I Lost Everything Trading in Penny Stocks—How Do I Recover?

Summary

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Ramsey Everyday Millionaires – Episode Summary

Episode: I Lost Everything Trading in Penny Stocks—How Do I Recover?
Date: April 13, 2026
Hosts: Dave Ramsey & Rachel Cruze

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Overview

This episode centers on a call from Kevin, a 30-year-old listener from Austin, Texas, who lost his entire $34,000 savings trading penny stocks. The conversation quickly broadens to dissect not just the pitfalls of risky investments, but also the underlying issues of debt, overspending, and unhealthy financial habits that led Kevin and his wife back to living with his mother. Dave Ramsey and Rachel Cruze dive into practical strategies for getting out of debt, building wealth the "boring," proven way, and breaking free from get-rich-quick mentalities.

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Key Discussion Points & Insights

1. Kevin's Current Financial State

• Lost $34,000 in penny stocks: All his savings from college and early working years gone due to speculative investing.
• Moved back with mother: Kevin and his wife, now lacking financial stability, are living with his mother.
• High debt load: Kevin owns two cars with a combined $50,000 in outstanding loans.
• Income: Kevin earns about $60,000 after tax as an In-N-Out manager. His wife is not currently working.

2. Breaking Down the Real Source of Financial Distress

• Not just risky investing:
  • Dave Ramsey reframes the issue, noting (02:30):

    "You have a debt problem. Not a 'I lost money in penny stocks' problem."

  • The real issue is overleveraged consumption—using financed cars well beyond their means.
• Behavior, not luck:
  • Rachel Cruze emphasizes the need for both spouses to work if they are to stabilize, especially without children.

3. Action Steps Advised by the Hosts

• Sell unnecessary (expensive) cars:
  • Dave urges (03:07):

    "Sell the cars... both of you get a job and both of you sell these dumb butt crazy cars and go get you a one-bedroom apartment, get you two $5,000 cars, and then you have $10,000 in car debt instead of $50,000." (04:24)

• Cut lifestyle to match income:
  • Downsize living space, limit car expenses, and focus on essential spending.
• Both spouses should work:
  • Rachel states (07:39):

    "If you're two well-bodied adults, both of you should be working...to get yourselves out of this mess."

• Kickstart wealth-building with debt payoff:
  • Dave offers:

    "The number one wealth building tool you have is your income. You have given that away to the car companies." (05:16)

• Switch to long-term, consistent investing:
  • Use growth stock mutual funds and traditional retirement vehicles like 401(k)s.

4. The Dangers of Get-Rich-Quick Schemes

• Misleading advice online:
  • Dave warns against financial "advice" found on TikTok or Internet forums unless it's from trusted sources (02:30).
  • Paraphrasing Abraham Lincoln in jest (07:01):

    "Abraham Lincoln said everything on the Internet's not true."

• Rewiring guilt and learning:
  • Dave:

    "I want 90% of your guilt or shame to be on the cars so you never do that again...that's doing more damage than the penny stocks did." (07:01)

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Notable Quotes & Memorable Moments

• On speculating vs. real investing:

  "You didn't need to take a lot of risk. So here's the thing, honey..." – Dave Ramsey (02:30)

• On practical wealth-building:

  "You live on less than you make. You don't go borrow money, you pay yourself. So you are investing, you are saving. You have an emergency fund..." – Rachel Cruze (06:33)

• Compound effect of wasted car payments:

  "If you just put this in good [growth] stock mutual funds... you'd have $9.8 million at 67." – Rachel Cruze (06:05)

• On expectations:

  "You're living like you're making $200,000 a year and you're not. And so you're gonna have to adjust your expectations of how this whole thing works." – Dave Ramsey (08:02)

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Timestamps for Key Segments

• 00:20 – Kevin shares his story: lost savings in penny stocks, back at his mother’s, wife unhappy
• 02:30 – Dave reframes the real problem as debt, not penny stocks; warns about online advice
• 03:07 – Dave and Rachel urge selling both cars, both spouses working
• 04:24 – Specifics of the new, realistic plan: 1-bedroom apartment, $5k cars
• 05:15 – Discussion on wealth-building tools: income > car loans; recommendation for mutual funds
• 06:03-06:28 – Rachel demonstrates impact of wasting money on car payments
• 07:01-07:39 – Closing thoughts: guilt assignment, Internet wisdom, both spouses need to work
• 08:02 – Reality check: adjusting lifestyle to fit actual income

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Takeaways for Listeners

• It's not a one-time risky investment mistake that ruins most people; it's ongoing debt, overspending, and get-rich-quick thinking.
• Real financial recovery comes from cutting expenses, paying off debt aggressively, both spouses contributing, and sticking to proven investment strategies—no shortcuts.
• Being honest about your financial reality is the first step toward “escaping the lower class,” not gambling with high-risk trading.

