Chapter 1: What is discussed at the start of this section?
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This is The Ramsey Show. And I'm Rachel Cruz hosting this hour with Jade Warshaw. And we're answering your questions. So give us a call at 888-825-5225. And we'll be talking about your life, your money, career relationships, anything and everything. We are here for you. So let's start off in Boston with Miguel. Hi, welcome to the show.
Hey, how's it going?
We're doing well. How can we help today?
So today I wanted to ask, so I have a business and I'm contemplating on what I should do next because I'm also $147,000 in debt, and that's including credit cards, student loans, and car payment. Okay. So I wanted to know if I should sell a business for what I've think I'd give value for and then start fresh and use that lump sum of money to attack the debt. What kind of business are you in?
It's a printing business, so merchandise. What would cause you to sell the business versus using profit from the business to pay down the debt? I think it's just because I'll collect a lump sum of money and the business right now is kind of you know, fluctuating. It's up and down. And I'm also alone in it.
So it's a lot of my time where I feel like if I could change the... If you didn't have debt, Miguel, would you stay in this business? Or would you still want out?
Yeah. You would stay in? I'll potentially stay in the business, yeah.
Okay. Yeah, because I look at this as, I mean, well, how much would you sell it for? How much could you get out of it? Minus all of your liabilities and everything.
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Chapter 2: What should I do about my $147,000 debt?
saved money and then started this business.
Yeah. How many hours a week? I've never really, how many hours a week are you putting into this?
A lot. It's probably like 50, 60.
Yeah. Yeah. Um, okay. So if you did, do you have a buyer out there? Like when you say sell the business, I mean, what's that? Have you, have you looked into that option? Is there a realistic option?
Yeah, I have. Yeah. I have a few options and that's, When I mean the business, I just mean the equipment and everything. Oh, I hear what you're saying. Because that's where the debt is, right? What did you invest in to do this business? What equipment do you have? Oh, I have a DTG printer, heat presses, and a couple other machines, desktops, and stuff like that. I'll tell you...
You haven't been doing the business long, so I don't want to say that there's no future in it. But how much of this debt is business debt? How much of it came from the business? About $8,000. Okay, that's not bad. Of the $147,000, that's only $8,000. I'm inclined for you to continue. What I want to know is what's the minimal amount of hours that you can put in it to keep the $1,500? $1,500.
so that you can search for something else. Is there any feasible way to do that? Yeah, it's possible. That's also another plan I've been thinking of. Because I have a location in a premier downtown area, so I was thinking of just getting rid of the space, trying to find something smaller, and then kind of just work on base of orders I get. Not so much like being in there.
Do you have consistent clients that you're reprinting for? Or is it a one and done?
Yeah, for the most part. A little bit of both, but I do have, I've picked up a few clients that are picking up, you know, monthly. Yeah.
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Chapter 3: How can I manage a fluctuating business income?
So it's November. A part of me would give it another six months while doing something else. Like you need to go wait tables. I mean, you could make more money doing that. I mean, something, right? You need to go be doing something. And if you can keep this on the side and actually get some clientele, you could... I don't know. Yes, grow it. And then maybe that be your full time.
Or you just have these clients and you start making $3,000 a month while also still working to get out of all the debt that you talked about at the beginning of this call. So I almost would be tempted just to hold tight for like maybe six months. Give yourself a time period, though, to say, OK, don't go into any more debt in it.
But to say, can I pick up any more steam in this business in the next six to nine months? And if you can't, then sure, sell the equipment and then that will give you some money. But we just see this, Jade and I both, I think, as a great side hustle for right now while you go get a full-time job somewhere else.
The fact that you've started generating money so quickly from it, I think is good. And you have made an investment in some equipment and it feels like worth it to try to play that out a little longer. But I like what Rachel said on putting a timeline on it.
So I would do that, Miguel, or just throwing this out there, kind of the other side of the coin is if you hate it and you're not enjoying it, but I think you are liking it in some degree because you said you'd still stay in if you didn't have debt, is to, yeah, find something, just full-time, sell the stuff, and you start a whole new life where you're not feeling like you have to carry a business, right?
Because it's a lot of strain and mental calories to do that. So I don't know, kind of two different options, but either way, you've got to get a second job, either way.
Agree, agree. Yeah. I hope that helps. I know that sometimes when we just tell people, cut your expenses and get a job. I know it feels tough, but truly that is the remedy. You don't have expenses to cut your bare bones as it is. So the next line of defense is getting more income. That's how it works.
Yeah. And Ken Coleman has a book, Find the Work You're Wired to Do. And we'll send that to you because there's a great... it's not a quiz, assessment at the back. Yeah, to kind of figure out, maybe this will help kind of narrow some possible career paths for you too, Miguel, that you can just kind of brainstorm and think. So holding the line, Christian's going to pick up.
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Chapter 4: What are the challenges of living paycheck-to-paycheck?
Hey, Andrew, welcome to the show.
Hey, thanks for having me.
Absolutely. How can we help?
Hey, so my wife and I were on baby step two and it kind of took us a little bit to get there, mostly because we've been pretty sick, both of us, for the past few years. And we're seeking some medical treatment to hopefully nip this in the bud, hopefully in a few short months. But the medical treatment that we're looking at that was recommended by our doctor is experimental.
