More Debt Is Never the Way out of a Tough Situation
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Brought to you by the EveryDollar app. Start budgeting for free today. Live from the Ramsey Network, it's the Ramsey Show, where we help people build wealth, do work that they love, and create amazing relationships. I'm George Campbell, joined by Jade Warshaw. We're taking your calls at 888-825-5225. You call in, we'll help you take the right next step for your life and your money. Courtney's going to kick us off in Oklahoma City. What's going on, Courtney?

Hi, I just have a question about home repairs and basically the route we should go on if we are trying to not get that. But we do currently live in a home that is proving to be not actually livable. Are we talking like black mold or is it like I don't like the kitchen?

No, no. We're talking about extensive mold. When we got testing done, it didn't come back as anything majorly toxic, but obviously it's just not currently ideal situation to live in. So that's interesting to me. So you got it tested and they said it's not overly toxic. Does that just mean they can remediate it, move on and no one's concerned? No.

They can remediate it, but the problem is the space that was added onto the house before we moved in was improperly ventilated. We actually didn't know this, but they

They built on top of a crawl space and then they just sort of tapered it off. And so there's a portion of the house that's not actually a true crawl space, but there is no moisture barrier. So now the support beams under that part of the house have completely rotted away with the mold and our floor caved in. So that part of the house is not habitable. Got you. Got you. So how much does it cost to fix it?

Fix all of them. The remediation alone would be between $6,000 and $8,000, but that does not include demo and to rebuild it. And

And we actually don't know if that includes mold that has traveled up into the sheetrock or if it's strictly underneath the floor. Got you. Okay, so now hit us with the hammer of why you can't afford this and why this is a... Well, we potentially could be looking at thousands and thousands of dollars. And we're just wondering what can we... What route should we go? Do we take out a loan to try and get this fixed? Do we...

Everything that we searched, it keeps pulling up HELOC and we're just more uncertain about that. So we just don't know what route to take here. Insurance is not going to cover it, by the way. Do you have any money anywhere? Like, do you have any money saved anywhere?

We have a little bit in 401k. We have a little bit in savings, but not much. What's in savings? It would be just around a couple of thousand. It's not much at all. Like 3,000 or like 1,200? Somewhere around there. Okay. Yeah, somewhere around there. Okay. Well, you're halfway there for the remediation. That's the good news. True. And we know it doesn't have to happen tomorrow. Right.

So could this happen over the course of the next 90 days and you guys cash flow it? Could you save up $1,000 or $2,000 a month out of your paychecks? Absolutely not. What do you guys take home every month? I'm not sure of the exact number that we take home, but yearly between the two of us, we probably only make about $75,000.

Okay, so here's where I want to challenge you, because I asked you a question and George asked you a question and you didn't know the answer to what I would say are pretty basic numbers, Courtney, which is how much do you have in savings and how much do you make every month, which that lets me know you don't have much of a budget.

We don't. Okay. There's a little bit of backstory there. We have had some issues in the past, and for that reason, we did keep our finances separate. So I'm tallying numbers here. And this is something that we are working towards. That's a separate issue. We are working towards that goal. But these are roughly...

around the numbers that we would be working with. So you're separating the money, but it's not you having all the control over the money or him having all the control over the money. You're managing your own. Is that what I hear? Correct. Okay.

That being said, it doesn't change the fact I still think that you need a budget and he needs a budget. And I think when you do that, because right now you really can't answer George's question. You don't know if there's extra margin you could pull together. You said emphatically there is not $1,000. I can almost guarantee I could find you $1,000 if I looked at your bank statements and helped you create a budget. So I want to encourage you that it is possible to do this, making $75,000 a year.

So what do we do about the literal store being, you know, we cannot use that part of the house? I mean, what are you doing today? Yeah. I'm sorry. I could only hear it with both of you. Well, I'm just wondering, you haven't been able to use it. What was it used for previously, if anything? That was our bedroom.

So where are you guys living right now or sleeping? Well, I am currently in the living room. Like on a couch? Is there an air mattress in there? What's the situation? We tried to move our bed into the living room and it just, it wasn't working out. So we tried to move it into a back part of the house and ultimately the couch was a better option. Are there kids involved? Yes. Okay. How many kids? One. Okay. And their bedroom's intact? Yes.

Yes. But mom and dad are hanging out in the living room. Yes. That's an adventure. That's a story you'll be able to tell one day to your kids. It's a camping trip. It's a good adventure, for sure. Could you survive this for another six months? We've been living like this for five years. Well, I'm sorry, five years? Yes. Wait a second.

So this issue has been happening for five years and we're just now doing something about it? No, this has been, like I said, there's been some other issues in other areas that don't deserve any time on the air. Okay.

now that we have worked through some of those issues and we are trying to get on top of finances, we just truly don't know where to go. And we've only recently started, my husband recently started the Dave Ramsey plan. And so we're on the right track, but it's been really hard to try and convince him that, you know,

Taking out some sort of loan or something somewhere to get this fixed is a good idea because right now he's really wrapped up in the idea of knocking out all that, knocking out everything. So you want to take out the loan and he doesn't?

Yes. Well, here's the thing. Here's what I'm hearing. There's discomfort going on. You've experienced something in your relationship. You don't have to mention it on air, but whatever that is, that has been very uncomfortable. And now you've had this thing pop up in your home, the mold and the issue with the...

I don't know, joist. Is that what they're called? I don't know. The wooden beam. And that's uncomfortable and you're trying to get the money and that's separate. So that's uncomfortable. There's a lot of uncomfortability going on. And now you called this show and we're asking you to do something else that is potentially quite uncomfortable for a longer period of time. And I think you're probably just experiencing a fatigue in that area of, can I just please have a simple solve guys? Can you just make it easy for me? And unfortunately, yeah,

debt can look like the simpler, you know, it can look like the solution. It can look like the easy button, but you've just told us you've been through some things. And if you turn around and add this debt to the equation, yes, maybe you get the thing fixed tomorrow, but now you've got this huge amount of debt hanging around your neck that you guys have to get on the same page on financially, which you're not in order to pay off. And I can tell you, it's probably going to be easier for you guys to lock arms and pay for something in cash than

then it is going to be for you guys to lock arms and pay off this debt because your money's separate. So he pony up the cash, you pony up the cash, and you guys get this thing paid for in cash. I'm on team husband. He locks are only going to give you permission to do the stupidest things like take this mold situation and go, you know what? Full kitchen reno. They're giving us $100,000. Don't do this, Courtney. It's going to be hard, but more debt is only going to make your situation more difficult. This is The Ramsey Show.

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Delete Me gives you peace of mind. Yes. So go to joindeleteme.com slash Ramsey for 20% off. And that discount brings their annual plans down to about $9 a month. So go check it out. joindeleteme.com slash Ramsey. Samantha's up next in Indianapolis. What's going on, Samantha? Welcome to the show. Hi. Thank you for having me. Sure. Welcome.

What's going on? So late last year, I just had a series of unfortunate events. I had lost my grandma. I was very close to her because she raised me. And then a month after that, I got laid off from my job. They eliminated my role. And while I had that job, it was a day-to-day job. I was making about $22 an hour. So, you know, I was very well off during my time there.

And I was living off credit cards because I thought that I could afford it at the time because I was making so much. So basically, I had about close to $8,000 in credit card debt. And just between grieving the loss of my job and then the loss of my grandma, who I was really close to,

I just wasn't keeping up with it. I just kind of shut down mentally. Um, I let it lapse. I wasn't communicating with them to try to maintain our injuries or anything. Um, so fast forward to now where I can play where everything is about to go to collections. Um,

My mom actually got a life insurance policy from my grandma. I was on the policy, but she was and she gifted me some money out of her part of the policy. And I'm using it to pretty much pay off as much of the credit card as I can. How much was the was the life insurance policy or the portion you got? So my mom only gave me about 8000. Okay. And how much is now the inflated collections credit card debt?

So I have actually been working, making phone calls all this week to get all of them paid off. So they're all good. I have $1,800 left out of the money, and I have one credit card left that's left to go to collections. That's $2,300. It's still with the company, it's not in collections yet, and I'm trying to get them to negotiate and just settle for the $1,800. So I...

can just be done with it and be debt free. And I'm unemployed now also. I'm just trying to get rid of all of this debt before I go back into the workforce because I don't want to have that stress right away. If that makes sense, when I go back to work of having to like, well, how are you going to live? What are you living on? What portion of money are you living on? So I have, I'm living with my partner. He's been nice enough to kind of take on my part of the bill. So he's fully supporting me right now. Okay. I don't love that.

Is this all the debt you have left to your name is the 1800 or the 2300? Yes. Okay. There's part of this. Okay. You got the life insurance money. If you had called us a couple of days before you paid off this debt, part of me would have said, Hey, you're between jobs. You're in a bit of a storm mode. Let's hold this and let's get really, really proactive about finding any job just so you have some money coming in and then you could turn around and pay these bills. But it bothers me that you have no income.

whatsoever coming in. And you're kind of at somebody else's kind of, you're at their mercy. And I love that you're paying off debt. But I also, you got to get some money coming in. And I don't want you thinking, okay, I paid off my debt. I can sit over here and like, this guy is going to help me out. Like, what's your plan for getting real money in the door?

So I actually do have a job lined up. I'm starting a part-time retail job. It's just because it is part-time. That's all I could just find at the moment. It's just not enough to like check one with it with that, if that makes sense. So I was just trying to pay it off. Like by the time I start working, I could just focus on, you know, like paying my actual

actual bills and things and not paying, putting it all towards it. When you say lined up, have you accepted the offer and you're starting, you have a start date? Yes, I start next week. Okay. And you're getting another job to go with that part-time job. Have you started that process?

No, I'm sorry. That's not just I'm just I just have a part time job. I haven't started that one yet. Okay, so that's what I want. That's what I want for you. And then once you do that, yeah, pay off this last step, but you've got to have a living wage. Otherwise, another you're just going to start another fire. Does that make sense? You got to get you got to have that in line. So yeah, go back to you're saying they won't settle for the 1800 when it's time.

Correct. So they're saying that the account is not negotiable at all and I have to pay that full $2,300. When is it going to collections? How soon? They wouldn't give me an exact date even, but I got an email saying that it's going to go in 60 days or less. Okay, so you can come up with $500 in the next 60 days, right? Even with a part-time retail job, you'll make over $500 net in 60 days. That's two months.

