He's Made Over $100,000 This Year And Still Can't Pay Off Debt?

Summary

Episode Overview

Main Theme:
In this episode of The Ramsey Show Highlights, Dave Ramsey and co-host Christian take a call from Lance, a listener who relocated for a high-paying job and is frustrated that, despite earning over $100,000 in the past year, he's made little progress tackling his $65,000 of debt. The hosts guide Lance through uncovering where his money is going, explore why sacrifices aren’t yielding results, and provide practical strategies to drastically reduce his debt and gain control of his finances.

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Key Discussion Points & Insights

1. Lance's Financial Situation: Income vs. Debt

• Lance's Dilemma: Moved to Ohio, earning ~$100,000/year, but still about $65,000 in debt with little progress made in a year. Main expenses include $1,450/month rent, $500 truck payment, $400 insurance, $500 Harley payment, a personal loan, and previously high credit card debt.
  • Lance: “It’s a year later, and I’m still pretty much in the same situation. And I don’t understand why... The math isn’t adding up for me.” [00:06]
• Breakdown of Debts:
  • $30,000 on a Harley
  • $25,000 on a truck
  • $8,000 personal loan
  • $1,000 credit card debt (down from $10,000)
  • Hosts spotlight that the majority of the debt is in vehicles.

2. Budgeting and Spending Analysis

• Budgeting Habits:
  • Started budgeting halfway through the year after realizing lack of progress.
  • Struggles to identify exactly where a significant portion of his income goes.
    • Dave Ramsey: “$6,000 doesn’t trickle out there.” [01:37]
• Key Insight:
  • Despite budgeting efforts, "disappearing" money is a concern. Christian points out this vague loss of thousands each month, highlighting a lack of detailed tracking and the risk of falling back into poor habits even after making financial changes.

3. Asset Sell-Off as a Solution

• Advice to Sell Vehicles:
  • Dave and Christian recommend Lance sell the Harley and truck to eliminate the bulk of his debt, noting he has an additional “beater” car for transportation.
  • Christian: “If you can... sell both the truck and the Harley. You may take out... a small personal loan for the difference—that’s a good chunk.” [04:15]
• Dealing With Negative Equity:
  • Since Lance owes more than the market value for his Harley (and possibly the truck), he’ll need to either save the difference or take a small loan to clear the titles so they can actually sell.
  • Dave Ramsey: “You need to find out the private party value and then... save that up through future paychecks or get a loan from a credit union for the difference.” [04:46]
• Practical How-To:
  • Avoid dealership trade-ins, use private party sales (Facebook Marketplace, Cars.com, AutoTrader).
  • Handle transactions on the same day by paying off the loan with proceeds (and extra cash/loan for negative equity), securing the title for the buyer.

4. Importance of Detailed Budgeting for True Progress

• Deeper Budgeting Required:
  • The hosts are concerned that even with selling assets, Lance’s spending habits are too loose, risking further money leaks.
    • Christian: “My only fear, Lance, is when you do all of this... you’re gonna go back to this kind of spending habit of not knowing exactly where your money’s going...” [05:48]
  • Offer Lance a free year of the EveryDollar budgeting app to help track every expense and visualize progress.
    • Dave Ramsey: “You’ll feel a whole lot less overwhelmed when you just see all the numbers. You can see the progress...” [06:59]
• Sacrifice Without Results:
  • Lance reports “living like a hermit” the past several months, but still sees no movement in debt paydown.
    • Christian: “I want the sacrifice to produce a result... It's just crazy to sacrifice and have no result, right?” [07:29]
  • Emphasize importance of aligning effort with actual, measurable progress—and how a practical plan makes all the difference.

5. Mindset, Persistence, and Encouragement

• Christian and Dave’s Encouragement:
  • Acknowledgement that slow progress is normal for some but push for Lance to stay motivated by seeking tangible wins.
    • Christian: “Some people... had the ‘I’ve had it’ moment... Some are like, hey, it took me about six months to kind of get all this under my belt... I just want you to see some progress to at least keep you motivated to stay with it.” [08:53]
  • Recommend maximizing this phase of Lance’s life (single, high income, overtime opportunities) to “cut everything” and accelerate debt payoff.

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Notable Quotes & Memorable Moments

• Dave Ramsey: “$6,000 doesn’t trickle out there.” [01:37]
• Christian: “If you can... sell both the truck and the Harley. You may take out... a small personal loan for the difference—that’s a good chunk.” [04:15]
• Dave Ramsey: “They’ll screw you harder than anyone.” — warning against dealership trade-ins [02:52]
• Christian: “I want the sacrifice to produce a result... It's just crazy to sacrifice and have no result, right?” [07:29]
• Dave Ramsey: “You’ll feel a whole lot less overwhelmed when you just see all the numbers. You can see the progress...” [06:59]
• Christian: “Some people... had the ‘I’ve had it’ moment... Some are like, hey, it took me about six months to kind of get all this under my belt... I just want you to see some progress...” [08:53]

