Debt Is Not A Problem Solving Tool - Financial Peace Is

21:37Dave Ramsey:Now you've got a real mess. And bouncing back is hard, emotionally, psychologically, John, financially. And if you have an emergency fund of$20 ,000 and no debt except your home, and life kicks you in the side of the head, you're emotionally in a different place to bounce back because you don't feel unsafe. You don't feel vulnerable, like I'm about to be homeless. My check is getting ready to be garnished. This divorce set me back. This illness in our family set us back. This job loss set us back. Name your tragedy. Name your poison. But it's coming. That thing is coming. Every time. And there's, you know, being ready for it financially by being out of debt and having an emergency fund, you know, when there's an emergency, hello, it does help.

22:40Dave Ramsey:It doesn't keep the problem from being there. It doesn't keep the, depending on the extent of the tragedy, the extent of the event, how bad it was. But even then, people recover at different speeds from a nasty divorce, a job loss that was devastating. A death in the family. A death in the family, a whatever. I mean, those are the three things that come to mind. But, you know, so my husband died. My wife died. We lost a child. we um you know my company i i was making serious money and they just walked in one day in corporate america and they just cut my head off just just fired me i didn't see it coming and um uh or my husband of 23 years walked in and said he had a girlfriend and we're done and and i haven't worked in the workplace in you know 12 years and so i don't know what i'm gonna do now and people recover from those things at different speeds, different resilience almost.

23:49John, what is the reason I'm setting all that up is I wanted to ask you on the air,

23:57Dave Ramsey:what are the principles if you're facing something like that? Where you want to be, I think, is within a certain number of months, you want to have that tragedy it still hurts it's still betrayal it's still whatever it is but you want to have it in the rearview mirror and be looking forward other than i you know but sometimes when i take a call or we take a call here they talk about that thing that happened in such fresh terms that you think it was 10 minutes ago and you find out later in the call it was six years ago right and they're still living back there emotionally what causes people to be able to move past the horrible thing that happens because it granted it's horrible it's trauma yeah but how do you move past trauma and get it in your rearview mirror as fast as is healthy i like to think of it not in terms of getting past it as much as i'm just going to start taking action um if you lose a child that will be with you forever if if your spouse walks in after 25 years and says, I got a girlfriend, that will embed itself in your nervous system.

25:07You'll be on guard for that for the rest of your life. My goal in that moment is I don't want to pass that on to my kids, but I get to decide, and this is honestly where a group of people, this is where a community, this is where a good group of friends, a good group of family members, even a therapist, if you have to call somebody or a minister, this is where when you can't carry it on your own, people walk alongside you and help carry the load. But I have to start taking the next right action. And what I'll find is after two months, after four months, after six months, this thing may still be on me, but I'm going to be stronger and I'm going to have moved down the road a little bit.

25:44It's when you just stop and it surrounds you like a fog and there's no one to help lift that fog. There's no one to shine a light in there. And there's no action taken moving forward that you wake up two years, three years, seven years, 20 years, and it's as though it just happened to you because you haven't taken that step to start moving towards a new thing.

26:04Dave Ramsey:And I don't know where this process happens in the brain, and I'd be interested to your take on this, but the Bible says out of the abundance of the heart, the mouth speaks. And so what I have noticed is, is the language that we use is an indicator as to whether we're taking action and moving forward. or whether we're sitting in the acid. That's right. Yeah, yeah, yeah. Because the language acts like I'm still there, and it was six years ago. Right. The language sounds fresh, and the words you use. So do you consciously say, I'm going to choose different words, or do you just choose a different stance, a different posture, and the words then change?

26:47Probably a little bit of both. I mean, it's a cocktail of genetics and life experience, et cetera. I think that's the beauty of a show like this is what you've been doing for so long is some people don't have people in their life to speak those words. Some people don't have wise counsel. Some people don't have a hand that can reach out and pick them up. And some people don't. I have a close friend of mine. When she was pregnant with a third kid, her husband just up and said, I'm out, left. And I remember saying a few years later, I don't know how you did that. How, you know, she had to get on.

27:18She was on welfare for a while. Now she's this many years later. She's got a great career. She's crushing it. She's remarried. Her new husband's awesome. But I said, I don't know how you did that. And she said something that stuck with me. She said, I had to. And I think there is a gap between I have to. I got three mouths to feed. I've got to do something. And there's this gap. And culturally, that gap has gotten wider and wider. I don't have to have to have to, right? I can continue to stay complacent. I'm just not going to pay. I'm just not going to do this. I'm going to let these things go to collections.

27:48And I'll get this judgment against me. You'll pay the piper at some point. someday you're going to have to, but our culture has allowed that there to be a bigger and bigger space. And it, what happens is you just end up basting in it.

28:00Dave Ramsey:A literal survival. I have to, we don't have literal survival anymore. Yeah. The way that we're struggling with. I mean, that's how I felt when we went bankrupt. That was a life changing tragedy experience. I lost everything. I've got a brand new baby, Rachel, a toddler, Denise, a marriage hanging on by a thread. And, um, people are like, so how did you get up and go to work? I had to, I have to, Especially back 30 years, 40 years ago, there wasn't a programs or wasn't, like, I have to right to second. There had to be money. There was a baby that wanted milk. Right. You know, there was a, I'm wanting formula.

28:33Dave Ramsey:There was diapers. There was an electricity that had been cut off and didn't need to be cut off again. I had to go to work. I have to. Yeah, yeah, yeah. That day. Yeah. I didn't file bankruptcy and then take a week off and mourn the tragedy that I'd been through for the last two and a half years prior to that. I didn't, PTSD. SD, I didn't have time for it. I couldn't spell it. Well, I think the bigger thing is wherever you find yourself, most of us believe, and again, it's another cultural lie, it's the air we breathe, that in the right time or when things feel right, then I'm going to go. I need to get my confidence back and then I'll go do X, Y, or Z.

29:13And the fallacy there is your body gains confidence through action. You begin to go look for... You don't think your way into confidence. You can't. You don't think your way into being well. Confidence comes from competence. From doing. You begin acting well, and your body starts to stand up taller, and you start to be able to breathe a little deeper. You don't sit in your house and say, when I can breathe better, then I'll go. I'm going to download an app and start doing breathing exercises in my living room, because that's what I got to do right now, right? And you begin taking tiny, tiny, tiny actions.

29:46And And, man, you look up six months, seven months later. Some of those things will never be in your rearview mirror, but they're not going to be so suffocating. They'll be with you, but you'll be taking action moving through it.

29:56Dave Ramsey:Now, there's always going to be a tender spot where that scar is. Oh, yeah. Oh, yeah, yeah. I mean, I was 28 years old, so that's almost 40 years ago. And I can hear someone's voice here on the air, and it takes my body back to there. I can feel it. My throat starts tightening up. Oh, yeah. I mean, I remember that. And I talk to any number of parents who lost a child 10 years ago, 20 years ago. Within 30 seconds, they'll be in tears again. That will be with you. But I'm going to take the next right action. I actually like what our buddy Jocko says when talking about service members that were under his care that he lost.

30:29I got two lives to live now. I got three lives worth of laughter, three lives worth of adventure, three lives worth of giving and generosity to live now. But it's taking that responsibility and saying, I'm going to head this way.

30:41Dave Ramsey:The answer to the overall thing is action. It's action, man. Instead of paralysis. Take action. And if you can't take action, get someone to reach out and pull your, like, take somebody's hand and let them pull you towards action. And let them pull you into action. That's right.

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32:33Dave Ramsey:Kenneth is in Richmond, Virginia. Hi, Kenneth. How are you? Very good. How are you? Better than I deserve. What's up? Yes, sir. So I wanted to call and ask you guys about opinions on refinancing medical school loans in order to pay them off quicker. Just recently graduated medical school and I'll be starting a five year residency here next month. I have about$100 ,000 in loans and I would love to be able to pay them off in the next five years. What is your residency in? I didn't know. I didn't think residency is over five years. Yes, sir. It'll be an orthopedic surgery. I was going to say, you're going to be a fancy pants, huh?

33:16Dave Ramsey:Good for you. Yes. There you go. Thank you. So what do you make during residency? Sorry, what was that? How much will you be making as a resident? Oh, in residency, I'll be making about$68 ,000 to start. I also have an additional about$15 ,000 from military disability compensation each year as well. Thank you for your service. Are you married? Thank you. No, sir. Okay. Okay. So we're dealing with$85 ,000 income with$100 ,000 in debt. And so$20 ,000 a year does that in five years, right? Yes, correct. That should be doable. A single guy who can't do anything but work all the time? You haven't got time to spend the money.

34:08Correct. Now, the tradeoff to that is being able to contribute to my retirement as well.

