Financial Momentum Starts With a Shift in Perspective

19:59Dave Ramsey:No, I would not pay the penalties. You'll pay penalties on it, and I wouldn't do that. Same as if you weren't getting a divorce. So if any liquid cash, just apply that to your next smallest debt, make minimum payments on the rest, and just debt snowball it. And if you're getting a big chunk of his 401k or something, then go see a SmartVestor Pro and just do a rollover into an IRA into some good mutual funds.

20:41George Camel here. Let me give you three signs it's time to stop hoping your debt problem goes away and actually take action to fix it. If you've defaulted on a debt, if collectors are calling nonstop, or if you're facing a lawsuit or think one's coming, you don't just have a debt problem anymore. You've got a legal problem. And that's why I tell people about Guardian Litigation Group, Because here's the thing, if you're behind on your bills, doing more of the same is not going to fix it. You need a different plan. And Guardian Litigation isn't just another debt relief company making promises they can't keep.

21:11They're an actual law firm. And from day one, you get an attorney who represents you. So when collectors start pushing, you're not guessing. You've got someone in your corner who knows how to respond when your debt problems escalate into legal problems. So don't wait for it to get worse. Go to GuardianLit.com slash Ramsey right away. That's GuardianLIT.com slash Ramsey. Attorney advertising. Results may vary and no specific outcome is guaranteed.

21:55Dave Ramsey:Well, we wish every call could get through on this show, but I'm afraid right now the lines are jammed, and as soon as one of those people are gone, There'll be four more, and we hope you can get through. The phone number, if you want to get in the lottery, is 888-825-5225. But if you can't, I've got something that might actually even be better. It's called Ask Ramsey. It's our free AI tool that's built and trained only on Ramsey Answers. So you'll get an answer the same way we would answer it right here on the show. You can ask your question today for free at RamseySolutions.com. Click the link in the description if you're listening on podcast or YouTube.

22:34Dave Ramsey:But in case you didn't know, and I didn't because I'm a boomer, how AI works. I did know that AI is artificial. It's not real. That's a good start. Artificial intelligence. So it doesn't manifest its own intelligence. It only can speak from the database that has been fed to it. And so that's the problem, for instance, with Google using AI to answer your questions because they're so stupid that they're using Reddit as part of their database to answer the question. And Reddit, if you look it up in the Greek, means not true. So people's opinion, it's like the TikTok in written form, you know, stupid stuff.

23:16Dave Ramsey:But that's being entered in. So we don't have any stupid stuff in our Ask Ramsey AI because the only thing we put in there was three years of this show, all the Ramsey personalities answering your questions, and all the books we've written and all the articles that we've written. And so they're all our opinion, how to work our system, how to work the baby steps. That's the only data that's in there. So that's the only possible answer that's going to come out. We've almost got it as snarky as I am. It's about at George level of snark, not quite at Dave level. It's not yelling at you quite yet. It's just snarky.

23:48Dave Ramsey:It's kind of funny snarky like George, not mean snarky like me. It is conversational, though, and you can have a conversation with it. So there's a back and forth, which is great. You can enter your own information. I'm really proud of our tech team. I mean, it's thinking good. Feedback's been amazing. 100 % free. Ask Ramsey at RamseySolutions.com. You can get the answer as if you called in on the show. Ash is with us in New York City. Hi, Ash. How are you? Hey, Dave. Thanks for taking my call. How are you? Better than I deserve. How can we help? Awesome. So I'm 26, and I make about$100 ,000 a year in my salary.

24:35And I had an education loan worth$65 ,000. My mom originally promised that she would pay for my education, so I went through school expecting that support. But now I'm left with the student debt, and she hasn't followed through yet. I'm sort of struggling with how to handle both the financial side and the emotional side of it. I want to move forward responsibly, but I also feel hurt and honestly misled. So what would you do in my situation? Do you have any advice for me?

25:09Dave Ramsey:Well, I mean, if you sat down with her over a cup of coffee and said, I feel hurt and misled, what would she say? she gets really emotional and then she says oh i did so much for you and you know this small thing is bothering you you make so much money uh i don't think a thousand dollar installment should hurt you that much and it's we just usually end up getting in an argument and then i okay so this is this is settled then this is settled she's not going to pay it and she doesn't care if it hurts your feelings.

25:49Dave Ramsey:That's the facts. That's the facts. Those are facts. Those are data points. She doesn't care if it hurts your feelings. She's not going to pay it. Now then you've got to decide what you're going to do. Okay? I'm not going to give her access to my feelings anymore. So I'm not going to talk about it with her. Ever again. She's not going to pay it. You are.

26:24Okay. Now the next step is easy. Let's attack this debt with our great$100 ,000 income. How fast could you pay it off on your own? Well, so I've got about$20 ,000 in savings. I've got$20 ,000 invested. Good. I live in New York, so I mean my monthly expenditure. is about$4 ,000. Yeah, great.

26:49Dave Ramsey:So you pay off the$40 ,000, and you've got$60 ,000 to go, and you just lean in and knock it out, and you know that your mom is your mom, so we can't be too mad at her, but we can be mad enough at her to go. She's not reliable, and if she promises me something ever again, I'm going to laugh and wink and not believe it because she doesn't care if it hurts your feelings. Right. And then I had this conversation that if she wanted me to pay it off, and she said, just pay it off for this year, just me$10 ,000, and then you won't have to worry about it from like Jan 2027. Yeah. She's not going to pay it, Ash.

27:35Dave Ramsey:You're wishing for something that's not going to happen. Okay. Dogs can't climb trees. she's a dog she ain't gonna climb a tree dude squirrels climb trees okay she can't climb a tree she's not gonna do it and and every every answer she gives you is telling you she's not gonna do it and that it's on you and so the faster you just go you know i i i hate that my that i have to say this about my mother but she's an unreliable person and is not concerned about the fact that she lied to me. And that just breaks my heart. And I have a bill to pay now. And you go pay it as fast as you can, Ash. And the sooner you get it paid off, and then please don't ever believe anything else she says.

28:25Dave Ramsey:So any plan she comes to you with is false. The plan should have a check attached to it for$65 ,000 if I'm going to believe her ever again. Yeah. And it can't bounce. So that's the only way you go, okay, we're going to rebuild trust here. Yeah, but she's not going to do it. I mean, there's no chance. She probably doesn't have it either, by the way. It was probably wishful thinking and it sounded like a nice thing to say that I'll cover your education when, you know. I believe in you, Ash. I got your back. Yeah. But yeah, I mean, this happens a lot. We hear this way too often of parents that don't want to follow through on the promise of what they were going to do with their kids' education costs.

29:04Dave Ramsey:And so it's yet one more reason for those of you out there that are considering taking out a student loan based on the promise of a parent to pay it, that would be a dumb idea. It puts a strain on the relationship even if they do follow through and pay it. Chris is in Fort Collins, Colorado. Hi, Chris. How are you? I'm fine. Thank you. My question to you is I lent my mom and dad$40 ,000 20 years ago. They put my name on their house via a quick claim in 2012, and I haven't lived in their house for 40 years. Well, they've both passed. They have a will that says to pay me$75 ,000 off the top and split the rest between myself and my three other siblings.

29:53What kind of a tax mess am I in?

29:58Dave Ramsey:Are you the only one on the deed, or were they on the deed with you after they quit claimed you? They were on the deed with me after they quit claimed.

30:11Okay, so you're going to need professional tax advice,

30:19Dave Ramsey:but I'll take a stab at it, okay? Okay. Here's what would happen if they had taken themselves off completely and it was just you. When you sell the house, you're going to be taxed on every dollar above what they paid for the house, which was nothing probably. Yeah, they paid$13 ,000, and now the house is worth$500 ,000. Yeah, so you'd have capital gains tax on$500 ,000 if the house was in your name. Mm-hmm. So you may have tax on half of that since the house is in their name and your name. You probably do. You probably have tax on that. And so what I would do is require that that tax be paid before and my$75 ,000 be repaid before we divvy up any proceeds.

31:15Dave Ramsey:And so you need to get tax advice, figure out what your tax bill is going to be. And I would add that and make the estate pay that because you got screwed.

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32:53Recapping, George, lesson for the day for some of you out there.

33:00Dave Ramsey:Do not gift capital assets like stocks or real estate to your children while you're alive. except in rare circumstances. Here's why. Okay. Our last caller, Chris, mom and dad quit claimed the house over to thinking they were doing her a favor. They were trying to do something nice and they were ignorant of tax law. So here's how tax law works. If Chris, again, in Chris's situation, both names were on it. So it doesn't matter. But if it was just her name. So if you gift, if mom and dad gifted that property to her, her basis for calculating capital gains is their basis, what they paid for it. Which was$13 ,000 in this case.

33:53Dave Ramsey:And the house sold for$513 ,000. Then they got a half a million dollars that's taxable. That's a gain in the IRS's eyes. Yeah, it's going to be a 15 % gain or capital gains tax. That's$75 ,000. So it's a$75 ,000 error. In that case, the reason it's an error is if her name was not on the deed and they give it to her by will after they die, her basis is the market value of the house at the time they die. So her basis would be five hundred thirteen thousand and she sells it within six months of death. It's presumed to have been market value and it's presumed that there is zero tax. Which just saved her 75 grand by doing it that way.