Yeah, I could possibly I could probably do that. You're right. No, not probably. Samantha, I need you to have a little confidence here and go, I'm paying this debt off next month. I mean, you can sign up for Instacart tonight and go make 500 bucks a week. I get that you don't want to pay the money like I can. I can sympathize with not wanting to. But you did rack up this money. It's not in collections yet. Let's let's pay what we owe and make it get it right side up.

But I think there's something deeper here because you haven't worked in a long time. How long has it been? It's been since before Christmas. And how old are you? I'm 27. 27. So my guess is, what is it? I'm getting into Ken Coleman land, but if you could snap your fingers today and be in a career field, what would it be?

So I was doing data entry. It was a work from home job. And I'm just trying to get back into that field because that was really what I love doing. And what's kept you from getting back into that field? Is it qualifications? Is it finding the openings?

Basically just finding the openings. The company that I worked for, they pretty much eliminated my role and sent it overseas, and that's what pretty much all of the companies that are relevant to my field are doing. And I even went, you know, branched out a little bit to just do work from home in general because I'm unable to drive, so I have to have work from home. You're unable to drive. Is that due to medical issues?

Yeah, I have epilepsy and I get seizures, so I'm not able to get a driver's license. Okay, good to know. Okay, so you've got some limitation there. I just want to make sure you're getting on a path that you're excited about because talking to you, it doesn't, I don't sense the excitement. I don't have that sense of urgency behind what it is that your next steps are going to be career-wise. Before you get off the line, we're going to give you a couple of resources. I

I want you to have find the work you're wired to do. There's a career assessment in there. And I think it'll give you some ideas on what not only how you're wired, but what that translates to as far as different careers are concerned. If we give it to you, do you promise you'll do it? Yeah, absolutely. OK, great. Great. We'll give you that. We'll give you paycheck to purpose. We'll give you proximity principle. I think that you just need to get fired up in the area of career. I don't want you leeching off some dude. Fair enough.

Yes. Yeah, you're more than that. You've got skills. You've got talents. You've got a lot to offer. And I want you to tap into that. And I want you to believe that. How old are you, Samantha? I'm 27. Okay. Okay.

I think we're just rooting for Samantha more than Samantha's rooting for herself. And I think you need to get some mojo back. You've been through a lot. You've had a lot of grief, the job loss, grandma who raised you. But the best path out of grief is not to stay put and just sit and wallow in it at home. You've done that. You've done that long enough. It hasn't gotten you anywhere. So the way I found my way out is through action.

activity, getting some momentum behind it and going, all right, you know what? There is a path forward. I'm not stuck here. And I think that's what's going to take for you. And I think there's a life beyond just another part-time job, another data entry role. And that's what these resources from Ken will give you is a deeper purpose that really lights a fire under you to go do something that you're passionate about and make good money doing it. And then you'll never touch a credit card again. Have you canceled all of your cards?

Yeah, so all the ones that I have paid off, I just done settlements, and the agreement is once they get that settlement, they're going to be closed. Good, good. And then never open one again. These companies are not your friend. I'm tired of them. It's not a security blanket. This is going to only hurt your future if you rely on credit card companies for anything, even if you, quote, pay it off perfectly. You can do that with your own money and not have to be at their, I don't know, their...

Under their thumb. Under their thumb. There you go. That's what I'm looking for, a big old credit card thumb. No thank you. Listen, Samantha's going to make good choices. I believe in her. The fact that she took the inheritance or took the life insurance and made a good, what she felt was a good choice in the moment. Cleaned up the mess. Yeah, that's a good sign. All signs are on the up and up for Samantha. She's just got to grab life. Got to grab it by the... Horns? Yes. We're really great today. We're finishing each other's... Sentences. Golly. All right, we'll get there, Jade. We'll get there. This is The Ramsey Show. We'll get there.

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If you're tired of living paycheck to paycheck and wondering where your money's going, your first step is getting on a budget. And our team is hosting free budgeting trainings this month where you're going to learn step by step how to make and stick to a budget using EveryDollar. Plus, you can get your biggest budgeting questions answered in a live Q&A. So jump on it. Spots are limited. You can sign up for free at EveryDollar.com slash webinar. James is up next in Buffalo, New York. James, welcome to The Ramsey Show. You with us, James?

Yes. Okay, good. What's up? So I am looking for some advice here. I've got a startup business in e-commerce, but don't really have any marketing money. So in turn, I'm not converting anything. I'm not able to work a regular job because of my current living situation. Which is what? Yeah.

Sorry, you're breaking up on us, James. Speak directly into your phone.

I've got a couple of cousins that I would be able to get it from, but I don't know if that's a good idea. I hear that maybe getting personal loans from family members really isn't the best way to go. So I just wanted your input on that. You're right in that. It is one of the worst ways to go, unless you hate your cousins. Then it's probably a net neutral at that point because they know they're not getting this money back from old James. He's not going to turn $5,000 to $20,000 overnight with a startup business.

Right. Yeah. I mean, you have to think about it from both ends. I mean, obviously that loaning money from families is not a great idea anyway, but now you're doing it into the unknown, into a business you've never run before. And what if you lose the money? What if you don't get the return on investment that you think you're going to get on the 5K? What happens then? Yeah.

Yeah, exactly. And I mean, again, my situation... Can I tell you, James, as an ex-marketing guy, good marketing will just make a bad product fail faster. And so the question is, what are you actually selling and why don't people want it? I think it's... Sorry, you're breaking up. Sorry, James, we can't hear you. What are you selling? What's the business? I'm...

I also have a mattress company that I'm working more on. It's called Z's Mattress. What's special about your mattress that I can't get from the 400,000 mattress sites that are out there with amazing marketing and slick sales and crazy deals? Mm-hmm.

It's just, you're right. Well, it's just, it's a luxury mattress at not a luxury price. It's an affordable luxury latex mattress. It just sounds like, let me say this. I'm not trying to kill your dream, but I am going to say this. I feel like what you said makes sense. You are a single dad. You've got to come up with creative ways to make money. I love the way you're thinking in that way.

You don't have any cash, though. You're looking for 5K. And to start a mattress company, I think you're going to need to save up a lot more money to do this and do this right. Can we start smaller? Can we start with a smaller product that's easy for you to create or manufacture or sell? Maybe it's a service-based thing and you do that online first and get some chops before we start into something so major, unless that's your background.

Unless that's his background and we don't know about it. Well, here's my guess, and I've seen these videos on TikTok. I'm guessing this is where James got it from. You can get into wholesale mattress business where you get the mattresses directly from the companies making them, the manufacturer, and then you increase the price and sell it and white label it with whatever name you want. I've seen the guys with the wear, you know, they've got the little storage units with the mattresses in there, and it

They're like, you can make $10,000 a day. Have you been past a mattress firm in the past five years? They're still the same guy spinning the sign on the corner. I assume it's a front for drugs at this point. It's a Breaking Bad situation at any mattress store in the country right now. It's not a hot commodity. And so that's my guess. And I just saw this post from Alex Hermosi that I thought was brilliant. He said, why do you think you're going to make money in your sleep if you can't make it while you're awake? And I was like, whoa.

He just dropped one right there. That is a mic drop situation from Hermosi. And he's right. The people who are attracted to these passive income streams, they're not making active income. You've got to start with that. Then we can figure out a way how to make money in our sleep. But right now, James, what I would encourage you to do is just find a work from home job. If

If it's difficult for you to go to an office, there's plenty of jobs out there. You sound like a smart guy. I would be looking for a job that I can do remotely with consistent pay that doesn't involve going into debt. Because I'm telling you right now, I don't want you calling back saying, I owe three cousins 20 grand. My mattress business failed. What do I do? And I'm not trying to dog your idea. No. I just know that's in the cards. It's what Mr. Wonderful says, take it out back and shoot it.

Is that what he said? That's what he says. And that's what I say. That's what I'm going to have to say to this. I've had a lot of like ideas that I thought were really cool too. Oh yeah. I'm glad I didn't pursue them. You know what I mean? Can I tell you one of the worst harebrained schemes that I was ever a part of? So multi-level marketing is what it was, but it was back in like, let's see, I was married in 07. So this would have been an 08.

my friend came to me. She's like, you got to come to this presentation with me. Oh, no. They're selling phones that you can call people over the internet. So... Instead of like a cell tower. And you had to like invest money to buy the phones. And so...

Think about that now. It's so silly to be able to call someone over the internet. And I was like, all right. Voice over IP, Jade. It's the future. It was voice over IP. And I went home and I was like, Sam, we have to invest in this. It's voice over IP. He looked at me. He was like, we're not doing that.

Thank God. If you ever use the words investment or opportunity, that is a great clue that you should be running far away. If you used it or someone else used it on you, that's a clue you're about to get screwed. But it's the desperate. My point is, we knew that we were in debt at that point. We were so desperate. And I could just sense with this guy, he's looking for something to grasp onto. Single dad of three, needs income fast, goes, well, I could set up a website and sell some mattresses. Yeah, you see the posts, you see the TikTok posts.

Your friend calls you and says, this is the newest thing. It's called the internet. And you can call, call, make calls over it. Watch their B-ag on my face when James calls back and he's like, hey, I'm a billionaire with my mattress company. I started online. Listen, I hope it happens. I'm never, no ill will. I hope he, I hope he does it. I'm wishing him the best. All right, let's take a quick one here from Josh in Louisville, Kentucky. What's going on, Josh? Oh, not a whole lot. How y'all doing? Great. What's your question?

I've got a lump sum of money coming in, and I was wondering if it would be all right to jump in the snowball to pay one debt off. Ah, okay. So our debt snowball method would say smallest to largest balance. You're saying, hey, I have a big lump sum coming in. Can I hit the largest debt first? So what's the lump sum you're getting? It's about $80,000. And what's your largest debt? $192,000. What kind of debt is it?

That's my house, but that's not the one I'm wanting to pay off. I'm wanting to pay the one off below it, which is because they're kind of a headache to deal with. What is it? Student loans. Student loans. Is it one giant loan or a bunch of little ones? It's several little ones, but it'll pay them all off, that amount. So if you put them in order from smallest to largest, including those little loans, what comes before it at that point?

I've got a car loan before that and a solar panel loan after that. And then it would be the student loans at the group. What's your total debt outside of the mortgage? About $170,000. $170,000 and you'll knock out about half with this lump sum. Where'd the lump sum come from?

Okay. So what's the smallest student loan? If you broke it into the smallest chunks, what's the smallest one? I have a feeling that, I mean, you compared it to solar panels. So I have a feeling there might be some student loans in there that end up being the smallest ones, but you're going to have to go online and look and see.