34:15Dave Ramsey:No, hold off on that. No retirement until you get student loan cleared.

34:21Okay.

34:22Dave Ramsey:Put 100 % of any free money you can get your hands on on the$100 ,000. If you can get done in three years, that'd be great. That's$33 ,000 a year. You probably could do that. Right. If you could get done in two years, that'd be$50 ,000 a year, and you lived on beans and rice and lived like a college student. Right. Hmm. That's a thought. Yeah. The more intense you are, the deeper you sacrifice, the faster you get out. That's how the math works. By the way, 100 % of your doctor friends are going to think you've lost your dadgum mind. Okay. Because they're all stupid with money. Yes, sir. Musicians, doctors, and sports figures, bad with money, by and large.

35:10Dave Ramsey:Okay? Stereotypically. Not all, but stereotypically. So, yeah, anyway, so don't listen to other people in the medical professional what to do with money. It's a bad place to get advice. Get advice from them on orthopedics, but not on money. How old are you? 28, almost 29. All right. Can I paint you a picture real quick? you at 34 you don't owe anybody any money you're a board certified orthopedic surgeon heading out into the world making 600 making yeah half million dollars and you get to keep a hundred percent of it because you've got you've got attendings that you've got supervisors who are still paying off their student loans don't you yeah yes don't be one of them be 34 years old making a half a million dollars to start before you end up buying your own practice a few years later and keep a hundred percent of your money based off decisions you decided to make at 29 yeah so i i would say sit down and map it out in detail but 24 to 36 months i'd be clear of this and then we can talk about saving towards retirement and or saving towards anything else and your military service is what's done this for you where you're getting out with only 100.

36:28Dave Ramsey:And now you're in a position to clear that because you've got some income from the military service and you've got a great residency, and obviously you're bright. So just apply a system to this, like you were prescribing this to a patient. You say, okay, either you do the physical therapy or you'll walk with a limp. You get your choice. So do the physical therapy, right? And that's what John and I are saying. Do the hard stuff now so that you can walk properly later. Trying to find a metaphor that fits. No pun intended for the orthopedic surgeon. No, pun totally intended. But, hey, I think that's the third call this hour, Dave.

37:11Whenever you get that first big paycheck, you cross that first big finish line. If you can hold tight, you set yourself up forever. And, man, I've lived it. I get it. You cross that finish line, and it's like crossing mile one of a marathon, and you just want to be so happy that you ran a good one-mile time. You've got to keep running. Man, if I could tell anybody, whether you're just graduating from med school, heading to residency, just like that caller in the very first call we took, that young man who has been down on his luck. He got a job making 65, which for him is a million dollars. If you can just hang tight and consider future you at five years down the road, 10 years down the road, man, you can set yourself up forever.

37:55Dave Ramsey:Yeah. So the deeper you can cut, Kenneth, and the less you can live on. Make a game out of it, you know, and say, all right, I'm going to set this up for 24 months. And it'll be like holding your breath for 24 months. And then you can excel after that. You can start retirement. You can start a lot of stuff. Build your emergency fund up. You can do a lot of stuff once you're clear of that. But if you tinker around with these student loans people, you end up keeping them like you think they're a pet. And you look up 15 years later, and your student loan needs a shave. I mean, it's ridiculous, you know?

38:31Dave Ramsey:So there's a problem. Alvaro is with us in Kansas City. Hey, Alvaro, what's up? Hey, what's going on, Dave? Hey, John. I'm grateful for this call, and just want to say thank you for answering. Well, thank you. How can we help? Yeah. So this is where I'm at. I make$160. My wife makes$90. So$250 grows. Wow. We live on about half our take-home after taxes, tithe, and 401k. Wow. So we save about$6k a month. Wow. Our house is worth$350 with$119 left on the mortgage at a 3.5 APY. And my previous plan was let's just throw all the cash, be completely paid off by October next year. and then save up about 120 in two years to move into a new house.

39:21What's happened since then is that one street over, someone got shot and killed, and about a year and a half prior to this, there's been other shootings.

39:31Dave Ramsey:In a$400 ,000 neighborhood, they're shooting up and down the street in Kansas City? Yeah, it's a busy road, and so it's not the neighbors, thankfully, but it's just people randomly walking at night. that's strange okay because this doesn't sound like it's in the hood or something no no yeah so so you don't want to live in a shooting gallery so you're going to move okay yep um but the plan was first you know paid off completely save up again but now what i'm doing is i'm just saving for that next down payment and we wanted to keep this home as a rental long term Well, not now. If you don't want to live there, why do you want to own it?

40:18Dave Ramsey:Right. That's not an investment. I mean, you don't buy investments where, oh, the neighborhood's going down. They're shooting up and down the street. That's a great place to invest. No. Yeah, I would – the only thing holding you back, brother, is you have this fantasy that this was going to be a rental house. Yeah. Sell it. If you can let that story go, you're free. Sell it. Go buy your house. pay that house off, and then save up some money and go buy you a rental in a neighborhood that they don't shoot down the street. Okay. So do you still think I should wait and pay down my mortgage? I thought you were unsafe and you were going to leave.

40:55Dave Ramsey:Yeah, I put a sales sign in the yard this weekend. Okay. If that's what you want to do. I mean, is it unsafe or not? Yeah. So that's a weird thing. I feel like there's been these pockets of unsafety, but it generally feels safe. Are you married? Yep. Does your wife want to move? With a one-year-old daughter. Eventually, yeah. No, does she want to move because of this? Yes. Then move. Move. Okay. Yeah. I'm just telling you what I would do if I was in your situation. Absolutely. I'd be out of there. But for the same reasons that you're not going to live there, you don't keep it as an investment.

41:36Dave Ramsey:I don't buy investments where they shoot down the street. It's not like, no, that's not going to go up in value. You're not going to get great return and great quality renters. What kind of renter are you going to get where they shoot down the street? The cokehead, man. I mean, that's no. Thank you.

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43:33Dave Ramsey:Welcome back to the Ramsey Show in the Fairwinds Credit Union studio. Dr. John Deloney, Ramsey personality, number one bestselling author, is my co-host today. Jessica is in Austin, Texas. Hi, Jessica. How are you? Better than I deserve. What's up in your world? Yeah, so I have been married to my husband 16 years now. We have four kids. I'm contemplating if we should divorce or not. We are completely drowning in debt. Our mortgage is in forbearance. He hasn't filed taxes in three years. It's just like snowball one thing after the next, right? Like$48 ,000 in debt. I don't know what to do. What do you make?

44:21I make about$30 ,000 a year. I work at a school.

44:24Dave Ramsey:What does he make? Well, he's been out of work since December, and he told me he was leaving in March to go out of state to work with some friends, and he really hasn't sent me anything. Is he still gone? Yes, he's still gone. so if behavior is a language as he told you through his actions i'm leaving you um yeah i mean in march we went to our um marriage counseling session we'd been going for six years and after about five minutes of me talking he ended up leaving and um told me he was done um And it sounds like he's followed through on that. He left you. He's left the house. I agree. I agree.

45:17But then he flew home last week to see our kids for their birthdays and basically was like, I still love you. I don't want to get a divorce. But then he left again and he's been gone for a week and a half now. And I've only heard from him once. yeah I hate this for you I think it's just it sounds to me just as a neutral third party guy I'm just a dude on the radio it seems really clear to me what's happened right and being being home for a couple of days or one day seeing the kids then being excited he got home you seeing him kind of surprised I can even go that with him that he liked the idea of that Right.

46:01But his actions are not of a man who wants to be married and build a life with somebody. His actions are not of somebody who wants to be a present father. Is he sending checks? No, he didn't send any money. No, he hasn't sent me. Yes, I think it's metabolizing this awful, heartbreaking truth. He left you.

46:21Dave Ramsey:Do you have any idea what he makes? Nothing, I don't think. Well, right now he's not really making anything. he told me that he and some friends out of state wanted to start up their own company and basically all the money that they've been making has been put back into the company. He said that he paid off a few bills in March. I'm sorry, not March, in May. But in reality, I paid like 90 % of the bills in May and I've paid at least a quarter of them for June. But I can't really afford to continue to pay anything else. Our mortgage is put into forbearance. What's your home worth? Well, it looks like we still owe$403 ,000.

47:09We bought it for$421 ,000.

47:13Dave Ramsey:What's it worth today? We owe$15 ,000. The realtor came by and pretty much said because there's a ton of unfinished projects, he could probably sell it for$430 ,000. But he said if we get all the projects done— So you basically get out of it even. Yeah, but with having that realtor over discovered that only his name is on the house. I don't think that matters in Texas. Yeah, I'm not sure. I think you're going to be okay on that. Yeah. And you've been married 16 years. I think you have marital rights to that house. Yeah. And let's back up a little bit. this is not a person of integrity, your husband.

