Debt Isn't The Problem - Your Mindset Is

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

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.

Regular shows are back next week.

Hope you enjoy. live from the headquarters of ramsey solutions it's the ramsey, where we help people build wealth, do work that they love, and create actual amazing relationships.
Jade Warshaw 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.
Hi, Dave. Pleasure to talk with you.
You too. What's up? 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. where he was working in the music business.
And he was going to take over my insurance agency a few years, retired about nine years ago from LA where he was working in the music business and he was going to take over my insurance agency a few years retired about nine years ago so he did take that over 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, ended up owing them $30,000 or $40,000, 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.
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. 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.

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 our estate when we die. We thought he'd 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. 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.
He also hasn't paid any 941 withholding or state unemployment tax. He has no business being self-employed, obviously.
So my question is, we have the assets to do that,

but we would have to sell off property and mutual funds.

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

What's your net worth?

Net worth is probably about $2.3 million.

And about roughly half of that is in two pieces of real estate, our residence here in Indiana and another home we own in Florida. I'm sorry, Jeff.
Including the real estate, the majority of our assets are in IRAs, Roths, and 403Bs from what my wife taught. We've got about $140,000 in a money market fund.
What's his income at the insurance

company? 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.
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.
Is he married? He's not married he has an eight year old granddaughter that we absolutely love and uh spends a lot of time with us uh he got he he uh 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 so both of them are here in town and both of them have jobs in our own businesses. And they get along fine.
We all get along fine. The insurance agency was yours, and you sold it or gave it to him? 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 so I didn't have a say in where so you had a book of business but what did he come into he didn't take over your book did he he did pretty much not all of it because they gave something it was a big agency so they split it up among other agents they gave him about half of it okay Jeff and he ran ground. Okay.
Ran into the ground. Okay.
Jeff, does he have any other debt besides the tax debt that you know of? Do you know what that number looks like? 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.
I hear your disgust for his behavior in your voice, and I also hear a dad that loves his son even though he's been stupid. You hear very well.
So I guess there's two options. One is you bail him out, which doesn't sound real appealing.
If you don't bail him out, what happens? He just has to work with the IRS for a lot of years and actually grow up. Yeah.
The thing is, Dave, this has happened so many times I can't count them. But you've been there to bail him out every time.
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. Then we put him in a private school in California, and all that required a second mortgage on our house at the time.
We bailed him out of a car loan that he didn't keep up with, but I co-signed for. It's just been one thing after another.
He just is. I'm okay with no being the answer.
If it were me, I wouldn't do it. Here's what I'm going to suggest.
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. 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 in.
But I initially thought we could do the whole amount. I don't think you should do any of that, Jeff.
I really don't. That's the way I think.
That's the way I think. I think that he's grown and I think that he makes a living.
He's not poverty level.

There's nothing wrong with him. I think he just needs to be a man and do man things.
I totally agree with you. And I think you're a great dad.
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 position he's in.

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.

Yeah, but we have all of our assets and our real estate is in trust. And my daughter is

the trustee and the executor. And we currently put a clause in our will that allowed my son

Thank you. Real estate is in trust, and my daughter is the trustee and the executor.
And 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. 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.

They can.

After he becomes the owner, they can, yeah.

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.

I think you can, I think these are two separate questions.

Do you help him today?

Yeah, they are.

Yeah, do you help him today?

Jade and I are both saying, sadly, I probably wouldn't. I probably wouldn't.
That's the way I'm thinking. And then do I change the will? In a few years, I might.
You can change it now. You can change it later.
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. You could leave an interest for the granddaughter and bypass it.

Bypass the kid that can't seem to find his way.

Yeah, that's so sad.

This is The Ramsey Show. Rachel, do you ever get these sketchy text messages that are like, hey, you need to update your address and verify so we can get you the package you didn't order? Yes, I have.
George, sketchy and never trust him. And that's why we recommend Delete Me.
They help with that. Yeah, they do.
Delete Me actually goes in and removes your information from data broker websites. And it is an incredible service that everyone needs.
And there's a lot of shady companies out there that solely exist to sell your personal data to bad guys. And that means your info, like your email address, your home address, your kids' names, your name, everything is just out there for scammers and spammers to find.
That's right. And then once they remove your information, then they're going to send you a detailed report telling you where they found your information, when they removed it, how many hours they've saved you.
I mean, it is incredible. So detailed and it's beautiful.
I love these reports so far. Get this.
They've reviewed 27,000 listings on my behalf, removed me from 240 data broker sites and saved me 77 hours of time. It's incredible.
Absolutely amazing. And Winston and I now get fewer texts, weird emails, spam calls, all of it.
I love it. So you got to be sure to check them out.
Ramsey fans get 20% off their annual plans. Just go to joindeliteme.com slash Ramsey.
That comes out to less than nine bucks a month. Super affordable.
It's amazing. So again, that's joindeliteme.com slash Ramsey.
That comes out to less than nine bucks a month.

Super affordable.

It's amazing.

So again, that's joindeliteme.com slash Ramsey.

