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Live from the headquarters of Ramsey Solutions Broadcasting, put all our car rental studios at the Dave Ramsey Show work. That is dumb. Cash is king and the paid off home mortgage has taken the place of the BMW as the status symbol of choice. Christy Right. Ramsey, personality number one, best selling author, is my co-host this hour here on the Dave Ramsey Show today on The Dave Ramsey Show.

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Open phones at eight eight two five five two two five. That's triple eight eight two five five two two five.

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Lindsay is going to start us off this hour on from Wilmington, North Carolina. Hi, Lindsey. How are you?

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Hi, Dave. It's such an honor to talk to you and Kristi for you, too. How can we help things? And I just want to say that I always thought that I'd be living paycheck to paycheck until I found you. And now I'm in the middle of babies up to and have so much hope for my financial future. So I just want to say thank you very much.

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Good for you then. Proud of you. Thank you. My question is not related to my dad. Unfortunately not. You're coming out here. It was an experiment you're cutting in and out to try one more time. OK, unfortunately, my boyfriend passed away about three months ago. Oh, my God. It was it was unexpected, of course. So one of my friends was pretty amazing and started a golf on me account to cover the cremation, the memorial services.

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And people were so generous that there is quite a bit of money left over. And I would like to set up a fund for his three year old daughter. There's about thirty eight hundred dollars in there. And I'm just trying to figure out where is the best place that I can put this money that it will grow and be able to provide her with something when she turns 18 and and maybe that she's the only one that can access it when she's 18.

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OK, wires or questionable relatives in the offing like her mother or something. I just I don't know her mother that well, I mean, you know, is that her caretaker who's a guardian? The mother, the mother is the guardian. All right, so she's raising the child well, she's 15 years.

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Somebody's got to stay plugged in here. Right. This is all real fresh, and so if I'm in your shoes, I'm going to ask if I'm advising you, I'm not going to advise you to stay plugged into the situation for 15 years.

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If you want to set it up and run it for a few years with the goal of developing a level of trust with someone in the child's family to turn over the management of this.

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But I wouldn't suggest to you that 15 years from today that you're still plugged into this. That would be pretty unusual. OK, I mean, you will have. Moved on with other sections of your life and so forth, so but you can open up a mutual fund in a kid's name. OK. And you can do that easy with 800 bucks. It's called a custodial account.

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Any time anything is opened up in a kid's name, it has to be actually done by someone over 21 because you're not allowed to do contracts in the United States unless you're 18 years old or older.

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So a custodial account is in the kid's name, but you are the custodian or someone is the custodian until they reach 21, actually.

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OK.

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And so I wouldn't have access to it until then. The only thing that can keep it safe after that is if it were in some kind of a trust and I wouldn't fool with it for 38 hundred bucks, you could end up spending half of that developing the trust.

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Right.

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So I would just open a mutual fund in the kid's name, name yourself as the custodian, and then have a game plan that in the jury sometime in the next five years, you hand that custodianship over to someone else. OK, if she went to I mean, I was thinking about a five twenty nine, but that's strictly for college, like if she decides not to go to college, would that five twenty nine would not help her. She wouldn't be able to get the money, correct.

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Well, she could get the money, but she'd be highly penalized. I've got a question.

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Maybe this is maybe this is not the right question, Lindsay, but you said you don't know that the little girl's mother. Or you do, I mean, I do, I know her, you know, we've spoken a few times over the 18 months that my boyfriend and I were together and I've met her a few times, not great terms or like or like cordial terms or just cordial, you know, very surface and cordial.

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And I've I've done a lot of stuff to try to reach out to her and and let her know that I'm here to help. And I just haven't gotten a lot back. So I don't feel like she wants me to to push.

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Well, it's pretty awkward. It's awkward. And it's just so painful. Like, this whole this whole situation is so painful for you, for for the little girl, for all of it.

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But the only reason I was just going to the only reason I bring that up is to say as if if you if you want to do something kind for her daughter, for your late boyfriend's daughter, it seems like she would be a potential good partner to say, hey, we've got this money in a go fund me. I want it to benefit your daughter. You know, do you have any, you know, input, I guess, to partner with her in that way of like you're trying to do something good?

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I'm planning on opening a mutual fund, being the custodian. And I want you to know the money's here. Yeah. Yeah.

