When You Don't Have Payments, You Have More Options

24:05Dave Ramsey:If you're going to be 10 years wandering through this debt, it doesn't make sense. You need to sell it. But if you're going to say, I'm going to knock this out$30 ,000 a year and be done in three years or$45 ,000 a year and be done in two years, which would be like$4 ,000 a month or$3 ,000 a month.

24:31Could you do that? Yeah. Yeah, I should be able to. Absolutely.

24:36Dave Ramsey:If you do that, then I'd probably try to hang on to it because it sounds like a good piece of property. Yeah, I get$1 ,750 per month. That's a good return on$200 ,000. That's good. That's a good cash-on-cash return. Good. I'm doing bookkeeping on the side, too. So I didn't even count that salary. Oh, good. So what's the most you could throw at this debt per month right now, if you just really tighten down the budget? If you're telling me that I can do$3 ,000 a month, then I'm going to do that. Well, I'm just asking, have you looked at your budget? I have. I mean, other than my credit cards, that's it.

25:17I have no car payment. I have nothing else. My mortgage where I live, that's the only thing, which is$2 ,000 a month.

25:24Dave Ramsey:Yeah. So I'm saying, get on EveryDollar and download it tonight and lay it out. You're a bookkeeper. You're smart. I can tell by talking to you that you know your numbers. And so what we're looking for is$3 ,000 to$4 ,000 a month. And if you can find that and commit to doing that, then keeping the investment makes sense because you're going to be done in either$4 ,000 is done in two years,$3 ,000 is done in three years. Okay. See, 36 times three is going to knock your 90 out, or four times 12 is 48 a year, and that's 90 in two years. Okay? Okay. I've been doing the snowfall effect. Yeah, I would do that.

26:06So I've been doing that. I'll do that and throw it at this.

26:08Dave Ramsey:But you've just got the two debts, right? Yeah, yeah. My credit card and my loan, my student loan. Yeah, and so knock the credit card. The credit card's a smaller one, right? Well, there's different credit cards. Okay, so yeah, knock out, list the credit cards out smallest to largest and attack them in that order. And that's going to put the student loan at the bottom, which actually ends up mathematically correct as well. So that's good. Got that going for us. But yeah, I think you're amazing and I think you can do this. But the answer to your question is it does not make sense to keep the investment property and drag this debt out a long, long time.

26:47Dave Ramsey:It does make sense if you like the investment property and want to sacrifice and do$3 ,000 to$4 ,000 a month on this debt and be done in anywhere from two to three years and keep the investment property. That does make sense. but you would tell someone if they had two hundred thousand dollars in an index fund to cash it out cash out part of it to pay off the debt i would but that's a lot easier transaction than real estate less expensive transaction and this is a known this piece of real estate's a known factor of course that's a known factor too but yeah but that's very liquid is what i'm saying yeah you just gotta you just gotta push one button and that money shows up in your account Right.

27:27Dave Ramsey:With real estate, you've got to sell it. You're going to pay brokerage fees. Totally. And then later, you're going to reinvest. You're going to pay a bunch of other fees. And so there's a lot of gyration that goes on with real estate. And the point is, too, that she enjoys it. Because we do talk to some people, and they have an extra property, and it's a headache, and they don't enjoy it. So you're like, yeah, if you want to take 200, throw 100 at your debt, take the other 100, stick it in an index fund, and just let it ride, and be more of that passive investor. Yeah, do go that direction. Exactly.

27:56But if you love real estate and that's part of how you want your long-term play, keeping that.

28:00Dave Ramsey:Good point. Brett's in Kansas City. Hey, Brett. Hey, Dave. How are you? Good, man. What's up? Hey, yeah, just a question. So recently just went through a divorce, finally got all our financial child support, all that stuff kind of figured out. In the next few months, I'm going to be getting some equity in the house I used to live in. And I'm curious, since she's going to be getting some of my retirement, I'm wondering, should I put that money back into my retirement or should I use that equity to pay off my bills, some of the loans, lawyer fees? And then that would pretty much put me debt free.

28:41Dave Ramsey:How much is she getting from your 401k? Well, it's CAPERS. I'm in the public school system here in here. How much is she getting from? It's going to be about half. I've worked for 20 years, and we've been married 17 of that. Does it have a dollar amount on it? I have$87 ,000 in there right now. Okay, so she's getting$43 ,000. Roughly, yes. Okay, and how much equity are you getting out of the house? About$60 ,000. Okay. Why didn't you leave your 401k alone and take less out of the house? uh that was just part of the deal i know why he came to during mediation why um it's a bad idea well i can't go back now you could hypothetically uh but how much is all the bills the lawyers fees debt everything um about let me see i got the biggest ones a vehicle that i got in divorce that she basically kind of gave me or that we came to an agreement on, 47, right about 50.

29:50Dave Ramsey:What's the car worth? The car is probably worth 35. Okay. And you don't need it, right? I have two vehicles. One's paid off. And that one? It's super old, and it's always in the shop getting repaired. And basically, we bought a truck about a month before we separated. so we don't I mean it's 30 I owe 30 ,000 on it is that and that's part of the 50. That's part of the 50 yes yeah I'd sell the truck and yeah throw some of the money at the difference yeah and if you need to buy a you know a ten thousand dollar car with some of the cash that'll be fine but I'd get out of that truck debt instead of paying it off and keeping it What's your income?

30:41My main job, I make about$87 ,500, and then I make about$25 ,000 and just some other side stuff that I do.

30:48Dave Ramsey:Yeah, okay. Well, yeah, I don't think you go back and change it like I said originally. I think you stay with the deal you got, take the cash, you become debt-free by getting rid of the truck, and you're not got enough to do much else with. Build an emergency fund. By the time you pay off everything, there's not much left. And then go back to retirement.

31:17so

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32:47Dave Ramsey:Tari is in Charlotte. Hey, Tari, what's up? How you doing, sir? Better than I deserve. How can I help? Okay, so I'm trying to clean up my debt. I'm trying to clean up my debt. And so a debt collector, they sold it off to another debt collector. So I called them up and tried to basically settle the debt. So they told me they can't collect on it, and it's reached a point of some, I can't remember the term he used, but they said that they can't collect on it, and they don't report on it to the credit bureaus. and I'm trying to get it off my credit report. The debt collector that bought the bad debt said he can't collect on it.

33:33Dave Ramsey:Yeah, he can't collect on it. You offered him money and he didn't want the money. Yeah, I tried to settle. I tried to settle the debt, and he said it's the point of statute of limitations or something. Exactly. That's exactly what it is. It's past the statute of limitations. Yeah, past those limitations. That is so unusual. That's all that. That's true. Right. But it's so unusual that a debt collector would actually tell you that instead of just take your money. Right. So now my thing is how do I tackle it and get that off? I'm trying to settle it and get that. The first thing I would do is call the debt collector back and ask for an email from him saying in writing what he told you on the phone.

34:21Okay. I mean, so I did call him back. And what they said was, he said, our team will handle it, file it in a dispute.

34:33Dave Ramsey:Our team will handle it? Yeah. She was like, our team will handle it. I'm asking you to send me an email saying that you cannot collect this debt because it is past the statute of limitations. I'm asking you to send me an email saying that. That's what I want him to do, number one. Then number two, you've got to write to, and there's an email placed to do it on each of the websites, all three credit bureaus. Right. Right. Okay. Okay. And what you do is you say, this particular debt, I am disputing it as being valid. Don't go into detail. Don't mention statute of limitations. Just say, I dispute this debt.

35:18Dave Ramsey:Okay. And according to, and you may want to go back and play this on the podcast later, play it back, according to the Federal Fair Credit Reporting Act, you have, this is your verbiage in the letter, you have 30 days to prove the validity of this debt or to completely remove the entry from my bureau. Exactly, exactly. And you send that, I would send that by email if they've got a place on their site, and I also would send it in hard copy letter form, certified mail or FedEx or something where you can get proof of delivery on when the 30-day starts. Okay. Because all the other credit, you know what I'm saying, I was able to, you know, settle on or this and one that they said they couldn't really, they don't report.

36:11Or they don't report on it, nor do they whatever.

36:18Dave Ramsey:Well, he can't collect on it because it's past the statute of limitations. And if it found out later that they collected on something that they're not allowed to by law, they could get in trouble. But most of the time, these guys are so scummy, they don't care. They take your money anyway. So I'm a little shocked, but it's okay. It's coming out in your favor. So, yeah, you need to send a certified letter, Federal Fair Debt Collection Practices Act and Federal Fair Credit Reporting Act is the two federal laws that dictate how this is handled. And when you dispute the validity of a debt on your credit bureau, they have 30 days to prove it or remove it.

