I Owe $40,000 On A $27,000 Car!

Summary

The Ramsey Show Highlights: “I Owe $40,000 On A $27,000 Car!”

Date: March 19, 2026
Host: Ramsey Network
Guests/Expert Contributors: Multiple (Names not given—referred to as C & D)
Caller: Katie

---

Episode Overview

In this fast-paced episode, the hosts tackle a listener’s financial predicament: being massively underwater on a car loan while juggling family needs, home repairs, and gearing up for two teenagers to start driving. The discussion centers on practical steps for escaping debt, reprioritizing large expenses, and maintaining focus in the face of daunting life challenges. The tone is empathetic but direct, laced with humor and classic Ramsey Network tough love.

---

Key Discussion Points & Insights

1. Progress on Debt Repayment (00:06–00:23)

• Caller (Katie): Currently in “Baby Step 2,” working extra hours and about to cut $12K in consumer debt by half with a $6K payment.
• Quote: “I’ve been working like 25 hours extra every week trying to like pump out the overtime…we are in full gazelle mode. Just running and feeling the passion.” — Katie (00:24)

2. The Car Loan Dilemma (00:50–01:44)

• Katie reveals she owes $40,000 on a car now worth only about $27,000–$33,000, making her $13,000 upside down.

• The hosts are surprised by both the car’s negative equity and that Katie initially forgot to mention it as a major debt component.

  Memorable Exchange:

  • “That’s a big one to forget about, Katie.” — Host C (01:17)
  • “I can’t forget about the car. I can’t forget about the car. It’s the whole reason I’m calling.” — Katie (01:21)

3. Household Situation & Prioritizing Needs (01:44–03:14)

• Katie and her husband earn a strong combined income ($93K + $54K per year), but high debt makes finances tight.
• She explains their dire kitchen situation after buying a fixer-upper:
  • No kitchen cabinets, counters, or proper sink — using folding tables and a utility sink in the laundry.
• Quote: “I have a sink. I have a utility sink in my laundry room.” — Katie (03:14)
• Added stress: twin teenagers about to need cars.

4. Unforeseen Home Expenses & Tapped-Out Savings (03:51–05:14)

• Home repairs far exceeded inspection reports, eating up all equity from a previous house sale.

• Now, their only reserve is a $1,000 emergency fund.

  Memorable Quotes:

  • “We did redo all of the plumbing. We did all of the electrical because our inspection came back horrific…Everything had to be replaced.” — Katie (04:03)
  • “I don’t have any [money] left…we’re down to our thousand dollar emergency fund…” — Katie (05:06)

5. Advice: Get Out of the Car Loan (05:19–06:49)

• Hosts advise selling the car, taking out a smaller loan (for the negative equity), and buying a cheap replacement.

  • Example: Sell the car, get a $13K–$18K loan (covering the difference and a cheap “clunker”).

• Warn about not letting total vehicle value for the household exceed half their annual income.

• Suggest waiting on cars for the twins, sharing vehicles, or even bikes if necessary.

  Memorable Exchange:

  • “And then give that to one of those kids that are driving because they’re inevitably going to make it even more of a clunker.” — Host C (06:44)
  • “Get them a tandem bicycle. That’ll look cool going down the road as twins.” — Host C, joking (07:18)
  • “If they have to wait for a while, while mom and dad get their life squared away, that is fine. They will survive that.” — Host D (07:22)

6. Tackling the Kitchen & Moving Forward (07:32–08:31)

• The kitchen renovation is almost done except for cabinets and counters (estimate: $7,500).

• The hosts assure her that with the car loan gone and debts cleaned up, this is achievable.

  Quote:

  • “If you get rid of this car and you knock out the other 6K, you can cash flow that $7,500 pretty quick. And cash flow a couple of cheap cars as well. So this is all very doable.” — Host C (08:11)
  • “By the end of summer, you’ll be driving, your kids’ll be driving, and…have your kitchen done if you go hard in the paint.” — Host D (08:31)

7. The Emotional Challenge of Downgrading (08:52–09:18)

• Mentally preparing to downgrade vehicles is critical:
  • Acknowledge the ego hit and potential social embarrassment, but stress the importance of focusing on financial goals over appearances.
  • “For anybody who’s doing this journey, just be prepared to not care what other people think is what we’re telling you.” — Host D (09:18)

---

Notable Quotes & Memorable Moments

• On debt intensity:
  • “We are in full gazelle mode.” — Katie (00:24)
• On missing major debts:
  • “That’s a big one to forget about, Katie.” — Host C (01:17)
• On home disasters:
  • “It just keeps unfolding. The bad decisions keep going with you wherever you go.” — Host C (04:53)
• On downgrading cars:
  • “You go from the nicest car you’ve ever driven to the worst car you’ve ever driven overnight.” — Host C (08:58)
  • “The good news is, it doesn’t matter what other people think. You guys are far beyond that at this point.” — Host D (09:11)

