If You Want Wealth, Stop Being Dumb With Money

You work so hard to be the strong one for everyone else, but you're running on empty.

The pressure to show up doesn't just disappear, it takes over your life, and talking to someone can help. Go to betterhelp.com/raimsie for 10% off. Normal as broken common sense is weird, so we're here to help you transform your life. From the Ramsey Network and the Fair Wins Credit in the studio, this is the Ramsey Show.

Rachel Cruz Ramsey personality number one bestselling author and co-hosts to smart money ampioch. My daughter is my co-host today. Open phones here at AAA-825-5225. The call is free and some say the advice is worth exactly what you pay for it.

“Daniel's with us in Indianapolis, hey Daniel, what's up?”

Hey. How are you? Better than our dessert, man. How can we help? I'm trying to figure out if I should pile for bankruptcy.

Ooh. That sounds scary. Okay. Yeah. What's going on?

So right now, I'm married and we bring home $777 a month together, but she's talking about separating and sale on my own. I only make $38.50 a month, so I'm upside down quite a bit at the end of the month. Okay. What's going on with your marriage, huh?

Um, not really sure.

Basically, there's just a lot of resentment for how I was the last year in half.

Sorry. Okay. How you were? What were you? Um, not very present.

Do you guys have kids? Yeah.

“I have a sexual daughter, but we have a sexual daughter.”

Well, typically when there's an overwhelming amount of stress having to do with money, it's the number one cause of marriage, fighting, and divorce. And so if you're thinking about bankruptcy, that means you're in a mess, and that's probably got a minimum contributed to your marriage issues, if not being the major cause of your marriage issues, and then we blame it on, or we point at something like saying you're not

present. Yeah, I'm not present because I'm totally in my own head trying to figure out how I'm going to get out of this dead young mess. So that could be very possible. So how much a dead have you got, huh?

Not counting the house, um, I mean, the cars, 14,000, and then got about 13 on a each back loan, and then, uh, 19,000 on one credit card, 1300 on another credit card, and 4,000 on another credit card. Okay. Were you guys using...

Well, and that's all your debt, you and your wife, other than your home. Um, and then, yeah, and then a fourth credit card at 4,000, sorry. Okay.

“Well, it's about 70, I mean, you're close to 75,000 in consumer debt.”

Was the credit card spending, I'm just curious, because there's multiple, you know, relatively high numbers on it. Is that to keep things afloat when you guys were paying bills, or was that just discretionary spending that you weren't even aware of? That's what things.

The stupid choices on my part, and trying to you fund Christmas without talking. Have you been running and money by yourself? Yeah. Okay. All right.

Has she, has she, did she have any awareness of where you guys were at at the level of debt? No, not that level, no. So that's part of what she's pissed off about, too. Um, kind of, yeah.

Yeah. Kind of, yeah. Something. Well, this has come out after. Yeah.

We're almost bankrupt. Yeah, I'm pretty mad at you. Yeah, okay. That could happen. Um, but it came out after the fact.

So everything kind of hit the wall with the marriage. Yeah. And then, other things started coming out in conversations, and that's being one of them. Yeah. How long have you been married?

About 13 years in August. Okay. Are you guys plugged into a church at all? No. Okay.

All right.

Um, well, here's the thing.

The math says you're not bankrupt. If you stay married, you could clean this up fairly quickly working together. But that involves staying together and working together and a whole mindset change on everything having to do with your relationship, you and your wife. But mathematically, if you got 7700 bucks coming in, you could plow right through a debt

and everybody having full transparency knowing what's going on, watching these debts fall

away, cutting up the credit cards, never going back again, living on an every dollar budget.

We're both of you see every expenditure and know what's going on. She's carrying the stress of the family with you while you're carrying the stress of the family together. That's called being a couple and we work our way through this, that is doable. The only question is, are both of you willing to sign up for that?

Yeah. More. It's time she's not. Okay. Well, I was going to say more importantly, you guys, are you guys willing to sign up

for the marriage, too? Right? Like, there's to a point. I have John Deloni in my head when he talks about that. Okay.

Can you go to marriage counseling? It's your attitude.

“I mean, I mean, the way you're making it sound, they know the only way to really save”

the marriage at this point is it's a complete excavation of what was, and you guys write an entire new story, which is going to take a lot of work working through a lot with a professional, having a therapist or a counselor involved. And as you do all of that, you are looking at the things impacting your range of money being one of those.

And so as you're going through and rebuilding marriage, you're doing the debt snowball, right? And so that that feels like, I feel like I'm missing your share. She moved out already. You broke up.

Say it again. Has she moved out already? There, she's planning to move out in two weeks. Okay. To where?

An apartment. Has she signed the papers? Yes.

“Did you, was there something major, Daniel, just versus you not being present?”

No. Hmm. All right, so what I would love to have happen in your old story is for the both of you to sit down and say, before we do that, let's go see a marriage counselor and see if we can begin to put this thing back together and as Rachel said, write a new story.

Now that's the best outcome of this conversation. And so if I were you, when I hang up, I would find a marriage counselor called better help, call somebody and get on the phone, and start asking them how to talk to your wife about coming as one last ditch effort to sit down with a marriage counselor. Okay.

Because I think that's a salvageable. I'm not hearing any reason here to end a marriage, but anyway, I think you guys get in that. If you can't control what other people do, so she just says, no, forget it. I'm done.

Yeah. I'm out. And that's after you talk to a counselor who tells you how to talk to your wife, be present about talking about possibly saving your marriage, not you just saying, she's not going to do it, Dave.

That's not an acceptable answer. You've got to put some effort into this. Okay. Now, if after all of that and the whole thing still goes up in flames, then you've got this and that you're still not bankrupt, you're still screwed, but you're not bankrupt, okay?

Because basically, you're probably going to end up with half of the debt.

She's probably going to end up with half of the debt in most states. And you're going to end up with child support. And you've got a $4,000 month income, she's got a $4,000 month income to work with towards the debt, and the house is going to be sold. And that's going to pay off a lot of the debt, including the HVAC.

And the car may be sold, but probably you're just going to pay it off, and then you're going to plow through some credit card debt together. And you're going to figure out who's doing what, you're going to end up doing it together with you want to or not, because both of them got both of your names on them, even if the judge says that one jurors, that one jurors until it's paid off, it's not done.

And so, but this can work. It's a lot harder doing it as two separate entities, though.

“Doing in life is a lot harder, raising this kid is a lot harder.”

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So go to mamabearlegalforms.com and use promo code Ramsi to save 20%. Mamabearlegalforms.com code Ramsi. Kayla is in San Diego, hi, Michaela, how are you? I'm growing in with a two-part question about business cash flow concerns. My husband had worked at this business for over 20 years and we recently bought it.

We took out two personal $50,000 loans to pay the previous owner and to start the business. But now after two months we're filling a lot of stress in our new marriage, they're like we're only paying that not making any progress and can't breathe anymore. We need guidance on how to manage the cash flow so we can try and get ahead. The monthly business expenses are between $50,000 and $60,000 a month, but the income varies

between $40,000 and $70,000 depending on the month.

My second question is, I paid a $100,000 for a business that breaks even.

That's, he told us it didn't. He said that it had a significant cash flow, but we are finding that we're only breaking even. He said it's a slow time period right now. Did you look at previous books of the business like the last 12 months before you bought it to see seasonality if that is true? He didn't really offer that and we kind of went on good faith because my husband had worked

for him for so long, but I'm realizing now that maybe we should have. No, no, maybe absolutely, you stepped up into a baritrap. What kind of business? It's an appliance repair business.

“What is the 50 to 60,000 in overhead on appliance repair?”

Mostly it's payroll. There's six technicians, but we're also paying for health insurance.

Rent, software insurance. Let's see what else. The auto insurance website leases on the vehicles, which I don't agree with, but. So the six technicians are not working all the time. Well, there's three office staff and three technicians. We did used to have four technicians in one quit during this time frame, so we're trying

to hire a new one. Why would you want more expense? We're hoping that you can also bring in more income. And why would you have that hope if you're not already overwhelmed with business? Yeah. You guys try down a lot of business? No, right now they're pretty busy. I think my husband's schedule.

He's got to next week, so not turning down a lot of business, but we're at least a day or two busy all the time.

“Yeah, okay. So here's the thing, you have to ask what must be true for this to work.”

And so revenues have to go up and expenses have to go down for this to work. That's a basic business premise, right? We all know that. And so that's what you guys start asking yourself, what kind of do to get revenues up and get expenses down? And none of these things are going to be easy. They're all going to be painful.

Like your husband's going to be working like all the time, welcome to being self-employed. And the technicians are going to get them to where they're so busy. They can't breathe. And then you're going to bump your rates and start charging more. And then you're going to lay off one of the three office staff or two and you're going to be down there doing the books.

And then you're going to look at getting rid of these least trucks and get some old trucks that show up. Because nobody gives a crap what you're driving if you fix their dishwasher. Yeah, the hard part is that I'm active duty military, so I can't move there yet. Okay. And I'm debating if I should pause my TSP savings. Yeah, I'm going to stop money towards the debt. Okay.

Yeah, yeah, you guys got to clear this debt and you got to stop everything and get where you can breathe. But the point is, the more you move into increased revenue and decreased expenses and more margin in your personal budgets, the more there's a light at the

are is if you feel like you're stuck there forever, that's an untenable place that creates

an unbelievable anxiety. But when you're in a hard time, but you can see your way out doing some hard things, well, the brain will help you do that. That's a lot.

“Where's your husband right now? Living. If you're in San Diego, where is he?”

He lives up in the Fred's no area. Okay. And you guys are a newly married. How long have you been married? One year. Okay. Were you deployed or something? No, we just met living in two different locations. When are you guys planning on being in one location together?