36:58Dave Ramsey:Now, for the rest of you out there, not for this guy, they will not be able to prove it in 30 days on any of your debts, even if they're valid, because if they write to Bank of America, Bank of America is not going to get back to them for 30 days. And so you could get that blown off your credit bureau. And there are people that teach that as a way to, quote, clean up your credit. The problem is it doesn't work, because it will get removed from your credit bureau report, but Bank of America or whoever downloads in batches to all three credit bureaus at least once a quarter. And so about 120 days from now, you're going to see the thing pop back up on your credit bureau report again.

37:41Dave Ramsey:If it's not been passed. If it's not an invalid debt, it's going to come back. You can knock it off for a minute, but it's going to come back. In this case, it sounds like these guys are not going to report it again. But if you remove it and they re-report that they have this out for collections, it'll show back up on there again. How long does it take for the statute of limitations? Statute of limitations on a debt is different in every state. But in his state, a lot of them are three, four, five, six, seven years, somewhere in there. um they everything comes off of your credit bureau report every seven years from date of last activity the problem is if bank of america in this example re-reports that's activity and it starts the seven years over again so even though you didn't pay anything on it even though you didn't actually have any activity on the account you could they can start the seven years over again and keep you in limbo for freaking ever so you cannot get out of paying these debts unless someone does what this guy's saying is happening with him which is a very unusual circumstance that he called with today but most folks out there listening you're going to have to go get those things settled and you're going to get them paid off you don't get your credit bureau cleaned up until you clean up the actual debt because it's just going to pop back on there And you're going to see it, and it's going to hang out seven years.

39:08Dave Ramsey:A Chapter 7 bankruptcy is the only thing that stays longer than seven years. It stays on 10 years. And an interesting fact with that is none of the loan applications or applications that you fill out for other things say, have you filed bankruptcy in the last 10 years? They say, have you ever filed bankruptcy? And so even if my Chapter 7 bankruptcy from 1988 no longer shows on my credit bureau report, If I answer, no, I have never filed bankruptcy because you can't see it on my credit bureau report, and someone does business with me due to me answering that question, that's called criminal fraud.

39:47Dave Ramsey:I lied to get to do business. So don't do that. It's a bad idea. Be honest. So you tell the truth. And so since I filed bankruptcy in 1988, the year Rachel was born, for the rest of my life, I get to answer that question. Yes, I filed bankruptcy. What were the dates? It's like filling out one of those medical forms. Have you ever had an operation? Yes, in 1982 I had one. But you still got to fill it out because they're still going to find it for your life insurance application or whatever it is. You still got to put all the stupid medical stuff in there. Anything, any hangnail that's ever happened has to show up.

40:23Dave Ramsey:And that's the way this stuff is. It's an interesting reason to almost avoid it so it doesn't just follow you your whole life. Yeah, hello. Hello. Well, I know after like a financial. Have you ever been divorced? Financially, you can recover and all of this. Have you ever been divorced? If you have, the answer is yes. Yeah, yeah. Not lately. It's not a not lately. That's not the answer. You know, not 20 years ago. That's not the answer. The answer is yes. You know, that's it. And it's that simple. So, you know, this stuff, these decisions are big life decisions. Yeah, and Tari brings up a good point, too.

40:54Just to remind everyone, you can check your credit report for free. And you should. Once a year, yes. And you should. With Equifax TransUnion, you can go to these websites for free. And you ought to also freeze your credit. Yes, and freeze your children's credit as well. We did that.

41:07Dave Ramsey:And that's a pain in the butt. I had to go in and just rip people's shred to get it. But I froze all of theirs when they were minors. When they first came out with the law allowing you to freeze it. And what freezing it does is if someone bothers to check your credit before they issue a debt that is not that's like a identity theft thing, as an example, then they would deny the credit because the credit bureau is frozen. And so they would say, oh, this person is not really applying for that. But the problem is about nine out of 10 credit cards are issued without checking credit. So that's why a dead person and dogs get credit cards.

41:47Dave Ramsey:and a guy in West Virginia one time sent me a copy of his credit card, and he had applied for the credit card in the name of Buck Naked. Oh, Lord. And they issued the card. Stop. Visa issued to Buck Naked. Stop. Unbelievable. Love it. That's a good segment. That's perfect. That's the craziest thing. Craziest things that have ever happened. Fru-Fru the Poodle got one, too, and he'd been dead three years before he got his.

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43:54Dave Ramsey:Welcome back to the Ramsey Show in the Fairwinds Credit Union studio. Rachel Cruz is my co-host today. James is in Kansas City. Hi, James. Hey, how are y 'all doing today? Better than we deserve. What's up? Good. So I'll shoot you the quick question here. So basically, I work for a university, and I'm due to be laid off here in about a year due to the school folding into another here in the area. I've got no debts. I've got a year's worth of emergency fund, and I'm also due to get some severance and retention bonuses of all of the school kind of goes towards closing here within a year. My question is, should I start really looking hard for a new job right now, or should I kind of wait, collect those bonuses, and see where I'm at within about a year?

44:39Dave Ramsey:So the bonuses and the severance are going to amount to how much money? After taxes, I've done the math. It's about$24 ,000 altogether. Okay. And what do you make? Right now I make about$70 ,000 a year. Okay. And what do you do? You're a professor? I work as a – yeah. No, I'm actually a compliance coordinator for the financial business office. Okay. All right. And so what will you likely go to? What's your new career going to be, your new job? Same thing? Well, I've been thinking about that. There's also some different, you know, whether I work for maybe a bank or a financial, like credit union or something along those lines where I get back into compliance or risk management.

45:23Dave Ramsey:I'm kind of on the fence with it. Probably a lot more money there, isn't there? 100 percent by far. Okay. So let's pretend that you found a new job making$120 ,000 today. And they want you to start today. Well, you would take that because 70 plus 24 is less than 120. Yeah. Let's pretend you found another job making 70. I would not take that until the last day of my current job because I would want to get all the bonuses. But I think you're probably going to move up in pay as you shift the type of compliance work that you're doing so much that this bonus is not going to be worth sticking around for.

46:11Dave Ramsey:I think you're right. I think that's the math. I'm going to let math drive it. But go out there and start poking around. Yeah. Have you talked to anybody, James, just in that industry and just kind of have a feel out of how easy it could be to get your foot in the door somewhere? Yeah, I've done some poking around. It's definitely going to be a lot harder. I actually used to work in the banking industry. I want to maybe jump back in. And I know you guys say, you know, don't just throw applications out there. So I'm really trying to hit my connections, you know, to see, to see kind of what I can get.

46:41Right now, I haven't had a lot of hits, but I know the job market is slow.

46:44Dave Ramsey:You ever had any history in the securities side of, like, working for a broker-dealer or something on that side of compliance? I have not, actually, but it's worth looking into. Okay. It pays better than banks. That's why I was asking. Sure. But if you've had the history in the bank and you can get your foot in the door, I don't care. But I'm actually thinking you're probably going to go move to six figures. Does that sound right? It does. It does. It takes a lot of, of course, effort, obviously. But why not? Why not work on it now? And if you could get six figures starting next month, then we would just go ahead and say goodbye.

47:23Dave Ramsey:Yeah, I think that's fair. Yeah. So let's do that. And I'll send you a copy of Coleman's book, Proximity Principle, which is what you're referring to, to use your connections to get in the door on things. For sure. And the wisdom of, I mean, he's at the luxury of just say it gets down to the wire. He's got three months or so of pay plus a year big emergency fund. Nothing's on fire right now. You know, you know, the end is coming. So you want to start having these conversations. But in a great way is you, you know, if you have two or three options ahead of you, you get to kind of make that decision of what's best for you.

47:57You get options. There's no urgency of, oh gosh, we have to start making an income. Because we get some of those calls and it's like, you got to go, you got to start doing anything.

48:06Dave Ramsey:Well, and when you're desperate, you don't interview as well. Yes. You know, your body language is different. Your voice tone is different. You walk in the door different. You feel different. They can feel it in the air that you're, that you're scratching and clawing at this. And if you're like, yeah, I'd like to do this. It looks good. If, if, if it's a good fit, I'll, you know, let's talk about it. And is this a good partnership? And that's a completely different interview. Yep. For sure. and in this there's nothing i mean there's no moral obligation by any means to stay but is there any level of loyalty of hey i'm gonna i'm gonna finish off this i'm gonna go down with the ship roll a college that went out of business well i don't know because they didn't follow my compliance guidelines and didn't stay financially solvent could be that too yep oh my gosh donald is in san antonio hey donald what's up hi good afternoon thanks for taking my call Sure.

