How Do I Get Rid Of My $1,200 Car Payment?

Summary

Summary of "How Do I Get Rid Of My $1,200 Car Payment?"

Episode Details:

• Title: How Do I Get Rid Of My $1,200 Car Payment?
• Host/Author: Ramsey Network
• Release Date: May 25, 2025

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Introduction

In this episode of The Ramsey Show Highlights, Terence reaches out to seek advice on managing an exorbitant $1,200 monthly car payment. Hosted by Dave Ramsey and featuring insights from John and other Ramsey Network experts, the discussion delves deep into Terence's financial predicament, exploring viable solutions to eliminate his hefty car debt and regain financial stability.

Caller Background

Terence begins by sharing his current financial burdens:

• Car Loan: $1,200 monthly payment on a Kia Stinger, totaling approximately $60,000, which includes rolled-over negative equity.
• Income: Gross monthly income of $10,000 (pre-tax), with a net of around $5,200 after taxes and child support.
• Debt Status: Fully paid off other debts, including credit cards, except for the car loan.

Notable Quote:

Terence: "I have a 1200 car note." [00:06]

The Problem

Terence's $1,200 car payment is straining his finances, especially since the Kia Stinger, a high-performance sports car, doesn't align with his income and needs. He acknowledges the poor decision and seeks guidance on how to eliminate this liability.

Notable Exchange:

Dave Ramsey: "A Kia Stinger. Stinger." [00:17]

Terence: "Yes. Yes, I bought a Stinger. It was a bad decision." [00:56]

Discussion and Analysis

1. Assessing the Financial Impact:

• Negative Equity: Terence owes $57,000 on the Stinger, while its private sale value is approximately $30,000, leading to a significant negative equity of $27,000.
• Monthly Financial Strain: With a $1,200 car payment and $2,000 in child support, Terence's disposable income post-expenses is about $1,300 monthly.

Notable Quote:

Dave Ramsey: "So 57,000. And what is the Stinger worth if you sold it? Private seller today?" [02:16]

2. Exploring Solutions:

• Selling the Car:

  • Option 1: Sell the Kia Stinger privately for $30,000 to settle a portion of the loan, leaving Terence with a remaining debt of $27,000.
  • Option 2: Pay off the remaining $27,000 aggressively by reallocating $1,300 monthly towards the debt.

• Purchasing a More Affordable Vehicle:

  • Terence previously drove a 2012 Buick LaCrosse, valued at $10,000, which he found reliable and sufficient for his needs.

Notable Quote:

John: "If you take that $1200 a month payment, you take that 1300 dollars extra and you go through your budget with a magnifying glass and you stop going out for a season... you can pay this thing off." [04:08]

3. Budgeting and Lifestyle Adjustments:

• Aggressive Budgeting: Terence has already made significant lifestyle changes, such as reducing his spending on dining out and entertainment to free up additional funds for debt repayment.
• Support and Encouragement: Dave and John commend Terence's commitment and stress the importance of maintaining discipline to achieve financial freedom.

Notable Quote:

Terence: "So I eat chicken salad sandwiches. Like I really just tried to, I really cut back just to see, to figure out was it me or was it just a lifestyle or anything." [05:05]

Advice and Action Plan

1. Sell the Current Vehicle:

• Immediate Action: List the Kia Stinger for sale to recover $30,000.
• Remaining Debt: Focus on eliminating the $27,000 negative equity.

2. Acquire a More Affordable Car:

• Target Price Range: Aim for a dependable vehicle within the $7,500 to $10,000 range, such as a used Honda or Toyota, to ensure reliability without the financial strain.

Notable Quote:

Dave Ramsey: "I'm going to challenge you to get a... try 7,500. I, I think you get something dependable." [06:03]

3. Aggressive Debt Repayment:

• Monthly Allocation: Devote the available $1,300 each month towards the remaining debt, potentially accelerating the payoff timeline.
• Lifestyle Sacrifices: Continue minimal spending habits to prioritize debt elimination.

Notable Quote:

John: "And by the time this 10 months is up and you've thrown $3,000 a month, you... you will never do this again." [07:17]

Terence’s Commitment and Final Thoughts

Terence expresses determination to resolve his financial issues, highlighting his commitment to the Baby Steps philosophy advocated by Dave Ramsey. He acknowledges past mistakes, such as borrowing money impulsively, and shows resolve to maintain financial discipline moving forward, especially with a daughter approaching college age.

Notable Quote:

Terence: "I'm done because I gotta... I wanna have the money. I have the nest egg. I did the baby steps, so I cut the credit cards off." [08:02]

Encouragement and Support: Dave and John reinforce their support, encouraging Terence to stay the course and reminding him of the long-term benefits of financial freedom over temporary luxury.

