Don’t Let Money Drama Keep You Broke

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Normal is broke, and common sense is weird.

So we're here to help you transform your life.

From the Ramsey Network and the Fairwinds Credit Union Studio, this is the Ramsey Show.

Ken Coleman, number one best-selling author, Ramsey personality, host of the big hit on the Ramsey Network called Front Row Seat.

He's my co-host today.

The phone number here is 888-825-5225.

Pat Samboise, Idaho.

Hey, Pat, how are you?

Hi, Dave.

Thanks for talking to me.

I'm the executor for my dad's estate.

About six months after his death, I received a letter looking for the person who could act on his behalf.

I looked up the company, and it's a debt collection agency

primarily focused on collecting debts related to deceased individuals.

Wow.

They utilize technology.

I've never heard of this either.

They utilize technology like probate finder on demand to identify and contact the personal representatives of the state to recover unpaid debts.

So my dad absolutely did not have any debt.

He was Dave Ramsey while Dave was running around in diapers.

He didn't borrow money.

I do know that there is

just from looking at unclaimed property, I do know that there is a gentleman who lived in the same metro area as my dad for many years who had his exact name

first name, middle initial, and last name.

So I'm thinking, I don't know, maybe they're looking for that guy.

Here's the deal.

I don't even want to talk to them.

I don't want to spend time on this.

I don't know if you need to know the name of the company, but how worried do I need to be?

Well, I mean, is the estate settled?

The probate is finished, but it's not closed yet.

I haven't closed it.

Okay.

What is lacking for it to be closed?

Nothing.

I was just doing some final insurance policies and transfer of his property to my mother.

So that is done.

I can close the estate at any time.

As far as I know, there was nothing that came up during the probate.

So your mom's still there and she's sitting with whatever assets that they had.

Yes.

Okay, good.

Okay.

Well,

I don't know Idaho law, and I'm not an attorney anyway, even if I did.

But

most states have a period of time that a creditor can file a claim against an estate

before, after, or during the probate being open, okay?

And I don't know what yours is, okay?

So if they didn't, I'm probably good.

Probably.

From a legal, practical standpoint, or from a legal standpoint.

From a practical standpoint,

these folks,

they have one little thread that they're hanging on, and they're going to pull that thread and pull that thread and pull that thread.

They're eventually going to end up hassling your mom, probably.

So from a practical standpoint, I would put them down.

I'm low power of attorney, so they won't get much further than that.

I know, I know, but if they start calling her,

Start mailing filling up her mailbox with stuff.

I don't think there's a legal issue.

I don't think they've got a claim.

You don't think they've got a claim.

They're probably outside the notice of meeting the creditors period of time, all that kind of stuff.

But that doesn't keep them from driving everybody in the soup crazy, okay?

So I probably would invest a few minutes and just shut them down.

How do I shut them down?

I would just call him and say,

he did not have any debt with you.

I'm the executor of the estate.

And you can give him a social security number, send them a copy of the death certificate.

None of that hurts you in any way.

And,

you know,

I'll give you the last four digits of Social Security numbers, see if it matches with what you think you're hunting.

But I think you're hunting this other guy, and you need to stop.

And if you don't provide me proof of, written proof of debt and you don't stop, I'm going to sue you under the Federal Fair Debt Collection Practices Act because you're violating it now that I have told you that I am demanding proof of the debt.

Can I just demand proof of the debt without providing them anything to start with?

Well, I've done the last four-digit Social Security number.

What I'm trying to do is, in case there's two brain cells on the guy you're talking to, if they happen to rub together, you want to give him a way to go away.

Oh, it's not him.

I got to go the other way.

Okay, right.

But

in case they think, but the problem is some of these companies, and what you need to be prepared for is, and I think you're kind of already there, is they will try to collect from someone that they know is not legitimately the debt just by hassling them.

And that's what I'm worried about.

Yeah.

Well, I'm not worried about it because you're going to shut them down.

We're not going to talk to them anymore.

Okay, we're going to block them.

And if they continue to pursue,

I would have an attorney send them a letter under the Federal Fair Debt Collection Practices Act.

Because they're in violation of federal law if they continue to pursue after you show them that it is not his debt and you give them the last four-digit social security number and they don't provide proof of debt.

The other thing that's going to come up is they probably don't have proof of debt.

They probably bought a line item on a spreadsheet.

A lot of debt buyers don't get the actual documentation on the debt.

They just get a line item, point of last contact, some details about a name, whatever the file's got, and it's just a whole list of line items.

It's not like they have a file on him.

So

point being, I don't think they can provide proof of debt.

But I'm going to ask because I'm going to make one or two phone calls with these people and try to, in a civil way, make this go away.

But if you determine that, A, they're trying to collect from somebody, just anybody, and they just think they can hassle you, then just pound their face, right?

And then,

or B, that they cannot provide proof of debt and they won't go away.

What I'm more than anything trying to do is get them to quit calling you and quit calling your mom.

And it's worth two phone calls to invest in that or to never call your mom.

Okay.

All right.

I like that.

Okay.

Yeah.

And then, but again, write that down.

It's the Federal Fair Debt Collection Practices Act.

Okay.

And it is federal law that they're violating.

If you demand a proof of the debt, they don't provide it and they continue to attempt collection.

Hammer them.

I was looking for something to add.

You covered it from every angle.

You know, look, you got the facts.

And so don't be afraid to take this on and then shut it down.

I think that's what this is.

I don't think this is harassment.

I just think Dave's nailed it.

They don't have a lot of info.

It's not harassment yet.

Not yet.

It probably is going to be there if it doesn't stop.

That's right.

So the thing is, folks,

debt buyers, when they buy debts, are typically paying anywhere from $0.02 to $0.08 on the dollar.

So they're paying $80 for $1,000 debt.

And they can't even find the people in most cases.

In this case, they're chasing deceased people's debt.

Okay, so they're always trying to chase down the

this is basically prospecting.

Yeah, yeah, they're dialing for dollars all day long.

And, you know, it's a horrible job.

And here's a, here's the, you want to be worse than somebody trying to collect on an old debt?

Collect on an old debt that you know the person is dead.

Right.

I mean, this is a bad job.

Cleaning septic tanks is more fun.

And so honestly, seriously, oh my gosh, what a horrible position.

So they probably got high turnover.

They've got a boiler room, phone room going.

Looks like something on Wolf of Wall Street or something.

That's right.

And they're just, you know, and the average time on the job is 21 days, and they're just constantly hiring new people that are dialing for dollars.

You're probably not going to talk to the same person twice.

And they're brainwashed, by the way.

They come at you with a script.

Oh, yeah.

And so that they don't get knocked off.

So you better really be strong and show a lot of facts.

And the other thing is, the neat thing about the technology is you can just hang the phone up.

Just push in.

That's always enjoyable.

And then slide that little thing over that says block,

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If you've not listened to Ken's show, it has exploded as a brand new big hit.

It's called Front Row Seat.

It's long form interviews with people who are changing the world in all kinds of different ways, inspiring people.

And Ken, I actually loaded and listened to about half of your episode with Rachel that popped.

That's the one that's currently up.

That's currently, yeah.

I was hoping that you and Sharon would actually listen to it.

I thought it was really fun.

I enjoyed it.

So, Cousin Ken.

Did you know this?

Cousin Ken.

No, you know, I don't think I've ever told you.

Yeah, but you're talking about it.

We talk about it.

Yeah, absolutely.

You've got to watch it, folks, because

I'll just leave it at that.

Ken and Rachel are like brother and sister in a way, and in really toxic ways, actually.

So he makes a great interview interviewing his sister of sorts

there.

And it's a great,

truthfully, I was a proud dad because you brought out some of the best parts of Rachel, I think, so.

In the interview.

It's a beautiful, beautiful.

She did it.

It was really fun.

And there is a very fun moment where you'll get to actually hear and see

what Dave is talking about.

Are Dave and I related?

We aren't 100% sure, but there is some evidence that maybe we are seventh cousins once removed, which makes Rachel my eighth cousin once removed.

And And interestingly enough, so you're cousin Eddie is what we're saying.

Yeah, right.

And we have fun with it on the show, but it's really funny.

I don't know if you ever saw that video.

When I haven't seen the video, but I remember you and I talking about it.

Wasn't it hilarious how she reacted?

Yeah, it's hilarious.

Her reaction is priceless.

Classic.

Because she's so fun.

James is in Salt Lake City.

Hey, James, what's up?

Hey, Dave, you've probably answered this question a thousand or a million times, but

my wife and I, we have a lot of kids, which is our decision.

you know I'm not blaming anybody but

I always wanted like I always wanted like four kids and she always wanted 12 so we're gonna compromise and have 12 so that's our family situation you really have 12 kids well we have 11 right now oh okay

but I make you seem thrilled by the way

well I have that type of voice okay

all right that's good to know so I make more money than I ever thought I would make honestly and yes and five years ago, we were pretty much debt-free.

But just in the past four to five years, as our kids have kind of reached that age, my wife has stuck them in sports and extracurricular activities.

And now we've amassed almost $50,000 of debt and maxed out a credit card and pushed some expenses that we haven't paid, medical or whatnot.

And this is something that

I think I know the answer.

Well, net, I mean, gross, I would say I'm pushing right around two hundred.

Okay.

All right.

And net, though, after everything, after insurance and medical and whatnot, taxes, it's about one twenty.

Okay.

Anyway,

the nearest I can figure, we're spending about twenty five grand a year on the you know, a little over two grand a month on these sports.

And I I think that's kind of the silver bullet.

And yet my wife is just absolutely not

willing to really give these up.

She's going to look for a job and stuff, but what do we do?

You know, I don't know.

How in the world does a woman with 11 kids work?

Well, that's a good point.

She doesn't have the time nor the energy.

Our youngest is five, and

that's

a nine.

That's obviously not going to happen.

I mean, the daycare, you'd have to float a federal grant.

Yeah.

Oh, my gosh.

So she's hoping to pick up part-time work while our youngest is in school.

in between the fourth and the seventh kid?

Oh my gosh, no way.

No, the sports are not the problem, and no, her working is not the problem.

Okay,

her

not saying out loud, we have a limited amount of resources and we're going to live within them.

You

not saying out loud, we have a limited amount of resources and we are going to live within them.

And write it down.

And my wife stuck the kids in sports.

Not anymore.

My wife and I decide if we can afford anything.

And then it goes on the budget.

And then, and only then, do we do it?

Because we both looked at the overall picture like two grown-up people and said, we chose to have 11 kids, and we have to manage $200,000 to feed them and not go in debt.

Because going into debt continuously is not sustainable.

Duh.

Well, part of our income is with, and maybe this is the tail end of my question to get your opinion.

We have a couple of real estate, a couple of rental properties that cash flow very decently, in my opinion.

