The Ramsey Show XX
[0] 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.
[1] Thank you for joining us, America.
[2] The phone numbers, AAA 825 -5 -225.
[3] Ken Coleman, Ramsey Personality, number one, bestselling author, and also author of the bestseller, newly minted bestseller.
[4] Find the work you're wired to do.
[5] Just hit the bestseller list, boys and girls.
[6] So congratulations, Ken. Thank you, sir.
[7] Very cool.
[8] You can hear him on the Ken Coleman show on the Ramsey Networks as well.
[9] So we're glad you guys are with us today.
[10] We're here to help.
[11] AAA 825 -5 -2 -2 -25.
[12] Dexter is in Philadelphia.
[13] Hi, Dexter.
[14] How are you?
[15] Good.
[16] How you doing today, guys?
[17] Better than I deserve.
[18] What's up?
[19] Awesome.
[20] Very good.
[21] A long -time listener here, and really appreciate the show.
[22] how you guys really help a lot of people and things like that.
[23] I have a, under circumstances, I met a very beautiful woman who I plan to be with for the rest of my life.
[24] And we're dealing with a situation where she is trying to basically get visitation for her daughter and she has been under a lot of financial stress.
[25] And apparently I've been, you know, trying to.
[26] do a lot to help with the circumstances a lot of lawyer fees the gentleman she had been married to is a very hostile I believe he is sort of as a condition or something I guess it's more of controlling control person and so I'm trying to do a lot of things to help and finance and I just bought a home myself and I have paid, you know, pretty much for the home and I'm renovating and it's taken a lot of my finances out.
[27] Uh, I have four months to try to get moved in, but I've, you know, have a lot of financials to re, re, uh, renovate the place.
[28] So I'm kind of doing it on my own.
[29] Um, so new the conditions, my, my, my, the girl I'm dating is actually trying to, see, give visitation to her, her daughter, and, uh, he won't allow her to see her daughter.
[30] And she had the cops come out to try and visitation, to have visitation.
[31] And she just, he won't allow her to see her daughter.
[32] And he's controlling the daughter by buying gifts and doing a lot of things to control, uh, the relationship of, you know, of that situation.
[33] So, I got you.
[34] Okay.
[35] So it's, you, you're dating a hot, mesh.
[36] Yes.
[37] Yes.
[38] No doubt.
[39] Okay.
[40] How can we help?
[41] I'm trying to figure out.
[42] She doesn't want me to help her somewhat finances.
[43] She's really like saying, look, I got this.
[44] This is my mess.
[45] You, you know, she's, you know, stating that don't get involved or don't, you know, try not to.
[46] And so I'm helping out.
[47] She's also helping me ready to make your place.
[48] So then I try to, you know, help her with other things and do things to whatever I can do, she'll allow me to help with.
[49] And she's in a situation where all her finances are into a lawyer who is fighting so she can just get visitation, and she's basically in debt with her family because her family is giving her money to help out with the situation.
[50] What does she make a year?
[51] She makes probably, I want to say maybe 50 ,000 a year, 55 ,000.
[52] Okay, all right.
[53] So you still not ask a question, but I'll just go ahead and give you a comment or two, okay?
[54] Okay, yeah.
[55] Number one, do not contribute money to someone's situation that you are not married to.
[56] Yes.
[57] If you're married, it's now your problem.
[58] If you're not married, you can share.
[59] cheer.
[60] You can be a shoulder to cry on.
[61] You can be angry with her.
[62] You can participate emotionally and relationally in her fight and so forth, but do not transfer money.
[63] You're going to change the tone of your relationship, if you do, and you're going to regret it later.
[64] Do not pay her bills when you are not married to her under any circumstances, period.
[65] I've been doing this a lot long time 100 % of the time people do this they wish they didn't for one reason or another it always bites you later in the butt don't do that okay that's very it's a true statement yes now then on top but but i want you to be there and be supportive for her she's obviously going through a hard time you're obviously emotionally invested and that's cool i got no issue with that at all have at it you're supporting somebody you care about and they're going through a hard time do it that's how what good people do you're a good man um okay as far as your house goes you just bought a house you got to renovate okay and um if you didn't have the money do the renovation you shouldn't bought a house that need a renovation so you need to step in there and get that sucker done and get moved into it but again that's got nothing to do with her finances it's as if you told me two different stories sure you have the story of the house which is completely independent of the story of her except the part where she's helping you sweep and do some of the renovation or whatever she Maybe she's swinging a hammer and hanging drywall.