48:59Dave Ramsey:How can we help? So me and my wife are retired. We're on baby step seven. And we are still doing the envelope system. And my question is, are we better off? Because a lot of the envelopes just build, like the ones we have for car repair and doctor co-pays and jet bills and all that. They kind of just sit there. And would we be better off just living that sitting in our IRAs instead of taking that money out every month? well i would at least probably put it donald in and just to a high yield savings account i would put it somewhere so yeah to your point that it's kind of if it's if it's building up too much you've got too much allocated to the category okay so i mean if you've got five thousand dollars in your vet bill envelope your dog's not been sick you know i mean you see what i'm saying or you're you know you got five thousand dollars built up in your car repair envelope you've over budgeted for car repairs and so that that's you know you should not have big buildups in there anyway but um a lot of people including um both of us have gone to just very few or no envelopes and instead are just using the every dollar budget and using a sinking fund approach inside, which is a little miniature savings account, like a miniature envelope per category inside your every dollar budget.

50:21Dave Ramsey:And it explains where your money is. And a lot of people are using that digitally now rather than the actual physical cash in the envelope. My wife still carries a couple of envelopes. She still does that. But everything else we do at the Ramsey's is now done with a debit card and with a budget system. And it is at your house too, right? Yeah. Yeah. Yeah. Cash has gotten limited in my life. Yeah, but you're right. What ends up happening is that you've got the money to do stuff, and you just do it, and then you look up and go, God, that envelope's got like$6 ,000 in it, and I'm walking around with this in cash.

50:58you know so no that you yeah and i would say the envelope system the purpose of it is to control your spending to know what's going on per category and to have a level of real life accountability that when there's no money in the envelope we stop spending in this category so people that are just starting to budget you know i think it still is for two or three months just test it on groceries on yeah on a couple of things because again it kind of just gets you back into this rhythm of knowing exactly what you have because it's physical money right there. And so that's really the purpose of the envelope system.

51:32But Donald, you guys are maybe step seven. The main reason for it is I think you guys have probably outgrown that main reason. So if you put everything into a Fairwinds credit union high yield savings account, you'd be great. You would be fine. You would not be doing anything.

51:47Dave Ramsey:Yeah, that'll work just fine. But the interesting thing is, by the way, for those of you that want to try this or you're just getting started, that the actual research says that when you spend cash, when you hand Uncle Benjamin Franklin over to the cashier at the grocery store, it activates the pain centers of the brain. It hurts to spend cash. It does not activate the pain centers of the brain to hand them a piece of plastic. So you spend more.

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54:09Dave Ramsey:Offense is investing. Defense is insurance. The right kinds at the right cost. You need both offense and defense to win the game, by the way. The right insurance acts as a shield around your loved ones and your wallet if some kind of disaster hits. Our free insurance coverage checkup helps you figure out if you have the right coverage by giving you a personalized action plan with clear next steps. Go to RamseySolutions.com slash checkup to get the free coverage checkup and find out if you have the right kinds of protection at the right cost. Julian is in Houston. Hi, Julian. How are you? Good.

54:50How are you doing?

54:50Dave Ramsey:Better than I deserve. What's up? Okay. So I have my question is I currently have a truck. I owe$38 ,800, my payoff. There's a dealer interested. and purchasing it for$44 ,000. My question now is, I do have a side hustle that I do monthly when I'm off from my work. My side hustle brings me in roughly around$1 ,300 to$2 ,000 per month. My truck, monthly I'm paying average about$1 ,000 with insurance. My diesel monthly is about$400. Does the side hustle have something to do with your truck? Yes, sir, because my side hustle, I do pressure washing, so I need to tow my trailer with my water totes, containers, and chemicals.

55:53Dave Ramsey:You could tow your trailer with a$10 ,000 truck. Right. That was my question now. Should I sell my truck? Yes. Buy something cheaper? Yes. Or should I sell my truck and just get a daily where I don't have to do side hustles no more? Oh, because you're sick. Yeah, I hear what you're saying. Because your side hustle basically paid for your truck, for the payments, the insurance, the gas. I mean, have you got other debt? Not really, no. What's your income at your main gig? big my my main job i'm making an estimate about sixty two thousand dollars and bi-weekly after taxes and insurance i'm making about 1900 yeah okay now there's two questions should i continue my side hustle and should i sell my truck the answer is you should sell your truck and if you want to continue the side hustle that's fine get an inexpensive truck to tow it with but if you if you don't want to continue it then sell off the equipment that's fine yep but if you want to make some extra money and this is a good way to do it.

57:00Dave Ramsey:Pressure washing is a good way to do it. It's a great side hustle, really good pay per hour. But you've got some equipment tied up, but you don't need a$40 ,000 truck to tow a pressure washer. That's kind of, that's backwards. Yeah. And if you don't have any other debt and you have an aggressive way to get a three-month emergency fund in place to keep moving down the baby steps, that's okay. Yeah. You can, yeah, you don't have to do the side hustle but if you want to i personally would keep the side hustle going by getting an inexpensive truck and pay cash for it and sell the big one that's definitely what i would do personally but i've always worked a lot most of my life so uh kayla is in boston hey kayla how are you hi i'm good how are you better than i deserve what's up so my fiance and i have been on the house hunt in Massachusetts for about a year now, and unfortunately, we keep getting overbid.

57:58Dave Ramsey:Good. You shouldn't be buying a house unless you're married. Yeah, my parents... A house together. What was that? Sorry, I was clarifying. You should not buy a home together when you're not married. It's not a good idea. Unmarried people can buy homes. Oh, I see. I see. Thank you. My parents' house is in a really great town in Massachusetts, and we've already went to our attorneys and put the house in an irrevocable trust since I am the only child. So instead of putting 20 % down on a$600 ,000 house, should I consider maybe putting 20 % down into this house, my parents' house, because I will be inheriting it one day?

58:47No, I would not. No, okay. Because it just locks you in to that home for a really long period of time where you and your husband may get married. And in two years, something may happen, right? And you guys may move and want to do something else. So, yeah, it locks your money up into an asset. That you can't get it out of. You can't get it out. Yeah, it's done. Versus you guys building a life together and having a home. And then one day when your parents pass, you know, then you can decide, hey, do we want to move in? Do we want to sell our current home? Take some of the equity to fix up mom and dad's home or sell mom and dad's home?

59:26You know, you actually have options. This just locks you into one option for a long period of time, which I would not do.

59:32Dave Ramsey:When is the wedding? Sorry? When is your wedding? Next fall. Like 18 months from now? Yes. Okay. In 30 years of doing this, almost 40 now, some of the worst nightmares I have seen are people that buy a home together who are not married. Please do not purchase a home until you're married. It is not together. It is not a good idea. You're going to make a mistake and it's going to cost you. You're getting this out of order. Yeah, rent for a little bit, get married, and then you guys go and look for a home. Yeah, and I think you've been protected so far from accidentally making that mistake by not being able to buy so far.

1:00:23Dave Ramsey:So, and no, I would save up and put as much down as I can put down after we are married. But too many things happen and you're too vulnerable. And most people are not going to do the proper documentation and everything else to make sure they're protected. And you're not either. so it's just best to wait until you're married and if you're going to buy together now if one of you wants to buy a house that's fine or the other wants to buy a house that's fine what rachel's point was but but couples should not buy homes together that are not married it creates all kinds of relational problems legal problems financial problems and the unseen things that come at you, the unexpected, unintended consequences that come at you create all kinds of issues for you.

1:01:12Dave Ramsey:I'm begging you, don't do this. Gabriel is in Augusta, Georgia. Hi, Gabriel. What's up? Hi, Mr. Ramsey. I'm doing well. How are you? Better than I deserve. How can I help? So here's the situation. I'm active duty military. I am married with two daughters, a one-year-old and a three-year-old. And we own a home. I put no money down on it. I used the VA loan. No debt other than that. That's a$250 ,000 mortgage, and I owe$243 ,000 left on it. And besides that, we just have my wife's student loans, which is about$12 ,700 left. So we're working on baby step two, working on paying it off. But I'm thinking ahead and thinking if we have a third kid, we're going to need a car that can have three car seats.

1:02:09And neither of our cars can do that right now. How old is your youngest?

1:02:16Dave Ramsey:Youngest is one year old. Okay. So how far out is this problem, do you think? Problem? Child. No, the problem is the third car seat, not the child. Not the child. The problem is I need a car. How far out is that? Yeah, so, I mean, not to get, you know, too personal about it, but we're not, we don't believe in using birth control. Oh, okay. So we're going to try natural family planning. Any minute. Nine months. We'll just say nine months. Okay. So how much do you have saved towards the next car? Well, I, zero right now. Okay. And how much is the current car worth? We have two cars. I have a beater I drive to work that's probably worth less than$2 ,000.

1:03:07Dave Ramsey:What's the other car worth? And it's fully paid off. And the other car is worth, I could probably sell it for$17 ,000 right now. Oh, perfect. So sell it for$17 ,000 and buy something that holds three car seats for$17 ,000. Yeah, go get you a used van, a nine-year-old van, Honda Odyssey is what I'd recommend. And if you can save up some cash to put with the 17, maybe you could move all the way up to 20.