34:40Dave Ramsey:It's called a stepped up basis. So the basis goes to market value if willed to you. So if grandpa has stock and he's got$2 million worth of Exxon stock, but he paid$10 for it and he gives it to his grandchild before dying, they have capital gains on $2 million. He just passed the hot potato right over. If he waits until he dies 10 seconds after he's dead, that stock basis for resale is the market value at the time,$2 million. Junior could sell every bit of it and have zero tax. This is huge, y 'all. Quit doing crap like this without seeking tax advice and knowing what you're doing. And it's like, well, I don't want the government to get it.

35:31Dave Ramsey:You just made sure the government's going to get it, dumb butt. It's exactly what you did. And you can't just practice law and tax law out of your ear and think you're going to get anything except screwed up. So just make a one phone call to a Ramsey trusted tax person, and they'll tell you, don't transfer this, period. Now, again, there might be a situation where you can use some of your gift tax exemption or you can use some of your estate tax exemption and qualify it under unified estate tax credit. And you have to fill out some forms and you can make the move and not get into the taxes. But you still could set up a problem with income tax on the other end.

36:19Dave Ramsey:And so you really need to think this stuff through. It's not as simple as, well, I need to protect little Chris. She gave us that$40 ,000 and her brothers and sisters ain't right. So I'm going to put the house in her name, make sure it's OK. Boom! Without checking. That's exactly what those sweet people did, and they screwed this up royally. And they meant well. I'll guarantee you they're not bad people. They didn't go, hey, let's screw Chris over. That wasn't what they meant to do. Sometimes good intentions are the most expensive mistake you can make. Yeah. Just don't be doing this stuff, people.

36:51Dave Ramsey:All right, James is with us. James is in Lexington, Kentucky. Hi, James. How are you? I'm good. How are you doing? Better than I deserve. What's up? Hey, man. You know, I'm really interested in how can I regain control of my finances. I just graduated college. You know, I have a good job, but I feel like I'm using control. Cool. What's the good job? What are you making? 73 base salary, and then with bonus and everything, I should be around 80. Good for you. Cool. Are you married? I am. Well, fiancé, and then I have a son with my previous relationship, and then we have two kids. my fiancée and I.

37:32Dave Ramsey:Oh, when are you getting married? You know, whenever she wants to. We haven't set a date date yet. Saturday works for me. Dave is free. I'll send you the invite. Okay. And the... Alright, so what does she make? So she stays at home. That is the... That is what's best for us. Yeah, Saturday works for me. Alright, and she's at an extreme risk right now. I don't like the position she's in. As her friend, I'm telling her to marry you now. Okay. Okay. Anyway, now we got that behind us. So you got how much debt with your$80 ,000 job and three kids and fiance getting ready to be wife? So my student loans, that is the largest,$44 ,000.

38:18I've used that to supplement income all throughout my time at school. My car made a dumb purchase when my son was born. I still owe about$20 ,000 on there. And then my credit card's around$12 ,000, and then she has around $12 ,000 as well,$12 ,000 on credit cards as well.

38:38Dave Ramsey:Gotcha. Okay,$44 ,000. You got$88 ,000. You make$80 ,000. It's going to take you two and a half years of living on beans and rice, rice and beans, and you can pay all this off. Okay. And that's if nobody adds any income to the equation, and you ought to try to talk about somebody adding some income to this equation if you can. So, and I am, I'm not being just smart aleck only. There's all kinds of data points that says being married is going to cause you to succeed financially. And so I want, I want good things for y 'all. I love y 'all. I want you to win. Okay. So then we're going to list our debts smallest to largest.

39:15Dave Ramsey:We're going to cut up the credit cards tonight. We're going to get on an every dollar budget tonight. Well, George and I will give you a premium version and let you get started. the two of you sit down together uh and since you're going to be married on saturday you can go ahead and start doing it tonight like you were married and um you sit down with everything and you're looking at it together and saying okay we have this baby and i've got these kids and we've got this stuff we've got to take care of and um you know and we got a house and we got to get you know we're going to plow through these credit cards get rid of them then we're going to knock that car out and then we're going to knock that student loan out meanwhile paying minimum payments on everything but the little one, attack the little one, everything but the little one, attack the little one, everything but the little one, and attack the little one with a vengeance.

39:56Dave Ramsey:You're not going to see the inside of a restaurant unless you're working there as your extra job. And don't talk to me about a vacation. You are seriously broke. Broke people don't go on vacation. And get this mess cleaned up in the next two years. And if you get, you get kind of, you kind of hear that anger in my voice, like, ah, right, the coach at halftime. That's what I want inside of y 'all. Okay. I'm trying to transfer that to you. and you get that swagger going and you start punching these credit cards out, knocking them in the nose, going, you people are screwing my family's future. I hate you, Citibank.

40:28Dave Ramsey:I hate you, Fifth Third. Get out of my life. Then when you kind of get that idea going, then you have a villain in the story and you are the hero. You get to go win and it changes everything. And that's what I want them to do, George. Yeah, what is your intensity level right now, James? One out of ten, would you say, to get out of this debt? 20 you know last week i sat down and i spent hours on an excel chart because i hate where budgeting apps charge you a subscription fee i think that's one of the biggest scams in this industry right now man it's mind-blowing you know you get on the app store look up budgeting in-app purchases in-app purchases you know what i mean yeah we don't have any in-app purchases but we do charge you a subscription fee after we give you this free portion so we'll give it to you for free for a while, so you don't have to worry about it, but later on, you'll have to pay.

41:18Dave Ramsey:Okay. I won't hold back on that, but we have to pay the guys that build the app and run the thing. If it gets you out of 88 grand in debt, I'd say it was worth the purchase, but if you don't do anything with it, I agree. It was a waste of your money, so I hope it helps you, but I just wanted to see how intense you were, and even think about selling this car if it's worth more than 20 grand. Yeah, I'm fired up. You can get out of that payment. I think you're going to do it. I'm proud of you, man. Go do it. You're going to have a great life. You graduate, you got babies, you got a new wife. Life's going to be great, man.

41:44But for now, you've got to keep living like a broke college kid, which is going to be not as fun. I've got a new salary. I've got to go buy some things. Nope. You've got to pay off some debt. You'll get there.

41:54Dave Ramsey:Absolutely. Absolutely. So why do people pay to join a gym if they can lift weights at home? The environment? Because they don't lift weights at home. That's why. And there's some skin in the game. If I paid for something... All you do is stub your toe on them. That's all they're for, is stub your toe. I want to see a study. If it was a free gym membership versus a paid gym membership, who's showing up at each gym? I'd be interested to see. Inquiring minds want to know.

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44:15Dave Ramsey:Welcome back to the Ramsey Show in the Fairwinds Credit Union Studio. I'm Dave Ramsey, your host. Thanks for joining us. George Camel, Ramsey personality, number one bestselling author, is my co-host today. Janessa is with us in Salt Lake City. Hi, Janessa. How are you? I am so good. How are you? Better than I deserve. What's up? Oh, wonderful. So me and my husband, we are struggling with a decision to make. We have decided to kind of get our butts in gear on our student loans. But in the past year, we have promised our girls season passes to a local amusement park. And we are trying to decide if we break our promise to our young kids and try to teach them a financial lesson.

45:04or we delay paying off our debt about two to three weeks and keep our promise.

45:15Okay.

45:18Dave Ramsey:Well, sometimes if you take an ethics thing to an extreme, it'll give you the answer. Okay. So you have information that is available to you today that was not available to you today or at least your viewpoint on the student loans was not the same when you made the promise. Things have changed. Yes. So if we took it to an extreme and said, hey, mom's got cancer, and so we're not going to get the theme park things this year because we're going to pay the doctor bills. That didn't happen, and I'm not speaking that into existence, okay? But if it was something like that, you wouldn't have an ethics problem because it's new information.

46:03Dave Ramsey:correct yes and so i think that you know i would sit down with them and say kids at the time we were trying to ignore these how old are the kids um we've got a six-year-old seven-year-old nine-year-old and a ten-year-old okay well they're not going to remember whatever it is much plus friday anyway but um but but you know what i would do is say at the time we sat down and talked about this we thought we were able to do it And now we've looked at the details of our debt, and I know you don't understand that necessarily, but we're not in trouble. We're not going to be hungry. We're not going to lose our home.

46:41Dave Ramsey:But we do have to clean up this debt, and we're going to have to get serious about it. And that means this year we're not going to be able to do the season passes unless we come up with some other way to pay for them. And you might create some – how expensive are they? All in all, it would be about$1 ,300. Yeah, okay. All together. And it might be that if we come up with some kind of fun kid-slash-parent participation adventure that is the GoFundMe of lemonade stands or something, and, you know, teach them a way, we've got to go find this money if we're going to do this, kids. And so we're going to have an adventure by doing these three things, and we're going to cut grass or we're going to rake leaves or we're going to do this together and come up with a$1 ,300 that way because we can't just go buy it after what we've discovered about our debts and we've got to pay it.

47:36Dave Ramsey:And so that's a third option. One option is buy it when you can't afford it. One is just look at them and go, no, we can't do it. New information. Third option is, is there some kind of an adventure that we can turn this into that says, okay, what do we do when we're broke? We go to work. Let's find something. Let's find something. Let's all get in here. And if you all want to do that, we'll be able to do it. If you don't want to do that, that's okay. It'll just be next year at least because we've got to get this student loans knocked out. Okay. When I was 11, my parents sold our boat because they had a bad year in the real estate business.

48:13And you remember it.

