I Owe $80,000 In Taxes and Don't See A Way Out

Summary

Episode Overview

Theme:
This episode of The Ramsey Show Highlights (May 11, 2026) dives into a listener's struggle with massive debt—specifically, $80,000 in taxes and $50,000 in credit cards. Hosts Ken Coleman and Jade Warshaw counsel a caller, Joshua, who’s contemplating bankruptcy as a last resort. Their focus is on practical strategies, the significance of taking control, and the value of perseverance—dispelling the misconception that bankruptcy is the only option.

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Key Discussion Points & Insights

Caller’s Situation and Initial Feelings

• Debt Amounts and Income:
  • Joshua owes about $130,000 ($80k taxes, $50k credit cards)
  • Combined household income: ~$100k/year
  • Rent: $2,200/month
  • Take-home pay: ~$4,400 (Joshua) + ~$3,000 (wife, seasonal)
• Joshua’s Frustration:
  • Feels overwhelmed by mounting debt, interest, and penalties ([01:14])
  • Can only make minimum payments, no visible progress
  • Used to juggle balances with transfers but situation is now "out of control"
• Considering Bankruptcy:
  • Wants to know if filing would be the best way to start over

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Immediate Financial Diagnosis

• Not Budgeting:

  • Joshua admits to not being on a budget when Ken asks ([03:29])

• Workload and Income:

  • Ken points out that in their financial situation, everyone able to work needs to work full-time or more, not seasonally ([03:30])
  • Joshua’s wife is resentful about work, and that’s impacting their income ([04:24])
  • "There is no seasonal work. You work in every season. You're working 60 hours a week for a season." – Ken ([03:30])

• Tough Love About Family Dynamics:

  • Ken dismisses the 14-year-old’s need for after-school care as an excuse not to increase income ([04:07])

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Exploring Options Other Than Bankruptcy

• Crunching the Numbers:

  • Ken and Jade demonstrate that making an extra $2,000-$3,600/month in income could resolve the debt in 3–4 years if approached aggressively ([04:39], [05:35])
  • "I can tell you $3,600 changes your life without question. $3,600 a month." – Jade ([04:39])

• Joshua’s Concerns and Pushback:

  • Joshua is skeptical, concerned about working that hard for several years at his age (47), and asks about bankruptcy alternatives ([06:03])

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The Reality of Bankruptcy Explained

• Loss of Control:

  • Jade explains the impact of bankruptcy, emphasizing loss of control and the fact that the courts will decide on payment plans or asset sales ([06:34])
  • "Why relinquish control when you have the opportunity here... to make your own choices and not them come in and have your stuff sold out from under you?" – Jade ([07:02])
  • Bankruptcy will also destroy credit, which is likely already damaged

• Empowerment and Dignity in Paying It Off:

  • Jade shares personal experience: "What if I told you I spent seven and a half years paying off $460,000 of debt and I didn’t file for bankruptcy?" ([05:52])
  • Highlights the self-respect and transformation that comes from working through tough times

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Encouragement and Final Guidance

• The Hard Truth and Motivation:

  • The hosts acknowledge it’s a tough road but stress it’s the better and more empowering path
  • "There's a confidence that's built in that. And...if you allow yourself to walk through that, you're going to come out...guaranteed better for it." – Jade ([07:42])

• Facing the Bigger Picture:

  • Ken addresses emotional exhaustion and relationship struggles, noting Joshua needs to get on the same page with his spouse but, in the meantime, the caller himself can take decisive action ([08:16])
  • "You called us going, I think this is my last shot. This is the hail Mary...And we're telling you that's not the case. You got to believe." – Ken ([08:16])

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Notable Quotes & Memorable Moments

• On facing debt and bankruptcy:
  • "Because it just seems like such an insurmountable number...now the taxes are racking up interest and penalties...just seems like I’m never going to be able to pay it off." – Joshua ([01:14])
• On work effort required:
  • "There is no seasonal work. You work in every season. You're working 60 hours a week for a season." – Ken ([03:30])
• On the dignity of payoff versus bankruptcy:
  • "Why relinquish control when you have the opportunity here...There is dignity in that." – Jade ([07:02])
• On perseverance:
  • "What is going to feel good is knowing that...you're also the same person that can turn back around and clean it up." – Jade ([07:42])
• On reaching out for help:
  • "You called us going, I think this is my last shot...And we're telling you that's not the case. You got to believe." – Ken ([08:16])