Make sure to check it out, you guys. jade washaw ramsey personality is my co-host today graham is with us in knoxville hey graham How are you? I'm doing dave how are you better than i deserve what's up uh me and my fiance 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 on that um yeah okay uh i would not buy until you're married for sure is that what you're talking about okay yeah we're we were thinking you know right around when we're getting married next um june yeah do you guys have any will you have debt together we will have very little debt she has a student loan for about seven thousand dollars we've saved up a pretty good

bit going into our marriage and plan on combining our finances and following you know a lot of your

instruction on that so you pay off the debt you'd have an emergency fund plus you'd have a down

payment yes okay then according to the baby steps and what we teach you would be in a position to

buy a home let me tell you an idea to think about okay and it's not it's not a hard and fast

Thank you. the baby steps and what we teach you would be in a position to buy a home let me let me tell you an idea to think about okay and it's not it's not a hard and fast um i wouldn't i wouldn't call you stupid if you didn't do it or something like that but here's an idea to think about i think because i'm old and i've seen a lot that one year after you're married you will pick a different house than one month after you're married.
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.
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 and picking wallpaper and for god's sakes doing a renovation okay so i mean i i just i love the idea of the house not being the purchase the move not being an emotional relational drain instead you all just get really comfortable with each other and pile up a big old stack of cash and the following spring buy a house that i like that um 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.
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.
And so it's a bit symbolic or metaphorical, if you will, and it's not something that you would be completely unwise and stupid and foolish and all that. No, it's none of that.
I just think you're going to make a different decision a year later. I absolutely agree with that.
And you've known each other. You get to know each other a little bit better by then.
We've been dating six years. Yeah, you haven't been living together.
It's different. I mean've not been married together you might have been living together i don't know what you're doing but yeah but it's different yeah i i it's it's it's a different deal man and um and it's not it's not that dramatic really but it's just it's subtle yeah it's um and and the thing i also the 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. Buy a house, buy a house, buy a house.
Oh, renters are going to hell. Buy a house, buy a house.
You know, people just go crazy. They're like a beagle chasing a rabbit, man.
And it's just, you know, it's okay to have a little bit of patience. Home home ownership is a great plan owning a home and getting it paid off is a great financial wealth building plan but everybody doesn't have to buy a house right now just calm your butt down you know it's like and the longer you wait the more you have more money to put down on it 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 or are you trying to make a call here dave are you no are you calling something nope okay just checking i'm just saying it'd be we'll be after an election at that point and we'll see what's happening i didn't know if you were seeing your shadow or what that happens around here a lot because uh yeah i've seen things you get old things circle back around.
If you keep the suit coat long enough, it comes back in style. All right, here we go.
JT is in Santa Fe, New Mexico. Hi, JT.
How are you? Dave and Jade. How's it going? Better than we deserve.
What's up? So I'm about to be at a point where I'm completely out of debt. I've working on it the last few years and i'm about to hit zero hey way to go my question is is it uh is it foolish to go back into debt yes start a business yes you just called the ramsey show jt into the bear cave.
You did. That's the bear if it was hungry.
You already know the answer, JT. I need straightforward advice.
What's the business? My trade or work is I'm a 401k consultant. I do a risk of compliance.
And I don't know.

I just kind of start my own firm,

and it's a lot to try to just bankroll.

Why?

Why?

What do you got to bankroll?

That's what I'm wondering.

How about a cash flow you day one?

Well, I mean, everything from, you know,

software, agreements, all sorts of stuff.

Wait a minute. For what? You don't need, you got to have customers first.
Well, I mean, I'm not so much worried about that part of getting everything started. Yeah, but you're going too fast.
What are you getting started? What do you mean? I mean, you don't have any money? Well, I mean, not enough to get this thing going. Well, what do you think it takes to get this going? What you're describing to me, you need a computer and some sweat.
And a customer. Yeah, or six.
Well, that's the thing. For what I'm doing, I'd be whale hunting in a canoe, and I need some stuff to be able to do such things.
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.

You need some customers on the hook.

Well, the first thing I do, I would take my current job and ask that they 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? Well, we've got to go after big fish to eat big, right uh i think you're no i mean rabbits are more plentiful let's kill some of those neat 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 and little to no cash yeah you need enough to eat on but i don't want you floating in a canoe looking for a whale starving to death yeah because you didn't have any plan or any background but if you got a plan for cash flow day one on the 1099 side then um and you think they'll do that what's the probability of them doing that i think so because i'd be taking on a lot of my uh you know i'd get my own insurance and stuff like that you know this is so vague and you have not pro forma this out the business you're in demands that you do a better job of pro forming than you have done so far this is a vague a group of vague generalities and i'm going to go borrow money no you don't need to borrow money you need to organically cash flow this little service oriented business and you're going to be just fine uh 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 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 that's i think dave people think if you build it they'll come and i think it's the opposite you've got to go get them and then build it while you're 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 so no yeah you don't you don't want to do that you need to have you need to have the some tell our guys all the time, hey, elephant hunting is great, but they're a lot more rare than rabbits.
You can eat really good on rabbits. Okay.
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 get a business model that churns cash.
Here, 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.