48:15Dave Ramsey:I'm still in counseling. But now Dave has multiple boats, so he's recovered. I have recovered. I have lots of boats now. His boat has its own boat. It's very impressive. So, yeah, this is a – it's just delaying. It's not a no. It's not crushing their dreams. It's just a not now. And so when are you going to be debt-free? In a year. Okay. Great. Will the theme park still be there in a year? I sure hope so. Can we do something that's an alternative that maybe is free or super low cost that also is fun this year? That's what we've been talking about, yeah. Our local pool has a swim pass for the summer we were thinking of doing instead.

48:56There you go.

48:57Dave Ramsey:There you go. That's a good idea. So there's still something fun for them to look forward to, and there are other things just delayed by a little bit. I like this plan. Our neighbors had a boat. That's what we did. Find a friend with a boat. You just saved yourself a lot of emotional hassle and finances. Boats and pickups. Find someone else that has it and use theirs. That's what I do. I borrow Dave's boats. Yeah. I wouldn't know how to drive it, Seth. I'd crash it. You're not getting near my boat. I barely could drive your little Sea-Doo. I almost crashed that thing. I know. I haven't been on it since.

49:26Dave Ramsey:It's scary. It was a really scary day for me. I've been counseling for that, too. But, you know, I think the thing is it's a bigger deal to you. This is grandpa talking, okay, eight grandkids. It's a bigger deal to you than it is to them, this breaking your promise thing. And it's not like you have a pattern throughout their lives of setting them up and then disappointing them, setting them up and then disappointing them. You're not that person. or you wouldn't even be asking this question if you were that person. So they're fine. They're going to be okay. Find an adventure to get them paid for.

50:04Dave Ramsey:Buy the pool passes instead. One year from now you'll be able to do it. And you can all talk about the time that we took a year off and got ourselves cleaned up as a family, and that's when we changed our family tree. And then when you're celebrating your 50th wedding anniversary, your kid can stand up and give a toast because of the character he witnessed when he was 11 that his parents delayed pleasure to change the family tree. That's a great lesson learned and some character built there as well. That's it. That's what's really going to happen. Not they're going to be so disillusioned that they need counseling.

50:38I would love for them to be in therapy going, yeah, what happened? Well, I got a pass at seven instead of six. That really crushed me, man. I just don't see that.

50:46Dave Ramsey:Never recovered. Never came back from that one. Blake's in Washington, D.C. Hey, Blake, how can we help? Hey, how's it going? Better than I deserve. How can we help? Yeah, so I just had a quick question about, I'll try to keep this short as well, but I am just wondering, I'm still planning out my education, my career path. I just graduated with my undergrad. Oh, cool. What's your degree in? Public health. Awesome. Public health. Okay, good. Yeah, and I want to go to audiology school, and that would be a three-year program. And I do have some student loan debt from my public health degree. I graduated in three years as well, and so now I'm just working and applying for audiology school.

51:37But I feel like current times have changed, and I feel like there's some things that I also need to change with my plan. So I was just actually thinking of holding back audiology for like two or three years until I work. And then I can save up that money, pay off for a moment like that. And then, you know, save up for that as well.

51:57Dave Ramsey:Nothing wrong with that. Try to, yeah, because it's going to be all on my own money. But my family does, they do want me to go straight into audiology school starting next year. I'm just a little bit scared because I feel like that. Well, they're not paying for it. Right, yeah. They don't get a vote. You only get a vote if you're paying for it. Yeah, I definitely understand. You can have an opinion, but you don't get a vote. And the opinion is that it's no big deal for you to go deeply in debt. No big deal to them. I wouldn't let them pressure me unless they're writing the check along with it.

52:34Dave Ramsey:I think they mean well, but they don't see this as big a problem as you do, or you wouldn't even be calling here. So I like your plan better, Blake.

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54:38Dave Ramsey:Noah is in Hawaii. Hi, Noah. Welcome to the Ramsey Show. Hi, Dave. Thanks for having me. Sure. What's up? So, I am in a bit of a kerfuffle. I have moved home to try to help my dad with his business. We're in construction. And we are digging into the finances. I've been listening to the show for a long time. I am currently trying to get myself out of debt. I'm$4 ,000 away, but have come to find out that father at 61 has saved nothing for retirement. It is met every time with, I'll figure it out, or it's not your problem. But Dave, I feel like it is my problem. You know, he's my dad, and I've got to take care of him at some point.

55:28Dave Ramsey:Well, that's sweet, but it's not your problem. He's right. Yeah, really. Okay. You're$4 ,000. in debt, you're broke, you came home to try to help him with his business, that's your problem, and you keep that running, he's a grown 61-year-old man, he should take care of it. I mean, he's not mentally disabled. You're right about that. Yeah. So it's not your problem. I mean, if he had a brain injury or something, maybe you'd want to go, okay, I need to help my dad, right? But all he is is bullheaded. Did you ask him why he hasn't put a cent away for 40 years? I think the conversation scares him. I don't think he knows what to do about it.

56:21And I think it's gotten to a point where avoidance is the only technique.

56:24Dave Ramsey:I think you can end up helping him and I'll give you an idea. But first thing I want you to do is release this emotional burden of having to carry your dad. Okay. But the way you help him is this. You finish turning this business around getting yourself out of debt. And then the more you get involved in the running of the business, set up a 401k at the business and sign him up for it. Okay. I mean, he's probably going to work another 10 years, isn't he? I'm hoping he's able to. How many people on your construction team? So right now we've just come down to three. So it's him, myself, and an accounts manager.

57:02and then everything else for the most part we subcontract out.

57:05Dave Ramsey:Okay, so he's not physically straining.

57:11No, the issue with his kind of thing here is that he's kind of avoiding technology and you've got a bunch of other companies coming in and kind of taking over.

57:21Dave Ramsey:Yeah, but see, you can fix that too to the extent you take over the running of the business. If you guys keep running the business and you continue to insert yourself in the operations of the business and you help with the technology and you help grow the business and you help keep it alive. And, you know, if you can't do that, then you all need to shut the thing down and you need to both go get a job, right? But if you can do that while you're doing that, you could reach over to a Ramsey SmartVestor Pro and set yourself up a simple 401K in there and just sign him up and start dumping company money and his name into it and dump company money and your name into it.

57:58Dave Ramsey:Awesome. Okay. You know, it's almost against his will, but you tell him, you go, hey, I just set up a 401k. I'm going to be putting our money into me and our money into you, and I need you to sign this right here. Shut up. Sometimes you've got to sneak the vegetables in for their own good. Eat your broccoli. Yeah. Does he have any money saved? Is he like a tin can guy? Like, does he have anything, or is he really just can't live on less than he makes? Well, so the company does well enough to where when he needs money, he just draws it out. Yeah. Um, and so he has got nothing saved, I believe from what the digging that I've been doing, he's got about eight grand in debt, which is nice.

58:37That's not much. And he makes enough to pay it. Um, but yeah, no, nothing in savings, no emergency savings. No other assets.

58:46Dave Ramsey:Yeah. So part of your, uh, business job to grow this business is to take the, the inner workings of the business and make them more sophisticated. you knew that already and you were the one told us that and as you're doing that you get your debts paid off his debts paid off you get you start instituting some financial systems as part of it and one of those financial systems is what's called a simple 401k it's a 401k or simple ira it's a 401k for businesses for small businesses your size and um and and you know it's real easy to set up, very inexpensive to set up except for the money that you stick into it.

59:29Dave Ramsey:And so then you guys, when you go make some money, you don't have any debt payments. You've got some savings in the business called retained earnings. That's part of your systems. You're building your technology base. You're competing. You're even getting ahead of the competition out there and the way you're doing the jobs. And in the process, your profits go up and you start chunking a bunch of them into the retirement. That's how you take care of him is almost against his will. But I don't want you feeling like you failed as a son if a full-bodied, full-brained 61-year-old didn't take care of themselves.

1:00:02Dave Ramsey:That's not a failure on your part. You've done nothing wrong. I'm not going to guilt trip you for, and I don't want you to guilt trip yourself. You can't and shouldn't fund his lifestyle for the rest of his life once he's done working. Yeah. That's a bad plan. By 61 or so, somewhere in there you should grow up. Somewhere in there. I'm trying still, but I'm still trying, but I'm getting there. All right. Ricky. Ricky is with us. Ricky's in Orange County. Hi, Ricky. How are you? Hi, Dave. How are you doing? Thanks for taking my call. Sure. I'll just paint a picture as to what the situation is. So I'm in California, so I'm considered in the world of high net worth based on my income.

1:00:44I have about$5 million in equities, a little over$2 million in 401k on top of that. So we're looking at about$7 million. Income, around$600 a year. Good for you. Now, my question to you is this. It's bothering me that, based on discussing with my CPA, that the house that I live in, I guess around a 6 ,000-square-foot house, I bought it for$2.5 million. Maybe it's worth$4 ,344 today. The mortgage is about$1.1. And I know I've been listening to you a long time, but I feel I want to continue to keep the mortgage because it's free money. It's at 2.2%, 2.3 % fixed. But that's a separate issue. But the bottom reason why I'm asking is, question is, I have a lot of equity sitting there, roughly around$3 million.

1:01:40And I could be, given the fact that my income is not allowing me to write off any of the$30 ,000 a year in taxes for property taxes. I have zero write-offs on that. They won't allow me to write off any of the interest. So I'm thinking, based on my return that I'm getting on my equities, whether it's the 401k or the other$5 million, I'm averaging maybe 12 % a year in good indexes. and the amount of money I could be making,$250 ,000,$300 ,000 a year on that equity. I'm better off maybe renting given I'm not getting any benefit of the write-off of being a homeowner. And I don't think in this country necessarily it's a benefit to be a homeowner if you're not getting the ability to write-off.