1:03:54you

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1:05:18Dave Ramsey:Today's question of the day is brought to you by Why Refi? One financial mistake doesn't have to define the rest of your life. If you've fallen behind on your private student loans in default, Y-Refi can help you explore low fixed rate refinancing options and affordable payment plans. Go to YRefi.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 Carly in New Mexico. She said, my husband and I are in our 40s and we have a household income of$80 ,000. We are debt-free except for mortgages on our home and business building.

1:05:55We have a fully funded emergency fund and about$75 ,000 in retirement. We have a net worth of over$1 million, but it's almost entirely made up of the equity and real estate investments. Should we be concerned about retirement if we have all of our eggs in one basket? I mean, over the long term, yes, I would be concerned. I mean, if you see a plan out of this where you start to equalize some of this in the next four to five years, I would be more okay with it because of your age and where you guys are at. But I would be making sure that you're funding 15 % of that$80 ,000 in retirement so that you don't become real estate heavy again over the long term.

1:06:37But that 15 % will help you kind of balance it out. But yeah, I personally wouldn't want all my net worth purely just in real estate. I would want cash available and real estate investments, or I'm sorry, retirement investments like 401Ks.

1:06:53Dave Ramsey:The problem is there's a shortage of cash in that situation. And so that lack of liquidity is going to pinch you even if you have a high net worth and it's all in real estate. I don't mind it being very heavy in real estate, but being cash poor is what I mind. No liquidity. And so having some other types of retirement investments to provide the cash is fine. Because these are not. People that love real estate, for some reason, end up cash poor if you're not careful. Right. Because a lot of the investments, you know, they're not making, they're not providing the cash, right? It's tied up in a business building.

1:07:28And unless the business is paying rent to the building, then you make money that way. But there's no cash coming out of these investments.

1:07:34Dave Ramsey:Nothing to panic. But I would start building a liquidity position is what we would call it. meaning some cash, and a good way to do that's exactly what Rachel said. Start putting 15 % of your income away into retirement, into some good mutual funds. And over time, that's going to be plenty. That alone will make you another several million. All right, Dennis is in Atlanta. Hi, Dennis, how are you? Hey, Dave and Rachel. It's an honor to speak to you guys. You too. What's up? So I've got a question for you. I am 32, no kids, not married. I'm going to be finishing baby step two this week and should be done with baby step three in about two months.

1:08:16And then that will put me into baby step seven. So I'm kind of not sure what to do. I know I'm going to max out my Roth IRA, put some money in my work 401k, but really just don't know what else to do at that point. Is it because your house is paid off or do you own a home? or are you living somewhere else?

1:08:40Dave Ramsey:Yes. Yes, I own a home. It's paid off. And it's paid off. Okay, good for you, Dennis. Way to go, man. Yeah, well done. Yeah. So, yeah, I would max out all the retirements, and then I would have some other investments going in non-retirement, minimum of something like an S &P 500. But if you wanted to get with your SmartVestor Pro and open up a brokerage and have some after-tax investing going in addition to your maxed-out retirement, That's what I did do with it, by the way. That's not what I would do with it. It's what I actually did. And that money, that side money, is what I started buying real estate paid for with.

1:09:15Dave Ramsey:And nowadays, many, many, many years later, Dennis, because I'm 65, you're 32, right? And I was probably about 32 when I started that. But now I've got a lot more of my net worth in real estate than I do in mutual funds. Okay, yeah. Yeah, I was going to plan on opening up a brokerage account and kind of start building potentially a bridge account or something to pull from if I wanted to buy a second home or something like that. Exactly. Exactly. That's exactly what we did. And, again, you can sit down with the SmartVestor Pro. You can find them at Ramsey Solutions. They can help you put all that together and lay out a game plan and start setting some targets on that that you're aiming for.

1:09:55Dave Ramsey:And, man, that's awesome. Yeah, well done. Very cool. Good stuff. Well done, well done. Brandon is with us in Provo, Utah. Hi, Brandon. How are you? Better than I deserve. I've wanted to say that to you for such a long time. Well, you pulled it off. One goal down. I know. Amen. All righty. So I'm currently dealing with a problem right now. Well, in my mind, it's a problem, first world problem. We're going to be in Utah for about three more years, me and my wife. She's going to school for architecture. and then we're headed out to Florida so I could start my own HVAC company out there with my brother-in-law and that's currently what I do.

1:10:36What we're currently looking at right now is we have a lot of good finances available. We're wondering if we should be putting money into purchasing a home in Florida now to kind of beat the market so to speak and this is what everyone's

1:10:53Dave Ramsey:been telling us to do. I don't care what everyone says. And then just rent it out. Everyone's broke. I don't listen to everyone on anything. Matter of fact, what everyone says, you usually run the other way. No, I wouldn't buy it in South Florida until you're ready to go. Okay. So you think just keep on building up our nest egg pretty big. Yep. Yeah, the market's not going to move that much, Brandon, in three years at this rate, right? It's not like it's 2022 again and everything's just skyrocketing. It has slowed down in a good way. But yeah, I think if you guys stack enough cash, you can out beat the growth there, if you will.

1:11:31Dave Ramsey:Yeah, you can out stack whatever changing values there are. But either way, even if it was going up quickly, I still would not go buy a property in another state in anticipation of moving there. I know that's the plan, but three years is a long time. It's also a very short time, but it's a long time. Well, to make a big purchase like that. No, I wouldn't do it. And being so far from it, I wouldn't do it. Nope, nope, not the way I'd handle it. David is in Chicago. Hey, David, what's up? Hey, pleasure to speak with you guys today. Sure, how can we help? I need a little advice. I've been with the company for 15 years, and through mismanagement, they are closing their doors in about four weeks.

1:12:13I have a traditional 401k that the company has been contributing to a flat amount. And I started a Roth 401k on the side. Also, it's handled through John Hancock. And I was wondering, once the company closes its doors, what would be a good option for me if I were to leave it with John Hancock or move it out into something

1:12:49Dave Ramsey:separate, such as Fidelity or Charles Schwab, something like that? I would move it to a more traditional mutual fund setting. And I would use a SmartVestor Pro that we recommend to do that, the Ramsey Trusted ones. And if you go to Ramsey Solutions, you can find the person that we recommend. I would move the John Hancock account over there. And your old 401k at your old company that's closing is very simple. It's a direct transfer rollover to a new traditional IRA, and there's zero taxes. Now, be very careful, David, okay? You need to get in touch with SmartVestor Pro now and get the paperwork filled out.

1:13:28Dave Ramsey:And they need to submit that then to the 401k. If you take a check on the 401K, the government requires them to withhold 20%, and you don't have 100 % then to roll over. And so that's going to burn you on taxes. So you don't want to do that. You want to directly transfer this rollover into the next IRA, and you not touch it. It doesn't need to touch your hands because they're going to withhold 20 % on you. So go to RamseySolutions.com and click on SmartVestor Pro, and you can find somebody in your area to sit down and do that and get that opened up. And you can roll your John Hancock thing over there, too.

1:14:13Dave Ramsey:It'll be easy. Do both of them. Do both of them. Keep them all in one place with your SmartVestor Pro. You'll be in much better shape than both of those situations. So I hope you got the next gig lined up, brother.

1:14:32Thank you.

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1:16:28Dave Ramsey:Linda is in Houston. Hi, Linda. Welcome to the Ramsey Show. Hello. Thank you for having me. So I am 35 years old. I have two kids. I have a common-law husband who's been unemployed for 12 years. I've been with him for 15. I have a total debt of 45K and student loans on my car. I have a home that was gifted to me that was worth$400 ,000. and so I am a registered nurse. My father told me, hey, come work for me. I'll pay you what you're making as a nurse while you go to nurse practitioner school, so that's where I'm at right now. My question to you is, should I pull a HELOC loan on my home to invest in real estate?

1:17:12And with that being said, one that would be helping me with the contracting and building is my father. He wants me to tell my husband to get a job, which my husband has had trouble listening.

1:17:27Dave Ramsey:Your husband's had trouble what? Listening to my advice on him getting a job. He did not take it well when I asked him to get a job. For 12 years. What's he been doing? He was taking care of the kids while the kids were during the pandemic doing online schooling, but the kids have been back in school for going on three years now, and he refuses to find work or help me out. What's he do all day? Oh, usually at home with the kids right now during the summer, but at home as well whenever they're in school. Keeps up with the home. And he just says, I want to take care of the home and the kids, and I don't want to go get a traditional job and make a living.

1:18:11Yes, I have talked to him and asked him to help me out because we are still currently living paycheck to paycheck.

1:18:17Dave Ramsey:You said common law, so you guys are never married. Correct. You're never married. No, we're not legally married, no. Okay. So I'm curious why you've put up with this for 12 years. Oh, yes. I asked myself the same thing, but the fact that we have kids, and I have tried talking to him about helping me work. I'm tired of living paycheck to paycheck. I want to grow. I'm 35 years old, and I'm already planning retirement. I want my kids to be able to be financially ahead, you know, just like I was, thanks to my father. Yeah, I also don't want to be married to a knot on a log. A lazy guy. Oh, yes, I agree.

