I'm 18 With A $1,000 Car Payment (Only Making $1,500 A Month)

Summary

Summary of "I'm 18 With A $1,000 Car Payment (Only Making $1,500 A Month)"

Podcast Information:

• Title: The Ramsey Show Highlights
• Host/Author: Ramsey Network
• Description: A quick, daily dose of advice on life and money in under ten minutes, featuring experts like Dave Ramsey, Ken Coleman, Rachel Cruze, and others.
• Episode: I'm 18 With A $1,000 Car Payment (Only Making $1,500 A Month)
• Release Date: April 15, 2025

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1. Introduction to the Caller's Financial Crisis

At the outset of the episode, an 18-year-old caller reaches out to seek advice on managing a substantial car loan while earning a limited income. The caller outlines a daunting financial scenario:

• Educational Debt: Anticipates a $100,000 to $120,000 student loan by graduation.
• Car Debt: Currently responsible for a car originally purchased for $30,000, now valued at $41,000, leading to a “negative equity” situation.
• Income: Earns between $1,000 to $1,500 monthly from retail work, with sporadic additional income from side businesses.
• Credit Issues: Lacks savings and is struggling with credit card debt, exacerbated by high-interest rates linked to the mother's damaged credit.

Notable Quote:

Caller [00:06]: “I'm 18, and by the time I graduate, I'm probably looking at 100 to $120,000 loan that I'm sitting at...”

2. Host’s Initial Assessment and Shock

Dave Ramsey and the co-host immediately express concern over the caller’s financial decisions, particularly the high-cost vehicle relative to his income and age. Dave Ramsey highlights the impracticality of maintaining such an expensive car as a college student.

Notable Quotes:

Dave Ramsey [00:54]: “With a $40,000 freaking car. What are you doing with a $40,000 car? You're a college student.”

Co-host [01:26]: “Do you make any money? What's your income?”

3. Deep Dive into Debt and Car Ownership

The discussion delves into the specifics of the car loan, revealing that the caller owes $41,000 on a vehicle traded in for $28,700, resulting in a $12,000 deficit. Additionally, the caller admits to depleting previous savings and accruing credit card debt to manage current expenses.

Notable Quotes:

Caller [02:15]: “I did. It's 30,500.”

Dave Ramsey [05:17]: “If you make $1,000 a month and you spend a thousand a month on your car, you don't have money to put gas in it and you don't have money to.”

4. Host’s Advice for Immediate Financial Relief

Dave Ramsey and the co-host provide actionable advice aimed at rectifying the dire financial situation:

• Sell the Current Car: Encourage selling the high-debt vehicle, preferably through a private sale to maximize return.
• Purchase a Low-Cost Vehicle: Recommend acquiring a modest, affordable car around $2,000 to eliminate exorbitant payments.
• Negotiate with the Bank: Suggest contacting the lender to discuss the negative equity and explore possible solutions.
• Increase Income and Reduce Expenses: Advocate for intensive work hours and possibly taking a gap year from college to focus on financial recovery.

Notable Quotes:

Dave Ramsey [02:13]: “Your homework is to look at the Kelly blue book value. If you did private sale, because you're going to get more for it.”

Dave Ramsey [04:21]: “Your mother is not your responsibility. Your responsibility is to love her and cheer for her. But not... she’s not your financial responsibility.”

Dave Ramsey [05:32]: “I didn’t say anything about monthly payments. I said get a two thousand dollar car.”

5. Emphasis on Tough Love and Accountability

Throughout the conversation, Dave Ramsey employs a tough-love approach, emphasizing the severity of the caller’s financial missteps. He underlines the necessity of drastic changes and personal responsibility, dismissing excuses related to family circumstances.

Notable Quotes:

Dave Ramsey [06:04]: “This is a mess. So you've got to get rid of this mess. You've got to create a big. You may need to quit school...”

Dave Ramsey [07:24]: “Your situation sucks beyond belief. The decisions you have made are beyond suicidal financially.”

Dave Ramsey [08:07]: “You go fix this. We gave you lots of suggestions... You are in this pile of stuff...”

6. Closing Remarks and Show Policies

In the closing segment, Dave Ramsey and the co-host reiterate their commitment to helping listeners resolve their financial issues, even when it involves delivering harsh truths. They emphasize that everyone makes mistakes and that the show’s primary goal is to guide callers towards financial stability.

Notable Quotes:

Dave Ramsey [07:25]: “We love you. All of you. If you've done something stupid, we love you anyway.”

Dave Ramsey [08:07]: “You're a calling for us. You're a crusade for us. We want you to win...”

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Key Takeaways

1. Realistic Financial Planning: It's crucial to align major purchases, like vehicles, with one’s income and long-term financial goals, especially for young individuals starting their financial journeys.