47:56He hadn't paid taxes in three years. I promise you he hasn't told you the truth about everything over the course of 16 years. Is that true? Yes. Okay, so I wouldn't believe him. Which is why I'm in therapy for sex years. Yeah, I wouldn't believe him if he suddenly started telling you he's got to reinvest all this money. Here's the truth. You'd have no idea where he is and what he's doing. Exactly. And so all you can deal with is you. The only person you can control right now is you. and I feel like you're attached to a weight that's pulling you underwater and the weight occasionally says, I want to swim, but you're the one paying the price for that right now.

48:31Yeah, I mean, we're completely trauma bonded. He got shot in 2022 and it completely shook our family. I got that. I got that. But listen, listen, be very careful. Be careful of what I would call therapy speak, internet speak, all that kind of stuff right now.

48:50Dave Ramsey:So the bottom line is your husband's not been home and he's not sending any money home for a long time after he walked out of the marriage counselor's office and said, I'm done. And you got four kids who are hungry. That's real. Yes. That's not on TikTok. That's real. That's real. Exactly. Yeah. And so the question before you is forget the diagnostics, forget the trauma, but all that stuff. The question you got to ask yourself is a hard one. What are you going to do now? Well, that's what I'm calling you for. I can't afford to leave. I can barely afford to take care of me or the kids right now.

49:27I can barely afford gas to get myself to go to work right now.

49:30Dave Ramsey:You could live in a much cheaper place than that house. Oh, I mean, I'm going to have to. We owe$15 ,000 on it. I know. Yeah. And somebody's making the payments now, aren't they? No, it's in forbearance. No, forbearance is you make a payment and a half. No, we haven't made any payment. We owe$15 ,000. That's not forbearance. That's default. Are you in foreclosure? Well, no. The paperwork that I have, it says forbearance. Okay. Forbearance is when you're making your payment plus some to catch up on your back payments. You are not doing that. You're not in forbearance. Okay. Okay. You are in default.

50:10Dave Ramsey:How long has it been since y 'all paid a payment? March. Okay. You're in default. You need to get this house on the market today. you're going to lose it. Right. And then you're going to get... How do I do that? How do I do that when it's in his name? Because I had two realtors come over, and they both told me that all the projects need to be done. You're not going to do the projects. You don't have any money, and you don't have anybody to do the projects. So you need to put the house on the market, and you need to sell it now. And you need to call him and tell him we're selling the house and that I'm having divorce papers filed on you.

50:46That may be the only way you can get your name on there is through divorce settlement.

50:50Dave Ramsey:I'm not sure there's any money. I don't care. I don't know if you want your money and name on it. Right. It's not going to bring enough to cover the bills. And if it does, you know, we'll argue about it then. But if she puts it on the market and he says, I don't want to sell it from afar, can he do that if he's his only name on there? That'll be up to her divorce attorney. Right. Okay. To convince him. Yeah, you may have to get a decree. He has four children. And by the way, there's child support due. and probably alimony. I don't know if they do alimony in Texas or not, but I know they do child support.

51:21Dave Ramsey:And so child support doesn't care if you want to reinvest back into your company. Yeah. The law doesn't care. It says you have four children that need to be fed. That's what it says. And since March, that ain't cool. Yeah. That ain't cool. And Jessica, can we say, I hate this for you, man. I hate this for you. Yeah. Golly. Daddy needs to be feeding the babies. Time to do it, bud. So you don't get to go off and play with your friends in another land. That's not how this works. You made babies. You get to feed them. That's how a functioning society works. And we that are functioning will make you do that.

51:55Dave Ramsey:And we should. So, yeah. Jeez. I'm sorry, Jessica. I'm sorry you're going through this. I think you're done, hon.

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53:45Dave Ramsey:The rich get rich and the poor get poorer.

53:51Dave Ramsey:Most of the time when you hear someone say that, they're trying to make the point that they are stuck and that all the opportunity is gone and capitalism has ruined their life. But if you actually think about that saying, you could ask yourself okay if that's true why is it true the rich get richer because the rich keep doing the stuff that got them rich rich people stuff like live on less than you make stay out of debt be generous be in agreement with your spouse this is what rich people do that's how they got rich and they keep doing rich people stuff and it makes them richer. Poor people, there's two reasons people are poor.

54:38Dave Ramsey:One is, I mean, in America anyway, in the United States of America where poor people are some of the richest people in the world. But in America, there's two reasons people are poor. One is they're being oppressed and some jerk, some predator is taking advantage of them and holding them down. That is real. That happens all the time. And in other words, if you drive down the poor end of town, you'll see payday lenders, tote-to-note car lots, rent-to-own, pawn shops. You don't see those in the rich end of town because they wouldn't stay in business because rich people don't do that stuff. That's poor people stuff.

55:23Dave Ramsey:That's people taking advantage of poor people, right? The other reason poor people are poor is when I was poor. Actually, I was not poor. I was just broke. Mike Todd said that there's a difference between being poor and being broke. Poor is a state of mind. Broke is I'm just passing through. I ain't going to stay here. I'm going to do something to get out. I've been broke a couple of times in my life. So when I started and then when I went broke. So if you do broke people stuff, you'll continue to be broke. If you do rich people stuff, you'll continue to be rich. Let me tell you, if you're going to win at anything, what you have to do, you have to have a plan to win and execute on the plan.

56:03Dave Ramsey:In money, that's called doing a budget. You lay out and you tell your money what to do because you want it to do something good instead of just pissing it away. Thank God it's Friday. Oh God, it's Monday, said all the broke people. They just take it easy. And they mean it. Don't take it easy. Get up off your butt and kill something and drag it on. Have a plan. This is where the Every Dollar Budgeting app came from. It is the detailed plan that will help you execute the stuff we teach here if you want to do things on purpose, if you want to do rich people stuff. You can download it for free in the App Store or in Google Play.

56:47Dave Ramsey:Mike is with us in Austin, Texas. Hey, Mike, what's up? Hey, Dave, how are you? Better than I deserve. How can I help? Yeah, Dave, I'm considering retiring sometime in the next six months to a year. Fun. And I've spent some time, you know, learning to invest a way that worked for me. I made some mistakes early on. and this will be the first time that I've, instead of contributing and having that monthly income for my monthly cost of living expenses, that I'll actually, instead of contributing to retirement or to an investment account, that I'm actually going to be withdrawing from my cost of living.

57:29And I'm wondering to see if there's things that I can avoid up front that I,

57:35Dave Ramsey:lessons learned that I had to learn the hard way early on when I was younger, when I was investing. How much do you have in your nest egg? Without the house, about$7.8 million.

57:52Dave Ramsey:Way to go, stud! I'm so proud of you! Oh, man! Mike, I thought you were, after you set that up, I thought you were going to say you had about$30 ,000. So, what is that$7.8 million in? Is that all in retirement accounts? it's in 401k it's in index funds and then some stocks and then a couple years of cash okay all right very cool when's the last time you did a cartwheel because if you haven't done one recently you should start way to go man how much of this did you inherit none yeah look at you i'm so proud of you well done sir well uh you need to sit down with your financial advisor, I'm sure you have one, and ask them what the tax-efficient withdrawals are.

58:44Dave Ramsey:The least efficient... Right, that's my big question. Yeah, the least efficient... How old are you? 55. 55. Okay. Yes, sir. You're not going to be able to touch your 401ks, as you know, until after 59 and a half, but you don't want to touch them anyway, because everything you're withdrawing there is going to be ordinary income, as you know. And if you've got some index funds that have appreciated, your withdrawals on that will be at capital gains rate. So that's pretty tax efficient. You probably have some stocks that you could begin to liquidate that the gains would be at capital gains rate because you've held them more than a year.

59:21Dave Ramsey:And so capital gains rate, what's your income? About$350. Yeah. If you break that, I believe it used to be$400. I think it may be$450 now. Then you get into a 20 % capital gain instead of a 15%. But talk to your tax advisor, your financial advisor, but I think you're going to liquidate the non-401K stuff first. And you're not going to liquidate anything. You're probably just going to take the income off of it, the growth. Yeah, I just want what I need to live on monthly. Now, how much have you got, say, in index funds? I would say about$4 million. Okay. And so, you know, the market is already up just under 10 % for the year on index funds.

1:00:03Dave Ramsey:Okay. Right. which would be$400 ,000 so far this year, which is more than you need. Right. Okay, so you could live off of a portion of the income created from the index funds easily and have very minimal taxes on that. Now, having said that, I want you to also sit with your tax advisor and your financial advisor and begin a strategy to start moving some of the 401k money on a steady stream into Roth and pay taxes on it now. Because how much is in 401k again? About$3 million. Okay. So that's going to roughly, if it's in good mutual funds, it's going to double about every seven years. Right. So when you're 62, that's$6 million.