1:19:04Aside from all your personal goals,

1:19:06Dave Ramsey:it's just hard to respect a guy that sits on his butt all day. I agree. I agree. So I wish he had the same. And I'm assuming that attitude of a little bit of laziness and apathy plays into every part of his life, right? Your marriage and all. It's who he is. Yeah. Yes. I make a decent amount of money. You know, I wish I made more. I'm really comfortable. But like I said, we're paycheck to paycheck, one disaster away from everything crumbling. So the house is in your name, correct? Yes. The house was gifted to me by my father. Everything's under my name. And in your state, the common law status does not give him any access to ownership in the house, right?

1:19:52No, because it was gifted. He doesn't have anything. But now I worry if I do pull a HELOC loan to invest with my father.

1:19:59Dave Ramsey:I would not pull a HELOC loan to invest with your father under any circumstances. Okay. Period. We don't teach people to borrow money to invest. We teach people not to do that. but yeah so basically you're the owner of the house and so relationally this comes down to just telling him he has to leave right yes I don't want to because I believe that you know every child deserves a both parent in their home but I don't want my children thinking this is how a man behaves exactly so this is not don't tell me we're doing this for the children the proper thing to do for the children is to not let this model be in front of them does he have an abuse problem is he abusing alcohol uh he's had a past with substance abuse you sure it's in the past yes so once in a while currently once in a while that's not in the past by the way.

1:21:05Dave Ramsey:Now, if you've been an abuser, if you've been an addict and you're drinking again, that's not in the past. Okay.

1:21:19Okay.

1:21:22Dave Ramsey:Well, I'm not sure exactly what our question is on the table, but what I would tell you to do is no, I would not take out a home equity loan to invest with your father, borrow on the home that he gave you that's paid for. That's a little weird. Okay, not even thinking about that one, period. And there's going to be, I think, some absolutes that are drawn. Yeah, you know, I think under the direction of a good marriage counselor, and I would go see one, he's not going to go, but if I were you, I would get somebody other than a couple of people on a podcast or your dad to advise you on this, and relationally.

1:21:58Dave Ramsey:What we're hearing, though, is is if we were in that situation, we would say, you're going to have a job working 40 hours a week sometime in the next 30 days, or you're going to have to leave. And that's what I would have done 11 years ago. Not sit on your butt for 12 years. So this is now your fault. It's no longer his fault because you've tolerated it this long. so now you've got to correct your problem that you created by drawing a line in the sand yeah and i think that's what a good counselor is going to tell you um but you ought to have someone other than us tell you how to do that or other than your dad yeah and i was trying to flip the script in my head if a man called and said we're paycheck to paycheck my wife refuses to get a job x y and z you know um like does that make it you know what i mean i'm i'm i'm playing that out in my head if there's a difference there.

1:22:58I don't know if there is, but I think the problem is that there's two people. I don't think this guy wants to be,

1:23:02Dave Ramsey:I don't think this guy's asking to be a stay-at-home dad. I think this guy doesn't want to work. That's what I'm saying. That's the difference. And when one spouse is the only income earner and is struggling and reaching out to the other spouse, I mean, I know they're not married, and saying, I need help. We need help to get us out of this situation, to get out of debt. It's kind of all hands on deck. Do you know what I'm saying? Like that's the attitude approach of a healthy marriage that we look at our situation and say, okay, what do we have to do? Instead, she has three dependents. Yes. And that he's doing nothing.

1:23:34Dave Ramsey:Nothing. See, nothing drives me bananas. I know. Yeah. I can't handle it. And just a dude. I mean, when you said that, I was like, it's so true. That would be one of the most unattractive things. Just lazy. Do you know what I mean? Just a hound dog in the sun on the front porch. Just lazy. I'm like, oh, man. That's it. If he had initiative in doing something, like, you know what I mean? Within another context, I'm like, I'm trying to like, I'm playing gymnastics in my head a little bit of how I would approach it if it was something else and something different. But I think it's just, I think the problem you're going to have is this.

1:24:08Dave Ramsey:Okay. Very little that you can do in this once this much water's under the bridge is going to work because we have 12 years of the same pattern of script. Yep. And now to flip the script and go, oh, you got to get a chopper. You're out of here. it's just not it's just gonna it's not gonna go it's not gonna happen it's not gonna happen he's not gonna go oh you know i was just thinking the same thing this morning no that's not gonna happen and help provide for my family yeah you know no you wouldn't have anywhere near the fuse on this bomb that you'd have around man and then you got linda who's like killing it working hard a nurse heading towards nurse practitioner yep got a paid for four hundred thousand dollar house Yeah.

1:24:50Dave Ramsey:By the way, I think you need to pursue nurse practitioner, not your dad's business, too. You didn't mention that, but I'll throw that in just for the fun of it. Linda, I'm sorry. I love the independence that you can have and that you have, and you're going to need it. Yeah. And that's where it's going to take you. So, yeah, I don't think this, as they say, leopard is going to change his spots. I got a feeling that as you just go, oh, and I was just thinking, no, that's not going to come up that way. I think the old boy is going to have to find somewhere else to take his naps because he takes a lot of naps after he drinks a lot.

1:25:32Dave Ramsey:And she's not being truthful. He drinks a lot still. Yeah. Linda, I'm sorry. I appreciate the mom heart, though, of fighting for your family and, you know, all of it. But you've got to figure out what's good for you, Linda. And for the kids. And you, yes. And you being in the healthiest situation, safest situation for you is going to be the best thing for your kids. But I would. I would go get some advice from a counselor. I would sit down with someone, a professional, and talk it through. Sit down with a good pastor, maybe. That's a good idea.

1:26:22Dave Ramsey:Welcome back to the Ramsey Show in the Fairwinds Credit Union studio. I'm Dave Ramsey, your host. Thank you for joining us. Steve is in Rochester, New York. Hi, Steve. How are you? Hey, Dave. I'm great. How are you? Better than I deserve. What's up? I have a business that I've owned for about eight years now. within the last 16 months or so. It's taken a hit, and it's basically breaking even. And I haven't been paying myself throughout that. So, you know, I'm trying to figure out. It's listed for sale. Probably not going to get anything close to what I would have gotten a few years ago. And I'm just trying to, you know, get some guidance on what I should do next.

1:27:14If I should try and pour some more money into it or go look for a nine to five or start a new company. What kind of business is it, Steve?

1:27:28Dave Ramsey:It's a protein supplement company. Okay. That you make or that you sell? Can you repeat that, please? Do you make the protein supplements or do you just sell other people's? We make it. We have a contract manufacturer and we sell it. What happened to the sales? Why is it down? Direct to consumer. We were using a 3PL, one 3PL, and they changed. They got bought out and then bought out again. And they threw out about$350 ,000 worth of inventory. We hired attorneys, went through the whole process, which was expensive, and we were out of stock on pretty much everything for six to eight months. So now you have inventory back?

1:28:19Dave Ramsey:Now we have most of the inventory back. So why can't you sell it? That flywheel momentum, we're trying, but that flywheel momentum hasn't gotten back up to speed. Why? To where it was. I don't know. I don't know if people are spending less on it or spending. They're spending more. Why isn't your selling?

1:28:48Probably marketing. Getting the name out there or back out there.

1:28:54Dave Ramsey:How were you? I mean, the other company was doing all the marketing for you. You've never had any experience selling your own product? No, we have. We used to use influencers, and we stopped using them because we didn't have great experiences with some of them. Okay, because it didn't work. At first it worked, but after that it didn't. Okay, so it sounds like you know how to make protein supplements, but you don't know how to sell them. That's what it sounds like. Me specifically to go out and... You own the company. Right. I'm not saying you need to go door to door, but you ought to have an idea how you're going to directly get this thing that you created, and you created it with someone in mind, and how are you going to get it to them?

1:29:52Dave Ramsey:That's marketing. Right, right. How many people work on the team, Steve? It's small. It's about, not about, it's four people. Okay. So after payroll and expenses and everything, you guys are breaking even. Yes. Yeah. I'm not paying myself. And how is that much product moving? Just on your website? Yeah. Yeah, on our website. And how long has it been since you've had inventory back?

1:30:29almost about four months.

1:30:33Dave Ramsey:How long ago did you start this company? Eight years ago. You told me that. I'm sorry. So eight years ago, if I had talked to Steve, would he have been more excited than he is right now? He sounds down in the dumps. Yeah, very much so. It's been so frustrating. I'm married. I wasn't married when I started the company, And we have a five-month-old. And you've been through a lawsuit and all of it. It's just taking you out. Yes. Yeah. It's been listed for sale for – since we got inventory back in stock, there's not been much movement. So it has been pretty frustrating. Well, it's not really much of an asset to buy because it's not profitable.