1:02:34Dave Ramsey:The problem is your analysis is based on a moment in time rather than projecting into the future. And so your analysis is flawed. Okay. And so I'm calling bull crap on your statement that in America today it's not a good idea to own a house. That's just bull crap. Because you're looking at this particular moment in time. You forgot the fact that this house has gone up several million dollars while you owned it. You seem to leave that out of the equation. True. But then again, if I were to put, you know, based on the money that I put down. California real estate has done better than mutual funds.

1:03:13Dave Ramsey:ROI, return on investment. Right, of course. Period. Okay, it's done better. Yeah, you can't write off the taxes, welcome to your socialistic state. But that's the problem that you got where you chose to live. But the issue is that California real estate remains an excellent investment. and so no I know renting and you know putting all your equity in an S &P does not outperform owning real estate I own a whole bunch of both I believe in both and all the people that we know that have 10 to 60 million dollar net worth that we coach my net worth several hundred million own a good mixture of real estate and mutual funds and they've owned their own home paid for for decades.

1:04:03Dave Ramsey:They haven't overanalyzed this.

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1:05:35Dave Ramsey:So, George, the Ramsey Show live recordings that we've done in all these different cities, Charlotte and Denver, they're a big hit. Oh, yeah. We had a blast doing them in April, and we finally released the very first one. Charlotte dropped last week. Denver episode releases later this week. We got Phoenix and Anaheim coming in the next few weeks. And I was on that one with Rachel and Ken. We had 300 people filled with live questions. So you actually get to see the person asking the question. And even better, we bring the spouse or boyfriend up and— Does that make you meaner or nicer? You have to be nicer if they're there.

1:06:10You have to be a little nicer. You can kind of poke a little more, which is fun, and be a little snarkier. with a live audience because they can tell it's for entertainment purposes. And you kind of get the crowd on your side or against you. And so that kind of adds a whole other element to it. So my favorite was how much should my boyfriend spend on an engagement ring? And, you know, Rachel and he's there. So we bring him up to say, hey, you tell me, bud. And so that got into some juicy debates. That's a good one. So if you want to go watch it, it's live on our Ramsey show, YouTube channel, Spotify, Ramsey Network app.

1:06:40Go check it out. It's like nothing you've seen before on this show with a live audience like that.

1:06:45Dave Ramsey:That's fun. Very fun. Yeah. We've got four cities. Denver. Charlotte's already up. Denver will be up this week, and then you'll see Phoenix and Anaheim come on in the next few weeks. You don't want to miss these. Every one of the Ramsey personalities had a blast being out there with you folks. So thank you all for showing up. We appreciate you. John is in Nashville. Hey, John, what's up? Hey, Dave. Thanks for taking my call. I am 23, and I am debt-free. Um, I, when I first graduated, I took out a truck loan and all that. And I, I got it all figured out. Um, so right now I have no debt. I got about 35 ,000 saved up and, uh, trying to figure out what I should do next.

1:07:29Dave Ramsey:Wow. That's impressive. Good job. What do you make? Um, I make about 60 ,000 a year. Um, and I work for family business and that's part of my issue is, uh, is coming up with that. What's the issue? At first, it was me, Mom, and Dad in the restaurant every day, and everything was going great. And it seemed like more of the responsibilities were getting pushed my way. And now, it's me in there every day, and Mom and Dad don't really work anymore. And he gave me a business card that said, I'm owner-operator, but I'm making about$20 an hour. and uh my mom you know i don't i don't want them to work all the time but you know mom's working no days a week and that'll work you know one day a week and they own it that's stuff they own it right so it's a formality that it says you're not an owner operator right you're an employee business cards that say i don't care and that's that's of no value whatsoever okay well i mean could you get a job at another restaurant if you were the general manager of another restaurant and you were responsible for the operations, what would you make?

1:08:44Well, I'm not exactly sure. I applied for Buc-ee's in Murfreesboro. I applied to be the assistant manager up there, and it does pretty good. What does that pay? It pays$33 ,000 plus benefits and retirement. See, right now, I'm a 1090. See, here's my issue. So he kicked me out of the house. Understandable. I'm 23. You know, it's about time. And so I came and got an apartment and started looking at one day getting my own home.

1:09:19Dave Ramsey:And I'm a 1099 employee. No, you're not. You're not supposed to be. Oh, I'm not? Yeah, y 'all are screwing that up. You're going to make a mess. You're not an employee. I mean, you're not a 1099. 1099 is an independent subcontractor. You're an employee. They're going to get their butt fined by the IRS big time. You guys are going to end up with tax penalties and all kinds of stuff. Your family needs to get some professional tax advice on how they do payroll. Okay. Yeah, that's going to get ugly. It's going to end up with a mess. But I think we've got a bigger mess, and that is that your parents walked off and handed you this thing, but they didn't really hand it to you.

1:10:00Dave Ramsey:So I think you all are just going to have to sit down and go, okay, Dad, what's the plan? I'm going to need to get with a tax person. I've gotten financial advice that says I'm going to get messed up on this 1099, and you're going to get messed up when we get audited. You're not going to like it. So we need to get that fixed, and then we need to get me in there as the general manager, and I need you to be paid like a general manager, which is a base salary plus a percentage of profits. Okay. And it's not an hourly rate. we see and and uh i'm sorry i hate to get it we keep interrupting you what kind of revs is the restaurant producing um we do about about 2 000 a day so that'd be 12 000 a week because we're closed sunday so that's about 50 000 a month roughly now we got a food truck so sometimes those numbers can change um but but just in the restaurant that's what i do they they'll do the food truck when we do it.

1:10:59Now, this year they decided we're only going to do it about five times this year. Is this their retirement plan? Are they basically getting paid from the business and don't have anything else? I'm not sure if we got a plan. That's my fear. It's really starting to bother me.

1:11:14Dave Ramsey:Yeah, I think you need to sit down and say, okay, Dad, we need to formalize this. Bucky's is going to make me an offer at 33 plus benefits and properly pay me on a W-2. And so if I'm going to stay in here and I'm going to do all the work, I'm going to need to be paid like a general manager because I'm your general manager. And that's going to be a base salary that's the equivalent of$40 an hour for a 40-hour week. But you're probably going to put in more than 40 hours plus a percentage of profits as your bonus. And then you need to close the books on the restaurant each month and tell what the profits are each month.

1:11:51you see that that's part of my problem is i pay all the employees i buy all the supplies so i i

1:11:57Dave Ramsey:know i can do simple math i know how much it's making and it's a lot more than me you know and uh i mean you are you are only 23 but you are doing the job and so regardless of your age and your experience or whatever if you're giving a job you should be paid to do that job. I'm not asking you to be paid more than the job is worth, but if you weren't there, they would have to hire a general manager for a salary of 30, 40 bucks an hour average and some kind of a bonus kick based on profits. That's what you would get paid in that business. Agreed? Yes, sir. And if you weren't there, that's what they got to do.

1:12:39Dave Ramsey:So if you take the job at Bucky's, that's what they're going to have to do. They're going to hire somebody. right and i'm about at the point to where i'm i'm about to start looking and applying just about anywhere because it's getting it's been a little overwhelming i think you sit down have a cup of coffee before you do that and say mom and dad i got a problem i'm about at the point that i need to go do something else the way we can solve that is i need to be paid for being the general manager and i'm going to close the books and we're going to get a base salary and a percentage of profits for being the general manager.

1:13:13Dave Ramsey:And we're going to develop a plan where I become the owner of this a little bit at a time over time. And meanwhile, you guys are going to make a lot of money and you don't have to work as much. I'll take care of running the thing. But if you don't want to pay me the proper amount to do the job that you've got, then I need to go work somewhere else and you need to get somebody in here that's going to enjoy doing this, which by the way, you can't get for$20 an hour. Right. That's fair. I mean, you sit down and have that conversation with them. And if they say, screw you, you're supposed to work for free, then go get a job somewhere else and let them figure it out.

1:13:54Dave Ramsey:They're not going to say that. That's what worries me. They're not going to say it. When I told him that, hey, I'm looking for a new job, it's kind of like he got aggressive. He took it as a personal attack. Right. And I didn't want to, I don't want to mess up my family. situation, you know. You're not messing it up. They are. Okay. All you're doing is talking about it. And I wouldn't say I'm going to quit if you don't do this, but I would say, Dad, if we can't work something out that's reasonable here, I'm going to be forced to do something different. And if he wants to get aggressive based on that, then go do something different.

1:14:33Dave Ramsey:Because you're going to get aggressive every time you have a conversation about this business. And then you're going to build resentment. Can't have a conversation. You're going to ruin the relationship anyways. Yeah. I mean, my son and I get in arguments. We run Ramsey together, but we don't get an argument every time we're together. Most of the time, we don't have an argument. But occasionally, we're just like, no, we bust and fight back and forth. We fight like grownups. Yeah, we fight like grownups. We're arguing about an idea. We're not personally offended like a four-year-old.

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1:16:49Dave Ramsey:our question of the day is brought to you by why refi when you fall behind on paying back your private student loans it can feel like your life's being held hostage but why refi helps you borrowers explore a fresh start with low fixed rate refinancing and a payment plan designed around their ability to pay. Visit yrefi.com slash ramsey. That's the letter y-r-e-f-y.com slash ramsey might not be in all states. Today's question comes from Dylan in New Mexico. I'm aware of your recommendation to invest your money evenly in four funds, small cap, mid cap, large cap, and international. I also hear you guys regularly reference the average annual return of the S &P over the last 30 to 50 years.

