If Nothing Changes Your Money Won't Change

9:23Dave Ramsey:Yeah, that's right. You need 10 to 12 times your income in coverage. No gimmicks, no whole life junk, just straightforward term life protection. But there's another piece that people often overlook and that's long-term disability insurance.

9:40Rachel Cruze:Yeah, it's important to understand the difference between them. Life insurance steps in when you die. Disability insurance steps in while you're alive but can't work. So it replaces a large part of your income so the bills still get paid while you get back on your feet.

9:53Dave Ramsey:Now if your employer gives you free disability insurance, great, take it. If it's discounted there at a better price, take it. But if not, Xander can help you find the right plan. Whether you're single or married, it's not optional. If you're going to be out of work for a while, then you need to make sure the money's still showing up. And that's why Zander is our go-to. They make it super simple to get the right coverage at the best price, no pressure, no upselling. I've trusted Jeff Zander and Zander Insurance for over 25 years, and so has my family. So don't wait. It's fast, it's easy, and it could make all the difference.

10:28Dave Ramsey:Go to Zander.com or call 800-356-4282. Protect yourself, protect your income, protect your family.

10:43Dave Ramsey:If you have a simple tax situation, like you haven't had any major life changes or big investments, use Ramsey Smart Tax. It's really affordable, makes filing super simple, and it has built-in support in case you need a little help. Ramsey Smart Tax. Filing early means you get the best deals and you get that tax stress off your shoulders. So as soon as you get all your tax documents, go to RamseySolutions.com slash smart tax and file quickly, easily, and affordably. Oscar is with us in Orlando. Hi, Oscar. How are you? Hey, I'm doing good. How are you? Better than I deserve. What's up? That's good.

11:20Rachel Cruze:So I currently have$2 ,000 in debt, me and my wife. That's her credit card debt. I also have that one's at a 17 % interest rate. I also have$3 ,053-ish at a 30 % interest rate on one of my credit cards, and then$1 ,200 on another credit card at 0 % interest rate, and$2 ,800 in collections currently. And I also have my wife's car, which owes$10 ,000. and we currently are at 27 % interest rate, and I have$8 ,100 cash.

12:06Dave Ramsey:Wait, wait, wait, wait, you have how much cash? $8 ,800. Wow, okay. All right.

12:13Rachel Cruze:So I don't know what I should do with it. Rather pay off the car, because then I could pay it off within a month, and we've been making payments on it for three years now, and we already gave$8 ,000 towards the original$13 ,000 debt towards it. So I kind of just want to get rid of it. That way I don't have those extra$500 I can put towards my savings and then pay off the other debt. So how old are you guys? I'm 20 and my wife's 21.

12:44Dave Ramsey:Wow, okay. And what's your household income, sir?

12:50Rachel Cruze:Right now, my take-home is$1 ,300 biweekly.

12:55Dave Ramsey:Okay. All right. Say that how much again?

13:00Rachel Cruze:That's$2 ,600 a month.

13:02Dave Ramsey:Okay. Does your wife work? No. Why?

13:08Rachel Cruze:She's at home watching the kids.

13:09Dave Ramsey:Oh, how many kids have you got?

13:12Rachel Cruze:I got one.

13:13Dave Ramsey:Okay. And$2 ,600 a month is your income?

13:18Rachel Cruze:Correct.

13:19Dave Ramsey:And you're working 40 hours?

13:22Rachel Cruze:Yeah. Sometimes 37, sometimes 40. Once I get my promotion, I'll be working 50, and then my income will jump up.

13:29Dave Ramsey:When is that?

13:30Rachel Cruze:Because I just got a new job. That's probably in about two more months. What are you doing, Oscar, for work? Manage the Chipotle. Okay.

13:39Dave Ramsey:Because you're not making any money. Yeah. All right.

13:43Rachel Cruze:Are you guys able to pay rent? How much is your rent or mortgage? So currently, we're living with her parents. Oh, okay. Because my collections is on the other apartment I had when I used to sell cars. I used to make like$4 ,000 to$5 ,000 a month, but I got another job, and I'm trying to change my career path and just get more steady income.

14:04Dave Ramsey:I don't mind if it's not steady if you're making twice what you're making now.

14:09Rachel Cruze:Yeah. I didn't like it either.

14:12Dave Ramsey:Oh, okay. There's that. Yeah. That's the biggest thing. So have you kind of, I mean, just listening to your situation and your story, you're 20 years old with a baby. You live with her parents. You make$2 ,600 a month, and you apparently don't read anything before you sign debt because you've got some of the worst debt products on the planet. I mean, everything you had was north of 20%. Like, do you like say, come over here. I like getting screwed. I mean, you, like, signed up for everything possible that was horrible. How do you do that?

14:51Rachel Cruze:So my credit cards that I got, I paid the rent from my last apartment that I had with it once I lost my job because there was a job that I had lined up that I didn't get, and that kind of messed me up, so I just used my credit card to pay it. And then as far as the car, I told her not to do it because I was working out of the car dealership and I was able to get her a better deal. but it was a rough time.

15:16Dave Ramsey:Yeah, I mean, like you guys need to figure out a different way of looking at life so you don't sign up for anything ever that looks like this again because you're getting tattooed by everybody on the planet. I never saw anything like this. This is a mess. Okay, so the bad news is you don't make a lot of money and you've got some debt. The good news is$20 ,000 makes you debt-free. Yeah. Completely debt-free. You need$20 ,000. And you have$8 ,800. So really,$10 ,000 makes you debt-free. And you're only working 40 hours. So you need to be working an additional 40 hours starting right now somewhere else in addition to what you have now.

16:04Dave Ramsey:You need two more part-time jobs. and you need to pile up some money so you can get out of your mother-in-law's house.

16:11Rachel Cruze:Yeah, make it a goal, Oscar, to make an extra two grand a month, whether it's Uber Eats, like whatever it is, that you're just doing something.

16:18Dave Ramsey:I would list my debts smallest to largest and usually 7 ,800 will clear off almost everything except the car and leave$1 ,000 in your emergency fund. And I would list these debts smallest to largest. So the 1 ,200 is gone, the 2 ,000 is gone, the 2 ,800 is gone. I think the whole$3 ,000 has gone right at it. I'm going to knock out all of those, and all you've got left is the car, and then$2 ,000 a month extra, and you start throwing everything you can at that car, maybe$3 ,000 a month at that car, and you'll be done in two or three, four, five months. Five months max. But you need to create some extra income until this Chipotle promotion comes along because you guys don't make any money.

17:03Dave Ramsey:You're starving to death. OK. And but, yeah, you could clean this up with the money you have in the bank, everything but the car and and then go get three extra jobs and work like a crazy man. But the two of you need to look at each other and go, OK, we have done our last stupid thing. We are not signing up for any more debt. We suck at picking out debt. I mean, 27 % on a car. Good God. I mean, really. And we can't do this and survive. We're going to live at your mother's the rest of our life if we do this. So never again. And the next time I can't pay my rent, I just can't pay my rent. I don't put it on a credit card.

17:50Dave Ramsey:We have to work with the landlord instead of the credit card company. You choose your poison. I don't, I don't, we don't borrow money anymore, Oscar. You guys have, you've stepped in every bear trap known to man.

18:02Rachel Cruze:Yeah. And you guys are young, but honestly, I would sit down with her and look out in five years and say, hey, when we're 26 years old.

18:09Dave Ramsey:Where do we want to be? Yeah.

18:10Rachel Cruze:What's a, what's a dream scenario? What kind of career do I want to be in? What kind of house or area of Orlando we want to live? Like start actually creating some of this like future thinking. And that sometimes does help when there's like a crisis right there in the present, right? Where you're like, nope, that's not getting us to where we want to be. And so it helps you stop. But if you're still on the line, Oscar, we'll have Christian pick up and get you Ken Coleman's book, Find the Work You're Wired to Do. And there's an assessment in the back. And it's very helpful just to start thinking through what you want your career to be so that you can up your income long term throughout your life.

18:44Yeah.

18:44Dave Ramsey:If you're making$4 ,000 a month and you hate it, if you're not doing anything illegal or wrong or unethical, keep making$4 ,000 a month until you find something making$5 ,000 a month that you like. You don't just go, I don't like doing this. I'm going to quit and move in with my mother-in-law. Bad choices. You keep working until you may have something to move to. You don't stop the income flow. And so, yeah, these are the mistakes you've made that have gotten you here. And so what you need to do is assess. When I went broke all those years ago when I was 28, I had to look and say, okay, what was the stupid butt decisions I made, and there were plenty of them that put me in this situation so I don't ever get back in this situation again.

19:29Dave Ramsey:And that's all I'm telling you to do is the same thing I had to do. And you can do it. You can do it. But if you keep doing what you've been doing, you're going to keep getting what you've been getting too. And quit trying to figure out the interest rates on these things other than stay away from them. That's a good plan. So, wow.

19:47Rachel Cruze:Well, just a lot of credit cards and cut up all the credit cards tonight. You listed out three of them for us. Just get rid of Just say, we're going to do something totally different with our money.

19:55Dave Ramsey:Yeah, we're going to be on debit cards and a budget on every dollar. Christian will get you a copy of Ken's book because I don't think you chose Chipotle because it was your dream job. You can't pronounce it. However you say it. Apparently, you don't even need to go there. I don't know. But I don't think you picked that place. I think you just fell into that instead of going, I always wanted to manage a restaurant. I don't think you said that out loud.

20:41Rachel Cruze:This show is sponsored by BetterHelp. I am right here because some extraordinary women in my life, mentors, friends, my wife, my mom, because they're all amazing. And one of the common themes I've heard from all of them is that between the responsibilities and expectations that the world places on them and the expectations they place on themselves, women are under incredible pressure every day. And they're often encouraged to overlook their own emotional wellbeing to care for others. Therapy offers a space for women to learn how to navigate those competing expectations, set healthy boundaries, and communicate what they want and what they need.

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22:09Dave Ramsey:Matt is in Fort Worth, Texas. Hi, Matt. How are you?

22:14Rachel Cruze:Good. How are you doing today?

22:15Dave Ramsey:Better than I deserve. What's up?

22:18Rachel Cruze:So I've been trying to help my mom get out of debt for the past three years. She wants to retire in three years, but I can't get her out of debt for gazelle and tense.

22:28Dave Ramsey:Wait a minute, you're kind of breaking up. Can you get where your phone is still and is working? Try again.

22:35Rachel Cruze:Yeah, I've been trying to help my mom get out of debt for three years, and she's retiring in three years as well, or she wants to, but I can't get her to become gazelle and tense. Okay.

22:48Dave Ramsey:She's broke and staring down the barrel of retiring broke, but won't fix it. Why?

22:56Rachel Cruze:I have no clue. I've asked and I've prodded and I've tried to get her to see how scary it could be retiring with nothing. How old are you? I'm 25.

23:10Dave Ramsey:How old is she?

23:12Rachel Cruze:Turning 60 this year.

23:15Dave Ramsey:Well, she's not going to retire at 63. because she's not going to have any money.

23:19Rachel Cruze:Yeah, she thinks she has a pension plan, but I've already looked and I've been helping her with her finances and I don't see it working for her for covering all her expenses and still her debt. How much debt does she have? Currently$40 ,000 total. Okay, what's it in? $20 ,000 in student loans,$16 ,000 in personal loans from credit cards, and then$4 ,000 in a remaining credit card. Okay. Did she go to school, the student loans? Was that hers, or was it a Parent Plus loan? She was going to school, but she didn't finish her last class, and so these are just the remaining student loans from her own degree.

24:02Dave Ramsey:Okay. So when you sit and say, Mom, this is serious. If you don't fix this, you're going to be up a creek without a paddle. What does she say?

24:12Rachel Cruze:She kind of laughs it off. Yeah.

24:18Rachel Cruze:And we've gone through the baby steps. No, we haven't. You have.

24:24Dave Ramsey:She hasn't done anything except laugh.

24:26Rachel Cruze:Yeah, my wife and I, we've done it, and I tried using that as look at what we've kind of been able to do. You could kind of live like this as well, but I don't know. It's not clicking. Yeah, it's a hard reality when you realize you can't force people to do anything. You can't say the right thing well enough to get them to see this or that. I mean, like there is a point in an adult's life that they have to make a decision on what they're going to do. And she's telling you through her decision making of what she's going to do. And so there's a part, Matt, that I hate to say it. I think you've done everything that you can possibly do to help her.

25:04Dave Ramsey:I probably have one closing conversation. Mom, I'm not going to bring this up again unless you bring it up.

25:10Rachel Cruze:If you need some help, if you want some coaching, fine.

25:12Dave Ramsey:We're here. I'm going to be giving you zero money when you're old. So you probably should figure this out. But I'm not going to beg you to do this stuff anymore. I want you to win with money more than you want to win with money. And I'm through talking to you about this and you laughing when I do it. So we're not going to talk about this subject anymore unless you call me and say, help me. And I will help you by teaching you. I will never help you by giving you money. Period. And then end it. Just drop it. Because you're not making any progress. You're beating your head against a rock. And she's not changing.

25:53Dave Ramsey:She doesn't want your advice. And so one of the things I figured out when I started doing this show years ago is I quit answering questions that people didn't ask. Yes. You know?

26:06Rachel Cruze:Yes, I know.

26:07Dave Ramsey:I quit coming into someone's life and presenting myself as the answer to your questions. Yep, that you're not asking. If you ask a question, I'll help you. I'm obligated then to answer your question, but I'm not going to just walk up to somebody randomly in my life and go, hey, that's stupid.

26:25Rachel Cruze:I know.

26:26Dave Ramsey:But if you ask me, I'll tell you, that's stupid. I love you enough to tell you the truth.

26:31Rachel Cruze:And what's frustrating, Matt, is what you've experienced, you and your wife at 25, of going through the baby steps and doing this and probably paying off debt and having an emergency fund and retirement and you're seeing the progress and you look over at someone you love, like your mom, and you're like, you could be doing this exact same thing. And so the motivation is totally understandable where you're coming from, but you have to understand the result is not, you have no control over that at all, at all. And so there's a part you have to let go. But you start winning,

26:59Dave Ramsey:it's something you want it for the people you love, but you can't make them do it. It's like, I've got a friend that lost a hundred pounds and his wife didn't. And he's frustrated with her and I'm like, dude, you know, that was you just a few years ago. So you decided that you had to make the decision. You have to make it. You can't. Your wife's not going to lose weight because you want her to. She's going to lose weight when she wants to. Nobody got you to lose weight until you wanted to. Same thing. You got to make these choices. You can't. But he feels so much better and he feels his dignity coming back.

27:31Dave Ramsey:You know, his clothing fits, all this kind of stuff. And he wants that for somebody that he loves and he can't. But you can't make somebody else do want something. You can only present to them what it's done for you. This is what's worked for me. You've done that. And then I would have one closing conversation and say, I'm not going to bring this up again. But also be forewarned, I will not be writing you checks because I've tried to help you. And I'm not going to be writing you checks at any point in your life. It's not going to happen. So you should figure this out. This should scare you. Where you are is scary.

28:03Dave Ramsey:And if it doesn't, I can't help you. If you want some coaching, some advice, I'll be happy to show you what we did. I would be honored. I'd be excited to show you what we did. But I'm not going to bring it up again unless you do and just drop it. That's what I would do. And then move on to the next thing. You can't, you know, the problem with most of us is we love somebody. We see them doing something that's hurtful to themselves. And we want them to be healed more than they want to be healed.

28:32Rachel Cruze:Yes.

28:32Dave Ramsey:And we want them to have a quality spiritual walk more than they want to. We want them to lose weight more than they want to. We want them to get out of debt more than they want to. And that's not unusual. Most of us have had that experience. We want something for someone we love more than they want it. And you just kind of have to stand back and go, dadgum, I just can't.

28:54Rachel Cruze:Well, and it's a weird feeling, too. This is always funny saying this, but Matt, as a 25-year-old, is doing better financially than his mom. And when you become an adult and you start to outpace your parents in any level of life, that is a weird feeling. And so, Matt, you're kind of grappling with this, like, I'm more of an adult. I'm like the parent in this situation, right, is how you're probably feeling. And that's a weird role reversal. And you don't have to do that. But that's part of growing up, too, is seeing that and being like, that feels so strange. But I feel like I've passed my parents in whatever the category is in life.

29:29Rachel Cruze:And so that's part of adulthood, too, Matt, with your mom, sadly.

29:33Dave Ramsey:Yeah, that's just part of the thing.

29:36Rachel Cruze:And I was trying to think what category have I passed you in, Dave?

29:39Dave Ramsey:I think you've raised better kids than I did.

29:45Rachel Cruze:That's an insult toward me. Unbelievable. You're better at parenting than I was. No. No. I laugh all the time, though, because sometimes my kids, if they say something to me, I've used this line multiple times. Every parenting expert is probably like, that's terrible. But I always am like, if I ever had said that to Poppin' Mimi growing up, fill in the blank what my consequences would have been.

30:08Dave Ramsey:It would not have gone well for my health.

30:10Rachel Cruze:You all.

30:11Dave Ramsey:Old school parents. Get away.

30:13Rachel Cruze:Yeah, they do. We discipline. But also, y 'all ran a tight ship growing up. Probably tighter than once than I do. But yeah, I'm so funny.

30:23Dave Ramsey:There's all kinds of ways you've passed us up, Rachel. It's okay. It's all good. You just gave me an underhand pitch. I couldn't resist. It was T-ball. That's good. Yeah, the thing is, when you're trying to convince someone in your life that you care about, about all you can do is not tell them what they're doing wrong. Instead, just show them what you've done. And I can't tell you how many things you can do to fix your life, but I can say this is what I did and I feel this way now. I had this experience. No one can take your experience away from you. So just tell people your story.

30:58Rachel Cruze:And in the marriage context, Dr. John Zalone talks about this all the time. When you're trying to get your spouse on board, use I statements versus you. Well, you're doing this, you're doing this. Yeah. So much about your story and what's going on inside of you is going to be the thing that's going to possibly move someone to a different action, but also it puts the self-responsibility on you and not that you're trying to implement and change someone else. because at the end of the day, you're not going to be able to.

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32:31Rachel Cruze:And many members save hundreds of dollars a month compared to traditional health insurance. And that margin gives you breathing room when you're working the baby steps and trying to steward your money well. And right now, CHM's offering new members a 50 % credit towards their first month of membership. Get started at chministries.org slash budget and use promo code Ramsey. That's chministries.org slash budget and promo code Ramsey.

33:13Dave Ramsey:Jimmy is in Atlanta. Hi, Jimmy. Welcome to the Ramsey Show. I appreciate you taking my call. Sure, what's up?

33:47Dave Ramsey:remodeled completely, and I've already remodeled two out of my pocket.

33:52Rachel Cruze:Total value of the property is about 2.2, and I have just under$400 ,000 in a money market. And I've bought two houses, the last two I paid cash for, and I've remodeled them out of my pocket. My question is, your thoughts on these DSCR loans, because I'm considered doing one of those. And remodeled them with it, too.

34:15Dave Ramsey:Yeah. Well, I don't teach people to borrow money, Jimmy, because I have found that the fastest way to wealth is to get out of debt and stay out of debt, and that's why you've worked so hard to be out of debt. And so you have$400 ,000 that you can do the remodel with. Yeah, but I've seen that going down from about$7 ,000 to$4 ,000. Because you've been doing remodels. Correct. And your net worth didn't go down. Your net worth went up because the value of the property went up because you remodeled it by more than the cost of the remodel.

34:53Rachel Cruze:Well, the last two houses, the$400 ,000 houses, I paid$120 ,000 for one and$150 ,000 for one. And I've got two more that I could possibly pick up, too, and that's why I was going to hang on to my cash and use one of these to remodel the other two.

35:06Dave Ramsey:I'm not going to tell you to go into debt to buy real estate. I'm not going to tell you to go into debt for anything. I own several hundred million dollars worth of real estate, and 100 % of it is paid for, and we remodel 100 % of it with cash or we don't do it. And even if you were going to go into debt, the DSCR loan is not a good loan because it's a higher interest rate than a standard loan. Well, I've been quoted six and three quarters. Yeah, it's a higher interest rate than a standard loan. That's what I just said, yeah. And so, yeah, it's not a good bargain. So why are you wanting to pay a subprime rate to borrow money when you have the cash in the bank to do the job?

35:45Dave Ramsey:Absolutely not. I wouldn't do that. I kind of think you're going to, but you asked me, and I wouldn't do it. I would pay cash for the remodel, or I'd dump one of these properties and take the cash out of that and move it around. If some of these properties are not fun and you would rather be in a different property, that's fine. I've got a couple up for sale now. I'm going to do some 1031s on it, do some tax deferred exchanges on some of the properties we've got to resituate some of our portfolio of real estate. You could do some of that, but definitely not going to borrow money. Definitely not.

36:16Rachel Cruze:And you don't need to either, Jimmy. It's not like you don't have anything, right? I mean, it's not like it's, okay, well, we have no money. You have money. So just pause on buying a new property and use that to remodel and up the

36:29Dave Ramsey:other ones or yeah or sell them or dump them and use that money to buy the other ones i don't care but but i there's no way i would tell you to go into debt it's not going to bring your make your dreams come true it's going to make your nightmares come alive lee is with us in uh leah is with us in cincinnati hi leah how are you i'm good how are you better than i deserve what's up

36:53Rachel Cruze:yes so my husband and i we have six-year-old boy-girl twins and when they were born i cut back and i currently only work very part-time and he's the breadwinner and we have term life insurance as you recommend for his salary but my little boy is profoundly autistic so he requires lifelong care if anything were to happen to me should I also have a life insurance policy for the same amount that we have my husband for because he would have to take on that caretaker role and he would no longer be able to do the work that he does yes all stay-at-home

37:40Dave Ramsey:moms that do not create income should have life insurance on them to replace the duties that they have. Yours is accentuated with the autism situation. But still, just the same, when Sharon had littles at home, when Rachel was small, we had life insurance on Sharon because if something happens to Sharon, I got to bring Mary Poppins in so I can work. and I have to pay her. And so then you figure out what the actual marketplace value of a stay-at-home mom is because they do a lot. They tutor. They keep the home clean. They make supper. Laundry. Laundry. They do all this stuff. I mean, there's this huge number of things.

38:28Dave Ramsey:If you have to pay someone to do all of these things, you're going to find out that it's a$40 ,000 or$50 ,000-a-year job.

38:35Rachel Cruze:Would you have a special needs trust for him? Would you? Yes. So we have all of that. We've got everything taken care of. Okay. Yeah. We have the only, we only have our mortgage. That's the only debt we have. Everything we have set up the 529s because I have two other children as well. But my, my life insurance policy is only$25 ,000. Yeah. You need 500 on you. Okay. Or more. I mean, maybe more.

39:02Dave Ramsey:Yeah. 500.

39:02Rachel Cruze:If you're healthy, Leah, and you're young, how old are you? I'm 36. Yeah. It will be so inexpensive. I almost would get it. I mean, I may need more. $500 would create a$50 ,000 income stream that would allow him to hire Mary Poppins to come in and help. I think you're in need more.

39:20Dave Ramsey:But if you want to spend more than that or if you wanted to replace his income, then you would have that amount and have him not working outside the home at all, which is probably not what's going to happen. But could be. could be what's happening. You know, again, if everybody, if you're not overweight and you don't smoke, term life insurance is unbelievably cheap.

39:47Rachel Cruze:Yeah, that's why I almost would just, just for out of safety, because it's not that much more expensive.

39:51Dave Ramsey:Get in touch with Xander and price it out, price out 500, price out a million and just go, okay, what do I want? It's the cost of a pizza for you. It really is. It's Xanderinsurance.com. Just call them. And we've been advertising for them for years. People are blown away at how little life insurance costs. And once you see how little it costs, it's like, why doesn't everybody have good life insurance to take care of their families if something happens to them? Yeah. So, yeah, you're very wise to ask that question. It's a very valid question. And by the way, it works for anyone who's got a stay-at-home situation.

40:27Dave Ramsey:Yours has got an extra twist on it because of the extra challenges you guys have. but it doesn't invalidate the other ones either. So, yeah, do all of that, every bit of it. Very cool stuff. Very cool. Open phones here at 888-825-5225. Jessica is in Kansas City. Right quick, Jessica, what's up?

40:50Rachel Cruze:So I just filed my taxes for 2025, and we owe the IRS about$7 ,000. Do you have$7 ,000? We do not, and we also have a baby on the way.

41:05Dave Ramsey:Do you have any money?

41:10Rachel Cruze:Yes, but we're saving that for when I'm off work. No, honey, you owe the IRS.

41:19Dave Ramsey:You don't get to choose between what you pay the IRS, and then you figure out how to not do that. No way. You do not want them on you. The penalties and the interest you're getting ready to take on make you wish you'd done a payday lender. No, no, no, no, no, no, no. So how much do you have saved for when you take time off?

41:44Rachel Cruze:About$2 ,400.

41:46Dave Ramsey:Okay. And what's your household income?

41:48Rachel Cruze:It's about$120. And why did you miss your taxes that far? um they didn't apparently i they went my job went off the new tax table i don't see that i could see like three thousand being off but not that much so um and i was just trusting that i was getting enough taken out and i didn't look at my pace okay yeah so what i would do

42:22Dave Ramsey:is pay whatever you have towards the IRS, and then I would pay the IRS off as fast as you possibly can, and then very quickly I would start stacking up money for you to take some time off. You make enough money to do all of that, but you're going to do nothing else. Don't talk to me about going out to eat, and don't talk to me about vacations, and don't talk to me about a$10 ,000 nursery for the new baby. You have a freaking tax problem and a savings problem you've got to fix before you do any of that kind of stuff.

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44:30Dave Ramsey:welcome back to the ramsey show in the fair winds credit union studio i'm dave ramsey your host rachel cruz ramsey personality number one best-selling author and my daughter is my co-host today abby is with us in oklahoma city hi abby how are you

44:48Rachel Cruze:Better than I deserve. How are you?

44:50Dave Ramsey:Better than I deserve. What's up?

44:53Rachel Cruze:I know that you say bankruptcy is very, very bad, but I was wondering if there's any situations where it may be the only way out. I am 34. I'm a single mom of two kids, and I am over$90 ,000 in debt. and I bring in about$64 ,000 a year working three jobs. So I feel like I'm drowning, and I've been doing the baby steps for like six months, but really like going in deep with it seriously for about three months, and I just don't see like a way out. And I found out recently when I went to try and get out of my car loan that I'm$17 ,000 upside down. So I just don't know what to do.

45:49Dave Ramsey:I'm sorry. You're scared.

45:51Rachel Cruze:I'm very scared. I have a 13-year-old and a 1-year-old. And my 1-year-old has very complex medical issues.

46:04Dave Ramsey:How much do you owe on your car?

46:07Rachel Cruze:$37 ,000. Okay.

46:10Dave Ramsey:And so you bought a car that you can't afford, and it has made this whole thing happen.

46:15Rachel Cruze:Pretty much, yeah. My car loan is$850 a month. Good God. Oh, my gosh.

46:20Dave Ramsey:And what is the rest of the debt, the other$50 ,000?

46:26Rachel Cruze:So I have$30 ,000 student loans,$13 ,000 medical,$6 ,500 to my grandma,$2 ,200 in a payday loan when I was desperate, and I owe$2 ,300 to my lawyers.

46:39Dave Ramsey:For what?

46:42Rachel Cruze:Child support for my baby.

46:44Dave Ramsey:Is child support coming in? Yes. Okay, good.

46:48Rachel Cruze:We're just still going back and forth because he owes me$26 ,000 in arrears. do you think you'll get that yeah you do okay when will that come do you know um anytime between the next 10 days and if we have to go to trial over it up to a year

47:09Dave Ramsey:but i will 100 get it he has it it's just oh he has it okay he just doesn't want to give it he wants to be told he has to give it okay yeah we'll tell him that's good we can help him with that um yeah all right so uh you owe 37 on your car and someone told you your car is worth 20 like the dealer said that's what they would give you for it i went to 13 different dealerships and the highest i was quoted was 22 yeah okay well that's because they're all buying it at wholesale dealers do not pay retail for a car they sell cars at retail but they buy them at wholesale and so who do you owe the 37 ,000 to?

47:56Rachel Cruze:Santander.

47:57Dave Ramsey:What is that?

47:59Rachel Cruze:It's a bank. A local bank? No, it's one of those will finance anybody deals. Yeah, so your interest rate's 15 %? 16 and a half.

48:12Dave Ramsey:Yeah, okay, I'm sorry.

48:15Rachel Cruze:And I tried, I had good credit when I got this loan, so I don't really know what happened. I know what happens.

48:20Dave Ramsey:You signed a loan that you shouldn't have signed. That's what happened. You allowed them to screw you. Oh, my gosh. You got taken to the cleaners.

48:30Rachel Cruze:I did. My engine was dying on my other car, and I had a newborn baby, and I went in, and they saw a helpless person, and they got me.

48:40Dave Ramsey:Yeah, they got you. They got you coming and going. Okay, so number one, the answer to your question is bankruptcy. is not going to solve your problems. Okay. Because the only way the car goes away in bankruptcy is if the car goes away.

48:59Rachel Cruze:Right.

49:00Dave Ramsey:Okay. And the student loans are not bankruptable.

49:03Rachel Cruze:Right.

49:04Dave Ramsey:Okay. So the two of those things are most of the debt. Oh, and by the way, you're not going to bankrupt your granny either.

49:12Rachel Cruze:No. Okay. So by the time we add those three things together that you're not going to bankrupt on,

49:19Dave Ramsey:or, you know, then you really haven't accomplished anything by filing bankruptcy because you're going to have to pay the student loans and grandmother and you're going to get the car repoed, which you could do without bankruptcy. That's not a problem. Just quit paying it. They'll come get it.

49:36Rachel Cruze:So it's okay to let it repo?

49:38Dave Ramsey:But before you'd file bankruptcy because you're going to lose it in bankruptcy anyway, right?

49:42Rachel Cruze:Okay. I just didn't know if that was a deadline. Have you just, Kelly?

49:46Dave Ramsey:I don't want you to do that. That's not my suggestion. But before we file bankruptcy, my point is bankruptcy is not doing anything for you. Right. Because the car, the student loans, and grandma, you know, so you end up bankrupting on$2 ,000 worth of stuff or something. That's silly. No, we're not going to do that. All right. But let's try to get you out of this mess. So, you know, I'm going to look up on Kelley Blue Book, KBB.com, what private sale is on that car. and you're going to find it's more like 28 ,000, but you're still 10 ,000 in the hole. You're not 17 in the hole, but you're probably 10.

50:23Dave Ramsey:And I don't doubt, what kind of car is it?

50:26Rachel Cruze:24 Ford Edge.

50:28Dave Ramsey:Oh, geez. Okay. Boy, did they get you. Sold you a piece of crap car on top of it. But anyway.

50:38Rachel Cruze:At least it's not a Chevy.

50:40Dave Ramsey:Oh, it's just awful. No, there's a lot of Chevys that are better than that.

50:44Rachel Cruze:There's not a bad.

50:46Dave Ramsey:Anyway, so we need to get rid of the car. Let's try to figure out how we can sell it to an individual for$25,$28, something like that. Then where are we going to come up with the 10 difference? Any ideas?

50:59Rachel Cruze:I'm praying that this check comes in.

51:01Dave Ramsey:Any ideas?

51:02Rachel Cruze:Yeah. I've just been hanging on to getting that payment.

51:07Dave Ramsey:So if that comes in, you sell the car the next day and you write a check for the difference.

51:12Rachel Cruze:Yep. And then you free it. Okay. Almost$900 a month.

51:15Dave Ramsey:Yeah, and that takes care of that, and then you use some of the money to buy you a$5 ,000 or$6 ,000 car that you pay cash for.

51:21Rachel Cruze:Okay.

51:22Dave Ramsey:And your student loans are on hardship deferral anyway. You're not paying them right now anyway, right?

51:27Rachel Cruze:I've been paying like$50 a month on them. Yeah, I wouldn't.

51:31Dave Ramsey:I'd call them up and put them on hardship deferral. Let's just put them on hardship for six months, and let's work on some of this other stuff. But the primary thing we've got to do is figure out a way to get out of this car sooner rather than later. So if it's going to be a year, I don't want you driving this car a year. It's going to be a year before you get the child support money. So if you're not going to get the child support money anytime soon, then we've got to find$10 ,000. Any other places you can get it? I mean, I could go into more debt with my grandmother.

52:05Rachel Cruze:I just don't want to.

52:06Dave Ramsey:No, I don't want to do that. Any chance you could borrow$5 ,000,$10 ,000 from the credit union?

52:11Rachel Cruze:No. I lost my job when I was seven months pregnant, and I couldn't get another one until recently. And so I used my entire savings, everything. And so my credit is now not great.

52:28Dave Ramsey:Okay. Abby, you're not bankrupt. I don't know how much pain you're going to be in with this car before you get out of it. But that's going to be the answer, and that's the way through. Because the car is the problem. You hang on. and I'm going to have Christian pick up. I'm going to get you with one of our financial counselors, Ramsey trained counselors as our gift. We're not going to charge you a dime. We're going to take care of you because you're out there by yourself and you're alone. And it's really scary. And we're going to help you. Okay.

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54:51Dave Ramsey:Ashley is in Dallas. Hi, Ashley. How are you?

54:55Rachel Cruze:I'm good. How are you doing?

54:57Dave Ramsey:Good. How can we help?

55:00Rachel Cruze:So my husband is a business owner, and when we got married, I signed a prenuptial agreement. you know saying what's his is his and what's mine is mine um since then i've had our daughter i'm a stay-at-home mom and i get told you know this is not mine um i don't have any say in the finances i don't know how much money we're making or if we're making any at all and but i get asked to do paperwork to do this for the business do this and this but i am not included in the said business.

55:38Dave Ramsey:What do you mean paperwork?

55:40Rachel Cruze:Like whenever something needs paid, it's, they put it on me. Like you need to call and pay these bills or you need to get this insurance updated or can you fix this for the store? Like constantly I'm getting told to do work for free basically. Okay.

56:03Dave Ramsey:Well, you're obviously not okay with this situation. So what has happened to make progress so that it's not this way anymore? I assume you've had a discussion with your husband, like, I'm not okay with this.

56:15Rachel Cruze:Well, in the beginning, I didn't have anything to do with any of the stories at all. I wasn't helping with anything. I just kind of stayed home with our daughter or not at the time we didn't have our daughter, but I just kind of stayed home when I was pregnant and when we had our daughter, but over time I'm getting dragged into it. I'm being asked to do a lot of stuff. When I get asked, can I be added into anything in the business so I have financial security for myself or if I can know any of the details about the bank accounts or anything like that, I'm told no, that this is not my business and it's theirs and it's not mine.

56:53Okay.

56:54Rachel Cruze:Outside of the -

56:55Dave Ramsey:It's who's theirs.

56:57Rachel Cruze:my husband and his partner.

56:59Dave Ramsey:Oh, okay.

57:00Rachel Cruze:Outside of the business, Ashley, do you have access to money at home? I'm giving money to pay bills. There is never money put in our personal checking account. Everything, they use money from the business checking account for everything, which I do not have access to. To pay your home bills, your husband is functioning out of the business account. Yes. Do you think something sketchy is going on? No, no. I mean, it's a small business. It's nothing big. They have a few locations for it. Your husband's kind of a jerk. Do you agree? Yes. Okay. Probably work on that end first. Yeah, like when prenuptials are involved, at what point, because I know when you all say like when you get married, everything's supposed to be combined.

57:55Rachel Cruze:at what point is a prenuptial in that like in a disagreement?

58:04Dave Ramsey:Well, here's the thing. It has nothing to do with the prenuptial. A prenuptial dictates what happens at divorce. It doesn't dictate what happens during the marriage.

58:16Rachel Cruze:Okay.

58:17Dave Ramsey:It just says upon divorce, he gets his business. You don't get it. That's all it says. Okay, but a prenuptial is not a thing that says, okay, you are now a woman that's not allowed to ask any questions about her husband's business. That's not what a prenuptial does. That's not how it functions. Okay, so he had you do a prenuptial because he's a jerk, not because he owns anything of substance.

58:48Rachel Cruze:Okay.

58:49Dave Ramsey:And so he doesn't own enough for this business is not that big a deal. It's not nearly as big a deal as he thinks he is. He's, you know, so, you know, you don't have a prenuptial problem and you don't have a financial problem. You have a desperately bad marriage problem.

59:12Rachel Cruze:So should I leave? Because at this point it's getting very questionable because it's putting too much on my mental toll.

59:19Dave Ramsey:Yeah, no, I'm not telling you to leave. I'm telling you to work on your marriage. But quit defining it as a prenuptial problem or he's got a control problem at the office. No, he's got problems. And we need to be in marriage counseling working on him treating his wife and child better. Okay. Because, number one, from a business perspective, we coach 10 ,000 small businesses. We tell every one of them, do not pay any personal bills out of your business account ever. It's bad business. It's bad accounting. Your home electric bill is not deductible as a business expense, and so you should not be paying it out of your business account.

1:00:04Dave Ramsey:You take money from the business that's profitable home, and you pay home bills with that. That's just good business practices. so he's not real good at business either and you're not and you're not signing your name

1:00:19Rachel Cruze:personally to anything ashley are you no good he just wants her to do some of the accounting i know i've just listened to too many podcasts yeah i hear you well there's money of ours yeah no well that too but money being sent in the caymans and ashley's names on it and then the law comes after her that's just what i didn't want i went extreme for a second but she seems clueless You seem clueless in what's going on because you have no information. So I just don't want you signing stuff because they're telling you to.

1:00:44Dave Ramsey:Like, for instance, if he's not filing his taxes properly and you sign the joint return.

1:00:51Rachel Cruze:You're on the line.

1:00:52Dave Ramsey:You just signed up for the tax problem.

1:00:54Rachel Cruze:Yeah, we filed separately this tax season.

1:00:58Dave Ramsey:Yeah, and the season before that?

1:01:01Rachel Cruze:Before that, we did not file together. I don't think. We've only. How long have I been married?

1:01:08Dave Ramsey:we've only been married one year okay but we've been together three or four years actually you have a tremendous marriage problem hon that's what you've got and we're we're not able to work on that in this setting uh effectively we're not able to help you with that but we can just help you identify that so the the situation you have you're not crazy it's weird and it's wrong. I can tell you that just as a dad, just as a grandpa, if you're my daughter, as a husband, you know, as a friend, I would tell you to go to a marriage counselor. You need to go see a pastor, see a marriage counselor. And I don't tell people to end marriages on this type of thing alone.

1:01:50Dave Ramsey:But if this is the way you're going to be treated for the next 20 years, yeah, you shouldn't be there if there's no change. I would not ask someone to be in an abusive, toxic environment for 20 years. And I'm not going to tell you to do that. And that's what this is. This is abusive, toxic environment. And you don't have to be a rocket scientist to figure that out. You already knew that. But what I would do is say, I'm going to a marriage counselor. Are you coming? Because I'm considering ending this marriage. I'm not going to be treated this way anymore. So, and then go to a marriage counselor, even if he doesn't come and get some coaching and have someone in that kind of a setting, not some, not a couple of people on a podcast telling you to leave your husband.

1:02:38Dave Ramsey:We're not, we're not going to sign up for that responsibility. You should sit down with someone that guides you through this and gives him every chance to turn around before you end this. And then you systematically bring it to an end at at some point, if there's zero change and zero hope that it's ever going to be any different.

1:02:58Rachel Cruze:Yeah, because the picture of health in exactly what you're explaining, like we have friends and he does real estate deals and she helps and does the books, but they pay, you know, like they pay a salary out of their company to them and she doesn't necessarily get it because they're keeping stuff in the business and all of it, but like they see it as one. Like we are a household and when we make money out of the business, it goes into the home and whether you choose to quote unquote get paid or not, it doesn't matter because you guys are bringing home and income together that you're both in on.

1:03:29Rachel Cruze:You're both working out of the same account. You're both doing this together. And so there's a healthy way to do everything you've just explained. You guys are just doing it completely backwards and the way you're being treated is just horrific, Ashley, from what you've told us.

1:03:41Dave Ramsey:I hope a counselor can help God get a hold of his heart because the heart that he has right now and the way it calls you to sign a prenup says, I like my business more than I like Ashley. That's what he's told you on the front end. And you went, oh, I'm okay with that. And you signed up and I'm not okay with that. And you aren't okay with it anymore either. So I wouldn't, I wouldn't marry a guy who likes his business more like me.

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1:06:10Dave Ramsey:Samantha is in Cincinnati. Hi, Samantha. How are you?

1:06:14Rachel Cruze:Hi, Dave. I'm good. How are you?

1:06:16Dave Ramsey:Better than I deserve. What's up?

1:06:20Rachel Cruze:So I have a boyfriend. We have a one-year-old. and it's always when I make more money, we'll save more money. But now he's making three times the income that he was, and we're still not saving. I mean, money burns a hole in his pocket. It's gone as soon as he gets it. So I just don't know what to do or how to help. Because I filed bankruptcy. So we did not get married. I mean, honestly, taxes, insurance. I get state insurance for the kids. And then I know they'll count his income towards the bankruptcy, so we were trying to pay that off before we considered it.

1:07:07Dave Ramsey:I'm sorry. You're in a bankruptcy now? Yeah, I'm in a Chapter 13 where I pay it back. Yeah. And how long have you been in the Chapter 13?

1:07:20Rachel Cruze:Um, maybe like six months.

1:07:22Dave Ramsey:Okay. And how much money do you owe?

1:07:26Rachel Cruze:Um, I think it's like, I think it went down to like$47 ,000 that I'm paying back.

1:07:31Dave Ramsey:Okay. And how much do you make?

1:07:36Rachel Cruze:So I had a high risk pregnancy and took off work. Um, and I just actually started back. Um, how are you paying a bankruptcy?

1:07:48Rachel Cruze:He pays it. He didn't file bankruptcy. Yeah, so he gives me the money for it.

1:07:56Dave Ramsey:Oh, he gives you the money so you can pay it?

1:07:59Rachel Cruze:Yeah.

1:08:00Dave Ramsey:Okay. So why didn't you get married? Because he's giving you the money for the bankruptcy anyway. As if you were married.

1:08:11Rachel Cruze:I think they're, I think they're, I think more so he's worried about them taking, because they take it if you make over so much. Like, you know, they tell you if you make over, like,$4 ,000, they take anything extra.

1:08:21Dave Ramsey:Not if he doesn't file, only if you file. You, you, you're in a bankruptcy, and you need to get out of the bankruptcy and get it paid off, and he makes enough money to do that. You shouldn't have been in bankruptcy to start with.

1:08:38Rachel Cruze:Yeah. Okay.

1:08:39Dave Ramsey:You got bad advice, and he's looking for an excuse to not get tied into this. So you said kids. I thought you had one kid with him. I do.

1:08:52Rachel Cruze:I have one kid with him, and I have a kid prior. Okay. And is that child with you full-time, Samantha, both? Yep, I have both full-time. How old are they? 11 and 1. Okay. All right.

1:09:11Dave Ramsey:Well, so the answer to your – the reason I'm asking all these questions is the answer to your question is that when you are married, your husband and the husband and wife join together and they do life together and they clean up debts together. And that way they don't have a reason to – they don't have the freedom to blow the money because we have a mess to clean up. And so right now he's acting like he's dating you, not having children with you, which is way different.

1:09:50Rachel Cruze:Right.

1:09:52Dave Ramsey:You know, if you said my boyfriend who I date, not who I have kids with, but a guy that I date is blowing some of his newfound income, I would say, well, you have a boyfriend that's irresponsible. Oh, darn. But you don't have a boyfriend. you have a husband in everything except legally.

1:10:11Rachel Cruze:Right, yeah. But I feel nervous to get married because...

1:10:19Dave Ramsey:Well, if he's not worth marrying, he's not worth living with and doing life with.

1:10:25Rachel Cruze:Yeah, I guess that's true.

1:10:27Dave Ramsey:Because it's the same stinking thing. The only difference is you put a piece of paper in place and then we decided we're going to be two grown-ups that do life together. How would you recommend helping? Yeah, I would recommend that the two of you start seeing a couple's counselor and make plans to get married and then make plans for the two of you to combine your finances and get your bankruptcy dismissed and clear those debts, working together and raising these two children together and build a beautiful life together over the next 10 years. but um right now there's this disconnect in his brain between his responsibilities and his realities he's acting out he took he got a huge raise and he goes and blows it all he's acting like a single guy dude ain't single anymore honey

1:11:24Rachel Cruze:right and he but the hard thing is there's no major leverage to pull because he's not married You know what I mean? Yeah, exactly. That's the messiness of doing this.

1:11:34Dave Ramsey:And here's the problem. Here's the problem. The number of couples that do what y 'all are trying to do that succeed financially and relationally is very close to zero. The data is in. The statistics on shacking up and playing house are horrendous. It does not work. The number of people who become millionaires shacking up is almost zero. It's almost zero.

1:11:57Rachel Cruze:And not even the money piece, the relational piece, Samantha. You know, like it's just because there's no he doesn't he doesn't have to commit to anything. He could choose tomorrow to walk out and there's no legal revocations.

1:12:07Dave Ramsey:Except possibly some palimony. Yeah. I mean, child support. Child support.

1:12:11Rachel Cruze:Yeah.

1:12:11Dave Ramsey:But yeah. And you'd have to go after that in a weird way because it's not a divorce and not a breakup. So I think the two of you need to sit down and go, OK, we've been acting like a couple of 16 year olds in heat and we're going to have to change that. We're going to have to actually be two grownups now and go and build a grownup adult-like life where we are responsible to and for each other and to and for these children.

1:12:37Rachel Cruze:Yeah, I was going to say, and there's a part, too, of like we've created a human together. We don't have a choice on whether we're going to choose to be adults or not. We have a child in this world. So we made that decision when we chose to do this.

1:12:49Dave Ramsey:You can't go to three X-rays, which you used to make, and your wife sits in bankruptcy. these are not even things that should come out of someone's mouth. But it does because of the arrangement you all have allowed yourself to get into. And so what I would advise you is to go see a couples counselor and start working through some of these issues, and sometime in the next 30 days go see a judge or a pastor and get married, and then let's put our finances together, let's put our incomes together, let's put our problems together, and let's put our dreams together, and let's go live this life in a prosperous and fun, wealthy, healthy, relational way.

1:13:30Dave Ramsey:And these children are going to grow up in a much better situation then. And they're going to be much more functional.

1:13:36Rachel Cruze:Yeah. Unless he's just a horrible person.

1:13:38Dave Ramsey:If he is, why are you there?

1:13:40Rachel Cruze:That's right. Then you got to call it, Samantha.

1:13:42Dave Ramsey:Then go the other way.

1:13:43Rachel Cruze:Yes. Yes.

1:13:44Dave Ramsey:But I didn't hear that. All I heard is an irresponsible child.

1:13:47Rachel Cruze:No, I know. I know.

1:13:48Dave Ramsey:She's got three kids. Yeah. That's what I heard. Yeah. So bless your heart. I mean, but that's what I would tell you to do. And so I went places you didn't think you were going to go. You thought I was going to tell him how to straighten up and not overspend. But him overspending is a symptom of the situation you all put yourselves in with the choices you've made. And so that's what I would tell you is to fix that. Because, again, the data on millionaires, 89 % of them, 9 out of 10 millionaires, did not become millionaires because of inheritance, which means they did it. And so you study how they live, what their habits are, what their processes are, if you want to be one of them.

1:14:30Dave Ramsey:Okay. And one of the things that keeps coming up over and over and over again is we saw almost zero. I mean, there was less than 4 % were not married and we're living with someone they weren't married to. They're all married. And 84 % of them that are married, some of them were single, but 84 % of them that were married said, I have a cooperative, aligned, goal-setting spouse that works with me, not against me. And that's how we got here. We didn't get here by dragging a princess or dragging an irresponsible 16-year-old little boy along the way against his will. We didn't get to millionaire doing that.

1:15:11Dave Ramsey:And so The data is in on this. It's ridiculous. The net worth of a single lady that's shacked up as compared to the net worth of a lady that's married at 35 years old is 13 times less. That's the data.

1:15:56We'll be right back.

1:16:11Dave Ramsey:Well, we wish we could get to every call and every question here on the show. And if you have a money question and you want an answer for your situation, here's a quick, easy way to do it. Go to our website, RamseySolutions.com, and click on Ask Ramsey. Ask Ramsey is our free AI tool that's built and trained by proven Ramsey principles. See, if you don't know how AI works, AI is going to regurgitate, spit back out what it has in it. So it's only as good as the data set that's entered into it. And so if AI is researching everything in the entire web, it's got a bunch of junk in it. But if AI has only been fed the diet that you want it to eat, it's going to spit back out what you have fed it.

1:16:57Dave Ramsey:And so all of the last three years of shows, us answering questions, are dumped into this tool. All the books we've written are dumped into this tool. All the Financial Peace University lessons are dumped into this tool. And so it has—

1:17:10Rachel Cruze:Every article on RamseySolutions.com.

1:17:12Dave Ramsey:All of our articles that we've written. And so all of the knowledge base that you hear us putting forth here on the air is dumped into this tool. And then AI answers the question. It's almost as smart aleck as I am. It's crazy. It's not quite.

1:17:26Rachel Cruze:Actually.

1:17:26Dave Ramsey:I want to add a little sarcasm to it.

1:17:28Rachel Cruze:But you probably could say, answer this like Dave would. And I bet it would.

1:17:31Dave Ramsey:I bet it'd probably get in your face then. Yeah. Probably bust on you. I love you well. Yeah. Ask your question today at RamseySolutions.com. It's completely free. Check Ask Ramsey. RamseySolutions.com. You're going to love this tool. By the way, it's very popular. A lot of people using it. All right. Jason is in Atlanta. Jason, how are you? Great. How are you? Better than we deserve, sir. How can we help?

1:17:55Rachel Cruze:Well, about eight months ago, me and my wife decided we wanted her to be a stay-at-home mom. And that's about the same time that we heard about the baby steps and started listening to your podcast. And so far, we've paid off about$53 ,000 in debt. Good for you. And we have about$8 ,000 left. Way to go. But my wife's a teacher, and when she quits in May, they're telling us that we can take her retirement out with no penalty because she's no longer an employee, but we also can't put any money back into her retirement.

1:18:26Dave Ramsey:That's not true.

1:18:27Rachel Cruze:No, no, no.

1:18:28Dave Ramsey:Stop, stop. That's not true. You misunderstood what they said, or they were just in error, one of the two. You cannot take your retirement out with no penalty. You can take your retirement out without them withholding, but the IRS has a penalty.

1:18:44Rachel Cruze:Okay, yeah, just paying taxes on it.

1:18:46Dave Ramsey:Yeah, and 10 % penalty.

1:18:49Rachel Cruze:Oh, okay.

1:18:50Dave Ramsey:Yeah, taxes and 10%. So, no, we're not going to do that. How much has she got in her retirement?

1:18:56Rachel Cruze:Probably$10 ,000.

1:18:58Dave Ramsey:Oh, not much. Okay. Well, basically, if you cash that money out and use it, it's going to hit you about 40%. 40%. 30 % tax bracket plus a 10 % penalty. So it's kind of like borrowing$10 ,000 at 40 % interest. Oh, wow. Yeah, wouldn't recommend it.

1:19:14Rachel Cruze:So we should just move that to my retirement?

1:19:18Dave Ramsey:No, I'll just move it to an IRA with a SmartVestor Pro. Get on Ramsey Solutions and find SmartVestor Pro in your area and roll it. Anytime you leave a company, we tell you to roll your retirement into an IRA so you can control it and pick some good mutual funds. So you have$8 ,000 left, and you've already paid off$53 ,000, and you've got until May to finish up?

1:19:39Rachel Cruze:Yes, sir. Way to go, man. You've done so good. Well done, y 'all.

1:19:42Dave Ramsey:What do you make?

1:19:45Rachel Cruze:$170 ,000.

1:19:46Dave Ramsey:Oh, okay. So you guys can live on your income and finish up the$8 ,000, right?

1:19:51Rachel Cruze:Yeah.

1:19:51Dave Ramsey:Okay. Good, good. Way to go, man. What do you do for a living?

1:19:56Rachel Cruze:I'm a lineman.

1:19:57Dave Ramsey:Oh, wow. Good for you. Excellent career. Excellent. Okay, cool. And so how many babies have you got?

1:20:06Rachel Cruze:We've got two along the way.

1:20:08Dave Ramsey:All right. So you're going to be home with three babies. Very cool. And she's been a teacher, but she now wants to be home with the babies. That's awesome, man. Yes, sir. And you're bringing home the bacon as a lineman, and so you all can afford to do that. And you cleaned up the$53 ,000. Great job.

1:20:23Rachel Cruze:Good job.

1:20:25Dave Ramsey:Proud of you, man. Go get them, hero. Yeah, just knock the$8 ,000 out and roll the$10 ,000 over into an IRA. We don't want to give the government half of it just because it's a small amount. I still, if it's$100 ,000, you'd really never do it. But at$10 ,000, you're like, well, whatever. But it's still$4 ,000 you're giving up for no apparent reason. So, no, I would roll that and.

1:20:46Rachel Cruze:Just let it grow.

1:20:47Dave Ramsey:Into an IRA and let it grow. Very, very good question. And, again, congratulations. I'm proud of you. Tanya's in Richmond, Virginia. Hi, Tanya. How are you?

1:20:57Rachel Cruze:Hi, Dave. Hey, guys. I'm great.

1:21:00Dave Ramsey:What's up?

1:21:02Rachel Cruze:Hey. So I am a mother of three, and I am a faith-driven entrepreneur, and I have a business that's a baby. So she's only about two years old. I am a concierge therapist. And I am trying to figure out, my question is, how do I continue to grow my business successfully with also trying to get out of debt personally? I feel like I'm using my business money a little too much for our personal debt.

1:21:34Dave Ramsey:Our. You're married.

1:21:37Rachel Cruze:Yes, sir.

1:21:38Dave Ramsey:And what is his income?

1:21:41Rachel Cruze:So he works for the government, and he makes approximately about$70 ,000 a year.

1:21:46Dave Ramsey:Cool. And what are you making profit on your concierge therapy business?

1:21:51Rachel Cruze:So last year was my second year, and profit was approximately around$34 ,000.

1:21:58Dave Ramsey:Not so much. Okay. And so is this like a concierge medical where you're getting an annual or a monthly fee, and then you're just like on call as their therapist?

1:22:10Rachel Cruze:Yes. So what I do is I do fitness and wellness. So I go to people's homes, but I don't have the brick and mortar, so I don't have a lot of overhead. Oh, that's the concierge part.

1:22:19Dave Ramsey:That's the concierge part. Yes. Okay. Yes. All right. And so where are you getting your clients?

1:22:28Rachel Cruze:word of mouth I do a lot of networking like I network all the time I have been doing my best to grind like I said I want to be a doer of what God's given me yeah and that's awesome and

1:22:40Dave Ramsey:so how would having more money expand that part of the business how would the business grow if you had more money in the business because you're not spending money you're spending hustle

1:22:52Rachel Cruze:yes my goal is to eventually get a brick and mortar so i would love to grow the business financially so that eventually i can get a brick and mortar yeah but my you asked if i'm taking

1:23:05Dave Ramsey:all the money out of the business to pay debt i feel like i'm not growing the business but you're not growing the business with any money costs you're growing the business with your sweat

1:23:17Dave Ramsey:oh yeah that's true so you're not starving the business growth due to the money coming out to pay debts at home but you're just not making much i mean 34 000 you're not you know you're not making any money yet you need to be making three times that to start being to justify being a therapist right?

1:23:37Rachel Cruze:Yes, sir.

1:23:38Dave Ramsey:Yeah. So I assume you're licensed.

1:23:41Rachel Cruze:Yes, I am licensed, but I don't, I do private pay. I don't take. Yeah, I understand.

1:23:46Dave Ramsey:But you and I know marriage counselors that make$150 ,000 a year.

1:23:51Rachel Cruze:Yes.

1:23:52Dave Ramsey:Okay. All right. And so that's my point. You know, if you have a unique take on this and I love the nuance of it, I think it's cool.

1:23:58Rachel Cruze:Tanya, is there, because you said you have three kids. Do you, do you have the time to have more clients and that's your problem is that you're not getting more clients? Yes, that's exactly. I do have the time. Yes. Okay. Okay. And how much debt do you guys have at home? So we did have, we have a home that we bought two grand. I think we own, we own about 210 on that. And we did actually just take a HELOC out to pay off, to consolidate the debt for my student loans because the interest rates were extremely high, and I felt like every year I was just paying off interest, and I wasn't able to actually pay off the student loans.

1:24:38Rachel Cruze:We did combine a few of our credit cards.

1:24:41Dave Ramsey:And what you've discovered now is you can't borrow your way out of debt. So, ouch. Yeah, so you're going to have to earn your way out. And so if you're going to create more income, you're going to have to arrange your life in such a way that it allows for that. and uh and and so i would love for you to be booked up enough that you're making 100 000 instead of 34 and then you're not calling me because you're you're starting to plow through this debt then that's been consolidated uh you're starting to see a way through it but you know so what you're dealing with is you've got three kids and 103 000 income and a pile of debt and you're underutilized in terms of uh what you could be making in the marketplace because there's

1:25:24Rachel Cruze:not much overhead. I'm okay with that 34 saying, okay, all my job, all my work is going to go for us to pay this. And then his is going to go to debt. Like, you don't even mean like you can kind of slice it that way.

1:25:33Dave Ramsey:She needs to be making a hundred.

1:25:34Rachel Cruze:She needs to be making more. Yeah. But she said it feels like it's all going to the debt and the expenses, but that's okay because you're at least paying off debt.

1:25:41Dave Ramsey:Exactly.

1:25:41Rachel Cruze:Which is helping.

1:25:42Dave Ramsey:Exactly. It's not costing your business. Other things are.

1:26:09Dave Ramsey:Welcome back to the Ramsey Show in the Fairwinds Credit Union studio. I'm Dave Ramsey, Rachel Cruz, Ramsey personality, number one bestselling author, and my daughter is my co-host today. Michael is in Little Rock. Hi, Michael. How are you? Good. How are y 'all? doing. It's a pleasure to speak with y 'all. You too, sir. How can we help?

1:26:29Rachel Cruze:So I am a 24-year-old father of one. I've got a fiance that's a stay-at-home mom. When I was born, I was born with some disabilities due to a medical, and I actually sued said company that caused these issues, you would say, and that settlement pays out in two months, and I'm really lost on where to start, it's about$400 ,000 total that I will be getting. Wow. And I think my main question is, should I immediately clear any debt and use my income to build wealth?

1:27:08Dave Ramsey:The data tells us that that's the most sure way to build wealth. The downside of that is the guy in your mirror. You have to follow through. So if you blow them, I mean, if you pay off all the debt and you don't take care of your income and use it to build wealth, then you're going to have just blown the money, right?

1:27:31Rachel Cruze:Yes, you're very true. How much debt do you have? Oh, debt is roughly$70 ,000, and that's between cars and medical bills only. I don't do the whole credit card schemes. I think that's all just a scam.

1:27:46Dave Ramsey:Okay, so when are you getting married?

1:27:49Rachel Cruze:We haven't set a date in stone yet due to this trustee payout.

1:27:55Dave Ramsey:Why? What's the trustee payout have to do with getting married?

1:28:01Rachel Cruze:I'm not really sure, honestly. It kind of comes to do we want to spend money on a wedding? Do we just want to elope? I want to elope. My wife wants to – well, my fiancé wants to have a wedding, so we're kind of stuck between the two.

1:28:15Dave Ramsey:Yeah. You're having a wedding.

1:28:19Rachel Cruze:That's what everyone's been saying. Yeah, you lose. You lose.

1:28:23Dave Ramsey:So how much are we going to spend on the wedding?

1:28:27Rachel Cruze:I didn't want to spend over$8 ,500. Okay.

1:28:31Dave Ramsey:What is the nature of your disability?

1:28:34Rachel Cruze:I was born with bilateral club feet at birth, and I've had over 32 surgeries on my legs. How are you doing now? It's a struggle, PT twice a week, exercise, but it's definitely something that I've never managed. What do you do for work, Michael? I'm a lot manager for a car dealership, so my job's pretty laid back. Okay. So what do you make?

1:29:01Dave Ramsey:I make$18.50 an hour, and I don't make less than 45 hours a week. Okay. And you're able to live on that?

1:29:12Rachel Cruze:In a way, yes. Comfortably, no.

1:29:16Dave Ramsey:Right. So what's your long-term career plan?

1:29:21Rachel Cruze:I am very big on wanting to start investments. I'm not sure where to start with that. I've looked into mutual funds. That's not a career plan.

1:29:31Dave Ramsey:That's investing. What's your career plan?

1:29:36Rachel Cruze:I think my career plan is to stay in a dealership life, potentially in a finance role.

1:29:43Dave Ramsey:Okay. So I want you to start moving towards something that doubles or triples your income on purpose. And I don't know what that is exactly. Dealership life is fine. I have no issue with that at all. There's a lot of money in the car business and a lot of people make a good living, a great living in the car business. So, but I want you to start thinking about, okay, what's the 32-year-old version of you look like? Because you got a 10-year-old and a wife at that point.

1:30:12Rachel Cruze:Right, yes, sir.

1:30:14Dave Ramsey:And 1850 ain't going to cut it.

1:30:15Rachel Cruze:And my fear is that you think this$400 ,000 you invest in, you're just going to live off of it the rest of your life. And that just wouldn't be good for you, Michael.

1:30:21Dave Ramsey:What I want to do is create, and it's not enough. What I want to do is create a life where you don't need this money. and then the money will explode and do fabulously for you. But create a life where you don't need this money, and that involves getting married and spending. I think you're going to spend$20 ,000 on your wedding, not$8 ,500. Oh, God, don't say that. No, that's way less than the average, by the way. But maybe$15 ,000. I don't care. But you two put together a budget between$10 ,000 and$20 ,000 that you can both agree to and set that money aside out of this money. You pay off the rest of your debt out of this money.

1:30:59Dave Ramsey:And I want you to also think about is there a class or a certification I need to take to move towards what I need to become to be a great dad, a great husband at 31 years old that makes a lot more than$1 ,850 an hour. Okay?

1:31:14Rachel Cruze:Awesome. Would you immediately max out your off account if you were handed$400 ,000 today?

1:31:21Dave Ramsey:Yes. and I would immediately pay off all those debts and I would immediately set aside$15 ,000 or so for a wedding and then I would build a life that doesn't need this money other than that and just let the money grow. And sit down with a smart investor pro and learn about mutual fund investing. But mutual fund investing is not a career and$300 ,000 will not produce enough for you guys to live on. So it sounds like a lot of money because you've never had that much money, but it's not going to create enough money for you to get the life I want you to have. Not yet. It will in 10 or 15 years. So if we can leave 300 of the 400 alone, which is about what it sounds like we're going to be doing, okay?

1:32:05Dave Ramsey:If we leave 300 of the 400 alone and put that in investing, including a Roth IRA and some good mutual funds, in seven years that'll be 600. In 14 years it'll be$1.2 million. two. And so when you're 35 years old, you'll have a million dollars in that account. If you keep your stinking hands off of it, because you build a life without the money, you build an income, a career track without the money that feeds your family. And then you let this thing do, let this money go over here and cook. So money is not microwavable, but it is, does really good in the crock pot. And so that's what we're setting up here is let it, Leave it alone.

1:32:45Dave Ramsey:Let it cook. But if you keep screwing around and buying cars you can't afford and putting them on

1:32:51Rachel Cruze:Or you can't afford, but you just buy them.

1:32:53Dave Ramsey:Yeah. Well, you pay cash for whatever car you buy.

1:32:56Rachel Cruze:Yeah, but if it takes that$300 and starts going on vacation, buying cars and living off of it, it's going to be done. Yeah.

1:33:01Dave Ramsey:And it won't have doubled if you take the interest off of it, if you take the income off of it. You don't let it alone. Pretend like you don't have this money, and it will set your life up and your children's life up and your grandchildren's life up. but you're going to have to leave it alone and go have a life of your own and build out the career side of things. So hang on, I'm going to send you a copy of Finding the Work You're Wired to Do by Ken Coleman. It's got a great career assessment in it to get you to thinking. And you and your fiancé, get the wedding planned and get married. You have babies, get married and start your life off.

1:33:33Dave Ramsey:Do the stuff that the data tells us is going to cause you to succeed.

1:33:37Rachel Cruze:And, Michael, go sit down with the SmartFestor Pro. Don't go to someone who's explaining stuff that you don't understand and put it in a boring mutual fund or an index fund or something. But make sure what you're putting that money into is boring, has a good track record, and again, just setting it aside. Don't talk to someone who's like, oh, you can invest in this business over here and do this and that and that.

1:34:00Dave Ramsey:Bitcoin, and I'll make sure you lose all of it by the fall.

1:34:03Rachel Cruze:Put it in something boring with a great track record and leave it alone. I'm telling you, that's going to be your best bet. And then you get to look up at 50. you got a couple million in there at that point you're like well what do we want to do with our lives

1:34:15Dave Ramsey:50 it'll be 10 million then you get to make some great decisions

1:34:20Rachel Cruze:but don't let 24 year old Michael do that now just wait

1:34:23Dave Ramsey:and you're very wise to ask this question and you got a whole lot more of an answer than you were looking for

1:34:56Dave Ramsey:You spend hours researching before making a major purchase like a home or car, but it's also a good idea to put in the work searching for the right insurance coverage. To protect your biggest assets, I recommend using Ramsey Trusted Pros. Whether you're looking for car, home, or any other type of insurance, Ramsey trusted providers have been coached and vetted to serve you like we would. Find what you need at RamseySolutions.com slash insurance.

1:35:41Dave Ramsey:Cassandra is in Raleigh, North Carolina. Hey, Cassandra, what's up?

1:35:47Rachel Cruze:Hi, Dave. Hi, Rachel. My husband and I are finally combining our finances. Yay! There's a couple charges that we're not quite sure where to put them in our budget. And my initial thought was to put them straight into what would be our personal funds, but I'm unsure if that's good, and I want to set a strong foundation for the future. Good for you. So I'd love your opinion on that.

1:36:13Dave Ramsey:Thank you for phrasing that that way.

1:36:19Dave Ramsey:What is the category?

1:36:23Rachel Cruze:So the categories are like a subscription to a deodorant company, an alcohol budget for my husband. And for me, I set aside a little bit of money a month to go out with my mentor or my coworkers or my boss for drinks or for coffee or something to kind of be there with my coworkers and build relationships.

1:36:50Dave Ramsey:You could just have an individual line item for each one of those things and just call them what they are. That's fine. And we are agreeing to the deodorant budget. We are agreeing to the mentor budget and coffee budget. We are agreeing that we're allocating this much for you to have a cocktail after work or whatever it is that he's doing. And we're agreeing to that and do it very individually. And or you could do what you're talking about, and that is just increase your personal by that much, and you just take care of that within your personal. He could in his, quote, his fund money and you could in your fund money, right?

1:37:33Dave Ramsey:Either one's fine. Here's what's interesting. Here's what we did as an example at our house that ended up being weird. We originally separated food and restaurants, and I recommend that when you start budgeting. Yeah, groceries and restaurants. Because otherwise you'll go to the restaurant and eat your groceries. Yeah. And you want to make money for the grocery store, okay? So we separated them initially. After doing it for several years, we got disciplined enough that we were able to just call it food and forget it. But when we first started, we needed the individual detail.

1:38:12Rachel Cruze:We still keep it separate.

1:38:13Dave Ramsey:You do? Uh-huh. Okay, that's good. Yeah. Nothing wrong with that.

1:38:15Rachel Cruze:So that's what I was going to say. And then we have, Cassandra, I don't know if you all have other subscriptions. We have a subscription line item in our budget that like Disney Plus, Amazon, like these things drop in.

1:38:25Dave Ramsey:Yeah, but that's not deodorant.

1:38:26Rachel Cruze:Well, it's a subscription.

1:38:27Dave Ramsey:I know, but I mean.

1:38:28Rachel Cruze:I would count it as a subscription. Okay.

1:38:31Dave Ramsey:It's just an Amazon button. I mean, that's, yeah. No, I mean. That's almost in like food and toiletries.

