Debt Isn't The Problem - Your Mindset Is

Speaker 1 guys, it's James Childs, producer of The Ramsey Show.

Speaker 1 This week, Dave and the personalities are living it up on the Ramsey Cruise, so we've put together a compilation of some of our favorite calls and segments from the last year.

Speaker 1 Regular shows are back next week. Hope you enjoy.

Speaker 2 Live from the headquarters of Ramsey Solutions, it's the Ramsey Show, where we help people build wealth, do work that they love, and create actual amazing relationships.

Speaker 2 Jade Washaw Ramsey Personality is my co-host today. I'm Dave Ramsey.
The phone number is 888-825-5225. Jeff's in Indianapolis.
Hi, Jeff. Welcome to the Ramsey Show.

Speaker 3 Hi, Dave. Pleasure to talk with you.

Speaker 2 You too. What's up?

Speaker 3 My wife and I are in our early 70s. My son lives about a mile from us.
He's in his early 40s. He relocated back here to Indiana from California about 11 years ago from L.A.

Speaker 3 where he was working in the music business. And he was going to take over my insurance agency a few years,

Speaker 3 retired about nine years ago. So he he did take that over

Speaker 3 he got into tax problems when he was in California because he was working for a music composer that actually treated him as an employee but paid him as an independent contractor so he didn't know anything about paying taxes got behind with the state and the IRS end up owing them

Speaker 3 30 or 40 grand I think we helped him work out a structured repayment plan as a condition to him coming back and getting into insurance and that's been paid through wage garnishments since then.

Speaker 3 I discussed with him before he came back the need to stay on top of his taxes and finances because he's never been good with money.

Speaker 3 During that period of time, many times I'd ask him if he was on this and he'd just blow up and wouldn't talk to me about it.

Speaker 3 Three months ago, he called us and told us that he was in tax debt to the IRS again and wanted his mom and I to bail him out, basically, using our share of

Speaker 3 our estate when we die.

Speaker 3 We thought he probably owe about $50,000 or $60,000. Turns out he hasn't filed any state or federal tax returns for the past four years, nor has he paid any estimated taxes for 2023.

Speaker 3 We're meeting with our accountant next Thursday to go over all this to get specific numbers, but I'm guessing from what I've seen, it's going to be over $200,000, and about half of that is just interest and penalties.

Speaker 3 He also hasn't paid any $941 withholding or state unemployment tax. He has no business being self-employed, obviously.
So my question is,

Speaker 3 we have the assets to do that, but we would have to sell off property and mutual funds.

Speaker 3 I don't know if you need our income or what exactly.

Speaker 2 What's your net worth?

Speaker 3 Net worth is probably about $2.3 million.

Speaker 3 And

Speaker 3 about roughly half of that is in two pieces of real estate, our residents here in Indiana and another home we own in Florida.

Speaker 2 I'm sorry, Jeff.

Speaker 3 Including the real estate, the majority of our assets are in IRAs, Roths, and 403Bs from what my wife taught.

Speaker 2 We've got about $130,000

Speaker 2 in the money market fund. What's his income at the insurance company?

Speaker 3 Well, he just resigned from that position because after he took it over, he ran it into the ground. He couldn't make a go of it.

Speaker 3 Right now, he's doing a sales job, and it seems to be going pretty well, but he's only been doing it a couple of months. He's making about $75,000 a year plus bonuses.

Speaker 2 Is he married?

Speaker 3 He's not married. He has an eight-year-old granddaughter that we absolutely love and spends a lot of time with us.

Speaker 3 He was going to get married, but they did it kind of reverse. They got pregnant first, and then they didn't get along, so they didn't get married.

Speaker 3 So both of them are here in town, and both of them have jobs or own businesses. And they get along fine.
We all get along fine.

Speaker 2 The insurance agency was yours and you sold it or gave it to him?

Speaker 3 It was, I actually worked for a captive company, so they actually owned it. And when I left, they paid me a percentage of my renewals, and that's one of the cornerstones of my retirement now.

Speaker 3 So I didn't have a say in where they were.

Speaker 2 So you had a book of business, but what did he come into? He didn't take over your book, did he?

Speaker 2 He did.

Speaker 2 Not all of it, because

Speaker 3 it was a big agency, so they split it it up among other agents. They gave him about half of it.

Speaker 2 And he ran your book into the ground. Okay.

Speaker 3 Ran into the ground.

Speaker 4 Jeff, does he have any other debt besides the tax debt that you know of? Do you know what that number looks like?

Speaker 3 I don't think he owes it. He rents.
He doesn't own a home. I don't think he owes anything else.
He doesn't have credit card debts. The tax debt's the only one that I'm aware of.

Speaker 2 I hear your disgust

Speaker 2 for his behavior in your voice. And

Speaker 2 also hear a dad that loves his son, even though he's been stupid.

Speaker 3 Do you hear very well?

Speaker 2 So I guess there's two options. One is you bail him out, which doesn't sound real appealing.

Speaker 2 If you don't bail him out, what happens? He just has to work with the IRS

Speaker 2 for a lot of years.

Speaker 2 Yeah, actually.

Speaker 3 Yeah,

Speaker 3 the thing is, Dave, this has happened so many times, times I can't count them.

Speaker 2 But you've been there to bail him out every time.

Speaker 3 Yeah, and we had to take him out of high school because of his behavior. We had to send him out to a survival camp in Idaho.

Speaker 3 Then we put him in a private school in California, and all that required a second mortgage on our house at the time.

Speaker 3 We bailed him out of a car loan that he didn't keep up with, but I co-signed for.

Speaker 3 It's just been one thing after another. He just isn't.

Speaker 2 I'm okay with no being the answer. Yeah, if it were me, I wouldn't do it.

Speaker 3 Here's

Speaker 3 what I'm going to suggest.

Speaker 3 He got a severance package from the insurance company that's going to pay out about 30 grand over the next five years, about $6,000 a year.

Speaker 3 I told him that we would help him out if he would sign that over to me to pay back what we're going to advance him. But I initially thought we could do the whole amount.

Speaker 2 I don't think you should do any of that, Jeff. I really don't.
That's the way I think. That's the the way I think.

Speaker 4 I think that he's grown, and I think that he makes a living.

Speaker 4 He's not poverty level. There's nothing wrong with him.
I think he just needs to be a man and do man things.

Speaker 3 I totally agree.

Speaker 4 And I think you're a great dad.

Speaker 3 Thank you. There's one other question to kind of take this out a little further because I don't think my son realizes how bad a

Speaker 3 position he's in.

Speaker 3 If he pays this over the next 20 or 30 years, he still may not have it paid off when we die and that's all right we may yeah but we have we have all of our all of our assets and our our our uh real estate is in trust and my daughter is the trustee and the executor and we current we currently put a clause in our will that allowed my son to take our house here as part of his settlement of the estate because he loves our home.

Speaker 3 But I'm concerned that if he doesn't have this paid off, I don't even know that I want to leave that share of the estate to him because I think the IRS could put a lien on that.

Speaker 2 They can.

Speaker 2 After he becomes the owner, they can, yeah.

Speaker 3 Yeah, and I want to make sure that, I mean, ultimately it was for him, but it's ultimately also to go to our granddaughter. And I don't want to eat up our share of that estate.

Speaker 2 I think these are two separate questions. Do you help him today? Yeah, they are.
Yeah, do you help him today?

Speaker 2 Jade and I are both saying, sadly, I probably wouldn't.

Speaker 2 I probably wouldn't. That's the way I'm thinking.
And then, do I change the deed, change the will?

Speaker 2 In a few years, I might. You can change it now.
You can change it later.

Speaker 4 Can he put something in there that says if the debt's not paid off, the home goes elsewhere until the debt is paid off?

Speaker 2 Yeah, you could leave it in trust for the granddaughter and bypass it, bypass the kid that can't seem to find his way. Yeah, that's so sad.
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Speaker 2 Jade Washaw Ramsey personality is my co-host today. Graham is with us in Knoxville.
Hey, Graham, how are you?

Speaker 3 I'm doing well, Dave. How are you?

Speaker 2 Better than I deserve. What's up?

Speaker 3 Me and my fiancé are getting married next June, and we've been bouncing around the idea of buying a home versus renting. And I wanted to get your thoughts on that.

Speaker 2 Yeah.

Speaker 2 I would not buy until you're married, for sure.

Speaker 2 Is that what you're talking about? Okay.

Speaker 3 Yeah, we were thinking, you know, right around when we're getting married next June. Yeah.

Speaker 4 Do you guys have any, will you have debt together?

Speaker 3 We will have very little debt. She has a student loan for about $7,000.

Speaker 3 We've saved up a pretty good bit going into our marriage and plan on combining our finances and following a lot of your instruction on that.