1:17:35Can you provide some insight into how his investment protocol has performed compared to the S &P? If mimicking S &P performance is the key metric, why wouldn't he recommend just parking your money in an S &P index fund? That's a great question. He, I assume, meaning Dave, per your recommendation for many, many years now. All right, so insight how this investment's performed compared to the S &P. Well, the small cap, mid-cap, large-cap international, there's not a one fund that we can look at to compare to the S &P. But the S &P largely is a bunch of mid-cap and large-cap companies, if you look at the makeup of that.

1:18:12So it's just not as diversified as what you're mentioning.

1:18:14Dave Ramsey:Exactly. So here's the thing. Individual mutual funds in the growth mutual fund sector, less than half of them beat the S &P. and that was um the guy that started the vanguard s &p index fund bogle uh john bogle was brilliant and he he discovered that and so he came up with this idea of where you hear the phrase passive investing that's where it first came from where you don't have to worry about it you just buy the s &p screw it because half the mutual funds don't even beat it and those people that do that are passive investors, sometimes called bogle heads, because John was actually on to something.

1:18:57Dave Ramsey:His actual data was correct and is correct. To this day, half the growth stock mutual funds do not outperform the S &P. But that also means it's kind of like there's a 60 % chance of rain. There's a 40 % chance of sunshine. Hello. So I have picked in the four categories for mutual funds that have outperformed their indexes. Now, the small cap, the index, would be the Russell. Because a small cap is not necessarily, it's more like an aggressive growth stock mutual fund, right? A mid cap would be like a growth. That's more like a typical growth mutual fund, large cap, typical growth stock mutual fund.

1:19:40Dave Ramsey:Like you said, the S &P is a mix of those two. And then obviously international, a foreign fund, that's a different index. Okay, so what I want to do is pick a fund that outperforms the no-brain way of doing it, the passive way of doing it. And so if I've got a mutual fund that for 35 years has outperformed the S &P, and it's a growth stock mutual fund, and I put that in my four, I've got a small cap that's outperformed the Russell, and I put that in my four, and so on. Well, guess what? The four of them as a group are going to outperform the group of indexes unless they don't do as well as they did in the last 25 years or whatever the number was of the history on the things.

1:20:23Dave Ramsey:So my particular four mutual funds that most of my stuff is in that has outperformed the indexes has outperformed the S &P because I didn't pick one of them that didn't. That's why. And the other piece of this that we're not factoring in is that that international fund, which we recommend 25%, if you look at the S &P 500 and it's down in a given year, the international fund usually is up. Yeah, it pretty much runs the inverse. And so even in a given year, if the index beat your mutual fund setup, you're not factoring in the long term of what could happen in the market. But it never has. The four I picked has always outperformed the S &P every single year.

1:21:05So if the average in the S &P is 10 to 12, you might be seeing 13, 14. Yeah.

1:21:09Dave Ramsey:I've not gotten 10 points more. It's not 20%. And here's the thing. Let's go back on this too. It's very interesting. I mean, the way I'm doing it is actually mathematically beating it. So it does answer the guy's question. But the problem with this discussion is always that somebody's having this hypothetical, if I had done this thing. And when we actually have figured out that people who invest in slightly substandard mutual funds way outperform those who never invest. Or those who jump out or those who are in single stocks. Those who analyze everything to the point that they've got an anal problem with it, right?

1:21:55Dave Ramsey:And it's like, you guys, would you shut up and invest? because 100 % of the people that invest end up with more money than those that don't. Every time. And that's the number you need to concentrate on. It's not mutual funds versus index funds. If you actually do the index fund versus the person that believes what we believe and doesn't do anything, I'm on your side. I'm glad I got you to invest in something. Because if you just put money away, you'll have some money. It's magical. And so, like, for instance, as we studied all the millionaires we studied, most of them were not super sophisticated investors.

1:22:35Dave Ramsey:They didn't spend a lot of time analyzing, like Dylan is, what this is and what I should do and da-da-da-da. There's not a lot of theoretical mumbo-jumbo. They weren't prodigies. They were just average people. They just said, I got a 401k at work, and I'm going to put some money in a gross stock mutual fund, and now I'm a millionaire. And that's exactly what they did. I mean, they really didn't. They picked out their mutual fund based on what the guy in the cubicle next to them was doing. They did not do some kind of sophisticated think tank analysis. But here's the trick. They did put money in investments.

1:23:12Dave Ramsey:They didn't sit around and talk about it and not do it. That's the problem. So, you know, the percentages all go out the window until you actually do it. Yeah. Whether it's 12 or 13 percent doesn't matter. If you have no money in the market. So all that to say, Dylan, I have four mutual funds that have outperformed the S &P for 30 years as a group. Not hard to do. It's really not that tough to do. You can have your smart mister pro say, show me some mutual funds that have a 25-year track record of outperforming the S &P. They can do it. They're there. Not all of them, less than half, but they're there.

1:23:48Dave Ramsey:Okay. And you can put that little portfolio together. And if it does what it did in the past, it will outperform the S &P. Mine half. But if you don't want to do that and you just want to put it in the S &P, you're going to end up with a lot of money. We'll all end up rich. And we'll be happy for you. We're not mad at you. But that's the answer to your overall question. What a great nerdy discussion. It is a fun nerdy discussion. And by the way, you actually cover how to pick mutual funds in our Investing Essentials virtual event. We've got one coming up later this year. So if you guys want to learn more about that, you can sign up for updates at ramsysolutions.com slash events.

1:24:20But that's where if you want to nerd out like this, you're interested in this kind of conversation, you want to know how to build wealth the right way in depth. We'll walk you through it in that event. Yeah.

1:24:28Dave Ramsey:And but here's the thing. I go. We have talked more people into putting money in their 401k and Roth IRAs than anybody in America because we got them out of debt so that they could do it. And then they believed us. And so they went and did it. It's a margin issue and a little bit of education. And then there's some, not Dylan, but there's some, you know, moron on the Internet going, well, Dave Ramsey's created more poor people. No, he didn't. He got people to invest while you're sitting with your thumb in your ear. You weren't listening very well if Dave Ramsey made you poor. I mean. That's pretty wild.

1:25:00Dave Ramsey:That's just, but that's, you know, because he doesn't understand, he doesn't understand. Yes, I do understand it, you idiot. Of course I understand it. But what I'm better at than you are is getting people to actually invest instead of discussing freaking theory. theory doesn't matter until it's applied. You know, I really don't care what you think about swinging a baseball bat until you swing one, honey. And then we'll talk about whether you can connect. That's how this works. You got a lot of theory going on out there. You got a lot of people that have an opinion out there that have no stinking money.

1:25:35Dave Ramsey:It's all these life coaches that don't have a life. It's the same thing, you know. And so, guys, just invest. Even if you do it wrong, you're doing it better than the moron who talks about it and never does it. It's like a bunch of out of shape people talking about workout routines and which one's better. It's like, great, let's go work out. How about that? Arnold Schwarzenegger has created more fat people. No, he didn't. No, he didn't. It's just dumb, okay? Seriously. But here's the trick. If you invest, you're going to have some money. Ooh. And if you don't invest. You're not going to have any money.

1:26:10Dave Ramsey:Take the money away. You're not going to have any money.

1:26:41Dave Ramsey:Welcome back to the Ramsey Show in the Fairwinds Credit Union studio. I'm Dave Ramsey, your host, George Camel. Ramsey personality, number one bestselling author, is my co-host today. Joshua's in Houston, Texas. Hey, Joshua, what's up? Hey, Dave. Thanks for having me on your show. I appreciate you taking the call. Sure. How can I help? Let me give you kind of like a brief back story. I'm 31 years old. I work as an HVAC technician. I make around$92 ,000 a year, but I still feel like I'm drowning financially and living paycheck to paycheck. Over the last year, I spent$22 ,000 fighting custody battle for my son, which I ultimately lost and kind of wrecked me financially.

1:27:30Right now, I have about$17 ,000 through a loan, another$28 ,000 through an Affirm loan, and then I have some credit card debt, about$3 ,500, and then I owe some family members around$7 ,500 because they help with my attorney fees. um i have some student loans but i'm in a forgiveness program with them uh which i have like zero dollar payments but they're expected to be forgiven in about 30 years i've also been in a debt settlement program for about a year now uh through national debt relief and i pay them about 603 a month while they're working to settle my debts i pay about 22 50 a month in rent,$650 in child support, and they also may be increasing that soon.

1:28:25I pay$750 a month in health insurance through work, and I pay$520 a month for my truck, which is about to be paid off in two months, thank God, and other monthly bills, obviously. But I feel like no matter how much I work, I can't get ahead, and I also want to buy a house soon, but I feel stuck. You're not buying a house anytime soon.

1:28:52Dave Ramsey:You're broke. You got a lot of cleanup due for you by house. So let's just set that on the side. And then, I mean, and you're getting ready to have the truck paid off. So that's going to free up a bunch of money. You do know where your money's going. It wouldn't take you long to build your every dollar budget because you've got most of the numbers in your head that are pretty clear. And I still hear room in this. I still hear room in what you've got. But what you've done is you've been focusing on the heartache of a custody battle, and you've been focusing every single dollar that you could towards that, and that's been a valid distraction for a year.

