I'm $600k in Debt, Should I Be Investing?

Summary

Episode Overview

Title: I'm $600k in Debt, Should I Be Investing?
Podcast: The Ramsey Show Highlights
Date: May 18, 2026
Main Theme:
A caller, Eric, seeks advice from Ramsey Network experts (likely Rachel Cruze and Dave Ramsey) on whether he should be investing given he has significant real estate debt, a growing family, and a complex financial situation. The advisors walk Eric through the pros and cons of investing in his current context and how to prioritize financial decisions for peace, simplicity, and long-term security.

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Key Discussion Points & Insights

1. Eric’s Financial Situation (00:06 – 02:15)

• Income & Family: Self-employed, annual income $156,000–$200,000. Wife is a stay-at-home mom; two kids, with a third on the way.
• Assets:
  • Rental property ($425,000 value, $304,000 mortgage at 2.75%), cash-flowing with $500/month margin
  • Primary home ($330,000 value, $208,000 mortgage at 6.5%)
• Debts:
  • $54,000 owed to parents (flexible, strong family relationship)
  • No car notes, credit cards, or student loans (wife’s loans recently paid off)
• Liquidity: $80,000–$85,000 in cash
• Investments: $100,000–$120,000 in Roth IRA and 401(k) (stopped contributions after becoming self-employed)
• Dilemma: Feels pressured to start (or continue) investing more, but recognizes tension with current debt and family priorities.

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2. Advisors Assess Situation & Ask Key Questions (01:20 – 03:16)

• Advisors clarify property values, mortgage balances, and total debt load.
• Rachel Cruze thanks Eric for providing detail:
  Quote: “Yeah, you got a lot going on, Eric. My gosh.” (01:20)
• Dave Ramsey highlights the need to prioritize vs. spreading efforts too thin, and asks Eric about past experience with the baby steps and Financial Peace University (FPU). Eric admits familiarity is outdated.

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3. Concrete Recommendations (03:19 – 06:12)

• Rachel's Step-by-Step Plan:
  • Pay off the $54,000 debt to parents immediately, reducing cash reserves to ~$28,000 (emergency fund).
  • Consider selling the rental property for simplicity; proceeds would free up equity for a potential new (more suitable) family home.
  • Use combined equity from both homes (estimated $175,000) for a down payment.
  • Begin investing 15% of income toward retirement only after becoming debt-free with an emergency fund in place.
  • Start college savings for children.
  • Assess if maintaining a rental property fits long-term family objectives.
  • Quote: “If I woke up in your shoes, Eric, here’s what I would do. I’d pay off your parents tonight... I probably would look to sell the rental.” (03:19)
• Key Principle: Consistency in retirement investing is important, but only after eliminating non-mortgage debt and having an emergency fund.

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4. Emotional and Lifestyle Considerations (04:30 – 06:57)

• Advisors note Eric's complex financial and personal landscape, with new baby and a spouse unhappy in current home.
• Both stress simplification for peace of mind — reducing moving parts to reduce stress and maximize focus.
• Discussion about risk and upside of rental property investment; Eric is comfortable with hands-on property management and likes the current setup but acknowledges risks.
• Advisors remind Eric he cannot “do it all at once and do it well.”
  Quote: “If you chase two rabbits, you lose them both.” (07:18)

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5. Long-Term Perspective & Final Guidance (07:07 – 09:05)

• Rachel Cruze: Focus on 15% income to retirement accounts and then, if desired, aggressively pay down real estate debt (particularly rental first).
• Dave Ramsey: Emphasizes order and intentionality:
  Quote: “You are really young... you can have it all, but rarely does someone have it all at the same time.” (07:42)
• Advisors suggest focusing on what matters most now (family comfort, peace, simplicity), then consider growth and investing later.
• Rachel: “There’s just something about solving for peace... Let’s go solve for peace.” (08:46)
• Dave: “And you know how to get that? Many times, just simplicity.” (08:50)
• Both agree it’s smart “to downshift into simplicity,” citing the complication of balancing family, debt, and investment.