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In a very loving and a very loving. I want to I want to do this for her kind of way, because I think the flip side of that is if I was in those shoes in any way, if someone was creating some type of fund for my daughter, I would just want to know about it. I would I would want to be involved in some way. And so all that says, I just feel like you can reach out to her from the perspective of, you know, here's where I'm trying to come from.

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Here's this money left over. I want to do what's best for your daughter. Here are my ideas. Do you have any what would you know, just just bring her into the conversation is what I would say. I don't know the financial aspect like Dave is saying with the trust, but I would say relationally that's what I would speak into, is just to put that out there and involve her. If over the five years that that this initial olive branch coming out, so to speak, develops into a little bit of a relationship where you got some input, then you could hand over the custodianship to her.

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Yeah, if you become. But today, you don't know enough about her to trust that. And you feel a responsibility because this money was raised more in your name and your boyfriend's name than it was in this mother's name or even in the kid's name, for that matter.

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And so you're just you're just passing it on. You don't you're not trying to take the money. You're trying to pass it on to his child.

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And, you know, that's a noble gesture as well.

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But ideal situation. If everything worked out, if if you could draw up the play and the play worked out, the play would be that you're the custodian for a few years. You develop enough trust that the mom is is functional, that you can turn over the custodianship to her. The Monegros the mom teaches the child that the money's there. Don't surprise them when they're 21 and go, you have thirty thousand dollars.

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You know, you always want children to know, you know, age appropriately, that there's some money there for their college, there's some money there for their car, whatever it is. And so we didn't surprise our children. We didn't get into details with a four year old about what kind of money was involved. But but, you know, by the time they were a certain age, they were looking at a mutual fund statement with us.

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They don't have any control over it.

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But, you know, twelve year old can do a can multiply number of shares, time share price and come up with the value of the account. And that's a good little exercise. So that would be ideal if Mom could step in and train.

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The child to be ready to accept this gift when they reach 21. This is the Dave Ramsey Show. Finding the right pair of sunglasses on a budget is difficult. They're either too expensive or they don't hold up. But recently I got a great pair of sunglasses from a company called Qadi. They are a game changer. Chagres Raise offers premium sunglasses that protect your eyes and are completely affordable. I'm talking the best overall value in sunglasses. Plus, they also replace your shades with a brand new pair if you lose or break them.

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Art Elaine is with us and Art Elaine is in Winston-Salem.

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Hi, Art. Elaine, how are you? Hi, I'm doing well, I hope you are. I am. How can we help? So I'll try to be brief, but I've gone through a pretty big life change recently, and I would absolutely love your advice for the past year or two. Just some background. I've been wanting to change jobs and income. I feel undervalued and not like I'm not being paid as much as I should be at work in order to knock out debt because I'm on baby step two right now.

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And then two weeks ago, my fiancee and I actually broke up. So obviously, yeah, obviously I'm trying to kind of re-evaluate some things I've been doing Darvish and I kind of want to make a fresh start and make a change and kind of get out of my dad and really just be financially successful for the future. So I've kind of got like two options that I've been going back and forth on, on what to do now that my life has changed quite rapidly in such a short amount of time.

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And I would love your opinions on them. OK, so first option is I could stay and what to and where I am now with my friends, family, I've actually got really low rent because I live in a house that my mom purchased. And so we're essentially just covering the mortgage and I could increase my salary and a local job or maybe even get a remote job. But I just am not finding high high paying opportunities in my area. So because I'm single now and have just myself to kind of look after, I guess I could also move to Houston where my sister is and her fiance.

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I think I would definitely be able to up my salary. I would obviously be paying more for rent, but I would have some family there, but also have a fresh start and probably much more, I guess a higher salary and probably a better career opportunity and career path moving forward.

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Have you looked at jobs in Houston to like I know that's a hunch that you think you could make more money, but have you actually looked for postings to find something you're qualified for or is this just something you're hoping? Is there?

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Yeah, I've honestly I've been looking for jobs for the past. I would say a year maybe. And the places I've been looking has obviously changed as time goes on. But I have looked in Houston and I definitely think that I could be making. So right now I'm making 46 a year and I think I could be making at least like seventy five or eighty five. I think I could definitely be qualified for a manager position in marketing. And I'm an associate level right now.

