Debt Isn't The Problem - Your Mindset Is

Summary

Podcast Summary: The Ramsey Show – "Debt Isn't The Problem - Your Mindset Is"

Episode Overview

In this compelling episode of The Ramsey Show, host Dave Ramsey and co-host Jade Warshaw delve into the intricate relationship between debt and mindset. Released on March 24, 2025, this episode features a series of listener calls that highlight common financial struggles and misconceptions. Through these real-life stories, Dave and Jade provide actionable advice aimed at transforming listeners' financial outlooks and behaviors.

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1. Main Caller: Jeff from Indianapolis – Struggling with His Son’s Tax Debt

Timestamp: [01:05] – [08:09]

Jeff shares a heart-wrenching story about his son, who inherited an insurance agency but struggled with tax debts from his time in the music business. Despite Jeff and his wife’s efforts to support him, his son has accrued significant state and federal tax liabilities totaling an estimated $200,000 due to unpaid returns and penalties.

Notable Quotes:

• Jeff: “Three months ago he called us and told us that he was in tax debt to the IRS again and wanted his mom and me to bail him out...” [07:00]
• Dave Ramsey: “Do you help him today? Jade and I are both saying, sadly, I'm probably wouldn’t.” [08:29]

Discussion Highlights:

• Parent’s Dilemma: Jeff wrestles with whether to use their substantial assets (~$2.3 million net worth) to bail out his son, risking their estate intended for their granddaughter.
• Mindset Over Debt: Dave emphasizes that the real issue is not the debt itself but the mindset and habitual financial mismanagement that led to it.
• Options Presented:
  • Bail Out: Although financially feasible, it sets a precedent of covering up financial irresponsibility.
  • Not Bailing Out: Encourages letting the son face the consequences, fostering personal accountability.
• Estate Concerns: Potential IRS liens on inherited property could jeopardize the estate intended for the granddaughter.

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2. Business Ownership: Graham from Knoxville – Should He Take On Debt to Start a Business?

Timestamp: [11:05] – [20:31]

Graham contemplates re-entering debt to fund a new business venture as he approaches being debt-free. He expresses concerns about balancing the initial costs with potential long-term financial stability.

Notable Quotes:

• Graham: “I have a negative balance every month and I'm kind of trying to figure out how to, how to get positive again.” [46:21]
• Dave Ramsey: “You just called the Ramsey show. Jt, I know you walked into the bearc...” [16:12]

Discussion Highlights:

• Debt Aversion vs. Business Needs: Dave strongly advises against taking on debt, advocating for organic growth through customer acquisition rather than borrowing.
• Practical Advice: Emphasizes the importance of having a solid business plan with cash flow from day one to avoid financial pitfalls.
• Business Planning: Encourages focusing on manageable, low-overhead business models that can generate income without significant initial investment.

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3. Rental Challenges: Patty from Illinois – Financial and Emotional Strain of Renting to In-Laws

Timestamp: [22:10] – [31:20]

Patty discusses the emotional and financial toll of renting their modest home to her in-laws, who require extensive repairs and frequent assistance, disrupting their own financial plans and retirement goals.

Notable Quotes:

• Jade Warshaw: “I think there was just a lack of foresight here and I don't know what the promise was.” [23:58]
• Dave Ramsey: “If you're trying to help your parents, you're trying to help your grown kids, you do not enter into a process that does not bring them to sustainability on their own.” [30:24]

Discussion Highlights:

• Initial Good Intentions: Renting to in-laws seemed like a compassionate choice but led to unforeseen financial drains and relationship strains.
• Evaluating the Decision: Dave advises reassessing the arrangement, considering selling the property to alleviate ongoing expenses and emotional stress.
• Sustainability: Highlights the importance of creating financially sustainable solutions rather than temporary fixes that lead to long-term issues.

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4. Financial Mismanagement: Sam from Lansing – Overdraft Issues and Budgeting Struggles

Timestamp: [34:06] – [55:25]

Sam seeks guidance on overcoming persistent negative bank balances despite efforts to manage finances, revealing underlying budgeting challenges and lack of coordinated financial planning with his spouse.

Notable Quotes:

• Dave Ramsey: “Your emotional state and your sense of control over your destiny changes when your family is fed, the lights and water are paid, and the mortgage is paid...” [50:03]
• Jade Warshaw: “Have you start, have you actually filled out a budget for the month?” [47:29]

Discussion Highlights:

• Budgeting Essentials: Dave stresses the necessity of establishing and adhering to a comprehensive budget to prioritize essential expenses like food, shelter, and utilities.
• Income vs. Expenses: Highlights the critical need to align income with expenditures, advocating for increased income and reduced unnecessary spending.
• Collaborative Budgeting: Emphasizes the importance of both spouses working together on budgeting to prevent financial discrepancies and foster mutual accountability.

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5. Inherited 401(k) Issues: Ryan from Hartford – IRS Withholding on Inherited Funds

Timestamp: [79:46] – [87:35]

Ryan faces a dilemma after inheriting a substantial 401(k) from his late father. Due to delays and lack of communication from the 401(k) provider, a significant portion of the inheritance is withheld for taxes, leaving him uncertain about how to recover his funds.

Notable Quotes:

• Ryan: “The way they explained it to me. I was on the phone with them for an hour and a half this morning with my 401k company...” [80:28]
• Dave Ramsey: “Go to ramseysolutions.com and click on SmartVestor and find a SmartVestor Pro in your area that you like...” [83:58]

Discussion Highlights:

• IRS Withholding: Ryan’s inherited 401(k) is subject to mandatory IRS withholding, resulting in a loss of $55,000 from his original $300,000 inheritance.
• Possible Solutions: Dave recommends seeking professional assistance through Ramsey’s SmartVestor pros to explore options like challenging the judge’s ruling or seeking an innocent spouse provision.
• Importance of Timely Action: Highlights the critical need to act within regulatory timeframes to minimize tax liabilities and recover withheld funds.

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6. Ex-Spousal Tax Debt: Travis – Managing IRS Debt Post-Divorce

Timestamp: [55:25] – [87:35]

Travis confronts a complex situation involving $100,000 in IRS debt incurred during her previous marriage. The joint tax filings have left her personally liable, exacerbated by her ex-husband’s refusal to share the financial burden.

Notable Quotes:

• Travis: “The IRS will not acknowledge that.” [75:09]
• Dave Ramsey: “I think you got lucky. Instead of losing a pile of money, you came home with a pile of money.” [35:06]

Discussion Highlights:

• Joint Liability: Due to joint tax filings during her divorce, Travis is responsible for the full IRS debt despite her ex-husband’s refusal to contribute.
• Legal Challenges: Dave advises exploring legal avenues such as the innocent spouse provision to potentially relieve herself from partial liability.
• Financial Prioritization: Emphasizes addressing the IRS debt before advancing other financial goals, ensuring stability and preventing prolonged financial strain.

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Key Takeaways

1. Mindset Matters: Financial challenges often stem from attitudes and habitual behaviors rather than the debt itself. Cultivating a responsible and proactive mindset is crucial for financial recovery and wealth building.

2. Importance of Budgeting: Establishing a detailed and collaborative budget is foundational in managing finances effectively, prioritizing essential expenses, and avoiding overdrawn accounts.

3. Sustainable Financial Practices: Decisions such as renting to family or taking on business debt should be carefully evaluated for long-term sustainability and potential emotional impacts.

4. Professional Assistance: Complex financial issues, especially those involving taxes and inheritances, benefit significantly from professional guidance to navigate legal and regulatory landscapes.

5. Proactive Financial Planning: Early and consistent financial planning, including timely actions on inherited funds and addressing debt issues, can prevent larger financial crises in the future.

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Final Thoughts

In this episode, Dave Ramsey and Jade Warshaw adeptly guide listeners through multifaceted financial dilemmas, emphasizing that while debt is a common issue, the underlying mindset and financial habits are pivotal in overcoming these challenges. Their practical advice underscores the importance of responsible budgeting, proactive financial planning, and seeking professional assistance when necessary, empowering listeners to take control of their financial destinies.

Listen to the full episode on www.ramseysolutions.com to gain deeper insights and strategies for financial empowerment.

Transcript

[James Childs]

Hey guys, it's James Childs, producer of the Ramsey Show. This week, Dave and the personalities are living it up on the Ramsey Cruise. So we've put together a compilation of some of our favorite calls and segments from the last year. Regular shows are back next week. Hope you enjoy.

[Dave Ramsey]

Live from the headquarters of Ramsey Solutions, it's the Ramsey show, where we help people build wealth, do work that they love and create actual amazing relationships. Jade Warshaw, Ramsey personality, is my co host today. I'm Dave Ramsey. The Phone number is 3882-55225. Jeff's in Indianapolis. Hi, Jeff. Welcome to the Ramsey Show.

[Jeff]

Hi, Dave. Pleasure to talk with you.

[Dave Ramsey]

You too. What's up?