Notable Quote:

Dave Ramsey: "This is super intense. You got to be super intense to do that. Three grand a month. You can do it." [08:02]

Conclusion

The episode concludes with a reaffirmation of the Ramsey Network's commitment to guiding listeners through financial challenges. Terence's journey exemplifies the practical application of budgeting and disciplined debt repayment strategies to overcome significant financial obstacles.

Closing Quote:

Dave Ramsey: "Create your free EveryDollar budget today. The simplest way to budget for your life." [08:41]

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Key Takeaways:

• Assess Your Finances: Understand the full scope of your debts and their impact on your budget.
• Prioritize Debt Repayment: Focus on eliminating high-interest and large debts first.
• Lifestyle Adjustments: Be prepared to make short-term sacrifices for long-term financial stability.
• Seek Expert Advice: Utilize resources and expert guidance to navigate financial challenges effectively.

Terence's case serves as a compelling example of how disciplined budgeting and strategic financial planning can lead to the resolution of even the most daunting financial dilemmas.

Transcript

[Dave Ramsey]

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

[Terence]

I have a 1200 car note.

[Dave Ramsey]

Oh, my goodness. Where's my tums at?

[John]

What is it?

[Terence]

It's a G2 Kia Stinger.

[Dave Ramsey]

A what did you say? A Kia Stinger. Stinger.

[John]

Stinger.

[Terence]

Kia. Yeah, the twin turbo. The sports car. Kia.

[John]

Wow.

[Dave Ramsey]

I've not heard of this model. Terence, how much did that set you?

[Terence]

It was around like 60,000, but I had. I had pre. I had another car to add on to it.

[John]

No, you didn't. Did you roll negative equity into it?

[Terence]

Yes, and I needed something reliable because I traveled back and forth to Tennessee to see my kids.

[John]

Bro, you did not. You didn't need a stinger. $10,000 camera. You bought a Stinger, dude.

[Dave Ramsey]

Yeah.

[Terence]

Yes. Yes, I bought a Stinger. It was a bad decision.

[Dave Ramsey]

We love you.

[John]

We're just having fun with you.

[Terence]

I know the bad by listening to the show. I knew it was a bad decision.

[Dave Ramsey]

So how can we help?

[Terence]

Well, I have that and I also have $2,000 a month child support. I was trying to figure out how can I get rid of the Stinger.

[John]

So. So every. The. The first of every month, you open your eyes and you're already 3200 down.

[Terence]

Yes, I made. I make $10,000 a month, $125,000 a year without overtime.

[Dave Ramsey]

Is that the only debt you have, is the car?

[Terence]

Yes, I paid off. I started literally today, Ramsey, a couple of years ago. Then last October, I paid off all my credit cards.

[Dave Ramsey]

Okay, so how much? Let's walk through this. Okay, go ahead.

[Terence]

You have one credit card that I. That I would use only to go into Sky Club and get a rental card. And that was another question that I had to ask y' all. That too. What do you do about when you need a rental car? Do I just use my debit card?

[Dave Ramsey]

Yeah, that's what John and I do.

[John]

That's what I use.

[Dave Ramsey]

That's what John and I do, is we use a debit card. You don't need the credit card. So cut the credit card up because it's going to remove the temptation. But let's dive into this car real quick. Okay, let's. Cuz we got negative equity. So what? What? You owe a total of how much?

[Terence]

Oh, like 57,000 now.

[Dave Ramsey]

So 57,000. And what is the Stinger worth if you sold it? Private seller today?

[Terence]

Probably 30,000.

[Dave Ramsey]

30,000. Oh, boy.

[John]

That's a bath. That hurts.

[Dave Ramsey]

That is a bath right there. Yeah.

[Terence]

Because the thing was, I didn't mind. I don't mind paying for it, but by the time I, you know, get around to paying bills and I see that 1200 note, I'm like, no, I get that.

[Dave Ramsey]

Listen, I have indigestion, and it's not even my payment.

[John]

I've got hemorrhoids now. Our bodies are falling apart. On your behalf, Terrence.

[Dave Ramsey]

Oh, boy. I could explain the first one. I can't explain the second one.

[John]

I can't either. I don't know how that works. Just my insides.

[Dave Ramsey]

Okay, so let's. Walking through this here, John. So see, the 57k also involves the negative equity, correct?

[Terence]

I think I'm done with the negative equity part of it.

[Dave Ramsey]

All right, so we owe 57.

[Terence]

Yes.

[Dave Ramsey]

All right, so I had the car.

[Terence]

For two years now.

[John]

All right, how much? So you. You make. You have $2,000 a month in child support. You bring home $10,000 after tax.

[Terence]

No, that's before taxes.

[Dave Ramsey]

All right, so what's your actual bring home? What's your bring home?

[Terence]

I bring home. Like. Like 50. 50. $200.

[Dave Ramsey]

60.

[Terence]

Taxes and child support.

[John]

Oh, after. Okay, child support.

[Dave Ramsey]

52.

[Terence]

Child support. 5,200 after child support.