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Notable Quotes & Moments

• Rachel Cruze: “If I woke up in your shoes, Eric, here’s what I would do…” (03:19)
• Dave Ramsey: “If you chase two rabbits, you lose them both.” (07:18)
• Rachel Cruze: “There’s just something about solving for peace…” (08:47)
• Dave Ramsey to Eric: “You can have it all, but rarely does someone have it all at the same time.” (07:42)

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Timestamps for Important Segments

• 00:06 – 02:15: Eric lays out his financial scenario.
• 03:19 – 04:30: Rachel offers concrete step-by-step advice for simplification.
• 05:16 – 06:12: Advisors emphasize prioritizing peace, emergency fund, and 15% into retirement.
• 07:18: Dave shares his “two rabbits” analogy for priorities.
• 08:30 – 08:57: Advisors urge focus on peace and simplicity as the ultimate financial goals.

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Summary

In this episode, Eric’s central question — whether he should be investing while $600k in debt — prompts a deep dive into financial priorities. Ramsey Network experts advocate for simplification and clarity: eliminate non-bank debt (even friendly family loans), consider whether owning multiple properties truly serves the family’s needs, and only invest for retirement (15% of income) after cementing a solid financial foundation. For those in similarly complex situations, the advisors encourage open communication with partners, decisive debt payoff, and an ongoing focus on peace and simplicity as pathways to long-term financial health.

Transcript

[Podcast Host/Announcer]

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[Eric (Caller)]

So I've got a. I feel like I'm in a position to start investing, but on paper it doesn't feel like it as well. So I've got an income about 156 to 200,000 years. Self employed. My wife stay at home, mom got two kids, one on the way. Our primary home. And I have a rental property as well. So rental property is worth about 425,000. The primary home is worth about 330,000. And the mortgages are 304,000 at 2.75% and 208,000 at 6.5%. And then I have about $54,000 in debt to my parents. Although I will caveat. I've got a great relationship with my parents. If anything were to ever happen, I'm confident they would just say either pause payments or they just forgive it. Anyway, rental property, it's cash flowing. My rent is. I charge 2,500amonth, and my cost at a month is 2,000 bucks. And I've got about 80 to $85,000 in cash sitting in the bank. So I'm trying to figure out. I feel like I should be putting money. Oh, sorry. In a Roth IRA. It's got about $100,000 in it. I'm trying to figure out. I feel like I should be investing more, but.

[Financial Advisor 1 (Possibly Rachel Cruze)]

Yeah, you got a lot going on, Eric. My gosh. Okay, so let's. Okay, first of all, I thought I'd

[Eric (Caller)]

give you the quick version.

[Financial Advisor 1 (Possibly Rachel Cruze)]

No, it's great. No, we needed all those numbers. My question is, is your rental property worth more than your primary home?

[Eric (Caller)]

Yeah. So I bought a bachelor pad before I got married. I got married and I had a kid, and it was not a good fit for a house. So, yes, my rental property was my own house a while ago. Okay, and then.

[Financial Advisor 1 (Possibly Rachel Cruze)]

And how much do you owe? How much do you owe on it? How much is left on the mortgage?

[Eric (Caller)]

304,304.

[Financial Advisor 1 (Possibly Rachel Cruze)]

Okay. And how much is on your primary home? How much is it worth? Or how much do you owe?

[Eric (Caller)]

208. 280,000 on the primary.

[Financial Advisor 1 (Possibly Rachel Cruze)]

280. Okay. And the only debt you have, consumer wise, is the 54,000 to your parents, Right? No car loans, no credit cards, student loans, none of that.

[Eric (Caller)]

Correct. I. I did pay off my wife's student loans. That was. That was a checkbox. So we did that to feel a little bit more relief from that. But yeah.

[Financial Advisor 2 (Possibly Dave Ramsey)]

So what's the. Anyway, you touched on this real quick. What. What is this burning desire with all the stuff you got going on? You feel like you need to be investing for retirement? Is that what I heard?