[Jeff]

My wife and I are in our early 70s. My son lives about a mile from us. He's in his early 40s. He relocated back here to Indiana from California about 11 years ago from LA where he was working in the music business and he was going to take over my insurance agency a few years, retired about nine years ago. So he did take that over. He got into tax problems when he was in California because he was working for a music composer that actually treated him as an employee but paid him as an independent contractor. So he didn't know anything about paying taxes, got behind with the state and the IRS, end up owing them 30 or 40 grand. I think we helped him work out a structured repayment plan as a condition to him coming back and getting into insurance. And that's been paid through wage garnishments since then. I discussed with him before he came back the need to stay on top of his taxes and finances because he's never been good with money during that period of time. Many times I'd ask him if he was on this and he'd just blow up and wouldn't talk to me about it. Three months ago he called us and told us that he was in tax debt to the IRS again and wanted his mom and I to bail him out, basically using our share of his of our state when we die. We thought he probably owe about 50 or 60 thousand dollars. Turns out he hasn't filed any state or federal tax returns for the past four years, nor has he paid any estimated taxes for 2023. We're meeting with our accountant next Thursday to go over all this to get specific numbers, but I'm guessing from what I've seen, it's going to be over $200,000 and about half of that is just interest and penalties. He also hasn't paid any 941 withholding or state unemployment tax. He has no business being self employed, obviously. So my question is, we have the assets to do that, but we would have to sell off property and mutual funds. We are in. I don't know if you need our income or what exactly.

[Dave Ramsey]

What's your net worth?

[Jeff]

Net worth probably about 2.3 million and about 80. About roughly half of that is in two pieces of real estate. Our residents here in Indiana and another home we own in Florida.

[Dave Ramsey]

I'm sorry, Jeff.

[Jeff]

80% including the rent, including the real estate. The majority of our assets are in IRAs, Roths and 403Bs. From where my wife taught, we've got about 140,000.

[Dave Ramsey]

What's his income at the insurance company?

[Jeff]

Well, he just resigned from that position because after he took it over he ran it into the ground. He couldn't make a go of it. Right now he's doing a sales job and it seems to be going pretty well. But he's only been doing it a couple of months. He's making about 75,000 a year plus bonuses.

[Dave Ramsey]

Is he, is he married?

[Jeff]

He's not married. He has an 8 year old granddaughter that we absolutely love and spends a lot of time with us. He got, he was going to get married, but they did it kind of reverse. They got pregnant first and then they, they didn't get along, so they didn't get married. So both of them are here in town and both of them are. Have jobs in our own businesses and they get along fine. We all get along fine.

[Dave Ramsey]

The insurance agency was yours and you sold it or gave it to him.

[Jeff]

It was. I actually worked for a captive company, so they actually owned it. And when I left, they paid me a percentage of my renewals and that's what one of the cornerstones of my retirement now. So I didn't have a say in where.

[Dave Ramsey]

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

[Jeff]

He did. Okay, not all of it because they gave some. It was a big agency so they split it up among other agents. They gave him about half of it.

[Dave Ramsey]

Okay, Jeff. And he ran your book into the ground. Okay.

[Jeff]

Ran into the ground.

[Jade Warshaw]

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

[Jeff]

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

[Dave Ramsey]

I hear your disgust for his behavior in your voice. And I also hear a dad that loves his son even though he's been stupid.

[Jeff]

You hear very well.

[Dave Ramsey]

So I guess there's two options. One is you bail him out, which doesn't sound real appealing. If you don't bail him out, what happens? He just has to work with the IRS and for a lot of years.

[Jeff]

Yeah, yeah. We got. The thing is, Davis, this has happened so many times, I can't count them.

[Jade Warshaw]

But you've been there to bail them out every time.

[Jeff]

Yeah. And we had to take him out of high school because of his behavior. We had to send him out to survival camp in Idaho. Then we put him in a private school in California. And all that required a second mortgage on our house at the time. We bailed him out of a car loan that he didn't keep up with, but I co. Signed for. It's just been one thing after another. He just is.

[Dave Ramsey]

I'm okay. I'm okay with no being the answer.

[Jade Warshaw]

Yeah. If it were me, I wouldn't do it.

[Jeff]

Here's. Here's. Here's what. What I'm gonna. Here's what I'm gonna suggest. He got it. He got a severance package from the insurance company that's gonna pay out about 30 grand over the next five years. About 6,000 a year. I told him that we would help him out if he would sign that over to me to pay back what we're gonna advance him, but I initially thought we could do the whole amount.

[Jade Warshaw]

I don't think you should do any of that, Jeff. I really don't.

[Jeff]

That's the way I think. That's the way I think.

[Jade Warshaw]

I think that he's grown, and I think that he makes a living. It's. He's not making. He's not poverty level. There's nothing wrong with him. I think he just needs to be a man and do man things.

[Jeff]

I totally agree.

[Jade Warshaw]

You know, and I think you're a great dad.

[Jeff]

Thank you. There's one other one of the question to kind of take this out a little further, because I don't think my son realizes how baddest position he's in. If he pays this over the next 20 or 30 years, he still may not have it paid off when we die.

[Jade Warshaw]

And that's all right.

[Jeff]

We may. Yeah. But we have. We have all of our. All of our assets and our. Our real estate is in trust, and my daughter is the trustee and the executor, and we cur. We currently put a clause in our will that allowed my son to take our house here as part of his settlement of the state because he loves our home. But I'm concerned that if he doesn't have this paid off, I don't even know that I want to leave that share of the estate to him because I think the IRS could put a lien on that.

[Dave Ramsey]

They can. And after. After he becomes the owner. They can. Yeah.

[Graham]

Yeah.

[Jeff]

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

[Dave Ramsey]

I think you can. I think these are two separate questions. Do you help him today?

[Jeff]

They are, yeah.

[Dave Ramsey]

Do you help him today? Jade and I are both saying, sadly, I'm probably wouldn't. Probably wouldn't.

[Jeff]

That's the way I'm thinking.

[Dave Ramsey]

And then do I change the d. Change the will in a few years? I might. You can change it now, you change it later.

[Jade Warshaw]

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

[Dave Ramsey]

You could leave it in trust for the granddaughter and bypass it. Bypass the. The kid. They can't seem to find his way. Yeah. That's so sad. This is the Ramsay Show.

[James Childs]

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[Rachel]

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[Rachel]

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[Dave Ramsey]

Foreign Jade Washaw Ramsey personality is my co host today. Graham is with us in Knoxville. Hey, Graham, how are you? I'm doing well, Dave.

[Graham]

How are you?

[Dave Ramsey]

Better than I deserve. What's up? Me and my fiance are getting married next June and we've been bouncing around.

[Graham]

The idea of buying a home versus renting. And I wanted to get your thoughts on.

[Dave Ramsey]

On that. Yeah, I would not buy until you're married for sure. Is that what you're talking about?

[Jeff]

Yeah.

[Dave Ramsey]

We were thinking, you know, right around.

[Graham]

When we're getting married next June.

[Dave Ramsey]

Yeah.

[Jade Warshaw]

Do you guys have any. Will you have debt together?

[Dave Ramsey]

We will have very little debt.

[Graham]

She has a student loan for about $7,000. We saved up a pretty good bit going into our marriage and plan on combining our finances and following, you know, a lot of your instruction on that.

[Dave Ramsey]

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

[Graham]

Yes.

[Dave Ramsey]

Okay, then. According to the baby steps and what we teach, you would be in a position to buy a home. Let me tell you an idea to think about, okay. And it's not a hard and fast. I wouldn't call you stupid if you didn't do it or something like that. But here's an idea to think about. I think because I'm old and I've seen a lot that one year after you're married, you will pick a different house than one month after you're married. Because I think you will learn a lot about each other during that year. And I always joke and say it takes about a year of marriage to know how close to your mother in law to buy, but that's the kind, you know, you get to know each other. I would rather relationally, you spend the first year of your marriage, all of your energy on your relationship, not on hanging curtains and picking wallpaper and for God's sakes, doing a renovation. Okay? So I mean, I just, I love the idea of the house not being the purchase, the move not being an emotional relational drain. Instead, you all just get really comfortable with each other and pile up a big old stack of cash and the following spring, buy a house. I like that. And it comes from The Old Testament biblical story in 2 Samuel that the young warriors in Israel in those days were not allowed to go to battle in the first year of marriage. They had to stay home and take care of the family. They were not allowed to go to battle until they'd been married at least a year. And so that, you know, it's a bit symbolic or metaphorical, if you will, and it's not something that you would be completely unwise and stupid and foolish and all that. No, it's none of that. I just think you're gonna make a different decision a year later.

[Jade Warshaw]

I absolutely agree with that. And you've known each other. You get to know each other a little bit better by then.

[Dave Ramsey]

We've been dating six years. Yeah. You ain't been living together.

[Jade Warshaw]

It's different.

[Dave Ramsey]

I mean, you've not been married together. You might have been living together. I don't know what you're doing, but.

[Jade Warshaw]

Yeah, but it's different.

[Dave Ramsey]

I, I, it's, it's, it's a different deal, man. And, and it's not, it's not that dramatic really, but it's just, it's subtle. Yeah, it's. And, and the thing I also, the, the thing that that makes you do is it makes you push back against the whole culture that's yelling at you, Buy a house, buy a house, buy a house. Oh, renting is throwing your money away. Buy a house, buy a house, buy a house. Oh, renters are going to hell. Buy a house, buy a house. You know, people are just go crazy. They're like a beagle chasing a rabbit, man. And it's just, you know, it's okay to have a little bit of patience. Home ownership is a great plan. Owning a home and getting it paid off is a great financial wealth building plan. But everybody doesn't have to buy a house right now. Just calm your butt down. You know, it's like, and the longer.

[Jade Warshaw]

You wait, the more you have more money to put down on it.

[Dave Ramsey]

Yeah.

[Jade Warshaw]

So there's that.

[Dave Ramsey]

And who knows what the interest rates will do during that time. Might be fun.

[Jade Warshaw]

It might. Oh, that's true. Are you trying to make a call here, Dave? Are you calling something?

[Dave Ramsey]

Nope.