Right, correct. So that's, that probably is the case. I would list out, go ahead and list out all your debts tonight, smallest to largest balance, see how it all lays out. And then if you'd apply that 80K, you'll see exactly how many payments you'll free up, which you can then apply to the next biggest debts. And the thing I want to encourage you, Josh, is this plan is all about behavior and getting this lump sum from the accident isn't going to change the behavior that got you here. So I would encourage you to follow the plan as is stated. And I think you will see great success. Thanks for the call.

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help change someone's life. Michelle is in Dallas up next. What's going on, Michelle? Hi, thanks for taking my call. Sure. Um, I'm,

I'm in a tricky spot financially. There's something I've been managing for about 10 years that started as a family business over 40 years ago. But over time, it's turned more into a hobby. And the emotional connection is really strong, but the financial side has really gotten foggy. And I honestly don't even know how much I make from it right now.

from month to month. And I'm trying to decide if I should keep pushing forward or close it. I want to know what the smartest move is to

Based on that, I'm trying to budget more intentionally, and I'm also applying for steady jobs like the post office to build a stronger foundation. I guess my question is, how do I start untangling the emotional from the financial? And how do I know if this is something I should keep trying to grow or let go of? I'm sorry. I'm so emotional.

Yeah, you're really struggling with this. And clearly this is it's been a long time of struggle. There is a lot behind those tears that you've you've tried. I can tell you've tried your darndest to keep this business and dream alive and probably for the sake of your family.

Well, yes, because it's, you know, my mom and dad started it and I took over 10 years ago and I have done it all on my dollar. I have gotten no loans. I'm not in debt with the business. Good. What's the nature of the business? What do you guys do? It's an upholstery shop. Okay.

And I'm the only one that's working now. I have no employees, and so it's really started to turn into a hobby. And I'm burnt out. When I come to work, I pull up to the shop, and I'm just sitting in my car going, I have to go in. And it's busy. I'm eight months booked out, so that makes it even harder to...

If I close, how do I close? So you're eight months booked out. Help me understand that part. You're eight months booked out, but it's not making any money. What does that mean? Are the prices too low? And the costs are too high? Have you figured out what that is?

I think a lot of it is I think I can get something done. You know, it's just me. So I think, oh, I can get this done. And you're the one that reupholsters the furniture? You do it? Yes. So I just wonder, Michelle, or I wonder if you're the person who does the work and you need someone else to run the business side of it.

That's the problem is that financially I don't see how I can do that when I'm struggling to just barely keep the lights on and keep my house. It's me at my house all by myself. Right, but you have, you're booked out eight months. I'm not trying to change your mind. I just wonder if a lot of that's... It's not for a lack of clients that we would be closing this. It's because you're just emotionally overwhelmed. Do you want to keep doing this? Do you enjoy upholstering?

I do, but I'm so burnt out and I've kind of closed my books and just working. I don't see a future as far as I can't work fast enough to make enough money. And I'm 56 years old. I have zero retirement.

And I try to do, I've been to Financial Peace University twice, and I've tried to do the every dollar budget every month I try to do it. But I never know how much I'm actually making. Do you have a CPA that you work with or an accountant?

I do, but she's never, she does it on the side. And so basically I do the QuickBooks and then she cleans it up and does what she does, her magic. So there's no real advice happening here. She's just like hitting a button and going, okay, done.

I think at this point, it's probably spilled milk. It probably is time for you to close doors and go do something else. But I mean, I would definitely be remiss if I didn't say it sounds like there probably is a business here. It sounds like you need another person who knows how to do upholstery to help you. And it sounds like you need another person who does

runs the day-to-day business side of things. And you might find, I don't know, but based on what you said, you might find that you do have the money to pay another part-time upholsterer and you do have the time to pay another one person, you know, a small salary to help you run the business. If you're done, you're done. Right.

And there's nothing wrong with being done at the same time. In my heart, I do love what I do. I love it. When I'm done with a piece, I'm like, oh, look, I did this. And I've called another upholstery shop that's, you know, in another town, like five hours away. And I know that they had bought their shop pretty recent and was asking questions and, you

You know, it's hard to find somebody to do upholstery. And shops around me are closing regular. I mean, shops are closing all the time. Yeah, because people aren't getting things reupholstered. They're going on Amazon and buying a new one. Just go to Wayfair and get it cheap. But there's a market for it. I mean, you start getting networked with interior designers and people working on new builds and they want custom pieces or they love the vintage stuff. There's clearly a market for it. Otherwise, you wouldn't have eight months of business backed up.

And so I don't want you to give up because of that. But I also want to free you that if you do close this business, you're not a failure. You're not a bad person. You're not a bad daughter. Well, if they cared about it so much, why are they not involved?

Well, my mom can't anymore. And my poor little dad, he has been up here and I send him home all the time. I'm like, you've got to go home. You need to enjoy your retirement. You can't just be up here, you know, trying to make me survive. Michelle, I think you're really sweet. I think you have like a servant's heart. I truly do. My guess though, I bet,

I bet no one is saying those things to you. I think you're just internalizing that. Your mom and dad didn't say that you're a failure if you close this business, did they?

Yes. Yes. Yes. There's nothing wrong with trying something different, trying something new. And guess what? You can always continue upholstering on the side.

And I think you should in a way that's really healthy for you. I think that's what I needed to hear. And just take on the projects you want to take on and charge what you're worth, Michelle. Clearly you're not. Clearly you don't think you're worth much. If this business isn't making money while you have eight months of work backed up and it's a solopreneurship. Mm-hmm.

And so I would encourage you to charge more, explain to the client what's going on. Hey, it's either I close business or I raise my prices. We've kept our prices this way for a decade now. And inflation's hit us hard, too. And, you know, this is all me, all my time. And I think people need to respect that. And again, if you chose not to ever upholster anything again, no one's going to shame you for that.

I appreciate that. I'm going to send you a copy of Dave Ramsey's newest book. It's called Build a Business You Love, and it walks you through. You do. Have you read it? I have it. I am in the middle of it, actually. Good.

Okay, here's the good news. You're in the treadmill phase. You are just trying to keep up and you need, if you want to keep this going and you want to grow it and you want to get the overwhelm off of you, you're going to have to learn how to delegate. You're going to have to learn to hire the right people to get involved in the business to help you. And there's people who love sales. That's what they're good at. There's people who love accounting. It's what they're good at. And there's Michelle. And she's the only one who can upholster like Michelle does. Also read the book Necessary Endings by Henry Cloud. That's a great one.

That's a solid one. Oh, Michelle, we're rooting for you. I feel for you. There's a lot underneath this business, and I hope it stays afloat because there's not a lot of people in the trades, and it sounds like you love what you do, and I hope you continue doing it.

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From the Ramsey Network, this is The Ramsey Show, where we help people build wealth, do work that they love, and create amazing relationships. I'm Ramsey personality, George Campbell, and joined by my co-host, Jade Warshaw. We're taking your calls at 888-825-5225. Robert is in Kansas City up next. What's going on, Robert?

Hey, thanks for taking my call. My parents are in their 80s, and they've been dealing with some health problems the last few years. So they made me the executor of their estate a few years ago, and they put me on their bank accounts and just kind of, you know, we're asking for help. And we helped them sell their house and moving them closer and helped them find a new place to live. I got a niece who keeps asking for help.

asking to borrow money. And my mom continues to loan to her with no repayments. And yet every month my mom is like, oh, I think next month she's going to start repaying. And so my question is, what is my responsibility to my parents as someone that they've asked to kind of help and oversee? Where does my role do? I say something to my niece. What would you guys recommend? How old is the niece? She's 40. And how much money is she asking for? What does this look like?

So it was like $5,000 and then another $2,000 and then $2,500. Wow. So we're into about $10,000. And, you know, my niece called me earlier this month and was kind of, you know, tongue-in-cheek.

Talking about life and how things aren't great. And she made an offhand comment about how there's a lot of cousin drama. And I'm just picturing, you know, her cousins, her sisters, her siblings, her cousins, like probably resenting what is going on because my mom tends to talk a lot. And so I think everybody probably knows that she's borrowing money. And I think my sense is there's probably some resentment building up there. Has anyone else asked for money from your mom?

Yeah, through the years. Yes, pretty much all the nieces and nephews have had different times that they've all paid it back. There was a stepbrother many, many years ago who asked for money who didn't pay it back, and that did not go well. That kind of still comes up in conversation 30 years later. So your mom has been soured by these situations before. Is she a people pleaser? Why does she continue to do this knowing that she's likely never going to see this money?

Yeah, I think she is a people pleaser. I think she genuinely cares about her grandkids. And but, you know, I think she struggles with saying no. And I think especially she she started this a long time ago and I think she's struggling to cut it off today. She made the comment about three or four years ago. I'm not loaning money to anyone anymore. And yet she'll continue to do it. Well, she she puts you on the hook to help her.

Yeah, what is the – I guess the boundaries of your help? Because you're the executor of the estate, and you said you have access to their bank accounts, but they haven't put you in charge of all of their finances it sounds like. Yeah, no, I am not like – I'm not their representative. I don't write their checks for them. I don't do any of those things. So that's kind of why I'm asking the question. I'm not sure where. They're legally grown adults who can make as many terrible decisions as they want.

Correct. Now, if and when they pass, that's when you'll be in charge to make sure their wishes are executed. But other than that, I don't know that you can stop her if that's what she wants to do. Yeah, all you can do is— Other than try to talk to her and convince her that this is not going to benefit her and it's actually going to harm the entire family. Mm-hmm.

So you would not recommend me saying something to my niece about, hey, you know, grandma's mentioned that I'm sorry, paying this loan. I wouldn't say it from grandma's perspective. I'd say it from your perspective. I wouldn't say, hey, grandma's doing because you don't want to speak for grandma, but you can go to your niece and say I'd go to the niece and grandma. I'd go to grandma and say, listen, grandma.

This is not good for you. I know I'm not in charge, but I'm observing this. And I, you know, you've asked for my help and I don't want to overstep, but I think this is a behavior that you need to stop and you really don't have the money to give. And she's not going to pay it back. You can have that conversation. Then you can go over to the niece and say, hey, you know, I've been helping you.

grandma and grandpa out with them with their money. And I'm seeing this trend and they don't have this money to give you. They're being nice, but they're making a mistake. And you've got to stop asking. I'm asking you nicely. You're grown. You can do what you want to do, but I'm just letting you know what I see going on and leave it at that and see what happens. Right. Do they have a lot of money? What is their net worth?

They're in a paid off house and they've got like $250,000. You know, that's their retirement. Yeah, they don't have the money. Yeah, that's not like outrageous generosity money where we can just fund misbehavior from 40 year olds.