2. Managing Debt: Understanding and managing debt, particularly high-interest loans, is essential to avoid long-term financial strain.

3. Personal Responsibility: Regardless of external circumstances, personal responsibility plays a significant role in financial health.

4. Actionable Advice: Implementing immediate changes, such as downsizing expenses and increasing income, can help recover from financial setbacks.

5. Supportive Tough Love: Constructive criticism and honest advice, even when harsh, are invaluable for overcoming financial challenges.

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This episode serves as a critical reminder of the importance of financial literacy, responsible borrowing, and proactive money management, especially for young adults navigating their financial independence.

Transcript

[Dave Ramsey]

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[Caller]

So I'm currently 18, and by the time I graduate, I'm probably looking at 100 to $120,000 loan that I'm sitting at. And my current car is under my mom's name with her interest rates on it. And her credit got ruined by my dad leaving. And I'm looking to switch the car with way less percentage of interest. I have to max out my credit cards for the entry, for the down payments to put on it. And I don't know what to do if it's even worth it or not.

[Dave Ramsey]

What's your car? What do you owe on the car?

[Caller]

I'm sitting, so I bought the car at 30,000. I'm looking at 41,000 right now.

[Dave Ramsey]

And you're a college student, first year.

[Caller]

Yes.

[Dave Ramsey]

With a $40,000 freaking car. What are you doing with a $40,000 car? You're a college student.

[Caller]

I had a $70,000 car and another 60,000. I sold it. I made profit. But my mom's credit got ruined and they gave me a 12% interest on it. And I didn't realize until yesterday when I checked, and I only had it for five months.

[Dave Ramsey]

I don't think this is your mom's fault. You bought a $30,000 car, and you're in a $40,000 car and you're in college. You get a $4,000 car.

[Co-host]

Do you make any money? What's your income?

[Caller]

So I'm sitting at 1,000 to 1,500 from my work at retail. And I had side businesses before, and I had like, about $70,000. I blew it all, and now I make maybe 500 to $1,000 for my side businesses a month.

[Co-host]

Okay. Do you have any money saved?

[Caller]

Nothing. I'm in debt to my credit cards.

[Co-host]

Okay. So the car, you owe 41,000 on it. If you sold it. Private sale, what's it worth?

[Caller]

Or your mom's right now with a trade in. They're giving me 28. 7.

[Co-host]

Oh, my gosh.

[Dave Ramsey]

That's a trade in.

[Caller]

$12,000. Negative equity on it.

[Co-host]

Okay, but let's look at. That's Your homework is to look at the Kelly blue book value. If you did private sale, because you're going to get more for it.

[Caller]

I did. It's 30,500.

[Co-host]

30,500. Okay. If I were in your shoes, I can't.

[Caller]

There's a lien on the car that I can't pay.

[Dave Ramsey]

Yeah, I mean, you make a thousand dollars A month? Your car payments. More than that, isn't it?

[Caller]

My car payments comes exactly to a thousand insurance.

[Dave Ramsey]

So how are you paying it?

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[Dave Ramsey]

So how are you paying it?

[Caller]

Credit cards, basically everything. I don't, no, no, I can't put on credit. Basically everything.

[Dave Ramsey]

If you, if you make $1,000 a month and you spend a thousand a month on your car, you don't have money to put gas in it and you don't have money to. So this math doesn't work out a lot.

[Caller]

I don't know how. And no, I make like 1500. I can. On a good month, I make 2000. On slow months in retail, I make 1500.

[Co-host]

Okay, so you got 500 to spare. You eat a little bit, you pay your insurance, you get gas, you've got nothing left.

[Dave Ramsey]

Okay, let me, let me stop a second because I did a drive by on something a minute ago I want to know more about. You had $70,000 in savings. You said from a side hustle that you blew. Did I hear you say that?

[Caller]

Yes.

[Dave Ramsey]

Tell me about that side hustle. Where did all that wonderful money come from?

[Caller]

It came from. I used to sell screen protectors and cases during COVID when I was 14. And Amazon.

[Dave Ramsey]

Yeah. So no Covid, no business. Gotcha. Okay. Yeah. All right.

[Caller]

And I gave most of it to my mom after the separation and she's sitting at least at 300 to $400,000 herself.

[Dave Ramsey]

Yeah. Okay. You're 18. You're 18. Your mother is not your responsibility. Your responsibility is to love her and cheer for her. But not. You are. She's not your financial responsibility. So this has got to stop. And unless you can create a huge income, you need to get rid of this car and get a two thousand dollar car.

[Caller]

I tried doing that, but I have to. So the loan I would put.

[Dave Ramsey]

I would put the 5,000, I'd put the $10,000 on a credit card. I'd rather have $10,000 on a credit CARD than 41,000 on a car.