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Important Timestamps

• 00:06 – Joshua’s debt overview and bankruptcy question
• 01:14 – Joshua expresses overwhelm and frustration
• 03:30 – Ken on the need for more consistent, full-time work
• 04:39 – Jade’s calculation on how extra income changes things
• 05:35 – Timeline to pay off debt if attacking aggressively
• 06:34 – Jade’s explanation of bankruptcy and loss of control
• 07:02–07:42 – Jade on the personal dignity and transformation from paying off debt
• 08:16 – Ken’s supportive, motivational closing

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Summary

In this brief but intense episode, Joshua’s story serves as a case study on the emotional and practical challenges of big debt. Ken and Jade encourage a no-excuses, all-hands-on-deck approach—emphasizing budgeting, increased work, and the hard work of payoff over the perceived “quick fix” of bankruptcy. Listeners walk away with a clear sense that survival is possible, and the process offers an opportunity for profound personal growth—even if it’s tough, uncomfortable, and demands the participation of every family member.

Transcript

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[Joshua (Caller)]

I've got about $80,000 in tax debt and 50,000 in credit card debt. And I'm wondering if I should file bankruptcy and just kind of start over.

[Ken]

What's your income?

[Joshua (Caller)]

70,000. And then combined with my wife, like around 100,000.

[Ken]

Okay, and that's your total debt that you just gave us?

[Joshua (Caller)]

Yes.

[Ken]

Okay. What is your mortgage or your rent?

[Joshua (Caller)]

Rent is 2,200.

[Ken]

Okay. What's your take home number every month?

[Joshua (Caller)]

Take home for me is probably like 4400. And for my wife, her job's a little bit seasonal. She cleans Airbnbs, but it's probably around like 3,000amonth at least on average.

[Ken]

Okay, and what's making you think that bankruptcy is the only way out of this?

[Joshua (Caller)]

Because it just seems like such an insurmountable number. And now the taxes are like racking up interest and penalties and the credit cards are. You know, I used to be able to do balance transfers and kind of keep it under control, but it's just gotten out of control. And so now, you know, it's just high interest. I can make the minimum payments, but just seems like I'm never going to be able to pay it off.

[Ken]

Sure. What do you do for a living?

[Joshua (Caller)]

Maintenance tech for apartment buildings.

[Ken]

Okay, and what does your wife do?

[Joshua (Caller)]

She cleans airbnbs.

[Ken]

That's right.

[Joshua (Caller)]

And does some caregiving.

[Ken]

I'm going to start right here and go right to what I think is one of the key things we need to address today is what is the amount of income after taxes? If Jade and I could just put it into your account today. Okay. What amount of money would allow you to start making progress and feel like you're actually getting momentum?

[Joshua (Caller)]

You mean like how much money?

[Ken]

Let's just assume I'm giving you extra income after taxes every month. I'm asking you, do you know how much money extra a month? If I gave it to you in payments, what would make a huge difference for you to where you go? Not only am I taking care of it, but I'm actually starting to knock this debt down. I'm making progress. I see momentum. What's that number? Additional income?

[Joshua (Caller)]

I mean, if it's 150 or 130 grand total, I don't know.

[Ken]

Like that's the problem.

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[Ken]

That's the problem. You see what I'm saying? That wasn't a trap question. But I don't think you're on a budget, am I right?

[Joshua (Caller)]

Correct.

[Ken]

So the reason I ask you that is because that's part of the issue. Your wife needs to be working at minimum 40 hours. Seasonal work for people who are broke and are worrying about bankruptcy is not an option. There is no seasonal work. You work in every season. You're working 60 hours a week for a season. Right. You said that like, that's interesting, but like, you didn't believe me.

[Joshua (Caller)]

I mean, we have a 14 year old. I've, you know, I've encouraged her to get more of a regular job for many years.

[Ken]

Why are we talking about the. Yeah, but the 14 year old is self sustaining. The 14 year old can let themselves in from school. I've raised three kids. My youngest is 18. Now, I'm not worried about the 14 year old. That's an excuse. Why isn't she making more money?