Right. So if your mom wants to be nice and be generous, she can gift money on occasion. But clearly this has become entitlement and it's only going to spread across the family as your niece says, well, yeah, they gave me five grand. You should go ask grandma. Bank of grandmas loaning out money interest free. And so I think this is going to your mom has to come to the realization that this is harming her and her financial future and the family. And I want her to be the person to stop this. Not you as the evil middleman.

cutting off the flow of money because that's just going to cause more family drama. Right. That makes sense. So that's what I would encourage you to do. It's a tough situation. It's very touchy. You're going to have to be very tactful with all of this. And convincing an 80-something-year-old to do anything is difficult. So I wish you the best of luck. Thank you so much. I appreciate it. Yeah, absolutely.

Whew, got to love a little family drama. Yeah. It happens. $5,000 is not a little bit of money. Sheesh. No. And yeah, she's clearly, if you're borrowing and then saying, yeah, I'll pay you back, and then asking for more money. Before you've paid the last. Not a good sign. Okay. All right, let's get to Victoria in Charlotte, North Carolina. What's going on, Victoria? Hi, George and Jade. Thanks all so much for taking my call. Sure. Mm-hmm.

What's happening? Long story short, my question is, should my husband and I sell our home to pay off our debt? Give us the lowdown. Why do you feel like you need to do something that drastic? Um...

Well, we both believe that we've outgrown our home. We just had our third and last baby a year ago. So we have three children. So we knew a larger home in the future was, you know, what we had planned. But...

So right now we have $201,000 left on our loan. The value of our home is $310,000, and we have $87,000 in debt. We're on baby step two, so we have the $1,000 saved. And then, if I'm being totally honest, this is just bad debt, you know, BD, before Dave, before we got on the Ramsey plan and everything. So your plan would be to rent? Yes.

Yes, we would like to rent. And for me, it's more just not having that debt anymore. Our income, I believe, is fine. What is it? So my husband makes $65,000 at his full-time job, and then he is a Navy reservist. He does make an income from that, but that income just pays our medical and our dental insurance. That's great. And what about you? Okay.

I just do little odds and ends. I am a travel agent. I stay at home with the kids. That's my priority, but I do travel agent work on the side. What's that translate to every month? About $1,250 on average. Okay. So can you guys actually rent a home that's around 25% of your take-home pay that can fit you all?

We can't. We have been looking. We're not ready to fully commit to it. We just really needed an unbiased opinion on is this a good idea? I don't know that I would. I think that you're wanting to get out of this debt fast. I didn't really hear anything super compelling that would make me sell my house. Other than the fact that you don't like the house and you want to move to a different house. But you guys are... This would be starting from scratch. And it doesn't change anything.

the behavior that got you into the debt. It's a cool shortcut to go, hey, we're out of debt. I love that. It's an awesome thing, but I'm scared you'll be right back to where you were and also unable to find a home you can rent at that price. I think I'd vote no. I'd vote no. I would pause on this and see if we can get our income up, get our expenses down and knock this out fast before I went and sold the home.

Hey, what's up, guys? It's Jade. And listen, if you're waiting on the government to cancel your student loans, I hate to say it, but that's like expecting your broke cousin Boo Boo to pay you back the 40 bucks you loaned him. It ain't happening. Now, when it comes to student loans, no one else is going to pay them off for you. So if you want the loans gone,

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Mindy's up next in Salt Lake City. What's going on, Mindy? How can we help?

Hi. So I'll just get to my question. I'm planning on making a big change in our family where I'm going to go back to school. Cool. But with this change, it requires a lot of... We live in a very high-priced area and everything. And with this particular program, I need to have...

Sorry, it's very expensive and the program itself doesn't let me work. And so we are thinking of changing from a townhome into a live-in trailer to try to cut expenses so that we don't need to take as much under us loan wines so I can finish this program. So you're still going to go into debt for it, just not as much? That's the idea, yes. What's the program? What is it for?

It's a perfusionist program. It's the people who run the heart and lung machines. Heart and lung machines? In cardiac cases. Yeah, in cardiac cases. Okay. What does the program cost in total? The one that I really want to go to is about $72,000 in Salt Lake. Wow. What do you make doing this at the end of the rainbow? Okay.

So it does depend on where you live. I've seen it in my area here. It's about $172,000 just as a baseline, and it goes up from there. And how long does the program take? It's two years. It's a master's program. Okay. And what will your income be if yours goes away? So my income right now is $104,000, and my husband's is $43,000. So it'll be $43,000. Okay.

That's tight. Oh my gosh. Yeah, I don't know that this is feasible. Could we pause and save up in cash flow? I mean, if you guys are making $147K, how quickly could you stack up cash?

And that's the problem is that even the, I was traveling, doing travel nursing just locally and I was making significantly more. But the problem is, is that this area is so expensive. Even if we just decided to downsize where we live just to a different apartment that was a little bit cheaper, it's only like maybe $300, $400 cheaper a month.

So when you see yourself doing this heart and lung machine operation, are you doing it in Salt Lake City or are you taking the first job that you can find out of this program? Yeah.

I mean, that depends because we've also talked about California where we're now talking about $230K a month. I'm asking because what I'm trying to find out, if it's just so expensive in Salt Lake City, what's keeping you there? Is it family or is this something that you could potentially say, hey, our goal is to get out of an expensive area and kind of like force rank these goals. Are our goals to get out of an expensive area? Are our goals that I have to make this career shift?

Where is it that we ultimately want to live? And I feel like that could help inform some of the answers and also the order in which you do this.

Does that make sense? Yes. And I would say that our goal, our family is in this area, but we've lived here for the past five to seven years, and it has just increasingly gotten more and more expensive to the point where my job is, we can't save up money like this. And it's ridiculous. What do you pay now for your home? $50,000.

What do you pay now for your living? We don't even, we tried to buy a home and we couldn't because of how expensive it was. They would have, it would have been like 3,700 a month. Yeah. So you're renting now. Yeah. And it's only 200 right now. So what I'm, what I'm getting at here is I'm just wondering if the first move is a move out of the area to a less expensive area. Cause you can nurse from anywhere. And I'm wondering if that's the first move so that you can get a salary that you can actually live on and start to save some money.

And then once you can get your hands around that margin, now we can actually start to save up a decent amount way more quickly than we could in Salt Lake City. Now this dream of saving up some money to pay for this master's program actually makes sense. And heck, maybe your husband will make a little bit more money, too. That's a good point. Yeah. What's he doing for work? I'm an operating room nurse right now.

And we do make really good money traveling. The problem is traveling is not consistent. What is he doing? I don't know why I looked into this program. It's not consistent. What is he doing making $43,000? He's a manager at a storage facility. Okay. What does the track look like for him to move up or get a different job that can make more to support the bills while you're in school?

I mean, right now he just got a dollar raise. It's one of those facilities that doesn't want to push too many people up if they can help it. But I'm saying if he has management skills, then he can be a manager anywhere. Yeah.

So what are the jobs out there that will pay $80,000 to be a manager? And now we're able to float the family bills without losing our appreciating asset to go into a depreciating asset, which is the trailer that you'll likely be underwater on and go into debt for on top of still going into student loan debt. You see how this problem is just going to put you in a deep hole that you'll have to really climb back out of on the other side.

Mm-hmm. Yeah.

We'd have to find a plan to move out of this area to another place and to try to find a job elsewhere. We'd have to reestablish ourselves somewhere else. Whereas right now, I'm already in process and have almost everything all together. And I will be applying within the next two months to five different programs, not just in Salt Lake, all over the country. So you would be gone? That would be in person?

Yes. Like the whole family would move with you? It was one where they would move with me.

Wow. Well, then I would be applying to the ones that are more affordable if you can go anywhere. That's what I'm saying. I think the bigger part of this is you've just got to get out of Salt Lake first. I feel like that'd be my first move is I'm getting out of here. That way, both of you have jobs that you can do from anywhere. So why not do it from someplace less expensive? Then to George's point, now you can be more urgent about saving up this money and doing this program. And then wherever you've been living, if you get a job elsewhere, you can go wherever the job is.

wherever the job takes you. The one thing I do have to consider is I have to be within a hospital and you would think like operating rooms, they're everywhere. It's not all the time, not the ones that pay really well. So you have to be within 30 minutes of a hospital to be able to take call and everything. And sometimes that means it's more expensive, unfortunately. Yeah, I get it. We'll do some research on that and see what's available to you because it's

You're the person basically who called in and said, we're up against a wall in Salt Lake City. So I'm just trying to look around and see if I can get you in a better location. And just on a quick search, Mindy, I found ones that are 28 grand total for these programs.

Yeah, there's only 13 schools in the entire U.S. for this perfusion program. And some of them don't give you a master's. If you don't get a master's, you can't teach it eventually. Those ones, I think you might be looking at the ones down in Texas. I'm seeing one in Iowa and upstate New York, and I'm not privy to all the...

certifications needed. And if you want to teach in the future, I just wouldn't get glued to one school that's the most expensive school and go, it has to be this one. It's the one I really want to go to. That's how we start making money

bad decisions when we go tunnel vision especially when we don't have the money or maybe it's something you can add to like maybe you do the profusion one where you're not a teacher and then maybe it's something you can add on the credentials to be able to teach it later i don't know i'm i truly don't know i'm just asking

Yeah, and I have looked at some of them. I just don't have all the requirements, and it would take longer and more money to get some of the requirements that some of these schools need. The ones that I have looked at. Utah isn't the cheapest, but it's definitely not the most expensive. I've eliminated a whole group of them just because of their expense. Got you. Okay. We'll keep drilling down. I think...

George and I gave us gave you some good things to think about. I just feel like we should pause and not right now we're getting starry eyed and it's an exciting thing to do. But I would pause and get yourself in a good financial situation and just cash flow this and not drop your income by 70 percent and live in a trailer. That wouldn't be my solution.

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Welcome back to The Ramsey Show. I'm George Campbell, joined by Jade Warshaw. The Ramsey Show question of the day is brought to you by YRefi. Let's be real. Defaulted private student loans don't go away on their own, but YRefi will help you explore a low fixed rate loan based on your unique circumstances. So go to YRefi.com slash Ramsey to learn more. That's

The letter Y, R-E-F-Y dot com slash Ramsey, may not be available in all states. Okay, today's question comes from Travis in Mississippi. He says,

She paid off her credit cards and told me that she was making payments on her student loans. I felt better about the situation and so I proposed. But I recently found out that she was only paying $20 a month toward her student loan debt. I also found out that other miscellaneous bills are barely being paid.

