Chapter 1: What is the main topic discussed in this episode?
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And we're going to talk about you right in front of you. Nancy's with us in Clarksville. Hey, Nancy, how are you? Good, Dave. Thank you for taking my call. My question is, I have paid off all my debt in step two, but the problem is I got involved in a lease for an HVAC system. The total cost of the system, when paid off at 10 years, will be over $62,000.
So I'm wondering, do I pay it off using the debt snowball method and just get out of it, meaning I'm responsible for all that, or just leave it until I do the house stuff? Wow. Okay. I didn't know you could do a lease on a heat and air system. I went to the Attorney General, and I went to Better Business Bureau, and the Attorney General Consumer Protection Department said it is legal.
It's being done all across the U.S. But it's so bad that it's horrible. Okay, so a lease typically, I have no idea in this case, but typically would have an early buyout provision because leasing is simply financing. Yes, their leasing is termination. Okay, what does it cost to terminate it? The cost of the whole contract. No. What you have remaining, yes, yes, sir. No. Yes, sir.
Forty-seven, right now, my lease buyout would be about $47,000. Oh, my gosh. I've paid 15. Now, you had an attorney look at that part also, right? Yes. I'm getting there. Right after I did this system, I got diagnosed with cancer. So I got kind of sidelined for a few years. Now I'm like, wait a minute, I don't want to keep doing this. This is thievery. It's theft. Wow.
But, okay, because I've – I mean, I know a lot of equipment leasing, certainly car leasing, and I've looked at the contracts on all kinds of leasing deals, even employee leasing they have out there now, which is really strange. And – every one of those have a buyout provision that is less than the total of payments because you're giving them their capital early.
You're giving them their money early, and so they're not collecting interest, so to speak, even though there's not technically an interest rate.
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Chapter 2: What financial question does Nancy ask about her HVAC lease?
And so almost every one I've ever seen, but I've never seen a heat and error one, so I don't know. My God, honey. All right, so let's do two things. Number one, I want you to reinvestigate that part of it. Okay. Because as suspect as this whole thing is, that part of it's suspect. So if the total of your remaining payments is 47, a normal buyout provision would put you somewhere in the 30s.
And the way you would do that, if that's the case, is instead of paying them in advance, like double payments like you would on a debt snowball, you simply save the money up. You pay yourself into a savings account and then write them one check. If there is a discount for early payout, okay? And there typically is. If there is not, either way, what is your income?
I just retired from federal service, so my income is roughly $2,400. Okay. This goes in Baby Step 6 then because it is the equivalent of a second mortgage, and it's a lien on your house because it's a lien on your heating and air system, and you would pay it off in Baby Step 6 when you're paying off the house. Okay. What is your interest rate on your home? $2.25. Okay. Yeah. No bueno there.
We leave that alone. Okay. Because if you had a higher interest rate, I would suggest refinancing and taking them out. Okay. My mortgage balance is $169,578. So when you get to baby step six, you knock out the lease first either way, whether you get a discount or not, because it's more than half your annual income.
When a home equity loan or a second mortgage of any kind is more than half your annual income, we move it to baby step six. Yeah. I've never heard of such a thing. I have now. There's a lot of things that I get on this show. This is where I learn about it. And then I have to go look it up later and go, oh, it is a thing. So, yeah. You know what else I didn't ask? She said federal employee.
Clarksville is a base, military base. Oh, that's right. So these may be morons that are preying on our military people. Yeah, that's big. That's a problem. Which makes this like double, yeah, a double negative for this company that does that. So if your son is out there, mom, and his new job is selling heat and air leases, tell him don't be a crook and go do something else with his life.
There we go. There you go. I helped with that, yeah. Just throw a dart out there into the universe and see if we can hit a balloon. Why not? Yeah. Man. Oh, man. Because I did have that happen one time.
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Chapter 3: What insights does Dave provide about leasing and buyout provisions?
