The Best Financial Plans Don’t Rely On Debt

22:34Dave Ramsey:It's to honor the position of parenthood. We honor our father and our mother so that we may live long in the land, okay, to quote Old Testament, right? And so we want to honor, but if mom's doing cocaine, we don't honor the cocaine use. Or if she's being verbally abusive to you, Claire. In other words, if she's misbehaving. Yeah. Yeah. So we don't honor misbehavior, but we do honor the position. So the same would be true where we're called biblically to honor our leaders and pray for our leaders. So, you know, I didn't agree with much of anything Joe Biden did, but I honored the position he held as president.

23:16Dave Ramsey:And I prayed for him as a person. But I don't have to agree with any of his policies to do that. It's the same thing. You honor the position, not the— And the current one. And that's got to do with your nobility and your dignity. But that does not mean you are enabling or allowing ridiculous, you know, interactions. And so— Okay. You know, just—if you get above that and go, you know, I honor—you know, you can honor fatherhood and have never met your father. Claire, what is it currently, your relationship dynamic? Because are you taking care of them financially? What's going on? Yeah, so my mom lives overseas, so I was financially taking care of them, taking care of her in terms of just like helping out monthly.

24:11but it got to a point where I was overextending myself too much and I fell back into a lot of debt that I thankfully was able to pay off by just hustling for the last couple of months with work and picking up as much overtime as possible but and I still owe a little bit more because I still have to pay for some things that I shipped overseas to her that have landed but we I talked to her today and she got frustrated at me because I had to cut off from things financially because it just was not in my means anymore. And she said some very hurtful things to me that I know is not true to my character, but I just, and I, it was not right.

24:50I yelled at her and I got upset because of what she was saying to me. And, you know, I prayed about it and I repented. And then I sent her a text, but she blocked me. So I was just like, I don't, it's a little frustrating. So it's a dysfunctional relationship. And then, you know, you're trying to be generous and kind and helping her, right, with the financial support monthly. So it's more just about boundaries, Claire, and you having integrity within yourself to say, I still feel good about this action of taking care of, because you may, right? She may be horrible to you, but I don't know what her living situation is.

25:23And maybe you think, I still want to be able to make sure that she's good. And that's the route you want to take. Then maybe from the relationship perspective is where the boundaries have to be, or vice versa. Maybe you look up and you're like, I can't have a relationship anymore and I don't feel good financially, maybe because of your numbers or just because of the whole situation. Right. With whatever you decide. Yeah.

25:46Dave Ramsey:The thing that happens is when we're helping someone, entitlement can set in. And she felt entitled to your money. and when you said i'm not able to do that for whatever reason it was as if you took her money away from her because she already owned it in her mind that's what entitlement means okay she feels like she already owned your money and like you stole it back from her and that can be compounded and made even worse by uh cultural norms what country is she in West Africa. Yeah, for sure. Cultural norms are at play in this, right? Because it's much more normal there for generations to take care of each other, even if they go broke doing that, which is dysfunctional, than it would be in America, where we're very compartmentalized from our extended family.

26:49Dave Ramsey:And that's a cultural norm here. One's not right, one's not wrong. It's just norm. Because, you know, that there has its roots in just sheer survival. This idea that you take care of your mom. You take care of your kid. You take care of your auntie. You know, you take care of... Well, yeah. And, yeah, you could look at all different cultures, right? And families living together, multigenerational, all of it. But, okay, so going forward, Claire, what's your gut? What are you thinking? So moving forward, my thing was to just... I told her, I said, I cannot help for a while because I have to get financially stable and I can't help you if I cannot help myself first to get on a proper footing.

27:31And she seems like she understood. But at the end of the day, I really come down to, I don't think she understood really, because it's hard for her to comprehend that. The more I try to explain my financial situation to her, the more she thinks, oh, well, you make this much money, then you should be able to help me with this much. so I kind of had to stop telling her so much about it. So I sent her some things overseas that should help her for the next six months to a year. And that's what put me in debt because I spent a lot of money on things that I knew would be beneficial to her for her to sell and make money over there.

28:08And I told her the reason why she's upset at me is because I told her I cannot transport the things from the dock to your house because she lives three hours away from the port. I said, you have to figure out a way or I can talk to the shipper to maybe, like, work something out where you can go get it little by little. And she's just like, oh, you left me in a bind and my husband's not working. And I'm like, okay, well, and she's my stepdad. But I'm like, it's not, I didn't make him not work, so I didn't know how to respond to that. And I just, like, got so mad because she kept on telling me, you know, oh, you're a good for nothing daughter.

28:39Like, you don't help me out. You put me in a bind. You're doing this. I'm like, in my mind, I'm like, wow, okay. So I just started yelling. I'm like, I have feelings too, you know, and it's not fair to me. She's like, it is fair to you. You need to like, you know, it was just a lot. And I, like I said, I didn't want to yell at her. Yeah. Well, it's yeah. Is that a pattern though with your relationship? Did that, did that shock you that she responded like that or. It did. It did not shock me, honestly. It was just more of like a quick instant response just because of all that's been going on, but it did not shock me.

29:10I was not like upset in a sense, but I was more than just hurt by what she said. Two areas that you need to clarify in your mind, your boundaries, and you may want to sit down with your pastor or somebody and discuss it.

29:22Dave Ramsey:You need to clarify your relational boundaries as to what am I willing to let someone that I love say to me? How am I, you know, Mom, I'm not going to have this discussion. If you're going to raise your voice, we'll have to talk another time. If you're going to cuss at me, we're going to have to talk another time. Okay. And just hang up. and when you, you know, I'll talk to you as long as we can talk reasonably. We can disagree, but we're not going to be disagreeable. And that's one set of boundaries. And the second set of boundaries is what amount of money is reasonable? You putting yourself in debt does not make sense to do this.

29:57Dave Ramsey:So that's unreasonable. But if you're going to ship goods over there, you need to think about how you're going to get them to her. You know, the three-hour gap is a bit of a problem on your end. So, I mean, how did you think that was going to work? I don't know why it would work. It shouldn't work. So you probably should have gotten them all the way to her doorstep or not done the whole shipping of goods thing, one of the two, because you knew she didn't have the ability to get there. So, yeah. So, yeah, you set your financial boundaries and your relational boundaries, and they should be two different.

30:32Dave Ramsey:They're not tied together. My financial boundaries aren't tied to my relational boundaries. I can have a quality relationship and give no money. I can give a lot of money and not tolerate misbehavior. They don't have to go together. But for sure, those things. But what this did is it put you just completely into a tornado. And it hurts. It hurts. And so, yeah, just back up and de-escalate and reset what you are willing to do. And then the next time you approach a conversation, what am I willing to do with the way we talk about things, our relationship? What am I willing to do financially?

31:38Dave, we got a lot of calls on this show where life happens. One day someone's healthy, they're working, providing for their family, and then a curveball hits.

31:46Dave Ramsey:You know, we hear it all the time. A car accident, a cancer diagnosis, a heart attack, and suddenly everything changes. Yeah, and that's why you've always said that having term life insurance from Xander is essential because it protects your family if the worst happens. 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. Yeah, it's important to understand the difference between them. Life insurance steps in when you die.

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33:33Dave Ramsey:Jessica is with us in Los Angeles. Hi, Jessica. How are you? Hi. Hi, I'm doing well. How are you? Better than we deserve. What's up? Hi. Well, I wanted to ask you guys a question. A little background. I'm 32 years old, and I am an attorney in L.A. County. I've been working hard to save up for my retirement and investments and all that. And I've been in a long-term relationship for about three years with my partner, who's 41, and marriage is on the horizon. And I just kind of, I had my suspicions, but I recently found out that, or confirmed that he doesn't have any investment accounts or like retirement accounts.

34:12And so this really concerned me. And I just wanted some insight from you guys about, you know, how big of a red flag is this? You know, can he catch up? am I being superficial for even being concerned about this at all? So just really wanted your insight. Wow. Do you know why, Jessica, that he has no retirement? I asked and kind of the common responses might be like, you know, I was just planning to work my whole life, which it's like you don't have that choice, right? You could get injured, have a disability. Other things were like, you know, I haven't had benefits in the past, maybe working for smaller employers.

34:52He's a sole proprietor now, so it's just kind of a mix of...

34:55Dave Ramsey:What does he make? I don't know exactly. It's three years. You need to know. I know, I know. I think approximately, probably gross,$100 to$150. That's kind of my guess. He told me once. Gross is not net. I mean, what's his taxable incomes? Is he making$30 ,000 and trying to live in L.A.? I know I should know that, but I don't because, you know, he recently went out on his own. And so when you kind of start your own business, year one is, you know, zero pretty much. Does he have a lot of debt, Jessica? No. If the reason that you want to know is because you're greedy and all about money, then yes, you would be superficial.