Speaker 2 So you pay off the debt, you'd have an emergency fund, plus you'd have a down payment.

Speaker 2 Yes. Okay.
And

Speaker 2 according to the baby steps and what we teach, you would be in a position to buy a home.

Speaker 2 Let me tell you an idea to think about. Okay.

Speaker 2 And it's not a hard and fast.

Speaker 2 I wouldn't call you stupid if you didn't do it or something like that. But here's an idea to think about.

Speaker 2 I think,

Speaker 2 because I'm old and I've seen a lot,

Speaker 2 that one year after you're married, you will pick a different house than one month after you're married.

Speaker 2 Because I think you will learn a lot about each other during that year. And I always joke and say it takes about a year of marriage to know how close to your mother-in-law to buy.

Speaker 2 But that's the kind, you know, you get to know each other. I would rather relationally you spend the first year of your marriage, all of your energy on your relationship, not on hanging curtains

Speaker 2 and picking wallpaper and, for God's sakes, doing a renovation. Okay.
So, I mean, I just, I love the idea of the house not being

Speaker 2 the purchase, the move, not being an emotional, relational dream. Instead, you all just get really comfortable with each other and pile up a big old stack of cash.

Speaker 2 And the following spring buy a house.

Speaker 2 I like that.

Speaker 2 And it comes from the Old Testament biblical story in 2 Samuel that the young warriors in Israel in those days were not allowed to go to battle in the first year of marriage.

Speaker 2 They had to stay home and take care of the family. They were not allowed to go to battle until they'd been married at least a year.

Speaker 2 And so that, you know, it's a bit symbolic or metaphorical, if you will.

Speaker 2 And it's not something that you would be completely unwise and stupid and foolish and all that. No, it's none of that.

Speaker 2 I just think you're going to make a different decision a year later. I absolutely agree with that.

Speaker 4 And you've known each other. You get to know each other a little bit better by then.

Speaker 2 And you're able to. We've been dating six years.
Yeah, you've been living together. It's different.
I mean, you're not been married together. You might have been living together.

Speaker 2 I don't know what you're doing. Yeah, but it's different.
Yeah,

Speaker 2 it's a different deal, man. And

Speaker 2 it's not that dramatic, really, but it's subtle.

Speaker 2 And the thing also

Speaker 2 the thing that that makes you do is it makes you push back against the whole culture that's yelling at you. Buy a house, buy a house, buy a house.
Oh, renting is throwing your money away.

Speaker 2 Buy a house, buy a house, buy a house. Oh, renters are going to hell.
Buy a house, buy a house. You know, people are just go crazy.
They're like a beagle chasing a rabbit, man.

Speaker 2 And it's just, you know, it's okay to have a little bit of patience. Home ownership is a great plan.
Owning a home and getting it paid off is a great financial wealth building plan.

Speaker 2 But everybody don't have to buy a house right now. Just calm your butt down.

Speaker 4 And the longer you wait, the more you'll have more money to put down on it.

Speaker 2 Yeah. So there's that.
And who knows what the interest rates will do during that time? Might be fun. It might.
Oh, that's true. Are you trying to make a call here, Dave? Are you calling something?

Speaker 2 Okay, just checking. I'm just saying

Speaker 2 we'll be after an election at that point, and we'll see what's happening.

Speaker 4 I didn't know if you were seeing your shadow or what.

Speaker 2 That happens around here a lot because, yeah, I see things

Speaker 2 you get old things circle back around. If you keep the suit coat long enough, it comes back in style.
so all right, here we go. Uh, JT is in Santa Fe, New Mexico.
Hi, JT. How are you?

Speaker 3 David Jade, how's it going?

Speaker 2 Better than we deserve. What's up?

Speaker 3 So, I'm about to be at a point where I'm completely out of debt. I've been working on it the last few years, and it's about to hit zero.

Speaker 2 Yay, way to go.

Speaker 3 My question is:

Speaker 3 Is it foolish to go back into debt?

Speaker 2 Yes. Start a business.
Yes.

Speaker 2 You just called the Ramsey show, JT.

Speaker 2 I know.

Speaker 2 You walked into the bear cave and asked the bear if it was hungry.

Speaker 4 You already know the answer, JT.

Speaker 4 What's the business?

Speaker 3 My trade or work is a, I'm a 401k consultant. I do a risk of compliance.

Speaker 3 And I don't know. I just kind of want to start my own firm, and it's a lot to try to just bankroll.

Speaker 2 Why?

Speaker 2 Why? What do you got to bankroll? That's what I'm wondering.

Speaker 2 Well, I don't know. That ought to cash flow your day one.

Speaker 3 Well, I mean, everything from, you know, software, agreements,

Speaker 2 all sorts of stuff. Wait, Matt, for what?

Speaker 4 You got to have customers first.

Speaker 3 Well, I mean, I've

Speaker 3 not so much worried about that as far as getting everything started.

Speaker 4 Yeah, but you're going to start.

Speaker 2 What are you getting started?

Speaker 2 What do you mean? I mean, you don't have any money?

Speaker 3 Well, I mean, not enough to get this thing going.

Speaker 2 Well, what do you think it takes to get this going? Why have you decided? What you're describing to me, you need a computer and some sweat. Okay.

Speaker 4 And a customer.

Speaker 2 Yeah, or six.

Speaker 3 Well, that's the thing, you know,

Speaker 3 for what I'm doing,

Speaker 3 I'd be whale hunting in a canoe, and I need some stuff to be able to do such stuff.

Speaker 2 Okay, you are not ready to open a business and leave your job when you have absolutely no customers whale hunting in a canoe means that you don't have a clue where your customers are coming from you're not ready to open a business and it has nothing to do with a loan

Speaker 2 you need some customers on the hook

Speaker 3 well the first thing i do i would take my current job and ask that they uh

Speaker 3 1099 me and i would contract all the work that i'm doing right now and then go look for my own bigger client so i have an idea for cash flow okay so now we're eating now why are we whale hunting in a canoe?

Speaker 3 Well, we got to go after big fish to eat big, right?

Speaker 2 Well,

Speaker 2 I think you're missing. No, I mean, rabbits are more plentiful.
Let's kill some of those and eat.

Speaker 4 I think you're missing the beauty of the type of business that you're starting, which is this is a business you can start with little to no overhead.

Speaker 2 And little to no cash. Yeah.

Speaker 2 You need enough to eat on, but I don't want you floating in a canoe looking for a whale starving to death because you didn't have any plan or any background.

Speaker 2 But if you've got a plan for cash flow day one on the 1099 side, then and you think they'll do that? What's the probability of them doing that?

Speaker 3 I think so because I'd be taking on a lot of my, you know, I'd get my own insurance and stuff like that.

Speaker 2 This is so vague and you have not pro formed this out. The business you're in demands that you do a better job of proforming than you have done so far.

Speaker 2 This is a vague group of vague generalities and I'm going to go borrow money. No, you don't need to borrow money.

Speaker 2 You need to organically cash flow this little service-oriented business and you're gonna be just fine.

Speaker 2 And you need to put together a business plan and process that has the probability of you being able to eat and cover the cost of basic software services.

Speaker 2 But there's no big $500,000 or $50,000 or $20,000 outlay for you to come out of the ground being a consultant. Yeah.

Speaker 4 That's, I think, Dave, people think if you build it, they'll come. And I think it's the opposite.

Speaker 2 You've got to go get them and then build it while like you've got to build it while they're coming if you build it they will come in the movie world is called the field of dreams in the business world is called a field of nightmares

Speaker 2 so no yeah you don't you don't want to do that you need to have you need to have the some you know i tell our guys all the time hey elephant hunting is great but they're a lot more rare than rabbits you you can eat really good on rabbits too there's lots of rabbits go get the rabbits and occasionally you stumble into an elephant then that's extra but let's go get the rabbits Let's put a business model that churns cash here.

Speaker 2 Stack some cash. You're fine, JT.
Do not borrow into the vagueness that you are describing us. You're really going to make a mess.
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Speaker 2 Jade Washaw, Ramsey Personality is my co-host today. Today's question of the day is brought to you by Y

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Speaker 4 Today's question comes from Patty in Illinois. My husband and I purchased a very modest home for his parents due to the rising cost of rent in our area.
My father-in-law is disabled.

Speaker 4 My mother-in-law works full-time at a very modest job, and they pay us a small amount of rent each month.

Speaker 4 It's been five years now, and the home has required a lot of repairs such as water, intrusion of mold.

Speaker 4 We've been able to cash flow the problems, but it has cost over 15,000, not to mention our sanity.

Speaker 4 It has also changed our relationship because they frequently contact us for issues or requests in spite of many conversations about what is quote nice to have versus what is quote needed.

Speaker 4 We're trying to honor our word, but it has been very taxing emotionally and financially. We are in baby step six and we need to plan for our own retirement.