And she says, well, let's just sell one of those, you know.

Do you think that's a good thing?

Well, that'd be fine, but what do we do when that money's gone?

Because you continue to overspend.

Right.

Yeah, that's my position.

Yeah, you can't, you can't, it's not sustainable.

What you're doing is not sustainable because your system sucks.

You don't have one.

Yeah, I like that word.

I've been using that a lot the past couple of years.

The system doesn't work.

The system, when the two of us sit down and look at our income that we have coming in and say, all right, what are we going to do with this income?

And we're not going over it.

And there's no excuses for going over it, by the way.

None.

Yeah, I agree.

Yeah, you've just confirmed.

I think that's kind of where we are.

You can't be passive and say, well, she did this.

No, she didn't do it.

You stood there and watched it.

Exactly.

So you did it too.

And she can't say, well, you know, you just go make the money and I'll take care of the house.

No, you're not taking care of the house.

You're spending more than we make and that's not sustainable.

So we are going to get on a system where we decide together where our money is going.

You get a vote, I get a vote.

We've got to come into alignment and it's got to be on less than we make.

And so the sports aren't the problem.

They're the symptom.

Her working's not the problem.

It's the symptom of you guys not being on the same page of being above this strategically and then developing a tactical process out of the strategy called a budget that actually makes the money behave.

I will add to this that you probably can afford to do the sports once you guys get organized and get aligned.

Yeah.

I think the reason, I think the reason you went in debt is she doesn't have an off-button because she didn't have any system at all.

There's no governor on this at all.

And so she's just going.

yeah i i don't believe that all fifty thousand of the credit card debt is two years worth of sports is that what you're telling us because you actually called it the silver bull

yeah it's about five years well what yeah we spend about twenty four grand a year on on sports programs right

well the other question i was going to ask you now because you're on the phone and because i'm a man i'm going to ask you this would you have worded the opening question the way you worded it if your wife had been on the call

meaning saying that she's got the kids in sports, yeah, it was all about her.

It was, it's here's what it sounded like: it was, forget your voice, because you already gave us an excuse on the voice.

The voice sounds like you're beat down and like you've just thrown in the flag and you're having no real communication with your wife.

That's what it sounded like.

But my question is: this is a real question.

Would you have said it that way?

I wanted four, she wanted 12, so we're doing it.

And then she stuck them in sports.

Would you have said it that way if she were sitting in here in the room with Dave and I and you?

I agree.

Of course.

What was the issue?

We compromised.

So I wouldn't have said that because she doesn't like it, but we've talked about this issue with a counselor, you know, and so I would say the same things.

I think that she's sticking them in sports

is the pain.

And by the way, I didn't ask you to paint you in the corner because that was not a gotcha question, but I'm glad you've answered it that way because I think that you got to be very careful.

I think there's some real resentment there between you and her, and that's got to get solved at the same time, if not before we sit down and get this budget.

We have got to resolve the resentment.

That's what I feel and hear on this call.

I don't know.

Your take.

I'll go with that.

I'll go with that.

So, guys,

I would say 50%

of the coaching and calls that we get and the different contact points we have with people

that are married.

come back to this idea that we have to both in the room be adults.

This is a limited amount of resources.

This is a math problem.

There's actually a number of dollars at the top of the page.

And we spend the money on the page the way we want our life to look.

And when it runs out, we stop.

And the two of us together both have a vote on that, and we figure that out together.

That is the only system in 35 years of doing this that I have been able to figure out that will actually work.

The idea that one spouse is off the rails or is not accountable to the mathematics and is a child and the other spouse is resentful, that idea, I've never seen that create a successful relationship or build wealth.

I've been doing this show for over 30 years, and some of the saddest calls I have taken are from situations that are completely preventable.

Yeah, and what's so hard is I feel like one of those, especially the ones that I'm like, oh, it's terrible, are people that call in and their spouse has passed away suddenly and they don't have life insurance.

We actually took a question of a lady and she had three kids pregnant and husband didn't have life insurance.

And I'm like, I can't even imagine, or even if it was opposite, right?

If a mom passed away, there's a dad with kids and trying to figure out how am I going to afford child care?

How do I outsource some stuff that maybe she was doing?

And it just takes the grief and the sadness of something like a sudden death to a whole new level.

Like when you have to think through how am I going to pay my bills

in the middle next week.

Yeah, in the middle of all that grief.

Like it's just, it is, it's terrible.

And so life insurance is the one thing, especially as a mom with three little kids that I'm like so big on for people to get because it's inexpensive.

Xander is the place that Winston and I actually get all of our life insurance.

And we keep re-upping it because I'm like, I just want it there.

Like there's something about that safety of knowing.

that you have money if something suddenly happens.

And it doesn't cost much because Xander shops among a gazillion different companies.

It doesn't cost much.

You just have to admit that someday you're not going to be here.

You got to say it out loud and you got to say, I'm going to say I love you to my family by taking care of them and taking the time to put this stuff in place.

The cost of stinking pizza.

There really is.

So that is one thing to do to say I love you to your family.

So we've used Xander for all of our family's needs for insurance for many years, including, of course, term life insurance.

To get a free quote, go to 800-356-4282.

That's 800-356-4282 or go to xander.com.

If you're tired of living paycheck to paycheck and feeling like you can't get ahead, join one of our free,

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Haley's in California.

Hi, Haley.

How are you?

Hi, Dave and Ken.

I'm good.

Thank you for taking my call.

Sure.

What's up?

Okay, so I'm going to try to be brief here.

I am a single mom to a five-year-old boy.

I don't receive any child support.

I have a career in finance.

I grow $140K a year.

Look at you.

Way to go, girl.

Thank you.

I have a pretty low net worth.

It's about $50K.

15K of that is an emergency fund.

My boyfriend and I have been together for three years.

We love each other.

We are discussing marriage.

His net worth is a lot bigger than mine.

He has a trust fund and he lives off the dividends of his trust.

The principal is about $2 million.

He doesn't work.

He owns a a business, but it is not profitable.

He's owned it for 10 years.

So he's a hobby.

It's a hobby.

He doesn't pay himself a salary.

Businesses that don't make a profit are called a hobby.

Yeah, it's kind of like a passion.

That's not a good indicator of his character.

He considers it like community service.

Yeah, I consider it he's hiding in his trust fund money.

It's a bad idea.

What's the business?

It's a bike shop.

He has four more years of his commercial lease, and then he's planning on closing the doors.

How old is he?

When it's over.

He's 43.

Have you discussed

it?

How old?

I'm 37.

Okay.

I'm sorry.

Let us stop peppering you.

How can we help you, hon?

So I am under the assumption that you would recommend a pre-nut given the dramatic difference in our net worth.

I

this

program to my life and I would like to apply it to my marriage as well.

But

I don't know.

I just,

if we have a pre-nupt,

how do we combine our finances?

Okay.

The pre-nup does not discuss the monthly operation of the household in most cases.

Most of the time, the prenup just says, what happens to the $2 million trust fund if you get split up?

In other words, a prenup would be something as simple as, if you did do it, if you did do a prenup, just be as simple as he leaves the marriage with his $2 million trust fund and you leave the marriage with $50,000 a net worth.

Or you leave the marriage with everything else and he leaves with whatever it is.

I don't care.

But I mean, you kind of, most prenups kind of start with the idea we leave with at least what we came in with.

And that's it.

It's only if you leave the marriage that does it come up.

But it's not like the money coming off the $2 million that allows him to not be profitable or productive, gross,

is

becomes part of your household income, even if you have a prenup.

So that's how you combine your finances.

But we're not, so we'll, so we won't combine all of our bank accounts, though?

Yeah, you combine all your bank accounts.

Absolutely.

Absolutely.

His trust fund is not a bank account.

His trust fund is an investment.

Does he have any control over the trust fund at all?

Yeah.

Okay.

All right.

So

anything that's in and around the trust fund would not necessarily be in your name.

But even if it is in your name, the prenup would, if you switch everything to your name, the prenup would just say, in the event the marriage breaks up, it goes back to his name.

That's all it would say.

It's not operationally inside the marriage.

It's only what happens at the end of the marriage.

Most of them.

I've seen a few of them that interfere in the marriage, but most of them are what happens in the event the marriage dissolves.

Simple.

Okay.

And your second question is what?

Well, how do I build wealth with somebody who already has wealth and isn't really motivated to build more wealth?

Now, there's a key issue.

Now you've opened up a whole other can of worms.

I'm going to love you enough to tell you the truth.

A guy that doesn't work for a profit and isn't productive scares me.

If he's marrying my daughter, I'm afraid.

And the trust fund has allowed him to not become who God intended him to be, a productive citizen that goes out there, leaves the cave, kills something, and drag it home.

Instead, it's stunted his emotional development, and he runs a bike shop, a bike shop that's not profitable.

Instead of becoming the man that God wanted him to be.

That scares me.

I'm looking in from the outside and I'm being a little bit harsh, but I'm short on time and I love you and I want you to hear that.

I don't want to leave this being dishonest with you.

Thank you.

It's greatly concerning to me and I would want you to deal with that.

And

if I'm you, if I'm your...

old ugly Uncle Dave, I would want you guys in pre-marriage counseling to get to the bottom of some of that stuff and some of that be solved to your satisfaction.

Because girl, you, on the other hand, are a warrior princess.

78% of the, or 50, oh, I'm sorry, 52% of the single moms live below the poverty level.

You make $140,000 a year.

You're self-sustaining and raising a human.

You're kind of amazing.

Dave took the words out of my mouth.

I was going to play the older brother card, and I went on a rant last week with a very similar situation like this on this show.

And I said, ladies, don't marry doofuses.

And I'm not.

They may well, but hold on.

Indicators aren't good.

I understand.

Look at you all of a sudden, Mr.

Nice.

I'm trying to give him a break.

I'm not because we've heard enough.

We've heard enough.

I'm not saying he's a bad person,

but being a doofus and being a bad person are two different things.

You have a great heart, and I'm just telling you, I have the exact same fear here.

This is a big deal.

Three years you guys have been dating.

He's been on this plan for 10 years.

I don't think that $2 million lasts as long as he thinks.

I'm concerned about that.

2 million is a lot of money right now.

It's not at 43.

That's why I asked that question.

How old is he?

So I echo Dave, and I'm saying I think premarital counseling is an absolute must.

And if he doesn't play ball with that, that would be the final red flag.

You've got to take care of you and that five-year-old.

And you can love somebody that is not the right person for you.

And again, I'm not accusing him of anything, but I have massive, massive red flags.

Same ones Dave has.

So let me

play something back to you that I heard, Haley, and I think everybody heard it.

Okay, you came into this conversation like you are the one that is not bringing as much to the table.