This is The Ramsey Show. I hate to admit this, but I don't always eat right.
I know I need to eat more fruits and veggies, but sometimes I just have to pound some chips because they taste so good. That's why I love my Field of Greens.
It helps me eat healthy when I don't have much time. And each fruit and vegetable in Field of Greens was doctor-selected for a specific health benefit.
Heart, lungs, kidney, metabolism, even healthy weight. And folks, I ain't getting any younger.
It's super easy to mix with water. And here is the great part of it.
I thought it might taste like grass, but it tastes great. And

only Field of Greens makes this promise. Your doctor will notice your improved health or your money back.
So go to fieldofgreens.com slash Ramsey for 20% off your first order. That's fieldofgreens.com slash Ramsey to save 20% on your first order.
Jade Walshaw, Ramsey Personality, is my co-host today. Today's question of the day is brought to you by Why Refi? If private student loan debt is taking away your peace of mind and you don't see any way out, you need Y-Refi.
Y-Refi refinances defaulted private student loans that other places won't touch. And they give you a low fixed rate loan that's custom built for you.
So go to Y-Refi.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 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, my mother-in-law works full-time at a very modest job and they pay us a small amount of rent each month. It's been five years now and the home has required a lot of repairs such as water, intrusion of mold.
We've been able to cash flow the problems but it has cost over $15,000 not to mention our sanity. 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.
We're trying to honor our word, but it has been very taxing emotionally and financially. We're in baby step six and we need to plan for our own retirement.
I keep telling myself to suck it up, but we are losing tons of money with no end in sight. 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? Well, first off, I wish I had more information, Dave. I want to know how old these parents are.
I want to know more. 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.
So 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.
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 until you die and we're covering it.
I don't know what the promise was did they say hey we're doing this house you're gonna live here and you know until you die and we're covering it i don't know what the promise was but i think that they may have 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 so she's got a lot of drama in her words uh-huh she does and it's her in-laws uh-huh i i 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 idea 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 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 no i think i don't think it was a hidden thing

uh but i think he went into it and went i bought mom and dad a house and dad's disabled mom got a

you know not not much of a job and they pay us what they can pay us and we fix the stuff that

breaks and yeah and she's going oh god i'm dying yeah you know it's like um so i don't i you know

Thank you. much of a job and they pay us what they can pay us and we fix the stuff that breaks and yeah and she's going oh god i'm dying yeah you know it's like um so i don't i you know fifteen thousand dollars is not uh we are losing tons of money for five years no it's nothing if you own a house you're going to spend more than fifteen thousand dollars over five years on a house and they're getting some rent which is good and it's going up in value uh-huh up in value.
Mom and dad are going to pass someday and you're going to have a nice asset that's going up in value that you can sell. And probably pay off your house and more if you haven't already.
So I think I would, first thing I would want to do is get to the bottom and say, what is, where's all this resentment really coming from? Is it really coming from the house? I kind of don't think it i don't think so i 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 in theory it sounded good and then when you start walking it out you're like oh my goodness but to your point if she's writing into to our show there's something that they're not talking about 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 um and you already had you know mother-in-law itis then that would just make it worse right i mean yes it's 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 there wasn't anything in here lavish there's also though i didn't hear a jacuzzi being installed i think to to quote myself i think there's also a vocab rehab that needs to happen amen because here she's saying my husband i purchased a very modest home for his parents they don't own the home 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 you know i have a rental house and it had a water leak and i had to fix them all that's right as opposed to it guess what i've had to do do that a bunch of times right so that'll help zero drama about it that's right i just fixed it and it's going up in value tree fell on the back porch i just fixed it it's just you know it's just you own a house and crap happens right i mean it's like um 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. But I'm trying to figure out what's really happening here and therefore to what to do

with this.

Because also their age might play into it.

If they're 87, suck it up.

If they're 57, kick them out.

Sell it and give them the money that it brings, it brings give them the money from it um because you didn't you didn't buy it for money you bought it to help them and you know if you want to give them the whatever proceeds are because you're going to have made some money to your point from 2019 so uh yeah that's that's that's part of it and um yeah yeah and and i think then I would want to just really ask, I don't know. 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. They've been paying us a small amount of rent.
What would you suggest in that situation to fairly? I mean, I don't care if you give them the money. Really, I mean, you sell the house and whatever i don't 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 i don't care um 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 patty makes three hundred thousand dollars a year stop whining and deal with it that's another good point If Patty makes $55,000 a year.
Stop whining and deal with it. That's another good point.
If Patty makes $55,000 a year, then 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. Because it's like, oh, it's been very taxing emotionally and financially.
Yeah. Okay, I don't understand it's um 15 grand is not taxing emotion i mean it's not but so uh that that's yeah it's a lot of details maybe call in sometime patty yeah yeah we we'd do that so you can contact them back off the email if you want to james we take the call because i i don't know what to do but if yeah i think we could give a couple of scenarios if then okay kind of flow charted 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 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 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 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. Now, if they're only paying the mortgages $2,000, and she said they're paying a small amount of rent, so they're paying $1,000, the proceeds, I'd split.
Okay split okay i don't care um the thing is i don't they're you're not selling it because you need money that's true she did not bring that up she you're right she did not get rid of an un an emotionally and financially draining situation to quote her that's true but she just she 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.
Could be, and it could just be that the drama tired of giving them anything. And I'd rather put it in my account in law situations.
They get, they get salty really quick. Not going there.
You know, not, not going to do that. You're right to that.
You started the whole thing, right? When you said you shouldn't have done it. Fores done it foresight you gotta 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 when you're trying to help your parents you're trying to help your own kids you do not enter into a process that does not bring them to sustainability on their own 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.

And so you people paying your 28-year-olds private schools for their kids,

that's not sustainable.

You shouldn't have entered into that.