Next year. I've retired next year.

Okay. I'm just wondering, Dazis, he have this level of stress as well because you're the one calling us and you're not even in the same city in the, with the business. And stress is easily two to three times what you are. And so you're just hearing it. You guys are talking through and you're like, I'm just going to call and see what they say. Yeah, okay. Okay.

“And you don't owe this former owner any money. We owe him almost to 400,000. Holy moly.”

You paid 500,000 dollars for a business that doesn't make a profit. That's a lot of money. Dishwasher's oh my gosh, kiddo. Yeah. Yeah. You got screwed. Wow. Unbelievable. Okay. So what does she do?

So I can help you with this real quick. Call the former owner and tell him to come get it. Come pick up the keys, buddy. I'm done. You just walk away and walk away with 100,000 and just pay it off with 100,000 often. Call that stupid tax. Call him and tell him to come get the thing. Oh, she's screwed this. You got hammered. Yeah.

Yeah. For a business to be worth $500,000, you need to be making a profit of $150,000 to $200,000 a year. And you ain't going to see that in your lifetime out of this thing.

“And I think that's what he told us that it was worth. Yeah. Well, he's a liar. Okay.”

And I'll be mean. Can I be mean for a minute? Insert. Y'all were dumb on how you did this. Yeah. I mean, you believe this guy just because your husband used to work there and he got a paycheck instead of actually checking out

the freaking numbers. You signed up for a half a million dollar trip around the sun

and didn't look at a stinkin' number just trust some good old boy. Yep. That's like walking in front of somebody's quit. Oh my gosh. Bless your heart. Yeah. You got a mess. This is not going to end well. I'm calling that owner and saying, I can't do this. You sold me a pig in a poke. I'm done with you. And there's no possible way this thing is worth anywhere close to what you sold it to me for. You screwed me and here I'm leaving. You can come pick up the pieces and tell your

husband to move to San Diego and come back to San Diego with his new beautiful wife and get a job. And then y'all scratch through your stupid $100,000 worth of debt. And when you look back on that, you'll say, that's a dumbest thing we ever did cost me a hundred grand. By the way, I've done dumber things that cost me more than a hundred grand. But I can look at myself in the mirror and go to your stupid day when you did that. So yeah, you, this is not recoverable. I'm turning this over

to this guy. I'm serious. You're not going to work your way through $500 in the seasonality part. See, see, see, see. I'm blind. I'm blind. So I'm like, you're just horses don't break in the summer more than the winter or less that is what he's telling them. I know. That's just absolute bogus. Now, if it was heating an air, maybe we'll talk about it. There is some, there's some coming go on heating an air. But that, you, you said appliance repair appliances aren't on a schedule for

repair refrigerators don't go, oh, I'm going to wait a life for Christmas to break. They don't do that. So that, that, this guy's full of it and he sold it to you and he said, oh, they're grinning going, look at these fools sending me checks. No more checks for Baba. Nope, I'm done. Okay, how does that really quickly? I'm serious. You're probably going to get yourself sued. I was going to say legally, what do you, how do you do that? But the other thing I would do is,

when he sues me, then I would countersue him for fraud and say you lied. This is verbally, this is what was said when you lied to do a business transaction, that's called fraud. Yeah. And this guy was fraudulent. He lied about how much money this business makes. I promise you, he lied. Well, seriously, lied. And the dumb part was you believed him. So you get to, you're probably

100 grand that you borrowed from real people. Oh, Jesus. Sorry, my God. Yeah, this is awful. I'm so

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that CHMministries.org/budget and use promo code RAMSI. Okay, now that I can breathe again, let's give a little bit of recap to talk about how to value and how to purchase a small business. A small business is a lot of work. I've run

one most of my life and RAMSI today is a $300 million business. It's not that small anymore,

but it's at its hardest small business. And I coach about our Entry Leadership Team and I coach about 10,000 small businesses will be with 3,000 people next week at Disney, at the Entry Leadership Summit event, teaching leadership and business acumen to small business people. So this is something that we do. It's not just a random guy who gets people out of debt that this poor lady, Michaela called and had gotten herself into a mess, so it's good for us to

part of what we want to get out of this is to help the individual caller that calls in, but we also want you guys to get a lesson and learn and inspiration from and so forth anytime we

“take a call on here. And so that's how we decide who we're going to talk to on the air on this show.”

So backing up them. Number one, the small business is all encompassing. It is the hardest when you own your own business. It's the hardest ball she'll ever work for. Your balls will work you to death when you're your own boss. It's hard. It is not to be taken on by someone who got married 20 minutes ago. Bad idea. It's a strain on you physically, mentally, emotionally, spiritually, and it's a strain on your family. The stress of it all. Yeah. When I started this business,

I worked 16 hours a day, five, six, seven days a week. You talked to my wife Sharon when Rachel was a little bit of kid and this business was growing up that she felt like a single mom a lot of

“times and she for all practical purposes was. That's what a small business is. You don't do that”

on a weak marriage. You don't do that on a new marriage. And you don't do that when both spouses are not fully engaged. You don't do that when you live in separate cities. So rule number one, violated two rules right there before we get started. Because it's hard, y'all. It's really, really, really hard. The season of grind when you sign up for it. When you when you buy a business or you start a business, it's hustle and grind. Hard core. And that's okay. But know what you're

signing up for. And it's not going to make everything better. It's going to make everything worse for a while. And but the bad idea is we're going to make more money and have control of our destiny.

And that makes thing better over time. But that's not where it starts. Then the second thing is

if you're going to buy a business, you investigate and expose every single number in the business.

and they may lie to you. But most of the time the tax returns are going to be some semblance of accurate. And if they say to you and you're looking at a business, oh, don't pay attention to the tax returns. We actually make more money than that. What they're saying is is we are lying to the federal

“government on our tax returns committing fraud. But we're trustworthy. That's what they're saying”

to you. So run away when someone says something like that. Okay. It was the tax returns before the number. I'd look at at least two years, but probably five years. Yeah. I want to see the trend line of the profits over the last five years. And what are the profits they actually paid taxes on? Now, if you take a hundred thousand dollars and put it into a good mutual fund, you can make

10 or 12 percent pretty much any year. So if you were going to take a hundred thousand dollars and buy

a high risk small business where I'm going to have to pour myself out and hustle and grind, you need to make a minimum of a 20% rate of return on your business. Okay. And you need to make it probably a 25% rate of return. So here's how that translates in valuing a small business. You look at the net profit after everyone is paid including the guy that works there that hasn't paid himself. If you weren't working there and you had to hire a manager, you take the manager

salary out and you have the net profit of the real business. If you're an absentee investor to determine what kind of actual revenue this business is creating. Because if he's just paying himself and that's all, you're not buying a business. You're just buying a job. You don't need to buy a job. Just go get a job. But don't buy a job. So if it pays a hundred thousand dollars and that's all it pays and you can make a hundred thousand dollars doing something else, then don't pay to buy

a business that only pays you what you would have made putting up nothing to work for somebody else. So don't buy a job. Instead, after the after everybody is paid, if I'm living over here in Tennessee,

“and I'm buying this and the thing will operate over there completely, what is the net profit then?”

And if you want a 25% rate of return, you multiply that number times four and that's the value of the business. If you want a 20% rate of return, then you multiply by five and that's the number. So if it made after everyone is paid a hundred thousand dollars, it's worth four or five hundred thousand dollars. If it made ten thousand dollars, it's worth thirty or forty thousand dollars. Which means don't buy it. And it's worth ten thousand. That's right. What they, what they should have

paid. Exactly for that business. Instead of a half a million dollars. If you to actually look at

this Goober's tax returns, you would have seen that after he got paid, the thing had no net profit, which is what they have discovered now that they're running it instead of just working there. The skill of being a technician inside of an organization is different than the skill of owning and operating a business. You can be a very smart graphic artist, a very smart software engineer, a very smart accountant. You can be a very smart anything and not know how to run a business.

“They're different skill sets. And then you have to consider that. So if you're a heat-and-air guy,”

and you've been working there 20 years, and the heat-and-air guy wants to sell you the heat-and-air company, you're not qualified to run it yet. You've got some skills. You've got some metaphorically tools you need to put in your belt to get rid of run that. Because you can fix an air conditioner, doesn't mean you can run a heat-and-air company. Because you can sell real estate, doesn't mean you can run a real estate company. It means you can sell it. That's different. So you've got to consider

those things when you're valuing out and deciding is this an appropriate purchase for me. And then lastly, if you have to borrow money to start all of this, you've increased your risk a hundred times.

Don't do it. 80% of the small businesses fail on the first five years according to small business

administration, which is really not trustworthy organization, but it's the only number we've got. Eight out of ten don't make it. If you're in a restaurant business, it's 95 out of a hundred. Don't make it. So just because you can cook, doesn't mean anybody's going buy your barbecue. It just means your neighbors liked it when you gave it away. That's all that means. You're not qualified yet to operate a barbecue joint and go $250,000 in an SBA loan. And now we've

got Dave's barbecue. Not so famous, Dave's. Right? Standing there is a day. There was a day.

the thing. You've got to dig into this. If though, and you know why 80% of those companies fail, those little businesses fail, cash flow problems. Cash flow problems are created by two things in small business. Not paying your taxes because you're taking all your money home, because you didn't have enough money coming in to eat and now you're starving to death. And so you don't pay your taxes. You don't pay your quarterly or worse than that. You don't turn in the withholding.

And if you don't pay your one, you're 142s. They're kind of come get you forever. That's not bankruptable.