He's bringing everything to the table.

And what we're saying is it's actually the opposite.

Yeah.

That's right.

This guy needs to step up and earn the right to be with Haley because she's a freaking warrior princess.

Pretty incredible.

Yeah.

I mean, making $140K a year, a single mom, gotten into finance.

You're out there swinging the machete through the jungle, kiddo.

It's pretty awesome.

And,

yeah.

So, so, you know,

he may have $2 million, but he won't have it long if he doesn't change.

And so

you just need to be careful.

Again, all we're looking at is we've known the situation for about a minute and 48 seconds is all.

So you know a lot more about it than we do.

We could have missed something.

The guy might not, but I'm not saying it's 100% off, but there are some things that are concerning enough.

You've got to dig into them and get solved before you go forward with this.

And to encourage you, you asked, how do I build wealth with

if there's a prenup, it probably needs to include him getting a job that's profitable.

Yeah.

But until we figure out if this is

in order to get married to me,

but you

need to become profitable.

You need to work the baby steps, whether or not he's in the picture or not.

And you've bought into that.

Keep working it.

You're doing really well, you got a good income, you can build wealth.

You, why OU in caps, you can build wealth.

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All right, as a society, we tend to over-share sometimes.

We tell everybody everything.

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going to be aware of Ryan is in Green Bay.

Hey, Ryan, what's up?

Hey, Ryan.

Ryan, you're on the air.

Hey, Ryan.

Bye.

All right.

Chris is in Dayton, Ohio.

Hey, Chris, what's up?

Hi.

I was on baby step two,

but then life happened and I had to dip into my step one savings.

Okay.

Should I replenish that and then get back on track with my debt payments?

Yes.

And also my second question,

I'm really not looking forward to this day, but a lot of my family members are getting older, and I stand to inherit probably about six figures when that time comes for them.

And I'm disabled, so the best thing I can think to do with it is stick it into an ABLE account.

Would you have any other advice?

as far as what to do with it.

I don't have any car payment or mortgage.

Are you receiving some kind of government assistance that would be affected if you got 100K?

No, not up to 100K.

I've got SSI and Medicaid and food stamps, but with this ABLE account, it wouldn't count as a resource.

Yeah, I know that.

But I was asking why you were using the ABLE account because you were taking food stamps and SSI.

Okay.

All right.

And welfare, you said, too, right?

Medicaid.

Medicaid.

Medicaid.

Yeah, okay.

All right.

What's the nature of your disability, Chris?

I was born legally blind.

Okay.

All right.

Wow.

All right.

Yeah, I'm trying to think what I would do

with the ABLE account.

I probably would just try to get some mutual funds and set it in that and let it create income for you from the ABLE account.

And I think you can do that.

I haven't dipped into those things in a while.

I know what they're for, and I kind of know what they are, but I'm not an expert on it.

And so I would have you sit down with, talk to one of our Smart Vestor pros

and the people that we have, that we endorse to help people with investing.

And they will know how to structure your ABLE account for that.

For those of you who don't know, if you're receiving governmental assistance, if you have money in an ABLE account up to a certain amount,

if you label the account as an ABLE account, it has to do with protecting,

keeping you from losing your government benefits if you are disabled.

That's the purpose of it.

That's how it's designed and what it is in general.

It's a legal, proper way to have some assets and not,

you know, in her case, not lose the help that she's getting.

So, wow.

Jay's in Alabama.

Hi, Jay.

How are you?

I'm better than I deserve, Dave.

How are you, sir?

Just the same.

How can we help?

All right.

I got a lot to unpack.

It's a rather happy story.

My wife and I have royally kicked butt.

I think we've done good, but I feel like we need to tweak it a little bit because

we both have great jobs.

We love them, but we don't think we're going to be able to do this till we retire in our late 60s or 70s.

And we're trying to figure out how to expedite speeding up so we can retire maybe in our mid-50s.

Right.

So I don't know if that involves

how much have you got in investments?

$1.1 million.

Okay.

Good lick.

Good for you.

And what's your household income today?

$475,000 a year.

Yo.

And how much of that's you?

How much of that's her?

She is

about $350,000, and I'm the rest.

So you're 175, okay?

Yes, sir.

All right.

And what does she do for a living?

We both work in medicine.

I was going to guess.

Okay.

Cool.

Good for y'all.

But she didn't get doctoritis.

Well done.

Yeah, apparently.

You got a good net worth and a great, great income.

How much of the 1.1 is in retirement accounts?

About 800.

Okay.

What's the other 300 in?

I got about $120 in a brokerage account that I invest in, and then the rest is home equity.

Okay.

And what's your

ages?

I'm I'm 45.

She's 43.

Okay.

All right.

So what you would do is to is your home paid off?

No, sir.

We are paying extra on it to knock it down.

Yeah, what do you owe on it?

We owe about $600 on it.

Okay.

If you got a paid-for home and you built some money in some non-retirement mutual funds, that's what people people in the financial world call a bridge fund.

It bridges from where the, from the time you want to quit to 59 and a half.

Exactly.

That's what I'm looking for.

Listen, you don't need as much if the house is paid for.

Yes, sir.

Well, our long term, we might have a kind of a strange long-term plan, but

we both are very well traveled, and we want to, once we get to that age,

we'd like to sell the house, take the equity we get from selling the house, buy a smaller house with their, you know, place that we ain't got to cut the grass and stuff like that.

And we actually want to spend about half the year in Southeast Asia because we've been there many times and love to vibe.

So it's much cheaper to rent a place there.

Yeah, let me ask you this.

It occurs to me that you fairly easily could sleepwalk into half of this income working part-time, even if you you were doing some of it in Southeast Asia.

My job currently is remote, but to be honest, I mean, I'm just being honest with you.

We have no problem adjusting our lifestyle.

No, no, no, that's not what I'm saying.

I'm just saying you have the ability to produce an incredible income, and you could probably do that

with 10% of the strain you have now.

You could probably, between the two of you, pull in a couple of hundred.

It's possible.

Oh, I think.

I think you're going to have to reimagine what you do, but yeah.

Right.

We're just both getting, we see the writing on the wall, and we just want to, we want to do the right thing,

pay off our house, or at least knock it down a lot.

I would get the house paid off, and I would build some money and bridge.

Is this 10 years that I hear 55?

You guys want to be checked out?

55, 56.

We're looking at, you know, say

2036.

You know,

well, the 1.1 will be almost 3 million by then if you leave it alone.

Okay.

All right.

And you would have bridge on top of that,

and you'd have the paid-for house.

And you've got the potential to do something, not nothing,

the rest of your life and probably generate a couple of bills doing that.

Right.

So there's a lot of different ways to roll into that 54, 55-year-old point.

And you're going to be in really, really good shape.

You're right.

You have kicked butt.

You're doing really well.

The main place you've kicked butt, though, is your income.

Well,

also,

we laughed, but on our very first date, I asked her, I said, I need to know how much student loans you got.

And she said, no.

And I said, all right, there'll be a second date.

Now, hearing that story, we all knew you out-kicked your coverage when you told us about your wife, but now this is a

woman with poor judgment.

Good for you, sir.

You did well.

You're a real romantic, buddy.

I'm just saying.

Yeah, you're a

sweep a girl off her feet.

You sweep her right off her feet.

You got any student loans, baby?

And then he declares there will be a second date.

Okay, we'll go out again.

You get the pleasure of my company one more time.

I love the advice you gave there, Dave.

And I think there's a bigger lesson for our audience.

We know from all kinds of data, you can go research this yourself, that when a person completely stops work altogether, there's got to be some purpose beyond just retiring from a job.

And in this case, I love what you recommend here, which they can travel the globe, do whatever they want,

stay involved a little bit, just enough to maybe cash flow all this and not eat into that retirement.

And I just think that's something to think about.

This idea of I'm going to stop cold turkey and just do nothing but hang out.

And that's not what he was saying.

But the data is really scary about how many are dead in six months.

It is.

And so finding some purposeful work, even if it's volunteering or something.

Well, doctors without a story.

Yeah.

I mean, you could go, you know, let's go.

Medical doctors in Southeast Asia would be at a premium.

That's exactly right.

So, great, great point.

I mean, that's what I was thinking.

You could use a lot of stuff you can do there.

Yeah, this idea that I'm going fishing for the next 45 years is probably not a plan.

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Welcome back to the Ramsey Show in the Fair Winds Credit Union Studio.

Ken Coleman, Ramsey personality, number one best-selling author and host of the new show Front Row Seat, which is a massive hit on Ramsey Network.

He's my co-host today.

Ryan is with us in Green Bay, Wisconsin.

Hey, Ryan, what's up?

Hey, how's it going?

Better than I deserve.

How can we help?

So,

kind of similar story, maybe to how you started out.

Right now, I got $1.8 million in debt.

That rental portfolio is worth $4.4 million.

That's a conservative estimate off of what realtors would tell me they would list for.

Currently, that portfolio puts out approximately

at a low end,

$5,000 a month, at a high end, $19,000 a month, because we're heavily invested in commercial.

So right now, with

post-COVID, we're

we're a little behind on the commercial leases.

Okay.

Just trying to think of like what, but so

I had a home run early on.

I sold a building that I bought for

$426.

I sold that building for $1.6.

And then I did a 1031 exchange on

two of the buildings.

Okay.

that I currently hold.

Okay.

How can we help?

Well, I don't know.

What are you asking?

Well, I'm not sure.

You know,

I'm not sure.

I guess I have $1.8 million in debt.

I have

a portfolio of 4.4 million.

And your rate of return on that portfolio sucks.

Yeah, it's not great.

No, it's horrible.

Do you want to get out of debt, Ryan?

Do you want to get out of debt?

I do.

I do.

Okay.

No,

you're still the guy that hit the slot machine once, and so you keep putting quarters in the stupid thing.

You had that one hit, did that 1031 and made bank, and ever since then you've been putting quarters back in the machine, trying to do it again, and none of the rest of them did that.

Well, no,

yes.

Yes, more or less.

Yes, I will agree with you.

But

I have hit more than once.

How old are you?

I'm 38 years old.

Where do you want to be when you're 58?

You want 10x this or you want

what do you want?

Yeah,

I want to 10x this, man.

I want to pay off my home that is worth a million dollars, but I have a $360 note.

I got it.

But I'm just telling you, I don't want to 10X your portfolio.

Your rate of return is awful, sir.

When you tell me you're getting an NOI of $60,000 to $19,000 on an asset base this high, your rate of return, your ROI, straight up mathematics, it's horrible.

It's 3.8.

It's 3.8.

I know, but when you make $60,000 as a return on 3.8,

I mean, that's horrendously bad.

You should be making a half million dollars on that.

Cracked.

Yeah, absolutely, I'm cracked.

Yeah.