---

Key Timestamps

• 00:06 – Katie outlines her current debt-reduction progress
• 01:11 – Car loan problem introduced
• 03:10 – Details of makeshift home kitchen come out
• 04:03 – Home repair costs spiral
• 05:27 – Advice: You can't keep the $40k car
• 06:36–06:49 – Specific instructions for getting a replacement car
• 07:32 – Kitchen costs and plan to cash flow repairs
• 08:52–09:18 – Prepping for the emotional adjustment of downsizing

---

Summary Takeaways

• Sell the upside-down car, even if it means taking out a small loan to cover negative equity.
• Prioritize essential home repairs and family stability over upgrading cars for teens.
• Stick to the debt snowball plan; use cash for major expenses like cars and remodels.
• Don't let pride or social pressure influence smart, values-driven money decisions.

This episode exemplifies The Ramsey Show’s blend of practical, actionable financial advice and empathetic, sometimes tough, coaching—reminding listeners that major turnarounds often require uncomfortable but empowering change.

Transcript

[A]

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

[B]

Currently, right now my husband and I are in baby step number two and we have about $12,000 in consumer debt that I am about to send a $6,000 payment on. So about to cut that in half.

[C]

Yes.

[B]

And I do so pumped. And then I'm expecting to remaining balance done by April. And I've been working like 25 hours extra every week trying to like pump out the overtime and my husband, you know, unfortunately overtime is not available for his job. But we are in full gazelle mode.

[D]

Love it.

[B]

Just running and feeling the passion. However, I am 41 and he's 45 and we have twin almost 15 year olds that are looking to get their permit. I have a car loan that is $40,000 and I'm currently 13,000 upside down on it.

[C]

What happened? You said you had 12k.

[D]

I'm confused.

[B]

I'm sorry. I forgot about the car.

[C]

That's a big one to forget about. Katie.

[D]

Forget about the car in baby step two.

[B]

I can't forget about the car. I can't forget about the car. It's the whole reason I'm calling.

[C]

Okay, so 40k loan and you're saying it's worth 27?

[B]

Yeah, yeah. Maybe 33. If I'm lucky, I might be, might be able to get 33 for it. But in the end I'm upside down. $13,000 on it. Roughly.

[C]

What's your household income?

[B]

My husband makes 93 and I make 54.

[C]

Great income.

[B]

Yeah, it's not terrible. I mean we used to make better money but we moved and total God thing and this is where we're supposed to be. So we're just trying to keep our eyes on that and, and stay focused.

[C]

Yeah, it's like double the average household income. So you guys are crushing it by, you know, America's standards. But when you're in crippling debt, it doesn't feel like that.

[D]

So what's the main question?

[B]

My main question is I got kiddos that I'm going to need to get cars for. Is it because I know Dave says if you can pay the car off within two years, then it's potentially a opt for keeping. Right. So do I keep the car or do I forego the car? Because I got my kids potential driving coming up and then I have one more wrench to throw in there. I'm currently living on folding tables in my kitchen because we bought a home that needed repairs and it ended up being a disaster. So I've been in a year in this house with no kitchen.

[C]

Oh boy.

[B]

So on top of everything else, I'm surviving and it's fine.

[D]

Like when you say folding tables.

[B]

I have no cabinets. I have no kitchen counters.

[D]

You have a sink.

[B]

I have a sink. I have a utility sink in my laundry room.

[A]

Hey, you gotta take care of your vehicle if you want to keep it on the road. And the smartest move is regular maintenance. I recommend Christian Brothers Automotive, the official auto repair partner of the Ramsey show. Your local Christian Brothers shop provides high quality maintenance and repair services you Can Trust. Visit cbac.comramsey to find a location near you and get an exclusive Ramsey discount of 10% off your visit.

[C]

10% off?

[D]

Up to a 250 value.

[C]

See store for details.

[B]

We have a utility sink in my laundry room.

[D]

I know you're making salad in the bathroom.

[C]

There's a. There's a porta potty out back that we all use. It's a good time.

[D]

Okay. There's a lot.

[B]

We did redo all of the plumbing. We did all of the electrical because our inspection came back horrific. And actually, no, the inspection came back fine. But once we started going through things, everything had to be replaced. Everything was a firehouse. Where did you was about to go.

[D]

Oh boy.

[C]

So is this going to be like $50,000 to get this thing up and running?

[B]

No. So we've got most of it up and running. So we dug into our nest egg, which is half the reason we're in our. Our.

[C]

You, like, robbed your retirement accounts?

[B]

No, no, no, no. Just the equity from our house that we sold in another state.

[C]

Okay.

[D]

Oh, okay. A secondary house.

