Ditch Debt Quickly so You Can Build Wealth Slowly

Speaker 1 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 1 Ken Coleman, number one best-selling author and host of the Ken Coleman Show here at Ramsey, is my co-host today. Open phones at 888-825-5225.
That's 888-825-5225.

Speaker 1 Right before we turn on the microphones, Ken and I were just discussing a fabulous appearance he just did on Mike Rowe's Dirty Jobs.

Speaker 1 Micro of Dirty Jobs has a podcast that's a long-form interview podcast. Mike and I have been friends a long, long time, and I've done it a couple of times.

Speaker 1 And Ken was just just a guest on there, and it just, I think it posted this week, and I've listened, I listened to it all the way through.

Speaker 1 It's an hour and 40 minutes of you two guys having way too much fun, but it's very informative, a great discussion.

Speaker 1 If you haven't checked out Mike's podcast, we recommend that you do, especially this week with Ken being on there. It was incredible, Ken.
Great job. Thank you.

Speaker 1 Brenda is in Tampa, Florida, to start off this hour. Hi, Brenda.
Welcome to the Ramsey Show.

Speaker 2 Brenda, thank you for having me.

Speaker 1 Sure. What's up?

Speaker 2 So my husband and I have been listening or found you December last year, and we started the Every Dollar app.

Speaker 2 And we have gotten an offer already of like $36,000 in debt, but we still have way more to go. We have around $255,000 in debt still.

Speaker 2 And we were wondering, like to accelerate it a little bit, if we should sell our house. It does

Speaker 2 it is 2.75

Speaker 2 APR on our house, but just to see what your opinion was. Okay.

Speaker 1 The $250,000 in debt, does that include your mortgage?

Speaker 2 It does not.

Speaker 1 Okay. What's it on? Student loans?

Speaker 2 It's student loan, solar panel, one car,

Speaker 2 credit cards, and a pool loan.

Speaker 2 Yeah, we did very bad mistakes, but we're learning from our bad habits.

Speaker 1 What do you owe on the car?

Speaker 2 The car, $35,000.

Speaker 1 Okay. And what's your household income?

Speaker 2 We bring home

Speaker 2 around $9,500 a month.

Speaker 1 Do you like your house?

Speaker 2 We do. We have...

Speaker 1 Well, it has nice solar panels and a pool. We know that.

Speaker 2 Yeah, so, yeah.

Speaker 1 Okay.

Speaker 1 um

Speaker 1 if I'm in your shoes I'm not selling the house except as a worst-case scenario if you get completely stuck you have a pretty good income I would sell my car

Speaker 1 and we did sell one of our cars yeah the 35,000 one would go too before I sold my house

Speaker 1 yeah yeah that's what a $1,200 a month car payment

Speaker 2 Actually, no, $760.

Speaker 1 Oh, okay. You got a good rate on that, too, then.
Okay, good. Yeah, but either way, I would be rid of that.
That's $35,000 of the $250,000. You've already made $36,000 progress.

Speaker 1 And, of course, every time we get rid of a payment, it increases the speed of your progress because you have more money freed up to attack the rest of the debts, working the debt snowball, right?

Speaker 2 Yes, yes.

Speaker 2 It is upside down, like almost 15 grand.

Speaker 1 How many times did you go out to eat last month?

Speaker 2 Quite a few. We did went down less, a lot less.

Speaker 1 Yeah.

Speaker 1 So that needs to be zero. You don't need to see the inside of a restaurant unless you're working there.

Speaker 1 And you don't need to be on vacation. You call me about to sell your house because you're desperate about your debt, and yet you're going out to eat every night.
That's got to stop, girlfriend.

Speaker 1 Not every night. You got to stop.

Speaker 1 It's got to stop.

Speaker 1 Well, going out to eat is entertainment. It is not nutrition.

Speaker 1 Yeah.

Speaker 1 Okay. You guys got it.
You need to get on a beans and rice, scorched earth budget where your family thinks you've joined a cult.

Speaker 1 You need to go crazy before you talk about selling your house because you've got a good situation with this house.

Speaker 1 And if you walk away from it because you won't curb in your other appetites, that would be a wrong set of choices.

Speaker 3 Yeah, the advice I would give here is I would get every dollar, which is our amazing budgeting app, and get control of your budget. within the parameter that Dave just gave you.

Speaker 3 And here's the number you got to come to. I wrote down, you said you're bringing home $9,500 per month.

Speaker 3 I would be looking to get the largest amount of money possible out of that $9,500 that you're putting towards debt per month.

Speaker 3 And I'm just making this up, but start to think in terms of could we put $3,000 a month towards debt? That's $36,000 a year. That's just out of your current income.

Speaker 1 It needs to be more.

Speaker 3 I know, I know, but I'm saying you got to build up to what can I put in? And you've got to put the max amount in.

Speaker 3 And it doesn't feel then so large and insurmountable to where she's trying to go, let's get the house and get a lump sum and say, no, over the next two years or three years, we can knock this out, but we have to do this per month.

Speaker 1 So, Brenda, another way of saying it is the only thing on the list of things you gave me that was smart was the house.

Speaker 1 Everything else was dumb.

Speaker 1 And so we don't want to lose the one smart thing for the dumb things without having pulled out all the stops to save the house, as if your life depended on it.

Speaker 1 And so $4,000 a month, $5,000 $5,000 a month, extra jobs, no vacations, no eating out, no nothing.

Speaker 1 Nothing. Just eat, pay the lights, keep the water on, work all the time, and pay your bills.
And you'll get out of debt so fast, it'll blow your mind how fast you can do this.

Speaker 1 But it's going to still take three hard years of doing that. And sell the stupid car.
And sell everything else. It's in sight.
Anything is sell so much stuff the kids think they're next.

Speaker 1 The dog on eBay and the cat on Craigslist. I mean, move some stuff.

Speaker 1 You kind of got to get in that mindset where nothing matters. And once you've done that for two years, if you run out of steam and you go, I can't do this anymore.
I hate this worse than I hate.

Speaker 1 I hate this house now. All this stuff I've had to do for it.
But, you know, you got pool, you got solar panels, both of which are going to bring squat when you get ready to resell this thing.

Speaker 1 You're going to get burned again if you resell it.

Speaker 1 So if I'm you, huh, I'm going to roll up my sleeves and go after this with a vengeance. And that's what changes everything.

Speaker 3 Absolutely. It's that mindset to go, I can actually do this, but I've got to have a plan.

Speaker 3 And that's why, again, the budget to understand how much money you've been spending. I love that immediately you went right to a very practical, how many times did you eat out last month?

Speaker 3 It's that idea of getting control of how much money we actually have to throw at this problem. Then it doesn't become insurmountable.
Yeah.

Speaker 1 This is doable. Very.
But because the great news is you've got a pretty decent shovel. You got a really big hole, but you've got a pretty decent shovel there.

Speaker 3 Can you resell solar panels? No.

Speaker 1 Like reselling a computer. That's what I thought.
As soon as you plug it in, it's obsolete. The technology is moving so fast on them that

Speaker 1 five-year-old solar panels are what is known as

Speaker 1 dumpster food.

Speaker 1 You know, they just have no, because the

Speaker 1 quality of the technology today versus five years ago, same as an old computer. Right.
It's the same thing. And so, yeah, that's why they're just

Speaker 1 junk.

Speaker 1 Solar panels are great if you can get about a five-year break-even and if you pay cash for them, but not going into debt for them.

Speaker 1 Because you've got to make your money back in five years because at the end of the five years, they're going to be worthless. They're going to be in the way.

Speaker 1 And, I mean, they'll still continue to produce something. But in terms of the value added to your house, nah, not at all.
This is the Ramsey Show.

Speaker 1 Ken Coleman, Ramsey Personality, is my co-host today. Thank you for joining us.
Open phones at 888-825-5225. Amanda is in Knoxville.
Hi, Amanda. Welcome to the Ramsey Show.

Speaker 2 Hi, Dave and Ken. Thank you for taking my call.
Sure. I need your advice.

Speaker 2 My husband and I are exhausted.

Speaker 2 So trying to figure out if maybe starting a business or working from home may may be a better option for us.

Speaker 2 We have about $89,000 in debt.

Speaker 2 And I work full time and I have an hour drive to work every day. And my husband works full time, but he works a night shift from ten at night till six in the morning.
And we have two children.

Speaker 2 My oldest just started kindergarten.