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And I just think that that doesn't really match up with my qualifications. So I think a promotion would definitely be something that I could be considered for, which I think would also definitely up it. But I really do think that being somewhere other than where I am now, especially covid and job opportunities, that being in a city might be better for my financial goals.

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It sounds like to me you just want to move Artley like, am I missing something? Because even when you look at your two examples, there's one. It's like, oh, this is such a bad example. Just are bad options. And this great option in Houston is so good. And I mean, sounds like you just want to go to Houston. Is that right or am I am I'm misreading you here.

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And I think you're right. I think I know that. I think I have a feeling that I know what they would say, which is that something really big has just happened. And I probably don't need to jump the gun on making any more big life changes.

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I think I like the idea of moving to maybe distract myself, and I don't know that that's the right way to handle it.

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But I have to say, when you get to Houston, you find your broken heart went with you.

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Yeah, yeah. The clean slate, the fresh, the fresh that. That's what I hear in your voice. You want to you want a fresh start.

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You know, that's it was a little bit of if I were in your shoes. I'm not saying this is you, but it might be if I were in your shoes, I might be.

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Figuring out a way intellectually that this all makes sense because I just want to get out of Dodge, I want to run, I want to run away. Yeah, yeah.

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Stop, stop answering the question. The grocery store, how are you? And so and so when's the wedding? Yes, that is the truth. Yes, yes, yes. How long were you engaged?

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We were engaged for actually a year on Monday, but we had been dating for five years. So, uh. And I don't know, it's probably not pertinent anyway. I was going to ask. No, she you know what?

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You know what I might do. How old are you? I'm twenty six. OK. What if we quit trying to make it OK, because it's a brilliant career move and just said I'm what? I'm going through a rough patch and I want to get out of Dodge. So I'm going to take a new job. And a year from two years later, I'm going to reevaluate.

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Nobody says you have to live in Houston the rest of your life.

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Nobody says you can't come back to Winston-Salem at some point. Nobody says any of that.

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Nobody says the job has to justify it. You can go because you just want to go out.

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It's just it's just time for an adventure. I mean, if you call me up said I've got the money and I want to go backpacking in Europe for six months to get over this, if you got the money, that's fine.

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I really would blame you for that. I did. I told. Yeah, I think the.

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Yeah, if you have it in your head that that this is why you're doing it, that you're doing it just to get a fresh start and to get away from the the grocery store conversation, as Christie put it. Therefore, it's not permanent. It's not like you have to move to Houston and never come back when you could go back and you're just owning your reasons.

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Yes, there's something very powerful about like I'm choosing this because of this reason. I don't have to try to convince anyone or myself that I'm going for a job because there's only one good job in Houston. You're just going because you want to go and you can.

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Yeah, there's probably some good marketing jobs in Winston-Salem that you could get a better income, but it sounds like you want to get out.

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And I it's up to you. It's I probably going to Houston for a little while, but I'm also going to get a raise while I'm at it.

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Yeah, well, I might as well make a little more money. You're going to need it because you're going to have an increased expenses. Houston, there's going to be more expensive than Winston-Salem on rents and on other things, too. So you're just going to sit in traffic a lot more.

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But there's something so fun. I mean, she's 26. Like, you have this you have this moment in time when you don't have roots keeping you there. Were there I would have that itch anyway. Like, oh, I can just go to another. I mean, that's fun.

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Like five year burn on this relationship is I'm turning out. It's been fizzling for a long time. We try to push it all the way through.

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Alternate stopped and yeah, it's not nothing wrong with just saying, honey, I need to go away and I want to go heal a little bit.

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And if that's two years or five years, meanwhile, have a great life. Right, go over. Suck your thumb in Houston. That's not the point.

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But go, go make more money, go schmoll a lot and dance a lot and have a lot of fun.

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And, you know, and then but the point being that it's OK to I don't think I don't want you to go to Houston and say it's going to make this not hurt.

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It's going to fix my problems. Yeah, it's still going to hurt. Yeah. It's got a broken heart. It's going to go with you. It's you know, when you get to Houston, you'll still be there.

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So I don't that's what I that's what I heard that I didn't like.

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But if you can kind of get that squared around in your head, make sure you're in a good church, make sure you're growing spiritually, you know, go run a half marathon, go.