1:38:37Rachel Cruze:But that helps me justify not putting too much in my personal. I try to avoid to spend, and I allocate it elsewhere.

1:38:42Dave Ramsey:My point is, it might be a good exercise to just make them line items for the first year. And then over time, you'll go, okay, I get comfortable with just melding them all together. So what we have ended up doing is we used to have a bazillion line items, and ours are now very broad buckets. Okay. But I've been doing it 35 years, okay? So, you know, it's different, right? But when we first started, we needed the emotional shock of looking down and seeing my mentor coffees cost that much or his drink after his happy hour cost that much. And he needs to see that and go, yeah, and you need to see that.

1:39:29Dave Ramsey:And it's good for everybody to get all that. So I would run it out as just individual line items. And you can do that in every dollar. You can add customized line items very easily just because, just for visibility. And it's just kind of a reminder. I spend that on alcohol. I spend that on deodorant, you know, and it's just, that's okay if you do that. I'm not griping at you about any of that. But I think the line item is just like staring you down every month and going, making you make a value choice. Is that really how I want to live? Is that really who I want to be? Yeah. And you might decide, I'm spending too much or I'm not spending enough on that.

1:40:07Rachel Cruze:Yeah. Yeah. And then if you feel comfortable with it, then I would probably lump anytime we go out to a restaurant, even if it is for coworkers or if he goes out with friends for lunch or whatever, we just dump everything into the restaurant category. Like if we go out to a restaurant, that's where it is, regardless of reason. And then I'd probably move, yeah, a deodorant subscription to your personal line item. That's what you're choosing. Later on. Later on. Yeah, yeah, yeah. So that's probably where I would go. But for the first, yeah, a couple months, six months, as detailed as you can be, I think it is just a good rhythm to be in to be able to see those charges and just see, okay, that's the transaction for that.

1:40:41Dave Ramsey:It kind of, folks, for those of you thinking about this, because we're talking to all of you out there, not just her, it kind of falls in the same place in your brain that doing the budget at all. When you wrote down everything, you're like, holy crud. You know, and so that's the thing you want to have happen. You'll feel like you got a raise when you do a detailed monthly budget before the month begins and you tell every dollar what to do before the month begins. You always feel like you got a raise because you always have this experience of we spend what?

1:41:17Rachel Cruze:Yep. And we don't have to do that. We can lower that category. That's ridiculous.

1:41:20Dave Ramsey:And you also have the experience of where's all this money going? I mean, the chaos and the disorganization in our life is eating half our salary. And so you have that experience and the shock effect of that starts to modify your behavior where now you're controlling your life and your money instead of your life and your money controlling you. And this is what she's talking about is a brilliant question because it's not only did she phrase it properly, I want to lay the right foundation, but she's recognizing that I'm setting new grooves in my brain. I'm setting new rhythms in my thinking and the way my behavior is acting out in this.

1:41:59Dave Ramsey:And so I want to be careful how I do that. That was her indirect comment. But it was a great comment. So really good question, Cassandra. Thank you for doing that. I appreciate you calling. Rose is in Phoenix. Hi, Rose. How are you?

1:42:14Rachel Cruze:I'm fine, Dave and Rachel. I appreciate you listening to me and answering my questions. Sure.

1:42:20Dave Ramsey:How can we help?

1:42:21Rachel Cruze:Okay. Well, just a quick scenario. I'm 72. My sister, whom I live with, is 70. We share our property together. My sister has owned this property. She's the one who initially bought it like 30 years ago. I have moved on to this property and been here for about the last 10, 11 years.

1:42:44Rachel Cruze:I mentioned to her at the beginning of this year that I was thinking about paying off half of the mortgage because I've been saving and saving. I've been listening to you for several years, Dave, and you guys, I appreciate you so much. But basically, she got mad at me for doing that and claiming that I did it behind her back. She also had the flu about last month. Sometimes she was sick for three weeks. She's self-employed. I'm retired. I do get my Social Security, and I do get a pension.

1:43:16Dave Ramsey:The house is in both of your names?

1:43:19Rachel Cruze:Correct, yes. So why did she not want you to pay off half the mortgage? She claims that I paid the mortgage off, this is in early February, the first, second to the fifth, while she was sick of the flu and that I took advantage, she says, of her being ill and doing this without consulting with her. And I said to her, well, Teresa, you're my sister, but you're not my parent, you're not a spouse, and you're not my boss. Does it harm her in some way? I'm sorry? Is it going to harm her in some way? No. My gosh, Rachel. We went from$237 ,305 down to, well, we both paid half of the mortgage February the 1st, of course.

1:44:12Rachel Cruze:Excuse me, March the 1st. So with that payment, which our monthly payment is$1 ,510.04 a month. So we split that in half. So now our mortgage is down to come April 1st. Our current mortgage payment or total is$114 ,000. I don't understand why she's mad.

1:44:29Dave Ramsey:How is she hurt? How did you hurt her?

1:44:31Rachel Cruze:Well, she's mad because, well, okay, I forgot to make that point. When she talked with me the other day about this, she said, now me paying off half the mortgage is screwing up her getting a trust placed on our entire property. Now she can only do half of a trust. Is there such a thing as half a trust? And I said to her, is that what your attorney told you?

1:44:56Dave Ramsey:No, there's no such thing as a trust on a property that you don't own all of. She can't put this property in a trust. She doesn't own it all. Even if there was a mortgage or not a mortgage. Doesn't screw it up at all. So she's got bad information. And she's mad about something she doesn't even understand. No reason to be mad. But it is weird you're continuing to pay the payment when you don't owe your half anymore. Hello.

1:45:30Dave 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.

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1:47:00Dave Ramsey:Donnie is in Richmond, Virginia. Hi, Donnie. How are you?

1:47:04Rachel Cruze:Good. How's it going, Dave?

1:47:06Dave Ramsey:Better than I deserve. What's up?

1:47:09Rachel Cruze:um so uh my question is i uh i started a side hustle about 13 months ago with my son um basically a tiktok shop uh it's done pretty well in my opinion i'm kind of thinking about leaving my job my wife's saying hey go all in do this full time um sounds crazy to me uh to like i said leave my my career uh to do a tiktok shop but curious what is a tiktok shop so tiktok is i'm sure you've heard of the app so you go on there but i don't know what a tiktok shop is gotcha gotcha so it's a marketplace um on tiktok where we go live and we sell things to other individuals

1:47:44Dave Ramsey:we sell oh okay i got you okay so selling things on ebay or selling things on facebook marketplace or selling things on tiktok i got you okay and what are you selling we're selling sports cards

1:47:54Rachel Cruze:so we we do live selling so we'll open the cards for people they buy them and then we open them on the screen for everybody. And everyone is excited. We hit a big card.

1:48:03Dave Ramsey:Gotcha. Okay. And what are you making?

1:48:07Rachel Cruze:So last year was our first year really hitting it hard. We did it every night. About$200 ,000 and 60 of that I gave to my son.

1:48:17Dave Ramsey:Profit? Profit, yes. Profit. And overall revenue was over$700 ,000. Okay. So you had$500 ,000 invested in the cards.

1:48:25Rachel Cruze:cards um and other things yeah we could probably be a little more efficient this year it was our first time we didn't really know what we were doing so we had to buy things a couple times didn't really know exactly but yeah mostly cards the cards are very expensive but you're yeah you're

1:48:38Dave Ramsey:buying them and sell i mean you're buying them for 500 and selling them for 700 and profiting 200 so your cost of goods sold was 500k does that sound right roughly yes okay roughly what do you make at your day job?

1:48:51Rachel Cruze:About$100 ,000. Okay, so you made twice as much at this as net profit as you

1:49:00Dave Ramsey:did at your day job? Correct. And you did it at night, but I'm guessing at night is when you do this, right?

1:49:06Rachel Cruze:Well, there's people on there doing this all day long. Yeah, but I'm thinking prime

1:49:11Dave Ramsey:time is prime time.

1:49:13Rachel Cruze:Well, it is, but at the same time, it's also a certain... It really is, because when I see them all during the day, they're doing just as well during the day. I see people doing, you know, having six or seven of these guys streaming at a time all day long. But I was with you. Primetime seems like nighttime, but it seems like when I go in the mornings on the weekends is also primetime.

1:49:34Dave Ramsey:Okay. All right. I don't know. I've never done it. So I just was guessing. Okay.

1:49:40Rachel Cruze:What kind of job do you have? What's your career? I work in finance. Okay.

1:49:46Dave Ramsey:Well, that's pretty vague. What do you do?

1:49:49Rachel Cruze:um so i do uh i work for a military contractor company we just we do uh with dod work during

1:49:54Dave Ramsey:the day okay cool so how hard would it be to replace that if tiktok folds up um i mean i

1:50:02Rachel Cruze:wouldn't think very hard i was a blue collar worker in my former life so if i needed to go

1:50:06Dave Ramsey:back to work and do something i think i could probably do pretty much anything and get a job

1:50:13Dave Ramsey:I would do it Really? Yeah, definitely You have a year track record There's no reason to think it's not projected into the future reasonably I think you'll make$300 or$400 not$200

1:50:28Rachel Cruze:But with the caveat always with the social media world as you know, Donnie it's ever-changing AI is changing everything It's just knowing that this may be long-term I pray it is for you No, it won't be.

1:50:40Dave Ramsey:This will not be around in five years. You understand? This will sunset. And so be watching for the next way that people are selling stuff. Okay? This is a very cutting-edge, early adopter process that a small percentage of the population is participating in and even knows about, for that matter, overall. Okay? Now, it's not like a mainstream thing. Like you walk into a 57-year-old or 67-year-old grandmother, she's not going to know what you're talking about, right? And so it's not mainstream. And because it's technology and social media based, 100 % chance it's going to change dramatically between now and five years.

1:51:26Dave Ramsey:So be looking for the next way to do something similar or just close the thing up when it's done. Don't be looking up and going, oh, well, what happened to my business? Well, it changed. You can 100%. Because, I mean, think about five years ago, nobody could spell TikTok. Yep. Okay. And it feels like 20 minutes ago, the Internet wasn't even real. Very true. And so it's not. So it's just some caution, but do it. But if I had based the things that we do at Ramsey on a single platform, we would be out of business.

1:52:06Rachel Cruze:Makes sense. And we're trying to pivot to other avenues. Whatnot has reached out to us eBay Live. Good. I don't have the time to do it unless I leave my main job.

1:52:15Dave Ramsey:Yeah, I would be investigating eBay Live. I'd be investigating anybody that's doing something similar where you're on multiple platforms accomplishing the same kind of tasks. Okay. And that way you're not married to one platform. And when it has an issue, you know, like there was a moment in time that TikTok was completely in jeopardy of shutting down all the way. Like the U.S. government shut it down. Right. And so, you know, you don't want that to happen and be standing on one leg. Exactly. Yep. Nope. A hundred percent. So, yeah, as long as you keep that kind of a mindset in your business acumen, then, yeah, go make$300 ,000 or$400 ,000 for the next two years while you're discovering the next thing to do.

1:53:00Okay.

1:53:01Dave Ramsey:And bank all of it. Don't spend it. And that's what I've been trying to do with just put it all to the side. That was my other caveat is do I pay off my house or do I keep just loading up the bank account? Yeah. That's very cool, Donnie. It's very interesting. And with your son. Good for you. He goes from blue collar to finance at the DOD to TikTok entrepreneur. This guy's flexible. It's good. He's flexible, man. He's able to do just about anything. So, yeah, that's the good thing. And so you don't ever want to base your career or business idea on something that probably has a fairly short shelf life without having a plan for moving on to the next thing.