This is The Ramsey Show. All right, Dave, you have some strong opinions.
Possibly, yeah. I think so.
Okay, because you really prefer credit unions over big banks. So why is that? 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. So you get better interest rate on savings, cheaper checking, and so on, that kind of thing.
But 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.
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. You know, that's why we're partnering with them, because 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, and the deals that they're offering, the Ramsey tribe is incredible. Yeah, absolutely.
And you're right. Their customer service is unbelievable.
Winston and I just signed up and we got an account. And I'm not kidding.
It took less than five minutes. It was so user-friendly.
The step-by-step approach was unbelievable. And then the next day my phone rings and it says fair wins on phone.
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 so, so appreciate that. 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.
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.
Hey, you guys know how much I hate banks in general. And so for me to do this is a big deal.
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.
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- open phones at 888-825-5225 sam's with us in lansing michigan hey to the Ramsey Show. Hi, how are you guys today? Great.
How can we help? So 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. And I wondering what would be the best way to pay it off we have a couple options um i got lucky you'd rather be lucky than good i won 36 000 at the casino um but that money i already um about a month ago and i already had that money tied up in money market because I'm using that for the down payment on my next home.
Um, we could cash in her 401k, which has $25,000 in it and pay it off. Or do we just, um, kind of suck it up and just make the payments and just pay it down month by month.
Um, I just wonder what the best option would be to avoid the interest payments and everything like that. Yeah.
You realize the interest payments aren't the real problem in your house, right? How long have you been married? How long have you been married? We have been married for a year and a half now. Okay.
And how long has she had this debt?

A year.

It started basically when my son was born a little bit over a year ago.

And it was just online ordering, stuff like that, three different credit cards, going shopping kind of thing.

And I never really noticed that we had separate finances.

And I never really noticed it because we don't have any debt,

and all that's at our house.

We don't owe anything. So how's that working for you?

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

Don't think it is, do you?

No.

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.
Not at all. Also, she's spending as a coping mechanism.
She, she's, 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.
And so revenge spending because you're gambling? I don't gamble. That was the second time I had been at the casino in five years.
What'd you spend? And did you budget for it, or did you just go and do it on a whim? We just did it out of whim basically okay and oh all right so um i think the thing that number one when we're meeting when we're researching millionaires one of the things we find typically among and we've done the largest study of millionaires ever done sam is that the husband and wife are working together and there aren't secrets and there is not impulsive spending and the number of millionaires in our study that became millionaires in a casino know is precisely zero. 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.
So those are the things that concern me more than the actual credit card debt. Do you see what I'm saying? Yes, I do.
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, only one checking account, and a budget meeting every month that the two of you sit down together. Both of you have a vote.
For some reason, she doesn't think she's got a vote. She had to hide it from shame or guilt or something.
And we've got to rebuild trust, which has been violated here. 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 you don't agree with this, but I'm going to tell you what I think, okay, because you called here.
I think you both did something stupid, and the only good news is it cancels out. I think you got lucky.
Instead of losing a pile of money, you came home with a pile of money. 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.
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. In 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 and uh so what she did here is not cute 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.
And so I, you know, 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. Not because I'm your dad, but because i love you and because i want you to win

and so uh 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 to run up up 24 000 and destroy or rather delay your dream of buying a home because of financial misbehavior yeah and a lie yeah and to be honest if i'm in their situation i'm probably going to seek out some counseling some marriage counseling yeah because they're they're early on and and this is not they're still forming that that foundation and this is not the sort of thing that you want in the foundation you want to get to the bottom of this find out why you guys are keeping secrets find out why she's feeling necessary feeling it's necessary to medicate by spending and and possibly same for you sam 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 these two things, 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.
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.
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 this is a, this is a, I'm not overreacting because this is millions of dollars we're talking about.
Absolutely. Over time.
Yeah. Dave, you're being kind because this, this, 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, there'd be an atom bomb that went off. You would see the explosion.
I'm just saying. There'd be a little fire.
There'd be little birds chirping around his head because I would have knocked him out. I'm just saying.
But I kind of think it might have been more likely you that would do that than him, though know what that's probably true because i am the spender he is the saber he's mr deliberate yeah he is which is even more reason if he did that i would have gone off on him but it's it's what you said these little things it makes me think of that that scripture that says a little leaven 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 i know you can't imagine that happening that sharon didn't feel like she had a vote yeah and she will tell you that about year seven of our marriage she felt like she got her voice yeah is the way she says it and she never lost it since i'll just tell you but um her voice but But her voice. But I got my voice.
And yeah, but she got her vote. Yeah.
And from then on, she's kind of had two to make up for the lost years. But 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 spouse tends to go off and hide stuff and do things and that's not an indication it's not a money problem that's a relationship that's right that's right relationship problem and it was it was at my house too sam i'm just admitting just like you but i'm just old and it was a long time ago that's the only difference so um don't be mad at us we love you that's why we're picking you.
But I would fix those things in my house because they're costing you over the scope of the rest of your life millions of dollars if you don't fix them. This is the Ramsey Show.
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. Download the Ramsey Network app in your favorite app store today.
This show is sponsored by BetterHelp.

All right, you've heard me say this a thousand times,

and I'm going to keep saying it.

You're worth being well.

And I believe therapy can help.

Right now, BetterHelp is offering 90% off your first week of therapy,

now through March 31st.