35:37Dave Ramsey:But if the reason you want to know and the reason you want a plan in place is because the way we handle money is indicative of our emotional, psychological, spiritual maturity and our character is reflected in how we handle money, then yes, this is of great concern. Yeah. And I, the reason why I felt, and this might come from a selfish place, but I couldn't help but feel like all this time that I've, you know, the money that I've responsibly saved in multiple accounts and whatever, I couldn't help but feel like it would be a subsidy for someone else. And I know the whole, you know, once you're married, you're one, I totally understand that.

36:20But you can't help but feel like maybe your retirement quality of life would go down because. Yes, but I think you would feel different, Jessica, if we painted a little bit of a dramatic picture. But if his parents were sick and he was their caretaker and like did all this and didn't have the margin to say for retirement, but he was telling you at 45, this is his plan. You know what I mean? Like if there was like an effort for the reason why and a good reason, I don't think you would feel like that. I think you'd be like, God, you are a good man and you're going to be a really great husband and I'm excited to partner with you.

36:52It wouldn't feel like a subsidy if what he was doing was honorable.

36:55Dave Ramsey:But if you're subsidizing, I really don't want to plan, and I kind of just want to work for myself, even though I make half of what I would make working for somebody else. And, you know, all of this screams lack of ambition, lack of, you know. Well, lack of planning and forethought. forethought. And when you go into a relationship with someone, right, a long-term, lifelong, and they don't have the ability to think far out in the future and monetarily of just taking care of the family. It's not a deal killer, but it is not superficial for you to be concerned either because what it's indicative of.

37:34Dave Ramsey:And so what's the source that's driving his lack of doing it? because you're, you know, and we could go on the other side and go, are you obsessed with money? And all you do is think about retirement. I don't want to live with somebody like that, you know, and no, we don't want to go that way either, right? But this idea that we're solving for peace, again, to quote Dr. John Deloney, which we do over and over, I'm afraid, but I'm solving for peace. Why am I saving for retirement? So I can eat. That's solving for peace. Yeah, and if I don't have a partner that's going to be not even equal dollar amount.

38:08But equal effort, you know what I mean, in that, yeah, that's hard. Equal concern. And it's not a woman versus man thing. I think the opposite would be the same. If a guy called and said, yeah, she has nothing, she hasn't really thought about it, I'd be like, golly, what is she doing? You know what I mean?

38:27Dave Ramsey:I don't want to be a kept woman. Yes, yeah. That's an old phrase. Some of y 'all have to look that one up. I will. I will have to break. There you go. Kelly doesn't know either. Well, again, it's someone who doesn't do anything and is being taken care of. Yeah. Kept. Yes. That's the definition. That's an old. And that's not a stay-at-home mom. No. No, I know. I hear in the comments. I didn't say not earning income. I didn't say that. I said doesn't do anything. Yes, that's it. That's it. I just want to say that out loud. Yes. Your mother's a full-time mom for 40 years. She's anything but kept.

38:59Dave Ramsey:Yes, that's right. I'll just tell you that. Don't even put that word near her. That's not even going to be good. Hey, buying or selling your home is a big deal, and you want an expert in your corner because it's expensive. You want somebody that fights for you to help you get the best deal for the right price. The Ramsey Trusted Program is the only way to find the top high-octane, high-protein agent in your area that you can trust to make buying a home a blessing, getting your home sold, make it a blessing. It's easy. To find a Ramsey Trusted Real Estate Pro for free, just go to RamseySolutions.com slash agent or click the link in the show notes and in the description.

39:41Dave Ramsey:And Rachel, I think the later people get married and they're getting married later and later and later, the more this type of discussion comes up. 100%. Yeah. Two broke 21-year-olds don't have this issue. You know, they're like, game on. Here we go. Whatever it is. Let's go. You know, and saddle up, right? Yeah. And it's worthy of the discussion. Oh, definitely. Because if you've built a life and you've worked hard on something and you have had a set of principles financially through your 20s, even your early, your 30s, whatever that is timeline-wise for you, and then you choose to get married to someone, you have built a substantial life over one to two decades of working.

40:23and it's, and I do think it would be easier to merge and mold those two lives when your values are the same, but when you're coming at it so separately and your results have been so different over the same amount of working time or hers are even, I mean, he's 10 years older than her, you know, and he has nothing and she's 10 years, you know, the last caller. Do you know what I mean? Like that's where the, that's the hard part. That, that is, that's the tension point because it, it reveals, it reveals who you are and what kind of partner you're going to be.

40:54Dave Ramsey:Ratio-wise of income to savings, there should be some kind of something going on. Yes. Not dollar amount to dollar amount. That's a good point. It's not about the money amount. That's right. It's not about I'm going to measure your value based on your bank account. That's not it at all. Right. But we are saying what created that, what character qualities, and are those character qualities attractive or are they going to cause you to become bitter out of lack of respect. Yes. Resentment of what they're doing. Yeah. If you lose respect right after that comes resentment. Yep. And so, you know, okay, I really like him.

41:31Dave Ramsey:He's, you know, he's a lot of fun and all that, but I don't respect him. That doesn't play long. That's right. Yeah. But if it's something as simple as, I've got to address this because I'm afraid it could go to that. That's okay. And you go, before we go forward with marriage, I've got, we got to be on the same page with this and I, I want to be able to respect your effort. Yes. Respect your forethought, your maturity. And if we can't do that, that isn't it. That's going to be a deal killer. Not the fact that there's no money. That's right. Absolutely. Yeah. No, I totally agree. That is, that's a deal breaker.

42:07Dave Ramsey:And that's really tough when you've been in something for three years and you're 31 or 32 and you're an attorney. Yes. And also knowing people's values can change. We get the question a lot, should I marry someone with debt? And we're like, yes, you can marry someone with debt. But what is their value around that subject? Should you marry someone that wants to stay in debt forever? No. If you want to be out. Not if you want to be out. You're going to be pissed off your whole life. That's going to be hard. So people can change their values, right? With what the decisions you make. And that's the beautiful thing.

42:39There's redemption in it, right? It's not like who you were at 21 has to be who you are forever. Thank God. Um, yep. But, but it is, it's a more weightier discussion with people getting married later. You're exactly right. Cause you have built a life, you know,

42:53Dave Ramsey:we're getting a hair on the air more. The questions coming in here.

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44:42Dave Ramsey:welcome back to the ramsey show in the fair winds credit union studios randy is with us in green bay wisconsin hi randy how are you hi dave i'm great how are you better than i deserve what's up so i'm going to try to keep this as quick as possible my husband and i have a varying income and recently sold one rental property but now we're questioning whether that was the right move We still own a duplex that cash flows, and we're also going through probate with an inherited home. We could potentially sell both properties, pay off around$225 ,000 in debt, and fly through almost all of the baby steps besides retirement savings.

45:25Or should we keep them for long-term wealth building and cash flow?

45:31Dave Ramsey:Okay, so you own currently two properties that are rented. Did I understand that right? We have a duplex, and both sides are rented. But the other home, you said COVID, what'd you say? It'll be an inherited home. And it's not rented or anything right now. We're just starting probate. Oh, so someone passed away. Okay, who passed away? My husband's mom in March. I'm sorry. Okay. And so you're going to inherit her home and you're going to do what with it? Well, we don't know if we should rent it. There currently is about$40 ,000 in debt on DSP. So the home is worth around$150 ,000, but we would have to pay the$40 ,000.

46:25Dave Ramsey:Was that his childhood home? No. Okay. All right. And the duplex, does it have debt on it? It does. How much? It's about, so it's a little confusing. because we have two properties tied up in one mortgage, and we did just sell an older home that my husband lived in. We sold that, and it didn't knock our mortgage down. All in all, for our house on 40 acres and that duplex, we only owe around$180 ,000. The duplex is on the same piece of property as your home? No, it's in the same town, though. It's just in the same note? Do they have one mortgage on the two of them? Yep. I'm sorry? Yes, they do.

47:14Dave Ramsey:Okay. All right. So$180 ,000 blanket mortgage across two pieces of property. One of them is your home and one of them is the duplex. And then the inherited home has$40 ,000. And the$200 ,000 and something thousand dollars in debt is what? It's both our current properties, my car and some consumer debt. Okay, so it's the$180 plus the$40 is$220 plus a car? Right. No, it's around altogether$225 for all that. How much is the car? The car is around$28 ,000, and I'm about$5 to$10 underwater, depending. I've had it for sale since summer of last year, and it's not selling. I even have it undervalued. No, you don't, or it would have sold.

48:11My bank told me not to sell it. I have it listed for$22 ,000, and the bank told me it's worth$24 ,000, and I'd be silly to sell it.

48:19Dave Ramsey:Yeah, bankers don't get to advise me on finance. They're just where I keep money. the last thing you want to ask is a banker about debt that's like asking a dog if it's hungry and so so what is your household income it varies so my husband works full-time he doesn't make much makes around$20 an hour I stay at home with my baby but I do work on weekends I bartend so it's all over the board. How are you paying all these bills? Our rental income is a big one. It does pay the mortgage and all of our escrow. That's why we're like, we don't know if we should sell because it cash flows so well. How much you guys on average would you say, Randy, bring home a month though?