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I don't know whatever. Right. Yeah, let's do something. Let's just get out there and engage the process a little bit and let the healing come and then, you know, always be open to. I could come back always, but I guess it's an interesting question. Thank you for calling in. I hope that helps you. This is that I Ramsha. Technology and innovation are crucial for any company's success, but the primary focus should always be on you and meeting your needs.

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Christy Wright Ramsey, personality number one, best selling author, is my co-host today here on The Dave Ramsey Show, Open Phones, as we talk about your life in your money, triple eight eight to five five two two five. That's eight eight two five five two two five. Tommy is with us and Tommy is in Charlotte, North Carolina. Hi, Tommy. Welcome to the show.

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Hey, guys. Appreciate you taking my call. Sure. My question is around pricing strategy. So my full time position is as a new product designer, designing websites, apps, that sort of thing. I do a lot of freelance for pro athletes, influencers, start ups, building out primarily their e-commerce brands and websites and strategy. So. Typically, I use two different models, sort of here's what it costs. Here's your design handoff and that sort of bit.

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The issue that I run into with that is if the website goes on to do a million, three million, five million, you paid me five or ten grand for the site to great Oraibi for the client, which is awesome. But maybe I sold myself short. And then the flip side is I typically will take less up front to the website and stay on for six month or 12 month retainer making X or even a percentage of sales or profits.

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The risk there is if I don't, so somebody goes rogue for whatever reason. I'm stuck with all this work being done and five percent of zero profits. So is there a different strategy that I should consider a mixed model account that you guys know in the past has worked at minimizing my risk, but also it's fair for all parties involved. You know, I've got a question, tell me, you know, first of all, both of the scenarios that you talked about, there's a risk on either side and that's just business, right?

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There's going to be a risk, you know, I mean I mean, you can try to structure a deal structure contract, you know, where there's there's very little risk. But there's going if you're doing it from one side or the other, there's a chance, if you're a flat fee, that you're going to miss out on commission or, you know, a cut. And then there's the chance, if you you know, that that's how commission works.

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That's just the risk of it. One of the things I'm curious about, though, in your industry specifically, how are contracts typically set up? Like what what in terms of the competition, what is standard for a freelancer that does what you do regardless of who the client is? How is that normally set up? I don't know if there is a standardization for that, so, I mean, you know, yeah, it's a flat fee or an hourly either contract or hourly taking a cut of someone else's business is highly unusual.

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Yeah, and there's nothing wrong with it, is the business.

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Right? And it would just be the profits based upon the ongoing fight. If you don't have that much money upfront to invest in smaller, smaller start up or whatnot, I grow with the business as a business becomes more profitable. So either right here, a percentage of those profits as we scale.

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I understand there's nothing immoral about it. It's just assumes that you were the reason that the sales happened. Yes, I can see that. I mean, if I let's say I was doing a total money makeover book in the book just was hot. And it's going to sell nine million copies and, you know, the U.S., the U.S. experienced the user experience on the website, helps it sell, but it's going to sell. And so you're accentuating the process.

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So either way, he's OK with me, it's just you got to decide really what you're looking at is the product or service that you're marketing with your skills.

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Do you believe in it enough to take a piece of it and that puts you in the B plan.

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Otherwise you're going to take a flat fee, because I don't know if these guys are going to make it. I don't know if this I don't even I don't think anybody needs fried pickles. I'm probably not going to do it, you know? And so you look at the product, you go, that's dumb. I'm taking a flat fee for my services and getting out of Dodge.

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Right. Well, I got a question, who manages the e-commerce once you get it set up? They do what you do. That's me, so I'll, you know, hooking the product inventory management, I'll do the month to month analytics reporting as well as tweaking based on customer journey and sort of what I'm seeing as users interact with the website, the conversion rates, all that sort of thing. So the maintenance part is a larger picture play in a partnership.

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So here's what I would do.

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And I'm just throwing this out there. I would do a both end and help people in all types of businesses if they have a product based business to add services to diversify and grow. They have a service based business to add products so they can diversify and grow. It doesn't always make sense for every business, but in your case, you would have the initial contracts set up. Here's your flat fee for you to set the whole thing up. You've got a guarantee then, regardless of if they sell what you say, dard pickles from pickles, regardless of whether their business does well or not.