I was ripping on the payday lenders at 800%. Yeah. Oh, gosh, yes. And a lady called and said, well, my son owns two of those stores. And I said, well, tell him to sell them and quit being scum. Uh-huh. He's ripping off poor people. He's oppressing the poor. Read about what happens in the Bible when you do that. It's not good for you. It's not a place you want to be.
Messing with widows, orphans, and oppressing the poor. These are not three things you want to do in the Bible. And really, just as a matter of living your life properly. Hello. But yeah, they're scum. They're scum. So yeah, shouldn't be. Don't be scummy. And then you're safe on the show. We'll leave you alone. We won't talk about you. We won't talk about your kid. We won't talk about you.
We won't do any of that. So interesting to side note, the lease on a car, and I suspect it's true on a heating and air system, is the most expensive way to operate a vehicle. Several publications, including Ramsey Research, have done detailed research on this. And when you run the math out, so you can take a financial calculator,
and say this is what the msrp is on the car which is what it's calculated on here's what the buyout is at the end of the lease a closed-end lease always has a number after three years four years seven years whatever it is you can buy the car for 12 000 but it was a 64 000 car or whatever it is so you've got those two numbers and then you have the number that is the monthly payment when you put those into a financial calculator you can figure out what the effective
Cost of capital is, that's a fancy way of saying the interest rate. However, interest rates are not disclosed on leases like they are on car loans. The Federal Trade Commission requires they hand you one piece of paper with your APR on it. Even if they're screwing you, they have to hand you that piece of paper and you'll look down and you'll see 38% or 28% or 12%.
You'll know you got subprime, right? On a lease, you don't have to do that because lease is not technically borrowing money, but you can run out, but it is borrowing money. So that cost of capital, there's no cap. No cap at all. And no knowledge of what it is unless you know how to run a financial calculator. Wow. And I've done it all in probably 40 or 50 leases over the years.
Every time I do it, it comes out between 14 and 17%. And so those of you that are... I got my BMW on a lease because my accountant said that was the smartest way to do it. You're an idiot. You got hammered. You're paying 17%. You should fire your accountant and get rid of your Beamer. You're getting hammered, but you never did any math. You just thought you were sophisticated. Geez.
No, you wanted a Beamer. That's what it was. And there's a way to get a Beamer. Very little down, a lot a month, and very little at the end. Yeah, this is the problem. Dave, we got a lot of calls on this show where life happens. One day someone's healthy, they're working, providing for their family, and then a curveball hits. You know, we hear it all the time.
A car accident, a cancer diagnosis, a heart attack, and suddenly everything changes. Yeah, and that's why you've always said that having term life insurance from Zander is essential because it protects your family if the worst happens. Yeah, that's right. You need 10 to 12 times your income in coverage. No gimmicks, no whole life junk, just straightforward term life protection.
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Chapter 4: How does Dave suggest handling a significant lease payment?
So, um, backstory, um, his, so his dad's brother used to pay them and, um, he died a couple of years ago. So after he died, um, he started asking my husband to do it. And this is only, I'm sorry, they, they meaning, um, I'm sorry, his dad asked him, he started asking his son to pay his property. He's been doing this. How old is your father in law? He's 60. What's the nature of his disability?
Um, diabetes and COPD. Okay. And, um, and he gets, so he gets a disability check from who do you know? I don't know. I've asked, I've asked the questions I haven't received. How long have you been married? Um, we've been married three years now. Okay. All right. So this started happening after you got married. Yes. But for some reason, your husband doesn't think it's any of your business.
That's weird. He just doesn't like to have these uncomfortable conversations. Yeah, he doesn't like to have a conversation that involves him explaining to his wife why he's doing something stupid. Yeah, I have that problem too. I don't like explaining to Sharon why I'm doing something stupid. It never comes out well. Right. How much are the property taxes? I mean, they're not crazy.
They're about $2,100 a year. And are you guys in debt? We have a car loan and we have, I can kind of consider it as daycare because it's just so expensive. So we have daycare expenses. What's your household income? It's about $8,900 a month. And you guys are what, 25 or 26? No, we're 33 and 35. Oh, my. Okay. I missed that one. Okay. Is your husband the sole heir? No. So, okay.