If the bill is $20, she will only pay a few bucks at a time saying she doesn't have enough to pay it in full while she constantly orders things from Amazon. Oh my goodness. It is becoming clear that getting on the same page doesn't seem possible. I love her, but I don't know how we get past this. Oh man, this is for Maury Povich. This is like for, this is, well, the big problem here, aside from the money, I think the bigger problem is she kind of lied about it, right? Yeah.

She gave you a sense that things were going better than they were and that she was making more progress than she actually was. At least from your side of things, that's the way it sounds. So there's the one side of it is, hey, you were not being honest with me. That feels weird. Yeah. Right. Going into a marriage. Financial infidelity here. And then, yeah, then you have the part of, hey, this girl can't manage her money. What's going on? Yeah.

Being together for five years, man, I wish this guy was on the phone because my guess is you've probably been seeing other things that reflect similar behavior, possibly. He's probably looked past a lot of this because, you know, love is love. But he's asking us, how do I get past this? I don't know that you can. The reason you're asking us this question is because you can't get past this. Yeah, this really happened. So there's two factors here, trust and respect. You have lost both for her.

And over this period of time, as she's laid all this out, lied to you, you've witnessed behavior. And so I think this would require some counseling. I would sit down and go, what's the root of this? And is it something that she can get over? Or is this just who she is? And she's made it clear and you need to believe her.

At that point, I would say, let's not move forward. Let's pause on the wedding. Let's not move forward with the engagement. And that could be it. I mean, you're not married yet. So if you don't feel good about it, don't do it. Yeah, I want to know what those conversations are like. You know, some people, they have such a scarcity mentality, right? That when the bill is due, I'm just going to pay the bare minimum because I want to make sure I have money over here because that makes me feel safe. Like she might have some interesting safety mechanisms with

within her. It could be financial literacy. She just may not know, hey, I was on this, you know, payment-based program for my student loans and they just said 20 bucks is what you owe and so that's what I paid and I thought I'm making progress. So, yeah, I don't want to, you know,

read too much into it and go well she's terrible yeah just I also don't want to gloss over it yeah and go well you'll probably be fine just go ahead and get married the problems will likely continue if not get worse yeah and so you need to deal with it now more like yesterday I would say be curious when you're talking about her why is it that you're only paying 20 and get a sense of is it an internal thing for her or is it truly a cash flow thing does she just not have the money is she is she truly broke

And then see if she's willing to do premarital counseling. Have you done that? If you haven't, you need to. Yeah. Yeah, this feels like it's beyond just personality differences of he's the nerd and she's the free spirit spender. There's something deeper here, and I wouldn't continue on with this until we got to the root of it. Yeah. Give us a call, Travis. I like talking about these ones. Let's talk through it. All right, let's go to the phones. Mike is in Houston up next. What's going on, Mike? Hey, guys. Thank you for taking my call. Sure.

So long story short, I'm four years together with my girlfriend. I've got basically $20,000 in debt left. So I was wondering, should I pause so I can go ahead and cash flow a proposal and later a wedding? Or otherwise, I'd be waiting about 10 more months till I finish my baby steps and

Ideally, I would want to be debt-free, but I don't think we want to know what you guys want. How expensive is this proposal? What's going on? We going to Disney World? What are we thinking? No, I was just thinking I really wanted to put some money aside so I can afford a ring, and then the wedding, obviously, will be after that. How much are you looking to spend on a ring? Probably a month's income, so it'll be about $42,000 to $44,000. Okay, and...

then you're probably going to be engaged for what, a year? I would say that's safe. A year to 18 months. Okay. You said you make $4,200 a month. I mean, I would not delay a proposal for debt, but I would want to make sure that you guys are on the same page and that she understands your financial situation, you understand hers, so you're not just kind of blindly jumping into this. I would go that far. How much money do you have in savings right now?

Savings, I have $3,500. Okay. And how much extra can you add each month to that pile if you just did minimum payments on your debt? If I did minimum payments, it would be about $2,000 every month. Okay. So how about this? Why don't we split the difference? You make minimum payments for one month. You stack up another $2,000. Now you have $5,500, and we set the budget at $4,500 max for this ring, all in. Okay.

Okay. And then get the ring and then push play on the debt snowball. And you guys can figure out cash flowing the wedding later on down the road. Who knows? Maybe family chips in. Maybe you guys go 50-50. Either way, you'll have plenty of time to get out of debt and cash flow a reasonable wedding.

So not even worry about the wedding later on. Just go ahead and get the ring, do that, knock that out. Yeah, I wouldn't delay proposing. If you're ready to marry this woman, go ahead and put a ring on it. Let her know you're serious. Otherwise, 10 months from now, she goes, it's been five years dating Mike. Banner, get off the ladder, dude. I got a life to live.

So I think four years is plenty of time. I'd go ahead and do it. And honestly, you could probably find an even cheaper ring. Nobody said you have to spend four grand except the jewelry companies. I'm saying it.

Jade's saying it. Jade wants to bling. It is a month's salary. That's fair. Sure, that's fair. That's the most I would go. She's been waiting five years. Well, some ladies are like, no, three-month salary minimum. Oh, gosh. That might have been me, too. I don't know. Maybe I'm old school. Maybe that's the frugal Middle Eastern in me. I think spending that much. Are you a young guy, Mike? How old are you? Yes.

I'm 27th a day, actually. Okay. I like your one month plan. Yeah, happy birthday. As a birthday gift to yourself, go get a ring. In fact, I would get one this month with the money you have, like spend $2,500, see what you can get out there. And I assume she's going to want to say in this ring, or do you feel like you know what she wants? Oh, she basically picked it out. I just got to go find it. And how much is it, the one that she picked out? I'm getting prices. It's like a custom ring, so I'm still like...

weird on prices I think around 35 to 42 it just depends okay like that's what it is because we're we're looking at custom things we're looking at just like custom things as opposed to going like the retail stores and I'm just trying to find the best spot for that I haven't picked a place out just yet but I love it all right maybe Etsy you know you don't have to go crazy don't get upsold at a jewelry store that's all I'm saying what's the diamond that's not it's like a man-made diamond moissanite yeah that's a great option too you can't tell the difference

But you know in your heart. She'll know the difference. But here's the key. Find a woman who doesn't care. Who goes, it's a beautiful ring. Who cares what kind of diamond it is? I got no one to impress. There you go. That's it. But good luck, Mike. That's an exciting time. That is exciting. I feel like we did a good deed today. We did. We caused love to take the next step. We did. We did nothing else. Well, on the question of the day, we put the kibosh on love.

And then we were able to circle back around. Yeah, this is the opposite side. He's got some debt and he's like, hey, should I wait? And we're saying, no, continue. So...

Oh, love. Love is expensive. We don't talk about that enough. Yeah, we don't. And now proposals have to be their own thing. You know what I mean? You gotta rent a bounce house. I think as long as you have a nice ring, I'm still okay with traditional on one knee. Doesn't have to be a band playing in the background or confetti. Just a nice ring. I have not seen a correlation to the level of...

you know, pomp and circumstance to the actual quality and longevity of the marriage. There's no, there's no, yeah. One is not indicative of the other. But hey, make it thoughtful. Make it sweet. Make her feel loved and seen. You can't go wrong there, Mike. I hope she says yes. Thank you.

Welcome back to The Ramsey Show. You know, investing may seem complicated or confusing, but it doesn't have to be. Whether you're a complete beginner or you're looking for next level investing strategies, the Ramsey Investing Hub has free tools and information that can help you invest with confidence. So go check it out, ramsesolutions.com slash investing, or click the link in the description if you're listening on YouTube or podcast. Amy is up next in Tampa. What's happening, Amy? How can we help?

Hey, George and Jade. I'm hoping you can help me. I am $28,000 in student loan debt, $25,000 in credit card debt. I am 61 years old, and I have nothing saved, and it hit me like a ton of bricks, and I'm in full freak-out mode. Oh, gosh. I don't know what to do.

Oh, I'm so sorry, Amy. So what caused the freak out mode? Because for, you know, about four decades, you weren't freaked out. So what caused this turn?

My best friend died a year ago and come to find out she had had a major stroke and for some reason that made me think, "Oh my gosh, what if something like that were to happen to me?" And I have nothing saved. I mean, yeah, nothing. Wow. Are you single? Yeah, I'm single. Okay. And how long have you had these student loans?

I went for my master's in nursing about three years ago and quit halfway because it was a ludicrous idea. So I've been paying more than the minimum since then, but I still owe $28,000 in student loan debt. Do you have a mortgage?

No, I own no property except my 14-year-old Toyota Camry. Okay, so you're renting right now in Tampa. And what are you earning? Yeah. I'm an RN. I work at home, and I'm making gross $78K a year. My take-home is about $4,700 a month. And how much are you paying on rent?

Well, it's funny you should say that. Jade, you're so smart. I moved from an apartment that was $1,900 a month down to another one that was $1,400 a month. Okay, good. It includes cable. It includes internet, all of that. Good. So I have about $600 a month extra, but what I'm wondering is...

Shouldn't I take, because I'm 61, shouldn't I take some of that and invest it in a program

IRA or a 401k just to get something going while I use the other half of it to pay off the debt. I see why you would think that. I mean, I think everybody wants that nest egg, but here's the thing. You could take that 60 and invest it, but you're still going to have this debt and we still have the issue of, um,

the biggest line item on your budget is variable because you're a renter. So those are the two things that give me the most pause about your situation. If I were you, being able to enter into retirement with zero debt and at least knowing that, okay, I'm still healthy. If I can bring in some money, that's great. I hate for anybody to depend on social security, but you'll have a little there. But think about what that would feel like if you still had this debt hanging around your neck. Now, if you called us at

I don't know if you were at 81, this might be a little bit of a different call, but you're 61 years old. You still have plenty of time to earn income, pay off this debt and get yourself in a better financial footing. Do you agree? Um, you're 61. You got time girl. So here, here's, let me tell you the current plan you're on Amy. And you tell me how you feel about it. You said you have 600 bucks you can throw at the debt. Is that on top of the minimum payments?

Yes. Okay, what's the minimum payments on the debt? Well, I have nine credit cards, so the total for the minimum payments is $1,492. And that's on the student loans as well? That's everything?

No, the student loans are, the minimum payment is $297. So the total for that is $1,751. Okay, and then you said you have an extra $600. And that's not including the monthly bills. Right. Okay, so you can put about $2,300 towards the debt a month. That includes the minimums plus the extra. No, that wasn't including the monthly bills. Yes, but I'm saying total towards debt, you have your minimum payments plus you said you have $600 extra to do something with.