“You're going to get it. That's the withholding numbers. Okay. On your employees, you have to turn”

that money in. You can't keep that money. Wow. And guess what the other thing calls as cash flow problems is the debt when you went borrowed money to start and run this business. And so one of my

friends that's sitting out here and he paid off half million dollars on his business. And that

means he's the exception of the rule. He made it out alive. Most people don't make it out alive when they do that. They don't make it. Don't sign up for that trip. It's not worth taking. [Music] Okay, guys. Let me ask you something. What would it take for you to switch your bank? Because if you're still earning next to nothing on your savings, you need to check out FairWins Credit Union.

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bundle from FairWins Credit Union. You get a high yield savings account, a no fee checking account, and the Ramsey B weird debit card. Go to FairWins.org/Ramsie to learn more and make the switch today. That's FairWins.org/Ramsie. Ensured by the NCUA. Buying or selling your home is a big deal. And right now, things are crazy out there. Interest rates are down. House prices are starting to change again. Things are moving.

If you're thinking about buying a home or selling a home in the market like this, you really need somebody knows what they're doing in your corner. Not somebody that got their license three weeks ago and you go to church with them. Sorry, Charlie, at the church. But that's unless you've been doing a bunch of real estate deals. We don't want you to be, we don't want people list their house with you. We want people list the largest asset they have with somebody that

“really has a proven track record. So that's how you become Ramsey trusted. You have to have an”

incredible track record of performance in the real estate market. To find a local Ramsey trusted real estate agent pro for free, go to RamseySolutions.com/agent or click the link in the description. Naya is with us in Boston. Hi Naya. How are you? Are Naya? Naya. Naya is Naya. It is Naya. I got it right the first time. How can I help today? Yes. So I am currently in baby step number two. I have $111,000 a set total and I am just trying

struggling with being in a long distance relationship and essentially staying in 10, 12, also still insisting and prioritizing that as well. How far is the relationship? How far are you guys? Four hours. Okay. How long have you been together? So we are here in a half. How many times have you physically seen each other? Once or twice a month. Okay. Okay. Good. Because I asked that question one time in the lady said

never. And I wanted to make sure what I was dealing with. So, okay.

“All right. That's what I'm struggling because I recently put just picked up another part time”

job I do. So what is your career and what do you make? So I'm a property manager and I currently

That's kind of a struggle in the relationship. But yeah. It's a struggle because he doesn't.

He's not working or he won't tell you. You won't tell you because he's not working and he's

“ashamed of it. Yeah. Has he not worked for a while? Yes. Okay. So why? Why is he not coming to see you then?”

Yeah. He got nothing to do. He says there's a trade off. I mean it's just like that's the struggle in the ideally it would be to live in the same state. But no no no no no stop. You did not answer the question. You completely deflected. This guy's got nothing to do. Why are you driving to him? Um, because he says it's more comfortable for me to go there. Yeah, that is. He does a lot of things

that are comfortable for him. It's more comfortable not to work too. No. No. Yeah. It's a bad. Do you see

it's bad? Do you not hear yourself? Yeah. Man, but you love him. You know. You know. Shoot. Holder you. I'm 25. Okay. Yeah, when together you're in a half and you're just way more mature than he is and he's going to be a husband that's going to everything about him right now will be magnified in marriage. So yeah. All the good and all the bad. Mostly the bad. Enough of people can't change and grow. But for the most part, he doesn't sound very proact right now

to come to you or to get a job. I don't know. Okay. So not talking about the debt snowball, which is actually how you frame the question. Then we got all up in your personal business. I'm sorry. But personal businesses there because it's personal finance. So um, you're going to be my 25-year-old little niece for a minute. I'm going to be an uncle, uncle, ugly uncle Dave. Okay. And I'm going to love you. I'm going to love you like you're in my family. All right. So if you had a daughter, you need

to think about what she would tell you or what you would tell her about this guy. The same stuff

“Rachel's telling you. Now, having said that, if you want to pursue this guy, that's fine. But he needs”

to show some initiative into areas to be worthy of you, my princess. In order for him to be worthy of you, he needs to be a working man. Period. Okay. And he needs to pursue you, not you have to pursue him. He needs to get his little butt in the car and drive over and see my princess the niece. Because you're worth that. He's not worth you chasing him. You're worth him chasing you. And if he can't do that, he's disqualifying himself. Does that sound like good uncle advice?

It does. Yeah, it's just I am like annoyingly obsessed with you guys. It's all I listen to and I'm just so sick and tired of being sick and tired. Well, you're going to get out of that because you're not going to be driving over there as much. Because he's going to be driving to you and you solve your problem. So now you can keep working your debt snowball. But as long as you're distracted, with this character, and you're the only one putting out all the effort in the money,

while he sits on his comfort, self. So if someone's wanting to date one of my daughters, comfort does not need to be a word that comes out of his mouth, discomfort while he serves and takes care of the princess that I raised, sitting next to me, or the good kind of princess, not a bad princess. And so when Winston, when Winston crews came into my house to talk to me about dating my daughter, he, there were requirements and being a

“productive young man is one of them. Well, and can I be super, probably a little prideful?”

I don't even think you guys would say that to Winston because he was doing. I never had to.

That makes sense. That makes sense. It makes sense. It makes sense. Okay, for him to be there. In college, you don't even like there's an idea. I'm gauging that. Yes, yeah. And if you don't qualify, you don't get invited back. And that's the mean old daddy. Yeah, the boys in the youth group are scared of you. Good. Keeps away whispers and jerks. Two things I don't want dating my daughter, right? Yeah, so productive is a good thing for a young man a young woman to be. Yes, for anyone's

soul and society. And but again, not to be like over generalization with gender, but there is something about a guy of going and doing something productive with his life. I'm highly unattractive to not do that. So it's to the father of the daughter. Well, that's. And then on top of that.

You know, to be like, we hear lots of stories and situations. Yeah. But the final, but the, but the straw of like, he doesn't want to drive to because it's, it's uncomfortable.

I've been in a lot of job markets. I've never struggled. Yeah, you run down home depot by a

leaf, lower rich people are for eight of leaves. You can always find something to do. There's something to do. There's always something to do for money. I mean, that's just that's I know. I'm just trying to give a little nice job. He's trying to find himself. Yeah, that's good. But, but my, my, my, my, my print, my princess niece of what I want you to do is I want you to stay in your town and invite him to come see you. And if he does, he might be worthy of pursuing.

If he refuses to come see you on his dime and he refuses to become gainfully employed,

please move on. However, while we're doing all of that, of course, we've solved the other problem.

You now can work and work on your death snowball and your productive person, your property manager, a professional young woman that makes $60,000 a year and more. And you're awesome. Yeah. Act like it. Yeah. And if you can work extra, you know, $23,000 a month on top of anything you can squeeze out in anything that you can sell at the bar. You've got a $150,000 car in one dwell.

“Sell the 12,000. Okay. Yeah. Oh, that's what we were driving for hours away. Oh, good. Okay.”

I got rid of that too. Can't come see you. Got rid of the car. Oh, there's no excuse. I'm sorry. I sold my car. Can't do it. Oh. And my $7,000 car probably is it for our worthy, uh, a road trip. So I'm thinking about it. I think in that hoop, he's not going to make the trip. So, um, yeah, you got to be careful when you call this show, boys and girls, because we love you. And we're going to treat you just like you remember our

family or some of our best friends, kids or something like that. We're going to put our arm around you and tell you the truth and sometimes it's a little disconcerting to hear all of that.

But we love you. And we're glad you're glad you called in. And I think you've got an incredible

future, but I want you to put more value on yourself. This is the Ramsay show. . Let me tell you something I see all the time. People are working hard, trying to get control of their money. And then their phone bill shows up higher than expected.

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“how are you? I'm doing okay. How are you? Better than I deserve. What's up?”

I'm trying to get some advice on whether we should sell our house in order to pay off our debt. My husband wants to sell the house and move back to his hometown to clear all our debts and start over. And I'm just concerned that I'm not the right move and I'm also just emotionally overwhelmed. So I figured I call for some advice. That's nice. Thank you. Do you feel like the right you're concerned about moving back to the home town more or selling the house or both?

I'm so sorry. Moving in like bar. Okay. My husband pushed a button on my card. It made it beep.

So my concern is I'm just a little emotionally overwhelmed because I do like our house and I like our neighborhood. And you don't want him to his town. Well, there's pros and cons to both I'm just in a fragile state emotionally and I don't feel like I feel like if we just move without changing the behaviors that got us here.

In the first place, we're just going to have the same problem. A hundred percent. A hundred percent. That's true.

But if you change your behaviors with a fresh start, if you change your behaviors with a fresh start,

“it could be a good move. So what does he do for a living?”

So he is a security contractor. He's a professional bodyguard for his celebrity country music star right now. And he's salary $7,100 a month. I'm sure he's on tour or whether he does. He will keep doing that regardless of where you live, whether you live in his old town or the current town.

Yes, because he traveled to that somewhere. Yeah. Okay. But on his off time that he is home,

he was an HR person with a union job which provided us benefits and an additional 4K per month. He got laid off because of his unpredictable bodyguard job. So now we're only living on the bodyguard salary. And he's doing extra side gigs. I'm taking up other security contracting and just kind of

“making it work, but just pay technically. So how much debt do you have not counting your home?”

So we have 10,000 on his truck and 16,000 on our van. And about 14,000 in credit cards, and about 3,000 in medical bills. And we owe 8,000 to the IRS because we didn't take out taxes properly last year for self-employment with security contracting. And so we've got to get a payment plan set up with the IRS for that. Okay. Have you been doing your quarterly estimates this year? No. We have not because his security work this year is, he gets the taxes taken out from the

salary office. Oh, they changed it. They made him a double you do. Okay. Yeah, he got this salary job. So now, now when he does that. But any of the side hustle stuff he does, you've got to set money in your quarterly. Yes. Exactly. Yeah. Okay. How long you guys been married? I spent like 19 years. And how old are your kids? We have 15 year old twins. And I have a five year old, a four year old, and a 22 month old baby, the 19 year old. Yeah, that's overwhelming. Yeah, that's a lot. That would

put me in a register. Yeah, that's a lot. Yeah. Okay. So I'm going to tell you this. And less

both of you hate the house. I would not sell the house. I would sell his truck. Okay. He never drives it.