49:09Everything in total? I would say around$4 ,500. Okay.

49:14Dave Ramsey:Yeah. Okay. Okay. I would sell mother's house and I would pay off your car and I would pay off your consumer debt and I would get on a detailed written budget to where you're running this like a business, not just a wish, not just like a wish. You've kind of just been throwing stuff around and hoping it worked. And you've got to really have to get very, very practical and very detailed and live on your income. And the two of you are going to work on your careers, y 'all suck at earning money. And so you need to really get some income coming into this house. And then you can work to pay down the 180.

49:54Dave Ramsey:But no, I wouldn't sell the duplex today. I would sell mom's house and clear this stupid car. And don't go buy in$28 ,000 cars when you make$20 an hour. Yeah. And hopefully they could clear, what, almost 100 after, if she owes 40, it's 150. Yeah, and then, well, you've got to pay off the$28 ,000 car and the consumer debt, which I didn't get all the way to the bottom of that. Yep, yep. So another$10 ,000 or$15 ,000 probably there because the numbers don't add. But anyway, yeah, so you need to get very detailed on your monthly income and what it goes to and begin to whittle down the$180 ,000 that you do keep at the end of the story.

50:33Dave Ramsey:But everything else I would sell mom's house and I would pay off your car and then get on a detailed budget, pay off all the consumer debt. They cut up the credit cards. And I don't think she didn't give us her primary home total of what they owe and the duplex. All together. 180. But all together. It was a blanket mortgage. One mortgage on the two of them. On both of them. Yeah. So they've got that deal down at the credit union. Yeah. The banker helped them with that. So, yeah. Blanket mortgages set you up for problems when you get ready to divest properties, when you get ready to sell a property.

51:08Dave Ramsey:because most of them don't have properly done release clauses, meaning that you can sell the duplex for$180, and they take the whole$180 against the debt, and you get nothing because there's no partial release clauses on blanket mortgages. So that sets you up for a problem, and that's a typical thing. Is that one reason why you wouldn't sell the duplex because of that, because it's tied into the same mortgage? No, I think she's making money on it right now, and they're dependent on it right now. But if we got rid of the car payment, now the cash starts to flow, and we get on a tight budget, now the cash starts to flow and we can start to whittle it down, you might be able to keep the duplex in time.

51:44Dave Ramsey:But I'm hoping it can. And I can't tell where this is, you know, we didn't get into every single dollar there. But, yeah. Yeah. So. But income is key there, Randy. If you guys, and after you sit down and run your numbers, I think it will give you some piece of having actual plan because everything is just feels so muddled together. And you're like, I don't even know like what to do here and there. And once you've laid out a plan, then you guys are able to say, I need to work X amount more per week. He needs to work X amount more per week for us to clear everything in four years, three years, you know, whatever the timeframe looks like for you guys.

52:24And to actually have a plan and then you can shape your life around. And that actually will probably give you the motivation then to actually play all this out. because when everything is just in your head and it just feels like there's no succinct order, it feels like more like chaos.

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55:09Dave Ramsey:So check it out, EveryDollar for free in the App Store or Google Play. Nate is in Cleveland. Hi, Nate. How are you? I'm doing well, and you? Better than I deserve. What's up? Well, my question today is, so me and my wife, we're about$65 ,000 in debt. I recently left my full-time job and started my own business because I was making significantly more. My question is, I want to get the heck out of debt. And my question is, how much should I be taking home from the business, but also leaving enough in the business to grow it? Okay. So what is the business profiting? You said you're doing a lot better.

55:58Dave Ramsey:That's awesome. What's your profit? Yes. So my profit, I am consistently bringing in$2 ,500 to$2 ,800 a week. Profit or gross? Profit, what I'm bringing and what I'm bringing home. My gross is being close to$5 ,500 to$6 ,500. Okay. What are you doing? What kind of business? I have a mobile mechanic business. Oh, good for you. That's awesome. Thank you. Okay. And so it costs you about$2 ,000 to$3 ,000 a month to operate. And you're making, did you say a week or a month? You said a week. A week. The past three weeks, I've brought in consistently$2 ,500 into my household. After expenses. Okay. Yes.

56:47Dave Ramsey:Okay. So you're making like$10 ,000 a month? Close to, yeah. Yeah. If you keep this pattern going anyway. All right. And good for you. Man, you're hustling. Yeah, well done. That's awesome. Thank you. And so what do you need to put back into the business to grow it? You seem to have it operating very well already. Well, part of this is I've been operating part-time about 16 hours a week since January, and the last three weeks I went full-time. Yeah, but that doesn't mean you need to put money back into it. You're making more money. Right. So I have about$50 ,000 in tooling that I still have to get, and I'm also getting to the point where potentially in the next two to three months I could look into adding another person.

57:45Dave Ramsey:I'm not adding anybody right now. This is a whole three weeks old. Right. So we don't need to – let's just put off talking about adding somebody. And by tooling, you mean purchasing tools to do the job? Yeah. So you already have enough tools to make$10 ,000 a month if you never bought another tool. Right? I guess that's correct. Nate's excited. He's excited about his business. I want you to be excited. I'm excited, too. But let me tell you what happens with guys like you and guys like me, okay? If I go in Home Depot, I discover things I need that I don't even know what they do, but I need one of them.

58:29Dave Ramsey:And so what happens in your world is you can tool yourself all the way through your profit. Right. And the Matco guy is making all your money then. Yeah. And down that road and getting out of that road. Exactly. Or whoever. Whoever's pitching you the tool. So you need to be very careful. Tools are not fun. Tools are overhead. Overhead is evil in business. And so you don't buy a stinking wrench unless that wrench is going to make you more than it costs you within the next two or three weeks. Well, the reason why I'm talking about tooling is specifically like there are jobs that I'm currently not able to do.

59:15Dave Ramsey:So what? But you're making$10 ,000 a month after three whole weeks in business. I mean, it's okay to add some of those jobs, but I don't know when you're going to do them. Right. But he's saying they pay more, right? So one job could be two grand, and then if you had this tool, I don't know, what, double? I don't know, or whatever it is for you. Only if you by yourself can make more money because you bought the tool, not because you can get jobs. Yeah. The tool has to make you more money because we get caught up in this thing of I could, you know, I'm turning down work. No, you're not. You're busy already 15 hours a day.

1:00:02Right.

1:00:03Dave Ramsey:Unless you can make double the hourly rate because of the tool, the tool has zero value to you right now because logistically you booked up. Gotcha. So I'm doing accounting now is what I'm doing. I'm not working on cars. I'm doing accounting with you. So if you're averaging$10 ,000 a month with the hours you have, unless you can average an extra$5 ,000, don't spend$2 ,000 on the tool. Gotcha. Because it didn't cause your income to go up. It just meant you could go to a different kind of a job than you're doing right now. Whoop-dee-doop-dee. Now, when we get ready to hire somebody six months from now, and you've actually got some downtime that you need to fill up, some available hours in the day, and the tool adds those jobs, now that tool's going to ROI quickly, and you're going to buy that one.

1:00:56Dave Ramsey:Gotcha. But your goal is not to end up with a trailer full of tools. Your goal is to end up with a pile of money. Yeah. That's what the tools are for. And that that I get like I'm sitting in a studio right now. It's a different world, but it's the same kind of principle. OK, when it comes to computers and electronics and cameras, my friends in the engineering department that work for me and Ramsey have no end to their appetite. They will buy two million dollars worth of crap that that this crap sitting here would already do. And I have to go, no, we're not doing that. But then also. But then also, Dave, you're going to look prettier.

1:01:37Dave Ramsey:I'm like, not that much prettier. And probably not. She's probably going to show off my ugly a little better. But that's all. But, I mean, this is the world you can get into where the increase in equipment, minimal functional. Yeah. Okay, so where's the balance of putting money back into the business? Only put money back. I know, versus paying off the$65 ,000 that he has in his household debt. I don't think he's going to have trouble with this because I think he needs to take most of it home right now. And pay it off. The reason is that putting money into the business right now is not going to cause his income to go up because he's already fully booked.

1:02:13Dave Ramsey:Now, if you're not fully booked and you can buy a tool that causes you to be fully booked, then you put that money back in. But that's not$50 ,000 worth of tooling, which was his original quote, and I'm all the way down to about$2 ,000 now. But$2 ,000 at a time, then when you add somebody and you've got available logistic hours, Now we can grow the scope of the business, the size of the business with the tooling. So, you know, we're going to tool up a little bit with cash, but you still got plenty of money, making more money than you've ever made in your whole life. It's awesome because you ain't afraid of work and you're out there doing it, man.