[Eric (Caller)]

I've. Yes. I used to be putting away a bunch of money. You know, when I had a standard W2 job, I was investing, obviously. I've got 100,000 in Iraq and 401k. Maybe 120. I don't know the exact number, but. But I stopped doing that ever since I've become self employed.

[Financial Advisor 2 (Possibly Dave Ramsey)]

Right.

[Eric (Caller)]

With this rental house and everything going on, I've got. I technically have the cash, but we're trying to save up about 100,000. My wife's not a big fan of the current house that we're in. Yeah.

[Financial Advisor 2 (Possibly Dave Ramsey)]

How familiar with the. How familiar with the baby steps are you?

[Eric (Caller)]

Admittedly, I went through FPU a long time ago, but that was pre everything, so not. Not a ton.

[Financial Advisor 2 (Possibly Dave Ramsey)]

Yeah.

[Financial Advisor 1 (Possibly Rachel Cruze)]

Okay.

[Financial Advisor 2 (Possibly Dave Ramsey)]

Okay.

[Financial Advisor 1 (Possibly Rachel Cruze)]

Gosh. Okay. So I always run these scenarios, Eric. If I woke up in your shoes, okay, and you called. You called our show. So if I woke up in your shoes, Eric, here's what I would do. I'd pay off your parents tonight, and that brings your savings down to 28,000, which I would count as probably your fully funded emergency fund. You may want to throw a little bit more in there, but we can just set that in a high yield. We're done. Wife is not happy in the home. And I would run for simplification personally of where you guys are. I probably would look to sell the rental. You'll make about 120, probably 100 after fees and everything. The home you're in now, you'll have some equity. I mean, you could throw possibly 175ish at a new home. And you guys start, you know, having, you know, having that over here. And then you go and you start investing 15% of your income and you got. Do you guys have kids?

[Eric (Caller)]

Three. Okay, well, two and one on the way.

[Financial Advisor 1 (Possibly Rachel Cruze)]

All right.

[Financial Advisor 2 (Possibly Dave Ramsey)]

Oh, my gosh.

[Financial Advisor 1 (Possibly Rachel Cruze)]

Yeah. And start working, you know, putting some money away for college for them and just start working the baby steps. But that's me, Eric, again. Everyone has a different thing.

[Financial Advisor 2 (Possibly Dave Ramsey)]

I think I can feel on you, Eric, the stress that you have in

[Financial Advisor 1 (Possibly Rachel Cruze)]

your life and a new baby coming to me.

[Financial Advisor 2 (Possibly Dave Ramsey)]

Am I feeling this or is it just bad pizza? What's going on?

[Eric (Caller)]

Oh, no, actually, I love this. I love all of this. Managing and keeping track of all this.

[Financial Advisor 2 (Possibly Dave Ramsey)]

Okay, so you do love the. But you do. Okay, so you may not feel it. What I'M feeling. But you do want to simplify a little bit or you're trying to at least strategize on how do I invest for retirement and you just can't do a. All of this at once and do it well.

[Eric (Caller)]

I, I'm worried that if. Am I, you know, I always hear, you know, if I had $100,000 early on in a retirement, it'll grow even if you don't invest anything. So I feel like I've checked the box of investing, but I feel like I should still be investing. I've got.

[Financial Advisor 2 (Possibly Dave Ramsey)]

You should, but you're tapped out with everything else going on.

[Financial Advisor 1 (Possibly Rachel Cruze)]

Yeah. The goal is to be funding 15% of your income into retirement, consistently continuing to build up that. So that's. But that's after you're debt free with an emergency fund, which could happen tonight, you know, so. So if you walk through the baby steps. Yeah. I think there's a non negotiable here that the 54,000 needs to be paid off. And even if it's a great relationship with your parents, all that be done, just be done with it. You'll have your fully funded emergency fund of 28,000. So that's a non negotiable. Now the next, the negotiable part, which is where we could maybe be different and that's okay is do you keep the rental property or not? But you need to be investing 15% of your income into retirement and then looking at this rental property and what you and your wife want, what do you guys want to be in five years? Do you want to be landlords and you know, still have this property and hopefully be paying it off? Because you need to be paying that. You should be paying that off even before your primary home.