Speaker 4 I keep telling myself to suck it up, but we are losing tons of money with no end in sight.

Speaker 4 I've listened to the show long enough to know we probably shouldn't have done this, but at the time it felt like the right thing to do. What would you do if you were in our shoes?

Speaker 4 Well, first off, I wish I had more information, Dave. I want to know how old these parents are.
I want to know, I want to know more.

Speaker 4 I want to know the value of the house because I'm thinking if you bought a house in 2019, like the value's probably gone up a good deal.

Speaker 4 So

Speaker 4 she they might not be losing money in the way that she thinks. Now, the actual idea of doing this, I think, was a really bad idea.

Speaker 4 I think there was just a lack of foresight here. And I don't know what the promise was.
Did they say, hey, we're doing this house. You're going to live here

Speaker 4 until you die. And we're covering it.
I don't know what the promise was, but I think that they may have,

Speaker 4 you know, brought, promised more than what they could deliver on. And I think that's probably what she's feeling some type of way about.

Speaker 2 So she's got a lot of drama in her words uh-huh she does and it's her in-laws uh-huh

Speaker 2 i i

Speaker 2 the piece of information i would like is i'd like to talk to her husband and see if he feels the same way uh-huh and if it was everybody's

Speaker 2 bothering him to the same degree or if this is in-law drama that you are now molding or laying over on this house yes uh-huh

Speaker 4 I think it's a little bit of both. She does use the word we a lot, which makes me think that there is some unity.

Speaker 2 No,

Speaker 2 I don't think it was a hidden thing, but I think he went into it and went, I bought mom and dad a house, and dad's disabled. Mom got

Speaker 2 not much of a job, and they pay us what they can pay us, and we fix the stuff that breaks. Yeah.
And she's going, oh, God, I'm dying. Yeah.
You know, it's like, so I don't, I, you know,

Speaker 2 $15,000 is not we are losing tons of money for five years. For five years.

Speaker 4 No, it's nothing.

Speaker 2 If you own a house, you're going to spend more than $15,000 over five years on a house.

Speaker 4 And they're getting some rent, which is good.

Speaker 2 And it's going up in value. Uh-huh.
Going up in value. Mom and dad are going to pass someday, and you're going to have a nice asset that's gone up in value that you can sell.

Speaker 4 And probably pay off your house and more if you haven't already.

Speaker 2 So I think I would, first thing I would want to do is get to the bottom and say,

Speaker 2 where is all this resentment really coming from?

Speaker 2 Is it really coming from the house? I kind of don't think it is.

Speaker 4 I don't think so.

Speaker 4 Now, there is part of it where they may have bitten off more than they realized they were going to be chewing. Do you know what I'm saying? Like, in theory, it sounded good.

Speaker 4 And then when you start walking it out, you're like, oh, my goodness. But to your point, if she's writing into our show, there's something that they're not talking about.

Speaker 2 If your mother-in-law is calling you and asking you to fix something at a house that you gave to her at a deal,

Speaker 2 and you already had, you know, mother-in-law Idis,

Speaker 2 then that would just make it worse, right? I mean, that's

Speaker 2 like, well, you know, the difference in what is needed and what's nice to have. Yeah.
But, you know, it's a modest home. They're modest people.
She makes a modest income.

Speaker 2 There wasn't anything in here lavish. There's also, though, David.
I didn't hear a jacuzzi being installed.

Speaker 4 I think

Speaker 4 to quote myself, I think there's also a vocab rehab that needs to happen. Amen.
Because here she's saying, my husband and I purchased a very modest home for his parents. They don't own the home.

Speaker 4 They're renters. You guys bought a house for yourself.
It's your asset. It's your home.
And I think if you start viewing it as an asset that we have, it's going to change your father.

Speaker 2 I have a rental house and it had a water leak and I had to fix them all. That's right.

Speaker 4 As opposed to it's guess what?

Speaker 2 I've had to do that a bunch of times. Right.

Speaker 4 So that'll help.

Speaker 2 And zero drama about it. That's right.
I just fixed it.

Speaker 4 And it's going up in value.

Speaker 2 Tree fell on the back porch. Just fixed it.
It's just, you know, it's just, you own a house and crap happens, right? I mean, it's like,

Speaker 2 the other question that I don't, I'm with you. I don't think we have enough information because it's a very interesting question.
It is. And I'm impugning a lot on you, Patty.
I apologize for that.

Speaker 2 But

Speaker 2 trying to figure out what's really happening here and therefore to what to do with this.

Speaker 4 Because also their age might play into it.

Speaker 2 If they're 87, suck it up. If they're 57,

Speaker 4 kick them out.

Speaker 2 You know, sell it and give them the money that it brings. Whatever it brings.
Give them the money from it.

Speaker 2 Because you didn't buy it for money. You bought it to help them.
And, you know, if you want to give them whatever proceeds are, because you're going to have made some money, to your point, from 2019.

Speaker 2 So,

Speaker 2 yeah,

Speaker 2 that's part of it. And,

Speaker 2 yeah.

Speaker 2 And I think then I would want to just really ask, I don't know.

Speaker 4 Well, walk that out. What would you do? So let's say she's listening.
She goes, yeah, you know what? They are in their 50s. They need to get out of this house.

Speaker 4 They've been paying us a small amount of rent. What would you suggest in that situation to fairly?

Speaker 2 I mean, I don't care if you give them the money.

Speaker 2 I mean, you sell the house and whatever, whatever, I don't know if there's a mortgage here or not, but pay off all the expenses and then whatever money you've made on the house, give it to them.

Speaker 2 I don't care.

Speaker 2 Oh, I'll tell you the other piece I don't know right here is I don't know Patty's income. Yeah, that's right.
If Patty makes $300,000 a year, stop whining and deal with it.

Speaker 4 That's another good point.

Speaker 2 If Patty makes $55,000 a year, then

Speaker 2 you did something you couldn't afford to do here. That's true.
And that's where some of this drama is coming from is the pinch.

Speaker 2 Because it's like, oh,

Speaker 2 but

Speaker 2 it's been very taxing emotionally and financially. Yeah.

Speaker 2 Okay, I don't understand. It's 15 grand is not taxing emotionally.
I mean, it's not. So

Speaker 2 that's, yeah.

Speaker 4 It's a lot of details. Maybe call in sometime, Patty.

Speaker 2 Yeah, yeah,

Speaker 2 we'd do that. So you can contact them back off the email if you want to, James.
We'd take the call. Because I don't know what to do, but if, yeah, I think we could give a couple of scenarios.

Speaker 2 If then, okay, kind of flowcharted. If they're super old and you make a lot of money, then this drama is in your head.
Calm down and suck it up.

Speaker 2 If they're super young and you don't make a lot of money, maybe you need to move them out and sell the house.

Speaker 2 I think those are the two variables that could be there. I don't hear a lot of mother-in-law drama, but I just think

Speaker 2 it was curious to me how much drama she had, and I wondered if her husband would feel exactly the same way. I bet he doesn't.

Speaker 4 Now, if they're only paying,

Speaker 4 you know, the mortgage is $2,000, and she said they're paying a small amount of rent, so they're paying $1,000, the proceeds, I'd split.

Speaker 2 Okay. I don't care.

Speaker 2 The thing is, I don't,

Speaker 2 you're not selling it because you need money. That's true.
She did not bring that up. You're right.
She did not bring that up. She's selling it to get rid of

Speaker 2 an emotionally and financially draining situation, to quote her.

Speaker 4 That's true, but she just did say we're in baby step six and need to plan for our own retirement. So that made me think they might want some money.

Speaker 2 Could be, and it could just be that the drama tired of giving them anything, and I'd rather put it into my account.

Speaker 4 In lost situations,

Speaker 4 they get salty really quick.

Speaker 2 Not going there. Yeah, not going to do that.
You're right.

Speaker 2 You started the whole thing right when you said you shouldn't have done it.

Speaker 4 Foresight. You have to play these things out in your mind years and years to see where it will land and all of the different variations of the plan.

Speaker 2 When you're trying to help your parents, you're trying to help your grown kids, you do not enter into a process that does not bring them to sustainability on their own.

Speaker 2 And so you get them up where they're standing on their own feet and you let them go. So whatever you're doing, create a situation that gets them up on their own feet instead of a continuous drain.

Speaker 2 And so that's so you people pay in your 28-year-olds private schools for their kids. That's not sustainable.

Speaker 2 Shouldn't have entered into that. This is the Ramsey Show.

Speaker 6 All right, Dave, you have some strong opinions.

Speaker 2 Possibly, yeah.

Speaker 4 I think so.

Speaker 6 Okay, because you really prefer credit unions over big banks. So why is that?

