I Bought A Business On Credit Cards (It's Not Making Money)

Brought to you by the EveryDollar app. Start budgeting for free today. I got a rental property that's worth $600,000. Well, it's estimated between $575,000 and $600,000. I owe $340,000 on it and I have $30,000 in personal debt and $20,000 in business debt. Um, I'm coming up on a bonus next year that I should be able to wipe out all the debt. I'm trying to this, you know, but I'm feeling a little pressure and I'm not sure if I should sell that rental to pay off the debt. What do you want to hold it out? What do you owe on your home? Um, a home I owe, uh, 200 just under one 99. Okay, cool. So you have a business debt, but you get a bonus. It sounds like you're an employee. How do you have both? I have a business I purchased last year. Um, and I also have a full-time job. Oh, okay. So your business that you bought has got the $30,000 and it's a side hustle. I have 30,000 in personal debt and then I have 20,000. Okay. So what kind of business debt, what do you owe them business debt on? Okay. It's not business debt. It's personal. You allocated it in your mind to business, but the bank doesn't know it's business. It's in your name. Yeah. So you have $20,000 of credit card debt because you used a credit card to buy a business. Okay. All right. And then $30,000 worth of other personal debt in addition to that. So none of, there's no such thing as business debt on something like this because banks don't loan money to businesses, your size. They loan money to people that do things like businesses, your size, which is fine. Okay. So anyway, minor detail now. So, so $250,000 gets you out of debt a hundred percent and you make what a year again, I make 60 a year, but then I get paid a bonus based on the revenue that the business that I work for does another 50 it's based on the revenue. So like this year, the bonus is projected to be a hundred thousand and I get paid at first quarter of the year and third quarter. Wow. And so next year I would get paid about 50,000 in January and then the other 50,000 in July. Don't wait for the interest rate to be perfect before buying or refinancing a home. Talk to Churchill Mortgage, smart buyers buy the home they can afford now and then refinance later. If rates improve, Churchill helps you make decisions with confidence instead of guessing. And Churchill Mortgage has a webpage with special offers just for our audience. Go to churchillmortgage.com slash Ramsey offer. This is a paid advertisement NMLS ID 1 5 9 1 NMLSconsumeraccess.org equal housing lender. Okay. All right. So the premise that we're using to answer your question overall, you've asked a very nuanced tactical question, but the principle is that what we have found in 30 years of 35 years of doing this is, and proven it by the way, is the fastest method to build wealth is to not have debt because your most powerful wealth building tool is your income. And when you give it to a stupid bank, it keeps you from building wealth. And so what I'm always going to lead you towards is being debt-free as soon as possible. The, the $50,000 in miscellaneous debt, the $200,000 mortgage and the rental. And so I love rental properties and you're making money and you're making good money and you're making it in kind of a weird way, which is fun because it makes you live on the 60 and then gives you a hundred to do something else with. It sounds like, are you married? Yes. What does she make? Well, she works in the business. Okay. What's the business make a year? Well, um, we just bought it. So this is our second year. Well, you didn't pay money for a business that doesn't make money. Did you? Well, oh, you did. Yes. Um, we did. It does make money. Um, but we've just invested it back into the business. Okay. So what is the profit? What's the profit on the business a year? Last year, the business made, um, it was just under 60,000. Okay. Did you pay taxes on it? And so good. Thank goodness. What'd you buy it for? 200, 200,000. Okay. And, but, but you paid cash for all of it, but 20. No. So I'm sorry. I messed up on that. So I, I have it seller financed. Um, oh, so there's more debt. Okay. How much do you owe the seller? Uh, right now it's about 60,000 that's left. Okay. All right. Yes. Sell the rental property and pay off the 60,000 and pay off the 50,000 and, um, pay off your home mortgage. And then you're a hundred percent debt free and you're making $250,000 a year pretty soon. And your cash, you're able to cash and invest and invest and invest and buy another rental property later on for cash if you want. Um, but I'm going to use this rental property to clean up this mess right now. Okay. Cause here, think about this for a minute. How would you, what business decisions would you make that are different and how would you walk and talk inside your office with your employer? If you had no mortgage, no credit card, no debt, no seller financing, zero debt in your life. Can you breathe that level of peace into your lungs? Oh, it's so really good. Yeah. That's worth the rental property for. Okay. So you wouldn't wait and cause I could pay off. I know I heard you. You can't pay it off. You just kept stacking debt in the conversation for a minute. Your bonus was going to handle it. But then after we finished the conversation, your bonus doesn't even come close anymore. So how much do you cashflow on this rental property? Uh, 1100. Yeah. So put it this way, the 11, you're paying more than $1,100 in payments. Yes. And this a hundred thousand, you're going to clear all your debts off. And if you get this a hundred thousand dollar bonus and it all comes through as you think it's going to just that's eight years, what? Nine years of rental of cashflow on this property. Yeah. Yeah. You just accelerated that. Right. So pocket that be happy. Put that a hundred grand towards the life you and your wife want to live and investments in what, I mean, you'll have no payments. You'll do whatever you want with a hundred thousand dollars. Go become a multimillionaire now with no debt payments and a great income and a good, a good business and a good job. And by the way, you can, you can do this two ways. Emotionally. You can think you're quote, unquote, losing this rental house, or you can think, thank God I have this thing that can clear up all of these goofy decisions I've made up until now. And let me do a hard reset. And we've learned our lesson. We're never going to borrow money again. We're going to have a hundred grand cash in the bank on top of what we already, what my, my salary, we were able to just do a control delete. That's an amazing place to be, be really grateful that you're in this position. Yeah. Go sell that house. That's wonderful. That's exactly what I would do. And if you want to own real estate to start stacking some of your bonuses in just, you know, in a high yield savings and look over there and go, Oh, there's 400,000 over there. Let's go buy a rental house. If you want to do that, that's okay. But that's three years out. Create your free every dollar budget today. The simplest way to budget for your life.