So if you've been on the fence,

this is your chance to try therapy for a fraction of the cost. Because let's be honest, we all spend money on things we hope will make us feel better, like new clothes, organic groceries, gym memberships.
But when it comes to actually digging in and getting real with our mental and emotional well-being, we hesitate, we pause. And I know actually going to therapy can seem like a huge first step, but please hear me.
Your mental and emotional health are just as important as your physical health. BetterHelp makes therapy more accessible than you think because it's online, so you can talk with your therapist when it works for your schedule.
You just fill out a short online survey to get matched with a licensed therapist, and you can switch therapists at any time for no extra cost. Your well-being is worth it.

And this offer makes it easier than ever to start.

90% off your first week of therapy now through March 31st, 2025.

Visit BetterHelp.com slash Deloney to get started.

That's BetterHelp.

H-E-L-P dot com slash Deloney. 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.
Jade Walshaw, Ramsey Personality, is my co-host today. Thank you for joining us, America.
We're glad you're here.

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.

Hi.

Thank you for taking my call.

Sure.

What's up?

I have a negative balance every month, and I'm kind of trying to figure out how to how to get positive again. Starting off kind of a little rough every single month after bills and everything.
So your your bank account is negative every month? Like you're overdrawn? Yeah, I'm overdrawn. I actually almost on a weekly basis.

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. Do you have a budget? I've been working on trying to do one.
I recently got the EveryDollar app premium because it was able to track my stuff better.

But I'm struggling like weekly with groceries. It's just with a family of five, it's hard to keep it under a certain amount.
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. You and your wife.
Yeah. Have you actually filled out a budget for the month? No, I have not.
I haven't been able to figure it out. Okay.
So that's step one. Matter of fact, I want you to go to everydollar.com slash budgeting when this call is over, and I want you to sign up for the next webinar 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 the time. Sit down with your wife tonight, start looking at it.
What's your take home pay? Take home is about $3,600 a month. How much is your rent? The mortgage is $560 a month.
What's your car payment? The car payment is a little high. It's $ 560 a month what's your car payment uh car payment is a little high it's 441 a month okay and five kids uh three kids wife that is unable to work due to yes five people the three kids that is unable to work due to medical issues what kind of medical issues uh it's actually like a hereditary degener degenerative disease where it's actually just getting worse as time goes on too.
Okay. How old are your kiddos? I got triplets, four and a half years old.
Wow. Okay.
So consumer debt's kind of got me. How much debt do you have um not including the car it's about 26 000 okay here's the thing we got to start at the other end groceries don't catch the slack groceries are the thing so we're going to start with this 3 600 at the top of the page you follow me me? Yes.
Minus the important things first. The most important thing in your entire budget is food.
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? So $3,600 minus food.
What are you all spending on food? I try to keep it around $180 a week, but, I mean, it's usually $180 to $220. How often do you eat out? How often do you eat out? 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.
nights a week um okay all right so so if we take um 800 bucks 700 bucks for your budget for food right for a month for a month that leaves us 2,900 dollars so you can buy food foods first you got me 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 right yep and then we pay the light bill and the water bill so we're warm we're fed and we're dry yes this is survival first You following me yes uh 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 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. Everyone else, let me tell you who's at the bottom of the freaking list, student loan.
How big is a student loan? I don't have one. Good.
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? 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.
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 you are in a different place emotionally and spiritually the rest of it's just a stupid game i'm behind on okay but right now it feels like life or death because you've got groceries as the last thing not the first thing yes 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 okay for this month and then we've got to adjust our income now you got to get your income up dude what are you going to do to get your income up it goes up progressively every uh every six months as long as i keep up my uh my apprenticeship and everything so you got you got six months of hell in ahead of you.

What are we going to do in the short term to get it up?

You're going to trade 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. I'm doing homework and doing whatever I can.

Yeah.

Around the house, housework and everything.

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

The laundry may pile up a little bit because you've got to go make some money

because $3,600 is tough.

So 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.

And that will get you under control, Travis.

So you do have a very tight tight tough situation so something's got to go out of the expense lines and something's got to come up quickly in the income side because you know you know it's not easy you got a really nice low house payment it's the best thing in this whole story right now so you got you got a fixable situation but the faster you get the income up and the out go down the faster the pain is going to leave okay does that make sense to you yeah absolutely i was just nervous about missing credit card payments i want to give you permission to feed your children before you pay mastercard yeah i understand okay when you. Okay.
When you get that straight in your head, all of a sudden it changes everything. 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. Been there, done that.
That terrorizes your butt, doesn't it?

Yes, it does.

Been there, done that.

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. There's a time in your life and at 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. Plus, rent means instability in your budget because it always goes up, never down.
So when you're ready to buy, make sure you work with a mortgage partner you can rely on. Churchill Mortgage.
Churchill is Ramsey-trusted to help you make the move from renting to home ownership wisely. Churchill understands that when you buy a home the Ramsey way, your mortgage payment will be a consistent, manageable part of your monthly budget.
Plus, when your home is paid off, that was your largest expense. Now it's extra money in your pocket and an asset towards turning you into a Baby Step millionaire.
So get started on the American dream of home ownership today at churchillmortgage.com. That's churchillmortgage.com.
This is a paid advertisement. NMLS ID 1591.
NMLS consumeraccess.org. Equal housing lender.
1749 Mallory Lane, Suite 100. Brentwood, Tennessee 37027.
I talk to people every day who want to know how to do better in two areas, money and relationships. That's why I'm pumped to bring the Money and Relationships Tour to a city near you.
Join me and Dr. John Deloney for a night that will challenge the way you think about this stuff and possibly change how you live forever.
Starting April 21st, we'll be in Louisville,

then on to Durham, Atlanta, Phoenix, Fort Worth, and Kansas City.

