Ordinary Habits Will Build Extraordinary Wealth

Brought to you by the every dollar app. Start budgeting for free today. [MUSIC] Normal is broken, common sense is weird, so we're here to help you transform your life. From the Ramsey Network and the Fair Wins Credit Union Studio, this is the Ramsey Show.

Wash all Ramsey personality number one best selling author is my coach today. Michael is in Dallas, say Michael, how are you? I'm so good, how are you sir? Better than I deserve, what's up? So I am 120,000 in debt, and that's a graduate college, and I'm getting married in April.

I currently have not a lot of money, and I was just going to ask, I should handle that debt and preparation for marriage. Wow. Got a lot going on.

“Congratulations on graduating, what's your degree in?”

It's in aviation. Wow. So what are you going to do, fly? Yeah, that's the plan. Currently I'm a flight instructor, I just got hired, but I haven't gotten any students yet.

So the income is not really coming in yet, and then I'm building those flight hours to eventually go to the airline. That's the path currently. What is a flight instructor earn?

20 dollars an hour for the first 30 days, and then 25.

And then with room for growth, but nothing crazy. Are you going to be getting a full-time job out of this flight instruction that you've signed up for? Oh, yeah, for sure. That's the plan. It just flows down at first, and then after the 60 days, then they'll start to give you more students.

And then it can become like a pretty heavy 40 hour week kind of workload. Where are you living right now until the marriage? Make any Texas? No, no, no. How are you living?

Are you renting with parents, roommates? No, not with my father. Okay, with your dad, so you're not paying any rent? No, man. Okay.

And what is your fiance going to be doing for a living? She's going to be doing esthetician. She's currently about to go to esthetician school, and she's going to be graduating in January, and then hopefully finding a job. But that'll be pretty soon before marriage, so there's not going to be a lot of income coming from her,

at least before the marriage starts. What do you all plan as far as? Because both of you have a bit of a ramp up to income? What do you all plan? What have you said as far as living?

And caring?

Yeah, I mean, the plan currently is just kind of like you always say just live below the means.

But it's kind of hard, you know, we're young, and we want to do this that and the other thing. So it's kind of, like, this thing called 220 grand. You're done with this, that and the other thing. That's the name of your four new jobs. That's the biggest thing that I see as an issue here.

Dead, aside, just getting your income up enough to where you guys can come together and have a life together is what I'm working at. And then what you can get on some solid footing with your income coming in. Of course, yeah, we need to tackle the debt.

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

Yes. It's going to be a while for you, make money. That is true. Yeah, that is true. It's going to be a while before I make some good money.

I totally agree with that. But yeah, I mean, to really answer the question, again, it's just live below the means. And we've kind of planned it out. Yeah, but you don't have any means.

The first thing we need to think about in this is your homework.

So let's make this easy to think about your homework tonight is brainstorming what you will do in between students. Because let's say you start out and you only have two or three students. You have a whole work week to do with. So let's brainstorm some ideas that are going to bring in real money. And today's point, it might be two or three different things or five or six different things that you can start applying for in doing immediately.

Because as much of this debt, the first thing is let's have means to live. But then if we can start attacking this debt and making some true headway before I think you said April, that's going to be a win win. And does she have debt that she's bringing to the equation? No, she got zero debt. Okay, good.

Here's the thing. I don't want and we we love you and we want you to win. We don't want you working for five hours a week at twenty dollars an hour when you first get married. That's going to be very frustrating for all of you. Mom and it's going to put stress on your brand new marriage that you don't need.

I would rather the stress be that you're working all the time. Yeah. No six or six things.

“You need to get a bunch of income coming in on the short short range.”

And then the other thing you can do is check other flight instruction things in the area. You're good news is you're in the Dallas area.

Is there anything I can do in my field? Yeah. And because of the quicker you build your book of hours as you know, the quicker you get to get in the air and be paid for it. And you both need to sit down and look at what it costs to live in your area. Look at some apartments, look at some rents, and get an idea of what it costs to live.

So you know what it looks like to actually live below your means. And there's a target that you're shooting at income wise.

So if you graduate folks over the four year degree in supply chain logistics, you come out and the first day you're going to be making 80 to 95 thousand hours a year.

If you graduate with a degree in aviation the first day you have a part time job making $20 now for the next three years until you get your hours up. So when you choose these career fields, you've got to choose what you're going to do in the interim while because basically he's now left four years of education going into what we would all call an apprentice program. Right.

“You have to get your hours and you get those hours oddly enough by being a flight instructor.”

That's kind of irony of ironies. Right, you're still learning aren't you? We're going to teach you while I get hours and that enables me to fly, you know, in a commercial airline. And so, but yeah, and then she chose the same thing. Right.

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

Or it's almost flip flopped. It's almost like you need another full-time job. And that thing is the side hustle until it builds up. There you go. There you go.

I like that plan.

I mean, we always talk about it around here.

We're in Nashville. And, you know, how do you get the next country music stars attention? Waiter.

“You know, that's, that's how you, you know, because it's just like if you're, how do you get the next movie stars attention?”

A waiter, you know, they'll all tell you they wait tables. And they do anything they can. And they write songs at night. And they're trying to get, you know, a break, to get to play. But they don't make enough money playing.

Yes. And the early days to, to make it.

And so you've got to ramp up period in those types of careers until you get, until you get into the money.

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

Yes. Or make that your be plan and have an A plan. Yes. You know.

“And I mean, the, the, the legend that is actually the truth is that Chris Christofferson was the janitor.”

And, and he, the guys invited him to sit down and write some songs. Really? The reason he was a janitor is because he wanted to be in the building where it was happening. Because he was writing songs at home. But he's going down the hall with a mop, not a guitar.

And that's, you know, you've got to have a be plan. Let me tell you what I get asked all the time. When should I get term life insurance? How much do I need? Is it affordable?

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[Music] Jenna is in Milwaukee. Hi, Jenna. How are you? I'm doing well. How are you? Better than I deserve. What's up? I am wondering if you can help me with a 401k question.

My financial advisor is advising me to switch from contributing to the company's Roth 401k to a traditional 401k. Do two basically my income level and the amount of tax savings that I would receive now. That's okay.

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

That was kind of my guess, but I didn't know if there was any specific circumstance where there's not an official. Yeah, so what are you? How old are you? I'm 40. Okay, and how much are you going to be putting in to the 401k? I'll basically be maxing it out. Okay, so you're going to put in how much in dollars.

About 24,000. Okay, we'll call it $2,000 a month.

Okay, if I put that in the retirement calculator, that says that you're going to have at 65 3.1 million.

Okay, and for 25 years you put in 24,000 dollars and I have to add up what that is. You want to do that for me? Say 25 years times 24,000. And so that's going to be 200 and something that I believe.

“But so the deal is this, everything above your contribution is taxable.”

You're saying what was the number? 600,000. Okay, 600,000. So he's telling you to save taxes on 600,000 of the 3.1 million. But for doing that, you get to pay taxes on 2.5 million. Lovely. You see what I'm doing?

Yep, I know that you're doing. Okay, so the growth would be 3. the total amount would be 3.1 of that 600,000 you put in, which is tax, you're going to pay taxes on the whole thing eventually, if it's traditional. But you save on taxes today in present value dollars on the 600,000. So to save taxes on 600,000 for a period of 25 years that you do have to pay back later,

you end up paying taxes on 2.5 million.

It's really bad math. Okay. Yeah, now, and here's the other problem. We'll go ahead and take it a step further. If you have a Roth IRA, there's no mandatory withdrawals.

“I'm 65. I've got millions of dollars in Roth IRAs and 401ks, okay?”

And I'm not going to have to draw any of it at 72 and a half on required minimum distributions RMDs. Okay. And when I die, it passes to my ares with no income tax. Okay. If you leave this 3.1 million to someone, and it's all taxable under the new Biden laws, that came in when President Biden was this correct, they will have to pay taxes on the 3.1 million.

You don't have to because you died, but you've never got around to pay taxes on because you never drew it out.

And so an inherited IRA is all taxable if it's traditional. And they have to do it within 10 years. So they're going to pay taxes on $300,000 a year for 10 years, which is crazy for your ares. So it's harder and retirement. It's harder and inherited. And you pay light years more taxes.

There's no case where this is not going to happen. Every one of these, any scenario. And so I'm flabbergasted that somebody could be this dumb and call themselves a financial advisor. Yeah. I think the same thing.

We're doing an investing event. We can give you a ticket to hang out at the investment event and learn a little bit more. And maybe we ought to give one to financial advisors. No, no, no, no, no, no. I don't want them around. I'll just let they need to stay away.

I don't need to train that guy. He's already a poser. So no, hang on. We'll give you a ticket to the investing essentials that George came on under doing September 1st in 2nd. It's a two night event on much more sophisticated investing issues than that than that issue.

So that is a great example for you guys on why the Roth is so big. So in her case, the Roth saves on tax. She's pay taxes on the 600,000. That's right.

But you don't pay taxes on all the growth. It's tax-free. And taxes on two and a half. Come on now.

A million dollars would be $7,800,000.

It's a no-brainer. So it's almost a million dollar mistake. So you guys think I'm being dramatic in saying this guy needs to be fired. No, a guy that makes a million dollar mistake, you don't keep. That's right.

And that's not dramatic. That's just mathematically wrong. You know, so wow. Wow. You and I had one other or two of those in the yesterdays.

Yeah, the other day. Were the financial advisors off the rate? Not very good. Yeah, you have to vet these guys. And we have smart vester pros that we vet that you can interview them for yourself.

They're trained on Ramsey principles. And you can trust that what they're telling you is based on how we teach things. Yeah.

“Now, if you want to get real technical a little bit in the guy's defense, but he won't still”

might be mine. He was short-sighted. He was thinking about her taxes for the year. He wasn't thinking about long-term. Well, even he could even be a total financial nerd.