Speaker 2 Well, credit unions, for one thing, are non-profit, which means that the members, the customers, own the credit union. So any profits that the credit union makes goes back into customer pricing.

Speaker 2 So you get better interest rate on savings, cheaper checking, and so on, that kind of thing.

Speaker 2 And what's more important than that, though, is the fact that the customer is the owner changes the spirit on the credit union. So I find very few credit unions that aren't very customer-centric.

Speaker 6 Yes. Well, and I think we have found one that is incredible, and that's Fairwinds.
They are an incredible credit union that is really out with the heart to help the customer.

Speaker 2 You know, that's why we're partnering with them because

Speaker 2 they've got a scope to be able to handle the Ramsey audience, and they're the right kind of people with the right kind of values. And they've done a really, really good job with customer service.

Speaker 2 And the deals that they're offering, the Ramsey tribe is incredible. Yeah, absolutely.

Speaker 6 And you're right. Their customer service is unbelievable.
Winston and I just signed up and we got an account.

Speaker 6 And I'm not kidding.

Speaker 6 It took less than five minutes. It was so user-friendly.
Like the step-by-step approach was unbelievable. And then the next day, my phone rings and it says fair wins on my phone.

Speaker 6 So I answered it and talked to someone there. And they said, yeah, they give calls to every new customer.
And so again, they just really care about your experience. And I, I so, so appreciate that.

Speaker 6 So again, you guys, I know it can be a pain to switch banks or to open up new accounts, but Fairwinds, again, they make it so easy.

Speaker 6 Plus, anything that you can do at a traditional branch, you can do with them at fairwinds.org or on their app. And you'll have free access to over 33,000 ATMs.

Speaker 2 Hey, you guys know how much I hate banks in general. And so for me to do this is a big deal.

Speaker 2 Talk to our friends at Fairwinds and check out the combined checking and savings bundle that they created just for the Ramsey tribe. You guys, it's incredible.

Speaker 6 Yeah, you guys, it's so easy to join Fairwinds no matter where you live. So go to fairwinds.org slash Ramsey to learn more.
That's F-A-I-R-W-I-N-D-S dot org slash Ramsey.

Speaker 2 Jade Washaw, Ramsey Personality is my co-host today.

Speaker 2 Open phones, triple eight, eight two five five two two five. Sam's with us in Lansing, Michigan.
Hey, Sam, welcome to the Ramsey Show.

Speaker 3 Hi, how are you guys today?

Speaker 2 Great. How can we help?

Speaker 2 So

Speaker 3 my wife informed me a couple weeks ago that she was $23,000, $24,000 in credit card debt without me knowing over the course of the last year.

Speaker 3 And I was wondering what would be the best way to pay it off. We have a couple options.

Speaker 3 I got lucky, rather be lucky than good. I won $36,000 at the casino.

Speaker 3 But that money I already, about a month ago, and I already have that money tied up in money market because I'm using that to put the down payment on my next home.

Speaker 3 We could cash in her 401k, which has $25,000 in it, and pay it off.

Speaker 3 Or do we just kind of suck it up and just make the payments and just pay it down month by month?

Speaker 3 I just wonder what the best option would be to avoid the interest payments and everything like that. Yeah.

Speaker 2 You realize the interest payments aren't the real problem in your house, right?

Speaker 2 How long have you been married?

Speaker 2 How long have you been married?

Speaker 3 We have been married for a year and a half now.

Speaker 2 Okay. And how long has she had this debt?

Speaker 3 A year. It started basically when my son was born a little bit over a year ago.
And it was just online ordering,

Speaker 3 stuff like that, three different credit cards, going shopping, kind of thing. And I never really noticed that we have separate finances.

Speaker 3 And I never really noticed it because we don't have any debt other than our house.

Speaker 2 We don't own anything. So, how's that working for you?

Speaker 3 Oh, it was working fantastic up until a couple weeks ago.

Speaker 2 Don't think it is, do you?

Speaker 2 No.

Speaker 2 It's not been working for some time, like ever in your married life. It just was revealed.
It was just revealed a couple weeks ago. Correct.
Yeah, you all are not on the same page.

Speaker 3 Not at all.

Speaker 4 Also, she's spending as a coping mechanism.

Speaker 4 There's something that she's trying to cope with, and she's not doing it in a healthy way. And so she's looking to spending.

Speaker 2 Does she revenge spending because you're gambling?

Speaker 3 I don't gamble that

Speaker 3 was was the second time I had been at the casino in five years.

Speaker 4 What'd you spend?

Speaker 4 And did you budget for it, or did you just go and do it on a whim?

Speaker 3 We just did it on a whim, basically.

Speaker 3 Okay.

Speaker 2 And

Speaker 2 all right. So

Speaker 2 I think the thing that number one, when we're meeting, when we're researching millionaires,

Speaker 2 one of the things we find typically among the, and we've done the largest study of millionaires ever done, Sam,

Speaker 2 is that the husband and wife are working together and there aren't secrets and there is not impulsive spending.

Speaker 2 And the number of millionaires in our study that became millionaires in a casino is precisely zero.

Speaker 2 The number of millionaires in our study whose wife or husband hides their finances from them because they don't have good communication is precisely zero.

Speaker 2 So those are the things that concern me more than the actual credit card debt. Do you see what I'm saying?

Speaker 3 Yes, I do.

Speaker 2 So if you guys want to prosper and do extremely well, which is our goal to help you because we love you, we want you to win, it would entail combining your finances.

Speaker 2 only one checking account and a budget meeting every month that the two of you sit down together. Both of you have a vote.
Some reason she doesn't think she's got a vote.

Speaker 2 She had to hide it from shame or guilt or something.

Speaker 2 And we've got to rebuild trust, which has been violated here.

Speaker 2 And the two of you together, she has a vote, you have a vote. We are in agreement about what our future goals are and where we're going from there.
And so

Speaker 2 You don't agree with this, but I'm going to tell you what I think, okay? Because you called here.

Speaker 2 I think you both did something stupid, and the only good news is it cancels out.

Speaker 2 I think you got lucky instead of losing a pile of money, you came home with a pile of money.

Speaker 2 That's the worst thing that can happen at a casino because you're so dumb, then you go back again thinking you're that guy. And so, I'm cashing this money out, paying off these credit cards.

Speaker 2 We're going to combine our finances, and we're going to set a goal where we're very diligent, very steady, not flashy to save up a down payment for a home together.

Speaker 2 In the the meantime, whatever spending we're going to do that is reasonable spending, the two of us are going to be in agreement every single month before the month begins and not following through on that, you or her is lying to your spouse.

Speaker 2 And so what she did here is not cute.

Speaker 2 It's not funny. And what you did here is not cute and it's not funny.
It can be devastating if it's extended out and forward. Both of them can be.

Speaker 2 And so I, you know,

Speaker 2 I'm fussing at you because I love you and I want you to win. But if you were my kid and you're 30 years old, this is exactly how I would talk to you and what I would tell you as your friend.

Speaker 2 Not because I'm your dad, but because I love you and because I want you to win. And so

Speaker 2 Sam, if you haven't had, in our world, we call what she did financial infidelity. Yeah.
Because it activates the same place in you that sexual infidelity does because it's a violation of trust

Speaker 2 to run up $24,000 and destroy or rather delay your dream of buying a home because of financial misbehavior. Yeah.
And a lie.

Speaker 4 Yeah. And to be honest, if I'm in their situation, I'm probably going to seek out some counseling.
Some marriage counseling.

Speaker 2 Yeah, because they're.

Speaker 4 They're early on and this is not, they're still forming that foundation. And this is not the sort of thing that you want in the foundation.

Speaker 2 You want to get to the the bottom of this find out why you guys are keeping secrets find out why she's feeling necess feeling it's necessary to medicate by spending and and possibly same for you sim I and I think if I were in your shoes and I was 24 and some guy said to me what I just said to you I would have a tendency to blow it off like you're overreacting Dave you're overstating this and what I'm saying is is these two things

Speaker 2 These three things, not working together, hiding and lying about money, and gambling are three things that will cause you to not become a millionaire. So this is like a million-dollar discussion.

Speaker 2 That's why this is important. So I'm not overreacting because even though it's only $24,000 and $36,000, it's small in the scope of life.

Speaker 2 The behaviors are going to prohibit you or delay you at minimum from becoming wealthy to the tune of millions and millions of dollars. So

Speaker 2 this is a, I'm not overreacting because this is millions of dollars we're talking about.

Speaker 4 Absolutely over time. Yeah, Dave, you're being kind because

Speaker 4 this is a big deal to me. I mean, if Sam Warshaw, if I found out Sam Warshaw went behind my back and spent $25,000,

Speaker 4 there'd be an atom bomb that went off. You would see the explosion.

Speaker 2 I'm just saying. There'd be a little

Speaker 2 fire.