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Timestamps for Key Segments

• Introduction & Lance's background: [00:06 – 01:24]
• Detailed debt breakdown: [02:06 – 02:32]
• Advice to sell vehicles: [02:32 – 04:31]
• How to sell with existing loans: [04:46 – 05:29]
• Addressing budgeting gaps/risk of backsliding: [05:48 – 06:59]
• Encouragement & next steps for lasting change: [07:15 – 09:12]

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Summary Takeaway

Lance’s high income isn’t translating to progress because of debt-heavy vehicles, loose spending habits, and insufficiently detailed budgeting. Dave and Christian advocate an aggressive approach: sell the assets that are dragging him down, use a rigorous budget to control every dollar, and match his hard sacrifices with real, measurable change. Their approach highlights that earning more only works if paired with intentional, disciplined money management—otherwise, even a six-figure salary can “disappear through your fingers.”

Transcript

[Dave Ramsey]

Brought to you by the EveryDollar app. Start budgeting for free today.

[Lance]

So I moved out to Ohio exactly a year ago with the goal to start clearing my debt away. About $65,000 in debt. It's a year later, and I'm still pretty much in the same situation. And I don't understand why. I pay rent now and I had to furnish my apartment when I got out here, but it just. The math isn't adding up for me.

[Dave Ramsey]

How much do you make?

[Lance]

At my new job, I make about 100,000 on a good year, assuming no layoffs.

[Dave Ramsey]

Okay, so in the past year, $100,000 has flowed through your hands in the last year. Or at least that's the gross pay.

[Lance]

Yes.

[Christian]

Are you doing a pretty detailed budget, Lance? Month to month?

[Lance]

I mean, about six months in, I really started cracking down on it because I saw that I wasn't gaining much traction.

[Christian]

Yeah, Yeah. I mean, how much is your rent a month?

[Lance]

Rent's not too bad. It's $1,450.

[Christian]

Okay. Yeah.

[Dave Ramsey]

Are you taking home five or six grand a month?

[Lance]

A little bit more, actually. It's about $2,000 a week.

[Dave Ramsey]

Okay, that's great. So where is the rest of the market?

[Christian]

Where is it all going?

[Lance]

Well, like I said, I pay rent now. Before, I didn't pay rent when I look back home in New Hampshire, and then I had to furnish my apartment. I guess the rest just gets trickled out there.

[Dave Ramsey]

$6,000 doesn't trickle out there. So if I looked at your bank statement and I added everything up, where would be the big piles of money that disappeared? Is it eating out? Is it subscriptions? Is it spending? Is it gamb. Any vices?

[Lance]

I don't gamble.

I have a lot of bills. I mean, I have a truck payment that's $500. I have insurance that's 400. Plus, I have a Harley that's $500.

[Dave Ramsey]

Break down the 65,000 for us. What are the balances and what are they owed for?

[Lance]

I have about. It's 65,000, give or take. I have 30,000 on my Harley. I have 25,000 on my truck. I have $8,000 on a personal loan, and I had $10,000 on credit card debt, which I was able to manage down to $1,000.

[Christian]

Oh, good. Well, what good news is if you sell all the vehicles.

[Lance]

Sell Harley?

[Christian]

Well, I mean. Yeah, you got. That's 55,000 of your 65,000, I think we found.

[Lance]

I looked into selling my Harley back to the dealership.

[Dave Ramsey]

No, no, not to the dealership.

[Christian]

They're gonna give you the worst price.

[Dave Ramsey]

They'll screw you harder than anyone.

[Christian]

Have you. Have you Kelly Blue booked it?

[Dave Ramsey]

What's the Kelly Blue Book, private party value?

[Lance]

I believe it's 17,000.

[Dave Ramsey]

I don't buy that. How are you that far underwater?

[Christian]

What about your truck?

[Lance]

I haven't looked up the Blue Book value on it.

[Dave Ramsey]

Did you roll over negative equity for this Harley?

[Lance]

The Harley? No, it was a $30,000 Harley. It was brand new.

[Christian]

Yeah, but how long have you had it?

[Lance]

I'm going on the third year now, I believe.

[Christian]

Because if that's the case, it's in half. I mean, the value of it went in half, which I don't. I'm not up on my Harleys. I know that's probably shocking, but I don't. I don't keep up with the market on Harley's.

[Dave Ramsey]

But she's a Mitsubishi Gal.

[Christian]

That's bad. Okay, okay. Let's just keep playing with the numbers here, Lance. Okay. Your truck. When did you get the truck?

[Lance]

I got the truck last year right before I moved out to Ohio.

[Christian]

And it was it used, I'm assuming?

[Lance]

Yes.

[Christian]

Yes. Okay. So the good thing is the truck probably hasn't lost a ton of its value. So let's just throw. I don't know, let's say it's 22. Maybe you've. Maybe you lost three grand on it in the last year. So what I would. I mean, honestly, what I would do is go and take out. Let's see, I would do 20. I mean, maybe go. If you can maybe sell both of these things. Sell both the truck and the Harley. You may take out a. Well, I was gonna say that's a good chunk of a personal loan. Well, you could all that.