Speaker 2 So we had

Speaker 2 help with drop off and pick up with my mother-in-law, but she has had some health issues and she can't drive right now. So that's put in on

Speaker 2 me doing the

Speaker 2 bedtime routine and the drop-offs in the morning and my husband waking up early to pick her up from school. So we're just exhausted.

Speaker 2 I don't know if that would be a good option for us considering the amount of debt we have.

Speaker 1 What do you make?

Speaker 2 I make 57, but I'm set to get a raise starting October 1.

Speaker 1 Okay. And I'm not too sure about my husband.

Speaker 2 I'm an account stable.

Speaker 1 Okay. And what's your husband do?

Speaker 2 Uh he works in a manufacturing plant. He drives a forklift.

Speaker 1 Okay.

Speaker 3 What would be the business that you two would start? I'm presuming you guys have kicked around some ideas if you ask us that.

Speaker 1 Well, I it would be me.

Speaker 2 Um I have some experience in grant writing and um

Speaker 2 I was thought thought about doing that as a side hustle, um but then I'm thinking, well, maybe a business,

Speaker 2 a full-time business, might be a better option so that I can take care of the kids.

Speaker 1 It's only a better option. It's only a better option.

Speaker 3 I don't know what grant writers make. I presume that you know, but it's only a better option if you're making the exact same amount of money or more with absolute opportunity to grow that.

Speaker 3 Other than that, you're just going to have to press through. This is a tough season of life.
You got debt to pay off.

Speaker 1 Well, the other thing is you could just change jobs. Yeah.

Speaker 1 Or you don't have an hour commute. An hour commute in Knoxville is unusual.

Speaker 1 Knoxville's not that big. It's not that big.

Speaker 2 I live outside of Knoxville. I'm more towards North Carolina, but Knoxville is my closest city.

Speaker 2 I have thirty minutes to the closest town.

Speaker 2 I actually

Speaker 2 and that's if I go straight to work. It's an hour drive.
I have to drop off one child at my mother's thirty minutes away and then to work and drop my mother off at work

Speaker 2 because she can't drive right now. So I'm actually, I want to have my morning commute and then pick up my one daughter on the way home.
So

Speaker 1 I was born in East Tennessee. What, honey, what city are you in?

Speaker 2 Our address is Hartford, where

Speaker 2 the rafting companies are.

Speaker 1 Yeah.

Speaker 1 Yeah.

Speaker 2 Okay. Yeah.
All right.

Speaker 1 Well, the job that your husband has is replaceable in a day position, not an overnight, because he doesn't make a ton of money. Your job is replaceable

Speaker 1 i if you found something there that even if it paid less

Speaker 1 and you got two hours a day back, you could do grant writing as a side hustle.

Speaker 1 Yeah. Okay.
But driving in an hour is part of what the problem is.

Speaker 1 You're burning two hours a day just to go make $57,000.

Speaker 1 And what you're telling me is is that that's not worth it. And him working overnight just to make, what's he making, $25?

Speaker 2 Close to that, yeah. Yeah, yeah.

Speaker 1 And there's no reason to do night shift to make $25. You can make $25 at Target.

Speaker 1 So and then that get him back on a day clock and you on a day clock, that helps. Cut your commute down, that helps.

Speaker 1 But jumping out and just declaring I am now in small business in a small town in the hills of East Tennessee suddenly and give up my you're the major breadwinner in the place, give up the biggest share of your income and hope it works out.

Speaker 1 No, I'm not going to tell you to do that. But I am with you that something has to change.

Speaker 1 Another thing that could change, and this is really painful, but you could move.

Speaker 1 Because you're driving you're basically driving into Knoxville is what you're telling me.

Speaker 2 Uh, Sevir County, yeah. Yeah.
Yeah.

Speaker 3 What would keep you from moving? I heard your response to that as an, eh, it's not an option.

Speaker 3 Why is that not an option?

Speaker 2 Family, land,

Speaker 1 in-laws. That's great.
It's a little hard to chew that up and eat it.

Speaker 1 And right now you're having trouble eating

Speaker 1 and you're calling me completely exhausted, ready to just throw yourself off of a career cliff

Speaker 1 and hope you hit a pad on the bottom. No.

Speaker 1 So

Speaker 1 I think you guys got to put a whole bunch of anything's on the table until it's not. Him changing to a day job, you all moving halfway between, so you get some things back.

Speaker 1 Are you changing jobs to something there in your town? But,

Speaker 1 you know, like you said,

Speaker 1 the life that you've built, you didn't build. It has happened to you by default, and it's tearing your butt up, and you've got to change.

Speaker 1 So you've identified something's got to give.

Speaker 1 And so my suggestion is that you decide what's going to give and that it's wise, meaning that you just quit a $57,000 a year job because I'm worn out and go get

Speaker 1 and open up a job hoping you make and you end up making nothing? No. Open up a small business? No.
I would not recommend that to anyone.

Speaker 1 I would recommend you start your small business as a side hustle, but you don't have any time to do that right now in this current situation.

Speaker 3 Yeah,

Speaker 3 it's fascinating to me, and not picking on Amanda at all, because I've seen this so many times, this idea that proximity to family or some type of family land or some benefit that I perceive as a benefit tied to my family as one of the key reasons why my life is otherwise miserable is so backwards.

Speaker 3 And you've got to get to a point where you go, what must be true for my life to be better?

Speaker 3 And then you stop thinking, well, I have to figure it out in the terms of I got to be in your family or I got to live on this family land.

Speaker 1 Everything's on the table when you're this tired. I agree.
It's quality of life. Bill is in Raleigh, North Carolina.
Hi, Bill. Welcome to the Ramsey Show.

Speaker 2 Hey, Dave, thanks for taking my call. I really appreciate it.

Speaker 1 Sure. What's up?

Speaker 2 Got a quick question. My wife and I bought a spec house last year that was about 40% finished when we purchased it.
And so we had the opportunity to make changes and add things

Speaker 2 with signed change orders with the builder. And we ended up adding about 250K to the price as far as what we paid.

Speaker 2 And then when we closed in December and the sale was recorded, it was recorded as the original sale price and didn't include any of the change orders we did.

Speaker 2 So I'm just wondering, is that accurate or can it include the change orders that we did?

Speaker 1 Why would you want them included? In most states, you record the deed based on the sale price. And that's going to increase

Speaker 1 your closing costs.

Speaker 2 Well, I guess the reason was just when I paid cash for the house,

Speaker 2 and so I was thinking at some point if we sell it, it would look better that

Speaker 2 we purchase it for X amount as opposed to X amount minus 250K.

Speaker 1 No, no, it doesn't affect sale price at all. What affects sale price when you get ready to sell it is the actual value of the house, which includes the 250K worth of stuff.

Speaker 1 So when you get ready to list it five years from now, you're going to say, this this is so many square feet. And by the way, we added all of these things to it when we bought it five years ago.

Speaker 1 And so it's a top-of-the-market appliances or top-of-the-market flooring or whatever it is you put in that increase those things.

Speaker 1 And so make sure you're considering that when we decide what we're going to list it for. And also you let the appraiser know at that time.

Speaker 1 But what you paid for it or

Speaker 1 what the tax rolls show has nothing to do with the actual value I mean case in point would be if you bought it at foreclosure for 50% of value

Speaker 1 you know that doesn't doesn't keep it from being valuable it has it's a hunt still worth a hundred percent even though you bought it at 50 at a deal and in this case it just recorded no it doesn't affect anything at all I wouldn't worry about it not a bit this is the Ramsey show

Speaker 1 Thank you for joining us America. We're glad you are here.
Ken Coleman, Ramsey Personality, number one best-selling author of the book, Paycheck to Purpose, and his new work,

Speaker 1 discovering or finding the work you're wired to do, which comes with the

Speaker 1 get clear assessment to help you figure out what your strengths are and where you need to head with your whole career and money-making endeavors. It's a great thing.
It's just hit a

Speaker 1 bunch of

Speaker 1 bestseller things this week, as a matter of fact. Very cool.
Hey, the average interest rate for a 15-year mortgage dropped from 6 to 5.6 this week.

Speaker 1 And the average this week, I'm sorry, fell to 5.15, the lowest we've seen since February of 23.

Speaker 1 So

Speaker 1 almost 20 some odd months now since we've seen an interest rate that low. So if you purchase a $423,000 house with a 20% down payment on a 15-year,

Speaker 1 the interest rate change is the difference now of

Speaker 1 about $3,000, $4,000 $4,000 a year is what it would save you.

