Highlights from the Dave Ramsey Show

QUESTION: Eric on Twitter asks if it's okay to pay two employees who do the same job different salaries. Dave says fair isn't equal.

ANSWER: Yeah. Fair is not equal. Equal is not fair. Michael Jordan plays better basketball than I do. That's not fair. But we're not equal. He's not going to get paid the same. There are no two people who do the exact same job the exact same way.

Let me give you an example. Let's say I had two personal assistants inside of our organization. Both of them were personal assistants to VPs, but one of them is a personal assistant to a VP who is extremely profitable and running a very large department where the other one is a personal assistant to a VP who's running a department that's brand-new and not yet profitable. And one of them is a personal assistant who's been in her seat as a personal assistant to a VP for 10 years, and the other one's been there 10 months. There's an example where it's very easy in my mind for the one who's been there longer and in a more profitable department would be making more. That would make more sense to me. That's kind of how we get at it.

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QUESTION: Jamie in Florida is a full-time guidance counselor at a high school. She also bakes and decorates cakes. Word about her cakes has gotten around, and she's being asked to do event cakes. She wants to keep it small and isn't sure how to respond. Dave explains how to choose her clients.

ANSWER: Choose your clients based on two things. One is raise your prices, and some of them will choose to not be clients. Then you'll make more per cake. The second thing that's more important than the first one is choose to work with people you like. You're not doing a big—enough volume to put up with a bunch of crap here. If you get Bridezilla, don't work with her. Get somebody else to work with her. Just raise your prices. That's what I would do. And choose your clients more carefully because you have no desire to grow this business much bigger than it is, and yet it's growing. You can stop that by choosing your clients and raising your prices. You'll get more joy and more money out of the business. I like that.

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QUESTION: Craig in Colorado says his dental business is $1 million in debt. The amount owed is $600,000 on the building and about $400,000 on the build-out he did to it. They are almost out of debt in their personal finances and make $400,000 a year. He wants to know if they should work on the business debt or contribute to retirement.

ANSWER: Because of your unbelievably huge, wonderful income, you could fully fund your $17,500 401(k) and it won't move the needle on the $1 million debt. If you do that out of $400,000 and live off $100,000 and also give $100,000 or so to taxes, and you are able to throw $200,000 at this, it's a five-year plan while fully funding a 401(k). But that's certainly not, percentage-wise, a heavy accumulation for you.

You fully funding a 401(k) is a small percentage of your income. You could do that and still really attack these debts. The first one I would go after is the build-out loan and the second would be the real estate loan, in that order.

I would have a five-year plan to get debt-free and not be living like I'm making $400,000. I wouldn't throw $50,000 a year at retirement. If you have a 401(k) at the office, $17,500 is your max unless you're over 50, in which case it's $22,500. Load up on that. If you max that out and don't do anything else, you'll pound your debt.

When you come out on the other side of that debt, it will be pretty easy to go into accumulation mode. It stabilizes your practice and your life dramatically when you are out of debt because now, not only do you have a practice and a building paid for, but you've got this incredible income on top of that and a piece of real estate. You've got all these different ways to accumulate wealth. You are doing great.

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