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You're covering your bases of your work because your work has been done and you fulfilled that promise. The other opportunity, though, is like and I think you mentioned this is to add on additional services or packages as a consultant or as an e-commerce manager for a period of time, six months, a year on retainer ongoing, then you're continually able to increase your income, continue the relationship, the client show how valuable you are to that client. But at the same time, you've covered your bases for the initial work.

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So I think I think you can you can still integrate products and services into what you're doing.

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It could be the way to lower the risk and still get the reward is to take a plan B, where you take a commission, take a smaller commission or a smaller percentage, but in a higher hourly, which is a hybrid. What you're talking about between the two plans. The only place I can think of that I've seen that that it's fairly normal is retail piece of real estate, where there's a retail shop going in and a mall as an example.

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The the lease terms are a substantial lease payment plus a gross sales kicker. And whatever the gross sales are, the landlord gets, you know, the books are audited on the clothing store and the clothing store based on a percentage of gross sales on top of regular rent to be in this mall. Yeah. And so that's kind of what you're talking about as a hybrid between the two.

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Yes. One of the things I would say Tommy me from a marketing slash, customer relations perspective, client relations, who you're dealing with here, if you are doing things, if you are providing value through this relationship, through your UX knowledge and experience that you are making, that you're not just setting up a store, you're making it a very easy, effortless, beautiful experience for the people purchasing on this e-commerce site. I would make sure that you keep those metrics and you regularly check in with your clients.

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Hey, you know, the conversion was this and now it's this or the sales were this analysis. And you're able to actually, to Dave's point, it's not all going to be attributed to you. But if you can show something you directly move the needle on, that's going to be good for the relationship and good for justifying that the what you're charging them, you know.

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So the answer is, I don't think we have a really good third option. The only idea that we've come up with is kind of a hybrid between the two and explore that which you probably honestly had already thought of. So I don't know if we're going to help or not.

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Tell me it was fun to talk about. It's a great discussion. It's a great discussion. It's a very interesting world you're in. So you've done a great job carving out a niche for yourself.

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Open phones at eight eight two five five to to five when you get ready to sell a house. The main difference between a house that sells. And a house that sits on the market. His real estate agent. Real estate agent that knows what the flip they're doing. Is worth their weight in gold and truthfully, there's not that many of them. It is truly the 80-20 principle 80 percent of the people do, 20 percent of the business, 20 percent of the people do 80 percent of the business.

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And if you take the 20 percent, they're doing 80 percent and did it again, you'd find it again, 20 percent of that, 80 percent of 20 percent of that 20 percent, meaning four percent are doing 80 percent of that business there. And so there's just hope in every business. That's true in the real estate business. It is very true.

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And you got to know the value of a good real estate agent so you don't hire some guy that's a friend of your mother's who got his license three weeks ago to sell your largest asset.

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And you get you get I mean, a monkey can get a real estate license.

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So it's like, you know, they put aside the art and go, oh, right. I mean, that's there's not much to this business when it's just to enter the business. But if you're going to sell 200, 500000, several thousand our asset, you ought to have some nice professional doing at this to got a proven track record and did it more than three times last year.

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Maybe they sold 30 or 40, 50 houses, maybe they sold 200 houses.

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These are the types of people we endorse, the high end ones that get it done. High protein, high octane. Don't settle for a subpar agent. Go to Dave Ramsey, dotcom slash agent. Click on our ELP program for real estate agents. Find who we endorse locally in your area to provide you with help. This is the Dave Ramsey Show. This is the day show show, right, Ramsey personality is my co-host today here on the air.

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Spencer is with us in Lima, Ohio. Hi, Spencer. How are you? Is it Lima, Lima, Lima, Lima? Okay, I got it right before making my call. Sure.

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How can we help? So I've been I've recently found your program and been going over my finances and trying to get down on our debt and really writing them down and where they're at. So my question is, we have about six week that total eight eighty six hundred is coming from my car, which I paid to thirty eight a month. My question is, if I, if I sold it I would get around ten to eleven thousand for it. Would that be worth it to sell it and just pay off that loan, get a sixth of the overall debt out of the way.

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Or should I keep the car because it's yeah it's a Honda Civic. So I've been told those are pretty reliable and maybe do like overeats or something to supplement my income.