[Jade Warshaw]

Okay, just check.

[Dave Ramsey]

I'm just saying it'd be, will be after an election at that point. And we'll see what's happening.

[Jade Warshaw]

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

[Dave Ramsey]

That happens around here a lot because, yeah, I've seen things. You get old, things circle back around if you keep the suit coat long enough. It comes back in style, you know, so. All right, Here we go. J.T. is in Santa Fe, New Mexico. Hi, J.T. how are you?

[Graham]

Dave and Jade, how's it going?

[Dave Ramsey]

Better than we deserve. What's up?

[Graham]

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

[Dave Ramsey]

Hey, way to go.

[Graham]

My question is, is it foolish to go back into debt?

[Jade Warshaw]

Yes.

[Graham]

Start a business?

[Jade Warshaw]

Yes.

[Dave Ramsey]

You just called the Ramsey show. Jt, I know you walked into the bearc. That's the bear. If it was hungry, you already know the answer.

[Jade Warshaw]

Jt, what's the business?

[Graham]

My trade or work is I'm a 401k consultant. I do ERISA compliance and. I don't know, I just kind of start my own firm. And it's a lot to try to just bankroll.

[Dave Ramsey]

Why? Why? What do you got a bankroll?

[Jade Warshaw]

That's what I'm wondering.

[Dave Ramsey]

Well, I got out of cash flow your day one.

[Graham]

Well, I mean, everything from, you know, software agreements. Look, all sorts of stuff.

[Dave Ramsey]

Wait a minute. For what?

[Jade Warshaw]

You don't. You got to have customers first.

[Graham]

Well, I mean, I not so much worried about that. Part of getting everything started.

[Jade Warshaw]

Yeah, but you're going.

[Dave Ramsey]

What are you getting started?

[Graham]

What do you mean?

[Dave Ramsey]

I mean, you don't have any money.

[Graham]

Not enough to get this thing going.

[Dave Ramsey]

Well, what do you think it takes to get this going? Why? Why? Have you decided what you're describing to me? You need a computer and some sweat.

[Jade Warshaw]

Okay. And a customer.

[Dave Ramsey]

Yeah. Or six.

[Graham]

Well, that's the thing, you know, for what I'm doing, I'd be go. I'd be whale hunting in a canoe. And I needed some stuff to be able to do such things.

[Dave Ramsey]

You are not ready to open a business and leave your job when you have absolutely no customers. Whale hunting in a canoe means that you don't have a clue where your customers are coming from. You're not ready to open a business and has nothing to do with a loan. You need some customers on the hook.

[Graham]

Well, the first thing I do, I would take my current job and ask that they 1099 me and I would contract all the work that I'm doing right now and then go look for my own bigger client. So I have an idea for cash flow.

[Dave Ramsey]

Okay, so now we're eating. Now why are we whale hunting in a canoe?

[Graham]

Well, we gotta go after big fish to eat big, right?

[Jade Warshaw]

Well, I think you're.

[Dave Ramsey]

No, I mean, Rabbits are more plentiful. Let's kill some of those. Neat.

[Jade Warshaw]

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

[Dave Ramsey]

And little to no cash. Yeah, you need enough to eat on, but I don't want you floating in a canoe looking for a whale, starving to death. Yeah. Because you didn't have any plan or any background. But if you got a plan for cash flow day one on the 1099 side, then. And you think they'll do that? What's the probability of them doing that?

[Graham]

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

[Dave Ramsey]

You know, this is so vague and you have not proformed this out. The business you're in demands that you do a better job of proforming than you have done so far. This is a vague. A group of vague generalities. And I'm going to go borrow money. No, you don't need to borrow money. You need to organically cash this little service oriented business and you're gonna be just fine. And you need to put together a business plan and process that has the probability of you being able to eat and cover the cost of basic software services. But there's no big 500,000 or 50,000 or $20,000 outlay for you to come out of the ground being a consultant.

[Jade Warshaw]

Yeah, that's. I think, Dave, people think if you build it, they'll come. And I think it's the opposite. You've gotta go get them and then build it while like, you've gotta build it while they're coming.

[Dave Ramsey]

If you build it, they will come in. The movie world is called the field of dreams. The business world is called a field of nightmares. So. No, yeah, you don't. You don't want to do that. You need to have. You need to have the. Some. You know, I tell our guys all the time, hey, elephant hunting is great, but they're a lot more rare than rabbits. You need really good on rats. There's lots of rabbits. Go get the rabbits. And occasionally you stumble into an elephant, then that's extra, but let's go get the rabbits. Sounds like a business model that churns cash. Here, stack some cash, you're fine. Jt, do not borrow into the vagueness that you are describing us. You're really gonna make a mess. This is the Ramsey Show.

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[Dave Ramsey]

Jade Washaw Ramsey personality is my co host today. Today's question of the day is brought to you by Y Refi. If private student loan debt is taking away your peace of mind and you don't see any way out you need, why refi? Why refi refinances defaulted private student loans that other places won't touch and they give you a low fixed rate loan that's custom built for you. So go to yrefi.com Ramsey that's the letter y r e f y.com Ramsey might not be in all states.

[Jade Warshaw]

Today's question comes from Patty In Illinois. My husband and I purchased a very modest home for his parents due to the rising cost of rent in our area. My father in law is disabled, my mother in law works full time at a very modest job and they pay us a small amount of rent each month. It's been five years now and the home has required a lot of repairs such as water intrusion of mold. We've been able to cash flow the problems but it has cost over 15,000, not to mention our sanity. It has also changed our relationship because they frequently contact us for issues or requests. In spite of many conversations about what is quote nice to have versus what is quote needed. We're trying to honor our word, but it has been very taxing emotionally and financially. We're in baby step six and we need to plan for our own retirement. I keep telling myself to suck it up, but we are losing tons of money with no end in sight. I've listened to the show long enough to know we probably shouldn't have done this, but at the time it felt like the right thing to do. What would you do if you were in our shoes? Well first off, I wish I had more information, Dave. I want to know how old these parents are. I want to know, I want to know more. I want to know the value of the house. Because I'm thinking if you bought a house in 2019, like the value's probably gone up a good deal. So they're, she, they might not be losing money in the way that she thinks now. The actual idea of doing this I think was a really bad idea. I think there was just a lack of foresight here and I don't know what the promise was. Did they say, hey, we're doing this house, you're gonna live here and you know, until you die and we're covering it? I don't know what the promise was, but I think that they may have, you know, brought promised more than what they could deliver on. And I think that's probably what she's feeling some type of way about.

[Dave Ramsey]

So she's got a lot of drama in her words.

[Jade Warshaw]

Uh huh. She does.

[Dave Ramsey]

And it's her in laws.

[Jade Warshaw]

Uh huh.

[Dave Ramsey]

The piece of information I would like is I'd like to talk to her husband and see if he feels the.

[Jade Warshaw]

Same way and if it was everybody's.

[Dave Ramsey]

Idea bothering him to the same degree or if this is in law drama that you are now molding or laying over on this house.

[Jade Warshaw]

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

[Dave Ramsey]

No, I think, I don't think it was a hidden thing, but I think he went into it and went, I bought mom and dad a house and dad's disabled. Mom got a, you know, not, not much of a job and they pay us what they can pay us and we fix the stuff that breaks and yeah, and she's going, oh God, I'm dying.

[Jade Warshaw]

Yeah.

[Dave Ramsey]

You know, it's like. So I don't, I, you know, $15,000 is not. We are losing tons of money for five years.

[Jade Warshaw]

No, it's nothing.

[Dave Ramsey]

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

[Jade Warshaw]

Some rent, which is good.

[Dave Ramsey]

And it's going up in value.

[Jade Warshaw]

Going up in value.

[Dave Ramsey]

Mom and dad are going to pass someday and you're going to have a nice asset that's going up in value that you can sell and probably pay.

[Jade Warshaw]

Off your house and more if you haven't already.

[Dave Ramsey]

So I think I would. First thing I would want to is get to the bottom and say what Is where is all this resentment really coming from? Is it really coming from the house? I kind of don't think it is.

[Jade Warshaw]

I don't think so. I. Now there is part of it where they may have bitten off more than they realized they were going to be chewing. Do you know what I'm saying? Like in, in theory it sounded good. And then when you start walking it out, you're like, oh my goodness. But to your point, if she's writing into, to our show, there's something that they're not talking about.

[Dave Ramsey]

If your mother in law is calling you and asking you to fix something at a house that you gave to her at a deal and you already had, you know, mother in law, itis, then that would just make it worse. Right? I mean that's, it's like, well, you know, the difference in what is needed and what's nice to have.

[Jade Warshaw]

Yeah.

[Dave Ramsey]

But you know, it's a modest home. They're modest people. She makes a modest income. There wasn't anything in here lavish. There's also, though I didn't hear a jacuzzi being installed.

[Jade Warshaw]

I think to, to, to quote myself, I think there's also a vocab rehab that needs to happen.

[Dave Ramsey]

Amen.

[Jade Warshaw]

Because here she's saying, my husband, I purchased a very modest home for his parents. They don't own the home, they're renters. You guys bought a house for yourself. It's your asset. It's your home. And I think if you start viewing it as an asset that we have, it's going to change your rental.

[Dave Ramsey]

I have a rental house and it had a water leak and I had to fix them all.

[Jade Warshaw]

That's right. As opposed to it's, guess what, I've.

[Dave Ramsey]

Had to do that a bunch of times.

[Jade Warshaw]

Right. So that'll help.

[Dave Ramsey]

And zero drama about it.