1:02:48Dave Ramsey:You know how to do it. This is, I got a feeling you're going to, this business, when we talk to you in three years is going to be, you know, six trucks running. If you're not careful, because also I would say him, I would say you, certain personalities, you do get excited and then you get up over your skis and you're like that and that's where well i could borrow on this truck i could do i could do that you know what you mean and you start to right but you it can start to expand so quickly and so but let's pretend there's a level of stability that's good let's pretend he was making five thousand before he quit his job now he's making ten and he got sixty five thousand dollars in debt he's debt free in a year easy yep easy and uh so you know just just figure out your math that way and then what we have done at ramsey i've organically grown this from a card table in my living room where we're sitting now and organically mean i took profit from the company and i bought tools i i hired people i used some of them i didn't take the money home i put it back in here but in every case those things have to give me a return on investment otherwise we're going backward and backward It ain't the plan.

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1:05:35Dave Ramsey:Mary is in Charleston. Hi, Mary. How are you? Good, Dave. How are you? Better than I deserve. What's up? Yeah, I have a just a, mine's probably pretty simple there. I have a question as far as our mortgage and paying it off. So we owe$110 ,000 on our house. It's worth about$400 ,000. And we pay$5 ,800 a month right now. Our mortgage is only almost$1 ,500, but we've been paying extra. And in doing that, our payoff, if we pay it off in, we have 23 months and we'll have it paid off. But if we chose to pay it off in 12 months at$5 ,800, then we would have to take some money out of our high yield savings to finish paying it off.

1:06:31And we have about$70 ,000 in high yield savings right now. and I've proposed that we take out after 12 months, continue paying the$5 ,800 for 12 months, and then take out$55 ,000 out of our savings is what we would have. I believe that we would have to pull out and leave about$15 ,000 in there at that time and pay the house off. So I just want to confirm with you that seems like a wise thing to do.

1:07:03Dave Ramsey:Yeah, so the difference is 12 months with your plan, or the original plan is 23 months. Right, right. So the argument is 11 months difference. Mm-hmm. And how old are you guys? I'm 56, and my husband's 60. And how long have you been married? For 11 years. Okay. And how much do you guys have in your nest egg, your retirement nest egg? In retirement, we have almost close to$200 ,000 in 403B. We've quit putting so much into it while we've decided to pay this$5 ,800 a month rather than the$1 ,500, the almost$1 ,500. We cut back and only... Yeah, and your household income is what? $160 ,000. Okay, all right.

1:08:00Dave Ramsey:So let's just back up and say both plans are in the smart column. Okay. There's no you're so stupid I can't breathe checkmark on this one, okay? I mean, both of these are very wise. This is an argument between, you know, minutiae, okay? And so neither one, you said he wants to do it the other way. You want to pay it off early. but he's worried about having not as much emergency fund. Am I reading between the lines? Yeah, and I told him I watched your show one day, and I said I think he said get uncomfortable for a while, and that's when I came up with the plan of I even suggested we leave$1 ,000 in there, and he's like, no, I'm not that uncomfortable.

1:08:45No, no, no, no, that's not our plan.

1:08:46Dave Ramsey:Our plan is your baby steps four through six, four through seven, you leave your fully funded emergency fund in place. and I think$15 ,000 is a little tight. I'll kind of come down on his side there. So maybe between the two of you is the answer because I also think$70 ,000 is a little high. Okay. Yeah, how much are your expenses every month, Mary? You know, not much, really. We're bringing home about$8 ,200 a month, and like I say, we're able to pay$6 ,000 on our and live within means and not take out a high-yield savings or anything like that. So our expenses aren't. We don't wear out of debt.

1:09:31So if you went in the middle and just said if we lost all income, right, and we had four months' worth, right, that's$32 ,000. So maybe you do throw, you know what I mean, some at it, but you guys are reasonable in the three - to six-month emergency fund, right, four - to five-month.

1:09:51Dave Ramsey:Yeah, you're in good shape. The 70 is high. The 15 is probably a little low. And so here's a fun game if you want to play it. Do the 5 ,800 for 12 months and then keep doing it every month until you look up and the balance and the high yield. You can pull enough out of the high yield. Wait a minute. I don't like that game all of a sudden because the high yield is not paying you what your mortgage is. What's your mortgage interest rate? It's high. It's 6.875. And your high yield's not but three, right? Yeah, it's just over three. So I want to go ahead and pull some of the high yield now. Yeah, why don't we see 15.

1:10:38Dave Ramsey:He says none, and you said 50. I'd go 35. Yeah, split the difference. Split the difference. That leaves you guys, again, with a four - to five-month emergency fund. Yeah. And with what you're going to save in the mortgage once it is paid off, You're going to have it bumped back up in six months, you know. And then you can also play my game. Okay. So you put$35 ,000 on it today. You pay$5 ,800 on it. And if you look up and he's okay with one month pulling another$10 ,000 out and knocking it off, and that's the last$10 ,000, you can every month look at it and go, if we paid it off this month, that would leave us this amount.

1:11:12Dave Ramsey:Oh, yeah. If we paid off this month, it would leave us this amount. and both of you sit down and look at it and be laughing and giggling while you're doing it, not wagging your finger. Okay, it's like, this is fun. Okay, are we going to pay it off this month? Are we going to pay it off next month? Keep the levity. Yeah, are we going to pay it off this month or next month or the next month? And then, you know, he's going to look up one of those times and surprise you and go a little further. You know, go on down to$20 ,000 balance or$25 ,000 balance. Now, Mary, I would want you guys investing in retirement, though.

1:11:42I mean, if you are following the baby steps, You guys need to be investing 15%. Are you? Because you said you pulled back some.

1:11:47Dave Ramsey:I'm putting none in. We pulled back. We were doing 15%. Completely. You pulled back completely. Yeah. Yeah, you got it. No, we're still investing 4%. We were at 15%. You need to go back to 15%. I spoke two hours. Go back to 15%. 15 even. Yeah. Okay. I was advised to cut back while we're paying the house off because our mortgage is so high. Six point, our interest rate in the mortgage is so high. Yeah, but the interest, the rate of return on mutual funds in a good retirement account is higher than your mortgage. Okay. So whoever advised you that. And your age right now. I mean, like, you know what I mean?

1:12:23I think it would be a little bit of a moot point, though, if it, you know, but if you're in your early 30s doing this. But they're in their, I mean, he's going to turn 60. So I'm like, I want, you want some in that account. Want more than 200. Yeah. Yeah. To be able to retire. Yeah. Because that is the balance about the paid off home, like where we are all about, yes, getting to that point, which is our baby step, you know, baby step six. But it does no good if you have a paid off house and you have no money to eat.

1:12:49Dave Ramsey:Exactly. Not enough money. So like you do want money in retirement. So what we teach, Mary, to follow our plan exactly would be to start putting 15 % of your household income. That's another 10 % more than you're doing now. Actually, lower the emergency fund. And lower the emergency fund down to, you know, three to six months, which would be$25 ,000. Okay. And so I'm going to put$45 ,000 onto the house. I'm going to start putting 15 % of my income away for retirement. And then I'm going to figure out how much I can put towards the house while putting 15 % into retirement. It won't be$5 ,800 anymore.

1:13:27Yep. It'll come back some.

1:13:28Dave Ramsey:It's going to be more like, whatever,$5 ,200 or whatever. and you're still going to be out in 23 months. That's right. And you will have been all along putting money into retirement and all along had a sufficient three to six months of expenses retirement plan and all along all your extra money then is going towards the house. And so that's what we teach. The baby steps four, five, and six are simultaneous. Four is 15 % of your income into retirement. Five is kids' college, not relevant in this discussion. and six is everything extra goes towards the house and the expense and no more should be in savings not non-retirement savings like high yield than three to six months and we're going to call that 30 25 000 right now and call it a day between that's what we actually teach if you're going to work our plan exactly that's what we would do and the truth is you'll end up with more money working that than either of the plans we discussed for the last eight minutes but it was fun discussing And either way, Mary, you're going to look up in two years and your life's going to be great.

1:14:30Dave Ramsey:None of these. You're going to be doing good. None of these options are in the stupid column. Yeah. None of them. And well done, Mary. Yeah. I mean, to get to this point, that's a lot of hard work. So you and your husband both. It's amazing. It's a good, healthy discussion between someone who's debt averse and someone who wants a pile of savings. Husband and wife. Love this discussion. And the fact that they're having the discussion. And it's a healthy argument. I like it.

1:15:39Dave Ramsey:Chris is in Boston. Hey, Chris, what's up in your world? Hey, guys. Thanks for taking my call. I'm a big fan of y 'all. Well, thank you. How can we help? So I wanted to ask the basic question of did my fiancé and I make a poor decision? on the house we just bought. And I was hopeful to kind of briefly go over my plan going forward and see if it aligns with y 'all's advice slash what you might suggest I do differently. Okay. What did you do on the house? Tell me about it. So the house was a$670 ,000 house and we did 10 % down. And so our monthly payment is$4 ,700.