And it's okay. The present value of taxes on 600,000 is going to grow to this. Okay. So if you don't pay taxes on 600,000, let's call that 200,000. Okay.

What would that 200,000 grow to over 25 years? Okay. Not enough to offset the mistake he's making.

A million dollar mistake.

But the present value formula is, you know, it's part of, so my guess is the guy got so nerded out. He got twisted up in his own fish hooks. That's very possible. That's my guess.

“Maybe he's not as dumb as I thought, but he's still ended up dumb.”

Because these guys that, I grew up in that world in the financial world. And they don't mean most of the time. They're not crooks. And most of them are not really intellectually just dumb. They just try and--

But they get paralysis of the analysis. As if this stuff all happens in a vacuum, instead of happening out here with flesh and blood and bruises and cuts and divorces and deaths and disabilities and job changes. And they forget that this stuff is not just a simple linear formula. Because there's people involved.

And so you can't do that. So another fun example is we would just bother being nerds from in it.

When the Roth first passed, we had the financial patient versus the class taught.

And we had a retirement and insurance lesson. And then we had to go reshoot that because the Roth changed everything. Yeah, that's right. Because everything was traditional before the Roth. That's how long I've been doing this.

“And what we kept doing was we got caught up in me and the guy that was doing it.”

We got caught up in the same stupid trap of being nerds. Because here was the trap. And those days you could put $2,000 into a Roth IRA back then. That was the limit. That was the math.

Okay. So $2,000 into your Roth. And we kept saying, okay, but $2,000 after taxes is only $1,600 or $1,400. That's what happens. And we were trying to compare apples to apples.

The 1,400 growth with the 2,000 growth, which is accurate if you're in a test tube. But you're not living in a vacuum. You're not living in a test tube. Because what happens is when you tell people to do traditional or you tell them to do Roth. And either case they put in $2,000.

And so effectively when you put in Roth, it took you almost $2,800 of income. And because you had to pay taxes on it to get to the 2,000. So it's not apples to apples to compare $2,000 with $2,000 on Roth. But nobody in the real world does that. They just max it out.

They're not thinking like that. They just go, I'm putting, what did she say? She said, I'm putting, I'm fully funding everything before I won K. Well, she didn't go. Oh, I have to calculate the after tax implications.

Now, she just like, I'm going to put in the full 2,000 or the full 8,000 or the full 8,000 or whatever the number is. And we don't calculate, but we were trying to nerd out and go, it's not really fair to compare $2,000 after tax with $2,000. But in the real world, no one's thinking like that. People don't do that. They just fully fund the stupid thing.

So in a sense, when we tell you to do Roth, we're tricking you to put more money in. Yes, I can see that. Because it's an after tax investment. [Music]

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And making a mistake in real estate, you make a mistake on a car. It's a couple thousand bucks. You make a mistake on a piece of real estate. It's 10 or 15, 20 thousand dollars.

We have won the other day, the lady sold her house for 350,000.

The appraisal came back at 380,000. Yeah, she was like a 30,000 bucks off. It's too late to fire him by then.

“Yeah, you got a real estate agent to know what they're doing.”

We listed the house to cheap, and we sold it. It's under contract. Oh my gosh. Yeah, so you want to pro if you're doing a real estate transaction. And a pro is somebody who's done a lot of transactions lately.

Not someone who got their license three weeks ago and you know them from church. And wrong answer. Only one good part of that. And that was church. But that was it.

The rest of it is a no. Okay. So that's it. So Ramsey trusted is where we real estate agents for high performance, and following the Ramsey way, and having the heart of a teacher.

And they're going to have your best interest at heart.

And you can find a Ramsey trusted agent for free at RamseySolutions.com. Slice agent or click the link in the description if you're on YouTube or podcast. Hope is in Brooklyn, New York. I hope welcome to the Ramsey show. Hi.

How are you? Better than I deserve. What's up? Yes. I am getting ready for retirement.

Hopefully in the next four years. And I want to find out if I'm ready for it. Being that I had just purchased a I purchased a new home last year. I put down about 30%. And I still owe about 220.

But I want to find out if the 600,000 that I have in my 403B. My I have my three months worth of. Expensive. And I'm on baby steps 60 now wanting to pay off that. Yeah.

What do you mean? What do you mean? What do you mean? What do you mean? If I should retire.

What do you make? I'm right now I make about 150. Good for you. And I know my pension will be about 90,000 years. Wow.

And you're in great shape. I don't know if I feel like that. Is your 600 and 20,000? That's the mortgage. And you have 600,000 invested.

And good growth stock mutual funds. Is it growing? Um, right now I have about. I have the option of putting. What I invest now, which is 17% of my salary in like a fixed.

No. And then like what so I do that right now? No. No. No.

We don't do fixed. 7% sucks. No.

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

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

I know you got scared. Yeah. Because I lost so much during the Covid. And then I. No, you didn't.

Did you pull it out? I didn't. I didn't pull it out. Then you didn't lose. You, you've regained it anymore.

Yeah. But you pulled it out in 2022. Yeah. And then I put it in to fix. Yeah.

7% major mistake. But I do now is good. Yeah. Major mistake. Okay.

Okay. I want you to be in good growth stock mutual funds. Something like an S&P 500 type of a thing.

Which. Um, I, I hope I can make you cry. You're ready to cry. Okay.

“When you pulled that money out in 2022, if you had left it in there, it would now be 1.2 million.”

That's what that mistake cost you. Because in the last five years, the stock market is doubled. You don't lose money unless you take it out. Yeah. That's when you lose money.

So you, you pulled it out and then the best five years in the last 20 have happened. And so you just missed the biggest wave ever. But if you, because you pulled it out it exactly the wrong time, your timing is preciously horrible. But if you do take that 600,000 and do what Dave is saying. And you've got four more years.

You said you're looking at a four year horizon.

If you invest your 1800 or your 1900 a month, that still gets you to a million 42.

Yeah, you're going to be, and that's in four years. Okay. And you mean while. And so you're going to have a million bucks. If you move it into good growth stock mutual funds.

And you keep adding to good growth stock mutual funds for the next five years. You don't take it out. And don't take it out. All right. Just ride it.

“Because you're going to be making a hundred thousand dollars a year.”

It's a pension. And in that five years, get the mortgage paid off. And then that house is going to be worth a million dollars. And you're going to have a million dollars. And by the time you get to 70, you're going to have four million dollars.

So you're going to be fine. Live on your pension and let this all grow. Yeah. Just, you know, I grew up very, you know, hand to mouth. And my parents are not very good with financial.

So I did the thing, perhaps you said. I even did the debt consolidation. So to be where I'm getting like where I am now. I think you're in pretty good shape. I just don't want you to be in fixed.

All right. And growing up hand to mouth doesn't mean be dumb. Yeah, you've gone far beyond that at this point. Yeah, you're way beyond hand to mouth. You've got a hundred thousand dollars of your pension.

A house that's going to be paid for by the time you retire.

And a million dollars will be in there if you go do what we tell you to do.

And if we're half or long, you're still okay. Kick it out of six and put it back in the stock market. In the mutual financial funds, not the stock market. But it is the stock market. But good growth stock mutual funds, something like an S&P 500.

That's what I would do. And I'm older than you. Yeah, and start describing yourself based on who you are today. Not who you were 50 years ago. Yeah, I had to learn a lot.

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

It's scarcity. Yeah, exactly. And panic and fear and all those things. It's half glass full thing. Yeah, half glass empty.

So yeah, that's the thing.

“And so, but it doesn't also doesn't mean you need to take rash risks.”

I'm not telling you to put it in crypto or go to Vegas. And I'm not telling you to bet on draft games. None of these stupid things. That's the other side of the coin, right? Where you go crazy.

And so, now this is steady and boring. It's just not as boring as fixed. So here's a good rule of thumb folks. Give you a little math formula. Today's show that has been a math show today.

So far, there's an old fashioned thing that was taught to us years ago. As math nerds called the rule of 72s. If you take an interest rate and you divide it into the number of 72s, it will tell you how long it takes a lump sum to double. So an example will be 7.2 years divided in our 7.2 interest rate,

divided into 72s would give you 10 years for the lump sum to double. Reverse it.

I'm going to put, I'm going to invest at 10 percent instead of 7 percent.

Then it will double every 7.2 years, right? And so that's basically what we're telling her. Okay, are you going to wait 10 years for this to double or 5 years for this to double? That's kind of the performance of a difference between 7 and 12. That's what's going to end up.

So, and that's the 600,000 we're not touching. And if you just said, okay, I'm going to run this thing out at 11 and a half, 11.8, which is the average that the S&P has done divide that into 72. Well, there you go. Now we've got about the time she retires this to double, which is what you did.

And you can do that in your head. You don't need to calculate her to do that. It's not bad at all. And so, just divide the interest rate that you're going to invest in at into 72 and it'll tell you how long it takes to lump sum to double.

So you start with 100,000. Then I'll be at 200. Then I'll be at 400. Then I'll be at 800. Then I'll be at 1.6.

And then I'll be at 3.2. And every time it every time. And so, if you divide 10 into that, it's just 7 year rolls.

It's going to double 3 times. Yep. And that gives you some confidence that you're on the right track with some of this stuff. You can also use the Ramsic Calculator, which is what we're using more on the air. It's on our computer.

You go to our website, the Ramsic Retirement Calculator. And all that is is a basic financial calculator. It's nothing super fancy, but it's just an easy way to do it.

“And you can plug in and go, what if I put $100 a month to 12% from age 25 to age 65?”

It's one million, one hundred and seventy two thousand dollars.

And the calculator will show you that. Okay. I can be a millionaire if I invest $100 a month from age 25 to age 65 at an average of 12%. Hmm. We're a good 12%.