[66] I don't know what she's doing.
[67] But, you know, that part, there's a little bit of overlap, but the rest of these are two separate stories.
[68] And they need to remain two separate stories.
[69] Yes.
[70] True.
[71] Okay.
[72] And so, and I think what you're struggling with is, is you've fallen for her, which is not a bad thing.
[73] I'm not saying she's not worthy of that.
[74] But, but you're, and so you're starting to want to treat this like a marriage situation before it is.
[75] And I'm telling you, when it's a marriage situation, you're all in, buddy.
[76] You signed up for the trip.
[77] You take the trip.
[78] But until then, until then, you're just a supportive boyfriend.
[79] Yeah.
[80] And I just add, Dexter, Dave's 100 % right.
[81] So don't think that the out here is to go ahead and make the marriage happen because I can hear it all over yourself, your voice.
[82] She said she didn't need help.
[83] It's my mess.
[84] But I can hear the butt coming.
[85] and I think you need to wait.
[86] This thing needs to resolve itself before you guys get married.
[87] That's just my opinion.
[88] But don't think all of a sudden that what Dave said is, well, the asterisk is, if I'm merrier now, now I can jump into this.
[89] And I think you've got financial troubles.
[90] You're not clear as you need to be financially with some margins.
[91] So you're just going to have to wait this thing out.
[92] Yeah, get the house renovated, get the visitation settled.
[93] And then you're both dealing from strength, not weakness to build a quality relationship.
[94] Yep.
[95] And I think Dr. John Deloney, where he's sitting here, we'll just channel our own inner Dr. Deloney.
[96] I like channeling any inner doctor stuff because I don't have a doctor.
[97] So there you go.
[98] I have a doctor, but I am not a doctor.
[99] Does that mean we have to take the same medication he does?
[100] I hope not.
[101] I wouldn't want to have those.
[102] I don't have any tattoos or I wouldn't want to have that Twitch.
[103] If I do this, I look silly.
[104] He looks cool when he does it.
[105] But I think you're right.
[106] I mean, I think we've got to be careful here.
[107] Let's get through this time.
[108] Yeah, deal in relationships from strength.
[109] Yeah.
[110] And you don't make yourself better when you're hurting by marrying someone.
[111] That just brought your hurt into the marriage is all it does, or your battle or your, God help you, a house renovation.
[112] I'm not sure which one I'd rather have.
[113] This is The Ramsey Show.
[114] This show is sponsored by BetterHelp.
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[134] Ken Coleman -Ramsey personality is my co -host today.
[135] Thank you for joining us, America.
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[157] Jeff's in Madison, Wisconsin.
[158] Hi, Jeff.
[159] Welcome to the Ramsey Show.
[160] Hey, Dave.
[161] How's it going?
[162] Better than I deserve, sir.
[163] What's up in your world?
[164] Not a whole lot.
[165] So I have a unique situation right now.
[166] Me and my wife, we started, or created and started of a spray phone business and we are in the um we had the opportunity right now to actually sell out our business um quick background on us is my wife she's a stay -at -home mom she's a home school teacher um we live out of the middle nowhere and kind of out in the middle of nowhere where there's no phone reception yeah just as you said that your phone cut out that's so perfect yeah are you back are you back with me yeah i'm here are you there Sort of.
[167] Okay.
[168] So you've got a spray phone business.
[169] Somebody's offering to buy it.
[170] Tell me about it.
[171] Yeah.
[172] So it generates about $175 ,000 to $400 ,000 a year.
[173] We run on about a 58 to 60 % profit margin.
[174] And we're just trying to figure out we're not, you know, a business kind of people.
[175] So we're just trying to figure out what we need to do.
[176] We're trying to figure out the value of the business, how to structure the sale of the business and what to do with the money after we get the money.
[177] Okay.
[178] Who's offering to buy it?
[179] Another guy, another contractor who actually just recently purchased another spray phone business.
[180] So he kind of wants to, I guess, control the market and keep his employees busy five days a week nonstop.
[181] So that's kind of what his objectives are.
[182] When you say you made a 60 % margin on $200 ,000, that's $120 ,000 profit.