[Joshua (Caller)]

I'm just telling you where she's at.

[Ken]

I get it.

[Joshua (Caller)]

But she's like, resentful of the fact even that she has to work at all.

[Ken]

Well, that's a problem. But I'm tr. You called us for financial advice and you guys need more income. So let's shift. All right. I can't solve the marriage problem. I can't solve that issue.

[Jade]

But I can tell you this. I can tell you $3,600 changes your life without question. $3,600 a month.

[Ken]

So let's shift it to you, okay? Because she's resentful for working and you're calling us. She's not on the phone. So with the skills you have, can you pick up overtime or go to a second job? And what this basically means is roughly 2,500 bucks a month or even 2,000 bucks a month would make a big difference. Can you do that, Josh?

[Joshua (Caller)]

I could, yeah.

[Ken]

Well, that's our work.

[Joshua (Caller)]

I've worked two jobs many points in my life.

[Ken]

Great.

[Joshua (Caller)]

But still, like, so say I came up with an extra three grand a month to pay down this debt. That's. Even if I'm Putting every dollar of that. That's 36 grand a year. It would still take me, what, five years, four or five years?

[Jade]

It's gonna take you between three and four years if you go intensely to pay this off.

[Joshua (Caller)]

Right. So my question is, as an alternative to that, what if I just filed for bankruptcy, got rid of as much of this debt as possible?

[Jade]

What if I told you. What if I told you I spent seven and a half years paying off $460,000 of debt and I didn't file for bankruptcy?

[Joshua (Caller)]

I think that's awesome. I'm just kind of. I'm older now.

[Jade]

Why are we different? How old are you?

[Joshua (Caller)]

I'm 47, bro.

[Ken]

Don't be bringing that to me. I'm 51. You're not old.

[Jade]

Here's here and here's why. Here's. Here's why. When you file bankruptcy, the control goes out of your hands.

[Ken]

Yeah. Do you understand what it looks like? I don't think you do. Go ahead, Jade. Paint the picture.

[Joshua (Caller)]

No, not exactly.

[Jade]

They're going to decide. They're going to make all the decisions. Depending on which chapter you file, they're going to make all decisions. They're either going to say, hey, we're going to put you on a payment plan, which is honestly something you can do yourself. They're going to look at your assets and they're going to say, we're going to sell off these assets and these assets, and we're going to put that towards the debt. That's something that you can decide to do for yourself. If it's going to tank your credit, that's something that's already happened or going to happen anyway. Do you see what I'm saying? So why relinquish control when you have the opportunity here to go, okay, I can look at my assets. I can determine what I want to sell off, when I want to sell it off, how I want to sell it off. I can look and I can call the IRS and I can say, let's get on a payment plan. Here's how much I can put towards it. And that's. That's what I want to retain for you, is the dignity of being able to make your own choices and not them come in and have your stuff sold out from under you and all the choices made for you. That's what I'm trying to save you from. I've never experienced bankruptcy. Dave Ramsey has. And he would sit here and tell you, you can work your way through this. And I'm telling you from my experience of paying off debt the next four to five years. They're not going to be fun. I can tell you that right now. It's not going to be something that's enjoyable. There will be enjoyable parts of life, but. But working two to three jobs is not going to be the enjoyable part. But what is going to feel good is knowing that you made some mistakes, you made a bit of a mess, but you're also the same person that can turn back around and clean it up. There is dignity in that. And there is something. There's a confidence that's built in that. And I can tell you on this side of it, if you allow yourself to walk through that, you're going to come out of this a completely changed person and guaranteed better for it. Guaranteed. Ken?

[Ken]

Oh, there's no question. I think Joshua, what we're hearing is a guy who feels like he's ready to give up. You called us going, I think this is my last shot. This is the hail Mary. The clock's ticking down and I only have a 55 yard pass and I hope someone catches it. And I think it's bankruptcy. And we're telling you that's not the case. You got to believe. I do tell you, you've got a marriage issue. You guys got to get on the same page. I get that she don't want to do it, but I think you guys are in the have to stage. You're past the want to create your free every dollar budget today. The simplest way to budget for your life.