The property is in the deceased uncle's name and his dad's name. It's like 50-50. But his dad, yes, he's the only child of his dad. And who's the only child of the uncle? He has, he has a couple of kids. Okay. Um, and his wife is the wife, his widow. Oh, okay. All right. So at this stage of the game, uh, your best, um, way this turns out is you guys ended up owning half of the property, right?
Okay. So what does your husband do for a living? He is a field service technician. He just got a different job in coordinating the field service folks. Okay. I have a 10% problem with him spending $2,100 to pay his dad's property taxes in an undefined situation. I have a 90% problem with how he's treating you. Agree. This is disrespectful to you.
And don't give me the cop out that he's such a wuss he can't have a difficult conversation with his own wife. Grow a backbone. Well, yeah, because marriage, there's a lot more difficult conversations than this. So if he can't handle this, then good luck to you. Yeah. Well, what I meant was, well, yes. No, that's exactly it. That's exactly it.
He refuses to talk about it because he knows he's going to lose the argument because he knows he's wrong, and he can't figure out how to weasel his way out of this, and he's more concerned about his daddy's opinion than he is his wife's opinion. This is a bad marriage situation for you, really, really bad.
This makes some really negative comments about the quality of your relationship with your husband and his ability to navigate basic relational bear traps. He doesn't know how to walk around them. It's either that or he you've said your piece and he wants to do what he wants to do and he's going to do it. Well, that's also a bad idea. Either way. Either way, it's not good. Yeah.
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Chapter 5: What are the implications of merging finances in a marriage?
He doesn't even want to look at himself in the mirror on this because it's a really dumb idea. He's paying 100% of the property taxes to get 50% of the property. Hello. Maybe if it all goes right and his crazy cousins don't take him to court and try to get the whole thing later. Because none of these people did a will either. I was going to say, sniff that out. Yeah, this is so screwed up.
So now let's say it was all perfect and it was a will and everything else. I'd still tell you to change it. The only way I'm paying property taxes on it is I want it in my name. Go ahead and deed it to me. I pay property taxes on property that I own. That's all. Jade, I'm not paying your property taxes. I would never ask Dave. James, I'm definitely not paying your property taxes.
Joe, I might think about it. I'm serious. Come on, guys. I know. It's just cray cray. So, yeah, the big problem, though, in this discussion, Penelope, is the way your husband is treating you and the way you're allowing yourself to be treated. And so you guys got to get down to the bottom of that. And that's the point, right?
He's afraid if he doesn't pay him, nobody's going to pay him and then they'll lose property. And so that is the solution. I'll bet you this bunch figures it out. Exactly. Like you want me to pay him? Deed the whole thing to me. Yeah. Otherwise, cousin Eddie, fess up your half. Just roll up here in your RV with your part of the 2100, buddy. Yeah.
because he's got two cousins over there that are getting ready to pick it up, because the widow aunt's not picking up nothing. She's used to the free ride. Oh, free ride is the family script. Oh, and you never question the family script in a dysfunctional family, because that might be saying the emperor has no clothes. Oh, we're all crazy, and now we have to talk about it. Oh, God.
That's what's going on. I know. Once there's a dysfunctional family script in place, no one's allowed to argue with the lines. You just say your lines, and you stay in your lane. You play your part. Even if your part is screwed up. And then comes along Penelope. Right. Who says? And then comes along worse than that, she called us. Mm-hmm. Mm-hmm. Ooh. There you go. Wow.
So, yeah, guys, these types of confrontational conversations They don't have to be confrontational. These types of conflicts they have at their core confrontation, discussing uncomfortable subjects is the ability to do that and still remain likable and still remain loving and still remain kind is the sign of a functional family.
And it's also a signal of whether you're going to end up with wealth or not. That's right. Because if you cannot handle and navigate these kinds of things, you're going to be broke all your life writing checks for crap that ain't yours. Hello. That's how this works. It works in every family that way. But the families that can figure out a way...