Speaker 4 There'd be birds, little birds chirping around his head because I would have knocked him out.

Speaker 2 So, but I kind of think it might have been more likely you that would do that than him, though.

Speaker 4 You know what? That's probably true because I am the spender. He is the saver.

Speaker 2 He's Mr. Deliberate.

Speaker 4 Yeah, he is. Which is even more reason if he did that, I would have gone off on him.
But it's what you said. These little things, it makes me think of that scripture that says a little leaven.

Speaker 2 The only time that we've even come close to that at our house, and we did come in the early days, we had lots of arguments about money and fights, was when I was so overbearing.

Speaker 2 I know you can't imagine that happening. That Sharon didn't feel like she had a vote.

Speaker 2 And she will tell you that about year seven of our marriage, she felt like she got her voice. Yeah.
This is the way she says it. And she never lost it since, I'll just tell you.

Speaker 2 Her voice.

Speaker 2 Her voice. But I got my voice.
And

Speaker 2 yeah, but it was, she got her vote. Yeah.
And

Speaker 2 from then on, she's kind of had two.

Speaker 2 But

Speaker 2 to make up for the lost years. But that's the thing.

Speaker 2 If you don't feel like you have a voice in the thing or you can't make a lot, you can't get there in a discussion, then one spouse tends to go off and hide stuff and do things.

Speaker 2 And that's not an indication. It's not a money problem.
That's a relationship problem. That's right.
That's right. That's a relationship problem.
And it was at my house too, Sam.

Speaker 2 I'm just admitting I'm just like you, but I'm just old and it was a long time ago. That's the only difference.
So

Speaker 2 don't be mad at us. We love you.
That's why we're picking on you.

Speaker 2 But I would fix those things in my house because they're costing you over the rest, the scope of the rest of your life millions of dollars if you don't fix them. This is the Ramsey Chef.

Speaker 2 Dave, here, you can find all of our shows with the Ramsey Network app on your smartphone. It's the only place to listen to the entire back catalog of episodes.

Speaker 2 Download the Ramsey Network app in your favorite app store today.

Speaker 8 This show is sponsored by BetterHelp. All right, you've heard me say it a thousand times, and I'm gonna keep saying it.
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Speaker 2 Live from the headquarters of Ramsey Solutions, it's the Ramsey Show, where we help people

Speaker 2 build wealth, do work that they love, and create actual amazing relationships. Jade Washall, Ramsey Personality, is my co-host today.
Thank you for joining us, America. We're glad you're here.

Speaker 2 Open phones at 888-825-5225. That's 888-825-5225.
Travis starts us off this hour in Toledo. Hi, Travis.
Welcome to the Ramsey Show.

Speaker 3 All right. Thank you for taking my call.

Speaker 2 Sure. What's up?

Speaker 3 I have a negative balance every month, and I'm kind of trying to figure out how to get positive again.

Speaker 3 Starting off kind of a little rough every single month after bills and everything.

Speaker 4 So

Speaker 4 bank account is negative every month?

Speaker 2 Like you're overdrawn?

Speaker 3 Yep, I'm overdrawn. I actually almost on a weekly basis.

Speaker 4 You know, it's funny that you talk about this. I literally just got off a webinar about this very thing.
And at the end of the day, it's probably boiling down to budgeting issues.

Speaker 4 Do you have a budget?

Speaker 3 I've been working on trying to do one.

Speaker 3 recently got the Every Dollar app premium

Speaker 3 because it was able to track my stuff better. But I'm struggling like weekly with groceries.

Speaker 3 It's just with a family of five, it's hard to keep it under a certain amount.

Speaker 4 Okay, so I want you to not try to do the budget. I want you to actually do it.
I want you to go in there, put the numbers in there. That's step one.

Speaker 2 You and your wife.

Speaker 4 Yeah. Have you started? Have you actually filled out a budget for the month?

Speaker 3 No. No, I have not.
I haven't been able to figure it out.

Speaker 4 Okay. So that's step one.
Matter of fact,

Speaker 4 I want you to go to everydoll.com/slash budgeting when this call is over, and I want you to sign up for the next webinar.

Speaker 4 Because if the issue is, I've got it, is it, you know, is it I'm not, I don't have time to do it, or I'm not prioritizing the time to do it. I really want you to prioritize this time.

Speaker 4 Sit down with your wife tonight, start looking at it.

Speaker 2 What's your take-home pay?

Speaker 3 Take-home is about $3,600 a month.

Speaker 2 How much is your rent?

Speaker 3 The mortgage is $560 a month.

Speaker 2 What's your car payment?

Speaker 3 payment is a little high. It's four forty one a month.
Mm-hmm.

Speaker 2 Okay. And five kids?

Speaker 3 Uh three kids, wife that is unable to work due to yes, five people.

Speaker 2 Three kids, wife that is unable to work due to medical issues. What kind of medical issues?

Speaker 3 Uh it's actually like a hereditary degenerative uh disease where it's actually just getting worse as time goes on too. So

Speaker 2 okay. How old are your kiddos?

Speaker 3 Uh I got triplets, four and a half years old.

Speaker 2 Wow.

Speaker 2 Okay.

Speaker 3 So consumer debt's kind of got me, you know.

Speaker 2 How much debt do you have?

Speaker 3 Not including the cards, about $26,000.

Speaker 2 Okay. Here's the thing.
We've got to start at the other end. Groceries don't catch the slack.
Groceries are the thing.

Speaker 2 So we're going to start with this. $3,600 at the top of the page.
You follow me?

Speaker 3 Yes.

Speaker 2 Minus the important things first. The most important thing in your entire budget is food.

Speaker 2 You have the money to buy food. You may not have the money to do some other stuff, but you have the money to buy food, period.
End of story. Okay?

Speaker 2 So $3,600 minus food. What are y'all spending on food?

Speaker 3 I try to keep it around $180 a week, but I mean, it's usually $180 to $220.

Speaker 2 How often do you eat out? How often do you eat out?

Speaker 3 Maybe once a week, but it's just me for lunch when I'm unable to pack. I am going to a trade school at night.
It's either lunch or dinner. I go three nights a week.

Speaker 3 Okay.

Speaker 2 All right.

Speaker 2 So if we take

Speaker 2 $800,

Speaker 2 $700 for your budget for food, right,

Speaker 2 for a month, for a month, that leaves us $2,900.

Speaker 2 So you can buy food. Food's first.
You got me?

Speaker 2 Yes. I don't care if you pay anybody else until you feed your family.
You follow me? All right. Second thing is we pay $550 for shelter.
Done.

Speaker 2 Right?

Speaker 2 Yep. And then we pay the light bill and the water bill.
So we're warm, we're fed, and we're dry.

Speaker 2 Yes. This is survival first.
You following me?

Speaker 3 Yes.

Speaker 2 We may not keep this stupid car because it's freaking out of control. If we can't come up with a way to get it paid off soon, it's got to go.
But for now, we're going to pay the car payment too.

Speaker 2 Food, shelter, clothing, transportation, and utilities are basic necessities of life. We call those the four walls.
You do the four walls before you do anything else.

Speaker 2 Everyone else, and let me tell you who's at the bottom of the freaking list.

Speaker 2 Student loan. How big is a student loan?

Speaker 3 I don't have one.

Speaker 2 You know who's right at the bottom next to them? Stupid credit card companies. Because you know what they can do if you don't pay them?

Speaker 2 Nothing except destroy your credit and sue you eventually eight years from now. But we're going to take care of them before we get there.
Okay? They're at the bottom of the page.

Speaker 2 So let me just tell you, your emotional state and your sense of control over your destiny changes when your family is fed, the lights and water are paid, and the mortgage is paid, and

Speaker 2 you are in a different place emotionally and spiritually. The rest of it's just a stupid game I'm behind on.

Speaker 2 But right now, it feels like life or death because you've got groceries as the last thing, not the first thing.

Speaker 2 Yes.

Speaker 2 By the time I pay groceries, I'm overdraft. No.
By the time you pay MasterCard, oh, wait, we're not going to go into overdraft, so we're not paying MasterCard. Screw them.

Speaker 3 Okay.

Speaker 2 For this month, and then we've got to adjust our income. Now, you've got to get your income up, dude.
What are you going to do to get your income up?

Speaker 3 It goes up progressively

Speaker 3 every six months, as long as I keep up my apprenticeship and everything.

Speaker 2 You got six months of hell then ahead of you. What are we going to do in in the short term to get it up?

Speaker 2 You're going to straight school three nights a week. What are we doing on those other nights? Because you're about to do some more work, dude.
Your family's hungry.

Speaker 3 I'm going to go homework and doing whatever I can.

Speaker 2 Yeah.

Speaker 3 Around the house, housework, and everything.

