I have 10 payday loans (Can I Break This Cycle?)

Summary

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Podcast Summary: The Ramsey Show Highlights

Episode: "I have 10 payday loans (Can I Break This Cycle?)"
Date: June 8, 2026
Hosts: Dave Ramsey & Rachel Cruze
Guest: James

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Main Theme

This episode centers around listener James, who finds himself overwhelmed by 10 payday loans. Dave Ramsey and Rachel Cruze break down the predatory nature of payday loans, provide a debt-elimination game plan, and dig into the core issues driving James’s financial cycle. The conversation also offers broad advice for listeners facing similar traps, emphasizing budgeting, increased income, and behavioral change.

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Key Discussion Points & Insights

The Payday Loan “Trap”

• James’s Situation (00:08)

  • James currently holds 10 payday loans: 4 from physical storefronts and 6 via phone apps.
  • The cycle began with emergency car repairs and rent; borrowing once led to repeated borrowing.

• Why Payday Loans Are So Dangerous (01:15)

  • Rachel Cruze: “These are small loans, but they’re usually due in a very short period of time... the interest rate, the APR on these is anywhere between 300 and 600% many times.”
  • Dave Ramsey: “They don’t know that because it’s just a fee. Oh, it’s a $45 fee… the loan grows. And by the next payday, you don’t have enough to cover it. So you go take out another one… It's just whack a mole.” (01:31-01:57)
  • Rachel adds: “You borrow $500, you add the 75 fee and now you owe 575. Like, that’s bananas.” (02:00)

The Scope of James’s Debt

• Breakdown of Debts (02:12 – 03:29)

  • Storefront payday loans: 4 loans, each maxed at $255 with a $300 repayment due every two weeks.
  • App payday loans: 6 loans, from $100 to $350, with various interest charges.
  • Total debt: about $2,500 (03:29)

• James’s Attempts at Recovery (03:37)

  • Has tried to save $1,000 (Ramsey’s “Baby Step 1”) twice but emergencies forced him to use the savings.
  • “I think this is such high interest, I should pay these off. But, like, I saved up a thousand twice, ended up emergency come up. So I would use that.” (03:37)

The Underlying Issues: Income & Budgeting

• Rachel’s Analysis (04:21)

  • “I'm hearing a cash flow issue, so an income issue. And I'm also hearing a lack of financial planning issue, which sounds like a budgeting issue. So let’s talk about those two things.”
  • James’s reported income: “I make about a little over 4,000 a month.” (04:56)

• Household Structure (05:02)

  • James lives with his girlfriend and two kids.
  • Girlfriend contributes by paying utilities and splitting rent.

• Hidden Drains on Cash Flow (05:38)

  • No major other debts except one credit card, a storage fee, and a significant car loan.
  • Car loan: Owes $19,000 on a car worth $8,000 (“underwater” by $12,000), with a $530 monthly payment.
  • Late car payments incur over $150/month in late fees.

• Rent Situation

  • Total rent is $1,800/month, split between James and his girlfriend. (06:41)

The Core Advice: Next Steps

• Budgeting Is Essential (06:44 – 07:58)

  • Rachel: “Do you have a budget? …Just plug in the minimum payments. …From there we can figure out how much margin you actually have, because I think you have more than you think you have.”
  • Dave: “The key here, James, is you need to throw more money at it than the balance is accruing, which means you need to get aggressive. That next paycheck needs to go mostly towards these debts so you can stop playing the shell game in Whack a mole. That's the only way out... and then, you know, never touch this hot stove again. Delete these apps. Never walk into one of those stores, you drive by and say, that's a past version of James. Never again.” (07:58)

• Debt Snowball Method

  • Pay minimums on everything, throw all extra money at the smallest debt first. Progressively attack each loan smallest-to-largest.

• Boosting Income and Side Hustles (08:21)

  • Rachel: “You're probably going to need to pick up a couple of side hustles. You're going to have to work extra to get this done quickly.”

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Notable Quotes & Memorable Moments

• On the Payday Loan Trap

  • Dave Ramsey (01:52): “No one can get out because the loan grows… It's just whack a mole.”
  • Rachel Cruze (02:00): “You borrow $500, you add the 75 fee and now you owe 575. Like, that’s bananas.”

• On the Emotional Toll

  • Rachel Cruze (07:35): “You’re just going to see the balance go up temporarily, but you’re going to feel great when you knock these payday loans down from 10 to 9 and from 9 to 8… you’re just going to have some stupid tax that you’re going to feel in way of interest.”

• Action Steps

  • Dave Ramsey (07:58): “You need to throw more money at it than the balance is accruing, which means you need to get aggressive. That next paycheck needs to go mostly towards these debts… never touch this hot stove again.”