S&P is average 11.8 since it began eight years ago. Okay. [Music] Hey George Kamel here. Listen, if you've had your phone two or three years, your phone can now be unlocked.

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I'm very well, how are you? Better than I deserve, what's up? I drive an older car, a little bit higher mileage. And that was wondering if it would be smarter or irresponsible to buy a $45,000 car around there. Okay.

Well, the way we determine if something's irresponsible around here is ratios and percentages. So let's play with some numbers for a minute. Number one, you pay in cash? Probably putting down and then financing. Okay, I can answer your question and no, it's irresponsible.

You should never have a car payment.

“You should have a bicycle for you of a car payment.”

How long have you been listening to the Ramsey Show, Jke? A couple years now. Okay, yeah. Cars are the largest purchase that Americans make that goes down in value. And they handcuff you financially.

So you'd never need to finance one under any circumstances. There's not a circumstance ever in 35 years of doing this show. We told somebody by a car and finance it. And if you're going to buy a car, you should measure all the things that you own that have wheels and or motors. And if the value of the total of those things and all of those things go down in value of it's wheels,

motors, batteries, I don't care. Add it all up. And it goes down in value. If the total is more than half your annual income, you have too much tied up and things going down in value. So that's boats and campers and RVs and sedos and tractors and lawn mowers that are now $12,000 and all this crap.

And cars and cars and Tesla's and cars and trucks and anything you want to add to anything you want to have. And I've got a bunch of stuff with motors in it. I'm an old redneck. I like things with loud mufflers. And I like cars, I like trucks, I love all of it, but they all suck as an investment.

And so they need to be a small part of your financial picture. Otherwise, you've got too much invested in things going down in value and then you're scratching your head and wondering why you're broke. Why you're doomed to be middle class. Think about this and this is something I've spent a lot of time thinking about. If you synthesize the data, you're going to end up with about 60% of working Americans having car payments.

Then you look over and say, well, that's suspiciously close to the amount of people who are living paycheck to paycheck. Which is also suspiciously close to the amount of Americans around 60% would say they are concerned about retirement because they don't have enough saved. That is a very interesting correlation. It's the car payment. That's why.

Yes, because you have a car payment. That's what's keeping you middle class. It's what's keeping you paycheck to paycheck.

“That's the money that you should have been investing for your future.”

It's tied up in your car payment. Yeah. And many of us have two. So in the car industry, the cars that they're building today are just fabulous. They're engineering works of art.

I mean, they're the most of the cars. There's a few on a piece of crap. But the vast majority of cars today are phenomenal. The in boats for that phenomenal vehicles and compared to, you know, whatever, the back in the day. Okay. They don't make them like they used to.

Thank God. They're a lot better now, you know. But the car industry is also done. A excellent job of making people associate their personal worth with what they drive. Instead of looking at maybe your net worth.

Yeah, absolutely. But I am what I drive. If you've seen those length of the jokes about if you drive this, you're this. Yes, I have. And some of them are funny and some of them you can't repeat.

And so, but yeah, their funny is crud. And so, I mean, if you really look at it further, it's in direct opposition to what people say their intentions are. Yeah, because when you talk to most people and say, well, what do you want for your life? What do you want for your family? Well, I want for my kids.

I don't want my kids to live the life I lived. I want to be able to send my kids to college. I want to be able to retire. I want to be able to play golf, right? Yep.

You say all these things about what you want. But you're not showing it with your dollars if you're. You're not with your actions and your behaviors. You're exactly right. Exactly right.

It's. So, Jake, you got us off on a tangent. Yes. We're preaching it everybody else. Not just you now.

But no, you don't get to buy the car if you're doing a do what we say. Not that one anyway. So, you know, that's the angle. And, you know, you talk about that. That's a funny thing.

We started talking about this years ago. I was doing a seminar with a guy in the financial world.

“And he said that their company had done surveys and asked people, you know, do you think it's important to say for your children's college?”

Yes. How many of you are saving for your children's college? Three percent. Really? Wow.

Nine percent aren't doing what they say is important. Yeah. It's very interesting. Very interesting number. I don't know if it's that today.

But people will say they're not doing it because they can't. And they leave it there. And that's not the reason. Exactly. Using not to.

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

I was a third employee at my company.

I don't know about 1.5 percent of it.

I was offered to buy back my shares at a $50 million valuation. Which, and my opinion is low for the company, which is fine. Just because we're trying to get, you know, clean up the categories a little bit. Well, I'm going to start with you. Did you say you own one and a half percent of the company is worth 50 million?

Yes. You're one and a half is worth 50 million. No. The company is worth 59. Oh.

Okay. So it's capitalized at 50 million. Can you sell your one and a half for 750,000? I get it indeed. Well, no.

It's not a theory. It's a question. Yes. I get it. Okay.

All right. And so now your question is what?

I think the company is worth about 250 million.

So it's quite low.

“That's why I thought you said it was worth 50 million.”

It's the share, the shares are being offered to be purchased back at 50 million by the company at a $59 valuation. Okay. All right. And you're how old?

I'm 29. And what do you make for you? What do you make here? 150 bucks. Okay.

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

Yes. And so your question is what? My question is so I bought our exercise. My options to purchase my shares this year, which cost me about 90% of my savings between the actual purchase of the shares and the A&T tax.

So on the surface, I would never have sold the shares at the $59 valuation because I

think the company's worth about five times as much. Yeah. But I'm wondering if you think the bad idea to distill my savings by so much. It's already you already did it. Well, I can still sell the shares that I purchased at the $59 valuation.

And you bought them for one. I mean, it varies in range from like $15 per share. I mean, you said you clean up your savings. It was the number you put to buy the whole thing. Oh.

Well, I would pay it all.

I don't have to pay until I actually pay taxes in 2027 for the 2026. I'm not sure what's the rate you wrote to buy the shares. I paid 17,000, but I'm expecting to pay another 80,000 and A&T tax. Okay. All right.

So you got a hundred and something. A thousand dollars in gluten tax invested in its worth 750,000. Yes. Okay. So let me ask you this.

If you had 750,000 dollars in the middle of the table in cash,

“sitting in your kitchen table, would you go buy these shares?”

You would, because you think they're about worth 5x that. Great. Yeah, I wouldn't. It's too big a gamble for me. Scares crap out of me.

It's a startup company brand new. And it's not even publicly traded. I don't think is it. No. This is private stock.

Yeah. And so their valuation is up to them on how they run their accounting. Yeah. Which is why it's all over the place.

“Are they planning to take it to an IPO at some point?”

I think it's more likely that we sell, which is another reason I chose to buy this shares when I did because the QSBS laws and the tax protections that are provided on the QSBS liquidation. Okay. So let me tell you. This is a.

You're playing the roulette wheel in Vegas. And you've got it distilled down to where you don't think there's risk here.

But basically you put a hundred thousand dollars on the table.

And so far, they stacked chips in front of you that we think we can get 7.54. And you're going to push the 7.50 back on to another bet open to get 5x that or 10x that. And sometimes you don't hit red. Sometimes you hit black. And you get zip-o.

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Welcome back to the Ramsey Show in the Fair Wins Credit Union Studio. Jade Washaw Ramsey personality number one bestselling author is my co-host, Michelle's and Pensacola. I'm Michelle, what's up? Hi, so we're trying to figure out how we can get out of this constant spiral of going into the red every month. My husband has been teaching for 10 years and he only makes 50,000.

And so he has a second job working at a grocery store that they can only schedule in part time.

So it must be like $80 a week. And then he's also trying to do long care on the side. Trying to see if he can't find somebody to sell woodworking stuff to you. We've both been door to action. We're reading Sparking Halversodgigs that we can and it feels like we're just spinning our wheels.

And we have no clue where to go to get income up. He's applaud on Mond and other Muslim TV for a few days on of it.

“You have to know somebody and so that's been hard for him to fund something else for the teaching degree.”

He's tried going into military and one branch said no, you know, your DPA is high enough actually for that route. And so I don't know if I've heard about where he can make digital marketing stuff and sell it on Amazon and it's passive income, but I don't know how legit that is.

So how much debt are you guys carrying? So I have student loans from years ago. That are actually in the firm right now. So that's not causing that. Okay.

What was your degree? So actually wasn't able to finish. I was dumb. My first year college. I told my high school said go to a private school.

It's great. And then I made super choices. What did you study? What were you interested in?

At first it was chemistry.

Then I changed the teaching and not now we've got three kids seven and under. And so to finish, I'm one semester away. But to finish, I would have to work a full-time teaching in a suit. It teaching job. Wall paying for the college classes and have to pay for childcare.

Sure. So I can't finish until my kids are old enough to go into school. Sorry, I'm coming up. So wait a minute. How much debt?

“How much is on the student loans that you're not paying on?”

About 60,000. Okay. And what debts do you have that you're paying on? Car payment? The current.

Yeah. We have a truck that he uses for his landscaping. I don't care. What's it? We've got a family car.

How much do you owe on the truck?

We looked at the day we owed 24 and we could sell for 21. Good. And what's the next one? It's a van. It's about the same.

We can get 19 out of it. Sure. But we owe 24 on it too. I just don't know what we would do because we can't give a loan or anything to get another car. And we wouldn't clear anything to have any vehicles after that.

Whatever debt. That's it. No credit cards. No. We have a secured one that it saves at zero.

We only got it because of running a car a few years ago. So you're just making the payments on the two vehicles. And so it's just a struggle. Keep in groceries then in the lights on. Yeah.

Okay.

“How much are you bringing in as income every month combined the two of you?”

So I'm bringing home probably at most on good months about a thousand to two thousand dollars a month. But that's only during the summer ball. He's able to stay home with the kids. That's what she bring home. So he brings homes at 50,000 from teaching 80 a week from this grocery job.