Speaker 2 Yeah, you're going to probably not be doing as much of that.

Speaker 2 The laundry may pile up a little bit because you've got to go make some money because $3,600 is tough.

Speaker 2 So,

Speaker 2 the way you get this straight side up is you first take care of necessities, and then two, you get over the top of it, and we're going to cut expenses and add income, and that creates margin.

Speaker 2 And that will get you under control, Travis. So you do have a very tight, tight, tough situation.

Speaker 2 So something's got to go out of the expense lines, and something's got to come up quickly in the income side. Because

Speaker 2 it's not easy. You got a really nice, low house payment.
It's the best thing in this whole story right now.

Speaker 2 So So you got a fixable situation, but the faster you get the income up and the out go down, the faster the pain's going to leave. Okay.
Does that make sense to you?

Speaker 3 Yeah, absolutely. I was just nervous about missing credit card payments.

Speaker 2 I want to give you permission to feed your children before you pay MasterCard.

Speaker 3 Yeah, I understand.

Speaker 2 Okay. When you get that straight in your head, all of a sudden it changes everything.

Speaker 2 Because if everybody's fed and the lights are done and the water's paid and the house payment's paid, I mean, we live to fight another day, but if we pay MasterCard and then we don't have enough money to feed the triplets, dad, gum, that's not fun.

Speaker 2 Been there, done that. That terrorizes your butt, does it? Yes, it does.

Speaker 4 I've been there, done that.

Speaker 2 Everydollar.com slash budgeting. Sign up for one of Jade's webinars.
She'll walk you through what we just did. This is the Ramsey Show.

Speaker 6 There's a time in your life and in the baby steps for renting, but you don't want to do it forever because when you rent, you're still paying for a mortgage, just somebody else's.

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Speaker 2 Jade Washall, Ramsey Personality, is my co-host today. Open phones at triple eight eight two five five

Speaker 2 two two five. You jump in, we'll talk about your life and your money.
Jared is with us in Courtelane, Idaho. Hi, Jared.
Welcome to the Ramsey Show.

Speaker 3 Hi, guys. Hey, I have a question regarding

Speaker 3 cost of living

Speaker 3 raises compared to inflation.

Speaker 3 I personally enjoy giving my customers

Speaker 3 the cheapest service available, yet to keep up with inflation, we have to

Speaker 3 give raises. How do those two things mesh together? And is there anything we can do to battle the inflation as a business owner?

Speaker 2 No, not, you know, your job is not the macroeconomy. Your job is to run your business.
And that means take care of your family and the families that you pay.

Speaker 2 That's your job.

Speaker 2 The macroeconomy discussion is that

Speaker 2 when things go up, when the cost of a loaf of bread, the cost of a service, the cost of a...

Speaker 2 a pack of hot dogs, whatever it is you want to call it, a gallon of gas, when the cost of that goes up,

Speaker 2 one of the reasons the cost of the item has gone up to the consumer when you raise your prices in business is because their cost of goods has gone up.

Speaker 2 If their cost of goods, you know, for instance, if I make a, if we print a book,

Speaker 2 a total money makeover, a Baby Steps Millionaires book, well, the cost of paper has gone up 30% in the last 24 months.

Speaker 2 All right.

Speaker 2 And so that's going to be built into my pricing on the next book that we put out. Agreed.

Speaker 2 If the cost of that book includes

Speaker 2 a dock worker to do the shipping and a truck driver to deliver it, and both of those people get paid more by me to bring me that book, then now the cost of that book has gone up again.

Speaker 2 The paper cost went up and the labor cost associated with delivering that went up. And so anytime you pay people more inside your business, you have to absorb that in price changes.

Speaker 2 And so price increases are always, not always, but

Speaker 2 you have to do a price increase to stay open, otherwise you're not profitable to cover your actual cost of goods and cost of labor.

Speaker 2 If you don't have any margin, you're out of business. And when the cost of labor goes up due to cost of living raises or any other raises,

Speaker 2 just a shortage of workers. An example of that is,

Speaker 2 you know, we told when America got Fauci'd, we told all of the service industry, all the waiters and the people that make your beds at the hotel and the people in the service world that they weren't essential.

Speaker 2 And we sent them home, told them they couldn't work. If you're a restaurant worker, you're not allowed to work.
And in some places we did that for a month. Other places we did it for a year.

Speaker 2 When you tell people they're not essential and then you want them to come back,

Speaker 2 they remember how you pissed on them last time.

Speaker 2 And so, guess what? You want to hire somebody in the service world today? Pre-COVID, you might have done that for $10.

Speaker 2 Now you might be looking at $25

Speaker 2 because there's a shortage of workers in those industries still to this day,

Speaker 2 post-COVID. And so,

Speaker 2 you know, the economic implications of COVID are still shaking out.

Speaker 2 You create a labor disruption and a labor price change.

Speaker 2 And we've seen it in other areas of labor as well. Our cost of what we pay someone to work here at Ramsey has changed in some of the areas pretty dramatically.

Speaker 2 We do comp studies to see where they're charging. So, yeah, then that means that if I'm going to

Speaker 2 be profitable, I have to raise a price somewhere.

Speaker 2 And so that person that buys that pays more, and that's called inflation.

Speaker 4 Yeah, you don't and you don't have to feel guilty about it. It's just part of

Speaker 2 it. But I mean,

Speaker 2 what he's pointing out, and I think it's good for people to hear out there, is when you're walking around with a little picket in your hand and you're saying, I demand

Speaker 2 $15,

Speaker 2 I demand $22 where I was making $10 to work at McDonald's, then the cost of McDonald's goes up to cover your idea of you being worth more, then you don't get to bitch about paying more for stuff because you caused it.

Speaker 2 That's what I'm talking about. That's what he's talking about.

Speaker 2 And so you can't go, I don't like the fact your fast food prices all went up, and yet you're walking around demanding that the cost of labor at a fast food place go almost freaking double. Yeah.

Speaker 2 And then, and then can't, you know, of course, you know,

Speaker 7 it's all connected.

Speaker 2 It costs more. You know, I mean,

Speaker 2 that's how how it works because these businesses are not evil and greedy, but they also are not not-for-profit. That's right.
They have to make a profit to stay open.

Speaker 2 And oh, by the way, even non-profits are profitable.

Speaker 2 A non-profit that isn't profitable closes. Out of business.
It's out of business. It's gone.
Nonprofit is not an actual dollar amount of they didn't make more than they spent.

Speaker 2 It's just an accounting entry and an IRS designation.

Speaker 2 But they actually, you know, your church has to take in more than it puts out, otherwise it closes.

Speaker 2 So nonprofits are profitable.

Speaker 2 Hello.

Speaker 2 And so if the cost of electricity at your church goes up, then there you go.

Speaker 2 I mean, you're going to, if the cost of staffing at your church goes up because you're competing in the marketplace for that creative position at the church, that music director at the church, you're competing with the marketplace, then it costs more to operate that organization.

Speaker 2 And some organizations haven't survived that. That's right.
So, yeah, inflation includes cost of labor. And when you've had a labor disruption like the quarantines created,

Speaker 2 we haven't seen, we've seen most of the end of it, but we haven't seen the complete end of it yet. It will calm down and smooth out eventually.

Speaker 2 But even a little 3%, 5% cost of living raise then gets built into the thing. And you can't really, in business, I can't stand against that and go, well, I just refuse to raise my prices.

Speaker 2 Well, you're going to refuse to stay in business. You know, that's just kind of dumb.
So the next book you buy from us, get ready. The price is going to be more because, hello.

Speaker 2 You know, those $10 sales we run,

Speaker 2 they're about done. I'm just saying.

Speaker 2 We're about done with a $10 sale because $10 sales about backward. It's about upside down now, and I'm about done with it.
So that was helpful for a while, but

Speaker 2 been doing them for 10 years. And,

Speaker 2 cost of paper kicked my butt. And so I'm going to pass on the butt kicking.
That's how this works.

Speaker 2 That's how it works, y'all. I mean, it's just, this is how it is.
So if you think it's otherwise, then you're being naive.

Speaker 2 But it's interesting to me that we teach so little civics and so little economics today that people can't make a basic connection. You don't know it's connected, do you?

Speaker 2 I demand to be paid more, but then on the other hand, I'm going to bitch about inflation. Yeah.
No, I don't think that's a lot of money. When you freaking caused it,

Speaker 2 you're the essence of it.

Speaker 2 I mean, you know, I can't believe the cost of bread. Well, it cost about twice the labor to put the bread on the shelf now

Speaker 2 that it did. So I mean, almost double.
It's crazy. And you can't even get the help.
Can't get people to show up because they're sitting at home in their mother's basement playing Nintendo. It's nuts.