[Jade Warshaw]

That's right. Because fixed it and it's going up in value.

[Dave Ramsey]

Tree fell on the back porch. Just fixed it. It's just, you know, it's just you own a house and crap happens. Right. I mean it's like the other question that I don't. I'm with you. I don't think we have enough information because it's very interesting question.

[Jade Warshaw]

It is.

[Dave Ramsey]

And I'm impugning a lot on you, Patty. I apologize for that. But trying to figure out what's really happening here and therefore to what to.

[Jade Warshaw]

Do with this because also their age might play into it.

[Dave Ramsey]

If they're, if they're 87, suck it up. If they're 57, kick them out. You Know, sell it and give them the money that it brings. Whatever it brings. Give them the money from it. Because you didn't. You didn't buy it for money. You bought it to help them. And, you know, if you want to give them the. Whatever proceeds are. Because you're going to have made some money, to your point, from 2019. So, yeah, that's. That's. That's part of it. And. Yeah, yeah. And I think then I would want to just really ask. I don't know.

[Jade Warshaw]

Well, walk that out. What would you do? So let's say. Let's say she's listening. She goes, yeah, you know what? They are in their 50s. They need to get out of this house. They've been paying us a small amount of rent. What would you suggest in that situation to fairly.

[Dave Ramsey]

I mean, I don't care if you give them the money, really. I mean, you sell the house and whatever, whatever. I don't know if there's a mortgage here or not, but pay off all the expenses and then whatever money you've made on the house, give it to him. I don't care. Oh, I'll tell you, the other piece. I don't know right here is I don't know Patty's income.

[Jade Warshaw]

Yeah, that's right.

[Dave Ramsey]

Patty makes $300,000 a year. Stop whining and deal with it.

[Jade Warshaw]

That's another good point.

[Dave Ramsey]

If Patty makes $55,000 a year, then you were. You did something you couldn't afford to do here.

[Jade Warshaw]

That's true.

[Dave Ramsey]

And that's where some of this drama is coming from, is the pinch. Because it's like, oh, it's. We're. We're. But we're. It's been very taxing emotionally and financially.

[Jade Warshaw]

Yeah.

[Dave Ramsey]

Okay. I don't understand. It's. 15 grand is not taxing emotion. I mean, it's not. But so that. That's.

[Jade Warshaw]

Yeah, it's a lot of details. Maybe call in sometime. Patty.

[Dave Ramsey]

Yeah, yeah, we. We do that. So you can contact them back off the email if you want to. James, we take the call because I. I don't know what to do. But if. Yeah, I think we could give a couple of scenarios if. Then. Okay, kind of flowcharted. If they're super old and you make a lot of money, then this drama is in your head. Calm down and suck it up. If they're super young and you don't make a lot of money, maybe you need to move them out and sell the house. I think those are the two variables that could be there. I don't hear a lot of mother in law drama, but I just think it was curious to me how much drama she had. And I wondered if her husband would feel exactly the same way. I bet he doesn't.

[Jade Warshaw]

Now, if they're only paying, you know, the mortgage is 2,000 and she said they're paying a small amount of rent, so they're paying 1,000. The proceeds, I'd split.

[Dave Ramsey]

Okay. I don't care. The thing is, I don't. You're not selling it because you need money.

[Jade Warshaw]

That's true.

[Dave Ramsey]

She did not bring that up.

[Jade Warshaw]

You're right.

[Dave Ramsey]

She did not get rid of an. An emotionally and financially draining situation, to quote her.

[Jade Warshaw]

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

[Dave Ramsey]

It could be. And it could just be that the drama. Tired of giving them anything and I'd rather put it in my account.

[Jade Warshaw]

In law situations, they get, they get salty really quick.

[Dave Ramsey]

Not going there. Yeah, not gonna do that. You're right to that. You started the whole thing right when you said you shouldn't have done it.

[Jade Warshaw]

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

[Dave Ramsey]

When you're trying to help your parents, you're trying to help your grown kids, you do not enter into a process that does not bring them to sustainability on their own. And so you get them up where they're standing on their own feet and you let them go. So whatever you're doing, create a situation that gets them up on their own feet instead of a continuous drain. And so that's so you people paying your 28 year olds private schools for their kids, that's not sustainable. You shouldn't have entered into that. This is the Ramsey show.

[Rachel]

All right, Dave, you have some strong opinions possibly. Yeah, I think so. Okay. Because you really prefer credit unions over big banks. So why, why is that?

[Dave Ramsey]

Well, credit unions for one thing, are non profit, which means that the members, the customers own the credit union. So any profits that the credit union makes goes back into customer pricing so you get better interest rate on savings, cheaper checking and so on, that kind of thing. And what's more important than that though is the fact that the customer is the owner, changes the spirit on the credit union. So I find very few credit unions that aren't very customer centric.

[Rachel]

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

[Dave Ramsey]

You know, that's why we're partnering with them, because they've got a scope to be able to handle the Ramsey audience. And they're the right kind of people with the right kind of values. And they've done a really, really good job with customer service and the deals that they're offering. The Ramsey Tribe is incredible.

[Rachel]

Yeah, absolutely. And you're right, their customer service is unbelievable. Winston and I just signed up and we got an account.

[Dave Ramsey]

Yeah.

[Rachel]

And I'm not kidding, it took, it took less than five minutes. It was so user friendly. Like the step by step approach was unbelievable. And then the next day my phone rings and it says fair wins on my phone. So I answered it and talked to someone there and they said, yeah, they give calls to every new customer. And so again, they just really care about your experience and I, I so, so appreciate that. So again, you guys, I know it can be a pain to switch banks or to open up new accounts, but Fairwinds, again, they make it so easy. Plus, anything that you can do at a traditional branch, you can do with [e-mail] or on their app. And you'll have free access to over 33,000 ATMs.

[Dave Ramsey]

You guys know how much I hate banks in general and so for me to do this is a big deal. Talk to our friends at Fairwinds and check out the combined checking and savings bundle that they created just for the Ramsey Tribe. You guys, it's incredible.

[Rachel]

Yeah, you guys, it's so easy to join Fairwinds no matter where you live. So go to Fairwinds.org Ramsey to learn more. That's F a I r w I n d s.org Ramsey.

[Dave Ramsey]

Jade Wash out Ramsey personality is my co host today. Open phones, triple 882-55-5225. Sam's with us in Lansing, Michigan. Hey, Sam. Welcome to the Ramsey Show.

[Travis]

Hi.

[Dave Ramsey]

How are you guys today? Great. How can we help? So my wife informed me a couple weeks ago that she was 23, $24,000 in credit card debt without me knowing over the course of last year.

[Jeff]

And I was wondering what would be the best way to pay it off.

[Graham]

We have a couple options. I got lucky.

[Jeff]

Rather be lucky than good. I won $36,000 at the casino.

[Graham]

But that money I ordered about a.

[Jeff]

Month ago and I already have that.

[Dave Ramsey]

Money tied up in money market because I'm using that for the down payment.

[Jeff]

On my Next home.

[Dave Ramsey]

We could cash.

[Jeff]

In her 401k, which has $25,000 in.

[Dave Ramsey]

It, and pay it off. Or do we just kind of suck it up and just make the payments and just pay it down month by month? I just wonder what the best option.

[Jeff]

Would be to avoid the interest payments.

[Dave Ramsey]

And everything like that. Yeah. You realize the interest payments aren't the real problem in your house, right? How long have you been married? How long have you been married?

[Jeff]

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

[Dave Ramsey]

Okay. And how long has she had this debt?

[Jeff]

A year. It started basically when my son was.

[Dave Ramsey]

Born a little bit over a year ago.

[Graham]

And it was just online ordering stuff like that.

[Dave Ramsey]

Three different credit cards, going shopping kind of thing.

[Jeff]

And I never really noticed that we have separate finances. And I never really noticed it because we don't have any debt other than our house. We don't.

[Ryan]

We don't.

[Dave Ramsey]

So how's that working for you? Oh, it was working fantastic up until a couple weeks ago. Don't think it is, do you?

[James Childs]

No.

[Dave Ramsey]

Not been work. It's not been working for some time. Like ever in your married life? It just was revealed. It was just revealed a couple weeks ago, correct? Yeah. You all are not on the same page. Not at all.

[Jade Warshaw]

Also, she's spending as a coping mechanism. She. She's. There's something that she's trying to cope with, and she's not doing it in a healthy way. And so she's looking to spending, and.

[Dave Ramsey]

So she revenge spending because you're gambling. I don't gamble that.

[Jeff]

I. That was the second time I had.

[Dave Ramsey]

Been at the casino in five years.

[Jade Warshaw]

What'd you spend? And did you budget for it, or did you just go and do it on a whim?

[Dave Ramsey]

We just did.

[Jeff]

We just did it.

[Dave Ramsey]

We just did it on a whim, basically. Okay. And. All right, So I think the thing that. Number one, when we're meeting, when we're researching millionaires, one of the things we find typically among. And we've done the largest study of millionaires ever done, Sam, is that the husband and wife are working together. And there aren't secrets, and there is not impulsive spending. And the number of millionaires in our study that became millionaires in a casino is precisely zero. The number of millionaires in our study whose wife or husband hides their finances from them because they don't have good communication is precisely zero. So those are the things that concern me more than the actual credit card debt. Do you see what I'm saying?

[Ryan]

Yes, I do.