And he's working four hours a week at the grocery store. He makes 16 an hour and they only schedule him from like three thirty to eighty dollars a four hour. Yeah. I'll go schedule him. It's time work there.

It's time work there. It's time work there. Yeah. So I don't know another less than a thousand from the grocery store or everything. Yeah.

Yeah. He brings home after insurance and everything. We actually get home for $1,000 from teaching. Okay. Plus your $4,000.

How much is your house payment? The rent is $2,000. Okay. Do you have a budget? Yes.

So you're going to try to figure that out. Good. So we'll start there. And what you're going to find is what you've just discovered, which is obviously your rent's 50%. The rent's not the problem so much as the income is the problem.

Yeah.

“But in the meantime, on that budget, the way you need to line it up is by your four walls.”

And keep those things first and foremost right now.

Obviously you got to pay rent, right? You got to do that. You got to make sure lights and water and utilities are on. You've got to make sure you've got groceries and you've got to make sure you've got transportation.

Now, aside from that, all of my focus would be geared towards, we've got to work work work work work work and find three four five thousand dollars. Not four hours a week though and call that a job. Yeah. Okay. The grocery thing, you know, we've spent more time talking about it than he does working.

I mean, he doesn't even go over there. Hardly four hours. It's not even worth doing. Yeah. I mean, that's a joke.

And where he's actually talked about stopping that. What he needs to do is what he needs to start tutoring. What does he teach? So he teaches PE and that's actually something he's in the middle of trying to do. It's like a homeschool co-op.

I don't want to start a homeschool co-op. I want to teach a kid to play basketball. It's like $40 an hour. Given why can't he be a skills coach? Yeah.

Everybody's in private sports.

Why can't he do private teaching? I like that. He play D1 basketball.

“And he makes $50 an hour teaching 13 year olds out of play basketball.”

Yeah. Yeah. Like that's the Kenny the homeschool thing he's trying to do. Kenny work with the school. Kenny work with the school and do a camp.

And put on a camp. There's so many. The point is there's so many ideas.

I'm worried that he's lost his.

His spark. There's a whole bunch of things he's doing. Not at all. Yeah. And you're listing them.

In hour a weekend landscaping. Four hours a week at the grocery. None of this is anything. That's why you don't have any money.

“So we need something that we're working 40 hours a week at.”

In addition to teaching. Yeah. Because of that.

And then by the way, if you've had if you've got all but one semester in chemistry and teaching,

you can tutor chemistry. So go over to high school and tell people that you're two kids for on chemistry. And they'll come to your house in afternoons and you charge $40 an hour. Okay. Yeah.

I didn't think about that. I'm a chemistry major. It's a whole lot better than freaking door dash or $16 an hour bag in groceries. Yeah. Yeah.

And these cars have to go. They're insanity. You guys have bought cars like you make six times as much income as you make. I mean, what the cred? A $25,000 truck.

How you crazy? That has got to go. So keep the van, get rid of the truck, and then quickly pile up enough money to get you a dumb but $4,000 advance. And sell this dumb but van.

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And right now, you can try NetSuite next for free. If your revenue is at least seven figures, go to netSuite.ai/Ramsey. That's netSuite.ai/Ramsey. [Music] Today's question of the day is brought to you by why ReFi, one financial mistake doesn't have to define the rest of your life.

If you fall in behind on your defaulted private student loans, why ReFi can help you explore low-fixed rate, refinancing options, and affordable payment plans, go to whyreFi.com/Ramsey. That's the letter why REFY.com/Ramsey might not be in all states. All right, today's question comes from Grant in Montana. He says, "You teach your listeners not to panic during a stock market downturn, and it just hold on for the ride. Is there ever a scenario where one would consider changing their investment portfolio for instance,

if someone is getting close to retirement?" That's an interesting question. Dave, I'll let you take that. What do you think? I mean, I could tell you what I would tend to... Well, the people say when you get close to retirement to move it, that is a theory and financial planning called asset allocation.

“The theory says, "When you're young, take more risk, and as you get old, move the assets away from risk because you need to be able to count on them."”

I disagree with the theory, and I certainly disagree with the implementation of the theory, and let me walk you through why. Okay, so the typical financial planner that follows that theory will tell you, "Okay, I'm 65. At 65, you should move your money towards bonds and growth and income mutual funds,

get away from growth stock mutual funds, get away from something that's an SNP, and move even into high yield savings."

“Okay, so when you do that, you lower your returns from 10 to 12 percent down to 6 to even 5 to 8 percent would be your portfolio change.”

But you take less risk. The reason that is dumb is that when you retire, if you have saved substantial money, like we teach, and you get there, and you've got 2 million dollars, you've got a million dollars, which people call here all the time that half or have the potential to. We talk to them all the time. We show people how to do that. So if you have 2 million dollars, when you retire, you don't need the whole 2 million dollars right then. So if it goes down a little bit, the next year, after you retire, it's not the big deal.

Because all you're going to be doing is living off a portion of the returns. You're not even going to be taking off all the returns. So if you've got 2 million dollars and it's invested, it's making 10 percent. That's $200,000 a year. You probably don't need $200,000 a year.

You're probably taking off 150. So you leave 50 in there. It's growing, and you never are touching the nest eggs.

So the nest egg can go up and down without really affecting your life. You don't need the safety. When you would need safety, as if you have no money. Now if you've got $100,000, maybe. But if you've got a million, it changes the whole scenario or 500 to a million or 2 million or 5 million or whatever it is. Okay, and so I'm, you know, I've got substantial assets, millions and millions. So I've moved zero to safety. And here's the other reason that's a dumb. Okay, I'm 65. I'm in good health.

All right. I'm not overweight. I don't smoke all that kind of stuff, right? So all the statistics say,

I want you to make it to 65 average death age of a male. Now is 74 females is 76. But that includes infant mortality. Okay. So when you make it to 65, the average death age is more like 90. You got a long ways to go as what you're saying. Yeah. So I got 25 freaking years for that to make 6% or make 12% and I'm not doing that. So that's just dumb.

“So I, that's why I think the asset allocation theory is just bogus because it assumes everybody's going to”

need all the money right now, what you don't and that you're going to die right now. What you're not. I think you're right. I think this question is probably someone who doesn't have a lot there. And when it downturns, it probably makes them feel the significance of whatever they're pulling off of it. Now what I would do to his question and it's a good question, is there ever a scenario considered changing the investment portfolio? Yes. I would change my investment portfolio when I have a mutual fund that is not keeping up with other mutual funds of its category.

Yep. I agree with that. And so if I've got a, you know, the SNP 500 is the baseline of the stock market. And so if my growth stock mutual fund is not outperforming that regularly on average over a long period of time, not on, not in one day. Not in one month, not even in one year. But if I look at mine about once a year and I go, okay, this thing trendlining, it should be competing with the SNP and beating it. Yeah. If it's coming in less than the SNP, I should just be in the SNP and be dumber. Okay. Be easier. I could just dumb it down. And so and I've got aggressive growth stock mutual funds.

I don't compare those to the SNP. I compare those to the other indexes that are measuring that market. Right. So I want to know other, other aggressive growth stock is is mine underperforming them. Then I would change my portfolio. But you're not changing your strategy. You're just changing your funds at that change the funds. I would even change the strategy, but only over a long viewpoint. When you ask this kind of question, when you change your investment portfolio, it's often people that are looking at it every day. And that would have you nuts.

“Yeah. So you need to think on this thinking blocks of time of a year and five years and 10 years. And when you think a blocks of time like that, then is there something indicating you need to change your mix.”

Yeah, that'd be okay. That'd be fine. And or if something has happened and you know your view of the world is different. Okay. That's fine. So I'll give you an example. If I died and Sharon looked at what we were doing and said, okay, I understood it when Dave and I were doing it, but I don't like it. I don't like that. I'm going to go all safe just because I want to sleep better. Uh-huh. Well, she could do that. That would be okay. And so if I talk to someone that's 78 on the air here and I'm talking to them, they just they any amount of variance is going to cause them to stay awake at night.

But there's all kinds of evidence that says you'll be fine doing it the other way. But if your emotions can't handle it, then that's a that's your risk tolerance. And then we wouldn't do that. We wouldn't tell you to do that. But um, no, I uh, the the funny thing about the financial world and it seems like today's been the day on this. It really has. It really has. But is that uh, the stuff we're taught in that world in Georgia studying the CFP materials right now, sort of out financial planning materials and he and I have this great discussions over some of the crap they're shoveling out.

And um, he's learning some good stuff academically, but it's also is that they present this stuff like it came from the Bible or something. Like it's absolute truth because it came from this group of nerds.

“And this asset allocation model that you have to move to safety as you get towards 65 years old is taught with such fervor that it says if if you don't believe it, you don't believe in the law gravity or something.”

And so me being on the air for 30 years saying, I don't believe it. I think it's a bad plan. Uh, all those guys, they go bananas on Dave Ramsey. They can the day Ramsey doesn't know, he's going all these good calls. All these people to lose everything they own. They're all going to be poor because they've runs another and I don't have a lot more money. So um, but um, do you have the same philosophy for things like 529s as the child gets closer to.

Yeah, same one. Keep the same. Yeah, because here's the thing, you're not taking the risk the day they go to college.

Some of that money is not going to be touched for four years. That's right. It's still has time. And so if the market, if Trump bombs I ran and the market drops has time to recover, panic and take it all out and lock your losses in.

“You know, in 2008 when the market went in half people talked to Warren Buffett and said, Mr. Buffett, you lost a trillion dollars today or you lost a billion dollars today because I didn't lose anything.”

I insult it. You lock your losses in when you sell it. As long as you're holding it, you're riding the roller coaster and no one gets hurt on a roller coaster except those that jump off in the middle of the ride. And so the same thing's true there. Now what you could do, if you're coming into college and say you got $200,000, I might pull the first year out and put it in high yield savings. But fifty over there. And then another hundred and fifty and then maybe the next year, you know, I start talking about that. But the chances of that statistically being down over four years.