Right, correct. Oh, yeah. Yeah. Oh, my gosh. Okay, so get this. If you follow that through, $2,300 a month, you have $53,000 in debt. You'll be done in about two years at this rate if you throw every single dime. And that's assuming that you don't – I have money. Yes. So here's the thing. Now we go, okay, two years, that's a long time. I want to get investing. So now we go, cool, how can we speed this up? Are you able to work any overtime? Or can you pick up any other gigs as an RN? No.

I have an autoimmune disorder that keeps me from being on my feet. And the company I work for, which is an insurance company, won't let me work for a competitor. Okay.

So, but I'm wondering, I thought about getting like a side gig as customer service rep. Yes. Because I work four 10-hour days. Yes. So I have three days a week that I don't have to work. Well, let me just show the math on it. Yes, love that. If you could do a side gig that pays $600 a month, $150 a week, that's reasonable, right? Right. That would speed up your debt payoff down to 18 months.

Oh, do you see how I'm getting excited for Amy? Now that means 18 months from now, we can begin, begin building our emergency fund so that six months later, two years total, you're back to investing 15% of your income, which you've never done that in your life. So let's do the math on that. We love to hear that. So now you're six. Let's paint the picture. You're now 63 years old and you're investing 15% of your $78,000 income, right? That's if you don't get a raise. That's,

Well, yeah, that's true. That's about $12,000 a year. Oh, my gosh, I'm so excited. So Jade's going to punch the numbers in. From age 63 to 73, let's say, you invest $1,000 a month, and you see a rate of return on average of about 10%. That's what we've seen in the U.S. stock market if you're investing in good mutual funds. So Jade's going to tell us how much you have. That's at 73. So you're going to have to work a little longer than the average person. But for a late start, let's see what your nest egg becomes. You're going to have about a quarter million dollars in that one account. Okay.

Oh, my gosh. I told you it's not too late. So that's, I mean, that's more than most people have in their retirement accounts, sadly. So, Amy, even for a late start, you can make a whole lot of progress. Mm-hmm, mm-hmm.

Guys, I can't thank you enough. I am pumped. I mean, I am ready to throw money at this debt. Yeah, you are. You just needed a few cheerleaders. Let's get her done. You need some people in your corner, Amy. Do you have anyone cheering you on in your personal life who can keep you accountable, keep you excited? My son. My son can do that. How old is he? He is 35. Love it. That's about my age. Is he financially responsible? No.

Not at all. We have a history of no financial literacy in my family. How about this? What if we make it a competition? Well,

Exactly. Oh, that's a good idea. You're going to let a 61-year-old beat you? Come on, step it up. That is a great idea, and I think if he sees me do it, he'll get pumped up as well. I don't know if people get this excited on your show. They should. They need to. You know, Amy, it doesn't happen as often as you think, but when it does, it gives us great joy. Oh, my gosh. Yeah.

I want to give you a gift. I want to give you a gift. I want to make sure you and your son have a copy of Total Money Makeover, because I think that the more you dig into this, Amy, you're going to get more and more excited. You're going to see what's possible. And that's just going to let your fire to go even faster. So we'll make sure you have that. We'll make sure you have the new every dollar so that you can do your budget and style. I love that. And will you call us back when you're debt free so we can celebrate with you?

I promise. I promise. Thank you so much, guys. I'll be marking the date 18 months from now. I'm going to wait for Amy from Tampa. There she is. Yes. She's not even 63 yet and she paid off her debt. Let that be a reminder to all of you that if you can still fog up a mirror, there is hope yet. So don't give up. I know you spent 40 years making poor decisions, not investing, hanging around with debt, but it's never too late to get out.

You can still retire with dignity. You can still live a life of peace with less stress. It's available to you, but you got to be willing. Amy was ready. She was ready. She had the enthusiasm we need. When the student was ready, the teacher appeared, and we're happy to be cheerleading her on. ♪

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Live from the Ramsey Network, it's The Ramsey Show, where we help people build wealth, do work that they love, and create amazing relationships. I'm George Camel, joined by bestselling author Jade Warshaw, and we're taking your calls at 888-825-5225. We're going to kick this hour off with Ava in Los Angeles. What's going on, Ava? How can we help?

Yes, hi. I'm trying to see if it's worth me possibly filing bankruptcy or just really grind it out and just keep paying debt. Give us the 411. So I make $142,000 a year. I'm a single parent. My credit cards are about $100,000. I took out a home equity line of $125,000.

to build a guest house in my backyard. My mortgage is about $4,800. I try to keep my savings between $9,000 and $12,000 because I'm terrified of going below that number. What's it at now? Now I'm at $10,000, and I get paid in a couple days. What's your average paycheck? Um...

With $142,000 a year, it's about $12,000 a month, $11,000 something. Oh, that's your take-home pay is $142,000. Oh, no, that's my salary. So take-home after pension and insurance, I net probably about $9,000. Okay. And your mortgage is almost half of that or over half of that. It is half, yeah. What's going on there?

Because that doesn't include the HELOC payment? It does not include the HELOC payment. Oh, boy, it doesn't. Oh, gosh. So what got you into this very expensive home as a single parent? At the time, my debt-to-income ratio was higher because I had a lot of student loans. But since then, a lot were forgiven thanks to the former president.

I still have about $15,000 left in student loans that did not qualify for anything. So I only put about 3% down on the house at the time. Okay, and you're in California. Homes are expensive in the L.A. area. How many kids do you have that are living in the house? One. Okay. And because it was 3%, I had to get a PMI insurance. Mm-hmm, mm-hmm.

And in order for me to get rid of that, I refinanced. So my interest rate went up from, I think I was 3% at the time. It went up to about 4.9% currently. Okay. Oh, gosh. All right. How old's your child? 11. Okay. So this is what's getting me. You're terrified of having less than 12 grand in the bank account, but you're on the verge of bankruptcy with a quarter million dollars in debt. Mm-hmm.

Yeah. If I had to play which one's more terrifying, I'm going with the latter on that one. I mean, I the way my credit card payments are set up is like I'm never paying every credit card at the right at the wrong time. And I pay more than the minimum. I am able to now set up the guest house to generate income as like, you know, a short term rental, which is going to be great. What was the purpose of the guest house?

To generate money. And so now you're able to rent it? Have you found, when will that happen? Probably in the next couple weeks once I get everything set up and final permits and things like that through the state. Oh, permits. That could take a while. Yeah. And how are you vetting this tenant who will be renting it?

I'm hoping the apps or the websites help that part because I'm also terrified of squatters, which is a huge issue. That's what I was going to say. There's a lot of risk here to spend $125,000 to hope to make a little bit of money. Because what's the HELOC payment? That's $1,100. And that's got a fixed rate on it? That's a fixed rate, yes. Okay, and what could you charge rent for this place?

In the L.A. market, probably $2,500. I mean, it'll be brand new, so that would be really competitive to get that amount. And if I do short-term rentals, probably equal that if I do higher on the weekend. And this is like in your backyard. Yeah. How do you feel about short-term rental with a kid in the house?

It's a detached garage, so I mean, I thought about all these things. Getting a part-time job, which is really difficult with my work schedule. But you make great money. I don't think income was the problem here. Right. A lot of it is when I got the house, it...

Sort of was a fixer-upper. So the first year I spent like eight grand getting new plumbing and then I needed to get an air conditioning that was eight grand. And then there was other issues with plumbing. So it all just really added up. So what do you owe on the house total? Since I did the refinance, I owe about $650,000. And what's the house worth if it were to sell today?

Minimum $985 or over $1 million. Here's my thing. It was peak $1.3 during the pandemic. What I'm worried about is your mortgage right now is over 50% of your take-home pay. It's a lot. That's my biggest problem with this. I also wonder about, I mean, this is your life, but I wonder about the short-term rental thing with a kid around. It feels...

Risky. Let me just put it like that. I'd be wondering if there's a situation where you can get in a better living situation for cheaper that's not eating up all of your margin every month. Like renting an apartment. Yeah, majorly downsizing. I would do that way before I would even consider bankruptcy.

See, I'm scared if I get out of my house, I'll never have a chance to buy another house. And that's not true. That's you living in fear. You're literally trading one crazy fear for another. And you're living out a crazy fear right now. And you're like, I'm fine with this. Because you're thinking in the future, you'll never be able to have anything again. You'll never be able to do this. And I'm like, no, let's set yourself up to where you can. And you can do it the right way without all the stress and the burden that you have today. How old are you?

Early 40s. Early 40s. You've got time. I feel like that's like my theme today. You've got plenty of time. Let's play this out a little bit. Let's say you sell this house for a million bucks. Right. And let's say you walk away with, I don't know, 350 out of that.

What would you do immediately? Well, we'd secure an apartment for you and your 11-year-old. You'd pay off the credit card debt. All right, now you're at $250,000. You'd clear the HELOC, I guess, when you pay that off, so we'll drop that down. And now you've got $15,000 of student loans to clear. Now that still leaves you with a decent amount of money. I never even touched your $10,000 of savings. Right.

That sounds like a way that you could start to rebuild. You still have about six figures sitting in the bank. Yeah. And then you begin to rebuild the down payment, which you're going to do easily, making $142,000 with no debt.

Yes, I even thought even if I get a different place, I could rent the house and the guest house and still have that time. I would not go rent and keep your mortgage and keep the HELOC and keep the debts. You need to let go of this dream. Think about this. If you cleared $1,000 a month from this rental of net profit, it would still take you 10 years to ROI after you spent the $125,000 to make it happen. And we're getting you free and clear plus six figures in the bank to restart. Yes.

Think about it. I would sell before bankruptcy and you make it $142,000. I think you're going to have a hard time. They're going to force you to sell all of your assets before they let you consider it. Bankruptcy is going to cost you thousands. It's going to destroy your credit for the next seven years likely. So this is just not a shortcut that you need to be exploring when you make great money and you've got a way out. ♪

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Jennifer is up next in Springfield, Illinois. What's going on, Jennifer? Hi, thanks for taking my call. Absolutely. So my daughter at 17 years old bought an old camper, and her and her dad gutted it and turned it into a food truck. She just turned 18 and... Hello? Hey. Oh, yeah. Oh, sorry. She just turned 18 and it's been her first full season and is doing great. Awesome. My question is, she does not want to go to college or, you know...

pursue business and her dad and I are just having a difficult time with that decision and do we just encourage her to keep going with this I mean she's an entrepreneur obviously she's doing good but she's got the best education out there it's called real life experience there's people with business degrees that want to start a food truck and don't know how well give us the definition of great and successful what is she doing how was she earning what's it look like so this is

This is her first season, so she does different events and she'll be stationed in a town one day a week. Anyway, she makes about $1,000 a day, but she still has to take her costs out of that. So maybe comes home with $600 to $800 an event per event. And how many events does she do a month? So far we're at, I mean, she's just getting started, but maybe she's done six so far this month.