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This episode is a compelling walkthrough of how ordinary people get off track, and how powerful simple, consistent steps are for reclaiming control and building real wealth, the Ramsey way.

Transcript

[Kevin]

This episode is brought to you by SmartVestor. Connect with an investing pro near you

[Dave Ramsey]

at RamseySolutions.com SmartVestor Kevin is in Austin, Texas. Hi, Kevin. How are you?

[Kevin]

I'm good. How are you?

[Dave Ramsey]

Better than I deserve. What's up?

[Kevin]

Hi. So I don't know if you can. You can hear me clearly, right? I. I'm 30 years old and I have made a few questionable investment that I spent most of my life saving up and getting ahead. I saved $34,000 over college and my early adulthood and long story short, I ended up losing everything in penny stocks that someone I knew suggested me to. And now I'm back at my mom's house with my wife and she's not too happy about it and I'm just trying.

[Rachel Cruze]

Did you lose your house and everything?

[Kevin]

I was renting an apartment.

[Rachel Cruze]

Okay, gotcha. How old are you?

[Dave Ramsey]

Not a job.

[Kevin]

I do, I do. I'm actually a manager at an in and out. I don't know if you've ever been

[Rachel Cruze]

before, but we just got one here.

[Dave Ramsey]

I just moved into the neighborhood, but the Flying Dutchman's corporate office is across the street. But anyway, so the. Wait a minute, you were a manager in n out when all this was happening?

[Kevin]

No, So I actually worked at. I had a full red scholarship through college and I worked at Wendy's and other like, fast food joints and I saved up a bunch of money.

[Dave Ramsey]

$34,000. Yes, but you were not living on the $34,000 when you were doing all of this. You were living on your income, were you not?

[Kevin]

No, that was just my savings.

[Dave Ramsey]

Okay, my point is this. There's no reason that you're at your mother's if you didn't lose your job, you just lost your savings.

[Kevin]

Yeah, well, the thing is, I have a bit of debt, I have a few different cars, and I don't have really enough money to afford any kind of like, you know, anything food related or going out to have fun. And I kind of just figured because, you know, the ultimate goal is to escape the lower class. And what I've read online is that you need to take a little bit of risk. I think I went the wrong way about that. But my goal is, I think you

[Dave Ramsey]

read about it in the wrong place. If you read about financial stuff on TikTok, unless it's us, it sucks. So, no, you didn't need to take a lot of risk. So here's the thing, honey. You know you have a debt problem. Not a I lost money in penny stocks problem. If you weren't using your savings to live on, you were already had a life. And then plus or minus savings is the penny stock thing. So we don't blame this on the penny stock. We blame this on the fact you bought a bunch of crap like cars that you can't afford to pay on a in and out manager's salary.

[Kevin]

Right.

[Dave Ramsey]

Sell the cars.

[Kevin]

I could definitely. I could definitely sell. I could sell the cars for sure.

[Dave Ramsey]

Yeah, you should have, but you can't.

[Rachel Cruze]

Yeah.

[Dave Ramsey]

Before you move in with your mother.

[Kevin]

Okay. And then would I just be Ubering or do I get like a cheaper car?

[Dave Ramsey]

But you had a job.

[Kevin]

Yeah, yeah, but I have to get to work.

[Dave Ramsey]

Yeah, but you get a $2,000 car, you said.

[Rachel Cruze]

Yeah, you said plural cars. How many cars do you have, Kevin?

[Kevin]

I have two cars.

[Rachel Cruze]

Okay. And they're both on payments?

[Kevin]

Yes.

[Dave Ramsey]

Okay, how much do you owe on them?

[Kevin]

One of them I owe about 30,000. The other one I owe about 20.

[Dave Ramsey]

Okay, so you have $50,000 in car debt. And what is your income, sir?

[Kevin]

About 60 after tax.

[Dave Ramsey]

Okay. Does your wife work outside the home?