Yeah, no,

So you've got to figure out why

these properties are not giving ROI and shed yourself of the properties that are not giving you a return and build a model portfolio where you're getting in real estate, you need a cash on cash in residential of 8% to 10%

net NOI, net operating income, 8 to 10% cash on cash annually.

Okay.

And

in addition to that, the thing needs to be going up in value.

And in addition to that, you need to be taking the tax depreciations that the depreciation schedules of the IRS allows.

All of those things together give you north of 15 to 20%.

On a commercial, you ought to be making 10 to 12 cash on cash.

Ours does that.

And it's not rocket surgery to do it.

But you've just been buying crap, man.

And you didn't think anything about the debt aspect.

And so the debt on some of these is eating your lunch because the rents are not commensurate with the values and with the debt service you're carrying.

And that's what's destroying your ROI.

So you need to get down inside of that and figure out which of these things you want to and create an ideal portfolio that's going to be 8 to 10 on residential and 10 to 12 on commercial, cash on cash.

And in properties that are going up in value, those are the ones you want to expand owning and the others you want to get rid of.

And so there's the playbook, right?

And you adjust it, and that's what's going on.

But you've fallen backward into this thinking that all real estate's good.

All real estate's not good.

Some of it sucks, and you've got some that sucks.

And some of it's leverage too high.

Some of it you've got too much debt on, and it's pulling you down.

And so, yeah, if I'm you, that's what I'm looking for.

And in the process of doing that over the next five years, I'm going to sell off enough of it and use enough of my income to become 100% debt-free.

That's where I would be going.

But I don't think you're going to do that because I think you like borrowing money.

So I'm not sure where you're going to end up exactly.

I hope you make it.

Hope you do, for your sake.

In this case, would you, I mean, because he's got enough, if we take him face value, 4.4 million, he said conservative and all that property, 1.8 million debt.

Would you get out of the rental game altogether and have him invest that?

He's a young guy.

He's like 37.

Yeah.

I mean, he'd be better off.

That's what I think.

If you just, if you did 100% slate clean and dropped it all on mutual funds, you'd make more money than you're making now.

That's where my head was going.

Yeah.

Because you got $2 million in mutual funds then and and you're making $200,000 a year.

Right.

You know, and that, and you're not doing anything to do that.

You don't have to collect rent.

You don't have to replace water heaters.

The roof doesn't leak.

You know, all that.

It's a really healthy reset for a guy his age with kids.

I'm not sure I would go that far.

Instead, I'd probably cherry-pick it and take about three years and clean up most of it.

Clean it all up in about a three-year period of time, but clean it up by getting rid of the properties that aren't cash flowing but have equities.

That's good.

And then get out of the debt business because that's what's part of what's bringing you down here.

The other part is

you're still trying to replicate that one deal.

So hit those numbers again for people because too many people are watching TikToks and Reels.

So what is the ROI you're looking for on commercial versus residential?

The stuff that you own or else you say it's not worth having?

I pay cash.

Right.

And so I want to make, if I put a half million dollars in a house, we don't buy houses anymore.

But when we were by, I got a bunch of them.

Still, I haven't got rid of all of them.

But

on the houses that we own, the residential single families that we own,

we look at what we we paid for it, what it's worth in the market, and we want an 8% to 10%

cash on cash.

After all expenses are paid, rent minus expenses is net operating income.

We want to see a cash on cash of 8 to 10%.

If you get that and you have appreciation and value, and you take the depreciation, those three things together are called the internal rate of return, the IRR, and those will be north of 15, 17% on your residentials, which is a lot better return than a mutual fund.

Absolutely.

But But it's a lot more hassle.

Right.

Then on our commercial stuff, we're making anywhere from 10 to 14% cash on cash.

And so we're seeing most of our

IRRs, our internal rates return up in the 20s on those.

Wow.

So we're making serious money on those commercials.

But because commercial property does that, but it's a lot bigger property.

And again, it's a lot more cash tied up in them.

So those are the processes you've got to go through to get there.

You've got to just decide what you're doing.

Because

if I can't make eight to 10 when I can make 12 on on a mutual fund, why am I going through all this hassle?

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Reed is with us in New Jersey.

Hi, Reed.

How are you?

I'm good.

Thank you for taking my call.

Sure.

What's up?

So I'm getting married in April, and I have about $15,000 worth of student loan debt, and I've saved up about $17,000, and that's not including my 401k in my investments.

And I'm wondering if I've seen that.

How much is in your non-401k investments?

I have $17,000 in a high-yield savings account,

not including the 401k.

Okay, and not including the other 17,000?

No, there's just one 17,000.

You said, okay, I'm sorry.

So you have savings of 17.

You have 15 in a student loan.

And then you said, I have investments and a 401k.

Yes.

Okay.

The 401k, I understand.

What are the investments that are not in the 401k?

I have about $5,000 in an IRA.

Okay.

All right.

Do you have any investments that are not in a retirement account other than the 17 in the high-yield savings?

No.

Okay.

All right.

Trying to make sure I had the clear picture.

Okay.

Because if I heard $20,000 laying in a mutual fund over there that wasn't retirement, that changes the picture.

You follow me?

Right.

That's what I was looking for.

Okay.

Yeah.

Yeah.

Yeah.

All right.

What do you make?

$120,000 before taxes.

Good for you.

Thank you.

What have you been spending and all on?

I living expenses in New Jersey, and I travel back and forth a lot between New Jersey and Atlanta to help take care of my mom.

She has MS, so it's a little bit difficult to save, but I'm putting away at least $500 a month.

Which is $6,000 a year out of $120,000.

That's not much.

No, it's not.

Okay.

So you've not been very intentional and careful and controlling with this great income that you have

until now when you started focusing on it recently.

Correct.

Okay.

Not trying to blame you.

I'm just trying to make sure I get the picture of

what the story arc of your behavior is, because that's going to that affects my answer.

So the good news is you kind of just started all this stuff, and you probably can do a lot better than $500 a month.

So if you took the $15 of the 17 paid off the student loan and really bare down on the budget, you probably could put the 15 back pretty quick.

Yes, we are planning a wedding.

Okay, are you paying for part of that?

Yes, for about half of it.

How much?

$10,000 total is our budget for that.

Okay, so you need five?

No, I'm sorry, it's my budget, so that's 50% of the wedding.

Oh, okay, 10, okay, all right.

So that changes the discussion again.

Okay.

And does he have debt?

What's his financial condition?

My fiancé has no debt other than the condo that we live in.

Okay.

All right, cool.

All right.

Well,

so

number one, as long as you do it

between now and April or as soon as you get back from the honeymoon, I don't care.

You're still going to get to where you need to go.

More than anything, what I'm wanting to do is create a behavior pattern that's realistic that you can lean into and take all the way into your marriage.

That's a positive behavior pattern, okay?

Because you make good money and you don't have much to show for it.

So that's why you're asking these wonderful questions because you want to do something better.

You want to have something to show for it.

Am I reading you correctly?

Yes.

It just becomes pretty challenging with the amount I have to fly and helping my parents out.

Yeah.

And that also is not the only reason.

Yeah, for sure.

Okay.

All right.

The

when is the wedding?

April.

Okay.

To the extent that you can be confident that you can build the 10,000 and then rebuild the other 15,

I need $25,000 by April.

Okay?

To the extent you can be confident of that.

Can't be confident of that because you're just starting.

All right, so

I was going to give you an answer that I'm not liking now.

Yeah, I see you're crunching those numbers.

So, no, I'm going going to take $10,000 of your

$17,000 and move it to a separate savings account, and the wedding is now funded.

Pressure's off.

Yep.

Okay.

And then I'm going to take $5,000 and throw it at the debt, leaving you $2,000 or $3,000 to $6,000 and throw it at the debt, leaving you $1,000 in the account.

And then I'm going to get on a tight beans and rice, rice and beans budget.

And you have no debt at that point, correct?

correct no no you still have the student loan debt because we only put six towards the fee

so we got nine thousand we got to tear into that nine and then we got to rebuild the emergency fund by the wedding but the wedding pressures off we've got the ten thousand sitting there to do that we're throwing six thousand I need nine thousand dollars and I need to rebuild my emergency fund by April.

You can do that making $120,000 if you get on the every dollar budget and you really start pounding it and you say, I'm not going out to eat.

I'm not spending money.

We're not going over this wedding budget.

That's it.

That's a whole budget.

Not a dime more.

We're picking out a dress that fits within that, a videographer and a reception that fits within the 20 budget.

And buddy, you putting up the 10.

He can put up the 10.

He's going to be able to do that.

Sounds like you guys got a good match here.

So, yeah, that's what I'm doing.

Let me recap.

What I'm trying to do is I'm trying to get not too many things coming at you to put pressure on you.

The only pressure is getting out of the debt now because we got the wedding financed.

You see what I did?

Right.

Yes.

But then you've got to create the people

read that change their lives doing this stuff are the ones that create this internal

positive anger.

It's like, I've had it.

I'm sick of making this much money and I got nothing.

Yeah, I got this expenses running back forth to Atlanta, but I got nothing and I'm sick of this and I'm going to do whatever it takes that's moral and legal to change that in the person in my mirror.

mirror.

And I'm freaking changing.

I mean, you got to get this thing going, right?

And when you get that going, then you're going to be okay.

But you can wander into debt.

You can't wander out.

You got to get passionate about it.

And that causes you to sacrifice deeply to hit the goals.

So $10,000 in an account, $6,000, leaving $1,000 in your savings account.

No more money going into your 401k.

Stop it temporarily.

Stop everything temporarily.

Your life is now on hold until you get the other 9,000 student loans paid off, and your life is not on hold until you finish that emergency fund, rebuilding it to $10,000 or $15,000.

So when you come home from the honeymoon, you have $15,000 cash, no debt on the wedding, and no debt, and you make $120,000.

That feels good.

That's worth pushing for.

Yeah.

And that's a burn the ships mentality, which is what you need at this point.

It's now I have no margin, but instead of stressing out over the wedding, we're just, hey, I don't like the fact that I don't have an emergency fund.

That's a very different vibe.

And that motivates you very clearly.

I love that.

All conviction at this point.

Yeah, I just,

I create systems that push me to do what I want me to do.

Yes.

Right.

I put myself in those positions.

Right.

It's one of the reasons I love stuff like automatic draft on your checking account going into your investments.

One of the reasons the 401k has caused more people to build wealth than just about anything else because it's automatic.

Anything I can do to put a system around me that automates my discipline.

Well, tell everybody why you, I know what you did, but what's the psychology behind saying, all right, we're going to fund the wedding.

Why'd you tell her to do that?

Because that's, I know what you did, and it's brilliant, but explain the psychology behind having her do that.

Can't focus on two things at once.

Yeah.