[Dave Ramsey]

So if you guys want to prosper and do extremely well, which is our goal, to help you, because we love you, we want you to win. It would entail combining your finances, only one checking account, and a budget meeting every month that the two of you sit down together. Both of you have a vote. Some reason she doesn't think she's got a vote. She had to hide it from shame or guilt or something. And we've got to rebuild trust, which has been violated here. And the two of you together. She has a vote. You have a vote. We are in agreement about what our future goals are and where we're going from there. And so you don't agree with this, but I'm going to tell you what I think, okay? Because you called here, I think you both did something stupid. And the only good news is it cancels out. I think you got lucky. Instead of losing a pile of money, you came home with a pile of money. That's the worst thing that can happen at a casino because you're so dumb. Then you go back again thinking you're that guy. And so I'm cashing this money out, paying off these credit cards. We're going to combine our finances and we're going to set a goal where we're very diligent, very steady, not flashy, to save up a down payment for a home together. In the meantime, whatever spending we're going to do that is reasonable spending, the two of us are going to be in agreement every single month before the month begins. And not following through on that, you or her is lying to your spouse. And so what she did here is not cute. It's not funny. And what you did here is not cute. And it's not funny. It can be devastating if it's extended out and forward. Both of them can be. And so I. You know, I'm fussing at you because I love you and I want you to win. But if you were my kid and you're 30 years old, this is exactly how I would talk to you and what I would tell you as your friend. Not because I'm your dad, but because I love you and because I want you to win. And so, Sam, if you haven't had. In our world, we call what she did financial infidelity because it activates the same place in you that sexual infidelity does because it's a violation of trust to run up $24,000 and destroy or rather delay your dream of buying a home because of financial misbehavior and a lie.

[Jade Warshaw]

Yeah, and to be honest, if I'm in their situation, I'm probably going to seek out some counseling.

[Dave Ramsey]

Some marriage counseling.

[Jade Warshaw]

Yeah, because they're, they're early on and, and this is not. They're still forming that, that foundation. And this is not the sort of thing that you want in the foundation. You want to get to the bottom of this. Find out why you guys are keeping secrets. Find out why she's feeling. Ne. Feeling it's necessary to medicate by spending and, and possibly same for you, Sam.

[Dave Ramsey]

And I think if I were in your shoes and I was 24 and some guy said to me what I just said to you, I would have a tendency to blow it off. Like, you're overreacting, Dave. You're overstating this. And what I'm saying is these two things, these three things not working together, hiding and lying about money and gambling are three things that will cause you to not become a millionaire. So this is like a million dollar discussion. That's why this is important. So I'm not overreacting because even though it's only 24,000 and 36,000, it's small in the scope of life. The behaviors are going to prohibit you or delay you, at minimum, from becoming wealthy to the tune of millions and millions of dollars. So I'm not overreacting because this is millions of dollars we're talking about.

[Jade Warshaw]

Absolutely. Over time. Yeah. Dave, you're being kind because this, this, this is a big deal to me. I mean, if Sam Warshaw. If I found out Sam Warshaw went behind my back and spent $25,000, there'd be an atom bomb that went off. You would see the explosion.

[Dave Ramsey]

I'm just saying there'd be a little, Little, Little fire.

[Jade Warshaw]

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

[Dave Ramsey]

So. But I, I kind of think it might been more likely you that would do that than him, though you know what?

[Jade Warshaw]

That's probably true because I am the spender, he is the saber.

[Dave Ramsey]

He's Mr. Deliberate.

[Jade Warshaw]

Yeah, he is. Which is even more reason. If he did that, I would have gone off on him. But it's, it's what you said, these little things, it makes me think of that, that scripture that says a little 11.

[Dave Ramsey]

The only time that we've even come close to that at our house, and we did come in the early days, we had lots of arguments about money and fights was when I was so overbearing. I know you can't imagine that happening, that Sharon didn't feel like she had a vote. And she will tell you, at about year seven of our marriage, she felt like she got her voice is the way she says it. And she never lost it since. I'll just tell you. But her voice. Her voice. But I got my voice and. Yeah, but it was. She got her vote. Yeah. And from then on, she's kind of had two. But to make up for the lost years. But that's the thing. If you don't feel like you have a voice in the thing or you can't make a lot, you can't get there in a discussion, then one spouse tends to go off and hide stuff and do things. And that's not an indication. It's not a money problem. That's a relationship problem.

[Jade Warshaw]

That's right. That's right.

[Dave Ramsey]

A relationship problem. And it was at my house, too, Sam. I'm just admitting I'm just like you, but I'm just old and it was a long time ago. That's the only difference. So don't be mad at us. We love you. That's why we're picking on you. But I would fix those things in my house because they're costing you over the rest the scope of the rest of your life millions of dollars if you don't fix them. This is the Ramsey Show. Dave. Here you can find all of our shows with the Ramsey network app on your smartphone. It's the only place to listen to the entire back catalog of episodes. Download the Ramsey network app in your favorite app store today.

[James Childs]

This show is sponsored by BetterHelp. All right, you've heard me say this a thousand times, and I'm going to keep saying it. You're worth being well, and I believe therapy can Help. Right now, BetterHelp is offering 90% off your first week of therapy now through March 31st. So if you've been on the fence, this is your chance to try therapy for a fraction of the cost. Because let's be honest, we all spend money on things we hope will make us feel better, like new clothes, organic groceries, gym memberships. But when it comes to actually digging in and getting real with our mental and emotional well being, we hesitate, we pause. And I know actually going to therapy can seem like a huge first step, but please hear me. Your mental and emotional health are just as important as your physical health. BetterHelp makes therapy more accessible than you think because it's online so you can talk with your therapist. When it works for your schedule, you just fill out a short online survey to get matched with a licensed therapist and you can switch therapists at any time for no extra cost. Your well being is worth it and this offer makes it easier than ever to start. 90% off your first week of therapy now through March 31, 2025. Visit betterhelp.com DeLoney to get started. That's BetterHelp H-E-L-P.com DeLoney.

[Dave Ramsey]

Live from the headquarters of Ramsey Solutions, it's the Ramsey show where we help people build wealth, do work that they love, and create actual amazing relationships. Jade Washall, Ramsey personality, is my co host today. Thank you for joining us, America. We're glad you're here. Open phones at Triple 882-55-5225. That's Triple 882-55-225. Travis starts us off this hour in Toledo. Hi, Travis. Welcome to the Ramsey Show.

[Graham]

Hi. Thank you for taking my call.

[Dave Ramsey]

Sure. What's up?

[Graham]

I have a negative balance every month and I'm kind of trying to figure out how to, how to get positive again. Starting off kind of a little rough every single month after bills and everything.

[Jade Warshaw]

So your, your bank account is negative every month. Like you're overdrawn?

[Graham]

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

[Jade Warshaw]

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

[Graham]

I've been working on trying to do one. I recently got the every dollar app premium because it was able to track my stuff better. But yeah, I'm struggling like weekly with groceries. It's just with a family of five, it's hard to keep it under a certain amount.

[Jade Warshaw]

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

[Dave Ramsey]

You and your wife.

[Jade Warshaw]

Yeah. Have you start, have you actually filled out a budget for the month?

[Dave Ramsey]

No.

[Graham]

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

[Jade Warshaw]

Okay. So that's step one. Matter of fact, I want you to go to everydollar.com budgeting when this call is over and I want you to sign up for the next webinar because if the issue is I've got it. Is it, you know, is it, I'm not, I don't have time to do it or I'm not prioritizing the time to do it. I really want you to Prioritize the time. Sit down with your wife tonight, Start looking at it.

[Dave Ramsey]

What's your take home pay?

[Graham]

Take home is about 3,600amonth.

[Dave Ramsey]

How much is your rent?

[Graham]

The mortgage is 560amonth.

[Dave Ramsey]

What's your car payment?

[Graham]

Car payment is a Little High. It's 441amonth.

[Dave Ramsey]

And five kids.

[Jeff]

Three kids.

[Graham]

Wife that unable to work due to. Yes, five people that is unable to work due to medical issues.

[Dave Ramsey]

What kind of medical issues?

[Graham]

It's actually like a hereditary degenerative disease where it's actually just getting worse as time goes on, too, so.

[Dave Ramsey]

Okay. How old are your kiddos?

[Graham]

I got triplets. Four and a half years old.

[Jade Warshaw]

Wow.

[Dave Ramsey]

Okay.

[Graham]

So consumer debts kind of got me, you know.

[James Childs]

How much debt do you have?

[Graham]

Not including the cards, about 26,000.

[Dave Ramsey]

Okay, here's the thing. We got to start at the other end. Groceries. Don't catch the slack. Groceries are the thing. So we're going to start with this 3600 at the top of the page. You follow me?

[Graham]

Yes.

[Dave Ramsey]

Minus the important things. First, the most important thing in your entire budget. Food. You have the money to buy food. You may not have the money to do some other stuff, but you have the money to buy food, Period. End of story. Okay, so 3600 minus food. What are you all spending on food?

[Graham]

I try to keep it around 180 bucks a week, but, I mean, it's usually 180 bucks to 20.

[Dave Ramsey]

How often do you eat out? How often do you eat out?

[Graham]

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

[Dave Ramsey]

Okay. All right. So. So if we take 800 bucks, 700 bucks for your budget, for food. Right. For a month. For a month. That leaves us $2900 so you can buy food. Foods first. You got me?

[Graham]

Yes.

[Dave Ramsey]

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

[Graham]

Yep.

[Dave Ramsey]

And then we pay the light bill and the water bill so we're warm, we're fed, and we're dry. This is survival. First, you're following me?

[Graham]

Yes.