Grab your tickets at RamseySolutions.com slash tour before they're gone.

jade washall ramsey personality is my co-host today open phones at 888-825-5225 you jump in we'll talk about your life and your money jared is with us in coerterlaine idaho hi Jared. Welcome to the Ramsey Show.
Hi, guys. I have a question regarding cost of living raises compared to inflation.
I personally enjoy giving my customers the cheapest service available, yet to keep up with inflation, we have to give raises. How do those two things mesh together,

and is there anything we can do to battle the inflation as a business owner?

No, not, you know, your job is not the macro economy your job is to run your business and that means take care of your family and the families that you pay um that's your job um the macro economy discussion is that um when things go up when the cost of a loaf of bread the cost of a service the cost of a uh a pack of hot dogs whatever it is you want to call it a gallon of gas when when the cost of that goes up 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. If their cost of goods, you know, for instance, if I make a, if we print a book, a total money makeover, a Baby Steps Millionaire's book, well, the cost of paper has gone up 30% in the last 24 months.
All right. And so that's going to be built into my pricing on the next book that we put out.
Agreed? If the cost of that book includes

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

Agreed? Agreed. If the cost of that book includes 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.
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.
And so price increases are always, not always, but 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.
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, just a shortage of workers.
An example of that is, 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. And we sent them home, told them they couldn't work.
If you're a restaurant worker 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 when you tell people they're not essential and then you want them to come back they remember how you pissed on them last time and so guess what you want to hire somebody in the service world today pre-covid you might have done that for ten dollars now you might be looking at 25 dollars because there's a shortage of workers in those industries still to this day yeah post-covid and so uh you know the economic implications of COVID are still shaking out.

It created a labor disruption and a labor price change. 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. And some of the – we do comp studies to see where they're charging.
So, yeah means that if i'm gonna uh be profitable i have to raise a price somewhere and so that person that buys that pays more and that's called inflation yeah you don't and you don't have to feel guilty about it it's just part of no part of it but i mean what what 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 15 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. That's what I'm talking.
That's what he's talking about. 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 and then and then can't fit you know of course you know it's all connected cost more you know i mean that's why that's how that's what works because these businesses are not evil and greedy but they also are not not for profit that's right right. They have to make a profit to stay open.

And oh, by the way, even nonprofits are profitable. A nonprofit 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.
It's just an accounting entry and an IRS designation. but they actually you know your church has to take in more than it puts out otherwise it closes so non-profits are profitable hello and you know and so if the cost of electricity at your church goes up then there you go i mean you're gonna you're gonna 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.
And some organizations haven't survived that. That's right.
That's a good discussion. Inflation includes cost of labor and when you've had a labor disrupt disruption like the quarantines created uh we haven't seen we've seen most of the end of it but we haven't seen the complete end of it yet um it will calm down and smooth out eventually but even a little three percent five percent cost 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 well you're gonna refuse to stay in business you know that's just kind of dumb so so the next book you buy from us get ready the price is gonna be more because hello you know those ten dollar sales we run they're about to be 12 50 they're about done i'm just saying we're about done with a $10 sale because it's $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 been doing them for 10 years and cost of paper kicked my butt.
And so I'm going to pass on the butt kicking. That's how this works.
That's how it works, y'all. I mean mean, it's just this is how it is.
So if you think it's otherwise, then you're being naive. 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.
They don't know it's connected, Dave. 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 people realize. When you freaking caused it, you're the essence of it.
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 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 so you know 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 uh uh things that we deal with that are wonderful by and large but yeah it's a it's a great discussion jared and you know the problem was you pulled the string on the monkey.
So you got the soapbox.

You got the soapbox response because I can go on up for days about this.

But it is interesting how ignorant, you know, some of this wealthy quality stuff is and

all this stuff.

It's just they're ignorant of the connection, the unintended consequences of their little

shallow ideas.

Yeah, absolutely.

And where they're going.

I'm glad that he pulled the string.

Yeah.

Well, you just, every so often,

I have to get out of my system.

We will look back in time and say,

Fauci, wow.

Just wow.

This is The Ramsey Show. Hey, listen up.
Everyone is at risk of identity theft. I don't care if you're a hermit living off the grid listening to the show on a battery-powered radio.
All of your data collected by every company you've ever done business with lives online. Your bank, your doctor's office, retailers, the apps on your phone, the gas station where you have loyalty rewards, they all store your info online making them ripe for a cyber attack or data breach.
That's why I've been telling people for almost 25 years. They need an ID theft protection plan, and the only one I've ever recommended is from Xander Insurance.
They monitor your personal and financial info, even your home title, and take over the work if you become a victim. It's the most thorough and affordable plan out there.
I even have it for my family and our entire team. Visit Xander.com or call 800-356-4282.
Hey, guys, good news. Presale is on now for my new book, Build a Business You Love.
If you're a business owner, you know running a business is hard. That's why I wrote this book, to share what we learned over the last 30 years so business owners

can grow your business faster with fewer mistakes. Pre-order your copy today and you'll get access

to over $350 in bonus items only at RamseySolutions.com slash store. RamseySolutions.com slash

store. Presey solutions.com slash store preorder today.