[183] But does that include paying you?
[184] So we generally don't really take a salary.
[185] we kind of like pay our bills and then you know whatever money we have left we kind of yeah we kind of just hold on to it so if i were going to buy the business i'd have to hire somebody to do what you do because i'm not going to spray the phone easy right so i'm trying to put a value on the business so the value of the business is the net profit after every piece of labor has been paid and you haven't paid yourself labor out of that 120 so if i hired someone to do what you do for your business, I might have to pay them 60 grand, right?
[186] Yep, both that, yep.
[187] Okay, which means we might make 50 or 60 grand net profit on your business.
[188] Does that sound about right?
[189] Yep, it's on the low right.
[190] And what's the guy offering you for your spray foam business?
[191] We're figuring right around $135 ,000.
[192] Little low.
[193] Little low.
[194] Yeah.
[195] So if you may, if you net 50 ,000 on it.
[196] Okay, and I want to make 25 % rate of return on my money.
[197] I would pay $200 ,000 for the business.
[198] Really?
[199] And I would make 25 % on my money.
[200] Invest $200 ,000 make 50.
[201] That's 25%.
[202] That's pretty, that's a, right.
[203] It's like kind of playing the stock market if you had 25%.
[204] Yeah, 25 % is a good rate of return on a small business, which is higher risk than stock market okay so right exactly so your business if you if you only wanted to make 20 % on your money then your business is worth 250 ,000 right I see what you're saying so your business is worth more than 135 interesting okay well that's good to know um so then how would we how would that be structured um cash like i said we're not in the cash yeah okay just straight up no no loans or anything like So if you can get 135 to 150 cash and walk away and you're smiling and you're happy and you're glad you did it, that's probably okay.
[205] That's probably okay.
[206] It's a little low, but it's cash on the barrelhead.
[207] The guy has to go scratch the money together from somewhere.
[208] Then you may have sold it a little cheap, but you got your money all up front.
[209] You're done.
[210] No questions asked.
[211] Everything's over.
[212] Okay.
[213] All right.
[214] And then so with that money, you know, we'd, Do we have some bills that we'd like to pay?
[215] Is there anything specific that you would suggest that we should do pay our bills off first and then worry about saving for the future?
[216] Yes.
[217] What do you think?
[218] Yeah, we recommend getting out of debt, which is baby step two.
[219] How much debt do you have not counting your house?
[220] Well, that's kind of an interesting thing.
[221] So we own 92 acres and we built the house.
[222] So we bought some property, I want to say, in 2018, and we paid about $3 ,500 an acre right now.
[223] the value that lands probably about around our area is about 8 ,500 bucks an acre.
[224] So the...
[225] That's where you live.
[226] Yeah.
[227] How much debt do you have not counting where you live?
[228] Okay.
[229] Then we would probably be sitting at about $72 ,000.
[230] Okay.
[231] First thing we do is clear all that.
[232] And then you raise your right in and never borrow money again.
[233] Exactly.
[234] What are you going to do for a living after you sell this?
[235] So that's the other side of our business We run a trucking company as well And I'm going to hop a trucking company Oh, okay All right So I'm going to hop back Do that as well Did you say hop back in the truck Yeah, I'm going to start driving again Okay, so what are you going to be making The gross on that is usually about 215 before everything Okay, all right So you're going to walk our base baby steps out, baby step three is the three to six months of expenses after you pay that debt off.
[236] So if you clear 150, all of that is basically, not all of it, but most of it's spoken for, right?
[237] Yeah, you're going to pay taxes on it.
[238] You're going to pay taxes on it.
[239] You've got to set that aside.
[240] And then you've got to, you clear up the 70 and you put some money aside for an emergency fund.
[241] And a lot of that money is gone then.
[242] Okay.
[243] And then after that, we take the fact that we don't have any payments anymore.
[244] You now have control of your most powerful wealth building tool, which is your income, and you use that to invest for your future, to invest for retirement, and a kid's college and start talking about paying off that piece of land that you were beginning to tell me about.
[245] And that's the direction that you go.
[246] So good question.
[247] Dave, I was going to follow up, because I think this would be interesting for small business people that are thinking about selling a business.
[248] I was running through the numbers as you were walking, was it Jeff?
[249] Jeff.
[250] Jeff through that.