And

one of them is going to suffer.

Yeah.

The wedding is so important to her.

It's such a huge deal that if Dave didn't have her do that, what happens is she starts to go, well, the the wedding is super important, super important.

I can't do both.

And it kills any momentum on getting rid of the debt.

This way, you give her a full-time break.

Still, I've got a light at the end of the tunnel this time on the train.

Brilliant.

Even if it's a pin light,

there's a light there.

That's right.

And it's

a singular focus point.

And when you're trying to modify behaviors, you look for a singular focus point and lean in on that with visceral, passionate craziness.

And then you can create this permanent change in your brain.

And you rock on then.

You reset who you are is what you're doing.

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Our question of the day is brought to you by YReFi.

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Today's question comes from David in Massachusetts.

My father suddenly passed away recently and did not make the will he always planned to create.

He owned five properties and only two have mortgages.

He also owned a business with a partner, which brings in close to $1 million in residuals annually.

My mother is not in the picture, and I have an older brother who has a substance abuse problem.

My father did not inherit any money from his parents and built all this from the ground up, so I want to honor him by making sure none of this goes to waste.

My brother will waste away his half of the inheritance on drugs if he gets access to it.

My name will be the only one on the death certificate, and our attorney will file for me to be the head of his estate.

Is there anything I can legally do to prevent my brother from getting a lump sum?

you need to seek legal counsel that really knows what they're doing.

No, I doubt it.

I think he's going to get his lump sum unless he's declared incompetent by the court, unable to take care of his own affairs.

And just being stupid or doing drugs is not going to cause that to happen.

Stupid, immature drug person is not going to, that's not incompetent by legal terms.

My mother's not in the picture.

She is now.

If they were married,

or if they are, if they were married at the time of his death, she's very much in the picture, whether you want her to be or not.

So, again, we're not attorneys in Massachusetts, so you need legal advice in Massachusetts where you are.

And my suspicion is Massachusetts has some wicked, crazy probate laws

because there's some other stuff on the books there that's wild.

And so I wouldn't surprise me a bit.

But

you need to find out what you're dealing with, okay?

Okay, so in most states,

if your mother is alive and they're still married, she's going to get at least half of these assets, whether you wanted her to or anybody else wanted her to.

And your brother, if not, if she's dead or they're divorced and gone or whatever, and she's really not in the picture legally, then you and your brother are going to get half each.

And I'm not aware of anything you can do to legally prevent your brother from getting his half.

Now, what I would do, if that's the case, when you sit down with your attorney, is I would sit down with your brother and say, look,

I love you, dad loved you,

I don't want you to use this to OD.

I don't want you to use this and have nothing to show for it later.

If you would allow me to manage your half for you

until you get through this part of your life, I will do that as a favor to you because I'm very afraid that you're going to end up with nothing.

What do you think?

And see what he says.

And again, what percentage of guys in this situation are going to go, oh, yeah, why don't you take care of it?

None, but it's worth asking.

But that's probably, persuasion is probably your only

technique.

Yeah, tough situation.

So sorry for your loss.

Yeah.

What does this illustrate?

Illustrates everyone needs a will.

Period.

And here's why.

What this guy did when he died suddenly

is he has put a curse on his two sons.

He left them with a mess because he didn't do a will.

And so now you've got one son trying to navigate, the older brother trying to navigate the prodigal

and try to do what dad wanted and try to think through and not there's no direction and there's no legal binding anything if your dad had simply left half of this in a trust for your brother it would have taken you know an hour and a half to do that will maximum And if he'd left half of it in the trust for your brother with you as the trustee to manage it, and upon such time as your brother exemplified positive behaviors, you release the trust to his control, which would be a fairly normal thing where you've got an immature kid or a kid doing drugs or whatever.

You're going to hold it for him, but not let them have it.

So those of you that are out there, do your freaking will

if you love the people that you're going to leave behind, because you just, you screw up everything for the people you leave behind by not doing it.

It is an act of love to do your estate planning.

Because now this poor guy, David, has got this whole thing is sitting on his shoulders.

He's the only adult in the story.

Yeah.

Just aggravates the pee out of me.

So this is millions of dollars we're dealing with here.

Yeah.

And by the way, there's a partner in a business he was running with him that doesn't know what to do, too.

And I'm sure there's no freaking plan there either.

So you guys, I don't care if you got two nickels and a kid.

You need a will because the kid is going to be controlled by the state if you don't have a will that dictates who's going to take care of your kid.

You're going to leave that up to the DMV people?

The people that run the DMV.

That's the level of competence you have when you're dealing with the state.

No, I'm not leaving that up to them.

No, I'm not leaving anything up to the government to decide anything because I was too trifling to get my dadgum work done.

And getting your will done is being an adult and getting your work done.

Oh, man.

Poor David.

I'm so sorry, David.

But I'll tell you what,

if you have a bunch of people, a bunch of kids that you don't like,

and

you want to really mess up the next 10 years of their life, leave about $2 million with no instructions and a bunch of scraps of paper laying around of what they thought you wanted.

And watch them fight through it.

And all the lawyers get the $2 million over the next 10 years, and nobody in the family talks to each other the rest of their lives.

It's almost a guaranteed formula.

That's right.

Yep.

It's like dropping a bomb off in the middle of a family.

Yeah.

That's exactly what it does.

So just aggravating.

David, I'm sorry you're facing that.

But I wouldn't burn a ton of calories on your brother.

It's not his fault.

It's not his problem.

He's his problem.

He's what's known as an adult.

And I wouldn't burn a ton of calories on anything except just getting this thing settled and moving your part over to the side, and you go live your life like a responsible human being.

And oh, by the way, get a will.

Did I mention that?

Rebecca's in San Diego.

Hi, Rebecca.

What's up?

Hello.

How are you?

Better than I deserve.

How can I I help?

So

my mother inherited my great-grandmother's property that has two houses.

Unfortunately, both of them need significant amount of work that my mother cannot afford to do.

If we were to move there, it'd be five generations on this land.

So we are trying to do what we can to not have to sell it off.

My husband and I do have a down payment saved to buy a house,

but we were thinking instead that we could move into the bigger house.

We've got two kids and another one on the way.

Use our down payment to fix up that house and live in it and have no debt, you know, no house payment.

And my mom would take on the smaller house that needs less work and better suitable for just her by herself single.

She recently decided she wanted to only be the sole landowner.

We wouldn't be put on the deed or anything legally.

That settles it.

I'm not going.

She wants us to pay $800 on top of about $100,000 we would be putting into

the house and the property.

I'm not going.

That's what I said.

You don't put $100,000 in somebody else's house.

Let's pretend, Rebecca, that you were my renter and you were my tenant.

And I said, hey, why don't you renovate my house?

You would look at me like, you're an idiot.

I'm not putting $100,000 in your house, Dave.

Why would a renter do that?

Yes.

Don't do

Sorry, mom.

This isn't going to work out.

We're going to have to just go buy a house somewhere else.

And I hope this all works out for you.

Yeah, family

said that because one day I would possibly inherit from my siblings, that children should take care of it.

I'll deal with it when I inherit it.

Right now, I'm not doing a thing.

Yeah.

You already don't like this.

And

your mom has set up a trick bag here.

You need to run.

This is a bad vibe.

Bad juju, kiddo.

Really bad.

You need to run.

this is a trick bag she likes to mess with people and I can see the strings from here you need to run run run run run run run run

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If you died tomorrow, how much would your family need to keep the lights on?

How would they pay the mortgage?

How would they buy groceries?

If anyone in your life depends on your income, you need life insurance.

And how do you choose from all the options out there?

Well, life insurance is, term life is the only kind that does everything you want, which is replace your income for the lowest possible cost.

And we've recommended only term life insurance for the last 35 years here on the air.

You need a policy worth about 10 to 12 times your annual income.

And the perfect term length, we think,

is a 15 to a 20-year level term policy, meaning the premium stays the same.

For more info and resources, use our free term life insurance guide.

You can go to ramseysolutions.com slash term lifeguard.

It's free or click the link in the show notes.

Speaking of life insurance, Kyle is with us with a life insurance question.

Look at that.

Hey, Kyle, in Tampa, what's up?

Good.

How about you?

Better than I deserve.

How can I help?

Yeah, so

I think we're doing good on our savings for retirement.

But we have like a large life and whole life that we got kind of sold on.

And my wife, she doesn't agree with giving it up, but I do.

And now it's kind of like a catch-22 where I think we have enough,

but I just want to give it up kind of just for potential growth.

Okay.

So it's like $800,000 in cash value.

Potential, it could be.

Maybe I looked into the end.

You currently have cash value of $800K?

Yes.

Are you sure?

Yes.

How much did you put into this?

We put a lot of money into this.

I don't know.

We just kind of got caught up into it.

I think it was like 10 years ago.

So what is the face value?

What's the the payout on death

at this moment 1.2 for me 2.3 for her okay all right and what do you make for 46

uh

i don't make them

together we make about 325 what do you make

about

55 and what does she make

about

275 okay all right

all right she a doc

Yes.

Yeah.

That's who they go after.

Okay.

Yes.

And that's Kanye.

She's a target.

She's a target.

They worked all her and they worked all her buddies.

Yeah, you got screwed.

And you're getting screwed every day that you keep it.

So do you ha you said I think we've got enough.

I mean, what you have a large net worth or something?

I mean, yeah.

What is your net worth?

I mean, it's it's probably like uh

three million.

Okay.

Invested in what?

That's not including that policy.

It's probably like 1.5 for houses and then about 1.4 for just 401k

things.

Okay.

And then I have 800,000 of this,

and I'm just kind of like.

I got you.

All right.

Well, let me kind of give you a little bit of a pair of people.

You can play this back for her.

Okay.

Docs are targeted by whole life guys.

They're the sweet spot for those guys that sell this crap.

It is one of the worst financial products in the world.

It's absolutely horrendous.

No one in the entire financial world believes in whole life insurance as a good product except the people that sell it.

All the rest of us, all the financial planning community, all the investment community, all the estate planning community, unless they're involved in the whole life business, they do not believe in it and they tell people not to do it.

All of us have abandoned this product

because it's not just bad, it's one of the worst.

It's the payday lender of the insurance world.

That's how bad it is.

This is not a medium product.

This is a product that absolutely is horrendous.

Okay?

Now, let me walk you through why.

And then you guys can go home and you can talk about this after you play this back because it'll be on the podcast, okay?

So

life insurance has one

possible need in a scenario like you're in, and that is to replace lost income if one of you dies and the rest of you are dependent on that person.

You do not have a large enough estate to have an estate tax problem, and so there is no, you have zero need for life insurance for that purpose.

You've got to get to $25 million before you have to worry about an estate tax problem, and you're a long way from $25 million.