Okay. And some in May. Of course, we're in Illinois. It's cold, so you shut down in the winter. And she works hard other jobs. She takes other jobs. So she's a hard worker. It's just to not get educated. Is that wise to be like, go for it? I mean, for $3,600, I think it's not worth it. Listen, I think that it's great that she's doing this. I think it's great she's doing this experience work.

But the way the call started, I thought that she was like rolling in the dough on this thing. But really, it's just like into a really great part time job or a really great, you know, full time job that's at her terms. It's not all year round. So is there a way that you can encourage her to maybe get an education that's working towards this? And maybe she does this in the summer months when she's out of school and she continues, she opens back up the food truck, that sort of thing.

Yeah, we're definitely encouraging her to do that. We're like, you could pay your college completely with this job, you know? And that's if there's something she wants to pursue that requires a degree. So I'm not a fan of just go to college so that we can say you went to college to get a piece of paper. We have millions of people who did that and now feel like they were lied to and they're stuck paying the price with no job on the other side. And so I think your daughter is...

It's proving what a lot of the Gen Zers are, is that there's a non-traditional path that might be upsetting to the parents because it's harder to brag about. But I would be happy to brag that my 18-year-old has a successful business. And let's ride this out. Let's say she does it for a year and goes, you know what? This isn't for me. The winters were slow. It doesn't make as much as I wanted. It's a lot of work. I got to be there in person. I don't want to delegate this. It was a fun experiment. That's okay, too.

But I don't think there's any rush to go. You have to go to college today. Well, was there something she wanted to pursue and then got starry-eyed with this food truck? Nope. She's just always been... She started during COVID. She started making masks, made $5,000 doing that, and then went on to another big... She's just that way. And, you know, I think the problem is she just...

It's just scary to send her out into the world like, go, you know, I didn't know. We are kind of from the generation where you do need a degree. And that's not the case anymore, I realize. Listen, I think I'm with George then, you know, if it wasn't, if it wasn't like she was on this track, and then she had this success, and you feel like it threw her off track.

It doesn't sound like that. It sounds like she's been this way and have had an entrepreneurial spirit from a young age. And so in that case, yeah, why not let it ride?

And my guess is she might be a serial entrepreneur where she jumps from one thing to another and eventually she'll land on something that really takes off. It might be in the food world. It might be something else. But what we do know is that she knows how to make money at a very young age without a piece of paper. And so I would let her follow that passion, let her follow that thread. And then if she's 25 and decides, all right, I'm done with that. I really want to pursue teaching or nursing. Schools will always be happy to take her money at any age. Yeah.

That's great. Thank you. She's doing all this debt-free? Yes, she is. Wow, that's great. And she uses the money that she makes to update her equipment. So she's not got a lot in savings yet because she needed better equipment, but just starting and trying to do it all with cheap stuff and then upgrade as she needed to. I cannot think of a better education than having her figure out how to cash flow all of this, how the P&L works, the profits, the revenues, the expenses, everything.

This is the real-life application of what they're teaching in college if she were to go get a business degree. And you've got to tell us, what's her specialty? Like, what can I get if I show up at this food truck? She makes everything from scratch. It's called Nourish, and she does little scriptures. She puts them on her stickers that go out, and she makes, like, sandwiches, amazing drinks, sparklers. She makes smoothie bowls.

Wow. Try to healthy, not, you know, fried. Not like carnival food. I love it. That's great. That's so good. And worst case, she can go work for someone else if she wants to. It sounds like she loves the food world, and there's a lot of room there for opportunity for people like her.

All right. Well, that's good. I'll pass that on. I feel great about this. So she's going to need to know she doesn't have to go. Yeah. And whatever she does, if she's doing it out of her own volition and doing it with cash, let it ride. Yeah, that's great. I'm the least worried about her. You raised a really incredible woman.

Thank you. Congratulations. Thank you so much. Well, I feel better. Yeah, I love it. And what a cool bonding experience with your dad. Like what a cool story to get the thing with your dad and start this business, especially at 18. I'm scared to see where she's going to end up at 25. We'll all be working for her one day. That's so, so cool. I love that for her. And Nashville has this a lot where I love the idea of starting with a food truck versus buying a brick and mortar restaurant hoping because the food world has one of the highest turnover failure rates out of any industry. Yes, restaurants, yes.

And so it is one of the scariest, riskiest things you can do. So starting with cash, starting small with a food truck, those are my favorite stories. And a lot of Nashville restaurants started as a food truck. It took off. They used all the cash to start the brick and mortar business. Then they can expand to another location if they want. And growing slow is the best way to grow. Moving at the speed of cash. It's good. Just like that. I love it.

Should we take a social question for fun? Yeah, do a social question. I love those. Do we have them? I think I have them. I've got them here. Somewhere. There we go. All right. I'll let you hit me with a surprise. Let's see. I did a couple of these yesterday. Let's go with this one. It says, I love working to support my family, but is the love of earning money as evil as the love of money? What? What?

It's it's this is very that's very in the clouds. Yes. I feel like I need Aristotle and Socrates Socrates here to duke this one out. I mean, is it bad to enjoy earning money? I think he's confusing with if I'm if I love earning money to support my family. Do I have is it evil? Is it like the love of money?

Well, let's play it out on the opposite side. If you don't earn money and you can't support your family, I would say that would be the evil side. Yeah. To just not provide when you've brought these humans into the world and brought a wife on board. Yeah.

So are you, I think the motive is important. Are you doing this out of greed? Are you not even being with your family and you're doing all this under the guise? All personal gain. Well, I'm supporting them, so they should appreciate it, even though I'm working 80 hours a week because I want to because I'm addicted to work. So I think we have to separate it. Are you addicted to work? Are you wanting the greed that comes with making more and more and more and you can't be content? No.

Or is it truly just, hey, I want to support my family. I want to make good money doing it. I want to give them a great life. I see no problems there. Yeah, I think it's a question of is it selfless or selfish if that's the gain. And if, yeah, the goalpost is constantly moving for you to get this thing. Yeah.

But yeah, it's an important distinction. It's not that money is evil. It's the love of money. Yeah. Yes. And that's where things like greed and pride come into play. Or that scarcity. I got to make more. I got to make more. It's never enough. That's when I would hit pause. Sing. I was going to do the harmony, but I won't. I'll spare you guys listening.

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Welcome back to The Ramsey Show. We always love a good debt-free scream. Yeah, we do. And on the debt-free stage in the lobby of Ramsey Solutions, we've got Robert and Angela. Welcome, guys. Hi. Welcome. Congratulations. You made it. Thank you. We're marking the moment today. How much debt did you pay off? $25,000. Nice. Love it. How long did it take? 28 months. Wow.

Awesome. And what was the range of income during that time? It was steady at $66,000. Good job. And where are you guys from? Ceres, California. Wow. Okay. Quite the journey to celebrate with us. We love that. Uh-huh. What kind of debt was the 25? It was a few credit cards, including one that actually we owed more on than our car, and a car that then died a year later with a blown head gasket. Oof.

Okay. So how long have you guys been married? Eight years. Eight years. And you started this journey 28 months ago. So you're a few years into this thing. What caused you guys to go, we got to do better. We got to do something drastic. So I lost my baby sister in August of 2022 to cancer. Thank you. And while I was mourning her, when we went to see her, we had to put the entire trip on a credit card.

And it was almost like insult to injury, but I didn't know what to change to get better. And then one day I was perusing Facebook and a friend of mine made a post about how different his life was from two years before because he'd paid off all of his debt and mentioned the total money makeover. So I ordered the book on Amazon. I had to make myself read it. I would set timers, only got to like baby step three. And then I sat him down and I said, look,

we need to make a change. I'm really concerned that something's going to happen to you before we can get this debt paid off. And I can't do this by myself. And he's like, all right, let's go. Yeah. Robert, how'd you feel about that? Shocked. Were you just kind of like, all right, if she says it, we're doing it. Like, are you that kind of guy who was like, if you've, if you've got more energy than I do toward it, I'm just going to go with it. I'll just put all my faith in her.

Wow. That's a good man. All right. So he's on board. You're on board. You get after it. What did that look like for you? I mean, was a big part of it budgeting or what did that look like? Yeah. So we were doing like he likes to say 2086 things with our money all at once and none of it was working. So it was more about getting organized, getting on a budget. And then I was also only working part time. So I went full time at work, started picking up extra shifts as well. And it was game on. Wow. Yeah.

And what, like going part-time to full-time, what was causing you to go part-time originally?

I had never done that kind of work before. I'm a housekeeper in a hotel. I had never done that kind of work before and wanted to kind of get used to it. But at the same time, I was like, now we need to make this change. And so it was really only one day a week difference. I went from four days to five, but then I started picking up a sixth day every so often as well. So was it kind of addictive once you got on the plan to go like, what else can we do? How much harder can we go? How much faster can we go? Absolutely. Wow. That's something. And where are you guys at now? What's the next thing you're doing?

There's a professional goal that I have that I want to chase after we're finished with Baby Step 3. But then we want to buy a house. Yes. I love that. California, that's going to cost you a pretty penny no matter where you are. And that's the next goal? You got the Baby Step 3 underway? Is that done? It is underway. Nowhere...

about a third of the way through it awesome that one can be a slog after paying off debt which is so exciting baby step three is like this is like watching paint dry i'm just stacking the cash but i'm so proud of you guys and total money makeover you would say was the thing that got you on the plan yes and then i started listening to the show and you just gave robert the spark notes he didn't even have to read the book you're like here's what we're doing

Yep. I took notes. I sat him down. I said, here's what this is. I think we need to do this. And he's like, let's go. He said, if you said it, I believe it. I'm doing it. What was the hardest sacrifice you had to make? The car. When the car died, we had bought a beater.

So driving that beater around was like, oh boy. We're still driving it. We just got it in September. It's a 2009 Chevy Aveo. Oh yeah, that's a beater. That's what's up. So is the plan to upgrade that now that you guys are debt free? Not now. Later. Once you're out of Baby Step 3. Right. That was a trick question. Wow. You answered correctly. Angela, you got this.