1:29:35Dave Ramsey:And now that distraction has passed because you lost, and now you know where you stand, and now you've got to turn around and focus back on cleaning up your mess. but you really weren't working on the mess before, and so it was sitting there or getting bigger, and now you can work on it. I think you're going to be okay. Well, my question really truly is, like, now should I get out of the debt settlement program and pay the$603 that I paid them and just pay my creditors directly? Probably. you can do what they're doing on your own without tanking your financial world because they told you to stop making payments it goes into collections and they try to settle i've already done yeah i've done that for about it i've been doing because i did it i've done it like twice now i've gone through different programs but i've been doing it for about two years yeah you keep looking for one of these programs to straighten you out and you got to straighten you out and that's kind of where it's like i've never really had any real instruction on you know how to put money away while trying to pay off those well you don't need to put money away we need to clean up the debt that's and then don't go into any more debt yeah first thing is don't borrow more the second thing is we're going to get on a detailed written budget we're going to give you every dollar our budgeting app once you sit down tonight and fill it all out.

1:31:03Dave Ramsey:It's really not hard. I mean, I actually have that. Okay. We'll start using it tonight. It's going to guide you through step by step exactly what to do and how to build that out and then stick to it. And you make enough to pay all these bills and extra on these bills and get rid of them, particularly when you get your car paid off. That's going to free up another 500 bucks a month to be able to attack this stuff with. And then if you want to stay in the debt settlement thing until you get this moving, that's fine. If you want to step out of it, that's fine. If you want to check with Guardian Litigation, they're a different type of program, but they do similar thing.

1:31:43Dave Ramsey:They don't work the same way that we endorse. You could talk to them and see what they can do. But I think more than anything, you've got to take control of this. And you've been focusing your energies emotionally, spiritually, financially on other things. And that's valid because it was a kid, and you need to take care of that kind of stuff first. But now, now we know where we stand, and now it's time to focus on the best dad you can be, and that is cleaning up your life and getting this mess cleaned up. Because, dude, if you didn't have any payments, you'd have money to stack. You've got serious payments going around that place from everywhere.

1:32:19Dave Ramsey:And no, we're not waiting 30 years to pay off those stupid student loans. They're just the last thing we're going to get to. When you get to them, knock them out too. List your debts, smallest to largest, pay minimum payments on everything but the little one, and attack the little one with a vengeance. So hang on. I'll send you a copy of the Total Money Makeover book also, which shows you exactly how to do this stuff. And you can read it to go with your EveryDollar app, and you'll be fine. And you call us back if you want more help. But more than anything, it's focus and being very intentional.

1:32:52Dave Ramsey:And I think you can do it with the numbers you gave me. You really do know where you stand, and that's pretty stinking cool. All right, Junior is with us in Atlanta. Hi, Junior. How are you? Hey, I'm doing well. How are you? Better than I deserve. How can I help? Doing well, doing well. So the reason why I'm calling is because a couple of years ago, we went through Hurricane Helene. And unfortunately, with Hurricane Helene, we had a couple of things that ended up happening with devastation to our home and our property. In Atlanta? It's in Augusta. Augusta hit us hard. Oh, okay. Yeah. Yeah. So in Augusta, we got hit pretty hard with Hurricane Helene and, you know, our roof, our deck, again, our fence.

1:33:51And now we had a power surge ended up messing up our AC unit. Fast forward, we've been doing Band-Aid repairs. Did you not get an insurance settlement at the time? So we tried to go through the insurance. At the time, we had Allstate. And Allstate told us that we had a clause that any typhoon, cyclone, or hurricane-related damage was a 10 % deductible of the entire dwelling coverage. My home's value is about$360 ,000. So out of pocket, they wanted us to come out first,$36 ,000, roughly. and... So what's it going to cost you out of pocket now if you do it on your own? To do all the repairs on our own?

1:34:46Well, right now we're going through getting all the estimates for everything that needs to be done. Thankfully, we've been approved and I say thankfully lightly because... For a loan?

1:34:59Dave Ramsey:Uh-uh. Hang on. We'll be right back with you. We're going to make sure we get all the details and we'll be back with you in a minute.

1:35:28Dave Ramsey:All right, let's cut to the chase. It's easy to get discouraged about crazy house prices and interest rates. But when you have the right real estate agent to help you buy and sell the right way, you'll have confidence to make smart decisions. Ramsey Trusted Agents aren't just experts who guide you through buying or selling. They're people you can trust to have your back from the first call to closing day. Find a Ramsey Trusted Agent near you at RamseySolutions.com slash agent. That's RamseySolutions.com slash agent.

1:36:18Dave Ramsey:All right. We're talking with Junior. He's got a house in Augusta, Georgia. It was damaged by Hurricane Elaine a couple of years ago. Allstate doesn't pay out on typhoons and hurricanes, he discovered after the fact. So I'm guessing you have different insurance now that you figured out Allstate's not a good idea. And they pay out, but they wanted a 10 % deductible of$30 ,000 on a$300 ,000 house. So now he's got all these repairs that still remain undone, and that's about how far we got in the discussion. Does that sound right, Junior? Yes, sir, that's correct. Okay, so what repairs remain to be done today?

1:36:59We are still getting an inspection on our roof. Um, thankfully, uh, one person mentioned that it's looking good. They still need to go into the, uh, into the attic. Um, I need to replace an AC unit. Our deck is completely done for. Um, and it's only deteriorated over the past year and a half.

1:37:20Dave Ramsey:So the AC has never been fixed since the hurricane? It's been, we've had a couple of band-aid fixes and then finally the condenser's finally gone out. and they said that all that's left to be done now is to... So you've got to put a new heat and air unit on it and you need a new deck. Correct. And that's what we need. Correct. Okay, and the deck has been that way for two years and the heat and air unit just finally gave up the ghost after some Band-Aids. So have you gotten three or four bids on the heat and air unit? Yes, sir. And let's see what do those bids look like. What do they look like?

1:37:57Yeah, we're averaging$10 ,000,$11 ,000, just depending on what the type of the air unit is.

1:38:06Dave Ramsey:Yeah, and what's your household income, sir? We're at about$175 ,000 between my wife and I. Okay, so why can you not come up with$10 ,000 making$175 ,000? Well, the reason why is because since the hurricane, we've had two major life events in the past couple of years. So one, my grandfather passed, which anyways, we had some major expenses come out of that. Unfortunately, we've also had some just mal-money management. So we're currently in debt, what we truly never have been as far as credit card debt goes. So how much debt do you have? We've got about$30 ,000 in debt right now. So why can you not come up with$10 ,000 with$30 ,000 in debt making$175 ,000.

1:38:58Dave Ramsey:$175 ,000, man, really? Are you taking home$10 ,000 a month? No. So after all our taxes are taken out, our take-home is probably about, I want to say maybe about$6 ,000,$5 ,000. No, it's not. You're taking home$72 ,000 out of$175 ,000? No, there's not$100 ,000 worth of taxes. Nope. Are you putting money in your 401k? No. We stopped that. How much are you taking health insurance out? What else is coming out of your check? Yeah, so health insurance is coming out. So we do owe on two vehicles. Out of your check? I'm sorry. My apologies. I'm pointing out the monthly expenses. I'm talking about what hits your bank account.

1:39:49Dave Ramsey:Here's the thing. $175 ,000. That's$15 ,000 a month. Okay? You with me? Yeah. Minus taxes, you should be coming home with$12 ,000. And$12 ,000 minus your house payment, you should be able to save up$10 ,000 and fix your heat and air. but you guys are just running in circles chasing your tail instead of getting on a system and making these these dollars behave as you said mal handling right yes sir yeah and so you got that that's how you ended up with thirty thousand dollars in debt i'm sorry your grandfather passed but that didn't cost you any money did it um well the overnight um travel for the family and just a few hundred bucks or something but it really wasn't i mean it's not it was a it was heartbreaking and it's tragic i don't i'm not not diminishing that but we don't confuse those things with the math impact so you make enough money to have cleaned up this mess long ago and that's what you should do you should cash flow the heating and air, and then you should begin to work on paying down your debt and talking about putting together some money to fix the deck and out of your monthly income.

1:41:19Dave Ramsey:And are you getting a big tax refund every year? Yes. Okay. I thought you might be. So you probably need to look at that. You probably have too much coming out of your check and you're getting it back at the end of the year. Correct. We claim zero. Okay. All year round. What was your refund this year? This year, being the biggest one that it's been, yeah, this year was about$9 ,000. Okay. Where did that go? So we still have it in a savings. So you can almost cash flow the AC unit. So use it to buy a heat and air unit. Why are you getting approved for loans? Well, this one was through the SBA. The loan?

1:42:04So, correct.

1:42:06Dave Ramsey:I don't care what it's through. I don't care if it's through your mama. You don't need a loan. You have the money in your bank account to buy heating and air. Go fix the heating and air and start getting the money that you have coming into the house. And you need to change your take-home pay by$700 a month. Now. And that's the minimum you need to change it by. So at least that, and go in and change your, go in tomorrow at work, tell payroll you need an extra$700 a month coming out of your check, pull the money out of your savings, order a heat and air unit, call the guy and tell him if it's cash, what's the discount?

