I'm 25 And Already $165,000 In Debt (Not Including The House)

Summary

The Ramsey Show Highlights: "I'm 25 And Already $165,000 In Debt (Not Including The House)"

Release Date: May 17, 2025

In this episode of The Ramsey Show Highlights, host Dave Ramsey, alongside financial expert George Kamel, addresses the overwhelming debt situation of a 25-year-old caller named Connor. Struggling with $165,000 in debt, excluding his mortgage, Connor seeks guidance on how to navigate his financial predicament. The discussion provides valuable insights into debt management, budgeting, and the implementation of Ramsey's renowned Baby Steps.

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Connor's Financial Predicament

Connor begins by outlining his dire financial situation:

Connor [00:06]: "I'm 25, married, I got a daughter and about $550,000 in debt, including a mortgage. Just kind of feels like I have your Every Dollar app. I've been trying to use it, but even then it just feels really overwhelming. Trying to see basically no light at the end of the tunnel."

He breaks down his debt as follows:

• Home Equity Line of Credit (HELOC): $145,000
• Personal Line of Credit: $14,000 (transferred from a student loan)
• Credit Cards: $1,000 and $5,000

This totals to $165,000 in consumer debt, excluding the mortgage.

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Analyzing the Debt Structure

George Kamel steps in to help Connor dissect his debt:

George Kamel [00:37]: "How much consumer debt do you have? Let's separate the mortgage out because that'll help take away this mountain of debt you're looking at."

Connor explains that the HELOC was used to consolidate other debts, including car loans and managing expenses during his wife's maternity leave.

Dave Ramsey probes deeper into the circumstances that led to the debt accumulation:

Dave Ramsey [01:54]: "So no, you don't get it at full. You get it at 500 bucks a month and starve to death. So she couldn't, you guys could not afford for her to go out for 18 months, but she did anyway."

Connor reveals that during his wife's 18-month maternity leave, he was on a commission-based job with unstable income, forcing them to rely heavily on debt to cover living expenses.

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Assessing Income and Financial Behavior

Dave Ramsey and George Kamel examine Connor's current income and spending:

Connor [02:46]: "Now I make about 80 to 100,000."

Dave Ramsey [03:00]: "So you make 165?"

Connor clarifies that collectively, their household income is approximately $165,000 annually, with a monthly take-home pay of about $8,000 after taxes.

Dave emphasizes the importance of living within their means:

Dave Ramsey [03:12]: "Because you should have easily been making it with both of you working and making progress, making. I mean, good God, what does it take for you to live? I mean you should be putting 5, 6, 8, $10,000 a month on these debts."

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Implementing the Baby Steps and Debt Snowball

George introduces Ramsey's Baby Steps as a strategic approach to tackle debt:

George Kamel [04:06]: "Baby step one is $1,000 starter emergency fund. Likely you guys have that. And then baby step two, again you're pausing. Investing. We're not borrowing another dime. You're going to pay off all of your debts from smallest to largest. Balance with the debt snowball method."

He advises making minimum payments on all debts while aggressively paying down the smallest debt first, then cascading payments to larger debts—a method known as the Debt Snowball.

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Dave Ramsey's Strong Recommendations

Dave Ramsey delivers a passionate and no-nonsense approach to Connor's situation:

Dave Ramsey [04:55]: "No eating out, no vacations, no investing, no over taxation. Don't over withhold... live on beans and rice... you have made a freaking mess at 25 years old with babies."

He stresses the necessity of cutting unnecessary expenses and focusing all available funds on debt repayment. Ramsey encourages Connor to eliminate non-essential spending and prioritize debt elimination:

Dave Ramsey [06:00]: "Start throwing it at these debts tonight. Knock out that thousand dollar credit card, cut it up. Knock out that $5,000 credit card, cut it up, knock out that little $14,000 personal loan and be done with it."

Ramsey also advises against further borrowing and emphasizes living below their means to prevent future debt accumulation.

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Avoiding Common Debt Traps

George highlights the pitfalls of debt consolidation without reduction:

George Kamel [07:25]: "One of the biggest traps out there is when you play the shell game, you start moving the debts around... you don't get to do the Debt snowball with a giant HELOC sitting there."

He warns that merely shifting debts can exacerbate the problem, preventing effective debt reduction through the snowball method.

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Final Takeaways and Motivation

Concluding the discussion, Dave Ramsey motivates Connor and listeners to adopt disciplined financial habits:

Dave Ramsey [08:00]: "Beans and rice, no freaking life... You have to live on less than you make. And I was the master at spending money and borrowing... I've done it worse than you."

George reinforces the possibility of becoming debt-free:

George Kamel [07:57]: "You guys are going to be completely debt free if you do it this way with the rest of your life."

