"I Have Been Dancing Around Bankruptcy For 7 Years"

Summary

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Episode Summary: “I Have Been Dancing Around Bankruptcy For 7 Years”

Podcast: The Ramsey Show Highlights
Host: Dave Ramsey (with a guest appearance by a Financial Advisor)
Date: December 27, 2025
Episode Theme:
This episode centers on Jeremy, a caller who has been struggling with overwhelming debt and contemplating bankruptcy for seven years. Dave Ramsey provides direct, actionable advice to break the cycle, emphasizing budgeting, decisive action, and financial discipline. The discussion covers the realities of living with debt, practical steps to regain financial control, and the importance of intensity and focus on the debt-free journey.

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Key Discussion Points & Insights

Jeremy’s Debt Situation and Background

• Total Debt: $120,000
  • $20,000 car loan (13% interest)
  • $4,000 in back taxes (2021)
  • $13,000 Parent PLUS loan (student loan)
  • Remaining ~$90,000 in unsecured debt (mainly credit cards, some loans)
• Income & Outflow:
  • Salary: $141,000/year
  • After withholdings, brings home about $5,000/month
  • $1,000/month wage garnishment (credit card company)
  • ~$1,280/month spousal support
  • 6% of salary goes to 401(k) contributions

“I have been struggling and dancing with bankruptcy for essentially seven years.”
— Jeremy (00:06)

• Asset Note: One-third ownership of a yet-to-be-liquidated family home, but currently not contributing income or expense.

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Unpacking the Numbers

• Dave questions the cash flow, pointing out that Jeremy’s high income doesn’t match his high debt anxiety and apparent cash shortage.
• Dave identifies unexplained “leaks” in the budget and emphasizes the need for Jeremy to track every dollar.

“You still got a lot of money that is unexplained here, and I want you to go find it.”
— Dave Ramsey (04:26)

• Advises Jeremy to temporarily cease 401(k) contributions to focus on debt.
• Financial Advisor suggests considering a second job to boost income aggressively.

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Dave Ramsey’s Step-by-Step Advice

Back-to-Basics Budgeting

• Stop 401(k) Contributions Temporarily: Free up cash flow to pay off debt.
• Beans and Rice Budget: No discretionary spending—no eating out or vacations.
• Meticulous Tracking: Use the EveryDollar app to account for every dollar before the month begins.
• Credit Card Destruction: “Cut up the stupid credit cards. Never touch one of those dadgum things again. They're destroying your life.” (05:28)

Debts Attack Plan

• “Debt Snowball” Method:

  1. List debts smallest to largest.
  2. Make minimum payments on all but the smallest.
  3. Attack the smallest with all extra funds.
  4. Move down the list aggressively.

• Special Advice on Loans:

  • Put the Parent PLUS loan on temporary hardship.
  • Clear the car debt—pay it off in 12 months, or sell the car.

Mindset Reset

“It feels like you've kind of been wallowing around in this for so long that you've kind of lost your footing... I want you to just back up three steps, take a deep breath and dive into cold water and go, Okay. Fresh start. Clean eyes. Clear eyes. Fresh start.”
— Dave Ramsey (05:04)

• Dave stresses the need for a fresh mental approach, seeing this as a turning point rather than a place to stay stuck.

Intensity & Additional Momentum

• Second Job: Financial Advisor recommends earning $30-$50k more quickly to attack debt with speed.
• Sell the Car: Strong recommendation to sell the $20,000 car if it cannot be paid off rapidly.
• Aggressive Mindset: Go “all in, scorched earth” to knock down debts “like dominoes.” (07:07)

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Notable Quotes & Memorable Moments

• Jeremy’s Admission:
  “I started the process post divorce but at the advice of the attorney, he's like well wait till this happens...” (00:12)

• Snap to Reality:
  “You kind of lost your footing and lost... You can't get a handhold, you can't get a foothold.”
  — Dave Ramsey (05:07)

• Urgency on Car Debt:
  “That thing needs to be paid off in the next 12 months or you need to sell it.”
  — Dave Ramsey (07:07)

• On Hope and Potential:
  “But the math here says you’ve got great hope. Your voice does not say that.”
  — Dave Ramsey (06:33)

• On Budget Mastery:
  “More than anything, Jeremy, you got to make every single dollar behave before the month begins and then execute on that with deathly efficiency.”
  — Dave Ramsey (05:00)

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Timestamps for Important Segments

• 00:06 — Jeremy lays out his seven-year struggle with looming bankruptcy and details debt breakdown
• 01:20 — Breakdown of types of unsecured debt
• 02:54 — Clarification about wage garnishment amounts
• 03:37 — Dave asks about 401(k) withholding and overall expenses
• 04:26 — Dave questions unaccounted spending, urges a detailed budget
• 05:04 — Dave pivots to mindset and the need for a “fresh start”
• 06:33 — Financial Advisor presses for Jeremy to increase his income via a second job
• 07:07 — Dave sets timeline to kill car debt or sell, and paints path out of debt

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Episode Tone & Takeaways

The tone is direct and challenging, yet hopeful—classic Dave Ramsey. There’s no sugarcoating: Jeremy is urged to drop excuses, radically rework his budget, and bring relentless focus and energy. The episode exemplifies the Ramsey method: tight budgeting, intensity, and no-debt resolve.

For listeners in similar straits, the message is clear:
Track every dollar, get painfully honest with yourself, and attack your debt with everything you have. The way out is simple but not easy—and hope lies beyond discipline and action.

Transcript

[Dave Ramsey]

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[Jeremy]

I have been struggling and dancing with bankruptcy for essentially seven years.

[Dave Ramsey]

Wow.