[251] Are you working out about a three to five times net profit?
[252] Is that what you were working on?
[253] 25 percent, 25 percent is four times.
[254] Right.
[255] That's what I was thinking.
[256] 20 percent is five times.
[257] Yeah.
[258] It's somewhere in that range for a small business or is that across the board?
[259] Yeah, a small business.
[260] I mean, because you've got a high risk.
[261] The thing that people in a business of that size that's making under a million dollars a year, they very seldom take their cost out.
[262] so you always have to remove that to get to a true net and you treat it like an absentee investor.
[263] Like if I was going to buy that spray phone business, I live in Nashville, I got to hire somebody to run it in Madison, Wisconsin.
[264] Right.
[265] Now that tells me what the business is truly netting.
[266] It's good.
[267] Net, net, net.
[268] And then that tells me what my return on investment, my cash on cash return is.
[269] And that's a good general rule of thumb.
[270] Dave, nobody gets 25 % on their money.
[271] In small business you do every day, honey.
[272] but you work your butt off and there's a lot of risk involved that you don't have buying a mutual fund okay it's a completely different setup than a mutual fund so yeah I make 25 % on my money all the time at Ramsey if I don't I'm probably not going to stay in business this is the Ramsey show these days it's not if your identity gets stolen it's when and the only ID theft protection plan I have ever recommended is from Xander insurance it helps real people with real life situations.
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[283] Thank you for joining us, America.
[284] We're glad you're here.
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[286] Ken Coleman, Ramsey, personality, number one bestselling author, is my co -host today.
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[298] Zach is in Oklahoma City, Oklahoma.
[299] Hi, Zach.
[300] How are you?
[301] Well, I'm doing good.
[302] How are you?
[303] Better than we deserve, sir.
[304] How can we help?
[305] well my wife and I were talking last night and we are wondering if we should pause baby step to to purchase a storm shelter since we do live in oklahoma how long have you lived in oklahoma uh myself uh 31 years and my wife about four years okay and so why all of the sudden last night are we afraid about tornadoes they've been there the whole time uh they haven't it wasn't something to happen last night but But I'm an ag teacher in spring is my busy season, and, you know, I've got a wife and a year -and -a -half -old daughter now.
[306] And one night I was gone, had kids a speech contest, and a storm starts headed right for the house.
[307] A tornado gets put on the ground, and my wife and kids' only real option was to drive five miles into town to her classroom, which is a storm shelter.
[308] So I guess that kind of got me kind of screwed the daylights out of me and got me thinking about it.
[309] Okay.
[310] How much would a storm shelter be?
[311] About 4 ,000 And what's your household income?
[312] After tax is 70 ,000 Okay So how long does it take you to save up and build a storm shelter if you push pause and do this?
[313] Two, possibly three months Two Okay Well, it's, you know The principle that we use is if you are, if your car broke down, okay, then, and you don't have the money to fix it because you would have paid down everything down to $1 ,000, and you need $2 ,000 or $4 ,000 to fix a car or replace a car, you would have to push pause because you're in the middle of an emergency, okay?
[314] Yeah.
[315] Emotionally, after the scare with a one and a half year old, your brain is in an emergency.
[316] And I can understand that.
[317] Okay.
[318] If that had been my little kid, that would have done it.
[319] But you and I both know that statistically you've lived there 31 years and haven't been hit by a tornado.
[320] They're all around you.
[321] You can see them out there dancing in Oklahoma.
[322] I know, I understand, and they put on quite a show sometimes, and sometimes they hurt people and tear up Jack.
[323] I'm not questioning that, okay?
[324] But statistically, tornadoes are way different than hurricanes.
[325] Because it's one finger on the ground versus the entire city gets wiped out.
[326] Okay.
[327] And I'm just talking about the actual data, not the emotion and the fear around it, okay?
[328] And so statistically, you're probably okay to get out of debt.
[329] and then do this, but I don't know if psychologically you're going to be.
[330] So you've got to, in order to stop your baby step two, you have to declare this an emergency.
[331] Yeah.
[332] Emotionally, I could probably do that.
[333] Statistically, I can't.
[334] Yeah.
[335] Does that make sense to you?
[336] Yeah, it does, and I think I'm just thinking about it more of a peace of mind.
[337] Yeah, it's exactly what it is.