We'll be right back. Jade Walshaw, Ramsey Personality, is my co-host today.
Open phones at 888-825-5225. Sam is in Daytona Beach.
Hi, Sam. Welcome to the Ramsey Show.
Hi, Dave. Hi, Jade.
Thanks so much for taking my call today. I it sure what's up okay so i've got um 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 so basically i have um i'm completely debt free i've never had any debt um very thankful to you for that when i was 18 years old i took fpu before I went to college.
Wow. And've never had any debt.
I'm very thankful to you for that. When I was 18 years old, I took FPU before I went to college 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. Now the sum of money that it 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. now, and I want you to do something with it.

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

How much money is it?

My problem is, so it was $20,000. Okay, cool.
That's awesome. Yeah.
Yeah, so I guess my next issue was more, I kind of don't know what to do in the sense of, I don't know much in regards to investments. And since it was kind of sprung on me, especially I think with the attachment of going, it was going to be for maybe a wedding or maybe a house deposit.
But that kind of hasn't happened. Do you not own a home?'m a bit are you renting I don't know you're renting um 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 well I guess that's I guess that's part of my question of just going, is that the best thing to do? Um, cause 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, the, I'm giving you this money cause I want you to do something with it in regards to investing it rather than it just sitting in my bank account doing nothing. Well, it wouldn doing nothing i mean you can put it in a mutual fund and add to that mutual fund and make that your down payment fund uh two years from now three years from now yep yeah okay um just go to ramsey solutions.com just go to ramsey solutions.com and click on smart vester and you'll find a group of smart vester pros in the daytona beach area you can choose from among them which one you would like to work with yeah 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 that That's right.
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 in there five years or so that's what i'd say so it has some time to go in the right direction yeah you should be able to do great with it that should be excellent easy jill is with us in phoenix uh if i push the right button jill's there hi jill's with us in phoenix hi jill how are you i'm'm well, thank you so much.
Thanks for taking my call. Sure.
What's up? 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 so I'm going to admit at the outstart that I know I've messed up. But I have about a hundred thousand dollars of debt with my ex-husband.
I'm currently married. Um, my current husband and I make good money.
Um, because this debt felt so overwhelming, I kind of shoved it to the side. We paid off all of our other debts.
Um, and I started saving for a house. I went to basically I skipped partial step two and went to step three.

We started saving.

We paid.

So you and your current husband paid off all your other debts from the other marriage except this debt.

And what is this debt?

How big is it?

It's $100,000.

And who's it owed to?

And the IRS. Oh.
Okay. And how did you end up a hundred thousand dollars in debt to the irs so my former husband owned a company 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 file seven years of taxes.
Yikes. Yeah.
So when we got divorced. Wait a minute.
Did you have an income during that time? You personally? I did. I did.
And you didn't file taxes on that income? So. Did you file taxes on your income during the seven years? No.
Nope. Okay.
So his business was complicated. You didn't file on it.
And how did the $100,000 come about? Who decided what that was? 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, you know, what we owed as well as initially interest and penalties.

And, of course, at that time it was a group war.

Why in the world did you file filing jointly while you were going through a divorce?

Why didn't you file separately?

You would have only been responsible for the taxes on your income.

The judge required it, unfortunately.

Interesting.

I know.

I don't believe you.

I think your attorney mailed it in.

Judges, that's not logical.

The judge required you file your freaking taxes.

I don't argue that.

But he didn't file, he didn't require you, you were as liable,

that you had to pay taxes on his business that he didn't file on. So because 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.
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 50, you pay 50. Is he going to, is he going to do it? No, it's joint and serval.
She's liable for all of it until it's all paid. Through the divorce, um, he is obligated to pay 60% and I'm obligated to pay 40.
And that's Kind of part of the question is, should I just try to pay the 40,000? No, he's not. No, he's not.
The divorce decree says that, but the IRS says you owe 100. Correct.
The IRS will not acknowledge that. Exactly.
They don't have to. If I pay the 100, I can take him back to court and sue him for that portion.
Yeah. Good luck with that.
I know. And honestly, I, it wasn't until I called a smart investor pro because I started saving for a house and I had my emergency fund or 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've got to deal with it. How much money do you have laying around? So I have $55,000.
Part of that was money that I got from my son passing away, and part of that is money we saved. Okay, I've got to tell you, there's a couple courses you can go through here.
One course you can go through is you can pay the $100,000 and hope you get his $40,000 back out of him, and I wouldn't give you much hope for that, and you move on with your life. 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? I would hire another CPA or rather a tax attorney, and I would go back before the probate courts where the divorce was done and challenge that judge's ruling and refile under the innocent spouse provision because I don't think you're liable for his taxes, and you're innocent of his.
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 they just sign off on it.
Then they don't get half the thing. 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. It's going to cost you 10 grand to do this.

I was going to say, how much would you spend to do that? Yeah, but I would do it. This is the Ramsey Show.
Listen, I know a lot of you would rather watch paint dry in slow motion than file your taxes. But thankfully, you don't have to dread filing when you've got Ramsey SmartTax.
It comes packed with everything you need to file online before the big deadline. That means all major federal forms and deductions are covered with no hidden fees.
Plus, with Ramsey SmartTax, you can save up to 70% compared to other tax software out there. It's a no-brainer.
Just go to RamseySolutions.com slash SmartTax and see how simple tax filing can be. That's RamseySolutions.com slash SmartTax.
Jade Walshaw, Ramsey Personality, is my co-host today. 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 and we have a podcast called entree leadership it was actually the very first podcast we ever did at ramsey and it was run by uh other ramsey personalities and interview style and stuff over years.
I took it over about two years ago and started taking calls from small business people about leadership and small business questions.