[Dave Ramsey]

Oh, okay, good. All right. So what I'm trying to get at is how much, John, I want to get to quickly. How much could you. How much could you. If you just pay the bills, just your basic bills and your child support and this car payment, how much money left over do you have put towards saving to get a. I'm thinking about a $10,000 car. Something that's dependable. Maybe 7,500 if I find myself a higher mile, Honda or Toyota. That'll get you back and forth to Tennessee. How much money could you put away each month?

[Terence]

Right now, I could probably pull away probably fourteen hundred dollars a month. Okay, because, like, after. Because after each check, I'm. I'm. I'm rolling around 1300 after everything.

[Dave Ramsey]

Okay. So I. What I'd like to see him do, John, is I'd like to see him save as much money. Let's get a 5, 6, $7,000 car and let's sell this Stinger. And now we're. We're at least, you know, we're now working on 30,000, 27,000, roughly, is what we're working on.

[John]

Or here's. Here's the other side of that. If you take that $1200 a month payment, you take that 1300 dollars extra and you go through your budget with a magnifying glass and you stop going out for a season. And let's say you can scrounge up 3000 bucks. That includes this $1200. You can pay this thing off.

[Terence]

Okay. Completely became a cheapo. What I became a cheapskate.

[John]

Okay.

[Terence]

So I eat chicken salad sandwiches. Like I really just tried to, I really cut back just to see, to figure out was it me or was it just a lifestyle or anything. And everybody been looking at me crazy like, hey, you want to go? I'm like, nope.

[John]

Good, good, good, good.

[Terence]

Can't go nowhere when I got this to pay, you know.

[John]

So I think a principle that we live by here is things with wheels should not cost more than 50% of your income. And so you're right there on the bubble here. So if you want to just to suck it up for 20 months and throw $3,000 a month at this, Ken said you're going to throw, you're going to suck it up for 10 months, throw $3,000 a month, get that 30 down to where it's just bottoming out, and then you try to sell it on the market.

[Dave Ramsey]

Yeah, that's another option. I, I gave you what I would do. I like what John saying, I'm doing.

[John]

What Ken would do. I, I would get rid of this thing out of my life.

[Terence]

Yeah, I want to get rid of it, man. Because before I got the Stinger, I was driving a 2012 Buick Lacrosse, which I didn't have no problem driving.

[John]

That's, that's, that's, that's a car. Ladies man.

[Dave Ramsey]

Listen, Terence, I, I think very few guys could pull off a Buick Lacrosse like you could. I just got a sense you got enough swag. Well, get you another one.

[Terence]

I got hit in a high speed chase and they totaled it. I love that.

[Dave Ramsey]

Tell me that you weren't being chased.

[Terence]

No, no, no. I was sitting in traffic and got hit by a police officer.

[Dave Ramsey]

What's a decent Buick Lacrosse gonna set.

[Terence]

You back probably now? Well, I bought that one in 2018 for ten grand. When I went to looking after the red, they went up to like 16,000.

[John]

Yeah, they're pretty, They're.

[Dave Ramsey]

Yeah, I, listen, I'm going to challenge you to get a. Somewhere. Try 7,500. I, I think you get something dependable. You know, a car that a, a car maker that's very dependable. You know, the ones that just, they're going to run forever. I'd take my chances on that. I'd do less cash right now because you got to get out of this deal.

[John]

And here's the words we use Terrence, this isn't an accusation. This is us having some fun. But you're gonna pay about $30,000 in stupid tax.

[Terence]

Okay?

[John]

And if you. If you just know that every time you send that check, it's just. I'm paying stupid tax. Write it in the little thing on the bottom of the check. Stupid tax. Or when you're making online payment, just put stupid tax. And by the time this 10 months is up and you've thrown $3,000 a month, and you haven't been on a date, you haven't been to a restaurant, you haven't seen a concert, you're gonna be. You will never do this again.

[Terence]

Never. I'm one of the ones that learn real fast.

[John]

Well, you were kind of with us last time, and then you borrowed money again. Are we done? Done.

[Terence]

I'm done.

[John]

Good. That's amazing.

[Terence]

I'm done because I gotta. I got a daughter about to go to college, so I. I want to put. I. I want to have the money. I have the nest egg. I did the baby steps, so I cut the credit cards off.

[John]

I love it.

[Dave Ramsey]

Well, this is super intense. You got to be super intense to do that. Three grand a month. You can do it. You got overtime options. What? You let. You let that slip out. So I'd be getting overtime. I'd be working weekends. And to John's point, if we can sock 3000 at a minimum away towards this, the 27. Get yourself another Buick, my man.

[John]

And people are going to watch you work like crazy over the next 10 months to a year, and they're going to think you're going to roll in there with a G3 or G Wagon. Listen, you're going to roll in with a. With a Buick. Let them know I'm opting out of the game and I solve for peace, not for a cool, shiny, depreciating asset.

[Dave Ramsey]

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