Well, he just recently bought it so that he had something to get himself down the Kentucky because his country's are living Kentucky. He has to drive down their regularly leaving me at home with kids. Oh, I see. Okay. He bought it. Yeah. So he does need a vehicle and he can use the truck for side hustles as well. Okay. Yeah. All right. And that's not my work. So our. But basically, you've got what you're telling me is, is the the debt you've got. You can clean up

if you guys lean into this and live on beans and rice, rice and beans for a period of time.

“But he's I'm not sure if we can. I don't know. That's why I don't know why you cannot. Why can't”

you? If he said he's working his life away and he's so miserable and he just he's so tired. He's so fired up. That's not changing. That's not changing when you move. Well, he said that it'll be a lower cost of living and our debt will be wiped out. No. Yeah, but that doesn't change. He's still on the road all the time. I'm working. So he's talking about side hustles or killing him. Um, yeah. Oh, wow. You care. I think he's right there too. I don't care.

Dude. Wow. And whatever money he does make could go towards something instead of just scraping by. So I was something could be like owning a home that your wife wants to live in in the neighborhood. She wants to live in because she's got a freaking house full of kids while you're off on the road with a country music store. Yeah. I think that's part of the, I think that's part of the gig you signed up for him son. So yeah. I'm not saying I don't ever want to move. I'm just saying

rash decision. Now you did say that. You're changing your story. You said, I love this house. I love

“my neighborhood. I don't want to move. That's what you said. I do. But okay. I know I could be happy”

anywhere. You know that's that's different. You did say I don't want to move. I like my house. I'm not like this. Yeah. And it's not because you want to change your habit. You do need to change your habits. Both of you need to do that for sure. And you need to get on a written budget. So what I would tell you guys to do is get on an every dollar budget. Don't go out to eat. Don't go on vacation. Pour every dollar on these debts. Cut up every credit card. You take any side income.

You can do to create from home. He takes any side he can take in addition to his bodyguard gig.

And you guys tear into this debt full throttle for six months, 12 months, next March. Revisit this. And if everybody's still miserable and we're all dying and the only way to fix this is sell the house well, then sell the house. But I don't think that's the problem. Because what's wild is if you got two extra thousand dollars a month just to put at this, you'll be done in two years. Do you know what I mean? Which is long, but also not really.

Not only two thousand extra. You already make 7700. Plus side gigs. Plus the side gigs. Yeah. I mean, you get some extra. He gets some extra. You guys cut. But your spend it. You guys got to quit spending money like you're in Congress, too. How much? How much is your mortgage payment?

“2400. Okay. That's not killing you. So you have to listen. Do whatever you want to do.”

But that's what I would do. Yeah. And I would look at the van and the truck. And we've got more calls than not that actually their vehicles, they actually have their upside down on it. And so if you guys can do anything to even move those. Because to me, that's 26,000 dollars of this. So, but you're not dying. You're not dying for more than extra to take care of your family and clean up the mess you made for one or two years. That's not going to kill you.

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you contact when it gets worse. So go to GuardianLit.com/RAMSI. That's GuardianLIT.com/RAMSI. It's an advertising results may vary in no specific outcomes guaranteed. There's a thing in the psychology called cognitive dissonance, which means that you are stressed and there's a frustration level building up because things are inconsistent in your emotions and in your brain. Frustration, anger, all these types of high

energy emotions start to appear. Fear, fear, fear. And when you have that around money and you see a quick way out like selling your house to pay off all your debt, it tells you I can make all of

this psychological pain cognitive dissonance go away if I just sell the house. So we're always looking

for human nature as to look for the quickest way away from the pain. It is not always the best methodology for your long-term health. The quickest way away from the pain after surgery is not doing physical therapy because physical therapy is painful. But if you don't do physical therapy therapy after a knee or an elbow or a shoulder, it won't work. It, you know, freeze up. You have a problem.

So what's painful? And you pick the short-term pain and the long-term gain in any money equation

“and it's almost always the right one versus the short-term gain and the long-term pain. There's always”

a trade-off. So if you sell your most expensive asset, your home, it's very, it's very mathematically expensive to move. It's emotionally expensive to move. It's relationally expensive to move. It's the biggest disruption you can cause to happen automatically in your life short of some kind of a tragedy. And so it's the last thing we tell you to do. Now, if you've got a house payment of the 60% of your take on pay, we're going to tell you sell it. Regardless of the pain because it's not

sustainable. But just looking for a quick way out of your debt and cashing in your retirement and having a huge penalty and tax bill is a short-term release for a long-term stupid move. Yeah. Selling your home often is a short-term release becomes long-term stupid because now you don't want to piece of real estate anymore. Real estate starts going up and you box yourself out of the market because you're renting in your old hometown in that guy's case. So when we say suck it up butter

cup, play through, it's for your good because it's 10 years from today, it's going to be the best

“decision to not go through a home move. Now again, if you have to, it's different. But if you want to,”

right, if you're talking about it, don't like the house. Yes. Yes. I hate this area. I don't want to live in the state anymore. That's okay. Yeah. That's a good point. But but don't do it as the quick fix as the

basically the sole motivation because I'm tired and I don't want to work extra. No work extra,

be tired. It's worth it. 10 years from today, you'll be glad you did. The 10 year from now version of you will like the current version of you better and you will pay a price to win. Yeah. And I think what he said or what she said he said, you know, to a degree is very relatable that he's working his butt off and it's just going to payments. Like you, you know, it's different if you work hard and you make all this extra money, you get to do fun stuff with it. But when you're in that season of

sacrifice, allowing that to be a driver too of like, I'm pissed. That's why even like selling the cars, it's like, okay, when you do the math, you know, okay, what if I got a $5,000 car and $5,000, how much extra was I having to work for that $5,000 that was sitting in a truck equity, that could be to this. Right. Like you're going to be thinking about it and that starts to like really mess with you and you actually see the hours I'm working, what, you know, if I could sell an asset

to save on a day of working, I'll do that all day. Like we'll just need to push that stuff. She'd rather have a $4,000,000, many vannies to the 16,000, many vannies. And because she's got more kids than kids everywhere. And, you know, that kind of thing. So what we want for you is to hurt in the short term, not the long term, so that you win in the long term. If you're going to choose pain, choose pain today, they give you the long term in most. The Bible says no discipline seems

pleasant at the time, but it yields a harvest of righteousness. And with, and so the way I'm going to say that is when, or suck it up, buttercup, or waste the same thing.

“And honestly, live like no one else, so later you can live and give like no one else.”

Yeah, the short term, right, sell if they sold the house. And that's the gain of short term, but long term, you think about it. The dynamic of even moving to his hometown that she wasn't crazy about, could be long term pain in a better, you know, any bitterness in her of like,

oh my gosh, we got stuck in the small town that I didn't want to be at the first place. We made

that move four years ago. Right, you're doing it all out of desperation, not out of clear headedness and desire for both. And that's, that's a red flag for me. What feels good in the moment is seldom the right financial decision. It feels good to impulse a brand new car and put nothing down and lease it and drive it off the lot. Long term is one of the dumbest things you can do. If feels good in the moment to buy something you can't afford, to eat something you don't need

to eat, it feels good in the moment, but the long term consequences to your health and your financial wealth are real. And so that's the trade-off we human beings make. The ability to delay pleasure for a greater good is the primary science psychologist tell us of emotional and spiritual maturity. Can I look at a great future and pay a painful price to get to the great future? That's maturity. Learning to delay pleasure. I was looking at a, I was watching a piece of research the other day

And they were talking about the study they did of seven-year-old kids. And they put them in a room

“and they put three marshmallows in the middle of the plate and they said, "Do not eat the marshmallow."”

And they walked out of the room with, you know, two-sided mirrors and cameras and everything. And watch them sit there. 100% of the eight-year-olds ate the marshmallows. However, some of them went, you know, 10 seconds, some of them went 10 minutes before they ate it. The ones that went 10 minutes, they studied them 15 and 20 years later and they were in order not only more successful because they delayed, they had the, even at seven or eight-years-old,

they had the personality. They had the discipline to avoid something that is harmful. You know? Is that nature or nurture? Did they learn that in a household or you think that's part of your personality? I do know this. Regardless of how you got there, once you're there, it's a choice. Whether DNA got you there or your mom and daddy got you there, once you're sitting in front of the marshmallow, it's still your choice. You still have the ability

to do so. You still have a choice. I mean, you know, so it's, you know, we do know now for instance that some people have a genetic predisposition to being alcoholics more than others. Right? But once you know that, then you still got to take a drink or not, take a drink.

“Right. You got to decide. Am I going to, am I going to do this or not?”

And so, you know, who falls off the wagon, who doesn't fall off the wagon? All these things are, this is all tied to this, this emotional maturity thing of delaying pleasure for a greater good. And it really is maturity. Sometimes we see it at a young person. We have a 19-year-old call in here with the numbers are just astronomically amazingly positive, right? We're like, how did you do that at 19? And we're all a guest at how wonderful this 19-year-old is.

And we get that call on the show fairly often, because we get those kinds of 19-year-olds around here. But the reason we're all kind of so impressed is that he or she matured to that degree at that young age. And it's not a chronological maturity. It's an emotional and a spiritual maturity.

“And so, I think the way that I got propelled forward in that category was when I was the opposite”

and it was impulsive as crap did everything, get rich quick, get rich quick, get rich quick. I went broke as a result, lost everything, including my dignity. And I'm humiliated, not just humble. And sitting there with driving a $100 car, we were born that year. And I've got a baby's, I can't feed. And so, I didn't have a choice. I snapped and went to the other side of the equation. And so, I don't want that for you guys as your method of learning. I'd rather just teach you.

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Visit Y-R-E-F-I dot com slash ramsie. That's Y-R-E-F-Y dot com slash ramsie. Might not be in all states. All right. Today's question comes from Matthew and Oklahoma. Dave, let's address to you. Ready? Okay. Dave. Back in the early days of establishing the seven baby steps. Did you ever have to use your emergency fund? If so, what type of emergency happened that you felt warranted using the savings account for? Huh. Well, when I was climbing out of this,

there weren't any baby steps because I hadn't started teaching financial piece university yet. So there was no starter emergency fund of $1,000 and later a fully funded emergency fund of three to six months of expenses. I just had the goal of the three to six months of expenses.

“So I did use that emergency fund, the big one. The only time that is specific. I think it's the”

only time. But if not, it's almost the only time. Was that, did I cash? I'm trying, I suddenly think and I might have cash flowed it. I might have cash flowed it, but I think out of the budget, but I think it was 40 years ago. I think I used the emergency fund. No, it's not that long. It's 30 plus years ago. Okay. So we had just bought the house on victory trail. Oh, okay. And I was eight. Yeah, yeah, you were eight years old. It's 30 years ago. So that heat and air went out.

And it was $7,000 at that time, which today would be $17,000, right? But yeah, the heat and air went out and I called a guy and he fixed the heat and air and I wrote a check. And the reason I remember

it was the first time we had a drama, a catastrophe happen that we had the money. And it was just

like an income, that's when I came up with a phrase that when you have an emergency fund and you have an emergency, it's an inconvenience rather than a crisis. You've heard us say that a hundred times. Yeah. But that was every time before that that the heat and air blinked, it was a crisis, because I didn't have the stink and money. And the only reason I'm thinking I might have cash floated is I paid cash for the house. So and from a book deal that we had done on financial peace. And

but it's possible that I was low enough on cash that I used the emergency fund for that. But I have a distinct memory around it so I must have. Other times I know I cash flowed everything

else after that. Whatever broke or blew up or whatever. Because we've always kept a larger amount

of cash than most people because it gives my wife after what we've been through with bankruptcy and everything. It gives her an extra level of security. We always laughed and said our emergency fund had an emergency fund. And so and that's been largely true in the last 35 years. So but in more recent years I don't think anything about it. It's all cash flowed. I wouldn't. I'd be very unusual for me. I'm going to emergency today that actually tapped into a store of cash

to fix it. That would be very strange. We did not have to do that during COVID even in our business

because the business never became unprofitable. So we never had to touch the even though we lost

huge sums of revenue we never went into the red. And so we never had to touch our retained earnings. So it didn't happen then. And that would have been another time that it could have happened. But yeah, that's an interesting question. It makes me go back and think I remember more clearly all the times I didn't have. There was drama and nation of teeth and crisis and everything else.

“Why it is in Pennsylvania? Hey, why it? How are you? I'm good. How are you all doing?”

Better than I deserve. What's up? Well, I had a question here. I'm not exactly at a, I guess, financial trouble. Crossroads more. What do I do now? Crossroads. I have a 65,000 dollar in total debt over my head. And I'm trying to figure out if it might be a good idea to sell my truck for around 41,000 and take like 20, 25,000 in the hole to get myself at a debt faster. So you are no 65 on the truck? I was 61, 62, roughly and then I owe about 4,000 on credit cards.

And are you married? No. Okay. Yes, I would sell the truck even if it was paid for.

All right. Because here's a good rule of thumb, things that have motors and wheels go down in value. You cannot build wealth while you own too many things that have what motors and wheels. Too many things is defined in our world as more than half of your annual income. Your truck is more than half your annual income in value. And so it's eating your lunch. Every day it goes down in value and you're trying to pedal uphill and it's killing you. So

are you sure it's only worth 41 or 45? I bought one night while the work and I checked the

Kelly blue book value which in my experience is a little bit heavy handed with its estimates but

it estimated it around 41,000 because private sale is trading. I believe I put down trading.

“I don't remember exactly. I go back and go back and go research. Because what kind of truck is it?”

It's a 2025, 2500 HD. It did have an accident. Like about a year after I bought it. Well, less than a year after I bought it and it has like some minor paint damage, but other than that it's mechanically sound. This is a hard core work truck and so there's probably a pretty good market for it. You know versus if you just had some kind of weird truck or something, it might be harder to sell. So this might be able to sell it and get out of it. Did you roll negative

equity into it? No. I don't believe so. They quoted 76,000. I put $10,000 down as the down payment. So you bought a truck at the time. You bought a truck at the time that you paid for it. What your annual income was about. And so yeah and so ever since that day there's trucks been hammering

“you. And so that's what brings you to this question. So yeah, I risk my case. I think I, I would sell it”

if I woke up in your shoes and I like a nice truck. I've got trucks. I love trucks. Yes, you just have to take a small loan from a credit union or something for the difference and enough to get you a 5,000 truck and then become a rich guy. Because most of the guys that drive trucks like this aren't the rich guys. Most of the guys that drive trucks that are 5 or 10,000 are the rich guys. And especially family construction site. Yeah. All right, Bridget is in Chicago. Hi, Bridget. What's up?

Hello there. Thank you so much for taking my call. Sure. How can we help? What I was calling for was that so I was a teacher. Now I'm an administrator and I'm fully funding my pension and my contribution is 9% and so my question is that is a mandatory contribution? It is. Okay. All right. And so my question is should that 9% be included as a part of the 15% that should be towards retirement? Excellent question. Okay. There's two problems with your pension.

One is you don't have any control over what it's invested in. Okay. Two. So the outcome of what you end up with at the end is totally up to someone else.

Okay. The second problem is because pensions are heavily regulated what they invest in is more

conservative and so your average rate of return that you're going to see is about 7%. So because of those two things I would take your 9% I would count about half of it. So if we want to just use round numbers let's count 5% of it towards your 15. I'd still put in another 10 in money that you control. But that's given it some credit but we're not giving it 100% credit so to speak. It'll still be there. I'm not predicting the end of it.

But I think you'll do a lot better with the 10% contribution than you do with this 9% contribution. [Music] Listen. Identity theft doesn't just happen just because you're careless. You can do everything right and still become a victim whether your information is skimmed online, stolen through a scam are exposed in a data breach which happens every day.

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we help? I'm calling to them kind of in a spot where we're not really sure what to do anymore. My wife and I she lost her job almost two years now and we've been just kind of racking in credit cards every

“month to kind of pay for bills and pay for everything going on. Why hasn't she gotten a job in two years?”

So she got laid off during her maternity leave. She did get like a long severance for that and

just now she's about to have a second about baby. So she's been in there during this time and then

she will. She has been working kind of like a diminisher of role with her with her cousin, not getting nearly as much about like, you know, she went from probably 5k a month to about $2,000 a month now. And what do you make? It's nice. I make about $4,500 a month. And what do you do? Accounting. Okay. And so if she got laid off during maternity, she had the baby and you guys knew

“you weren't making it. Why did you keep doing exactly the same thing for two years?”

Well, I think we have, I think we have just kind of our principles of, you know, we didn't want to pay for daycare, especially since it's so expensive up here and, you know, having being at home, I work from home and then she is also at home. So she's kind of just watching watching our daughter and then also you're still not answering my question. That doesn't none of that changes the fact that you were going in the whole every month and you kept doing that for two years. Why?

Why didn't you change something? Yeah. I mean, I think that's a very good question. I think we were just kind of a little nice and now we're at the point where, I mean, we're going to look into a regardless because we were trying to get out of Massachusetts, but we're... So you have, you

don't think you have a second child on the way, right? Yes. Okay. All right. And you make 4500 and

what is your, how much debt do you guys have not counting your home? So not counting the home, it's about 30k and that's pretty well, triglyd student loans as well. Yeah. So which student loans probably about 50k? So about 20 and student loans, what's their 20 and student loans? So what's the 30? It's pretty much all credit cards now. Yeah, no card debt. We do have a file, sorry. Actually, yes, we do have a car as well. There's about 20,000 on the car left to pay. And what is it?

What kind of car is it? Yeah, what kind of car? Just a Tesla Model Y. Okay. All right. That car will bring more than 20,000 won. It's, um, it'll probably just pay off the loan. Good. More likely. Good. Sell it this week. You can't afford the payment. It is our only car that's the other thing. That's okay. I don't care. Sell it this week and get you a 5,000 dollar car. I can't afford to drive a Tesla. You're broken going in debt every month.

“These are the kinds of the ways you need to start talking to yourself.”

I can't afford to do this. We can't afford to go out to eat, which you've been continuing to do. You're broke. You can't afford to go on vacation. We can't afford to buy three airline tickets

So you got $30,000 in credit card debt paying Tesla payments. That's what I'm talking about.

“Does that feel accurate, Matthew? Do you get that? Yeah. Yeah. I mean, I've been making cuts”

where I can. We definitely made the cuts, but just clearly. How much in the whole per month are you guys that you're having to use credit cards for? So pretty much we're probably putting. You know, started this dumb thing when we did have both of us working where I said let's rack out points. So let's put everything on the credit cards and pay everything on at the end of the month, which we were doing fine with until she lost her job. And then we're like, well, let's just

keep putting out the credit card so that we can manage continue. So one more time. And what's

a how much? If we were to do a really tight budget, which you have not done and now you've got to do starting today, how much do you really have to have to stay afloat beyond the $6,500, $45,000 from you, $2,000 from her? So that just to survive and pay credit cards are not just to survive and pay credit cards. No eating out, no new shoes, no new purses, no new hobbies, nothing, what does it take to feed your freaking family only? I put everything down. It's probably going to

be just like on my own simple budget. I have about $300, $300, $15, $1 to put everything at the end of the

day. And that's not how y'all are living right now, right? You're a little bit more wide spread. So

“for sure, it's the only how much is the test. When I get rid of the test, yeah, how much is that?”

per mile you're bound. How much is the test will pay me in a month? It's $700,000. It's good. Now we got $400 in margin. You're driving a $5,000 car, not a $20,000 car. Do you have any money, any wear saved? We do. I do have just some money and robbing it and how much. I think we'll invest into the gut. Perfect. Go buy a car with that and sell the Tesla and now your $400 upset $400 right side. Cut up the credit cards. Do you have one with you right now,

Matthew? A card. A great card yet. Yeah, take it out. Cut it, just cut one. Just do it. I want to hear it. I want to hear it in the phone. Well, he do it. He's like, oh, I left it in my other wallet. Do it, Matthew. You got it. This is the start of change, Matthew. This is the start of change. You got to do some extreme stuff. You guys have to stop. You got to stop the whole thing. By the way, we're completely aligned with your wife being at home with the babies. That's great. But we're going to put your

book work. Yeah, I mean, I'm trying to do to make more money. Yeah, I started just like a woodworking

“side business. Well, I think you make more money doing bookkeeping on the side. You got one?”

You got a card? Yeah. Let's hear it. Yeah. You did it. What kind of card was it? Yeah. Has a just a discover card? Yeah. You just discovered freedom, Matthew. Matthew, you're so proud of you. Why did you do it? Seriously, you got to be start making some action, some action steps. And that's one. That's a proclamation of like we're done. Next thing is what it's hard to cut the cord on the test. It's hard to go into credit card debt when there are no credit cards.

You know what I mean? Like when you don't have an option. Yeah. Literally when you physically don't have an option, you have to start getting creative and you're like, then you got to have to start winning away at these cards. Yes. But I'm all up. We'll only go at them. They'll start to go away. You don't have the $700 ridiculous car payment. You've got to make adjustments to be able to live the life that you are choosing to live with your wife being

with the babies. And again, we're aligned to help you get that. But we're not going to act like it didn't cost something. It says cost something. She has a $3,000 less income now than she had. And let me go back to what you said, Matt, you said, now she's working for my sister and her family member making less, you know, because it sounds like a favor kind of thing. If she can find a side hustle with the hours she's doing and get paid twice as much because it's not

some weird connection of family and you're like being nice all day. All day. So the family be nice somewhere else. Yes. Yes. You guys are in a and a mode. You guys, you have to

chipping away. And in two years, Matthew, you guys could be out. If you guys can get an extra two

grand a month by working extra selling stuff, it's amazing to progress you can make. So

we got you to cut one card if we really get your cell the test like you can really do this. [Music] Welcome back to the Ramsey Show in the Fairwins Credit Union Studio. I'm Dave Ramsey, your host. Thank you for joining us America. Rachel Cruz. Ramsey personality is my co-host today and my daughter. Julie is with us in Boko Raton. Hi Julie, how are you? Hi, Dave, I'm good

and how are you? Better than I deserve. What's up? Kind of a typical situation. I'm wondering

“if I should sell my house to pay off a total debt of $575,000 and $160,000. $575,000. What?”

$575, $165,000. I know $575 is the debt on wood. So part of that includes a Heroic of $51,000, credit card debt of $74,000, $175,000, through loans of $53,000, a custody battle that I'm currently going through of $7,000 and $176. New roof, I had a pay because my insurance claim was denied of $27,700 and an IRS that for my business of around $18,000. Wow, it's been a tough five years, I don't know.

Oh, yeah, it's just horrible. Yeah, so the 162 in addition to the 575 is what? Well, I mean, all of it is just, it's credit card debt.

“No, so you broke the two numbers apart. Did you not give me two different numbers, right?”

I know, I gave you the total $575,000 and $160,000. So we can around it's $500,000. Oh, I'm not $162,000. $575,162. I got you. Okay, I misunderstood. Okay. Okay, so and how much is your

first mortgage on the home? So my first mortgage, I have $330,000. Is that in the 575?

Yes. Okay, so you've got about $2,00 and $25,000 in non mortgage debt unless we count the how you lock, right? Well, I should count the he lock and the roof. Yeah. I did a base program and they included the roof in my escrow. And so and what is your income today? I own a business of physical therapist and I have a group practice and it's a little foggy to understand the numbers. I have a business coach who's helping me right now. But basically I grossed around $385,000. But my take home, my personal salary was about $65,000.

Okay. And that's what you pay taxes on was 65. The taxes actually are back dated as I said. No, no, no. When you file your income tax, what will be your income showing on your income tax return? Oh, the $65,000. Okay, so that's really what you're making. Okay. Yeah, my personal. But I mean, and I'm trying to fix this with my business coach because there's a lot of expenses. I'm trying to get rid of like my lease. Yeah, agree. And pay rules high and then there's everybody's market money, but you and

“this business, I got you. Basically, I think that's what your coach is saying. Yeah. Basically, I'm the one”

working to pay the bills if I fucking find that. How much did you sell the house for Julie? So my realtor wants me to leave listed them. I was at $575. It's been in the market for a month.

As first, I thought I had an consumable mortgage, but I found out with the bank that it's only

available to family members. So the file is offered every seed was $4,545,000, which is what my neighbor's

credit. I have an interest rate of $3.375. Okay, so when you give me the list of things that equal the 575, what I hear are a lot of, that's why it's been to five years. The numbers all are associated with painful things. Child support, our child custody, IRS debt, a roof that went bad. 74,000 in credit card debts. Yeah, over spending, it's out of control. There's a lot of stuff in here

“that I think is mostly in your rear view mirror and is not representative of your future, am I wrong?”

No, that's correct. And one problem, sorry, that it's been very hard. Yeah, it has. I can tell. One thing I realized was that, you know, in therapies, I didn't try to save everybody, but myself, you know, I bought it for you bedroom house on my own, you know, my husband didn't help me. It was just me, that's all of the subject. How old are you? I'm 21. Okay. Are you still married Julia? You

guys are, you're divorced, and that's what the custody was for the child or is this? We were never,

we were never married. This is just a custody battle, which, um, okay. My lawyers are telling me that because I declare more money, they're thinking that there's some kind of tax evasion. They're thinking that I may have, I may end up having to pay him. Okay. Now, this isn't your husband that you just mentioned, though, right? This is a different guy. No, no, this is my daughter's father. Okay.

“Okay. We're never married. He just, okay. No, same guy. And when you bought the house, that's what you were”

meeting him when you said that. Yeah, I bought the house just myself, got my effort, you know, you contributed when you lived with me, but it's just all me. Okay. I was an invention that, you know, I bought the house, I realized now it's, you know, I bought a three-bedroom, I wanted to help my parents be moved then with me, in my culture, you know, we're resilient, you know, you salt your parents and you take care of them, but I just can't do it anymore. And I had a conversation with them, I mean, I,

not their fall, but I just, they're looking for a place now, they're considering returning to Brazil, and I'm just trying to figure out what to do for my mouth and my dad. I, I think you sell the house for 545,000, take the offer. Okay. And give yourself a fresh start with all of the mistakes

then in your review mirror. Now, the trick from the mistakes that I always want to do, I've done

a lot of stupid stuff in my life, I often say I have a PhD into UMB. And so I want to make sure I never repeat that mistake that caused that. Okay. So I don't want to repeat the mistake that caused me to be 18,000 dollars in the whole of the IRS. So I got to get my business coach and my business running right. I don't want to repeat the mistake that trying to save everybody. I don't want to repeat the mistake of this or that or this or that. And just go down the list of these

items that you're paying off and you're not even going to be able to pay them all off. You're still going to have 30,000 dollars in debt, right? That's right. That's right. Yeah. But you can clear you have even said that, you know, they suggested that I do a chapter 13. You're not bankrupt. You're not bankrupt. You're not bankrupt. You won't let you in a chapter 13. They'll throw you out because you have this huge asset. So now you need to sell the house. You need to put all this

mess in your rearview mirror and start fresh cleaning up 30,000 dollars worth of debt. Start making

more than 65 out of this business so that because your country expenses there never get behind

on the IRS again. Never get in a situation where you're living with somebody you're not married to again. It sets up these kinds of problems and on and on and on and on. You just make the list down through here. What did I do? I was trying to save everybody. You know, yeah, I think you got to go

“ahead on your shoulders. I think you can do it. But you need to put the pain in the past.”

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“One of our favorite things is when people share their stories about how they're winning. I just got”

this from awesome review from our every dollar budgeting app. Quote, every dollar is excellent.

It helped me get my personal finances in order. Well, there you go. Now that I married my wife and I use it together out of our joint checking account, it really helps us maintain a common vision instead of goals. Man, that's perfect. That's exactly what we want to hear. Hey, you can work the Ramsey plan the Ramsey way. What you hear here on the air, we will coach you right along the way only on every dollar and you can start every dollar for free in the App Store or at Google Play

today. Doug is in for worth. Hi, Doug. How are you? I'm doing great. I'm so excited to hear you Dave. How are you? Better than I deserve sir. What's up? I'm calling today my wife owns a small business. Well, actually we both own the small business but she runs it and my question is she's she's stopped paying herself because she's trying to get out of the negative and every time we discuss it, it ends up in an argument but we got some supplemental, I worked full time and we got some

supplemental payment through part time stuff at the beginning of the year and she didn't tell me she was going to stop paying herself and I found out in January and we got on a big side about it and then so pay ourselves a little bit here and there but still not up to her salary if she was doing last year and every time we talk about it, it just ends up in an argument and I just want to get sure advice on how I should approach it or if I should just trust her that you know

whatever is happening in the businesses is going to work out or I'm just stuck at what I should do.