[Eric (Caller)]

Yeah.

[Financial Advisor 1 (Possibly Rachel Cruze)]

But yeah, it's just a lot of real estate and depending on what you want to do. Eric. Right. If you want more money in the market or, or some there. Do you enjoy the rental property?

[Eric (Caller)]

Yeah, well, I'm. Luckily I've got great tenants right now, but I know that could theoretically change. Yeah. And I, I'm handy, so any, any repairs and stuff I'll do myself. So.

[Financial Advisor 1 (Possibly Rachel Cruze)]

Yeah. So. So having a second home long term is good with both of you. That's like part of your portfolio that you're good with.

[Eric (Caller)]

That's correct. I feel like that's what I'm investing in right now. But yes.

[Financial Advisor 1 (Possibly Rachel Cruze)]

Yep. So. So yeah, the only change up I would do is is start putting 15 away into your. That's going to be your Roth and Then do you have a 401k at your work?

[Eric (Caller)]

Yes.

[Financial Advisor 1 (Possibly Rachel Cruze)]

Yep. So those two. Those two buckets need to start being filled consistently 15% of your income. And then above that is where you start paying off these. This real estate.

[Financial Advisor 2 (Possibly Dave Ramsey)]

So, you know, I'm just reminded of this old saying, and, you know, you love my old saying, so I feel like I gotta give you another one.

[Financial Advisor 1 (Possibly Rachel Cruze)]

Yes. Before we end his old man here.

[Financial Advisor 2 (Possibly Dave Ramsey)]

If you chase two rabbits, you lose them both. And it feels like you're trying to chase all the rabbits right now. And you're doing. Sounds like you're doing a good job. Not criticizing you, but I think you have to decide again, what are my priorities? What matters most to me right now? How old are you, Eric?

[Eric (Caller)]

32? 33. Excuse me.

[Financial Advisor 2 (Possibly Dave Ramsey)]

My man, you are really young, and, you know, you can have it all, but rarely does someone have it all at the same time. And that's my encouragement to you. I hope you hear encouragement, not criticism. But I think that's what you're facing right now. Rachel. Nailed it. You two need to sit down together and decide, what do we want right now? And then what do we want in the future?

[Financial Advisor 1 (Possibly Rachel Cruze)]

And $600,000 in real estate debt. So whether you feel that or not, that's. That's. I mean, that. That's out there. You know what I mean? So depending on how quickly you guys say, we're gonna keep these, but we're gonna pay them off in the next four to five years, you know, and get radical and do what we can to get rid of. To get rid of that debt, especially that. The rental property one. But yeah, I don't know, Eric. I. There's just always time to invest in real estate in my head. Do you know what I mean? And do it with cash. And do it with cash.

[Eric (Caller)]

I agree.

[Financial Advisor 1 (Possibly Rachel Cruze)]

And there's just a lot of strain happening. And in your life too, Right. You got two little kids and a baby coming. Yeah. And I've been there. And there's just something about solving for peace. When Dr. John Galani says that, let's go solve for peace.

[Financial Advisor 2 (Possibly Dave Ramsey)]

And you know how to get that? Many times. Just simplicity.

[Financial Advisor 1 (Possibly Rachel Cruze)]

Simplicity.

[Financial Advisor 2 (Possibly Dave Ramsey)]

I know, but he's 32. I love it. He's trying to.

[Financial Advisor 1 (Possibly Rachel Cruze)]

The hustle's great.

[Financial Advisor 2 (Possibly Dave Ramsey)]

I love the hustle, but I would downshift it into simplicity, and I think that'll be the piece that you're looking for. Thanks for listening and. And hope we helped you out.

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