Speaker 2 So

Speaker 2 we don't have that problem at Ramsey because we're not dealing with that level of labor. We're dealing with a high class, you know, generally here.
So we got a whole different, whole different set of

Speaker 2 things that we deal with that are wonderful by and large. But yeah, it's a great discussion, Jared.
And, you know, the problem was you pulled the string on the monkey. So

Speaker 2 you got the soapbox response because I can go on up for days about this. But it is interesting how ignorant

Speaker 2 some of this wealthy quality stuff is and all this stuff.

Speaker 2 They're ignorant of the connection, the unintended consequences of their little shallow ideas. Yeah, absolutely.
And where they're going.

Speaker 4 I'm glad that he pulled the string. Yeah.

Speaker 2 Well, you just, every so often, I have to get out of my system.

Speaker 2 We will look back in time and say,

Speaker 2 Fauci.

Speaker 2 Wow.

Speaker 2 Just wow.

Speaker 2 This is the Ramsey Show.

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Speaker 5 All right, this one's for my classroom superheroes, aka the teachers out there. You know what's better than an unexpected classroom observation? An unexpected getaway.

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Enter before April 30th at ramseysolutions.com/slash teacher.

Speaker 5 That's ramseysolutions.com/slash teacher.

Speaker 2 Jade Washall Ramsey Personality is my co-host today. Open phones at 888-825-5225.

Speaker 2 Sam is in Daytona Beach. Hi, Sam.
Welcome to the Ramsey Show.

Speaker 3 Hi, Dave. Hi, Jade.
Thanks so much for taking my call today. I appreciate it.

Speaker 2 Sure. What's up?

Speaker 3 Okay, so I've got, it's a complicated situation, but I'm going to try and simplify it as easy, as best as possible for you guys so I can just honor your time.

Speaker 3 So basically, I have, I'm completely debt-free. I've never had any debt.

Speaker 3 Very thankful to you for that. When I was 18 years old, I took FPU before I went to college.

Speaker 2 Wow.

Speaker 3 And actually graduated fully debt-free and so it was the best decision I ever made so never known any debt I have a fully funded emergency fund but about a year ago I was given a sum of money from a family member

Speaker 3 now the sum of money that it was that I was given it was kind of given with the pretext of the reason why they had this money was for a wedding or maybe to invest into to give me to give for like my first property that I would own but since kind of none of those things had happened they decided I'm just going to give it to you now, and I want you to do something with it.

Speaker 3 So in regards to like investing or et cetera, et cetera.

Speaker 4 How much money?

Speaker 2 My problem is,

Speaker 3 so it was $20,000.

Speaker 2 Okay. Cool.

Speaker 4 That's awesome.

Speaker 3 Yeah. So I guess my next issue was more

Speaker 3 I kind of don't know what to do in the sense of I don't know much in regards to investments

Speaker 3 and since it was kind of sprung on me

Speaker 3 of especially I think with the attachment of going it's gonna be for maybe a wedding or maybe a house deposit but that kind of hasn't happened so do you not own a house I'm I'm a bit are you renting I don't know

Speaker 4 you're renting

Speaker 4 are you opposed to saving this money I mean you said that initially it was maybe for a wedding, maybe for a down payment. Why wouldn't you set it aside and add to it as a down payment?

Speaker 3 Well,

Speaker 3 I guess that's part of my question of just going, is that the best thing to do?

Speaker 3 Because I actually have no problem with it. I think what I've been struggling with is because from this family member, it was kind of given the,

Speaker 3 I'm giving you this money because I want you to do something with it in regards to investing it rather than it just sitting in my bank account doing nothing.

Speaker 2 Well, it wouldn't be doing nothing.

Speaker 2 I mean, you can put it in a mutual fund and add to that mutual fund and make that your down payment fund two years from now, three years from now.

Speaker 3 Yep. Yeah.
Okay.

Speaker 2 So just go to ramseysolutions.com.

Speaker 2 Just go to ramseysolutions.com and click on Smart Vestor.

Speaker 2 And you'll find a group of Smart Vestor pros in the Daytona Beach area. You can choose from among them which one you would like to work with.
Yeah.

Speaker 2 And you want someone with the heart of a teacher because it sounds like you're new to investing and they'll sit down and teach you about investing only after you have learned and feel competent and comfortable

Speaker 2 do you invest and don't ever invest in something you don't understand but if i woke up in your shoes and if i had given you that gift with that guideline i would be happy with you using some basic mutual funds to let that be parked in until and add some to it as you go along for a future down payment Yeah, plan on having it in there five years or so.

Speaker 4 That's what I'd say. So it has some time to go in the right direction.

Speaker 2 Yeah, you should be able to do great with it. That should be excellent.
Easy. Jill is with us in Phoenix.

Speaker 2 If I push the right button, Jill's there. Hi, Jill's with us in Phoenix.
Hi, Jill. How are you?

Speaker 3 I'm well. Thank you so much.
Thanks for taking my call.

Speaker 2 Sure. What's up?

Speaker 3 So I'm calling. I've listened to the show off and on for years, but I got really serious about six months ago.
And

Speaker 3 so I'm going to admit at the outstart that I know I've messed up,

Speaker 3 but I have about $100,000 of debt with my ex-husband. I'm currently married.
My current husband and I make good money.

Speaker 3 Because this debt felt so overwhelming, I kind of shoved it to the side. We paid off all of our other debts

Speaker 3 and I started saving for a house. I went to basically, I skipped partial step two and went to step three.

Speaker 2 We started saving. We paid so all your you and your current husband paid off all your other pre-married debts from the other marriage except this debt.
And what is this debt? How big is it?

Speaker 3 It's $100,000

Speaker 3 and the IRS. Oh.

Speaker 2 Okay. And how did you end up $100,000 in debt to the IRS?

Speaker 3 So my former husband owned a company.

Speaker 3 Tax issues got complicated. Life was really overwhelming.
He didn't want to deal with it. I didn't know how to deal with it.
So we just didn't file seven years of taxes.

Speaker 2 Yikes. Yeah.

Speaker 3 So when we got divorced.

Speaker 2 Wait a minute. Wait a minute.
Did you have an income during that time? You personally?

Speaker 3 I did.

Speaker 2 I did. And you didn't file taxes on that income?

Speaker 3 So.

Speaker 2 Did you file taxes on your income during the seven years?

Speaker 3 No.

Speaker 3 No.

Speaker 2 Okay. So his business was complicated.
You didn't file on it.

Speaker 2 And how did the $100,000 come about? Who decided what that was?

Speaker 3 So when we were getting divorced, we actually hired a CPA, which is what we should have done in the first place. And they went through, filed all of our taxes, and let us know

Speaker 3 what we owed as well as initially interest and penalties.

Speaker 2 And of course, why in the world did you file filing jointly or you're going through a divorce? Why didn't you file separately? You would have only been responsible for the taxes on your income.

Speaker 3 The judge required it, unfortunately.

Speaker 3 Interesting. I know.

Speaker 2 I don't believe you.

Speaker 2 I think your attorney mailed it in. Judges, that's not logical.
The judge required you file your freaking taxes.

Speaker 2 I don't argue that. But

Speaker 2 he didn't require you were as liable that you had to pay taxes on his business that he didn't file on.

Speaker 3 so because the the judge basically said well you benefited from the income while you were married so you are both jointly and severally liable and you have to file together it was very very frustrating

Speaker 4 so the ex i have a question about your ex-husband is he going to if you both said all right it's a hundred thousand dollars i pay fifty you pay fifty is he gonna is he gonna do it no it's joint and several she's liable for a whole lot until it's all paid

Speaker 3 through the divorce,

Speaker 3 he is obligated to pay 60%, and I'm obligated to pay 40%. And that's kind of part of the question:

Speaker 2 he's not going to try to pay the 40%. No, he's not.
No, he's not. The divorce decree says that, but the IRS says you owe $100.

Speaker 3 Correct. The IRS will not acknowledge that.

Speaker 2 Exactly. They don't have to.
If I pay the $100,

Speaker 3 and I can take him back to court and sue him for that portion.

Speaker 2 Yeah, good luck with that.

Speaker 3 I know.

Speaker 3 And honestly

Speaker 3 i it wasn't until i called a smart investor pro because i started saving for a house and i had my emergency fund our savings for a house and um your smart investor pro was like no no girl you got to go back to step two you have to deal with this yes you got to deal with it right so how much money do you have laying around

Speaker 3 So I have $55,000.

Speaker 3 Part of that was money that I got from my son passing away. And part of that is money we saved.

Speaker 2 Okay. I got to tell you, there's a couple courses you can go through here.

Speaker 2 One course you can go through is you can pay the hundred thousand and hope you get his forty back out of him, and I wouldn't give you much hope for that, and you move on with your life.

