Chapter 1: What financial questions are addressed in this episode?
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Normal is broke and common sense is weird. So we're here to help you transform your life. From the Ramsey Network and the Fairwinds Credit Union Studio, this is The Ramsey Show. And I'm Rachel Cruz hosting this hour with my good friend and co-host of Smart Money Happy Hour, George Campbell. And we'll be answering your calls. So give us a call at 888-825-5225.
And we'll be talking about your life and your money. First up, we have Jimmy in Los Angeles. Hi, Jimmy. Welcome to the show.
Hey, Rachel. Hey, George. Big fan of y'all's. Thank you so much for what you do. I really appreciate everything that you guys do. And I've gained a lot of knowledge these past few weeks, learning more about what you guys do and how to kind of like financially plan my future.
But I've kind of gotten myself into a sticky situation and I'm just trying to see if I can like maybe get some guidance on trying to find a way out.
Sure. So what's going on?
So late 2024, you know, I retired from the military. I served for 22 years. And earlier that year, I decided to open up like a kind of like a shop and, um, where we just do like detail services, paint protection, film wraps and things like that. And, um, yeah, it actually cost me a lot of money throughout that year.
I'm sure.
How much to the point? Uh, well, we're at a point now where we're like. Like $580,000 in debt at this point. Okay. Um, that first year we took like a $220,000 loss. Um, admittedly, I think I hired too many people full time. Um, kind of went in too fast and, uh, too hard on that. And, um, yeah, it kind of really hurt me. So I had to take, had to take like an SBA loan to kind of get caught up and,
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Chapter 2: What challenges does Jimmy face with his business debt?
It's looking positive. Because, you know, last year, like I said, even though we had a net loss, it was a smaller net loss. And I think this year we'll be in the positive. But I'm struggling because, like, I've been working for free for two years, essentially, in this business.
Well, and digging deeper in debt. I mean, 35% loss. I mean, this is just a very expensive hobby at this point. This isn't a business.
Even if it breaks even, this isn't worth it.
No.
Right. Well, I was afraid of.
Yeah. Yeah. Jimmy, when you project out, with all these loans, is it half a million now or how much debt in general? I'm trying to project out what by, I don't know, in the next month or two, how much total debt are you guys in?
I've written everything down. As it stands right now, on the business side, we're at $580,000 in debt Um, I know I have a PhD in being a bozo.
Um, how much of that's credit card? How much of that is small business loans?
Um, so 165,000 of that is credit. And then the rest is split up between the SBA working capital and a line of credit.
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Chapter 3: How can Jimmy manage his overwhelming debt situation?
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Go to Zander.com or call 800-356-4282. Protect yourself, protect your income, protect your family. George is up next in Newark, New Jersey. George, welcome to the show. Are you with us? Thank you. Thank you. Sorry about that. Oh, absolutely. Yes. What's going on? How's it going, guys? Rocking and rolling. First of all, you guys are awesome.
I've been working with you all for maybe like going on two years. About to be debt-free this year and everything like that. Nice. Smart Vestor Pro in Maryland.
Oh, good. Fantastic. Amazing.
I had a quick question for you. Hopefully, this is your area of expertise. If not, then hopefully you got me in the right direction. Before I was working with you all, I was ignorant to a lot of stuff. So I got mixed up back in maybe 2016 with a guy from my gym. Long story short, he was running an LLC, supposedly, And I was investing into a high-interest savings account.
So basically I got scammed, long story short. He got me for $38,000.
Oh, no.
And then I hired lawyers and everything like that. So all in all, I was out maybe like $45,000. Oh, my gosh, George.
I'm so sorry. Was it like a Ponzi scheme kind of thing or like a – Or he would take your money and put it somewhere else, thinking he would make a difference, and then he ended up not and lost all your money?
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Chapter 4: What insights are shared about dealing with family financial dynamics?
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How can we help today?
Hi. Hi. I'm so excited, you guys.
We're excited as well.
Glad you called, Trina. We're excited to talk to you. OK, guys, I'm having this issue.
I always said I wanted to retire, but I'm almost 40. I am almost 40. Wow. It's an aggressive plan. My dad did it twice before he turned 40. And I'm just like, wait, I can't wait.
Hold on. He retired twice. What do you mean?
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Chapter 5: What advice is given for managing financial relationships with family?
And so it's so much easier to just either put the boundary up and say no or give a one-time gift if it's going to be a blessing and you're not enabling terrible money decisions.
Not one time, though. You think just once for the rest of their life.
Well, not like an ongoing, hey, I'm going to give you a thousand bucks every month forever.
The pattern. Yes.
You know what I mean? If you reward bad behavior, that's when it turns into entitlement.
Agreed.
I'm going to come back to Bank of Dad. Why would I go work harder? That's silly. This is The Ramsey Show.
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Chapter 6: How can one protect against deed fraud when paying off a mortgage?
And you tell this lady that you're real estate investors, which I guess technically you are. You have one investment property. And I think she saw, ding, ding, ding, here's my ticket out. I got to get out of this horrible situation I'm in because my husband's sick. And again, I don't think it's like ill will on her end.
I just think she thought, oh, my gosh, here's a guy who's probably doing all these like deals that you see on TikTok. And he's he's got eight VRBOs in here. You know what I mean? And he'll do it. I bet I bet I bet I could offer him this and we'll we'll structure the loan where it works for him so I can get out of here. That's what she saw. I mean, honestly, she didn't list it.