Speaker 1 So, yeah, if you're financially ready, if you're out of debt, you have your down payment ready and you have your emergency fund in place, we're huge on the real estate market, and this is the time to do it.

Speaker 1 It's also a great time to sell because there's a shortage of inventory.

Speaker 1 So it's kind of a weird market in that way, but you need a good, strong real estate agent in your corner that knows what the flip they're doing. High protein, high octane.

Speaker 1 So go to ramseysolutions.com slash agent, and you can find the real estate agent that's ramsey trusted that we have vetted in your area

Speaker 1 so there we go open phones at triple eight eight two five five two two five nicole is in jacksonville hi nicole how are you

Speaker 1 good how are you better than i deserve what's up

Speaker 2 okay so um me and my husband are about to bring a baby into the world in january next year and congratulations

Speaker 2 Thank you. He's had this credit card with his mom

Speaker 2 that he's been having for like the past basically a year and a half. But

Speaker 2 she basically has like joint ownership of his like account and stuff like that because he's in the military. So like when he first

Speaker 2 got in, he was like, oh, well, you're going to oversee everything.

Speaker 2 Just make sure like my bills are paid and stuff like that. But she opened up a credit card and she's ran up like $14,000 since then.

Speaker 2 And

Speaker 2 every time I try to talk to him about it, like, hey, like, what's going on with this? Like,

Speaker 2 you know, is she going to take care of it now that we're bringing a baby into the world? I'm concerned.

Speaker 2 And like, every time she'll ask him about it, like, she completely gets angry or upset and cries because she has lupus and she has like a lot of medical bills too. So

Speaker 2 we're not really sure how to do that.

Speaker 1 How long have you been married?

Speaker 2 We've We've been married for a year and a half.

Speaker 1 Okay.

Speaker 1 And what does he make?

Speaker 1 What does he make, and what do you make?

Speaker 2 He makes

Speaker 2 like $55,000 a year.

Speaker 2 And me, I'm a student, so I'm still in school and everything. I work part-time.

Speaker 1 How old are you? How old are you two?

Speaker 2 I'm 22, and he's 23.

Speaker 1 Okay.

Speaker 1 And me or something.

Speaker 1 Here's the thing. Stop.
You don't have a mother-in-law problem. You have a husband problem.

Speaker 1 Okay.

Speaker 1 So hubby has got to decide now that there's a new woman in his life that's not his mother.

Speaker 1 In the old days, people would say things like, when you get married, you leave your parents and cleave

Speaker 1 to your spouse. Leave and cleave, we called it.
Okay? And there's a boundary drawn. There's a new household that has been established a year and a half ago, and now it has a baby entering it.
Okay,

Speaker 1 and we're not going to blame any of this on the baby, we're going to blame all of this on your husband.

Speaker 1 The day you all got married, it was his job as a man to separate all of his accounts from his mother.

Speaker 1 This is very boyish, not manly, behavior

Speaker 1 that he's engaging in. And so

Speaker 1 if I'm in your shoes, I'm going to sit down very calmly. And I don't care if his mom cries, I'm sorry.

Speaker 1 And I don't care. I'm sorry she has lupus.
But the reason she's crying is because she's ashamed

Speaker 1 and because it works on her little boy.

Speaker 1 So we're going to have to help your husband run down to Walmart and pick up a backbone. They're on aisle three.

Speaker 1 And then he's going to walk in there very calmly and gently and say, Mom, now that I'm married and I have my own family, we're not going to have any more joint accounts.

Speaker 1 So everything is being closed today.

Speaker 1 And you're going to reopen your own accounts, mom, and you need to pay this $14,000 you ran up on this credit card.

Speaker 1 Okay?

Speaker 1 And if she doesn't, you'll have to. Because it's got your husband's name on it.
This is a mistake that he has made.

Speaker 1 And it may cost him and you $14,000 because I got a feeling this woman's not going to pay this. Don't you?

Speaker 1 Yeah.

Speaker 1 Yeah. And you're not to be involved at all.

Speaker 1 You'll become the wicked daughter-in-law. It'll be all your fault because this woman is a travel agent for guilt trips.

Speaker 2 Okay. Yeah, every time I try to talk to her about it.

Speaker 1 Nope, nope, nope. Don't you ever say a word to her about this again.

Speaker 1 But your husband, he needs to throw his shoulders back and become a man

Speaker 1 today.

Speaker 1 Today.

Speaker 1 This is weak and fearful behavior. He needs to become courageous, bold, gentle with his mom.
There's no reason to be mean to her.

Speaker 1 He's the one entered into this arrangement, but it does need to be very thorough and complete immediately.

Speaker 1 It's absurd that a man that is married and has a baby on the way has joint accounts with his mommy. That's ridiculous.
Okay?

Speaker 1 You can play this back for him if you want.

Speaker 1 He needs to square

Speaker 1 his shoulders and walk in there. I don't want him to be unkind to his mom, but it was his duty the week before you got married to separate everything.

Speaker 1 When my kids were getting married, we sat down two weeks before.

Speaker 1 I transferred every single mutual fund that was theirs, every single checking account or piece of savings that was theirs completely out of our name.

Speaker 1 And if they went and did something stupid with it the next day, that's on them because they're now what's known as grown-up adults.

Speaker 1 And so it's not my job anymore to manage them.

Speaker 1 They are now free agents. They're grown people.
And you don't even have to get married to do that.

Speaker 1 But that happened to be the one we made sure that everything was final because I did not want to be interfering with

Speaker 1 my daughters-in-law, sons-in-law, just like Nicole situation.

Speaker 1 This is happening more and more. Yeah,

Speaker 3 the emotional umbilical cord needs to be cut. And this is the reason why is because the lupus, she's my mom, she did this, she's done that.

Speaker 3 And you cannot think rationally when you are thinking emotionally. You cannot have a rational thought at the same time that you have an emotional thought.

Speaker 3 And this tie together, he's never going to act rational until the clear cut has happened. And I really would recommend that he watch this so that he realizes you're not the bad person.

Speaker 1 And you can't be pissed if somebody be pissed at me. It's like a spiritual gift I have.
I'm fine with that. Yeah, cut the cord, man.
His entire Reddit page is devoted to doing that.

Speaker 1 So you can comment sections of everything.

Speaker 3 By the way, this is only going to get worse.

Speaker 1 I want the young man to be in the business.

Speaker 1 Every day this goes on. This is going to get worse.
Every day this goes on. And we're not even going to blame this on the baby.
Oh, no. Not the baby.

Speaker 1 This is something that should have been done before there was a baby.

Speaker 3 Well, I'll tell you, it's the big baby.

Speaker 1 I'm blaming it on the big baby.

Speaker 3 Not the baby in the womb, the baby who has yet to mature.

Speaker 1 Yeah.

Speaker 3 And by the way, mom enabled this. So there's enough blame to go on.

Speaker 1 She didn't enable it. She manipulated it.
She wanted it. She likes this.

Speaker 3 He was a mama's boy to go to the military and say, mom, pay my bills. Yep.
Yep. I'm not blaming that all on him.
Yep. We got to let these kids fly, folks.
Kick them out of the nest.

Speaker 3 That's what the birds do.

Speaker 3 This is a national problem, to your point.

Speaker 1 It's a real problem. It's a real problem.
This is the Ramsey Show.

Speaker 1 Ken Coleman Ramsey personality is my co-host today.

Speaker 1 Today's Ramsey Network app. Question comes from the Ramsey Network app, obviously.

Speaker 1 If you don't know what that is, you can download that app for free and you get this entire show every day on video and audio. So you can turn it into a podcast or a video watch, whatever you want.

Speaker 1 The last segment of this show every day is available only on the Ramsey Network app. So be sure and do that.
And you can do stuff like ask a question there, which is what happened here.

Speaker 1 Taryn sent us a question, Ken.

Speaker 3 My husband and I just had a healthy baby girl in July and are transitioning out of stork mode and back into gazelle intensity.

Speaker 3 In preparation for the hospital bills, we were maxing out our HSA and have used nearly all of that money on covering those bills.

Speaker 3 I'm nervous to stop contributing to the HSA and having no funds for a medical emergency to at least cover our deductible.

Speaker 3 Can you please ease my worries and explain why HSA contributions should also stop?

Speaker 1 Because all savings stops when you're in gazelle intensity mode. That's why.

Speaker 1 Medical,

Speaker 1 car repair,

Speaker 1 everything. We're walking out on the $1,000 tight wire, and we're going to get in attack mode and clean this stuff up.