Speaker 2 That's a fairly easy course to take. That's the clean course, that's the easy one.
Okay, here's the one I would do, though, and it's the hard one. Okay,

Speaker 2 I would hire another

Speaker 2 CPA, or rather, a tax attorney, and I would go and

Speaker 2 go back before the probate courts where the divorce was done and challenge that judge's ruling and re-file under the innocent spouse provision.

Speaker 2 Because I don't think you're liable for his taxes and you're innocent of his.

Speaker 2 Ask your tax attorney about the innocent spouse provision. This is where a spouse just signs off on everything and the other spouse is running the business and then and they just sign off on it.

Speaker 2 They don't do it. Then they don't get half the thing.

Speaker 2 They get out scot-free. And you'd be liable for your income, the taxes on your income during that seven years, but not on the business's income.
And I'm challenging that judge's ruling, if I'm you.

Speaker 2 It's going to cost you 10 grand to do this.

Speaker 4 I was going to say, how much would you spend to do that?

Speaker 2 Yeah, but I would do it. This is the Ramsey Show.

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Speaker 2 Jade Washaw, Ramsey Personality, is my co-host today. Hey guys, if you didn't know, I love talking to you about money.
We also help small businesses, about 10,000 of them across America.

Speaker 2 And we have a podcast called Entree Leadership. It was actually the very first podcast we ever did at Ramsey.
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Speaker 2 Ryan is with us in Hartford, Connecticut. Hey, Ryan, welcome to the Ramsey Show.

Speaker 3 Hey, how are you guys? Sure. What's up?

Speaker 3 Hey, so I have a bit of a problem. I never thought this was going to happen.
So in 2018, my father passed away and he left me and my brother a 401k plan.

Speaker 3 Fast forward five years, I got a check in the mail this morning for about $245,000. The original account balance was about $300,000.

Speaker 3 And what's happening is they gave me the check and I have to pay the IRS that $55,000 difference from the $300,000 to the $245,000.

Speaker 3 I called them and asked them if they could roll it over, and they said once they issued the check, there's nothing that can be done.

Speaker 2 Who told them to issue the check?

Speaker 3 Not me. Apparently, the company my father was working for

Speaker 3 I didn't either didn't read it.

Speaker 2 I didn't hear you. You cut out.
Apparently the company your father worked for what?

Speaker 3 Yeah, they

Speaker 3 have a five-year plan, I guess, for the death benefit that if it's not rolled over to something else within five years, they must close the account and just issue a checkout.

Speaker 3 It's super confusing. The way they explained it to me, I I was on the phone with them for an hour and a half this morning with my 401k

Speaker 3 company. And they pretty much said, once we issue the check, there's nothing that can be done.
There was no workaround.

Speaker 3 They had until just, that's what I'm saying.

Speaker 2 I'm sure you don't have an extra 55 grand laying around.

Speaker 3 No, so the way it worked is my account balance was $300,000. It started like $215,000, and over the years, I got it up to $300,000.
They issued me a check for $245,000.

Speaker 3 They already took the money out and sent it to the IRS and issued me the difference.

Speaker 2 Yeah, they have to withhold 20%. That's the rule.

Speaker 2 If you take a withdrawal, but this is an involuntary withdrawal without no, without any contact to you or anything, which is completely at a minimum unprofessional.

Speaker 4 What caused you to wait?

Speaker 4 What caused you to wait the five years as opposed to rolling it over?

Speaker 3 Because the 401k plan my father was invested in had really good options.

Speaker 2 All of those same options exist in the open market.

Speaker 3 Yeah. And I have my own personal investment accounts, and I do it with that as well.

Speaker 3 Don't rock the boat if the boat shouldn't be rocked. So the way I figured is the 401k plan was perfectly fine.
I kept it in there just because the investment options were fine.

Speaker 3 It was just, it's a retirement account. I was treating it like a retirement account.
I wasn't going to touch it until I was 65. I'm 30 now.
Yeah.

Speaker 2 What do you make?

Speaker 3 I make

Speaker 3 I'm a truck driver, so I make about $110,000 a year, and I also own a small business that I make about the same.

Speaker 2 Okay, under the Secure Act that Biden passed, you have 10 years to liquidate the 401k completely.

Speaker 2 You should have been liquidating it at one-tenth a year from the time the Secure Act passed two years ago, and you've not been doing that.

Speaker 3 I didn't know about that. I know.

Speaker 2 So I'm trying to figure out how that plays into this and how hardcore. All right, let's pretend that we figure out a way to lean on them and they cancel the check and

Speaker 2 put the money back in the 401k so that you can roll it over within 30 days, which is what they should do if they're

Speaker 2 people of integrity. This is a problem.
It's not technically unethical. It's just so nasty that it ought to be unethical.
What they have to do is. Yeah, it's a big thing.

Speaker 2 It's a lot of money.

Speaker 2 It's going to cost you

Speaker 2 $20,000, $30,000

Speaker 2 that you don't have.

Speaker 3 It cost me two years. It cost me two whole years of

Speaker 2 gains because of this. No, well,

Speaker 3 I never thought I would be upset to get a huge check in the mail, but I did.

Speaker 2 Well, I'm upset because I should have had it rolled over. It should have been huge.
He should have called me.

Speaker 2 Yeah.

Speaker 2 All right. So

Speaker 2 here's what I'm going to suggest you do. And I don't think it'll work, but it's the only thing I can think of.
All right. Okay.

Speaker 2 Go to ramseysolutions.com and click on smart vestor and find a smart vestor pro in your area that you like after talking to them on the phone

Speaker 2 they may be able

Speaker 2 to call on your behalf and uh talk them into undoing this and immediately rolling it and they'll help you with the rollover

Speaker 2 okay they may be able to cite

Speaker 2 something that a regulation or something that I'm not aware of

Speaker 2 because this is

Speaker 2 when you started talking I thought you were going to tell me this was a tiny little 401k like a ten thousand dollar and they were just cleaning out all the little ones sometimes they do that when a company sells or in the event of an inherited 401k like you've got um

Speaker 2 but this is huge this is a lot of money and so this is and with no notification at all this is particularly nasty

Speaker 2 and so if they had simply notified you, you could have quickly rolled it over and avoided this.

Speaker 3 Right? And they said they notified me, but I

Speaker 2 was just like, you're a truck driver. You're a truck driver.

Speaker 2 You didn't

Speaker 3 check my account.

Speaker 3 They said they did, but I never got any notification.

Speaker 2 So you've never seen evidence of that relentlessly.

Speaker 3 Yeah,

Speaker 2 ask them to prove that they did.

Speaker 3 Okay.

Speaker 2 I mean,

Speaker 2 I don't think you've got a basis for suing them, but I'd be tempted to.

Speaker 2 I really would. I mean, because you're talking about $25,000 or $30,000 cost here that is unnecessary.

Speaker 3 $55,000 they took out.

Speaker 2 They

Speaker 2 gave me

Speaker 2 $50,000. It's the taxes on $55,000.
The $55,000 is going to be taxed,

Speaker 2 not penalized.

Speaker 3 No,

Speaker 3 when I got my experiment, like the summary of what my original account balance was $300,000, they cut me a check for $245,000.

Speaker 2 I understand. They took $55,000, they sent it to the federal government as tax withholding, and it's not all taxable.
So because the entire, because you're going to roll the rest of this.

Speaker 2 If you take the check in your hand and you roll it to a 401k, the only harm that's going to come to you is the taxes on the 55,000,

Speaker 2 which is going to be 15 grand or 20 grand.

Speaker 3 Oh, so I'm going to have to pay another 15 grand.

Speaker 2 Honey, you haven't paid anything yet.

Speaker 2 Okay, they withheld

Speaker 2 your money, $55,000, and sent it to the federal government. Then what you do is you file a tax return of what is actually due.

Speaker 2 And what will be actually due is not $55,000. It'll only be the taxes on $55,000 if you take the check in your hand and put it into an IRA traditional within 60 days of right now.

Speaker 2 So you need to get on the phone with a Smart Investor Pro right now, because at least we need to do that.

Speaker 2 Okay, i will but so the worst case scenario if you follow through on what i just told you is taxes on 55 000 because the government has 55 000 of your money as if you're going to get taxed on the whole thing and you're not

Speaker 2 okay because you're going to roll the portion in your hand which is 80 percent of it into a traditional to keep you from getting taxed you got 60 days to do that from the time withdrawal so folks you can pull your money out of 401k

Speaker 2 they have to withhold 20 but you have to put a hundred

Speaker 2 into an account within 60 days to avoid taxation.

Speaker 2 You can't do that because they have to

Speaker 2 do that because they got 55 of his money over at the IRS now. And so, if you just take the 55, then you're going to pay some taxes, but not 55.

Speaker 2 So, there we go.

Speaker 2 This is the Ramsey Show.