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Important Timestamps

• 00:08 – James introduces his situation: 10 payday loans
• 01:15-01:40 – Rachel and Dave explain payday loan pitfalls
• 02:12-03:29 – James details his debts and payments
• 03:37 – James discusses failed savings attempts
• 04:21-04:56 – Rachel diagnoses income and planning as main issues
• 05:38-06:41 – Uncovering other debts, car loan details
• 06:44-07:58 – Discussion on budgeting and the debt snowball method
• 07:58 – Dave’s final motivational push and call to action

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Takeaways for Listeners

• Payday loans are designed to trap borrowers: Extremely high fees and short terms make them almost impossible to escape.
• Budgeting and tracking spending is non-negotiable: You may have more cash flow than you think once you track everything.
• Aggression and side hustles are crucial: Extra income and a targeted plan (debt snowball) are the path out.
• Behavioral change is necessary: Don’t just pay off the loans—break the cycle by refusing to borrow again and altering your money habits.

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Episode Mood:
Empathetic but firm; focused on problem-solving and real talk, delivered with both urgency and encouragement.

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Transcript

[Dave Ramsey]

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

[James]

What's the best way to pay off payday loans? Ooh, I have 10 altogether.

[Rachel Cruze]

That's a monster. My goodness.

[James]

I've seen someone call in about them, but never this many.

[Rachel Cruze]

Wow. How. How did you. Let me just ask. How did you get in the situation where you were needing to go to these places 10 different times?

[James]

I had some car troubles a couple, maybe a little over two years ago and I needed to pay rent, so there was one down the street from me. So I seen it and I walked in there and to get, to try to get a loan and they gave me that man. And then it spiraled into getting behind again. So I got end up getting another one, then another one. So altogether it's four. Four payday loans where I walk into a store and do it. And then I got stuck with the ones on the apps on the phone, so I got six of those.

[Dave Ramsey]

Have you deleted these apps? Like, I know you're still paying on them, but I'm scared you're going to go get an 11th one.

[James]

That's right. Yeah. No, I got, Yeah, I need to. I got all the ones I could possibly get.

[Rachel Cruze]

So for listeners listening, we hate payday loans because number one, most people, they're borrowing somewhere from 100 to $1,000, right? These are small loans, but they're usually due in a very short period of time. So sometimes they're doing two weeks, sometimes they're doing four weeks. But the main kicker by the next

[Dave Ramsey]

payday, that's where they get the name.

[Rachel Cruze]

The main kicker is, guys, the, the, the interest rate, the APR on these is anywhere between 300 and 600% many times.

[Dave Ramsey]

But they don't know that because it's just a fee. Oh, it's a $45 fee to get this small loan. And when you actually factor in what that's costing you.

[Rachel Cruze]

Yeah.

[Dave Ramsey]

No one can get out because the loan grows.

[Rachel Cruze]

It just grows.

[Dave Ramsey]

And by the next payday, you don't have enough to cover it. So you go take out another one.

[Rachel Cruze]

Right.

[Dave Ramsey]

It's just whack a mole. So that's where James found found himself.

[Rachel Cruze]

You borrow $500, you add the 75 fee and now you owe 575. Like that's bananas. So James, how much do yours total? Do you fall in line with this or tell me what yours.

[James]

I'm gonna break them down.

[Rachel Cruze]

I'd love that.

[James]

The four, the four that I go to in store, they let you borrow maximum 255, but I have to pay them back 300. So every two weeks I gotta pay that. So that's about 190 every two weeks. So almost 400 just on those two a month.

[Rachel Cruze]

Wow.

[James]

And then the phones. The phone ones, I. Let me see. I got it written down. The phone ones are just different numbers. The smallest one is 100, and I pay $5 in interest for that every two weeks. And then the next one is 300, and I paid $13 in interest. Next one is 350. I paid 1050 interest. The next one is 240, and I pay 35 in interest. And then the next one is 250, and I paid 19 in interest.

[Rachel Cruze]

Oh, my goodness. That is.

[Dave Ramsey]

So what's the total balances of all these 10 payday loans if I would

[James]

pay them all off today? Yeah, the four are 1200 and then the other are 12, 13, 50.

[Dave Ramsey]

So, okay, about 2500 bucks would clear these.

[James]

Yeah, it's about 2500.

[Dave Ramsey]

And do you have any money in the bank right now?

[James]

I don't. I try to, like, listen to your guys's steps. Like, save up a thousand. I tried that twice. I think this is such high interest, I should pay these off. But, like, I saved up a thousand twice, ended up emergency come up. So I would use that.