1:53:41Dave Ramsey:But, man, what a great, cool, I'm glad you're making so much money. That's awesomeness. Very neat. Chris is in Roanoke. Hi, Chris. How are you?

1:53:50Rachel Cruze:I'm good, Dave. How are you?

1:53:51Dave Ramsey:Better than I deserve. How can we help?

1:53:54Rachel Cruze:Well, we've ended up, unfortunately, in Baby Step 7, and now we have 529 accounts that we don't really need. We're able to cash flow to college, and we're debating what to do. Don't cash flow to college.

1:54:07Dave Ramsey:Use the 529s.

1:54:11Rachel Cruze:And then if we want to do additional investing for the kids, we should just do that on the side?

1:54:15Dave Ramsey:Yeah. Yeah. But use the 529s for college. It gets the money out of there. That is cash flowing it. And then use the cash that you're going to use for college to do, if you want to build an account to the side, just an UTMA, Uniform Transfer to Minors Act, which is simply a mutual fund in the kid's name. And then they can buy houses and weddings and stuff with that without having any issues with the 529. But don't cash flow college and trap 529 money.

1:54:41Rachel Cruze:Well, I've asked the kids about it. They're both in college now. One of them was interested in leaving the 529 intact to use it to pay for his kid's college, and I didn't know how good an idea that would be. No, I wouldn't do that. And then the other one wanted to – we talked about putting half of it in a Roth IRA and putting the other half just in a brokerage account. They're both – they're not minors. They're college students now. And we could certainly pull out the same amount equal to their tuition and then just use that for anything really, I suppose. Yeah.

1:55:16Dave Ramsey:Yeah, but that's using it. I mean, so, I mean, we get the money out of the 529 is the answer to your question. And then whatever you guys want to choose to do with that money and how you want.

1:55:26Rachel Cruze:If there's leftover, he can use the rest for the kids or cash out some penalty.

1:55:28Dave Ramsey:But I would rather have a pile of cash for your son's kids in mutual funds that's not in a 529 than have it in a 529. Because I don't know what 20 years is going to do to 529s.

1:55:44Thank you.

1:56:11Rachel Cruze:When I talk to people on The Ramsey Show, 90 % of the problems I hear come down to one thing, not having a plan. They're not living on a budget. They have no idea where their money's going. Money is just happening to them instead of them happening to their money. And guys, that is so normal, but it doesn't have to be normal for you. And that's why I want you to go download our EveryDollar budget app. EveryDollar not only helps you tell your money where to go with a budget, It also builds a plan to free up extra money so you can pay debt off faster and start building wealth. And the best part, your plan is completely personalized to your life.

1:56:49Rachel Cruze:It's the same advice that you would get if you called the show. And it's right in your pocket. So don't keep living normal. Go download the EveryDollar app, answer a few questions, and get your plan today.

1:57:14Dave Ramsey:Our scripture of the day, Luke 14, 28. Suppose one of you wants to build a tower. Won't you sit down first and estimate the cost to see if you have enough money to complete it? Mitch Albom said, one half of knowing what you want is knowing what you must give up before you get it. Oh, there it is. Our question of the day is brought to you by YREFI. If private student loans are in default and it's knocked you off track, This is how you reset. YReFi works with borrowers that other lenders won't work with, helping you refinance defaulted private student loans with low fixed rates so you can get back on the plan and move forward.

1:57:50Dave Ramsey:Visit YReFi.com slash Ramsey. That's the letter Y-R-E-F-Y dot com slash Ramsey. Might not be in all states.

1:57:58Rachel Cruze:Today's question comes from Joe in Pennsylvania. I lease a new car every three to four years because I'm retired and I don't want to deal with brakes or tires or any other maintenance issues. I'm not hurting for money and can afford to pay cash for a new car if I wanted to own one, but I don't. So what's your opinion on having a lease in my situation instead of a paid off car?

1:58:21Dave Ramsey:A lease is the most expensive way to operate a vehicle, mathematically. Period. you're getting screwed. And so if you simply don't, you want to keep a new enough car that you never have to buy a set of tires or buy a set of brakes, then you're just going to be trading cars every time that you need to do that, every three to four years, and pay cash for your cars. That's going to be the least expensive way to do this because the lease is capitalized on MSRP, meaning those stupid payments that you're paying are based on the full sticker of the car. But if you walk in and buy a brand new car, and I'm assuming you have a million dollars or more and can afford to do that, and you're going to walk in and buy a brand new car, you can buy them at invoice or$500 over invoice or$1 ,500 over invoice if it's a premium vehicle.

1:59:11Dave Ramsey:And so you're getting the best possible buy, paying cash.

1:59:19Dave Ramsey:But, yeah, you got money to throw away is what you're saying, and you're throwing a lot of it away.

1:59:25Rachel Cruze:a lot of it it's just being wasteful yeah at that point but yeah but it's if you've got you know if

1:59:31Dave Ramsey:you got 10 million dollars i don't know we don't know your net worth or your income you just said you got plenty of money and we have to take your word for that i'm not sure i believe you but anyway uh because usually people that have plenty of money don't think this way um this is usually like broke people think this way but anyways no don't lease it if you got 10 million dollars and you want to waste some money so you never buy brakes or tires, then buy a new car ever so often and pay cash for it, and you'll get a better deal. Do what?

2:00:00Rachel Cruze:I said it's just so funny to me. Like the brakes and tires thing. It would be one thing of like, hey, I'm a car person, and I love new cars, and my thing is cars, and I just want to buy a new one every four years and drive something new. But I don't want to deal with the maintenance. A part of me is like, I don't think that's the truth. I don't know. Like that's just like a funny, I'd rather him be like, I just like cars.

2:00:17Dave Ramsey:It's not what people say that are wealthy usually. It's just not. It's not. It's not.

2:00:22Rachel Cruze:Well, if you're that wealthy, you just have someone to go and take your car in and do it for you.

2:00:27Dave Ramsey:Hello. Just call my guy. Yeah. All right. John is in Reno. Hey, John, what's up?

2:00:35Rachel Cruze:Hi, Dave. Hi, Rachel. Thank you so much for taking my call. It's a real pleasure. Longtime listener, first time caller. I'm looking for some Papa Dave advice on if a prenup makes sense for my situation. Maybe I'll give you a little bit of background. I'm 28 years old. I've been dating the fiance that I love to death for five years now, and we got engaged last year. And we have a wedding scheduled for next summer in June.

2:01:00Dave Ramsey:Awesome.

2:01:01Rachel Cruze:And, yeah, yeah, definitely awesome. I know, like, previous calls that you said that there's a – it only seems to make sense that there's a significant gap. And the pastimes I've heard when you guys are discussing it, it's usually, like, someone has a million dollars, another person has, like,$100 ,000. So my situation is I have$230 ,000 of the net worth, and she doesn't have – she has zero, no debt. I have no debt.

2:01:27Dave Ramsey:No, you don't need a prenup. Okay. She's worth a quarter million. Okay.

2:01:35Rachel Cruze:She's been hanging around five years. Yeah, yeah, that's fair. And then, yeah, I think the reason outside of that gap, I was contemplating the idea that I like that we would both know the terms of if we were to end the marriage and if something bad was to happen.

2:01:56Dave Ramsey:Well, you do know the terms. The laws have set them in place. Typically, the judge is going to split the baby in half.

2:02:03Rachel Cruze:Oh, my gosh. What a horrible example.

2:02:06Dave Ramsey:It's from the Bible. It's from Solomon. Okay. Look it up. All right. Anyway, the, um, oh my gosh, it's an old saying, Rachel, you're okay. You're okay. Calm down.

2:02:18Rachel Cruze:I know.

2:02:18Dave Ramsey:I just feel very, you're going to turn whatever, whatever net worth you guys have grown together in your life together is going to be split down the middle. That's the terms typically. with rare exceptions, with rare exceptions. And your 230 is not enough to tip the scales that much. She may out-earn you through the next 10 years. And so, you know, that could come up that way too. So, no, I wouldn't in this case. I want you to fight for working together, fight for alignment, fight for shared goals and vision and serving each other and having a wonderful marriage and never worrying about whether we have to split this down the middle again.

2:03:05Dave Ramsey:Okay. So. Okay. Thank you. Thank you. Yep. All right. Good question. All right, Rachel. You don't know the Bible story?

2:03:14Rachel Cruze:Well, apparently not. Okay. It feels very Moses.

2:03:17Dave Ramsey:Well, Solomon, the wisest man. Yes, I got that. He wrote Proverbs. He was sitting in judgment, and a lady brought her baby up, and two women were fighting about which child it was, and he said, well, just cut the baby in half.

2:03:29Rachel Cruze:Oh, and whichever one the mom said. Okay, yeah.

2:03:31Dave Ramsey:And whichever one the mother was. That feels like an old. Agreed and said. And so the saying is, split the baby. That's where it comes from. And the mom. The real mom says. No one literally splits a baby, Rachel.

2:03:43Rachel Cruze:I know, I know, I know. But it's just such a sad. I don't know. Oh, my gosh.

2:03:54Dave Ramsey:There's no show like when Rachel's on. I don't like it.

2:03:57Rachel Cruze:I don't like it.

2:03:58Dave Ramsey:Paul's in Philadelphia. Hey, Paul.

2:04:01Rachel Cruze:Solomon.

2:04:02Dave Ramsey:Hey, Dave and Rachel. How's it going? Great. We're short on time. Go straight to your question, boss.

2:04:08Rachel Cruze:We'll make it easy. So mom died last year at 55. I'm 28. She left about half a million dollars in debt. That's$30K business debt,$200 ,000 mortgage,$180 ,000 in medical debt from a heart attack,$50 ,000 in personal debt. Well, she also left the business. The business is a home care business, non-medical, not nurses or anything, just caregivers coming in to take care of grandma. The business makes about$800 ,000 a year. Profit? 47%, I wish. No, 47 % gross profit.

2:04:44Dave Ramsey:What's the net profit? It's not, that's under 50K. Oh, it's not worth screwing with. Okay. You're going through a million dollars to get to 50K? Oh, my God. What a horrible thing. All right. I know. Can you sell it? Coming from the business I'm in, that's the question.

2:05:04Rachel Cruze:Do I sell it now? Yes.

2:05:06Dave Ramsey:Walk away? Yes. If somebody will buy it. And here's the thing. Here's the thing. You're not liable for her debts. Her estate is liable for her debts. And if her estate does not have a positive net worth, her debts are not going to get paid. So she didn't leave you$180 ,000 in debt. She left that in her estate. Now, if the business brings a million dollars, then you've got to pay off her debts out of the million dollars before you get anything. so what you own stands good for what you owe when you die assets minus liabilities is your net worth you do not inherit debt

2:05:53Rachel Cruze:did you know that so even with the business yeah i mean if the business has a positive if the

2:05:59Dave Ramsey:business has a positive value then yeah you're going to have to use that value to first clear up her debts, which would include her medical bills. Okay? But if it does not have a positive value, you are not personally responsible. Yeah. Right. I got that. Okay.

2:06:18Rachel Cruze:But you think it's a smart thing to...

2:06:20Dave Ramsey:Get out of it. You don't want it. You wouldn't go out and buy that business. Do you have any idea what you can get for it? Probably$400 ,000 to$500 ,000. Good. And that'll clear up all of her debts, right? Yep. Okay. That's the plan. Yeah, that's exactly what I'd do. I got rid of two headaches, creditors and a business I didn't want that doesn't make any money. This is all happening for me. I like it. 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.

2:07:04Thank you.