All right?

So you don't have an estate tax problem at all, not even close, nor are you going to have one anytime soon.

Now,

so but what you do need life insurance for is if you wanted to replace the income.

Now we replace her income, you would need about 10 times that, so you would take about $2.5 million to $3 million, probably $3 million policy on her, and we'd take about 10 times on you, so we'd take $750,000 on you just to round up.

Okay?

You could do that at your age for nothing.

The cost of a pizza, if you don't smoke and you're not obese,

if you're not fat and you don't smoke, life insurance costs almost nothing.

It's ridiculously inexpensive.

Like the cost of a pizza.

Well, in your case, it's this many millions, probably three pizzas.

But it's really no money compared to the 800 grand we're talking about, all right?

Now, here's the problem.

You put so much money into this thing.

If she dies, you know what they're going to pay?

2.3 million.

You know what happened to the 800,000?

They're going to keep it.

Cash value dies with you.

This is a dangerous situation because you guys have gotten screwed so bad.

So if I were you, I would cash this out really fast.

And let me say, like, hers is 500 and mine's 300.

So we have two different dollars.

That's okay.

I'd cash it out real fast.

Mr.

Just get rid of them.

I get both of them.

I'll be done by the end of the day.

Because if one of you dies without life insurance in the next 60 days and you've got $3 million left to live on, I think you're going to be okay.

Yeah, that's what I told her.

All right.

So you're self-insured.

If you want to go buy some term insurance, price it out with Xander Insurance.

It doesn't cost nothing

if you want some extra insurance.

But right now, you've got $3 million.

Oh, wait a minute.

No, you've got almost $4 million counting this 800,000, right?

Yes.

Yeah.

And I think you guys, if one of you dies, the other one can make it on $4 million.

Yeah.

So you're self-insured.

Just taking this $800,000 and putting it into like a mutual fund.

You should have put it in a good investment.

Yeah, absolutely.

One that goes up in value.

Cash value has an average rate of return nationally of 1.26%.

1%?

You're making nothing.

This is costing you $100,000 a year in a lost opportunity of what it should be growing.

It's awful.

Absolutely awful.

So, no,

she needs to tell this life insurance guy to jump off a cliff.

And he screwed you guys.

Bad.

Really bad.

And I can name the company probably.

Uh-oh.

Why are doctors ground zero for this?

Because they make a lot of money, and they feel all fancy because they're new doctors, and they have no knowledge of finances at all.

They're the worst with money with the possible exception of actors and country music stars.

MDs are horrendous with their money.

There's a handful of country music stars do a really good job.

There's a handful of doctors do a really good job.

There's a handful of NFL players do a really good job.

And the rest of them are financial morons.

And so these guys weigh in on these guys who are all puffed up because I just got my MD and these gals and they're feeling all good about themselves because they just got to be a doc and they swoop in just about that time, about the time you're making a little money, and they go, oh, well, you need whole life life insurance.

So

horrible, horrible, horrible product.

Yeah, you're, and I don't care, I'll sell either one.

You do whatever you want to do.

But if I woke up in your shoes, by the end of the week, I'd have my 800K in my hand, and I'd be sitting down with a Smart Vestor Pro and opening up a good mutual fund and making 10, 12% on this money instead of 1%.

And when I die, they don't keep it.

There's an idea.

And if you want some life insurance in addition to your $4 million net worth at that point, just call Xander Insurance and get you some insurance.

You can get, like, again, 46 years old, if you're not obese and you don't smoke, you can get some insurance.

It's really not that much.

But long ago, I quit buying insurance because Sharon's okay if I die.

Matter of fact, she's really okay if I die.

I kind of need to sleep with one eye open.

Hey, what's up?

Dr.

John Deloney here.

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Welcome back to the Ramsey Show in the Fair Winds Credit Union Studios.

I'm Dave Ramsey, Ken Coleman, Ramsey personality, number one best-selling author, and the host of the new Ramsey Runaway hit called Front Row Seat, long-form interviewing with people who really know how to do life well.

You'll learn a lot if you join him on Front Row Seat.

Our phone number here is 888-825-5225.

Jessica's in Birmingham.

Hey, Jessica, what's up in your world?

Hey, guys.

I feel so blessed to talk to you today.

Thank you for taking my call.

Well, thank you.

How can we help?

Okay, so I run a solo aesthetic skincare business that grosses around $85,000 a year.

But after expenses, I only bring home about $24,000.

My husband and I are on Baby Step 2.

I do really love my business.

I love my clients, but I do have a lot going on in my life right now, and I just do not have the drive to keep pushing and building my business the way that I have in the past.

I'm just tired.

But my question is, should I

take a full-time job for a year to pay off all of our debt?

And while I do that, keep the business open for like one to four days a month.

Yes.

And then go, okay.

Okay.

I'm tired.

I don't make any money.

Yeah.

It's a formula, right?

What would you make if you did the exact same thing you're doing, the aesthetic skincare for your clients?

If you're doing that for somebody else and you were just getting paid for your time, what would you make?

Easily double or triple.

Yeah.

That's the answer.

Yeah.

As long as they allow you to keep your clients.

Yeah, that's the problem is if I worked for another

conflict of interest.

Yeah, exactly.

So what I was thinking was doing something similar in the industry, like working in sales for a brand or something like that, that wouldn't be directly a conflict of interest.

Would you make as much as if you did your actual craft?

Yeah, I'm sure I could probably if I've got into sales and worked for like a skincare brand, I could probably bring anywhere from 70 to 100 in a year.

Then do it.

Okay.

Yeah, it's a no-brainer.

Meanwhile, consider,

begin to read and study business.

Yes, sir.

Because you're a classic accidental entrepreneur.

Here's what we find when we're working with our entrepreneurial clients and entree leadership, and we coach about 10,000 small businesses.

There's a vast difference between being good at your skill and running a business that accomplishes your skill.

You are good at your craft of helping people with their skin.

You suck at running a business.

That's okay.

You can do it.

You can learn how, though.

It's a learned skill, business acumen, because you're not making any profit.

We know this because you should, just talking to you for a few minutes, you're obviously bright.

You're articulate.

I think you're right.

I think you could go make 100K selling just after talking to you.

I actually believe you.

All right.

Now, if you're all of those things and you're not making at least that doing this craft that you're good at, it's a business problem.

And so learn the business part.

Let me tell you, I recommend a couple books to you.

I'm going to send you a copy of Building a Business You Love, my latest number one bestseller.

I'll give you a copy of it.

Another book I'm going to recommend is by by a friend of mine named Michael Gerber.

It's called The E-Myth, The Entrepreneurial Myth.

And it is learning to work on your business, not just in your business.

Okay.

So what we run into all the time, Jessica, and I tell them exactly the same thing I just told you.

A guy who knows how to work on heating and air, and he's doing a really good job fixing people's heating and air, replacing their broken heating and air, all that kind of stuff, an HVAC guy, and he decides I'm going to open my own thing and he gets a truck and he leaves his job and he goes into business fixing heating and air.

Now, he's really good heating and air technician, but he knows nothing about running a business.

And he ends up exactly where you are.

Instead of making $80,000 working for somebody else fixing heating and air, he ends up making $20,000 with his own truck.

And he's miserable.

And so, but the only difference there is pricing and marketing and accounting and growing the business, understanding the parts of a business and growing a business.

and you can reset, relaunch four years from now with some knowledge that you don't have now on how to run a business, hire three people that do skincare, and you do some skincare, and you could make 150.

But you've got to have those pieces, you've got to have those other tools in your belt you don't have right now.

And right now, you just need some money and you're tired.

Yes, sir.

Do you want to run a business long term?

After Dave gave you that pep dog, it's a great one, by the way, and he's right.

Do you want to run a business on the other side of this debt elimination and how tired you are?

No, I really do.

I absolutely love entrepreneurship.

We just have a lot going on in our family right now, so that's the reason I'm tired.

But I love, I love it.

No, I mean, if you go to work every day and you make $24,000, you're tired.

You go to work every day and you make $240,000, you're not as tired.

That's true.

That's true.

It's just, it's hard.

I mean, you're just in a slog.

Yeah.

And we call call it the treadmill stage of business.

You feel like you're on a treadmill.

And when you're on a treadmill, it's more tiring than running down the road because you're not getting anywhere.

It's just tiring.

And it's emotionally exhausting because the scenery does not change.

And that's part of the thing.

And I've been there myself running hours over the years, in years past.

So I think you're amazing.

And I think you, this is not a permanent solution.

It's a solution for three to five years.

Go make you some money.

That's right.

Get not tired.

That's right.

And you're going to come back on the other side of this, and you're still an entrepreneur.

So don't let the doubting voices, you know, kind of win the day here as you take a break.

Because a lot of entrepreneurs refuse to do what you're actually doing, which is, A, you raise your hand and said, Dave, Ken, I need some help, number one.

Number two,

you've taken it and said, okay, it doesn't mean I'm a big giant failure because you're not.

And you're going to pause and you're going to learn during the pause.

And I think you come back and you're way more successful.

I'm very excited for you.

This is not the end of the story.

It's just another chapter.

Yeah, absolutely.

Kelly, I don't know if we've got E-Myth in stock.

If we do, send her one.

If we don't, you'll have to get it yourself, Jessica.

But I mean, there's this thing called Amazon.

They'll put one on your front porch before I can get it there anyway.

But E-Myth by Michael Gerber.

It's a short book.

You'll like it.

And it's a classic in the business literature realm.

And we'll send you a copy of mine as a gift, Building a Business You Love, and read it and begin to learn.

But start becoming, I'm going to read 12 business books on small business, running a small business this year while you're doing the other stuff.

And turn off Netflix.

And I'd add one more assignment.

And learn how to run a business.

I'm going to add one more homework assignment.

There's got to be somebody in your neck of the woods who's winning in this area.

Yeah, go learn from them.

And just go buy their lunch and just ask them, like a book report.

Keep it simple.

Act like you're doing a sixth-grade book report on their business.

You'd be surprised what you'll learn.

Yep.

Yep.

You could, you know,

I would imagine there's about four levers if we had time to get into it.

it.

It's an in-depth coaching session that you could pull and go from 24 to 50 quick.

That's true.

You could probably double the nets on this because it's probably just some stupid.

I mean, it's just, it's, when I look back on some of the stuff I've done, I go, God, man, that one little thing, it was so stupid.

And

it changed a million dollars.

It's just nuts.

Yeah, you can do this, and you're very capable.

I don't hear someone that's lacking in capability.

I think you got it.

We've all done dumb things with money.

I've done them with zeros on the end.

One of of the biggest mistakes I see people make with money is not having a plan for it.

