I Took Out A Payday Loan And Now I’m Trapped

Summary

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Episode Overview

Title: I Took Out A Payday Loan And Now I’m Trapped
Podcast: The Ramsey Show Highlights
Date: January 24, 2026
Host(s): Dave Ramsey, George Kamel
Guest: Alicia

In this episode, Dave Ramsey and George Kamel take a heartfelt call from Alicia, who is dealing with significant financial and mental health challenges after taking out a payday loan during a manic episode associated with bipolar II disorder. The discussion centers around strategies for breaking the payday loan cycle, building stability, and the importance of mental health management when addressing financial struggles.

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Key Discussion Points & Insights

1. Alicia’s Situation: The Intersection of Mental Health and Debt

• Background: Alicia describes having a manic episode due to a combination of family and health challenges (including endometriosis and surgery), which led her to take out a payday loan.
• Diagnosis: Alicia confirms she's diagnosed with bipolar II (00:20).
• Debt Details:
  • Initial payday loan amount: ~$2,300.
  • Current owed (due to fees and interest): ~$5,800 (00:58).
  • Additional debts: $3,000 student loan (on deferment), a dental bill, and an old credit card in collections.
  • Current assets: $10 in savings, $200 cash saved for pet emergencies (03:32).

2. Payday Loan Trap and Emotional Toll

• Predatory Interest: The hosts are outraged about the high fees.
  • Quote: “Gosh, I don't. I don't know how those people sleep, to be honest with you.” — George (01:09)
• Cycle of Desperation: Discussion of how payday lenders prey on vulnerable individuals in survival mode (08:08).

3. Mental Health: Management & Protective Measures

• Management Steps: George stresses the importance of medication management, professional oversight, and self-care strategies like handing over debit cards during vulnerable times (01:17–02:55).
  • Quote: “I’ve seen friends, colleagues, countless students... they put some really big hurdles to protect themselves from themselves in those seasons.” — George (01:25)
• Alicia’s Efforts: Alicia confirms she is now on the right medication and under professional care (02:55).
• Encouragement and Support:
  • Quote: "I just want to tell you I'm proud of you." — George (03:10)
  • Quote: “We probably believe in you more than you do right now. But hear us say we believe in you. Okay. Same team?” — George (03:39)

4. Current Life & Financial Status

• Employment & Income: Currently a part-time waitress; returning to school for HR/Business. Income fluctuates, averaging $300/week (04:11–07:32).
• Living Arrangements: No formal rent; living on food stamps and minimal expenses (07:44).

5. Ramsey’s Baby Steps Approach

• Step 1: Save $1,000 as an emergency fund. She’s $200 in, with $800 to go (05:47).
• Step 2: Make minimum payments while increasing income, if possible; consider pausing school to work full-time and knock down payday loan debt more aggressively (06:25–07:22).
  • Quote: “That might mean we need to take a semester off and go really hard and work 50 hours a week to at least knock out the payday loan.” — Dave (06:25)
• Debt Snowball: List debts smallest to largest and attack them in order after the emergency fund goal (08:40).
  • Practical Advice: Write out all debts on paper, with balances, and work through each methodically.

6. Sacrifice and Planning for Stability

• Hard Choices: Host advises possible reduction in school load or temporary pause to prioritize full-time work and debt repayment (06:52–07:22).
• Survival Mode: Hosts emphasize that her current life situation, while manageable, is not sustainable long-term; urge her not to resign to survival mode (08:08).

7. Hope and Forward Momentum

• Emotional Support: Hosts repeatedly encourage Alicia, reinforcing belief in her capacity for change and offering practical tools (like the EveryDollar budgeting app).
  • Quote: “It’s a thing you don’t have right now, which is peace.” — George (05:06)
  • Quote: “I want you to just picture Alicia for the first time in her adult life, completely debt free with savings in the bank…” — Dave (04:52)
• Budgeting Tools: Alicia is offered free access to the EveryDollar budgeting app as a first step towards regaining financial control (09:27).

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Memorable Quotes & Moments

• The Toll of Payday Loans:
  • “Gosh, I don't. I don't know how those people sleep, to be honest with you.” — George (01:09)
• On Mental Health Self-Defense:
  • “They put some really big hurdles to protect themselves from themselves in those seasons.” — George (01:25)
• Hope and Solidarity:
  • “We probably believe in you more than you do right now. But hear us say we believe in you. Okay. Same team?" — George (03:39)
• On Breaking the Cycle:
  • “I don't want you to look up. And now it feels hopeless because this loan just keeps doubling and doubling because it's 3 or 400% APR.” — Dave (09:16)

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Notable Timestamps

• [00:05] Alicia shares her debt and mental health context
• [00:58] Payday loan amount discussed
• [01:15] Discussion on predatory lending
• [01:17–02:55] George’s mental health management suggestions
• [03:39] Encouragement for Alicia
• [04:11] Alicia’s current income/job/education
• [05:47] Starting the baby steps approach
• [06:25] Advice to consider pausing school to repay debt
• [08:08] Describing her current living as survival mode
• [08:40] Explaining the debt snowball method
• [09:27] Offering budgeting app and closing encouragement

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Final Takeaways

This episode shines in its empathetic approach toward someone facing both serious financial hardship and mental health challenges. Dave Ramsey and George Kamel blend practical financial advice with encouragement, urging Alicia to take actionable steps—starting with a small emergency fund, attacking her most urgent (and toxic) debts, and considering tough choices around employment and schooling. Their tone remains supportive and hopeful, offering both the vision of future peace and practical tools to help Alicia (and listeners in similar situations) get there.