She didn't go and go to some, you know, investment firm that has, you know, 18 different investors around the country that go and buy property. You know what I mean? Like, no, no, no. She found you and your wife and you thought you hit the hit a great deal and you hit a horrible deal. Not good. Not good.
Okay. Okay. Thank you. I appreciate your advice. Not what you wanted to hear right now.
Sorry, Matthew. So listen, what you and your wife did, though, with I would pay off your house, but I'm all about, I think having investment properties is amazing. My husband and I do. I mean, I think it is great. You just have to start slow. Like the first one Winston and I got, this was, gosh, probably 10 years ago. It was a short sale condo.
in this like kind of like sketchy part of nashville but it's what we did but we got a deal we saved up you know we we bought it for really not a lot had to go do a lot of work in it we sold it probably gosh seven years later when nashville was on and it was amazing i was like this is great right like you have to start slow start small don't start with a million dollar eight unit property because you're about to take on all those people like that's going to be
a huge headache like get some things under your belt start small and then start to work your way up which is not as flashy not as exciting but it is it is peace that is a peaceful way to do this and not create chaos because you guys are setting yourself up from chaos and maybe to ruin a relationship with your dad if this goes bad too
I've rarely seen it where they go, yeah, borrowed money from dad. It worked out perfectly. Paid him back and he was happy, I was happy. Usually it becomes, well, dad wants a piece of the pie now. He wants his money back because he needs to retire.
That's it, yes.
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Chapter 7: What strategies are suggested for dealing with significant debt?
We pushed off getting life insurance way too long, and I thought it would be pretty straightforward. I wanted to call down their insurance, and my husband knew two people who kept bugging him that they wanted to sell him life insurance. So I said, okay, we need a 20-year term, and...
I think we got a little screwed by them because we ended up getting a policy which they said it was 20 years, but it's extendable 20 years. Oh. So after the 20 years, you can re-up at the current premiums for your age, which is going to be two to five times higher probably?
Something like that, but I think when we got the package, which was after, you know, we have 30 days to cancel or whatever, but It's past the 30 days. Either way, I'm going to replace it. But it goes up even before the 20 years, I think. There's a whole chart. It's hard to understand. I'm not really sure. Who'd you get it through? What company? Northwestern? Oh, boy. Okay.
You've said enough, Miriam. I would cancel yesterday. It's not a scam, and they're a company who does all kinds of financial products, but likely what happens, here's what I've seen. It's mostly young guys right out of college who want some sales experience, and they sell the scummiest life insurance products to unsuspecting victims like their family and friends. Right. That's what I've seen.
That's accurate.
So I'm not dogging the whole company, but that's my brother.
Same thing happened to my own brother, right? Some guy from college reaches out, hey man, how you doing? And so I would get out of this and I would contact our friends at Zander because they're not going to sell you extendable term life insurance. Term life insurance by definition. I did already reach out to Zander. Okay. So I just wanted to know, like, basically, should I take 20 years?
Should I take 30 years? They said that Dave recommends a child writer, which I never heard on the show. Hold on, hold on. Northwestern said Dave recommends a child writer? No, no, no. Vander, Vander. For what reason? I don't know. I have four kids. That's why. I never heard it from him. That's why I called because I wanted to understand.
And then somebody else, I'm getting very overwhelmed, but somebody else told me that we should really do a disability rider. No, there's a lot of riders. And when you hear the word rider, just think gimmick. And so all you need is term life insurance. 20 years should be enough. And here's how to think about it. In 20 years' time, you should be self-insured if you follow the Ramsey plan.
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Chapter 8: How can you ensure your 529 plan benefits future generations?
So I'm less worried 25 years from now about what life looks like if you follow the plan. Exactly. Okay. Can I ask one more quick question? Sure. About when your income goes up, you're sort of 10 to 12 times your income. So then do you buy another plan in term for the difference? You can get a small policy for the difference. I wouldn't cancel the one you currently have and get a new one.
So you can always add a small one. How often would you look at that? Like in a year if it goes up? Every few years. It's a parameter. So if you get a $5,000 raise, you don't need to go out and get an extra policy. Right. But if you get a substantial raise and your lifestyles change and your expenses have changed dramatically, that's when you go, all right, we need to relook at this.
Yeah, it's about every four to five years I would relook. And in the, you know, the kids situation, too, changes it. I mean, for me. So, yeah. But I'd say, yeah, every every four to five years. I'm trying to go Wednesday night because we just re-upped our life insurance. maybe like two years ago or something. Because we still get it. I don't know.
I like having it, you know, even if we're debt free. And every day there's a part of me that I'm like, we're young and healthy and it's cheap.
And that's the great thing about term. For what it costs, I mean, it's a great policy to have. Yeah, we could have done it a long time ago. Yeah.
Yeah, so yeah, so anything fancy around it, any words you don't understand Miriam usually is like a, that's a red flag to me, they're adding things on. If it's a young guy that's in the situation, and it's all these weird terms, again, that they're selling you this package. Probably not a great deal. Like the simpler, the better. Just a 20 year, 25.
And they always want to prey on your emotions and the what ifs. And while a good parent would do this, you really want to take care of kids.
And kids don't need life insurance. Only you. You know, I mean, all of it.
So it's meant to do one thing, which is replace income.
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