1:16:31Dave Ramsey:And what do you make? So I have a salary of$120 ,000 per year, and my fiance has a salary of$70 ,000 per year. The big variable in that is that I work in sales and I get a bonus every quarter that can vary.

1:16:56Typically, three of the quarters will vary between$10 ,000 and$40 ,000, and then one quarter will vary between$30 ,000 all the way up to maybe$100 ,000. Okay.

1:17:08Dave Ramsey:Well, what we recommend for married people is that your payment That should not be more than one-fourth of your take-home pay, and you should be well under that with the numbers you gave me. So that's what I was – so with the – outside of the bonuses, if you remove the bonuses, our take-home pay is roughly$11 ,540 per month. Yeah, but we don't – we're not removing the bonuses because they're there. um even on the small end they it maybe around 60 000 per year at the small end that would still it still puts you it still puts you at a fourth of your take-home pay um i guess uh our main question was you know did we overindulge because it did drain pretty much all of our savings to get to it.

1:18:05Now, I did invest. And the way I did it was before listening to y 'all show and learning your take on it. I invested in real estate before I was paid off fully on. So we do have some debt that I wanted to go over as well. And so I but I long story short, I invested in real estate prior to paying off all of our debt, and not only, and including only having 10 % down on our primary residence worried me a little bit, and I know that that's not...

1:18:38Dave Ramsey:It's not best, and no, I would not be investing in real estate before you bought a house, and no, I would not be buying a house if you didn't, if you weren't debt-free, but you already did, so now let's get out of debt. Why don't you sell the rental and pay off the debts? That was going to be one of my questions. We've only owned it for about a year and a few months. My thought was selling the rental before it appreciating to its full value. It's not going to appreciate to its full value. At what date? When does it stop appreciating? Yeah, no, I understand that. There's no end to that question.

1:19:16But you just feel like the quick turn after you pay commissions and everything.

1:19:19Dave Ramsey:All you're doing is admitting your mistake, and that's the problem.

1:19:26But if you sold the property, Chris, I mean, if he only had it for a year, it probably doesn't have much equity in it.

1:19:32Dave Ramsey:Which means it sucks. Because it should have some equities? No, it's draining him. He's not making any money on it. Right. Unless you've got a bunch of equity, you're not making money on it. Yeah, but if he sells it for the same price, basically, he bought it for a year ago because it hasn't really appreciated much. and he pays fees, all of it, he's going to be under. Can you get out even, Chris? Yeah, that's my question. We probably could get out even, yes. Good. After everything. 20 % equity in it, but we do have very stable monthly income on it. No, you don't. No, you don't. I agree. No, you don't.

1:20:09I agree. It's useless.

1:20:11Dave Ramsey:You're spinning your wheels. You're breaking even at best on the monthly cash flow. By the time you include vacancy repairs and crap owning rental property, you have to make a lot more than you're making to break even. You are not breaking even. Not net, net, net over a 12 to an 18-month period of time. When you look back on it, that's what's going to happen. I've owned$600 million worth of real estate. Believe me. You have to have more margin than you've got to break even. Now, so I would get out of that. That's what I would do. And then all of a sudden, your house starts looking smarter. and I would use anything I can do to clear up.

1:20:43Dave Ramsey:What other personal debts have you guys got? I have 20 ,000 student loans, 9 ,000 car. She has 20 ,000 roughly student loans. Yeah, and you guys make a pile of money, so clean that mess up. Yeah, yeah. See, if you don't have this rental property hanging over your head like a hatchet and you don't have any personal debt at all, all of a sudden we're not sweating the house. Yeah, but I do hear you, Chris, with when the bonuses come, depending on the month, right? The instability is, yeah, on the low end. You said if you bring home$11 ,000, right? And$5 ,000 almost of it's being taken by the mortgage.

1:21:21On that one particular month, you need to have a fund. We call it the Peaks and Valleys Fund. So when the bonuses do come in, throw some of it in that fund. So when there is a low month, you can pull from that fund and that the house is fine, that it is around a fourth year take-home pay.

1:21:35Dave Ramsey:If you didn't have any car payments, so you wouldn't be noticing it. Okay. Okay. Yeah, I mean, my plan going forward was to try and save three months reserves and then get to 20 % equity in the house. So you would add step one to that, be sell the condo. I would sell the condo. I'd get debt free. I'd build my emergency fund, baby steps. Do you guys have any cash saved, Chris? So we really did pretty much get very low, but in a few days. When's the wedding? I get in October. We are very lucky that we do have family help for that. We did put a small portion of our money already into it, but that wasn't a big factor.

1:22:18But I should be in a few days, I'll be getting another one of those quarterly bonuses that will at least replenish some of that.

1:22:25Dave Ramsey:So the advice I gave you is what you do from today forward. Okay. Had you called me a year ago, here's what I would have told you for the rest of you guys out there, not to shame Chris, but for the rest of you guys out there. Don't buy a home until you're married. Number one. Number two, don't buy a home unless you're out of debt. Period. Don't buy a home unless you're out of debt and have three to six months of expenses plus a down payment. and then don't buy a home where the payment on a 15-year fixed is more than a half or more than a quarter of your take-home pay and don't buy rental property unless you pay cash for it, which is way after all those other don't things that I just covered.

1:23:14Dave Ramsey:So if you had done that, you would now have, you'd be planning a wedding with a pile of money sitting there and no debt and you'd have no rental property and no house. And you'd be looking at October going, I'm sure you're ready for it to come. And then the following spring after your marriage, after renting an apartment for six months, I would talk about buying a home. By then you'd have a great down payment and you'd have no debt and you'd have an emergency fund too. That changes the level of anxiety to this discussion dramatically. automatically. And when you buy a home with someone you aren't married to, you are extremely vulnerable.

1:23:55Dave Ramsey:Both of you. It is legal and financial suicide to do this. They're probably going to get away with it because it's probably going to work out. They're probably going to get a wedding date. They have a wedding call and they're like, well, sure. I mean, Saturday works for me. as a wedding date. But the, you know, because she, I mean, if something happens with this relationship and everything's already exactly tied down and tight, and so we're stressing this relationship right now, and if anything, God forbid, happens, y 'all are going to find out what screwed looks like. It's going to be a mess.

1:24:36Dave Ramsey:But I'm hoping that for y 'all it just sails right on through October and you can just execute the plan we talked about. And we're going to start selling stuff and we're going to get this mess cleaned up. But that's what I, again, not to shame him, but you guys got to quit buying houses that aren't married yet. It's really, the nightmare stories that come into this show. Buy houses together when you're not married, yes. Both your names on it. It's just, the stuff that can happen is all bad and not good. So yeah, please don't do this. Again, Chris, we're hoping for you that this all works out. We're not trying to beat you up, but you called and asked, so we're going to tell you.

1:25:32Dave Ramsey:Welcome back to the Ramsey Show in the Fairwinds Credit Union studio. Rachel Cruz, Ramsey personality. My daughter is my co-host today. Matthew's in Portland, Oregon. Hi, Matthew. How are you? Hi, good. How are you again? Better than I deserve. What's up? Well, I'm just wondering how to, you know, attack this mess that I'm in, basically. Yeah, I kind of figured out where to start. What's going on, Matthew? you? Well, I have a total of$48 ,090.49 of total debts.

1:26:11I have some goals for myself I want in the next year or so, but I want to climb out all this before I can start doing those. What are those goals? I want to be able to buy a house. The house payment is kind of an interesting situation, family situation sort of. So I have really great parents who basically are giving me$300 ,000 for a house and I want to be able to be secure and able to be able to buy a home, but I want to get out of all this debt I have before I do any of that.

1:26:51Dave Ramsey:What do you make? So I make$77 ,000. My wife makes about$55 ,000. Okay. Very good. All right. Okay. And so how much,$48 ,000, what's the breakdown on that? It's$19 ,305 in student loans for my wife,$12 ,639 for one car, and$11 ,145 for another car. Gotcha. Okay. And then$15.45 on one credit card and$31.39 on another. Okay. So when the two of you sit down at the kitchen table with the television off and you put these numbers in front of you, what do they tell you?

1:27:46They've probably been living above our means. That's what it tells me.

1:27:51Dave Ramsey:Okay. But what they tell me is, I mean, you make$125 ,000 a year. You have$48 ,000 in debt. I think you can attack this debt fairly rapidly. The$300 ,000, is this a cash gift from your parents? Yes. And where are you living now? I'm living outside of Portland. No, I mean, are you living in a rental? I'm renting. Yeah, I'm renting. Okay. And how much is your monthly rent? $1 ,470. Okay. And you're outside of Portland, Oregon, right? Yeah. Okay. What will$300 ,000 buy outside of Portland, Oregon? It won't outright buy anything. Oh, yes, it will. I mean, it would get close. It won't buy something you like, but it'll buy something.