1:31:16Dave Ramsey:Right. I don't know why anybody would want to buy it. Unless they would just want to buy the inventory and then – Yeah. Yeah. And the formulas. Yeah, recipes or whatever. Okay, so Steve, so what next steps for you, you're wondering. Your main question is do you keep putting money into this? No, not unless you have a reason to believe it's going to work. And right now I haven't heard a reason to believe it's going to work. So Henry Cloud says in his book Necessary Endings that we end something, a relationship, a job, a business, a department, an employment, whatever it is when we lose hope that the situation is going to improve.

1:31:58Dave Ramsey:And I have not heard a single thing talking to you that you have any hope this is going to improve. I know. Well, I'm just thinking it's been four months since everything's been back. But there's no light at the end of the tunnel that's not an oncoming train. Well, I'm just wondering, Steve, if you were killing it right now, would you still love the business? Or do you just want out in general? I probably wouldn't be. I've visited a company before and was making pretty good money then. Okay, so you just won out in general. Even if it was doing good, owning your own company and doing all of this, it's not fun right now for you in general.

1:32:37Hello?

1:32:37Dave Ramsey:He's gone. Oh, we lost him. Oh, did I offend him? No, I'm just kidding. I doubt it. Yeah, no. That's my job. yeah i would just tell him i just wonder if there's strategies you go back to for 60 more days to see if there's anything tell me three things you want to try to keep it open that's right and i can't get any of that out of it yeah no he seems like he's done he seems like he's done he's done so what do you do sell off the inventory to another company or something try to get the cash keep your website open and shovel it out of your basement we got him back steve you there Wait, press two.

1:33:13Dave Ramsey:We got him. Okay, good. Steve, you there? We got your back. Oh, there we are. Okay, good. Okay, so do you have three moves you can make to try to salvage this thing and get it profitable that you want to try, or do you want to close it? My gut instinct is to close it and or sell it, but, you know, to put money into it in three months, another 50 grand. You don't have anything that gives you hope. That's what I'm hearing. Yeah. Yeah. And I'm also hearing in your voice that you're out of gas. Yes. Yes. You know, with a five-month-old and staying up until 2 a.m., 3 a.m. to try and make this work, it's my family and faith are more important than the company.

1:33:58Dave Ramsey:What is the value of the inventory? It's about$350 ,000. Okay. Yeah, I wonder if you can sell that somewhere. I think you can work that as your side hustle, just running now for your own website with no overhead and get your inventory back out of it. You're probably going to make more that way than you will trying to sell it. Sell the business. Because I don't think the business is a viable purchase because it's not got profit. And businesses that aren't profitable are called a hobby. So, yeah, I'd go get a nine to five and come in out of the cold for a while and heal. You may go back to being an entrepreneur someday.

1:34:33Dave Ramsey:that's not a sin but it's not unusual at all for somebody to take five years and go back in out into the marketplace work for someone else get their emotions healed get the lick your wounds as they say and um you know you've got these responsibilities that are weighing heavy on you so that's what i would do took a minute to get there sorry about that

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1:36:00Dave Ramsey:Tessa is in Pensacola. Hi, Tessa. Welcome to the Ramsey Show. Hi, thank you. What's up? I am calling. My husband and I have been following your principles for the last six years. We just paid off our mortgage. Yay! Yeah, really excited. And we've been investing 15 % since we hit maybe step four. But now that we paid off our mortgage, we've been looking in how to optimize that investment. We've been investing between Roth and traditional and just like a split there. But now we just found out that for Roth, there's an income limit. so we cannot invest in the traditional or the Roth. I know there's the backdoor, but the question is, is there a recommendation on percentages of the 15 % to invest in traditional versus backdoor versus other investments?

1:37:06A hundred percent into Roth.

1:37:08Dave Ramsey:A hundred percent into Roth. Your 401k ought to be Roth. Everything ought to be Roth if it can be. Is Roth available on your 401ks? It is, but we don't qualify because of our income. That's not true. 401k does not have an income limitation. The traditional, but doesn't the Roth have a... No. A Roth individual has a$200 ,000 married filing jointly limit, and you have to do a backdoor, but not on the 401k. I do a Roth 401k, and my income is way above that. Okay. So just put the whole 15 % in Roth? No, I'd put everything. I'd max out your 401k. Okay. All Roth, and then I'd do two backdoor Roth IRAs, individuals as well.

1:38:01Okay.

1:38:02Dave Ramsey:And if you've got money, if you have the money to do all of that and still do some of the other things you want to do with your life, then that's what I would do. What's your household income? um it's it's variable because of a commission structure but anywhere between three to four hundred thousand okay yeah you got the money to have a wonderful life and max out all your retirements okay yeah so 100 % Roth and back doors exactly and then if you wanted to be on that Tessa open up I mean I mean it would be like a bridge account I guess or you know just a brokerage account to put some money in mutual funds that are not in retirement that you can use because if you go down this rabbit hole there's the mega backdoor for i mean there's all these other elements that are so such high numbers and i remember we even we we've talked about this on the show high earners there is a point that you can max out all these things you know there's all these elements of massive retirement investments but it's all stuck till you're 59 and a half so there is a point of maxing out everything from the traditional sense, but then there's all these other layers that you could do, but I probably wouldn't.

1:39:11Dave Ramsey:At your level of income, I probably would not do megas. Yes. But I would just take your full 401k at Roth and take your backdoor Roths individuals at your income. You'll still have plenty of money. You'll do some other investing, some other generosity, some other enjoyment, and you'll have plenty, or you should have plenty of wiggle room in there making three or 400 ,000. So yeah, sit down with your SmartVestor Pro. They can walk you through every single bit of that and show you how to do it. Jared is in Chattanooga. Hi, Jared. How are you? Hi, Dave. Good. How are you? Better than I deserve. What's up?

1:39:46Well, I just want to say what an honor it is to talk to you. My question is, so right now I'm 30 years old. I'm in a pretty high-paying career. I would like to make a 10-year plan for myself to transition to a more flexible career path so that I can spend more time with family. I'm just wondering the best way to think about that. It'll be probably I'll be making about a fourth of what I'm making now.

1:40:16Dave Ramsey:What do you make now? Right now, I make about$194. After taxes, it's like$170. A year. How old is your family? I'm 30. My wife is 25. We have a one-year-old, and we have another daughter on the way. And you want to transition your career to make less money so that you have more flexibility. How many hours a week do you work? Right now I work full-time, so 45 to 50. You make$200 ,000 a year working 40 hours a week? Yeah, probably more like 45 to 50 hours right now. And what will you be making in five years if you stay in this career?

1:41:13Probably slightly over$200 ,000.

1:41:15Dave Ramsey:Yeah. And what are you doing? What's your career? I work in finance and accounting for a manufacturing company. And where did you get the numbers that it's going to be a fourth? Like, were you looking at a specific role at a job that's 20 hours a week or something? Like, give me the reasoning of when you said it's going to be about a fourth. Yeah, I want to be a soccer coach, and we would like to homeschool our kids. so I'd like to transition to that just to be with family more. Okay, but you have a one, so you have the one-year-old who won't be in school for another four to five years, right?

1:41:56Right. Okay, so is that what you're thinking when they start kindergarten? But you won't be, will your wife be homeschooling or will you? My wife is going to homeschool. This is, I'm trying to find like a 10-year plan, hopefully. Okay. So I think I have about 10 years to. Okay, yeah. Yeah, I mean, I would just work my, yeah, work hard. Don't overwork yourself, but work hard, save, get out of debt, pay off the house, get yourself in a position that, yeah, if you decide to pull back career-wise at 40 and make a fourth that you'll have enough. But I just don't, Dave's not going to do this. Where are you a soccer coach at 50K?

1:42:39Dave Ramsey:Where are you going to be a soccer coach for$50 ,000? I was going to do like youth club teams and probably a local high school around here. Okay. All right.

1:42:58Dave doesn't compute with this.

1:43:00Dave Ramsey:No. And Jared, let me just tell you, I think in 10 years, your life is going to look so different. I think you're 30. You have a one-year-old. I think by the time you guys have another couple kids, they start school, you start your life. Things may shift. I think there's a lot of different ways to accomplish similar goals that aren't as destructive as this is. So, I mean, you can soccer coach on the side and make a shift in your career where you've got more flexibility in your current career and you're still making the same kind of money. I think that's an entire possibility. This idea that you somehow have to come home and, you know, destroy your earning power so that your children turn out is not a truth.

1:43:40Dave Ramsey:That's not a true story. That's not true. OK. Men have worked 40 hours a week for since time began and their children turn out. And so this idea that you have to be at home to nurture is not true. No, but what I would say is true at 40 to have the flexibility, just like you're saying, to be able to leave an office at 3.30 to go and coach your kid's soccer team on the side. As opposed to leaving the office for good. Yeah. Right. I don't have a problem with that at all. Yeah. That's fine. Yeah. One of the reasons we work and build up a nest egg and some wealth is to give us some flexibility. And Jared, you may look up in an accounting.