It's called Entree Leadership Podcast.

It's very popular in that world.

And if you want to be part of that and you run a small business, you've got a question about it, you can call and leave us a voicemail there at 844-944-1070, 844-944-1070, or you can go to entreleadership.com slash ask, leave your question, and our team will get you set up to be a caller on there. Also, a reminder that this is the last portion of the show that is broadcast over YouTube and podcast.
There's another portion coming up that is on the Ramsey Network app and on some talk radio stations around America. And so if you want, the Ramsey Network app is completely free.
So you can finish this version of the show, video or audio, or both, and just jump over to the Ramsey Network app.

It's completely free.

There's all kinds of stuff you can do there, like search calls by subject.

Find out what we've got to say about any certain thing.

Type it in.

You can type in an email and send it to us.

We'll answer it here on the air.

We do a lot of stuff that's really fun over on the Ramsey Network app,

so be sure you check all that out.

Ryan is with us in Hartford, Connecticut.

Hey, Ryan, welcome to the Ramsey Show. Hey hey how are you guys sure what's up hey so i have a bit of a problem i never thought this was going to happen so uh in 2018 my father passed away and he left me and my brother a 401k plan uh fast forward five years uh i got a check in the mail this morning uh for about 245 000 the original account balance was about 300 000 and what's happening is they gave me the check and i have to pay the irs that 55 000 difference from the 300 000 245 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 who told them to issue the check not me apparently uh the company my father was for i didn't either didn't read i'm sorry i didn't i didn't hear you you cut out apparently the company your father worked for what? Yeah, they 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.
It's super confusing. The way they explained it to me, I was on the phone with them for an hour and a half this morning with my 401k company, and they pretty much said once we issue the check, there's nothing that can be done.
There was no workaround. Yeah, there is.
They had until this, that's what I'm saying. Yeah, there is.
I'm sure you don't have an extra 55 grand laying around. No, so the way it worked is my account balance was $300,000.
It started at like $215,000, and over the years, I got issued me a check for two 45. They already took the money now and sent it to the IRS and issued me the difference.
Yeah. They have to withhold 20%.
That's the rule. If you, if you take a withdrawal, but this is an involuntary withdrawal without note, without any contact to you or anything, which is completely at a minimum unprofessional.
What caused you to wait? What caused you to wait the five years as opposed to rolling it over? Because the 401k plan my father was invested in had really good options. All of those same options exist in the open market.
Yeah, and I have my own personal investment accounts, and I do know, if you know, 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. It was just, it's a retirement account.
I was treating it like a retirement account. I wasn't going to touch it till I was 65.
I'm 30 now. Yeah.
What do you like? I make I'm a truck driver so I make about

$120,000 a year, and I also own a small business that I make about the same. Okay.
Under the SECURE Act that Biden passed, you have 10 years to liquidate the 401k completely. 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.
I didn't know about that. I know.
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 put the money back into the 401k so that you can roll it over within 30 days, which is what they should do if they're, uh, are people of integrity.
This is a problem. It's not technically unethical.
It's just so nasty that it ought to be unethical. Yeah, it's a big investment.

It's a big investment.

It's going to cost you $20,000, $30,000 that you don't have.

It cost me two years.

It cost me two whole years of gains because of this.

No, well, I mean that's.

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

I'm upset because I should have had it rolled over. It should have been huger.
He should have called me. Yeah.
All right, so 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.
Go to RamseySolutions.com and click on SmartVestor and find a SmartVestor Pro in your area that you like after talking to them on the phone they may be able to call on your behalf and uh talk them into undoing this and immediately rolling it and they'll help you with the rollover okay they may be able to cite uh something that a regulation or something that i'm not aware of um because this is uh 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 but this is huge this is a lot of money and so this is and with no notification at all this is particularly nasty and so i if they had simply notified you you could have quickly rolled it over and avoided this right and they said they notified me but i i wait a minute like you're a truck driver you didn't they did notify you my accounts they said they did but i never got an notification so you've never seen evidence of them yeah ask them to prove that they ask them to prove that they did okay Okay. Good idea.
I mean, I don't think you've got a basis for suing them, but I'd be tempted to. I really would.
I mean, because you're talking about $25,000 or $30,000 cost here that is unnecessary. $55,000 they took out.
No, honey, it's the taxes on $55,000. The $55,000 is going to be taxed, not penalized.
No, 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.
I understand. They took $55,000, they sent it to the federal government as tax withholding, and it's not all taxable.
Because you're going to roll the rest of this. 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, which is going to be $15,000 or $20,000.
Oh, so I'm going to have to pay another 15 grand. Honey, you haven't paid anything yet.
Okay. They withheld 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. 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 rent right now. So you need to get on the phone with a SmartVestor Pro right now because at least we need to do that.
Okay, I will. 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. Okay.
Because you're going to roll the portion in your hand, which is 80% of it, into a traditional to keep you from getting taxed. You've got 60 days to do that from the time of withdrawal.
So, folks, you can pull your money out of 401k.

They have to withhold 20%,

but you have to put 100% into an account within 60 days to avoid taxation.

He can't do that because they've already sent it.

But he can't do that because they've 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.

So there we go.