1:00:54Dave Ramsey:When you're 69, that's$12 million. and all of that is taxable at ordinary income. Right. And taxable to your kids at ordinary income. It sucks. And you've got required minimum distributions at 73, 72 and a half. That's right. Okay, RMDs. So because of that, I'm 66, or getting ready to be. I have years ago moved everything into Roth and went ahead and paid taxes on it before it doubled. So all the doubling has zero taxes. Yeah, that's great. And the inheritance has zero taxes. That's great. Okay. Because Roth has inherited tax as well. And I don't have RMDs. Right. Because it's in Roth. So I want you to begin to move that$3 million at a steady pace and pay some taxes to do it to Roth.

1:01:47Dave Ramsey:Because before it doubles and triples and quadruples, I want it to be in tax-free growth and all that doubling and quadrupling and so forth. It'll be, dadgum, son. Okay, so if I'm Mike, 7.8. I think I would cash out stocks today and pay it all in one lump sum now if I could. Would that be dumb? No, it would not be dumb. Depending on— I guess the capital gains might kill me on the tax sale. He's already making$400. So, yeah, probably not be dumb because you'll probably max that on taxes either way. Your RMDs are going to max you out on taxes. So, yeah. That'd be one painful check to write. These numbers are so big that it changes the equations.

1:02:32Dave Ramsey:Yeah. Very cool. Yeah, I think you might be right, John. But I change everything to Roth instantaneously every time I get anything that's not Roth. And so I just go ahead and pay the taxes right then. And so there's a case to be made to move the whole$3 million this year to Roth. And just bite that bullet. it. It's one ugly tax payment, and you'll never make one again. On that. On that money. Yeah, if you keep putting money in 401k, you got to change that to Roth as well and go with that. Your match is never in Roth, and so you got to convert it to Roth at the end of the year every year. That's what I do.

1:03:06Dave Ramsey:But yeah. Wow. Well done, brother.

1:03:22Thank you.

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1:04:56Dave Ramsey:Ramsey Show Question of the Day is brought to you by Y-Refi. If you've fallen behind on your private student loans and don't know where to turn, Y-Refi works with borrowers, other lenders that won't. They won't help them. And they'll help you. Y-Refi will. Find low fixed rate refinancing options. Go to Y-Refi.com slash Ramsey. That's the letter Y-R-E-F-Y dot com slash Ramsey. might not be available in all states. Today's question comes from Sierra in Mississippi. Sierra writes, I've been engaged for three years, but after finding out last weekend that my fiance cheated on me, I called off the wedding.

1:05:34He had talked me into financing our$8 ,000 wedding rings and now refuses to help pay them off. The debt is in my name. Would it be smart to get another loan to pay off these rings if the current interest is really high? I have four kids to support, so every cent that comes into my account matters. I just want to move forward. How do I do it? Yeesh. Honestly, Sierra, here's what I would do. You did a big, hard, scary thing by saying I'm worth more getting married to somebody who's not going to cheat on me. So I'm not doing this. Good for you. Yeah, exactly. Good for you. Smart girl. The next sentence, he talked me into financing our$8 ,000 wedding rings.

1:06:15I would stop right there and I'd reframe this as I chose to finance our$8 ,000 wedding rings. Take full ownership of every action you took. And then that reframes this whole thing. I made a big decision that I'm worth more than this. And that big decision also came with a financial cost because I chose to finance expensive, expensive wedding rings. and I'm going to be in charge of dealing with what comes next. And I get, man, you got four kids. It's just brutal. It's brutal. But getting another loan to cover up another, it's just, you're just going to compound this issue. I would. Number one, we're going to sell the rings.

1:06:58Dave Ramsey:Yeah, sell the rings and then pay the difference. That's what I would do. Yeah, sell the rings and pay the difference as fast as you can. Yeah. Now, there's two other things I'd add to it. Number one, I don't know how long you've had the rings. We don't know that in this particular email. I'd swing back by that jewelry store ask for the manager, the owner if it's a local store and tell them your story and say I have four children the guy's a bum he cheated on me and you don't owe me anything but would you help me mercy would you give me some credit buy them back will you help me get out of this mess can I put them in here on consignment and get the most form at a retail setting versus pawning them, you know, help me.

1:07:45Dave Ramsey:And don't come in there acting like the jewelry store did something wrong. They didn't. They did what jewelry stores do. They sold you rings and you financed them, and that's on you. But just ask the owner or the manager for some mercy, some help. I think you'll find yourself a listening ear because they sell wedding rings, and they might sell you another one someday. and if they take care of you guess who's going to hear about it everyone you know you're going to say nice things about those people and you and you would and you should that that's thing number one thing number two is i don't know what all is going on here um but i'm pretty pissed at this guy right this second and so i would um let's just pretend i'm going to make something up okay she has four kids these aren't a couple of 18 year olds okay so i'm going to pretend he has some money and he's a jerk and won't pay his part of the rings i'm going to pretend that for a second and so then i'm going to ask uh a family friend that's an attorney to contact him and uh let him know that we're going to sue him for breach of contract because he breached our marriage contract when he cheated on me.

1:09:05Dave Ramsey:And the settlement is$8 ,000. I'm just going to mess with him just for the fun of it. I'm not really going to do it, but I'm actually going to make him think I'm going to do it just to have some fun here. But now if he's a broke jerk and he's just out digging ditches or whatever, leave him alone. It's not worth the trouble. But I'm just going to pretend that he has a big old pile of money. He's driving a fancy car, and he don't want the hassle of Sierra being all up in his business. So between those two things, maybe we can add a little edge to this and get you out of these rings. Wow. One I go for mercy.

1:09:43Dave Ramsey:The other one I go for the throat. Go for blood. Please give me mercy. I'm going to kill you, by the way. I want to harp on this line. I just want to move forward, but how do I do it? That's good. Take action. That's good. Take action. Take action. Don't sit and look at the rings. Don't keep them in your house. Get rid of them. Don't use his name in your house anymore. Lay out a game plan. And if you do this attorney thing, I'm half joking, I'm half not. But if you did something like that, make it real quick and it's over and it's in the rearview mirror. Just see if we can get him to write a check just for the fun of it.

1:10:15Dave Ramsey:Because he actually morally, ethically does owe this back. Because he's the one that breached the contract. Actually, if you really want to be technical about it. So I'm talking about the law. I'm talking about ethics. Do you have a contract if you shake hands on a... That's a contract. On a... It's not worth the paper it's written on. Engagement? Yeah. It's not worth a lot. It is a contract. You made a promise. And based on that promise, there was a financial transaction. Yeah. And so there's damages. And I'm not an attorney. I'm just going to have some fun with it. It just happened to be$8 ,000.

1:10:49Dave Ramsey:I'm going to make a legal case out of it, even if there's not one. I would say move forward and don't say his name again in your house. That means I'm going to own that I sign my name to this financing deal. Quick as you can move on past this. Your heart's broken. I do love the idea of going back and looking the jewel in the eye. They may tell you to leave. What's the worst case scenario? You're going to get back in your car in the same situation. You're not out anything. But, man, it's worth asking for mercy. That's cool. Kirsten is in Orlando. So, hi, Kirsten. How are you? Hi, Gabe. I'm good.

1:11:24How are you guys?

1:11:25Dave Ramsey:Better than we deserve. What's up? Okay. So, I just have some little questions. Me and my husband opened up a company about three years ago now. It has flourished into something we never expected it to, kind of. Just dreamed of it to. I just want to know If I'm doing the right thing By paying him what we need Because we do have credit card debt and stuff Car loans, excavator loans, that kind of thing, house loans So I'm just trying to figure out Yeah, because everybody has an excavator loan What in the world? I know I'm guessing you got in the dirt moving business, right? We own a natural gas and propane company.

1:12:18So we install the gas lines for generators, cook stoves, water heaters.

1:12:24Dave Ramsey:So you bought a backhoe. Yeah. An excavator. Yeah. Okay. What did you pay for the excavator to dig a$400 ditch? We paid about$37 ,000 for it. We financed it, obviously. That's a lot of ditches. Yes. We did it when we first opened up the company, because to put some of these tanks in the ground, he can't hand dig them. No, but you could rent one. Yes, but we were spending about$10 ,000 a month renting one. No, you weren't. $10 ,000? It was, yeah, it was about$600 a day. If you were spending$10 ,000 a month, why didn't you just pay cash in three months? Because we didn't know what to do with the money.

1:13:07But you still didn't know it. Okay.