1:44:24You could have your own accounting firm in 10 years and do the business you want to do. You know what I mean? And create your own destiny.

1:44:31Dave Ramsey:Like it's - A lot better idea. Yeah. There's a lot of avenues here. Yeah. So I would say, and again, money is not everything. We're not saying that. No, I'm not saying that at all. No, but it does give - But this is a false narrative that you need to cut your income to a fourth in order to be a good dad. That's right. And in order to be, have being called flexible and in order to homeschool your kids and in order, I don't know what you're reading, but that's just a false narrative. And so never seeing your children and working 80 hours a week and being an alcoholic is the other end of the spectrum.

1:45:06Dave Ramsey:And we don't endorse that either. We don't endorse that either. The reason we live like no one else is so that later we can live and give like no one else. And that involves some flexibility. But I think you need to be careful what narrative you're buying off on. That's, that's what's bothering me with this.

1:45:43Dave Ramsey:Hey, guys. Dave Ramsey here. Every day on this show, we help people work through real money problems and figure out what to do next. Now you can get that same kind of help anytime with Ask Ramsey. Ask your money question and get answers built on Ramsey principles we use on the show. Whether you're making a decision or just want something explained, Ask Ramsey is here to help. It's fast, simple, and free to use. Go to RamseySolutions.com and try Ask Ramsey today. That's RamseySolutions.com.

1:46:31Dave Ramsey:You can tell it's summertime in the lobby of Ramsey Solutions. There's a bunch of folk showing up today. And we do the show from 1 to 4 Central Time every day, Monday through Friday on the glass. You're more than welcome to come by and get a free homemade chocolate chip cookie and some coffee and visit the store, visit the museum and sit and watch the show. and also whatever you call that thing back there. The Smithsonian of Ramsey. The Smithsonian of Ramsey. That's it. Our history wall. Yeah, the history wall. The wall of history. What do you call that if it's not that? I don't know. Anyway, so also in the middle of that lobby is the debt-free stage, which is where Erin is standing on the debt-free stage.

1:47:11Dave Ramsey:Hey, Erin, how are you? I'm doing well. How are you guys doing? Better than we deserve. Where do you live? Doing great. From Columbus, Ohio. Very cool. Welcome to Nashville. How much debt have you paid off? I paid off$31 ,000 in 30 months. Good for you. And your range of income during that two and a half? $35 ,000 up to$38 ,000. Wow, that's amazing numbers. $1 ,000 a month you're putting away. Oh, you lived on beans, not even beans and rice. I moved into an apartment above the vet clinic that I work at that involved not paying any rent or utilities in exchange for taking care of boarding and hospitalized patients overnight on the weekends.

1:47:49Dave Ramsey:Wow. You went all in. Amazing. What kind of debt was the$31 ,000? $23 ,000 of that was a car loan, and then the$8 ,000 were two student loans. Wow. Very cool. Did you go to vet school? No, I'm a vet tech. Vet tech. Okay. Perfect. Okay. So I was going to say, that's pretty good. $8 ,000 for a veterinarian degree. You got off the other way. That's good. Yeah. That's good. So how old are you? 28 years old. Very good. Good for you. So what happened 30 months ago that made you get so radical? I took Financial Peace University through my church. And just knowing other people who were actively getting out of debt or people who had gotten out of debt, who I knew who were able to do that, really inspired me and helped me get a jump start on getting out of debt.

1:48:40Dave Ramsey:And what a cool opportunity to be able to get a free apartment for a little while and do what you love anyway. You love animals. It's been a huge blessing. Yeah. That's very cool. That's a neat, that's a, that's a creative way. It's always fun to hear what people do, you know, and you hear that and you're like, well, there you go. How great for Aaron. Yeah. You don't have to pay rent. It's not a forever thing, but for a little while, that was fun. Absolutely. Yeah. Yeah. Good for you. That's awesome. Okay. So in the 30 months, what was, what was the hardest part? Would you say you're 28? You're like, I'm, I'm living on nothing doing this debt free thing.

1:49:13What was tough about it? I would say staying motivated at first. There at the beginning, it just seemed like a huge mountain to climb. But as I kept going, as the snowball happened and I got the student loans taken care of, that was very motivating just to watch my payments be able to get bigger and just to watch my debt just decrease.

1:49:34Dave Ramsey:Yeah, just watch it go down. Yeah. It keeps you motivated. It keeps you moving. Yeah. And it's like, I can see the end. I can see the end. I can do this. I can do this. Yes. That's called hope. Yes. Very cool. I'm so proud of you. Way to go. Who was cheering you on, this gang over here in the peanut gallery? Yes. Yep, my whole family. All right. Oh, it's awesome. Very good. And they all came down with you to cheer today, huh? They did, yes. Very good. So mom and dad are proud. Yes. Yeah, you're living in the vet clinic, not their basement. That's good. Yes. I like it. Very cool. Now that you did all this, how does it feel?

1:50:08Fantastic.

1:50:09Dave Ramsey:Was it worth it? Yes. It feels very freeing. yeah very cool so what do you tell people the key to getting out of debt is having and sticking to a budget was very helpful there's freedom within the budget too that budgeting just gives you a plan for your money so you can still do the fun things you want to do and still save for the things that you want to do while also being able to pay your bills yeah yeah are you doing it on the every dollar app or on paper yes i've used every dollar okay Okay. All right. Very cool. Good for you. So great. Very, very proud of you. Erin, that's awesome. Good work!

1:50:45Okay, so the other 20-something-year-olds that are listening, and they have student loan debt, they got car loans, all the things. What would you tell them if they're sitting there thinking, there's no way I can do what Erin did? Like, she just, she killed it. She sacrificed so much and got out of, what,$31 ,000 a day. I don't know if I can do it. What encouragement would you give someone listening in their 20s? I would say to think outside the box. look for opportunities to decrease your living expenses and find anything you can do to increase your income so and I was able to do this doing things that I love I on in addition to living above the vet clinic I've also done a lot of pet sitting on the side which I love doing that anyway yes yes I love that when people can find a side hustle that they're naturally good at it's what they're it's what they can do well you know and then you get paid for it just like what

1:51:33Dave Ramsey:you're saying that's awesome works out perfectly perfectly well done miss aaron proud of you good work good work and on to everything else in your life from this point forward you got everything's wide open now yes congratulations well well done all right it's aaron in columbus ohio 31 thousand dollars paid off in 30 months for those of you slow at math that's a thousand dollars a month, making only 35 to 38. She did this. It's amazing. This is very cool. Those numbers are unbelievably cool. Very good work. All right. Erin from Columbus, count it down. Let's hear a debt-free scream. Three, two, one.

1:52:16Dave Ramsey:I'm debt-free. Yeah.

1:52:23Dave Ramsey:That's how it's done, ladies and gentlemen. That's how it's done. love it so uh we get to meet the uh gen zers and the millennials that um are not victims and that are not entitled and that are actually go-getters they they get up leave the cave kill something and drag it home she's obviously one of them and uh we get to meet them and so we have um a distinct advantage over a lot of people out there because a lot of people can believe that these two generations are all entitled brats that live in their mother's basement or something, and they're not. There's a high percentage of them qualify like her.

1:53:05Yes.

1:53:06Dave Ramsey:And we got a bunch of them working here in that age group too, and they're incredible. Well, when you, and I think what's always impressive is when you choose to do something when you are on the younger side of life. You know what I mean? Like it's one thing when you're in your 40s or 50s and you're like, I gotta get my crap together because I see retirement coming, all of it. But to have people in their 20s like step into this and be like you know what i'm gonna do it early because it's what everyone else wishes they had done you know they're like living out the life i had met you when i was 19 yeah that's so many people that's right yeah and for aaron to think about at 28 you think 10 years from now 38 48 20 like what she can save and put away like she will she'll be um she'll be a baby steps millionaire honestly in no time like it's it is wild what your income can do when you have no payments.

1:53:53Dave Ramsey:Yep. Yep. And what your career will do. Yes. Because it opens up. You don't have to sit in a bad situation. You can make different choices on where you work, how you work, who you work with. And because you're not stuck, you're not dependent upon, oh, if I lose one paycheck, I lose my car. If I lose one paycheck, the student loan people are going to come knocking at my door. If I lose one paycheck, we're going to discover that Samuel well, Jackson's actually in my wallet. You know, it's a master card, right? What's in your wallet? Apparently you, you know. And so, yeah, all that's gone. And so when you learn to do what she did, which is take a very intentional approach, step-by-step, systematic like she did, follow the process, didn't argue, didn't try to make up her own thing with some math thing she read on TikTok.