[Rachel Cruze]

I think that.

[Carla]

How much money do you have to make where budgeting is just optional? If you chose C. Watch this.

[James]

She makes about 170. I make about 115. Hold on.

[Carla]

Did you go back after you paid off everything, borrow some more money?

[James]

Oh, yeah. Oh, no, Carla, we like to go here and there and get this Mercedes and. Oh, no, you went full South Beach.

[Carla]

It's not just about how much you make. It's about having a plan for what you've got. So start budgeting with every dollar for free today.

[Rachel Cruze]

I think, James, that the baby step is not the issue. I think it's your income that's the issue. Because obviously not having the money for car repairs, whatever is going on with the vehicle is what caused you to get into this mess in the first place. And that's also the thing that's holding you back from getting the thousand dollars saved and being able to hold on to it. So I'm hearing two issues. I'm hearing a cash flow issue, so an income issue. And I'm also hearing a lack of financial planning issue, which sounds like a budgeting issue. So let's talk about those two things. Do you have a budget? And also I want to know how much are you bringing in every month as income?

[James]

I make about a little over 4,000amonth.

[Rachel Cruze]

And is it just you?

[James]

I have a girlfriend also, and two kids.

[Rachel Cruze]

Okay, girlfriend and two kids. And you guys are all living together? It's one household.

[James]

Yeah. Apartment.

[Rachel Cruze]

Okay. Is she contributing financially or no?

[James]

Yeah, she goes. She basically covers all the lights, gas, food, and she goes half with the rent with me.

[Rachel Cruze]

So why is I cover. Why is there a huge issue? Because if I'm hearing somebody who is in a shared financial situation, you've got 4,000amonth. You're splitting rent. She's covering all the basic utilities. Where's your money going? Tell us. Tell us more. Tell us about all your other debt.

[James]

No, other. I just have one credit card. I pay every month. I have storage, phone bill. Then another big problem I was going to bring up next is I have a car loan that I'm underwater in.

[Rachel Cruze]

How much?

[James]

And I'm also behind on.

[Dave Ramsey]

Do you still own that car?

[James]

Yeah, I still have it. I'm about 12,000 underwater.

[Rachel Cruze]

What's it worth?

[James]

It's worth about 8,000.

[Rachel Cruze]

Okay, so you owe 10 and a half, 20?

[James]

Yeah, I owe about 19.

[Dave Ramsey]

What's the payment on that?

[James]

Payment's 530.

[Rachel Cruze]

Yeah, that's messing with you. I don't.

[James]

I just realized just about a month ago, that's why I gave you guys a call, so that I was behind a lot. And I didn't know that the. It's like a big fee of interest when you're late also on top of the other interest. So it's basically like a little over 150 in late fees every month occurring. Mm.

[Rachel Cruze]

What about your rent? What are you guys paying in rent? Because still I'm wondering where this money is going.

[James]

It's 1800.

[Rachel Cruze]

That's your half or that's the full amount.

[James]

That's the full rent.

[Rachel Cruze]

Okay. So, yeah, we've definitely got to find out where your money's being spent. So, second question. Do you have a budget? I'm guessing no.

[James]

I tried the budget with the app, but it's just so confusing with all these other fees and other stuff.

[Rachel Cruze]

Okay, so what I want you to do, I want you to give it another shot, because I think you just need a little help tweaking it when it comes to the fees and everything. Just plug in the minimum payments. That's all you need to do. So there's a section. You list all of them out. It'll ask you what the minimum payment is that you pay just Fill that in. And then from there we can figure out how much margin you actually have, because I think that you have more than you think you have. And then we can see a full number. Because the way we want you to tackle this is with the debt snowball, which means you're only paying minimum payments on everything. And then smallest to largest, we're taking the very smallest debt and all of our extra money goes on the smallest debt. So there for a while, it's going to feel like the others are struggling, because they are. And you're going to feel it because these are payday loans. You're just going to see the balance go up temporarily, but you're going to feel great when you knock these payday loans down from 10 to 9 and from 9 to 8 and you're just going to have some stupid tax that you're going to feel in way of interest.

[Dave Ramsey]

But the key here, James, is you need to throw more money at it than the balance is accruing, which means you need to get aggressive. That next paycheck needs to go mostly towards these debts so you can stop playing the shell game in Whack a mole. That's the only way out, is you got to be more aggressive than they are. And then, you know, never touch this hot stove again. Delete these apps. Never walk into one of those stores, you drive by and say, that's a past version of James. Never again.

[Rachel Cruze]

And you're probably going to need to pick up a couple of side hustles. You're going to have to work extra to get this done quickly.

[Dave Ramsey]

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