1:28:44Dave Ramsey:It'll buy something, sure. Okay. That's what I asked. What will it buy? Small piece of property. Probably need some fixing up at that price. Not too cheap up here, unfortunately. No, I mean, that would be reasonable because the median household, median house price in all of America, and Portland's much more expensive than most of America, but the median house price is right now$400 and something thousand. In the Midwest, it's a—I can't see that. You're flipping it. But anyway, the—it's like 400— 615 in the West. In the West, but that includes California. Well, it includes Portland, too. Okay, anyway, that's the median.

1:29:34Dave Ramsey:But bottom line is you're going to be substantially lower than median. How old are you two? I'm 29. My life's 30. Okay. All right. It may not buy an outright house, though, outside of Portland. Yeah, it will. Yeah, it will. It's just not a house he wants. Yeah, it definitely will. I mean, 100 % will buy one, but I'm not sure that you want to live in it, I want to live in it, or he wants to live in it. Okay, that's fair. I'm not going to say it won't buy a house. Definitely, you can find a property, 100 % chance for$300 ,000. None of us are going to like it, but we can find one. Okay. Okay, now that we've gotten that established, for real.

1:30:15Dave Ramsey:Well, I mean, I'm still considering it, even if I don't like it. So one thing that's interesting about this money is my folks want it split in a certain way. They want a title titled a certain way when we do it. No, I'll pass. Why? Wait, wait, stop. Why? Why? Attendance and common title is what they would want. I don't know what that is. I'm sorry. Say it again. Why? It's a tenets and common title. I know. Why? With them? So they could have it if something happened to you? No, between her and I. Between your wife? They don't like your wife. Oh, no. I'll pass. They've done this for all five of us.

1:31:05We have five siblings. And their idea is that, not that they think anything's going to happen, But if it was, you know, this is their nest egg they've worked for a long time to keep and have. And giving it to us, if something was to happen between us, they wouldn't want some of that going towards, you know, in a divorce or something.

1:31:29Dave Ramsey:I'm sorry. I completely disagree with them. And I would turn that gift down. If it requires that. If a gift is contingent upon you, splitting you and your wife and to protect you from your wife and protect them from your wife, no thank you. They are now interfering in my household. They came across my threshold. No thank you. I'll have to pass. I would not do that to Rachel and Winston in a thousand years. And if I did, Winston would bow up and he would be right. Well, if that happened to me, I feel like I'd be pissed. I'd be like, yo, we just got married. Like, I don't know. No. I don't like it.

1:32:07Dave Ramsey:Nope. Nope. Nope. Nope. I have about$47 ,000 invested in a brokerage account, and I just really want to get— If I were you, I would just start working my way out of debt. Work your baby steps. The two of you need to get on a budget together, and you need to be on beans and rice, rice and beans, and let's start paying off these$48 ,000 worth of debt with your$125 ,000, and then start saving towards the house. But you're going to do it unless your wife bows up, and she should. But you guys are probably going to do this. But you shouldn't do it. This is bad medicine. Well, it's just bad relation, the whole relational side.

1:32:50Dave Ramsey:Yeah, it's not good. You're insulting. You're inserting spiritual things into this that shouldn't be there. This is bad. Yeah. And sorry, Mom and Dad. You don't get that level of control. Well, if you want my money, you have to do it that way. Okay, I'll pass on your money then. You're not driving a wedge between me and my wife. Not a chance. You don't have enough money to do that. And so, because you don't have enough money to be generous. Instead, you've still got your fingers and everything, and you can't let go. Ugh, control people. And all my siblings did it. No, I'm sorry. Hey, you get to be the first one to say, Well, all the siblings didn't do it.

1:33:33Dave Ramsey:I didn't. There you go. Oh, man.

1:34:22Hey, George Camel here. So you're thinking about buying or selling your home. It's exciting, but there's a lot to think about, and all those decisions can feel overwhelming. Well, here's the good news. You don't have to tackle the process alone. Ramsey's Real Estate Homebase is the place to find all of your free tools and resources for help to get prepared to buy or sell your home with confidence. You'll find calculators, start-to-finish guides, a podcast, and even an in-depth video course hosted by yours truly. What's not to love? So if you're ready to take the next steps toward your home goals, go to RamseySolutions.com slash real estate.

1:34:54That's RamseySolutions.com slash real estate.

1:35:12Dave Ramsey:The Ramsey Show question of the day is brought to you by Why Refi. Out of control, private student loans can make it feel like you're stuck financially. But Why Refi helps borrowers explore refinancing with low fixed rates and payments that make it sense for your budget. Visit whyrefi.com slash Ramsey. That's the letter Y-R-E-F-Y dot com slash Ramsey. Might not be in all states. Today's question comes from Allison in Alaska. I recently discovered my husband has been opening credit cards, maxing them out, and only making the minimum payments each month. Should I put my home into a trust to ensure it cannot be touched by his decisions?

1:35:52All of our assets are in my name since I owned them before we met. And we both agreed that they need to be protected for my children to inherit. I fully understand the bigger issue of him hiding debt. But first, I need to take steps to fully protect my children's future before addressing the elephant in the room.

1:36:17Oh, man. Would a trust protect the home?

1:36:27um i don't know alaska law um in um most states if you enter a marriage

1:36:37Dave Ramsey:owning a piece of real estate you will exit that marriage owning that same piece of real estate um now then the question becomes if he takes out a bunch of debt can they put a lien on the house that he that she owns because he's married to her and in some states they can so in some states they could lean in the event it's not unpaid credit card debt for instance could become a lawsuit they would become a judgment against any real estate and his marital rights to that real estate in some states would be it would cloud the title for her children and putting it in a trust probably won't change that you'd have to ask an attorney about all that um And here's the thing.

1:37:21Dave Ramsey:When we're talking about, when I'm teaching leaders in small business and we coach, in Entree Leadership, we coach about 10 ,000 small businesses. And when I'm teaching, for instance, business legal issues from a business perspective more than a legal perspective, I remind those guys that contracts are useless when you are contracting with a crook. you can't sign a contract with a crook and then yell later, I have a contract, because it's not worth the paper it's written on. You've heard that saying. And the reason is you just did a deal with someone who doesn't have integrity. And so you could put the house in a trust, and according to Alaskan law, that could protect it.

1:38:08Dave Ramsey:That's possible. but then he could just decide to sue you in divorce court because you fraudulently did the trust without his permission even though you didn't he could just make that crap up and you can make up crap in a lawsuit in any state and just file a lawsuit and just make up crap it's called pleadings okay and and so what you do is just make up crap and file a lawsuit and the only recompense the other party has is to spend thousands and tens of thousands and hundreds of thousands of dollars to disprove the lie that was in the pleading. And that'll be coming out of her pocket. By the way, that's going to cost you the house and legal fees to defend against a crook.

1:38:53Dave Ramsey:So the problem is you can't anticipate the moves of a crook, except that they're going to be a crook that we can establish. And now I'm talking about your husband. And so you can't fix this problem with a legal document. Ultimately, you might make it somewhat safer, but you'll be under the illusion that it's done. And it's not done until the crook quits crooking, until the husband quits being a jerk and hiding and spending like he's in freaking Congress and running up credit card debt. so you have to deal with the problem. The elephant in the room is going to crap on whatever you try, so you've got to deal with the elephant because 100 % chance you're going to have elephant crap if you don't.

1:39:43Dave Ramsey:There's 100 % chance, and no matter what you do, it's going to have poop on it. So, I mean, you really have to deal with it. So you've got to go all – there's no legal maneuver that makes this guy not be a problem. except divorce, and he's still a problem until the divorce is final. And I'm not suggesting divorce, but I am suggesting that you could go do everything exactly right according to Alaska law, and he could make up a big story and file a lawsuit, and you will spend the cost of the house defending it. That's my point. Can you tell that's happened to me? And so, I mean, people make up crap, okay?

1:40:28Dave Ramsey:They just lie. And the court system allows them to get away with it. Yeah. So for you, Allison, I mean, honestly, yes, if you wanted to go and do it to make yourself feel better, that's great. But the elephant is in the room, just like you're saying, Dave, is the thing that it does. It has to be. Call the zoo. It has to be the zoo. I'm going to come get their elephant. He's lost. Yeah.

1:40:53Dave Ramsey:Oh, my gosh. Yeah. It's really sad. I mean. It's horrible that you're facing this, but you're trying to fix the problem without fixing the problem, and you can't. You're going to have to fix the problem. You got to deal with the dude. The dude is the problem, not your legal structure. That's going to be, yeah. So you can't get there. A lot to unpack. Sorry, Allison. So an example of that is, okay, you do a will and you do a full estate plan. That doesn't keep someone from suing. they might not win but by the time you finish paying them to win it would be very hard for them to win you can put a very detailed thing in place but by the time you finish writing checks to lawyers so they can send their kids to Harvard by the time you finish writing all those checks you ain't going to feel like you won although you won and so you're still dealing with entitled little trust fund baby brats who didn't get what they wanted, and so they sued the estate.