Ramsey emphasizes the importance of commitment and strategic planning:

Dave Ramsey [09:24]: "Stop borrowing, decide I'm not living like this anymore so that you can get clear of this."

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Conclusion

This episode serves as a compelling guide for young individuals grappling with significant debt. Through Connor's real-life example, Dave Ramsey and George Kamel demonstrate the effective application of the Baby Steps and Debt Snowball method to regain financial stability. The conversation underscores the importance of disciplined budgeting, prioritizing debt repayment, and making informed financial decisions to achieve long-term financial freedom.

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Notable Quotes:

• Connor [00:06]: "Trying to see basically no light at the end of the tunnel."
• Dave Ramsey [04:55]: "No eating out, no vacations, no investing... live on beans and rice."
• George Kamel [04:06]: "You're going to pay off all of your debts from smallest to largest."
• Dave Ramsey [08:00]: "You have to live on less than you make."
• George Kamel [07:57]: "You guys are going to be completely debt free if you do it this way."

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This comprehensive discussion provides actionable steps for individuals facing similar financial challenges, emphasizing the transformative power of disciplined financial planning and commitment to change.

Transcript

[Dave Ramsey]

Brought to you by chm, a biblically based alternative to health insurance.

[Connor]

Learn [e-mail] budget so I'm 25, married, I got a. I got a daughter and about $550,000 in debt, including a mortgage. Just kind of feels like I have your Every Dollar app. I've been trying to use it, but even then it just feels really overwhelming. Trying to see basically no light at the end of the tunnel. So. Right, so it's some guidance basically on how to work it out from here.

[George Kamel]

How much consumer debt do you have? Let's separate the mortgage out because that'll help take away this mountain of debt you're looking at.

[Connor]

Sure, Yeah. I have $145,000 home equity line of credit, $14,000 personal line of credit on my wife's side that was transferred over from a student loan. Thousand dollar credit card and a $5,000 credit card. So 165,000 total.

[Dave Ramsey]

What was the home equity line for?

[Connor]

Consolidating other debt.

[Dave Ramsey]

What was that debt?

[Connor]

Two cars that we had. And then some of it too, was basically robbing Peter to pay Paul. Right. My wife went on here in Ontario, like, you get 18 months of maternity leave. Right. So but when you are in 18 months, the subsidy, the subsidy that you get from the government is very low. Like it could be maybe $500 a month. Right. So I was using that to pay for our home expenses too, on top of that.

[Dave Ramsey]

So she couldn't afford to go on 18 months worth of leave, but did it anyway.

[Connor]

12 or 18 months, yeah, that's what you get.

[Dave Ramsey]

So no, you don't get it at full. You get it at 500 bucks a month and starve to death. So she couldn't, you guys could not afford for her to go out for 18 months, but she did anyway.

[Connor]

Yeah, she was on maternity leave for.

[George Kamel]

That time and use debt to fund it, essentially.

[Connor]

Yeah. At the time I was working a commission job. Right. So I wasn't making a steady income at a time during that 18 months.

[Dave Ramsey]

At the time, you couldn't afford for her to take that much time off and she did anyway.

[Connor]

Yes.

[Dave Ramsey]

Okay, I want you all to hear that, because you can't, you can't go into these things and you fall backward into them again. You can do that once, but you need to learn what the mistake was. And the mistake was you can't look up and go, well, I don't want to work. Yeah, that's not an option when you're broke. All right, so what do you make.

[Connor]

Now I make about 80 to 100,000.

[Dave Ramsey]

What does she make now?

[Connor]

About 65 ish.

[Dave Ramsey]

So you make 165?

[Connor]

Yeah. I will get raises next. For the next.

[Dave Ramsey]

How long is there, how long has she been back to work?

[Connor]

For about six to eight months now.

[Dave Ramsey]

Okay. Because you should have easily been making it with both of you working and making progress, making. I mean, good God, what does it take for you to live? I mean you should be putting 5, 6, 8, $10,000 a month on these debts.

[Connor]

Yeah, I mean our take home pay probably per month is about 8,000.

[Dave Ramsey]

Oh yeah, you're in Canada. You guys get your butts taxed off. We whine about taxes in the US and you make us look like champions.

[George Kamel]

Are you guys investing too at all?

[Connor]

Yeah, she has a, an investment account here we call it. It's a tax free savings account. Right. And you get to invest and you get to take out tax free. But you're capped at about 6,000 a year to put in.

[Dave Ramsey]

Yeah, you need to stop investing temporarily and work what we call the baby steps. Have you ever heard of that?

[Connor]

I have. Just based on the podcast. Like I've thought about getting Financial Peace University. I didn't know if it translated over to Canada, but I'm sure the principals would.