And it's not covered by insurance. And the treatment is going to be between $10,000 to $30,000. So we're kind of in a position where we don't know.
Are you there, Andrew? Oh, no. Oh, man. Andrew, we'll give you one more second. Oh, yeah, that's a bad line, I think. We're going... Is this better? Oh, there you are. Oh, you're back. Yes.
Sorry.
Oh, you're good. You're good.
My phone's a little weird. So, yes, I don't know if my wife and I should actually take out a loan or not.
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Chapter 5: What are the implications of co-signing a loan with an ex?
Sure. What's the time frame that you owe the 50K? It's supposed to be, because we went back to court. So it's 30 days after the court ruling. And I got the court ruling in the mail two weeks ago. So I have, yeah, yeah. So basically in two to three weeks it's due? Yes. Okay.
Okay.
So let me kind of set the stage for this right quick. Is his name on the mortgage? Like is he on the deed or the title of the house? It is. So typically, typically what would happen if you're divorced, you would do a refinance to get his name off of it.
Chapter 6: How can I manage debt from a divorce?
And you would do a cash out refinance so that you could also pull the 50K out, give him his money. And now you're free and clear from that. Um, but I see why you don't want to do that because of the interest rate. But I now double check this because I'm not sure, but I feel like you can, when you refinance, you don't necessarily have to refinance the entire, the entire mortgage.
Yeah.
But just the amount that you're a portion of it.
Yes.
Yeah. And so a portion of it would be at the old interest rate and a portion of it would be at the new interest rates.
Yeah. Have you talked to have you talked to your lawyer, Wanda, about different options when it because considering it's because of the house and his name is on it. So you are going to have to get his name off the home. Yeah.
Right. So what I was advised was I actually talked to the accountant.
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Chapter 7: What are the best options for refinancing after a divorce?
And so what I was advised to do was to do a quick deed to take his name off the title and he agrees to stay on the loan. let his name stay on the loan, because if I ask them to take his name off the loan, they may make me refinance anyways, and then I lose the two and a quarter. And so he said he was agreeable with his name being on the loan, and he would just quick deed the home into my name.
Yeah. Yeah. A quick deed is definitely a great option when it comes to the situation. Yeah. I mean, we never tell people to go and take on debt, but there is a point that you're you're going to be owed this from a legal standpoint. And so you have to give that money. And Wanda, you don't have it right now.
And so I don't want to see you take equity out of your home and get into that mess of a HELOC or anything like that. So it may just have to be a personal loan.
Okay. Even though the interest rate for the personal loans is just through the roof.
Well, I mean, from the court of law, you have to give this money. So either, Wanda, you sell your home and, you know what I mean, take the equity and pay him what he's due and you have to go find a new situation. Are you able to sustain the home that you're in?
oh most definitely most definitely definitely yeah the house is now worth almost 700,000 when we purchased the house it was at 391 and so um how much do you owe on it how much do you owe on it 360 okay and in California I can't buy another house at 391 and not in the area that I live in anyway sure sure what uh how much do you make how much are you making
I make $188,000 a year. Good for you, Wanda. And you're bringing... How much are you bringing home after taxes and insurance and everything per month? What's your take-home pay?
A little over $6,000.
Okay. Yeah, I mean, and your mortgage payment's $2,000. Mm-hmm. Yeah, so you're in...
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Chapter 8: How can I navigate financial responsibilities in a blended family?
Because I don't know which way to go with that yet.
A hundred percent. Yeah. I mean, I mean. I mean, you're kind of stuck between, you know, a hard place. I don't want you to make a bad decision with your home. I think that would be unwise. So it's not this idea that like, you know, and it's one thing if you couldn't afford the payment on your income, but you're able to sustain that, which is wonderful and great.
But yeah, I would, yeah, do the quick deed. I would, again, ask the accountant again, wrap back around and just ask what Jade was talking about. And if there's a way to take a portion of it, where you're able to pay him out of it. And the entire loan is not then subject to the new interest rates, because that would not be smart.
And it's a blessing that he dropped from 150 to 50,000. That's a big blessing.
Yeah. So, so Wanda, I mean, I'm looking at this. So let's just say you have, you have, you have $50,000 in debt because of the divorce. You got a $25,000 car and you got a $12,000 401k debts, uh, seven, eight. I mean, that's, yeah, that's $87,000. You make 188,000. I want you to pay this off in 18 months, Wanda. That's why I got a second job.
Yeah, which I'm so proud of you, seriously.
Put all the money to it. Yeah, and that's the thing is, you know, that when you look at this high income, I'm like, man, this is, and I know you're in Southern California, so it doesn't go as far as it would in Kansas City or something. I get it. But man, you have a lot on your side, Wanda. But from this point forward, I want you to draw that line in the sand and say no more.
I'm not doing car payments. We're not doing credit cards. We're not, you know, borrowing our 401k. I'm living on what I make. I'm going to be, you know, funding retirement. I mean, why? It's because, I mean, how old are you, Wanda?
55.
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