1:13:09Dave Ramsey:So what's the profits on your propane tank business? So profit was close to$100 ,000 last year. Okay. And that's what you paid taxes on. That was the profit. Yes. And that was before or after you paid your husband a salary for running the business? After. What does he get paid? We pay him about$1 ,500 a week. Okay, so another$72 ,000. So your household income from this business would be$172 ,000? Yes. And how much debt do you have? We have quite a bit. We were young and dumb. We had credit cards. This week alone, we paid about$6 ,500 just in credit card debt, just from the cash savings we've had over the years, just stuffing it away.

1:14:15We still have a remaining amount.

1:14:17Dave Ramsey:I'll tell you what, hang on. I'm going to have to get the rest of the story because I got right down in the middle of it and I can't get to the end of it in the next 20 seconds.

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1:16:12Dave Ramsey:All right, we're talking with Kirsten in Orlando. They started a propane tank business, and last year they made$100 ,000 profit plus paid him$72 ,000. So I make$172 ,000 on the business to the household and they've begun paying off debt, paid off some credit card debt the other day. Now total, not counting your home, Kirsten, what kind of debt do you have and how much is it? So we owe$57 ,000 on my car. We owe$26 ,932 on the excavator. and about$7 ,000 left in credit cards. Okay. And why do we have a$60 ,000 car? So my car's transmission was going out, and I've always dreamed of having, like, a bigger SUV because I'm a sports mom.

1:17:05So my husband bought me a 2024 Ford Expedition Max.

1:17:11Dave Ramsey:Okay. Okay, you need to say that sentence a different way. All right. we bought a car that was super expensive. Yes, we did. Not my husband bought me. You guys made this decision together. No, we did. And I dreamed of putting myself into a nightmarish car debt. Okay? No, there's nothing in this that makes it okay. But no one forced you to do this. So anyway, and you paid off$6 ,500 out of savings. But if you've got$172 coming in, what did you guys used to make before you started this business? He worked full-time. I've always been a stay-at-home mom. Our kids are five and eight. What did you used to make before you started this business?

1:18:09He made around about the same, between$60 to$70.

1:18:14Dave Ramsey:Well, no, now you make$172 ,000. This is not the same. Yes, if you pull from the business. Of course we pull from the business. We're broke and we bought a car we can't afford. And we're in debt. Of course we're pulling from the business. So what you do, does the business have any debt that you failed to mention? No. Okay, so just the excavator, that's it. That was the only thing you bought for the business on debt. yes okay good good okay so what i would do if i was in your situation is um you have no the business is able to run off of cash flow and run the budget and able to buy the things it needs to buy and it still nets you guys 172 so you're going to pay taxes on 172 because you've got 72 set up as your income, and then you've got 100 in profit.

1:19:16Dave Ramsey:Both of those are taxable events in any given calendar year that that occurs. So I'm going to bring most, if not all, of that home, and I'm going to pay off this debt this year, live on the 72, and be debt-free. If you're unwilling to do that for some reason, then you need to sell this stupid car.

1:19:39Dave Ramsey:okay the car is not stupid the debt on it was stupid you bought a car that was completely outside the picture and the next time the business needs a piece of equipment it needs to save up out of profits and pay cash for the equipment yes okay so the number of times i have seen people in your in the construction world buy equipment that they can't afford because they act like the rental fees are killing them. And if the rental fees were literally$10 ,000 a month, that's$120 ,000 a year in rental fees. I don't believe you. I think your numbers are wrong. I'm positive your numbers are wrong, but it doesn't cost$10 ,000 a month to rent a backhoe from Rent All Place because you don't need it every day, all day long.

1:20:33Dave Ramsey:You need it for a few hours to dig the ditch, dig the hole, and then you drop it back off at Sunbelt or whoever you're renting it from. And that's what people in the construction business do all the time instead of buying$60 ,000 backhoes. And even if it did, Dave, what is the hesitancy of a small business owner? Like, let's say, for instance, it was$10 ,000 a month and they bought a$37 ,000 backhoe. why wouldn't you as a small business we we've we went into debt bought this depreciating asset we're going to hold off for four months and just with the money we would have spent anyway and just pay the sucker off in four months in four months yeah i i talk to small business owners all the time what is that hesitancy to pull the money out of the business yeah i don't know i don't know the idea that some well you have to pull it out because it's taxable so it's it's technically out of the business.

1:21:27Dave Ramsey:If it's an LLC or a sub S, which it should be, it's a hundred percent taxable. And so it's out, even if it's sitting in the business account, Ramsey, my money here, if I have make a profit here, just cause I leave it in the Ramsey account doesn't help me. I still got to pay taxes on it. Right. I mean, the federal government still comes and takes a chunk of my butt. And so, you know, I didn't really leave it in the business. It's just after taxes or some money still sitting here, but it can be sitting at home. It can be sitting here. It doesn't matter. The only reason I would leave it sitting here is if I'm getting ready to spend it on something inside the business.

1:22:03Or if you have a retained earnings account or something. Exactly. But even there, if my business has that kind of debt on it,

1:22:09Dave Ramsey:it seems like I just pay it off. You would clear it in four months at least, because if the rental fees were really$10 ,000, you should have been able to put$10 ,000, increased cash flow right on that thing and been done within four months. Instantly, yeah. And you've got to have that kind of discipline on these equipment purchase decisions because they'll catch up with you. There's two things that kill small business startups like this, and they're doing great. Congratulations, Kirsten. I'm happy you all are doing so good, and that's exactly what I'd do. I'd live on 72. I'd pull 100 out of there, and I'd be debt-free in a year.

1:22:41Dave Ramsey:Simple as that. And the next time you get ready to buy a car, you pay for it or you don't buy it. Next time you get ready to buy equipment, you pay for it or you don't buy it. Just live your life that way, and you'll have a lot simpler, a lot cleaner life. Now, then back to the other thing. The things that kill small businesses is the one thing that kills them is cash flow because they don't keep up with their taxes. They don't keep their books. They don't do their quarterly estimates. And then they get in debt. It's the second thing. And both of those cause cash flow problems. Number one reason for small business failure is cash flow problems.

1:23:11Dave Ramsey:Translation, tax problem, not paid, and debt problem. So 76 % of the small businesses in America are carrying credit card debt on the business. wow they used a stupid master card to do a business finance i mean this is it's 30 something yeah so and then wonder why i have cash flow problems okay now she didn't do that or they may have but they just paid off the six thousand the other day but i don't know if that's business or personal but um so you gotta stay out of debt then the second thing that kills small businesses is what's killing her uh it grows so fast that you don't keep your accounting systems in place and your other processes and systems in place, they don't keep up.

1:23:54Dave Ramsey:You're still running it in the mentality of out of my back pocket. And that's what causes people to leave$100 ,000 laying there because they don't know what to do. But the federal government doesn't care. They've taxed that$100 ,000 and that$72 ,000 the same. Exactly. They've got their piece of it. So if you want to keep a piece of it in that account or this in this account, they don't care. Exactly. It's you all just choosing to carry debt at your house and leave that money there. Exactly. Might as well take it at home. Might as well clear your debt. Pay your taxes and clear it off. But so success is the second thing.

1:24:26Dave Ramsey:Rapid success. Hockey stick growth up into the right that crashes businesses because they don't get quality people on their team. And they don't put systems and accounting systems and overall systems and processes in place that keep you from doing this. You know, something like retained earnings, something like keeping up with your taxes and all those kinds of things. You've got to keep up with that because you're just making money so fast, and you've never seen that kind of money. Your eyes are kind of wide. You're in the street going, whoa, don't hit me with a car. And it's like, wow, how can I mess this up?

1:24:58Dave Ramsey:We've got a warehouse full of cash back here. We're just stacking Benjamins, right? But you can't out-earn bad processes and bad accounting. It'll catch up with you. Well, and I've known some guys who got into construction who scratched and clawed for so long, And then when it hits, they can't say no to anything because they still live five years ago when they had to say yes to every job. And then they get way overextended. Get over your skis. Yeah. Get over your skis big time. That's what happens. And so, yeah, you guys got to catch up with that. It sounds like you got a good business. It sounds like you're hard workers.

1:25:31Dave Ramsey:It sounds like you're doing a good thing. But that's a couple of things. Don't be buying anything else unless you pay for it. Get this stuff paid off. And then get your systems caught up and really understand where you are with your taxes. so that you don't get burnt.

1:26:08Dave Ramsey:Welcome back to the Ramsey Show in the Fairwinds Credit Union Studio. Elizabeth is in Grand Rapids. Hi, Elizabeth. How are you? Oh, I'm good. How are you? Better than I deserve. What's up? I have a question of quandary. My husband and I have been in our house for five years, and I'm on Social Security. And we have two separate bank accounts. And I'm afraid to put my Social Security in the bank because he won't pay the mortgage. Should I put my Social Security in the bank with our joint account? How old are you guys? He's 56 and I'm 55. How long have you all been living like this? Did you say 66 and 65?