Speaker 1 But you do need to finish up whatever you're doing through the HSA with the medical bills. I don't even get any problem with that, with this particular set of medical bills.

Speaker 1 But the HSA is an emergency fund only for a medical emergency. It doesn't cover other emergencies.
And so it's like a

Speaker 1 part-time emergency fund, a partial emergency fund. And we don't fund that until we get to baby step three.

Speaker 1 And so,

Speaker 1 no, I would not do that. Now the exception,

Speaker 1 no, there's not an exception. I just would not do that.
I'm trying to think through. No, nope, nope.
Simple, simple. Jacob is in Louisville, Kentucky.
Hi, Jacob. Welcome to the Ramsey Show.

Speaker 2 Hi, Dave. Hi, Ken.
Ken, how are y'all doing?

Speaker 1 Better than we deserve. What's up?

Speaker 2 Hi, so my wife and I, we have a long-term goal to purchase some land outside of Louisville and to build a cabin on it and just make that our full-time home, makes it close to church and keeps us away from honestly the city,

Speaker 2 which we so desperately want.

Speaker 2 But we're trying to see how we can financially do that.

Speaker 2 We found some land we like, we have a price on it, we know how much the house would be to build on it, but I just don't know if we're in a financial spot to do it.

Speaker 1 What's the total package? We're land and cabin right now, sure.

Speaker 2 Yeah, so land is 80,000. I think I can get them down to 70, but you know, we'll say 80.

Speaker 2 And then house is $330,000.

Speaker 1 Okay, so let's call it $400.

Speaker 1 Okay, do you own a home currently? Yes. And what is it worth?

Speaker 2 It's worth $225,000.

Speaker 1 Okay. Is it paid for?

Speaker 2 I have $150,000 left on the mortgage.

Speaker 1 Okay, so you get $70,000 from that if you sell it as a down payment. on your cabin and land of $400,000.
So you would take out a mortgage of $330,000 in that case, am I right?

Speaker 1 Yes. Okay.

Speaker 1 And what's your household income?

Speaker 2 Collectively around $150,000.

Speaker 1 Okay.

Speaker 1 So can you take out a $330,000 15-year fixed-rate mortgage at 5% today

Speaker 1 and it be about a fourth of your take-home pay? I don't think you can.

Speaker 1 Can you?

Speaker 1 No.

Speaker 2 No. I don't think so.
That's what we're thinking, and tell me if I'm being dumb, which I probably am,

Speaker 2 to purchase the land, pay it off, and then sell our home.

Speaker 1 No, it doesn't change anything.

Speaker 1 You can just save up the money to buy land and then sell your home. It's the same exact thing.
Are you out of debt other than the house?

Speaker 2 We have a car loan that's going to go away here in the next week.

Speaker 1 It'll be done.

Speaker 1 And you need to build your emergency fund, and then you need to be putting 15% away for retirement and start saving for land. But you're not ready to do this deal today.
You can't afford it.

Speaker 2 Gotcha. We have 30 already saved up.
Does that change anything on there?

Speaker 1 Well, where's your emergency fund?

Speaker 2 We have about 20,000 in mutual funds and 30,000 in savings.

Speaker 1 Okay. All right.
So how much of your $50,000 should be your emergency fund?

Speaker 2 Which that would cover what and all of that is that?

Speaker 1 Three to six months of expenses.

Speaker 2 Okay.

Speaker 2 20,000.

Speaker 1 Okay. All right.
And so you've got $30,000 then to put between the two things. You'd cash out the mutual fund.
You have $30,000 to put towards it.

Speaker 1 So now instead of $70,000, we're putting down $100,000. When your down payment is enough that your house payment becomes a fourth of your take-home pay, we're fine with that.

Speaker 1 And then you go get a construction loan that buys the land and builds the cabin. You may need to rent for a little while while you're doing that and get your house sold.

Speaker 1 You may have to move twice to make this work, but you've got to get that mortgage amount down to where your house payment's no more than a fourth of your take-home pay on a 15-year fixed.

Speaker 1 And so your take-home pay is, what, $8,000, $9,000?

Speaker 1 Yes. Okay.
If we call it $10, you can take a $2,500 house payment as an example, right?

Speaker 2 Okay, right.

Speaker 1 And I don't think that's going to support

Speaker 1 a $330,000 mortgage,

Speaker 1 but as you save more money, you're going to get in a position to do that. So it may be this particular piece of land gets away.

Speaker 1 But if you go buy the land now now and finance it, you're going to slow down the speed at which you pull this off

Speaker 1 because you've got more debt then to support while you're trying to do all this savings. So

Speaker 1 be careful that you don't do your dreams, Jacob, in such a way that they become a nightmare.

Speaker 1 And so let's just slow down. You'll get there.

Speaker 1 Or let's change the house plan. Build less house on this land.

Speaker 1 Or let's change the construction process and not where it doesn't cost as much. I don't know.
I don't know what you're talking about building on this acreage.

Speaker 1 But,

Speaker 1 you know,

Speaker 1 I think you went shopping for a house or for a piece of land before you were ready, and now you've got land fever.

Speaker 3 Yeah, I remember getting land fever when we first moved here. It's dangerous to keep going and looking at land when you're not ready.

Speaker 3 Just wait till you're ready.

Speaker 1 There you go. It's hard.

Speaker 3 Acknowledge that. That's hard.

Speaker 1 Chris is in Tampa. Hi, Chris.
Welcome to the Ramsey Show.

Speaker 2 Hey, guys. Thanks for taking my call.
Sure. What's up?

Speaker 2 So I have two homes. One is a rental and one is my primary.

Speaker 2 The rental has become more than I want to deal with in my life,

Speaker 2 so much for passive income, right?

Speaker 2 And I've decided to sell it.

Speaker 2 And I guess my question is, I have a financial advisor I work with who's done really well for me throughout my life.

Speaker 2 And he thinks that it would be in my best interest to take the proceeds from the rental and,

Speaker 2 you know, invest the money.

Speaker 2 The proceeds will probably be about $150,000-ish.

Speaker 2 But I feel like I should take the money and put it in, pay down my primary mortgage.

Speaker 1 You are right, your financial advisor is wrong.

Speaker 2 And why do you say that?

Speaker 1 Because as we studied millionaires, 10,000 of them in the largest study study of millionaires ever done, we found that they had two primary things that made them wealthy.

Speaker 1 Steadily investing in their retirement plans, like 401ks and good mutual funds,

Speaker 1 and getting their home paid off. The typical millionaire that we run into, say they had a million and a half, million eight net worth, something like that, the first stage of millionaire status.

Speaker 1 They were sitting on a $400,000 or $5,000, $600,000 paid-for house, and they got $400,000, $600,000

Speaker 1 in their 401k.

Speaker 1 Very, very few of them became millionaires by investing with their financial advisor while keeping debt on their home.

Speaker 1 Because essentially, from a balance sheet perspective, what you stumbled into with your direction, Chris, is that it's as if you've borrowed on your home to invest, and you would never do that.

Speaker 1 Correct. Yeah.
Because by not paying it down and instead investing, it has the exact same mathematical effect as having borrowed on your home in order to invest.

Speaker 1 And that would be ludicrous from a risk management standpoint because now you're putting your home at risk to play footsie with something your advisor wants to do. No, thank you.

Speaker 2 Yeah, okay, cool. I wanted to hear what you guys thought.
I had a feeling you were going to say that.

Speaker 1 Yeah, I'm fairly predictable. I've been saying the same thing over and over and over again for a long time.
My pastor told me the day, he goes, You say the same thing over and over.

Speaker 1 And I said, So do you.

Speaker 1 Well played.

Speaker 1 Yeah. That's a great point.

Speaker 1 For 30 years.

Speaker 1 it's very predictable but it turns out that the data actually backs up this idea of being debt-free is one of the key elements of wealth that's right it's undisputable there we go it's called data yeah it's a fact that this whole fact thing facts get in the way of all this feelings this is the ramsey show

Speaker 1 Live from the headquarters of Ramsey Solutions, it's the Ramsey Show, where we help people

Speaker 1 build wealth, do work that they love and create actual amazing relationships ken coleman ramsey personality number one best-selling author is my co-host today open phones at triple eight eight two five

Speaker 1 two two five elliot is i'm gonna start this hour off in grand rapids michigan hey elliott what's up

Speaker 1 hey how are you guys doing better than we deserve how can we help

Speaker 2 uh well thank you guys for what you do uh my parents became millionaires just following your guys' plan.