This is a woman with a plan. This is a woman on a mission. Don't cross, Angela. Yeah, you could feel invincible now. Did you guys have cheerleaders in your corner or was this kind of a secret thing just between the two of you? My friends all think I'm weird. Was that before the debt-free journey or is that now after too? Both. Okay, nothing changed. Nobody in California knows who Dave Ramsey is. You're spreading the word now. You got the shirt to prove it. You got the shirt and everything. That's amazing. Well, how does it feel now that you guys are completely debt-free? How do you explain the emotion to someone?

Amazing. Like a load I didn't know I was carrying has been lifted. Wow. And how about you, Robert? Is your life any different? Not really. You're like, well, she's happier now, so that's nice.

Yes. Robert seems like the most even keel guy. Like we could be in an apocalypse and Robert would be like, ah, everything's fine. He's happy wife, happy life. He's like that meme. Oh, I love it. It takes a lot to check me up. I love it. Well, hey, we got a parting gift for you. We got two every dollar premium subscriptions. Good for a year. You can pass that along to someone who said you're weird. You can use them for yourself. Do what you will with it. We are so proud of you guys.

Thank you. Okay. You ready to do this? Yep. Came all the way here. Might as well. Let's do it. Let's do it right. We got Robert and Angela from California. $25,000 paid off. A lot of credit cards. Bunch of car loans. Driving the beater car. Going full time. Doing whatever it takes. In 28 months, making $66,000. Count it down. Let's hear a debt-free scream. Three, two, one. We're debt-free! Woo!

Another one bites the dust. So good. All right, man. Even people in California, they're getting hip with it, Jade. They are. They're starting to catch the message. Get rid of this Dutch.

I mean, the taxes are killing you. Might as well free up some of your money. I know. That's right. That's real talk. I love it. Just another story of someone else getting the job done. Yeah. I like it. 28 months. Think about that. That's not a long time. No. It's going to fly by. Yeah. So do you want to be debt free? The time's going to pass anyway. Or do you want to be where you are today? That's right. You get to choose. I love it. Let's get back to the phones. Andrea is up next in Miami, Florida. What's going on, Andrea?

Hey, so I am just, I guess, disagreeing with my husband right now. He is active duty military and he's wanting to buy a house and sell each time we move. And I just don't think that's a smart financial decision. Well, you are right, my friend. So he wants to be a real estate mogul.

Well, so we initially what started this is I had $160,000. We needed a qualified expense to get it out of the investment account that it was in. We put it into this house down here in Miami. And I'm just worried about all the fees that come with buying and selling.

Yeah.

And so I would very much caution him against this whole plan. I don't know if he played a lot of Pokemon growing up, but he's trying to catch them all. That's not what you want to do in real estate. It's two different mindsets. The mindset that you go in to a property that you're purchasing that's going to be your primary residence is very different than the mindset that you would go in looking for a rental.

looking for the area. You know what I'm saying? So this two birds with one stone thing is a really bad idea. And all it's going to do is you're going to collect a bunch of mortgages and then hope to make a spread on the rent, which there's going to be a lot of supply. Yeah, I think he's not so much...

Right. Wanting to rent. He wants to buy and then sell. And I think what a lot of other military members do, they use their VA zero percent down. And then essentially they're getting that basic allowance for housing and they're pocketing it instead of giving it into rent. And so then everybody thinks that they're saving that money or they're pocketing that money by putting it into a mortgage versus into a rental. Right.

So I think they're hacking the system by doing this VA loan trick. Well, having 0% equity, there's a lot of risk with these VA loans, putting nothing down, having no equity, hoping that the market shifts in your favor within two or three years. There's just way too much risk. And I don't want you guys calling back five years from now going, we created a nightmare. We have five properties all over the country. What do we do? We can't handle this. And then you've got to offload them

for way less than you paid potentially in short sales because you need to get out. How long is your average stay before you move? Well, this one will sell our house. So we bought the first one down here in February and that'll be a little after two years. Yeah. Yeah. I would, I like the rental plan or, you know, something to where at least if you are buying, you're making the plan. We're not keeping these houses. We're offloading them when we move because we're

The goal is not, what do we say? It's not Pokemon. You don't have to catch them all. Yeah, exactly. I would not be, this is not a game of Monopoly. And so I would caution him against it. I don't know that I can convince him, but I think Andrea can. A lot of risk here. ♪♪♪

Our scripture of the day, Proverbs 16, 11. Adjust balance and scales are the Lord's. All the weights in the bag are his work. Margaret Thatcher said, pennies do not come from heaven. They have to be earned here on earth. Good job. She was chew on that one, Jay. Yeah, she did. We'll get it later tonight. I got it today. I got it now. It'll take me a second. Michael is in San Francisco up next. What's going on, Michael?

Yeah, hey, thanks for taking my call. So I have been debt-free for over 10 years, but I live in California and my expenses are going up. I recently had to take on some debt for some home repairs that we've been putting off for a long time.

I've also got more expenses coming on the home repair front and some kids on their way to college. I am based in the San Francisco Bay Area. My business is, I'm self-employed. My business is dependent upon the tech industry. And there's a lot of uncertainty in that industry now. My projections for my business dropped significantly.

by, I don't know, 30, 40, 40% this year alone. And I'm not sure if I should stay in California or if I should be looking for someplace with a lower cost of living. Tell us a little bit about what you're in debt on the home repair and what that's going to look like finishing the repair. And tell us a little bit about what your income is from this tech business.

Sure. So I anticipate the repairs are going to be a minimum of $30,000. And we don't have that cash. And you asked, sorry, the revenue of the business? Yeah, well, what's your income? What do you take home? Yeah, so last year it was just over $200,000. This year it'll be...

you know, maybe 120, 130. Oh, wow. If I don't, if I don't recover, you know, the lost business. What was your best year?

Last year, I've been self-employed for about five years. The first two, I invested some savings. So I had some savings invested up that kind of floated us through. Third year broke even. Last year kind of started to break out. And I was on my way to a good year. But, you know, there's been a squeeze on budgets in the valley. And my clients are feeling that. And that's kind of having a repercussion back on me.

Yeah, there's part of this where, you know, what's keeping you in California, it's so expensive for you, you're making good money, but I feel like you can make 120,000 in a lot of parts of the country, and slowly build it back up to 200, depending on your know how, or if you set up a business elsewhere. What do you think is keeping you there?

So I'm originally from California. I have deep family roots here. My family was, you know, my kids are born and raised here. I've traveled a lot. I have, you know, I've lived in the South, lived overseas. And, you know, in addition to the family roots, I think it's just, it's either habit or just kind of a personal preference. And you're married?

Happily married for 18 years. Okay. And is your wife working? She works part-time and she brings in another 20. Okay. What would it look like for her to work full-time if the kids are going off to college? Would she be willing and able? Yes. And, you know, we're looking at that, but the difference is her, you know, her potential income is a fraction of mine. Um, and, uh,

When we look at the opportunity ahead, the answer is yes, absolutely. She's putting in more hours. She's taking on more hours. And as the kids move out of the house, that'll be easier for her to do. But my potential for income exceeds the $200,000 in the past. I've made even more than that. I'm obviously not self-employed because now I've got my kids.

I've got my own expenses, my own health insurance. But our thought process generally leads towards what can I do to increase our income? What kind of debt are you in right now? None except for the roof repair. I had to go on a HELOC, so we just refreshed our HELOC. It's a 10-year HELOC. That's at 8.3. And what's the balance on that?

About 18 to 20. Okay. Because my concern is you had your best year ever last year, and it still wasn't enough to cash flow the repairs, which tells me that it's not an income problem. And so obviously you live in one of the top three most expensive areas in the country. And so I'm not trying to say that this is a major part of it, but is there also lifestyle spending, other things where it's just kind of that lifestyle creep? You make more, you spend more, and now it's hard to backtrack. Yeah.

I'm fully aware of that risk. Generally, we operate extremely frugally, so we have been in debt in the past. None of us likes it, and we worked really hard to get out of it. The cash flow issue for last year really had to do with... I've been working with a tax preparer who was not experienced in handling my type of business and self-employed and S-corps.

So I got hit – I had $20,000 in the bank, but then I got hit with a big tax bill, which again leads me back to California taxes, California real estate expenses. So that may be a –

path out because we can rebudget and squeeze our expenses down. I've fixed the tax issue, but still, we were just about break-even. And with the loss of income, which again, I'm investing in my business. I'm looking to go upmarket. I primarily work with smaller companies.

companies in the valley. I'm going mid-market. Artificial intelligence is a threat. That's kind of what I wanted to ask is, is there feasibly a way to bring this number back up that's dropped by 40% or is it that AI is kind of stealing your model and you need to find new cheese?

So I think it's a little bit of both. I think over the next two years, so the short answer is I believe I can absolutely get back to 200 and –

Okay. Okay, that's good.

It takes time. Could you also go work for a company and keep this business on the side? It's very alluring, and I love that idea. And the short answer is yes, except layoffs – it's mostly layoffs, and there's a ton –

I mean, I have more experience than most. I've been independent for a while, which makes me more attractive. But, you know, there's not a lot of well, I have not seen a lot of hiring to date. That said, you know, last couple of weeks, I've seen a lot of people get placed. It's just it's just getting, you know, getting hired.

So it's a little bit of a tradeoff of, you know, do I spend my time, my free hours, you know, that I'm not billing? Do I spend it on looking for an ex-client, which has the potential for a real upside? Right. Or do I spend that on a job, which is going to, it's a little tough for me to take a full-time job and pay.

keep my side business and I'm reluctant to do that because I've spent so many, you know, so much time and effort building. I just don't want to see you continue using this, you know, HELOC to go into debt to cover the repairs if things get tight. It feels like your wife stepping in into a full-time role, like you said, she's

It's going to be a fraction of what you're earning, but it could close that gap a little bit. So like to your point, you can track down more leads and secure more clients to kind of grow this percentage a little bit for you. I would at least start with that action and see how that gets you guys. And then the second act, really the first action is let's look at the budget.

let's crunch our lifestyle way down, then wife's going back to work full time and see if those two actions don't clear up enough margin for you to cash flow the rest of this project. Is it just the roof? Is that what you're doing? You have to replace the whole roof? Yeah. And I mean, desperate need of a paint job. I mean, you can see the woods. And we're kind of in the sun, so we need to do that. That's going to be another maybe...

Six to eight. Okay. So let's force rank these things of what's most important. And then, yeah, we're going through the list and cash flowing them. Obviously, the things that are must-haves are the ones that go first. And then other things, they might be smaller projects that you can break into chunks and kind of quell that amount a little bit. But I would clear that HELOC, get this emergency fund in place, and cash flow the rest as you can. And that's going to take keeping that income up and your wife working full-time. Best of luck, Michael. This is The Ramsey Show.

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