And the ones that I've observed that can break the old family script and shift and change, it usually has to do with the faith awakening of a key member of the family. And they inject Christ into the discussion. And they go, we're going to talk about this out loud. We're not going to duck and cover. We're going to be bold and kind and loving. And we're going to be proper and caring.
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Chapter 6: How did Shauna and Chad achieve financial freedom?
Yum, yum. Free coffee that's homemade. Yum, yum. Smiling people. And there's always 50 to 200 folks sitting out here watching us do the show. We do it on the glass from 1 to 4 p.m. Central time every Monday through Friday. And among the people sitting in there, among the area where you sit in to watch the show is the debt-free stage.
Chapter 7: What challenges did they face during their debt payoff journey?
People come there to do their debt-free screams. It's our favorite thing we get to do around here is to celebrate with people when they have won. The only thing that's more favorite is when it's one of our own. Ooh. from Ramsey Solutions, one of our team members. And that's the case now on the debt-free stage. Shauna McCulley, her husband, Chad.
Shauna has been with us for 17 years in the finance and administration department of Ramsey. For a long time, we've been watching this family win, and now they're here to do a debt-free scream. Congratulations, guys. Thank you.
Chapter 8: What significant life events impacted their finances?
So proud of you. Now, you actually did this in staff meeting the other day when I was leading staff meeting. I got to be there when you did that. And our staff just goes bananas. I mean, 1,100 people screaming when you did your debt-free screen. Plus, she's been here 17 years, so everybody knows Shawna, right? Right. And loves her and so forth. And you too, Chad. Oh, thanks. All right.
So how much debt have you paid off? $336,000. And how long did this take? It took us 17 years. And house and everything? House and all. Okay. Very cool. Very cool. But there were a few stops along the way, shall we say. I won't spill the beans. I won't. Spoiler alert. I'll let you all tell the story. Yeah. So just a few stops along the way, we have a new baby in the beginning of that.
We've paid cash for eight cars, two transmissions, over $100,000 in home repairs, and six years of cancer treatment. For two different people. Yeah. These two. These two right here. Yeah. So how old is Lexi? Alexa is about to be 20 in December. I remember when Shauna walked into the office and tears run down her face and said, my baby's got cancer. And I went, whoa, I can't breathe.
And she said, well, try being me. I can't breathe either. And I'm like, well, we got your back. We're going to walk with you, whatever it takes, whatever you need through this. And for a little while, we had a little bald toddler running around here. And she was cute. She was a cute little bald cancer survivor. It was very cool. The fact that you were surviving made everybody happy.
We weren't worried about your hair, I'll tell you that. Neither was she. Yeah, she wasn't old enough to even care, hardly. And then we get the word that she's beat it, and it comes the other side of it. And then? So she was three years old. Her treatment went for three years. Then I think five years later in 2017, I was actually diagnosed with the same cancer that she had and beat.
And so I went through three and a half years worth of treatment to get through that. So I'm now five years out. Yeah. Congratulations. Thank you. And we walked with y'all through that too. Absolutely. Yeah, it was incredible. And watched you change from deputy sheriff to real estate extraordinaire agent. Yeah. There we go. And yeah, the whole thing. So 17 years we've been doing this together.
Yeah. It's been a wild ride. Yeah. And now the house has paid off. The house has paid off. And so that's why we say $336,000 over 17 years now. We don't ask what they make because they're... 50 of their teammates are standing around, so a little bit unfair to do that.
So we asked the rest of you what you make and you have to tell everybody in front of everybody, but we let them off the hook on that. So, but I mean, needless to say, um, quite a bit of cancer in that 17 years and quite a bit of the rest of normal life in that 17 years. And you still managed to walk through and get the house paid off. How's that feel? It feels incredible.
But I mean, even through cancer treatment and new cars and unexpected home repairs, We never went back into debt. We always had an emergency fund or just really great people around us that made sure that we never had to want for anything. Wow. So how do you celebrate what happens next? You've come 17 years to this moment. So travel. Yeah.
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