[Dave Ramsey]

You could save the difference pretty quick making the money you're making.

[Lance]

I'm willing. I'm willing to sell my truck and Harley. I do have a small car, like a beater winter car.

[Dave Ramsey]

That perfect.

[Christian]

You have three.

[Dave Ramsey]

Three things with wheels and Moses.

[Christian]

Yeah, yeah, yeah.

[Lance]

Yes.

[Dave Ramsey]

Okay, so here's your homework. You need to find out the private party value and then the amount you're underwater on, you either need to save that up through future paychecks or get a loan from a credit union for the difference so that you can clear the titles and sell these, because that's.

[Christian]

Going to be about 15,000 that you'll be negative on both of these around. So I just.

[Lance]

I just don't know who to sell my Harley. I don't Know how to sell my Harley, I guess, because the dealership was the only way I knew. And when they offered me less than.

[Dave Ramsey]

Half, I, I mean, Facebook, Marketplace, Cars.com, auto Trader, there's a lot of people looking. You bought a Harley brand new for 30. So three years later, someone's looking for it at half price.

[Lance]

Okay. I just, I've never, I've never sold anything that I. That a bank owned, you know.

[Dave Ramsey]

Sure. Well, here's the deal. You're going to need to clear the title before they can actually take possession of it. And that's why you need the difference either in cash that you save up or that loan from the credit union. And you can do all the transactions on the same day. So the day you sell it is the day you go down to the. Wherever you owe the loan to and you pay off the loan with the difference.

[Christian]

Yeah, because you just cut all your debt in half, Lance, when you do this, which means you get back again, you said the 600 payment for the Harley, the 500 car payment, I mean, that's eleven hundred dollars less the insurance. But here's what worries me a little bit is even after some of the things you were just saying, I mean, you still have a couple of grand sitting there that is kind of disappearing, that you still, at the beginning of the call weren't able to tell us exactly where it was going. So that's still enough money for me to be like, oh, my only fear lands is when you do all of this, and it does give you margin and frees you up that you're going to go back to this kind of spending habit that you're in of not knowing exactly where your money's going. And that's not going to be helpful either because instead of $4,000 slipping through your fingers now it'll be 6,000. Right. Or whatever it is. So I want you to be able to know and control your money and where it's going. And so before we get off the call, Christian will pick up and we're gonna give you a year of every dollar, which is our, not just our budgeting app, but our overall financial. You can put in all of your numbers and your entire financial picture can be in this app, which is so helpful because you're gonna be able to walk through the baby steps, pay off this debt, and we can really walk with you through it in this app.

[Lance]

But.

[Christian]

But.

[Dave Ramsey]

And you'll feel a whole lot less overwhelmed when you just see all the numbers. You can see the progress, because right now you're just sort of hoping you make great money, you work really hard and it's disappearing through your fingers and every dollar is going to help you take control of that, to help stop that.

[Lance]

Yes, I understand. A year ago I was terrible with my money and I'm still not the best, but I have tightened down a lot and I've been living like a hermit for the last four or five months. I'm desperate to get out of debt.

[Christian]

I wanna, I hear, yeah, I totally hear that, Lance. But what worries me is you've lived like a hermit for four months, but there's no been. There's been no progress. So that's what I'm saying. It's like the two things don't add up. I want you to be a hermit, but I wish you'd called him. Like I was a hermit for four months and I paid off $9,000 of my debt, you know, or whatever it is. Like, I want the sacrifice to produce a result. Cause it's just crazy to sacrifice and have no result. Right? And so that's the power of when you are working a very detailed plan, is you're getting the results that the sacrifice is allowing. And so that's what I want. Those two parents. Because you'll run on fumes the rest of your life if you're living like this and not making any progress, which is what sounds like you're doing. So, yeah, as a single guy, Lance, man, I really would. This is the time in your life to cut everything. And even if you want to work extra, you make great money. But man, if you even want to just throw in some extra income just to get it paid off that much faster to be able to have some savings, I, Yeah, I mean, I think.

[Lance]

The money I make is, is with immense overtime. Like I, they operate, it's there.

[Christian]

Gotcha.

[Lance]

And I do work a lot.

[Christian]

Gotcha. Yeah, I believe it. And I think that work ethic, if it's channeled to. I just think you just maybe need more details and direction and it's going to help you see kind of where you're going. But you're right, your, your habits are like, I hear that. That you are changing for the better, which I think is a, Is a great way to go. And you know what, Lance too, I'm gonna say, like, some people, their money story is that one day they've, they had the I had it moment and they change everything. And then some people are like, hey, it took me about six months to kind of get all this under my belt to really learn and understand it, and then they take off. And that just may be your story, which is great, but I just want you to see some progress to at least keep you motivated to stay with it.

[Dave Ramsey]

Create your free every dollar budget today. The simplest way to budget for your life.