[B]

Yeah, we sold. We. We used to live in Colorado and we sold everything to move Days of our Lives.

[D]

It just keeps unfolding.

[C]

The bad decisions keep going with you wherever you go.

[D]

You had a house in Colorado. You sold that. You had a sum of money and you've been pulling from that.

[B]

Yes.

[D]

How much was it and how much do you have left?

[B]

Oh, I don't have any left. You know, like we're down to our thousand dollar emergency fund and we're sl. Getting.

[C]

How much was it originally?

[B]

That credit card? I think it was like 50.

[D]

Okay, so here's where we're. Here's where we're at. So the $40,000 car you just told me, now you can't keep it because

[C]

of all too many priorities.

[D]

Yes. And as it relates. And I'll just give you a couple of thoughts. Even aside from the kitchen malfunctioning, I'm thinking, okay, 40,000 in this car. Surely you have another vehicle that's worth something. And then you've got these kids. We don't want more than half of your income in vehicles going down in value. So you're likely going to have to lower this because you've got about 60. You've got about 70,000 that you can spend on vehicles. Right. So all four of you having vehicles, somebody's going to have to shift down.

[C]

And it doesn't mean you should have 70,000 in vehicles. That's just the upper, upper tip top limit if you really want it. And right now.

[B]

And my husband's car is paid off, but paid off. It's a 2020 Chevy.

[C]

Yeah, that sounds expensive.

[B]

So it was. But we got it during COVID Besides the point.

[D]

But the point is, we're going to go down to the credit union. We're getting some sort of loan to get out of this $13,000. And then because you owe 40 now. So if you take a loan for 13, 13 is less than 40, that's a better deal for you.

[C]

Plus some cash to get you a car to get from A to B right now.

[B]

Yeah.

[D]

So maybe try to get the loan for 18 and you spend 5,000 on a clunker. That's what I would do.

[C]

And then give that to one of those kids that are driving because they're inevitably going to make it even more of a clunker.

[B]

Indeed.

[C]

And then you can upgrade with cash once you guys have it. So that's up to you how you want to prioritize. Hey, we got to get a car for Junior. We need to get some cabinets in this kitchen. We got to clean up the other $6,000 of debt that you have left.

[D]

And if Junior has to wait a while for a car, by the way, he'll be. He or she will be strong, like, it's okay.

[C]

I shared my parents cars a long time.

[D]

Yes, yes, absolutely.

[B]

Well, it's two of them. They're twins.

[D]

That's okay. They can ride together.

[C]

Get them a tandem bicycle. You know, that's. That'll look cool going down the road as twins.

[D]

Yeah. Either way, if they have to wait for a while, while mom and dad get their life squared away, that is fine. They will survive that.

[B]

Absolutely. Now, the.

[D]

The kitchen. Let's talk about finding the money. So how much did you say? 50,000 or that's. How much is it going to cost to just get this in order? Yeah.

[B]

Oh, the kitchen. We've already done almost everything except countertops and cabinets.

[C]

So that's, like, the expensive part.

[B]

I know, but we've priced, and we've. We're looking at about 7,500, and then that's not bad. Done with the kids. No, I'm not a bougie girl. Okay. Sounds bougie, but I'm not.

[D]

Okay, good.

[B]

So I. I'm not looking to make it crazy. Okay, well, if you.

[C]

If you get rid of this car and you knock out the other 6K, you can cash flow that 7,500 pretty quick. And cash flow a couple of cheap cars as well. So this is all very doable. We just need to start putting things in order. And I think this getting rid of this car is going to give you such relief.

[D]

Yeah.

[C]

And later on, you can get you a nice $30,000 car with cash, but right now, it's sinking, you guys.

[D]

Yeah. By the. I mean, put it to you like this. By the end of summer, you'll be driving, your kids will be driving, and you'll have your cat, your. Your. If you go hard in the paint, you'll have your kitchen done. And I think that's. That's a great feeling. The one thing I will kind of throw out there, because it's hard selling a vehicle. It is hard on the ego.

[B]

Okay.

[D]

Because everybody knows something's up. You were driving, and you go from

[C]

the nicest car you've ever driven to the worst car you've ever driven overnight.

[D]

Absolutely.

[C]

That's brutal.

[D]

Because people are like, whoa, hey, what happened? You know, they're at Chili's wondering what happened to Bob and Susan. They have their Escalade.

[C]

My butt's cold.

[D]

But the good news is, it doesn't matter what other people think. You guys are far beyond that at this point. If you're. If you're gazelle intense, that is one lesson that you have learned.

[C]

If you got real friends who have seen your kitchen, they won't care about your beater card. I'll tell you.

[D]

That's right. That's right. But for anybody who's doing this journey, just be prepared to not care what other people think is what we're telling you.

[C]

The superpower.

[A]

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