Speaker 2 I'm calling because my brother-in-law, he's a little younger than me, he's 24.

Speaker 2 He's a pretty successful guy, crazy hard worker.

Speaker 2 But he's starting to get caught up in a peer-to-peer lending program that unfortunately another family friend is talking him into.

Speaker 2 I know I can't just kind of be like, this is stupid and ended at that.

Speaker 2 Do you guys have any advice? How do I talk to him about this? Because he's trying to make sure it's legit, but he also just keeps getting further into it.

Speaker 1 Well, I mean, the only way you can convince someone

Speaker 1 is to the extent of the quality of your relationship with them. So if you have a deeper relationship with him than this family friend, then you've got the ability to get between them.

Speaker 1 But if you have a casual relationship with him that's about equal to the family friend, you're probably not going to be successful at this.

Speaker 1 In order to hold someone accountable, in order to hold someone accountable and smack them in the back of the head, you have to get your arm around their shoulder.

Speaker 1 It starts with a hug, it starts with a hug. So, I mean,

Speaker 1 those convinced against their will are of the same opinion still. I've had very little luck in my life answering questions that people didn't ask.

Speaker 2 He has asked.

Speaker 1 Oh, good.

Speaker 2 Which is cool. And I've sold it.

Speaker 1 Yeah, He called you and asked you about this.

Speaker 2 Yeah, he was talking with me about it, and I was like, there's a lot of red flags going up, man. And so he's just been sending me things about it.

Speaker 1 And I've been talking about it. Is he trying to sell you and joining it?

Speaker 2 No, I think he's just trying to sell himself and kind of prove he can out discuss me on it.

Speaker 1 Well, now you've got him in a good spot.

Speaker 1 That's okay, then. That's good.
Yeah, so I think that your best shot

Speaker 1 for persuasion is in person, in private. You don't want to embarrass him in front of your sister that he's married to, I think,

Speaker 1 or your wife, is his sister. I don't know, whichever it is, his brother-in-law.
But, yeah, so no embarrassment. This is not going to be over a dinner with the gals.

Speaker 1 And you start. But basically, what I would do is not call him stupid.

Speaker 1 What I found is that

Speaker 1 the stuff that I did that was really stupid when I was 24 came from trying to find a shortcut.

Speaker 1 I was trying to find a way to get rich quick.

Speaker 1 And it's very humorous to think about that loaning money to broke people, broke people loaning money to broke people is going to cause you to get wealthy. That's what peer-to-peer lending is.

Speaker 2 It's even funnier than that because he's borrowing too into the peer-to-peer, but he's also really successful for his age. I think he could easily retire in like 10, 20 years if he wanted to.

Speaker 1 Yeah, but he's not successful in this.

Speaker 1 He's successful because he's ambitious and a hard worker. And he looked over here and went, oh,

Speaker 1 this may look on the outside like it doesn't work, but I'm smart enough. I can do this.
That's what I did. And that's how I lost my butt.

Speaker 3 Yeah, Elliot, I jump in real quick to say, I think since he's opened the door to you and your first response was red flags, I think you got to go back, just as Dave said, one-on-one and say, hey, I've done my research.

Speaker 3 And let me tell you what the data says that the risks are. And I would, in this case, play to the natural, real real fear to the actual high-risk situation.
This is not a manipulation.

Speaker 3 This is, this stuff is really, really risky. Start talking about the psychological and the relationship stuff.

Speaker 3 Start talking about it's not an actual good investment strategy compared to, and start showing like the Ramsey, you know, go to our website.

Speaker 1 Basically loaning money to people no one else will loan money to. Yeah, you got to make the case.

Speaker 3 But make the case. Kind of dumb.
But it's got to be data-based, right? And say, man, this is risky. Here's why.

Speaker 1 And the other thing I would do is I would appeal to him to say, okay, what, you know, let's study wealthy people.

Speaker 1 How many of them used shortcuts to get there? They really don't. They use their innate work ethic and go-getter mentality.

Speaker 1 In other words, I think, Elliot, that your brother-in-law's secret sauce is him, not that he hasn't found the right thing to accelerate it yet. He's the secret sauce.

Speaker 1 I want him to hear from you that you think he's amazing and that this is a total waste.

Speaker 1 It would be a waste of his time.

Speaker 1 He's going to get,

Speaker 1 he's got the ability to go far and go fast if he stays away from things like this.

Speaker 1 Yeah.

Speaker 1 Because of who he is. So you've got this admiration of him until he lost his mind on this one thing, right?

Speaker 2 Yeah.

Speaker 2 Yeah, pretty much. I'm looking at him like, man, you've been doing so well up to date.

Speaker 1 I would say that over and over and over again.

Speaker 1 His secret sauce.

Speaker 1 his secret sauce is him. He's the secret sauce.
It's not that he needs to find some, you know, the multi-level people all go, you need to find a vehicle. No, you don't.
You're the vehicle. You know,

Speaker 1 I need to find a system. No, you don't.
You're the system. Live on less than you make and save money.
Work your butt off. That's the system.

Speaker 1 And that's the one that the wealthy people use. They don't go, oh, I found a Bitcoin.
There we go. Look at that.
It made it easy. Whew, I found an algorithm where I can do lotto tickets.

Speaker 1 No, you didn't. Okay.
And so,

Speaker 1 I mean, this is what get rich quick is based on. That's right.
It is based on desperation or greed.

Speaker 1 And it always, in either case, requires a level of pride. And pride is what comes right before you fall.
I did every one of these stupid butt things.

Speaker 1 Every part of my story of losing everything in my 20s is because of those exact things.

Speaker 1 Because I thought I could do nothing down, flip real estate, and get away with it because I was so smart.

Speaker 1 And everyone that does that eventually goes completely freaking broke.

Speaker 1 All the guys that did it when I did it are all either out of the business or they paid off their debt. One of the two.
They either went broke.

Speaker 1 doing nothing down flip this house before there was chip and joanna they weren't even born yet okay and so this but it's this stuff has been around forever but it's it's all rooted in desperation or greed.

Speaker 1 In your brother-in-law's case, it's greed. That's right.
Not filthy greed, like horrible, nasty person greed. Just like, I think I can do this because I'm smarter than the average cat.

Speaker 1 The rules don't apply to me because I'm smart and I work hard and I'm ahead of the game.

Speaker 3 There's something about all of these things that I want to make sure the audience catches what Dave said earlier. Every shortcut that exists always requires you to suspend common sense.

Speaker 3 And the reason it does is because you feel like it's that emotional, I figured out the hack and I'm going to short circuit the system. And so your emotion takes over.

Speaker 1 So the law of gravity doesn't apply to me.

Speaker 3 Exactly.

Speaker 1 That's emotional. Flap your arms, boy.
You're about to hit the sidewalk.

Speaker 1 Law of gravity applies.

Speaker 2 Boom.

Speaker 1 Put your hands on your little print right there on the sidewalk. I know, man.
That's exactly what I did. You know,

Speaker 1 I understood intellectually the dangers dangers of leverage,

Speaker 1 but I thought I could beat it.

Speaker 3 That's the classic example.

Speaker 1 Flap your dad gum arms and hit the sidewalk. That's it, man.
The law of gravity does not apply to me.

Speaker 1 This is the Ramsey Show.

Speaker 1 Ken Coleman Ramsey Personality is my co-host today, number one best-selling author. The best way to make the most of your money is by doing it on purpose.

Speaker 1 Most people don't win with their money because we can't can't get them to do it on purpose.

Speaker 1 If you will simply make the money that you have behave and go towards your goals, you will start hitting your goals.

Speaker 1 But most people kind of wander along half asleep and then wake up at retirement going, oh man, oh man. Hope the government, which is well known for its ability to handle money, will take care of me.

Speaker 1 Bad idea. You need a plan.
A plan monthly is called a budget. The best budgeting app on the planet is called Every Dollar because you give every dollar an assignment.

Speaker 1 Every dollar of your life is put to work. Download the Every Dollar budgeting app for free in the App Store.

Speaker 1 Tens of millions of people, not exaggerating, are using this app now.

Speaker 1 Yeah,

Speaker 1 and you're not. What's up? Every dollar.
It's free in the App Store or Google Play. Check it out.
And of course, you can click the link in the description if you're listening on YouTube or a podcast.

Speaker 1 We'll take you straight in in there.

Speaker 1 Josh is in Charlotte, North Carolina. Hi, Josh.
How are you?

