I'm Illegally Living In My Work Building

Summary

The Ramsey Show Highlights

Episode: I'm Illegally Living In My Work Building
Date: March 19, 2026
Host: Dave Ramsey
Guests: Financial Coach, Hannah (Caller)

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Overview

This episode centers on a dilemma faced by Hannah, a New York City gym owner who, along with her husband and newborn, has been living in the basement of their business to save money and pay down debt. Hannah seeks Dave Ramsey’s advice on when and how to transition out of their current, technically illegal living situation while continuing to aggressively pay off a substantial amount of remaining debt. The discussion explores the legal, ethical, and financial factors at play, culminating in a practical, actionable plan for moving forward.

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Key Discussion Points & Insights

1. Hannah’s Situation

• Living Arrangement:

  • Hannah and her husband moved into their gym’s basement to eliminate their $3,000/month rent and accelerate debt repayments (00:06).
  • "We decided to move into the basement of the gym...so that I could be a stay at home mom and run the business at the same time." — Hannah (00:08)

• Financial Progress:

  • They paid off $70,000 in business loans within a year but have $120,000 remaining debt: $40,000 in credit cards, $80,000 in student loans (00:48; 04:54).
  • "We paid off $70,000 of our business loans, but we still have about $120,000 in debt." — Hannah (00:12)

• Legality and Safety:

  • The basement is not zoned for residential living, making the arrangement illegal though the space meets basic safety requirements (window egress, ceiling height) (01:01, 01:18).
  • Inspectors visited after a report, but allowed them to stay at that time (04:19).

2. Legal and Ethical Risks

• Dave’s Concerns:

  • Emphasizes the legal risks (“integrity of the situation on top of the risk that you’re putting yourself in. Especially with a baby.” — Dave, 01:09)
  • Raises the possibility of fines, forced eviction, or lawsuits from the city (03:44–03:57).
  • "I would rather be on the proactive end of you all choosing [to move] than versus...getting fined or something." — Financial Coach (03:44)

• Practical Advice:

  • Advocates for moving out soon, before being forced by authorities (03:44–04:02).
  • Encourages establishing a legal, stable home, even if it means slowing down the debt payoff briefly.

3. Financial Feasibility

• Income Growth:

  • Business gross has risen from $40,000 to $65,000 per month within the year (02:45).
  • Take-home pay is now $10,000–$15,000/month, up from nearly nothing (03:04).
  • “Now we're bringing in about $65,000 a month.” — Hannah (02:53)
  • “We're probably taking about $10,000 to $15,000 a month [home].” — Hannah (03:04)

• Affording Rent:

  • Given the increased income, a $4,000 monthly rent is manageable while continuing debt payments (03:14–03:36).
  • Ramsey sets a target: “The goal is to keep it around 25% of your take home pay...but the goal is to not have 50% of your take home pay going to rent.” — Dave (05:57)

4. Debt Repayment Strategy

• Snowball Method:

  • Employ the debt snowball approach: address smallest balances first, continue living frugally, prioritize essentials ("four walls" — food, shelter, utilities, transportation) (05:08).
  • Urges continued business growth to expedite debt freedom (05:08–05:34).
  • "How can this business make even more? How do we really continue to scale this thing?" — Dave (05:28)

• Sustainability:

  • The plan’s viability relies on their ability to maintain or grow income (“As long as that $65k a month is sustainable...then, you know, spending four grand a month on rent is manageable.” — Dave, 05:37).

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Notable Quotes & Memorable Moments

• Legal/Ethical Tension:

  • "Another one's just the integrity of the situation on top of the risk that you're putting yourself in. Especially with a baby." — Dave Ramsey (01:09)
  • “I would rather be on the proactive end of you all choosing [to move] than...a forced situation.” — Financial Coach (03:44)
  • “That sounds like...I wouldn't put it past New York City.” — Dave Ramsey (03:57)

• Financial Progress & Hope:

  • "Now we're bringing in about $65,000 a month." — Hannah (02:53)
  • "I think this is a very doable plan." — Dave Ramsey (05:37)
  • “If you can keep that up and you're debt free, you guys are going to be living beautifully in New York City.” — Dave Ramsey (05:31)

• Realities of New York Living:

  • “In New York City, rent is so expensive. We were paying $3,000 a month for an apartment that was basically...a closet.” — Hannah (01:38)
  • “New York City is just a wild place.” — Dave Ramsey (04:35)
  • “It would be nice to have, like, more of a real house.” — Hannah (04:41)

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Important Timestamps

• 00:06 – Hannah describes why they moved into the gym
• 01:01 – Discussion about the legality, safety, and risks
• 02:45 – Hannah explains current business income
• 03:14 – Dave assesses what they can afford in rent
• 03:44 – Urgent recommendation to move out legally
• 04:19 – Hannah shares experience with city inspectors
• 04:54 – Breakdown of remaining debt
• 05:08 – Dave outlines debt snowball strategy
• 05:37 – Encouragement about the plan's viability and sustainability
• 05:57 – Final advice on managing rent-to-income ratio

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Conclusion

Dave Ramsey and his team encourage Hannah to move her family into a legal and safe home as soon as possible, even if it means slightly slowing their debt payoff. Given their significant increase in business income, they can afford New York City rent and still work aggressively toward being debt-free. Dave reinforces the importance of integrity, sustainability, and proactive decision-making, concluding that with continued focus and prudent budgeting, Hannah and her family are well-positioned for future success.