[Dave Ramsey]

We may not keep this stupid car because it's freaking out of control. If we can't come up with a way to get it paid off soon, it's got to go. But for now, we're going to pay the car payment, too. Food, shelter, clothing, Transportation and utilities are basic necessities of life. We call those the four walls. You do the four walls before you do anything else. Everyone else. Let me tell you who's at the bottom of the freaking list. Student loan. How big's a student loan?

[Graham]

I don't have one.

[Dave Ramsey]

You know who's right at the bottom next to them? Stupid credit card companies. Because you know what they can do if you don't pay them? Nothing except destroy your credit and sue you eventually, eight years from now. But we're going to take care of them before we get there, okay? They're at the bottom of the page. So let me just tell you. Your emotional state and your sense of control over your destiny changes when your family is fed, the lights and water are paid, and the mortgage is paid, and you are in a different place emotionally and spiritually. The rest of it's just a stupid game I'm behind on. But right now, it feels like life or death because you've got groceries as the last thing, not the first thing. Yes, by the time I pay groceries, I'm overdraft. No, by the time you pay MasterCard. Oh, wait, we're not going to go into overdraft, so we're not paying MasterCard. Screw them. Okay, for this month. And then we've got to adjust our income now. You got to get your income up, dude. What are you gonna do to get your income up?

[Graham]

It goes up progressively every. Every six months, as long as I keep up my. My apprenticeship and everything.

[Dave Ramsey]

So you got. You got six months of hell then ahead of you. What are we gonna do in the short term to get it up? You're going to trade school three nights a week. What are we doing on those other nights? Because you're about to do some more work, dude.

[Graham]

Your family's homework and doing whatever I can.

[Dave Ramsey]

Yeah.

[Graham]

Around the house, housework and everything.

[Dave Ramsey]

Yeah, you're going to probably not be doing as much of that. The laundry may pile up a little bit because you got to go make some money, because 3,600 bucks is tough. So the way you. The way you get this straight side up is you first take care of necessities, and then two, you get over the top of it. And we're going to cut expenses and add income, and that creates margin, and that will get you under control, Travis. So you do have a very tight, tight, tough situation. So something's got to go out of the expense lines, and something's got to come up quickly in the income side because, you know, it's not easy. You got a really nice low house payment. It's the best thing in this whole story right now. So you got, you got a fixable situation, but the faster you get the income up and the out go down, the faster the pain is going to leave.

[Graham]

Okay.

[Dave Ramsey]

Does that make sense to you?

[Graham]

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

[Dave Ramsey]

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

[Graham]

Yeah, I understand.

[Dave Ramsey]

Okay. When you get that straight in your head, all of a sudden, it changes everything. Because if everybody's fed and the lights are done and the water's paid and the house payments paid, I mean, we live to fight another day. But if we pay MasterCard and then we don't have enough money to feed the triplets. Dad gum. That's not fun. Been there, done that. That terrorizes your butt, doesn't it?

[Jade Warshaw]

Yes, it does. Been there, done that.

[Dave Ramsey]

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

[Rachel]

There's a time in your life and did the baby steps for renting, but you don't want to do it forever, because when you rent, you're still paying for a mortgage, just somebody else's. Plus, rent means instability in your budget because it always goes up, never down. So when you're ready to buy, make sure you work with a mortgage partner. You can rely on Churchill Mortgage. Churchill is Ramsey, trusted to help you make the move from renting to home ownership wisely. Churchill understands that when you buy a home the Ramsey way, your mortgage payment will be a consistent, manageable part of your monthly budget. Plus, when your home is paid off, that was your largest expense. Now it's extra money in your pocket and an asset towards turning you into a baby steps millionaire. So get started on the American dream of home ownership [e-mail] that's churchillmortgage.com this.

[James Childs]

Is a paid advertisement in MLS ID 1591 in mlsconsumeraccess.org equal housing lender, 1749 Mallory Lane, Suite 100, Brentwood, Tennessee, 37027.

[Dave Ramsey]

I talk to people every day who want to know how to do better in two areas, money and relationships. That's why I'm pumped to bring the Money and Relationships tour to a city near you. Join me and Dr. John DeLoney for a night that will challenge the way you think about this stuff and possibly change how you live forever. Starting April 21, we'll be in Louisville, then on to Durham, Atlanta, Phoenix, Fort Worth and Kansas City. Grab your [e-mail] tour before they're gone. Jade Washaw, Ramsey personality, is my co host today. Open phones at 888-825-5225. You jump in, we'll talk about your life and your money. Jared is with us in Coeur d'alene, Idaho. Hi, Jared. Welcome to the Ramsey Show. Hi, guys. Hey.

[Graham]

I have a question regarding cost of living raises compared to inflation. I personally enjoy giving my customers the cheapest service available yet. To keep up with inflation, we have to give raises. How do those two things mesh together? And is there anything we can do to battle the inflation? As a business owner.

[Dave Ramsey]

No, not, you know, your job is not the macro economy. Your job is to run your business. And that means take care of your family and the families that you pay. That's your job. The macroeconomy discussion is that when things go up, when the cost of a loaf of bread, the cost of a service, the cost of a pack of hot dogs, whatever it is, you want to call it a gallon of gas, when the cost of that goes up, one of the reasons the cost of the item has gone up to the consumer when you raise your prices in business is because their cost of goods has gone up. If their cost of goods, for instance, if we print a book, a total money makeover, a baby steps millionaire's book, well, the cost of paper has gone up 30% in the last 24 months. And so that's going to be built into my pricing on the next book that we put out. Agreed. If the cost of that book includes a, a dock worker to do the shipping and a truck driver to deliver it, and both of those people get paid more by me to bring me that book, then now the cost of that book has gone up again. The paper cost went up and the labor cost associated with delivering that went up. And so anytime you pay people more inside your business, you have to absorb that in price changes. And so price increases are always, not always, but you have to do a price increase to stay open. Otherwise you're not profitable to cover your actual cost of goods and cost of labor, if you don't have any margin.

[Jade Warshaw]

You'Re out of business.

[Dave Ramsey]

And when the cost of labor goes up due to cost of living raises or any other raises, just a shortage of workers. An example of that is, you know, we told when America got faucied, we told all of the service industry, all the waiters and the people that make Your beds at the hotel and the people in the service world that they weren't essential. And we sent them home, told them they couldn't work. If you're a restaurant worker, you're not allowed to work. And in some places we did that for a month. Other places we did it for a year. When you tell people they're not essential and then you want them to come back, they remember how you pissed on them last time. And so guess what? You want to hire somebody in the service world today, pre Covid, you might have done that for $10. Now you might be looking at $25 because there's a shortage of workers in those industries still to this day post Covid. And so, you know, the economic implications of COVID are still shaking out. It created a labor disruption and a labor price change. And we've seen it in other areas of labor as well. Our cost of what we pay someone to work here at Ramsey has changed in some of the areas pretty dramatically. And some of the. We do comp studies to see where they're charging. So yeah, then that means that if I'm going to be profitable, I have to raise a price somewhere. And so that person that buys that pays more. And that's called inflation.

[Jade Warshaw]

Yeah, you don't. And you don't have to feel guilty about it. It's just part of. Part of it.

[Dave Ramsey]

But I mean, what he's pointing out, and I think it's good for people to hear out there, is when you're walking around with a little picket in your hand and you're saying, I demand $15, I demand $22 where I was making 10 to work at McDonald's. Then the cost of McDonald's goes up to cover your idea of you being worth more. Then you don't get to bitch about paying more for stuff because you caused it. That's what I'm talking. That's what he's talking about. And so you can't go, I don't like the fact the fast food prices all went up. And yet you're walking around demanding that the cost of labor at a fast food place go almost freaking double.

[Jade Warshaw]

Yeah.

[Dave Ramsey]

And then, and then can't fit, you know, of course, you know, it's all connected. Cost more. You know, I mean, that's how it works. Because these businesses are not evil and greedy, but they also are not not for profit.

[Jade Warshaw]

That's right.

[Dave Ramsey]

They have to make a profit to stay open. And oh, by the way, even nonprofits are profitable. A non profit that isn't profitable Closes out of business. It's out of business. It's gone. Nonprofit is not an actual dollar amount of. They didn't make more than they spent. It's just an accounting entry and an IRS designation. But they actually, you know, your church has to take in more than it puts out. Otherwise, it closes. So nonprofits are profitable. Hello. And so if the cost of electricity at your church goes up, then there you go. I mean, if the cost of staffing at your church goes up because you're competing in the marketplace for that creative position at the church, that music director at the church, you're competing with the marketplace, then, you know, it costs more to operate that organization. And some organizations haven't survived that.

[Jade Warshaw]

That's right.

[Dave Ramsey]

So, yeah, inflation includes cost of labor. And when you've had a labor disruption like the quarantines created, we haven't seen. We've seen most of the end of it, but we haven't seen the complete end of it yet. It will calm down and smooth out eventually. But even a little 3%, 5% cost of living raise then gets built into the thing. And you can't really, in business, I can't stand against that and go, well, I just refuse to raise my prices. Well, you're gonna refuse to stay in business. You know, that's just kind of dumb. So the next book you buy from us, get ready, the price is gonna be more. Hello. You know those $10 sales we run.

[Jade Warshaw]

About to be $12.50?