[Dave Ramsey]

To the principals send you a copy of the total money makeover book. And George, then he would work the baby steps.

[George Kamel]

Yeah. So baby step one is $1,000 starter emergency fund. Likely you guys have that. And then baby step two, again you're pausing. Investing. We're not borrowing another dime. You're going to pay off all of your debts from smallest to largest. Balance with the debt snowball method. So you make minimum payments on all the debts, but on that smallest one, attack it with a vengeance. Throw as much extra as you can at it and it gets knocked out real quick because it's the smallest one. Take that payment you freed up, apply it to the next and to the next until you're completely debt free. And if you do it that way, making 1:65 and maybe working even more, maybe you get a side hustle. You guys can clean this up in two years.

[Dave Ramsey]

No eating out, no vacations, no investing, no over taxation. Don't over withhold. Make sure your withholding is the only what you have to pay in taxes. No more. You don't want to get tax refunds like we do in the U.S. it's a bad idea. And you guys got to live on beans and rice, rice and beans, because you have made a freaking mess at 25 years old with babies. And that's not unusual. You're not a horrible person. Most people live like you're living. But as you described when you opened the call, when I picked up the phone, it's no freaking fun. Normal sucks and I don't want to be normal. So you got to get mad and pay. And if you got any savings at all that's not retirement savings, start throwing it at these debts tonight. Knock out that thousand dollar credit card, cut it up. Knock out that $5,000 credit card, cut it up, knock out that little $14,000 personal loan and be done with it. Man, that's only that right there is only 20 grand. You should be done with that. Just a few months and then that gets you down to the home equity line and the house. And then I want you to plow through that home equity line as fast as you possibly can. Or refinance the house and roll the home equity line into it. Either one. But no more borrowing, ever. You need to have plastic surgery. Chop up the credit cards, a plastic to me. You need to decide I'm not living like this anymore so that you can get clear of this. Because you've, you've spent more than you make your entire married life and it's reached the end mathematically. You don't have that option to do that anymore. And it's stressful and it makes you feel shamed and it puts a strain on your relationship. And you guys as a couple, as two grownups have to live on less than you make, Period. No exceptions. And by the way, Connor, that's all of us, we all of you people listening, all of you people watching. You have to live on less than you make. And I was the master at spending money and borrowing it and borrowing to cover up my disorganization, my impulsive spending, my entitled mentality. I had all of that in my 20s. And it's one of the things that led me to build a business that caused me to go bankrupt. And that's how I learned all this stuff was the hard way. So I've done it worse than you.

[George Kamel]

And one of the biggest traps out there is when you play the shell game, you start moving the debts around. Well, we can consolidate that, we can wrap it into the heloc. And you feel like you did something because action was taken, but you just moved the debts around and didn't clean any of it up. In fact, it probably is worse now because they're not separated. So you don't get to do the Debt snowball with a giant HELOC sitting there. And so this is. This is the stupid tax that we talk about. And we're. One day you look back and go, man, remember when we were young? We made all those decisions. Well, at 27, you guys are going to be completely debt free if you do it this way with the rest of your life.

[Dave Ramsey]

Or sooner.

[George Kamel]

Yeah, you heard Dave. Get to work.

[Dave Ramsey]

Yeah, I mean, I want you guys. Beans and rice, no freaking life. And I don't care if your broke friends are making fun of you. If your broke friends are making fun of your financial plan, that means you're right on track. It's like fat people making fun of your diet. You don't care. I don't care. I'm trying to stay alive. I'm trying to build a future here. And you don't have any credibility to make fun of me. So you don't get a vote in my life, you know? And when you reach that kind of stuff, that's when everything changes. And so you and your wife tonight need to have a come to Jesus meeting. And the two of us say, all right, we are not doing this anymore. Brand new life to children, having children. No more. We're two adults now and we're gonna make adult decisions and we're gonna get after this. And adults devise a plan and follow it. Children do what feels good. And I gotta tell you, I don't care if you're 55 or you're 25, if you just do what feels good. I work so hard, I deserve it. You don't deserve nothing. Shut up, you whiner. You deserve it. When you saved up the money and paid for it because you worked your butt off, that's when you deserve it. Until then, you didn't deserve it. I work hard. Like we all don't work hard. You want some cheese with that wine? Shut up.

[George Kamel]

David just served up a charcuterie board.

[Connor]

Right.

[Dave Ramsey]

I'm serious, man. That just. I'm working. I deserve. You don't deserve it. You just. You deserve to get off your butt and straighten things up. That's what you deserve. That's it. I'm not yelling at you, Connor. I'm yelling at everybody. CHM isn't health insurance. It's a health cost sharing ministry. Check it out for [e-mail] budget.