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i'm good how you doing better than i deserve how can i help

uh so i wanted to get your advice um my wife and i have a very different risk tolerance when it comes to investing in debt specifically uh when it pertains to

a single family home that we currently live in that I would like to rent

and get a different home for us to live in.

And my wife would like to sell it.

She has the mentality of being completely debt-free.

And we're conflicted because of some of the variables underneath.

I wanted to kind of walk it through and see what you thought.

Okay.

What are your underneath variables?

Yeah, so for me,

I have more in cash on hand than I owe on the mortgage.

We have about $330, $330

I'm sorry, $330K in equity on the house.

And the only debt that we currently have are my wife's student loans, which she has 30K in student loans, 20K of that being at about 5% to 6%

interest,

10K at 3.5% or lower.

So

my thought process was

between the two of us, we have about 190K in cash.

And

what's your mortgage balance?

The mortgage balance, we have 97K left on the mortgage.

It's a fixed 15 years at 2.4%.

Okay.

And what's your household income?

Household income between the two of us before taxes is $285.

Okay.

All right.

Cool.

Good for you.

Well, well done.

And how old are you two?

34.

Okay.

All right.

And so that's the variables you were talking about, the underneath, right?

In other words, that's your story, your financial story, your math story.

Yes.

For me, I'm thinking we have a very low mortgage.

So

her vote is to

pay cash for the next house and sell this one and pay off the student loans today out of the cash that you have.

Your vote is keep the rental house and keep the student loans because they're low interest rate and stay leveraged.

Yeah, so what I said was let's pay off the 5% or higher, the 20K.

The 3.5% is about the same as what we can get in a high-yield savings.

It's low.

Leave them.

If the rates change, then let's pay them off.

But I would like to stay leveraged and make money on the spread because my mortgage is about one percent.

One more time.

Tell me what you, how old you guys are again?

34.

Okay, I'm sorry.

And what do you do for a living, Sam?

I work in corporate finance.

Ah, okay.

Sounded like it.

Okay, good.

All right.

Do you have a finance degree?

Yes.

You have an MBA?

No.

Okay.

All right, cool.

All right.

So

I've got a finance degree, too, by the way, and with a specialization in real estate, that's the world I grew up in, which is the king of leverage, right?

Real estate.

So

obviously you two are smart people and you make really good money and you're going to be okay if you watch what you're doing.

You're not in bankruptcy zone or anything like that.

Do you remember looking at the case studies back in college when we used to do case studies on companies?

And when the bond, when a publicly traded company, when the bond,

when they were putting out too many bonds, they were issuing so many bonds, and they were carrying a load of bank debt,

that we looked at that as risk, and

we would run a formula and lower the value of the stock because they were carrying too much debt, that debt equaled risk.

Do you remember those case studies?

At a high level, yeah.

Yeah, okay.

And then when I got out of school, I got my securities license and I was selling investments in the investment world.

And

there's a thing when you're comparing an aggressive growth stock mutual fund, which has high volatility, and the measure statistically of the high volatility is called a beta.

It's a math number

that the more volatility, the higher the beta.

Okay, and a

low volatility smooth curve versus a high mountain and valley curve is a low beta.

And what we were taught to do in that world on a sophisticated level was to say, all right, we're going to adjust for risk by adjusting with the beta.

We're going to use the beta as the mathematical way to adjust for risk, because you can't really compare a 20% rate of return high volatility mutual fund with an 11% rate of return, low volatility mutual fund, and compare them apples to apples.

You have to adjust for risk.

And mathematically, the way you do that is to use a beta in an inverse math formula.

Does any of that sound familiar?

Yeah, a little bit.

Okay.

That's how it's done.

Point of all of that gobbledygook academic talk was, because you approached this from an academic intellectual viewpoint.

And so that's the way I'm approaching your question.

The point being that mathematically, we are 100% sure in business, and it's proven in every area, more debt equals more risk, period.

Lots of debt equals lots of risk.

No debt equals almost no risk.

So risk is associated with levels of debt.

Would you agree with that?

Yeah.

So to compare your zero risk of being debt-free by paying off the 3% loan and say, no, I don't want to pay that off because I'm going to invest that money at 3%,

to say that you're actually, or 4%, to say that you're actually making money on that transaction, you're not after you mathematically adjust for risk.

Do you follow that?

I do, yeah.

So your initial formula is a formula most people use, but it's a naive, unsophisticated formula because you're not mathematically including risk in the discussion.

That's all I'm bringing up.

So, all of that to say, debt and leverage equals risk.

Now, does that prove out in the data over long periods of time?

Well, it does because when we interviewed 10,167 millionaires, and I'll send you a copy of the book, Baby Steps Millionaires, which has the white paper of the research in the back of it, and you can go through it.

When we interviewed 10,000 millionaires, the number of them that said, I became a millionaire by borrowing money at my house, on my house, or not paying off a student loan at a low interest rate and investing the difference.

The number of people that said that caused me to become a millionaire, Sam, it was precisely zero.

None of them did it.

They all said what your wife said, they all said, I'm getting out of debt.

And with the lowered risk and the increased cash flow, because I don't have debt payments, I'm going to use the increased cash flow to build wealth.

And the sustainability of this is very high because I've lowered my risk quotients.

And this is a real fancy long diatribe to say, Sam, your wife's right.

It's true.

Yeah, she's right.

Sorry, bud.

You lose.

And again, if I woke up in your shoes, I'd sell your house and I'd pay off your student loans today.

And I'd buy me another house with cash.

And I'd kiss my wife on the lips and say, thank you, Jesus.

I married a good woman.

That's so true.

Yeah, because the 190K cash.

Oh, you're in such a good position.

You've done so many things right.

And this is almost a esoteric philosophical argument.

It's really not really a big, but you've got to work this through because the problem is you're going to extrapolate.

You're going to magnify whatever your value system is here.

So if your value system is Sam's and you're going to continue to borrow money into it, all of that crap I just laid out there that's all true is going to take you down eventually.

That's right.

Because you'll keep doing it.

And if you go her way, which is grandma's way,

it doesn't feel as sophisticated doing a finance major, but is actually technically more sophisticated.

Hmm.

Isn't that interesting?

Then you end up with a high sustainability, high cash flow, low-risk environment.

And it's not about risk tolerance.

It's about what works in the end.

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Elijah is in Oklahoma.

Hi, Elijah.

How are you?

I'm good.

How are you guys?

Better than we deserve.

What's up, sir?

Hey, so me and my wife, not too long ago, decided to go ahead and start doing the baby steps.

We're still in baby step one.

It hasn't been that long since we decided.

But the reason I was calling today is because we did lease a car about a year ago.

I've been listening to you for a little while, and I know that's a no-no, but we did do it.

And

we're upside down on it, about ten thousand dollars.

And so we're kind of in a pickle.

And I was just calling you guys to see if I should just ride the lease out and you know, see how you know, figure it out when it ends, or if there's something I can do in the meantime to kind of get us in a better position.

Okay, what kind of car is it?

It's a 2025 Chevy Equinox.

Okay.

How long is the lease?

I believe it's three years.

So coming up October will be one year.

So we'll still have a couple years on there.

And how much is your monthly payment?

$645.

Okay.

So it's good.

It takes $14,000 to ride the lease up.

$15,000.

Yeah, so $15,000.

Yeah, give or take.

And

okay, I'm not sure.

I want you to double check your numbers on the $10,000 upside down.

That sounds wrong after one year.

Okay, well, I had another vehicle that I had leased previously, and again, I know it shouldn't have done it.

You rolled the negative into those.

I was from my six.

Yes, yes.

Okay, so

when you called,

did you call, you called to get a payoff?

Did they give you the early buyout number on the lease or the total number on the lease?

I believe it was the total number.

I didn't ask.

You need the early buyout.

If I wrote you a check today

to pay the car off and own it, what is the number today?

Because I think that's going to be less than $10,000 with the numbers you're giving me.

Okay.

Might not be, but it could be.

That's the first thing I want to do.

So here's the thing.

We know if you write a check for $15,000, you can drive the car for two years.

That's your numbers today.

We know that number.

645 times 24.

Okay.

And so we know that's where that's going to take us.

Now,

and so that's our worst case scenario.

And then you turn it in

at the end of the lease.

Like you said, ride the lease out.

Okay, that's our worst case.

Now, if we sell the car and in order to sell the car, we have to write a $10,000 check, then we could have driven the car for two more years for only $5,000 difference.

Okay.

I'd probably ride the lease out if that's the case.

So if your 10 number is correct, I'm going to ride the lease out because you're not making enough headway on this versus you get the full use of the car.

If you pay the 15.

If I write a check for 10, I don't have the car for two years.

And so really, I get the use of the car for the difference, which is five in that scenario.

Now, I think you're going to find it to be less.

Let's call it seven.

And if you could get out of it for seven, would I get out of it?

Yeah, I probably would.

That's like 10 months' payments.

And then I'm free from the other month's payments.

So yeah, if you could get out of it for seven or anything less, I'm probably going to write a check and get out of it or borrow the money of the $7,000 at the credit union and get out of it.

But I don't know how much negative equity you rolled, and I don't know which numbers you're getting.

And of course, you've got to compare this to the actual value of the car.

How did you value the car?

Well, I called some dealerships and gave them all the information.

They told you what they would pay for it.

Oh, yeah.

Yeah, exactly.

See, that's the wholesale number.

You could sell the Equinox to an individual.

Yes, yeah.

And if you did that, is it seven or is it five?

Difference.

Yeah, probably, because that's a wholesale number you got.

So the second, so first thing you got to do to figure out your real numbers is you got to call the finance department.

That's your 1-800 number on your payment book, okay, or on your website for payments, and talk to them and say, I need the early buyout.

If I write a check today,

what's the payoff today?

I need that number.

I think it's less than 10, okay?

Then the second number you need, go to KellyBlueBook, KBB.com, or Edmunds CarGuide, either one, and look up the private sale value of your car, not the trade-in value.

Because when a dealer buys a car from you, Elijah, they buy it to resell at a profit.

Okay.

And so if they buy that car for 20, that means they plan to sell it for 25.

Okay, which means you could have sold it to an individual for 23,

if that's the case.

And

that's probably your difference, something like that with that Equinox, somewhere in there.

Yeah, I'm sitting here listening to to this, and you know, it's just a reminder to not get sucked into whatever the decision was.

There's an emotion there because here's a young guy who's going, Man, we messed up, and now you got to try to wade through this.

Yeah, and as you were laying this out, I just feel legit compassion.

And there is such an emotional pull, it seems like such a good idea, the lease idea.

And then when you actually get stuck with it, and the pit in your stomach or your chest of that $600 and what, I think I wrote $645 a month payment.

Yeah, that's a lot.

That's a heavy weight.