Speaker 2 I'm anxious, Dave. How are you?

Speaker 1 Oh, okay. Better than I deserve.
What's up?

Speaker 2 Well, my wife is a contract worker. She's

Speaker 2 doing HR recruiting, and the contract that she's with is slowing down dramatically to the point where signs are on the walls that she may be losing her job in the next month or two.

Speaker 2 We are pushing hard to get out of debt,

Speaker 2 have a medical loan from earlier this year that we are hoping to be paid off by the end of this year. But our concern is with the

Speaker 2 proposed incoming doom

Speaker 2 on the horizon, should we forego hitting debt hard to switch to, oh no, we need to start saving for a few months?

Speaker 1 What I can't tell here is

Speaker 1 you gave a lot of metaphors and dramatic things, but no one has ever said anything to her about this other than she's observing things around her and feels like this is coming to a close.

Speaker 1 I think she needs to go in and get some actual input from the leadership team.

Speaker 2 So the leadership team has told them that with the way things are slowing down, they don't know how much longer their contract is going to be valid for.

Speaker 3 But I would have another follow-up question to that. Okay.
So how long is the current contract going to last? In other words, is this a reset or

Speaker 3 whoever's paying that contract can close that contract out at any time? I just get really detailed on that.

Speaker 3 But real quick, Josh, I would immediately, if I was in your situation and it was my wife in her situation, I would have her immediately looking for replacement work.

Speaker 3 I wouldn't necessarily pause on the debt elimination. I'd get real aggressive to have some options out there while having this conversation.

Speaker 1 Let me tell you this. If this is bad enough that you need to stop all progress in your financial plan and pile up cash because she's going to lose her job, then she needs to go get another job.
Yeah.

Speaker 1 Right now.

Speaker 1 Is it that bad?

Speaker 2 It's starting to see that. They did a massive

Speaker 1 you sound like a worrier. I can't tell if you're worrying worrying or if this is really happening.

Speaker 1 It's starting to... No, it's not either.
Is this bad enough that she's ready to quit her job and go get another one?

Speaker 2 It's bad enough that we ended up going to urgent care due to stress-related illnesses yesterday.

Speaker 3 Okay, then happen to this situation.

Speaker 1 Yeah, then don't stand around and wait on this to happen to you. Be proactive.
Yes, stop everything, start piling up cash and put her in an aggressive job hunt.

Speaker 1 She needs a new job in two weeks.

Speaker 1 And then she needs to quit

Speaker 1 and take the new job.

Speaker 1 No discussing this. This is hard cold break.
These people have said, we're about to poop on you. So dodge the poop.

Speaker 1 Okay? Fair enough. I mean, get after it.

Speaker 1 They told you it's coming.

Speaker 3 Dodge. I'm telling you, when I hear about a storm coming, I start to make adjustments to the storm.

Speaker 1 We don't go, well, it could hit us.

Speaker 3 It may not. If it's dangerous, this is dangerous financially, address it.
Get out in front of it.

Speaker 1 Ken and I are the two guys standing in the front yard watching the tornado. Keep that in mind.

Speaker 1 That is true. That was the wrong thing.
That's both of us. All right.
Just keep in mind. That's who you're talking about.
I am ready, but I'm waiting until the last time.

Speaker 1 You can still get out of the way. Right.

Speaker 1 Olay, right?

Speaker 3 I never worry about Dave when a storm is coming because I know he's.

Speaker 1 No, right where he is.

Speaker 1 I'm going to to be walking right straight into it. Jennifer is in New York.
Hi, Jennifer. Welcome to the Ramsey Show.

Speaker 5 Hi, Dave. Hi, Ken.
I love you guys. I'm hoping that you can help me with an issue.

Speaker 5 My husband and I would like to purchase a one-acre lot of land, but it's currently owned by a dissolved LLC, and there is an $87,000 tax lien on it owned by the town, which exceeds the value of the land, which is most likely between 30 to 50,000.

Speaker 5 I have reached out to a couple lawyers, and they have let me know this is beyond their scope. They've never seen like a weird situation like this.

Speaker 5 And I thought, who better to help me than the two-year-olds?

Speaker 1 You can't get a clear title unless the tax lien is cleared.

Speaker 1 So,

Speaker 1 unless the town will accept value,

Speaker 1 appraised value, you're about to overpay for this piece of ground. No, thank you.

Speaker 2 Right.

Speaker 1 So, I do, is this in New York State?

Speaker 5 This is in New Jersey.

Speaker 1 In New Jersey, okay.

Speaker 1 Some

Speaker 1 states,

Speaker 1 I don't know about New Jersey, sell tax liens

Speaker 1 to individuals. They auction them off, and you buy them not for the amount of the tax lien, but less than the amount of the tax lien.

Speaker 1 And then you can take that tax lien and foreclose on the property and have clear title.

Speaker 1 So if Jersey sells tax liens, Tennessee does not.

Speaker 1 If you were in Tennessee, you would have to go into the city municipality, go in to talk to the, if it's a small town, the mayor, if it's otherwise, you talk to the tax assessor and say,

Speaker 1 you have more owed on this property than it is worth. When you foreclose, you're not going to get all of the tax stuff out of this.

Speaker 1 Can we negotiate down to actual appraisal?

Speaker 1 And then you've got to figure out why the current people that gave up and walked away would bother to sign because they're not going to get anything out of this.

Speaker 1 Right. So I don't think you're getting this piece of land, probably.
It's probably a whole lot more trouble than it's worth, sounds to me like.

Speaker 1 But it's worth poking around and learning about, I guess, if you're interested in it.

Speaker 3 Quick research says you can do it in the tax. It does allow for it in New Jersey.
I don't know what the process is, but you can do it.

Speaker 1 You can buy a tax lien. They do allow that.
Okay. Well, talk to the city and find out what you can do to buy that tax lien.

Speaker 1 If you buy the tax lien, then you foreclose on the tax lien. The former owner would have to pay you $87,000.
You paid $60,000 for it, okay?

Speaker 1 And they would have to pay you $87,000 to stop your foreclosure.

Speaker 1 Now, the other thing you need to learn about, then, Jennifer, if you want to keep typing in there, Ken, you can, does this have a right of redemption?

Speaker 1 Some tax liens have a two-year right of redemption.

Speaker 1 So you could go through all this foreclose, and they can come back anytime during that two years or one year or whatever the right of redemption is and redeem it.

Speaker 3 Okay, the owner of a property or legally interested party may redeem at any time as long as foreclosure has not begun.

Speaker 1 Okay, that's not a right of redemption then. That just stops the foreclosure, okay? But after foreclosure, some of them have an additional, and you need to make sure of that.

Speaker 1 So, what I would talk to, Jennifer, is if you're going to go buy the tax lien,

Speaker 1 before you do that, talk to a title company about what it's going to take for you to get clean title and buy title insurance

Speaker 1 okay okay but my guess is if you can buy the 87,000 title what's the property worth

Speaker 5 it's probably only worth 30 to 50 so we have how are you interested in it yeah

Speaker 5 because so it is a lot that is directly next to our property and

Speaker 5 it was from a builder who actually built our house on one acre and then he I think went bankrupt during the process sold off a bunch of the land to the town but they must have had an oversight and not realized that this piece of land didn't transfer to the town.

Speaker 5 So we're trying to purchase this.

Speaker 1 Perfect. Yeah, I would go in and try to buy the tax lien for less than the value of the property and then do the foreclosure.

Speaker 1 Or if the builder will just sign it over to you as a favor and waive any rights of redemption, you can have clear title tomorrow. But you don't want to pay 87 for 30.

Speaker 1 This is the Ramsey Show.

Speaker 1 Ken Coleman, Ramsey Personality, is my co-host. We invite you to stop by and hang out in the Ramsey Solutions lobby anytime you want.
We do this show from 1 to 4 Central Time every day.

Speaker 1 And we can come in and sit down for free. We've got homemade chocolate chip cookies and coffee.
It's all on us. Smells like Mama's Kitchen in here, not corporate America.

Speaker 1 And we've usually got 50 to a couple of hundred folks sitting around watching us do the show, and they can hear the show and all that.

Speaker 1 Also in the lobby, we have a little stage that we call the debt-free stage. On the debt-free stage is Quincy.
Hi, Quincy. How are you?

Speaker 4 Good. How are you, Mr.
Ramsey? How are you, Mr. Coleman?

Speaker 1 Good. Better than we deserve, sir.
Where do you live? I live in St.