1:26:55Dave Ramsey:55, 56. How are you getting Social Security at 55? I'm disabled. I'm on disability. So you have SSI coming in. What's the nature of your disability? Seizures and epilepsy. Wow. How long have you been facing that, kiddo? I found out back in 95. I was diagnosed by 2015. Okay, and he is 57, and he makes what? How much money does he make? He's 56, and he makes$23 an hour, and he's also on DoorDash during the day. And he's, I mean, I'm settled with the mortgage, and he's not giving any. Why? he doesn't he's said he's he's trying to figure it out that's all he gives me that's all that's all he needs time to figure it out he's been saying that since he bought the house and it's almost been five years okay well while you're figuring it out go get another place to live because i'm not gonna let you stay here anymore

1:28:04it sounds like you've made peace with this arrangement if you i don't it doesn't sound healthy but if that's the world that you choose to inhabit no i would not put money in an account where he's gonna spend it and i'm not i'm gonna get kicked out of the house okay um i i i mean i'm hearing from my family that i shouldn't be paying the mortgage and he should be because he's from a husband.

1:28:28Dave Ramsey:How about both of you should be putting all of your money in the account, and both of you should be deciding what is happening to our money, which includes paying the mortgage on our house. That's what normal, healthy people do. Y 'all are whacked. No, he is. I mean, he's... No, you put up with it, which makes you whack. yeah yeah i've been told that and i've i mean we almost lost the house like not even in fact the year of covid um we were on forbearance and uh it was like i i left them why why why would you be on forbearance you had social security coming in whether covid came in or not i know and you You were the one paying the bill.

1:29:17Yeah.

1:29:17Dave Ramsey:Why did the bill not get paid? Because he's the primary signer. No. You're the one who has paid the bill for five years. Right? Right. So during COVID, why were you not the one paying the bill? Because I was with my family, and he was unemployed at the time. And after I pay the mortgage, I'm left with almost nothing. I know, but you're talking about your home. Like me and my two college roommates talked about our little townhome that we shared in college. Right, right. Like, hey, man, I bought pizza, so you got to pay the light bill. And no, the water. I know. I know. How long have y 'all been married?

1:30:0816 long years in September. I mean, so this is the world y 'all have co-created together, and it sounds like it's annoying to you, but not annoying enough to leave it, right?

1:30:24People told me to leave him.

1:30:27Dave Ramsey:We're not telling you to leave him. No. So, no, listen, there's not a good way for you to manage the situation that you told us about because the situation you told us about is a bad situation. There's not a good way to manage a bad situation. So the proper thing to do, and I don't think y 'all are going to do it, but if I wanted to say, all right, Elizabeth and her husband of 16 long years are going to learn to work together for the good of Elizabeth and her husband, and we're going to put our money together, and we're going to put our spending together, and that includes paying all of our bills.

1:31:02Dave Ramsey:Who's going to buy the mustard? We're both buying the mustard. We're both paying the house. Everything goes in one pile, and we work that together, and we have good communication, and we talk about things. Y 'all aren't anywhere near that. You're not even on that planet. And I don't think I can get you there, but if I could talk you guys into it, that's what I would talk you into because that's the only thing that is going to work here. Otherwise, if you put your money into an account that he has access to, he's going to blow it, and then the house doesn't get paid because you get to pay the house.

1:31:33Dave Ramsey:But I don't know why you're tolerating this level of misbehavior that you use up your entire Social Security check to pay the house payment and your husband is contributing nothing to that. That is just not – that's not right. And so – It lacks fidelity. I would have a duck fit. You know, you ever seen a duck have a fit? What's a duck fit? Wah, wah, wah, wah, wah, wah, wah, wah. I mean, it's just – I'd have a duck fit. There'd be a problem, right? Next time you get mad in a meeting, Dave, I'm going to say, Dave, that sounds like a duck. Yeah, that's what it sounds like sometimes when I'm mad in a meeting.

1:32:09But, yeah, I mean, I'm not – some things need to change here, Elizabeth,

1:32:14Dave Ramsey:and you are going to be the cause of the change or you're going to tolerate the lack of change. Right. One of the two. So far, you've tolerated the lack of change. And then you've got to decide if that's going to continue to be the script in your all's life. Matthew is in Pittsburgh. Hey, Matthew, what's up? Hi, Dave. Thank you for all the wonderful work you do for everybody. Thank you and your staff. I really appreciate it. Thanks for taking my call. So I have a question. I have a question regarding just remaining healthy in my financial goals and how much is too much. So right now, collectively, we have about$280 ,000 in debt.

1:32:51$210 ,000 of that is the house. We're on baby step two. I plan on having all the debt except for the house paid off by August of 2029. Hopefully, when the extra comes in, I can get more thrown toward that. And then the house paid off within eight more years after that and be completely debt-free by the time I'm 52. What's your household income?

1:33:14About$145 ,000 a year.

1:33:16Dave Ramsey:Okay, and you're talking about paying$22 ,000 a year? Yeah. For three years? Yeah. Why? Why not more? Well, we also started a small business because my wife's goal is to work from home. No longer work outside of home, I'm sorry. That's great. Does it make money? Yes. We started back in January, and it's currently making about$1 ,000 a month. Is that part of the$145 ,000? Yes. Okay, so if you make$145 ,000, why can you not put more than$22 ,000 towards debt? Well, some of that is going back into the business, so I had to... Then you're not making$145 ,000. Yeah, I was talking... Is the business making a profit of$1 ,000 after reinvestment or not?

1:34:19Dave Ramsey:No, no. Okay. We don't open a business that's sucking money when we're in debt. This business needs to make money now. She quit her job to spend money. No, we're not doing that.

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1:35:59Dave Ramsey:Emily is in Oklahoma City. Hi, Emily. How are you? I'm good. How are you? Better than I deserve. What's up? Good. Good. So my dad passed away recently, and he left me. quite a bit of money. Thank you. And my fiance and I agree that it's my inheritance, but he's concerned about the financial imbalance between us. And he came from divorce and that woman took advantage of him. And so I feel like he's kind of like operating out of fear. So I'm trying to figure out what fairness looks like in our marriage and what your advice would be. A prenup. Yeah. So we have that. Okay. We have that going. And then what does the prenup say about the future growth of wealth, not the current state?

1:36:54I'm not sure. I've met with the lawyers. We're saying that the trust that my dad has left is mine. I'm going to be creating a trust where all of this is going into.

1:37:06Dave Ramsey:Okay. And I guess from his side, he wants to create his own trust, and he feels like he needs to catch up. Like he's not— No, he doesn't. My dad— He can't catch up. My dad loves him. I know. He's going to do something stupid trying to catch up. How much money did your dad leave you? Over$5 million. Yeah, he doesn't catch up. Yeah. So the trust just sits over here as a third thing. There's you making money, and you all build money together. There's your husband, future husband, making money, building money together. He doesn't need a trust. He doesn't need money. So he does a little bit. He does anesthesia, so we have pretty good income together.

1:37:50Dave Ramsey:Our income is our incomes, and we share those, and we share what we do with those going forward. He does not need a trust, and he does not need to catch up. The trust is sitting over here to the side. The two of you build a life together with your incomes. I wouldn't fool with that in the thing. And I would let the trust, you know, he has no access to that in the event of divorce. But anytime you get ready to use money, you're going to use it for us. Yes. You know, and so if we decide to buy a lake house later for, you know, for a million dollars and this trust has grown to$10 million and I pull a million dollars out and buy us a lake house, that's fine.

1:38:30Dave Ramsey:The lake house is in the name of the trust. but we are going to use it for our family, our kids, and our grandkids, and whatever. I'm making up something, okay? But you can use some of the trust money for the benefit of the family, and the stuff still stays in the name of the trust. And so the money, the$5 million, and any growth it turns into stays yours. But keep it over to the side, and then you all just combine everything else and quit trying to be, you know, like he has to catch up. Yeah, that's ego talking. Yeah. I think it's more so like if we were to get divorced, he wants to have enough money for himself.

1:39:09I don't know. He does not need a prenup.

1:39:12Dave Ramsey:You do. Yeah. He doesn't have any money. Yeah. And he's an anesthesiologist. If y 'all get divorced, you'll both be fine. He's going to make a lot of money. We're going to make a lot of money together. You're marrying an anesthesiologist. He's making$400 a year, right? Around three. They should be making four. Okay. He's a CRNA, so it's a little bit different, but they do the same job. Okay. Hear what Dave said that's really important. There's this thing over here, but y 'all are building a life together. Right? The fact that that$5 million landed in your lap has changed the way you all were talking about your future.