Very slow. Almost zero. Yeah. [Music]

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John is in San Francisco. Hey, John, what's up in your world. Hey, thanks for taking my call. Sure. How can we help? So I'm dealing with the three pending debt collection lawsuits right now. I have another account that's still in collections that's probably going to turn to fourth lawsuit. If I don't get it resolved soon, I'm trying to negotiate settlements and it's been pretty overwhelming.

Doesn't make sense to hire an attorney to fight them or even look into like chapter 7 as a last resort. I don't think I'm there yet, but one can all my options.

“What's the amount of things? How much do you owe these guys?”

So the four in total is $21,000. When I'm 26, the two I'm trying to negotiate, the lowest will come down to $6,000. You know, I'm trying to offer them $3,000, but you know, they won't touch. I do have around $8,000 saving just trying to deal with this, but. Okay, so you've got two in court. Is that right?

So three in court. Okay, and the three in court or how much? Give me the amounts on those each. Okay, so this is a one. $3,000 or $3,100. Okay.

Those are $4,300. Everyone is $5,500. Okay, and these are credit cards or what? They were personal loans that it took out in my spare early 20s. So you can't take the $8,000 and clear the top two?

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

They offered a $6,000 to take out of the first two they mentioned.

I love that. Okay, that's a $7,400 discounted to $6,000. Okay. So you could do that and then you'd be down to two. And then you got $5,500.

“Now personal loans, are you talking about with a bank or a rip off finance company or what?”

Yeah, it was just like there was just a anchor through it. What do you, what do you make? $95 a year. Why are you behind on these little bitty loans if you make $95 a year? So I only started making $95 for, I think, about a year before that.

I was making maybe $6,500. Yeah, but if you make $95, you could have cleared $21 in one year or why haven't you? I also have some more debt on top of that. Okay. Okay.

Okay. What about how much do you earn your car? No car payments. That is right. Are you married?

Yes. I have a girlfriend in one kid. Okay. How old are you? Okay.

Is this family take, is this, I'm putting family and air quotes as everybody together? Like you all live together? Yes. And you're all contributing? Okay.

Okay. I mean, yeah, I do want to get married.

Just, you know, I just want to deal with the debt first before.

I don't want to be liable for any of this. She's not going to be liable for it. Yeah. That's me either here or there. I think part of cleaning up the situation.

All of this is a mess, not just the financial side. So part of cleaning up this situation is going to involve the relational side too. And I think you'll be shocked at how much peace you get from putting a nice little bow on your family situation and making it legal. And then now you can actually have real support as you go and start cleaning up this mess. And today's point, you make $95,000 a year.

I would. You are not bankrupt. That's one of the officers. Okay. You haven't changed.

Take the money that you have. Clear off the first two.

Now you've got the $5,500 one and you never said what the fourth one was.

Well it's the first one was $92. $92. Okay. Okay. And that one's not even in court yet.

“So you kind of have to focus on what you need to focus on.”

The first two that are in court. You can clear those. And then you're not going to be far away from getting the money that you need to clear the third one. You make enough money to pay these. Yeah.

Especially if you get settlement offers. So pile up, you know, you've got $8,000 now. We're going to spend six of it and get rid of these two. Get it in writing before you give them any money. Don't give them money unless you get the settlement and writing.

That they offer the 6,000 dollar offer coming writing on email.

Yeah. I can't answer it.

“The only thing I can turn me was that they wanted like my bank account over.”

No.

I'll wire you the money or I'll give you a pre-paid debit card number.

Get a pre-paid debit card for 6,000, do not give them access to your checking account under any circumstances. Okay. They'll clean you out. They lie. Okay.

And so, but you know, you can clear every bit of this. And there's nothing to panic about. Um, but here's the deal. You're going to have to get proactive and get after this. Yeah.

You're in a state. You're just screwing out for a year. Your life is just in chaos. And you need to, you need to clean it up. Like I said, Mary, go ahead and marry the girl.

You need a budget and see where this $9,500 is going or $95,000 is going every year. You need to put some, some formation to your life. And I think that that's going to help you out a lot.

And I think that this is just the kick in the pants.

Yeah. No more eating out. No more partying. No more happy hour. No more nothing.

All you're going to do is work and pay bills and get your life back.

“Your life is screwed up upside down because you're not addressing these things.”

And they're coming after your throat. And so, you know, you got to address them. The good news is we can get rid of two of the four that are pending going towards this. Cut up the credit cards. Get on a budget.

You can clean every bit of your debt. All of it. Everything you've told us about in the year. Everything. Yeah.

And what we'll do is we'll set you up on the every dollar account. And yeah. So our suggestion is clear those two. Get married this weekend. If you don't have any money, she's not liable just because you got married.

And then the two of you sit down as a husband and wife and start building a life together, which involves cleaning this mess up. But y'all are just running around like you're freaking 16 years old. And you're getting your head taken off. Doing it.

So this is no longer a game. We're down into adult land now. And that's what we got to play. You got to play serious. And no, you're not bankrupt.

And no, you know, there's no you don't need an attorney. Because if you go to court with or without an attorney. And the question, the law, the judge asks is, is this for valid debt? Yes. Have you paid it?

No. Guilty. That's simple. You lose the case. Because it's not a question of your character.

It's not a question of what happened. It's not a question you didn't have a job. It's not a question of your mama. It's not a question of nothing. Just simple.

Did you pay the debt that you owe? No. Boom. Judgment. Okay.

That's simple. It'll law you're can't keep that from happening.

“The only thing a law you're going to do is be maybe.”

Maybe could think being negotiating better than you've been negotiating. Because you're. You're all for here at $6,000. It's not a great offer. But given that you've got eight, I'd get rid of.

I do it in a heartbeat. Yeah. Yeah. So these things when we ignore them and sweep them under the rug, we not only get a lumpy rug, they have a high rate of resurrection.

And now you have zombies walking all through your. They come up out of the grave and you have zombies walking through your house. And because we didn't deal with them. And so what you've got to do is take the zombies out. That's the worst hard core.

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[MUSIC] Patrickson, Madison was constant. Hi, Patrick, how are you? Hey, how's it going, Dave? Better than I deserve, what's up?

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

What do you expect to agree in? I'm working in software that wasn't exact. I studied business. Okay, great. Yeah, well done.

Good for you. 23 and 85k is no chump change. Good job. Good job. Thank you.

And so I have, I guess my question here. I have about $25,000 in student loan debt.

“And that's about, I think it's 4.25% right now.”

Whereas I could initially, I was trying to pay them off as aggressively as possible. But now I'm kind of doing some of the math year. And my raw 401(a), I could hit the 24,500 limit there. And that seems to be a lot more money in the long time. So I did the math.

I calculated the difference between what I would otherwise, and probably otherwise you're about 10k towards that per year. So it's really looking at $15,000 per year compound up until I retire. And it almost seems more the math check out to where maximum. Or leaving things out of your math formula though.

The things you left out of your math formula are a probability of completion. And also risk. And neither one of those are mathematically factored in. And you've added risk by leaving the student loan in place.

And here's what we found.

We studied, we did the largest research project on millionaires in North America ever done. We studied 10,167 of them. The number of them that said, Dave, we became a millionaire by not paying off my student loan. And instead investing was precisely zero.

No millionaire's did your plan. None. They all said, I'm going to get completely clear of debt. Have a clean life. Have a 23 years old, make an $85,000 and be investing aggressively.

“You should pay off that $24,000 in one year or less if you're making 85,000 in your 23 years old.”

And then start your 401k. And don't put a dime in investments until you get that stupid student loan cleared up. This is not a freaking pet. It's not a leverage project. You left risk out of your equation.

I guess I'm just worried about like. Okay, you do what you want to do. I told you what today. Now you go do what you want to do. Aaron is in Cincinnati.

Hey, Aaron, welcome to the Ramsey Show. Hey. Thanks for having me. So my question is,

we're a big, basically, baby stuff five, I would say, somewhat.

My, my wife's family, the half 30 acres. They gifted the kids all at acre. And we saw our house last December and we moved in with them. And her uncle's going to be the one building the house at a much better price than what we could ever buy. And my question is,

so we have the numbers of basically. A hundred and thirty thousand dollars down for the house. And I'm wondering if I should. The thing and how the bill goes to cash in my wife's 401k of 37,000 in case things go over at the end. I have a hundred and twenty seven thousand in my 401k. And she just they had a home mom with our two kids.

“No, you should not cash in a 401k to do a bill.”

And no, you should not be thirty seven thousand dollars over on your bill. You need to do a budget in detail and then pick the appliances and the tile and the flooring and the brick and the roof. The fits the budget. Right. And if your uncle doesn't know what he's doing,

the budget should be accurate. Right. I guess the concern was her sister and brother both build houses by the same guy.

And I guess the like gets thrown around as always.

It's going to cost what's going to cost and they try to stay with them budget. But with. Oh, so he doesn't know what he's doing. I guess one could one could assume that right.

I mean, because I just built a house.

And it was millions of dollars. And it was within one percent of budget. Because the builder put the budget together. We went over the budget before we broke ground. And I told the decorator my wife and the builder.

This is the freaking budget. We're not spending more than this. So make it work. And guess what we did. Okay.

Don't plan to fail.

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

Well, I mean, you're a guy that fails. You're right. Two times you fail. And you're already thinking about how to sell one of the fail. One kid.