“What kind of business? It's a spa. How long ago did she start it?”

She's had it about three years now. How much money have you all invested in it? She bought it from her the previous owner and it was like a owner who sent it they did along between each other so she kind of so pays her salary until the loans paid off. The former owner? Okay so she has debt to the former owner and that's the only debt she has. As far as I know, yes. And do you know how much that debt is?

It was it was only maybe a couple hundred thousand. Yeah okay so the the first mistake you all

it made that is caused a lot of this angst between the two of you is you don't handle your money together. She's got her world and you've got your world and so when you start speaking into her world you don't have a foothold to do that because you're just a roommate. And the roommate doesn't like it when you tell her what to do. Instead you guys need to have in depth combined finances full transparency. So you know exactly what she's making because

you're able to put it in the monthly budget together every month that you're house.

And you would never enter into a business transaction. It's a couple hundred thousand dollars

without your spouse knowing every stinking detail and being in agreement align to it. And you don't even know what's going on down there. Oh I think it's a couple hundred thousand. Yeah that's a fairly good rounding error. You know you know so that tells me how disengaged you are until you decide you want to get engaged when she doesn't pay herself. But you don't know what's

“going on down there. So that's what she's saying that's why she's insulted. How much are how much”

you guys bring in and household income if she doesn't pay yourself and you guys are living off yours. You're salary. What are you making? I think about 55. We started at the beginning of the year. We're helping the church do music and they've been paying us 500 a week. So I think she's looking at that as supplemental to where she doesn't really need to pay herself because it's not like we're struggling. We were in baby steps three. We were building our emergency fund because we

got out of debt but now that stopped till you went $200,000 in debt. Yeah. So but we were I mean we

no you don't. That's not true Doug because she quit paying herself a salary which would have

“gone into your personal finances and you discovered it later. You are not doing your personal finances”

together. Now she paid herself all last year. She stopped in January and that's when I found out that because she didn't pay herself and I asked her why she hadn't paid herself and that's when she just told me that she was she losing money. That's down on me. Losing money. Yeah. Yeah. So her business is failing and anytime you question her about it it shames her. But salt's in the wind yeah. It puts salt in the wind and and so honey the business is not doing well. I want to help but but just know where's your

paycheck that's not a help and so yeah you need you guys need to get together and look at the business

together in a supportive way. How can I help? What's going on? How can what's going to happen here and we're on the same team and we're on the same team and we're making decisions together here. Not you haven't put your part in and that's still the language you're using tells us all of this. So I don't know. I mean you speak into Winston's business right? Sure. I mean yeah some of it. I'm like I mean there's a there's a level at which we see money come in and out and we're talking

about and we're just talking about a deal actually. He's going to go do a showing today and I'm like

oh great this this and this now I'm probably not the most detailed person in the world just like

I'll probably you know into it's all to a degree but high level when we look at our numbers every single month. Yeah I mean we know what's going on. Yeah if something was going on there he was losing money on. Oh yeah well he tells me like if there's a deal that yeah that they yeah they bought something and it was like golf or selling it for less than what and that it's a loss and that sucks it's like okay yeah but it's been talked about 100% you know that that's the process yes and so yeah and I think it's an

attitude at which which I don't I wish Doug I understand why you would be frustrated I get that but also the way you approach it and the way you guys have this conversation it's either that the business is between you all and you're you know it almost splits you apart emotionally or together you lock arms say hey we're taking on this world and this business and everything together and the problems out there that's the problem it's not us it's out there and so pointing it at the right

“direction and at the right thing I think is what's important because it's it's almost like a third”

party where it actually starts to become her identity instead now she's not he's not been involved until he questions are about right so she's insulted and she's yeah yeah yeah yeah yeah and so that's right and she'll get intensive which makes sense why she would be defensive because she's not in the numbers you're not in the numbers throughout the month and you guys aren't talking about it yeah but sit down look at how this business is operating what are the parts of it what are the details

and what can we do together to get this going hey I'll come down there and help I mean what do you need I'll cut the janitor you allowed I'll come clean the toilets but what do we got to do but we got to work this through and otherwise that couple a hundred thousand that you owe somebody's going to come down around your head at some point and so we need to get this thing back profitable again where it's making money and it's still losing money and right now it's losing money so

and yeah I'm suggesting you become supportive and ask how I can help and I made a mistake by not being more involved and being more helpful I am sorry for that and how I'm going to start today though being very involved and very helpful and so where's how should I do that and what's the place to start because we need to get this thing moving because it's scaring me and I know it's probably scaring you yeah and it's probably a story you've made up in your head dug a story she's

made up in her head of what he thinks about her and her business act community me and that may

“not all be true so it's saying those things out loud I think is really really important and you”

guys start getting on that trajectory where yeah where you're seeing it's helpful and not being an accuser of what she is or isn't doing yep hey George Camel here so you're thinking about buying or selling your home it's exciting but

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find all of your free tools and resources for help to get prepared to buy or sell your home with confidence you'll find calculators start to finish guides a podcast and even an in-depth video course hosted by yours truly what's not to love so if you're ready to take the next step towards your home goals go to ramseysolutions dot com slash real estate that's ramseysolutions dot com slash real estate the right insurance acts as a shield around your loved ones and your wallet

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slash check-up to take the coverage check-up and find out if you have the protection you need it's free Brad is in Des Moines Iowa high Brad welcome to the Ramsey show. Hey Dave quick question how much stage to a 32 year old guy put in his tension fund being still around and still buyable when he retired at 55. I would actually study the history and the articles that are written about the

“particular pension fund but overall as a category I think pension funds are safe.”

Does that take any responsibility away from no doing additional? No. That's retirement savings? No. It does not. Pension funds will underperform standard investments because because of the regulation they typically are going to yield about a 7% rate of return and so if you put the same amount into a good growth stock mutual fund or funds in a Roth IRA you would make well more than twice as much meaning you'd make 11 or 12% 10 or 11 to 12% somewhere in there as an average rate of return but that's

a lot more than double the result of it dollars then and so very very important that you do your own investing and not rely exclusively on a pension fund regardless of if the pension fund is going to be there or not. I thought you were saying is it going to collapse and I'm going to lose everything and have nothing. I doubt that's going to happen but you definitely want to have money that you have control of where it's invested and you want to and that you get to decide the disposition of it as you

reach the retirement years. What percentage of your income is going into the pension?

“Well it's all our employer paid. Oh then you need to be putting 15% away.”

And they pay in to an annuity fund as well that's that's growing also. Yeah. Both are lame. Both are lame. Including the annuity. Yes. Even the annuity that's here had a 20% return. Well the market had a 25% return. Okay. So they're lame. So you're the only retirement account. Absolutely. You need to be doing baby step four when you get there when you're out of debt and have your emergency fund in place

following the baby steps. You need to be putting 15% of your income aside for retirement. And then all of the employer funded things are just going to be gravy on a really nice large biscuit that you build. Gotcha. And I think both are not there. They're just they're just underperforming products compared to good mutual funds and a Roth. Yeah, but for some people like we had a caller 9%. Mandatory was going in mandatory and so you cut it in half. So four and a half

5% went to the 15%. Exactly. Percent rule. Exactly. But in his case he's not putting anything. So he needs a full 15%. Yeah. A quote unquote benefit, which is very weird because

in the old days when I first started to show 30 something years ago almost 40 years ago,

“the pensions were everywhere. 70% of the companies had a pension. Now I think it's like four”

percent of the companies have a pension. It's very unusual to find an actual pension anymore unless it's government. I was going to say more so government. Yeah. You see teacher pensions and union pensions and that kind of stuff. Yeah. But actual corporate America has just about done away with them. Because they're difficult to manage. They're highly regulated. It's very hard to make them work in terms of managing them for the benefit of your employees. But many do. And they seldom completely

collapse. I mean, you've got some pensions. Some of the state pensions are in trouble. They're being run very poorly. You're in no way. Your pension sucks because your government sucks or horrible

there's an earth. But if you and all you got to do is just Google, you'll see what I'm talking about. I mean, there's a lot of states that are so poorly run. The actual state is creating a horrible pension product. But or or municipalities the same thing. Your local city government for your police pension or whatever. You got to look at that kind of stuff and make sure it's solid. But even if it is or isn't solid, I'm still going to go build my own biscuit. And then whatever this stuff is,

it's just the gravy on it. And that's going to put you on a good position where you're never

never really worried about that. And then you don't say, well, the mind closed and the pension collapsed and grandpa ain't got no money. You don't want to be that guy. That's the guy we're not going to be. Benjamin is in Los Angeles. I've been German. How are you? Don't forget, I would you better than I deserve. How can I help? I had a question because I am on baby step two and one of my debtors in collection. And I

called the collection agency today and offered them a settlement offer to pay it in, uh, to pay it and be done with it. And they declined my settlement offer. Okay. So tell them, it's time to call me when

“I tell them to call you back when they feel better. That's what I did. I told them when they're”

ready to accept my settlement offer to call me back. Yeah. Yeah. And next time they call you,

just say, hey, there's a settlement offer on the table. We don't even have to have a conversation. If you take that, I'll send you money. How much do you owe them and what did you offer them and who is it? I owe them 300, um, the company is $300. Yes. And I offer 300 bucks. In total, I have about $2,300 in debt. And I was just trying to settle the collections and get done with it and offer them $100 and then want to take it. So I was just curious if I should just

that would not be unusual on $300. I thought we were talking about you were had $5,000 you owed and you hadn't paid them in two years and you offered them $1,500. But on $300, they're not going to screw with it. No wonder they laughed at you. Hopefully you'll be out of debt in a month or two, right? Yeah. I would just pay them. It's what I would do. It's $300. Get yet to get a letter confirming the amount by email and then send them the amount. No, I would not

settle at $300. Yeah. And for a lot of people out there that are settling, um, yeah, we do find obviously talking, you know, giving a little ball off or and depending on how long you've been in the collections process is probably how easily that can happen. But we also have friends at

