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Chapter 1: What is discussed at the start of this section?
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 amazing relationships. I'm George Campbell, joined by Jade Warshaw this hour. The number to call is 888-825-5225. Don't be scared. You jump in, we'll talk about your life and your money.
That's all we want to do is help you take the right next step and maybe talk you off a ledge if you're about to do something stupid. That's always a fun call. The preventative medicine versus the emergency surgery. All right, let's kick it off with Maria in Denver, Colorado. What's going on, Maria?
Hi, thanks for taking my call. So I purchased a home from a meth addict and I'm now $33,000 in debt because I had to do remediations on the home after I closed. And I'm just curious how I should best pay this off and salvage my credit.
I did receive a settlement from the owner after discovering this problem, but I still have probably $80,000 in repairs to make to the home, and I'm just curious how I can pay it down and salvage my credit.
So how much total debt do you have outside of a mortgage?
The $32,000, I don't have any other debt outside of my mortgage.
How many cards is that across?
Across three cards. How much money are you bringing in every month?
I'm bringing in about $4,000, no, probably $5,500.
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Chapter 2: How can I handle debt from a problematic home purchase?
You're going to make a mortgage payment every single month. You're going to be just fine.
The credit score will settle itself.
Yeah. And you're not planning on taking out more credit.
So... No. Okay. You're right. You're right.
That's the only point of having a good credit score is so you can access more debt.
Yeah. Well, I do want to... I was planning to start like... buying other homes and, you know.
No, no, no, no. We're done buying homes right now. We need to focus on our problems today and we can become real estate moguls down the line when you have a paid for property and money in the bank to pay cash.
Well, here's the thing, Maria. We're not in here when we say we're not the point of we're not intentionally trying to tank your credit. However, George and I both know that when when you set down the path of paying off debt, you're also simultaneously saying not not only am I paying off this debt, but I'm not going to borrow money in the future.
Otherwise, what's the point of paying off debt just so you can get more and paid off again? That doesn't really make sense.
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Chapter 3: What should I do if my identity is stolen?
Joe, what do you have to say for yourself?
Well, I do agree that she needs a new car. She just wants to spend way too much on a new car.
What does she want to spend?
$50,000.
Okay.
That's a lot of money.
And that's the most you guys have ever spent on anything outside of a house, I'm guessing? Yes. Okay. Where are you guys at financially?
We're on Baby Step 7.
Paid for house, no debt, love it. And what's your net worth?
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Chapter 4: How do I navigate the decision to sell my house to pay off debt?
Excited for you guys to make that cash purchase of that beautiful new-to-you car very, very soon. More of your calls coming up. 888-825-5225. This is The Ramsey Show. Welcome back to The Ramsey Show. I'm George Campbell, joined by Jade Warshaw this hour. The number to call is 888-825-5225. Springfield, Illinois is where we're heading next. Levi joins us there. Welcome to The Ramsey Show, Levi.
Are you with us, Levi? We were so close to getting Levi on the air. Well, we'll try to get you back, Levi. I don't know what happened, but if we can't, I'm sorry, and call back later, my friend. We're going to go to Taylor up next in Eau Claire, Wisconsin. Taylor, welcome to the show.
Thank you. Oh, my gosh. Okay, so my husband and I put in an offer on a house, which was accepted right away. We had seven days to turn in the earnest money, and on day five, we decided to not... Um, do it. So we told our realtor right away and we never paid the earnest money. Um, long story short, we got married last August. We're now pregnant with a baby in July.
And we found out last month that my husband who's in the military is deploying this fall for about a year. So the reason that we jumped on this house is because we got scared, tried to make a decision. It would be easier for me to live by myself for a year. Um, and then after signing it, we were like, this is not a good idea. This is not the house we want. So we canceled.
We never paid the earnest money. And now the seller's mad and they want not only the 3000 of the earnest money, but they're asking for 5,000 and they're threatening to seek legal counsel, I guess, if we don't pay and we just don't know what to do.
So you signed the offer. saying that you would, and the offer said that you would pay their earnest money within seven days.
Yes. What does the contract say about getting out of this? Because generally there's, you know, a few ways you could legally back out of this and get your earnest money back or not have to pay. Home inspection contingency, appraisal contingency, financing contingency. Is any of that in the contract?
It is, but none of that applies to the situation. And I mean, it was just us backing out of it. Our realtor isn't being very helpful, which we feel like is because obviously she's not.
I think you are on the hook for it though, Taylor. If you make an offer, because literally my husband and I were just in this situation a couple of weeks back. If you make an offer, And you work with the agent to say, here's what we're offering, da-da-da-da-da. They send you the paperwork. You sign it.
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Chapter 5: How can I manage variable income while paying off debt?
So I have a wee way to pay either $500 or $2,000 a month. Obviously, I'm trying to get it done as quick as possible, but it's hard to with the varying income.
Interesting. So what do you bring in every month? Not just you, but your wife as well.
Chapter 6: What should I consider when evaluating my car's equity?
So we bring in anywhere from $6,000 to $8,000 a month.
Okay. And these cars, so you said together they're worth $30,000. Can you split them out for me so I can evaluate them?
Yes, I have a Toyota Tacoma, a 2019 that's $20,000. And then she just got a new, not new, but it's a used Hyundai Elantra. It's a 2019 as well. I think there's $14,000 on that.
Okay.
It's a 34 between the two.
If you were to sell the $20,000 car, would it bring anything?
Or are you upside down? I have like $10,000 in equity in it right now.
Okay. I might consider getting out of one of these car notes, especially since you could get something for one of them.
Yeah, and my only hesitation about doing that is I live in Arizona, but I work in California, and I just want to make sure that I have reliable transportation to get there.
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Chapter 7: What steps can I take to achieve financial stability?
Yeah, that's private. I'd probably get a little bit less selling it to a dealership.
So there's some money there to get a reliable vehicle. I mean, think about it. Your wife's vehicle is only $4,000 more. So if you were really up against it, you guys could switch for a little while until you get right side up on this debt.
Yeah, luckily she works from home, but I feel bad leaving her out here without a car. No, you'd be getting a $10,000 car. Oh, I got you. Yeah, okay. That makes a lot more sense.
What kind of business are you in?
I own a tattoo shop.
Okay. And you travel for that?
Yeah, yeah. So the shop, luckily, it pays for itself.
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Chapter 8: How can I transition to a more stable lifestyle while managing debt?
So the shop itself has a savings as well, but I just don't want to touch that just in case something does happen. I know I have to replace the floor soon and all that. I've never really had this much debt in my life, so I'm a little bit anxious, to say the least.
And you have no savings for yourself?
We have a personal savings of somewhere around $3,000 or $4,000. Okay. Okay. But I've literally emptied my bank account. I mean, I have some other, like, investments, like somewhere around, like, $8,000 with a precious metal that I have vaulted with the company, but, like, that's about it.
Well, I'm getting rid of that.
Yeah, I'd probably dump the precious metal and take $3,000 from your pile in savings and go get yourself a reliable car with cash after you sell yours. And what's your payment on that?
My monthly payment on my truck is $600 a month, probably $800 total with insurance.
So you'll free up that money as soon as you sell this thing.
Yeah.
Which is going to add a whole bunch to your income every month, which will help you get rid of the business debt and get rid of her car loan, and so you can see how this thing snowballs.
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