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

a plant on a paper bag on the hood of a pickup. - I sure hope not. - God, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no "God, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no,

to the day, February the freaking 12th, and the cabinets are going to

cost this because we bid them out. The plumbing fixtures are going to cost this because we bid them out. There's this many bathrooms, this many toilets and this many sinks. And we're not buying the engraved sink. We don't have a budget for it. Or we are buying the engraved sink because we have a budget for it. Whatever, I've done both, but yeah, the gold in like crap or whatever that goes

in the formal powder bath shoot me, but I did buy it. I was going to say, I know you got it though. Yeah, you know, I got it. You know, it's S-W-I, Sharon once said. But we didn't make it up after we started eating go for a

“budget. In the deal. When we started, the powder bath gets extra upgrade, right?”

But when you, when you set your budget, surely a portion of it is that contingency, that one percent or whatever that, that it will go over. Like, Tom and you can have a mine. Mine, they contingency. Yeah, but to whatever. If you say, you just have the money to cover it. Yeah. But don't plan on, well, we just don't know. We're making this crap up as we go. Yeah, you can. You know, no. Because I mean, I built a house one time and

a country music star built a house across the street. And it took them two years longer. And they spent literally twice as much money to build the exact same square footage. And both of the massive houses, both of the massive. But because the country music star and her decorator used the, I'm going to build by change order method. I'm going to make it up as I go. I'm going to look at it and then decide I don't want it and change it.

Yeah. And they put stuff in, tear stuff out, put stuff in, tear stuff out, reorder stuff. The builder was ready to shoot them both. He could, he was like a career house. He couldn't get away from it. It was like the worst nightmare of next door to the best possible scenario. So you don't have to do that. And if you're relative is incompetent, don't use your relative. Yeah, because he knew that going in. Yeah. And, you know, well, he's given us a good deal.

He's not giving you a good deal. He's going to be 37,000 dollars over. That's not a good

“deal. That's not, that's not, that's, you have to have a predictable environment in”

these things and control the controllables. It's project management. And when you do that, then you're going to be fine. And be careful about building on family land where we're all going to compound. What happens when you want to sell it? Yeah, that's a good point. Who's going to be pissed all of them? Because you broke up the car on you. Yeah. But Daddy gave me a free acre. Yeah, but it comes with your stuck there forever. And the number

of times you want to live there forever is pretty close to zero. So be careful with that part too. Nope, we don't cash out 401k's to go cover over it just that shouldn't have occurred because we should have had a good budget. Moral of the story. And that's how you do it. So my, my builder and our laughing about this, he's become a good friend. The last three guys that they'll tell us is for me are all good friends. Because we simply developed

a plan and executed the plan. You gave him a headache. And the easiest guy wrote checks exactly when I was supposed to because I had the money. And nobody, there's no bank involved, there's no appraiser involved. It's great for no bull crap involved. And so we just write a check, build the house. And write a check, you know, take a monthly draw. They get their money. They stay on track. They don't have any issue with me as long as they're on

track. And if it's something's wrong, we come over, we look at it, we fix it, we keep going.

“We stay on track. So he said you need to write a book on how to build a house. But it's”

really wouldn't be that long. I just covered it in that segment. Welcome back to the Ramsey Show in the Fair Wins Credit Union Studio. Jade Washaw Ramsey

apolis. Hi, Katrina, how are you?

Hi, great. Thanks for taking my call. My husband and I are new to your show. We finally

did finish your book. And we have an entirely different view of our situation than we did a little while ago. We're going to cringe really bad when I reduce by the way. So I'm sorry in advance. So we have $620,000 in debt outside of our mortgage. My house is worth $800,000. My husband makes $880,000. I make about 70K. A bulk of this medical school debt. I guess what I'm interested to hear your opinion on is just how fast

or what level does that like intensity that you say? Do we need to go over or do we need

to trouble ourselves out of this? I'm wondering, after finishing your book, you know, I'm

like we need to eat beans and I need to sell our house. We need to sell our vehicle.

“And I've just kind of got this overwhelming, you know, wait. I don't think you need to sell”

your house. But I am going to recommend you get really, really serious about this. Now let me make sure I got my numbers right here. Okay, these are wild numbers. He makes 80880 and you make 70 for a total of $950,000 a year in gum. That is so cool. It is. What are you doing? What are you doing? What are you doing? He's a working hospitalist. Hospitalist. Wow. Wait a go. Okay. And you have $610,000 in non mortgage debt. That's

all your debt except your house. Okay. Let me just ask a simple question. And so, 610 from 950 still leaves $300,000. Okay. Why could you not just pay this off in one

“year and have it still have a pretty decent life? Yeah. I think we can do it out of pretty”

inconsiderate our expenses. We are for kids. We have student loans. I know. The student loans are what we're talking about. Yeah. 950 minus 16 is $340. Yeah. What are the expenses that you got taxes out of that? That would stop you from doing what Davis saying. I mean, I'm thinking about your mortgage. I think we pay $1,500 a month. Okay. Okay. We have a suburban payment. No. The suburban payment is part of the $610. That'll be gone. Yes. Yes. So, you know,

as of right now, my husband kind of told me he thinks we could get the car and some additional things taken care of him immediately. Yeah. Let what's the guy that borrowed $610,000? Okay. His vote of doing this gradually is not a good vote. Okay. I want you to hear me. I want you guys to pay your house payment, eat, live on $150 or $200,000 a year and put $60,000 a month on this debt and you will be done in one year. Tell us about the list of smalls to largest.

What's tell us what's included in the 620? Obviously, you said medical. Obviously, you said student loan. But give us some real numbers and we're going to show you just how quickly this is going to go. Okay. So we have $70,000 in car. $30,000. Again, we're going to crunch in a jet ski. $20,000 in an RV. Okay. Yeah. And then the other ones are medical. And then everything else is your student loans? Yes. Okay. So, if you're paying 60 a month, you would pay off

the RV and the C2 and a portion of the car the first month and the next month you'd pay off

the car and then we would be down to just $60,000 a month going on the student loans. Yeah. And you'd have all those payments backed by the way. Yeah. Yeah. Because what's the total of payments

“between the car, jet ski, and RV? Yeah. That's several thousand. 120, I think. No, no, no, no.”

That's the balance. That's not the payment. Yeah. Yeah. So, I go back. I go back to the simple math and I want to just stay there. Okay. Yeah. Because you guys, you guys have ridiculous numbers. So nine 50 minus taxes minus 16. And that means you have zero debt at the end of the year.

Okay. So, the only thing that has to come out of the balance is your house payment and food.

“And that's not two beans and rice. You still got 150. That's what I'm saying.”

Our show income to live on after I did all that. And beans and right, by the way, let me just say this, because I know there's somebody out there. You said cringing, but let me just remind you,

beans and rice while living in a, you know, million dollar house and driving a new suburb,

and that doesn't feel too bad. And keeping the RV. You know, I'm saying it. Right. So your life is not changing that much. You're just reallocating. You're redirecting the money. That's it. Yeah. And think about at the end of that year where you'll be standing. 950,000 already income and no debt at all except a house. Wow. Wow. Wow. Wow. You're, your biggest battle here is the husband.

Don't do this. You don't have to convince me right now. Yeah. Don't do this gradually. Do it in one year. Mathematically with the numbers you gave me. There's no excuse for this taking longer than a year. Okay. And you got to be mate. You're going to have to you probably have a ridiculous lifestyle.

And it, you know, it's probably okay once you get all the debt paid off because you make a million

dollars a year. Jeez. It's pretty incredible. So I'm thrilled with your income. But I will tell you what normally happens in these situations. Doctors, people in the medical field, they have spent their whole lives in school and they finally get out of school and they finally get some income. And then they just go buy crap like this everywhere. Yeah. And then they kick the can down the road and they keep their student loan around. Because they're comfortable. It's comfortable.

You're comfortable when you're making a million dollars a year. You can do a whole lot of stupid and get away with it. You really, you can be stupid for a long time and get away with it. It's right.

It's different. Million dollars a year covers a lot of sins. But, but, but it's doesn't mean it's

the smart thing to do. So I call it doc eyedess is what I call it. Because Docs come out of school with a unique thing. They've been holding their breath. You know, other people went to school for, you know, 12 years of undergrad or 12 years and then they went four years of undergrad. But, add another five or six or seven or eight or ten years for a doc, depending on their specialty, right? And they've been holding their breath all that time. They've been delaying their lives.

Delaying pleasure. And then along comes Dave and says delay pleasure one more year.

“And they're late. No. No. That's Doc eyedess. No. That's what it sounds like.”

If you hear no, ah, a doc eyedess. It's it. It's I don't want to. I've held my breath long enough. I've delayed pleasure long enough. I'm going to reward myself. And I'm going to put my hands over my ears and act and go la la la la la. And act like there's not $600,000 for the day. But, he went and bought toy toy toy toy and didn't pay off the student loans. He had doc eyedess. It's straight up. Straight up case. You can see the symptoms are all right there doc.

So I got your prognosis for you. And I got your prescription for you. One year no life. Clear up your mess. Then go have an awesome life. Hey guys, Rachel Cruz here. And I love summer. There is more fun on the calendar, more time with your people. And way more chances to make memories. But you know what else there's more of? Spending. Oh, between the extra groceries and gas and camp fees and family trips,

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[Music] Isabella is in Houston. Hi Isabella, how are you?

“I'm doing well. They have how are you? Better than I deserve, what's up?”

So my question is what order I should tackle my debt? I have 170,000 in student loans. It's broken up into 12 smaller loans. There's 27,000 that's in a debt relief program.

And so the issue is that the 27,000 in the debt relief program is not accruing interest.

We came to an agreement with the creditors and I have there's like a final deadline. So the end of my payments would be June 7 to 20 28. I pay $20 a month or not. Well, then we're still going to work. What we call the debt snowball where you list all of your debts, individual debts and our categories, smallest to largest, pay minimum payments on everything, but the little one and attack the little one. Are any of the 12 student loans smaller than the

engagement ring? Yes. Okay, then that's your smallest debt. Okay. And then your next smallest debt

and then the engagement ring. And when you get to the debt relief, I don't care what the plan is.