Speaker 4 Louis, Missouri.

Speaker 1 Very cool. Well, welcome to Nashville.
And how much debt have you paid off, Quincy?

Speaker 4 Paid off $55,000.

Speaker 1 Good for you. How long did that take? 36 months.
Good for you. And your range of income during that three years?

Speaker 4 $24,000 to $85,000.

Speaker 1 Good for you. What do you do for a living?

Speaker 4 I'm a business consultant.

Speaker 1 Good. Very good.
All right. What kind of debt was the $55,000?

Speaker 4 It was a rental property and two cars.

Speaker 1 You paid off a rental property for $55,000? I did. Sounds like a fine piece of property.

Speaker 4 So the rental property, I had $11,000 left on it. And the two vehicles, I had a truck, which was worth $15,000 at the time.

Speaker 1 More than the rental property.

Speaker 4 More than the rental property. And then I had my Cadillac, which I had just purchased at the beginning of that year before when I started my debt-free journey.
That was around $29,000.

Speaker 1 So what's the story? What happened? How'd you run into Ramsey and what made you decide to clean all of this up in just 36 months? Because you leaned in, man. Congratulations.

Speaker 4 Thank you. I appreciate it.
So before I even knew of Financial Peace University or Ramsey Solutions, we were on the same page and I didn't even know it.

Speaker 4 Before in In high school, I had a negative experience with debt, with credit cards. And so when I moved out of my mom's house, that's when all of that came to light.

Speaker 4 And paying off those two credit cards that I had no control over at the time, it really frustrated me.

Speaker 4 And so I started learning about finances and APR and interest rates right out of high school, entering into college. And then I didn't like college.
So I had, thankfully, I had got a scholarship.

Speaker 4 I gave that back, and I decided to join the military to just give me some stability until I decided to

Speaker 4 do what I wanted to do next.

Speaker 4 And so, when I joined the military, they sent me to El Paso, Texas.

Speaker 4 And the home church that I found in El Paso offers FPU.

Speaker 4 And so,

Speaker 4 I learned more about Ramsey Solutions and learned more about financial literacy when I started FPU. And from there, I mean,

Speaker 4 my coordinator mr. Carlos and his wife Mr.
Carlos is with us today but they were spiritual mentors they were financial accountability partners to me and they led me through

Speaker 1 they led me through the course and I learned so much more so what branch of the military Army and how old were you when you landed in El Paso I was 20 20 wow 20 Well, thanks for serving our country, guys.

Speaker 1 Yes, thank you. And thank you, God, for setting a mentor like Mr.
Carlos right on a 20-year-old young dude in the Army. Completely changed the trajectory of your life, didn't they?

Speaker 4 Most definitely.

Speaker 1 Yeah, that church, way to go, what church is this?

Speaker 4 Hope City Community Church in El Paso, Texas.

Speaker 1 Way to go, Hope City. You're living out your name, baby.
Most definitely. You just laid out and you laid out hope right here and did it.
That's exactly what's supposed to happen.

Speaker 3 That's exactly right.

Speaker 1 Wow. You love somebody enough to get all up in their life and help them change the whole trajectory of everything.

Speaker 1 And because you're looking at stuff that they're bringing you going, oh, man oh man yeah i can just see what i can see it happening wasn't it most definitely yes sir man i love this that's powerful that's powerful dude you you got a debt to pay back to young guys later on you got to be mr carlos the rest of your life man you you this is awesome i love it i love it too so what was uh what was the most difficult adjustment after you so you're watching fpu you're engaged in the class and here you are a young guy in the military, probably surrounded by a lot of other young guys with the first time they've ever had any money in their pocket.

Speaker 4 Most definitely.

Speaker 3 What was the big challenge for you to begin to adjust your lifestyle after you learned all this?

Speaker 1 After, well,

Speaker 4 it wasn't much of

Speaker 4 adapting to the principles because these are all godly principles, and I grew up in the church. So that part I understood, and I was very excited for

Speaker 4 what I really needed to adjust with was making sure that I stayed focused, speaking that there were young people around me and even older people around me. We were talking sergeants or, you know,

Speaker 4 first class, sergeant majors that are stunting, so to speak, like they have everything together. And me sitting over here eating on beans and rice.

Speaker 4 And

Speaker 4 when I found out what moonlighting was, I became a travel CNA. I got that certification while I was in the military and I got the document signed by my commander.

Speaker 4 And because of that, I was able to work overnight shifts, which were, you know, that helped, and that's what allowed me to be able to go full force with, you know, paying off my vehicle code at the time.

Speaker 4 It jumped my income up as well as, you know, when I started my business after I got out the military. And so I.

Speaker 1 So you're how old now?

Speaker 4 I'm 25.

Speaker 1 How does it feel to be free, man?

Speaker 4 Oh,

Speaker 4 it feels great.

Speaker 1 You got to feel so empowered. You got to feel like you got muscle.

Speaker 4 Well, it's not just that, Mr. Ramsey, but it's more so I have a responsibility to pass it forward.

Speaker 1 Yeah, that's what I've already called that out. Yes, sir.
Yeah, but I'm just saying,

Speaker 1 you're incredible. I'm so proud of you.
Well done. What a sharp young dude, man.
Glory to God. Yeah, amen.
Glory to God, Mr. Carlos, and that church, man.
That's good stuff right there.

Speaker 1 That's the way it's supposed to be.

Speaker 1 You got a young private out there left home for the first time, doesn't know squat, is listening to us right now. What do you tell him?

Speaker 4 Well, I would tell that private specifically to live below their means and to make sure that

Speaker 4 they understand who they are.

Speaker 4 And if they don't know who they are, focus on who they are and whose they are because that ultimately will help them not have to feel that pressure and that burden of living like everyone else.

Speaker 1 Yeah.

Speaker 4 Because it's not worth it.

Speaker 1 Shoot. You nailed it right there.

Speaker 1 One of the things we find among people that are able to build wealth and you discovered it and are walking in it and you just gave that same advice back is that you have to lose the need to impress others yes sir when you quit caring what other people think building wealth becomes very easy Because you really need, you spend almost no time on Instagram.

Speaker 1 Very true. Because you don't care what anybody thinks.
You're not posting, look at me, look at me, look at me, because you don't care what people think.

Speaker 1 I'm on beans and rice. I'm going to get my overnight.
I'm going to get my CNA. I'm going to jack this to $84,000 a year.
I'm going to get done here in 36 months. Mic drop, man.
You're incredible.

Speaker 1 Very cool. Very cool, man.
Neat, neat story. I love it, Quincy.
Very, very well done. All right.
So

Speaker 1 that advice, you would just teach them to, yeah, that's good advice. Very good advice.
What am I missing?

Speaker 3 Nothing. I just think if you're going to

Speaker 3 share for people what it feels like now on the other side of this, you're about ready to do your debt-free screen.

Speaker 3 In about 20 seconds, seconds, what does it feel like now as you're looking at your future?

Speaker 4 It feels bright is such an understatement.

Speaker 4 I was purposeful before, but it's even more empowering. And it feels like that I'm creating a legacy and breaking generational curses like never before.

Speaker 3 Is the American Dream live and well to you?

Speaker 4 It is live and well.

Speaker 1 Thanks again for your service. Proud of you.
Way to go to that church and to Mr. Carlos.
And that's just beautiful. By the way, he's here, right?

Speaker 3 Is that Mr. Carlos? This is Mr.

Speaker 4 Carlos. And then this right here is Mr.
Allen. Mr.
Allen, thankfully, was able to make it because he lives here in Franklin, Tennessee. But he's the one that sold me my first house.
Oh, wow.

Speaker 1 At 19 years old.

Speaker 4 Oh, very cool.

Speaker 1 That's fun. Good, good.
Way to go. All right, Quincy from St.
Louis. $55,000 paid off.
What a great story. In 36 months, making 24 to 85.
Count it down. Let's hear a debt-free scream.
Three, two, one.

Speaker 1 I'm debt-free.

Speaker 1 Yeah.

Speaker 1 That is what you call transformation. He will not go back.

Speaker 3 He will not.

Speaker 1 Well done. This is the Ramsey Show.

Speaker 1 Today's question of the day is brought to you by Y ReFi.

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Speaker 3 Today's question comes from Andre in Indiana. I'm being managed out of my job at my current employer.

Speaker 3 When I realized what was happening, I got ahead of it and have turned in my resignation, so I won't have a termination on my employment record.