[Dave Ramsey]

They're about done. I'm just saying we're about done with a $10 sale. Cause it sent $10 sales about backward. It's about upside down now, and I'm about done with it. So that was helpful for a while, but been doing them for 10 years. And, you know, cost of paper kicked. Kicked my butt. And so I'm gonna pass on the butt kicking. All right? That's how this works. That's how. That's how it works, y'all. I mean, it's just. This is how it is. So if you think it's otherwise, then you're being naive. So. But it's interesting to me that we teach so little civics and so little economics today that people can't make a basic connection.

[Jade Warshaw]

You don't know what's connected.

[Dave Ramsey]

Dude, I demand to be paid more. But then on the other hand, I'm going to bitch about inflation.

[Jade Warshaw]

Yeah.

[Dave Ramsey]

No, I don't think when you freaking caused it. You're the essence of it. I mean, you know, I can't believe the Cost of bread. Well, it cost about twice the labor to put the bread on the shelf now that it did, so, I mean, almost double. It's crazy. And you can't even get the help. Can't get. People show up because they're sitting at home in their mother's basement playing Nintendo. It's nuts. So we don't have that problem at Ramsey because we're not dealing with that level of labor. We're dealing with a high class generally here. So we got a whole different set of things that we deal with that are wonderful, by and large. But, yeah, it's a great discussion, Jared. And, you know, the problem was you pulled the string on the monkey. So you got the soapbox. You got the soapbox response. Because I can go on for days about this, but it is interesting how ignorant.

[Jade Warshaw]

Yeah.

[Dave Ramsey]

You know, some of this wealthy quality stuff is. And all this stuff, it just. They're ignorant of the connection, the unintended consequences of their little shallow ideas.

[Jade Warshaw]

Yeah, absolutely.

[Dave Ramsey]

And where they're going.

[Jade Warshaw]

So I'm glad that he pulled the string.

[Dave Ramsey]

Yeah. Well, you just ever so often have to get out of my system. We will look back in time and say, fauci.

[Jade Warshaw]

Wow.

[Dave Ramsey]

Just wow. This is the Ramsay Show. Hey, listen up. Everyone is at risk of identity theft. I don't care if you're a hermit living off the grid, listening to the show on a battery powered radio. All of your data collected by every company you've ever done business with lives online. Your bank, your doctor's office, retailers, the. The apps on your phone, the gas station where you have loyalty rewards. They all store your info online, making them ripe for a cyber attack or data breach. That's why I've been telling people for almost 25 years they need an ID theft protection plan. And the only one I've ever recommended is from Zander Insurance. They monitor your personal and financial info, even your home title, and take over the work if you become a victim. It's the most thorough and affordable plan plan out there. I even have it for my family and our entire team. Visit Zander.com or call 800-356-4282. Hey, guys, good news. Presale is on now for my new book, build a business you love. If you're a business owner, you know running a business is hard. That's why I wrote this book. To share what we learned over the last 30 years so business owners can grow your business faster with fewer mistakes. Pre order your copy today and you'll get access to over $350 in bonus items only at ramseysolutions.com store ramseysolutions.com store pre order. Jade Washall, Ramsey personality, is my co host today. Open phones at Triple 882-55-5225. Sam is in Daytona Beach. Hi, Sam. Welcome to the Ramsey Show.

[Travis]

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

[Dave Ramsey]

Sure. What's up?

[Travis]

Okay, so I've got. It's a complicated situation, but I'm going to try and simplify it as easy as best as possible for you guys. So I can just honor your time. So basically I have, I'm completely debt free. I've never had any debt. Very thankful to you for that. When I was 18 years old, I took FPU before I went to college.

[Dave Ramsey]

Wow.

[Travis]

And actually graduated fully debt free. And so it was the best decision I ever made. So never known any debt. I have a fully funded emergency fund. But about a year ago I was given a sum of money from a family member. Now the sum of money that I was given, it was kind of given with the pretext of the reason why they had this money was for a wedding or maybe to invest into, to give me to give for like my first property that I would own. But since kind of none of those things had happened, they decided I'm just going to give it to you now and I want you to do something with it. So in regards to like investing or etc, etc.

[Jade Warshaw]

How much money is it?

[Travis]

My problem is. So it was $20,000.

[Jade Warshaw]

Okay, cool. That's awesome.

[Travis]

Yeah. So I guess my next issue was more I kind of don't know what to do in the sense of I don't know much in regards to investments. And since it was kind of sprung on me especially I think with the attachment of going it was going to be for maybe a wedding or maybe a house deposit, but that kind of hasn't happened.

[Jade Warshaw]

So do you not own a home?

[Travis]

I'm a bit.

[Jade Warshaw]

Are you renting?

[Travis]

I don't know.

[Jade Warshaw]

You're renting. Are you opposed to saving this money? I mean, you said that initially it was maybe for a wedding, maybe for a down payment. Why wouldn't you set it aside, add to it as a down payment?

[Travis]

Well, I guess that's, I guess that's part of my question of just going, is that the best thing to do? Because I actually have no problem with it. I think what I've been struggling with is because from this family member, it was kind of given that the I'm giving you this Money. Because I want you to do something with it in regards to investing it rather than it just sitting in my bank account doing nothing.

[Jade Warshaw]

Well, it wouldn't be doing nothing.

[Dave Ramsey]

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

[Travis]

Yep. Yeah.

[Dave Ramsey]

Okay, so just go to ramseysolutions.com just go to ramseysolutions.com and click on smartvestor and you'll find a group of smartvestor pros in the Daytona beach area. You can choose from among them which one you would like to work with.

[Jade Warshaw]

Yeah.

[Dave Ramsey]

And you want someone with the heart of a teacher because it sounds like you're new to investing and they'll sit down and teach you about investing. Only after you have learned and feel competent and comfortable do you invest. And don't ever invest in something you don't understand. But if I woke up in your shoes and if I had given you that gift with that guideline, I would be happy with you using some basic mutual funds to let that be parked in until an ad some to it as you go along for a future down payment.

[Jade Warshaw]

Yeah. Plan on having it in there. Five years or so. That's what I'd say. So it has some time to go in the right direction.

[Dave Ramsey]

Yeah, you should be able to do great with it. That should be excellent.

[Jade Warshaw]

Easy.

[Dave Ramsey]

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

[Travis]

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

[Dave Ramsey]

Sure. What's up?

[Travis]

So I'm calling. I've listened to the show off and on for years. But I got really serious about six months ago. And so I'm going to admit at the out start that I know I've messed up. But I have about $100,000 of debt with my ex husband. I'm currently married. My current husband and I make good money. Because this debt felt so overwhelming, I kind of shoved it to the side. We paid off all of our other debt and I started saving for a house I went to. Basically I skipped partial step two and went to step three.

[Dave Ramsey]

We started saving. We paid. So all your. You and your current husband paid off all your other premarit from the other marriage except this debt. And what is this debt? How big is it?

[Travis]

It's $100,000. And who should owe to and the IRS.

[Dave Ramsey]

Oh, okay. And how did you end up $100,000 in debt to the IRS.

[Travis]

So my former husband owned a company. Tax issues got complicated. Life was really overwhelming. He didn't want to deal with it. I didn't know how to deal with it. So we just didn't file seven years of taxes.

[Jade Warshaw]

Yikes.

[Travis]

Yeah. So when we got divorced.

[Dave Ramsey]

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

[Travis]

I did. I did.

[Dave Ramsey]

And you didn't file taxes on that income. So did you file taxes on your income during the seven years?

[Travis]

No. No.

[Dave Ramsey]

Okay, so his business was complicated. You didn't file on it. And how did the $100,000 come about? Who decided what that was?

[Travis]

So when we were getting divorced, we actually hired a cpa, which is what we should have done in the first place. And they went through. Filed all of our taxes and let us know, you know, what we owed, as well as initially interest and penalties.

[Dave Ramsey]

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

[Travis]

The judge required it, unfortunately. I know.

[Dave Ramsey]

I don't believe you. I think your attorney mailed it in. Judges. That's not. That's not logical. The judge required you file your freaking taxes. I don't argue that. But he didn't file. He didn't require. You were as liable that you're had to pay taxes on his business that he didn't follow on.

[Travis]

So. Because the judge basically said while you benefited from the income while you were married, so you are both jointly and severally liable, and you have to file together. It was very, very frustrating.

[Jade Warshaw]

So the ex. I have a question about your ex husband. Is he going to. If you both said, all right, it's $100,000. I pay 50. You pay 50. Is he gonna. Is he gonna do it?

[Dave Ramsey]

No, it's joint and several. She's liable for a whole paid through the divorce.

[Travis]

He is obligated to pay 60% and I'm obligated to pay 40. And that's kind of part of the question is, no, he's not trying to pay the 40.

[Dave Ramsey]

No, he's not. No, he's not. The divorce decree says that. But the IRS says you owe 100.

[Travis]

Correct. The IRS will not acknowledge that.

[Dave Ramsey]

Exactly. They don't have to.

[Travis]

If I pay the hundred and I can take him back to court and sue him for that portion.

[Dave Ramsey]

Yeah, good luck with that.

[Travis]

Or. I know. And honestly, I. It wasn't until I called a smart investor pro, because I started saving for a House. And I had my emergency fund, our savings for a house. And your smartvestor pro was like, no, no, girl, you got to go back to step two. You have to deal with this.

[Dave Ramsey]

Yes, you got to deal with it.

[Jade Warshaw]

So how much money do you have laying around?

[Travis]

So I have $55,000. Part of that was money that I got from my son passing away. And part of that is money we saved.

[Dave Ramsey]

Okay, I gotta tell you, there's a couple courses you can go through here. One course you can go through is you can pay the 100,000 and hope you get his 40 back out of him. And I wouldn't give you much hope for that. And you move on with your life. That's a fairly easy course to take.