“Guardian litigation. So if you go to GuardianLit.com. But remember that was 300 bucks. No, no, no,”

but for everyone else out there, if you are in baby step two and you have gotten to this point where collections, it's, you know, you have 10 or you got 10 or you got 10 or 20,000 bucks in collection. Yeah. Or 50,000 or something. They can help you. GuardianLit can work that through and they're their lawyers just what they are. And so yeah, that you're right, right? But that's a question we

get a lot, not always for 300 bucks. It's usually, it's usually more. But the collections process

is real. And so, um, so yeah, and it can work to your benefit, right? If you aren't, maybe step two, if you're going to settle it. Getting in writing before you give them any money. Matter of fact, if you're going to pay in full, get it in writing because they'll double the amount and say they added late chargers and try to get more out of your later. So even with you Benjamin on 300 bucks, have you seen your email exactly what is the balance? Wait a week

since you just got off the phone with them. But have you seen your email if the exact amount and then cut them a check for that that day. And, um, but don't give them electronic access to your checking account. They'll take more out than they're supposed to because they lie. It's a

“filthy business. And so that's why GuardianLitigation is a good idea to have the lawyers on your side.”

Yeah, for sure. But, but don't do that with 300 bucks either. So yeah, it's just, it's just, it's just, I'm glad you're dead amount though. It's so low. It's been honestly. That's, yeah, you'll be out of debt quick and then start building up that emergency funds. Maybe step three of three six months of expenses. Precisely, that's how it works, you know. So, um, typically what happens with credit card debt is as it gets older, the credit card company, the the older the

debt is, meaning the longer it's mentioned, it's just been paid. It ages out. The credit card company will quote unquote write it off. Now, that does not mean that you no longer owe the debt. It means they no longer think they can collect it. And so they take it off of their books and take a tax right off for bad debt on you. Then they sell that bad debt to a debt buyer at pennies on the dollar and that debt buyer will try to collect from you. And they will work with you because they only

paid two and a half to five and a half cents on the dollar for the for the debt, but not on three hundred dollars.

money problems and figure out what to do next. Now, you can get that same kind of help anytime

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on the show whether you're making a decision or just want something explained. Ask Ramsey is here to help. It's fast, simple, and free to use. Go to RamseySolutions.com and try Ask Ramsey today that's RamseySolutions.com Roman's five four through five patience produces character and character hope and hope does not disappoint. Thomas Sowell said some people who are very dissatisfied with their lives nevertheless have no intention of changing their own behavior.

They want to keep on doing what they've always done, but just have it turned out differently.

Oh, it's like the definition of insanity. Exactly. I can see anything over and over again.

“And expecting a different result. There you go. All right. Jasmine is next. Jasmine's in the”

St. Louis. Hi, Jasmine, how are you? I'm doing well. How are you all? That other than we deserve. How can we help? I have a question about paying off an auto-limbs that I took out in my name or my mom? The balance of the loan is a little over six thousand and I want to just understand if it would be wise. Do you take out a loan against my 401(k) or take out the money from my 401(k) to pay off the high interest flow? Neither would be wise. And I will walk you through a why. Do you

and not have $6,000 or the ones? I have $6,000 if there's a separate drop I read and also funds college fund and savings. Oh, savings. What's in savings? So I have a little over $5,000 in savings. And what is your income? I mean, $105,000 dollars annually before a bonus. Okay. All right. I would scrape together from some non-retirement something and pull the $6,000 together and pay

it off. It's a high interest loan. I wouldn't have bought the car in the first place if I didn't

pay cash for it as a gift to someone, even your mom. Now here's why we're not going to cash out for 401(k) or kids' college or your kids' college or any or your Roth or anything. So if you take money out of a retirement account, they charge you a 10% penalty plus your tax rate, which in your case is 30%. So you're going to get a 30% hit plus a 10% hit for a total of a 40% hit. That's going to make your high interest rate look like a deal. Eight. So we don't want to do that. We don't

want to borrow money at 40% interest in order to do that. Now, if you borrow on the 401(k) you are unplugging a good mutual fund investing, assuming you've got an invested in good mutual funds, and you will pay yourself back at the rate of 6%. When you leave the job and you will leave, when you die, get fired or get a better job, one of the three. When you leave the job, that loan is considered due in full and you're facing the same thing with the penalties and interest.

If you don't repay it, it precisely the wrong time for you to want to come up with money is just when you're doing a job change. So no, we don't want to borrow against a 401(k) anytime and we certainly don't want to cash out a retirement account or something that has a penalty on it in order to pay off the thing. So I'm going to take some of the $5,000 and scrape together some money out of my budget and I'm going to try to get it paid off that way. Yeah, making what you're making, too.

Yeah, you're making money to knock this out. Yeah, it'll be amazing. That's so good.

Yeah, the car thing, it's real. The issue with the car debt, people, I mean,

“like this whole show so far. Yeah, today. I think it has been, we talked car debt all day long.”

All right, open phones at Triple 8, 825, 5225. Jennifer is in Pittsburgh. Hey, Jennifer, what's up? Hi, Dave. Oh, I couldn't. I'm so sorry. How can we know? I can't believe it. Hey, so a little bit of a situation here, like two years ago, I was married, now separated.

out in his mom deficit to take care of her. And now he doesn't want to talk about where to my rent. He doesn't want to talk about what he does it. He doesn't want to talk about how

to my words the money from the settlement over the accident. Yep. Yep. You basically, it's,

“you said you're, you're separated. So you're getting a divorce?”

I'm thinking of it. If he's not going to come clean right now. No, I'm sorry. Are you separated? Your marriage is not good. Separated or what's going on? Well, he moved out and moved out to his mother's house. Right now, that's where it's taken care of her because she had cancer. But after that, the conversation of buying the house, a matter of house is no longer in, you know, and the story, like you want us to just get

like rent. And basically, does he want to, does he want to help me tell you? Like he's now saying

he's in debt. But honestly, we've been married for so long, but his mom is one of the reasons we

fight a lot. And now I feel like I'm like, Mrs. too much. It's like, you're not telling me anything about the money. And now you want us to rent. And well, there's not one of us. He lives over there. You live over here. It pretty much. So now I feel like I really need to talk to, to, you know,

“a lawyer and like, yeah. Yeah, that's what that's your next step. I mean, you need to get some legal”

advice and then you need to get some marriage counseling advice and decide, you know, if we're going to keep this marriage together, what are going to be the guidelines for the relationship going forward? Because the ones that you have right now don't work. Yeah. And, you know,

there could be a good chance that that money is gone. The 170 that happened two years ago from

the settlement. That's what she's saying she's trying to get. And he and she doesn't know where it is. So there's, yeah, you waited precisely two years, too long to deal with it. That's right. That's right. If you're wondering about where it's going to go, you should deal with it. The instant, it comes up. Yep. That's right. You can't wait two years later and go, oh, I wonder what he did. I wonder what happened there? What happened there? That's not going to play out very well. All right.

I know how much you love social media. All right. I love social media. So we got a, we got a question from Instagram for you. I'm 26 years old. I just sold my house and we'll be netting 72,000 dollars from the sale. I have no other debt than the mortgage of my new primary residence. What's the smartest way to use or invest that money? So netting 72, but the other home, I guess, is already bought. So yeah, I mean, if I really, I probably just roll it right into the mortgage to the mortgage,

unless you have consumer debts. Make sure you're consumer debt is required. Work your baby steps. Make sure you're consumer debt is required. Do you have an emergency fund in place? You're putting 15% of your income away in retirement, putting money to sever kids' college, and you're putting then you start paying down your mortgage. That's right. So if you suddenly get 75,000 dollar bonus, you apply it to whichever one of those baby steps you're in. And so if you're all the way up to

baby steps six, you would put it on the mortgage. And at least from Facebook asks, it feels weird to be in stork mode and not paying off debt. We're expecting a baby and the hospital bill should only

“be around $2 to $3,000. Can we just set that money aside and keep working to pay off our debt?”

I wouldn't. I would pile up cash. It's just for a short period of time. Yeah. And that, you know, having 10, 20, 30,000 dollars laying around when a baby comes is comforting in case something did happen that was outside the range of your insurance policies. Yeah, that is one event that there's just a level of peace of like who knows? And it's just for a short period of time. That's right. I mean, so really, let's say you stack up $20,000 instead of paying down the debt for $20,000.

And the day that you and the baby come home from the hospital healthy and there's nothing wrong and everything's okay, you're sitting there with an extra $20,000. You paid on the debt. What did you lose by doing that? You lost the interest on rate on $20,000 of debt for that three-month period of time, which is nothing. We'll buy you a biscuit. Yeah. So when you look over the debt. I was making sure you, you know, you be a pile up cash ready for a baby to come. Now, if you are out of debt

and you have a fully funded emergency fund and you're at baby steps four, five, and six, you keep going. Don't do stork mode. Yeah. And what we call stork mode is while you're in debt, you temporarily stop paying down your debt snowball with a baby on the way to become to be sure about it.

it on the nursery. Okay. We're building up this cash as extra pad that is going to go on the debt,

the instant that we were able to do that. Who would do that? I don't know anybody. That would put

this hour of the Ramsey Show in the books. We'll be back with you before you know it. In the meantime,

“remember, there's ultimately one way to financial peace and that's to walk daily with the Prince of”

Peace Christ Jesus.