Speaker 3 I have several interviews lined up, and I'm not worried about finding another position. My question is: how should I approach obtaining a letter of reference from my current employer should I need it?

Speaker 3 Well, you're going to approach it now before you leave leave the building, number one.

Speaker 3 Number two, you're going to approach it with some gratitude and humility and just say, hey, I appreciate this opportunity to be here.

Speaker 3 And I would love if you feel comfortable being a reference for me and give me a reference letter upon request. Are you comfortable with that?

Speaker 3 It's just a man-to-man conversation or man-to-woman conversation. And that's about all you can do there.
And hopefully, you've left well.

Speaker 3 We don't know what the situation here is, but I'm such a proponent for people leaving well.

Speaker 3 Even if you feel like you're not supposed to be there anymore, even if you feel like you've got some tension, you feel like maybe it wasn't the best situation for you, leaving well and not burning that bridge is always the right way to go because you have to assume that any future employer is going to call your past employer.

Speaker 3 And so humility and gratitude in class would be the three ingredients in the ask. And by the way, with every remaining second you have at that place before you leave, act with class.

Speaker 1 Yeah, smile, act with class, do everything. So

Speaker 1 most employers, Andre, do not give references on farmers because of the liability. Right.

Speaker 1 And so we don't. If someone calls here, the only thing we'll confirm is that they worked here between this date and that date.
And that's the only thing we'll tell you.

Speaker 1 We won't say whether they're awesome or not.

Speaker 3 I didn't realize that. That's good for me to know.
I did not. I've heard of that.
I didn't know that. Because

Speaker 1 we don't want to get sued. Right.

Speaker 1 Because we referred them or told, or told somebody, you know, this guy's,

Speaker 1 he wasn't good. Right.
And then you turn around and

Speaker 1 you get all this other stuff on you. So,

Speaker 1 yeah, we just, and that's not that unusual in the employment market, we've learned. When we're trying to check references,

Speaker 1 it's tough to get people to actually

Speaker 1 give you a reference. I want to sidestep, Ken.
I want you to coach for a second here, and I want to join you in it.

Speaker 1 Let's pretend that Andre, I'm going to make up something for Andre. I don't know anything about him, so this is all pretend.
Sure. Okay.

Speaker 1 Let's pretend he's 26, and this is his second job,

Speaker 1 and he says, I'm being managed out of my job. Now, if you were working at Ramsey, we don't manage people out of a job.

Speaker 1 We do

Speaker 1 manage them. if they're not competent.

Speaker 1 We're going to talk to you about it and help you work on your competence.

Speaker 1 We do manage you and talk to you about it and create uncomfortable conversations if you're not handling your relationships with others inside the building well, if you're being a twerp. Okay?

Speaker 1 And so

Speaker 1 being the potential employer of someone in this situation,

Speaker 1 I wouldn't take the position I'm being managed out. Yeah.
Unless you've got a pure political situation going on.

Speaker 1 I mean, just because someone tells you to suck it up, buttercup, and get better, that is not being managed out.

Speaker 3 That's correct. So if I were coaching, Andre, I would ask a lot of detailed questions.
What does that actually mean?

Speaker 3 And to the best of my ability,

Speaker 3 be able to discern, well, you're not being managed out, or maybe you are. Now, what it's going to look like in this case, if we're assuming what he's saying, is that someone is basically being

Speaker 3 making you as uncomfortable as possible, not in a way of leading you for growth and having an uncomfortable conversation with your growth in mind, but actually being a turd to you to get you to quit because they don't want to fire you.

Speaker 3 Does that happen? It does.

Speaker 1 But in this case,

Speaker 3 that's bad leadership. So I would be asking enough questions to find out what's really going on.

Speaker 3 And to your point, if they are holding you to a standard that they hired you to keep, you aren't being managed out. You're being held accountable for what they're paying you for.

Speaker 3 So I would be diving into what's really going on and then coaching from there. And in many cases, and I'm going to say this.

Speaker 1 Just because you're uncomfortable

Speaker 1 doesn't mean you're being managed out.

Speaker 3 That's correct. Or held to a standard.
Right. And so what we've got to determine, we're seeing this a lot with the younger generation.

Speaker 3 Accountability is really, really hard.

Speaker 1 We had one a while back that just couldn't seem to get to work on time, wander in an hour late.

Speaker 1 And we say, you know, well, you're creating stress by. Yeah, that's kind of like what we do here.
We create stress for you. You need to be here on time.
If that's stressful, just suck it up.

Speaker 1 I mean, that's,

Speaker 1 I know, I'm sorry about your anxiety. Get your butt to work on time, okay? That's what we do.
And so, and that's about how it would sound.

Speaker 1 I mean, we might be a little kinder than that, but, you know, it's a pretty simple thing. We open the building at a certain time, and you need to be here by then.
Yeah.

Speaker 3 You have to reframe that. It's not creating stress, right?

Speaker 1 I'm not creating stress, but it's like anyone that ever told me I'm not perfect in the apple of my mother's eye now is managing me out. Exactly.
That's

Speaker 1 just a bunch of crap.

Speaker 1 That's what I'm saying. Yeah.
Okay. So now there's two possibilities.
You're being that.

Speaker 1 I'm not saying that Andre is, but if you be careful when you're using a phrase like I'm being managed out, you are taking the position of victim. And you might not be the victim.
That's right.

Speaker 1 That's what I'm saying.

Speaker 1 You might be the victim.

Speaker 1 You might be a bunch of political junk, and they're moving the chest pieces around, trying to knock you over and get you out because they don't want you there, and they don't have

Speaker 1 the backbone to just fire you. Right.

Speaker 3 You know, the metaphor I would use here, Dave, is, are you being coached or are you being mistreated? There you go. And a coach, and I usually return to sports because I grew up playing sports.

Speaker 1 This coach does not mean you're being mistreated.

Speaker 3 Yeah, you know, I watch these NFL training camps. These are millionaires, and the coach is pulling them off the field and they are coaching them up.

Speaker 3 They're getting out those little Microsoft pads on the sideline and they're showing these young quarterbacks that are franchise quarterbacks. Here's what you did wrong on this interception.

Speaker 3 That's not mistreating that kid. That is coaching that kid on what they expect of them because they're paying them millions of dollars a year.
And the same metaphor holds true in the workplace.

Speaker 3 Is your leader coaching you

Speaker 3 or are they mistreating you? Yeah, that's true.

Speaker 1 There's a lie. That's exactly what I'm saying.

Speaker 1 exactly what i'm saying because we spent a lot of time and money to hire you yeah get you in here that's that's right and so we're not going to manage anybody out um yeah it costs you more to replace them exactly we're going to try to help you make it that's exactly right but that may involve discomfort and it should it usually doing something you've never done before or something you suck at and you've got to get better is discomfort it's not comfortable it's outside your comfort zone a quarterback feels really uncomfortable when he runs off the field after throwing an interception because there's 75,000 people that are mad at him and his head coach.

Speaker 3 But guess what? That's the price of admission.

Speaker 1 That is the ticket to the BME. Yeah.

Speaker 1 So step it up. Yeah.
So again, I think that's a good clarification. Are you being coached? And if you are, expect discomfort because that's what's called growth.
That's right.

Speaker 1 And you're moving up and in. If you're being mistreated, then you're being managed out.
But either one of those could fall under this phrase.

Speaker 1 I don't like the phrase is what I'm saying.

Speaker 3 It feels very victim. I felt the same thing when I saw it, you know?

Speaker 1 Yeah, but it could be that he's just, he might be the victim of some toxic politics. It very well could be.

Speaker 3 That happens all the time. There's no question there being that.

Speaker 1 Because spineless leaders will do stuff like that that's passive-aggressive rather than just fire somebody. That's right.
So you won't have that trouble here.

Speaker 1 We're going to tell you this is what we're doing. If it doesn't work, we're going to tell you it didn't work.

Speaker 1 We're not scared.

Speaker 1 We're not afraid. And we're not mean.
And we're not unkind.

Speaker 1 So, hey guys, for all of you listening to the show on YouTube or the podcast, it's about to end, you can get the entire show, including the next segment, on the Ramsey Network app, which is free.

Speaker 1 Download it in the App Store or Google Play. You can get the full video or audio podcast production, either one of the whole thing, but certainly the last segment every day.

Speaker 1 So click in the show notes and check it out. We'd love to have you join us with the Ramsey Network app in the App Store.
The whole thing's free. We're not charging a thing for this.

Speaker 1 This is the Ramsey Show.