1:42:51Dave Ramsey:Because I'm going to give you cash, like Benjamins. What's the discount? And I want a discount. I want you to get over here and get this thing fixed now. Then I want you to get four bids on the deck, and I want you to find some guy at your church that's looking for work that knows how to build decks and get him to build the deck for you at a deal and he gets work and you get to use some money to do that and you got$700 a month now to put towards fixing that deck and then you start getting rid of these credit cards you get them out and chop them up so you just got to sit down by the way you eat an elephant is a bite at a time you list these different things out that are going on and you fix them one fix that one then fix that one then fix that one then fix that one and you've been very passive and stood back and all of this has happened to you and you're being a perpetual freaking victim and you need to stop it man it's killing you i mean i talked to you for seven eight minutes before you finally revealed to me you have the money in your savings account to buy your heating and air you buried the lead that's how screwed up your brain is right now so dig into this stuff man dig into it and get it laid out like it was your job because it is your job.

1:44:00Dave Ramsey:That's what you got to do. Anna is in New York. Hey, Anna, what's up? Hey, George and Dave. Very excited to be speaking to you guys today. So I recently learned earlier today that my husband was hiding, I would say hiding, not being fully honest with$40 ,000 worth of credit card debt. And I am unsure how to proceed in both our relationship and paying it off. Wow. You're being very calm. I'm trying. Is he alive? Why did he do this? Let him out of the closet, Anna. You can't lock him in the closet. That's illegal.

1:44:47Dave Ramsey:Oh, my gosh. Wow. Well, you rebuild trust one brick at a time by being trustworthy. and so it's not instantaneous and it's not a system and there's not a switch you flip. So he has violated trust, whether he did it because of shame and didn't want to tell you about it or deception, which is even worse. Either way. I think it's the former. Yeah, either way, he regains trust by being extremely transparent, both of you getting on the same page, and every single transaction is in front of both of you for the rest of your lives. And then you sit down and you go, okay, with our income, how are we going to pay off this $40 ,000?

1:45:30Dave Ramsey:We're going to cut up a stupid card and we're going to attack it and knock it out as fast as we possibly can.

1:46:02Dave Ramsey:Hey, guys. Dave Ramsey here. Every day on this show, we help people work through real money problems and figure out what to do next. Now, you can get that same kind of help anytime with Ask Ramsey. Ask your money question and get answers built on Ramsey principles we use on the show. Whether you're making a decision or just want something explained, Ask Ramsey is here to help. It's fast, simple, and free to use. Go to RamseySolutions.com and try Ask Ramsey today. That's RamseySolutions.com.

1:46:53Dave Ramsey:Well, we love debt-free screams. We love debt-free screams on the debt-free stage in the Ramsey Solutions lobby. We especially love them when it's our own team members. So Gabe is with us. Gabe Fox is a copywriter here at Ramsey Solutions. He's been with us for a whole year over in the Ramsey Trusted area, and he's up here to do his debt-free scream. Did I get all that right, Gabe? That's correct. Absolutely. Very cool. So when you moved here, did you move here from somewhere else? I did, yeah. From where? From Texas. All right. And you came here to take this job? I did. Yes, sir. Okay. And how much debt did you have?

1:47:27Dave Ramsey:I had$26 ,469. Okay. And that's been one year you paid it off then? 21 months. 21 months. Okay. So since you've been here, it's been half of that roughly. Yeah. Okay. Cool. Very cool. And we don't ask incomes on team members because he's got 50 of his friends that work with him standing around here. Don't make it weird. Not fair and awkward. Okay. So anyway, what kind of debt was the$26 ,000? Completely student loans. Okay. And your degree is in? It's called integrated studies with a minor in business. Okay. Very good. Perfect for being a copywriter at Ramsey Trusted. That's right. No question.

1:48:03Dave Ramsey:Good. Okay. So before you came here, had you just graduated? Is that what the 21 months is? No, I moved home for a year, I graduated in 2024, moved back to Texas for a year, and then I moved here. Okay. All right. And so this was your second job, I guess, after college then? Correct. Okay, cool. And so how did you, because you started this get out of debt process a year before you came to work here? Correct. I did. And how did you find Ramsey at that point? So I graduated in 2024, moved back home to work a copywriting job for a Christian TV network back there. And right before graduating, one of my buddies is sitting over there.

1:48:41He was like, dude, I was just becoming familiar with Ramsey. I'd heard about FPU and a few other books. And he's like, dude, I think that might be something that you should take. And I'm like, honestly, I think you're right. So signed up for it, started taking it. It fired me up. Financial Peace. Correct. Okay.

1:48:59Dave Ramsey:Went to Financial Peace University. Correct. And freshly graduated from college, freshly minted. Right. Yeah. A little, like two weeks later, bought it and started taking it. Wow. Okay. And so from then on, there's no looking back. Correct. Yeah. Yeah, because once we suck you into that portal, you're going to do it. Oh, for sure. Oh, for sure. And then once you got here, did it put things into high gear for you? What changed once you landed at Ramsey? Lots of shaming. We shamed them. We shamed them at length until they pay off their debt. Well, people think we don't even hire you unless you're debt free.

1:49:27Guilt trip. And I could tell them it's a lie.

1:49:28Dave Ramsey:Lots of guilt tripping. No, I'm being sarcastic. There's a lot of encouragement really in there. Oh, absolutely, yeah. My whole team was encouraging me. They knew where I was at. My whole onboarding team walked me through this and encouraged me to do the Deft Rescream. And it was just so encouraging to have people alongside me that, one, had their own stories. A lot of people here have paid off their own debt and were just in it with me daily and catching up with me and taking me to the end. Very cool. So other than the Ramsey team that you sit with every day, who was cheering you on? I've got four friends over here.

1:50:02Yeah. Went to college with two of them, and they were with me from the very beginning when I realized, guys, I've got$26 ,000 to pay off, and I have a decision right now that could really impact my future, and not only my future but my family's future. If I go ahead and deal with this now, and they just sat me down and sent me straight and said, Gabe, this is the time to deal with this. And I said, you know what, you're right. So I decided to do it.

1:50:30Dave Ramsey:Boom, game on. I love it. So mom and dad sharing you on too, I'm sure. A hundred percent. Yeah. They let me live at home for a year. And I mean, that freed up so much money for me to send to the debt. Massive shout out to them. Such a generous offer. Very cool. Very cool. Good for you, man. And then you've been here a year and finished off the thing 21 months total for$26 ,000. Okay. Now you write copy for Ramsey Trusted. Which area in Ramsey Trusted? Protections. Protections. Okay. So for insurance. Correct. for those of you that don't know, out there. And so you're kind of immersed in this stuff every day.

1:51:06Dave Ramsey:But now when you're personally doing this and your buddy from college calls up and says, hey, what's the secret? What did you do to get out of debt? What do you tell him? That's a great question. I think the idea of ownership, just realizing that this is mine to deal with. I could look away and I could just act like it's not there for 30 years and look back and it's grown to be much larger than it was in the first place. Or I can decide that I have a decision, an opportunity to transform my family tree, my family's financial legacy. Both are hard. Both are hard in different ways. But I think hard things are worth doing.

1:51:47And this was a hard thing worth doing. I decided that this decision is going to change my life forever. And just deciding that taking ownership is so worth it. But that would be a message that I would share with anybody, teaching them to take ownership.

1:52:04Dave Ramsey:Okay, so for all you people out there that when I say there's awesome Gen Zs and a bunch of them work here, you just heard it. Okay? You just heard it. That was a complete mic drop. That's a good hire right there. That's a complete mic drop. I see myself in your story, Gabe, because when I started here, I was 23, 36 grand in student loan debt. And we did good to get a continuous sentence out of you. That's true. I was on the struggle bus back then. He just preached a sermon. Gabe's a stud from day one. It took me a while to blossom, but I just I love that story because I go, OK, he's on this trajectory to be a baby steps millionaire now, probably in your 30s if you continue down this path sooner.

1:52:41And so it just encourages me that we're going to see a whole new generation of Gabes who go, I'm not going to wait on the government or student loan forgiveness or make it someone else's problem. I'm going to look in the mirror and go, I can clean this up. I own this. I'm not a victim. Yeah, and in 21 months, it's done. Most people go 21 years in mediocrity hoping that someone else changes their life, and you decided it's my job.

1:53:02Dave Ramsey:Yeah, amen, amen. Well done, sir. Thank you. Very proud of you. The gang is very proud of you. Got a few hundred people. Is anybody working anymore, Dave? Does anybody work here anymore? They all come out and watch Debt Free Screams. I love it. Gabe Fox, copywriter for Protections and Ramsey Trust, had been with us for the last year. But 21 months ago, he started Financial Peace University, started the process, and he's now paid off$26 ,000. Debt-free Gen Z, ready to rock and roll. Count it down. Let's hear a great debt-free scream. Three, two, one. I'm debt-free! Yeah! Whoop, whoop, whoop, whoop, whoop, whoop, whoop, whoop, whoop.

1:53:45The crowd goes wild.

1:53:46Dave Ramsey:Yeah! That's pretty cool. Man. I loved his answer. Ownership. Own it. I did it. I got to fix it. I own it. Personal responsibility. You call it whatever you want to call it. But I mean, that at any age, once you look in the mirror and you go, you're the freaking problem and you're the solution, your life has changed. But until you look in the mirror and you say that to you, you're going to struggle the rest of your life. And getting people to do this at any age group, that's an emotional maturity, a spiritual maturity that is necessary to just have a world-class impact on things. Yeah. I mean, if he can do this with money, now he's going, I can take ownership in every other area of my life.

1:54:31And so it really gives you agency, maybe for the first time, to go, I can affect change in every other area. That's encouraging.

