A 21-year-old dog trainer recently called into “The Ramsey Show,” looking for advice on his growing debt and business struggles. Sal, who is about to become a father, revealed that he is $300,000 in debt after renovating a rented facility for his dog training business. He wanted to know whether he should focus on expanding the business or paying off his debt.
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How Did He Get Into So Much Debt?
Sal started his business at 19 as a mobile dog trainer, keeping costs low. But as he expanded, he decided he needed a physical location. "We rented and then kind of renovated a 4,000-square-foot facility," he explained. To finance the renovations and other expenses, he took out a home equity line of credit from his father, something he now realizes was a mistake.
Dave Ramsey was stunned when Sal confirmed that most of his $300,000 debt came from renovating a building he doesn't even own. "You spent money renovating someone else's building that you rent?" Ramsey asked. "So where's the $300,000? You spent $300,000 on someone else's building?"
Sal broke it down: $225,000 went toward the renovations, marketing, and employee salaries, while another $30,000 went toward a van for the business.
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The Reality Check
Despite the massive investment, Sal's business brought in $300,000 in revenue last year, with only $40,000 in profit. Ramsey immediately shut down the idea of expanding: "No. You need to make some money with all this money you’ve spent. You need to double your revenues with your existing facilities and your stupid $30,000 van that you did not need. You have never seen anything you wanted that you didn’t go buy it. Stop it."
Ramsey warned Sal that spending more money doesn't guarantee success. "The disease that you have is the idea that if I spend more, I'm always going to make more. And that is a disease that doesn't work in business."
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The Path Forward
Instead of hiring more employees or investing in marketing, Ramsey urged Sal to focus on increasing profits with what he already has. "Your ability to look at an animal and teach it to behave is the secret sauce. It is not whether you have a van and it's not whether you have a rental property with a kennel in it."
Ramsey also suggested selling the $30,000 van to free up cash and start repaying his father. He emphasized that hard work, not new purchases, would turn things around. "You've made a mess, and you need a shovel—and you are the shovel."
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