Transcript

[Dave Ramsey]

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

[Alicia]

Today I had a manic episode and put myself into a little bit of debt. And I want to know where to start with the baby steps to get myself out of the situation I put myself into.

[George]

Very cool. So when you say a manic episode, are you diagnosed bipolar?

[Alicia]

Yes, I am.

[George]

Okay, one or two?

[Alicia]

I believe it is two. It's the genetic one.

[George]

Okay, um, different conversation, but. So have you had manic episodes before?

[Alicia]

Yes, I have, but they were not as extreme as this one.

[George]

Tell me about it.

[Alicia]

So basically, I was having a lot of family trouble, and then I had health problems, too, so I also have endometriosis. I had a flare up and had to have emergency surgery, and it was just a complication of everything all together that I think what made it a really bad episode for me.

[George]

So tell me about the petty loans you took out. How bad is it?

[Alicia]

So the original total amount was like 2, 300 and something. And with all that interest, it is approximately $5,800. With all that interest.

[George]

Gosh, I don't. I don't know how those people sleep, to be honest with you. I just don't. But.

[Alicia]

I'm not very happy about it.

[George]

I know, I know, I know. Okay, so question number one is, do you have your. Are you. I've seen friends, I've seen colleagues. I've seen countless students of mine over the years who are diagnosed with bipolar disorder. And, you know, it's on a spectrum, various levels of it. Who, when com. When they commit to med management, when they actually take their meds and when they feel great and when they don't feel great and when they put in some. What I would call, for lack of a better term, some hurdles. When I feel myself beginning to start down a path where I'm going down to the basement, or when I'm starting on a path where I'm about to go to the mountaintop. I know I'm going to give my debit card to a trusted friend. I am going to turn my Internet off for seven days. Right. So they put some really big hurdles to protect themselves from themselves in those seasons. Do you have. Are you taking care of your medications? Are you seeing a professional? Are you. Are you managing this thing in a. In a healthy way? This is an ad for better help. One of the most important things I've ever done in my life as a husband, as a dad, as a community member, as a neighbor, is to finally break down and go see a therapist. It's not just for major traumas. It's for anyone wanting better mental and emotional health and peace. If you're thinking about trying therapy, try my friends at Better Help. BetterHelp is 100% online, so it's affordable and it's convenient. Visit betterhelp.comramsey for 10% off your first month. Are you managing this thing in a. In a healthy way?

[Alicia]

Yes. So we were in the process of figuring out what dose worked for me last year, like what medications, and that's when I had the episode. So it wasn't the correct medication. Now I'm actually on the correct one. So I don't know if it's okay for me to disclose the type.

[George]

Well, it doesn't matter for this conversation, but I just want to tell you I'm proud of you.

[Alicia]

Thank you.

[George]

And I want you to commit to me and George and everyone listening. You're going to stay on the plan. Okay?

[Alicia]

Okay.

[George]

And that's awesome. Now when it comes to getting this paid off, George will walk you through it. It's a, it's a. It's a math problem, but we fully believe you can get there. Is that. And you don't believe in yourself. We probably believe in you more than you do right now. But hear us say we believe in you. Okay. Same team?

[Alicia]

Same team.

[George]

Awesome. Awesome. I'm really glad that you called.

[Dave Ramsey]

So give me some more details about your financial picture. Are you working full time right now?

[Alicia]

No. So I'm actually going back to school for human resource management and business management because I want to get a better career right now. I really just working as a waitress. So my income isn't like what's the proper term I'm looking for. It's not like a set in stone thing. It's always flip floppy and it's.

[Dave Ramsey]

So are you working part time as a waitress and then part time school?

[Alicia]

Yeah.

[Dave Ramsey]

Okay. What other debts do you have?

[Alicia]

Right now I have a student loan debt that is only 3,000 but that's on deferment right now because I'm in school. Okay. And then there's one dental debt that I'm still paying back because I had to get my teeth fixed. And then the last one was a previous collection from a credit card when I was like really young that I decided to open it anyway. It's getting taken.

[Dave Ramsey]

Have you ever been debt free in your adult life?

[Alicia]

I guess technically not because like I opened my first credit card at 18. It was a student credit card.