“Just pay it off. Okay. Pay it off early. Is it on? Is it just you?”

I can go. So my husband and I both combined. So we pull together our annual income is between 23 to 270. And so we are really just we kind of woke up, saw where our finances were and we were like, okay, we need to figure out how to get rid of this. So we're on the same page. We just really wanted to know like order of operation. I do have baby number two on the way right now. I'm doing December. And so we were trying to figure out what can we knock out now? We do have, we were doing

the every dollar, like trying to sign everything. And we do see that we have an excess of like around

4,500 a month. So what we were thinking about was applying all of that to the debt relief program because once we're done with that one, I did probably pay it off in maybe like five months. And that's $1,200 back of that. I was thinking that we could reapply somewhere.

“Oh, no, let's just pay off. Let's just pay our smallest to larger do you have any money and savings?”

We have about 7,000 savings. What's your deductible? Hello, deductible for, yeah, for the delivery. It's like like two thousand. Okay. I might feather that 7,000 nest a little bit until baby comes, put three or 4,000 more in there. And $4,000 a month, you haven't cut your budget yet. You're just getting started. Right. No eating out, no vacations, your broke. No 20,000 other nurseries for new babies.

Your broke. Got it. You're a hundred and I mean you're two hundred and some thousand dollars in debt. But now we don't, we have learned that people have a higher probability of finishing when they have a positive feedback loop. And we've been doing this for 30 years. And the positive feedback loop is pay off the smallest to largest. And the 27 is a single payment now that it is all combined in the debt consolidation thing. And so when you get to that, your water softener will

be gone several of your student loans will be gone. Your other stuff will be gone. But you're going to get to it pretty quick. You are. And this is coming from somebody who's had the types of student loans that you have more. And let me tell you, it does feel good. When you have a list of 17 or 22 debts and you go through smallest to largest. And because you did it that way, you're able to check off five or six of them off the list. Yeah, you're leaving a small little refrigerator with big red lines

drum though. You done. You done. You done. You done. You done. And you just keep attacking it. Yeah, that there is a positive thing to that. And what it does is actually, we figured out that personal finances 80% behavior. It's only about 20% math. And so feedback loops are more important for behavior modification than the actual math is. And the math that you're using is not interest rate math. In your case, you're using cash flow math. Which is not a bad one. It's not

an unintelligent way of looking at it. It's just it's about doing math. Didn't get you into this mess. If you'd have done math, you wouldn't have done any of this. And when you start looking, we're looking at the probability of you completing it. And if you start looking at it, well, if I could just get $500 back in my pocket for a lot of people, that's enough to make them go,

“well, that was all I needed. Yep, Renee is in San Diego. Hi, Renee. How are you?”

Better than I deserve. What's up? Well, the reason I'm calling today is because a couple years ago, my husband and I went into partnership with my brother and sister-in-law and we bought

Long story short, my brother-in-law wanted to scale and my additional ones found out it's one more difficult to find this because it's don't generally sell them. And then he and my sister-in-law decided they really didn't want to participate in nothing, they didn't have any more. Which about that, for my husband and I were also retired and we had just wanted to place the park from additional money we had so that we could spread our lives. Is it for sale? Not officially.

Well, we started down that road and contacted, my brother-in-law contacted OREE that had been interested in it when we purchased it, contacted another group that owns property and those have properties in the city. And we contacted someone who buy storage units, kind of as a collective. So he talked to us, and of course, three. And those three were interested but they were trying to purchase it like fire sell. List it with a real estate agent by the end of the week.

Local, because we also looked at the other way, it was a fourth one and that was a

“large commercial brokerage that specializes in that. That's what I'm going to use a formula”

that didn't work because they were using a big metro area instead of the area, those storage units, so much as scarcity of land surrounded by Indian reservations and no property to expand central location. So their algorithm did not provide for that. And then they're obviously don't need to list it. So how a real estate agent that's a commercial real estate agent that knows how to crunch numbers on storage units, is it full? Is it full? Is it rented?

Well, we up the ramps because it was rented. Is it rented? Some of it is that all of you industrial, what's your vacancy?

Right now it's 75 because we up the ramp and 75 percent vacant? 75 units are 75 percent.

Oh, occupancy. Okay. All right. So yeah, you got a pretty heavy vacancy then at 25 percent and that is going to devalue it because the valuation is not based on scarcity of land. The valuation is based on cash flow. How much money does this create? And then you use a

“cap rate on it. That's how commercial brokerage is done. And so it doesn't matter where it is.”

What matters is not an algorithm. It's a simple thing. I'm going to put a million dollars in it. I want to return on my million dollars. If I'm going to put ten million dollars in it, I want to return on my ten million dollars. And I don't care about the end-end reservation.

I'll accept to the extent it creates money for the bottom line of this project.

And so you guys need to get your occupancy up probably because it's pretty devalued right now. See if you can get it filled back up and get and then raise your rents a little bit, not so much. And you're going to spend some effort on it. And then you're going to get it up for sale. And what you're looking for is a commercial real estate agent that knows this. They don't have to be a large national firm, but they probably need a CCIM,

which is the designation and they add or something like that. So that they actually know how to run the cash flow analysis on it and put it up for sale and get it sold. But you call for people. You've talked to four people. That doesn't solve your problem. You've got to get things on the market and get it gone. This thing's run. It's course. You're out of here. You're done. And don't play around with it and talk big call me five years from now on. We're still stuck. Well, list it and sell it.

“Sell it. If you have to sell it at a pretty good deal, that's fine. Get rid of it. Put some money in”

your pocket and wave by to the brother and law. Our summer black Friday sale starts now. For five days only, a new deal drops each day. Listen, you work too hard to be broke. Car payments, surprise bills, another overdraft notice. It's stressful. But you don't have to stay stuck. Get the books, assessments, and more that have helped millions

take control of their money. Get out of debt and finally breathe again. Deals change daily. And once

they're gone, they're gone. Visit RamseySolutions.com/store before these deals disappear.

central time, wonderful PM, Monday through Friday. We're on the glass and the lobby of Ramsey

“Solutions. So folks, come by. We have free homemade chocolate chip cookies and coffee and”

wonderful bookstore and museum. All kinds of stuff for you to see when you're here. And we usually have 52, 200 folks sitting out here watching the show on people dropping in from every state in the Union and even a couple from Canada today. So there you go. So check it out. Come out and do that. Also in the lobby there is the debt free stage where people come to do their debt free screen. And that's where Toby and Jamie are standing. Welcome, guys. Hi, Dave. Hi, Dave.

Hi, Dave. Where do you guys live? We're from Casper, Wyoming. Awesomeness. Well, welcome to the show. Thank you. Thank you. And how much debt have you paid? We've paid off $176,000. I love it. How long did that take? Five years and nine months. Wow. And you're range of income during that time. We started about 120 and currently up to 160,000. Good job. What are you all doing for a living? We are both teachers. Awesome. I teach middle school band. And I'm a fifth grade

teacher. Awesome. What kind of debt was the 176? It was our house. Wow. Look at another couple of

“where to. That's right. Way to go. You guys, excellent job. So what's this house worth?”

About 400,000. Well, love it. And your your next egg is up to what these days. Retirement accounts are just north of 700,000. Look at you. Couple of millionaires. A couple of baby ships. A millionaires standing here that are teachers. And you look young, how old are you? We are both 43. Come on now. Excellent. Excellent. You know, when we did our study of baby steps a millionaires a millionaires, we found that the third most likely to become a millionaires

a teacher. And in the career field, it's an engineer, a accountant teacher. That's the order.

And people always question us on that and yet here stands two of them. Yes, and is less. Well done.

Thank you. Thank you. I love it. I love it. Congratulations. Okay. So five years and nine months ago, you decided to concentrate on paying off your house. Why? So we first found Randy

“Solutions in 2008 after reading the total money makeover immediately paid off all of our consumer”

debt. Since then, we've cash flowed two basement remodels, two masters degrees, three car upgrades, and a boat. In 2012, we took financial piece of university and I sense taught the class three times to the staff at my school. Wow. Thank you. My pleasure. It's so much fun. And then in 2020, we decided to finally just start aggressively pounding on the mortgage using all the margin on our monthly budget. It would have been paid off even faster. Had I not had a car accident,

which caused us to dip into our emergency fund and find a different used vehicle. Yeah. Okay. Wow. Wow. Wow. Did you do voiceover work or something? You. We practiced this a lot to make it that we were ready. You got this a lot. Good job. He speaks in front of audiences all the time.

I can tell natural. I can tell. Good job. Well, why do you go, guys? It's incredible. So

you've taught the class, how much consumer debt did you knock out back in the old age? Oh, we had a little $3,000 loan on the car and then no, it was very, very small. We just realized after reading the book, oh, this makes sense. Let's do that. And just lived a cash lifestyle after that. That's right. Wow. And I'm staying on a budget living on a plan. Absolutely. A couple of teachers salaries and in great. Why do you go? Thank you. Thank you. You're 43 years old in your millionaires,

asper Wyoming. Wow. Very nice. Very nice. How's your field? And I have a payment in the world. It's free. We can just do what we want. And we're very goal oriented people. So we set goals and then we work towards that. And we're also very visual. And so a funny story is that Toby came to me in 2020 and he wanted to build a paper chain to represent our mortgage. And so each link on that paper chain was $1,000. And then so the kids got involved during a budget time,

any each budget month, they would get to tear off a paper chain. And then that, wow, that chain hung in our kitchen all across through my dining room for five years for five years and until it didn't. Until it didn't. So it's just, it's very freeing. Yeah. So at which point you look at him and he said, I thought, I taught fifth grade. I'm pretty cool. So, you know, this is interesting because very few people that I know that are teachers went into the teaching profession saying,

oh, I'm going to be a millionaire. That's usually not a cow that that's not the way the wiring works. Right. But once you start seeing this, you said, we're goal oriented and you can see how if you follow the system, like if you follow a lesson plan or, you know, if you follow whatever that's in a kind of a process that's proven that we could get there, then I hope kicks in,

question of whether or not we're going to accumulate wealth. It's how soon can we get there.