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What is your household income? All right, now it's around sixty thousand. My fiancee is currently going to school, so I'm the only one bringing income right now.

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When you get married by the end of this month, actually on the 30th. Oh, congratulations. It's wonderful. Oh, thank you. OK. When will your fiancee graduate? She's graduating next May. She's doing cosmetology. OK. If this was a huge chunk of your debt, I would sell it in a heartbeat.

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But it's a small portion of your debt and you need a car, you know? I mean, it's not some extravagant car. Yeah, it's not a thirty thousand dollar car. So I'm probably going to hold onto it.

[00:31:59]

I'm probably going to hold onto it and pick up the extra jobs.

[00:32:01]

And by the way, she can to. So that makes sense, I just thought, because right now I'm working from home seven days a week or five days a week, I guess I didn't know if maybe it made sense. So now get a cheaper car.

[00:32:19]

Well, it's not a bad idea, but here's what's going to happen.

[00:32:22]

You should be debt free in two years anyway, and you're going to be moving back to a reasonable car soon during then anyway. So the car is not really what's killing you here.

[00:32:32]

It's your income and the focus on the debt and so forth.

[00:32:36]

And so as you get married and she works an extra job while she's finishing finishing up cosmetology school, you work an extra job. You guys are going crazy work. And I think you're going to clear all this debt pretty quick.

[00:32:47]

And again, it's not a big portion of your debt. So you can do it, you can do it if you want to sell it, it's OK. But it's not a Dave Ramsey Christie right. Slap on our hand on the table going, you're gonna get a stupid car. It's not it's not that situation.

[00:33:01]

It's just you know, it's interesting, Dave, in the last few weeks when I've been cohosting with you on the show, I hear this type of call pretty often someone says something very similar to this call where they say, hey, I'm new to you, I'm starting the plan. And they want to make this big decision. And what I'm sensing is when you first start and you're kind of overwhelmed by your debt, 60000, whatever it is, 80000, you want to not just have a quick win, you want to have a big quick win.

[00:33:25]

It's almost like we want to feel like I've made a huge amount of progress. I'm really on the plan. But to your point, you can take an extra job to do something like that where it's just consistency over time. You talk about this all the time with the tortoise and the hare that leads to winning. You can do that without like you said, you can sell the car. It's not a bad idea, but that's not going to be the thing that's going to get you debt free super fast.

[00:33:48]

You just probably want to feel like you've made a big difference. Do you hear that? Like, I've I've noticed that pattern.

[00:33:53]

And if you can get a quick win, it's really good, not only mathematically but emotionally. I mean, if you had ten thousand dollars a mutual fund, just cash that and paid on the debt. Yeah, that's a good thing. Yes. We're going to do that.

[00:34:04]

I'm not cashing out your retirement, but the cash out their retirement to pay off my dad is a quick win. It's it's scratching that exact same itch that you're talking about. Yes. It's the exact same place in people's brains or in our emotions that that we that we want to do that.

[00:34:19]

So, you know, and again, if you had a thirty thousand dollar car with thirty thousand or three of our car period or the other debt on it or not, I'd be getting rid of it in this situation because it would be a big quick win.

[00:34:31]

This is a small win and it's a fairly large sacrifice. Yes. Yeah, the trade off is not there for me.

[00:34:38]

The headache of selling the car and buying a new car to downgrade a little bit, you know, I mean, it's just.

[00:34:43]

Yeah, no, you know, so much except in the car and go through things like are you didn't move the needle. Right. You know, that's not that one his numbers.

[00:34:49]

But I mean, that's the same category that this falls into. Grace is in Tampa. Hi, Grace.

[00:34:55]

Welcome to The Dave Ramsey Show. Thank you. My question is, when my husband and I were a baby step two in where we have a Monday to Friday job, so we want to open a residential painting business, but only for the weekend as our side hustle and when. And I think it's going to make no more profit, maybe 30000 a year. So to protect my assets and protect, you know, just myself, what I said, I'll see what I say.

[00:35:30]

You know, like, you know, just whatever homes I have, you know, how many homes do you know are just to.

[00:35:40]

But I mean, like my you know, I do I do an LLC or do I just ask the IRS, you know, for ten ninety nine type of thing, like with the federal. I do. No.