[Jade Warshaw]

That's the clean course.

[Dave Ramsey]

That's the easy one. Okay, here's the one I would do though. And it's the hard one. Okay, I would hire another CPA or rather a tax attorney and I would go and go back before the probate courts where the, where the divorce was done and challenge that judge's ruling and refile under the innocent spouse provision because I don't think you're liable for his tax taxes and you're innocent of his. Ask your, ask your tax attorney about the innocent spouse provision. This is where a spouse just signs off on everything and the other spouse is running the business. And then, and they just sign off on it. Then they don't get half the thing. They get out. They get out scot free. And you'd be liable for your income, the taxes on your income during that seven years, but not on the business's income. And I've challenged that judge's ruling. If I'm you, it's going to cost you ten grand to do this.

[Jade Warshaw]

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

[Dave Ramsey]

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

[James Childs]

Listen, I know a lot of you would rather watch paint dry in slow motion than file your taxes. But thankfully you don't have to dread filing. When you've got Ramsey Smart Tax, it comes packed with everything you need to file online before the big deadline. That means all major federal forms and deductions are covered with no hidden fees. Plus, with Ramsey Smart Tax, you can save up to 70% compared to other tax software out there. It's a no brainer. Just go to ramseysolutions.com smarttax and see how simple tax filing can be. That's ramseysolutions.com smarttax.

[Dave Ramsey]

Jade Washall Ramsey personality is my Co host today. Hey guys, if you didn't know, I love talking to you about money. We also help small businesses, about 10,000 of them across America. And we have a podcast called Entree Leadership. It was actually the very first podcast we ever did at Ramsey and it was run by other Ramsey personalities and interview style and stuff over the years. I took it over about two years ago and started taking calls from small business people about leadership and small business questions. It's called Entree Leadership Podcast. It's very popular in that world and if you want to be part of that and you run a small business, you got a question about it, you can call and leave us a voicemail there at 8449-4410-7084-4944 1070. Or you can go to entreeleadership.com ask. Leave your question. Our team will get you set up to be a caller on there. Also, a reminder that this is the last portion of the show that is broadcast over YouTube and podcast. There's another portion coming up that is on the Ramsey Network app and on some talk radio stations around America. And so if you want, the Ramsey Network app is completely free. So you can finish this version of the show, video or audio or both, and just jump over the Ramsey Network app. It's completely free. There's all kinds of stuff you can do there, like search calls by subject, find out what we got to say about any certain thing, type it in. You can type in an email and send it to us. We'll answer it here on the air. We do a lot of stuff that's really fun over on the Ramsey Network app. So be sure you check all that out. Ryan is with us in Hartford, Connecticut. Hey, Ryan. Welcome to the Ramsey Show.

[Ryan]

Hey, how are you guys?

[Dave Ramsey]

Sure, what's up?

[Jeff]

Hey.

[Ryan]

So I have a bit of a problem. I never thought this was going to happen. So in 2018, my father passed away and he left me and my brother a 401k plan. Fast forward 5 years. I got a check in the mail this morning for about 245,000. The original account balance was about 300,000. And what's happening is they gave me the check and I have to pay the IRS that 55,000 difference from the 300,000. 245. I called them and asked them if they could roll it over and they said once they issued the check, there's nothing that can be done.

[Dave Ramsey]

Who told them to issue the check?

[Ryan]

Not me, apparently, the company my father for. I didn't either didn't read.

[Dave Ramsey]

I'm sorry, I didn't. I didn't hear you. You cut out. Apparently the company your father worked for. What?

[Ryan]

Yeah, they. They have a five year plan, I guess, for the death benefit that if it's not rolled over to something else within five years, they must close the account and just issue a checkout. It's super confusing. The way they explained it to me. I was on the phone with them for an hour and a half this morning with my 401k company and they pretty much said once we issue the check, there's nothing that can be done. There was no workaround.

[Dave Ramsey]

Yeah, there. They had.

[Ryan]

They had until this. That's what I'm saying.

[Dave Ramsey]

I'm sure you don't have an extra 55 grand laying around. No.

[Ryan]

So the way it worked is my account balance is 300,000. It started like 215, and over the years I got it up to 300. They issued me a check for 245. They already took the money out and sent it to the irs. And it should be the difference.

[Dave Ramsey]

Yeah. They have to withhold 20%. That's the rule. If you, if you take. But this is an involuntary withdrawal without any contact to you or anything, which is completely, at a minimum, unprofessional.

[Jade Warshaw]

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

[Ryan]

Because the 401k plan my father was invested in had really good options like I built.

[Dave Ramsey]

All of those same options exist in the open market.

[Ryan]

Yeah. And I have my own personal investment accounts and I do it with that as well. The, you know, you know, don't rock the boat if the boat shouldn't be rocked. So the way I figured is the 401k plan was perfectly fine. I kept it in there just because the investment options were fine.

[Travis]

It was just.

[Ryan]

It's a retirement account. I was treating it like a retirement account. I wasn't going to touch it till I was 65. I'm 30 now.

[Jade Warshaw]

Yeah.

[Dave Ramsey]

What do you make?

[Ryan]

I make. I'm a truck driver. So I make about 110,000 a year. And I also own a small business that I make about the same.

[Dave Ramsey]

Okay. Under the Secure act that Biden passed, you have 10 years to liquidate the 401k completely. You should have been liquidating it at 1 10th a year from the time the SECURE act passed two years ago. And you've not been doing that.

[Ryan]

I didn't know about that.

[Dave Ramsey]

I know. So I'm trying to figure out how that plays into this and how hardcore. All right, let's pretend that we figure out a way to lean on them and they cancel the check and put the money back in the 401k so that you can roll it over within 30 days, which is what they should do if they are people of integrity. This is a problem. It's not technically unethical. It's just so nasty that it ought to be unethical. What they.

[Ryan]

Yeah, it's a big.

[Jade Warshaw]

It's a lot of money.

[Dave Ramsey]

It's going to cost you. It's going to cost you, you know, 20, 30,000 bucks. And that you don't have across me two years.

[Ryan]

It cost me two whole years of. Of gains because of this. I never thought I would be upset to get a huge check in the mail, but I did.

[Dave Ramsey]

And.

[Ryan]

Well, I'm upset because I should have had it rolled over.

[Dave Ramsey]

It should have been huger. Yeah. All right, so here's. Here's. Here's what I'm going to suggest you do. And I don't think it'll work, but it's the only thing I can think of. All right.

[Ryan]

Okay.

[Dave Ramsey]

Go to ramseysolutions.com and click on SmartVestor and find a SmartVestor Pro in your area that you like. After talking to them on the phone, they may be able to call on your behalf and talk them into undoing this and immediately rolling it, and they'll help you with the rollover.

[Ryan]

Okay.

[Dave Ramsey]

They may be able to cite something that. A regulation or something that I'm not aware of, because this is. When you started talking. I thought you were going to tell me this was a tiny little 401k, like a $10,000, and they were just cleaning out all the little ones. Sometimes they do that when a company sells or in the event of an inherited 401k like you've got. But this is huge. This is a lot of money. And so this is. And with no notification at all, this is particularly nasty. And so if they had simply notified you, you could have quickly rolled it over and avoided this. Right.

[Ryan]

And they said they notified me, but I.

[Dave Ramsey]

Wait a minute. You're a truck driver. You didn't. They did notify you?

[Ryan]

Check my accounts. They said they did, but I never had enough again.

[Jade Warshaw]

So you've never seen evidence of them.

[Dave Ramsey]

To prove that they ask them to prove that they did.

[Ryan]

Okay.

[Dave Ramsey]

Okay. So, I mean, I don't. I don't think you've got a basis for suing them, but I'd be tempted to I really would. I mean, because you're talking about 25 or $30,000 cost here. That is unnecessary.

[Ryan]

55,000. They took out they.

[Dave Ramsey]

Taxes on 55,000. The 55,000 is going to be taxed, not penalized.

[Ryan]

No. When I got my experiment like the summary of what my original account balance was, 300,000, they sent me a check for 245.

[Dave Ramsey]

I understand they took 55,000, they sent it to the federal government as tax withholding. And it's not all taxable. So because the entire. Because you're going to roll the rest of this. If you take the check in your hand and you roll it to a 401k, the only harm that's going to come to you is the taxes on the 55,000, which is going to be 15 grand or 20 grand.

[Ryan]

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

[Dave Ramsey]

Honey, you haven't paid anything yet. Okay? They withheld your money, 55,000 and sent it to the federal government. Then what you do is you file a tax return of what is actually due. And what will be actually due is not 55,000. It'll only be the taxes on 55,000 if you take the check in your hand and put it into an IRA traditional within 60 days of right now. So you need to get on the phone with a smartvestor pro right now because at least we need to do that.

[Ryan]

Okay, I will.

[Dave Ramsey]

So the worst case scenario, if you follow through on what I just told you, is taxes on $55,000 because the government has 55,000 of your money. As if you're going to get taxed on the whole thing and you're not. Okay, because you're going to roll the portion in your hand, which is 80% of it, into a traditional to keep you from getting taxed. You got 60 days to do that from the time withdrawal. So folks, you can pull your money out of 401k, they have to withhold 20%, but you have to put 100% in to an account within 60 days to avoid taxation.

[Jade Warshaw]

That's what the problem.

[Dave Ramsey]

He can't do that because they got 55 of his money over at the IRS now. And so if you just take the, take the 55, then you're going to pay some taxes, but not 55. So there we go. This is the Ramsey Show.