1:41:53Dave Ramsey:And so the problem was not how the estate was structured. The problem was you raised entitled trust fund baby brats. And so you suck as a parent. That's what that was. And so you've got to go back and deal with the issue because the legal system does not – there's not legal processes or systems that protect the righteous from being sued or from having to run up legal fees to offset. Yeah, but a will, I mean, that stuff holds up in court for people out there to get a will in place and to get these things. You need to get a will, and it will hold up in court. But if you have crazy in your family, there may be some crazy.

1:42:29You might spend$100 ,000 making sure that will is upheld.

1:42:34Dave Ramsey:You might spend$100 ,000 on it. But still do it. So, yeah, do it anyway. It's your only shot. But don't do that and say, this fixes the crazy in my family, because you still hadn't dealt with the crazy. That's the problem. You've got to go to the root behavior when you're dealing with this. And so when I'm teaching these small business guys, I'm like, don't sign a contract with a crook. Here's an idea. If he's a known crook, the guy's doing cocaine. I'm kind of worried about him. Well, then quit using him as a sub. Hello. No kidding. He's going to steal everything off your job site. Dumb butt.

1:43:05Dave Ramsey:He's doing coke. Hello. Have some sense. You know, this is the stuff I get. All these questions on our trade leadership all the time. It's the same thing. So you've got to fire the sub. That's a lot of cocaine. You've got to get rid of it. Well, this is a great segment. We've got elephant poop. We've got cocaine. We've got elephants in the room. Lord have mercy. There's so many metaphors here. All because of Allison. Now there's an elephant on cocaine. All because of Allison's question. Oh, poor Allison. Question of the day. Poor Allison. So, yeah, you've got to deal with the husband. The husband.

1:43:40Dave Ramsey:Wow. You know what? We'd be out of business if the husbands would behave. we wouldn't have any callers money and marriage that's a real we wouldn't have any callers it's a real thing yeah we'd have people we'd be reduced to boring 401k questions all tax and estate tax and estate law that's all we'd be doing and 401k I don't invest my 401k this is so much more fun we've got elephants and cocaine oh my gosh just a lot more stuff in this question it's a lot better

1:44:18Thank you.

1:45:01Dave Ramsey:You work your butt off for your money, but your money's never going to return the favor if all you do is hope for the best. If you're ready to learn how to make your money work for you, check out the SmartVestor program. SmartVestor can help you find advisors who specialize in retirement planning, charitable giving, advanced investing strategies, and more. Whatever your goals, your pro will take the time to explain your options, so you never have to invest in anything you don't understand. Head to RamseySolutions.com slash SmartVestor to get connected. Ramsey Solutions is a paid, non-client promoter of participating pros.

1:45:37Learn more at RamseySolutions.com slash SmartVestor.

1:46:04Dave Ramsey:Well, we wish we could get to every call and question here on the show. If you have a money question and you can't get through, head on over to our website and use Ask Ramsey. Ask Ramsey is our free AI tool that's built and trained on only proven Ramsey principles. So if you want to follow the baby steps and you want to know the details about any type of question, we've loaded three or four years worth of shows answered into Ask Ramsey. We've loaded the books and articles into Ask Ramsey. And so it's going to sound particularly like one of us here on the show actually answered your question. and no other crap was led into the database.

1:46:41Dave Ramsey:And so you don't have to worry about the artificial intelligence part being screwed up. Nope, it's just us. And it'll give you the same answer. So ask your question today. It's completely free at RamseySolutions.com or click the link in the description if you're listening on a podcast or on YouTube and you can ask Ramsey for free. Johnson, Boise, Idaho. Hey, John, what's up? Hey, Dave. Thanks for taking my call. and Rachel. I tried using Ask Ramsey on this one, but it didn't come back with an answer. Really? What did it tell you? Plenty of issues. Well, it said unable to answer this question at this time.

1:47:19Dave Ramsey:Interesting. Okay, I can't wait to hear the question. It might have been the topic, but it's pretty simple. I've got plenty of debt. I've got a lot of issues, but specifically, I know you guys tell counsel not to do debt consolidation, but you also tell us to be very wary and try to get rid of our IRS debt as quickly as possible. So I owe about$20 ,000 to the IRS and wondering if I should consolidate that or transfer that over to another lender and have the IRS paid off and I just deal with that lender. Yes. Okay. The interest rate will be better, and they have nowhere near the power to screw up your life that the KGB, I mean the IRS has.

1:48:05Dave Ramsey:And so what you're paying in penalties and interest with the IRS far exceeds a credit card rate, far exceeds a home equity loan rate, far exceeds anything else. And I'm not suggesting this, but the IRS is not bankruptable and all other debt just about is. So if you did hit a worst case scenario, even it turns out better, but you're not going to be there. That's not going to be your problem. But, yeah, I would move it. How much total debt have you got? Oh, boy. Here we go. Here we go. Do you want the house, too? No, everything but the house. Okay,$315 ,000. On what? Let's see. We've got$192 ,000 in one school loan.

1:48:51Let's see. Let me do that real quick. We've actually probably got about$220 ,000 in school loans. My wife is an attorney, and she graduated recently, although we're in our 50s.

1:49:07Dave Ramsey:Great. So is she making lawyer money yet? She is making government service lawyer money right now. Why did she take like a real lawyer job and get this debt paid off? Because she's got this bleeding heart. She's looking to make a change soon. Okay. And so we're hoping for a good change in the positive there. Good. All right. That's sweet, but I'll also keep you broke. Okay. And$30 ,000 in a 401k loan that I'm paying back. That's 10 % interest paid back to myself. Lending club, we consolidated some other loans. That's about$15 ,000. my student loan is 13 grand um and then we've got other consumer debt together we make we bring home about 10 000 a month

1:50:10what is she being paid uh she is getting paid 80 now she just got a raise to 90 and I'm getting paid$100, but I see only about$4 ,200 a month after I have everything taken out. So out of my paycheck comes on my 401k, maxed out on benefits and everything. Now, this coming paycheck this Friday is going to be my first paycheck without putting$1 ,200 a month into my 401k.

1:50:46Dave Ramsey:Okay. How are some of the benefits? I'm putting it toward the debt. Are some of the benefits rip off stuff that you need to get out of? I don't know. I haven't delved closely into that. Because you're not getting home with half your money even. Yeah. Yeah, that's true. That's kind of crazy. Yeah. So I want to clean that paycheck up so we can address this thing. And then, of course, get her income up so we can address this thing and get this mess cleaned up. Yeah. Good. But, yes, to answer your original question. And that question, I don't remember answering it in the last five years. So I have answered it, but I don't remember recently answering whether I would refinance IRS debt.

1:51:27Dave Ramsey:So it would not have been in Ask Ramsey. So now it makes sense why it didn't answer it because it wouldn't have had the data to do it with. But anyway, yeah, that's the answer is yes, refinance IRS debt because it's better interest rates. You don't have the penalties and they don't have the power to suddenly come start leaning accounts and everything else. Folks, for you listening out there, the IRS can just place a lien. They don't have to ask a judge. If you have a loan with your bank, they have to sue you, win, and then ask a judge to place a lien. It's a five-step process. and you're going to get like tons of paperwork at your front door by the sheriff before that any of that happens with the irs they won't even tell you they'll just be money disappearing out of your checking account you won't know what happened uh because they have almost unlimited power not that often but i have had it happen to clients and i had it happen to me when i was going broke they just came in and just took money and i'm like where's my money we just took it you can do that We can do whatever we want.

1:52:34Dave Ramsey:I'm like, yeah, apparently you can. So, yeah, be very afraid of your government. Yes. So, yeah, especially if you owe them money. Yeah, that's the thing. So, yeah, get them out of your life. And that's a 5 % of your situation, though, John. 95 % is getting organized and starting to squeeze the juice out of everything here to be able to clean this mess up as fast as possible. and get yourself where you're not broke and you're very wealthy and then your wife can do pro bono work the rest of her life if she wants to help the hurting and not charge or something. That's cool. That's wonderful if you want to do that.

1:53:12Dave Ramsey:You just can't be broke in doing that with$220 ,000 in student loan debt. So you kind of lose your options for your heart to bleed when you do that. Yep. And I just did ask Ramsey because I was curious because we've answered that recently. You have? Okay. So what did it say? Yeah, yeah. Yeah, it's, yeah. Did it give you an answer? Yeah, and it just, you have to, which is great about it. You know, it's asking me, do I have a$1 ,000 start or emergency fund? It takes you through the baby steps. And then you get to it. It made you jump some hoops. Yep. And then the installment agreement, yep. Offer and compromise, currently non-collectible.

1:53:48Yeah, it goes on and on. Okay. It's good.