Transcript

[Dave Ramsey]

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[Hannah]

My husband and I own a gym here in New York City. And about a year ago, right before I had our baby, we decided to move into the basement of the gym to save money on rent and then kind of make it so that I could be a stay at home mom and run the business at the same time. And in that year, because we were like able to save so much money, we paid off $70,000 of our business loans, but we still have about $120,000 in debt. And we're trying to decide when to move out because we're not technically supposed to live here and it's not the most comfortable living situation, but we do want to pay off the rest of our debt.

[Dave Ramsey]

Oh, boy. So when you say technically, do you

[Hannah]

mean it's not legal, it is not zoned for it?

[Dave Ramsey]

Oh, boy. Well, that poses a problem.

[Hannah]

Yeah.

[Dave Ramsey]

I mean, one is the actual legal implications. Another one's just the integrity of the situation on top of the risk that you're putting yourself in. Especially with a baby.

[Hannah]

Yeah.

[Dave Ramsey]

I mean, is it even safe to have a baby there?

[Hannah]

It is safe. It is. It meets all the requirements of the windows being above ground and like the ceilings being high enough, all of that. It's just the zoning.

[Dave Ramsey]

Got it. Well, the real question is, why can't you guys afford rent and start to knock out this debt?

[Hannah]

We. I mean, in New York City, rent is so expensive. We were paying $3,000 a month for an apartment that was basically, you know, a closet. Yeah.

[Financial Coach]

So can y' all afford to live there? Hannah? I mean, you're. You're not paying rent right now, but in order to, you know what I mean, have the four walls that we call them food, shelter, utilities, transportation, in order to survive, you have to be able to afford it. Will you guys be able to.

[Dave Ramsey]

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[Financial Coach]

You have to be able to afford it. Will you guys be able to?

[Hannah]

I think so. We went from last year when we moved here, we were only bringing in gross $40,000 a month for the gym, and we've improved that by $25,000 a month. So now we're bringing in about $65,000 a month.

[Dave Ramsey]

Nice. How much of that do you take home?

[Hannah]

So last year we were taking home basically nothing, but now we're probably taking about 10 to $15,000 a month.

[Dave Ramsey]

Great. Okay, so let's play this out. Even if you're spending four grand a month and you make, you know, 15, that's still reasonable. And of course, everything's just going to be more New York City, but it's not like you guys are making five grand a month and you're paying four grand in rent, right?

[Hannah]

Yeah. And we could probably pay the same amount of debt off that we were paying last year.

[Dave Ramsey]

Yeah. I would make that a goal of let's still attack the debt aggressively and have a place that is. That we can legally live in and rent. Even if it slows you down.

[Financial Coach]

Yeah. Because eventually you're gonna have to move. You know what I mean? So I think I would rather be on the proactive end of you all choosing than versus, I don't know, getting fined or something. Found out. You know what I mean? It's like a forced situation or get

[Dave Ramsey]

sued by the city. I don't know.

[Financial Coach]

Yeah.

[Dave Ramsey]

That sounds like. I wouldn't put it past New York City.

[Financial Coach]

No, right. I mean, for real. Yeah. I would be. I would be making this move soon and just to set up a home and set up a, you know, a place that you guys are going to be for a while. Where did you guys move from?

[Hannah]

Just a couple blocks away.

[Financial Coach]

Oh, okay. Gotcha. Okay. Because you said we moved here last year. I didn't know what that meant. So. Okay.

[Hannah]

Yeah, no, we just moved here last year. We actually did. The inspectors did come and look at it because someone reported us.

[Dave Ramsey]

Oh, boy.

[Hannah]

So, yeah, you already found out you're fine. Yeah, but they didn't. They said that we were okay. Wow.

[Dave Ramsey]

New York City is just a wild place.

[Hannah]

It is a wild place. So that's why we weren't. We're not too worried about it, but it would be nice to have, like, more of a real house.

[Dave Ramsey]

Yeah.

[Financial Coach]

Right.

[Dave Ramsey]

I would make it a very urgent goal to get out of there and get your own place. Now, what makes up the 120,000 in debt?

[Hannah]

What's Left now is credit cards is about 40,000 and then I have 80,000 in student loans.

[Dave Ramsey]

Okay. And are those broken up into smaller debts and multiple credit cards?

[Hannah]

Yeah, it is multiple.

[Dave Ramsey]

So I would just debt snowball this. And you're going to just try to live as frugally as you can, which I know is saying a lot in New York City, paying four grand in rent. But anything that isn't your four walls and insurance, we're going to try to chunk at this debt. And that gives me some urgency to also go, hey, how can this business make even more? How do we really continue to scale this thing? Because then if you can keep that up and you're debt free, you guys are going to be living beautifully in New York City.

[Hannah]

Yeah, yeah. That's very exciting to think about.

[Dave Ramsey]

So I think this is a very doable plan. As long as that 65k a month is sustainable and it's not going to go down to 40 or 30 in the next few months, then, you know, spending four grand a month on rent, you know, if you need a slightly nicer place, you don't need to go crazy. But I think four grand a month will get you something a whole lot better than the three, right?

[Hannah]

Yeah, absolutely.

[Dave Ramsey]

Okay. The goal is to keep it around 25% of your take home pay, which I understand a very high cost of living area like New York City, it might be a little over the parameter, but the goal is to not have 50% of your take home pay going to rent. And you guys are on the path to that. So thank you so much for the call. Create your free every dollar budget today. The simplest way to budget for your life.