[Co-host]

Amen.

[Caller]

I can't, I can't put it on a credit card.

[Dave Ramsey]

Why?

[Caller]

I have maybe 3,500 left on a credit that I can spend.

[Dave Ramsey]

Yeah. Okay. Who do you owe the 41,000 to?

[Caller]

To the bank.

[Dave Ramsey]

Go down, talk to the bank about signing a note for the difference.

[Caller]

Do that. Right. And then what about on the new car? So that's the thing that doesn't make sense to me. On the new car that I looked at that I'm gonna get, see monthly payments instead of 96 month loan.

[Dave Ramsey]

I didn't say anything about monthly payments. I said get a two thousand dollar car.

[Caller]

We tried when we went to the bank.

[Dave Ramsey]

I didn't want you to go to the bank. I want you to come up with $2,000 and go buy a car.

[Caller]

Buy a car?

[Dave Ramsey]

Yeah. Are you, are you in school full time?

[Caller]

Yeah.

[Co-host]

Are you on campus? You're at home or at home?

[Caller]

Campus, so. Oh, like where do I live? At home.

[Co-host]

Okay. How close are you to campus? What I'm getting at is you might go through two months where you don't have a vehicle and you make it work. And instead of using that thousand dollars a month to pay for a car note, you use it to save up and get yourself a little beater car is what we're saying.

[Dave Ramsey]

One of your buddies take you to.

[Caller]

Class away from campus.

[Dave Ramsey]

Okay, all right. Okay. Here, here's the thing. We keep throwing suggestions out and the only answer you've got is it doesn't work. So let me tell you what doesn't work. Your life. The way you have it set up right now, your situation sucks beyond belief. The decisions you have made are beyond suicidal financially. So you've got to throw a stick of dynamite in the middle of this freaking mess you've created. And it's going to be really uncomfortable. But you know what's going to be more uncomfortable? You sit there in this pile of stuff and you're gonna smell like this stuff as long as you sit there in it, coming up with excuses to sit there in it. So you have got to get rid of this mess. You've got to create a big. You may need to quit school. You need to go get some dadgum money and start cleaning up this mess. So I want you working like 80, 90 hours a week, going to school on caffeine and doing what normal people do when they get in this. Instead of telling me, oh, my mom got screwed over by my dad when he left. I'm sorry, but that doesn't mean you buy a $70,000 car while you're in college and downgrade it to a $41,000 car and act like that's smart. Nowhere in this conversation is smart. Smart didn't come up today, okay?

[Co-host]

No, it didn't.

[Dave Ramsey]

It didn't even show up here. So, dude, you've got to get rid of the car, and you've got to figure this out some way or another. Now, we're giving you lots of suggestions, okay? Take. Get. Get a buddy to take that's in the neighborhood to take you to college. Quit college for a year and take you a gap year and go clean this mess up while you work like a freaking maniac. But you are, man. You. You. You cannot. There's nothing in this that the math works. Sixth graders could tell you this. Math doesn't work. This is a mess. And so, no, you can't keep this car, and no, you can't keep this life the way it has it designed right now. That's why you called.

[Co-host]

And you can't get another car.

[Dave Ramsey]

And I'm not going to argue with you about it anymore. I'm through talking to you about it. So you go fix this. We gave you some suggestions, but part of fixing it is you've got to decide that where I live, the land I live in right now is the land of stupid, and I want to leave. That's. That's the first decision you got to make. And we hadn't even been able to get that far with you. So that's where you got to go, man. That's where you got to go. Open phones here at Triple 882-55-5225. Now, Jay, let's just review the policies on it. We love you. All of you. If you've done something stupid, we love you anyway. We've done something stupid. I have a PhD in dumb. Jade and Sam cleaned up $465,000 worth of stupid in their life. So no one's sitting here high and mighty, talking down to someone. So we love you. We love you so much. We're going to tell you the truth. We're going to start, gentlemen, and we're going to start by trying to help you move along. But if you want to argue with us while we're trying to help you, it's going to get nasty fast because we love you. I'm going to smack you upside your stupid head until you listen to the stuff that'll make your life better. Now, I will start with a gentle handshake and say, honey, this is the best way to do it. Well, Dave, I listen to you all the time, but I'm not selling the car. Well, you're an idiot. You got to sell the car. That's how it's going to sound around here, honey. Okay? So we're going to serve you when you call here. You're not entertainment value for us. You're a calling for us. You're a crusade for us. We want you to win. And we're going to do everything in our power, starting at first gently, and turning up the heat by degrees during the time we're on the phone together until we have contact. This is the Ramsey Show. Create your free every dollar budget today. The simplest way to budget for your life.