And now he doesn't have a ton of options because I don't, I mean, I'd love for him to try to sell it on the open market to somebody, but not a lot of people in today's economy are looking for a 2025 Chevy Equinox.

You try it,

but you may have to just bite the bullet on this.

There's a guy named Elijah that bought one.

Yeah, that's right.

Somebody buying them, but yeah.

He released it, right?

You know, I think you bring up a good point, too, that

when

you're excited about buying something

or you're in what feels like a desperate situation and you're buying something, you need to push pause

in both cases and wait overnight.

And here's the lens.

I think, Ken, you're bringing up this very smart.

Here's the lens to look at it.

Say, all right,

is this a good decision 10 years from now?

If I'm 26 years old, will the 36-year-old version of me be pissed at the 26-year-old

way of looking at it?

If that 36-year-old version of me is going to look back and go, I'm going to choke you, you little, you know, and because you're just being impulsive and excited and you like that new car leather smell, all that stuff, and,

you know, you got stuck in it, or you're feeling scared and you're scared about nothing.

You're acting like this is a big deal.

It's not a big deal.

And that's what perspective gives you when you pan back and you say out there, 10 years, 15 years, 30 years.

One of the things we found, I found this study like, God, man, when I first started on this show, like 30-something years ago, that wealthy people, when you talk to them and interview them, their planning window,

when they're asking, when they're getting ready to do something, they ask themselves,

how's this going to affect me 10 or 20 or 30 years from now?

Middle-class people say, how's this going to affect me three years from now?

Poor people say, thank God it's Friday.

That's right.

That's right.

Oh, God, it's Monday.

Yeah, that's right.

And so, and Zig Ziglar used to say, poor people have big TVs, rich people have big libraries.

So it's a long-term thinking thing.

And

so

don't think like poor people.

And if you want to be rich people, start thinking like rich people and you'll become rich people in America.

That's right.

By the way, here's a notion.

In the 24-hour pause that Dave recommended, actually go home and run the numbers on what a $645 a month payment is going to do to your expenses a lot of people don't do that they're on the car lot right and there's a negative emotion or an excited emotion that drove them to the car lot they got a salesperson all the things endorphins are exploding when they sit in the car when they drive it and they wonder what it's going to feel like what am I going to look like and nobody sits there and goes what's $645 a month gonna feel like yeah well the number of times somebody gets a $500 a month raise and celebrates it with a new $750 a month payment yeah that's just yeah that's a great point.

It's the same exact thing.

What are we doing here for?

It's the same exact thing.

Yeah, it falls into all of that.

And point being, Elijah, you're not the only one.

Most of us have done this dumb thing you did.

We love you.

We're proud of you for turning it around.

Get those two numbers, the actual private sale value and the early buyout.

Compare those to the $15,000 number to keep the car, and then ask yourself, is it worth it to be set free?

If you're only going to save $1,000 or $2,000, drive the thing through the lease.

If you're going to save $15,000 or or ten thousand dollars, then get rid of it today.

Our scripture of the day, Proverbs 4, 18 and 19, but the path of the just is like the shining sun that shines ever brighter into the perfect day.

The way of the wicked is like darkness.

They do not know what makes them stumble.

Theodore Roosevelt said, knowing what's right doesn't mean much unless you do what's right.

Sarah is with us in Grand Rapids.

Hey, Sarah, what's up?

Hi, Dave.

I want to thank you for walking with me every day.

I listen to you on my walks and I pray.

So be thankful.

I knew I was getting some exercise.

I am debt-free, but I make about $55,000.

And I'm just wondering at what point I

should I help my daughter buy a car or purchase windows for my house or go on a vacation when you have the money.

Yeah,

yeah.

So that's what I have to figure out.

I think according to you, I probably need to save more.

So well, I don't know.

I mean, I don't know why what I told you on your walk, but

give us a picture of it.

But I mean,

you're debt-free.

You have have an emergency fund of three to six months of expenses, right?

I have

about $12,000, yeah.

Is that three to six months of expenses?

Yeah, that's probably the lower end of that, yeah.

All right.

Then we have an emergency fund in place.

And then do you have any more money saved than that?

No.

No, not much.

When you have money saved, you buy windows.

Or when you have money saved, we buy daughter a car.

By the way, it won't hurt for daughter to be working.

And,

you you know maybe she pays for half of this car maybe you put in a little helper you put in a thousand two thousand dollars she puts in a thousand two thousand dollar car get gives her a little teenage hoop dee right

right well yeah there yeah that's a whole issue but yes why is that an issue

well i gave uh when i went through one of my divorces my um ex-husband promised both my daughters a car well that's his car

So I gave one of my daughters a car, but I made her pay half, but I gave that money to the other daughter.

So I

think then if that daughter was, and she hasn't bought a car, so and I'm driving her back and forth to school in Ann Arbor.

So it's a lot of driving, and I have a 45-minute commute as well.

You gave her cash for a car, and she didn't use it for a car.

Well,

she still has the cash, but she just is saving it.

How much money does she have?

She has

about $6,000.

I'll tell her just go buy a dad gun car.

But I only gave her $2,000.

Okay, that's fine.

She can go buy a car.

What's the problem?

Your ex-husband hadn't got anything to do with this.

That's why we call him ex.

Yeah,

but I gave the other daughter half the value.

I made her pay half the value of that car.

Well, so what?

You don't have any money.

Okay.

$6,000 daughter, get a $6,000 car.

Other daughter, that's the way it went down in the divorce.

If your ex-husband wants to put some money in, that's fine, but you don't have any money.

And you don't need to be commuting for a kid that's got $6,000 in the bank, and you're driving around half of Egypt up there.

Ann Arbor's a long way from Grand Rapids.

That's insanity.

Get that kid's butt in a car.

Tell her to

get up and drive herself down there.

Sarah, I think you've got to get to a point where you realize you are going to disappoint your daughter at some point.

And when we have real reasons for the disappointment, like Dave's saying, you're just going to have to own that.

It feels like you're in this crazy cycle right now, trying to please, trying to make everybody happy, and you don't have enough money to get windows in your house.

Right.

So start taking some

initiative.

I'm going to help you a whole bunch in this one call.

This is even better than our walk.

Okay.

So here's the one call.

You ready?

You tell your daughter to go buy a car because you're not driving her anymore.

And I'll help you go pick out a car.

Okay.

now that one's done.

And let me tell you what you just got back.

Two hours a day, you just got back.

And all the gas money.

And all the gas.

And that's going to help you save up a lot of money for your windows.

This is just a miracle right here.

Maybe.

Maybe miracle.

I'm so glad you called.

And we also found you some overtime opportunities or second job opportunity now that you're not driving all over Michigan.

Now that you're not ubering a kid that has the money to buy her own car.

Yeah.

Wow.

I love to disappoint my kids when I'm right.

You know, I like, you know, when I'm right or it makes common sense, it's like, yeah, I'm disappointing you right now.

I used to tell them all the time, look, you got to have something to tell your therapist when you're 30.

So we're just going to go ahead and cover that now.

Right.

Come on.

Everybody needs a struggle.

Everybody needs a struggle.

Everybody needs some dad issues.

So I'm going to give you some dad issues right now.

Oh, that's good.

Answer is no.

Nope.

Nope.

Let me help you with that.

I'm going to open out the big box.

I nope.

So true, though.

Yeah, I mean, it's tough.

And poor little Rachel survived, didn't she?

And poor little Daniel still

survived.

It's just amazing.

They're resilient little creatures.

They are.

It's amazing what they can come through.

Yeah.

Poor little thing.

Mommy ain't driving her all the way to Dad Gum Ann Arbor from Grand Rapids.

Good lord.

A lot of guilt and shit.

She opened up a big old box of nope.

Here, let me give you a present.

Nope.

Nope.

Happy birthday.

Right.

Carrie is in Charlotte, North Carolina.

Hey, Carrie, what's up?

Hi, I just had a quick question for you.

I recently got married, and we each had a house before we got married, and we're just trying to figure out what to do to maximize essentially the growth on my house,

avoiding capital gains, maybe.

You're not going to have any capital gains.

You've lived in it.

Well, if we rent it out,

I'd sell it.

No details needed.

Just sell it.

The details are I'm I'm making the assumption that you have mortgages on both of these.

Correct.

Okay.

Yeah, I don't need another mortgage payment.

I got a husband.

So that's enough.

So

now we're going to

combine our households, move in one of them, take the money from the other one, pay down the one you're going to live in, pay off your debts, the one you're going to live in, walk your baby steps with the one you're going to live in from the equity of the old one.

If you tell me I'm wrong and they're both paid for and you've got a million dollars in your 401k, I might change my answer.

Not that much, but we're in a good spot.

Are they both paid for?

Are they both paid for?

Yes.

Do you have the money to pay both of them off today?

No.

Okay.

Then don't keep it.

Okay.

Because essentially you've defaulted into I borrowed money to buy a rental property.

That's the default that you backed into, and I'm going to avoid that mistake.

And so that's,

I'm not trying to just rush the answer and say there's an answer that your situation is not different.

Your situation's got its nuances, without a doubt.

But I'm not going to lead you into borrowing money to buy a rental property.

And if you keep a property that has debt on it, that's you backed into it and had the exact same effect.

And I want to point out that when we talk to so many people like this and they think, oh, this is a great investment, and you start running through the actual numbers of what you make, there's not much there for the headache.

Now all of a sudden, you're a landlord in a new marriage, and it's just never worth the squeeze.

I shouldn't say never.

It's very rare in the situation you gave, then it would be worth it with cash.

You own it cash.

Well, that's one thing.

But maybe

there's some actual cash flow.

That's exactly right.

But the margin are so small on a lot of these stories.

Very small.

That's an interesting thing.

And we don't have the exact numbers in this situation, but let's pretend you had a $500 house payment, a low, low house payment, okay?

And you rented it for $1,000.

Right.

You're barely breaking even.

Barely.

Okay.

Now, I own

$700 million in real estate right now.

That's where I get that formula from, of barely breaking even.

I would know what I'm talking about, is what I'm saying.

Yes.

We own a bunch of houses.

We own a bunch of commercial property.

We own this campus that we're sitting in and so on.

And so the deal is that in the real estate world, you have your gross rent potential, the maximum if it stays rented the whole time, minus vacancy,

right?

Minus credit loss, which is people who don't pay and you have to remove them and then you never get your money, minus repairs, the heating and air that goes out, the roof that leaks, the

floor that has a creep, you know, the mold, scare, whatever the 9 million things are that's going to go wrong with that house in a year, minus taxes, minus insurance, minus your payment.

Ta-da, you didn't really make any money.

You did a lot of work for $100.

bucks.

And you took a lot of risk for a hundred bucks.

And that's where most of these things shake out to Ken's point.

We'll be back with you before you know it.

In the meantime, remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus.