?

So we met this woman at a graduation. And we, we had owned a single family home, investment property. And we got to talk in the her and she and I kind of told her that we're real estate investors. And so I go, well, I got a deal for you. My husband and I are trying to get out of this property because her husband is pretty sick.

And they're just trying to move down to Arizona. And so that's kind of how this got brought up. And then she's the one that kind of structured this deal. Sounds like it. So she knows your dad and was like, well, if he ponies up 100, you pony up 100, we can make this work. And I'll mentor you for two years.

Yes, from Arizona. Yeah, she's kind of creature related to my wife, not by blood or anything. But good. Matthew, I just see 85 ways this could go sideways. It's not worth it. It's not.

I mean, from the way the loan structure with the balloon happening in 10 years. All this borrowing from family. Going into a $900,000 investment property. And that you don't have the money for. I mean, do you, how much you all have saved? How much cash do you and your wife have?

So I have $100,000 for the down. And then we have about $250,000 in the market right now.

“Okay, why don't you have to borrow money from your dad.”

Take your money out if you're going to do the deal. I wouldn't do the deal. But don't, don't, don't, don't, don't borrow money from your dad. You have $350,000. Okay. Got it. And I get, I don't know.

I guess my thought is if I could keep it in the market to make 10%. Where is I could pay my dad back 10% on the money that he loaned the company? I mean, you're needing the stars to align with this. You need 810 and 2 pay on time with no risk there. You need to pay dad back.

You need to make money in the markets. There are so many variables here that could go wrong. And all this just tanks your screwed, right? If the market tanks your screwed, you can't find printers your screwed. If the market goes down.

As Dave always says, if Trump burps and the market credit goes down.

I mean, he's like, we're going to invade Greenland. The stock market got spooked. This is right. And so you just don't know. Well, I mean, yeah.

But here's the parameters that are under house Matthew. Yeah, the underlying principles are we never recommend you buy investment property until your primary home is paid off. Number two, we never recommend you borrow to invest in a rental property. Always recommend paying cash.

And number three, we always tell people never borrow money from family. And so there's a lot of principles here that are being violated all for the sake of it. Quote on quote, good opportunity. And can I, I'm going to say this, Matthew. And I don't want it to be rude.

But you guys had one single residential investment property. Correct you in your wife. Mine is correct. And you tell this lady that you're, you're real estate investors.

You have one investment property.

“And I think she saw ding ding ding ding.”

Here's my ticket out. I got to get out of this horrible situation. I'm in because my husband's sick. And again, I don't think it's like ill will on her end. I just think she thought, oh my gosh, here's a guy who's probably doing all these

like deals that you see on TikTok. And he's got eight VRBOs in here. You know what I mean? And he'll do it. I bet I bet I bet I could offer him this.

And we'll, we'll structure the loan where it works for him. So I can get out of here. That's what she saw. I mean, honestly, she didn't list it. She didn't go and go to some, you know,

investment firm that has, you know, 18 different investors around the country that go and buy property. You know what I mean? I don't know. She found you in your wife.

And you thought you hit the hit a great deal. And you hit a horrible deal. Not good. Not good. Okay.

Okay. Thank you. I appreciate your advice. And you do. Not what you wanted to hear right now.

Sorry, Matthew. So listen. You and you I've did though with, I would pay off your house. But I, I'm all about.

“I think I think having investment properties is amazing.”

My husband and I do. I mean, I think it's, I think it is great. You just have to start slow.

Like the first one when Cine and I got.

This was gosh, probably 10 years ago. It was a short sale condo. In this like kind of like sketchy part of Nashville. But it's what we did. But we got a deal.

We saved up. You know, we bought it for really not a lot. Had to go do a lot of work in it. We sold it. Probably gosh.

Seven years later. When Nashville was not. And it was amazing. I was like, this is great, right? You're like, you have to start slow.

Start small. Don't start with a million dollar eight unit property. Because you're about to take on all those people. Like that's going to be a huge headache. Like get some things under your belt.

Start small. And then start to work your way up. Which is not as flashy. Not as exciting. But it is, it is peace.

That is a peaceful way to do this.

“And not create chaos because you guys are setting yourself up from chaos.”

And maybe to ruin a relationship with your dad if this goes bad too. I've rarely seen it where they go. Yeah, bar money from dad. It worked out perfectly. Payed him back and he was happy.

I was happy. Usually it becomes all dad wants a piece of the pie now. He wants his money back because he needs to retire. That's it. Which means I need to sell the property.

Oh, and he wants appreciation. And so he wants that too on top of his 100,000 on top of interest.

And it just always ruins.

Yeah, or he gets sick and he needs 100 grand back. You know, and I don't know. There's just a lot, a lot of things. So I would hold off and just go slow. And it's not exciting.

I don't know. But it's worth it. What is the 250 invested for? What is that earmarked for? Um, what do you, what exactly do you mean by like,

What am I saving that for? Yeah, you said you had 250,000 in the markets. I'm guessing that's not a retirement just in a brokerage account. Yeah, yeah, so it's a mix of IRAs and then just the personal brokerage account. And that's just saving for retirement is kind of what I'm doing.

And kind of learning to trade it on my own. And with the help from a financial investor and stuff. So okay. I was going to say if you have liquid money that is really earmarked for nothing. And you want to take it and throw it at the house.

The non-retirement portion. You could do that in speed up the process. Free up a mortgage payment. And then you can stack cash fast. And you guys are amazing savers.

So then yeah stack up some cash and get 300 grams here. You know, like save that over the next five years or whatever your income is. And then go buy a rental property with cash. And that's it. You know what you mean?

Like you can, you can do this. Slow walk in it. But do it in the right order. Pay off the house. If you have the money, I would pay off your primary home.

And. Yeah. I just. Is reducing risk. And right now we're just adding more and more more risk.

And you're going to pay off your money. You're going to pay off your money. You're going to pay off your money. You're going to pay off your money. You're going to pay off your money.

You're going to pay off your money. You're going to pay off your money. You're going to pay off your money. You're going to pay off your money. You're going to pay off your money.

You're going to pay off your money. You're going to pay off your money. You're going to pay off your money. You're going to pay off your money. You're going to pay off your money.

You're going to pay off your money. You're going to pay off your money. You're going to pay off your money. You're going to pay off your money. You're going to pay off your money.

You're going to pay off your money. You're going to pay off your money. You're going to pay off your money. You're going to pay off your money. You're going to pay off your money.

You're going to pay off your money. You're going to pay off your money. You're going to pay off your money. You're going to pay off your money. You're going to pay off your money.

If you're working the baby steps, the best and fastest way to do it is by using every dollar. It's more than just our budgeting app. Now the plan is built right in. You can track your progress, plus get personalized recommendations and coaching for

It's like having one of us walking with you every day 24/7, showing you the next

right step and holding you accountable. So start every dollar for free. You can download it in the app store or Google Play. Miriam is in New York City up next. Miriam, how can we help?

Hi. It's a pleasure to speak with you. Thank you for taking my call. Sure. My question is about life insurance.

I thought it would appreciate forward. I wanted to call that insurance and my husband knew two people who kept bugging him that they wanted to solve what insurance said. We need a 20 year term.

“I think we got a little screwed by them because we didn't get a policy which they said”

was 20 year but it's extendable 20 year. So after the 20 years you can re-up at the current premiums for your age which is going to be two to five times higher problem. I think when we got the package which was after we had 30 days to cancel or whatever but it's passed in 30 days either way.

Either way, I'm going to replace it but it goes up even before the 20 years I think. Like there's a whole chart. It's hard to understand. Yeah. I'm not really sure.

Who'd you get it through? What company? New York Western. Oh boy, okay, you've said enough for me. I am a cancel yesterday.

It's not a scam and there are company who does all kinds of financial products but likely what happens. Here's what I've seen. It's mostly young guys right out of college who want some sales experience and they sell the scumiest life insurance products to unsuspecting victims like their family and friends.

That's what I've seen. So I'm not talking about company. But that's my brother. Same thing happened to my own brother. That's right.

Some guy from college reaches out. Hey, man, I do. And so I would get out of this and I would contact our friends at Zander because they're not going to sell you extendable term life insurance. Turn life insurance by definition. Did you already reach out to them there?

Okay. So I just wanted to know, like based on something that I should I take 20 years. Should I take 30 years? Based on the daybreak with a child writer.

Which I never heard on the show.

They hold on. North Western said they've recognized the child. No, no, no, no, no. For what reason? I don't know.

I have four kids. I never heard it from him.

“That's why I called because I wanted to understand.”

And then somebody else. I'm getting very overwhelmed with somebody else told me that we should really do disability writer. No, there's a lot of writers. And when you hear the word writer, just think gimmick.

And so all you need is term life insurance. 20 years should be enough. And here's how to think about it. In 20 years time, you should be self-insured. If you follow the Ramsey plan, you become debt free.

Stay debt free. You have the emergency fund. You invest in retirement for 20 years. You pay the house off in 15 years. If you follow our parameters of 15 year mortgage.

And all of a sudden, you don't need the life insurance anymore. Once the term expires. So that's the goal. And if it needs. If you need 25 years to get there, they get 25.

Well, and that's what I'm asking. That's what I'm asking. We're in baby set 3B. We're in New York. So that's taking a while.

I have four kids. One on the way. And I'm not done. My husband and I are both in very large families. So I'm thinking, might you do not be out of the house in 20 years.

Should I go longer? Should I look for something in between? To add? Yeah. I mean, you could see how much it is because are you guys in good health?

Would you say? Yes. Okay.

“Because that's the great thing about term life is it is so inexpensive.”

So if you have time for renewal, you can always go back through and recheck things

and make different decisions. You can always get additional policies in a few years. Now, it's going to be more expensive as you age. So your best bet likely. And they can help you run the math is going, hey, let's do a 25 year.

Because it's going to end up being cheaper than doing a 20 now and a five later. And so I would confer with them. Get the math on it and always stick to term no matter what. Just term. If it's 15, 20, 25, that's fine.

And always get 10 to 12 times your annual income or your husband's annual income. And both of you should have your own individual policies. Yes. And you're saying not 30, 25 should. I think of more than that.

30 feels impressive. If the kids are still in the house at that point, that's on them. And you guys will be multimillionaires. Yeah, I was going to say because I mean, yes. You'll be self-insured.

In 25 years. Yes, Miram. If you guys are investing 15% of your income. If you guys are working to pay everything off. I'm like, it's just that continues about that's where you build wealth.

And in 25 years, what that's going to end up being is a lot of money. And so for the kids that are in the home. Maybe it's one or two of them. They're going to have plenty of money. The others should be out living their own lives.

Right. You know, and not needing your funding. You'll have a village at that point to take care of each other. So I'm less worried. 25 years from now.

But what life looks like if you follow the plan. Because I can ask one more question. Sure.

So then do you buy another plan in terms of the difference?

You can, you can get a small policy for the difference. I wouldn't cancel the one you currently have and get a new one. So you can ask. What do you look at that like in a year? If it goes up every few years.

It's a parameter. So if you get a $5,000 raise, you don't need to go out and get an extra policy. Right. But if you get a substantial raise and your lifestyles change and your expenses have changed dramatically. That's when you go, all right, we need to re-look at this.

Yeah, it's about every four to five years I would re-look. And in the, you know, the kids situation too changes it. I mean, for me. Right. So yeah, but I'd say, yeah, every four to five years.

I'm trying to go Winston. Because we just re-upped our life insurance. Maybe like two years ago or something. Because we still get it. I don't know.

I like having it, you know, even if we're debt free. I mean, there's a part of me that I'm like, we're young and healthy. And it's cheap. That's a great thing about it. It costs.

I mean, it's a great policy to have it. Yeah. Yeah. So yeah. So anything fancy around it anywhere you don't understand.

Miriam usually is like a, that's a red flag to me. They're adding things on. If it's a young guy that's in the situation. And it's all these weird terms again that they're selling you this package. Probably not a great deal.

Like the simpler the better. Just a 20 year 25 year.

And they always want to pray on your emotions and the what ifs and well, a good parent would do this.

You really want to take care of it. So kids don't need life insurance. No, you, you know, mean all of it. So it's meant to do one thing, which is replace income. That's it.

Yeah. Your two year old is not bringing, you know, money into the house here unless he's like a Gerber baby making bank. So you're asking really good questions, Miriam. And I love that you're taking care of your family and this way.

“Most people are going, what the heck are they talking about?”

I don't have any insurance. And so for everyone out there listening, you need term life insurance if anybody depends on you. A spouse or children. And it's very affordable. And you can call our friends at Zander and get this done today.

800 356 4282 or go to zander.com. They'll take care of you. Rachel and I both have our policies through Zander for our families. And it's well worth them. And Zander's great because they go and shop.

They're all different companies versus again, like a northwestern right to pick on them a little bit. But it's like, okay, it's just one or aflac. It's just one. You know what I mean? I guess their car.

I don't know if they do life. They probably do it all these things. But yeah, it's not just the one company that you're getting, the price from what Zander does. They shop all the companies to get you the best place in what you're looking. And a lot of these now have no medical exams.

Like if you're under, I don't know, a million dollar policy. Oh, really? You don't have to go get the medical exam or that's not.

You know, so that's, that's always nice, not have to get convenient.

Have someone come to the house and get pregnant and get your blood done or go somewhere and get the blood worked on. I love it. And it's a good idea to get healthy before you shop for life insurance. Get the bad habits. We thinking about your diet the night before.

Like it's strong. Yeah. It's like cramming for a test. You're like, well, if I don't eat bad today. Bad soon drink a lot of water.

Because they're like, good going.

“How fast will my blood work be good if I look cut sweet?”

I know. Yeah. That's a good reminder. Yeah. And I think those are some of the saddest calls Georgia.

You know, we'll get, you know, a widow or widow or widow calling that their spouse passed away. And they have kids. And they're trying to pick up the pieces. You know, whether they're trying to find a new job or starting to work because they were a stayed home parent or trying to figure out child care for the kids. So they can't go to where I mean, it's just it.

And if there is no life insurance, then they are, they have nothing. You know, they're just like what it is. And so it is. And the sad part is a lot of people think they're covered because they're like, well, he has one through work. And they go, well, how much is that policy?

They go, it's $50,000. I was like, well, great. We can get by for maybe six to 12 months. Yeah. But what about after that?

And so the goal here is if you make $50,000 and you get a $500,000 policy, you could invest that money. And it would be able to spit off $50,000 with the average return of the market. And so that's the goal of getting 10 to 12 times your income is because the stock market historically has done about 10 to 12%. And so that's the reason for life insurance. That's the mechanics of it.

And it doesn't take long. I know it feels like, well, I'm going to die sooner if I get life insurance. Now, you're going to die regardless, maybe tomorrow, maybe in 50 years.

“But either way, you need to sleep better knowing that your family's protected.”

And our friends and their will hook you up. You spend hours researching before making a major purchase, like a home or car. But it's also a good idea to put in the work searching for the right insurance coverage. To protect your biggest assets, I recommend using Ramsey Trusted Pros. Whether you're looking for car home or any other type of insurance,

Ramsey Trusted Providers have been coached and vetted to serve you like we would.

[Music]

Welcome back to the Ramsey Show in the Fairwins Credit Union Studio.

I'm George Campbell, joined by Ramsey Personality Rachel Cruz. We're taking your calls at Triple 8-825-5225. Katie is in South Carolina up next. Katie, what's going on? Hey, thank you guys so much for taking my call.

I hope you all are well. We are. What's going on with you? How can we help? So I mean, I might sound crazy for seeing this, but I just can't take the feeling that we're charging a little bit too much money. And I guess I'm looking for a way to justify my count.

Or, you know, try and figure out how to process, you know, how fast do we want to grow and how should we scale our company. Okay, so we, is this your husband? Yeah, my husband started this business before we got married and I kind of joined him after that.

We've been a business for about 11 years. Cool, what kind of business is it? It's a trucking company, so we do some hauling.

“Wow, that business has really taken off, hasn't it?”

Yeah. What are you guys bringing in? I was the last year we brought in 290,000 sales. And then after, you know, paying everyone and expenses, we profit about 120,000.

And that's as a household. So that's your household income for the year? So that's not the household income. Most of that stayed in the business. That was just what the business proceeded.

We paid ourselves about 50,000. Oh, wow. And that's together. That's total that came to us. Wow, all right.

So where did this price hike come into play? And why? Yeah, so we are pricing is very simple. We've just matched what the competition is around us. We don't have a lot of competitors.

“And, you know, we're one of the few people that do”

our specific type of hauling in our area.

So we really have just always kind of matched what market price is.

But I'm kind of looking at a case by case job by job and realizing that the range of profit we have on each job is super wide. So sometimes it's, you know, a small amount of profit. But a lot of the time, it's quite large. So I'm just kind of, you know, when I brought up the idea of restructuring

how we do our pricing and, you know, taking it from super simple to trying to be a little bit more specific. So we can afford to help some people that usually say, "Oh, no, you're too expensive." Well, you know, if you're willing to make 40% profit on that job

instead of 60, maybe that person would have said yes. Because you need more business. Do you find you need more business? Well, so our work is very seasonal. The demand in season is so high.

We can't keep up with it. But then during the off season, it's not really a thing. So we, you know, we obviously sewed down a lot. And that's where blessed that, you know, able to work very full time over time six months out of the years

enough for us to live off of. And then the rest of the time we can work on side gigs or spending more time with family, which is great. So yes, and no, we definitely don't need more work. We can't handle it in the summer.

But the idea is obviously to grow. So we can do even more during the summer if that makes sense. Got it. So is there a moral profit margin in your mind or anything above this? It's a moral to charge?

Well, I don't have a specific number.

“It's more the concept of, you know, is that even a valid question?”

Well, I mean, if you look at prices, is his reasoning. Hey, everything's gone up. Everything costs us more fuel insurance maintenance, tires, labor payments. Like that's all gone up.

And so it's not like he's tripling the cost just for fun. And you guys are bringing home 50 grand as a household. And it's a specific type of service that you said. There's not a lot of competition. And you guys are...

Yeah, I mean, and not a lot of supply. Which means you can charge more. And it's not like you're hurting anybody. They're happily paying you for this service that they can't do the same.

Yes, so more I say that loud. The more I know, I'm kind of making my husband sound like a super star of business.

But you know, I just always go back to,

I always go back to this UK's where people have asked us for help and we give them our price and they're like, "Oh, you know, that's way over budget." And in my head, I'm saying, "I really know I could have helped this person now. I could have met their needs." Sure.

And I chose not to because I wanted to keep that profit high. Yeah, I hear you.

like we give stuff away a lot.

Whether it's tickets to a live event, books, you know. And some stuff, it's like very nice coaching, you know, when I'm one coaching that we'll pay for people's sessions. Yeah. We will have life within open hands, business-wise,

but we're only able to do that because we are making a profit on the other end.

“That is feeding a thousand people that work here and their families and all of it, right?”

So there is room to be, if there is room to be generous, I would talk to your husband about that and say, "Hey, you know, and I had to sound so legalistic and I don't mean to be this like for me only. I could about it, but I don't know. Okay, I'm just thinking like four different situations,

you know, throughout the summer. When you guys are in high demand and people like we need you, but I can't afford that pricing. You know, are there four times that you can say, and you guys agree on that?

Okay, I just feel something in my spirit that I'm supposed to extend some grace to them and help them. Yeah. And so that way you're at least in the practice of doing that when you feel led, but it's not changing the whole structure of the company

because I don't feel like you guys are doing something wrong or immoral to George's point and you know, you're, you know, you guys are bringing home 50K a year out of... We're far from being greedy here.

Yeah, yeah, it's not like you're making five million

and you're like, "Oh my gosh, I feel like we're over charging everyone." Most of your customers are making more than you. And so that's the other thing to think about here is you guys also need to put food on the table and you have financial goals and there's nothing wrong or immoral but making money.

Have you screwed anyone over? Have you lied? Have you cheated? Right, no, you have absolutely not. And so it's okay to say, this is what our service is worth and we're going to charge it.

And if you can't afford it, that's not a slide on them.

“It's just saying, "Hey, there's, you need to go somewhere else”

that you can afford." Mm-hmm. And so I can't, I can't get everything that I want. There's things that I can't afford. And I don't expect that business to go, "Well, can you just bring the budget down

for me?"

This is not a chair. If you want to start a charity, go for it.

You can open a non-profit and do all kinds of charitable gifts. Yeah, but I wonder, because she kind of like scratched this it's a little bit within it, right? I like your idea of saying, "Hey, there's going to be a customer that comes our way that I just, my heart,

grieves for them and I want to help them." And that's totally great. Yeah. Say, "We want to be generous to this many customers a year or when it comes up, we're going to give some people a break."

But I don't think you also need to go, "Well, whatever your budget is, we'll try to meet that because that's how you go out of the way." Yeah. I mean, any industry, Katie, there's going to be people that can't afford. You know what I mean?

I just think, "Well, I don't know why I thought social media." I'm like people that need help with social media. There's people that do that as a job that charge in same money because they're really good at it or people that are starting out and don't charge much at night.

You couldn't afford the high ends. That's okay. It's a service they provide. And just because they charge a lot, it doesn't make them a bad person.

It means they're probably really good at their job on this niche area of life, which is what you guys have done. Yeah. So nothing bad. But I would say lean into when you can.

And it's not the whole business bottle. But if there's moments to say, "Hey, I want to be generous in this instance. You and your husband get on the same page with that. And maybe that'll kind of help free up your spirit, some in that generosity."

Think about this way. If you guys charge more and you make more that gives you the freedom to be more generous when the time comes without it being a loss for you.

“And so I think there's nothing wrong with that.”

And listen, if you charge too much, you'll go out of business eventually. And so you'll know when the price is right, when you have the right amount of supply and demand happening. And so I don't think anyone's right or wrong here.

I think we need to meet in the middle and understand you want to be generous and he needs to pay the bills. Both of you are right. [music] Hey guys, I've got big news.

The Ramsey Show is going on tour. And this is your chance to be more than just a listener. You get to be part of the show. So here are questions, ask live, and experience the kind of momentum

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Get your tickets at RamseySolutions.com/events or by clicking the link in the show notes. [music] CJ's in Phoenix up next. Welcome to the Ramsey Show.

CJ, how can we help? Yeah, it's how you're doing. Thank you for hosting me.

with the credit cards, student loans, and a card loan.

“And my house payment, I think when I first got the house,”

I was making a certain amount of money. And I thought it was a good idea to get this two story house. But for paycheck, it's been the house payment. What I take to escrow is a whole check. So it's half your income?

I have my income, yes sir. You take home pay. Okay, my take home. What do you make? I make before taxes about 103,000.

Okay, are you single? At in married. Married. Okay, is your kid? Spouse working outside of the home or at home?

She, we just, she just had a baby. So she's not working currently. Congrats. That's exciting. Thank you.

Okay, what's your total debt? My total debt with the house payment. I want to say not including the mortgage. Just give us the consumer mortgage. You said, car loan credit cards, student loans.

About 110,000. How much is the car loan? The car loan is only 5,000. The bigger one is the credit cards and the student loans. What are those breakouts to be?

How much are the student loans? The student loan is about 40,000 on the government one. And 5,000 are taxes loan. I don't think that's the private one. Okay.

And the credit card comes out to be all together about 60,000. 60,000. How many credit cards do you have? And five, in between five, it's the 60,000. Okay.

Well, what did the 60k get spent on the credit cards? And over a what period of time was this? It's been over the last I want to say it about year and a half. Where I got the clinical court need a position. Not that the pay I came home as a full-time nurse and to get this position.

And I was doing a travel assignment. So I was getting paid more.

“So that's how I thought in my mind that I was just going to stay together.”

I mean, for a good amount of time traveling, but we had our first kid. And that was, you know, off of home. So you're income went down, but you're spending state high.

The lifestyle creep never went away.

And so you were just spending on the cards. So the house payment. Okay. And you know, the one payment and to, you know, as a thing. Speak directly in your phone, CJ. We're having a hard time hearing you.

Oh, sorry. Okay. So once the house pay, once I came full-time and the house payment was half of what, you know, half of once. One take, one take per month. That's when I was, you know, I'll put it on the card. And hopefully I'll, you know, be able to pay it.

And never just put in the mortgage on the card. And not the mortgage. It was just everything else. Everything else. Okay.

Yes. Oh, because you spent one full-page check on the mortgage and then anything else. I'll just went on the card. Yes, ma'am. Okay.

“Are you and your wife ready to have a very different life?”

Yes, sir. We talked about it.

And we always listen to the show.

And we always just talk about, we need to do better. And with the credit cards, most of them are through, through Chase Bank. And I did call to tell them that I can pay anymore. So they put me on the plan. But even with that, it's about just chase alone.

It's about 1200 that I'm paying. Okay. With everything CJ with, with your paid twice a month. With the mortgage, the credit card bills, your regular utilities. I mean, everything.

I'm assuming you're coming up short every month. If you say current with all of your debt. I do come short. I did pick up this year. I did pick up a home health job, which usually it's about $4,500 more per month.

And that gives me the ability like that 500 to pay. That's what you need to say. To keep your head above water. But that's it, though. There's nothing extra to be throwing out the set to get out of it.

It's just, that's just to pay the mental payments. That's just a month to month. And you know what? Yeah. How many hours are you doing that extra job?

That's per patient. Okay. Right now it. I have about three or four patients. Sometimes I'll tell them my days off.

And they'll try to give me, you know, PRN jobs to just go see a patient. But they don't come off. And it's just not reliable.

So I mean, that's a good thing to have. Because I feel like it pays well. But I would have another side hustle. Because, yes, CJ, it's something. It's got a ship from the income perspective.

“I think you guys need to cut your lifestyle if you haven't already.”

Yeah, no eating out, not no investing, no saving. All we're doing is trying to pay down the smallest debt. So take that smallest credit card that you have. And we're going to knock that out. Or if it's the car loan, that's the smallest debt or the student loan.

We're knocking that balance out first and make minimums on the rest.

So we're going to try to stay current on all the bills and throw extra at the smallest debt we have. That's called the debt snowball method. It'll either be that $5,000 private student loan or your $5,000 car. Or if there's a credit card smaller than $5,000, you're going to attack that first.

Okay. Is there anything you could sell to come up with some cash to speed this up? Everything else we would have looked and it would just be just kind of most of a shoe. But you know, what is the car worth? You said you owe five on it.

What is it worth? It's worth about 3000. Oh, gee. But the miles it I have.

“I think right now it's about a hundred and fifty five thousand miles on it.”

Okay.

How long ago did your wife have the baby?

A couple months ago. Okay. You know, I would have a goal for you guys because again, $500 a month shifts. You know, you guys, it's so helpful. So I'm thanking for her.

What could she do from home to make $500 a month? And that could include selling stuff. She could make a part-time job of selling your shoes CJ. Making some money. Yeah.

You know, but for real, like what what can she do? And she doesn't have to start today. But maybe you guys look up and say, okay, you're going to start working CJ extra. You're cutting life style. And then we're going to look up and I don't know how I'm making this up.

June. She's going to start doing something through the end of the year. Bringing home an extra five to a thousand five hundred to a thousand dollars. Like I think as much income as you guys can get in rolling in, which is going to be exhausting. It's going to be so hard.

It's so frustrating. But that's going to make you guys get out of debt that much faster. Because it's not fun right during this process of sacrifice. But you guys either have to do it really intensely and just go all in. Or you kind of just dabble around the edges and you guys will keep it around for another four to five years.

Because here's the truth. If we continue with this pace and you can only throw a hundred or 200 bucks of this debt, you're going to be in debt for the rest of your life.

“And so that's why we're saying six figure debt.”

You need a massive six figure income to pay this off in a reasonable amount of time. Two, three, four years. That's the goal here of intense sacrifice. Not 20 years of just trying to make our way through and make the minimum payments while the interest racks up. So that's why we want you to have a sense of urgency to get this income up.

And you've got a lot of skills that are very valuable. And so if you can go make a hundred fifty grand, 200 grand, and she makes another fifty grand, even if the kids are in daycare for a season, they will survive. The goal is for you guys to get above water here. Okay.

We're getting our income up. That's the key. Getting expenses down as much as we can. But even then your income has to go up in order to knock this out quickly. Yes, sir.

So hang on a line. See, Jay. I'm going to send you a copy of my book, Breaking Free from Broke along with every dollar. That's our budgeting tool. And you and your wife tonight, you're going to lay out here's our next paychecks.

Here's all of our expenses. Here's our plan to make the most of every dollar.

Yeah, and we always caution against moving.

I mean, honestly, because it's such a big expense. It's like one of the biggest things to uproot your family out of a home. But I would consider it's half of your income. And unless your main job, you're going to see significant raises in the next one, two, three years. If there's not, and it's looking pretty plateau.

I mean, probably that's an extra $2,000. If you get it under that to that 24, that 25%. That's an extra two grand a month that you're, you know, that you could save. If you guys change your housing situation, which I know is that's a big ask. But it changes the whole timeline.

Yeah. And you guys can become homeowners again once we're not broke. But right now, with that 50% mortgage, it's eaten your lunch and hurting your ability to pay down the debt. So hang on a line. CJ, we're going to get you those resources. We wish you guys the best for this debt pay off.

Hey, guys. Dave Ramsey here. Every day on this show, we help people work through real money problems and figure out what to do next. And now you can get that same kind of help anytime with ask Ramsey. Ask your money question and get answers built on Ramsey principles we use on the show. Whether you're making a decision or just want something explained, ask Ramsey is here to help.

Go to RamseySolutions.com and try ask Ramsey today.

That's RamseySolutions.com. [Music]

“The Ramsey show a question of the days brought to you by a Wi-Refi.”

You don't have to stay stuck in default in private student loans forever. Wi-Refi helps borrowers take back control with affordable refinancing options that actually work. Learn more at Wi-Refi.com/Ramsey. Not available in all states. Today's question comes from Lucy in Oregon,

which I'm concerned about being a target of deed fraud if we pay off our mortgage. If we keep our current mortgage, the bank would have to notify us if someone tries to take out a second mortgage to steal our equity. We're both in our 70s. I am retired and my husband plays the retire soon. The balance on the mortgage is $48,000.

We have the funds to take out of our 401k to pay it off what should we do. Wow. Okay. Well, I mean deed fraud. It does exist, but I'm not going to be so paranoid that I keep my mortgage around for it.

To do it.

Because you can always, you know,

if God forbid that happened, it's not super common. More when you're like, you know, buy in homes. I can sure the deed's, you know, good. I don't know. I don't know how recently we got owner title insurance, which protects you against that.

So if you're worried about it, I would look into one of those policies. Yeah, to do that. You can sign up with your county and get deed alerts as well. So that's also one way to forget. You can also, you know, if it did happen, God forbid,

you're not going to be on the line for it because it's fraud. And so you can go through the bank and, you know, maybe some, I don't know, lawsuits. But at the end of the day, you're not going to have to owe it because it's fraud at that point. So I wouldn't, I wouldn't be so worried that I avoid paying my house off.

That's wild. You're in your 70s. There's a much more risk with this mortgage hanging around than there is that you guys experienced deed fraud. Yeah. So I wouldn't worry about that.

I would just pay it off and do your due diligence to stay protected. You know, for easier credit, check the records with your county regularly. Get the owner title insurance if you can. All of that good stuff. Well, it's a good question. And it's a valid concern. So thank you for that.

“Alan is in Colorado up next. What's going on, Alan?”

Thank you for taking my call. I have a question about a 529 account that my wife and I have for our son. When he is finished with college, which he's just a couple years down the road, there'll be approximately 120,000 left in the 529 account. I had to go.

I haven't. Yeah. Yeah. It's pretty strong. Um, I haven't opinion of what to do with it, but I'm just curious to get you all steak. How old is the 529? When did you open it? Oh, boy.

Our son is 20. Let's say 20 years ago. Oh, great. I was going to say there's the with the new secure 2.0 act. You can roll over up to 35 grand if it's been open for 50 years. You know, you can do that periodically. You can't do all 35 at once.

But up to the Roth IRA limit. You can start funding that. So that's one option. Do you have other kids, Alan? Uh, no, we don't. Okay.

It's just this. Yeah. Well, if you do that, you know, that's 35 out. So you got about what 85 or so, 95 left. Um, you said you had a plan already. I'm curious as to what you wanted to do. So my body is keep it.

Get the 539. It's worth the Guardian of it. Put it in his name. He's an adult now. But don't let him touch it. Just have it be there. So it's generational. You know, when his kids are ready to go to college. That's going to be a pretty large sum.

When his kids kids get ready to go to college, it'll be astronomical. Um, it's something that you can really just listen. That's true. Well, people don't think about that.

It becomes like an endowment basically for your own family.

It's a generational wealth that no one ever goes into debt for education. And that's personally what I'm doing.

“A lot of people go, well, I don't want to overfund it because what if they don't go to college?”

And I go, if I overfund it, they're going to love all great, great grandpa George. Just setting up this 529 many moons ago. And can I do some math for you? Your kid is 20, right? 20.

So let's say he has a kid at what? 25? Is that fair? Um, got to make it, but sure. Okay, should we go 30? Is that more realistic? Yeah, go 30. You can say 18 years that kid can pose up.

Yes. So your son will be 48 when your grandson granddaughter goes to college theoretically. How should be in the account? So from 20 to 48, if you just left, let's say 90 grand in there.

Didn't do anything.

You never contribute another dime.

You'd have $1.4 million when he's 48. I hope that's enough to cover college at that point. And something to us, think, even if this kids don't want to go or do go. And there's extra at 65, correct me if I'm wrong. You can start using that for his own retirement with no penalties.

Yeah, there's a lot of stipulations with the 529. And even if he used it in before then, you know, you'd pay the 10% penalty. But other than that, it's not like wasted money.

“It's just throwing down the toilet, so I think you're being very wise with this.”

And I love the idea of creating generational wealth. And a lot of people don't realize the definition of beneficiary family is pretty loose. And so siblings, nieces, nephews, future kids, yourself, your spouse, a grandchild. There's so many options here that you could bless someone within your family. I agree.

That's right. So let's say you got a brother. And they're like, hey, they didn't prepare. But the kid doesn't deserve to go into crippling debt just because of that. I'd love to transfer this to them.

You can change it in a picture at that point. Yeah. Yeah, there's a lot of way you can go with it. Yes, for sure. Well done, Alan.

Yes. Usually not. It's usually the opposite problem that we talk to people about. So it's like a parent plus loan. This is the exact opposite.

So I'm curious. How much money did it cost for your kid to go through school? So first off, something else too, we owe it to your Dave Ramsey from like 2005. You all have been a blessing to both my life and I. So much for we actually taught many, many after you classes.

Thank you. So yeah, you're welcome, you're welcome. So this 529 account, we actually showed him how compounding interest works. We stopped investing in the 529 when he was a freshman in college. At 150, that's about where it was at.

He's gone through three years of school in the 759. Wow. It's crazy. You're telling me that it was growing faster than you were withdrawing. That's what I'm telling you.

That's incredible. That's amazing. And it sounds like he went to a reasonably price school and maybe even got some other scholarships. There's a few scholarships. And you know, he was an Albert Einstein, but he didn't care.

And yeah, he was a state school, so 20, 20 to 23,000. Totally. That's incredible. That's the dream, Alan. Well done.

Well done. We'll just applaud you. I mean, honestly, that is.

“If you're in the family tree of Alan, you should be thankful right now.”

That's right. Pretty awesome. Thank you for the call. That's a cool kind of case study and what actually happens when you do it right. Yes.

And so I always recommend get started early on that 529, even if it's 100 bucks, 200 bucks.

300, 400, 500. Yeah, you're talking six figures in there by the time they're 18. For sure. And the college conversation, I feel like has been around a little bit changing, right? That college has changed.

We don't know what it's going to look like. Are we all going to do two birds and AI is going to walk over us? Yeah, that's right. We don't know. But just remember, it's not stuck in there to your point.

It's not like you're, you know, it's in insane amounts. If you were to pull out, just say, like, God forbid, you're like, listen, we don't. We don't need this at all. But we need the cash, so we're going to take the penalty. Okay.

So then you do that, right? And you pay some of the penalty. But then you have your cash. It's not like you lose it completely. So.

And people ask, well, what if I want to invest for my kid for something else other than school? I say, great. Do the 529. Don't trade those dollars for investing over here. Yeah.

“If you want to invest on top of that, you can just open a brokerage account in your name.”

Yep. A non-retirement account and put money in there. I'm not a fan of putting the accounts in your kids' names because they legally then have access with the, you know, the UGM and their ATLA. At 18, this kid might have 120 grand.

That's legally theirs. Mm-hmm. That's frightening. I don't know if you know, or any 18 year olds, most of them cannot be trusted with a 120,000 dollar pile of money.

Most adults can't be trusted with that. Let's say, yeah. And so I like the idea of me being able to control how much to give to that child for a, you know, a wedding or a down payment or a car. Whatever it is to help them get a leg up.

Yeah. Delayed gratification for a 45 year old 50 year old. It's probably a little bit more embedded than a 18 year old. Yes. We need to make sure they're prefrontal cortex is not yet.

That's right. So that's personally what I'm doing for my kids. I got the 529s for each of them and I've got the brokerage accounts.

So they'll be very thankful one day when homes are $4 million.

And your grandkids. And my grandkids. Great, great, great uncle George. That's so weird to think about. But I think grandpa George, I'm going to settle into that.

I love it. Thank you. Thank you. Thank you. Thanks on like Steve Martin on Father of the bride.

Oh, that's a good one. I thought you were going George Bailey. A lot of good George is going to move east. Oh, it's a wonderful life. That's a good one too.

Our scripture of the day Luke 1411.

“For all those who exalt themselves will be humbled.”

And those who humble themselves will be exalted. CS Lewis said humility is not thinking less of yourself, but thinking of yourself less. Poetry right there. That's good.

All right. Let's go out to Dave and Denver. What's going on Dave? Hey guys, thanks for having me. I'm a low-knocker for mortgages.

My question is, how to get clients and they become the meaning of mortgage. Most often it's older clients in the situation. And one spouse is passed away. I've access to their assets or see what they have. And it's a vulnerable situation.

And really they don't need a mortgage. What they need to do is sell some of their assets to get a home to downsides. I'm just looking for advice on how to bridge that gap with that. And kind of properly communicate that tool. So you see this going to a dangerous place.

And you're like, how do I help these people when my job is to lend them the money that they're approved for? Yeah. And it's not overly dangerous sometimes to like, you know, they have one spouse maybe under a whole life collecting these assets.

“And so when I come on, I say, maybe you should look at something.”

That's kind of a, you know, my husband or whoever close together. This whole life who will you to tell me to sell this kind of thing. Yeah, you feel like, hey, that's outside the boundaries of my job. But it's like your heart is aching for them to be like, hey, you really need to go do these things. Yeah.

So I'm looking for words of wisdom when I'm a properly navigate that. Well, I think you have the right heart.

That's the most important part is your motive and your spirit and the tone in which you deliver this.

But I think it's just starting with, I want to make sure this house fits your life, not just your approval amount. And as I'm seeing it here, I can see the assets over here. I can see what the mortgage payment's going to be. I think things are going to be tight unless you make some moves.

Make some sacrifices here. And you could offer, hey, one recommendation you could pursue is selling these assets, which could do XYZ. Yeah, yeah. And then it's just, it's not you telling what they have to do. It's just saying, hey, I try to, I treat people how I want to be treated.

And I can see all of your information here. And this is what I'm seeing. Yeah, and it's kind of a, you know, for them, take it or leave it kind of thing. But it's almost for your conscience, you know, you, you're like, man, I see this. And I just want to say it out loud.

But at the end of the day, they're going to be the ones, you know, making the decision. And if they don't take that advice and they do something else, that's okay. That's, you know, they're adults and they can do that. At least you're sleeping well at night. No, you said your piece.

Oh, yeah, absolutely. I just kind of thought how I sprayed the Dave Ramsey throughout my entire career. Yeah, love it a lot. It's hard because you want to, well, Dave says, but you can't do that. It's not going to work.

And instead, you, you sort of get to the root of it. You say the families that I see thrive when it comes to buying a home, they have margin outside of their mortgage payment to live and to save and to have fun and go on vacations. And right now, what I'm seeing with your payment, it's going to be a lot of your income taken up by this payment. And so you can go, hey, here's the approval amount, but here would be it. Let's run the numbers and see what would be a comfortable amount.

And then you can kind of get to the principles without saying, well, Dave recommends 25% of your take home pay on 15 year fixed rate mortgage. You know, they get to choose the wisdom at that point. Yeah, big Dave, I'm a little Dave, that's big Dave. A little Dave, big Dave. A little Dave, big Dave.

I like it. That's true. I mean, honestly, that's, it's really going to be so impressive and it would actually Garner a lot of trust. I would think from the people you're working for because in some situations,

I'm assuming, you know, you're asking for them to pay less for a home, you know, and that's money out of your pocket too, right? If they choose that. Less law and less origination fee, less commission. Yeah, I mean, all of it. So there's something, I don't know, really trust worthy for you to say, because you're not,

“you're not doing it the other way to be like, hey, you should spend more here with me so I can make more.”

And some of these cases, it's, it's the opposite. And so, they shouldn't be offended by that, right? There's, I mean, yeah, there's, I don't know, a lot of kindness and you even doing that. Yeah. Thank you.

Absolutely. Thanks for actually being, you know, serving well and serving your customer as well. And being one of the good guys in the mortgage world. That's fantastic, Rachel, I've got a friend in the mortgage world, and he knowing what I do. He's like, dude, you would not believe the debt to income ratios people show up with.

Well, you're like, this is bonkers. No one should be giving them this loan. And sadly, a lot of the banks, you run it through the computer and it goes, yeah, give them the loan. That's fine. Yep. Yep. We'll just do it.

And the bank doesn't always care about the reality of your financial situation.

It's because of that kind of stuff, too. Lending people money, given it. And I'm not kidding. I know. Whoop. Keep on doing it, though.

Oh, my gosh. All right. Let's go out to Brian in Alaska. Brian, what's up? Hi, can you hear me?

Yes. Loud and clear. Okay, sweet.

So I am an interesting situation where I actually live in my dad's second home.

Here in Alaska, well, my family is out of state. I'm curious. I feel like I'm getting this smoking good deal on rent here. I just rent a room, but it's way cheaper than I could rent anything else in the area. How long should I stay here?

Stay down for a house.

“How long should I left this good deal right as long as they're willing to give it to me?”

Yeah, it's a good question. How old are you? 28. 28. Okay.

Are you married? I'm single. Okay. Any debt? Consumer debt?

I owe 12,000 dollars on an airplane. But that's in a, like at least, in companies I own. Okay. 12,000 dollars. And that is at it.

No credit cards or car loans. Okay, great. And how much do you make a year? Last year. So I started new job last year and six months.

I made about 55,000. And then this year. For the, for the whole year. I guess about 120 to 140. Good for you.

Okay. And how much money do you have saved?

“I currently only have like $3,000 saved.”

Okay. How long have you been living in the city? You're your dad's place. So I've been living here about three years. I actually used to on half of it.

And then I sold out my half to my stepmom. That paid off one of my debt. And, and was able to give me a down payment for this airplane. That I at least sell. Okay.

So this airplane is this business you have?

Were you basically rent out the airplane?

Yep. Okay. What do you make from that? Is that on top of your 140? That's completely separate.

So I make about $40 now. I recommend flies. And right now, it's pretty much just all going back into the business for improvements for the, for the airplane. Got it.

I'm paying the principal for. I get a loan from a friend of mine. It's basically zero interest. That the, I pay the principal out of my, my personal funds. And then with the airplane makes this kind of get circulated back.

And then make improvements for the airplane. Okay. Gotcha. Okay. So yeah, the whole living, you know, with parents or on their property or whatever.

You know, for a period of time, I'm totally fine with it. I think after a while, there needs to be a point that you, you know, go and you're on your own. And you're living, you know, on your own doing your own thing. So what worries me is, and I know you just got this job six months ago.

You said, so I'm not going to harp on it too much. But you've had a, you know, you said, I'm going to a great deal. All this, but you only got $3,000 saved. So there's a part of me that's like, you know, people have this idea. I'm going to go live really cheaply at my parents.

But then they don't take what they would have paid and rent or more of what they're saving. And actually save it. You know, they end up spending it on restaurants and going on trips and stuff. And so then it ends up being this point of like, okay, you weren't using it. Actually to benefit yourself or to get you further financially.

You're just using it for lifestyle in the moment. So if you're doing this, I want you to be really, really disciplined. And you make a great income.

“And so honestly, Brian, I mean, you're a single guy.”

You're living in Alaska and basically no rent.

If you, if you could live on, I don't know, 40 grand a year or something crazy. Like, you could bank so much money. Not only pay off the Sarah plane, but you could have six figures saved up. Yes, you know, by the end of the year, maybe into little into 27. Really quickly.

And I would, I would use that for a down payment on a home. Because as soon as you can get something in your name, building equity, that's the best route for you, Brian. So I'm okay with it for a little bit, maybe a year or two. But I would be so disciplined in that to actually put that money in that savings towards your future and a future home for yourself. I would just say, hey, dad, I'm going to be out on my 30th birthday.

And that's the plan. And you go, I'm going to save up like a madman until then. I'm going to live off 1,000 or 1,500 bucks a month. And the other six seven grand is going to go into savings for that house. Build through your own future and independence, and you will not regret it.

That puts the Sarah of the Ramsey Show in the books. Remember there's ultimately only one way to financial peace. And that's to walk daily with the Prince of Peace, Christ Jesus.