[00:35:51]

Well Federal Court limited liability. So really, what you need is really what you need, insurance. On your business, why the coverage that you have? I'm going to get insured, that's all. You know, that's only you don't you don't you do not have a net worth of over a million dollars, do you? No. OK, and you're talking about 30000 out of business, so the business is not large enough, it has a target on it and your personal assets are not big enough that they've got a target on them.

[00:36:18]

So just get some good insurance and don't waste your money. And screwing around with an LLC, the only reason you would need an LLC is if you're trying to protect from liability and not this business starts doing 300 grand or you look up and you've got a paid for property in your name is worth 500 grand or something. And you want to get an LLC at that point, then that's fine. But the business that is Ramsey Solutions started as a sole proprietorship and we were well beyond thirty thousand dollars of your income before we incorporated, which we later converted to an LLC.

[00:36:51]

I get this question all the time, Dave, and I think I think it's two part one. People are asking, do I need to incorporate for my side business that's making ten thousand dollars a year because they feel like that that's what a real business is. This was what makes it a legitimate business. There's one side. The other side of the equation is they're getting advice from people, you know, attorneys, people in the the tax and legal profession that are saying you have to incorporate, you have to set your business up as an LLC to, you know, protect against risk and yada, yada, yada.

[00:37:26]

And so, so many people that's a barrier for them because they they feel like, well, I'm not ready to do that or know how to do that or that's too much money, etc.. And you don't have to paint some houses. You don't have to go paint some houses and get some money. And if you paint a bunch of houses and get a bunch of money, then then we'll worry about an LLC. But this idea that it's a you don't have to you know, it does not legitimize your business and it does not mean that your official, your official, when you pick up a paintbrush and somebody pays you.

[00:37:54]

That's right. At that moment, you is official. You is a painter. At that point. This is what's happened until somebody pays you for it, you're not.

[00:38:03]

And that's the measure of the legitimacy of the idea. And the LLC does not legitimize the idea or the business or you.

[00:38:12]

And it wasn't wasn't what she asked, but that is down in that question all the time.

[00:38:17]

You're right. Yes. Well, and even like you said, like when they're at the set up stage, if you Google it, if you talk to someone who has an a friend who is attorney, a lot of times they'll get that advice that they have to. So they're not sure what to do from there. So I just love reminding people, hey, you don't have to do that out of the gate. This is a small business. It's a side business.

[00:38:35]

Let's validate the idea. Let's get some cash flow in and then we can talk about that if and when the business justifies it.

[00:38:41]

Yeah, absolutely. That's exactly how it works, folks. So, yeah, you can get an iron and employee identification number from the IRS does absolutely nothing. It just identifies the business for purposes of payroll taxes or for purposes. If you want to run the you know, when you get ready to file your sole proprietorship as a Schedule C on your income tax return, you just list the union.

[00:39:07]

But it doesn't it doesn't limit liability at all. It doesn't change the fact on that whatsoever. So the question thank you for joining us, Grace. That puts us our The Dave Ramsey Show in the books. Our thanks to James Childs, our producer, Kelly Daniel, our associate producer and phone screener. I'm Dave Ramsey, your host, and we'll be back.

[00:39:44]

Hey, it's Kelly, associate producer and phone screener for The Dave Ramsey Show. This episode is over, but if you heard about an event, product or service, it didn't have a chance to write it down. Don't worry. We list everything you've heard about during this episode in the podcast show notes or head to Dave Ramsey Dotcom. Thanks for listening.

[00:40:02]

Feel like you're in a rut and living life. Just going through the motions, build confidence in yourself and learn to trust the God who created you. Check out the Christy Wright Show, where Christy inspires you to break through your limitations and create the life you're proud to live. Hey, all, I'm Christy, right? You know, it's so easy to feel stuck. You live life just going through the motions, doing dishes, doing laundry, carpool lines and a whole list of commitments that bring you no joy.

[00:40:30]

Why do we live like that? That's why I want you to check out the Christy Wright Show. Each episode will help you build confidence in yourself and the God that created. You hear more from the Ramsey network, including the Christy Wright Show wherever you listen to podcasts.

[00:40:47]

Hey, it's James, producer of The Dave Ramsey Show. This episode is over, but check the episode notes for links to products and services you've heard about during this episode. Thanks for listening.