1:54:41Dave Ramsey:She just said, I took this class, I'm going to do this. Yes. It's real simple. And there's a beauty to that simplicity. Absolutely. Well, and the consistency. And over time, like it's not fast, right? I mean, 30 months, like she, you know, over two and a half years. And it's, that's when you're in the grind of that, that's long, right? You can look up and think two and a half years ago from sitting here and you're like, oh my gosh, that went so fast. But when you're in the middle of it, like she was saying, it can be hard. So the perseverance and the motivation, yep, I think is great. Yeah. And I think another funny thing is being on this show and you get calls from all generations.

1:55:18And I'll say, I think we've met as many entitled boomers calling in, expecting certain things as we have Gen Zers, you know? I mean, there is an amazing thing that regardless of your age or generation, the people that went on this stage, I think the consistent thing that we see over and over again, regardless of age, is that they believe they can do it. And she looked up and said, you know what, I'm going to change some things in my situation and And I'm going to do it. And she did it.

1:55:42Dave Ramsey:I'm going to take this. It's amazing. And a buddy of mine said, he said, your stuff never worked, Dave, until I submitted myself to the program. And just like, yeah. I had to submit myself to something that's different than I thought and different than my arrogance. Yeah. That's very good. Congrats, Erin. Very cool, Erin. Proud of you. Awesome.

1:56:10Thank you.

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1:57:23Dave Ramsey:Our scripture of the day, teach me your way, Lord, that I may rely on your faithfulness. Give me an undivided heart that I may fear your name. B.B. King said the beautiful thing about learning is nobody can take it away from you. All right. Up next, we have Chase in Columbus, Ohio. Hi, Chase. Welcome to the show. Hey, guys. How are you? We're doing great. How can we help? Hey, so first off, I want to say I'm sorry if I stutter. I stutter when I get nervous. Oh, yeah. So it might be a little awkward here. No worries at all. Dave just screwed up his whole in-ear, so he's having issues too. So you're in good company.

1:58:02Don't worry, Chase. Don't worry. Okay. So my wife and I, we make decent money. I mean, I would say it's okay money. How much is that? So we make$118 ,000 a year combined. Okay. We just paid off her debt besides her car. which we still owe about$18 ,000 on it. And now we're transitioning into my debt. I made a bunch of stupid decisions when I was around 23, and I have three items on my credit that are charge-offs, and those charge-offs total up to about$4 ,000. And then I have about an additional$3 ,000 that is medical debt that is not charge-off. So my question is, how do I go by paying these off to be able to boost my credit and be able to buy a house by no later than February?

1:58:56Dave Ramsey:Don't know if you're going to make it by February, but we can help you get it cleaned up, and then we'll see how quick it changes your credit score, okay? Of course. So the$3 ,000 in medical, why has that not been paid, and how long ago was that? So it was about two years ago. Pretty much it came down to I used to work in law enforcement. I got injured when I wasn't working and ended up having to leave my job. I wasn't able to return just due to the injuries. And then we lived pretty much penny-pinching paycheck to paycheck. I was trying to do odds and end jobs. Okay, so that's an old debt, but it's not been written off or charged off yet, as far as you know.

1:59:43Dave Ramsey:Yeah, so do you have a contact point on all three of these debts? I do, yes. Okay, so call them up and ask them what it takes to clear the debt, or what they will accept to clear the debt. Okay? Okay. They're all bad debts, and a bad debt made good, even if it's settled, is about the same thing as paying it. And so that$3 ,000, they might say, oh, we've added charges and interest, and it's$8 ,000. And you may have to negotiate down and say, okay, I can't give you$8 ,000, but I can give you$3 ,000. If you'll take the original amount, I can send you a check today if you send me that in writing that you'll accept that as settlement in full.

2:00:24Dave Ramsey:Okay? Okay. So in all three cases, you're looking for a couple of things. One is you need an email or something in writing that says we, the organization, will accept X amount as settlement in full. And then you keep that piece of paper in hard form, print it off, in a file for the rest of your life. Because these people forget. They screw up. They call back. They go, oh, we didn't settle that. Oh, that guy didn't have the right. Sorry, I got it in writing. Okay? So you need to get it in writing. And then the second thing is they will ask, some of them will ask for electronic access to your checking account to pay the bill.

2:01:11Dave Ramsey:Once you agreed on the settled amount, do not allow them to have electronic access to your checking account. They lie. They will clean you out. Okay? Okay. So instead, you can wire them the money or you can buy a prepaid one-time use debit card for the exact amount and put it on that and then give them that card number. But don't let them use your regular debit card and don't give them your checking account number or anything like that, okay? Okay. So in writing, no electronic access to your checking account, and then you've got to deal on all three. The fastest, as soon as you do that, and then, you know, go ahead and put in, then you can, and you can even put in writing that as soon as we receive this, we will enter on the credit bureau that it was paid in, that it was settled, or that it was paid in full, whatever.

2:02:04Dave Ramsey:Settled in full is fair. That's fine. But that will remove the damage, the bulk of the damage. So if we were going to put it on a scale of 1 to 10, as an example, a bad charge-off is an 8 or a 9 if 10 is the worst, which is where you are today. A paid-off charge-off is a 3 or a 4. So it still damages your credit because this really happened, and it shows that you didn't pay a bill, but you went back later and paid it. But it's not nearly as bad as where you are today, and that's what I'm saying. I'm not sure you'll quite be ready by February. Yeah. And do you guys have an emergency fund chase and a down payment?

2:02:45Will you have all that by February?

2:02:46Dave Ramsey:Yeah. So we've actually been looking now to go look at houses. We actually have$40 ,000 for a down payment. And then we have$7 ,500 put aside specifically for my debt. Yeah. Meaning we can go pay off everything. And we're lucky enough that my in-laws, they have like an in-law suite for their house. We're able to live here for free. they offered it to us instead of renting so we could fix everything up and be able to save for a house. So everything can be paid theoretically today. I'm sorry. No, I was going to say you, it takes usually around six, eight months, six to nine months with, for the credit score to go undetermined once all the accounts are closed.

2:03:30So yeah, you guys will be right on that line.

2:03:33Dave Ramsey:That's why I keep saying, I don't know if February is going to work. It might be May, But you got to do it anyway. So let's go get it cleaned up. Go get it cleaned up and get everything shut down. And if you have no other active accounts. Yeah. Making sure everything's closed. Then you may see it go all the way to undetermined, which is the best possible scenario. Because if they pull your credit score when you're trying to get a mortgage and it's bad, it's going to hurt you more than having an undetermined credit score at that point. Exactly. When you can do manual underwriting and have two years of back bills that you're showing that you pay.

2:04:07right cell phone insurance electricity so on exactly hey we wish we could get to every call

2:04:13Dave Ramsey:and question but we can't so we built a thing called ask ramsey it's our ai tool that's free and it's built and trained only on proven ramsey principles the data that ai is accessing is only ramsey data so you're only going to get a ramsey answer ask ramsey it's free ask your question at ramseysolutions.com or click the link in the description. Jada's in Sacramento. Hey Jada, what's up? Hi, thank you for taking my call. Sure. How can I help? So my husband and I decided to pay off our$33 ,000 debt this year and we've made$6 ,000 progress so far. So we're doing really well. And he's the one working.

2:04:55I stay home with our one-year-old and he works a lot. He commutes almost two hours to and from work. He has a side gig. He's really busy. So he feels like he should have a good, you know, size allotment of fun money. We haven't budgeted up until this month. And so that ends up being$360 for each of us, which I feel like is a lot because I want to, I'm the one who wants to pay off the debt. And so my question is, what do I do with that$360? Do I throw it at the debt? Do I try to save it? Do I, you know, go blow it somewhere? What should I do? Well, have you guys, have you run out? I mean, how much debt do you guys have left?

2:05:30uh 27 000 okay i mean if i were you i think having some level of money right for yourself because you're gonna have to be buying you know there's things you have to buy throughout the month for yourself which is fine um but just to blow money for the heck of it while you're getting out of debt feels wasteful to me because as you're looking and running out the numbers both of you i mean the the math is the deeper you sacrifice and the more money that goes at the debt the faster you're going to get out and the faster you can get back to a great life without payments and so i guess that's a decision that you guys have to make because the more you spend and just enjoy the longer it's going to take you guys to get out of debt and i know he works hard and all of that and yeah we all work hard so yeah that's too much y 'all have too much

2:06:18Dave Ramsey:fun money budgeted i'd back it i'd back it down less fun it's almost 700 bucks a month yeah less Less fun. Yes. And so that was the quote-unquote compromise. He wanted 10 % at first, which is just crazy. Well, he's not on board then. You're the only one doing this. Yeah. And so it feels like if I do. The problem is not the fund money. The problem is whether or not he's engaged. Yeah. Once he's engaged, then we don't argue about this. He's not engaged in the process. You don't need a timeline to say, here's an aggressive way or aggressive time to get out of debt. He needs to believe that this is worth it.

2:06:53Dave Ramsey:And he doesn't yet. 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.