[Kevin]

No, she does. It's complicated. I think that she. I kind of am a big believer of the whole nuclear house, you know, so she takes care of.

[Dave Ramsey]

You don't live in your mother's house if you're a believer in the nuclear house.

[Kevin]

Yeah. I think my mentality was that she could just help out.

[Rachel Cruze]

Do y' all have kids? Kevin? To make that sacrifice, Kevin, you guys gotta work. How old are y'? All?

[Kevin]

30. I'm 30 years old.

[Rachel Cruze]

We gotta start working.

[Dave Ramsey]

Do you have children?

[Kevin]

I do not have children.

[Dave Ramsey]

Both of you get a job and both of you sell these dumb butt crazy cars and go get you a one bedroom apartment, get you two $5,000 cars, and then you have $10,000 in car debt. And instead of $50,000 in car debt, that is your problem.

[Rachel Cruze]

And you do nothing.

[Dave Ramsey]

Not penny stock and then do nothing. That's what's causing you to be in the lower class, living in your mother's basement. Not penny stocks.

[Kevin]

Okay, that definitely makes sense.

[Dave Ramsey]

You lost $50,000 on these cars. You lost $30,000 on the penny stocks.

[Kevin]

Yes, absolutely. For reference, I had seen it work. I'm definitely not gonna miss it anymore. I did have a question, as someone with all your experience. If I'm not investing in the riskier the penny stocks or call options or anything like that, do you have a investment recommendation for when I build up?

[Rachel Cruze]

Yes, he does.

[Dave Ramsey]

Savings, the number one wealth building tool. That you have is your income. You have given that away to the car companies. And so in order to be able to be a real investor and become wealthy, like the wealthy do it, you have to put your income into investments. And it's not speculative and it's not high risk. And I put mine in basic growth stock mutual funds. Okay, I'm going to send you a copy of the book, the total money makeover. 20 million people have read this book and it's helped them work the baby steps to get out of debt. Because when you're out of debt, then you're freed up to start doing long term investing.

[Rachel Cruze]

How much do you guys pay in car payments each month?

[Kevin]

I think about about 1200.

[Rachel Cruze]

1200. Okay, so here's what's crazy. Here's the, here's the mindset, okay? Instead of paying the car companies, you pay yourself at 1200 from age 30, ready for this. From age 30 to where you are now to 67 years old at a 12% rate of return. If you just put this in good gross stock mutual funds and did not risky paid yourself these car payments instead of the cards, you'd have $9.8 million at 67.

[Dave Ramsey]

And that's not speculative and it's not risky.

[Rachel Cruze]

So that's it.

[Dave Ramsey]

That's what basic people do in a 401k?

[Rachel Cruze]

Yes. And the lie, Kevin, that you're, that you have in the back of your head, that's why you do these penny stocks, is a get rich quick mentality to build true wealth is actually very simple. You live on less than you make. You don't go borrow money, you pay yourself. So you are investing, you are saving. You have an emergency fund. So when something comes up, you're not running the debt. You, you have the money saved. You invest, you're generous. So there's a plan which, yeah, the book tmmo told Money makeover will help with that.

[Dave Ramsey]

I'll send you that to try to help you. So the summation of the overall call is this. You're feeling 90% of your shame over the penny stocks and 10% of it on the cars. I want you to flip that. I want 90% of your guilt or shame to be on the cars so you never do that again because that's doing more damage to you than the penny stocks did. And then the lesson you learn from the penny stocks is you, you know, Abraham Lincoln said everything on the Internet's not true. Okay, so just.

[Rachel Cruze]

Did you read that on the Internet?

[Dave Ramsey]

Yeah, I read that on the Internet. So I mean, this is, you know, so just gotta know that most of the stuff on TikTok is a lie. Most of this stuff.

[Rachel Cruze]

And if you're too. Can I just say this too? Sorry. If you're too well, well bodied adults,

[Dave Ramsey]

both of you should be working.

[Rachel Cruze]

You should be working, especially if you don't have kids, right? And to get yourselves out of this mess and to get yourself on a financial playing field that you actually then have stability and then you can make choices of, hey, I want someone home. I don't. But right now, you guys don't have that luxury. That's a luxury to keep one spouse at home.

[Dave Ramsey]

You're living like you're making $200,000 a year and you're not. And so you're gonna have to adjust your expectations of how this whole thing works.