[Jeremy]

Everything, everything started. I'm not in it. I started the process post divorce but at the advice of the attorney, he's like well wait till this happens now, wait till this happens and essentially got in a position where I borrowed money from family and I wasn't going to run them through the ringer to go through a Chapter 13 bankruptcy. Try to make this as quick as I can. As your call screener requested. I'm essentially $120,000 in debt. $20,000 added as a car loan at a very high interest rate because of my credit score. There's roughly $4,000 in back taxes from 2021. A $13,000 parent plus loan that I owe money on and the rest is unsecured debt that I've accumulated either from, from back in the divorce, over the years of having three kids.

[Dave Ramsey]

How much of this is family? How much do you owe your family?

[Jeremy]

I don't owe my family anymore.

[Dave Ramsey]

I thought you said. So what's the unsecured debt for? 90,000 bucks was credit cards.

[Jeremy]

Mostly credit cards and some loans. Yeah. So what do you make trying to get through? My current salary now is 141,000. That's good that my. I am currently being garnished for 100,000 from one credit card company and my spousal support, my child support has had expired just last year and garnishments came in and my spouse supports roughly $1,200. Aside from other bills that I have before anything, I'm bringing home roughly 5,000amonth. And I started down back down the track on bankruptcy again. But again I'm not a year out from having my family being into that and I don't want to do that to them.

[Dave Ramsey]

Referential treatment. Yeah. Okay. So the. Let me ask you, you said $100,000 worth of garnishment. What are you talking about?

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[Dave Ramsey]

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[Dave Ramsey]

You said $100,000 worth of garnishment. What are you talking about?

[Jeremy]

Oh, no, no, no, no. Not $100,000 worth of garnishment. I'm saying $1,000 a month.

[Dave Ramsey]

Oh, $1,000 a month garnish. Okay, so you make 140 and there's taking out a thousand for that. And they're taking out how much for child support? 1200.

[Jeremy]

Spousal support? 1212. 1280.

[Dave Ramsey]

Okay, so that's $2,200. That. That's less than 30,000 out of the 140. So that leaves you 90, not counting taxes. How big's your tax refund?

[Jeremy]

Oh, I don't get. I don't usually get any good.

[Dave Ramsey]

Okay, and then. So how much do you have coming out for 401k?

[Jeremy]

That is maxing out at 6%.

[Dave Ramsey]

Yeah. Okay. All right, so here's what I'm going to do, Jeremy. You're making a lot of money. It's just going back out the door. What do you think you're spending it on all these payments? You got all this car payments. Outrageous. It's 1500, isn't it?

[Jeremy]

My. My car payment is $438 a month, but it's a very long loan at a 13% interest rate.

[Dave Ramsey]

Okay.

[Jeremy]

One of the other things that's. That's in the mix here is I do have. I am one third owner of my mother's home from when she passed, and there's currently no settlement with my brothers and I on liquidating at least my. My share.

[Dave Ramsey]

But you're not paying anything on that.

[Jeremy]

No, I'm not paying anything on that.

[Dave Ramsey]

You just. You might get some money out of it someday. Okay. All right, so here's what I'm doing. I'm still not finding 140,000, so I temporarily would stop your 401k. I'm going to put you on a beans and rice budget. You don't eat out anymore. You don't go on vacation anymore. And you're going to make every doll because.140, minus 2,200, minus 500 for a car payment. You still got a lot of money that is unexplained here, and I want you to go find it. I'm going to give you the every dollar premium budget, which is going to guide you through this whole process. But more than anything, Jeremy, you got to make every single dollar behave before the month begins and then execute on that with deathly efficiency. And, you know, you've kind of been. It feels like you've kind of been wallowing around in this for so long that you've kind of Lost your footing and lost. You can't get a handhold, you can't get a foothold. And so I want you to just back up three steps, take a deep breath and dive into cold water and go. Okay. Fresh start. Clean eyes. Clear eyes. Fresh start. Now look at the math. Only where the flip is $140,000 going? Because you sure hadn't explained it to me in this. And I want you to go find that. For your sake. You don't have to explain it to me, but you need to go find it. Cut up the stupid credit cards. Never touch one of those dadgum things again. They're destroying your life. And then let's list your debts, smallest to largest, and begin to attack them in that order after you start paying minimum payments. But you could stop the 401k, you can put the Parent plus loan on temporary hardship and then you could turn around and start attacking these other debts that you are paying monthly on. Get them cleared up and then come back to the parent plus loan and clean it up later. All of these things are gettable. They're very doable. And whatever that one that's got the garnishment on, get that thing, get it done, get it knocked out. And man, I would just pump. I'd pop it that way as hard as I could hit it. But the math here says you've got great hope. Your voice does not say that.

[Financial Advisor]

Yeah, I would recommend that you even get a second job. Target 30 to $50,000. What would it take? How could you make an additional 30 to 50? Now you got good income. But I think you need some intensity right now. We've heard enough debt free screams that when we hear these people say we worked every second that we could and we made so much money. I think right now you need a jump start of intensity. And I would look to sell this car. This $20,000 car's got a $400 plus payment to it. You need to go all in scorched earth. More income and beans and rice.

[Dave Ramsey]

That thing needs to be paid off in the next 12 months or you need to sell it. Yep, you need to get get fired up here. So you clean up those credit cards, you clean up that car loan, you start cleaning up a bunch of this and all you've got left is unsecured. You can start plowing through this stuff like a snowplow, baby. You can start knocking them down just like dominoes. It'll happen. We've seen people do it all the time. Hang on, we'll sign you up. As our gift to the expanded version, the new and improved everydollar. Create your free everydollar Budget today. The simplest way to budget for your life.