1:39:58Dave Ramsey:And it shouldn't have. Don't let it. it sits over there by itself and then you guys still have the future you would have had together one checking account we have an income right okay i made all of the income in the ramsey household for the last 40 years my wife has not earned a dime but we have a great income and there is no prenup on that income. We don't have a prenup anyway. We started with nothing. But the point is, and we went back a couple times, but anyway, all that to say, so he has an income that's bigger than yours, but that's not in the discussion. That would not even been a discussion had the$5 million not dropped in your lap.

1:40:50Yeah.

1:40:51Dave Ramsey:And so it doesn't need to be a discussion now. Y 'all aren't competing with each other financially. No, we're combining everything except the five. And the five sits over here as a separate entity, and it grows, and we handle the investments on that. And we may use some of the money to buy something that the family, you and your husband and future kids, if you have any, all that kind of stuff, are all going to do together. That's all great. There's nothing wrong with that. But just, yeah, you need a prenup. That's all. That's all. Okay. Very simple. Don't get – everybody has a trust because we don't trust.

1:41:26Dave Ramsey:No, that's not good. No, he doesn't need a trust just because he's an anesthesiologist. And he's not even a real one. He's just a CRNA. I'm kidding. Ooh, that was a diss. Well, I mean, he got a$100 ,000 pay cut while I was talking to him. But, yeah. So, in many ways, that prenup just builds a wall around that money. And we know it's there. Great. And we're going to move forward. if if she's presenting this as i'm gonna have this money that i can spend however i want whenever i want to no he has a right to feel like hey there's an inequity here like i feel like you're building the secret life over here and then you come home to this this life that we're building any money you take across the wall to use for personal use is ours that's right there's ours yeah with the exception of if you bought something like a piece of real estate like a like a if you bought a lake house in the name of the trust pay cash for it and then we enjoy the lake house together that could still stay in the name of the trust but if you're going to pull money out of this to buy a car we're not putting the car in the name of the trust we're just going to buy a car right and it's part of the marital property at that point but i i just keep this real clean and simple tell me tell me this is very combined so if sheila my wife got five million dollars and we signed a prenup to protect that money.

1:42:47And we started talking about, Hey, it'd be awesome if we had a lake house. And she said, well, let's pull from this thing. I would want that lake house in our name. Why would we keep that lake house in that trust?

1:42:59Dave Ramsey:Because it was the trust money that bought it. Okay. And, um, you, you know, if you're going to say the trust is hers upon divorce, yeah. Then if you use some of the trust money for something, it's gone. okay so it stays it's not in the trust name it's gone okay she would lose that lake house in the truck in the divorce yeah if you pulled it out and put it in both names or at least half of it you know that kind of thing so uh yeah and again that's probably not the issue right the issue is is the and two sometimes we're dealing with people that are in later light later stages and it's a second marriage they got three kids each and maybe a couple grandkids each i talked to a 60 something year old the other day.

1:43:39Dave Ramsey:And they both had a couple million bucks, not big, not 20 million, but a couple million. And I'm like, okay, just you guys, if you can leave the marriage with what you came in with, and then you could just say all the growth is going to be combined. Sure. But they're both coming in with similar piles of money. And what I would be careful in that case is I don't want one of your second cousins suing for my money from my kids if I die. Exactly. This one, I can feel it would be a little bit messier, but he's going to have to exhale through the ego that he's not trying to compete with her. It's not, oh, I got to get mine now because you got yours.

1:44:18I got to get mine. I'm going to catch up is a bad phrase. We are building this thing together and we have this awesome stack over here. What if Sharon thought she had to catch up after not earning an income?

1:44:30Dave Ramsey:She'd have to kill you. that'd be the quickest way to catch up don't tell her that she doesn't listen to this she doesn't listen to the show that'd be the quickest way for her to catch up yeah well she is convinced accurately so that it is all half hers yeah and so I told her if she leaves I'm going with her it's that simple

1:45:02Thank you.

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1:47:13Dave Ramsey:A high octane, high protein Ramsey trusted agent who has your best interest at heart for free. Go to RamseySolutions.com slash agent or click the link in the description. It'll put you right there. George is in Jacksonville, Florida. Hi, George. How are you? Better than I deserve and things could always be worse. I hear you. What's up? Well, I've had a couple bad real estate deals back to back and it's put me in a bind on using business lines of credit and business credit cards. Not sure if I should just do bankruptcy to reset or if there's a way I can dig my way out of almost half a million dollars worth of debt.

1:48:00Dave Ramsey:Okay. Wow. What a mess. What do you do for a living? Well, I work on cars, so I've got an automotive business, and it's pretty taxing physically, so I've been trying to get more real estate going so I can get out of the car business. Yeah. What do you make on your automotive repair business? between my wife and I our w-2 is about about 105 ,000 a year okay cool all right and uh and you got a half a million now you said real estate so some of that mortgages or what no uh business lines of credit so I had uh one bank gave me a large line of credit to do deals with so I use that to buy the land and improve it and then uh zero percent interest credit cards which many of them are about to be out of their zero percent interest term.

1:48:48Dave Ramsey:And the first deal, everything just went wrong. And then the second deal got held up because the first deal didn't close because everything went wrong. So just got crushed by holding costs. So do you still own the land? I own one of the two. It's for sale, but the market here is taking a big dip. So it's dropped about$30 ,000 in value and still doesn't have a buyer. What is it worth? Before the market dropped, it was worth about$140 ,000. No, what's it worth today? What do you got on the market for? It's on the market right now for$115 ,000. How did you spend a half million dollars getting a$115 ,000 piece of land?

1:49:32Dave Ramsey:Well, the first deal lost about$60 ,000 because of delays and market drop and then using business lines of credit to support just getting by while trying to get that deal going. The automotive business fell behind, so that business has debt. I had another business that the manager scammed us, so that lost about$30 ,000 getting scammed on that one. That's still nowhere near a half a million dollars. Yeah. Well, you lost 60 on one. You got scammed for 30. That's 90. Yep. And you have a$130 ,000 piece of property that I assume you paid for out of this half million, right? Correct. So that gets me to 220.

1:50:20Dave Ramsey:I'm still$300 ,000 off. I can't find it. Yep. Well, one of it's a car. That's my wife's car. It's about$58 ,000 for that. But that's obviously something that if we needed to, we could dump that and get another car. But I had to take a personal loan just because I had credit cards from before that had piled up. And then there was a high interest line of credit that I had that went some bad stock market trades. What did you buy with all of this stuff? What did you buy? Well, there's about$50 ,000 lost in the stock market. But there was the money lost on the home. How did you lose$50 ,000 in the stock market?

1:51:07Dave Ramsey:Bad advice, borrowing money to trade with, and yeah. Day trading? It's gone. Correct. Of course you lost money. Okay. Yep. All right.

1:51:21Wow.

1:51:21Dave Ramsey:Wow. Wow.

1:51:25Dave Ramsey:So if you sold the land for$130 and you sold your wife's car for$60, that's$190, and that leaves you$320 in debt. And there's nothing else left except your business and your home, right? Well, we don't even own the home, so we rent where we live. Do you own the land that the business is sitting on? No, we rent there as well. Okay. Okay. All right.

1:52:03Dave Ramsey:And then the balance, if we paid off the land and sold it and we sold the car, the balance of the debt is credit cards and personal loans, right? Credit cards,$78 ,000 on a personal loan, and then business. But like a bank, a personal loan at the bank, right? Correct. Okay. All right. Well, I think what can happen here is that you clear off what you can clear off by selling things, and then you negotiate the rest of it in default at pennies on the dollar. You probably could get out of this whole thing for, you know, after you sold off everything for another$100 ,000 out of pocket. So you probably can make it out without bankrupting if you want to fight all the way through it.

1:52:57Dave Ramsey:However, I do want to establish that day trading sucks and you suck at it. Yep. And that buying real estate you're not very good at. Well, they were mobile homes, so I know what your take is on mobile homes. Pretty much sure now that you're not good at it. Well, these are the first two that had really gone wrong, so everything else was going well, and mobile homes were hot items in the area and barely spending any time on market. So you're the guy that hit at the slot machine, and you thought that made slot machines a good idea. Yeah. So one of the things I did when I went broke, George, was I had to sit down and go, what was broken inside of me that allowed me to make bad decisions?

1:53:44Dave Ramsey:Because I want to come out of this at least with wisdom. If you're going to get the crap kicked out of you, you ought to know why so you don't go in that bar again. I don't go in there again. I don't want to get kicked again. And it doesn't sound like you've learned that. No, you're still defending. Yeah. Mobile homes were hot. Said no one ever. You know, I mean, really? And day trading, and I just caught a bad no. Day trading, 97 % of the day traders lose money. That's all of them. It's fool's gold. While you're hemorrhaging money, you go buy a car. For 60 grand. Yeah. That you can't afford. Yeah.