1:53:49Dave Ramsey:All right, there's plenty in there. Oh, oh, okay. May have just been a fluke at the time. Yeah, might have been. But more often than not, but we do, I mean, I feel like we've gotten that question a good bit with the IRS debt. And the answer is to anyone out there, if you have a large amount enough that you have to be put on a payment plan that you can't pay off in 30 to 60 days. Yeah. The IRS is not an installment plan company. No. Yep. This is not Klarna. Afterpay. Don't do afterpay with the IRS. Don't do afterpay when you're tight with the IRS. You want to clear it up as fast as possible. because they got power.

1:54:29Dave Ramsey:Well, I'm glad to know. Ask Ramsey's doing that. That's good. After I just did an ad for it. I know, and he said that. And the guy comes on. Doesn't work. Oh, no. Doesn't work. Well, good news is it worked for Rachel. Okay. Yeah. So that's, there we go. Yeah, John, but I really do hope for you guys that y 'all can get into a high-income situation, knock this debt out, and then you can, yeah, spend the rest of your life with that degree that she has and use it, you know, for good and where she wants to, to have the freedom to do that. It's just hard to have that freedom when you have$300 ,000 of consumer debt.

1:55:02Dave Ramsey:Yeah.

1:55:28Thank you.

1:55:45Hey, George Camel here. We often talk about how being normal sucks when it comes to your money. But guess what? Normal isn't so great when it comes to your job either. Normal is staying in a job you hate, dreading Mondays, and working for people you don't even like. Sound familiar? Well, the good news is you can break free from normal because Ramsey Solutions is hiring, and we refuse to settle for the ordinary. In fact, we are anything but normal, and we are proud of it. And right now we're hiring for technology, sales, marketing, writing, copy editing, and creative roles. So head over to RamseySolutions.com slash careers and apply today.

1:56:31Dave Ramsey:Our scripture of the day, Matthew 11, 29. Take my yoke upon you. Let me teach you, because I am humble and gentle at heart, and you will find rest for your souls. Jim Rohn said, formal education will make you a living. Self-education will make you a fortune. Scott's in Twin Falls, Idaho. Hey, Scott, what's up? Hey, guys. Been following you guys on my Facebook videos for a long time, so good to jump in. Well, thank you. Good to have you. Hey, I'm engaged. Yay! When are you getting married? Super excited. End of September. End of September coming up. Yay, good for you. Thank you. So listen, my fiance owns a house.

1:57:19She's got three kids. The house is the house where the divorce went down, all the bad stuff, I guess, that led us here. and so we are now trying to make a decision on what to do with this house and the realtor is recommending a short sale I don't love that idea but I'm just I guess trying to decide whether to take this financial hit now for kind of a clean break a fresh start or preserve cash stay put here temporarily while we stabilize even though that will delay sort of this I guess breaking free of that baggage. So anyway, I would love some insight.

1:57:59Dave Ramsey:So she owes more on the house than she can get for it? Yes, sir. Yes, sir. Anywhere from 25 to 40-ish is what the realtor is recommending. And the house is obviously in her name? Yes. And does it have the X on it? I believe that the X is on it. The ex has got medical issues out of a job right now. We're basically not considering him. Does he have to sign to sell it? Yeah. He may. Yeah, yeah. Yeah, I guess. If he's on the deed and he's on the mortgage, if you're going to do a short sale, he has to sign that he's not paying his bill because that's what a short sale is. So a short sale is like a voluntary repossession.

1:58:54Dave Ramsey:okay it's like turning it's like turning in a car on a repo and not paying the difference so if you do a short sale or if she does a short sale you're not involved okay but if she does it technically if she does a short sale make sure you remember these words it is without recourse without recourse. And what that means is they can't come after her for the difference. That 25 or 40, they're accepting that the house is, if they foreclose on it, their analysis tells them, the mortgage company, that if they foreclose on it and resell it after foreclosure, they're not going to get any more for it than you're offering them.

1:59:42Okay.

1:59:43Dave Ramsey:You see what I'm saying? In other words, if they go through all that and they lose$45 ,000 or they accept a buyer's offer and do a short sale, they lose$45 ,000. That's their analysis. If they think they can take it back and sell it for enough to get all their money, they would rather foreclose than take a short sale. But that means that the house is worth more than your realtor says it is, and I doubt it. Right. Why has the house gone down in value in Twin Falls, Idaho? I wouldn't think that's the case. I don't understand it, to be honest. I'm trying to get to the bottom of it. Is there something wrong with the house?

2:00:18The house is fine. I suspect that there was some mortgage payments not being made. Yeah, I'm still trying to get to the bottom of it.

2:00:27Dave Ramsey:I feel like there's details I'm missing. $45 ,000 worth of mortgage payments not made? I doubt it. Yeah. The thing is, Dave, I've been saving. I've been following your principles. I don't have any debt. I have money set aside that I've been saving up for a house payment myself before her. Does she have debt other than this? Only a small student loan of 5K, which I'm expecting to just kind of write off as soon as we are together. As soon as you're married. And we've got a car. Yes, sir. And you've got to pay off the car. Okay. Yes, sir. I'm debating on doing that. You know, I'm paying it all down right now.

2:01:07Dave Ramsey:So you could either pay the$45 ,000 and keep this house with all the bad memories and still not be shed of the ex because he's on everything. Or you can let her do a short sale before you're married. But she's going to have the equivalent of a repo. Her credit score is going to disappear. Now you wish it would disappear. It's just going to be very low. And would that be a problem when they go to buy a house? Yeah, it's going to be a problem when you get ready to buy something later. Could I not do it my own? Probably. Just have everything in my name? You probably can, depending on the Idaho law, yeah.

2:01:43Yeah.

2:01:44Dave Ramsey:Okay. And she probably has marital rights, even if she's not on the mortgage. So you could talk to Churchill Mortgage, and they can tell you, you know, if your spouse has a super low credit score in Idaho, and you have the money and a good score or no score, in your case it would be a good score, then, you know, can I qualify that way and get a house? I really, I think this lady and these three kids need to physically be off of that site. Yeah, I agree. I think I heard you say that clearly between the lines. And so, you know, based on their emotional well-being and being rid of the medical, the guy with medical problems, which that can mean a whole lot of bad stuff I don't even want to get into.

2:02:34Dave Ramsey:Yeah, I'm going to ask her to put this house on the market and get it sold. I will tell you that the short sale is a long and arduous process, though. Mortgage companies don't forgive debt easily. Right. They're going to want appraisals. They're going to go. They're going to drag this thing out. It's very difficult. And real estate has appreciated in most areas enough that they don't do many short sales anymore. so they're not as adept at it as they used to be. Like back in 2008, everybody got to be experts on short sales. But, yeah, it's where the bank agrees to accept a price that yields them less than their payoff, and they eat the difference if you do it without recourse.

2:03:21Dave Ramsey:For God's sakes, there's no point in doing it with recourse. I'd let her be foreclosed on before I did it with recourse because then that's the same thing they got them. them to agree to? No. No, they pretty much, that's what a short sale usually is. Yeah. But just make sure they don't forget to put that in there. You know, like a Citibank forgets to do stuff. Yeah. So that, yeah. Wow. Interesting. All right. Josh is in Canada. Hey, Josh, what's up with you? Hey, Dave. Thank you so much for taking my call. Sure. How can we help? So I'm wondering if I should quit working for my family business and work on my side business that I had started to get out of debt.

2:04:03My wife and I are in baby step three, and it's taken off more than I ever expected it to.

2:04:11Dave Ramsey:How long have you been doing it, and what are you making? So I've been doing my side business for about three years. I've started taking it more seriously this year when we decided to just completely knock out the debt. Currently, it's making about$10 ,000 to$12 ,000 a month in profit. That's just before taxes, though. And I'm making about$90 ,000 at my job working for the family business. What is your side business? My side business is automotive and commercial and residential window tinting. So I just go to people's places and tint their windows, basically. But it's great margins, and it's just like I'm already booking three weeks out at this point.

2:04:55And you are a good salesman.

2:04:58Dave Ramsey:Yeah, way to go. I'm proud of you. Yeah. So what are the relational repercussions when you quit the family? I don't know. I feel like they're doing – When you leave the family. It's the mafia. I feel like they're going to basically cut off the relationship with me. Wait, for real? Are you being for real? But some things tell me yes. You think they'll cut off? Yeah, some things tell me, yeah. The reason being my brother left the business. He was in it for a bit, left the business, and he had moved away. There was problems on his part, too. He didn't do it the same way. But anyways, yeah, he had left the business, and now they just don't talk anymore.

2:05:40Part of that is mutual, but yeah, it's just kind of a, he doesn't exist. I would give them a long runway of communication.

2:05:47Dave Ramsey:Yeah. Don't, don't make it sudden. Yeah. Just go, Hey dad, I'm making 90 ,000 over here. I'm probably going to, or I'm making$10 ,000 a month. I think I'm going to go this direction. I need to know how I can do that and help you guys and be a blessing to y 'all. If I need to put six more months in here to help you, I will, but I'm probably not going to be here a year from now. So let's talk about how I can do that and be a blessing to you, dad. that puts us our 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