1:54:38Dave Ramsey:I'm not going to wait 30 years to pay off my student loans. I'm not going to wait on the government or Biden to forgive my student loan debt. I'm not going to just knock it out. Just draw back and smack it in the head, man. Just go, you, you're going down. I own you. You don't own me. And when you get that going, you get that thing going, you understand the borrower is slave to the lender. And I don't need any more masters. I am so done with masters. I'm so done with people telling me freaking what to do. What's in your wallet? Jump off a cliff. I don't want to care what's in my wallet. What's in your wallet?

1:55:13Dave Ramsey:Millions of dollars for doing them stupid ads. That's what's in your wallet. So, no, we don't want to listen to some broke actor. This is not, no, no, no, no. I'm not living like this anymore. Ford Motor Company, keep it. We don't need a payment, you know? No, no. It changes everything when you take that ownership. I love this guy. Yeah, when you have that level of focus, just for a short time, in an ADD culture, you'll be shocked at how far it'll take you. Just being focused on one thing at one time, you will get so much done and be so successful. Yeah, but it starts with this idea of spiritual ownership.

1:55:46Dave Ramsey:and Gabe nailed it. So proud of you, Gabe. I love it, man. Glad you're on the team. Man, we're definitely proud of you. Glad you're here. Yes, yes, yes, yes. This is how it works, ladies and gentlemen.

1:56:17Thank you.

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1:57:39Dave Ramsey:Our scripture of the day, 2 Corinthians 4, 8, and 9. We are hard-pressed on every side, but not crushed. Perplexed, but not in despair. persecuted but not abandoned, struck down but not destroyed. Aretha Franklin said, It's the rough side of the mountain that's the easiest to climb. The smooth side doesn't have anything for you to hang on to. Which makes a good point. Not bad, not bad. Hey, the right insurance acts as a shield around your loved ones and your wallet if disaster strikes. Our free insurance coverage checkup helps you figure out if you have the right coverage by giving you a personalized action plan with clear next steps.

1:58:21Dave Ramsey:RamseySolutions.com slash checkup is where you go to get the free coverage checkup. And be sure you do that. RamseySolutions.com slash checkup. Andrew is in San Francisco. Hi, Andrew. How are you? Hi. Good. How are you doing, Dave? Better than I deserve. What's up? Good, good. Just kind of calling about an issue I got myself into. A little bit of a backstory. About two or three years ago, I put myself in a bit of a hole. I had a very good financial year for myself, and then I lost someone who meant very much to me, a good friend. I decided then to take the money that I had after becoming debt-free and buying a car.

1:59:02You know, I went to spoil myself route to feel better. I now have a remainder of a balance of$34 ,000 on a car loan at a horrible interest with a$795 car payment per month, not including insurance and the rest. I also have about$5 ,900 in credit card debt included with about$7 ,000 in personal loans debt. And I have a baby coming up that is due in August. Cool.

1:59:32Dave Ramsey:How long have you been married? I am not married. Okay. What does your fiancé make? She's actually a stay-at-home mom. Okay. All right. And how old are you? 23 years old. Okay. One more time, tell me what you make. I make$83 ,000 a year gross. Doing what? It sums up to about— What do you do? I work in sales. Okay. All right. Cool. All right. Fun. Okay. Okay. Well, you're probably going to get a little more than you asked for on this call, but I'm going to try to love you well. If you were – my son is 10 years older than you, but if you were my kid, here's what I would tell you, okay? The data tells us that people that are married and work together have higher net worths and higher income and live longer than people who are not.

2:00:30Dave Ramsey:This is statistical data. Okay. So when we study millionaires, we find almost none of them shacked up. Almost all of them are married is what we find. That's the data. Okay. So it's a financial advantage, a relational advantage, an advantage for your child, a legal advantage for your wife because she has some protections then. and so my first recommendation to you would be to get married Saturday. That's my first recommendation, okay, to help you move forward and build your family, and let's go from here. Then you've got$5 ,900 in credit card debt and$34 ,000 on a car, and you make$83 ,000. Is that your only debts?

2:01:18Those are my only debts along with the credit card debt. Yeah, credit card debt, personal loans, which was$7 ,000, and the car loan. Okay, personal loans as well.

2:01:28Dave Ramsey:Who are the personal loans to? Me. Okay. No, I mean, who did you borrow them from? Oh, it was an online company called Upstart. Oh, crap. So this is like a payday lender type thing. Not necessarily. Yeah, but it's crappy interest rate, yeah. It's horrible interest rate. Yeah, that's the one I remember. What's the car worth? Car is worth an estimated of about$30 ,000. So I've already looked into getting rid of it. I'm about$4 ,000 upside down. Okay, good. Good. Okay. So I think I would scratch up the$4 ,000 first, pay minimum payments on the other stuff. Let's get rid of the car and get you a$2 ,000 or$3 ,000 car that you pay cash for.

2:02:13Dave Ramsey:Getting rid of that car mistake does two things. One, obviously the mathematics are horrible. The interest rate and all of that, the payment's crazy, all that stuff. It's dragging you down. But the other thing is that car is tied to pain. It's tied to psychological trauma for you. So every time you get in it, every time you write a check for it, you know I got ripped off because my heart was broken and I made a bad decision. And it's a reminder of that. I'd want that reminder out of my life. Am I right? Yes. Yeah. And with that, an$800 a month raise. Yeah. Yeah. So the first thing I'm going to do is pay minimums or just quit paying the$7 ,000.

2:02:58Dave Ramsey:I don't care. It doesn't matter to me. But I want you to get rid of the car by scratching up$4 ,000 working overtime. You got anything you can sell? Do you have any money saved? I don't have any money saved. I've been trying to work continuously to save up a little bit extra money on the side. How old is the baby? The baby isn't here yet, luckily. So we're due in August. Oh, great. Okay, so you can get married before that. That's even better. Okay, that's very helpful to the data. Okay, good. Yeah, well, I mean, anything she can do to earn money until the baby comes, I know she's in her third trimester.

2:03:34Dave Ramsey:I'm not trying to put her in the salt mines. But if anything she can do to earn money, it adds flavor to this, right? Because here's the deal. The faster we get rid of this car, we got$800, and then the two of us sit down. We do a tight budget. We work what we, and then all we got to do is just, you know, knock out like 10, 15 ,000 bucks and you can do that in a few months. Yes. Because most of this debt isn't tied up in this car. Think about what it would be like to get to Christmas and have zero debt. Man, it would feel good. Yeah, that's what I want for you. And a new baby and a new wife, life is good.

2:04:08Dave Ramsey:I'm smiling right now. Now we're moving forward. I like this a lot. and you've learned your lesson at 23 to never go on one of these rip-off interest rate personal loan sites. Like, you got screwed. And you got screwed on the car, too. Yes, I did. It was a very bad decision that I've been living with. The good news is you got the whole rest of your life to never get screwed again because now you know what it looks like. You go, I'm not signing up for that. I don't care what you do. You can do whatever you want to do. I'm not signing up for that. You can have a gun. I'm not signing up for that ever.

2:04:40Dave Ramsey:Again, I'm not going to let myself get screwed ever again. You got a beautiful life ahead of you. You're only 23. I went broke when I was 28 and filed bankruptcy. I've had a beautiful life since then because I learned a lot of stupid stuff about myself during that time. And there's a lot of stuff I never do again. You know, you got a great thing going here. I'm so proud of you, young man. You're going to be great. This is going to be so good for you. All right. I'm going to give you a wedding gift. Ooh, so kind. I'm going to give you a copy of George's book. Oh, perfect. Yeah. Happy to give that away.

2:05:09Dave Ramsey:And a copy of the Total Money Makeover book, since you and I are the ones that took the call. And the baby's going to have a mommy and a daddy, and they make$85 ,000 a year, and he's 23 years old. And he's going to get rid of people screwing him. All these car companies, all these payday lender types. What was it? Upstart. Upstart this. Yeah. Upstart just had 30 million people say you suck. Upstart, I hope you heard that. We just told 30 million people you suck. You screwed a 23-year-old kid, and you deserve for everybody in America. Oh, and I bet their marketing is like, we're the lifeline. We'll give you the financial freedom you need.

2:05:49Dave Ramsey:Their marketing is like, we suck, but come do it anyway. We'll screw you, but come see us anyway. That's their marketing line. It's like SoFi, right? Yeah. We have a stadium. Who do you think paid for that? You and your interests. You and you and you and you. They're people that we help. Oh, my goodness. We're helpful. That's what we are. Oh, man, I'll tell you what. The villains are run amok in this cartoon. Well, it's funny. The villains will happily show up in your life when you're so desperate, and they'll act like they're the hero. That's the scary part. We're here to help. You'll get an Instagram ad going, oh, finally, relief is here.

2:06:23No, that's not relief. That's 600 % interest on your payday loan. Relief is when I get upstart out of my life.

2:06:32Dave Ramsey:Unless you're selling hemorrhoid cream. What a name. We don't want relief. What a name. shame you people ought to be i bet your mother's a shame to you if you work at upstart oh my gosh wow hey hang on uh andrew we're gonna give you a couple wedding gifts and congratulations on your wedding this weekend that's exciting i love that dave just planned the wedding for you the man should be in the wedding planning totally assumptive clothes yes no question i wonder how many people you've convinced to get married that otherwise wouldn't have that's a beautiful thing it's a wonderful thing and you're not even ordained i don't think Not yet.

2:07:03Dave Ramsey:You never know. You never know. I'm a lot of things, but that's not one of them. 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.