1:54:30Dave Ramsey:So you need to do an autopsy on the behaviors and the beliefs that got you here so you don't repeat this. And then claw your way through it if you can. If not, you might be bankrupt. I don't know. In Florida, it is one of two states that you keep your home. You don't have one. Regardless of how much equity there is. I don't know what they'll do to your business In a chapter 7 bankruptcy If you file bankruptcy I'm not sure what they'll do with a valuation on something like that You might lose that in a bankruptcy It's possible Or a bunch of your equipment or tools or whatever They actually could liquidate that place on you So you need to be very, very careful about thinking Bankruptcy is just going to be an easy way to walk out of this I don't think it's going to be easy I think it'll be really, really messy, so I would avoid it.

1:55:26Dave Ramsey:So I would sell the land. I would do a detailed autopsy on who I am and why I make the decisions I made so that I don't repeat it. That's what I had to do when I made all those mistakes. You do too, George. And then I would see if I could start settling these other deals in default for 25 cents on the dollar and scratch up the cash by fixing a whole lot of cars, car repair business. and work my way through this if I can.

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1:57:33Dave Ramsey:In the 70s, there was a book that came out, and I was a teenager. My dad was in the real estate business. He asked me to read it because he was always having me read these motivational books. The 1870s, right? Yeah. Yeah, absolutely. And there were dinosaurs in the backyard. But the book was called Con Man or Saint, written by a guy who was in jail. So apparently he was a con man. But he was trying to make the case that he was a saint. He had run a multi-level, I mean a pyramid scheme, not a multi-level scheme, an actual pyramid scheme, an illegal. That's why he was in jail. There's a difference between multi-level and pyramid.

1:58:09Dave Ramsey:People use them interchangeably, but they're not the same. And so he ran an actual con, like a Madoff type thing, Bernie Madoff deal, and went to jail. In the book, about the only thing I remember out of it was this bizarre case. He was rationalizing all this, that he had stolen all this money from these people. but he'd made a few people fortunes in the process, so that made it all okay in his mind. But the thing that stuck with me, the reason I bring it all up is, he said that you can con anyone if they are one of two things, afraid or greedy. That it doesn't matter how smart they are, doesn't matter how dumb they are, if they're one of those two things you can con them and the more of one of those two things there are the easier they are to con and um so when i go back and usually when i look at someone having a financial catastrophe including me losing everything in my 20s having the opportunity to start over in the real estate business um i had to go okay what was i why did i get because get rich quick is a con.

1:59:28Dave Ramsey:Right. Get rich easy is a con. It's a house of cards always. So playing the roulette wheel, sports gambling. Losing weight quick is a con. However you're going to do it quick. It's a con. It's a con. If it's a life change, a permanent process, because all the data that we now have at Ramsey says that the people that build wealth do it gradually, slowly, and they're not doing it based on fear or greed. And so when you're trying to get rich quick with nothing down real estate, you know, some of these guys on TikTok or whatever, and that's what I was doing, I got a bunch of real estate. I had a$4 million net worth.

2:00:09Dave Ramsey:I was making$200 ,000 a year, but I was deeply in debt. I had$4 million worth of real estate, a million dollar net worth. And I was 26 years old starting from nothing. But it was still a house of cards that I had built, and I was trying to do it quick, do it quick, do it quick, do it quick, do it quick, catch it while it's hot. Crypto is another one. Dave, I'm ashamed to say this, but I had this thought during this big IPO that just went out. Yeah. I thought, I wonder if I'm going to kick myself 20 years from now for not doing this. Yeah. And I actually had the thought, my son's out of town right now, and I thought, I might have to tell him.

2:00:47I didn't put money in on this. And it could have hit. And I thought, and again, I talked myself out of it. I was like, that's foolish, right? But even somebody who does this for a living, I had the thought of, I'm scared to miss out.

2:01:03Dave Ramsey:That's quick money. It's fear. I'm scared to miss out on this. Yeah, it's a FOMO. Fear of missing out, which is fear and greed. And so if you catch yourself saying, I've got this situation I have to get away from, I'm desperate, you're setting yourself up to be conned by one of these get-rich-quick things that's out there. Or I've got to get that. I've got to get it. I've got to get it. You know, in George's case, he's like, okay, I don't, my body is not going to last working on these cars. And so I've got, I've got this desperation in my soul to get away from the automotive thing and I've got to go.

2:01:43Dave Ramsey:So I went and day trade, went and did this, went and did that. And he's just, he's just walk a mowing everywhere with debt. This pops up, he pops it down. This pops up, he pops it down. And that's exactly what I did. And so he's, I'm no better than him. It's the same. I'm the same guy as him. and that's why I can you know I've got a PhD in DUMB I've got experience from my own stupidity so but the point is folks just the lesson that you take away from today's show we'll summarize is okay if you feel yourself getting greedy and everyone does if you feel yourself getting fearful and everyone does you're getting ready to make a bad financial decision yeah and slow your butt down.

2:02:25And underneath all of that, one of the things we tell people, hey, don't ever borrow money. I can guarantee you that that last, you know, George, that last caller didn't take out this huge business loan, this huge personal loan with the intent of, I'm going to buy this over here. I'm going to do this. Oh, we need a new car over here. If you go take out a HELOC, I'll just get a little bit extra just in case. And when you have it, it's so impossible to not spend it and you end up making the problem so much bigger so if you just say hey you know what i don't magnify i don't i don't mess with i don't borrow money just as a rule um unless i'm buying a house right like it keeps you from it's like a it's a barrier it's a break it's a hurdle it keeps you from making even a bigger mess than the one you're already in but the reason people have

2:03:11Dave Ramsey:lost so much money on crypto is fomo yeah and that's a form of greed a form of fear fear of missing out. It's greed. Uh, it's like, Oh, they're going to get theirs and I'm not going to get mine. Right. And instead of I, instead I got really, after I went broke, I got really comfortable with being boring. Yeah. Slow and steady wins the race. The tortoise beats the hair every time, every time I get desperate and fearful right after that, I get stupid and I do something stupid. But every time I get greedy and I think, oh, this is going to be a hot knife through butter. This is going to go. And it's just like, and it's just 100 % of those things bite me in the butt.

2:03:56Dave Ramsey:And it's just like, and the things that we have made, everything that we've made on were death by a thousand cuts. Incremental, little tiny, little tiny, little tiny, little tiny, little tiny. And then when you add it all up, it's a lot. But none of it was sexy or impressive. and everybody wants sexy, impressive, the greed side. Everybody wants the quick thing. I've got to get out of this. I'm desperate. And so as soon as you say that, you're set up. So all of you out there, that's the lesson you can take from Dave's stupidity and my story and even from some of the other stories that call in here is you have to be really, really careful to avoid fear and greed or greed driving your decisions around money because very few times do you go slow in those situations.

2:04:47Dave Ramsey:Both those things cause you to go too fast. Both of those things cause you to rationalize and look past all the warning signs, bridge out, bridge out, bridge out, bridge out. Not me. I can Bo, Duke, jump that sucker, right? Bo and Luke, here we go with the General Jackson. That's it. But yeah, you think you're the one, and no, you just end up in the edge of the bridge embutment, stuck on there like a fly on the wall. I'm sitting here thinking of the last 20 bad decisions I made, every one of them came back to, I had talked myself into a fear of something. Yeah. Or all media today is selling you, it's all coming down.

2:05:27So you got to do this or you got to do that or you got to do this, right? And the more I consume of that, the more my eyes are open looking for things that are coming to get me, which means I'm going to look for things to buy.

2:05:37Dave Ramsey:All the signals, the people involved are bad people, but I'm going to keep going because it's probably going to be okay. Yeah, yeah. No, they're not. They're going to keep being bad people. So why am I continuing? Proverbs 22, the wise see danger and hide. The fool sees danger and moves forward and suffers for it. And when I see those warning signs, the only way I look past them is when I'm greedy or I'm fearful. And I overlook the warning signs. I go, well, that guy, he didn't mean that. Yeah, he did. He's a freaking crook. and you're going to go in a deal with him anyway because you just have to.

2:06:13No, you don't. Can I tell you what helps me in these moments? Wise counsel, a good group of friends. Yeah. That now I know I can pick up a phone and call and say, hey, I'm about to do this or I'm scared of this. And they'll say, that's dumb, John. Don't do that. That's called a good friend.

2:06:27Dave Ramsey:That's a good friend. That's dumb, John, friend. Yeah. I've got many of those. That's dumb, Dave. Dave, you have had some dumb ideas and this is at the top of the list. Yeah, I get those too. George, we'll pray for you, my friend. It's a hard thing you're going through. That puts us out of the Ramsey Show in the books. We'll be back with you before you know it. In the meantime, remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus.

2:07:07Thank you.