[Dave Ramsey]

Didn't we all? So I want, I want you to just picture Alicia for the first time in her adult life, completely debt free with savings in the bank to cover any emergency that would come up. How good would that feel?

[Alicia]

No, it would feel really great.

[George]

It's. It's a thing you don't have right now, which is peace.

[Alicia]

Yeah.

[George]

Right. And trust in when I'm having a good day, I'm having a bad day, I'm having a really, really wild week or a really low week, I'm okay. It's. It's a magic feeling for somebody in your situation. It's a magic feeling for all of us, but especially for somebody whose inner world can be as volatile as yours is. Right?

[Alicia]

Yeah.

[George]

Yeah, it's beautiful.

[Dave Ramsey]

Do you have any money in your checking account or savings account right now?

[Alicia]

In my savings, I only have like, 10 bucks right now. Unfortunately, I do have 200 in cash savings, but that I was saving for, like, emergencies for my pet if something happens with her.

[Dave Ramsey]

Okay, well, let me walk into the baby steps, because this is the framework that will help you actually have a very tactical plan instead of just trying to do a few good things at once. And so baby step one is get $1,000 saved. So you have 200 now. That's awesome. We're on the path to getting 1,000. So right now, can you make minimum payments on your debts while working part time, or do we need to up the. The income?

[Alicia]

It's most. If I do minimum payments and everything, it is doable with the income right now.

[Dave Ramsey]

Okay. Now, minimum payments on that payday loan. That balance grew since we've been on the phone. Yeah, that's the scary part. And so I want you to get angry at this thing.

[George]

And.

[Dave Ramsey]

And that might mean we need to take a semester off and go really hard and work 50 hours a week to at least knock out the payday loan. Okay, what's the trajectory for this program that you're in? How much longer and how much money?

[Alicia]

So luckily, financial aid covers everything, and I've been doing scholarships, so I haven't had to pay for a penny for school, luckily. Great.

[Dave Ramsey]

And how much longer do you have?

[Alicia]

I believe it is two years.

[Dave Ramsey]

So here's the bad. As long as I don't have two more years working part time as a waitress and make any financial progress. Would you agree?

[Alicia]

Probably, yeah.

[Dave Ramsey]

And so we need to figure out a different path. Maybe it's a pause. Maybe you do less school right now, less credits, and it takes you longer, but you could go work full time and clean this up, get some money. In savings and then go back to school with a whole lot more peace. Because right now it's probably hard to focus on your schoolwork when you see that interest accruing on that loan.

[Alicia]

Yeah, definitely.

[Dave Ramsey]

So once you get a th000 bucks saved, which I hope happen, what do you make in a week?

[Alicia]

So just to average it out, probably like 300. There are some weeks where I can get up to like 500, 700, but, you know, it's not always guarant.

[Dave Ramsey]

So you're living off of like $1,200 a month?

[Alicia]

Yes.

[Dave Ramsey]

Are you able to do that without going further into debt right now?

[Alicia]

Yes. So luckily, just because of my low income, I have food stamps and I'm able to get food and everything. My living situation is basically just pay what you can. So I have no rent. So so far it's actually been really doable. And I have like a really cheap phone plan where it's only like 25 bucks a month. Wow.

[Dave Ramsey]

Well, I don't want you to stay there. This is not like a. Well, I can make it all work. You're in survival mode. This is literal poverty. And that, that's the exact target demo these payday lenders go after because they're the most vulnerable, the most desperate. And so this is going to take a lot of work, literal work. And that might mean we get two waitress jobs and, you know, we ratchet down on school, ramp up on income just for even a season so that we can get her head above the water.

[Alicia]

Okay.

[Dave Ramsey]

Because once you have $1,000 saved, now we can start tackling these debts and just list them out from smallest to largest. So today this is going to really help you get it out of your brain. Put them all the debts on paper and put the balances and list them in order from the smallest balance to the largest balance. So your next goal after getting $1,000 is throw as much as you can on that smallest debt.

[Alicia]

Okay.

[Dave Ramsey]

That might be the dental debt, I don't know. And maybe I'm guessing your credit is shot at this point. No one's going to go give you a personal loan, correct?

[Alicia]

Yeah, no, I know my score is like 625, but I don't think anybody's going to give me a loan or anything.

[Dave Ramsey]

Yeah, I'm trying to get you out of this payday loan cycle because if this is going to be another year before you can attack this payday loan, the balance is going to be ten grand.

[Alicia]

Yeah.

[Dave Ramsey]

We have to stop the bleeding. And if that means the dream of the HR job is on pause. I'm okay with that because I don't want you to look up. And now it feels hopeless because this loan just keeps doubling and doubling because it's 3 or 400% APR. I'm so sorry you're going through this, Alicia. Hang on the line. We're going to hook you up with our budgeting app, Every Dollar, to help you make a plan for every one of those dollars coming in. And hopefully you'll see some light at the end of this tunnel soon. Create your free Every Dollar budget today. The simplest way to budget for your life.