This process works. Just follow it. So when you teach folks this strategy, what's the number one piece of advice? Like, what do you tell folks who are maybe not in the same situation as you

“with their teachers and they're thinking, man, how am I supposed to do this? I think for us, the biggest”

thing was communication with each other. As I said before, we're very goal oriented. So we would discuss what is our next goal, what is our next big achievement that we want to reach, and then how are we going to get there? But for us, it was that communication between each other and agreeing on where we wanted to go. Wow. Well, we appreciate you coming all with a national tool to testify that this works. It's pretty cool. What to miss it for the world?

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

Well, the kids don't know this yet, but we are going to take an upcoming vacation to Disney World. Yay, they're back! Just announced the two of them right now. I did it pretty cool. We should have had some Mickey ears here for a little bit. Wow. That'll be fun. Wow, they're excited. Very cool. And how old are the kids and what are their names? Bring them up. Come on up, guys. We have Ryan and she's 12.

Riley's 12. And Mr. Kellan is eight. All right, 12 and eight. And this has happened over the last six years. So, Kellan doesn't, I mean, when it all started, he didn't know much, but Riley's been there for the whole ride. Yes, all the way to Disney. Yep. And all the way from paper chains, all over Mama's dining room to Disney. Yes. And the day that I heard Mama Dad were millionaires. Wow. Very, very cool. You know, when your kids are growing up while you're doing this and they see

what Mom and Dad are doing. They see goal oriented. They see communication between the two of you. They see a budget. They see we're sticking to this. We're sacrificing to win. And then they hear that you win. Those guys, you really did change your family tree because more is caught than Todd is Rachel says. And you can teach them all day long. But when they watch you and see this example, and they live, their body takes this in. Yeah. And they can't, they can't unlearn it. It even

changes who they'll date in the future. Thank God. Yeah. They truly do understand when it's when it's budget time. And they understand what that means to make a budget. And how to spend your money appropriately. Yeah. And where it comes from? Then you get to go to Disney. Yeah. I like it.

“Excellent. No notes. Very excellent. Very cool. Life is good. Life is good. Well, way to go.”

Y'all, I'm very proud of you. You did everything the right way. You've executed executed and now you've reminded some 30 million people with this debt free screen right now that this can be done. And teachers can do it, too, for those of you that are doubters out there and Debbie Downers, you're looking at two of them that at 43 became baby steps, millionaires, 700,000 in investments, a 400,000 dollar paid for house. The last step was

baby steps six, paying off the house five years and nine months, making 120 up to 160. All right, Toby, Jamie, Riley, and Kelly. Disney bound, counted down. Let's hear a debt free screen. Three, two, one,

we're different. Wow. That's how it's done. Wow. That's impressive. It's impressive. It never gets old.

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

“Locked in. See, when I've got guys like that that I'm talking to. That's why I'm not going”

to talk to you if you want to argue. This works. It works. Don't argue. Just do it. Just do it. Winnie, you're going to start. Winnie, you're going to start. Now, yeah, I'm talking to you. Just do it. Winnie, you're going to start. Winnie, you're going to start. . Hey, George Camel here. So you're thinking about buying or selling your home. It's exciting, but there's a lot to think about. And all those decisions can feel overwhelming.

base is the place to 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 steps toward your home goals, go to RamseySolutions.com/reelastate. That's RamseySolutions.com/reelastate. Our scripture that a ecclesiasties seven, eight, the end of something is better than its beginning. Patience is better than arrogance. Bill Bradley said ambition is the path to success.

Persistence is the vehicle you arrive in. Okay. There we go. Amy is in local Kentucky.

Hi, Amy. How are you? I'm doing good, Dave. I've got a couple of questions for you. My income is 2100 a month. I'm on disability. My savings is $6,000. And on my debt side, I have credit cards for $650. My monthly bills are $688. My yearly property tax is an insurance or $1700. Now here's where the twist comes in. I got a construction loan to build a tiny home on my property for $112,000. As a reconstruction got $30,000 of that, fees are $4,700, which is a total of $34,000.

So I have around $78,000 left. This is at a $6.75 interest. But he has bailed on me.

And I can't find any assets under his name. So I'm not even sure if I'm going to be able to recruit that. I'm sorry. Who bailed on you? There's a contractor that was supposed to build my tiny home for $120,000. Well, it was 112, but they've only gotten 29,000, 1,65, so far. Have they done any work? Nothing. They've applied for permits incorrectly. Why did you give them money before

“they did work? The bank did. I have a mortgage for this. I know, but you have to approve it.”

Yeah. And the bank said this was standard practice. So now I'm on the hook for $34,000 with nothing to show for it. Did the permits not get approved? No. Why? In complete or inconsistent. They keep getting rejected, rejected, rejected, and now all communications has stopped. So the permits were denied because they were filed incorrectly, not because you can't build the tiny house. Yes. Correct. Why does a tiny house cost 112,000? That's what I've been wondering.

Well, I mean, why didn't you wonder that before you signed up for it? Because it like pouring concrete, putting it on a foundation, where I'll live, it has to be done a certain way. It has to be like stick built. I thought tiny houses were more like 60. They are. And when you put them inside a city limit, they have to be up on a foundation and then the plumbing and the electric and the sewer and all that good stuff. Which is not another 60.

Okay. I don't know exactly what to tell you. Obviously, you've informed the bank not to let any more draws happen right? Absolutely yes. Okay. And you have a $31,000 loan with a possibility going to 112. And you're hunting for a new contractor that can execute this deal. But what you're saying isn't it is not standard practice to issue checks to a builder draws to a builder on a construction loan, except as work is completed. That's not standard

practice. And so no, we don't issue 31,000 dollars to pull a permit on a tiny home. That's assignan. And so, you know, I don't know who's over there at the bank that doesn't know what they're doing. But I probably am going to just shut the whole thing down and I'm not going to deal with that bank anymore. Because I think they're incompetent. And I think you've been you've bought into some kind of idea here with this tiny home construction that this is somehow

“going to be the best thing for you. And the numbers you're giving us are not they don't pass a”

smell test. Okay. Because the purpose of a tiny home is this is a small square footage thing.

pouring a slab the size of a deck. This is not an expensive process. And yeah, you got to hook

“into sewer and you probably got some tap fees and you got to run a water line to it. But none”

of this is rocket science and none of this should cost, you know, $50,000 dollars, not even close. So I don't know this whole thing sounds like it just smells. And so when I run into something that I get into, like you've got into here where the whole thing stinks, I just start pulling back and pulling back and resetting what I'm going to do and how I'm going to do it. And that may be that you do a tiny house, but you do it the proper way rather than the way you were trying

to do it. And just because it's in a city limit, doesn't mean it costs $50,000 dollars to build a

slab. That's just not true in Louisville, Kentucky. It's not that, it's not that ownerist. You're not in California where they've got regulations out there, but this is Louisville. And so they

“got regulations, but not like that. So now I think you've going to have to gather a whole lot”

more information to decide what your next steps are. And you know, if you have a contract with someone that has taken 31,000 from you, and they've done that fraudulently, then I guess you need to see an attorney for that. But if you've discovered the person has no assets, then you're probably going to have a hard time getting any of that money back. Because you can sue somebody and win that has no assets and you get nothing. It's not worth the trouble. But I would look into the legal side

of it as well. Kristina is in San Jose, California. Hi, Kristina, how are you? I'm sure you're a little bit muffled. Can you speak directly into your phone, please? I'm speaking directly into my phone. Okay, thank you. How can we help? Well, my heart's staying. I'm 16 years old, and my husband wants to get a few locks on. For what? So, so we both are in home since 2004, and I say that again. So, we have owned our home since 2004, and we want to upgrade the bathroom and ask them back

and the whole way back. What's it going to cost? Roughly around $80,000. To do. Oh, wow. Okay, that feels steep. Yes. Yes, you want to get a lot of the shower, but you can. And you obviously don't have the money to do that. No, we don't have the money. Okay. What's the size of your, do you have any money in savings? We do have many in savings. You have probably around $300,000 in savings. Is that retirement savings? No, it's not retirement savings. Well, why don't you just use some of your

“$300,000 to build your bathroom? I, that's what I told you. Otherwise, what's the point of it? What's”

so you want to get a few off your phone? That's why I'm calling you because I don't, I don't want to create more depth. No. You already have debt. You already have some. You said you don't want to create more. You have, you have some already? No, we don't have any debt. Okay. The house is paid for. You said you're how old? No, I'm 62 years old. The house is not paid for. It's worth $1 million. And we still owe about $300,000 on the phone. Well, I mean, in California, you'll have to sign for the

heat lock. And if you refuse to sign for it, it won't happen. Yeah. Oh, no, this is so weird. Yeah, so just telling me that. Wow. Just telling me I'm not going to sign for the heat lock.

You gave her the ultimate legal loophole. Good job, Dave. She too. I've never heard someone cheer

like that after, but by the way, you know, you also have 300,000 sitting on the ceiling. Well, I was going that you got to deal with. I mean, this is not, I don't know if I'm sharing about anything here. I know. I'm just looking at the fact that what you haven't seen is what you owe on the house, but good luck convincing him to pay the house off. Yeah. I don't know what your household income is. I consider paying off the house and building your nest egg and building

your bathrooms with cash. And by the way, when you end up building them with cash, they probably won't

books. We'll be back with you before you know it. And the meantime, remember, there's ultimately one way to financial peace. And that's to walk daily with the Prince of Peace, for I choose this.